Exhibit 10.2

October 10, 2007

John F. Hamilton

540 Liberty Street

San Francisco, CA  94114

Dear John:

This letter will confirm that you have resigned your employment with Depomed,
Inc. (“Depomed”) effective at 5:00 p.m., local time, on October 12, 2007 (the
“Termination Date”).  Please find enclosed your final paycheck, including all
accrued wages (including accrued, unused vacation) through that date.

Separate from the above-referenced payment, if you choose to sign this letter
agreement and release by October 31, 2007 (at least 21 days from date of
letter), Depomed will provide you with the following:

(a).                               A payment of $190,000, less applicable
withholdings.  This payment will be made to you within 10 business days of
Depomed’s receipt of a fully-executed original of this letter, provided that you
have not revoked your agreement.  Other than the payments described in this
letter, you agree that Depomed has already provided you with all other wages,
payments and benefits, of any kind, owed to you.

(b).                              Through October 10, 2008, provided that you
are eligible thereunder, Depomed shall reimburse you for 125% of Depomed’s
portion of the health insurance benefits provided to you immediately prior to
the Termination Date pursuant to the terms of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”).

(c).                               In addition, as consideration for your
agreement to irrevocably cancel and not exercise all options to purchase shares
of Depomed common stock held by you, including without limitation those set
forth on Exhibit A hereto, Depomed will issue to you, pursuant to its 2004
Equity Incentive Plan (the “Plan”), 100,000 fully-vested shares of Depomed
common stock (the “Shares”).  The Shares will be delivered to you within 10
business days of Depomed’s receipt of a fully-executed original of this letter,
provided that you have not revoked your agreement, and subject to your execution
and delivery of a Stock Purchase Agreement in substantially the form of Exhibit
B hereto.

In consideration for Depomed’s above commitments set forth in subparagraphs (a),
(b) and (c) above, you agree, by signing below, to release and extinguish all
claims or rights you may have against Depomed and its past, present and future
officers, directors, shareholders, agents, insurers, employees, successors and
assigns (collectively “Releasees”), for any claim, charge, loss or injury of any
kind based on any act or omission occurring prior to the date you sign below,
including but not limited to those which in any way relate to or arise out of
your

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employment, termination of employment or lack of employment with Depomed, or
which arise under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, and the California Fair Employment and Housing
Act or any applicable local, state or federal law.  You acknowledge that you
have been paid all wages, salary and vacation pay that you may be owed, and this
release is not provided as consideration for any such payments.  This agreement
and release extinguishes not only all claims and charges which you may have
made, but also all those you could raise or could have raised against Depomed
anywhere whether known to you or not, under the terms of Section 1542 of the
California Civil Code and any similar law of any state or territory of the
United States.

Depomed hereby releases you from any claim, charge, loss or injury of any kind
that Depomed ever had, now has or may claim to have had against you including,
but not limited to, claims relating to any oral or written employment agreement
between Depomed and you, to any services performed by you for Depomed, or to
your employment with Depomed.

Section 1542 of the California Civil Code provides as follows:

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.”

This agreement and release does not extinguish those rights which cannot be
released as a matter of law, including, but not limited to, claims under
Division 3, Article 2 of the California Labor Code (which includes
indemnification rights).

You agree that you have not filed or otherwise pursued any charges, complaints
or claims of any nature which are in any way pending against the Releasees with
any court with respect to any matter covered by this agreement and release and
that, to the extent permitted by law, you will not do so in the future.  You
further agree that, with respect to any charge, complaint or claim you may have
filed or will file in the future with any state or federal agency against the
Releasees, you will forgo any monetary damages, including but not limited to
compensatory damages, punitive damages, and attorneys’ fees, to which you may
otherwise be entitled in connection with said charge, complaint or claim. 
Nothing in this agreement and release shall limit your right to file a charge,
complaint or claim with any state or federal agency or to participate or
cooperate in such matters.

You agree that you will not disclose to anyone the terms of this agreement and
release without Depomed’s prior written consent (except to the extent that the
terms of this agreement are publicly disclosed by Depomed), unless required to
do so by law.  Notwithstanding the preceding sentence, it is understood that you
may disclose this agreement and its terms to your spouse, attorneys and tax
advisors.  If any lawsuit is brought relating to this agreement and release or
any breach of it, the prevailing party will be entitled to reasonable attorneys’
fees and its other legal remedies.  You further agree that you will not
disparage Releasees or their products, services, agents, representatives,
directors, officers, shareholders, attorneys, employees,

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vendors, affiliates, successors or assigns, or any person acting by, through,
under or in concert with any of them, with any written or oral statement. 
Neither Depomed nor any of its directors or executive officers will disparage
you with any written or oral statement except as may be required by law or by
any court or governmental entity.

You understand that you have been given a period of at least 21 days within
which to consider this agreement and release and are advised, if you wish, to
consult with an attorney prior to signing it.  This agreement and release does
not become effective until 7 days after you sign it, and you understand that you
may revoke it at any time within 7 days after you sign it by delivering a
written revocation to Depomed, addressed to Kera Alexander, Vice President,
Administration and Human Resources, within that 7-day period.

Both Depomed and you are voluntarily agreeing to this agreement.  It is agreed
that Depomed’s payment is not an admission of any liability or obligation.  This
letter agreement and release is a complete and integrated agreement, may only be
amended in writing, and supersedes any prior express or implied agreements
between you and Depomed, except for any confidentiality and proprietary rights
agreements, which remain in full force and effect to the extent not inconsistent
with this letter release.

Please express your agreement to the terms of this letter agreement and release
by signing and dating this letter below and returning the original to me.  John,
we wish you all the best in your future endeavors.

 

 

Sincerely,

 

 

 

 

 

/s/ Carl Pelzel

 

 

 

 

 

 

Carl Pelzel

 

 

President and Chief Executive Officer

 

 

 

 

 

 

I agree to the above.

 

 

 

 

 

 

 

 

/s/ John F. Hamilton

 

 

October 10, 2007

John F. Hamilton

 

Date

 

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