Document:

Exhibit 10.1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED
AND REPLACED WITH "***".   A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE EXCHANGE ACT OF 1934.

AMENDMENT NO. 1 TO

EXCLUSIVE LICENSE AND MARKETING AGREEMENT

This Amendment No. 1 (the “Amendment”)
to Exclusive License and Marketing Agreement is made as of July 24, 2006 by and
between Depomed, Inc., a California corporation (“Depomed”), and Esprit
Pharma, Inc., a Delaware corporation (“Esprit”).

BACKGROUND

A.            Depomed and Esprit are parties to
that certain Exclusive License and Marketing Agreement is made as of July 21,
2005 (the “Agreement”). 
Capitalized terms used here without definition have the meanings given
to them in the Agreement.

B.            Depomed and Esprit desire to amend
the Agreement as set forth herein.

Accordingly,
the parties agree as follows:

1.               Amendments.

1.1           Section 2.3(b). 
Section 2.3(b) is hereby amended and restated to read in its entirety as
follows:

(b)           Notwithstanding the foregoing provisions of Section
2.3(a), Depomed will be entitled to the minimum royalty payments set forth on Exhibit
B (each, a “Minimum Annual Royalty Amount”) for each calendar year
of the term of this Agreement beginning on or after January 1, 2006; provided, however
royalties paid by Esprit for Net Sales recorded in the fourth Fiscal Quarter of
2005 shall be credited against any Minimum Royalty Amount payable in respect of
Net Sales recorded in 2006; provided, however, that (i) “Depomed Net Sales”, as
defined in that certain Co-Promotion Agreement, dated as of July 24, 2006,
between Depomed and Esprit (the “Co-Promotion Agreement”), shall be excluded
from Net Sales for purposes of determining the Minimum Annual Royalty Amount,
and (ii) any Minimum Annual Royalty Amount payable pursuant to this Section
2.3(b) shall be pro-rated for any portion of any calendar year of the term of
this Agreement during which Depomed fails to meet its supply obligations to
Esprit pursuant to the Supply Agreement. 
The Parties acknowledge that the credit against any Minimum Royalty
Amount Payable in respect of the Net Sales recorded in 2006 is being made due
to the Parties’ understanding that Net Sales recorded in 2005 were primarily
related to the initial stocking of the Licensed Product in the Territory in
connection with the commercial launch of the Product.

1.2           Article 3.  Article 3 of the Agreement is amended and restated
in its entirety to read as follows (it being understood that Esprit has made
the license fee payments set forth in Sections 3(a) and 3(b) below):

 

 

“3.           License
Fees.

Esprit shall make the following license fee
payments to Depomed:

(a)                                  Five Million Dollars ($5,000,000) on the
Effective Date;

(b)                                 Twenty-Five Million Dollars ($25,000,000) on
or before the fifteenth day after the Effective Date;

(c)                                  Ten Million Dollars ($10,000,000) on or
before December 15, 2006; and

(d)                                 Ten Million Dollars ($10,000,000) on the
second anniversary of the Effective Date.”

1.3           Sections 5.5, 5.6, 5.7 and 5.8.  The following Sections 5.5, 5.6, 5.7 and 5.8 are
hereby added to the Agreement:

“5.5         Details.  Notwithstanding the foregoing provisions of
Section 5.4, during the period beginning on August 1, 2006 and ending on
December 31, 2006, Esprit shall conduct detail calls with respect to the Licensed
Product ***.

5.6           Joint Marketing Team.  A
Joint Marketing Team (“JMT”) shall be established by the Parties and
shall be comprised of four (4) members. 
The Parties have identified their respective initial appointments to the
JMT.  A Party may change any of its
representatives at any time if a new person (with appropriate expertise to
replace the outgoing member) is appointed to any of the foregoing positions by
giving written notice to the other Party. 
The total number of JMT members may be changed by unanimous vote of the
JMT from time to time as appropriate; provided, that the JMT shall in
all cases be comprised of an equal number of members from each of Esprit and
Depomed.  One representative of Depomed
and one representative of Esprit shall serve as co-chairs of the JMT (the “Co-Chairs”).  The members appointed to the JMT by each
Party shall be vested with appropriate decision-making authority and
power by such Party.

5.7           JMT
Responsibilities.  The JMT shall review and discuss all
Promotional and marketing activities related to the Licensed Product,
including, at a minimum, Esprit’s commercialization plans and strategies
related to the Licensed Product, which shall include, among other matters, the
following:

(a)                                  actual (during the six-month period prior to
each JMT meeting) and anticipated (during the six-month period following each
JMT meeting) number of Calls (by position) of Esprit’s sales force;

(b)                                 Esprit’s list of physicians who receive Calls
(with ME number);

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(c)                                  Licensed Product positioning, strategy and
tactics with supporting advertising and promotional activity to be undertaken;

(d)                                 any training and/or sampling programs to be
conducted;

(e)                                  medical education programs to be conducted;

(f)                                    planned public relations activities;

(g)                                 Licensed Product sampling plans and
strategies;

(h)                                 pricing and contracting strategies to the
extent permitted by law;

(i)                                     sales, marketing and educational materials;

(j)                                     managed health care strategies and tactics;

(k)                                  advertising placement and market responses;

(l)                                     sales incentive compensation for Esprit’s
sales force;

(m)                               customer targets;

(n)                                 post-marketing clinical studies; and

(o)                                 budgeting for costs and expenses associated
with Licensed Product commercialization.

5.8           Meetings of the JMT. 
Meetings of the JMT may be called by either Co-Chair from time to time
on at least five (5) business days’ notice; provided, however,
that meetings of the JMT shall be held on at least a monthly basis, on the
first business day of each month through 2006 and then quarterly thereafter,
unless the Parties otherwise agree in writing. 
If possible, the meetings shall be held in person or where appropriate,
by video or telephone conference.  Unless
otherwise agreed, the location of any in-person meetings of the JMT shall
alternate between the principal corporate offices of the Parties.  The Parties shall determine the form of the
meeting.  Either Party may invite up to
five (5) additional participants to any meeting of the JMT.  Each Party shall bear its own travel and
related costs incurred in connection with participation in the JMT and the JMT.”

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1.4           Section 9.10. 
The following Section 9.10 is hereby added to the Agreement:

“9.10       Clinical Studies. 
Notwithstanding any provision of this Agreement to the contrary, Depomed
shall be entitled to conduct clinical studies or trials utilizing the Licensed
Product (“Clinical Studies”) at its sole expense (a) for the purpose of
supporting Regulatory Approval of one or more additional indications for the
Licensed Product, or (b) that otherwise could enhance or support the Marketing
of the Licensed Product.  The JMT shall
review and approve the design of, and any protocol related to and the
dissemination of, any Clinical Study conducted by or on behalf of Depomed.  Esprit hereby grants a non-exclusive license
under the Patent Rights solely for the purpose of conducting, or having
conducted, Clinical Studies.  All
Regulatory Data generated in any such Clinical Study conducted by or on behalf
of Depomed shall be owned by Depomed. However Depomed shall allow Esprit, at no
additional cost, to utilize such data in connection with its promotional
activities. Depomed shall be permitted to publish the results of any such
Clinical Study conducted by or on behalf of Depomed, after affording Esprit at
least twenty (20) days to review and comment on any such publication, and
considering in good faith any comments provided by Esprit.  If requested by Depomed, Esprit shall
cooperate with Depomed in facilitating any necessary filings or approvals with
the FDA.”

1.5           Section 20.2. 
Section 20.2 is hereby amended and restated to read in its entirety as
follows:

“20.2  Entire Agreement.  This Agreement, the Supply Agreement and the
Co-Promotion Agreement represent the entire agreement between the Parties
concerning the subject matter herein (except as specifically noted herein) and
supersedes all prior or contemporaneous oral or written agreements of the
Parties; except that information disclosed pursuant to the confidentiality
agreement between the Parties dated June 22, 2005 shall continue to be subject
to the terms of that agreement until the effective date of this Agreement, from
which date it will be treated as Proprietary Information pursuant to Article 8
of this Agreement.  This agreement may be
modified, amended or changed only by a written instrument signed and delivered
by the Parties, with clear intent to modify, amend or change the provisions
hereof.”

2.               Miscellaneous.

2.1           Full Force and
Effect.  Except as expressly amended
hereby, the Agreement will continue in full force and effect in accordance with
the provisions thereof on the date hereof.

2.2           No Waiver.  Depomed’s agreement to enter into this
Amendment does not constitute a waiver by Depomed of any default or breach or
succession of defaults or breaches by Esprit under the License Agreement, and
shall not deprive Depomed of any right under the License Agreement or
controlling law in respect of any breach or default thereof by Esprit.

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2.3           Counterparts.  This Amendment may be signed in one or more
counterparts, all of which will be considered one and the same instrument.

2.4           Consent to Grant of Security Interest.  Depomed does hereby consent to the granting
of a security interest in this Amendment in favor of any Fortress Credit Corp.
pursuant to that certain Loan Agreement, dated as of March 9, 2006, among
Esprit, Fortress Credit Corp. and the lenders identified therein.   Depomed agrees to execute such other
documentation may be reasonably requested by Fortress Credit Corp. to evidence
such consent.

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IN WITNESS WHEREOF, Depomed
and Esprit have caused this Amendment to be duly executed as of the day and
year first above written.

	
  DEPOMED, INC.:

  	
  ESPRIT PHARMA, INC.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Carl A.
  Pelzel

  	
   

  	
  By: 

  	
  /s/ Steven M. Bosacki

  
	
   

  	
   

  
	
  Name: Carl A.
  Pelzel

  	
  Name: Steven M. Bosacki

  
	
  Title: Executive
  Vice President & COO

  	
  Title: VP, General Counsel & Assistant Secretary

  
					

 

 6Exhibit 10.2

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT
WERE OMITTED AND REPLACED WITH "***". 
 A COMPLETE VERSION OF THIS
EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL
TREATMENT UNDER RULE 24B-2 OF THE EXCHANGE ACT OF 1934.

 

CO-PROMOTION AGREEMENT

This Co-Promotion
Agreement (this “Agreement”) is entered into this 24th day of July, 2006 by and between Depomed,
Inc., a California corporation (“Depomed”), and Esprit Pharma, Inc., a
Delaware corporation (“Esprit”).

BACKGROUND

A.            Esprit has exclusive marketing rights to the extended
release ciprofloxacin hydrochloride pharmaceutical product known as ProQuin® XR, which product is the subject of NDA
#021744 (as such NDA may be amended or supplemented subsequent to the
Effective Date) (the “Product”).

B.            Esprit and Depomed desire to enhance the marketing of the
Product in the Territory (as hereinafter defined) by enlisting the support and
participation of Depomed and the Depomed Sales Force (as defined below) in the
Product marketing effort.

AGREEMENT

Now, therefore, in
consideration of the foregoing and the mutual promises herein contained, Esprit
and Depomed hereby agree as follows:

1.             Definitions

1.1.          “Affiliate”
means a corporation or business entity that, directly or indirectly, is
controlled by, controls, or is under common control with any entity.  For this purpose, “control” means the direct
or indirect ownership of more than fifty percent of the voting or income
interest in such corporation or business entity, or such other relationship as,
in fact, constitutes actual control.

1.2.          “Call” means
an in-person, face-to-face sales presentation of the Product made by a sales
representative, which presentation is for the purpose of promoting the sale of
the Product.

1.3.          “Depomed Net
Sales” means, for a particular period, the amount calculated by multiplying
(a) Net Sales for such period by (b) the Depomed Percentage.

1.4.          “Depomed
Percentage” means, for a particular period, the percentage determined by
dividing (a) the total number of Units of prescriptions for Product written
during such period by Prescribers on the Depomed Physician List (not including
any Prescriber who is an Excluded Depomed Physician as of the end of any
calendar month included within such period), by (b) the total number of Units
of prescriptions for Product written during such period, in each case based on
Prescriber Data for the applicable period.

 

 

1.5.          “Depomed
Physician List” means the list of Prescribers to whom, pursuant to the
terms of this Agreement, the Depomed Sales Force conducts Calls, as such list
may be amended from time to time either (i) by mutual agreement
of Esprit and Depomed, or (ii) otherwise in accordance with this Agreement.  Notwithstanding the foregoing, the Depomed
Physician List will not include urologists, ob/gyns or Prescribers on the
Esprit Target Physician List, and will not include more than 40,000
Prescribers.

1.6.          “Early
Termination Detail Amount” is an amount equal to ***.

1.7.          “Early
Termination Fee” is an amount equal to ***.

1.8.          “Effective Date”
means the date first set forth above.

1.9.          “Esprit Target
Physician List” means those Prescribers identified by Esprit with whom the
Esprit Sales Force conducts Calls, which includes all ob/gyns, urologists and
certain high prescribing primary care physicians, as such list may modified
from time to time upon timely notice to Depomed.  Notwithstanding the foregoing, the Esprit
Target Physician List will not include any Prescribers on the Depomed Physician
List.

1.10.        “Excluded Depomed
Physicians” means any Prescriber on the Depomed Physician List who,
following the Promotion Commencement Date ***.

1.11.        “FDA” means
the United States Food and Drug Administration.

1.12.         “First Position
Detail Call” means a Call in which a full Product presentation is
made,  during which key Product
attributes are verbally presented, the Product is the first Product
presented and (c) on which the most time is spent during the Call.  No more than one presentation in any Call
shall be considered a First Position Detail Call.

1.13.        “Fiscal Quarter”
means the three-month periods ending on March 31, June 30, September 30 and
December 31 of each year, except for the first “Fiscal Quarter” hereof, which
shall begin on the Promotion Commencement Date and end on the earliest to occur
of the dates set forth in this sentence. 
These periods (other than the first “Fiscal Quarter” referred
to above) correspond to the quarters in the Esprit fiscal year, which ends on
December 31 of each year.

1.14.        “License Agreement”
means that certain Exclusive Marketing and Supply Agreement, dated as of July
21, 2005, by and between Depomed and Esprit as amended by Amendment No.1
thereto of even date herewith.

1.15.        “Marketing Plan”
means a plan for the marketing and detailing of the Product in the Territory to
Prescribers, and may include provisions related to promotional strategies,
detailing plans, pricing, advertising plans and budgets for promotional and
advertising activities.

1.16.        “NDA” means a
New Drug Application filed with the FDA.

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1.17.        “Net Sales”
means the actual gross amount invoiced on sales of the Product in the Territory
by Esprit, its Affiliates, sublicensees and assigns to independent,
unrelated third parties during a calendar year in bona fide arms length
transactions, less the following deductions allowed and taken by third parties
and not otherwise recovered by or reimbursed to Esprit, its Affiliates,
sublicensees or assigns: (a) freight, insurance and other transportation
charges to the extent added to the sales price and set forth separately as
such on the total amount invoiced; (b) any sales, use, value-added, excise
taxes and/or duties or allowances on the selling price of the Product which fall
due and are paid as a consequence of such sale; (c) chargebacks, trade,
quantity and cash discounts and rebates actually allowed and taken to the
extent customary in the trade, including, without limitation, governmental
rebates; (d) allowances or credits, including but not limited to, allowances or
credits to customers on account of rejection, defects or returns of the
Product or because of a retroactive price reduction,
and such other deductions (including without limitation shortage deductions)
actually taken by customers that are customary in the trade; and
(e) bad debt.  Net Sales shall not
include a sale or transfer to an Affiliate, sublicensee and assign or if done
for clinical, regulatory or governmental purposes where no consideration is
received but the resale by such Affiliate, sublicensee, or assign shall be
considered a sale of the Product.

1.18.         “Prescribers”
means physicians and other health care practitioners who are
permitted by law to prescribe Product in the Territory.

1.19.        “Prescriber Data”
means data provided by a third party which measures prescriptions written for
Product (by individual Prescriber) in the Territory during a specified time
period, from a source mutually agreed in writing by the parties.

1.20.        “Promotion
Commencement Date” means the first date upon which the Product is promoted
within the Territory by the Depomed Sales Force in the
Territory to Prescribers.

1.21.        “Proprietary
Information” means any and all scientific, clinical, regulatory, marketing,
financial and commercial information or data, whether communicated in writing,
orally or by any other means, which is owned and under the
protection of one party and is provided by that party to the other party in
connection with this Agreement.

1.22.        “Sales Force”
means the sales representatives employed by or on behalf of Depomed or Esprit,
as the case may be, for the detailing of the Product in the Territory to
Prescribers.  A party’s Sales Force
includes, without limitation, any sales representatives engaged by the party
during through an arrangement with a contract sales organization or other third
party (in the case of Depomed, engaged in accordance with Section 2.5).

1.23.        “Second
Position Detail Call” means any Call other than a First
Position Detail Call.

1.24.        “Supply Agreement”
means that certain Supply Agreement, dated
as of July 21, 2005, by and between Depomed and Esprit.

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1.25.        “Term” of this
Agreement means the period of time defined in Section 13.1 of this Agreement.

1.26.        “Territory” means the United
States of America.

1.27.        “Unit” means a single tablet of the
Product.

2.             Grants And Obligations

2.1.          Grant of Co-Promotion Right.  Pursuant to
its rights under the License Agreement, Esprit hereby grants to Depomed, during
the Term of this Agreement, the non-exclusive right to promote and detail the
Product in the Territory to Prescribers jointly with Esprit, subject to the
terms and conditions of this Agreement.

2.2.          Limitation on Marketing
Diligence.  Subject to the provisions of this Agreement,
including those related to termination and compensation and those related to
the Prescribers on whom Depomed is entitled to call, Depomed shall have no
specific minimum marketing diligence obligations with respect to the Product
with regard to minimum Calls or minimum First Position Details or Second
Position Details.

2.3.          Proprietary Interest in the
Product.  Nothing contained in this Agreement shall be
deemed to grant Depomed, either expressly or by implication, a license or other
right or interest in any patent, trademark or other similar property of Esprit
or its affiliates except as may be necessary for Depomed to promote and detail
the Product pursuant to this Agreement; provided, however, that except for the
grant by Esprit to Depomed of the license to market the Product in the
Territory in the License Agreement, nothing in this Agreement shall supersede
or modify the provisions of the License Agreement relating to intellectual
property matters.

2.4.          Establishment of Depomed
Physician List.  At Depomed’s option, it may, but is not
obligated to, have the Depomed Sales Force promote and detail the Product
directly to Prescribers who are not on the Esprit Target Physician List.  Depomed will inform Esprit at least
forty-five (45) days in advance of the commencement of Calls by the Depomed
Sales Force and provide Esprit with the Depomed Physician List.  During such fifteen (15) day period following
its receipt of the Depomed Physician List, Esprit will be entitled to review
the Depomed Physician List and confirm that such list does not contain any
Prescribers who are, as of the end of the most recently completed month, on the
Esprit Target Physician List.  Following
creation of the initial Depomed Physician List, from time to time but not more
than three (3) times per calendar year, Depomed may have the Depomed Sales
Force promote and detail the Product to Prescribers on the Esprit Target
Physician List, but such Prescribers will not be added to the Depomed Physician
List for purposes of calculating promotion fees payable to Depomed hereunder.

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2.5.          Depomed Sales Force.  Depomed shall be entitled to perform Calls
through its own sales force, or through a contract sales organization engaged
by Depomed to perform Calls on Depomed’s behalf.  Depomed’s engagement of any third party,
other than members of Depomed’s sales force or a contract sales organization,
to perform Calls on Depomed’s behalf shall be subject to Esprit’s prior written
consent, which shall not be unreasonably withheld, delayed or conditioned.  Prior to engaging any such third party to
perform Calls on its behalf, Depomed shall identify such third party in writing
to Esprit (such communication, a “Sales Force Notice”), and Esprit shall
approve or reject in writing Depomed’s engagement of such third party within fifteen
(15) business days after receipt from Depomed of the Sales Force Notice.  Esprit’s failure to respond in writing to a
Sales Force Notice within such fifteen (15) business day period shall be deemed
to be an approval of Depomed’s engagement of the third party identified in the
Sales Force Notice.

3.             Marketing Committee

3.1.          Coordinators.  Esprit and Depomed shall each appoint an
authorized representative (“Coordinator”) between whom
communications will be directed.  Each
party will notify the other as to the name of the individual so appointed.  The Coordinators shall meet periodically in
person or by video or telephone conference, but not less frequently than
monthly through 2006 and thereafter on a quarterly basis, to monitor the call
plan of the Depomed Sales Force and the Esprit Sales Force to ensure
coordination between the parties’ respective call plans.  Each party may replace its Coordinator
at any time, upon written notice to the other party.

3.2.          Marketing Committee.  If
requested by Esprit, Depomed’s Coordinator shall appoint a qualified
representative of Depomed with expertise in the marketing of specialty
pharmaceutical products to any marketing or commercialization committee
established by Esprit for the purpose of coordinating and/or directing the
marketing effort with respect to the Product (such committee, the “Marketing
Committee”).  The Marketing Committee may perform such
coordination and oversight functions as determined by Esprit.  Such functions may include, among others:  (i) meeting from time to time, at mutually
agreeable times and locations, to discuss and coordinate the promotion and
detailing of the Product in the Territory and the strategies and programs that
should be developed to maximize Net Sales of the Product; and (ii) coordinating
marketing activities with respect to the Product.  Esprit will have the final responsibility for
developing promotional materials with respect to the Product in the Territory.  The parties acknowledge that Depomed’s
participation on the Marketing Committee is not expected to require more than
ten (10) working days annually of the time of the Depomed representative
appointed to the Marketing Committee.

3.3.          Expenses.  Each party shall bear its own costs
associated with its participation in the Marketing Committee, including but not
limited to the costs of travel and expenses directly associated with
participation in the Marketing Committee.

3.4.            Dispute
Resolution.  Esprit shall have the
right to resolve any disagreement among the members of the Marketing
Committee in its sole and absolute discretion.

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4.             Product
Promotion

4.1.          Depomed Physician List.  Depomed shall be
primarily responsible for, and shall bear all costs and expenses associated
with, the detailing of the Product in the Territory to the Prescribers on the
Depomed Physician List.  Depomed will not
compensate Esprit for services performed by the Esprit Sales Force or for other
costs of promotion incurred by Esprit.

4.2.          Promotional Materials.  Esprit
shall create and develop sales and promotional materials relating to the
Product.  Depomed will not, without
Esprit’s prior review and approval, publish or distribute any sales or
promotional material with respect to the Product developed or created by or on
behalf of Depomed.  Esprit shall provide
Depomed with copies of promotional materials relating to the Product at ***% of
Esprit’s out-of-pocket cost for such materials.

4.3.          Adverse Reaction
Reports.  During the Term of this
Agreement, each party shall promptly notify the other party of all information
required to be reported to the FDA coming into its possession concerning side
effects, injury, toxicity or sensitivity reaction including unexpected
increased incidence and severity thereof associated with commercial or clinical
uses, studies, investigations or tests with the Product (animal or human),
throughout the world, whether or not determined to be attributable to the
Product (“Adverse Reaction Reports”). 
In the case of Adverse Reaction Reports within the scope of 21 CFR
314.80(c)(iii), Depomed shall transmit such adverse reaction reports so that
they are received by Esprit within three (3) business days after receipt by
Depomed, or such earlier reporting period as may be required by law.  Esprit shall transmit adverse reaction reports
to Depomed on a periodic basis, but no less often than once every six (6)
months; provided, however, that Esprit shall promptly notify Depomed of any
Adverse Reaction Report requiring the cessation or substantial alteration of
detailing activities by the Depomed Sales Force.  All such communications shall be held in the
strictest confidence by Depomed and shall be subject to the terms of Article 11
hereof.

4.4.          Regulatory Compliance.  Depomed’s
detailing and promotional activities with respect to the Product shall be
conducted (a) only in a manner which is consistent with FDA and all other
applicable regulatory approvals or requirements which are then in effect with
respect to the Product and (b) in compliance with all applicable laws,
restrictions and regulations of the FDA, the Department of Commerce and any
other United States, state, local, or applicable agency or authority.  Depomed shall (a) limit its claims of
efficacy and safety for the Product to those that are consistent with approved
promotional materials and FDA-approved prescribing information for the Product
in the Territory, (b) not add, delete or modify claims of efficacy and safety
in the marketing of the Product under this Agreement from those claims of
efficacy and safety that are consistent with the FDA-approved prescribing
information and applicable law and (c) detail and promote the Product in
adherence to applicable laws and in compliance with the then current
Pharmaceutical Research and Manufacturers of America Code on Interactions with
Healthcare Professionals.

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4.5.          Samples.  Esprit will
provide Depomed with samples (such as starter or trial kits) of Product for
distribution to health care personnel and the trade in connection with Depomed’s
promotion of the Product hereunder at ***% Esprit’s out-of-pocket cost for such
samples; provided, however, that during the term of the Supply
Agreement, Depomed may obtain samples directly from its contract manufacturer (provided that Depomed shall supply Esprit’s
requirements of samples pursuant to the terms of the Supply Agreement prior to
supplying its own sample requirements). 
With respect to Depomed’s purchase of samples through either of the
foregoing options, Depomed shall only order full lots of samples.  Depomed shall maintain records concerning its
trial kit or sample distribution as required by the Prescription Drug Marketing
Act of 1987 (the “Act”) and relevant state laws.  Depomed shall take such steps as necessary to
ensure that its representatives comply with all requirements of the Act,
including but not limited to obtaining requests and receipts signed by licensed
prescribers for all trial kits or samples delivered.  If requested by Esprit, Depomed shall provide
to Esprit copies of such records as the manufacturer is required by the Act to
retain.  Otherwise, Esprit shall have
access to such records in accordance with Section 12.1 of this Agreement.  Depomed shall indemnify Esprit and hold
Esprit harmless from any liability that Esprit may incur, whether civil,
criminal or otherwise, by reason of a violation of the Act by Depomed or by any
member of the Depomed Sales Force.

4.6.          Trademarks.  This
Agreement shall not confer upon Depomed any interest in any trademark or trade
name associated with the Product in the Territory, including those used in
promotional materials.

4.7.          Ownership of Promotional
Materials.  Esprit shall own all copyrights to all
advertising, promotional and training materials as well as all other written
materials, audiotapes, videotapes, or other copyrightable materials that are
created by or on behalf of Esprit during the Term of this Agreement in
connection with the marketing of the Product. 
Depomed shall use commercially reasonable efforts consistent with
accepted business practices to obtain such assignments from the authors and
creators of such materials as may be necessary to vest ownership of the
copyright in Esprit.  Esprit shall, and
does hereby, grant to Depomed a royalty-free license to use and reproduce such
materials solely in conjunction with its performance of services pursuant to
this Agreement, which license shall not be assignable or transferable by
Depomed.

4.8.          Prescriber Data.  Depomed
shall reimburse Esprit quarterly for the portion of Esprit’s out-of-pocket costs
incurred in procuring the Prescriber Data that is equal to the cost of such
Prescriber Data multiplied by the Depomed Percentage for the applicable Fiscal
Quarter.  Esprit shall make all
Prescriber Data available to Depomed promptly, but in no event more than
twenty-one (21) days following, Esprit’s receipt thereof.

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5.             Detailing
Effort; Depomed Physician List

5.1.          Reports.  Following
the Promotion Commencement Date, within thirty (30) days following the end of
each calendar month during the Term, Depomed shall provide Esprit with a status
report, which report will summarize Depomed’s
detailing efforts pursuant to this Agreement for such prior month and on a
rolling 12 month basis, including: 
(a) the number of Calls made, including detail as to the
Prescribers who received Calls, dates of Calls and the relative emphasis of the
Calls (i.e., First Position Detail Call or Second Position Detail Call); (b)
information pertaining to the Depomed Sales Force, including the number of
sales representatives and the number of days in the field per sales
representative; (c) a list of Prescribers on the Depomed Physician List who, as
of the date such report, are Excluded Depomed Physicians.  Depomed warrants and represents
that it maintains records of Calls made by its Sales Force and that these records
accurately represent the number of Calls made and the relative emphasis given
to each Product during a Call.  Esprit
shall be entitled to audit the source data and documents used to compile such
reports pursuant to the provisions of Section 12.1 of this Agreement.

5.2.          Modification of Depomed
Physician List.  Esprit may, in its sole discretion, remove
from the Depomed Physician List any Prescriber identified as an Excluded
Depomed Physician in the most recent report received by Esprit pursuant to Section
5.1, or who otherwise qualifies as an Excluded Depomed Physician.

5.3.          Esprit Reports.  Within thirty (30) days following the end of
each calendar month during the Term, Esprit shall provide Depomed with a status
report, which report will summarize, on a monthly and rolling three and 12
month basis, including:  (a) the
number of Calls made, including detail as to the Prescribers who received
Calls, dates of Calls and the relative emphasis of the Calls (i.e., First
Position Detail Call or Second Position Detail Call); (b) information
pertaining to the Esprit Sales Force, including the number of sales
representatives and the number of days in the field per sales representative;
and (c) a list of all Prescribers on the Esprit Target Physician List (which list
shall specifically identify those Prescribers who are Esprit Provisional
Prescribers).  Esprit warrants and
represents that it maintains records of Calls made by its Sales Force and that
these records accurately represent the number of Calls made and the relative
emphasis given to each Product during a Call. 
Depomed shall be entitled to audit the source data and documents used to
compile such reports pursuant to the provisions of Section 12.1 of this
Agreement.

6.             Compensation

6.1.          Compensation.  During the
Term, for each Fiscal Quarter of the Term in which Depomed conducts detailing
and promotional activities pursuant to this Agreement, Esprit shall pay Depomed
compensation at a rate equal to eighteen (18) percent of the amount of Depomed
Net Sales in such Fiscal Quarter. 
Compensation payable for any partial Fiscal Quarter during the Term
shall be pro-rated based on the number of days within such Fiscal Quarter that
occur during the Term relative to the total number of days within such Fiscal
Quarter.

 8
 

 

 

6.2.          Payment.  (a)  Within fifteen (15) days after receipt of the
Prescriber Data, but in no event later than sixty (60) days after the close of
each Fiscal Quarter during the Term, Esprit shall submit to Depomed an
accounting reporting the Depomed Net Sales and itemizing all deductions under
Section 1.17 for such Fiscal Quarter and calculating the compensation due
Depomed for said Fiscal Quarter under Section 6.1
above.  At the time of submitting each
accounting report, Esprit shall remit to Depomed all payments accruing under
this Agreement during such Fiscal Quarter. 
All payments to Depomed under this Agreement shall be made in U.S.
Dollars.

(b)           During the Term of
this Agreement, any returns, recalls, credits or other reductions to Net Sales
allowed by this Agreement shall be recognized in the Fiscal Quarter in which
they arise.  If any such reduction
results in negative Depomed Net Sales for the current Fiscal Quarter, the
negative amount shall be treated as a reduction to Depomed Net Sales for the
Fiscal Quarter(s) in which the sales giving rise to such return, recall, credit
or other reduction occurred (the “Relevant Fiscal Quarter”) solely for
purposes of calculating the compensation that should have been paid to Depomed
for the Relevant Fiscal Quarter(s).

(c)           Likewise, if, after
the Term of this Agreement, actual Depomed Net Sales are reduced due to
returns, recalls, credits, or other reductions allowed by this Agreement
relating to Products sold during the Term of this Agreement, then the Net Sales
for the Relevant Fiscal Quarter(s) shall be reduced accordingly, solely for
purposes of calculating the compensation that should have been paid to Depomed
for the Relevant Fiscal Quarter(s).

(d)           Whenever Depomed Net
Sales for a Relevant Fiscal Quarter are reduced, whether during or after the
Term of this Agreement, Esprit shall give Depomed a report detailing the
compensation paid to Depomed in respect of Depomed Net Sales during such
Relevant Fiscal Quarter that is in excess of the compensation that should have
been paid to Depomed based on the reduced Depomed Net Sales, and Depomed shall
return to Esprit such excess compensation within sixty days after receipt of
such report.

(e)           For the purposes of
calculating any reduction in Depomed Net Sales and any compensation that should
have been paid to Depomed under Sections 6.2(b) or 6.2(c), or the excess
compensation that is to be returned to Esprit by Depomed under Section 6.2(d),
it shall be assumed that the last Product sold in any Relevant Fiscal Quarter
is the first Product to come back or be returned, recalled, etc., thus, in
effect, causing the above calculations to be determined at the lowest
compensation rate that was used in any such Relevant Fiscal Quarter, gradually
working toward the highest compensation rate, if more than one compensation
rate was used in such Relevant Fiscal Quarter, and, if further calculation is
needed, continuing this process in prior Relevant Fiscal Quarter(s).

(f)            Depomed shall not
be obligated to reimburse Esprit with respect to any compensation paid by
Esprit to Depomed under Section 6.1 on Depomed Net Sales made before the date
of termination of this Agreement that were subsequently reduced by retroactive
pricing reductions made after such date of termination.

 9
 

 

 

6.3.          Net Sales.  The parties
acknowledge and agree that “Net Sales” during any particular period under this
Agreement is intended to correspond to “Net Sales” calculated under the License
Agreement during the same period, and that any modification of License
Agreement to the definition or calculation of “Net Sales”, unless otherwise
agreed in writing by the parties, is intended to apply to the definition and
calculation of “Net Sales” for purposes of this Agreement.

7.             Regulatory
Affairs and Medical Inquiry

7.1.          Ownership of NDA.  Esprit will
maintain ownership of the NDA to market the Product and any supplements
thereto.  Any future regulatory
submissions pertaining to the Product shall be filed by Esprit and maintained
in its name, and Esprit shall own any regulatory approvals that may be issued
with respect to the Product.

7.2.          Regulatory Affairs.  Esprit
shall have the sole right and responsibility, and shall bear all costs related
thereto, to take such actions as may be necessary, in accordance with accepted
business practices and legal requirements, to maintain the authorization and/or
ability to market the Product in the Territory to Prescribers, including,
without limitation, the following:

(a)           Responding to
customer and medical complaints relating to the quality, strength or purity of
the Product.  Depomed agrees that it
shall promptly refer any such complaints that it receives to Esprit;

(b)           Handling all returns
of the Product.  If the Product is
returned to Depomed, it shall be shipped to Esprit’s nearest distribution
center, with any reasonable or authorized shipping or other documented
out-of-pocket cost to be paid by Depomed. 
Depomed and Esprit shall each advise their customers generally that they
should make returns to Esprit;

(c)           Handling all recalls
of the Product.  At Esprit’s request,
Depomed will assist Esprit in receiving the recalled Product, and any direct
documented out-of-pocket costs incurred by Depomed with respect to
participating in such recall shall be reimbursed by Esprit.

7.3.          Communications with
Regulatory Authorities.  Esprit shall have the sole right and
responsibility and shall bear all costs related to communications with any
government agencies to satisfy their requirements regarding the authorization
and/or continued authorization to market the Product in commercial quantities
in the Territory to Prescribers.  Depomed
shall promptly notify Esprit of any inquiry or other communication that it
receives from the FDA concerning the Product. 
Esprit shall handle all communications with the FDA concerning the
Product, including but not limited to reporting adverse reactions and
responding to any inquiries concerning advertising or promotional materials,
and shall provide copies of all such communication to Depomed.  Depomed, however shall be able to communicate
with such governmental agency regarding the Product if:

(a)           Such communication
is necessary to comply with the terms of this Agreement or the requirements of
any law, governmental order or regulation; or

 10

 

 

(b)           Depomed, if
practical, made a request of such agency to communicate with Esprit instead,
and such agency refused such request;

provided, however, that
before making any communication under (a) or (b) of this Section, Depomed shall
give Esprit notice as soon as possible of Depomed’s intention to make such
communication, and Esprit shall be permitted to accompany Depomed, take part in
any such communications and receive copies of all such communications.

7.4.          Medical Inquiries.  Esprit
shall respond to medical questions or inquiries relating to the Product
directed to Depomed.  Depomed shall
instruct its Sales Force to direct medical inquiries either to Esprit’s medical
personnel or to the toll-free number referred to in the following
sentence.  Esprit shall maintain a
toll-free telephone number to provide information in response to inquiries from
health care professionals and consumers. 
This number shall be noted in all appropriate advertising and
promotional materials.

7.5.          License Agreement.  In the event
of any inconsistency between the provisions of this Article 7 and Article 9 of
the License Agreement, the License Agreement shall control.

8.             Supply
and Distribution

8.1.          Supply.  During the
term of the Supply Agreement, the Product shall be supplied to Esprit pursuant
to the terms and conditions thereof.  As
between Depomed and Esprit, solely for purposes of this Agreement, Esprit shall
have sole responsibility and obligation for ensuring that the Product is manufactured,
either directly or through a contractor (whether pursuant to the Supply
Agreement or otherwise), receiving and processing orders, distributing the
Product to customers, and handling Product inventory and receivables, and
Esprit shall bear all costs of such activities. 
Esprit shall use reasonable efforts to insure that sufficient stock of
the Product will be available in its inventory to promptly fill orders from the
trade based on its reasonable forecasts of the commercial quantity of product
reasonably necessary to ensure the consistent availability of the Product
throughout the Territory.  Esprit shall
also use reasonable efforts to have FDA-approved manufacturing facilities
available to it or its manufacturer (which facilities may be located outside of
the Territory) that can produce an amount of the Product in any fiscal year
that is equal to or greater than the amount of Product reasonably necessary to
ensure the consistent availability of the Product throughout the Territory,
based on Esprit’s reasonable forecast.

8.2.          Distribution.  Esprit will
supply and distribute the Product to its customers in accordance with the
specifications and requirements set forth in the NDA approved by the FDA for
sale of the Product in the Territory. 
Esprit will be responsible and obligated to supply the Product to
customers in accordance with purchase orders received by Esprit from customers
for the Product, which supply of the Product shall meet FDA requirements as set
forth above.

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8.3.          Direct Sales.  Esprit will
generally deliver the Product only to wholesalers and to direct buying
customers who have accounts with Esprit or its distributor.  If Depomed desires to arrange for Esprit to
make direct sales of the Product to any customers who do not have accounts with
Esprit or its distributor, Depomed will provide the documentation required by
Esprit to determine whether to open an account for such customer.  Depomed is not authorized to open an account
with any customer or accept any order on behalf of Esprit.  All orders are subject to acceptance by Esprit.

8.4.          Orders Received by Depomed.  If, for any
reason, Depomed should receive orders for the Product other than pursuant to
the Supply Agreement, Depomed shall promptly forward such orders to Esprit.

8.5.          Inability to Supply.  In the
event that Esprit is at any time unable to supply the Product for any reason
whatsoever, whether due to the failure of Esprit or its contract manufacturers
to meet their obligations to supply Product or otherwise, such failure will be
treated as a force majeure condition under Article 14, and Depomed’s sole and
exclusive remedy in respect of such supply failure shall be termination of this
Agreement pursuant to Article 14.  In
furtherance and not in limitation of the foregoing, in no event shall Esprit be
responsible under this Agreement for an inability to supply Product resulting
from a breach by Depomed of the Supply Agreement.

9.             Representations
and Warranties.

Each party hereby
represents and warrants to the other party as follows:

(a)           It is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.  It
has all requisite power and authority to carry on its business and to own and
operate its properties and assets.  The
execution, delivery and performance of this Agreement have been duly authorized
by its Board of Directors.  Such party has obtained all authorizations,
consents and approvals,
governmental or otherwise, necessary for the execution and delivery of this
Agreement, and to otherwise perform such party’s obligations under this
Agreement.

(b)           There is no pending
or, to its knowledge, threatened litigation involving it which would have any
material adverse effect on this Agreement or on its ability to perform its
obligations hereunder.

(c)           There is no
indenture, contract, or agreement to which it is a party or by which it is
bound which prohibits or would prohibit the execution and delivery by it of
this Agreement or the performance or observance by it of any material term or
condition of this Agreement.

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10.           Indemnification.

10.1.        Indemnification.  Each party
will defend, at its own expense, indemnify and hold harmless the other party
and its Affiliates from and against any and all damages, liabilities, losses,
costs, and expenses, including attorneys fees, arising out of any claim, suit
or proceeding brought against the other party to the extent such claim, suit,
or proceeding is based upon a claim arising out of or relating to (i) any
breach or violation of, or failure to perform, any covenant or agreement made
by such indemnifying party in this Agreement, unless waived in writing by the
indemnified party; (ii) any breach of the representations or warranties made by
such indemnifying party in this Agreement; or (iii) the negligence or willful
misconduct of the indemnifying party, except (under any of (i) and (ii)) to the
extent arising out of the breach, violation, failure, negligence or willful
misconduct of the indemnified party. 
Each party agrees that it shall promptly notify the other in writing of
any such claim or action and give the indemnifying party full information and
assistance in connection therewith.  The
indemnifying party shall have the sole right to control the defense if any such
claim or action and the sole right to settle or compromise any such claim or
action, except that the prior written consent of the other party shall be
required in connection with any settlement or compromise which could (i) place
any obligation on or require any action of such other party; (ii) admit or imply
any liability or wrongdoing of such other party; or (iii) adversely affect the
goodwill or public image of such other party. 
Notwithstanding the foregoing, the indemnified party may participate
therein through counsel of its choice, but the cost of such counsel shall be
borne solely by the indemnified party.

10.2.        Survival.  The
provisions of this Article 10 shall survive termination of this Agreement and
shall remain in effect until a date seven (7) years after the Term of this
Agreement.

11.           Confidentiality

11.1.        Confidentiality Obligation.  Except as
specifically authorized by this Agreement, each party shall, for the Term and
for five (5) years after the expiration or termination of this Agreement, keep
confidential, not disclose to others and use only for the purposes authorized
herein all Proprietary Information provided by the other under this Agreement;
provided, however, that the foregoing obligations of confidentiality shall not
apply to the extent that any such information is (i) already known to the
recipient at the time of disclosure as evidenced by its prior written records;
(ii) published or publicly known prior to or after disclosure other than
through unauthorized acts or omissions of the recipient; (iii) disclosed in
good faith to the recipient by a third party entitled to make such disclosure;
or (iv) independently developed by or on behalf of the recipient without
recourse to the disclosure herein as documented in writing.  Notwithstanding the aforesaid, the recipient
may disclose Proprietary Information to governmental agencies as required by
law, and to vendors and clinical investigators having a need to know and as may
be necessary for the recipient to perform its obligations hereunder, but only
if such disclosure to vendors and, where practicable, to clinical investigators
is in accordance with a written agreement imposing essentially the same
obligation of confidentiality on such party as is imposed upon the recipient
hereunder.

 13
 

 

 

11.2.        Survival.  The
provisions of this Article 11 shall survive termination of this Agreement and
shall remain in effect until a date seven (7) years after the Term of this
Agreement.

12.           Audits

12.1.        Maintenance of Records.  Each party
agrees to keep, for a period of at least three (3) years after the date of
entry (or such longer period as may be required by law, or regulation) full and
accurate records maintained in accordance with such party’s accounting
practices in sufficient detail to enable a third party to accurately calculate
Calls completed (in the case of Depomed), and Net Sales and Depomed Net Sales
reported and payments to be made under this Agreement (in the case of
Esprit).  Such records shall be made
available by the audited party for audit by an independent certified public
accounting firm designated by the other party and reasonably acceptable to the
party whose records are to be examined. 
The auditor will only examine such books and records during business
hours but not more than twice each fiscal year while this Agreement remains in
effect and for two (2) years thereafter in order to verify the calculation of
Calls completed (in the case of Depomed), or Net Sales and Depomed Net Sales
reported and payments to be made under this Agreement (in the case of Esprit).  The fees and expenses of the auditor
performing such verification examination shall be borne by the party conducting
the verification; provided, however, that if any verification reveals that the
examined party has reported incorrectly, and the amount of such discrepancy is
at least five (5) percent of the aggregate amount that should have been
reported for the period examined, then the examined party shall pay the entire
amount of the fees and expenses for such verification.

12.2.        Audits Conclusive.  All audits
and reports and all information contained therein provided to a party pursuant
to this article shall be deemed conclusive and binding upon such party unless
written objection shall be lodged with the other party within one year from the
date of such audit or report, except that objections discoverable only upon
audit shall be reserved for a period of one year after completion of an audit
in which the facts giving rise to the objection are discovered.

12.3.        Calculation of Costs.  Whenever in
this Agreement a party is required to report its costs, or is entitled to
receive or obligated to make a payment based on its costs, such costs shall be
determined in accordance with generally accepted accounting principles as
applied in the United States, consistent with the terms of this Agreement.  The term “out-of-pocket” costs means costs
paid to third parties and shall not include any fixed costs, personnel costs,
overhead costs, or other costs of a similar nature.

13.                                 Term
and Termination

13.1.        Term.  The Term of
this Agreement shall commence on the Effective Date and shall continue, unless
terminated sooner in accordance with Section 8.5 or the subsequent provisions
of this article, until July 24, 2010. 
The Term of this Agreement may be extended for subsequent two year
periods upon the mutual agreement of the parties, which agreement shall be set
forth in writing.  Notwithstanding the
foregoing, the Term of this Agreement shall immediately expire upon any
termination or expiration of the License Agreement.

 14
 

 

 

13.2.        Termination for Cause.  Either
party may terminate this Agreement for Good Cause (as defined in Section 13.4
below), effective at any time after providing sixty (60) days written notice
and an opportunity to cure during such sixty (60) day period (if such cure is
effected, such notice with respect to such good cause shall be null and
void).  If the agreement is so terminated
by Depomed for Good Cause, Esprit shall pay to Depomed all of the compensation
due to Depomed under Section 6.1 up to and including the calendar month in which
effective termination occurs, including sums which have accrued but have not
yet been paid as of the effective date of termination.

13.3.        Termination for Change in Control. Esprit may
terminate this Agreement upon an Esprit Change in Control (as defined in the
License Agreement) upon ninety (90) days’ prior written notice, or one hundred
eighty (180) days’ prior written notice if the Promotion Commencement Date has
occurred, to Depomed delivered within ninety (90) days’ following the
consummation of such Change of Control; provided, however, that if the
Promotion Commencement Date occurs prior to Depomed’s receipt of such notice of
termination, or if Depomed provides to Esprit a notice of its intention to
commence Calls by the Depomed Sales Force pursuant to Section 2.4 prior to
Depomed’s receipt of such notice of termination, then such termination shall be
effective only if Esprit pays Depomed an Early Termination Fee not later than
thirty (30) days after the date on which Depomed receives a notice of termination
pursuant to this Section 13.3.

13.4.        Definition of Good Cause.  “Good Cause”
which entitles a party to terminate this Agreement under Section 13.2 means:

(a)           The material failure
of the other party to comply with its material obligations contained in this
Agreement.  These material obligations
include, but are not limited to, (i) the failure of Esprit to make the payments
required by Sections 6.1, (ii) Esprit being considered as unable to supply the
Product in accordance with Section 8.2, and (iii) Depomed’s material breach of
its obligations under Section 4.4;

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

(c)           Any force majeure as
defined in Article 14 affecting the other party beyond the other party’s
control which lasts for a period of at least six (6) months and which is of
sufficient intensity to interrupt or prevent the carrying out of such other
party’s material obligations under this Agreement during such period.

 15
 

 

 

13.5.        Force Majeure.  Any force
majeure of the type described in Article 14 affecting a party hereunder shall
provide the other party hereto, at any time after the expiry of the period of
six months specified therein and upon sixty days written notice given after
such six month period (such notice being, null and void if the force majeure is
discontinued during such sixty day period), in addition to the right to
terminate this Agreement for good cause under Section 13.2, the right to (i) extend
this Agreement for a period equal to the duration of the force majeure which
occasioned the delay, interruption or prevention (subject to the maximum term
of six months) or (ii) continue the agreement in full force and effect without
modification.  In no circumstances will
either party be liable to the other for its inability to perform under this
Agreement due to any such force majeure.

13.6.        Recall.  Either
party shall have the right to terminate this Agreement in the event of a large
scale recall or withdrawal of the Product from the Territory resulting from a
significant safety risk inherent in the Product and not due to tampering, a
remediable manufacturing problem, or other defect that can be cured with
respect to Products manufactured after such risk is discovered.

13.7.        Remedies.  Except as
indicated in Sections 8.5 and 18.4, termination of this Agreement shall be
without prejudice to (a) any remedies which any party may then or thereafter
have hereunder or at law; and (b) a party’s right to receive any payment
accrued under the agreement prior to the termination date but which became
payable thereafter; and (c) either party’s right to obtain performance of
any obligations provided for in this Agreement which survive termination by
their terms or by a fair interpretation of this Agreement.

13.8.        Post-Termination Obligations.  No
additional payment obligations arising under Article 6 hereof shall accrue
after the date of expiration or termination of this Agreement; provided,
however, that expiration or termination of this Agreement shall not relieve
either party of any obligations accruing prior to such expiration or
termination.  Certain provisions of this
Agreement by their terms continue after the expiration or termination of this
Agreement.  In addition, any other
provisions required to interpret and enforce the parties’ rights and
obligations under this Agreement shall also survive, but only to the extent
required for the full observation and performance of this Agreement.  Any expiration or termination of this
Agreement shall be without prejudice to the rights of any party against the
other accrued or accruing under this Agreement prior to expiration or
termination.  Except as expressly set
forth herein, the rights to terminate as set forth herein shall be in addition
to all other rights and remedies available under this Agreement, at law, or in
equity or otherwise.  Upon the expiration
or termination of this Agreement pursuant to this Article 13, each party shall
promptly transfer and return to the other party all Proprietary Information of
the other party (provided that each party may keep one copy of such Proprietary
Information of for archival purposes only).

 16
 

 

 

14.           Force
Majeure

14.1.        Force Majeure Event.  In the
event of any failure or delay in the performance by a party of any provision of
this Agreement due to acts beyond the reasonable control of such party (such
as, for example, fire, explosion, strike or other difficulty with workmen,
shortage of transportation equipment, accident, act of God, or compliance with
or other action taken to carry out the intent or purpose of any law or
regulation), then such party shall have such additional time to perform as
shall be reasonably necessary under the circumstances.  In the event of such failure or delay, the
affected party will use its diligent efforts, consistent with sound business
judgment and to the extent permitted by law, to correct such failure or delay
as expeditiously as possible.

14.2.        Performance.  In the
event that a party is unable to perform by a reason described in Section 14.1
above, its obligation to perform under the affected provision of this Agreement
shall be suspended during such time of nonperformance.

14.3.        Effect.  If the
delay resulting from the force majeure exceeds six months, the injured party
may elect to treat such delay as a default and may terminate this Agreement
pursuant to the provisions of Section 13.2. 
If no notice of such election is given prior to termination of the force
majeure, the agreement will continue in effect without modification.

15.           Publicity

Neither party will
originate any publicity, news release, public comment or other public
announcement, written or oral, whether to the press, to stockholders, or
otherwise, relating to this Agreement, without the consent of the other party,
except for such announcement which, in accordance with the advice of legal
counsel to the party making such announcement, is required by law; provided,
however, that each party shall be entitled to refer publicly to the relationship
of the parties reflected in this Agreement (i.e., Esprit as the marketer of the
Product and Depomed as the co-promoter of the Product in the Territory) in a
manner that is not damaging to the business or reputation of the other party.  Except as otherwise permitted pursuant to the
immediately preceding sentence, any party making any announcement which is
required by law will, unless prohibited by law, give the other party an
opportunity to review the form and content of such announcement and comment
before it is made.  Either party shall
have the right to make such filings with governmental agencies, including
without limitation the United States Securities and Exchange Commission, as to
the contents and existence of this Agreement as it shall reasonably deem
necessary or appropriate.  The parties
have agreed upon the form and content of a joint press release to be issued by
the parties promptly following the execution of this Agreement. The provisions
of this Article 15 shall survive termination of the agreement and shall remain
in effect until a date seven (7) years after the Term of this Agreement.

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16.                           Notices

16.1.        Notices.  All
notifications, demands, approvals and communications required to be made under
this Agreement shall be given in writing and shall be effective when either
personally delivered or sent by facsimile if followed by prepaid air express
addressed as set forth below.  The
parties hereto shall have the right to notify each other of changes of address
during the life of this Agreement.

DEPOMED, INC.

1360 O’Brien Drive

Menlo Park,
California  94025

Attention:  President

Facsimile: 
650-462-9991

With a copy to:

Heller Ehrman LLP

275 Middlefield
Road

Menlo Park,
California  94025

Attention:  Julian N. Stern

Facsimile:  650-324-0638

ESPRIT PHARMA, INC.

2 Tower Center Boulevard

East Brunswick, NJ  08816

Attn:  Steve Bosacki, General Counsel

Facsimile:  (732) 828-9954

16.2.        Receipt.  Any such
notice mailed as aforesaid shall be deemed to have been received by and given
to the addressee on the date specified on the notice of receipt and delivery
evidenced to the sender.

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17.           Arbitration

Any and all disputes
between the parties relating in any way to the entering into of this Agreement
and/or the validity, construction, meaning, enforceability, or performance of
this Agreement or any of its provisions, or the intent of the parties in
entering into this Agreement, or any of its provisions, or any dispute relating
to patent validity or infringement arising under this Agreement shall be settled
by arbitration.  Such arbitration shall
be conducted in San Francisco, California (if brought by Depomed) or Newark,
New Jersey (if brought by Esprit) in accordance with the rules then pertaining
of the American Arbitration Association with a single arbitrator selected by
the American Arbitration Association from the National Panel of
Arbitrators.  Reasonable discovery as
determined by the arbitrator shall apply to the arbitration proceeding.  The law of the State of California shall
apply to the arbitration proceedings. 
Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof.  The
successful party in such arbitration, in addition to all other relief provided,
shall be entitled to an award of all its reasonable costs and expenses
including attorney costs.

18.           Miscellaneous

18.1.        Assignment.  This
Agreement may be assigned by either party without the consent of the other
party to (i) an Affiliate, or (ii) a third party in connection with the
acquisition of a party (whether by merger, asset sale or otherwise) or the
business of a party associated with the Product.  This Agreement may not otherwise be assigned
by either party without the prior written consent of the other party, which
consent shall not be unreasonably withheld or delayed.  Each party shall provide the other with at
least thirty (30) days’ prior written notice of any assignment of this
Agreement.  No assignment permitted by
this Section 18.1 to an Affiliate shall serve to release either party from
liability for the performance of its obligations hereunder.

18.2.        Independent Contractors.  Nothing
herein contained shall be construed to constitute the parties hereto as
partners or as joint venturers, or either as agent for the other.  No employee or representative of a party
shall have any authority to bind or obligate the other party to this Agreement
for any sum in any manner whatsoever, or to create or impose any contractual or
other liability on the other party without said party’s authorized written
approval.  For all purposes, and
notwithstanding any other provision of this Agreement to the contrary, Depomed’s
legal relationship under this Agreement to Esprit shall be that of independent
contractor.

18.3.        Entire Agreement.  This
Agreement, the License Agreement and the Supply Agreement represent the entire
agreement between the parties concerning the subject matter hereof and thereof
and supersedes all prior or contemporaneous oral or written agreements of the
parties.  This Agreement may be modified,
amended or changed only by a written instrument signed and delivered by the
parties, with clear intent to modify, amend or change the provisions hereof.

 19
 

 

 

18.4.        No
Consequential Damages. 
Neither Esprit nor Depomed (which for the purposes of this Section 18.4
shall include their respective Affiliates, directors, officers, employees and
agents) shall have any liability to the other for any punitive damages,
special, incidental, consequential or indirect damages, relating to or arising
from this Agreement, even if such damages may have been foreseeable; provided that
such limitation shall not apply in the case of fraud or willful misconduct.

18.5.        Counterparts.  This
Agreement may be executed in several counterparts, each of which shall be
deemed to be an original.

18.6.        Governing Law.  This
Agreement, including without limitation any arbitration, shall be construed,
regulated and administered and governed in all aspects under and in accordance
with the law of the State of California (excluding its or any other
jurisdiction’s choice of law principles).

18.7.        Waiver.  Except to
the extent that a party may have otherwise agreed in writing, no waiver by such
party of any breach by any other party of any of the other party’s obligations,
agreements or covenants hereunder shall be deemed to be a waiver by such first
party of any subsequent or other breach of the same or any other obligation,
agreement or covenant; nor shall any forbearance by a party to seek a remedy
for any breach by the other be deemed a waiver by said party of its rights or
remedies with respect to such breach or of any subsequent or other breach of
the same or any other obligation, agreement or covenant.

18.8.        Binding Effect.  Except as
provided in Section 18.1, this Agreement shall be binding upon and inure to the
benefit of the parties to this Agreement and their respective successors.

18.9.        Headings.  Headings as
used in this Agreement are for convenience only and are not to be construed as
having any substantive effect by way of limitation or otherwise.  References to Sections herein are, unless
otherwise indicated, references to the designated Sections of this Agreement,
unless the content requires otherwise.

18.10.      Severability.  If one or more of the provisions of this
Agreement shall, by any court or under any provision of law, be found to be
void or unenforceable, the agreement as a whole shall not be affected thereby,
and the provisions in question shall be replaced by an interpretation in
conformity with law which comes closer to effecting the parties’ original
intention.

18.11       Consent to Grant of Security Interest.  Depomed does hereby consent to
the granting of a security interest in this Agreement in favor of any Fortress
Credit Corp. pursuant to that certain Loan Agreement, dated as of March 9,
2006, among Esprit, Fortress Credit Corp. and the lenders identified
therein.   Depomed agrees to execute such
other documentation may be reasonably requested by Fortress Credit Corp. to
evidence such security interest.

[signature page follows]

 20
 

 

 

Wherefore the parties
have caused this Agreement to be executed and delivered by their undersigned
duly authorized representatives.

	
  DEPOMED, INC.

  	
  ESPRIT PHARMA, INC.

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Carl A.
  Pelzel

  	
   

  	
  By: 

  	
  /s/ Steven M. Bosacki

  
	
  Name: Carl A.
  Pelzel

  	
  Name: Steven M. Bosacki

  
	
  Title: Executive
  Vice President & COO

  	
  Title: VP, General Counsel & Assistant Secretary

  
					

 

 21
 

 

 

Schedule
1.6

Per Detail Amount

	
  

  	
  Number of complete months following the

  Promotion Commencement Date

  	
   

  	
   

  	
  Per Detail Amount

  	
   

  
	
  ***

  	
  ***

  

 

 

 22

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