Document:

EX-10.39 3 v451028_ex10-39.htm EXHIBIT 10.39
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Exhibit 10.39
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Execution Version
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	Certain identified information has been excluded from this exhibit because it is both not 
material and would likely cause competitive harm to the registrant if publicly disclosed.

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MANUFACTURING AND SUPPLY AGREEMENT
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between
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INTERCEPT PHARMA EUROPE LTD.
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and
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PHARMAZELL GMBH
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​
​

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	ARTICLE 1
	DEFINITIONS
	1

	 
	 
	 

	ARTICLE 2
	MANUFACTURING AND SUPPLY
	7

	 
	 
	 

	2.1
	Supply Obligations
	7

	 
		 

	2.2
	Work Orders
	8

	 
		 

	2.3
	Delivery Terms; Inspection
	10

	 
		 

	2.4
	Materials
	10

	 
		 

	2.5
	Costs and Expenses
	11

	 
		 

	2.6
	Supply Shortage; Inability to Supply
	11

	 
		 

	2.7
	Intercept Materials
	11

	 
	 
	 

	ARTICLE 3
	QUALITY; COMPLIANCE; REGULATORY
	13

	 
	 
	 

	3.1
	Quality Control
	13

	 
		 

	3.2
	Maintenance of Facility
	14

	 
		 

	3.3
	Regulatory Cooperation of PharmaZell
	15

	 
		 

	3.4
	Cooperation with Regulatory Authorities and Regulatory Correspondence
	15

	 
		 

	3.5
	Compliance with Applicable Law
	16

	 
		 

	3.6
	Change Requests
	16

	 
		 

	3.7
	General Cooperation
	16

	 
	 
	 

	ARTICLE 4
	FINANCIALS
	17

	 
	 
	 

	4.1
	Price
	17

	 
		 

	4.2
	Invoice and Payment
	17

	 
	 
	 

	4.3
	Currency
	18

	 
		 

	4.4
	Adjustment of Purchase Price
	18

	 
		 

	4.5
	Audit; Late Payments
	19

	 
	 
	 

	ARTICLE 5
	INTELLECTUAL PROPERTY
	20

	 
	 
	 

	5.1
	Ownership of Inventions
	20

	 
		 

	5.2
	Patent Prosecution
	22

	 
		 

	5.3
	Enforcement of Patents
	24

	 
		 

	5.4
	Third Party Litigation
	25

	 
		 

	5.5
	Third Party Licenses
	25

	 
		 

	5.6
	United States Law
	25

	 
	 
	 

	ARTICLE 6
	REPRESENTATIONS AND WARRANTIES; COVENANTS
	26

	 
	 
	 

	6.1
	Representations and Warranties of Each Party
	26

	 
		 

	6.2
	Additional Representations, Warranties and Covenants of PharmaZell
	26

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	​
	​
	​

	6.3
	Disclaimer of Other Warranties
	28

	 
	 
	 

	ARTICLE 7
	CONFIDENTIALITY
	28

	 
	 
	 

	7.1
	Confidential Information
	28

			 

	7.2
	Exceptions to Confidentiality
	28

			 

	7.3
	Disclosure
	29

			 

	7.4
	Notification
	29

			 

	7.5
	Remedies
	29

			 

	7.6
	Use of Names
	30

			 

	7.7
	Press Releases
	30

	 
	 
	 

	ARTICLE 8
	TERM AND TERMINATION
	30

	 
	 
	 

	8.1
	Term
	30

	 
		 

	8.2
	Termination
	30

	 
		 

	8.3
	Effect of Expiration or Termination
	31

	 
	 
	 

	ARTICLE 9
	INDEMNIFICATION
	33

	 
	 
	 

	9.1
	PharmaZell Indemnification
	33

	 
		 

	9.2
	Intercept Indemnification
	33

	 
		 

	9.3
	Indemnification Procedure
	33

	 
	 
	 

	9.4
	Insurance
	35

	 
		 

	9.5
	Limitation on Damages
	35

	 
	 
	 

	ARTICLE 10
	MISCELLANEOUS
	36

	 
	 
	 

	10.1
	Notices
	36

	 
		 

	10.2
	Force Majeure
	37

	 
		 

	10.3
	Entire Agreement; Amendment
	37

	 
		 

	10.4
	Further Assurances
	38

	 
		 

	10.5
	Successors and Assigns
	38

	 
		 

	10.6
	Governing Law
	38

	 
		 

	10.7
	Dispute Resolution
	38

	 
		 

	10.8
	Arbitration
	38

	 
		 

	10.9
	Third Party Beneficiaries
	40

	 
		 

	10.10
	Export Control
	40

	 
		 

	10.11
	Assignment
	40

	 
		 

	10.12
	Waiver
	41

	 
		 

	10.13
	Severability
	41

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	10.14
	Independent Contractors
	41

	 
		 

	10.15
	Construction
	41

	 
		 

	10.16
	Remedies
	41

	 
		 

	10.17
	Counterparts; Facsimile Execution
	42

	 
		 

	10.18
	English Language
	42

	 
		 

	10.19
	Parent Guarantee
	42

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This MANUFACTURING AND SUPPLY AGREEMENT (this “Agreement”), dated the last date of signature (the “Effective Date”), is made by and between Intercept Pharma Europe Ltd., having a location at 2 Pancras Square, Floor 1, London, United Kingdom N1C 4AG (“Intercept”), and, solely for purposes of Section 10.19, Intercept Pharmaceuticals, Inc. (“Intercept Parent”), and PharmaZell GmbH, a corporation organized under the laws of Germany (“PharmaZell”). Intercept and PharmaZell are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”
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RECITALS
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WHEREAS, pursuant to a certain Development Agreement by and between the Parties dated August 18, 2010, the Parties collaborated to develop a synthesis pathway for the manufacture, production, and validation of an active pharmaceutical ingredient for Intercept referred to as [**]; and
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WHEREAS, Intercept and PharmaZell now wish to enter into this Agreement to arrange for the manufacture and supply by PharmaZell to Intercept of the API (as defined below), on the terms and subject to the conditions set forth in this Agreement.
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NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises and covenants of the Parties contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, do hereby agree as follows:
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ARTICLE 1
DEFINITIONS
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As used herein, the following terms shall have the following meanings:
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1.1         “Adjustment Date” has the meaning set forth in Section 4.4(a).
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1.2         “Adverse Event” means (a) any finding from tests in laboratory animals or in vitro that suggests a significant risk for human subjects including reports of mutagenicity, teratogenicity or carcinogenicity, (b) any undesirable, untoward or noxious event or experience associated with the clinical, commercial or other use, or occurring following application of a Product to humans, whether expected and whether considered related to or caused by such Product, including such an event or experience as occurs in the course of the use of such Product in professional practice, in a clinical trial, whether accidental or intentional, from abuse, from withdrawal or from a failure of expected therapeutic action of such Product, and (c) those events or experiences that are required to be reported to the Regulatory Authorities under corresponding Applicable Law.
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1.3         “Affiliate” of a Person means any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such first Person. For purposes of this definition, “control” and, with correlative meanings, the terms “controlled by” and “under common control with”, means to possess the power to direct the management or policies of a Person, whether through ownership of voting securities or by contract or otherwise.
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1.4         “Agreement” has the meaning set forth in the preamble hereto, including all Work Orders provided by Intercept.
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1.5         “API” means the active pharmaceutical ingredient [**].
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1.6         “API Precursor” means any intermediary, ingredient, composition or element [**] that arises or is created or produced following production of the Intermediary during the Manufacture of the API.
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1.7         “API Specifications” means the specifications for the API to be Manufactured by PharmaZell and supplied to Intercept hereunder as such specifications are set forth in the Quality Agreement, as the same may be amended from time to time.
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1.8         “Applicable Law” means all laws, statutes, rules, codes, regulations, requirements, orders, judgments and ordinances of any Regulatory Authority, including the FFDCA.
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1.9         “Business Day” means a day other than a Saturday or a Sunday on which banks in New York, New York and Munich, Germany are open for the conduct of regular banking business.
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1.10       “Calendar Quarter” means each period of three (3) consecutive calendar months commencing on 1 January, 1 April, 1 July, and 1 October, except that the first Calendar Quarter of the Term shall commence on the Effective Date and end on September 30, 2016, and the last Calendar Quarter of the Term shall commence on the first day of the calendar quarter in which the Term ends and end on the last day of the Term.
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1.11       “Calendar Year” means each successive period of twelve (12) consecutive calendar months commencing on 1 January and ending on 31 December, except that the first Calendar Year of the Term shall commence on the Effective Date and end on 31 December 2016, and the last Calendar Year of the Term shall commence on January 1 of the year in which the Term ends and end on the last day of the Term.
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1.12       “Certificate of Analysis” or “COA” has the meaning set forth in the Quality Agreement.
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1.13       “Certificate of Compliance” or “COC” has the meaning set forth in the Quality Agreement.
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1.14       “CMC Data” means the chemistry, manufacturing and controls data required by Applicable Law to be included in a New Drug Application (as defined in the FFDCA and the regulations promulgated thereunder) for a Product or in any other Regulatory Approval outside the United States.
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1.15       “Confidential Information” means any and all information or material that, at any time before or after the Effective Date, has been or is provided or communicated to the Receiving Party by or on behalf of the Disclosing Party (including by a third party) pursuant to this Agreement or in connection with the transactions contemplated hereby or any discussions or negotiations with respect thereto; any data, ideas, concepts or techniques contained therein; and any modifications thereof or derivations therefrom. Confidential Information may be disclosed either orally, visually, electronically, in writing, by delivery of Materials containing Confidential Information or in any other form now known or hereafter invented.
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1.16       “Control” means, with respect to any item of information, Invention, Regulatory Documentation, patent, trademark or other intellectual property right, possession of the right, whether directly or indirectly, and whether by ownership, license or otherwise (other than by operation of any license and other grants hereunder), to assign or grant a license, sublicense or other right to or under, or perform other acts in respect of, such information, Invention, Regulatory Documentation, patent, trademark or other intellectual property right as provided for herein without violating the terms of any agreement or other arrangement with any third party.
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1.17       “Deficiency” has the meaning set forth in Section 2.3(c).
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1.18       “Delivery Date” means the date the API leaves the Facility for shipment to Intercept.
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1.19       “Disclosing Party” means the Party disclosing Confidential Information.
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1.20       “Disqualification” has the meaning set forth in Section 6.2(c).
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1.21       “Effective Date” has the meaning set forth in the preamble hereto.
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1.22       “Employee Inventions” has the meaning set forth in Section 5.1(g).
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1.23       “Existing Work Orders” has the meaning set forth in Section 2.2(a).
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1.24       “Exploit” means to make, have made, import, use, sell, offer for sale or otherwise dispose of a compound, product or process, including all discovery, research, development, commercialization, registration, modification, enhancement, improvement, Manufacture, storage, formulation, optimization, exportation, transportation, distribution, promotion and marketing of such compound, product or process.
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1.25       “Facility” means a Manufacturing facility of PharmaZell located at (i) [**], (ii) [**], and/or (iii) such other facility as the Parties may agree to in writing from time to time.
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1.26       “FDA” means the United States Food and Drug Administration and any successor agency thereto.
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1.27       “FFDCA” means the U.S. Federal Food, Drug, and Cosmetic act codified at 21 U.S.C. § 301 et seq., as may be amended from time to time.
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1.28       “Gesetz über Arbeitnehmererfindungen” has the meaning set forth in Section 5.1(g).
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1.29       “GMI” means the German Producer Price Index (“Index der Erzeugerpreise gewerblicher Produkte”) for pharmaceutical preparations, as compiled and published by the Bureau of Labor Statistics of the United States Department of Labor and using the latest version of data published as of the date of adjustment.
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1.30       “GMP” or “cGMP” means all applicable standards relating to manufacture of pharmaceutical products, including, as applicable current Good Manufacturing Practices as they apply to the manufacture of Supplied Material, and including (i) standards promulgated by any Regulatory Authority having jurisdiction over the Manufacture of the Supplied Material, in the form of Applicable Laws, including the U.S. current Good Manufacturing Practices regulations promulgated by the FDA, as described in 21 U.S.C. 351, 21 C.F.R. Parts 210 and 211, as amended, and any successor provision thereto and ICH Q7 – Good Manufacturing Practice for Active Pharmaceutical Ingredients; (ii) standards promulgated by any Regulatory Authority having jurisdiction over the Manufacture of the Supplied Material, in the form of draft or final guidance documents (including advisory opinions, compliance policy guides and guidelines); and (iii) such other industry standards as may be agreed upon by the Parties in the Specifications (as defined and set forth in the Quality Agreement).
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1.31       “ICC Rules” has the meaning set forth in Section 10.8(a).
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1.32       “Indemnification Claim Notice” has the meaning set forth in Section 9.3(a).
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1.33       “Indemnified Party” has the meaning set forth in Section 9.3(a).
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1.34       “Indemnifying Party” has the meaning set forth in Section 9.3(a).
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1.35       “Initial Term” has the meaning set forth in Section 8.1.
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1.36       “Intercept” has the meaning set forth in the preamble hereto.
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1.37       “Intercept Indemnified Parties” has the meaning set forth in Section 9.1.
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1.38       “Intercept Information” means all technical, scientific and other know-how and information, trade secrets, knowledge, technology, means, methods, processes, practices, formulae, instructions, skills, techniques, procedures, technical assistance, designs, assembly procedures, specifications, assays, test methods, analytical methods, and other material or information owned or Controlled by Intercept or its Affiliates (including information received from a third party) as of the Effective Date or at any time during the Term.
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1.39       “Intercept Intellectual Property” has the meaning set forth in Section 5.1(a).
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1.40       “Intercept Materials” means those Materials identified on Schedule 1.40 to be supplied by Intercept to PharmaZell for Manufacture of the API.
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1.41       “Intermediary” means [**].
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1.42       “Invention” means any discovery, improvement, process, formula, data, information, invention, know-how, trade secret, procedure, device, or other intellectual property, whether or not protectable under patent, trademark, copyright or similar laws, including any enhancement in the manufacture, formulation, ingredients, preparation, presentation, means of delivery, dosage or packaging of a compound or product or any discovery or development of a new indication for a compound or product.
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1.43       “Joint Invention Patents” has the meaning set forth in Section 5.2(c)(i).
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1.44       “Joint Inventions” mean any and all Inventions that are or have been created, conceived, discovered, developed or otherwise made jointly by or on behalf of the Parties, but excluding Specified Inventions.
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1.45       “Latent Defect” means any deficiency (including any Supplied Material that fails to meet the Supplied Material Warranty or other quality requirements set forth in the Quality Agreement) that is not readily determinable upon a reasonable inspection of the Supplied Material (based on physical inspection, identity test and review of the certificate of analysis).
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1.46       “Losses” has the meaning set forth in Section 9.1.
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1.47       “Manufacture” and “Manufacturing” means all steps, processes, activities and operations from purchase of Materials, through production, quality control, release and storage, to distribution of API, and the related controls.
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1.48       “Material(s)” means all ingredients, raw materials, packaging and labeling components, and all other supplies of any kind, required or used in connection with the Manufacturing of Supplied Material.
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1.49       “Minimum Annual Requirement” has the meaning set forth in Section 2.2(b).
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1.50       “Minimum Percentage Requirement” has the meaning set forth in Section 2.2(b).
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1.51       “Other PharmaZell Invention Patents” has the meaning set forth in Section 5.2(b)(i).
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1.52       “Other PharmaZell Inventions” means [**].
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1.53       “Party” and “Parties” has the meaning set forth in the preamble hereto.
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1.54       “Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department or agency of a government.
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1.55       “PharmaZell” has the meaning set forth in the preamble hereto.
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1.56       “PharmaZell Indemnified Parties” has the meaning set forth in Section 9.2.
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1.57       “Policies” has the meaning set forth in Section 9.4(a).
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1.58       “Products” means the finished product containing the API.
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1.59       “Purchase Price” has the meaning set forth in Section 4.1(a).
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1.60       “Quality Agreement” means the quality assurance agreement dated August 20, 2014 entered into by the Parties.
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1.61       “Quality Standards” means the obligations set forth in the Quality Agreement as well as compliance with applicable environmental/health/safety requirements and cGMP requirements.
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1.62       “Receiving Party” means the Party receiving Confidential Information.
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1.63       “Recipients” has the meaning set forth in Section 7.1.
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1.64       “[**]” means [**].
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1.65       “Regulatory Approval” means, with respect to any particular country or other jurisdiction, as applicable any and all approvals, licenses, registrations or authorizations of any Regulatory Authority necessary for the Exploitation of a Product in such country or jurisdiction, including, where applicable, (a) approval of a Product in such country or jurisdiction, including any marketing authorization and supplements and amendments thereto, including an approved New Drug Application as defined in the FFDCA or any corresponding foreign application, registration or certification necessary or reasonably useful to market any Product in a country or regulatory jurisdiction; (b) pre- and post-approval marketing authorizations (including any prerequisite Manufacturing approval or authorization related thereto); (c) labeling approval; and (d) technical, medical and scientific licenses.
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1.66       “Regulatory Authority” means any applicable supra-national, federal, national, regional, state, provincial or local regulatory agencies, departments, bureaus, commissions, councils or other government entities regulating or otherwise exercising authority with respect to the Exploitation of Supplied Material or a product in any country or other jurisdiction, including those responsible for granting approvals for the performance of services by PharmaZell to Intercept or for issuing regulations pertaining to the manufacture or use of the Supplied Material or Product in the intended country of use, including the FDA.
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1.67       “Regulatory Documentation” means as applicable (a) submissions to any Regulatory Authority, including investigational new drug applications, New Drug Applications (as defined in the FFDCA and the regulations promulgated thereunder), correspondence with regulatory agencies (registrations and licenses, regulatory drug lists, advertising and promotion documents), periodic safety update reports, adverse event files, complaint files and manufacturing records and, if applicable, any updates or supplements to any of the foregoing and (b) any minutes or contact logs with respect to any telephone conferences or in-person meetings conducted with any Regulatory Authority relating to the subject matter described in clause (a) of this sentence.
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1.68       “Release Testing” means all testing of the quality attributes of the Supplied Material in accordance with the Specifications and the Quality Agreement.
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1.69       “Renewal Period” has the meaning set forth in Section 8.1.
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1.70       “Required Manufacturing Changes” has the meaning set forth in Section 3.6(b).
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1.71       “Representative” has the meaning set forth in Section 6.2(a).
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1.72       “Services” means the Manufacturing, supply and other services performed under this Agreement.
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1.73       “Specifications” means the API Specifications.
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1.74       “Specified Invention Patents” has the meaning set forth in Section 5.2(a)(i).
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1.75       “Specified Inventions” means [**].
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1.76       “Supplied Material” means the API.
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1.77       “Supplied Material Warranty” has the meaning set forth in Section 6.2(b).
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1.78       “Term” has the meaning set forth in Section 8.1.
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1.79       “Testing Laboratory” means an independent third party laboratory engaged by the Parties to test conformance of the Supplied Material to the Specifications in accordance with the terms set forth in the Quality Agreement.
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1.80       “Third Party Claim” has the meaning set forth in Section 9.1.
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1.81       “Total Commercial Volume Requirements” means, for purposes of calculating Intercept’s total commercial volume requirements for Supplied Material for a given Calendar Year, the total amount of Supplied Material [**].
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1.82       “United States” means the United States of America, its territories and possessions, including the District of Columbia and Puerto Rico.
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1.83       “Work Order” means a written work order that sets forth, with respect to the period covered thereby, (a) the quantities of each Supplied Material to be processed and delivered by PharmaZell to Intercept or its designee, (b) the required Delivery Dates therefor, and (c) the required delivery locations therefor, in the form attached hereto as Schedule 1.83.
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ARTICLE 2
MANUFACTURING AND SUPPLY
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2.1         Supply Obligations.
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(a)          Generally. Subject to the terms and conditions hereof, PharmaZell shall Manufacture and supply to Intercept such quantities of Supplied Material as Intercept may from time to time during the Term order. Such Manufacture and supply shall be in accordance with Applicable Laws, the Specifications, the Regulatory Documentation, Regulatory Approvals and the terms of this Agreement and the Quality Agreement.
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(b)          Exclusivity of PharmaZell. To the maximum extent permitted by Applicable Law, without the written consent of Intercept, PharmaZell shall not, and PharmaZell shall cause its Affiliates not to, distribute, market, promote, offer for sale, sell, supply or Manufacture API or any API Precursor, directly or indirectly, whether alone or in combination with other molecules or compounds, whether as a raw material or as a finished product, and whether at wholesale or retail, to any Person other than Intercept, its Affiliates or designees.
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(c)          Purchase Obligations of Intercept. Subject to the Minimum Percentage Requirement and the Minimum Annual Requirement set forth in Section 2.2(b), this Agreement shall not limit Intercept’s right to obtain Supplied Material from any third party. PharmaZell acknowledges that Intercept has the right to enter into arrangements with one or more third parties to act as additional sources of Supplied Material.
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(d)          Subcontractors. PharmaZell may not subcontract with any third party to perform any of its obligations hereunder without the prior written consent of Intercept; provided that with respect to the existing subcontractors and activity set forth on Schedule 2.1(d), Intercept hereby agrees that such subcontractors are hereby permitted subcontractors with respect to the activity identified for such subcontractor. PharmaZell shall be solely responsible for the performance of any permitted subcontractor, and for costs, expenses, damages, or losses of any nature arising out of such performance as if such performance had been provided by PharmaZell itself under this Agreement. PharmaZell shall cause any such permitted subcontractor to be bound by, and to comply with, all confidentiality, quality assurance, regulatory and other obligations and requirements of PharmaZell set forth in this Agreement. PharmaZell and its subcontractors may use Intercept Intellectual Property only for the performance of the Services as specified in this Agreement.
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2.2         Work Orders.
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(a)          Existing Work Orders. The Parties acknowledge and agree that Intercept and PharmaZell have, prior to the date hereof, agreed to certain Work Orders with respect to Supplied Materials, including penalties therein for PharmaZell’s failure to deliver Supplied Material in accordance with the terms of such Work Orders. The existing Work Orders are attached hereto as Schedule 2.2(a) (the “Existing Work Orders”). The Parties acknowledge and agree that PharmaZell shall continue to Manufacture the quantities of Supplied Materials set forth in the Existing Work Orders in accordance with the timelines set forth in the Existing Work Orders; provided, however, the Parties acknowledge and agree that the Supplied Materials Manufactured and supplied under the Existing Work Orders shall be governed by the terms and conditions of this Agreement, and this Agreement supersedes and replaces any term or condition contained in such Existing Work Orders and any term or condition associated with such Existing Work Orders other than the delivery obligations, the price, the shared risk provisions and associated penalties of PharmaZell, which shall continue to apply as specified in the Existing Work Orders.
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(b)          New Work Orders; Minimum Percentage Requirement. Intercept shall place Work Orders at least [**] months in advance of the requested Delivery Date but no more than [**] months in advance of the requested Delivery Date. With respect to each Work Order, Intercept shall be obligated to purchase, and PharmaZell shall be obligated to deliver, by the required Delivery Date set forth therein such quantities of the Supplied Material as are set forth therein. Intercept agrees to order from PharmaZell at least [**] of Intercept’s Total Commercial Volume Requirements for delivery in each of [**] (“Minimum Percentage Requirement”); provided that, [**] notwithstanding Intercept’s actual Total Commercial Volume Requirements in Calendar Years 2017 and 2018, at a minimum, Intercept shall order at least [**] of Supplied Material to be delivered in each of Calendar Year 2017 and Calendar Year 2018 (“Minimum Annual Requirement”). Notwithstanding the foregoing, (i) to the extent that Intercept has ordered a quantity of Supplied Material from PharmaZell but PharmaZell fails for any reason to deliver such quantity within [**] days of the Delivery Date or such Supplied Material is rejected by Intercept pursuant to Section 2.3(c), all such ordered Supplied Material shall be considered Supplied Material that was “ordered and delivered” under the terms of this Section 2.2(b) in calculating the Minimum Percentage Requirement and Minimum Annual Requirement, and (ii) if Intercept’s Total Commercial Volume Requirements in a given year are in excess of PharmaZell’s capacity to Manufacture such quantity of Supplied Material, then for purposes of calculating Intercept’s total volume, the percentage shall be based upon PharmaZell’s maximum capacity. In addition, if Intercept has ordered a quantity of Supplied Material from PharmaZell but PharmaZell fails to deliver such quantity as a result of PharmaZell’s inability to satisfy the Quality Standards (and PharmaZell is unable to remedy such inability to satisfy the Quality Standards within [**] days) or the Supplied Material is rejected by Intercept pursuant to Section 2.3(c) as a result of PharmaZell’s failure to satisfy the Quality Standards, then (i) Intercept’s obligation to achieve the Minimum Percentage Requirement and Minimum Annual Requirement shall be suspended until such time as PharmaZell is able to remedy such Quality Standard issue and (ii) Intercept’s Minimum Percentage Requirement and Minimum Annual Requirement for such Calendar Year shall be proportionately reduced by the length of the suspension; provided that if PharmaZell is able to remedy the issue with the Quality Standards and deliver Supply Material to Intercept and Intercept accepts the full amount of the delivery despite the proportional reduction, then Intercept’s Minimum Annual Requirement and Minimum Percentage Requirement for the subsequent Calendar Year shall be reduced by such proportionate amount. To the extent PharmaZell is responsible for manufacturing the Intermediary and to the extent Intercept is responsible for supplying the [**] to PharmaZell for the manufacture of the Intermediary, Intercept shall ensure timely delivery of the [**] to PharmaZell. In addition, in the event that [**], then Intercept shall have no Minimum Annual Requirement commencing on the date of any such event and for the duration of the Agreement. The Parties agree that the first new work order under the Agreement shall be as specified in Schedule 2.2(b) attached hereto.
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(c)          Work Order Terms. In the event that the terms of any Work Order are not consistent with or are in addition to the terms of this Agreement, the terms of this Agreement shall prevail. The Parties agree that each Work Order shall be for a minimum of [**] and that Intercept shall attempt to order a batch size of [**]. The Parties further agree that if the Manufacturing is to be done at [**], the size of the batch in a Work Order [**] but otherwise is subject to the terms of this Agreement.
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2.3         Delivery Terms; Inspection.
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(a)          Delivery. PharmaZell shall deliver the quantities of API set forth in each Work Order by the required Delivery Date(s) set forth in such Work Order and in accordance with the reasonable written instructions as such instructions are agreed by the Parties. PharmaZell shall deliver API, DAP (Incoterms 2010), with the delivery address specified by Intercept. Risk of loss and title shall pass to Intercept upon delivery of API as specified in the preceding sentence. In the event Intercept wishes to have an expedited delivery, PharmaZell reserves the right to charge Intercept for the additional costs involved therefor.
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(b)          Accompanying Documentation. Each delivery of API shall be accompanied by (i) a Certificate of Analysis, (ii) a Certificate of Compliance, (iii) such other documents as may be required pursuant to the Quality Agreement, and (iv) documentation necessary for the sale or export of the API, as applicable.
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(c)          Inspection. Within [**] days of receipt of a given shipment of Supplied Material, Intercept (or its agent) shall verify on the basis of a visual inspection the quantity of Supplied Material delivered. In addition, Intercept (or its agent) shall inspect at Intercept’s discretion (based minimally on physical inspection, identity test and review of the Certificate of Analysis and Certificate of Conformance provided by PharmaZell) the Supplied Material following Delivery for variances and defects; and if Intercept claims that a shipment of Supplied Material did not, at the time of receipt by Intercept, meet the Supplied Material Warranty or the quality requirements set forth in the Quality Agreement (a “Deficiency”), Intercept shall notify PharmaZell based on the foregoing inspection within [**] days after receipt of such Supplied Material at Intercept’s (or its designee’s) site, which notice shall provide the quantities affected, the basis for the claim and other information reasonably necessary for PharmaZell to assess the claim. Notwithstanding the foregoing, if Intercept claims that the Deficiency is a Latent Defect, Intercept shall have the obligation to provide such notification to PharmaZell in writing within [**] days after Intercept’s discovery of such Latent Defect (or within [**] days after Intercept is notified in writing by a third party of such Latent Defect, if later). If Intercept and PharmaZell are unable to agree as to whether such Supplied Material contains a Deficiency, the Parties shall cooperate to have the Supplied Materials in dispute analyzed by the Testing Laboratory. The results of the Testing Laboratory shall be final and binding on the Parties on the issue of whether such Supplied Material contains a Deficiency. If the Supplied Materials are determined to not contain a Deficiency, then Intercept shall bear the cost of the Testing Laboratory and pay the Purchase Price with respect to the Supplied Materials in accordance with this Agreement. If the Supplied Materials are determined to contain a Deficiency, then PharmaZell shall bear the cost of the Testing Laboratory, and PharmaZell shall (i) at Intercept's election, either replace the rejected Supplied Materials at no cost to Intercept, or refund to Intercept the Purchase Price paid for such Supplied Materials, and the cost of all Intercept Materials used for such Supplied Materials plus any applicable delivery charge and (ii) reimburse to Intercept all costs associated with any manufacturing and distribution of Products incorporating such Supplied Material, including formulation, packaging, storage and distribution expenses (and including materials used in connection therewith).
​
2.4         Materials. PharmaZell shall be responsible for auditing and qualifying its supplier(s) of Materials and obtaining supplies of Materials in accordance with the Specifications, Applicable Laws, Regulatory Documentation, Regulatory Approvals and the Quality Agreement. Quality and Regulatory and all GMP related issues shall be defined in the Quality Agreement. At all times during the Term, PharmaZell shall (at its own cost and expense) maintain sufficient amounts of available inventory of Materials (other than Intercept Materials) consistent with industry standards and shelf life requirements of such Materials as may be necessary for PharmaZell to Manufacture Supplied Materials.
​

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2.5         Costs and Expenses. Except as otherwise explicitly set forth herein, PharmaZell shall be solely responsible for all costs and expenses incurred in connection with the Manufacture of Supplied Materials hereunder, including costs and expenses of personnel, quality control testing, Manufacturing facilities and equipment, and Materials. In addition, at PharmZell’s cost and expense, PharmaZell shall be entitled to maintain an inventory of safety stock of Supplied Material and any of its intermediates.
​
2.6         Supply Shortage; Inability to Supply.
​
(a)          In the event that PharmaZell is unable or anticipates it will be unable to supply, in whole or in part, the quantity of Supplied Material as set forth in any Work Order, PharmaZell shall notify Intercept of such inability upon discovery of the same by PharmaZell, including the underlying reasons for such inability, proposed remedial measures and the date such inability is expected to end. In the event that PharmaZell is unable to Manufacture Supplied Material as a result of a shortage of Materials (other than to the extent such shortage is the result of Intercept’s failure to provide [**]), then PharmaZell hereby agrees and acknowledges that [**].
​
(b)          In the event that Intercept is unable to provide [**] to PharmaZell within the project timelines agreed to by the Parties, the Parties shall discuss in good faith allowing PharmaZell to manufacture [**] itself and for Intercept to purchase such [**] from PharmaZell.
​
(c)          Nothing contained in this Section 2.6 shall limit any legal, equitable or other rights or remedies that may be available to Intercept on account of any failure of PharmaZell to Manufacture and supply Supplied Materials hereunder.
​
2.7         Intercept Materials.
​
(a)          PharmaZell shall maintain, handle and store the Intercept Materials in accordance with the cGMP, Applicable Laws and all written instructions as agreed by the Parties. The Intercept Materials shall be stored in a secured area and clearly marked and identified as property of Intercept clearly separated from other products or materials by palette or location. PharmaZell shall be responsible to communicate any necessary information regarding such Intercept Materials (including material safety data sheets and other information provided to PharmaZell relating to the handling and safety of the Intercept Materials) to its employees, agents and representatives engaged in performing the Manufacturing services. PharmaZell shall ensure that Intercept Materials are free and clear of any liens or encumbrances. PharmaZell shall notify Intercept if at any time it believes Intercept Materials have been damaged, lost or stolen.
​
(b)          PharmaZell shall notify Intercept when the inventories of Intercept Materials become insufficient to Manufacture the API, as required under this Agreement. In addition, at the end of each calendar month, PharmaZell shall provide to Intercept a stock reconciliation report of the Intercept Materials, which report shall include: (a) the opening stock of Intercept Materials at the beginning of the month, (b) the receipt of any additional Intercept Materials, (c) the usage of Intercept Materials during the month (including yield loss), and (d) the stock balance of Intercept Materials.
​

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(c)          PharmaZell shall use the Intercept Materials solely and exclusively to Manufacture the Supplied Materials under this Agreement and for no other purpose. PharmaZell shall withdraw Intercept Materials from storage on [**].
​
(d)          PharmaZell shall at all times take such measures as are required to protect the Intercept Materials from risk of loss or damage at all stages of the Manufacturing process that are consistent with those measures that PharmaZell utilizes for its own materials but in no event less than are reasonable and customary in the industry. PharmaZell accepts all risk of loss and full responsibility for the condition of Intercept Materials which may be damaged, lost or stolen by PharmaZell or its personnel. PharmaZell shall at all times take such measures as are required to protect the Intercept Materials from risk of loss or damage. Intercept will be responsible for all transportation costs for such Intercept Materials. Notwithstanding the foregoing, PharmaZell shall be financially responsible for any loss of such Intercept Materials to the extent such loss results from (a) breach of this Agreement by PharmaZell, (b) negligence or willful misconduct of PharmaZell, its Affiliates and any permitted subcontractors, in which case PharmaZell shall reimburse Intercept for costs of such Intercept Materials, plus any shipping costs and out-of-pockets costs incurred by or on behalf of Intercept with respect to such Intercept Materials.
​
(e)          PharmaZell shall use its best efforts to obtain standard yields. The standard yields are set forth in Schedule 2.7(e). The allowable annual yield variation from the standard yield for the Intercept Materials shall not be more than [**]. For illustration purposes only, an example yield loss calculation is set forth on Schedule 2.7(e). Concurrently with each invoice of Supplied Materials, PharmaZell shall provide Intercept with a written accounting of the disposition of each yield variation of Intercept Materials. In the event that the yield variation exceeds the agreed upon allowable yield variation or any losses of Intercept Materials are due to the negligence or willful misconduct of PharmaZell, Intercept shall, at the option of Intercept, either receive a reimbursement from PharmaZell or reduce Intercept’s payment for the relevant invoice for such Supplied Material in an amount equal to [**]. The Parties shall in good faith reevaluate the standard yield and the annual yield variation at the beginning of each Calendar Year to account for increased efficiencies in the Manufacture of Supplied Material or decreases caused by Required Manufacturing Changes or other agreed changes to the process.
​
(f)           In the event that PharmaZell obtains excess yields of the Intercept Materials, PharmaZell will invoice the excess quantities to Intercept (such excess quantity not to exceed more than [**] of the amount in Intercept’s Work Order), and Intercept will accept such delivery and invoice.
​
(g)          To the extent Intercept supplies [**] as part of the Intercept Materials, all such [**] provided by Intercept shall be [**].
​

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ARTICLE 3
QUALITY; COMPLIANCE; REGULATORY
​
3.1         Quality Control.
​
(a)          Quality Agreement. Intercept and PharmaZell have entered into the Quality Agreement that sets forth the terms and conditions upon which both Parties will conduct their quality activities in connection with this Agreement. Each Party shall duly and punctually perform all of its obligations under the Quality Agreement. In the event of any inconsistency between the terms of this Agreement and the terms of the Quality Agreement, the terms of the Quality Agreement shall control with respect to quality related matters, and the terms of this Agreement shall control with respect to any other matters.
​
(b)          Materials; Vendor and Supplier Qualification and Validation. PharmaZell shall be responsible for: (i) obtaining all starting Materials (other than Intercept Materials) required to Manufacture Supplied Materials in accordance with the Specifications, Applicable Laws and cGMPs and Regulatory Documentation; and (ii) supplying all equipment and personnel necessary for the performance of the Manufacture and supply of the API to Intercept. The Quality Agreement sets forth additional details regarding each Party’s obligations regarding Critical Raw Materials (as defined in the Quality Agreement) and in the qualification and validation of vendors and suppliers retained or contracted in connection with the Manufacture and any other services requested by Intercept.
​
(c)          Analyses. PharmaZell shall be responsible for all quality control analyses of Supplied Materials and all Supplied Material shall be released by PharmaZell, in each case in accordance with the terms of the Quality Agreement.
​
(d)          Documentation and Standard Operating Procedures. PharmaZell shall maintain complete and accurate documentation of all validation data, stability testing data, batch records, quality control, laboratory testing, complaint handling, deviations, investigations, and corrective and preventative actions and any other data required under cGMPs, Applicable Laws, and other requirements of any relevant Regulatory Authority in connection with the Manufacture of the Supplied Material. PharmaZell shall make such documentation available for inspection during any audit conducted by or on behalf of Intercept in accordance with the Quality Agreement. Throughout the term of this Agreement, and for so long thereafter as is reasonably necessary, PharmaZell shall strictly monitor and maintain records documenting its compliance with cGMPs and any other Applicable Laws, including through the establishment and implementation of such operating procedures as are reasonably necessary to assure such compliance.
​

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(e)          Inspection. The Quality Agreement sets forth each Party’s rights and obligations with respect to inspection of the Supplied Material as well as inspection of the Facilities. Notwithstanding the foregoing and without limiting anything contained in the Quality Agreement, Intercept shall have the right to audit the Facilities in their entirety and inspect those portions of the Facilities and the records and information relating to the Facilities and the Manufacture of the Supplied Material, to determine and ensure that PharmaZell meets the obligations of the Quality Agreement and is compliant with the Quality Standards. PharmaZell shall permit any Regulatory Authority to audit and inspect the Facilities and the Manufacture of the Supplied Material. In connection with Intercept’s determination of PharmaZell’s ability to satisfy the Quality Standards pursuant to this Section 3.1(e), Intercept may, at Intercept’s discretion and to the extent determined by Intercept, consult with PharmaZell regarding cGMP quality, technical capability, and performance standards. If a Regulatory Authority or Intercept identifies any observations in connection with any audit or inspection under this Section 3.1(e) or the Quality Agreement, the Parties will discuss in good faith suitable approaches for correcting such observations, and PharmaZell shall have a reasonable time following such consultation with Intercept to make appropriate corrections or dispute Intercept’s observations (but not dispute a Regulatory Authority’s observations which shall be deemed conclusive). If PharmaZell disputes Intercept’s observations and Intercept and PharmaZell are unable to agree as to whether PharmaZell meets the Quality Standards, the Parties shall cooperate to have the Facilities and the records and information relating to the Facilities and the Manufacture of the Supplied Material inspected and audited by an independent inspection company of recognized repute selected by Intercept and approved by PharmaZell, which approval shall not be unreasonably withheld. The results of such inspection company shall be final and binding on the Parties on the issue of whether PharmaZell meets the Quality Standards.
​
(f)           Recalls; Withdrawals. The Quality Agreement sets forth each Party’s rights and obligations with respect to recalls and withdrawals. If and to the extent such recall or withdrawal is caused by Supplied Material that contains a Deficiency or by PharmaZell’s negligence or willful misconduct or breach of this Agreement, PharmaZell shall reimburse Intercept for [**]; provided that, other than with respect to PharmaZell’s gross negligence or willful misconduct, PharmaZell’s liability pursuant to this Section 3.1(f), on a per claim basis, shall not exceed Fifteen Million United States Dollars ($15,000,000).
​
(g)          Release. PharmaZell shall perform Release Testing to ensure conformance to the Specifications, in accordance with the Quality Agreement.
​
(h)          Stability Testing. PharmaZell shall perform stability testing on the API to ensure conformance to the Specifications, in accordance with the Quality Agreement.
​
3.2         Maintenance of Facility.
​
(a)          Except as otherwise approved in writing by Intercept, PharmaZell shall Manufacture Supplied Material exclusively at the Facilities.
​
(b)          PharmaZell shall at all times during the Term ensure that any and all licenses, registrations, and Regulatory Authority approvals required by Applicable Law to be obtained in connection with the Facilities and their operation and equipment used or to be used in connection with the Manufacture of Supplied Material so as to permit PharmaZell to Manufacture Supplied Material and supply it to Intercept as contemplated hereunder have been obtained and are in all respects current and in full force and effect.
​
(c)          PharmaZell shall only use disposal services or sites that have appropriate environmental permits and are in compliance with Applicable Law.
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3.3         Regulatory Cooperation of PharmaZell. PharmaZell shall cooperate with any reasonable requests for assistance from Intercept with respect to obtaining, maintaining, and supporting any and all Regulatory Approvals and Regulatory Documentation required in connection with the sourcing of Supplied Material by Intercept hereunder and the sale of Products, including by:
​
(a)          at Intercept’s cost, making PharmaZell employees, consultants and other staff available upon reasonable notice during normal business hours to attend meetings with Regulatory Authorities concerning Supplied Material and Products;
​
(b)          at PharmaZell’s own cost, disclosing and making available to Intercept, in whatever form Intercept may reasonably request, all Manufacturing and quality control data, CMC Data, records, and other information related to Supplied Material, the Manufacturing process for Supplied Material, and any other services related to Supplied Material as may be reasonably necessary or desirable for Intercept to prepare, file, obtain, and maintain any Regulatory Approval required in connection with the sourcing of Supplied Material by Intercept hereunder and the sale of Products, as defined in the Quality Agreement; and
​
(c)          to the extent that Intercept requests any additional regulatory services from PharmaZell, PharmaZell shall provide to Intercept a fee estimate for the provision of such additional regulatory services. Thereafter, the Parties shall negotiate and agree in advance on the cost and time to provide any such additional regulatory services. Intercept shall not be responsible for the cost or expense of any amount to the extent that Intercept has not explicitly agreed in writing to pay for such cost or expense.
​
3.4         Cooperation with Regulatory Authorities and Regulatory Correspondence.
​
(a)          PharmaZell shall immediately notify Intercept in the event that PharmaZell receives notice from FDA or any other relevant Regulatory Authority of its intent to conduct any audit or inspection of PharmaZell with respect to the Facility or its operations, and shall cooperate with the Regulatory Authority in connection with such audit or inspection or related request, including access to records and documentation related to Manufacturing. Without limiting the foregoing, PharmaZell agrees to immediately notify Intercept of any correspondence and other documentation received or prepared by either Party in connection with any of the following events: (i) receipt of a Warning Letter, FDA Form 483, or other regulatory correspondence from the FDA or any other Regulatory Authority in connection with the manufacture or design of the API or Product; (ii) any recall of the API or Product; (iii) the mandate, advice or recommendation from any Regulatory Authority with respect to the withdrawal of any API or Product; and (d) any regulatory comments from the FDA or any other Regulatory Authority relating to the Manufacture of the Supplied Material.
​
(b)          As applicable, PharmaZell shall provide copies of any notices or communications to Intercept of any FDA or other Regulatory Authority inspection, investigation or other inquiry, or other material governmental notice or communication, relating to the Manufacturing, or Supplied Material. PharmaZell shall consult with Intercept prior to submitting responses to any inquiry posed by any Regulatory Authority relating to the Manufacturing, Supplied Material or Product. PharmaZell shall not initiate communication with any Regulatory Authority concerning the Manufacturing, or Supplied Material absent the prior written, express permission of Intercept concerning any such communications.
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3.5         Compliance with Applicable Law. With respect to the Manufacturing of Supplied Material and PharmaZell’s other duties and obligations under this Agreement, PharmaZell shall strictly comply with (i) the Specifications, (ii) GMP, and all other Applicable Laws, including those relating to the processing, manufacturing, packaging, labeling, testing, inspection, storage, delivery, shipment, or disposal of the Supplied Material; (iii) the Quality Agreement; and (iv) all Applicable Laws concerning environmental matters, public health, wages, hours and conditions of employment, subcontractor selection, discrimination and occupational health/safety. Without limiting the foregoing, PharmaZell covenants that neither PharmaZell nor any of its permitted subcontractors shall utilize child, or any form of forced or involuntary, labor in the Manufacture of Supplied Material under this Agreement or source Materials from any supplier that uses child, or any form of forced or involuntary, labor. Upon Intercept’s request, PharmaZell shall certify in writing its compliance with this Section 3.5 and shall provide to Intercept true and correct copies of all permits, certificates and licenses that may be required for its performance under this Agreement and, upon Intercept’s request, permit Intercept to inspect originals of the same.
​
3.6         Change Requests.
​
(a)          Changes Requested by Intercept. Intercept shall have the right to request an amendment, change or supplement to any of the following upon written notice to PharmaZell, and except as may be prohibited by Applicable Law, PharmaZell shall use its commercially reasonable efforts to promptly implement such change: (a) the Specifications, (b) the Materials, (c) the source of Materials, (d) the specifications for Materials, (e) the equipment used in Manufacture, (f) the test methods used in connection with the Manufacturing of Supplied Material and Materials, (g) the process for Manufacturing Supplied Material, or (h) any test methods to Manufacture or release Supplied Material. PharmaZell shall ensure that any change in any of the foregoing shall, in each case, comply with cGMPs and all Applicable Laws. PharmaZell and Intercept will jointly discuss the cost resulting from such changes.
​
(b)          Required Manufacturing Changes. Each Party shall give the other Party reasonable written notice prior to any changes to the Specifications, process of Manufacturing, or other change, as applicable, with respect to the Supplied Materials, in each case that are required by cGMPs or Applicable Laws or a Regulatory Authority (collectively, “Required Manufacturing Changes”). PharmaZell shall use commercially reasonable efforts to promptly implement such Required Manufacturing Changes. PharmaZell shall ensure that any change in any of the foregoing shall, in each case, comply with cGMPs and all Applicable Laws. PharmaZell and Intercept will jointly discuss the cost resulting from such changes.
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3.7         General Cooperation. PharmaZell shall cooperate with any reasonable requests for assistance from Intercept and collaborate with Intercept with respect to any responses by Intercept to any Regulatory Authority and requests for information from Regulatory Authorities, pharmacovigilance and recall matters, and in accommodating Intercept’s needs for Supplied Materials, including accepting changes in forecasting and Work Orders.
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ARTICLE 4
FINANCIALS
4.1         Price.
​
(a)          Subject to Section 4.4, the purchase price (the “Purchase Price”) for Supplied Material shall be determined as follows:
​
	Amount of Supplied Material
	    
	​

	Ordered for Delivery in a
	​
	​

	Calendar Year
	​
	Price

	[**]

	 

	[**]

	[**]

	 

	[**]
[**]

	[**]
	 
	[**]

	[**]

	 

	[**]

​
​
(b)          For purposes of determining the Purchase Price applicable to a given quantity of Supplied Material that is ordered for delivery for a given Calendar Year, any quantity of Supplied Material that has been ordered by Intercept for delivery in a given Calendar Year shall be deemed ordered for delivery for such Calendar Year even if such quantity is ordered or Manufactured in an earlier Calendar Year. If Intercept places multiple orders for delivery in the same Calendar Year, such that the total amount of Supplied Material ordered for delivery in such Calendar Year in the aggregate is in a higher tier than a previously placed order, the Parties shall reconcile the total amount ordered for delivery in such Calendar Year and recalculate the Purchase Price and PharmaZell shall pay to Intercept the difference or, to the extent the final invoice for such Calendar Year has not yet been paid, Intercept may reduce the amount of such invoice accordingly. For example, and by way of illustration purposes only, if Intercept places an order for [**].
​
4.2         Invoice and Payment. PharmaZell shall invoice Intercept for the Manufacture of Supplied Material as follows:
​
(a)          PharmaZell shall be entitled to invoice Intercept for a certain percentage of the total Purchase Price calculated in accordance with Section 4.1(a) in accordance with the Work Order for such Supplied Material prior to delivery of the Supplied Material upon achievement of certain steps of the Manufacturing process as follows:
​
​
	​
	​
	Step of Manufacturing
	​
	Percentage of total

	Milestone
	    
	Process
	    
	Purchase Price

	[**]
	 
	[**]
	 
	[**]

	[**]
	 
	[**]
	 
	[**]

	[**]
	 
	[**]
	 
	[**]

	[**]
	 
	[**]
	 
	[**]

	[**]
	 
	[**]
	 
	[**]

	[**]
	 
	[**]
	 
	[**]

	[**]
	 
	[**]
	 
	[**]

​
​

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(b)          Prior to PharmaZell issuing an invoice to Intercept pursuant to Section 4.2(a), PharmaZell shall provide to Intercept the batch documentation and the testing and analytical data, if applicable, for such step of the Manufacturing to demonstrate to Intercept that PharmaZell has successfully completed such step of the Manufacturing. Upon Intercept’s acceptance of the batch documentation and the testing and analytical data, if applicable, but no later than [**] days after PharmaZell has provided such batch documentation, PharmaZell shall invoice Intercept for the percentage of the total Purchase Price for such step of the Manufacturing in accordance with Section 4.2(a) and payment shall be due [**] days after receipt of such invoice by Intercept.
​
(c)          PharmaZell promptly shall invoice Intercept for the remaining amount of the total Purchase Price calculated pursuant to Section 4.1 for the quantities of API actually delivered (subject to Section 2.7(f)) to Intercept; provided that if the total quantity of API actually delivered is less than [**] of the total quantity ordered for delivery, PharmaZell shall reimburse Intercept for the amounts overpaid pursuant to Section 4.2(a) and the amount actually delivered. Payment for the remaining amount of the total Purchase Price for the quantity of Supplied Material actually delivered shall be due [**] days after receipt by Intercept of the invoice and receipt of corresponding Supplied Material with respect thereto (which shall be sent in electronic form contemporaneously with such delivery); provided that if Intercept rejects such Supplied Material, then payment shall be due within [**] days after receipt by Intercept of notice from the Testing Laboratory that the invoiced Supplied Material does not contain a Deficiency or receipt by Intercept of replacement Supplied Material, as the case may be. If the Supplied Material contains a Deficiency and Intercept does not order replacement Supplied Material, PharmaZell shall promptly reimburse all amounts previously paid by Intercept for such Supplied Material pursuant to Section 4.2(b).
​
(d)          If Intercept disputes any portion of an invoice, it shall pay the undisputed portion and shall provide PharmaZell with written notice of the disputed portion and its reasons therefor, and Intercept shall not be obligated to pay such disputed portion. The Parties shall use good faith efforts to resolve any such disputes promptly. In the event of any inconsistency between an invoice and this Agreement, the terms of this Agreement shall control. Payment of invoices shall be made by wire transfer to an account designated in writing by PharmaZell.
​
4.3         Currency. PharmaZell will invoice Intercept in [**] and Intercept will pay in [**]. The exchange rate of [**] to [**] at the date of the last signature to this Agreement will be used as Reference Exchange Rate. Should at any time during the Agreement for a period longer than [**] months the then current exchange rate of [**] to [**] deviates more than [**] from the Reference Exchange Rate, both Parties will discuss in good faith impact on Prices and cost and adjust Price as agreed by the Parties in writing.
​
4.4         Adjustment of Purchase Price.
​
(a)          The Purchase Prices set forth in Section 4.1 for Supplied Material shall remain fixed until [**] (the “Adjustment Date”). Effective on [**], the Purchase Price for such Supplied Material shall be adjusted by [**].
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(b)          If at any time market conditions (raw material costs e.g.) result in PharmaZell’s cost of components for the API or manufacturing process being materially greater [**] than normal forecasted increases, then PharmaZell shall be entitled to request an adjustment to the pricing of the Supplied Material to compensate for such increased cost. The Parties shall negotiate in good faith such increase.
​
(c)          If at any time market conditions result in PharmaZell’s cost of components for the Supplied Material or manufacturing process being materially less [**] than normal, then Intercept shall be notified and an adjustment to the pricing will be given to compensate for such decreased cost.
​
(d)          The Parties agree to make reasonable efforts to improve the productivity, efficiency and quality of the process under which the Supplied Material is Manufactured. Any investment and/or cost savings as a result of such improvement shall be shared equitably between the Parties.
​
4.5         Audit; Late Payments.
​
(a)          Intercept shall have the right to have an independent accounting firm of internationally recognized standing, and reasonably acceptable to PharmaZell, provided with access by PharmaZell during normal business hours, and upon reasonable prior written notice, to examine only those records of PharmaZell (and its Affiliates) as may be reasonably necessary to determine, with respect to any Calendar Year ending not more than [**] prior to Intercept’s request, the correctness of any statement submitted by PharmaZell under this Agreement. Such examinations may not (i) be conducted more than once in any [**] period (unless a previous audit during such [**] period revealed an incorrect statement submitted by PharmaZell in respect of such period or PharmaZell restates or revises its books and records for such period) or (ii) be repeated for any Calendar Year. Results of such audit shall (i) be (A) limited to information relating to the supply of Supplied Material hereunder and use of the Intercept Materials, (B) made available to both Parties in writing, and (C) subject to ARTICLE 7 and (ii) not reveal any specific information of PharmaZell to Intercept other than (A) whether statements submitted by PharmaZell under this Agreement are true and correct and (B) the amount of any excess payment reimbursable to Intercept. The cost of any such examination shall be borne by Intercept unless the examination reveals a variance of more than [**] from the amounts reflected on PharmaZell’s statements, in which case PharmaZell shall bear the cost of the audit. Unless disputed pursuant to Section 4.5(c), if such audit concludes that excess payments were made by Intercept during such period, PharmaZell shall reimburse such amounts, with interest from the date originally due as provided in Section 4.5(d), within [**] days after the date on which such auditor’s written report is delivered to the Parties.
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(b)          Solely for the purposes of ensuring Intercept’s compliance with Section 2.2(b), PharmaZell shall have the right to have an independent accounting firm of internationally recognized standing, approved by Intercept, during normal business hours, and upon reasonable prior written notice which notice shall be at least [**] days prior to the audit, to examine only those records of Intercept (and its Affiliates) as may be necessary to determine whether Intercept has met its Minimum Percentage Requirement, with respect to any Calendar Year ending not more than [**] prior to PharmaZell’s request. Such examinations may not be conducted more than once in any [**] period. The results communicated to Pharmazell regarding any such audit shall be limited solely to whether Intercept ordered the Minimum Percentage Requirement for such Calendar Year and any deviations from the Minimum Percentage Requirement. No other information may be included in the audit results and the audit results must be concurrently communicated to Intercept in writing. The cost of any such examination shall be borne by PharmaZell. Unless disputed pursuant to Section 4.5(c), if such audit concludes that Intercept did not order the Minimum Percentage Requirement for such Calendar Year, Intercept shall order an additional amount of Supplied Material in a subsequent calendar year equal to the difference between the amount of Supplied Material Intercept actually ordered from PharmaZell in such Calendar Year and the amount Intercept would have ordered had Intercept actually ordered the Minimum Percentage Requirement for such Calendar Year.
​
(c)          In the event of a dispute of any examination conducted under Section 4.5, PharmaZell and Intercept shall work in good faith to resolve the disagreement. If the Parties are unable to reach a mutually acceptable resolution of any such dispute within [**] days, the dispute shall be resolved in accordance with Section 10.7.
​
(d)          If any undisputed payment due to a Party under this Agreement is not paid when due, then the owing Party shall pay interest thereon (before and after any judgment) at an annual rate (but with interest accruing on a daily basis) equal to the lesser of [**], and [**]. Interest payable under this Section 4.5(d) shall run from the date upon which payment of the relevant undisputed principal sum became due through the date of payment thereof in full together with such interest.
​
ARTICLE 5
INTELLECTUAL PROPERTY
​
5.1         Ownership of Inventions.
​
(a)          Intercept shall own all right, title and interest in and to (i) the Specifications and the Intercept Information, (ii) any and all Specified Inventions, (iii) the API and the API Precursor, and (iv) any and all work outputs and reports prepared by PharmaZell (together, “Intercept Intellectual Property”). PharmaZell shall, and shall cause its Affiliates to, promptly disclose in writing to Intercept the discovery, development, making, conception or reduction to practice of any Specified Invention and does hereby, and shall cause its Affiliates, employees, agents, subcontractors to, assign to Intercept any and all right, title or interest PharmaZell or its Affiliates may have in or to any Specified Invention. Intercept shall, and does hereby, grant to PharmaZell and its Affiliates a non-exclusive, royalty-free license to use the Specifications, Intercept Information, Specified Inventions, and Specified Invention Patents for the sole purpose of performing PharmaZell’s obligations hereunder. The Specified Inventions and the work outputs and reports shall be considered Intercept Information.
​
​

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(b)          PharmaZell shall keep complete, accurate and dated records of the results of the services performed under this Agreement and all Specified Inventions and will promptly and fully disclose to Intercept such results and Specified Inventions. Such records shall also identify the names of PharmaZell’s employees, officers or Affiliates who performed the work. Intercept may discuss, in person or otherwise, the services and the results thereof from time to time with PharmaZell and such employees. PharmaZell agrees that it shall not publish or present any information related to the Intercept Information, the Product, API or the results thereof, any Specified Inventions or any other Intercept Intellectual Property without the prior written consent of Intercept unless PharmaZell is legally obliged to do so. PharmaZell must identify and obtain Intercept’s approval prior to inclusion of any PharmaZell technology into any Supplied Material or other deliverable hereunder.
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(c)          PharmaZell shall own all right, title and interest in and to any and all Other PharmaZell Inventions. PharmaZell shall, and shall cause its Affiliates to, promptly disclose in writing to Intercept the discovery, development, making, conception or reduction to practice of any Other PharmaZell Invention. PharmaZell shall, and does hereby, grant to Intercept a non-exclusive, royalty-free, irrevocable and transferable license to Other PharmaZell Inventions and Other PharmaZell Invention Patents and, to any PharmaZell technology to the extent it is incorporated into or otherwise necessary to Manufacture or use API (including any Intermediary incorporated therein), with the right to sublicense through multiple tiers, to Exploit API and Products (and any Intermediary incorporated therein) in all fields of use in all countries worldwide.
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(d)          PharmaZell and Intercept shall jointly own all right, title and interest in and to any and all Joint Inventions. Each of PharmaZell and Intercept shall, and shall cause its respective Affiliates to, promptly disclose in writing to the other Party the discovery, development, making, conception or reduction to practice of any Joint Invention. For those countries worldwide where a specific license is required to be granted by a Joint Invention owner to the other Joint Invention owner in order for the other Joint Invention owner to practice such Joint Inventions in such country, (i) PharmaZell shall, and does hereby, grant to Intercept a non-exclusive, royalty-free, irrevocable, transferable license, with the right to sublicense through multiple tiers, to PharmaZell's interest in all Joint Inventions and Joint Invention Patents in all fields of use and (ii) Intercept shall, and does hereby, grant to PharmaZell a non-exclusive, royalty-free, irrevocable license, with the right to sublicense through multiple tiers, to Intercept 's interest in all Joint Inventions and Joint Invention Patents in all fields of use.
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(e)          Without limiting the provisions of this Section 5.1, PharmaZell shall use the Specifications and Intercept Information solely for purposes of performing its obligations hereunder.
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(f)           Upon the request and at the expense of Intercept, PharmaZell shall execute and deliver any and all instruments and documents and take such other acts as may be necessary or desirable to document the assignment and transfer described in Section 5.1(a) or to enable Intercept to secure its rights in the Specified Invention and Specified Invention Patents relating thereto in any and all jurisdictions, or to apply for, prosecute and enforce Specified Invention Patents, or to obtain any extension, validation, re-issue, continuance or renewal of any such Specified Invention Patents. Without limiting the foregoing, PharmaZell shall disclose to Intercept all pertinent information and data with respect thereto and shall execute all applications, specifications, oaths and all other instruments which Intercept deems necessary in order to apply for and obtain such rights and in order to assign and convey to Intercept the sole and exclusive right, title and interest in and to such Specified Invention Patents relating thereto. If Intercept is unable for any other reason to secure PharmaZell’s signature to apply for or to pursue any application for any United States or foreign patent, trademark, copyright or other registration covering Inventions assigned to Intercept hereunder, then PharmaZell hereby irrevocably designates and appoints Intercept and its duly authorized officers and agents as PharmaZell’s agent and attorney in fact, to act for and in PharmaZell’s behalf and instead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or trademark, copyright or other registrations thereon with the same legal force and effect as if executed by PharmaZell.
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(g)          Inventorship Acts. To the extent applicable, the Parties understand that Inventions that are conceived, developed, generated or reduced to practice under this Agreement may be subject to the German Act on Employee Inventions (the German “Gesetz über Arbeitnehmererfindungen”). The provisions of such Gesetz über Arbeitnehmererfindungen are, inter alia, designed to protect the rights of employees to so called employee inventions (the “Employee Inventions”); the provisions of the Gesetz über Arbeitnehmererfindungen constitute inalienable rights which may not be changed by contractual arrangements to the detriment of the employees. To the extent that Inventions relate to Employee Inventions under the German Gesetz über Arbeitnehmererfindungen made by employees of a Party or its Affiliates, such Party undertakes to claim the rights in and to such Employee Inventions under Section 5ss. of the Gesetz über Arbeitnehmererfindungen. To the extent that such Party acquires rights to Employee Inventions in accordance with the principles stated in this Section 5.1(g), the further provisions of this 5.1 shall apply to such Inventions. The Party subject to the Gesetz über Arbeitnehmererfindungen shall be solely responsible for any payments to its employees and such Party will take all actions necessary to obtain the rights to use any such Inventions for the other Party. In addition, PharmaZell shall comply with all other inventorship laws of a country in which any portion of a Supplied Material is Manufactured.
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5.2         Patent Prosecution.
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(a)          Specified Invention Patents.
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(i)          Intercept shall have sole discretion and responsibility to prepare, file, prosecute and maintain all patent applications and patents covering Specified Inventions (the “Specified Invention Patents”) and shall be responsible for related interference and opposition proceedings. PharmaZell shall have no right to prepare, file, prosecute or maintain any Specified Invention Patents.
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(ii)         Costs and expenses of filing, prosecuting and maintaining (including any costs and expenses of patent interference, opposition, reissue, re-examination, and post-grant procedure proceedings) Specified Invention Patents shall be borne by Intercept.
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(b)          Other PharmaZell Invention Patents.
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(i)          PharmaZell shall have the first right, but not the obligation, to prepare, file, prosecute and maintain all patent applications and patents covering Other PharmaZell Inventions (the “Other PharmaZell Invention Patents”) and shall be responsible for related interference and opposition proceedings; provided, however, that if PharmaZell plans to abandon any Other PharmaZell Invention Patent, PharmaZell shall notify Intercept in writing at least [**] days in advance of the due date of any payment or other administrative action that is required to maintain such Other PharmaZell Invention Patent (i.e., an administrative action that involves routine and customary filings, it being understood that interference, opposition, reissue, re-examination, and post-grant procedure proceedings, prosecution or defense of infringement actions, and the like, shall not be considered administrative actions), and Intercept may elect, upon written notice within such [**]-day period to PharmaZell, to make such payment or take such administrative action on behalf of PharmaZell. Except as expressly permitted in this Section 5.2(b)(i), Intercept shall have no right to prepare, file, prosecute or maintain any Other PharmaZell Invention Patents.
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(ii)         If PharmaZell does not wish to file, prosecute or maintain any Other PharmaZell Invention Patent or maintain or defend any Other PharmaZell Invention Patent in a particular country, it shall notify Intercept in writing and, if Intercept elects to maintain such Other PharmaZell Invention Patent as contemplated by Section 5.2(b)(i), PharmaZell shall, and shall cause its Affiliates, as applicable, to (A) reasonably cooperate with Intercept in this regard and, (B) upon Intercept’s request, promptly release or assign to Intercept, without compensation, all right, title and interest in and to such Other PharmaZell Invention Patent in such country. In the event of such assignment, Intercept hereby grants to PharmaZell a non-exclusive, royalty-free, irrevocable license, with the right to sublicense through multiple tiers, under the relevant Other PharmaZell Invention Patent in all fields of use in the relevant country.
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(iii)        Costs and expenses of filing, prosecuting and maintaining (including any costs and expenses of patent interference, opposition, reissue, re-examination, and post-grant procedure proceedings) Other PharmaZell Invention Patents as contemplated by this Section 5.2(b) shall be borne by the Party controlling such filing, prosecution and maintenance.
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(c)          Joint Invention Patents.
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(i)          Intercept shall have the first right, but not the obligation, to prepare, file, prosecute and maintain all patent applications and patents covering Joint Inventions (the “Joint Invention Patents”) and shall be responsible for related interference and opposition proceedings; provided, however, that if Intercept plans to abandon any Joint Invention Patent, Intercept shall notify PharmaZell in writing at least [**] days in advance of the due date of any payment or other administrative action that is required to maintain such Joint Invention Patent (i.e., an administrative action that involves routine and customary filings, it being understood that interference, opposition, reissue, re-examination, and post-grant procedure proceedings, prosecution or defense of infringement actions, and the like, shall not be considered administrative actions), and PharmaZell may elect, upon written notice within such [**]-day period to Intercept, to make such payment or take such administrative action on behalf of Intercept. Except as expressly permitted in this Section 5.2(c)(i), PharmaZell shall have no right to prepare, file, prosecute or maintain any Joint Invention Patents.
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(ii)         If Intercept does not wish to file, prosecute or maintain any Joint Invention Patent or maintain or defend any such Joint Invention Patent in a particular country, it shall notify PharmaZell in writing and, if PharmaZell elects to maintain such Joint Invention Patent as contemplated by Section 5.2(c)(i), Intercept shall, and shall cause its Affiliates, as applicable, to reasonably cooperate with PharmaZell in this regard.
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(iii)        Costs and expenses of filing, prosecuting and maintaining (including any costs and expenses of patent interference, opposition, reissue, re-examination, and post-grant procedure proceedings) Joint Invention Patents as contemplated by this Section 5.2(c) shall be borne by the Party controlling such filing, prosecution and maintenance.
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(d)          Each Party shall assist and cooperate with the other Party as such other Party may reasonably request from time to time in connection with its activities set forth in this Section 5.2.
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(i)          Each Party shall keep the other Party currently informed of all steps to be taken in the preparation and prosecution of all applications filed by it according to Sections 5.2(b) and 5.2(c) and shall furnish such other Party with copies of such applications for patents, amendments thereto and other related correspondence to and from patent offices, and, to the extent reasonably practicable, permit such other Party an opportunity to offer its comments thereon before making a submission to a patent office which could materially affect the scope or validity of the patent coverage that may result. Such other Party shall offer its comments, if any, promptly.
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5.3         Enforcement of Patents.
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(a)          If any Specified Invention Patent, Other PharmaZell Invention Patent, or Joint Invention Patent is allegedly or actually infringed by any Person, the Party first having knowledge of such infringement shall promptly notify the other in writing. The notice shall set forth the facts of that infringement in reasonable detail.
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(b)          As between the Parties, Intercept shall have the sole and exclusive right, but not the obligation, to prosecute any infringement described in Section 5.3(a). To the extent any such action relates to an Other PharmaZell Invention Patent or a Joint Invention Patent, PharmaZell shall have the right, at its own expense, to be represented in any such action by counsel of its own choice.
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(c)          PharmaZell shall cooperate fully, including furnishing of a power of attorney, being joined as a party plaintiff or indispensable party in such action, providing access to relevant documents and other evidence, and making its employees available at reasonable business hours in connection with any enforcement action that may be brought by Intercept under this Section 5.3.
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(d)          Any costs and expenses relating to any enforcement action commenced by Intercept pursuant to this Section 5.3 shall be borne by Intercept and any damages or other amounts collected in any such enforcement action shall be retained by Intercept.
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5.4         Third Party Litigation.
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(a)          If any Person institutes against PharmaZell any action that alleges that the Manufacture of Supplied Material hereunder in accordance with the terms hereof infringes the intellectual property rights held by such Person, then, as between PharmaZell and Intercept, Intercept shall have the first right, but not the obligation, to contest, and assume direction and control of the defense of, such action, including the right to settle such action; provided that, prior to any such settlement, PharmaZell provides its written consent (such consent not to be unreasonably withheld, conditioned or delayed). If Intercept determines not to defend against such action, then PharmaZell shall, at its sole cost and expense, have the right but not the obligation to control the defense of such action except to the extent it relates to a Specified Invention Patent; provided that, if an Other PharmaZell Invention Patent or Joint Invention Patent is at issue in the action and is the only patent protecting a Product, then PharmaZell shall in any event consult with Intercept with respect to any such action and shall obtain Intercept's written consent prior to taking any steps in respect of such action. Intercept shall have the right, at its own expense, to be represented in any such action by counsel of its own choice.
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(b)          Any costs and expenses relating to any defense undertaken pursuant to this Section 5.4 shall be borne by the Party controlling the defense. Any damages or other amounts recovered shall be first allocated to reimburse the Parties for their costs and expenses in making such recovery (which amounts shall be allocated pro rata if insufficient to cover the totality of such expenses). Any remainder after such reimbursement is made shall be retained by the Party that has exercised its right to control the defense of the action.
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(c)          In the event that a Party entitled to defend an infringement action does so in accordance with this Section 5.4, the other Party shall cooperate fully, including providing access to relevant documents and other evidence and making its employees available at reasonable business hours. If a Party pursues the defense of such an infringement action, it shall consider in good faith any comments from the other Party and shall keep the other Party reasonably informed of any steps taken to remedy such infringement.
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5.5         Third Party Licenses. If, in the absence of a license from a Person, the Manufacture of API or API Precursor hereunder in accordance with the terms hereof infringes or misappropriates any patent or any intellectual property right of such Person, such that PharmaZell or any of its Affiliates cannot Manufacture the API or API Precursor without infringing the patent or intellectual property rights of such Person, then Intercept shall have the sole and exclusive right to take the lead in negotiating the terms of any such license. The Parties shall negotiate in good faith an appropriate allocation of any royalties or other payments to be made pursuant to any such license so as to reflect the economic interests of the Parties under this Agreement with respect to the Product.
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5.6         United States Law. The determination of whether Inventions are conceived, discovered, developed or otherwise made by a Party for the purpose of allocating proprietary rights (including patent, copyright or other intellectual property rights) therein, shall, for purposes of this Agreement, be made in accordance with Applicable Law in the United States. In the event that United States law does not apply to the creation, conception, discovery, development or making of any Invention hereunder, each Party shall, and does hereby, assign, and shall cause its Affiliates to so assign, to the other Party, without additional compensation, such right, title and interest in and to any Inventions, as well as any intellectual property rights with respect thereto, as necessary to fully effect ownership as contemplated by Section 5.1 and the preceding sentence of this Section 5.6.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES; COVENANTS
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6.1         Representations and Warranties of Each Party. Each Party hereby represents and warrants to the other Party as of the Effective Date, and covenants with the other Party, as follows:
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(a)          Such Party (i) is duly formed and in good standing under the laws of the jurisdiction of its formation, (ii) has the power and authority and the legal right to enter into this Agreement and perform its obligations hereunder, and (iii) has taken all necessary action on its part required to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered on behalf of such Party and constitutes a legal, valid and binding obligation of such Party and is enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditor rights and judicial principles affecting the availability of specific performance and general principles of equity, whether enforceability is considered in a proceeding at law or equity;
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(b)          All necessary consents, approvals and authorizations of all Regulatory Authorities and other Persons required to be obtained by such Party in connection with the execution and delivery of this Agreement and the performance of its obligations hereunder have been obtained; and
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(c)          The execution and delivery of this Agreement and the performance of such Party’s obligations hereunder (i) do not and will not conflict with or violate any requirement of Applicable Law or any provision of the articles of incorporation, bylaws, limited partnership agreement or other similar documents of such Party and (ii) do not and will not conflict with, violate, or breach, or constitute a default or require any consent under, any contractual obligation or court or administrative order by which such Party is bound.
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6.2         Additional Representations, Warranties and Covenants of PharmaZell. PharmaZell hereby represents and warrants to Intercept as of the Effective Date, and covenants to Intercept, as follows:
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(a)          PharmaZell has executed agreements with all Affiliates, employees, agents subcontractors and any other representative of PharmaZell performing services for PharmaZell in connection with the Manufacture and supply of Supplied Materials to Intercept, or its designee (each, a “Representative”) requiring such Representative to assign all right, title and interest in and to any intellectual property conceived, discovered, developed or otherwise made by such Representative to PharmaZell;
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(b)          In connection with each delivery, and as of the date of delivery, of Supplied Materials to Intercept or its designee: (i) such Supplied Material has been Manufactured in compliance with the Specifications and is in conformity with the Specifications, the Certificate of Analysis and the Certificate of Conformance therefor provided pursuant to Section 2.3(b); (ii) such Supplied Material has been Manufactured, stored, disposed of and handled in conformance with GMP, all other Applicable Laws, the Regulatory Documentation and Regulatory Approvals, this Agreement and the Quality Agreement; (iii) title to such Supplied Material will pass to Intercept free and clear of any security interest, lien or other encumbrance; (iv) the Facilities are in compliance with all Applicable Law at the time of such Manufacture (including applicable inspection requirements of FDA and other Regulatory Authorities); (v) the retest date of such Supplied Material meets the retest set forth in the Specifications or otherwise determined in accordance with Applicable Law after the date of delivery thereof for such Supplied Material; and (vi) such Supplied Material has not been adulterated or misbranded within the meaning of the FFDCA or other Applicable Law, or is an article that may not, under the FFDCA or other Applicable Law, be introduced into interstate commerce (collectively, the “Supplied Material Warranty”);
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(c)          neither PharmaZell nor any of its Affiliates, nor any Third Party engaged by PharmaZell has ever been, are currently, nor during the performance of any services hereunder, shall become: (i) disqualified or debarred by the FDA or other Regulatory Authorities for any purpose pursuant to Applicable Laws (including United States law, including the statutory debarment provisions at 21 U.S.C. § 335a(a) or (b)) or is under consideration or investigation to be disqualified or debarred, or has been convicted of, or is currently charged with, a felony for conduct relating to the development, approval, regulation or handing of any drug product under any Applicable Law; (ii) charged or convicted for conduct relating to the development or approval of, or otherwise relating to the regulation of, any drug product under any Applicable Laws; (iii) excluded or, to the best of the knowledge of PharmaZell after due inquiry, threatened with exclusion under state or federal laws, including under 42 U.S.C. § 1320a-7 or relevant regulations in 42 C.F.R. Part 1001, or assessed or, to the best of the knowledge of PharmaZell after due inquiry, threatened with assessment of civil money penalties pursuant to 42 U.S.C. Part 1003; (iv) ineligible for contract with the federal government, including due to disbarment, disqualification, or conviction of a felony related to conduct relating to the development, approval, regulation or handing of any drug product under any Applicable Law; or (v) subject to similar actions by any state, local, or foreign governmental authority (collectively “Disqualification”). PharmaZell agrees to notify Intercept immediately, in the event that PharmaZell or any of its officers, directors, employees, agents, or parties under contract to perform and work under this Agreement, (i) becomes subject to Disqualification, or (ii) receives or becomes aware of an action, notice of action, inquiry, or investigation with relating to or that could result in Disqualification during the Term. In the event that PharmaZell receives any notice of actions set forth in this Section 6.2(c), without limiting any other rights or remedies of Intercept, Intercept shall have the right to terminate this Agreement immediately pursuant to the provisions of this Agreement. Any termination by Intercept pursuant to this Section 6.2(c) shall be deemed to be a termination by Intercept for material breach of this Agreement by PharmaZell;
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(d)          its retention as a contractor by Intercept and its Manufacture of Supplied Material do not, and shall not, breach any agreement that obligates PharmaZell to keep in confidence any trade secrets or confidential information of any third party or to refrain from competing, directly or indirectly, with the business of any other party;
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(e)          the Manufacture and supply of the Supplied Material shall be performed with requisite care, skill and diligence, in accordance with this Agreement, Applicable Laws and industry standards, and by individuals who are appropriately trained and qualified; and
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(f)           the Manufacturing services provided under this Agreement will not infringe the intellectual property rights of any third party, and PharmaZell will promptly notify Intercept in writing should it become aware of any claims asserting such infringement.
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6.3         Disclaimer of Other Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF MERCHANTABILITY.
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ARTICLE 7
CONFIDENTIALITY
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7.1         Confidential Information. Subject to the provisions of Sections 7.2 and 7.3, at all times during the Term and for [**] following the expiration or termination of this Agreement, the Receiving Party (a) shall keep completely confidential and shall not publish or otherwise disclose any Confidential Information furnished to it by the Disclosing Party, except to those of the Receiving Party’s employees, Affiliates, or consultants who have a need to know such information to perform such Party’s obligations hereunder (and who shall be advised of the Receiving Party’s obligations hereunder and who are bound by confidentiality obligations with respect to such Confidential Information no less onerous than those set forth in this Agreement) (collectively, “Recipients”) and (b) shall not use Confidential Information of the Disclosing Party directly or indirectly for any purpose other than performing its obligations or exercising its rights hereunder. The Receiving Party shall be jointly and severally liable for any breach by any of its Recipients of the restrictions set forth in this Agreement. Notwithstanding the foregoing, trade secrets of the Disclosing Party shall be maintained by the Receiving Party for so long as such information remains the trade secret of the Disclosing Party.
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7.2         Exceptions to Confidentiality. The Receiving Party’s obligations set forth in this Agreement shall not extend to any Confidential Information of the Disclosing Party:
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(a)          that is or hereafter becomes part of the public domain by public use, publication, general knowledge or the like through no wrongful act, fault or negligence on the part of a Receiving Party or its Recipients;
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(b)          that is received from a third party without restriction and without breach of any agreement between such third party and the Disclosing Party;
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(c)          that the Receiving Party can demonstrate by competent evidence was already in its possession without any limitation on use or disclosure prior to its receipt from the Disclosing Party;
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(d)          that is generally made available to third parties by the Disclosing Party without restriction on disclosure; or
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(e)          that the Receiving Party can demonstrate by competent, written evidence was independently developed by the Receiving Party without the use of the Disclosing Party’s Confidential Information.
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7.3         Disclosure. Each Party may disclose Confidential Information to the extent that such disclosure is:
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(a)          made in response to a valid order of a court of competent jurisdiction or other Regulatory Authority of a country or any political subdivision thereof of competent jurisdiction; provided, however, that the Receiving Party shall first have given notice to the Disclosing Party and given the Disclosing Party a reasonable opportunity to quash such order or to obtain a protective order requiring that the Confidential Information or documents that are the subject of such order be held in confidence by such court or governmental body or, if disclosed, be used only for the purposes for which the order was issued; and provided further that if a disclosure order is not quashed or a protective order is not obtained, the Confidential Information disclosed in response to such court or governmental order shall be limited to that information that is legally required to be disclosed in such response to such court or governmental order;
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(b)          otherwise required by law or regulation, in the reasonable opinion of legal counsel for the Receiving Party; provided, however, the Receiving Party must promptly give the Disclosing Party notice of any such disclosure and provide the Disclosing Party with reasonable assistance in obtaining a protective order with respect to the Confidential Information subject to disclosure;
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(c)          Intercept may disclose Confidential Information to the extent that such disclosure is made to Regulatory Authorities as required in connection with any filing, application or request for Regulatory Approval; provided, however, that reasonable measures shall be taken to assure confidential treatment of such information; or
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(d)          To the extent, if any, that a Party concludes in good faith that it is required by applicable laws or regulations to file or register this Agreement or a notification thereof with any Regulatory Authority, including the U.S. Securities and Exchange Commission, such Party may do so, and the other Party shall cooperate in such filing or notification and shall execute all documents reasonably required in connection therewith. In such situation, the filing Party shall request confidential treatment of sensitive provisions of the Agreement, to the extent permitted by Applicable Law and in consultation with the other Party. The Parties shall promptly inform each other as to the activities or inquiries of any such Regulatory Authority relating to this Agreement, and shall cooperate to respond to any request for further information therefrom.
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7.4         Notification. The Receiving Party shall notify the Disclosing Party immediately, and cooperate with the Disclosing Party as the Disclosing Party may reasonably request, upon the Receiving Party’s discovery of any loss or compromise of the Disclosing Party’s Confidential Information.
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7.5         Remedies. Each Party agrees that the unauthorized use or disclosure of any information by the Receiving Party in violation of this Agreement will cause severe and irreparable damage to the Disclosing Party. In the event of any violation of this ARTICLE 7, the Receiving Party agrees that the Disclosing Party shall be authorized and entitled to seek to obtain from any court of competent jurisdiction injunctive relief, whether preliminary or permanent, as well as any other relief permitted by Applicable Law. The Receiving Party agrees to waive any requirement that the Disclosing Party post bond as a condition for obtaining any such relief.
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7.6         Use of Names. Neither Party shall mention or otherwise use the name, insignia, symbol, trademark, trade name or logotype of the other Party (or any abbreviation or adaptation thereof) in any publication, press release, promotional material or other form of publicity without the prior written approval of such other Party in each instance. The restrictions imposed by this Section 7.6 shall not prohibit either Party from making any disclosure identifying the other Party that is required by Applicable Law; provided, however, that reasonable measures shall be taken to assure confidential treatment of such information.
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7.7         Press Releases. Except as expressly provided in Section 7.3, neither Party shall make a press release or other public announcement regarding this Agreement, the terms hereof or the transactions contemplated hereby without the prior written approval of the other Party. Each Party shall provide the other with the proposed text of any such press release or public announcement for review and approval, which approval shall not be unreasonably withheld, conditioned or delayed, as early as possible, but in no event less than [**] Business Days in advance of the publication, communication or dissemination thereof; provided, however, that the receiving Party shall be deemed to have approved any such press release or public announcement if it fails to notify the proposing Party in writing of any objections to such press release or public announcement within [**] Business Days after receipt by the receiving Party of the text of such public announcement.
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ARTICLE 8
TERM AND TERMINATION
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8.1         Term. This Agreement shall commence as of the Effective Date and, unless earlier terminated in accordance with the terms hereof, shall expire on December 31, 2020 (the “Initial Term”). Thereafter, this Agreement shall automatically renew for successive two (2)-year periods (each a “Renewal Period”) unless (a) Intercept provides notice to PharmaZell indicating its desire not to renew at least twelve (12) months prior to the end of the Initial Term or then-current Renewal Period, as applicable, or (b) PharmaZell provides notice to Intercept indicating its desire not to renew at least twelve (12) months prior to the end of the Initial Term or then-current Renewal Period, as applicable. The Initial Term together with any Renewal Periods, shall be the “Term”.
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8.2         Termination. In addition to any other provision of this Agreement expressly providing for termination of this Agreement, this Agreement may be terminated as follows:
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(a)          Intercept may terminate this Agreement immediately upon written notice to PharmaZell in the event that (i) Regulatory Authorities require or cause the withdrawal of Product or if the Product is not approved by the FDA and the European Medicines Agency (EMA) or (ii) [**].
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(b)          Intercept may terminate this Agreement immediately upon written notice to PharmaZell if (i) PharmaZell does not deliver at least [**] of the amount of Supplied Material specified in a Work Order within [**] of the Delivery Date specified in such Work Order or (ii) PharmaZell does not deliver at least [**] of Supplied Material in [**] provided that Intercept has ordered at least [**] of Supplied Product for delivery in [**].
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(c)          This Agreement may be terminated by either Party:
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(i)          immediately upon written notice if the other Party shall (A) file in any court or agency pursuant to any statute or regulation of any state, country or jurisdiction a petition in bankruptcy or insolvency or for reorganization or for arrangement or for the appointment of a receiver or trustee of that Party or of its assets, (B) propose a written agreement of composition or extension of its debts, (C) be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within [**] days after the filing thereof, (D) propose or be a party to any dissolution or liquidation, (E) make an assignment for the benefit of its creditors, or (F) admit in writing its inability generally to pay its debts as they fall due in the general course;
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(ii)         immediately upon written notice in the event of any material breach by the other Party in the performance of any of its obligations herein contained that (if curable) has not been cured by the defaulting Party within [**] days after receiving written notice thereof from the non-breaching Party;
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(iii)        immediately upon written notice in the event that, as a result of an order of government or any other official authority, the continued operation of this Agreement in its entirety or in substantial part is prohibited or prevented or delayed for an unspecified and indeterminate period; or
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(iv)        as provided in Section 10.2.
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(d)          Intercept may terminate this Agreement immediately upon written notice to PharmaZell in the event that (i) any audit by a Regulatory Authority identifies critical or major finding (as defined by the FDA and/or EMA) at a Facility and such critical or major finding is not remedied by PharmaZell within the time period as agreed between the Regulatory Authorities and PharmaZell or as mandated by the Regulatory Authorities after the identification thereof, (ii) PharmaZell fails to meet and/or maintain the Quality Standards and does not remedy such failure within a reasonable time as agreed between Intercept and PharmaZell or, if no agreement is reached with respect to such time, such time as established by an independent auditor, or (iii) any audit reveals that a Facility is in violation of Applicable Laws.
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8.3         Effect of Expiration or Termination.
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(a)          The expiration or earlier termination of this Agreement shall be without prejudice to any rights or obligations of the Parties that may have accrued prior to such termination. Those provisions that by their terms or intent are required to survive the expiration or earlier termination of the Agreement in order to give effect to the intent of the Parties shall so survive. Without limiting the foregoing, the provisions of Sections 4.5, 6.3 and 8.3 and ARTICLE 5, ARTICLE 7, ARTICLE 9 and ARTICLE 10 shall survive the expiration or termination of this Agreement and continue thereafter in accordance with and to the extent of their terms. Except as otherwise expressly provided herein, termination of this Agreement in accordance with the provisions hereof shall not limit remedies that may otherwise be available at law or in equity.
​

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​
(b)          Upon expiration or earlier termination of this Agreement, each Party, at the request of the other, shall return all data, files, records and other materials in its possession or Control containing or comprising the other Party’s Confidential Information except that the legal department of such Party may retain one copy solely for archival purposes.
​
(c)          Upon any termination of this Agreement by Intercept pursuant to Section 8.2(a) or by PharmaZell pursuant to Section 8.2(c), (i) PharmaZell shall return to Intercept all Intercept Materials, (ii) Intercept shall purchase from PharmaZell the amount of Supplied Material that is subject to Work Orders outstanding at the time of such termination, (iii) Intercept shall reimburse PharmaZell for work in process and Materials that PharmaZell has purchased for the purpose of supplying Supplied Material to Intercept in accordance with the delivered Work Orders, and (iv) Intercept shall pay PharmaZell’s direct cost for any such work in process in accordance with the Work Orders and PharmaZell’s purchase price from its suppliers for any such Materials ordered for such Work Orders that have a minimum of [**] shelf life and have been stored and controlled by PharmaZell per the Quality Agreement; provided, however that PharmaZell shall use reasonable best efforts to return such Materials to suppliers or use such Materials in the manufacture of product for third parties. In the event of termination of this Agreement by Intercept pursuant to Section 8.2(b), 8.2(c) or 8.2(d), at the request of Intercept, PharmaZell shall fulfill all outstanding Work Orders for Supplied Materials prior to the effective date of such termination and to the extent not used to fulfill Work Orders at Intercept’s request, PharmaZell shall return to Intercept all Intercept Materials.
​
(d)          Except as and to the extent contemplated by Section 8.3(c), upon expiration of this Agreement or any earlier termination of this Agreement, PharmaZell immediately shall cease all Manufacturing of Supplied Materials pursuant to this Agreement.
​
(e)          Following expiration or termination of this Agreement, PharmaZell shall (i) provide Intercept with such reasonable cooperation and support with respect to regulatory matters as Intercept may require in order to dispose of previously purchased API, (ii) grant to Intercept a perpetual, irrevocable, non-exclusive royalty-free license (with the right to grant sublicenses) under know-how, patents and other intellectual property rights owned, licensed or otherwise controlled by PharmaZell (or any of its Affiliates) as may be necessary or useful for the purpose of making and having made the API and API Precursor and (iii) within thirty (30) days of such expiration or termination, provide to Intercept copies of the physical embodiment of those processes, protocols, procedures, methods, tests and other know-how, relating to the Manufacturing of the API and API Precursor. In addition, PharmaZell shall provide reasonable assistance to Intercept and its Affiliates with respect to assisting Intercept and its Affiliates in obtaining all necessary regulatory approvals and/or modifying existing Regulatory Approvals for the Manufacture of the API.
​

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​
ARTICLE 9
INDEMNIFICATION
​
9.1         PharmaZell Indemnification. PharmaZell shall indemnify Intercept, its Affiliates and sublicensees and its and their respective directors, officers, employees and agents (the “Intercept Indemnified Parties”), and defend and hold each of them harmless, from and against any and all claims, lawsuits, actions, suits and demands brought by a third party (a “Third Party Claim”) and all associated losses, damages, liabilities, penalties, costs and expenses (including reasonable attorneys’ fees and disbursements) (collectively, “Losses”) incurred by any of them arising from or occurring as a result of (a) the breach by PharmaZell of any of its representations or warranties set forth in this Agreement, (b) PharmaZell’s breach of any of its covenants or obligations under this Agreement, (c) PharmaZell’s gross negligence or willful misconduct in the performance of this Agreement, (d) the storage, release, or disposal of any hazardous or regulated material or any waste by PharmaZell, (e) violation of Applicable Law by any PharmaZell Indemnitee, or (f) the enforcement by Intercept of its rights under this Section 9.1, except, in each case, for those Losses for which Intercept has an obligation to indemnify the PharmaZell Indemnified Parties pursuant to Section 9.2, as to which Losses each Party shall indemnify the other Party to the extent of its respective liability for such Losses.
​
9.2         Intercept Indemnification. Intercept shall indemnify PharmaZell, its Affiliates and its and their respective directors, officers, employees and agents (the “PharmaZell Indemnified Parties”), and defend and hold each of them harmless, from and against any and all Third Party Claims and all associated Losses incurred by any of them arising from or occurring as a result of (a) the breach by Intercept of any of its representations or warranties set forth in this Agreement, (b) Intercept’s breach of its covenants or obligations under this Agreement, (c) violation of Applicable Law by any Intercept Indemnitee, or (d) the enforcement by PharmaZell of its rights under this Section 9.2, except, in each case, for those Losses for which PharmaZell has an obligation to indemnify the Intercept Indemnified Parties pursuant to Section 9.1, as to which Losses each Party shall indemnify the other Party to the extent of its respective liability for such Losses.
​
9.3         Indemnification Procedure.
​
(a)          Notice of Claim. The indemnified party (the “Indemnified Party”) shall give the indemnifying Party (the “Indemnifying Party”) prompt written notice (an “Indemnification Claim Notice”) of any Third Party Claims and the associated Losses or discovery of facts upon which such Indemnified Party intends to base a request for indemnification under Section 9.1 or 9.2, but in no event shall the Indemnifying Party be liable for any Losses that result from any delay in providing such notice. Each Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss are known at such time). The Indemnified Party shall furnish promptly to the Indemnifying Party copies of all papers and official documents received in respect of any Losses.
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(b)          Control of Defense. At its option, the Indemnifying Party may assume the defense of any Third Party Claim by giving written notice to the Indemnified Party within [**] days after the Indemnifying Party’s receipt of an Indemnification Claim Notice. The assumption of the defense of a Third Party Claim by the Indemnifying Party shall not be construed as an acknowledgment that the Indemnifying Party is liable to indemnify any Indemnified Party in respect of the Third Party Claim, nor shall it constitute a waiver by the Indemnifying Party of any defenses it may assert against any Indemnified Party’s claim for indemnification. Upon assuming the defense of a Third Party Claim, the Indemnifying Party may appoint as lead counsel in the defense of the Third Party Claim any legal counsel selected by the Indemnifying Party, which shall be reasonably acceptable to the Indemnified Party. In the event the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party shall immediately deliver to the Indemnifying Party all original notices and documents (including court papers) received by any Indemnified Party in connection with the Third Party Claim. Subject to Section 9.3(c), if the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnifying Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party in connection with the analysis, defense or settlement of the Third Party Claim. In the event that it is ultimately determined that the Indemnifying Party is not obligated to indemnify, defend or hold harmless a Intercept Indemnified Party or PharmaZell Indemnified Party, as applicable, from and against the Third Party Claim, the Indemnified Party shall reimburse the Indemnifying Party for any and all costs and expenses (including reasonable attorneys’ fees and costs of suit) and any Losses incurred by the Indemnifying Party in its defense of the Third Party Claim with respect to such Intercept Indemnified Party or PharmaZell Indemnified Party, as applicable.
​
(c)          Right to Participate in Defense. Without limiting Section 9.3(b), any Indemnified Party shall be entitled to participate in, but not control, the defense of such Third Party Claim and to employ counsel of its choice for such purpose; provided, however, that such employment shall be at the Indemnified Party’s own expense unless (A) the employment thereof has been specifically authorized by the Indemnifying Party in writing, (B) the Indemnifying Party has failed to assume the defense and employ counsel in accordance with Section 9.3(b) (in which case the Indemnified Party shall control the defense), or (C) the interests of the Indemnified Party and the Indemnifying Party with respect to such Third Party Claim are sufficiently adverse to prohibit the representation by the same counsel of both Parties under applicable law, ethical rules or equitable principles.
​
(d)          Settlement. With respect to any Losses relating solely to the payment of money damages in connection with a Third Party Claim, without any admission of liability or fault, and that will not result in the Indemnified Party’s becoming subject to injunctive or other relief or otherwise adversely affect the business of the Indemnified Party in any manner, and as to which the Indemnifying Party shall have acknowledged in writing the obligation to indemnify the Indemnified Party hereunder, the Indemnifying Party shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, on such terms as the Indemnifying Party, in its sole discretion, shall deem appropriate. With respect to all other Losses in connection with Third Party Claims, where the Indemnifying Party has assumed the defense of the Third Party Claim in accordance with Section 9.3(b), the Indemnifying Party shall have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss; provided that it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed). The Indemnifying Party shall not be liable for any settlement or other disposition of a Loss by an Indemnified Party that is reached without the written consent of the Indemnifying Party. Regardless of whether the Indemnifying Party chooses to defend or prosecute any Third Party Claim, no Indemnified Party shall admit any liability with respect to, or settle, compromise or dispose of, any Third Party Claim without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed).
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​
(e)          Cooperation. If the Indemnifying Party chooses to defend or prosecute any Third Party Claim, the Indemnified Party shall cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include access during normal business hours afforded to the Indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Third Party Claim, and making employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the Indemnifying Party shall reimburse the Indemnified Party for all its reasonable out-of-pocket expenses in connection therewith.
​
(f)           Expenses. Except as provided above, the reasonable and verifiable costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party in connection with any Third Party Claim shall be reimbursed on a calendar quarter basis in arrears by the Indemnifying Party, without prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event the Indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party.
​
9.4         Insurance.
​
(a)          During the Term, each Party shall maintain adequate liability insurance covering its activities and obligations under this Agreement that is standard and reasonable in the biopharmaceutical industry for companies conducting similar activities; provided that for PharmaZell in no event shall such amounts be less than (i) with respect to comprehensive general liability insurance, a combined single limit for bodily injury and property damage of not less than [**]and (ii) with respect to product liability/completed operations coverage, a per claim limit of not less than [**] (collectively, the “Policies”). If any Policy is written on a claims-made basis, the retroactive date, if any, shall not be later than the Effective Date and such coverage shall be continued for a period of [**] following the Term. Each Party shall provide prompt notice to the other Party in the event that the first Party’s Policies are canceled or subjected to a reduction of coverage or any other material adverse modification.
​
(b)          Each Party shall furnish certificates of insurance for its Policies to the other Party within [**] days after the Effective Date.
​
9.5         Limitation on Damages. IN NO EVENT SHALL: (A) EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING BUSINESS INTERRUPTION OR LOST PROFITS, WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE, TORT, STRICT LIABILITY OR OTHERWISE AND (B) EITHER PARTY’S LIABILITY EXCEED FIFTEEN MILLION UNITED STATES DOLLARS ($15,000,000) ON A PER CLAIM BASIS. THE FOREGOING LIMITATIONS AND EXCLUSIONS ARE NOT INTENDED TO, NOR SHALL THEY, EXCLUDE OR LIMIT DAMAGES OR CLAIMS CAUSED BY A PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BREACH OF THE PROVISIONS OF ARTICLE 5, OR EXCLUDE OR LIMIT A PARTY’S INDEMNIFICATION OBLIGATIONS UNDER SECTION 9.1 OR 9.2.
​

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ARTICLE 10
MISCELLANEOUS
​
10.1       Notices. All notices, requests and other communications hereunder must be in writing, specifically reference this Agreement in a prominent manner, and be delivered personally, sent by first class registered or certified mail, postage prepaid, return receipt requested or by internationally recognized overnight delivery service that maintains records of delivery to the Parties at the following addresses:
​
If to Intercept to:
​
Intercept Pharma Europe Ltd.
2 Pancras Square, Floor 1, London
United Kingdom N1C 4AG
Attention: [**]
​
with copies (which shall not constitute notice) to:
​
Intercept Pharma Europe Ltd.
2 Pancras Square, Floor 1, London
United Kingdom N1C 4AG
Attention: Head of Legal
​
and
​
Intercept Pharmaceuticals, Inc.
450 W 15th St,
Suite 505 Floor 5
New York, NY 10011
Attention: General Counsel
​

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​
If to PharmaZell to:
​
PharmaZell GmbH
Rosenheimer Straβe 43
83064 Raubling
Germany
Attention: [**]
​
All such notices, requests and other communications will (a) if delivered personally to the address as provided in this Section, be deemed given upon delivery, (b) if delivered by internationally recognized overnight delivery courier be deemed given on the second Business Day (at the place of delivery) after deposit with such internationally recognized delivery service, (c) if sent by first class registered or certified mail, postage prepaid, return receipt requested, within the United States, on the third Business Day following the date of mailing, and (d) if sent by international first class registered or certified mail, postage prepaid, return receipt requested, on the seventh Business Day following the date of mailing. Any Party from time to time may change its address or other information for the purpose of notices to that Party by giving notice specifying such change to the other Party hereto.
​
10.2       Force Majeure. Neither Party shall be liable for delay in delivery or nonperformance in whole or in part, nor shall the other Party have the right to terminate this Agreement except as otherwise specifically provided in this Section 10.2, where delivery or performance has been affected by fires, floods, embargoes, strikes, epidemics, quarantines, war, acts of war (whether war be declared or not), terrorism, insurrections, riots, civil commotion, acts of God or acts or similar condition beyond such Party’s reasonable control; provided that the Party affected by such a condition shall, within [**] days of its occurrence, give notice to the other Party stating the nature of the condition, its anticipated duration and any action being taken to avoid or minimize its effect. The suspension of performance shall be of no greater scope and no longer duration than is reasonably required and the nonperforming Party shall use commercially reasonable efforts to remedy its inability to perform. Notwithstanding the foregoing, in the event the suspension of performance continues for [**] days after the date of the occurrence, and such failure to perform would constitute a material breach of this Agreement in the absence of such force majeure event, the nonaffected Party may terminate this Agreement immediately by written notice to the affected Party.
​
10.3       Entire Agreement; Amendment.
​
(a)          This Agreement, together with the Schedules and Exhibits attached hereto and the Quality Agreement, which shall be incorporated by reference hereto, sets forth and constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and all prior agreements (including any terms and conditions previously agreed upon by the Parties), understandings, promises and representations, whether written or oral, with respect thereto are superseded hereby. Each Party confirms that it is not relying on any representations or warranties of the other Party except as specifically set forth herein.
​
(b)          No amendment, modification, release or discharge shall be binding upon the Parties unless in writing and duly executed by authorized representatives of both Parties.
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​
10.4       Further Assurances. Each Party shall duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents and instruments as may be necessary or as the other Party may reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes hereof or to better assure and confirm unto such other Party its rights and remedies under this Agreement.
​
10.5       Successors and Assigns. The terms and provisions hereof shall inure to the benefit of, and be binding upon, Intercept, PharmaZell and their respective successors and permitted assigns.
​
10.6       Governing Law. This Agreement shall be governed and interpreted in accordance with the laws of England and Wales, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction; provided, however, for all intellectual property matters, this Agreement shall be governed and interpreted in accordance with the laws of New York, New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. To the extent not resolved pursuant to Section 10.7 or Section 10.8, venue for any litigation between the Parties shall be London, England or, with respect to intellectual property matters, New York, New York. The Parties agree to exclude the application to this Agreement of the United Nations Convention on Contracts for the International Sale of Goods.
​
10.7       Dispute Resolution.
​
(a)          In the event of a dispute between the Parties, either Party may, by giving written notice of dispute to the other Party, request a meeting of authorized representatives of the Parties for the purpose of resolving the dispute. The Parties agree that, within [**] days after any such request, each Party shall designate a representative to participate in dispute resolution discussions that shall be held in [**] at a mutually acceptable time for the purpose of resolving the dispute. Each Party agrees to negotiate in good faith to resolve the dispute in a mutually acceptable manner.
​
(b)          If for whatever reason the Parties are unable to resolve the dispute within [**] days after the issuance of a notice of dispute, then either Party may, by written notice to the other Party, submit the dispute to binding arbitration in accordance with the provisions of Section 10.8, except for those disputes excluded from Section 10.8 which shall be subject to the provisions of Section 10.6.
​
10.8       Arbitration.
​
(a)          Except to the extent otherwise provided in Section 4.5, Section 7.5, or arising out of a dispute relating to Article 5, any dispute arising out of or relating to this Agreement, including the breach, termination or validity thereof, shall, after first being subject to negotiations between the Parties as provided in Section 10.7(a), be finally resolved by arbitration in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce (“ICC Rules”) as then in effect, provided that, in the event and to the extent such rules conflict with the terms of this Section 10.8, the terms of this Section 10.8 shall govern. Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The place of arbitration shall be [**]. The arbitration shall be conducted in the English language. The place of litigation for disputes relating to Article 5 shall be [**].
​
​

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(b)          Except as provided in Section 10.8(c), the arbitration shall be held before a single arbitrator, who shall be selected by agreement of the Parties, or, if the Parties cannot agree within [**] days after commencement of arbitration, then by the International Chamber of Commerce. The arbitrator selected pursuant to this Section 10.8(c) shall be a practicing or retired lawyer or retired judge and have experience relating to agreements concerning the marketing of pharmaceutical products in the United States.
​
(c)          Notwithstanding Section 10.8(b), in the event that the dispute that is subject to arbitration is one in which a Party seeks to recover an amount of at least [**] from the other Party, then either Party shall have the option, exercisable by written notice to the other Party given at any time within [**] days after commencement of arbitration, to require that the arbitration be held before a panel of three (3) arbitrators. In such case, within [**] days after the provision of notice described in the preceding sentence, each Party shall select one person to act as arbitrator. If a Party shall fail within the designated time period to select an arbitrator, then the arbitrator to be selected by the Party shall be selected by the International Chamber of Commerce. The two (2) persons so selected as arbitrators shall select a third arbitrator within [**] days of their appointment. If the two (2) initially selected arbitrators are unable or fail to agree upon the third arbitrator, the third arbitrator shall be selected by the International Chamber of Commerce. Each arbitrator selected pursuant to this Section 10.8(c) shall be a practicing lawyer or retired judge and have experience relating to agreements concerning the marketing of pharmaceutical products in the United States.
​
(d)          Each Party shall, upon the written request of the other Party, promptly provide the other Party with copies of documents relevant to the issues raised by the dispute on which the producing Party may rely in support of, or in opposition to, any claim or defense. Any dispute regarding discovery, or the relevance or scope thereof, shall be determined by the arbitrator(s), which determination shall be conclusive. To the extent reasonable under the circumstances and as agreed in writing by the Parties, all discoveries shall be completed within [**] days following the appointment of the arbitrator(s).
​
(e)          It is the intent of the Parties that, barring extraordinary circumstances, and to the extent reasonable, arbitration proceedings will be concluded within [**] months from the date the arbitrator is appointed (or, where a panel of three (3) arbitrators is used, within [**] months from the date upon which the third arbitrator is appointed). The arbitrator(s) may extend this time limit in the interests of justice. Failure to adhere to this time limit shall not constitute a basis for challenging the award.
​
(f)           Except as may be required by Applicable Law (including applicable securities laws or rules of a securities exchange) or as may be necessary to enforce the arbitration award or the provisions of this Section 10.8, and except for disclosures made by a Party to its accountants, insurers, consultants, or attorneys or to actual or potential lenders, non-public investors, rating agencies, acquirers, or business partners who are under obligations to the disclosing Party to hold the disclosed information in confidence, neither a Party nor its representatives may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of the other Party.
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(g)          The arbitrator(s) shall have discretion to allocate the Parties’ costs and expenses for the arbitration (including attorneys’ fees), the fees of the arbitrator(s), and the administrative fees of arbitration between the Parties in proportion to the extent to which they prevail. Failing such allocation, each Party shall bear its own costs and expenses and an equal share of the fees of the arbitrators and administrative fees of the arbitration.
​
10.9       Third Party Beneficiaries. Nothing in this Agreement shall be construed as giving any Person, other than the Parties hereto and their successors and permitted assigns, any right, remedy or claim under or in respect of this Agreement or any provision hereof.
​
10.10     Export Control. This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States or other countries that may be imposed on the Parties from time to time. Each Party agrees that it will not export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity in accordance with Applicable Law.
​
10.11     Assignment. Except as expressly provided herein, neither Party may, without the prior written consent of the other Party, sell, transfer, assign, delegate, pledge, subcontract or otherwise dispose of, whether voluntarily, involuntarily, by operation of law or otherwise, this Agreement or any of its rights or duties hereunder; provided, however, that (a) Intercept may, without such consent, assign this Agreement and its rights and obligations hereunder to an Affiliate, (b) Intercept may, without such consent, assign its rights and delegate its obligations under this Agreement in respect of Supplied Materials to the purchaser or sublicensee of Intercept’s rights in and to such Supplied Materials or the relevant Product, (c) PharmaZell may, without such consent, assign this Agreement and its rights and obligations hereunder to one or more Affiliates, and (d) either Party may, without such consent, assign this Agreement and its rights and obligations hereunder to the purchaser of all or substantially all of its assets or to any successor entity or acquirer in the event of a merger, consolidation or change in control of such Party. Any attempt to assign, transfer, subcontract or delegate any portion of this Agreement in violation of this Section 10.11 shall be null and void. In the event either Party assigns all of its rights and delegates all of its obligations under this Agreement to another Person in accordance with the terms hereof and the assignee/delegee acquires all rights and assumes all obligations of its assignor/delegor under this Agreement, then the assignor/delegor shall cease to be a party to this Agreement or to have any rights or obligations under this Agreement from and after the effective date of such assignment or delegation. Except as provided in the preceding sentence, no assignment or delegation shall relieve the assignor or delegor of any of its obligations hereunder.
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10.12     Waiver. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. No waiver by either Party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion.
​
10.13     Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of either Party under this Agreement will not be materially and adversely affected thereby, (a) such provision shall be fully severable, (b) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom, and (d) in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and reasonably acceptable to the Parties herein.
​
10.14     Independent Contractors. The status of the Parties under this Agreement shall be that of independent contractors. Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, employer, employee, or joint venture relationship between the Parties. Neither Party shall have the right to enter into any agreements on behalf of the other Party, nor shall it represent to any Person that it has any such right or authority.
​
10.15     Construction. Unless the context of this Agreement otherwise requires: (a) words of any gender include each other gender; (b) words using the singular or plural number also include the plural or singular number, respectively; (c) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement; (d) the terms “Article,” “Section,” “Schedule,” “Exhibit” or “clause” refer to the specified Article, Section, Schedule, Exhibit or clause of this Agreement; (e) the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or”; (f) the term “including” or “includes” means “including without limitation” or “includes without limitation”; and (g) references to any agreement, instrument or other document in this Agreement refer to such agreement, instrument or other document as originally executed or, if subsequently amended, replaced or supplemented from time to time, as so amended, replaced or supplemented and in effect at the relevant time of reference thereto. Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. The captions of this Agreement are for convenience of reference only and in no way define, describe, extend, or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The language of this Agreement shall be deemed to be the language mutually chosen by the Parties and no rule of strict construction shall be applied against either Party.
​
10.16     Remedies. The rights and remedies provided herein are cumulative and do not exclude any other right or remedy provided by applicable law or otherwise available except as expressly set forth herein.
​

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10.17     Counterparts; Facsimile Execution. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which, taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement (and each amendment, modification and waiver in respect of it) by facsimile or other electronic transmission shall be as effective as delivery of a manually executed original counterpart of each such instrument.
​
10.18     English Language. This Agreement shall be written and executed in, and all other communications under or in connection with this Agreement shall be in, the English language. Any translation into any other language shall not be an official version thereof, and in the event of any conflict in interpretation between the English version and such translation, the English version shall control.
​
10.19     Parent Guarantee. Intercept Parent hereby agrees to be jointly and severally liable for the prompt and complete performance of Intercept’s financial obligations under this Agreement, and hereby guarantees the financial performance by Intercept of the obligations set forth in this Agreement.
​
[Signature Page Follows]
​

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement to be effective as of the last date of signature below.
​
	INTERCEPT PHARMA EUROPE LTD.
	   
	PHARMAZELL GmbH

	 
	 
	 

	By: 
	/s/ Steve Arnold
	 
	By: 
	/s/ Oliver Bolzern

	 
	​
	 
	 
	​

	Name: 
	Steve Arnold
	 
	Name: 
	Oliver Bolzern

	 
	​
	 
	 
	​

	Title: 
	SVP
	 
	Title: 
	CEO

	 
	​
	 
	 
	​

	Date: 
	August 12, 2016
	 
	Date: 
	August 12, 2016

	 
	 
	 

	AGREED TO AND ACCEPTED SOLELY FOR PURPOSES OF SECTION 10.19:
	 
	 

	 
	 
	 

	INTERCEPT PHARMACEUTICALS, INC.
	 
	 

	 
	 
	 

	By: 
	/s/ Sandip Kapadia
	 
	 

	 
	​
	 
	 

	Name: 
	Sandip Kapadia
	 
	 

	 
	​
	 
	 

	Title: 
	CFO
	 
	 

	 
	​
	 
	 

	Date: 
	August 12, 2016
	 
	 

​
[Signature Page to Manufacturing and Supply Agreement]
​

​

SCHEDULE 1.40
​
Intercept Materials
​
[**]
​
Schedule 1.40 to Manufacturing and Supply Agreement
​

​

SCHEDULE 1.83
​
Form of Work Order
​
FOR ILLUSTRATION PURPOSES ONLY – DO NOT EXECUTE
​
WORK ORDER #____
​
This Work Order #____ (“Work Order”) is entered into and effective with and as of the last signature to it by either Party by and between Intercept Pharma Europe Ltd. (“Intercept”) and PharmaZell GmbH (“PharmaZell”)and is subject to all of the terms and conditions of the Manufacturing and Supply Agreement between Intercept and PharmaZell, effective as of ____, 2016 (the “Agreement”) and in accordance with this Work Order using, if applicable, the materials provided by Intercept hereunder.
​
Specifications supplied by Intercept: as in Quality Agreement signed September 12, 2014
​
Description of Services or Scope of Work: PharmaZell shall provide the following Supplied Material to Intercept: Work Order Description. [Or insert Description, including any work product, reports, or presentations contemplated under this Agreement; please be as specific as possible] or [If applicable, “as outlined in Appendix 1 attached hereto and incorporated by reference.”]
​
Deliverables: Quantity of Supplied Materials.
​
Delivery Date: [Insert desired Delivery Date]
​
Place of Delivery: [Insert desired Delivery location]
​
Timelines and Milestones: PharmaZell will provide schedule and progress updates in accordance with the terms of the Agreement.
​
Compensation: Intercept shall pay the total sum not to exceed of Total Estimated Work Amount (the “Total Fee”) in accordance with the commercial pricing set forth in the Agreement and in consideration for the performance of the above Supplied Material supplied. Payment shall be made in accordance with the details outlined in the Agreement.
​
OTHER TERMS TO BE ADDED AS AGREED
​
Capitalized terms contained in this Work Order and not otherwise defined herein, shall have the meaning ascribed to them in the Agreement.
​
This Work Order may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Work Order delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
​
[Remainder of Page Intentionally Blank]
​
Schedule 1.83 to Manufacturing and Supply Agreement
​

1

IN WITNESS WHEREOF, each Party has executed this Work Order by a duly authorized individual effective as of the later of the signatures below.
​
	INTERCEPT PHARMA EUROPE LTD.
	    
	PHARMAZELL GMBH

	 
	 
	 
	 
	 

	By:
	Form Only – Do Not Sign
	 
	By:
	Form Only – Do Not Sign

	Name:
	 
	 
	Name:
	 

	Title:
	 
	 
	Title:
	 

	Date:
	 
	 
	Date:
	 

​
Schedule 1.83 to Manufacturing and Supply Agreement
​

2

SCHEDULE 2.1(d)
​
Approved Subcontractors and Activities
​
	Subcontractor
	    
	Activity

		 
	
	[**]
	 
	[**]

		 
	
	[**]
	 
	[**]

		 
	
	[**]
	 
	[**]

		 
	
	[**]
	 
	[**]

​
Schedule 2.1(d) to Manufacturing and Supply Agreement
​

​

SCHEDULE 2.2(a)
​
Existing Work Orders
​
[**]
​
Schedule 2.2(a) to Manufacturing and Supply Agreement
​

​

Schedule 2.2(b)
​
First New Work Order
​
[**]
​
Schedule 2.2(b) to Manufacturing and Supply Agreement
​

​

SCHEDULE 2.7(e)
​
Standard Yields
​
[**]
​
Schedule 2.7(e) to Manufacturing and Supply Agreement

​EX-10.41 14 v324396_ex10-41.htm EXHIBIT 10.41
​
Exhibit 10.41
​
EXECUTION COPY
​
	Certain identified information has been excluded from this exhibit because it is both not 
material and would likely cause competitive harm to the registrant if publicly disclosed.

​
LICENSE AGREEMENT
​
This License Agreement (this “Agreement”), dated as of March 29, 2011 (the “Effective Date”), is made by and between DAINIPPON SUMITOMO PHARMA CO. LTD., a company organized under the laws of Japan (“DSP”), having a place of business at 6-8 Doshomachi 2-chome, Chuo-ku, Osaka 541-0045 Japan, and INTERCEPT PHARMACEUTICALS, INC., a company organized under the laws of the State of Delaware (“Intercept”), having a place of business at 18 Desbrosses Street, New York, New York 10013. DSP and Intercept are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”
​
RECITALS
​
WHEREAS, Intercept is a clinical stage biopharmaceutical company engaged in the development of therapeutics for the treatment of metabolic diseases, and is currently developing Obeticoholic acid, a farnesoid X receptor (FXR) agonist, more commonly known as 6α-ethyl-3α,7α-dihydroxy-5β-cholan-24-oic acid (6-ECDCA) or INT-747, in any form (the “Compound”)to be used to formulate a new product for therapeutic use in connection with primary biliary cirrhosis (“PBC”) and nonalcoholic steatohepatitis (“NASH”) (PBC and NASH, collectively the “Field”);
​
WHEREAS, Intercept is simultaneously engaged in the development of other indications for the Compound, including in connection with portal hypertension (together with all present and future indications of the Compound, each an “Additional Indication”, and collectively, the “Additional Indications”);
​
WHEREAS, DSP is a worldwide pharmaceutical company that has significant experience in the development, manufacturing and commercialization of pharmaceutical products in the Territory (as defined hereinafter); and
​
WHEREAS, Intercept desires to grant certain exclusive rights to DSP in the Territory with respect to the development, manufacturing and commercialization of the Compound and the Product in the Field in the Territory and DSP wishes to accept the grant of such rights; all as more particularly set forth in this Agreement.
​
NOW THEREFORE, in consideration of the foregoing premises and the mutual promises, covenants and conditions contained in this Agreement, the Parties agree as follows:
​
1.          DEFINITIONS
​
Whenever used in the Agreement with an initial capital letter, the terms defined in this Article 1 shall have the meanings specified below.
​
​

​
​
“Actual Costs” shall mean Intercept’s direct costs and indirect costs incurred by sub-contractors of Intercept of materials and labor specifically incurred in Manufacturing or formulating the Clinical Supplies or Commercial Supplies supplied to DSP under the Clinical Supply Agreement or the Commercial Supply Agreement, including but not limited to excipients and packaging components for both the Compound and the Product, as well as in process and release testing, stability testing, development of the Specifications, manufacturing validation, quality assurance and quality control activities necessary to release the Compound or Product to DSP or to a Third Party designated by DSP; together with directly allocable manufacturing overheads specifically attributable to the Manufacture or formulation of the Compound or Product under this Agreement, including depreciation and maintenance costs of fixed assets that are wholly dedicated to and used in manufacturing the Compound or Product for DSP; but excluding corporate, general or administrative overheads. Actual Costs shall be calculated in accordance with Intercept’s standard cost accounting policies and with generally accepted accounting principles, consistently applied to the manufacture of pharmaceutical compounds and products.
​
“Additional Indications” shall have the meaning set forth in the second recital of this Agreement.
​
“Additional Indications Option” shall have the meaning set forth in Section 7.2.
​
“Additional Indications Option Commencement Notice” shall have the meaning set forth in Section 7.3.
​
“Additional Indications Exercise Period” shall have the meaning set forth in Section 7.3.
​
“Additional Indications Option Fee” shall have the meaning set forth in Section 7.3.
​
“Affiliate” shall mean any corporation, firm, limited liability company, partnership or other entity that directly controls or is controlled by or is under common control with a Party to this Agreement. For purposes of this definition only, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” shall mean the possession, directly or indirectly through one or more intermediaries, of the power to direct the management or policies of an entity, whether through the ownership of fifty percent (50%) or more of the voting securities of the other organization or entity or by contract relating to voting rights or corporate governance. Notwithstanding the foregoing, Sumitomo Chemical Co., Ltd. (“Sumitomo Chemical”), the parent company of DSP, shall not be considered an Affiliate for the purposes of this Agreement; provided that DSP shall be permitted to engage in routine reporting of matters concerning this Agreement to Sumitomo Chemical.
​
“Clinical Supply Agreement” shall have the meaning set forth in Section 6.1.
​
“Clinical Supplies” shall mean Compound formulated into Product or matching placebos to be used exclusively for conducting clinical studies to gain Regulatory Approval in the Territory.
​
“CMC” shall mean the Chemistry, Manufacturing and Controls information required to be submitted under Section 505 of the U.S. Food, Drug and Cosmetic Act (as amended) and 21 C.F.R. 312.23(a)(7) and 314.50(d)(1).
​
​

2

​
“Commercial Supplies” shall mean the supply of the Product in bulk formulation (either packaged or pre-packaged) made to DSP by Intercept pursuant to Section 6.2 of this Agreement and the Commercial Supply Agreement.
​
“Commercial Supply Agreement” shall have the meaning set forth in Section 6.2.
​
“Commercialize” shall mean to promote, market, distribute, sell (and offer for sale or contract to sell) or provide product support for a Product, including by way of example: (i) detailing and other promotional activities in support of a Product; (ii) advertising and public relations in support of a Product, including market research, development and distribution of selling, advertising and promotional materials, field literature, direct-to-consumer advertising campaigns, media/journal advertising, and exhibiting at seminars and conventions; and (iii) developing reimbursement programs and information and data specifically intended for managed care organizations, governmental agencies and the like.
​
“Commercially Reasonable Efforts” shall mean with respect to a Party’s obligations under this Agreement, including to Develop, Manufacture or Commercialize the Product, those efforts and resources consistent with the usual practices of such Party in pursuing the development or commercialization of its own pharmaceutical products that are of similar market potential and strategic value as such Product, taking into account all relevant factors including product labeling or anticipated labeling, present and future market potential, past performance of such product and such Party’s other pharmaceutical products that are of similar market potential, financial return, medical and clinical considerations, past and future regulatory environment and competitive market conditions, all measured by the facts and circumstances at the time such efforts are due. Commercially Reasonable Efforts shall be determined on a country-by-country and indication-by-indication basis for the Product, and it is anticipated that the level of effort will change over time, reflecting changes in the status of the Products and the market(s) or countries involved.
​
“Confidential Information” shall mean with respect to a Party (the “Receiving Party”), all information which is disclosed by the other Party (the “Disclosing Party”) to the Receiving Party hereunder or to any of its employees, consultants, Affiliates, licensees or sublicensees, which is marked as confidential or indicated at the time of disclosure as being confidential (and subsequently summarized in writing) except to the extent that the Receiving Party can demonstrate by written record that such information, (i) as of the date of disclosure is demonstrably known to the Receiving Party or its Affiliates other than by virtue of a prior confidential disclosure to such Party or its Affiliates; (ii) as of the date of disclosure is in, or subsequently enters, the public domain, through no fault or omission of the Receiving Party; (iii) is obtained from a Third Party having a lawful right to make such disclosure free from any obligation of confidentiality to the Disclosing Party; or (iv) is independently developed by or for the Receiving Party without reference to or reliance upon any Confidential Information of the Disclosing Party; or (v) is required to be disclosed by judicial or governmental authority of competent jurisdiction; provided that the Receiving Party shall first provide the Disclosing Party with sufficiently timely notice of such requirement to permit the Disclosing Party to take measures to avoid or limit the scope of the requested disclosure. Confidential Information shall include, without limitation, results and data of any type whatsoever, in any tangible or intangible form whatsoever, including, preclinical data, clinical trial data, databases, practices, methods, techniques, specifications, formulations, formulae, knowledge, know-how, skill, experience, test data including pharmacological, biological, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, stability data, studies and procedures.
​

3

​
“Compound” shall have the meaning set forth in the first recital of this Agreement.
​
“Control” or “Controlled” shall mean, when used in reference to intellectual property, other intangible property, or materials, that a Party owns or has a license or sublicense to such intellectual property, other intangible property or materials, and has the ability to grant a license or sublicense or other right to use such intellectual property, other intangible property or materials, as applicable, as provided for herein, without violating the terms of any agreement or other arrangement with any Third Party; provided that where the ability to grant a license or sublicense is subject to a Third Party consent or notice requirement, “Commercially Reasonable Efforts” shall require seeking such consent or providing such notice to the Third Party.
​
“Country Option” shall have the meaning set forth in Section 8.1.
​
“Country Option Exercise Notice” shall have the meaning set forth in Section 8.2.
​
“Development” and “Develop” shall mean with respect to the Compound or the Product, all activities relating to preparing and conducting non-clinical studies, clinical studies (Phase I Clinical Trials, Phase II Clinical Trials, Phase III Clinical Trials and Phase IV Clinical Trials), formulation, development, statistical analysis, quality assurance and quality control activities and other product development activities, which may include, but is not limited to, research, and regulatory activities directed toward obtaining Regulatory Approval of the Product in the Field inside or outside the Territory, as the case may be.
​
“DSP Defense Costs” shall have the meaning set forth in Section 12.3.
​
“Effective Date” shall have the meaning set forth in the first line of this Agreement.
​
“Eroded Country” shall have the meaning set forth in Section 9.3.1.
​
“Exclusive Period” shall mean, on a country-by-country basis, the period beginning upon the First Commercial Sale of the Product in the relevant country until the later to occur of (i) the expiration of (x) the Intercept substance patent with respect to Japan or (y) the last to expire of the Intercept patent family members with respect to China, after giving effect, in each of items (x) and (y) to any Patent Term Extensions, and (ii) the date upon which generic drugs relying on the Compound or Product data for Regulatory Approval may be introduced.
​
“Field” shall have the meaning set forth in the first recital of this Agreement, together with any other Additional Indications, which shall each automatically be included in the “Field” upon the exercise by DSP of the Additional Indication Option.
​
​

4

​
“First Commercial Sale” shall mean, on a country-by-country basis, the date of the first arm’s length transaction, transfer or disposition for value to a Third Party of a Product by or on behalf of DSP or any Affiliate or sublicensee of DSP in such country after receipt of Marketing Approval, (and any labeling or pricing negotiations that may be required after Marketing Approval for such Product in the Territory.)  A First Commercial Sale shall not include any Product sold for use in clinical trials, for research or for other non-commercial uses, or that is supplied as part of a compassionate use or similar program.
​
“First Tier Royalty Rate” shall have the meaning set forth in Section 9.2.3.
​
“GMP” shall mean all applicable Good Manufacturing Practices standards, including, as applicable, those standards required by the MHLW or its equivalent in each country in the Territory.
​
“Good Clinical Practices” or “GCP” shall mean all applicable Good Clinical Practice standards for the design, conduct, performance, monitoring, auditing, recording, analyses and reporting of clinical trials, including, as applicable, (i) those standards required by the MHLW or its equivalent in the Territory, and (ii) the equivalent Laws in any relevant country, each as may be amended and applicable from time to time and in each case, that provide for, among other things, assurance that the clinical data and reported results are credible and accurate and protect the rights, integrity, and confidentiality of trial subjects.
​
“Good Laboratory Practices” or “GLP” shall mean all applicable Good Laboratory Practice standards, including, as applicable, (i) those standards required by the MHLW as hereinafter defined or its equivalent in each country in the Territory, and (ii) the equivalent Laws in any relevant country, each as may be amended and applicable from time to time.
​
“Improvement” shall mean any improvements, enhancements or modifications to the Intercept Technology, the Intercept Manufacturing Technology, or other technology claimed in the Intercept Patents (whether patentable or not), which would be useful or necessary in the Manufacture, Development, and Commercialization of the Compound and/or Products, which is conceived, solely by one Party or jointly by one Party with a Third Party or jointly by both Parties.
​
“IND” shall mean the equivalent application of an Investigational New Drug Application to the MHLW or its equivalent in any country in the Territory, such as a clinical trial application or a clinical trial exemption, the filing of which is necessary to commence or conduct clinical testing of a pharmaceutical product in humans in such country.
​
“Intercept Change of Control” shall mean: (i) the liquidation or dissolution of Intercept or the sale or other transfer by Intercept of all or substantially all of its respective assets; or (ii) the occurrence of a tender offer, stock purchase, other stock acquisition, merger, consolidation, recapitalization, reverse split, sale or transfer of assets or other transaction, as a result of which any person or entity (x) becomes the beneficial owner, directly or indirectly (including through multiple entities), of respective securities of Intercept representing more than fifty percent (50%) of the combined voting power with respect to the election of directors of Intercept, (y) obtains the ability to appoint a majority of the Board of Directors of Intercept, or (z) obtains the ability to direct the operations or management of Intercept or any successor to the business of Intercept.
​
​

5

​
“Intercept Development Plan” shall have the meaning set forth in Section 3.1.2.
​
“Intercept Know-How” shall mean the Know-How which Intercept or its Affiliates Control on the Effective Date or during the Term, which information is necessary or useful for the Development, Manufacture or Commercialization of the Product or the Compound in the Field in the Territory.
​
“Intercept Manufacturing Know-How” shall mean all methods, processes, designs, patterns, or know-how, programs, systems, procedures, technical data, technology, information, data, results of tests, studies, and analyses, whether patentable or not, which are specifically related to the manufacturing process of the Compound and/or the Product, including Know-How that is in the case of each of the foregoing Controlled by Intercept (or its Affiliates) as of the Effective Date or during the Term of this Agreement.
​
“Intercept Manufacturing Patent” shall mean any Patent that is Controlled by Intercept (or its Affiliates) as of the Effective Date and/or during the Term, in each case, which is necessary or useful for the Manufacture of the Compound or the Product for Commercialization in the Field in the Territory.
​
“Intercept Manufacturing Technology” shall mean the Intercept Manufacturing Know-How and the Intercept Manufacturing Patents.
​
“Intercept Patents” shall mean all Patents that Intercept Controls as of the Effective Date or during the Term, which Patents are necessary or useful for the purpose of Development, Manufacture or Commercialization of the Compound or the Product in the Field in the Territory, all as more particularly set forth on Exhibit A.
​
“Intercept Technology” shall mean the Intercept Patents and the Intercept Know-How.
​
“Joint Steering Committee” or “JSC” shall mean the joint steering committee formed by the Parties as described in Section 3.1.
​
“Joint Improvements” shall mean an Improvement or invention, whether patentable or not, which is invented, made or discovered jointly by or on behalf of the employee(s), licensee(s) (including sublicensees), or contractors (including subcontractors) of both Parties (and/or their Affiliates).
​
“Know-How” shall mean intellectual property including any asset that comprises any of the following items and has a substantial value independent of the services of any individual: inventions, formulae, processes, designs, patterns, or know-how; copyrights; trademarks, trade names, or brand names; franchises; methods, programs, systems, procedures, campaigns, surveys, studies, forecasts, estimates, customer lists, or technical data; and other similar items (whether or not in documentary form and whether or not patentable, copyrightable or otherwise protectable under applicable Laws).
​
​

6

​
“Laws” shall mean all applicable laws, statutes, rules, regulations, directives, decisions, ordinances, guidelines concerning the Development, Manufacturing and Commercialization of the Compound or the Product in the Field in the Territory.
​
“Manufacturing” shall mean all activities related to the production, manufacture, testing, processing, filling, finishing, packaging, labeling, inspection, receiving, holding and shipping of the Compound and/or the Product, the Clinical Supplies or the Commercial Supplies, or any raw materials or packaging materials with respect thereto, or any intermediate of any of the foregoing, including process and cost optimization, process qualification and validation, commercial manufacture, stability and release testing, quality assurance and quality control. For clarity, “Manufacture” has a correlative meaning.
​
“Marketing Approval” shall mean (i) for the United States, the approval of an NDA, and (ii) for jurisdictions in the Territory, the approval from the relevant Regulatory Authority necessary to market and sell the Product in that country, including, where required, pricing approvals.
​
“Market Share” shall have the meaning set forth in Section 9.3.1.
​
“MHLW” shall mean the Japanese Ministry of Health, Labor and Welfare, or a successor agency thereto.
​
“NASH” shall have the meaning set forth in the first recital of this Agreement.
​
“Necessary Third Party Patents” shall mean, on a country-by-country and indication-by-indication basis, the patents that are owned or controlled by a Third Party, which do not infringe the Intercept Technology, but are necessary for the Development, Manufacturing or Commercialization of the Compound or the Product in the Field, as reasonably determined in accordance with Section 4.3.
​

7

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“Net Sales” shall mean the gross amounts invoiced by DSP and its Affiliates and sublicensees for sales or other dispositions of the Product to Third Parties that are not Affiliates or sublicensees in the Field in the Territory, in bona fide, arms-length transactions less the following items, as allocable to such Products (if not previously deducted from the amount invoiced): (i) trade, cash or quantity discounts, credits or allowances actually allowed (provided that such discounts are applied in a normal and customary manner with respect to other similarly situated products of the selling party, and not in a manner which is unreasonably disproportionate to one or more Products when compared to other products of the selling party); (ii) charge back payments, administrative fees, price reductions, rebates allowed or granted, or other forms of consideration to managed care organizations, government agencies or trade customers, including wholesalers and chain and pharmacy buying groups (provided that such discounts are applied in a normal and customary manner with respect to other similarly situated products of the selling party, and not in a manner which is unreasonably disproportionate to one or more Products when compared to other products of the selling party); (iii) credits actually allowed for claims, allowances for damaged goods, retroactive price reductions or returned goods; (iv) prepaid freight, postage, shipping, customs duties and insurance charges; and (v) sales taxes, value added taxes, duties and other governmental charges. Such amounts shall be determined in accordance with Japanese GAAP, consistently applied, or GAAP in effect in a country in the Territory, as permitted by DSP. Any of the items set forth above that would otherwise be deducted from the invoice price in the calculation of Net Sales but which are separately charged to Third Parties shall not be deducted from the invoice price in the calculation of Net Sales. Further, in the case of any sale or other disposal other than in an arm’s length transaction exclusively for cash, such as barter or counter-trade, of any Product, or part thereof, Net Sales shall be determined by referencing Net Sales at which substantially similar quantities of the Product are sold in an arm’s length transaction for cash. Finally, financial compensation, if any, received by DSP from a subsequent resale of the Product by a third party reseller, if any, shall be included in the calculation of Net Sales.
​
“NDA” shall mean a new drug application or its equivalent filed with a Regulatory Authority in the Territory seeking Regulatory Approval to Commercialize the Product in the Territory for a particular indication within the Field.
​
“Non-Territory Data” shall have the meaning set forth in Section 4.2.2.
​
“Patents” means any patents and patent applications and all substitutions, divisions, continuations, continuations-in-part, any patent issued with respect to any such patent applications, any reissue, reexamination, utility models or designs, renewal, adjustment or extension (including any supplementary protection certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent, and all counterparts thereof in any country owned or Controlled by a Party on the Effective Date and during the Term of this Agreement.
​
“Patent Term Extension” means any term extensions, adjustments, supplementary protection certificates, regulatory exclusivity and equivalents thereof offering Patent protection beyond the initial term with respect to any issued Patents.
​
“PBC” shall have the meaning set forth in the first recital of this Agreement.
​
“Phase I Clinical Trial” means a clinical trial in humans, the principal purpose of which is to make a preliminary determination of metabolism, pharmacokinetics, dose findings or preliminary safety in healthy individuals or patients in the Territory.
​
“Phase II Clinical Trial” means a clinical trial in humans, the principal purpose of which is to make a preliminary determination that a given product is safe in the population in the Territory for its intended use and to obtain information about such product’s efficacy sufficient to permit the design of further clinical trials, or if no further trials are necessary, to enable an Regulatory Approval.
​

8

​
“Phase III Clinical Trials” shall mean a clinical trial of a Product conducted in human patients with a defined dose or a set of defined doses of a Product designed to ascertain efficacy and safety of such Product for the purpose of submitting applications for Regulatory Approval to the competent Regulatory Authorities.
​
“Phase IV Clinical Trials” means post-marketing studies to delineate additional information about a pharmaceutical product’s risks and benefits, and optimal use, commenced after receipt of Regulatory Approval for a Product in the indication for which such trial was conducted.
​
“Product” shall mean any pharmaceutical composition or formulation that contains the Compound, whether or not such Product is used as a single agent or in combination with other therapeutically active components, as the term “Product” may be further defined in each of the Clinical Supply Agreement and the Commercial Supply Agreement.
​
“Product Development Plan” shall have the meaning set forth in Section 3.1.1.
​
“Quality Assurance Agreement” shall have the meaning set forth in Section 6.3.5.
​
“Regulatory Approval” shall mean all necessary approvals (including INDs, NDAs, product approvals, import permits, and, in each case any supplements and amendments thereto), licenses, registrations or authorizations of any Regulatory Authority, necessary for the Development, Manufacture, and Commercialization of the Compound or the Product in the Field in the Territory.
​
“Regulatory Authority” shall mean, in a particular country in the Territory, any applicable governmental authority involved in granting Regulatory Approval in the Territory, including the MHLW.
​
“Second Tier Royalty Rate” shall have the meaning set forth in Section 9.2.3.
​
“Specifications” shall mean those tests, methods and acceptance criteria for the Compound and the Product required in the Territory as set forth the in the IND and NDA.
​
“Target Actual Cost” shall have the meaning set forth in Section 6.2.2.
​
“Target Country” shall have the meaning set forth in Section 8.3.
​
“Technical Transfer” shall have the meaning set forth in Section 6.4.1.
​
“Technology” shall mean and include any and all unpatented, proprietary ideas, inventions, discoveries, Confidential Information, biologic materials, data, results, formulae, designs, specifications, methods, processes, formulations, techniques, ideas, know-how, technical information (including, without limitation, structural and functional information), process information, pre-clinical information, clinical information, regulatory filings, and any and all proprietary biological, chemical, pharmacological, toxicological, pre-clinical, clinical, assay, control and manufacturing data and materials.
​
“Term” shall have the meaning set forth in Section 15.1.
​
​

9

​
“Territory” shall mean Japan and China (excluding Taiwan), and such other countries which are the subject of the Country Option, each of which shall be automatically deemed included in the Territory upon the exercise of the Country Option by DSP for such country.
​
“Third Party” shall mean any person or entity other than DSP or Intercept, and their respective Affiliates.
​
“Third Tier Royalty Rate” shall have the meaning set forth in Section 9.2.3.
​
“Third Party Offer Notice” shall have the meaning set forth in Section 9.3.
​
“Wholesale Acquisition Cost” or “WAC” shall mean the wholesaler acquisition cost for the Product in the U.S.
​
2.          GRANT OF RIGHTS
​
2.1           Exclusive License
​
2.1.1           Grant of Exclusive License. Intercept hereby grants to DSP an exclusive, royalty-bearing license, including the right to grant sublicenses in accordance with Section 2.1.2, under the Intercept Technology to research, Develop, have Developed, make, have made, use, sell, offer for sale, have sold, import, have imported, export and have exported, register, for the purpose of Commercializing the Product in the Territory, for any and all uses within the Field, subject to the terms and conditions of this Agreement. For clarification, the Parties agree that DSP’s appointing a sublicensee to engage in the Manufacture of the Compound or the Product outside the Territory for the Development and Commercialization of the Product inside the Territory shall not be deemed a breach of this Agreement.
​
2.1.2           Right to Sublicense. After Intercept’s receipt of the Upfront Fee set forth in Section 9.1, DSP shall have the right to grant sublicenses to any Affiliate or Third Party to all or any portion of its rights under the license granted to DSP pursuant to this Section 2; provided, however, that (i) Intercept shall be notified of and approve the sublicensing arrangement, such approval not to be unreasonably withheld, (ii) each such sublicensee agrees to be bound by all applicable Sections of this Agreement, and (iii) DSP shall provide Intercept with a summary of such sublicensing agreements, to include (a) the country in the Territory applicable to such sublicensee, (b) the full legal name of the sublicensee, (c) the applicable indications in the Field, (d) the term and termination provisions of the sublicensing agreement, and (e) the standard of performance applicable to the sublicensee with respect to its obligations under the sub-licensing agreement. Items (a)-(e) inclusive of item (iii) of the preceding sentence shall be set forth in a format substantially similar to Exhibit B, which shall also be executed by the relevant sublicensee affirming its understanding of and willingness to comply with Sections of this Agreement applicable to it.
​
2.1.3           Patent Challenge. Any challenge to the validity, scope or enforceability of any claim in an Intercept Patent by DSP or its Affiliates shall constitute a material breach of this Agreement.
​
​

10

​
2.2           Registration. Upon DSP’s request, but only after Intercept’s receipt of the Upfront Fee set forth in Section 9.1, Intercept shall use Commercially Reasonable Efforts, at DSP’s sole expense, to register a “Senyo-Jisshiken Tohroku” (i.e. registration of the exclusive license with the Japanese Patent Office) for DSP (or the equivalent in any other country in the Territory) with respect to the Intercept Technology and Intercept Patents, which registration shall be transferred or assigned to DSP by Intercept immediately upon issuance for no additional consideration.
​
2.3           No Implied Licenses; Retained Rights. Except as explicitly set forth in this Agreement, neither Party grants any license, express or implied, under its intellectual property rights to the other Party, whether by implication, estoppel or otherwise
​
2.4           Bankruptcy-Related Rights.
​
2.4.1           U.S. Bankruptcy Code 365(n). All rights and licenses granted under this Agreement are hereby deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101(35A) of the U.S. Bankruptcy Code. The Parties shall retain and may fully exercise all of their respective rights and elections under the U.S. Bankruptcy Code. The Parties agree that DSP, as the licensee under this Agreement, shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code, and that upon commencement of a bankruptcy proceeding by or against Intercept under the U.S. Bankruptcy Code, DSP shall be entitled to a complete duplicate of or complete access to any such intellectual property and all embodiments of such intellectual property, provided that DSP continues to fulfill its payment or royalty obligations in accordance with this Agreement. Such intellectual property and all embodiments thereof shall be promptly delivered to DSP (x) upon any such commencement of a bankruptcy proceeding upon written request therefore by DSP, unless Intercept elects to continue to perform all of its obligations under this Agreement or (y) if not delivered under (x) above, upon the rejection of this Agreement by or on behalf of Intercept upon written request therefor by DSP. The foregoing is without prejudice to any rights DSP may have against Intercept arising under the U.S. Bankruptcy Code or other applicable law.
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2.4.2           Intellectual Embodiments. Each Party hereby acknowledges that (i) copies of research data (both clinical and non-clinical), (ii) laboratory samples, (iii) product samples and inventory, (iv) formulae, (v) laboratory notes and notebooks, (vi) data and results related to clinical and non-clinical trials, (vii) regulatory filings and approvals, (viii) rights of reference in respect of regulatory filings and approvals, (ix) pre-clinical research data and results, and (x) marketing, advertising and promotional materials, constitute “embodiments” of intellectual property pursuant to Section 365(n) of the Bankruptcy Code.
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2.5           Bankruptcy Assistance. Each Party agrees not to interfere with the other Party’s exercise of rights and licenses to intellectual property licenses granted to the Party pursuant to Section 2.4 or under Section 365(n) of the U.S. Bankruptcy Code and embodiments thereof in accordance with this Agreement and agrees to use Commercially Reasonable Efforts to assist the other Party to obtain such intellectual property and embodiments thereof in the possession or control of Third Parties, as reasonably necessary for the other Party to exercise such rights and licenses in accordance with this Agreement.
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3.          GOVERNANCE
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3.1           Joint Steering Committee. The Parties shall use Commercially Reasonable Efforts to establish the JSC within sixty (60) days after the Effective Date. The JSC shall engage in consultation, discussion and decision-making with respect to the following:
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3.1.1           A development plan for the Development of the Product in the Territory (the “Product Development Plan”) and any material amendments thereto;
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3.1.2           A development plan for the Development of the Product and the Additional Indications by Intercept and/or its licensees outside the Territory(the “Intercept Development Plan”), and any material amendments thereto;
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3.1.3           Clinical trials to be conducted in connection with the Development of the Compound and the Product in the Field in the Territory; including, as appropriate Phase I Clinical Trials, Phase II Clinical Trials, Phase III Clinical Trials and Phase IV Clinical Trials, including review of synopses of clinical study protocols;
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3.1.4           Nonclinical studies, including CMC and formulations, to be conducted in connection with the Development of the Compound and the Product in the Field in the Territory;
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3.1.5           Development of Additional Indications to be conducted outside the Territory by Intercept and/or its licensees in connection with the Additional Indications Option;
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3.1.6           Matters related to Regulatory Approvals for Product in the Field in the Territory, including the formulation of a plan consistent with this Agreement for the exchange of and reporting to Regulatory Authorities of safety data reported or arising in the course of the Development;
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3.1.7           The activities of any sub-committees;
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3.1.8           Encouraging and facilitating communication between the Parties regarding the progress and results (whether preliminary or final) of the Development and Manufacturing activities for the Compound and the Product in the Field in the Territory, including the coordination of clinical and nonclinical data exchange and preparation of regulatory filings;
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3.1.9           The filing, maintenance, and abandonment, if any, of the Intercept Patents (including the Intercept Manufacturing Patents) and any patents issued on Improvements or Joint Improvements, and all Patent Term Extensions;
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3.1.10         Matters relating to the Manufacture of the Clinical Supplies and the Commercial Supplies, including the details and timing of the Technical Transfer;
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3.1.11         Establish internal rules for the governance and operation of the JSC; and
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3.1.12         Such other responsibilities as may be assigned to the JSC pursuant to this Agreement or as may be mutually agreed upon by the Parties in writing from time to time.
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3.2           JSC Membership. The initial membership of the JSC shall be comprised of three (3) representatives designated by each of DSP and Intercept, at least one(1) of whom from each Party shall be senior enough within its respective organization to have the requisite decision-making authority with respect to the matters set forth in Section 3.1 above, and all of whom shall have appropriate expertise and ongoing familiarity with the Development and Manufacturing of the Product in the Field in the Territory. From time to time, the number and qualifications of the designated members to the JSC may be changed by the mutual written agreement of the Parties, so long as an equal number of members from each of DSP and Intercept is maintained. Each Party shall inform the other Party of its initial representatives to the JSC as soon as practicable after the Effective Date. Each Party may also designate non-voting representatives to attend the meetings from time to time as necessity requires, but only with the consent of the other Party. The JSC shall be chaired by a representative from DSP, who shall be responsible for (i) calling meetings, (ii) preparing and issuing minutes of each such meeting as soon as practicable following each meeting, and (iii) preparing and circulating an agenda for the upcoming meeting, which shall include agenda items proposed by either Party no less than ten (10) calendar days prior to the next scheduled JSC meeting.
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3.3           JSC Meetings. The JSC shall hold meetings at least once every six months, and more frequently as necessity requires. The first JSC meeting shall be held at a mutually agreed venue and date following the Effective Date. Meetings of the JSC shall be effective only if at least one (1) representative of each Party is present or participating. The JSC may meet either (i) in person at either Party’s facilities, or (ii) by audio or video teleconference. Additional meetings of the JSC may also be held with the consent of each Party. Each Party shall be responsible for all of its own expenses incurred in connection with participating in the JSC meetings or any of the other committee meetings.
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3.4           Decision-Making. The JSC shall endeavor to reach consensus on all matters brought before it pursuant to Section 3.1, with each Party having a single vote, irrespective of the number of representatives actually in attendance at a meeting. The JSC shall use Commercially Reasonable Efforts to resolve the matters brought before it pursuant to Section 3.1. DSP shall have the final decision making authority with respect to Development of the Compound and Product in the Field in the Territory. In the event that either Party has concern about whether the Development and the Commercialization of the Compound and/or the Product is reasonably likely to have a materially negative impact on the Compound or the Product inside or outside the Territory, the Parties shall consult through the JSC for a period of thirty (30) days; failing resolution of which, such matter shall be elevated to the CEO of Intercept and the CEO of DSP, for attempted resolution in good faith within the time frame set forth in Section 16.1.
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3.5           Progress Reports and Exhibit Amendments. At each meeting of the JSC and, as applicable, that of any sub-committee or new committee established by the JSC, DSP shall provide Intercept with a written report summarizing its activities and progress regarding the Development and Commercialization of the Compound and Product in the Field in the Territory, including its marketing and promotional materials, which may, in DSP’s option, be in the local language of the country in the Territory to which it pertains. At each meeting of the JSC, and, as applicable, that of any sub-committee or new committee established by the JSC, Intercept shall provide DSP with a written report summarizing its Development activities of the Compound and Product outside the Territory and its Development activities of the Additional Indications outside the Territory. In addition, at each meeting of the JSC, each Party shall inform the other of any Improvements conceived by or on behalf of such Party, as well as any Joint Improvements. Notwithstanding Section 17.4, upon the notification to the JSC through a progress report (or otherwise) of the filing of a patent application with respect to any Improvement or Joint Improvement, Exhibit A shall be deemed automatically amended, and an updated version of Exhibit A shall be distributed to the Parties together with the meeting minutes.
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3.6           Sub-committees. From time to time, the JSC may establish and delegate duties to sub-committees to oversee particular projects or activities. Each such sub-committee shall be constituted and shall operate as the JSC determines. Each sub-committee and its activities shall be subject to the oversight, review and approval of, and shall report to, the JSC. It is contemplated that, at the appropriate time, the JSC will expand its scope of activity to include consultation, discussion and decision-making with respect to Commercialization or, alternatively, decide that a separate decision-making committee should be established to govern Commercialization planning and implementation. In the case that the JSC decides that such a new committee should be established, such committee shall be formed and governed according to the same principles as the JSC.
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3.7           Alliance Manager. Each Party shall designate an alliance manager, who shall be responsible for the day-to-day coordination of the collaboration between the Parties and shall facilitate communication between the Parties. The Alliance Manager, may but need not be, one of the designated members of the JSC.
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4.          DEVELOPMENT AND COMMERCIALIZATION
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4.1           Commercially Reasonable Efforts.
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4.1.1           DSP’s Commercially Reasonable Efforts. From and after the Effective Date, DSP shall use Commercially Reasonable Efforts to Develop and Commercialize the Compound and the Product in the Field (including with respect to any Additional Indications) in the Territory. Subject to Section 9.4, DSP shall be responsible for all costs and expenses incurred by it in connection with such Development and Commercialization activities.
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4.1.2           Intercept’s Commercially Reasonable Efforts. From and after the Effective Date, Intercept shall use Commercially Reasonable Efforts to Develop the Compound and the Product anywhere outside the Territory, either on its own or through Third Party licensees or subcontractors. In addition, from and after the Effective Date, Intercept shall (i) use Commercially Reasonable Efforts to Develop the Additional Indications outside the Territory in accordance with the Intercept Development Plan outside the Territory and (ii) shall use
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Commercially Reasonable Efforts to cause each of its licensees to use Commercially Reasonable Efforts to Develop the Additional Indications outside the Territory.
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4.2           Information and Data Exchange.
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4.2.1           Intercept Technology. No later than thirty (30) days following Intercept’s receipt of the Upfront Fee set forth in Section 9.1, Intercept shall transfer and otherwise make available to DSP, its Affiliates and its designated Third Party subcontractors the Intercept Technology and all material information and data relating thereto to enable DSP to engage in the Development and Commercialization of the Product in the Field in the Territory. The transfer of the Intercept Technology and related information and data shall be made in readily accessible electronic format wherever possible. Following the payment of the “Upfront Payment” pursuant to Section 9.1, Intercept shall, for no additional consideration, undertake to provide reasonable assistance DSP, its Affiliates and sublicensees.
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4.2.2           Non-Territory Data. Intercept shall make available to DSP, its Affiliates and Third Party subcontractors any clinical and non-clinical data, post-marketing data and information which is generated by or in connection with Intercept and its licensees’ Development of the Compound and Product, both in the Field and with respect to Additional Indications outside the Territory (the “Non-Territory Data”), which data and information may be used by DSP for [***] in connection with its Development, Commercialization and/or Manufacturing, as well as its activities to gain Regulatory Approval for the Product in the Field in the Territory. Intercept shall maintain Non -Territory Data in conformity with all applicable Laws and regulations and in a good scientific manner appropriate for patent and regulatory purposes. Intercept shall use Commercially Reasonable Efforts to cause any Third Party or Affiliate who is engaged in the Development of the Compound or Additional Indications outside the Territory to provide access to DSP and its Affiliates for the Non-Territory Data for [***].
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4.3           Necessary Third Party Patents. In the event that DSP determines, in the exercise of sound business judgment, it is necessary to license or acquire Necessary Third Party Patents in connection with the Development, Manufacture or Commercialization of the Product in the Field in the Territory, it shall so notify Intercept in writing explaining the reasons therefor, following which the Parties shall engage in good faith discussions concerning such matter. DSP’s request for Necessary Third Party Patents shall require Intercept’s prior consent, which shall not be unreasonably withheld or delayed.
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4.4           Records. DSP shall maintain scientific records, in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, which will fully and properly reflect all work done and results achieved in the performance of the Development and Commercialization activities with respect to the Product in the Field in the Territory; all of the foregoing in conformity with standard pharmaceutical industry practices, the terms and conditions of this Agreement, and all applicable Laws and regulations (including re-examination systems for post-marketing information). DSP shall provide Intercept with reasonable access to the scientific records maintained by DSP pursuant to this Section 4.4 which may be used by Intercept in pursuance of its Development activities for the Compound and the Product outside the Territory.
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4.5           Cooperation. Except as expressly forth herein, each Party shall, at its own cost and expense, provide all reasonable assistance and take all actions reasonably requested by the other Party that are necessary or desirable to enable the Development and Commercialization of the Product in the Field in the Territory. Further, Intercept shall provide reasonable assistance to DSP to prepare the regulatory materials for Regulatory Approval and to respond to Regulatory Authorities’ inquiries and investigation relating to analysis of data arising from non-clinical studies, pre-clinical studies and/or clinical trials conducted by Intercept. In the event that a Regulatory Authority and/or DSP reasonably requests Intercept to disclose its data and documentation related to the Intercept Technology for an IND or NDA to be prepared or filed outside the Territory, Intercept shall cooperate with this request by providing such Regulatory Authority and DSP with the requested data and documentation. In the event that DSP reasonably requests to audit Intercept and its sub-contractors or licensees, Intercept shall, and shall cause its licensees and sub-contractors to, allow such audit, subject to customary prior notice requirements.
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5.          REGULATORY MATTERS
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5.1           Commercially Reasonable Efforts. DSP shall use Commercially Reasonable Efforts, at its own expense, with respect to all regulatory activities concerning the Development and Commercialization of the Products in the Field in the Territory. DSP shall have sole responsibility for all pricing and reimbursement approval proceedings relating to each Product in the Field in the Territory. In the event that DSP wishes to commence Development of the Product in China following Intercept’s receiving Regulatory Approval in the U.S. and prior to the receipt of Regulatory Approval in Japan, Intercept shall cooperate with DSP based on mutual good faith discussions. Upon reasonable prior notice and during normal business hours, Intercept shall, and shall cause its Affiliates and its Third Party sub-contractors to whom all or a part of the Development outside the Territory has been entrusted or contracted, to allow the inspection by a Regulatory Authority which is required as a condition of Regulatory Approval for the Product in the Field in the Territory. DSP shall use its Commercially Reasonable Efforts to provide any information concerning such inspection to Intercept in a timely manner. Intercept shall manage, but shall permit DSP or its designated representatives to be present at any inspection conducted by such Regulatory Authority. If any issue or concerns are raised concerning the Development of the Compound or the Product in connection with the inspection by such Regulatory Authority, Intercept shall immediately inform and discuss with DSP to solve the issue, including any recommendations made by the Regulatory Authority.
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5.2           Ownership of Regulatory Approvals. DSP (or its designated Affiliate or sublicensee) shall be the holder of all Regulatory Approvals issued by Regulatory Authorities with respect to the Product in the Field in the Territory and shall be responsible, at its own cost, for preparing and, subject to Section 5.1 hereof, drafting all regulatory filings in the Territory (including any supplements or modifications thereto). DSP (or through its designated Affiliate or sublicensee) shall, subject to Section 5.1 above, be responsible for communicating with and negotiating with all Regulatory Authorities in the Territory and shall keep Intercept informed of the status of regulatory filings.
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5.3           Pharmacovigilance. The Parties agree to handle safety information including adverse events occurring or having occurred in connection with the use of the Compound or the Product in accordance with applicable Laws and requirements of relevant Regulatory Authorities. The Parties shall exchange all safety information including adverse events occurring or having occurred in connection with the use of the Compound or the Product. The Parties shall execute a separate agreement relating to safety matters on the Compound or the Product including the procedure for the exchange of safety information during the Term of the Agreement.
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6.          MANUFACTURING
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6.1           Clinical Supply. Intercept shall, by itself or through its Third Party contract manufacturers, supply to DSP (or its Affiliates, sublicensees or sub-contractors) all quantities of Clinical Supplies of the Product (packaged or prepackaged) required by DSP to Develop the Product in the Field in the Territory and for quality control analysis. The Parties shall discuss in good faith and cooperate with each other with respect to the negotiation of a manufacturing and clinical supply agreement (the “Clinical Supply Agreement”) governing the supply of Clinical Supplies of the Product (packaged or pre-packaged). Intercept undertakes to improve quality assurance system and /or organization to supply DSP (or its Affiliates, sublicensees or sub-contractors) with Clinical Supply, including permitting and causing any of its Third Party sub-contractors to permit, an audit by DSP for quality assurance purposes. The Clinical Supply Agreement shall include, among other customary provisions, the following or substantially equivalent provisions:
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6.1.1           Intercept shall, before entering into any negotiations for an agreement with a Third Party contract manufacturer of Clinical Supplies for supply to DSP (or its Affiliates, sublicensees or sub-contractors) hereunder notify DSP of the fact. Thereafter, DSP shall have the right to provide input within thirty (30) days regarding the terms of such agreement (as well as any amendments thereof), review and comment on the draft agreement and participate in person in the negotiation of such agreement. However, Intercept shall have final determination of the terms. Further, Intercept shall provide DSP with an execution copy of each agreement between Intercept and any Third Party contract manufacturer.
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6.1.2           From time to time, DSP shall submit to Intercept purchase orders for quantities of Clinical Supplies and Intercept shall supply or have supplied to DSP such quantities of Clinical Supplies. DSP’s sole financial liability with respect to Clinical Supplies shall be to reimburse Intercept for the Actual Costs. DSP shall provide Intercept with non-binding forecasts of DSP’s purchase orders for Clinical Supplies which may be placed for the initial [***] ([***]) [***] after the Effective Date, and thereafter DSP shall provide Intercept with non-binding forecasts of DSP’s purchase order for Clinical Supplies [***] ([***]) [***] prior to the estimated date of placing the purchase order. The purchase orders for Clinical Supplies shall be placed to allow no less than [***] ([***]) [***] lead time prior to the shipment dates specified in the purchase orders, and upon placement shall be deemed non-cancelable, unless Intercept indicates that it does not have sufficient stock of Clinical Supplies to accommodate the lead time specified in DSP’s purchase order, in which event the lead time for the Clinical Supplies for such order shall be determined by mutual agreement of Intercept and DSP through good faith discussions; provided that should the Parties not reach agreement on an adjusted lead time, then DSP may cancel the relevant purchase order. Notwithstanding the foregoing, Intercept shall use best reasonable efforts to comply with the purchase orders. The risk of loss and damage for, and the title in, Clinical Supplies supplied hereunder shall pass to DSP upon delivery of the Clinical Supplies to the carrier designated by DSP. Shipment shall be FCA an international airport or port designated by Intercept as defined in INCOTERMS 2010, as amended. DSP may at any time elect to Manufacture or have Manufactured the Clinical Supplies, provided such election will not terminate any purchase orders for Clinical Supplies submitted by DSP to Intercept prior to notice of such election.
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6.1.3           Intercept shall invoice DSP for such Clinical Supplies with each shipment, clearly setting forth the calculation of the Actual Cost for the shipped order of the Clinical Supplies and DSP shall pay such invoices within thirty (30) days of its receipt of such invoice.
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6.2           Commercial Supply. Intercept shall supply DSP (or its Affiliates, sublicensees or sub-contractors) with all DSP’s requirements of the Commercial Supplies until such time as DSP provides written notice to Intercept that DSP is ready to commence Manufacturing (or have Manufactured) of the Product on its own or on its behalf. Intercept shall be responsible for the Manufacture of the Commercial Supplies in compliance with the Specifications, GMP and all applicable Laws. The Parties shall discuss in good faith and cooperate with respect to the negotiation of a manufacturing and supply agreement (the “Commercial Supply Agreement”) governing the supply of the Commercial Supply by or on behalf of Intercept, to DSP (or its Affiliates, sublicensees or sub-contractors) for the Commercialization of the Product in the Field in the Territory at the initiation of the Phase III Clinical Trials in Japan. In the event that manufacturing batches for the U.S. are conducted prior to the commencement of Phase III Clinical Trials in Japan, Intercept shall afford DSP a reasonable opportunity to comment upon and make suggestions with respect to such manufacturing validation, which Intercept shall use good faith efforts to incorporate on a going-forward basis. The Commercial Supply Agreement shall contain, in addition to other customary terms, the following terms and conditions:
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6.2.1           The transfer price for the first three orders of the Commercial Supply supplied to DSP by or on behalf of Intercept following receipt of Marketing Approval in Japan shall be calculated at the rate of [***] percent ([***]%) of [***] in effect on the date upon which each such order is sent to Intercept by DSP.
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6.2.2           The fourth and subsequent orders of the Commercial Supply supplied to DSP by or on behalf of Intercept following receipt of Marketing Approval in Japan shall be based on the Actual Cost plus [***] percent ([***]%) of the Actual Costs. The target actual cost is less than or equal to $[***] (the “Target Actual Cost”). In the event that the Actual Cost exceeds such Target Actual Cost, Intercept shall use Commercially Reasonable Efforts to reduce the Actual Cost. Should that not be possible, the Parties shall discuss in good faith an increased Target Actual Cost for the Product.
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6.2.3           Intercept shall, before entering into any negotiation for an agreement with a Third Party contract manufacturer of Commercial Supplies to DSP hereunder, notify DSP of the fact. Thereafter, DSP shall have the right to provide input regarding the terms of such agreement (as well as any amendments thereof), review and comment on the draft agreement and participate in person in the negotiation of such agreement. Further, Intercept shall provide DSP with an execution copy of each agreement between Intercept and any Third Party contract manufacturer.
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6.3           Additional Supply Terms and Conditions. In addition to the supply terms and conditions to be incorporated in the Clinical Supply Agreement and the Commercial Supply Agreement pursuant to Sections 6.1 and 6.2 respectively, each of the Clinical Supply Agreement and the Commercial Supply Agreement shall also include provisions substantially similar to the following:
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6.3.1           Conformity. All Products Manufactured and supplied by or on behalf of Intercept under each of the Clinical Supply and the Commercial Supply Agreement shall strictly conform to (i) the Specifications and (ii) GMP.
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6.3.2           Change Control. If Intercept wishes to change the Specifications, the location of the Manufacturing site, the Manufacturing process, or the raw materials, which in the case of each of the foregoing requires approval of the Regulatory Authorities, Intercept shall first obtain the prior written consent of DSP (not to be unreasonably withheld) and provide the information relevant to such proposed change to DSP, following which DSP shall use Commercially Reasonable Efforts to obtain any required approval from the Regulatory Authorities. Intercept shall provide DSP with all reasonable assistance with respect to the foregoing. When Intercept wishes to make any change in the Manufacturing process or the raw materials which, in either case, is subject to a reporting or notification requirement to Regulatory Authorities, Intercept shall notify DSP sufficiently in advance so that DSP may comply with such reporting or notification requirements. Prior to initiating any change in the Specifications, the location of the Manufacturing site, the Manufacturing process, or the raw materials, Intercept and DSP shall discuss in good faith and agree upon the quantity of a reasonable safety stock of the Product to be maintained until completion of the any proposed change.
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6.3.3           GMP Audit by DSP. DSP may audit the facilities of Intercept, its Affiliates or its Third Party subcontractors upon reasonable prior notice and during normal business hours. Intercept shall allow and shall cause its Affiliate or its Third Party subcontractors to allow such inspection to the extent such facilities relate to the Manufacture of the Compound and/or the Product. Intercept shall, and shall cause its Affiliates and Third Party sub-contractors, to use Commercially Reasonable Efforts to implement changes reasonably requested by DSP as a result of any GMP audit undertaken pursuant to the preceding sentence.
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6.3.4           Inspection by Regulatory Authority. Upon reasonable prior notice and during normal business hours, Intercept shall allow, and shall cause its Affiliates and its Third Party subcontractors to whom all or a part of the Manufacturing process of the Compound and/or the Product has been entrusted or contracted to allow, the inspection by the Regulatory Authority which is required as a condition for obtaining or maintaining Regulatory Approval for the Product in the Field in the Territory. DSP shall use its Commercially Reasonable Efforts to provide any information concerning such audit to Intercept in a timely manner. Intercept shall permit DSP or its designated representatives to be present at any audit conducted by any Regulatory Authority pursuant to this Section 6.3.4. If any issue or concerns are raised concerning the Manufacturing of the Compound or Product in connection with the audit by such Regulatory Authority, Intercept shall immediately inform DSP, including any recommendations made by the Regulatory Authority.
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6.3.5           Quality Assurance Agreement. The Parties shall enter into a mutually agreed-upon companion quality agreement (the “Quality Assurance Agreement”) with respect to each of the Clinical Supply Agreement and the Commercial Supply Agreement, which shall set forth in detail the quality assurance arrangements and procedures of the Product and the GMP responsibilities between the Parties prior to the Manufacture of the Compound to be used for the first commercial lot of the Product.
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6.4           Technical Transfer. In the event that DSP wishes to commence the Manufacture of the Compound and/or Product itself (including having the Product Manufactured), DSP shall raise the issue to the JSC for consultation with Intercept with respect to the timing and other related details of the Technical Transfer of the Intercept Manufacturing Technology so to enable DSP to Manufacture or have Manufactured the Compound and the Product for Commercialization in the Territory.
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6.4.1           Immediate Transfer. Following consultation with the JSC, Intercept shall use Commercially Reasonable Efforts to make available, or cause to be made available, in either case, within sixty (60) days to DSP, its Affiliates, and its designated Third Party subcontractors, all relevant information, data, and Intercept Know-How relating to the Intercept Manufacturing Technology. To give effect to the foregoing, DSP shall have the right to obtain transfer and Intercept shall have the obligation to give immediate transfer free of charge to DSP, its Affiliates and its designated Third Party subcontractors, without undue delay, of any and all Intercept Manufacturing Technology necessary to enable DSP to Manufacture or have Manufactured the Compound and/or Product by a Third Party subcontractor to meet DSP’s requirements (the foregoing, the “Technical Transfer”).
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6.4.2           Additional Licenses. In connection with the Technical Transfer, Intercept hereby grants to DSP a non-exclusive right, non-royalty-bearing license, with the right to sublicense to its Affiliates and Third Party subcontractors, with prior notice to and reasonable approval of Intercept, to use the Intercept Manufacturing Technology both in the Territory and outside the Territory to engage in the Manufacture of the Compound and/or Product for Commercialization in the Territory. If any Intercept Manufacturing Technology is within the control or possession of a Third Party, Intercept shall use Commercially Reasonable Efforts to obtain the cooperation and assistance of such Third Party in connection with the Technical Transfer.
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6.4.3           Assistance and Continued Supply Obligation. Both Parties acknowledge that the process of DSP’s becoming manufacturing-ready may require reasonable assistance from Intercept, which Intercept agrees to provide as reasonably requested. At the request of DSP made pursuant to Section 6.4, Intercept shall facilitate the transfer of the Intercept Manufacturing Technology from Intercept’s contract manufacturers to DSP and/or its contract manufacturers, in which case the expenses reasonably incurred for the Technical Transfer shall be borne by DSP. During the Term of this Agreement, Intercept shall remain available to answer technology transfer questions relating to the Intercept Manufacturing Technology. In the event DSP should require any additional technical assistance beyond the Term of this Agreement, Intercept shall provide such assistance at DSP’s expense to the extent Intercept has personnel available. Intercept makes no warranty, express or implied, with respect to the Intercept technical assistance. Further, Intercept shall supply the Clinical Supplies and Commercial Supplies to DSP hereunder until DSP indicates that it is ready to Manufacture or have Manufactured the Compound or Product. If, notwithstanding Intercept’s Commercially Reasonable Efforts, Intercept reasonably determines that Manufacture and supply of the Commercial Supply are not practicable for a technical and/or economic reason, Intercept’s commitment to supply Product may be terminated upon three (3) years prior written notice to DSP, in which event Intercept shall, (i) at DSP’s option, (x) assign to DSP certain contracts between Intercept and its subcontractors which are selected by DSP or (y) arrange for DSP to negotiate its own terms and conditions with Intercept’s subcontractors designated by DSP, and (ii) bear all reasonable cost and effects arising in connection with the Technical Transfer.
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7.          ADDITIONAL INDICATIONS OPTION
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7.1           Development of Additional Indications for Products. The Parties shall cooperate in good faith in generating ideas and concepts for Additional Indications for Products.
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7.2           Grant of Option. Subject to the terms and conditions of this Agreement and throughout the Term of the Agreement, Intercept hereby grants to DSP the exclusive option to an exclusive license to Products in the Territory for each and every Additional Indication (both present and future) on the same terms and conditions as provided for the Product in the Field (each such Additional Indication, an “Additional Indication Option”). For the avoidance of doubt, the rights granted to Intercept pursuant to Section 7.3.3 below with respect to Third Parties shall have effect only in the event that DSP declines to exercise a particular Additional Indications Option.
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7.3           Exercise Period; Exercise of Additional Indications Option. The period during which DSP may exercise each Additional Indications Option shall commence on the date that Intercept notifies DSP in writing of the “first patient” in a Phase III Clinical Trial for the target Additional Indication by Intercept and/or its licensees outside the Territory (the “Additional Indications Option Commencement Notice”) and shall end on the [***] ([***]) [***] of the receipt by DSP of the Additional Indications Option Commencement Exercise Notice (the foregoing period, the “Additional Indications Exercise Period”). DSP may exercise each Additional Indications Option at any time during the Additional Indications Exercise Period by (i) providing written notice to Intercept that DSP has obtained required internal approvals to commence a pivotal clinical study for the target Additional Indication (the “Additional Indications Option Exercise Notice”) and (ii) making payment of the applicable fee indicated in Section 7.3.1 below to a bank account designated by Intercept (each payment, an “Additional Indications Option Fee”) within thirty (30) calendar days of dispatch of the Additional Indications Option Exercise Notice. The Additional Indications Option shall be deemed duly exercised on the date when Intercept has received both items (i) and (ii) (the “Additional Indications Option Effective Date”).
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7.3.1           Additional Indications Option Fee. The Additional Indications Option Fee shall be US$[***] ([***] U.S. Dollars) for each Additional Indication. For the sake of clarity, no Additional Indications Option Fee is required to be paid upon the exercise of any Additional Indications Option in China. Upon the exercise of each Additional Indications Option, DSP shall be entitled to exercise the rights granted to it under Section 7.1 with respect to the target Additional Indication in the Territory as it is constituted on the Additional Indications Option Effective Date and as it may thereafter be constituted through the exercise by DSP of the Country Option.
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7.3.2           License Grant. Following each Additional Indications Option Effective Date, (i) the definition of “Field” shall be automatically amended and expanded to include the target Additional Indication and (ii) Intercept shall provide DSP with any copies and access to any Know-How or Technology in its Control relating to the target Additional Indication.
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7.3.3           Non-Exercise of Additional Indication Option. If DSP declines in writing to exercise any particular Additional Indications Option within the Additional Indications Exercise Period, then Intercept may grant the right to a Third Party to develop and commercialize the target Additional Indication in the Territory; provided that should any discussions with a Third Party not result in a binding written agreement for the target Additional Indication, then DSP’s Additional Indications Option with respect to such target Additional Indication shall revive and the provisions of Article 7 shall apply thereto.
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7.4.          Separate Nature. For the sake of clarification, the exercise of the Additional Indications Option by DSP in connection with one of the Additional Indications shall not be construed as relieving Intercept of the obligation of complying with Articles 7.1-7.3 above with respect to each Additional Indication.
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8.          COUNTRY OPTION
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8.1           Grant and Exercise of Country Option. Intercept hereby grants to DSP the exclusive option to add any or all of the following countries to the Territory: Korea, Taiwan, Malaysia, Vietnam, the Philippines, Thailand, Singapore and Indonesia (the “Country Option”). DSP shall have a separate exclusive option with respect to each of the countries listed in the preceding sentence, such that the exercise by DSP of the Country Option with respect to one country shall not be deemed a waiver of its rights with respect to the other countries listed in the first sentence of this Section 8.1. Upon the exercise of the Country Option by DSP with respect to any particular country, such country shall be automatically deemed a part of the Territory. The exercise of the Country Option with respect to one country shall automatically include all Fields in the Territory.
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8.2           Country Option Fee. The Country Option shall be exercisable at DSP’s discretion at any time from the Effective Date to the date of issuance of Marketing Approval for Commercialization of the Product in the Field in Japan by providing written notice of its intent to the exercise the Country Option (the “Country Option Exercise Notice”). DSP shall pay an exercise fee of US$[***] ([***] U.S. Dollars) per each country, due within [***] ([***]) [***] following exercise of the relevant Country Option. Unless exercised in accordance with this provision, or as otherwise set forth in this Agreement, the Country Option shall expire on the date upon which Regulatory Approval for the sale of the Product in the Field in Japan is issued.
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8.3           Third Party Offers. Notwithstanding the exclusive option granted to DSP in Section 8.1 hereof, following the [***] ([***]) [***] of the Effective Date, in the event that Intercept desires to accept or make a bona fide offer from a Third Party for the exclusive development and/or commercialization rights for the Product in countries listed in the first sentence of Section 8.1 (the “Target Country”), Intercept shall immediately notify DSP in writing and indicate the Target Country, desired indications, and provide a summary of the material financial terms and conditions of the offer (the “Third Party Offer Notice”). Within forty-five (45) calendar days of receipt of the Third Party Offer Notice, DSP shall notify Intercept in writing whether or not it wishes to exercise the Country Option for the Target Country (the “Country Exercise Option Notice”). If DSP desires to exercise the Country Option for the Target Country, DSP shall make the payment of the Country Option Fee for the Target Country to a bank account designated by Intercept no later than thirty (30) calendar days following dispatch of the Country Exercise Option Notice. If DSP declines to exercise the Country Option for the Target Country, then Intercept shall be free to negotiate with the Third Party on terms no less materially favorable than those contained in the Third Party Offer Notice; provided that should such negotiations fail, then DSP’s Country Option shall revive with respect to the Target Country.
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8.4           Right of First Negotiation. Prior to accepting or making a bona fide offer from or to a Third Party with respect to the exclusive development and commercialization rights for the Compound in the Field (including all Additional Indications) in the U.S. and Canada, Intercept shall promptly deliver a written notice thereof to DSP. Intercept and DSP shall engage in good faith negotiations, but to avoid any confusion, Intercept shall also be free to engage in good faith negotiations with such Third Party Offeror; provided that should the parallel discussions between Intercept and such Third Party and Intercept and DSP not result in a binding agreement, then this Right of First Negotiation shall revive with respect to any subsequent offers from or to third parties with respect to the rights described in this Section 8.4. Further, in the event that DSP terminates the Agreement based on the cessation of development of the Compound or the Product by Intercept, then immediately following such termination, DSP and Intercept shall engage in good faith discussions concerning the exclusive development and commercialization rights for the Compound in the Field (including all Additional Indications) in the U. S. and Canada.
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9.          PAYMENTS
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9.1           Upfront Fee. DSP shall make a one-time, non-refundable, non-creditable payment to Intercept of US$15,000,000 (Fifteen Million Dollars) (“Upfront Fee”) within thirty (30) calendar days of the Effective Date to a bank designated in writing by Intercept. It is acknowledged that this upfront fee shall include the consideration for the rights granted to DSP in Section 8.4. All references to “fiscal year” shall refer to the Japanese fiscal year which ends on March 31 of each calendar year and indicate that it applies to all sub-sections in Article 9 and also Article 10.
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9.2           Milestone Payments. The milestone payments set forth in this Section 9.2 shall be paid only once, upon the first achievement of the applicable milestone event in the applicable listed geographic area. For purposes of determining whether a milestone event set forth in Sections 9.2.2 and 9.2.3 has occurred (and without creating an obligation to pay the milestone more than once as set forth in the preceding sentence), Net Sales for each fiscal year shall be aggregated for all Products sold in the Territory during the relevant fiscal year.
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9.2.1           Within thirty (30) calendar days following the occurrence of each of the events set forth below for the Product, DSP shall pay to Intercept each of the non-refundable, non-creditable milestone payments set forth below:
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	Milestone Event
	Milestone Payment

	 
	 

	Development Milestones
	 

	 
	 

	Japan
	 

	 
	 

	PBC-Commencement of Phase III Clinical Trial
	US$[***]

	 
	 

	PBC-Marketing Approval
	US$[***]

	 
	 

	NASH-2nd indication-Marketing Approval
	US$15,000,000.00

	 
	 

	Additional Indications-Marketing Approval
	US$[***]

	 
	 

	China
	 

	 
	 

	PBC-Commencement of Phase III Clinical Trial
	US$[***]

	 
	 

	PBC-Marketing Approval
	US$[***]

	 
	 

	NASH-2nd indication-Commencement of Phase III Clinical Trial
	US$[***]

	 
	 

	NASH-Marketing Approval
	US$10,000,000.00

	 
	 

	Additional Indications-Commencement of Phase III Clinical Trial
	US$[***]

	 
	 

	Additional Indications-Marketing Approval
	US$[***]

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	United States
	 

	 
	 

	PBC-Marketing Approval
	US$3,000,000.00*

	 
	 

	NASH Successful NIH Clinical Trial
	US$[***]**

	 
	 

	NASH-Marketing Approval
	US$[***]***

	 
	 

	Other Asian countries
	 

	 
	 

	PBC-Initiation of clinical trial
	US$[***]

	 
	 

	PBC-Marketing Approval
	US$[***]

	 
	 

	Additional Indications-Initiation of clinical trial
	US$[***]

	 
	 

	Additional Indications-Marketing Approval
	US$[***]

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*In the event that the WAC exceeds US$[***] per day before approval in Japan, then an amount of US$2,000,000.00 shall be paid as an additional milestone payment (i.e., a total of US$5,000,000.00).
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**The milestone payment for the NASH NIH clinical trial is conditioned on the results being available no later than [***], and supporting a decision by the JSC to continue Development of the Product for the NASH indication.
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***In the event that (i) the NASH Marketing Approval in the U.S. occurs prior to the end of 2017 (i.e., based on a sNDA submission of the NIH clinical trial data) and DSP is able to use these data in support of a NDA submission in Japan, then the additional amount of US$[***] shall be paid (i.e., a total of US$[***]); but (ii) if the NASH Marketing Approval in the U.S. occurs after the Marketing Approval in Japan, then no milestone payment of US$[***] as set forth in the chart above shall be due.
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9.2.2           Sales Milestones. Within sixty (60) calendar days following the end of each calendar quarter in which any event set forth below occurs, DSP shall notify Intercept of such event via the reports as indicated in Section 10.1 and within sixty (60) calendar days following the end of such calendar quarter shall pay to Intercept each of the non-refundable, non-creditable milestone payments set forth below. For the avoidance of doubt, in the event that two or more of the events set forth below occur during the same calendar quarter, then DSP shall pay to Intercept the aggregate of the applicable sales milestone payments set forth below in the manner set forth in the first sentence of this Section 9.2.2.:
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	Net Sales exceed US$50 Million (one time only payment)  
	US$5,000,000.00
	 

	 
	 
	 

	Net Sales exceed US$100 Million (one time only payment)  
	US$10,000,000.00
	 

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	Net Sales exceed US$200 Million (one time only payment)  
	US$20,000,000.00
	 

	 
	 
	 

	Net Sales exceed US$400 Million (one time payment only)
	US$40,000,000.00
	 

	 
	 
	 

	Net Sales exceed US$1,200 Million (one time payment only)
	US$120,000,000.00
	 

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9.2.3           Royalty Tiers. DSP shall pay to Intercept a royalty of [***] percent ([***]%) based on total annual Net Sales of all Products in the Field in the Territory for each fiscal year (i.e. ending on March 31 of each calendar year) in which the Net Sales of all Products in the Territory for such year is less than US$[***] (the “First Tier Royalty Rate”). DSP shall pay to Intercept a royalty of [***] percent ([***]%) based on total annual Net Sales of all Products in the Field in the Territory for each fiscal year in which the Net Sales of all Products in the Territory for such year is US$[***] or more but less than US$[***] (the “Second Tier Royalty Rate”). DSP shall pay to Intercept a royalty of [***] percent ([***]%) based on total annual Net Sales of all Products in the Field in the Territory for each fiscal year in which the Net Sales of all Products in the Territory for such year exceeds US$[***] (the “Third Tier Royalty Rate”). Notwithstanding the foregoing, the transfer price for the [***] of the Commercial Supplies to DSP by Intercept following receipt of Marketing Approval in Japan shall be calculated in accordance with Section 6.2.1 and shall be deemed to including the running royalty payment, and accordingly no further royalty payments by DSP shall be required with respect thereto; however in no event will the transfer price be less than the [***] percent ([***]%) plus the applicable First, Second or Third Tier Royalty Rate.
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9.3           Reduced Royalty Rates for Net Sales
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9.3.1           Reduced Royalty Rates in Countries Excluding Japan. If at any time [***] of the First Commercial Sale in a country in the Territory (excluding Japan), a generically equivalent product enters the market and captures more than [***] percent ([***]%) of the market share as determined by unit sales (“Market Share”) for [***], then the country shall be designated an “Eroded Country” beginning the first day of the next calendar quarter. For the purpose of determining royalty payments due on an Eroded Country’s Net Sales, total annual Net Sales will be assessed country-by-country and not aggregated with other country Net Sales in the Territory. The reduced royalty rates that shall apply in an Eroded Country are as follows:
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i.    Eroded Country Net Sales up to US$[***] assessed at [***] percent ([***]%); and
ii.   Eroded Country Net Sales of US$[***] up to (but less than) US$[***] assessed at [***] percent ([***]%); and
iii.  Eroded Country Net Sales of US$[***] or more assessed at [***] percent ([***]%).
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Thereafter, DSP’s Market Share in each subsequent calendar quarter will be assessed and if the Market Share is restored to [***] percent ([***]%) or above then the royalty rates set forth in Section 9.2.3 shall apply again to Net Sales in that country, which shall be aggregated with all other Net Sales (excluding Eroded Country Net Sales), and if the Market Share remains or falls back below [***] ([***]%) in any calendar quarter, then the Eroded Country reduced royalty rates set forth in this Section 9.3.1 shall apply. The JSC shall be responsible for determining the most effective means to implement an effective Market Share, Net Sales and royalty tracking system in the Territory in order to give effect to DSP’s royalty payment obligations hereunder.
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9.3.2           Reduced Royalty Rates in Japan. The royalty rates set forth in Section 9.2.3 shall remain in effect with respect to total annual Net Sales in Japan until such time as (i) the substance patent in Japan expires (after taking into account all available extensions) and (ii) a generically equivalent product enters the market and captures more than [***] percent ([***]%) of the Market Share for [***]. Thereafter, beginning the first day of the next calendar quarter, Japan shall be designated an Eroded Country and DSP shall pay Intercept a reduced royalty of [***] percent ([***]%) on total annual Net Sales in Japan for [***] of such designation, [***] percent ([***]%) on total annual Net Sales for the [***] of such designation, and then [***] percent ([***]%) on total annual Net Sales thereafter. Once Japan has been designated as an Eroded Country, DSP’s Market Share in each subsequent calendar quarter will be assessed and if the Market Share is restored to [***] percent ([***]%) or above then the royalty rates set forth in Section 9.2.3 shall apply again to Net Sales in Japan, which shall be aggregated with all other Net Sales (excluding Eroded Country Net Sales), and if the Market Share remains or falls back below [***] percent ([***]%) then the Eroded Country reduced royalty rates set forth in this Section 9.3.2 shall apply at the applicable royalty rate based on the cumulative number of quarters that had previously passed while Japan had been designated an Eroded Country. The JSC shall be responsible for determining the most effective means to implement an effective Market Share, Net Sales and Royalty tracking system in the Territory in order to give effect to DSP’s royalty payment obligations hereunder.
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9.4           Necessary Third Party Technology Payments. DSP shall be entitled to deduct [***] percent ([***]%) of all royalties it is required to pay to a Third Party for Necessary Third Party IP under any agreement to license or acquire intellectual property used in the Development or Commercialization of the Product in the Field in the Territory up to a maximum of [***] percent ([***]%) for purposes of Section 9.2.3, or [***] percent ([***]%) for purposes of Section 9.3.1 or 9.3.2 of the applicable royalty rate.
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10.         PAYMENT; RECORDS; AUDITS
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10 .1         Payment; Reports. Royalties shall be calculated and reported during the fiscal year for each calendar quarter. All payments due to Intercept under this Agreement shall be paid within sixty (60) calendar days after the end of each calendar quarter. DSP shall deliver to Intercept (i) within thirty (30) calendar days after the end of each calendar quarter a report of gross sales of Product in the Territory and (ii) within sixty (60) days after the end of each calendar quarter, a report certified by DSP as accurate to the best of its ability based on information then available to DSP, setting forth for such calendar quarter the following information on a country-by-country basis and other such information to permit confirmation of the accuracy of the information for which payments are calculated including: (i) gross and Net Sales of Product, (ii) the basis for any adjustments to the royalty payable for the sale of Product, and (iii) the royalty due hereunder for the sale of Product. All payments hereunder shall be payable in U.S. dollars. All payments owed under this Agreement shall be made by wire transfer in immediately available funds to a bank and account designated in writing by Intercept. Conversion of foreign currency to U.S. Dollars shall be made at the Telegraphic Transfer Selling (TTS) rate published by Sumitomo Mitsui Banking Corporation or any other mutually agreed upon source, in effect on the last day of each calendar month within each calendar quarter to the Net Sales that was deemed sold during such month with respect to royalty and sales milestones payments under Sections 9.2.2 and 9.3 and for the previous day of the notification of the development milestone under Section 9.2.1.
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10.2         Tax Withholding. Intercept shall be responsible for any income taxes payable by Intercept on payments made to it under this Agreement. If applicable Laws require that taxes be deducted and withheld from a payment due from DSP to Intercept under this Agreement, DSP shall (i) deduct those taxes from the payment; (ii) pay the taxes to the proper taxing authority; and (iii) send evidence of the proof of payment to Intercept promptly following that payment. Intercept shall provide DSP with documentation necessary for DSP to file an application with the applicable tax authorities to avoid or reduce withholding or other applicable taxes under any applicable tax treaty.
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10.3         Audits. During the Term and for a period of three (3) years thereafter, DSP shall keep (and shall cause its Affiliates and sublicensees to keep) complete and accurate records pertaining to the sale or other disposition of Products in the Field in the Territory and calculations of Net Sales and payments required under this Agreement in sufficient detail to permit Intercept to confirm the accuracy of all payments due to it hereunder. Notwithstanding the foregoing, should applicable Law in the Territory require DSP to retain records of the nature described in the preceding sentence for a period longer than that set forth in the preceding sentence, DSP shall retain such records for the longer period; provided that Intercept shall advise of any applicable record-keeping requirements imposed by laws outside the Territory. Intercept shall have the right to cause an independent, certified public accountant reasonably acceptable to DSP to audit such records to confirm Net Sales, royalty, milestone and other payments for a period covering up to but not more than the preceding twelve (12) calendar quarters; provided that any such accountant shall have previously entered into a confidentiality agreement reasonably satisfactory to DSP limiting its disclosure of such information to authorized representatives of the Parties or as required under applicable Laws. Any such inspection shall be for the sole purpose of verifying the calculation of payments on Net Sales of the Products in the Field in the Territory by DSP, and its Affiliates or sublicensees and milestone, royalty and other payments paid by DSP under this Agreement. The accountant shall only disclose to Intercept the findings of the audit and the specific details concerning any discrepancies. No other information shall be provided to Intercept. Such audit rights may be exercised during normal business hours upon reasonable prior written notice to DSP; provided that such audit right may be exercised no more than once in any twelve (12) -month period. Prompt adjustments shall be made by the Parties to reflect the results of such audit. Intercept shall bear the full cost of such audit unless such audit discloses an underpayment by DSP of more than [***] percent ([***]%) of the amount of royalties or other payments due under this Agreement, in which case, DSP shall bear the full cost of such audit.
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11.         TREATMENT OF CONFIDENTIAL INFORMATION
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11.1         Confidential Obligations. DSP and Intercept each recognize that the other Party’s Confidential Information constitutes highly valuable and proprietary confidential information. Intercept and DSP each agree that during the Term of this Agreement and for five (5) years thereafter, it will keep confidential, and will cause its employees, consultants, contractors, Affiliates and sublicensees to keep confidential, all Confidential Information of the other Party. Neither Intercept nor DSP, nor any of their respective employees, consultants, Affiliates or sublicensees shall use Confidential Information of the other Party for any purpose whatsoever other than exercising any rights granted to it or reserved by it hereunder. Without limiting the foregoing, each Party may disclose information to the extent such disclosure is reasonably necessary to (i) file and prosecute patent applications and/or maintain patents which are filed or prosecuted in accordance with the provisions of this Agreement, or (ii) file, prosecute or defend litigation in accordance with the provisions of this Agreement or (iii) comply with applicable Laws, regulations or court orders; provided, however, that if a Party is required to make any such disclosure of the other Party’s Confidential Information in connection with any of the foregoing, it will give reasonable advance notice to the other Party of such disclosure requirement and will use reasonable efforts to assist such other Party in efforts to secure confidential treatment of such information required to be disclosed.
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11.2         Publication. If either Party plans to publish or present the results of any studies or other data regarding the Compound, the Product or Additional Indications conducted in and outside the Territory, the Party shall submit the draft of the publication, translated into English, to the other no later than four (4) weeks prior to the planned submission for publication for approval, unless such disclosure requires immediate publication due to disclosure requirements of the U.S. Securities and Exchange Commission, the NASDAQ stock exchange or any other stock exchange on which securities issued by a Party are traded and Intercept has advised DSP of the deadline for disclosure in a sufficiently timely manner. As soon as a Party is aware of a deadline for submitting an abstract for an
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upcoming scientific meeting, it shall notify the other Party in writing and the Parties shall use Commercially Reasonable Efforts to exchange comments on the proposed abstract in a timely manner to facilitate the publication/presentation of the proposed abstract. Otherwise, any publication shall need the other Party’s prior written consent, which shall not be unreasonably withheld. Any comment, reasonable request for modification or reasonable rejection must be made within as quickly as practically possible from the receipt of the draft. Failure to quickly make such comments shall be conclusively deemed to constitute approval of such publication or presentation. For the avoidance of doubt, this Section 11.2 shall apply to publications made by either Party both in the Territory and outside the Territory.
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11.3         Publicity. DSP and Intercept may, by mutual written agreement, issue a press release announcing the execution of this Agreement, which shall be substantially in a form approved by the Parties. Except with respect to such initial release or as otherwise required by applicable Laws (including disclosure requirements of the U.S. Securities and Exchange Commission, the NASDAQ stock exchange or any other stock exchange on which securities issued by a Party are traded), neither Party shall issue an additional press release or public announcement relating to this Agreement without the prior written approval of the other Party, which shall not be unreasonably withheld or delayed. In the event that a Party wishes to refer to the other Party or the transactions under this Agreement in promotional or other communications with prospective customers and investors, such Party shall first provide the other Party with advance notice of such proposed disclosure and the form, substance and intended use of such proposed disclosure and obtain the prior written approval of the other Party to the form, substance and intended use of such proposed disclosure.
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12.         FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS
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12.1         Patent Filing, Prosecution and Maintenance. Subject to the other terms of this Section 12.1, Intercept shall be responsible for preparing, filing, prosecuting, obtaining and maintaining, all Intercept Patents in the Territory. Intercept (i) will provide DSP with a copy of any proposed patent application or prosecution or other document relating to a patent or application within the Intercept Patents and to the Field (and the Additional Indications) for review and comment reasonably in advance of filing which shall under no circumstances be less than thirty (30) days, and (ii) will keep DSP reasonably informed of the status of such filing, prosecution and maintenance.
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12.2         Enforcement. If, during the Term, either Party learns of any actual, alleged or threatened infringement by a Third Party of any Intercept Patent under this Agreement, such Party shall promptly notify the other Party and shall provide such other Party with available evidence of such infringement. Intercept shall have the first right (but not the obligation), at its own expense and with legal counsel of its own choice, to bring suit (or take other appropriate legal action) against any actual, alleged or threatened infringement of the Intercept Patent in the Field in the Territory; provided that the settlement of such matter shall require DSP’s consent, not to be unreasonably withheld or delayed. DSP shall have the right, at its own expense, to be represented in any such action by counsel of DSP’s own choice. If Intercept does not file any action or proceeding against any such material infringement, with material infringement determined using reasonable commercial standards (including obtaining the advice of patent counsel), within three (3) months after the later of (i) DSP’s notice to Intercept hereunder, (ii) Intercept’s notice to DSP hereunder, or (iii) a written justified request from DSP to take action with respect to such infringement, then DSP shall have the right (but not the obligation), at its own expense, to bring suit (or take other appropriate legal action) against such actual, alleged or threatened infringement, with legal counsel of its own choice, including the right to settle any such suit without the prior consent of Intercept, who shall render all assistance reasonably required or requested by DSP. Irrespective of which party is taking the lead with respect to the defense of a claim, the party taking the lead shall keep the other party reasonably informed as to the status of any such action and shall give due regard to the comments and suggestions of the other Party with respect to the defense of such claims. Any damages, monetary awards or other amounts recovered, whether by judgment or settlement, pursuant to any suit, proceeding or other legal action taken under this Section 12.2, shall applied as follows:
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(a)          first, to reimburse the Parties for their respective costs and expenses (including reasonable attorneys’ fees and costs and costs for providing assistance) incurred in prosecuting such enforcement action, and
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(b)          second, any amounts remaining shall be allocated [***] percent ([***]%) to the Party initiating the legal action and [***] percent ([***]%) to the other Party, if the other Party provides material assistance, as determined using reasonable commercial standards, and if not then, [***] ([***]%) to the initiating Party.
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If a Party brings any such action or proceeding hereunder, the other Party agrees to be joined as party plaintiff if necessary to prosecute such action or proceeding, and to give the Party bringing such action or proceeding reasonable assistance and authority to file and prosecute the suit; provided, however, that neither Party shall be required to transfer any right, title or interest in or to any property to the other Party or any Third Party to confer standing on a Party hereunder.
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12.3         Defense. Each Party shall promptly notify the other Party in writing of any allegation by a third Party that the activity of either of the Parties or their Affiliates or sublicensees pursuant to this Agreement infringes or may infringe the intellectual property rights of such Third Party. Intercept shall have the right to control, at its own expense, the defense of any claim alleging that the Development, Manufacturing or Commercialization of the Product in the Field in the Territory infringes any such Third Party rights. If Intercept fails to proceed in a timely manner with respect to such defense, DSP shall have the option to assume control the defense of such claim. As a general matter, the Parties acknowledge that Intercept, as the licensor of the Intercept Technology shall, in principle, be responsible for all costs associated with maintaining validity of the Intercept Technology. Nonetheless, in light of the fact that Intercept is in an early-stage development company, DSP is willing to bear [***] percent ([***]%) of reasonable and actual costs and expenses incurred by DSP in connection with any defense of which DSP assumes control (the “DSP Defense Costs”), with the remainder being reimbursed by Intercept in the form of reduced royalties owed to it from DSP pursuant to Section 9.3, provided that in the event of an Intercept Change of Control, DSP may reduce the percentage of DSP Defense Costs for which DSP is responsible. Notwithstanding anything to the contrary herein, from the [***] ([***]) anniversary of the Effective Date, the preceding proviso shall become null and void, such that Intercept shall be fully responsible for all actual and reasonable costs incurred by DSP in any defense which it assumes pursuant to this Section 12.3. Irrespective of which Party is taking the lead with respect to the defense of a claim, the Party taking the lead shall keep the other Party reasonably informed as to the status of any such action and shall give due regard to the comments and suggestions of the other Party with respect to the defense of such claims. DSP shall have the right to participate in the defense of any such claim with counsel of its choice at its own expense. Intercept shall not have the right to settle any claim or litigation described in this Section 12.3 without the consent of DSP, such consent not to be unreasonably withheld; notwithstanding which, in the event that DSP assumes control of the defense of any such claim in accordance with this Section 12.3, then DSP shall be entitled to settle such matter in its reasonable discretion. If a Party brings any such action or proceeding hereunder, the other Party agrees to be joined as party plaintiff if necessary to prosecute such action or proceeding, and to give the Party bringing such action or proceeding reasonable assistance and authority to file and prosecute the suit; provided, however, that neither Party shall be required to transfer any right, title or interest in or to any property to the other Party or any Third Party to confer standing on a Party hereunder.
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12.4         Ownership of Improvements. Intercept shall solely own all Improvements that are made, conceived or reduced to practice solely by one or more employees or contractors of either Intercept arising in connection with the performance by Intercept of its obligations hereunder. Intercept hereby grants to DSP the exclusive right to use all such Intercept Improvements in the Territory during the Term of this Agreement. DSP shall solely own all Improvements that are made, conceived or reduced to practice solely by one or more employees or contractors of DSP arising in connection with the performance by DSP of its obligations hereunder. DSP hereby grants to Intercept the non-exclusive right to use all such DSP Improvements outside the Territory during the Term of this Agreement. Each of DSP and Intercept shall have the right, in its discretion, but subject to the terms and conditions of this Agreement, to file patents applications with respect to their respective Improvements.
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12.5         Joint Improvements.
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12.5.1           Ownership and Disclosure. DSP and Intercept shall be joint owners in and to any and all Joint Improvements and any Patents claiming such Joint Improvements. Subject to the terms and conditions of this Agreement, DSP and Intercept, as joint owners of the Joint Improvements, shall have the right to practice and exploit the Joint Improvements without any obligation to account to the other for profits. Any assignment of an interest in a Joint Improvement shall require the prior consent of the other Party, such consent not to be unreasonably withheld. Each Party agrees to be named as a party, if necessary, to bring or maintain a lawsuit involving a Joint Improvement. Each Party shall promptly report to the other Party in writing, through the JSC, and shall cause its Affiliates, licensees (including sublicensees), and contractors (including subcontractors) to so disclose, the invention or conception of any Joint Improvements.
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12.5.2           Prosecution and Maintenance.
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(i)   Inside the Territory, DSP shall have the first right to prepare, file, prosecute and maintain Joint Improvements at its own cost and expense. Through its progress reports submitted to the JSC pursuant to Section 3.5, DSP shall keep Intercept informed of the status of all filings related to the Joint Improvements (including the nature of any objections and other information reasonably requested by Intercept) and will provide Intercept with copies, in either English or Japanese, of all substantive documentation submitted to, or received from, the patent offices in connection therewith. DSP shall provide Intercept with the right to comment on the documentation. The Parties shall cooperate reasonably in the prosecution of all Patents covering the Joint Improvements if practicably possible and shall share all material information relating thereto promptly after receipt of such information. If during the Term of this Agreement, DSP intends to allow any Patent claiming a Joint Improvement to expire or intends to otherwise abandon any such Patent in the Territory, or decides not to file patent applications covering or claiming a Joint Invention in the Territory, DSP shall notify Intercept of such intention or decision at least ninety (90) days prior to any filing or payment due date, or any other that requires action, in connection with such Patent in the Territory, and Intercept shall thereupon have the right, but not the obligation to assume responsibility for the preparation, filing, prosecution or maintenance thereof at its sole cost and expense, in the name of and solely owned by Intercept.
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(ii)   Outside the Territory, Intercept shall have the first right to prepare, file, prosecute and maintain Joint Improvement at its own cost and expense. Intercept shall keep DSP informed of the status of all filings related to the Joint Improvement and will provide Intercept with copies, in either Japanese or English, of all substantive documentation submitted to, or received from, the patent offices in connection therewith. Intercept shall provide DSP with the right to comment on the documentation. The Parties shall cooperate reasonably in the prosecution of all Patents covering the Joint Improvement if practicably possible and shall share all material information relating thereto promptly after receipt of such information. If during the term of this Agreement, Intercept intends to allow any Patent claiming a Joint Improvement to expire or intends to otherwise abandon any such Patent outside the Territory, or decides not to file patent applications covering or claiming a Joint Invention in the Territory, Intercept shall notify DSP of such intention or decision at least ninety (90) days prior to any filing or payment due date, or any other that requires action, in connection with such Patent outside the Territory, and DSP shall thereupon have the right, but not the obligation to assume responsibility for the preparation, filing, prosecution or maintenance thereof at its sole cost and expense, in the name of and solely owned by DSP.
​
12.5.3           Enforcement; Defense. Through the JSC, the Parties shall develop a process to coordinate the defense of Patents claiming a Joint Improvement, including cost-sharing allocation, both inside and outside the Territory; provided that should the Parties be unable to resolve any disagreement regarding the defense of a Patent claiming a Joint Improvement, such issue shall be resolved in accordance with Section 12.5.4.
​
12.5.4           Ownership and Other Disputes. The JSC shall resolve any issues regarding inventorship or ownership of Joint Improvements and the defense of any Patent claiming a Joint Improvement pursuant to the provisions of Article 12. In connection with the resolution of this issue, each Party is entitled to have a patent lawyer of its own choosing attend the meeting and submit its written legal opinion. In the event that the JSC is unable to reach a decision, the matter shall be referred for resolution to a patent counsel, reasonably acceptable to both Parties, who is affiliated with a firm of international repute. The decision of such patent attorney shall be rendered in writing and shall be final and binding on the parties. Each Party shall bear its own costs and expenses for legal advice provided to it in accordance with the second sentence of this Section 12.5.3. All costs and expenses incurred in connection with the mutually appointed patent attorney shall be shared equally.
​
12.6         Trademarks. DSP shall own and have sole control over all matters relating to the use of all trademarks (and all associated goodwill) used in the sale of Products in the Field in the Territory. DSP shall be solely responsible for trademark searches, prosecution of applications to register and to record licenses (if applicable), and maintenance of the Product-related trademarks in the Territory as well as costs and expenses incurred in connection with the foregoing. If Intercept becomes aware of any actual or threatened infringement of any Product-related trademark by a Third Party, it shall promptly notify DSP, who shall be responsible for enforcing the Product-related trademarks.
​
​

33

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13.         REPRESENTATIONS, WARRANTIES AND COVENANTS
​
13.1         Intercept’s Representations. Intercept represents and warrants to DSP that as of the Effective Date and throughout the Term of this Agreement:
​
(a)          The execution and delivery of this Agreement and the performance of the transactions contemplated hereby have been duly authorized by all appropriate Intercept corporate action;
​
(b)          This Agreement is a legal and valid obligation binding upon Intercept and enforceable in accordance with its terms, and the execution, delivery and performance of this Agreement by the Parties, and does not conflict with any agreement, instrument or understanding to which Intercept is a party or by which it is bound;
​
(c)          Intercept has, to the best of its knowledge, the full right and legal capacity to grant the rights granted to DSP hereunder without violating the rights of any Third Party, and is the sole and exclusive owner of the Intercept Technology and the Intercept Manufacturing Technology, all of which are free and clear of any liens, charges and encumbrances.
​
(d)          To Intercept’s best knowledge, there are no pending legal actions, nor is Intercept aware of the receipt of any written notice regarding any pending legal actions or threatened claims (including pending re-examination, opposition or interference), with respect to the Intercept Technology or the Intercept Manufacturing Technology, or litigation seeking to invalidate any Intercept Technology or any Intercept Manufacturing Technology;
​
(e)          Intercept owns the Intercept Patents listed on Exhibit A, has not assigned, transferred, conveyed or otherwise encumbered its right, title and interest in the Intercept Patents, Intercept Know-How, or Intercept Manufacturing Technology in the Territory.
​
(f)          Intercept has not granted, and during the Term of this Agreement will not grant, rights to any Third Party under the Intercept Technology or the Intercept Manufacturing Technology that conflict with the rights granted to DSP hereunder.
​
(g)          Intercept is not aware of any safety, efficacy, or regulatory issues, other than the information that has previously been made available to DSP in writing that would preclude DSP from Developing, Manufacturing, or otherwise Commercializing the Products in the Field in the Territory.
​
(h)          To Intercept’s best knowledge, DSP’s exercise of its rights with respect to the Intercept Technology and the Intercept Manufacturing Technology shall not infringe any patent or other intellectual property right of any Third Party.
​
​

34

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(i)          All material Development activities with respect to the Product whether clinical, non-clinical or preclinical conducted by Intercept or at its request, has been, and shall be conducted in compliance with all applicable Law, including but not limited to Good Manufacturing Practices, Good Clinical Practice and Good Laboratory Practices.
​
13.2         DSP Representations. DSP represents and warrants to Intercept that as of the Effective Date:
​
(a)          the execution and delivery of this Agreement and the performance of the transactions contemplated hereby have been duly authorized by all appropriate DSP corporate action; and
​
(b)          this Agreement is a legal and valid obligation binding upon DSP and enforceable in accordance with its terms, and the execution, delivery and performance of this Agreement by the Parties does not conflict with any agreement, instrument or understanding to which DSP is a party of or by which it is bound.
​
(c)          to DSP’s knowledge, DSP’s exercise of its rights with respect to the Intercept Technology and the Intercept Manufacturing Technology shall not infringe any patent or other intellectual property right of any Third Party.
​
13.3         Change of Control Covenant. Intercept shall provide DSP with prior written notice of a proposed or contemplated Intercept Change of Control and shall use Commercially Reasonable Efforts to afford DSP an opportunity to meet with the potential acquirers (or the like) to discuss any necessary or advisable amendments to this Agreement no later than 60 days prior to the effective date of the Intercept Change of Control.
​
13.4         Competitive Products. DSP shall not engage, directly or indirectly, in the commercialization of any other product FXR agonist compound or product in the Field within the Territory. For the avoidance of doubt, this does not include manufacturing, research or development activities. Further, this provision shall not apply to any country in the Territory or any indication with respect to which the nature of the rights granted to DSP under this Agreement are converted to non-exclusive rights by Intercept pursuant to Section 15.2(c) of this Agreement.
​
13.5         No Warranties.
​
Nothing in this Agreement is or shall be construed as:
​
(a)          a warranty or representation by either Party as to the validity, enforceability, or scope of any patent application or patent licensed hereunder or
​
(b)          a warranty or representation that anything made, used, sold or otherwise disposed of under any license granted pursuant to this Agreement is or will be free from infringement of patents, copyrights, and other rights of third parties.
​
​

35

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EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR OF NON-INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS OF THIRD PARTIES, OR ANY OTHER EXPRESS OR IMPLIED WARRANTIES.
​
14.         INDEMNIFICATION
​
14.1         Indemnification.
​
14.1.1           DSP Indemnity. DSP shall indemnify, defend and hold harmless Intercept and its Affiliates and their respective directors, officers, employees, stockholders and agents and their respective successors, heirs and assigns (the “Intercept Indemnitees”) from and against any liability, damage, loss or expense (including reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon such Intercept Indemnitees, or any of them, in connection with any Third Party claims, suits, actions, demands or judgments, including, without limitation, personal injury and product liability matters, to the extent arising out of (i) the Development, Manufacture, or Commercialization or use by any person of any the Product Manufactured or sold by DSP or any Affiliate or sublicensee under this Agreement, (ii) any material breach of this Agreement by DSP, or (iii) the negligence or willful misconduct on the part of DSP or any Affiliate or sublicensee, in any such case under this Section 14.1.1, except to the extent of Intercept’s responsibility therefor under Section 14.1.2 below.
​
14.1.2           Intercept Indemnity. Subject to Section 14.1.1 above, Intercept shall indemnify, defend and hold harmless DSP, its Affiliates and their respective directors, officers, employees, and agents, and their respective successors, heirs and assigns (the “DSP Indemnitees”), from and against any liability, damage, loss or expense (including reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon such DSP Indemnitees, or any of them, in connection with any Third Party claims, suits, actions, demands or judgments, including, without limitation, personal injury and product liability matters, to the extent arising out of (i) the Manufacture of any the Product Manufactured or by or on behalf of Intercept, (ii) any actions or omissions of Intercept or its Affiliates under this Agreement, (iii) any material breach of this Agreement by Intercept, or (iv) the negligence or willful misconduct on the part of Intercept or any Affiliate, except to the extent of DSP’s responsibility therefore under Section 14.1.1 above.
​
​

36

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14.2         Indemnification Procedures. In the event that any Indemnitee is seeking indemnification under Section 14.1 above from a Party (the “Indemnifying Party”), the other Party shall notify the Indemnifying Party of such claim with respect to such Indemnitee as soon as reasonably practicable after the Indemnitee receives notice of the claim, and the Party (on behalf of itself and such Indemnitee) shall permit the Indemnifying Party to assume direction and control of the defense of the claim (including the right to settle the claim solely for monetary consideration) and shall cooperate as requested (at the expense of the Indemnifying Party) in the defense of the claim. The indemnification obligations under Article 14 shall not apply to any harm suffered as a direct result of any delay in notice to the Indemnifying Party hereunder or to amounts paid in settlement of any claim, demand, action or other proceeding if such settlement is effected without the consent of the Indemnifying Party, which consent shall not be withheld or delayed unreasonably. The Indemnitee, its employees and agents, shall reasonably cooperate with the Indemnifying Party and its legal representatives in the investigation of any claim, demand, action or other proceeding covered by Section 14.1.
​
14.3         Limitation on Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR LOSS, DAMAGE, OR LIABILITY WITH RESPECT TO LOSS OF PROFIT, SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGE.
​
15.         TERM AND TERMINATION
​
15.1         Term; Expiration. The term of this Agreement (the “Term”) shall commence on the Effective Date and expire on a country-by-county basis on the later to occur of (i) the tenth (10th) anniversary of the First Commercial Sale of the Product for the first or second indication in such country (whichever is later) or (ii) the expiration date of the Exclusive Period in such country. The Agreement as a whole shall expire on the date upon which the Agreement terminates with respect to the last country in the Territory.
​
15.2         Material Breach. (a) In the case that one of the Parties believes that the other Party has materially breached the Agreement, the JSC shall be notified and meet as soon as possible in order that the Parties attempt to resolve any dispute as to the existence of any such material breach. Failing a consensus decision by the JSC within thirty (30) days of receiving the matter for review, it shall then be referred for “Executive Negotiation” as set forth in Article 16.1. Failing a decision by the business executives within sixty (60) days of receiving the matter for review from the JSC, the non-breaching Party may then proceed to give written notice of termination for material breach.
​
(b)          If pursuant to Section 15.2(a), either Party gives written notice to the other Party of termination for material breach, which notice shall describe such material breach in reasonable detail and whether it has been deemed non-curable or curable by the JSC and senior executives, this Agreement and the rights and options granted herein may be terminated by the non-breaching Party, effective ten (10) days after giving written notice to the breaching Party of termination for non-curable breach, thirty (30) days after giving written notice to the breaching Party of such termination in the case of a curable payment breach, and sixty (60) days after giving written notice to the breaching Party of such termination in the case of any other curable breach. The foregoing notwithstanding, if any curable material breach is cured within the aforesaid thirty (30) or sixty (60) day period, the notice shall be automatically withdrawn and of no effect.
​
​

37

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(c)          Any exercise by Intercept or DSP of its rights under Section 15.2(b) may be on a country-by-country or indication-by-indication basis, at Intercept’s discretion, or DSP discretion, in which case such termination shall be partial in nature and shall only apply to the particular country or indication which is the source of the alleged material breach. Furthermore, Intercept shall have the alternative option, in its sole discretion, instead of terminating the Agreement in part or in whole, to convert the exclusive appointment of DSP under Section 2 of this Agreement into a non-exclusive appointment, and to apply such non-exclusive status on a country-by-country or indication-by-indication basis, at Intercept’s sole discretion, in which case such non-exclusivity shall only apply to the particular country or indication which is the source of the alleged material breach.
​
15.3         Voluntary Termination. DSP shall have the right to terminate this Agreement at any time upon ninety (90) days’ written notice to Intercept, either in its entirety or on a country-by-country basis or indication-by-indication basis, at the discretion of DSP.
​
15.4         Effects of Termination.
​
15.4.1    Upon the expiration of this Agreement or any termination of the entire Agreement by DSP under Section 15.2, as of the effective date of such expiration or termination, DSP thereafter automatically shall have a perpetual, fully sublicensable and transferable, exclusive license in the Territory under the Intercept Technology and Intercept Manufacturing Technology, to Develop, have Developed, make, have made (including Manufacture), use, have used, sell, have sold, offer for sale, import and have imported or otherwise Commercialize any and all Products and to practice the Intercept Technology and the Manufacturing Technology in the Territory. Such license shall not be fully paid-up, but instead shall be payable as follows (subject to Intercept making the transfer of the relevant Manufacturing Technology to DSP):
​
(a)          if before the First Commercial Sale, then [***] percent ([***]%) of royalties that would have become due under Section 9 of this Agreement but for the termination or expiration, for a period equal to the remainder of the Term of the Agreement, had the Agreement not been terminated;
​
(b)          if after the First Commercial Sale, then [***] percent ([***]%) of royalties that would have become due under Section 9 of this Agreement but for the termination or expiration, for a period equal to the remainder of the Term of the Agreement, had the Agreement not been terminated; provided, however, that in the event Intercept does not comply with its obligations under the Commercial Supply Agreement, the applicable rate will be [***] percent ([***]%).
​
(c)          At the end of the period equal to the remainder of the Term of the Agreement, had the Agreement not been terminated, the exclusive license shall be deemed fully paid-up. Intercept shall disclose to DSP all material research, non-clinical and clinical data on Products generated prior to the termination date outside the Territory and DSP shall thereafter have the unrestricted right to use such data and information in the Territory. Intercept shall promptly provide to DSP any other material, information, contracts, etc. which Intercept owns or Controls related to the Intercept Product in the Territory and are reasonably required to allow DSP to continue the Development, Manufacture and Commercialization of Products in the Territory with minimal delay.
​
​

38

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(d)          The foregoing notwithstanding, in the case that DSP determines, in its sole discretion, upon termination of the Agreement pursuant to this Section 15.4.1 to cease all Development, Manufacturing and Commercialization activities relating to the Compound and the Product, then all licenses and sublicenses shall revert in full to Intercept and DSP shall have no further payment obligations to Intercept. To give effect to the reversion of the licenses and sublicenses, DSP shall be bound by its obligations pursuant to Section 15.4.2 below, except that DSP shall not be bound to disclose to Intercept all material research, non-clinical and clinical data (except for safety data) on Products generated prior to the termination date, nor shall DSP be bound to assign all Regulatory Filings relating to Products in the Territory.
​
15.4.2       Upon any termination of the Agreement by Intercept under Section 15.2 , or upon any termination of the Agreement by DSP under Section 15.3, as of the effective date of such termination all relevant licenses and sublicenses granted by Intercept to DSP shall cease and all such licenses and sublicenses shall revert in full to Intercept. If there is a partial termination, only the licenses and sublicenses as to the respective country and/or indication being terminated shall revert to Intercept. In order to revert the licenses and sublicenses, DSP shall be obligated to the following:
​
(a)          DSP shall provide to Intercept (or at Intercept’s request, destroy) all remaining Product and disclose to Intercept all material research, non-clinical and clinical data on Products generated prior to the termination date and Intercept shall thereafter have the unrestricted right to use such data and information;
​
(b)          DSP shall assign to Intercept all Regulatory Filings relating to Products in the Territory, if assignment is permitted by applicable Regulatory Authorities; and
​
(c)          DSP shall promptly provide to Intercept any other material, reagents, information, contracts, etc. DSP owns or Controls related to the Intercept Product and are reasonably required to allow Intercept to continue the research, Development, protection, and Commercialization of Products with minimal delay.
​
15.4.3      Remedies. Except as otherwise expressly set forth in this Agreement, the termination provisions of this Section 15 are in addition to any other relief and remedies available to either Party at law.
​
15.4.4      Joint Improvements. For the avoidance of doubt, Joint Improvements shall remain jointly owned upon any termination or expiration of the agreement.
​
15.4.5      Surviving Provisions. Notwithstanding any provision herein to the contrary, the rights and obligations of the Parties set forth in Sections 10.3, 11.1, 12, 14, and 15.4 shall survive the date of termination or expiration of the Agreement (except as otherwise provided for in this Agreement). Without limiting the generality of the foregoing, DSP shall have no obligation to make any milestone or royalty payment to Intercept that has not accrued prior to the effective date of any termination or expiration of this Agreement (except with respect to the payments pursuant to Section 15.4.1), but shall remain liable for all such payment obligations accruing prior to the effective date of such termination.
​
​

39

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16.         DISPUTES
​
16.1         Executive Negotiation. The Parties recognize that a bona fide dispute as to certain matters may from time to time arise during the Term of this Agreement that relates to either Party’s rights and/or obligations hereunder. In the event of the occurrence of such a dispute, either Party may, by written notice to the other Party, have such dispute referred to their respective senior officials designated below or their successors, for attempted resolution by good faith negotiations within sixty (60) days after such notice is received. Said designated senior officials are as follows:
​
For Intercept: Chief Executive Officer
​
For DSP: Chief Executive Officer (or a designated senior executive with decision-making authority).
​
In the event the designated senior officials are not able to resolve such dispute within the sixty (60) day period, either Party may invoke the provisions of Section 16.2.
​
16.2         Arbitration. Subject to Section 16.1 and except with respect to disputes relating to the intellectual property or a breach of the confidentiality obligations of this Agreement, any dispute, controversy or claim initiated by either Party arising out of, resulting from or relating to this Agreement, or the performance by either Party of its obligations under this Agreement (other than bona fide Third Party actions or proceedings filed or instituted in an action or proceeding by a Third Party against a Party), whether before or after termination of this Agreement, shall be submitted to the International Court of Arbitration of the International Chamber of Commerce and shall be finally settled by binding arbitration. Whenever a Party shall decide to institute arbitration proceedings, it shall give written notice to that effect to the other Party. Any such arbitration shall be conducted under the then-current Rules of Arbitration of the International Chamber of Commerce Rules of Arbitration by a panel of one or more arbitrators appointed in accordance with such rules. Any such arbitration shall be held in New York, New York if initiated by DSP and in Osaka, Japan if initiated by Intercept. All arbitration proceedings, communications, and documents shall be in the English language. Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be. Notwithstanding the foregoing, each Party may at any time pursue equitable remedies, including without limitation injunctive relief, to protect its respective Confidential Information as well as its respective intellectual property rights, including Know-How and Patents.  For the avoidance of doubt, either Party can take such action without first having to go to the JSC pursuant to Section 3, or the Executive Negotiation pursuant to Section 16.1.
​
​

40

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17.         MISCELLANEOUS
​
17.1         Notification. All notices, requests and other communications hereunder shall be in writing, shall be addressed to the receiving Party’s address set forth below or to such other address as a Party may designate by notice hereunder, and shall be either (i) delivered by hand, (ii) made by facsimile transmission (to be followed with written fax confirmation), (iii) sent by private courier service providing evidence of receipt, or (iv) sent by registered or certified mail, return receipt requested, postage prepaid. The addresses and other contact information for the parties are as follows:
​
	If to Intercept:
	Intercept Pharmaceuticals, Inc.
18 Desbrosses Street
New York, NY 10013
Fax: +1-646-747-1001

	 
	 

	If to DSP:
	Director of Business Development
6-8, Doshomachi 2-Chome
Chuo-ku, Osaka 541-0045, Japan
Fax: +81-6-6203-4533

​
All notices, requests and other communications hereunder shall be deemed to have been given either (i) if by hand, at the time of the delivery thereof to the receiving Party at the address of such Party set forth above, (ii) if made by telecopy or facsimile transmission, at the time that receipt thereof has been acknowledged by the recipient, (iii) if sent by private courier, on the day such notice is delivered to the recipient, or (iv) if sent by registered or certified mail, on the fifth (5th ) business day following the day such mailing is made.
​
17.2         Governing Law. This Agreement will be construed, interpreted and applied in accordance with the laws of the state of New York (excluding its conflict of law principles law).
​
17.3         Limitations. Except as expressly set forth in this Agreement, neither Party grants to the other Party any right or license to any of its intellectual property.
​
17.4         Entire Agreement. This is the entire Agreement between the Parties with respect to the subject matter hereof and supersedes all prior representations, understandings and agreements between the Parties with respect to the subject matter hereof. No modification shall be effective unless in writing with specific reference to this Agreement and signed by the Parties.
​
17.5         Waiver. The terms or conditions of this Agreement may be waived only by a written instrument executed by the Party waiving compliance. The failure of either Party at any time or times to require performance of any provision hereof shall in no manner affect its rights at a later time to enforce the same. No waiver by either Party of any condition or term shall be deemed as a continuing waiver of such condition or term or of another condition or term.
​
17.6         Assignment. Neither this Agreement nor any right or obligation hereunder may be assigned, delegated or otherwise transferred, in whole or part, by either Party without the prior express written consent of the other Party, which may be withheld in the sole discretion of the Party giving such consent.
​
​

41

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17.7         Force Majeure. Neither Party shall be liable for failure of or delay in performing obligations set forth in this Agreement, and neither shall be deemed in breach of its obligations, if such failure or delay is due to natural disasters or any cause beyond the reasonable control of such Party. In event of such force majeure, the Party affected thereby shall use reasonable efforts to cure or overcome the same and resume performance of its obligations hereunder.
​
17.8         Construction. The Parties hereto acknowledge and agree that: (i) each Party and its counsel reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; (ii) the rule of construction to the effect that any ambiguities are resolved against the drafting Party shall not be employed in the interpretation of this Agreement; and (iii) the terms and provisions of this Agreement shall be construed fairly as to all Parties hereto and not in favor of or against any Party, regardless of which Party was generally responsible for the preparation of this Agreement.
​
17.9         Severability. If any provision(s) of this Agreement are or become invalid, are ruled illegal by any court of competent jurisdiction or are deemed unenforceable under then current applicable law from time to time in effect during the Term hereof, it is the intention of the Parties that the remainder of this Agreement shall not be affected thereby provided that a Party’s rights under this Agreement are not materially affected. The Parties hereto covenant and agree to renegotiate any such term, covenant or application thereof in good faith in order to provide a reasonably acceptable alternative to the term, covenant or condition of this Agreement or the application thereof that is invalid, illegal or unenforceable, it being the intent of the Parties that the basic purposes of this Agreement are to be effectuated.
​
17.10         Further Assurances. Each Party agrees to execute, acknowledge and deliver such further instructions, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.
​
17.11         Affiliate Delegation. DSP may delegate to an Affiliate all or part of its obligations hereunder, provided that it shall provide prior notice to Intercept.
​
17.12          Compliance with Law. Each Party shall comply with all applicable Laws, including by way of example, but without limitation U.S. export controls and the U.S. Foreign Corrupt Practices Act.
​
17.13         Governing Language. This Agreement has been executed in English. If any translation of this Agreement conflicts with the English version or contains terms in addition to or different from the English version, the English version shall prevail.
​
17.14         Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
​
​

42

​
[SIGNATURES FOLLOW ON THE NEXT PAGE.]
​
​

43

​
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representative in two (2) originals.
​
​
	DAINIPPON SUMITOMO PHARMA CO., LTD.
	 
	INTERCEPT PHARMACEUTICALS, INC.

	 
	 
	 

	/s/ Masayo Tada
	 
	/s/ Mark Pruzanski

	 
	 
	 

	Name:
	Masayo Tada
	 
	Name:
	Mark Pruzanski

	 
	 
	 

	Title:
	President and Chief Executive Officer
	 
	Title:
	President and Chief Executive Officer

​
​

44

​
​
EXHIBIT A
​
INTERCEPT PATENTS
​
​
	Country
	​
	Title
	​
	Serial No.
	​
	Filing
Date
	​
	Parent PCT
	​
	Status
	​
	Patent
No.

	Japan
	​
	Steroids As Agonists For FXR
	​
	2002-571512
	​
	Feb. 21, 2002
	​
	PCT/EP2002/001832
WO2002/072598
	​
	Granted
	​
	4021327

	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​

	Japan
	 
	Process For Preparing 3alpha(Beta)-7alpha(Beta)-Dihydroxy-6alpha(Beta)-Alkyl-5beta Cholanic Acid
	 
	2008-511719
	 
	May 19, 2006
	 
	PCT/EP2006/062446
WO2006/122977
	 
	Pending
	 
	N/A

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	China
	 
	Process For Preparing 3alpha(Beta)-7alpha(Beta)-Dihydroxy-6alpha(Beta)-Alkyl-5beta Cholanic Acid
	 
	200680017025.6
	 
	May 19, 2006
	 
	PCT/EP2006/062446
WO2006/122977
	 
	Pending
	 
	N/A

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Japan
	 
	Treatment Of Fibrosis Using FXR Ligands
	 
	2007-503111
	 
	Mar. 14, 2005
	 
	PCT/US2005/008575
WO2005/089316
	 
	Pending
	 
	N/A

​
​

45

EXHIBIT B
​
Summary of Sublicense Agreements
​
1. Sublicense Agreement
​
(a) Full corporate name of sublicensee:
​
(b) Applicable country:
​
(c) Applicable indications in the Field:
​
(d) Standard of sublicensee’s performance (e.g. best efforts, commercially reasonable efforts, etc.):
​
(e) Term of sublicense agreement:
​
(f) Summary of termination provision:
​
2. Sublicensee Confirmation
​
I, [Name], the [Title] of [Full Corporate Name of Sublicensee] (the “XX”) confirm and acknowledge that the XX is aware of and agrees to comply with the provisions of that certain License Agreement, dated March 29, 2011 by and between Dainippon Sumitomo Pharma Co., Ltd. and Intercept Pharmaceuticals, Inc. (the “Agreement”), which in accordance with their respective terms, are expressly applicable to XX, as a sublicensee appointed pursuant to Section 2.1.2 of the Agreement.
​
By:
​
Name:
​
Title:
​
Date:

46

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