DepoMed (DEPO)

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On March 26, 2009, the board of directors of Depomed, Inc. (the “Company”) approved an amendment to the Management Continuity Agreements between the Company and each of its officers to extend the term of the agreements by one year, from May 15, 2009 to May 15, 2010.

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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Effective April 8, 2008, the Board of Directors of the Company appointed Karen A. Dawes, as a director of the Company.

Ms. Dawes, 56, is president and founder of Knowledgeable Decisions, LLC, a consulting firm that assists emerging pharmaceutical companies on development and commercialization strategies. Ms. Dawes’ broad pharmaceutical experience includes four years as senior vice president and head of Bayer Corporation’s U.S. Pharmaceuticals Group.  Prior to Bayer, she was senior vice president of Global Strategic Marketing at Wyeth.  Before that, she served as vice president of Commercial Operations at Genetics Institute, Inc., where she designed and implemented the commercialization strategy to launch BeneFIX^® and Nuemega^®.  Ms. Dawes began her pharmaceutical industry career at Pfizer, Inc., where for 10 years she held a number of positions in Marketing, serving most recently as vice president, Marketing of the Pratt Division.  She directed product launches of Glucotrol XL^®, Zoloft^® and Cardura^® while at Pfizer.  Ms. Dawes is the chairman of the board of directors of PDL BioPharma, and is a member of the board of directors of Repligen Corporation.

In connection with her appointment to the Board of Directors, Mr. Dawes received an automatic grant of an option to purchase 25,000 shares of the Company’s common stock under the Company’s 2004 Equity Incentive Plan (the “2004 Plan”).  The exercise price of the option is $3.54 per share, and the option vests and becomes exercisable in 48 equal monthly installments.  Ms. Dawes will also receive the cash compensation payable to non-employee directors pursuant to the Company’s non-employee director compensation policy, and annual option grants to purchase 15,000 shares of common stock pursuant to the automatic option grant provisions of the 2004 Plan.  The Company has entered into its standard form of indemnification agreement with Ms. Dawes.

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Item 5.02  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On February 19, 2008, the Company and Carl A. Pelzel, the Company’s President and Chief Executive Officer, amended the employment offer letter, dated as of August 24, 2007, between Mr. Pelzel and the Company (the “Pelzel Offer Letter”).

Mr. Pelzel and the Company agreed to amend the Pelzel Offer Letter to:  (a) acknowledge that the 62,500 share performance vesting option that was to be granted to Mr. Pelzel with an exercise price equal to $1.98 per share pursuant to the original terms of the Pelzel Offer Letter was previously approved and granted by the compensation committee of the board of directors on January 25, 2008 with an exercise price equal to $3.60 per share, and (b) to compensate Mr. Pelzel for the incrementally higher option exercise price of that option, the Company has agreed to make Mr. Pelzel a fully vested 30,000 share stock award under the Company’s 2004 Equity Incentive Plan on January 9, 2009 (or earlier, upon the occurrence of a change of control of the Company).  The Pelzel Offer Letter was filed as Exhibit 10.2 to the Form 8-K filed by the Company with the Securities and Exchange Commission on August 27, 2007.

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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On January 25, 2008, the compensation committee of the board of directors of Depomed, Inc. (the “Company”) approved the following compensation arrangements for certain of the Company’s executive officers; (a) payment of bonuses to executive officers pursuant to the Company’s bonus plan for 2007 performance; (b) increases in the base salaries of the Company’s executive officers retroactive to January 1, 2008; (c) discretionary stock option grants under the Company’s 2004 Equity Incentive Plan (the “2004 Plan”); and (d) an amendment to the Management Continuity Agreements between the Company and each of its officers to extend the term of the agreements by one year, from May 15, 2008 to May 15, 2009.

Cash bonuses for 2007 performance for the Company’s executive officers were as follows:  $150,000 to Mr. Pelzel; $34,300 to Tammy L. Cameron, the Company’s Controller and interim principal accounting and financial officer; $97,700 to Matthew M. Gosling, the Company’s Vice President and General Counsel; and $25,000 to John N. Shell, the Company’s Vice President, Operations.

Mr. Pelzel’s 2008 base salary was raised to $425,000, Ms. Cameron’s base salary was raised to $195,000, and Mr. Gosling’s base salary was raised to $325,000.

The following options to purchase shares of the Company’s common stock were granted under the 2004 Plan:  Mr. Pelzel was granted an option to purchase 25,000 shares; Ms. Cameron was granted an option to purchase 13,000 shares; Mr. Gosling was granted an option to purchase 35,000 shares; and Mr. Shell was granted an option to purchase 10,000 shares.  Each option has an exercise price equal to $3.60 per share, the closing price of the Company’s common stock on the Nasdaq Global Market on January 25, 2008.  The options granted to Messrs. Pelzel, Gosling and Shell vest monthly in 48 equal installments.  The option granted to Ms. Cameron vests with respect to 5/48ths of the underlying shares on July 9, 2008, and in 43 equal monthly installments on the 25th day of each month thereafter.

Mr. Pelzel also received an option to purchase 62,500 shares of the Company’s common stock that vests upon the earlier to occur of (a) achievement of certain performance milestones or (b) August 24, 2011, as contemplated by the employment offer letter between the Company and Mr. Pelzel dated as of August 24, 2007.

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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Effective December 10, 2007, the Board of Directors of Depomed, Inc. (the “Company”) appointed James A. Schoeneck as a director of the Company.  Mr. Schoeneck was also appointed as a member of the Audit Committee of the Board of Directors.

Since September 2005, Mr. Schoeneck, 50, has served as chief executive officer of BrainCells, Inc., a privately-held biopharmaceutical company. Before joining BrainCells, Inc., Mr. Schoeneck served as chief executive officer of ActivX BioSciences, a proteomics-based biotechnology company, from November 2003 until its acquisition in December 2004.  Prior to ActivX, Mr. Schoeneck served as president and chief operating officer of Prometheus Laboratories Inc., a specialty pharmaceutical company, for three years.  Before Prometheus, Mr. Schoeneck served as vice president and general manager, Immunology Business Unit and vice president of Marketing and Commercial Development of Centocor, Inc. for three years.  Prior to Centocor, Mr. Schoeneck spent 13 years at Rhone-Poulenc Rorer, Inc., serving in various marketing positions.  Mr. Schoeneck holds a B.S. degree in Education from Jacksonville State University.

In connection with his appointment to the Board of Directors, Mr. Schoeneck received an automatic grant of an option to purchase 25,000 shares of the Company’s common stock under the Company’s 2004 Equity Incentive Plan (the “2004 Plan”).  The exercise price of the option is $3.38 per share, and the option vests and becomes exercisable in 48 equal monthly installments.  Mr. Schoeneck will also receive the cash compensation payable to non-employee directors pursuant to the Company’s non-employee director compensation policy, and annual option grants to purchase 15,000 shares of common stock pursuant to the automatic option grant provisions of the 2004 Plan.  The Company has entered into its standard form of indemnification agreement with Mr. Schoeneck.

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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On October 12, 2007, John W. Shell, Ph.D., 82, resigned as a member of the Board of Directors (the “Board”) of Depomed, Inc. (the “Company”). Dr. Shell is the founder of the Company and served as its Chairman of the Board from its inception in August 1995 to April 2000, when he retired as the Company’s Chairman and Chief Scientific Officer. Dr. Shell served as the Company’s President and Chief Executive Officer from 1995 to 1996.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Retirement of John F. Hamilton

On October 10, 2007, John F. Hamilton, the Vice President, Finance and Chief Financial Officer of Depomed, Inc. (the “Company”), retired from the Company, effective October 12, 2007.

On October 10, 2007, the Company and Mr. Hamilton entered into the Consulting Agreement attached to this report as Exhibit 10.1 (the “Consulting Agreement”) and the letter agreement attached to this report as Exhibit 10.2 (the “Letter Agreement”).  Pursuant to the Consulting Agreement, Mr. Hamilton will provide consulting services to the Company through October 10, 2008 and the Company will pay Mr. Hamilton $25,667 per month for his consulting services.  In the event of a “Change in Control” of the Company (as defined in the Company’s 2004 Equity Incentive Plan), any remaining monthly payments for consulting under the agreement will be accelerated.

Pursuant to the Letter Agreement:  (a) the Company will reimburse Mr. Hamilton for COBRA premiums; (b) options held by Mr. Hamilton to purchase 471,000 shares of the Company’s common stock will not be exercised and will be cancelled; (c) the Company will issue to Mr. Hamilton 100,000 fully vested shares of common stock pursuant to the Company’s 2004 Equity Incentive Plan; and (d) the Company will make a lump sum payment to Mr. Hamilton equal to $190,000.  The Letter Agreement also provides for a customary mutual release of claims.  The Letter Agreement (including the provisions related to the cancellation of Mr. Hamilton’s stock options and the issuance of shares of common stock to Mr. Hamilton) and the Consulting Agreement will become effective after a mandatory seven-day revocation period in favor of Mr. Hamilton pursuant to the Letter Agreement.

Appointment of Tammy L. Cameron as interim principal accounting and financial officer

The Company’s Board of Directors has designated Tammy L. Cameron, the Company’s Controller, as the Company’s interim principal accounting and financial officer, effective as of October 15, 2007.

Ms. Cameron, 41, has served as the Company’s Controller since July 2007.  From January 2005 to June 2007, Ms. Cameron served as the Controller of Adeza Biomedical Corporation, a publicly-traded medical device company.  Ms. Cameron’s responsibilities at Adeza included, among others, external reporting, Sarbanes-Oxley compliance, budgeting and forecasting, income tax reporting, and cost accounting.  From 2001 to 2005, Ms. Cameron served as the Director of Finance and Administration of Timi3 Systems, a venture-backed medical device company.  From 1995 to 2001, Ms. Cameron served as Director of Treasury and External Reporting of KeraVision, Inc., a publicy-traded medical device company.  Ms. Cameron spent the first four years of her career as an auditor for Ernst & Young.  She is a Certified Public Accountant.

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The Company has entered into its standard form of director and officer indemnification agreement with Ms. Cameron.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Retirement of John W. Fara, Ph.D.

Effective August 27, 2007, John W. Fara, Ph.D. retired from his positions as President, Chief Executive Officer and Chairman of Depomed, Inc. (the “Company”).  Dr. Fara will continue to serve as a member of the Company’s Board of Directors (the “Board”).

On August 24, 2007, the Company entered into a Consulting Agreement with Dr. Fara, which is attached as Exhibit 10.1 to this Report.  Pursuant to the agreement, Dr. Fara will provide consulting services to the Company through December 31, 2009.  Through December 31, 2008, the Company will pay Dr. Fara $20,833 per month for his consulting services, and will reimburse Dr. Fara for COBRA and life insurance premiums.  Dr. Fara will be paid on an hourly basis for consulting services provided in 2009.

During the period of his consultancy, Dr. Fara will continue to vest in all of his currently unvested stock options, and his vested stock options will remain exercisable.  In the event of a “Change in Control” of the Company (as defined in the Company’s 2004 Equity Incentive Plan), all of Dr. Fara’s unvested options will fully vest, and any remaining monthly payments (i.e., payments for services provided through December 31, 2008) for consulting under the agreement will be accelerated.

Appointment of Carl A. Pelzel as President, Chief Executive Officer and Director

On August 24, 2007, the Company entered into a letter agreement (the “Letter Agreement”) with Carl A. Pelzel pursuant to which Mr. Pelzel has agreed to serve as the Company’s President and Chief Executive Officer and as a member of the Board, effective August 27, 2007.

Mr. Pelzel has served as the Company’s Executive Vice President and Chief Operating Officer since September 2005, and served as the Company’s Vice President, Marketing and Commercial Development between June 2005 and September 2005.  Before joining the Company, Mr. Pelzel was Senior Vice President, Global Commercial Operations at Chiron Corporation from June 2003 to September 2004. Prior to joining Chiron, Mr. Pelzel was President and Chief Executive Officer of Invenux Inc., a privately-held biopharmaceutical company from March 2001 to November 2002. Mr. Pelzel also spent 11 years with GlaxoSmithKline in senior-level sales, marketing and international operational positions, including Country Manager of Hong Kong and China. He spent 13 years with American Home Products, focused primarily on their antibiotics business. During his career, he directed the launch of five major pharmaceutical products, many on a global basis. Mr. Pelzel has a B.A. degree from Hartwick College of Oneonta, New York.

The Letter Agreement provides for Mr. Pelzel to receive an annual base salary of $400,000, and, in accordance with the Company’s Bonus Plan, an annual target cash bonus of 50% of his base salary for the period beginning on August 27, 2007.  Accordingly, Mr. Pelzel’s cash bonus for 2007 will be determined as follows:  (a) for the period beginning on January 1, 2007 and ending on August 26, 2007, the bonus target will be 40% of Mr. Pelzel’s pay for that period, based on corporate goals and personal goals associated with his 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, Mr. Pelzel’s bonus target will be 50% of his pay for that period, based on corporate goals and personal goals established by the Compensation Committee that are associated with his service as President and CEO.  A copy of the Company’s Bonus Plan is attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 12, 2006.

As contemplated by the Letter Agreement, on August 24, 2007, the Compensation Committee of the Board (the “Compensation Committee”) granted to Mr. Pelzel 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 $1.98, the closing sale price of the Common Stock on the Nasdaq Global Market on August 24, 2007 (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 to be determined (the “Performance Milestone”), and (y) August 24, 2011.

The Letter Agreement also provides for the grant to Mr. Pelzel, as soon as reasonably practicable after January 1, 2008, and in no event later than March 31, 2008, of 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 above-described 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 Mr. Pelzel and the Company dated as of June 1, 2006 (as amended, the “Management Continuity Agreement”).

As contemplated by the Letter Agreement, on August 24, 2007, the Company and Mr. Pelzel amended the Management Continuity Agreement to (a) increase, from 18 months to 24 months, the post-termination severance period during which Mr. Pelzel is eligible to receive continued payments of his base salary and COBRA benefits; and (b) modify the amount of the lump sum payment Mr. Pelzel is eligible to receive in respect of his pre-termination average annual bonus so that it is two times his average annual bonus determined under the agreement, and is based on bonuses paid to Mr. Pelzel in his capacity as President and CEO.  A copy of the amendment to the Management Continuity Agreement is attached hereto as Exhibit 10.3.  A copy of the form of Management Continuity Agreement between the Company and the officers of the Company, including Mr. Pelzel, is attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 19, 2006.

Mr. Pelzel will receive no additional compensation in connection with his service as a Director.

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