Document:

ex_151939.htm

Exhibit 10.4

 

INPHI CORPORATION 

 

CHANGE OF CONTROL SEVERANCE AGREEMENT 

 

This Change of Control Severance Agreement (this “Agreement”) is made and entered into effective as of ________, 20__ (the “Effective Date”), by and between [name] (“Executive”) and Inphi Corporation, a Delaware corporation (the “Company”). Certain capitalized terms used in this Agreement are defined in Section 1 below. [This Agreement supersedes the Change of Control Severance Agreement between the parties dated as of ______.]

 

RECITALS

 

A.     It is expected that the Company from time to time will consider the possibility of a Change of Control. The Board of Directors of the Company (the “Board”) recognizes that such consideration can be a distraction to Executive and can cause Executive to consider alternative employment opportunities.

 

B.     The Board believes that it is in the best interests of the Company and its shareholders to provide Executive with an incentive to continue his employment and to maximize the value of the Company upon a Change of Control for the benefit of its shareholders.

 

C.     In order to provide Executive with enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change of Control, the Board believes that it is imperative to provide Executive with certain severance and other benefits upon Executive’s termination of employment in connection with a Change of Control.

 

AGREEMENT 

 

In consideration of the mutual covenants herein contained and the continued employment of Executive by the Company, the parties agree as follows:

 

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

 

(a)     Cause. “Cause” shall mean (i) commission of a felony, an act involving moral turpitude, or an act constituting common law fraud, and which has a material adverse effect on the business or affairs of the Company or its affiliates or stockholders; (ii) intentional or willful misconduct or refusal to follow the lawful instructions of the Board that is not cured within thirty (30) days following written notice from the Board; or (iii) intentional breach of Company confidential information obligations which has an adverse effect on the Company or its affiliates or stockholders. For these purposes, no act or failure to act shall be considered “intentional or willful” unless it is done, or omitted to be done, in bad faith without a reasonable belief that the action or omission is in the best interests of the Company.

 

 

 

 

(b)     Change of Control. “Change of Control” shall mean the occurrence of any of the following events:

 

(i)       the approval by the shareholders of the Company of a plan of complete liquidation or dissolution of the Company or the closing of a sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition to a subsidiary of the Company or to an entity, the voting securities of which are owned by the stockholders of the Company in substantially the same proportions as their ownership of the Company’s voting securities immediately prior to such sale or disposition;

 

(ii)      a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent directly or indirectly (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;

 

(iii)     any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or

 

(iv)     a change in the composition of the Board, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date hereof or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors whose election or nomination was not in connection with any transactions described in subsections (i), (ii) or (iii), or in connection with an actual or threatened proxy contest relating to the election of directors of the Company.

 

Notwithstanding the foregoing, the term “Change of Control” shall not be deemed to have occurred if the Company files for bankruptcy protection, or if a petition for involuntary relief is filed against the Company.

 

(c)     Involuntary Termination. “Involuntary Termination” shall mean:

 

(i)      without Executive’s express written consent, the assignment to Executive of duties or responsibilities inconsistent with Executive’s education and experience;

 

(ii)     without Executive’s express written consent, a reduction by the Company of Executive’s base compensation of more than ten percent (10%) as in effect immediately prior to the Change of Control, unless such reduction in base compensation is part of a general reduction in compensation applicable to senior executives of the Company;

 

 

 

 

(iii)     without Executive’s express written consent, the relocation of Executive’s principal place of employment to a facility or a location more than fifty (50) miles from its location immediately prior to the Change of Control;

 

(iv)     any termination of Executive by the Company which is not effected for Cause; or

 

(v)      the failure of the Company to obtain the assumption of this Agreement or any other agreement between the Company and Executive by any successors contemplated in Section 8 below.

 

A termination shall not be considered an “Involuntary Termination” unless Executive provides notice to the Company of the existence of the condition described in subsections (i), (ii), (iii) or (v) above within ninety (90) days of the initial existence of such condition, the Company fails to remedy the condition within thirty (30) days following the receipt of such notice, and Executive terminates employment within one-hundred eighty (180) days following the initial existence of such condition. A termination due to death or disability shall not be considered an Involuntary Termination.

 

(d)     Termination Date. “Termination Date” shall mean Executive’s “separation from service” within the meaning of that term under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

 

2.     Term of Agreement. This Agreement shall terminate upon the date that all obligations of the parties hereto under this Agreement have been satisfied.

 

3.     At-Will Employment. The Company and Executive acknowledge that Executive’s employment is and shall continue to be at-will, as defined under applicable law.

 

4.     Effect of Change of Control on Performance-Based Equity Awards. If Executive is either employed at the time of a Change of Control or Executive’s employment terminates as a result of an Involuntary Termination on or within three (3) months prior to a Change of Control, Executive’s performance-based stock unit awards will be subject to the following provisions:

 

(a)     Stock Price Performance-Based Equity Awards. For each stock unit equity award with vesting conditioned all or in part on the per share fair market value of the Company's common stock exceeding one or more target levels (including appreciation relative to one or more other publicly-traded securities), the performance measurement period will terminate on the date of the Change of Control, and Executive will vest in that percentage of the Company shares covered by the equity award determined by applying the formula set forth in the award agreement as if the fair market value of the Company's common stock on the last day of the performance measurement period was the per share consideration paid pursuant to the transaction(s) constituting the Change of Control. The portion of the equity award for which the performance condition is not deemed satisfied pursuant to this Section 4(a) will be forfeited. The effective date of the foregoing vesting credit and forfeiture will be the date of the Change of Control. This provision will apply to all such equity awards that are outstanding as of the Effective Date, and all such future equity awards unless specifically provided otherwise by the Board’s Compensation Committee (the “Committee”) in the applicable award agreement.

 

 

 

 

(b)     Performance-Based Equity Awards not based on Stock Price. For each stock unit equity award with vesting conditioned on performance other than stock price that is outstanding as of the Effective Date, and for all such future awards unless specifically provided otherwise by the Committee in the applicable award agreement, the performance criteria will be deemed satisfied at 100% of target for any unfinished performance period and the equity award will convert to time-based restricted stock units (“RSUs”) for such target number of shares which continue to vest in accordance with any service-based vesting condition specified in the applicable award agreement, subject to the provisions of Section 5. The portion of the equity award for which the performance condition is not deemed satisfied pursuant to this Section 4(b) will be forfeited. The effective date of the foregoing vesting credit and forfeiture will be the date of the Change of Control.

 

5.     Change of Control Severance Benefits.

 

(a)     Involuntary Termination in Connection with a Change of Control. If Executive’s employment with the Company terminates as a result of an Involuntary Termination on or at any time within twelve months (12) months after a Change of Control, or within three (3) months prior to a Change of Control, and Executive signs and does not revoke a standard release of claims with the Company in a form acceptable to the Company (the “Release”) within fifty (50) days following the later of the Change of Control or the Termination Date (or such shorter period as the Company may require), then Executive shall be entitled to the following severance benefits:

 

(i)     100% of the sum of Executive’s annual base salary (as in effect prior to any reduction that constitutes a basis for Involuntary Termination pursuant to this Agreement) plus annual target bonus as in effect on the Termination Date, payable in a lump sum on the date on which the Release becomes irrevocable (provided, however, that if any portion of such amount is subject to Section 409A of the Code as nonqualified deferred compensation, then payment shall be made on the sixtieth (60th) day following the later of the Termination Date or the Change of Control, subject to Section 7 below);

 

(ii)     any earned but unpaid annual bonus for any annual bonus period which had ended prior to the Termination Date, which amount shall be paid at such time as annual bonuses are paid to other senior executives of the Company;

 

(iii)     acceleration of the vesting and exercisability so that 100% of each of Executive’s awards of options, stock appreciation rights, restricted shares and stock units with respect to the Company or its successor, or the parent of either, to the extent outstanding on the Termination Date, and that are subject to vesting based only on Executive’s service over a specified time period, including any award converted from a performance-based award to a time-based award pursuant to Section 4 of this Agreement, or of any deferred compensation into which such stock options, stock appreciation rights, restricted shares or stock units were converted upon the Change of Control (the “Equity Awards”) shall be vested and exercisable (as applicable); provided, however, that notwithstanding any contrary term of the Equity Award agreement, if Executive is entitled to accelerated vesting (or if Executive’s performance-based Equity Awards become subject to the provisions of Section 4) as a result of an Involuntary Termination within three (3) months prior to a Change of Control: (x) the portion of the Equity Award subject to such accelerated vesting shall not be forfeited or terminated upon the Termination Date pending the Change of Control, (y) the accelerated vesting shall be deemed to take place immediately prior to the effective date of the Change of Control, and (z) the period within which the Equity Award may be exercised following the Termination Date, if applicable, will expire no less than one (1) month following the effective date of the Change of Control (but no later than the expiration of the term of the Equity Award); and

 

 

 

 

(iv)     if Executive so elects and pays to continue health insurance under Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or corresponding provision of state law (“COBRA”), then beginning in the month following the Termination Date (or if later, the date the Release becomes irrevocable, with a catch-up payment for payments deferred pending the irrevocability of the Release), Company will pay Executive’s monthly COBRA premium costs up to the monthly amount the Company was paying as the employer-portion of premium contributions for health coverage for Executive and Executive’s eligible dependents immediately before the Termination Date, until the earlier of: (i) the end of the 12-month period following Termination Date or (ii) the date Executive or Executive’s eligible dependents lose eligibility for COBRA continuation coverage. The period of such company-paid COBRA continuation coverage shall be considered part of Executive’s (and Executive’s eligible dependents’) COBRA coverage entitlement period. Executive will be solely responsible for timely electing such continuation coverage for Executive and Executive’s eligible dependents. Any increase in the premium contribution and/or in the number of covered dependents by Executive during the period that Executive continues in the Company’s health insurance benefit plans or receives company-paid COBRA continuation coverage will be at Executive’s own expense.

 

(b)     Termination Apart from a Change of Control. If Executive’s employment with the Company terminates other than as a result of an Involuntary Termination on or at any time within twelve months (12) months after a Change of Control, or within three (3) months prior to a Change of Control, then Executive shall not be entitled to receive severance or other benefits hereunder.

 

(c)     Accrued Wages and Vacation; Expenses. Without regard to the reason for, or the timing of, Executive’s termination of employment: (i) the Company shall pay Executive any unpaid wages due for periods prior to the Termination Date; (ii) the Company shall pay Executive all of Executive’s accrued and unused vacation through the Termination Date; and (iii) following submission of proper expense reports by Executive, the Company shall reimburse Executive for all expenses reasonably and necessarily incurred by Executive in connection with the business of the Company prior to the Termination Date. These payments shall be made promptly upon termination and within the period of time mandated by law.

 

6.     Limitation on Payments. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Code and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive’s benefits under this Agreement shall be either:

 

(a)     delivered in full or

 

 

 

 

(b)     delivered as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax,

 

whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.

 

Unless the Company and Executive otherwise agree in writing, any determination required under this Section 6 shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6. In the event that a reduction is required, the reduction shall be applied first to any benefits that are not subject to Section 409A of the Code, and then shall be applied to benefits (if any) that are subject to Section 409A of the Code, with the benefits payable latest in time subject to reduction first.

 

7.     Section 409A; Delayed Commencement of Benefits. Notwithstanding any provision to the contrary in this Agreement, no cash severance and no Company-paid health care coverage to which Executive otherwise becomes entitled under this Agreement shall be made or provided to Executive prior to the earlier of (i) the expiration of the six (6)-month period measured from the Termination Date or (ii) the date of Executive’s death, if Executive is deemed on the Termination Date to be a “specified employee” within the meaning of that term under Code Section 409A and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2). Upon the expiration of the applicable Code Section 409A(a)(2) deferral period, all payments and benefits deferred pursuant to this Section 7 (whether they would have otherwise been payable in a single sum or in installments in the absence of such deferral) shall be paid or reimbursed to Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein. Executive shall be entitled to interest on the deferred benefits and payments for the period the commencement of those benefits and payments is delayed by reason of Code Section 409A(a)(2), with such interest to accrue at the prime rate in effect from time to time during that period and to be paid in a lump sum upon the expiration of the deferral period. Each installment payment under Section 5 shall be considered a separate payment for purposes of Code Section 409A.

 

8.     Successors.

 

(a)     Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law.

 

 

 

 

(b)     Executive’s Successors. Without the written consent of the Company, Executive shall not assign or transfer this Agreement or any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

 

9.     Notices.

 

(a)     General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of Executive, mailed notices shall be addressed to him at the home address which he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

 

(b)     Notice of Termination. Any termination by the Company for Cause or by Executive as a result of an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with this Section 9. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the Termination Date (which shall be not more than thirty (30) days after the giving of such notice). The failure by Executive to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of Executive hereunder or preclude Executive from asserting such fact or circumstance in enforcing his rights hereunder, subject to the requirements of Section 1(c).

 

10.   Arbitration. Any controversy involving the construction or application of any terms, covenants or conditions of this Agreement, or any claims arising out of any alleged breach of this Agreement, will be governed by the rules of the American Arbitration Association and submitted to and settled by final and binding arbitration in Santa Clara County, California, except that any alleged breach of Executive’s confidential information obligations shall not be submitted to arbitration and instead the Company may seek all legal and equitable remedies, including without limitation, injunctive relief.

 

 

 

 

11.   Miscellaneous Provisions.

 

(a)     No Duty to Mitigate. Executive shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that Executive may receive from any other source.

 

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

 

(c)     Integration. This Agreement supersedes and replaces any prior agreements, representation or understandings, whether written, oral, express or implied, between Executive and the Company and constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof.

 

(d)     Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California.

 

(e)     Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

 

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

 

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

 

* * *

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

 

	
			COMPANY:

				
			INPHI CORPORATION

			
	 	 
	 	 
	 	
			By:

				 
	 	
			Name: Ford Tamer

			
	 	
			Title: President, Chief Executive Officer and Director

			
	 	 
	 	 
	
			EXECUTIVE:

				 
	 	 
	 	
			Signature

			
	 	 
	 	
			[name]

			
	 	
			Printed Name

			
	 	
			Title: [title]chrs-ex101_146.htm

 

[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10).  Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

 

Exhibit 10.1

CONFIDENTIAL LITIGATION SETTLEMENT AGREEMENT AND RELEASE

This Confidential Litigation Settlement Agreement and Release (“Settlement Agreement”), signed on the 30th day of April, 2019, is between Amgen Inc. and Amgen USA Inc. (collectively “Amgen”), and Coherus BioSciences Inc. (“Coherus”) and resolves the litigation involving Amgen and Coherus pending in the Superior Court of California County of Ventura, (the “Court”) Case No. 56-2017-00493553-CU-BT-VTA (the “Action”). Amgen and Coherus may each be referred to herein individually as “Party” or collectively as “Parties.”

WHEREAS Amgen is a Delaware corporation, having a principal place of business at One Amgen Center Drive, Thousand Oaks, California 91320-1799;

WHEREAS Coherus is a Delaware corporation, having a principal place of business at 333 Twin Dolphin Drive, Suite 600, Redwood City, California 94065;

WHEREAS Amgen developed and obtained regulatory approval to sell both a filgrastim and a pegylated filgrastim product (“pegfilgrastim”) in the United States and in many other countries around the world;

WHEREAS beginning in 2002, Amgen has sold and continues to sell pegfilgrastim in the United States and many countries under the tradename Neulasta®;

WHEREAS Coherus developed and obtained regulatory approval to sell a biosimilar pegfilgrastim product, designated UDENYCA® or pegfilgrastim-cbqv, in the United States and Europe;

WHEREAS Coherus has launched its biosimilar pegfilgrastim in the United States;

 

US-DOCS\109211923.2

WHEREAS beginning in 2019, Coherus has sold and continues to sell its pegfilgrastim product in the United States under the trade name UDENYCA®;

WHEREAS on March 3, 2017, Amgen filed a lawsuit against Coherus and others alleging unfair competition, misappropriation of trade secrets, and tortious interference, among other claims, relating to the development, manufacture, and marketing of Coherus’ pegfilgrastim biosimilar product. On April 21, 2017, Amgen filed a First Amended Complaint and on June 1, 2017, Amgen filed a Second Amended Complaint with the same and additional causes of action against Coherus and others. Amgen alleged, among other things, that Coherus had misappropriated confidential and trade secret information from Amgen relating to particular components of Amgen’s pegfilgrastim product, certain steps in the manufacturing process to make such product, and certain information relating to Amgen’s marketing and pricing of its pegfilgrastim product. In this Action, Amgen alleged that Coherus has used and continues to use Amgen’s trade secrets and confidential business information in the manufacture and marketing of Coherus’ biosimilar pegfilgrastim all to Amgen’s detriment. Amgen sought injunctive and other relief, including damages, from Coherus as compensation for its actions;

WHEREAS Coherus denied Amgen’s allegations and raised certain defenses;

WHEREAS the Parties, having a full and fair opportunity to litigate their claims and defenses, now seek to resolve by settlement the Action and all claims and defenses raised, and those that could have been raised therein, and to avoid further litigation and expenditure of attorney fees or other resources;

NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties intending to be legally bound do hereby agree as follows:

	
1.
	
DEFINITIONS

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1.1The term “Affiliate” shall mean, with respect to a Party, any entity or person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Party. For purposes of this definition, “control” means (a) ownership, directly or through one or more intermediaries, of (i) more than fifty percent (50%) of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or (ii) more than fifty percent (50%) of the equity interests in the case of any other type of legal entity or status as a general partner in any partnership, or (b) any other arrangement whereby an entity or person has the right to elect a majority of the board of directors or equivalent governing body of a corporation or other entity or the right to direct the management and policies of a corporation or other entity.

1.2The term “Coherus Product” shall mean any product that includes pegfilgrastim or its equivalent, including pegfilgrastim-cbqv or UDENYCA®, that is manufactured by or for, sold, offered for sale, or distributed by or on behalf of Coherus or by a Third Party to whom Coherus transfers its interest in pegfilgrastim-cbqv or its equivalent as permitted by the provisions of this Settlement Agreement.

1.3“Calendar Quarter” means a three-month period beginning on January, April, July or October 1st.

1.4“Calendar Year” means a one-year period beginning on January 1st and ending on December 31st.

1.5“Contract Interest Rate” shall mean [***] percent ([***]%) plus the [***] day U.S. Dollar LIBOR rate effective for the date that payment was due, as published by Reuters, on the date such payment was due (or, if unavailable on such date, the first date thereafter on which such rate is available), or, if lower, the maximum rate permitted by applicable law.

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1.6“Net Sales” means the actual gross retail or wholesale amounts (as the case may be) invoiced by Coherus, its Affiliates or distribution partners from the sale of the Coherus Product to Third Parties in the Territory in a given period, less allowances for the following without duplication:

	
 
	
a)
	
sales and excise taxes, value added taxes, and duties which fall due and are paid by the purchaser as a direct consequence of such sales and any other governmental charges imposed upon the importation, use or sale of such product, but only to the extent that such taxes and duties are (i) actually included and itemized in the gross amounts invoiced to and specifically paid by the purchaser over and above the usual selling price of such product, (ii) customarily included and itemized in the gross amounts invoiced to and specifically paid by the purchaser over and above the usual selling price of all comparable products in the relevant market and (iii) are not recovered or recoverable;

	
 
	
b)
	
Third Party distribution fees and trade, quantity and cash discounts, including prompt pay discounts, that are customary in the industry in the United States and that are actually allowed on such product;

	
 
	
c)
	
allowances or credits to customers on account of rejection, withdrawal, recall (only for the purchase price of such product; Coherus shall be responsible for any other costs associated with a recall), return of Coherus Product, on account of retroactive price reductions, reprocurement charges, price protection and shelf stock adjustments, slotting allowances, allowances, discounts or inventory management fees, to the extent that 

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such allowances, credits or charges are customary in the generic pharmaceutical industry in the United States;

	
 
	
d)
	
rebates and chargebacks specifically related to such product on an accrual basis, which shall be trued up and reconciled in the ordinary course of business, including, but not limited to, those granted to government agencies (i.e. payments made under the “Medicare Part D Coverage Gap Discount Program”);

	
 
	
e)
	
freight, insurance and other transportation charges to the extent that Coherus or an Affiliate is responsible for payment of such charges;

provided, however, where any such discount (or similar adjustment to Net Sales) is based on sales of a bundled set of products in which such product is included, the discount (or similar adjustment to Net Sales) shall be allocated to such product on a pro rata basis based upon the sales value (i.e., the unit average selling price of a bundled set of products in which such product is included multiplied by the unit volume of such product within the bundled set of products) of such product relative to the sales value contributed by the other constituent products in the bundled set, with respect to such sale. Net Sales are to be ascertained from books and records maintained by or on behalf of Coherus in accordance with generally accepted accounting principles, as consistently applied by it with respect to sales of all its drug products.

1.7The “Royalty Period” shall be July 1, 2019 to July 1, 2024.

1.8The term “Third Party” shall mean any entity or person that is not a Party or an Affiliate of a Party.

1.9The term “Territory” shall include all countries in the world.

 

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2.
	
JOINT REQUEST FOR DISMISSAL

2.1Within [***] business days after the date of signature of the last Party to sign this Settlement Agreement (the “Signing Date”), the Parties, through their respective counsel, will dismiss the entire Action with Prejudice. Counsel for Amgen shall lodge (and shall be authorized by this Settlement Agreement to lodge) with the Court the Joint Request Regarding Settlement and [Proposed] Order for Dismissal of Defendant Coherus Biosciences Inc. from Action (the “Joint Request and Order Re: Dismissal”), in the form attached hereto as Exhibit A.  If for any reason the Court raises an objection to the Joint Request and Order Re: Dismissal as drafted or requires that the Parties modify the Proposed Order before it will enter it as an order of the Court, the Parties agree to confer promptly and in good faith and revise that document consistent with the requirements of the Court. Coherus will cause its counsel to execute the Joint Request and Order Re: Dismissal prior to or contemporaneously with the execution of this Settlement Agreement, and Coherus hereby consents to the filing of the document with the Court by counsel for Amgen.

2.2The date on which the Joint Request and Order Re: Dismissal is entered by the Court shall be the “Effective Date” of this Settlement Agreement.

 

	
3.
	
OBLIGATIONS AND MUTUAL RELEASES

3.1In marketing the Coherus Product, Coherus agrees that it will not reference Amgen’s manufacturing process for pegfilgrastim or any similarity of Coherus’ manufacturing process to Amgen’s process. This provision does not preclude Coherus from discussing the attributes or characteristics of the Coherus Product or the fact that it is a biosimilar to Amgen’s Neulasta®. Coherus agrees that it will destroy any Amgen document found in the possession of a Coherus employee in the course of this Action.  In addition, if Coherus discovers any Amgen  

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document not previously discovered, Coherus agrees to destroy or return such document to Amgen. For sake of clarity, this provision does not impose any obligation on Coherus to search for such Amgen documents.

3.2As of the Effective Date, in settlement of the disputed claims in the Action, and in consideration of the promise of payment of future royalties by Coherus, and the representations, warranties and covenants contained in this Settlement Agreement, Amgen and its subsidiaries, successors, and assigns, on behalf of themselves and their successors, administrators and attorneys, Affiliates, assigns, agents, officers, employees,  directors, representatives, and all other Persons claiming by, through and under them (the “Amgen Releasors”) hereby fully, finally and forever release, relinquish, acquit, and discharge Coherus and its respective administrators, attorneys, agents, stockholders, directors, officers, employees, representatives, insurers, predecessors, successors, assigns and customers, distributors and suppliers of the Coherus Product, (the “Coherus Releasees”) from any and all claims, demands, damages, lawsuits, liabilities, obligations, causes of action, and controversies, whether known or unknown, that Amgen could assert at common law or by any statute, rule, regulation, ordinance or law, whether federal, state or local, or on any other grounds whatsoever that arise out of the allegations, claims, or defenses made in this Action or the filing of the Action, including but not limited to, costs, expenses and attorneys’ fees arising before the Effective Date of this Settlement Agreement. For sake of clarity, this release does not extend to any breach of contract claims that Amgen may have against any Third Party.

3.3As of the Effective Date, in settlement of the disputed claims in the Action, and in consideration of the representations, warranties and covenants contained in this Settlement Agreement, Coherus and its subsidiaries, successors, and assigns, on behalf of themselves  and 

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their successors, administrators and attorneys, Affiliates, assigns, agents, officers, employees, directors, representatives, and all other Persons claiming by, through and under them (the “Coherus Releasors”) hereby fully, finally and forever release, relinquish, acquit, and discharge Amgen and its respective administrators, attorneys, agents, stockholders, directors, officers, employees, representatives, insurers, predecessors, successors, assigns and customers, distributors and suppliers of Neulasta® (the “Amgen Releasees”) from any and all claims, demands, damages, lawsuits, liabilities, obligations, causes of action, and controversies, whether known or unknown, that Coherus could assert at common law or by any statute, rule, regulation, ordinance or law, whether federal, state or local, or on any other grounds whatsoever that arise out of the allegations, claims, or defenses made in this Action or the filing of the Action, including but not limited to, costs, expenses and attorneys’ fees arising before the Effective Date of this Settlement Agreement.  For the sake of clarity, this release does not extend to any breach of contract claims that Coherus may have against any Third Party.

3.4In connection with this Settlement Agreement, the Parties and their respective Affiliates expressly waive and relinquish all rights and benefits afforded by Section 1542 of the California Civil Code (“Section 1542”), 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, the Parties and their respective Affiliates expressly waive and relinquish all rights and benefits afforded by any law in any other jurisdiction similar to Section 1542.

3.5For the avoidance of doubt, the releases in this Article 3 do not apply to the obligations and responsibilities agreed to herein or to the enforcement of compliance with this Settlement Agreement.

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3.6The Amgen Releasors covenant that no Amgen Releasor will commence or cause to be commenced against any of the Coherus Releasees any action or other proceeding based upon any claim which has been released in this Article 3 and will not challenge or seek to challenge the validity or enforceability of any portion of the release contained in this Article 3.

3.7The Coherus Releasors covenant that no Coherus Releasor will commence or cause to be commenced against any of the Amgen Releasees any action or other proceeding based upon any claim which has been released in this Article 3 and will not challenge or seek to challenge the validity or enforceability of any portion of the release contained in this Article 3.

	
4.
	
ROYALTIES, REPORTS AND PAYMENTS

4.1As compensation to Amgen, Coherus shall pay a [***] percent ([***]%) royalty on Net Sales of the Coherus Product in the Territory for the Royalty Period.

4.2Beginning with the first Calendar Quarter in the Royalty Period and thereafter for each Calendar Quarter until the expiration of the Royalty Period, Coherus shall deliver a report of the sale of the Coherus Product for each Calendar Quarter to Amgen within [***] days after the end of each Calendar Quarter. Such report shall state: (i) Net Sales of each such Coherus Product by or on behalf of Coherus or its Affiliates by country or region during the applicable Calendar Quarter; and (ii) a calculation of the royalty payment due from Coherus hereunder for such Calendar Quarter.

4.3Based on the royalty report, Coherus shall pay the amount of royalty payment due within [***] days after the end of each Calendar Quarter to an account designated by Amgen.  All payments made hereunder shall be made in U.S. Dollars.  Coherus shall pay all sums due hereunder by check, wire transfer, or electronic funds transfer in immediately available funds. Amgen will promptly notify the other Party of the appropriate account information to facilitate any such payments. All amounts owing under this Settlement Agreement shall be paid in full.

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4.4Coherus shall keep complete and accurate records pertaining to the underlying revenue and expenses data relating to the calculation of Net Sales for the Coherus Product in sufficient detail to permit Amgen to confirm the accuracy of all payments due hereunder. Coherus will retain their books and records pertaining to the Net Sales for the Coherus Product for each Calendar Quarter for at least [***] years from the end of such Calendar Quarter. Until [***] years after the expiration of the Royalty Period, Amgen may provide Coherus with reasonable notice of its request to have an independent public accounting firm licensed to practice in the United States audit records required to determine the Net Sales of the Coherus Product and the royalty due under this Agreement. Coherus will accommodate such an audit and use reasonable efforts to accommodate such request within [***] days of Amgen’s request; provided however, any audit under this Article 4.4 shall be conducted during normal business hours of Coherus. The audit will be at Amgen’s sole expense unless the audit shows an underpayment in the royalties due to Amgen of [***] percent ([***]%) or more in any Calendar Quarter in which case Coherus will pay for the audit. In the event that an audit reveals any underpayment in royalties due to Amgen, Coherus shall promptly, but in no event later than [***] days after receipt of written notice thereof, pay such underpayment to Amgen. Amgen’s audit rights may only be exercised [***] and any such audit shall be limited to those necessary books and records for a period no greater than [***] years prior to the quarter in which such audit takes place.  No set of books and records for any given period shall be audited more than once and cannot cover any period outside of the Royalty Period.

4.5Each Party will be responsible for its own taxes, fees, or duties payable on account of any payments made under this Settlement Agreement.

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4.6Any payments or portions thereof due hereunder which are not paid when due shall bear interest at the Contract Interest Rate calculated on the number of days such payment is delinquent. The provisions of this Section shall in no way limit any other remedies available to Amgen.

	
5.
	
REPRESENTATIONS, WARRANTIES AND ASSIGNMENT

5.1Each Party represents and warrants to the other Party that: (a) it has the power and authority to enter into this Settlement Agreement and to perform its obligations hereunder, (b) its execution, delivery and performance of this Settlement Agreement have been duly authorized by all necessary corporate or other organizational actions of it and its Affiliates, and (c) that entering into this Settlement Agreement does not and will not conflict with or result in a breach of any other agreement to which it or any of its Affiliates is a party, any judgment of any court or governmental body applicable to the Party or its properties, or, to the Party’s knowledge, any statute, decree, order, rule or regulation of any court or governmental authority applicable to the Party or its properties.

5.2Upon execution and delivery of this Settlement Agreement by both Parties, this Settlement Agreement is a valid obligation binding upon such Party and enforceable in accordance with its terms.

5.3Coherus represents that it is the sole owner of the Coherus Product and holds all the rights to commercialize the Coherus Product in the Territory. Coherus agrees that it will not transfer the rights to commercialize the Coherus Product to any Third Party during the term of the Royalty Period unless, first, such Third Party provides a written acceptance of the Coherus obligations under this Settlement Agreement and agrees to be bound by the terms of this Settlement Agreement as Coherus is bound, second, provides such written acceptance to Amgen, and third, Amgen shall then have [***] business days to approve such transfer and such approval 

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may not be unreasonably withheld. In the event of a transfer, Coherus will guarantee the payment of royalties pursuant to the terms of this Settlement Agreement.

5.4Any such purported assignment, transfer or attempt by Coherus to assign or transfer the commercialization rights to the Coherus Product without Amgen’s consent as required in 5.3 shall be void and of no effect, except that Coherus may, after providing notice pursuant to Section 5.3 to Amgen, transfer this Settlement Agreement to an Affiliate or a Third Party without prior written consent of Amgen upon the sale to such Third Party of all or substantially all Coherus’ business. Upon any permitted assignment, this Settlement Agreement, including the obligations of the Parties, shall be binding upon and shall inure to the benefit of each Party hereto, and each of its Affiliates, successors and permitted assigns, and any Third Party to which any rights are transferred.

 

	
6.
	
GENERAL PROVISIONS

6.1Confidentiality. The Parties shall keep the terms of this Agreement and the underlying settlement terms confidential using at least the level of care they use for their own proprietary information.  Except as (a) required by statute, ordinance or regulation, (b) required pursuant to compulsory legal process, (c) necessary for the exercise of the rights granted to the Parties under this Settlement Agreement, or (d) as expressly permitted under this Section 6.1, neither the Parties nor their Affiliates shall publicly announce or otherwise disclose to Third Parties any of the confidential terms of this Settlement Agreement without the prior written approval of the other Party, not to be unreasonably withheld or delayed. Except as otherwise provided in this Section 6.1, the Parties shall only release public announcements of the execution of this Settlement Agreement in the following form:

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Amgen and Coherus have settled the trade secret action brought by Amgen against Coherus that was pending in the Superior Court of California County of Ventura. The details of the settlement are confidential but Coherus will continue to market UDENYCA and will pay a mid-single digit royalty to Amgen.

If a Party intends to disclose more details relating to this Settlement Agreement because it is required to do so in order to comply with a statute, ordinance, regulation, or compulsory legal process, including, without limitation, its reporting requirements under the Securities Exchange Act of 1934, as amended, such Party shall give the other Party at least [***] business days’ prior notice in writing of the text of the intended disclosure, unless such statute, ordinance, regulation, or compulsory legal process requires earlier disclosure, in which event the notice shall be provided as early as practicable. A Party that determines that it is required to file this Settlement Agreement with the Securities and Exchange Commission or any other governmental authority shall request confidential treatment with respect to the terms of this Settlement Agreement, shall consult in good faith with the other Party regarding such confidential treatment and shall use commercially reasonable efforts to have redacted from any publicly available version such provisions as the Parties may agree.

6.2Governing Law.  This Settlement Agreement and the rights and obligations of the Parties under this Settlement Agreement shall be governed and construed in accordance with the laws of the State of California, without regard to its choice-of-law or conflicts-of-law principles that might otherwise refer construction or interpretation of this Settlement Agreement to the substantive law of another jurisdiction. Amgen and Coherus agree that venue is proper in the Superior Court of California County of Ventura.

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6.3Waiver.  No waiver of a breach, failure of any condition, or any right or remedy, contained in or granted by the provisions of this Settlement Agreement shall be effective unless it is in writing and signed by the Party waiving the breach, failure, right or remedy. No waiver of any breach, failure, right or remedy shall be deemed a waiver of any other breach, failure, right or remedy, whether or not similar, nor shall any waiver constitute a continuing waiver unless the writing so specifies.

6.4Entire Agreement. This Settlement Agreement, including Exhibit A, represents the entire understanding and agreement of the Parties with regards to the matters addressed herein. No terms or conditions of this Settlement Agreement will be varied or modified by any prior or subsequent statement, conduct or act of either Party, except that the Parties may supplement, amend, or modify this Settlement Agreement by a subsequent written agreement executed by all of the Parties through their authorized representatives. Each Party and its counsel have participated fully in the review and revision of this Settlement Agreement. Any rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not apply in interpreting this Settlement Agreement.

6.5Notice.  Any notice required or permitted to be given or sent under this Settlement Agreement shall be hand delivered, sent by an express delivery service that provides proof of delivery, or sent by certified or registered mail, postage prepaid, to the Parties at the addresses indicated below.

If to Amgen, to:

Jonathan Graham
Senior Vice President, General Counsel & Secretary 
One Amgen Center Drive

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Building 28-1E
Thousand Oaks, CA 91320

If to Coherus, to:

Thomas Fitzpatrick 
Chief Legal Officer
333 Twin Dolphin Drive, Suite 600 
Redwood City, CA 94065

These addresses may be changed by notice given pursuant to this Section.

6.6Counterparts.  This Settlement Agreement may be executed in any number of counterparts, and through pdf, facsimile or photocopy signatures. Each counterpart shall be deemed an original instrument, but all counterparts together shall constitute but one agreement.

6.7Headings.  The descriptive headings contained in this Agreement are for convenience of reference only and shall not in any way affect the meaning or interpretation of this Agreement.

6.8Evidence. This Agreement and all of the terms herein constitute compromises and offers to compromise covered by California Evidence Code Section 1152. Nothing in this Agreement may be used as evidence in any action or proceeding between the Parties hereto, except in connection with any action or proceeding relating to enforcement of this Agreement.

6.9No Admission of Liability.  The Parties hereby acknowledge and agree that neither the execution of this Agreement, nor the performance of any act pursuant to the Agreement, constitutes an admission of liability, express or implied, of any Party with respect to any fact or matter which may have arisen in connection with the Action. This Agreement is 

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entered into for the purpose of resolving the disputes that have arisen between the Parties without further expenditure of attorney fees or other resources.

[remainder of this page left blank intentionally]

 

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IN WITNESS WHEREOF, the Parties, through their authorized officers, have executed this Settlement Agreement as of the Signing Date.

 

Amgen Inc. and Amgen USA Inc.

By:  /s/ STUART L. WATT
Name:  Stuart L. Watt
Title: VP Law & Intellectual Property Officer
Date:  May 1, 2019

 

Coherus BioSciences Inc.

By:  /s/ DENNIS M. LANFEAR
Name:  Dennis M. Lanfear
Title: Chief Executive Officer
Date:  May 1, 2019

 

 

 

 

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EXHIBIT A

Proposed Order of Dismissal

 

Omitted pursuant to Regulation S-K, Item 601(a)(5)

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