Exhibit 10.3

DEPOMED, INC.

1995 STOCK OPTION PLAN

NONSTATUTORY STOCK OPTION AGREEMENT

(A)      Name of Optionee:

(B)        Grant Date:

(C)        Number of Shares:

(D)       Exercise Price:

(E)         Vesting Base Date:

THIS NONSTATUTORY STOCK OPTION AGREEMENT (the “Agreement”) is made and entered
into as of the date set forth in Item B above (the “Grant Date”) between
DepoMed, Inc., a California corporation (the “Company”), and the person named in
Item A above (“Optionee”).

THE PARTIES AGREE AS FOLLOWS:

1.                                       GRANT OF OPTION; VESTING BASE DATE.

1.1  GRANT.  THE COMPANY HEREBY GRANTS TO OPTIONEE PURSUANT TO THE COMPANY’S
1995 STOCK OPTION PLAN (THE “PLAN”), A COPY OF WHICH IS ATTACHED TO THIS
AGREEMENT AS EXHIBIT 1, A NONSTATUTORY STOCK OPTION (THE “NSO”) TO PURCHASE ALL
OR ANY PART OF AN AGGREGATE OF THE NUMBER OF SHARES (THE “NSO SHARES”) OF THE
COMPANY’S COMMON STOCK (AS DEFINED IN THE PLAN) LISTED IN ITEM C ABOVE ON THE
TERMS AND CONDITIONS SET FORTH HEREIN AND IN THE PLAN, THE TERMS AND CONDITIONS
OF THE PLAN BEING HEREBY INCORPORATED INTO THIS AGREEMENT BY REFERENCE.

1.2  VESTING BASE DATE.  THE PARTIES HEREBY ESTABLISH THE DATE SET FORTH IN ITEM
E ABOVE AS THE VESTING BASE DATE (AS DEFINED IN SECTION 5.1 BELOW).

2.                                       EXERCISE PRICE.  THE EXERCISE PRICE FOR
PURCHASE OF EACH SHARE OF COMMON STOCK COVERED BY THIS NSO SHALL BE THE PRICE
SET FORTH IN ITEM D ABOVE.

3.                                       TERM.  UNLESS OTHERWISE SPECIFIED ON
EXHIBIT 3 ATTACHED HERETO, IF ANY (THE ABSENCE OF SUCH EXHIBIT INDICATING THAT
NO SUCH EXHIBIT WAS INTENDED), THIS NSO SHALL EXPIRE AS PROVIDED IN SECTION
6.1.12 OF THE PLAN.

4.                                       ADJUSTMENT OF NSOS.  THE COMPANY SHALL
ADJUST THE NUMBER AND KIND OF SHARES AND THE EXERCISE PRICE THEREOF IN CERTAIN
CIRCUMSTANCES IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.1.1 OF THE PLAN.

--------------------------------------------------------------------------------

5.                                       EXERCISE OF OPTIONS.

5.1  VESTING; TIME OF EXERCISE.  THIS NSO SHALL BE EXERCISABLE ACCORDING TO THE
SCHEDULE SET FORTH ON EXHIBIT 5.1 ATTACHED HERETO.  SUCH SCHEDULE SHALL COMMENCE
AS OF THE DATE SET FORTH IN ITEM E ABOVE (THE “VESTING BASE DATE”).

5.2  EXERCISE AFTER TERMINATION OF STATUS AS AN EMPLOYEE, DIRECTOR OR
CONSULTANT.  IN THE EVENT OF TERMINATION OF OPTIONEE’S CONTINUOUS STATUS AS AN
EMPLOYEE, DIRECTOR OR CONSULTANT, THIS NSO MAY BE EXERCISED ONLY IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 6.1.7 OF THE PLAN.

5.3  MANNER OF EXERCISE.  OPTIONEE MAY EXERCISE THIS NSO, OR ANY PORTION OF THIS
NSO, BY GIVING WRITTEN NOTICE TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE,
TO THE ATTENTION OF THE OFFICER OF THE COMPANY DESIGNATED BY THE PLAN
ADMINISTRATOR, ACCOMPANIED BY THE NOTICE OF EXERCISE IN SUBSTANTIALLY THE FORM
ATTACHED HERETO AS EXHIBIT 5.3 EXECUTED BY OPTIONEE, PAYMENT OF THE EXERCISE
PRICE AND PAYMENT OF ANY APPLICABLE WITHHOLDING OR EMPLOYMENT TAXES.  THE DATE
THE COMPANY RECEIVES WRITTEN NOTICE OF AN EXERCISE HEREUNDER ACCOMPANIED BY
PAYMENT WILL BE CONSIDERED AS THE DATE THIS NSO WAS EXERCISED.

5.4  PAYMENT.  EXCEPT AS PROVIDED IN EXHIBIT 5.4 ATTACHED HERETO, IF ANY (THE
ABSENCE OF SUCH EXHIBIT INDICATING THAT NO EXHIBIT WAS INTENDED), PAYMENT MAY BE
MADE FOR NSO SHARES PURCHASED AT THE TIME WRITTEN NOTICE OF EXERCISE OF THE NSO
IS GIVEN TO THE COMPANY, BY DELIVERY OF CASH, CHECK OR PREVIOUSLY OWNED SHARES
OF COMMON STOCK (PROVIDED THAT DELIVERY OF PREVIOUSLY OWNED SHARES MAY NOT BE
MADE OTHER THAN ONCE IN ANY SIX-MONTH PERIOD).  THE PROCEEDS OF ANY PAYMENT
SHALL CONSTITUTE GENERAL FUNDS OF THE COMPANY.

5.5  DELIVERY OF CERTIFICATE.  PROMPTLY AFTER RECEIPT OF WRITTEN NOTICE OF
EXERCISE OF THE NSO, THE COMPANY SHALL, WITHOUT STOCK ISSUE OR TRANSFER TAXES TO
THE OPTIONEE OR OTHER PERSON ENTITLED TO EXERCISE, DELIVER TO THE OPTIONEE OR
OTHER PERSON A CERTIFICATE OR CERTIFICATES FOR THE REQUISITE NUMBER OF NSO
SHARES.  AN OPTIONEE OR TRANSFEREE OF AN OPTIONEE SHALL NOT HAVE ANY PRIVILEGES
AS A STOCKHOLDER WITH RESPECT TO ANY NSO SHARES COVERED BY THE OPTION UNTIL THE
DATE OF ISSUANCE OF A STOCK CERTIFICATE.

6.                                       LIMITED TRANSFERABILITY OF NSO.

6.1  Transfer to Immediate Family Members.  All or any portion of this NSO may
be transferred by Optionee to (i) the spouse, children or grandchildren of the
Optionee (“Immediate Family Members”), (ii) a partnership in which such
Immediate Family Members are the only partners, or (iii) a trust or trusts for
the exclusive benefit of such Immediate Family Members, provided that (x) there
may be no consideration for such transfer and (y) subsequent transfers of this
NSO shall be prohibited except those in accordance with Section 6.2.  Following
transfer, this NSO shall continue to be subject to the same terms and conditions
as were applicable immediately prior to transfer.  The events of termination of
Section 5.2 shall continue to be applied with respect to the original Optionee,
following which this NSO shall be exercisable by the transferee only to the
extent, and for the periods specified in, Section 5.2.  Neither the

2

--------------------------------------------------------------------------------

Company nor the Administrator shall have any obligation to provide the
transferee with notice of termination of an Optionee.

6.2  NONTRANSFERABILITY.   THIS NSO IS NOT ASSIGNABLE OR TRANSFERABLE BY
OPTIONEE EXCEPT IN ACCORDANCE WITH SECTION 6.1 OR BY WILL OR BY THE LAWS OF
DESCENT AND DISTRIBUTION.  DURING THE LIFE OF OPTIONEE, THIS NSO IS EXERCISABLE
ONLY BY THE OPTIONEE OR BY A TRANSFEREE PERMITTED PURSUANT TO SECTION 6.1.  ANY
ATTEMPT TO ASSIGN, PLEDGE, TRANSFER, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS
NSO IN A MANNER NOT HEREIN PERMITTED, AND ANY LEVY OF EXECUTION, ATTACHMENT, OR
SIMILAR PROCESS ON THIS NSO, SHALL BE NULL AND VOID.

7.                                       MARKET STANDOFF.  OPTIONEE HEREBY
AGREES THAT IF SO REQUESTED BY THE COMPANY OR ANY REPRESENTATIVE OF THE
UNDERWRITERS IN CONNECTION WITH ANY REGISTRATION OF THE OFFERING OF THE
SECURITIES OF THE COMPANY UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OPTIONEE SHALL NOT SELL OR OTHERWISE TRANSFER THE NSO SHARES
FOR A PERIOD OF 180 DAYS FOLLOWING THE EFFECTIVE DATE OF A REGISTRATION
STATEMENT FILED  UNDER THE SECURITIES ACT; PROVIDED THAT SUCH RESTRICTIONS SHALL
APPLY ONLY TO THE FIRST TWO REGISTRATION STATEMENTS OF THE COMPANY TO BECOME
EFFECTIVE UNDER THE SECURITIES ACT WHICH INCLUDE SECURITIES TO BE SOLD ON BEHALF
OF THE COMPANY IN AN UNDERWRITTEN PUBLIC OFFERING UNDER THE SECURITIES ACT.  THE
COMPANY MAY IMPOSE STOP-TRANSFER INSTRUCTIONS WITH RESPECT TO THE NSO SHARES
SUBJECT TO THE FOREGOING RESTRICTIONS UNTIL THE END OF EACH SUCH 180-DAY PERIOD.

8.                                       RESTRICTION ON ISSUANCE OF SHARES.

8.1  LEGALITY OF ISSUANCE.  THE COMPANY SHALL NOT BE OBLIGATED TO SELL OR ISSUE
ANY NSO SHARES PURSUANT TO THIS AGREEMENT IF SUCH SALE OR ISSUANCE, IN THE
OPINION OF THE COMPANY AND THE COMPANY’S COUNSEL, MIGHT CONSTITUTE A VIOLATION
BY THE COMPANY OF ANY PROVISION OF LAW, INCLUDING WITHOUT LIMITATION THE
PROVISIONS OF THE SECURITIES ACT.

8.2  REGISTRATION OR QUALIFICATION OF SECURITIES.  THE COMPANY MAY, BUT SHALL
NOT BE REQUIRED TO, REGISTER OR QUALIFY THE SALE OF THIS NSO OR ANY NSO SHARES
UNDER THE SECURITIES ACT OR ANY OTHER APPLICABLE LAW.  THE COMPANY SHALL NOT BE
OBLIGATED TO TAKE ANY AFFIRMATIVE ACTION IN ORDER TO CAUSE THE GRANT OR EXERCISE
OF THIS OPTION OR THE ISSUANCE OR SALE OF ANY NSO SHARES PURSUANT THERETO TO
COMPLY WITH ANY LAW.

9.                                       RESTRICTION ON TRANSFER.  REGARDLESS
WHETHER THE SALE OF THE NSO SHARES HAS BEEN REGISTERED UNDER THE SECURITIES ACT
OR HAS BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE, THE
COMPANY MAY IMPOSE RESTRICTIONS UPON THE SALE, PLEDGE OR OTHER TRANSFER OF NSO
SHARES (INCLUDING THE PLACEMENT OF APPROPRIATE LEGENDS ON STOCK CERTIFICATES)
IF, IN THE JUDGMENT OF THE COMPANY AND THE COMPANY’S COUNSEL, SUCH RESTRICTIONS
ARE NECESSARY OR DESIRABLE IN ORDER TO ACHIEVE COMPLIANCE WITH THE PROVISIONS OF
THE SECURITIES ACT, THE SECURITIES LAWS OF ANY STATE, OR ANY OTHER LAW.

10.                                 STOCK CERTIFICATE RESTRICTIVE LEGENDS. 
STOCK CERTIFICATES EVIDENCING NSO SHARES MAY BEAR SUCH RESTRICTIVE LEGENDS AS
THE COMPANY AND THE COMPANY’S COUNSEL DEEM NECESSARY OR ADVISABLE UNDER
APPLICABLE LAW OR PURSUANT TO THIS AGREEMENT.

3

--------------------------------------------------------------------------------

11.                                 EMPLOYMENT OR CONSULTING RELATIONSHIP. 
NOTHING IN THIS AGREEMENT SHALL INTERFERE WITH OR LIMIT IN ANY WAY THE RIGHT OF
THE COMPANY OR OF ANY OF ITS AFFILIATES TO TERMINATE THE OPTIONEE’S EMPLOYMENT
OR CONSULTING AT ANY TIME, NOR CONFER UPON THE OPTIONEE ANY RIGHT TO CONTINUE IN
THE EMPLOY OF, OR CONSULT WITH, THE COMPANY OR ANY OF ITS AFFILIATES.

12.                                 ASSIGNMENT; BINDING EFFECT.  SUBJECT TO THE
LIMITATIONS SET FORTH IN THIS AGREEMENT, THIS AGREEMENT SHALL BE BINDING UPON
AND INURE TO THE BENEFIT OF THE EXECUTORS, ADMINISTRATORS, HEIRS, LEGAL
REPRESENTATIVES, AND SUCCESSORS OF THE PARTIES HERETO; PROVIDED, HOWEVER, THAT
OPTIONEE MAY NOT ASSIGN ANY OF OPTIONEE’S RIGHTS UNDER THIS AGREEMENT.

13.                                 DAMAGES.  OPTIONEE SHALL BE LIABLE TO THE
COMPANY FOR ALL COSTS AND DAMAGES, INCLUDING INCIDENTAL AND CONSEQUENTIAL
DAMAGES, RESULTING FROM A DISPOSITION OF NSO SHARES WHICH IS NOT IN CONFORMITY
WITH THE PROVISIONS OF THIS AGREEMENT.

14.                                 GOVERNING LAW.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA EXCLUDING THOSE LAWS THAT DIRECT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION.

15.                                 NOTICES.  ALL NOTICES AND OTHER
COMMUNICATIONS UNDER THIS AGREEMENT SHALL BE IN WRITING.  UNLESS AND UNTIL THE
OPTIONEE IS NOTIFIED IN WRITING TO THE CONTRARY, ALL NOTICES, COMMUNICATIONS,
AND DOCUMENTS DIRECTED TO THE COMPANY AND RELATED TO THE AGREEMENT, IF NOT
DELIVERED BY HAND, SHALL BE MAILED, ADDRESSED AS FOLLOWS:

DepoMed, Inc.

1360 O’Brien Drive

Menlo Park, CA  94404

Unless and until the Company is notified in writing to the contrary, all
notices, communications, and documents intended for the Optionee and related to
this Agreement, if not delivered by hand, shall be mailed to Optionee’s last
known address as shown on the Company’s books.  Notices and communications shall
be mailed by first class mail, postage prepaid; documents shall be mailed by
registered mail, return receipt requested, postage prepaid.  All mailings and
deliveries related to this Agreement shall be deemed received when actually
received, if by hand delivery, and two business days after mailing, if by mail.

4

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have executed this Nonstatutory Stock Option
Agreement as of the Grant Date.

DEPOMED, INC.

 

 

 

 

 

By:

 

 

 

 

 

Title:

President and CEO

 

The Optionee hereby accepts and agrees to be bound by all of the terms and
conditions of this Agreement and the Plan.

Optionee

 

 

 

 

Dated:

 

 

 

Optionee’s spouse indicates by the execution of this Nonstatutory Stock Option
Agreement his or her consent to be bound by the terms thereof as to his or her
interests, whether as community property or otherwise, if any, in the option
granted hereunder, and in any NSO Shares purchased pursuant to this Agreement.

Optionee’s Spouse

 

 

 

 

Dated:

 

 

 

5

--------------------------------------------------------------------------------