Document:

aldr-ex102_267.htm

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

Exhibit 10.2

 

Execution Copy

 

SETTLEMENT AND LICENSE AGREEMENT

This SETTLEMENT AND LICENSE AGREEMENT (this “Agreement”) is hereby entered into and made effective on January 5, 2018 (the “Effective Date”) by and among Teva Pharmaceuticals International GmbH (“Teva”), AlderBio Holdings, LLC (“AlderHoldings”) and Alder Biopharmaceuticals, Inc. (“AlderBio”). AlderHoldings and AlderBio are referred to collectively as “Alder”. Teva and Alder are referred to herein individually as a “Party” and collectively, as the “Parties.”

WHEREAS, Alder is developing the Alder Product (as defined herein);

WHEREAS, Teva and Alder, among other parties, are involved in an appeal, designated Appeal No. T0860/17, following opposition proceedings before the European Patent Office (the “Proceedings”) relating to Patent No. EP1957106, owned by Teva; and

WHEREAS, the Parties desire and agree to fully settle the Proceedings as between them, and for Teva to grant a license under the Licensed Patents (as defined herein) to Alder to develop, manufacture and commercialize the Alder Product in the Field and in and for the Territory upon the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual agreements herein contained and the consideration described herein, the sufficiency and receipt of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows:

	
1.
	
DEFINITIONS

	
 
	
1.1
	
“Affiliate” of a Person means any other Person which (directly or indirectly) is controlled by, controls or is under common control with such Person. For the purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) as used with respect to any Person means (a) in the case of a corporate entity, direct or indirect ownership of voting securities entitled to cast at least fifty percent (50%) of the votes in the election of directors, (b) in the case of a non-corporate entity, direct or indirect ownership of at least fifty percent (50%), including ownership by trusts with substantially the same beneficial interest, of the equity interests with the power to direct the management and policies of such Person, provided that if local law restricts foreign ownership, control will be established by direct or indirect ownership of the maximum ownership percentage that may, under such local law, be owned by foreign interests, or (c) the power to direct the management or policies of a Person, whether through ownership of voting securities, by contract or otherwise.

	
 
	
1.2
	
“Alder Antibody” means either (a) eptinezumab (also referred to internally by Alder as ALD403), as described in U.S. patent number 9,745,373 in any form or formulation[***]; (b) any anti-CGRP antibody that is other than eptinezumab and is first discovered or first identified as of the Effective Date by Alder or its controlled (as defined in Section 1.1) Affiliate; or (c) any antigen-binding fragment of an anti-CGRP antibody described in clause (a) or (b). [***]

	
 
	
1.3
	
“Alder Product” means (a) a pharmaceutical product, in any mode of administration, that contains an Alder Antibody, [***], and (b) any Generic Product commercialized in the Territory by Alder, its Affiliates or sublicensees. [***]

	
 
	
1.4
	
“BLA” means a biologics license application, as described in the FDA regulations to obtain marketing approval for a biological product in the United States, including all amendments and supplements to the application, and any equivalent filing with any Regulatory Authority.

1.

176421764 v2 

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

	
 
	
1.5
	
“Calendar Quarter” means the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31.

	
 
	
1.6
	
“Calendar Year” means each successive period of twelve (12) months commencing on January 1 and ending on December 31.

	
 
	
1.7
	
“CGRP” means calcitonin gene-related peptide.

	
 
	
1.8
	
“Effective Date” has the meaning set forth in the first paragraph of this Agreement.

	
 
	
1.9
	
“FDA” shall mean the United States Food and Drug Administration and any successor agency thereto.

	
 
	
1.10
	
“Field” means any disease or condition in humans, including, but not limited to, migraine or other headache prevention or treatment.

	
 
	
1.11
	
“First Commercial Sale” means the first sale in each country of the Territory of an Alder Product by or on behalf of Alder, its Affiliates, sublicensees or their respective distributors, to a Third Party.

	
 
	
1.12
	
“Generic Product” means, with respect to an Alder Product, any product (including a “generic product,” “biogeneric,” “follow-on biologic,” “follow-on biological product,” “similar biological medicinal product,” or “biosimilar product”) approved by way of an abbreviated regulatory mechanism by a Regulatory Authority in the Territory, including any such product that is determined by the applicable Regulatory Authority to be “comparable,” “interchangeable,” “bioequivalent,” “biosimilar” or other term of similar meaning, with respect to the Alder Product.

	
 
	
1.13
	
“Law” means any federal, state, provincial, local, international or multinational law, statute, standard, ordinance, code, rule, regulation, resolution or promulgation, or any order, writ, judgment, injunction, decree, stipulation, ruling, determination or award entered by or with any governmental authority or Regulatory Authority, or any license, franchise, permit or similar right granted under any of the foregoing, or any similar provision having the force or effect of law.

	
 
	
1.14
	
“Licensed Patents” means (a) the patents and patent applications identified on Schedule 1.14 attached hereto, (b) any patent or patent application in the Territory that claims priority to any patent identified on Schedule 1.14, including without limitation thereto any continuations, continuations-in-part, divisionals, reissues, regional or national stage applications, registrations, validations, extensions, and reexaminations thereof, and that contains at least one claim that covers the Alder Antibody, a nucleic acid that encodes the Alder Antibody, a cell that expresses the Alder Antibody, a method of making the Alder Antibody, or a method of using the Alder Antibody, (c) any supplementary protection certificates (SPCs) or certificates of supplemental production (CSPs) of any of the foregoing, and (d) any United States patent or patent application in which a terminal disclaimer is filed over any of the items listed in clauses (a) through (c).

	
 
	
1.15
	
“Net Sales” means, with respect to an Alder Product sold by or on behalf of Alder, its Affiliates, or sublicensees (the “Selling Party”) the aggregate gross sales amount invoiced for such Alder Product by such Selling Party, as applicable, on a product-by-product and country-by-country basis, on an arms-length basis to Third Parties in accordance with US GAAP (or, IFRS, if applicable to such Selling Party, hereinafter, “Accounting Standards”) consistently applied, less the following deductions:

	
 
	
(a)
	
cash and quantity discounts actually taken in the ordinary course of business in connection with the sale of such Alder Product;

	
 
	
(b)
	
reasonable estimates for any adjustments on account of price adjustments, billing adjustments, shelf stock adjustments;

2.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

	
 
	
(c)
	
[***]

	
 
	
(d)
	
reasonable estimates for chargebacks, rebates, administrative fee arrangements and reimbursements to wholesalers and other distributors, pharmacies and other retailers, buying groups, health care insurance carriers, pharmacy benefit management companies, health maintenance organizations, other institutions or health care organizations in connection with the sale of the Alder Product as evidenced in a contract or invoice;

	
 
	
(e)
	
transportation charges, and other charges, such as insurance, relating thereto incurred for delivery of such Alder Product to the extent any such items are set forth separately in the sales invoice and actually paid by the Selling Party;

	
 
	
(f)
	
amounts due to Third Parties on account of rebate payments, including Medicaid rebates, or other price reductions provided, based on sales by Alder, its Affiliates and sublicensees to any governmental authorities in respect of state or federal Medicare, Medicaid or similar programs;

	
 
	
(g)
	
allowances and credits to Third Parties on account of rejected, damaged, returned or recalled Alder Product; and

	
 
	
(h)
	
sales and excise taxes or customs duties incurred by the Selling Party and any government-imposed brand manufacturing taxes imposed upon the sale of such Alder Product and incurred by the Selling Party.

Sales and other transfer of the Alder Product between any of Alder and its Affiliates, and sublicensees, will not give rise to Net Sales, but rather the subsequent sale of the Alder Product by such party to Third Parties shall be so included in Net Sales. Sales by a Selling Party to any distributor for resale by such distributor in a given country in the Territory shall be included in Net Sales.

Net Sales for any Combination Product will be calculated on a country-by- country basis by multiplying actual Net Sales of such Combination Product by the fraction A/B, where A is the gross invoice price for the Alder Antibody contained in such Combination Product if such Alder Antibody is sold separately in finished form in such country, and B is the gross invoice price for such Combination Product in such country. If such Alder Antibody is not sold separately in finished form in such country, [***] For purposes of this subsection, “Combination Product” means a product that, in addition to containing an Alder Antibody, also contains at least one other active pharmaceutical ingredient that is not an Alder Product.

Net Sales will be calculated on an accrual basis, in a manner consistent with the Selling Party’s internal accounting policies and the Accounting Standards, as consistently applied. To the extent any accrued amounts used in the calculation of Net Sales are estimates, such estimates shall be trued-up to actual amounts paid or credited by a Selling Party.

No Selling Party shall use the Alder Product as a ‘loss leader’ or as a part of a bundle, basket, or group sale, with sales of its other products not covered under this Agreement [***]

	
 
	
1.16
	
“Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, beneficiary or trustee of any trust, incorporated association, joint venture, or similar entity or organization, including a government or political subdivision or department or agency of a government.

	
 
	
1.17
	
“Regulatory Authority” shall mean any federal, national, multinational, state, provincial or local regulatory agency, department, bureau or other governmental entity anywhere in the world with 

3.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

	
 
		
authority over the development, manufacture, importation, sale or promotion of the Product in the Field and in and for the Territory. The term Regulatory Authority includes the FDA and the European Medicines Agency (or any successor thereto) and any corresponding regulatory authority that regulates the marketing or sale of biological products or pharmaceuticals.

	
 
	
1.18
	
“Royalty Term” means, on a country-by-country basis, the period beginning at the time of First Commercial Sale of the Alder Product in such country and ending upon the latest to occur of (a) expiry of the last-to-expire Valid Claim of the Licensed Patents in such country or in such country where such Alder Product was manufactured, and (b) expiry of the last to expire SPC or CSP included in the Licensed Patents in such country.

	
 
	
1.19
	
“Territory” means worldwide, other than Japan and South Korea (unless added to the Territory pursuant to Section 3.1(d)). For clarity, however, no royalties or other consideration shall be owed with respect to any Alder Product in any country of the Territory in which no Valid Claim exists.

	
 
	
1.20
	
“Third Party” means any Person that is not a Party, an Affiliate of a Party, or a sublicensee of Alder with respect to the Alder Product.

	
 
	
1.21
	
“Valid Claim” means, with respect to a particular Alder Product and a particular country of the Territory, a claim of an issued and unexpired Licensed Patent (including the term of any patent term extension, SPC, CSP, renewal or other extension) in such country that covers such Alder Product, the manufacture of the Alder Product or the use of the Alder Product in an indication in the Field and at a dosage and dosing schedule for which it has received approval for commercial sale by the Regulatory Authority (or for which dosing or dosing schedule it is actively being marketed or detailed by or on behalf of Alder, its Affiliates or sublicensees) in such country, and has not, in such country of issuance, been held unpatentable, invalid or unenforceable in a final decision of a court or other governmental authority of competent jurisdiction from which no appeal may be or has been taken.

	
2.
	
SETTLEMENT; DISMISSAL; RELEASE; COVENANTS

	
 
	
2.1
	
All of the terms and conditions set forth in this Agreement shall be binding on the Parties as of the Effective Date.

	
 
	
2.2
	
The Parties are entering into this Agreement in an effort to avoid the fees, costs and expenses associated with the continued dispute of this matter, as well as the attendant risks of litigation.

	
 
	
2.3
	
Dismissal. Within five (5) business days of the Effective Date, Alder shall cause to be filed with the European Patent Office a notification of withdrawal from the Proceedings.

	
 
	
2.4
	
Release. In consideration of the mutual execution of this Agreement and the mutual agreement to be legally bound by the terms hereof, Teva and Alder, each on behalf of itself and its predecessors, successors, assigns, shareholders, members, trustees, officers, directors, employees, agents, representatives, licensees, licensors, partners, distributors, suppliers, customers, parents, subsidiaries, Affiliates and all others claiming by, through and under them, hereby fully, finally, irrevocably and forever releases, relinquishes, acquits and discharges the other Party and its predecessors, successors, assigns, shareholders, members, trustees, officers, directors, employees, agents, representatives, licensees, licensors, partners, distributors, suppliers, customers, parents, subsidiaries, Affiliates, importers, attorneys, manufacturers and insurers, if any, from any and all past and present (on or before the Effective Date) claims, counterclaims, demands, causes of action, liabilities, losses, all manner of actions, judgments, settlements, interest, damages, punitive damages and other damages or costs of whatever nature (including costs, expenses, and attorneys’ fees), whether known or unknown, foreseen or unforeseen, certain or contingent, that Teva or its Affiliates asserted or could have asserted from any occurrence on or prior to the Effective Date, arising out of, derived from, predicated upon, or relating to the Licensed Patents solely as applicable to the 

4.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

	
 
		
development, testing, manufacture, or seeking Regulatory Approval for, or preparing for commercial sale of, any Alder Product in and for the Territory, including without limitation any claim or counterclaim that any or all of the Licensed Patents are or would be infringed by the manufacture, use, sale, offer for sale or importation of any Alder Product; provided, however, that nothing herein shall preclude, prevent or impair the right of either Party to bring a proceeding in court or any other forum for a breach of this Agreement, or any representation, warranty, or covenant herein, or any proceeding outside of the Territory.

	
 
	
2.5
	
Except as required by Law, requested by any Regulatory Authority, for reasons that relate to the safety and/or efficacy of any pharmaceutical product, or the failure by Alder, its Affiliates or sublicensees to comply with the terms and conditions of this Agreement, Teva and its Affiliates shall not initiate or otherwise undertake any activity with any Regulatory Authority in the Territory against any BLA solely relating to the Alder Product or for the purpose of interfering with Alder’s efforts to obtain approval from any Regulatory Authority in the Territory with respect to any BLA solely relating to the Alder Product.

	
 
	
2.6
	
Unknown Claims. Each Party, on behalf of itself and its Affiliates, hereby expressly waives and relinquishes any and all provisions, rights and benefits conferred by Section 1542 of the California Civil Code, which provides as follows:

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 TO HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

Further, each Party, on behalf of itself and its Affiliates, expressly waives and relinquishes all rights and benefits afforded by any Law in any other jurisdiction similar to Section 1542 of the California Civil Code.

	
 
	
2.7
	
[***]

	
 
	
2.8
	
Teva Covenant Not to Sue. Subject to the terms of this Agreement and Alder’s compliance with the terms of this Agreement, Teva, for itself and its Affiliates, covenants to Alder that it will not sue, assert any claim or counterclaim against, or otherwise participate in any action or other judicial or legal proceeding against, Alder or its Affiliates or any of their respective shareholders, licensees, sublicensees, customers, suppliers, importers, manufacturers, distributors, or insurers, or any patients, physicians, pharmacists, REMS administrators, REMS vendors or other health care providers or entities, or any heirs, administrators, executors, predecessors, successors, or assigns of the foregoing, or cause, assist, or authorize any person or entity to do any of the foregoing, in each case claiming or otherwise asserting that the filing of the BLA with respect to the Alder Product anywhere in or for the Territory, and/or that the manufacture, use, sale, distribution, marketing, offer for sale or importation of the Alder Product anywhere in or for the Territory, infringes the Licensed Patents or any other patents or patent applications owned or controlled (i.e., licensed with the right to assert) by Teva or its Affiliates either on the Effective Date or thereafter (the “Teva Patents”). As used in this Section 2.8, “Alder Product” shall not include, and this Section 2.8 shall not apply to, any active agents contained in an Alder Product which are other than the Alder Antibody. Teva shall impose the foregoing covenant on any Third Party to which Teva or any of its Affiliates may after the Effective Date of this Agreement assign, exclusively license or otherwise transfer or grant any rights to assert any Teva Patents. Notwithstanding the foregoing, Teva Patents shall not include any patents or patent applications owned or controlled by any Third Party who becomes a controlling Affiliate (as defined in Section 1.1) through a change of control of Teva or its Affiliate and which exist as of the closing date of such change of control transaction.

	
 
	
2.9
	
Alder Covenant Not to Sue.

5.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

	
 
	
(a)
	
Subject to the terms of this Agreement and Teva’s compliance with the terms of this Agreement, Alder, for itself and its Affiliates, covenants to Teva that it will not sue, assert any claim or counterclaim against, or otherwise participate in any action or other judicial or legal proceeding against, Teva or its Affiliates or any of their respective shareholders, licensees, licensees, customers, suppliers, importers, manufacturers, distributors, or insurers, or any patients, physicians, pharmacists, REMS administrators, REMS vendors or other health care providers or entities, or any heirs, administrators, executors, predecessors, successors, or assigns of the foregoing, or cause, assist, or authorize any person or entity to do any of the foregoing, in each case claiming or otherwise asserting that the filing of the BLA with respect to the Teva Product anywhere in or for the Territory and/or that the manufacture, use, sale, distribution, marketing, offer for sale or importation of the Teva Product anywhere in or for the Territory, infringes any patents or patent applications owned or controlled (i.e., licensed with the right to assert) by Alder or its Affiliates either on the Effective Date or thereafter (the “Alder Patents”). Alder shall impose the foregoing covenant on any Third Party to which Alder or any of its Affiliates may after the Effective Date of this Agreement assign, exclusively license or otherwise transfer or grant any rights to assert any Alder Patents. Notwithstanding the foregoing, Alder Patents shall not include any patents or patent applications owned or controlled by any Third Party who becomes a controlling Affiliate (as defined in Section 1.1) through a change of control of Alder or its Affiliate and which exist as of the closing date of such change of control transaction.

	
 
	
(b)
	
As used in this Section 2.9: (i) “Teva Product” means a pharmaceutical product, in any mode of administration, that contains the Teva Antibody, either as the single antibody included in such product, or as part of a bi- specific or multi-specific product which includes an antigen-binding portion of the Teva Antibody and at least one antigen-binding portion of a different antibody (but shall not include any such other antigen-binding portion of a different antibody), and (ii) “Teva Antibody” means

[***]

	
 
	
2.10
	
Each Party represents, warrants and covenants that it has not heretofore assigned or transferred, and will not assign or otherwise transfer, to any Person any matters released by such Party in Section 2.4, and each such Party agrees to indemnify and hold harmless the other Party and the other Persons released under Section 2.4 from and against all such released matters arising from any such alleged or actual assignment or transfer.

	
3.
	
LICENSE; RESTRICTIONS

	
 
	
3.1
	
License.

	
 
	
(a)
	
Grant. Subject to the terms and conditions of this Agreement, Teva hereby grants to Alder a royalty-bearing, non-transferable (except as permitted under Section 8.11), non-exclusive license, under the Licensed Patents to develop, manufacture, use, offer to sell, sell, export and import Alder Products in the Field and in the Territory.

	
 
	
(b)
	
Restrictions on Sublicensing.

	
 
	
(i)
	
Subject to Section 3.1(b)(ii) below, Alder shall have the right to grant sublicenses of its rights granted to Alder under Section 3.1(a) above solely to any Third Parties (subject to Section 3.1(b)(ii)) [***]. Any such sublicenses will be granted and governed by written agreements and will be subject to the terms and conditions of this Agreement. Alder will be liable for any act or omission of each such sublicensee that is a breach of any of Alder’s obligations under this Agreement as though the same were a breach by Alder.

6.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

	
 
	
(ii)
	
Alder shall have the right to grant any sublicense to or under the Licensed Patents to any Third Party under Section 3.1(b)(i), [***]

	
 
	
(c)
	
Survival of Sublicense. Sublicenses shall survive any termination of this Agreement by Teva in the event of Alder’s breach, provided that the applicable sublicensee is not itself in breach. Upon becoming aware of any material breach of any such sublicense, Alder shall notify Teva in writing thereof, and shall use diligent efforts to enforce the terms of such sublicense agreement.

	
 
	
(d)
	
Potential Territory Expansion. The Parties acknowledge that [***] (the “Third Party License”). The Parties hereby agree that if the Third Party License is terminated or if the rights under the Licensed Patents [***] otherwise revert to Teva or any of its Affiliates, then upon such termination or reversion, [***] shall be automatically included in the Territory defined herein, and Teva shall so notify Alder in writing [***] of such inclusion of [***] into the Territory.

	
 
	
3.2
	
No Other Licenses; Disclaimer. Nothing in this Agreement will be construed as (a) obligating Teva or its Affiliates to bring or prosecute actions or suits against any Third Party for infringement of the Licensed Patents; (b) conferring a right to use any trademark or trade name of either Party; (c) granting by Teva or its Affiliates by implication, estoppel or otherwise, any licenses or rights under any patent rights, except as expressly described in this Agreement; (d) granting by Alder or its Affiliates by implication, estoppel or otherwise, any licenses or rights (i) under any patent rights, except as expressly described in this Agreement, or (ii) with respect to any BLA filed by Alder or its Affiliates or sublicensees; (e) granting by Teva or its Affiliates by implication, estoppel or otherwise, any licenses or rights (including without limitation rights of reference) with respect to (i) any Teva BLA, (ii) any product that includes any portion of an active agent that is not an anti-CGRP antibody, or (iii) any anti-CGRP product other than the Alder Product, [***] or (f) an obligation on the part of Teva or its Affiliates to provide to Alder or its Affiliates any know-how or information (including confidential information) owned or controlled by Teva or any of its Affiliates.

	
 
	
3.3
	
Covenant Not to Challenge or Assist Challenges to the Licensed Patents. Alder shall not, shall cause its Affiliates not to, and shall include in any sublicense agreement with any sublicensees granted rights under Section 3.1(b) a requirement not to, directly or indirectly through a Third Party, (a) challenge the validity, enforceability, patentability, priority of invention or other claim to priority, infringement or patent term adjustment of any of the Licensed Patents in any reexamination, inter partes proceeding, protest, observation, comment, opposition, post-grant proceeding, inter partes review, interference or other action or proceeding in the United States Patent and Trademark Office (“USPTO”) or a foreign counterpart, or in any court proceedings in the Territory or submit or cause, in any manner, to be submitted, any correspondence or communication with the USPTO or its foreign counterpart or in any court proceedings in the Territory with respect to the Licensed Patents; (b) assert that the manufacture, use, sale or importation of the Alder Product does not infringe the Licensed Patents in the Territory, except to the extent that the claims of the Licensed Patents are limited to requiring specific amino acid or polynucleotide sequences that differ from those of the Alder Product, or are limited to requiring a dosage, dosing schedule, combination with another therapy, patient selection, therapeutic indication, therapeutic outcome, medical device such as a syringe, formulation, route of administration, or other method steps or physical characteristics that are not possessed by Alder Product and/or are not required to be performed in the use of the Alder Product in an indication in the Field for which it has received approval for commercial sale by the Regulatory Authority (or for which dosing or dosing schedule it is actively being marketed or detailed by or on behalf of Alder, its Affiliates or sublicensees) in the country of such Licensed Patent, as Alder and Teva agree that the manufacture, use, sale, offer for sale, or importation of the Alder Product would not infringe such claims; and (c) challenge Teva’s ownership of or license rights to the Licensed Patents; and (d) assist, encourage, or finance any Third Party in challenging any Licensed Patents or Teva’s ownership of or license to any Licensed Patents.

7.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

	
 
	
3.4
	
Cooperation. Upon Alder’s request, Teva shall cooperate with Alder in informing the FDA and any other Regulatory Authority in the Territory that Teva has granted to Alder the license rights set forth in Section 3.1(a).

	
4.
	
CONSIDERATION

	
 
	
4.1
	
Alder will pay Teva the following amounts in consideration for the license rights granted hereunder: (i) $25,000,000 in cash within five (5) business days of the Effective Date (the “Upfront Payment”) plus (ii) the Royalty Payments plus (iii) the Milestone Payments.

	
 
	
(a)
	
Royalty Payments. For each Calendar Quarter during the Royalty Term, Alder will pay Teva non-refundable, non-creditable royalties on that portion of Net Sales of the Alder Product [***] for the applicable Calendar Year at the rates set forth below in the Territory (the “Royalty Payments”):

		
	
Portion of Calendar Year Net Sales 
(US Dollars)
	
Royalty Rate

	
[***]

 

For clarity, Net Sales used to calculate the foregoing sales threshold amounts shall not include sales arising in countries for which no Royalty Payment is due hereunder during the Royalty Term.

	
 
	
(b)
	
Milestone Payments. Alder will pay Teva non-refundable, non-creditable milestone payments upon the first occurrence of each of the following milestone events (the “Milestone Payments”):

		
	
Milestone Event
	
Milestone Payment 
(US Dollars)

	
First Regulatory Approval of the Alder Product [***]
	
$25,000,000

	
First attainment of $1,000,000,000 in cumulative Net Sales in a calendar year for the Alder Product in and for the Territory
	
$75,000,000

	
First attainment of $2,000,000,000 in cumulative Net Sales in a calendar year for the Alder Product in and for the Territory
	
$75,000,000

 

	
 
	
4.2
	
Payment Terms. Alder will make all payments, without any reduction or setoff, in United States dollars by wire transfer to an account designated in writing by Teva. In those cases where the amount due in U.S. dollars is calculated based upon one or more currencies other than U.S. dollars, such amounts shall be converted to U.S. dollars at the average rate of exchange for the Calendar Quarter to which such payment relates using the arithmetic mean of the daily rate of exchange, as reported in Thomson Reuters Eikon as the “Mid Price Close”, or using any other source as agreed to by the Parties. Royalty Payments shall be due within [***] following the end of each applicable Calendar Quarter. Each Royalty Payment by Alder hereunder will be accompanied by a report that includes the aggregate gross sales of the applicable Alder Product in the Territory during the applicable Calendar Quarter, the corresponding Net Sales, royalty rate applied and the amount of each of the Royalty Payments payable with respect to such Net Sales on a consolidated basis including relevant Net Sales and royalty rates attributable to its Affiliates and sublicensees (each, a “Royalty Statement”). Milestone Payments shall be due within [***] following the occurrence of the applicable milestone event.

8.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

	
 
	
4.3
	
True-Up; Adjustments.

	
 
	
(a)
	
Within [***] after the end of each calendar year during the Royalty Term, Alder shall perform a “true up” reconciliation (and shall provide Teva with a written report of such reconciliation) of the deductions outlined in the definition of “Net Sales.” The reconciliation shall be based on actual cash paid or credits issued plus an estimate for any remaining liabilities incurred related to the Alder Product, but not yet paid. If the foregoing reconciliation report shows either an underpayment or an overpayment between the Parties, the Party owing payment to the other Party shall pay the amount of the difference to the other Party within [***] after the date of delivery of such report.

	
 
	
(b)
	
Within [***] after the termination or expiration of the Royalty Term, Alder shall perform a “true-up” reconciliation (and shall provide Teva with a written report of such reconciliation) of the items constituting deductions from Net Sales. If the foregoing reconciliation report shows either an underpayment or an overpayment between the Parties, the Party owing payment to the other Party shall pay the amount of the difference to the other Party within [***] after the date of delivery of such report.

	
 
	
4.4
	
Audit Rights.

	
 
	
(a)
	
Teva will have the right to engage, at its own cost and expense, subject to this Section 4.4, an independent nationally recognized public accounting firm chosen by Teva and reasonably acceptable to Alder (which accounting firm will not be the external auditor of Teva, will not have been hired or paid on a contingency basis and will have experience auditing pharmaceutical companies) (a “CPA Firm”) to conduct an audit of Alder for the purposes of confirming Alder’s compliance with the Royalty Payment provisions of this Agreement.

	
 
	
(b)
	
The CPA Firm will be given access to and will be permitted to examine such books and records of Alder, its Affiliates and sublicensees (to the extent Alder has such right itself to so audit and is able to transfer such right to Teva, and if not, Alder will so audit as directed by Teva) as it will reasonably request, upon [***] prior written notice having been given by Teva, during regular business hours, for the sole purpose of determining compliance with the Royalty Payment provisions of this Agreement. Prior to any such examination taking place, the CPA Firm will enter into a confidentiality agreement reasonably acceptable to Teva and Alder with respect to the information to which they are given access and will not contain in its report or otherwise disclose to Teva or any Third Party any information labeled by Alder as being confidential customer information regarding pricing or other competitively sensitive proprietary information.

	
 
	
(c)
	
Alder and Teva will be entitled to receive a full written report of the CPA Firm with respect to its findings and Teva will provide, without condition or qualification, Alder with a copy of the report, or other summary of findings, prepared by such CPA Firm promptly following Teva’s receipt of same. In the event of any dispute between Alder and Teva regarding the findings of any such inspection or audit, the Parties will initially attempt in good faith to resolve the dispute amicably between themselves, and if the Parties are unable to resolve such dispute within [***] after delivery to both Parties of the CPA Firm’s report, each Party will select an internationally recognized independent certified public accounting firm (other than the CPA Firm), and the two firms chosen by the Parties will choose a third internationally recognized independent certified public accounting firm which will resolve the dispute, and such accounting firm’s determination will be binding on both Parties, absent manifest error by such accounting firm.

	
 
	
(d)
	
Within [***] days after completion of the CPA Firm’s audit, Alder will pay to Teva any deficiency in the Royalty Payment amount determined by the CPA Firm. If the report of the CPA Firm shows that Alder overpaid, then Alder will be entitled to off-set such 

9.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

	
 
		
overpayment against any Royalty Payment then owed to Teva. If no royalty is then owed to Teva, then Teva will remit such overpayment to Alder within [***] after completion of the CPA Firm’s audit. If the report of the CPA Firm shows a discrepancy between the amount of the royalty to which Teva is entitled and the Royalty Payment amount reflected by Alder in the Royalty Statement in Teva’s favor, then in addition to the payment of the Royalty Payment amount, and if such discrepancy exceeds the [***] of the CPA Firm in performing such audit will be paid by Alder.

	
 
	
(e)
	
Teva’s exercise of its audit rights under this Section 4.4 may not be (a) conducted for any Calendar Quarter more than [***] after the end of such Calendar Quarter to which such books and records pertain, (b) conducted more than once in [***] (unless a previous audit during such [***] revealed an underpayment with respect to such period), or (c) repeated for any Calendar Quarter.

	
5.
	
TERM AND TERMINATION

	
 
	
5.1
	
Term. Unless earlier terminated in accordance with the terms of this Section 5, the term of this Agreement will commence on the Effective Date and will remain in effect on a country-by-country basis until [***].

	
 
	
5.2
	
Termination for Cause. Either Party may terminate this Agreement at any time in the event that the other Party materially breaches this Agreement; provided that the non-breaching Party provides written notice detailing such alleged breach, in which event, if such breach is curable, the alleged breaching Party shall have a [***] after written notice thereof to cure such breach, and if not cured within such time, this Agreement shall terminate immediately at the end of such period on written notice from the non-breaching party, unless the alleged breaching Party provides notice during the applicable cure period set forth above that such breaching Party disputes the basis for termination pursuant to this Section 5.2 in which case this Agreement shall not terminate unless and until a final determination as been made with respect to such dispute pursuant to Section 8.2 upholding such basis for termination.

	
 
	
5.3
	
Effect of Expiration or Termination. Expiration or termination of this Agreement will not relieve the Parties of any obligation accruing prior to such expiration or termination. Sections 2.5, 2.8, 2.9, 3.3, shall survive expiration, but not termination, of this Agreement. In addition, Sections 2.1 through 2.4, Section 2.6, Section 3.2, Sections 4.1 through 4.4 (with respect to payments owed as of such date of termination or expiration), this Section 5.3, Sections 7.3 through 7.7, Articles 6 and 8 shall survive expiration or termination of this Agreement.

	
6.
	
CONFIDENTIALITY; PUBLICITY

	
 
	
6.1
	
The Parties hereby agree that, except to enforce this Agreement or unless otherwise agreed to by the Parties in writing or as required by Law, the Parties, their Affiliates and their respective employees, officers, directors and other representatives shall not publish or otherwise disclose the contents of this Agreement, except that (a) each Party may disclose this Agreement (i) to its attorneys, advisors, consultants, agents, financial advisors and representatives who are subject to obligations of confidentiality consistent with this Agreement and (ii) as and to the extent required by Law, including reporting requirements to the U.S. Securities and Exchange Commission or a foreign counterpart having jurisdiction over a Party, or by the rules or regulations of any stock exchange to which the Parties are subject; (b) Alder may disclose the terms of this Agreement to and communicate with the Regulatory Authorities on a confidential basis concerning the licenses provided for herein, (c) Alder may disclose the terms of this Agreement to any bona fide investor, acquiror or sublicensee provided such disclosure is under obligations of confidentiality consistent with this Agreement; (d) Teva may disclose such terms as may be necessary or useful in connection with any legal proceeding relating to the Licensed Patents, provided that if Teva does so disclose in such proceeding, it will provide to Alder a copy of such proposed disclosure for its review and comment; (e) Teva may disclose the terms of this Agreement to any bona fide investor or acquiror, 

10.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

	
 
		
or to any acquirer of an interest in the royalty stream to be paid to Teva hereunder, provided such disclosure is under obligations of confidentiality consistent with this Agreement; and (f) Teva may disclose to [***] the terms of this Agreement, all Royalty Statements and all other information and reports related to the payment, audit or true-up of all royalties, milestones and other amounts paid or payable to Teva under this Agreement, provided such disclosure is under obligations of confidentiality consistent with this Agreement. In the event that a Party is required by Law or the rules of any securities exchange or automated quotation system to make any such disclosure under the foregoing clause (a)(ii), the Party making such disclosure shall (A) give reasonable advance notice to the other Party of such disclosure requirement and, in each of the foregoing, will use its reasonable efforts to secure confidential treatment of such information required to be disclosed; (B) cooperate with the other Party in an attempt to prevent or limit the disclosure, and (C) limit any disclosure to the specific purpose at issue, including consulting with the other Party concerning which terms of this Agreement will be requested to be redacted in any public disclosure of this Agreement, and in any event seek reasonable confidential treatment for any public disclosure by any such agency.

	
 
	
6.2
	
Except as expressly permitted under and in accordance with Section 6.1, neither Party shall make or allow the publication of any press release or other public announcement with respect to this Agreement or any of the transactions contemplated hereby, without the prior written approval of the other Party. Alder and Teva may each disclose to Third Parties the information contained in any such approved press release without the need for further approval by the other. Attached hereto as Exhibit A-1 is the form of press release that Teva will issue, and attached as Exhibit A-2 is the form of press release that Alder will issue, in each case, in connection with the signing of this Agreement.

	
 
	
6.3
	
The Parties hereby agree that, except as set forth in Section 6.1, to enforce this Agreement, as otherwise agreed to by the Parties in writing or as required by Law, the Parties, their Affiliates and their respective employees, officers, directors and other representatives shall not publish or otherwise disclose the contents of this Agreement.

	
7.
	
REPRESENTATIONS AND WARRANTIES

	
 
	
7.1
	
Mutual Representations and Warranties. Each of Teva and Alder hereby represents and warrants to the other, as of the Effective Date of this Agreement, that:

	
 
	
(a)
	
Such Party is duly organized and validly existing under the Law of the jurisdiction of its incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof;

	
 
	
(b)
	
Such Party has taken all corporate action necessary to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement;

	
 
	
(c)
	
This Agreement has been duly executed by such Party and constitutes a valid and legally binding obligation of such Party, enforceable in accordance with its terms;

	
 
	
(d)
	
The execution, delivery, and performance of this Agreement does not conflict with any agreement, instrument, or understanding, oral or written, to which such Party is bound nor violate any Law or regulation of any court, governmental body, or administrative or other agency having jurisdiction over it;

	
 
	
(e)
	
It has been advised by its counsel of its rights and obligations under this Agreement and enters into this Agreement freely, voluntarily, and without duress; and

	
 
	
(f)
	
It is not relying on any promises, inducements, or representations other than those provided herein.

11.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

	
 
	
7.2
	
Additional Representations and Warranties of Teva. Teva hereby represents and warrants to Alder, as of the Effective Date of this Agreement, that:

	
 
	
(a)
	
Teva is the sole owner of or otherwise possesses the right to grant the license to Alder hereunder of, the Licensed Patents.

	
 
	
(b)
	
Teva has not granted any assignment, license, covenant not to sue, or other similar interest or benefit, exclusive or otherwise, to any Third Party in the Field and in the Territory relating to any Licensed Patent that conflicts with or limits the rights granted to Alder hereunder

	
 
	
(c)
	
As of the Effective Date, other than the Licensed Patents listed on Schedule 1.14, Teva and its Affiliates do not own or control any other granted patents or pending patent applications in the Territory that claim or cover the Alder Antibody, polynucleotides encoding the Alder Antibody, or the use, import or manufacture of the Alder Antibody or such polynucleotides encoding the Alder Antibody, or manufacture or use of the Alder Antibody in the Territory, or that if not licensed by Alder according to this Agreement, would be infringed by the manufacture, use, sale, offering for sale, or importation of the Alder Antibody in the Territory.

	
 
	
7.3
	
Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NO PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF APPLICABLE LAW.

	
 
	
7.4
	
Indemnification by Alder. Alder shall indemnify and hold Teva, its Affiliates and their respective officers, directors, agents and employees (the “Teva Indemnitees”) harmless from and against any charges, allegations, notices, demands, claims, complaints, causes of action, orders, investigations, or proceedings (whether criminal or civil, in contract, tort or otherwise) for losses, liabilities, obligations, awards, settlements, penalties, fines, sanctions, damages, reasonable legal costs and other reasonable expenses of any nature (“Claims”) payable by any Teva Indemnitee to a Third Party claimant arising under or related to this Agreement to the extent arising or resulting from:

	
 
	
(a)
	
the development or commercialization of any Alder Product by Alder or any of its Affiliates, licensees, sublicensees or contractors; or

	
 
	
(b)
	
the [***] or willful misconduct of any of the Alder Indemnitees; or

	
 
	
(c)
	
the breach of any of the warranties or representations made by Alder to Teva under this Agreement; or

	
 
	
(d)
	
the breach by Alder of its obligations pursuant to this Agreement

except in each case, to the extent such Claims result from the breach by any Teva Indemnitee of any covenant, representation, warranty or other agreement made by Teva in this Agreement or the gross negligence or willful misconduct of any Teva Indemnitee.

	
 
	
7.5
	
Indemnification by Teva. Teva shall indemnify and hold Alder, its Affiliates, and their respective officers, directors, agents and employees (the “Alder Indemnitees”) harmless from and against any Claims payable by any Alder Indemnitee to a Third Party claimant arising under or related to this Agreement to the extent arising or resulting from:

	
 
	
(a)
	
the [***] or willful misconduct of any of the Teva Indemnitees in performing under this Agreement; or

12.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

	
 
	
(b)
	
the breach of any of the warranties or representations made by Teva to Alder under this Agreement; or

	
 
	
(c)
	
any breach by Teva of its obligations pursuant to this Agreement

except in each case, to the extent such Claims result from the breach by any Alder Indemnitee of any covenant, representation, warranty or other agreement made by Alder in this Agreement or the gross negligence or willful misconduct of any Alder Indemnitee.

	
 
	
7.6
	
Procedures. If either Party is seeking indemnification under Sections 7.4 and 7.5 (the “Indemnified Party”), it shall inform the other Party (the “Indemnifying Party”) of the Claim giving rise to the obligation to indemnify pursuant to such Section as soon as reasonably practicable after receiving notice of the Claim. The Indemnifying Party shall have the right to assume the defense of any such Claim for which it is obligated to indemnify the Indemnified Party. The Indemnified Party shall cooperate with the Indemnifying Party and the Indemnifying Party’s insurer as the Indemnifying Party may reasonably request, and at the Indemnifying Party’s cost and expense. The Indemnified Party shall have the right to participate, at its own expense and with counsel of its choice, in the defense of any Claim that has been assumed by the Indemnifying Party. Neither Party shall have the obligation to indemnify the other Party in connection with any settlement made without the Indemnifying Party’s written consent, which consent shall not be unreasonably withheld or delayed.

	
 
	
7.7
	
Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR INDIRECT DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 7.7 IS INTENDED TO OR SHALL LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER SECTION 7.4 OR 7.5.

	
8.
	
GENERAL PROVISIONS

	
 
	
8.1
	
Waiver. None of the provisions of this Agreement will be considered waived by any Party unless such waiver is agreed to, in writing, by authorized agents of such Party. The failure of a Party to insist upon strict conformance to any of the terms and conditions hereof, or failure or delay to exercise any rights provided herein or by Law will not be deemed a waiver of any rights of any Party.

	
 
	
8.2
	
Dispute Resolution.

	
 
	
(a)
	
The Parties recognize that disputes as to certain matters may from time to time arise that relate to either Party’s rights and/or obligations hereunder, including the interpretation, alleged breach, enforcement, or validity of this Agreement (a “Dispute “). It is the objective of the Parties to establish procedures to facilitate the resolution of such Disputes arising under this Agreement in an expedient manner by mutual cooperation. To accomplish this objective, the Parties agree that, if such a Dispute arises under this Agreement, and the Parties are unable to resolve such Dispute within [***] after such Dispute is first identified by either Party in writing to the other, the Parties shall (i) notify the other party in writing of the title of a senior executive of such Party within [***] thereafter to whom such dispute may be referred, and (ii) refer such Dispute to such senior executives of each Party for attempted resolution by good faith negotiations within [***] after such notice of designation is delivered.

	
 
	
(b)
	
If the senior executives (or their designees) are not able to resolve such Dispute within [***] and either Party wishes to pursue the matter, either Party shall have the right to pursue such Dispute as provided in Section 8.3.

13.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

	
 
	
8.3
	
Choice of Law and Remedies. This Agreement and any dispute arising out of or related to this Agreement shall be governed and interpreted in accordance with the [***] without regard to conflicts of law principles. The [***] shall have exclusive jurisdiction in all matters arising under this Agreement, and the Parties hereto expressly consent and submit to the personal and subject matter jurisdiction of the [***]. This Agreement does not limit or restrict the remedies available to any Party for the breach of another Party, and the Parties expressly reserve any and all remedies available to them, at law or in equity, for breach of this Agreement or otherwise, but subject to Section 7.7.

	
 
	
8.4
	
Costs. Each Party shall each bear its own costs and legal fees associated with the negotiation and preparation of, and performance under, this Agreement and any activities related to the implementation of this Agreement.

	
 
	
8.5
	
Entire Agreement. This Agreement constitutes the entire agreement between the Parties relating to the subject matter hereof and thereof and supersedes all previous agreements and understandings, oral or written, with respect to such matters.

	
 
	
8.6
	
Notice. All notices or other communications hereunder shall be deemed to have been duly given and made if in writing and if served by personal delivery upon a Party, if delivered by a reputable overnight express courier service (charges prepaid), or if sent by facsimile to the person at the address set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such person as follows:

	
 
	
If to Teva:
	
Teva Pharmaceutical International GmbH
Schluselstrasse 12
Jona 8645, Switzerland
Attention: Naama Baram

	
 
	
With a copy to:
	
Teva Pharmaceuticals
425 Privet Road
Horsham, PA 19044
Attention: General Counsel

	
 
	

	
and

Goodwin Procter LLP
100 Northern Avenue
Boston, MA 02210
Attention: Robert M. Crawford
Fax: (617) 321-4432

	
 
	
If to Alder:
	
Alder BioPharmaceuticals, Inc.
11804 North Creek Parkway South
Bothell, WA 98011
Attention: General Counsel

	
 
	
With a copy to:
	
Cooley LLP
3175 Hanover Street
Palo Alto, CA 94304
Attention: Barbara Kosacz
Fax:(650) 849-7400

Such notices will be deemed to have been given on the date delivered in the case of delivery by personal delivery or overnight courier or on the date actually received in the case of facsimile delivery.

14.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

	
 
	
8.7
	
Severability. When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law. If, however, any provision of this Agreement is held to be invalid, illegal, or unenforceable for any reason, the Parties shall negotiate in good faith for a substitute provision to continue the intent and purpose of such invalid provisions, and the validity, legality, and enforceability of the remaining provisions shall not be in any way impaired thereby.

	
 
	
8.8
	
Amendments. No amendment, modification or supplement of any provisions of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party.

	
 
	
8.9
	
Descriptive Headings. The captions and descriptive headings of this Agreement are for convenience only and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement.

	
 
	
8.10
	
Third-Party Benefit. None of the provisions of this Agreement shall be for the benefit of, or enforceable by, any Third Party.

	
 
	
8.11
	
Assignment. Alder shall not assign this Agreement or any part hereof or any interest herein (whether by operation of law or otherwise) without the prior written consent of Teva, such consent not to be unreasonably withheld, except that Alder may assign this Agreement without Teva’s consent to any Affiliate, or to any Third Party successor to all or substantially all of Alder’s business or assets, whether by merger, sale of stock or assets or similar transaction. Teva may assign this Agreement, in whole or in part, without Alder’s consent to any Affiliate or to any Third Party successor to any of the Licensed Patents or the Teva Product, subject to the terms and conditions of this Agreement. No assignment will be valid unless the permitted assignee(s) assumes all obligations of its assignor under this Agreement. No assignment will relieve any assigning Party of responsibility for the performance of its obligations hereunder. Any purported assignment in violation of this Section 8.11 will be null and void ab initio. Subject to the foregoing, the rights and obligations of each Party under this Agreement will be binding upon and inure to the benefit of the successor and permitted assigns of such Party.

	
 
	
8.12
	
Counterparts; Electronic Delivery. This Agreement may be executed in counter-parts with the same effect as if both Parties had signed the same document. All such counterparts will be deemed an original, will be construed together and will constitute one and the same instrument. Signature pages of this Agreement may be exchanged by facsimile or other electronic means without affecting the validity thereof.

SIGNATURES FOLLOW ON NEXT PAGE

 

 

 

15.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

IN WITNESS WHEREOF, each of the Parties has caused this Agreement lo be executed by its duly authorized representative as of the Effective Date.

		
	
Teva Pharmaceuticals International GmbH

 

 

By:/s/Naama Bar Am

Name:Naama Bar Am

Title:General Manager
	
Alder BioPharmaceuticals, Inc.

 

 

By:

Name:

Title:

 

	
By:

Name:

Title:
	
AlderBio Holdings, LLC

 

By:

Name:

Title:

 

 

 

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

IN WITNESS WHEREOF, each of the Parties has caused this Agreement lo be executed by its duly authorized representative as of the Effective Date.

		
	
Teva Pharmaceuticals International
GmbH

 

By:/s/David Koch

Name:David Koch

Title:President of the Managing Officers
	
Alder BioPharmaceuticals, Inc.

 

 

By:

Name:

Title:

 

	
By:

Name:

Title:
	
AlderBio Holdings, LLC

 

By:

Name:

Title:

 

 

 

17.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

IN WITNESS WHEREOF, each of the Parties has caused this Agreement lo be executed by its duly authorized representative as of the Effective Date.

		
	
Teva Pharmaceuticals International
GmbH

 

By:

Name:

Title:
	
Alder BioPharmaceuticals, Inc.

 

 

By:/s/Randall C. Schatzman

Name:Randall C. Schatzman

Title:President & CEO

 

	
By:

Name:

Title:
	
AlderBio Holdings, LLC

 

By:

Name:

Title:

 

 

18.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

IN WITNESS WHEREOF, each of the Parties has caused this Agreement lo be executed by its duly authorized representative as of the Effective Date.

		
	
Teva Pharmaceuticals International
GmbH

 

By:

Name:

Title:
	
Alder BioPharmaceuticals, Inc.

 

 

By:

Name:

Title:

 

	
By:

Name:

Title:
	
AlderBio Holdings, LLC

 

By:/s/Joshua C. Miller

Name:Joshua C. Miller

Title:Manager

 

 

 

 

19.

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

SCHEDULE 1.14

Licensed Patents

[***]

 

 

 

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

EXHIBIT A-1

Teva Press Release

TEVA ANNOUNCES GLOBAL LICENSE AGREEMENT WITH ALDER BIOPHARMACEUTICALS®
IN THE FIELD OF ANTI-CGRP-BASED THERAPY

JERUSALEM—January XX, 2018 -- Teva Pharmaceutical Industries Ltd., (NYSE and TASE:TEVA) today announced that its subsidiary, Teva Pharmaceuticals International GmbH., has signed a global license agreement with Alder BioPharmaceuticals. The agreement validates Teva’s IP and resolves Alder’s opposition to Teva’s European Patent No. 1957106 B1, with respect to calcitonin gene-related peptide (CGRP) antagonist antibodies, also providing Alder with clarity for its ongoing plans in the field.

Under the terms of the agreement, Alder has received a non-exclusive license to Teva’s CGRP patent portfolio to develop, manufacture and commercialize eptinezumab in the U.S. and worldwide, excluding Japan and Korea. In exchange, Alder has agreed to:

	
 
	
•
	
Withdraw its appeal before the European Patent Office;

	
 
	
•
	
Make an immediate one-time payment of $25 million to Teva;

	
 
	
•
	
Make a second one-time payment of $25 million upon the approval of a biologics license application (BLA) for Alder’s eptinezumab with the U.S. Food and Drug Administration or of an earlier equivalent filing with a regulatory authority elsewhere in the license territory in which any Teva licensed patents exist;

	
 
	
•
	
Following commercial launch of eptinezumab, pay $75 million at each of two sales-related milestones (at $1 billion and $2 billion in sales achieved in any given 12-month period) and provide certain royalty payments on net sales at rates from 5% to 7%.

“This agreement reinforces the broad coverage provided by Teva’s IP in the field of anti-CGRP therapy. At the same time, it also helps facilitate the ongoing development of additional potential therapies in this exciting field – this can only be good for our increased understanding of the area and ultimately improved patient wellbeing”, said Marcelo Bigal, M.D., Ph.D., Chief Scientific Officer and Head of Specialty R&D at Teva.

About Teva

Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) is a leading global pharmaceutical company that delivers high-quality, patient-centric health care solutions used by approximately 200 million patients in 100 markets every day. Headquartered in Israel, Teva is the world’s largest generic medicines producer, leveraging its portfolio of more than 1,800 molecules to produce a wide range of generic products in nearly every therapeutic area. In specialty medicines, Teva has the world-leading innovative treatment for multiple sclerosis as well as late-stage development programs for other disorders of the central nervous system, including movement disorders, migraine, pain and neurodegenerative conditions, as well as a broad portfolio of respiratory products. Teva is leveraging its generics and specialty capabilities in order to seek new ways of addressing unmet patient needs by combining drug development with devices, services and technologies. Teva’s net revenues in 2016 were $21.9 billion. For more information, visit www.tevapharm.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which are based on management’s current beliefs and expectations and are subject to substantial risks and uncertainties, both known and unknown, that could cause our future results, performance or achievements to differ significantly from that expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to:

Our ability to defend our intellectual property rights, including our CGRP patent portfolio;

 

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•
	
our specialty medicines business, including: competition for our specialty products, especially Copaxone®, our leading medicine, which faces competition from existing and potential additional generic versions and orally-administered alternatives; our ability to achieve expected results from investments in our product pipeline; competition from companies with greater resources and capabilities; and the effectiveness of our patents, and other measures to protect our intellectual property rights.

	
 
	
•
	
our business and operations in general, including: uncertainties relating to the potential success and our ability to effectively execute a restructuring plan; uncertainties relating to the potential benefits and success of our new organizational structure and recent senior management changes; our ability to develop and commercialize additional pharmaceutical products; manufacturing or quality control problems, which may damage our reputation for quality production and require costly remediation; interruptions in our supply chain; disruptions of our or third party information technology systems or breaches of our data security; the restructuring of our manufacturing network , including potential related labor unrest; the impact of continuing consolidation of our distributors and customers; and variations in patent laws that may adversely affect our ability to manufacture our products;

	
 
	
•
	
compliance, regulatory and litigation matters, including: costs and delays resulting from the extensive governmental regulation to which we are subject; the effects of reforms in healthcare regulation and reductions in pharmaceutical pricing, reimbursement and coverage; potential additional adverse consequences following our resolution with the U.S. government of our FCPA investigation; governmental investigations into sales and marketing practices; potential liability for sales of generic products prior to a final resolution of outstanding patent litigation; product liability claims; increased government scrutiny of our patent settlement agreements; failure to comply with complex Medicare and Medicaid reporting and payment obligations; and environmental risks;

and other factors discussed in our Annual Report on Form 20-F for the year ended December 31, 2016 (“Annual Report”), including in the section captioned “Risk Factors,” and in our other filings with the U.S. Securities and Exchange Commission, which are available at www.sec.gov and www.tevapharm.com. Forward-looking statements speak only as of the date on which they are made, and we assume no obligation to update or revise any forward-looking statements or other information contained herein, whether as a result of new information, future events or otherwise. You are cautioned not to put undue reliance on these forward-looking statements.

###

				
	
IR Contacts:
	
Kevin C. Mannix
	
United States
	
(215) 591-8912

	
 
	
Ran Meir
	
United States
	
(215) 591-3033

	
 
	
Tomer Amitai
	
Israel
	
972 (3) 926-7656

	
PR Contacts:
	
Iris Beck Codner
	
Israel
	
972 (3) 926-7208

	
 
	
Kaelan Hollon
	
United States
	
(202) 412-7076

 

 

 

 

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

EXHIBIT A-2

Alder Press Release

Alder BioPharmaceuticals® Enters into European Patent Settlement and Global License Agreement with Teva in the Field of Anti-CGRP-Based Therapy

BOTHELL, Wash. , Jan. X, 2018 – Alder BioPharmaceuticals, Inc. (NASDAQ: ALDR), a biopharmaceutical company focused on novel therapeutic antibodies for the treatment of migraine, today announced that it has entered into a European patent settlement and global license agreement with Teva Pharmaceuticals International GmbH. The agreement resolves Alder’s appeal following opposition proceedings before the European Patent Office related to Teva’s European Patent No. 1957106 B1, with respect to calcitonin gene-related peptide (CGRP) antagonist antibodies, and provides clarity regarding Alder’s freedom to develop, manufacture and commercialize eptinezumab, its lead product candidate for migraine prevention targeting CGRP.

Under the terms of the agreement, Alder has received a non-exclusive license to Teva’s CGRP patent portfolio to develop, manufacture and commercialize eptinezumab in the U.S. and worldwide, excluding Japan and Korea. In exchange, Alder has agreed to:

	
 
	
•
	
Withdraw its appeal before the European Patent Office;

	
 
	
•
	
Make an immediate one-time payment of $25 million to Teva;

	
 
	
•
	
Make a second one-time payment of $25 million upon the approval of a biologics license application (BLA) for eptinezumab with the U.S. Food and Drug Administration or of an earlier equivalent filing with a regulatory authority elsewhere in the license territory in which any Teva licensed patents exist; and

	
 
	
•
	
Following commercial launch of eptinezumab, pay $75 million at each of two sales-related milestones (at $1 billion and $2 billion in annual sales) and provide certain royalty payments on net sales at rates from 5% to 7%.

“This agreement solidifies Alder’s freedom to operate and provides a clear path for us to commercialize eptinezumab and, if approved, deliver this potential treatment option to the many patients suffering from migraine,” said Randall C. Schatzman, Ph.D., Alder president and chief executive officer.

About Alder BioPharmaceuticals, Inc.

Alder BioPharmaceuticals, Inc., is a clinical-stage biopharmaceutical company that discovers, develops and seeks to commercialize genetically engineered therapeutic antibodies with the potential to meaningfully transform current treatment paradigms. Alder’s lead pivotal-stage product candidate, eptinezumab, is being evaluated for migraine prevention. Eptinezumab is a monoclonal antibody (mAb) inhibiting calcitonin gene-related peptide (CGRP), which is believed to play a key role in mediating and initiating migraine. The eptinezumab mAb design combined with delivery via quarterly infusion allows for strong and immediate inhibition of CGRP biology. Alder is additionally evaluating ALD1910, a preclinical product candidate also in development as a migraine prevention therapy. ALD1910 is a monoclonal antibody that inhibits pituitary adenylate cyclase-activating polypeptide-38 (PACAP-38), another protein that is active in mediating the initiation of migraine. Clazakizumab, Alder’s third program, is a monoclonal antibody candidate that inhibits interleukin-6 and is licensed to Vitaeris, Inc. For more information, please visit http://www.alderbio.com.

Forward-Looking Statements

This press release contains forward-looking statements, including, without limitation, statements relating to: the continued development and clinical, therapeutic and commercial potential of eptinezumab; the commercialization of eptinezumab; and the anticipated benefits to Alder under the referenced settlement and license agreement and the obligations of the parties thereunder. Words such as “will,” “provide,” “clarity,” “freedom,” “deliver,” “potential,” or other similar expressions, identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. The forward- looking 

 

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

statements in this press release are based upon Alder’s current plans, assumptions, beliefs, expectations, estimates and projections, and involve substantial risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in the forward-looking statements due to these risks and uncertainties as well as other factors, which include, without limitation: risks related to the potential failure of eptinezumab to demonstrate safety and efficacy in clinical testing; Alder’s ability to conduct clinical trials and studies of eptinezumab sufficient to achieve a positive completion; the availability of data at the expected times; the clinical, therapeutic and commercial value of eptinezumab; risks and uncertainties related to regulatory application, review and approval processes and Alder’s compliance with applicable legal and regulatory requirements; risks and uncertainties relating to the manufacture of eptinezumab; Alder’s ability to obtain and protect intellectual property rights, and operate without infringing on the intellectual property rights of others; the uncertain timing and level of expenses associated with Alder’s development and commercialization activities; the sufficiency of Alder’s capital and other resources; market competition; changes in economic and business conditions; and other factors discussed under the caption “Risk Factors” in Alder’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017, which was filed with the Securities and Exchange Commission (SEC) on November 7, 2017, and is available on the SEC’s website at www.sec.gov. Additional information will also be set forth in Alder’s other reports and filings it will make with the SEC from time to time. The forward-looking statements made in this press release speak only as of the date of this press release. Alder expressly disclaims any duty, obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Alder’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

Media Contacts:

Ashley Cadle TogoRun

310-463-0143

a.cadle@togorun.com

 

Investor Relations Contacts:

Michael Schaffzin

Stern Investor Relations, Inc.

212-362-1200

michael@sternir.comaldr-ex103_268.htm

 

Exhibit 10.3

 

 

 

March 26, 2018

 

Randall C. Schatzman, Ph.D.

5733 - 238th Place NE 

Redmond, WA 98053

 

 

Re:Separation and Consulting Agreement 

 

Dear Randy:

This letter sets forth the terms of the separation and consulting agreement (the “Agreement”) which Alder BioPharmaceuticals, Inc. (the “Company”) is offering to you to aid in your employment transition.

1.Separation.  Your last day of work with the Company and your employment termination date was March 15, 2018 (the “Separation Date”). You hereby resign from the Board of Directors of the Company and from every position you hold with the Company and its affiliated entities, effective as of the Separation Date.

2.Accrued Salary and Vacation.  Shortly after your last day of employment with the Company, the Company will pay you all accrued salary and all accrued and unused vacation time earned through the last day of your employment, subject to standard payroll deductions and withholdings.  You will receive these payments regardless of whether or not you sign this Agreement. 

3.Severance Benefits.  In full satisfaction, and in excess, of any obligations to provide you severance or retention benefits for a Non-Change in Control Termination under the terms of that certain Alder BioPharmaceuticals, Inc. Executive Severance Benefit Plan, as amended and restated effective December 15, 2016, a copy of which is attached hereto as Exhibit A (the “Severance Plan”), and subject to Section 3 (“Eligibility for Benefits”) of the Severance Plan, if you timely return this fully signed Agreement to the Company, allow it to become effective, and you comply fully with your obligations hereunder, the Company will provide you with the following as your sole severance benefits (the “Severance Benefits”):

(a)Severance Pay.  The Company will pay you the Non-Change in Control Cash Severance for a Participant who is the Chief Executive Officer (“CEO”) of the Company, as set forth in Section 4(a)(ii) of the Severance Plan in the total amount of $1,343,849.94 payable as follows: $74,658.33 per month, less appropriate withholdings, beginning with the first payment on May 14, 2018 (provided this Agreement has become effective by such time), and thereafter on the last business day of each month, from May 31, 2018 with the last payment due on September 30, 2019. 

(b)Health Insurance.  To the extent provided by the federal COBRA law or, if applicable, state insurance laws (collectively, “COBRA”), and by the Company’s current group health insurance policies, you will be eligible to continue your group health insurance benefits at your own expense after the last day of your employment.  Later, you may be able to convert to an individual policy through the provider of the Company’s health insurance, if you wish.  You will be provided with a separate notice describing your rights and obligations under COBRA laws on or after the last day of your employment.  As an additional Severance Benefit, provided that you timely elect continued coverage under COBRA, the Company will provide you with the COBRA severance benefits for a Participant who is the CEO of the Company, as set forth in Section 4(b) of the Severance Plan.

 

 

 

4.Consulting Agreement.  In exchange for your entering into this Agreement, allowing it to become effective, and complying with it, as an additional benefit, the Company agrees to retain you as a consultant under the terms specified below.  

(a)Consulting Period.  The consulting relationship will be deemed to commence on the day after the Separation Date and will continue for a period of eighteen (18) months, unless terminated earlier pursuant to Paragraph 4(h) below or extended by agreement of you and the Company (the “Consulting Period”).  Any agreement to extend the Consulting Period after the initial period must be set forth in writing signed by you and a duly authorized member of the Board of Directors of the Company. 

(b)Consulting Services.  You agree to provide consulting services to the Company in any area of your expertise, including but not limited to, providing transition briefing information regarding projects you have worked on for the Company and providing strategic advice (the “Consulting Services”).  During the Consulting Period, you will report directly to the CEO.  You agree to exercise the highest degree of professionalism and utilize your expertise and creative talents in performing these services.  You agree to make yourself available to perform such Consulting Services throughout the Consulting Period, on an as-needed basis, up to a maximum of ten (10) hours per month.  You will not be required to report to the Company’s offices during the Consulting Period, except as specifically requested by the Company.  When providing such services, you shall abide by the Company’s policies and procedures.  

(c)Independent Contractor Relationship.  Your relationship with the Company during the Consulting Period will be that of an independent contractor, and nothing in this Agreement is intended to, or should be construed to, create a partnership, agency, joint venture or employment relationship after the Separation Date.  Other than the Severance Benefits, you will not be entitled to any of the benefits which the Company may make available to its employees, including but not limited to, group health or life insurance, profit-sharing or retirement benefits, and you acknowledge and agree that your relationship with the Company during the Consulting Period will not be subject to the Fair Labor Standards Act or other laws or regulations governing employment relationships. 

(d)Consulting Compensation.  Vesting of your outstanding stock options, restricted stock units and any other equity awards, if any (the “Equity”), will continue during the Consulting Period.  Your Equity, including the terms and conditions of the Equity and your rights and obligations with respect to the Equity, will continue to be governed by the terms of your stock option grant notices, restricted stock unit grant notices and applicable plan documents pursuant to which you acquired the Equity.  You understand and agree that the tax treatment of certain of your stock options may change depending upon when you exercise them and that the Company makes no representation as to the tax treatment that will be afforded to any of your options. In addition, during the Consulting Period and provided that you remain in compliance with this Agreement, you will receive as consulting fees $750 per hour for each hour of Consulting Services you are approved to perform and actually perform for the Company (the “Consulting Fees”).  Because you will be providing the Consulting Services as an independent contractor, the Company will not withhold any amount for taxes, social security or other payroll deductions from the Consulting Fees.  The Company will report the Consulting Fees on an IRS Form 1099.  You acknowledge that you will be entirely responsible for payment of any taxes that may be due on the Consulting Fees, and you hereby indemnify, defend and save harmless the Company, and its officers and directors in their individual capacities, from any liability for any taxes, penalties or interest that may be assessed by any taxing authority with respect to the Consulting Fees.  The Consulting Fees will be paid within thirty (30) business days of receipt by Company of each of your invoice(s) for Consulting Services.   

(e)Limitations on Authority.  You will have no responsibilities or authority as a consultant to the Company other than as provided above.  You will have no authority to bind the Company to any contractual obligations, whether written, oral or implied, except with the written authorization of the CEO.  You agree not to represent or purport to represent the Company in any manner whatsoever to any third party unless authorized by the Company, in writing, to do so.

(f)Proprietary Information and Inventions.  You agree that, during the Consulting Period and thereafter, you will not use or disclose any confidential or proprietary information or materials of the Company, including any confidential or proprietary information that you obtain or develop in the course of performing the Consulting Services.  Notwithstanding the foregoing, pursuant to 18 U.S.C. Section 1833(b), you shall not be held 

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criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that:  (1) is made in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (2) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  Any and all work product you create in the course of performing the Consulting Services will be the sole and exclusive property of the Company.  You hereby assign to the Company all right, title, and interest in all inventions, techniques, processes, materials, and other intellectual property developed in the course of performing the Consulting Services.  You further acknowledge and reaffirm your continuing obligations under the Severance Plan and under your signed Proprietary Information and Inventions Agreement, a copy of which is attached hereto as Exhibit B.

(g)Other Work Activities.  Throughout the Consulting Period, you retain the right to engage in employment, consulting, or other work relationships in addition to your work for the Company.  The Company will make reasonable arrangements to enable you to perform your work for the Company at such times and in such a manner so that it will not interfere with other activities in which you may engage.  In order to protect the trade secrets and confidential and proprietary information of the Company, you agree that, during the Consulting Period, you will notify the Company, in writing, before you obtain employment with or perform competitive work for any business entity, or engage in any other work activity that is competitive with the Company.  

(h)Termination of Consulting Period.  Without waiving any other rights or remedies, the Company may terminate immediately the Consulting Period upon your breach of any provision of this Agreement or your Proprietary Information and Inventions Agreement and your failure to cure said breach after you have been given 30 days’ notice to cure said breach (if deemed curable).  Upon termination of the Consulting Period, the Company will pay those fees incurred through and including the effective date of such termination.

5.No Other Compensation or Benefits.  You acknowledge that payment of the Severance Benefits and provision of other benefits set forth in this Agreement fulfills and exceeds all of the Company’s obligations to pay you severance or other benefits for a Non-Change in Control Termination pursuant to the Severance Plan, and that to the extent this Agreement differs from the Severance Plan with respect to the payment of any severance payments or benefits, this Agreement nevertheless supersedes the Company’s severance obligations to you under the Severance Plan or any other plan, policy or agreement.  You further acknowledge that upon receipt of the Severance Benefits as provided herein, if so required pursuant to this Agreement, the Company’s severance obligations to you under the Severance Plan or any other plan, policy or agreement shall be extinguished.  You further acknowledge that, except as expressly provided in this Agreement, you have not earned, will not earn by the last day of your employment, and will not receive from the Company any additional compensation, severance, or benefits on or after the last day of your employment, with the exception of any vested right you may have under the express terms of any applicable written ERISA-qualified benefit plan (e.g., 401(k) account).  By way of example, you acknowledge that you have not earned and are not owed any equity, bonus, incentive compensation, or commissions.

6.Expense Reimbursements.  You agree that, within 30 days after the Separation Date, you will submit your final documented expense reimbursement statement reflecting all business expenses you incurred through the last day of your employment, if any, for which you seek reimbursement.  The Company will reimburse you for reasonable business expenses pursuant to its regular business practice.

7.Return of Company Property.  Within fifteen (15) days after the Separation Date (or earlier if requested by the Company), you shall return to the Company all Company documents (and all copies thereof) and other Company property in your possession or control, including but not limited to Company files, notes, financial and operational information, customer lists and contact information, product and services information, research and development information, drawings, records, plans, forecasts, reports, payroll information, spreadsheets, studies, analyses, compilations of data, proposals, agreements, sales and marketing information, personnel information, specifications, code, software, databases, computer-recorded information, tangible property and equipment (including but not limited to computers, facsimile machines, mobile telephones, tablets, handheld devices, and servers), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of the Company and all reproductions thereof in whole or in part and in any medium.  You agree that you will make a diligent search to locate any such documents, property and information within the timeframe referenced above.  In addition, if you have used any personally owned computer, 

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server, or e-mail system to receive, store, review, prepare or transmit any confidential or proprietary data, materials or information of the Company, then within fifteen (15) days after the Separation Date (or earlier if requested by the Company), you must provide the Company with a computer-useable copy of such information and then permanently delete and expunge such confidential or proprietary information from those systems without retaining any reproductions (in whole or in part); and you agree to provide the Company access to your system, as requested, to verify that the necessary copying and deletion is done.  Your entitlement to and receipt of the Severance Benefits described in this Agreement are expressly conditioned upon return of all Company property.  In addition, during the Consulting Period only, and after your return of property as required in this paragraph above, the Company will permit you to receive, and/or use any documents and/or information reasonably necessary to perform the Consulting Services, all of which equipment, documents and information you must return to the Company upon request and not later than the last day of the Consulting Period.

8.Mutual Nondisparagement.  You agree not to disparage the Company, Alder BioPharmaceuticals Limited, and their respective officers, directors, employees, stockholders, agents and affiliates, in any manner likely to be harmful to them or their business, business reputation or personal reputation. Similarly, the Company agrees to instruct its officers and directors and the officers and directors of Alder BioPharmaceuticals Limited not to disparage you in any manner likely to be harmful to you or your business or personal reputation.  Notwithstanding the foregoing in this paragraph, you and the Company (including the officers and directors of the Company and Alder BioPharmaceuticals Limited) may respond accurately and fully to any question, inquiry or request for information when required by legal process or in connection with a government investigation. In addition, nothing in this provision is intended to prohibit or restrain any party in any manner from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice and the Securities and Exchange Commission, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. 

9.No Admissions.  The promises and payments in consideration of this Agreement shall not be construed to be an admission of any liability or obligation by either party to the other party, and neither party makes any such admission.

10.Release of Claims.

(a)General Release.  In exchange for the consideration provided to you under this Agreement to which you would not otherwise be entitled, you hereby generally and completely release the Company and its affiliated, related, parent and subsidiary entities, and each of its and their current and former directors, officers, employees, stockholders, partners, agents, attorneys, predecessors, successors, insurers, affiliates, and assigns (collectively, the “Released Parties”) from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to or on the date you sign this Agreement (collectively, the “Released Claims”).  

(b)Scope of Release.  The Released Claims include, but are not limited to:  (i) all claims arising out of or in any way related to your employment with the Company, or the termination of that employment; (ii) all claims related to compensation or benefits from the Company, including salary, bonuses, commissions, vacation, paid time off, expense reimbursements, severance pay, fringe benefits, stock, stock options, restricted stock units, or any other ownership, equity, or profits interests in the Company; (iii) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (iv) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (v) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964, the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (as amended) (the “ADEA”), the Washington Law Against Discrimination (RCW chapter 49.60; WAC 162-04-10, et seq.), the Washington Family Leave Act and the Washington Minimum Wage Act.

(c)Excluded Claims.  Notwithstanding the foregoing, the following are not included in the Released Claims (the “Excluded Claims”):  (i) any rights or claims for indemnification you may have pursuant to any written indemnification agreement with the Company to which you are a party or under applicable law; (ii) any 

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rights which cannot be waived as a matter of law; (iii) any rights you have to file or pursue a claim for workers’ compensation or unemployment insurance; and (iv) any claims for breach of this Agreement.  In addition, nothing in this Agreement prevents you from filing, cooperating with, or participating in any proceeding before any federal, state or other government agency, except that you acknowledge and agree that you hereby waive your right to any monetary benefits in connection with any such claim, charge or proceeding before the Equal Employment Opportunity Commission, the Department of Labor, the Washington State Human Rights Commission, or any other analogous state or federal agency.  You represent and warrant that, other than the Excluded Claims, you are not aware of any claims you have or might have against any of the Released Parties that are not included in the Released Claims.

(d)ADEA Waiver.  You acknowledge that you are knowingly and voluntarily waiving and releasing any rights you may have under the ADEA, and that the consideration given for the waiver and release in this Section is in addition to anything of value to which you are already entitled.  You further acknowledge that you have been advised, as required by the ADEA, that:  (i) your waiver and release do not apply to any rights or claims that may arise after the date that you sign this Agreement; (ii) you should consult with an attorney prior to signing this Agreement (although you may choose voluntarily not to do so); (iii) you have twenty-one (21) days to consider this Agreement (although you may choose voluntarily to sign it earlier); (iv) you have seven (7) days following the date you sign this Agreement to revoke it (by providing written notice of your revocation to me); and (v) this Agreement will not be effective until the date upon which the revocation period has expired, which will be the eighth day after the date that this Agreement is signed by you provided that you do not revoke it (the “Effective Date”).  

11.Release of Unknown Claims.  YOU UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS, EVEN IF THOSE UNKNOWN CLAIMS THAT, IF KNOWN BY YOU, WOULD AFFECT YOUR DECISION TO ACCEPT THIS AGREEMENT.  In giving the release herein, which includes claims which may be unknown to you at present, you hereby expressly waive and relinquish all rights and benefits under any law of any jurisdiction with respect to your release of any unknown or unsuspected claims herein.

12.Representations.  You hereby represent that you have been paid all compensation owed and for all hours worked, you have received all the leave and leave benefits and protections for which you are eligible pursuant to the federal Family and Medical Leave Act, the Washington Family Leave Act, or otherwise, and you have not suffered any on-the-job injury for which you have not already filed a workers’ compensation claim.  You further acknowledge and understand that the Company may disclose this Agreement, including without limitation by publicly filing it in connection with any corporate or public disclosure or filing requirements.

13.Miscellaneous.  This Agreement, including its exhibits, constitutes the complete, final and exclusive embodiment of the entire agreement between you and the Company with regard to the subject matter hereof.  It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other agreements, promises, warranties or representations concerning its subject matter.  This Agreement may not be modified or amended except in a writing signed by both you and a duly authorized officer of the Company.  This Agreement will bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company, their heirs, successors and assigns.  If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question will be modified so as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible under applicable law.  This Agreement will be deemed to have been entered into and will be construed and enforced in accordance with the laws of the State of Washington as applied to contracts made and to be performed entirely within Washington.  This Agreement may be executed in counterparts, each of which will be deemed an original, all of which together constitutes one and the same instrument.  This Agreement may be signed and delivered by facsimile signature, PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000 (e.g., www.docusign.com).

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If this Agreement is acceptable to you, please sign and date below within twenty-one (21) days and send me the fully signed Agreement.  The Company’s offer contained herein will automatically expire if we do not receive the fully signed Agreement within this timeframe.

I wish you good luck in your future endeavors.

Sincerely,

Alder BioPharmaceuticals, Inc.

By:  /s/ Clay B. Siegall       

Clay B. Siegall, Ph.D. 

Chairman of the Compensation Committee

 

Understood and Agreed:

/s/ Randall C. Schatzman

Randall C. Schatzman, Ph.D.

 

March 29, 2018

Date

 

 

 

 

 

Exhibit A

Alder BioPharmaceuticals, Inc.

Executive Severance Benefit Plan

1.Introduction.  This Alder BioPharmaceuticals, Inc. Executive Severance Benefit Plan (the “Plan”) amends and restates the Alder BioPharmaceuticals, Inc. Executive Change in Control Severance Benefit Plan established effective June 13, 2012 and the Executive Severance Benefit Plan effective May 7, 2014.  The Plan is hereby amended and restated effective December 15, 2016. The purpose of the Plan is to provide for the payment of severance benefits to certain eligible executive employees of Alder BioPharmaceuticals, Inc. (the “Company”) or any Affiliate (as defined below) in the event that such persons become subject to involuntary or constructive employment terminations.  This Plan document also is the Summary Plan Description for the Plan.

2.Definitions.  For purposes of the Plan, the following terms are defined as follows: 

(a) “Accrued Amounts” means any unpaid annual base salary accrued through the date of a Participant’s Qualifying Termination and any accrued but unpaid vacation pay.

(b)“Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the Company as such terms are defined in Rule 405 of the Securities Act of 1933, as amended.  The Plan Administrator shall have the authority to determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition.

(c) “Annual Bonus” means the annual cash bonus that a Participant is eligible to earn, if any, under the Company’s or any Affiliate’s annual cash incentive program, as in effect from time to time.

(d)“Annual Target Bonus” means the annual bonus that a Participant is expected to earn under the Company’s or any Affiliate’s annual cash incentive program assuming achievement of target-level performance on all metrics.

(e)“Board” means the Board of Directors of the Company.

(f)“Cause” shall include, but not be limited to:  (i) employee’s continued failure, in the reasonable opinion of the Board, to perform one or more assigned duties or responsibilities to the Company or an Affiliate, such failure being evidenced by a written report submitted on behalf of the Company or an Affiliate to the Board so indicating failure and including a remedy or remedies reasonably satisfactory to the Board for correcting the asserted failure(s); (ii) failure to follow the lawful directives of employee’s manager(s), such failure being evidenced by a written report submitted by such manager(s) to the Board so indicating failure and including a remedy or remedies reasonably satisfactory to the Board; (iii) material violation of any Company or Affiliate policy; (iv) commission of any act of fraud, embezzlement, dishonesty or any other misconduct that has caused or is reasonably expected to result in material injury to the Company or an Affiliate; (v) unauthorized use or disclosure of any proprietary information or trade secrets of the Company or an Affiliate or any other party to whom employee owes an obligation of nondisclosure as a result of the relationship with the Company or an Affiliate; (vi) material breach by employee of any obligations under any written agreement or covenant with the Company or an Affiliate; or (vii) conviction of, or plea of “guilty” or “no contest” to, a felony under the laws of the United States or any state.

(g)“Change in Control” shall have the meaning set forth in the Company’s 2014 Equity Incentive Plan.  The definition of Change in Control is intended to conform to the definitions of “change in ownership of a corporation” and “change in ownership of a substantial portion of a corporation’s assets” provided in Treasury Regulation Sections 1.409A-3(i)(5)(v) and (vii).

(h)“Change in Control Termination” means a Participant’s Separation from Service due to (i) dismissal or discharge by the Company or an Affiliate for a reason other than death, disability, or Cause, or (ii) a 

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Resignation for Good Reason, either of which occurs in connection with or within twelve (12) months following the effective date of a Change in Control.  In no event will a Participant’s Separation from Service due to death, disability or Cause, or a resignation by a Participant without Good Reason, constitute a Change in Control Termination.

(i)“Code” means the Internal Revenue Code of 1986, as amended.

(j)“Common Stock” means the common stock of the Company. 

(k)“Company” means Alder BioPharmaceuticals, Inc. or, following a Change in Control, the surviving entity resulting from such event.

(l)“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

(m) “Monthly Annual Target Bonus” means a Participant’s Annual Target Bonus, divided by 12.

(n)“Monthly Base Salary” means the Participant’s annual base salary, ignoring any decrease in annual base salary that forms the basis for a Resignation for Good Reason, as in effect on the date of the Qualifying Termination, divided by 12.  

(o)“Non-Change in Control Termination” means a Participant’s dismissal or discharge by the Company or an Affiliate resulting in a Separation from Service, for a reason other than death, disability, or Cause, other than in connection with or within twelve (12) months following the effective date of a Change in Control.  In no event will a Participant’s Separation from Service due to death, disability or Cause, or a resignation by a Participant for any reason, constitute a Non-Change in Control Termination.

(p)“Participant” means each individual who (i) is employed by the Company or an Affiliate as an executive officer or key employee designated by the Board, and (ii) has received and returned a signed Participation Notice. 

(q)“Participation Notice” means the latest notice delivered by the Company to a Participant informing the Participant that he or she is eligible to participate in the Plan, in substantially the form of Exhibit A to the Plan.

(r)“Plan Administrator” means the Board or any committee of the Board duly authorized to administer the Plan. The Plan Administrator may be, but is not required to be, the Compensation Committee of the Board. The Board may at any time administer the Plan, in whole or in part, notwithstanding that the Board has previously appointed a committee to act as the Plan Administrator. 

(s)“Qualifying Termination” means either a Change in Control Termination or a Non-Change in Control Termination.

(t)“Resignation for Good Reason” means a Participant’s resignation from all positions the Participant then holds with the Company and its Affiliates, resulting in a Separation from Service, within thirty (30) days after the expiration of the cure period set forth below, provided the Participant has given the Plan Administrator written notice of the occurrence of any of the following events taken without the Participant’s written consent within thirty (30) days after the first occurrence of such event and the Company and its Affiliates have not cured such event, to the extent curable, within thirty (30) days thereafter: (1) a material reduction in the Participant’s annual base salary; (2) a material adverse change in Participant’s position causing such position to be of materially reduced status or responsibility; (3) relocation of the Participant’s principal place of employment to a place that increases the Participant’s one-way commute by more than fifty (50) miles as compared to the Participant’s then-current principal place of employment immediately prior to such relocation; or (4) the failure of any successor-in-interest to assume a 

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material obligation of the Company under this Plan or material written contractual obligation to Participant, which (in either case) adversely affects the Participant. 

(u)“Separation from Service” means a “separation from service” within the meaning of Treasury Regulations Section 1.409A-1(h), without regard to any alternative definition thereunder.

(v)“Severance Multiplier” means: 

(1)for a Participant who is the Chief Executive Officer of the Company at the time of the Qualifying Termination, eighteen (18); and

(2)for a Participant who is not the Chief Executive Officer of the Company at the time of the Qualifying Termination, six (6) plus one (1) for each full year of employment with the Company or an Affiliate up to a maximum of twelve (12).

(w)“Severance Period” means a period of months commencing on the date of a Participant’s Qualifying Termination, with the number of months being equal to a Participant’s applicable Severance Multiplier.

(x)“Stock Awards” means outstanding stock options and any other equity awards granted to a Participant from a Company plan.

3.Eligibility for Benefits.

(a)Eligibility; Exceptions to Benefits. Subject to the terms and conditions of the Plan, the Company (or the Participant’s employing Affiliate) will provide the benefits described in Section 4 to the affected Participant.  The Plan does not provide for duplication (in whole or in part) of benefits with any other agreement or plan and any payments under this Plan shall be reduced by any severance benefit payable to Participant under any other Company or Affiliate plan, program or agreement. A Participant will not receive benefits under the Plan in the following circumstances, as determined by the Plan Administrator, in its sole discretion:

(i)The Participant’s employment is terminated by the Company, an Affiliate or the Participant for any reason other than a Qualifying Termination.

(ii)The Participant has not entered into the Employee Proprietary Information and Inventions Agreement or any similar or successor document (the “Proprietary Information Agreement”).

(iii)The Participant has failed to execute and allow to become effective the Release (as defined and described below) within sixty (60) days following the Participant’s Separation from Service.

(iv)The Participant has failed to return all Company Property.  For this purpose, “Company Property” means all paper and electronic Company and Affiliate documents (and all copies thereof) created and/or received by the Participant during his or her period of employment with the Company or any Affiliate and other Company or Affiliate materials and property that the Participant has in his or her possession or control, including, without limitation, Company and Affiliate files, correspondence, emails, memoranda, notes, notebooks, drawings, records, plans, forecasts, reports, studies, analyses, proposals, agreements, financial information, research and development information, sales and marketing information, operational and personnel information, specifications, code, software, databases, computer-recorded information, tangible property and equipment (including, without limitation, leased vehicles, computers, computer equipment, software programs, facsimile machines, mobile telephones, servers), credit and calling cards, entry cards, identification badges and keys, and any materials of any kind that contain or embody any proprietary or confidential information of the Company or any Affiliate (and all reproductions thereof, in whole or in part).  As a condition to receiving benefits under the Plan, a Participant must not make or retain copies, reproductions or summaries of any such Company or Affiliate documents, materials or property and must make a diligent search to locate any such documents, property and information.  If the Participant has used any personally owned computer, server, or e-mail system to receive, store, 

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review, prepare or transmit any Company or Affiliate confidential or proprietary data, materials or information, then within ten (10) business days after the Separation from Service, the Participant must provide the Company or an Affiliate with a computer-useable copy of all such information and then permanently delete and expunge such confidential or proprietary information from those systems.  However, a Participant is not required to return his or her personal copies of documents evidencing the Participant’s hire, termination, compensation, benefits and stock options and any other documentation received as a stockholder of the Company.  A Participant’s failure to return Company Property that is neither confidential nor material, such as an identification badge or calling card, will not, in and of itself, disqualify such Participant from receiving benefits under the Plan; provided, that any such items of Company Property are subsequently returned to the Company upon request.

(v)The Participant has failed to cooperate fully with the Company or an Affiliate in connection with its actual or contemplated defense, prosecution, or investigation of any existing or future litigation, arbitrations, mediations, claims, demands, audits, government or regulatory inquiries, or other matters arising from events, acts, or failures to act that occurred during the time period in which the Participant was employed by the Company or an Affiliate (including any period of employment with an entity acquired by the Company).  Such cooperation includes, without limitation, being available upon reasonable notice, without subpoena, to provide accurate and complete advice, assistance and information to the Company and an Affiliate, including offering and explaining evidence, providing truthful and accurate sworn statements, and participating in discovery and trial preparation and testimony.  As a condition of receiving benefits under the Plan, the Participant must also promptly send the Company copies of all correspondence (for example, but not limited to, subpoenas) received by the Participant in connection with any such legal proceedings, unless the Participant is expressly prohibited by law from so doing.  The Company will (A) make reasonable efforts to accommodate the Participant’s scheduling needs, (B) reimburse the Participant for reasonable out-of-pocket expenses incurred in connection with any such cooperation (excluding foregone wages, salary, or other compensation, except as set forth in subsection C below) within thirty (30) days after the Participant’s timely presentation of appropriate documentation thereof, in accordance with the Company’s standard reimbursement policies and procedures, and (C) to the extent the Participant provides such cooperation following the latter of the termination of Participant’s employment with the Company or an Affiliate or the Severance Period, will pay Participant for his or her time in providing such cooperation at a rate equivalent to a per diem based upon his or her base salary as in effect on the date of termination of Participant’s employment with the Company or an Affiliate. 

(b)Termination of Benefits. A Participant’s right to receive benefits under the Plan will terminate immediately if, at any time prior to or during the period for which the Participant is receiving benefits under the Plan, the Participant, without the prior written approval of the Plan Administrator: 

(i)willfully breaches a material provision of the Participant’s Proprietary Information Agreement and/or any obligations of confidentiality, non-solicitation, non-disparagement, no conflicts or non-competition provision set forth in any other agreement between the Company (or an Affiliate) and a Participant (including, without limitation, the Participant’s employment agreement or offer letter) or under applicable law;

(ii)encourages or solicits any of the then current employees of the Company or any Affiliate to leave the  employ of the Company or any Affiliate for any reason or interferes in any other manner with employment relationships at the time existing between the Company or any Affiliate and their then current employees; or

(iii)induces any of the Company’s or any Affiliate’s then current clients, customers, suppliers, vendors, distributors, licensors, licensees, or other third party to terminate their existing business relationship with the Company or any Affiliate or interferes in any other manner with any existing business relationship between the Company of any Affiliate and any then current client, customer, supplier, vendor, distributor, licensor, licensee, or other third party.

4.Payments & Benefits. Except as may otherwise be provided in a Participant’s Participation Notice, in the event of a Qualifying Termination, the Company, directly or through an Affiliate, will pay the Participant the Accrued Amounts, if any, on the date of such Qualifying Termination.  In addition, subject to 

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Sections 5 and 6 and a Participant’s continued compliance with the provisions of any agreement with the Company or any Affiliate, including, without limitation, the Participant’s Proprietary Information Agreement, in the event of a Qualifying Termination, the Participant shall be entitled to the payments and benefits described in this Section 4, subject to the terms and conditions of the Plan.

(a)Cash Severance.

(i)Change in Control Termination.  Upon a Change in Control Termination, the Participant will receive as severance an amount equal to the product of (i) the sum of the Participant’s Monthly Base Salary and Monthly Annual Target Bonus, and (ii) the Participant’s applicable Severance Multiplier (the “Change in Control Cash Severance”).  The Change in Control Cash Severance will be paid in a single lump sum, less all applicable withholdings and deductions; provided, however, that no payments will be made prior to the first business day to occur on or after the 60th day following the date of the Participant’s Qualifying Termination.

(ii)Non-Change in Control Termination.  Upon a Non-Change in Control Termination, the Participant will receive as severance an amount equal to the product of (i) the sum of the Participant’s Monthly Base Salary and Monthly Annual Target Bonus, and (ii) the Participant’s applicable Severance Multiplier (the “Non-Change in Control Cash Severance”).  The Non-Change in Control Cash Severance will be paid in equal installments on the Company’s (or the Participant’s employing Affiliate) regular payroll schedule over the Severance Period, less all applicable withholdings and deductions; provided, however, that no payments will be made prior to the first business day to occur on or after the 60th day following the date of the Participant’s Qualifying Termination.  On the first business day to occur on or after the 60th day following the date of the Participant’s Qualifying Termination, the Company (or the Participant’s employing Affiliate) will pay the Participant in a lump sum the Non-Change in Control Cash Severance that the Participant would have received on or prior to such date under the original schedule but for the delay while waiting for the 60th day in compliance with Section 409A of the Code and the effectiveness of the Release referenced in Section 5(a) below, with the balance of the Non-Change in Control Cash Severance being paid as originally scheduled.

(b)COBRA Benefits. 

(i)If the Participant is eligible and has made the necessary elections for continuation coverage pursuant to COBRA under a health, dental, or vision plan sponsored by the Company or an Affiliate, the Company (or the Participant’s employing Affiliate) will pay, as and when due directly to the COBRA carrier, the COBRA premiums necessary to continue the COBRA coverage for the Participant and his or her eligible dependents until the earliest to occur of (i) the end of the applicable Severance Period, (ii) the date on which the Participant becomes eligible for coverage under the group health insurance plans of a subsequent employer, and (iii) the date on which the Participant is no longer eligible for continuation coverage under COBRA (such period from the date of the Qualifying Termination through the earliest of (i) through (iii), the “COBRA Payment Period”).

(ii)Notwithstanding the foregoing, if at any time the Company (or the Participant’s employing Affiliate) determines, in its sole discretion, that the payment of COBRA premiums hereunder is likely to result in a violation of the nondiscrimination rules of Section 105(h)(2) of the Code or any statute or regulation of similar effect (including, without limitation, the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of providing the COBRA premiums, the Company will instead pay the Participant, on the first day of each month of the remainder of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA premiums for that month, subject to applicable tax withholdings and deductions.  To the extent applicable, on the first business day to occur on or after the 60th day following the date of the Participant’s Qualifying Termination, the Company (or the Participant’s employing Affiliate) will make the first payment under this Section 4(b)(ii) in a lump sum equal to the aggregate amount of payments that the Company (or the Participant’s employing Affiliate) would have paid through such date had such payments commenced on the Separation from Service through such 60th day, with the balance of the payments paid thereafter on the original schedule.  The Participant may, but is not obligated to, use such payments toward the cost of COBRA premiums.

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(iii)If the Participant becomes eligible for coverage under another employer’s group health plan or otherwise ceases to be eligible for COBRA during the applicable Severance Period, the Participant must immediately notify the Company (or the Participant’s employing Affiliate) of such event, and all payments and obligations under this section 4(b) will cease.  For purposes of this Section 4(b), references to COBRA also refer to analogous provisions of state law.  Any applicable insurance premiums that are paid by the Company (or the Participant’s employing Affiliate) will not include any amounts payable by the Participant under a Code Section 125 health care reimbursement plan, which are the sole responsibility of the Participant.

(c)Accelerated Vesting.

(i)Change in Control.  Upon a Change in Control, the vesting and exercisability (if applicable) of outstanding and unvested Stock Options that are held by the Participant on the effective date of the Change in Control will accelerate and become fully vested upon any of the following events:  (i) any Stock Awards that do not remain in effect and are not assumed or substituted with similarly equivalent options, restricted stock, stock appreciation rights, restricted stock units or the like following the closing of a Change in Control; (ii) if within one year following the closing of a Change of Control there is a Change in Control Termination for Participant, and (iii) if the Participant is the Chief Executive Officer and remains an employee of the Company (or the Participant’s employing Affiliate) or its successor on the one-year anniversary of the closing of a Change in Control. 

5.Conditions and Limitations on Benefits.

(a)Release.  To be eligible to receive any benefits under the Plan, a Participant must sign a general waiver and release in substantially the form used by the Company (or the Participant’s employing Affiliate) from time to time.

(b)Prior Agreements; Certain Reductions.  The Plan Administrator will reduce a Participant’s benefits under the Plan by any other statutory severance obligations or contractual severance benefits, obligations for pay in lieu of notice, and any other similar benefits payable to the Participant by the Company of an Affiliate that are due in connection with the Participant’s Qualifying Termination and that are in the same form as the benefits provided under the Plan (e.g., equity award vesting credit). Without limitation, this reduction includes a reduction for any benefits required pursuant to (i) any applicable legal requirement, including, without limitation, the Worker Adjustment and Retraining Notification Act (the “WARN Act”), (ii) a written employment, severance or equity award agreement with the Company of an Affiliate, (iii) any Company or Affiliate policy or practice providing for the Participant to remain on the payroll for a limited period of time after being given notice of the termination of the Participant’s employment, and (iv) any required salary continuation, notice pay, statutory severance payment, or other payments either required by local law, or owed pursuant to a collective labor agreement, as a result of the termination of the Participant’s employment. The benefits provided under the Plan are intended to satisfy, to the greatest extent possible, and not to provide benefits duplicative of, any and all statutory, contractual and collective agreement obligations of the Company and its Affiliates in respect of the form of benefits provided under the Plan that may arise out of a Qualifying Termination, and the Plan Administrator will so construe and implement the terms of the Plan.  Reductions may be applied on a retroactive basis, with benefits previously provided being recharacterized as benefits pursuant to the Company’s or an Affiliate’s statutory or other contractual obligations. The payments pursuant to the Plan are in addition to, and not in lieu of, any unpaid salary, bonuses or employee welfare benefits to which a Participant may be entitled for the period ending with the Participant’s Qualifying Termination.

(c)Mitigation. Except as otherwise specifically provided in the Plan, a Participant will not be required to mitigate damages or the amount of any payment provided under the Plan by seeking other employment or otherwise, nor will the amount of any payment provided for under the Plan be reduced by any compensation earned by a Participant as a result of employment by another employer or any retirement benefits received by such Participant after the date of the Participant’s termination of employment with the Company (or the Participant’s employing Affiliate) (except as provided for in Section 5(b)).

(d)Indebtedness of Participants. To the extent permitted under applicable law, if a Participant is indebted to the Company or any Affiliate on the effective date of a Participant’s Qualifying 

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Termination, the Company and its Affiliates reserve the right to offset the payment of any benefits under the Plan by the amount of such indebtedness. Such offset will be made in accordance with all applicable laws. The Participant’s execution of the Participation Notice constitutes knowing written consent to the foregoing.

(e)Parachute Payments. 

(i)Except as otherwise expressly provided in an agreement between a Participant and the Company or an Affiliate, if any payment or benefit the Participant would receive in connection with a Change in Control from the Company or otherwise (a “Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment will be equal to the Reduced Amount. The “Reduced Amount” will be either (A) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax, or (B) the largest portion, up to and including the total, of the Payment, whichever amount ((A) or (B)), after taking into account all applicable federal, state, provincial, foreign, and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Participant’s receipt, on an after-tax basis, of the greatest economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction will occur in the following order: (1) reduction of cash payments; (2) cancellation of accelerated vesting of stock awards other than stock options; (3) cancellation of accelerated vesting of stock options; and (4) reduction of other benefits paid to the Participant. Within any such category of Payments (that is, (1), (2), (3) or (4)), a reduction will occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A of the Code and then with respect to amounts that are “deferred compensation.”  In the event that acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant of the Participant’s applicable type of stock award (i.e., earliest granted stock awards are cancelled last).  If Section 409A of the Code is not applicable by law to a Participant, the Company will determine whether any similar law in the Participant’s jurisdiction applies and should be taken into account.

(ii)The professional firm engaged by the Company for general tax purposes as of the day prior to the effective date of the Change in Control shall make all determinations required to be made under this Section 5(e).  If the professional firm so engaged by the Company is serving as an accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint a nationally recognized independent registered public accounting firm to make the determinations required hereunder.  The Company shall bear all expenses with respect to the determinations by such professional firm required to be made hereunder.  Any good faith determinations of the professional firm made hereunder shall be final, binding and conclusive upon the Company and the Participant.

6.Tax Matters.

(a)Application of Code Section 409A.  Notwithstanding anything herein to the contrary, (i) if at the time of Participant’s termination of employment with the Company or an Affiliate, the Participant is a “specified employee” as defined in Section 409A of the Code and the applicable guidance and regulations thereunder (collectively, “Section 409A”), and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A, then the Company (or the Participant’s employing Affiliate) will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Participant) until the first business day to occur following the date that is six (6) months following Participant’s termination of employment with the Company (or the Participant’s employing Affiliate) (or the earliest date as is permitted under Section 409A); and (ii) if any other payments of money or other benefits due to Participant hereunder could cause the application of an accelerated or additional tax under Section 409A, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A, or otherwise such payment or other benefits shall be restructured, to the extent possible, in a manner, determined by the Board, that does not cause such an accelerated or additional tax.  In the event that payments under the Plan are deferred pursuant to this Section 6 in order to prevent any accelerated tax or additional tax under Section 409A, then such payments shall be paid at the time specified 

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under this Section 6 without any interest thereon.  The Company shall consult with Participant in good faith regarding the implementation of this Section 6; provided, that neither the Company, any Affiliate nor any of its employees or representatives shall have any liability to Participant with respect thereto.  Notwithstanding anything to the contrary herein, to the extent required by Section 409A, a termination of employment shall not be deemed to have occurred for purposes of any provision of the Plan providing for the payment of amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “resignation,” “termination,” “termination of employment” or like terms shall mean separation from service.  For purposes of Section 409A, each payment made under the Plan shall be designated as a “separate payment” within the meaning of the Section 409A.  Notwithstanding anything to the contrary herein, except to the extent any expense, reimbursement or in-kind benefit provided pursuant to the Plan does not constitute a “deferral of compensation” within the meaning of Section 409A, (A) the amount of expenses eligible for reimbursement or in-kind benefits provided to a Participant during any calendar year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to a Participant in any other calendar year; (B) the reimbursements for expenses for which a Participant is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred; and (C) the right to payment or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit.

(b)Withholding. All payments and benefits under the Plan will be subject to all applicable deductions and withholdings, including, without limitation, obligations to withhold for federal, state, provincial, foreign and local income and employment taxes.

(c)Tax Advice.  By becoming a Participant in the Plan, the Participant agrees to review with the Participant’s own tax advisors the federal, state, provincial, local, and foreign tax consequences of participation in the Plan.  The Participant will rely solely on such advisors and not on any statements or representations of the Company, any Affiliate or any of its agents.  The Participant understands that Participant (and not the Company or any Affiliate) will be responsible for his or her own tax liability that may arise as a result of becoming a Participant in the Plan.

7.Reemployment.  In the event of a Participant’s reemployment by the Company  of an Affiliate during the period of time in respect of which severance benefits have been provided (that is, benefits as a result of a Qualifying Termination), the Company or the Participant’s employing Affiliate, in its sole and absolute discretion, may require such Participant to repay to the Company or an Affiliate all or a portion of such severance benefits as a condition of reemployment.

8.Clawback; Recovery.  All payments and severance benefits provided under the Plan will be subject to recoupment in accordance with any clawback policy that the Company or an Affiliate is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, the Board may impose such other clawback, recovery or recoupment provisions in the Participation Notice, as the Board determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of Common Stock or other cash or property upon the occurrence of Cause.  No recovery of compensation under such a clawback policy will be an event giving rise to Resignation for Good Reason, constructive termination, or any similar term under any plan of or agreement with the Company or any Affiliate.

9.Right to Interpret Plan; Amendment and Termination.

(a)Exclusive Discretion.  The Plan Administrator shall have the exclusive discretion and authority to establish rules, forms, and procedures for the administration of the Plan and to construe and interpret the Plan and to decide any and all questions of fact, interpretation, definition, computation or administration arising in connection with the operation of the Plan, including, but not limited to, the eligibility to participate in the Plan and amount of benefits paid under the Plan.  The rules, interpretations, computations and other actions of the Plan Administrator shall be binding and conclusive on all persons.

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(b)Amendment or Termination.  The Company reserves the right to amend or terminate the Plan, any Participation Notice issued pursuant to the Plan or the benefits provided hereunder at any time; provided, however, that no such amendment or termination will apply to any Participant who would be adversely affected by such amendment or termination unless such Participant consents in writing to such amendment or termination. Any action amending or terminating the Plan or any Participation Notice will be in writing and executed by a duly authorized officer of the Company.

10.No Implied Employment Contract.

The Plan shall not be deemed (i) to give any employee or other person any right to be retained in the employ of the Company or any Affiliate  or (ii) to interfere with the right of the Company or an Affiliate to discharge any employee or other person at any time, with or without cause, which right is hereby reserved.

11.ERISA; Legal Construction.

This Plan is intended to be governed by and shall be construed in accordance with the Employee Retirement Income Security Act of 1974 (“ERISA”) and, to the extent not preempted by ERISA, the laws of the State of Washington.  A statement of ERISA rights, and other Plan information is set forth in Exhibit B attached hereto and incorporated by reference.

12.General Provisions.

(a)Notices. Any notice, demand or request required or permitted to be given by either the Company or a Participant pursuant to the terms of the Plan will be in writing and will be deemed given when delivered personally, when received electronically (including email addressed to the Participant’s Company email account and to the Company email account of the Company’s Chief Executive Officer), or deposited in the U.S. Mail, First Class with postage prepaid, and addressed to the parties, in the case of the Company, at the address set forth in Section 14(d), in the case of a Participant, at the address as set forth in the Company’s employment file maintained for the Participant as previously furnished by the Participant or such other address as a party may request by notifying the other in writing.

(b)Transfer and Assignment. The rights and obligations of a Participant under the Plan may not be transferred or assigned without the prior written consent of the Company. The Plan will be binding upon any surviving entity resulting from a Change in Control and upon any other person who is a successor by merger, acquisition, consolidation or otherwise to the business formerly carried on by the Company without regard to whether or not such person or entity actively assumes the obligations hereunder.

(c)Waiver. Any party’s failure to enforce any provision or provisions of the Plan will not in any way be construed as a waiver of any such provision or provisions, nor prevent any party from thereafter enforcing each and every other provision of the Plan. The rights granted to the parties herein are cumulative and will not constitute a waiver of any party’s right to assert all other legal remedies available to it under the circumstances.

(d)Severability. Should any provision of the Plan be declared or determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired.

(e)Section Headings. Section headings in the Plan are included only for convenience of reference and will not be considered part of the Plan for any other purpose.

 

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Exhibit A

Alder BioPharmaceuticals, Inc.

Executive Severance Benefit Plan

Participation Notice

 

To:  

Date:

Alder BioPharmaceuticals, Inc. (the “Company”) has adopted the Alder BioPharmaceuticals, Inc. Executive Severance Benefit Plan (the “Plan”). The Company is providing you this Participation Notice to inform you that you have been designated as a Participant in the Plan. A copy of the Plan document is attached to this Participation Notice. The terms and conditions of your participation in the Plan are as set forth in the Plan and this Participation Notice, which together constitute the Summary Plan Description for the Plan.

You understand that by accepting your status as a Participant in the Plan, [except as expressly stated in the Plan] you are waiving your rights to receive any severance benefits on any type of termination of employment under any other contract or agreement with the Company or any Affiliate.

You also understand that by accepting your status as a Participant in the Plan, your stock options that have been considered to be “incentive stock options” prior to the date hereof may cease to qualify as “incentive stock options” as a result of the vesting acceleration benefit provided in the Plan.  By accepting participation, you represent that you have either consulted your personal tax or financial planning advisor about the tax consequences of your participation in the Plan, or you have knowingly declined to do so.

Please return a signed copy of this Participation Notice to the Company’s Human Resources Director at the Company’s offices and retain a copy of this Participation Notice, along with the Plan document, for your records.  

	
 
	
Alder BioPharmaceuticals, Inc.:

 

(Signature)

By:

Title:

 

Participant:

 

(Signature)

 

 

 

 

 

 

Exhibit B

Matters related to Plan claims, ERISA rights and other information

I.Claims, Inquiries and Appeals. 

(f)Applications for Benefits and Inquiries.  Any application for benefits, inquiries about the Plan or inquiries about present or future rights under the Plan must be submitted to the Plan Administrator in writing by an applicant (or his or her authorized representative).  The Plan Administrator is:

Alder BioPharmaceuticals, Inc.

11804 North Creek Parkway South

Bothell, WA  98011

 

(g)Denial of Claims.  In the event that any application for benefits is denied in whole or in part, the Plan Administrator must provide the applicant with written or electronic notice of the denial of the application, and of the applicant’s right to review the denial.  Any electronic notice will comply with the regulations of the U.S. Department of Labor.  The notice of denial will be set forth in a manner designed to be understood by the applicant and will include the following:

(1)the specific reason or reasons for the denial;

(2)references to the specific Plan provisions upon which the denial is based;

(3)a description of any additional information or material that the Plan Administrator needs to complete the review and an explanation of why such information or material is necessary; and

(4)an explanation of the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the applicant’s right to bring a civil action under Section 502(a) of ERISA following a denial on review of the claim, as described in Section 9(d) below.

This notice of denial will be given to the applicant within ninety (90) days after the Plan Administrator receives the application, unless special circumstances require an extension of time, in which case, the Plan Administrator has up to an additional ninety (90) days for processing the application.  If an extension of time for processing is required, written notice of the extension will be furnished to the applicant before the end of the initial ninety (90) day period.

This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan Administrator is to render its decision on the application.  

(h)Request for a Review.  Any person (or that person’s authorized representative) for whom an application for benefits is denied, in whole or in part, may appeal the denial by submitting a request for a review to the Plan Administrator within sixty (60) days after the application is denied.  A request for a review shall be in writing and shall be addressed to:

Alder BioPharmaceuticals, Inc.

11804 North Creek Parkway South

Bothell, WA  98011

 

A request for review must set forth all of the grounds on which it is based, all facts in support of the request and any other matters that the applicant feels are pertinent.  The applicant (or his or her representative) shall have the opportunity to submit (or the Plan Administrator may require the applicant to submit) written comments, documents, records, and other information relating to his or her claim.  The applicant (or his or her representative) shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to his or her claim.  The review shall take into account all comments, documents, records and other information 

 

submitted by the applicant (or his or her representative) relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

(i)Decision on Review.  The Plan Administrator will act on each request for review within sixty (60) days after receipt of the request, unless special circumstances require an extension of time (not to exceed an additional sixty (60) days), for processing the request for a review.  If an extension for review is required, written notice of the extension will be furnished to the applicant within the initial sixty (60) day period.  This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan Administrator is to render its decision on the review.  The Plan Administrator will give prompt, written or electronic notice of its decision to the applicant. Any electronic notice will comply with the regulations of the U.S. Department of Labor.  In the event that the Plan Administrator confirms the denial of the application for benefits in whole or in part, the notice will set forth, in a manner calculated to be understood by the applicant, the following:

(1)the specific reason or reasons for the denial;

(2)references to the specific Plan provisions upon which the denial is based;

(3)a statement that the applicant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to his or her claim; and

(4)a statement of the applicant’s right to bring a civil action under Section 502(a) of ERISA. 

(j)Rules and Procedures.  The Plan Administrator will establish rules and procedures, consistent with the Plan and with ERISA, as necessary and appropriate in carrying out its responsibilities in reviewing benefit claims.  The Plan Administrator may require an applicant who wishes to submit additional information in connection with an appeal from the denial of benefits to do so at the applicant’s own expense.

(k)Exhaustion of Remedies.  No legal action for benefits under the Plan may be brought until the applicant (i) has submitted a written application for benefits in accordance with the procedures described by Section 9(a) above, (ii) has been notified by the Plan Administrator that the application is denied, (iii) has filed a written request for a review of the application in accordance with the appeal procedure described in Section I(c) above, and (iv) has been notified that the Plan Administrator has denied the appeal.  Notwithstanding the foregoing, if the Plan Administrator does not respond to a Eligible Employee’s claim or appeal within the relevant time limits specified in this Section 9, the Eligible Employee may bring legal action for benefits under the Plan pursuant to Section 502(a) of ERISA.  

II.Basis of Payments to and from Plan.

The Plan shall be unfunded, and all cash payments under the Plan shall be paid only from the general assets of the Company.

III.Other Plan Information.

(a)Employer and Plan Identification Numbers.  The Employer Identification Number assigned to the Company (which is the “Plan Sponsor” as that term is used in ERISA) by the Internal Revenue Service is _______________.  The Plan Number assigned to the Plan by the Plan Sponsor pursuant to the instructions of the Internal Revenue Service is _______.

(b)Ending Date for Plan’s Fiscal Year.  The date of the end of the fiscal year for the purpose of maintaining the Plan’s records is December 31.

(c)Agent for the Service of Legal Process.  The agent for the service of legal process with respect to the Plan is:

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Alder BioPharmaceuticals, Inc.

11804 North Creek Parkway South

Bothell, WA  98011

 

In addition, service of legal process may be made upon the Plan Administrator. 

(d)Plan Sponsor and Administrator.  The “Plan Sponsor” and the “Plan Administrator” of the Plan is:

Randall Schatzman

Alder BioPharmaceuticals, Inc.

11804 North Creek Parkway South

Bothell, WA  98011

 

The Plan Sponsor’s and Plan Administrator’s telephone number is (425) 205-2910.  The Plan Administrator is the named fiduciary charged with the responsibility for administering the Plan.

IV.Statement of ERISA Rights.

Eligible Employees in this Plan (which is a welfare benefit plan sponsored by Alder BioPharmaceuticals, Inc.) are entitled to certain rights and protections under ERISA.  If you are an Eligible Employee, you are considered a participant in the Plan and, under ERISA, you are entitled to:

(e)Receive Information About Your Plan and Benefits

(1)Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as worksites, all documents governing the Plan and a copy of the latest annual report (Form 5500 Series), if applicable, filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration;

(2)Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan and copies of the latest annual report (Form 5500 Series), if applicable, and an updated (as necessary) Summary Plan Description.  The Administrator may make a reasonable charge for the copies; and

(3)Receive a summary of the Plan’s annual financial report, if applicable.  The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report.

(f)Prudent Actions by Plan Fiduciaries.  In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan.  The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries.  No one, including your employer, your union or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising your rights under ERISA.

(g)Enforce Your Rights.  If your claim for a Plan benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request a copy of Plan documents or the latest annual report from the Plan, if applicable, and do not receive them within thirty (30) days, you may file suit in a Federal court.  In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.

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If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court.

If you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court.  The court will decide who should pay court costs and legal fees.  If you are successful, the court may order the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

(h)Assistance with Your Questions.  If you have any questions about the Plan, you should contact the Plan Administrator.  If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.  You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

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Exhibit B

ALDER BIOPHARMACEUTICALS, INC.

 

PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

 

In exchange for my becoming employed (or my employment being continued), or retained as a consultant (or my consulting relationship being continued, by Alder BioPharmaceuticals, Inc. or any of its current or future subsidiaries, affiliates, successors or assigns (collectively, the “Company”), and for any cash and equity compensation for my services, I hereby agree as follows:

1.Duties.  I will perform for the Company such duties as may be designated by the Company from time to time.  During my period of employment or consulting relationship with the Company, I will devote my best efforts to the interests of the Company and will not engage in any activities detrimental to the best interests of the Company without the prior written consent of the Company.

2.Confidentiality Obligation.  I understand and agree that all Proprietary Information (as defined below) shall be the sole property of the Company and its assigns, including all trade secrets, patents, copyrights and other rights in connection therewith.  I hereby assign to the Company any rights I may acquire in such Proprietary Information.  I will hold in confidence and not directly or indirectly to use or disclose, both during my employment by or consulting relationship with the Company and for a period of three years after its termination (irrespective of the reason for such termination), any Proprietary Information I obtain or create during the period of my employment or consulting relationship, whether or not during working hours, except to the extent authorized by the Company, until such Proprietary Information becomes generally known.  I agree not to make copies of such Proprietary Information except as authorized by the Company.  Upon termination of my employment or consulting relationship or upon an earlier request of the Company, I will return or deliver to the Company all tangible forms of such Proprietary Information in my possession or control, including but not limited to drawings, specifications, documents, records, devices, models or any other material and copies or reproductions thereof.  Notwithstanding anything in this Section 2, pursuant to 18 U.S.C. Section 1833(b), I shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that: (1) is made in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (2) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.   

3.Ownership of Physical Property.  All document, apparatus, equipment and other physical property in any form, whether or not pertaining to Proprietary Information, furnished to me by the Company or produced by me or others in connection with my employment or consulting relationship shall be and remain the sole property of the Company.  I shall return to the Company all such documents, materials and property as and when requested by the Company, except only (i) my personal copies of records relating to my compensation, if any; (ii) if applicable, my personal copies of any materials evidencing shares of the Company’s capital stock purchased by me and/or options to purchase shares of the Company’s capital stock granted to me; (iii) my copy of this Agreement and (iv) my personal property and personal documents I bring with me to the Company and any personal correspondence and personal materials that I accumulate and keep at my office during my employment (my “Personal Documents”).  Even if the Company does not so request, I shall return all such documents, materials and property upon termination of my employment or consulting relationship, and, except for my Personal Documents, I will not take with me any such documents, material or property or any reproduction thereof upon such termination.

4.Assignment of Inventions.  

(a)Without further compensation, I hereby agree promptly to disclose to the Company, all Inventions (as defined below) which I may solely or jointly develop or reduce to practice during the period of my employment or consulting relationship with the Company which (i) pertain to any line of business activity of the Company, (ii) are aided by the use of time, material or facilities of the Company, whether or not during working hours or (iii) relate to any of my work during the period of my employment or consulting relationship with the Company, whether or not during normal working hours (“Company Inventions”). During the term of my employment or consultancy, all Company Inventions that I conceive, reduce to practice, develop or have developed (in whole or in part, either alone or jointly with others) shall be the sole property of the Company and its assigns to the maximum extent 

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permitted by law (and to the fullest extent permitted by law shall be deemed “works made for hire”), and the Company and its assigns shall be the sole owner of all patents, copyrights, trademarks, trade secrets and other rights in connection therewith.  I hereby assign to the Company any rights that I may have or acquire in such Company Inventions.  

(b)I attach hereto as Exhibit A a complete list of all Inventions, if any, made by me prior to my employment or consulting relationship with the Company that are relevant to the Company’s business, and I represent and warrant that such list is complete.  If no such list is attached to this Agreement, I represent that I have no such Inventions at the time of signing this Agreement. If in the course of my employment or consultancy (as the case may be) with the Company, I use or incorporate into a product or process an Invention not covered by Section 4(a) of this Agreement in which I have an interest, the Company is hereby granted a nonexclusive, fully paid-up, royalty-free, perpetual, worldwide license of my interest to use and sublicense such Invention without restriction of any kind.

NOTICE REQUIRED BY REVISED CODE OF WASHINGTON 49.44.140:

Any assignment of Inventions required by this Agreement does not apply to an Invention for which no equipment, supplies, facility or trade secret information of the Company was used and which was developed entirely on the employee’s own time, unless (a) the Invention relates (i) directly to the business of the Company or (ii) to the Company’s actual or demonstrably anticipated research or development or (b) the Invention results from any work performed by the employee for the Company.

5.Further Assistance; Power of Attorney.  I agree to perform, during and after my employment or consulting relationship, all acts deemed necessary or desirable by the Company to permit and assist it, at its expense, in obtaining and enforcing the full benefits, enjoyment, rights and title throughout the world in the Inventions assigned to the Company as set forth in Section 4 above.  Such acts may include, but are not limited to, execution of documents and assistance or cooperation in legal proceedings.  I hereby irrevocably designate the Company and its duly authorized officers and agents as my agent and attorney-in fact, to execute and file on my behalf any such applications and to do all other lawful acts to further the prosecution and issuance of patents, copyright and mask work registrations related to such Inventions.  This power of attorney shall not be affected by my subsequent incapacity.

6.Inventions.  As used in this Agreement, the term “Inventions” means discoveries, developments, concepts, designs, ideas, know‐how, improvements, inventions, trade secrets and/or original works of authorship, whether or not patentable, copyrightable or otherwise legally protectable.  This includes, but is not limited to, any new product, machine, article of manufacture, biological material, method, procedure, process, technique, use, equipment, device, apparatus, system, compound, formulation, composition of matter, design or configuration of any kind, or any improvement thereon.

7.Proprietary Information.  As used in this Agreement, the term “Proprietary Information” means information or physical material not generally known or available outside the Company or information or physical material entrusted to the Company by third parties.  This includes, but is not limited to,  Inventions, confidential knowledge, copyrights, product ideas, techniques, processes, formulas, object codes, biological materials, mask works and/or any other information of any type relating to documentation, laboratory notebooks, data, schematics, algorithms, flow charts, mechanisms, research, manufacture, improvements, assembly, installation, marketing, forecasts, sales, pricing, customers, the salaries, duties, qualifications, performance levels and terms of compensation of other employees, and/or cost or other financial data concerning any of the foregoing or the Company and its operations.  Proprietary Information may be contained in material such as drawings, samples, procedures, specifications, reports, studies, customer or supplier lists, budgets, cost or price lists, compilations or computer programs, or may be in the nature of unwritten knowledge or know-how.

8.Solicitation of Employees, Consultants and Other Parties.   During the term of my employment or consulting relationship with the Company, and for a period of one year following the termination of my relationship with the Company for any reason, I will not directly or indirectly solicit, induce, recruit or encourage any of the Company’s employees or consultants to terminate their relationship with the Company, or attempt any of the foregoing, either for myself or any other person or entity.  For a period of one year following termination of my relationship with the Company for any reason, I shall not solicit any licensor to or customer of the Company or licensee of the Company’s products, that are known to me, with respect to any business, products or services that are competitive to the products or services offered by the Company or under development as of the date of termination of my relationship with the Company.

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9.Noncompetition.  During the term of my employment or consulting relationship with the Company and for one year following the termination of my relationship with the Company for any reason, I will not, without the Company’s prior written consent, directly or indirectly work on any products or services that are competitive with products or services (a) being commercially developed or exploited by the Company during my employment or consultancy and (b) on which I worked or about which I learned Proprietary Information during my employment or consultancy with the Company.

10.No Conflicts.  I represent that my performance of all the terms of this Agreement as an employee of or consultant to the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by me in confidence or in trust prior to my becoming an employee or consultant of the Company, and I will not disclose to the Company, or induce the Company to use, any confidential or proprietary information or material belonging to any previous employer or others.  I agree not to enter into any written or oral agreement that conflicts with the provisions of this Agreement.

11.No Interference.  I certify that, to the best of my information and belief, I am not a party to any other agreement which will interfere with my full compliance with this Agreement.

12.Effects of Agreement.  This Agreement (a) shall survive for a period of five years beyond the termination of my employment by or consulting relationship with the Company, (b) inures to the benefit of successors and assigns of the Company and (c) is binding upon my heirs and legal representatives.

13.At-Will Relationship.  I understand and acknowledge that my employment or consulting relationship with the Company is and shall continue to be at-will, as defined under applicable law, meaning that either I or the Company may terminate the relationship at any time for any reason or no reason, without further obligation or liability.

14.Injunctive Relief.  I acknowledge that violation of this Agreement by me may cause irreparable injury to the Company, and I agree that the Company will be entitled to seek extraordinary relief in court, including, but not limited to, temporary restraining orders, preliminary injunctions and permanent injunctions without the necessity of posting a bond or other security and without prejudice to any other rights and remedies that the Company may have for a breach of this Agreement.

15.Miscellaneous.  This Agreement supersedes any oral, written or other communications or agreements concerning the subject matter of this Agreement, and may be amended or waived only by a written instrument signed by me and the Chief Executive Officer of the Company.  This Agreement shall be governed by the laws of the State of Washington applicable to contracts entered into and performed entirely within the State of Washington, without giving effect to principles of conflict of laws.  If any provision of this Agreement is held to be unenforceable under applicable law, then such provision shall be excluded from this Agreement only to the extent unenforceable, and the remainder of such provision and of this Agreement shall be enforceable in accordance with its terms.

16.Acknowledgment.  I certify and acknowledge that I have carefully read all of the provisions of this Agreement and that I understand and will fully and faithfully comply with such provisions. 

 

Alder BioPharmaceuticals, Inc.Employee

 

 

By: /s/ Mark J. Litton/s/ Randall C. Schatzman

         Mark J. LittonName: Randall C. Schatzman

 

Dated: August 12, 2004Dated: August 9, 2004

 

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Exhibit A

 

 

 

Alder BioPharmaceuticals, Inc.

11804 North Creek Parkway So.

Bothell, WA 98011

Ladies and Gentlemen:

1.The following is a complete list of all Inventions relevant to the subject matter of my employment by the Company that have been made or conceived or first reduced to practice by me, alone or jointly with others or which has become known to me prior to my employment by the Company.  I represent that such list is complete.

Methods of synthesizing hetero-multimeric polypeptides in yeast using a haploid mating strategy.

 

 

 

 

2.I propose to bring to my employment or consultancy the following materials and documents of a former employer:

XNo materials or documents.

See below:

 

By: /s/ Randall C. Schatzman

Randall C. Schatzman

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