Exhibit 10.40

 

February 8, 2008

 

Mr. Carl Pelzel

 

Dear Carl:

 

I refer you to the employment offer letter between you and Depomed, Inc. dated
as of August 24, 2007 (the “Offer Letter”).

 

This letter is to confirm our agreement that:  (a) the option to purchase 62,500
shares required to be issued to you under the Offer Letter not later than
March 31, 2008 at an exercise price equal to $1.98 was granted to you on
January 25, 2008, with an exercise price equal to $3.60 per share; and (b) to
compensate you for the incremental increase in the exercise price of that stock
option, the Company will issue you a 30,000 share fully vested stock award under
the Company’s 2004 Equity Incentive Plan (the “2004 Plan”) on the earlier to
occur of (i) January 9, 2009; and (ii) immediately prior to the occurrence of an
event of “Change in Control”, as so determined by the Company’s Board of
Directors pursuant to Section 10.4 of the Company’s 2004 Equity Incentive Plan.

 

Except as modified by this letter, all other provisions of the Offer Letter
remain in effect.

 

Please countersign where indicated below to indicate that the foregoing
correctly sets forth our agreement

 

On behalf of the

Board of Directors,

 

/s/ Craig R. Smith, M.D.

 

 

Craig R. Smith, M.D.

Chairman of the Board of Directors

 

 

Acknowledged and Agreed:

 

 

 

 

 

/s/ Carl A. Pelzel

 

Carl A. Pelzel

 

 

 

Date: February 19, 2008

 

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