Document:

Exhibit 10.3

2004 EMPLOYEE STOCK PURCHASE PLAN

OF

DEPOMED, INC

Table of
Contents

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Establishment of Plan

  	
  1

  
	
  2.

  	
  Number of Shares

  	
  1

  
	
  3.

  	
  Purpose

  	
  1

  
	
  4.

  	
  Administration

  	
  1

  
	
  5.

  	
  Eligibility

  	
  2

  
	
  6.

  	
  Offering Dates

  	
  2

  
	
  7.

  	
  Participation in this Plan

  	
  2

  
	
  8.

  	
  Grant of Option on Enrollment

  	
  3

  
	
  9.

  	
  Purchase Price

  	
  3

  
	
  10.

  	
  Payment of Purchase Price; Changes in Payroll
  Deductions; Issuance of Shares

  	
  4

  
	
  11.

  	
  Limitations on Shares to be Purchased

  	
  5

  
	
  12.

  	
  Withdrawal

  	
  5

  
	
  13.

  	
  Termination of Employment

  	
  6

  
	
  14.

  	
  Return of Payroll Deductions

  	
  6

  
	
  15.

  	
  Capital Changes

  	
  6

  
	
  16.

  	
  Nonassignability

  	
  7

  
	
  17.

  	
  Reports

  	
  7

  
	
  18.

  	
  Notice of Disposition

  	
  7

  
	
  19.

  	
  No Rights to Continued Employment

  	
  7

  
	
  20.

  	
  Equal Rights and Privileges

  	
  7

  
	
  21.

  	
  Notices

  	
  8

  
	
  22.

  	
  Term; Shareholder Approval

  	
  8

  
	
  23.

  	
  Designation of Beneficiary

  	
  8

  
	
  24.

  	
  Conditions upon Issuance of Shares; Limitation on
  Sale of Shares

  	
  8

  
	
  25.

  	
  Applicable Law

  	
  8

  
	
  26.

  	
  Amendment or Termination

  	
  8

  

 

 i

DEPOMED, INC.

2004 EMPLOYEE STOCK PURCHASE PLAN

(as amended
through May 31, 2007)

1.                                      Establishment
of Plan.

Depomed,
Inc. (the “Company”)
proposes to grant options for purchase of the Company’s common stock (the “Common Stock”) to
eligible employees of the Company and its Participating Subsidiaries (as
hereinafter defined) pursuant to this 2004 Employee Stock Purchase Plan (this “Plan”).  For the purposes of this Plan, “Parent
Corporation” and “Subsidiary” shall have the same meanings as “parent
corporation” and “subsidiary corporation” in Sections 424(e) and 424(f),
respectively, of the Internal Revenue Code of 1986, as amended (the “Code”).  “Participating Subsidiaries” are Parent
Corporations or Subsidiaries that the Board of Directors of the Company (the “Board”) designates
from time to time as corporations that shall participate in this Plan.  The Company intends this Plan to qualify as
an “employee stock purchase plan” under Section 423 of the Code (including any
amendments to or replacements of such Section), and this Plan shall be so
construed.  Any term not expressly
defined in this Plan but defined for purposes of Section 423 of the Code shall
have the same definition herein.

2.                                      Number
of Shares.

The
total number of shares of Common Stock reserved and available for issuance
pursuant to this Plan shall be 1,000,000 (the “Share Limit”), subject to adjustments
effected in accordance with Section 15 of this Plan. Shares issued under this
Plan may consist, in whole or in part, of authorized and unissued shares or
treasury shares reacquired in private transactions or open market purchases,
but all shares issued under this Plan shall be counted against the Share Limit.

3.                                      Purpose.

The
purpose of this Plan is to provide eligible employees of the Company and Participating
Subsidiaries with a convenient means of acquiring an equity interest in the
Company through payroll deductions, to enhance such employees’ sense of
participation in the affairs of the Company and Participating Subsidiaries, and
to provide an incentive for continued employment.  For the purposes of this Plan, “employee”
shall mean any individual who is an employee of the Company or a Participating
Subsidiary. Whether an individual qualifies as an employee shall be determined
by the Committee (as hereinafter defined), in its sole discretion. The
Committee shall be guided by the provisions of Treasury Regulation Section
1.421-7 and Section 3401(c) of the Code and the Treasury Regulations
thereunder, with the intent that the Plan cover all “employees” within the
meaning of those provisions other than those who are not eligible to
participate in the Plan, provided, however, that any determinations regarding
whether an individual is an “employee” shall be prospective only, unless
otherwise determined by the Committee. Unless the Committee makes a contrary
determination, the employees of the Company shall, for all purposes of this
Plan, be those individuals who are carried as employees of the Company or a
Participating Subsidiary for regular payroll purposes or are on a leave of
absence for not more than 90 days. Any inquiries regarding eligibility to
participate in the Plan shall be directed to the Committee, whose decision
shall be final.

4.                                      Administration.

This
Plan shall be administered by the Compensation Committee of the Board (the “Committee”).  Subject to the provisions of this Plan and
the limitations of Section 423 of the Code or any successor provision in the
Code, all questions of interpretation or application of this Plan shall be
determined by the Committee and its decisions shall be final and binding upon
all participants.  Members of the
Committee shall receive no compensation for their services in connection with
the administration of this Plan, other than standard fees as established from time
to time by the Board for services rendered by Board members serving on Board
committees.  All expenses incurred in
connection with the administration of this Plan shall be paid by the Company.

 1
 

5.                                      Eligibility.

Any
employee of the Company or the Participating Subsidiaries is eligible to
participate in an Offering Period (as hereinafter defined) under this Plan
except the following:

a)              employees who are not employed by the Company
or a Participating Subsidiary prior to the beginning of such Offering Period or
prior to such other time period as specified by the Committee;

b)             employees who are customarily employed for
twenty (20) hours or less per week;

c)              employees who are customarily employed for
five (5) months or less in a calendar year;

d)             employees who, together with any other person
whose stock would be attributed to such employee pursuant to Section 424(d) of
the Code, own stock or hold options to purchase stock possessing five percent
(5%) or more of the total combined voting power or value of all classes of
stock of the Company or any of its Participating Subsidiaries or who, as a
result of being granted an option under this Plan with respect to such Offering
Period, would own stock or hold options to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or any of its Participating Subsidiaries;

e)              individuals who provide services to the
Company or any of its Participating Subsidiaries as independent contractors who
are reclassified as common law employees for any reason except for federal
income and employment tax purposes; and

f)                employees who reside in countries for whom
such employees’ participation in the Plan would result in a violation under any
corporate or securities laws of such country of residence.

6.                                      Offering
Dates.

The
offering periods of this Plan (each, an “Offering Period”) shall be of twenty-four
(24) months duration commencing on December 1 and June 1 of each year (or
at such time or times as may be determined by the Committee).  Each Offering Period shall consist of four
(4) six month purchase periods (individually, a “Purchase Period”) during which payroll
deductions of the participants are accumulated under this Plan.  The first business day of each Offering
Period is referred to as the “Offering Date.” 
The last business day of each Purchase Period is referred to as the “Purchase Date.”  The Committee shall have the power to change
the Offering Dates, the Purchase Dates and the duration of Offering Periods or
Purchase Periods without shareholder approval if such change is announced prior
to the relevant Offering Period or prior to such other time period as specified
by the Committee.

7.                                      Participation
in this Plan.

Eligible
employees may become participants in an Offering Period under this Plan on the
Offering Date, after satisfying the eligibility requirements, by delivering a
subscription agreement to the Company prior to such Offering Date, or such
other time period as specified by the Committee.  An eligible employee who does not deliver a
subscription agreement to the Company after becoming eligible to participate in
an Offering Period shall not participate in that Offering Period or any
subsequent Offering Period unless such employee enrolls in this Plan by filing
a subscription agreement with the Company prior to such Offering Period, or
such other time period as specified by the Committee.  Once an employee becomes a participant in an
Offering Period by filing a subscription agreement, such employee shall
automatically participate in the Offering Period commencing immediately
following the last day of the prior Offering Period unless the employee
withdraws or is deemed to withdraw from this Plan or terminates further
participation in the Offering Period as set forth in Section 12 below.  Such participant is not required to file any
additional subscription agreement in order to continue participation in this
Plan.

 2
 

8.                                      Grant
of Option on Enrollment.

Enrollment
by an eligible employee in this Plan with respect to an Offering Period shall
constitute the grant (as of the Offering Date) by the Company to such employee
of an option to purchase on the Purchase Date up to that number of shares of
Common Stock determined by a fraction, the numerator of which is the amount
accumulated in such employee’s payroll deduction account during such Purchase
Period and the denominator of which is the lower of (i) eighty-five percent
(85%) of the fair market value of a share of Common Stock on the Offering Date
(but in no event less than the par value of a share of Common Stock), or (ii)
eighty-five percent (85%) of the fair market value of a share of Common Stock
on the Purchase Date (but in no event less than the par value of a share of
Common Stock), provided, however, that the number of shares of Common Stock
subject to any option granted pursuant to this Plan shall not exceed the lesser
of (x) the maximum number of shares set by the Committee pursuant to Section
11(c) below with respect to the applicable Purchase Date, or (y) the maximum
number of shares which may be purchased pursuant to Section 11(b) below with
respect to the applicable Purchase Date. 
The fair market value of a share of Common Stock shall be determined as
provided in Section 9 below.

9.                                      Purchase
Price.

The
purchase price per share at which a share of Common Stock shall be sold in any
Offering Period shall be eighty-five percent (85%) of the lesser of:

a)              the fair market value on the Offering Date;
or

b)             the fair market value on the Purchase Date.

For
the purposes of this Plan, the term “fair market value” means, as of any date, the
value of a share of the Common Stock determined as follows:

a)              If the Common Stock is traded on any
established stock exchange or quoted on a national market system, fair market
value shall be the closing sales price for the Common Stock as quoted on that
stock exchange or system for the date the value is to be determined (the “Value Date”) as reported by such stock exchange or
national market system, or, if not reported by such stock exchange or national
market system, as reported in The Wall
Street Journal or a similar
publication.  If no sales are reported as
having occurred on the Value Date, fair market value shall be that closing
sales price for the last preceding trading day on which sales of Common Stock
are reported as having occurred.  If no
sales are reported as having occurred during the five trading days before the
Value Date, Fair Market Value shall be the closing bid for Common Stock on the
Value Date.  If the Common Stock is
listed on multiple exchanges or systems, fair market value shall be based on
sales or bid prices on the primary exchange or system on which the Common Stock
is traded or quoted;

b)             If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported on any
established stock exchange or quoted on a national market system, fair market
value shall be the mean between the high bid and low asked prices on the Value
Date.  If no prices are quoted for the
Value Date, fair market value shall be the mean between the high bid and low
asked prices on the last preceding trading day on which any bid and asked
prices were quoted; or

c)              If the Common Stock is not traded on any
established stock exchange or quoted on a national market system and are not
quoted by a recognized securities dealer, the Board or Committee will determine
fair market value in good faith.  The
Board or Committee will consider the following factors, and any others it
considers significant, in determining fair market value: (i) the price at
which other securities of the Company have been issued to purchasers other than
employees, directors, or consultants, (ii) the Company’s shareholder’s
equity, prospective earning power, dividend-paying capacity, and non-operating
assets, if any, and (iii) any other relevant factors, including the
economic outlook for the Company and the Company’s industry, the Company’s
position in that industry, the Company’s goodwill and other intellectual
property, and the values of securities of other businesses in the same
industry.

 3
 

10.                               Payment
of Purchase Price; Changes in Payroll Deductions; Issuance of Shares.

a)     The purchase price of the shares is
accumulated by regular payroll deductions made during each Offering Period. The
deductions are made as a percentage of the participant’s compensation in one
percent (1%) increments, not less than one percent (1%), nor greater than
fifteen percent (15%), or such lower limit set by the Committee.  Compensation shall mean all regular straight-time
gross earnings, and shall not include payments for overtime, shift premium,
incentive compensation or payments, bonuses, commissions or other
compensation.  Payroll deductions shall
commence on the first payday of the Offering Period and shall continue to the
end of the Offering Period unless sooner altered or terminated as provided in
this Plan.

b)    A participant may increase or decrease the
rate of payroll deductions during an Offering Period by filing with the Company
a new authorization for payroll deductions, in which case the new rate shall
become effective for the next payroll period commencing after the Company’s
timely receipt of the authorization and shall continue for the remainder of the
Offering Period unless changed as described below.  Such change in the rate of payroll deductions
may be made at any time during an Offering Period, but not more than one (1)
change may be made effective during any Purchase Period.  A participant may increase or decrease the
rate of payroll deductions for any subsequent Offering Period by filing with
the Company a new authorization for payroll deductions prior to the beginning
of such Offering Period, or such other time period as specified by the
Committee.

c)     A participant may reduce his or her payroll
deduction percentage to zero during an Offering Period by filing with the
Company a request for cessation of payroll deductions.  Such reduction shall be effective beginning
with the next payroll period after the Company’s timely receipt of the request
and no further payroll deductions shall be made for the duration of the
Offering Period.  Payroll deductions
credited to the participant’s account prior to the effective date of the
request shall be used to purchase shares of Common Stock of the Company in accordance
with Section (e) below.  A participant
may not resume making payroll deductions during the Offering Period in which he
or she reduced his or her payroll deductions to zero.

d)    All payroll deductions made for a participant
are credited to his or her account under this Plan and are deposited with the
general funds of the Company.  No
interest accrues on the payroll deductions. 
All payroll deductions received or held by the Company may be used by
the Company for any corporate purpose, and the Company shall not be obligated
to segregate such payroll deductions.

e)     On each Purchase Date, for so long as this
Plan remains in effect and provided that the participant has not submitted a
signed and completed withdrawal form before that date, which notifies the
Company that the participant wishes to withdraw from that Offering Period under
this Plan and have all payroll deductions accumulated in the account maintained
on behalf of the participant, as of that date returned to the participant, the
Company shall apply the funds then in the participant’s account to the purchase
of whole shares of Common Stock reserved under the option granted to such
participant with respect to the Offering Period to the extent that such option
is exercisable on the Purchase Date.  The
purchase price per share shall be as specified in Section 9 of this Plan.  Any cash remaining in a participant’s account
after such purchase of shares shall be refunded to such participant in cash,
without interest, provided, however, that any amount remaining in such
participant’s account on a Purchase Date which is less than the amount
necessary to purchase a full share of Common Stock shall be carried forward,
without interest, into the next Purchase Period or Offering Period, as the case
may be.  In the event that this Plan has
been oversubscribed, all funds not used to purchase shares on the Purchase Date
shall be returned to the participant, without interest.  No Common Stock shall be purchased on a
Purchase Date on behalf of any employee whose participation in this Plan has
terminated prior to such Purchase Date.

f)     As soon as practicable after the Purchase
Date, the Company shall issue shares for the 

 4
 

participant’s
benefit representing the shares purchased upon exercise of his or her option.

g)             During a participant’s lifetime, his or her
option to purchase shares hereunder is exercisable only by him or her.  The participant shall have no interest or
voting rights in shares covered by his or her option until such option has been
exercised.

11.                               Limitations
on Shares to be Purchased.

a)              No participant shall be entitled to purchase
stock under this Plan at a rate which, when aggregated with his or her rights
to purchase stock under all other employee stock purchase plans of the Company
or any Subsidiary, exceeds $25,000 in fair market value, determined as of the
Offering Date (or such other limit as may be imposed by the Code) for each
calendar year in which the employee participates in this Plan.  The Company shall automatically suspend the
payroll deductions of any participant as necessary to enforce such limit
provided that when the Company automatically resumes such payroll deductions,
the Company must apply the rate in effect immediately prior to such suspension.

b)             No participant shall be entitled to purchase
more than 3,000 shares of Common Stock (the “Maximum Share Amount”)
on any single Purchase Date.  Prior to
the commencement of any Offering Period or prior to such time period as
specified by the Committee, the Committee may, in its sole discretion, set a
new Maximum Share Amount.  If a new
Maximum Share Amount is set, then all participants must be notified of such
Maximum Share Amount prior to the commencement of the next Offering Period.  The Maximum Share Amount shall continue to
apply with respect to all succeeding Purchase Dates and Offering Periods unless
revised by the Committee as set forth above.

c)              If the number of shares to be purchased on a
Purchase Date by all employees participating in this Plan exceeds the number of
shares then available for issuance under this Plan, then the Company shall make
a pro rata allocation of the remaining shares in as uniform a manner as shall
be reasonably practicable or as the Committee shall determine to be equitable.  In such event, the Company shall give written
notice of such reduction of the number of shares to be purchased under a
participant’s option to each participant affected.

d)             Any payroll deductions accumulated in a
participant’s account which are not used to purchase stock due to the limitations
in this Section 11 shall be returned to the participant as soon as practicable
after the end of the applicable Purchase Period, without interest.

12.                               Withdrawal.

a)              Each participant may withdraw from an
Offering Period under this Plan by signing and delivering to the Company a
written notice to that effect on a form provided for such purpose.  Such withdrawal may be elected at any time
prior to the end of an Offering Period, or such other time period as specified
by the Committee.

b)             Upon withdrawal from this Plan, the
accumulated payroll deductions shall be returned to the withdrawn participant,
without interest, and his or her interest in this Plan shall terminate.  In the event a participant voluntarily elects
to withdraw from this Plan, he or she may not resume his or her participation
in this Plan during the same Offering Period, but he or she may participate in
any Offering Period under this Plan which commences on a date subsequent to
such withdrawal by filing a new authorization for payroll deductions in the
same manner as set forth in Section 7 above for initial participation in this
Plan.

c)              If the fair market value on the first day of
the current Offering Period in which a participant is enrolled is higher than
the fair market value on the first day of any subsequent Offering Period, the
Company shall automatically enroll such participant in the subsequent Offering
Period.  Any 

 5
 

funds accumulated in a
participant’s account prior to the first day of such subsequent Offering Period
shall be applied to the purchase of shares on the Purchase Date immediately
prior to the first day of such subsequent Offering Period, if any.

13.                               Termination
of Employment.

Termination
of a participant’s employment for any reason, including retirement, death or
the failure of a participant to remain an eligible employee of the Company or
of a Participating Subsidiary, shall immediately terminate his or her
participation in this Plan.  In such
event, the payroll deductions credited to the participant’s account shall be
returned to him or her or, in the case of his or her death, to his or her legal
representative, without interest.  For
purposes of this Section 13, an employee shall not be deemed to have terminated
employment or failed to remain in the continuous employ of the Company or of a
Participating Subsidiary in the case of sick leave, military leave, or any
other leave of absence approved by the Committee, provided, however that such
leave is for a period of not more than ninety (90) days or reemployment upon the
expiration of such leave is guaranteed by contract or statute.

14.                               Return
of Payroll Deductions.

In the
event a participant’s interest in this Plan is terminated by withdrawal,
termination of employment or otherwise, or in the event this Plan is terminated
by the Board, the Company shall deliver to the participant all payroll
deductions credited to such participant’s account.  No interest shall accrue on the payroll
deductions of a participant in this Plan.

15.                               Capital
Changes.

a)              Subject to any required action by the
shareholders of the Company, the number and type of shares of Common Stock
covered by each option under this Plan which has not yet been exercised and the
number and type of shares of Common Stock which have been authorized for
issuance under this Plan but have not yet been placed under option
(collectively, the “Reserves”), as well as the price per share of Common
Stock covered by each option under this Plan which has not yet been exercised,
shall be proportionately adjusted for any increase or decrease in the number of
issued and outstanding shares of Common Stock resulting from a stock split,
stock dividend, combination or reclassification of the Common Stock or any
other increase or decrease in the number of issued and outstanding shares of
Common Stock effected without receipt of any consideration by the Company,
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the
Committee, whose determination shall be final, binding and conclusive.  Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to an option.

b)             In the event of the proposed dissolution or
liquidation of the Company, the Offering Period will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Board.  In the event of (i) a merger
or consolidation in which the Company is not the surviving corporation (other
than a merger or consolidation with a wholly-owned subsidiary, a
reincorporation of the Company in a different jurisdiction, or other
transaction in which there is no substantial change in the shareholders of the
Company or their relative stock holdings and the options under this Plan are
assumed, converted or replaced by the successor corporation, which assumption
shall be binding on all participants), (ii) a merger in which the Company is
the surviving corporation but after which the shareholders of the Company
immediately prior to such merger (other than any shareholder that merges, or
which owns or controls another corporation that merges, with the Company in
such merger) cease to own their shares or other equity interest in the Company,
(iii) the sale of all or substantially all of the assets of the Company, or
(iv) the acquisition, sale, or transfer of more than 50% of the outstanding
shares of the Company by tender offer or similar transaction, each option under
this Plan shall be assumed or an equivalent option 

 6
 

shall be substituted by the
successor corporation or a parent or subsidiary of the successor corporation,
unless the successor corporation does not agree to assume the option or to
substitute an equivalent option, in which case the Board may determine, in the
exercise of its sole discretion and in lieu of such assumption or substitution,
to shorten the Offering Period then in progress by setting a new Purchase Date
(the “New
Purchase Date”).  If the Board shortens the Offering Period
then in progress, the Board shall notify each participant in writing, at least
ten (10) days prior to the New Purchase Date, that the Purchase Date for his or
her option has been changed to the New Purchase Date and that his or her option
will be exercised automatically on the New Purchase Date, unless prior to such date
he or she has withdrawn from the Offering Period as provided in
Section 12.

c)              The Committee may, if it so determines in the
exercise of its sole discretion, also make provision for adjusting the
Reserves, as well as the price per share of Common Stock covered by each
outstanding option, in the event that the Company effects one or more
reorganizations, recapitalizations, rights offerings or other increases or
reductions of shares of its outstanding Common Stock, or in the event of the
Company being consolidated with or merged into any other corporation.

16.                               Nonassignability.

Neither
payroll deductions credited to a participant’s account nor any rights with
regard to the exercise of an option or to receive shares under this Plan may be
assigned, transferred, pledged or otherwise disposed of in any way (other than
by the laws of descent and distribution or as provided in Section 23 below) by
the participant.  Any such attempt at
assignment, transfer, pledge or other disposition shall be void and without effect.

17.                               Reports.

Individual
accounts shall be maintained for each participant in this Plan.  Each participant shall receive, as soon as
practicable after the end of each Purchase Period, a report of his or her
account setting forth the total payroll deductions accumulated, the number of
shares purchased, the per share price thereof and the remaining cash balance,
if any, carried forward to the next Purchase Period or Offering Period, as the
case may be.

18.                               Notice
of Disposition.

Each
participant shall notify the Company in writing if the participant disposes of
any of the shares purchased in any Offering Period pursuant to this Plan if
such disposition occurs within two (2) years from the Offering Date or within
one (1) year from the Purchase Date on which such shares were purchased (the “Notice Period”).  The Company may, at any time during the
Notice Period, place a legend or legends on any certificate representing shares
acquired pursuant to this Plan requesting the Company’s transfer agent to
notify the Company of any transfer of the shares.  The obligation of the participant to provide
such notice shall continue notwithstanding the placement of any such legend on
the certificates.

19.                               No
Rights to Continued Employment.

Neither
this Plan nor the grant of any option hereunder shall confer any right on any
employee to remain in the employ of the Company or any Participating
Subsidiary, or restrict the right of the Company or any Participating
Subsidiary to terminate such employee’s employment.

20.                               Equal
Rights and Privileges.

All
eligible employees shall have equal rights and privileges with respect to this
Plan so that this Plan qualifies as an “employee stock purchase plan” within
the meaning of Section 423 or any successor provision of the Code and the related
regulations.  Any provision of this Plan
which is inconsistent with Section 423 or any successor provision of the Code
shall, without further act or amendment by the Company, the Committee or the
Board, be reformed to comply with the requirements of Section 423.  This Section 20 shall take precedence over
all other 

 7
 

provisions in this
Plan.

21.                               Notices.

All
notices or other communications by a participant to the Company under or in
connection with this Plan shall be deemed to have been duly given when received
in the form specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.

22.                               Term;
Shareholder Approval.

This
Plan shall be approved by the shareholders of the Company, in any manner
permitted by applicable corporate law, within twelve (12) months after the date
this Plan is adopted by the Board.  No
purchase of shares pursuant to this Plan shall occur prior to such shareholder
approval.  This Plan shall continue until
the earliest to occur of (a) termination of this Plan by the Board (which
termination may be effected by the Board at any time), (b) issuance of all of
the shares of Common Stock reserved for issuance under this Plan, or (c) ten
(10) years from the adoption of this Plan by the Board.

23.                               Designation
of Beneficiary.

a)              A participant may file a written designation
of a beneficiary who is to receive any shares and cash, if any, from the
participant’s account under this Plan in the event of such participant’s death
subsequent to the end of a Purchase Period but prior to delivery to him of such
shares and cash.  The participant shall
deliver along with such designation a written acknowledgment of the participant’s
spouse, if any, consenting to the designation. 
In addition, a participant may file a written designation of a
beneficiary who is to receive any cash from the participant’s account under
this Plan in the event of such participant’s death prior to a Purchase Date.

b)             Such designation of beneficiary may be
changed by the participant at any time by written notice.  The participant shall deliver along with such
designation a written acknowledgment of the participant’s spouse, if any,
consenting to the designation.  In the
event of the death of a participant and in the absence of a beneficiary validly
designated under this Plan who is living at the time of such participant’s
death, the Company shall deliver such shares or cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the
Company, in its discretion, may deliver such shares or cash to the spouse or to
any one or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.

24.                               Conditions
upon Issuance of Shares.

Shares
shall not be issued with respect to an option unless the exercise of such
option and the issuance and delivery of such shares pursuant thereto shall comply
with all applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange or automated quotation system upon which the
shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

25.                               Applicable
Law.

The
Plan shall be governed by the substantive laws (excluding the conflict of laws
rules) of the State of California.

26.                               Amendment
or Termination.

The
Board may at any time amend, terminate or extend the term of this Plan;
provided, however, that:  (i) 

 8
 

any such
termination cannot affect options previously granted under this Plan; (ii) no
amendment may make any change in an option previously granted which would
adversely affect the right of any participant, nor may any amendment be made
without approval of the shareholders of the Company obtained in accordance with
Section 22 above within twelve (12) months of the adoption of such amendment if
such amendment would:

a)              increase the number of shares that may be
issued under this Plan; or

b)             change the designation of the employees (or
class of employees) eligible for participation in this Plan.

Notwithstanding
the foregoing, the Board may make such amendments to the Plan as the Board
determines to be advisable, if the continuation of the Plan or any Offering
Period would result in financial accounting treatment for the Plan that is
different from the financial accounting treatment in effect on the date this
Plan is adopted by the Board.

Adopted by the Board
on:  March 19, 2004

Approved by the
shareholders on:  May 27, 2004

Effective date of this
Plan:  May 27, 2004

Amended by the Board
on:  March 22, 2007

Amendment approved
by the shareholders on:  May 31, 2007

 9EXHIBIT
10.4

Amendment
to the Supply Agreement

This AMENDMENT TO THE
SUPPLY AGREEMENT (EXTENDED RELEASE METFORMIN FORMULATIONS – U.S.A.) (the “Amendment”)
is made and entered into the 30th day of June 2007, by and between:

BIOVAIL
LABORATORIES INTERNATIONAL SRL

(hereinafter
referred to as “Biovail”)

— and –

DEPOMED,
INC.

(hereinafter
referred to as “Depomed”)

WHEREAS Biovail and
Depomed are parties (the “Parties”) to a Supply Agreement (Extended Release
Metformin Formulations – U.S.A.) (the “Agreement”) dated December 13, 2005; and

WHEREAS the Parties
desire to amend certain specific provisions of the Agreement in accordance with
the terms more fully herein set forth;

NOW, THEREFORE, in
consideration of the terms and conditions contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:

1.         DEFINITIONS

Unless otherwise explicitly set forth herein, all capitalized terms
used herein and not otherwise defined herein shall have the respective meanings
ascribed to them in the Agreement.

2.         AMENDMENTS TO THE
AGREEMENT

The Parties hereby agree to amend the Agreement, as follows:

(a)               The
following definition is added to the Agreement:

“1.14(a) “Launch” has the meaning set forth in section 18.1 of
this Agreement.”

(b)               Section 5.1 of the
Agreement is deleted and replaced with the following:

“No later than June 30, 2007, and within one hundred twenty (120) days
before the end of each calendar year thereafter, Depomed shall deliver to BLS a
non-binding forecast, by calendar month, of the quantities of 1000mg Product,
by SKU (including samples), that Depomed expects to order from BLS for
Marketing in the Territory, for the following eighteen (18) calendar months
(the “Planning Forecast”). No less than once per calendar year, the
Parties shall meet to review the then effective Planning Forecast of Depomed to
compare the yearly requirements of 1000mg Product which Depomed expects would
be necessary to fulfill the sales forecast provided in such Planning Forecast,
projecting the highest level of sales of the 1000mg Product in the Territory.

(c)               Section 18.1 of the
Agreement is deleted and replaced with the following:

“Provided that BLS is in compliance with its supply obligation hereunder,
Depomed shall cause the First Commercial Sale to occur within 180 days after
Regulatory Approval of the first 1000mg Product (the “Launch”).

(d)               Exhibit A to the
Agreement is deleted and replaced with the following:

EXHIBIT A

SPECIFICATIONS

“Extended release formulation of metformin hydrochloride in t   he form of a 1000mg tablet
manufactured using BLS’ AQ formulation technology, packaged in bottles of 7, 30
or 90 for distribution to the trade, tested in accordance with, and complying
with, the requirements of the NDA, and including an approved product outsert
containing approved product labeling.”

3.         GENERAL

(a)               Other
than as explicitly herein set forth, the Agreement shall remain in full force
and effect, unamended, and the Amendment shall remain subject to all unamended
terms and provisions of the Agreement.

(b)               Except
as set forth herein, in the event of any inconsistencies between the terms of
the Agreement and the terms of the Amendment, the provisions of the Amendment
will govern.

(c)               This
Amendment shall be governed by the laws of New York and the parties attorn to
the jurisdiction of the courts in New York to resolve any dispute.

IN WITNESS WHEREOF, the
parties to this Amendment hereby execute this Agreement as of the date first
written above.

	
  BIOVAIL LABORATORIES INTERNATIONAL SRL

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Per:

  	
  /s/ Jean-Luc Marte

  	
   

  
	
   

  	
  Jean-Luc Marte

  	
   

  
	
   

  	
  VP Commercial
  Operations

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DEPOMED, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Per:

  	
  /s/ Matthew M. Gosling

  	
   

  
	
   

  	
  Matthew M. Gosling

  	
   

  
	
   

  	
  VP and General Counsel

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