Exhibit
10.5


SECOND LEASE EXTENSION AGREEMENT


Building #6

1360 O’Brien Drive

Menlo Park, California 94025


THIS
SECOND LEASE EXTENSION AGREEMENT (this “Agreement”) is made and entered into on
June 23, 2006 by and between MENLO BUSINESS PARK, LLC, a California limited
liability company (“Lessor”), and DEPOMED, INC., a California corporation (“Lessee”).


RECITALS


A.            Lessor and Lessee entered into a
Lease dated February 4, 2000 of the premises referred to as Building #6 located
at 1360 O’Brien Drive, Menlo Park, California 94025, more particularly
described on Exhibit “A” attached to the Lease and incorporated by reference
herein (the “Premises”).  The Premises
contain approximately 20,624 rentable square feet of space.  Lessor and Lessee entered into a Lease Extension
Agreement on April 30, 2003 (the “First Lease Extension Agreement”) extending
the expiration date of the initial term of the Lease from March 14, 2005 to
April 30, 2008.  The Lease dated February
4, 2000, as amended by the First Lease Extension Agreement, is hereafter
referred to collectively as the “Lease.”


B.            Lessor and Lessee wish to extend
further the expiration date of the initial term as previously extended by the
First Lease Extension Agreement, subject to the terms and conditions set forth
herein.


AGREEMENT


NOW THEREFORE, in
consideration of the mutual covenants contained herein, the parties agree as
follows:


1.             Defined Terms.  Terms defined in the Lease and used in this
Agreement shall have the meaning ascribed to them in the Lease.


2.             Extension of Initial Term.


(a)           The initial term of the Lease is hereby extended for a
period of fourteen (14) calendar months commencing on May 1, 2008 and ending on
June 30, 2009 (the “Second Extension Term”). 
The Second Extension Term shall be upon all of the same terms and
conditions of the Lease, except that the Monthly Base Rent payable by 









 



Lessee to Lessor during the
Second Extension Term shall be as set forth in Paragraph 3 hereof.


(b)           The option to extend provided for in Paragraph 3 of the
Lease shall be for a term of sixty (60) calendar months immediately following
the expiration of the Second Extension Term and shall otherwise be upon the
same terms and conditions as set forth in Paragraph 3 of the Lease.


3.             Monthly Base Rent.  Lessee shall pay to Lessor Monthly Base Rent
during the Second Extension Term, in monthly installments in advance on a
triple net basis in lawful money of the United States, as follows:


(a)           Commencing on May 1, 2008 and continuing through April 30,
2009, the sum of Fifty-four Thousand Six Hundred Fifty-three and Sixty
Hundredths Dollars ($54,653.60) per month ($2.65/square foot/NNN).


(b)           Commencing on May 1, 2009 (the “Rental Adjustment Date”),
the Monthly Base Rent shall be adjusted to reflect any increase in the cost of living.  The adjustment shall be calculated upon the
basis of the United States Department of Labor, Bureau of Labor Statistics
Consumer Price Index, all items,  for all
Urban Consumers - San Francisco-Oakland-San Jose (1982-84=100), hereafter
referred to as the “Index.”  The Index
for said subgroup published most recently as of the end of the calendar month
immediately preceding the month in which the commencement date of the Second
Extension Term occurs shall be considered the “base Index.”


(c)           The
Monthly Base Rent shall be adjusted as of the Rental Adjustment Date to an
amount equal to the product obtained by multiplying Fifty-four Thousand Six Hundred Fifty-three
and Sixty Hundredths Dollars ($54,653.60) (the Monthly Base Rent for the Premises
commencing on May 1, 2008 referred to in Paragraph 3(a) above), by a fraction,
the numerator of which is the Index most recently published as of the end of
the calendar  month immediately preceding
the Rental Adjustment Date and the denominator of which is the base Index; provided
that in no event shall the Monthly Base Rent be increased on the Rental
Adjustment Date to an amount less than three percent (3%) per annum or more
than six percent (6%) per annum of the Monthly Base Rent payable immediately
before the Rental Adjustment Date.  The
Monthly Base Rent as so adjusted shall continue through June 30, 2009, the
expiration date of the Second Extension Term.


(d)           When
the new Monthly Base Rent is determined for the Rental Adjustment Date, Lessor
shall give Lessee written notice of the amount of the new Monthly Base Rent and
how the new Monthly Base Rent figure was computed in accordance with
subparagraphs 3(b) and 3(c) above. 
Lessee shall pay to Lessor retroactively any unpaid increase in Monthly
Base Rent due from and after the Rental 



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Adjustment Date.  If the Index does not exist on the Rental
Adjustment Date in the same format as referred to in subparagraph 3(b) above,
Lessor shall substitute in lieu thereof an index reasonably comparable to the Index
referred to above which is acceptable to Lessee and which is then published by
the Bureau of Labor Statistics, or successor or similar governmental agency, or
if no governmental agency then publishes an index, Lessor shall substitute
therefor any index commonly accepted which is published by a reputable private
organization.


(e)           Monthly
Base Rent for any partial month shall be prorated on the basis of the number of
calendar days in such month.


4.             Additional Rent; Operating
Expenses and Taxes.  In addition to
the Monthly Base Rent payable by Lessee pursuant to Paragraph 3 above, Lessee
shall pay to Lessor during the Second Extension Term, as Additional Rent,
Operating Expenses and Taxes pursuant to Paragraph 5 of the Lease.


5.             Condition of the Premises.  Lessee is currently in possession of the
Premises and is conducting business thereon pursuant to the Lease.  Lessee agrees to accept the Premises in its “as
is” condition at the commencement of the Second Extension Term, subject to the
performance by Lessor of Lessor’s obligations under Paragraph 14(a) of the
Lease.


6.             Security
Deposit.  Lessor acknowledges that
Lessor has received from Lessee and is currently holding the sum of One Hundred Forty-five Thousand Four
Hundred and Forty Hundredths Dollars
($145,400.40) in cash (the “Security Deposit”), as security for Lessee’s faithful performance
of Lessee’s obligations under the Lease. 
Lessor shall continue to hold the Security Deposit during the remainder
of the initial term and during the Second Extension Term pursuant to Paragraph
7 of the Lease.


Subject to the satisfaction
of the conditions set forth in Paragraph 6(b) of the First Lease Extension
Agreement, Lessor shall refund to Lessee Forty-eight Thousand Four Hundred
Sixty-six Dollars ($48,466.00) of the Security Deposit on March 15, 2007.


7.             Real Estate
Brokers.  Lessor shall pay a leasing commission to Tarlton
Properties, Inc., who has acted as exclusive leasing agent for Lessor in
connection with this Agreement, pursuant to a separate agreement between Lessor
and said broker.  Lessor shall also pay
leasing commissions to NAI BT Commercial and Technology Commercial, Inc., who
have acted as leasing agents for Lessee in connection with this Agreement,
pursuant to an agreement between Lessor and said brokers.  Each party represents and warrants to the
other party that it has not had any dealings with any real estate broker,
finder, or other person with respect to this Agreement other than the above
named brokers.  Each party shall hold
harmless the other party from all damages, expenses, and



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liabilities resulting
from any claims that may be asserted against the other party by any broker,
finder, or other person with whom the other party has or purportedly has dealt,
other than the above named brokers.


8.             Notices.  Paragraph 24, Notices, of the Lease is
amended to read as follows:


“24.         Notices.  All notices, statements, demands, requests,
or consents given hereunder by either party to the other shall be in writing
and shall be personally delivered or sent by United States mail, registered or
certified, return receipt requested, postage prepaid, and addressed to the
parties as follows:


	
  Lessor:

  	
  Menlo Business Park, LLC

  
	
   

  	
  c/o Tarlton
  Properties, Inc.

  
	
   

  	
  955 Alma Street

  
	
   

  	
  Palo Alto, California
  94301

  
	
   

  	
   

  
	
   

  	
  Attention: John C.
  Tarlton

  
	
   

  	
  Telephone: (650)
  330-3600

  
	
   

  	
   

  
	
  Lessee:

  	
  DepoMed, Inc.

  
	
   

  	
  1330 O’Brien Drive

  
	
   

  	
  Menlo Park,
  California 94025

  
	
   

  	
   

  
	
   

  	
  Attention:

  
	
   

  	
  Telephone:

  



 


All
such notices or other communications given hereunder shall be addressed to the
parties to such other address as either party may have furnished to the other
as a place for the service of notice. 
Notices shall be deemed given upon receipt or attempted delivery where
delivery is not accepted.”


9.             Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.



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10.           Continuing Effect.  The parties acknowledge that the Lease
remains in full force and effect as amended hereby, and with the initial term
further extended as provided herein.


IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date set forth above.


	
  

  	
  “Lessor”

  
	
   

  	
   

  
	
   

  	
  MENLO BUSINESS PARK, LLC

  
	
   

  	
  a California limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. O. Oltmans, II

  
	
   

  	
   

  	
  J.
  O. Oltmans, II, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James R. Swartz

  
	
   

  	
   

  	
  James R. Swartz, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “Lessee”

  
	
   

  	
   

  
	
   

  	
  DEPOMED, INC.,

  
	
   

  	
  a California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John F. Hamilton

  
	
   

  	
   

  	
  John F. Hamilton, Vice President and

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew M. Gosling

  
	
   

  	
   

  	
  Matthew M. Gosling, Vice President and

  General Counsel

  
				



 



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