**Exhibit10.31**

**CERTAIN CONFIDENTIAL PORTIONS OFTHIS EXHIBIT WERE OMITTED AND REPLACED WITH THE SYMBOL “[***]”.  A COMPLETE VERSION OF THIS EXHIBIT HAS BEENFILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSIONPURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24B-2OF THE SECURITIES EXCHANGE ACT OF 1934.**

**SUBLICENSE AGREEMENT**

This Sublicense Agreement (this “**Agreement**”) ismade as of October 13, 2006 (the “**Effective Date**”)by and between PharmaNova Inc. a Delaware corporation with its principal placeof business located at 50 Lucius Gordon Drive, Ste 206, West Henrietta, NY14586 (“**Licensor**”), and Depomed, Inc., aCalifornia corporation with its principal place of business located at 1360 O’BrienDrive, Menlo Park, CA 94025 (“**Licensee**”)(each, a “**Party**” and collectively, the “**Parties**”).

# **1.             PREAMBLE**

## 1.1                                 Licensorhas exclusively licensed the rights (with the right to sub-license) to certainintellectual property specifically covering the use of gabapentin for certainconditions secondary to hormonal variation.

## 1.2                                 Licenseehas in clinical development a gabapentin product utilizing Licensee’sproprietary drug delivery technology currently referred to as the AcuFormtechnology (“**Gabapentin GR**”).  Licensee desires, pursuant to terms andsubject to conditions set forth in this Agreement, to create a unique dosageform of Gabapentin GR, utilizing the same proprietary drug delivery technologyand a unique strength, release profile or mechanism of drug delivery relativeto Licensee’s current formulation of Gabapentin GR, for the treatment ofcertain conditions secondary to hormonal variation, and to seek to obtainregulatory approvals for such product in the US.

## 1.3                                 Licensordesires to grant to Licensee a license for certain of the use and territorialrights to gabapentin held by Licensor.

NOW, THEREFORE, The Parties agree as follows:

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# **2.             DEFINITIONS**:  Terms defined in this Article 2, andparenthetically defined elsewhere in this Agreement, will throughout this Agreementhave the meaning here or there provided. Defined terms may be used in the singular or in the plural, as senserequires.

## 2.1                                 “**‘098****Patent**”means U.S. Patent No. 6,310,098, including all re-examinations, reissues,supplemental protection certificates and extensions thereof.

## 2.2                                 “**Affiliate**” means any corporation or other business entitythat controls, is controlled by or is under common control with the Licensee orLicensor.  “Controls,” “control” or “controlled”as used in this paragraph means direct or indirect ownership of more than fiftypercent (50%) of the voting stock of such corporation or the ability toexclusively direct, either directly or indirectly, the decision-makingauthority of such other unincorporated business entity.

## 2.3                                 **“API”**means gabapentin[1-(aminomethyl)cyclohexaneacetic acid].

## 2.4                                 **“Cancer Indications”**means treatment, diagnosis orprevention of vasomotor symptoms associated with cancer (e.g., conditions suchas breast, endometrial, uterine and prostate cancer) and/or drug treatment forcancer and/or chemotherapy for cancer.

## 2.5                                 “**Cancer Product**” means a product whenlabeled for use for any of the Cancer Indications.

## 2.6                                 “**Clinical Information**” shall mean allin-vivo or clinical, pharmacology, toxicology, safety and efficacy data,formulary submissions, pharmacoeconomic data, Phase I, II and III clinical dataand results, and other such information now or hereafter known and available toUniversity, Licensor or its Affiliates, whether generally known to others ornot, which concerns Product and does not concern PharmaNova Product.

## 2.7                                 **“Collaboration Committee”** means the committee described inSection 6.

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## 2.8                                 **“Commercialize” or “Commercialization”** means the ongoing process andactivities generally engaged in by a pharmaceutical company to sell and marketa pharmaceutical product.

## 2.9                                 **“Confidential Information”** means information that is markedas confidential, or, if orally disclosed, is indicated at the time ofdisclosure as confidential and provided in written form within thirty days.  Not withstanding the foregoing, the receivingParty will have no obligation of confidentiality relating to any information ofthe disclosing Party that:

##### (i)                                     isor becomes part of the public domain through no fault of the receiving Party;

##### (ii)                                  isknown to the receiving Party prior to the disclosure by the disclosing Party,as evidenced by documentation;

##### (iii)                               isindependently developed by the receiving Party without reference or use of theConfidential Information or without any breach of this Agreement as evidencedby documentation;

##### (iv)                              issubsequently obtained by the receiving Party from a duly authorized ThirdParty;

##### (v)                                 ispublicly released as authorized under this Agreement by the disclosing Party,its employees or agents.

## 2.10                           **“Confidentiality Agreement”** means that certain ConfidentialityAgreement between Licensor and Licensee dated May 24, 2004.

## 2.11                           “**Control**”or “**Controlled**” shall mean, withrespect to any intellectual property right or other intangible property, that aParty or one of its Affiliates owns or has a license or sublicense to such itemor right, and has the ability to grant access, license or sublicense in or tosuch right without violating the terms of any agreement or arrangement with anyThird Party.

## 2.12                           “**DiligentEfforts**” shall mean the carrying out of obligations or tasksconsistent with the commercially reasonable practices of the pharmaceuticalindustry for the development or Commercialization of a pharmaceutical producthaving similar market potential or profit potential as the Product, based onconditions then prevailing.  DiligentEfforts

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## requires that the Party, at a minimum:  (a) determine the general industry practices with respect to theapplicable activities, (b) reasonably promptly assign responsibility for suchobligations to specific employee(s) who are held accountable for progress andmonitor such progress on an on-going basis, (c) set and consistently seek toachieve specific and meaningful objectives for carrying out such obligations,and (d) make and implement decisions and allocate resources designed to advanceprogress with respect to such objectives.

## 2.13                           **“FDA”** means the United States Food and DrugAdministration or any successors to its responsibilities with respect topharmaceutical products such as the Products.

## 2.14                           **“First Commercial Sale”** means the initial transfer by or onbehalf of Licensee or its Sublicensees of Products in exchange for cash or someequivalent to which value can be assigned for the purpose of determining NetSales Revenue.

## 2.15                           **“GovernmentAuthority”** means any court, agency, department, authority or otherinstrumentality of any federal, state, county, city or other politicalsubdivision.

## 2.16                           **“Law” or “Laws”** means all laws, statutes,rules, regulations, orders, judgments and/or ordinances of any GovernmentAuthority.

## 2.17                           **“Licensed Patent”** means the ‘098 Patent.

## 2.18                           **“Licensor Patent Rights”** means any Patent Rights, includingwithout limitation those rights in the Licensed Patent granted to and held byLicensor under the University License, in the field of use of API for MenopauseIndications, which rights are owned by or Controlled by Licensor or anAffiliate of Licensor as of the Effective Date; *provided, however*, that Licensor Patent Rightsshall not include the PharmaNova Patent Application or any Patent Rightsassociated therewith.  All LicensorPatent Rights currently within this definition are set forth on Exhibit A,which exhibit shall be amended from time to time as necessary to reflectchanges or additions to the Licensor Patent Rights.

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## 2.19                           **“Menopause Indications”**means the treatment, diagnosis orprevention of vasomotor symptoms of hormonal variation (*e.g.*, hot flashes) associated withmenopause in women.

## 2.20                           **“NDA”** means a New Drug Application filed with the FDA withrespect to a pharmaceutical product (or similar application, if suchapplication is no longer available or appropriate).

## 2.21                           **“Net Sales”** means the gross amount of monies orcash equivalent or other consideration that is paid by Third Parties toLicensee or any of its Affiliates, assignees, licensees, Sublicensees,transferees, distributors or commercial partners (or their affiliates) ordesignees thereof for Product by sale or other mode of transfer, in *bona fide* arm’s length transactions, lessthe following deductions, in each case related specifically to Product andactually allowed and customarily taken by such Third Parties and not otherwiserecovered by or reimbursed to Licensee or any of its affiliates, assignees,licensees, Sublicensees, transferees, distributors or commercial partners (ortheir affiliates) or designees thereof:  (i) all trade, quantity and cash discounts actually allowed andcustomarily taken; (ii) customary and usual credits, and allowances actually grantedand taken on account of rejections, returns or billing errors; (iii) packingcosts; (iv) transportation; and, (v) insurance, solely related to shipping suchProduct ***except***that no deductions may be made for commissions paid to individuals whether theybe with independent sales agencies or regularly employed by Licensee, itsAffiliates or Sublicensees, and on its payroll.

## 2.22                           “**PatentRights**” shall mean (i) valid and enforceable patents,re-examinations, reissues, renewals, extensions, supplementary protectioncertificates and term restorations, any confirmation patent or registrationpatent or patent of addition based on any such patent, (ii) pendingapplications for patents, including without limitation continuations,continuations-in-part, divisional, provisional and substitute applications, andinventors’ certificates, and (iii) all priority applications of any of theforegoing.

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## 2.23                           “**PharmaNovaProduct**” means any pharmaceutical product containing API asan active pharmaceutical ingredient such that (i) the development, manufacture,sale or use of such product in the Territory would be covered by a Valid Claimof a Licensed Patent, and (ii) such product or its use is described in, or iscovered by one or more of the claims of, PCT Patent Application No.PCT/US06/001887 (Pharmaceutical Formulations and Methods of Use) (the “**PharmaNova Product Patent Application**”).

## 2.24                           **“Phase III Clinical Studies”** means controlled human clinical studiesinvolving administration of a drug with the goal of establishing that a drug issafe and efficacious for its intended use, and to be considered as a pivotalstudy or studies for submission of an NDA.

## 2.25                           “**Product”** means any pharmaceutical product containing API asan active pharmaceutical ingredient such that the development, manufacture,sale or use of such product for the Menopause Indications would, but for thelicense granted under this Agreement, infringe in the Territory a Valid Claimof a Licensed Patent.  Product does notinclude PharmaNova Products nor any product that is Commercialized in theTerritory but is not expressly labeled or marketed for the MenopauseIndications.

## 2.26                           “**Program**” means all activities related to the development and commercializationof Product performed by or on behalf of Licensee (or its Affiliates) orLicensor (or its Affiliates) pursuant to this Agreement; provided, however,that all activities related to the development of Products conducted byLicensee (or its Affiliates) prior to the Effective Date will be deemed tobe conducted outside of the Program.

## 2.27                           **“Quarter”** means each of the three-month periodsending on March 31, June 30, September 30 and December 31 in any calendar year.

## 2.28                           **“Regulatory Approval”** means in the United States, writtennotice of marketing approval by the FDA based on approval of an NDA and satisfactionof any related applicable FDA registration and notification requirements (ifany) which are required before a product may be commercially sold in the UnitedStates.

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## 2.29                           “**Regulatory Data**” means any information anddata necessary or useful to obtain or maintain Regulatory Approval for theProduct in the Territory, including post-approval reports, filings andsubmission and shall include, but not be limited to, any Clinical Informationrequired for that purpose.

## 2.30                           **“Sublicense”** means the present, future or contingenttransfer of any license, right, option, first right to negotiate or other rightgranted under the Licensor Patent Rights in whole or in part pursuant toSection 4.2; *provided, however*,that the development, promotion, distribution or marketing of the Product by aThird Party on behalf of Licensee does not constitute a Sublicense.

## 2.31                           **“Sublicensee”** means a Third Party that is granted aSublicense.

## 2.32                           **“Territory”** means United States of America and itsterritories including Puerto Rico.

## 2.33                           **“Third Party”** means any individual, estate, trust,partnership, joint venture, association, firm, corporation, company or otherentity, other than Licensor or Licensee or any of their Affiliates.

## 2.34                           **“University”**means the University of Rochester, locatedin Rochester, New York.

## 2.35                           **“University License”** means the Exclusive Patent LicenseAgreement, dated August 11, 2004, between Licensor and University, as amendedby Amendment No. 1 thereto dated as of the Effective Date, and as may besubsequently amended in accordance with this Agreement.

## 2.36                           **“University Provisions”** means the following provisions of this Agreement:  Section 4.2 (Sublicensing); Section4.3 (Research License); Section 5.7.1 (Records); Section 6.2 (ProductDevelopment Diligence Obligations); Section 6.5 (Patent Marking); Section 9.2.1(Control of Actions); Section 13.4 (Use of Names); Section 14.6 (Assumption byUniversity); Section 15.2 (Indemnification of University); Section 15.3 (NoConsequential Damages); Section 15.4 (Insurance); and Section 15.5(Settlements).

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## 2.37                           **“Valid Claim”** means any claim of an issued andnon-expired patent which has not been withdrawn, canceled, or disclaimed norheld invalid by a court, tribunal, arbitrator or governmental agency ofcompetent jurisdiction in a final or unappealed or unappealable decision.

# **3.             UNIVERSITY CONSENT AND APPROVAL**

## 3.1                                 **UniversityApproval. **Licensor has delivered to the Universitya copy of this Agreement, and received the University’s written approval of thesublicense in the Licensor Patent Rights granted herein, and has providedLicensee with a complete and accurate copy of such written approval.

## 3.2                                 **Consentand Acknowledgement. **Licensorhas received from the University a Consent and Acknowledgement providing that,to the extent that any of the University Provisions are inconsistent with anyprovision of the University License, the University Provisions shall control,and that Licensee shall be a third party beneficiary of such Consent andAcknowledgement.  Licensor has provided Licenseewith a complete and accurate copy of such Consent and Acknowledgement.

# **4.             LICENSE**

## 4.1                                 **Grant.**  Subject to the terms of this Agreement andLicensee’s obligations arising therefrom, Licensor hereby grants, effectiveupon Closing, to Licensee and its Affiliates an exclusive, royalty-bearinglicense, under the Licensor Patent Rights to import, develop, have developed,make, have made, use, offer for sale and sell Product for the MenopauseIndications in the Territory.

## 4.2                                 **Sublicensing**. Licensee shall have the right to Sublicense its rights to the LicensorPatent Rights, but solely to the extent such Sublicense is consistent with thefollowing limitations:

### 4.2.1                        Licenseeis responsible for its Sublicensees and must not grant any rights that areinconsistent with the rights granted to and obligations of Licenseehereunder.  Any act or omission of aSublicensee that would be a breach of this Agreement if performed

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### by Licensee will be deemed to be a breach by Licensee of thisAgreement.

### 4.2.2                        EachSublicense granted by Licensee must provide that the obligations of Licensee to(i) University in the University Provisions and (ii) Licensor in this Agreementshall be binding upon the Sublicensee as if it were a party to this Agreement.

### 4.2.3                        NoSublicense may contain any provision that would cause the sublicensed rights tothe Licensor Patent Rights to extend beyond the term of this Agreement or toextend outside the scope of the license granted to Licensee in this Agreement.

### 4.2.4                        Anyand all Sublicenses granted by Licensee are subject to the prior approval ofLicensor and University; such approval will not be unreasonably withheld,delayed or conditioned, and shall be deemed granted unless Licensor orUniversity reasonably report within 30 (thirty) business days of its receipt ofsuch sublicense that such Sublicense is unacceptable.

### 4.2.5                        NoSublicensee shall have the power to grant a sublicense under any Sublicense.

### 4.2.6                        Licenseemust promptly give Licensor and University the name and address of eachSublicensee with whom it concludes a Sublicense, and must forward to Licensorand University a copy of each executed Sublicense within thirty (30) days ofthe date of execution of such Sublicense.

## 4.3                                 **Research License. **The license granted to Licensee herein is subject to andrestricted by a reserved non-exclusive license, with the right tonon-exclusively sublicense, to non-profit institutions for research purposesonly, to University to make, have made, and use, but not to sell or have sold,or license others to sell or have sold, Products.

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# **5.             CONSIDERATION**

As partial consideration for the rightsand licenses granted to Licensee in this Agreement, Licensee agrees to pay thefollowing, subject to the provisions of Section 10.1:

## 5.1                                 **License Issue Fee.** Licensee shall pay to Licensor a one-time, non-refundable,non-creditable license issue fee of five hundred thousand US dollars ($500,000)on the Effective Date, fifty thousand US dollars ($50,000) of which has beenpaid pursuant to the letter of intent between the Parties dated as of June 22,2006.

## 5.2                                 **Development Milestone Payments**. Milestone payments, when made, will be non-refundable, non-recoupableand non-creditable.  Each milestonepayment will be payable only once no matter how many Products attain suchspecified milestone events.  Each paymentis dependent upon the reaching of the specified milestone event.  In addition to (and not in lieu of) royaltypayments due under this Agreement, Licensee will pay Licensor the followingone-time development milestone payments no later than forty-five (45) daysfollowing the occurrence of each of the events listed below:

### 5.2.1                        **Five Hundred ThousandUS dollars ($500,000)**upon the dosing with Product of the first patient in the first Phase IIIClinical Study conducted by or on behalf of Licensee or any of its Affiliates; *provided, however*, that in the eventthis milestone has not been reached by April 1, 2008, Licensee shall payLicensor $100,000 (one hundred thousand dollars) monthly towards such milestone(up to a maximum of $500,000) until the milestone is reached whereupon thebalance of the milestone shall be immediately paid to Licensor.

### 5.2.2                        **One Million US Dollars ($1,000,000)** upon submission forreview by the FDA of the first NDA for Product in the Territory;

### 5.2.3                        **Two Million US Dollars($2,000,000)** upon receipt ofthe first Regulatory Approval for Product in the United States.

 

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### 5.2.4                        Licensorwill be solely responsible for, and will satisfy in a timely manner, allmilestone payments and royalty obligations agreed by Licensor and University inthe University License.

## 5.3                                 **Royalties.** Licensee shall pay on a quarterly basis to Licensor royalties on all NetSales occurring during the Term in the Territory in an amount comprising thefollowing:  [*  *  *].  AggregateAnnual Net Sales shall be calculated on a calendar year basis.

## 5.4                                 **Commercial Milestone Payments.** Licensee shall pay Licensor the following one-time commercialmilestone payments, up to a maximum cumulative amount of [* *  *] in payments underthis Section 5.4 during the Term, upon Licensee’s achievement of each of thefollowing Aggregate Annual Net Sales targets as follows:  [*  *  *].  For example, [*  *  *].

## 5.5                                 **Revenue Sharing Payments.**

### 5.5.1                        Licenseeshall pay Licensor [*  *  *]percent [*  *  *] ofall revenues received by Licensee or its Affiliates in connection with sales ofProduct by Third Parties with whom Licensee has entered into a Sublicense or anagreement for the development, promotion, distribution or marketing of Product(“**Revenue Sharing Payments**”), suchRevenue Sharing Payments shall not exceed the amount which would be due asroyalties on such sales under Section 5.3 if such sales were made by Licenseeor its Affiliate.  Revenue Sharingpayments for sales of Product by Third Parties shall equal the amount whichwould be due as a royalty on such sales under Section 5.3 as if such productsales had been made by Licensee if Licensee has an ownership interest (whetherdirect or indirect) exceeding twenty percent (20%) in such Third Party.

### 5.5.2                        Licenseeshall pay Licensor [*  *  *] percent[* *  *] of any sub-licensefees, milestone payments and other revenues received by

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* * *  Portions of this page have been omittedpursuant to a request for Confidential Treatment and filed separately with theCommission.

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### Licensee as aresult of sub-licensing the rights to the Licensor Patent Rights or enteringinto co-development or marketing agreements with any Third Party.

## 5.6                                 **Consultancy Retainer.** Licensee will pay to Licensor consultancy fees of three hundred thousandUS dollars ($300,000) in consideration for the provision of consulting servicesby Licensor in the amountof up to 150 person-days in support of the development of the Product. Suchconsultancy shall be performed, and Licensor’s related expenses shall bereimbursed, pursuant to Licensee’s standard form of consulting agreementconsistent with the terms of this Agreement; provided, however that Licenseeshall pay Licensor such consultancy fees in monthly installments, commencing onthe Effective Date, of thirty thousand US dollars ($30,000), and such paymentsshall be reconciled on a quarterly basis against consulting services actuallyperformed.  The consulting services undersuch consulting agreement shall be performed by employees and/or advisors andconsultants of Licensor.

## 5.7                                 **Payment and Reports.** Payments owed pursuant to Sections 5.3 — 5.5 shall be paid by Licenseeto Licensor not later than forty-five (45) calendar days following the end ofthe Quarter in which the obligation to make such payment accrues.  Each royalty payment made pursuant to Section5.3 will be accompanied by a report in writing (the **“Royalty Report”**) specifying the Quarter to which such royaltypayment applies and detailing the calculation of the royalties due to Licensorfor such Quarter (including total invoiced amount and the total amount of thedeductions from such total invoiced amount which were taken into account indetermining Net Sales).

### 5.7.1                        **Records**. Licensee will keep, and will require any of its Affiliates andSublicensees selling Product to keep, for five (5) years from the date of eachpayment of royalties, complete and accurate records of Net Sales of eachProduct in sufficient detail to allow the royalties to be determinedaccurately.  Licensor will have the

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### right for a period of five (5) years after receiving any report orstatement with respect to royalties due and payable or after delivery of suchreport is required, to appoint an independent certified public accountant withnational presence and reputation that is not Licensor’s auditor to inspect therelevant records to verify such report or statement.  Licensee will make its records and therecords of its Affiliates available (including any Net Sales reports receivedfrom its Sublicensees selling Products) for inspection by such independentcertified public accountant during regular business hours at such place orplaces where such records are customarily kept, upon reasonable notice from theother Party, to verify the accuracy of the reports and payments.  Such inspections may occur not more than onceper calendar year.  No period may beaudited more than one time pursuant to this Section 5.7.1.  The Party requesting the audit will bear allcosts and expenses associated with an audit conducted pursuant to this Section5.7; *provided, however*, that ifthe designated auditor discovers an underpayment of 5% or more for any yearbetween the amount of any royalties Licensee has paid to the Licensor underthis Agreement, and the amount of royalties actually owed to Licensor underthis Agreement, then Licensee shall bear all costs and expenses associated withsuch audit.  Licensor agrees to hold inconfidence all information concerning royalty payments and reports of Licensee,and all information learned in the course of any audit or inspection, except tothe extent necessary for Licensor to (i) reveal such information in order toenforce its rights under this Agreement, (ii) to provide requiredinformation to University pursuant to the University License; or (iii) makesuch disclosure as is required by Law. The results of each inspection, if any, will be binding on bothParties.  Licensee will requiresubstantially the

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### same audit rights in any Sublicense it grants hereunder in order toverify the correctness of payments due thereunder.

## 5.8                                 **Withholding Taxes.**  In the event any of the payments made byLicensee pursuant to this Section 5 become subject to withholding taxes underthe Laws of any jurisdiction, Licensee shall deduct and withhold the amount ofsuch taxes for the account of Licensor to the extent required by Law.  Amounts payable to Licensor shall be reducedby the amount of taxes deducted and withheld, and Licensee shall pay theamounts of such taxes to the proper Government Authority in a timely manner andshall promptly transmit to Licensor an official tax certificate or otherevidence of such tax obligations together with proof of payment from therelevant Government Authority of all amounts deducted and withheld sufficientto enable Licensor to claim such payment of taxes.  Any such withholding taxes required underapplicable Law to be paid or withheld shall be an expense of, and borne solelyby, Licensor.  Licensee will provideLicensor with reasonable assistance to enable Licensor to recover such taxes aspermitted by Law.

## 5.9                                 **No Multiple Royalties**.  No multiple royalties under Section 5.3 shallbe payable because the Product, its manufacture, use or sale is or shall becovered by more than one Licensor Patent Right.

# **6.****                                     ****PRODUCT DEVELOPMENT:   COLLABORATION COMMITTEE**

## 6.1                                 **Product DevelopmentObligations.**  Licensee shall have control over developmentand Commercialization in the Territory of the Product throughout the Term.  Licensee (itself or through an Affiliate orThird Party) will be responsible for determining which form(s) of Products todevelop, the design and completion of formulation activities, and pre-clinicaland clinical studies in the Territory. Licensee will bear all the expenses for Product development activities.

## 6.2                                 **ProductDevelopment Diligence Obligations**.

### 6.2.1                        Licensee,during the Term, agrees to use DiligentEfforts to proceed with the development, manufacture, and

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### Commercializationof Product(s) consistent with a First Commercial Sale of Product on or before [*  *  *],either by itself or through Affiliate(s), Third Parties, orSublicensee(s).  Subject to theobligations set forth in the immediately preceding sentence and with respect tothe development of Product, the Parties acknowledge that it is in their mutualinterest to cause the First Commercial Sale of Product to occur on or before [* *  *], and that thedevelopment target dates set forth in Exhibit B reflect the Parties’desire to cause the First Commercial Sale of Product to occur by that date,provided that all of the assumptions set forth in Exhibit B prove to becorrect in all material respects.  TheParties acknowledge that the dates set forth in Exhibit B are targetdates, and may not be achieved for reasons that include without limitation thefollowing:  (i) the inaccuracy of any ofthe assumptions set forth in Exhibit B; (ii) recommendations orrequirements of the FDA relating to the Product; (iii) delays in thedevelopment of the Product arising from issues related to intellectualproperty, safety, clinical trial enrollment, manufacturing, or supply.  Subject to the qualifications set forth inthe immediately preceding sentence, Licensee additionally agrees to useDiligent Efforts to meet the Product development target dates set forth in ExhibitB.

### 6.2.2                        TheParties acknowledge and agree that in the event that Licensee determines thatany of the target dates set forth in Exhibit B is not reasonablyachievable notwithstanding Licensee’s compliance with Section 6.2.1, and thefailure to achieve such target date is reasonably likely to  delay the First Commercial Sale of theProduct beyond [*  *  *],then Licensor and Licensee shall meet and confer with University regardingLicensee’s development program with respect to the Product, and request thatLicensor’s

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* * *  Portions of this page have been omittedpursuant to a request for Confidential Treatment and filed separately with theCommission.

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### obligation inthe University License to cause the First Commercial Sale of the Product tooccur on or before [*  *  *] be extended for a period of time equal tothe delay in the First Commercial Sale likely to be caused by the failure toachieve such target date.  The Partiesacknowledge that University’s decision not to agree to any such extension willrequire a reasonable determination on the part of University that Licensee isnot diligently pursuing the development of the Product, and that a Third Partycould develop and commercially launch an alternative formulation of the Product(including without limitation an immediate release formulation) more rapidlythan Licensee.   Any extension beyond [* *  *] of the deadline tocause the First Commercial Sale of the Product to occur under the UniversityLicense will have the effect of extending the [*  *  *] target date set forth above anequivalent period of time.

### 6.2.3                        Licensee acknowledges and agrees that in connection with any assumption orassignment of this Agreement by University, Licensee’s obligations with respectto the development and Commercialization of the Product in the Territory shallbe as set forth in Article 6 of the University License, as set forth therein onthe date hereof (or as amended in accordance with the written approval ofLicensee subsequent to the date hereof), and such provisions shall supersedethe provisions of Section 6.2.1 above.

### 6.2.4                        TheParties further agree that in the event that the First Commercial Sale ofProduct occurs before [*  *  *],then, if requested in writing by Licensee within six (6) month following theFirst Commercial Sale of Product, the Territory shall thereafter during theTerm additionally include Canada, and the Parties shall negotiate in good faithLicensee’s obligations in respect of the

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* * * Portions of this page have been omitted pursuant to a request forConfidential Treatment and filed separately with the Commission.

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### developmentand Commercialization of the Product in Canada, and, if agreed by the Parties,set forth such obligations in an amendment to this Agreement.

## 6.3                                 **Collaboration Committee. **Within thirty (30) days after the Effective Date, the Parties will forma joint committee (the “**CollaborationCommittee**”), which will meet at least monthly until the initiationof Phase III Clinical Trials and, thereafter, no less frequently than quarterlyuntil Regulatory Approval is obtained. The Collaboration Committee will be composed of at least two, but notmore than four, representatives from Licensee or its Affiliates and at leastone, but no more than three, representatives from Licensor.  The chairperson of the CollaborationCommittee will be one of Licensee’s representatives.  The Collaboration Committee may request that otheremployees or consultants of Licensee or Licensor or their Affiliates attend itsmeetings to present information or participate in discussions on an *ad hoc* basis as it deems appropriate.  Participation by representatives of Licensorin the Collaboration Committee shall constitute consulting services provided byLicensor to Licensee.  The CollaborationCommittee will review and discuss the activities of the Parties with respect toProduct development, and plans for obtaining Regulatory Approvals, Licenseewill also inform the Collaboration Committee at its meeting of then-currentCommercialization plans.  TheCollaboration Committee may meet in person or by telephone or video conference.  Each party will bear its own costs arisingfrom or associated with travel for the purpose of attending such meetings,except that Licensor’s attendance at such meetings may be considered consultingservices for purposes of the consultancy arrangement contemplated by Section5.6.

## 6.4                                 **Trademarks.** Licensee will determine which trademark or trademarks will be used inmarketing Products in the Territory.

## 6.5                                 **Patent Marking**. Licensee must mark, and must require any Affiliate or Sublicensee tomark, any and all material forms of Products or packaging

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## pertaining thereto sold by Licensee (and/or by its Affiliates orSublicensees) in the Territory with an appropriate patent marking identifyingthe Licensor Patent Rights.

## 6.6                                 **Use of Regulatory Data.** Licensee shall have the right to use any Regulatory Data concerning theProduct, which Regulatory Data is owned or controlled by Licensor or itsAffiliates, at any time after the Effective Date for the purpose of obtainingor maintaining Regulatory Approval of the Product in the Territory.  Licensor shall (i) provide to Licensee all ClinicalInformation in its possession not later than ten (10) days after the EffectiveDate, and (ii) on a periodic basis during the Term, but not less frequentlythan quarterly, provide to Licensee any and all additional Regulatory Datacreated subsequent to the Effective Date that is owned or controlled byLicensor or its Affiliates.

## 6.7                                 **Licensee RegulatoryData.**  All Regulatory Data concerning Product andcreated by or on behalf of Licensee or its Affiliates pursuant to the Programshall be owned by Licensee.  NeitherLicensor nor University shall have any interest in or to any such RegulatoryData.

# 7.**                                       COMMERCIALIZATION****.**

## 7.1                                 **Commercialization.** Licensee (itself or through an Affiliate) will be responsible for sales,marketing and promotional activities for Products in the Territory and willbear related expenses (although such activities may be performed through anAffiliate or Third Party).

## 7.2                                 **Covenant**. In the event that Licensee or its Affiliate Commercializes in theTerritory a pharmaceutical product containing API other than Product, Licenseeshall not Commercialize, and shall cause its Affiliates not to Commercialize,such product in a way that materially and adversely affects theCommercialization of Product.

## 7.3                                 **Unauthorized Sales.** To the extent legally permissible, Licensor shall, and shall cause itsAffiliates to, ensure that any licensee or sublicense of the Licensor PatentRights (or any associated foreign patent rights) outside of the Territory usescommercially reasonable efforts to prevent the

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## exportation of the Product from outside of the Territory for salewithin the Territory.  Licensor shallnot, and shall cause its Affiliates not to, license any of the Licensor PatentRights (or any associated foreign patent rights) to any Third Party or entitywhom Licensor or one of its Affiliates has reason to believe may export or who,to the knowledge of Licensor or one of its Affiliates, has in the pastexported, or permitted the exportation of, the Product from outside of theTerritory for sale within the Territory (any such sale, an **“Unauthorized Sale”**).  Licensor shall promptly use commerciallyreasonable efforts to take any action reasonably available to Licensor or oneof its Affiliates, and shall within sixty (60) days after any Unauthorized Salehas come to the attention of Licensor or one of its Affiliates, initiate allcommercially reasonable steps which are lawfully available to Licensor in theTerritory, to prevent such Unauthorized Sales.

## 7.4                                 **Cancer ProductDevelopment and Promotion Arrangement.**  Licensee acknowledges that thisAgreement does not grant Licensee any right to import, develop, have developed,make, have made, use, offer for sale and sell Product for the CancerIndications.  During the [*  *  *]-monthperiod beginning on the Effective Date, Licensee and Licensor agree tonegotiate in good faith an arrangement whereby Licensee would develop onLicensor’s behalf a formulation of Gabapentin GR for the Cancer Indications andprovide Licensor with a supply of such Gabapentin GR formulation for theclinical development of a Cancer Product (“**PromotionAgreement**”).  Any suchPromotion Agreement shall be subject to the execution and delivery of adefinitive agreement providing for such an arrangement that is acceptable toeach Party in its sole discretion.

# **8.****                                     ****OWNERSHIP AND INTELLECTUALPROPERTY**

## 8.1                                 **Intellectual PropertyOwnership.**  Subject to the license granted herein, allrights, title and interest in intellectual property held by a Party to this

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## Agreement prior to theEffective Date shall continue to be owned by such Party.  All intellectual property (i) relating toProduct developed or funded by Licensee and its Affiliates or developed byLicensor pursuant to its consulting services under Section 5.6, shall be andremain the property of Licensee.  Allintellectual property relating to drug delivery or gastric retention inconnection with, or compositions or uses of, Licensee’s Gabapentin GR innon-nociceptive pain shall be owned by Licensee.

## 8.2                                 **Patent Prosecution.** As between the parties, Licensor shall be responsible for ensuring theprosecution and maintenance of patents within the Licensor Patent Rights.  Each Party shall be responsible for the fullcosts of and responsibility for preparing, filing and prosecuting, in its solediscretion, patent applications for inventions owned by it as provided herein.

## 8.3                                 **Trademarks.** Licensorwill have no interest in any trademarks used in commercializing the Product inthe Territory.

## 8.4                                 **Cooperation.** Each Party will cooperate, and will cause its employees, consultants andsubcontractors to cooperate, with all reasonable requests of the other Partyfor assistance in preparation and prosecution and maintenance of anyapplications for patent and any patent issuing therefrom.  Each Party will sign documents to vest ormaintain title to patents in the owner determined in accordance with thisArticle 8.

## 8.5                                 **Licensed Patents.** Licensor shall ensure that (i) all patents within the Licensor PatentRights are maintained, and the fees required for such purpose by the US Patentand Trademark Office are promptly and timely paid, and (ii) such patentextensions or restorations of patent terms as may become available from time totime regarding patents within the Licensor Patent Rights are obtained.  Licensor will keep Licensee fully informed ofall prosecutions and other actions pursuant to this Article 8, including bypromptly submitting to Licensee copies of all official actions and responsesthereto.  Licensee shall have reasonableopportunities to provide comments to Licensor or University, as applicable.  Licensor shall

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## consider in good faith any such comments.  University shall have no obligation to acceptsuch comments, with respect to the preparation, filing, and prosecution of thepatents and patent applications contained in the Licensor Patent Rights.

# **9.****                                     ****INFRINGEMENT BY OR CLAIMS AGAINSTTHIRD PARTIES**

## 9.1                                 **Notices.** Each Party will advise the other promptly upon its becoming awareof:  (a) any unlicensed activities whichsuch Party believes may be an actual or impending infringement in the Territoryof any patent or other proprietary right owned or applied for by it or theother Party and related to the Product or the development, manufacture, use,importation, or sale thereof; (b) any attack on or appeal of the grant of anypatent owned or applied for by it or the other Party in the Territory andrelated to the Product or the development, manufacture, use or sale thereof;(c) any application for patent by, or the grant of a patent to, a Third Partyin the Territory in respect of rights which may be related to the Product so asto potentially affect the development, manufacture, use, importation, or saletherefore or which may claim the same subject matter as or conflict with anypatent owned or applied for by it or the other Party and related to the Productor the development, manufacture, use, importation or sale thereof.

## 9.2                                 **Control of Actions.**

### 9.2.1                        Inthe event of an alleged infringement or patent invalidity action concerning anyof the Licensor Patent Rights, the Parties shall meet to discuss in good faithan appropriate course of action to defend the intellectual property and toprevent any infringement of these rights.  Licensor and Licensee shall then meet with University to discuss sameand attempt to secure the University’s agreement to the Parties chosen courseof action.  As between Licensor andLicensee, Licensee shall have the first right, but not the obligation, toprosecute alleged infringement actions against Third Parties and defend againstinfringement or patent invalidity actions against the Parties or University.  The Parties acknowledge

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### that beforeLicensee may commence an infringement action or defend against a declaratoryjudgment action, counterclaim or affirmative defense alleging non-infringementor invalidity of the Licensor Patent Rights, University must first grant itspermission to initiate such an action. Pursuant to the Consent and Acknowledgement: University has agreed, withrespect to any such suit, (i) not to unreasonably withhold, delay or conditionits permission to initiate or settle such an action and (ii) in any actionas to which University’s consent is granted to permit Licensee to join theUniversity in such suit.  ShouldUniversity be made a party to any such suit which Licensee elects to initiateor defend on behalf of the University (but not any such suit which Universityelects to initiate or defend), Licensee must reimburse University for anyreasonable costs, expenses, or fees that University incurs as a result of suchsuit, including any and all costs incurred by University in opposing any suchmotion or other action.  If requested byUniversity, Licensee shall advance such costs on a monthly basis.  Upon Licensee’s payment of all costs incurredby University as a result of Licensee’s joinder motion or other action, theseactions by Licensee will not be considered a default in the performance of anymaterial obligation under this Agreement. In all cases, Licensee will keep University and Licensor reasonablyapprised of the status and progress, and will collaborate with respect to theprosecution or defense, of any litigation prosecuted or defended byLicensee.  The University may, at its ownexpense, retain separate counsel to participate in any such action orproceeding in which it is or is reasonably likely to become a party so that itcan control its own prosecution or defense, but the University shall still beobligated to collaborate, as appropriate, with Licensee and Licensor.  Licensor and Licensee each agree that it willnot, without the prior written consent of the University,

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### settle,compromise or consent to the entry of any judgment in any action or proceedingrelated to the matters contemplated in this section.

### 9.2.2                        Inany action commenced or defended pursuant to Section 9.2.1 by Licensee, theexpenses of Licensee, including costs, fees, attorney fees, and disbursements,must be paid by Licensee.  Any recoverymade by Licensee from such action, through court judgment or settlement, mayfirst be applied to reimburse Licensee for its litigation expenses with respectto all such actions;****[* *  *] percent [* *  *] of any remainingrecoveries shall be paid to Licensor.

# **10.****                              ****INFRINGEMENT OF THIRD PARTYRIGHTS**

## 10.1                           **Third Party Claims.** In the event of a judgment in any suit in which a Third Party assertspatent rights covering the use of API for Menopause Indications, which judgmentrequires Licensee to pay damages or a royalty in respect of the Product to suchThird Party or in the event of a settlement of such suit or threatened suitconsented to by Licensor (which consent shall not be unreasonably withheld)requiring damages or royalty payments to be made in respect of the Product, thepayments thereafter due to Licensor pursuant to Sections 5.2, 5.3, 5.4, 5.5 and5.6 shall be reduced by an amount equal to no greater than [*  *  *]percent [*  *  *] of the full amounts due under Sections5.2, 5.3, 5.4, 5.5 and 5.6, as applicable, until the cumulative amount of suchreductions equals the full amount of such damages or royalties actually paid byLicensee to such Third Party; *provided,however*, this Section 10.1 shall not apply with respect to ThirdParty patent rights unless the use of Product for Menopause Indications, asopposed to any other indication, is a necessary element of the infringement ofsuch patent rights; and *provided further*,that Licensor shall not be required to return, or forego payment of,

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## amounts previously accrued or any of the payments previously made byLicensee to Licensor.

# **11.****                              ****REPRESENTATIONS AND WARRANTIES**

## 11.1                           **Representations andWarranties of Both Parties.**  Licensor and Licensee eachhereby represents and warrants to the other, as of the Effective Date as follows:

### 11.1.1                  It is a corporation, duly organized,validly existing and in good standing under the laws of the jurisdiction of itsincorporation and has all requisite power and authority, corporate orotherwise, to conduct its business as now being conducted, to own, lease andoperate its properties and to execute, deliver and perform this Agreement.

### 11.1.2                  Neither it, nor any of its employees orconsultants who shall be undertaking any activities related to this Agreementor the subject matter thereof, has been debarred or is the subject of debarmentor other disciplinary proceedings by the FDA or any Regulatory Authority in theTerritory.

### 11.1.3                  No consent, approval, order orauthorization of, or registration, declaration or filing with, any governmentalagency is required to be obtained or made by or with respect to such party inconnection with its execution, delivery and performance of this Agreement.

### 11.1.4                  The execution, delivery and performanceby it of this Agreement and the transactions contemplated thereby have beenduly authorized by all necessary corporate action and stockholder action andwill not (i) violate any applicable laws or regulations or (ii) result in abreach of or constitute a default under any material agreement, mortgage,lease, license, permit or other instrument or obligation to which it is a partyor by which it or its properties may be bound or affected; *provided,however*, that the Parties acknowledge that terms of thisAgreement, with respect to any

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### Sublicense of the Licensed Patent are subject to the approval ofUniversity.

### 11.1.5                  This Agreement is a legal, valid andbinding obligation of such Party, enforceable against it in accordance with itsterms and conditions, except as such enforceability may be limited byapplicable bankruptcy, insolvency, moratorium, reorganization or similar Laws,from time to time in effect, affecting creditors’ rights generally and generalprinciples of equity.

### 11.1.6                  It is not under any obligation to anyThird Party, contractual or otherwise, that conflicts with the terms of thisAgreement or that limits the rights of such party to fulfill its obligationshereunder.

## 11.2                           **Representations andWarranties of Licensor.**  Licensor hereby represents and warrants toLicensee, as of the execution date of this Agreement, as follows:

### 11.2.1                  Licensor owns or has (and will for theterm of any such grant hereunder maintain) the lawful right to grant thelicense rights granted herein.

### 11.2.2                  To Licensor’s knowledge, the use of anyright in the Licensor Patent Rights granted hereunder does not infringe anyright of a Third Party.

### 11.2.3                  Licensor hasnot received any notice or other communication, written or oral, from University regarding anybreach by Licensor ofits obligations under the UniversityLicense.

### 11.2.4                  Licensor hasprovided Licensee with a complete, current, and accurate copy of the University Licensesubject only to redaction of certain financial terms related to Licensor’spayment of an initial license fee to University set forth in Section 8.1thereof.  Licensor has also providedLicensee with copies of all amendments and modifications to the UniversityLicense and will provide to Licensee such future amendments and modificationsto the University License as are entered into during the Term.

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### Licensorhas provided Licensee with true and complete copies of all materialcorrespondence between Licensor and University concerning the UniversityLicense received or sent by Licensor subsequent to the initial execution of theUniversity License.

### 11.2.5                  Licensor has carried out allrequirements under the University License that are necessary to enable it tovalidly grant sublicenses to Licensee pursuant to the terms thereof, and thatthere are no other requirements necessary to enable Licensor to validly grantsublicenses under the University License.

### 11.2.6                  Subject to such rights as the Universitymay have granted to Third Parties in the Licensed Patent with respect toproducts not containing API, no Third Party other than University has anyrights, title or interest in or to the Licensor Patent Rights.

### 11.2.7                  Licensor has received no notice ofdefault under the University License and Licensor is not in default and thereare no circumstances existing as of the Effective Date which constitute adefault under the University License.

### 11.2.8                  The University License is a legal, validand binding agreement, enforceable in accordance with its terms except asenforceability may be limited by bankruptcy, fraudulent conveyance, insolvency,reorganization, moratorium and other Laws relating to or affecting creditors’right generally and by general equitable principles.

### 11.2.9                  Other than the University License,Licensor is not a party to any material agreement, contract or commitmentpertaining to the Product in the Territory.

## 11.3                           **MUTUAL LIMITATIONS ONWARRANTIES.**  OTHER THAN THE REPRESENTATIONS AND WARRANTIESMADE BY THE PARTIES PURSUANT TO SECTION 11, THE PARTIES DISCLAIM ANY AND ALLOTHER WARRANTIES WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANYWARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A

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## PARTICULAR PURPOSE OR ANY WARRANTY ARISING FROM COURSE OF DEALING ORUSAGE OF TRADE.

# **12.****                              ****COVENANTS**

## 12.1                           **Covenants of theParties.**

### 12.1.1                  Throughout the Term, Licensor andLicensee will comply in all material respects with all applicable Lawsconcerning the development, manufacture, use and sale of the Products.

### 12.1.2                  Each of Licensor and Licensee willpromptly advise the other if it becomes aware of any information which relatesto fatal, life threatening or other serious adverse events associated withProduct (“**Adverse Event Information**”).  Each Party shall advise the other Party ofsuch Adverse Event Information by telephone, telex or other instantaneousmethod of communication and shall within fifteen (15) days thereafter providewritten confirmation of such Adverse Event Information.

### 12.1.3                  **Noncompetition**.  During the Term, neither Licensor nor any ofits Affiliates shall, whether for its own account or for the account or benefitof any Third Party, develop, offer for sale, sell, distribute or otherwiseCommercialize in the Territory any product, including but not limited toPharmaNova Product, that includes the API (including without limitation bylicensing intellectual property rights to a Third Party for the purpose ofdeveloping, offering for sale, distributing, or otherwise Commercializing aproduct that includes the API in the Territory), other than pursuant to anyPromotion Agreement entered into pursuant to Section 7.3.

### 12.1.4                  **Covenant****Not To Sue**.  On its own behalf, and on behalf of itsAffiliates, Licensor covenants and agrees that with respect to any Applicable Patents (as defined below)it will not sue or otherwise bring any proceeding or enforcement procedureagainst Licenseeor its Affiliates for infringement based on the manufacture, use, sale, offerfor sale or import of any Product in the Territory during

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### the Term provided that (i) such Product wasmade or sold by Licensee, its Affiliates or Sublicensees under the licenserights granted hereinand (ii) all applicable accrued royalties hereunder whichare not disputed by Licensee have been timely paid.  Nothing in this Section 12.4.1 shall limitLicensor’s rights or remedies under this Agreement.

#### 12.1.4.1                      Nothing in thisSection 12.1.4 shall affect Licensor’s rights against any person or entityother than Licenseeor its Affiliates or Sublicensees.

#### 12.1.4.2                      For purposes of this Section 12.1.4,  “**ApplicablePatents**” means all Patent Rights  (i)which as of the Effective Date are owned or controlled by Licensor or any ofits Affiliates, (ii) which as of the Effective Date Licensor or any of itsAffiliates has the right to enforce; or (iii) which cover the manufacture, use,sale, offer for sale or import of API for Menopause Indications and which Licensoror any of its Affiliates own or control or have the right to enforce at anytime following the Effective Date.

### 12.1.5                  **Further Assurances**. The Parties will execute and deliver any further or additionalinstruments or documents and perform any acts which may be reasonably necessaryin order to effectuate and carry out the purposes of this Agreement.

### 12.1.6                  During the Term, Licensor shall not (i)amend so as to alter or impair Licensee’s right in the Licensor Patent Rightsgranted hereunder, alter Licensee’s obligations hereunder, or adversely affectthe anticipated benefits to Licensee hereunder (ii) terminate, or (iii) causeto be terminated, the University License without the prior written consent ofLicensee, which consent shall not be unreasonably withheld.

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### 12.1.7                  Licensor shall not exercise or fail toexercise any of Licensor’s material rights or obligations under the UniversityLicense to the extent such exercise or failure to exercise would materiallyalter the obligations or anticipated benefits of Licensee under this Agreement,without the prior written consent of Licensee, such consent not to beunreasonably withheld.

### 12.1.8                  Licensor will comply with allobligations and duties under the University License (including any provisionsnecessary to maintain in effect any rights granted to Licensee hereunder and,if applicable, the exclusive nature of such rights, including the preservationof Licensee’s rights hereunder in the event that Licensor shall breach ordefault on its obligations under the University License) to the extent afailure to do so would have or could reasonably be expected to have a materialadverse effect on the obligations or anticipated benefits of Licensee underthis Agreement.

### 12.1.9                  If Licensor should at any time breach ordefault on the University License or become unable to timely perform itsobligations thereunder, or receive notice that it may be, is or is deemed to bein breach or default of the University License or has otherwise given rise to aright on the part of the University to terminate Licensor’s license in whole orin part, Licensor shall immediately notify Licensee, and, if Licenseereasonably believes, following consultation with Licensor, that Licensor willnot be able to cure such breach or default within the applicable notice period,Licensee shall be permitted to attempt to cure such breach or default on behalfof Licensor in accordance with the terms and conditions of the UniversityLicense, or to otherwise attempt to resolve such breach or default jointly withLicensor and University.

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# **13.****                              ****CONFIDENTIAL INFORMATION**

## 13.1                           **Confidentiality.**

### 13.1.1                  Each Party agrees that during the Termand at all times thereafter, it shall use all commercially reasonable effortsto keep, and cause its Affiliates and Sublicensees, if any, to keepconfidential all Confidential Information of the other Party, and neither Partynor any of its Affiliates or Sublicensees, if any, will use or disclose theConfidential Information of the other Party except as expressly permitted inthis Agreement.  All informationdisclosed pursuant to the Confidentiality Agreement will be deemed ConfidentialInformation of the disclosing Party within the meaning of this Agreement andsubject to the terms hereof. Notwithstanding the foregoing the Party receiving ConfidentialInformation of the other Party may (i) disclose it to government agenciesand others where such information may be required to be included in patentapplications or regulatory filings permitted under the terms of this Agreement;(ii) provide it to Third Parties under agreements including confidentialityprovisions substantially equivalent to those in this Agreement for consulting,market research, manufacturing, development, and preclinical and clinicaltesting with respect to the Products and similar activities under the Program;or (iii) publish it if and to the extent such publication has been approved inwriting by the disclosing Party.  In eachof the foregoing cases, the receiving Party will use diligent efforts to limitthe disclosure and maintain confidentiality to the extent possible.

### 13.1.2                  The fact that a particular item ofinformation is not or has ceased to be Confidential Information by virtue ofone or more of the exclusions specified in the definition of ConfidentialInformation set forth in Section 2.9 (the “**ExcludedItem**”) shall not relieve the Party who obtained or received theExcluded Item from that

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### Party’s obligation of confidentiality and non-use (a) as to any otheritem of Confidential Information of the other Party or (b) as to therelationship of the Excluded Item to any other item of Confidential Informationof the other Party.

### 13.1.3                  Each Party hereby acknowledges that theConfidential Information of the other Party is highly valuable, proprietary andconfidential and that any disclosure to any officer, employee, or agent of suchParty or any of its Affiliates will be made only to the extent necessary tocarry out its responsibilities under this Agreement and only if such officer,employee or agent is informed of the confidential nature thereof and shall haveagreed to hold such information in confidence under confidentiality provisionsat least as stringent as those provided in this Agreement.

### 13.1.4                  The Parties agree that the obligationsof this Section 13 are necessary and reasonable in order to protect the Parties’respective businesses, and that monetary damages alone may be inadequate tocompensate a Party for any breach by the other Party of its covenants andagreements set forth herein.  The Partiesagree that any breach or threatened breach of this Section 13 may causeirreparable injury to the injured Party for which Damages may not be anadequate remedy and that, in addition to any other remedies that may beavailable, in law and equity or otherwise, such Party will be entitled to seekequitable relief against the breach or threatened breach of the provisions ofthis Section 13.

### 13.1.5                  Following termination of this Agreementfor any reason and at the request of the other and except as provided to thecontrary herein, each Party will destroy all physical records or embodiments ofConfidential Information of the other Party or return such information to theother Party, at the returning Party’s expense, and a senior officer of suchParty shall certify to the other Party that all such items have been soreturned or destroyed; *provided*, *however*,

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### that each Party will be entitled to maintain one copy of theConfidential Information of the other Party solely for the purpose ofmonitoring its continuing obligations hereunder.

## 13.2                           **Disclosure toInvestors; Public Announcements.**  The Parties have agreed on aninitial press release of the transaction contemplated by this Agreement (the “**Initial Press Release**”).  The Initial Press Release may be issued orused by each or any Party individually or by the Parties jointly after Licensor’sgrant of the License to Licensee.  Otherthan the Initial Press Release, neither Party will originate any publicity,news release or public announcement, written or oral, whether to the public,the press, stockholders or otherwise, disclosing the existence of thisAgreement, the subject matter to which it relates, the performance under it orany of its specific terms and conditions without the prior written approval ofthe other Party, except such announcements, as in the opinion of the counselfor the Party making such announcement, are required by Law or rules orregulations of any stock exchange on which a Party’s securities are listed orquoted.  If a Party decides to make anannouncement it believes to be required by law with respect to this Agreement,it will give the other Party such notice as is reasonably practicable.  Notwithstanding the foregoing, Licensor willalso have the right to provide investors and potential investors in Licensorwith information regarding (i) the existence of this Agreement and theessential terms hereof and (ii) pursuant to confidentiality restrictions atleast as stringent as those set forth herein which are binding on such persons,the text of this Agreement.

## 13.3                           **Required Disclosure.** The receiving Party will be entitled to disclose ConfidentialInformation where such disclosure is reasonably necessary to enforce its rightspursuant to this Agreement or where demand for such disclosure is made on thereceiving Party pursuant to:  (i) a validorder of a court or other governmental body or (ii) any other applicable Law;provided that if the receiving Party intends to make such disclosure or

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## receives such demand, the receiving Party shall give the disclosing Partyprompt notice of such fact to enable the disclosing Party to seek a protectiveorder or other appropriate remedy concerning any such disclosure.  The receiving Party will fully co-operatewith the disclosing Party at the disclosing Party’s expense in connection withthe disclosing Party’s efforts to obtain any such order or other remedy.  If any such order or other remedy does notfully preclude disclosure, the receiving Party will make such disclosure onlyto the extent that such disclosure is legally required.

## 13.4                           **Use of Names.** Nothing contained in this Agreement will be construed as conferring anyright on Licensee to use in advertising, publicity or other promotionalactivities any name, trade name, trademark or other designation of University,including any contraction, abbreviation or simulation of any of the foregoing,unless the express written permission of University has been obtained, providedthat Licensee may state the existence of this Agreement.  For any other use other than the foregoing,Licensee hereby expressly agrees not to use the name “University of Rochester”without prior written approval from University.

# **14.****                              ****TERM AND TERMINATION**

## 14.1                           **Term.** Unless otherwise terminated pursuant to this Section 14, this Agreementwill remain in effect for the longer of ten (10) years or the life of theLicensor Patent Rights, with any extensions, in the Territory (“**Term**”).

## 14.2                           **Termination by Licensor**. Licensor may terminate this Agreement immediately upon written notice (“**Termination Notice**”) in the event of amaterial breach by Licensee or its Affiliates of this Agreement, provided thatLicensee has received, at least ninety (90) days before such TerminationNotice, written notice from Licensor of such breach, specifying in reasonabledetail the particulars of the alleged breach (“**Breach Notice**”), and such breach has not been cured withinninety (90) calendar days after the date of such Breach Notice.

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## 14.3       **Termination by Licensee. **Licensee may terminate this Agreement upondelivery of a Termination Notice to Licensor immediately in the event of amaterial breach by Licensor or its Affiliates of this Agreement, provided thatLicensor has received a Breach Notice from Licensee regarding such breach,specifying in reasonable detail the particulars of the alleged breach, suchbreach is continuing for ninety (90) calendar days after such Breach Notice andsuch breach has not been cured within such ninety (90) days of such BreachNotice.

## 14.4       **Termination for Force Majeure Even****t**.  Either Party may terminate this Agreementupon delivery of a Termination Notice to the other Party, provided (a) suchtermination is not effective for at least fifteen (15) days following deliveryof such Termination Notice and (b) a Force Majeure Event continues withrespect to the other Party for a period in excess of six (6) consecutive monthsand through the date such termination is to become effective.

## 14.5       **Rights and Duties upon Termination or Expiration**.  Uponthe termination or expiration of this Agreement, each Party will have the rightto retain all payments from the other Party properly made pursuant to thisAgreement, and each Party shall pay to the other all sums accrued hereunderwhich are then due.  In the event thatthis Agreement is terminated by Licensor pursuant to either of Sections 14.2 or14.4, Licensee shall, upon Licensor’s request, negotiate in good faith withLicensor during the three month period following such termination for thetransfer to Licensor of the rights and information necessary to allow Licensorto continue the development and Commercialization of Product.  Any such transfer shall be made pursuant todefinitive documentation that is acceptable to each Party in its solediscretion.

## 14.6       **Assumption by University. **In the event that Licensee has sent Licensora Breach Notice and the Licensor has not cured the breach within ninety (90)days of the Breach Notice, Licensee, instead of terminating this Agreementpursuant to Section 14.3, may give written notice to Licensor

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## to assign this Agreement toUniversity.  Upon receipt of such notice,Licensor will promptly assign this Agreement to University with such mutuallyagreeable modifications to this Agreement as University shall reasonablyrequest (provided that University shall not be entitled to request any changesto the provisions of Article 5 hereof), and the University will keep thisAgreement in full force and effect. Notwithstanding the foregoing provisions of this Section 14.6, thefollowing provisions of this Agreement shall not be binding upon University inthe event of any assumption of this Agreement by University:  (i) Section 12.1.3 (Noncompetition); and (ii)Section 12.1.4 (Covenant Not to Sue).  Inconnection with any termination of the University License by University, otherthan any termination of the University License that arises from circumstancesor events that give rise to a right in favor of Licensor to terminate thisAgreement pursuant to Section 14.2, this Agreement will be assigned toUniversity as contemplated by Section 11.7 of the University License, as ineffect on the date hereof.

# **15.****        INDEMNIFICATION ANDLIMITATION OF LIABILITY**

## 15.1       **Indemnification by the Parties.**

### 15.1.1     Licensor will defend, at its own expense, indemnify and hold harmlessthe Licensee and its Affiliates from and against any and all damages,liabilities, losses, costs, and expenses, including attorneys fees, arising outof any claims, causes of action, lawsuits or other proceedings (“**Claims**”) brought against it to the extent suchClaim arises out of or relates to (i) any breach or violation of, or failure toperform, any covenant or agreement made by Licensor in this Agreement, unlesswaived in writing by Licensee; (ii) any breach of the representations orwarranties made by Licensor in this Agreement; or (iii) the negligence orwillful misconduct of Licensor or its Affiliates, except, with respect toclauses (i) and (ii)

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### above, to the extent arisingout of the breach, violation, failure, negligence or willful misconduct of theindemnified party.

### 15.1.2     Licensee will defend, at its own expense, indemnify and hold harmlessLicensor and its Affiliates from and against any and all Claims brought againstit to the extent such Claim arises out of or relates to (i) any breach orviolation of, or failure to perform, any covenant or agreement made by Licenseein this Agreement, unless waived in writing by Licensor; (ii) any breach of therepresentations or warranties made by Licensee in this Agreement; (iii) thenegligence or willful misconduct of Licensee, its Affiliate or Sublicensees; or(iv) the development, use, offer for sale, or sale of Product by Licensee, itsAffiliates or Sublicensees, except, with respect to clauses (i) and (ii) above,to the extent arising out of the breach, violation, failure, negligence orwillful misconduct of Licensor.

### 15.1.3     Each Party agrees that it shall promptly notify the other in writing ofany such claim or action and give the indemnifying Party full information andassistance in connection therewith.  Theindemnifying Party shall have the sole right to control the defense if any suchclaim or action and the sole right to settle or compromise any such claim oraction, except that the prior written consent of the other Party shall berequired in connection with any settlement or compromise which could (i) placeany obligation on or require any action of such other Party; (ii) admit orimply any liability or wrongdoing of such other Party; or (iii) adverselyaffect the goodwill or public image of such other Party.  Notwithstanding the foregoing, theindemnified Party may participate therein through counsel of its choice, butthe cost of such counsel shall be borne solely by the indemnified Party.

## 15.2       **Indemnification of University. **Licensee agrees that it will defend,indemnify and hold harmless University, its faculty members, scientists,

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## researchers, employees,officers, trustees, agents and each of them (the “**University Indemnified Parties**”), from and against any and all Claims filedor otherwise instituted against any of the University Indemnified Partiesrelated directly or indirectly to or arising out of the design, process,manufacture, or use by any person or Party of Product or as a result of theexercise by Licensee, its Affiliates or Sublicensees of any rights grantedhereunder, including without limitation any Claim by a Third Party forinfringement even though such Claims and the costs (including but not limitedto, the payment of all reasonable attorneys’ fees and costs of litigation orother defense) related thereto are based upon doctrines of strict liability orproduct liability; provided, however, that such indemnity will not apply to anyClaims (i) arising from gross negligence, fraud, or willful misconduct ofany University Indemnified Party, or (ii) with respect to which Licensor isobligated to indemnify Licensee pursuant to Section 15.1, and which obligationLicensor has acknowledged in writing with respect to the Claim.  Licensee will also assume responsibility forall costs and expenses related to such Claims for which it is obligated toindemnify the University Indemnified Parties pursuant to this Section 15,including, but not limited to, the payment of all reasonable attorneys’ feesand costs of litigation or other defense. University shall be an express third party beneficiary of this Section15.2.

## 15.3       **NO CONSEQUENTIAL DAMAGES**.  NEITHER PARTY SHALL BE LIABLETO THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, LOST PROFIT, EXPECTATION,PUNITIVE OR OTHER INDIRECT DAMAGES IN CONNECTION WITH ANY CLAIM ARISING OUT OFOR RELATED TO THIS AGREEMENT, WHETHER GROUNDED IN TORT (INCLUDING NEGLIGENCE),STRICT LIABILITY, CONTRACT, OR OTHERWISE.

## 15.4       **Insurance**.  Prior to the administration of Product to anyhuman being, Licensee will obtain and for three (3) years following the end ofthe Term, maintain comprehensive general liability insurance, including product

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## liability insurance, with areputable and financially secure insurance carrier consistent with industrystandards, to cover the activities of Licensee, its Affiliates and Sublicenseeswith annual coverage limits of at least [* *  *] per occurrence and [*  *  *]in the aggregate.  Such insurance shallname Licensor and University as additional insureds.  Such insurance shall cover claims relating toProduct incurred, discovered, manifested or made during or after the Term ofthis Agreement. Within fifteen (15) days of the Effective Date of suchinsurance, Licensee will furnish a Certificate of Insurance evidencingcompliance with these coverage requirements. Licensee will provide Licensor and University with prompt written noticeof cancellation or material change affecting these coverage requirements. Suchinsurance will be primary coverage; and the insurance of Licensor andUniversity shall be excess and noncontributory. University shall be a third-party beneficiary of the insurancerequirements of this Section 15.4.

## 15.5       **Settlements.**  No person who has undertaken to defend aClaim under Sections 15.1, or15.2 will, without written consent of allIndemnified Parties or University Indemnified Parties, as the case may be,settle or compromise any Claim or consent to entry of any judgment, *provided*, *however*, that such consent will not be required ifsuch settlement, compromise or judgment (i) includes as an unconditional termthereof the release by the claimant or plaintiff of all such indemnifiedParties from all liability arising from events which allegedly gave rise tosuch Claim and (ii) contains no restriction, limitation or prohibition of anykind on the manner in which any such indemnified Party conducts itsbusiness.  Any payment made by a Party tosettle a Claim against it without obtaining consent of the indemnifying Partywill be at its own cost and expense. Notwithstanding the foregoing, the indemnifying Party will be liableunder this Section 15 for any settlement effected without its consent if theindemnifying Party has refused to acknowledge liability for

* * * Portions of thispage have been omitted pursuant to a request for Confidential Treatment andfiled separately with the Commission.

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## indemnification hereunderand/or declines to defend such indemnified Party in any such Claim, action orproceeding and it is determined that the indemnifying Party was liable to suchindemnified Party for indemnification related to such settlement.

# **16.****        MISCELLANEOUS**

## 16.1       **Governing Law**.  For all matters other than the scope andvalidity of patents, this Agreement shall be deemed to have been made in theState of California and its form, execution, validity, construction and effectshall be determined in accordance with the laws of the State of California,without giving effect to the principles of conflicts of law thereof.

## 16.2       **Arbitration.**

### 16.2.1     All disputes arising out of or in connection with this Agreement or itsvalidity will be finally settled without any recourse to the ordinary courts oflaw in accordance with the Rules of the American Arbitration Association****by three arbitrators appointed in accordancewith such rules, which arbitrators will have expertise in transactions of thenature of the transactions contemplated under this Agreement (the “**Arbitrators**”).

### 16.2.2     The arbitration proceedings, including the making of any award, willtake place in San Francisco, California.

### 16.2.3     The arbitration hearing need not be conducted strictly according torules of law relating to examination of witnesses or presentation of evidence,and the parties to the proceeding may present evidence determined to berelevant by the Arbitrators appointed hereunder regardless of its admissibilityin a court of law.  The parties expresslyagree that exclusion of evidence by the Arbitrators on grounds of irrelevanceor redundancy will not be grounds for failure to confirm and enforce theaward.  In deciding any matter dulysubmitted hereunder to the Arbitrators, the Arbitrators will be bound to applythe pertinent contractual provisions of this Agreement and will be bound by anyprior factual or legal

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### determination made by anyother Arbitrators appointed under this Agreement.  The Arbitrators may, under procedures whichthe Arbitrators deem appropriate, hear and determine any preliminary issue oflaw asserted by a Party to the proceeding to be dispositive, in whole or inpart, of a claim or defense to the same extent that a court could do so under amotion for summary judgment.  The award(the “**Award**”) determined by the Arbitrators will beissued in accordance with a dated, written opinion, which will set forth theArbitrators’ findings of fact and conclusions of law.  Counterparts of the Award and opinion will bepromptly sent to the Parties to the proceeding.

### 16.2.4     No Party will be entitled to commence or maintain any action in a courtof law upon any matter in dispute, except for interim injunctive relief, untilsuch matter will have been submitted to arbitration and determined as providedin this Section 16.2, and then only for the enforcement of any Award.  The Parties agree that judgment on the arbitrationaward may be entered in any court of competent jurisdiction and they will notchallenge such judgment.

### 16.2.5     All costs of enforcing this Agreement, including the costs ofarbitration, judicial enforcement of the arbitration and award, court costs,reasonable accountants’ and expert witness fees, and reasonable attorneys’fees, will be awarded to the prevailing Party. “Reasonable attorneys’ fees” for purposes of this Agreement refers tosuch fees as are reasonable and customary in light of the relevant dispute.

### 16.2.6     Pending the resolution of a dispute by arbitration, the Parties will,except in the event of termination, continue to perform all their obligationsunder this Agreement without prejudice to a final adjustment in accordance withthe arbitral award.

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## 16.3       **Assignment and Binding Effect**. This Agreement may not be assigned by either Party without the priorwritten consent of the other, except as part of a merger, consolidation, sale,or transfer of all or substantially all its assets, but only if the intendedassignee executes and delivers to the Party which is not the assignor a writingwhereby the assignee expressly undertakes to perform and comply with all of itsassignor’s obligations hereunder. Notwithstanding such undertaking, such assignor shall continue to beprimarily liable for such assignee’s performance hereof and complianceherewith.

### 16.3.1     Any assignment in violation of this Section 16.3 shall be void and ofno effect.

### 16.3.2     This Agreement, and the rights and duties of the Parties hereincontained, shall be binding upon, and shall inure to the benefit of, theParties and their respective legal representatives, successors and permittedassigns.

## 16.4       **Independent Contractor Status**.  The relationship of theParties hereto is that of independent contractors.  Nothing in this Agreement will be construedto constitute, create, give effect or otherwise imply a joint venture, agency,partnership or other formal business organization or any employer/employeerelationship of any kind between the Parties.

## 16.5       **Notices**.  All notices, requests and othercommunications required or permitted to be given hereunder or with respecthereto will be in writing, and may be given by (i) personal service, (ii)registered first-class United States mail, postage prepaid, return receiptrequested, or (iii) overnight delivery service, charges prepaid, and in eachcase addressed to the other Party at the address for such Party as set forthbelow, and shall be effective upon receipt in the case of clauses (i) or (iii)above, and five days after mailing in the case of clause (ii) above.

| If to Licensor: | PharmaNova Inc.  150 Lucius Gordon Drive, Ste 206  West Henrietta, NY 14586  Attention: President |
|-----------------|---------------------------------------------------------------------------------------------------|

 

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|                 | Copy to:  Pillsbury Winthrop Shaw Pittman LLP  1540 Broadway  New York, NY  10036-4039  Attention: Ron Fleming |
|-----------------|----------------------------------------------------------------------------------------------------------------|
|            |                                                                                                           |
| If to Licensee: | Depomed, Inc.  1360 O’Brien Drive  Menlo Park, CA 94025  Attention:President                              |
|            |                                                                                                           |
|            | Copy to:                                                                                                       |
|            |                                                                                                           |
|            | Heller Ehrman LLP  4350 La Jolla Village Drive  7th Floor  San Diego, CA 92122  Attn: Stephen Ferruolo         |

 

The address of eitherParty set forth above may be changed from time to time by written notice in themanner prescribed herein from the Party requesting the change.

## 16.6       **Waivers**.  The waiver by either Party of a default or abreach of any provision of this Agreement by the other Party will not operateor be construed to operate as a waiver of any subsequent default orbreach.  The continued performance byeither Party with knowledge of the existence of a default or breach will notoperate or be construed to operate as a waiver of any default or breach.  Any waiver by a Party of a particularprovision or right will be in writing, will be as to a particular matter and,if applicable, for a particular period of time and will be signed by suchParty.

## 16.7       **Entire Agreement**.  This Agreement (including the Exhibitshereto) constitutes the entire agreement between the Parties with respect tothe subject matter hereof, superseding all prior agreements and negotiations,and may be modified only by written agreement executed by both Parties.

## 16.8       **Severability**.  If any provision in this Agreement is deemedto be, or becomes, invalid, illegal, void or unenforceable under applicablelaws, then:  (i) it will be deleted andthe validity, legality and enforceability of the remaining provisions of thisAgreement shall not be impaired or

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## affected in any way, and(ii) the Parties will use commercially reasonable efforts to substitute for theinvalid, illegal or unenforceable provision a valid, legal and enforceableprovision which conforms as nearly as possible with the original intent of theParties.

## 16.9       **Counterparts**.  This Agreement may be executed in more thanone counterpart, each of which shall be deemed to be an original but all ofwhich taken together shall be deemed a single instrument.  A facsimile transmission of the signedAgreement will be legal and binding on both Parties.

## 16.10     **Force Majeure**.  Neither Party to this Agreement will beliable for failure or delay in the performance of any of its obligationshereunder (other than the failure to pay monies owed), if such failure or delayis due to causes beyond its reasonable control, including, without limitation,acts of God, earthquakes, fires, strikes, acts of war, or intervention of anygovernmental authority (each a “**ForceMajeure Event**”), but anysuch delay or failure will be remedied by such Party as soon as practicableafter the removal of the cause of such failure or delay.  Upon the occurrence of a Force Majeure Event,the Party failing or delaying performance will promptly notify the other Partyin writing, setting forth the nature of the occurrence, its expected durationand how such Party’s performance is affected.

## 16.11     **Interest on Late Payments**.  If any Party fails to pay infull on or before the date due any royalty, fee or other amount that isrequired to be paid to the other Party under this Agreement, the paying Partywill also pay to the other Party (or its designee), on demand, interestcompounded daily on any such amount beginning 16 days after such due date at anannual rate equal to the lowest prime rate as published by The Wall StreetJournal (or, if The Wall Street Journal is not then published, suchother financial periodical of general circulation in the United States) on ornearest to such due date plus two percent (2%) to be assessed from the datepayment of the amount in question first became due.

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## 16.12     **Amendment**.  This Agreement may not be amended,supplemented or otherwise modified except by an instrument in writing signed byboth Parties that specifically refers to this Agreement.  Any amendment, supplementation ormodification of any of the University Provisions, or of any other provision ofthis Agreement in a manner that has the effect of amending, supplementing ormodifying any of the University Provisions, shall require the prior writtenapproval of University.

## 16.13     **Headings and References**.  All section headings contained in thisAgreement are for convenience of reference only and will not affect the meaningor interpretation of this Agreement.

## 16.14     **No Strict Construction**.  This Agreement has been prepared jointly andwill not be strictly construed against either Party.

## 16.15     **Survival**.  The Provisions of Sections 2, 6.7, 8, 13, 14,15 and 16 shall survive any expiration or termination of this Agreement.

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IN WITNESS WHEREOF, theParties hereto, intending to be legally bound hereby, have caused thisAgreement to be executed by their duly authorized representatives as of thedate first written above.
| PHARMANOVA INC.        |             | DEPOMED, INC.                              |
|------------------------|------------------|--------------------------------------------|
|                   |             |                                       |
|                   |             |                                       |
| By:                    | /s/ Rodney Brown |                                       | By: | /s/ Carl A. Pelzel |
| Name: Rodney Brown     |             | Name: Carl A. Pelzel                       |
| Title: President       |             | Title: Executive Vice  President & COO |
| Date: October 13, 2006 |             | Date: October 13, 2006                     |
|                        |                  |                                            |  |  |

 

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**ExhibitA**

**LicensorPatent Rights:**

·                  Rights in U.S. Patent No. 6,310,098 grantedto Licensor under the University License in the field of use of API forMenopause Indications.

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**ExhibitB**

**ProductDevelopment Target Dates**
| **Activity /  Event** | ** ** | **Target Date** |
|-----------------------|------------|-----------------|
| [* * *]               |       | [* * *]         |
| [* * *]               |       | [* * *]         |
| [* * *]               |       | [* * *]         |
| [* * *]               |       | [* * *]         |
| [* * *]               |       | [* * *]         |
| [* * *]               |       | [* * *]         |
| [* * *]               |       | [* * *]         |
| [* * *]               |       | [* * *]         |

**Key Assumptions**

[*  *  *]

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* * * Portions of thispage have been omitted pursuant to a request for Confidential Treatment andfiled separately with the Commission.

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