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`Case 4:21-cv-07683-YGR Document 1 Filed 09/30/21 Page 1 of 40
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`Laurence M. Rosen, Esq. (SBN 219683)
`THE ROSEN LAW FIRM, P.A.
`355 South Grand Avenue, Suite 2450
`Los Angeles, CA 90071
`Telephone: (213) 785-2610
`Facsimile: (213) 226-4684
`Email: lrosen@rosenlegal.com
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`Counsel for Plaintiff
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`[Additional Counsel on Signature Page]
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`IN THE UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
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`Case No.:
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` JURY TRIAL DEMANDED
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`AI PHUONG CHI, derivatively on behalf of
`ACELRX PHARMACEUTICALS, INC.,
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`Plaintiff,
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`v.
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`VINCENT J. ANGOTTI, RAFFI
`ASADORIAN, ADRIAN ADAMS, RICHARD
`AFABLE, MARK G. EDWARDS, STEPHEN J.
`HOFFMAN, PAMELA P. PALMER,
`HOWARD B. ROSEN and MARK WAN,
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`ACELRX PHARMACEUTICALS, INC.,
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`Defendants,
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`and
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`Nominal Defendant.
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`VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT
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`Verified Shareholder Derivative Complaint
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`Case 4:21-cv-07683-YGR Document 1 Filed 09/30/21 Page 2 of 40
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`INTRODUCTION
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`Plaintiff Ai Phuong Chi (“Plaintiff”), by Plaintiff’s undersigned attorneys, derivatively and on
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`behalf of Nominal Defendant AcelRx Pharmaceuticals, Inc. (“AcelRx” or the “Company”), files this
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`Verified Shareholder Derivative Complaint against Individual Defendants Vincent J. Angotti, Raffi
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`Asadorian, Adrian Adams, Richard Afable, Mark G. Edwards, Stephen J. Hoffman, Pamela P. Palmer,
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`Howard B. Rosen, and Mark Wan, (collectively, the “Individual Defendants”) for violations of the
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`Securities Exchange Act of 1934 (the “Exchange Act”), breaches of their fiduciary duties as directors
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`and/or officers of AcelRx, unjust enrichment, abuse of control, gross mismanagement, waste of corporate
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`assets, and for contribution under Sections 10(b) and 21D Exchange Act. As for Plaintiff’s complaint
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`against the Individual Defendants, Plaintiff alleges the following based upon personal knowledge as to
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`Plaintiff and Plaintiff’s own acts, and information and belief as to all other matters, based upon, inter alia,
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`the investigation conducted by and through Plaintiff’s attorneys, which included, among other things, a
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`review of the Defendants’ public documents, conference calls and announcements made by Defendants,
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`United States Securities and Exchange Commission (“SEC”) filings, wire and press releases published by
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`and regarding AcelRx, legal filings, news reports, securities analysts’ reports and advisories about the
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`Company, and information readily obtainable on the Internet. Plaintiff believes that substantial evidentiary
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`support will exist for the allegations set forth herein after a reasonable opportunity for discovery.
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`NATURE OF THE ACTION
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`1.
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`This is a shareholder derivative action that seeks to remedy wrongdoing committed by
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`AcelRx’s directors and officers between March 17, 2020 and February 12, 2021 (the “Relevant Period”).
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`2.
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`AcelRx
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`is a pharmaceutical company specializing
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`in
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`the development and
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`commercialization of therapies for acute pain treatment. The Company’s lead product candidate is a
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`sublingual opioid tablet called DSUVIA, a sufentanil-based treatment for moderate-to-severe acute pain.
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`3.
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`The Company announced on November 2, 2018 that the United States Food and Drug
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`Administration (“FDA”) had approved DSUVIA “for the management of acute pain in adults that is severe
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`enough to require an opioid analgesic in certified medically supervised healthcare settings, such as
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`hospitals, surgical centers, and emergency departments.”
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`Case 4:21-cv-07683-YGR Document 1 Filed 09/30/21 Page 3 of 40
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`4.
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`Under the Federal Food, Drug and Cosmetic Act (“FD&C Act”), it is prohibited to
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`introduce or deliver for introduction into interstate commerce any drug that is misbranded.
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`5.
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`In contravention of the FD&C Act, the Company developed and used a banner and a
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`tabletop display as promotional materials that were materially false or misleading and that misbranded
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`DSUVIA by, among other things, giving greater prominence to the benefits of DSUVIA while relegating
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`information regarding limitations of use and risks to significantly less prominent locations and employing
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`typographical and layout techniques less apt to achieve emphasis (the “Misbranding Violations”).
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`6.
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`Throughout the Relevant Period, Individual Defendants made or caused AcelRx to make
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`false and/or materially misleading statements and failed to disclose, inter alia, that: (1) AcelRx failed to
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`implement and/or maintain sufficient disclosure controls and procedures regarding the marketing of
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`DSUVIA; (2) as a result, the Company engaged in the Misbranding Violations; and (3) the Company was
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`therefore subject to increased risk of regulatory investigations or enforcement actions. As a result, the
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`Company’s public statements were materially false and misleading at all relevant times.
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`7.
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`The truth was revealed on February 16, 2021, when AcelRx disclosed that it had received
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`a warning letter from the FDA regarding promotional claims it had made about DSUVIA in a banner ad
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`and a tabletop display. In the letter, which the Company received on February 11, 2021, the FDA stated
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`as follows:
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`The Office of Prescription Drug Promotion (OPDP) of the U.S. Food and Drug
`Administration (FDA) has reviewed an “SDS Banner Ad” (banner) (PM-US-DSV-0018)
`and a tabletop display (PM-US-DSV-0049) (display) for DSUVIA (sufentanil) sublingual
`tablet, CII (Dsuvia) submitted by AcelRx Pharmaceuticals, Inc. (AcelRx) under cover of
`Form FDA 2253. The promotional communications, the banner and display, make false or
`misleading claims and representations about the risks and efficacy of DSUVIA. Thus,
`the banner and display misbrand Dsuvia within the meaning of the Federal Food, Drug
`and Cosmetic Act (FD&C Act) and make its distribution violative.
`
`
`(Emphasis added.)
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`8.
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`The warning letter “request[ed] that AcelRx cease any violations of the FD&C Act,” and
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`it instructed the Company to submit a response to the warning letter within fifteen days of having received
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`the warning letter, “listing all other promotional communications . . . for Dsuvia that contain
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`representations like those described above, and explaining any plan for discontinuing use of such
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`Case 4:21-cv-07683-YGR Document 1 Filed 09/30/21 Page 4 of 40
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`communications, or for ceasing distribution of Dsuvia.”
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`9.
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`Following the disclosure of the warning letter, AcelRx’s stock price fell $0.21 per share,
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`or 8.37%, from its closing price on February 12, 2021 to close at $2.30 per share on February 16, 2021.
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`10.
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`During the Relevant, the Individual Defendants breached their fiduciary duties by
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`personally engaging in and/or causing the Company to engage in the Misbranding Violations.
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`11.
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`Also during the Relevant Period, the Individual Defendants breached their fiduciary duties
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`by personally making and/or causing the Company to make to the investing public a series of materially
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`false and misleading statements regarding the Company’s business, operations, and prospects.
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`Specifically, the Individual Defendants willfully or recklessly made and/or caused the Company to make
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`false and misleading statements that failed to disclose, inter alia, that: (1) AcelRx failed to implement
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`and/or maintain sufficient disclosure controls and procedures regarding the marketing of DSUVIA; (2) as
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`a result, the Company engaged in the Misbranding Violations; and (3) the Company was therefore subject
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`to increased risk of regulatory investigations or enforcement actions. As a result, the Company’s public
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`statements were materially false and misleading at all relevant times.
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`12.
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`The Individual Defendants also breached their fiduciary duties by failing to correct and/or
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`causing the Company to fail to correct these false and misleading statements and omissions of material
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`fact.
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`13.
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`Additionally, in breach of their fiduciary duties, the Individual Defendants caused the
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`Company to fail to maintain adequate internal controls.
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`14.
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`In light of the Individual Defendants’ misconduct—which has subjected the Company, its
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`Chief Executive Officer (“CEO”), and its Chief Financial Officer (“CFO”) to a federal securities fraud
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`class action lawsuit pending in the United States District Court for the Northern District of California (the
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`“Securities Class Action”), the need to undertake intake internal investigations, the need to implement
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`adequate internal controls, losses from the waste of corporate assets, and losses due to the unjust
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`enrichment of Individual Defendants who were improperly overcompensated by the Company, and/or
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`who benefitted from the wrongdoing alleged herein—the Company will have to expend many millions of
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`dollars.
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`3
`Verified Shareholder Derivative Complaint
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`Case 4:21-cv-07683-YGR Document 1 Filed 09/30/21 Page 5 of 40
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`15.
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`The Company has been substantially damaged as a result of the Individual Defendants’
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`knowing or highly reckless breaches of fiduciary duty and other misconduct.
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`16.
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`In light of the breaches of fiduciary duty engaged in by the Individual Defendants, most of
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`whom are the Company’s current directors, of the collective engagement in fraud and misconduct by the
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`Company’s directors, of the substantial likelihood of the directors’ liability in this derivative action and
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`of the CEO’s and CFO’s liability in the Securities Class Action, of their not being disinterested and/or
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`independent directors, a majority of the Company’s Board of Directors (the “Board”) cannot consider a
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`demand to commence litigation against themselves on behalf of the Company with the requisite level of
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`disinterestedness and independence.
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`JURISDICTION AND VENUE
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`17.
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`This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331 because Plaintiff’s
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`claims raise a federal question under Section 14(a) of the Exchange Act (15 U.S.C. § 78n(a)(1)) and Rule
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`14a-9 promulgated thereunder (17 C.F.R. § 240.14a-9), Section 10(b) of the Exchange Act (15 U.S.C.
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`§ 78j(b)), and Section 21D of the Exchange Act (15 U.S.C. § 78u-4(f)). Plaintiff’s claims also raise a
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`federal question pertaining to the claims made in the Securities Class Actions based on violations of the
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`Exchange Act.
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`18.
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`This Court also has subject matter jurisdiction pursuant to 28 U.S.C. § 1332. Plaintiff and
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`Defendants are citizens of different states and the amount in controversy exceeds the sum or value of
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`$75,000 exclusive of interest and costs.
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`19.
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`This Court has supplemental jurisdiction over Plaintiff’s state law claims pursuant to 28
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`U.S.C. § 1367(a).
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`20.
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`This derivative action is not a collusive action to confer jurisdiction on a court of the United
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`States that it would not otherwise have.
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`21.
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`Venue is proper in this District because AcelRx is headquartered in this District. In
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`addition, a substantial portion of the transactions and wrongs complained of herein occurred in this
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`District, the Defendants have conducted business in this District, and Defendants’ actions have had an
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`effect in this District.
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`4
`Verified Shareholder Derivative Complaint
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`Case 4:21-cv-07683-YGR Document 1 Filed 09/30/21 Page 6 of 40
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`Plaintiff
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`PARTIES
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`22.
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`Plaintiff is a current shareholder of AcelRx. Plaintiff has continuously held AcelRx
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`common stock at all relevant times. Plaintiff is a citizen of Texas.
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`Nominal Defendant AcelRx
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`23.
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`AcelRx is a Delaware corporation with principal executive offices at 25821 Industrial
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`Boulevard, Suite 400, Hayward, CA 94545. The Company’s common stock trades under the ticker symbol
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`“ACRX” on the Nasdaq Global Market.
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`Defendant Vincent J. Angotti
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`24.
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`Defendant Vincent J. Angotti (“Angotti”) is currently the Company’s CEO and has served
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`both in that position and as a Company director since March 2017.
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`25.
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`Upon information and belief, Defendant Angotti is a citizen of California.
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`Defendant Raffi Asadorian
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`26.
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`Defendant Raffi Asadorian (“Asadorian”) served as the Company’s CFO at all relevant
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`times.
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`27.
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`Upon information and belief, Defendant Asadorian is a citizen of California.
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`Defendant Adrian Adams
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`28.
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`Defendant Adrian Adams (“Adams”) has served as Chairman of the Board since February
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`2013. He also served as a member of the Audit Committee until June 16, 2020, when Defendant Howard
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`B. Rosen was appointed to the Audit Committee.
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`29.
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`Upon information and belief, Defendant Adams is a citizen of Pennsylvania.
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`Defendant Richard Afable, M.D.
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`30.
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`Defendant Richard Afable, M.D. (“Afable”), has served as a member of the Company’s
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`Board since December 2013.
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`31.
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`Upon information and belief, Defendant Afable is a citizen of California.
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`Defendant Mark G. Edwards
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`32.
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`Defendant Mark G. Edwards (“Edwards”) has served as a member of the Company’s Board
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`5
`Verified Shareholder Derivative Complaint
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`Case 4:21-cv-07683-YGR Document 1 Filed 09/30/21 Page 7 of 40
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`since September 2011. He also serves as a member of the Audit Committee.
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`33.
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`Upon information and belief, Defendant Edwards is a citizen of California.
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`Defendant Stephen J. Hoffman, M.D., Ph.D.
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`34.
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`Defendant Stephen J. Hoffman, M.D., Ph.D (“Hoffman”) has served as a member of the
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`Company’s Board since February 2010. He also serves as a member of the Audit Committee.
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`35.
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`Upon information and belief, Defendant Hoffman is a citizen of Massachusetts.
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`Defendant Pamela P. Palmer, M.D., Ph.D.
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`36.
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`Defendant Pamela P. Palmer, M.D., Ph.D. (“Palmer”), co-founded the Company. She has
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`served as Chief Medical Officer and as a member of the Board since the Company’s founding in 2005.
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`37.
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`Upon information and belief, Defendant Palmer is a citizen of California.
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`Defendant Howard B. Rosen
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`38.
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`Defendant Howard B. Rosen (“Rosen”) has served as a member of the Company’s Board
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`since 2008 and is currently a member of the Audit Committee. In addition, he served as the Company’s
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`CEO from April 1, 2016 until March 5, 2017, and as the Company’s interim CEO from April 1, 2015 until
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`March 31, 2016.
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`39.
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`Upon information and belief, Defendant Rosen is a citizen of California.
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`Defendant Mark Wan
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`40.
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`Defendant Mark Wan (“Wan”) has served as a member of the Company’s Board since
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`August 2006.
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`41.
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`Upon information and belief, Defendant Wan is a citizen of California.
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`FIDUCIARY DUTIES OF THE INDIVIDUAL DEFENDANTS
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`42.
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`By reason of their positions as officers, directors, and/or fiduciaries of AcelRx and because
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`of their ability to control the business and corporate affairs of AcelRx, the Individual Defendants owed
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`AcelRx and its shareholders fiduciary obligations of trust, loyalty, good faith, and due care, and were and
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`are required to use their utmost ability to control and manage AcelRx in a fair, just, honest, and equitable
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`manner. The Individual Defendants were and are required to act in furtherance of the best interests of
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`AcelRx and its shareholders so as to benefit all shareholders equally.
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`6
`Verified Shareholder Derivative Complaint
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`43.
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`Each director and officer of the Company owes to AcelRx and its shareholders the fiduciary
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`duty to exercise good faith and diligence in the administration of the Company and in the use and
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`preservation of its property and assets and the highest obligations of fair dealing.
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`44.
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`The Individual Defendants, because of their positions of control and authority as directors
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`and/or officers of AcelRx, were able to and did, directly and/or indirectly, exercise control over the
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`wrongful acts complained of herein.
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`45.
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`To discharge their duties, the officers and directors of AcelRx were required to exercise
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`reasonable and prudent supervision over the management, policies, controls, and operations of the
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`Company.
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`46.
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`Each Individual Defendant, by virtue of his or her position as a director and/or officer,
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`owed to the Company and to its shareholders the highest fiduciary duties of loyalty, good faith, and the
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`exercise of due care and diligence in the management and administration of the affairs of the Company,
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`as well as in the use and preservation of its property and assets. The conduct of the Individual Defendants
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`complained of herein involves a knowing and culpable violation of their obligations as directors and
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`officers of AcelRx, the absence of good faith on their part, or a reckless disregard for their duties to the
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`Company and its shareholders that the Individual Defendants were aware or should have been aware posed
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`a risk of serious injury to the Company. The conduct of the Individual Defendants who were officers and
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`directors of the Company has been ratified by the remaining Individual Defendants who collectively
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`comprised AcelRx’s Board at all relevant times.
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`47.
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`As senior executive officers and/or directors of a publicly-traded company whose common
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`stock was registered with the SEC pursuant to the Exchange Act and traded on the Nasdaq Global Market,
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`the Individual Defendants had a duty to prevent and not to effect the dissemination of inaccurate and
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`untruthful information with respect to the Company’s financial condition, performance, growth,
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`operations, financial statements, business, products, management, earnings, internal controls, and present
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`and future business prospects, including the dissemination of false information regarding the Company’s
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`business, prospects, and operations, and had a duty to cause the Company to disclose in its regulatory
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`filings with the SEC all those facts described in this Complaint that it failed to disclose, so that the market
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`7
`Verified Shareholder Derivative Complaint
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`Case 4:21-cv-07683-YGR Document 1 Filed 09/30/21 Page 9 of 40
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`price of the Company’s common stock would be based upon truthful and accurate information. Further,
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`they had a duty to ensure the Company remained in compliance with all applicable laws.
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`48.
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`To discharge their duties, the officers and directors of AcelRx were required to exercise
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`reasonable and prudent supervision over the management, policies, practices, and internal controls of the
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`Company. By virtue of such duties, the officers and directors of AcelRx were required to, among other
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`things:
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`(a)
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`ensure that the Company was operated in a diligent, honest, and prudent manner in
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`accordance with the laws and regulations of Delaware, California, and the United States, and pursuant to
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`AcelRx’s own Code of Business Conduct and Ethics (the “Code of Conduct”);
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`(b)
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`conduct the affairs of the Company in an efficient, business-like manner so as to
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`make it possible to provide the highest quality performance of its business, to avoid wasting the
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`Company’s assets, and to maximize the value of the Company’s stock;
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`(c)
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`remain informed as to how AcelRx conducted its operations, and, upon receipt of
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`notice or information of imprudent or unsound conditions or practices, to make reasonable inquiry in
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`connection therewith, and to take steps to correct such conditions or practices;
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`(d)
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`establish and maintain systematic and accurate records and reports of the business
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`and internal affairs of AcelRx and procedures for the reporting of the business and internal affairs to the
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`Board and to periodically investigate, or cause independent investigation to be made of, said reports and
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`records;
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`(e)
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`maintain and implement an adequate and functioning system of internal legal,
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`financial, and management controls, such that AcelRx’s operations would comply with all applicable laws
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`and AcelRx’s financial statements and regulatory filings filed with the SEC and disseminated to the public
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`and the Company’s shareholders would be accurate;
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`(f)
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`exercise reasonable control and supervision over the public statements made by the
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`Company’s officers and employees and any other reports or information that the Company was required
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`by law to disseminate;
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`(g)
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`refrain from unduly benefiting themselves and other Company insiders at the
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`8
`Verified Shareholder Derivative Complaint
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`

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`Case 4:21-cv-07683-YGR Document 1 Filed 09/30/21 Page 10 of 40
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`expense of the Company; and
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`(h)
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`examine and evaluate any reports of examinations, audits, or other financial
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`information concerning the financial affairs of the Company and to make full and accurate disclosure of
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`all material facts concerning, inter alia, each of the subjects and duties set forth above.
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`49.
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`Each of the Individual Defendants further owed to AcelRx and the shareholders the duty
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`of loyalty requiring that each favor AcelRx’s interest and that of its shareholders over their own while
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`conducting the affairs of the Company and refrain from using their position, influence or knowledge of
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`the affairs of the Company to gain personal advantage.
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`50.
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`At all times relevant hereto, the Individual Defendants were the agents of each other and
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`of AcelRx and were at all times acting within the course and scope of such agency.
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`51.
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`Because of their advisory, executive, managerial, and directorial positions with AcelRx,
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`each of the Individual Defendants had access to adverse, nonpublic information about the Company.
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`52.
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`The Individual Defendants, because of their positions of control and authority, were able
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`to and did, directly or indirectly, exercise control over the wrongful acts complained of herein, as well as
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`the contents of the various public statements issued by AcelRx.
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`CONSPIRACY, AIDING AND ABETTING, AND CONCERTED ACTION
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`53.
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`In committing the wrongful acts alleged herein, the Individual Defendants have pursued,
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`or joined in the pursuit of, a common course of conduct, and have acted in concert with and conspired
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`with one another in furtherance of their wrongdoing. The Individual Defendants caused the Company to
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`conceal the true facts as alleged herein. The Individual Defendants further aided and abetted and/or
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`assisted each other in breaching their respective duties.
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`54.
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`The purpose and effect of the conspiracy, common enterprise, and/or common course of
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`conduct was, among other things, to: (i) facilitate and disguise the Individual Defendants’ violations of
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`law, including breaches of fiduciary duty, unjust enrichment, waste of corporate assets, gross
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`mismanagement, abuse of control, and violations of the Exchange Act; (ii) conceal adverse information
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`concerning the Company’s operations, financial condition, legal compliance, future business prospects
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`and internal controls; and (iii) artificially inflate the Company’s stock price.
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`
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`9
`Verified Shareholder Derivative Complaint
`
`

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`Case 4:21-cv-07683-YGR Document 1 Filed 09/30/21 Page 11 of 40
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`55.
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`The Individual Defendants accomplished their conspiracy, common enterprise, and/or
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`common course of conduct by causing the Company purposefully or recklessly to conceal material facts,
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`fail to correct such misrepresentations, and violate applicable laws. In furtherance of this plan, conspiracy,
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`and course of conduct, the Individual Defendants collectively and individually took the actions set forth
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`herein. Because the actions described herein occurred under the authority of the Board, each of the
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`Individual Defendants who is a director of AcelRx was a direct, necessary, and substantial participant in
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`the conspiracy, common enterprise, and/or common course of conduct complained of herein.
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`56.
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`Each of the Individual Defendants aided and abetted and rendered substantial assistance in
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`the wrongs complained of herein. In taking such actions to substantially assist the commission of the
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`wrongdoing complained of herein, each of the Individual Defendants acted with actual or constructive
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`knowledge of the primary wrongdoing, either took direct part in, or substantially assisted in the
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`accomplishment of that wrongdoing, and was or should have been aware of his overall contribution to and
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`furtherance of the wrongdoing.
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`57.
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`At all times relevant hereto, each of the Individual Defendants was the agent of each of the
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`other Individual Defendants and of AcelRx, and was at all times acting within the course and scope of
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`such agency.
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`ACELRX’S CODE OF CONDUCT AND GOVERNANCE
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`AcelRx’s Code of Conduct
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`58.
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`In a section titled “Honest and Ethical Conduct,” the Code of Conduct states as follows:
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`It is the policy of AcelRx to promote high standards of integrity by conducting our affairs
`in an honest and ethical manner. The integrity and reputation of AcelRx depends on the
`honesty, fairness and integrity brought to the job by each person associated with us.
`Unyielding personal integrity is the foundation of corporate integrity.
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`59.
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`In a section titled “Legal Compliance,” the Code of Conduct states as follows:
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`Obeying the law, both in letter and in spirit, is the foundation of this Code. Our success
`depends upon each employee’s operating within legal guidelines and cooperating with
`local, national and international authorities. . . .
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`Disregard of the law will not be tolerated. Violation of domestic or foreign laws, rules
`and regulations may subject an individual, as well as AcelRx, to civil and/or criminal
`penalties.
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`
`
`10
`Verified Shareholder Derivative Complaint
`
`

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`Case 4:21-cv-07683-YGR Document 1 Filed 09/30/21 Page 12 of 40
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`60.
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`In a section titled “Maintenance of Corporate Books, Records, Documents and Accounts;
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`Financial Integrity; Public Reporting,” the Code of Conduct states as follows:
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`The integrity of our records and public disclosure depends upon the validity, accuracy
`and completeness of the information supporting the entries to our books of account.
`Therefore, our corporate and business records should be completed accurately and
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`honestly. The making of false or misleading entries, whether they relate to financial
`results or test results, is strictly prohibited. Our records serve as a basis for managing our
`business and are important in meeting our obligations to customers, suppliers, creditors,
`employees and others with whom we do business. As a result, it is important that our books,
`records and accounts accurately and fairly reflect, in reasonable detail, our assets,
`liabilities, revenues, costs and expenses, as well as all transactions and changes in assets
`and liabilities.
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`(Emphasis added.)
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`61.
`In the same section, the Code of Conduct provides as follows:
`• no employee may take or authorize any action that would intentionally cause our
`financial records or financial disclosure to fail to comply with generally accepted
`accounting principles, the rules and regulations of the SEC or other applicable laws,
`rules and regulations;
`• all employees must cooperate fully with our finance department as well as our
`independent public accountants and counsel, respond to their questions with candor
`and provide them with complete and accurate information to help ensure that our books
`and records, as well as our reports filed with the SEC, are accurate and complete; and
`• no employee should knowingly make (or cause or encourage any other person to
`make) any false or misleading statement in any of our reports filed with the SEC or
`knowingly omit (or cause or encourage any other person to omit) any information
`necessary to make the disclosure in any of our reports accurate in all material
`respects.
`(Emphasis added.)
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`Audit Committee Charter
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`62.
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`The Company’s Audit Committee Charter contains a statement of purpose regarding the
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`Audit Committee. Specifically, it explains that the states that the Audit Committee is tasked with acting
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`on behalf of the Board in fulfilling the Board’s oversight responsibilities:
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` The primary purpose of the Audit Committee (the “Committee”) of AcelRx
`Pharmaceuticals, Inc. (the “Company”) shall be to act on behalf of the Company’s Board
`of Directors (the “Board”) in fulfilling the Board’s oversight responsibilities with respect
`to the Company’s corporate accounting and financial reporting processes, systems of
`internal control over financial reporting and audits of financial statements, as well as the
`quality and integrity of the Company’s financial statements and reports and the
`qualifications, independence and performance of the registered public accounting firm or
`firms engaged as the Company’s independent outside auditors for the purpose of preparing
`or issuing an audit report or performing audit services (the “Auditors”), and the
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`
`
`11
`Verified Shareholder Derivative Complaint
`
`

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`Case 4:21-cv-07683-YGR Document 1 Filed 09/30/21 Page 13 of 40
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`performance of the Company’s internal audit function as well as oversight of the
`Company’s healthcare and privacy programs. The operation of the Committee shall be
`subject to the Amended and Restated Bylaws of the Company as in effect from time to
`time and Section 141 of the Delaware General Corporation Law.
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`63.
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`The Audit Committee Charter specifically tasks the Audit Committee with overseeing the
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` Company’s financial reporting processes on behalf of the Board:
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`The Committee shall oversee the Company’s financial reporting process on behalf of the
`Board, shall have direct responsibility for the appointment, compensation, retention and
`oversight of the work of the Auditors and any other registered public accounting firm
`engaged for the purpose of performing other review or attest services for the Company.
`The Auditors and each such other registered public accounting firm shall report directly
`and be accountable to the Committee. The Committee’s functions and procedures should
`remain flexible to address changing circumstances most effect