Exhibit
10.33


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


MOVA
Pharmaceutical Corporation


and


Depomed,
Inc.


COMMERCIAL
MANUFACTURING


AGREEMENT


THIS
AGREEMENT is executed as of this 19th day of December, 2006 and effective as of June
1, 2006 (the “Effective Date”), by
and between MOVA Pharmaceutical Corporation
(“MOVA”), a corporation organized
under the laws of the Commonwealth of Puerto Rico, having its principal place
of business at  Villa Blanca Industrial
Park, State Road No. 1, Km. 34.5,Caguas, Puerto Rico, and Depomed, Inc. (“DEPOMED”), a corporation organized under the laws of the State
of California, having its principal place of business at 1360 O’Brien Drive,
Menlo Park, California  94025.  MOVA and DEPOMED each shall sometimes be
referred to herein sometimes as a “Party” and collectively as the “Parties.”


WITNESSETH:


WHEREAS,
MOVA is in the business of providing contract manufacturing services to the
pharmaceutical industry and desires to provide such services to DEPOMED;


WHEREAS,
DEPOMED desires to engage MOVA to provide certain of such services; and


WHEREAS,
MOVA and DEPOMED have agreed upon a contract pursuant to which MOVA would
provide manufacturing and packaging services for the Product (as hereinafter
defined) for DEPOMED pursuant to the terms and conditions set forth below.


NOW, THEREFORE, in
consideration of the foregoing premises, which are hereby incorporated as a
substantive part of this Agreement, and in consideration of the performance of
the mutual covenants and promises herein contained, MOVA and DEPOMED intending
to be legally bound, agree as follows:


ARTICLE 1 – DEFINITIONS


The following
terms not defined elsewhere in this Agreement have the following respective
meanings:



 1
 









“Act” means the Federal Food, Drug, and Cosmetic Act,
together with any regulation promulgated thereunder, including without
limitation cGMPs, in each case as amended from time to time.


“Active Pharmaceutical Ingredient” or “API” shall mean the substance having
the name of Metformin Hydrochloride.


“Affiliate” shall mean, with respect to
either Party, all corporations or other business entities that, directly or
indirectly, are controlled by, control or are under the common control with
that Party. For this purpose, the meaning of the word “control” shall mean
having the ability substantially to direct the affairs or management of an
entity, including, but not be limited to, ownership of more than fifty percent
(50%) of the voting shares or interest of such corporation or other business
entity.


“Annual Volume” means that volume of
Product to be manufactured in any year of this Agreement.


“API Credit
Value” means the value to be attributed to the API for
certain purposes of this Agreement as set forth on Schedule E.


“Applicable Law”  means all Laws to the extent
applicable to the subject matter of, or the performance by the Parties of their
respective obligations under, this Agreement, including, but not limited to,
(i) with respect to MOVA, the Act and any other Laws of all jurisdictions where
the Products are manufactured, and (ii) with respect to DEPOMED, the Laws of
all jurisdictions where the Products are manufactured, distributed and
marketed.


“Authority” means any governmental or
regulatory authority, department, body or agency or any court, tribunal,
bureau, commission or other similar body, whether federal, state, provincial,
county or municipal, including, but not limited to, the FDA.


“Batch Records” shall mean the executed
manufacturing instructions, the executed packaging order, the analytical
testing results and any other manufacturing related document, such as deviation
or investigation reports.


“Certificate of Analysis” shall mean
documented test results in written form executed by an authorized responsible
person that demonstrate compliance to the Specifications.


“cGMPs” shall mean the then current and
applicable good manufacturing practice regulations established in 21 C.F.R.
Parts 210 and 211, as amended and in effect from time to time and other
applicable FDA policies, as applicable and in effect from time to time during
the term of this Agreement.


“FDA” shall mean the United States Food
and Drug Administration.



 2
 









“Intellectual Property” includes,
without limitation, rights in patents, patent applications, formulae, trade-marks,
trade-mark applications, trade-names, Inventions, copyright and industrial
designs.


“Latent Defect” shall mean a defect in
the Product or the API that results in the Product not conforming to the
Specifications and that was not discoverable with commercially reasonable
inspection.


“Laws” means all laws, statutes,
ordinances, regulations, rules, by-laws, judgments, decrees or orders of any
Authority, including, but not limited to, the Act and cGMPs.


“Materials” shall mean all materials
necessary for the manufacture and packaging of the Product, including but not
limited to labels, excipients, packaging components and raw materials,
excluding the Active Pharmaceutical Ingredient.


“MOVA Facilities” shall mean the MOVA
manufacturing facilities located in Caguas, Puerto Rico.


“NDA or ANDA” shall mean the New Drug
Application(s) or Abbreviated New Drug Application, as the case may be, for the
Product submitted to the FDA by DEPOMED, including any amendments and
supplements thereto.


“Product” shall mean those finished
pharmaceutical products that contain solely Active Pharmaceutical Ingredient as
its active ingredient.


“Quality Agreement” shall mean the
quality agreement attached hereto as Schedule C.


“Specifications” shall mean the file for
the Product, which is provided by DEPOMED to MOVA in accordance with the
procedures in Schedule A hereto which contains documents related to such
Product, including but not limited to, the bulk drug specifications, the
formulations, processing specifications, packaging specifications, packaging
bills of material (BOMs), storage requirements, all environmental health and
safety information related to the Product, including material safety data
sheets and finished product specifications that are set forth in Schedule A
hereto for Product manufacturing, packaging and testing, and any revisions
thereto. Specifications shall also include any specifications added to this
Agreement by mutual written agreement of the Parties during the term of this
Agreement.


“USA” shall mean the United States of
America.


“Year” means a calendar year.



 3
 









ARTICLE 2 – COMMERCIAL MANUFACTURING
SERVICES


2.1          Commercial Manufacturing.
Based upon the successfully completed technology transfer of the Product in
accordance with the provisions stated in the Proposal No.
DPM-FCG1-1201-0206-R1, during the term of and subject to the terms and
conditions of this Agreement, DEPOMED hereby grants MOVA the exclusive right to
manufacture and package DEPOMED’s requirements for [*  *  *]
of the Product, and MOVA hereby agrees to timely manufacture and package such
requirements of Product for DEPOMED.  At
such time as DEPOMED first seeks manufacturing services of a nature similar to
those provided by MOVA under this Agreement to meet the need for Product supply
in a country or geographical region, as the case may be, where Product has not
previously been sold, DEPOMED shall offer to MOVA the opportunity to discuss
its capabilities relating to such supply outside [*  *  *]
and to make a proposal to DEPOMED in such regard.


2.2          Forecasts.
Manufacturing, packaging and delivery of Product to DEPOMED shall be conducted
by MOVA in accordance with the following forecasting procedure. On or before
the first day of each quarter during the term of this Agreement, DEPOMED agrees
to provide MOVA with a written forecast of the required quantities for each
strength and unit size of the Product, that DEPOMED expects to purchase during
each of the next twelve (12) months commencing October 1, 2006 (“Forecast”). DEPOMED shall advise MOVA of
any significant changes in its estimated forecast of Products. Except as
otherwise explicitly described herein, the quarterly Forecast shall be
non-binding.  Notwithstanding the
foregoing to the contrary, the initial Forecast shall be submitted to MOVA on
or before June 15, 2006, and shall incorporate Product manufacture or to be
manufactured by MOVA under purchase orders submitted by DEPOMED to MOVA prior
to or pending at the Effective Date.


2.3          Purchase Orders.
During the term of this Agreement, not less than ninety (90) calendar days
prior to each requested delivery date, DEPOMED will provide MOVA with firm
purchase orders setting forth the quantities of Product ordered for each month
(“Purchase Order”). The quantities
indicated in the Purchase Order will be for not less than [*  *  *]
and not more than [*  *  *] of the total number of units of Product
forecasted for such month, as provided to MOVA in the last quarterly Forecast
prior to the placement of the Purchase Order. Within ten (10) calendar days
from receipt of each Purchase Order, MOVA shall issue an order confirmation for
such Purchase Order and shall notify DEPOMED of MOVA’s requirements for API to
manufacture and package the quantities covered by the Purchase Order and the
corresponding needs for each month of that quarter.   No Purchase Order,
confirmation, shipping document or other document between the Parties shall
supplement or alter the terms set forth in this Agreement without the express
written consent of the Parties.


2.4          Supply of Materials for Commercial
Manufacturing. MOVA shall purchase all Materials, except
the Active Pharmaceutical Ingredient, required for the manufacture of






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



 4
 









Product from
DEPOMED’s approved vendors, or vendors mutually agreed to in writing by the
Parties. MOVA shall not change any vendors of packaging components or excipient
materials without previous notification to and written approval from DEPOMED.
MOVA shall be responsible for sampling, inspecting, testing and releasing all
excipient materials, packaging materials and labels for Product.


2.5          Supply of Active Pharmaceutical
Ingredient.  At
least forty-five (45) days prior to the start of each month,  DEPOMED shall furnish to MOVA at MOVA’s
plant in Caguas, Puerto Rico, the Active Pharmaceutical Ingredient [* * *], in
such quantities as are necessary to enable MOVA to manufacture and package the
required quantities of Product in accordance with the Specifications in
Schedule A hereto. All shipments of Active Pharmaceutical Ingredient shall be
accompanied by a certificate of analysis from the Active Pharmaceutical
Ingredient manufacturer confirming the identity, purity and compliance with the
Active Pharmaceutical Ingredient Specifications covering such Active
Pharmaceutical Ingredient. MOVA shall verify the quantity of each Active
Pharmaceutical Ingredient lot, and will release the supplied material based on
tests of conformance detailed in the Specifications for Active Pharmaceutical
Ingredient approved by DEPOMED.  The failure of DEPOMED to supply
API or any other item hereunder shall not give rise to a right to terminate
this Agreement or to any cause of action by MOVA, but shall stand as sufficient
justification for MOVA of its inability to deliver Product, without any further
consequences to MOVA, to the extent it is a direct result of such failure to
supply API by DEPOMED.


2.6  Reliance by MOVA


2.6.1       DEPOMED
acknowledges that MOVA will rely on the Forecast and the Purchase Orders
submitted pursuant to Sections 2.2 and 2.3 in ordering the Materials required
to meet such Purchase Orders.  In
addition, DEPOMED understands that to ensure an orderly supply of such
Materials it may be desirable for MOVA to purchase such Materials in sufficient
volumes to meet the production requirements for Products during the ensuing six
(6) months of DEPOMED’s Forecast or to meet the production requirements of any
longer period agreed to by MOVA and DEPOMED. 
Accordingly, DEPOMED authorizes MOVA to purchase Materials in order to
satisfy the requirements for Products for the immediately following six months
contemplated in the most recent Forecast provided by DEPOMED and agrees that
MOVA may make such other purchases of Materials to meet the Product
requirements during such longer periods as may be agreed to in writing from
time to time by DEPOMED at the request of MOVA or DEPOMED.  If Materials ordered by MOVA pursuant to the
Purchase Orders or this Section 2.6 are not included in finished Products
manufactured for DEPOMED within six months after the forecasted month in
respect of which such purchases have been made (or such longer period as the
parties may agree), or if such Materials have expired or become obsolete during
such period (subject to MOVA using the First -In /First -Out method of
accounting for such Materials), then MOVA shall promptly notify DEPOMED, and
DEPOMED shall pay MOVA its actual costs therefor (including all costs incurred
by






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



 5
 









MOVA in connection
with the purchase and handling of such Materials and MOVA shall ship such
Materials to DEPOMED at DEPOMED’s request); provided, however, that (i) DEPOMED
shall have the option but not the obligation to take title to and possession of
all or any portion of such Materials by written notice to MOVA, in which case
MOVA shall cooperate with DEPOMED in the surrender, delivery and transfer of
such Materials as promptly as is commercially reasonable, with any shipping and
related expenses to be borne by DEPOMED, or (ii) in the event such Materials
are incorporated into Products subsequently purchased by DEPOMED or into third
party products manufactured by MOVA and subsequently purchased by a third
party, DEPOMED will receive credit for any costs of such Materials previously
paid to MOVA by DEPOMED. MOVA shall promptly notify DEPOMED of the identity of
any Materials which have been purchased pursuant to this Section 2.6.1 and have
not been used or since expired or become obsolete and the associated cost to be
incurred.


2.6.2       MOVA
shall provide DEPOMED, upon execution of this Agreement and thereafter on an
annual basis, with a listing of all Materials which are unique to the Product,
which MOVA anticipates purchasing pursuant to the terms of this Agreement (in
accordance with the Forecasts and Purchase Orders as per Section 2.2 and 2.3
above, as set forth in Schedule H (the “Exclusive
Component Purchasing Summary”). The Exclusive Components Purchasing
Summary shall indicate which Materials have a limited shelf-life and which are
subject to minimum order quantities as specified by the supplier.  If such exclusive Materials, purchased in
accordance with this Section 2, have not been used within six months after the
forecasted month in respect of which such purchases have been made (or such
longer period as the parties may agree), or if such Materials have expired or
become obsolete during such period, Depomed agrees that it shall reimburse MOVA
for the actual costs of such Materials, then MOVA shall promptly notify
DEPOMED, and DEPOMED shall pay MOVA its actual costs therefor (including all
costs incurred by MOVA in connection with the purchase and handling of such
Materials and MOVA shall ship such Materials to DEPOMED at DEPOMED’s request);
provided, however, that (i) DEPOMED shall have the option but not the
obligation to take title to and possession of all or any portion of such
Materials by written notice to MOVA, in which case MOVA shall cooperate with
DEPOMED in the surrender, delivery and transfer of such Materials as promptly
as is commercially reasonable, with any shipping and related expenses to be
borne by DEPOMED, or (ii) in the event such Materials are incorporated into
Products subsequently purchased by DEPOMED, DEPOMED will receive credit for any
costs of such Materials previously paid to MOVA by DEPOMED.


2.6.3       Reimbursement
by DEPOMED under this Section 2.6 shall be due, where applicable, within thirty
(30) days of the annual reconciliation and calculation of such costs.  MOVA agrees that it shall provide pricing
information sufficient to show the costs of such Materials, where reimbursement
is requested by MOVA, at the request of DEPOMED.



 6
 









ARTICLE 3 – DELIVERY AND TITLE


3.1          Shipment.


3.1.1       MOVA
shall deliver the Product, F.C.A., MOVA Facilities (Incoterms 2000)  and ship it at [* * *], in accordance with
DEPOMED’s written routing orders to DEPOMED’s designated distribution centers
or warehouses. The Product shall be shipped by MOVA under conditions consistent
with Product labeling, the Specifications and the type of transport to be
established by DEPOMED. For each lot of Product shipped to DEPOMED by MOVA a
Certificate of Analysis will be provided by MOVA. In addition, MOVA shall
include a packing slip with each order shipped, copy of which will be provided
to DEPOMED upon shipment of the Product to the designated distribution centers
or warehouses. DEPOMED shall be responsible for all cost associated with the
delivery of the Product.


3.1.2       MOVA
shall provide DEPOMED prompt written notice if MOVA becomes aware of any
circumstance that may render it unable to timely supply Product to DEPOMED. In
the event there is a delay in the delivery of Product, the responsible Party
that has caused such delay shall be responsible for the cost of the premium
time and shipping via an expedited routing.


3.2          Title. Title
and risk of loss to all API, all work in process to manufacture the Product,
and all Product in the possession of, or under control or responsibility of,
MOVA shall, at all times, remain in DEPOMED; provided, however, that, subject
to the provisions of Section 7.6, MOVA shall assume liability for any loss or
damage relating to the foregoing due to MOVA’s negligence or willful
misconduct.


ARTICLE
4 – QUALITY


4.1          Quality Control.
MOVA shall ensure that all Product supplied to DEPOMED complies with the
Specifications and has been manufactured in accordance with cGMPs.  In addition, without limiting the foregoing,
MOVA and DEPOMED shall comply with their respective obligations under the
Quality Agreement.


4.2          Stability Testing.
MOVA shall conduct stability testing services on the Product in accordance with
the protocols established in the Specifications and for the fees specified in
Schedule D.


4.3          Test
Reports and Certificates of Analysis. Prior to delivery to
DEPOMED or its designee, of each lot of Products supplied pursuant to this
Agreement, MOVA shall test the Product in accordance with the Specifications.
Each test report shall set forth the items tested, the Specifications, and the
test results in a Certificate of Analysis for each batch or lot of Product
delivered. MOVA shall send such Certificate of Analysis to DEPOMED at the time
of the shipment of the Products to which it relates. With every






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



 7
 









shipment MOVA
shall certify that each batch or lot has been manufactured and packaged in
accordance with cGMPs and with the Specifications.


4.4          Modifications. DEPOMED
will inform MOVA in writing of any modifications required to the Specifications
in accordance with the procedure set forth in Schedule A. Any change in the
manufacturing process by MOVA (such as changes in Specifications, raw material
testing, quality controls, equipment, facilities, manufacture and/or packaging)
shall be subject to DEPOMED ́s prior written approval.


4.5          Deviations.  MOVA will diligently track all deviations
associated with the Product.  MOVA shall
be responsible for investigating, resolving, and documenting deviations from
Batch Records and Specifications and reporting on such matters to DEPOMED
promptly and regularly.  MOVA will notify
DEPOMED of any Significant Deviations (as defined herein) within twenty-four
(24) hours of occurrence according to written standard operating procedures
approved in writing by DEPOMED.  MOVA
shall ensure that appropriate investigations are conducted.  MOVA shall provide quality assurance approval
for all investigations and corrective and preventive action plans, all of which
shall be shared in advance with DEPOMED and shall be subject to the reasonable
approval of DEPOMED.  For purposes of
this Agreement a “Significant Deviation”
shall mean any deviation: (i) resulting in an immediate or probable
wide-ranging impact on GMP products, processes or systems in any facility where
activities are conducted pursuant to this Agreement, (ii) which could result in
significant Product safety or efficacy risks (e.g., sterility failure or data
integrity issues), (iii) which would require notification to a regulatory
authority, or (iv) which would otherwise be considered by reasonable quality
assurance professionals to be significant.


4.6          Rejection.


4.6.1 DEPOMED shall have thirty (30)
calendar days following the date on which DEPOMED actually receives a shipment
of Product from MOVA to reject the same, because all or part of the shipment
fails to conform to cGMPs or the Specifications. For purposes of this
Agreement, no claims due to Latent Defects shall be made after six (6) months
after the expiration date of the Product. DEPOMED shall notify MOVA within
thirty (30) calendar days following discovery of any Latent Defect not
discoverable upon reasonable physical inspection. MOVA shall not be held
responsible for reasons related to the carrier; provided MOVA has packed and
shipped in accordance with applicable Specifications and followed DEPOMED’s
other shipping instructions. A shipment of Product shall not be deemed received
until actual receipt by DEPOMED, or third parties designated by DEPOMED in the
Purchase Order, of both the Product with the appropriate shipping documents,
and copies of the complete certificates of analysis relating thereto including,
but not limited to, certification of manufacture in compliance with cGMPs and
including any deviation report.


4.6.2 DEPOMED or its designee shall give
MOVA written notice (“Deficiency Notice”)
of all claims for Products that fail to conform with the Specifications, cGMP’s
or any Applicable Law. Should DEPOMED or its designee fail to provide MOVA with



 8
 









the Deficiency
Notice within the applicable thirty (30) days period, then the delivery shall
be deemed to have been accepted, provided however that the foregoing limitation
shall not apply to Latent Defect claims. 
Any rejection shall be made effective by DEPOMED or its designee giving
notice to MOVA specifying the manner in which all or part of such shipment failed
to meet the aforementioned requirements.


4.6.3 Upon rejection of a shipment or lot
of PRODUCT, DEPOMED or its designee may require at its option, rework in
accordance with procedures spelled out in the applicable NDA, destruction or
replacement of the shipment. Cost associated with such rework, destruction or
replacement of shipment shall be borne by the Party responsible.  MOVA shall be so responsible for only those
failures due to its negligence or willful misconduct, whether such failure is
discovered before or after shipping.  For
clarification purposes and by means of example, MOVA’s failure to follow the
protocols agreed to by the Parties, MOVA’s standard operating procedures,
written instructions from DEPOMED not contrary to law, or cGMP regulations
shall be deemed to constitute negligence on the part of MOVA.


4.6.4 If MOVA and DEPOMED fail to agree on
the cause for such Product failure, the dispute may be referred to a Laboratory
or an independent expert of recognized repute, as the case may be, pursuant to
Section 4.7 herein, and the finding of such Laboratory or expert shall be
determinative as to the cause for such failure. 
When there has been no definitive determination of the cause for
failure, whether following reasonable investigations by MOVA and DEPOMED or
referral of a dispute to the Laboratory or expert, each of MOVA and DEPOMED
shall bear their respective costs of such failure.  DEPOMED shall not be entitled to payment from
MOVA for lost raw materials and MOVA shall not be entitled to payment for
services in manufacturing such failed Product.


4.6.5 If DEPOMED, due to the negligence or
willful misconduct of MOVA, rejects a shipment before the date on which payment
therefor is due pursuant to Sections 5.1 and 5.2 hereof, DEPOMED may withhold
payment for that shipment or the rejected portion thereof. In the event that
DEPOMED, due to the negligence or willful misconduct of MOVA, rejects a
shipment or portion thereof within such thirty (30) calendar day period but
after payment therefor has been made, DEPOMED shall be entitled to recoup the
payment amount by, at DEPOMED’s election, MOVA issuing a prompt refund or
DEPOMED offsetting such amount against the payment of future invoices for
shipments of Product that may become due hereunder. Payments for all shipments
or portions thereof that DEPOMED rejects but, did not have the right to reject,
shall be paid to MOVA within fifteen (15) calendar days following the date on
which such determination is made and DEPOMED shall bear the responsibility for
any costs incurred by MOVA as a consequence of such rejection, including the
destruction of the rejected lots.


4.6.6 Notwithstanding the foregoing, MOVA
shall not destroy any rejected lots as to which there exists a dispute until
such dispute has been resolved.  DEPOMED’s
exclusive remedies under this Agreement for the delivery of Product not
conforming to the Specifications, delivered without the required documentation,
or not manufactured in



 9
 









accordance with
cGMPs shall be as set forth in this Article 4, Section 8.1, Section 10.3, and
Section 10.7.


4.7          Disputes. Notwithstanding
anything in this Agreement to the contrary, if MOVA disputes DEPOMED’s right to
reject all or part of any shipment of the Product pursuant to the provisions of
Section 4.5 hereof, and such dispute is not resolved by mutual agreement of the
Parties within sixty (60) calendar days, such dispute if related to an
analytical result shall be resolved by the determination of a laboratory
approved by both MOVA and DEPOMED that is compliant with FDA guidelines and
regulations or if relating to another item of compliance with the
Specifications, an independent expert of recognized repute within the United
States pharmaceutical industry, as applicable, mutually agreed upon by the
Parties (the “Laboratory”), the
appointment of which shall not be unreasonably withheld or delayed by either
Party. The determination of the Laboratory shall be final and binding upon the
Parties. The fees and expenses of the Laboratory making the determination as
well as all costs relating to the supply of defective Product shall be paid by
the Party against whom the determination is made.


4.8          Defective
Active Pharmaceutical Ingredient.  In the event that the Laboratory or MOVA determines that the
failure of Product to meet Specifications is due to a defect in API that could
not have been reasonably discovered using the testing methods set forth in the
Specifications, and contemplated by, this Agreement, MOVA shall be entitled to
the Production Fees (as defined in Section 5.1) for (i) such finished Product,
and (ii) the costs of the testing methods employed by MOVA to determine the
defect in the API.


4.9          Access to MOVA Facilities by
DEPOMED Representatives. Upon reasonable advance notice,
MOVA shall permit DEPOMED representatives to enter MOVA’s plant during regular
business hours for the purpose of making quality control inspections of the
facilities used in the manufacture of Product for DEPOMED, during the period of
such use. Any DEPOMED representatives shall be advised of the confidentiality
obligations of Article 6 and shall follow such security and facility access
procedures as are reasonably designated by MOVA. MOVA may require that at all
times the DEPOMED representative be accompanied by a MOVA representative and that
the DEPOMED representative not enter areas of the facility used in production
of the Product at times other than when the production is occurring to assure
protection of MOVA or third party confidential information.


4.10                        Active
Pharmaceutical Ingredient Yield Calculation.


(a)           Reporting.  MOVA shall provide DEPOMED with a monthly
inventory report, within four (4) business days after the end of each month, of
the API held by MOVA in accordance with the inventory report form annexed
hereto as Schedule F, which shall contain the following information for such
month:


“Quantity Received”  shall mean the total quantity of API that
complies with the applicable Specifications for the API when received at the
MOVA Facility.



 10















“Quantity Dispensed”  shall mean the total quantity of API
dispensed at the MOVA Facility during the applicable period.  The Quantity Dispensed is calculated by
adding the Quantity Received to the existing inventory of API that complied with
the Specifications for API upon receipt by MOVA and is held at the beginning of
the applicable period, less the inventory of API that is held at the end of
such period.  The Quantity Dispensed
shall only include API received and dispensed in connection with commercial manufacturing
of Products and, for certainty, shall not include any (i) API that must be
retained by MOVA as samples pursuant to this Agreement, the Quality Agreement
or applicable regulatory requirements, (ii) API contained in Product that must
be retained as samples pursuant to this Agreement, the Quality Agreement or
applicable regulatory requirements, (iii) API used in connection with testing
by or on behalf of MOVA or DEPOMED in the performance of this Agreement or the
Quality Agreement (if applicable) and (iv) API dispensed in connection with
technical transfer activities or development activities during the applicable
period, including, without limitation, any regulatory, stability, validation or
test batches manufactured during the applicable period and required in the
performance of this Agreement, the Quality Agreement or pursuant to Applicable
Law.


“Quantity Converted”  shall mean the total amount of API
contained in the Products produced with the Quantity Dispensed and delivered to
DEPOMED and not rejected, recalled or returned in accordance with Section 4.6
or Article 8 as a result of a failure by MOVA to provide manufacturing services
in accordance with this Agreement, the Quality Agreement, the Specifications,
and Applicable Law.


Within 60 days after the end of each Year, MOVA
shall prepare an annual reconciliation of API in accordance with the
reconciliation report form annexed hereto as Schedule G including the
calculation of the “Actual Annual Yield”
or “AAY” for the Product at the
MOVA Facility during the Year. AAY is the percentage of the Quantity Dispensed
that was converted to Products delivered and is calculated as follows:




	
  Quantity Converted during
  the Year

  	
   

  	
  x

  	
   

  	
  100

  	
  %

  
	
  Quantity Dispensed during the Year

  	
   

  	
   

  	
   

  	
   

  	
   

  






 


The Parties agree that the target yield in
respect of such Product at the MOVA Facility (the “Target Yield”) is equal to [*  *  * ].  MOVA shall maintain Actual Annual Yield
levels for each Product equal to or above the applicable Target Yield.


(b)           Shortfall
Calculation.  If the
Actual Annual Yield falls below the respective Target Yield in a Year, then the
shortfall for such Year (the “Shortfall”)
shall be determined based on the following calculation:


[(Target
Yield – AAY] * API Credit Value * Quantity Dispensed






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



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The Shortfall shall be disclosed by MOVA on the
reconciliation report prepared in the form annexed hereto as Schedule G.


(c)           Credit.   If there is a Shortfall for a Product in a
Year, then MOVA shall credit DEPOMED’s account for the amount of any such
Shortfall not later than 60 days after the end of each Year.  Each credit under this Section 4.10 shall be
summarized on the reconciliation report prepared in the form annexed hereto as
Schedule G and shall be made in accordance with Section 5.2.  Upon expiration or termination of this
Agreement any remaining credit amount owing under this Section 4.10 shall be
reimbursed to DEPOMED by payment thereof to DEPOMED.


(d)           Maximum
Credit.  Notwithstanding
the following provisions of this Section 4.10, MOVA’s liability for API
calculated in accordance with this Section 4.10 for any Product in a Year shall
not exceed, in the aggregate, the Maximum Credit Value set forth in Schedule E
hereto.


ARTICLE
5 – PRODUCTION FEES AND PAYMENT


5.1          Production Fees.
DEPOMED shall pay MOVA for manufacturing finished Product in accordance with
the fees set forth in Schedule B hereto (“Production
Fee(s)”). [*  *  *].


5.2          Invoices.


5.2.1       MOVA
shall invoice DEPOMED for the Production Fees on or after MOVA ships the
subject Product and sends the manufacturing and testing records and deviation
report, if any, for each lot of Product to DEPOMED. All invoices shall be due
and payable within thirty (30) calendar days after the receipt of the invoice.
If DEPOMED disagrees for any reason with the amount of any invoice submitted by
MOVA, DEPOMED shall notify MOVA of such disagreement within thirty (30) calendar
days after receipt of such invoice, and the Parties shall promptly attempt to
resolve the difference. Any portion of the invoiced amount that is not in
dispute shall be paid within thirty (30) calendar days after the original date
of receipt of the invoice.


5.2.2 In the event that any Product
manufactured in accordance with DEPOMED ́s orders cannot be recommended for
disposition by MOVA for a period of thirty (30) calendar days following
completion of manufacturing and such delay arises from cause(s) which have been
established to be other than the negligent or willful misconduct of MOVA or
MOVA’s failure to fully comply with the manufacturing protocols and GMPs, MOVA
may upon the expiration of such thirty (30) day period invoice DEPOMED for the
applicable  Production Fees and such
invoice shall be due according to Section 5.2 hereof.






* * * Portions of
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 12
 









5.3          Adjustments
for changes in the U.S. Producer Price Index. The Production
Fees shall be adjusted [*  *  *]. In addition, the Production Fee shall be
adjusted [*  *  *].


5.4          Adjustments for Cost of Materials.
 At any time during a
Year when MOVA determines that its actual cost of Materials used in the
manufacture of Product has increased or decreased in excess of [*  *  *]
of the per unit prices set forth on Schedule B (or otherwise established) for
either or both bulk and bottled Product, the price per unit of Product so
affected shall be adjusted to give effect to the actual increase in cost or
savings in the cost of Materials in excess of [*  *  *].  MOVA shall make such calculation on a per lot
basis, but shall convert such calculation into the units expressed on Schedule
B for proper comparison.  Such newly
calculated prices shall take effect with the first lot of Material so
affected.  Any such adjusted price shall
remain in effect until next adjusted.  No
adjustment shall be made in any Year when increases or decreases in the actual
cost of Materials do not exceed [* 
*  *], as described above.  In support of any adjustment to the prices of
Product to DEPOMED made pursuant to this Section 5.3, MOVA shall disclose in
writing to DEPOMED the costs of Materials before and after such adjustment.  MOVA shall keep complete and accurate records
of such costs and shall allow DEPOMED or its representatives to audit such
records. 
MOVA shall use its best efforts to keep the cost of Materials
at current or lower levels while utilizing only those vendors approved by
DEPOMED.  Any adjustment pursuant to this
Section 5.4 shall be taken into consideration 
when calculating any price adjustment pursuant to Section 5.3 so as not
to cause a multiple increase.


5.5
         Adjustments
Due to Technical Changes.  
In the event that there are changes in laws or regulations, cGMPs, the
Specifications  or the Quality Agreement
in a manner that increases or decreases, in the aggregate, the manufacturing
cost on a per lot basis by more than [* 
*  *] of the per unit price to
DEPOMED, the entire corresponding change on a per unit price to DEPOMED shall
be made to the Production Fees set forth in Schedule B, any other relevant
document and the related schedules shall be revised.  Any changes subject to this Section 5.5 shall
be implemented after a technical review and prior approval by the Parties.


5.6          Multi-Country
Manufacturing Services. If and when DEPOMED decides to
have MOVA provide manufacturing services with respect to the Product for
countries outside the USA, then MOVA shall prepare a quotation for
consideration by DEPOMED for the additional costs, if any, and the change over
the Production Fees for the Product destined for each new country. The agreed
new Product requirements and related costs and changes over the Production Fees
shall be set out in an amendment to this Agreement.  If MOVA comes to manufacture Product for
countries outside the USA, by undertaking such activity it hereby represents
and warrants that all such Product shall be manufactured, stored, handled, and
shipped in compliance with all Applicable Law where such Product is destined.






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



 13
 









5.7          Volume
Reduction.  If at
any time during the term of this Agreement the annual volume order by DEPOMED
falls below five (5) million tablets, then MOVA shall be entitled to request an
adjustment to the Production Fees with respect to the Product to reflect the
increased costs that MOVA will incur as a result of the reduced volumes.  To the extent that the Production Fee has
been previously adjusted pursuant to this Section 5.7 to reflect reduced
volumes, the adjustment provided for shall operate based on the fees attributed
to such Product at the time the last of such adjustments were made, including
any other applicable price adjustments in accordance with this Article 5.


ARTICLE
6 – CONFIDENTIAL INFORMATION


6.1          Confidentiality.
Any information or data (including but not limited to technical information,
experience, or data) regarding either Party’s formulations, plans, programs,
plants, process, technical materials, products, production requirements,
standard specifications, costs, equipment, operations, procedures, instructions
or customers (all of which is herein referred to as “Confidential Information”) is the sole property of each
respective Party. Each Party shall treat the other Party’s Confidential
Information in the same protective manner that it treats its own Confidential
Information. Except as provided herein, the Parties shall not during the term
of this Agreement and for a period of five (5) years from the date of
termination of expiration of this Agreement, use, or disclose to others, or
permit their employees or agents to use or disclose to others Confidential
Information which has heretofore come or hereafter may come within the
knowledge of, or which has been or may hereafter be acquired or developed by
the respective Party, its employees or agents, in the performance of any
services hereunder.  For the avoidance of
doubt, manufacturing processes, analytical methods used in the manufacture of
Product and test results shall be the Confidential Information of DEPOMED.  This paragraph shall not prevent either Party
from using or disclosing to others information:


(a)           that is known to the receiving Party
at the time it is disclosed by or obtained from the disclosing Party, which
knowledge can be established by competent evidence; or


(b)           that is in the public domain at the
time of disclosure, or through no fault of the receiving Party becomes
available to the public;


(c)           that lawfully becomes available to the
receiving Party from a source other than the disclosing Party;


(d)           that a Party can prove by written
records dated prior to the date of disclosures hereunder that such information
was independently developed by persons not engaged in activities hereunder and
without regard to any information conveyed hereunder or arising in connection
herewith; or


(e)           is required by law or court order or
a judicial or administrative agency of competent jurisdiction to be disclosed,
after maximum practicable notice by the receiving



 14
 









Party to the
disclosing Party, provided that in each case the receiving Party shall use its
best efforts to limit such disclosure and maintain the confidentiality of such
Confidential Information to the extent possible; or


(f)            that is needed to be disclosed for
the sole purpose of carrying out the responsibilities and obligations of this
Agreement.


6.2          Obligations Upon Termination.
Upon termination of this Agreement, if requested, the receiving Party shall
deliver to the disclosing Party all notes, drawings, blueprints, manuals,
letters, notebooks, reports and other materials of or pertaining to the
Confidential Information, including all copies thereof, and all other
Confidential Information that is in the possession of or under the control of
the receiving Party, except for one copy which shall be maintained in the files
of counsel for the sole purpose of assuring compliance with the continuing
confidentiality obligations under this Agreement.


6.3          Access Restriction.
The Parties shall restrict access to Confidential Information to as few as
practicable of their employees and agents, and in all cases shall restrict such
knowledge to only those employees and agents who are directly connected with
the performance of the services hereunder.


6.4          Equitable and other Injunctive
Relief.  The
Parties acknowledge and agree that disclosure, distribution, use or any other
handling of the Confidential Information contrary to the terms of this
Agreement will cause irreparable harm to the Party owning such Confidential
Information for which damages at law will not provide an adequate remedy.  The Parties agree that the provisions of this
Article 6 may be specifically enforced in addition to any and all other
remedies available at law or in equity.


ARTICLE
7 – INDEMNIFICATION


7.1          Indemnification by DEPOMED. DEPOMED
shall indemnify, defend and hold MOVA, its Affiliates and their respective
directors, officers, employees and agents harmless from and against all claims,
causes of action, suits, costs and expenses (including reasonable attorney’s
fees), losses or liabilities of any kind asserted by third persons (except to
the extent due to a negligent or willful act or omission of an indemnified
party) that arise out of or are attributable to:


(i)
any material breach of this Agreement by DEPOMED; or


(ii)
any negligence or willful misconduct on the part of DEPOMED, its employees,
agents or representatives; or


(iii)
any violation by DEPOMED of any Intellectual Property rights, including but not
limited to, patent rights or any property rights of any third party related to
the Product, except where such violation is attributable to MOVA.



 15
 









7.2          Indemnification by MOVA. MOVA
shall indemnify, defend and hold DEPOMED, its Affiliates and their respective
directors, officers, employees and agents harmless from and against all claims,
causes of action, suits, costs and expenses (including reasonable attorney’s
fees), losses or liabilities of any kind asserted by third persons (except to
the extent due to a negligent or willful act or omission of an indemnified
party) that arise out of or are attributable to:


(i)
any material breach of this Agreement by MOVA; or


(ii)
any negligence or willful misconduct on the part of MOVA, its employees, agents
or representatives; or


(iii)
any violation by MOVA of any Intellectual Property rights, including but not
limited to, patent rights or any property rights of any third party related to
the Product, except where such violation is attributable to DEPOMED.


7.3
         Consequential Damages. Under no
circumstances whatsoever shall either Party be liable to the other in contract,
tort, negligence, breach of statutory duty or otherwise for (i) any (direct or
indirect) loss of profits, of production, of anticipated savings, of business
or goodwill or (ii) any other liability, damage, costs or expense of any kind
incurred by the other Party of an indirect or consequential nature, regardless
of any notice of the possibility of such damages.  The foregoing shall not be construed to limit
payment of any amount due pursuant to either Section 7.1 or Section 7.2.


7.4          Indemnification Procedures.
Each Party shall notify the other promptly of any threatened or pending claim
or proceeding covered by any of the above Sections in this Article 7 and shall
include sufficient information to enable the other Party to assess the facts.
Each Party shall cooperate fully with the other Party in the defense of all
such claims. No settlement or compromise shall be binding on a Party hereto
without its prior written consent, whereas such consent shall not be
unreasonably withheld or delayed.  The
indemnitee, its Affiliates and their respective directors, officers, employees
and agents shall cooperate fully with the indemnitor and its legal
representatives in the investigation and defense of any claim, lawsuit or other
action covered by this indemnification, all at the reasonable expense of the
indemnitor.  The indemnitee shall have
the right, but not the obligation, to be represented by counsel of its own
selection and expense.


7.5          Insurance.
During the term of this Agreement, each Party shall maintain adequate product
liability insurance. During the term of this Agreement, MOVA and DEPOMED shall
each maintain comprehensive general liability insurance, including product
liability. At the time of first commercial sale of Product manufactured
pursuant to this Agreement, the insurance afforded by the Parties shall be
primary insurance with minimum limits of [* 
*  *] per occurrence






* * * Portions of this
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filed separately with the Commission.



 16
 









and an annual aggregate
amount of  [* 
*  *]. Such insurance shall not be
cancelled or modified without providing the other Party at least thirty (30)
calendar days prior written notice. If requested each Party will provide the
other with a certificate of insurance evidencing the above and showing the name
of the issuing company, the policy number, the effective date, the expiration
date and the limits of liability.   If a
Party is unable to maintain the insurance policies required under this
Agreement through no fault on the part of such Party, then such Party shall
forthwith notify the other Party in writing and the Parties shall in good faith
negotiate appropriate amendments to the insurance provision of this Agreement
in order to provide adequate assurances.


7.6                 Limitation of Liability .


7.6.1       API.  Except as expressly set forth in Section 4.10
hereof (including with respect to API lost or damaged due to MOVA’s negligence
or willful misconduct under no circumstances shall MOVA be responsible for any
loss or damage to the API)MOVA’s maximum liability for loss or damage to API
shall not exceed the Maximum Credit Value in any Year.  The parties agree that MOVA’s maximum
liability for API under this Section 7.6.1 shall be in addition to any
liability of MOVA for other matters pursuant to Section 7.6.3.


7.6.2       Product
Claims.   Unless MOVA has failed to
provide the manufacturing services hereunder in accordance with the
Specifications, cGMPs, Applicable Law or Section 14.1 of this Agreement,  MOVA shall not be liable nor have any
responsibility for any deficiencies in, or other liabilities associated with,
any Product manufactured by it, including, without limitation, the costs and
expenses of any Recall (collectively, “Product
Claims”). For greater certainty, MOVA shall have no obligation for
any Product Claims to the extent such Product Claim (i) is caused by
deficiencies with respect to the setting of the Specifications, the inherent
safety, efficacy or marketability of the Products or any distribution thereof,
(ii) results from a defect in Materials that is not reasonably discoverable by
MOVA using the test methods set forth in the Specifications, (iii) results from
a defect in the API or Materials supplied by DEPOMED that is not reasonably
discoverable by MOVA using the test methods set forth in the Specifications,
(iv) is caused by actions of third parties occurring after such Product is
shipped by  MOVA pursuant to Section 3.1;
(v) is due to packaging or labeling defects or omissions for which MOVA has no
responsibility, or (vi) is due to any other breach by DEPOMED of its
obligations under this Agreement.  For
greater certainty, if failure by MOVA to provide the manufacturing services
hereunder in accordance with the Specifications, cGMPs, Applicable Law or
Section 14.1 of this Agreement which gives rise to a Product Claim, then MOVA’s
obligations under this Section 7.6.2 shall not be subject to the maximum
liability limitation set forth in Section 7.6.3.


7.6.3       Maximum
Liability. Except as set forth in Sections 7.6.1, 7.6.2, and excluding MOVA’s
liability for replacement Product under Article 4, MOVA’s maximum liability
under this Agreement for any reason whatsoever, shall not exceed in a






* * * Portions of
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and filed separately with the Commission.



 17
 









Year, in the
aggregate the greater of $500,000 or 35 % of the purchase price for Product
arising from Purchase Orders submitted in such Year up to a cap of $2,500,000
in any Year.


ARTICLE
8 – RECALLS


8.1          Recalls. In
the event (i) any Authority issues a request, directive or order that the
Product be recalled, or (ii) a court of competent jurisdiction orders such a
recall, or (iii) DEPOMED reasonably determines that the Product should be
recalled, the Parties shall take all appropriate corrective actions.


8.1.1       In
the event that such Recall results from the manufacture, packaging, storage,
testing and handling of the Product by MOVA and such recall or event is due to
MOVA’s failure to provide the manufacturing services hereunder in accordance
with the Specifications, and Applicable Law, as determined by the Laboratory,
MOVA shall be responsible for the documented out-of-pocket expenses of such
Recall or return and shall use its commercially reasonable efforts to replace
the recalled or returned Products with new Products contingent upon the receipt
from Depomed of all API required for the manufacture of such replacement
Product.  For greater certainty, MOVA’s
responsibility for any loss of API in connection with the recalled Product
shall be subject to the limitation set forth in Section 7.6.1.  In the event that MOVA is unable to replace
the recalled or returned Products, then DEPOMED may request MOVA to reimburse
DEPOMED for the Production Fees paid to MOVA 
with respect to the recalled Products. 
In all other circumstances, Recalls, returns or other corrective actions
shall be made at DEPOMED’s cost and expense. For the purposes of this
Agreement, the expenses of Recall shall include, without limitation, the
expenses of notification and destruction or return of the recalled Product, and
DEPOMED’s costs for the Product recalled. Marketing and advertising expenses
associated with the goodwill of the Product subject to the recall shall not be
included as an expense of recall and shall, in all instances, be borne by
DEPOMED. The remedies set forth above shall constitute the sole remedy of each
Party under this Section 8.1.


8.1.2 MOVA shall have no obligation
pursuant to Section 8.1 above to the extent such claim (i) is caused by
deficiencies with respect to the setting of the Specifications, the inherent
safety, efficacy or marketability of the Products or any distribution thereof,
(ii) results from a defect in Materials that is not reasonably discoverable by
MOVA using the test methods set forth in the Specifications, (iii) results from
a defect in the API or Materials supplied by DEPOMED that is not reasonably
discoverable by MOVA using the test methods set forth in the Specifications,
(iv) is caused by actions of third parties occurring after such Product is
shipped by  MOVA pursuant to Section 3.1;
(v) is due to packaging or labeling defects or omissions for which MOVA has no
responsibility, or (vi) is due to any other breach by DEPOMED of its
obligations under this Agreement.


8.2          Recall Coordination. All
coordination of any recall or field correction activities involving Product
shall be handled by DEPOMED, but MOVA shall reasonably cooperate with DEPOMED
in accomplishing any of the foregoing actions.



 18
 









8.3          Recall Records. Each of the Parties shall maintain complete
and accurate recall records of all the Product sold by it for such periods as
may be required by Applicable Law, but in no event less than three (3) years
after the date of the recall. Each party shall promptly notify the other by telephone
(to be confirmed in writing) of any information which might affect the
marketability, safety or effectiveness of the Products and/or which might
result in the Recall or seizure of the Products.  Upon receiving any such notice or upon any
such discovery, each party shall cease and desist from further shipments of
such Products in its possession or control until a decision has been made
whether a Recall or some other corrective action is necessary.  The decision to initiate a Recall or to take
some other corrective action, if any, shall be made and implemented by
DEPOMED.  “Recall” shall mean any action (i) by the Client to recover
title to or possession of quantities of the Products sold or shipped to third
parties (including, without limitation, the voluntary withdrawal of Products
from the market); or (ii) by any regulatory authorities to detain or destroy
any of the Products.  Recall shall also
include any action by either party to refrain from selling or shipping
quantities of the Products to third parties which would have been subject to a
Recall if sold or shipped.


8.4          Disputes. Any
disputes, as between MOVA and DEPOMED, with regards to the quality of the
Product shall be handled according to the provisions stated in Section 4.7 of
this Agreement.


ARTICLE
9 – RECORDS AND AUDITS


9.1          Records and Retained Samples.
During the term hereof, MOVA shall (i) prepare and maintain Batch Records and
(ii) retain samples, properly stored, from each lot or batch of Products
supplied by MOVA hereunder, sufficient to perform each quality control test
specified in the Specifications at least twice. DEPOMED agrees to provide for
such purpose all the information, processes, analytical methods, testing
procedures, and any other information reasonably requested by MOVA and in the
possession of DEPOMED necessary for manufacturing the Product in accordance
with cGMPs. MOVA agrees to provide DEPOMED upon release and delivery of the
Product, copies of the analytical testing data such as Certificate of Analysis.
MOVA agrees to provide DEPOMED copies of its executed Batch Records and related
documents. Such records shall be available for audit by DEPOMED, and its
designates, as well as FDA and foreign regulatory agencies, upon request. MOVA
shall store the manufacture and analysis documentation for each batch of
PRODUCT for the shelf life period of the respective batch and for two (2) years
thereafter.


9.2          Quarterly Review.
Each party shall forthwith upon execution of this Agreement appoint one of its
employees to be a relationship manager responsible for liaison between the
parties.  The relationship managers shall
meet not less than quarterly, whether in person, by means of video conference,
telephone or such other agreed upon means of communication, to review the
current status of the business relationship and manage any issues that have
arisen.



 19















ARTICLE
10 – TERM AND TERMINATION


10.1        Term. Subject
to the termination provisions of Section 10.3, the initial term of this
Agreement shall commence on the Effective Date and shall end on the fifth (5th) anniversary from regulatory
approval of the first dosage form of the Product at MOVA’s Facilities, the (“Initial Term”). Thereafter, this Agreement
shall be automatically renewed for an additional term of two (2) years unless
one Party gives notice to terminate twelve (12) months prior to the expiration
of the Initial Term or any extension thereof.


10.2        Termination due to Market Conditions;
Early Termination by Depomed.


(a)           At any time  after a period of two (2) years from the Effective Date,
DEPOMED shall be entitled to terminate this Agreement, upon one hundred and
eighty (180) days written notice to MOVA, if due to market conditions, the
Product becomes commercially unfeasible and DEPOMED discontinues selling the
Product. If DEPOMED subsequently elects to resume commercializing the Product,
this Agreement shall once again take effect between the Parties, and the
Parties shall meet in good faith to determine the procedure to follow in order
for DEPOMED to resume the purchase of Product from MOVA and MOVA resume the
supply of Product to DEPOMED.


10.3        Termination.
This Agreement may be terminated under the conditions stated herein:


(a)           by either Party by giving the other
Party written notice thereof if the other Party fails to remedy and make good
any breach in the performance of any condition or obligation under this
Agreement after ninety (90) calendar days of the date of a written notice of
breach is sent to the breaching Party thereof, or if such breach cannot be
reasonably remedied within such ninety (90) calendar day period; the Party in
default diligently commences and continues to remedy such breach; or


(b)           by DEPOMED by giving MOVA written
notice of a breach of the Quality Agreement if MOVA fails to remedy and make
good any breach in the performance of any condition or obligation under the
Quality Agreement after ninety (90) calendar days of the date of a written
notice of breach is sent to the breaching Party thereof, or if such breach
cannot be reasonably remedied within such ninety (90) calendar day period;


(c)           by either Party if the other Party is
declared insolvent or bankrupt by a court of competent jurisdiction, or a
voluntary petition of bankruptcy is filed in any court of competent
jurisdiction by the other Party, or the other Party makes or executes any
assignment for the benefit of creditors.


(d)           by DEPOMED, immediately, by giving
MOVA written notice of such termination as a result of any debarment, whether
actual or threatened, or any conviction which could result in debarment,
whether it does so in fact or not; provided that if such circumstance relates
to an individual, MOVA may avoid such termination by the



 20
 









immediate removal
of such person from all tasks performed pursuant to this Agreement and
replacement of such person by another qualified person.


10.4        Effect of Termination. Upon
termination of this Agreement for any reason MOVA shall furnish to DEPOMED a
complete inventory of all stock on hand of work-in-progress for the manufacture
of the Product and finished Product. Unless otherwise agreed to between the
Parties, all stock on hand as of the effective date of termination of this
Agreement shall be dealt with promptly as follows:


(a)           Product manufactured and packaged
pursuant to Purchase Orders from DEPOMED shall be delivered by MOVA to DEPOMED,
whereupon DEPOMED shall pay MOVA therefor in accordance with the terms hereof;


(b)           Work-in-progress commenced by MOVA
against Purchase Orders from DEPOMED shall be completed by MOVA and delivered
to DEPOMED, whereupon DEPOMED shall pay MOVA therefor in accordance with the
terms hereof; and (c)               Materials
not necessary to complete 10.3(b) above but having been ordered or purchased by
MOVA in accordance with DEPOMED ́S then current twelve (12) months rolling
forecast shall be disposed of by MOVA or returned to DEPOMED at DEPOMED’s
option and expense. If MOVA terminates this Agreement under Section 10.3(a)
herein, DEPOMED shall reimburse MOVA for MOVA’s actual cost of such raw
materials purchased by MOVA in order to fulfill DEPOMED ́s then current twelve
(12) months rolling forecast. Additionally, DEPOMED shall reimburse MOVA for
any fees charged to MOVA for the termination of such supply contracts for raw
materials which MOVA can only use for the manufacture of Products. In all other
events of termination and without prejudice to the above mentioned, the Party
having given reason to the termination shall bear the costs of disposal of raw
materials and Active Pharmaceutical Ingredient. 
Any credit balance owed to DEPOMED after application to amounts due to
MOVA shall be promptly paid to DEPOMED.


10.5        No Discharge of Obligations.
Termination of this Agreement for any reason shall not discharge either Party’s
liability for obligations incurred hereunder and amounts unpaid at the time of
such termination.


10.6        Tooling. Upon
any termination, MOVA shall after consultation with and upon request by DEPOMED
deliver to DEPOMED or a third party designated by DEPOMED all tooling and
equipment purchased and for which DEPOMED has remitted payment to MOVA, with
delivery costs to be borne by DEPOMED.


10.7        Conversion
to Non-Exclusive Rights. In the event that MOVA fails to deliver
at least [*  *  *] of the Product volume per order for [*  *  *]
consecutive months or [*  *  *] of the sum of the Product ordered during
such [*  *  *] consecutive months (provided, that
MOVA shall not be deemed to have failed to deliver any Product during a
calendar






* * * Portions of
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and filed separately with the Commission.



 21
 









month, if delivery
of such Product occurs within five business days of the confirmed delivery
date), for reasons other than those related to: (i) DEPOMED, including, failure
to diligently place the corresponding purchase orders; (ii) DEPOMED’s failure
to provide the Specifications or supplying Active Pharmaceutical Ingredient; or
(ii) due to a Force Majeure Event (which shall be governed by Article 17); the
exclusive manufacturing right granted to MOVA in Section 2.1 of this Agreement
shall immediately, and with notice to MOVA, become non-exclusive entitling
DEPOMED to place orders for the greater of (a) [*  *  *],
or (b) the quantity of Product not delivered by MOVA, provided however, that
the requirements for Product will be adjusted to at least [*  *  *]
of its total requirements for Product at the later of (x) thirty (30) days
after MOVA has demonstrated to DEPOMED’s reasonable satisfaction that it is
capable of meeting such requirements and (y) subject to fulfillment by DEPOMED
of any reasonable Product volume purchase requirement in any secondary supplier
contract into which DEPOMED has entered.   
If DEPOMED exercises its right to use an alternative supplier hereunder,
MOVA shall cooperate in good faith with DEPOMED’s reasonable requests relating
to the provision of the Specifications, SOPs, analytical tests, procedures and
all other applicable documents to the alternative supplier(s) designated by
DEPOMED, which shall be entitled to use the same for DEPOMED.  The foregoing conversion shall not apply in
the event that the reason for the delay or shortfall was due to a failure of
supply of API by, or other fault of, DEPOMED. Promptly following execution and
delivery of this Agreement, MOVA shall propose a disaster recovery plan
addressing catastrophic loss of its ability to perform hereunder, with such
plan to focus on minimizing interruption of supply to DEPOMED.  Such plan shall be subject to the reasonable
agreement of the Parties.


10.8        Second Source.  DEPOMED shall be entitled
to qualify a second source for Product manufacture and related activities
provided, however, that upon such qualification DEPOMED shall not purchase more
than an amount estimated in good faith to be [* 
*  *] of its annual requirements
of Product from such source during the term of this Agreement. The parties
agree that DEPOMED will consider in good faith any proposal from Patheon Inc.
or any of its Affiliates to become DEPOMED’s second source supplier.  The implementation of this Section 10.8 shall
not limit DEPOMED’s rights under Section 10.7. 
DEPOMED’s rights pursuant to Sections 10.7 and 10.8 shall be cumulative
and not in substitution for each other. 
The manufacturing party used pursuant to Section 10.7 may be the second
source qualified by DEPOMED pursuant to this Section 10.8, a different
manufacturer, or DEPOMED itself.  MOVA
shall provide reasonable assistance to DEPOMED in qualifying a second source
pursuant to this Section 10.8.


ARTICLE
11 – REGULATORY MATTERS


11.1        Regulatory Filings.
DEPOMED shall be responsible for preparing and submitting all documents
necessary for maintaining the NDA including without limitation adverse drug
reaction reports and annual reports. MOVA shall use best efforts to assist
DEPOMED in complying with any arising requirements of the FDA and any






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



 22
 









other regulatory
authorities. MOVA agrees to comply with all reasonable commitments made in the
NDA and any supplement thereto regarding MOVA’s manufacturing responsibilities
as directed herein, provided that MOVA is notified of such responsibilities and
given an opportunity to review such commitments with sufficient time prior to
their being included in the submitted document by DEPOMED and provided they are
not inconsistent with the then applicable Specifications. Any incremental costs
as a result of the above are subject to the price adjustments as provided in
Section 5.3 herein.


11.2        Compliance.
DEPOMED shall be responsible for compliance of the Specifications (including
but not limited to the text and accuracy of any labeling required by DEPOMED)
with FDA standards. MOVA shall be responsible for compliance of the
manufacturing, processing, packaging procedures and testing procedures with FDA
standards, including those pertaining to cGMPs. Each Party will provide
reasonable assistance to the other, at no charge, if necessary to respond to
FDA audits, inspections, inquiries or requests concerning the Product. DEPOMED
employees present at the facility shall at all times adhere to safety
regulations, cGMPs and work schedule generally applicable to MOVA’s own
employees, provided that such DEPOMED employees are notified of the same.


11.3        Adverse Events Reporting and Product
Information Requests.


(a)           Adverse Reaction Reporting. During
the term of this Agreement, MOVA shall immediately but in any case within
twenty-four (24) hours notify DEPOMED, by facsimile or telephone, of any
adverse drug experience involving the Product that a responsible employee of
MOVA becomes aware of.


(b)           Product Information Requests.
Information concerning any complaints, inquiries and/or drug information
requests from consumers, physicians, or other third parties regarding the
Product shall be forwarded to DEPOMED within twenty-four (24) hours of MOVA’s
receipt of the information and/or inquiry. DEPOMED shall respond to such
complaints and inquiries, if necessary, in accordance with its usual and
customary procedures. DEPOMED shall supply MOVA, for MOVA’s information
purposes only, with copies of its standard response information for the Product
as well as any updates thereto.


(c)           Governmental Reports. DEPOMED shall
be responsible for filing with the FDA any required adverse reaction reports
that it receives directly from third parties and any adverse reaction reports
that it receives through MOVA.


11.4        Cooperation. The
Parties expect that any information concerning the Product required by the FDA
will be submitted by DEPOMED. If MOVA is required to submit to the FDA any
information concerning the Product as part of a FDA inspection or audit in
connection with the manufacture of the Product, DEPOMED will provide to MOVA
such documentation, data and other information as MOVA may require for
submission to the FDA. DEPOMED shall also provide, if required by the FDA,
information concerning its



 23
 









quality control
procedures and marketing of the Product and any other information reasonably
requested by FDA. DEPOMED shall provide its reasonable cooperation and
consultation to MOVA in addressing any issue raised by FDA concerning
manufacture of the Product.


11.5        Compliance Audits. MOVA
shall permit representatives of DEPOMED to conduct audits to confirm MOVA’s
compliance with cGMPs and Specifications upon reasonable advance notice and
subject to the provisions of Article 6. MOVA shall notify DEPOMED within
twenty-four (24) hours after it receives notice of an FDA audit or inspection
involving the Product, any component thereof, or any portion of MOVA’s facility
used or likely to be used in connection with the activities of MOVA to be
conducted under this Agreement, and shall allow DEPOMED to be present and to
participate in any such inspection.  In
each such case, whether or not DEPOMED attended such audit or inspection provide
to DEPOMED copies of any resulting document of action (FDA Form 483 inspection
observation report, regulatory letters, etc.) resulting from these audits,
which pertains to the Product, any component thereof, or any portion of MOVA’s
facility used or likely to be used in connection with the activities of MOVA to
be conducted under this Agreement, within two (2) calendar days after receipt.
Should either MOVA or DEPOMED receive any such document of action, it shall so
notify the other within two (2) business days after receipt and shall provide
to the other an opportunity to the extent feasible under the circumstances, to
provide input to any response to any such document of action.


ARTICLE
12 – INTELLECTUAL PROPERTY


12.1        Trademarks and Labeling. MOVA
shall affix labeling to the Product as specified in the Specifications. That
labeling shall bear one or more trademarks to be designated by DEPOMED. Nothing
contained herein shall give MOVA any right to use any DEPOMED trademark except
on Product for DEPOMED, and MOVA shall not obtain any right, title or interest
in any DEPOMED trademark by virtue of this Agreement or its performance of
services hereunder.


12.2        Inventions.


(a)           For the term of this Agreement,
DEPOMED hereby grants MOVA a non-exclusive, paid-up, royalty-free,
non-transferable license to DEPOMED’s Intellectual Property which MOVA must use
in order to perform the manufacturing services under this Agreement.


(b)           All Intellectual Property generated
or derived by MOVA in the course of performing the manufacturing services, to
the extent it is specific to or is based or relies upon the development,
manufacture, use and sale of the Product, shall be the exclusive property of
DEPOMED.


(c)            
All Intellectual Property generated or derived by MOVA in the course of
performing the manufacturing services 
which is not specific to, or based or reliant upon,



 24
 









the
Product and which has application to manufacturing processes or formulation
development of drug products or drug delivery systems generally shall be the
exclusive property of MOVA (the “Broader Intellectual
Property Rights”).  MOVA
hereby grants DEPOMED, a non-exclusive, paid-up, royalty-free, transferable
license of MOVA’s Broader Intellectual Property Rights which DEPOMED may use
for the manufacture of the Product.


(d)           Each Party shall be solely
responsible for the costs of filing, prosecution and maintenance of patents and
patent applications owned by it.


(e)           Each Party shall give the other Party
written notice, as promptly as practicable, of all Inventions which can
reasonably be deemed to constitute improvements or other modifications of the
Products or processes or technology owned or otherwise controlled by such Party
and a subject matter of this Agreement.


(f)            All rights and licenses granted
under or pursuant to this Agreement by either Party are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code or
analogous provisions of Applicable Law outside the United States, licenses of
right to “intellectual property” as defined under Section 101 of the U.S.
Bankruptcy Code or analogous provisions of Applicable Law outside the United
States (hereinafter “IP”).  The Parties agree that each of them , as
licensee of such rights under this Agreement, shall retain and may fully
exercise all of its rights and elections under the U.S. Bankruptcy Code or any
other provisions of Applicable Law outside the United States that provide
similar protection for IP.  The Parties
further agree that, in the event of the commencement of a bankruptcy proceeding
by or against MOVA under the U.S. Bankruptcy Code or analogous provisions of
Applicable Law outside the United States, DEPOMED shall be entitled to a
complete duplicate of (or complete access to, as appropriate) any such IP and
all embodiments of such IP, which, if not already in DEPOMED’s possession,
shall be promptly delivered to it upon DEPOMED’s written request therefor.


12.3        Intellectual Property.  Subject to Section 12.2, all DEPOMED’s
Intellectual Property shall be owned by DEPOMED and all MOVA Intellectual
Property shall be owned by MOVA.  Neither
Party has, nor shall it acquire, any interest in any of the other Party’s
Intellectual Property unless otherwise expressly agreed to in writing.  Neither Party shall use any Intellectual
Property of the other Party, except as specifically authorized by the other
Party or as required for the performance of its obligations under this
Agreement.


ARTICLE
13 – RELATIONSHIP OF PARTIES


13.1        Independent Contractors.
It is not the intent of the Parties hereto to form any partnership or joint
venture. Each Party shall, in relation to its obligations hereunder, act as an
independent contractor, and nothing in this Agreement shall be construed to
give such Party the power or authority to act for, bind or commit the other
Party in any way whatsoever.



 25
 









13.2        Public Statements. MOVA
and DEPOMED each agree not to disclose the terms of this Agreement in any
public statements, whether oral or written, including but not limited to
shareholder reports, communications with stock market analysts, statements to
other customers or prospective customers, press releases or other
communications with the media, or prospectuses, without the other Party’s prior
written consent, which shall not be unreasonably withheld or delayed, or as
required by Applicable Law. If possible, each Party shall give the other at
least five (5) calendar days advance written notice of a disclosure required by
Applicable Law and will cooperate with the other Party to minimize the scope
and content of such disclosure.


ARTICLE
14 – WARRANTIES


14.1        MOVA’s Warranty. MOVA
hereby represents and warrants as follows:


(a)           The Product shall conform with the
Specifications as set out in Schedule A at the time of delivery to a common
carrier pursuant to Section 3.1.


(b)           MOVA shall comply in all material
respects with Applicable Law.  For
purposes of this Section 15.1(b), and without limiting the foregoing sentence,
any failure to comply with any Applicable Law that exposes DEPOMED to any
sanction or liability, or prevents DEPOMED from using the Product as intended,
shall be deemed to be a material noncompliance.


(c)           MOVA shall maintain all required
governmental permits, licenses, orders, applications and approvals regarding
the manufacturing of the Product, and MOVA shall manufacture Product in accordance
with all such permits, licenses, orders, applications and approvals. Any
expenses incurred to obtain special permits for Product that MOVA would not
have to acquire absent this Agreement will be reimbursed by DEPOMED.


(d)           Product shall, at the time it is
shipped to DEPOMED (i) not be adulterated or misbranded within the meaning of
the Act, or within the meaning of any applicable State or municipal laws in the
U.S.A. and (ii) not be articles that may not, under the Act or any other
Applicable Law, be introduced into interstate commerce.


(e)
MOVA has full authority to enter into this Agreement, that it has no reason to
believe that its performance under this Agreement will infringe any third party
rights and that nothing contained in any other agreement prohibits or restricts
MOVA from entering into any part of this Agreement.


(f)            MOVA represents as of the date of
this Agreement and continuously during the term of this Agreement that it and
its employees, affiliates, and agents have never been (i) debarred or (ii)
convicted of a crime for which a person can be debarred, under Section 335(a)
or 335(b) of the Federal Food, Drug, and Cosmetic Act (“Section 335(a) or (b)”).  MOVA represents that it has never been and,
to the best of its knowledge after due inquiry, none of its employees,
Affiliates, or agents has ever been (i) threatened to be debarred or (ii)
indicted for a crime or otherwise engaged in conduct for



 26
 









which a person can
be debarred, under Section 335(a) or (b). 
MOVA agrees that it will promptly notify DEPOMED in the event of any
such debarment, conviction, threat, or indictment.


14.2        DEPOMED’s Warranty. DEPOMED
hereby represents and warrants as follows:


(a)           The Active Pharmaceutical Ingredient
shall, to the best of DEPOMED’s knowledge, at the time it is shipped to MOVA,
(i) not be adulterated or misbranded within the meaning of the Act or within
the meaning of any other Applicable Law in which the definitions of
adulteration and misbranding are substantially the same as those contained in the
Act; (ii) not be articles that may not, under the Act or any other Applicable
Law, statute or regulation, be introduced into interstate commerce, (iii)
comply with its specifications as provided by DEPOMED and (iv) to the best of
DEPOMED’s knowledge, the use of the Active Pharmaceutical Ingredient for the
manufacture of the Product does not infringe third party intellectual
property  rights.


(b)           As of the time that any Product
produced hereunder is sold, DEPOMED will own all rights to the Product trademarks
and the Product labeling will meet regulatory requirements.


(c)           The manufacture, marketing and sale
of the Product by or on behalf of DEPOMED or its customers shall not, to the
best of DEPOMED’s knowledge, infringe any patent, trademark, trade secret or
other proprietary right of any third person.


(d)           the Specifications for the Product
are its or its Affiliate’s property, or it or its Affiliates have the right to
use the same, or such Specifications are in the public domain, and that DEPOMED
may lawfully disclose the Specifications to MOVA ;


(e)           the Specifications for the Product
are consistent with the NDA for the Product;


(f)            the Product is the subject of an NDA
approved by the U.S.A. Food and Drug Administration;


(g)           Specifications for the Product conform
to all applicable cGMPs and Applicable Law;


(h)           the Products, if labeled and
manufactured in accordance with the Specifications and in compliance with
Applicable Law, including, without limitation cGMPs, (i) may be lawfully sold
and distributed in every jurisdiction in which DEPOMED markets such Products,
(ii) will be fit for the purpose intended, and (iii) will be safe for human
consumption;


(i)
DEPOMED has full authority to enter into this Agreement and that nothing
contained in any other agreement prohibits or restricts DEPOMED from entering
into any part of this Agreement.



 27
 









(k)           All material safety data sheets and
other raw material, Active Pharmaceutical Ingredient or any data supplied by
DEPOMED to MOVA are accurate to the best of DEPOMED’s knowledge. The Parties
understand that MOVA will not do analysis to verify the accuracy of such
DEPOMED supplied data.


14.3        No Implied Warranties. EXCEPT
AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, MOVA AND DEPOMED MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING, IN THE CASE OF MOVA, ANY EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.


ARTICLE
15 – ASSIGNMENT


Except
as set forth in this Article, this Agreement, and all rights and obligations
hereunder, are personal to MOVA and shall not be assigned in whole or in part
by MOVA to any other person or company without the prior written consent of
DEPOMED, which consent shall not be unreasonably withheld.  Notwithstanding the foregoing, MOVA shall be
entitled to assign this Agreement to an Affiliate whose performance is
guaranteed by MOVA or to a party which is the successor to, or the assignee of,
all or substantially all of MOVA’s pharmaceutical business; provided, however,
that any such successor or assignee has agreed in writing to assume all of MOVA’s
obligations under this Agreement. 
DEPOMED may, without the consent of MOVA, assign this Agreement
provided, however, that DEPOMED shall give prior written notice of any assignment
to MOVA. Any assignee of DEPOMED to which it has sold or licensed rights to
manufacture, market or sell the Product in the Territory, which has assumed all
of DEPOMED’s obligations hereunder  must
be qualified and shall have (i) a financial condition at the time of assignment
at least comparable to that of DEPOMED as of the Effective Date, and (ii) has
neither been debarred by the FDA nor is otherwise subject to an order of the
FDA or a court of competent jurisdiction which would prevent it from performing
the obligations of DEPOMED hereunder.  In
the event of any assignment pursuant to the provisions of this Article, the
assigning Party shall have no further obligations hereunder except:  (i) to the extent the same has accrued prior
to such assignment or (ii) pursuant to the guarantee obligation set forth
above.  The terms and conditions of this
Agreement shall be binding upon, and shall inure to the benefit of, the Parties
hereto and their respective successors and permitted assigns.


ARTICLE
16 – GOVERNING LAW AND DISPUTE RESOLUTION


Any
controversy, claim or dispute arising out of or relating to this Agreement or
the breach thereof shall be settled, if possible, through good faith
negotiation between the Parties. Such good faith negotiations shall commence
promptly upon a Party’s receipt of notice of any claim or dispute from the
other Party and continue for a period of sixty (60) calendar days.



 28
 









If
such efforts are not successful, such controversy, claim or dispute relating
to, arising out of, or in any way connected with this Agreement or any term or
condition hereof, or the performance by either Party of its obligations
hereunder, whether before or after termination of this Agreement, except as
otherwise expressly provided in this Agreement, shall be finally resolved by
binding arbitration. Whenever a Party shall decide to institute arbitration
proceedings, it shall give written notice to that effect to the other Party.
This Agreement shall be governed by and construed in accordance with the laws
of the Commonwealth of Puerto Rico without reference to any rules of conflicts
of law or renvoi. Disputes shall be resolved through arbitration before three
(3) arbitrators. Such arbitration shall take place in the vicinity of the
non-triggering Party, and shall proceed in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (“AAA”). Within seven (7) calendar  days of either Party making a demand for
arbitration (or longer if the Parties so agree), DEPOMED and MOVA shall each select
one (1) arbitrator. A third arbitrator shall be selected by the arbitrators
selected by the Parties within thirty (30) calendar days of the demand for
arbitration. In the event that either Party shall fail to appoint its
arbitrator, or the two arbitrators selected by the Parties fail to appoint the
third arbitrator, in either case within the prescribed time period, then either
Party may apply to the AAA for the appointment of such arbitrator. The
determination of a majority of the panel of arbitrators shall be the decision
of the arbitrators and shall be binding regardless of whether one of the
Parties fails or refuses to participate in the arbitration; said determination
shall be enforceable by any court of competent jurisdiction. Each Party shall pay
for the arbitrator it selects with the cost of the third arbitrator being split
equally between the Parties. All other costs shall also be split equally
between the Parties. Either Party may enter any arbitration award in any court
having jurisdiction or may make application to any such court for a judicial
acceptance of the award and order of enforcement, as the case may be. The
Parties’ agreement to submit to arbitration referred to herein shall in no way
prevent either Party from exercising its right to terminate this Agreement
consistent with the terms herein.


ARTICLE
17 – FORCE MAJEURE


Neither
Party shall be liable to the other for default or delay in the performance of
its obligations under this Agreement, if such default or delay shall be caused
directly or indirectly by accident, fire, flood, riot, war, weather, act of
God, embargo, strike, failure or delay of usual sources of supply of materials,
or delay of carriers or governmental orders or regulations, or complete or
partial shutdown of plant by any of the foregoing causes or other causes beyond
its reasonable control, provided the same are not due to the negligence or
willful misconduct of such Party and provided further that any such default,
delay or failure shall be remedied by such Party as soon as possible after the
removal of the cause of such default, failure or delay. Obligations to pay
amounts due under this Agreement shall not be subject to the forestated
excuses.  If due to force majeure MOVA is
unable to supply DEPOMED with the Product for a period exceeding one hundred
and twenty (120) days then DEPOMED shall have the right to terminate this
Agreement without further cost and with immediate effect and upon written
notice to MOVA.  At the end of the first
sixty (60) days during the persistence of the force majeure event MOVA shall
reasonably determine whether it will be able to resume supplying Product at the
end



 29
 









of such one
hundred and twenty (120) days period and notify DEPOMED in writing of such
assessment.  If MOVA has concluded that
it will be unable to resume supplying Product at the end of such period,
DEPOMED shall have the right to terminate this Agreement upon thirty (30) days
written notice to MOVA without further cost. 
MOVA will provide reasonable assistance during the technology transfer
for the Product upon termination due to force majeure.


ARTICLE
18 – NOTICES


Unless
otherwise provided herein, any notice required or permitted to be given
hereunder or any proposal for any modification of this Agreement (hereinafter
collectively referred to as the “Correspondence”)
shall be faxed, mailed by overnight mail, mailed by certified mail, postage
prepaid, or delivered by hand to the Party or the individual to whom such
Correspondence is required or permitted to be given hereunder. If mailed, any
such Correspondence shall be deemed to have been given five (5) business days
from the date mailed, as evidenced by the postmark at the point of mailing. If
delivered by hand or fax, any such Correspondence shall be deemed to have been
given when received by the Party to whom such Correspondence is given, as
evidenced by written and dated receipt of the receiving Party.


All
Correspondence to MOVA shall be addressed as follows:


	
  

  	
   

  	
  MOVA Pharmaceutical Corporation

  
	
   

  	
   

  	
  P.O. Box 8639

  
	
   

  	
   

  	
  Caguas, Puerto Rico 00726

  
	
   

  	
   

  	
  Attention: President

  
	
   

  	
   

  	
  Facsimile: (787) 258-1794

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Patheon, Inc.

  
	
   

  	
   

  	
  7070 Mississauga Road, Suite 350

  
	
   

  	
   

  	
  Mississauga ON    
  L5N 7J8

  
	
   

  	
   

  	
  Attention:  
  General Counsel

  
	
   

  	
   

  	
  Facsimile: (905) 812-6613

  



 


All
Correspondence to DEPOMED shall be addressed as follows:


	
  

  	
   

  	
  Depomed, Inc.

  
	
   

  	
   

  	
  1360 O’Brien Drive

  
	
   

  	
   

  	
  Menlo Park, California  94025

  
	
   

  	
   

  	
  Attention: Vice President, Operations

  
	
   

  	
   

  	
  Facsimile: (650) 462-9993

  



 


	
  with a copy to:

  	
   

  	
  Heller Ehrman LLP

  
	
   

  	
   

  	
  4350 La Jolla  Village Drive, 7th Floor

  
	
   

  	
   

  	
  San Diego, California  92122

  
	
   

  	
   

  	
  Attention: 
  Richard A. Kaufman, Esq.

  



 



 30
 









 


	
  

  	
   

  	
  Facsimile: 
  (858) 450-8499

  



 


Either
Party may change the address to which any correspondence to it is to be
addressed by notification to the other Party as provided herein.


ARTICLE
19 – CAPTIONS


The
captions in this Agreement are solely for convenience of reference and shall
not be used for purposes of interpreting or construing the provisions hereof.


ARTICLE
20 – SEVERABILITY


Should
any part or provision of this Agreement be held unenforceable or in conflict
with Applicable Law, the invalid or unenforceable part or provision shall be
replaced with a provision that accomplishes, to the extent possible, the
original business purpose of such part or provision in a valid and enforceable
manner, and the remainder of this Agreement shall remain binding upon the
Parties hereto.


ARTICLE
21 – WAIVER


No
failure on the part of either Party hereto to exercise, and no delay in
exercising, any right, privilege or power hereunder shall operate as a waiver
or relinquishment of the provision giving rise thereto; nor shall any single or
partial exercise by either Party hereto of any right, privilege or power
hereunder preclude any other further exercise thereof, or the exercise of any
other right, privilege or power.


ARTICLE
22 – SURVIVAL


The
provisions of Articles 1, 6 through 9, Sections 10.4, 10.5, 10.6, 10.7, 11.4,
11.5, Articles 12 through 13, 17 through 22 and 23 shall survive the
termination or expiration of this Agreement.



 31
 









ARTICLE
23 – ENTIRE AGREEMENT


This
Agreement, together with the Schedules hereto constitute the complete and
exclusive Agreement between the Parties hereto with reference to the subject
matter hereof, and no statement or agreements, oral or written, made prior to
or at the signing hereof shall vary or modify the written terms hereof, and
neither Party shall claim any modification or rescission from any provision
hereof unless such modification or rescission is in writing, signed by the
other Party.


IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their
respective duly authorized representatives as of the day and year first above
written.


	
  MOVA Pharmaceutical
  Corporation

  	
  DEPOMED, Inc.

  
	
   

  	
   

  
	
  By:_

  	
  /s/ Michael
  Harding

  	
   

  	
  By: 

  	
   /s/ John N. Shell

  
	
  Name: Michael
  Harding

  	
  Name: John N. Shell

  
	
  Title: COO

  	
  Title: VP Operations

  
	
  Date: June 13,
  2006

  	
  Date: June 19, 2006

  
					



 



 32














Schedule
A


Specifications


Prior to the
commencement of the commercial manufacturing of the Product under this
Agreement DEPOMED shall provide MOVA with copies of such portion of the
Specifications as are contained in the NDA for the Product. If the Specifications
provided are subsequently amended, the DEPOMED shall provide MOVA with such
revised Specifications. Upon acceptance of the revised Specifications MOVA
shall provide DEPOMED with a signed and dated receipt evidencing such
acceptance of the revised Specifications.


Schedule
B


Commercial
Production Fees


1.                                      Per
unit prices


A.  The prices of Product are as follows:


[*  *  *]


[*  *  *]


[*  *  *]


[*  *  *]


[*  *  *]


[*  *  *]


2.                                      Price
Adjustments


[*  *  *]






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











Schedule
C


Quality
Agreement


TO BE
ATTACHED AS SOON AS PRACTICABLE











Schedule
D


Stability
Testing Fees


1.  Stability Annual Fee


The Stability Annual Fee
will be [*  *  *].


2.                                      Price
Adjustments


[*  *  *]






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











Schedule
E


API CREDIT  VALUE
and MAXIMUM CREDIT VALUE


The API Credit Value and Maximum
Credit Value shall be as follows:


	
  [* * *]

  	
  [* * *]

  	
  [* * *]

  	
  [* * *]

  
	
  [* * *]

  	
  [* * *]

  	
  [* * *]

  	
  [* * *]

  



 






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











Schedule
F


MONTHLY
ACTIVE MATERIALS INVENTORY REPORT


TO:                                                                            DEPOMED
INC.


FROM:                                                         MOVA PHARMACEUTICAL CORPORATION


RE:                                                                            API monthly inventory report pursuant to
Section 4.10 of the Commercial Manufacturing Agreement dated (the “Agreement”)


	
  Reporting month:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  API on hand

  	
   

  	
   

  	
   

  
	
  at beginning of month: 

  	
   

  	
  kg 

  	
  (A) 

  
	
   

  	
   

  	
   

  	
   

  
	
  API on hand

  	
   

  	
   

  	
   

  
	
  at end of month:

  	
   

  	
  kg

  	
  (B)

  
	
   

  	
   

  	
   

  	
   

  
	
  Quantity Received during month:

  	
   

  	
  kg

  	
  (C)

  
	
   

  	
   

  	
   

  	
   

  
	
  Quantity Dispensed (1) during month:

  	
   

  	
  kg

  	
   

  
	
  (A + C – B)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Quantity Converted during month:

  	
   

  	
  kg

  	
   

  
	
  (total API in Products produced

  	
   

  	
   

  	
   

  
	
  and not rejected, recalled or returned)

  	
   

  	
   

  	
   

  



 


Capitalized
terms used in this report have the meanings given to such terms in the
Agreement.


	
  MOVA Pharmaceutical
  Corporation

  	
  DATE:

  	
   

  	
   

  
	
   

  	
   

  
	
  Per:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
						



 






(1)
Excludes any (i) API that must be retained by MOVA as samples, (ii) API
contained in Product that must be retained as samples, (iii) API used in
connection with testing (if applicable) and (iv) API received or consumed in
connection with technical transfer activities or development activities,
including, without limitation, any regulatory, stability, validation or test
batches manufactured during the month











SCHEDULE
G


REPORT
OF ANNUAL ACTIVE MATERIALS INVENTORY RECONCILIATION AND CALCULATION OF ACTUAL
ANNUAL YIELD


TO:                                                                            DEPOMED INC.


FROM:                                                       MOVA Pharmaceutical Corporation


RE:                                                                            API annual inventory reconciliation report
and calculation of Actual Annual Yield pursuant to Section 4.10 of the
Commercial Supply Agreement dated • (the “Agreement”)


	
  Reporting Year ending:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  API on hand

  	
   

  	
   

  	
   

  	
   

  
	
  at beginning of Year:

  	
   

  	
   

  	
  kg

  	
  (A)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  API on hand

  	
   

  	
   

  	
   

  	
   

  
	
  at end of Year:

  	
   

  	
   

  	
  kg

  	
  (B)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quantity Received during Year:

  	
   

  	
   

  	
  kg

  	
  (C)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quantity Dispensed (2) during Year:

  	
   

  	
   

  	
  kg

  	
  (D)

  
	
  (A + C - B)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quantity Converted during Year:

  	
   

  	
   

  	
  kg

  	
  (E)

  
	
  (total API in Products produced

  	
   

  	
   

  	
   

  	
   

  
	
  and not rejected, recalled or returned)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  API Credit Value:

  	
  $

  	
   

  	
   

  	
  / kg

  	
  (F)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Target Yield:

  	
   

  	
   

  	
  %

  	
  (G)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Actual Annual Yield:

  	
   

  	
   

  	
  %

  	
  (H)

  
	
  ((E ∕D) * 100)

  	
   

  	
   

  	
   

  	
   

  
						



 






(2) Excludes any (i) API
that must be retained by MOVA as samples, (ii) API contained in Product that
must be retained as samples, (iii) API used in connection with testing (if
applicable) and (iv) API received or consumed in connection with technical
transfer activities or development activities, including, without limitation,
any regulatory, stability, validation or test batches manufactured during the
Year.











SCHEDULE
H


EXCLUSIVE
COMPONENT PURCHASING SUMMARY


[*  *  *]






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