Document:

Exhibit 10.21

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXECUTION
COPY

 

AMENDED
AND RESTATED LICENSE AGREEMENT

(Extended Release Metformin Formulations — Canada)

 

DEPOMED, INC.
a company organized under the laws of California, USA 

with offices at 

1360 O’Brien Drive

Menlo Park,

California, 94025

 

AND:

 

BIOVAIL LABORATORIES INTERNATIONAL SRL

a Barbados society with restricted liability organized under the laws of
Barbados

whose head office is

Chelston Park

Building 2, Collymore Rock

St. Michael BH1

Barbados, West Indies

 

Biovail – Depomed
Amended and Restated License Agreement

 

THE
SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

 

CONFIDENTIAL TREATMENT
REQUESTED

 

Contents

 

	
  1.

  	
  DEFINITIONS

  	
  2

  
	
   

  	
   

  	
   

  
	
  2.

  	
  DEVELOPMENT AND DEVELOPMENT COSTS

  	
  8

  
	
   

  	
   

  	
   

  
	
  3.

  	
  DISCLOSURE OF INFORMATION AND REPORTING

  	
  8

  
	
   

  	
   

  	
   

  
	
  4.

  	
  LICENSE OF PRODUCT

  	
  8

  
	
   

  	
   

  	
   

  
	
  5.

  	
  ROYALTIES

  	
  10

  
	
   

  	
   

  	
   

  
	
   

  	
  500MG PRODUCT ROYALTIES

  	
  10

  
	
   

  	
  1000MG PRODUCT ROYALTIES

  	
  11

  
	
   

  	
  REDUCTION OF ROYALTIES

  	
  11

  
	
   

  	
  ROYALTY REPORTS AND PAYMENTS

  	
  11

  
	
   

  	
  RECORDS AND AUDITS

  	
  13

  
	
   

  	
  500MG PRODUCT SUBSTITUTION

  	
  13

  
	
   

  	
   

  	
   

  
	
  6.

  	
  REGULATORY AFFAIRS

  	
  14

  
	
   

  	
   

  	
   

  
	
   

  	
  REGULATORY RESPONSIBILITY

  	
  14

  
	
   

  	
  ADVERSE REACTION REPORTS

  	
  16

  
	
   

  	
  WITHDRAWAL OF REGULATORY APPROVAL

  	
  16

  
	
   

  	
  RIGHTS OF REFERENCE

  	
  16

  
	
   

  	
   

  	
   

  
	
  7.

  	
  TECHNOLOGY TRANSFER; MANUFACTURING; BATCH
  RELEASE

  	
  17

  
	
   

  	
   

  	
   

  
	
   

  	
  TECHNOLOGY TRANSFER TO BLS

  	
  17

  
	
   

  	
   

  	
   

  
	
  8.

  	
  PATENTS, INFRINGEMENT

  	
  17

  
	
   

  	
   

  	
   

  
	
   

  	
  INFRINGEMENT

  	
  17

  
	
   

  	
  INFRINGEMENT OF THIRD PARTY PATENTS

  	
  19

  
	
   

  	
   

  	
   

  
	
  9.

  	
  OWNERSHIP OF INVENTIONS AND KNOW-HOW

  	
  20

  
	
   

  	
   

  	
   

  
	
   

  	
  OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS

  	
  20

  
	
   

  	
  DISCLOSURE OF INVENTIONS

  	
  21

  
	
   

  	
  FILING AND PROSECUTION OF PATENT APPLICATIONS BY BLS

  	
  21

  
	
   

  	
  FILING AND PROSECUTION OF PATENT APPLICATIONS BY DEPOMED

  	
  22

  
				

 

i

 

CONFIDENTIAL TREATMENT
REQUESTED

 

	
  10.

  	
  CONFIDENTIALITY

  	
  22

  
	
   

  	
   

  	
   

  
	
  11.

  	
  REPRESENTATIONS AND WARRANTIES;
  NON-COMPETITION; EXPORTATION

  	
  24

  
	
   

  	
   

  	
   

  
	
   

  	
  REPRESENTATIONS AND WARRANTIES OF DEPOMED

  	
  24

  
	
   

  	
  MUTUAL REPRESENTATIONS AND WARRANTIES

  	
  25

  
	
   

  	
  NON-COMPETITION

  	
  26

  
	
   

  	
  EXPORTATION OF 500MG PRODUCT

  	
  26

  
	
   

  	
   

  	
   

  
	
  12.

  	
  INDEMNIFICATION

  	
  27

  
	
   

  	
   

  	
   

  
	
   

  	
  INDEMNIFICATION OF DEPOMED

  	
  27

  
	
   

  	
  INDEMNIFICATION OF BLS

  	
  28

  
	
   

  	
   

  	
   

  
	
  13.

  	
  TERM

  	
  29

  
	
   

  	
   

  	
   

  
	
  14.

  	
  EXPIRY AND TERMINATION

  	
  29

  
	
   

  	
   

  	
   

  
	
  15.

  	
  PUBLICITY

  	
  31

  
	
   

  	
   

  	
   

  
	
  16.

  	
  ASSIGNABILITY

  	
  32

  
	
   

  	
   

  	
   

  
	
  17.

  	
  NOTICES

  	
  33

  
	
   

  	
   

  	
   

  
	
  18.

  	
  FORCE MAJEURE

  	
  34

  
	
   

  	
   

  	
   

  
	
  19.

  	
  MISCELLANEOUS

  	
  34

  
	
   

  	
   

  	
   

  
	
   

  	
  PRIOR PAYMENT

  	
  37

  
				

 

THE
SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

ii

 

CONFIDENTIAL TREATMENT
REQUESTED

 

AMENDED
AND RESTATED LICENSE AGREEMENT

(Extended Release Metformin Formulations — Canada)

 

THIS AMENDED AND RESTATED LICENSE AGREEMENT is made as of the 13th
day of December, 2005, by and between

 

DEPOMED, INC.
a company organized under the laws of California, USA 

with offices at 

1360 O’Brien Drive

Menlo Park,

California, 94025

 

(Hereinafter
referred to as “Depomed”)

 

AND:

 

BIOVAIL LABORATORIES INTERNATIONAL SRL

a Barbados society with restricted liability organized under the laws of
Barbados,

whose head office is

Chelston Park

Building 2, Collymore Rock

St. Michael BH1

Barbados, West Indies

 

(Hereinafter referred to as “BLS”)

 

RECITALS

 

A.                                   Depomed
and BLS (the successor in interest to Biovail Laboratories Incorporated) are
parties to that certain Development and License Agreement, dated as of May 28,
2002, as amended as of April 27, 2004 (the “Prior Agreement”).

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

1

 

CONFIDENTIAL TREATMENT
REQUESTED

 

B.                                     Pursuant
to the Prior Agreement, the Parties have developed the 500mg Product (as
defined below) and obtained regulatory approval to market the 500mg Product in
the Territory.

 

C.                                     Depomed
and BLS desire to amend and restate in part the Prior Agreement as set
forth herein.

 

NOW, THEREFORE, in consideration of the agreements and covenants
hereinafter set forth herein and intending to be legally bound hereby, the
parties hereto covenant and agree as follows:

 

1.                                      DEFINITIONS.

 

The terms defined in this Article 1
shall, for all purposes of this Agreement, have the following meanings:

 

1.1                                 “500mg Product” shall mean the
once-daily oral formulation of the Active Ingredient in combination with the
AcuForm Delivery Technology that is the subject of NDS No. 091207,
file number 9427-B1245-30 filed with the TPD on April 21, 2004 (as such
NDS may be amended or supplemented subsequent to the Effective Date).

 

1.2                                 “1000mg Approval” shall mean the
approval by the FDA of a supplemental new drug application filed in accordance
with the Supply Agreement for approval of the 1000mg Product for Marketing in
the USA.

 

1.3                                 “1000mg Product” shall mean the
once daily oral tablet formulation of the Active Ingredient in a 1000 mg
strength to be developed using proprietary BLS drug delivery technology
pursuant to the Supply Agreement.

 

1.4                                 “Active Ingredient” shall mean the
chemical compound known as metformin HCl.

 

1.5                                 “AcuForm Delivery Technology”
shall mean Depomed’s delivery system
designed to be retained in the stomach for an extended period of time while
that delivery system delivers the incorporated drug or drugs, and includes the
delivery system described in the patents and patent applications listed in
Schedules 1.24(a) and 1.24(b) and any and all 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

2

 

CONFIDENTIAL TREATMENT
REQUESTED

 

improvements to that delivery system. The AcuForm Delivery
Technology was referred to as the “GR System” in the Prior Agreement.

 

1.6                                 “Affiliate” shall mean any
corporation or other entity that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with the
designated party but only for so long as such relationship exists. For the
purposes of this Section, “Control” shall mean ownership of at
least fifty percent (or such lesser percent as may be the maximum that may be
owned by foreign interests pursuant to the laws of the country of
incorporation) of the shares of stock entitled to vote for directors in the
case of a corporation and at least fifty percent (or such lesser percent as may be
the maximum that may be owned by foreign interests pursuant to the laws of
the country of domicile) of the interests in profits in the case of a business
entity other than a corporation.

 

1.7                                 “Applicable Permits” shall mean all
permits or approvals necessary to market the 500mg Product in the Territory,
including, without limitation, Regulatory Approvals granted by the TPD.

 

1.8                                 “Application for Regulatory Approval” shall mean an application made to a
Regulatory Authority in any country for permission to Market a pharmaceutical
product in that country.

 

1.9                                 “BMS Settlement Agreement” shall
mean that certain Settlement Agreement and Release, dated as of November 22,
2002, by and between Depomed and Bristol-Myers Squibb Company.

 

1.10                           “Clinical Information” shall mean all
in-vivo or clinical, pharmacology, toxicology, safety and efficacy data,
formulary submissions, pharmaco-economic data, Phase I, II and III
clinical data and results, and other such information now or hereafter known and

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

3

 

CONFIDENTIAL TREATMENT
REQUESTED

 

available
to Depomed or BLS or their Affiliates, whether generally known to others or
not, relating to the 500mg Product.

 

1.11                           “Distributor” shall mean an
entity designated by BLS to perform its distribution and Marketing
activities with respect to the 500mg Product in the Territory, in accordance
with the terms of this Agreement.

 

1.12                           “Effective Date” shall mean the date
first written on page 1 of this Agreement.

 

1.13                           “FDA” shall mean the United States
Food and Drug Administration or any successor United States governmental agency
performing similar functions with respect to pharmaceutical products.

 

1.14                           “Final Judgment” shall
mean a judgment by a court of competent jurisdiction that is unappealed (and
the time for appealing has expired) or is
unappealable.

 

1.15                           “Invention” shall mean the 500mg Product, any
improvement to the 500mg Product, any new use of the 500mg Product, any new
performance characteristic of the 500mg Product, any new process used to
Manufacture the 500mg Product, or any step or steps in any such process, and
includes all formulations of the 500mg Product developed pursuant to the Prior
Agreement.

 

1.16                           “Know-How” shall mean all
inventions, discoveries, trade secrets, improvements and information not in the
public domain, whether or not patented or patentable (but excluding Patent
Rights), together with all experience, data, formulas, procedures and results,
and improvements thereon, now or hereafter developed or acquired by and
proprietary or licensed with right to sublicense to Depomed on the date hereof
or which are developed or acquired during the term of and in connection with
this Agreement, which relate to or are used in conjunction with the
development, manufacture or use of 500mg Product.

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

4

 

CONFIDENTIAL TREATMENT
REQUESTED

 

1.17                           “knowledge” shall mean, with respect to Depomed,
the actual knowledge of the executive officers of Depomed, after reasonable
inquiry directed to such employees of Depomed who would reasonably be expected
to have knowledge of relevant matters.

 

1.18                           “Manufacture” shall mean to
process, prepare, make, have made and analyze, and Manufacturing and Manufactured
shall have a corresponding meaning.

 

1.19                           “Manufacturing Transfer Agreement”
shall mean the Manufacturing Transfer Agreement, dated as of the Effective
Date, by and between Depomed and BLS providing for the grant to Depomed of
exclusive Marketing rights in the United States to the 1000mg Product, and for
the grant of Manufacturing rights in the United States to the 1000mg Product.

 

1.20                           “Market” shall mean to promote, distribute, package,
label, market, advertise, sell or offer to sell, and Marketing shall have a
corresponding meaning.

 

1.21                           “NDA” shall mean a New Drug
Application or equivalent application for approval to market submitted to the
FDA.

 

1.22                           “Net Sales” shall mean the total of all
amounts invoiced by BLS, its Affiliates, Distributors and assigns for 500mg
Product and 1000mg Product, as applicable, sold to independent, unrelated third
parties in the Territory in bona fide arms-length transactions, less the
following deductions actually allowed and taken by such third parties and not
otherwise recovered by or reimbursed to BLS or its Affiliates, sub-licensees
and assigns: (i) trade, cash and quantity discounts in such amounts as are
customary in the trade; (ii) rebates, credits or other reimbursements
actually paid; (iii) taxes on sales (such as sales or use taxes) to the
extent added to the sales price and set forth separately as such in the total
amount invoiced; (iv) value added taxes when included as part of the
sales price and not refunded to the payor; (v) freight, insurance, and
other transportation charges to the extent added to the sales price and set
forth separately as such in the total amount invoiced; and (vi) amounts
repaid or credited by reason of rejections, defects or returns or 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

5

 

CONFIDENTIAL TREATMENT
REQUESTED

 

because of
retroactive price reductions. Net Sales shall not include sales of a 500mg
Product or a 1000mg Product between or among BLS, its Affiliates, sub-licensees
or assigns.

 

1.23                           “Party” shall mean Depomed or BLS,
and Parties shall mean Depomed and BLS.

 

1.24                           “Patent Rights” shall mean any
patent application or issued patent covering 500mg Product or any improvement
to 500mg Product or any methods for making or using 500mg Product or any
improvement to such methods, which patents or patent applications are owned by
or licensed to Depomed as of the date hereof or which are developed or acquired
by or licensed to Depomed during the term of this Agreement, in the Territory,
including any addition, continuation, continuation-in-part, or division thereof
or any substitute application thereof, any reissue or extension of any such
patent, and any confirmation patent, registration patent revalidation patent,
or patent of addition based on any such patent, and includes without limitation
the Canadian patents and patent applications set forth in Schedule 1.24(a).
“Foreign Patent Rights” shall mean any patent application or issued patent
covering 500mg Product or any improvement to 500mg Product or any methods for
making or using 500mg Product or any improvement to such methods, which patents
or patent applications are owned by or licensed to Depomed as of the date
hereof or which are developed or acquired by or licensed to Depomed during the
term of this Agreement, in the United States, including any addition,
continuation, continuation-in-part, or division thereof or any substitute
application thereof, any reissue or extension of any such patent, and any
confirmation patent, registration patent revalidation patent, or patent of
addition based on any such patent, and includes without limitation the United
States patents and patent applications set forth in Schedule 1.24(b).

 

1.25                           “Regulatory Data” shall mean all
information and data necessary to obtain or maintain Regulatory Approval for
500mg Product in the Territory, including post-approval reports, filings and
submissions and shall include, but not be limited to, any Clinical Information
required for that purpose.

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

6

 

CONFIDENTIAL TREATMENT
REQUESTED

 

1.26                           “Regulatory Approval” shall mean the permission or consent granted by any relevant Regulatory
Authority for the Marketing of a 500mg Product in the Territory, and includes
all of the contents of the Application for Regulatory Approval as approved by
that Regulatory Authority.

 

1.27                           “Regulatory Authority” shall mean, in respect of any country, any government or other agency
responsible for the issuance of approval to Market pharmaceutical products in
or sold from that country, including without limitation the TPD.

 

1.28                           “Substitute Product” shall mean any
once daily oral formulation containing between 400 mg and 600 mg of Active
Ingredient as the sole active ingredient and utilizing technology other than
the AcuForm Delivery Technology and that does not infringe a Valid Claim.

 

1.29                           “Supply Agreement” shall mean
the Supply Agreement, dated as of the Effective Date, between Depomed and BLS
relating, inter alia, to the 1000mg Product.

 

1.30                           “Technical Information” shall mean
all Know-How, and all trade secrets, inventions, data and technology relating
to the 500mg Product, and any improvements and modifications to any of the
foregoing, and includes, without limitation, processes and analytical
methodology used in the development, testing, analysis and manufacture of the
500mg Product, and medical, clinical, toxicological and other scientific data
relating to the 500mg Product.

 

1.31                           “Territory” shall mean the country
of Canada.

 

1.32                           “TPD” means the Therapeutic
Products Directorate — Health Canada or any successor Canadian governmental
agency performing similar functions with respect to pharmaceutical products.

 

1.33                           “Valid Claim” shall mean a claim of (a) an
unexpired issued patent falling within Patent Rights, which claim shall not
have been withdrawn, cancelled, disclaimed or held invalid 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

7

 

CONFIDENTIAL TREATMENT
REQUESTED

 

by a
court, tribunal, arbitrator or governmental agency of competent jurisdiction in
a final or unappealed or unappealable decision or (b) of any patent
application that has not been cancelled, withdrawn or abandoned, or has been
pending for more than seven years.

 

2.                                      DEVELOPMENT AND DEVELOPMENT COSTS

 

2.1                                 Depomed shall have no obligations to
perform, or incur any expense with respect to, any research or development with
respect to the 500mg Product.

 

3.                                      DISCLOSURE OF INFORMATION AND REPORTING

 

3.1                                 During the term of this Agreement, each
Party shall disclose to the other, in confidence under the terms of Article 10
hereof, Technical Information and Clinical Information, and copies of
correspondence with any Regulatory Authority (whether inside or outside of the
Territory), as the same shall become available, including information and
correspondence relating to the safety and efficacy of 500mg Product and any
regulatory problems relating thereto, all to the extent necessary or useful to
enable the receiving Party to Manufacture or Market the 500mg Product.

 

3.2                                 Appropriate representatives of the
Parties will meet (in person or by video or telephone conference) from time to
time, but at least quarterly, to discuss regulatory affairs, marketing and
commercialization of 500mg Product in Canada and the United States. Within two (2) weeks
after the Effective Date, each Party shall designate a representative to
coordinate the meetings contemplated by this Section 3.2.

 

4.                                      LICENSE OF PRODUCT

 

4.1                                 Depomed hereby grants to BLS an
exclusive license in the Territory under the Patent Rights, Know-How and
Technical Information, with the right, subject to Section 4.3, to grant sublicenses of the same scope as the license
granted by this Agreement, or to 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

8

 

CONFIDENTIAL TREATMENT
REQUESTED

 

appoint a
Distributor, to Manufacture and Market 500mg Product in, and import 500mg
Product into, the Territory.

 

4.2                                 Depomed hereby grants to BLS a
non-exclusive license under the Foreign Patent Rights, Know-How and Technical
Information, with the right, subject to Section 4.3,
to grant sublicenses of the same scope as the license granted by this Section 4.2,
to Manufacture 500mg Product in the United States or Puerto Rico for export to
the Territory for sale in the Territory in compliance with this Agreement.

 

4.3                                 BLS may grant sub-licenses under Section 4.1
or Section 4.2 with respect to the Manufacturing of the 500mg Product (i) to
any Affiliate of BLS without consent, and (ii) to no more than two third
parties, simultaneously, with the prior written consent of Depomed, which
consent shall not be unreasonably delayed or withheld. BLS shall not grant further
sub-licenses without the consent of Depomed, which may be granted in
Depomed’s discretion. The Parties acknowledge that 500mg Product will initially
be manufactured for BLS by MOVA Pharmaceutical Corporation (“MOVA”)
pursuant to a supply agreement between BLS and MOVA. Depomed acknowledges that
BLS has granted a sublicense to MOVA under the Prior Agreement and consents to
the continuation of that sub-license pursuant to Section 4.2 of this
Agreement.

 

4.4                                 BLS shall have the right to market and
sell 500mg Product under any trademark or trademarks that BLS chooses and has
the legal right to use, whether now or hereafter acquired or developed. Nothing
herein shall be deemed to give either Party any rights to the trademarks of the
other Party. BLS may freely refer to the trademark “AcuForm” with respect
to 500mg Product so long as it is used in a form that is approved by
Depomed and protects the proprietary interests of Depomed in such trademark. BLS
shall endeavour to indicate in any promotional and marketing materials for the
500mg Product that the 500mg Products incorporates the AcuForm Delivery
Technology, unless BLS determines in its sole discretion that the use of the
trademark “AcuForm” may infringe a third party’s trademark in the
Territory; provided, however, that BLS may deplete its existing stock of 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

9

 

CONFIDENTIAL TREATMENT
REQUESTED

 

promotional
and marketing materials that does not contain any reference to the AcuForm Delivery
Technology.

 

5.                                      ROYALTIES

 

500mg
Product Royalties

 

5.1                                 In consideration for the license
granted herein, and subject to the other provisions of this Article 5 of
this Agreement, BLS shall pay to Depomed an earned royalty of six percent of Net Sales which are Net Sales of 500mg Product. Notwithstanding
the foregoing, the earned royalty payable under this Agreement in respect of
Net Sales which are Net Sales of 500mg Product shall be increased to ten
percent of such Net Sales in the event that the 1000mg Approval is not obtained
on or before June 30, 2007 (whether or not the failure to obtain the
1000mg Approval constitutes a breach or default under the Supply Agreement),
and shall apply to all Net Sales of the 500mg Product made from [***] until 1000mg Approval is obtained. If
any delay in the obtaining of 1000mg Approval is due to Depomed’s failure to
comply with Section 2.8 of the Supply Agreement, the increase in royalty
shall not take effect on [***],
but shall be delayed for a period of time equivalent to the length of any delay
that is due to Depomed’s non-compliance with Section 2.8 of the Supply
Agreement.

 

5.2                                 BLS shall pay the earned royalties
required by Section 5.1, in respect of the Net Sales of the 500mg Product
in the Territory until:

 

(a)                                  the expiry of [***] from the first commercial sale of
500mg Product in the Territory; or

 

(b)                                 the 500mg Product is no longer
covered by a Valid Claim ,

 

whichever is later.

 

5.3                                 If at any time during the term of this Agreement,
500mg Product is not, or is no longer, covered by a Valid Claim, but the [***]
period referred to in Section 5.2(a) has not 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

10

 

CONFIDENTIAL TREATMENT
REQUESTED

 

expired in
the Territory, then the Net Sales of 500mg Product in the Territory that are
subject to payment of earned royalty shall be reduced to one-half of such
actual Net Sales.

 

5.4                                 Upon the expiration of the obligations
of BLS to make the royalty payments required by Sections 5.1, 5.2 or 5.3 in the
Territory, the licenses granted to BLS in Sections 4.1 and 4.2 shall become
perpetual, fully paid-up, and royalty free.

 

1000mg
Product Royalties

 

5.5                                 In consideration for the license
granted herein, and subject to the other provisions of this Article 5 of
this Agreement, BLS shall pay to Depomed an earned royalty of one percent of
Net Sales which are Net Sales of 1000mg Product.

 

5.6                                 BLS shall pay the earned royalties
required by Section 5.5, in respect of the Net Sales of the 1000mg Product
in the Territory until the expiry of [***]
from the first commercial sale of the 1000mg Product in the Territory.

 

Reduction
of Royalties

 

5.7                                 In the event that a court or
governmental agency compels BLS to grant a sub-license to any third party for
500mg Product in the Territory under terms or conditions more favorable than
those contained herein, BLS shall automatically have the benefit of the more
favorable terms with respect to all sales of 500mg Product in the Territory.

 

Royalty
Reports and Payments

 

5.8                                 Within ten (10) days after the end
of each calendar month, BLS shall deliver a report to Depomed specifying the
gross sales of the 500mg Product sold by BLS, its Affiliates, sub-licensees or
distributors in that calendar month in the Territory.

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

11

 

CONFIDENTIAL TREATMENT
REQUESTED

 

5.9                                 Within fifteen (15) days after the end
of each calendar quarter, BLS shall submit to Depomed a report setting forth
separately the Net Sales of 500mg Product and the 1000mg Product sold during
said calendar quarter in the Territory, the calculation of earned royalties
payable for such calendar quarter, and the basis for any reduction in those
earned royalties taken pursuant to this Agreement. Earned royalty payments
hereunder shall be made within forty-five days following the end of each
calendar quarter, and each payment shall include royalties which shall have
accrued during said calendar quarter.

 

5.10                           No multiple royalties shall be payable
because the 500mg Product, or the 1000mg Product, or their respective
manufactures, use or sale is or shall be covered by more than one Patent Right.

 

5.11                           The remittance of royalties payable on
Net Sales in the Territory shall be made to Depomed in United States dollars at
the free market rate of exchange of the currency for the last business day of
the calendar quarter for which the report and payment referred to in Section 5.9
is applicable, as published in the Wall Street Journal (New York edition), less
any withholding or transfer taxes which are applicable. BLS shall supply
Depomed with proof of payment of any taxes deducted from the royalties payable
to Depomed and paid on Depomed’s behalf.

 

5.12                           If the transfer or the conversion of all
or a part of the remittance into the United States dollar equivalent in
any such instance is not lawful or possible, the payment of such part of
the royalties shall be made by the deposit thereof, in the currency of the
country where the sale on which the royalty was based was made, to the credit
and account of Depomed or its nominee in any commercial bank or trust company
of Depomed’s choice located in that country. Notification of such choice of
bank or trust company shall be given to Depomed at least thirty days prior to
the date that any payment is due. Prompt notice of deposits by BLS shall be
given to Depomed. Any tax burden levied by any country on 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

12

 

CONFIDENTIAL TREATMENT
REQUESTED

 

payments
due or made by BLS to Depomed under this Agreement shall be borne by Depomed.

 

Records
and Audits

 

5.13                           BLS and its Affiliates shall keep and
maintain, and shall cause its Distributors and assigns to keep and maintain,
records of Net Sales. Such records shall be open to inspection by Depomed or,
in the case of Distributors and assigns, by BLS on behalf of Depomed, at any
mutually agreeable time during normal business hours within two years after the
royalty period to which such records relate by an independent certified public
accountant (or the equivalent in countries other than the United States)
reasonably acceptable to BLS but selected by Depomed. Said accountant shall
have the right to examine the records kept pursuant to this Agreement and
report findings of said examination of records to Depomed only insofar as it is
necessary to evidence any error on the part of BLS. This right of
inspection shall be exercised only once for any calendar year. The cost of such
inspection shall be borne by Depomed unless the result of such examination is
the determination that Net Sales have been understated by at least three
percent for any calendar year in which event BLS shall bear the reasonable cost
of such inspection.

 

500mg
Product Substitution

 

5.14                           If at any time during the Term of this
Agreement BLS determines that the 500mg Product should not be Marketed in the
Territory, BLS may Market, and authorize any Affiliate of BLS to Market, a
Substitute Product. BLS shall pay to Depomed the royalties that would be
required by this Article 5 if the Substitute Product were a 500mg Product,
in respect of all net sales of that Substitute Product by BLS or by its
Affiliate, calculated in a manner consistent with Section 1.22 of this
Agreement. Provided that BLS makes the payments required by this Agreement in
respect of such Substitute Product, BLS shall not be 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

13

 

CONFIDENTIAL TREATMENT
REQUESTED

 

deemed to
be in default of its obligations under this Agreement by reason of that
substitution or its failure to Market the 500mg Product.

 

6.                                      REGULATORY AFFAIRS

 

Regulatory
Responsibility

 

6.1                                 During the term of this Agreement, BLS
shall have full control and authority, with full responsibility over,
commercialization of 500mg Product in the Territory, and all such activity
shall be undertaken at BLS’s expense. BLS will use, or will cause an Affiliate
of BLS to use, commercially reasonable efforts in undertaking investigations
and actions required to maintain appropriate governmental approvals to market
500mg Product in the Territory.

 

6.2                                 BLS shall bear responsibility for, and
shall bear all costs related thereto, to take such actions as may be
necessary, in accordance with accepted business practices and legal
requirements, to obtain and maintain the authorization and/or ability to Market
the 500mg Product in the Territory. Notwithstanding the foregoing, BLS shall be
entitled to allow any Regulatory Approval or other authorization to Market the
500mg Product to expire or lapse, and to discontinue Marketing the 500mg
Product, if, as a consequence of any changes to any applicable laws or
regulations, any Regulatory Authority requires any changes to the Marketing of
the 500mg Product, the Manufacturing process for the 500mg Product, or to the
500mg Product specifications that BLS does not want to make (each an “Unforeseen
Requirement”). If BLS discontinues the Marketing of the 500mg Product as a
result of an Unforeseen Requirement, Depomed can terminate this Agreement with
respect to 500mg Product, and itself Market the 500mg Product in the Territory,
upon reimbursement of BLS for all regulatory and other fees associated with
transfer of the 500mg Product to Depomed. BLS shall notify Depomed at least
ninety days in advance of discontinuing the Marketing of the 500mg Product as a
result of an Unforeseen Requirement.

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

14

 

CONFIDENTIAL TREATMENT
REQUESTED

 

6.3                                 BLS shall have the responsibility, and
shall bear all costs related to, communications with any government agencies to
satisfy its requirements regarding the authorization and/or continued
authorization to Market the 500mg Product in commercial quantities in the
Territory. Depomed shall promptly notify BLS of any inquiry or other
communication that it receives from the TPD concerning the 500mg Product. BLS
shall handle all communications with the TPD concerning the 500mg Product,
including but not limited to reporting adverse reactions and responding to any
inquiries concerning advertising or promotional materials, and shall provide
copies of all such communication to Depomed. Depomed, however shall be able to
communicate with such governmental agency regarding the 500mg Product if:

 

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

 

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

 

(c)                                  Such communication relates to the
AcuForm Delivery Technology generally (and not specifically to the 500mg
Product); provided, however, that before making any communication under (a), (b) or
(c) of this Section, Depomed shall give BLS notice as soon as possible of
Depomed’s intention to make such communication, and BLS shall be permitted to
accompany Depomed, take part in any such communications and receive copies
of all such communications.

 

6.4                                 BLS shall be responsible for handling
all complaints from customers in the Territory relating to adverse reaction
reports, adverse events, and recall activities with respect the 500mg Product
and the 1000mg Product. Depomed shall promptly notify BLS of any such
complaints received by Depomed.

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

15

 

CONFIDENTIAL TREATMENT
REQUESTED

 

Adverse
Reaction Reports

 

6.5                                 During the Term of this Agreement, each
Party shall promptly notify the other of all information required to be
reported to the FDA or TPD coming into its possession concerning side effects,
injury, toxicity or sensitivity reaction including unexpected increased
incidence and severity thereof associated with commercial or clinical uses,
studies, investigations or tests (animal or human) with the 500mg Product and
the 1000mg Product, throughout the world, whether or not determined to be
attributable to the 500mg Product or the 1000mg Product(“Adverse Reaction
Reports”). Such adverse reaction reports shall be transmitted so that they
are received by the receiving Party within three (3) business days after
receipt by the transmitting Party, or such other reporting period as may be
required to enable the receiving Party to comply with all applicable laws. All
such communications shall be held in confidence by the Parties and shall be
subject to the terms of Article 10 hereof.

 

Withdrawal
of Regulatory Approval

 

6.6                                 Subject to the provisions of Section 6.2,
the Parties acknowledge and agree that “Cause” shall be deemed to exist
pursuant to Section 14.2 of this Agreement upon any breach of the
provisions of this Agreement by BLS that results in the withdrawal of the
Regulatory Approval pertaining to 500mg Product if BLS does not immediately
thereafter Market a Substitute Product in the Territory, or, if BLS has been
Marketing a Substitute Product in lieu of the 500mg Product, and the Regulatory
Approval of that Substitute Product is withdrawn, if BLS does not immediately
thereafter Market another Substitute Product in the Territory.

 

Rights of
Reference

 

6.7                                 BLS shall have the right to use any
Regulatory Data relating to the 500mg Product at any time after the Effective
Date for the purpose of obtaining Regulatory Approval of the 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

16

 

CONFIDENTIAL TREATMENT
REQUESTED

 

1000mg
Product or a Substitute Product in the Territory. Except as set forth in the
immediately preceding sentence, BLS shall not have the right to use any
Regulatory Data relating to the 500mg Product for any purpose other than
maintaining the Regulatory Approval of the 500mg Product or a Substitute
Product in the Territory.

 

6.8                                 Depomed shall be entitled to use the
Regulatory Data at any time after the Effective Date for the purpose of
obtaining regulatory approval of the 500mg Product in jurisdictions outside of
the Territory.

 

7.                                      TECHNOLOGY TRANSFER; MANUFACTURING; BATCH RELEASE

 

Technology
Transfer to BLS

 

7.1                                 The Parties acknowledge and agree that
Depomed has transferred to BLS all Technical Information that Depomed was
required to transfer to BLS pursuant to the Prior Agreement. BLS shall use the
Technical Information only in accordance with this Agreement and shall not use
it for any other purpose.

 

8.                                      PATENTS, INFRINGEMENT

 

Infringement

 

8.1                                 If either Party determines that any of
the Patent Rights have been infringed by the Manufacture or Marketing in the
Territory of a product containing metformin as its sole active ingredient, such
Party shall give to the other Party notice of such alleged infringement, in
which event BLS may at its discretion take such steps as it may consider
necessary to prosecute such infringement. BLS may not settle any such
litigation in a manner that adversely affects the rights of Depomed hereunder
without the consent of Depomed, which consent shall not be unreasonably
withheld. Depomed shall have the right, at its own expense, to be represented
by counsel in any such litigation. If BLS, after such notice, elects not to
bring suit, it shall notify Depomed of such election within thirty 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

17

 

CONFIDENTIAL TREATMENT
REQUESTED

 

days after
receipt of such notice and Depomed shall then have the right to bring suit at
its own expense. Depomed shall also have the right to bring suit if BLS fails
to institute suit within ninety days from the date of the original notice of
infringement by Depomed. In furtherance and not in limitation of the foregoing
provisions of this Section 9.1, Depomed may at its discretion take
such steps as it may consider necessary to prosecute any infringement of
any patent or other intellectual property rights owned or Controlled by Depomed
by the Manufacture or Marketing outside of the Territory of any product
containing metformin as the sole active ingredient, and BLS shall have no right
to prosecute, or otherwise participate in the prosecution of, any such
infringement.

 

8.2                                 In any litigation brought by BLS under Section 8.1,
BLS shall notify Depomed of the commencement of that litigation and shall have
the right to use and sue in Depomed’s name, and Depomed shall have the right,
at its own expense, to be represented by counsel. In any such litigation,
Depomed may elect by notice to BLS to share equally with BLS the costs of
such litigation (including any costs incurred by Depomed prior to the Effective
Date) in exchange for the right to share equally with BLS in any recovery of
damages resulting from such litigation. Such election by Depomed shall be made
not later than 60 days from the date such litigation is commenced. BLS may not
settle any such litigation in a manner that adversely affects the rights of
Depomed hereunder without Depomed’s consent, which consent shall not be
unreasonably withheld.

 

8.3                                 In any litigation brought by Depomed
following an election by BLS pursuant to Section 8.1 not to bring suit,
Depomed shall notify BLS of the commencement of that litigation and shall have
the right to use and sue in BLS’s name, and BLS shall have the right, at its
own expense, to be represented by counsel. In any such litigation, BLS may elect
by notice to Depomed to share equally with Depomed the costs of such litigation
in exchange for the right to share equally with Depomed in any recovery of
damages resulting from such litigation. Such election by BLS shall be made not
later than 60 days from the date of the commencement of any such action.
Depomed may not settle any 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

18

 

CONFIDENTIAL TREATMENT
REQUESTED

 

such
litigation in a manner that adversely affects the rights granted to BLS under
this Agreement without BLS’s consent.

 

8.4                                 BLS shall have the first right to
institute proceedings under the Patented Medicines (Notice
of Compliance) Regulations. BLS shall add Depomed or any Affiliate
of Depomed as a party to any such litigation if required to do so by any
applicable Law. BLS’s attorneys shall represent both BLS and Depomed in any
such litigation, and BLS shall have sole control over any such proceedings. Depomed
may retain its own lawyers at its own expense to advise Depomed with
respect to the conduct of the litigation by BLS. Depomed shall fully co-operate
with BLS, at the expense of BLS, and shall cooperate with BLS in the
prosecution of such litigation. If BLS fails to exercise its exclusive right to
take appropriate steps under the Patented Medicines (Notice
of Compliance) Regulations, within thirty (30) days after a Notice
of Allegation under the Patented Medicines (Notice
of Compliance) Regulations is served on BLS, Depomed shall be
entitled to take any such steps, and may do so in the name of BLS, if
necessary.

 

Infringement
of Third Party Patents

 

8.5                                 In the event of a judgment in any suit
requiring BLS to pay damages or a royalty to a third party in respect of the
500mg Product or in the event of a settlement of such suit or threatened suit
consented to by Depomed (which consent shall not be unreasonably withheld)
requiring damages or royalty payments to be made in respect of the 500mg
Product, the future royalty payments due to Depomed pursuant to Article 5
in respect of the 500mg Product shall be reduced by the full amounts due under
the requirement of such Final Judgment or under the terms of such settlement,
until the full amount of such judgment or settlement has been recovered by BLS.

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

19

 

CONFIDENTIAL TREATMENT
REQUESTED

 

9.                                      OWNERSHIP OF INVENTIONS AND KNOW-HOW

 

Ownership
of Intellectual Property Rights

 

9.1                                 Rights in and/or title to all
Inventions made prior to the Effective Date shall be governed by the Prior
Agreement.

 

9.2                                 All Inventions made
by BLS or by Depomed in the performance of their respective obligations under
this Agreement shall be owned as follows:

 

(a)                                  any such Inventions relating to the
formulations of the 500mg Product, to the AcuForm Delivery Technology, or
to any process for manufacturing the 500mg Product shall belong to Depomed; and

 

(b)                                 any such Inventions relating to the
clinical use of the 500mg Product shall belong the Party making such Invention.

 

9.3                                 BLS shall have the exclusive right to
use, within the Territory, any Invention relating to the clinical use of the
500mg Product that is subject to Section 9.2(b) and that is owned or
controlled by Depomed. Depomed shall have the exclusive right to use, outside
the Territory, any Invention relating to the clinical use of the 500mg Product
that is subject to Section 9.2(b) and that is owned or controlled by
BLS.

 

9.4                                 The determination of inventorship for
Inventions shall be made in accordance with applicable laws relating to
inventorship set forth in the patent laws of the United States (Title 35,
United States Code).

 

9.5                                 Except as expressly provided in this
Agreement, each joint owner may make, use, sell, keep, license, assign, or
mortgage any jointly owned Inventions, and otherwise undertake all activities a
sole owner might undertake with respect to such inventions, to the extent of
the joint owner’s interest therein, without the consent of and without
accounting to the other joint owner.

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

20

 

CONFIDENTIAL TREATMENT
REQUESTED

 

9.6                                 Each of BLS and Depomed shall cause any
inventor of any Invention employed by BLS or Depomed respectively to assign any
and all rights that any such inventor may have in any such Invention to
BLS or to Depomed, as contemplated by this Agreement, and shall at no further
cost to BLS execute any documents that may reasonably be required to apply
for and to obtain any such patents.

 

Disclosure
of Inventions

 

9.7                                 Each of Depomed and BLS shall endeavour
to advise the other of any Inventions and of any patent applications that it
intends to file that may be subject to the provisions of this Article 9,
as promptly as possible, to arrange, to the fullest extent possible, for
simultaneous filing of applications where appropriate and to avoid as much as
possible any disclosure that may be considered to be prior art to an
application filed by the other Party. If at any time during the term of this
Agreement it appears that any further agreement between the Parties is
reasonably required to assist in obtaining patent protection for the 500mg
Product, the Parties shall act diligently and reasonably to negotiate the terms
of, and enter into, such an agreement.

 

Filing and
Prosecution of Patent Applications by BLS

 

9.8                                 BLS shall have right and the
responsibility for filing, prosecuting and maintaining patents and patent
applications for all Inventions owned by BLS.

 

9.9                                 BLS shall advise Depomed in writing of
its plans to file patent applications for any such Invention, and of the
countries in which BLS intends to file such applications. Depomed may at
its own expense file an application for any Invention in any country in respect
of which BLS has not indicated it will file an application. Any such
application filed by Depomed and any patent issuing therefrom shall be filed in
the name of the inventors or of BLS and shall at the request of Depomed be
assigned to Depomed.

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

21

 

CONFIDENTIAL TREATMENT
REQUESTED

 

Filing and
Prosecution of Patent Applications by Depomed

 

9.10                           Depomed shall have right and the
responsibility for filing, prosecuting and maintaining patents and patent
applications for all Inventions owned by Depomed in the Territory. Depomed
shall disclose to BLS the complete texts of all patent applications filed by
Depomed that relate to the 500mg Product owned by Depomed, as well as all
information received concerning the institution or possible institution of any
interference, opposition, re-examination, reissue, revocation, nullification or
any official proceeding involving such a patent application anywhere in the
world. BLS shall have the right to review all such pending applications and
other proceedings and make recommendations to Depomed concerning such
applications. Depomed shall keep BLS promptly and fully informed of the course
of patent prosecution or other proceedings relating to any such invention, and
shall provide to BLS copies of any substantive communications submitted to or
received from patent offices throughout the world.

 

9.11                           BLS shall have the right to assume
responsibility for any patent or patent application filed in the Territory
relating to the 500mg Product that Depomed intends to abandon or otherwise
cause or allow to be forfeited. Depomed shall give BLS reasonable written
notice prior to abandonment or other forfeiture of any patent or patent
application so as to permit BLS to exercise its rights under this Section at
its own expense.

 

10.                               CONFIDENTIALITY

 

10.1                           Each of BLS and Depomed shall maintain
all Technical Information and Clinical Information, and any other information
about this Agreement and the businesses or affairs of the other relating to
each of the 500mg Product and the 1000mg Product, in confidence, and shall not
at any time disclose any such information to persons other than their Affiliates,
officers, employees, agents, consultants, advisers, and licensees and potential
sub-licensees, except where permitted by this Agreement, and only to the extent
necessary for the purposes of this Agreement. BLS and Depomed shall use such 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

22

 

CONFIDENTIAL TREATMENT
REQUESTED

 

information
only to the extent necessary or permitted by this Agreement, or required by law.
BLS and Depomed shall take all reasonable steps to ensure that their respective
Affiliates, agents, officers, employees, representatives, consultants, advisors
and licensees and potential licensees and sub-licensees maintain the
obligations of confidence imposed on BLS and Depomed by this Agreement.

 

10.2                           Section 10.1 shall not apply to
any Technical Information or Clinical Information that:

 

(a)                                  was known to BLS at the time of its
disclosure by Depomed;

 

(b)                                 has been published or is otherwise
within the public knowledge or is generally known to the public;

 

(c)                                  has come into the public domain
without any breach of this Agreement;

 

(d)                                 became known or available to BLS
from a source having the right to make such disclosure to BLS and without
restriction on such disclosure to BLS;

 

(e)                                  is disclosed to the public and is
generally available to the public as a result of compliance with any applicable
law or regulation;

 

(f)                                    is disclosed as the result of any
applications for patents relating to the 500mg Products anywhere in the world;
or

 

(g)                                 after Regulatory Approval of the
500mg Product is reasonably required by BLS for the Marketing of the 500mg
Product in the Territory

 

10.3                           Each Party acknowledges that improper
use or disclosure of information of the other Party that must be kept in
confidence under Section 10.1 above would cause substantial harm to the
other Party (in particular in barring patent protection for that Party’s
technology), and that such harm could not be remedied by the payment of damages
alone. Accordingly, each Party will be entitled to preliminary and permanent
injunctive relief 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

23

 

CONFIDENTIAL TREATMENT
REQUESTED

 

and other
equitable relief for any breach of this Article 10 by the other Party,
without prejudice to all other remedies available at law or in equity.

 

11.                               REPRESENTATIONS AND WARRANTIES; NON-COMPETITION; EXPORTATION

 

Representations
and Warranties of Depomed

 

11.1                           Depomed hereby warrants and represents
to BLS that:

 

(a)                                  to Depomed’s knowledge, Depomed has
full right, title, and interest in and to or the right to practice all
presently existing Patent Rights, Foreign Patent Rights, Know-How, and
Technical Information relating to 500mg Product;

 

(b)                                 subject only to the BMS Settlement
Agreement, there are no outstanding written or oral agreements inconsistent
with this Agreement; and

 

(c)                                  subject only to the BMS Settlement
Agreement, to Depomed’s knowledge, it is empowered and has the right to enter
into this Agreement and to grant the licenses provided herein without burdens,
encumbrances, restraints, or limitations of any kind which could adversely
affect the rights of BLS under this Agreement; and

 

(d)                                 Depomed has no knowledge of any
patents or patent applications owned by a third party and not licensed to
Depomed that would be infringed by the practice of the presently existing
Patent Rights, Foreign Patent Rights, Know-How or Technical Information or by
the Manufacture or Marketing of the 500mg Product in the Territory or by the
Manufacture of the 500mg Product in the United States (including Puerto Rico),
nor has Depomed received any claims by third parties with respect to such
matters.

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

24

 

CONFIDENTIAL TREATMENT
REQUESTED

 

(e)                                  subject only to the BMS Settlement
Agreement, Depomed has no knowledge of any claim that any third party asserts
ownership rights in any of the Patent Rights, Foreign Patent Rights, Know-How,
and Technical Information,

 

(f)                                    Depomed has no knowledge that
Depomed’s or its subsidiaries’ use of any of the Patent Rights, Foreign Patent
Rights, Know-How, or Technical Information infringes any right of any third
party.

 

(g)                                 except for general disclosures that
have not been and will not be in detail sufficient to enable the recipient to
Manufacture the 500mg Product, and to Depomed’s knowledge, Depomed’s Technical
Information has not been disclosed to others, and will not be disclosed to
persons other than BLS, except pursuant to appropriate confidentiality
agreements or to the extent disclosed in the patents, or as otherwise expressly
permitted by this Agreement.

 

Mutual
Representations and Warranties

 

11.2                           Each Party hereby represents and
warrants to the other Party as follows:

 

(a)                                  It is a corporation (in the case of
Depomed) or a society with restricted liability (in the case of BLS) duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. It has all requisite power and authority to
carry on its business and to own and operate its properties and assets. The
execution, delivery and performance of this Agreement have been duly authorized
by its Board of Directors;

 

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

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

25

 

CONFIDENTIAL TREATMENT
REQUESTED

 

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

 

Non-Competition

 

11.3                           Depomed covenants and agrees with BLS
that, during the term of this Agreement, Depomed shall not, in the Territory,
whether for its own or any Affiliate’s account or for the account or benefit of
any third party, make, have made, use, import, offer for sale, sell, or
otherwise commercialize any product that includes the Active Ingredient (or any
other salt, chiral forms or metabolites thereof) as its sole active ingredient
except as contemplated by this Agreement, or authorize, permit or assist any
other person to do any of the foregoing, except as permitted by this Agreement.

 

11.4                           The provisions of Section 11.3
shall not apply to the Manufacture or Marketing by Depomed of the 500mg Product
if this Agreement is terminated by Depomed with respect to the 500mg Product,
or if Depomed acquires or re-acquires the right to the 500mg Product from BLS
pursuant to this Agreement.

 

Exportation
of 500mg Product

 

11.5                           To the extent legally permissible, BLS
shall, and shall cause its Affiliates to, use commercially reasonable efforts
to prevent the exportation of the 500mg Product outside of the Territory. BLS
shall not, and shall cause it Affiliates not to, directly or indirectly, in any
manner whatsoever, enter into or engage in the Marketing of the 500mg Product
outside the Territory, and shall not sell the 500mg Product to any person or
entity whom BLS or an Affiliate of BLS has reason to believe may sell or
who, to the knowledge of BLS or an Affiliate of BLS, has in the past sold the
500mg Product outside the Territory (any such sale, an “Unauthorized Sale”).
BLS shall promptly use commercially 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

26

 

CONFIDENTIAL TREATMENT
REQUESTED

 

reasonable
efforts to take any action reasonably available to BLS, and shall within sixty
(60) days after any Unauthorized Sale has come to the attention of BLS or an
Affiliate of BLS, initiate all steps lawfully available to BLS in the
Territory, to prevent such Unauthorized Sales.

 

11.6                           Depomed and its Affiliates in the
United States, shall use commercially reasonable efforts to take steps lawfully
and reasonably available to them to prevent or reduce Unauthorized Sales.

 

12.                               INDEMNIFICATION

 

Indemnification
of Depomed

 

12.1                           Subject to the provisions of Section 12.2,
BLS shall indemnify and hold harmless Depomed and its officers, directors,
employees and agents against and from any losses, damages, injuries,
liabilities, claims, demands, settlement, judgments, awards, fines, penalties,
taxes, fees, charges, or expenses (including reasonable attorneys’ fees) of
Depomed or any of its officers, directors, employees or agents arising from or
relating to:

 

(a)                                  The breach or inaccuracy in any
material respect of any BLS representation or warranty contained in Article 11
of this Agreement;

 

(b)                                 Any claim that 500mg Product
packaging, labels, inserts and marketing and sales materials, other than the
Acuform trademark, infringe a trademark, trade dress or copyright of a
third party in the Territory;

 

(c)                                  Any injury or alleged injury to any
person (including death) or to the property of any person not a party hereto
arising out of the gross negligence or intentional act or omission of BLS or
its employees or agents relating to the manufacture or sale of 500mg Product;

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

27

 

CONFIDENTIAL TREATMENT
REQUESTED

 

(d)                                 Any injury or alleged injury to any
person (including death) or to the property of any person not a party hereto
arising out of the use of the 1000mg Product in the Territory;

 

(e)                                  The use, manufacture, promotion,
marketing and sale of 500mg Product by BLS, its Affiliates, its sublicensees,
distributors and customers; or

 

(f)                                    The enforcement of Depomed’s
indemnification rights hereunder.

 

Indemnification
of BLS

 

12.2                           Depomed shall indemnify and hold
harmless BLS and its officers, directors, employees and agents against and from
any losses, damages, injuries, liabilities, claims, demands, settlement, judgments,
awards, fines, penalties, taxes, fees, charges or expenses (including
reasonable attorneys’ fees) of BLS or a third party arising from or relating
to:

 

(a)                                  The breach or inaccuracy in any
material respect of any Depomed representation, warranty or covenant contained
in Article 11 of this Agreement;

 

(b)                                 Any injury or alleged injury to any
person (including death) or to the property of any person not a party hereto
arising out of the gross negligence or intentional act or omission of Depomed
or its employees or agents relating to 500mg Product; or

 

(c)                                  Any injury or alleged injury to any
person (including death) or to the property of any person not a party hereto
arising out of the use of the AcuForm Delivery Technology in the 500mg
Product; or

 

(d)                                 The enforcement of BLS’s
indemnification rights hereunder.

 

12.3                           If any indemnified Party intends to
claim indemnification under this Article 12 it shall promptly notify the
other Party in writing of such alleged claim. The indemnifying Party shall have
the sole right to control the defense and settlement thereof. The indemnified 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

28

 

CONFIDENTIAL TREATMENT
REQUESTED

 

Party
shall cooperate with the indemnifying Party and its legal representatives in
the investigation of any action, claim or liability covered by this Article 12.
The indemnified Party shall not, except at its own cost, voluntarily make any
payment or incur any expense with respect to any claim or suit without the
prior written consent of the indemnifying Party. In addition, the indemnifying
Party shall be subrogated to the rights of the indemnified Party against any
third party, and such indemnified Party hereby assigns to the indemnifying
Party all claims, causes of action and other rights that the indemnified Party may then
have against any third party, including Affiliates and sublicensees, with
respect to the claim, suit or proceeding. Conversely, and without in any way
limiting the obligation of either Party to indemnify the other Party as herein
provided, to the extent that any Party shall fail to perform its
indemnification obligations under Section 12.1 or Section 12.2, such
Party owing a duty of indemnification hereby assigns to the indemnified Party
to whom indemnification is owed all claims, cause of action and other rights
that the Party owing such duty may then have against any third party,
including Affiliates and sublicensees with respect to the claim, suit or
proceeding.

 

13.                               TERM

 

Unless sooner terminated as herein provided,
this Agreement shall become effective on the Effective Date and shall continue
in effect thereafter until it is terminated in accordance with the terms
hereof.

 

14.                               EXPIRY AND TERMINATION

 

14.1                           Unless earlier terminated pursuant to Section 14.2
below, this Agreement shall not expire.

 

14.2                           At any time during the Term of this
Agreement, either BLS or Depomed may terminate this Agreement with respect
to the 500mg Product or the 1000mg Product if the other Party is in material
breach or default in the performance or observance of any of the provisions of
this Agreement applicable to it and relating to the product in respect of which
termination of this Agreement is sought, and such breach or default is not
cured 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

29

 

CONFIDENTIAL TREATMENT
REQUESTED

 

within
sixty days (or thirty days in the case of failure to make royalty or other
payments due hereunder) after the giving of notice by the Party specifying such
breach or default.

 

14.3                           At any time during the Term of this
Agreement, either BLS or Depomed may terminate this Agreement forthwith
for cause, as “Cause” is described below, by giving written notice to the other
Party. “Cause” for termination by one Party of this Agreement shall be deemed
to exist if, with respect to the other Party:

 

(a)                                  (i) a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect shall be instituted by such Party, or such Party shall consent to the
entry of any order for relief in an involuntary case under any such law; (ii) a
general assignment for the benefit of creditors shall be made by such Party; (iii) such
Party shall consent to the appointment of or possession by a receiver,
liquidation, trustee, custodian, sequestrator or similar official of the
property of such Party or of any substantial part of its property; or (iv) such
Party shall adopt a directors resolution in furtherance of any of the foregoing
actions specified in this subsection (a); or

 

(b)                                 a decree or order for relief by a
court of competent jurisdiction shall be entered in respect of such Party in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, trustee,
sequestrator or other similar official of such Party to wind up or liquidate
its affairs, and any such decree or order shall remain unstayed or undischarged
and in effect for a period of sixty days.

 

14.4                           Upon termination by Depomed pursuant to
Section 14.2 or for Cause, BLS shall, at the request of Depomed, assign to
Depomed the Regulatory Approval for the 500mg Product in the Territory, within
ten (10) days after Depomed has paid to BLS all of the costs incurred by
BLS in obtaining Regulatory Approval of the 500mg Product in the Territory.

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

30

 

CONFIDENTIAL TREATMENT
REQUESTED

 

14.5                           Except as set forth in Sections 14.1
and 14.4, upon termination of this Agreement pursuant to Sections 14.2 or 14.3,
the rights and licenses granted to BLS in Sections 4.1, 4.2, 4.3 and 4.4 of
this Agreement shall terminate. Notwithstanding such termination, and subject
to the terms and conditions of this Agreement, BLS may dispose of, by sale
or otherwise, any remaining inventory of 500mg Product that BLS may have
in its possession or control on the date of termination.

 

14.6                           Termination shall not release BLS or
Depomed from any obligations or liabilities that matured prior to termination,
including without limitation the obligations of BLS to make any payments owing
at the time of termination through the date of termination. If the terms of
this Agreement expressly state that a right or obligation shall survive
expiration or termination of this Agreement, such right or obligation shall
survive expiration or termination to the degree necessary to allow complete
fulfilment or discharge of the right or obligation. The provisions of Sections 9.1
through 9.5, and Articles 10, 11, 12, and 15 of this Agreement shall survive
the expiration or termination of this Agreement.

 

14.7                           In the event of termination or
expiration, each of Depomed and BLS shall retain ownership of the ideas,
inventions, discoveries, developments, designs, trademarks, trade secrets,
improvements, know-how, process, procedures, techniques, formulae, computer
programs, drawings, technology(ies) and intellectual and industrial property
accorded to each under the terms of this Agreement.

 

15.                               PUBLICITY

 

15.1                           Neither Party will originate any
publicity, news release, public comment or other public announcement, written
or oral, whether to the press, to stockholders, or otherwise, relating to this
Agreement, without the written consent of the other Party, except for such
announcement which, in accordance with the advice of legal counsel to the Party
making such announcement, is required by law or the regulations of the
securities exchange or market on which the disclosing Party’s securities are traded.
The Party making any 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

31

 

CONFIDENTIAL TREATMENT
REQUESTED

 

announcement
which is required by law or the regulations of the securities exchange or
market on which the disclosing Party’s securities are traded will, unless
prohibited by law, give the other Party an opportunity to review the form and
content of such announcement and comment before it is made. Either Party shall
have the right to make such filings with governmental agencies as to the
contents and existence of this Agreement as it shall reasonably deem necessary
or appropriate.

 

16.                               ASSIGNABILITY

 

16.1                           This Agreement may be assigned by
either Party to an Affiliate or as part of the sale by either Party of all
of its business of which this Agreement may be a part without the
consent of the other Party; provided, however, that neither Party shall assign
this Agreement to an Affiliate that is not reasonably capable of performing all
of its obligations under this Agreement. Except as permitted by this Section 16.1,
Depomed shall not assign any rights licensed to BLS under this Agreement. BLS may assign,
sublicense, subcontract or delegate, to any Affiliate of BLS reasonably capable
of performing such obligations, all or part of the rights and obligations
of BLS under this Agreement, but in no event shall such assignment,
sublicensing, subcontracting or delegation be deemed to relieve BLS of its
liabilities or obligations to Depomed under this Agreement. BLS expressly
acknowledges and agrees that BLS shall remain fully and unconditionally obligated
and responsible for the full and complete performance of all of BLS’s
obligations under the terms and conditions of this Agreement. This Agreement may not
otherwise be assigned by either Party without the prior written consent of the
other Party, which consent shall not be unreasonably withheld.

 

16.2                           No assignment permitted by this Article 16
to an Affiliate of either Party shall serve to release either Party from
liability for the performance of its obligations hereunder.

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

32

 

CONFIDENTIAL TREATMENT REQUESTED

 

17.                               NOTICES

 

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

 

Depomed, Inc.

1360 O’Brien Drive

Menlo Park, California 94025 

Attention: President

 

Facsimile: 650-462-9991

 

With a copy to:

 

Heller Ehrman LLP

275 Middlefield Road

Menlo Park, California 94025

Attention:  Matthew Gosling

Facsimile: 650-324-0638

 

Biovail Laboratories International SRL

Chelston Park

Building 2, Collymore Rock

St. Michael BH1

Barbados, West Indies

 

Attention: Mr. Eugene Melnyk, President 

Facsimile No.: (246) 437-7085

 

With a copy to:

 

Biovail Corporation 

7150 Mississauga Road

Mississauga, Ontario

L5N 8M5

 

Attention: 
Vice President and Associate General Counsel 

Facsimile: 905 286 3374

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

33

 

CONFIDENTIAL TREATMENT
REQUESTED

 

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

 

18.                               FORCE MAJEURE

 

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

 

18.2                           In the event that a Party is unable to
perform any of its obligations under this Agreement by a reason described
in Section 18.1 above, the obligations under this Agreement shall be
suspended during such time of non-performance.

 

19.                               MISCELLANEOUS

 

19.1                           This Agreement, the Manufacturing
Transfer Agreement and the Supply Agreement define the full extent of the
legally enforceable undertakings of the Parties hereto with respect to the
Manufacture and Marketing of the 500mg Product and the 1000mg Product for and
in the Territory as of and after the Effective Date, and with respect to the
rights and obligations of the Parties relating to the subject matter hereof after
the Effective Date, supersedes all previous writings and understandings. No
terms or provisions of this Agreement shall be varied or modified by any prior
or subsequent statement, conduct or act of either of the Parties, except that
the Parties may amend this Agreement by written 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

34

 

CONFIDENTIAL TREATMENT
REQUESTED

 

instruments
specifically referring to and executed in the same manner as this Agreement. Nothing
in this Agreement affects any rights or obligations of the Parties relating to
the Manufacture or Marketing of the 500mg Product for or in the Territory prior
to the Effective Date, and except as otherwise expressly provided by this
Agreement, none of the rights or obligations of the Parties under the Prior
Agreement, any amendments thereto or any other agreements between the Parties
relating to the 500mg Product in the Territory prior to the Effective Date are
affected by this Agreement, provided, however, that no such rights or
obligations created or arising prior to the Effective Date shall continue in
force after the Effective Date except as expressly provided in this Agreement. No
promise or representation, written or oral, with respect to the subject matter
hereof which is not set forth explicitly in this Agreement is intended by
either Party to be legally binding. Both Parties acknowledge that in deciding
to enter into this Agreement and to consummate the transactions contemplated
hereby, neither has relied upon any statements or representations, written or
oral, other than those explicitly set forth in this Agreement.

 

19.2                           It is the desire and intent of the
Parties that the provisions of this Agreement shall be enforced to the extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement which substantially affects the commercial basis of this Agreement
shall be determined to be invalid or unenforceable, such provision shall be
amended as hereinafter provided to delete therefrom or revise the portion thus
determined to be invalid or unenforceable. Such amendment shall apply only with
respect to the operation of such provision of this Agreement in the particular
jurisdiction for which such determination is made, provided no unfairness
results. In such event, the Parties agree to use reasonable efforts to agree on
substitute provisions, which, while valid, will achieve as closely as possible
the same economic effects or commercial basis as the invalid provisions, and
this Agreement otherwise shall continue in full force and effect. If the
Parties cannot agree to such revision within sixty days after such invalidity
or 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

35

 

CONFIDENTIAL TREATMENT
REQUESTED

 

unenforceability
is established, the matter may be submitted by either Party to arbitration
as provided in this Agreement to finalize such revision.

 

19.3                           The waiver by a Party of any single
default or breach or succession of defaults or breaches by the other shall not
deprive either Party of any right under this Agreement arising out of any
subsequent default or breach.

 

19.4                           All matters affecting the
interpretation, validity, and performance of this Agreement shall be governed
by the laws of the State of New York without regard to that state’s conflict of
laws rules or principles.

 

19.5                           Nothing in this Agreement authorizes
either Party to act as agent for the other Party as to any matter. The
relationship between Depomed and BLS is that of independent contractors.

 

19.6                           Any and all disputes between the
Parties relating in any way to the entering into of this Agreement and/or the
validity, construction, meaning, enforceability, or performance of this
Agreement or any of its provisions, or the intent of the Parties in entering
into this Agreement, or any of its provisions arising under this Agreement,
except for any disputes relating to the provisions of Articles 8, 11, 12 and 14,
shall be settled by binding arbitration. Such arbitration shall be conducted at
New York, New York, in accordance with the rules then pertaining of the
American Arbitration Association with a panel of three arbitrators. Each Party
shall select one arbitrator and the two selected arbitrators shall select the
third arbitrator. If the two selected arbitrators cannot agree on a third
arbitrator then the American Arbitration Association shall select said
arbitrator from the National Panel of Arbitrators. Reasonable discovery as
determined by the Arbitrators shall apply to the arbitration proceeding. The
law of the State of New York shall apply to the arbitration proceedings. Judgment
upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The successful Party in such arbitration, in
addition to all other relief provided, shall be entitled to an award of all its
reasonable 

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

36

 

CONFIDENTIAL TREATMENT
REQUESTED

 

costs and
expenses including attorney costs. Both Parties agree to waive, and the
Arbitrators shall have no right to award, punitive damages in connection with
an arbitration proceeding hereunder.

 

Prior
Payment

 

19.7                           The Parties acknowledge that BLS has
made to Depomed a payment of twenty five million US dollars (US$25,000,000)
under the Prior Agreement.

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

37

 

CONFIDENTIAL TREATMENT
REQUESTED

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their duly authorized officers on the date first above
written.

 

 

	
   

  	
  DEPOMED, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carl A. Pelzel

  
	
   

  	
  Name:

  	
  Carl A. Pelzel

  
	
   

  	
  Title:

  	
  Executive Vice President & COO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BIOVAIL LABORATORIES 

  
	
   

  	
  INTERNATIONAL SRL

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John A.R. McCleery

  
	
   

  	
  Name:

  	
  John A.R. McCleery

  
	
   

  	
  Title:

  	
  Vice President, General Manager

  
					

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

38

 

CONFIDENTIAL TREATMENT
REQUESTED

 

Schedule 1.24(a)

 

Patent Rights - Canadian Patents and Patent Applications

 

	
  Application
  No.;

  Filing Date

  	
   

  	
  Title

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

39

 

CONFIDENTIAL TREATMENT
REQUESTED

 

Schedule 1.24(b)

 

Patent Rights - Foreign Patents and Patent Applications

 

	
  Issued Patent No. /

  Pending Patent Application No.

  	
   

  	
  Title

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.Exhibit 10.22

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXECUTION COPY

 

SUPPLY AGREEMENT

(Extended Release
Metformin Formulations – U.S.A.)

 

DEPOMED, INC.

a company organized
under the laws of California, USA 

with offices at 

1360 O’Brien Drive

Menlo Park,

California, 94025

 

AND:

 

BIOVAIL LABORATORIES INTERNATIONAL SRL

a Barbados society with restricted liability organized under the laws of
Barbados

whose head office is

Chelston Park

Building 2, Collymore Rock

St. Michael BH1

Barbados, West Indies

 

Biovail – Depomed Supply
Agreement (1000mg Glumetza)

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

Contents

 

	
  1.

  	
  DEFINITIONS

  	
  2

  
	
   

  	
   

  	
   

  
	
  2.

  	
  DEVELOPMENT

  	
  6

  
	
   

  	
   

  	
   

  
	
   

  	
  WORK PLAN

  	
  6

  
	
   

  	
  PROTOCOLS AND METHODS

  	
  7

  
	
   

  	
  BLS FACILITIES AND EMPLOYEES

  	
  7

  
	
   

  	
  SUPPLEMENTAL NDA

  	
  7

  
	
   

  	
  ADDITIONAL DEVELOPMENT

  	
  8

  
	
   

  	
   

  	
   

  
	
  3.

  	
  PRODUCT DEVELOPMENT COSTS

  	
  9

  
	
   

  	
   

  	
   

  
	
  4.

  	
  PURCHASE OF 1000MG PRODUCT

  	
  9

  
	
   

  	
   

  	
   

  
	
  5.

  	
  FORECASTS

  	
  10

  
	
   

  	
   

  	
   

  
	
   

  	
  PLANNING FORECAST

  	
  10

  
	
   

  	
  LAUNCH FORECAST

  	
  10

  
	
   

  	
  SUPPLY FORECAST

  	
  10

  
	
   

  	
  FIRST THREE MONTHS FIRM

  	
  11

  
	
   

  	
  PERMITTED MODIFICATIONS TO FORECASTS

  	
  11

  
	
   

  	
   

  	
   

  
	
  6.

  	
  PURCHASE ORDERS

  	
  12

  
	
   

  	
   

  	
   

  
	
   

  	
  FORMS

  	
  13

  
	
   

  	
   

  	
   

  
	
  7.

  	
  DELIVERY AND SHIPPING TERMS

  	
  13

  
	
   

  	
   

  	
   

  
	
   

  	
  DELIVERY

  	
  13

  
	
   

  	
  VARIANCE IN QUANTITIES DELIVERED

  	
  14

  
	
   

  	
  SHIPPING TERMS

  	
  14

  
	
   

  	
  LOSSES IN TRANSPORT

  	
  16

  
	
   

  	
   

  	
   

  
	
  8.

  	
  PRICES AND PAYMENTS

  	
  17

  
	
   

  	
   

  	
   

  
	
   

  	
  DEPOMED SALES

  	
  17

  
	
   

  	
  DISTRIBUTOR SALES

  	
  17

  
	
   

  	
  SUPPLY PRICES IF NO VALID CLAIM

  	
  17

  
	
   

  	
  SAMPLE PRICE

  	
  18

  
					

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

i

 

CONFIDENTIAL TREATMENT REQUESTED

 

	
   

  	
  INVOICING

  	
  18

  
	
   

  	
  PAYMENT TERMS

  	
  18

  
	
   

  	
  RECONCILIATION

  	
  19

  
	
   

  	
  PRICE ADJUSTMENTS

  	
  20

  
	
   

  	
  TAXES

  	
  21

  
	
   

  	
   

  	
   

  
	
  9.

  	
  RECORD KEEPING; AUDIT

  	
  22

  
	
   

  	
   

  	
   

  
	
   

  	
  RECORDS

  	
  22

  
	
   

  	
  AUDIT

  	
  22

  
	
   

  	
   

  	
   

  
	
  10.

  	
  MODIFIED SPECIFICATIONS

  	
  23

  
	
   

  	
   

  	
   

  
	
   

  	
  CHANGES MANDATED BY GOVERNMENTAL AUTHORITY

  	
  23

  
	
   

  	
  OTHER CHANGES

  	
  24

  
	
   

  	
   

  	
   

  
	
  11.

  	
  QUALITY CONTROL

  	
  24

  
	
   

  	
   

  	
   

  
	
  12.

  	
  FACILITY INSPECTION

  	
  25

  
	
   

  	
   

  	
   

  
	
  13.

  	
  ACCEPTANCE AND REJECTION

  	
  26

  
	
   

  	
   

  	
   

  
	
   

  	
  ACCEPTANCE TESTING

  	
  26

  
	
   

  	
  DISCREPANT TEST RESULTS

  	
  26

  
	
   

  	
  CONFIRMATION

  	
  27

  
	
   

  	
  RETURN OR DESTRUCTION OF REJECTED SHIPMENTS

  	
  27

  
	
   

  	
  REFUND; REPLACEMENT

  	
  27

  
	
   

  	
  EXCEPTIONS

  	
  28

  
	
   

  	
   

  	
   

  
	
  14.

  	
  SUPPLY OF 500MG PRODUCT

  	
  28

  
	
   

  	
   

  	
   

  
	
   

  	
  PACKAGING AND BATCH RELEASE SERVICES

  	
  30

  
	
   

  	
   

  	
   

  
	
  15.

  	
  CONTRACT MANUFACTURERS

  	
  30

  
	
   

  	
   

  	
   

  
	
  16.

  	
  INABILITY TO SUPPLY

  	
  31

  
	
   

  	
   

  	
   

  
	
   

  	
  NOTICE

  	
  31

  
	
   

  	
  DEPOMED’S RIGHTS ON BLS FAILURE TO SUPPLY

  	
  31

  
	
   

  	
   

  	
   

  
	
  17.

  	
  MATERIAL SAFETY

  	
  33

  
						

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

ii

 

CONFIDENTIAL TREATMENT REQUESTED

 

	
  18.

  	
  MARKETING OF THE 1000MG PRODUCT;
  GLUMETZA WEBSITE

  	
  33

  
	
   

  	
   

  	
   

  
	
  19.

  	
  REGULATORY AFFAIRS

  	
  34

  
	
   

  	
   

  	
   

  
	
   

  	
  REGULATORY RESPONSIBILITY

  	
  34

  
	
   

  	
  ADVERSE REACTION REPORTS

  	
  36

  
	
   

  	
  WITHDRAWAL OF REGULATORY APPROVAL

  	
  36

  
	
   

  	
   

  	
   

  
	
  20.

  	
  LIMITED WARRANTIES; RECALL

  	
  37

  
	
   

  	
   

  	
   

  
	
   

  	
  REPRESENTATIONS AND WARRANTIES BY BLS

  	
  37

  
	
   

  	
  MUTUAL REPRESENTATIONS AND WARRANTIES

  	
  38

  
	
   

  	
  PRODUCT RECALL.

  	
  39

  
	
   

  	
   

  	
   

  
	
  21.

  	
  TECHNOLOGY TRANSFER TO DEPOMED

  	
  40

  
	
   

  	
   

  	
   

  
	
  22.

  	
  INDEMNIFICATION

  	
  40

  
	
   

  	
   

  	
   

  
	
   

  	
  BY BLS

  	
  40

  
	
   

  	
  BY DEPOMED

  	
  41

  
	
   

  	
  COSTS AND EXPENSES

  	
  41

  
	
   

  	
  PROCEDURE

  	
  41

  
	
   

  	
   

  	
   

  
	
  23.

  	
  CONFIDENTIALITY

  	
  42

  
	
   

  	
   

  	
   

  
	
  24.

  	
  TERM; TERMINATION

  	
  43

  
	
   

  	
   

  	
   

  
	
   

  	
  TERM

  	
  43

  
	
   

  	
  TERMINATION FOR CAUSE

  	
  43

  
	
   

  	
  TECHNOLOGY TRANSFER

  	
  44

  
	
   

  	
  SURVIVAL

  	
  44

  
	
   

  	
   

  	
   

  
	
  25.

  	
  PUBLICITY

  	
  45

  
	
   

  	
   

  	
   

  
	
  26.

  	
  ASSIGNABILITY

  	
  45

  
	
   

  	
   

  	
   

  
	
   

  	
  ASSIGNMENT

  	
  45

  
	
   

  	
  LIABILITY

  	
  46

  
	
   

  	
   

  	
   

  
	
  27.

  	
  NOTICES

  	
  46

  
	
   

  	
   

  	
   

  
	
   

  	
  NOTICES

  	
  46

  
					

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

iii

 

CONFIDENTIAL TREATMENT REQUESTED

 

	
   

  	
  RECEIPT

  	
  47

  
	
   

  	
   

  	
   

  
	
  28.

  	
  FORCE MAJEURE

  	
  47

  
	
   

  	
   

  	
   

  
	
   

  	
  FORCE MAJEURE EVENT

  	
  47

  
	
   

  	
   

  	
   

  
	
   

  	
  PERFORMANCE

  	
  48

  
	
   

  	
   

  	
   

  
	
  29.

  	
  MISCELLANEOUS

  	
  48

  
	
   

  	
   

  	
   

  
	
   

  	
  ENFORCEABILITY

  	
  48

  
	
   

  	
   

  	
   

  
	
   

  	
  ENTIRE AGREEMENT

  	
  49

  
	
   

  	
   

  	
   

  
	
   

  	
  WAIVER

  	
  49

  
	
   

  	
   

  	
   

  
	
   

  	
  GOVERNING LAW

  	
  49

  
	
   

  	
   

  	
   

  
	
   

  	
  INDEPENDENT CONTRACTORS

  	
  49

  
	
   

  	
   

  	
   

  
	
   

  	
  COUNTERPARTS

  	
  49

  
	
   

  	
   

  	
   

  
	
   

  	
  INCONSISTENCY

  	
  50

  
	
   

  	
   

  	
   

  
	
   

  	
  ARBITRATION

  	
  50

  
					

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

iv

 

CONFIDENTIAL TREATMENT REQUESTED

 

SUPPLY AGREEMENT

 

(Extended Release Metformin Formulations – U.S.A.)

 

THIS
SUPPLY AGREEMENT (this “Agreement”) is made this 13th
day of December, 2005 (the “Effective Date”), by and between

 

DEPOMED, INC.

a company organized
under the laws of California, USA 

with offices at 

1360 O’Brien Drive

Menlo Park,

California, 94025

 

(Hereinafter referred to as “Depomed”)

 

AND:

 

BIOVAIL LABORATORIES INTERNATIONAL SRL

a Barbados society with restricted liability organized under the laws of
Barbados,

whose head office is

Chelston Park

Building 2, Collymore Rock

St. Michael BH1

Barbados, West Indies

 

(Hereinafter referred to as “BLS”)

 

BLS and Depomed are
sometimes referred to herein individually as a “Party” and collectively
as the “Parties.”

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

1

 

CONFIDENTIAL TREATMENT REQUESTED

 

Recitals

 

A.                                   BLS
is the owner of original processes, a patent application and know-how for the
development and manufacture of, and has plans to seek Regulatory Approval for
the 1000mg Product in the Territory, as contemplated by this Agreement.

 

B.                                     BLS
and Depomed have entered into an exclusive Manufacturing Transfer Agreement
providing for the grant by BLS to Depomed of exclusive marketing rights to the
1000mg Product in the Territory (the “Manufacturing Transfer Agreement”).

 

C.                                     BLS
desires to sell 1000mg Product to Depomed, and Depomed desires to purchase
1000mg Product from BLS, in accordance with the terms and conditions contained
herein.

 

It is therefore agreed as
follows:

 

Agreement

 

1.                                      DEFINITIONS.

 

For the purposes of this
Agreement, the terms hereunder shall have the meanings as defined below:

 

1.1                                 “1000mg Product” shall mean a once daily oral tablet formulation of
1000 mg of the Active Ingredient using proprietary BLS drug delivery technology
to be developed pursuant to this Agreement.

 

1.2                                 “500mg
Product” shall mean the once-daily oral formulation of 500mg of the
Active Ingredient in combination with the AcuForm Delivery Technology that
is the subject of NDA No. 21-748 filed with the FDA on April 27, 2004
(as such NDA may be amended or supplemented subsequent to the Effective
Date).

 

1.3                                 “Affiliate” means any corporation or other entity that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with the designated Party but only for so long as such
relationship exists. For the purposes of this section, “Control” mean
ownership of at least fifty percent (or such lesser percent as may be the
maximum that may be owned by foreign interests pursuant to the laws of the
country of incorporation) of the shares of stock entitled to vote for directors
in the case of 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

2

 

CONFIDENTIAL TREATMENT REQUESTED

 

a corporation and at
least fifty percent (or such lesser percent as may be the maximum that may be
owned by foreign interests pursuant to the laws of the country of domicile) of
the interests in profits in the case of a business entity other than a
corporation.

 

1.4                                 “Applicable Laws” means all federal, state and local laws,
statutes, rules, regulations and ordinances as in effect on the Effective Date,
applicable to each Party’s activities hereunder, including, without limitation,
the applicable regulations and guidelines of any Governmental Authority
including the FDA and foreign counterparts and all applicable cGMPs together
with amendments thereto.

 

1.5                                 “Application for Regulatory Approval” shall
mean an application made to a Regulatory Authority in any country for
permission to Market a pharmaceutical product in that country.

 

1.6                                 “Batch Size” shall mean:

 

(a)                                  With respect to the 500mg Product, [***]
tablets; and

 

(b)                                 With respect to the 1000mg Product, [***]
tablets,

 

and a Batch shall have a
corresponding meaning.

 

1.7                                 “Canadian Agreement” shall mean the Amended and Restated License
Agreement providing for, inter alia, the grant by Depomed to BLS of exclusive
marketing rights to the 500mg Product in Canada.

 

1.8                                 “cGMP” means the then-current Good Manufacturing Practices as
promulgated under the United States Federal Food, Drug and Cosmetic Act, as amended at
21 CFR (chapters 210 and 211), as the same may be amended or re-enacted
from time to time and as interpreted in accordance with then-current industry
standards and FDA policies.

 

1.9                                 “Depomed Revenues” shall mean for any calendar quarter, the aggregate of all
amounts received, or receivable in future periods, by Depomed or its Affiliates
and assigns in respect of sales of 1000mg Product by Distributors made in that
calendar quarter, including without limitation supply prices, royalties,
trademark license fees, handling fees and commissions, less the following
deductions actually allowed and taken and not 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

3

 

CONFIDENTIAL TREATMENT REQUESTED

 

otherwise recovered by
or reimbursed to Depomed or its Affiliates and assigns in respect of such
amounts:  (i) rebates, credits or
other reimbursements actually paid; and (ii) amounts repaid or credited by
reason of rejections, defects or returns or because of retroactive price
reductions. Depomed Revenues shall not include amounts in respect of sales of
1000mg Product between or among Depomed or its Affiliates or assigns.

 

1.10                           “Develop” shall mean to perform all of the work set out in the
Work Plan and this Agreement, and “Developed”
and “Development” have
corresponding meanings.

 

1.11                           “Distributor” shall mean an entity designated by Depomed to perform its
distribution and Marketing activities with respect to the 1000mg Product in the
Territory, in accordance with the terms of this Agreement.

 

1.12                           “FDA” means the United States Food and Drug Administration or any
successor entity thereto.

 

1.13                           “First Commercial Sale” means the date of the first commercial sale
of the 1000mg Product in the Territory by Depomed or a Distributor.

 

1.14                           “Governmental Authority” means any regulatory agency, department,
bureau, or other governmental entity, including without limitation the FDA,
which is responsible for issuing approvals, licenses, registrations,
clearances, or authorizations necessary for the manufacture, use, storage,
import, transport, marketing or sale of pharmaceutical products in a country in
the Territory and having jurisdiction over any activity of a Party under this
Agreement.

 

1.15                           “Manufacturing Transfer Agreement” shall mean the Manufacturing
Transfer Agreement, dated as of the Effective Date, by and between Depomed and
BLS providing for the grant to Depomed of exclusive Marketing rights in the
United States to the 1000mg Product, and for the grant of Manufacturing rights
in the United States to the 1000mg Product.

 

1.16                           “Net Sales” shall mean the total of all amounts invoiced by
Depomed, its Affiliates, its Distributors, its licensees and assigns for 1000mg
Product (other than samples) sold to independent, unrelated third parties in
the Territory in bona fide arms-length transactions, less the following
deductions actually allowed and taken by such third parties and not 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

4

 

CONFIDENTIAL TREATMENT REQUESTED

 

otherwise recovered by
or reimbursed to Depomed its Affiliates, or its Distributors: (i) trade,
cash and quantity discounts in such amounts as are customary in the trade; (ii) rebates,
credits or other reimbursements actually paid; (iii) taxes on sales (such
as sales or use taxes) to the extent added to the sales price and set forth
separately as such in the total amount invoiced; (iv) value added taxes
when included as part of the sales price and not refunded to the payor; (v) freight,
insurance, and other transportation charges to the extent added to the sales
price and set forth separately as such in the total amount invoiced; and (vi) amounts
repaid or credited by reason of rejections, defects or returns or because of
retroactive price reductions. Net Sales shall not include sales of 1000mg Product
between or among Depomed, its Affiliates, Distributors, licensees or assigns.

 

1.17                           “Net Selling Price”
shall mean, with respect to any calendar quarter, the Net Sales of the 1000mg
Product for that calendar quarter divided by the number of tablets of the
1000mg Product (other than samples) sold by Depomed, its Affiliates and its
Distributors in that calendar quarter (excluding any sales between or among
Depomed, its Affiliates, Distributors, licensees or assigns).

 

1.18                           “Supplemental NDA” has the meaning set forth in the Manufacturing
Transfer Agreement.

 

1.19                           “PPI Increase” shall mean, with respect to any twelve month period,
the percentage increase in the producer price index for the pharmaceutical
manufacturing industry over that twelve month period, as reported by the United
States Bureau of Labor Statistics.

 

1.20                           “Patent Rights” has the meaning set forth in the Manufacturing
Transfer Agreement.

 

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

 

1.22                           “Regulatory Approval” shall mean the permission or consent granted by any
relevant Regulatory Authority for the Marketing of the 1000mg Product in the
Territory, including the approval of the manufacturing facility of BLS, its
Affiliate or any contract 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

5

 

CONFIDENTIAL TREATMENT REQUESTED

 

manufacturer at which
BLS intends to manufacture or have manufactured, commercial quantities of the
1000mg Product, and includes all of the contents of the Application for
Regulatory Approval as approved by that Regulatory Authority, and any Drug
Master File referenced by that Application for Regulatory Approval.

 

1.23                           “Specifications” means the specifications for as to manufacturing,
packaging, labelling and testing of packaged, finished 1000mg Product ready for
commercial sale set forth in Exhibit A attached hereto, as such
specifications may be amended from time to time pursuant to Article 10
below.

 

1.24                           “Supply Price” shall mean each of the prices that Depomed shall pay
to BLS for the 1000mg Product as set out in Schedules 8.1, 8.2, 8.4, 8.5 and for the 500mg Product, as set
out in Schedule 14.6.

 

1.25                           “Territory” shall mean the United States and its possessions,
including Puerto Rico.

 

1.26                           “Valid Claim” shall mean a claim of (a) an unexpired issued
patent falling within Patent Rights, which claim shall not have been withdrawn,
cancelled, disclaimed or held invalid by a court, tribunal, arbitrator or
governmental agency of competent jurisdiction in a final or unappealed or
unappealable decision or (b) of any patent application that has not been
cancelled, withdrawn or abandoned, or has been pending for more than seven
years.

 

1.27                           “Work Plan” shall mean the work plan related to the development of
the 1000mg Product attached as Schedule 1.27 to this Agreement.

 

2.                                      DEVELOPMENT

 

Work Plan

 

2.1                                 BLS shall, at its own expense, use diligent efforts (i) to carry out
its obligations under this Agreement and the Work Plan to Develop, and assist
Depomed in obtaining Regulatory Approval for, the 1000mg Product, and (ii) to
the extent specified in the Work Plan, to design and undertake any required
analytical testing and clinical studies. BLS shall use diligent efforts to
carry out such obligations in accordance with the time limits set out in 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

6

 

CONFIDENTIAL TREATMENT REQUESTED

 

the Work Plan. The
Parties recognize that the time frames in the Work Plan include “target dates”
and “assumptions” and may be dependent on FDA actions.

 

2.2                                 BLS shall be responsible for obtaining, at its own expense, all materials,
supplies and resources required for the Development of the 1000mg Product in
accordance with the Work Plan.

 

Protocols and Methods

 

2.3                                 To the extent specified in the Work Plan, BLS shall develop all of the
analytical and clinical protocols that have not already been developed and that
are required for Regulatory Approval of the Supplemental NDA, or for the
manufacture of the 1000mg Product.

 

2.4                                 To the extent specified in the Work Plan, BLS shall use diligent efforts
to develop and validate all necessary analytical methods not already developed
for the 1000mg Product .

 

BLS Facilities and Employees

 

2.5                                 BLS shall use commercially reasonable efforts to ensure that any
facilities at which all or part of the Development of the 1000mg Product
is conducted complies with all required cGMP Standards.

 

2.6                                 BLS shall use commercially reasonable efforts to ensure that any employee
or sub-contractor of BLS to whom any Development work is assigned or
sub-contracted is competent to perform the tasks assigned or
sub-contracted at the time of such assignment or sub-contract.

 

2.7                                 BLS shall bear the cost of any Development work that must be repeated
because the facilities at which the work was conducted did not comply with all
required cGMP standards, or because the work was assigned or sub-contracted to
persons who were not competent to do that work.

 

Supplemental NDA

 

2.8                                 Provided that BLS has complied in all material respects with its
obligations under of this Agreement, and that all of the other data and
information required for that purpose are 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

7

 

CONFIDENTIAL TREATMENT REQUESTED

 

available to Depomed in
the form required for an Application for Regulatory Approval in respect of
the Supplemental NDA, Depomed shall use commercially reasonable efforts to
file, as soon as reasonably possible, in the name of Depomed, or any Affiliate
or sub-licensee of Depomed, the Supplemental NDA and any amendments or
supplements thereto contemplated by the Work Plan. BLS shall reimburse Depomed
for any FDA fees incurred by Depomed in filing the Supplemental NDA.

 

2.9                                 Each Party shall use diligent efforts to cause the Regulatory Approval for
the 1000mg Product to be obtained on or before June 30, 2007 (consistent
with the Parties’ respective obligations with respect to the Development of the
1000mg Product).

 

Additional Development

 

2.10                           If the FDA does not approve the Supplemental NDA notwithstanding the
Parties’ compliance with their respective obligations hereunder in respect of
the Development and Regulatory Approval of the 1000mg Product, then the Parties
shall continue to develop and seek Regulatory Approval for the 1000mg Product,
and, in connection therewith, shall incur no more than [***] of additional costs and expenses (or
such other amount as agreed in writing by the Parties) calculated
in a manner consistent with other research and development cost allocations by
BLS for other similar projects. BLS
shall be responsible for the [***]
of such costs and expenses. The [***]
of expenses shall be shared equally by the Parties.

 

2.11                           If the Parties have agreed, notwithstanding the provisions of Section 2.10,
not to incur any additional costs and expenses for the Development of the
1000mg Product, or if, following any actions taken by the Parties pursuant to Section 2.10,
the FDA does not approve the Supplemental NDA, then, unless otherwise agreed in
writing by the Parties, neither Party shall have any additional obligations in
respect of the development or Regulatory Approval of the 1000mg Product.

 

2.12                           If one Party elects to continue with the
Development of the 1000mg Product, and the other Party does not wish to
continue with that Development, then:

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

8

 

CONFIDENTIAL TREATMENT REQUESTED

 

(a)                                  If BLS elects to continue with the
Development of the 1000mg Product, and if Regulatory Approval of the 1000mg
Product is granted, BLS shall notify Depomed of that election, and within
thirty (30) days after that notice Depomed shall either (i) agree to
market the 1000mg Product in accordance with its obligations under this
Agreement or (ii) permit BLS to terminate this Agreement with respect to
1000mg Product, and itself Market the 1000mg Product in the Territory, upon
reimbursement to Depomed of all regulatory and other fees associated with
transfer of the 1000mg Product to BLS;

 

(b)                                 If Depomed elects to continue with
the Development of the 1000mg Product, Depomed may use the rights granted
to it by this Agreement and the Manufacturing Transfer Agreement to do so, and may offset
against any amounts due to BLS under this Agreement the costs incurred by
Depomed in obtaining such approval in excess of those specified in Section 2.10.

 

3.                                      PRODUCT DEVELOPMENT
COSTS

 

3.1                                 In consideration of the entering into of this Agreement by Depomed, and
the agreement by Depomed to acquire its requirements for the 1000mg Product
from BLS, BLS agrees to carry out its obligations under this Agreement and the
Work Plan for the Development of the 1000mg Product after the Effective Date.

 

4.                                      PURCHASE OF 1000MG
PRODUCT

 

4.1                                 Depomed agrees that it will purchase 1000mg Product exclusively from BLS
and, other than as may be set forth herein, that it will not manufacture
(or have manufactured on its behalf) 1000mg Product directly without BLS’s
prior written consent or as provided in Section 16.2 hereof, and BLS
agrees that it will produce (or have produced for it) and sell to Depomed one
hundred percent of Depomed’s requirements for 1000mg Product, during the term
of, and subject to the provisions of, this Agreement.

 

4.2                                 BLS shall use commercially reasonable efforts to maintain a production
capacity sufficient to supply Depomed with [***]
of the 1000mg Product per calendar month.

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

9

 

CONFIDENTIAL TREATMENT REQUESTED

 

5.                                      FORECASTS

 

Planning Forecast

 

5.1                                 On the date that the first Supply Forecast is delivered pursuant to Section 5.3,
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.

 

Launch Forecast

 

5.2                                 Promptly following the date of Regulatory Approval for the 1000mg Product
in the Territory, Depomed shall deliver to BLS a non-binding (except as
otherwise provided in this Section 5.2), forecast setting forth, by calendar month, the
quantities of 1000mg Product, including all quantities of 1000mg Product required
for stocking the trade in the Territory (the “Launch Forecast”) and for
samples that Depomed expects BLS to deliver to Depomed during the twelve (12) calendar months period after Launch.
Depomed shall include in that Launch Forecast Depomed’s good faith estimates of
the Net Selling Price of the 1000mg Product upon Launch. Quantities of 1000mg
Product identified in the Launch Forecast shall be in whole multiples of the
Batch Size. The anticipated quantities for the first [***] covered by the Launch Forecast shall be a binding
commitment by Depomed to purchase the quantities of Product set out in the
Launch Forecast for such [***]
period.

 

Supply Forecast

 

5.3                                 Commencing in the first full Calendar month following Launch, Depomed
shall deliver to BLS, on or before the fifteenth (15th) day of each calendar
month, a rolling eighteen 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

10

 

CONFIDENTIAL TREATMENT REQUESTED

 

(18) calendar month
Supply Forecast setting forth, by calendar month, the quantities of Product
(including samples) that Depomed expects BLS to deliver to Depomed during each calendar month of the next eighteen (18) calendar
month period for the Territory. Quantities of 1000mg Product identified in each
Supply Forecast shall be in whole multiples of the Batch Size. BLS shall notify
Depomed within fifteen (15) days after BLS’s receipt of any Supply Forecast of
any inability of BLS to supply to Depomed any quantities of 1000mg Product that
BLS is expected to deliver to Depomed pursuant to any such Supply Forecast in excess
of the quantities set out in Section 4.2.

 

First [***] Firm

 

5.4                                 The 1000mg Product quantity stated for the first [***] of each Supply Forecast shall be a
binding commitment by Depomed to purchase and, subject to the provisions of
Sections 5.5 to 5.7, binding commitment by BLS to deliver, the quantities
of 1000mg Product set forth in such Supply Forecast for those [***]. The estimated requirements for each
succeeding calendar month in each Supply Forecast shall be Depomed’s good faith
estimates of Depomed’s requirements for 1000mg Product in each such calendar
month, and may be varied only to the extent set out in Sections 5.5 to
5.7.

 

Permitted Modifications to Forecasts

 

5.5                                 The forecast for any calendar month in the tenth (10th) through the
eighteenth (18th) calendar months of any Supply Forecast may be varied
from the forecast made for the same calendar month in the previous Supply
Forecast by any reasonable percentage consistent with Depomed’s good faith
estimates for its requirements for that calendar month, provided that quantities
set out in each month in each Supply Forecast are in whole multiples of Batch
Size.

 

5.6                                 The forecast for the seventh (7th) through ninth (9th) calendar months of
any Supply Forecast vary from the forecast made for that calendar month when it
was the tenth (10th) calendar month in a Supply Forecast, by an
amount that does not exceed the greater of fifty (50%) of the forecast for that
calendar month when it was the tenth (10th) calendar 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

month in a Supply Forecast
or one Batch Size. provided that quantities set out in each month in each
Supply Forecast are in whole multiples of Batch Size.

 

5.7                                 The forecast for any of the fourth (4th) through sixth (6th)
calendar months of any Supply Forecast may vary from the forecast made for
that calendar month when it was the seventh (7th) calendar month in
a Supply Forecast, by an amount that does not exceed the greater of twenty five
per cent (25%) of the forecast for that calendar month when it was the seventh
(7th) calendar month in a Supply Forecast or one Batch Size,
provided that quantities set out in each month in each Supply Forecast are in
whole multiples of Batch Size.

 

5.8                                 Notwithstanding the above, from time to time, due to unforeseen
circumstances, Depomed may deliver to BLS a Supply Forecast for 1000mg
Product volumes in excess of those specified in any prior Supply Forecast
and/or in excess of the percentage variances permitted by Sections 5.5 to 5.7,
provided that quantities set out in each month in each Supply Forecast are in
whole multiples of Batch Size. BLS shall provide written notification to
Depomed as soon as reasonably possible after the delivery of such Supply
Forecast of the amount of any such excess that BLS determines it will be able
to deliver to Depomed, and shall use commercially reasonable efforts to deliver
that amount of 1000mg Product in addition to the amounts otherwise properly
included in such Supply Forecast.

 

5.9                                 Notwithstanding any forecast delivered by Depomed to BLS pursuant to the
provisions of Article 5, BLS shall have no obligation to supply to Depomed
quantities of the 1000mg Product in excess of the quantities specified in Section 4.2.

 

6.                                      PURCHASE ORDERS

 

6.1                                 Depomed shall deliver to BLS, concurrently with the delivery of the Launch
Forecast delivered pursuant to Section 5.2, a firm Purchase Order for the
quantities of 1000mg Product (including samples) required by Depomed for the
first [***] of the Launch
Forecast, specifying in such Purchase Order the required Delivery Date within
each such month for the quantities so ordered. Each Purchase Order shall be in
whole multiples of 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

12

 

CONFIDENTIAL TREATMENT REQUESTED

 

the Batch Size. The
Delivery Date specified in any such Purchase Order shall not be less than
ninety (90) days after the date of delivery of the Launch Forecast. The
Purchase Order may be delivered electronically or by other means to such
location, as BLS shall designate.

 

6.2                                 Depomed shall deliver to BLS, with each Supply Forecast delivered pursuant
to Section 5.3, a firm Purchase Order for the quantities of 1000mg Product
required by Depomed for the third (3rd) month of such Supply
Forecast. Each Purchase Order shall be in whole multiples of the Batch Size,
and shall specify the required Delivery Date within such month for the
quantities so ordered. The Delivery Date specified shall not be less than
ninety (90) days after the date of such Purchase Order. The Purchase Order may be
delivered electronically or by other means to such location, as BLS shall
designate.

 

6.3                                 Notwithstanding any Purchase Orders delivered by Depomed to BLS pursuant
to the provisions of section 6.1, BLS shall have no obligation to supply
to Depomed quantities of the 1000mg Product in excess of the quantities
specified in Section 4.2.

 

Forms

 

6.4                                 In ordering or delivering 1000mg Product, each of Depomed and BLS may use
its respective standard forms, provided that nothing in those forms shall be
construed to modify or amend the terms and conditions of this Agreement. In the
event of any conflict between the terms and conditions of any such form and
the terms and conditions of this Agreement, the terms and conditions of this
Agreement shall control.

 

7.                                      DELIVERY AND SHIPPING
TERMS

 

Delivery

 

7.1                                 The quantities of 1000mg Product ordered in each Purchase Order shall be
delivered no more than ten (10) business days before or after the Delivery
Date specified in the relevant Purchase Order. In the event that BLS expects
delivery of quantities of 1000mg Product ordered by Depomed to be delayed due
to unforeseen transportation difficulties, BLS shall notify Depomed not later
than ten (10) business days before the Delivery Date 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

13

 

CONFIDENTIAL TREATMENT REQUESTED

 

specified in the
relevant Purchase Order, and shall inform Depomed of the expected delayed
Delivery Date.

 

Variance in Quantities Delivered

 

7.2                                 Quantities (in tablets) of 1000mg Product actually delivered by BLS may vary
from the quantities specified in a Purchase Order by [***]. Depomed shall be invoiced only for the quantities of
1000mg Product actually delivered to Depomed.

 

Shipping Terms

 

7.3                                 In the case of delivery of the 1000mg Product
by BLS from BLS’s manufacturing facility in Puerto Rico, all 1000mg Product
shall be delivered FCA (INCOTERMS 2000) to Depomed’s designated warehouse in
the Territory, but outside Puerto Rico. Title to, ownership of
and risk of loss of, the 1000mg Product shall transfer at the location that is
immediately after the 1000mg Product leaves Puerto Rico and enters
international waters while the 1000mg Product is in transit from BLS’s facility
in Puerto Rico to Depomed’s designated warehouse in the Territory, but outside
Puerto Rico.

 

7.4                                 In the case of delivery of the 1000mg
Product by BLS from a manufacturing site in Canada, all Product shipped to Depomed shall be delivered, Delivered Duty Paid
(DDP) (INCOTERMS 2000) at the U.S. Customs port designated by Depomed, in
accordance with Section 7.5 below, immediately after the 1000mg Product
has cleared U.S. Customs (such location shall be the “Delivery Point”),
except that Depomed shall, at Depomed’s determination, either pay the freight
costs directly to the shipping company or reimburse BLS for the freight charges
to the Delivery Point. Title to, ownership of, and risk of loss of the 1000mg
Product shall pass from BLS to Depomed immediately after the 1000mg Product has
cleared U.S. Customs. BLS shall be responsible for the payment of all duties,
tariffs, taxes and other charges payable for the exportation of the 1000mg
Product, and BLS shall be the importer of record of the 1000mg Product and be
responsible for the payment of U.S. Customs’ duties and all other taxes,
charges and administrative costs applicable to the U.S. Customs clearance of
the 1000mg Product into the United States. 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

14

 

CONFIDENTIAL TREATMENT REQUESTED

 

BLS shall adhere to
Depomed’s import policies and practices, and BLS and Depomed shall agree on a
freight forwarder to use for delivery of the 1000mg Product to Depomed.

 

7.5                                 BLS and Depomed shall cooperate with and assist each other in all aspects
of the shipment, importation and delivery process in order to ensure the
expeditious delivery of the 1000mg Product to the Delivery Point referred to in
Section 7.4, including assisting in obtaining any documents that may be
required. BLS shall consult with Depomed with regard to any communications with
U.S. government agencies, including the FDA. Upon the request of Depomed, BLS’s
customs broker shall provide information to Depomed regarding customs clearance
and any issues related thereto. In the case of delivery of the 1000mg
Product by BLS from a manufacturing site in Canada, Depomed shall designate the U.S. Customs entry points used by
Depomed or Depomed’s designated customs broker that are on a reasonably direct
route from the manufacturing facility to Depomed’s designated delivery
facility.

 

7.6                                 BLS shall notify Depomed that the 1000mg Product is ready for shipment no
less than forty eight (48) hours before such time.

 

7.7                                 Product ordered by Depomed and delivered by BLS shall be shipped by ground
transportation in the case of delivery from a manufacturing facility in Canada,
and by ship in the case of delivery from a manufacturing facility in Puerto
Rico. Notwithstanding the foregoing, if Depomed has reasonably determined that
shipment of the 1000mg Product by air freight is advisable, Depomed shall
specify in the relevant Purchase Order that Depomed wishes to have the 1000mg
Product which is the subject of such Purchase Order shipped by air freight. BLS
shall arrange for such shipment of the 1000mg Product and Depomed shall pay
for, or reimburse BLS for, the cost of air freight for the shipment in question.
In the event BLS is responsible for any delay in the shipment of the 1000mg
Product which would require shipment by air freight to meet the specified Delivery
Date in the relevant Purchase Order (giving effect to the provisions of Section 7.1),
BLS shall pay for, or reimburse Depomed for, any increase in cost incurred by
Depomed occasioned by using air freight for such shipment. Delivery of the
1000mg Product so shipped shall, notwithstanding Sections 7.3 and 7.4
above, be (FCA) 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

15

 

CONFIDENTIAL TREATMENT REQUESTED

 

(INCOTERMS 2000), and
title to, ownership of and risk of loss of, the 1000mg Product shall pass from
BLS to Depomed at the location that (i) in the case of 1000mg Product
shipped from Canada, is immediately after the 1000mg Product has left the
territory of Canada, (including the airspace above international waters over
which Canada may exercise rights in respect of the seabed and subsoil, and
their natural resources, in accordance with international law and the laws of
Canada) while in transit to Depomed’s designated warehouse in the Territory; or
(ii) in the case of 1000mg Product shipped from Puerto Rico, is
immediately after the 1000mg Product leaves the territory of Puerto Rico and
enters the airspace above international waters in transit from Puerto Rico to
Depomed’s designated warehouse in the Territory. Such location shall be the
Delivery Point. All other terms of this Section 7 shall apply to such
shipment.

 

Losses in Transport

 

7.8                                 Depomed shall notify BLS in writing if Depomed determines from the
applicable shipping documentation that the quantities of 1000mg Product
delivered to Depomed differ from the quantities of 1000mg Product shipped by
BLS and invoiced to Depomed, within thirty (30) days following delivery of any
such 1000mg Product. Any claim for such a quantitative deficiency which is not
made within such thirty (30) days shall be deemed to have been waived by
Depomed. If the Parties agree that such quantitative deficiency occurred prior
to delivery, BLS shall, at BLS’s option, and as Depomed’s exclusive remedy
against BLS for such quantitative deficiency, (a) credit Depomed for the
amount invoiced to or paid by Depomed to BLS in excess of the aggregate price
for actual quantities delivered or (b) subject to BLS having sufficient
1000mg Product on hand at the time of request by Depomed, promptly deliver the
appropriate quantities of 1000mg Product to Depomed sufficient to negate any
such deficiency, at no additional cost to Depomed. Any unresolved dispute with
respect to any quantitative deficiency asserted by Depomed under this Section 7.8
shall be resolved pursuant to Section 29.8.

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

8.                                      PRICES AND PAYMENTS

 

Depomed Sales

 

8.1                                 BLS shall sell to Depomed, and Depomed shall purchase
from BLS, all quantities of the 1000mg Product to be Marketed by Depomed in the
Territory at the applicable Supply Price per tablet set out in Schedule 8.1
and corresponding to the Net Selling Price per tablet of the 1000mg Product for
that calendar quarter.

 

Distributor Sales

 

8.2                                 BLS shall sell to Depomed and Depomed shall purchase
from BLS, all quantities of the 1000mg Product intended for resale by Depomed
to a Distributor for Marketing in the Territory by that Distributor, at the
applicable Supply Price per tablet set out in Schedule 8.2 and
corresponding to the Depomed Revenue per tablet calculated on the Distributor’s
Net Sales of the 1000mg Product for that calendar quarter, provided, however,
that if the Supply Price set out in Schedule 8.2 is higher than the Supply
Price set out in Schedule 8.1 or Schedule 8.4, as applicable, that
would be paid based on the Distributor’s Net Selling Price, Depomed shall pay
to BLS the Supply Price set out in Schedule 8.1 or Schedule 8.4,
whichever is applicable.

 

8.3                                 Depomed shall pay to BLS, as an additional supply price, within thirty
(30) days after receipt by Depomed, [***]
of the value of all consideration not otherwise included in Depomed Revenues or
Net Sales and received by Depomed for the right to Market or distribute the
1000mg Product in the Territory under this Agreement or the Manufacturing
Transfer Agreement.

 

Supply Prices if no Valid Claim

 

8.4                                 Notwithstanding the provisions of Section 8.1, the Supply Price to
paid by Depomed to BLS for each tablet of the 1000mg Product delivered by BLS
to Depomed shall be the Supply Price set out in Schedule 8.4 during any
calendar quarter when there is no Valid Claim.

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

17

 

CONFIDENTIAL TREATMENT REQUESTED

 

Sample Price

 

8.5                                 The Supply Price to paid by Depomed to BLS for each tablet of the 1000mg
Product delivered by BLS to Depomed packaged as a sample shall be the Supply
Price set out in Schedule 8.5. In the event that samples are packaged
other than as set forth in the Specifications, the Supply Price applicable to
samples shall be adjusted to reflect any incremental increase or decrease in
costs associated with sample packaging.

 

Invoicing

 

8.6                                 BLS shall invoice Depomed upon shipment of the 1000mg Product to Depomed
an amount for each tablet of the 1000mg Product shipped equal to the applicable
Supply Price set out above, provided that, for the purposes of this Section,
the Net Selling Price or Depomed Revenues to be used by BLS in preparing its
invoices shall be either the estimated Depomed Revenues or estimated Net
Selling Price of the 1000mg Product in the Territory as
set out in the Launch Forecast, and thereafter the actual Depomed Revenue and
Net Selling Price set out in the most recent Quarterly Reports delivered
pursuant to Section 8.10 (the “Estimated Net Selling Price”).

 

Payment Terms

 

8.7                                 Payment of all invoices issued by BLS to Depomed shall be made within
thirty days after the date thereof. The running of such thirty day period shall
be suspended during the pendency of any reasonable dispute pursuant to Section 13
below concerning the conformity of a shipment of 1000mg Product to the
Specifications. Unpaid balances shall accrue interest, from due date until
paid, at a rate equal to the lesser of (a) the prime rate, as reported in The
Wall Street Journal, U.S. Edition, on the date such payment is due, plus an
additional two percent or (b) the maximum rate permitted under applicable
law. If any amount due hereunder and not subject to a reasonable, good-faith
dispute by Depomed remains outstanding for more than forty-five days after its
due date, BLS may, in addition to any other rights or remedies it may have,
refuse to ship 1000mg Product hereunder except upon payment by Depomed in
advance.

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

18

 

CONFIDENTIAL TREATMENT REQUESTED

 

8.8                                 All prices set out in Schedules 8.1, 8.2, 8.4 and 8.5 are in U.S. dollars,
and all payments due to BLS under this Agreement shall be made in U.S. dollars.
All payments shall be made by wire transfer in immediately available funds to
the account of BLS specified in Schedule 8.8 or such other account of BLS
as BLS may indicate to Depomed in writing at least thirty (30) days prior
to the date payment is due in accordance with Section 27.1.

 

Reconciliation

 

8.9                                 Within ten (10) days after the end of each calendar month, Depomed
shall deliver a report to BLS specifying the quantities of the 1000mg Product
sold by Depomed and its Distributors in that calendar month in the Territory.

 

8.10                           Within fifteen (15) days after the end of each calendar quarter, Depomed
shall deliver a report to BLS specifying, for such calendar quarter in the
Territory:

 

(a)                                  the quantities of the 1000mg
Product sold by Depomed and its Distributors in that calendar quarter;

 

(b)                                 Net Sales of the 1000mg Product in
the Territory by each of Depomed and its Distributors during such calendar
quarter, including itemization of all
deductions provided for in Section 1.15;

 

(c)                                  the Net Selling Price for the
1000mg Product sold in that calendar quarter in the Territory;

 

(d)                                 the Depomed Revenues for the 1000mg
Product for the calendar quarter, calculated in accordance with United States
Generally Accepted Accounting Principles; and

 

(e)                                  the total amount payable to BLS for
all quantities of the 1000mg Product delivered during such calendar quarter
calculated in accordance with Sections 8.1, 8.2 and 8.4, using the Depomed
Revenues and the Net Selling Price, as applicable, for the 1000mg Product in the
Territory for the just-ended calendar quarter.

 

8.11                           Depomed shall pay to BLS, within thirty (30) days after the delivery of
such report, the difference, if any, between the aggregate amount invoiced by
BLS under Section 8.6 for all quantities of the 1000mg Product delivered
by BLS during the calendar quarter for 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

19

 

CONFIDENTIAL TREATMENT REQUESTED

 

which the report is
rendered and the aggregate amount payable by Depomed for those quantities
determined pursuant to Sections 8.1, 8.2 and 8.4, as applicable. In the
event that calculations made in accordance with the immediately preceding
sentence determine that Depomed has overpaid BLS, an amount equal to such
overpayment shall be credited to Depomed on the immediately succeeding invoice
rendered by BLS.

 

Price Adjustments

 

8.12                           The Supply Prices in each of Schedules 8.1, 8.2, 8.4 and 8.5 may be increased or decreased
effective on the first business day of January in each year during the
term, commencing in January 2007, as follows:

 

(a)                                  subject to subsection (b), each Supply Price in each such Schedule may be
increased by the percentage obtained by multiplying the PPI Increase over the
most recent period of twelve consecutive months for which the PPI Increase is
available by the PPI Multiplier corresponding to such Supply Price set forth on
each such Schedule; and

 

(b)                                 if BLS’s actual cost of manufacturing the 1000mg Product has decreased
over the most recent period of twelve consecutive months for which the PPI
Increase is available, each such Supply Price shall not be increased for the
following calendar year, but shall be decreased by an amount equal to the
amount of that decrease in manufacturing cost.

 

For purposes of
illustration of Section 8.12(a) only, with respect to a Supply Price
of $1.00, if the PPI Increase were 4.0% and the applicable PPI Multiplier were
0.5, such Supply Price would be increased by 2.0%, from $1.00 to $1.02, and
that Supply Price, and the applicable schedule, would be amended accordingly.
Each other Supply Price, and each other applicable schedule, would be amended
in the same manner (subject to Section 8.12(b)). For the purposes of
illustration of Section 8.12(b) only, with respect to a Supply Price
of $1.00, if BLS’s actual cost of manufacturing the 1000mg Product has
decreased by $0.005 per tablet, such Supply Price would be decreased from $1.00
to $0.995, and that Supply Price, and the applicable schedule, would be amended

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

20

 

CONFIDENTIAL TREATMENT REQUESTED

 

accordingly. Each other
Supply Price, and each other applicable schedule, would be amended in the same
manner. Any Supply Price adjusted pursuant to this Section 8.12 shall be
rounded to the nearest four decimal places.

 

8.13                           BLS shall notify Depomed on or before the last business day of January in
each year of the amount of any change in the Supply Prices in each of Schedules
8.1, 8.2, 8.4 and 8.5, in
accordance with Section 8.12. If Depomed does not accept BLS’s assertion
that there has been no decrease in the manufacturing cost of the 1000mg Product
over the immediately preceding calendar year, Depomed shall within thirty (30)
days of BLS’s notice identify to BLS in writing any cost savings which, in
Depomed’s view, BLS ought to have realized over that calendar year, and BLS
shall within thirty (30) days thereafter explain why such savings were not
realized. If Depomed does not accept BLS’s explanation, and has reasonable
grounds for believing that BLS has enjoyed cost savings, Depomed may conduct
an audit (using any of the “Big Four” independent auditors free of a conflict
of interest with respect to any such audit, or any other auditor reasonably
acceptable to BLS, in each case subject to confidentiality restrictions) of BLS’s
costs at Depomed’s own expense. Any dispute unresolved by that audit shall be
resolved in accordance with the provisions of Section 29.8.

 

Taxes

 

8.14                           Depomed shall be responsible for all taxes imposed by any governmental
authority that are applicable to (i) Depomed’s purchase of the 1000mg
Product or 500mg Product from BLS (other than any taxes payable by BLS pursuant
to Section 7.5) or (ii) to the marketing of the 1000mg Product in the
Territory. BLS shall be responsible for all other taxes related to the
manufacture of the 1000mg Product by BLS, including income, payroll and
business licensing taxes.

 

8.15                           Depomed shall pay federal, state and local sales, use and other taxes
imposed on or with respect to the sale of 1000mg Product by BLS for and to
Depomed, if any.

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

21

 

CONFIDENTIAL TREATMENT REQUESTED

 

9.                                      RECORD KEEPING; AUDIT

 

Records

 

9.1                                 For at least three years after the end of each calendar quarter during the
term of this Agreement, Depomed shall keep and maintain accurate and complete
records concerning Depomed Revenues, and the gross sales and Net Sales of the
1000mg Product and of all deductions taken in calculating Net Sales and Net
Selling Price, except in the event of an ongoing audit pursuant to Section 9.2,
below, in which case such records shall be preserved until the completion of
such audit and final resolution of any resulting dispute.

 

Audit

 

9.2                                 During the term of this Agreement and for a period of at least three years
thereafter, Depomed shall, at the request and expense of BLS, permit an
independent certified public accountant appointed by BLS and reasonably
acceptable to Depomed, during regular business hours, upon reasonable notice,
and no more than once per calendar year, to examine all relevant records and
documents in the possession or control of Depomed as may be necessary to
verify the Depomed Revenues, and the gross sales and Net Sales of the 1000mg
Product hereunder, as reported by Depomed to BLS during each of the past twelve
calendar quarters. The results of any such examination shall be made available
to both Parties and shall be subject to the obligations of confidentiality
contained in Article 23 hereof. The cost of such examination shall be
borne by BLS unless the result of such examination is the determination that
the amount payable by Depomed hereunder has been understated by at least three
percent for any calendar year, in which event Depomed shall bear the reasonable
cost of such examination.

 

9.3                                 Each of Depomed and BLS shall pay to the other any amounts determined by
the audit conducted pursuant to Section 9.1 to be owing to the other,
within thirty (30) days after the delivery of the audit report.

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

22

 

CONFIDENTIAL TREATMENT REQUESTED

 

10.                               MODIFIED
SPECIFICATIONS

 

Changes Mandated by Governmental Authority

 

10.1                           If BLS proposes to change the Specifications due to a change in Applicable
Laws or as mandated by a Governmental Authority (a “Mandated Change”),
BLS shall notify Depomed within the earlier of (i) not less than one
hundred twenty days prior to the proposed Mandated Change and (ii) the
date BLS becomes aware of the change in Applicable Laws or mandate by a
Governmental Authority necessitating such Mandated Change. To the extent such
Mandated Change makes it necessary for Depomed to amend any of its filings with
any Governmental Authority relating to the 1000mg Product, BLS shall cooperate
fully with Depomed and provide all necessary information relating to such
change in Specifications as may be required in such amended filings. BLS
shall promptly advise Depomed as to any lead-time or delivery time changes,
Purchase Volume Limitations or other terms which may result from a
Mandated Change to the Specifications, including but not limited to price
adjustments necessary to enable BLS to recover one-half of the costs it
incurred for materials already purchased by BLS expressly for Depomed, its
Affiliates, Distributors, sub-contractors or sublicensees and rendered unusable
by Depomed, its Affiliates or sublicensees due to a Mandated Change, and the
Parties shall document such changes in an amendment to this Agreement. BLS
shall not be in breach of its obligations hereunder to the extent that a
Mandated Change prevents, impairs or delays BLS’s performance hereunder
(provided that a Mandated Change shall not excuse any breach by BLS hereunder
to the extent that such breach is not related to a Mandated Change); provided,
however, that Depomed shall be entitled to engage an alternate manufacturer of
1000mg Product in accordance with the provisions of Section 16.2(b) in
the event that BLS fails to supply Depomed 1000mg Product that complies with
any Mandated Change. For purposes of this Agreement, a Mandated Change shall
include such changes to the Specifications as may be mandated by the FDA
in connection with any approval of the Supplemental NDA. Not later than thirty
(30) days following approval of the Supplemental NDA, the Parties shall agree
upon complete, detailed product specifications consistent with such approval,
which specifications, as so agreed 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

23

 

CONFIDENTIAL TREATMENT REQUESTED

 

upon, shall cover
manufacturing, packaging, labelling and testing of packaged, finished 1000mg
Product (including samples) ready for commercial sale, and shall be the
Specifications for all purposes under this Agreement.

 

Other Changes

 

10.2                           If BLS proposes to change the Specifications for any reason other than a
Mandated Change, and such change would make it necessary for Depomed to amend
any of its filings with any Governmental Authority relating to the 1000mg
Product (an “Elective Change”), BLS shall notify Depomed at least one
hundred eighty days prior to the proposed Elective Change. Prior to
implementing any such Elective Change, BLS and Depomed shall meet in good faith
to determine a course of action, which shall be one of the following, as
reasonably acceptable to Depomed:  BLS
shall either (i) continue to supply Depomed for the term of this Agreement
with 1000mg Product manufactured pursuant to the Specifications in effect prior
to the Elective Change, (ii) make arrangements (including, without
limitation, granting all applicable licenses) to have a third party manufacture
1000mg Product for Depomed pursuant to the Specifications in effect prior to
the Elective Change or (iii) cooperate fully with Depomed and provide all
necessary information relating to such change in Specifications as may be
required in such amended filings and indemnify and hold Depomed harmless for
all reasonable expenses (including all clinical, administrative and legal
expenses) incurred by Depomed in amending such filings.

 

11.                               QUALITY CONTROL

 

11.1                           Prior to each shipment of 1000mg Product to Depomed, BLS shall conduct or
have conducted quality control testing of 1000mg Product in accordance with the
Specifications and such other BLS-approved quality control testing procedures
that are consistent with FDA cGMPs (the “Testing Methods”). BLS shall
retain or have retained accurate and complete records pertaining to such
testing. BLS shall notify Depomed in writing at least thirty days prior to any
proposed change in the Testing Methods and shall at its own expense make any
changes necessary to any CMC section or drug master file 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

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relating to the 1000mg
Product and provide Depomed a copy of the revised Testing Methods within thirty
days prior to implementation of the changes. Each shipment of 1000mg Product
hereunder shall be accompanied by a certificate of analysis (“Certificate of
Analysis”) for each lot of 1000mg Product therein, as well as any other
documentation required by any applicable laws or regulations.

 

11.2                           The Parties shall use commercially reasonable efforts to agree upon and
execute, within thirty (30) days after the Effective Date, a quality agreement
applicable to the 1000mg Product in form and substance customary in the
pharmaceutical industry (the “Quality Agreement”). Subsequent to its
execution, the Parties shall comply with their obligations under the Quality
Agreement.

 

12.                               FACILITY INSPECTION

 

12.1                           BLS shall permit no more than three (3) of Depomed’s authorized
representatives, during normal working hours and upon reasonable prior notice
to BLS but in no event less than twenty days prior notice, to inspect that
portion of all the facilities of BLS, it Affiliates or any Contract
Manufacturer (as defined in Section 15 below) utilized for the
manufacture, preparation, processing, storage or quality control of 1000mg
Product, together with all related manufacturing, batch and QA/QC records, no
more frequently than once per calendar year, except as provided below;
provided, however, that BLS shall make available or cause to be made available
for inspection all batch and QA/QC records upon reasonable advance notice from
Depomed from time to time, as reasonably requested by Depomed. BLS may remove
or expurgate from any such manufacturing, batch and QA/QC records any
information that is proprietary or confidential to BLS, including, without
limitation, any information relating to the process for manufacturing the
1000mg Product. Depomed’s authorized representatives shall be accompanied by
BLS personnel at all times, shall comply with all applicable rules and
regulations relating to facility security, health and safety, and shall execute
a written confidentiality agreement with terms at least as restrictive as those
set forth in Section 23 below. Except as provided below, in no event shall
any such manufacturing audit exceed two days in duration. 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

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Depomed shall ensure
that its authorized representatives conduct each manufacturing audit in such a
manner as to minimize interference with the normal and ordinary operation of
BLS, its Affiliates or its Contract Manufacturer. In the event that the
manufacturing audit uncovers information that reasonably demonstrates that the
1000mg Product is not being manufactured in accordance with the Specifications
(an “Inspection Failure”) or in the event of any communication from the
FDA that reasonably requires inspection by Depomed, then Depomed shall have the
right to schedule and execute one or more follow-up inspections until the
Inspection Failure is resolved. Except as expressly set forth in this Section 12,
neither Depomed nor its Affiliates, Distributors, licensees or their respective
employees or representatives shall have access to BLS’s facilities or the
facilities of any Contract Manufacturer engaged by BLS.

 

13.                               ACCEPTANCE AND REJECTION

 

Acceptance Testing

 

13.1                           Depomed shall have a period of thirty days from the date of receipt of
each shipment of the 1000mg Product to test or cause to be tested that 1000mg
Product. Depomed or its designee shall have the right to reject any shipment of
1000mg Product made to it under this Agreement that does not conform with
the Specifications when received by it at such destination when tested in
accordance with the Testing Methods. All shipments of 1000mg Product shall be
deemed accepted by Depomed unless BLS receives written notice of rejection from
Depomed within such thirty day period, describing the reasons for the rejection
in reasonable detail. Once a delivery of 1000mg Product is accepted or deemed
accepted hereunder, Depomed shall have no recourse against BLS in the event
1000mg Product is subsequently deemed unsuitable for use for any reason, except
as provided in Section 22 (Indemnification) below.

 

Discrepant Test Results

 

13.2                           In the event of a discrepancy between BLS’s and Depomed’s test results
such that one Party’s results fall within the Specifications and the other
Party’s test results fall outside the Specifications, the Parties shall cause
an independent laboratory to review records, 

 

THE SYMBOL [***] IS USED
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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

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test data and to perform comparative
tests and/or analyses on samples of the alleged defective 1000mg Product. The
independent laboratory’s results shall be final and binding. Unless otherwise
agreed to by the Parties in writing, the costs associated with such testing and
review shall be borne by the Party against whom the independent laboratory
rules.

 

Confirmation

 

13.3                           After its receipt of a notice of rejection from Depomed pursuant to Section 13.1
above, BLS shall notify Depomed as soon as reasonably practical whether it
accepts Depomed’s basis for rejection and Depomed shall cooperate with BLS in
determining whether such rejection was necessary or justified. In the event
that the Parties are unable to agree as to whether a shipment of 1000mg Product
delivered to Depomed by BLS or its Contract Manufacturer hereunder meets the
Specifications, such question shall be submitted to an independent laboratory
pursuant to Section 13.2 hereof.

 

Return or Destruction of Rejected Shipments

 

13.4                           Depomed may not destroy any batch of 1000mg Product until it receives
written notification from BLS that BLS does not dispute that the batch fails to
meet the Specifications and that BLS does not request return of 1000mg Product.
Upon written authorization from BLS to do so, Depomed shall promptly destroy
the rejected batch of 1000mg Product in accordance with Applicable Laws and
provide BLS with written certification of such destruction. BLS shall reimburse
Depomed for the reasonable costs of such destruction. Upon receipt of BLS’s request
for return,  Depomed shall promptly
return the rejected batch of 1000mg Product to BLS at the expense of BLS.

 

Refund; Replacement

 

13.5                           Depomed shall not be required to pay any invoice with respect to any
shipment of 1000mg Product properly rejected pursuant to this Section 13. Notwithstanding
the foregoing, Depomed shall be obligated to pay in full for any rejected
shipment of 1000mg Product that is subsequently determined to meet the
Specifications, and shall be entitled to retain or receive and use the same,
irrespective of whether Depomed has 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

already paid BLS for a
replacement shipment. In the event that Depomed pays in full for a shipment of
1000mg Product and subsequently properly rejects such shipment in accordance
with this Section 13, Depomed shall be entitled, upon confirmation that
such shipment failed to meet the Specifications in all material respects,
either (a) to a refund or credit equal to the purchase price paid with
respect to such rejected shipment, or (b) to require BLS to replace such
rejected shipment at no additional cost to Depomed. In the event Depomed elects
to require BLS to replace such rejected shipment, BLS shall deliver such
replacement within sixty days of its receipt of notice from Depomed of Depomed’s
election to receive such replacement. Depomed acknowledges and agrees that,
except for the indemnification obligations set forth in Section 22 below,
Depomed’s rights to a refund or credit for or to receive replacement of
properly rejected shipments of 1000mg Product hereunder shall be Depomed’s sole
and exclusive remedy, and BLS’s sole obligation, with respect to non-conforming
1000mg Product delivered hereunder.

 

Exceptions

 

13.6                           Depomed’s rights of rejection, return, refund and replacement set forth
herein shall not apply to any 1000mg Product that is non-conforming due to
damage (a) caused by Depomed, its Affiliates or Distributors or their
respective employees or agents, including but not limited to, misuse, neglect,
improper storage, transportation or use beyond any dating provided or (b) which
occurs subsequent to delivery of such 1000mg Product to the carrier at the
point of origin, including but not limited to any damage caused thereafter by
accident, fire or other hazard and BLS shall have no liability or
responsibility to Depomed with respect thereto.

 

14.                               SUPPLY OF 500MG
PRODUCT

 

14.1                           During the period beginning on the Effective Date and ending on December 31,
2006, BLS shall, if so requested by Depomed or a sub-licensee of Depomed,
supply Depomed with 500mg Product on the terms set forth in this Article 14.

 

14.2                           Within thirty (30) days after the Effective Date, Depomed shall deliver to
BLS a non-binding supply forecast in whole multiples of Batch Sizes covering
the period beginning 

 

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CONFIDENTIAL TREATMENT REQUESTED

 

on the Effective Date
and ending on December 31, 2006 (the “Supply Period”) for estimated
quantities of 500mg Product, by SKU, including physician’s samples.

 

14.3                           During the Supply Period, Depomed may submit (not more often than
once per month) firm purchase orders for finished, packaged 500mg Product at
least one hundred twenty (120) days prior to delivery dates requested in such
purchase orders. BLS shall use commercially reasonable efforts to deliver the
amount of 500mg Product specified in each such purchase order; provided,
however, that BLS shall be entitled to supply the requirements of itself and
its Affiliates for the Marketing of the 500mg Product in Canada prior to
supplying Depomed with 500mg Product. BLS shall inform Depomed within ten (10) days
after receipt of each purchase order whether it will supply to Depomed the
requested quantities of the 500mg Product. Each purchase order shall be in
whole multiples of the Batch Size for the 500mg Product. Purchase orders may be
delivered electronically or by other means, to such location as BLS shall
designate. In ordering or delivering Product, each of Depomed and BLS may use
its respective standard forms, provided that nothing in those forms shall be
construed to modify or amend the terms and conditions of this Agreement. In the
event of any conflict between the terms and conditions of any such form and
the terms and conditions of this Agreement, the terms and conditions of this
Agreement shall control.

 

14.4                           BLS shall not be subject to any monetary or other penalty for a failure to
supply Depomed with 500mg Product under this Article 14.

 

14.5                           500mg Product supplied to Depomed under this Agreement shall conform to
the specifications applicable to 500mg Product set forth in the NDA relating to
the 500mg Product.

 

14.6                           The supply price to Depomed per tablet (as delivered in finished, packaged
bottles of 100 or 500 tablets of the 500mg Product) shall be as set out in U.S.
dollars in Schedule 14.6. Depomed will reimburse BLS for any agreed-upon
expenses incurred by BLS in connection with 500mg Product labelling changes
processed by BLS.

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

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14.7                           The delivery, acceptance, payment, record keeping and quality assurance
terms applicable to Depomed’s purchases of 1000mg Product set forth in Article 7,
Section 11.1 and Article 13 of this
Agreement shall, and, except as otherwise set forth in this Article 14,
apply to Depomed’s purchases of 500mg Product hereunder (except that references
to the “1000mg Product” shall be deemed to be references to the 500mg Product,
and all references to Specifications shall be deemed to be references to the
specifications described in Section 14.5 for purposes of this Agreement).

 

Packaging and Batch Release Services

 

14.8                           If requested by Depomed, BLS shall perform during the Supply Period,
those services necessary to provide final, finished 500mg Product from bulk
tablets manufactured for Depomed in Puerto Rico by a contract manufacturer
other than BLS or an Affiliate of BLS. Depomed shall pay BLS [***] per tablet for performing such
functions. The foregoing amount shall not be applicable to quantities of 500mg
Product supplied pursuant to the provisions of Sections 14.1 through 14.7 of
this Agreement. BLS shall perform such services at BLS’s facility in
Puerto Rico in a manner compliant with applicable FDA laws and regulations. Such
services shall be completed not later than ten (10) business days
following delivery to BLS’s batch release facility. Depomed will reimburse BLS
for any agreed-upon expenses incurred by BLS in connection with 500mg Product
labelling changes processed by BLS.

 

15.                               CONTRACT
MANUFACTURERS

 

15.1                           Without limiting BLS’s responsibility under this Agreement, BLS shall have
the right at any time to satisfy its supply obligations to Depomed hereunder
either in whole or in part through arrangements with Affiliates of BLS or
third parties engaged by and under license from BLS to perform services or
supply facilities or goods in connection with the manufacture or testing of
1000mg Product (each, a “Contract Manufacturer”). BLS shall require that
all such facilities comply with applicable manufacturing standards and will
give Depomed prior written notice of any such arrangement. Further, it is
understood that such Contract Manufacturers shall be subject to inspection by
Depomed’s authorized 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

representatives, in
accordance with the terms of Section 12 above. It is understood that use
of a Contract Manufacturer shall not relieve BLS of its obligations under Section 4.1.
BLS agrees to give Depomed prompt written notice of (a) the termination,
or receipt or delivery of notice of termination, of any third party supply
agreement with a Contract Manufacturer or (b) any other event or
development related to any supply agreement with a Contract Manufacturer that
might adversely affect the ability of BLS to meet its obligations under this
Agreement.

 

16.                               INABILITY TO SUPPLY

 

Notice

 

16.1                           BLS shall notify Depomed if BLS is unable to supply the quantity of 1000mg
Product ordered by Depomed in any Purchase Order delivered in accordance with Section 6.1
and 6.2 above: (a) within thirty days after BLS’s receipt of that Purchase
Order, (b) immediately upon becoming aware of an event of force majeure (as defined in Section 28 below), or
(c) immediately upon becoming aware of any other event that would render
BLS unable to supply to Depomed the quantity of 1000mg Product that BLS is
required to supply hereunder.

 

Depomed’s Rights on BLS Failure to Supply

 

16.2                           In the event that (A) BLS shall deliver less than [***] of the aggregate amount ordered of
1000mg Product ordered under purchase orders conforming to the forecasting and
purchase order requirements of Article 5 and as to which BLS is obligated
to supply in any period of six (6) consecutive months and such failure to
deliver is not cured by BLS within thirty days following written notice by
Depomed, or (B) within any twelve month period BLS shall deliver
quantities of 1000mg Product in amounts less than [***] of the aggregate of the amounts ordered under purchase
orders conforming to the forecasting and purchase order requirements of
Articles 5 and 6 for that twelve month period and as to which BLS is obligated
to supply, within sixty days’ written notice thereof from Depomed, Depomed
shall have any or all of the following rights:

 

THE SYMBOL [***] IS USED
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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
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CONFIDENTIAL TREATMENT REQUESTED

 

(a)                                  Depomed shall no longer be
obligated to purchase its requirements of 1000mg Product from BLS pursuant to
this Agreement.

 

(b)                                 Depomed shall be entitled to grant
to a third party a sublicense of the rights granted to Depomed under the
Manufacturing Transfer Agreement, to manufacture and supply the 1000mg Product
for Marketing (but not for sale or other transfer to a party that is not an
Affiliate or Distributor of Depomed) by Depomed, its Affiliates and
Distributors in the Territory. In such event: (A) BLS shall provide to
Depomed (or to a sublicensee reasonably acceptable to BLS (it being understood
that MOVA Pharmaceutical Corporation (“MOVA”) is acceptable to BLS, and
that BLS shall not unreasonably withhold or delay its acceptance of any such
sublicensee) at the request of Depomed copies of all documentation that is
reasonably necessary for Depomed to manufacture or have manufactured 1000mg
Product, and (B) BLS shall provide technical assistance to Depomed (it
being understood that MOVA is acceptable to BLS, and that BLS shall not
unreasonably withhold or delay its acceptance of any such sublicensee) in the manufacture
of the 1000mg Product in conformity with the Specifications, in accordance with
Section 21.1. All documentation, technical assistance and other
information is subject to the provisions and limitations of Section 21.1
of this Agreement.

 

(c)                                  Depomed may terminate this
Agreement with respect to the 1000mg Product by giving written notice to BLS in
accordance with Section 27.

 

16.3                           The Parties shall discuss and endeavor to resolve promptly and in good
faith any concern of either Party over the availability of 1000mg Product
within the Territory so as to avoid any interruption in supply of 1000mg
Product within the Territory. Such discussions shall include senior
manufacturing, marketing and other management personnel of each Party. In the
event that either Party believes it to be in the best interests of both
Parties, as the licensor and licensee of the 1000mg Product in the Territory,
to designate and qualify an alternative Contract Manufacturer of the 1000mg
Product, each Party shall consider in good faith the views of the other Party
as to the advisability of engaging an alternative contract manufacturer. If
agreed after discussion between the Parties’ 

 

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principal executive
officers that an alternative contract manufacturer should be designated and
qualified, the Parties shall cooperate to ensure the transition of 1000mg
Product manufacturing to a Third Party in a manner that minimizes any
interruption of supply of 1000mg Product within the Territory.

 

17.                               MATERIAL SAFETY

 

17.1                           BLS shall provide Depomed, in writing, from time to time, with all
information currently known to it regarding handling precautions, toxicity, and
hazards with respect to 1000mg Product. In addition, BLS shall provide Depomed
with the appropriate Material Safety Data Sheet for 1000mg Product as may be
in effect from time to time. Notwithstanding the foregoing or anything in this
Agreement to the contrary, Depomed is solely responsible for (a) its use
of all documentation provided by BLS, including without limitation, use in any
regulatory submission to the FDA or any other regulatory agency inside or
outside of the United States, (b) document control and retention, (c) determining
the suitability of any documentation provided by BLS hereunder for use in any
regulatory submission and (d) for all filings necessary for maintaining
Regulatory Approval.

 

18.                               MARKETING OF THE
1000MG PRODUCT; GLUMETZA WEBSITE

 

18.1                           Provided that BLS is in compliance with its supply obligations hereunder,
Depomed shall cause the First Commercial Sale to occur within 120 days after
Regulatory Approval of the 1000mg Product.

 

18.2                           The Parties will cooperate in good faith to cause traffic on any website
dedicated to the 1000mg Product and/or the 500mg Product incorporating the “Glumetza”
trademark to be directed in the United States to a Depomed-designated website
and to be directed in Canada to a BLS-designated website.

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTION.

 

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19.                               REGULATORY AFFAIRS

 

Regulatory Responsibility

 

19.1                           During the term of this Agreement, Depomed shall have full control and
authority, with full responsibility over, commercialization of 1000mg Product
in the Territory, and all such activity shall be undertaken at Depomed’s
expense. Depomed will use commercially reasonable efforts in undertaking
investigations and actions required to maintain appropriate governmental
approvals to Market 1000mg Product in the Territory.

 

19.2                           Except as otherwise provided in this Agreement, Depomed shall bear
responsibility for, and shall bear all costs related thereto, to take such
actions as may be necessary, in accordance with accepted business
practices and legal requirements, to obtain and maintain the authorization
and/or ability to Market the 1000mg Product in the Territory. The Parties
acknowledge and agree that, with respect to obtaining the authorization to
Market the 1000mg Product in the Territory, Depomed’s obligations are as set
forth in Article 2 of this Agreement. Notwithstanding the foregoing,
Depomed shall be entitled to allow any Regulatory Approval or other
authorization to Market the 1000mg Product to expire or lapse, and to
discontinue Marketing the 1000mg Product, if, as a consequence of any changes
to any applicable laws or regulations, any Regulatory Authority requires any
changes to the Marketing of the 1000mg Product, the Manufacturing process for
the 1000mg Product, or to the 1000mg Product specifications that Depomed does
not want to make (each an “Unforeseen Requirement”). If Depomed
discontinues the Marketing of the 1000mg Product as a result of an Unforeseen
Requirement, BLS can terminate this Agreement with respect to 1000mg Product,
and itself Market the 1000mg Product in the Territory, upon reimbursement to
Depomed of all regulatory and other fees associated with transfer of the 1000mg
Product to Depomed.

 

19.3                           BLS shall bear responsibility for the CMC section of the NDA relating
to the 1000mg Product, and shall and shall bear all costs related thereto, and
shall take such actions as may be necessary in connection therewith in
order to maintain the authorization and/or ability to Market the 1000mg Product
in the Territory. BLS shall notify Depomed 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

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promptly upon making any
modifications to the CMC section of the NDA relating to the 1000mg Product.
BLS shall cooperate with Depomed to the extent necessary to transfer
responsibility for the CMC section of the of the NDA relating to the
1000mg Product in connection with Depomed’s exercise of its rights under Section 16.2(b) with
respect to the manufacturing of the 1000mg Product.

 

19.4                           Depomed shall have the responsibility, and shall bear all costs related
to, communications with any government agencies to satisfy its requirements
regarding the authorization and/or continued authorization to Market the 1000mg
Product in commercial quantities in the Territory (other than in connection
with the CMC section of the NDA relating to the 1000mg Product, with
respect to which BLS shall have such responsibility, and shall bear all such
costs). BLS shall promptly notify Depomed of any inquiry or other communication
that it receives from the FDA concerning the 1000mg Product, other than any
such inquiry or other communication relating only to the CMC Section or
any Drug Master File relating to the 1000mg Product. Depomed shall handle all
communications with the FDA concerning the 1000mg Product, including but not
limited to reporting adverse reactions and responding to any inquiries
concerning advertising or promotional materials, and shall provide copies of
all such communication to BLS. BLS, however shall be able to communicate with
such governmental agency regarding the 1000mg Product if:

 

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

 

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

 

(c)                                  Such communication relates to the
CMC section of the NDA relating to the 1000mg Product, or to any Drug
Master File relating to the 1000mg Product; or

 

(d)                                 Such communication relates
generally to the BLS drug delivery technology incorporated within the 1000mg
Product (and not specifically to the 1000mg Product); provided, however, that
before making any communication under (a), (b) 

 

THE SYMBOL [***] IS USED
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or (c) of this Section, BLS shall give Depomed notice
as soon as possible of BLS’s intention to make such communication, and Depomed
shall be permitted to accompany BLS, take part in any such communications
and receive copies of all such communications.

 

19.5                           Depomed shall be responsible for handling all complaints from customers in
the Territory relating to adverse reaction reports, adverse events, and recall
activities with respect the 1000mg Product. BLS shall promptly notify Depomed
of any such complaints received by BLS.

 

Adverse Reaction Reports

 

19.6                           During the Term of this Agreement, each of BLS and Depomed shall promptly
notify the other Party of all information required to be reported to the FDA
(or any other Regulatory Authority) coming into its possession concerning side
effects, injury, toxicity or sensitivity reaction including unexpected
increased incidence and severity thereof associated with commercial or clinical
uses, studies, investigations or tests (animal or human) with the 1000mg
Product or the 500mg Product, throughout the world, whether or not determined
to be attributable to the 1000mg Product or the 500mg Product (“Adverse
Reaction Reports”). Each Party shall transmit such adverse reaction reports
so that they are received by the other Party within three (3) business
days after receipt by the transmitting Party, or such other reporting period as
may be required by law. All such communications shall be held in
confidence by each Party and shall be subject to the terms of Article 23
hereof.

 

Withdrawal of Regulatory Approval

 

19.7                           Subject to the provisions of Section 19.2, the Parties acknowledge
and agree that “Cause” shall be deemed to exist pursuant to Section 24.3
of this Agreement upon any breach of the provisions of this Agreement by
Depomed that results in the withdrawal of the Regulatory Approval pertaining to
1000mg Product.

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
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20.                               LIMITED WARRANTIES;
RECALL

 

Representations and Warranties by BLS

 

20.1                           BLS represents and warrants to Depomed that all 1000mg Product sold to
Depomed shall, at the time of delivery to Depomed:

 

(a)                                  conform to the Specifications
for 1000mg Product in effect at the time of such delivery;

 

(b)                                 have been manufactured in
accordance with the Specifications and FDA cGMPs and all other Applicable Laws.

 

20.2                           BLS represents and warrants to Depomed that

 

(a)                                  BLS has not experienced any
material difficulties in manufacturing the 500mg Product in commercial
quantities, and has not experienced any material difficulty in obtaining active
pharmaceutical ingredient or other excipients or components necessary for the
Manufacture and packaging of the 500mg Product.

 

(b)                                 BLS has experienced no batch
failures following completion of the validation batches, in manufacturing
commercial product batches for either the Canadian or United States markets.

 

(c)                                  BLS has granted to Depomed under
this Agreement and the Manufacturing Transfer Agreement, collectively, all of
the rights under any Intellectual Property owned or controlled by BLS or its
Affiliates necessary for the Manufacture or Marketing of the 500mg Product in
the United States.

 

(d)                                 The formulation of the 500mg
Product reflected in the NDA for the 500mg Product is substantially similar to
the formulation of the 500mg Product originally submitted to the FDA on April 27,
2004 in connection with the Application for Regulatory Approval for the 500mg
Product.

 

(e)                                  BLS has taken no steps that could
reasonably be expected to affect the price that Depomed may charge for the
500 mg Product in the United States, including without 

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

limitation by (i) disseminating materials to any
potential purchaser of the 500 mg Product in the United States indicating a
price for the 500 mg Product in the United States applicable to wholesalers,
distributors, retailers or government agencies, or (ii) by making any
commitment, or undertaking any obligation, to sell the 500 mg Product to
wholesalers, distributors, retailers or government agencies in the United
States for a specified price or prices.

 

Mutual Representations and Warranties

 

20.3                           Each Party represents and warrants to the other as follows:

 

(a)                                  it is a corporation (in the case of
Depomed), or a society with restricted liability (in the case of BLS) duly
organized and validly existing under the laws of the state of its organization;

 

(b)                                 it has the complete and unrestricted
power and right to enter into this Agreement and to perform its
obligations hereunder;

 

(c)                                  this Agreement has been duly
authorized, executed and delivered by such Party and constitutes a legal, valid
and binding obligation of such Party enforceable against such Party in
accordance with its terms except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, moratorium,
fraudulent transfer, or other similar laws affecting the rights and remedies of
creditors generally and by general principles of equity;

 

(d)                                 the execution, delivery and
performance of this Agreement by such Party does not conflict with any
agreement, instrument or understanding, oral or written, to which such Party is
a party or by which such Party may be bound, nor violate any law or
regulation of any court, governmental body or administrative or other agency
having authority over such Party;

 

(e)                                  all consents, approvals and
authorizations from all governmental authorities or other third parties
required to be obtained by such Party in connection with the execution and
delivery of this Agreement have been obtained;

 

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
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CONFIDENTIAL TREATMENT REQUESTED

 

(f)                                    no person or entity has or will
have, as a result of the transactions contemplated by this Agreement, any
right, interest or valid claim against or upon such Party for any commission,
fee or other compensation as a finder or broker because of any act by such
Party or its agents; and

 

(g)                                 it has not entered into any
agreement with any third party that is in conflict with the rights granted to
the other pursuant to this Agreement.

 

20.4                           EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, EACH OF DEPOMED AND BLS
HEREBY DISCLAIMS ALL CONDITIONS, OTHER WARRANTIES AND STATEMENTS IN RESPECT OF
THE 1000MG PRODUCT OR THE 500MG PRODUCT, WHETHER EXPRESS OR IMPLIED, BY
STATUTE, CUSTOM OF THE TRADE OR OTHERWISE (INCLUDING, WITHOUT LIMITATION, ANY
SUCH CONDITION, WARRANTY OR STATEMENT RELATING TO THE DESCRIPTION OR QUALITY OF
THE EACH OF THE 1000MG PRODUCT AND THE 500MG PRODUCT, ITS MERCHANTABILITY OR
ITS FITNESS FOR A PARTICULAR PURPOSE OR USE UNDER ANY CONDITIONS) AND ANY SUCH
CONDITION, WARRANTY OR STATEMENT IS HEREBY DISCLAIMED BY EACH OF DEPOMED AND
BLS AND EXCLUDED

 

Product Recall.

 

20.5                           In the event that any 1000mg Product should be alleged or proven not to
meet the Specifications, Depomed shall notify BLS promptly, and both Parties
shall cooperate fully regarding the investigation and disposition of any such
matter. If Depomed should deem it appropriate to recall any 1000mg Product and
such recall is due to any negligence or breach of warranty by BLS, then BLS
agrees, upon substantiation thereof, to bear all reasonable direct costs
associated with said recall, including refund of the purchase price for such
1000mg Product and the actual cost of conducting the recall in accordance with
the recall guidelines of the applicable governmental authority. Depomed shall
in all events be responsible for conducting any such recalls with respect to
the 1000mg Product and shall maintain records of all sales of 1000mg Product
and customers 

 

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RESPECT TO THE OMITTED PORTION.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

sufficient to adequately
administer any such recall, for a period of five years after expiration or
termination of this Agreement.

 

21.                               TECHNOLOGY TRANSFER
TO DEPOMED

 

21.1                           In fulfillment of the obligations of BLS under Section 16.2(b), and
at Depomed’s request upon reasonable notice, during normal business hours, BLS
shall provide not more than three (3) people who are in BLS’s reasonable
determination fully qualified with respect to and familiar with the procedures
and processes used in the Manufacture of the 1000mg Product, for a cumulative
period of not more than ten (10) business days each, to provide or to
cause to be provided to Depomed at the facilities of Depomed, its licensee or
its contract manufacturer, the assistance and Know-How required pursuant to Section 16.2
to assist Depomed, it’s licensee or its contract manufacturer, in the
Manufacture of the 1000mg Product in the Territory and to observe and assist at
no cost to Depomed in the Manufacture by Depomed, at Depomed’s expense, of
three (3) pivotal batches of the 1000mg Product. BLS shall not be required
to update any dossiers or other files provided to Depomed as part of the
assistance to be provided to Depomed pursuant to this Article 21 beyond
what is required to put such dossiers or files in compliance with the then
current Laws of the Territory. The obligations of BLS to provide technical
assistance under this Section 21.1 shall expire two (2) years after
Depomed’s first request for documents or information under Section 16.2(b).

 

22.                               INDEMNIFICATION

 

By BLS

 

22.1                           BLS shall defend, indemnify and hold Depomed and its Affiliates and
sublicensees, and each of their respective directors, officers and employees,
harmless from and against any and all third party claims, suits or demands for
liability, damages, losses, costs and expenses (including the reasonable costs
and expenses of attorneys and other professionals) with respect to death or
injury to person or damage to property (collectively, “Claims”) arising
from (a) the manufacture of the 1000mg Product by BLS, 

 

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RESPECT TO THE OMITTED PORTION.

 

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its Affiliates,
sublicensees, distributors, or agents in a manner that does not meet the
Specifications, (b) a material breach of BLS’s representations and
warranties set forth in Article 20 or (c) BLS’s negligence or willful
misconduct, except to the extent such Claims arise out of any of the conditions
specified in Section 22.2 below.

 

By Depomed

 

22.2                           Depomed shall defend, indemnify and hold BLS, its Affiliates and their
respective directors, officers and employees, harmless from and against any and
all Claims, arising out of (a) the use, handling, promotion, marketing, or
distribution of 1000mg Product by Depomed, its Affiliates, sublicensees,
distributors, or agents, (b) a material breach of Depomed’s
representations or warranties set forth in Article 20 or (c) Depomed’s
negligence or willful misconduct, except to the extent such Claims arise out of
any of the conditions specified in Section 22.1 above.

 

Costs and Expenses

 

22.3                           As the Parties intend complete indemnification, all costs and expenses of
enforcing any provision of this Section 22 shall also be reimbursed by the
indemnifying Party.

 

Procedure

 

22.4                           A person or entity that intends to claim indemnification under this Section 22
(an “Indemnitee”) shall promptly notify the other Party (the “Indemnitor”)
of any Claim in which the Indemnitee intends to claim such indemnification, and
the Indemnitor shall assume the defense thereof whether or not such Claim is
rightfully brought. The indemnity provided for under this Section 22 shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Indemnitor, which consent
shall not be withheld or delayed unreasonably. The Indemnitee, and its
employees and agents, shall cooperate fully with the Indemnitor and its legal
representatives in the investigations and defense of any Claim.

 

22.5                           EXCEPT FOR THE PARTIES’ INDEMNIFICATION OBLIGATIONS PROVIDED FOR HEREIN,
UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE FOR ANY SPECIAL, INCIDENTAL,
INDIRECT, PUNITIVE OR CONSEQUENTIAL 

 

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CONFIDENTIAL TREATMENT REQUESTED

 

DAMAGES, COSTS OR
EXPENSES (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOST REVENUES AND/OR
LOST SAVINGS), ARISING UNDER THIS AGREEMENT (OTHER THAN ARTICLE 21
HEREOF), EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, COSTS OR EXPENSES.

 

23.                               CONFIDENTIALITY

 

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

 

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
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24.                               TERM; TERMINATION

 

Term

 

24.1                           The term of this Agreement shall commence on the Effective Date and shall
continue in effect until the expiration or termination of the Manufacturing
Transfer Agreement, unless terminated earlier as set forth in Section 16.2
or this Section 24.

 

24.2                           Either Party may terminate this Agreement upon 180 days’ written
notice to the other Party at any time on or after the [***] anniversary of the date of Regulatory
Approval of the 1000mg Product.

 

24.3                           At any time during the Term of this Agreement, either BLS or Depomed may terminate
this Agreement with respect to the 1000mg Product, and BLS may terminate
this Agreement with respect to the 500mg Product, if the other Party is in
material breach or default in the performance or observance of any of the
provisions of this Agreement applicable to it and relating to the product in
respect of which termination of this Agreement is sought, and such breach or
default is not cured within sixty days (or thirty days in the case of failure
to make royalty or other payments due hereunder) after the giving of notice by
the Party specifying such breach or default.

 

Termination for Cause

 

24.4                           At any time prior to the expiration of this Agreement, either Depomed or
BLS may terminate this Agreement forthwith for cause, as “Cause” is
described below, by giving written notice to the other Party. “Cause” for
termination by one Party of this Agreement shall be deemed to exist if, with
respect to the other Party:

 

(a)                                  (i) a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect shall be instituted by such Party, or such Party shall consent to the
entry of any order for relief in an involuntary case under any such law; (ii) a
general assignment for the benefit of creditors shall be made by such Party; (iii) such
Party shall consent to the appointment of or possession by a receiver,
liquidation, trustee, custodian, sequestrator or similar official of the 

 

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RESPECT TO THE OMITTED PORTION.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

property of such Party or of any substantial part of its
property; or (iv) such Party shall adopt a directors resolution in
furtherance of any of the foregoing actions specified in this subparagraph (a);
or

 

(b)                                 a decree or order for relief by a
court of competent jurisdiction shall be entered in respect of such Party in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, trustee,
sequestrator or other similar official of such Party to wind up or liquidate
its affairs, and any such decree or order shall remain unstayed or undischarged
and in effect for a period of sixty days.

 

Technology Transfer

 

24.5                           BLS may terminate this Agreement on one hundred twenty (120) days’
notice in writing to Depomed on completion of the Technology Transfer
contemplated by Section 16.2(b).

 

Survival

 

24.6                           Notwithstanding any other provisions of this Agreement, any liability or
obligation of either Party to the other for acts or omissions prior to the
termination or expiration of this Agreement shall survive the termination or
expiration of this Agreement. Such termination or expiration shall not relieve
either Party from obligations that are expressly indicated to survive
termination or expiration of this Agreement, nor shall expiration or
termination of this Agreement relieve Depomed from its obligation to pay BLS
sums due in respect of the 1000mg or the 500mg Product shipped prior to
termination or expiration of this Agreement. In addition, upon termination of
this Agreement by BLS pursuant to Section 24.3 above for breach by
Depomed, Depomed shall, at BLS’s option, purchase from BLS at a purchase price
equal to the lowest price set out on Schedule 14.6 (for the 500mg Product)
or Schedule 8.1 (for the 1000mg Product) manufactured by or on behalf of
BLS for the purpose of satisfying purchase orders submitted by Depomed prior to
the effective date of termination. The Parties’ rights and obligations under
Articles 19 (so long as Depomed is Marketing the 1000mg Product in the
Territory), 22 and 23 shall survive termination or expiration of this
Agreement.

 

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
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CONFIDENTIAL TREATMENT REQUESTED

 

25.                               PUBLICITY

 

25.1                           Neither Party will originate any publicity, news release, public comment
or other public announcement, written or oral, whether to the press, to
stockholders, or otherwise, relating to this Agreement, without the consent of
the other Party, except for such announcement which, in accordance with the
advice of legal counsel to the Party making such announcement, is required by
law; provided, however, that each Party shall be entitled to refer publicly to
the relationship of the Parties reflected in this Agreement (i.e., BLS as the
developer and manufacturer of the 1000mg Product and Depomed as the exclusive
marketer and distributor of the 1000mg Product in the Territory) in a manner
that is not damaging to the business or reputation of the other Party. Except
as otherwise permitted pursuant to the immediately preceding sentence, any
Party making any announcement which is required by law will, unless prohibited
by law, give the other Party an opportunity to review the form and content
of such announcement and comment before it is made. Either Party shall have the
right to make such filings with governmental agencies, including without limitation
the United States Securities and Exchange Commission, as to the contents and
existence of this Agreement as it shall reasonably deem necessary or
appropriate. The Parties have agreed upon the form and content of a joint
press release to be issued by the Parties following the execution of this
Agreement.

 

26.                               ASSIGNABILITY

 

Assignment

 

26.1                           This Agreement may be assigned by either Party to an Affiliate or as part of
the sale by either Party of all of its business of which this Agreement may be
a part without the consent of the other Party; provided, however, that
neither Party shall assign this Agreement to an Affiliate that is not
reasonably capable of performing all of its obligations under this Agreement. Except
as permitted by this Section 26.1, Depomed shall not assign any rights
licensed to BLS under this Agreement. BLS may assign, 

 

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

sublicense, subcontract
or delegate, to any Affiliate of BLS reasonably capable of performing such
obligations, all or part of the rights and obligations of BLS under this
Agreement, but in no event shall such assignment, sublicensing, subcontracting
or delegation be deemed to relieve BLS of its liabilities or obligations to
Depomed under this Agreement. This Agreement may not otherwise be assigned
by either Party without the prior written consent of the other Party, which
consent shall not be unreasonably withheld.

 

Liability

 

26.2                           No assignment permitted by this Article 26 shall serve to release
either Party from liability for the performance of its obligations hereunder.

 

27.                               NOTICES

 

Notices

 

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

 

if to
BLS:

 

Biovail Laboratories International
SRL

 

Chelston Park

Building 2, Collymore Rock

St. Michael BH1

Barbados, West Indies

Attention: Mr. Eugene
Melnyk, President

Facsimile No.: (246)
437-7085

 

With a copy to:

 

Biovail Corporation

 

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CONFIDENTIAL TREATMENT REQUESTED

 

7150 Mississauga Road

Mississauga, Ontario

L5N 8M5

Attention: Vice President
and Associate General Counsel

Facsimile: 905 286 3744

 

if to Depomed:

 

Depomed, Inc.

1360 O’Brien Drive

Menlo Park, California  94025

Attention: 
President

Facsimile: 
(650) 462-9991

 

With a copy to:

 

Heller Ehrman LLP

275 Middlefield Road

Menlo Park,
California  94025

Attention:  Matthew Gosling

Facsimile: 
(650) 324-0638

 

Receipt

 

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

 

28.                               FORCE MAJEURE

 

Force Majeure Event

 

28.1                           In the event of any failure or delay in the performance by a Party of any
provision of this Agreement due to acts beyond the reasonable control of such
Party (such as, for example, fire, explosion, strike or other difficulty with
workmen, shortage of transportation equipment, accident, act of God, or
compliance with or other action taken to carry out the intent or purpose of any
law or regulation), then such Party shall have such additional 

 

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CONFIDENTIAL TREATMENT REQUESTED

 

time to perform as
shall be reasonably necessary under the circumstances. In the event of such
failure or delay, the affected Party will use its diligent efforts, consistent
with sound business judgment and to the extent permitted by law, to correct
such failure or delay as expeditiously as possible.

 

Performance

 

28.2                           In the event that a Party is unable to perform by a reason described
in Section 28.1 above, its obligation to perform under the affected
provision of this Agreement shall be suspended during such time of
nonperformance.

 

29.                               MISCELLANEOUS

 

Enforceability

 

29.1                           It is the desire and intent of the Parties that the provisions of this
Agreement shall be enforced to the extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought. Accordingly,
if any particular provision of this Agreement which substantially affects the
commercial basis of this Agreement shall be determined to be invalid or
unenforceable, such provision shall be amended as hereinafter provided to
delete therefrom or revise the portion thus determined to be invalid or
unenforceable, such amendment to apply only with respect to the operation of
such provision of this Agreement in the particular jurisdiction for which such
determination is made. In such event, the Parties agree to use reasonable
efforts to agree on substitute provisions, which, while valid, will achieve as
closely as possible the same economic effects or commercial basis as the
invalid provisions, and this Agreement otherwise shall continue in full force
and effect. If the Parties cannot agree to such revision within sixty days
after such invalidity or unenforceability is established, the matter may be
submitted by either Party to arbitration as provided in this Agreement to
finalize such revision.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

Entire Agreement

 

29.2                           This Agreement and the Manufacturing Transfer Agreement represent the
entire agreement between the Parties concerning the Manufacture and Marketing
of the 1000mg Product in the Territory, and the supply by BLS of the 500mg
Product to Depomed (except as specifically noted herein) and supersedes all
prior or contemporaneous oral or written agreements of the Parties. This
agreement may be modified, amended or changed only by a written instrument
signed and delivered by the Parties, with clear intent to modify, amend or
change the provisions hereof.

 

Waiver

 

29.3                           The waiver by a Party of any single default or breach or succession of
defaults or breaches by the other shall not deprive either Party of any right
under this Agreement arising out of any subsequent default or breach.

 

Governing Law

 

29.4                           All matters affecting the interpretation, validity, and performance of
this Agreement shall be governed by the laws of the State of New York without
regard to that state’s conflict of laws rules or principles.

 

Independent Contractors

 

29.5                           Nothing in this Agreement authorizes either Party to act as agent for the
other Party as to any matter. The relationship between BLS and Depomed is that
of independent contractors.

 

Counterparts

 

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

 

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Inconsistency

 

29.7                           If there is any inconsistency between the provisions of this Agreement and
any other document passing between the Parties, including, but not limited to
purchase orders, the provisions of this Agreement shall control and be
determinative.

 

Arbitration

 

29.8                           Any and all disputes between the Parties relating in any way to the
entering into of this Agreement and/or the validity, construction, meaning,
enforceability, or performance of this Agreement or any of its provisions, or
the intent of the Parties in entering into this Agreement, or any of its
provisions arising under this Agreement shall be settled by binding arbitration.
Such arbitration shall be conducted at New York, New York, in accordance with
the rules then pertaining of the American Arbitration Association with a
panel of three arbitrators. Each Party shall select one arbitrator and the two
selected arbitrators shall select the third arbitrator. If the two selected
arbitrators cannot agree on a third arbitrator then the American Arbitration
Association shall select said arbitrator from the National Panel of Arbitrators.
Reasonable discovery as determined by the Arbitrators shall apply to the
arbitration proceeding. The law of the State of New York shall apply to the
arbitration proceedings. Judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The successful Party in such
arbitration, in addition to all other relief provided, shall be entitled to an
award of all its reasonable costs and expenses including attorney costs. Both
Parties agree to waive, and the Arbitrators shall have no right to award,
punitive damages in connection with an arbitration proceeding hereunder.

 

[signature page follows]

 

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

 

	
   

  	
  DEPOMED, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carl A.
  Pelzel

  
	
   

  	
  Name:

  	
  Carl A. Pelzel

  
	
   

  	
  Title:

  	
  Executive Vice
  President & COO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BIOVAIL
  LABORATORIES 

  
	
   

  	
  INTERNATIONAL
  SRL

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John A.R.
  McCleery

  
	
   

  	
  Name:

  	
  John A.R. McCleery

  
	
   

  	
  Title:

  	
  Vice President,
  General Manager

  
					

 

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CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT A

 

SPECIFICATIONS

 

Extended
release formulation of metformin hydrochloride in the form of a 1000mg
tablet manufactured using BLS’s AQ formulation technology, packaged in bottles
of 90 or 500 (bottles of 21 in the case of samples) 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.

 

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Schedule 1.27

Work Plan

 

	
  1000mg Product Work Plan

  
	
  Activity

  	
   

  	
  Status/Timing

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

Schedule 8.1

Supply Prices

Sales by Depomed

 

(as of the Effective Date and subject to
adjustment in accordance with Section 8.12)

 

	
  Net
  Selling Price 

  per Tablet

  	
   

  	
  Per tablet 

  Supply Price

  	
   

  	
  PPI Multiplier

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [ ***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [ ***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [ ***]

  	
   

  	
  [***]

  

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

Schedule 8.2

Supply Prices

Sales by Depomed’s Distributor

 

(as of the Effective Date and subject to
adjustment in accordance with Section 8.12)

 

	
  Revenue
  from 

  3rd party /tablet

  	
   

  	
  Per tablet 

  Supply Price

  	
   

  	
  PPI Multiplier

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [ ***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [ ***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [ ***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [ ***]

  	
   

  	
  [***]

  

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

Schedule 8.4

Supply Prices

if no Valid Claim

 

(as of the Effective Date and subject to
adjustment in accordance with Section 8.12)

 

	
  Net
  Selling Price

  per Tablet

  	
   

  	
  Per tablet 

  Supply Price

  	
   

  	
  PPI Multiplier

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [ ***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [ ***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

Schedule 8.5

Supply Prices

for Samples

 

(as of the Effective Date and subject to
adjustment in accordance with Section 8.12)

 

	
  Supply Price

  per tablet

  	
   

  	
  PPI Multiplier

  
	
  [***]

  	
   

  	
  [***]

  

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

Schedule 8.8

Banking Information

 

	
  BIOVAIL LABORATORIES
  INTERNATIONAL SRL

  
	
  Wire Transfer Instructions

  
	
   

  
	
   

  	
   

  
	
  Bank:

  	
  [***]

  
	
   

  	
   

  
	
  Address:

  	
  [***]

  
	
   

  	
  [***]

  
	
   

  	
   

  
	
  ABA No:

  	
  [***]

  
	
   

  	
   

  
	
  Account Name:

  	
  [***]

  
	
   

  	
   

  
	
  Account No:

  	
  [***]

  
	
   

  	
   

  
	
  Currency:

  	
  United States Dollars

  
	
   

  	
   

  
	
  Amount:

  	
  US$

  
	
   

  	
   

  
	
  Payment Details:

  	
   

  

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

Schedule 14.6

 

Supply Price of 500mg Product

 

[***]

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}]]