**Exhibit10.3**

**DEPOMED, INC.**

**1995 STOCK OPTION PLAN**

**NONSTATUTORY STOCK OPTIONAGREEMENT**

(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 “GrantDate”) between DepoMed, Inc., a California corporation (the “Company”), and theperson named in Item A above (“Optionee”).

THE PARTIES AGREE AS FOLLOWS:

# 1.                                       Grantof Option; Vesting Base Date.

## 1.1  Grant.  The Company hereby grants to Optioneepursuant to the Company’s 1995 Stock Option Plan (the “Plan”), a copy of whichis 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 “NSOShares”) of the Company’s Common Stock (as defined in the Plan) listed in ItemC above on the terms and conditions set forth herein and in the Plan, the termsand conditions of the Plan being hereby incorporated into this Agreement byreference.

## 1.2  Vesting Base Date.  The parties hereby establish the date setforth in Item E above as the Vesting Base Date (as defined in Section 5.1below).

# 2.                                       ExercisePrice.  The exercise price forpurchase of each share of Common Stock covered by this NSO shall be the priceset forth in Item D above.

# 3.                                       Term.  Unless otherwise specified on Exhibit 3attached hereto, if any (the absence of such exhibit indicating that no suchexhibit was intended), this NSO shall expire as provided in Section 6.1.12 ofthe Plan.

# 4.                                       Adjustmentof NSOs.  The Company shall adjustthe number and kind of shares and the exercise price thereof in certaincircumstances in accordance with the provisions of Section 6.1.1 of thePlan.

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# 5.                                       Exerciseof Options.

## 5.1  Vesting; Time of Exercise.  This NSO shall be exercisable according tothe schedule set forth on Exhibit 5.1 attached hereto.  Such schedule shall commence as of the dateset forth in Item E above (the “Vesting Base Date”).

## 5.2  Exercise After Terminationof Status as an Employee, Director or Consultant.  In the event of termination of Optionee’scontinuous status as an employee, director or consultant, this NSO may beexercised 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 anyportion of this NSO, by giving written notice to the Company at its principalexecutive office, to the attention of the officer of the Company designated bythe Plan Administrator, accompanied by the Notice of Exercise in substantiallythe form attached hereto as Exhibit 5.3 executed by Optionee, payment of theexercise price and payment of any applicable withholding or employmenttaxes.  The date the Company receiveswritten notice of an exercise hereunder accompanied by payment will beconsidered as the date this NSO was exercised.

## 5.4  Payment.  Except as provided in Exhibit 5.4 attachedhereto, if any (the absence of such exhibit indicating that no exhibit wasintended), payment may be made for NSO Shares purchased at the time writtennotice 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 ofpreviously owned shares may not be made other than once in any six-monthperiod).  The proceeds of any paymentshall constitute general funds of the Company.

## 5.5  Delivery of Certificate.  Promptly after receipt of written notice ofexercise of the NSO, the Company shall, without stock issue or transfer taxesto the Optionee or other person entitled to exercise, deliver to the Optioneeor other person a certificate or certificates for the requisite number of NSOShares.  An Optionee or transferee of anOptionee shall not have any privileges as a stockholder with respect to any NSOShares covered by the option until the date of issuance of a stock certificate.

# 6.                                       LimitedTransferability of NSO.

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

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

# 6.2  Nontransferability.   This NSO is not assignable or transferableby Optionee except in accordance with Section 6.1 or by will or by the laws ofdescent and distribution.  During thelife of Optionee, this NSO is exercisable only by the Optionee or by atransferee permitted pursuant to Section 6.1. Any attempt to assign, pledge, transfer, hypothecate or otherwisedispose of this NSO in a manner not herein permitted, and any levy ofexecution, attachment, or similar process on this NSO, shall be null and void.

# 7.                                       MarketStandoff.  Optionee hereby agreesthat if so requested by the Company or any representative of the underwritersin connection with any registration of the offering of the securities of theCompany under the Securities Act of 1933, as amended (the “Securities Act”),Optionee shall not sell or otherwise transfer the NSO Shares for a period of180 days following the effective date of a Registration Statement filed  under the Securities Act; provided that suchrestrictions shall apply only to the first two registration statements of theCompany to become effective under the Securities Act which include securitiesto be sold on behalf of the Company in an underwritten public offering underthe Securities Act.  The Company mayimpose stop-transfer instructions with respect to the NSO Shares subjectto the foregoing restrictions until the end of each such 180-day period.

# 8.                                       Restrictionon Issuance of Shares.

## 8.1  Legality of Issuance.  The Company shall not be obligated to sell orissue any NSO Shares pursuant to this Agreement if such sale or issuance, inthe opinion of the Company and the Company’s counsel, might constitute aviolation by the Company of any provision of law, including without limitationthe provisions of the Securities Act.

## 8.2  Registration orQualification of Securities.  TheCompany may, but shall not be required to, register or qualify the sale of thisNSO or any NSO Shares under the Securities Act or any other applicablelaw.  The Company shall not be obligatedto take any affirmative action in order to cause the grant or exercise of thisoption or the issuance or sale of any NSO Shares pursuant thereto to complywith any law.

# 9.                                       Restrictionon Transfer.  Regardless whether thesale of the NSO Shares has been registered under the Securities Act or has beenregistered or qualified under the securities laws of any state, the Company mayimpose restrictions upon the sale, pledge or other transfer of NSO Shares(including the placement of appropriate legends on stock certificates) if, inthe judgment of the Company and the Company’s counsel, such restrictions arenecessary or desirable in order to achieve compliance with the provisions ofthe Securities Act, the securities laws of any state, or any other law.

# 10.                                 StockCertificate Restrictive Legends. Stock certificates evidencing NSO Shares may bear such restrictivelegends as the Company and the Company’s counsel deem necessary or advisableunder applicable law or pursuant to this Agreement.

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# 11.                                 Employmentor Consulting Relationship.  Nothingin this Agreement shall interfere with or limit in any way the right of theCompany or of any of its Affiliates to terminate the Optionee’s employment orconsulting at any time, nor confer upon the Optionee any right to continue inthe employ of, or consult with, the Company or any of its Affiliates.

# 12.                                 Assignment;Binding Effect.  Subject to thelimitations set forth in this Agreement, this Agreement shall be binding uponand inure to the benefit of the executors, administrators, heirs, legalrepresentatives, and successors of the parties hereto; provided, however, thatOptionee may not assign any of Optionee’s rights under this Agreement.

# 13.                                 Damages.  Optionee shall be liable to the Company forall costs and damages, including incidental and consequential damages,resulting from a disposition of NSO Shares which is not in conformity with theprovisions of this Agreement.

# 14.                                 GoverningLaw.  This Agreement shall begoverned by, and construed in accordance with, the laws of the State ofCalifornia excluding those laws that direct the application of the laws ofanother jurisdiction.

# 15.                                 Notices.  All notices and other communications underthis 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 relatedto the Agreement, if not delivered by hand, shall be mailed, addressed asfollows:

DepoMed, Inc.

1360 O’Brien Drive

Menlo Park, CA 94404

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

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IN WITNESS WHEREOF, the parties have executed thisNonstatutory Stock Option Agreement as of the Grant Date.
|        | DEPOMED, INC. |
|--------|---------------|
|   |          |
|   |          |
|   | By:           |   |
|   |          |   |
|   | Title:        | President and CEO |

 

The Optionee hereby accepts and agrees to be bound byall of the terms and conditions of this Agreement and the Plan.
|        | Optionee |   |
|--------|----------|--------|
|   |     |   |
| Dated: |     |   |
|        |          |        |  |  |

 

Optionee’s spouse indicates by the execution of thisNonstatutory Stock Option Agreement his or her consent to be bound by the termsthereof as to his or her interests, whether as community property or otherwise,if any, in the option granted hereunder, and in any NSO Shares purchasedpursuant to this Agreement.
|        | Optionee’s Spouse |   |
|--------|------------------------|--------|
|   |                   |   |
| Dated: |                   |   |
|        |                        |        |  |  |

 

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