Exhibit 10.1

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT (the “ Agreement ”) is made and entered into this 24 th  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 th