Exhibit 10.6


FORM OF
INDEMNIFICATION AGREEMENT


THIS INDEMNIFICATION
AGREEMENT (the “Agreement”) is entered into as of this           
day of                       ,
200  , by and between Depomed, Inc., a California corporation (the “Company”),
and                                     ,
an individual (“Indemnitee”).


BACKGROUND


A.            Indemnitee is a member of the Board of Directors or an
officer of the Company and, in that capacity, performs a valuable service for
the Company.  For a variety of reasons,
including the frequency, magnitude and often baseless nature of claims and
actions brought against corporate directors and officers generally, it is
difficult for corporations to attract and retain highly competent persons as
directors and officers.  In addition, there
exists uncertainty, both as to matters of “substance” and “procedure,” about
the protection against such claims provided by statutory, charter and bylaw
provisions and through “director and officer” insurance.


B.            The Company’s Bylaws also provide for indemnification of,
and advancement of expenses to, the directors and officers of the Company to
the fullest extent permissible under California law, and permit, by their
nonexclusive nature, the establishment of indemnification agreements between
the Company and its directors and officers.


C.            In order to induce Indemnitee to continue to serve as a
member of the Board of Directors or as an officer of the Company and to clarify
the specific procedure for addressing indemnification matters if and as they
arise, the Company and the Indemnitee hereby agree to contractual
indemnification arrangements on the terms set forth in this Agreement.


THE PARTIES AGREE AS
FOLLOWS:


1.             Definitions.  For purposes of this Agreement, the following
terms have the following meanings:


(a)           “Disinterested Director” means
a director of the Company who neither is nor was a party to the Proceeding in
respect of which indemnification is sought under this Agreement or otherwise.


(b)           “Expenses”
includes any and all direct and indirect costs (including, without limitation,
attorneys’ fees and disbursements, court costs, fees and expenses of witnesses,
experts, professional advisers and private investigators, arbitration expenses,
costs of attachment, appeal or similar bonds, travel expenses, duplicating,
printing and binding costs, telephone charges, postage, delivery service fees,
and any and all other disbursements or out-of-pocket expenses) actually and
reasonably incurred by or on behalf of Indemnitee in connection with either (i)
the investigation, defense, settlement or appeal of, or being a witness or
participant in, a Proceeding (including preparing for any of the foregoing) or
(ii) the establishment or enforcement of any right to indemnification under
this Agreement or otherwise or any right to recovery under any liability
insurance policy maintained by the Company; provided, however, 









 



that “Expenses” shall not include any
judgments, fines or amounts paid in settlement.


(c)           “Independent
Counsel” means a law firm or attorney that neither is presently nor in the
past two years has been retained to represent: 
(i) the Company or Indemnitee in any matter material to the Company or
Indemnitee, or (ii) any other party to the Proceeding in respect of which
indemnification is sought under this Agreement or otherwise.  In addition, the term “Independent Counsel”
does not include any law firm or attorney who, under the applicable standards
of professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee’s right to indemnification under this Agreement or otherwise.


(d)           “Liabilities”
means liabilities and losses of any type whatsoever, including, without
limitation, judgments, fines, excise taxes and penalties (including ERISA
excise taxes and penalties) and amounts paid in settlement (including all
interest, assessments and other charges paid or payable in connection with or
in respect of such liabilities and losses), actually incurred by Indemnitee in connection
with or as a result of a Proceeding.


(e)           “Proceeding”
means any threatened, pending or completed action, suit or proceeding
(including any inquiry, hearing, arbitration proceeding or alternative dispute
resolution mechanism), whether civil, criminal, administrative or investigative
(including any action by or in the right of the Company), to which Indemnitee
is or was a party, witness or other participant, or is threatened to be made a
party, witness or other participant, by reason of the fact that Indemnitee is
or was a director or officer of the Company, or by reason of anything done or
not done by Indemnitee in that capacity or in any other capacity while serving
as a director or officer of the Company, whether before or after the date of
this Agreement. “Proceeding” shall not include any Proceeding initiated
by Indemnitee (other than as contemplated by Sections 3(d) or 6 of this
Agreement) unless such Proceeding was authorized or consented to by the Board
of Directors of the Company.


2.             Agreement to
Indemnify.  Subject to the terms and
conditions of, and in accordance with the procedures set forth in, this
Agreement, the Company shall hold Indemnitee harmless and indemnify Indemnitee
(and Indemnitee’s spouse as provided below), to the fullest extent permitted by
the provisions of California law and other applicable law, from and against all
Expenses and Liabilities, including, without limitation, Expenses and
Liabilities arising from any Proceeding brought by or in the right of the
Company or its shareholders.  The Company
and Indemnitee intend that this Agreement shall provide for indemnification in
excess of that expressly granted by statute or provided by the Company’s
Articles of Incorporation, Bylaws or by vote of its shareholders.  If, after the date hereof, California law or
any other applicable law is amended to permit or authorize indemnification of,
or advancement of defense expenses to, Indemnitee to a greater extent than is
permitted on the date hereof, references in this Agreement to California law or
any other applicable law shall be deemed to refer to California law or such
applicable law as so amended.


3.             Procedural
Matters.


(a)           Initial Request.  Whenever Indemnitee believes that, in a
specific case, 



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Indemnitee is then entitled to indemnification
under this Agreement or under the Company’s Articles of Incorporation or
Bylaws, California law or otherwise, Indemnitee shall submit a written notice
to the Company requesting an authorization and determination by the Company to
that effect.  The notice shall describe
the matter giving rise to the request and be accompanied by all appropriate
supporting documentation reasonably available to Indemnitee.


(b)           Determination and
Payment.  The Company shall make a
determination about Indemnitee’s entitlement to indemnification in the specific
case no later than 90 days after receipt of Indemnitee’s request.  In making that determination, the person or
persons making the determination shall presume that Indemnitee met any
applicable standard of conduct required for indemnification, unless the person
or persons making the determination shall have reasonably determined, after
consultation with counsel, that Indemnitee did not meet that standard.  The determination shall be made by the Board
of Directors by a majority vote of a quorum consisting of Disinterested
Directors.  If such a quorum is not
obtainable, or, even if obtainable, a quorum of Disinterested Directors so
directs, the determination shall be made by Independent Counsel in a written
opinion obtained at the Company’s expense. 
If the person or persons empowered to make the determination
either:  (i) affirmatively makes a
determination of Indemnitee’s entitlement to indemnification or (ii) fails to
make any determination at all within the 90-day period, indemnification shall
be considered as authorized and proper in the circumstances, and Indemnitee
shall be absolutely entitled to such indemnification, and shall receive payment
as promptly as practicable, in the absence of any misrepresentation of a
material fact by Indemnitee in the request for indemnification, or a specific
determination by a court of competent jurisdiction that all or any part of such
indemnification is prohibited by applicable law.  If the person or persons empowered to make the
determination find that the Indemnitee is not entitled to indemnification, the
Indemnitee shall have the right to apply to a court of competent jurisdiction
for the purpose of enforcing Indemnitee’s right to indemnification pursuant to
this Agreement.  The termination of any
Proceeding by judgment, order, settlement, arbitration award, conviction or
upon a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that Indemnitee did not act in good faith and in a manner which he
reasonably believed to be in the best interests of the Company.


(c)           Advancement of Expenses.  If so requested in a writing by Indemnitee
accompanied by appropriate supporting documentation, the Company shall, within
ten days after receipt of the request, advance funds for the payment of
Expenses, whether that request is made before or after the final disposition of
a Proceeding (including, without limitation, any criminal Proceeding or any
Proceeding brought by or in the right of the Company or its shareholders),
unless there has been a final determination that Indemnitee is not entitled to
indemnification for those Expenses.  If
required by law at the time of the advance, the payment of the advance shall be
conditioned upon the receipt from Indemnitee of an undertaking (which need not
be secured) to repay the advance to the extent that it is ultimately determined
that Indemnitee is not entitled to such indemnification by the Company.  Any dispute concerning the advancement of
Expenses may, at the election of the Indemnitee, be resolved by arbitration
before an arbitrator selected by Indemnitee and approved by the Company.  If the parties cannot agree on a single
arbitrator, then the claim shall be heard by a panel of three arbitrators, with
one selected by Indemnitee, one selected by the Company and one selected
jointly by the foregoing two arbitrators. 
Each of the arbitrators shall be a litigation or corporate attorney with
experience in the field of officer and 



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director indemnification.  The arbitrators shall be selected within
fifteen (15) days after demand for arbitration and shall render a decision
within forty-five (45) days after selection, unless good cause is shown for
requiring a longer decision period.  The
Company shall act in utmost good faith to provide timely information to the
arbitrators and to insure Indemnitee a full opportunity to defend against the
Company’s claim that Indemnitee is not entitled to an advance of Expenses.  The Company shall indemnify Indemnitee
against all Expenses incurred by Indemnitee under the dispute resolutions
proceedings set forth in this Subsection 3(c), unless a court of competent
jurisdiction finds that each of the claims and/or defenses by Indemnitee in the
action or proceeding for which an advance is sought was frivolous or made in
bad faith.


(d)           Enforcement.  If Indemnitee has not received a
determination of entitlement to indemnification or an advance, as the case may
be, within the applicable time periods for such actions specified in this
Agreement, or if it has been determined that Indemnitee substantively would not
be permitted to be indemnified in whole or in part under applicable law,
Indemnitee shall be entitled to commence an action in any court of competent
jurisdiction (including the court in which the Proceeding (as to which
Indemnitee seeks indemnification) is or was pending) (i) in the former case,
seeking enforcement of Indemnitee’s rights under this Agreement or otherwise,
or seeking an initial determination by the court, or (ii) in the latter case,
challenging any such determination or any aspect thereof, including the legal
or factual bases therefor.  The Company
hereby consents to service of process and to appear generally in any such
proceeding.  It shall be a defense to any
such action that applicable law does not permit the Company to indemnify
Indemnitee for the amount claimed.  In
any such action, the Company shall have the burden of proving that
indemnification or advances are not proper in the circumstances of the specific
case.  Neither the failure of the Company
to have made a determination prior to the commencement of such action that
indemnification is proper under the circumstances because Indemnitee has met
the standard of conduct under applicable law, nor an actual determination by
the Company that Indemnitee has not met such standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met that
standard of conduct.  The Company shall
indemnify Indemnitee for Expenses incurred by Indemnitee in connection with the
successful establishment or enforcement, in whole or in part, by Indemnitee of
his right to indemnification or advances.


(e)           Notice by
Indemnitee and Defense of Proceedings. 
Indemnitee shall promptly notify the Company in writing upon being
served with any summons, citation, subpoena, complaint, indictment, information
or other document relating to any matter which may give rise to a claim for
indemnification under this Agreement or otherwise; provided, however, that a
failure of Indemnitee to provide that notice shall relieve the Company from
liability only if and to the extent that the failure materially prejudices the
Company’s ability to adequately defend Indemnitee in the Proceeding.  With respect to any Proceeding as to which Indemnitee
so notifies the Company:


(i)            The Company shall
be entitled to participate at its own expense.


(ii)           Except as otherwise
provided below, the Company, jointly with any other indemnifying party
similarly notified, shall be entitled to assume the defense of such Proceeding,
with counsel reasonably satisfactory to Indemnitee.  After notice from the Company 



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to Indemnitee of the Company’s election to
assume the defense, the Company shall not be liable to Indemnitee under this
Agreement for any Expenses subsequently incurred by Indemnitee, other than as
provided below.  Indemnitee shall have
the right to employ his own counsel in that Proceeding, but the fees and
expenses of such counsel incurred after notice from the Company of its election
so to assume the defense shall be borne by Indemnitee, except to the extent
that (x) the employment of counsel by Indemnitee has been authorized by the
Company, (y) Indemnitee has reasonably concluded that there may be a conflict
of interest between the Company and Indemnitee in the conduct of the defense of
such Proceeding or that counsel selected by the Company may not be adequately
representing Indemnitee, or (z) the Company has not in fact employed counsel to
assume the defense of such Proceeding. 
In those cases, the fees and expenses of Indemnitee’s own counsel shall
be paid by the Company.


(iii)          Neither the Company
nor Indemnitee shall unreasonably withhold its or his consent to any proposed
settlement.  The Company has no
obligation to indemnify and hold Indemnitee harmless under this Agreement for
any amounts paid in settlement of any Proceeding effected without its written
consent.  The Company shall not settle
any Proceeding in any manner which would impose any penalty or limitation on
Indemnitee without Indemnitee’s written consent.


4.             Nonexclusivity.  The indemnification provided by this
Agreement is not exclusive of or inconsistent with any rights to which
Indemnitee may be entitled under the Company’s Articles of Incorporation or
Bylaws, any other agreement, any vote of shareholders or directors, California
law, or otherwise, both as to action in Indemnitee’s official capacity and
otherwise.  If and to the extent that a
change in the California Corporations Code (whether by statute or judicial
decision) permits greater indemnification by agreement than would be afforded
currently under the Company’s Bylaws or under this Agreement, it is the intent
of the parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change.


5.             Partial
Indemnification.  If Indemnitee is
entitled to indemnification by the Company for some or a portion of Expenses or
Liabilities but not for the total amount, the Company shall nevertheless
indemnify Indemnitee for the portion of such Expenses and Liabilities to which
Indemnitee is entitled to be indemnified.


6.             Liability
Insurance.  To the extent the Company
maintains an insurance policy or policies providing directors’ and officers’
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer, as the case may be.  If Indemnitee serves as a fiduciary of any
employee benefit plan of the Company or any of its subsidiary or affiliated
corporations, then to the extent that the Company maintains an insurance policy
or policies providing fiduciaries’ liability insurance, Indemnitee shall be
covered by such policy or policies in accordance with its or their terms, to the
maximum extent of the coverage available for any fiduciary. Upon notice to the
Company, either from Indemnitee or from any other source, of the commencement
or threat of commencement of any Proceeding or matter which may give rise to a
claim for indemnification of Indemnitee and which may be covered by any
insurance policy maintained by the Company, the Company shall promptly give
notice to the insurer in accordance with the procedures prescribed by such
policy and shall thereafter take all necessary 



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or appropriate action to cause such insurer
to pay, to or on behalf of Indemnitee all Liabilities and Expenses payable
under such policy with respect to such Proceeding or matter.  The Company shall indemnify Indemnitee for
Expenses incurred by Indemnitee in connection with any successful action
brought by Indemnitee for recovery under any insurance policy referred to in
this Section 6 and shall advance to Indemnitee the Expenses of such action in
the manner provided in Section 3(c) above.


7.             Other Sources.  Indemnitee shall not be required to exercise
any rights Indemnitee may have against any other parties (for example, under an
insurance policy purchased by Indemnitee, the Company or any other person or
entity) before Indemnitee exercises or enforces Indemnitee’s rights under this
Agreement.  However, to the extent the
Company actually indemnifies Indemnitee or advances Indemnitee funds in respect
of Expenses, the Company shall be entitled to enforce any such rights which Indemnitee
may have against third parties. 
Indemnitee shall assist the Company in enforcing those rights if it pays
Indemnitee’s costs and expenses of doing so. 
If Indemnitee is actually indemnified or advanced Expenses by any such
third party, then, for so long as Indemnitee is not required to disgorge the
amounts so received, to that extent the Company shall be relieved of its
obligation to indemnify Indemnitee or to advance Expenses.


8.             Certain
Relationships.  The obligations and
rights created under this Agreement shall not be affected by any amendment to
the Company’s Articles of Incorporation or Bylaws or any other agreement or
instrument to which Indemnitee is not a party, and shall not diminish any other
rights which Indemnitee now or in the future has against the Company or any other
person or entity.


9.             Severability.  If any provision of this Agreement is
determined to be unenforceable for any reason, it shall be adjusted rather than
voided, if possible, in order to achieve the intent of the Company and
Indemnitee.  In any event, the remaining
provisions of this Agreement shall remain enforceable to the maximum extent
possible.


10.           Contribution.  If the indemnification provided in Section 2
of this Agreement is unavailable, then, in respect of any Proceeding in which
the Company is jointly liable with Indemnitee (or would be if joined in the
Proceeding), the Company shall contribute to the amount of Expenses and
Liabilities as appropriate to reflect:  
(i) the relative benefits received by the Company, on the one hand, and
Indemnitee, on the other hand, from the transaction from which the Proceeding
arose, and (ii) the relative fault of the Company, on the one hand, and of
Indemnitee, on the other, in connection with the events which resulted in such
Expenses and Liabilities, as well as any other relevant equitable
considerations.  The relative fault of
the Company, on the one hand, and of Indemnitee, on the other, shall be
determined by reference to, among other things, the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent the
circumstances resulting in such Expenses and Liabilities.  The Company agrees that it would not be just
and equitable if contribution pursuant to this Section 10 were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations described in this Section 10.


11.           Governing Law.  This Agreement shall be governed by and its
provisions 



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construed in accordance with the laws of the
State of California as applied to contracts between California residents
entered into and to be performed entirely within California.


12.           Notices.  All notices and other communications under
this Agreement shall be in writing and shall be given by personal or courier
delivery, confirmed facsimile or telex transmission or first class mail, and
shall be deemed to have been duly given upon receipt if personally delivered or
delivered by courier, on the date of transmission if transmitted by facsimile
or telex, or three days after mailing if mailed, to the addresses set forth
below:


	
  

  	
  If to
  Indemnitee:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attn:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  If to the
  Company:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Depomed, Inc.

  	
   

  
	
   

  	
  1360 O’Brien
  Drive

  	
   

  
	
   

  	
  Menlo Park, CA
  94025

  	
   

  
	
   

  	
  Facsimile No.:
  (650) 462-9991

  	
   

  
	
   

  	
  Attn: President

  	
   

  
				



 


or to such other address as
either party may designate by notice to the other from time to time.


13.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.


14.           Successors and Assigns.  This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee’s spouse, estate, heirs, executors, administrators,
personal or legal representatives and assigns. 
The Company shall require any successor corporation (whether by merger,
consolidation, or otherwise) by written agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place.


15.           Amendment and Waiver.  This Agreement may not be amended except by a
writing executed by both the Company and Indemnitee.  No waiver of any provision of this Agreement
shall be effective unless in writing and signed by the party to be charged
therewith.  A waiver of, or a failure to
insist on, complete compliance with any provision of this Agreement shall not
be construed as a waiver of a subsequent or different non-compliance, breach or
default of that or any other provision of this Agreement.


16.           Acknowledgment.  The Company expressly acknowledges that it
has entered into this Agreement and assumed the obligations imposed on the
Company under this Agreement in 



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order to induce Indemnitee to serve or to continue to
serve as a director or officer and acknowledges that Indemnitee is relying on
this Agreement in serving or continuing to serve in such capacity.  The Company further agrees to stipulate in
any court proceeding that the Company is bound by all of the provisions of this
Agreement.


17.           Period of Limitations.  No legal action shall be brought and no cause
of action shall be asserted by or in the right of the Company against
Indemnitee, estate, heirs, executors, administrators or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a
legal action within such two-year period; provided, however, that if any
shorter period of limitations is otherwise applicable to any such cause of
action, such shorter period shall govern.


18.           Duration of Agreement.  This Agreement shall continue in effect for
so long as Indemnitee is subject to any possible Proceeding, regardless of
whether Indemnitee continues to serve as a director or officer.



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IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the date set
forth in its first paragraph.


 


	
  

  	
  DEPOMED, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Indemnitee

  



 



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