UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 8-K

 

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):   May 17, 2017

 

DEPOMED, INC.

(Exact name of registrant as specified in its charter)

 

001-13111

(Commission File Number)

 

California

 

94-3229046

(State or other jurisdiction of

 

(I.R.S. Employer Identification No.)

incorporation)

 

 

 

7999 Gateway Blvd, Suite 300, Newark, California 94560

(Address of principal executive offices, with zip code)

 

(510) 744-8000

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

 



 

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

 

On May 17, 2017, the Board of Directors (the “ Board ”) of Depomed, Inc. (the “ Company ”) amended the Depomed, Inc. Annual Bonus Plan (the “ Bonus Plan ”) to provide that the weighting of corporate and individual objectives for the CEO and other executive officers is 70% and 30%, respectively.

 

The foregoing description of the terms of the Bonus Plan is qualified in its entirety by reference to the provisions of the Bonus Plan, which is filed as Exhibit 10.1 to this Current Report on Form 8-K.

 

Item 5.03                                            Amendment to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

On May 17, 2017, the Board adopted and approved an amendment and restatement to the Company’s Bylaws (the “ Amended Bylaws ”).  The Amended Bylaws, among other things, reduce the period of time by which the Board must establish a measurement record date for purposes of ascertaining shareholders eligible to call for a special meeting of shareholders and reduce the overall period of time for completing certain other procedures relating to the calling of a special meeting of shareholders.  The Amended Bylaws also provide for a plurality voting standard for directors in a contested election and clarify that cumulative voting is not permitted as is already set forth in the Company’s Articles of Incorporation.

 

The foregoing description of the Amended Bylaws is qualified in its entirety by reference to the Amended Bylaws, which is filed as as Exhibit 3.1 to this Current Report on Form 8-K.  All of the changes approved by the Board are shown in the marked version comparing the Amended Bylaws to the Bylaws as in effect immediately prior to such Board approval that is filed as Exhibit 3.2 to this Current Report on Form 8-K.

 

Item 8.01                                            Other Events

 

On May 17, 2017, the Board, upon the recommendation of the Audit Committee of the Board, revised the Audit Committee Charter, which is filed as Exhibit 99.1 to this Current Report on Form 8-K.

 

On May 17, 2017, the Board, upon the recommendation of the Compensation Committee of the Board, revised the Compensation Committee Charter, which is filed as Exhibit 99.2 to this Current Report on Form 8-K.

 

On May 17, 2017, the Board, upon the recommendation of the Nominating and Corporate Governance Committee of the Board, revised each of the Nominating and Corporate Governance Committee Charter and the Corporate Governance Guidelines, which are filed as Exhibits 99.3 and 99.4, respectively, to this Current Report on Form 8-K.

 

On May 17, 2017, the Board set August 15, 2017 as the date for the Company’s 2017 Annual Meeting of Shareholders (the “ 2017 Annual Meeting ”). Additional information about the 2017 Annual Meeting will be included in the Company’s proxy materials. In accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, shareholders who wish to have a proposal considered for inclusion in the Company’s proxy materials for the 2017 Annual Meeting under Rule 14a-8 must ensure that such proposal is received by the Company not later than the close of business on July 1, 2017, which the Company has determined to be a reasonable time before the Company expects to begin disseminating its proxy materials. Any such proposal should be delivered to the Company at 7999 Gateway Blvd., Suite 300, Newark, California 94560, Attention: Corporate Secretary and must comply with the rules and regulations of the Securities and Exchange Commission under Rule 14a-8 in order to be eligible for inclusion in the proxy materials for the 2017 Annual Meeting.

 

Item 9.01

 

Exhibits

 

 

 

 

 

 

 

(d)

 

Exhibit No.

 

Description

 

 

 

 

 

 

 

3.1

 

Amended and Restated Bylaws

 

 

 

 

 

 

 

3.2

 

Marked Comparison of Bylaws

 

 

 

 

 

 

 

10.1

 

Depomed, Inc. Amended and Restated Annual Bonus Plan, as adopted on May 17, 2017

 

 

 

 

 

 

 

99.1

 

Audit Committee Charter, as amended through May 17, 2017

 

 

 

 

 

 

 

99.2

 

Compensation Committee Charter, as amended through May 17, 2017

 

 

 

 

 

 

 

99.3

 

Nominating and Corporate Governance Committee Charter, as amended through May 17, 2017

 

 

 

 

 

 

 

99.4

 

Corporate Governance Guidelines, as amended through May 17, 2017

 

 

 

 

 

 

 

99.5

 

Depomed Press Release dated May 22, 2017

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

DEPOMED, INC.

 

 

 

 

Date: May 22, 2017

By:

/s/ Matthew M. Gosling

 

 

Matthew M. Gosling

 

 

Senior Vice President and General Counsel

 

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Exhibit 3.1

 

AMENDED AND RESTATED

BYLAWS

OF

 

DEPOMED, INC.

 

(as amended through May 17, 2017)

 

SHAREHOLDERS

 

1.                                       Annual Meeting .  The annual meeting of shareholders shall be held on such date, time and place, as may be designated by resolution of the Board of Directors of the corporation (the “Board” or the “Board of Directors”) each year.  At the annual meeting, directors shall be elected and any other proper business may be transacted.

 

2.                                       Special Meetings .

 

(a)                                  Special meetings of the shareholders may be called at any time by the Board of Directors, the Chairman of the Board, the President or the holders of shares entitled to cast not less than 10% of the votes at the meeting (the “Special Meeting Percentage”).

 

(b)                                  Any shareholder seeking to request a special meeting shall request that the Board of Directors fix a record date to determine the shareholders entitled to request a special meeting (the “Request Record Date”) by sending written notice to the Secretary of the corporation (the “Record Date Request Notice”) by registered mail.  Any shareholder may make a Record Date Request Notice, provided that such shareholder’s Record Date Request Notice provides the information required under Section 5(d).

 

(c)                                   Upon receiving a Record Date Request Notice, the Board of Directors may set a Request Record Date, which shall not precede, and shall not be more than 20 days after the close of business on, the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors.  If the Board of Directors, within 20 days after the date on which a valid Record Date Request Notice is received by the Secretary of the corporation, fails to adopt a resolution fixing the Request Record Date, the Request Record Date shall be the close of business on the 20 th  day after the date a valid Record Date Request Notice is received by the Secretary (or, if such 20 th  day is not a business day, the first business day thereafter).

 

(d)                                  In order for a shareholder to request a special meeting, one or more written requests for a special meeting signed by shareholders as of the Request Record Date entitled to cast not less than the Special Meeting Percentage (the “Special Meeting Request”) shall be delivered to the Chairman of the Board, the Chief Executive Officer, a President, a Vice President or the Secretary of the corporation (collectively, the “Designated Officers”).  The Special Meeting Request shall (i) set forth the purpose of the meeting, (which shall be limited to the matters set forth in the Record Date Request Notice received by the Secretary), and the matters proposed to be acted on at the meeting (which shall be limited to the matters set forth in the Record Date Request Notice received by the Secretary), (ii) bear the date of signature of each such shareholder signing the Special Meeting Request, (iii) set forth the name and address as they appear in the corporation’s books of each shareholder signing such request, (iv) comply with the requirements set forth in Section 5(d) as to each shareholder signing such request, (v) state a time requested for the special meeting (which shall not be less than 35 nor more than 60 days after the receipt of the Special Meeting Request (or in the case of written requests from more than one shareholder, not less than 35 nor more than 60 days after the receipt of the written request that results in the Special Meeting Percentage)) and (vi) be received by a Designated Officer by registered mail or personal delivery within 30 days after the Request Record Date; the record date for such special meeting shall be fixed by the Board as set forth in Section 7.  Within five business days after receiving a Special Meeting Request, the Board shall determine whether such shareholder has satisfied the requirements for calling a special meeting of shareholders, and notify the requesting shareholder of its finding. Any requesting shareholder may revoke a request for a special meeting by written revocation delivered to the Secretary of the corporation at any time prior to the giving of notice of the special meeting.

 

3.                                       Place .  Meetings of shareholders shall be held at the principal executive office of the corporation or at any other place, within or without California, which is designated by the Board of Directors or the President.

 

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4.                                       Notice .

 

(a)                                  Annual and Special Meetings .  A written notice of each meeting of shareholders shall be given not more than 60 days and, except as provided below, not less than 10 (or, if sent by third-class mail, 30) days before the meeting to each shareholder entitled to vote at the meeting.  The notice shall state the place, date and hour of the meeting and, if directors are to be elected at the meeting, the names of the nominees intended to be presented by the Board of Directors for election.  The notice shall also state (i) in the case of an annual meeting, those matters which the Board of Directors intends to present for action by the shareholders, and (ii), in the case of a special meeting, the general nature of the business to be transacted and that no other business may be transacted.  Notice shall be delivered personally, by mail or other means addressed to each such shareholder at the address of the shareholder appearing on the books of the corporation, the address given by the shareholder to the corporation for the purpose of notice or as otherwise provided by law.  Upon written request to the Chairman of the Board, the President, the Secretary or any Vice President of the corporation by any person (other than the Board of Directors) entitled to call a special meeting of shareholders, the person receiving such request shall cause notice to be given to the shareholders entitled to vote that a meeting will be held at a time requested by the person calling the meeting not less than 35 nor more than 60 days after receipt of the Special Meeting Request. In the case of written requests from more than one shareholder, the person receiving such request shall cause notice to be given to the shareholders entitled to vote that a meeting will be held at a time requested by the person calling the meeting not less than 35 nor more than 60 days after the receipt of the written request that results in the Special Meeting Percentage being met.

 

(b)                                  Adjourned Meetings .  Notice of an adjourned meeting need not be given if (i) the meeting is adjourned for 45 days or less, (ii) the time and place of the adjourned meeting are announced at the meeting at which the adjournment is taken and (iii) no new record date is fixed for the adjourned meeting. otherwise, notice of the adjourned meeting shall be given as in the case of an original meeting.

 

5.                                       Advance Notice of Shareholder Proposals .

 

(a)                                  Nominations of persons for election to the Board of Directors and the proposal of business to be transacted by the shareholders may be made at a meeting of shareholders: (i) pursuant to the corporation’s notice with respect to such meeting, (ii) by or at the direction of the Board of Directors or (iii) by any shareholder of the corporation who was a shareholder of record at the time of giving of the notice provided for in this Section 5, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this Section 5.

 

(b)                                  For nominations (or in the case of an annual meeting of shareholders, nominations or other business) to be properly brought before a meeting of shareholders by a shareholder pursuant to clause (iii) of paragraph (a) of this Section 5:

 

(i)                                      the shareholder must have given timely notice thereof in writing to the Secretary of the corporation, as provided in this Section 5;

 

(ii)                                   such business must be a proper matter for shareholder action under California corporation law;

 

(iii)                                if the shareholder, or the beneficial owner on whose behalf any such proposal or nomination is made, has provided the corporation with a Solicitation Notice (as defined below), such shareholder or beneficial owner must, in the case of a proposal, have delivered a proxy statement and form of proxy to holders of at least the percentage of the corporation’s voting shares required under applicable law to carry any such proposal, or, in the case of a nomination or nominations, have delivered a proxy statement and form of proxy to holders of a percentage of the corporation’s voting shares reasonably believed by such shareholder or beneficial holder to be sufficient to elect the nominee or nominees proposed to be nominated by such shareholder, and must, in either case, have included in such materials the Solicitation Notice; and

 

(iv)                               if no Solicitation Notice relating thereto has been timely provided pursuant to this section, the shareholder or beneficial owner proposing such business or nomination must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this section.

 

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(c)                                   To be timely, a shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the corporation not less than 120 or more than 150 days prior to the first anniversary (the “Anniversary”) of the date on which the corporation first mailed its proxy materials for the preceding year’s annual meeting of shareholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the preceding year’s annual meeting, notice by the shareholder to be timely must be so delivered not later than the close of business on the later of the 120th day prior to such annual meeting, or the 10th day following the day on which public announcement of the date of such meeting is first made.; provided, further, that in the case of the corporation’s 2017 annual meeting of shareholders, to be timely, a shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the corporation not earlier than March 15, 2017 and not later than April 15, 2017.

 

(d)                                  Such shareholder’s notice shall set forth:

 

(i)                                      as to each person whom the shareholder proposes to nominate for election or re-election as a director (1) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (2) such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; provided, however, that, in addition to the information required in the shareholder’s notice pursuant to this Section 5(d)(i), the corporation may require each such person to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such person to serve as a director of the corporation, including information relevant to a determination whether such person can be considered an independent director;

 

(ii)                                   as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting and any substantial interest (within the meaning of Item 5 of Schedule 14A under the Exchange Act) in such business of such shareholder and the beneficial owner (within the meaning of Section 13(d) of the Exchange Act), if any, on whose behalf the proposal is made;

 

(iii)                                as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made or the other business is proposed:

 

(A)                                the name and address of such shareholder, as they appear on the corporation’s books, and the name and address of such beneficial owner,

 

(B)                                the class or series and number of shares of stock of the corporation which are owned of record by such shareholder and such beneficial owner as of the date of the notice, and a representation that the shareholder will notify the corporation in writing within five business days after the record date for such meeting of the class or series and number of shares of stock of the corporation owned of record by the shareholder and such beneficial owner as of the record date for the meeting, and

 

(C)                                a representation that the shareholder intends to appear in person or by proxy at the meeting to make such nomination or propose such business (an affirmative statement of such intent, a “Solicitation Notice”);

 

(iv)                               as to the shareholder giving the notice or, if the notice is given on behalf of a beneficial owner on whose behalf the nomination is made or the other business is proposed, as to such beneficial owner, and if such shareholder or beneficial owner is an entity, as to each director, executive, managing member or control person of such entity (any such individual or control person, a “control person”):

 

(A)                                the class or series and number of shares of stock of the corporation which are beneficially owned (as defined below) by such shareholder or beneficial owner and by any control person as of the date of the notice, and a representation that the shareholder will notify the corporation in writing within five business days after the record date for such meeting of the class or series and number of shares of stock of the corporation beneficially owned by such shareholder or beneficial owner and by any control person as of the record date for the meeting,

 

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(B)                                a description of any agreement, arrangement or understanding with respect to the nomination or other business between or among such shareholder, beneficial owner or control person and any other person, including without limitation any agreements that would be required to be disclosed pursuant to Item 5 or Item 6 of Exchange Act Schedule 13D (regardless of whether the requirement to file a Schedule 13D is applicable) and a representation that the shareholder will notify the corporation in writing within five business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting,

 

(C)                                a description of any agreement, arrangement or understanding (including without limitation any derivative or short positions, profit interests, options, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the shareholder’s notice by, or on behalf of, such shareholder, beneficial owner or control person, the effect or intent of which is to mitigate loss, manage risk or benefit from changes in the share price of any class or series of the corporation’s stock, or maintain, increase or decrease the voting power of the shareholder, beneficial owner or control person with respect to securities of the corporation, and a representation that the shareholder will notify the corporation in writing within five business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting,

 

(D)                                a representation whether the shareholder or the beneficial owner, if any, will engage in a solicitation with respect to the nomination or other business and, if so, the name of each participant (as defined in Item 4 of Schedule 14A under the Exchange Act) in such solicitation and whether such person intends or is part of a group which intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation’s stock required to approve or adopt the business to be proposed (in person or by proxy) by the shareholder.

 

(E)                                 all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Exchange Act.

 

(v)                                  For purposes of this Section 5(d), shares shall be treated as “beneficially owned” by a person if the person beneficially owns such shares, directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Regulations 13D and 13G thereunder or has or shares pursuant to any agreement, arrangement or understanding (whether or not in writing):  (A) the right to acquire such shares (whether such right is exercisable immediately or only after the passage of time or the fulfillment of a condition or both), (B) the right to vote such shares, alone or in concert with others and/or (C) investment power with respect to such shares, including the power to dispose of, or to direct the disposition of, such shares.

 

(e)                                   Notwithstanding anything in this Section 5 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the corporation at least 55 days prior to the Anniversary, a shareholder’s notice required by this Bylaw shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the corporation.

 

(f)                                    Only persons nominated in accordance with the procedures set forth in this Section 5 or Section 6 below shall be eligible to serve as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this section. The chairman of the meeting shall have the power and the duty to determine whether a nomination or any business proposed to be brought before the meeting has been made in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defectively proposed business or nomination shall not be presented for shareholder action at the meeting and shall be disregarded.

 

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(g)                                   For purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

 

(h)                                  Nothing in this Section 5 shall be deemed to affect any rights of shareholders to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

 

6.                                       Shareholder Proposals at Special Meetings .

 

(a)                                  Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the corporation’s notice of meeting (i) by or at the direction of the Board of Directors or (ii) by any shareholder of record at the time of giving of notice provided for in this paragraph, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 6.  Nominations by shareholders of persons for election to the Board of Directors may be made at such a special meeting of shareholders if the shareholder’s notice has been delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the later of the 120th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.

 

(b)                                  Nothing in this Section 6 shall be deemed to affect any rights of shareholders to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

 

7.                                       Record Date .  The Board of Directors may fix in advance a record date for the determination of the shareholders entitled to notice of any meeting, to vote, to receive any dividend or other distribution or allotment of rights or to exercise any rights.  The record date shall be not more than 60 nor less than 10 days prior to the date of the meeting, nor more than 60 days prior to such other action.  If no record date is fixed, the record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, the close of business on the business day next preceding the day on which the meeting is held. The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board of Directors has been taken, shall be the day on which the first written consent is given.  The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later.  Except as otherwise provided by law, only shareholders at the close of business on the record date are entitled to notice and to vote, to receive the dividend, distribution or allotment of rights or to exercise rights, as the case may be, notwithstanding any transfer of shares on the books of the corporation occurring after the record date.  Except as otherwise provided by law, the corporation shall be entitled to treat the holder of record of any shares as the holder in fact of such shares and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not the corporation shall have express or other notice of such claim or interest.  A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the Board of Directors fixes a new record date.  The Board of Directors shall fix a-new record date if the adjourned meeting takes place more than 45 days after the date set for the original meeting.

 

8.                                       Meeting Without Regular Call and Notice .  The transactions of any meeting of shareholders, however called and noticed and wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present in person or by proxy and if, either before or after the meeting, each of the persons entitled to vote who is not present at the meeting in person or by proxy signs a written waiver of notice, a consent to the holding of the meeting or an approval of the minutes of the meeting.  Attendance of a shareholder at a shareholders’ meeting shall constitute a waiver of notice of such meeting unless, at the beginning of the meeting, the shareholder objects to the transaction of any business because the meeting was not properly called or convened or, with respect to the consideration of a matter required to be included in the notice for the meeting which was not so included, the shareholder expressly objects to such consideration at the meeting.

 

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9.                                       Quorum and Required Vote .  A majority of the shares entitled to vote, represented in person or by proxy, constitutes a quorum for the transaction of business.  No business may be transacted at a meeting in the absence of a quorum other than the adjournment of the meeting, except that if a quorum is present at the commencement of the meeting, business may be transacted until the meeting is adjourned even though the withdrawal of shareholders results in less than a quorum.  Subject to Section 18 below, if a quorum is present at a meeting, the affirmative vote of the holders of shares having a majority of the voting power of the shares represented and voting at the meeting on any matter shall be the act of the shareholders unless the vote of a larger number or voting by classes is required by law or the Articles of Incorporation.  Subject to Section 18 below, if a quorum is present at the commencement of a meeting but the withdrawal of shareholders results in less than a quorum, the affirmative vote of a majority of shares required to constitute a quorum shall be the act of the shareholders unless the vote of a larger number is required by law or the Articles of Incorporation.  Any meeting of shareholders, whether or not a quorum is present, may be adjourned by the vote of a majority of the shares represented at the meeting.

 

10.                                Proxies .  A shareholder may be represented at any meeting of shareholders by a written proxy signed by the person entitled to vote or by such persons duly authorized attorney-in-fact.  A proxy must bear a date within 11 months prior to the meeting, unless the proxy specifies a different length of time.  A revocable proxy is revoked by a writing delivered to the Secretary of the corporation stating that the proxy is revoked or by a subsequent proxy executed and delivered to the Secretary by, or by attendance at the meeting and voting in person by, the person executing the proxy.

 

11.                                Voting .  Except as provided below or as otherwise provided by the Articles of Incorporation or by law, a shareholder shall be entitled to one vote for each share held of record on the record date fixed for the determination of the shareholders entitled to vote or, if no such date is fixed, the date determined in accordance with law.   Upon the demand of any shareholder made at a meeting before the voting begins, the election of directors shall be by ballot.

 

12.                                Election Inspectors .  One or three election inspectors may be appointed by the Board of Directors in advance of a meeting of shareholders or at the meeting by the chairman of the meeting.  If not previously chosen, one or three inspectors shall be appointed by the chairman of the meeting if a shareholder or proxy holder so requests.  When inspectors are appointed at the request of a shareholder or proxy holder, the majority of shares represented in person or by proxy shall determine whether one or three inspectors shall be chosen.  The election inspectors shall determine all questions concerning the existence of a quorum and the right to vote, shall tabulate and determine the results of voting and shall do all other acts necessary or helpful to the expeditious and impartial conduct of the vote.  If there are three inspectors, the decision, act or certificate of a majority of the inspectors is effective as if made by all.

 

13.                                Action Without Meeting .  Except as provided below or by the Articles of Incorporation, any action which may be taken at a meeting of shareholders may be taken without a meeting and without prior notice if a consent in writing setting forth the action so taken is signed by the holders of outstanding shares having not less than the minimum number of votes which would be necessary to authorize or take such action at a meeting at which all shares entitled to vote on such action were present and voted.  Unless the consents of all shareholders entitled to vote have been solicited in writing, the corporation shall give to those shareholders entitled to vote who have not consented in writing (i) a written notice at least 10 days before consummation of an action authorized by shareholders without a meeting covered by the following sections of the California Corporations Code: 310 (certain transactions involving interested directors), 317 (indemnification of corporate agents), 1152 (plan of conversion), 1201 (reorganizations) and 2007 (certain distributions of assets) and (ii) a written notice promptly after the taking of any other action approved by shareholders without a meeting.  Subject to Section 305(b) of the California Corporations Code, directors may not be elected by written consent except by unanimous written consent of all shares entitled to vote for the election of directors.

 

14.                                Reports .  The annual report to shareholders specified in Section 1501 of the California Corporations Code is dispensed with, except as the Board of Directors may otherwise determine, as long as there are less than 100 holders of record of the corporation’s shares.  Any such annual report sent to shareholders shall be sent at least 15 (or, if sent by third-class mail, 35) days prior to the next annual meeting of shareholders and not later than 120 days after the close of the fiscal year.

 

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15.                                Lost Stock Certificates .  The corporation may cause a new stock certificate to be issued in place of any certificate previously issued by the corporation alleged to have been lost, stolen or destroyed.  The corporation may, at its discretion and as a condition precedent to such issuance, require the owner of such certificate to deliver an affidavit stating that such certificate was lost, stolen or destroyed or to give the corporation a bond or other security sufficient to indemnify it against any claim that may be made against it, including any expense or liability, on account of the alleged loss, theft or destruction or the issuance of a new certificate.

 

BOARD OF DIRECTORS

 

16.                                Number .  The authorized number of directors of this corporation shall not be less than five nor more than nine.  The exact number of directors shall be fixed by resolution of the Board of Directors.  The indefinite number of directors may be changed or a definite number fixed without provision for an indefinite number by an amendment to the Articles of Incorporation or by amendment to these bylaws duly adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote.  An amendment reducing the minimum number of directors to a number less than five cannot be adopted if the votes cast against its adoption at a meeting of the shareholders, or the shares not consenting in the case of action by written consent, are equal to more than 16-2/3% of the outstanding shares entitled to vote.  No amendment may change the maximum number of authorized directors to a number greater than two times the minimum number of directors minus one.

 

17.                                Powers .  Subject to the limitations imposed by law or contained in the Articles of Incorporation, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the ultimate direction of the Board of Directors.

 

18.                                Election, Term of Office and Vacancies .

 

(a)  At each annual meeting of shareholders, directors shall be elected to hold office until the next annual meeting.   Except as set forth in Section 18(b) below, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which the director was elected and until a successor has been elected.  The Board of Directors may declare vacant the office of any director who has been declared to be of unsound mind by court order or convicted of a felony.  Vacancies on the Board of Directors not caused by removal may be filled by a majority of the directors then in office, regardless of whether they constitute a quorum, or by a sole remaining director.  The shareholders may elect a director at any time to fill any vacancy not filled, or which cannot be filled, by the Board of Directors.  No reduction in the authorized number of directors shall have the effect of removing any director prior to the expiration of his term of office.

 

(b)  In any uncontested election of directors of the corporation, approval of the shareholders (as defined in Section 153 of the California General Corporation Law) shall be required to elect a Director.  If an incumbent director fails to be elected by approval of the shareholders in an uncontested election then, unless the incumbent director has earlier resigned, the term of the incumbent director shall end on the earlier of (a) the date that is 90 days after the date on which the voting results of the election are determined pursuant to Section 707 of the California General Corporation Law or (b) the date on which the Board of Directors selects a person to fill the office held by that director in accordance with this Section 18 and Section 305 of the California General Corporation Law.  An “uncontested election” means an election of directors of the corporation in which the number of candidates for election does not exceed the number of directors to be elected by the shareholders at that election, determined (a) in the case of an annual meeting of shareholders, at the expiration of the time fixed under Section 5(c) of these Bylaws requiring advance notification of director candidates and (b) in the case of a special meeting of shareholders, at the expiration of the time fixed under Section 6(a) of these Bylaws requiring advance notification of director candidates.

 

(c)  In any election of directors of the corporation that is not an uncontested election, the candidates receiving the highest number of affirmative votes of the shares entitled to be voted for them, up to the number of directors to be elected by those shares, shall be elected and votes against the director and votes withheld shall have no legal effect.

 

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19.                                Removal .  Except as provided below, any or all of the directors may be removed without cause if such removal is approved by the affirmative vote or written consent of a majority of the outstanding shares entitled to vote.  Unless the entire Board of Directors is so removed, no director may be removed if (i) the votes cast against removal, or not consenting in writing to such removal in the case of written consent, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes was cast or, if such action is taken by written consent, all shares entitled to vote were voted and (ii) the entire number of directors authorized at the time of the director’s most recent election were then being elected.

 

20.                                Resignation .  Any director may resign by giving notice to the Chairman of the Board, the President, the Secretary or the Board of Directors.  The resignation of a director shall be effective when given unless the director specifies a later time.  The resignation shall be effective regardless of whether it is accepted by the corporation.

 

21.                                Compensation .  If the Board of Directors so resolves, the directors, including the Chairman of the Board, shall receive compensation and expenses of attendance for meetings of the Board of Directors and of committees of the Board.  Nothing herein shall preclude any director from serving the corporation in another capacity and receiving compensation for such service.

 

22.                                Committees .  The Board of Directors may, by resolution adopted by a majority of the authorized number of directors, designate one or more committees, each consisting of two or more directors, to serve at the pleasure of the Board.  The Board may designate one or more directors as alternate members of a committee who may replace any absent member at any meeting of the committee.  To the extent permitted by the resolution of the Board of Directors, a committee may exercise all of the authority of the Board except:

 

(a)                                  the approval of any action which, under the California Corporations Code, must be approved by the outstanding shares or approved by the shareholders;

 

(b)                                  the filling of vacancies on the Board or any committee;

 

(c)                                   the fixing of compensation of the directors for serving on the Board or any committee;

 

(d)                                  the adoption, amendment or repeal of Bylaws;

 

(e)                                   the amendment or repeal of any resolution of the Board which by its express terms is not so amendable or repealable;

 

(f)                                    a distribution to the shareholders of the corporation, except at a rate, in a periodic amount or within a price range determined by the Board; and

 

(g)                                   the appointment of any other committees of the Board or the members of such committees.

 

23.                                Inspection of Records and Properties .  Each director may inspect all books, records, documents and physical properties of the corporation and its subsidiaries at any reasonable time.  Inspections may be conducted either by the director or the director’s agent or attorney.  The right of inspection includes the right to copy and make extracts.

 

24.                                Time and Place of Meetings and Telephone Meetings .  Unless the Board of Directors determines otherwise, the Board shall hold a regular meeting during each quarter of the corporation’s fiscal year.  All meetings of directors shall be held at the principal executive office of the corporation or at such other place, within or without California, as shall be designated in the notice of the meeting or in a resolution of the Board of Directors.  Directors may participate in a meeting through use of conference telephone or similar communications equipment, provided that all members so participating can hear each other.

 

25.                                Call .  Meetings of the Board of Directors, whether regular or special, may be called by the Chairman of the Board, the President, the Secretary, any Vice President or any two directors.

 

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26.                                Notice .

 

(a)                                  Regular meetings of the Board of Directors may be held without notice if the time of such meetings has been fixed by the Board.  Special meetings shall be held upon four days’ notice by mail or 24 hours’ notice delivered personally or by telephone (including a voice message system or other system or technology designed to record and communicate messages), first-class mail, or electronic transmission (as defined below).  Notices sent by mail, facsimile or electronic mail shall be sent charges prepaid and shall be addressed to each director at that director’s mailing, facsimile or e-mail address, as applicable as it is shown on the records of the corporation.  If the notice is mailed, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting.  If the notice is delivered personally, by telephone or by electronic transmission, it shall be delivered at least 24 hours before the time of the holding of the meeting.  Any oral notice given personally, by telephone, or by electronic transmission may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director.  The notice need not specify the purpose of the meeting nor, if the meeting is to be held at the principal executive office of the corporation, the place of the meeting.  Notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place of the adjourned meeting is announced at the meeting at which the adjournment is taken, but if a meeting is adjourned for more than 24 hours, notice of the adjourned meeting shall be given prior to the time of such meeting to the directors who were not present at the time of the adjournment.

 

(b)                                  Electronic transmission by the corporation ” includes facsimile transmissions, electronic mail, posting on an electronic message board or network which the corporation has designated for such purpose (together with a separate notice to the shareholder of the posting), or other means of electronic communication, provided such electronic transmission (i) creates a record that is capable of retention, retrieval and review and may otherwise be rendered into clearly legible tangible form and (ii) complies, to the extent applicable, with the Electronic Signatures in Global and National Commerce Act (15 U.S.C. Sec. 7001(c)(1)).

 

27.                                Meeting Without Regular Call and Notice .  The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, a consent to the holding of the meeting or an approval of the minutes of the meeting.  For such purposes, a director shall not be considered present at a meeting if, although in attendance at the meeting, the director protests the lack of notice prior to the meeting or at its commencement.

 

28.                                Action Without Meeting .  Any action required or permitted to be taken by the Board of Directors may be taken without a meeting, if all of the members of the Board individually or collectively consent in writing to such action.

 

29.                                Quorum and Required Vote .  A majority of the authorized number of directors shall constitute a quorum for the transaction of business.  Subject to the provisions of Section 310 (relating to certain transactions involving interested directors) and Section 317(e) (relating to indemnification of corporate agents) of the California Corporations Code, every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the Board.  A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting.  A majority of the directors present at a meeting, whether or not a quorum is present, may adjourn the meeting to another time and place.

 

30.                                Committee Meetings .  The principles set forth in Sections 24 through 29 shall apply to committees of the Board of Directors and to actions taken by such committees.

 

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31.                                Indemnification of Directors and Officers .

 

(a)                                  Indemnification .  To the fullest extent permissible under California law, the corporation shall indemnify its directors and officers against all expenses, judgments, fines, settlements and other amounts actually and reasonably incurred by them in connection with any proceeding, including an action by or in the right of the corporation, by reason of the fact that such person is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director, officer, trustee, employee or agent of another corporation, or of a partnership, joint venture, trust or other enterprise (including service with respect to employee benefit plans).  To the fullest extent permissible under California law, expenses incurred by a director or officer seeking indemnification under this Bylaw in defending any proceeding shall be advanced by the corporation as they are incurred upon receipt by the corporation of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that the director or officer is not entitled to be indemnified by the corporation for those expenses.  If, after the effective date of this Bylaw, California law is amended in a manner which permits the corporation to authorize indemnification of or advancement of expenses to its directors or officers, in any such case to a greater extent than is permitted on such effective date, the references in this Bylaw to “California law” shall to that extent be deemed to refer to California law as so amended.  The rights granted by this Bylaw are contractual in nature and, as such, may not be altered with respect to any present or former director or officer without the written consent of that person.

 

(b)                                  Procedure .  Upon written request to the Board of Directors by a person seeking indemnification under this Bylaw, the Board shall promptly determine in accordance with Section 317(e) of the California Corporations Code whether the applicable standard of conduct has been met and, if so, the Board shall authorize indemnification.  If the Board cannot authorize indemnification because the number of directors who are parties to the proceeding with respect to which indemnification is sought prevents the formation of a quorum of directors who are not parties to the proceeding, then, upon written request by the person seeking indemnification, independent legal counsel (by means of a written opinion obtained at the corporation’s expense) or the corporation’s shareholders shall determine whether the applicable standard of conduct has been met and, if so, shall authorize indemnification.

 

(c)                                   Definitions .  The term “proceeding” means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative.  The term “expenses” includes, without limitation, attorneys’ fees and any expenses of establishing a right to indemnification.

 

OFFICERS

 

32.                                Titles and Authority .  The officers of the corporation shall include a Chairman of the Board or a President or both, a Secretary and a Chief Financial Officer.  The Board of Directors may also choose one or more Vice Presidents, Assistant Secretaries, Assistant Chief Financial Officers or other officers.  Any number of offices may be held by the same person.  All officers shall perform their duties and exercise their powers subject to the direction of the Board of Directors.  Deeds, notes, contracts, and any other instrument or document may be executed on behalf of this corporation by the single signature of the Chairman of the Board or the President or by the signatures of any two officers, provided that the signing officers shall not both be Assistant Vice Presidents, Assistant Secretaries, Assistant Chief Financial Officers or other subordinate officers.  Notwithstanding the foregoing, any officer is authorized to sign (i) a proxy or consent solicited by the directors or management of any company in which this corporation owns shares or (ii) any notice given by this corporation to any other person.

 

33.                                Election, Term of Office and Vacancies .  At its regular meeting after each annual meeting of shareholders, the Board of Directors shall choose the officers of the corporation.  The Board may choose additional officers or fill vacant offices at any other time.  No officer must be a member of the Board of Directors except the Chairman of the Board.  The officers shall hold office until their successors are chosen, except that the Board of Directors may remove any officer at any time.

 

34.                                Resignation .  Any officer may resign at any time upon notice to the corporation without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.  The resignation of an officer shall be effective when given unless the officer specifies a later time.  The resignation shall be effective regardless of whether it is accepted by the corporation.

 

35.                                Chairman of the Board; President .  If the Board of Directors elects a Chairman of the Board, such officer shall preside over all meetings of the Board of Directors and of shareholders.  If there be no Chairman of the Board, the President shall perform such duties.  The Board of Directors shall designate either the Chairman of the Board or the President as the chief executive officer and may prescribe the duties and powers of the chief executive officer.  If there be no Chairman of the Board, the President shall be the chief executive officer.

 

36.                                Secretary .  Unless otherwise determined by the Board of Directors or the chief executive officer, the Secretary shall have the following powers and duties:

 

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37.                                Record of Corporate Proceedings .  The Secretary shall attend meetings of shareholders and the Board of Directors and its committees and shall record all votes and the minutes of such meetings in a book to be kept at the principal executive office of the corporation or at such other place as the Board may determine.  The Secretary shall keep at the corporation’s principal executive office, if in California, or at its principal business office in California if the principal executive office is not in California, the original or a copy of these Bylaws, as amended.

 

(a)                                  Record of Shares .  Unless a transfer agent is appointed by the Board of Directors to keep a share register, the Secretary shall keep a share register at the principal executive office of the corporation showing the names of the shareholders and their addresses, the number and class of shares held by each, the number and date of certificates issued and the number and date of cancellation of each certificate surrendered for cancellation.

 

(b)                                  Notices .  The Secretary shall give such notices as may be required by law or these Bylaws.

 

38.                                Chief Financial Officer .  Unless otherwise determined by the Board of Directors or the chief executive officer, the Chief Financial Officer shall have custody of the corporate funds and securities, shall keep adequate and correct accounts of the corporation’s properties and business transactions, shall disburse such funds of the corporation as may be ordered by the Board or the chief executive officer (taking proper vouchers for such disbursements), and shall render to the chief executive officer and the Board, at regular meetings of the Board or whenever the Board may require, an account of all transactions and the financial condition of the corporation.

 

39.                                Other officers .  The other officers of the corporation, if any, shall exercise such powers and perform such duties as the Board of Directors or the chief executive officer shall prescribe.

 

40.                                Salaries .  The Board of Directors shall fix the salary of the chief executive officer and may fix the salaries of other employees of the corporation, including the other officers.  If the Board does not fix the salaries of the other officers, the chief executive officer shall fix such salaries.

 

FORUM FOR ADJUDICATION OF DISPUTES

 

41.                                Forum .  Unless the corporation consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for any shareholder (including any beneficial owner) to bring: (a) any derivative action or proceeding brought on behalf of the corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or employee of the corporation to the corporation or the corporation’s shareholders, (c) any action asserting a claim arising pursuant to any provision of the California Corporations Code or the articles of incorporation or bylaws of the corporation or (d) any action asserting a claim governed by the internal affairs doctrine shall be the Santa Clara County Superior Court within the State of California (or, if no state court located within the State of California has jurisdiction, the federal district court for the Northern District of California); in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.   If any provision of this Section 41 shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provision in any other circumstance and of the remaining provisions of this Section 41 (including, without limitation, each portion of any sentence of this Section 41 containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.

 

AMENDMENT OF BYLAWS

 

42.                                Bylaws may be adopted, amended or repealed by the affirmative vote of a majority of the outstanding shares entitled to vote or by the Board of Directors, except that an amendment changing the authorized number of directors may only be adopted as provided in Section 16.

 

CERTIFICATION

 

This is to certify that the foregoing is a true and correct copy of the bylaws of the corporation named in the title of these bylaws and that such bylaws were duly amended by the by the Board of Directors of such corporation effective May 17, 2017.

 

 

/s/ Matthew M. Gosling

 

Matthew M. Gosling, Secretary

 

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Exhibit 3.2

 

AMENDED AND RESTATED

BYLAWS

OF

 

DEPOMED, INC.

 

(as amended through July 12, 2015 May 17, 2017 )

 

SHAREHOLDERS

 

1.                                                                                       Annual Meeting .  The annual meeting of shareholders shall be held on such date, time and place, as may be designated by resolution of the Board of Directors of the corporation (the “Board” or the “Board of Directors”) each year.  At the annual meeting, directors shall be elected and any other proper business may be transacted.

 

2.                                                                                       Special Meetings .

 

(a)                                  Special meetings of the shareholders may be called at any time by the Board of Directors, the Chairman of the Board, the President or the holders of shares entitled to cast not less than 10% of the votes at the meeting (the “Special Meeting Percentage”).

 

(b)                                  Any shareholder seeking to request a special meeting shall request that the Board of Directors fix a record date to determine the shareholders entitled to request a special meeting (the “Request Record Date”) by sending written notice to the Secretary of the corporation (the “Record Date Request Notice”) by registered mail.  Any shareholder may make a Record Date Request Notice, provided that such shareholder’s Record Date Request Notice provides the information required under Section 5(d).

 

(c)                                   Upon receiving a Record Date Request Notice, the Board of Directors may set a Request Record Date, which shall not precede, and shall not be more than 60 20 days after the close of business on, the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors.  If the Board of Directors, within 28 20 days after the date on which a valid Record Date Request Notice is received by the Secretary of the corporation, fails to adopt a resolution fixing the Request Record Date, the Request Record Date shall be the close of business on the 28 20 th  day after the date a valid Record Date Request Notice is received by the Secretary (or, if such 28 20 th  day is not a business day, the first business day thereafter).

 

(d)                                  In order for a shareholder to request a special meeting, one or more written requests for a special meeting signed by shareholders as of the Request Record Date entitled to cast not less than the Special Meeting Percentage (the “Special Meeting Request”) shall be delivered to the Chairman of the Board, the Chief Executive Officer, a President, a Vice President or the Secretary of the corporation (collectively, the “Designated Officers”).  The Special Meeting Request shall (i) set forth the purpose of the meeting, (which shall be limited to the matters set forth in the Record Date Request Notice received by the Secretary), and the matters proposed to be acted on at the meeting (which shall be limited to the matters set forth in the Record Date Request Notice received by the Secretary), (ii) bear the date of signature of each such shareholder signing the Special Meeting Request, (iii) set forth the name and address as they appear in the corporation’s books of each shareholder signing such request, (iv) comply with the requirements set forth in Section 5(d) as to each shareholder signing such request, (v) state a time requested for the special meeting (which shall not be less than 35 nor more than 60 days after the receipt of the Special Meeting Request (or in the case of written requests from more than one shareholder, not less than 35 nor more than 60 days after the receipt of the written request that results in the Special Meeting Percentage)) and (vi) be received by a Designated Officer by registered mail or personal delivery within 30 days after the Request Record Date; the record date for such special meeting shall be fixed by the Board as set forth in Section 7.  Within five business days after receiving a Special Meeting Request, the Board shall determine whether such shareholder has satisfied the requirements for calling a special meeting of shareholders, and notify the requesting shareholder of its finding. Any requesting shareholder may revoke a request for a special meeting by written revocation delivered to the Secretary of the corporation at any time prior to the giving of notice of the special meeting.

 

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3.                                                                                       Place .  Meetings of shareholders shall be held at the principal executive office of the corporation or at any other place, within or without California, which is designated by the Board of Directors or the President.

 

4.                                                                                       Notice .

 

(a)                                  Annual and Special Meetings .  A written notice of each meeting of shareholders shall be given not more than 60 days and, except as provided below, not less than 10 (or, if sent by third-class mail, 30) days before the meeting to each shareholder entitled to vote at the meeting.  The notice shall state the place, date and hour of the meeting and, if directors are to be elected at the meeting, the names of the nominees intended to be presented by the Board of Directors for election.  The notice shall also state (i) in the case of an annual meeting, those matters which the Board of Directors intends to present for action by the shareholders, and (ii), in the case of a special meeting, the general nature of the business to be transacted and that no other business may be transacted.  Notice shall be delivered personally, by mail or other means addressed to each such shareholder at the address of the shareholder appearing on the books of the corporation, the address given by the shareholder to the corporation for the purpose of notice or as otherwise provided by law.  Upon written request to the Chairman of the Board, the President, the Secretary or any Vice President of the corporation by any person (other than the Board of Directors) entitled to call a special meeting of shareholders, the person receiving such request shall cause notice to be given to the shareholders entitled to vote that a meeting will be held at a time requested by the person calling the meeting not less than 35 nor more than 60 days after receipt of the Special Meeting Request. In the case of written requests from more than one shareholder, the person receiving such request shall cause notice to be given to the shareholders entitled to vote that a meeting will be held at a time requested by the person calling the meeting not less than 35 nor more than 60 days after the receipt of the written request that results in the Special Meeting Percentage being met.

 

(b)                                  Adjourned Meetings .  Notice of an adjourned meeting need not be given if (i) the meeting is adjourned for 45 days or less, (ii) the time and place of the adjourned meeting are announced at the meeting at which the adjournment is taken and (iii) no new record date is fixed for the adjourned meeting. otherwise, notice of the adjourned meeting shall be given as in the case of an original meeting.

 

5.                                                                                       Advance Notice of Shareholder Proposals .

 

(a)                                  Nominations of persons for election to the Board of Directors and the proposal of business to be transacted by the shareholders may be made at a meeting of shareholders: (i) pursuant to the corporation’s notice with respect to such meeting, (ii) by or at the direction of the Board of Directors or (iii) by any shareholder of the corporation who was a shareholder of record at the time of giving of the notice provided for in this Section 5, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this Section 5.

 

(b)                                  For nominations (or in the case of an annual meeting of shareholders, nominations or other business) to be properly brought before a meeting of shareholders by a shareholder pursuant to clause (iii) of paragraph (a) of this Section 5:

 

(i)                                                                                      the shareholder must have given timely notice thereof in writing to the Secretary of the corporation, as provided in this Section 5;

 

(ii)                                                                                   such business must be a proper matter for shareholder action under California corporation law;

 

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(iii)                                                                                if the shareholder, or the beneficial owner on whose behalf any such proposal or nomination is made, has provided the corporation with a Solicitation Notice (as defined below), such shareholder or beneficial owner must, in the case of a proposal, have delivered a proxy statement and form of proxy to holders of at least the percentage of the corporation’s voting shares required under applicable law to carry any such proposal, or, in the case of a nomination or nominations, have delivered a proxy statement and form of proxy to holders of a percentage of the corporation’s voting shares reasonably believed by such shareholder or beneficial holder to be sufficient to elect the nominee or nominees proposed to be nominated by such shareholder, and must, in either case, have included in such materials the Solicitation Notice; and

 

(iv)                                                                               if no Solicitation Notice relating thereto has been timely provided pursuant to this section, the shareholder or beneficial owner proposing such business or nomination must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this section.

 

(c)                                                                                                                                                  To be timely, a shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the corporation not less than 120 or more than 150 days prior to the first anniversary (the “Anniversary”) of the date on which the corporation first mailed its proxy materials for the preceding year’s annual meeting of shareholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the preceding year’s annual meeting, notice by the shareholder to be timely must be so delivered not later than the close of business on the later of the 120th day prior to such annual meeting, or the 10th day following the day on which public announcement of the date of such meeting is first made. ; provided, further, that in the case of the corporation’s 2017 annual meeting of shareholders, to be timely, a shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the corporation not earlier than March 15, 2017 and not later than April 15, 2017. 1

 

(d)                                                                                                 Such shareholder’s notice shall set forth:

 

(i)                                                                                      as to each person whom the shareholder proposes to nominate for election or re-election as a director (1) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (2) such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; provided, however, that, in addition to the information required in the shareholder’s notice pursuant to this Section 5(d)(i), the corporation may require each such person to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such person to serve as a director of the corporation, including information relevant to a determination whether such person can be considered an independent director;

 

(ii)                                                                                   as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting and any substantial interest (within the meaning of Item 5 of Schedule 14A under the Exchange Act) in such business of such shareholder and the beneficial owner (within the meaning of Section 13(d) of the Exchange Act), if any, on whose behalf the proposal is made;

 


1                    Explanatory Note:  This Section 5(c) was amended pursuant to Amendment No. 1 to the Amended and Restated Bylaws, dated October 17, 2016.

 

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(iii)                                                                                as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made or the other business is proposed:

 

(A)                                                                                the name and address of such shareholder, as they appear on the corporation’s books, and the name and address of such beneficial owner,

 

(B)                                                                                the class or series and number of shares of stock of the corporation which are owned of record by such shareholder and such beneficial owner as of the date of the notice, and a representation that the shareholder will notify the corporation in writing within five business days after the record date for such meeting of the class or series and number of shares of stock of the corporation owned of record by the shareholder and such beneficial owner as of the record date for the meeting, and

 

(C)                                                                                a representation that the shareholder intends to appear in person or by proxy at the meeting to make such nomination or propose such business (an affirmative statement of such intent, a “Solicitation Notice”);

 

(iv)                                                                               as to the shareholder giving the notice or, if the notice is given on behalf of a beneficial owner on whose behalf the nomination is made or the other business is proposed, as to such beneficial owner, and if such shareholder or beneficial owner is an entity, as to each director, executive, managing member or control person of such entity (any such individual or control person, a “control person”):

 

(A)                                                                                the class or series and number of shares of stock of the corporation which are beneficially owned (as defined below) by such shareholder or beneficial owner and by any control person as of the date of the notice, and a representation that the shareholder will notify the corporation in writing within five business days after the record date for such meeting of the class or series and number of shares of stock of the corporation beneficially owned by such shareholder or beneficial owner and by any control person as of the record date for the meeting,

 

(B)                                                                                a description of any agreement, arrangement or understanding with respect to the nomination or other business between or among such shareholder, beneficial owner or control person and any other person, including without limitation any agreements that would be required to be disclosed pursuant to Item 5 or Item 6 of Exchange Act Schedule 13D (regardless of whether the requirement to file a Schedule 13D is applicable) and a representation that the shareholder will notify the corporation in writing within five business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting,

 

(C)                                                                                a description of any agreement, arrangement or understanding (including without limitation any derivative or short positions, profit interests, options, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the shareholder’s notice by, or on behalf of, such shareholder, beneficial owner or control person, the effect or intent of which is to mitigate loss, manage risk or benefit from changes in the share price of any class or series of the corporation’s stock, or maintain, increase or decrease the voting power of the shareholder, beneficial owner or control person with respect to securities of the corporation, and a representation that the shareholder will notify the corporation in writing within five business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting,

 

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(D)                                                                                a representation whether the shareholder or the beneficial owner, if any, will engage in a solicitation with respect to the nomination or other business and, if so, the name of each participant (as defined in Item 4 of Schedule 14A under the Exchange Act) in such solicitation and whether such person intends or is part of a group which intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation’s stock required to approve or adopt the business to be proposed (in person or by proxy) by the shareholder.

 

(E)                                                                                 all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Exchange Act.

 

(v)                                                                                  For purposes of this Section 5(d), shares shall be treated as “beneficially owned” by a person if the person beneficially owns such shares, directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Regulations 13D and 13G thereunder or has or shares pursuant to any agreement, arrangement or understanding (whether or not in writing):  (A) the right to acquire such shares (whether such right is exercisable immediately or only after the passage of time or the fulfillment of a condition or both), (B) the right to vote such shares, alone or in concert with others and/or (C) investment power with respect to such shares, including the power to dispose of, or to direct the disposition of, such shares.

 

(e)                                                                                   Notwithstanding anything in this Section 5 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the corporation at least 55 days prior to the Anniversary, a shareholder’s notice required by this Bylaw shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the corporation.

 

(f)                                                                                    Only persons nominated in accordance with the procedures set forth in this Section 5 or Section 6 below shall be eligible to serve as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this section. The chairman of the meeting shall have the power and the duty to determine whether a nomination or any business proposed to be brought before the meeting has been made in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defectively proposed business or nomination shall not be presented for shareholder action at the meeting and shall be disregarded.

 

(g)                                                                                   For purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

 

(h)                                                                                  Nothing in this Section 5 shall be deemed to affect any rights of shareholders to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

 

6.                                                                                       Shareholder Proposals at Special Meetings .

 

(a)                                  Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the corporation’s notice of meeting (i) by or at the direction of the Board of Directors or (ii) by any shareholder of record at the time of giving of notice provided for in this paragraph, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 6.  Nominations by shareholders of persons for election to the Board of Directors may be made at such a special meeting of shareholders if the shareholder’s notice has been delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the later of the 120th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.

 

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(b)                                                                                  Nothing in this Section 6 shall be deemed to affect any rights of shareholders to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

 

7.                                                                                       Record Date .  The Board of Directors may fix in advance a record date for the determination of the shareholders entitled to notice of any meeting, to vote, to receive any dividend or other distribution or allotment of rights or to exercise any rights.  The record date shall be not more than 60 nor less than 10 days prior to the date of the meeting, nor more than 60 days prior to such other action.  If no record date is fixed, the record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, the close of business on the business day next preceding the day on which the meeting is held. The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board of Directors has been taken, shall be the day on which the first written consent is given.  The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later.  Except as otherwise provided by law, only shareholders at the close of business on the record date are entitled to notice and to vote, to receive the dividend, distribution or allotment of rights or to exercise rights, as the case may be, notwithstanding any transfer of shares on the books of the corporation occurring after the record date.  Except as otherwise provided by law, the corporation shall be entitled to treat the holder of record of any shares as the holder in fact of such shares and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not the corporation shall have express or other notice of such claim or interest.  A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the Board of Directors fixes a new record date.  The Board of Directors shall fix a-new record date if the adjourned meeting takes place more than 45 days after the date set for the original meeting.

 

8.                                                                                       Meeting Without Regular Call and Notice .  The transactions of any meeting of shareholders, however called and noticed and wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present in person or by proxy and if, either before or after the meeting, each of the persons entitled to vote who is not present at the meeting in person or by proxy signs a written waiver of notice, a consent to the holding of the meeting or an approval of the minutes of the meeting.  Attendance of a shareholder at a shareholders’ meeting shall constitute a waiver of notice of such meeting unless, at the beginning of the meeting, the shareholder objects to the transaction of any business because the meeting was not properly called or convened or, with respect to the consideration of a matter required to be included in the notice for the meeting which was not so included, the shareholder expressly objects to such consideration at the meeting.

 

9.                                                                                       Quorum and Required Vote .  A majority of the shares entitled to vote, represented in person or by proxy, constitutes a quorum for the transaction of business.  No business may be transacted at a meeting in the absence of a quorum other than the adjournment of the meeting, except that if a quorum is present at the commencement of the meeting, business may be transacted until the meeting is adjourned even though the withdrawal of shareholders results in less than a quorum.  If Subject to Section 18 below, if a quorum is present at a meeting, the affirmative vote of the holders of shares having a majority of the voting power of the shares represented and voting at the meeting on any matter shall be the act of the shareholders unless the vote of a larger number or voting by classes is required by law or the Articles of Incorporation.  If Subject to Section 18 below, if a quorum is present at the commencement of a meeting but the withdrawal of shareholders results in less than a quorum, the affirmative vote of a majority of shares required to constitute a quorum shall be the act of the shareholders unless the vote of a larger number is required by law or the Articles of Incorporation.  Any meeting of shareholders, whether or not a quorum is present, may be adjourned by the vote of a majority of the shares represented at the meeting.

 

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10.                                Proxies .  A shareholder may be represented at any meeting of shareholders by a written proxy signed by the person entitled to vote or by such persons duly authorized attorney-in-fact.  A proxy must bear a date within 11 months prior to the meeting, unless the proxy specifies a different length of time.  A revocable proxy is revoked by a writing delivered to the Secretary of the corporation stating that the proxy is revoked or by a subsequent proxy executed and delivered to the Secretary by, or by attendance at the meeting and voting in person by, the person executing the proxy.

 

11.                                Voting .  Except as provided below or as otherwise provided by the Articles of Incorporation or by law, a shareholder shall be entitled to one vote for each share held of record on the record date fixed for the determination of the shareholders entitled to vote or, if no such date is fixed, the date determined in accordance with law.   Upon the demand of any shareholder made at a meeting before the voting begins, the election of directors shall be by ballot .  At any election of directors, shareholders may cumulate votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shares are entitled or distribute votes according to the same principle among as many candidates as desired.  No shareholder shall be entitled to cumulate votes for any one or more candidates unless such candidate or candidates’ names have been placed in nomination prior to the voting and at least one shareholder has given notice at the meeting prior to the voting of such shareholder’s intention to cumulate votes .

 

12.                                Election Inspectors .  One or three election inspectors may be appointed by the Board of Directors in advance of a meeting of shareholders or at the meeting by the chairman of the meeting.  If not previously chosen, one or three inspectors shall be appointed by the chairman of the meeting if a shareholder or proxy holder so requests.  When inspectors are appointed at the request of a shareholder or proxy holder, the majority of shares represented in person or by proxy shall determine whether one or three inspectors shall be chosen.  The election inspectors shall determine all questions concerning the existence of a quorum and the right to vote, shall tabulate and determine the results of voting and shall do all other acts necessary or helpful to the expeditious and impartial conduct of the vote.  If there are three inspectors, the decision, act or certificate of a majority of the inspectors is effective as if made by all.

 

13.                                Action Without Meeting .  Except as provided below or by the Articles of Incorporation, any action which may be taken at a meeting of shareholders may be taken without a meeting and without prior notice if a consent in writing setting forth the action so taken is signed by the holders of outstanding shares having not less than the minimum number of votes which would be necessary to authorize or take such action at a meeting at which all shares entitled to vote on such action were present and voted.  Unless the consents of all shareholders entitled to vote have been solicited in writing, the corporation shall give to those shareholders entitled to vote who have not consented in writing (i) a written notice at least 10 days before consummation of an action authorized by shareholders without a meeting covered by the following sections of the California Corporations Code: 310 (certain transactions involving interested directors), 317 (indemnification of corporate agents), 1152 (plan of conversion), 1201 (reorganizations) and 2007 (certain distributions of assets) and (ii) a written notice promptly after the taking of any other action approved by shareholders without a meeting.  Subject to Section 305(b) of the California Corporations Code, directors may not be elected by written consent except by unanimous written consent of all shares entitled to vote for the election of directors.

 

14.                                Reports .  The annual report to shareholders specified in Section 1501 of the California Corporations Code is dispensed with, except as the Board of Directors may otherwise determine, as long as there are less than 100 holders of record of the corporation’s shares.  Any such annual report sent to shareholders shall be sent at least 15 (or, if sent by third-class mail, 35) days prior to the next annual meeting of shareholders and not later than 120 days after the close of the fiscal year.

 

15.                                Lost Stock Certificates .  The corporation may cause a new stock certificate to be issued in place of any certificate previously issued by the corporation alleged to have been lost, stolen or destroyed.  The corporation may, at its discretion and as a condition precedent to such issuance, require the owner of such certificate to deliver an affidavit stating that such certificate was lost, stolen or destroyed or to give the corporation a bond or other security sufficient to indemnify it against any claim that may be made against it, including any expense or liability, on account of the alleged loss, theft or destruction or the issuance of a new certificate.

 

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BOARD OF DIRECTORS

 

16.                                Number .  The authorized number of directors of this corporation shall not be less than five nor more than nine.  The exact number of directors shall be fixed by resolution of the Board of Directors.  The indefinite number of directors may be changed or a definite number fixed without provision for an indefinite number by an amendment to the Articles of Incorporation or by amendment to these bylaws duly adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote.  An amendment reducing the minimum number of directors to a number less than five cannot be adopted if the votes cast against its adoption at a meeting of the shareholders, or the shares not consenting in the case of action by written consent, are equal to more than 16-2/3% of the outstanding shares entitled to vote.  No amendment may change the maximum number of authorized directors to a number greater than two times the minimum number of directors minus one.

 

17.                                Powers .  Subject to the limitations imposed by law or contained in the Articles of Incorporation, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the ultimate direction of the Board of Directors.

 

18.                                Election, Term of Office and Vacancies .

 

(a)  At each annual meeting of shareholders, directors shall be elected to hold office until the next annual meeting.  Each Except as set forth in Section 18(b) below, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which the director was elected and until a successor has been elected.  The Board of Directors may declare vacant the office of any director who has been declared to be of unsound mind by court order or convicted of a felony.  Vacancies on the Board of Directors not caused by removal may be filled by a majority of the directors then in office, regardless of whether they constitute a quorum, or by a sole remaining director.  The shareholders may elect a director at any time to fill any vacancy not filled, or which cannot be filled, by the Board of Directors.  No reduction in the authorized number of directors shall have the effect of removing any director prior to the expiration of his term of office.

 

(b)  In any uncontested election of directors of the corporation, approval of the shareholders (as defined in Section 153 of the California General Corporation Law) shall be required to elect a Director.  If an incumbent director fails to be elected by approval of the shareholders in an uncontested election then, unless the incumbent director has earlier resigned, the term of the incumbent director shall end on the earlier of (a) the date that is 90 days after the date on which the voting results of the election are determined pursuant to Section 707 of the California General Corporation Law or (b) the date on which the Board of Directors selects a person to fill the office held by that director in accordance with this Section 18 and Section 305 of the California General Corporation Law.  An “uncontested election” means an election of directors of the corporation in which the number of candidates for election does not exceed the number of directors to be elected by the shareholders at that election, determined (a) in the case of an annual meeting of shareholders, at the expiration of the time fixed under Section 5(c) of these Bylaws requiring advance notification of director candidates and (b) in the case of a special meeting of shareholders, at the expiration of the time fixed under Section 6(a) of these Bylaws requiring advance notification of director candidates.

 

(c)  In any election of directors of the corporation that is not an uncontested election, the candidates receiving the highest number of affirmative votes of the shares entitled to be voted for them, up to the number of directors to be elected by those shares, shall be elected and votes against the director and votes withheld shall have no legal effect.

 

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19.                                Removal .  Except as provided below, any or all of the directors may be removed without cause if such removal is approved by the affirmative vote or written consent of a majority of the outstanding shares entitled to vote.  Unless the entire Board of Directors is so removed, no director may be removed if (i) the votes cast against removal, or not consenting in writing to such removal in the case of written consent, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes was cast or, if such action is taken by written consent, all shares entitled to vote were voted and (ii) the entire number of directors authorized at the time of the director’s most recent election were then being elected.

 

20.                                Resignation .  Any director may resign by giving notice to the Chairman of the Board, the President, the Secretary or the Board of Directors.  The resignation of a director shall be effective when given unless the director specifies a later time.  The resignation shall be effective regardless of whether it is accepted by the corporation.

 

21.                                Compensation .  If the Board of Directors so resolves, the directors, including the Chairman of the Board, shall receive compensation and expenses of attendance for meetings of the Board of Directors and of committees of the Board.  Nothing herein shall preclude any director from serving the corporation in another capacity and receiving compensation for such service.

 

22.                                Committees .  The Board of Directors may, by resolution adopted by a majority of the authorized number of directors, designate one or more committees, each consisting of two or more directors, to serve at the pleasure of the Board.  The Board may designate one or more directors as alternate members of a committee who may replace any absent member at any meeting of the committee.  To the extent permitted by the resolution of the Board of Directors, a committee may exercise all of the authority of the Board except:

 

(a)                                  the approval of any action which, under the California Corporations Code, must be approved by the outstanding shares or approved by the shareholders;

 

(b)                                                                                  the filling of vacancies on the Board or any committee;

 

(c)                                                                                   the fixing of compensation of the directors for serving on the Board or any committee;

 

(d)                                                                                  the adoption, amendment or repeal of By-laws Bylaws ;

 

(e)                                                                                   the amendment or repeal of any resolution of the Board which by its express terms is not so amendable or repealable;

 

(f)                                                                                    a distribution to the shareholders of the corporation, except at a rate, in a periodic amount or within a price range determined by the Board; and

 

(g)                                                                                   the appointment of any other committees of the Board or the members of such committees.

 

23.                                Inspection of Records and Properties .  Each director may inspect all books, records, documents and physical properties of the corporation and its subsidiaries at any reasonable time.  Inspections may be conducted either by the director or the director’s agent or attorney.  The right of inspection includes the right to copy and make extracts.

 

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24.                                Time and Place of Meetings and Telephone Meetings .  Unless the Board of Directors determines otherwise, the Board shall hold a regular meeting during each quarter of the corporation’s fiscal year.  All meetings of directors shall be held at the principal executive office of the corporation or at such other place, within or without California, as shall be designated in the notice of the meeting or in a resolution of the Board of Directors.  Directors may participate in a meeting through use of conference telephone or similar communications equipment, provided that all members so participating can hear each other.

 

25.                                Call .  Meetings of the Board of Directors, whether regular or special, may be called by the Chairman of the Board, the President, the Secretary, any Vice President or any two directors.

 

26.                                Notice .

 

(a)                                  Regular meetings of the Board of Directors may be held without notice if the time of such meetings has been fixed by the Board.  Special meetings shall be held upon four days’ notice by mail or 24 hours’ notice delivered personally or by telephone (including a voice message system or other system or technology designed to record and communicate messages), first-class mail, or electronic transmission (as defined below).  Notices sent by mail, facsimile or electronic mail shall be sent charges prepaid and shall be addressed to each director at that director’s mailing, facsimile or e-mail address, as applicable as it is shown on the records of the corporation.  If the notice is mailed, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting.  If the notice is delivered personally, by telephone or by electronic transmission, it shall be delivered at least 24 hours before the time of the holding of the meeting.  Any oral notice given personally, by telephone, or by electronic transmission may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director.  The notice need not specify the purpose of the meeting nor, if the meeting is to be held at the principal executive office of the corporation, the place of the meeting.  Notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place of the adjourned meeting is announced at the meeting at which the adjournment is taken, but if a meeting is adjourned for more than 24 hours, notice of the adjourned meeting shall be given prior to the time of such meeting to the directors who were not present at the time of the adjournment.

 

(b)                                  Electronic transmission by the corporation ” includes facsimile transmissions, electronic mail, posting on an electronic message board or network which the corporation has designated for such purpose (together with a separate notice to the shareholder of the posting), or other means of electronic communication, provided such electronic transmission (i) creates a record that is capable of retention, retrieval and review and may otherwise be rendered into clearly legible tangible form and (ii) complies, to the extent applicable, with the Electronic Signatures in Global and National Commerce Act (15 U.S.C. Sec. 7001(c)(1)).

 

27.                                Meeting Without Regular Call and Notice .  The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, a consent to the holding of the meeting or an approval of the minutes of the meeting.  For such purposes, a director shall not be considered present at a meeting if, although in attendance at the meeting, the director protests the lack of notice prior to the meeting or at its commencement.

 

28.                                Action Without Meeting .  Any action required or permitted to be taken by the Board of Directors may be taken without a meeting, if all of the members of the Board individually or collectively consent in writing to such action.

 

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29.                                Quorum and Required Vote .  A majority of the authorized number of directors shall constitute a quorum for the transaction of business.  Subject to the provisions of Section 310 (relating to certain transactions involving interested directors) and Section 317(e) (relating to indemnification of corporate agents) of the California Corporations Code, every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the Board.  A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting.  A majority of the directors present at a meeting, whether or not a quorum is present, may adjourn the meeting to another time and place.

 

30.                                Committee Meetings .  The principles set forth in Sections 24 through 29 shall apply to committees of the Board of Directors and to actions taken by such committees.

 

31.                                Indemnification of Directors and Officers .

 

(a)                                  Indemnification .  To the fullest extent permissible under California law, the corporation shall indemnify its directors and officers against all expenses, judgments, fines, settlements and other amounts actually and reasonably incurred by them in connection with any proceeding, including an action by or in the right of the corporation, by reason of the fact that such person is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director, officer, trustee, employee or agent of another corporation, or of a partnership, joint venture, trust or other enterprise (including service with respect to employee benefit plans).  To the fullest extent permissible under California law, expenses incurred by a director or officer seeking indemnification under this By-law Bylaw in defending any proceeding shall be advanced by the corporation as they are incurred upon receipt by the corporation of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that the director or officer is not entitled to be indemnified by the corporation for those expenses.  If, after the effective date of this By-law Bylaw , California law is amended in a manner which permits the corporation to authorize indemnification of or advancement of expenses to its directors or officers, in any such case to a greater extent than is permitted on such effective date, the references in this By-law Bylaw to “California law” shall to that extent be deemed to refer to California law as so amended.  The rights granted by this By-law Bylaw are contractual in nature and, as such, may not be altered with respect to any present or former director or officer without the written consent of that person.

 

(b)                                  Procedure .  Upon written request to the Board of Directors by a person seeking indemnification under this By-law Bylaw , the Board shall promptly determine in accordance with Section 317(e) of the California Corporations Code whether the applicable standard of conduct has been met and, if so, the Board shall authorize indemnification.  If the Board cannot authorize indemnification because the number of directors who are parties to the proceeding with respect to which indemnification is sought prevents the formation of a quorum of directors who are not parties to the proceeding, then, upon written request by the person seeking indemnification, independent legal counsel (by means of a written opinion obtained at the corporation’s expense) or the corporation’s shareholders shall determine whether the applicable standard of conduct has been met and, if so, shall authorize indemnification.

 

(c)                                   Definitions .  The term “proceeding” means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative.  The term “expenses” includes, without limitation, attorneys’ fees and any expenses of establishing a right to indemnification.

 

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OFFICERS

 

32.                                Titles and Authority .  The officers of the corporation shall include a Chairman of the Board or a President or both, a Secretary and a Chief Financial Officer.  The Board of Directors may also choose one or more Vice Presidents, Assistant Secretaries, Assistant Chief Financial Officers or other officers.  Any number of offices may be held by the same person.  All officers shall perform their duties and exercise their powers subject to the direction of the Board of Directors.  Deeds, notes, contracts, and any other instrument or document may be executed on behalf of this corporation by the single signature of the Chairman of the Board or the President or by the signatures of any two officers, provided that the signing officers shall not both be Assistant Vice Presidents, Assistant Secretaries, Assistant Chief Financial Officers or other subordinate officers.  Notwithstanding the foregoing, any officer is authorized to sign (i) a proxy or consent solicited by the directors or management of any company in which this corporation owns shares or (ii) any notice given by this corporation to any other person.

 

33.                                Election, Term of Office and Vacancies .  At its regular meeting after each annual meeting of shareholders, the Board of Directors shall choose the officers of the corporation.  The Board may choose additional officers or fill vacant offices at any other time.  No officer must be a member of the Board of Directors except the Chairman of the Board.  The officers shall hold office until their successors are chosen, except that the Board of Directors may remove any officer at any time.

 

34.                                Resignation .  Any officer may resign at any time upon notice to the corporation without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.  The resignation of an officer shall be effective when given unless the officer specifies a later time.  The resignation shall be effective regardless of whether it is accepted by the corporation.

 

35.                                Chairman of the Board; President .  If the Board of Directors elects a Chairman of the Board, such officer shall preside over all meetings of the Board of Directors and of shareholders.  If there be no Chairman of the Board, the President shall perform such duties.  The Board of Directors shall designate either the Chairman of the Board or the President as the chief executive officer and may prescribe the duties and powers of the chief executive officer.  If there be no Chairman of the Board, the President shall be the chief executive officer.

 

36.                                Secretary .  Unless otherwise determined by the Board of Directors or the chief executive officer, the Secretary shall have the following powers and duties:

 

37.                                Record of Corporate Proceedings .  The Secretary shall attend meetings of shareholders and the Board of Directors and its committees and shall record all votes and the minutes of such meetings in a book to be kept at the principal executive office of the corporation or at such other place as the Board may determine.  The Secretary shall keep at the corporation’s principal executive office, if in California, or at its principal business office in California if the principal executive office is not in California, the original or a copy of these By-laws Bylaws , as amended.

 

(a)                                  Record of Shares .  Unless a transfer agent is appointed by the Board of Directors to keep a share register, the Secretary shall keep a share register at the principal executive office of the corporation showing the names of the shareholders and their addresses, the number and class of shares held by each, the number and date of certificates issued and the number and date of cancellation of each certificate surrendered for cancellation.

 

(b)                                  Notices .  The Secretary shall give such notices as may be required by law or these By-laws Bylaws .

 

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38.                                Chief Financial Officer .  Unless otherwise determined by the Board of Directors or the chief executive officer, the Chief Financial Officer shall have custody of the corporate funds and securities, shall keep adequate and correct accounts of the corporation’s properties and business transactions, shall disburse such funds of the corporation as may be ordered by the Board or the chief executive officer (taking proper vouchers for such disbursements), and shall render to the chief executive officer and the Board, at regular meetings of the Board or whenever the Board may require, an account of all transactions and the financial condition of the corporation.

 

39.                                Other officers .  The other officers of the corporation, if any, shall exercise such powers and perform such duties as the Board of Directors or the chief executive officer shall prescribe.

 

40.                                Salaries .  The Board of Directors shall fix the salary of the chief executive officer and may fix the salaries of other employees of the corporation, including the other officers.  If the Board does not fix the salaries of the other officers, the chief executive officer shall fix such salaries.

 

FORUM FOR ADJUDICATION OF DISPUTES

 

41.                                Forum .  Unless the corporation consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for any shareholder (including any beneficial owner) to bring: (a) any derivative action or proceeding brought on behalf of the corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or employee of the corporation to the corporation or the corporation’s shareholders, (c) any action asserting a claim arising pursuant to any provision of the California Corporations Code or the articles of incorporation or bylaws of the corporation or (d) any action asserting a claim governed by the internal affairs doctrine shall be the Santa Clara County Superior Court within the State of California (or, if no state court located within the State of California has jurisdiction, the federal district court for the Northern District of California); in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.   If any provision of this Section 41 shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provision in any other circumstance and of the remaining provisions of this Section 41 (including, without limitation, each portion of any sentence of this Section 41 containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.

 

AMENDMENT OF BYLAWS

 

42.                                Bylaws may be adopted, amended or repealed by the affirmative vote of a majority of the outstanding shares entitled to vote or by the Board of Directors, except that an amendment changing the authorized number of directors may only be adopted as provided in Section 16.

 

CERTIFICATION

 

This is to certify that the foregoing is a true and correct copy of the bylaws of the corporation named in the title of these bylaws and that such bylaws were duly amended by the by the Board of Directors of such corporation effective July 12, 2015. May 17, 2017.

 

 

/s/ Matthew M. Gosling

 

Matthew M. Gosling, Secretary

 

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Exhibit 10.1

 

 

DEPOMED, INC. AMENDED AND RESTATED ANNUAL BONUS PLAN

(as adopted by the Board of Directors on May 17, 2017)

 

Depomed, Inc. (“Depomed” or the “Company) has established an Annual Bonus Plan (the “Bonus Plan”) that is designed to align employee performance with annual corporate goals and to reward the achievement of corporate and personal goals during the plan year, which shall coincide with the applicable calendar year.

 

The Bonus Plan is administered at the absolute discretion of the Company, including its management and Board of Directors, which may, at its discretion, choose not to fund the Bonus Plan or to fund it at any level it chooses; provided, however, that in connection with the occurrence of a Change in Control (as defined in the Company’s Amended and Restated 2014 Omnibus Incentive Plan, as amended from time to time), the Board of Directors shall provide for the funding of the Bonus Plan as described below.

 

Background

 

Depomed has a history of rewarding its high-performing employees for their efforts and accomplishments.  We have formalized the structure of employees’ activities to be consistent with Depomed’s corporate goals and have defined a specific process for calculating bonuses consistent with the Company’s performance and the employees’ performance and individual contributions.  The Company maintains absolute discretion in administering and deciding whether to fund the Bonus Plan so that it remains flexible in meeting the changing needs of the organization (except in the context of a Change in Control, as described below).

 

All levels of Depomed employees establish personal goals consistent with Depomed’s corporate goals and their department goals.  By following defined goals, employees will align their activity with the corporate goals and major department deliverables.  Progress toward achievement of personal goals is to be reviewed together by employees and their supervisors, with oversight from department heads, on an ongoing basis throughout the calendar year.  The review period for accomplishing personal goals ends on December 31.

 

Eligibility

 

All regular Depomed employees who are not field-based sales personnel and work at least 25 hours per week will be eligible to participate in the Bonus Plan.  Bonuses for employees regularly scheduled to work less than 40 hours weekly will be prorated based on the number of hours they are regularly scheduled to work.  New employees who join the company by the first business day in October of a calendar year will be eligible to participate in the current year’s plan on a prorated basis based on the number of full calendar months worked.  If an employee’s Bonus Target (as defined below) changes during the plan year due to a promotion or otherwise, the final Bonus Target level will be calculated based on the months the employee worked at each Bonus Target and the base compensation received while at each level.  Employees who are on approved leaves of absence of more than 6 weeks (or such other period determined by the Company in its discretion) in any calendar year may have their annual bonus award prorated in accordance with applicable law to reflect the time they were on leave.

 

Field-based sales personnel participate in separate incentive compensation plans and are not subject to this Bonus Plan.  Depomed shall have sole discretion to make any eligibility determinations.

 

Bonus Target

 

A “Bonus Target” has been identified for different levels of personnel and is based on a percentage of annual base pay, including overtime compensation paid to non-exempt employees during the plan year.  The Company seeks to set Bonus Targets based on external compensation benchmarks for similar positions within our industry and on internal equity considerations.  The Compensation Committee of the Board of Directors sets the Bonus Targets for the CEO and all other executive officers who report directly to the CEO and are at the Senior Vice President level or above.  Except as may be otherwise specified by the Compensation Committee from time to time, management sets Bonus Targets for all other positions and reviews the various Bonus Target levels periodically with the Compensation Committee.  The Bonus Target is comprised of two elements:  (i) the employee’s achievement of personal goals; and (ii) Depomed’s achievement of corporate goals.

 



 

Corporate Goals Bonus Calculation

 

The portion of the Bonus Target attributed to the corporate goals will be subject to a “Corporate Goals Bonus Calculation,” which will reflect the Company’s overall success and fiscal and other considerations the Board of Directors deems relevant.  In a year where all the corporate goals are fully met and the Company’s finances are on target, the Corporate Goals Bonus Calculation would usually be 100%.  Conversely, in a year where the corporate goals are not fully met, finances are not on target or as other considerations warrant, Corporate Goals Bonus Calculation multiplier of 75%, 50% or 0%, for example, might be applied to the Bonus Target.  If the Company has exceeded corporate goals and finances are above target, the Corporate Goals Bonus Calculation may be more than 100%.  After the end of each calendar year, the Company’s performance will be evaluated by the CEO, CFO, and Vice President of Human Resources, who will recommend a Corporate Goals Bonus Calculation to the Compensation Committee of the Board of Directors.  The Compensation Committee then makes a recommendation to the full Board of Directors, which has final authority and discretion on determining the Corporate Multiplier.

 

Exhibit A reflects the current Bonus Targets for various positions within the Company.  Management will update Exhibit A from time to time as appropriate.

 

Personal Goals

 

For all levels of Depomed employees, personal goals consistent with Depomed’s corporate goals and applicable department goals are established by management in consultation with employees. Employees may have up to six personal goals. Each personal goal will be assigned a weight reflecting the significance and impact of the goal and the contribution towards corporate and department goals.  The minimum weight assigned to each goal is 10%, and the combined weight of the goals must equal 100%.  Personal goals will be approved by the next level manager.  Any exceptions to the personal goals minimum described above must be approved by an employee’s supervisor, department head and the Vice President of Human Resources.

 

Personal Goals Bonus Calculation

 

The portion of the Bonus Target attributed to the personal goals will be subject to a “Personal Goals Bonus Calculation,” which will reflect each employee’s personal success as assessed by management.  At the end of each calendar year employees’ goals and achievements will be assessed by management.  Based on management’s assessment of the level of achievement, employees may receive no credit, partial credit or full credit for achieving any single personal goal (or for achieving all of personal goals collectively) up to a maximum of 1.25 times target.  Management determines the final award for the achievement of personal goals.

 

Performance Assessment and Payment of Bonuses

 

Following the plan year, personal goals and corporate goals will be assessed and performance reviews will be prepared and delivered to employees.  Employees receiving an overall performance rating of below “Meets Expectations” will receive no more than 50% of their target bonus payout. Employees who receive an overall performance rating of “Unsatisfactory Performance” will not be eligible to receive any bonus payout.  Bonuses will be calculated and payment of bonuses will be made to eligible employees no later than March 15 (unless otherwise determined by the Company).

 

The CEO’s direct reports will recommend the bonus award for achievement of personal goals for employees in their departments subject to approval or modification by the CEO.  Management maintains absolute discretion in determining the scope and impact of accomplishments as well as the final bonus payout for all employees.  Employees’ final bonus payouts generally are based on the Corporate Goals Bonus Calculation and aggregate personal goal calculation but may be modified as deemed appropriate by management or the Compensation Committee, as applicable.

 

Employees must be employed by Depomed on the day payment is made to earn and be eligible for a bonus payment, since the payments are intended to incent successful employees to remain with Depomed.  For avoidance of doubt, in the event of a Change in Control that occurs following the end of the plan year, an eligible employee shall only be required to remain employed by Depomed on the closing date of the Change in Control in the event that payment cannot be made on or before such closing date.

 

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Employees who have received formal disciplinary action during or after a plan year may have their bonus payout reduced or eliminated for that plan year, at the sole discretion of management.

 

Change in Control

 

In the event of a Change in Control (which shall have the meaning given such term in the Amended and Restated Depomed, Inc. 2014 Omnibus Incentive Plan) that occurs prior to the end of a plan year, each eligible employee who is employed by Depomed on the closing date of the Change in Control will receive a pro-rated bonus payout on such closing date based on (1) such employee’s Bonus Target and individual weighting of corporate and personal goals as well as (2) the  number of days in the plan year that have elapsed, through and including the closing date.  The amount of the payout shall be based on the following principles, which shall control in the event that there is any inconsistency with any other provision of the Bonus Plan: (1) the Personal Goals Bonus Calculation shall be deemed to be achieved at 100% and (2) the Corporate Goals Bonus Calculation shall be deemed to be achieved at100% of target.  For avoidance of doubt, in the event that a Change in Control occurs following the completion of the plan year, each eligible employee who is employed by Depomed on the closing date of the Change in Control will receive the full bonus for such completed plan year based on actual performance for both the Personal Goals Bonus Calculation and the Corporate Goals Bonus Calculation as determined in accordance with the Bonus Plan.

 

Depomed retains the right to alter or eliminate the Bonus Plan and to alter its terms and conditions at any time and for any reason, before, during or after the plan year; provided, however, that Depomed may not alter or eliminate the Bonus Plan in connection with a Change in Control in the event that such alteration or termination would adversely affect a participant’s rights hereunder without such participant’s written consent.  All decisions made by the Company, including management and the Board of Directors, will be in their absolute discretion, and are final and not subject to dispute of appeal.

 

No participant shall have any vested right to receive any payment until actual delivery of any such payment.  This Bonus Plan does not constitute a contract or other agreement concerning employment with Depomed.  Employment at Depomed is and remains “at will” and may be terminated at any time by Depomed or by the employee, either with or without cause.

 

All payments made under this Bonus Plan shall be subject to recovery or clawback by the Company under any clawback policy adopted by the Company, whether before or after the date of any payment made under this Bonus Plan.

 

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Exhibit A to Depomed, Inc. Bonus Plan

Bonus Targets

(effective as of May 17, 2017)

 

Title / Level

 

Bonus Target

 

Weighting of
Corporate
Goals

 

Weighting of
Personal
Goals

 

President and Chief Executive Officer

 

100

%

70

%

30

%

Chief Financial Officer

General Counsel

Chief Medical Officer

Chief Commercial Officer

 

50

%

70

%

30

%

All other Vice Presidents on the Executive Team which currently includes:

SVP, Business Development

SVP, Human Resources

SVP, Tech Development and Quality

 

40

%

70

%

30

%

VP Sales

VP Marketing

VP Managed Markets & Trade

 

30

%

70

%

30

%

All other Vice Presidents

 

30

%

60

%

40

%

Sr. Directors / Directors

 

25

%

60

%

40

%

Associate Directors

 

20

%

55

%

45

%

Sr. Managers / Managers

 

15

%

50

%

50

%

Supervisors

 

10

%

40

%

60

%

Senior Scientific / Technical Individual Contributors

 

10

%

30

%

70

%

Individual Contributors

 

5

%

30

%

70

%

 


Exhibit 99.1

 

 

DEPOMED, INC.

 

AUDIT COMMITTEE CHARTER

 

Adopted by the Board of Directors of Depomed, Inc.
(as amended and restated through May 17, 2017)

 

Purpose

 

The purpose of the Audit Committee (the “ Committee ”) of the Board of Directors (the “ Board ”) of Depomed, Inc. (the “ Company ”) is to assist the Board in fulfilling its audit oversight responsibilities.  In its audit oversight role, the Committee shall have the principal duties and responsibilities set forth below.

 

·                   Review the audits of the Company’s financial statements and the integrity of the Company’s financial statements, financial reporting and accounting processes, and systems of internal controls regarding finance and accounting.

 

·                   Review the independence, qualifications and performance of the Company’s independent auditor and the personnel performing the internal audit function.

 

·                   Facilitate communication among the independent auditor, management, the personnel responsible for the internal audit function and the Board.

 

·                   Assist the Board in the oversight of the Company’s compliance with applicable legal, regulatory and tax requirements, including with respect to the above denoted areas.

 

·                   Prepare the report that is required to be included in the Company’s annual proxy statement (or, if not previously provided during the fiscal year, any other proxy statement or consent statement relating to the election of directors) pursuant to the rules and regulations of the Securities and Exchange Commission (the “ SEC ”).

 

The Board recognizes that although the Committee has been given certain duties and responsibilities pursuant to this Charter, the Committee is not responsible for guaranteeing the accuracy of the Company’s financial statements or the quality of the Company’s accounting and financial reporting practices.  The fundamental responsibility for the Company’s financial statements and disclosures rests with management and the Company’s independent auditor.  The Board also recognizes that meeting the responsibilities of the Committee requires a degree of flexibility. To the extent that procedures included in this Charter go beyond what is required of an audit committee by existing law and regulation, such procedures are meant to serve as guidelines rather than inflexible rules, and the Committee may adopt such different or additional procedures as it deems necessary or appropriate from time to time.

 

Composition

 

The Committee shall be composed of three or more directors, each of whom (i) meets the Nasdaq Global Market (“ Nasdaq ”) listing standards requirements for independence, and (ii) otherwise satisfies the applicable requirements for audit committee service imposed by the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and the rules and regulations of the SEC under the Exchange Act, or the Nasdaq.  Determinations as to whether a particular director satisfies the requirements for membership on the Committee shall be made by the Board.

 



 

At least one member of the Committee shall be an “audit committee financial expert” in accordance with the rules and regulations of the SEC, and at least one member (who may also serve as the audit committee financial expert) shall have accounting or related financial management expertise.  The designation or determination by the Board of a person as an audit committee financial expert will not impose on such person individually, on the Committee, or on the Board as a whole, any greater duties, obligations or liability than would exist in the absence of such designation or determination.  All other members of the Committee shall be financially literate.

 

Members of the Committee shall be appointed by the Board on the recommendation of the Nominating and Corporate Governance Committee.  Members of the Committee shall serve for such terms as the Board may determine, or until their earlier resignation, death or removal by the Board.  The Board may remove or replace any member of the Committee at any time with or without cause.  The Nominating and Corporate Governance Committee may make recommendations to the Board on all such matters regarding membership, removal and replacement.

 

Meetings

 

The Committee shall meet with such frequency and at such intervals as it shall determine is necessary or appropriate to carry out its duties and responsibilities, but in any case, not less than five times a year.  The Board shall designate one member of the Committee to serve as its chairman.  The Committee will meet at such times as determined by its chairman or as requested by any two of its members.  Notice of all meetings shall be given, and waiver thereof determined, and all actions of the Committee shall be taken, pursuant to and in accordance with the Bylaws of the Company.  The chairman will preside, when present, at all meetings of the Committee.  The Committee may meet by telephone or video conference and may take action by written consent.

 

Each member of the Committee shall have one vote.  The Committee shall be authorized to take any permitted action only by the affirmative vote of a majority of the Committee members present at any meeting at which a quorum is present, or by the unanimous written consent of all of the Committee members.

 

The Committee shall maintain copies of minutes of each meeting of the Committee, and each action by written consent taken without a meeting, reflecting the actions so authorized or taken by the Committee.  A copy of the minutes of each meeting and all consents shall be placed in the Company’s minute book. The Committee chairman will report the Committee’s actions and recommendations to the Board after each Committee meeting.

 

Authority

 

The Committee shall have all of the powers of the Board that are necessary or appropriate for the Committee to fulfill its purposes and carry out its duties and responsibilities as set forth in this Charter, including the following:

 

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1.                                       Conduct or authorize such inquiries or investigations into matters within the Committee’s scope of responsibility as the Committee deems appropriate.

 

2.                                       Have such direct and independent interaction with employees and members of executive management, including the Company’s Chief Financial Officer (“ CFO ”), chief accounting officer and controller, as the Committee deems appropriate.

 

3.                                       Meet with and seek any information the Committee requires from employees, executive management, directors or external parties.

 

4.                                       Engage independent counsel and other advisers as the Committee determines necessary to carry out its responsibilities.

 

5.                                       Cause the executive management of the Company to provide such funding as the Committee shall determine to be appropriate for payment of reasonable compensation to the Company’s independent auditor and any independent counsel or other advisers engaged by the Committee, and payment of ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

 

Responsibilities

 

The Committee, to the extent it deems necessary or appropriate, shall:

 

A.                         Oversight of the Company’s Relationship with the Independent Auditor

 

1.                                       Appoint (and recommend that the Board submit for shareholder ratification), compensate, retain and oversee the work of the independent auditor (including resolution of any disagreements between management and the independent auditor regarding financial reporting), evaluate the performance of the independent auditor and, if so determined by the Committee, replace the independent auditor; it being acknowledged that the independent auditor is ultimately accountable to the Board and the Committee, as representatives of the shareholders. The independent auditor will report directly to the Audit Committee.

 

2.                                       Discuss with the independent auditor any disclosed relationships or services that may affect the independence and objectivity of the independent auditor and take appropriate actions to oversee the independence of the independent auditor.

 

3.                                       Review and evaluate the lead audit partner of the independent auditor and assure the regular rotation of the lead audit partner, the concurring partner and other audit partners engaged, to the extent required by law, and further consider whether, in order to assure continuing auditor independence, there should be regular rotation of the audit firm itself.

 

4.                                       Discuss with the Chief Executive Officer (the “ CEO ”) and the CFO their views as to the competence, performance and independence of the independent auditor.

 

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5.                                       Review and pre-approve both audit and permitted non-audit services to be provided by the independent auditor.  The Committee may adopt policies and procedures for the approval of such services which may include delegation of authority to a designated member or members of the Committee to approve such services so long as any such approvals are disclosed to the full Committee at its next scheduled meeting.  The Committee will pre-approve and regularly review the amounts of fees paid to the independent auditor for audit and non-audit services.

 

6.                                       Ensure the receipt of, and evaluate the written disclosures and the letter that the independent auditor submits to the Committee regarding the auditor’s independence in accordance with the rules of the Public Company Accounting Oversight Board (“ PCAOB ”), discuss such disclosures and letter with the independent auditor, oversee the independence of the independent auditor and, if so determined by the Committee in response to such disclosures and letter, take appropriate action to address issues raised by such evaluation.

 

7.                                       Establish policies for the hiring of employees and former employees of the independent auditor and review and discuss with management the Company’s compliance with such policies.

 

B.                         Financial Statements and Disclosure Matters

 

1.                                       Review and discuss with management and the independent auditor the Company’s annual audited financial statements, including disclosures made in management’s discussion and analysis, and recommend to the Board whether the audited financial statements should be included in the Company’s Form 10-K.  Review should include discussion with management and independent auditors of significant issues regarding accounting principles, practices and judgments.  The Committee should consider the independent auditor’s judgments about the quality and appropriateness of the Company’s accounting principles as applied in its financial reporting.

 

2.                                       Review and discuss with management and the independent auditor the Company’s quarterly financial statements prior to the filing of the Form 10-Q.

 

3.                                       Review and discuss quarterly reports from the independent auditor on: (i) all critical accounting policies and practices used; (ii) all alternative treatments of financial information within GAAP that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; and (iii) other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences.

 

4.                                       Discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including any significant changes in the Company’s selection or application of accounting principles.

 

5.                                       Discuss with the independent auditor the matters required to be discussed by the applicable Auditing Standards adopted by the PCAOB related to the conduct of the audit, including: any difficulties encountered in the course of the audit work; restrictions on the scope of activities or access to required information; or any significant disagreements with management.

 

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6.                                       Discuss with management and the independent auditor the adequacy of internal financial controls; and the adequacy of the disclosure of off-balance sheet transactions, arrangements, obligations and relationships in reports filed with the Commission.

 

7.                                       Review disclosures made to the Committee by the Company’s CEO and CFO during their certification process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein, and any fraud involving management or other employees who have a significant role in the Company’s internal controls over financial reporting.

 

8.                                       Obtain assurance from the independent auditor that the audit was conducted in a manner consistent with Section 10A of the Exchange Act.

 

9.                                       Review with financial management and the independent auditor the Company’s quarterly and year-end financial results prior to the public release of earnings. The Committee will discuss with management earnings press releases, including the use of “ pro forma ” or “adjusted” non-GAAP information, as well as financial information and earnings guidance provided to analysts and ratings agencies.  Such discussion may be general (consisting of discussing the types of information to be disclosed and the types of presentations to be made).

 

10.                                Ensure that a public announcement of the Company’s receipt of an audit opinion that contains a going concern qualification is made promptly.

 

11.                                Review and discuss with management SEC comment letters or other communications regarding the Company’s public filings and the Company’s responses thereto.

 

C.                         Internal Audit, Internal Controls and Risk Management

 

1.                                       Meet at least annually in separate executive sessions with management, the personnel responsible for the internal audit function, and the independent auditor to discuss matters that any of them or the Committee believes could significantly affect the financial statements and should be discussed privately.

 

2.                                       Review the activities, performance, staffing, budget, annual internal audit plan (and any changes to such plan), and organizational structure of the internal audit function, as well as the qualifications of the personnel responsible for the internal audit function.

 

3.                                       Review and discuss with management, the personnel responsible for the internal audit function and the independent auditor periodic reports prepared by the personnel responsible for the internal audit function, including the scope and results of any internal audit, and discuss any significant observations or recommendations to management and management’s responses.

 

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4.                                       Instruct management, the independent auditor and the personnel responsible for the internal audit function that the Committee expects to be informed if there are any subjects that require special attention or if any significant deficiencies or material weaknesses to the system of internal control over financial reporting are identified.

 

5.                                       Review any proposed material changes to the company’s system of internal control over financial reporting with management, the independent auditor and the personnel responsible for the internal audit function, including any such changes proposed by management, the independent auditor or the personnel responsible for the internal audit function or adopted as a result of any significant deficiencies or material weaknesses.

 

6.                                       Meet at least annually with management and the independent auditor to consider the integrity of the Company’s financial reporting processes and controls, including the process by which the CEO and the CFO engage in due diligence for and execute the financial statement certifications required by the Sarbanes-Oxley Act.

 

7.                                       Discuss with management the Company’s major financial, accounting, legal and business risk exposure and the steps management has taken to monitor and control such exposure, including the Company’s policies, practices and plans with respect to enterprise risk assessment, enterprise risk management, crisis communications, disaster recovery and the risk of fraud.

 

8.                                       Discuss and review with management the Company’s insurance portfolio and the adequacy of the type and scope of coverage provided by such insurance portfolio relative to the risk exposure of the Company, including product liability insurance, general liability insurance and director and officer insurance.

 

9.                                       In coordination with the Compensation Committee, annually review the Company’s compensation plans, programs and policies as they relate to the Company’s risk management.

 

D.                         Investment Policies, and Tax Planning and Strategies

 

1.                                       Discuss and review with management the Company’s investment policies that may be adopted by the Board from time to time, and the Company’s compliance with such policies.

 

2.                                       Discuss and review with management the performance of the Company’s investments.

 

3.                                       Discuss and review with management the Company’s: (i) tax planning strategies, including the effect of U.S. and any applicable international tax regulations; (ii) tax return filing compliance; (iii) pending tax audits, including the status of any such audits; and (iv) interest rate and currency exposure, including any related hedging activities.

 

6



 

E.                         Finance Organization and Operations

 

1.                                       Discuss and review with management the activities, performance, staffing and experience level of the Company’s finance, accounting and information technology organizations.

 

2.                                       Discuss with management the Company’s policies and practices regarding information technology systems, information management systems and related infrastructure, including the Company’s information technology and information management security, risk management and back-up policies, practices and infrastructure, including, to the extent related to the Company’s financial reporting and accounting processes.

 

F.                          Compliance and Related Party Transactions

 

1.                                       Discuss with management, including the Company’s General Counsel, the Company’s compliance with applicable laws and regulations or other legal matters that may have a material effect on the Company’s financial statements and results of operations.

 

2.                                       Review current developments in accounting and regulatory requirements, including accounting standards and financial legislation or regulations, and assess the impact of any such developments on the Company and the Company’s financial statements and disclosures.

 

3.                                       Review the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the Company’s financial statements.

 

4.                                       Discuss with management and the independent auditor any correspondence with regulators or governmental agencies or published reports that raise material issues regarding the Company’s financial statements or accounting policies.

 

5.                                       Establish procedures for (i) receipt, retention and treatment of any complaints received by the Company about its accounting, internal accounting controls or audit matters and (ii) the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

 

6.                                       Establish and periodically review policies and procedures for the review, approval and ratification of related person transactions, as defined in applicable SEC rules.

 

7.                                       At least quarterly, review and assess related person transactions, and oversee other related party transactions governed by applicable Company policies and procedures, laws and accounting standards.

 

G.                        Other Matters

 

1.                                       Review the scope, coverage and results of any employee benefit plan audit with management.

 

2.                                       Review any significant internal controls over financial reporting improvements recommended by the independent auditor or internal audit function.

 

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3.                                       In coordination with the Nominating and Corporate Governance Committee, review and oversee (i) the Company’s policies and procedures regarding compliance with applicable laws and regulations, including the Foreign Corrupt Practices Act (“ FCPA ”), and the Company’s Code of Business Conduct and Ethics (“ Code of Ethics ”) and (ii) the Company’s compliance therewith.

 

4.                                       In coordination with the Nominating and Corporate Governance Committee,, discuss at least quarterly with management, including the Company’s General Counsel (and Chief Compliance Officer if other than the General Counsel), and receive at least annually a report from the General Counsel (and Chief Compliance Officer if other than the General Counsel) covering, (i) the Company’s policies and procedures regarding compliance with applicable laws and regulations, including the FCPA, and the Code of Ethics, (ii) the Company’s compliance with such laws, regulations and Code of Ethics and (iii) the material legal or contractual risks to the Company.

 

5.                                       Report to the Board on any significant matters arising from the Committee’s activities.

 

6.                                       At least annually, review and reassess this Charter and, if appropriate, recommend changes to the Board.

 

7.                                       At least annually, the Committee shall review, discuss and assess its own performance and effectiveness.

 

8.                                       Perform any other activities consistent with this Charter, the Bylaws of the Company and governing law, as the Committee deems necessary or appropriate.

 

9.                                       This Charter may be amended only by the Board.

 

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Exhibit 99.2

 

 

DEPOMED, INC.

 

COMPENSATION COMMITTEE CHARTER

 

Adopted by the Board of Directors of Depomed, Inc.

(as amended and restated through May 17, 2017)

 

Purpose

 

The purpose of the Compensation Committee (the “ Committee ”) of the Board of Directors (the “ Board ”) of Depomed, Inc. (the “ Company ”) is to discharge the Board’s responsibilities relating to compensation of the Company’s directors and executive management.  Except as set forth in this Charter, the Committee has overall responsibility for evaluating and approving the compensation applicable to directors and executive management, including the cash compensation and incentive, equity-based and other compensatory plans, policies, practices and programs of the Company (collectively, the “ Compensation Programs ”) applicable to directors and executive management. The Committee also has overall responsibility for oversight of the Compensation Programs and benefit plans (excluding investment performance and audit oversight) that pertain to all employees.  For purposes of this Charter, the term “executive management” means (i) any person designated by the Board as an “officer” of the Company as defined in Rule 16a-1 for purposes of Section 16 of the Securities Exchange Act of 1934, as amended (“ Section 16 Officer ”) and (ii) any person who is not so designated but reports directly to the Chief Executive Officer (“ CEO ”) or holds a title of Senior Vice President or Vice President and reports directly to the Chief Commercial Officer (“ CCO ”).

 

Principles

 

1.               The Committee shall structure executive Compensation Programs in a manner that the Committee believes will enable the Company to attract, motivate and retain executive management who are capable of leading the Company in achieving its business objectives.

 

2.               The Committee shall establish Compensation Programs that are designed to reward executive management for the achievement of specified business objectives of the Company, to create and maintain a performance-oriented environment for the Company’s executive management.

 

3.               The Committee shall establish Compensation Programs that are intended to provide executive management with an equity interest in the Company so as to link a portion of executive management’s compensation with the performance of the Company common stock.

 



 

Composition

 

The Committee shall be composed of three or more directors, each of whom shall satisfy the independence requirements of the Nasdaq Global Market (“ Nasdaq ”) (subject to any exceptions permitted under Nasdaq requirements) and any other standards of independence as may be prescribed for purposes of any federal securities, tax or other laws relating to the Committee’s duties and responsibilities (including Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and Section 162(m) of the Internal Revenue Code of 1986, as amended, or any successor thereto (“ Section 162(m) ”)).

 

The members of the Committee shall be appointed by the Board on the recommendation of the Nominating and Corporate Governance Committee. Members of the Committee shall serve for such terms as the Board may determine, or until their earlier resignation, death or removal by the Board.  The Board may remove or replace any member of the Committee at any time with or without cause.  The Nominating and Corporate Governance Committee may make recommendations to the Board on all such matters regarding membership, removal and replacement.

 

Meetings

 

The Committee will meet at least four times annually, or more frequently as the circumstances dictate. The Board shall designate one member of the Committee to serve as its chairman.  The Committee will meet at such times as determined by its chairman or as requested by any two of its members.  Notice of all meetings shall be given, and waiver thereof determined, and all actions of the Committee shall be taken, pursuant to and in accordance with the Bylaws of the Company.  The chairman will preside, when present, at all meetings of the Committee.  The Committee may meet by telephone or video conference and may take action by written consent.

 

Each member of the Committee shall have one vote.  The Committee shall be authorized to take any permitted action only by the affirmative vote of a majority of the Committee members present at any meeting at which a quorum is present, or by the unanimous written consent of all of the Committee members.

 

The Committee shall maintain copies of minutes of each meeting of the Committee, and each action by written consent taken without a meeting, reflecting the actions so authorized or taken by the Committee.  A copy of the minutes of each meeting and all consents shall be placed in the Company’s minute book. The Committee chairman will report its actions and recommendations to the Board after each Committee meeting.

 

As appropriate under the circumstances, the Committee will, among its other responsibilities:

 

A.             Chief Executive Officer and Executive Management Compensation

 

1.               Develop and periodically review Compensation Programs applicable to executive management.

 

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2.               (i) Evaluate the performance of the Company against corporate goals and objectives relevant to executive management compensation approved by the Board, and recommend to the Board for its determination the level of the Company’s achievement of those goals and objectives; (ii) in consultation with the chairman of the Board, evaluate the CEO’s performance in light of corporate goals and objectives and any individual goals and objectives; (iii) evaluate the performance of members of executive management (other than the CEO) in light of the CEO’s evaluation of their performance and the corporate and individual goals and objectives; (iv) recommend to the Board for its approval CEO compensation, including approving salary, grants of cash and equity awards and other incentive compensation, based on the Committee’s evaluation; and (v) review and approve the compensation of executive management, other than the CEO, including approving salary, grants of cash and equity awards and other incentive compensation, based on the Committee’s evaluation.  In making its determinations or recommendations, as applicable, regarding executive compensation, the Committee shall consider factors it believes appropriate, including without limitation, performance against corporate and individual goals and objectives, the impact of performance on the outlook for the Company, absolute and relative shareholder return, executive compensation at peer companies and compensation provided to executive management in past years.  The CEO and members of executive management, as applicable, may not be present during voting or deliberations on his or her compensation.

 

3.               Periodically, as and when appropriate and applicable, review and approve the following as they affect the CEO and other executive management: (i) any employment agreements and severance arrangements; (ii) any change-in-control agreements and change-in-control provisions affecting any elements of compensation and benefits; and (iii) any special or supplemental compensation and benefits, including supplemental retirement benefits and the perquisites provided during and after employment.

 

4.               Annually review and approve the objective performance measures and the performance targets, as applicable, for executive management participating in the Company’s cash bonus plan, equity incentive plans, and any other applicable executive compensation plans, and determine the performance results under such measures and targets.

 

5.               Determine, amend, and monitor compliance with the stock ownership guidelines applicable to any member of executive management and take actions to address any violation of the stock ownership guidelines.

 

6.               Notwithstanding anything to the contrary in this Charter, if any grant or award to one or more executive management (including the CEO) is intended to qualify for the performance-based compensation exemption from the limitations on deductibility of executive compensation imposed by Section 162(m), the Committee, or any independent subcommittee thereof, rather than the Board, shall approve such award, but it may refer such award to the Board for ratification.

 

B.             Executive Compensation Disclosure

 

1.               Review and discuss the Compensation Discussion and Analysis (“ CD&A ”) with Company management and, based on such review and discussion, make a recommendation to the Board regarding whether to include the CD&A in the Company’s proxy statement and/or Annual Report on Form 10-K.

 

2.               Oversee, review and approve inclusion of a compensation committee report in the Company’s proxy statement and/or Annual Report on Form 10-K pursuant to applicable securities rules and regulations.

 

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3.               Review the Company’s compliance programs relating to the Sarbanes-Oxley Act of 2002 relating to the participation of directors and executive management in any Compensation Program and any employee benefit plan or program.

 

4.               Oversee the Company’s compliance with the rules and regulations of the Securities and Exchange Commission (“ SEC ”) regarding shareholder approval of certain executive compensation matters, including advisory votes to approve executive compensation and the frequency of such votes, and any applicable requirements under Nasdaq rules that stockholders approve equity incentive plans.

 

5.               Provide recommendations to the Board on compensation-related proposals to be considered at the Company’s annual meeting, including the frequency of advisory votes to approve executive compensation.

 

6.               Review and consider the results of any advisory vote to approve executive compensation and otherwise oversee the Company’s engagement with shareholders on the subject of executive compensation.

 

C.             Compensation and Benefit Plans

 

1.               Provide general oversight (excluding investment performance and audit oversight) of the Compensation Programs and material benefit plans that pertain to all employees.  That oversight may include: (i) periodically reviewing and making recommendations to the Board with respect to the adoption of, or material changes in, such Compensation Programs and material benefit plans; and (ii) reviewing with the CEO and the head of Human Resources the material criteria used by management in evaluating employee performance throughout the Company, and in establishing and implementing appropriate Compensation Programs.

 

2.               Review and make recommendations to the Board with respect to adopting, amending and overseeing the policies and practices related to the Company’s recoupment, or the forfeiture by employees, including the CEO, Chief Financial Officer (“ CFO ”) and other members of executive management, of incentive compensation as the Committee determines to be necessary or appropriate and in accordance with any legal requirements.

 

3.               Administer, terminate or amend the Company’s employee stock purchase plan, if any, except to the extent shareholder approval is required, and subject to any express limitation on such authority set forth in the applicable plan document.

 

4.               Review quarterly and approve all grants of stock options, restricted stock, and restricted stock units, and any other types of awards, including stock appreciation rights or other equity-based awards that may be granted under the Company’s equity incentive plans to all employees (other than the CEO, which shall be approved by the Board), consultants, independent contractors and other eligible recipients of awards.

 

5.               Review and approve all cash awards under the Company’s cash bonus plan and the terms of such grants, made to executive management (other than the CEO, which shall be approved by the Board).

 

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6.               Establish guidelines pursuant to which the CEO, or such other member of executive management appointed by the Committee, shall administer one or more of the Company’s equity incentive plans with respect to awards made under such plans to new employees (other than members of executive management) at the time of their hiring.

 

7.               Review and establish rules, regulations and perform all other duties specifically required of the Committee by the provisions of the Company’s cash bonus plan, equity incentive plans and any other executive compensation plans, except those duties that may be specifically retained by the Board or delegated by the Board other than to the Committee.

 

8.               Amend or modify any provisions of the Company’s cash bonus plan, equity incentive plans and any other executive compensation plan, in each case, to the extent such amendments or modifications (i) do not require shareholder approval or (ii) do not specifically require approval by the Board, and if such approval is required, recommend such amendments or modifications to the Board.

 

9.               Require and review reports submitted at least annually by any individual or group to whom the Committee has delegated any of its duties, if any, listing all actions taken by the delegates pursuant to their respective delegations.

 

D.             Risk Oversight

 

1.               In coordination with the Audit Committee, annually review the Compensation Programs as they relate to the Company’s risk management, determine whether and to what extent risks arising from the Compensation Programs are reasonably likely to have a material adverse effect on the Company, consider methods of mitigating any such risks, and discuss with the Company’s management the results of its review and any disclosures required by Item 402(s) of Regulation S-K.

 

2.               In coordination with the Audit Committee, provide oversight of the risks associated with the Committee’s responsibilities in this Charter.

 

E.             Non-Employee Director Compensation

 

1.               Develop and periodically review Compensation Programs applicable to non-employee directors.

 

2.               Review periodically, and recommend to the Board for approval, the form and amount of compensation of non-employee directors of the Board for service on the Board and its committees, based on director compensation at peer companies and other factors the Committee deems appropriate.

 

3.               In coordination with the Nominating and Corporate Governance Committee, review the Company’s stock ownership guidelines for non-employee directors and recommend to the Board revisions to such guidelines as the Committee deems desirable or appropriate, and monitor compliance with such guidelines.

 

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F.              Other Committee Responsibilities

 

1.               Report to the Board on any significant matters arising from the Committee’s work.

 

2.               Review and reassess this Charter annually and, if appropriate, recommend changes to the Board.

 

3.               Annually evaluate the performance of the Committee, including as compared to the requirements of this Charter.

 

4.               Perform any other activities consistent with this Charter, the Company’s Bylaws and governing law, as the Committee deems necessary or appropriate.

 

5.               Review periodically with the CEO the Company’s plans for succession to the offices of members of executive management, and make recommendations to the Board with respect to the selection of appropriate individuals to succeed to these positions.

 

Authority

 

By adopting this Charter, the Board delegates to the Committee full authority to perform each of the duties and responsibilities of the Committee described above.

 

1.               The Committee may form and delegate such of its authority and responsibilities to subcommittees consisting of two or more members of the Committee as the Committee deems proper and consistent with applicable legal requirements, provided that any actions taken by it shall be reported to the whole Committee.

 

2.               In its sole discretion, the Committee has the authority to appoint, obtain advice from, retain, engage and terminate compensation consultants, independent counsel and such other advisers as the Committee determines necessary or advisable to carry out its responsibilities (after assessing the independence of such advisers under the independence standards applicable to engagements of, or receipt of advice from, as applicable, any such consultant, counsel or adviser under federal securities and other laws, and Nasdaq listing standards); and approve reasonable fees and other terms of retention of any such consultant, counsel or adviser, and cause the executive management of the Company to provide funding to pay such fees, as determined by the Committee.  The Committee shall be directly responsible for the appointment, compensation and oversight of any such consultant, counsel or adviser. Nothing in this Charter shall affect the Committee’s ability exercise its own judgment in the fulfillment of its duties, to seek advice from persons who do not meet independence standards such as company human resources or legal professionals, or require the Committee to implement or act in accordance with the advice or recommendations of any compensation advisor.

 

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General

 

1.               In performing their responsibilities, Committee members are entitled to rely in good faith on information, opinions, reports or statements prepared or presented by: (i) executive management or employees of the Company whom the Committee member reasonably believes to be reliable and competent in the matters presented; and (ii) consultants, counsel, independent auditors or other persons as to matters which the Committee member reasonably believes to be within the professional or expert competence of such person.

 

2.               This Charter may be amended only by the Board.

 

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Exhibit 99.3

 

 

DEPOMED, INC.

 

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
CHARTER

 

Adopted by the Board of Directors of Depomed, Inc.
(as amended and restated through May 17, 2017)

 

Purpose

 

The Nominating and Corporate Governance Committee (the “ Committee ”) will provide assistance to the Board of Directors (the “ Board ”) in fulfilling its responsibility to the shareholders relating to corporate governance policies and practices of Depomed, Inc. (the “ Company ”), including Board and committee structure and nominations.  The Committee will have free and open communication with the directors and the executive management of the Company.

 

Composition

 

The Committee shall be composed of three or more directors, each of whom, in the judgment of the Board, shall satisfy the independence requirements of Nasdaq Global Market (the “ Nasdaq ”). The members of the Committee shall be appointed by the Board. Members of the Committee shall serve for such terms as the Board may determine, or until their earlier resignation, death or removal by the Board. The Board may remove or replace any member of the Committee at any time with or without cause.  The Committee may make recommendations to the Board on all such matters regarding membership, removal and replacement.

 

In carrying out its responsibilities, the Committee will adopt policies and procedures it believes are necessary or appropriate to enable it to react to changing conditions, and to increase the confidence of the directors and shareholders that the corporate governance practices of the Company comply with all requirements.

 

Meetings

 

Meetings of the Committee will be held at the request of the Board and the members of the Committee, from time to time, in response to needs of the Board.  Notwithstanding the foregoing, the Committee will meet at least two times annually, or more frequently as circumstances dictate.

 

The Board shall designate one member of the Committee to serve as its chairman.  The Committee will meet at such times as determined by its chairman or as requested by any two of its members.  Notice of all meetings shall be given, and waiver thereof determined, and all actions of the Committee shall be taken, pursuant to and in accordance with the Company’s bylaws.  The chairman will preside, when present, at all meetings of the Committee.  The Committee may meet by telephone or video conference and may take action by written consent.

 



 

Each member of the Committee shall have one vote.  The Committee shall be authorized to take any permitted action only by the affirmative vote of a majority of the Committee members present at any meeting at which a quorum is present, or by the unanimous written consent of all of the Committee members.

 

The Committee shall maintain copies of minutes of each meeting of the Committee, and each action by written consent taken without a meeting, reflecting the actions so authorized or taken by the Committee.  A copy of the minutes of each meeting and all consents shall be placed in the Company’s minute book.  The Committee chairman will report its actions and recommendations to the Board after each Committee meeting.

 

Authority

 

The Committee will have independent access to the Company’s internal staff and has the authority to retain any search firm engaged to assist in identifying director candidates, and to retain outside counsel and any other advisors as the Committee may deem appropriate in its sole discretion.  The Committee will have the sole authority to approve related fees and retention terms.

 

Responsibilities

 

As appropriate under the circumstances, the Committee will, among its other responsibilities:

 

A.             Board of Directors

 

1.                                                 Develop, periodically review and recommend to the Board the desired qualifications of members of the Board and its committees, including: the number and nature of other board memberships held; relevant experience, desired diversity and the collective expertise of the Board and of its committees; independence; and possible conflicts of interest, as well as protocol for selecting the new members (the current version of which is attached as Appendix A ).

 

2.                                                 Determine the need for new directors and, as appropriate, lead the search for new individuals qualified (consistent with criteria approved by the Board) to become members of the Board.  In doing so, the Committee will consider individuals who will be able to contribute to an effective Board, serve the long-term interests of the shareholders of the Company, and satisfy the qualification criteria and standards for nomination of directors and committee members.

 

3.                                                 Evaluate each new director candidate and each incumbent director before recommending that the Board nominate or re-nominate such individual for election or reelection as a director based on the extent to which such individual meets the established criteria. In selecting nominees, the Committee will consider individuals who individually and collectively meet the qualification criteria developed by the Committee and approved by the Board and who individually meet the highest standards of personal and professional integrity, ability and judgment to serve the long-term interests of the shareholders.  As part of its process, the Committee will consider individuals who are properly proposed by

 

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shareholders of the Company to serve on the Board in accordance with the requirements of Nasdaq, the Bylaws of the Company and applicable corporation law, and make recommendations to the Board regarding such individuals based on the established qualification criteria and standards for members of the Board.  The Company will disclose any material changes to the shareholder nomination procedures as required by applicable law.

 

4.                                                 Review the appropriate size, function and needs of the Board.

 

5.                                                 Develop and recommend to the Board a policy involving tenure and retirement of directors.

 

6.                                                 Identify and recruit candidates to fill new positions on the Board and, in the case of a vacancy on the Board, recommend to the Board an individual to fill such vacancy through appointment by the Board or through election by the shareholders.

 

7.                                                 Conduct appropriate and necessary inquiries into the backgrounds and qualifications of possible Board candidates.

 

8.                                                 Review and make recommendations to the Board regarding the appropriate organizational and board leadership structure.  To the extent that the chairman of the Board is not independent, review and recommend to the independent directors of the Board the director deemed appropriate for the position of lead independent director.

 

9.                                                 Review resignations tendered by a director if, in an uncontested election, the director does not receive the vote of at least the majority of the votes cast at any meeting for the election of directors and recommend to the Board whether to accept or reject the tendered resignation, or whether other action should be taken.

 

10.                                          Annually review the composition of the Board for skills and characteristics focused on the governance and business needs and requirements of the Company and the qualifications and independence of the members of the Board and its various committees, make any recommendations to the Board that the Committee deems appropriate concerning any recommended change in the composition or size of the Board or its committees, and recommend to the Board those directors determined to satisfy the requirements for “independence” in accordance with the Nasdaq listing standards and the Company’s Corporate Governance Guidelines.

 

11.                                          Develop and periodically evaluate initial orientation procedures and continuing education guidelines for each member of the Board and any committee.

 

12.                                          In consultation with the chairman of the Board, develop and oversee an annual evaluation and self-assessment process for the Board and its committees and monitor the performance of directors and the Board’s committees, including evaluating the effectiveness of each.  As appropriate, the Committee will make recommendations to the Board regarding its findings.

 

13.                                          Provide the Board advice regarding Board succession.

 

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B.             Board Committees

 

1.                                       Review the Board’s committee structure and recommend to the Board for its approval directors to serve as members and chairpersons of each committee.  In doing so, the Committee will make recommendations, on an annual basis, regarding the members of the Board who meet the independence requirements, and members of the Audit Committee who meet the financial expert requirements, established by the Securities and Exchange Commission (“ SEC ”) and Nasdaq.

 

2.                                       Evaluate at least annually, or more frequently as circumstances dictate, the functions, performance, authority, operations, charter and composition of each standing or ad hoc Board committee, including any authority of a committee to delegate to a subcommittee, management committee or senior executive officer.

 

3.                                       Recommend to the Board such changes to the Board’s committee structure as the Committee deems advisable.

 

C.             Corporate Governance

 

1.                                       Review and recommend to the Board proposed changes to the Company’s Articles of Incorporation and Bylaws as advisable or needed.

 

2.                                       Develop and recommend to the Board the corporate governance principles applicable to the Company, including the codes of ethical conduct and legal compliance by which the Company and its directors, officers, employees and agents will be governed, and recommend proposed changes as from time to time the Committee deems appropriate to the Board for approval, and monitor compliance with those principles.

 

3.                                       Periodically review the policies and practices of the Company in the area of corporate governance and, as necessary, recommend new policies and changes to existing policies to the Board for its approval.  In doing so, the Committee will review with the Company’s counsel or other appropriate personnel new and relevant legal and regulatory requirements that may be imposed on the Company from time to time.

 

4.                                       Review and make recommendations to the Board with respect to proposals properly presented by shareholders for inclusion in the Company’s annual proxy statement.  The Committee may, as appropriate in light of the proposal’s subject matter, refer any proposal to any other committee of the Board for purposes of review and recommendations, except however proposals relating to executive compensation will be reviewed by the Compensation Committee.

 

5.                                       In coordination with the Audit Committee, consider questions of possible conflicts of interest of Board members and of the Company’s senior executives.

 

6.                                       Review the Company’s compliance with SEC and Nasdaq rules and other applicable legal or regulatory requirements pertaining to corporate governance.

 

7.                                       Review and discuss the disclosure in the Company’s annual proxy statement regarding corporate governance, director independence and the operation of the Committee and make recommendations with respect thereto.

 

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8.                                       Review at least annually the reports covering the Company’s corporate governance issued by the leading proxy advisory firms, and report on such to the Board.

 

D.             Risk Oversight

 

1.                                       In coordination with the Audit Committee, assess the Board’s role in risk oversight and recommend appropriate disclosures for approval by the Board.

 

2.                                       In coordination with the Audit Committee, discuss with management and report to the Board risk management issues related to the matters overseen by the Committee.  Specifically, without limitation, the Committee shall discuss and report to the Board the Company’s major risk exposures and management’s risk monitoring and mitigation activities in connection with: (i) corporate governance; (ii) director succession planning; (iii) political and charitable contributions; (iv) insider trading; and (v) reputational risk to the extent such risk arises from the topics under discussion.

 

E.             Other Duties

 

1.                                       In consultation with the chairman of the Board, recommend policies regarding succession in the event of an emergency impacting the CEO or retirement of the CEO.

 

2.                                       In coordination with the Audit Committee, annually review any Company corporate political and charitable contributions and expenditures to ensure alignment with Company policies and values.

 

3.                                       Annually review and assess the effectiveness of any Company environmental and social responsibility policy, goal and program, and make recommendations as deemed appropriate based on such review and assessment.

 

4.                                       Periodically review and reassess the adequacy of the Company’s insider trading policy, compliance therewith and recommend any proposed changes to the Board for approval.  The Committee will periodically review the operation of the insider trading policy compliance program.

 

5.                                       In coordination with the Audit Committee, annually review the Company’s directors and officers (“ D&O ”) insurance program.

 

6.                                       Annually evaluate the performance of the Committee, including as compared to the requirements of this Charter.

 

7.                                       Review and reassess the adequacy of the Charter at least annually and recommend any proposed changes to the Board for approval.

 

8.                                       Make reports to the Board following the meetings of the Committee accompanied by any recommendations to the Board.

 

9.                                       Perform any other activities consistent with this Charter, the Company’s Bylaws and governing law, as the Committee deems necessary or appropriate.

 

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The Committee will have the authority to delegate any of its responsibilities to subcommittees as the Committee may deem appropriate so long as any such subcommittee shall consist of at least two members, shall report any actions taken by it to the whole Committee, and such actions are ratified by the Committee as a whole.  This Charter may be amended only by the Board.

 

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APPENDIX A

 

DEPOMED, INC.
DIRECTOR NOMINATION PROTOCOL

 

BACKGROUND

 

Nominating individuals to serve on the Board of Directors (the “ Board ”) of Depomed, Inc. (the “ Company ”) is one of the incumbent directors’ key responsibilities and rights.  In general, the Nominating and Corporate Governance Committee (the “ Committee ”) makes the initial recommendations on such nominees to the full Board.  This protocol describes the process by which the Company intends to recommend to the Board nominees for the Board.

 

PRINCIPLES

 

A.                                     Any candidate for service on the Board must share and exhibit the Company’s core values of common purpose, integrity, teamwork, agility and accountability, and must strongly support the Company’s core purpose, which is to enhance the lives of the patients, families, physicians, payors and providers it serves.  Directors should reflect these core values, possess the highest personal and professional ethics, and be committed to representing the long-term interests of the shareholders.  They must also have an inquisitive and objective perspective, practical wisdom and mature judgment.

 

B.                                     The Company seeks Board members who will bring to the Board a deep and wide range of experience in the business world, and diverse problem-solving talents.  Typically, they will be people who have demonstrated high achievement in business or another field, enabling them to provide strategic support and guidance for the Company.  Particular areas of expertise sought include: corporate strategy and development; commercial sales and marketing; commercial operations and execution; corporate finance; financial and/or accounting expertise; organizational leadership, development and management; public company management and disclosure; and corporate risk assessment and management.

 

C.                                     Director nominations shall be considered in light of the Company’s stated policy that at least two- thirds of the Company’s directors must be independent directors as defined under applicable Nasdaq rules and the Company’s Corporate Governance Guidelines.

 

NOMINATING PROCESS

 

A.                                     The nominating process outlined below will be used when a vacancy occurs, or when the Board determines to add one or more additional directors.

 

B.                                     The Committee will recommend to the full Board for its input and approval, the particular skills to be sought in a new director, using the principles described above.

 

C.                                     The Committee will identify potential candidates to recommend to the full Board.  All directors (employee and non-employee) may recommend candidates.  In the discretion of the Committee, a search firm may be engaged to identify additional candidates and to assist with initial screening of all candidates.

 

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D.                                     The Committee and the chairman of the Board, assisted by staff and the search firm as needed, will screen and review the credentials of all candidates (i) to identify those candidates that appear to possess the skills sought by the Board and (ii) to evaluate each candidate’s overall qualifications and fitness for the position.

 

E.                                      The chairman of the Committee, working with the chairman of the Board, will obtain background and reference information, as appropriate, for candidates under consideration following the above-referenced screening.

 

F.                                       The Committee will review all available information concerning the candidates’ qualifications and, in conjunction with the chairman of the Board, will identify the candidate(s) they feel are best qualified to serve on the Board.

 

G.                                     Each member of the Committee, the Chief Executive Officer (“ CEO ”), and the chairman of the Board (or the chairman of the Board’s delegate from the Board) will meet with the leading candidate(s) to further assess their qualifications and fitness, and to determine their interest in joining the Board.  At the discretion of the chairman of the Committee, the candidates may also meet with one or more of the other directors, the Chief Financial Officer (“ CFO ”), the General Counsel and other members of management as appropriate.

 

H.                                    Following the meeting, the Board member participants and the chairman of the Board will make a recommendation concerning the candidate to the Committee, which will consider whether to recommend the candidate to the full Board for election.

 

SHAREHOLDER NOMINATING PROCESS

 

A.                                     Shareholders may recommend nominees for director, and the Committee will consider such nominees.

 

B.                                     The procedures by which shareholders may submit their nominees are set forth in Section 5 of the Company’s Bylaws.  Shareholders making director nominations should not only provide, as required by the Bylaws, all information regarding the nominee that is required by law to be disclosed in proxy solicitations, but also should provide such additional information as will allow the Committee to evaluate the candidate in light of the key principles listed above, including but not limited to information concerning the candidate’s commitment to the Company’s core values, personal and professional ethics, business experience and independence.  The Committee may ask the candidate or the shareholder nominating the candidate to provide additional information at any time, and may conduct its own investigation of a candidate’s background, as the Committee deems appropriate under the circumstances.

 

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C.                                     The process for identifying and evaluating nominees is provided above, and there are no differences in the manner of evaluation if the nominee is recommended by a shareholder.

 

D.                                     There are no specific minimum qualifications that a shareholder nominee for director must satisfy in order to be recommended for the Board, but the general qualities and skills the Committee believes are necessary for directors to possess are listed above.

 

E.                                      The Company will disclose shareholder nominations if such disclosure is required by applicable laws, including the current rules of the Securities and Exchange Commission.

 

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Exhibit 99.4

 

 

DEPOMED, INC.

 

CORPORATE GOVERNANCE GUIDELINES

 

Adopted by the Board of Directors of Depomed, Inc.
(as amended and restated through May 17, 2017)

 

The Board of Directors (the “ Board ”) of Depomed, Inc. (the “ Company ”) has adopted the following Corporate Governance Guidelines (these “ Guidelines ”) to assist the Board in the exercise of its responsibilities.  These Guidelines, together with the Articles of Incorporation and Bylaws of the Company, and the charters of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee of the Board, provide the framework for the governance of the Company.

 

The Nominating and Corporate Governance Committee will review these Guidelines and other aspects of the Company’s governance as necessary, but no less than annually, and will report to the full Board the Nominating and Corporate Governance Committee’s findings and recommendations.  If necessary, these Guidelines will be revised and updated by the Board based on the recommendations of the Nominating and Corporate Governance Committee.

 

1.               Role of the Board and Management

 

The Board establishes broad corporate policies, sets strategic direction and oversees management, which is responsible for the Company’s operations.  The Company’s business is conducted by its officers, managers and employees, under the direction of the chief executive officer (the “ CEO ”) and the oversight of the Board, to enhance the long-term value of the Company for its shareholders.  The Board is elected by the shareholders to oversee management and to assure that the long-term interests of the shareholders are being served.

 

Directors are expected to exercise their business judgment to act in good faith, on an informed basis and in what they reasonably believe to be in the best long-term interests of the Company and its shareholders.  The Board is responsible for exercising all powers specifically conferred upon the Board by the Articles of Incorporation and Bylaws of the Company, as either may be amended from time to time, or by virtue of any applicable law or regulation.

 

2.               Management Selection and Oversight

 

The Board selects the CEO of the Company. The CEO selects executive management in consultation with the Board.  The CEO may select non-executive management consistent with any authority delegated by the full Board.

 

Together, the CEO and executive management are charged with the day-to-day conduct of the Company’s business.  The Board acts as an advisor and counselor to the CEO and executive management and ultimately monitors their activities and their performance.  Both the Board and executive management recognize that the long-term interests of shareholders are advanced by responsibly addressing the concerns of other stakeholders and interested parties, including employees, patients, payors, vendors, partners, suppliers, communities, government officials and the public at large.

 



 

3.               Chairman of the Board and CEO

 

It is the policy of the Company that (i) the positions of Chairman of the Board (the “ Chairman ”) and CEO be held by separate persons and (ii) the position of Chairman be held by an independent director.

 

4.               Director Responsibilities

 

In addition to its general oversight of management, the Board, acting itself or through one or more of its committees, performs a number of specific functions, including:

 

A.             Selecting, evaluating and compensating the CEO and overseeing CEO succession planning;

 

B.             Providing counsel and oversight on the selection, evaluation, development and compensation of executive management;

 

C.             Reviewing, approving and monitoring fundamental financial and business strategies and major corporate actions;

 

D.             Assessing major risks facing the Company, and reviewing options for their mitigation; and

 

E.              Ensuring processes are in place for maintaining the integrity of the Company, including the integrity of the financial statements, the integrity of compliance with law and ethics, the integrity of relationships with employees, patients, payors, vendors, partners, suppliers, communities, government officials and the public at large, and the integrity of relationships with other stakeholders.

 

5.               Meeting Attendance and Preparation; Confidentiality

 

Regular meetings of the Board are held a minimum of four times a year.  Special meetings may be called from time to time as determined by the needs of the business.  Each director is expected to attend all meetings of the Board and of committees to which he or she is appointed, and all annual shareholder meetings.

 

Directors are expected to carefully review Board and committee meeting agendas and related materials in advance of meetings so they may participate in an informed manner.  Attendance in person is highly preferable for regularly scheduled full Board meetings.  Occasional attendance via communications equipment is acceptable when needed due to extenuating individual circumstances.

 

Information learned in connection with or during the course of service on the Board is to be held confidential and used solely in furtherance of the Company’s business.  Maintaining confidentiality of such information is imperative to protecting the Company’s interests, and it also promotes open and effective communications among Board members and between the Board and members of management.

 

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6.               Director Qualification Standards

 

The Company’s core purpose is to enhance the lives of the patients, families, physicians, payors and providers it serves, as supported by the Company’s core values of common purpose, integrity, teamwork, agility and accountability.  Directors should reflect these core values, possess the highest personal and professional ethics, and be committed to representing the long-term interests of the shareholders.  Directors must also have an inquisitive and objective perspective, practical wisdom and mature judgment.  The Company endeavors to have a Board representing diverse experience at policy-making levels in areas that are relevant to the Company’s activities.  Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serve on the Board for an extended period of time.  Further information concerning director qualification standards will be provided in the Director Nomination Protocol that is attached to and made a part of the charter of the Nominating and Corporate Governance Committee of the Board.

 

7.               Independence of Directors

 

It is a policy of the Company that at least two-thirds of the directors must be independent directors as defined under the rules of the Nasdaq Global Market (“ Nasdaq ”).  Historically, transactions of any kind between the Company and its directors have been infrequent and immaterial, and the Company intends to encourage its outside directors to continue to limit their contacts with the Company.  Nevertheless, the Company will, in any event, comply with the applicable independence standards of Nasdaq.  In accordance with the listing standards of Nasdaq, a director is “independent” if he or she is not an executive officer or employee of the Company, and the Board affirmatively determines that such director does not have any relationship which, in the opinion of the Company’s Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and the director meets the bright-line independence standards promulgated by Nasdaq in its listing standards.  Independence recommendations will be made on an annual basis by the Nominating and Corporate Governance Committee at the time that the Board approves director nominees for inclusion in the proxy statement or at any time a director joins the Board between annual meetings.  The Board will broadly consider all relevant facts and circumstances in determining director independence.

 

Members of the Company’s Audit Committee must satisfy the requirements of Rule 10A-3 under the Securities Exchange Act of 1934, as amended from time to time.  Additionally, in accordance with Nasdaq listing standards, when determining the independence of members of the Compensation Committee, the Board must consider all factors specifically relevant to determining whether a director has a relationship to the Company which is material to the director’s ability to be independent from management in connection with Compensation Committee duties, including, but not limited to, consideration of the sources of compensation of Compensation Committee members, including any consulting, advisory or other compensatory fees paid by the Company, and whether any Compensation Committee member is affiliated with the Company or any of its subsidiaries or affiliates.

 

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The Company will not make any personal loans or extensions of credit to directors or executive management.  All directors are required to deal at arm’s length with the Company and its subsidiaries and to disclose circumstances material to the director that might be perceived as a conflict of interest.

 

8.               Size of Board and Selection Process

 

The directors are elected each year by the shareholders at the annual meeting of shareholders.  The Board proposes a slate of nominees to the shareholders for election to the Board.  The Nominating and Corporate Governance Committee considers and makes recommendations to the Board concerning the appropriate size and needs of the Board.  The Committee considers candidates to fill new positions created by expansion and vacancies that occur by resignation or for any other reason.  Shareholders may propose nominees for consideration by the Nominating and Corporate Governance Committee by submitting the names and supporting information to the Secretary of the Company in accordance with the deadlines and procedures indicated in the proxy statement for the annual meeting of shareholders.  Between annual shareholder meetings, the Board may elect directors to serve until the next annual meeting.  The Board also determines the number of directors on the Board.  The Board believes that, given the size and breadth of the Company and the need for diversity of board views, the size of the Board should be in the range of five to nine directors.  The Board annually reviews the appropriate size of the Board.

 

9.               Board Committees

 

The Board currently has established the following standing committees to assist the Board in discharging its responsibilities: (i) Audit Committee; (ii) Compensation Committee; and (iii) Nominating and Corporate Governance Committee.  The Board determines the responsibilities of each of the committees from time to time.  The duties for each of these committees are outlined in the committee charters, which are published on the Company’s corporate website.  The committee chairs report the highlights of their meetings to the full Board following each meeting of the respective committees.  The Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are made up entirely of independent directors.  From time to time, the Board may provide for such other standing committees or special committees as may be necessary to carry out its responsibilities.

 

10.        Meetings of Non-Employee Directors

 

The Board will meet in executive session of independent directors without management present at least four times a year on the same day as the regularly scheduled Board meetings.  Such sessions will be led by the Chairman.  The Chairman will (i) approve Board meeting agendas, including approving meeting schedules to assure that there is sufficient time for discussion of all agenda items, and other information sent to the Board, (ii) advise the committee chairs with respect to agendas and information needs relating to committee meetings, (iii) have the authority to call meetings of independent directors as he or she deems appropriate and (iv) and perform other duties as the Board may from time to time delegate to assist the Board in fulfilling its responsibilities.  The identity of the Chairman will be stated in the proxy statement for the Company’s annual meeting of shareholders.  The independent directors may meet without management present at any other times as determined by the Chairman, if applicable.

 

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11.        Continuing Director Education and Orientation

 

Directors are encouraged to participate in continuing educational opportunities that enhance their ability to fulfill their duties and remain informed about industry conditions affecting the Company.  The Company will pay the reasonable costs of attendance by a director at external programs.  Where possible, directors are encouraged to allocate reimbursement of such costs among the various boards on which they serve.

 

In addition, the Company’s General Counsel and the Chief Financial Officer will be responsible for providing an orientation for new directors, and for periodically providing materials or briefing sessions for all directors on subjects that would assist them in discharging their duties.  Each new director will, within six months of election to the board, receive a personal briefing by executive management on the Company’s strategic plans, financial statements, and key policies and practices.

 

12.        Authorized Spokespersons; Communicating with Directors and Shareholders

 

Generally, the Company’s management should speak for the Company with outsiders, including the general public, institutional investors, analysts, shareholders and the press.  The Company’s authorized spokespersons include the CEO, CFO and their designees.  Non-management directors should generally refer all inquiries from outsiders to the CEO or CFO.  Where comments from the Board are appropriate, they should in most circumstances come from the Chairman after consultation with executive management.  Notwithstanding the foregoing, in fulfillment of their fiduciary duties, non-employee directors have the right to directly hear from and communicate with shareholders, provided that any such communications shall be subject to applicable securities laws, including Regulation FD.

 

In general, shareholders may communicate directly with the Board of Directors, the Chairman, or non-employee directors as a group, by following the Shareholder Communication Procedures that are approved by the Company’s independent directors and posted on the Company’s corporate website.  Anyone who has a concern about the Company’s conduct, or about the Company’s accounting, internal accounting controls or auditing matters, may communicate that concern using the Shareholder Communication Procedures or by following the confidential process established for submission of employee complaints about accounting or auditing matters.  Concerns relating to accounting, internal controls, auditing or executive management conduct will be sent immediately to the chair of the Audit Committee and will be simultaneously reviewed and addressed by the Company’s internal auditor in the same way that other concerns are addressed by the Company.  The Company’s Code of Business Conduct and Ethics (the “ Code ”) prohibits the Company and its employees from retaliating or taking any adverse action against anyone who in good faith raises or helps to resolve an integrity concern.

 

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13.        Term Limits and Retirement Age

 

The Board does not believe in automatic re-nomination of directors. The Board self-evaluation process described below will be an important determinant for board tenure.  Directors will not be nominated for election to the Board after their 72 nd  birthday, except when the full Board determines that special circumstances exist.  The Nominating and Corporate Governance Committee reviews the effectiveness of each director in deciding whom to recommend to the full Board for nomination.

 

14.        Directors Who Change Their Job Responsibilities; Conflicts of Interest; Potential Independence Change

 

Directors who are members of Company management will offer to resign from the Board upon their resignation, removal or retirement as officers of the Company.

 

When a non-employee director substantially changes his or her principal occupation or business association, or when a director becomes aware of personal circumstances that (i) are likely to reflect materially and adversely on the Company or the director, or (ii) are likely to materially affect the ability of the director to serve as a director of the Company, the director is expected to offer his or her resignation to the Chairman and the chair of the Nominating and Corporate Governance Committee.  The Chairman and chair of the Nominating and Corporate Governance Committee will evaluate the offer of resignation and the propriety of continued service on the Board in light of the change or circumstances, and will recommend to the Board the action, if any, to be taken with respect to the offer of resignation.  The director will be expected to act in accordance with any request made by the Board. Directors should also offer their resignation in writing upon leaving the Board for any reason.

 

If an actual or potential conflict of interest arises for a director, or if a non-employee director who has been deemed an “independent director” believes there has been or may be a change to his or her independent status, the director will promptly inform the Chairman and the chair of the Nominating and Corporate Governance Committee.  The Chairman and chair of the Nominating and Corporate Governance Committee will coordinate an analysis and appropriate review in light of the circumstances, which may include action by the Nominating and Corporate Governance Committee or full Board.  The director will be expected to act in accordance with any request made by the Board.

 

15.        Service on Multiple Boards of Directors

 

Non-employee directors should not serve on more than four other boards of public companies in addition to the Company’s board.  No member of the Audit Committee of the Board should simultaneously serve on the audit committee of more than three public companies, including the Company’s.  Moreover, the Board and the Nominating and Corporate Governance Committee will take into account the nature and time involved in the directors’ service on other boards in evaluating the suitability of directors.

 

The Board encourages the CEO to serve on the board of directors of one other company, with service on an additional company board subject to the Nominating and Corporate Governance Committee’s discretion.

 

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Directors must advise the Chairman and the chair of the Nominating and Corporate Governance Committee in advance of accepting an invitation to serve on the board of directors or audit committee of another company.  If the Chairman and the chair of the Nominating and Corporate Governance Committee determine that a conflict may exist or that such service may interfere with the director’s ability to fulfill his or her duties to the Company, they will convene the Nominating and Corporate Governance Committee to consider the matter.  If recommended by the Nominating and Corporate Governance Committee, directors are expected to decline such proposed invitation or appointment, or else resign from the Board.

 

16.        Annual Performance Evaluation of the Board

 

The Board led by the Chairman and each of the committees will perform an annual self-evaluation.  The directors will be requested to provide their assessments of the effectiveness of the Board and the committees on which they serve.  The individual assessments will be organized and summarized for discussion with the Board and the committees.  The Nominating and Corporate Governance Committee will oversee the self-evaluation processes, summarize the results of the evaluations and present the results to the Board.  In addition to the annual self-evaluations, no less often than every two years, the Board will undergo an in-depth evaluation of its overall effectiveness, conducted by an independent facilitator.

 

17.        Evaluation of the CEO

 

The independent directors led by the Chairman of the Compensation Committee shall perform an annual evaluation of the CEO in executive session of the independent directors.  The evaluation shall be based on a broad range of criteria and shall include input from members of executive management.  The evaluation process shall assess, among other things, the CEO’s leadership and management of the Company and his or her relationship with the Company’s stakeholders.  The evaluation process shall also address objective criteria, including the performance of the business, accomplishment of long-term strategic objectives and development of management succession.

 

18.        Setting the Board and Committee Agenda

 

The Chairman sets the agenda for Board meetings with the understanding that certain items pertinent to the advisory and monitoring functions of the Board be brought to it periodically for review and decision.  The Chairman, or committee chair as appropriate, will determine the nature and extent of information to be provided regularly to the directors before each regularly scheduled Board or committee meeting.  Board and committee materials relating to agenda items are provided to directors sufficiently in advance of Board meetings to allow the directors to prepare for discussion of the items at the meeting.  Any member of the Board may make suggestions to the Chairman, or appropriate committee chair, at any time that an item be included on the agenda, or that information be included in pre-meeting materials.

 

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19.        Director Compensation

 

Directors who are also employees of the Company do not receive additional compensation for serving on the Board.  The Compensation Committee has the responsibility for recommending to the Board compensation and benefits for non-employee directors.  In discharging this duty, the Compensation Committee will be guided by three goals: compensation should fairly pay directors for work required in a company of the Company’s size and scope; compensation should align directors’ interests with the long-term interests of shareholders; and the structure of the compensation should be adequate to enable the Company to attract and retain well-qualified directors.  The Compensation Committee reviews the compensation of directors periodically.

 

20.        Management Succession Plan

 

The Board shall designate the appropriate committee of the Board, in consultation with the Chairman, to approve and maintain a succession plan for the CEO and executive management.  The CEO annually provides to the chair of such committee an assessment of senior managers and of their potential to succeed him or her.  He or she also provides an assessment of persons considered potential successors to certain executive management positions.

 

21.        Annual Compensation Review of the CEO and Executive Management

 

The Compensation Committee will annually review and approve the goals and objectives for compensating the CEO.  In consultation with the Chairman, the Committee will evaluate the CEO’s performance in light of these goals and objectives before recommending to the Board for approval the CEO’s compensation, including salary, grants of cash and equity awards, and other incentive compensation.  The Committee will also annually review and approve the compensation structure for the Company’s executive management, and will evaluate the performance of the Company’s executive management, in light of the CEO’s evaluation of their performance, before reviewing and approving their salary, grants of cash and equity awards, and other incentive compensation.

 

22.        Director Access to Executive Management

 

Board members shall have complete and independent access to executive management.  Board members shall use sound business judgment to ensure that such contact is not distracting, and if in writing, shall be copied to the CEO and the Chairman.  At the invitation of the Board, members of executive management recommended by the CEO or the Chairman may attend Board meetings or portions of meetings to participate in discussions.

 

23.        Director Access to Independent Advisors

 

The Board and its committees have the right at any time to retain independent outside financial, legal, accounting or other advisors.

 

24.        Risk Oversight

 

The Board shall oversee the establishment and maintenance of the Company’s risk management processes.  The Board may delegate primary responsibility for oversight of specific risks to any one or more of its committees.

 

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25.        Stock Ownership Guidelines

 

Directors are subject to stock ownership guidelines established by the Nominating and Governance Committee.

 

26.        Code of Business Conduct and Ethics

 

All Company employees, executive management and directors, including the principal executive officer and principal financial officer, are required to abide by the Code to ensure that the Company’s business is conducted in a consistently legal and ethical manner. The Code covers conflicts of interest; corporate opportunities; confidentiality; compliance with laws, rules and regulations; and fair dealing; and encourage the reporting of any illegal or unethical behavior, among other things.  The Code is posted on the Company’s corporate website.  The Board expects the Company directors, as well as executive management and employees, to act ethically at all times and to adhere to the Code.  The Sarbanes-Oxley Act of 2002 also requires companies to have procedures to receive, retain and treat employee complaints regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters.  The Company currently has procedures in place, and a description of the procedures is posted on the Company’s corporate website.  The Company’s Audit Committee oversees treatment of employee concerns in this area.

 

27.        Review of Corporate Governance Guidelines

 

The Nominating and Corporate Governance Committee will review these Guidelines from time to time and recommend to the full Board for its consideration and adoption any amendments to these Guidelines.

 

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Exhibit 99.5

 

 

DEPOMED ANNOUNCES CORPORATE GOVERNANCE UPDATES

 

Sets Date of 2017 Annual Meeting of Shareholders

 

NEWARK, Calif., May 22, 2017 — Depomed, Inc. (Nasdaq: DEPO) today announced that following a comprehensive review of the Company’s corporate governance practices, the Board of Directors has taken a number of actions designed to ensure that the Company’s policies are further aligned with shareholder interests and corporate governance best practices.  In addition, the Board of Directors set August 15, 2017 as the date for the Company’s 2017 Annual Meeting of Shareholders.

 

“Our Board is committed to being responsive to our shareholders and aligning Depomed’s corporate governance policies with best practices,” said Jim Fogarty, Chairman of the Board of Directors of Depomed.

 

The actions taken by the Board of Directors, include, but are not limited to the following:

 

·                   Revised Board Committee Charters .  The Company revised each of the charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee to further reflect best practices and enhance transparency.  Copies of the updated Board Committee Charters are available on the Company’s website at www.depomed.com.

 

·                   Corporate Governance Guidelines .  The Company revised its Corporate Governance Guidelines to, among other things, (i) formally require the Chairman of the Board to be an independent director, (ii) further clarify the role and responsibilities of the Board, (iii) outline director qualification standards, (iv) require at least four meetings annually of the independent directors, (v) adopt a director retirement age of 72, (vi) implement over-boarding limits for Board and Audit Committee service, (vii) require an annual evaluation of the CEO be conducted by the independent directors, led by the Chairman of the Board of Directors, and (viii) provide that directors have complete and independent access to executive management.  A copy of the updated Corporate Governance Guidelines are available on the Company’s website at www.depomed.com.

 

·                   Stock Ownership Guidelines; Clawback Policy; Anti-Hedging and Anti-Pledging Policies.  The Company adopted stock ownership guidelines applicable to directors and executive officers as well as an executive compensation clawback policy.  The Company also enhanced the anti-hedging and anti-pledging provisions of its Insider Trading Policy.

 



 

·                   Shareholder Communications Policy .  The Company adopted a formal Shareholder Communications Policy outlining the procedures by which shareholders may communicate with the Board of Directors.  A copy of the Shareholder Communications Policy is available on the Company’s website at www.depomed.com.  The Board of Directors encourages shareholders to communicate their thoughts, ideas and concerns about the Company to the Board.

 

·                   Plurality Voting Standard for Contested Elections .  The Company amended its Bylaws to provide for a plurality voting standard for contested elections.

 

·                   Timing of Shareholder Requested Special Meeting .  The Company amended its Bylaws to reduce the time between the receipt by the Company of a record date request from a shareholder requesting a special meeting and the date such special meeting is held.  A copy of the Company’s Amended and Restated Bylaws will be an exhibit to the Current Report on Form 8-K to be filed today with the Securities and Exchange Commission (and which is available on the SEC’s website at www.sec.gov).

 

In addition to updating the Company’s corporate governance policies and practices, the Board of Directors adopted a revised peer group for compensation benchmarking which reflects the Company’s size and profile.  This new peer group will assist the Board of Directors in aligning the Company’s compensation practices with shareholder interests.

 

Shareholders are encouraged to read and review the definitive proxy statement relating to the 2017 Annual Meeting of Shareholders the Company will (i) file with the SEC (and which will be available on SEC’s website at www.sec.gov) and (ii) mail to shareholders entitled to vote at the meeting.

 

About Depomed

Depomed is a leading specialty pharmaceutical company focused on enhancing the lives of the patients, families, physicians, providers and payors we serve through commercializing innovative products for pain and neurology related disorders. Depomed markets six medicines with areas of focus that include mild to severe acute pain, moderate to severe chronic pain, neuropathic pain, migraine and breakthrough cancer pain. Depomed is headquartered in Newark, California. To learn more about Depomed, visit www.depomed.com.

 

Investor Contact:

 

Christopher Keenan

VP, Investor Relations and Corporate Communications

510-744-8000

ckeenan@depomed.com