Exhibit
10.2


October 10, 2007


John F. Hamilton


540 Liberty Street


San Francisco, CA  94114


Dear John:


This
letter will confirm that you have resigned your employment with Depomed, Inc. (“Depomed”)
effective at 5:00 p.m., local time, on October 12, 2007 (the “Termination
Date”).  Please find enclosed your final paycheck, including all accrued
wages (including accrued, unused vacation) through that date.


Separate from the
above-referenced payment, if you choose to sign this letter agreement and
release by October 31, 2007 (at least 21 days from date of letter), Depomed
will provide you with the following:


(a).                               A payment of $190,000, less applicable
withholdings.  This payment will be made
to you within 10 business days of Depomed’s receipt of a fully-executed original
of this letter, provided that you have not revoked your agreement.  Other than the payments described in this
letter, you agree that Depomed has already provided you with all other wages,
payments and benefits, of any kind, owed to you.


(b).                              Through October 10, 2008, provided that you
are eligible thereunder, Depomed shall reimburse you for 125% of Depomed’s portion
of the health insurance benefits provided to you immediately prior to the
Termination Date pursuant to the terms of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”).


(c).                               In addition, as consideration for your
agreement to irrevocably cancel and not exercise all options to purchase shares
of Depomed common stock held by you, including without limitation those set
forth on Exhibit A hereto, Depomed will issue to you, pursuant to its
2004 Equity Incentive Plan (the “Plan”), 100,000 fully-vested shares of
Depomed common stock (the “Shares”). 
The Shares will be delivered to you within 10 business days of Depomed’s
receipt of a fully-executed original of this letter, provided that you have not
revoked your agreement, and subject to your execution and delivery of a Stock
Purchase Agreement in substantially the form of Exhibit B hereto.


In consideration for Depomed’s
above commitments set forth in subparagraphs (a), (b) and (c) above, you agree,
by signing below, to release and extinguish all claims or rights you may have
against Depomed and its past, present and future officers, directors,
shareholders, agents, insurers, employees, successors and assigns (collectively
“Releasees”), for any claim, charge, loss or injury of any kind based on
any act or omission occurring prior to the date you sign below, including but
not limited to those which in any way relate to or arise out of your 













employment, termination of
employment or lack of employment with Depomed, or which arise under Title VII
of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, and
the California Fair Employment and Housing Act or any applicable local, state
or federal law.  You acknowledge that you
have been paid all wages, salary and vacation pay that you may be owed, and
this release is not provided as consideration for any such payments.  This agreement and release extinguishes not
only all claims and charges which you may have made, but also all those you
could raise or could have raised against Depomed anywhere whether  known
to  you  or  not, under the terms of Section 1542 of
the California Civil Code and any similar law of any state or territory of the
United States.


Depomed hereby releases you
from any claim, charge, loss or injury of any kind that Depomed ever had, now
has or may claim to have had against you including, but not limited to, claims
relating to any oral or written employment agreement between Depomed and you,
to any services performed by you for Depomed, or to your employment with
Depomed.


Section 1542 of the
California Civil Code provides as follows:


“A general release does not extend to claims which
the creditor does not know or suspect to exist in his or her favor at the time
of executing the release, which if known by him or her must have materially
affected his or her settlement with the debtor.”


This agreement and release
does not extinguish those rights which cannot be released as a matter of law,
including, but not limited to, claims under Division 3, Article 2 of the
California Labor Code (which includes indemnification rights).


You agree that you have not
filed or otherwise pursued any charges, complaints or claims of any nature
which are in any way pending against the Releasees with any court with respect
to any matter covered by this agreement and release and that, to the extent
permitted by law, you will not do so in the future.  You further agree that, with respect to any
charge, complaint or claim you may have filed or will file in the future with
any state or federal agency against the Releasees, you will forgo any monetary
damages, including but not limited to compensatory damages, punitive damages, and
attorneys’ fees, to which you may otherwise be entitled in connection with said
charge, complaint or claim.  Nothing in
this agreement and release shall limit your right to file a charge, complaint
or claim with any state or federal agency or to participate or cooperate in
such matters.


You agree that you will not
disclose to anyone the terms of this agreement and release without Depomed’s
prior written consent (except to the extent that the terms of this agreement
are publicly disclosed by Depomed), unless required to do so by law.  Notwithstanding the preceding sentence, it is
understood that you may disclose this agreement and its terms to your spouse,
attorneys and tax advisors.  If any
lawsuit is brought relating to this agreement and release or any breach of it,
the prevailing party will be entitled to reasonable attorneys’ fees and its
other legal remedies.  You further agree
that you will not disparage Releasees or their products, services, agents,
representatives, directors, officers, shareholders, attorneys, employees, 



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vendors, affiliates,
successors or assigns, or any person acting by, through, under or in concert
with any of them, with any written or oral statement.  Neither Depomed nor any of its directors or
executive officers will disparage you with any written or oral statement except
as may be required by law or by any court or governmental entity.


You understand that you have
been given a period of at least 21 days within which to consider this agreement
and release and are advised, if you wish, to consult with an attorney prior to
signing it.  This agreement and release
does not become effective until 7 days after you sign it, and you understand
that you may revoke it at any time within 7 days after you sign it by
delivering a written revocation to Depomed, addressed to Kera Alexander, Vice
President, Administration and Human Resources, within that 7-day period.


Both Depomed and you are
voluntarily agreeing to this agreement. 
It is agreed that Depomed’s payment is not an admission of any liability
or obligation.  This letter agreement and
release is a complete and integrated agreement, may only be amended in writing,
and supersedes any prior express or implied agreements between you and Depomed,
except for any confidentiality and proprietary rights agreements,  which remain in full force and effect to the extent not inconsistent
with this letter release.


Please express your
agreement to the terms of this letter agreement and release by signing and
dating this letter below and returning the original to me.  John, we wish you all the best in your future
endeavors.


	
   

  	
   

  	
  Sincerely,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Carl Pelzel

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Carl Pelzel

  
	
   

  	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  I agree to the
  above.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ John F.
  Hamilton

  	
   

  	
   

  	
  October 10, 2007

  
	
  John F. Hamilton

  	
   

  	
  Date

  
					



 



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