Exhibit 10.2

 

DEPOMED, INC.

 

AMENDED AND RESTATED
MANAGEMENT CONTINUITY AGREEMENT

 

This Amended and Restated Management Continuity Agreement (the “Agreement”) is
effective as of                     , 2016 (the “Effective Date”) by and between
                       (“Employee”) and Depomed, Inc., a California corporation
(the “Company”).  This Agreement is intended to provide Employee with certain
benefits described herein upon the occurrence of specific events.  This
Agreement amends and restates that certain Management Continuity Agreement
entered into between the parties as of [            ], 2014 (referred to herein
as the “Prior Agreement”).

 

RECITALS

 

A.            It is expected that the Company may from time to time consider the
possibility of realigning its organization.

 

B.            It is further expected that another company may from time to time
consider the possibility of acquiring the Company or that a change in control
may otherwise occur, with or without the approval of the Company’s Board of
Directors.

 

C.            The Board of Directors recognizes that such considerations can be
a distraction to Employee and can cause Employee to consider alternative
employment opportunities.

 

D.            The Board of Directors has determined that it is in the best
interests of the Company and its shareholders to assure that the Company will
have the continued dedication and objectivity of the Employee, notwithstanding
the foregoing factors.

 

E.            The Company’s Board of Directors believes it is in the best
interests of the Company and its shareholders to retain Employee and provide
incentives to Employee to continue in the service of the Company.

 

F.             The Board of Directors further believes that it is imperative to
provide Employee with certain benefits upon certain termination of Employee’s
employment, including in connection with a Change in Control, which benefits are
intended to provide Employee with financial security and provide sufficient
income and encouragement to Employee to remain with the Company, including and
notwithstanding the possibility of a Change in Control.

 

G.            To accomplish the foregoing objectives, the Board of Directors has
directed the Company, upon execution of this Agreement by Employee, to agree to
the terms provided in this Agreement, which Agreement shall supersede the Prior
Agreement and any other agreement or understanding pertaining to the subject
matter herein, including any offer letter between the Company and Employee, as
of the Effective Date.

 

Now therefore, in consideration of the mutual promises, covenants and agreements
contained herein, and in consideration of the continuing employment of Employee
by the Company, the parties hereto agree as follows:

 

1.             At-Will Employment; Term.

 

(a)           The Company and Employee acknowledge that Employee’s employment is
and shall continue to be at-will, as defined under applicable law, and that
Employee’s employment with the Company may be terminated by either party at any
time for any or no reason.  If Employee’s employment terminates for any reason,
Employee shall not be entitled to any payments, benefits, damages, award or
compensation other than as provided in this Agreement or otherwise agreed to by
the Company.  The terms of this Agreement shall terminate upon the earlier of:
(i) the date on which Employee ceases to be employed by the Company, other than
as a result of a Change in Control Involuntary Termination or an Other
Involuntary Termination,  or (ii) the last day of the Term (such date being
referred to herein as the “End Date”; provided, however, that in the event of a
Pending Change in Control in

 

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effect on the End Date, the End Date shall be delayed until the later to occur
of (x) the termination of any Pending Change in Control by the parties to such
Pending Change in Control and (y) one year after the completion of any Pending
Change in Control).  Notwithstanding the foregoing, in no event shall this
Agreement terminate prior to the time that all outstanding obligations of the
parties hereunder have been satisfied.  A termination of the terms of this
Agreement pursuant to this Section 1(a) shall be effective for all purposes,
except that such termination shall not affect the payment or provision of
compensation or benefits on account of a termination of employment occurring
prior to the termination of the terms of this Agreement.  The rights and duties
created by this Agreement are contingent upon the Employee’s execution of a
release of claims against the Company, in substantially the form attached hereto
as Appendix A, within forty-five (45) days following his termination of
employment and the expiration of any statutory revocation period and may not be
modified in any way except by a written agreement executed by the Employee and
an officer of the Company upon direction from the Board of Directors.

 

(b)           Subject to Section 1(a), this Agreement shall be for an initial
term that begins on the Effective Date and continues in effect through the third
anniversary of the Effective Date (the “Initial Term”) and, unless terminated
sooner as herein provided, shall continue on a year to year basis after the
third anniversary of the Effective Date (each a “Renewal Term” and together with
the Initial Term, the “Term”).  If the Company or the Employee elects not to
renew this Agreement for a Renewal Term, the Company or the Employee must give a
written notice of termination to the other party at least twelve (12) months
before the expiration of the then-current Initial Term or Renewal Term, as
applicable.  In the event that one party provides the other with a written
notice of termination pursuant to this Section 1(b), no further automatic
extensions will occur and at the end of the then-existing Initial Term or
Renewal Term, as applicable, the Term shall expire.

 

2.             Termination Benefits.

 

(a)           Benefits Upon a Change in Control Involuntary Termination.

 

(i)            Treatment of Equity Awards.  In the event that Employee is
subject to a Change in Control Involuntary Termination, 100% of Employee’s
unvested Company option shares, restricted stock, restricted stock units and
other equity-based awards shall become immediately vested on such termination
date and the risk of forfeiture of 100% of Employee’s restricted stock shall
lapse on such termination date.  Each such equity award shall be exercisable in
accordance with the provisions of the award agreement and plan pursuant to which
such equity award was granted, including, in the case of stock options, the plan
or award agreement provisions regarding any post-termination period of
exercisability.

 

(ii)           Severance.  In the event that Employee is subject to a Change in
Control Involuntary Termination, Employee shall be entitled to receive severance
benefits as follows:  (A) a lump sum cash severance payment equal to [one
(1) times (if Employee is not the CEO)] [two (2) times (if Employee is the CEO)]
the higher of (1) the base salary which Employee was receiving immediately prior
to the Change in Control or (2) the base salary which Employee was receiving
immediately prior to the Change in Control Involuntary Termination, which
payment shall be paid on the sixtieth (60th) day following the Change in Control
Involuntary Termination; (B) a lump sum cash payment equal to [one (1) times (if
Employee is not the CEO)] [two (2) times (if Employee is the CEO)] Employee’s
Target Annual Bonus; and (C)  payment by the Company of the full cost of the
health insurance benefits provided to Employee and Employee’s spouse and
dependents, as applicable, immediately prior to the Change in Control pursuant
to the terms of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”) or other applicable law through the earlier of the end of the
[twelve (12) month (if Employee is not the CEO)] [twenty-four (24) month (if
Employee is the CEO)] period following the Change in Control Involuntary
Termination date or the date upon which Employee is no longer eligible for such
COBRA or other benefits under applicable law.  The benefits to be provided under
clauses (a)(i) and (a)(ii) shall be paid on the sixtieth (60th) day following
Employee’s termination of employment ; except that any payments under clause
(a)(ii)(C) shall be paid on a monthly basis commencing on the sixtieth (60th)
day following Employee’s termination of employment (subject in all cases to
Employee’s release of claims against the Company as set forth in Section 1(a)). 
Notwithstanding the foregoing, in the event the Board of Directors concludes in
its reasonable judgment that the provision of subsidized COBRA benefits to
Employee is likely to cause the Company to become subject to excise tax as a
result of the Patient Protection and Affordable Care Act, as amended by the
Health Care and Education Reconciliation Act of 2010 (the “Healthcare Reform
Act”), the Company shall pay Employee a monthly amount in cash equal to the
amount of the COBRA subsidy during the period the Company is obligated to
provide

 

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subsidized COBRA benefits to Employee.  In addition, Employee shall receive
payment(s) for all salary, bonuses and unpaid vacation accrued as of the date of
Employee’s termination of employment and up to three (3) months of outplacement
services not to exceed $5,000 per month (with a provider and in a program
selected by the Employee. provided Employee commences such services within
ninety (90) days of Employee’s Change in Control Involuntary Termination date).

 

(b)           Benefits Upon an Other Involuntary Termination.

 

[Item (i) - if Employee is CEO only]

 

(i)            Treatment of Equity Awards.  In the event that Employee is
subject to an Other Involuntary Termination, Employee shall be credited with an
additional twelve (12) months of employment for purposes of determining the
vesting of his equity-based awards, which shall result in the immediate vesting
as of such termination date of those otherwise unvested Company option shares,
restricted stock, restricted stock units and other equity-based awards that
would have become vested if Employee had completed an additional twelve (12)
months of employment following such termination date and the risk of forfeiture
of Employee’s applicable number of restricted stock, restricted stock units and
similar equity-based awards shall lapse on such termination date.  Each such
equity award shall be exercisable in accordance with the provisions of the award
agreement and plan pursuant to which such equity award was granted, including,
in the case of stock options, the plan or award agreement provisions regarding
any post-termination period of exercisability.

 

(ii)           Severance.  In the event that Employee is subject to an Other
Involuntary Termination, Employee shall be entitled to receive severance
benefits as follows:  (A) severance payments for [twelve (12) months (if
Employee is not the CEO)] [eighteen months (18) (if Employee is the CEO)] after
the effective date of the termination (for purposes of this
Section 2(b)[(i)][(ii)], the “Severance Period”) equal to the base salary which
Employee was receiving immediately prior to the Other Involuntary Termination,
which payments shall be paid during the Severance Period in accordance with the
Company’s standard payroll practices; and (B)  payment by the Company of the
full cost of the health insurance benefits provided to Employee and Employee’s
spouse and dependents, as applicable, immediately prior to the Other Involuntary
Termination pursuant to the terms of COBRA or other applicable law through the
earlier of the end of the Severance Period or the date upon which Employee is no
longer eligible for such COBRA or other benefits under applicable law.  The
benefits to be provided under Section 2(b)(i)[ and 2(b)(ii)] shall be paid or
commence to be paid on the sixtieth (60th) day following Employee’s termination
of employment (subject to Employee’s release of claims against the Company as
set forth in Section 1(a)).  Notwithstanding the foregoing, in the event the
Board of Directors concludes in its reasonable judgment that the provision of
subsidized COBRA benefits to Employee could cause the Company to become subject
to excise tax as a result of the Patient Protection and Affordable Care Act, as
amended by the Healthcare Reform Act, the Company shall pay Employee a monthly
amount in cash equal to the amount of the COBRA subsidy during the period the
Company is obligated to provide subsidized COBRA benefits to Employee.  In
addition, Employee shall receive payment(s) for all salary, bonuses and unpaid
vacation accrued as of the date of Employee’s termination of employment and up
to three (3) months of outplacement services not to exceed $5,000 per month
(with a provider and in a program selected by the Company, provided Employee
commences such services within ninety (90) days of Employee’s Other Involuntary
Termination date).

 

(c)           Termination for Cause.  If Employee’s employment is terminated for
Cause at any time, then Employee shall not be entitled to receive payment of any
severance benefits or equity award acceleration.  Employee shall receive
payment(s) for all salary, bonuses and unpaid vacation accrued as of the date of
Employee’s termination of employment.

 

(d)           Voluntary Resignation.  If Employee voluntarily resigns from the
Company under circumstances which do not constitute a Change in Control
Involuntary Termination or an Other Involuntary Termination, then Employee shall
not be entitled to receive payment of any severance benefits or equity award
acceleration.  Employee shall receive payment(s) for all salary, bonuses and
unpaid vacation accrued as of the date of Employee’s termination of employment.

 

(e)           Death or Disability.   If Employee’s employment terminates on
account of Employee’s death or Disability at any time, whether or not in
connection with a Change in Control or Pending Change in

 

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Control, then Employee shall not be entitled to receive payment of any severance
benefits or equity award acceleration.  Employee shall receive payment(s) for
all salary, bonuses and unpaid vacation accrued as of the date of Employee’s
termination of employment.

 

3.             Definition of Terms.  The following terms referred to in this
Agreement shall have the following meanings:

 

(a)           Cause.  “Cause” shall mean (i) gross negligence or willful
misconduct in the performance of Employee’s duties to the Company where such
gross negligence or willful misconduct has resulted or is likely to result in
substantial and material damage to the Company or its subsidiaries,
(ii) repeated unexplained or unjustified absence from the performance of
services for the Company, (iii) a material and willful violation of any federal
or state law resulting or likely to result in substantial and material damage to
the Company or its subsidiaries; (iv) commission of any act of fraud with
respect to the Company resulting or likely to result in substantial and material
damage to the Company or its subsidiaries, or (v) conviction of a felony or a
crime involving moral turpitude causing material harm to the standing and
reputation of the Company, in each case as determined in good faith by the Board
of Directors, subject to the Company’s compliance with the “Cause Cure Process”.

 

(b)   Cause Cure Process.  “Cause Cure Process” shall mean that (i) Company
reasonably determines that Employee has engaged in behavior constituting
“Cause”; (ii) Company notifies the Employee in writing of the first occurrence
of the behavior constituting “Cause” within ninety (90) days of the first
occurrence of such condition; (iii) the Employee shall have [thirty (30)] days
following such notice (the “Cause Cure Period”), to substantially remedy the
condition, if curable; (iv) notwithstanding such efforts, the condition
constituting “Cause” continues to exist; and (v) Company terminates Employee’s
employment due to “Cause” within ninety (90) days after the end of the Cause
Cure Period.  For avoidance of doubt, if the behavior constituting “Cause” is
not substantially curable, then the Cause Cure Period shall end on the date the
Employee receives the Company’s written notice set forth in clause (ii) above. 
If the Employee substantially cures the condition constituting “Cause” during
the Cause Cure Period, such behavior constituting “Cause” shall be deemed not to
have occurred.

 

(c)  Change in Control; Pending Change in Control.  “Change in Control” shall
have the meaning given such term in the Amended and Restated Depomed, Inc. 2014
Omnibus Incentive Plan.  “Pending Change in Control” shall mean any transaction
or transactions which, if consummated, would result in a Change in Control with
respect to which the Company enters into a definitive agreement prior to the End
Date which has not been completed or terminated, as determined by the Board of
Directors in its reasonable determination (whereupon the End Date shall be
delayed as provided in Section 1(a) above).  Pending Change in Control shall
also include any Change in Control with respect to which the Company enters into
a binding agreement within thirty (30) days after the termination of any other
Pending Change in Control.

 

(d)           Change in Control Involuntary Termination.  “Change in Control
Involuntary Termination” shall mean: (i) any termination by the Company other
than for Cause, death or Disability, or (ii) Employee’s voluntary termination
for Good Reason (as defined in Section 3(d)), in each case in connection with,
or within the period beginning (A) ninety (90) days prior to the effective date
of a Change in Control and ending (B) twenty-four (24) months following the
effective date of a Change in Control.  For purposes of this Section 3(d), “Good
Reason” shall mean that Employee has complied with the “Good Reason Process”
following the occurrence of any of the following events:  (i) a material
diminution in Employee’s responsibilities, authority or duties; (ii) a material
diminution in the authority, duties, or responsibilities of the supervisor to
whom Employee is required to report [including a requirement that Employee
report to a corporate officer or other employee instead of reporting directly to
the board of directors of a corporation (or similar governing body with respect
to an entity other than a corporation) if Employee is the CEO]; (iii) a material
diminution in Employee’s base salary, target annual bonus amount or paid bonus
amount (relative to the last annual bonus paid), in each case other than in
connection with a general decrease in base salaries, target annual bonuses or
paid annual bonuses, as applicable, for most officers of the successor
corporation; provided, however, that any decrease in base salary and/or target
annual bonus greater than ten percent (10%) shall provide grounds for “Good
Reason” regardless of whether a general decrease in base salaries and/or target
bonuses occurs for most officers of the successor corporation; (iv) a change in
the geographic location at which Employee provides services to the Company that
increases Employee’s one way commute by twenty-five (25) miles or more; or
(v) failure of the successor corporation to assume the obligations under this
Agreement.

 

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(e)           Disability.  “Disability” shall mean the inability of Employee to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or that has lasted or can be expected to last for a continuous period of
not less than 12 months as provided in Sections 22(e)(3) and 409A(a)(2)(C)(i) of
the Internal Revenue Code of 1986, as amended (the “Code”), and will be
determined by the Board of Directors on the basis of such medical evidence as
the Board of Directors deems warranted under the circumstances.

 

(f)            Good Reason Process.  “Good Reason Process” shall mean that
(i) Employee reasonably determines in good faith that a “Good Reason” condition
has occurred, as may be applicable; (ii) Employee notifies the Company in
writing of the first occurrence of the Good Reason condition within ninety (90)
days of the first occurrence of such condition; (iii) Employee cooperates in
good faith with the Company’s efforts, for a period of thirty (30) days
following such notice (the “Good Reason Cure Period”), to remedy the condition;
(iv) notwithstanding such efforts, the Good Reason condition continues to exist;
and (v) Employee terminates his employment within ninety (90) days after the end
of the Good Reason Cure Period.  If the Company substantially cures the Good
Reason condition during the Good Reason Cure Period, Good Reason shall be deemed
not to have occurred.

 

(g)           Other Involuntary Termination.  “Other Involuntary Termination”
shall mean (i) any termination by the Company other than for Cause, death or
Disability, or (ii) Employee’s voluntary termination for Good Reason (as defined
in this Section 3(g)), in each case, excluding a Change in Control Involuntary
Termination.  For purposes of this Section 3(g), “Good Reason” shall mean that
Employee has complied with the “Good Reason Process” following the occurrence of
any of the following events: (i) a ten percent (10%) or greater decrease in
Employee’s annual total cash compensation target (annual base salary plus annual
bonus target) other than in connection with a general decrease in the total
annual cash compensation target (annual base salary plus annual bonus target)
for most officers of the Company and the successor corporation, if applicable;
or (ii) a change in the geographic location at which Employee provides services
to the Company that increases the Employee’s one-way commute by twenty-five (25)
miles or more.

 

(h)           Target Annual Bonus.  “Target Annual Bonus” shall mean Employee’s
target annual bonus that may be earned for performance during the Company’s
fiscal year in which a termination occurs; provided, however, that sign-on or
other special bonuses shall not be taken into account.  If Employee’s Target
Annual Bonus has not been set or determined as of the termination date, the
“Target Annual Bonus” shall mean Employee’s target annual bonus for the
Company’s most recently completed fiscal year.

 

4.             Limitation and Conditions on Payments.

 

In the event that the severance and other benefits provided to Employee under
this Agreement and any other agreement (i) constitute “parachute payments”
within the meaning of Section 280G of the Code and (ii) but for this Section,
would be subject to the excise tax imposed by Section 4999 of the Code, then
Employee’s severance benefits under Sections 2(a) and 2(b) shall be payable
either:

 

(a)           in full; or

 

(b)           as to such lesser amount which would result in no portion of such
severance benefits being subject to excise tax under Section 4999 of the Code;

 

whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by Employee on an after-tax basis, of the greatest amount of
severance benefits under Section 2(a) and 2(b), notwithstanding that all or some
portion of such severance benefits may be taxable under Section 4999 of the
Code.  The reduction of payments and benefits hereunder, if applicable, shall be
made by reducing, first, cash severance pay that is exempt from Section 409A of
the Code; second, any other cash severance pay; third. any other payments or
benefits to be paid in cash hereunder in the order in which such payment or
benefit would be paid or provided (beginning with such payment or benefit that
would be made last in time and continuing, to the extent necessary, through to
such payment or benefit that would be made first in time); fourth, reducing any
benefit to be provided in kind hereunder in a similar order, except

 

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for equity-based awards; fifth, any restricted stock, restricted stock units or
similar awards, to be reduced in a similar order; and lastly, sixth, any stock
options, stock appreciation right or similar awards, to be reduced in a similar
order.  Unless the Company and Employee otherwise agree in writing, any
determination required under this Section 4 shall be made in writing by a
qualified independent certified public accounting or law firm selected by the
Company and approved by the Employee, which such approval shall not be
unreasonably withheld (the “Independent Tax Professional”).  The Employee shall
not be deemed to have unreasonably withheld approval if the Employee does not
consent to an Independent Tax Professional selected by the Company that has
provided any services to the Company or any successor corporation within the
preceding five (5) year period. The Independent Tax Professional shall provide
its determinations and any supporting calculations both to the Company and the
Employee in writing setting forth in reasonable detail the basis of the
Independent Tax Professional’s determinations, which shall be subject to
approval by the Employee, which such approval shall not be unreasonably
withheld. Such determination shall be conclusive and binding upon Employee and
the Company for all purposes.  For purposes of making the calculations required
by this Section 4, the Independent Tax Professional may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of
Section 280G and 4999 of the Code.  The Company and Employee shall furnish to
the Independent Tax Professional such information and documents as the
Independent Tax Professional may reasonably request in order to make a
determination under this Section.  The Company shall bear all costs the
Independent Tax Professional may reasonably incur in connection with any
calculations contemplated by this Section 4.  If, after the payment of severance
benefits has been made to the Employee, it is established that the payments made
to, or provided for the benefit of Employee, exceed the limitations provided in
Section 4(b) (an “Excess Payment”) or are less than such limitations (an
“Underpayment”), as the case may be, then the following shall apply: (x) if it
is determined that an Excess Payment has been made, the Employee shall repay the
Excess Payment within 20 days following the determination of such Excess
Payment; and (y) if it is determined that an Underpayment has occurred, the
Company shall pay an amount equal to the Underpayment to the Employee on the
later of (A) 20 days after such determination or resolution and (B) the time
period such payment would otherwise have been paid or provided to the Employee
absent the application of Section 4(b).

 

5.             Section 409A.  Notwithstanding any provision of this Agreement to
the contrary, if, at the time of Employee’s termination of employment with the
Company, Employee is a “specified employee” (as defined in Section 409A of the
Code) and the deferral of the commencement of any severance payments or benefits
otherwise payable pursuant to this Agreement as a result of such termination of
employment is necessary in order to prevent any accelerated income recognition
or additional tax under Section 409A of the Code, then the Company will not
commence any payment of any such severance payments or benefits otherwise
required hereunder (but without any reduction in such payments or benefits
ultimately paid or provided to Employee) that (a) will not and may not under any
circumstances, regardless of when such termination occurs, be paid in full by
March 15 of the year following Employee’s termination of employment, and (b) are
in excess of the lesser of (i) two (2) times Employee’s then annual compensation
or (ii) two (2) times the limit on compensation then set forth in
Section 401(a)(17) of the Code and will not be paid by the end of the second
calendar year following the year in which the termination occurs, until the
first payroll date that occurs after the date that is six (6) months following
Employee’s “separation of service” with the Company (as defined under Code
Section 409A).  If any payments are delayed due to such requirements, such
amounts will be paid in a lump sum to Employee on the earliest of (x) the
Employee’s death following the date of Employee’s termination of employment with
the Company or (y) the first payroll date that occurs after the date that is
six (6) months following Employee’s “separation of service” with the Company. 
For these purposes, each severance payment or benefit is designated as a
separate payment or benefit for purposes of Treas. Reg. § 1.409A-2(b) and will
not collectively be treated as a single payment or benefit.  This paragraph is
intended to comply with the requirements of Section 409A of the Code so that
none of the severance payments and benefits to be provided hereunder will be
subject to the additional tax imposed under Section 409A of the Code and any
ambiguities herein will be interpreted to so comply.  Employee and the Company
agree to work together in good faith to consider amendments to this Agreement
and to take such reasonable actions which are necessary, appropriate or
desirable to avoid imposition of any additional tax or income recognition prior
to actual payment to Employee under Section 409A of the Code.  Notwithstanding
anything to the contrary contained herein, to the extent that any amendment to
this Agreement with respect to the payment of any severance payments or benefits
would constitute under Code Section 409A a delay in a payment or a change in the
form of payment, then such amendment must be done in a manner that complies with
Code Section 409A(a)(4)(C).

 

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6.             Conflicts.  Employee represents that Employee’s performance of
all the terms of this Agreement will not breach any other agreement to which
Employee is a party.  Employee has not, and will not during the term of this
Agreement, enter into any oral or written agreement in conflict with any of the
provisions of this Agreement.  Employee further represents that Employee is
entering into or has entered into an employment relationship with the Company of
Employee’s own free will.

 

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

 

8.             Notice.  Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid.  Mailed notices to Employee shall
be addressed to Employee at the home address which Employee most recently
communicated to the Company in writing.  In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of the Company’s Legal Department.

 

9.             Miscellaneous Provisions.

 

(a)           No Duty to Mitigate.  Employee shall not be required to mitigate
the amount of any payment contemplated by this Agreement (whether by seeking new
employment or in any other manner), nor shall any such payment be reduced by any
earnings that Employee may receive from any other source.

 

(b)           Waiver.  No provision of this Agreement shall be modified, waived
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by Employee and by an authorized officer of the Company
(other than Employee).  No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.

 

(c)           Whole Agreement.  No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof.  This Agreement supersedes any agreement
of the same title and concerning similar subject matter dated prior to the date
hereof, and by execution of this Agreement both parties agree that any such
predecessor agreement shall be deemed null and void.

 

(d)           Choice of Law.  The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California without reference to conflict of laws provisions.

 

(e)           Severability.  If any term or provision of this Agreement or the
application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective
as to such jurisdiction to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining terms and
provisions of this Agreement or the application of such terms and provisions to
circumstances other than those as to which it is held invalid or unenforceable,
and a suitable and equitable term or provision shall be substituted therefor to
carry out, insofar as may be valid and enforceable, the intent and purpose of
the invalid or unenforceable term or provision.

 

(f)            Arbitration.  All claims, demands, causes of action, disputes,
controversies or other matters in question (“Claims”) arising out of this
Agreement or the Employee’s service (or termination from service) with the
Company, whether arising in contract, tort or otherwise and whether provided by
statute, equity or common law, that the Company may have against the Employee or
that the Employee may have against the Company, or its parents or subsidiaries,
or against each of the foregoing entities’ respective officers, directors,
employees or agents in their capacity as such or otherwise, shall be settled in
accordance with the procedures described in

 

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Section 9(f)(i) and (ii).  Claims covered by this Section 9(f) include, without
limitation, claims by the Employee for breach of this Agreement, wrongful
termination, discrimination (based on age, race, sex, disability, national
origin, sexual orientation, or any other factor), harassment and retaliation.

 

(i)            Agreement to Negotiate.  First, the parties shall attempt in good
faith to resolve any Claims promptly by negotiations between the Employee and
executives or directors of the Company or its affiliates (or, following the
occurrence of a Change in Control, any person or committee selected by the
Compensation Committee of the Board of Directors prior to the Change in Control
(referred to as the “Independent Decision Maker”), who shall act on behalf of
the Company or its affiliates), who shall have authority to settle the Claims. 
Either party may give the other disputing party written notice of any Claim not
resolved in the normal course of business.  Within five (5) days after the
effective date of that notice, the Employee and such executives or directors of
the Company, or, following the occurrence of a Change in Control, the
Independent Decision Maker, shall agree upon a mutually acceptable time and
place to meet and shall meet at that time and place, and thereafter as often as
they reasonably deem necessary, to exchange relevant information and to attempt
to resolve the Claim.  The first of those meetings shall take place within
thirty (30) days of the date of the disputing party’s notice.  If the Claim has
not been resolved within sixty (60) days of the date of the disputing party’s
notice, or if the parties fail to agree on a time and place for an initial
meeting within five (5) days of that notice, either party may elect to undertake
arbitration in accordance with Section 9(f)(ii).

 

(ii)           Agreement to Arbitrate.  If a Claim is not resolved by
negotiation pursuant to Section 9(f)(i), such Claim must be resolved through
arbitration regardless of whether the Claim involves claims that the Agreement
is unlawful, unenforceable, void, or voidable or involves claims under
statutory, civil or common law.  Any arbitration shall be conducted in
accordance with the then-current International Arbitration Rules of the American
Arbitration Association (“AAA”).  If a party refuses to honor its obligations
under this Section 9(f)(ii), the other party may compel arbitration in any
federal or state court of competent jurisdiction.  The arbitrator shall apply
the substantive law of California (excluding choice-of-law principles that might
call for the application of some other jurisdiction’s law) or federal law as
applied by the United States Court of Appeals for the Ninth Circuit, or both as
applicable to the Claims asserted.  The arbitration shall be conducted by a
single arbitrator selected by the parties according to the rules of AAA.  In the
event that the parties fail to agree on the selection of the arbitrator within
30 days after either party’s request for arbitration, the arbitrator will be
chosen by AAA.  The arbitration proceeding shall commence on a mutually
agreeable date within 90 days after the request for arbitration, unless
otherwise agreed by the parties. The arbitrator shall have exclusive authority
to resolve any dispute relating to the interpretation, applicability or
enforceability or formation of this Agreement (including this Section 9(f)),
including any claim that all or part of the Agreement is void or voidable and
any Claim that an issue is not subject to arbitration.  The results of
arbitration will be binding and conclusive on the parties hereto.  Any
arbitrator’s award or finding or any judgment or verdict thereon will be final
and unappealable.  The seat of arbitration shall be in the State of California,
City of San Jose, and unless agreed otherwise by the parties, all hearings shall
take place at the seat.  Any and all of the arbitrator’s orders, decisions and
awards may be enforceable in, and judgment upon any award rendered by the
arbitrator may be confirmed and entered by any federal or state court having
jurisdiction.  All evidentiary privileges under applicable state and federal
law, including attorney-client, work product and party communication privileges,
shall be preserved and protected.  The decision of the arbitrator will be
binding on all parties.  Arbitrations will be conducted in such a manner that
the final decision of the arbitrator will be made and provided to the Employee
and the Company no later than 120 days after a matter is submitted to
arbitration.  All proceedings conducted pursuant to this agreement to arbitrate,
including any order, decision or award of the arbitrators, shall be kept
confidential by all parties.  Each party shall pay its own attorneys’ fees and
disbursements and other costs of arbitration and the parties to the arbitration
shall split all of the arbitrator’s fees equally; ; provided, however, that
following the occurrence of a Change in Control, the Company will bear the forum
fees required by AAA and any other administrative fees associated with the
arbitration and shall advance to the Employee the fees and expenses (including
legal fees) in connection with any arbitration proceeding provided that Employee
shall be obligated to repay all such amounts in the event the Employee does not
prevail in such proceeding.  EMPLOYEE ACKNOWLEDGES THAT, BY SIGNING THIS
AGREEMENT, EMPLOYEE IS WAIVING ANY RIGHT THAT EMPLOYEE MAY HAVE TO A JURY TRIAL
OR A COURT TRIAL OF ANY SERVICE RELATED CLAIM ALLEGED BY EMPLOYEE.

 

(g)           Legal Fees and Expenses.  The parties shall each bear their own
expenses, legal fees and other fees incurred in connection with entering into
this Agreement.

 

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(h)                                 No Assignment of Benefits.  The rights of
any person to payments or benefits under this Agreement shall not be made
subject to option or assignment, either by voluntary or involuntary assignment
or by operation of law, including (without limitation) bankruptcy, garnishment,
attachment or other creditor’s process, and any action in violation of this
Section 9(h) shall be void.

 

(i)                                     Employment Taxes.  All payments made
pursuant to this Agreement will be subject to withholding of applicable income
and employment taxes.

 

(j)                                    Assignment by Company.  The Company may
assign its rights under this Agreement to an affiliate, and an affiliate may
assign its rights under this Agreement to another affiliate of the Company or to
the Company.  In the case of any such assignment, the term “Company” when used
in a section of this Agreement shall mean the corporation that actually employs
the Employee.  Notwithstanding the foregoing, neither the Company (or any
successor thereto) nor the Employee may assign its obligations under this
Agreement.

 

(k)                                 Counterparts.  This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which together will constitute one and the same instrument.

 

[SIGNATURE PAGE FOLLOWS]

 

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The parties have executed this Management Continuity Agreement on the date first
written above.

 

 

DEPOMED, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

[NAME]

 

 

 

Address:

 

 

 

 

 

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APPENDIX A

 

DEPOMED, INC.

 

WAIVER AND RELEASE AGREEMENT

 

Depomed, Inc. has offered to pay me certain benefits (the “Benefits”) pursuant
to Section 2 of my management continuity agreement with Depomed, Inc., effective
as of            , 2016 (the “Management Continuity Agreement”), which were
offered to me in exchange for my agreement, among other things, to waive all of
my claims against and release Depomed, Inc. and its predecessors, successors and
assigns (collectively referred to as the “Company”), all of the affiliates
(including parents and subsidiaries) of the Company (collectively referred to as
the “Affiliates”) and the Company’s and Affiliates’ directors and officers,
employees and agents, insurers, employee benefit plans and the fiduciaries and
agents of said plans (collectively, with the Company and Affiliates, referred to
as the “Corporate Group”) from any and all claims, demands, actions, liabilities
and damages arising out of or relating in any way to my employment with or
separation from the Company or the Affiliates; provided, however, that this
Waiver and Release shall not apply to (1) any existing right I have to
indemnification, contribution and a defense, (2) any directors and officers and
general liability insurance coverage, (3) any rights I may have as a shareholder
of the Company, (4) any rights I have to the Benefits, (5) rights to vested
benefits under the Company’s benefit plans and (6) any rights which cannot be
waived or released as a matter of law.

 

I understand that signing this Waiver and Release is an important legal act.  I
acknowledge that the Company has advised me in writing to consult an attorney
before signing this Waiver and Release and has given me at least [twenty-one
(21)] [forty-five (45)] calendar days from the day I received a copy of this
Waiver and Release to sign it.  I understand my termination is an [“Other
Involuntary Termination”][“Change in Control Involuntary Termination”] pursuant
to the Management Continuity Agreement.

 

In exchange for the payment to me of Benefits, I (1) agree not to sue in any
local, state and/or federal court regarding or relating in any way to my
employment with or separation from the Company or the Affiliates, (2) knowingly
and voluntarily waive all claims and release the Corporate Group from any and
all claims, demands, actions, liabilities, and damages, whether known or
unknown, arising out of or relating in any way to my employment with or
separation from the Company or the Affiliates (including any claim for a bonus
in respect of actual performance for the year of termination in the event that
such bonus has not yet been paid) and (3) waive any rights that I may have under
any of the Company’s involuntary severance benefit plans (other than the
Management Continuity Agreement), except to the extent that my rights are vested
under the terms of an employee benefit plan sponsored by the Company or an
Affiliate and except with respect to such rights or claims as may arise after
the date this Waiver and Release is executed.  This Waiver and Release includes,
but is not limited to, claims and causes of action under:  Title VII of the
Civil Rights Act of 1964, as amended (“Title VII”); the Age Discrimination in
Employment Act of 1967, as amended, including the Older Workers Benefit
Protection Act of 1990 (“ADEA”); the Civil Rights Act of 1866, as amended; the
Civil Rights Act of 1991; the Americans with Disabilities Act of 1990 (“ADA”);
the Energy Reorganization Act, as amended, 42 U.S.C. §§ 5851; the Workers
Adjustment and Retraining Notification Act of

 

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1988; the Sarbanes-Oxley Act of 2002; the Employee Retirement Income Security
Act of 1974, as amended; the Family and Medical Leave Act of 1993; the Fair
Labor Standards Act; the Occupational Safety and Health Act; the California Fair
Employment and Housing Act, as amended; the California Labor Code; claims in
connection with workers’ compensation or “whistle blower” statutes (except to
the extent prohibited by law); and/or contract, tort, defamation, slander,
wrongful termination or any other state or federal regulatory, statutory or
common law.  Further, I expressly represent that no promise or agreement which
is not expressed in the Management Continuity Agreement has been made to me in
executing this Waiver and Release, and that I am relying on my own judgment in
executing this Waiver and Release, and that I am not relying on any statement or
representation of the Company, any of the Affiliates or any other member of the
Corporate Group or any of their agents.  I agree that this Waiver and Release is
valid, fair, adequate and reasonable, is entered into with my full knowledge and
consent, was not procured through fraud, duress or mistake and has not had the
effect of misleading, misinforming or failing to inform me.

 

In further exchange for the payment to me of Benefits, I agree not to make any
disparaging or derogatory statements concerning the Company. The Company hereby
agrees to instruct its officers and directors not to make any disparaging
statements concerning you.  These non-disparagement obligations shall not in any
way affect my or the Company’s obligation or rights in connection with any legal
proceeding.  I further acknowledge and agree that I am bound by and will comply
with the Employee Confidential Information and Inventions Agreement and any
similar agreements that I have entered into with the Company and that I will,
within seven (7) calendar days of the date of this Waiver and Release, return
all Company property to the Company.

 

Notwithstanding the foregoing, nothing contained in this Waiver and Release is
intended to prohibit or restrict me in any way from (1) bringing a lawsuit
against the Company to enforce the Company’s obligations under the Management
Continuity Agreement; (2) making any disclosure of information required by law;
(3) providing information to, or testifying or otherwise assisting in any
investigation or proceeding brought by, any federal regulatory or law
enforcement agency or legislative body, any self-regulatory organization, or the
Company’s legal, compliance or human resources officers; (4) testifying or
participating in or otherwise assisting in a proceeding relating to an alleged
violation of any federal, state or municipal law relating to fraud or any
rule or regulation of the Securities and Exchange Commission or any
self-regulatory organization; or (5) filing any claims that are not permitted to
be waived or released under applicable law (although my ability to recover
damages or other relief is still waived and released to the extent permitted by
law).  Nothing contained in this Waiver and Release is intended to waive any
rights I may have related to unemployment compensation and workers’ compensation
and indemnification claims under Section 2802 of the California Labor Code.

 

I acknowledge that I may discover facts different from or in addition to those
which I now know or believe to be true and that this Waiver and Release shall be
and remain effective in all respects notwithstanding such different or
additional facts or the discovery thereof.  I hereby expressly waive any and all
rights and benefits conferred upon me by the provisions of Section 1542 of the
Civil Code of the State of California, and/or any analogous law of any other
state.

 

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Section 1542 states:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

 

Should any of the provisions set forth in this Waiver and Release be determined
to be invalid by a court, agency or other tribunal of competent jurisdiction, it
is agreed that such determination shall not affect the enforceability of other
provisions of this Waiver and Release.  I acknowledge that this Waiver and
Release and the Management Continuity Agreement set forth the entire
understanding and agreement between me and the Company or any other member of
the Corporate Group concerning the subject matter of this Waiver and Release and
supersede any prior or contemporaneous oral and/or written agreements or
representations, if any, between me and the Company or any other member of the
Corporate Group on the same subject matter.  I understand that for a period of
seven (7) calendar days following the date that I sign this Waiver and
Release, I may revoke my acceptance of the offer, provided that my written
statement of revocation is received on or before that seventh day by the Vice
President, Human Resources, Depomed, Inc., 7999 Gateway Boulevard, Suite 300,
Newark, California 94560, facsimile number:  (510) 744-8001, in which case the
Waiver and Release will not become effective.  In the event I revoke my
acceptance of this offer, the Company shall have no obligation to provide me
Benefits.  I understand that failure to revoke my acceptance of the offer within
seven (7) calendar days from the date I sign this Waiver and Release will result
in this Waiver and Release being permanent and irrevocable.

 

I acknowledge that I have read this Waiver and Release, have had an opportunity
to ask questions and have it explained to me and that I understand that this
Waiver and Release will have the effect of knowingly and voluntarily waiving any
action I might pursue, including breach of contract, personal injury,
retaliation, discrimination on the basis of race, age, sex, national origin, or
disability and any other claims arising prior to the date of this Waiver and
Release.  By execution of this document, I do not waive or release or otherwise
relinquish any legal rights I may have which are attributable to or arise out of
acts, omissions, or events of the Company or any other member of the Corporate
Group which occur after the date of the execution of this Waiver and Release.

 

 

 

 

Employee’s Name

 

Company Representative’s Signature

 

 

 

 

 

 

Employee’s Signature

 

Company’s Representative’s Name and Title

 

 

 

 

 

 

Employee’s Signature Date

 

Company’s Execution Date

 

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