Document:

Exhibit 10.1

CONSULTING
AGREEMENT

THIS CONSULTING AGREEMENT
(the “Agreement”) is made and entered into this 24th day of August, 2007, between Depomed, Inc., a
California corporation (the “Company”) and John W. Fara, Ph.D. (“CONSULTANT”).

THE PARTIES AGREE AS FOLLOWS:

1.             Consultancy.  CONSULTANT shall serve as a Consultant to the
Company for a period commencing on the date of this Agreement and concluding on
the date set forth in Schedule A hereto. 
The period during which CONSULTANT shall serve as a Consultant to the
Company pursuant to this Agreement shall constitute the “Consulting Period”.

2.             Duties.  CONSULTANT shall serve as a consultant to the
Company in the activities of the Company set forth in Schedule A, or as
otherwise requested by the chief executive officer of the Company.  In the performance of such duties, CONSULTANT
shall consult with the Company up to the number of hours per month set forth at
Schedule A, which consulting will take place at such places and at such times
as the Company and CONSULTANT mutually agree.

3.             Compensation; Stock Options;
Change in Control.

3.1.          Compensation.  Subject to the provisions of Section 4.3
below, the Company agrees to pay CONSULTANT, and CONSULTANT agrees to accept
for CONSULTANT’s services under this Agreement, consulting fees (the “Consulting
Fees”) as set forth in Schedule A. 
Through December 31, 2008, CONSULTANT will not be entitled to any
additional cash compensation for his service as a member of the Company’s Board
of Directors while he is receiving fees pursuant to this Agreement.

3.2.            Stock
Options.  The parties acknowledge
that, subject to the provisions of Section 4.3 below, any stock options to purchase the common
stock of the Company (“Company Options”) held by CONSULTANT will
continue to vest during the Consulting Period in accordance with the terms of
such Company Options.

3.3.          Change in Control.  In the event that a Change in Control (as
defined below) occurs during the Consulting Period:  (a) 100% of CONSULTANT’s unvested options to
purchase shares shall become immediately vested on the date of such Change in
Control; and (b) CONSULTANT shall receive, on the date the Change in Control
occurs and in lieu of any further monthly payments set forth in Schedule A, a
lump sum payment equal to the remainder of (x) $340,000, minus (y) the sum of
all payments received under this Agreement by CONSULTANT prior to the date of
the Change in Control (if such remainder is a positive number).  For purposes 

of
this Agreement, “Change in Control” shall mean any event so determined
by the Company’s Board of Directors pursuant to Section 10.4 of the
Company’s 2004 Equity Incentive Plan.

3.4.          COBRA.  Through December 31, 2008, the Company shall
continue to pay (or reimburse Consultant for) its portion of the health
insurance benefits provided to CONSULTANT immediately prior to the commencement
of the Consulting Period pursuant to the terms of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended (“COBRA”) or other
applicable law through the earlier of the end of the Consulting Period, or the
date upon which CONSULTANT is no longer eligible for such COBRA or other
benefits under applicable law.

3.5.          Insurance.  Through December 31, 2008, the Company will
reimburse CONSULTANT for premiums paid by CONSULTANT in respect of a life
insurance policy comparable to the life insurance policy provided to CONSULTANT
prior to his retirement from the Company, with a coverage amount of up to
$550,000.

4.             Other Employment.

4.1.          Other
Affiliation.  CONSULTANT represents
that he is not a party to any existing agreement that would prevent him from
entering into this Agreement, and that CONSULTANT is not a party to any
agreement with third parties which may restrict his consulting activities on
behalf of the Company or obligate CONSULTANT to assign inventions. The Company
understands and agrees that during the Consulting Period CONSULTANT may be
retained by other companies, corporations, and/or commercial enterprises which
are not engaged in the design, development, manufacture, or marketing of
products in the area of the Company’s business or field of interest.  CONSULTANT agrees to inform the Company of
any such agreement immediately. 
CONSULTANT agrees to use his best efforts to segregate work done under
this Agreement from all work done at, or for, any such company, corporation,
and/or other commercial enterprise.  In
any dealings with any such company, corporation, and/or other commercial
enterprise, CONSULTANT shall protect and guard the Company Confidential
Information in accordance with the terms of this Agreement.

4.2.          Conflict
of Interest.  CONSULTANT warrants
that he is not obligated under any other consulting, employment, or other
agreement which would affect the Company’s rights or CONSULTANT’s duties under
this Agreement other than those referred to in Section 4.1.

5.             Confidentiality.

5.1.          Protection
of Information and Scientific Publications. 
CONSULTANT shall hold all the Company Confidential Information (as
defined below) in confidence and shall not disclose Confidential Information to
any unauthorized person.  Except as
required in his duties for the Company, CONSULTANT will never directly or
indirectly use, disseminate, disclose, lecture upon, or publish articles concerning,
Confidential Information or remove Confidential Information from the Company’s
premises.

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5.2.          Records.  CONSULTANT agrees to keep separate and
segregated from other work all documents, records, notebooks and correspondence
which directly relate to his work under this Agreement.

5.3.          Company
Property.  All notes, memoranda,
reports, drawings, manuals, materials, files, samples, products, data, and any
papers or records of every kind which are or shall come into CONSULTANT’s
possession at any time during the Consulting Period related to the business of
the Company shall be the sole and exclusive property of the Company, whether or
not such items are Confidential Information. 
This property shall be surrendered to the Company upon termination of
the Consulting Period or upon request of the Company at any time either during
or after the termination of the Consulting Period, and no copies, notes, or
excerpts thereof shall be retained.

5.4.          Information
of Others.  CONSULTANT will safeguard
and keep confidential the proprietary information of customers, vendors,
consultants, and other parties with which the Company does business to the same
extent as if it were Company Confidential Information.  CONSULTANT will not, during his consulting
with the Company or otherwise, use or disclose to the Company any confidential,
trade secret, or other proprietary information or material of any previous
employer or other person, and will not bring onto the Company’s premises any
unpublished document or any other property belonging to any former employer
without the written consent of that former employer.

5.5.          Computers;
Telephone Line.  During the
Consulting Period, CONSULTANT will continue to have access to Company computers
in his possession, and to his current home office telephone service, for the
provision of consulting services under this Agreement.

6.             Inventions.

6.1.          Company Property.  All Inventions (as defined below) made,
conceived, or completed by CONSULTANT, individually or in conjunction with
others, resulting from work or consulting services performed by CONSULTANT on
behalf of the Company or from access to the Company Confidential Information or
property, whether or not patentable, copyrightable, or qualified for mask work
protection, shall be the sole and exclusive property of the Company and to the
extent permitted by law shall be “works made for hire.”  CONSULTANT hereby assigns and agrees to
assign to the Company or its designee, without further consideration, his
entire right, title, and interest in and to all Inventions, other than those
protected by Section 2870 of the California Labor Code, including all rights to
obtain, register, perfect, and enforce patents, copyrights, mask work rights,
and other intellectual property protection for Inventions.

6.2.          Technical
Information, Copyrights, Patents. 
CONSULTANT shall, without royalty or any other further consideration to
CONSULTANT therefore, but at the expense of the Company:

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6.2.1.       Disclosure.  As promptly as known or possessed by
CONSULTANT, disclose to the Company all information with respect to any
Inventions whether or not such Invention qualifies under Section 2870 of the
California Labor Code.

6.2.2.         Copyright and
Patent Applications.  Whenever
requested to do so by the Company, promptly execute and assign any and all
applications, assignments and other instruments which the Company shall deem
necessary to apply for and obtain copyrights, letters patent, or mask work
rights in the United States and in foreign countries, for all Inventions, and
convey to the Company or to the Company’s nominee the sole and exclusive right,
title and interest in and to said Inventions or copyrights, mask work rights,
patents, or applications for any of the foregoing.

6.2.3.         Legal Proceedings.  Whenever requested to do so by the Company,
deliver to the Company evidence for interference purposes or other legal
proceedings and testify in any administrative or other legal proceedings which
relates to any matters on which CONSULTANT has provided services to the
Company.

6.3.          Excluded
Inventions.  Nothing contained in
this Agreement shall affect the rights or obligations of CONSULTANT with
respect to any Inventions protected by Section 2870 of the California Labor
Code.  Attached as Schedule B is a list of all inventions, improvements, and
original works of authorship related to the Company’s business that are
excluded from this Agreement.

7.             Termination. 
The Consulting Period may be terminated by the Consultant upon 30 days’
written notice to the Company.  The
Consulting Period may not be terminated by the Company.

8.             Survival of Certain Agreements.  The covenants and agreements set forth in
paragraphs 3, 5 and 6 shall survive the Consulting Period and remain in full
force and effect regardless of such termination and payment shall continue for
the original term of the Agreement.

9.             Notice. 
Any notice to be delivered pursuant to this Agreement shall be in
writing and shall be deemed delivered upon service, if served personally, or
three days after deposit in the United States Mail, if mailed by first class
mail, postage prepaid, registered or certified with return receipt requested,
and addressed to the other party at the following address, or such address as
may be designated in accordance herewith:

	
  

  	
    To the
  Company:

  	
  Depomed, Inc.

  
	
   

  	
   

  	
  1360 O’Brien Drive

  
	
   

  	
   

  	
  Menlo Park, CA   
  94025

  
	
   

  	
   

  	
  Attention: President

  
	
   

  	
   

  	
   

  
	
   

  	
  To CONSULTANT:

  	
  at the address set forth at Schedule A

  

 

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10.           Binding Effect.  This Agreement shall be binding upon
CONSULTANT, and, except as regards personal services, upon CONSULTANT’s heirs,
personal representatives, executors and administrators, and shall inure to the
benefit of the Company, its successors and assigns.

11.           Enforcement.  If any provision of this Agreement is
determined to be invalid or unenforceable, the remainder of this Agreement
shall be valid and enforceable to the maximum extent possible.

12.           Amendment.  This Amendment may be modified or amended
only by mutual written consent of the parties.

13.           Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California excluding
those laws that direct the application of the laws of another jurisdiction.

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

15.           Entire Agreement.  This instrument contains the entire agreement
of the parties relating to the subject matter hereof, and supersedes all prior and contemporaneous
negotiations, correspondence, understandings and agreements of the parties
relating to the subject matter hereof.

16.           Successors.  Any
successor to the Company (whether direct or indirect and whether by purchase,
lease, merger, consolidation, liquidation or otherwise) to all or substantially
all of the Company’s business and/or assets shall assume the obligations under
this Agreement and agree expressly to perform the obligations under this
Agreement in the same manner and to the same extent as the Company would be required
to perform such obligations in the absence of a succession.  The terms of this Agreement and all of
CONSULTANT’s rights hereunder shall inure to the benefit of, and be enforceable
by, CONSULTANT’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.

17.           Definitions.  For the purposes of this Agreement:

17.1.        “Confidential
Information” shall mean information disclosed to CONSULTANT as a
consequence of or through performance of services for the Company, its
subsidiaries or affiliates, whether or not related to his specific work at the
Company.  Confidential Information
includes all information related to any aspect of the Company’s business which
is either information not known by actual or potential competitors of the
Company or is proprietary information of the Company, whether of a technical
nature or otherwise.  Confidential
Information includes Inventions (as defined in Section 17.2), know-how, data,
financial information and forecasts, product plans, marketing plans and
strategies, and customer lists. 
Information shall be considered, for purposes of this Agreement, to be
Confidential Information if not known by the trade generally, even though such
information has 

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been disclosed
to one or more third parties pursuant to distribution agreements, joint
research agreements or agreements entered into by the Company or any of its
affiliates.  For the purposes of this
Agreement, information shall not be considered confidential to the extent that
such information is or becomes, through no fault of CONSULTANT, part of the
public domain, or such information is lawfully furnished to CONSULTANT by a
third party without restriction or disclosure.

17.2.        “Inventions”
shall mean any and all inventions, concepts, ideas, designs, circuits,
schematics, formulas, algorithms, trade secrets, works of authorship, mask
works, developmental or experimental work, processes, techniques, and
improvements.

IN WITNESS WHEREOF, the
parties have executed this Consulting Agreement as of the date first above
written.

	
  CONSULTANT:

  	
  DEPOMED, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ John W.
  Fara, Ph.D.

  	
   

  	
  By: 

  	
  /s/ Matthew M. Gosling

  	
   

  
	
  John W. Fara,
  Ph.D.

  	
   

  	
  Matthew M.
  Gosling

  
	
   

  	
   

  	
  Vice President
  and General Counsel

  
					

 

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SCHEDULE A

to Consulting Agreement

1.                                       Name
of Consultant:            John W.
Fara, Ph.D.

2.                                       Address
of Consultant for Notice:

3.                                       Term
of Consulting Period:  August 28,
2007 – December 31, 2009.

4.                                       Duties
of Consultant:          To consult in
areas associated with the Company’s business (including without limitation
product development, business development and investor relations) as requested
by the Company’s chief executive officer then in office.

5.                                       Number
of Hours of Consulting to be Performed Per Month:  Not more than 20 hours per month, unless
agreed by Consultant.

6.                                       Consulting Fees: 
$20,833.33 per month (or $1,042 per business day for any partial month),
which amount shall be paid irrespective of the number of hours of consulting
services per month performed by Consultant for the period ending on December
31, 2008, and at the rate of $300 per hour for the period January 1, 2009
through December 31, 2009 for consultancy approved in writing in advance.

Initialed By:

CONSULTANT:  JWF

Depomed:
MMG

SCHEDULE B

to Consulting Agreement

(Excluded Inventions, Improvements, and

Original Works of Authorship)

	
  

  	
   

  	
   

  	
   

  	
  Identifying Number

  
	
  Title

  	
   

  	
  Date

  	
   

  	
  or Brief Description

  
	
  (None)Exhibit 10.2

August 24, 2007

Mr.
Carl Pelzel

Dear
Carl:

On
behalf of the Board of Directors, I am very pleased to extend to you this offer
to become Depomed’s President and Chief Executive Officer, and a member of
Depomed’s Board of Directors, effective on Monday, August 27, 2007.

Your
initial rate of pay as President and CEO will be $400,000 per year.  Your salary will be reviewed periodically
consistent with the company’s compensation policies.  You will receive no additional compensation
for your service as a Director.

In
connection with your appointment as President and Chief Executive Officer, the
Compensation Committee of the Board of Directors has approved, effective upon
your acceptance of this offer, the grant to you of the following stock options
under the company’s 2004 Equity Incentive Plan: 
(a) an option to purchase 400,000 shares of common stock with an
exercise price equal to today’s closing sale price of the common stock on the
Nasdaq Global Market (the “August 24, 2007 Closing Price”) that vests in
equal monthly installments over four years, such that the option will be fully
vested and exercisable on August 24, 2011; and (b) an option to purchase 37,500
shares of common stock with an exercise price equal to the August 24, 2007
Closing Price that vests upon the earlier to occur of (x) the achievement of
one or more objective performance conditions related to the Company’s 2008
performance, which conditions will be developed by the Compensation Committee
in consultation with you not later than December 31, 2007 (the “Performance
Milestone”), and (y) August 24, 2011. 
In addition, provided that your service as the Company’s President and
CEO continues through December 31, 2007, as soon as reasonably practicable
after January 1, 2008, and in no event later than March 31, 2008, the
Compensation Committee of the Board of Directors will grant to you a
nonstatutory option to purchase 62,500 shares of common stock with an exercise
price equal to the August 24, 2007 Closing Price that vests upon the earlier to
occur of (x) the achievement of the Performance Milestone, and (y) August 24,
2011.  Each of the options will be
subject to the terms and conditions set forth in the Company’s 2004 Equity
Incentive Plan and the Management Continuity Agreement between you and Depomed
dated as of June 1, 2006 (as may be amended, the “Management Continuity
Agreement”).

You
will continue to be entitled to participate in Depomed’s Bonus Plan, with a
bonus target of 50% of your pay from and after your appointment as President
and CEO, subject to the achievement of corporate and personal goals.  Accordingly, your cash bonus for 2007 will be
determined as follows:  (a) for the
period beginning on January 1, 2007 and ending on August 26, 2007, your bonus
target will be 40% of your pay for that period, based on corporate goals 

and
personal goals associated with your service as Executive Vice President and
Chief Operating Officer during that time; and (b) for the period beginning on
August 27, 2007 and ending on December 31, 2007, your bonus target will be 50%
of your pay for that period, based on corporate goals and personal goals
established by the Compensation Committee that are associated with your service
as President and CEO.

In
addition, Section 2(b) of your Management Continuity Agreement will be amended
to increase the post-termination severance period during which you are eligible
to receive continued payments of your base salary and COBRA benefits, and to
increase the lump sum payment you are eligible to receive in respect of your
pre-termination annual bonus, each as set forth in the amendment to the
Management Continuity Agreement presented to you along with this letter.

You will continue to
participate in the company’s complete benefits package.

This
offer will expire at 5:00 p.m. local time on August 24, 2007.  If you elect to accept this offer, please
sign and return one copy of this letter to me by fax.

	
  On behalf of the Board of
  Directors,

  
	
   

  
	
  /s/ Julian N.
  Stern

  	
   

  
	
  Julian N. Stern

  
	
   

  
	
   

  
	
   

  	
  This letter
  correctly sets forth our agreement:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Carl A.
  Pelzel

  	
   

  
	
   

  	
  Carl A. Pelzel

  
	
   

  	
   

  
	
   

  	
  Date: August 24,
  2007

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