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DepoMed, Inc.
  
    WARRANT    
  


No. W-
2002PA-01                                        
                                          
                                      121,981 Shares
  


        This certifies that, for value received, Fahnestock & Co. Inc. or registered assigns (the "holder"),
upon due exercise of this Warrant, is entitled to purchase from DepoMed, Inc., a California corporation (the "Company"), at any time on or after
March 22, 2002 (the "Initial Exercise Date"), and before the close of business on March 22, 2006, or if not a business day in San
Francisco, California (a "Business Day"), the next following Business Day (the "Expiration Date"), all
or any part of 121,981 (One hundred twenty-one thousand nine hundred eighty-one) fully paid and nonassessable Shares (the "Warrant
Shares") of the Common Stock, no par value, of the Company ("Common Stock"), at a purchase price of $4.875 per share (the
"Purchase Price"), both the Purchase Price and the number of Warrant Shares issuable upon exercise of this Warrant being subject to possible adjustment
as provided below. 


        This
Warrant is hereinafter called the "Warrant." The holder hereof and all subsequent holders of this Warrant shall be entitled to all
rights and benefits provided to the holder or holders hereof pursuant to the terms of this Warrant. 


SECTION 1. Exercise of Warrant.  


        (a)  The
holder of this Warrant may, at any time on or after September 22, 2002 and on or before the Expiration Date, exercise this Warrant in whole at any time or in
part (but not less than 1,000 Warrant Shares so long as this Warrant is exercisable for 1,000 or more Warrant Shares) from time to time for the purchase of the Warrant Shares or other securities which
such holder is then entitled to purchase hereunder ("Warrant Securities") at the Purchase Price (as hereinafter defined). In order to exercise this
Warrant in whole or in part, the holder hereof shall deliver to the Company (i) a written notice of such holder's election to exercise this Warrant, which notice shall specify the number of
Warrant Shares to be purchased, (ii) payment of the aggregate purchase price of the Warrant Shares being purchased by certified or bank cashier's check, unless pursuant to a Cashless Exercise
as described in subsection (b) below, and (iii) this Warrant, provided that, if such Warrant Shares or other Warrant Securities have
not then been registered under the Securities Act or applicable state securities laws, the Company may require that such holder furnish to the Company a written statement that such holder is
purchasing such Warrant Shares or other Warrant Securities for such holder's own account for investment and not with a view to the distribution thereof, that none of such shares will be offered or
sold in violation of the provisions of the Securities Act and applicable state securities laws and as to such other matters relating to the holder as the Company may reasonably request to permit the
issuance of such Warrant Shares or other Warrant Securities without registration under the Securities Act and applicable state securities laws. Upon receipt thereof, the Company shall, as promptly as
practicable, but in no event later than three (3) business days, execute or cause to be executed and deliver to such holder a certificate or certificates representing the aggregate number of
Warrant Shares (or if applicable, other Warrant Securities) specified in said notice. The stock certificate or certificates so delivered shall be in the denomination of 100 shares each or such other
denominations as may be specified in said notice and shall be registered in the name of such holder or such other name as shall be designated in said notice. 



        No
fractional Warrant Shares are to be issued upon the exercise of this Warrant, but the Company shall pay a cash adjustment in respect of any fraction of a share which would otherwise
be issuable in an amount equal to the same fraction of the fair market value per share of the Warrant Shares on the day of exercise, as reasonably determined by the Company consistent with the
determination of "Current Price" below. If this Warrant shall have been exercised only in part, the Company shall, at the time of delivery of said
certificate or certificates, deliver to such holder a new Warrant evidencing the rights of such holder to purchase the remaining Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant, or, at the request of such holder, appropriate notation may be made on this Warrant and same returned to such holder. The Company 





 




shall pay all expenses, taxes and other charges payable in connection with the preparation, execution and delivery of share certificates under this Section, except that, if such share certificates
are requested to be registered in a name or names other than the name of the holder of this Warrant, funds sufficient to pay all stock transfer taxes which shall be payable upon the execution and
delivery of such share certificates shall be paid by the holder hereof at the time of delivering the notice of exercise mentioned above. 



        The
Company represents, warrants and agrees that it shall at all times prior to the exercise of this Warrant reserve sufficient shares of Common Stock for issuance upon the exercise
hereof, and all Warrant Shares issuable upon any exercise of this Warrant in accordance herewith shall be validly authorized and issued, fully paid and nonassessable. 


        This
Warrant shall not entitle the holder hereof to any of the rights of a stockholder of the Company prior to exercise in the manner herein provided. 


        (b)  Notwithstanding
anything in subsection (a) to the contrary, the holder of this Warrant may elect to exercise this Warrant in part (but not for less than 1,000
Warrant Shares) or in whole, at any time on or after the Initial Exercise Date and on or before the Expiration Date, by the surrender of this Warrant (with the cashless exercise form at the end hereof
duly executed) (a "Cashless Exercise") at the address set forth in subsection 6(i) hereof. Such presentation and surrender shall be deemed a
waiver of the holder's obligation to pay the Purchase Price, or the proportionate part thereof if this Warrant is exercised in part. In the event of a Cashless Exercise, the Holder shall exchange its
Warrant for that number of Warrant Shares or Warrant Securities, as the case may be, subject to such Cashless Exercise multiplied by a fraction, the numerator of which shall be the difference between
the then Current Market Price per share of the Common Stock and the per share Purchase Price, and the denominator of which shall be the then Current Market Price per share of the Common Stock. For
purposes of any computation under this subsection, the then Current Market Price shall be based on the trading day prior to the Cashless Exercise. "Current Market
Price" shall be deemed to be the last sale price of the Common Stock on the trading day prior to such date or, in case no such reported sales take place on such day, the
average of the last reported bid and asked prices of the Common Stock on such day, in either case on the principal national securities exchange on which the Common Stock is admitted to trading or
listed, or if not listed or admitted to trading on any such exchange, the representative closing bid price of the Common Stock as reported by the American Stock Exchange
("AMEX"), or other similar organization if AMEX is no longer reporting such information, or, if the Common Stock is not reported on AMEX, the high per
share bid price for the Common Stock in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or if not so available, the fair
market value of the Common Stock as determined in good faith by the Board of Directors, subject to the right of the holder to contest and appoint an appraiser to make such determination. 


SECTION 2. Transfer, Division and Combination.  


        The Company shall maintain at its principal executive office a register for the registration of, and registration of transfers of, the Warrants. The name and
address of each holder of one or more Warrants, each transfer thereof and the name and address of each transferee of one or more Warrants shall be registered in such register. Prior to due presentment
for registration of transfer, the person in whose name any Warrants shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not
be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Warrant promptly upon request therefor, a complete and correct copy of the names and addresses of all
registered holders of Warrants. 


        Subject
to the provisions of Section 3, upon surrender of any Warrant at the principal executive office of the Company for registration of transfer or exchange (and in the case of
a surrender for 


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registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Warrant or his attorney duly authorized in writing and
accompanied by the address for notices of each transferee of such Warrant or part thereof), the Company shall execute and deliver, at the Company's expense, one or more new Warrants (as requested by
the holder thereof) in exchange therefor, exercisable for an aggregate number of Warrant Shares equal to the number of shares for which the surrendered Warrant is exercisable and issued to
such person or persons as such holder may request, which Warrant or Warrants shall in all other respects be identical with this Warrant. 



        Upon
receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Warrant, and (a) in the case of
loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Warrant is, or is a nominee for, an original holder, such person's own unsecured agreement
of indemnity shall be deemed to be satisfactory), or (b) in the case of mutilation, upon surrender and cancellation thereof, the Company at its own expense shall execute and deliver, in lieu
thereof, a new Warrant identical in all respects to such lost, stolen, destroyed or mutilated Warrant. 


SECTION 3. Compliance with Securities Act; Restrictions on Transfer and Sale.  


        (a)  Each
certificate for Warrant Shares (or other Warrant Securities) initially issued upon the exercise of this Warrant and each certificate for Warrant Shares (or other
Warrant Securities) issued to subsequent transferees of any such certificate shall (unless otherwise permitted by this Section 3) be stamped or otherwise imprinted with legend in substantially
the following form: 


        "THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE. SUCH
SECURITIES MAY NOT BE SOLD OR OTHERWISE DISPOSED OF UNLESS PURSUANT TO A REGISTERED OFFERING OR BY TRANSFER EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS." 


        (b)  The
holder understands that Warrant Shares (or other Warrant Securities) which may be acquired by it upon exercise of this Warrant shall be entitled to certain
registration rights provided for in the Subscription Agreements providing the issuance of Common Stock Units of the Company in the private placement of such Units completed as of the Initial Exercise
Date. 


SECTION 4. Adjustment of Purchase Price.  


        (a)  The
Purchase Price and the number of Warrant Shares and the number or amount of any other securities and property as hereinafter provided for which this Warrant may be
exercisable shall be subject to adjustment from time to time effective upon each occurrence of any of the following events. 



        (i)    If
the Company shall declare or pay any dividend with respect to its Common Stock payable in shares of Common Stock, subdivide the outstanding Common Stock into a
greater number of shares of Common Stock, or reduce the number of shares of Common Stock outstanding (by stock split, reverse stock split, reclassification or otherwise than by repurchase of its
Common Stock) (any of such events being hereinafter called a "Stock Split"), the Purchase Price and number of Warrant Shares issuable upon exercise of
this Warrant shall be appropriately adjusted so as to entitle the holder hereof to receive upon exercise of this Warrant, for the same aggregate consideration provided herein, the same number of
shares of Common Stock (plus cash in lieu of fractional shares) as the holder would have received as a result of such Stock Split had such holder exercised this Warrant in full immediately prior to
such Stock Split. 



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        (ii)  If
the Company shall merge or consolidate with or into one or more corporations or partnerships and the Company is the sole surviving corporation, or the Company shall
adopt a plan of recapitalization or reorganization in which the Common Stock is exchanged for or changed into another class of stock or other security or property of the Company, the holder of this
Warrant shall, for the same aggregate consideration provided herein, be entitled upon exercise of this Warrant to receive in lieu of the number of shares of Common Stock as to which this Warrant would
otherwise be exercisable, the number of shares of Common Stock or other securities (plus cash in lieu of fractional shares) or property to which such holder would have been entitled pursuant to the
terms of the agreement or plan of merger, consolidation, recapitalization or reorganization had such holder exercised this Warrant in full immediately prior to such merger, consolidation,
recapitalization or reorganization. 


        (iii)  If
the Company is merged or consolidated with or into one or more corporations or partnerships under circumstances in which the Company is not the sole surviving
corporation, or if the Company sells or otherwise disposes of substantially all its assets, and in connection with any such merger, consolidation or sale the holders of Common Stock receive cash,
stock or other securities convertible into equity of the surviving or acquiring corporations or entities, or other securities or property after the effective date of such merger, consolidation or
sale, as the case may be, the holder of this Warrant shall, for the same aggregate consideration provided herein, be entitled upon exercise of this Warrant to receive, in lieu of the shares of Common
Stock as to which this Warrant would otherwise be exercisable, shares of such stock or other securities (plus cash in lieu of fractional shares), cash or property as the holder of this Warrant would
have received pursuant to the terms of the merger, consolidation or sale had such holder exercised this Warrant in full immediately prior to such merger, consolidation or sale. In the event of any
consolidation, merger or sale as described in this Section 4(a)(iii), provision shall be made in connection therewith for the surviving or acquiring corporations or partnerships to assume all
obligations and duties of the Company hereunder or to issue substitute warrants in lieu of this Warrant with all such changes and adjustments in the number or kind of shares of stock or securities or
property thereafter subject to this Warrant or in the Purchase Price as shall be required in connection with this Section 4(a)(iii). 


        (iv)  If
the Company (other than in connection with a sale described in Section 4(a)(iii)) proposes to liquidate and dissolve, the Company shall give notice thereof as
provided in Section 5(b) hereof and shall permit the holder of this Warrant to exercise any unexercised portion hereof at any time within the 10 day period following delivery of such
notice, if such holder should elect to do so, and participate as a stockholder of the Company in connection with such dissolution. 




        (b)  Whenever
any adjustment is made as provided in any provision of this Section 4: 



        (i)    the
Company shall compute the adjustments in accordance with this Section 4 and shall prepare a certificate signed by an officer of the Company setting forth the
adjusted number of shares or other securities or property and Purchase Price, as applicable, and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall
forthwith be filed with the Company or its designee; and 


        (ii)  a
notice setting forth the adjusted number of shares or other securities or property and the Purchase Price, as applicable, shall forthwith be required, and as soon as
practicable after it is prepared, such notice shall be delivered by the Company to the holder of record of each Warrant. 




        (c)  If
at any time, as a result of any adjustment made pursuant to this Section 4, the holder of this Warrant shall become entitled, upon exercise hereof, to receive
any shares other than shares of Common Stock or to receive any other securities, the number of such other shares or securities so receivable upon exercise of this Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained in this Section 4 with respect to the Common Stock. 


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SECTION 5. Special Agreements of the Company.  



        (a)  The
Company covenants and agrees that it will reserve and set apart and have at all times a number of shares of authorized but unissued Common Stock (and, if applicable,
other Warrant Securities) then deliverable upon the exercise of the Warrants or any other rights or privileges provided for therein sufficient to enable it at any time to fulfill all its obligations
thereunder; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of this
Warrant at the Purchase Price then in effect, the Company will take such corporate action as may, in the reasonable opinion of its counsel, be necessary to increase its authorized but unissued shares
of Common Stock (and, if applicable, other Warrant Securities) to such number of shares as shall be sufficient for such purposes. 


        (b)  In
case the Company proposes 



        (i)    to
pay any dividend upon the Common Stock or make any distribution or offer any subscription or other rights to the holders of Common Stock, or 


        (ii)  to
effect any capital reorganization or reclassification of capital stock of the Company, or 


        (iii)  to
effect the consolidation, merger, sale of all or substantially all of the assets, liquidation, dissolution or winding up of the Company, then the Company shall
cause notice of any such intended action to be given to each holder of the Warrants not less than 15 nor more than 60 days prior to the date on which the transfer books of the Company shall
close or a record be taken for such dividend or distribution, or the date when such capital reorganization, reclassification, consolidation, merger, sale, liquidation, dissolution or winding up shall
be effected, or the date of such other event, as the case may be. 




SECTION 6. Notices.  


        Any notice or other document required or permitted to be given or delivered to holders of Warrants and holders of Common Stock (or other Warrant Securities) shall
be in writing and sent (a) by fax if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered
or certified mail with return receipt requested (postage prepaid) or (c) by a recognized overnight delivery service (with charges prepaid). 



        (i)    if
to the Company, at DepoMed, Inc., 1360 O'Brien Drive, Menlo Park, California 94025, Fax No.: (650) 462-9991 Attention: Chief Financial
Officer, or such other address as it shall have specified to the holders of Warrants in writing, with a copy (which shall not constitute notice) to Heller Ehrman White & McAuliffe llp, 4350 La
Jolla Drive, 7th Floor, San Diego, California 92122-1246, Fax. No. (858) 450-8499, Attn: Stephen C. Ferruolo; 



        (ii)  if
to a holder, at its address set forth below, or such other address as it shall have specified to the Company in writing. 




        Notices
given under this Section 6 shall be deemed given only when actually received. 


SECTION 7. Amendment.  


        This Warrant may not be amended, modified or otherwise altered in any respect except by the written consent of the registered holder of this Warrant and the
Company. 


SECTION 8. Successors and Assigns.  


        This Warrant shall be binding upon and inure to the benefit of the Company and the holder of this Warrant and their respective successors and permitted assigns. 


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SECTION 9. Governing Law.  


        This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without reference to the conflicts of law principles
thereof; provided, however, that this Warrant shall be governed by and construed under the General Corporation Law of California as to matters relating to the issuance or purchase of stock. 


[signature page follows]


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        IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed in its name by its duly authorized officers and accepted by the holder of this Warrant this 22nd day of
March, 2002. 



	
ATTEST:	
 	

DepoMed, Inc.
	

By:	

/s/  JOHN W. FARA      
	
 	

By:	

/s/  JOHN HAMILTON      

	 	Name: John W. Fara	 	 	Name: John Hamilton
	 	Title: President and CEO	 	 	Title: Vice President of Finance and Chief Financial Officer





Address
for Notices: 


Fahnestock
& Co. Inc.

125 Broad Street, 16th Floor

New York, NY 10004 


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SUBSCRIPTION    
  


        The undersigned,                        , pursuant to the
provisions of the foregoing Warrant, hereby agrees to subscribe for and purchase                        shares of the
Common Stock, no par value, of DepoMed, Inc. covered by said Warrant, and makes payment therefor in full at the price per share provided by said Warrant. 



	

Dated:	

	
 	

Signature:	







	

Signature Guarantee:	

	
 	

Address:	


	

 	

 	
 	


	

 	

 	
 	







	

 	
 	

Social Security No.	









 
 

CASHLESS EXERCISE    
  


        The undersigned                        , pursuant to the
provisions of the foregoing Warrant, hereby elects to exchange its Warrant for                        shares of Common
Stock, no par value, of DepoMed, Inc. pursuant to the Cashless Exercise provisions of the Warrant. 



	

Dated:	

	
 	

Signature:	







	

Signature Guarantee:	

	
 	

Address:	


	

 	

 	
 	


	

 	

 	
 	







	

 	
 	

Social Security No.	









 
 

ASSIGNMENT    
  


        FOR VALUE RECEIVED                        hereby sells, assigns
and transfers unto                        
(SS#                        ) the foregoing Warrant and all rights evidenced
thereby, and does irrevocably constitute and appoint                        , attorney, to transfer said Warrant on the books of
DepoMed, Inc. 



	

Dated:	

	
 	

Signature:	







	

Signature Guarantee:	

	
 	

Address:	


	

 	

 	
 	


	

 	

 	
 	









 
 
 

PARTIAL ASSIGNMENT    
  


        FOR VALUE RECEIVED                        hereby assigns and
transfers unto                        
(SS#                        ) the right to purchase            shares
of the
Common Stock, no par value, of DepoMed, Inc. covered by the foregoing Warrant, and a proportionate part of said Warrant and the rights evidenced thereby, and does irrevocably constitute and
appoint                        , attorney, to transfer that part of said Warrant on the books of DepoMed, Inc. 



	

Dated:	

	
 	

Signature:	







	

Signature Guarantee:	

	
 	

Address:	


	

 	

 	
 	


	

 	

 	
 	






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DepoMed, Inc. WARRANT


SUBSCRIPTION

CASHLESS EXERCISE

ASSIGNMENT

PARTIAL ASSIGNMENT