Document:

Exhibit 10.1

 

CONSENT OF REGISTERED PUBLIC ACCOUNTING FIRM

 

We consent to the incorporation by reference in the Registration
Statements on Form S-8 (Registration Nos. 333-11842, 333-9352, 333-11154,
333-13686, 333-111112 and 333-111113) and on Form F-3 (Registration Nos.
333-12996, 333-11250 and 333-109766) of our report dated February 2, 2005,
with respect to the consolidated financial statements of NICE Systems Ltd.
included in this Annual Report on Form 20-F for the year ended December 31,
2004.

 

 

 

	
  Tel-Aviv, Israel

  	
  /s/ KOST FORER GABBAY &
  KASIERER

  
	
  June 29, 2005

  	
  KOST FORER GABBAY & KASIERER

  
	
   

  	
  A Member of Ernst & Young GlobalExhibit 10.1

 

CONVERTIBLE
NOTE REPURCHASE AGREEMENT

 

THIS CONVERTIBLE NOTE REPURCHASE AGREEMENT
(the “Agreement”), dated as of June 24, 2005, is made and entered
into by and between Elan Pharma International Limited, a private limited
company organized under the laws of Ireland (the “Seller”), and Depomed, Inc.,
a California corporation (the “Purchaser”).

 

WHEREAS, the Seller
is the owner of that certain Depomed, Inc. Convertible Promissory Note in
aggregate principal amount of $8,010,000.00 issued by Purchaser to Elan
International Services, Inc., an affiliate of Seller, on January 21,
2000 (the “Convertible Note”), a true and complete copy of which is
attached hereto as Exhibit A.

 

WHEREAS, the Seller
desires to sell to the Purchaser and the Purchaser desires to repurchase from
the Seller the Convertible Note.

 

NOW, THEREFORE, in
consideration of the premises and of the respective representations,
warranties, covenants, agreements and conditions contained herein, the Purchaser
and the Seller agree as follows:

 

1.  Definitions.  As used in this
Agreement, the following terms shall have the meanings set forth below:

 

“Convertible Note” has the meaning set
forth in the recitals hereto.

 

“Purchase Price” means $9,100,000.00.

 

2.  Purchase and Sale of the
Convertible Note; Closing.  The
Purchaser and the Seller agree as follows:

 

(a)                Repurchase
and Sale of the Convertible Note.  On
the basis of the representations and warranties, and subject to the terms and
conditions, set forth herein, (i) the Seller agrees to sell to the Purchaser
the Convertible Note, and (ii) the Purchaser agrees to repurchase from the
Seller the Convertible Note.

 

(b)               Closing.  The closing (the “Closing”) of the
purchase and sale of the Convertible Note shall take place at 2:00 p.m. on
Monday, June 27, 2005 (the “Closing Date”) at the offices of Heller
Ehrman LLP, Times Square Tower, 7 Times Square, New York, NY, or at such other time and place as the
parties hereto shall mutually agree.  At
the Closing, (i) the Seller shall deliver to the Purchaser the originally
executed Convertible Note and such other appropriate instruments of transfer
and assignment, as the Purchaser shall reasonably request prior to the Closing
Date, in order to vest in the Purchaser, as of the Closing Date, all of the Seller’s
right, title and interest in, to and under the Convertible Note, and (ii) the
Purchaser shall deliver or cause to be delivered to the Seller by wire transfer
to a bank account designated by the Seller, the Purchase Price in immediately
available funds.

 

(c)                Conversion
Price; Principal and Accrued Interest. 
The Purchaser and the Seller acknowledge and agree that (i), as of June 22,
2005, the Conversion Price applicable

 

 

to the
Convertible Note is $7.30 and (ii), as of March 31, 2005, the aggregate
amount of principal and interest accrued thereon under the Convertible Note was
$10,504,635.01.

 

3.  Conditions to the
Purchaser’s Obligation.  The
obligation of the Purchaser to purchase and pay for the Convertible Note is
subject to the satisfaction (or waiver by Purchaser) of the following condition
as of the Closing Date:

 

(a)                the
representations and warranties of the Seller made in this Agreement shall be
true and correct in all respects, as of the date hereof and as of the Closing
Date as though then made; and

 

(b)               Seller
shall have delivered the Convertible Note to the Purchaser.

 

4.  Conditions to the Seller’s
Obligation.  The obligation of the
Seller to sell and deliver the Convertible Note to the Purchaser is subject to
the satisfaction (or waiver by the Seller) of the following conditions as of
the Closing Date:

 

(a)                the
representations and warranties of the Purchaser made in this Agreement shall be
true and correct in all respects, as of the date hereof and as of the Closing
Date as though then made; and

 

(b)               the
Purchaser shall have delivered to the Seller the Purchase Price.

 

5.  Representations and
Warranties of Purchaser.  The
Purchaser represents and warrants to the Seller that:

 

(a)                The
Purchaser has all requisite corporate power and authority to enter into and
perform this Agreement and to consummate the transactions contemplated
hereby.  The Purchaser has duly and validly
authorized, executed and delivered this Agreement.

 

(b)               This
Agreement constitutes a valid and binding agreement of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
relating to or affecting creditors’ rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).

 

6.  Representations and
Warranties of the Seller.  The Seller
represents and warrants to the Purchaser that:

 

(a)                The
Seller has all requisite corporate power and authority to enter into and
perform this Agreement and to consummate the transactions contemplated
hereby.  The Seller has duly and validly
authorized, executed and delivered this Agreement.

 

(b)               This
Agreement constitutes a valid and binding agreement of the Seller, enforceable
against the Seller in accordance with its terms, except as enforceability may
be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws relating to or
affecting creditors’ rights generally

 

2

 

and (ii) general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).

 

(c)                No
consent, approval, qualification, order or authorization of, or filing with,
any local, state or federal governmental authority is required for the consummation
by the Seller of the transactions contemplated hereby.

 

(d)               The
Seller has good and marketable title to the Convertible Note that it is
transferring hereunder, free and clear of any liens, claims, encumbrances,
charges or restrictions of any kind (collectively, “Liens”).  Upon consummation of the transactions
contemplated hereby, the Purchaser will have acquired good and marketable title
in and to the Convertible Note, free and clear of any Liens.

 

7.  Applicable Law.  This agreement shall be governed by and
construed in accordance with the laws of the State of California.

 

8.  Invalidity of Provisions.  The invalidity or unenforceability of any provision
of this Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that provision, in any
other jurisdiction.

 

9.  Survival of
Representations and Warranties.  The
representations and warranties contained herein shall survive the Closing or
any termination of this Agreement.

 

10.  Headings; Execution in
Counterparts.  The headings and
captions contained herein are for convenience of reference only and shall not
control or affect the meaning or construction of any provision hereof.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and which
together shall constitute but one and the same instrument.

 

11.  Notices.  All notices and other communications relating
to this Agreement shall be dated and in writing and shall be deemed to have
been duly given when delivered, if delivered personally or sent by registered
or certified mail, return receipt requested, postage prepaid, and when received
if delivered otherwise, to the party to whom it is directed;

 

(a)                If
to the Seller, to the Seller at the following address:

 

Elan Pharma
International Limited

WIL House

Shannon
Business Park

Shannon

County Clare

Ireland

Attn.:
Director

Fax: +353-1-709-4082

 

3

 

If to the
Purchaser, to the Purchaser at the following address:

 

Depomed, Inc.

1360 O’Brien Drive

Menlo Park, CA  94025-1436

Attn:  President

Fax:  650-462-9991

 

With a copy
to:

 

Heller Ehrman
LLP

275
Middlefield Road

Menlo Park, CA
94025

Attn: Matthew
Gosling

Fax: 650-324-0628

 

12.  Integration.  The parties agree that this Agreement
contains the entire understanding between the parties hereto relating to the
subject matter hereof.

 

13.  Third Party Beneficiaries.  Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give to any third
party any rights or remedies against any party hereto.

 

14.  Further Assurances.  Each of the parties hereto covenants and
agrees upon the request of the other, to do, execute, acknowledge and deliver
or cause to be done, executed, acknowledged and delivered all such further
acts, deeds, documents, assignments, transfers, conveyances, powers of attorney
and assurances as may be reasonably necessary or desirable to give full effect
to this Agreement.

 

[Signature Page Follows]

 

4

 

IN WITNESS WHEREOF, the Purchaser and the
Seller have executed this Agreement as of the date first above written.

 

	
   

  	
  ELAN PHARMA INTERNATIONAL LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul V. Breen

  	
   

  
	
   

  	
  Name:

  	
  Paul V. Breen

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DEPOMED, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John F. Hamilton

  	
   

  
	
   

  	
  Name:

  	
  John F. Hamilton

  	
   

  
	
   

  	
  Title:

  	
  VP and CFO

  	
   

  
					

 

5

 

Exhibit A

 

Convertible Note

 

 

THIS
CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES
LAWS.

 

THE
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS ALSO SUBJECT TO
THE RESTRICTIONS CONTAINED IN THAT CERTAIN SECURITIES PURCHASE AGREEMENT, DATED
JANUARY  21, 2000, BY AND BETWEEN DEPOMED, INC. AND ELAN
INTERNATIONAL SERVICES, LTD.

 

DEPOMED, INC.

CONVERTIBLE PROMISSORY NOTE

 

	
  U.S. $8,010,000

  	
   

  	
  January 21, 2000

  	
   

  
	
   

  	
   

  	
  New York, New York

  	
   

  

 

The undersigned, DepoMed, Inc.,
a California corporation with offices at 366 Lakeside Drive, Foster City, CA
94404-1146 (the “Company”), unconditionally promises to pay to Elan International Services, Ltd., a Bermuda exempted
limited liability company (“EIS”), or its permitted assigns, transferees
and successors as provided herein (collectively with EIS, the “Holder”),
on January 21, 2006 (the “Maturity Date”), at such place as may be
designated by the Holder to the Company, the principal amount outstanding
hereunder  excluding accruals of interest
(not to exceed U.S.$8,010,000), together with interest thereon accrued at a
rate per annum equal to 9.0%, from and after
the date of the initial disbursement of funds hereunder (the “Original Issue
Date”), compounded on a semi-annual basis, the initial such compounding to
commence on the date that is six months from and after the Original Issue
Date  and thereafter on each six month
anniversary (each such date, a “Compounding Date”).

 

SECTION 1.  SECURITIES PURCHASE
AGREEMENT AND FUNDING AGREEMENT.

 

This Note is issued pursuant to a Securities Purchase Agreement dated
as of the date hereof, by and between the Company and EIS (as amended at any time,
the “Securities Purchase Agreement”), and the Holder hereof is intended
to be afforded the benefits thereof, including the representations and
warranties set forth therein.  The
Company shall use the proceeds of the issuance and sale of this Note solely in
accordance with the provisions set forth therein and as required therein and in
a certain Funding Agreement, dated as of the date hereof (as amended at any
time, the “Funding Agreement”), by and among Elan Corporation, plc, Elan
Pharma International

 

 

Limited, EIS and the Company,
and as described in Section 6 below. 
Capitalized terms used but not otherwise defined herein shall, unless
otherwise indicated, have the meanings given such terms in the Securities
Purchase Agreement.

 

SECTION 2.  DISBURSEMENTS.

 

(a)                                  From
and after the date hereof and until January 21, 2002, disbursements shall
be made by EIS to the Company hereunder in minimum increments of U.S.$250,000
(except in the event that an amount less than U.S.$250,000 shall be remaining
and available for funding hereunder, in which case such lesser amount may be
funded hereunder); provided, that the Company shall have, prior to each such disbursement,
delivered a written request therefor to the Holder in the form attached hereto
as Exhibit A (the “Disbursement Notice”), together with an
Officer’s Certificate confirming that as of such date no Event of Default
exists hereunder; the Holder shall, subject to the terms and conditions hereof,
fund the applicable amount within 10 business days of the receipt of the Disbursement
Notice, subject to the receipt by the Holder of any required approvals under
the Mergers and Takeovers (Control) Acts 1978-1996.  A “business day” is any day that commercial
banks are open for the transaction of business in the City of New York and in
the City of San Francisco.

 

(b)                                 The
Holder shall not be required to disburse more than the maximum principal amount
hereunder, excluding accruals of interest, of U.S.$8,010,000.

 

(c)                                  Each
disbursement shall accrue interest at the rate set forth in Section 1 from
the date of disbursement through the date of payment.

 

SECTION 3.  PAYMENTS AND COVENANTS.

 

(a)                                  Unless
earlier converted in accordance with the terms of Section 4 below, or prepaid
in accordance with the terms hereof, the entire outstanding principal amount of
this Note, together with any accrued and unpaid interest thereon, shall be due
and payable on the Maturity Date.

 

(b)                                 Accrued
interest hereon shall not be paid in cash, but shall be capitalized and added
to the principal amount outstanding hereunder on each Compounding Date.

 

2

 

SECTION 4.  CONVERSION. 

 

(a)                                  Conversion
Right.

 

(i)  From and after the Original Issue Date and until this Note is
repaid in full, the Holder shall have the right from time to time, in its sole
discretion, to convert all or any portion of the outstanding principal amount
and accrued and unpaid interest then-outstanding hereunder, (the “Conversion
Right”), into such number of shares of Common Stock that shall be obtained
by dividing the sum of the outstanding principal amount and all accrued and
unpaid interest by $10.00, subject to adjustment as provided below in this Section (the
“Conversion Price”).

 

(ii)  The Holder shall be entitled to exercise the Conversion
Right from time to time as to the unconverted portion of this Note upon at
least five days’ prior written notice to the Company, such notice to be in the
form attached hereto as Exhibit B. 
Within 10 days of the conversion date specified in such notice, the
Company shall issue appropriate stock certificates to EIS representing the
aggregate number of shares of Common Stock due to EIS as a result of such
conversion.

 

(b)                                 Reclassification,
Etc.  In case of (i) any
reclassification, reorganization, change or conversion of securities of the
class issuable upon conversion of the outstanding principal amount and accrued
and unpaid interest then-outstanding hereunder (other than a change in par
value, or from par value to no par value), or (ii) any consolidation of
the Company with or into another entity (other than a merger or consolidation
with another entity in which the Company is the surviving entity and that does
not result in any reclassification or change of the class of securities
issuable upon the conversion of the outstanding principal amount and accrued
and unpaid interest then-outstanding hereunder), or (iii) any sale of all
or substantially all the assets of the Company for stock of another company,
then the Company, or such successor or purchasing entity, as the case may be,
shall duly execute and deliver to the Holder a new Note or a supplement hereto
(in form and substance reasonably satisfactory to the Holder of this Note), so
that the Holder shall have the right to receive, in lieu of the shares of
Common Stock otherwise issuable upon the conversion of such outstanding
principal amount and accrued and unpaid interest then-outstanding hereunder,
the kind and amount of shares of stock and other securities, money and property
receivable upon such reclassification, reorganization, change, merger,
consolidation or conversion by a holder of the number of shares of Common Stock
then issuable under this Note.  Such new
Note shall provide for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4.  The provisions of this Section 4(b) shall
similarly attach to successive reclassifications, reorganizations, changes,
mergers, consolidations, transfers or conversions; provided, however, that this
provision shall not include (i) any stock option (or shares issued upon
their exercise) or other securities issued under incentive plans granted to
employees, officers, directors or consultants in connection with their
employment with the Company or (ii) warrants (or shares issued upon their
exercise) issued in connection with any equipment loan by the Company or (iii) this
Note or one of the Transaction Documents or any shares issued on conversion
thereof or (v) securities issued in a private sale at a price not less
than 85% of the Fair Market Value (as defined in Section 4(c)) pursuant to
which the purchasers are granted registration rights for the resale of such
securities provided, that the rights of the Holder in Section 4(c) below
are not affected.

 

3

 

(c)                                  Below
Market Issuance; Stock Dividends; Etc.

 

(i)                                     If
the Corporation shall issue  any
Additional Stock (as defined below) without consideration or for a consideration
per share less than the Closing Price on such date, the Conversion Price for
such series in effect immediately prior to each such issuance shall forthwith
(except as otherwise provided in this clause (i)) be adjusted to a price equal
to a price determined by multiplying such Conversion Price by a fraction, the
numerator of which shall be the sum of (w) the number of shares of Common
Stock outstanding immediately prior to such issuance (assuming the conversion
of all then outstanding shares of Series A Convertible Preferred Stock and
including shares issued or issuable pursuant to Section 4(c)(i)) and
(x) the number of shares of Common Stock that the aggregate consideration
received by the Corporation for such issuance would purchase at such Conversion
Price; and the denominator of which shall be the sum of (y) the number of
shares of Common Stock outstanding immediately prior to such issuance (assuming
the conversion of all then outstanding shares of Series A Convertible
Preferred Stock and including shares issued or issuable pursuant to this Section 4
and (z) the number of shares of such Additional Stock.  For purposes of this Note, (1) ”Closing
Price” shall mean (x) the average of the closing prices on the 20 trading
days prior to such determination on the principal national securities exchange
on which the Common Stock is traded, if any, (y) the average of the last quoted
prices on the 20 trading days prior to such determination if the Common Stock
is traded on the Nasdaq National Market or Nasdaq Small Cap Market, or (z) if
the Common Stock is not listed on a national securities exchange or traded on
the Nasdaq National Market or the Nasdaq SmallCap Market, then as determined in
good faith by the Company’s Board of Directors and reasonably agreed to by EIS
and (2) ”Additional Stock” shall mean any Common Stock or
securities exercisable, exchangeable or convertible for or into Common Stock at
a price (or effective price in the case of such other securities) below the
greater of (A) the Conversion Price therein effect and (B) the
then-current Closing Price per share. 
Additional Stock shall not include (i) any stock option (or shares
issued upon their exercise) or other securities issued under incentive plans
granted to employees, officers, directors or consultants in connection with
their employment with the Company or (ii) warrants (or shares issued upon
their exercise) issued in connection with any equipment loan by the Company or (iii) this
Note (or shares issued upon its conversion) or (iv) Series A
Convertible Preferred Stock (or shares issued upon its conversion) or (v) securities
issued in a private sale at a price not less than 85% of the Fair Market Value
pursuant to which the purchasers are granted registration rights for the resale
of such securities.

 

(d)                                 No
Impairment.  The Company will not, by
amendment of its Articles of Incorporation or bylaws or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of
all such action as may be necessary or appropriate in order to protect the
rights of EIS against impairment.  This
provision shall not restrict the Company from otherwise amending and/or
restating its Articles of Incorporation in accordance with California
Corporations Code.

 

4

 

(e)                                  Notice
of Adjustments.  Whenever the
consideration issuable upon a conversion hereunder shall be changed pursuant to
this Section 4, the Company shall prepare a certificate setting forth, in
reasonable detail, the event requiring the change and the kind and amount of
shares of stock and other securities, money and property subsequently issuable
upon a conversion hereof.  Such
certificate shall be signed by its chief financial officer and shall be
delivered to EIS.

 

(f)                                    Fractional
Shares; Rounding.  No fractional
shares of Common Stock will be issued in connection with any exercise hereunder,
but in lieu of such fractional shares the Company shall make a cash payment
therefor based on the applicable Conversion Price.  All calculations under this Section 4
shall be made to the nearest cent or to the nearest one-hundredth of a share,
as the case may be.

 

SECTION 5.  EXCHANGE RIGHT.

 

In the event that EIS shall exercise the EIS Exchange Right (as such
term is defined in the Securities Purchase Agreement), EIS shall, at its
option, (i) cause to be paid to the Company, within 30 days of such
exercise, an amount equal to 30.1% of the aggregate amount (but not including
any accrued and unpaid interest thereon) of the Development Funding (as such
term is defined in the Funding Agreement) through the date of such exercise provided
by each of the parties to Newco, in accordance with the terms of the Funding
Agreement, from and after the date hereof and until the date of such exercise,
and/or (ii) offset against the amount payable under this Note an amount
equal to 30.1% of the total amount (but not including any accrued and unpaid
interest in respect of any debt, including the Note thereon) of Development
Funding provided by each of the parties to Newco, in accordance with the terms
of the Funding Agreement, from and after the date hereof and until the date of
the exercise of the Exchange Right, against the principal amount outstanding
hereunder, if any, or (iii) effect a combination of the provisions
described in clauses (i) and (ii) above, if applicable.

 

SECTION 6.  USE OF PROCEEDS.

 

The Company shall use the proceeds of this Note solely for
developmental funding of Newco, including the reimbursement of the Company for
any amounts previously advanced for such developmental funding; provided,  that the Board of Directors of Newco shall
have determined that such developmental funding is necessary (which approval
shall in all events include the consent of at least one director designated by
the Company and at least one director designated by EIS).  Accordingly, total disbursements hereunder
shall not in any event exceed the amount of Development Funding funded by the
Company to Newco pursuant to the Funding Agreement.

 

SECTION 7.  EVENTS OF DEFAULT.

 

The occurrence of any of the following events shall constitute an event
of default (an “Event of Default”):

 

5

 

(a)                                  a
default in the payment of the principal amount of this Note, when and as the
same shall become due and payable;

 

(b)                                 a
default in the payment of any accrued and unpaid interest on this Note, when
and as the same shall become due and payable;

 

(c)                                  a
breach by the Company of its obligations under any of the Transaction Documents,
which breach remains uncured 45 days after written notice thereof by EIS;

 

(d)                                 a
distress, execution, sequestration or other process is levied or enforced upon
the Company against a material part of its property which is not discharged or
challenged within 60 days;

 

(e)                                  the
Company is unable to pay its debts in the normal course of business;

 

(f)                                    the
Company ceases wholly or substantially to carry on its business, otherwise than
for the purpose of a reconstruction or amalgamation, without the prior written
consent of the EIS (such consent not to be unreasonably withheld);

 

(g)                                 the
appointment of a liquidator, receiver, administrator, examiner, trustee or
similar officer of the Company or over all or substantially all of its assets
under the law; or

 

(h)                                 any
other termination of the JDOA.

 

SECTION 8.  REMEDIES IN THE EVENT OF
DEFAULT.

 

(a)                                  In
the case of any Event of Default by the Company, the Holder, may in its sole
discretion, demand that the aggregate amount of funds advanced to the Company
under this Note and outstanding hereunder and accrued and unpaid interest
thereon shall, in addition to all other rights and remedies of the Holder
hereunder and under applicable law, be and become immediately due and payable
upon written notice delivered by the Holder to the Company.  Notwithstanding the preceding sentence, the
rights of the Holder as set forth in Sections 4 and 5 hereunder shall survive
any such acceleration.  If the Holder
shall accelerate and be paid and thereafter elect to exercise the Conversion
Right, the Holder shall reimburse to the Company an amount in respect of the
shares of Common Stock issued under such Conversion Right equal to the
principal amount of this Note attributable thereto as calculated in accordance
with Section 4 above.

 

(b)                                 The
Company hereby waives demand and presentment for payment, notice of nonpayment,
protest and notice of protest, diligence, filing suit, and all other notice and
promises to pay the Holder its costs of collection of all amounts due hereunder,
including reasonable attorneys’ fees.

 

(c)                                  In
the case of any Event of Default under this Note by the Company this Note shall
continue to bear interest after such default at the interest rate otherwise in
effect hereunder plus, until such default is cured, 3% per annum
(but in any event not in excess of the maximum rate of interest permitted by
applicable law).

 

6

 

SECTION 9.  MISCELLANEOUS.

 

(a)                                  EIS
may assign this Note to its affiliates and subsidiaries, as well as any special
purpose financing or similar vehicle established by EIS or its affiliates.  This Note and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, that EIS and
the Company shall remain liable for their respective obligations hereunder
after any such assignment.

 

(b)                                 Each of the parties
agrees that the Company may be required under U.S. tax laws to withhold from
any payments of interest on the Note appropriate withholding taxes to be paid
to jurisdictions of the United States.  
Each of the parties agrees to cooperate to minimize the amount of such
withholding taxes, if any, and to consult with each other for this purpose from
time to time.

 

(c)                                  All notices, demands
and requests of any kind to be delivered to any party in connection with this
Agreement shall be in writing and shall be deemed to have been duly given if
personally delivered or if sent by nationally-recognized overnight courier or
by registered or certified mail, return receipt requested and postage prepaid,
or by facsimile transmission, addressed as follows:

 

(i) if to the Company:

 

DepoMed, Inc.

366 Lakeside Drive

Foster City, CA 94404-1146

Attention:  Chief Executive Officer

Facsimile:  (650) 513-0999

 

with a copy to:

Heller Ehrman White & McAuliffe

525 University Avenue

Palo Alto, CA 
94301

Attn: Julian Stern, Esq.

Facsimile: (650) 324-0638

 

(ii) if to EIS, to:

 

Elan International Services,
Ltd.

102 St. James Court

Flatts, Smiths Parish

Bermuda 
FL04

Attention: President

Fax: 
(441) 292-2224

 

7

 

with a copy to:

 

Brock Silverstein LLC

800 Third Avenue

New York, New York 10022

Attention: David Robbins, Esq.

Fax: 
(212) 371-5500

 

Each party, by written notice given to the other in accordance with
this Section 9(c) may change the address to which notices, other communication
or documents are to be sent to such party. 
All notices, other communications or documents shall be deemed to have
been duly given when received. Any such notice or communication shall be deemed
to have been effectively given, (a) in the case of personal delivery, on
the date of such delivery, (b) in the case of nationally-recognized
overnight courier, on the second business day after the date when sent, (c) in
the case of mailing, on the fifth business day following that day on which the
piece of mail containing such communication is posted, and (d) in the case
of facsimile transmission, on the date of transmission.

 

(d)                                 This Note may not be
modified or amended, or any of the provisions hereof waived, except by written
agreement of the Company and EIS.

 

(e)                                  This Note shall be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to principles thereof relating to conflicts of laws.

 

(f)                                    This Note may be
executed in any number of counterparts, and each such counterpart hereof shall
be deemed to be an original instrument, but all such counterparts together
shall constitute one note.  The Note may
be signed and delivered to the other party by a facsimile transmission; such
transmission shall be deemed a valid signature.

 

(g)                                 Each of the parties
shall be responsible for its own costs and expenses incurred in connection with
the transactions contemplated hereby.

 

8

 

IN WITNESS WHEREOF, the
Company and EIS have executed this Note on the date first above written.

 

	
   

  	
  DEPOMED, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ John W. Fara

  	
   

  
	
   

  	
  Name: 

  	
  John W. Fara

  
	
   

  	
  Title: 

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ELAN INTERNATIONAL SERVICES, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Kevin Insley

  	
   

  
	
   

  	
  Name:

  	
  Kevin Insley

  
	
   

  	
  Title: 

  	
  President and CFO

  
						

 

 

EXHIBIT A

 

NOTICE OF REQUEST FOR DISBURSEMENT

 

Date:

 

	
  To:

  	
  Elan International Services, Ltd.

  
	
   

  	
   

  
	
  From:

  	
  DepoMed, Inc.

  
	
   

  	
   

  
	
  Re:

  	
  Disbursement Request

  

 

Pursuant to the terms of the Convertible
Promissory Note (the “Note”) issued by DepoMed, Inc. (the “Company”) to
Elan International Services, Ltd. (“EIS”), dated       ,
      , the Company hereby notifies EIS of its
request for a disbursement thereunder in the amount of $         .  Please provide funding in the requested
amount to the Company in accordance with the following wire instructions:

 

[

 

 

]

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  DEPOMED, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT B

 

NOTICE OF ELECTION TO EXERCISE A CONVERSION
RIGHT

 

Date:

 

	
  To:

  	
  DepoMed, Inc.

  
	
   

  	
   

  
	
  From:

  	
  Elan International Services, Ltd.

  
	
   

  	
   

  
	
  Re:

  	
  Exercise of a Conversion Right

  

 

Pursuant to the terms of the Convertible
Promissory Note (the “Note”) issued by DepoMed, Inc. (the “Company”) to
Elan International Services, Ltd. (“EIS”), dated            ,
     , specifically Section 4 thereof, EIS hereby
notifies the Company of its intention to exercise a right of conversion.

 

Pursuant to Section 4 of the Note, EIS
hereby elects to convert [$          ]*
in aggregate principal amount and all accrued and unpaid interest thereon for
shares of the Company’s Common Stock, no par value per share, effective [          ,
    ]

 

We have instructed our attorneys to contact
the Company to discuss the timing and documentation of the conversion.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  ELAN INTERNATIONAL SERVICES, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

* Amount must represent one or
more tranches drawn down by the Company under the Note.

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