Ad
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2022 | |
OR | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to | |
Commission file number: 001-35668
INTERCEPT PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware |
| 22-3868459 |
(State or Other Jurisdiction of | (I.R.S. Employer |
305 Madison Avenue,
Morristown, NJ 07960
(Address of Principal Executive Offices and Zip Code)
(646) 747-1000
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.001 per share | ICPT | Nasdaq Global Select Market |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ◻ | Accelerated filer ⌧ |
Non-accelerated filer ◻ | Smaller reporting company ☐ |
| Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧
The number of shares of the registrant’s common stock outstanding as of June 30, 2022 was 29,798,040.
Intercept Pharmaceuticals, Inc.
INDEX
Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “we,” “our,” “us” and the “Company” refer, collectively, to Intercept Pharmaceuticals, Inc., a Delaware corporation, and its consolidated subsidiaries.
2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements, including, but not limited to, statements regarding the progress, timing and results of our clinical trials, including our clinical trials for the treatment of nonalcoholic steatohepatitis (“NASH”), the safety and efficacy of our approved product, Ocaliva (obeticholic acid or “OCA”) for primary biliary cholangitis (“PBC”), and our product candidates, including OCA for liver fibrosis due to NASH, the timing and acceptance of our regulatory filings and the potential approval of OCA for liver fibrosis due to NASH, the review of our New Drug Application (“NDA”) for OCA for the treatment of liver fibrosis due to NASH by the U.S. Food and Drug Administration (the “FDA”), our intent to work with the FDA to address the issues raised in a complete response letter (“CRL”), the potential commercial success of OCA, as well as our strategy, future operations, future financial position, future revenue, projected costs, financial guidance, prospects, plans and objectives.
These statements constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “possible,” “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and we undertake no obligation to update any forward-looking statement except as required by law. These forward-looking statements are based on estimates and assumptions by our management that, although believed to be reasonable, are inherently uncertain and subject to a number of risks.
The following represent some, but not necessarily all, of the factors that could cause actual results to differ materially from historical results or those anticipated or predicted by our forward-looking statements:
| ● | the success of our existing business and operations, including Ocaliva for PBC; |
| ● | our ability to successfully commercialize Ocaliva for PBC and, if approved, OCA for NASH; |
| ● | our ability to maintain our regulatory approval of Ocaliva for PBC; |
| ● | our ability to timely and cost-effectively file for and obtain regulatory approval of our product candidates on an accelerated basis or at all, including OCA for liver fibrosis due to NASH; |
| ● | our ability to address the issues raised in the complete response letter (“CRL”) received in June 2020 with respect to OCA for NASH; |
| ● | any advisory committee recommendation or dispute resolution determination that our product candidates, including OCA for liver fibrosis due to NASH, should not be approved or approved only under certain conditions; |
| ● | any future determination that the regulatory applications and subsequent information we submit for our product candidates, including OCA for liver fibrosis due to NASH, do not contain adequate clinical or other data or meet applicable regulatory requirements for approval; |
| ● | the progress, timing, and results of our REGENERATE clinical trial, including the safety and efficacy of OCA for liver fibrosis due to NASH, and the use of a consensus panel approach to histology reads; |
| ● | our pre-submission meeting with the FDA in July 2022 in which we reviewed with the FDA the planned content and the timing of the submission of our NDA for OCA for liver fibrosis due to NASH; |
| ● | our planned resubmission of an NDA to the FDA for OCA for liver fibrosis due to NASH, and the potential timing, review, acceptance, and approval of the NDA; |
| ● | conditions that may be imposed by regulatory authorities on our marketing approvals for our products and product candidates, including OCA for liver fibrosis due to NASH, such as the need for clinical outcomes data (and not just results based on achievement of a surrogate endpoint), any risk mitigation programs such as a Risk Evaluation and Mitigation Strategies (“REMS”) program, and any related restrictions, limitations and/or warnings contained in the label of any of our products or product candidates; |
| ● | any potential side effects associated with Ocaliva for PBC, OCA for liver fibrosis due to NASH or our other product candidates that could delay or prevent approval, require that an approved product be taken off the market, require the inclusion of safety warnings or precautions, or otherwise limit the sale of such product or product candidate, including in connection with our update to the Ocaliva prescribing information in May 2021 contraindicating Ocaliva for |
3
| patients with PBC and decompensated cirrhosis, a prior decompensation event, or compensated cirrhosis with evidence of portal hypertension; |
| ● | the initiation, timing, cost, conduct, progress and results of our research and development activities, preclinical studies and clinical trials, including any issues, delays or failures in identifying patients, enrolling patients, treating patients, retaining patients, meeting specific endpoints, or completing and timely reporting the results of our NASH or PBC clinical trials; |
| ● | the outcomes of interactions with regulators, including the FDA regarding our clinical trials; |
| ● | our ability to establish and maintain relationships with, and the performance of, third-party manufacturers, contract research organizations and other vendors upon whom we are substantially dependent for, among other things, the manufacture and supply of our products, including Ocaliva for PBC and, if approved, OCA for liver fibrosis due to NASH, and our clinical trial activities; |
| ● | our ability to identify, develop and successfully commercialize our products and product candidates, including our ability to successfully launch OCA for liver fibrosis due to NASH, if approved; |
| ● | our ability to obtain and maintain intellectual property protection for our products and product candidates, including our ability to cost-effectively file, prosecute, defend and enforce any patent claims or other intellectual property rights; |
| ● | the size and growth of the markets for our products and product candidates and our ability to serve those markets; |
| ● | the degree of market acceptance of Ocaliva for PBC and, if approved, OCA for liver fibrosis due to NASH or our other product candidates among physicians, patients and healthcare payors; |
| ● | the availability of adequate coverage and reimbursement from governmental and private healthcare payors for our products, including Ocaliva for PBC and, if approved, OCA for liver fibrosis due to NASH, and our ability to obtain adequate pricing for such products; |
| ● | our ability to establish and maintain effective sales, marketing and distribution capabilities, either directly or through collaborations with third parties; |
| ● | competition from existing drugs or new drugs that become available; |
| ● | our ability to attract and retain key personnel to manage our business effectively; |
| ● | our ability to prevent or defend against system failures or security or data breaches due to cyber-attacks, or cyber intrusions, including ransomware, phishing attacks and other malicious intrusions; |
| ● | our ability to comply with data protection laws; |
| ● | costs and outcomes relating to any disputes, governmental inquiries or investigations, regulatory proceedings, legal proceedings or litigation, including any securities, intellectual property, employment, product liability or other litigation; |
| ● | our collaborators’ election to pursue research, development and commercialization activities; |
| ● | our ability to establish and maintain relationships with collaborators with development, regulatory and commercialization expertise; |
| ● | our need for and ability to generate or obtain additional financing; |
| ● | our estimates regarding future expenses, revenues and capital requirements and the accuracy thereof; |
| ● | our use of cash, cash equivalents and short-term investments; |
| ● | our ability to acquire, license and invest in businesses, technologies, product candidates and products; |
| ● | our ability to manage the growth of our operations, infrastructure, personnel, systems and controls; |
| ● | our ability to obtain and maintain adequate insurance coverage; |
| ● | continuing threats from COVID-19, including additional waves of infections, and their impacts including quarantines and other government actions; delays relating to our regulatory applications; disruptions relating to our ongoing clinical trials or involving our contract research organizations, study sites or other clinical partners; disruptions relating to our supply chain or involving our third-party manufacturers, distributors or other distribution partners; and facility closures or other restrictions; and the impact of the foregoing on our results of operations and financial position; |
| ● | the impact of general economic, industry, market, regulatory or political conditions; |
4
| ● | how we use the funds received from the sale of our ex-U.S. business to Advanz Pharma; |
| ● | disagreements or legal, operational, or other business problems arising from our ongoing relationship with Advanz Pharma, including the licensing of the ex-U.S. rights to Ocaliva for PBC and, if approved, OCA for NASH, our operational separation from our former ex-U.S. commercial operations, and our agreement to supply Advanz Pharma with OCA; |
| ● | unexpected tax, regulatory, litigation, or other liabilities; |
| ● | whether we receive any future earn-outs or royalties under the Advanz Pharma transaction documents; and |
| ● | the other risks and uncertainties identified under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q and in our other periodic filings filed with the U.S. Securities and Exchange Commission (the “SEC”), including our most recent Annual Report. |
NOTE REGARDING TRADEMARKS
The Intercept Pharmaceuticals® name and logo and the Ocaliva® name and logo are either registered or unregistered trademarks or trade names of the Company in the United States and/or other countries. All other trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this Quarterly Report on Form 10-Q may appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights to these trademarks and trade names.
5
PART I
Item 1. Financial Statements.
INTERCEPT PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share data)
June 30, | December 31, | |||||
2022 | 2021 | |||||
Assets |
|
|
|
| ||
Current assets: |
|
|
|
| ||
Cash and cash equivalents | $ | 58,019 | $ | 84,709 | ||
Restricted cash | 7,537 | 8,119 | ||||
Investment debt securities, available-for-sale |
| 346,757 |
| 334,980 | ||
Accounts receivable, net of allowance for credit losses of $51 and $58, respectively |
| 27,516 |
| 28,337 | ||
Prepaid expenses and other current assets |
| 17,307 |
| 21,735 | ||
Current assets of discontinued operations | 29,879 | 30,138 | ||||
Total current assets |
| 487,015 |
| 508,018 | ||
Fixed assets, net |
| 1,002 |
| 3,281 | ||
Inventory |
| 6,891 |
| 7,883 | ||
Security deposits |
| 627 |
| 4,284 | ||
Other assets |
| 3,062 |
| 3,557 | ||
Total assets | $ | 498,597 | $ | 527,023 | ||
Liabilities and Stockholders’ Deficit |
|
|
|
| ||
Current liabilities: |
|
|
| |||
Accounts payable, accrued expenses and other liabilities | $ | 86,364 | $ | 103,780 | ||
Short-term interest payable |
| 8,635 |
| 8,601 | ||
Current liabilities of discontinued operations | 56,428 | 55,780 | ||||
Total current liabilities |
| 151,427 |
| 168,161 | ||
Long-term liabilities: |
|
|
| |||
Long-term debt |
| 713,859 |
| 539,782 | ||
Long-term other liabilities |
| 3,144 |
| 3,042 | ||
Total liabilities | $ | 868,430 | $ | 710,985 | ||
Commitments and contingencies (Note 15) | ||||||
Stockholders’ deficit: |
|
|
|
| ||
Common stock par value $0.001 per share; 90,000,000 shares authorized; 29,798,040 and 29,572,953 shares and as of June 30, 2022 and December 31, 2021, respectively |
| 30 |
| 30 | ||
Additional paid-in capital |
| 2,016,201 |
| 2,308,653 | ||
Accumulated other comprehensive loss, net |
| (2,548) |
| (2,873) | ||
Accumulated deficit |
| (2,383,516) |
| (2,489,772) | ||
Total stockholders’ deficit |
| (369,833) |
| (183,962) | ||
Total liabilities and stockholders’ deficit | $ | 498,597 | $ | 527,023 | ||
See accompanying notes to the condensed consolidated financial statements.
6
INTERCEPT PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Revenue: |
|
|
|
|
|
| ||||||
Product revenue, net | $ | 71,757 | $ | 68,178 | $ | 130,903 | $ | 125,477 | ||||
Total revenue |
| 71,757 |
| 68,178 |
| 130,903 |
| 125,477 | ||||
Operating expenses: |
|
|
|
|
|
|
|
| ||||
Cost of sales |
| 309 |
| 254 |
| 532 | 547 | |||||
Selling, general and administrative |
| 39,985 |
| 43,882 |
| 77,739 |
| 88,984 | ||||
Research and development |
| 44,826 |
| 37,668 |
| 92,719 |
| 88,279 | ||||
Restructuring | — | (160) | — | (284) | ||||||||
Total operating expenses |
| 85,120 |
| 81,644 |
| 170,990 |
| 177,526 | ||||
Operating loss |
| (13,363) |
| (13,466) |
| (40,087) |
| (52,049) | ||||
Other (expense) income: |
|
|
|
|
|
|
| |||||
Interest expense |
| (6,669) |
| (12,589) |
| (13,342) |
| (25,008) | ||||
Other (expense) income, net |
| (289) |
| 721 |
| (342) |
| 2,179 | ||||
Total other (expense), net |
| (6,958) |
| (11,868) |
| (13,684) |
| (22,829) | ||||
Loss from continuing operations | $ | (20,321) | $ | (25,334) | $ | (53,771) | $ | (74,878) | ||||
Income from discontinued operations | $ | 12,793 | $ | 14,240 | $ | 28,959 | $ | 23,364 | ||||
Net loss | $ | (7,528) | $ | (11,094) | $ | (24,812) | $ | (51,514) | ||||
Net income/(loss) per common and potential common share (basic and diluted): |
|
|
|
|
|
|
|
| ||||
Net loss from continuing operations | (0.68) | (0.76) | (1.81) | (2.26) | ||||||||
Net income from discontinued operations | 0.43 | 0.43 | 0.97 | 0.70 | ||||||||
Net loss | (0.25) | (0.33) | (0.83) | (1.55) | ||||||||
Weighted average common and potential common shares outstanding: |
|
|
|
| ||||||||
Basic and diluted |
| 29,747 |
| 33,179 |
| 29,721 |
| 33,159 | ||||
See accompanying notes to the condensed consolidated financial statements.
7
INTERCEPT PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)
(In thousands)
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Net loss | $ | (7,528) | $ | (11,094) | $ | (24,812) | $ | (51,514) | ||||
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
| ||||
Net changes related to available-for-sale investment debt securities: | ||||||||||||
Unrealized losses on investment debt securities |
| (506) |
| (23) |
| (1,526) |
| (367) | ||||
Reclassification adjustment for realized losses on investment debt securities included in other income, net |
| — |
| — |
| — |
| 2 | ||||
Net unrealized losses on investment debt securities | $ | (506) | $ | (23) | $ | (1,526) | $ | (365) | ||||
Foreign currency translation gains (losses) |
| 1,445 |
| (304) |
| 1,851 |
| (23) | ||||
Other comprehensive income (loss) | $ | 939 | $ | (327) | $ | 325 | $ | (388) | ||||
Comprehensive loss | $ | (6,589) | $ | (11,421) | $ | (24,487) | $ | (51,902) | ||||
See accompanying notes to the condensed consolidated financial statements.
8
INTERCEPT PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Changes in Stockholders’ Deficit
(Unaudited)
(In thousands)
Accumulated | |||||||||||||||||
Additional | Other | Total | |||||||||||||||
Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders’ | |||||||||||||
Shares |
| Amount |
| Capital |
| Loss, Net |
| Deficit |
| Deficit | |||||||
Balance - March 31, 2022 | 29,709 | $ | 30 | $ | 2,007,684 | $ | (3,487) | $ | (2,375,988) | $ | (371,761) | ||||||
Stock-based compensation |
| — |
| — |
| 8,544 |
| — |
| — |
| 8,544 | |||||
Issuance of common stock under equity plan | 96 | — | — | — | — | — | |||||||||||
Employee withholding taxes related to stock-based awards | (7) | — | (27) | — | — | (27) | |||||||||||
Other comprehensive income | — | — | — | 939 | — | 939 | |||||||||||
Net loss |
| — |
| — |
| — | — |
| (7,528) |
| (7,528) | ||||||
Balance - June 30, 2022 |
| 29,798 | $ | 30 | $ | 2,016,201 | $ | (2,548) | $ | (2,383,516) | $ | (369,833) | |||||
Accumulated | |||||||||||||||||
Additional | Other | Total | |||||||||||||||
Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders’ | |||||||||||||
Shares |
| Amount |
| Capital |
| Loss, Net |
| Deficit |
| Deficit | |||||||
Balance - December 31, 2021 | 29,573 | $ | 30 | $ | 2,308,653 | $ | (2,873) | $ | (2,489,772) | $ | (183,962) | ||||||
Stock-based compensation |
| — |
| — |
| 15,264 |
| — |
| — |
| 15,264 | |||||
Issuance of common stock under equity plan | 251 | — | — | — | — | — | |||||||||||
Employee withholding taxes related to stock-based awards | (26) | — | (345) | — | — | (345) | |||||||||||
Reclassification of the equity components of the Convertible Notes to liability upon adoption of ASU 2020-06 | — | — | (307,371) | — | 131,068 | (176,303) | |||||||||||
Other comprehensive income |
| — |
| — |
| — | 325 |
| — |
| 325 | ||||||
Net loss |
| — |
| — |
| — |
| — |
| (24,812) |
| (24,812) | |||||
Balance - June 30, 2022 |
| 29,798 | $ | 30 | $ | 2,016,201 | $ | (2,548) | $ | (2,383,516) | $ | (369,833) | |||||
Accumulated | |||||||||||||||||
Additional | Other | Total | |||||||||||||||
Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders’ | |||||||||||||
Shares |
| Amount |
| Capital |
| Loss, Net |
| Deficit |
| Deficit | |||||||
Balance - March 31, 2021 | 33,154 | $ | 33 | $ | 2,241,273 | $ | (2,538) | $ | (2,438,766) | $ | (199,998) | ||||||
Stock-based compensation | — | — | 8,448 | — | — | 8,448 | |||||||||||
Net proceeds from exercise of stock options | 47 | — | 18 | — | — | 18 | |||||||||||
Employee withholding taxes related to stock-based awards |
| — | — | (242) | — | — | (242) | ||||||||||
Other comprehensive loss |
| — |
| — |
| — |
| (327) |
| — |
| (327) | |||||
Net loss | — | — | — | — | (11,094) | (11,094) | |||||||||||
Balance - June 30, 2021 | 33,201 | $ | 33 | $ | 2,249,497 | $ | (2,865) | $ | (2,449,860) | $ | (203,195) | ||||||
9
Accumulated | |||||||||||||||||
Additional | Other | Total | |||||||||||||||
Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders’ | |||||||||||||
Shares |
| Amount |
| Capital |
| Loss, Net |
| Deficit |
| Deficit | |||||||
Balance - December 31, 2020 | 33,016 | $ | 33 | $ | 2,233,937 | $ | (2,477) | $ | (2,398,346) | $ | (166,853) | ||||||
Stock-based compensation | — | — | 16,867 | — | — | 16,867 | |||||||||||
Net proceeds from exercise of stock options | 188 | — | 18 | — | — | 18 | |||||||||||
Employee withholding taxes related to stock-based awards |
| (3) | — | (1,325) | — | — | (1,325) | ||||||||||
Other comprehensive loss |
| — |
| — |
| — |
| (388) |
| — |
| (388) | |||||
Net loss | — | — | — | — | (51,514) | (51,514) | |||||||||||
Balance - June 30, 2021 | 33,201 | $ | 33 | $ | 2,249,497 | $ | (2,865) | $ | (2,449,860) | $ | (203,195) | ||||||
See accompanying notes to the condensed consolidated financial statements.
10
INTERCEPT PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended June 30, | ||||||
| 2022 |
| 2021 | |||
Cash flows from operating activities: |
|
|
|
| ||
Net loss | $ | (24,812) | $ | (51,514) | ||
Less: Net income from discontinued operations | 28,959 | 23,364 | ||||
Adjustments to reconcile net loss to net cash used in operating activities: |
|
| ||||
Stock-based compensation |
| 10,870 |
| 13,693 | ||
Amortization of premium on investment debt securities |
| 964 |
| 2,296 | ||
Amortization of deferred financing costs |
| 1,601 |
| 1,356 | ||
Write-off of fixed assets | 2,399 | — | ||||
Depreciation |
| 411 |
| 1,661 | ||
Non-cash operating lease cost | 1,219 | 2,386 | ||||
Accretion of debt discount |
| — |
| 13,877 | ||
Gain on extinguishment of debt | (21) | — | ||||
Gain on lease termination | (1,101) | — | ||||
Provision for allowance of credit losses, net of write-offs | (7) | 4 | ||||
Changes in operating assets: |
|
| ||||
Accounts receivable |
| 828 |
| 550 | ||
Prepaid expenses and other current assets |
| 4,845 |
| 788 | ||
Inventory |
| 215 |
| 76 | ||
Security deposits | 3,656 | 345 | ||||
Changes in operating liabilities: |
|
| ||||
Accounts payable, accrued expenses and other current liabilities |
| (10,485) |
| (28,635) | ||
Operating lease liabilities | (1,449) | (3,350) | ||||
Interest payable | 87 | — | ||||
Net cash used in operating activities - continuing operations | (39,739) | (69,831) | ||||
Net cash provided by operating activities - discontinued operations | 34,353 | 20,028 | ||||
Net cash used in operating activities |
| (5,386) |
| (49,803) | ||
Cash flows from investing activities: |
|
|
|
| ||
Purchases of investment debt securities |
| (239,422) |
| (87,407) | ||
Sales and maturities of investment debt securities |
| 225,155 |
| 227,459 | ||
Purchases of equipment, leasehold improvements, and furniture and fixtures |
| (531) |
| (397) | ||
Net cash (used in) provided by investing activities - continuing operations | (14,798) | 139,655 | ||||
Net cash (used in) provided by investing activities - discontinued operations | — | — | ||||
Net cash (used in) provided by investing activities |
| (14,798) |
| 139,655 | ||
Cash flows from financing activities: |
|
|
|
| ||
Payments of employee withholding taxes related to stock-based awards | (345) | (1,325) | ||||
Proceeds from exercise of options, net | — | 18 | ||||
Payments for repurchases of convertible senior notes | (3,862) | — | ||||
Payments of debt issuance costs | (35) | — | ||||
Net cash used in financing activities - continuing operations |
| (4,242) |
| (1,307) | ||
Net cash (used in) provided by financing activities - discontinued operations | — | — | ||||
Net cash used in financing activities | (4,242) |
| (1,307) | |||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
| (2,977) |
| (522) | ||
Net (decrease) increase in cash, cash equivalents and restricted cash |
| (27,403) |
| 88,023 | ||
Cash, cash equivalents and restricted cash at beginning of period |
| 94,409 |
| 65,654 | ||
Cash, cash equivalents and restricted cash at end of period | 67,006 | 153,677 | ||||
Less: Cash, cash equivalents and restricted cash of discontinued operations | 1,450 | 1,659 | ||||
Cash, cash equivalents and restricted cash of continuing operations | $ | 65,556 | $ | 152,018 | ||
Supplemental disclosure of non-cash transactions: | ||||||
Right-of-use asset obtained in exchange for new operating lease obligations | $ | (3,173) | $ | — | ||
Non-cash investing and financing activities | ||||||
Net increase in accrued fixed assets | $ | 13 | $ | — | ||
Reconciliation of cash, cash equivalents and restricted cash included in the condensed consolidated balance sheets: | ||||||
Cash and cash equivalents | $ | 58,019 | $ | 145,620 | ||
Restricted cash | 7,537 | 6,398 | ||||
Total cash, cash equivalents and restricted cash | $ | 65,556 | $ | 152,018 | ||
See accompanying notes to the condensed consolidated financial statements.
11
INTERCEPT PHARMACEUTICALS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Overview of Business
Intercept Pharmaceuticals, Inc. (the “Company”) is a biopharmaceutical company founded in 2002 and focused on the development and commercialization of novel therapeutics to treat progressive non-viral liver diseases, including primary biliary cholangitis (“PBC”) and nonalcoholic steatohepatitis (“NASH”). The Company currently has one marketed product, Ocaliva (obeticholic acid or “OCA”).
On May 5, 2022, the Company entered into a series of agreements to sell the Company’s ex-U.S. commercial operations and sublicense the right to commercialize Ocaliva for PBC and, if approved, OCA for NASH outside of the United States to Advanz Pharma and its affiliates (collectively, “Advanz”) (the “Disposition Transaction”). Consideration under the agreements totaled $405 million up front, subject to adjustments including for cash, working capital, and assumed liabilities.
The Company will receive an additional $45 million from Advanz contingent upon receipt of extensions of orphan exclusivity for Ocaliva from the European Medicines Agency (“EMA”) and Medicines and Healthcare products Regulatory Agency (“MHRA”).
2. Basis of Presentation
The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany balances and transactions have been eliminated in consolidation. Certain information that is normally required by U.S. GAAP has been condensed or omitted in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2022. In the opinion of management, these unaudited condensed consolidated financial statements include all normal and recurring adjustments considered necessary for a fair presentation of these interim unaudited condensed consolidated financial statements.
These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC.
Reclassifications
Certain amounts in prior periods have been reclassified to reflect the impact of the discontinued operations treatment in order to conform to the current period presentation.
Use of Estimates
The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.
3. Summary of Significant Accounting Policies
The Company’s significant accounting policies are described in Note 2 of Notes to Consolidated Financial Statements included in its Annual Report on 10-K for the year ended December 31, 2021. With the exception of the accounting for held for sale assets and liabilities and discontinued operations under ASC 205-20, Presentation of Financial Statements:
12
Discontinued Operations (“ASC 205”), there have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Annual Report, other than the adoption of the accounting pronouncements below.
Held for Sale and Discontinued Operations
Assets and liabilities of a group of components of an entity are classified as held for sale when all of the following criteria for a plan of sale have been met: (1) management, having the authority to approve the action, commits to a plan to sell the entities to be sold; (2) the entities to be sold are available for immediate sale, in their present condition, subject only to terms that are usual and customary for sales of such entities to be sold; (3) an active program to locate a buyer and other actions required to complete the plan to sell the entities have been initiated; (4) the sale of the entities is probable and is expected to be completed within one year; (5) the entities are being actively marketed for a price that is reasonable in relation to their current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or the plan will be withdrawn.
Components of an entity that are classified as held for sale and have operations and cash flows that can be clearly distinguished from the rest of the entity are required to be reported as assets and liabilities held for sale. A disposal of a group of components that is classified as held for sale is reported as discontinued operations if the disposal represents a strategic shift that has and will have a major effect on our operations and financial results.
In the period in which the components meet held-for-sale or discontinued operations criteria, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. Assets classified as held for sale are reported at the lower of their carrying value or fair value less costs to sell. Depreciation and amortization of assets ceases upon designation as held for sale. For components that meet the discontinued operations criteria, the results of operations for the discontinued operation are reclassified into separate line items in the condensed consolidated statements of operations, net of income taxes for all periods presented.
The Company accounts for contingent consideration received as a gain contingency, and recognizes such contingent consideration when it is realized or realizable, once the contingency is resolved.
Additional details surrounding the Company's assets and liabilities held for sale and discontinued operations are included in Note 4.
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for convertible instruments by eliminating the requirement to separately account for embedded conversion features as an equity component in certain circumstances. A convertible debt instrument will be reported as a single liability instrument with no separate accounting for an embedded conversion feature unless separate accounting is required for an embedded conversion feature as a derivative or under the substantial premium model. The ASU simplifies the diluted earnings per share calculation by requiring that an entity use the if-converted method and that the effect of potential share settlement be included in diluted earnings per share calculations. Further, the ASU requires enhanced disclosures about convertible instruments. The Company adopted ASU 2020-06 on January 1, 2022 using the modified retrospective method. Upon adoption at January 1, 2022, the Company made certain adjustments in its condensed consolidated balance sheets which consisted of an increase of $176.3 million in Long-term debt, a net decrease of $307.4 million in Additional paid-in capital and a net decrease of $131.1 million in Accumulated deficit resulting from the reversal of previously recognized non-cash interest expense.
13
After adoption, the Company accounts for the Convertible Notes as single liabilities measured at amortized cost. The Company did not elect the fair value option. Additionally, the Company will no longer incur non-cash interest expense for the amortization of debt discount related to the previously separated equity components. The Company will apply the if-converted methodology in computing diluted earnings per share if and when profitability is achieved.
The following table summarizes the adjustments made to the Company’s condensed consolidated balance sheet as of January 1, 2022 as a result of applying the modified retrospective method in adopting ASU 2020-06:
Under the modified retrospective method, comparative prior periods are not adjusted. The adoption did not impact previously reported amounts in the Company’s condensed consolidated statements of operations, cash flows and the basic and diluted net loss per share amounts.
4. Discontinued Operations
On May 5, 2022, the Company entered into the Disposition Transaction. Consideration under the agreements totaled $405 million up front, subject to adjustments including for cash, working capital, and assumed liabilities. The Company will receive an additional cumulative $45 million from Advanz contingent upon receipt of extensions of orphan drug exclusivity from the EMA and MHRA. The Company will also receive royalties on any future net sales of OCA in NASH outside of the U.S., should Advanz pursue marketing authorization for this indication in ex-U.S. regions. The Company will continue to be responsible for the manufacturing and supply of OCA globally while Advanz will be responsible for packaging, distribution and commercialization of the therapy in all markets outside of the U.S. In addition, the Company will be responsible for any difference between the cumulative rebate estimated for France for periods prior to July 1, 2022 and the amount agreed through final negotiations with the French government. Under the Sublicense Agreement, we agreed to continue to conduct certain post-marketing work and other activities with respect to Ocaliva for PBC, including continuing to conduct certain PBC studies (the “PBC Post-Marketing Work”). The Company will be reimbursed by Advanz for a portion of the total R&D costs related to the PBC Post-Marketing Work. Refer to Note 16 for additional details regarding the closing and completion of the Disposition Transaction subsequent to the end of the reporting period.
The Company accounted for the Disposition Transaction in accordance with ASC 205 as it met the definitions of held for sale and discontinued operations as of June 30, 2022 and therefore has reclassified the results of the disposed entities into discontinued operations in its unaudited condensed consolidated statements of operations and cash flows for all periods presented. The series of agreements entered into with Advanz were accounted for as a single integrated disposal transaction. The assets and liabilities associated with the ex-U.S. commercial operations to be disposed in the Disposition Transaction were reclassified to assets and liabilities of discontinued operations in the Company's unaudited condensed consolidated balance sheets for the periods presented. All amounts included in the notes to the unaudited condensed consolidated financial statements relate to continuing operations unless otherwise noted.
14
The following table presents the carrying amounts of the classes of assets and liabilities related to the discontinued operations as of June 30, 2022 and December 31, 2021:
The following table presents the results of operations related to the discontinued operations for the three and six months ended June 30, 2022 and 2021 respectively:
15
The following table presents the net cash provided by operating activities for the assets and liabilities held for sale (discontinued operations) for the six months ended June 30, 2022 and 2021 respectively:
5. Cash, Cash Equivalents and Investment Debt Securities
The following table summarizes the Company’s cash, cash equivalents and investment debt securities as of June 30, 2022 and December 31, 2021:
16
The aggregate fair value of the Company’s available-for-sale investment debt securities that have been in a continuous unrealized loss position for less than twelve months or twelve months or longer is as follows:
As of December 31, 2021 | ||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||
| Gross |
|
| Gross |
|
| Gross | |||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||
| Fair Value |
| Losses |
| Fair Value |
| Losses |
| Fair Value |
| Losses | |||||||
Commercial paper | $ | 81,464 | $ | (49) | $ | — | $ | — | $ | 81,464 | $ | (49) | ||||||
Corporate debt securities | 196,120 | (245) | — | — |
| 196,120 |
| (245) | ||||||||||
Municipal bonds | 5,027 | (1) | — | — | 5,027 | (1) | ||||||||||||
U.S Treasury securities | 12,997 | (1) | — | — | 12,997 | (1) | ||||||||||||
Total | $ | 295,608 | $ | (296) | $ | — | $ | — | $ | 295,608 | $ | (296) | ||||||
At June 30, 2022 and December 31, 2021, respectively the Company had 112 and 97 available-for-sale investment debt securities in an unrealized loss position without an allowance for credit losses. Unrealized losses on corporate debt securities have not been recognized into income because the issuers’ bonds are of high credit quality (rated A3/A- or higher) and the decline in fair value is largely due to market conditions and/or changes in interest rates. Management does not intend to sell and it is likely that management will not be required to sell the securities prior to the anticipated recovery of their amortized cost basis. The issuers continue to make timely interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.
Accrued interest receivable on available-for-sale investment debt securities totaled $0.9 million and $1.3 million at June 30, 2022 and December 31, 2021, respectively, is excluded from the estimate of credit losses and is included in Prepaid expenses and other current assets.
17
6. Fair Value Measurements
The carrying amounts of the Company’s receivables and payables approximate their fair value due to their short maturities.
Accounting principles provide guidance for using fair value to measure assets and liabilities. The guidance includes a three-level hierarchy of valuation techniques used to measure fair value, defined as follows:
| ● | Unadjusted Quoted Prices — The fair value of an asset or liability is based on unadjusted quoted prices in active markets for identical assets or liabilities (Level 1). |
| ● | Pricing Models with Significant Observable Inputs — The fair value of an asset or liability is based on information derived from either an active market quoted price, which may require further adjustment based on the attributes of the financial asset or liability being measured, or an inactive market transaction (Level 2). |
| ● | Pricing Models with Significant Unobservable Inputs — The fair value of an asset or liability is primarily based on internally derived assumptions surrounding the timing and amount of expected cash flows for the financial instrument. Therefore, these assumptions are unobservable in either an active or inactive market (Level 3). |
The Company considers an active market as one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Conversely, the Company views an inactive market as one in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate, non-performance risk, or that of a counterparty, is considered in determining the fair values of liabilities and assets, respectively.
The Company’s cash deposits, money market funds and U.S. Treasury securities are classified within Level 1 of the fair value hierarchy because they are valued using bank balances or quoted prices from active markets. Commercial paper, corporate debt securities, and U.S. government agency bonds are classified as Level 2 instruments based on market pricing and other observable inputs.
18
Financial assets carried at fair value are classified in the tables below in one of the three categories described above:
See Note 10 for the carrying amounts and estimated fair values of the Company’s 3.50% Convertible Senior Secured Notes due 2026 (“2026 Convertible Secured Notes”), 2.00% Convertible Senior Notes due 2026 (“2026 Convertible Notes”) and 3.25% Convertible Senior Notes due 2023 (“2023 Convertible Notes”).
The aggregate fair value of all available-for-sale investment debt securities (commercial paper, corporate debt securities, U.S. government agency bonds and U.S. Treasury securities), by contractual maturity, are as follows:
Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.
19
7. Fixed Assets, Net
Fixed assets are stated at cost and depreciated or amortized using the straight-line method based on useful lives as follows:
8. Inventory
Inventories are stated at the lower of cost or market. Inventories consisted of the following:
| ||||||
June 30, 2022 |
| December 31, 2021 | ||||
(in thousands) | ||||||
Work-in-process | $ | 6,702 | $ | 7,801 | ||
Finished goods |
| 189 |
| 82 | ||
Inventory | $ | 6,891 | $ | 7,883 | ||
9. Accounts Payable, Accrued Expenses and Other Liabilities
Accounts payable, accrued expenses and other liabilities consisted of the following:
Research & Development Tax Credit
The Company has benefited from the U.K. Small and Medium-sized Enterprise R&D Tax Credit scheme, or the SME scheme, under which it can obtain a tax credit of up to 33.4% of eligible research and development expenses incurred by the Company in the U.K. Eligible expenses generally include employment costs for research staff, consumables, software and certain internal overhead costs incurred as part of research projects.
The Company has started to benefit from the U.K. Research and Development Expenditure Scheme, or the RDEC scheme, under which it can obtain a tax credit of 12% of eligible research and development expenses incurred by the Company in the U.K. The RDEC scheme is more restrictive than the SME scheme, and generally applies where qualifying R&D expenditure is not eligible for relief under the SME scheme.
20
The Company has submitted claims seeking to obtain tax credits for qualifying R&D expenses incurred in the 2015, 2016, 2017, 2018 and 2019 calendar years. As described further in Note 12, the 2018 RDEC claim was finalized during the quarter ended June 30, 2022, and therefore the $4.0 million net payment received, which was previously deferred, was released into income as a reduction to research & development expenses.
With respect to the 2019 RDEC claim, in February 2022, the Company received a payment of $3.8 million from HMRC. Given the claim review has not been finalized for the 2019 year, the $3.8 million credit received is recorded as a deferred liability within Accounts payable, accrued expenses, and other liabilities. The Company will be entitled to this benefit based on the terms of the Disposition Transaction.
10. Long-Term Debt
Debt, net of debt issuance costs and discounts, consisted of the following:
*Recorded as a reduction of Additional paid-in capital upon the adoption of ASU 2020-06.
The Company has three series of convertible notes outstanding (together, the “Convertible Notes”). All three series are convertible under certain circumstances into cash, shares of the Company’s common stock, or a combination thereof, at the Company’s election.
The 2023 Convertible Notes were issued on July 6, 2016, in the amount of $460.0 million principal, at an interest rate of 3.25%. The Company received net proceeds from their sale of $447.6 million, net of $12.4 million in underwriting discounts, commissions, and estimated offering expenses.
The 2026 Convertible Notes were issued on May 14, 2019, in the amount of $230.0 million principal, at an interest rate of 2.00%. The Company received net proceeds from their sale of $223.4 million, net of $6.6 million in underwriting discounts, commissions, and estimated offering expenses.
On August 10, 2021, the Company entered into privately negotiated exchange and subscription agreements with a limited number of existing “accredited investors” and “qualified institutional buyers” (as defined under Securities Act rules) holding 2023 Convertible Notes and 2026 Convertible Notes to (1) exchange $306.5 million principal of 2023 Convertible Notes for $292.4 million principal of new notes, (2) exchange $114.7 million principal of 2026 Convertible Notes for $90.0 million principal of new notes, and (3) sell $117.6 million principal of new notes for cash. On August 17, 2021, these new notes were issued as 2026 Convertible Secured Notes in the amount of $500.0 million principal, at an interest rate of 3.50%. The Company received cash proceeds from the sale of notes of approximately $117.6 million. The Company also paid its financial advisor $10.0 million in stock for services rendered, in the amount of 769,823 shares, based on the closing price of $12.99 per share on August 20, 2021.
21
On September 9, 2021, the Company entered into privately negotiated agreements with certain holders of 2023 Convertible Notes to repurchase $39.9 million principal for $38.1 million in cash, which purchase closed on September 14, 2021.
On June 1, 2022, the Company entered into an agreement with a certain holder of 2023 Convertible Notes to repurchase $3.8 million principal for $3.8 million in cash, which purchase closed on June 3, 2022.
The approximate fair value of the Convertible Notes was determined as follows using Level 2 inputs based on quoted market values:
June 30, 2022 |
| December 31, 2021 | ||||
(in thousands) | ||||||
2026 Convertible Secured Notes | $ | 470,940 | $ | 543,370 | ||
2026 Convertible Notes | $ | 74,030 | $ | 69,492 | ||
2023 Convertible Notes | $ | 107,333 | $ | 107,727 | ||
Previously, in accordance with ASC 470-20, the Company used effective interest rates to determine the liability components of the Convertible Notes, with the residual as the debt discount, with a corresponding increase to additional paid-in capital for the equity component of the Convertible Notes. Underwriting discounts, commissions, and estimated offering expenses (both cash and non-cash) (“debt issuance costs”) were allocated as debt or equity issuance costs in proportion to the allocation of the liability and equity components of the Convertible Notes, with debt issuance costs recorded as a deduction from the carrying value of the debt, and equity issuance costs recorded as an offset to additional paid-in capital.
The Note Indentures
The 2023 Convertible Notes, and the 2026 Convertible Notes, were each issued pursuant to a Base Indenture, dated as of July 6, 2016, between the Company and U.S. Bank National Association (“U.S. Bank”), as trustee, and a First Supplemental Indenture (with respect to the 2023 Convertible Notes) and Second Supplemental Indenture (with respect to the 2026 Convertible Notes), dated July 6, 2016, and May 14, 2019, respectively, each between the Company and U.S. Bank as trustee. The 2026 Convertible Secured Notes were issued pursuant to a Base Indenture and a First Supplemental Indenture, each dated as of August 17, 2021, between the Company and U.S. Bank as trustee and collateral agent. In connection with the issuance of the 2026 Convertible Secured Notes, the Company also entered into a Security Agreement, dated as of August 17, 2021, with U.S. Bank as collateral agent.
Pursuant to these indentures, the 2023 Convertible Notes and 2026 Convertible Notes are senior unsecured obligations, and the 2026 Convertible Secured Notes are senior secured obligations, of the Company. Each indenture provides for customary events of default.
Each series of notes bears a fixed rate of interest as identified above, payable semi-annually in arrears:
* Unless earlier repurchased, redeemed, or converted.
Each of the three series of notes is convertible under certain circumstances. Prior to January 1, 2023 (for the 2023 Convertible Notes), February 15, 2026 (for the 2026 Convertible Notes), and November 15, 2025 (for the 2026 Convertible Secured Notes), holders may convert their notes only under any of the following circumstances:
22
(i) | During any calendar quarter commencing after the calendar quarter ended on September 30, 2016 (for the 2023 Convertible Notes), June 30, 2019 (for the 2026 Convertible Notes), or December 31, 2021 (for the 2026 Convertible Secured Notes), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is at least 130% of the applicable conversion price (as defined in the applicable indenture) on each applicable trading day (the “Stock Price Conversion Condition”). |
(ii) | During the business day period after any consecutive trading day period in which the trading price (as defined in the applicable indenture) per $1,000 principal amount for each trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate (as defined in the applicable indenture) on each such trading day. |
(iii) | If the Company calls any or all of the applicable series of notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date. |
(iv) | Upon the occurrence of specified corporate events. |
After those dates, holders may convert their notes, regardless of the foregoing circumstances, at any time until immediately preceding the applicable maturity date.
Upon conversion of notes, the Company will pay or deliver cash, shares of common stock (or cash in lieu of fractional shares), or a combination of cash and common stock, at the Company’s election.
The initial conversion rates of the Convertible Notes per $1,000 principal amount, and the approximate conversion price, are as follows:
Initial conversion rate |
| Approximate conversion price | ||
2026 Convertible Secured Notes | 47.7612 | $20.94 | ||
2026 Convertible Notes | 9.2123 | $108.55 | ||
2023 Convertible Notes | 5.0358 | $198.58 |
These conversion rates are subject to adjustment upon occurrence of certain events but will not be adjusted for accrued and unpaid interest. Also, if certain specified events occur, the conversion rate will be increased for notes converted in connection with such events.
The Convertible Notes are redeemable by the Company in certain circumstances starting July 6, 2021 (for the 2023 Convertible Notes), May 20, 2023 (for the 2026 Convertible Notes), and February 20, 2024 (for the 2026 Convertible Secured Notes). After such dates, the Company may redeem for cash all or any part of the applicable Convertible Notes, at its option, if the last reported sale price of the common stock has been at least 130% of the applicable conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on and including the trading day immediately preceding the date of the applicable notice of redemption. The redemption price is equal to 100% of the principal amount redeemed, plus accrued and unpaid interest to (but excluding) the redemption date.
No sinking fund is provided for any of the Convertible Notes.
If the Company undergoes a fundamental change (as defined in the applicable indenture), noteholders may require the Company to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to (but excluding) the fundamental change repurchase date.
Upon the occurrence of certain corporate events (i.e., a “make-whole fundamental change”, as defined in the applicable indenture), the Company will, under certain circumstances, increase the conversion rate for holders of the
23
Convertible Notes who elect to convert in connection with such corporate events. In addition, with respect to the 2026 Convertible Secured Notes, (1) if the Company elects to redeem all or part of such notes and provides notice of redemption to the holders or (2) if the Stock Price Conversion Condition is satisfied with respect to any calendar quarter commencing after the quarter ended September 30, 2022, the Company will, under certain circumstances, increase the conversion rate for holders who elect to convert (1) during the related redemption period, or (2) in connection with such Stock Price Conversion Condition. Upon a Company redemption of the 2026 Convertible Secured Notes, holders of notes called for redemption may be eligible to receive a make-whole premium. The Company, at its option, will satisfy the conversion obligation through cash, shares of common stock, or a combination of cash and common stock. The right to redeem the 2026 Convertible Secured Notes requires the Company to specify a date of redemption no earlier than 60 days and no later than 90 days after the notice of redemption is sent. If a holder elects to convert its 2026 Convertible Secured Notes prior to the effective date of a make-whole fundamental change or the date of the redemption notice, then it is not entitled to the increased conversion rate in connection with such make-whole fundamental change or redemption.
Upon certain events of default occurring and continuing, either the indenture trustee or holders of at least 25% in aggregate principal amount of a series of notes then outstanding may declare the entire principal amount of that series of notes, and accrued interest, if any, to be immediately due and payable. Upon events of default involving specified bankruptcy events involving the Company, the Convertible Notes are due and payable immediately.
The 2026 Convertible Secured Notes indenture and security agreement include (1) customary covenants, (2) guarantor provisions, and (3) collateral provisions. The 2026 Convertible Secured Notes may become guaranteed in the future by subsidiaries of the Company that meet certain threshold requirements, with the 2026 Convertible Secured Notes becoming senior obligations of such guarantor. The 2026 Convertible Secured Notes are secured by a first priority security interest in substantially all assets of the Company, and of any guarantors, subject to certain exceptions.
The Capped Call Transactions
On June 30, 2016, in connection with the pricing of the 2023 Convertible Notes, the Company entered into privately-negotiated capped call agreements (the “Base Capped Calls”) with each of Royal Bank of Canada, UBS AG, London Branch, and Credit Suisse Capital LLC. On July 1, 2016, in connection with the underwriters’ exercise of their over-allotment option in full, the Company entered into additional capped call agreements (the “Additional Capped Calls” and, together with the Base Capped Calls, the “Capped Calls”) with same counterparties.
The Capped Calls are considered to be instruments indexed to the Company’s own shares and met the criteria to be classified within equity. Therefore, they are not remeasured.
In August 2021, in connection with the exchange of 2023 Convertible Notes, of the 460,000 Capped Call options outstanding (400,000 Base Capped Call options and 60,000 Additional Capped Call Options), 306,486 options were terminated (246,486 Base Capped Call options and 60,000 Additional Capped Call options), equivalent to approximately 1.5 million shares.
In September 2021, in connection with the additional repurchase of $39.9 million of 2023 Convertible Notes, 39,859 more Capped Call options were terminated, equivalent to approximately 0.2 million shares, with 113,655 Base Capped Call options remaining, equivalent to approximately 0.6 million shares.
24
Interest Expense on Convertible Notes
The table summarizes the total interest expense recognized in the periods presented:
Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | ||||||||||||||||||||||||
| 2026 Convertible Secured Notes | 2026 Convertible Notes | 2023 Convertible Notes | Total | 2026 Convertible Secured Notes | 2026 Convertible Notes | 2023 Convertible Notes | Total | |||||||||||||||||
(in thousands) | |||||||||||||||||||||||||
Contractual interest expense | $ | 4,375 | $ | 577 | $ | 913 | $ | 5,865 | $ | 8,750 | $ | 1,154 | $ | 1,837 | $ | 11,741 | |||||||||
Amortization of debt issuance costs | 569 | 116 | 119 | 804 | 1,132 | 232 | 237 | 1,601 | |||||||||||||||||
Accretion of debt discount |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | |||||||||
Total interest expense | $ | 4,944 | $ | 693 | $ | 1,032 | $ | 6,669 | $ | 9,882 | $ | 1,386 | $ | 2,074 | $ | 13,342 | |||||||||
Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | ||||||||||||||||||||||||
| 2026 Convertible Secured Notes | 2026 Convertible Notes | 2023 Convertible Notes | Total | 2026 Convertible Secured Notes | 2026 Convertible Notes | 2023 Convertible Notes | Total | |||||||||||||||||
(in thousands) | |||||||||||||||||||||||||
Contractual interest expense | $ | — | $ | 1,150 | $ | 3,737 | $ | 4,887 | $ | — | $ | 2,300 | $ | 7,475 | $ | 9,775 | |||||||||
Amortization of debt issuance costs | — | 196 | 490 | 686 | — | 386 | 970 | 1,356 | |||||||||||||||||
Accretion of debt discount |
| — |
| 2,553 |
| 4,463 |
| 7,016 |
| — |
| 5,043 |
| 8,834 |
| 13,877 | |||||||||
Total interest expense | $ | — | $ | 3,899 | $ | 8,690 | $ | 12,589 | $ | — | $ | 7,729 | $ | 17,279 | $ | 25,008 | |||||||||
The effective interest rates during the three and six months ended June 30, 2022 for the 2026 Convertible Secured Notes, 2026 Convertible Notes and 2023 Convertible Notes are 4.03%, 2.44% and 3.69%, respectively. The effective interest rates during the three and six months ended June 30, 2021 for the 2026 Convertible Notes and 2023 Convertible Notes were 9.90% and 8.42%, respectively. Accrued interest on the Convertible Notes was approximately $8.6 million and $8.6 million as of June 30, 2022 and December 31, 2021, respectively.
The Company’s total recorded debt issuance costs are $17.1 million, which are being amortized using the effective interest method through the date of maturity. As of June 30, 2022, and December 31, 2021, $11.3 million and $10.3 million, respectively, of debt issuance costs are unamortized on the condensed consolidated balance sheets in Long-term debt. Cash payments for interest were $11.7 million and $9.8 million for the six months ended June 30, 2022 and 2021, respectively.
11. Product Revenue, Net
The Company recognized U.S. Ocaliva net sales of $71.8 million and $68.2 million for the three months ended June 30, 2022 and 2021, respectively and $130.9 million and $125.5 million for the six months ended June 30, 2022 and 2021, respectively.
25
Credit Losses
The following table summarizes the allowance for credit losses activity on the Company’s trade receivables for the six-month period ended June 30, 2022 (in thousands):
Balance at December 31, 2021 | $ | 58 |
Provision for credit losses | (7) | |
Write-offs | — | |
Balance at June 30, 2022 | $ | 51 |
12. Research and Development Tax Credit
The Company has benefited from the U.K. Small and Medium-sized Enterprise R&D Tax Credit scheme, or the SME scheme, under which it can obtain a tax credit of up to 33.4% of eligible research and development expenses incurred by the Company in the U.K. Eligible expenses generally include employment costs for research staff, consumables, software
and certain internal overhead costs incurred as part of research projects.
The Company submitted a claim seeking to obtain tax credits for qualifying R&D expenses incurred in the years ended December 31, 2018 and 2019. In June 2021, the Company received a payment of $4.2 million from HMRC and made a cash repayment of $0.2 million to the HMRC due to submission of an amended claim.
Given the finalization and approval of the claims for 2018, the Company recorded the net U.K. research and development tax credit payments received of $4.0 million (less $0.5 million due to foreign currency translation) as a reduction of research and development expense in the condensed consolidated statements of operations for the three and six months ended June 30, 2022. In the three and six months ended June 30, 2021, the Company recorded U.K. research and development tax credits of $10.7 million as a reduction of research and development expense.
13. Stock Compensation
In April 2022, the Company’s Compensation Committee and Board of Directors approved the Amended and Restated Equity Incentive Plan (“2022 Plan”), which became effective upon stockholder approval at the annual meeting of stockholders on May 25, 2022, and which replaced the Company’s 2012 Stock Incentive Plan (“2012 Plan”). Under the 2022 Plan, the Company may grant stock options, which include incentive stock options (“ISOs”) and non-qualified stock options (“NSOs”), stock grants, which include unrestricted shares, restricted shares (“RSAs”) and performance restricted shares (“PSAs”) along with stock-based awards, which include restricted stock unit awards (“RSUs”) and performance restricted stock unit awards (“PRSUs”). The pool of available shares under the 2022 Plan consists of those shares which remained unallocated under the 2012 Plan, plus any shares subject to previously issued awards which are forfeited. The 2022 Plan does not contain an evergreen share replenishment clause and prohibits the repricing of stock options. The 2022 Plan will remain effective for a ten-year term, expiring in 2032.
The estimated fair value of the stock options granted in the six months ended June 30, 2022 was determined utilizing a Black-Scholes option-pricing model at the date of grant. The fair value of the RSUs granted in the six months ended June 30, 2022 was determined utilizing the closing price of the Company’s common stock on the date of grant. The fair value of the PRSUs granted in the six months ended June 30, 2022 was determined utilizing the Monte Carlo simulation method. The Company accounts for all forfeitures when they occur. Ultimately, the actual expense recognized over the vesting period will be for only those shares that vest and are not forfeited.
26
The following table summarizes stock option activity during the six months ended June 30, 2022 (under both the 2012 Plan and the 2022 Plan):
The aggregate intrinsic value of options is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock. As of June 30, 2022, the total compensation cost related to non-vested option awards not yet recognized is approximately $16.0 million with a weighted average remaining vesting period of 1.25 years.
The Company estimated the fair value of stock options granted in the periods presented utilizing a Black-Scholes option-pricing model utilizing the following assumptions:
Six Months Ended June 30, | |||||
| 2022 |
| 2021 | ||
Volatility |
| 66.4 - 67.7 | % | 65.2 - 67.7 | % |
Expected term (in years) |
| 5.5 - 6.0 |
| 5.5 - 6.0 |
|
Risk-free rate |
| 1.3 - 2.8 | % | 0.4 - 0.9 | % |
Expected dividend yield |
| — | % | — | % |
The following table summarizes the aggregate RSU, RSA and PRSU activity during the six months ended June 30, 2022:
As of June 30, 2022, there is approximately $24.7 million of total unrecognized compensation expense related to unvested RSUs, RSAs and PRSUs, which is expected to be recognized over a weighted average vesting period of 1.68 years.
During the six months ended June 30, 2022, the Company granted a total of 168,600 PRSUs to certain of the Company’s executive officers. The performance criterion for such PRSUs is based on the Total Shareholder Return (“TSR”) of the Company’s common stock relative to the TSR of the companies comprising the S&P Biotechnology Select Industry Index (the “TSR Peer Group”) over a 3-year performance period and is accounted for as a market condition under ASC Topic 718, Compensation – Stock Compensation. The TSR for the Company or a member of the TSR Peer Group is calculated by dividing (a) the difference of the ending average stock price minus the beginning average stock price by
27
(b) the beginning average stock price. The beginning average stock price equals the average closing stock price over the one calendar month period prior to the beginning of the performance period, after adjusting for dividends, as applicable. The ending average stock price equals the average closing price over the one calendar month period ending on the last day of the performance period, after adjusting for dividends, as applicable. The Company’s relative TSR is then used to calculate the payout percentage, which may range from zero percent (0%) to one hundred and fifty percent (150%) of the target award. The Company utilized a Monte Carlo simulation to determine the grant date fair value of such PRSUs.
The Company recorded approximately $0.2 million and $0.5 million of stock-based compensation related to such PRSUs granted during the three and six months ended June 30, 2022.
The Company modified certain stock option, stock grant and stock-based awards to accelerate vesting in anticipation of the sale of the ex-U.S. commercial operations to Advanz. The Company accelerated the vesting of all awards held by employees of those operations being sold because those employees would have otherwise forfeited the awards. Given the sale of the ex-U.S. commercial operations was probable at the time the awards were modified and the entities met the held for sale criteria, the modification to accelerate vesting was recognized at the date of the modification. As a result, incremental compensation expense of $3.4 million was recognized based on the fair value of the modified awards for the three months ended June 30, 2022.
Stock-based compensation expense has been reported in the Company’s condensed consolidated statements of operations as follows:
Stock-based compensation expense recognized under discontinued operations, included in net income from discontinued operations, was $3.2 million and $1.6 million for the three months ended June 30, 2022 and 2021, respectively and $4.4 million and $3.2 million for the six months ended June 30, 2022 and 2021, respectively.
14. Net Loss Per Share
Basic loss per share is computed by dividing net loss attributable to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. For the three and six-month periods ended June 30, 2022 and 2021, as the Company was in a net loss position, the diluted loss per share computations for such periods did not assume the conversion of the Convertible Notes, exercise of stock options or vesting of RSUs or PRSUs as they would have had an anti-dilutive effect on loss per share.
The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding for the three and six-month periods ended June 30, 2022 and 2021, as the inclusion thereof would have been anti-dilutive:
28
15. Commitments and Contingencies
Legal Proceedings
The Company is involved in various disputes, legal proceedings and litigation in the course of its business, including the matters described below and, from time to time, governmental inquiries and investigations and employment and other litigation. These matters, which could result in damages, fines or other administrative, civil or criminal remedies, liabilities or penalties, are often complex and the outcome of such matters is often uncertain. The Company may from time to time enter into settlements to resolve such matters.
Shareholder Litigation
The Company currently is involved in a purported shareholder class action lawsuit, as well as a related derivative suit. While the Company believes that it has a number of valid defenses to the claims of the litigants, and intends to vigorously defend itself, matters are in early stages of litigation, and no assessment can be made as to likely outcomes or whether these matters will be material to the Company. Accordingly, an estimate of the potential loss, or range of loss, if any, to the Company relating to these matters is not possible at this time.
The 2017 Litigation
On September 27, 2017, a purported shareholder class action, initially styled DeSmet v. Intercept Pharmaceuticals, Inc., et al., was filed in the United States District Court for the Southern District of New York, naming the Company and certain of its officers as defendants. On June 1, 2018, the Court appointed lead plaintiffs in the lawsuit, and on July 31, 2018, the lead plaintiffs filed an amended complaint, captioned Hou Liu and Amy Fu v. Intercept Pharmaceuticals, Inc., et al., naming the Company and certain of its current and former officers as defendants. The lead plaintiffs claim to be suing on behalf of anyone who purchased or otherwise acquired the Company’s common stock between June 9, 2016 and September 20, 2017. This lawsuit alleges that material misrepresentations and/or omissions of material fact were made in the Company’s public disclosures during that period, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder. The alleged improper disclosures relate to statements regarding Ocaliva dosing and use, and pharmacovigilance-related matters, as well as the Company’s operations, financial performance, and prospects. The plaintiffs seek unspecified monetary damages on behalf of the putative class, an award of costs and expenses, including attorney’s fees, and rescissory damages. On September 14, 2018, the Company filed a motion to dismiss the amended complaint. On March 26, 2020, the Court granted the Company’s motion to dismiss the amended complaint in its entirety, and on March 27, 2020 the Court entered judgment in favor of the Company. On May 8, 2020, the plaintiffs filed a motion to set aside the judgment and grant leave to file a second amended complaint. On September 9, 2020, the Court denied the plaintiffs’ motion, finding that the proposed second amended complaint did not cure the deficiencies identified in the amended complaint. On October 9, 2020, the plaintiffs filed a notice of appeal to the United States Court of Appeals for the Second Circuit and on January 25, 2021, the plaintiffs filed an appellate brief challenging the March 27, 2020 judgment, the September 9, 2020 judgment, and other court orders. On April 23, 2021, the Company filed a response brief in the Second Circuit appellate proceeding. On May 14, 2021, the plaintiffs filed a reply brief. On December 9, 2021, oral argument was held in the Second Circuit. On June 16, 2022, the Second Circuit entered a summary order affirming the order of the District Court dated September 9, 2020.
Separately, on December 1, 2017, a purported shareholder demand was made on the Company based on substantially the same allegations as those set forth in the securities case above. Also, on January 5, 2018, a follow-on derivative suit, styled Davis v. Pruzanski, et al., was filed in New York state court by shareholder Gregg Davis based on substantially the same allegations as those set forth in the securities case above. The derivative litigation is presently stayed pending the exhaustion of all appeals relating to the dismissal of the securities case.
Patent Litigation
The Company has received paragraph IV certification notice letters from six generic drug manufacturers indicating that each such manufacturer submitted to the FDA an Abbreviated New Drug Application (“ANDA”) seeking approval to manufacture and sell a generic version of the Company’s 5 mg and 10 mg dosage strengths of Ocaliva® (obeticholic acid)
29
for PBC prior to the expiration of certain patents listed for Ocaliva in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”).
The six generic drug manufacturers and when we received their initial paragraph IV certification notices are as follows: (1) Apotex Inc. (July 2020), (2) Lupin Limited (July 2020), (3) Amneal Pharmaceuticals of New York, LLC, as U.S. agent for Amneal EU Limited (July 2020), (4) Optimus Pharma Pvt Ltd (July 2020), (5) MSN Pharmaceuticals Inc. and MSN Laboratories Private Limited (July 2020), and (6) Dr. Reddy’s Laboratories, Inc., and Dr. Reddy’s Laboratories, Ltd. (December 2020).
Each paragraph IV certification notice alleged that the challenged Orange Book patents were invalid, unenforceable, and/or would not be infringed by the commercial manufacture, use, or sale of the generic products described in the generic manufacturer’s respective ANDA. In each case, within 45 days of receipt of the paragraph IV certification notice, the Company initiated a patent infringement suit against the generic manufacturer in the United States District Court for the District of Delaware. As a result, under the Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”), the FDA cannot grant final approval of each generic manufacturer’s ANDA before the earlier of November 27, 2023, or a court decision in their favor. The Company has since received additional paragraph IV certification notices from certain of the six generic manufacturers challenging additional Ocaliva Orange Book patents, and the Company has been amending its complaints against the generic challengers accordingly to add infringement allegations in relation thereto.
The challenged Ocaliva Orange Book patents that are the subject of the ongoing patent litigation are U.S. Patents Nos. RE 48,286 (the “‘286 Patent”), 9,238,673 (the “‘673 Patent”), 10,047,117 (the “‘117 Patent”), 10,052,337 (the “‘337 Patent”), 10,174,073 (the “‘073 Patent”), 10,751,349 (the “‘349 Patent”), and 10,758,549 (the “‘549 Patent”).
Trial against all of the generic challengers is scheduled for February 27, 2023.
These patent proceedings are costly and time-consuming, and successful challenges to the Company’s patent or other intellectual property rights could result in the Company losing those rights in the relevant jurisdiction, and could allow third parties to use the Company’s proprietary technologies without a license from the Company or its collaborators. While the Company intends to vigorously defend and enforce its intellectual property rights protecting Ocaliva, the Company can offer no assurances regarding when these lawsuits will be decided, which side will prevail, or whether a generic equivalent of Ocaliva could be approved and enter the market before the expiration of the Company’s patents.
16. Subsequent Events
On July 1, 2022, the Company completed the previously announced Disposition Transaction. Consideration totaled $405.0 million up front. Total cash consideration received upon closing was $366.5 million. Additional consideration of $38.5 million under the Share Purchase Agreement (the “SPA”) will be settled in connection with the completion statements, which will also include adjustments including for cash, working capital, and assumed liabilities. As a result of this transaction, the Company’s international business has been divested and its international commercial and medical infrastructure have transitioned to Advanz.
30
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis together with our condensed consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”). This discussion and analysis contains forward-looking statements, which involve risks and uncertainties. As a result of many factors, such as those described under “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report, our actual results may differ materially from those anticipated in these forward-looking statements.
Overview
We are a biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat progressive non-viral liver diseases with high unmet medical need utilizing our proprietary bile acid chemistry. Our first marketed product, Ocaliva® (obeticholic acid or “OCA”), is a farnesoid X receptor (“FXR”) agonist approved in the United States and several other jurisdictions for the treatment of primary biliary cholangitis (“PBC”) in combination with ursodeoxycholic acid (“UDCA”) in adults with an inadequate response to UDCA or as monotherapy in adults unable to tolerate UDCA.
In addition to commercializing OCA for PBC under the Ocaliva brand name, we are also currently developing OCA for additional indications, including nonalcoholic steatohepatitis (“NASH”). We are also developing product candidates in various stages of clinical and preclinical development. We believe that OCA and our other product candidates have the potential to treat orphan and other more prevalent liver diseases such as NASH for which there are currently limited therapeutic options.
Ocaliva was approved for PBC by the U.S. Food and Drug Administration (“FDA”) in May 2016 under the accelerated approval pathway. We commenced sales and marketing of Ocaliva in the United States shortly after receiving approval, and Ocaliva is now available to U.S. patients primarily through a network of specialty pharmacy distributors. In addition, we continue to work to execute on our post-marketing regulatory commitments with respect to Ocaliva. In June 2022, we announced topline results from our COBALT trial. The primary endpoint, as agreed with the FDA, was time to first occurrence of any of the following clinical endpoints: all-cause death, liver transplant, hospitalization for other serious liver-related events, signs of progression to hepatic decompensation, or signs of development of portal hypertension. The study did not demonstrate a statistically significant difference between Ocaliva and placebo on the primary endpoint: 71 subjects in the Ocaliva arm progressed to clinical events compared to 80 in the placebo arm (p=0.30; HR 0.84). The safety and tolerability of Ocaliva were consistent with its known profile and adverse events were in line with expectations for patients with advanced PBC based on the natural history of the disease. In June 2022, we also announced topline results for our HEROES-US study, a retrospective real-world study that evaluated data from a U.S. claims database, to compare clinical outcomes in a pre-defined group of patients with PBC who were treated with Ocaliva and a comparable group of PBC patients who were eligible, but who were not treated with Ocaliva. The results from the HEROES-US study showed a statistically significant and clinically meaningful reduction in all-cause death, liver transplant, or hospitalization for hepatic decompensation among Ocaliva-treated patients compared to the control group. In the Ocaliva arm (n=429), 8 events were observed compared to 226 in the control group (n=4,585) with a weighted hazard ratio of 0.38 (p= 0.027). HEROES-US is one of two HEROES studies we are conducting that utilizes real-world data to assess the impact of Ocaliva on clinical outcomes in PBC patients.
We intend to submit the data from the COBALT and HEROS-US studies as well additional data, including data from other real world evidence studies, as part of a broader evidence package in support of full approval of Ocaliva for the treatment of PBC, which we anticipate submitting to the FDA in the second half of 2022. If this data package does not support fulfillment of our post-marketing obligations, we may not be able to maintain our previously granted marketing approval of Ocaliva for PBC.
Our lead development product candidate is OCA for the potential treatment of NASH. In February 2019, we announced topline results from the planned 18-month interim analysis of our pivotal Phase 3 clinical trial of OCA in patients with liver fibrosis due to NASH, known as the REGENERATE trial (the “Original Analysis”). The
31
REGENERATE trial is ongoing and is expected to continue through clinical outcomes for verification and description of the clinical benefit of OCA. In June 2020, we received a complete response letter (“CRL”) from the FDA stating that our NDA for OCA for the treatment of liver fibrosis due to NASH could not be approved in its present form. We had our end of review meeting with the FDA in October 2020 to discuss the FDA’s risk-benefit assessment in the CRL based on its review of the available data, as well as our proposed resubmission of our NDA for the treatment of liver fibrosis due to NASH. The meeting was constructive and the FDA provided us with helpful guidance regarding supplemental data we can provide to further characterize OCA’s efficacy and safety profile that could support resubmission based on our Phase 3 REGENERATE 18-month biopsy data, together with a safety assessment from our ongoing studies.
Following our end of review meeting, we had a dialogue with FDA regarding the REGENERATE study to clarify data, a new consensus read methodology for liver biopsies, and analyses required to resubmit our NDA. In connection with the potential resubmission of our NDA, we conducted a new interim analysis of our ongoing pivotal Phase 3 REGENERATE trial of OCA using a biopsy consensus read methodology in the same intent-to-treat (“ITT”) population as the Original Analysis (the “New Interim Analysis”).
In July 2022, we announced topline results from the New Interim Analysis. In this new interim analysis of the ITT population from REGENERATE, 22.4% of subjects randomized to once-daily oral OCA 25 mg met the primary endpoint of achieving at least one stage of fibrosis improvement with no worsening of NASH at month 18 on liver biopsy compared with 9.6% of subjects on placebo (p<0.0001). The results were consistent with the Original Analysis, which also showed that OCA 25 mg had a statistically significant effect on fibrosis improvement (p=0.0002). The New Interim Analysis used a consensus panel approach to histology reads, in line with recent FDA guidance, while the Original Analysis used individual central readers. A numerically greater proportion of individuals in the OCA 25 mg treatment group compared to placebo achieved the endpoint of resolution of NASH with no worsening of liver fibrosis but, consistent with the Original Analysis, the results for the endpoint of resolution of NASH were not statistically significant. As part of the New Interim Analysis, a safety evaluation was conducted in 2477 subjects from the REGENERATE trial who took at least one dose of study drug (placebo, OCA 10 mg, or OCA 25 mg). Topline results from this ongoing safety evaluation showed that treatment-emergent adverse events (TEAEs), treatment-emergent serious adverse events (TESAEs), and deaths were generally balanced across the OCA and placebo treatment groups in this new safety population. The most common TEAE was pruritus (24% in placebo, 33% in OCA 10 mg and 55% in OCA 25 mg) and pruritus was the most common cause for treatment discontinuation. As part of the safety review of the New Interim Analysis, independent groups of experts reviewed certain categories of safety events to provide a blinded adjudication as specifically requested by the FDA. These included events pertaining to hepatic safety (excluding clinical outcomes), cardiovascular and renal. Topline analysis through four years of treatment showed a numerically higher number of adjudicated hepatic safety events for OCA 25 mg, the majority of which were mild in severity. For adjudicated core major adverse cardiovascular events and adjudicated acute kidney injury events, frequency of events was low and balanced across treatment groups. Consistent with its mechanism of action as an FXR agonist, OCA treatment was associated with an increase in LDL at Month 1 which returned to near baseline values by Month 12.
Based on the results of the New Interim Analysis, we intend to re-submit the NDA for OCA in liver fibrosis due to NASH. In July 2022, we had a pre-submission meeting with the FDA in which we reviewed with the FDA the planned content and the timing of the submission of our NDA.
As part of our product development activities, we expect to continue to invest in evaluating the potential of OCA in progressive non-viral liver diseases. We are currently conducting a Phase 3 clinical trial in NASH patients with compensated cirrhosis, known as the REVERSE trial. The liver biopsy samples from REVERSE are being evaluated utilizing a similar, new consensus methodology to what we are using for REGENERATE. We expect top line data from our Phase 3 REVERSE trial in the third quarter of 2022.
We are evaluating the efficacy, safety and tolerability of OCA in combination with bezafibrate in patients with PBC in a Phase 2 study outside of the United States. In the United States, we have an ongoing Phase 1 study to better characterize the exposure response of the fixed-dose combination, which has completed enrollment, and we have an open Investigational New Drug (“IND”) application with the FDA. We are also conducting a second Phase 2 study in the United States evaluating a fixed-dose combination of OCA and bezafibrate for the treatment of patients with PBC who have not
32
achieved an adequate biochemical response to UDCA. Our longer-term goal is developing and seeking regulatory approval for a fixed dose combination regimen in PBC and potentially in other diseases.
In addition, we have other compounds in early stages of research and development in our pipeline, including our INT-787 compound, an FXR agonist. We are currently evaluating INT-787 in a Phase 1 clinical trial. We submitted an IND for INT-787 in the first half of 2022.
Sale of our ex-U.S. commercial operations to Advanz Pharma
On July 1, 2022, we completed the sale of our ex-U.S. commercial operations Advanz Pharma (“Advanz”), and sublicensed the right to commercialize Ocaliva outside of the United States. The transaction included a total upfront consideration of $405 million, subject to customary working capital and other adjustments, plus a $45 million earnout, payable upon Advanz’s receipt of extensions of orphan drug exclusivity in Europe. We will also receive royalties on any future net sales of OCA in NASH outside of the U.S., should Advanz pursue marketing authorization for this indication in ex-U.S. regions. We will continue to be responsible for the manufacturing and supply of OCA globally while Advanz will be responsible for packaging, distribution and commercialization of the therapy in all markets outside of the U.S. The majority of employees outside of the U.S. were transferred to Advanz, while remaining international employees continue to manage our global supply chain, support our quality organization, and support global clinical trials.
Under the Transition Services Agreement (the “TSA”), we agreed to provide certain transition services for periods of up to six months to Advanz for continuity purposes. Services include human resources, finance, and information technology.
Under the Supply and Manufacture Agreement, OCA will be supplied in bulk tablet form and we will charge Advanz for certain incurred costs related to manufacturing OCA.
Under the Sublicense Agreement, we agreed to continue to conduct certain post-marketing work and other activities with respect to Ocaliva for PBC, including continuing to conduct certain PBC studies (the “PBC Post-Marketing Work”). The Company will be reimbursed by Advanz for a portion of the total R&D costs related to the PBC Post-Marketing Work.
The transaction allowed us to capitalize on an opportunity that supports multiple pathways for the future and further strengthens our balance sheet for the current year and beyond. The terms of this transaction will allow us to focus our resources on the U.S., our largest market, while retaining upside from the potential NASH opportunity ex-U.S., via royalties on any future net sales of OCA, should Advanz pursue marketing authorizations for this indication in ex-U.S. regions.
The ex-U.S. commercial business operations met the criteria within Accounting Standards Codification 205-20 to be reported as discontinued operations because the transaction was held for sale and represents a strategic shift in business that will have a major effect on our operations and financial results. Therefore, we have reported the historical results of the ex-U.S. commercial business including the results of operations and cash flows as discontinued operations, and related assets and liabilities were retrospectively reclassified as assets and liabilities of discontinued operations for all periods presented herein. Unless otherwise noted, applicable amounts in the prior year have been recast to conform to this discontinued operations presentation. Refer to Note 4 of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.
33
Recent Developments
On May 5, 2022, the Company entered into a series of agreements to sell its ex-U.S. commercial operations, and sublicense the right to commercialize Ocaliva outside of the United States, to Advanz. On July 1, 2022, the Company closed its previously announced transaction with Advanz.
On May 25, 2022, the Company’s stockholders approved the Amended and Restated Equity Incentive Plan.
On June 3, 2022, the Company announced results from two studies designed to evaluate clinical outcomes in patients with PBC on Ocaliva: COBALT, a Phase 3b/4 confirmatory clinical outcomes study, and HEROES-US, one of two HEROES real-world studies. Findings from these studies are intended to be part of a broader evidence package that the Company anticipates submitting to the FDA in the second half of 2022.
On July 7, 2022, the Company announced topline results from a new interim analysis of its ongoing pivotal Phase 3 REGENERATE trial of OCA in patients with liver fibrosis due to NASH. Following these results, the Company intends to re-submit its NDA for OCA in liver fibrosis due to NASH.
Financial Overview
Revenue
We commenced our commercial launch of Ocaliva for the treatment of PBC in the United States in June 2016. We sell Ocaliva to a limited number of specialty pharmacies which dispense the product directly to patients. The specialty pharmacies are referred to as our customers.
Product Revenue, Net
We recognize revenue upon delivery of Ocaliva to our customers, net of discounts, rebates and incentives associated with the product. We provide the right of return to our customers for unopened product for a limited time before and after its expiration date.
Under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), we have written contracts with each of our customers that have a single performance obligation — to deliver products upon receipt of a customer order — and these obligations are satisfied when delivery occurs and the customer receives Ocaliva. We evaluate the creditworthiness of each of our customers to determine whether collection is reasonably assured. We estimate variable revenue by calculating gross product revenues based on the wholesale acquisition cost that we charge our customers for Ocaliva, and then estimating our net product revenues by deducting (i) estimated government rebates and discounts related to Medicare, Medicaid and other government programs, (ii) estimated costs of incentives offered to certain indirect customers including patients and (iii) trade allowances, such as invoice discounts for prompt payment and customer fees.
We recognized net sales of Ocaliva of $71.8 million and $68.2 million for the three months ended June 30, 2022 and 2021, respectively, and $130.9 million and $125.5 million for the six months ended June 30, 2022 and 2021, respectively.
Selling, General and Administrative Expenses
We have incurred and expect to continue to incur significant selling, general and administrative (“SG&A”) expenses as a result of, among other initiatives, the commercialization of Ocaliva for PBC in the United States. In addition, we have incurred significant selling, general and administrative expenses and may in the future incur similar expenses in connection with the preparation for the potential commercialization of OCA for liver fibrosis due to NASH, if approved, and our other future approved products, if any, and any maintenance of our general and administrative infrastructure in the United States.
34
Research and Development Expenses
Since our inception, we have focused significant resources on our research and development activities, including conducting preclinical studies and clinical trials, pursuing regulatory approvals and engaging in other product development activities. We recognize research and development expenses as they are incurred.
We have incurred and expect to continue to incur significant research and development expenses as a result of, among other initiatives, our clinical development programs for OCA for PBC and NASH, our other earlier stage research programs and our regulatory approval efforts.
Results of Operations
Comparison of the Three Months Ended June 30, 2022 and 2021
The following table summarizes our results of operations for the three months ended June 30, 2022 and 2021:
Three Months Ended June 30, | ||||||
| 2022 |
| 2021 | |||
(in thousands) | ||||||
Revenue: |
|
|
|
| ||
Product revenue, net |
| $ | 71,757 | $ | 68,178 | |
Total revenue |
|
| 71,757 |
| 68,178 | |
Operating expenses: |
| |||||
Cost of sales |
| 309 |
| 254 | ||
Selling, general and administrative |
|
| 39,985 |
| 43,882 | |
Research and development |
|
| 44,826 |
| 37,668 | |
Restructuring |
| — |
| (160) | ||
Total operating expenses |
|
| 85,120 |
| 81,644 | |
Other (expense) income: |
| |||||
Interest expense |
|
| (6,669) |
| (12,589) | |
Other (expense) income, net |
|
| (289) |
| 721 | |
Total other (expense), net |
|
| (6,958) |
| (11,868) | |
Loss from continuing operations | $ | (20,321) | $ | (25,334) | ||
Income from discontinued operations | $ | 12,793 | $ | 14,240 | ||
Net loss | $ | (7,528) | $ | (11,094) | ||
Revenues
Product revenue, net was $71.8 million and $68.2 million for the three months ended June 30, 2022 and 2021, respectively. For the three months ended June 30, 2022 and 2021, product revenue, net was solely comprised of U.S. Ocaliva net sales. The increase in product revenues was driven by operational growth, primarily due to higher pricing and increased unit sales volumes, partially offset by higher gross to net deductions.
Cost of sales
Cost of sales was $0.3 million and $0.3 million for the three months ended June 30, 2022 and 2021, respectively. Our cost of sales for the three months ended June 30, 2022 and 2021 consisted primarily of packaging, labeling, materials and related expenses.
35
Selling, general and administrative expenses
Selling, general and administrative expenses were $40.0 million and $43.9 million for the three months ended June 30, 2022 and 2021, respectively. The $3.9 million net decrease between periods was primarily driven by our ongoing efforts to manage our operational costs.
Research and development expenses
Research and development expenses were $44.8 million and $37.7 million for the three months ended June 30, 2022 and 2021, respectively. The $7.1 million net increase between periods was primarily driven by a $7.2 million reduction in recognition of UK R&D tax credits under the SME and RDEC schemes.
Interest expense
Interest expense was $6.7 million and $12.6 million for the three months ended June 30, 2022 and 2021, respectively. For the quarter ended June 30, 2022, interest expense related to the principal amounts outstanding for the 2023 Convertible Notes, 2026 Convertible Notes and 2026 Convertible Secured Notes and no longer included any accretion of debt discounts, which was $7.0 million for the three months ended June 30, 2021, after the adoption of ASU 2020-06. For the quarter ended June 30, 2021, interest expense related to the principal amounts outstanding for the 2023 Convertible Notes and 2026 Convertible Notes.
Other (expense) income, net
Other (expense) income, net was $(0.3) million and $0.7 million for the three months ended June 30, 2022 and 2021, respectively. Such (expense) income is primarily attributable to realized losses on foreign currency transactions and interest income earned on cash, cash equivalents and investment debt securities, respectively.
Income taxes
For the three months ended June 30, 2022 and 2021, no income tax expense or benefit was recognized. Our deferred tax assets are comprised primarily of net operating loss carryforwards. We maintain a full valuation allowance on our deferred tax assets since we have not yet achieved sustained profitable operations. As a result, we have not recorded any income tax benefit since our inception.
36
Comparison of the Six Months Ended June 30, 2022 and 2021
Six Months Ended June 30, | ||||||
| 2022 |
| 2021 | |||
(in thousands) | ||||||
Revenue: |
|
|
|
| ||
Product revenue, net | $ | 130,903 | $ | 125,477 | ||
Total revenue |
| 130,903 |
| 125,477 | ||
Operating expenses: | ||||||
Cost of sales |
| 532 |
| 547 | ||
Selling, general and administrative |
| 77,739 |
| 88,984 | ||
Research and development |
| 92,719 |
| 88,279 | ||
Restructuring |
| — |
| (284) | ||
Total operating expenses |
| 170,990 |
| 177,526 | ||
Other (expense) income: | ||||||
Interest expense |
| (13,342) |
| (25,008) | ||
Other (expense) income, net |
| (342) |
| 2,179 | ||
Total other (expense), net |
| (13,684) |
| (22,829) | ||
Loss from continuing operations | $ | (53,771) | $ | (74,878) | ||
Income from discontinued operations | $ | 28,959 | $ | 23,364 | ||
Net loss | $ | (24,812) | $ | (51,514) | ||
Revenues
Product revenue, net was $130.9 million and $125.5 million for the six months ended June 30, 2022 and 2021, respectively. For the six months ended June 30, 2022 and 2021, product revenue, net was solely comprised of U.S. Ocaliva net sales. The increase in product revenues was driven by operational growth, primarily due to higher pricing and increased unit sales volumes, partially offset by higher gross to net deductions.
Cost of sales
Cost of sales was $0.5 million and $0.5 million for the six months ended June 30, 2022 and 2021, respectively. Our cost of sales for the six months ended June 30, 2022 and 2021 consisted primarily of packaging, labeling, materials and related expenses.
Selling, general and administrative expenses
Selling, general and administrative expenses were $77.7 million and $89.0 million for the six months ended June 30, 2022 and 2021, respectively. The $11.3 million net decrease between periods was primarily driven by our ongoing efforts to manage our operational costs.
Research and development expenses
Research and development expenses were $92.7 million and $88.3 million for the six months ended June 30, 2022 and 2021, respectively. The $4.4 million net increase between periods was primarily driven by a reduction in recognition of UK R&D tax credits under the SME and RDEC schemes offset by lower development costs.
Interest expense
Interest expense was $13.3 million and $25.0 million for the six months ended June 30, 2022 and 2021, respectively. For the six months ended June 30, 2022, interest expense related to the principal amounts outstanding for the 2023
37
Convertible Notes, 2026 Convertible Notes and 2026 Convertible Secured Notes and no longer included any accretion of debt discounts, which was $13.9 million for the six months ended June 30, 2021, after the adoption of ASU 2020-06. For the six months ended June 30, 2021, interest expense related to the principal amounts outstanding for the 2023 Convertible Notes and 2026 Convertible Notes.
Other (expense) income, net
Other (expense) income, net was $(0.3) million and $2.2 million for the six months ended June 30, 2022 and 2021, respectively. Such (expense) income is primarily attributable to realized losses on foreign currency transactions and interest income earned on cash, cash equivalents and investment debt securities, respectively.
Income taxes
For the six months ended June 30, 2022 and 2021, no income tax expense or benefit was recognized. Our deferred tax assets are comprised primarily of net operating loss carryforwards. We maintain a full valuation allowance on our deferred tax assets since we have not yet achieved sustained profitable operations. As a result, we have not recorded any income tax benefit since our inception.
Liquidity and Capital Resources
Sources of liquidity
Since inception, we have incurred significant operating losses. We have never been profitable and do not expect to be profitable in the foreseeable future. To date, we have financed our operations primarily through public and private securities offerings, sales of product and payments received under our licensing and collaboration agreements and the sale of our ex-U.S. commercial operations.
Continued cash generation is highly dependent on the success of our commercial product, Ocaliva, as well as the success of our product candidates if approved.
We have devoted substantially all of our resources to the development of our product candidates, including the conduct of our clinical trials, the launch and commercialization of Ocaliva for PBC, preparation for a potential launch of OCA for liver fibrosis due to NASH and general and administrative operations, including the protection of our intellectual property. We intend to continue to develop OCA and our other existing product candidates, alone or in combination, for non-viral liver diseases. If OCA or any of our other product candidates fails in clinical trials or does not gain or maintain regulatory approval, or if OCA or any of our other product candidates does not achieve market acceptance, we may never become profitable. Our net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ deficit and working capital.
Our executive officers and our Board of Directors periodically review our sources and potential uses of cash in connection with our annual budgeting process. Generally speaking, our principal funding source is cash from operating activities, and our principal cash requirements include operating expenses and interest payments.
We expect to continue to incur losses for the foreseeable future, and we expect these losses to be significant as we, among other things, develop and seek regulatory approval for our product candidates, including OCA for liver fibrosis due to NASH, maintain our regulatory approval and commercialize our approved products. We believe our prospects and ability to significantly grow revenues will be dependent on our ability to successfully develop and commercialize OCA for indications other than PBC, such as NASH, and to identify strategic business development opportunities to leverage our capabilities in rare diseases. As a result, we expect a significant amount of resources to continue to be devoted to our development programs for OCA and to developing our pipeline.
38
Cash Flows
The following table sets forth the significant sources and uses of cash for the periods indicated:
Six Months Ended June 30, | ||||||
| 2022 |
| 2021 | |||
(in thousands) | ||||||
Net cash (used in) provided by: |
|
|
|
| ||
Operating activities | $ | (39,739) | $ | (69,831) | ||
Investing activities |
| (14,798) |
| 139,655 | ||
Financing activities |
| (4,242) |
| (1,307) | ||
Effect of exchange rate changes |
| (2,977) |
| (522) | ||
Net increase in cash, cash equivalents and restricted cash classified as discontinued operations | 34,353 | 20,028 | ||||
Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (27,403) | $ | 88,023 | ||
Operating Activities. Net cash used in operating activities for continuing operations of approximately $39.7 million during the six months ended June 30, 2022 was primarily a result of our $53.8 million net loss from continuing operations, a net decrease in operating assets and liabilities of $2.3 million, partially offset by $10.9 million in stock-based compensation, $2.4 million of write-offs of fixed assets and $1.2 million for non-cash operating lease costs. Cash flows for the six months ended June 30, 2022 include net cash receipts of $3.8 million reflecting payments from the HMRC for the U.K. R&D tax credit claims.
Net cash used in operating activities for continuing operations of approximately $69.8 million during the six months ended June 30, 2021 was primarily a result of our $74.9 million net loss from continuing operations and a net decrease in operating assets and liabilities of $30.2 million, partially offset by $13.7 million in stock-based compensation, $8.8 million for accretion of the discount on the 2023 Convertible Notes, $5.1 million for accretion of the discount on the 2026 Convertible Notes, $2.4 million for non-cash operating lease costs and $1.7 million of depreciation. Cash flows for the six months ended June 30, 2021 include cash receipts of $4.2 million reflecting payments from the HMRC for the U.K. R&D tax credit claims.
Investing Activities. For the six months ended June 30, 2022, net cash used in investing activities primarily reflects the purchase of investment debt securities of $239.4 million, partially offset by the sales and maturities of investment debt securities of $225.2 million.
For the six months ended June 30, 2021, net cash provided by investing activities primarily reflects the sales and maturities of investment debt securities of $227.5 million, partially offset by the purchase of investment debt securities of $87.4 million.
Financing Activities. Net cash used in financing activities in the six months ended June 30, 2022, consisted of $3.9 million from payments for the repurchase of 2023 Convertible Notes.
Net cash used in financing activities in the six months ended June 30, 2021 consisted of $1.3 million from payments of employee withholding taxes related to stock-based awards.
Future Funding Requirements
We are currently developing OCA for additional indications, including NASH, and other product candidates through various stages of clinical and preclinical development. Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is expensive. In addition, we have incurred and anticipate that we will continue to incur significant research and development, product sales, marketing, manufacturing and distribution expenses relating to the commercialization of Ocaliva for PBC. As part of our longer-term strategy, we anticipate that we will incur significant expenses in connection with our research and development efforts, the commercialization of our other products such as OCA for liver fibrosis due to NASH, if approved, and the maintenance of our general and administrative infrastructure.
39
We may also engage in business development activities that involve potential in- or out-licensing of products or technologies or acquisitions of other products, technologies or businesses.
As of June 30, 2022, we had $412.3 million in cash, cash equivalents, restricted cash and investment debt securities. We currently expect to continue to incur significant operating expenses in the fiscal year ending December 31, 2022. These expenses are planned to support, among other initiatives, the continued commercialization of Ocaliva for PBC, our continued clinical development of OCA for PBC and NASH and our other earlier stage research and development programs. Although we believe that our existing capital resources, together with our net sales of Ocaliva for PBC, will be sufficient to fund our anticipated operating requirements for the next twelve months following the filing of this report, we may need to raise additional capital to fund our operating requirements beyond that period. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. As of June 30, 2022, our funds are primarily held in U.S. treasuries, U.S. government agency bonds, corporate bonds, commercial paper and money market accounts.
The proceeds received from the closing of the sale to Advanz will help strengthen our balance sheet and provide optionality in terms of where it takes the business for the future and beyond. The proceeds received will allow us to continue meeting our commitment to invest in our strategic objectives, which include the growth of the PBC business in the U.S. and potential future activities in NASH, including a U.S. launch if successful, along with continuing to advance and expand the pipeline.
We successfully exchanged the majority of our near-term debt to address the maturity of 2023 convertible notes. While we have retired approximately 76% of our 2023 Convertible Notes, we still have $109.8 million of them scheduled to mature on July 1, 2023, and $615.3 million of convertible notes scheduled to mature in 2026, all of which will need to be paid off or refinanced, if not converted. Furthermore, in light of our receipt of the CRL from the FDA in June 2020 with respect to our NDA for OCA for liver fibrosis due to NASH and the numerous risks and uncertainties associated with pharmaceutical product development and commercialization, any delays in, or unanticipated costs associated with, our development, regulatory or commercialization efforts could significantly increase the amount of capital required by us to fund our operating requirements. Accordingly, we may seek to access the public or private capital markets whenever conditions are favorable, to issue new securities, or to refinance or repurchase existing securities, even if we do not have an immediate need for additional capital at that time.
Our forecasts regarding the period of time that our existing capital resources will be sufficient to meet our operating requirements and the timing of our future funding requirements, both near and long-term, will depend on a variety of factors, many of which are outside of our control. Such factors include, but are not limited to, those factors listed above under “Cautionary Note Regarding Forward-Looking Statements”.
We have no committed external sources of funding and additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available to us, we may not be able to make scheduled debt payments on a timely basis, or at all, and may be required to delay, limit, reduce or cease our operations.
Contractual Obligations
Except as discussed above regarding Advanz Pharma, there have been no material changes to our contractual obligations outside the ordinary course of business from those disclosed under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Future Funding Requirements—Future Contractual Obligations” in our Annual Report on Form 10-K for the year ended December 31, 2021.
Off-Balance Sheet Arrangements
As of June 30, 2022, we did not have any off-balance sheet arrangements.
40
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates and there have been no material changes to our market risk from that disclosed under the caption “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Based on the evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), required by Rule 13a-15(b) or 15d-15(b) of the Exchange Act, our Chief Executive Officer and Chief Financial Officer have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
41
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
For a description of our significant legal proceedings, see Note 15 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and incorporated by reference herein.
Item 1A. Risk Factors.
As of the date of this Quarterly Report on Form 10-Q, there are no material changes to the risk factors set forth in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 2, 2022, except for the following Risk Factors. The following updates primarily relate to our recently completed transaction with Advanz Pharma and developments associated with recent clinical trial results. The following set of Risk Factors does not purport to be a full list of risks relating to the business of the Company and any of these factors or others disclosed in our Annual Report on Form 10-K could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
Background and recent developments
Ocaliva (obeticholic acid or “OCA”) was approved for PBC by the U.S. Food and Drug Administration (“FDA”) in May 2016 under the accelerated approval pathway. We commenced sales and marketing of Ocaliva in the United States shortly after receiving approval, and Ocaliva is now available to U.S. patients primarily through a network of specialty pharmacy distributors. In addition, we continue to work to execute on our post-marketing regulatory commitments with respect to Ocaliva. Based on a review by the Data Monitoring Committee (“DMC”) of an unblinded pre-specified interim efficacy analysis of the COBALT trial and unblinded safety and pharmacokinetic data from both the COBALT and 401 trials, the DMC stated that it was not feasible to continue the COBALT trial as designed and noted the challenges in enrolling and maintaining placebo-controlled post-marketing studies in this rare disease setting. We notified the FDA of the DMC’s recommendation and based on discussions with the FDA, which are ongoing, we closed our COBALT and 401 trials and compiled data available from these studies.
In June 2022, we announced topline results from our COBALT trial. The primary endpoint, as agreed with the FDA, was time to first occurrence of any of the following clinical endpoints: all-cause death, liver transplant, hospitalization for other serious liver-related events, signs of progression to hepatic decompensation, or signs of development of portal hypertension. The study did not demonstrate a statistically significant difference between Ocaliva and placebo on the primary endpoint: 71 subjects in the Ocaliva arm progressed to clinical events compared to 80 in the placebo arm (p=0.30; HR 0.84). The safety and tolerability of Ocaliva were consistent with its known profile and adverse events were in line with expectations for patients with advanced PBC based on the natural history of the disease. In June 2022, we also announced topline results for our HEROES-US study, a retrospective real-world study that evaluated data from a U.S. claims database, to compare clinical outcomes in a pre-defined group of patients with PBC who were treated with Ocaliva and a comparable group of PBC patients who were eligible, but who were not treated with Ocaliva. The results from the HEROES-US study showed a statistically significant and clinically meaningful reduction in all-cause death, liver transplant, or hospitalization for hepatic decompensation among Ocaliva-treated patients compared to the control group. In the Ocaliva arm (n=429), 8 events were observed compared to 226 in the control group (n=4,585) with a weighted hazard ratio of 0.38 (p= 0.027). HEROES-US is one of two HEROES studies we are conducting that utilizes real-world data to assess the impact of Ocaliva on clinical outcomes in PBC patients.
We intend to submit the data from the COBALT and HEROS-US studies as well additional data, including data from other real world evidence studies, as part of a broader evidence package in support of full approval of Ocaliva for the treatment of PBC, which we anticipate submitting to the FDA in the second half of 2022. If this data package does not support fulfillment of our post-marketing obligations, we may not be able to maintain our previously granted marketing approval of Ocaliva for PBC.
42
Our lead development product candidate is OCA for the potential treatment of NASH. In February 2019, we announced topline results from the planned 18-month interim analysis of our pivotal Phase 3 clinical trial of OCA in patients with liver fibrosis due to NASH, known as the REGENERATE trial (the “Original Analysis”). The REGENERATE trial is ongoing and is expected to continue through clinical outcomes for verification and description of the clinical benefit of OCA. In June 2020, we received a complete response letter (“CRL”) from the FDA stating that our NDA for OCA for the treatment of liver fibrosis due to NASH could not be approved in its present form. The CRL indicated that, based on the data the FDA had reviewed, the FDA determined that the predicted benefit of OCA based on a surrogate histopathologic endpoint remained uncertain and did not sufficiently outweigh the potential risks to support accelerated approval for the treatment of patients with liver fibrosis due to NASH. We had our end of review meeting with the FDA in October 2020 to discuss the FDA’s risk-benefit assessment in the CRL based on its review of the available data, as well as our proposed resubmission of our NDA for the treatment of liver fibrosis due to NASH. The meeting was constructive, and the FDA provided us with helpful guidance regarding supplemental data we can provide to further characterize OCA’s efficacy and safety profile that could support resubmission based on our Phase 3 REGENERATE 18-month biopsy data, together with a safety assessment from our ongoing studies.
Following our end of review meeting, we had a dialogue with FDA regarding the REGENERATE study to clarify data, a new consensus read methodology for liver biopsies, and analyses required to re-submit our NDA. In connection with the potential resubmission of our NDA, we conducted a new interim analysis of our ongoing pivotal Phase 3 REGENERATE trial of OCA using a biopsy consensus read methodology in the same intent-to-treat (“ITT”) population as the Original Analysis (the “New Interim Analysis”).
In July 2022, we announced topline results from the New Interim Analysis. In this new interim analysis of the ITT population from REGENERATE, 22.4% of subjects randomized to once-daily oral OCA 25 mg met the primary endpoint of achieving at least one stage of fibrosis improvement with no worsening of NASH at month 18 on liver biopsy compared with 9.6% of subjects on placebo (p<0.0001). The results were consistent with the Original Analysis, which also showed that OCA 25 mg had a statistically significant effect on fibrosis improvement (p=0.0002). The New Interim Analysis used a consensus panel approach to histology reads, in line with recent FDA guidance, while the Original Analysis used individual central readers. A numerically greater proportion of individuals in the OCA 25 mg treatment group compared to placebo achieved the endpoint of resolution of NASH with no worsening of liver fibrosis but, consistent with the Original Analysis, the results for the endpoint of resolution of NASH were not statistically significant. As part of the New Interim Analysis, a safety evaluation was conducted in 2477 subjects from the REGENERATE trial who took at least one dose of study drug (placebo, OCA 10 mg, or OCA 25 mg). Topline results from this ongoing safety evaluation showed that treatment-emergent adverse events (TEAEs), treatment-emergent serious adverse events (TESAEs), and deaths were generally balanced across the OCA and placebo treatment groups in this new safety population. The most common TEAE was pruritus (24% in placebo, 33% in OCA 10 mg and 55% in OCA 25 mg) and pruritus was the most common cause for treatment discontinuation.
Based on the results of the New Interim Analysis, we intend to re-submit the NDA for OCA in liver fibrosis due to NASH. In July 2022, we had a pre-submission meeting with the FDA in which we reviewed with the FDA the planned content and the timing of the submission of our NDA.
On May 5, 2022, the Company entered into a series of agreements to sell to Advanz its ex-U.S. commercial operations, including certain foreign subsidiaries, and sublicense the right to commercialize Ocaliva outside of the U.S. On July 1, 2022, the sale closed. Total cash consideration received upon closing was $366.5 million, subject to settlement in connection with completion statements, including adjustments including for cash, working capital, and assumed liabilities. The Company will receive an additional cumulative $45 million from Advanz contingent upon receipt of extensions of orphan drug exclusivity from the EMA and MHRA (the “Earnout”). The Company will also receive royalties on any future net sales of OCA in NASH outside of the U.S., should Advanz pursue marketing authorization for this indication in ex-U.S. regions. Pursuant to a Supply and Manufacture Agreement, the Company will continue to be responsible for the manufacturing and supply of OCA globally while Advanz will be responsible for packaging, distribution and commercialization of the therapy in all markets outside of the U.S. The Company will maintain an office in the UK to manage its global supply chain, support its quality organization, and support its global clinical trials. The majority of employees outside of the U.S. were transferred to Advanz, while remaining international employees continue to manage our global supply chain, support our quality organization, and support global clinical trials. As a result of this transaction,
43
the Company’s international business has been divested and its international commercial and medical infrastructure have transitioned to Advanz.
Risks Related to Transaction with Advanz
We or Advanz may fail to perform under any of the agreements entered into in connection with the Advanz transaction, we may be subject to liabilities related to our ongoing relationship with Advanz, and we may fail to receive certain financial benefits from the transaction. As a result, our business may be adversely affected.
On July 1, 2022, we completed the sale of our ex-U.S. commercial operations to Advanz, and sublicensed the right to commercialize Ocaliva outside of the United States. Our transaction with Advanz is subject to risks, that we may not be able to control and therefore our business may be adversely affected.
| ● | Under the Supply and Manufacture Agreement (the “SMA”), OCA will be supplied in bulk tablet form. If we encounter supply chain delays and are unable to procure sufficient supplies of OCA, we may not be able to fulfill our supply obligations to Advanz under the SMA and this could impact the fulfillment of our own supply needs for OCA. |
| ● | If Advanz breaches the contractual obligations owed to us pursuant to the SMA, the Transitional Services Agreement, the Sublicense Agreement or the other transactions documents, we could be exposed to commercial, regulatory or other liabilities. |
| ● | We may be subject to liabilities in connection with ongoing studies with respect to Ocaliva for PBC and other development activities related thereto, including with respect the studies we will continue to support under our agreements with Advanz. |
| ● | We may not be able to adequately protect our intellectual property or become involved in intellectual property enforcement actions, which may cause us to incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights, and such litigation may divert the attention of our management and scientific personnel and adversely affect our development and commercialization efforts. |
| ● | We may not be able to detect and prevent fraud, breaches of regulations, anticorruption and laws and other misconduct by Advanz or our former employees, which could expose us to liability. |
| ● | Our ability to receive certain economic benefits from the transaction, including the Earnout and royalties from the commercial sale of OCA for NASH outside of the U.S., is dependent upon certain contingencies which are beyond our control, including the extension of pediatric orphan exclusivity in Europe for Ocaliva and marketing approval of OCA for NASH in markets outside of the United States. As a result, we may not receive certain economic benefits from the Advanz transaction. |
Any of these factors could cause us to incur higher costs, disrupt the supply of our product candidates or approved products, delay the approval of our product candidates or prevent or disrupt the commercialization of our approved products.
44
Risks Related to Clinical Trials
We are developing product candidates for the treatment of rare diseases or diseases for which there are no or limited therapies, such as PBC and NASH, and for some of which there is little clinical experience, and our development approach involves new endpoints and methodologies. As a result, there is a heightened risk that we will not be able to gain agreement with regulatory authorities regarding an acceptable development plan, that the outcome of our clinical trials will not be favorable or that, even if favorable, regulatory authorities may not find the results of our clinical trials to be sufficient for marketing approval.
We are focused on developing therapeutics for the treatment of rare diseases and diseases for which there are no or limited treatments. As a result, the design and conduct of our clinical trials for these indications is subject to heightened risk.
In the United States, the FDA generally requires two adequate and well-controlled pivotal clinical trials to approve a NDA. Furthermore, for full approval of a NDA, the FDA requires a demonstration of efficacy based on a clinical benefit endpoint. The FDA may grant accelerated approval based on a surrogate endpoint reasonably likely to predict clinical benefit. Even though our pivotal clinical trials for a specific indication, such as our Phase 3 REGENERATE trial of OCA in patients with liver fibrosis due to NASH and our Phase 3 REVERSE trial for NASH patients with compensated cirrhosis, may achieve their primary endpoints and are reasonably believed by us to be likely to predict clinical benefit, the FDA may not accept the results of such trials or approve our product candidate on an accelerated basis, or at all. It is also possible that the FDA may refuse to accept for filing and review any regulatory application we submit for regulatory approval in the United States. Even if our regulatory application is accepted for review, there may be delays in the FDA’s review process and the FDA may determine that such regulatory application does not contain adequate clinical or other data or support the approval of the product candidate. In such a case, the FDA may issue a CRL that may require that we conduct and/or complete additional clinical trials and preclinical studies or provide additional information or data before it will reconsider our application for approval. For example, in June 2020 we received a CRL from the FDA regarding our NDA for OCA for liver fibrosis due to NASH. The CRL indicated that, based on the data the FDA had reviewed, the FDA had determined that the predicted benefit of OCA based on a surrogate histopathologic endpoint remained uncertain and did not sufficiently outweigh the potential risks to support accelerated approval for the treatment of patients with liver fibrosis due to NASH. In addition, following the results of the New Interim Analysis we intend to re-submit our NDA for OCA for liver fibrosis due to NASH with the FDA. The requirements imposed by the FDA in connection with the resubmission of our NDA may be substantial, expensive and time-consuming, and there is no guarantee that we will continue to pursue any such application or that the FDA will ultimately decide that any such application supports the approval of the product candidate on an accelerated basis, or at all. The FDA may also refer any regulatory application to an advisory committee for review and recommendation as to whether, and under what conditions, the application should be approved. While the FDA is not bound by the recommendation of an advisory committee, it considers such recommendations carefully when making decisions.
Even if we receive accelerated approval for any of our product candidates, we may be required to conduct or complete a post-approval clinical outcomes trial to confirm the clinical benefit of such product candidates by demonstrating the correlation of the surrogate endpoint therapeutic response in patients with a significant reduction in adverse clinical outcomes over time. For example, the results of the New Interim Analysis were based on surrogate endpoints and the impact on clinical outcomes has not been confirmed. There can be no assurance that the clinical outcomes portion of our REGENERATE trial will confirm that the surrogate endpoint used as the basis of the regulatory submissions we have made or expect to make seeking approval of OCA for liver fibrosis due to NASH will eventually show an adequate correlation with clinical outcomes.
In addition, as a condition of the accelerated approval of Ocaliva for PBC in the United States, we are required to conduct a clinical outcomes study with respect to Ocaliva for PBC. Based on a review by the DMC of an unblinded pre-specified interim efficacy analysis of the COBALT trial and unblinded safety and pharmacokinetic data from both the COBALT and 401 trials, the DMC stated that it was not feasible to continue the COBALT trial as designed and noted the challenges in enrolling and maintaining placebo-controlled post-marketing studies in this rare disease setting. We notified the FDA of the DMC’s recommendation and based on discussions with the FDA, which are ongoing, we closed our COBALT and 401 trials and compiled data available from these studies. In June 2022, we announced topline results from
45
our COBALT trial. The primary endpoint, as agreed with the FDA, was time to first occurrence of any of the following clinical endpoints: all-cause death, liver transplant, hospitalization for other serious liver-related events, signs of progression to hepatic decompensation, or signs of development of portal hypertension. The study did not demonstrate a statistically significant difference between Ocaliva and placebo on the primary endpoint. The safety and tolerability of Ocaliva were consistent with its known profile and adverse events were in line with expectations for patients with advanced PBC based on the natural history of the disease. In June 2022, we also announced topline results for our HEROES-US study, a retrospective real-world study that evaluated data from a U.S. claims database, to compare clinical outcomes in a pre-defined group of patients with PBC who were treated with Ocaliva and a comparable group of PBC patients who were eligible, but who were not treated with Ocaliva. The results from the HEROES-US study showed a statistically significant and clinically meaningful reduction in all-cause death, liver transplant, or hospitalization for hepatic decompensation among Ocaliva-treated patients compared to the control group. We intend to submit the data from the COBALT and HEROS-US studies as well additional data, including data from other real world evidence studies, as part of a broader evidence package in support of full approval of Ocaliva for the treatment of PBC, which we anticipate submitting to the FDA in the second half of 2022. If this data package does not support fulfillment of our post-marketing obligations, we may not be able to maintain our previously granted marketing approval of Ocaliva for PBC.
Our lead development product candidate is OCA for the potential treatment of NASH. In February 2019, we announced the results of the REGENERATE Original Analysis. The REGENERATE trial is ongoing and is expected to continue through clinical outcomes for verification and description of the clinical benefit of OCA. In June 2020, we received a CRL from the FDA stating that our NDA for OCA for the treatment of liver fibrosis due to NASH could not be approved in its present form. The CRL indicated that, based on the data the FDA had reviewed, the FDA determined that the predicted benefit of OCA based on a surrogate histopathologic endpoint remained uncertain and did not sufficiently outweigh the potential risks to support accelerated approval for the treatment of patients with liver fibrosis due to NASH. We had our end of review meeting with the FDA in October 2020 to discuss the FDA’s risk-benefit assessment in the CRL based on its review of the available data, as well as our proposed resubmission of our NDA for the treatment of liver fibrosis due to NASH. The meeting with FDA provided us with helpful guidance regarding supplemental data we can provide to further characterize OCA’s efficacy and safety profile that could support resubmission based on our Phase 3 REGENERATE 18-month biopsy data, together with a safety assessment from our ongoing studies.
Following our end of review meeting, we had a dialogue with FDA regarding the REGENERATE study to clarify data, a new consensus read methodology for liver biopsies, and analyses required to re-submit our NDA. In connection with the potential resubmission of our NDA, we conducted the New Interim Analysis. In the New Interim Analysis of the ITT population from REGENERATE, 22.4% of subjects randomized to once-daily oral OCA 25 mg met the primary endpoint of achieving at least one stage of fibrosis improvement with no worsening of NASH at month 18 on liver biopsy compared with 9.6% of subjects on placebo (p<0.0001). These results are consistent with the Original Analysis, which also showed that OCA 25 mg had a statistically significant effect on fibrosis improvement (p=0.0002). The New Interim Analysis used a consensus panel approach to histology reads, in line with recent FDA guidance, while the Original Analysis used individual central readers. A numerically greater proportion of individuals in the OCA 25 mg treatment group compared to placebo achieved the endpoint of resolution of NASH with no worsening of liver fibrosis but, consistent with the Original Analysis, the results for the endpoint of resolution of NASH were not statistically significant. As part of the New Interim Analysis, a safety evaluation was conducted in 2477 subjects from the REGENERATE trial who took at least one dose of study drug (placebo, OCA 10 mg, or OCA 25 mg). Topline results from this ongoing safety evaluation showed that treatment-emergent adverse events (TEAEs), treatment-emergent serious adverse events (TESAEs), and deaths were generally balanced across the OCA and placebo treatment groups in this new safety population. The most common TEAE was pruritus (24% in placebo, 33% in OCA 10 mg and 55% in OCA 25 mg) and pruritus was the most common cause for treatment discontinuation. Serious gallbladder-related events occurred in <3% of subjects in any treatment group and, consistent with its known mechanism of action, OCA 25 mg had higher rates of biliary events including gallstones.
While OCA received breakthrough therapy designation from the FDA in January 2015 for the treatment of NASH patients with liver fibrosis and we intend to re-submit our NDA for approval of OCA for liver fibrosis due to NASH following the results from the New Interim Analysis, we do not know if this will be sufficient for marketing approval or if the FDA will approve OCA for liver fibrosis due to NASH on an accelerated or conditional basis, or at all. There may be delays in the FDA review processes and the FDA may also require that we continue our Phase 3 REGENERATE trial
46
until completion to assess the potential benefits of OCA treatment on liver-related and other clinical outcomes for purposes of marketing approval. Our regulatory pathway for OCA for the treatment of NASH will depend upon our ongoing discussions with the FDA. As a result, we may face difficulty in establishing an acceptable registration strategy with respect to our Phase 3 REGENERATE and REVERSE trials, as well as other trials we may conduct in other subpopulations of NASH patients.
Delays or difficulties in the commencement, enrollment and completion of our clinical trials and studies could increase our product development costs and delay, limit or prevent us from obtaining regulatory approval for OCA and our other product candidates.
Delays or difficulties in the commencement, enrollment and completion of our clinical trials and studies could increase our product development costs and limit or prevent us from obtaining or maintaining regulatory approval for OCA and our other product candidates. The results of our clinical trials may not be available when we anticipate and we may be required to conduct additional clinical trials or studies not currently planned in order for our product candidates, including OCA for PBC and NASH, to be approved or to maintain approvals in the U.S. In addition, our clinical programs are subject to a number of risks and uncertainties, such as the results of other trials, patient enrollment, safety issues or regulatory interactions that could result in a change of trial design or timing. Any delays or difficulties in completing one of our clinical trials could increase our product development costs and limit or prevent us from obtaining or maintaining regulatory approval. Consequently, we do not know whether our current or future clinical trials or studies of OCA or our other product candidates will be completed on schedule, if at all.
For example, our Phase 3 REGENERATE trial is a large and complicated clinical trial in a disease without any approved therapies and involves serial liver biopsies over many years. While we announced the topline results from the New Interim Analysis in July 2022, there can be no assurance the FDA will approve our NDA for OCA for NASH on an accelerated or conditional basis, or at all. As we engage in other large and complicated trials and trials in advanced disease populations, we may experience a number of challenges that may negatively affect or delay our plans and development programs.
Failure can occur at any stage of clinical development. The results of earlier clinical trials are not necessarily predictive of future results and any product candidate we or our collaborators advance through clinical trials, including OCA, may not have favorable results in later clinical trials or receive or maintain regulatory approval.
Clinical failure can occur at any stage of clinical development. Clinical trials may produce negative or inconclusive results, and we or our collaborators may decide, or regulators may require us, to conduct additional clinical trials or preclinical studies. In addition, data obtained from trials and studies are susceptible to varying interpretations, and regulators may not interpret our data as favorably as we do, which may delay, limit or prevent regulatory approval. Success in preclinical studies and early clinical trials does not ensure that subsequent clinical trials will generate the same or similar results or otherwise provide adequate data to demonstrate the efficacy and safety of our product candidates. A number of companies in the pharmaceutical industry, including those with greater resources and experience than us, have suffered significant setbacks in Phase 3 clinical trials and at other stages of clinical development, even after seeing promising results in earlier clinical trials.
In addition, the design of clinical trials, including trial endpoints, protocols and statistical analysis plans, can determine whether such trials will support product approvals, and flaws in the design of such trials may not become apparent until such trials are well-advanced. We may be unable to design and execute clinical trials to support regulatory approval. Further, clinical trials of product candidates often reveal that it is not practical or feasible to continue development efforts. If OCA or our other product candidates are found to be unsafe or lack sufficient efficacy for any indication, we will not be able to obtain or maintain regulatory approval for them, and our prospects and business may be materially and adversely affected.
There may be significant variability in the safety and/or efficacy results we see in different trials studying OCA or our other product candidates due to numerous factors, including differences in the underlying disease being studied, changes or differences in trial protocols or statistical analysis plans, differences in the composition of the patient populations or clinical trial sites, differences in adherence to the dosing regimen and other aspects of the trial protocols and differences
47
in the rate of dropouts among clinical trial participants. We do not know whether any Phase 2, Phase 3 or other clinical trials we or any of our collaborators may conduct on our product candidates will demonstrate consistent or adequate efficacy and safety or result in the approval of our product candidates by regulatory authorities. If we are unable to bring any of our current or future product candidates to market, acquire any previously approved products or maintain approval for our approved products, our ability to create long-term stockholder value will be limited.
In December 2014, we received comprehensive datasets from the Phase 2b FLINT trial for the treatment of NASH, which met its primary endpoint with statistical significance. In October 2015, we announced that the Phase 2 dose ranging trial of OCA in 200 adult NASH patients in Japan conducted by our former collaborator, Sumitomo Dainippon, did not meet its primary endpoint with statistical significance. In the Sumitomo Dainippon trial, there was a dose dependent, although not statistically significant, increase in the percentage of OCA-treated patients compared to placebo who achieved the primary endpoint (p = 0.053). In addition, no difference was seen in fibrosis improvement in the OCA groups compared to placebo. The Sumitomo Dainippon Phase 2 trial involved different doses of OCA being administered to the trial subjects than those utilized in the Phase 2b FLINT trial. Furthermore, the baseline characteristics between the patients in the Japanese Phase 2 dose ranging trial conducted by Sumitomo Dainippon were distinct in a number of ways from those of the Western patients included in the Phase 2b FLINT trial.
In February 2019, we announced the results from the REGENERATE Original Analysis. In the primary efficacy analysis, once-daily OCA 25 mg met, with statistical significance, the primary endpoint agreed with the FDA of fibrosis improvement by at least one stage with no worsening of NASH (defined as no worsening of hepatocellular ballooning, no worsening of lobular inflammation and no worsening of steatosis) at the planned 18-month analysis. Although a numerically greater proportion of patients in both OCA treatment groups compared to placebo achieved the primary endpoint of NASH resolution with no worsening of liver fibrosis in the primary efficacy analysis, this result did not reach statistical significance. As agreed with the FDA, in order for the primary objective to be met, the study was required to achieve one of the two primary endpoints. Notwithstanding the results of the REGENERATE 18-month analysis, the CRL indicated that, based on the data the FDA had reviewed, the FDA had determined that the predicted benefit of OCA based on a surrogate histopathologic endpoint remained uncertain and did not sufficiently outweigh the potential risks to support accelerated approval for the treatment of patients with liver fibrosis due to NASH. The FDA recommended that we submit additional post-interim analysis efficacy and safety data from the ongoing REGENERATE study in support of potential accelerated approval and that the long-term outcomes phase of the study should continue.
In connection with the potential resubmission of our NDA, we conducted a new interim analysis of our ongoing pivotal Phase 3 REGENERATE trial of OCA using a biopsy consensus read methodology in the same ITT population as the Original Analysis. In July 2022, we announced topline results from our New Interim Analysis. In this new interim analysis of the ITT population from REGENERATE, once-daily OCA 25 mg met, with statistical significance, the primary endpoint agreed with the FDA of fibrosis improvement by at least one stage with no worsening of NASH at month 18. The New Interim Analysis used a consensus panel approach to histology reads, in line with recent FDA guidance, while the Original Analysis used individual central readers. A numerically greater proportion of individuals in the OCA 25 mg treatment group compared to placebo achieved the endpoint of resolution of NASH with no worsening of liver fibrosis but, consistent with the Original Analysis, the results for the endpoint of resolution of NASH were not statistically significant. As part of the New Interim Analysis, a safety evaluation was conducted in 2477 subjects from the REGENERATE trial who took at least one dose of study drug (placebo, OCA 10 mg, or OCA 25 mg). Topline results from this ongoing safety evaluation showed that treatment-emergent adverse events (TEAEs), treatment-emergent serious adverse events (TESAEs), and deaths were generally balanced across the OCA and placebo treatment groups in this new safety population. The most common TEAE was pruritus (24% in placebo, 33% in OCA 10 mg and 55% in OCA 25 mg) and pruritus was the most common cause for treatment discontinuation. Serious gallbladder-related events occurred in <3% of subjects in any treatment group and, consistent with its known mechanism of action, OCA 25 mg had higher rates of biliary events including gallstones.
While we intend to resubmit to the FDA our NDA for approval of OCA for liver fibrosis due to NASH following the results of the New Interim Analysis, we do not know if such results will be sufficient for marketing approval or if the FDA will approve OCA for liver fibrosis due to NASH on an accelerated or conditional basis, or at all.
48
Our product candidates may have undesirable side effects which may delay or prevent marketing approval, or, if approval is received, require that our products be taken off the market or include new or additional safety warnings. Any such events may limit our existing and future product sales and materially and adversely affect our business, financial condition and results of operations.
OCA has been shown to be a potent FXR agonist. With the exception of the endogenous human bile acid chenodeoxycholic acid and cholic acid, there are no approved FXR agonists and the adverse effects from long-term exposure to this drug class are unknown. Unforeseen side effects from any of our product candidates, including OCA, could arise either during clinical development or, if approved, after the approved product has been marketed. Serious adverse events, including deaths, in patients taking OCA have occurred in clinical trials and in the post-marketing setting, and we cannot assure you that additional serious adverse events in patients taking OCA in clinical trials or in the post-marketing setting will not occur.
The most common side effects observed in clinical trials of OCA for PBC were pruritus, fatigue, headaches, nausea, constipation and diarrhea. In our Phase 3 POISE trial, pruritus, generally mild to moderate, was the most frequently reported adverse event associated with OCA treatment for PBC and was observed in 38% of patients on placebo, 70% of patients in the OCA 10 mg group and 56% of patients in the OCA titration group (5 mg to 10 mg). Eight patients discontinued due to pruritus, of whom none were in the placebo group, seven (10%) were in the OCA 10 mg group and one (1%) was in the OCA titration group. Pruritus also has been observed in other clinical trials of OCA. Decreases in high density lipoprotein HDL cholesterol were also observed during treatment in our Phase 3 POISE trial. In our Phase 2 trials for OCA for PBC, a dose-response relationship was observed in the occurrence of liver-related adverse reactions, including jaundice, ascites and primary biliary cholangitis flare with dosages of OCA of 10 mg once daily to 50 mg once daily (up to 5-times the highest recommended dosage), as early as one month after starting treatment with OCA.
In the course of our post-marketing pharmacovigilance activities, deaths have been reported in PBC patients with moderate or severe hepatic impairment. In an analysis performed by us and in consultation with the FDA, we concluded that certain of these patients were prescribed once daily doses of Ocaliva, which is seven times higher than the recommended weekly dose in such patients. As a result, in September 2017, we issued a Dear Health Care Provider (“DHCP”) letter, and the FDA also subsequently issued its own drug safety communication to reinforce recommended label dosing. Both communications remind healthcare providers of the importance of the recommended reduced dosing of Ocaliva in PBC patients with moderate or severe hepatic impairment, while reiterating the importance of monitoring PBC patients for progression of their disease and the occurrence of liver-related adverse reactions. In addition to the DHCP letter, we took actions to enhance education about appropriate use of Ocaliva. These initiatives included: reeducating physicians on the label, with a focus on ensuring appropriate dosing for patients with moderate or severe hepatic impairment; enhancing monitoring of patients for liver-related adverse reactions; and adjudicating reported cases of serious liver injury, including in patients with no or mild hepatic impairment. In February 2018, we announced that the Ocaliva label in the United States had been updated by the FDA to include a boxed warning and a dosing table that reinforced the then-existing dosing schedule for patients with Child-Pugh Class B or C or decompensated cirrhosis. In addition, the FDA issued an updated drug safety communication to accompany the revised label. We remain focused on the safety of all of the patients using Ocaliva within and outside of our ongoing clinical studies and have engaged with relevant regulatory authorities to ensure that the Ocaliva label sufficiently reinforces the importance of appropriate dosing in patients with advanced cirrhosis.
In 2020 the FDA notified us that, in the course of its routine safety surveillance, in May of that year it began to evaluate a newly identified safety signal, or NISS, regarding liver disorder for Ocaliva which the FDA classified as a potential risk, focused on a subset of the cirrhotic, or more advanced, PBC patients who had taken Ocaliva. In May 2021, the NISS process was concluded and we aligned with the FDA on updated Ocaliva prescribing information in the United States, and Ocaliva is now contraindicated for patients with PBC and decompensated cirrhosis, a prior decompensation event, or compensated cirrhosis with evidence of portal hypertension, in addition to the existing contraindication for complete biliary obstruction. This issue, and any other safety concerns associated with Ocaliva, perceived or real, may adversely affect the successful development and commercialization of our product candidates and approved products, including Ocaliva, and materially and adversely affect our business including future revenue generated by Ocaliva.
49
In June 2022, we announced the results of our COBALT study. The safety and tolerability of Ocaliva were consistent with its known profile and adverse events were in line with expectations for patients with advanced PBC based on the natural history of the disease.
In July 2022, we announced topline safety results from the New Interim Analysis of our REGENERATE study. Compared to the Original Analysis, the safety population in the New Interim Analysis had significantly longer exposure to study drug (median 42 months vs. 15 months), yielding more than 8,000 total patient-years and 3.4 times more exposure. As part of the New Interim Analysis, a safety evaluation was conducted in 2477 subjects from the REGENERATE trial who took at least one dose of study drug (placebo, OCA 10 mg, or OCA 25 mg). Topline results from this ongoing safety evaluation showed that treatment-emergent adverse events (TEAEs), treatment-emergent serious adverse events (TESAEs), and deaths were generally balanced across the OCA and placebo treatment groups in this new safety population. The most common TEAE was pruritus (24% in placebo, 33% in OCA 10 mg and 55% in OCA 25 mg) and pruritus was the most common cause for treatment discontinuation. Serious gallbladder-related events occurred in <3% of subjects in any treatment group and, consistent with its known mechanism of action, OCA 25 mg had higher rates of biliary events including gallstones. As part of the safety review of the New Interim Analysis, independent groups of experts reviewed certain categories of safety events to provide a blinded adjudication as specifically requested by the FDA. These included events pertaining to hepatic safety (excluding clinical outcomes), cardiovascular and renal. Topline analysis through four years of treatment showed a numerically higher number of adjudicated hepatic safety events for OCA 25 mg, the majority of which were mild in severity. For adjudicated core major adverse cardiovascular events and adjudicated acute kidney injury events, frequency of events was low and balanced across treatment groups. Consistent with its mechanism of action as an FXR agonist, OCA treatment was associated with an increase in LDL at Month 1 which returned to near baseline values by Month 12.
In the Phase 2b FLINT trial, pruritus occurred more frequently in the OCA treatment group than in the placebo treatment group (23% vs. 6%, p < 0.0001) and at a higher grade (predominately moderate pruritus). OCA treatment was also associated with changes in serum lipid levels, including increases in total cholesterol and LDL cholesterol and a decrease in HDL cholesterol, that were observed within 12 weeks of initiating treatment, peaked and then decreased in magnitude while on treatment, and reversed further during the 24-week post-treatment period. These changes in cholesterol levels, along with the achievement of pre-defined efficacy criteria, played a role in the decision of the FLINT data and safety monitoring board to terminate the treatment phase of the Phase 2b FLINT trial, and the publication of the FLINT results noted the need for further study of these changes. There were two patient deaths in the Phase 2b FLINT trial, and neither death was considered related to OCA treatment.
In December 2015, we initiated a Phase 2 clinical trial, known as the CONTROL trial, to characterize the lipid metabolic effects of OCA and cholesterol management effects of concomitant statin administration in NASH patients. CONTROL enrolled 80 NASH patients who were naïve to statin therapy or had undergone a statin washout period. The study included a 16-week double-blind phase followed by an optional long-term safety extension (“LTSE”) phase of the trial. OCA treatment in the absence of statin therapy over the first four weeks resulted in an increase in LDL across all OCA treatment groups, while the placebo group was relatively unchanged. Treatment with atorvastatin beginning at week four and continuing through week 16 reversed OCA-related increases in LDL to below baseline levels in all OCA treatment groups. Dose-dependent pruritus was the most common adverse event in patients treated with OCA, occurring in 5% of patients on placebo, 5% of patients in the OCA 5 mg group, 10% of patients in the OCA 10 mg group and 55% of patients in the OCA 25 mg group. All adverse events were mild to moderate and two patients discontinued treatment in the OCA 25 mg group due to pruritus. Over 95% of the patients completing the double-blind phase of CONTROL enrolled in the LTSE phase of the trial.
During the LTSE phase of CONTROL, there was one patient death. This patient was a 64 year-old male with a history of NASH associated liver cirrhosis, morbid obesity (BMI >40) and type 2 diabetes. At baseline, this patient had blood tests consistent with impaired liver function (e.g., low LDL and low platelets). The patient was randomized to placebo for the double-blind phase of the study. Early in the double-blind phase, the patient had serum biochemistry changes consistent with worsening hepatic impairment (e.g., albumin decline and bilirubin was increasing). Atorvastatin was started per protocol and then stopped early due to the patient’s persistently low LDL levels. The patient later enrolled in the LTSE phase and began receiving OCA 25 mg treatment. Over the following four months, the patient’s serum biochemistry remained consistent with ongoing hepatic impairment. Approximately five months after starting the LTSE phase, the
50
patient developed severe protracted diarrhea, which resulted in weight loss of 30 pounds over the ensuing one-month period. Both an infectious cause and possible inflammatory bowel disease were suspected, and the patient subsequently was started on broad spectrum antibiotics and steroid therapy. Due to the diarrhea, the principal investigator stopped treatment with OCA and discontinued the patient from the study. Concurrently, the patient reported jaundice and was found to have significantly elevated serum bilirubin and ALP, while other liver enzymes remained relatively stable. Over the ensuing two-week period, various diagnostic tests and procedures were performed (e.g., magnetic resonance cholangiopancreatography to investigate possible gallstone bile duct obstruction) and the patient continued receiving a number of other medications, including the ongoing course of steroid therapy. During this time, the patient continued to deteriorate and was hospitalized with acute renal and liver failure, complicated by severe metabolic acidosis. The patient rapidly progressed to multi-organ system failure, sepsis and death. The principal investigator determined that the events leading to the patient’s death were unlikely related to OCA. Despite the numerous confounding factors in this case, given the contemporaneous administration of OCA during the patient’s ongoing deterioration, we determined that it could not be ruled out that these events were possibly related to treatment. Subsequent to our determination, the independent data safety monitoring committee separately evaluated the case and determined that the events leading to the patient’s death were unlikely related to OCA.
Additional or unforeseen side effects relating to OCA or any of our other product candidates could arise either during clinical development or, if approved, after the approved product has been marketed. With the approval of Ocaliva for PBC in the United States, OCA is currently used in an environment that is less rigorously controlled than in clinical studies. If new side effects are found, if known side effects are shown to be more severe than previously observed or if OCA is shown to have other unexpected characteristics, we may need to abandon our development of OCA for PBC, NASH and other potential indications. Furthermore, our commercial sales of Ocaliva for PBC may be materially and adversely affected.
The range and potential severity of possible side effects from systemic therapies is significant. The results of our current or future clinical trials may show that our product candidates, including OCA, cause undesirable or unacceptable side effects, which could interrupt, delay or halt clinical trials, result in a delay of, or failure to obtain, marketing approval from the FDA and other regulatory authorities, result in marketing approval from the FDA and other regulatory authorities with restrictive label warnings or result in the withdrawal of previously granted marketing approvals.
In addition, our product candidates are being developed as potential treatments for severe, life-threatening diseases and, as a result, our trials will necessarily be conducted in patient populations that are more prone than the general population to exhibit certain disease states or adverse events. For example, our Phase 3 REVERSE trial in NASH patients with compensated cirrhosis has expanded our NASH development program into a more advanced NASH patient population and accordingly imposes certain eligibility requirements for titration, as well as certain monitoring requirements thereafter. Ocaliva is prescribed in patients suffering from various stages of PBC, which can be life threatening, and patients may suffer from other concomitant illnesses that may increase the likelihood of certain adverse events. It may be difficult to discern whether certain events or symptoms observed during our clinical trials or by patients using our approved products are related to our product candidates or approved products or some other factor. As a result, we and our development programs may be negatively affected even if such events or symptoms are ultimately determined to be unlikely related to our product candidates or approved products. We cannot assure you that additional or more severe adverse side effects related to OCA or our other product candidates will not be observed in our clinical trials or in the commercial setting. If observed, such adverse side effects could delay or preclude regulatory approval of OCA, limit commercial use or result in the withdrawal of previously granted marketing approvals.
We may not be able to obtain or, if approved, maintain orphan drug exclusivity for our approved products or product candidates, which could cause our revenues to suffer.
Regulatory authorities in the United States may designate drugs and biologics for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug or biologic intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the United States. OCA has received orphan drug designation in the United States for the treatment of PBC and PSC.
51
Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA from approving another marketing application for the same product during the exclusivity period. The applicable exclusivity period is seven years in the United States. Orphan drug exclusivity may be lost if the FDA determines that the request for designation was materially defective or if the manufacturer is unable to assure a sufficient quantity of the product to meet the needs of patients with the rare disease or condition.
Even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different products can be approved for the same condition. Even after an orphan drug is approved, the FDA may subsequently approve another product for the same condition if the FDA concludes that the later product is clinically superior (i.e., it is shown to be safer, more effective or makes a major contribution to patient care). Any inability to secure or maintain orphan drug status or the exclusivity benefits of this status could have a material adverse impact on our ability to develop and commercialize our product candidates and approved products.
Risks Related to Our Financial Position and Need for Additional Capital
We are currently dependent on the successful commercialization of Ocaliva for PBC. To the extent Ocaliva is not commercially successful, our business, financial condition and results of operations may be materially and adversely affected and the price of our common stock may decline.
Ocaliva is our only drug that has been approved for sale and it has only been approved for the treatment of PBC in combination with UDCA in adults with an inadequate response to UDCA or as monotherapy in adults unable to tolerate UDCA.
Our ability to generate profits from operations and become profitable currently depends on the commercial success of Ocaliva for PBC. However, the successful commercialization of Ocaliva for PBC is subject to many risks. We have not launched or commercialized a drug before Ocaliva, and there is no guarantee that we will be able to do so successfully. There are numerous examples of unsuccessful product launches and commercial efforts, as well as failures to meet expectations of market potential, including by pharmaceutical companies with greater experience and resources than us.
The commercial success of Ocaliva for PBC depends on the extent to which patients, physicians and payers accept and adopt Ocaliva as a treatment for PBC, and we do not know whether our or others’ estimates in this regard will be accurate. As such, there is significant uncertainty in the degree of market acceptance that Ocaliva will have for PBC. For example, if the patient population suffering from PBC is smaller than we estimate, or even if the patient population matches our estimates but Ocaliva is not widely accepted as a treatment for PBC, the commercial potential of Ocaliva for PBC will be limited. Physicians may not prescribe Ocaliva and patients may be unwilling to use Ocaliva if coverage is not provided or reimbursement is inadequate to cover a significant portion of the cost. Additionally, the use of Ocaliva in a non-trial setting may result in the occurrence of unexpected or a greater incidence of side effects, adverse reactions or misuse that may negatively affect the commercial prospects of Ocaliva for PBC.
Furthermore, any negative development in any other development program for OCA or our failure to satisfy the post-marketing regulatory commitments and requirements to which we are or may become subject including any other study to assess the clinical benefit of Ocaliva in PBC may materially and adversely impact the commercial results and potential of Ocaliva for PBC. For example, based on a review by the DMC of an unblinded pre-specified interim efficacy analysis of the COBALT trial and unblinded safety and pharmacokinetic data from both the COBALT and 401 trials, the DMC stated that it was not feasible to continue the COBALT trial as designed and noted the challenges in enrolling and maintaining placebo-controlled post-marketing studies in this rare disease setting. We notified the FDA of the DMC’s recommendation and based on discussions with the FDA, which are ongoing, we closed our COBALT and 401 trials and compiled data available from these studies. In June 2022, we announced topline results from our COBALT trial, which did not demonstrate a statistically significant difference between Ocaliva and placebo on the primary endpoint. While we intend to submit the data from the COBALT study as well additional data, including data from other real world evidence studies, as part of a broader evidence package in support of full approval of Ocaliva for the treatment of PBC, if this data package
52
does not support fulfillment of our post-marketing obligations, we may not be able to maintain our previously granted marketing approval of Ocaliva for PBC.
In May 2021, we updated the Ocaliva prescribing information in the United States and Ocaliva is now contraindicated for patients with PBC and decompensated cirrhosis, a prior decompensation event, or compensated cirrhosis with evidence of portal hypertension, in addition to the existing contraindication for complete biliary obstruction. Corresponding limitations on the use of Ocaliva in our potential patient population, or similar safety concerns, could reduce our sales.
As a result, it is uncertain whether Ocaliva net sales for PBC will sustain our operations and it may take a significant amount of time before Ocaliva net sales for PBC sustain our operations. If the commercialization of Ocaliva for PBC is unsuccessful or perceived to be unsuccessful, the long-term prospects of Ocaliva for PBC, as well as the long-term prospects of our company, may be materially and adversely affected.
If OCA or any of our other product candidates fails in clinical trials or does not gain or maintain regulatory approval, or if OCA or any of our other product candidates does not achieve market acceptance, we may never become profitable. Our net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital. Because of the numerous risks and uncertainties associated with pharmaceutical product development and commercialization, we are unable to predict with certainty the timing or amount of our expenses, whether such expenses may increase, or when, or if, we will be able to achieve profitability. The amount of our future net losses will depend, in part, on our future expenses, whether and by how much such expenses increase and our ability to generate revenues.
Risks Related to the Development and the Regulatory Review and
Approval of Our Products and Product Candidates
We cannot be certain whether Ocaliva will receive full approval for PBC in the United States. Furthermore, OCA may not be approved on an accelerated basis, or at all, for NASH or any other indication beyond PBC and we may not receive regulatory approval for any other product candidate. Without regulatory approval, we will not be able to market and commercialize our product candidates.
The development, testing, manufacture, packaging, labeling, storage, approval, promotion, advertising, distribution, marketing and export and import, among other things, of our products and product candidates are subject to extensive regulation by the FDA in the United States. We are not permitted to market our product candidates in the United States until we receive approval of a NDA from the FDA. Currently, our ability to generate product sales depends on the successful marketing of Ocaliva for PBC. In the future, our ability to generate product sales in addition to those of Ocaliva for PBC will depend on whether we are successful in obtaining regulatory approval of our other product candidates, including OCA for liver fibrosis due to NASH.
Ocaliva is our only drug that has been approved for sale and it has only been approved for the treatment of PBC in combination with UDCA in adults with an inadequate response to UDCA or as monotherapy in adults unable to tolerate UDCA. In the United States, Ocaliva was approved for PBC under the accelerated approval pathway. Accelerated approval was granted for Ocaliva for PBC based on a reduction in ALP; however, an improvement in survival or disease-related symptoms has not yet been established. Continued approval of Ocaliva for PBC in the United States is contingent upon the verification and description of clinical benefit in confirmatory trials and our satisfaction of our other post-marketing regulatory requirements. Any failure by us to confirm the clinical benefit of Ocaliva for PBC due to COVID-19 or other factors may jeopardize the continued approval of Ocaliva for PBC.
In addition, we continue to work to execute on our post-marketing regulatory commitments with respect to Ocaliva. Based on a review by the DMC of an unblinded pre-specified interim efficacy analysis of the COBALT trial and unblinded safety and pharmacokinetic data from both the COBALT and 401 trials, the DMC stated that it was not feasible to continue the COBALT trial as designed and noted the challenges in enrolling and maintaining placebo-controlled post-marketing studies in this rare disease setting. We notified the FDA of the DMC’s recommendation and based on discussions with the FDA, which are ongoing, we closed our COBALT and 401 trials and compiled data available from these studies. In June 2022, we announced topline results from our COBALT trial. The primary endpoint, as agreed with the FDA, was time to
53
first occurrence of any of the following clinical endpoints: all-cause death, liver transplant, hospitalization for other serious liver-related events, signs of progression to hepatic decompensation, or signs of development of portal hypertension. The study did not demonstrate a statistically significant difference between Ocaliva and placebo on the primary endpoint: 71 subjects in the Ocaliva arm progressed to clinical events compared to 80 in the placebo arm (p=0.30; HR 0.84). The safety and tolerability of Ocaliva were consistent with its known profile and adverse events were in line with expectations for patients with advanced PBC based on the natural history of the disease. In June 2022, we also announced topline results for our HEROES-US study, a retrospective real-world study that evaluated data from a U.S. claims database, to compare clinical outcomes in a pre-defined group of patients with PBC who were treated with Ocaliva and a comparable group of PBC patients who were eligible, but who were not treated with Ocaliva. The results from the HEROES-US study showed a statistically significant and clinically meaningful reduction in all-cause death, liver transplant, or hospitalization for hepatic decompensation among Ocaliva-treated patients compared to the control group. In the Ocaliva arm (n=429), 8 events were observed compared to 226 in the control group (n=4,585) with a weighted hazard ratio of 0.38 (p= 0.027). HEROES-US is one of two HEROES studies we are conducting that utilizes real-world data to assess the impact of Ocaliva on clinical outcomes in PBC patients.
We intend to submit the data from the COBALT and HEROS-US studies as well additional data, including data from other real world evidence studies, as part of a broader evidence package in support of full approval of Ocaliva for the treatment of PBC, which we anticipate submitting to the FDA in the second half of 2022. If this data package does not support fulfillment of our post-marketing obligations, we may not be able to maintain our previously granted marketing approval of Ocaliva for PBC.
Ocaliva is not approved for any indication other than PBC. We currently have no other products approved for sale and we cannot guarantee that we will ever have additional marketable products or that OCA will be approved for use in additional indications such as NASH. NDAs must include extensive preclinical and clinical data and supporting information to establish the product candidate’s safety and effectiveness for each desired indication. NDAs must also include significant information regarding the chemistry, manufacturing and controls for the product. Obtaining approval of a NDA is a lengthy, expensive and uncertain process, and we may not be successful in obtaining approval. The FDA review processes can take years to complete and approval is not guaranteed. Even after the submission of a NDA, the FDA may decide not to accept the submission for filing and review or may determine that the submission does not support approval. For example, in 2020 we received a CRL from the FDA with respect our NDA for OCA for liver fibrosis due to NASH. The CRL indicated that, based on the data the FDA had reviewed, the FDA determined that the predicted benefit of OCA based on a surrogate histopathologic endpoint remained uncertain and did not sufficiently outweigh the potential risks to support accelerated approval for the treatment of patients with liver fibrosis due to NASH. In July 2022, we announced topline results from the New Interim Analysis and intend to re-submit our NDA for liver fibrosis due to NASH. There can be no assurances that the FDA will approve such NDA on an accelerated or conditional basis, or at all.
In order to obtain and/or maintain regulatory approval for OCA for indications other than PBC, we will need to complete additional clinical trials and studies. For example, we intend to re-resubmit our NDA for OCA for patients with liver fibrosis following the results of the New Interim Analysis, but we can provide no assurances that the FDA will grant approval. Our ability to obtain and maintain the regulatory approvals necessary to commercialize OCA for indications other than PBC, including NASH, will depend on our ability to successfully design, conduct and complete these trials, the efficacy, safety and risk-benefit profile of OCA demonstrated by such trials and our ability to prepare and submit complex regulatory filings in accordance with applicable regulatory requirements.
There can be no assurance that Ocaliva will receive full approval from the FDA or that OCA will receive marketing approval on an accelerated or conditional basis, or at all for NASH, or that any of our other product candidates will receive marketing approval for any indication in any jurisdiction. We cannot predict whether our clinical trials and studies for our product candidates, including OCA for NASH or any other indication, will be successful, whether regulatory authorities will agree with our conclusions relating to the clinical trials and studies we conduct, or whether such regulatory authorities will require us to conduct additional clinical trials or studies.
For example, while OCA received breakthrough therapy designation from the FDA in January 2015 for the treatment of NASH patients with liver fibrosis and we intend to resubmit our NDA for OCA for liver fibrosis due to NASH following
54
the results of the New Interim Analysis, we do not know if the FDA will approve OCA for liver fibrosis due to NASH on an accelerated or conditional basis, or at all.
If we are unable to obtain or maintain regulatory approval for OCA for PBC or for other indications, we may not be able to generate sufficient revenue to maintain profitability or to continue our operations.
Risks Related to the Commercialization of Our Products
If we fail to develop OCA for additional indications such as NASH, our commercial opportunity will be limited.
To date, we have focused the majority of our development efforts on the development of OCA. One of our strategies is to pursue clinical development of OCA for liver fibrosis due to NASH and other progressive non-viral liver diseases, to the extent that we have sufficient funding to do so.
PBC is an orphan disease and the potential market size for Ocaliva for PBC is relatively limited. Furthermore, because a significant proportion of PBC patients do not exhibit any symptoms at the time of diagnosis, PBC may be left undiagnosed for a significant period of time. Due to these factors, our ability to grow revenues will be dependent on our ability to increase market share and successfully develop and commercialize OCA for the treatment of additional indications. In particular, we believe that our future success will depend in large part on the results of our development of OCA for the treatment of NASH. Although NASH is believed to be one of the most prevalent chronic liver diseases worldwide, NASH may be left undiagnosed in patients for a long period of time and a definitive diagnosis of NASH is often based on a histological assessment of a liver biopsy, which impacts the ability to easily identify patients. Furthermore, even if we are successful in developing and obtaining marketing approval of OCA for the treatment of NASH, we may not be commercially successful.
The completion of development, securing of approval and commercialization of OCA for additional indications such as liver fibrosis due to NASH will require substantial additional funding, is subject to numerous risks and we may not be successful. We cannot provide you any assurance that we will be able to successfully advance any of these indications through the development process. Even if we receive regulatory approval to market OCA for the treatment of liver fibrosis due to NASH or any other additional indications, we cannot assure you that any such additional indications will be successfully commercialized, widely accepted in the marketplace or more effective than other commercially available alternatives. If we are unable to successfully develop and commercialize OCA for liver fibrosis due to NASH or other additional indications, our commercial opportunity will be limited and our business prospects will suffer.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
Not applicable.
Issuer Purchases of Equity Securities
We did not purchase any of our registered equity securities during the three months ended June 30, 2022.
Item 6. Exhibits.
The exhibits filed or furnished as part of this Quarterly Report on Form 10-Q are set forth in the Exhibit Index below, which is incorporated herein by reference.
55
Exhibit Index
56
Balance Sheets at June 30, 2022 and December 31, 2021 (unaudited), (ii) Condensed Consolidated Statements of Operations for the three and six-month periods ended June 30, 2022 and 2021 (unaudited), (iii) Condensed Consolidated Statements of Comprehensive Loss for the three and six-month periods ended June 30, 2022 and 2021 (unaudited), (iv) Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three and six-month periods ended June 30, 2022 and 2021 (unaudited), (v) Condensed Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2022 and 2021 (unaudited) and (vi) Notes to Condensed Consolidated Financial Statements (unaudited). | ||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
# Indicates a management contract or compensatory plan or arrangement.
++ Portions of the exhibit have been omitted pursuant to Regulation S-K, Item 601(b)(10)(iv).
(1) The certifications attached hereto as Exhibit 32.1 are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
57
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
INTERCEPT PHARMACEUTICALS, INC. | ||
Date: August 3, 2022 | By: | /s/ Jerome Durso |
Jerome Durso | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) | ||
Date: August 3, 2022 | By: | /s/ Andrew Saik |
Andrew Saik | ||
Chief Financial Officer | ||
(Principal Financial Officer) | ||
58
Exhibit 10.1
[Certain identified information has been excluded from the exhibit because it is both not material and is
the type that the registrant treats as private or confidential.]
DATED 5 May 2022
(1) INTERCEPT PHARMACEUTICALS, INC
- and -
(2) MERCURY PHARMA GROUP LIMITED
SHARE PURCHASE
AGREEMENT
Relating to certain non-US subsidiaries of
Intercept Pharmaceuticals, Inc.
CONTENTS
1. | DEFINITIONS AND INTERPRETATION | 1 |
2. | SALE AND PURCHASE OF SHARES | 11 |
3. | CONSIDERATION | 11 |
4. | CONDITION | 12 |
5. | PRE-COMPLETION | 15 |
6. | SIGNING OBLIGATIONS | 19 |
7. | COMPLETION | 19 |
8. | PURCHASER WARRANTIES | 20 |
9. | SELLER WARRANTIES | 21 |
10. | SELLER LIMITATIONS | 23 |
11. | SELLER RESTRICTIVE COVENANTS | 25 |
12. | PRE-SALE MERGER | 26 |
13. | CONFIDENTIALITY AND ANNOUNCEMENTS | 26 |
14. | CEPS MATTER | 28 |
15. | GROUP SEPARATION MATTERS | 29 |
16. | ASSIGNMENT AND SUCCESSORS | 32 |
17. | THIRD PARTY RIGHTS | 33 |
18. | COSTS AND EXPENSES | 33 |
19. | PAYMENTS, ETC | 33 |
20. | FURTHER ASSURANCE | 34 |
21. | ENTIRE AGREEMENT | 34 |
22. | GENERAL | 35 |
23. | NOTICES | 36 |
24. | AGENT FOR SERVICE | 37 |
25. | GOVERNING LAW AND LANGUAGE | 38 |
SCHEDULE 1: WARRANTED INFORMATION | 39 | |
Part 1: The Group Companies | 39 | |
Part 2: The Shares | 50 | |
Part 3: Leased Property | 51 | |
SCHEDULE 2: WARRANTIES | 56 | |
SCHEDULE 3: MARKETING AUTHORISATIONS | 71 | |
SCHEDULE 4: COMPLETION OBLIGATIONS | 72 | |
Part 1: Seller obligations on Completion | 72 | |
Part 2: Purchaser's obligations on Completion | 76 | |
SCHEDULE 5: COMPLETION STATEMENTS | 79 |
Part 1: General | 79 |
Part 2: Expert determination | 81 |
Part 3: Pro formas | 84 |
Part 4: Specific bases of preparation | 85 |
SCHEDULE 6: TAX COVENANT | 88 |
THIS AGREEMENT is made on 5 May 2022
BETWEEN:
(1) | INTERCEPT PHARMACEUTICALS, INC., a company incorporated in Delaware with number 3565213 which has its business address at 305 Madison Avenue, Morristown, New Jersey 07960 (the "Seller"); and |
(2) | MERCURY PHARMA GROUP LIMITED, a company incorporated in England with number 02330913 which has its registered office at Capital House, 85 King William Street, London, EC4N 7BL (the "Purchaser"). |
BACKGROUND:
A | The Group Companies are engaged in commercialization activities with respect to the Product. |
B | The Seller owns either directly, or indirectly, the Shares. The Seller has agreed to sell or procure the sale of, and the Purchaser has agreed to purchase, the Shares on the terms set out in this agreement. |
C | The Seller also owns certain intellectual property rights relating to obeticholic acid that it has licensed to Intercept Pharma Europe Ltd. (“IPEL”), a Seller subsidiary, and in connection with this agreement and the BTA, the Seller has agreed to procure that IPEL enters into a licence agreement with the Purchaser in relation to certain of these rights to the Product and the Seller is also entering into the Trademark Assignment with respect to trademarks relating to the same. |
IT IS AGREED:
1.DEFINITIONS AND INTERPRETATION
1.1In this agreement:
"Accounts" means (a) the unaudited financial statements of each Group Company as at and for the financial year ended on the Accounts Date as contained at folder 2.1.1 of the Due Diligence Information and (b) the profit and loss statements and balance sheets of the Group Companies as contained at folder 2.1.2.1 and 2.1.3.1, respectively, of the Due Diligence Information;
"Accounts Date" means 31 December 2021;
"Acquisition" means the proposed acquisition of the Shares by the Purchaser on the terms of this agreement;
"Acquisition Documents" means this agreement, the Disclosure Letter, the Licence Agreement, the Supply Agreement, the Transitional Services Agreement, the SDEA, the BTA the Trademark Assignment and the Agreed Form documents (including any attachments or schedules thereto) and other documents to be delivered on Completion;
"Actual Working Capital" means the aggregate Working Capital of the Group Companies as set out in the Completion Statements;
"ADVANZ Group" means ADVANZ Pharma Holdco Limited and its subsidiary undertakings;
1
"Affiliate" in relation to a company, means any other company directly or indirectly controlling, controlled by or under common control with such company, and "control" for these purposes means (a) holding the majority of the voting rights or share capital of such company; or (b) otherwise having the power to direct the management and policies of such company;
"Agreed Form", in relation to a document, means the form approved and for identification purposes included in a zip file of agreed form documents titled “Project Echo Agreed Form Documents” and emailed from the Seller’s lawyers to the Purchaser’s Lawyers on the date of this agreement;
"Anti-Bribery Laws" means, in each case to the extent applicable to a Group Company or a member of the Seller Group (as the case may be) at any time prior to the date of this agreement: (i) the UK Bribery Act 2010; (ii) the U.S. Foreign Corrupt Practices Act of 1977 (as amended); (iii) the Italian Legislative Decree no. 231/2001; and (iv) any other applicable anti-bribery and anti-corruption law in any jurisdiction;
"Austrian Shares" means the entire issued share capital of the Austrian Target;
"Austrian Target" means Intercept Pharma Austria GmbH;
"Authority" means any supra-national, national or sub-national authority, commission, department, agency, regulator, regulatory body, court, tribunal or arbitrator;
"Base CEPS Amount" means EUROS 40,600,000 (forty million six hundred thousand euros)
"BTA" means the business transfer agreement dated on or about the date hereof and entered into between (1) IPEL and (2) Advanz Pharma Services (UK) Limited relating to the transfer of certain assets related to the Product;
"Business" means the business of the Group Companies, including the marketing of the Product, as it is carried on at the date of this agreement and as it has been carried on in the 12 months prior to the agreement in the Territory;
"Business Day" means any day other than a Saturday or Sunday on which commercial banks are open for general business in London, Milan and New York;
“Canadian Marketing Authorisation” means the marketed drug product registrations relating to the Product in 5 mg and 10mg form, issued by the Canadian authorities to the Seller with registration number HC e186967;
"Canadian Shares" means the entire issued share capital of the Canadian Target;
"Canadian Target" means Intercept Pharma Canada Inc.;
"Cash" means the aggregate amount of cash (including cash in hand, in transit and credited to any account with any banking, financial, acceptance credit, lending or other similar institution or organisation, together with accrued interest) and cash equivalents (including liquid or easily realisable stocks, shares, bonds, treasury bills and other similar securities) held by or on behalf of any Group Company as at the Effective Time and as shown in the Completion Statements, excluding Restricted Cash;
"CEPS Matter" means the discussions between the Seller’s Group and the Economic Committee for Health Products in France (Comité Economique des Produits de Santé) relating
2
to the historic reimbursement price for sales of the Product in France by any Group Company prior to Completion;
"Claim" means any claim against the Seller in relation to this agreement;
"Competing Business" means any business which commercially sells or distributes or provides for commercial sale or distribution a therapeutic product that is indicated for the treatment of primary biliary cholangitis ("PBC") or non-alcoholic steatohepatitis (“NASH”) in the Territory but shall not include clinical development activities for the development of any therapeutic product for the treatment of PBC or NASH in the Territory;
"Completion" means completion of the sale and purchase of the Shares in accordance with this agreement;
"Completion Date" means the date that is 15 Business Days after (and excluding) the day on which the Condition has been satisfied or waived (as the case may be) in accordance with this agreement, or such other date as the Seller and the Purchaser may agree in writing;
"Completion Payment" has the meaning given in clause 3.2;
"Completion Statements" means the statements to be prepared and agreed or determined in accordance with schedule 5;
"Consideration" means the consideration for the Shares calculated as provided in clause 3.1;
"Debt" means the aggregate amount (expressed as a positive number) of all borrowings and indebtedness in the nature of borrowings of all Group Companies (other than between Group Companies) and all accrued and outstanding interest thereon calculated up to and including the Effective Time pursuant to the terms of such debt and as shown in the Completion Statements, including:
(a) | loans and bank overdrafts; |
(b) | liabilities under acceptances of trade bills (other than in respect of purchases in the ordinary course of business) and acceptance credits; |
(c) | liabilities under any bond, note, loan stock, debenture or other similar instrument or security; |
(d) | liabilities under factoring arrangements; |
(e) | amounts raised by any other transactions having the commercial effect of borrowings; |
(f) | liabilities under any currency or interest swap or other interest or currency protection, hedging or financial futures transaction or arrangement; |
(g) | liabilities under any guarantee of, or indemnity against financial loss in respect of, any obligation of another person (other than another Group Company); |
(h) | liabilities in relation to any letter of credit (but not the letter of credit itself), bond or guarantee given by a third party in relation to any obligation and/or liability of any Group Company; |
3
(i) | any amounts relating to costs and expenses, bonuses or other costs payable on or after Completion by any Group Company in connection with the transactions contemplated by this agreement; |
(j) | any liabilities (including Taxes) of a Group Company in relation to the accelerated vesting of share options; |
(k) | to the extent that the CEPS Matter has not been finally resolved at Completion and the relevant liability paid a provision of $42,800,000 (forty two million eight hundred thousand dollars) in respect of the CEPS Matter being the dollar equivalent of the Base CEPS Amount. |
(l) | A provision of $1,000,000 in respect of potential Tax Liabilities which may arise in respect of the matters disclosed at paragraph 34.1 of the Disclosure Letter. |
(m) | the aggregate cash value of any declared but unpaid dividends and other distributions attributable to the Shares, to the extent that a member of the Seller’s Group is entitled to receive the relevant dividend or other distribution after Completion; and |
liability if any, to pay, corporate income tax in respect of the period from the Accounts Date to the Effective Time and any unpaid liability to pay corporate income tax for all periods up to and including the Accounts Date;
but excluding, for the avoidance of doubt, Intra-Group Debt owed by any Group Company and any amount included in the Completion Statements as Working Capital;
“Disclosed” means fairly disclosed to the Purchaser within the Disclosed Information with sufficient detail to enable the Purchaser to identify the nature and scope of the matter disclosed;
"Disclosed Information" means the information in the Disclosure Letter and the Due Diligence Information;
"Disclosure Letter" means the letter of the same date as this agreement from the Seller to the Purchaser relating to the Warranties, together with any documents annexed to it;
"Dispute" means any dispute or claim arising out of or in connection with this agreement, its subject matter or formation (including any non-contractual dispute or claim);
"Due Diligence Information" means the information and documents contained in the electronic data room maintained by Firmex in relation to the Group Companies and their respective businesses and assets as at 30 April 2022 (the “Data Room”) as listed in the index in the Agreed Form (a download of which has, for evidential purposes, been delivered to the Purchaser's Lawyers immediately before the signing of this agreement);
"Effective Time" means the time immediately prior to Completion;
"Encumbrance" means any mortgage, charge, pledge, lien, option, restriction, assignment, right to acquire, right of pre-emption or any other form of right, interest, preference, security or encumbrance of any nature in favour of a third party or any agreement, arrangement or obligation to create any of them;
“French Shares” means the entire issued share capital of the French Target;
“French Target” means Intercept Pharma France SAS;
4
"Fund" means any fund, bank, company, unit trust, investment trust, investment company, limited, general or other partnership, industrial provident or friendly society, any collective investment scheme (as defined by the FSMA), any investment professional (as defined in article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion Order) 2005 (the “FPO”)), any high net worth company, unincorporated association or partnership (as defined in article 49(2)(a) and (b) of the FPO) or any high value trust (as defined in article 49(6) of the FPO), any pension fund or insurance company or any person who is an authorised person under the FSMA;
“German Shares” means the entire issued share capital of the German Target;
“German Target” means Intercept Pharma Deutschland GmbH;
“Golden Power Clearance” means (i) the authorisation issued in an express way or by tacit consent (silenzio assenso), to the transactions contemplated hereunder by the Italian Prime Minister’s Office pursuant to the Golden Power Law for the purpose of completing the transactions contemplated by this agreement in relation to the Italian Shares, or, as the case may be, (ii) the order or measure by the Italian Prime Minister’s Office that, in response to the Golden Power Notification, confirms that the Golden Power Law is not applicable to the transactions contemplated by this agreement;
“Golden Power Law” means Law Decree 21/2012 (as subsequently amended and supplemented);
"Group Companies" means the companies listed in schedule 1, and "Group Company" means each such individual company listed in schedule 1:;
"Intra-Group Debt" means:
(a) | the aggregate amount owed by the Group Companies to the members of the Seller Group; less |
(b) | the aggregate amount owed by members of the Seller Group to the Group Companies, |
as at the Effective Time as stated in the Completion Statements;
"IP" means:
(a) | patents, utility models, inventions, know-how, trade secrets, copyright and related rights and allied rights including moral rights, database rights and other rights in and relating to software, registered designs, unregistered design rights, trademarks and service marks, trade names, business names, company names, brand names, logos, rights in get-up, domain names and URLs, goodwill and rights to sue for passing-off (or for unfair competition) and any other intellectual property rights (in each case, whether or not registered, and including all applications to register and rights to apply to register any of them, and all rights to sue for any past or present infringement of them) and renewals or extensions of such rights; and |
(b) | rights having equivalent or similar effect to the above items in any jurisdiction in which any Group Company conducts business; |
“Irish Shares” means the entire issued share capital of the Irish Target;
“Irish Target” means Intercept Pharma International Limited;
5
“Italian Prime Minister’s Office” means the Presidenza del Consiglio dei Ministri of the Republic of Italy;
“Italian Shares” means the entire corporate capital of the Italian Target;
“Italian Target” means Intercept Italia S.r.L;
"Key Customer" means any customer of the Group Companies (taken as a whole) which in the financial year ended on the Accounts Date accounted for revenue in excess of US$[***];
"Key Supplier" means any supplier to the Group Companies (taken as a whole) which in the financial year ended on the Accounts Date accounted for expenditure in excess of US$[***];
"Key Warranties" means the Warranties in paragraphs 1 (The Seller), 2 (The Shares and the Group Companies), 4 (Interests in other companies) and 5 (Insolvency) of schedule 2;
"Key Warranty Claim" means any Warranty Claim in relation to any Key Warranty;
"Latest Financial Information" means the profit and loss statements and balance sheets of the Group Companies as contained at folder 2.1.2.1 and 2.1.3.1, respectively, of the Due Diligence Information;
"Latest Financial Information Date" means 31 December 2021
"Licence Agreement" means the licence agreement to be entered into on or about the date hereof between (1) Intercept Pharma Europe Ltd. and (2) the Purchaser relating to the licensing of certain intellectual property rights;
"Long Stop Date" means the date that falls 90 Business Days immediately following (but excluding) the date of this agreement (as extended pursuant to clause 4.3(a) (as the case may be)), or such other date as the Seller and the Purchaser may agree in writing;
“Marketing Authorisations” means the licenses and approvals held by the Group Companies relating to the marketing, sale and distribution of the Product as listed in schedule 3;
“Marketing Websites” means the following websites used for the marketing of the Product in various territories which are registered in the name of the Seller:
[***]
“Material Contract” means a contract with a Key Customer or a Key Supplier;
“Nordic Capital Sphere” means any Fund whose general partner, operator, manager or investment adviser is a Nordic Capital entity, any company in which such a Fund holds shares (whether directly or indirectly but excluding any portfolio company thereof), or any Affiliate of the same, including each of their general partners, operators, managers and investment advisers and each of their respective employees, directors, officers, finance providers, consultants, advisors and associates;
“Office User Agreement” means the office user agreement amongst United Overseas Investment Ltd., carrying on a business as Zemlar Offices, as centre, and Canadian Target, as user, dated May 21, 2020 with respect to the offices located at Top Level, Suite 300, 4263 Sherwoodtowne Blvd, Mississauga, ON L4Z 1Y5, Canada;
6
“Outgoing Directors” means [***] and such other persons as the Purchaser specifies no later than five Business Days prior to Completion;
“Portuguese Shares” means the one quota share of EUR 5,000 in the capital of the Portuguese Target;
“Portuguese Target” means Intercept Pharma Portugal, Unipessoal Lda;
"Product" means Ocaliva® (a monotherapy in which obeticholic acid is the active pharmaceutical ingredient) that is commercially sold for the treatment of PBC;
"Product Files" means all information, processes, technology, and data in the Seller's possession or control and required to (i) enable the manufacture of the Product including that relating to the chemical formula of the Product (including the identity, relative volumes and combination of ingredients and the results of clinical or other trials and investigations or the like) and (ii) obtain and maintain the Marketing Authorisations;
"Property" means the land and buildings leased, licensed or occupied by any Group Company as detailed in part 3 of schedule 1, including without limitation, the Office User Agreement;
"Purchaser Group" means each or any of (a) the Purchaser and any Affiliate of the Purchaser, in each case for the time being; and (b) with effect from Completion, each Group Company (and any reference to "member of the Purchaser Group" or, in the case of any member of the Purchaser Group, to "its group" shall be construed accordingly);
"Purchaser Relevant Persons" means the following employees of the Purchaser Group as at the date of this agreement: Chief Corporate Development Officer, Director – Strategic Finance, Assistant General Counsel and International Tax Manager.;
"Purchaser's Lawyers" means White & Case LLP of 5 Old Broad Street, London EC2N 1DW;
"Regulatory Authority" means the Austrian Federal Competition Authority (Bundeswettbewerbsbehörde), the Federal Cartel Prosecutor (Bundeskartellanwalt), the Cartel Court (Kartellgericht) and the Supreme Cartel Court (Kartellobergericht), and, if relevant, the Italian Prime Minister’s Office;
"Relevant CEPS Amount" means the aggregate, expressed in Euros of (a) any amounts paid by the Purchaser, the French Target or any Group Company to the French Authorities (including the French Economic Committee for Health Products) in respect of the CEPS Matter which are payable as a result of the French Authority successfully asserting (including by agreement) that the reimbursement price received by any Group Company in respect of sales of the Product by any Group Company prior to Completion was too high and (b) all costs and expenses reasonably and properly incurred by the Purchaser, the French Target or any Group Company in connection with the CEPS Matter, including amounts paid pursuant to any related litigation and any other third party fees;
"Relief" means any relief, loss, allowance, credit, set-off, deduction or exemption for any Tax purposes, any right to repayment of Tax or to a payment in respect of Tax from a Tax Authority, and:
(a) | any reference to the use or set off of a Relief shall be construed accordingly and shall include the use of set-off in part; and |
7
(b) | any reference to the loss of a Relief shall include the failure to obtain, reduction, modification, loss, counteraction, nullification, absence, unavailability, disallowance, withdrawal, clawback, non-existence or cancellation of any such Relief, or to such Relief being available only in a reduced amount; |
“Restricted Cash” means all cash and cash equivalents which cannot be:
(a) | lawfully spent; or |
(b) | distributed; or |
(c) | loaned; or |
(d) | released |
in each case by a Group Company from the jurisdiction in which it is situated within a period of 30 days without deduction, withholding or additional cost (other than general foreign exchange controls applicable in jurisdictions in which the relevant Group Company operates and the de minimis administrative costs of transfer from a bank account incurred in the ordinary course of business); or
(e) | used within a period of 90 days as: |
(i) | it is securing obligations, guarantees or any liabilities of any person in respect of obligations of a Group Company; |
(ii) | is held by an agent of a Group Company or a regulator or a governmental authority pursuant to a regulatory or contractual requirement; |
(iii) | it is being held in escrow for the benefit of any person in respect of obligations of a Group Company; or |
(iv) | amounts are otherwise committed, including but not limited to, in respect of rent deposits, security deposits, customer deposits, to support letters of credit, |
and “Restricted Cash” shall include any cash that is held as collateral for any letters of credit issued in respect of any Group Company;
"Seller Group" means each or any of the Seller and any Affiliate of the Seller from time to time, excluding each Group Company (and any reference to "member of the Seller Group" or, in the case of any member of the Seller Group, to "its group" shall be construed accordingly);
"SDEA" means a safety data exchange agreement to be made between the Seller and the Purchaser and entered into on or about the date hereof;
"Seller Group Guarantees Facility" means the facility with HSBC Bank USA pursuant to which HSBC issues standby letters of credit for the benefit of Group Companies from time to time and which are secured by a cash deposit made by the Seller;
"Seller's Lawyers" means DLA Piper UK LLP of 160 Aldersgate Street, London EC1A 4HT;
"Shares" means the issued shares in each Group Company details of which are set out in part 2 of schedule 1;
8
"Spanish Shares" means the entire issued share capital of the Spanish Target;
"Spanish Target" means Intercept Pharma Spain, S.L.;
"Supply Agreement" means the agreement entered into on or about the date hereof between Intercept Pharma Europe Ltd. and the Purchaser relating to the supply of the Product;
"Swiss Share" means the one quota share of CHF 20,000 in the capital of the Swiss Target;
"Swiss Target" means Intercept Pharma Switzerland GmbH;
"Tax" or "Taxation" means, save for rates, council tax, municipal taxes and utilities charges, all forms of taxation and statutory and governmental, state, provincial, local governmental or municipal charges, duties, contributions and levies in each case in the nature of tax, and withholdings and deductions required by law in respect of the foregoing, and shall further include social security contributions and payments to a Tax Authority, court or tribunal on account of Tax, in each case, whether chargeable directly or primarily against a Group Company or any other person and wherever and whenever imposed and all related penalties and interest;
"Tax Authority" means any governmental or other authority competent to assess, collect, administer or impose a liability for Taxation and acting in that capacity, whenever and wherever;
"Tax Claim" means a Tax Warranty Claim or Tax Covenant Claim;
"Tax Covenant Claim" means a claim under paragraph 2 of schedule 6 (Tax Covenant);
"Tax Warranties" means the Warranties in paragraph 34 of schedule 2;
"Tax Warranty Claim" means any Claim in relation to any Tax Warranty;
"Territory" means all countries and territories in the world other than the United States and its territories and possessions;
“Trademark Assignment” means the assignment agreement relating to certain trademarks related to the Product to be entered into on or about the date hereof between the Seller (1) and the Purchaser (2);
"Transitional Services Agreement" means the agreement to be entered into on or about the date hereof between the Seller and the Purchaser in relation to certain services to be provided by the Seller to the Purchaser following Completion;
"UK Shares" means the entire issued share capital of each of the UK Targets;
"UK Targets" means Intercept Pharma UK & Ireland Ltd and Intercept Pharma Ltd;
"US GAAP" means the generally accepted accounting principles in the United States of America, including standards and interpretation issued or adopted by the Financial Accounting Standards Board;
"VAT" means value added tax as defined in the Value Added Tax Act 1994 and the EC Sixth Directive on VAT 77/388/EEC, any similar Tax levied by reference to added value or sales and
9
all Taxes of a similar nature levied in addition to or in substitution for the foregoing, in each case imposed, collected or assessed by, or payable to a Tax Authority;
"W&I Policy" means the warranty and indemnity policy to be taken out by the Purchaser at its own cost and for its own benefit for the purposes of the Warranties;
"Warranties" means the warranties given by the Seller in clause 9.1 and schedule 2;
"Warranty Claim" means any Claim in relation to any Warranty;
"Working Capital" means the amounts as at the Effective Time of those items stated in the balance sheet in part 3 of Schedule 5 as relating to Working Capital; and
"Working Capital Target" means USD 13,000,000.
1.2 | In this agreement (unless the context requires otherwise): |
(a) | "$" and "dollars" means the lawful currency of the United States of America; and |
(b) | "including", "includes" or "in particular" means including, includes or in particular without limitation. |
1.3 | In this agreement (unless the context requires otherwise), any reference to: |
(a) | any gender includes all genders, and the singular includes the plural (and vice versa); |
(b) | a company includes any company, corporation or body corporate, or any other entity having a separate legal personality; and a person includes an individual, company, partnership, unincorporated association or Authority (whether or not having a separate legal personality); and any professional firm or company includes any firm or company effectively succeeding to the whole, or substantially the whole, of its practice or business; |
(c) | any time of day or date is to that time or date in London; |
(d) | a day shall be a period of 24 hours running from midnight to midnight, and days shall be to calendar days unless Business Days are specified; |
(e) | a month or a year shall be to a calendar month or a calendar year respectively; |
(f) | legislation or a legislative provision includes reference to the legislation or legislative provision as amended or re-enacted, any legislation or legislative provision which it amends or re-enacts and any legislation made under or implementing it, in each case for the time being in force (whether before, on or after the date of this agreement); |
(g) | any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of any jurisdiction other than England, be deemed to include the specific term stated in the language of such other jurisdiction immediately after it or, if no such term is stated, what most nearly approximates to such English term in such other jurisdiction; and any reference to any specific English law shall be deemed to include any equivalent or similar law in any other jurisdiction; and |
10
(h) | writing or written includes any method of representing or reproducing words in a legible form. |
1.4 | For the purposes of applying a reference to a monetary sum expressed in dollars in: |
(a) | any Warranty; or |
(b) | clause 10 (Seller limitations), |
an amount in a different currency shall be deemed to be an amount in dollars converted at the closing mid-point spot rate for a transaction between the relevant currency and dollars as quoted by Barclays Bank plc as at the close of business on the Business Day immediately preceding the date of this agreement.
1.5 | Unless the context requires otherwise, any reference in this agreement to a clause or schedule, appendix, exhibit or annex is to a clause of or schedule, appendix, exhibit or annex to this agreement, any reference to a part or paragraph is to a part or paragraph of a schedule to this agreement, any reference within a schedule to a part is to a part of that schedule, and any reference within a part of a schedule to a paragraph is to a paragraph of that part of that schedule. |
1.6 | This agreement incorporates the schedules and appendices, exhibits, annexes to it. |
1.7 | The contents list, headings, recitals, background section and any descriptive notes are for ease of reference only and shall not affect the construction or interpretation of this agreement. |
2. | SALE AND PURCHASE OF SHARES |
2.1 | Subject to the terms of this agreement, the Seller shall sell (or procure the sale of) and the Purchaser shall purchase the Shares on and with effect from Completion. |
2.2 | The Shares shall be sold free from all Encumbrances and together with all rights of any nature attached or accruing to them on or after Completion (including the right to receive all dividends and distributions declared, paid or made by the Company on or after the Completion Date). |
2.3 | Neither the Seller nor the Purchaser shall be obliged to complete the sale and purchase of the Shares unless the sale and purchase of all of the Shares is completed on the Completion Date |
3. | CONSIDERATION |
Consideration
3.1 | The aggregate consideration for the sale and purchase of the Shares shall be the payment by the Purchaser of an amount (“Consideration”), which is calculated as follows (and shall be apportioned as provided in clause 3.4): |
(a) | US$ 38,500,000; |
(b) | plus an amount equal to the Cash; |
(c) | less an amount equal to the Debt; |
(d) | plus, if the Actual Working Capital exceeds the Working Capital Target, the amount of the excess or, if the Working Capital Target exceeds the Actual Working Capital, less the amount of such excess; and |
11
(e) | either (as applicable): |
(i) | plus, where the Intra-Group Debt is a negative number, such amount (expressed as a positive number); or |
(i) | less, where Intra-Group Debt is a positive number, such amount. |
The “Initial Consideration” payable by the Purchaser to the Seller at Completion is nil. The parties acknowledge that the calculation above may result in the Consideration being a negative number which requires a payment from the Seller to the Purchaser.
3.2 | Payment on account of Consideration |
The Purchaser shall pay an amount equal to the Initial Consideration to the Seller on Completion ("Completion Payment") on account of the Consideration in cash in accordance with clause 19.
3.3 | Adjusting payment |
Within 15 Business Days of the agreement, deemed agreement or determination of the Completion Statements in accordance with schedule 5:
(a) | if the Consideration exceeds the Completion Payment, the Purchaser shall pay an amount equal to the excess to the Seller; or |
(b) | if the Consideration is less than the Completion Payment, the Seller shall repay an amount equal to the difference to the Purchaser. |
3.4 | Apportionment |
The Consideration shall be apportioned to the Shares of each Group Company, in the proportions as the Parties may agree prior to Completion or failing such agreement based on a calculation by reference to the proportion the net assets of each Group Company represent as a proportion of the aggregate net assets of all the Group Companies.
4. | CONDITION |
4.1 | Condition Precedent |
The obligations of the Seller and the Purchaser to complete the sale and purchase of the Shares are conditional upon satisfaction (or waiver in accordance with this agreement, to the extent permitted by applicable law) of the following conditions (the “Conditions”):
(a) | the Regulatory Authorities in Austria providing approvals or clearances (or deemed approvals or clearances) relating to the proposed sale and purchase of the Shares under applicable laws, regulations or statutes in the jurisdiction of Austria (the “Austrian AT Condition”); |
(b) | the Golden Power Clearance having been issued (in an express way or by tacit consent (silenzio assenso)) in accordance with applicable laws; |
(c) | the German Federal Ministry for Economic Affairs and Climate Action (i) in response to the pending jurisdictional consultation having confirmed in writing (email suffices) that the transaction is not subject to a mandatory FDI filing requirement; or otherwise (ii) having cleared the transaction (by way of express clearance or issuing a non- |
12
objection certificate) or the transaction being deemed to be cleared by operation of the law; and
(d) | the relevant Spanish authority providing either: (i) the approval to the acquisition of the Spanish Target by the Purchaser for the purposes of Article 7.bis of Spanish Law 19/2003 of 4th of July; or, alternatively (ii) a confirmation from such authority confirming that the mentioned approval or clearance shall not be required. |
4.2 | Responsibility for satisfaction |
(a) | Purchaser Obligations |
(i) | The Purchaser shall use its reasonable endeavours to ensure satisfaction of each of the Conditions as soon as possible. |
(ii) | The Purchaser undertakes to: |
(A) | (i) submit the filing (or where applicable a draft thereof) to each relevant Regulatory Authority and the relevant Spanish authority promptly following the date of this agreement and in any event within five Business Days of the date of this agreement and (ii) notify the Italian Prime Minister’s Office of the transactions contemplated under this agreement on the terms and conditions of this agreement by serving the relevant notice in the agreed form (“Golden Power Notification”) promptly following the date of this agreement and in any event within five Business Days of the date of this agreement, subject only to the Seller complying with its obligations under clause 4.2(b) below; |
(B) | use its reasonable endeavours to avoid any declaration of incompleteness by any Regulatory Authority or any other suspension for the time periods of clearance; |
(C) | take all steps necessary to secure the satisfaction of the Austrian AT Condition by the end of any Regulatory Authority’s initial period of review (without the need for a second phase of investigation). In respect of the Austrian AT Condition only, such steps shall include, but are not limited to, proposing, negotiating, offering to commit and agreeing, in each case where necessary to ensure that each the Austrian AT Condition is satisfied prior to the Long Stop Date with the Regulatory Authority to effect (and if such offer is accepted, commit to effect), by agreement, order or otherwise the sale, divestiture, license, or disposition of any necessary assets or businesses by the Purchaser or by any member of the ADVANZ Group; |
(D) | take all steps reasonably necessary to secure the satisfaction of the Conditions (other than the Austrian AT Condition) by the end of any Regulatory Authority’s initial period of review (without the need for a second phase of investigation); |
(E) | procure that the Seller is given a reasonable opportunity to review and comment on drafts of any filings or other material documentation prior to their submission to any Regulatory Authority (it being acknowledged that certain such drafts and/or documents may be shared on a confidential outside counsel to counsel basis only) and to consider and take account of any reasonable comments; |
13
(F) | respond as soon as reasonably practicable to all inquiries received from any Regulatory Authority for additional information or documentation and to supplement such filings as reasonably requested by the Regulatory Authority. The Purchaser undertakes to keep the Seller informed of contact with the Regulatory Authorities and to the extent permitted by law, provide the Seller with copies of all relevant documentation in relation thereto (to the extent such information relates to the Group Companies); and |
(G) | promptly notify the Seller after receipt of each such clearance or approval required to satisfy each of the Conditions. |
(iii) | The Purchaser shall be responsible for all filing fees and other costs incurred in relation to any filing required to be made in connection with each of the Conditions. |
(b) | Seller Obligations |
(i) | The Seller undertakes, to the extent permitted by law, to co-operate with the Purchaser and to use its reasonable endeavours to procure that each relevant Group Company co-operates with a view to satisfying each of the Conditions, including, to the extent necessary and on a confidential basis, providing all information and cooperation reasonably required by the Purchaser in relation to the business of the Company and/or relevant Group Company or in relation to the Seller and providing all information required by any Regulatory Authority in relation to the business of the Company and/or relevant Group Company or in relation to the Seller on a timely basis, provided that any information provided in relation to the Seller shall be provided only to the applicable Regulatory Authority and/or, if necessary the Purchaser’s Lawyers on a strictly confidential basis and shall not be provided to the Purchaser. |
(ii) | Without prejudice to the above, the Seller undertakes to procure that the Italian Target, in compliance with applicable provisions of the Golden Power Law, executes and notifies the Golden Power Notification under clause 4.2 (a)(ii)(A) above jointly with the Purchaser. |
(c) | Seller and Purchaser Obligations |
(i) | The Seller undertakes to the Purchaser, to the extent permitted by law, to notify it in writing of anything which it is actually aware will, or which it believes (acting reasonably) is likely to, prevent any of the Conditions from being satisfied on or before the Long Stop Date promptly upon the same coming to the Seller’s attention. |
(ii) | The Purchaser undertakes to the Seller, to the extent permitted by law, to notify it in writing of anything which it is actually aware will, or which it believes (acting reasonably) is likely to, prevent any of the Conditions from being satisfied on or before the Long Stop Date promptly upon the same coming to the Purchaser’s attention. |
4.3 | Non-Satisfaction |
(a) | If any of the Conditions is not fulfilled (or waived in accordance with this agreement, to the extent permitted by applicable law) on or before the Long Stop Date, or becomes incapable of satisfaction on or before the Long Stop Date, this agreement shall automatically terminate, provided that each of the Purchaser or the Seller may in its |
14
sole discretion extend the Long Stop Date on no more than 2 occasions each and on each such occasion by up to 25 calendar days in the event that the relevant Condition(s) has not been satisfied prior to the Long Stop Date due to a breach by the other of its obligations under this agreement.
(b) | If this agreement terminates in accordance with clause 4.3(a), and without limiting the right of any Party to claim damages, all obligations of the Parties under this agreement shall end (except for the Continuing Provisions) but all rights and liabilities of the Parties which have accrued before termination shall continue to exist. |
4.4 | The Purchaser shall not be liable for any breach of this clause 4 for failure to take any reasonable step or failing to satisfy any of the Conditions to the extent that such failure arises as a result of the Seller not complying with its obligations under clauses 4.2 (b) or (c). |
5. | PRE-COMPLETION |
5.1 | The Seller shall, from the date of this agreement until the Effective Time: |
(a) | procure that each Group Company will conduct its business in the ordinary course of business and that, in the absence of the prior written consent of the Purchaser (such consent not to be unreasonably delayed or withheld), no Group Company will knowingly do or agree to: |
(i) | enter into, modify any material term of or terminate (other than expiration or termination by a counterparty ) any Material Contract or any other contract involving revenue or expenditure in excess of US$[***]; |
(ii) | dispose of or grant any option in respect of any material part of its assets other than stock in the ordinary course of business; |
(iii) | acquire or dispose of any fixed asset having a book value in excess of US$[***]; |
(iv) | make any capital commitment in excess of US$[***] individually or which together with all other such capital commitments entered into during such period exceeds US$[***] in aggregate; |
(v) | make any material change in the nature of its business; |
(vi) | discontinue or cease to operate all or a material part of its business (except to the extent required to do so by law); |
(vii) | make any material variation to the terms and conditions of employment of any employee earning US$[***] per annum or more (other than annual salary increases and benefits in the usual course and or which together with all other variations made between the date of this agreement and Completion would increase the total annual salary or benefits costs of the Group Companies taken as a whole by [***]% or more; |
(viii) | appoint, employ or offer to appoint or employ any person at a rate of remuneration per annum in excess of US$[***] individually or which together with all other appointments, employments or offers made between the date of this agreement and Completion would increase total annual salary or benefits costs of the Group Companies taken as a whole by [***]% or more; |
(ix) | other than for cause, dismiss any employee earning US$[***] per annum or |
15
more or, directly or indirectly, induce any such employee to terminate his employment;
(x) | borrow money or incur any indebtedness in the nature of borrowing (in each case from or in respect of a person which is not a Group Company and/or a member of the Purchaser Group) otherwise than in the ordinary and usual course of business; |
(xi) | grant any loan, advance or capital contribution to any other person other than a loan to any employee in an amount not exceeding US$[***] individually or, which together with all other such loans, advances or capital contributions between the date of this agreement and Completion exceeds US$[***]; |
(xii) | reduce its share capital or purchase or redeem its own shares; |
(xiii) | acquire any share or other interest in any person or acquire any business carried on by any person; |
(xiv) | create any Encumbrance or redeem or release any Encumbrance or give any guarantees or indemnities other than in the ordinary course of business; |
(xv) | grant, modify or terminate any material rights or entering into any agreement relating to material IP or doing or omitting to do anything to jeopardise the validity or enforceability of any material IP, including the non-payment of any application, search, maintenance or other official fees; |
(xvi) | fail to pay any premium in respect of any its insurance policies which are required to be paid to continue such policy of insurance or otherwise reduce the level of cover provided; |
(xvii) | institute or settle any legal proceedings where the amount claimed exceeds US$[***] (except for debt collection in the normal course of business); |
(xviii) | fail to renew or, when due, pay the premium in respect of any material insurance policy which relates to a Group Company; |
(xix) | declare, make or pay any dividend or other distribution; |
(xx) | create, allot or issue any shares, loan capital or other securities; |
(xxi) | create, issue, redeem or grant any option or right to subscribe in respect of any share or loan capital or other securities; |
(xxii) | amend its articles of association, by-laws or equivalent constitutional documents, adopting further articles of association, by-laws or equivalent constitutional documents or passing resolutions which are inconsistent with them except as required by applicable law; |
(i) | make any change to the material basis, accounting methods, accounting procedures, policies, reference dates or treatment by reference or practice to which its accounts or other financial statements are prepared (or request a Tax Authority to make such changes); |
(ii) | changing its residence for Tax purposes and/or creating a permanent establishment and/or any taxable presence in any jurisdiction outside its jurisdiction of incorporation; |
(iii) | amending, retracting or re-submitting any Tax return which has previously |
16
been submitted to a Tax Authority (other than at the request of a Tax Authority or to correct errors in such return), or amending, disclaiming or revoking any Tax refund or relief or any claim, surrender or election relating to Tax which has previously been received or submitted or notified to any Tax Authority or otherwise given effect pursuant to applicable law (save where such amendment, disclaimer or revocation is at the request of a Tax Authority or in order to correct an error or will not give rise to any Tax liability for a Group Company);
(iv) | settle, compromise, agree or materially negotiate any liability, audit, enquiry, assessment, dispute or litigation relating to Tax with any Tax Authority, entering into any closing agreement or similar agreement with any Tax Authority in each case on terms which impose obligations or restrictions on a Group Company after Completion in respect of Tax (other than solely in relation to the the payment of a Tax liability pursuant to such settlement); |
(v) | consenting to any extension or waiver of a limitation period relating to Tax, outside of the ordinary course on a basis materially inconsistent with past practice; or |
(vi) | taking any steps or other action (including making any admission to a Tax Authority) which is inconsistent with past practice which could materially increase any liability to Tax and/or could result in any material liability to Tax arising (or being deemed to arise) or any adverse terms or conditions or other material obligations being imposed upon any Group Company after Completion rather before Completion, other than as required to comply with any applicable laws or generally accepted practice; |
(b) | not, and shall procure that IPEL shall not, do or agree to: |
(i) | modify or terminate any of the Transaction Documents; |
(ii) | deal with its interest in the IP (and applications for IP) which are the subject of the Licence Agreement where the same would have an adverse effect on the rights granted to the Purchaser pursuant to the Licence Agreement; |
(iii) | except as contemplated in and/or to comply with an Acquisition Document, make any variation to the terms and conditions of employment of, or (other than for cause) dismiss or terminate the employment of, any employee who is listed as an employee in the BTA (other than annual salary and benefit increases in the ordinary course of business) ; or |
(iv) | modify or terminate (other than expiration or termination by a counterparty) any terms of any material contract which is being assigned pursuant the BTA; and |
(c) | shall procure that Intercept Pharmaceuticals UK & Ireland Ltd shall enforce its rights pursuant to the BTA in the best interests of Intercept Pharmaceuticals UK & Ireland Ltd. |
5.2 | Clause 5.1 shall not apply in respect of anything done or to be done pursuant to an Acquisition Document, in order to give effect to an Acquisition Document and/or to the extent required in connection with: |
(a) | electing for patent box treatment and/or capitalising research and development costs for IPEL; |
17
(b) | the settlement (on a full and final basis) of the CEPS Matter for an amount less than or equal to the CEPS Base Amount; |
(c) | settlement (on a full and final basis) of any claim from any employee in respect of any matter which has been Disclosed; |
(d) | the transfer of a Canadian marketing agreement and Spanish filings solely to reflect the removal of [***] as a director of the Spanish target; |
(e) | anything which is required to be done (or not done) in order to comply with any applicable law or regulation; and |
(f) | anything which is required to be done (or not done) in order for Seller to comply with any binding obligations under any indenture and security agreements relating to Seller’s bond debt. |
5.3 | Subject to clause 5.4, from the date of this agreement until Completion the Seller shall procure that the Purchaser and its Agents shall be allowed: |
(i) | reasonable access to, and to take copies of (at the Purchaser’s sole expense), the books, records and documents of or relating in whole or in part to the Group; and |
(ii) | reasonable access to the directors and employees of the Group (who shall be instructed to assist Purchaser or any of the Purchaser’s Agents with any such reasonable request ). |
5.4 | Any access granted pursuant to clause 5.3 shall only be permitted: |
(i) | within normal working hours and on reasonable prior notice having been provided to the Seller; |
(ii) | to the extent reasonably required by the Purchaser to plan for the integration of the Group into the Purchaser’s Group; and |
(iii) | provided that access shall not give the Purchaser or its Agents any right to give instructions or otherwise interfere with the management and conduct of any Group Company and is otherwise subject to the legal, regulatory and compliance obligations of the Group Companies. |
5.5 | Any request for consent for any matter pursuant to clause 5.1 shall be sent by email to [***] and [***]. The Purchaser shall respond as soon as is reasonably practicable. If no response is received within five Business Days of such request, then consent shall be deemed to have been given. |
5.6 | Prior to Completion the Seller shall procure that the employment of each of [***] and [***] are transferred to an entity other than a Group Company with effect from a time on or prior to Completion in such a manner and on terms that the relevant Group Company shall have no liability arising out of such transfer. |
5.7 | Not later than 3 Business Days prior to Completion the Seller shall procure that any amounts which would otherwise constitute Intra Group Debt are settled in cash prior to Completion and to therefore reduce the amount of any Intra Group Debt in existence at Completion and such settlement shall be on terms such that there is no additional liability for any Group Company other than to repay the amount of any Intra Group Debt. The Seller shall provide to the |
18
Purchaser details of the proposed steps to be taken to enable such Intra Group Debt to be settled. To the extent that any steps require the issue of shares by any Group Company then for the avoidance of doubt such shares issued shall constitute “Shares” for the purpose of this agreement.
6. | SIGNING OBLIGATIONS |
On the date hereof, immediately after signing this agreement:
6.1 | the Seller shall procure that there are delivered to the Purchaser: |
(a) | the Transitional Services Agreement executed by the Seller; |
(b) | the Licence Agreement, duly executed by Intercept Pharmaceuticals Europe Ltd.; |
(c) | the Supply Agreement duly executed by Intercept Pharmaceuticals Europe Ltd.; |
(d) | the SDEA, signed by or on behalf of Intercept Pharmaceuticals, Inc.; |
(e) | the BTA duly executed by Intercept Pharmaceuticals Europe Ltd; and |
(f) | the Trademark Assignment duly executed by the Seller |
6.2 | the Purchaser shall procure that there are delivered to the Seller duly executed counterparts of each of the agreements referred to in clauses 6.1(a) to 6.1(e) (inclusive). |
7. | COMPLETION |
7.1 | Completion arrangements |
Completion of the sale and purchase of the Shares shall take place on the Completion Date at such place or in such manner as shall be agreed by the parties.
7.2 | Completion actions |
On Completion:
(a)the Seller shall:
a) | deliver, or procure the delivery of, the documents set out in part 1 of schedule 4 to the Purchaser; and |
b) | comply, or procure compliance, with the obligations set out in that part; and |
(b)the Purchaser shall:
a) | deliver, or procure the delivery of, the documents set out in part 2 of schedule 4 to the Seller; and |
b) | comply, or procure compliance, with the obligations set out in that part. |
19
7.3 | Non-compliance |
If, on the Completion Date, any party does not comply with its obligations under clause 7.2 in any material respect, then the Seller (in the case of the Purchaser's non-compliance) or the Purchaser (in the case of the Seller's non-compliance) may by notice to the other:
(a) | proceed to Completion to the extent reasonably practicable; |
(b) | postpone Completion to another date not less than two (2) nor more than five (5) Business Days after the Completion Date (so that the provisions of this clause 7 (other than this clause 7.3(b)) shall apply as if that later date is the Completion Date); or |
(c) | subject to Completion having first been postponed in accordance with clause 7.3(b), terminate this agreement. |
7.4 | Effect of termination |
If this agreement is terminated pursuant to clause 7.3(c), then each party's further rights, obligations and liabilities under this agreement shall cease immediately on termination, except for:
(a) | each party's accrued rights (including the right to claim any remedy for breach or non-performance), obligations and liabilities as at the date of termination; and |
(b) | each party's continuing rights, obligations and liabilities under this clause 7.4 and clauses 1 (Definitions and interpretation), 13 (Confidentiality and announcements), 16 (Assignment and successors), 17 (Third party rights), 18 (Costs and expenses), 19 (Payments, etc), 21 (Entire agreement), 22.1 (Severance), 22.2 (Variation), 22.3 (Waiver), 22.4 (Cumulative remedies), 22.5 (Counterparts), 23 (Notices), 24 (Agent for service) and 25 (Governing law and language). |
To the extent lawful and except as stated in clause 7.3(c) or in the case of fraud or fraudulent concealment, no party shall have any right to rescind or terminate this agreement or to treat it as having been terminated (whether before or after Completion).
8. | PURCHASER WARRANTIES |
Purchaser warranties
The Purchaser warrants to the Seller as at the date of this agreement that:
(a) | it is validly existing and is a company duly incorporated and registered under the law of its jurisdiction of incorporation; |
(b) | it has the legal right, full power and authority and all necessary consents and authorisations to enter into and perform its obligations under this agreement and each other Acquisition Document to which it is or will be party; |
(c) | this agreement and each other Acquisition Document to which it is or will be party constitutes, or will when executed constitute, legal, valid and binding obligations on it and will be enforceable in accordance with their respective terms (assuming that each such Acquisition Document has been properly executed by the other parties to it and that their entry into it has been duly authorised); |
20
(d) | the entry into and performance of its obligations under this agreement and each other Acquisition Document will not: |
a) | conflict with or breach any provision of its constitutional documents; |
b) | breach any agreement or instrument to which it is a party or by which it is bound and which is material in the context of the Acquisition; |
c) | conflict with or breach any applicable law or any requirement of any Authority to which it is subject or submits which is material in the context of the Acquisition; or |
d) | require the consent, approval or authorisation of any Authority; |
(e) | it is not insolvent under the law of its jurisdiction of incorporation or of any jurisdiction in which it carries on business, and it is not unable to pay its debts as they fall due, nor has it stopped paying its debts as they fall due; |
(f) | no arrangement or compromise has been made by it with its creditors; |
(g) | so far as it is aware, no insolvency proceedings have been commenced or applied for, nor has any liquidator, receiver or similar officer been appointed, in relation to it or any of its assets; and |
(h) | no resolution has been passed, proceedings commenced or order made for its winding-up or any other reorganisation or restructuring. |
9. | SELLER WARRANTIES |
9.1 | Warranties |
The Seller warrants to the Purchaser that, save as Disclosed, each of the statements set out in schedule 2 are true and accurate as at the date of this agreement and, in the case of the Key Warranties only, will be true and accurate at Completion.
9.2 | Separate and independent |
Each of the Warranties is separate and independent.
9.3 | Knowledge or awareness |
Any Warranty qualified by a reference (however expressed) to the knowledge or awareness of the Seller shall be limited to the actual knowledge or awareness of the following persons in column (1) of the table below in relation to the Warranties set out in column (2) of the table below:
Warranties | Persons |
All | [***] (Assistant Corporate Secretary), [***] (VP, Legal Affairs), [***] (General Counsel), [***] (Chief Financial Officer) and [***] (Corporate Counsel) |
21
6 (Accounts), 7 (Period since Accounts Date), 8 (Funding), 9 (Grants and state aid), 10 (Assets), 11 (Debtors), 19 (Guarantees, etc) | [***] (Chief Accounting Officer & Treasurer) and [***] (Executive Director, Finance) |
12 (Real property) | [***] (Head/Director, Global Facilities) |
14 (IP) | [***] (VP, Chief Intellectual Property Counsel) |
15 (Regulatory) | [***] (SVP, Regulatory Affairs) |
16 (IT Systems) | [***] (VP, Global Information Technology) and [***] (Director, IT Business Partner, International) |
17 (Data protection), 18 (Confidential information), 23 (Licences), 30 (Compliance with laws), 31 (Anti-Bribery and Improper Payment) | [***] (Global Chief Compliance and Privacy Officer) |
20 (Key contracts), 21 (Terms of Trade), 22 (Product), 35 (BTA) | [***] (Director and SVP, Commercial), [***] (Chief Commercial Officer) and [***] (Regional VP Iberia, France and Markets Expansion), [***] (SVP, Medical Affairs, Safety & Pharmacovigilance) and [***] (President of Research & Development; Chief Medical Officer), [***] (Head of Medical Affairs, INTL), [***] (Chief Quality Officer; SVP, Operations), [***] (VP, Product Development), [***] (Director, Global Supply Chain Planning) |
25 (Employees and terms of employment), 26 (Senior Employees), 27 (Trade unions, etc), 28 (Employment disputes), 29 (Pension obligations) | [***] (Chief Human Resources Officer) and [***] (VP, Head of HR, International Region) |
34 (Tax) | [***] (VP Tax and Treasury) |
9.4 | No rights against the Group Companies, etc |
Save in the case of fraud or deliberate misstatement, misconduct or concealment, the Seller undertakes to the Purchaser that each of it and each member of the Seller’s Group (and each of their respective directors, officers and employees) has no rights against (and waive any rights it may have against) and shall not make any claim against:
(a) | any of the Group Companies; or |
(b) | (save in the case of fraud or fraudulent concealment) any current director, officer or employee of any Group Company. |
other than any claim which may arise after Completion pursuant to any of the Transaction Documents, any amounts due pursuant to the VAT Group arrangements or any amounts due in respect of any Intra Group Debt which remains outstanding at Completion.
22
10. | SELLER LIMITATIONS |
10.1 | Financial cap |
The aggregate liability of the Seller for all Warranty Claims and Tax Covenant Claims except for any Key Warranty Claim , including interest and costs, shall not exceed US$1. The aggregate liability of the Seller and each other member of the Seller Group in respect of all claims pursuant to this agreement and all other Acquisition Documents shall not exceed US$405,000,000.
10.2 | Time limits |
(a) | The Seller shall not be liable for any Warranty Claim or Tax Covenant Claim unless the Purchaser has given notice of such Warranty Claim or Tax Covenant Claim to the Seller on or before the date specified against that type of Warranty Claim or Tax Covenant Claim below: |
Claim relating to: | Time limit: |
|---|---|
Key Warranties | Two years from Completion |
Tax Warranties and Covenant Claims | Seven years from Completion |
Any other Warranty | One year from Completion |
10.3 | Information and knowledge |
The Seller shall not be liable for any Warranty Claim to the extent that the matter giving rise to it:
(a) | has been Disclosed; or |
(b) | was, at the date of this agreement, known by the Purchaser Relevant Persons and which it was reasonable for the Purchaser Relevant Persons to know could give rise to a Warranty Claim. |
10.4 | Completion Statements |
The Seller shall not be liable for any Warranty Claim if and to the extent that the matter giving rise to it has been specifically provided for in the Completion Statements.
10.5 | Insurance |
The Seller shall not be liable for any Warranty Claim if and to the extent that the loss, liability or damage to which it relates is recovered by the Purchaser Group under any insurance policy, including, without limitation, the W&I Policy.
10.6 | Other exclusions |
The Seller shall not be liable for any Warranty Claim to the extent that it arises from or is otherwise attributable to, or the amount of such Warranty Claim is increased as a result of any new or amended legislation, law or administrative or regulatory practice, or any change in the
23
generally accepted interpretation or application of any legislation or law, in each case taking effect after Completion.
10.7 | Non-application of limitations |
Nothing in clauses 10.1 to 10.6 (inclusive) and clause 10.10 shall operate to exclude or limit the liability of the Seller in relation to any Claim that arises as a result of the fraud of the Seller.
10.8 | No double recovery |
Any payment made by the Seller in respect of any Claim shall satisfy and discharge any other Claim which is capable of being made against the Seller in respect of the same loss, but only to the extent of the payment made.
10.9 | Claim to be reduction of Consideration |
Any payment by the Seller in respect of any Claim shall, to the extent legally possible, be deemed to reduce the Consideration received by the Seller.
10.10 | W&I Policy |
Notwithstanding any provision to the contrary in this agreement:
a) | the parties acknowledge that the Purchaser has the benefit of the W&I Policy which provides (conditional on Completion) insurance coverage in respect of Warranty Claims and Tax Covenant Claims; |
b) | the Purchaser shall procure that the W&I Policy contains terms to the effect that the insurer shall be subrogated to (or may require the Purchaser to assign to the insurer) all rights of recovery of the Purchaser or the Group, save that the insurer shall only be entitled to subrogate against the Seller if the loss arose in whole or part out of the Seller’s fraud or fraudulent misrepresentation; and |
c) | the Purchaser shall: |
i. | provide a certified copy of the W&I Policy to the Seller within five (5) Business Days of the date of this agreement; |
ii. | not agree to any amendment, variation, novation, assignment or waiver of the W&I Policy (or do anything which has a similar effect), where such amendment, variation, novation, assignment or waiver would have an adverse effect on the Seller, without the express prior written consent of the Seller; and |
iii. | without limitation to any right of the Seller to separately enforce such terms, use all reasonable endeavours to enforce any term in the W&I Policy under which the insurer waives its rights to take subrogated action against the Seller upon the terms set out in the W&I Policy; |
d) | the Purchaser acknowledges that there shall not be any excess or any other amount payable by the Seller under the W&I Policy. |
10.11 | The limitations of liability referred to in this clause 10 shall apply irrespective of whether or not the Purchaser has obtained, or will obtain, a W&I Policy, or any non-payment (including |
24
of premium) under or in respect of a W&I Policy, any expiry or termination of a W&I Policy for any reason whatsoever, insolvency of the insuring parties of a W&I Policy or if the W&I Policy is not otherwise effective or has not come into force or the Purchaser is unable to recover under a W&I Policy and the Purchaser’s sole recourse against the Seller for any Warranty Claims (except for any Key Warranty Claim) and Tax Covenant Claims shall be capped at $1.
11. | SELLER RESTRICTIVE COVENANTS |
11.1 | Employees |
(a) | The Seller shall not, and shall procure that the Seller Group shall not, for a period of three (3) years after the Completion Date, either for itself or jointly with or for any other person, directly or indirectly, solicit, employ or engage any person who was at Completion employed by any Group Company with an annual salary in excess of US$[***]. |
(b) | Nothing in clause (a) shall prohibit the Seller Group from employing any person who responds to a recruitment advertisement which is one directed at suitable candidates generally or whose employment with the Purchaser Group has ceased, provided that such response or cessation was not solicited or induced directly or indirectly by the Seller Group. |
11.2 | Competing businesses; customers and suppliers |
The Seller shall not, and shall procure that the Seller Group shall not, for a period of three (3) years after the Completion Date carry on any Competing Business.
11.3 | Permitted actions |
Nothing in clause 11.2 shall prohibit the Seller Group from:
(a) | holding up to five (5) per cent of the shares in any company listed or traded on any securities exchange; |
(b) | performing its obligations as a contractor of the Purchaser Group (including those under the Transitional Services Agreement, the Licence Agreement, the BTA and/or the Supply Agreement); |
(c) | manufacturing Product in any territory or marketing and/or selling Product outside of the Territory. |
11.4 | Acknowledgement |
The Seller agrees and acknowledges that the restrictions contained in this clause 11 are fair and reasonable, and necessary to assure to the Purchaser the full value and benefit of the Shares.
25
12. | PRE-SALE MERGER |
12.1 | The Seller shall procure that ownership of the entire issued share capital of the Italian Target is transferred at Completion to the Purchaser by Intercept Pharmaceuticals LLC. |
13. | CONFIDENTIALITY AND ANNOUNCEMENTS |
13.1 | Definitions |
In this clause 13:
(a) | "Announcements" means: |
(i) | the announcement to be issued by the Seller and the Purchaser on Completion, the form of which is to be agreed between the parties following singing of this agreement; and |
(ii) | the announcement in the Agreed Form to be issued by the Seller and the Purchaser following signing of this agreement. |
(b) | "discloser" means the person making the announcement or disclosing or using the information; and, for the purposes of clause 13.5(a), includes its group; and |
(c) | "Relevant Party" means (a) when the discloser is a member of the Purchaser Group, the Seller; or (b) when the discloser is a member of the Seller Group, the Purchaser. |
13.2 | Announcements |
Other than the Announcement and as permitted under clause 13.4, no party shall, and each party shall procure that its group shall not, at any time issue, or procure the issue of, any press release, circular or other publicity relating to the existence or provisions of this agreement or any other Acquisition Document or the sale and purchase of the Shares except as required by law (including United States securities laws).
13.3 | Transaction and parties' confidential information |
Other than as permitted under clause 13.4, each party shall, and shall procure that its group shall, at all times keep confidential:
(a) | the provisions and subject matter of, and the negotiations relating to, this agreement and any other Acquisition Document; and |
(b) | all confidential information of the other party or its group (in the case of the Purchaser, including the Group from Completion) received by it as a result of negotiating, entering into or performing this agreement, |
and shall use the information only for the purposes contemplated by this agreement or any other Acquisition Document.
26
13.4 | Permitted announcements and disclosures |
Clauses 13.2 and 13.3 shall not restrict the making of any announcement or the disclosure or use of information:
(a) | with the prior written consent of the Relevant Party, such consent not to be unreasonably withheld or delayed; |
(b) | to the extent required by any applicable law or any Authority or securities exchange, including, without limitation, the requirements of the Securities and Exchange Commission and Nasdaq Stock Exchange; or |
(c) | that is consistent in all material respects with the Announcement, or any other announcement issued in accordance with this clause 13.4. |
13.5 | Other permitted disclosures |
Clauses 13.2 and 13.3 shall not restrict the disclosure or use of information if and to the extent:
(a) | the information is or becomes publicly available (other than as a result of a breach by the discloser of any provision of this agreement); |
(b) | the information is independently developed after Completion; |
(c) | expressly required or permitted by, or required for or in connection with the performance by any party of its obligations under, this agreement or any other Acquisition Document; |
(d) | required for or in connection with the performance by the Seller Group of its obligations as a contractor of the Purchaser Group (including those under the Transitional Services Agreement, Supply Agreement, Licence Agreement) or otherwise for the benefit of the Purchaser Group; or |
(e) | disclosure is made on a strictly confidential and need to know basis by the discloser to: |
a) | its group or any of its or its group's officers, employees, consultants, agents, insurers, pension trustees, professional advisers, debt providers or auditors who are subject to confidentiality obligations; or |
b) | in the case of the Purchaser: |
i. | any member of the Purchaser Group; |
ii. | any entity within the Nordic Capital Sphere; |
iii. | any Fund which owns any interest in any group undertaking of the Purchaser in respect of which any member of its group is a general partner, manager, operator or investment adviser (in each case, whether solely or jointly with others); |
iv. | any Fund which has the same general partner, operator, manager or investment adviser as any Fund referred to in (iii) above; |
27
v. | any general partner, operator, manager or investment adviser to any Fund referred to in (iii) or ((iv) above; |
vi. | any group undertaking of any entity referred to in (iii), (iv or (v) above; |
vii. | any scheme under which certain officers, employees or partners of any group undertaking of any entity referred to in (iii), (iv) or (v) are entitled (as individuals or through a body corporate or any other vehicle) to acquire shares in companies in which any group undertaking of any entity referred to in (iii), (iv or (v) also invests, or any person (excluding natural persons) holding shares or other interests under such a scheme or entitled to the benefits of shares or other interests under such a scheme; and |
viii. | any director, employee or partner of any of the above. |
14. | CEPS MATTER |
14.1 | Subject to the finally resolved Relevant CEPS Amount exceeding the Base CEPS Amount, the Seller undertakes to the Purchaser that it shall, within 15 Business Days of a demand by the Purchaser, and subject to the Purchaser providing evidence of it having paid the same, pay to the Purchaser or the French Target or any Group Company designated by the Purchaser (on a Euro for Euro basis) |
(a) | an amount, equal to the Relevant CEPS Amount less the Base CEPS Amount (the “CEPS Reimbursement”); |
(b) | less the amount of any actual cash Tax benefit or saving for the Purchaser and/or any Group Company that it reasonably determines, acting in good faith, that part of the Relevant CEPS Amount as corresponds to the CEPS Reimbursement (including all reasonable costs and expenses determined in accordance with paragraph 14.1, (b)) is reasonably expected to give rise to at any time. |
14.2 | Subject to the finally resolved Relevant CEPS Amount being less than the Base CEPS Amount in Euros, the Purchaser undertakes to the Seller that it shall, within 15 Business Days of payment of the Relevant CEPS Amount, pay to the Seller (on a Euro for Euro basis): |
(a) | an amount equal to the Base CEPS Amount less the Relevant CEPS Amount (the “CEPS Reimbursement”); less |
(b) | all costs and expenses properly incurred by the Purchaser, the French Target or any Group Company in connection with the CEPS Matter. |
14.3 | The Purchaser shall, and shall procure that the Purchaser Group shall: |
(a) | consult with the Seller, and, consider in good faith all reasonably commercial actions as the Seller may reasonably request in writing to assess, defend, mitigate, settle or compromise the amount of the CEPS Reimbursement or to defend, mitigate or settle the CEPS Matter or to appeal against any judgment or other adjudication made in relation to the CEPS Matter; and |
(b) | otherwise, use all commercially reasonable endeavours to take reasonable steps required by the Seller to minimise its liability in relation to the CEPS Reimbursement. |
28
(c) | Not settle or agree the Relevant CEPS Amount with the French Authority, or appeal any determination thereof without the prior written consent of the Seller (not to be unreasonably withheld or delayed) |
14.4 | No member of the Purchaser Group shall be required to take any action or to omit to do anything pursuant to clause 14.3 (a) or (b) which, on a reasonable view, would have a material and adverse effect on the business, goodwill, standing or reputation, or to its relationship with customers, suppliers, employees, or Authorities with oversight of, or be materially onerous or prejudicial to, any Group Company or which might, in the reasonable opinion of the Purchaser, adversely impact the Purchaser Group’s relationship or future dealings with the French Authorities such that the sales or profitability of the Product in France might reasonably be expected to be adversely impacted to an extent which is material in the context of the amount of the CEPS Reimbursement. |
14.5 | Until such time as the CEPS Matter is finally resolved, the Purchaser shall procure that all material information, correspondence and other communication received or transmitted, sent or communicated by it or any Group Company in relation to the CEPS Matter is shared with the Seller as soon as is reasonably practicable and to the extent legally permissible. |
14.6 | For the purposes of this clause 14, “finally resolved” shall mean agreed in writing by the relevant Group Company or determined by a court of competent jurisdiction in respect of which (a) there is no right of appeal or (b) no appeal is launched within 60 days of such court’s determination. |
15. | GROUP SEPARATION MATTERS |
15.1 | Seller's access to information |
The Purchaser shall procure that:
(a) | all books of account, records, documents and information of any Group Company (in whatever form) relating to the period before Completion that are held by the Group ("Group Company Information") are preserved for seven (7) years from the Completion Date (or such longer period required by applicable laws); and |
(b) | (on giving reasonable notice to the Purchaser and subject to the Seller giving such undertakings as to confidentiality as the Purchaser shall reasonably require) the Seller Group and its representatives are permitted, during normal business hours, to have access to, and to take copies (at the Seller's expense) of, such Group Company Information as they reasonably require for Tax, accounting or insurance purposes, or to comply with any applicable law or requirement of any Authority or securities exchange. |
15.2 | Purchaser's access to information |
The Seller shall procure that:
(a) | all books of account, records, documents and information of any Group Company (in whatever form) relating to the period before Completion that are retained by the Seller Group ("Retained Information") are preserved for seven (7) years from the Completion Date (or such longer period required by applicable laws); and |
(b) | (on giving reasonable notice to the Seller) each Group Company and its representatives are permitted, during normal business hours, to have access to, and to take copies (at |
29
such Group Company's expense) of, its Retained Information as they reasonably require for Tax, accounting or insurance purposes, or to comply with any applicable law or requirement of any Authority or securities exchange.
15.3 | Intra-group guarantees given by Group Companies |
(a) | The Seller shall use all reasonable endeavours to procure the release of each Group Company from all guarantees, securities, indemnities, agreements or other commitments given by or binding on any Group Company in respect of any obligation or liability of the Seller Group ("Group Company Guarantees") as soon as reasonably practicable after Completion. |
(b) | The Seller shall indemnify the Purchaser and each Group Company against all liabilities, costs and expenses incurred (whether before or after Completion) under or in relation to the Group Company Guarantees. |
15.4 | Intra-group guarantees given by Seller Group |
The Purchaser acknowledges that with effect from Completion the Seller shall cease to provide collateral as security for the Seller Group Guarantees Facility. The Seller and the Purchaser shall cooperate with the aim that from Completion the letters of credit issued pursuant to the Seller Group Guarantees Facility shall remain in effect but the Seller shall not be under any obligation to provide any security for such facility post Completion.
15.5 | Insurance |
The Purchaser acknowledges and agrees with the Seller that, on and with effect from Completion:
(a) | all insurance coverage provided in relation to any Group Company pursuant to policies maintained by the Seller Group (each a "Seller Insurance Policy") shall cease; and |
(b) | it shall be the sole responsibility of the Purchaser to ensure that adequate insurance policies are put in place for each Group Company. |
15.6 | Canadian Marketing Authorisation |
Within 15 Business Days of the date of this Agreement the Seller shall apply for the transfer of the Canadian Marketing Authorisation from the Seller to the Canadian Target.
15.7 | Websites |
The Seller shall procure that on or promptly following Completion it takes the relevant action (including execution of relevant documents) to apply to transfer registration of the Marketing Websites to the Purchaser or such member of the Purchaser Group as it may direct.
15.8 | VAT Group |
(a) | The Purchaser acknowledges that prior to Completion the Seller may make an application for the Irish Target to retrospectively join the VAT Group and to the extent such application remains outstanding at Completion shall, subject to the Seller providing reasonable details of the Seller’s and its advisers’ analysis regarding there being no adverse consequences for the Purchaser and any Group Company and reasonably consulting with the Purchaser thereon, provide the Seller with such |
30
reasonable assistance (at the Seller’s cost) as may be requested (including the signing of relevant documents) in connection with such application.
(b) | The Seller and (to the extent relevant) the Purchaser agree to take all reasonable steps to procure that each relevant Group Company is removed from the VAT Group with effect from not later than the Completion Date, and to provide all reasonable co-operation and assistance (including, to the extent relevant and without limitation, the giving of consents and making of elections) to each other in respect of such removal. |
(c) | The Purchaser shall procure that each relevant Group Company provides such information and assistance to the Representative Member that is reasonably necessary to enable the Representative Member to make the returns and provide the information required for VAT purposes in respect of the period for which such Group Company was a member of the VAT Group. |
(d) | The Purchaser shall pay, or shall procure that there is paid, to the Representative Member (on behalf of each relevant Group Company) an amount (if any) equal to any VAT for which the Representative Member is accountable that is properly attributable to Supplies made by a Group Company while a member of the VAT Group less the amount of deductible input tax that is properly attributable to those Supplies. |
(e) | Such payment shall be made in cleared funds no later than the date which is the later of the date ten Business Days after the Purchaser receives a demand for payment from the Seller or the Representative Member and two Business Days before the first date on which the VAT in question is payable to the relevant Tax Authority in order to avoid any related interest or penalty. No payment shall be required under this clause 14.6(c) to the extent that the relevant Group Company made a payment in respect of such VAT to the Representative Member already on or before Completion. |
(f) | In relation to any pre-Completion period, the Seller shall pay, or shall procure that there is paid, to the Purchaser (on behalf of each relevant Group Company) an amount (if any) equal to any repayment of VAT received by the Representative Member or any credit obtained by the Representative Member (in either case) by reference to an excess of: |
i. | any deductible input VAT attributable to Supplies to each such Group Company during the pre-Completion period while a member of such VAT Group; over |
ii. | output VAT attributable to Supplies made by such relevant Group Company during the pre-Completion period while a member of the relevant VAT Group, |
to the extent that such repayment or credit has been taken into account as an asset (or reduction in a liability) in the Actual Working Capital in the Completion Statements, such payment to be made in cleared funds as soon as reasonably practicable following receipt of the relevant repayment by, or set off of the relevant credit against a liability of, the Representative Member. No payment shall be due under this clause 14.6(d) to the extent payment in respect of the relevant repayment or credit has been made already by the Representative Member on or before Completion. The Purchaser shall provide such information in respect of output VAT and deductible input VAT of any Group Company (which is relevant either to this clause 14.6(d) or clause 14.6(e)), to the extent that such information is in the possession or control of the Purchaser or the relevant Group Company, as may be required for the Representative Member to make the returns and provide the information required to be provided by it for VAT purposes.
31
(g) | In relation to any post-Completion period, the Seller shall pay, or shall procure that there is paid, to the Purchaser (on behalf of each relevant Group Company which is a member of the VAT Group) an amount (if any) equal to any repayment of VAT received by the Representative Member or any credit obtained by the Representative Member by reference to an excess of: |
a) | any deductible input VAT attributable to Supplies to each such Group Company during the post-Completion period while a member of such VAT Group; over |
b) | output VAT attributable to Supplies made by such relevant Group Company during the post-Completion period while a member of the relevant VAT Group, |
such payment to be made in cleared funds as soon as reasonably practicable following receipt of the relevant repayment by, or set off of the relevant credit against a liability of, the Representative Member.
15.9 | For the purposes of clause 15.6: |
(a) | “Representative Member” means Intercept Pharma Europe Ltd. |
(b) | “Supplies” means any supply, acquisition or importation; |
(c) | “VAT Group” means the UK VAT group having registration number GB 626 8036 35, the representative member of which is the Representative Member at the date hereof. |
15.10 | Tax Matters |
Following signature of this agreement the Seller shall, in conjunction with its third party advisers, prepare for delivery to the Purchaser a file of historic information relating to the tax affairs (including without limitation the tax losses and a breakdown of such losses and reasonable evidence of the same) of the Group Companies and shall liaise with the Purchaser to agree the scope of such information with the intent that such file will include the relevant information in reasonable detail to be provided to any Tax Authority in support of any filings made or to be made in respect of any period prior to Completion.
16. | ASSIGNMENT AND SUCCESSORS |
16.1 | No person shall assign, transfer, charge or otherwise deal with all or any of its benefits, rights or obligations under this agreement, or grant, declare, create or dispose of any right or interest in this agreement, without the prior written consent of the Seller and the Purchaser (such consent not to be unreasonably withheld or delayed). |
16.2 | The Purchaser and any permitted assignee under this clause 16.2 may assign all or any of its benefits or rights under this agreement to the Purchaser Group. |
16.3 | If the Purchaser assigns any of its benefits or rights under this agreement as permitted by this clause 16, then the liability of the Seller to the assignee shall not be greater than it would have been had such assignment not taken place, and all the benefits, rights and protections afforded to the Seller shall continue to apply for the benefit of the Seller as against the assignee as they would have applied as against the Purchaser. |
32
16.4 | This agreement shall be binding on and continue for the benefit of the successors and permitted assignees of each party. |
17. | THIRD PARTY RIGHTS |
17.1 | Each member of the Seller Group which is party to an Acquisition Document shall have the right to enforce clause 10.1 as if a party to this agreement. No other person who is not a party to this agreement shall not have any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms. This clause does not affect any right or remedy of any person which exists or is available otherwise than pursuant to that Act. |
17.2 | The parties may, without the consent of the Seller Group (other than the Seller) rescind or vary this agreement in such a way as to extinguish or alter the benefits or rights conferred by clause 17.1 |
18. | COSTS AND EXPENSES |
18.1 | The Purchaser shall pay any notarial fees and costs, any registration fees and any stamp duty or other similar transfer tax payable in connection with this agreement or its execution or on or in respect of the transfer of the Shares. |
18.2 | Unless otherwise expressly provided in this agreement, each party shall bear its own costs, charges and expenses incurred in relation to the preparation, negotiation, execution and implementation of this agreement. |
19. | PAYMENTS, ETC |
19.1 | In this clause 19, "Payment Account" means: |
(a) | if the relevant payment is to be made to the Seller, the account of the Seller notified to the Purchaser for this purpose not less than three (3) Business Days before the date such payment is due and any payment so made will constitute a good, effective and complete discharge of the Purchaser’s obligation to make that payment, in an amount not exceeding the amount of the payment which is made; |
(b) | if the relevant payment is to be made to the Purchaser, the account of the Purchaser notified to the Seller for this purpose not less than three (3) Business Days before the date such payment is due. |
19.2 | Any payment to be made to the Seller or the Purchaser under this agreement shall be made in US dollars by transfer of immediately available funds for same day value to the Payment Account. |
19.3 | Each party shall pay, and shall procure that its group pays, all amounts due under this agreement in full, without any set-off, counterclaim, deduction or withholding, except to the extent required by applicable laws. Any such deduction or withholding which is required by law shall not exceed the minimum amount required by law, and (apart from in relation to the Consideration and any interest) the payer shall be obliged to simultaneously pay to the payee such sum as will after such deduction or withholding has been made leave the payee with the same amount as it would have been entitled to receive in the absence of any such requirement to make a deduction or withholding.. If any additional amount is paid under this clause 18.3 by virtue of any deduction or withholding and the payee receives a Tax credit, repayment or other benefit by reason of such deduction or withholding, the payee shall repay to the payer an |
33
amount equal to the lesser of that Tax credit, repayment or other benefit and the additional amount paid under this clause 19.3.
19.4 | To the extent that any payment (excluding in relation to the Consideration and any interest) pursuant to any indemnity or covenant to pay in this agreement is subject to a charge to Tax in the hands of the payee, the payer shall simultaneously pay to the payee such sum as will ensure that after payment of any Tax charged on such sum in the hands of the payee, the payee shall be left with a sum equal to the sum that it would have received in the absence of such a charge to Tax. |
19.5 | For the purposes of clause 19.4, if a payment would have been charged or subject to Tax in the hands of a payee but for the availability of any Relief (other than an exemption), the payee shall be deemed to have been subject to Tax. |
19.6 | Unless otherwise expressly provided in this agreement, if any amount payable under this agreement is not paid by the due date for payment, then interest shall also be paid on that amount from (and including) the due date for payment to (but excluding) the date it is paid (whether before or after judgment) at the base rate of the Bank of England plus 5% accruing on a daily basis, and compounded monthly. |
20. | FURTHER ASSURANCE |
Each party shall from time to time, so far as it is reasonably able, do (or procure to be done) all such other things and/or execute and deliver (or procure to be executed and delivered) all such other documents as may be reasonably requested of it (at the requesting party's expense) to give effect to this agreement and the Acquisition Documents.
21. | ENTIRE AGREEMENT |
21.1 | In this clause 21, "Statement" means representation, warranty, statement or assurance (whether contractual or otherwise). |
21.2 | The Acquisition Documents (as varied in accordance with their terms) constitute the entire agreement and understanding between the parties in connection with the transactions contemplated by the Acquisition Documents. Accordingly, they supersede and extinguish all previous agreements, arrangements and understandings between, and (except to the extent incorporated in the Acquisition Documents) all Statements given by, the parties in connection with such transactions. |
21.3 | Each party acknowledges that it has not relied on, or been induced to enter into any Acquisition Document by, any Statement given by any person (whether a party to this agreement or not) that is not incorporated in any Acquisition Document. |
21.4 | No party shall be liable in equity, contract or tort, under the Misrepresentation Act 1967 or in any other way for any Statement that is not incorporated in any Acquisition Document. |
21.5 | No party shall be liable in tort or under the Misrepresentation Act 1967 for any Statement that is incorporated in any Acquisition Document. |
21.6 | This clause 21 shall not exclude or limit any liability or remedy arising as a result of any fraud. |
34
22. | GENERAL |
22.1 | Severance |
If any provision of this agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any relevant jurisdiction, that shall not affect or impair the legality, validity or enforceability of (a) any other provision of this agreement in that jurisdiction; or (b) that provision or any other provision of this agreement in any other relevant jurisdiction. If any illegal, invalid or unenforceable provision of this agreement would be legal, valid and enforceable if some part or parts of it were modified, such provision shall apply with whatever modification is necessary so that it is legal, valid and enforceable and gives effect to the commercial intention of the parties.
22.2 | Variation |
No variation of this agreement shall be valid unless it is in writing and signed by or on behalf of the Seller and the Purchaser.
22.3 | Waiver |
Any waiver of any right or remedy under or in respect of this agreement shall only be valid if it is in writing, and shall apply only to the person to whom it is addressed and in the specific circumstances for which it is given. Unless otherwise expressly provided in this agreement, no right or remedy under or in respect of this agreement shall be precluded, waived or impaired by (a) any failure to exercise or delay in exercising it; (b) any single or partial exercise of it; (c) any earlier waiver of it, whether in whole or in part; or (d) any failure to exercise, delay in exercising, single or partial exercise of or earlier waiver of any other such right or remedy.
22.4 | Cumulative remedies |
Unless otherwise expressly provided in this agreement, the rights and remedies under this agreement are in addition to, and do not exclude, any rights or remedies provided by law.
22.5 | Counterparts |
This agreement may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until each party has executed at least one counterpart. Each counterpart shall constitute an original of this agreement, but all the counterparts shall together constitute one and the same agreement. A signed copy of this agreement delivered by 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.
22.6 | Effect of Completion |
Each provision of this agreement (other than any obligation which is fully performed at Completion) shall remain in full force and effect after Completion.
35
23. | NOTICES |
23.1 | Interpretation |
In this clause 23 any reference to a time is to the local time in the place at or to which the Notice is delivered or sent.
23.2 | Form and method of giving Notice |
Any notice or other communication to be given or made under or in connection with this agreement ("Notice") shall be in writing in English, sent to the relevant party at the postal or email address and for the attention of the person specified in clause 23.3, and may be delivered:
(a) | by hand or by courier (using an internationally recognised courier company); |
(b) | by prepaid recorded delivery post or equivalent if the Notice is to be received in the same country from which it is sent; or |
(c) | by email, provided that the sender must deliver a copy of such Notice to the recipient otherwise than by email by 5.00 pm on the fifth Business Day after the date on which the original Notice is deemed to have been given in accordance with clause 23.4(b). Failure by the sender to deliver such copy Notice to the recipient shall not invalidate the original Notice or delay the time such Notice is deemed given under clause 23.4(b). |
23.3 | Contact details for Notices |
The postal and email addresses and relevant contacts of the parties for the purposes of clause 23.2 are:
Seller: Intercept Pharmaceuticals, Inc. | |
For the attention of: General Counsel | |
Address: 305 Madison Avenue, Morristown, New Jersey 07960 | |
Email: [***] with a copy by email to [***] | |
Purchaser: Mercury Pharma Group Limited | |
For the attention of: The General Counsel | |
Address: Capital House, 85 King William Street, London, EC4N 7BL | |
Email: [***] with a copy by email to [***] | |
or, in each case, such other postal or email address or contact in the UK as a party may notify to the other for this purpose in accordance with this clause 23. Notice of any change shall be
36
effective five Business Days after the date on which it is deemed to have been given in accordance with this clause 23, or such later date as may be specified in the Notice.
23.4 | Time Notice is given |
Any Notice which has been delivered in accordance with clause 23.2 shall be deemed to have been given:
(a) | if delivered by hand, by courier or by post, at the time of delivery; or |
(b) | if sent by email, at the time the email is sent, provided that no automated message is received stating that the email has not been delivered. |
However if any Notice would be deemed to have been given after 5.00 pm on a Business Day and before 9.00 am on the next Business Day, such Notice shall be deemed to have been given at 9.00 am on the second of such Business Days.
23.5 | Service of process |
clause 23 shall not apply to the service of process in any legal action or proceedings relating to any Dispute.
24. | AGENT FOR SERVICE |
24.1 | In this clause 24, "Agent" means Intercept Pharma Europe Ltd. (or any substitute agent appointed pursuant to clause 24.5). |
24.2 | Subject to clause 24.5, the Seller irrevocably appoints the Agent as its agent in England and Wales for service of process in any legal action or proceedings relating to any Dispute. The Seller irrevocably agrees that any such process shall be effectively served on it if served on the Agent in accordance with this clause (whether or not such process is then forwarded to or received by the Seller). |
24.3 | All process to be served on the Agent shall be sent to: |
Qauyseco Limited | |
For the attention of: The Company Secretary of Intercept | |
Address: One, Glass | |
with a copy, by email | |
or such other name, postal or email address or contact as may be notified pursuant to clause 24.4 or 24.5(b).
37
24.4 | The Seller shall notify the Purchaser immediately of any change to the Agent's postal or email address or relevant contact. |
24.5 | If, for any reason, the Agent ceases to be able to act as agent or no longer has a postal address in the UK, the Seller shall immediately: |
(a) | (subject to this clause 24.5) irrevocably appoint a substitute agent with a postal address in the UK; and |
(b) | notify the Purchaser of the name, postal and email addresses and relevant contact (when appropriate) of the substitute agent. |
Such appointment and notice shall be effective five Business Days after the date on which the notice given pursuant to clause 24.5(b) is deemed to have been given in accordance with clause 23.
25. | GOVERNING LAW AND LANGUAGE |
25.1 | This agreement and any Dispute are governed by and shall be construed in accordance with English law. |
25.2 | Each party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any Dispute. |
25.3 | Each party irrevocably agrees that the courts of England and Wales are the most appropriate and convenient courts to settle Disputes and, accordingly, will not argue to the contrary. Further, each party irrevocably agrees that a judgment in any legal action or proceedings brought in the courts of England and Wales in relation to a Dispute shall be conclusive and binding on it and may be enforced in the courts of any other jurisdiction. |
25.4 | Each party irrevocably agrees that any process in any legal action or proceedings relating to any Dispute may be served on it in accordance with the provisions of clause 23 (Notices). |
25.5 | Nothing in this agreement shall affect the right of any party to serve any process in any legal action or proceedings relating to any Dispute in any other manner permitted by law. |
38
SCHEDULE 1: WARRANTED INFORMATION
Part 1: The Group Companies
1. | Austria |
Company name: | Intercept Pharma Austria GmbH | |
Registered number: | FN 433322 p | |
Date of incorporation: | 29 April 2015 | |
Place of incorporation: | Vienna, Austria | |
Registered office: | Fleischmarkt 1/6/12, A-1010 Vienna, Austria | |
Issued share capital: | Class: | Number of shares: |
Ordinary shares of EUR 35,000 | One | |
Directors: | [***] | |
Secretary: | None | |
Shareholder: | Name: | Number and class of shares: |
The Seller | One ordinary share of EUR 35,000 | |
39
2. | Canada |
Company name: | Intercept Pharma Canada Inc. | |
Registered number: | BC1040261 | |
Date of incorporation: | 18 June 2015 | |
Place of incorporation: | British Columbia, Canada | |
Registered office: | Suite 2300, Bentall 5, 550 Burrard Street, Vancouver BC V6C 2B5, Canada | |
Issued share capital: | Class: | Number of shares: |
Common shares without par value | 1,000 | |
Director: | [***] | |
Secretary: | [***] | |
Shareholder: | Name: | Number and class of shares: |
The Seller | 1,000 common shares without par value | |
40
3. | France |
Company name: | Intercept Pharma France SAS | |
Registered number: | 814 555 173 RCS Paris | |
Date of incorporation: | 18 November 2015 | |
Place of incorporation: | Paris, France | |
Registered office: | 19 boulevard Malesherbes, 75008 Paris, France | |
Issued share capital: | Class: | Number of shares: |
Ordinary shares of EUR 1.00 | 20,000 | |
Legal Representatives: | [***] | |
Secretary: | N/A | |
Shareholder: | Name: Intercept Pharmaceuticals Inc. | Number and class of shares: |
The Seller | 20,000 ordinary shares of EUR 1.00 | |
41
4. | Germany |
Company name: | Intercept Pharma Deutschland GmbH | |
Registered number: | HRB 218597 | |
Date of incorporation: | 19 May 2015 | |
Place of incorporation: | Munich, Germany | |
Registered office: | Rosenheimer Straße 52, 81669 Munich, Germany | |
Issued share capital: | Class: | Number of shares: |
Ordinary shares of EUR 1.00 | 25,000 | |
Directors (Geschäftsführer): | [***] | |
Secretary: | None | |
Shareholder: | Name: | Number and class of shares: |
The Seller | 25,000 ordinary shares of EUR 1.00 | |
42
5. | Ireland |
Company name: | Intercept Pharma International Limited | |
Registered number: | 634539 | |
Date of incorporation: | 25 September 2018 | |
Place of incorporation: | Ireland | |
Registered office: | 10 Earlsfort Terrace, Saint Kevin's, Dublin, D02 T380, Ireland | |
Issued share capital: | Class: | Number of shares: |
Ordinary shares of EUR 1.00 | Three | |
Director: | [***] | |
Secretary: | Bradwell Limited | |
Shareholder: | Name: | Number and class of shares: |
The Seller | Three ordinary shares of EUR 1.00 | |
43
6. | Italy |
Company name: | Intercept Italia S.r.l | |
Registered number: | 02890650548 | |
Date of incorporation: | 26 June 2006 | |
Place of incorporation: | Milan, Italy | |
Registered office: | Via Giosuè Carducci, 24, 20123 Milan, Italy | |
Issued corporate capital: | Euro 100.000,00 | |
Directors: | [***] | |
Secretary: | None | |
Shareholder: | Name: | Corporate participation: |
, Intercept Pharmaceuticals, LLC | 1 quota equal to 100% of the corporate capital | |
44
7. | Portugal |
Company name: | Intercept Pharma Portugal, Unipessoal Lda | |
Registered number: | 513679073 | |
Date of incorporation: | 6 October 2015 | |
Place of incorporation: | Lisbon, Portugal | |
Registered office: | Avenida Fontes Pereira de Melo, nº 6, Lisboa, Freguesia de Santo António, conselho de Lisboa, 1050 121 Lisbon, Portugal | |
Issued share capital: | Class: | Number of shares: |
Quota shares of EUR 5,000 | One | |
Directors: | [***] | |
Secretary: | None | |
Shareholder: | Name: | Number and class of shares: |
The Seller | One quota share of EUR 5,000 | |
45
8. | Spain |
Company name: | Intercept Pharma Spain, S.L. | |
Registered number: | Sheet M-607565, Volume 33756, Page 194. | |
Date of incorporation: | 29 July 2015 | |
Place of incorporation: | Madrid, Spain | |
Registered office: | Paseo de la Castellana 135, 7ª Planta, Madrid, Spain | |
Issued share capital: | Class: | Number of shares: |
Ordinary shares of EUR 1.00 | 10,000 | |
Director: | [***] | |
Secretary: | None | |
Shareholder: | Name: | Number and class of shares: |
The Seller | 10,000 ordinary shares of EUR 1.00 | |
46
9. | Switzerland |
Company name: | Intercept Pharma Switzerland GmbH | |
Registered number: | CHE-426.015.896 | |
Date of incorporation: | 30 July 2015 | |
Place of incorporation: | Zürich, Switzerland | |
Registered office: | Dreikönigstrasse 31a, 8002 Zürich, Switzerland | |
Issued share capital: | Class: | Number of shares: |
Quota share of CHF 20,000 | One | |
Director: | [***] | |
Secretary: | None | |
Shareholder: | Name: | Number and class of shares: |
The Seller | One quota share of CHF 20,000 | |
47
10. | United Kingdom |
Company name: | Intercept Pharma UK & Ireland Ltd | |
Registered number: | 09793586 | |
Date of incorporation: | 24 September 2015 | |
Place of incorporation: | England and Wales | |
Registered office: | One Glass Wharf, Bristol BS2 0ZX | |
Issued share capital: | Class: | Number of shares: |
Ordinary shares of £1.00 each | 10 | |
Directors: | [***] | |
Secretary: | Quayseco Limited (registration number 02287256) | |
Shareholder: | Name: | Number and class of shares: |
The Seller | 10 ordinary shares of £1.00 each | |
48
Company name: | Intercept Pharma Ltd | |
Registered number: | 10152652 | |
Date of incorporation: | 28 April 2016 | |
Place of incorporation: | England and Wales | |
Registered office: | One Glass Wharf, Bristol BS2 0ZX | |
Issued share capital: | Class: | Number of shares: |
Ordinary shares of £1.00 each | Two | |
Directors: | [***] | |
Secretary: | Quayseco Limited (registration number 02287256) | |
Shareholder: | Name: | Number and class of shares: |
The Seller | Two ordinary shares of £1.00 each | |
49
Part 2: The Shares
(1) |
| (2) |
| (3) |
|---|---|---|---|---|
Company name | | Type and class of Shares in issue | | Registered owner |
Intercept Pharma Austria GmbH | | Ordinary shares of EUR 35,000 | | The Seller |
Intercept Pharma Canada Inc. | | Common shares without par value | | The Seller |
Intercept Pharma France SAS | | Ordinary shares of EUR 1.00 | | The Seller |
Intercept Pharma Deutschland GmbH | | Ordinary shares of EUR 1.00 | | The Seller |
Intercept Pharma International Limited | | Ordinary shares of EUR 1.00 | | The Seller |
Intercept Italia S.r.l | | 1 quota equal to 100% of the corporate capital | | Intercept Pharmaceuticals LLC |
Intercept Pharma Portugal, Unipessoal Lda | | Quota share of EUR 5,000.00 | | The Seller |
Intercept Pharma Spain, S.L. | | 10,000 ordinary shares of EUR 1.00 each, numbered from 1 to 10,000 | | The Seller |
Intercept Pharma Switzerland GmbH | | Quota shares of CHF 20,000 | | The Seller |
Intercept Pharma UK & Ireland Ltd | | Ordinary shares of £1.00 each | | The Seller |
Intercept Pharma Ltd | | Ordinary shares of £1.00 each | | The Seller |
50
Part 3: Leased Property
1. | Austria |
Description of property: | Fleischmarkt 1/6/12, A-1010 Vienna, Austria |
Tenant: | Intercept Pharma Austria GmbH |
Current landlord: | IWG Management (Austria) GmbH |
Date of lease: | 18 May 2021 |
Lease term: | 1 August 2021 for a period of one month, subject to automatic renewal on the last day of each month |
Current use: | Office space |
Current rent: | EUR [***] per month |
2. | Canada |
Description of property: | Top Level, Suite 300, 4263 Sherwoodtowne Blvd, Mississauga-ON L4Z 1Y5, Canada |
User: | Intercept Pharma Canada Inc. |
Current Centre: | United Overseas Investments Ltd. o/a Zemlar Offices |
Date of agreement: | 21 May 2020 |
Term: | Two years commencing on 1 July 2020 and expiring on 30 June 2022, with an option to renew for one further year |
Current use: | Office space |
Current annual rent: | CDN $[***], CDN $[***] (rent only) and CDN $[***] (HST only) per month |
51
3. | France (Domiciliation contract (contrat de domiciliation)) |
Description of property: | Madeleine, Paris, France 19 boulevard Malesherbes, 75008 Paris, France |
Customer: | Intercept Pharma France SAS |
Current provider: | Regus Paris SAS |
Date of contract: | 18 September 2020 |
Term: | 1 January 2021 for one month, subject to automatic renewal on the last day of each month |
Current use: | Office space |
Current fee: | EUR [***] per month |
4. | Germany |
Description of property: | Rosenheimer Straße 52, 81669 Munich |
Tenant: | Intercept Pharma Deutschland GmbH |
Current landlord: | Stadtsparkasse München |
Date of lease: | 31 August 2020 |
Lease term: | 1 September 2020 for an indefinite period |
Current use: | Office space |
Current rent: | EUR [***] per month |
5. | Ireland |
Description of property: | Ormond, Dublin |
Tenant: | Intercept Pharma International Limited |
Current landlord: | Regus CME Ireland Ltd |
Date of lease: | 14 July 2021 |
Lease term: | 1 November 2021 to 31 October 2022 |
Current use: | Office space |
Current rent: | EUR [***] per month |
52
6. | Italy |
Description of property: | Ground Floor, via G. Carducci 24, Milan, Italy |
Tenant: | Intercept Italia S.r.l. |
Current landlord: | Vikivi S.r.l. a socio unico |
Date of lease: | 15 June 2020 |
Lease term: | 18 months commencing on 1 November 2020 and expiring on 30 April 2022 |
Current use: | Office space |
Current rent: | EUR [***] per annum plus VAT |
Description of property: | Ground Floor, via G. Carducci 24, Milan, Italy |
Tenant: | Intercept Italia S.r.l. |
Current landlord: | Vikivi S.r.l. a socio unico |
Date of lease: | 22 January 2022 |
Lease term: | 12 months commencing on 1 May 2022 and expiring on 30 April 2023 |
Use: | Office space |
Agreed rent: | EUR [***] per annum plus VAT |
7. | Portugal |
Description of property: | Torres de Lisboa, Lisbon, Portugal |
Tenant: | Intercept Pharma Portugal Unip., Lda. |
Current landlord: | Regus Business Centre Lda |
Date of lease: | 6 June 2019 |
Lease term: | 1 August 2019 for one month, subject to automatic renewal on the last day of each month |
Current use: | Office space |
53
Current rent: | EUR [***] per month |
8. | Spain |
Description of property: | Office numbers 501-502-503-504-539-542 at Paseo de la Castellana 135, Madrid, Spain |
Tenant: | Intercept Pharma Spain S.L. |
Current landlord: | Negocenter Business Center, SL |
Date of lease: | 30 October 2015, as amended by: ● Amendment No 1 dated 15 November 2016; ● Amendment No 2 dated 24 March 2017; ● Amendment No 3 dated 12 March 2018; ● Amendment No 4 dated 3 April 2019; ● Amendment No 5 dated 23 March 2020; and ● Amendment No 6 dated 1 March 2021. |
Lease term: | One year commencing on 1 May 2021 and expiring on 30 April 2022 |
Current use: | Office space |
Current rent: | EUR [***] per month |
9. | Switzerland |
Description of property: | City Center Stockerhof, Zurich, Switzerland |
Tenant: | Intercept Pharma Switzerland GmbH |
Current landlord: | Regus Business Centers AG |
Date of lease: | 11 April 2019 |
Lease term: | 1 June 2019 for one month, subject to automatic renewal on the last day of each month |
Current use: | Office use |
Current rent: | CHF [***] per month |
54
10. | United Kingdom |
Description of property: | Sixth floor, 2 Pancras Square, King’s Cross Central, London N1C 4AG |
Title number: | NGL931387 |
Tenant: | Intercept Pharma Europe Ltd. |
Guarantor: | Intercept Pharmaceuticals, Inc |
Current landlord: | Performing Right Society, Limited |
Date of lease: | 22 January 2016 |
Lease term: | From and including 22 January 2016 to and including 31 May 2024 |
Current use: | Office space |
Current rent: | £[***] per annum |
55
SCHEDULE 2: WARRANTIES
1. | Title and capacity |
1.1 | As at the Effective Time, the Seller is the sole legal and beneficial owner of or has the right to exercise all voting and other rights over and is able to procure the sale, free from Encumbrances, of the Shares. |
1.2 | There is no Encumbrance affecting any of the Shares, nor any agreement or commitment to give or to create any such Encumbrance over or affecting the Shares and no claim has been made by any person to be entitled to any such Encumbrance. |
1.3 | The Seller is validly existing and is a company duly incorporated and registered under the law of its jurisdiction of incorporation. |
1.4 | The Seller has the legal right, full power and authority and all necessary consents and authorisations to enter into and to perform its obligations under this agreement and each other Acquisition Document to which it is or will be party. |
1.5 | This agreement and each other Acquisition Document to which the Seller is or will be party constitutes, or will when executed constitute, legal, valid and binding obligations on the Seller in accordance with its terms (assuming that each such Acquisition Document has been properly executed by the other parties to it and that their entry into it has been duly authorised). |
1.6 | The entry into and performance of its obligations under this agreement and each other Acquisition Document by the Seller will not: |
(a) | conflict with or breach any provision of its certificate of incorporation or by-laws; |
(b) | breach or constitute a default under any agreement or instrument to which it is party or by which it is bound and which is material in the context of the Acquisition and that would have a material adverse effect on the Group Companies taken as a whole; |
(c) | conflict with or breach any applicable law or any order, judgment, decree or requirement of any Authority to which it or any Group Company is subject or submits and which is binding on it; or |
(d) | require the consent, waiver, approval or authorisation of any Authority. |
2. | Share capital |
2.1 | The Shares constitute the entire allotted and issued share capital of each Group Company and have been properly issued and are fully paid up. |
2.2 | No person has any right (whether contingent or otherwise) to require any Group Company: |
(a) | to allot, or grant rights to subscribe for, shares in or other securities of any Group Company; or |
(b) | to convert any existing securities into, or to issue securities that have rights to convert into, shares in any Group Company. |
56
3. | Corporate information |
3.1 | The information set out in part 1 schedule 1 relating to the Group Companies is accurate in all respects. |
3.2 | No Group Company acts or carries on business by way of a legal partnership with any other person or is a party to any joint venture agreement. |
3.3 | No Group Company is a member of any corporate or unincorporated person. |
3.4 | No Group Company has any branch or permanent establishment outside its jurisdiction of incorporation. |
3.5 | Each Group Company has been duly incorporated or formed and is validly existing under the laws of its place of incorporation or formation. |
3.6 | The statutory books of each Group Company have been properly kept, are up-to-date and contain complete and accurate details of all matters required by applicable laws to be entered in them. No notice or indication that any of them is incorrect or should be rectified has been received. |
4. | Interests in other companies |
4.1 | No Group Company is the legal or beneficial owner of, or has agreed to acquire, any shares, securities or other interests in any company (other than another Group Company). |
5. | Insolvency |
5.1 | The Seller is not insolvent under the law of its jurisdiction of incorporation and it is not unable to pay its debts as they fall due, nor has it stopped paying its debts as they fall due. |
5.2 | No Group Company is insolvent under the law of its jurisdiction of incorporation. |
5.3 | So far as it is aware, no liquidator, administrator, receiver or similar officer has been appointed by any person in relation to the Seller or any Group Company or the whole or any part of its assets or undertaking and so far as the Seller is aware: |
(a) | no steps have been taken to initiate any such appointment; and |
(b) | no voluntary arrangement has been proposed in respect of it. |
5.4 | No resolution has been passed or, so far as the Seller is aware, order been made for the winding up of the Seller or any Group Company and so far as the Seller is aware, no provisional liquidator has been appointed. So far as the Seller is aware, no petition has been presented for the winding up of the Seller or any Group Company which has not been withdrawn or dismissed. |
5.5 | No arrangement or compromise in relation to reduced payments or the time for payment has been made by the Seller or any Group Company with its creditors generally. |
5.6 | So far as the Seller is aware: |
(a) | no application has been made to court for an administration order in respect of the Seller or any Group Company; and |
57
(b) | no notice of intention to appoint an administrator of the Seller or any Group Company has been given or filed. |
6. | Accounts |
6.1 | The Accounts were prepared in accordance with the accounting principles and practices generally accepted in the United Kingdom at the Accounts Date. |
6.2 | The Accounts are complete and accurate in all material respects and give a true and fair view of the assets, liabilities, financial position and profit or loss of the relevant Group Company and of the Group Companies as a whole as at and for the period to the Accounts Date. For the purposes of this paragraph 6.2 in respect of each Group Company which is not incorporated in the United Kingdom, the words “true and fair” shall be substituted with the equivalent terminology applicable under local auditing or statutory regulations to denote accounts in respect of which an unqualified auditor’s certificate has been given. |
6.3 | No change has been made to the accounting policies or to any other accounting treatment including, for the avoidance of doubt, any estimation techniques, of any Group Company in the three (3) years prior to the Accounts Date. |
6.4 | The Accounts include full provision for all bad and doubtful debts, obsolete or slow moving stock and the Accounts state accurately all liabilities and the value of all assets. |
6.5 | The depreciation and amortisation rates adopted in the Accounts are sufficient to ensure that the assets are written down to nil by the end of their useful economic lives. |
6.6 | The Accounts are not affected by any unusual or non-recurring item or by any other factor that makes the Accounts unusual or misleading in any respect. |
6.7 | At the Accounts Date no Group Company had any other liability (whether actual, contingent, unquantified or disputed) or outstanding capital commitment which is not fully disclosed or fully provided for in the Accounts. |
6.8 | The accounting and other records of each Group Company are up-to-date and have been fully, properly and accurately maintained and are in the possession of the relevant Group Company. |
6.9 | The Latest Financial Information has been prepared with reasonable skill and care, having regard to its nature and purpose, in a manner consistent in all material respects with the Accounts, is free from material error and does not materially misstate the asset and liabilities of each Group Company or profits or losses of each Group Company. |
7. | Period since Accounts Date |
Since the Accounts Date:
7.1 | no Group Company has declared, paid or made a dividend or other distribution or agreed to do any such things; |
7.2 | no resolution of the shareholders of any Group Company has been passed (other than resolutions relating to routine business at annual general meetings); |
7.3 | no Group Company has changed its accounting reference date; |
7.4 | the business of the Group Companies has been conducted in the ordinary course of business; |
58
7.5 | no asset of a value in excess of $[***] has been acquired or disposed of nor has there been any agreement to acquire or dispose of any such asset; |
7.6 | no liability (actual or contingent) has been incurred or has arisen of an amount in excess of $[***] otherwise than trade credit incurred in the ordinary course of business; |
7.7 | no Group Company has materially changed its policies or procedures in relation to the collection of trade debtors or the payment of trade creditors. |
8. | Funding |
8.1 | The name and address of each bank with which each Group Company maintains a bank account together with full details of each account (including the account name and number, a statement showing the balance as at the day immediately preceding the date of this agreement, all authorities and mandates, standing orders and direct debits) are set out in the Disclosed Information. |
8.2 | The Disclosed Information contains details (including the amounts and terms) of any overdraft, loan or other financial facilities currently available to any Group Company ("Facilities"). |
8.3 | No Group Company has received written notice: |
(a) | that it is in material default under the terms of any of the Facilities (which default remains outstanding at the date of this agreement); or |
(b) | to repay any of the Facilities in advance of their stated maturity. |
8.4 | No event which is, or which may become or result in, an event of default or a breach of the terms of any borrowing or financial facility of any Group Company has occurred or been alleged and no change in the direct or indirect ownership or control of any Group Company will or may result in such an event of default or breach. |
8.5 | No guarantee, mortgage, charge, pledge, lien or other security agreement or arrangement has been given by or entered into by any Group Company or third party in respect of any obligations of any Group Company (including in respect of borrowings) or in respect of the indebtedness or obligations of any other person. |
8.6 | No Group Company has lent or agreed to lend any money which has not been repaid to it and there are no debts owing to any Group Company other than debts that have arisen in respect of trading and in the ordinary course of business. |
8.7 | No Group Company is a party to any subsisting debt factoring or discounting arrangement or agreement. |
9. | Grants and state aid |
In the last two years, no Group Company has applied for or received grants, subsidies, allowances, loan payments, guarantees or other financial assistance from Authorities in excess of USD $[***].
10. | Assets |
For the purposes of this paragraph 10 only, a "material asset" means an asset (other than the Property and any IP) with a book value in the Accounts of, or one acquired since then at a purchase price of, more than US$[***]
59
10.1 | All assets, properties and rights used by any Group Company for or in connection with its business, or which are required for the continuation of the Business as it is currently conducted and as conducted for the twelve (12) months prior to the date hereof are legally and beneficially owned by a Group Company, or will be transferred under the BTA and are free from any Encumbrance and there is no agreement or commitment to create any Encumbrance and no claim has been made by any person to be entitled to any such Encumbrance, other than those: |
(a) | disposed of in the ordinary course of business; |
(b) | subject to hire purchase or finance lease agreements; |
(c) | acquired subject to retention of title clauses; or |
(d) | subject to liens arising by operation of law. |
10.2 | All material assets are in the possession of or under the control of the Group Companies or are being transferred under the BTA (save where held by a third party in the ordinary course of business). |
10.3 | The trading stock (including work in progress) of each Group Company is in good condition and is capable of being sold by the relevant Group Company in the ordinary course of business at no less than current pricing levels and without discount, rebate or other allowance. |
10.4 | The amounts of trading stock (including work in progress) of each Group Company is appropriate and normal for such Group Company’s current level of business, having regard to current and reasonably anticipated orders, and none is obsolete, slow moving, unusable or unmarketable. |
10.5 | All plant and machinery (including fixed plant and machinery), vehicles and office equipment used by any Group Company in connection with its business are in good repair and condition, are properly maintained and fully serviceable and are capable of being used safely and efficiently in connection with the business of the relevant Group Company. None is obsolete, surplus to current requirements or in need of renewal or replacement. |
11. | Debtors |
No Group Company is owed any sums other than trade receivables incurred in the ordinary course of business or in respect of any Intra-Group Debt.
12. | Real property |
12.1 | The Disclosed Information contains accurate details of the Property. |
12.2 | The Property comprises all the land and premises owned or occupied by any Group Company and no Group Company has interest in any other real estate. |
12.3 | The brief particulars of the Property set out in part 3 of schedule 1 are accurate in all material respects. |
12.4 | In relation to each lease under which any part of the Property is held: |
(a) | there is no subsisting breach of any covenant, condition or agreement; |
(b) | such lease is legal, valid, binding, enforceable and in full force and effect, and the relevant Group Company has a valid leasehold interest; |
60
(c) | the rents and other monies due and payable under it have been paid; |
(d) | the Group Company named in part 3 schedule 1 as its holder has not received written notice from the landlord that it is in material breach of its obligations under such lease (which breach remains outstanding at the date of this agreement); and |
(e) | there is no event, fact or circumstance which would allow the lessor to terminate its lease agreement with respect to the Property prior to the expiry of the term of such lease agreement. |
12.5 | In relation to the Office User Agreement under which any part of the Property is occupied: |
(a) | there is no subsisting breach of any covenant, condition or agreement; |
(b) | such Office User Agreement is legal, valid, binding, enforceable and in full force and effect, and the Canadian Target occupies such Property; |
(c) | the fees and other monies due and payable under the Office User Agreement have been paid; |
(d) | the Canadian Target named in part 3 schedule 1 as its holder has not received written notice from the centre that it is in material breach of its obligations under such Office User Agreement (which breach remains outstanding at the date of this agreement); and |
(e) | there is no event, fact or circumstance which would allow the centre to terminate its Office User Agreement with respect to the Property prior to the expiry of the term of such Office User Agreement. |
12.6 | No Group Company has leased or otherwise granted to any third party the right to use of occupy any of the Properties or any portion thereof. |
12.7 | There are no easements or other Encumbrances on the Property related to any Group Company’s lease, occupation or use thereof. |
13. | Insurance |
13.1 | The Disclosed Information contains summary details of the material insurance policies maintained by or on behalf of any Group Company. |
13.2 | Each Group Company has maintained full indemnity insurance cover against all risks normally insured against by companies carrying on a similar business, complete and accurate written particulars of each of which have been provided to the Purchaser. |
13.3 | All of the insurance policies are in full force and effect, none are void or voidable, no claims are outstanding, no event has occurred which might give rise to any claim, and all premiums due and payable have been paid. |
13.4 | During the two (2) years immediately preceding the date of this agreement no individual insurance claim in excess of $[***] has been made by any Group Company. |
13.5 | All known incidents or circumstances that could give rise to (i) a product liability claim, (ii) an employer’s liability claim or (iii) a directors and officers claim against a Group Company or a Seller have been properly disclosed, notified, declared and accepted by the relevant insurer. |
61
14. | IP |
14.1 | Each Group Company owns, or has licensed to it or will have licensed to it pursuant to the Licence Agreement, all the IP necessary to carry on its business in all material respects as currently conducted. |
14.2 | The Disclosed Information contains complete and accurate details of the registered IP , or the subject of an application to register IP, in the name of any Group Company or the Seller or any Affiliate of the Seller and the subject of the Licence Agreement or the Trademark Assignment("Seller IP"). |
14.3 | The Seller IP is in the sole legal and beneficial ownership of any Group Company or the Seller or any Affiliate of any of them in each case free from any Encumbrance. |
14.4 | The application, registration and renewal fees relating to the Seller IP that have fallen due have been paid. |
14.5 | The Seller IP is in force without restriction and, so far as the Seller is aware, nothing has been done, or not been done, as a result of which any Seller IP may cease to be in force. |
14.6 | In the two years prior to the date of this agreement, neither the Seller nor any Group Company has received any written notice challenging the validity of any Seller IP that would have a material adverse effect on either the Seller or any Group Company. |
14.7 | The Disclosed Information contains complete and accurate details of the terms of all licences of the Seller IP which are material to the business of any Group Company. So far as the Seller is aware, neither of them nor any Group Company is in material breach of any such licence. |
14.8 | So far as the Seller is aware, in the two years prior to the date of this agreement, no third party has infringed or threatened to infringe any Seller IP. |
14.9 | The Disclosed Information contains details of the licences of IP granted to any Group Company used in, and which is material to, the business of each of the Group Companies ("Material IP Licences"). All Material IP Licences are valid and subsisting. |
14.10 | No Group Company has received written notice from any counterparty to any Material IP Licence that it is in material breach of such licence (which breach remains outstanding at the date of this agreement) and no notice to terminate has been given or threatened. |
14.11 | In the two years prior to the date of this agreement, no activities of any Group Company nor the Seller have been alleged to infringe the IP of any third party. |
14.12 | All rights in and to the Seller IP that was created or developed by an employee or a contractor was either created, developed or conceived pursuant to a valid and enforceable written agreement under which all right, title and interest in and to any IP is assigned to or vests in any Group Company, the Seller or any Affiliate of any of them or so vests by operation of applicable law. |
15. | Regulatory |
15.1 | The manufacture and sale of the Product in accordance with the formulation set out in the Product Files is in compliance with all applicable laws in all material respects with which the Seller must abide. |
62
15.2 | In the two years prior to the date of this agreement there have been no enforcement actions against the Seller by any regulatory body or government agency relating to the Product that would have a material adverse effect on the Group Companies taken as a whole. |
15.3 | In the two years prior to the date of this agreement there have been no product recalls affecting the Product that would have a material adverse effect on the Group Companies taken as a whole. |
15.4 | So far as the Seller is aware, the Marketing Authorisations are in full force and effect and the Seller is not aware of any reason why any of them should be withdrawn. |
15.5 | So far as the Seller is aware, the marketing authorisation for the Product in Canada held by the Seller is in full force and effect and the Seller is not aware of any reason why it should be withdrawn. |
16. | IT Systems |
16.1 | In this paragraph 16, "IT Systems" means the material information technology systems used by any Group Company other than the internet and third party telecommunication networks. |
16.2 | The Disclosed Information contains brief details of the IT Systems. |
16.3 | So far as the Seller is aware, in the last 12 months, there has been no failure, breakdown or security breach of the IT Systems which had a material adverse effect on the Group Companies taken as a whole. |
17. | Data protection |
17.1 | In the last two years, no Group Company has received any formal written notice from any Authority that would have a material adverse effect on the Group Companies taken as a whole: |
(a) | alleging non-compliance with the Data Protection Act 1998, the Data Protection Act 2018 or the General Data Protection Regulation (EU 2016/679); |
(b) | requiring it to change, cease using, block or delete any personal data; or |
(c) | prohibiting the transfer of personal data to any place. |
18. | Confidential information |
In the last two years, no Group Company has received any written notice alleging any misuse of any third party's confidential information that has had a material adverse effect on the Group Companies taken as a whole.
19. | Guarantees, etc |
19.1 | So far as the Seller is aware, no Group Company is a party to or has any liability (actual or contingent) under any subsisting guarantee, security, indemnity or letter of credit, agreement or other commitment in respect of any obligation or liability of any third party (other than another Group Company) in excess of USD $[***]. |
19.2 | Except for any guarantee or warranty implied by law, no Group Company has given any indemnity, guarantee, warranty, or made any representation in respect of goods or services supplied or to be supplied. |
63
20. | Key contracts |
20.1 | In this paragraph references to “contract” include any arrangement, obligation, understanding or commitment, and references to “material” shall mean material to the business, prospects, profits or assets of any Group Company. |
20.2 | Save as Disclosed, no Group Company is a party to any contract which: |
(a) | is of a revenue nature in excess of US$[***] per annum or expenditure nature in excess of US$[***] |
(b) | is of an unusual or exceptional nature or is not in the ordinary course of business; or |
(c) | cannot readily be performed by it on time except with undue effort or unusual expenditure; or |
(d) | restricts its freedom to carry on the whole or any part of its business in any part of the world in such manner as it thinks fit,. |
20.3 | The Disclosed Information contains and a copy of each Material Contract (to the extent that the terms of such contract are included within a written agreement). |
20.4 | No Group Company has received written notice from any counterparty to any Material Contract that it is in material breach of such contract (being a breach that would have a material adverse effect on the Group Companies taken as a whole). |
20.5 | Each of the Material Contracts is in full force and effect. So far as the Seller is aware, no party to any Material Contract is in material breach of it (being a breach that would have a material adverse effect on the Group Companies taken as a whole). |
20.6 | No notice of termination of any Material Contract has been served or received by any Seller or any Group Company and which termination would have a material adverse effect on the Group Companies taken as a whole, there are no grounds for the determination, rescission, avoidance or repudiation of any such contract and there has been no allegation of such a thing. |
20.7 | No Group Company is or, within the past 3 years has been, a party to a contract which is, or was, not entirely of an arm’s length nature and no Group Company has transferred or has agreed to transfer any assets except at market value. |
21. | Terms of Trade |
21.1 | No substantial customer or supplier of any Group Company (being a customer or supplier which accounts for [***] per cent. ([***]%) or more of such Group Company’s annual custom or supply, as the case may be) has during the twelve (12) months immediately preceding the date of this agreement ceased, reduced or indicated an intention to cease or reduce, changed the terms of or indicated an intention to change the terms of, its trading with or supplying to such Group Company. |
21.2 | No Group Company carries on business under any name other than its own corporate name. |
21.3 | No third party has any option or right of first refusal over the Product or any similar product developed by the Seller Group or any Group Company. |
22. | Product |
22.1 | So far as the Seller is aware, no Group Company has given any warranty or guarantee in relation to the Product (other than those implied by any applicable law or contained in its standard terms and conditions of sale) that is reasonably likely to give rise to a liability in excess of US$[***]. |
64
22.2 | The Disclosed Information contains details of each customer claim in the last 12 months which resulted in a payment or refund to the customer in excess of US$[***]. |
22.3 | In the last two years, there has not been any recall of products manufactured or sold by any Group Company where the value of the products recalled exceeded US$[***] in aggregate (either in any calendar year or with respect to any particular product recall or series of product recalls). |
22.4 | No Group Company has manufactured, sold or provided any product or service which did not comply with all laws, regulations, standards and requirements then applicable or with any representation or warranty (express or implied) given in respect of it and in respect of which the relevant time period for bringing a claim has not expired.. |
23. | Licences |
23.1 | The Disclosed Information contains details of the licences, registrations, consents, permits and authorisations by any Group Company from any Authority that are material to the Group Companies taken as a whole, excluding any licences relating to IP ("Licences"). |
23.2 | Each Licence is in full force and effect, , is not and in the last two years, no Group Company has received formal written notice from any Authority that it is in material breach of any Licence (which breach remains outstanding at the date of this agreement) that is likely to result in the suspension or revocation of such Licence. |
23.3 | The change of control of the Group Companies pursuant to the sale and purchase of the Shares will not result in the revocation, termination or modification of any Licence. |
24. | Powers of attorney |
No Group Company has given any power of attorney or other authority (express, implied or ostensible) which remains in force to any person to enter into any contract or commitment on its behalf (other than those given to its officers and employees in the ordinary course of business).
25. | Employees and terms of employment |
25.1 | The Disclosed Information contains: |
(a) | an anonymised list of employees of the Group Companies detailing job title, category of employee, start date, annual salary, length of service, function and location of each employee; |
(b) | a representative sample of standard terms and conditions of employment used for each grade of employee and details of the staff handbooks and employment policies which apply to each Group Company's employees; and |
(c) | details of the share incentive schemes, share option schemes or profit sharing, bonus or other incentive schemes applicable to any of the Group Companies' employees. |
25.2 | So far as the Seller is aware, no Group Company is under any obligation to make any material change in the basis of remuneration or other benefits paid or provided to any of its employees. |
25.3 | Each contract of employment between a Group Company and its employees can be terminated, in accordance with its terms, by that Group Company giving nine months' notice or less. |
65
25.4 | No Group Company engages workers or consultants who should properly be categorised as employees for Tax purposes and any independent contractors, workers and consultants of each Group Company have been properly categorised as employed or self-employed for tax and employment purposes. |
25.5 | No Group Company is subject to any claims or liabilities resulting from its employees working from home. |
25.6 | No Group Company has agreed to, or indicated its agreement to, pay any bonus or other incentive or overtime payments to its employees which has not been paid. |
26. | Senior Employees |
26.1 | No Group Company has given notice of termination or retirement to, or received notice of resignation from, any employee earning in excess of $[***] base annual salary (“Senior Employee”). |
26.2 | No Group Company has made any offer of employment to any person who, if employed, would be a Senior Employee which has either been accepted or remains open for acceptance. |
26.3 | No Group Company has any current disciplinary proceedings or appeals in respect of any Senior Employee. |
26.4 | No Senior Employee will become entitled to any payment or other benefit, or be entitled to give notice to terminate his employment, solely as a result of Completion. |
27. | Trade unions, etc |
The Disclosed Information contains details of any material agreements or arrangements entered into by any Group Company with, or recognising, any trade union, works council, staff association other body representing any of its employees.
28. | Employment disputes |
28.1 | No Group Company is involved in any industrial dispute that is of material importance to the Group Companies taken as a whole. |
28.2 | There is no material claim against any Group Company from any of its employees or former employees and, so far as the Seller is aware, none is pending or threatened. |
29. | Pension obligations |
29.1 | No Group Company has any obligation or liability to provide any pension, allowance, lump sum or other similar benefit on death, disability, retirement or termination of employment (whether voluntary or not) for the benefit of any of the Group Companies' employees, former employees or any of their respective dependants ("Pension Benefits"), or to contribute or provide access to any arrangement which provides Pension Benefits. |
29.2 | Each Group Company has, at all times, complied in all material respects with all applicable pensions legislation in each country and no claims or complaints have been made or are pending or threatened in relation to any pension arrangement of any Group Company. |
66
30. | Compliance with laws |
30.1 | Each Group Company has, at all times, conducted its business in compliance with all applicable laws and regulations in each country in which its business is or has been carried on and no Group Company has received written notice from any Authority that it is in breach of any law. |
30.2 | Each Group Company has, at all times, conducted its business in compliance with any applicable sanction laws and regulations (including the international sanction laws and regulations of the European Union, the United States and the United Nations, where applicable). |
30.3 | The Italian Target is not liable pursuant to the Italian Legislative Decree no. 231/2001 for crimes committed by any of its executives, managers or other employees. |
31. | Anti-Bribery and Improper Payment |
31.1 | No Group Company and no member of the Seller Group nor, so far as the Seller is aware, any of its or their respective directors, officers, employees, agents, representatives or other persons associated with, performing a service for or otherwise acting for or on behalf of it or them (each, an “Associated Person”) has, in connection with the Business, breached or contravened any Anti-Bribery Laws or any applicable anti-money laundering law, rule or regulation or any books and records offences relating directly or indirectly to a bribe. |
31.2 | Each Group Company maintains and regularly keeps under review on an ongoing basis adequate written anti-corruption procedures and internal accounting controls which are designed to ensure compliance by the relevant Group Company and its respective directors, officers and employees with all Anti-Bribery Laws. |
31.3 | Neither the Seller, nor any other member of the Seller Group, nor any Group Company has retained any intermediaries, representatives or other agents to act on their behalf in connection with the Business or any Group Company without first conducting a due diligence review with respect to such proposed intermediary, representative or other agent. |
32. | Litigation |
32.1 | No Group Company is engaged in or in the six (6) years prior to the date of this agreement has been engaged in any civil, criminal or arbitration proceedings or is proposing to engage in any litigation, arbitration, mediation or other legal proceedings (whether as plaintiff, defendant or otherwise), no litigation, arbitration, mediation or other legal proceedings are pending or threatened and there are no circumstances likely to give rise to any such proceedings. |
32.2 | No Group Company is the subject of any investigation, enquiry or enforcement proceedings by any governmental or other body, no investigations, enquiries, or enforcement proceedings are pending or threatened and there are no circumstances likely to give rise to any such investigation, enquiry or enforcement proceedings. |
32.3 | No director or employee (in each case, past or present) of any Group Company is engaged in or subject to any of the matters referred to in paragraphs 31.1 or 31.2 for which any Group Company may be liable. |
32.4 | No Group Company is affected by any existing or pending judgments or rulings, orders or decrees of any court or governmental authority or any expert determination or arbitration proceedings. |
67
33. | Judgments |
So far as the Seller is aware, there is no outstanding judgment, order, ruling or decision by any court, tribunal or arbitrator against any Group Company which is likely to have a material adverse effect on the Group Companies taken as a whole.
34. | Tax |
Returns and Disputes
34.1 | In the last six years, each Group Company: |
(a) | has (to the extent due) made and submitted all material notices, returns (including any land and IP transaction returns) and submitted all reports, accounts, computations, statements, assessments, claims, disclaimers, elections and registrations and any other information to any Tax Authority as reasonably requested by any such Tax Authority or required by applicable law within any requisite period, and all such returns and information and notices made were on a proper basis and within the last three years were true and accurate in all material respects and are not the subject of any material dispute with a Tax Authority and, so far as the Seller is aware, there are no facts or circumstances in existence which are likely to give rise to or be the subject of any such dispute; |
(b) | has maintained complete and accurate records, invoices and other information in relation to Tax that meet all applicable Tax related legal requirements and enable the tax liabilities of the Group Company to be calculated accurately in all material respects; |
(c) | has not entered into a concession, agreement or arrangement with a Tax Authority; |
(d) | has not been, nor so far as the Seller is aware (or ought reasonably to have known) will it become, liable to make to any person (including any Tax Authority) any payment in respect of any liability to Tax which is primarily or directly chargeable against, or attributable to, any other person (not being a Group Company); |
(e) | has duly paid all amounts of Tax and all amounts in respect of Tax to the relevant Tax Authority to the extent the same were required by law to have been paid by it, has done so within the applicable time limit and is not liable nor has it been liable to pay any material penalty or interest in connection therewith; and |
(f) | has not been involved in any dispute with any Tax Authority, nor has it been subject to any non-routine investigation, audit, enquiry, visit, discovery or access order by any Tax Authority, and no Tax Authority has indicated to a Group Company that it intends to make the same. |
34.2 | The Accounts make provision or reserve in accordance with US generally accepted accounting principles for all Tax for which each Group Company is accountable at the Accounts Date. Proper provision has been made and shown in the Accounts for deferred Tax in accordance with US generally accepted accounting principles. |
34.3 | All financing costs, including interest, discounts and premiums payable in the last six years by each Group Company in respect of its loans and amounts payable in the last six years by each Group Company in respect of its derivatives contracts, are deductible by it in computing its |
68
profits, gains or losses for Tax purposes to the extent that they have been treated as so deductible by the Group Company in its applicable Tax returns.
34.4 | No Group Company: |
(a) | has any subsisting liability under any agreement relating to the surrender of losses (other than a liability to another Group Company); and |
(b) | has any subsisting liability under any arrangements for the payment of group Tax liabilities (other than to another Group Company and other than the VAT Group (as defined elsewhere in this agreement)). |
34.5 | All claims made by a Group Company in the last six years for the surrender of losses were valid when made and have been or so far as the Seller is aware will be allowed by way of relief from or allowance or credit against Tax. All arrangements entered into by a Group Company in the last six years in relation to consolidated groups for Tax purposes and fiscal unities were valid when made and (to the extent they remain subsisting) remain valid. Each Group Company has in the last six years met in all material respects all procedural and other requirements of all applicable Tax statutes in respect of such claims, unities or consolidated groups. |
34.6 | So far as the Seller is aware (or ought reasonably to have known), neither the execution nor completion of this agreement will result in the clawback or any other form of disallowance of any Relief or allowance previously given to the Group Company for Tax purposes. |
Deductions and Withholdings
34.7 | Each Group Company has in the last six years properly made all deductions and withholdings on account of Tax required to be made from any payment made or treated as made by it as are required by applicable law and, to the extent required by applicable law, accounted for all such deductions and withholdings in full to the appropriate Tax Authority. |
Residence
34.8 | Each Group Company was incorporated in, and is and has at all times within the last six years been resident in, its jurisdiction of incorporation for Tax purposes and is not and has not in the last six years been resident for Tax purposes elsewhere. |
34.9 | No Group Company holds, or has held in the last six years, shares in a company that is not resident in its jurisdiction of incorporation or a permanent establishment or taxable presence outside its jurisdiction of incorporation. |
Stamp Duty and Transfer Taxes
34.10 | Any document that is reasonably necessary in proving the title of any Group Company to any asset which is owned by that Group Company is duly stamped or has had the transfer or registration Tax due in respect of it paid. |
Sales at Undervalue/Overvalue
34.11 | All transactions entered into by the Group Companies in the last six years have been entered into on an arm's length basis and the processes by which prices and terms have been arrived at have, in each case, been appropriately documented in accordance with applicable laws. No notice, enquiry or adjustment has been made by any Tax Authority in the last six years in connection with any such transactions or arrangements. |
69
Tax Schemes
34.12 | No Group Company has entered into or been a party to or otherwise been involved in any marketed scheme, transaction, series of transactions or other form of arrangement designed wholly or mainly for the purposes of avoiding, deferring or reducing a liability to Tax or any transaction that produced a loss for Tax purposes with no corresponding commercial or economic loss. |
VAT
34.13 | Each Group Company is a taxable person and is registered for the purposes of VAT in its jurisdiction of incorporation. |
34.14 | Where required by applicable law, each Group Company has in the last six years complied in all material respects with the requirements and provisions of the applicable VAT legislation and has in the last six years made and maintained materially true, accurate and up to date records, invoices and other documents required by the applicable VAT legislation and each Group Company has in the last six years in all material respects punctually paid and made all payments and returns required thereunder. |
35. | BTA Warranties |
In this paragraph 35 only, terms shall have the meaning given in the BTA.
35.1 | No consents are required for the completion of the transfer of the Property from the Seller to the Purchaser, save for the Assignment Consent. |
35.2 | Each of the Assets has been and is being used exclusively in the Business. |
35.3 | The Assets comprise all the assets that are necessary for the full and effective continuation of the Business both as it is currently conducted and as it has been conducted in the 12 months prior to the date of this agreement. |
35.4 | Each of the Assets capable of possession is in the possession and control of the Seller. |
36. | Seller Arrangements |
Save as set out in the Disclosed Information and other than trading in the ordinary course of business there is no contract or arrangement outstanding between any Group Company and any member of the Seller Group which (i) can not be terminated by either party without notice or liability to the other party and (ii) which if terminated would have a material adverse effect on the ability of any Group Company to operate its business as currently carried on.
70
SCHEDULE 3: MARKETING AUTHORISATIONS
[***]
71
SCHEDULE 4: COMPLETION OBLIGATIONS
Part 1: Seller obligations on Completion
1. | Documents, etc to be delivered |
The Seller shall deliver or procure to be delivered to the Purchaser:
Authorities
1.1 | as evidence of the authority of any person signing any Acquisition Document on behalf of the Seller, a copy of the minutes of a meeting, or written consent resolutions, of its board of directors or shareholders, as applicable, which: |
(a) | authorises its execution of any Acquisition Document to which it is party; and |
(b) | appoints the relevant signatory or signatories to sign such Acquisition Document(s) on its behalf, |
or, alternatively,
(c) | a duly notarized, and, if necessary, apostilled power of attorney with notarial certification of the powers of the signatory, appointing the relevant signatory or signatories to sign such Acquisition Document(s) on its behalf, |
1.2 | if required by any Group Company’s articles of association or other constitutional documents or by applicable law, a copy of the board of directors resolution or shareholder resolution of such Group Company to approve the acquisition of the Shares by the Purchaser; |
Transfer of Shares
1.3 | in respect of the Austrian Shares: |
(a) | shareholder's resolution executed by the Seller as the sole shareholder of the Austrian Target (i) approving the sale and transfer of the Austrian Shares to the Purchaser and (ii) appointing new managing directors at the effective time of resignation of all prior directors; |
(b) | a notarial deed of transfer in the Agreed Form in respect of the Austrian Shares executed in the presence of an Austrian civil law notary by and between the Seller and the Purchaser |
1.4 | in respect of the Irish Shares: |
(a) | a stock transfer form in respect of the Irish Shares duly executed by the registered holders thereof in favour of the Purchaser; and |
(b) | a share certificate in respect of the Irish Shares in the names of such registered holders or an indemnity in respect of same. |
1.5 | in respect of the German Shares: |
72
(a) | the notarization of a German share transfer and assignment agreement in the Agreed Form by a German notary; |
(b) | the filing of the new list of shareholder by the notarizing notary, which shows the Purchaser as new owner of the German Shares; |
1.6 | in relation to the Portuguese Company, an executed short-form share purchase agreement in the Agreed Form in respect of the Portuguese Shares; |
1.7 | in respect of the Italian Shares: |
(a) | notarial sale and purchase agreement in the Agreed Form pursuant to Article 2470 of the Italian Civil Code ("Italian Notarial Deed") to be executed by and between Intercept Pharmaceuticals, LLC and the Purchaser and authenticated by an Italian notary public; and |
(b) | filing by the notary public of the Italian Notarial Deed with the relevant Companies’ Register (which may also occur after Closing); |
it being understood, acknowledged and agreed that the Italian Notarial Deed will not amend or novate this Agreement in any way and that, in case of conflicts between this Agreement and the Italian Notarial Deed, this Agreement shall prevail;
1.8 | in respect of the Spanish Shares: |
(a) | the Seller shall appear duly represented (with notarized and apostilled powers of attorney) in order to execute a notarial deed of transfer in respect of the Spanish Shares executed in the presence of a Spanish civil law notary (in Madrid) to be appointed by the Seller who shall bear the notarization costs; |
(b) | annotation of the share transfer in the registry book of shareholders of the Spanish Target; |
(c) | sealing (rebaje notarial) of the ownership titles by virtue of which the Seller owns 100% of the shares of the Spanish Target; |
(d) | the Seller shall confirm in the transfer deed the receipt of the closing payment relating to the Spanish Shares; |
(e) | execution and filing of the D1B model; |
1.9 | in respect of the Swiss Share: |
(a) | an executed quota assignment agreement in the Agreed Form executed in wet ink by the Seller in respect of the Swiss Share; and |
(b) | Commercial Register application, including all required annexes, in respect of the Swiss Share, filing the change of the quotaholder and any board changes of the Swiss Target executed in wet ink by the board members of the Swiss Target incumbent upon Completion; |
1.10 | in respect of the French Shares: |
73
(a) | a duly completed, executed and dated original copy of the shares transfer form (ordre de mouvement de titre) in the Agreed Form in respect of the transfer of the entire share capital of the French Target to the Purchaser; |
(b) | three duly completed, executed and dated original copies of the tax transfer form (Cerfa n°2759) in the Agreed Form in respect of the transfer of the entire share capital of the French Target to the Purchaser; and |
(c) | the original versions of the shareholders’ individual accounts (comptes d’actionnaires), the share transfer register (registre des mouvements de titres) and the register of shareholders’ decisions (registre des décisions dés associés) (as well as other registers of corporate decisions, if any) of the French Target; |
1.11 | executed share or stock transfer power forms in the Agreed Form in respect of each of the Canadian and UK Shares in favour of the Purchaser; |
Other documents, consents, approvals
1.12 | share certificates for the UK Shares (or an indemnity in respect of any lost or unavailable share certificates in the agreed terms) relating to such UK Shares; |
1.13 | a power of attorney in the Agreed Form duly executed as a deed in favour of the Purchaser to enable the Purchaser to exercise voting and other rights attaching to the UK Shares with effect from Completion, pending registration of the transfer; |
1.14 | in respect of the Canadian Target and Canadian Shares: |
(a) | a signed resolution of the directors of the Canadian Target in the Agreed Form consenting to, among other things: |
(i) | the cancellation of share certificate no. C-2; |
(ii) | the issuance of uncertificated replacement share C-2R; |
(b) delivery of a written notice of uncertificated shares (no. C-2R) to the Seller;
(c) | delivery to the Canadian Target of a statutory declaration in the Agreed Form duly signed by the Seller in respect of lost share certificate no. C-2; |
(d) | a signed resolution of the directors of the Canadian Target in the Agreed Form consenting to, among other things: |
(i) | the transfer of the Canadian Shares from the Seller to the Purchaser; |
(ii) | the cancellation of the written notice of uncertificated shares (no. C-2R); |
(iii) | the issuance of uncertified share C-3; and |
(iv) | delivery of a written notice of uncertificated shares (no. C-3) to the Purchaser; |
(e) | delivery of a written notice of uncertificated shares (no. C-3) in the Agreed Form to the Purchaser; and |
74
(f) | delivery of a certified copy of the share register showing the Purchaser as the holder of the Canadian Shares; |
1.15 | a written resolution of the Seller as sole quota holder of the Swiss Target in the Agreed Form approving the quota assignment agreement, to be executed in wet ink by the Seller; |
1.16 | a tax reference number (e-stamping number) of the Seller in respect of the transfer of the Irish Shares for the purpose of relevant stamp duty filings; |
1.17 | a Tax Clearance Certificate pursuant to section 980 of the Tax Consolidation Act, 1997 (the “CGT Clearance Certificate”), or a letter in a form satisfactory to the Purchaser from the auditors of the Irish Target confirming that no such CGT Clearance Certificate is required; |
1.18 | Spanish Target to provide evidence that it has filed missing FY 2020 financial statements with the Spanish registry; |
Records
1.19 | the statutory registers and minute books, corporate books and records of each Group Company; and |
1.20 | the updated quota and beneficial owner register of the Swiss Target, reflecting the Purchaser as its new sole quota holder and the registration of the beneficial owner(s) (if any) as notified by the Purchaser; |
Auditors, officers, secretary and employees
1.21 | the written resignations in the Agreed Form of the Outgoing Directors in their capacity as directors and (where applicable) the secretary, and, if requested by the Purchaser other officers, of each Group Company; |
1.22 | acknowledges the resignation of the Outgoing Directors; and |
Other documents
1.23 | the Disclosure Letter duly executed by the Seller. |
75
Part 2: Purchaser's obligations on Completion
1. | Documents, etc to be delivered |
The Purchaser shall deliver to the Seller:
1.1 | as evidence of the authority of any person signing any Acquisition Document on behalf of the Purchaser: |
(a) | a copy of the minutes of a meeting of its board of directors (authorising its execution of any Acquisition Document to which it is party, and appointing the relevant signatory or signatories to sign such Acquisition Document(s) on its behalf); |
or, alternatively,
(b) | a duly notarized, and, if necessary, apostilled power of attorney with notarial certification of the powers of the signatory, appointing the relevant signatory or signatories to sign such Acquisition Document(s) on its behalf, |
Other documents
1.2 | in respect of the Austrian Shares: |
(a) | a notarial deed of transfer in the Agreed Form executed in the presence of an Austrian civil law notary by and between the Seller and the Purchaser; |
(b) | application to the Austrian commercial register to register (a) the Purchaser as the new shareholder of the Austrian Target and (b) the deletion of the current directors and the appointment of the incoming (new) directors. |
1.3 | in respect of the German Shares: |
(a) | the notarization of a German share transfer and assignment agreement in the Agreed Form by a German notary; |
(b) | the filing of the new list of shareholder by the notarizing notary, which shows the Purchaser as new owner of the German Shares; |
1.4 | in relation to the Portuguese Company: |
(a) | an executed short-form share purchase agreement in the Agreed Form in respect of the Portuguese Shares; |
(b) | a shareholder’s resolution of the Portuguese Target aiming to (i) approve the amendment to article 3 of the Portuguese Target’s bylaws (providing identification of shareholder); (ii) accept the resignation of the Outgoing Directors and (iii) approve the appointment of incoming directors; |
(c) | acceptance letter(s) of the incoming directors; |
76
(d) | Commercial Register application, including all required annexes, in respect of the transfer of Portuguese Shares, amendment of the bylaws and the resignation and appointment of directors; |
1.5 | in relation to the Italian Shares: |
(a) | the Italian Notarial Deed to be executed by and between the Seller and the Purchaser and authenticated by an Italian notary public; and |
(b) | filing by the notary public of the Italian Notarial Deed with the relevant Companies’ Register (which may also occur after Closing); |
being it understood, acknowledged and agreed that the Italian Notarial Deed will not amend or novate this Agreement in any way and that, in case of conflicts between this Agreement and the Italian Notarial Deed, this Agreement shall prevail;
1.6 | in respect of the Spanish Shares: |
(a) | the Purchaser shall appear duly represented (with notarized and apostilled powers of attorney) in order to execute a notarial deed of transfer of the Spanish Shares in the presence of a Spanish civil law notary (in Madrid); |
(b) | the Purchaser shall grant a public deed in respect of the Spanish Target’s ultimate beneficial owner; |
(c) | execute a notarial deed in order to acknowledge the change of sole shareholder of the Spanish Target; |
(d) | a public deed raising into public status the certificate of acknowledging the resignation of the joint directors, the appointment of the new directors of the Spanish Target and the change of the corporate name of the Spanish Target; |
1.7 | in relation to the Swiss Share: |
(a) | an executed quota assignment agreement in the Agreed Form executed in wet ink by the Purchaser in respect of the Swiss Share; |
(b) | beneficial owner notification in respect of the Swiss Share in the Agreed Form executed in wet ink by the Purchaser and delivered to the Seller acting on behalf of the Swiss Target; |
(c) | Commercial Register application, including all required annexes, in respect of the board changes of the Swiss Target, executed in wet ink by the board members of the Swiss Target newly elected at Completion (thus constituting combined, written acceptance declarations, notarized and apostilled signature specimens and a circular resolution on the board constitution and granting of signature rights); and |
(d) | procure original executed annexes to the Commercial Register application of the Swiss Target as required for (i) the new board members, and (ii) proof of the incorporation and good standing of the Purchaser (i.e., a notarised and apostilled UK Companies House extract of the Purchaser); |
77
1.8 | Tax reference numbers (E-stamping number) of the Purchaser in respect of the transfer of the Irish Shares for the purpose of relevant stamp duty filings; |
1.9 | a copy of the W&I Policy; |
1.10 | the Disclosure Letter duly executed by the Purchaser; and |
1.11 | indemnity letters in favour of the Outgoing Directors of the Italian Target in the Agreed Form. |
2. | Payment on account of the Consideration |
2.1 | The Purchaser shall pay the Completion Payment in cash in accordance with clause 19. |
78
SCHEDULE 5: COMPLETION STATEMENTS
Part 1: General
1. | Contents |
The Completion Statements shall comprise:
1.1 | a statement of the Cash, Debt and Actual Working Capital in the form and including the items set out in part 3; and |
1.2 | a statement of the Intra-Group Debt detailing, for each amount owing, the payer, payee and a breakdown of the sum due, |
in each case as at the Effective Time.
2. | Bases of preparation |
The Completion Statements shall be prepared:
2.1 | as at the Effective Time; and |
2.2 | in accordance with the following: |
(a) | the specific accounting policies, principles, estimation techniques, measurement bases, practices, procedures and rules set out in part 4; |
(b) | to the extent not covered by paragraph 2.2(a) the accounting policies, principles, estimation techniques, measurement bases, practices and procedures used by the Group Companies in the preparation of the Latest Financial Information on a consistent basis, to the extent not inconsistent with accounting standards detailed in paragraph 2.2(c); and |
(c) | to the extent not covered by paragraphs 2.2 (a) or 2.2 (b), US GAAP at the Accounts Date and applying to the relevant Group Company. |
3. | Submission of Draft Completion Statements |
The Seller shall procure the preparation and submission to the Purchaser of a draft of the Completion Statements in accordance with the provisions of this schedule 4 ("Draft Completion Statements") within 60 Business Days of Completion.
4. | Agreement or determination of Draft Completion Statements |
4.1 | Within 45 Business Days of receipt of the Draft Completion Statements ("Response Period"), the Purchaser may give notice to the Seller either: |
(a) | disputing the Draft Completion Statements (a "Dispute Notice"), stating: |
(i) | the item or items in dispute; |
(ii) | the reasons for such dispute; and |
79
(iii) | (to the extent then reasonably practicable) details of its proposed adjustments to the Draft Completion Statements; or |
(b) | confirming to the Seller in writing its acceptance of the Draft Completion Statements. |
4.2 | If the Purchaser does not give a Dispute Notice within the Response Period, then the Draft Completion Statements shall constitute the agreed Completion Statements. |
4.3 | If a Dispute Notice is given within the Response Period: |
(a) | the Purchaser and the Seller shall endeavour to agree the Draft Completion Statements in good faith and, failing such agreement in writing within fifteen (15) Business Days of receipt of the Dispute Notice (or such later date as may be agreed in writing between the Purchaser and the Seller), any item or items which then remain in dispute shall be referred for determination by an Expert in accordance with the provisions of part 2 on the written request of either the Purchaser or the Seller; and |
(b) | the Draft Completion Statements adjusted, where applicable, to reflect any modifications agreed in writing between the Purchaser and the Seller and the Expert's determination pursuant to part 2, shall constitute the Completion Statements. |
4.4 | The Completion Statements as constituted pursuant to paragraph 4.2 or 4.3(b) shall be final and binding on the parties for the purposes of this agreement. |
5. | Records, etc |
The Purchaser shall procure that each Group Company provides the Seller and its representatives with reasonable access during normal business hours to its accounting records and personnel to facilitate the review and agreement or other determination of the Completion Statements.
80
Part 2: Expert determination
1. | Appointment of Expert |
1.1 | An "Expert" is an individual at a firm of chartered accountants in England (who and which are independent of the parties): |
(a) | agreed by the Purchaser and the Seller in writing; or |
(b) | in default of agreement within five (5) Business Days of the date of either the Purchaser or the Seller serving on the other details of its suggested Expert or Experts, nominated by the President of the Institute of Chartered Accountants in England and Wales on the application at any time of either the Purchaser or the Seller. |
1.2 | Any firm proposed or nominated to provide an Expert shall be required to declare in writing any current and past associations of such firm and its proposed Expert with any party or its group before appointment to establish their independence. |
1.3 | The Expert shall be jointly appointed by the Purchaser and the Seller and shall act as an expert and not as an arbitrator. |
1.4 | Each of the Purchaser and the Seller agrees to: |
(a) | use its reasonable endeavours to appoint the Expert expeditiously following a written request to do so from the other and to agree the terms of engagement for the Expert within ten (10) Business Days of the Expert's selection or nomination; |
(b) | not unreasonably (having regard to the provisions of this part 2) refuse its agreement to any terms of engagement proposed by the Expert (which may include a limitation on his liability at a level consistent with market practice at the relevant time) or each other; and |
(c) | instruct the Expert to deliver his determination within twenty (20) Business Days of his appointment. |
2. | Procedure |
2.1 | Within 10 Business Days of his appointment, the Purchaser and the Seller shall each provide the Expert with a written statement detailing the remaining disputed item or items, its submission in relation to each item and the adjustments (if any) it proposes to the Draft Completion Statements, together with copies of any supporting documents. The Expert shall afford the Seller and the Purchaser the opportunity within reasonable time limits to make written representations to him on the written statement and representations of the other and each of the Purchaser and the Seller shall receive a copy of the other’s written statement at the same time. |
2.2 | The Purchaser and the Seller shall each provide (or, to the extent it is reasonably able, procure that others provide) the Expert with such other documents, information and assistance (including the right to inspect such documents, records and materials held by it or under its control) as the Expert reasonably requires for the purpose of making his determination. For the avoidance of doubt, neither the Purchaser nor the Seller shall be obliged to provide the Expert with auditors' working papers or any information or documents prepared by it or its advisers with a view to assessing the merits of any argument on any item in dispute. |
81
2.3 | Following submission of the written statements pursuant to paragraph 2.1 above, the Purchaser and the Seller shall supply each other with a copy of anything provided by it or on its behalf to the Expert pursuant to this part 2 at the same time as it is provided to the Expert. |
2.4 | All matters relating to the Expert's determination shall be kept confidential by the parties and the Expert. |
3. | Determination of Expert |
3.1 | The Expert shall: |
(a) | conduct and deliver his determination in the English language; |
(b) | be entitled to obtain such independent legal or other professional advice as he may reasonably require in making his determination; |
(c) | to the extent not provided for in or inconsistent with this part 2, determine the procedure to be followed but shall otherwise be directed to apply the provisions of this schedule 5 in making his determination, unless otherwise agreed by each of the Seller and the Purchaser in writing; |
(d) | make his determination on the remaining disputed items within in the range between the amounts proposed by the Seller and the Purchaser; |
(e) | determine on the basis of all information, documents and materials before him what adjustments (if any) are in his opinion necessary to the amounts shown by the Draft Completion Statements in respect of each of the disputed items referred to him in order to comply with the provisions of this agreement; and |
(f) | notify the Purchaser and the Seller of his determination in writing (without reasons) as soon as practicable. |
3.2 | The Expert's determination shall be final and binding on the parties except when there is fraud or manifest error. On the Expert's determination, the Draft Completion Statements shall be adjusted (if required) to reflect the disputed items as so determined. |
3.3 | The Expert's fees and expenses (including the costs of his nomination and any fees and expenses of any professional advisers appointed by him) shall be borne as determined by the Expert (having regard to the merits of the parties' submissions), failing which, borne equally by the Purchaser and the Seller. |
4. | Substitute or replacement Expert |
If the Expert dies or becomes unwilling to act or incapable of acting, then the Purchaser and the Seller shall:
4.1 | accept any substitute Expert reasonably nominated by the firm engaged by them following a written request to such firm to do so from either the Purchaser or the Seller; or |
82
4.2 | if no substitute is nominated within five Business Days of such request, promptly discharge the original Expert and appoint a replacement expeditiously, and this part 2 shall apply to the replacement Expert as if he were the first Expert appointed. |
83
Part 3: Pro formas
[***]
84
Part 4: Specific bases of preparation
1. | Calculation of Cash |
All amounts held in the form of cash (if any) which comprise the proceeds of any insurance claim in respect of the destruction of, or damage to, assets of any Group Company, to the extent that such entity would need to apply it towards the replacement or repair of the insured asset in order to be able to continue to use or earn income from the asset or its replacement in the manner in which it did so during its period of ownership shall be excluded when calculating Cash.
Fifty per cent of any cash amount which, as at the date of this Agreement, is held by or on behalf of any member of the Seller’s Group (or which is replaced on or around Completion by cash from a member of the Purchaser Group) as collateral for any letters of credit provided pursuant to the Seller Guarantees Facility prior to the Effective Time, will be included as a current liability in the calculation of Working Capital in the Completion Statements.
Any Restricted Cash which is held in any account of a Group Company as collateral for any letter of credit shall be allocated to Working Capital as a net current asset in the Completion Statements.
2. | Deferred taxes shall be excluded from the Completion Statements. |
3. | CEPS |
To the extent that the CEPS Matter has not been finally resolved at the date of the Completion Statements a provision of $42,800,000 (forty two million eight hundred thousand US dollars) shall be included within Debt in respect of the CEPS Matter and no further provision will be included in the Completion Statements in respect of the CEPS Matter.
4. | Inventory valuation |
Inventory will be valued at external cost, excluding any internal pricing mark-up applied by the Seller Group for transfer pricing purposes. For the avoidance of doubt, the inventory balances of the Canadian Target and the Swiss Target as at Effective Time, will be allocated to ‘Other’ in the Completion Statements. Inventory shall include the Stock transferred under the BTA.
5. | Vesting of share options |
The Completion Statements will include a liability within Debt, for any expected future outflow arising in any Group Company as a result of the accelerated vesting of RSU’s or stock option or other equity awards pursuant to any plan operated by the Seller, including any Taxes and social security costs payable thereon save to the extent that the terms of such options, RSU’s or equity awards provide for such Taxes and social security costs to be borne by the relevant employee.
6. | Provisions against trade receivables |
A provision of 1 per cent of all gross trade receivables shall be included in the Completion Statements. In addition, a further provision shall be included in respect of any trade receivable where evidence exists that such trade receivable is not expected to be received.
7. | Transfer Pricing tax liabilities |
85
A liability of $1 million shall be included in the Completion Statements, as Debt, in respect of potential Tax Liabilities which may arise in respect of the matters disclosed at paragraph 34.1 of the Disclosure Letter.
8. | General |
The balance sheets in relation to each of the Group Company balance sheets reflected in the Completion Statements shall be prepared with the same degree of care and attention, using those procedures that would customarily be adopted for statutory accounts prepared at a financial year end.
The provisions of this Schedule 5, Part 4 shall be interpreted so as to avoid double counting (whether positive or negative) of any item to be included in the Completion Statements and no minimum materiality limits and thresholds shall be applied in calculating any amounts included in the Completion Statements.
The Completion Statements will include within Working Capital Advance Receipts and Advance Payments (as defined in the BTA) as a relevant net current asset or net current liability as appropriate.
The Completion Statements will include within Working Capital accounts payable which are transferred pursuant to the BTA as a relevant net current liability.
A corporate income tax provision shall be included in the Completion Statements in respect of the period between Accounts Date and the Effective Time as if this were a normal financial accounting period. Any corporate tax provisions outstanding for any prior periods shall also be included in the Completion Statements.
The Completion Statements shall reflect events occurring after the Effective Time but before the date on which the Draft Completion Statements are delivered to the Purchaser to the extent that these provide additional evidence of conditions that existed at the Effective Time.
For the avoidance of doubt the Completion Statements shall not include any amount in respect of deferred tax (whether as a liability or an asset).
The Completion Statements shall be expressed in US$. Any amounts which are to be included in any such calculation which are expressed in a currency other than dollars shall be converted into dollars at the closing midpoint spot rate for a transaction between the relevant currency and dollars as quoted by Barclays Bank Plc as at the close of business Completion Date.
Fixed Assets will be allocated to column “Other” in the Completion Statements.
Prepayments and Advance Payments shall only be included in the Completion Statements, within Actual Working Capital, to the extent goods and services in respect of such prepayments are receivable and will provide a benefit to any Group Company after Effective Time.
For the avoidance of doubt, the Completion Statements shall include, within Actual Working Capital, any unpaid outstanding amounts in respect of audit and accountancy fees, together with an accrual for all audit and accountancy fees relating to the period prior to Completion by pro rating the forecast cost for the year ended on 31 December 2022 (which shall be assumed equal to the total cost incurred in respect of the year ended 31 December 2021).
86
The Completion Statements shall not release accruals or provisions included in the Latest Financial Information unless they have been utilised (but not released) before the Effective Time.
The Completion Statements shall include, within Debt, a full provision for any redundancies announced prior to the Effective Time but which are not yet effective.
A provision for any unsettled employee claims as at Effective Time, will be included in the Completion Statements, within Debt. For the avoidance of doubt, the value of any such provision will not take into account any insurance claim proceeds which may or may not be receivable as at the Effective Time.
A liability will be included in the Completion Statements, within Debt, for any unsettled transaction costs, and transaction bonuses (including any irrecoverable Tax thereon) associated with the transaction contemplated by this agreement, and payable by any Group Company.
87
SCHEDULE 6: TAX COVENANT
1. | Definitions |
1.1 | "Accounts Relief" means a Relief which has been: |
(a) | treated as an asset in the Completion Statements; and/or |
(b) | taken into account in computing (and reducing) any provision for Tax (including deferred Tax) which appears in the Completion Statements or which has resulted in no provision for Tax (including deferred Tax) being made in the Completion Statements; |
"Actual Tax Liability" means any liability of a Group Company to make an actual payment of or in respect of, or on account of, Tax, whether or not the same is primarily payable by a Group Company and whether or not the Group Company has or may have any right of reimbursement against any other person, in which case the amount of the Actual Tax Liability will be the amount of the actual payment;
"Purchaser’s Relief" means:
(a) | an Accounts Relief; |
(b) | any Relief arising to a Group Company: |
(i) | as a consequence of, in relation to or in connection with any Event occurring, or |
(ii) | from, in relation to or in connection with income, profits or gains earned, accrued or received, |
after Completion; and/or
(c) | any Relief arising to any member of the Purchaser Group (other than a Group Company); |
"Deemed Tax Liability" means:
(a) | the Loss of an Accounts Relief, and the amount of the Tax Liability will be: |
(i) | where the Relief was a right to repayment of Tax or to a payment in respect of Tax, the amount of the repayment or payment; |
(ii) | in any other case, the amount of Tax which would have been saved on the basis of the Tax rates current at Completion (assuming for this purpose that relevant Group Company had sufficient profits or was otherwise in a position to use the Relief); and/or |
(b) | the use or setting-off of any Purchaser’s Relief where, but for that set-off or use, the Seller would have had a liability to make a payment to the Purchaser under this Schedule and/or the agreement (ignoring any financial limitations or restrictions), and the amount of the Tax Liability will be the amount of Tax for which the Seller would have been liable but for such use or set-off; |
"Event" means any transaction, act, failure to act, event or omission whatsoever, whether or not a Group Company is a party to the transaction, act, failure to act, event or omission, and any reference to an Event occurring on or before a particular date shall include an Event which for Tax purposes is deemed to have, or is treated or regarded as having, occurred on or before that date;
88
"Loss" includes absence, failure to obtain, non-existence, non-availability, reduction, modification, loss, counteraction, nullification, utilisation, disallowance, withdrawal or clawback for whatever reason; and
"Tax Liability" means an Actual Tax Liability or a Deemed Tax Liability.
1.2 | In this Schedule, a reference to a statutory provision includes a reference to the statutory provision as modified or re-enacted or both from time to time whether before or after the date of this Schedule and any subordinate legislation made under the statutory provision whether before or after the date of this Schedule. |
1.3 | Each of the covenants contained in paragraph 2 shall be construed as a separate and independent covenant and shall not be limited or restricted by reference to or inference from any other covenant contained in paragraph 2. |
1.4 | References to a repayment of Tax shall include any repayment supplement or interest in respect of it. |
1.5 | Any stamp duty charged on any document (or in the case of a document that is outside the UK, any stamp duty that would be charged on the document if it were brought into the UK) that is necessary to establish the title of any Group Company to any asset or which a Group Company may wish to rely upon for the purposes of any litigation in which a Group Company is or is reasonably likely to be involved or in connection with any Tax matter, and any interest, fine or penalty relating to the stamp duty, shall be deemed to be a liability of such Group Company to make an actual payment of Tax because of an Event arising on the last day on which it would have been necessary to pay the stamp duty to avoid any liability to interest or penalties arising on it. |
1.6 | Any reference to gross receipts, income, profits or gains earned, accrued or received on or before a particular date or in respect of a particular period shall include gross receipts, income, profits or gains deemed, treated or regarded to have been earned, accrued or received on or before that date or in respect of that period for the purposes of any Taxation. |
1.7 | Any word or expression defined in the agreement shall, save as otherwise defined or as the context may otherwise require in this Schedule, have the same meaning in this Schedule. |
2. | Covenant |
2.1 | The Seller covenants to pay to the Purchaser (as far as possible, as an adjustment to the Consideration) an amount equal to: |
(a) | any Actual Tax Liability arising in respect of, by reference to or in consequence of: (i) an Event which occurred, or was deemed to occur, on or before Completion; or (ii) any income, profits or gains which were earned, accrued or received on or before Completion; |
(b) | any Deemed Tax Liability; |
(c) | any Tax Liability that arises to a Group Company, or any member of the Purchaser Group due to the relationship for Tax purposes before Completion of a Group Company with any person (other than another Group Company or any other member of the Purchaser Group), whether arising before or after Completion; |
(d) | any liability of a Group Company arising from an obligation to repay the whole or any part of any payment received for any surrender or transfer of any Relief pursuant to an arrangement entered into by a Group Company on or before Completion; |
89
(e) | any amount paid (or payable to the extent it is not yet actually paid) by a Group Company for a surrender or transfer to it of any Relief in respect of any period ended on or prior to Completion to the extent that such Relief is lost, cancelled or disallowed or otherwise proves to be unavailable to set off against income, profits or gains or Tax for the period in respect of which the surrender is made; |
(f) | any liability of a Group Company to pay or account for income Tax under any withholding regime or payroll system or national insurance/social security contributions (in each case together with any related interest and/or penalties) which arises at any time as a result of, in consequence of or in connection with the remuneration paid, or otherwise referable to any period, prior to Completion of any person engaged by a Group Company, whether engaged by a Group Company as an employee or office-holder or otherwise (including through a personal services company and/or agency); |
(g) | any Tax Liability of a Group Company relating to employment taxes or social security contributions in respect of the grant, exercise, surrender, exchange or other disposal of an option or other right to acquire securities, or in respect of any acquisition, holding, variation or disposal of securities, where the acquisition of the security or the grant of the option, or other right to acquire the security occurred on or before Completion; |
(h) | any Tax Liability relating to, in connection with, or arising (in respect of a period or part-period ending on or before Completion) as a result of any Group Company entering into any transaction or arrangement prior to Completion otherwise than on arm's length terms and/or the lack of documentation relating to the processes by which prices and terms have been arrived at for any transaction or arrangement entered into by a Group Company; |
(i) | any Tax Liability relating to, in connection with, or arising as a result of any Group Company entering into any transaction or arrangement relating to IP with IPEL prior to Completion, but only to the extent such Tax Liability arises as a result of an Event occurring or income, profits or gains earned, accrued or received by a Group Company on or before Completion; |
(j) | any Tax Liability relating to, in connection with or arising as a result of the offset in 2011 and 2012 of the R&D tax credit related to activities carried out by Intercept Italia S.r.l; and |
(k) | any reasonable liabilities, losses and costs incurred by the Purchaser, any member of the Purchaser Group and/or a Group Company in connection with any claim or in connection with any action taken in taking defending or settling any action in respect of a claim under this Schedule. |
3. | Exclusions |
3.1 | The covenant at paragraph 2 does not apply in respect of any Tax Liability of a Group Company if and to the extent that: |
(a) | a specific provision, accrual, allowance or reserve for the Tax Liability has been made in the Completion Statements; |
(b) | the Tax Liability or other liability arises or is increased as a result of: |
(i) | a change in Tax rates or in law; or |
90
(ii) | a change or withdrawal of any published practice, concession or interpretation of any Tax Authority; |
in each case both announced and with effect after Completion;
(c) | such Tax Liability has been discharged, or the relevant Group Company has been compensated for such Tax Liability (by any person other than the Purchaser and/or any member of the Purchaser Group), in each case without cost to the relevant Group Company, the Purchaser and/or any member of the Purchaser Group. |
4. | Payment of Claims |
4.1 | Any sums required to be paid by the Seller under this schedule shall be paid (in cleared funds): |
(a) | in respect of an Actual Tax Liability, on the later of: |
(i) | the date five Business Days after the date on which the Seller receives written notice of the amount of the Tax Liability from the Purchaser; and |
(ii) | the date five Business Days before the date on which the relevant Group Company will finally be liable to pay the Tax without incurring a liability to interest and/or penalties (or would have been liable to pay the Tax but for the availability of some other Relief); |
(b) | in respect of a Deemed Tax Liability, on the later of: |
(i) | the date five Business Days after the date on which the Seller receives written notice of the amount of the Tax Liability from the Purchaser; |
(ii) | five Business Days before the date on which the relevant Group Company is due to pay any Tax without incurring a liability to interest and/or penalties which it would not have had to pay but for the loss or settling off of an Accounts Relief or, where the loss of an Accounts Relief is the loss of a repayment of Tax, the date on which such repayment would otherwise have been due; or |
(iii) | five Business Days before the date on which the relevant Group Company would have had to pay the Tax without incurring a liability to interest and/or penalties but for the setting off of a Purchaser’s Relief; and |
(c) | for anything else, on the date five Business Days following the date on which written notice of the amount due is received by the Seller from the Purchaser. |
5. | Miscellaneous |
5.1 | Any sum payable under or pursuant to this Schedule is (unless expressly stated otherwise) exclusive of any applicable VAT. If any supply is treated as made for VAT purposes by one party (the "Supplier") to the other party (the "Recipient") under or pursuant to this Schedule and the Supplier (or the representative member of any VAT group of which it is a member) is required to account for VAT in respect of that supply then, unless expressly stated otherwise, the Recipient shall, subject to the receipt of a valid VAT invoice, pay to the Supplier (in addition to, and at the same time as, any other consideration for that supply) an amount equal to such VAT. |
91
5.2 | Where under the terms of this schedule one party is liable to indemnify or reimburse another party (the "Payee") in respect of costs, charges or expenses, the payment shall include an amount equal to any VAT thereon. |
5.3 | The Seller shall (and shall procure that any other member of the Seller Group) provide (at the cost of the Purchaser) to the Purchaser, any Group Company and/or any relevant professional advisers such information, documentation and/or assistance as the Purchaser might reasonably require to assist the Purchaser and/or any Group Company in dealing with the pre-Completion Tax affairs of any Group Company. |
5.4 | The Purchaser shall (and shall procure that the Group Companies shall) provide (at the cost of the Seller) to the Seller and/or any relevant professional advisers such information, documentation and/or assistance as the Seller might reasonably require to assist the Seller and/or any member of the Seller Group in dealing with their Tax affair |
92
Signed for and on behalf of MERCURY | ) | | |
PHARMA GROUP LIMITED by: | ) | Signature | /s/ Andreas Stickler |
| | | |
| | Name (block capitals) | ANDREAS STICKLER |
| | | Authorised signatory |
Signed for and on behalf of INTERCEPT | ) | ||
PHARMACEUTICALS, INC. by: | ) | Signature | /s/ Andrew Saik |
| | | |
| | Name (block capitals) | ANDREW SAIK |
| | | Authorised signatory |
[ Signature Page to SPA ]
Exhibit 10.2
2.1 | Grant of License to Licensee | 13 | |
2.2 | Grant of Sublicense by Licensee | 13 | |
2.3 | Retained Rights | 14 | |
2.4 | Grant of License to Licensor | 15 | |
2.5 | Data Transfer | 16 | |
2.6 | No Implied License | 16 | |
3.1 | Formation | 16 | |
3.2 | JSC Functions and Powers | 17 | |
3.3 | JSC Decision Making | 18 | |
3.4 | Disputed JSC Matter | 19 | |
3.5 | Termination of JSC | 20 | |
4.1 | Licensee Development | 20 | |
4.2 | Licensor Development | 21 | |
4.3 | Regulatory | 23 | |
5.1 | Commercialization Generally | 24 | |
5.2 | Licensed Product Statements and Promotional Materials | 24 | |
6.1 | Supply of the Licensed Products | 25 | |
6.2 | Manufacture by Licensee | 25 | |
6.3 | Finished Product Packaging and Labeling | 25 | |
7.1 | Upfront Payment | 25 | |
7.2 | Royalty | 25 | |
7.3 | Sublicensee Income | 25 | |
7.4 | Exclusivity Extension | 26 | |
7.5 | Mode of Payment and Currency | 27 | |
7.6 | Royalty and Sublicensee Income Reports | 27 | |
7.7 | Late Payments | 27 | |
7.8 | Default Payment | 27 | |
7.9 | Accounting | 27 | |
7.10 | Books and Records | 27 | |
7.11 | Audits | 27 | |
7.12 | Taxes | 28 | |
8.1 | Ownership of Intellectual Property | 29 | |
8.2 | Patent Filing Prosecution and Maintenance | 31 | |
8.3 | Actions Regarding Licensed IP and Joint IP | 32 | |
8.4 | Enforcement of Licensee Technology | 33 | |
8.5 | Patent Marking | 33 | |
9.1 | Confidentiality | 34 | |
9.2 | Publicity | 35 | |
9.3 | Publications | 35 | |
10.1 | Mutual Representations and Warranties | 35 | |
10.2 | Representations and Warranties of Licensor | 36 | |
10.3 | Representations and Warranties of Licensee | 36 | |
10.4 | Disclaimer of Representations and Warranties | 36 | |
10.5 | Covenants | 37 | |
11.1 | Indemnification by Licensor | 38 | |
11.2 | Indemnification by Licensee | 38 | |
11.3 | Indemnification Procedure | 39 | |
11.4 | Indemnification Settlement | 39 | |
11.5 | Insurance | 39 | |
11.6 | Limitation of Liability | 40 | |
12.1 | Term | 40 | |
12.2 | Licensor Rights of Termination for the NASH Product | 41 | |
12.3 | Licensee Rights of Termination for the NASH Product | 41 | |
12.4 | Effects of Termination | 41 | |
12.5 | Survival | 42 | |
12.6 | Rights in Bankruptcy | 42 | |
13.1 | Executive Officers | 43 | |
13.2 | Governing Law and Venue | 43 | |
13.3 | Injunctive Relief | 43 | |
14.1 | Force Majeure | 43 | |
14.2 | Notices | 44 | |
14.3 | Independent Status | 44 | |
14.4 | Entire Agreement; Amendment and Waiver | 44 | |
14.5 | Headings; Construction; Certain Conventions | 44 | |
14.6 | Assignment | 45 | |
14.7 | Third Party Beneficiaries | 45 | |
14.8 | Severability | 45 | |
14.9 | Further Assurances | 45 | |
14.10 | Translation | 45 | |
14.11 | Other Obligations | 46 | |
14.12 | Counterparts | 46 | |
SCHEDULES
Schedule 1.39 – Licensed Patents
Schedule 4.2.1(a) – Post-Marketing Work
Schedule 4.2.1(b) - Budget
SUBLICENSE AGREEMENT
THIS SUBLICENSE AGREEMENT (this “Agreement”), executed as of the 5th day of May, 2022 (the “Execution Date”) and effective as of the Completion Date (as defined below) (the “Effective Date”), is made by and between Intercept Pharma Europe Ltd., a UK limited corporation (“Licensor”), and Mercury Pharma Group Limited, a company incorporated in England with number 02330913 which has its registered office at Capital House, 85 King William Street, London, EC4N 7BL (“Licensee”). Licensor and Licensee may be referred to herein as a “Party” or, collectively, as “Parties”.
RECITALS
WHEREAS, Intercept Pharmaceuticals, Inc. (“Intercept”) is a clinical stage biopharmaceutical company engaged in the development of therapeutic products for the treatment of progressive non-viral liver diseases, and Intercept Controls (as defined below) certain intellectual property rights in the active pharmaceutical ingredient obeticoholic acid (“OCA”) for therapeutic use in connection with primary biliary cholangitis (“PBC”) and nonalcoholic steatohepatitis (“NASH”);
WHEREAS, Intercept granted a license to such intellectual property rights to Licensor, Intercept’s subsidiary, pursuant to the terms of that certain License Agreement dated and effective as of May 22, 2015 (the “License Agreement”);
WHEREAS, Intercept and Licensee are entering into that certain Share Purchase Agreement as of the Execution Date whereby, upon the Completion Date, Licensee shall acquire the business of certain non-US subsidiaries of Intercept (the “Share Purchase Agreement”);
WHEREAS, pursuant to the Share Purchase Agreement, Intercept has agreed to Licensor entering into this Agreement to grant a sublicense to Licensee of certain rights to Intercept’s product Ocaliva®, a therapeutic product with OCA as its sole Active Pharmaceutical Ingredient (as defined below) that is commercially sold for the treatment of PBC (“Ocaliva”), and rights to Licensor’s OCA product being developed for the treatment of NASH; and
WHEREAS, Licensee desires to obtain, and Licensor is willing to grant, such rights pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the various promises and undertakings set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the following terms shall have the following meanings:
1.1“Active Pharmaceutical Ingredient” means any substance that is used in a pharmaceutical product that when used becomes an active pharmaceutical ingredient of that product and exerts a pharmacological, immunological or metabolic action with a view to restoring, correcting or modifying physiological functions and such substance has an effect on the price of such pharmaceutical product (excluding formulation components such as coatings, stabilizers, excipients, solvents or adjuvants).
1
1.2“Adverse Risk” means any risk of a material adverse effect on the Development, procurement or maintenance of Regulatory Approval, Manufacture or Commercialization of the applicable Licensed Product(s), including, without limitation, safety-related matters with respect to the applicable Licensed Product(s).
1.3“Affiliate” means a Person that controls, is controlled by or is under common control with a Party, but only for so long as such control exists. For the purposes of this Section 1.3, the word “control” (including, with correlative meaning, the terms “controlled by” or “under common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such Person, whether by the ownership of more than fifty percent (50%) of the voting stock of such Person, or by contract or otherwise.
1.4“Anti-Corruption Laws” means laws, regulations, or orders prohibiting the provision of a financial or other advantage for a corrupt purpose or otherwise in connection with the improper performance of a relevant function, including without limitation, the Corruption of Foreign Public Officials Act (CFPOA), the US Foreign Corrupt Practices Act (FCPA), the UK Bribery Act 2010, and similar laws governing corruption and bribery, whether public, commercial or both, to the extent applicable.
1.5“Applicable Laws” means all applicable common law, statutes, ordinances, rules, regulations, guidances and orders of any Governmental Body.
1.6“Authorized Or Other Generic Entry” means, with respect to a country, the first commercial sale in such country of any product that has regulatory approval for use in such country pursuant to a regulatory process governing the approval of generic products where such regulatory approval relied on or incorporated data submitted to any Regulatory Authority generated by or on behalf of Licensor or its Affiliates or licensees, or was obtained using an abbreviated, expedited, or other similar regulatory process, including that is the subject of a license grant by Licensor, its Affiliates or licensees granting the right to sell such product in the jurisdiction.
1.7“BTA” means the business transfer agreement of even date entered into between the Licensor and Advanz Pharma Services (UK) Limited relating to the transfer of the business and related assets of the Licensor relating to the importing, offering for sale, commercializing, registering, holding or keeping exporting, transporting, distributing, promoting, packaging, labelling marketing and sale of the Licensed Product outside of the US.
1.8“Business Day” means any Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which banking institutions in the State of New York are explicitly authorized or required by, in either case, law, regulation or executive order to close.
1.9“Calendar Quarter” means the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31 of each Calendar Year.
1.10“Calendar Year” means each successive period of twelve (12) months commencing on January 1 and ending on December 31.
1.11“Challenge” will be interpreted as follows: Licensee, its Affiliate or a Sublicensee (including sub-Sublicensees) will be deemed to have made a “Challenge” of the Licensed Patents if Licensee, such Affiliate or such Sublicensee (including sub-Sublicensees), respectively: (a) institutes, voluntarily joins as a party to, causes its counsel to institute on Licensee’s or such Affiliate or Sublicensee’s (including sub-Sublicensees) behalf, or otherwise provides material support to, any
2
interference, opposition, re-examination, post-grant review or similar proceeding with respect to any Licensed Patents with the US Patent and Trademark Office (“USPTO”) or similar foreign equivalent filing or request in any foreign patent office; or (b) makes any filing, institutes, voluntarily joins as a party or otherwise provides material support to any legal proceeding, or causes its counsel to make any filing or institute or voluntarily join as a party to any legal proceeding on Licensee’s or such Sublicensee’s (including sub-Sublicensees) behalf, with a court or other Governmental Body (including, without limitation, the USPTO or any foreign patent office) having authority to determine the validity, enforceability or scope of the Licensed Patents, in which one or more claims or allegations challenges the validity or enforceability of any Licensed Patents.
1.12“Clinical Trial” means a human clinical study, in which a Licensed Product is administered to human subjects, that is designed to (a) establish that a pharmaceutical product is reasonably safe for continued testing; (b) investigate the safety and efficacy of the pharmaceutical product for its intended use, and to define warnings, precautions and adverse reactions that may be associated with the pharmaceutical product in the dosage range to be prescribed; (c) support Regulatory Approval of such pharmaceutical product or label expansion of such pharmaceutical product; or (d) obtain or maintain marketing approval and for a purpose other than to obtain, support or maintain Regulatory Approval, including any and all post-marketing commitments.
1.13“Commercialization” means any and all activities of marketing, promoting, importing, exporting, distributing, offering for sale or selling the Licensed Products in the Field and in the Territory, including, for example, marketing, branding, pricing, distribution, Sales, obtaining health insurance reimbursement and formulary coverage, market research, business analytics, pharmacovigilance and medical affairs activities, pre-commercial launch market development activities conducted in anticipation of Regulatory Approval to sell or market the Licensed Products, product livery, labelling/summary of product characteristics, patient information leaflet, preparing advertising and promotional materials, sales force training, and all interactions and correspondence with a Regulatory Authority regarding Clinical Trials commenced following Regulatory Approval. When used as a verb, “Commercialize” means to engage in Commercialization. “Commercialized” and “Commercializing” shall be construed accordingly.
1.14“Commercially Reasonable Efforts” means with respect to a Party, the use of reasonable, diligent, good faith efforts and resources consistent with the general practices followed by such Party for its own internally discovered technology of similar commercial potential and similar stage of development, taking into account efficacy, safety, patent and regulatory exclusivity, profitability, pricing and reimbursement, probability of Regulatory Approval and all other relevant factors reasonably determined by such Party to be relevant. Without limiting the foregoing, Commercially Reasonable Efforts requires, with respect to such obligations, that the applicable Party applies resources and personnel to complete tasks or activities in connection with the Development or Commercialization, as applicable, of Licensed Products in a timely manner, including (a) promptly assigning responsibility for such obligation to specific employee(s) with appropriate experience and expertise, and reasonably monitoring the performance of such task or activity on an on-going basis, (b) setting and reasonably seeking to achieve the intended endpoints or outcomes of such task or activity, and (c) allocating resources designed to advance progress with respect to such objectives.
1.15“Confidential Information” means all secret, confidential or proprietary information or data, whether in written, oral, graphic, video, computer or other form, provided by one Party (the “Disclosing Party”) to the other Party (the “Receiving Party”) pursuant to this Agreement or generated pursuant to this Agreement, including information relating to the Disclosing Party’s existing or proposed research, development efforts, activities to commercialize, Patent applications, business or products and any other materials that have not been made available by the Disclosing Party to the general public.
3
Notwithstanding the foregoing sentences, Confidential Information shall not include any information or material that:
(a)was already known to the Receiving Party (other than under an obligation of confidentiality owed to the Disclosing Party), at the time of disclosure by the Disclosing Party;
(b)was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party;
(c)became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the Receiving Party in breach of this Agreement;
(d)was subsequently disclosed to the Receiving Party by a Third Party who had no legal obligation to the Disclosing Party not to disclose such information to others;
(e)is independently discovered or developed by or on behalf of the Receiving Party without the use of the Confidential Information belonging to the other Party; or
(f)is approved for release by the Disclosing Party in writing.
1.16“Controlled” means, when used in reference to Technology, trademark rights or Patents, the ownership thereof, or the possession of the ability to grant licenses or sublicenses thereto, without violating the terms of any agreement or other arrangement with, or the rights of, any Third Party existing as of the date on which such license or sublicense is granted. “Control” shall be interpreted accordingly.
1.17“Damages” means all claims, threatened claims, damages, losses, suits, proceedings, liabilities, costs (including reasonable legal expenses, costs of litigation and reasonable attorney’s fees), or judgments, whether for money or equitable relief, of any kind and is not limited to matters asserted by Third Parties against a Party, but includes claims, threatened claims, damages, losses, suits, proceedings, liabilities, costs (including reasonable legal expenses, costs of litigation and reasonable attorney’s fees) or judgments incurred or sustained by a Party in the absence of Third Party claims; provided, however, that no party shall be liable to hold harmless or indemnify the applicable indemnified party, as applicable, for any claims, threatened claims, damages, losses, suits, proceedings, liabilities, costs or judgments for punitive or exemplary damages, except to the extent the Party seeking indemnification is actually liable to a Third Party for such punitive or exemplary damages in connection with a claim by such Third Party.
1.18“Data” shall mean all data and information generated, collected or filed, in connection with the conduct of research and development activities relating to a Licensed Product in the Field in the Territory, including toxicology data, pharmacological data, biomarker data, bioanalytical data, non-clinical reports, clinical reports, single patient clinical report forms, data points and the databases, and stability data, chemical data, quality control data (excluding the closed portion of any drug mater file), marketing data, pharmaco-economic data, branding and naming research reports, assays, study designs, protocols, specifications, and all CMC data (including CMC (chemistry, manufacturing and control) development reports).
1.19“Development” means all activities related to research, preclinical development efforts, test method development and stability testing, assay development, toxicology, formulation, process development, formulation development, delivery system development, quality assurance and quality control development, statistical analysis, clinical pharmacology, clinical studies (including Clinical Trials) and clinical study regulatory activities, seeking Regulatory Approval and otherwise handling regulatory
4
affairs, statistical analysis and reporting writing with respect to the Licensed Products. Development shall not include Manufacturing or Commercialization. When used as a verb, “Develop” means to engage in Development. “Developing” shall be construed accordingly.
1.20“EMA” means the European Medicines Agency and any successor entity thereto.
1.21“EU Sales Territory” means any member state of the European Union.
1.22“Executive Officers” means each Party’s respective Chief Medical Officer.
1.23“FD&C Act” means the United States Federal Food, Drug and Cosmetic Act, as amended.
1.24“FDA” means the United States Food and Drug Administration and any successor entity thereto.
1.25“Field” means any and all uses in humans and animals.
1.26“First Commercial Sale” means the date of the first Sale of the NASH Product.
1.27“Force Majeure” means any occurrence beyond the reasonable control of a Party that prevents or substantially interferes with the performance by the Party of any of its obligations hereunder, if such occurs by reason of any act of God, flood, fire, explosion, earthquake, strike, lockout, labor dispute, casualty or accident; or war, revolution, civil commotion, acts of public enemies, terrorist attack, blockage or embargo; or any injunction, law, order, proclamation, regulation, ordinance, demand or requirement of any government (to the extent such government has ruling authority over such Party) or of any subdivision, authority or representative of any such government; or other similar event, beyond the reasonable control of such Party, if and only if the Party affected shall have used reasonable efforts to avoid such occurrence.
1.28“Governmental Body” means any: (a) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, provincial, state, local, municipal, foreign or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or entity and any court or other tribunal); (d) multi-national or supranational organization or body; or (e) individual, entity, or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature.
1.29“HMRC” means HM Revenue & Customs.
1.30“IFRS” means the International Financial Reporting Standards issued by the International Accounting Standards Board, as in effect from time to time.
1.31“IND” means (a) an Investigational New Drug Application as defined in the FD&C Act and the regulations promulgated thereunder, or (b) the equivalent application to the equivalent Regulatory Authority in any other regulatory jurisdiction, the filing of which is necessary to initiate or conduct clinical testing of a pharmaceutical product in humans in such jurisdiction.
1.32“Intellectual Property” means all rights in Patents and Know-How.
1.33“Inventions” means any idea, process, method, composition of matter, article of manufacture, discovery, improvement or finding that is discovered, generated or invented (whether
5
patentable or not) in the course of activities performed under this Agreement and all Intellectual Property therein.
1.34“Joint Steering Committee” or “JSC” means the committee formed by the Parties pursuant to Section 3.1.
1.35“Know-How” means Confidential Information relating to the research and development of the Licensed Products and other scientific and technical activities contemplated under this Agreement, including unpatented technical and other information, including inventions, discoveries, methods, data, processes and procedures, ideas, concepts, formulae, scientific notebooks, specifications, procedures for experiments and tests and results of experimentation and testing; together with all common law or statutory rights protecting the same and any similar or analogous rights to any of the foregoing whether arising or granted under any Applicable Laws. Know-How shall also include all information for the Field for the Licensed Indications necessary to conduct research relative to OCA for therapeutic uses in the NASH Indication and/or the PBC Indication.
1.36“Licensed Indication” means, individually, the NASH Indication or the PBC Indication, and “Licensed Indications” means, collectively, the NASH Indication and the PBC Indication.
1.37“Licensed IP” means the Licensed Patents, Licensed Technology and Licensed NASH Trademarks.
1.38“Licensed NASH Trademarks” means the trademarks Controlled by Licensor and approved by applicable Regulatory Authorities for the Commercialization of the NASH Products in the Territory.
1.39“Licensed Patents” means Patents that are Controlled by Licensor in the Territory as of the Effective Date or throughout the Term and are necessary to make, have made, use, sell, offer for sale or import Licensed Products, including those Patents existing as of the Execution Date as set forth on Schedule 1.39.
1.40“Licensed Product” means, individually, the NASH Product or the PBC Product, and “Licensed Products” means, collectively, the NASH Product and the PBC Product.
1.41“Licensed Technology” means any and all Technology Controlled by Licensor as of the Effective Date or during the Term that is necessary for exploitation of the Licensed Products.
1.42“Licensee Insolvency Event” means that Licensee has (a) commenced a voluntary proceeding under any insolvency law, (b) had an involuntary proceeding commenced against it under any insolvency law which has continued undismissed or unstayed for sixty (60) consecutive days, (c) had a receiver, trustee or similar official appointed for it or for any substantial part of its property, (d) made a general assignment for the benefit of creditors, or (e) had an order for relief entered with respect to it by a court of competent jurisdiction under any insolvency law. For purposes hereof, the term “insolvency law” means any applicable bankruptcy, insolvency or other similar law now or hereafter in effect.
1.43“Licensee Product Data” means all Data and Regulatory Documentation (including all Regulatory Approvals) Controlled by Licensee, its Affiliates or their respective Sublicensees during the Term that relates to the Development or Commercialization of the Licensed Products.
1.44“Manufacture” or “Manufacturing” means all operations necessary or appropriate to make, test, release, store, supply and ship the Licensed Products, including bulk tablet packaging and
6
labeling, in accordance with good manufacturing practices (where applicable), Applicable Laws and the Licensed Products’ specifications. For the avoidance of doubt, “Manufacture” and “Manufacturing” shall not include Packaging and Labeling requirements for the Licensed Products for Licensee to Develop or Commercialize the Licensed Products in the Territory. “Manufactured” shall be construed accordingly.
1.45“MHRA” means the Medicines and Healthcare products Regulatory Agency and any successor entity thereto.
1.46“NASH Indication” means utilizing the NASH Product for therapeutic use to treat NASH.
1.47“NASH Product” means any product composition or formulation that contains OCA as the sole Active Pharmaceutical Ingredient for the treatment of NASH, or an authorized generic thereof in any jurisdiction in the Territory.
1.48“NDA” means a “New Drug Application”, as defined in the United States Federal Food, Drug, and Cosmetic Act, as amended, and applicable regulations promulgated thereunder by the FDA and all amendments and supplements thereto filed with the FDA, or the equivalent application filed with any Regulatory Authority, including all documents, data, and other information concerning Licensed Products, which are necessary for gaining Regulatory Approval to market and sell Licensed Product in the relevant jurisdiction, including an application for an import drug license in Mainland China.
1.49“Net Sales” means the gross amounts billed or invoiced by Licensee or any of its Affiliates or Sublicensees (including all sub-Sublicensees) for Sales of the NASH Product, in a bona fide arm’s length transaction, less the following deductions (to the extent included in and not already deducted from the gross amounts invoiced or otherwise charged) to the extent reasonable and customary and related to the Sales of the NASH Product:
1.49.1trade discounts, including trade, cash and quantity discounts or rebates, credits or refunds (including inventory management fees, discounts or credits which shall not include warehousing or distribution costs);
1.49.2price reductions or rebates, retroactive or otherwise, imposed by, negotiated with or otherwise paid to Regulatory Authorities or other payees;
1.49.3amounts repaid or credited by reason of rejections, defects, return goods allowance, recalls or returns, or because of retroactive price reductions, including rebates or wholesaler charge backs;
1.49.4allowances or credits actually granted upon claims, returns or rejections of the NASH Product;
1.49.5charges included in the gross sales price for freight, insurance, transportation, postage, handling and any other charges relating to the Sale, transportation, delivery or return of such Licensed Products;
1.49.6customs duties, sales, excise and use taxes and any other government charges (including value added tax) actually paid in connection with the transportation, delivery or return of the NASH Product (but excluding what is commonly known as income taxes); and
1.49.7any other items actually deducted from gross invoiced sales amounts as reported by a Party in its financial statements in accordance with IFRS, as applied on a consistent basis.
7
Even if there is overlap between any of the deductions described above, each individual item shall only be deducted once in the overall Net Sales calculation. Each of the above deductions to Net Sales shall be calculated in accordance with IFRS. Deductions exceeding gross amounts billed or invoiced in a period shall be carried forward and applied to future periods until fully taken. Net Sales shall not include transfers or dispositions for charitable, promotional, pre-clinical, clinical, regulatory, or governmental purposes, provided that such transfer or disposition is at or less than cost of manufacturing of such NASH Product. Net Sales shall not include sales between or among the Licensor or its Affiliates. In the event that any components of Net Sales are denominated in a currency other than US Dollars, such amounts shall be converted into US Dollars in accordance the average rate of exchange, as specified on Oanda in respect of the period during which the relevant Net Sales were recorded.
1.50“Packaging and Labeling” means finished product packaging and labeling and holding (including storage) of a Licensed Product in the Territory. When used as a verb, “Package and Label” means to engage in Packaging and Labeling.
1.51“Patent” means any and all (a) patent applications filed under Applicable Laws in any jurisdiction, including all provisional applications, substitutions, continuations, continuations-in-part, divisionals, renewals, and all patents granted thereon; and (b) all patents, reissues, reexaminations and extensions or restorations by existing or future extension or restoration mechanisms, including Patent Term Extension, supplementary protection certificates or the equivalent thereof.
1.52“Patent Term Extension” means any term extensions, supplementary protection certificates, regulatory exclusivity and equivalents thereof offering patent protection beyond the initial term with respect to any issued Patents.
1.53“PBC Indication” means utilizing the PBC Product for the treatment of PBC.
1.54“PBC Product” means Ocaliva® or an authorized generic thereof in any jurisdiction in the Territory.
1.55“Person” means any natural person, corporation, firm, business trust, joint venture, association, organization, company, partnership or other business entity, or any Governmental Body or agency or political subdivision thereof.
1.56“Promotional Materials” means all written, printed, electronic or graphic materials, provided or approved by Licensor for use by Licensee in promotion of the Licensed Products in the Territory.
1.57“Regulatory Approval” means, with respect to a Licensed Product in any regulatory jurisdiction, approval from the applicable Regulatory Authority sufficient for the manufacture, distribution, use, marketing and sale of such pharmaceutical product in such jurisdiction in accordance with Applicable Laws. For countries where governmental approval is required for pricing or reimbursement for a Licensed Product, “Regulatory Approval” shall not be deemed to occur in such country in the Territory until such pricing or reimbursement approval is obtained in such country.
1.58“Regulatory Authority” means any Governmental Body, including the FDA or any successor agencies thereto and its foreign equivalents, that has responsibility for granting any licenses or approvals or granting pricing or reimbursement approvals necessary for the marketing and sale of a pharmaceutical product in any country.
8
1.59“Regulatory Documentation” shall mean all applications, registrations, licenses, authorizations, approvals (including all Regulatory Approvals), and correspondence (registration and licenses, pricing and reimbursement correspondence, regulatory drug lists, advertising and promotion documents) submitted to or received from Regulatory Authorities (including minutes and official contact reports relating to any communications with any Regulatory Authority) and all supporting documents in connection therewith, and all non-clinical, preclinical trials and Clinical Trials, tests and biostudies, relating to the use of Licensed Product in the Field, or as required for regulatory purposes (including all Regulatory Approvals) and all Data contained in any of the foregoing, including all INDs, NDAs and Regulatory Approvals, regulatory drug lists, advertising and promotion documents, manufacturing data and records, drug master files, inspection reports, Data from Clinical Trials, adverse event files and complaint files, in each case related to Licensed Products in the Field, or as required for regulatory purposes.
1.60“Right of Reference or Use” means a “Right of Reference or Use” as that term is defined in 21 C.F.R. § 314.3(b), and any non-United States equivalents.
1.61“Royalty Term” means, with respect to the NASH Product in a country or region in the Territory, the period commencing upon the First Commercial Sale of the NASH Product in such country or region and expiring upon the latest of (a) the tenth (10th) anniversary of the First Commercial Sale of the NASH Product in such country or region, (b) the expiration of the last-to-expire Valid Claim of the Licensed Patents, and (c) the expiration of regulatory exclusivity for the NASH Product in such country or region.
1.62“Sale” means any transaction, transfer or disposition of value for which consideration is received by Licensee, its Affiliates or Sublicensees for sale, use, lease, transfer or other disposition of the NASH Product to or for the benefit of a Third Party. A Sale shall not include any NASH 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; provided, however, that Licensee, its Affiliates or their respective Sublicensees do not make a profit from such sale.
1.63“Selected Supply Events” means the occurrence of any of the following events (a) Licensee Affiliate that is party to the Manufacturing Agreement gives notice of termination under the Manufacturing Agreement exercising its rights to terminate the Manufacturing Agreement under Section 21.2.2 (subject to the applicable cure period) or under Section 24.5 of the Manufacturing Agreement (in the case of Section 24.5, solely due to a Force Majeure Event (as defined in the Share Purchase Agreement)) that results in no supply of Licensed Product for a period of six (6) months or under Section 21.5; (b) Licensor gives notice of termination under the Manufacturing Agreement exercising its rights to terminate the Manufacturing Agreement under Section 21.1 or 21.4.2 of the Manufacturing Agreement; or (c) the Manufacturing Agreement is terminated or rejected in any proceeding in relation to a bankruptcy or insolvency of Licensor solely to the extent that this Agreement remains in effect pursuant to Section 12.6.
1.64“Sublicense Documents” means any and all agreements, amendments or written understandings entered into with a Sublicensee (including any of its Affiliates) that are related to the grant of a Sublicense, Licensed Patents or Licensed Product. For clarity, in addition to the primary sublicense agreement, any other agreement with the Sublicensee that grants rights to Develop or Commercialize a Licensed Product other than for or on behalf of Licensee is a Sublicense Document. By way of example, a co-promotion or co-marketing agreement with such Sublicensee would be a Sublicense Document, but an agreement with such Sublicensee for the oversight of a Clinical Trial for Licensee (i.e., a master services agreement with a contract research organization) would not be a Sublicense Document. For clarity, the
9
foregoing exclusion is limited to such contract research organization master service agreements, and does not encompass all agreements with such Sublicensee.
1.65“Sublicensee” means a Person (including any Affiliate) to which a Sublicense is granted pursuant to this Agreement.
1.66“Sublicensee Income” means any and all financial consideration (including equity), upfront payments, license fees, and milestone payments, in cash payments or any other form of financial (or equity) consideration (as determined using the fair market value of such other form of financial (or equity) consideration), in each case other than all gross amounts included in Net Sales, received by Licensee or its Affiliates for the grant by Licensee or its Affiliates of a sublicense under this Agreement to a Third Party, including any right granted to a Third Party to Develop or Commercialize the NASH Product, including, but not limited to, a right to market or distribute the NASH Product (excluding rights granted by Licensee or its Affiliates to a Third Party to market or distribute the NASH Product for or on behalf of Licensee, where Licensee or its Affiliates are booking the sales of the NASH Product).
1.67“Technology” means any and all compounds, materials, equipment, specifications, Confidential Information, proprietary ideas and information, designs, formulae, methods, techniques, processes, procedures, inventions, Know-How, data and information, Clinical Trial data and all other scientific data, documentation and other technology, whether or not patentable or protectable as a trade secret.
1.68“Territory” means all countries and territories in the world other than the United States.
1.69“Third Party” means any Person other than the Parties and their respective Affiliates.
1.70“Transitional Services Agreement” means that certain Transitional Services Agreement entered into by Intercept Pharmaceuticals, Inc. and Mercury Pharma Group Limited as of even date.
1.71“TOGC” means the transfer of a business or part of a business as a going concern for the purposes of section 49 of the VAT Act and article 5 of the Value Added Tax (Special Provisions) Order 1995.
1.72“United States” or “US” means the United States of America, its territories and possessions.
1.73“Valid Claim” means a claim of any Patent that covers the make, use or sale of the Licensed Product, whose validity, enforceability, or patentability has not been affected by any of the following: (a) irretrievable lapse, abandonment, revocation, dedication to the public, or disclaimer; or (b) a holding, finding, or decision of invalidity, unenforceability, or non-patentability by a court, governmental agency, national or regional patent office, or other appropriate body that has competent jurisdiction, such holding, finding, or decision being final and unappealable or un-appealed within the time allowed for appeal.
1.74“VAT” means: (a) value added tax; (b) any tax imposed in compliance with the council directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); (c) any other sales tax, use tax, consumption tax and goods and services tax; and (d) any other tax of a similar nature to such tax referred to in any of (a) to (c).
1.75Other Terms. The definition of each of the following terms is set forth in the Section of this Agreement indicated below:
10
Defined Term | Section |
|---|---|
Additional Studies | 4.2.1(c) |
Agreement | Introductory Clause |
Adjusted Budget | 4.2.1(a) |
Budget | 4.2.1(a) |
Completion Date | 12.1.1 |
Costs | 4.2.1(a) |
Development Plan | 4.1.2(b) |
Disclosing Party | 1.15 |
Effective Date | Introductory Clause |
EMA Second Payment Amount | 7.4 |
EU First Payment Amount | 7.4 |
Execution Date | Introductory Clause |
Financial Report | 7.6 |
Infringement | 8.3.1 |
Intercept | Recitals |
Joint Inventions | 8.1.4 |
Joint IP | 8.1.4 |
Joint Patents | 8.1.4 |
License | 2.1 |
License Agreement | Recitals |
Licensee | Introductory Clause |
Licensee Know-How | 8.1.3 |
Licensee Necessary IP | 2.4.1 |
Licensee Patents | 8.1.3 |
Licensee Technology | 8.1.3 |
Licensor | Introductory Clause |
Licensor Inventions | 8.1.2 |
Manufacturing Agreement | 6.1 |
11
Defined Term | Section |
MHRA First Payment Amount | 7.4 |
MHRA Second Payment Amount | 7.4 |
NASH | Recitals |
Non-Objecting Party | 3.4 |
Objecting Party | 3.4 |
OCA | Recitals |
Ocaliva | Recitals |
Parties | Introductory Clause |
Party | Introductory Clause |
Patent Costs | 8.2.1 |
PBC | Recitals |
PIP Studies | 3.2(b) |
Post-Marketing Work | 4.2.1(a) |
Progress Report | 4.1.2(c) |
Prosecution and Maintenance | 8.2.1 |
Quality Agreement | 6.1 |
Recall Notice | 4.3.4(a) |
Receiving Party | 1.15 |
Review Period | 9.3 |
SDEA | 4.3.3 |
Share Purchase Agreement | Recitals |
Sublicense | 2.2 |
Term | 12.1.2 |
Termination | 12.1.1 |
Third Party Claim | 11.1 |
USPTO | 1.11 |
12
ARTICLE 2
LICENSES AND OTHER RIGHTS
2.1Grant of License to Licensee. In consideration of the payments due from Licensee under Article 7,
2.1.1Licensor hereby grants to Licensee an exclusive (even as to Licensor, but subject to Licensor’s retained rights set forth in Sections 2.3 and 4.2.1), fully paid-up, perpetual, irrevocable right and license, with the right to grant sublicenses in accordance with Section 2.2, under the Licensed IP to Develop, Commercialize, Package and Label, use and import, in each case of the foregoing the PBC Product for the Field for the PBC Indication in the Territory.
2.1.2During the Term, subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee an exclusive (even as to Licensor, but subject to Licensor’s retained rights set forth in Sections 2.3 and 4.2.2), royalty-bearing right and license, with the right to grant sublicenses in accordance with Section 2.2, under the Licensed IP to Develop, Commercialize, Package and Label, use and import the NASH Product for the Field for the NASH Indication in the Territory.
2.1.3Licensor hereby grants to Licensee a non-exclusive, fully paid-up, perpetual, irrevocable right and license under the Licensed IP to have Third Parties Manufacture the PBC Product for the Field for the PBC Indication in the Territory solely for use by or behalf of Licensee to the extent licensed to Licensee under Section 2.1.1; provided, however Licensee hereby agrees to not exercise its rights under this license grant unless and until the occurrence of any of the Selected Supply Events.
2.1.4During the Term, subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee a non-exclusive, fully paid-up right and license under the Licensed IP to have Third Parties Manufacture the NASH Product for the Field for the NASH Indication in the Territory solely for use by or behalf of Licensee to the extent licensed to Licensee under Section 2.1.2; provided, however Licensee hereby agrees to not exercise its rights under this license grant unless and until the occurrence of any of the Selected Supply Events.
Sections 2.1.1, 2.1.2, 2.1.3, and 2.1.4, collectively, are herein referred to as the “License”.
For clarity, the Parties intend for Licensee to primarily be supplied PBC Products and NASH Products by Licensor and the foregoing license grants provided in Sections 2.1.3 and 2.1.4 are part of the Parties’ plans to provide assurances and continuity of the supply of these products to Licensee, as further detailed in the Selected Supply Events.
2.2Grant of Sublicense by Licensee. Licensor grants to Licensee the right to grant sublicenses, in whole or in part, under the License (each, a “Sublicense”) subject to the terms and conditions of this Agreement and specifically this Section 2.2.
2.2.1All Sublicenses may be granted through multiple tiers, and are subject to the prior written consent of Licensor, which shall not be unreasonably conditioned, withheld or delayed, and to the agreement of the Sublicensee to comply with the applicable terms of this Agreement; provided, however, no such consent shall be required in connection with a Sublicense to a Third Party solely for distribution and/or Packaging and Labeling activities performed by such Third Party on behalf of Licensee.
2.2.2All Sublicenses will be issued in writing, and all Sublicenses shall include all of the rights of Licensor and require the performance of obligations due to Licensor contained in this Agreement and include no less than the following terms and conditions:
13
(a)Reasonable record keeping, audit and reporting obligations sufficient to enable Licensee to reasonably verify the payments due to Licensee and royalties due to Licensor under such Sublicense and to reasonably monitor such Sublicensee’s progress in Developing and/or Commercializing any Licensed Products, provided that such obligations shall be no less stringent than those provided in this Agreement for Licensee;
(b)Infringement and enforcement provisions that do not conflict with the restrictions and procedural requirements imposed on Licensee and do not provide greater rights to Sublicensee than as provided in Article 8;
(c)Confidentiality provisions with respect to Confidential Information of Licensor and publication requirements consistent with the restrictions on Licensee and rights of Licensor in Article 9;
(d)Covenants by Sublicensee that are equivalent to those made by Licensee in Section 10.5;
(e)A requirement of indemnification of Licensor by Sublicensee that is equivalent to the indemnification of Licensor by Licensee under Section 11.2;
(f)A requirement of obtaining and maintaining insurance by Sublicensee that is equivalent to the insurance requirements of Licensee under Section 11.5; and
(g)A requirement that Licensor is a third party beneficiary of such Sublicense.
2.2.3A fully executed copy of any Sublicense granted by Licensee pursuant to this Section 2.2 and any and all related Sublicense Documents must be provided to Licensor within fifteen (15) days following execution.
2.2.4If any Sublicense does not include all of the terms and conditions set forth in Section 2.2.2 or is not issued in accordance with the terms and conditions set forth in this Section 2.2, Licensee shall be liable to Licensor for any harm to Licensor that actually results from such deficiency.
2.2.5Licensee may only grant sublicenses under the licenses granted in Section 2.1.2 to the extent granted in connection with (and of the same scope as) a sublicense granted under the License granted to Licensee under Section 2.1, in each case solely to Develop or Commercialize Licensed Products for the Field in the Territory (i.e., no naked sublicensing permitted).
2.2.6Licensee shall be responsible for each Sublicensee complying with the applicable terms and conditions of this Agreement as if such Sublicensee were a party to this Agreement with respect to such terms and conditions, and Licensee hereby waives any requirement that Licensor exhaust any right, power or remedy, or proceed against any such Sublicensee directly.
2.3Retained Rights. Notwithstanding the rights granted in Section 2.1, but subject to the restrictive covenants binding upon the Licensor as set forth in the Share Purchase Agreement, Licensor retains:
2.3.1the right to practice the Licensed IP in order to perform, or have performed by a Third Party, Licensor’s rights or obligations under this Agreement (including, without limitation, the right and obligation to perform the Post-Marketing Work and the right to perform Additional Studies, Additional PIP Studies, and a global study for the NASH Product) and obligations under the Transitional Services
14
Agreement, including providing the assistance to Licensee in the preparation of applications for Regulatory Approvals in the Territory that will be filed in the name of Licensee as contemplated under this Agreement and the Transitional Services Agreement;
2.3.2the right to Develop and use the Licensed Products inside the Territory, including as part of global studies, solely for support of applications for Regulatory Approvals outside of the Territory;
2.3.3the right to Develop and use the Licensed Products for Regulatory Approvals and Commercialization outside of the Territory, irrespective of where such activities occur in the world (including the Territory), including, without limitation, in connection with activities performed by Licensor pursuant to Section 4.2;
2.3.4all rights to practice the Licensed IP with respect to compounds and products other than the Licensed Products;
2.3.5all rights to practice the Licensed IP for a product containing OCA for indications other than the Licensed Indications;
2.3.6the right to Manufacture and have Manufactured the Licensed Products and OCA in the Territory (but for clarity, Licensee also has certain rights to have Manufactured the Licensed Products under Section 2.1.3 or Section 2.1.4); and
2.3.7all rights to practice the Licensed IP with respect to countries outside of the Territory.
2.4Grant of License to Licensor. Subject to the terms and conditions of this Agreement, Licensee hereby grants to Licensor the following:
2.4.1a (a) royalty-free, transferable, perpetual, sublicensable (subject to the provisions of this Section 2.4.1), irrevocable, exclusive right and license under the Licensee Technology that are necessary or reasonably useful for the Development, Manufacture or Commercialization by Licensor, its Affiliates or their respective sublicensees of a Licensed Product outside of the Territory, (b) subject to the restrictive covenants binding upon the Licensor as set forth in Clause 11 of the Share Purchase Agreement, a worldwide, royalty-free, transferable, perpetual, sublicensable (subject to the provisions of this Section 2.4.1), irrevocable, non-exclusive right and license under the Licensee Technology that is necessary or reasonably useful for the Development, Manufacture or Commercialization by Licensor, its Affiliates or their respective sublicensees of a product containing OCA (other than the Licensed Products), (c) a royalty-free, transferable, sublicensable (subject to the provisions of this Section 2.4.1), irrevocable, non-exclusive right and license under any Inventions that are first reduced to practice or discovered, developed, invented, created or obtained solely by Licensee, its Affiliates or Third Parties acting on its or its Affiliates’ behalf while conducting Manufacturing activities of the Licensed Products that are necessary or reasonably useful for the Manufacture by Licensor, its Affiliates or their respective sublicensees of a Licensed Product inside the Territory for Commercialization outside the Territory (subsections (a), (b) and (c) collectively, “Licensee Necessary IP”). The foregoing licenses shall include the right for Licensor to grant sublicenses under the Licensee Necessary IP to its Affiliates and to Third Parties, through multiple tiers, solely in connection with (and of substantially equivalent scope to) a grant of rights to such Affiliates and Third Parties under the Licensed IP (inside of the Territory) or a Licensed Product outside of the Territory (i.e., no naked sublicensing of the Licensee Necessary IP is permitted); and
15
2.4.2a Right of Reference or Use to all Licensee Product Data solely to the extent necessary or reasonably required in connection with the Development, Manufacturing and Commercialization of the Licensed Products by Licensor, its Affiliates or their respective sublicensees.
2.5Data Transfer. To enable Licensee to benefit from the License, Licensor will conduct (a) an initial or agreed later time point, one-time transfer of all Data that is necessary for Licensee to Develop and Commercialize the Licensed Products for the Field for the Licensed Indications in the Territory (including relating to regulatory matters), (b) a transfer of the Data arising from Licensor’s performance of the Post-Marketing Work and other Data to be transferred on an agreed frequency, which Data is necessary for Licensee to Develop and Commercialize the Licensed Products for the Field for the Licensed Indications in the Territory (including relating to regulatory matters), which transfer shall be at mutually agreed milestones relating to such Post-Marketing Work or directly related activities, as applicable, and (c) upon Licensee’s reasonable written requests from time to time after the Effective Date to which Licensor does not reasonably object, Licensor will conduct data transfers to Licensee of such other requested Data that is reasonably necessary, for Licensee to Develop and Commercialize the Licensed Products for the Field for the Licensed Indications in the Territory (including relating to regulatory matters), to the extent such Data has not been previously transferred under subsection (a) or (b). Prior to Completion, the Parties’ applicable subject matter experts will discuss and reach mutual agreement on their shared expectation for what Data would be transferred under the foregoing subsections (a) and (b). All such transfers of Data shall be undertaken by both Parties efficiently with a goal of minimizing both cost as well as disruption to the other activities of Licensor. If fulfillment of any such transfer of Data would cause Licensor to incur any out-of-pocket costs, Licensee will be responsible for Licensor’s reasonable out-of-pocket costs incurred in any transfer of such Data to Licensee. Without limiting the generality of the foregoing, or being limited thereby, from and after the Effective Date, during the Term the Licensor shall make available to Licensee access to global patient outcome Data relating to the use of the PBC Product in the PBC Indication for use by Licensee in support of its activities for the PBC Product in the PBC Indication in the Territory, subject to such access and use at all times being in compliance with applicable privacy and data protection laws as forth in a data use agreement entered into by the Parties within fifteen (15) days following the Effective Date.
2.6No Implied License. Each Party acknowledges that the rights and licenses granted in this Agreement are limited to the scope expressly granted herein. Accordingly, except for the rights expressly granted under this Agreement, no right, title, or interest of any nature whatsoever is granted whether by implication, estoppel, reliance, or otherwise, by either Party to the other Party. All rights with respect to any Know-How, Patent or other intellectual property that are not specifically granted herein are reserved to the owner thereof.
ARTICLE 3
JOINT STEERING COMMITTEE
3.1Formation. Within thirty (30) calendar days following the Effective Date, the Parties will form a JSC comprised of three (3) non-legal subject matter expert representatives of each of the Parties. One representative at the JSC will be selected to act as the chairperson of the JSC. The JSC will meet on a regular basis but in no event less than two (2) times per year. Each Party may also schedule a meeting of the JSC on an ad hoc basis at any time upon two (2) weeks’ notice to the other Party, subject to the reasonable availability of the JSC members. Meetings of the JSC may be conducted by videoconference, teleconference or in person, as agreed by the Parties. The JSC will agree upon the time and location of the meetings. The chairperson, or his or her designee, will circulate an agenda for each meeting approximately one week before the date scheduled for the meeting, and will include all matters requested to be included on such agenda by either Party. The chairperson, or his or her designee, will take complete and accurate minutes of all discussions occurring at the JSC meetings and all matters decided upon at the
16
meetings, except that matters reflecting legal advice of counsel will not be included in such minutes. A copy of the draft minutes of each meeting will be provided to each Party by the chairperson, or his or her designee, after each meeting, and such minutes will be reviewed by the JSC members, any needed changes discussed and final minutes agreed to and provided to each Party within fifteen (15) Business Days after each meeting unless otherwise agreed. A reasonable number of additional non-legal subject matter expert representatives of a Party may attend meetings of the JSC in a non-voting capacity. Each Party is responsible for their travel costs and expenses associated with attending meetings.
3.2JSC Functions and Powers. The responsibilities of the JSC will be limited to the following matters:
(a)encouraging and facilitating communication between the Parties with respect to the Development of the Licensed Products;
(b)providing a forum for the Parties to discuss the pediatric investigation plan studies, as defined in Schedule 4.1.2(a) as, “PIP Studies”, conducted by Licensor for the PBC Product;
(c)providing a forum for the Parties to discuss and mutually agree on the overall strategy and priorities for Development of the NASH Product for the Field for the Licensed Indications in the Territory and to assist Licensor in coordinating Development activities for the NASH Product outside of the Territory;
(d)reviewing and approving the Budget and any deviations from the Budget of the Costs;
(e)reviewing and approving the initial Development Plan and each updated Development Plan thereafter, including any amendments thereto, for the NASH Product, and reviewing and approving the material aspects of any other Development of the PBC Product by or on behalf of Licensor;
(f)monitoring the progress of the Development of the NASH Product against the Development Plan and Licensee’s diligence in carrying out its responsibilities thereunder;
(g)providing a forum for the Parties to discuss whether Licensee should file for Regulatory Approval for the NASH Product in the Territory pursuant to Section 4.1.2;
(h)reviewing and commenting on proposed regulatory filings and submissions from Licensee to Regulatory Authorities to obtain, support and maintain Regulatory Approval of the Licensed Products for the Field for the Licensed Indications in the Territory;
(i)providing a forum for the Parties to discuss the status of Regulatory Approvals for the Licensed Products;
(j)providing a forum for the Parties to discuss the status of Commercialization efforts by Licensee for the NASH Product;
(k)providing a forum for the Parties to discuss the Commercialization of an authorized generic of a Licensed Product in the Territory; and
(l)providing a forum for the Parties to discuss inventorship disputes of Inventions.
17
3.3JSC Decision Making. The JSC is intended to serve primarily as an advisory body and to serve as a forum for the Parties to discuss matters relating to this Agreement and to provide a convenient mechanism for implementation of any review and/or approval rights granted to a Party under this Agreement. However, to the extent that the JSC is required to make a decision on a matter (including, without limitation, drafting, accepting and amending the Development Plan), all such decisions of the JSC will be made by unanimous vote, with each Party having one vote, irrespective of the number of members it has on the JSC. In the event that, after reasonable discussion and good faith consideration of each Party’s view on a particular matter before the JSC, the JSC cannot reach an agreement as to such matter (to the extent that such matter requires the agreement of the JSC hereunder), then:
(a) so long as the Licensor is the lead Party conducting the PIP Studies for the PBC Product, Licensor shall have the final decision-making authority with respect to the PIP Studies for the PBC Product which may be exercised by Licensor only in a manner that is consistent with seeking to complete the Post-Marketing Work as agreed by the Parties in the development plans and the Budget (or Adjusted Budget) therefor and other requirements provided therefor in Section 4.2.1, and if and when Licensee becomes the lead Party conducting the PIP Studies for the PBC Product, Licensee shall have the final decision-making authority with respect to the PIP Studies for the PBC Product;
(b) Licensor shall have the final decision-making authority with respect to all matters related to Development and Commercialization of the NASH Product (including, without limitation, any Clinical Trial) outside the Territory, and Licensor shall also have the right to object to, and have final decision-making authority with respect to, (i) any Development of the NASH Product (including, without limitation, any Clinical Trial) in the Territory or submission for a label change to the extent relating to safety for the NASH Product to either the MHRA or EMA, in each case proposed by Licensee that Licensor has a good faith objection that it (individually or in the aggregate) presents an Adverse Risk to the NASH Product outside the Territory, and (ii) the Commercialization of an authorized generic for the NASH Product inside the Territory at any time prior to Authorized Or Other Generic Entry for the NASH Product in the U.S.;
(c) except as set forth in Section 3.3(b) and Licensee’s obligation to use Commercially Reasonable Efforts to Commercialize the NASH Product in each country in the Territory where Licensee has obtained Regulatory Approval for the NASH Product pursuant to Section 5.1, Licensee shall have the final decision-making authority with respect to Development or Commercialization of the NASH Product in the Territory;
(d) any deviations from the Budget (or an Adjusted Budget) of the Costs, the status quo shall prevail;
(e) Licensee shall have the final decision-making authority with respect to all matters related to its Development and Commercialization of the PBC Product in the Territory, including Commercialization of an authorized generic of the PBC Product in the Territory, provided that Licensor shall have the right to object to (i) any such Development of the PBC Product, (ii) any submission for a label change to the extent relating to safety for the PBC Product to either the MHRA or EMA, or (iii) the Commercialization of an authorized generic of the PBC Product in the Territory at any time prior to Authorized Or Other Generic Entry for the PBC Product in the U.S., in each case proposed by Licensee with respect to which Licensor has a good faith objection that such Development (individually or in the aggregate), submission for a label change or the Commercialization of an authorized generic of the PBC Product in the Territory presents an Adverse Risk to the PBC Product outside the Territory, and in such event such objected to Development, submission for a label change or Commercialization of an authorized generic of the PBC Product in the Territory shall be subject to the provisions of Section 3.4; and
18
(f) Licensor shall have the final decision-making authority with respect to all matters related to its Development and Commercialization of the PBC Product outside the Territory, including Commercialization of an authorized generic of the PBC Product outside the Territory, provided that Licensee shall have the right to object to (i) any such Development of the PBC Product, (ii) any submission for a label change to the extent relating to safety for the PBC Product to the FDA, or (iii) Commercialization of an authorized generic of the PBC Product outside the Territory at any time prior to Authorized Or Other Generic Entry for the PBC Product in the Territory, in each case proposed by Licensor with respect to which Licensee has a good faith objection that such Development (individually or in the aggregate), submission for a label change or Commercialization of an authorized generic of the PBC Product outside the Territory presents an Adverse Risk to the PBC Product inside the Territory, and in such event such objected to Development or Commercialization of an authorized generic of the PBC Product outside the Territory, shall be subject to the provisions of Section 3.4.
The JSC shall not have any authority other than for those matters expressly set forth in Section 3.2 and, specifically, shall have no authority (1) to amend or interpret this Agreement (2) to determine whether or not Licensee has met its diligence or other obligations under this Agreement, or (3) to determine whether or not a breach of this Agreement has occurred. For clarity, the JSC decision-making authority shall not supersede any right, obligation or reservation of rights of a Party that is otherwise set forth in this Agreement.
3.4Disputed JSC Matter. In the event Licensor objects to Development of the PBC Product, submission for a label change to the extent relating to safety for the PBC Product to either the MHRA or EMA, or Commercialization of an authorized generic for the PBC Product in the Territory pursuant to Section 3.3(e) or Licensee objects to the Development for a PBC Product outside the Territory, submission for a label change to the extent relating to safety for a PBC Product to the FDA, or Commercialization of an authorized generic for the PBC Product pursuant to Section 3.3(f), (in each case, an “Objecting Party”), the Parties shall meet and confer in good faith on such objected matter within thirty (30) days from written request from an Objecting Party to the other Party (“Non-Objecting Party”) to meet pursuant to the provisions of this Section 3.4; provided, to the extent the timely resolution of the objected matter is critical to meeting any deadline set by a Regulatory Authority, then the foregoing thirty (30) day period will be shortened as much as needed in order to meet the applicable deadline (and the Non-Objecting Party shall promptly inform the Objecting Party of this reduced time period). The Non-Objecting Party shall take into good faith consideration the Adverse Risk raised by the Objecting Party in connection with such proposed activities and the Non-Objecting Party shall present to the Objecting Party, for further consideration by the Objecting Party, alternatives to eliminate the Adverse Risk raised by the Objecting Party. In the event that after the proposal of such alternatives during such thirty (30) day (or shorter) time period, the activities remain disputed by the Objecting Party, the Executive Officers shall meet and confer on such disputed activities. The Executive Officers shall work in good faith to mutually agree on alternative activities to address the Objecting Party’s concerns regarding such Adverse Risk in an additional time period of no longer than ten (10) Business Days. In the event that the Parties cannot reach agreement after such escalation to the Executive Officers, then the Non-Objecting Party shall have final decision-making authority for such disputed matters other than (a) Commercialization of an authorized generic of the PBC Product in the Territory at any time prior to Authorized Or Other Generic Entry of the PBC Product in the U.S., and (b) a submission for a label change to the extent relating to safety of the PBC Product in the Territory, in which case under subsection (a) and (b), Licensor shall have final decision-making authority. The Parties agree and acknowledge that in the event that Licensor exercises its final decision-making authority under this Section 3.4(b) relating to a submission for a label change to the extent relating to safety, such submission shall be in compliance with any requests from the Regulatory Authorities relating to such label and Applicable Laws. For clarity, if the Parties utilize this dispute escalation provision for any other disputed matters outside Sections 3.3(e) or 3.3(f), the provisions of Section 3.3 with respect to final decision-making authority shall remain.
19
3.5Termination of JSC. The JSC shall continue to exist until the Parties mutually agreeing to disband the JSC. Thereafter, the JSC shall have no further obligations under this Agreement.
ARTICLE 4
DEVELOPMENT AND REGULATORY AFFAIRS
4.1Licensee Development.
4.1.1PBC Product. Subject to Sections 4.2.1 and 4.3, Licensee shall have responsibility for, and control over, the Development of the PBC Product in the Territory, including supporting and maintaining Regulatory Approval of the PBC Product in the Territory. Notwithstanding the foregoing and anything in Section 4.3 to the contrary, prior to conducting any Clinical Trial for the PBC Product, Licensee shall submit the proposed design, protocol and endpoints for such Clinical Trial to Licensor for Licensor’s review and prior written approval, such approval not to be unreasonably withheld, conditioned or delayed. Licensee shall be solely responsible for all costs and expenses incurred by Licensee for the Development of the PBC Product. In addition to the Post-Marketing Work, Licensee may request that Licensor perform on behalf of Licensee, and at Licensee’s sole cost and expense, Development activities for the PBC Product in the Territory. Any agreement by Licensor to perform any Development activities for the PBC Product in the Territory (other than the Post-Marketing Work) shall be in Licensor’s sole discretion.
4.1.2NASH Product.
(a)General. Subject to Sections 4.2.2 and 4.3, Licensee shall have responsibility for, and control over, the Development of the NASH Product in the Territory, including supporting and maintaining Regulatory Approval of the NASH Product in the Territory, and may initiate such activities as and when it determines to do so during the Term, subject in each case to the provisions of Article 3 (including Section 3.3(a)). In the event that Licensee determines that it no longer wishes to seek or maintain Regulatory Approval from the EMA for the NASH Product, or to pursue the Commercialization of the NASH Product in the Territory, Licensee shall terminate this Agreement solely with respect to the NASH Product effective upon written notice to the Licensor as provided in Section 12.3 and with effects of termination provided in Section 12.4. Licensee shall be solely responsible for all costs and expenses incurred by Licensee for the Development of the NASH Product for the Territory.
(b)Development Plan. Prior to commencing any NASH Product Development activities Licensee shall submit a proposed development plan for the NASH Product for the Field for the NASH Indication in the Territory to the JSC for review and approval by the JSC (the “Development Plan”). Any Development conducted by Licensee under this Agreement relating to the NASH Product for the Field for the NASH Indication in the Territory shall be conducted pursuant to the Development Plan. The Development Plan shall be focused on efficiently obtaining Regulatory Approvals for the NASH Product in the Territory (subject to the obligations set forth in Section 4.1.2(a)), while taking into consideration the potential Development, Regulatory Approval or Commercialization impact on the NASH Product outside of the Territory. On no less than an annual basis following adoption of the initial Development Plan, Licensee shall submit any updates and amendments, as appropriate, to the then-current Development Plan to the JSC for review and approval by the JSC. Notwithstanding the foregoing and anything in Section 4.3 to the contrary, prior to conducting any Clinical Trial for the NASH Product, Licensee shall submit the proposed design, protocol and endpoints for such Clinical Trial to Licensor for Licensor’s review and prior written approval, such approval not to be unreasonably withheld, conditioned or delayed.
20
(c)Progress Reports. Following adoption of the initial Development Plan for the NASH Product pursuant to Section 4.1.2(b) and continuing until the First Commercial Sale of the NASH Product, Licensee, on an annual basis or more frequently as reasonably requested by Licensor, shall submit to Licensor a progress report (each, a “Progress Report”) covering Licensee’s (and any Affiliates’ and Sublicensees’) achievements and activities under the Development Plan for the NASH Product. Each Progress Report must include at least the following: (i) a summary of achievements and activities under the Development Plan for the NASH Product; (ii) a summary of pre-launch activities prior to Commercialization of the NASH Product; (iii) an identification of filings for Regulatory Approval (and status of such filings) and other material correspondence and meetings with Regulatory Authorities for the NASH Product; and (iv) a listing of any and all Sublicenses granted by Licensee regarding the NASH Product.
4.2Licensor Development.
4.2.1PBC Product Post-Marketing Work. All Development activities provided for under this Section 4.2.1 shall be efficiently undertaken by the Parties with the goal of limiting cost and expenditure to both Parties to what is reasonably necessary to achieve the objective of such Development activities.
(a)Licensee acknowledges that Licensor is performing, and shall have the right and obligation to continue to perform (subject to Section 4.2.1(d)), Development activities for the PBC Product that have been planned by Licensor as of the Effective Date and are detailed in Schedule 4.2.1(a) attached hereto (with an associated budget on Schedule 4.2.1(b)) (“Budget”), and shall also perform the PIP Studies as they are modified and perform further data analysis of, and other non-clinical work with respect to, the PIP Studies, in each case that are required by Regulatory Authorities as a result of meetings with, and submissions to, Regulatory Authorities regarding the PIP Studies through December 31, 2029, which modifications, data analysis and other non-clinical work shall be implemented efficiently to meet the requirements of the Regulatory Authorities, (collectively, the “Post-Marketing Work”). To the extent any Post-Marketing Work regarding the PIP Studies in respect of the Territory extends past December 31, 2029, unless otherwise mutually agreed by the Parties, Licensor shall transition to Licensee the conduct of the remaining Post-Marketing Work in respect of the Territory for Licensee to undertake as the lead party for such Development activities, and Licensee shall bear [***] percent ([***]%) of all costs for such Development, and Licensor shall bear [***] percent ([***]%) of all costs for such Development. The Budget (and any Adjusted Budget) shall include all associated out-of-pocket costs and expenses expected to be incurred by the Party leading the applicable Post-Marketing Work after the Effective Date, including necessary regulatory costs and expenses and costs and expenses payable to contract research organizations, pharmacovigilance costs (solely related to the performance of such Post-Marketing Work), Clinical Trial sites, Development, including in the foregoing categories personnel fairly allocated to this Post-Marketing Work, and regulatory service providers and external consultants, through December 31, 2029 (collectively, the “Costs”); provided, that such Budget shall be subject to adjustment (proposed by the Party leading such Post-Marketing Work and discussed with the other Party, and finally decided by the Party leading such Post-Marketing Work taking into good faith consideration the comments of the other Party) based on (i) any modifications to the PIP Studies resulting from meetings with, and submissions to, Regulatory Authorities, (ii) any Additional PIP Studies, (iii) any data analysis and other non-clinical work included in the Post-Marketing Work, or (iv) Additional Studies (solely to the extent such Additional Studies are performed by Licensor) (“Adjusted Budget”) and Licensee shall bear [***] percent ([***]%) of all such Costs in such Adjusted Budget and Licensor shall bear [***] percent ([***]%) of all such Costs in such Adjusted Budget. In the event any new pediatric investigation plan studies not included in the PIP Studies are required by Regulatory Authorities in the Territory as a result of meetings with, and submissions to, MHRA or EMA in support of the same pediatric investigation plan objectives in the Territory of the PIP Studies through December 31, 2029, Licensor shall have the first right to conduct such additional studies
21
and shall implement these efficiently to meet the requirements of such Regulatory Authorities (the “Additional PIP Studies”), and if Licensor conducts such Additional PIP Studies, Licensor shall provide Licensee an Adjusted Budget for such Costs associated with such Additional PIP Studies, and Licensee shall bear [***] percent ([***]%) of all such Costs in such Adjusted Budget and Licensor shall bear [***] percent ([***]%) of all such Costs. In the event that Licensor elects not to conduct such Additional PIP Studies, Licensee may conduct such Additional PIP Studies, and Licensor shall bear [***] percent ([***]%) of all such costs for such Additional PIP Studies, and Licensee shall bear [***] percent ([***]%) of all such costs for such Additional PIP Studies, and Licensee shall provide Licensor with an Adjusted Budget.
(b)In the event there is a positive deviation between the Costs and the Budget (or Adjusted Budget) greater than [***] percent ([***]%), Licensor shall provide Licensee with all reasonable documentation supporting any increase in the Costs from the Budget (or Adjusted Budget), and the Parties will meet and agree upon an adjustment of Licensee’s share above such [***] percent ([***]%) deviation, and any such amendment shall be done in writing by mutual agreement and with formal amendment to this Agreement; provided further, that to the extent any such increase to the Budget (or Adjusted Budget) which is caused by and commensurate with a material market event (not caused by or related to any fault, action or omission by the Licensee), material new or increased requirements by a Regulatory Authority or material changes in Applicable Laws, Licensee shall bear [***] percent ([***]%) of such Adjusted Budget to account for such material market event or material new or increased requirements by a Regulatory Authority, or material changes in Applicable Law. Licensor shall invoice Licensee for its share of the Costs, and Licensee shall make payment to Licensor for such Costs within thirty (30) days following the invoice date. Except as expressly provided herein, any PBC Product Development undertaken by Licensee in the Territory shall be undertaken at Licensee’s cost and expense. Upon Licensor’s request, Licensee shall submit to Regulatory Authorities, in a form and manner directed by Licensor, any Regulatory Documentation prepared by Licensor in connection with such Post-Marketing Work.
(c)In the event the FDA and/or one or more Regulatory Authority(ies) in the Territory requires additional clinical studies not included in the PIP Studies or Additional PIP Studies for the PBC Product and such requirement arises from the 2022 annual renewal procedures set forth by the EMA or MHRA relating to the COBALT (302) Study (described on Schedule 4.2.1(a)) (“Additional Studies”), (i) if the FDA requires such Additional Studies (whether or not any other Regulatory Authorities in the Territory also require such Additional Studies), then Licensor shall perform such Additional Studies; and (ii) otherwise Licensor shall have the first right to perform such Additional Studies, and if the Licensor elects not to, then the Licensee may conduct such Additional Studies. In the event that Licensor performs such Additional Studies which are required by the FDA but no Regulatory Authorities in the Territory also require such Additional Studies, such Additional Studies shall not be considered part of the Post-Marketing Work and Licensor shall perform such Additional Studies at its cost and expense. In the event that Licensor exercises its first right to perform such Additional Studies which are required by one or more Regulatory Authorities in the Territory (whether or not also required by the FDA) , such Additional Studies shall be considered part of the Post-Marketing Work and addressed in an Adjusted Budget provided by Licensor to Licensee, and Licensee shall bear [***] percent ([***]%) of all such Costs in such Adjusted Budget and Licensor shall bear [***] percent ([***]%) of all such Costs. In the event that Licensee performs such Additional Studies which are not required by the FDA, such Additional Studies shall not be considered part of the Post-Marketing Work and Licensee shall perform such Additional Studies at its cost and expense.
(d)In the event that there is a termination, suspension or wind-down of the PIP Studies or Additional PIP Studies, or any portion thereof, that is agreed to by the Regulatory Authorities prior to December 31, 2029, the Licensor’s obligation to perform such Post-Marketing Work (including PIP Studies or Additional PIP Studies) shall be modified based on such approved action by the Regulatory Authority. In such event, Licensor shall submit an Adjusted Budget to Licensee to reflect the reduction in
22
scope to such Post-Marketing Work (including PIP Studies or Additional PIP Studies), and such Adjusted Budget shall be subject to the provisions of Section 4.2.1(a).
4.2.2NASH Product Development. Notwithstanding anything in this Agreement to the contrary, Licensor shall have the sole and exclusive right to conduct all Development work, including Clinical Trials necessary for the Development of the NASH Product up until receipt of Regulatory Approval by the FDA of the NASH Product for the NASH Indication. Any NASH Product Development undertaken by Licensee in the Territory shall be undertaken at Licensee’s cost and expense.
4.2.3Cooperation. Licensor shall provide such technical assistance and cooperation to Licensee as Licensee may reasonably request in writing as necessary for Licensee to Develop the Licensed Products for the Field for the Licensed Indications in the Territory, subject to Licensees’ reimbursement of Licensor’s out-of-pocket costs and expenses related thereto. Licensor shall invoice Licensee for any such costs and expenses, and Licensee shall make payment to Licensor for such costs and expenses within thirty (30) days following the invoice date.
4.3Regulatory.
4.3.1Subject to the provisions of Article 2 and this Article 4, Licensee shall have authority and responsibility for regulatory activities for the Licensed Products for the Field for the Licensed Indications in the Territory. Licensee will have the right to conduct all communications with Regulatory Authorities, including all meetings, conferences and discussions (including advisory committee meetings), with regard to the Licensed Products for the Field for the Licensed Indications in the Territory; provided, however, that Licensee shall notify Licensor of all such communications, and Licensor shall have the right to attend and reasonably participate in any such meetings, conferences and discussions. Licensee will lead and have control over preparing and submitting all regulatory filings related to the Licensed Products for the Field for the Licensed Indications in the Territory, including all applications for Regulatory Approval; provided, however, that all such filings and submissions shall be submitted in advance to Licensor for review and comment with such comments to be incorporated in good faith and require Licensor’s prior written approval, such approval not to be unreasonably withheld, conditioned or delayed. Licensee will own any and all Regulatory Approvals and applications therefor (including INDs) and other regulatory filings related to the Licensed Products for the Field for the Licensed Indications in the Territory, which will be held in the name of Licensee or its designees. For clarity, Licensor retains the right to file, and owns, any and all Regulatory Approvals and applications therefor (including INDs), and other regulatory filings related to the Licensed Products outside of the Territory. Licensee agrees to grant to Licensor any rights to such Regulatory Approvals and applications therefor (including INDs) in the Territory necessary for Licensor to perform the activities set forth in Section 4.2, including in the Territory.
4.3.2Safety Reporting. The Parties agree to comply with any and all Applicable Laws that are applicable as of the Effective Date and thereafter during the Term in connection with Licensed Product safety data collection and reporting. If either Party has or receives any safety information which may be related to the use of Licensed Product, then such Party shall provide the other Party with all such information in accordance with the obligations set forth in the SDEA.
4.3.3Safety Data Exchange Agreement. Without limiting Section 4.3.2, the Parties have executed as of the Effective Date that certain Safety Data Exchange Agreement, which sets forth standard operating procedures governing the collection, investigation, reporting, and exchange of safety information sufficient to permit each Party to comply with its regulatory and other legal obligations within applicable timeframes (the “SDEA”). Each Party shall comply with its obligations under the SDEA.
4.3.4Recalls.
23
(a)If either Party is subject of a request, court order or other directive of a Governmental Body or Regulatory Authority to withdrawal or recall any Licensed Product from the market in the Territory, or otherwise becomes aware of any product safety concern or other circumstances which may reasonably result in a withdrawal or recall being undertaken voluntarily it shall notify immediately the other Party in writing (a “Recall Notice”) enclosing a copy of all relevant information.
(b)Following receipt of a Recall Notice, both Parties shall:
(i)Discuss the Recall Notice in good faith with a view to agreeing to the course of action to be taken (subject to Section 4.3.4(c) either Party shall be free to undertake a withdrawal or recall in respect of any Licensed Product which it has placed on the market in the Territory (with respect to Licensee) or outside the Territory (with respect to Licensor)); and
(ii)Comply with their respective obligations set forth in the Quality Agreement.
(c)Unless required by Applicable Law, neither Party may (i) refer to the other Party in any public statement or announcement; or (ii) make any admission of liability on the other Party’s behalf, whether in connection with a withdrawal, recall or otherwise, without the other Party’s prior written consent.
4.3.5Adverse Risk. The Parties agree to actively cooperate in the event that there is an Adverse Risk to a Licensed Product, subject to the final decision-making set forth in Section 3.3.
ARTICLE 5
COMMERCIALIZATION
5.1Commercialization Generally. Subject to Section 5.2, Licensee shall have sole responsibility for, and control over, the Commercialization of the Licensed Products for the Field for the Licensed Indications in the Territory. The Parties shall reasonably coordinate to create alignment on nonpromotional materials and medical information used in the Commercialization of the Licensed Products in their respective territories. Subject to the terms and conditions of this Agreement, Licensee shall bear one hundred percent (100%) of all costs and expenses associated with the Commercialization of the Licensed Products in the Territory. Following receipt of Regulatory Approval for the NASH Product in a country or region in the Territory, Licensee, its Affiliates and/or their respective Sublicensees shall use Commercially Reasonable Efforts to Commercialize the NASH Product that receives Regulatory Approval in such country or region, which efforts shall include using Commercially Reasonable Efforts to (a) Commercialize the NASH Product in the Territory to maximize the commercial return, (b) undertake marketing, promoting and selling the NASH Product in a diligent sustained manner consistent with the best practices of the pharmaceutical industry, and (c) establish and consistently seek to achieve specific and meaningful sales goals and allocate sufficient resources designed to meet such objectives, including, but not limited to, fielding, training (including any reasonably necessary medical education) and supervising a sales force (including an appropriate management structure) reasonably necessary for Licensee to perform its Commercialization obligations hereunder.
5.2Licensed Product Statements and Promotional Materials. The Licensee shall only make statements and claims regarding the Licensed Products, including as to efficacy and safety, that are consistent with the product labels of the Licensed Products and the Promotional Materials, and Licensee shall not make any false or misleading statements or comments about the Licensed Products. The Parties shall reasonably cooperate to create alignment in the marketing and Promotional Materials used for the Licensed Products for the Field for the Licensed Indications inside and outside of the Territory, including
24
Licensor providing to Licensee after the Effective Date a one-time transfer of copies of Promotional Materials used by Licensor outside the Territory together with high resolution artwork and layout files used therein. Licensee shall have a fully paid-up, perpetual, irrevocable non-exclusive right to use such Promotional Materials in the Territory in connection with the Commercialization of the PBC Product in the Territory.
ARTICLE 6
MANUFACTURING
6.1Supply of the Licensed Products. The Parties have executed as of the Execution Date that certain Agreement for the Supply of Manufactured Products, effective as of the Effective Date, pursuant to which Licensee shall exclusively purchase from Licensor, and Licensor shall supply to Licensee, bulk tablets of the Licensed Products for Development and Commercialization by Licensee in accordance with this Agreement (the “Manufacturing Agreement”). In connection with the Manufacturing Agreement, the Parties will also execute a certain Quality Agreement, governing the agreed upon specifications and other technical aspects of supply of the Licensed Products under the Manufacturing Agreement (the “Quality Agreement”). The Parties shall comply with the obligations of the Manufacturing Agreement and Quality Agreement.
6.2Manufacture by Licensee. Except as expressly permitted pursuant to Section 2.1 following the occurrence of a Selected Supply Event, Licensee shall not be permitted to Manufacture (or have Manufactured) the Licensed Products, inside or outside of the Territory, without the prior written consent of Licensor, and nothing herein shall be construed as granting any license or right to Licensee to Manufacture the Licensed Products.
6.3Finished Product Packaging and Labeling. Licensee shall have the right and the sole obligation to perform all Packaging and Labeling for the Licensed Products in accordance with Applicable Laws and all applicable Regulatory Approvals for Licensee’s Development, Commercialization and use of the Licensed Products in connection with this Agreement. In no event shall Licensor have any responsibility or liability for the Packaging and Labeling of the Licensed Products in the Territory.
ARTICLE 7
FINANCIALS
7.1Upfront Payment. As consideration for the rights and licenses granted to Licensee under this Agreement (including the License) with respect to the Licensed Products, Licensee shall make a one-time, non-refundable, non-creditable amount to Licensor of US$364,500,000 in cash and cleared funds on the Completion Date in accordance with Section 7.5.
7.2Royalty. As further consideration for the rights and licenses granted to Licensee under this Agreement (including the License) with respect to the NASH Product, during the Royalty Term, Licensee shall pay Licensor a royalty of [***] percent ([***]%) of Net Sales of the NASH Product. Licensee shall pay such royalties owed to Licensor on a Calendar Quarter basis. Royalties for Sales that take place in a Calendar Quarter shall be paid within thirty (30) days following the end of such Calendar Quarter, at the same time as delivery of the Financial Reports for such Calendar Quarter under Section 7.6.
7.3Sublicensee Income. As further consideration for the rights and licenses granted to Licensee under this Agreement (including the License), Licensee shall pay Licensor [***] percent ([***]%) of all Sublicensee Income paid to Licensee or its Affiliates by a Sublicensee in consideration for any Sublicense granted to such Sublicensee to Develop or Commercialize the NASH Product pursuant to
25
Section 2.2. Licensee will make such payment to Licensor within thirty (30) days after the receipt by Licensee of any Sublicensee Income from such Sublicensee.
7.4Exclusivity Extension. In the event an extension of orphan exclusivity of two (2) years for the PBC Product is received from the EMA prior to the receiving an extension from the MHRA, then:
Upon receipt of an extension of orphan exclusivity of two (2) years for the PBC Product by the EMA, Licensor shall provide Licensee notice that such extension has been granted and for the twelve (12) month period preceding the date of such receipt from the EMA extension grant Licensee shall calculate the aggregate Net Sales of the PBC Product in the EU Sales Territory divided by the aggregate Net Sales of the PBC Product in the United Kingdom and the EU Sales Territory, and multiply this by US$45,000,000 (the “EU First Payment Amount”). The twelve (12) month calculation period shall be based on the first full month immediately preceding receipt of such notice of extension and the full twelve (12) month period preceding the end of such first full month. Licensee shall pay the EU First Payment Amount to Licensor in cash and cleared funds as set forth in Section 7.5 no later than thirty (30) days of the Licensee being provided notice by Licensor that such EMA extension has been granted (which notice shall act as an invoice for this payment). Thereafter, if and when an extension of orphan exclusivity of two (2) years for the PBC Product is received from the MHRA, Licensor shall provide Licensee notice that such extension has been granted and Licensee shall calculate US$45,000,000 less the EU First Payment Amount (the “MHRA Second Payment Amount”). Licensee shall pay the MHRA Second Payment Amount to Licensor in cash and cleared funds as set forth in Section 7.5 no later than thirty (30) days of the Licensee being provided notice by Licensor that such extension by the MHRA has been granted (which notice shall act as an invoice for this payment).
Alternatively, in the event an extension of orphan exclusivity of two (2) years for the PBC Product is received from the MHRA prior to the receiving an extension from the EMA, then:
Upon receipt of an extension of orphan exclusivity of two (2) years for the PBC Product by the MHRA, Licensor shall provide Licensee notice that such extension has been granted and for the twelve (12) month period preceding the date of such receipt from the MHRA extension grant Licensee shall calculate the aggregate Net Sales of the PBC Product in the United Kingdom divided by the aggregate Net Sales of the PBC Product in the United Kingdom and the EU Sales Territory, and multiply this by US$45,000,000 (the “MHRA First Payment Amount”). The twelve (12) month calculation period shall be based on the first full month immediately preceding receipt of such notice of extension and the full twelve (12) month period preceding the end of such first full month. Licensee shall pay the MHRA First Payment Amount to Licensor in cash and cleared funds as set forth in Section 7.5 no later than thirty (30) days of the Licensee being provided notice by Licensor that such MHRA extension has been granted (which notice shall act as an invoice for this payment). Thereafter, if and when an extension of orphan exclusivity of two (2) years for the PBC Product is received from the EMA, Licensor shall provide Licensee notice that such extension has been granted and Licensee shall calculate US$45,000,000 less the MHRA First Payment Amount (the “EMA Second Payment Amount”). Licensee shall pay the EMA Second Payment Amount to Licensor in cash and cleared funds as set forth in Section 7.5 no later than thirty (30) days of the Licensee being provided notice by Licensor that such extension by the EMA has been granted (which notice shall act as an invoice for this payment).
For clarity: (i) the maximum aggregate payments that can become due and payable under this Section 7.4 is US$45,000,000, which would only occur in the event an extension of orphan exclusivity of two (2) years for the PBC Product is received from each of the MHRA and the EMA (regardless of which such extension is received first); and (ii) if only one such extension is received and the second extension is no longer
26
achievable due to the deadline for approval expiring, then only one payment will become due and payable under this Section 7.4 (either the EMA First Payment Amount or the MHRA First Payment Amount, as applicable).
7.5Mode of Payment and Currency. Unless otherwise directed by Licensor in writing, all payments to Licensor hereunder shall be made by deposit of US Dollars in the requisite amount to “Intercept Pharma Europe Ltd.” and will be made by delivery by ACH/WIRE to the account of Licensor notified to Licensee for this purpose. Payments under this Agreement shall be made in US Dollars. All royalties payable shall be calculated first in the currency of the jurisdiction in which payment was made, then converted into US Dollars at the average rate of exchange, as specified in Oanda, in respect of the period during which the Net Sales occurred.
7.6Royalty and Sublicensee Income Reports. Within thirty (30) days after the end of each Calendar Quarter, Licensee shall deliver to Licensor a report (“Financial Report”), in a reasonable form requested by Licensor, setting out all details necessary to calculate the royalty and Sublicensee Income due under this Article 7 for such Calendar Quarter, including: (a) the number of NASH Product sold by Licensee, its Affiliates and their respective Sublicensees in each country; (b) gross sales and Net Sales of the NASH Product made by Licensee, its Affiliates and Sublicensees; (c) royalties; (d) names and addresses of all Sublicensees; (e) Sublicensee Income payable to Licensor in such Calendar Quarter, if applicable; (f) a specification of all deductions and their dollar value taken under each of Section 1.49; and (g) the date of First Commercial Sale in each country or region in the Territory for the NASH Product (this need only be reported in the first Financial Report following such First Commercial Sale of in the respective country).
7.7Late Payments. In addition to any other remedies available to Licensor, any failure by Licensee to make a payment within thirty (30) days after the date when due shall obligate Licensee to pay computed interest, the interest period commencing on the due date and ending on the actual payment date, to Licensor at a rate per annum (but with interest accruing on a monthly basis) four (4) percentage points above the then-applicable prime rate published by the Wall Street Journal (or, if not available therein, as quoted in a reputable source reasonably acceptable to both Parties), calculated daily on the basis of a 365-day year, or the highest rate allowed by Applicable Laws, whichever is lower.
7.8Default Payment. In the event of default in payment of any payment owing to Licensor under the terms of this Agreement, and if it becomes necessary for Licensor to undertake legal action to collect said payment, Licensee shall pay reasonable, documented out-of-pocket attorneys’ fees and costs incurred in connection therewith.
7.9Accounting. Each Party shall calculate all amounts, and perform other accounting procedures required, under this Agreement and applicable to it in accordance IFRS.
7.10Books and Records. Licensee will keep accurate books and records of the Licensed Products and all Sublicenses and any agreements entered into by Licensee that involved Licensed IP. Licensee will preserve these books and records for at least five (5) years from the date of the Financial Report to which they pertain.
7.11Audits. Upon reasonable written notice, Licensor, at its own cost, through an independent auditor reasonably acceptable to Licensee, may inspect and audit the relevant financial books and records of Licensee pertaining to the calculation of any royalties and Sublicensee Income due to Licensor under this Agreement. Licensee shall provide such auditors with access to necessary key personnel, and necessary financial books and records during reasonable business hours. Such access need not be given to any such set of records more often than once each year unless for cause, or to any set of records for any
27
period that has already been the subject of an audit under this Section 7.11. Licensor shall provide Licensee with written notice of its election to inspect and audit the records related to the royalties and Sublicensee Income due hereunder not less than thirty (30) days prior to the proposed date of review of Licensee’s records by Licensor’s auditors. Should the auditor find any discrepancy relating to the non-payment and/or underpayment of royalties or Sublicensee Income by Licensee, Licensee shall (a) promptly pay Licensor the amount of such non-payment and/or underpayment; and (b) shall reimburse Licensor for the cost of the audit, if non-payment of Sublicensee Income due is discovered or if such non-payment or underpayment of such Sublicensee Income or royalties equals or exceeds five percent (5%) of the Sublicensee Income or royalties, as applicable and as calculated separately, due during the time period audited. If the auditor finds overpayment by Licensee, then Licensee shall have the right to deduct the overpayment from any future royalties or Sublicensee Income due to Licensor by Licensee.
7.12Taxes.
7.12.1Generally. Each Party shall be solely responsible for the payment of all taxes imposed on its share of income arising from the activities of such Party under this Agreement. Except for VAT which shall be subject to the provisions of Section 7.12.2, Licensee may withhold from payment made to Licensor under this Agreement any income tax required to be withheld by Licensee under Applicable Laws. If any tax is withheld by Licensee, Licensee shall provide Licensor receipts or other evidence of such withholding and payment to the appropriate tax authorities on a timely basis following that tax payment. Each Party agrees to cooperate with the other Party in claiming refunds or exemptions from such deductions or withholdings under any relevant agreement or treaty which is in effect. The Parties shall discuss applicable mechanisms for minimizing such taxes to the extent possible in compliance with Applicable Laws. In addition, the Parties shall cooperate in accordance with Applicable Laws to minimize indirect taxes (such as value added tax, sales tax, consumption tax and other similar taxes) in connection with this Agreement.
7.12.2VAT.
(a)The consideration for any License or other supply by Licensor for VAT purposes made or deemed to be made under this Agreement, including any non-monetary consideration, shall be deemed to be expressed as exclusive of any applicable VAT. Licensee shall make all payments due hereunder (in addition to the consideration) and shall pay to Licensor all VAT that Licensor is required to account for in relation to amounts paid or consideration given under this Agreement.
(b)The Parties consider that, as the License is granted in connection with the sale of the Business (as defined in the BTA) under (and is required to be entered into under the terms of) the BTA and will be used for the purposes of the Business, the grant of the License will form part of a TOGC, and they shall use their reasonable endeavours to procure that such grant is so treated by HMRC. This obligation shall not require the Licensor to make any appeal against any determination of HMRC that the grant does not amount to a TOGC.
(c)If it is determined that the grant of the License under this Agreement does not constitute a TOGC, or part of a TOGC, then the VAT chargeable by the Licensor to the Licensee shall be paid within ten (10) Business Days of the receipt by the Licensor of a valid VAT invoice and a copy of the confirmation from HMRC (such documentation to be delivered by the Licensor as soon as possible after receipt from HMRC).
(d)The Licensee warrants and undertakes to the Licensor that: (i) it is and will at Completion (as defined in the Share Purchase Agreement) be registered for UK VAT purposes as a member of a VAT group with Advanz Pharma Services Limited; (ii) the Licensed IP that is the subject of
28
the License will be used by Advanz Pharma Services Limited for the purposes of the Business; and (iii) it is not taking the grant of the License as a nominee of any other Person.
ARTICLE 8
INTELLECTUAL PROPERTY
8.1Ownership of Intellectual Property.
8.1.1Inventorship. Inventorship of Inventions shall be determined in accordance with US patent laws. Ownership of Inventions shall follow inventorship. Any dispute between the Parties on inventorship of Inventions may be referred to the JSC for discussion.
8.1.2Licensor Inventions. Licensor shall be the sole owner of any Inventions and Know-How, and all intellectual property rights therein, that are first reduced to practice or discovered, developed, invented, created or obtained solely by Licensor, its Affiliates or Third Parties acting on its or its Affiliates’ behalf (“Licensor Inventions”), and will retain all of its rights, title and interests thereto; provided, however, that, for the avoidance of doubt, Licensor Inventions shall be included in Licensed Technology and subject to the License.
8.1.3Licensee Technology. As between the Parties, Licensee will be the sole owner of any Inventions and Know-How, and all intellectual property rights therein, that are first reduced to practice or discovered, developed, invented, created or obtained solely by Licensee, its Affiliates or Third Parties acting on its or its Affiliates’ behalf while conducting activities under this Agreement or arising from or related to the exploitation of the Licensed Products, in each case without the use of Licensed IP or Licensor’s Confidential Information (such Inventions, Know-How and intellectual property rights, “Licensee Know-How”), and any Patents that claim such Licensee Know-How (“Licensee Patents” and, together with the Licensee Know-How, the “Licensee Technology”), and will retain all of its rights, title and interests thereto, subject to the license grant set forth in Section 2.4.1.
8.1.4Joint Inventions. Licensor and Licensee will be the joint owners, each with an undivided one-half interest, of any Inventions and Know-How, and all intellectual property rights therein, that are first reduced to practice or discovered, developed, invented, created or obtained (a) jointly by Licensor, its Affiliates or Third Parties acting on its or its Affiliates’ behalf on the one hand and by Licensee, its Affiliates or Third Parties acting on its or its Affiliates’ behalf while conducting activities under this Agreement on the other hand or (b) by Licensee, its Affiliates or Third Parties acting on its or its Affiliates’ behalf through the use of the Licensed IP or Licensor’s Confidential Information (each (a) and (b), “Joint Inventions”), including any Patents that claim such Joint Inventions (“Joint Patents” and, together with the Joint Inventions, the “Joint IP”), and will retain all of its rights, title and interests thereto.
8.1.5Trademarks, Trade Dress and Copyrights.
(a)Goodwill. Licensee acknowledges that all goodwill generated by Licensee’s, its Affiliates’ or any Sublicensee’s use of the Licensed NASH Trademarks will inure to the benefit of Licensor.
(b)Quality. Licensee shall adhere to the level of quality for the Packaging and Labeling of the Licensed Products (and where Licensor has NASH Products made for it by Third Parties exercising its license rights to do so after a Selected Supply Event, the level of quality of the NASH Products) bearing the Licensed NASH Trademarks at least as high as that maintained by Intercept and Licensor prior to and during the Term, and adhere to such other quality control standards for the Packaging
29
and Labeling (and in the event of a Selected Supply Event, any other quality control standards of Licensed Products) as Licensor may from time to time communicate to Licensee.
(c)Samples. Licensee will submit samples of all the Packaging and Labeling of Licensed Products bearing the Licensed NASH Trademarks (and where Licensor has NASH Products made for it by Third Parties exercising its license rights to do so after a Selected Supply Event, samples of the NASH Products) to Licensor for approval prior to the first use of a Licensed NASH Trademark thereon, provided, however, that Licensee may continue to sell any Licensed Product bearing a Licensed NASH Trademark in the form that is substantially similar to that sold by Licensor, its Affiliates and their respective sublicensees prior to the Effective Date, without prior approval.
(d)Inspection. Licensor will have the right to inspect, upon reasonable notice and during normal business hours, Licensee’s, its Affiliates’ and Sublicensees’ premises, records, operations and samples in connection with the use of the Licensed IP for the Packaging and Labeling of Licensed Products bearing the Licensed NASH Trademarks (and where Licensor has NASH Products made for it by Third Parties exercising its license rights to do so after a Selected Supply Event, the NASH Products), provided, however, that such inspections shall not be conducted in a manner that unduly interferes with Licensee’s operations.
(e)Licensee Selected Trademarks. Licensee shall Commercialize, promote and otherwise exploit the PBC Product under the Licensed Trademark Ocaliva® in the Territory. Licensor shall select, in coordination with Licensee, a Licensed NASH Trademark.
(f)Limited Use Outside the Territory.
(i)Licensor hereby grants to Licensee a non-exclusive, royalty-bearing, right and license under the Licensed NASH Trademark during the Term to (A) arrange, attend and present at investment bank or other financing/investment focused industry conferences, (B) arrange, attend and present at non-investment bank/financing/investment focused other industry conferences or seminars and/or trade shows (or anything similar) without using marketing materials incorporating use of a Licensed NASH Trademark that have not been pre-approved by the Licensor and without using any marketing booth presence that has not been pre-approved by the Licensor (which approvals shall not be unreasonably withheld, delayed or conditioned), and (C) subject to the provisions of Section 9.3(a), draft, review, edit, publish and/or submit (or anything similar) publications and/or articles, in each case of the foregoing (A), (B) and (C) outside the Territory only in connection with and in support of Licensee’s Development and Commercialization of the NASH Product in the Territory.
(ii)Licensor hereby grants to Licensee a non-exclusive, fully-paid, perpetual, irrevocable right and license under the Licensed Trademark Ocaliva® to (A) arrange, attend and present at investment bank or other financing/investment focused industry conferences, (B) arrange, attend and present at non-investment bank/financing/investment focused other industry conferences or seminars and/or trade shows (or anything similar) without using marketing materials incorporating use of a Licensed NASH Trademark that have not been pre-approved by the Licensor and without using any marketing booth presence that has not been pre-approved by the Licensor (which approvals shall not be unreasonably withheld, delayed or conditioned), and (C) subject to the provisions of Section 9.3(a), draft, review, edit, publish and/or submit (or anything similar) publications and/or articles, in each case of the foregoing (A), (B) and (C), outside the Territory only in connection with and in support of Licensee’s Development and Commercialization of the PBC Product in the Territory.
(g)Domain Name. As of the Effective Date and until mutually agreed by the Parties otherwise, (i) the Licensor shall promptly reprogram any domain name associated with
30
Development and Commercialization of the PBC Product or Nash Product held by the Licensor such that a person located in the Territory accessing such domain name is immediately, and without any user intervention or action, redirected to a relevant web page address of the marketing websites designated by the Licensee from time to time; and (ii) Licensee shall promptly reprogram the marketing websites such that a person located outside the Territory accessing such domain name is immediately, and without any user intervention or action, redirected to relevant webpages held by the Licensor designated by the Licensor from time to time.
8.2Patent Filing Prosecution and Maintenance.
8.2.1Licensed Patents and Joint Patents. Licensed Patents will be held in the name of Licensor and obtained and maintained with counsel selected solely by Licensor. Licensor shall have the first right to control the prosecution and maintenance (including, without limitation, all proceedings before the European Patent Office, and all foreign equivalent agencies, such as, interference proceedings, post grant reviews, oppositions, reexaminations, nullity actions and inter partes proceedings) (“Prosecution and Maintenance”) of all relevant Licensed Patents and any Joint Patents. When used as a verb, “Prosecute and Maintain” means to engage in Prosecuting and Maintaining. Licensor shall provide Licensee with a reasonable opportunity to review and comment on such filing and Prosecution and Maintenance efforts regarding such Licensed Patents and Joint Patents in the Territory, to the extent relevant to the Licensed Products, reasonably prior to any submissions with applicable patent authorities. Licensor shall reasonably consider any such comments and the commercial strategy of Licensee in the Territory in its Prosecution and Maintenance of the Licensed Patents and Joint Patents. Licensor shall be responsible for all out-of-pocket costs, all accrued attorney fees, expenses, official and filing fees (“Patent Costs”) for the Prosecution and Maintenance of the Licensed Patents and Joint Patents in the Territory. If Licensor determines in its sole discretion to abandon, cease Prosecution and Maintenance any Licensed Patent or Joint Patent anywhere in the Territory, then Licensor shall provide Licensee written notice of such determination at least sixty (60) days before any deadline for taking action to avoid abandonment (or other loss of rights) and, except in the case of a strategic abandonment by Licensor, Licensee shall have the right (but not the obligation) to Prosecute and Maintain such Licensed Patent or Joint Patent in the Territory on behalf of Licensor and in Licensor’s name. Licensee’s rights under this Section 8.2.1 with respect to any Licensed Patent licensed to Licensor by a Third Party shall be subject to the rights of such Third Party to Prosecute and/or Maintain such Licensed Patent. If Licensee assumes responsibility for any Licensed Patent or Joint Patent pursuant to this Section 8.2.1, then Licensee shall afford Licensor the same review and comment rights afforded to Licensee in the circumstance where Licensor controls Prosecution and Maintenance, and all costs incurred by Licensee in the course of Prosecuting and Maintaining such Licensed Patent or Joint Patent (including Patent Costs) shall be borne by Licensee, without reimbursement by Licensor.
8.2.2Licensee Patents. Licensee Patents will be held in the name of Licensee and obtained and maintained with counsel selected solely by Licensee. Licensee shall retain sole responsibility and control over the Prosecution and Maintenance of all relevant Licensee Patents at Licensee’s cost and expense. Licensee shall provide Licensor with a reasonable opportunity to review and comment on such filing and Prosecution and Maintenance efforts regarding such Licensee Patents reasonably prior to any submissions with applicable patent authorities. Licensee shall reasonably consider any such comments and the commercial strategy of Licensor outside of the Territory in its Prosecution and Maintenance of the Licensee Patents.
8.2.3Cooperation. Each Party shall provide the other Party all reasonable assistance and cooperation in the Patent prosecution efforts provided above in this Section 8.2, including providing any necessary powers of attorney and executing any other required documents or instruments for such prosecution.
31
8.3Actions Regarding Licensed IP and Joint IP.
8.3.1If either Party, including, in the case of Licensee, Licensee’s Affiliates or their respective Sublicensees, learn of any infringement or violation by a Third Party (an “Infringement”) of any Licensed IP or Joint IP in the Territory, whether or not within the Field, it shall notify the other Party as soon as practicable.
8.3.2As between the Parties, Licensor shall have the first right, but not the obligation, to prosecute any Infringement with respect to Licensed IP and Joint IP against a competing product for the Field for the Licensed Indications in the Territory. Notwithstanding the foregoing, if Licensor does not take commercially reasonable steps to prosecute or take other measures to address such an Infringement (a) within ninety (90) days following the first notice provided above with respect to such Infringement or (b) if such date occurs after the first such notice of such Infringement is provided, thirty (30) Business Days before the time limit, if any, set forth in appropriate laws and regulations for filing of such actions, whichever comes first, then Licensor shall so notify Licensee and Licensee shall have the right (but not the obligation) to prosecute such Infringement at its sole cost and expense. For the avoidance of doubt, Licensor shall have the sole and exclusive right (but not the obligation) to prosecute any Infringement with respect to the Licensed IP or the Joint IP to the extent such Infringement is (i) outside of the Licensed Indications, whether or not in the Territory, or (ii) outside the Territory, whether or not for the Licensed Indications.
8.3.3If a Party is entitled to, and pursues an action against an Infringement in accordance with this Section 8.3, (a) the other Party shall, and shall cause its Affiliates and sublicensees (including Sublicensees) to, cooperate fully, including being joined as a necessary party to such action upon the pursuing Party’s request (in the case of Licensee’s request, at Licensee’s cost and expense), providing access to relevant documents and other evidence and making its employees available at reasonable business hours, (b) the Party pursuing any action against an Infringement shall consult with the other Party as to the strategy for such action and (c) such Party shall consider in good faith any comments from the other Party and shall keep the other Party reasonably informed of any steps taken with respect to such action; provided, however, clauses (b) and (c) shall not apply to any Infringement action prosecuted by Licensor pursuant to the last sentence of Section 8.3.2.
8.3.4The Party that is entitled to and pursues an action against an Infringement in accordance with this Section 8.3 shall have the right to control any settlement of such claim; provided that, except for any Infringement action pursued by Licensor pursuant to the last sentence of Section 8.3.2, no settlement shall be entered into without the prior consent of the other Party (which consent shall not be unreasonably withheld, conditioned or delayed) if such settlement would reasonably be expected to have a material adverse effect on the rights or interest of the other Party or any of its Affiliates or impose any costs or liability on, or involve any admission by, the other Party or any of its Affiliates.
8.3.5In the event that an action alleging nullity, invalidity or non-infringement of any Licensed IP shall be brought against Licensor or Licensee in the Territory that is related to a Licensed Product, Licensor shall have the right to take and control the action, in accordance with the provisions of this Section 8.3.
8.3.6Each Party shall bear its own costs and expenses relating to any action commenced pursuant to this Section 8.3; provided that the pursuing Party (or in the case of Section 8.3.5, the defending Party) shall reimburse the other Party for the costs and expenses incurred by the other Party for any assistance requested by the pursuing Party (or in the case of Section 8.3.5, the defending Party) for such action. Except as otherwise agreed by the Parties in connection with a cost sharing arrangement, any recovery realized as a result of such litigation described above in this Section 8.3 (whether by way of
32
settlement or otherwise) shall be first allocated to reimburse the Parties for their costs and expenses in connection with such action (which amounts shall be allocated pro rata if insufficient to cover the totality of such expenses). Except for any Infringement action prosecuted by Licensor pursuant to the last sentence of Section 8.3.2, (a) to the extent the action related to PBC Products in the Territory, then the remainder after such reimbursement shall be paid to Licensee, and (b) otherwise, [***] percent ([***]%) of the remainder after such reimbursement shall be paid to Licensee and [***] percent ([***]%) of the remainder after such reimbursement shall be paid to Licensor.
8.4Enforcement of Licensee Technology.
8.4.1If either Party learns of any Infringement by a Third Party of any Licensee Technology for the Licensed Products outside of the Territory, it shall notify the other Party as soon as practicable.
8.4.2Licensee shall have the first right (but not the obligation) at its own cost and expense to enforce all Licensee Technology related to the Licensed Products against Third Parties outside of the Territory. If Licensee does not take steps to enforce the Licensee Technology within thirty (30) days of actual notice of any Infringement by a Third Party of any Licensee Technology outside of the Territory, Licensor may take enforcement actions and prosecute the suit, action or proceeding of the Licensee Technology against such Third Party at its own cost and expense. In the event Licensor elects to prosecute a suit, action or proceeding under this Section 8.4.2, Licensor shall keep Licensee updated as to the steps it intends to take to prosecute such suit, action or proceeding, and shall otherwise provide Licensee with any information reasonably requested by Licensee. Licensee agrees to be joined as party plaintiff if necessary to prosecute the suit, action or proceeding and to give Licensor reasonable authority to file and prosecute the suit, action or proceeding. Licensee shall provide reasonable assistance to Licensor.
8.4.3The Party that is entitled to and pursues an action against an Infringement in accordance with this Section 8.4 shall have the right to control any settlement of such claim; provided that no settlement shall be entered into without the prior consent of the other Party (which consent shall not be unreasonably withheld, conditioned or delayed) if such settlement would reasonably be expected to have a material adverse effect on the rights or interest of the other Party or any of its Affiliates or impose any costs or liability on, or involve any admission by, the other Party or any of its Affiliates.
8.4.4Each Party shall bear its own costs and expenses relating to any action commenced pursuant to this Section 8.4; provided that the pursuing Party shall reimburse the other Party for the costs and expenses incurred by the other Party for any assistance requested by the pursuing Party for such action. Except as otherwise agreed by the Parties in connection with a cost sharing arrangement, any recovery realized as a result of such litigation described above in this Section 8.4 (whether by way of settlement or otherwise) shall be first allocated to reimburse the Parties for their costs and expenses in connection with such action (which amounts shall be allocated pro rata if insufficient to cover the totality of such expenses), and the remainder after such reimbursement shall be paid to Licensor.
8.5Patent Marking. Licensee shall place in a conspicuous location on any Licensed Product (or its packaging where appropriate and practicable) made or sold under this Agreement a patent notice in accordance with the Applicable Laws concerning the marking of patented articles where such Licensed Products are made or sold, as applicable.
8.6Patent Term Extensions. The Parties shall reasonably cooperate with each other in obtaining Patent Term Extension in any country in the Territory under any statute or regulation equivalent or similar to 35 U.S.C. §156. Licensor shall make such election (including by filing supplementary protection certificates and any other extensions that are now or in the future become available). Licensee
33
shall abide by such election and cooperate as reasonably requested by Licensor in connection with the foregoing (including by providing appropriate information and executing appropriate documentation).
ARTICLE 9
CONFIDENTIALITY AND PUBLICATIONS
9.1Confidentiality. In the course of their activities pursuant to this Agreement, the Parties anticipate that they may disclose Confidential Information. The Parties wish to protect such Confidential Information in accordance with this Section 9.1. The provisions of this Section 9.1 shall apply to disclosures furnished to or received by a Party and its agents and representatives (which may include agents and representatives of its Affiliates). Each Party shall advise its agents and representatives of the requirements of this Section 9.1 and shall be responsible to ensure their compliance with such provisions.
9.1.1Treatment of Confidential Information. The Receiving Party shall (a) use such Confidential Information solely and exclusively in connection with the exercise of its rights and discharge of its obligations under this Agreement and (b) not disclose such Confidential Information without the prior written consent of the Disclosing Party to any Person other than its Affiliates and those of its and/or its Affiliates’ agents and representatives who need to know such Confidential Information in order to perform activities under or in connection with this Agreement and are subject to confidentiality obligations at least as stringent as those set forth herein.
9.1.2Permitted Disclosures. Notwithstanding Section 9.1.1, a Party may disclose Confidential Information (a) to Regulatory Authorities as reasonably needed to Develop and/or obtain or maintain Regulatory Approvals of the Licensed Products, (b) to its Sublicensees as reasonably needed to Develop and/or Commercialize the Licensed Products, under terms of confidentiality that are no less restrictive than those set forth in this Agreement (including, in the case of Licensor, to its agents, sublicensees, or partners for Commercialization of the Licensed Products outside the Territory), (c) to prospective Sublicensees, strategic partners, merger partners or acquirers, existing and potential investors and in each case, their respective professional advisors, in connection with evaluation and/or negotiation of possible sublicense, corporate partnering, merger, asset purchase or other similar transactions; provided, however, that any such disclosure shall be subject to a written confidentiality agreement with terms of non-disclosure no less restrictive than those set forth in this Agreement, or (d) as reasonably needed to conduct or defend any litigation relating to this Agreement, the Licensed Products or such Party’s rights hereunder. Furthermore, if the Receiving Party becomes legally compelled to disclose any Confidential Information in order to comply with Applicable Laws or with an order issued by a court or regulatory body with competent jurisdiction, the Receiving Party shall (i) provide prompt written notice to the Disclosing Party so that the Disclosing Party may seek a protective order or other appropriate remedy or waive its rights under this Section 9.1.2; and (ii) disclose only that portion of Confidential Information that is legally required to furnish; provided, however, that, in connection with such disclosure, the Receiving Party shall use Commercially Reasonable Efforts to obtain assurance that confidential treatment will be given with respect to such Confidential Information.
9.1.3Return and Destruction. Upon the termination or expiration of this Agreement, upon the request of the Disclosing Party, the Receiving Party shall promptly re-deliver to the Disclosing Party all Confidential Information provided to the Receiving Party in tangible form or destroy the same and certify in writing that such destruction has occurred; provided, however, that nothing in this Agreement shall require the alteration, modification, deletion or destruction of computer backup tapes made in the ordinary course of business. All notes or other work product prepared by the Receiving Party based upon or incorporating Confidential Information of the Disclosing Party shall be destroyed, and such destruction shall be certified in writing to the Disclosing Party by the Receiving Party. Notwithstanding the foregoing, legal counsel to the Receiving Party shall be permitted to retain in its files one copy of all Confidential
34
Information to evidence the scope of and to enforce the Party’s obligation of confidentiality under this Section 9.1.
9.1.4Term of Obligation. The obligations and prohibitions contained in this Section 9.1 shall survive expiration or termination of this Agreement for a period of ten (10) years, which may be shortened or extended as mutually agreed by both Parties in writing.
9.2Publicity. The Parties acknowledge that, in connection with the execution of the Share Purchase Agreement, the Parties shall issue the announcement (as defined in the Share Purchase Agreement). The Parties agree that any public announcement regarding the transactions contemplated hereby, if any, by the Parties or any other publication, news release or other public announcement relating to this Agreement or to the performance hereunder, shall first be reviewed and approved by both Parties in writing, such approval not to be unreasonably withheld; provided, however, that any disclosure which a Party is required to make under Applicable Law, including, without limitation, the requirements of the Securities and Exchange Commission and Nasdaq Stock Exchange, may be made without the prior consent of the other Party.
9.3Publications; Review of Use of Trademarks for the Licensed Products in Publications.
(a)Licensee shall submit to Licensor for review and approval any proposed academic, scientific and medical publication or public presentation which contains any Licensed IP, Data, Licensor’s Confidential Information, makes use of the Licensed NASH Trademark or Licensed Trademark Ocaliva® outside the Territory or otherwise relates to the Licensed Products. Such review and approval will be conducted for the purposes of preserving the value of the Licensed IP and the rights granted to Licensee hereunder as well as the optimal use of the Licensed NASH Trademark and Licensed Trademark Ocaliva® outside the Territory and determining whether any portion of the proposed publication or public presentation containing the Licensor’s Confidential Information or using any such trademark should be modified or deleted. Written copies of such proposed publication or public presentation required to be submitted hereunder shall be submitted to Licensor no later than thirty (30) days before submission for an abstract and forty-five (45) days before submission for a publication or public presentation (the “Licensor Review Period”). The Licensor shall provide its comments with respect to such publications and presentations within thirty (30) days for an abstract and forty-five (45) days for a publication or public presentation, from Licensor’s receipt of such written copy. Licensee shall fully address and remedy any reasonable objections of Licensor with respect to the use of such trademarks outside the Territory in such proposed publication or public presentation. The Licensor Review Period may be extended for an additional sixty (60) days in the event the Licensor can demonstrate reasonable need for such extension including for the preparation and filing of patent applications.
(b)Licensor agrees to use good faith efforts to provide notice to Licensee of academic, scientific and medical publications relating to the Licensed Products in the Territory.
(c)Licensor and Licensee will each comply with standard academic practice regarding authorship of scientific publications and recognition of contribution of other parties in any publication governed by this Section 9.3, including International Committee of Medical Journal Editors standards regarding authorship and contributions.
ARTICLE 10
REPRESENTATIONS, WARRANTIES AND COVENANTS
10.1Mutual Representations and Warranties. Each Party represents and warrants to the other Party that, as of the Execution Date:
35
10.1.1such Party is duly organized and validly existing under the Applicable Law of the jurisdiction of its incorporation or organization;
10.1.2such Party has taken all action necessary to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement;
10.1.3this Agreement is a legal and valid obligation of such Party, binding upon such Party and enforceable against such Party in accordance with the terms of this Agreement, except as enforcement may be limited by applicable bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other Applicable Laws relating to or affecting creditors’ rights generally and by general equitable principles; and
10.1.4such Party has all right, power and authority to enter into this Agreement, to perform its obligations under this Agreement.
10.2Representations and Warranties of Licensor. Licensor hereby represents and warrants to Licensee that, as of the Execution Date:
10.2.1no party to the License Agreement has breached any of its obligations under the License Agreement; and
10.2.2Licensor has the right to grant the rights and licenses Licensor grants to Licensee under this Agreement.
10.3Representations and Warranties of Licensee. Licensee hereby represents and warrants to Licensor that:
10.3.1Licensee has maintained and will maintain appropriate skilled personnel and facilities to carry out its obligations under this Agreement;
10.3.2No Licensee employees or other Persons performing services on behalf of Licensee under this Agreement have been debarred or excluded, or are the subject of debarment or exclusion proceedings, under Section 306 of the FD&C Act, and, if Licensee becomes aware that a Person performing on its behalf under this Agreement has been debarred or has become the subject of debarment or exclusion proceedings under Section 306 of the FD&C Act, Licensee shall promptly notify Licensor and shall prohibit such Person from performing on its behalf under this Agreement;
10.3.3There is no action, claim, demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or otherwise, in law or in equity, pending or, to the best of Licensee’s knowledge, threatened against Licensee in connection with or relating to the transactions and/or activities contemplated by this Agreement; and
10.3.4Licensee is not aware of any Licensee Patents which are necessary for the Development or Commercialization of the Licensed Products for the Field for the Licensed Indications in the Territory.
10.4Disclaimer of Representations and Warranties.
10.4.1EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTIONS 10.1, 10.2 AND 10.3, NEITHER PARTY MAKES ANY REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, AND
36
EXPLICITLY DISCLAIMS ANY REPRESENTATION AND WARRANTY, INCLUDING WITH RESPECT TO ANY ACCURACY, COMPLETENESS, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMMERCIAL UTILITY, NON-INFRINGEMENT, VALIDITY, PATENTABILITY OR TITLE FOR THE LICENSED INTELLECTUAL PROPERTY, LICENSED PATENTS, LICENSE AND ANY PRODUCT, OR THE LIKELIHOOD OF SUCCESSFUL DEVELOPMENT OR COMMERCIALIZATION OF THE LICENSED PRODUCTS.
10.4.2Furthermore, nothing in this Agreement will be construed as: (a) a representation or warranty by Licensor as to the scope of any Licensed Patent; (b) a representation or warranty that anything made, used, sold or otherwise disposed of under this Agreement is or will be free from infringement of Patents, copyrights, trademarks or any other forms of intellectual property rights or tangible property rights of Third Parties; (c) obligating Licensor to bring or prosecute actions or suits against Third Parties for Patent, copyright or trademark infringement; and (d) conferring by implication, estoppel or otherwise any license or rights under any Patent of Licensor other than Licensed Patents as defined herein, regardless of whether such Patent(s) are dominant or subordinate to the Licensed Patents.
10.5Covenants.
10.5.1Each Party shall, and shall ensure that its Affiliates and their respective Sublicensees will, comply in all respects with Anti-Corruption Laws and all Applicable Laws in the performance of its obligations under this Agreement and any Regulatory Authority and Governmental Body health care programs having jurisdiction in such Party’s respective territory, each as may be amended from time to time. Each Party shall immediately notify the other Party if it has any information or suspicion that there may be a violation of any Applicable Laws (including Anti-Corruption Laws) in connection with its performance under this Agreement or the Development or Commercialization of any Licensed Product hereunder. In the event that either Party has violated or been suspected of violating any of its obligations, representations, warranties or covenants in this Section 10.5.1, such Party will take reasonable actions to remedy such breach and to prevent further such breaches from occurring. Notwithstanding the foregoing, each Party will have the right, upon reasonable prior written notice and during the other Party’s regular business hours, to audit the other Party’s books and records in the event that a suspected violation of any Anti-Corruption Law needs to be investigated (in such Party’s reasonable, good-faith discretion). Such audit shall be conducted by such Party’s audit team comprised of qualified auditors who have received anti-corruption training. For clarity, a credible finding, after a reasonable investigation, of any breach of this Section 10.5.1 with respect to any Anti-Corruption Law, shall be deemed a material breach of this Agreement.
10.5.2Licensee shall require that work done by Licensee and its Affiliates pursuant to this Agreement shall be done by representatives of Licensee, including, but not limited to its employees or agents, that are required to assign all Intellectual Property developed in the performance of any obligation under this Agreement to Licensee, such assignments having terms materially consistent with those governing the ownership of Intellectual Property in this Agreement.
10.5.3Licensee shall not Develop or Commercialize the Licensed Products outside of the Territory or outside of the Licensed Indications.
10.5.4Licensee shall not, and shall cause its Affiliates and Sublicensees (including sub-Sublicensees) not to, engage in a Challenge to any Licensed Patent. In the event that Licensee, its Affiliate or any Sublicensee (including any sub-Sublicensee) engages in a Challenge to any Licensed Patent, Licensor has the right to adjust the amounts payable under this Agreement as further set forth in this Section 10.5.4. If Licensee does not, within fifteen (15) days following notice from Licensor, cease, or cause its Affiliate or Sublicensee (including any sub-Sublicensee) to cease, its participation in such
37
Challenge or terminate the Sublicense with such Sublicensee, as applicable, then (a) during the pendency of such Challenge, the amounts payable by Licensee to Licensor under Section 7.2 shall increase to two (2) times the amount otherwise payable under Section 7.2, effective as of the first date of Licensee’s or its Affiliate’s or Sublicensee’s (including any sub-Sublicensee’s) first filing, joining, participation in, causing of the filing or provision of material support to the Challenge, (b) following the Challenge in the event that the Licensed Patent or claim of the Licensed Patent subject to the Challenge is not adjudged to be invalid by a court or Governmental Body of competent jurisdiction, the amounts payable by Licensee to Licensor under Section 7.2 shall increase to two and one-half (2.5) times the amount otherwise payable under Section 7.2, effective as of the date of such judgment, and (c) Licensee shall reimburse all otherwise unreimbursed reasonable costs and expenses of Licensor in defending such Challenge, including reasonable attorneys’ fees. For clarity, to the fullest extent permitted by Applicable Law, Licensee agrees that no payment previously made to Licensor is refundable or may be offset as the result of any Challenge by Licensee, its Affiliate or its Sublicensee (including any sub-Sublicensee) even if the Challenge is successful or it is otherwise determined that the Licensed Patent does not include Valid Claims. Notwithstanding the foregoing, if any Licensed Patent is asserted against Licensee, or its Affiliate or its Sublicensee (including any sub-Sublicensee), then Licensee or its Affiliate or Sublicensee (including any sub-Sublicensee) is entitled to all and any defenses available to it including challenging the validity or enforceability of such Licensed Patent and Licensor shall have no right to adjustment amounts payable by Licensor to Licensee as set forth herein.
10.5.5Licensor covenants that the License Agreement shall not be amended in any manner that materially adversely effects the rights of Licensee under this Agreement; provided, however, that termination of the License Agreement with survival of Licensee’s rights and licenses under this Agreement as provided for in clause (ii) of the signature page of this Agreement shall not be deemed a breach of this Section 10.5.5.
ARTICLE 11
INDEMNIFICATION; INSURANCE AND LIMITATION OF LIABILITY
11.1Indemnification by Licensor. Licensor shall indemnify and hold harmless Licensee and its Affiliates and their respective directors, officers, employees and agents from and against any and all Damages, arising out of or resulting from any claim, demand, action, suit or proceeding by a Third Party (collectively, a “Third Party Claim”) to the extent arising from: (a) any breach by Licensor of any of its representations, warranties or material obligations under this Agreement; (b) any gross negligence or willful misconduct of Licensor or any of their respective employees or agents in connection with this Agreement; (c) any Development, Commercialization, storage, handing or use of the Licensed Products by Licensor, its Affiliates and/or their respective Sublicensees, distributors, agents and/or customers outside the Territory; or (d) in the event of termination of this Agreement with respect to the NASH Product pursuant to Section 12.2 or Section 12.3, any Development, Commercialization, storage, handing or use of the NASH Products by Licensor, its Affiliates and/or their respective Sublicensees, distributors, agents and/or customers in the Territory; provided further that Licensor shall not have any obligations under this Section 11.1 to the extent such Damages arise out of the gross negligence, recklessness, or wrongful acts or omissions of Licensee. Licensor’s indemnification obligations shall be limited to the extent covered by Licensee’s indemnification obligation under Section 11.2.
11.2Indemnification by Licensee. Licensee shall indemnify and hold harmless Licensor and its Affiliates and their respective directors, officers, employees and agents from and against any and all Damages in connection with any Third Party Claim to the extent arising from: (a) any breach by Licensee, any of its Affiliates and/or any of their respective Sublicensees of any of Licensee’s representations, warranties, covenants or material obligations under this Agreement; (b) the Development, Commercialization, storage, handling or use of the Licensed Products by Licensee, its Affiliates and/or
38
their respective Sublicensees, distributors, agents and/or customers in the Territory; (c) any gross negligence or willful misconduct of Licensee, its Affiliates, their respective Sublicensees or any of their respective employees or agents in connection with this Agreement; or (d) any exploitation by Licensee, its Affiliates and/or their respective Sublicensees of the Licensed Products in the Territory, including, but not limited to, product liability claims, provided that Licensee shall not have any obligations under this Section 11.2 to the extent such Damages arise out of the gross negligence, recklessness, or wrongful acts or omissions of Licensor. Licensee’s indemnification obligations shall be limited to the extent covered by Licensor’s indemnification obligation under Section 11.1 or to the extent covered by Licensor’s indemnification obligation under the Manufacturing Agreement.
11.3Indemnification Procedure. The indemnified Party shall give the indemnifying Party prompt written notice of any Third Party Claim with respect to which the indemnifying Party’s indemnification obligations apply, but any delay or failure of such notice shall not excuse such indemnification obligations except to the extent that the indemnifying Party’s legal position is actually and materially prejudiced thereby. The indemnifying Party shall have the right to assume and control the defense and settlement of any Third Party Claim; provided, however, that the following conditions must be satisfied: (a) the indemnifying Party must provide to the indemnified Party written acknowledgement of the indemnifying Party’s obligation to indemnify the indemnified Party hereunder against Damages that may result from the Third Party Claim, (b) the indemnified Party shall not have given the indemnifying Party written notice that it has determined, in the exercise of its reasonable discretion based on the advice of counsel, that a conflict of interest makes separate representation by the indemnified Party’s own counsel advisable, (c) the Third Party Claim does not include damages other than monetary damages for which indemnity hereunder is available, (d) the Third Party Claim does not relate to or arise in connection with any criminal proceeding, action, indictment, criminal allegation or investigation, and (e) if requested by the indemnified Party, the indemnifying Party has reasonably demonstrated its financial ability to pay for the defense of such Third Party Claim and to satisfy the full amount of any Damages that may result from such Third Party Claim. The indemnified Party shall have the right to participate in the defense of the Third Party Claim at its own expense, but in any event shall cooperate with the indemnifying Party in the investigation and defense of the Third Party Claim.
11.4Indemnification Settlement. If the indemnifying Party is entitled to, and does, assume and control the defense and settlement of any Third Party Claim with respect to which its indemnification obligations apply, then the indemnifying Party shall not settle such Third Party Claim without the indemnified Party’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), unless (a) the sole relief provided in such settlement is monetary in nature and shall be paid in full by the indemnifying Party and (b) such settlement does not include any finding or admission of a violation by the indemnified Party, its Affiliates or their respective Sublicensees of any Applicable Laws or Third Party’s rights.
11.5Insurance. Licensee acknowledges and agrees that during the Term and for a period of three (3) years thereafter it shall maintain, at its own expense, Commercial General Liability Insurance in commercially reasonable amounts to cover Licensee’s indemnification and other obligations under this Agreement and as required under Applicable Laws; provided such insurance shall cover product and related contractual liabilities in amounts no less than (a) prior to the commencement of Clinical Trials of any Licensed Product by or on behalf of Licensee, its Affiliates or its Sublicensees, [***] United States dollars ($[***]) per occurrence for personal injury, bodily injury and injury or destruction of property, and [***] United States dollars ($[***]) in the aggregate, and (b) following the commencement of Clinical Trials for the first Licensed Product by or on behalf of Licensee, its Affiliates or its Sublicensees, [***] United States dollars ($[***]) per occurrence for personal injury, bodily injury and injury or destruction of property, and [***] United States dollars ($[***]) in the aggregate, in each case of (a) and (b), with an internationally recognized, reliable and financially sound insurance carrier, to cover Licensee’s obligations
39
under this Agreement, including personal injury, bodily injury, including death resulting therefrom, and injury or destruction of property caused by or arising from activities conducted under this Agreement. Minimum limits of insurance may be satisfied through a combination of primary and excess liability insurance policies. Licensee shall name Licensor and its subsidiaries, Affiliates, employees, directors, officers, and agents as an additional insured on each such policy and an endorsement stating same must be endorsed to the policy(ies) providing such required coverage. Licensee shall waive rights of subrogation against Licensor and its subsidiaries, Affiliates, employees and agents. Licensee’s policies of insurance are primary and non-contributory with any other coverage maintained by any insured. Licensee will furnish to Licensor, no later than the Effective Date, a properly executed Certificate of Insurance in English evidencing such coverages and endorsements set forth above, and shall, within ten (10) Business Days of any request by Licensor at any time during the Term, provide copies of the policies, with all endorsements evidencing the coverage required by this Agreement. In the event of any notice of cancellation or non-renewal of the required minimum insurance, Licensee will take all necessary steps to ensure continuity of coverage and shall provide to Licensor written disclosure thirty (30) days in advance of such cancellation or non-renewal, along with evidence of its intention to enter into a replacement policy for the required insurance.
11.6Limitation of Liability. EXCEPT FOR DAMAGES ARISING FROM A BREACH OF ARTICLE 8 OR ARTICLE 9, DAMAGES PAYABLE TO A THIRD PARTY IN CONNECTION WITH INDEMNIFICATION OBLIGATIONS PURSUANT TO ARTICLE 11, OR THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A PARTY, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, INCLUDING LOSS OF PROFITS, WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREIN OR ANY BREACH HEREOF. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, THE PARTIES ACKNOWLEDGE THAT THE PROVISIONS OF CLAUSE 10.1 OF THE SHARE PURCHASE AGREEMENT SHALL OPERATE TO LIMIT THE LIABILITY OF LICENSOR PURSUANT TO THIS AGREEMENT.
ARTICLE 12
TERM AND SURVIVAL
12.1Term.
12.1.1Effective Date. The Parties acknowledge that, as of the Execution Date, the Parties have entered into the Share Purchase Agreement, the Completion (as defined in the Share Purchase Agreement) of which shall not occur until the satisfaction or waiver of the Condition (as defined in the Share Purchase Agreement). Accordingly, this Agreement is conditional in all respects on Completion taking place. Notwithstanding any other provision in it, this Agreement shall not take effect (and no term in it shall have effect) until Completion takes place (the “Completion Date”). On and with effect from Completion, this Agreement shall have full effect in accordance with its terms. In the event that: (a) prior to Completion, the Share Purchase Agreement is terminated or otherwise ceases to have effect (whether pursuant to its terms, by agreement of the parties to it or otherwise) (each a “Termination”) or (b) Completion has not taken place on or prior to the Longstop Date (as defined in the Share Purchase Agreement); on and with effect from the first to occur of (i) the Longstop Date; and (ii) the date of such Termination, this Agreement shall automatically terminate and it shall have no effect (as if void when first entered into). On and after automatic termination of this Agreement, no Party to it shall have any liability to any other Party to it pursuant to its terms and/or in respect of a breach of it, whether actual or contingent and whether in relation to the actual time of termination or the period prior to or following termination.
40
12.1.2Term. This Agreement shall become effective as of the Effective Date and shall continue in full force and effect until the final sale of all Licensed Products by Licensee, its Affiliates and its Sublicensees in the Territory (the “Term”).
12.2Licensor Rights of Termination for the NASH Product. Licensor shall have the right to terminate this Agreement as expressly set forth in this Section 12.2.
12.2.1Termination for Material Breach. In the event that Licensee commits a material breach of its obligations under this Agreement and such breach is not cured within ninety (90) days (or such other time period as mutually agreed by the Parties), or a material breach of its payment obligations under this Agreement that is not cured within thirty (30) days, after Licensee receives written notice from Licensor, which notice shall specify the nature of the breach and demand its cure, Licensor may terminate this Agreement, solely with respect to the NASH Product, upon written notice to Licensee.
12.2.2Insolvency Event. In the event of a Licensee Insolvency Event, Licensor may terminate this Agreement, solely with respect to the NASH Product, upon written notice to Licensee.
12.2.3Adverse Risk Termination. In the event that Licensee takes any action, or omits to take any action, that the JSC, through its final decision-making process pursuant to Section 3.3, has determined may have an Adverse Risk with respect to the NASH Product, Licensor may terminate this Agreement, solely with respect to the NASH Product, upon written notice to Licensee.
12.3Licensee Rights of Termination for the NASH Product. Licensee may terminate this Agreement, solely with respect to the NASH Product, at any time effective upon at least ninety (90) days’ prior written notice to Licensor.
12.4Effects of Termination. In the event of termination of this Agreement with respect to the NASH Product pursuant to Section 12.2 or Section 12.3, then this Agreement shall remain in full force and effect with respect to the PBC Product and the following terms shall apply solely with respect to the NASH Product:
12.4.1The rights and licenses in respect of the NASH Product granted by Licensor, including under Sections 2.1.2, 2.1.4, and 5.2 shall immediately terminate;
12.4.2Licensee shall, upon written request of Licensor, assign to Licensor all of its rights, title, and interests in and to all Regulatory Documentation (including any Regulatory Approvals) applicable to the NASH Product that are Controlled by Licensee or any of its Affiliates;
12.4.3If applicable, Licensee shall upon written request and approval of Licensor, notify the applicable Regulatory Authorities and take any other action reasonably necessary to effect the transfer set forth in Section 12.4.2;
12.4.4Licensee shall, in addition to the rights and licenses granted by Licensee to Licensor pursuant to Section 2.4, grant, and hereby grants, effective as of the effective date of termination, to Licensor (a) a non-exclusive, perpetual, irrevocable, royalty-free worldwide license, with the right to grant multiple tiers of sublicenses, under the Licensee Technology to the extent necessary or reasonably useful for Licensor to exploit the NASH Product in the Territory, and (b) a non-exclusive, perpetual, irrevocable, royalty-free worldwide license and Right of Reference or Use, with the right to grant multiple tiers of sublicenses and further rights of reference, under all Regulatory Documentation (including any Regulatory Approvals) then Controlled by Licensee or any of its Affiliates that are necessary or reasonably useful for Licensor or any of its Affiliates or sublicensees to exploit the NASH Product in the Territory;
41
12.4.5Licensee shall, unless expressly prohibited by any Regulatory Authority, at Licensor’s written request, transfer Control to Licensor of all Clinical Trials for the NASH Product in the NASH Indication being conducted by Licensee or its Affiliates as of the effective date of termination and subject to reasonable time periods and conditions of transfer to ensure the safety and quality of such Clinical Trial; provided, however, that (a) Licensor shall not have any obligation to continue any Clinical Trial unless required by Applicable Laws, and (b) with respect to each Clinical Trial for which (i) such transfer is expressly prohibited by the applicable Regulatory Authority, (ii) Licensor does not accept assignment or (iii) wind-down is reasonably expected to take more than six (6) months, if any, solely in the case of termination pursuant to Sections 12.2.1 and 12.2.3, Licensee shall continue to conduct such Clinical Trial to completion, at Licensee’s cost;
12.4.6Licensee, at its sole cost and expense, to the extent applicable, shall within thirty (30) days of Licensor’s written request (a) conduct a technology transfer to Licensor, including all relevant Licensee Technology, included in the license set forth in 12.4.4, and (b) during a period of ninety (90) days following such technology transfer, provide other reasonable assistance necessary to permit Licensor to assume responsibility for the Development or Commercialization of the NASH Product; and
12.4.7Licensee shall duly execute and deliver, or cause to be duly executed and delivered, such instruments and shall do and cause to be done such acts and things, including the filing of such assignments, agreements, documents, and instruments, as may be necessary under, or as Licensor may reasonably request in connection with, or to carry out more effectively the purpose of, or to better assure and confirm unto Licensor its rights under this Section 12.4.
12.5Survival. Expiration or termination of this Agreement shall not relieve any Party of any obligations that are expressly indicated to survive expiration or termination. The provisions of Articles 1, 3 (with respect to the PBC Product), 5 (with respect to the PBC Product), 6 (with respect to the PBC Product), 8 (with respect to the PBC Product), 9, 10 (with respect to the PBC Product), 11, 13, and 14 and Sections 2.1.1, 2.1.3, 2.2, 2.3, 2.4, 2.5 (with respect to the PBC Product), 2.6, 4.1.1, 4.2, 4.3 (with respect to the PBC Product), 7.1, 7.2 (for royalties due prior to termination), 7.3 (for Sublicensee Income amounts due prior to termination), 7.4, 7.5, 7.7, 7.8, 7.9, 7.10, 7.11 (for a period of two (2) years after termination), 7.12, 10.4, 12.4, and this 12.5 shall survive expiration or termination. Except as otherwise expressly provided, expiration or termination of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of any Party prior to such expiration or termination.
12.6Rights in Bankruptcy. The Parties intend to take advantage of the protections of Section 365(n) (or any successor provision) of the US Bankruptcy Code or any analogous provisions in any other country or jurisdiction to the maximum extent permitted by Applicable Law. All rights and licenses granted under or pursuant to this Agreement, but only to the extent they constitute licenses of a right to “intellectual property” as defined in Section 101 of the US Bankruptcy Code, shall be deemed to be “intellectual property” for the purposes of Section 365(n) or any analogous provisions in any other country or jurisdiction. The non-bankrupt Party shall retain and may fully exercise all of its rights and elections under the US Bankruptcy Code or any analogous provisions in any other country or jurisdiction, including the right to obtain such intellectual property from another entity. In the event of the commencement of a bankruptcy proceeding by or against a Party under the US Bankruptcy Code or any analogous provisions in any other country or jurisdiction, the non-bankrupt Party shall be entitled to a complete duplicate of (or complete access to, as appropriate) all such intellectual property (including all embodiments of such intellectual property), which, if not already in the non-bankrupt Party’s possession, shall be promptly delivered to it upon its’s written request (a) upon commencement of a bankruptcy proceeding, unless the bankrupt Party continues to perform all of its obligations under this Agreement, or (b) if not delivered pursuant to clause (a) because the bankrupt continues to perform, upon the rejection of this Agreement by or on behalf of the bankrupt Party. Unless and until the bankrupt Party rejects this Agreement, the bankrupt
42
Party shall perform this Agreement or provide such intellectual property (including all embodiments of such intellectual property) to the non-bankrupt Party, and shall not interfere with the rights of the non-bankrupt Party to such intellectual property, including the right to obtain the intellectual property from another entity. In the case of an insolvency that is governed by non-US bankruptcy law, the Parties agree that, to the extent not prohibited by the applicable insolvency law, the non-bankrupt Party will be entitled to at least the same rights and protections afforded by the US Bankruptcy Code, including survival of the licenses granted hereunder even if the bankrupt Party revokes or terminates this Agreement and a copy of the embodiments of such intellectual property, without conditions other than any legally required payment of royalties.
ARTICLE 13
DISPUTE RESOLUTION; GOVERNING LAW
13.1Executive Officers. If a dispute arises between the Parties concerning this Agreement, then such dispute shall be escalated to the Executive Officers of each Party. The Executive Officers will meet and confer, as soon as practicable, in an attempt to resolve the dispute. If the Parties are unable to resolve such dispute amicably within thirty (30) days from the date of escalation to the Executive Officers of each Party, then each Party may submit such dispute to the exclusive jurisdiction of, and venue in, the state and federal courts located in the State of New York pursuant to Section 13.2.
13.2Governing Law and Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to any choice of law provisions thereof that would result in the application of the law of any jurisdiction other than the State of New York. Each Party hereby submits itself for the purpose of this Agreement and any controversy arising hereunder to the exclusive jurisdiction of the state and federal courts located within the Borough of Manhattan in the City of New York, and any courts of appeal therefrom, and waives any objection on the grounds of lack of jurisdiction (including, without limitation, venue) to the exercise of such jurisdiction over it by any such courts. To the extent a payment alleged to be due under this Agreement is the subject of a bona fide good faith dispute asserted by the Licensee, the Licensor shall continue to provide all services as required by this Agreement during the pendency of the dispute so long as Licensee timely pays (including the allowance of 7 days cure period) all undisputed amounts due under this Agreement and can only withhold payment of disputed amounts where there is a bona fide good faith dispute.
13.3Injunctive Relief. Notwithstanding anything to the contrary in this Agreement, either Party will have the right to seek temporary injunctive or preliminary equitable relief pending final resolution of any dispute, in any court of competent jurisdiction as may be available to such Party under the Applicable Laws in such jurisdiction with respect to any matters arising out of the other Party’s performance or breach of its obligations under this Agreement.
ARTICLE 14
MISCELLANEOUS
14.1Force Majeure. Neither Party shall be held liable or responsible to the other Party or be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from a Force Majeure event. The non-performing Party shall notify the other Party of such Force Majeure within thirty (30) days after such occurrence by giving written notice to the other Party stating the nature of the event, 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 necessary and the non-performing Party shall use Commercially Reasonable Efforts to remedy its inability to perform.
43
14.2Notices. All notices, documentation and other communications that are required or permitted under this Agreement shall be in writing in the English language, and delivered personally, sent by email or sent by internationally-recognized overnight courier to the addresses below. Any such communication will be deemed to have been given (a) when delivered, if personally delivered or sent by email with confirmation of receipt (including read-receipt in the case of email), and (b) on the second Business Day after dispatch, if sent by internationally-recognized overnight courier. Unless otherwise specified in writing, the mailing addresses of the Parties shall be as described below.
For Licensor: Intercept Pharma Europe Ltd. Attn: Intercept Pharmaceuticals 305 Madison Avenue Attention: General Counsel Email: [***] | For Licensee: Mercury Pharma Group Limited Capital House, 85 King William Street, Attention: The General Counsel Email: [***] |
with a copy to: DLA Piper LLP (USA) 51 John F. Kennedy Parkway Suite 120 Short Hills, NJ 07078 United States of America Attention: [***] | with a copy to: White & Case LLP 5 Old Broad Street London EC2N 1DW United Kingdom Attention: [***] Email: [***] |
14.3Independent Status. Neither Party is an agent, employee or representative of the other Party. Neither Party shall have the authority to make any statements, representations or commitments of any kind, nor to take any action, which shall be binding on the other Party, except as may be explicitly authorized by the other Party in writing. This Agreement shall not constitute, create or in any way be interpreted as a joint venture, partnership or formal business organization of any kind.
14.4Entire Agreement; Amendment and Waiver. This Agreement, including the Exhibits attached hereto (each of which is hereby and thereby incorporated herein and therein by reference) shall constitute the entire agreement and understanding of the Parties relating to the subject matter of this Agreement and supersedes all prior oral or written agreements, representations, understandings or arrangements between the Parties relating to the subject matter of this Agreement. No amendment, supplement or other modification to any provision of this Agreement shall be binding unless in writing and signed by both Parties. No waiver of any rights under this Agreement shall be effective unless in writing signed by the Party to be charged. A waiver of a breach or violation of any provision of this Agreement will not constitute or be construed as a waiver of any subsequent breach or violation of that provision or as a waiver of any breach or violation of any other provision of this Agreement.
14.5Headings; Construction; Certain Conventions. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof. The
44
Exhibits to this Agreement are incorporated herein by reference and will be deemed a part of this Agreement. Unless otherwise expressly provided herein or the context of this Agreement otherwise requires, (a) words of any gender include each other gender, (b) words such as “herein”, “hereof”, and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (c) words using the singular will include the plural, and vice versa, (d) the words “include,” “includes” and “including” will be deemed to be followed by the phrase “but not limited to”, “without limitation”, “inter alia” or words of similar import, (e) the word “or” will be deemed to include the word “and” (e.g., “and/or”) and (f) references to “Article,” “Section,” “subsection”, “clause” or other subdivision, or to an Exhibit or Schedule, without reference to a document are to the specified provision or Exhibit or Schedule of this Agreement. Licensor and Licensee have each consulted counsel of their choice regarding this Agreement, and each acknowledges that this Agreement will be construed as if it were drafted jointly by the Parties and shall not be strictly construed against either Party.
14.6Assignment. Subject to this Section 14.6, a Party shall not have the right to assign, by operation of law or otherwise, any of its rights or obligations under this Agreement without the prior written consent of the other Party, which shall not be unreasonably withheld, conditioned or delayed. Any assignment not in accordance with this Section 14.6 shall be void. Notwithstanding the limitations in this Section 14.6, either Party may assign this Agreement, or any rights or obligations hereunder in whole or in part, without the consent of the other Party, to (a) its Affiliates or (b) its successor in interest pursuant to a merger, acquisition, reorganization, consolidation or sale of all or substantially all of the assets of the business pertaining to the subject matter of this Agreement.
14.7Third Party Beneficiaries. All rights, benefits and remedies under this Agreement are solely intended for the benefit of Licensor and Licensee, and no Third Party shall have any rights whatsoever to (a) enforce any obligation contained in this Agreement; (b) seek a benefit or remedy for any breach of this Agreement; or (c) take any other action relating to this Agreement under any legal theory, including but not limited to, actions in contract, tort (including but not limited to negligence, gross negligence and strict liability), or as a defense, setoff or counterclaim to any action or claim brought or made by the Parties.
14.8Severability. If any provision of this Agreement or application thereof to anyone is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction. Further, the judicial or other competent authority making such determination shall have the power to limit, construe or reduce the duration, scope, activity and/or area of such provision, and/or delete specific words or phrases as necessary to render, such provision enforceable in such jurisdiction.
14.9Further Assurances. Each Party shall, as and when requested by the other Party, do all acts and execute all documents as may be reasonably necessary to give effect to the provisions of this Agreement.
14.10Translation. This Agreement is in English language only, which language shall be controlling in all respects, and all versions hereof in any other language shall be for accommodation only and shall not be binding upon the Parties. All communications and notices to be made or given pursuant to this Agreement, and any dispute proceeding related to or arising hereunder, shall be in the English language. If there is a discrepancy between any translation of this Agreement and this Agreement, this Agreement shall prevail.
45
14.11Other Obligations. Except as expressly provided in this Agreement or as separately agreed upon in writing between Licensor and Licensee, each Party shall bear its own costs incurred in connection with the implementation of the obligations under this Agreement.
14.12Counterparts. This Agreement may be executed simultaneously in any number of counterparts, any one of which need not contain the signature of more than one Party but all such counterparts taken together shall constitute one and the same agreement. Copies of original signature pages sent by facsimile and/or PDF shall have the same effect as signature pages containing original signatures.
[SIGNATURE PAGE FOLLOWS]
46
IN WITNESS WHEREOF, duly authorized representatives of the Parties have executed this Agreement as of the Execution Date.
47
Intercept Pharmaceuticals, Inc. hereby acknowledges and agrees, and represents and covenants to each of the Parties, that: (i) it has reviewed and consents to the terms and provisions of this Agreement; and (ii) if the License Agreement is terminated for any reason (other than due to breach of this Agreement by Licensee), then Licensee’s rights and licenses under this Agreement shall not terminate or otherwise be materially adversely effected, and all of Licensee’s rights and licenses under this Agreement, including all of the license grants provided in this Agreement, shall survive and continue pursuant to their terms notwithstanding the purported termination of the License Agreement as if Intercept Pharmaceuticals, Inc. were the Licensor under this Agreement.
48
Schedule 1.39.
Licensed Patents
[***]
Schedule 4.2.1(a) – Post-Marketing Work
[***]
Schedule 4.2.1(b) – Budget
[***]
Exhibit 10.3
[Certain identified information has been excluded from the exhibit because it is both not material and is the type that the registrant treats as private or confidential.]
DATED5 May 2022
(1) INTERCEPT PHARMA EUROPE LTD.
- and -
(2) AMDIPHARM LTD.
AGREEMENT FOR THE
SUPPLY OF MANUFACTURED
PRODUCTS
1 | INTERPRETATION | 3 |
2 | SUPPLY OF PRODUCTS | 8 |
3 | FORECASTING | 8 |
4 | LEAD TIME AND PURCHASE ORDERS | 9 |
5 | STOCKS, QUALITY AND STORAGE | 10 |
6 | DELIVERY | 12 |
7 | DEFECTIVE PRODUCTS | 12 |
8 | TITLE AND RISK | 13 |
9 | PRODUCT RECALL | 13 |
10 | PRODUCT PRICES | 14 |
11 | PRICE REVIEW | 14 |
12 | TERMS OF PAYMENT | 14 |
13 | EXPERT DETERMINATION | 15 |
14 | INSURANCE | 16 |
15 | COMPLIANCE WITH LAWS AND POLICIES | 16 |
16 | INDEMNITY | 16 |
17 | LIMITATION OF LIABILITY | 18 |
18 | ASSIGNMENT AND OTHER DEALINGS | 19 |
19 | CONFIDENTIALITY | 20 |
20 | CONDITION PRECEENT, COMMENCEMENT AND TERM | 20 |
21 | TERMINATION AND SUSPENSION | 21 |
22 | OBLIGATIONS ON TERMINATION | 22 |
23 | SURVIVAL | 23 |
24 | FORCE MAJEURE | 23 |
25 | COSTS | 24 |
26 | SEVERANCE | 25 |
27 | MULTI-TIERED DISPUTE RESOLUTION PROCEDURE | 25 |
28 | FURTHER ASSURANCE | 26 |
29 | VARIATION | 26 |
30 | WAIVER | 26 |
31 | NOTICES | 26 |
32 | ENTIRE AGREEMENT | 27 |
33 | COOPERATION | 27 |
34 | THIRD-PARTY RIGHTS | 28 |
35 | COUNTERPARTS | 28 |
36 | GOVERNING LAW | 28 |
37 | JURISDICTION | 28 |
SCHEDULE 1: - PRODUCTS | 30 |
SCHEDULE 2: - SPECIFICATIONS | 31 |
SCHEDULE 3: - FORMULA | 32 |
THIS AGREEMENT is made on 5 May 2022
BETWEEN:
(1)INTERCEPT PHARMA EUROPE LTD., a company incorporated and registered in England and Wales with company number 09224395 whose registered office is at One, Glass Wharf, Bristol, BS2 0ZX (“Supplier”);
(2)AMDIPHARM LTD, a company organized and existing under the laws of Ireland, having its registered office at 3, Burlington Road, Dublin 4, Ireland, and having its trading address at Suite 17, Northwood House, Northwood Avenue, Santry, Dublin 9, Ireland (“Purchaser”).
Purchaser and Supplier shall be referred to in this Agreement individually as a “Party” and collectively as the “Parties.”
BACKGROUND:
(A) | Supplier sells pharmaceutical products to third-parties, and has procured the formulation, development and Manufacture of the Product for this purpose. |
(B) | In connection with the SPA (defined below) entered into by the Purchaser and Intercept Pharmaceuticals Inc. and the Sub-License Agreement entered into by the Purchaser and the Supplier (“Sub-License Agreement”), the Purchaser wishes to buy and Supplier wishes to supply the Product to the Purchaser on the terms and conditions set out in this Agreement. |
IT IS AGREED:
1. | INTERPRETATION |
The following definitions and rules of interpretation in this clause apply in this Agreement.
1.1 | Definitions: |
“ADR Notice” has the meaning given in clause 27.1.
“Affected Party” has the meaning given in clause 24.2.
“Agreement” means this agreement for the supply of Manufactured Products.
“API” means active pharmaceutical ingredient, being OCA.
“Applicable Laws” means all applicable laws, rules, regulations, guidance standards of any international, national, state or local governmental authority.
“Available Manufacturing Capacity” means such stock as the Supplier’s third-party manufacturer(s) has at its disposal, or is able to manufacture, to fulfil the Purchaser’s demand and the Supplier’s own demand for the Products from time to time.
“Batch” means a batch of a type of Products, being 476,000 tablets.
“Business Day” means any day other than a Saturday or Sunday on which commercial banks are open for general business in London and New York.
3
“Completion” has the meaning given in the SPA.
“Confidential Information” means any information of a confidential nature concerning the business, affairs, customers or suppliers of the other Party or its Group Companies, including information relating to a Party’s operations, processes, plans, product information, know-how, designs, trade secrets, software, market opportunities and customers.
“Continuing Inability to Supply” means:
(i) | any Inability to Supply under which no Product is delivered to Purchaser for three (3) or more consecutive months; or |
(ii) | three (3) or more instances within any eighteen (18) month period where an Inability to Supply results in delivery of a volume of Products to the Purchaser which is lower than [***] per cent ([***]%) of the volume required to be delivered against the corresponding Purchase Order in accordance with this Agreement. |
“Control” means the actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such person, whether by the ownership of more than fifty percent (50%) of the voting stock of such person, or by contract or otherwise. The terms “Controlled” and “under common Control with” shall be interpreted accordingly.
“Delivery Location” means the facility address specified by the Supplier in writing from time to time.
“Demonstrable Costs of Manufacture” means the costs incurred by the Supplier in procuring the Manufacture of the Products including without limitation third-party manufacturing costs, including (without limitation) costs incurred in purchasing API, tableting, and release testing (estimations of which as at the Effective Date are as set out in SCHEDULE 1 ); provided, however, notwithstanding any of the foregoing, during the first five (5) years after the Completion, no costs incurred in purchasing API shall be included in Demonstrable Costs of Manufacture.
“Dispute” has the meaning given in clause 27.1.
“Dispute Notice” has the meaning given in clause 27.1.
“Effective Date” means the Completion Date, as defined in the SPA.
“European Economic Area” means the countries that comprise the European Union, as well as Norway, Iceland and Lichtenstein.
“Expert” has the meaning given in clause 13.1.
“Force Majeure Event” has the meaning given in clause 24.1.
“Formula” means the formula set out in SCHEDULE 3: .
“Good Manufacturing Practice” means current Good Manufacturing Practice as defined, and as applicable, in Parts 210 and 211 of Title 21 of the Code of Federal Regulations; or EudraLex (The Rules Governing Medicinal Products in the European Union) Volume 4 and European Commission
4
Directives 91/356/EEC (as amended by Directive 91/412/EEC), in each case as may be updated, amended and/or replaced from time to time.
“Group Company” means a company that Controls, is Controlled by or is under common Control with, a Party, but only for so long as such Control exists.
“holding company” has the meaning given in clause 1.6.
“Intellectual Property Rights” means patents, utility models, rights to inventions, copyright and neighbouring and related rights, moral rights, trade marks and service marks, business names and domain names, rights in get-up and trade dress, goodwill and the right to sue for passing off or unfair competition, rights in designs, database rights, rights to use, and protect the confidentiality of, confidential information (including know-how and trade secrets), and all other intellectual property rights, in each case whether registered or unregistered and including all applications and rights to apply for and be granted, renewals or extensions of, and rights to claim priority from, any rights and all similar or equivalent rights or forms of protection that subsist or will subsist now or in the future in any part of the world.
“Lead Time” means the period from the date on which the Supplier accepts a Purchase Order until the earliest date on which the Products can be made available for delivery, such period being six (6) months from the date on which the Supplier accepts the Purchase Order.
“Liquidity” means, on the date of determination, the sum of a Party’s unrestricted cash, cash equivalents, and investment debt securities.
“Inability to Supply” has the meaning given to it in clause 5.1.
“Manufacture” or “Manufacturing” means all operations necessary or appropriate to make, test, release, store, and supply the Products, but shall not include finished product packaging and labelling. “Manufactured” shall be interpreted accordingly.
“Material Sub-Supplier” has the meaning given to it in clause 21.4.2.
“Minimum Liquidity Covenant” means a Liquidity of at least [***] million US dollars ($[***]), based on Supplier’s financial statements, calculated in accordance with GAAP, consistently applied.
“Minimum Order Quantity” means the minimum quantity of a type of Product that may be ordered by the Purchaser in each Purchase Order, being one Batch.
“month” means a calendar month.
“NASH” means non-alcoholic steatohepatitis.
“NASH Product” means any product composition or formulation that contains OCA as the sole API for the treatment of NASH.
“OCA” means obeticoholic acid.
“Products” means the products (i.e. tablets) set out in SCHEDULE 1: PRODUCTS and, where the context requires, the Products ordered by and supplied to the Purchaser.
5
“Product Prices” means the prices of the Products as determined in accordance with clause 10 and Product Price means the price of an individual Product as determined in accordance with that clause.
“Purchase Order” means a formal document in written form containing the information set out in clause 4.4 below and issued by Purchaser to Supplier containing a firm instruction to supply and deliver a volume of the Product.
“Purchase Order Number” means the reference number to be applied to a Purchase Order by Supplier in accordance with clause 4.4.
“Quarter” means each period of three consecutive months starting on 1 January, 1 April, 1 July and 1 October each year during the Term.
“Quarterly Maximum” has the meaning given to it in clause 4.3.
“Regulatory Approval” means with respect to the Product in any regulatory jurisdiction, approval from the applicable Regulatory Authority sufficient for the distribution, use, marketing, sale and, in the context of clause 21.4 only, Manufacture of such pharmaceutical product in such jurisdiction in accordance with Applicable Laws in that jurisdiction. For countries where governmental approval is required for pricing or reimbursement for a Product, “Regulatory Approval” shall not be deemed to occur in such country until such pricing or reimbursement approval is obtained in such country.
“Regulatory Authority” means any governmental body that has responsibility for granting any licences or approvals or granting pricing or reimbursement approvals necessary for the marketing and sale of a pharmaceutical product in any country.
“Regulatory Requirements” means all applicable laws (including Good Manufacturing Practices), rules, regulations, standards of any national, state or local governmental authority in the jurisdictions in which the Product was sold by the Supplier and/or its distributors and the Supplier’s Group Companies and/or their distributors prior to the Effective Date, excluding the United States of America.
“SPA” means the share sale and purchase agreement entered into between (1) Intercept Pharmaceuticals, Inc. and (2) Mercury Pharma Group Limited in relation to certain non-US subsidiaries of Intercept Pharmaceuticals, Inc. on or about the date of this Agreement.
“Specifications” means the specifications for the Products set out in SCHEDULE 2:
“Stand-By Contract” has the meaning given in clause 33.
“subsidiary” has the meaning given in clause 1.6.
“Term” means the term of the Agreement, as determined in accordance with clause 20.
“VAT” means value added tax or any equivalent tax chargeable in the UK or elsewhere.
“year” means 1 January to the following 31 December.
1.2 | Clause, Schedule and paragraph headings shall not affect the interpretation of this Agreement. |
6
1.3 | A person includes a natural person, corporate or unincorporated body (whether or not having separate legal personality). |
1.4 | The Schedules form part of this Agreement and shall have effect as if set out in full in the body of this Agreement and any reference to this Agreement includes the Schedules. |
1.5 | A reference to a company shall include any company, corporation or other body corporate, wherever and however incorporated or established. |
1.6 | A reference to a holding company or a subsidiary means a holding company or a subsidiary (as the case may be) as defined in section 1159 of the Companies Act 2006 and a company shall be treated, for the purposes only of the membership requirement contained in sections 1159(1)(b) and (c), as a member of another company even if its shares in that other company are registered in the name of (a) another person (or its nominee), whether by way of security or in connection with the taking of security, or (b) its nominee. For the purposes of determining whether a limited liability partnership which is a subsidiary of a company or another limited liability partnership, section 1159 of the Companies Act 2006 shall be construed so that: (a) references in sections 1159(1)(a) and (c) to voting rights are to the members’ rights to vote on all or substantially all matters which are decided by a vote of the members of the limited liability partnership; and (b) the reference in section 1159(1)(b) to the right to appoint or remove a majority of its board of directors is to the right to appoint or remove members holding a majority of the voting rights. |
1.7 | Unless the context otherwise requires, words in the singular shall include the plural and vice versa. |
1.8 | Unless the context otherwise requires, a reference to one gender shall include a reference to the other genders. |
1.9 | This Agreement shall be binding on, and ensure to the benefit of, the Parties to this Agreement and their respective personal representatives, successors and permitted assigns, and references to any Party shall include that Party’s personal representatives, successors and permitted assigns. |
1.10 | Unless expressly provided otherwise in this Agreement, a reference to legislation or a legislative provision is a reference to it as amended, extended or re-enacted from time to time. |
1.11 | Unless expressly provided otherwise in this Agreement, a reference to legislation or a legislative provision shall include all subordinate legislation made from time to time under that legislation or legislative provisions. |
1.12 | A reference to writing or written includes fax and email. |
1.13 | Any obligation in this Agreement on a person not to do something includes an obligation not to agree or allow that thing to be done. |
1.14 | References to a document in agreed form are to that document in the form agreed by the Parties and initialled by them or on their behalf for identification. |
1.15 | A reference to this Agreement or to any other Agreement or document is a reference to this Agreement or such other Agreement or document, in each case as varied from time to time. |
1.16 | References to clauses and Schedules are to the clauses and Schedules of this Agreement; and references to paragraphs are to paragraphs of the relevant Schedule. |
7
1.17 | Any words following the terms including, include, in particular, for example or any similar expression shall be construed as illustrative and shall not limit the sense of the words, description, definition, phrase or term preceding those terms. |
2. | SUPPLY OF PRODUCTS |
2.1 | In accordance with the terms and conditions of this Agreement, Supplier shall supply to Purchaser, and Purchaser shall purchase such quantities of Products as the Purchaser may order under any Purchaser Order accepted by the Supplier in accordance with clause 4. |
2.2 | If the Supplier should request in writing that the Purchaser agrees to a minimum purchase obligation in relation to supplies of Product under this Agreement, the Purchaser shall, acting reasonably and in good faith, enter into discussion with the Supplier, seeking to agree a reasonable minimum purchase volume and reasonable criteria in relation to how and when purchases might count toward the satisfaction of that minimum purchase volume. Once agreed the Parties shall record the relevant obligations in a variation to this Agreement. |
3. | FORECASTING |
3.1 | Subject to clause 3.4 below, no later than the last day of each Quarter during the Term, Purchaser shall provide to Supplier a rolling forecast of its estimated Purchase Order placement in each of the following eight (8) Quarters (a twenty-four (24) month period) commencing with the following Quarter (“Forecast”). The Purchaser shall provide each such Forecast subject to the Lead Time (such that the Forecast shall not contemplate the delivery of any Product within a period which is shorter than the Lead Time) and Minimum Order Quantity. |
3.2 | Subject to clause 4, the purchase volumes for the first four (4) Quarters of each Forecast (“Binding Period”) shall be binding on the Parties save for the permitted variations set out in clause 3.6 below. Each Quarter of a Binding Period shall be considered a “Binding Quarter”. |
3.3 | The purchase volumes for the fifth to eighth Quarters (inclusive) of each Forecast (“Non-binding Period”) shall be non-binding and indicative estimates of demand. |
FIRST FORECAST FOLLOWING THE COMMENCEMENT OF THIS AGREEMENT
3.4 | The first Quarter (or part Quarter where the Effective Date does not fall on the first day of a Quarter) following the Effective Date, shall be the first Binding Quarter as if it had been included in a Forecast (the “Initial Binding Quarter”). The forecasted volume for the Initial Binding Quarter is as set out in the table below and the Purchaser shall issue a Purchase Order for such volume within thirty (30) days of the Effective Date. |
3.5 | As at the Effective Date, the Forecast provided for Binding Quarters two (2) three (3) and four (4) immediately following the Initial Binding Quarter shall be as set out in the table below and each shall be considered the baseline Product volumes (“Anchor Point”) for the relevant Quarter. |
Quarter relative to the Effective Date | Forecasted Product Volumes as at Effective Date |
Q1 (Quarter or part thereof, in which the Effective Date falls) | [***] Products (i.e. tablets)* – Fixed and final Purchase Order |
8
Q2 (First full Quarter after Q1 above) | [***] Products (i.e tablets)* – Anchor Point (subject to +/- [***]% tolerance as per clause 3.6) |
Q3 (The full Quarter after Q2 above) | 0 (nil) – Anchor Point (subject to +/- [***]% tolerance as per clause 3.6) |
Q4 (The full Quarter after Q3 above) | [***] Products (i.e. tablets)* – Anchor Point (subject to +/- [***]% tolerance as per clause 3.6) |
*Such volume comprising approximately [***]% 5mg Product and [***]% 10mg Product
FORECASTS FOLLOWING THE INITIAL BINDING QUARTER AND FOR THE TERM OF THIS AGREEMENT
3.6 | As part of each Forecast, the forecast volumes for any Binding Quarter of the Binding Period which already has an Anchor Point set, may only be revised by the Purchaser within a range of +/-[***]% of the Anchor Point for that Binding Quarter. For the avoidance of doubt, this would normally be the first, second and third Binding Quarters in each Binding Period. |
3.7 | As part of each Forecast, for any Binding Quarter of the Binding Period which does not yet have an Anchor Point, the forecast volumes for that Binding Quarter in that Forecast shall set the Anchor Point for that Binding Quarter under all subsequent Forecasts. For the avoidance of doubt, this would normally be the fourth Binding Quarter in each Binding Period. |
3.8 | The revised forecast volume for the first Binding Quarter of each Binding Period (which in accordance with clause 3.6 must be within the range +/-[***]% of the Anchor Point for that Binding Quarter), shall be considered fixed and final. Alongside such Forecast, the Purchaser shall simultaneously issue a Purchase Order for the relevant volume of Product for that first Binding Quarter in accordance with the Forecast. |
3.9 | Purchaser shall act in good faith when forecasting its requirements for Products. |
4. | LEAD TIME AND PURCHASE ORDERS |
4.1 | The Purchaser shall place Purchase Orders, such Purchase Orders to include all the information set out in clause 4.4, in accordance with: |
4.1.1 | the Lead Time; |
4.1.2 | the Minimum Order Quantity; |
4.1.3 | clause 3.8 in respect of the first Binding Quarter of each Forecast. |
4.2 | Subject to the terms of this Agreement, the Supplier shall accept in writing all Purchase Orders submitted by the Purchaser which comply with the requirements of this Agreement within twelve (12) Business Days of receipt, confirming the Delivery Date (as defined below). |
4.3 | The Supplier shall be under no obligation to accept a Purchase Order to the extent that the volume of Products ordered exceeds [***] Products (i.e. tablets) in any Quarter (“Quarterly Maximum”), save that the Supplier shall use commercially reasonable endeavours to fulfil the Purchase Order |
9
in respect of quantities ordered in excess of the Quarterly Maximum with such quantities of Product as can be reasonably made available to the Purchaser, save that for the avoidance of doubt, and subject to clause 5.2, this shall not oblige the Supplier to forego or otherwise prioritise supply of Products to the Purchaser over the Supplier’s own need for Products.
4.4 | Purchase Orders must set out the following: |
4.4.1 | Purchase Order Number; |
4.4.2 | Product type; |
4.4.3 | quantity required (expressed as whole numbers of Batches only); |
4.4.4 | Product Prices (subject to clause 11.1); |
4.4.5 | the requested date on which the Products shall be delivered in accordance with clause 6.1, subject always to the Lead Time (the “Delivery Date”); and |
4.4.6 | invoice address. |
5. | STOCKS, QUALITY AND STORAGE |
5.1 | If limitations (howsoever arising) in Available Manufacturing Capacity mean that the Supplier is unable, or anticipates that it will be unable, to supply, in whole or in part, the quantity of a Product set out in any Purchase Order that is below the Quarterly Maximum, whether or not while also meeting the Supplier’s own requirements for that Product, (an “Inability to Supply”), the Supplier shall notify the Purchaser of the Inability to Supply within a reasonable time of discovery of the same by the Supplier, including the underlying reasons for the Inability to Supply, proposed remedial measures and the date that the Inability to Supply is expected to end. Subject to its compliance with clause 5.2, the Supplier shall not be considered to be in breach of this Agreement in respect of any Inability to Supply. |
5.2 | In the event of an Inability to Supply, the Purchaser shall be entitled to a proportion of the Available Manufacturing Capacity in respect of each Product affected by the Inability to Supply (“Purchaser’s Allocation”) in accordance with the Formula in SCHEDULE 3: . The Supplier shall use reasonable endeavours to fulfil Purchase Orders as far as the Purchaser’s Allocation will allow until the Inability to Supply is resolved. The Purchaser’s Allocation shall be calculated in respect of each type of Product (i.e. 5mg, 10mg and, if applicable, 25mg Products) that the Inability to Supply affects. |
5.3 | Once an Inability to Supply has arisen, that Inability to Supply shall continue (and clauses 5.1 and 5.2 above shall apply to any Purchase Orders received during such Inability to Supply) until such time as the Available Manufacturing Capacity exceeds the total of: |
5.3.1 | the shortfall in supplies of Product that have accumulated under all Purchase Orders; plus |
5.3.2 | the shortfall in Supplier’s own needs for the Product that have arisen since the Inability to Supply commenced; plus |
5.3.3 | the Purchaser’s Forecast for the next Binding Quarter; plus |
10
5.3.4 | the Supplier’s own need for the Product during that next Quarter. |
5.4 | Supplier warrants that, at the time of delivery, the Products supplied to the Purchaser by the Supplier under this Agreement shall: |
5.4.1 | have been Manufactured in accordance with the Specifications (subject to clause 5.4.2); |
5.4.2 | have been Manufactured and supplied in accordance with the Good Manufacturing Practice. |
5.5 | Subject to legal title having passed pursuant to clause 8.1, the Supplier warrants that all Products supplied pursuant to this Agreement shall be sold with good title, and free from any lawful security, interest, lien or encumbrances |
5.6 | The Supplier shall use commercially reasonable endeavours to ensure that Products are properly packed and secured in a manner to enable them to reach their destination in good condition. |
5.7 | The Supplier shall use commercially reasonable endeavours to ensure that it, or as applicable its third-party service provider, obtain and maintain in force for the duration of the Term all licences, permissions, authorisations, consents and permits needed to supply the Products in accordance with the terms of this Agreement. |
5.8 | Once per year, the Purchaser (or its professional advisers) may, at the Purchaser’s cost, inspect, audit, take copies of relevant records and other documents as necessary to verify the Supplier’s compliance with this Agreement (“Audit”). In order to exercise its right to carry out an Audit in accordance with this clause 5.8, the Purchaser must provide written notice to the Supplier of the Purchaser’s intention to carry out an Audit. Following the Supplier’s receipt of such notice, the Parties shall agree a date and time for the Audit to take place (Supplier’s agreement not to be unreasonably withheld or delayed), such date to be no sooner than 20 Business Days from the Supplier’s receipt of the Purchaser’s written notice. |
5.9 | The Parties agree to use commercially reasonable endeavours to execute a quality and technical agreement within 90 days of the Effective Date of this Agreement (“Quality Agreement”). |
5.10 | The Purchaser shall not market, import and/or sell the Products, or have its third party contractors market, import and/or sell the Products in a jurisdiction outside those contemplated by the Regulatory Requirements (“New Jurisdiction”) without the prior written approval (in principle) of the Supplier (not to be unreasonably withheld or delayed). For the avoidance of doubt, this clause 5.10 shall not operate to restrict the Purchaser’s ability to market, import and/or sell the Products within the United Kingdom, Switzerland and European Economic Area, and no such written approval shall be required in respect of these markets. |
5.11 | If the Regulatory Requirements change, or, having first obtained the Supplier’s approval in principle in accordance with clause 5.10 (where required), the Purchaser wishes to market, import and/or sell the Products or have its third party contractors market, import and/or sell the Products in a New Jurisdiction, the Purchaser shall notify the Supplier immediately on becoming aware and the parties shall work together in good faith to ensure the Products remain compliant with the Regulatory Requirements or with the Applicable Laws of the New Jurisdiction (as applicable). |
11
5.12 | The Supplier shall not be obliged to supply any Products which would be in breach of the Regulatory Requirements or the Applicable Laws of the New Jurisdiction. Once the Parties agree in writing that the Products comply with the Applicable Laws of the New Jurisdiction, the definition of Regulatory Requirements shall be deemed amended automatically to include reference to the New Jurisdiction. |
6. | DELIVERY |
6.1 | Delivery of the Products shall be Ex Works Delivery Location (Incoterms 2020). Subject to the Lead Time, delivery shall be made by the Delivery Date. |
6.2 | A Batch of Products shall be subject to a volume tolerance of plus or minus [***] per cent (+/- [***]%) and therefore a Batch shall be considered properly delivered and the order in respect of that Batch fulfilled where the number of Products is within such [***] per cent ([***]%) tolerance. |
6.3 | To the maximum extent permitted by law, delays in the delivery of Products shall not entitle the Purchaser to: |
6.3.1 | refuse to take delivery of Products; |
6.3.2 | claim damages; or |
6.3.3 | terminate this Agreement, subject always to clause 24.5. |
6.4 | Supplier shall have no liability for any failure or delay in delivering Products to the extent that any failure or delay is caused by the Purchaser’s failure to comply with its obligations under this Agreement. |
6.5 | If the Purchaser fails to take delivery of Products by the Delivery Date, then, except where that failure or delay is caused by Supplier’s failure to comply with its obligations under this Agreement: |
6.5.1 | delivery of Products shall be deemed to have been completed at 9.00 am on the Delivery Date; and |
6.5.2 | Supplier or its subcontractors shall store Products until delivery takes place, and charge the Purchaser for all related costs and expenses (including insurance). |
6.6 | Each delivery of Products shall be accompanied by a delivery note from Supplier showing the Purchase Order Number, the date of the Purchase Order, the type and quantity of Products included in the Purchase Order, including the batch numbers of the Products, and, in the case of Products being delivered by instalments, the outstanding balance of Products specified in a Purchase Order remaining to be delivered. |
7. | DEFECTIVE PRODUCTS |
7.1 | The Purchaser may reject any Products delivered to it that do not comply with clause 5.4 provided that: |
7.1.1 | unless specified otherwise in the Quality Agreement, notice of rejection is given to the Supplier: |
12
7.1.1.1 | in the case of a defect that is apparent on normal visual inspection, within twenty (20) days of delivery; |
7.1.1.2 | in the case of a latent defect, within fifteen (15) days of the latent defect having become apparent; and |
7.1.2 | none of the events listed in clause 7.2 apply. |
7.2 | Supplier shall not be liable for the Product’s failure to comply with clause 5.4 in any of the following events: |
7.2.1 | the Purchaser makes any further use of those Products after giving notice in accordance with clause 7.1; |
7.2.2 | the defect arises because the Purchaser failed to follow Supplier’s oral or written instructions for the storage, handling or use of the Products or (if there are none) good trade practice regarding the same; |
7.2.3 | the defect arises as a result of wilful damage, negligence, or abnormal storage or working conditions; or |
7.2.4 | the Products differ from the Specifications as a result of changes made to ensure they comply with Applicable Laws. |
7.3 | If Purchaser rejects Products under clause 7.1 then the Purchaser shall be entitled to: |
7.3.1 | require the Supplier to replace the rejected Products; or |
7.3.2 | require the Supplier to repay the price of the rejected Products in full. |
Once the Supplier has complied with the Purchaser’s request, it shall have no further liability to the Purchaser for the rejected Products’ failure to comply with clause 5.4.
7.4 | The terms of this Agreement shall apply to any replacement Products supplied to the Supplier. |
8. | TITLE AND RISK |
8.1 | Title to Products shall pass at the same time as risk. |
8.2 | The Purchaser shall schedule freight pick-up. The Supplier shall arrange for the loading of the carrier’s trailer (at the Purchaser’s risk and cost) and complete documentation required by Applicable Laws. |
9. | PRODUCT RECALL |
9.1 | If either Party is the subject of a request, court order or other directive of a governmental or regulatory authority to withdraw or recall any Products from the market, or otherwise becomes aware of any product safety concern or other circumstances which may reasonably result in a withdrawal or recall being undertaken voluntarily, it shall immediately notify the other Party in writing (“Recall Notice”) enclosing a copy of all relevant information. |
9.2 | Following the service of a Recall Notice both Parties shall: |
13
9.2.1 | discuss the Recall Notice in good faith with a view to agreeing the course of action to be taken (save that, subject to clause 9.3 below, either party shall remain free to undertake a withdrawal or recall in respect of any Products which it has put on the market); and |
9.2.2 | comply with their respective obligations set out in the Quality Agreement. |
9.3 | Unless required by law, neither Party may: |
9.3.1 | refer to the other Party in any public statement or announcement; or |
9.3.2 | make any admission of liability on the other Party’s behalf, |
whether in connection with a withdrawal, recall or otherwise, without the other Party’s prior written permission.
10. | PRODUCT PRICES |
10.1 | The Product Price for the relevant Purchase Order will be the sum of the Supplier’s Demonstrable Costs of Manufacture of the Product. The Supplier shall annually update the Purchaser from time to time as to the then current Demonstrable Costs of Manufacture. |
10.2 | The Product Prices are exclusive of amounts in respect of VAT. The Purchaser shall, on receipt of a valid VAT invoice from the Supplier, pay to the Supplier any additional amounts in respect of VAT as are chargeable on a supply of Products. |
10.3 | The Product Prices are exclusive of the costs (if any) of packaging, insurance and carriage of the Products, which shall be paid by the Purchaser. |
11. | PRICE REVIEW |
11.1 | The Parties acknowledge that the Demonstrable Costs of Manufacture will vary from time to time in accordance with the Supplier’s contractual obligations to its suppliers and other factors. The Parties shall work collaboratively to have periodic discussions with Supplier’s underlying suppliers in relation to the Demonstrable Costs of Manufacture. |
11.2 | Supplier shall provide all such evidence as the Purchaser may reasonably request in order to verify invoices submitted by Supplier, including the Demonstrable Costs of Manufacture. In addition, Supplier shall, on request, provide the Purchaser with copies of (or extracts from) all relevant records of Supplier relating to the supply of the Products as may be reasonably required in order to verify those matters. |
11.3 | All disputes concerning the Product Prices shall be resolved in accordance with clause 27. |
12. | TERMS OF PAYMENT |
12.1 | Supplier shall be entitled to invoice the Purchaser for each Purchase Order on or at any time after delivery. Each invoice shall quote the relevant Purchase Order Number. |
12.2 | The Purchaser shall pay invoices in full and in cleared funds by the end of the month following the month in which a valid invoice was received by the Purchaser. Payment shall be made to the bank account nominated in writing by Supplier. |
14
12.3 | If a Party fails to make a payment due to the other Party under this Agreement by the due date, then, without limiting the other Party’s remedies under clause 21.2, the defaulting Party shall pay interest on the overdue sum from the due date until payment of the overdue sum, whether before or after judgment. Interest under this clause 12.3 will accrue each day at [***]% per annum. |
12.4 | If the Purchaser disputes any invoice or other statement of monies due, the Purchaser shall immediately notify Supplier in writing. The Parties shall negotiate in good faith to attempt to resolve the dispute promptly. Supplier shall provide all evidence as may be reasonably necessary to verify the disputed invoice or request for payment. If the Parties have not resolved the dispute within 30 days of the Purchaser giving notice to Supplier, the dispute shall be resolved in accordance with clause 27. Where only part of an invoice is disputed, the undisputed amount shall be paid on the due date as set out in clause 12.2. |
12.5 | All payments payable to Supplier or the Purchaser under this Agreement shall become due immediately on its termination or expiry. This clause 12.5 is without prejudice to any right to claim for interest under the law or under this Agreement. |
13. | EXPERT DETERMINATION |
13.1 | An Expert is a person appointed in accordance with this clause 13 to resolve certain matters as specified in this Agreement. |
13.2 | Where under this Agreement a Party wishes to refer a matter to an Expert, the Parties shall first agree on the appointment of an independent Expert and agree with the Expert on the terms of their appointment. |
13.3 | Where the Parties propose to appoint an Expert, the Expert shall be in the case of a dispute relating to Product Prices, or Financial Remedy discussions in accordance with clause 16.3, a chartered accountant. |
13.4 | If the Parties are unable to agree on an Expert or the terms of the Expert’s appointment within seven days of either Party serving details of a suggested expert on the other, either Party shall then be entitled to request the Institute of Chartered Accountants in England and Wales to appoint as Expert a chartered accountant of repute with international experience in resolving disputes of the nature set out in clause 13.3 and for the Institute of Chartered Accountants in England and Wales to agree with the Expert the terms of their appointment. |
13.5 | The Expert is required to prepare a written decision including reasons and give notice (including a copy) of the decision to the Parties within a maximum of three (3) months of the matter being referred to the Expert. |
13.6 | If the Expert dies or becomes unwilling or incapable of acting, or does not deliver the decision within the time required by clause 13.5, then: |
13.6.1 | the Parties may agree or, failing such agreement, either Party may apply to the Institute of Chartered Accountants in England and Wales, to discharge the Expert; and |
13.6.2 | the Parties may proceed to appoint a replacement Expert in accordance with this clause 13 which shall apply to the replacement Expert as if they were the first Expert to be appointed. |
15
13.7 | All matters to be determined in accordance with this clause 13 must be conducted, and the Expert’s decision shall be written, in the English language. |
13.8 | The Parties are entitled to make submissions to the Expert and will provide (or procure that others provide) the Expert with any assistance and documents as the Expert reasonably requires to reach a decision. |
13.9 | To the extent not provided for by this clause 13, the Expert may, in their reasonable discretion, determine any other procedures to assist with the conduct of the determination as the Expert considers just or appropriate, including (to the extent the Expert considers necessary) instructing professional advisers to assist the Expert in reaching a determination. |
13.10 | Each Party shall with reasonable promptness supply each other with all information and give each other access to all documents, personnel and things as the other Party may reasonably require to make a submission under this clause 13. |
13.11 | The Expert shall act as an expert and not as an arbitrator. The Expert shall determine the matters referred to the Expert under the Agreement. The Expert’s written decision on the matters referred to the Expert shall be final and binding on the Parties in the absence of manifest error or fraud. |
13.12 | The Expert may direct that any legal costs and expenses incurred by a Party in respect of the determination shall be paid by another Party to the determination on the general principle that costs should follow the event, except where it appears to the Expert that, in the circumstances, this is not appropriate in relation to the whole or part of those costs. |
13.13 | All matters concerning the process and result of the determination by the Expert shall be kept confidential among the Parties and the Expert. |
13.14 | Each Party shall act reasonably and co-operate to give effect to the provisions of this clause 13 and otherwise do nothing to hinder or prevent the Expert from reaching their determination. |
13.15 | The Expert and Institute of Chartered Accountants in England and Wales shall have no liability to the Parties for any act or omission in relation to this appointment, save in the case of bad faith. |
14. | INSURANCE |
14.1 | During this Agreement and for a period of twelve (12) months afterwards each Party shall maintain in force product liability insurance with a limit of at least $ [***] ([***]) million USD (or the equivalent amount in an alternative currency) per occurrence and in the aggregate. |
14.2 | Each Party shall ensure that any of its applicable sub-contractors also maintain adequate insurance having regard to their obligations under this Agreement. |
14.3 | Each Party shall notify the other Party if any policy held by the notifying Party is (or will be) cancelled or its terms are (or will be) subject to any material change in coverage or protection. |
14.4 | Each Party’s liabilities under this Agreement shall not be deemed to be released or limited by taking out the insurance policies referred to in clause 14.1. |
16
15. | COMPLIANCE WITH LAWS AND POLICIES |
15.1 | In performing their obligations under the Agreement, each Party shall and shall procure that each of its Group Companies shall comply with all Applicable Laws. |
16. | INDEMNITY |
16.1 | The Purchaser acknowledges that the Supplier sub-contracts the Manufacture of the Products to third parties. |
16.2 | In the event that either the Purchaser, the Supplier or the Supplier’s relevant manufacturer(s) is the subject of a third-party allegation or claim that any part of the Manufacturing process infringes a third-party’s Intellectual Property Rights (“Third-Party IP Claim”), the Supplier shall use commercially reasonable endeavours to secure a contractual remedy from the relevant manufacturer(s) in connection with the Third-Party IP Claim in order to enable the continuation of the supply of the Products and/or obtain a settlement payment or other financial remedy (“Financial Remedy”) from the relevant manufacturer(s). For the avoidance of doubt, nothing in this Agreement shall oblige the Supplier or any of its Group Companies to commence legal proceedings against any person. |
16.3 | If, having fulfilled its obligations under clause 16.2 the Supplier is successful in obtaining a Financial Remedy, the Supplier and the Purchaser shall promptly enter into good faith negotiations in order to determine how the Financial Remedy is to be apportioned between them, having regard to the direct losses suffered by each Party in connection with the Third-Party IP Claim, which shall include the Supplier’s costs incurred in pursuing its contractual remedies in accordance with clause 16.2. |
16.4 | Notwithstanding anything to the contrary in this Agreement, the remedy set out in this clause 16 shall be the Purchaser’s sole and exclusive financial remedy in connection with any Third-Party IP Claim, including the Supplier’s inability to comply with any of its obligations in this Agreement as a result of such Third-Party IP Claim. For the avoidance of doubt, this clause 16.4 shall be without prejudice to the Purchaser’s ability to terminate this Agreement in accordance with clause 21.5.1 to the extent a Continuing Inability to Supply occurs. |
16.5 | In the event that the Parties cannot agree to the apportionment of the Financial Remedy within three months of the Supplier having received the Financial Remedy in cleared funds, either Party may refer the matter to an Expert for determination in accordance with clause 13. The Expert shall determine the apportionment of the Financial Remedy, taking into account the factors for consideration referred to in clause 16.3. |
16.6 | Subject to clause 16.4, Supplier shall indemnify and hold harmless the Purchaser and its respective Group Companies, directors, employees and agents (“Purchaser Indemnified Parties”) from and against any and all losses, costs, expenses and damages arising out of or resulting from any claim, demand, action, suit or proceeding made against any of the Purchaser Indemnified Parties to the extent such an claim arises from: |
16.6.1 | any breach by the Supplier of any of its representations, warranties or material obligations under this Agreement; |
16.6.2 | any gross negligent act or omission or wilful misconduct of the Supplier or any of their respective employees or agents in connection with this Agreement; or |
17
16.6.3 | any breach by the Supplier of any Applicable Law. |
16.7 | Purchaser shall indemnify and hold harmless the Supplier and its respective Group Companies, directors, employees and agents (“Supplier Indemnified Parties”) from and against any and all losses, costs, expenses and damages, arising out of or resulting from any allegation, claim, demand, action, suit or proceeding made against any of the Supplier Indemnified Parties to the extent such an allegation or claim arises from or in connection with: |
16.7.1 | any breach by the Purchaser of any of its representations, warranties or material obligations under this Agreement; |
16.7.2 | any gross negligent act or omission or wilful misconduct of the Purchaser or any of their respective employees or agents in connection with this Agreement; |
16.7.3 | any breach by the Purchaser of any Applicable Law; or |
16.7.4 | any injury or death caused by use of the Product, save to the extent that such allegation, claim, demand, action, suit or proceeding arises as a result of the Supplier’s failure to comply with its warranties at clause 5.4 of this Agreement; |
16.7.5 | the packaging, labelling, marketing, sale, importation, distribution or use of the Products by the Purchaser or any of its Group Companies, save to the extent that such allegation, claim, demand, action, suit or proceeding arises as a result of the Supplier’s failure to comply with its warranties at clause 5.4 of this Agreement. |
17. | LIMITATION OF LIABILITY |
17.1 | Supplier has obtained insurance cover in respect of certain aspects of its own legal liability for individual claims as is considered reasonable and prudent in the industry. The limits and exclusions in this clause 17 reflect the insurance cover Supplier has been able to arrange and the Purchaser is responsible for making its own arrangements for the insurance of any excess liability. |
17.2 | References to liability in this clause 17 include every kind of liability arising under or in connection with this Agreement including liability in contract (including under any indemnity), tort (including negligence), misrepresentation, restitution or otherwise. |
17.3 | Nothing in this clause 17 shall limit the Purchaser’s payment obligations under this Agreement. |
17.4 | Nothing in this Agreement limits any liability which cannot legally be limited, including liability for: |
17.4.1 | death or personal injury caused by negligence; |
17.4.2 | fraud or fraudulent misrepresentation; |
17.4.3 | breach of the terms implied by section 12 of the Sale of Goods Act 1979 (title and quiet possession); and |
17.4.4 | breach of section 2 of the Consumer Protection Act 1987. |
17.5 | Subject to clause 17.3, clause 17.4, and clause 17.7: |
18
17.5.1 | Supplier’s total liability to the Purchaser, subject to clause 17.6 shall not exceed $[***] USD; and |
17.5.2 | Purchaser’s total liability to the Supplier shall not exceed $[***] USD. |
17.6 | Notwithstanding any other provision of this Agreement, the Parties acknowledge that the provisions of clause 10.1 of the SPA shall operate to limit the liability of the Supplier and each of the Seller Group (as defined in the SPA) pursuant to this Agreement. |
Specific heads of excluded loss.
17.7 | Subject to clause 17.3 and clause 17.4, neither Party shall have any liability for the following losses under this Agreement: |
17.7.1 | any direct or indirect: |
17.7.1.1 | loss of profits, income, capital or cost; |
17.7.1.2 | the cost of substitute services arising out of or relating to the Supplier’s performance under this Agreement; |
17.7.1.3 | anticipated sales or business; |
17.7.1.4 | lost agreements, contracts or opportunities; |
17.7.1.5 | anticipated savings; |
17.7.1.6 | use or corruption of software; |
17.7.1.7 | loss of data or information; or |
17.7.1.8 | loss of or damage to goodwill; or |
17.7.1.9 | any incidental, special, consequential or punitive loss. |
17.8 | Supplier has given commitments as to compliance of the Products with relevant the Specifications in clause 5.4. In view of these commitments, the conditions implied by sections 13 to 15 of the Sale of Goods Act 1979 are, to the fullest extent permitted by law, excluded from this Agreement. |
18. | ASSIGNMENT AND OTHER DEALINGS |
18.1 | Subject to clause 18.2 and clause 18.3, neither Party shall assign, transfer, mortgage, charge, subcontract, delegate, declare a trust over or deal in any other manner with any or all of its rights and obligations under this Agreement without the prior written consent of the other Party (such consent not to be unreasonably withheld or delayed). |
18.2 | Either Party may, after having given prior written notice to the other Party, assign or subcontract any or all of its rights and obligations under this Agreement to any of its Group Companies for so long as that company remains a Group Company. |
18.3 | Supplier may subcontract the Manufacture of the Products, or any part of them, to any third party. |
19
19. | CONFIDENTIALITY |
19.1 | Each Party undertakes that it shall not disclose to any person any Confidential Information, except as permitted by clause 19.2. |
19.2 | Each Party may disclose the other Party’s Confidential Information: |
19.2.1 | to its employees, officers, representatives, contractors, subcontractors or advisers who need to know such information for the purposes of exercising the Party’s rights or carrying out its obligations under or in connection with this Agreement. Each Party shall ensure that its employees, officers, representatives, contractors, subcontractors or advisers to whom it discloses the other Party’s confidential information comply with this clause 19; and |
19.2.2 | as may be required by law, a court of competent jurisdiction or any governmental or regulatory authority (which shall include a Regulatory Authority), or any securities exchange. |
19.3 | Each Party reserves all rights in its Confidential Information. No rights or obligations in respect of a Party’s Confidential Information other than those expressly stated in this Agreement are granted to the other Party or to be implied from this Agreement. In particular, no licence is hereby granted directly or indirectly under any Intellectual Property Rights held, made, obtained or licensable by either Party now or in the future. |
20. | CONDITION PRECEDENT, COMMENCEMENT AND TERM |
20.1 | This Agreement is conditional in all respects on Completion taking place. Notwithstanding any other provision in it, this Agreement shall not take effect (and no term in it shall have effect) until Completion takes place. On and with effect from Completion, this Agreement shall have full effect in accordance with its terms. |
20.2 | Subject to clause 20.1 and clause 20.3, this Agreement shall begin on the Effective Date and shall continue unless and until terminated in accordance with clause 21 (“Term”). |
20.3 | In the event that: |
20.3.1 | prior to Completion, the SPA is terminated or otherwise ceases to have effect (whether pursuant to its terms, by agreement of the parties to it, or otherwise) (each an “SPA Termination”); or |
20.3.2 | Completion has not taken place on or prior to the Longstop Date (as defined in the SPA); |
then, on and with effect from the first to occur of (a) the Longstop Date; and (b) the date of such SPA Termination, this Agreement shall automatically terminate and it shall have no effect (as if void when first entered into). On and after automatic termination of this Agreement, no Party to it shall have any liability to any other Party to it pursuant to its terms and/or in respect of a breach of it, whether actual or contingent and whether in relation to the actual time of termination or the period prior to or following termination.
20
21. | TERMINATION AND SUSPENSION |
21.1 | Without affecting any other right or remedy available to it, either Party may terminate this Agreement on giving not less than twelve months’ written notice to the other Party, provided that any notice to terminate served under this clause 21.1 shall not expire before the second anniversary of the Effective Date. |
21.2 | Without affecting any other right or remedy available to it, either Party may terminate this Agreement with immediate effect by giving written notice to the other Party if: |
21.2.1 | the other Party fails to pay any undisputed amount due under this Agreement on the due date for payment and remains in default not less than fourteen (14) days after being provided notice of breach in writing in connection with such payment; |
21.2.2 | the other Party commits a material breach of any other term of this Agreement and fails to remedy that breach within a period of 60 days after being notified in writing to do so; or |
21.2.3 | the other Party takes any step or action in connection with its entering administration, provisional liquidation or any composition or arrangement with its creditors (other than in relation to a solvent restructuring), applying to court for or obtaining a moratorium under Part A1 of the Insolvency Act 1986, being wound up (whether voluntarily or by order of the court, unless for the purpose of a solvent restructuring), having a receiver appointed to any of its assets or ceasing to carry on business or, if the step or action is taken in another jurisdiction, in connection with any analogous procedure in the relevant jurisdiction. |
21.3 | Without limiting its other rights or remedies, Supplier may suspend provision of the Products under the Agreement or any other contract between the Purchaser and Supplier if the Purchaser becomes subject to any of the events listed in clause 21.2.3, or Supplier reasonably believes that the Purchaser is about to become subject to any of them, or if the Purchaser fails to pay any undisputed amount due under this Agreement not less than seven (7) days after being provided notice of suspension in writing in connection with such payment. |
21.4 | The Supplier may terminate this Agreement: |
21.4.1 | immediately on written notice to the Purchaser if a Regulatory Authority revokes or withdraws a Regulatory Approval relating to the Products and such revocation or withdrawal is not subject to any pending appeal or reversal; or |
21.4.2 | if, with respect to any of the Supplier’s contracts with its subcontractors and/or sub-suppliers that are material to the Product’s supply chain (“Material Sub-Suppliers”), any notice of termination is received by Supplier, then Supplier shall as soon as practical, but in any event within five (5) Business Days, provide notice of such event to Purchaser, and this Agreement shall terminate upon date Supplier’s contract with the Material Sub-Supplier so terminates, unless Supplier has at that time in place another subcontractor and/or sub-supplier to provide the services that the terminated or expired Material Sub-Supplier has provided, |
which in each case has the effect of preventing the Manufacture and/or supply of the Products to the Purchaser in accordance with this Agreement.
21
21.5 | Without affecting any other right or remedy available to it, Purchaser may terminate this Agreement with immediate effect by giving written notice to the Supplier if: |
21.5.1 | a Continuing Inability to Supply has occurred; or |
21.5.2 | the Supplier’s Liquidity falls below the Supplier’s Minimum Liquidity Covenant. |
21.6 | If the Sub-License Agreement is terminated in respect of the NASH Product only, the Supplier’s obligation (if any) to supply the NASH Product in accordance with this Agreement shall immediately cease on the effective date of such partial termination (“NASH Termination”) and, for the avoidance of doubt, the Supplier shall not be obliged to fulfil any accepted Purchase Orders, to the extent they relate to NASH Products, that remain unfulfilled as at the date of termination. |
22. | OBLIGATIONS ON TERMINATION |
22.1 | On termination of this Agreement, each Party shall promptly: |
22.1.1 | return to the other Party all equipment, materials and property belonging to the other Party that the other Party had supplied to it or any of its Group Companies in connection with the supply and purchase of the Products under this Agreement; |
22.1.2 | return to the other Party all documents and materials (and any copies) containing the other Party’s Confidential Information; |
22.1.3 | erase all the other Party’s Confidential Information from its computer systems (to the extent possible); and |
22.1.4 | on request, certify in writing to the other Party that it has complied with the requirements of this clause 22.1. |
22.2 | In the event of a NASH Termination, the Purchaser shall: |
22.2.1 | comply with the obligations set out in clause 22.1 to the extent such equipment, materials, property, documents, and Confidential Information relate to the NASH Product, save to the extent that such obligations conflict with the Purchaser’s applicable obligations in the Sub-License Agreement; and |
22.2.2 | in good faith acting reasonably, enter into negotiations with the Supplier regarding the sale of the Purchaser’s stock of NASH Products to the Supplier at a price which accounts for both the price paid by the Purchaser for the stock and the cost the Supplier may incur in repackaging the Products for sale in the United States of America. |
22.3 | In the event of termination of this Agreement, other than by the Supplier in accordance with clause 21.2 or clause 21.4 or by either Party in accordance with clause 24.5, the Supplier shall fulfil all Purchase Orders that were accepted by the Supplier prior to the date of termination. Such Purchase Orders shall be fulfilled in accordance with this Agreement. |
22.4 | In the event of termination of this Agreement by Purchaser under clause 21.2.2 or clause 21.5, or by Supplier under clause 21.1 or 21.4.2, the Supplier shall, at its option, either: |
22
22.4.1 | continue supplying Products to the Purchaser in accordance with this Agreement for a period of two (2) years from the date of the relevant notice of termination; or |
22.4.2 | provide the Purchaser with an opportunity to make a single, final purchase of Products of up to twice the total volume of Products purchased by the Purchaser under this Agreement in the 12 months prior to the date of the relevant notice of termination (and for the purposes of the purchase under this clause 22.4.2 only, the Quarterly Maximum set out in clause 4.3 shall not apply); |
provided, however, in the event of termination of this Agreement by Supplier under clause 21.4.2, to the extent complying with Supplier’s obligations under this clause 22.4 are not possible due to the termination of the contract with the Material Sub-Supplier, Supplier shall be relieved of such obligations to such extent.
23. | SURVIVAL |
23.1 | On termination of this Agreement the following clauses shall continue in force: |
23.1.1 | Clause 14 (Insurance); |
23.1.2 | Clause 16 (Indemnity); |
23.1.3 | Clause 17 (Limitation of liability); |
23.1.4 | Clause 19 (Confidentiality); |
23.1.5 | Clause 22 (Obligations on termination); |
23.1.6 | Clause 27 (Multi-tiered dispute resolution procedure); |
23.1.7 | Clause 36 (Governing law); and |
23.1.8 | Clause 37 (Jurisdiction). |
23.2 | In addition to those clauses referred to in clause 23.1, any other clause which explicitly or by implication is intended to continue in force on termination of this Agreement shall do so. |
23.3 | Termination of this Agreement shall not affect any rights, remedies, obligations or liabilities of the Parties that have accrued up to the date of termination, including the right to claim damages for any breach of the Agreement that existed at or before the date of termination. |
24. | FORCE MAJEURE |
24.1 | “Force Majeure Event” means any circumstance not in a Party’s reasonable control including: |
24.1.1 | acts of God, flood, drought, earthquake or other natural disaster; |
24.1.2 | epidemic or pandemic; |
24.1.3 | terrorist attack, civil war, civil commotion or riots, war, threat of or preparation for war, armed conflict, imposition of sanctions, embargo, or breaking off of diplomatic relations; |
23
24.1.4 | nuclear, chemical or biological contamination, or sonic boom; |
24.1.5 | any law or any action taken by a government or public authority, including imposing an export or import restriction, quota or prohibition, or failing to grant a necessary licence or consent; |
24.1.6 | collapse of buildings, fire, explosion or accident; |
24.1.7 | any labour or trade dispute, strikes, industrial action or lockouts (other than in each case by the employees of the Party seeking to rely on this clause, or employees of the Group Companies of that Party); |
24.1.8 | non-performance by suppliers or subcontractors (other than by Group Companies of the Party seeking to rely on this clause); and |
24.1.9 | interruption or failure of utility service. |
24.2 | Provided it has complied with clause 24.4, if a Party is prevented, hindered or delayed in or from performing any of its obligations under this Agreement by a Force Majeure Event (“Affected Party”), the Affected Party shall not be in breach of this Agreement or otherwise liable for any such failure or delay in the performance of such obligations. The time for performance of such obligations shall be extended accordingly. |
24.3 | The corresponding obligations of the other Party will be suspended, and its time for performance of such obligations extended, to the same extent as those of the Affected Party. |
24.4 | The Affected Party shall: |
24.4.1 | as soon as reasonably practicable after the start of the Force Majeure Event, notify the other Party in writing of the Force Majeure Event, the date on which it started, its likely or potential duration, and the effect of the Force Majeure Event on its ability to perform any of its obligations under the Agreement; and |
24.4.2 | use all reasonable endeavours to mitigate the effect of the Force Majeure Event on the performance of its obligations. |
24.5 | If the Force Majeure Event prevents, hinders or delays the Affected Party’s performance of its obligations for a continuous period of more than six (6) months, the Party not affected by the Force Majeure Event may terminate this Agreement by giving one month’s written notice to the Affected Party. |
24.6 | A Party shall not as a result of or in connection with a Force Majeure Event be relieved of liability for failure or delay in performing any of its obligation(s) to pay any sums properly due to the other Party in accordance with this Agreement. |
25. | COSTS |
Except as expressly provided in this Agreement, each Party shall pay its own costs incurred in connection with the negotiation, preparation, and execution and registration of this Agreement and any documents referred to in it.
24
26. | SEVERANCE |
26.1 | If any provision or part-provision of this Agreement is or becomes invalid, illegal or unenforceable, it shall be deemed deleted, but that shall not affect the validity and enforceability of the rest of this Agreement. |
26.2 | If any provision or part-provision of this Agreement is deemed deleted under clause 26.1, the Parties shall negotiate in good faith to agree a replacement provision that, to the greatest extent possible, achieves the intended commercial result of the original provision. |
27. | MULTI-TIERED DISPUTE RESOLUTION PROCEDURE |
27.1 | If a dispute arises out of or in connection with this Agreement or the performance, validity or enforceability of it (“Dispute”) then except as expressly provided in this Agreement, the Parties shall follow the procedure set out in this clause 27: |
27.1.1 | either Party shall give to the other written notice of the Dispute, setting out its nature and full particulars (“Dispute Notice”), together with relevant supporting documents. On service of the Dispute Notice, the contract manager of Supplier and contract manager of the Purchaser shall attempt in good faith to resolve the Dispute; |
27.1.2 | if the contract manager of Supplier and contract manager of the Purchaser are for any reason unable to resolve the Dispute within 30 days of service of the Dispute Notice, the Dispute shall be referred to an executive officer of Supplier and executive officer of the Purchaser who shall attempt in good faith to resolve it; and |
27.1.3 | if the executive officer of Supplier and executive officer of the Purchaser are for any reason unable to resolve the Dispute within 30 days of it being referred to them, the Parties agree to enter into mediation in good faith to settle the Dispute in accordance with the CEDR Model Mediation Procedure. To initiate the mediation, a Party must serve notice in writing (“ADR Notice”) to the other Party to the Dispute, referring the dispute to mediation. A copy of the ADR Notice should be sent to CEDR. Unless otherwise agreed between the Parties within 10 days service of the ADR Notice, the mediator shall be nominated by CEDR. Unless otherwise agreed between the Parties, the mediation will start not later than 30 days after the date of the ADR Notice. |
No provision in this Agreement should be construed as precluding a Party from bringing an action for injunctive relief or other equitable relief. To the extent a payment alleged to be due under this Agreement is the subject of a bona fide good faith dispute asserted by the Purchaser, the Supplier shall continue to provide all services as required by this Agreement during the pendency of the dispute so long as Purchaser timely pays (including the allowance of 7 days cure period) all undisputed amounts due under this Agreement and can only withhold payment of disputed amounts where there is a bona fide good faith dispute.
27.2 | No Party may commence any court proceedings under clause 37 in relation to the whole or part of the Dispute until 90 days after service of the ADR Notice, provided that the right to issue proceedings is not prejudiced by a delay. |
25
28. | FURTHER ASSURANCE |
At its own expense, each Party shall, and shall use all reasonable endeavours to procure that any necessary third-party shall, promptly execute and deliver such documents and perform such acts as may reasonably be required for the purpose of giving full effect to this Agreement.
29. | VARIATION |
No variation of this Agreement shall be effective unless it is in writing and signed by both Parties (or their authorised representatives).
30. | WAIVER |
30.1 | A waiver of any right or remedy under this Agreement or by law shall only be effective if given in writing and shall not be deemed a waiver of any subsequent right or remedy. |
30.2 | A failure or delay by a Party to exercise any right or remedy provided under this Agreement or by law shall not constitute a waiver of that or any other right or remedy, nor shall it prevent or restrict any further exercise of that or any other right or remedy. No single or partial exercise of any right or remedy provided under this Agreement or by law shall prevent or restrict the further exercise of that or any other right or remedy. |
30.3 | A Party that waives a right or remedy provided under this Agreement or by law in relation to one Party, or takes or fails to take any action against that Party, does not affect its rights in relation to any other Party. |
31. | NOTICES |
31.1 | Any notice or other communication given to a Party under or in connection with this Agreement shall be in writing and shall be: |
31.1.1 | delivered by hand or by pre-paid first-class post or other next working day delivery service at its registered office (if a company) or its principal place of business (in any other case); or |
31.1.2 | sent by email to the address specified in the SPA. |
31.2 | Any notice or communication shall be deemed to have been received: |
31.2.1 | if delivered by hand, at the time the notice is left at the proper address; |
31.2.2 | if sent by pre-paid first-class post or other next working day delivery service, at 9.00 am on the second Business Day after posting; or |
31.2.3 | if sent by email, at the time of transmission, or, if this time falls outside business hours in the place of receipt, when business hours resume. In this clause 31.2.3, business hours means 9.00am to 5.00pm Monday to Friday on a day that is not a public holiday in the place of receipt. |
31.3 | This clause 31 does not apply to the service of any proceedings or other documents in any legal action or, where applicable, any arbitration or other method of dispute resolution. |
26
32. | ENTIRE AGREEMENT |
32.1 | This Agreement constitutes the entire Agreement between the Parties, and supersedes and extinguishes all previous agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to its subject matter. |
32.2 | Each Party acknowledges that in entering into this Agreement it does not rely on, and shall have no remedies for, any statement, representation, assurance or warranty (whether made innocently or negligently) that is not set out in this Agreement. |
32.3 | Each Party agrees that it shall have no claim for innocent or negligent misrepresentation or negligent misstatement based on any statement in this Agreement. |
32.4 | Nothing in this clause 32 shall limit or exclude any liability for fraud. |
33. | COOPERATION |
33.1 | It is recognised that both Parties will be relying upon the supply of Products and components thereof from the Supplier’s Material Sub-Suppliers. In that context both parties shall work together collaboratively with a view to exploring opportunities for negotiating more favourable terms of supply with the Supplier’s primary subcontractor for bulk tablets as at the date of this Agreement (“Tablet Sub-Supplier”). |
33.2 | Without limiting the foregoing or being limited thereby, Supplier hereby consents for Purchaser to enter into a Stand-By Contract with: |
33.2.1 | the Tablet Sub-Supplier; and |
33.2.2 | a subcontractor to the Supplier for the supply of API, as selected by the Supplier acting reasonably (“API Sub-Supplier”). |
33.3 | Each Stand-By Contract shall be structured such that through the Stand-By Contract Purchaser will have access to the Tablet Sub-Supplier or API Sub-Supplier (as applicable, each a “Relevant Sub-Supplier”) if Purchaser exercises its rights to have made the Products as and when permitted to do so under the Sub-License Agreement. |
33.4 | Each “Stand-By Contract” with a Relevant Sub-Supplier shall be a letter agreement reasonably acceptable to Purchaser, and which may not be agreed without the Supplier’s written approval (such approval not to be unreasonably withheld, delayed or conditioned), providing that upon receipt of notice from Purchaser, each Relevant Sub-Supplier shall, in respect of the Product for use in the Territory (as defined in the Sub-License Agreement), agree to provide Purchaser with broadly equivalent manufacturing and supply services and products (as appropriate) as Supplier receives under its contract with the Relevant Sub-Supplier. |
33.5 | Purchaser shall be the lead negotiator with each Relevant Sub-Supplier in respect of any such Stand-By Contract and shall keep Supplier reasonably informed as to the progress of the negotiations. Supplier shall, for a period of six months from the Effective Date, reasonably cooperate with Purchaser in connection with Purchaser negotiating and entering into such Stand-By Contracts. |
27
34. | THIRD-PARTY RIGHTS |
Unless it expressly states otherwise, this Agreement does not give rise to any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement.
35. | COUNTERPARTS |
35.1 | This Agreement may be executed in any number of counterparts, each of which shall constitute a duplicate original, but all the counterparts shall together constitute the one Agreement. |
35.2 | No counterpart shall be effective until each Party has delivered to the other at least one executed counterpart. |
36. | GOVERNING LAW |
This Agreement and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed by and construed in accordance with the law of England and Wales.
37. | JURISDICTION |
Each Party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with this Agreement or its subject matter or formation.
28
/s/ Rocco Venezia | | |
and on behalf of INTERCEPT | …………………………………. | |
PHARMA EUROPE LTD. | Director | |
Signed by VIKRAM KAMATH for | /s/ Vikram Kamath | |
and on behalf of AMDIPHARM | …………………………………. | |
LTD. | Director | |
29
SCHEDULE 1: - PRODUCTS
PRODUCTS: | 5mg OCA tablet* | 10mg OCA tablet* | 25mg OCA tablet*** | ||||
DEMONSTRABLE COSTS OF MANUFACTURE:** | [***] | [***] | [***] | ||||
*Whole tablets in drums for commercial supply only (this Agreement is not intended to, and does not, extend to clinical supply), as more specifically described in SCHEDULE 2: **This is an estimate of limb (i) (only) of the actual Demonstrable Costs of Manufacture (to be paid by the Purchaser) and may vary in accordance with the terms of Supplier’s agreements with its subcontractors and sub-suppliers. These estimates have been calculated as follows (figures in USD and based on a 500,000 tablet batch): | |||||||
| 5mg | 10mg | 25mg | | |||
[***] | |||||||
| |||||||
30
SCHEDULE 2: - SPECIFICATIONS
OCA Drug Product Description
[***]
Table 1: | Quantitative Composition of OCA Tablet Formulations |
[***]
Table 2: | Global Commercial Specification for 5 mg and 10 mg OCA Tablets (OCALIVA) |
[***]
Table 3: | Proposed Global Commercial Specification for 25 mg OCA Tablets (NASH) |
[***]
31
SCHEDULE 3: - FORMULA
[***]
32
Exhibit 10.4
[Certain identified information has been excluded from the exhibit because it is both not material and is the type that the registrant treats as private or confidential.]
DATED5 MAY 2022
(1) INTERCEPT PHARMA EUROPE LTD.
- and -
(2) ADVANZ PHARMA SERVICES (UK) LIMITED
AGREEMENT
relating to
the sale and purchase of certain of
the business and assets of
INTERCEPT PHARMA EUROPE LTD.
CONTENTS
1 | DEFINITIONS AND INTERPRETATION | 1 | |
2 | SALE AND PURCHASE OF BUSINESS AND ASSETS | 6 | |
3 | CONSIDERATION | 7 | |
4 | LIABILITIES | 7 | |
5 | COMPLETION | 8 | |
6 | APPORTIONMENTS | 10 | |
7 | TRANSFER OF CONTRACTS | 11 | |
8 | VAT AND TRANSFER TAXES | 12 | |
9 | TRANSFER OF EMPLOYEES | 13 | |
10 | WARRANTIES | 15 | |
11 | POST-COMPLETION | 17 | |
12 | PAYMENTS | 18 | |
13 | CONFIDENTIALITY AND ANNOUCEMENTS | 19 | |
14 | LIABILITY | 19 | |
15 | ENTIRE AGREEMENT | 19 | |
16 | GENERAL | 19 | |
17 | NOTICES | 20 | |
18 | GOVERNING LAW AND JURISDICTION | 21 | |
SCHEDULE 1 ASSETS AND EXCLUDED ASSETS | 22 | ||
| Part 1 Assets | 22 | |
| Part 2 Excluded Assets | 22 | |
SCHEDULE 2 THE EMPLOYEES | 23 | ||
SCHEDULE 3 THE PROPERTY | 24 | ||
| Part 1 Property | 24 | |
| Part 2 Terms and conditions of the sale of the Property | 24 | |
SCHEDULE 4 CONTRACTS | 25 | ||
THIS AGREEMENT is made on 5 May 2022
BETWEEN:
(1) | INTERCEPT PHARMA EUROPE LTD., a company incorporated and registered in England and Wales with number 09224395 which has its registered office at One Glass Wharf, Bristol BS2 0ZX ("Seller"); and |
(2) | ADVANZ PHARMA SERVICES (UK) LIMITED, a company incorporated and registered in England and Wales with number 04678629 which has its registered office at Capital House, 85 King William Street, London EC4N 7BL ("Purchaser"). |
BACKGROUND:
A | The Seller owns and carries on the Business. |
B | The Seller has agreed to sell, and the Purchaser has agreed to purchase, the Business and Assets as a going concern on the terms set out in this agreement. |
IT IS AGREED:
1.DEFINITIONS AND INTERPRETATION
1.1 | In this agreement: |
"Acquisition Documents" means this agreement and any other documents to be delivered on Completion;
"Advance Payments" means the aggregate of all payments (whether by deposit, prepayment or otherwise) made by the Seller in respect of the Business before the Transfer Time in respect of the price or cost of any contract under which any goods or services are to be provided to the Purchaser after the Transfer Time (but excluding any amount in respect of VAT paid by the Seller);
"Advance Receipts" means the aggregate of all amounts (whether by way of deposit, prepayment or otherwise) received by the Seller in respect of the Business before the Transfer Time in respect of the price or cost of any contract under which any goods are to be provided or any service is to be performed by the Purchaser after the Transfer Time (but excluding any amount in respect of output VAT for which the Seller is required to account but including accounts payable and accruals);
"Affiliate" in relation to a company, means any other company directly or indirectly controlling, controlled by or under common control with such company, and "control" for these purposes means (a) holding the majority of the voting rights or share capital of such company; or (b) otherwise having the power to direct the management and policies of such company;
"Assets" means all the assets, contracts and rights owned by or licensed to the Seller that relate exclusively to the Business;
1
“Assumed Liabilities” means the obligations and liabilities (other than Tax and VAT which relate to the period prior to the Transfer Time) of the Seller that properly relate to the period after the Transfer Time and which arise:
(a) | Pursuant to the Contracts or the Lease; or |
(b) | Relate to the employment of any Employee |
But in each case excluding any matter excluded pursuant to clause 4.3
"Business" means the management of activities related to the importing, offering for sale, commercialising, registering, holding or keeping, exporting, transporting, distributing, promoting, packaging, labelling, marketing and sale of the Product outside of the US and its territories as carried on at the Transfer Time by the Seller either directly or indirectly through one or more licensees or distributors, but excluding any other activity relating to the development or manufacture of Product or any other product or relating to the marketing and sale of the Product or any other product within the US and its territories;
"Business Claims" means all rights and claims of the Seller against any third parties or insurers arising directly or indirectly out of or in connection with the operation of the Business or in relation to any of the Assets, but excluding any such rights or claims which form part of the Excluded Assets;
"Business Day" means any day other than a Saturday or Sunday on which commercial banks are open for general business in London and New York;
"Business Equipment" all the office equipment, office furniture and office computer hardware and peripherals and other chattels located at the Property, owned by the Seller and, in each case, used exclusively in the Business at the Transfer Time, but excluding any such item which forms part of the Excluded Assets;
"Business Information" means information owned by the Seller and which relates exclusively to the Business, whether or not in written form;
"Business Records" means any books of account, records and documents of the Seller (in whatever form held) which relate exclusively to the Business, the Assets to be sold and purchased hereunder or the Employees, but excluding any such books of account, records which form part of the Excluded Assets;
"Completion" has the meaning given in the SPA;
"Completion Date" has the meaning given in the SPA;
"Consideration" has the meaning set out in clause 3;
"Contracts" means the contracts that relate exclusively to the Business, including, but not limited to, those contracts listed in schedule 4 but excluding any contracts which form part of the Excluded Assets;
"Debts" means any debts or other sums which have been invoiced by the Seller, or in respect of which the Seller is entitled to raise an invoice, at the Transfer Time which arise out of or are attributable to the carrying on of the Business;
"Employees" means those persons employed by the Seller at the Transfer Time listed in schedule 2 (and "Employee" means any one of them);
2
"Encumbrance" means any mortgage, charge, pledge, lien, deposit by way of security, bill of sale, option, restriction, assignment, right to acquire, right of pre-emption or any other form of right, interest, preference, security, encumbrance of any nature in favour of a third party or any agreement, arrangement or obligation to create any of them;
"Excluded Assets" means all those Assets which are not listed in clause 2.1 together with all those assets, contracts and rights owned by or licensed to the Seller in relation to the Business, details of which are set out in part 2 of schedule 1;
"Excluded Employee" means any person employed by the Seller who is not an Employee;
"Excluded Liabilities" means those debts, obligations and liabilities of the Seller which are not assumed by the Purchaser;
"Goodwill" means the goodwill of the Business together with the exclusive right of the Purchaser to represent itself as carrying on the Business in succession to the Seller;
"HMRC" means HM Revenue and Customs;
"IP" means:
(a) | patents, utility models, inventions, know-how, trade secrets, copyright and related rights and allied rights including moral rights, database rights and other rights in and relating to software, registered designs, unregistered design rights, trademarks and service marks, trade names, business names, company names, brand names, logos, rights in get-up, domain names and URLs, goodwill and rights to sue for passing-off (or for unfair competition) and any other intellectual property rights (in each case, whether or not registered, and including all applications to register and rights to apply to register any of them, and all rights to sue for any past or present infringement of them) and renewals or extensions of such rights; and |
(b) | rights having equivalent or similar effect to the above items in any jurisdiction in which the Seller conducts business; |
“Licence Agreement” means the sublicence agreement to be entered into on or about the date hereof between the Seller and Mercury Pharma Group Limited pursuant to which the Seller grants certain sub licences in respect of IP to which it has licenced rights;
“Loss” or “Losses” means any and all losses (including loss in revenue or reduction in value of the Business or of any of the Assets), liabilities, actions and claims including charges, costs, damages, demands, fines, penalties, interest and all legal and other professional fees and expenses including, in each case, all related Taxes;
"Non-Property Assets" means all those Assets listed in clause 2.1 other than the Property;
"Non-Product Business IP" means IP, other than the Product IP, which is owned by the Seller whether or not used in relation to the Business at the Transfer Time;
"Option to Tax" means a valid option to tax, election to waive the exemption or real estate election in relation to the Property pursuant to schedule 10 of the VAT Act;
"Product" means Ocaliva® (a monotherapy in which obeticholic acid is the active pharmaceutical ingredient) that is commercially sold for the treatment of primary biliary cholangitis (PBC);
3
"Product IP" means IP in and to the Product which is owned by or licensed to the Seller;
"Property" means all and any part or parts of the leasehold property detailed in part 1 of schedule 3;
“Purchaser’s Group” means the Purchaser, its subsidiary undertakings, any parent undertaking of the Purchaser and all other subsidiary undertakings of any such parent undertaking as the case may be from time to time;
“Receivables” means all amounts owing to the Seller and/or any other member of the Seller’s Group as at Completion in connection with the Business;
"Regulations" means The Transfer of Undertakings (Protection of Employment) Regulations 2006;
"SPA" means the share sale and purchase agreement entered into between (1) Intercept Pharmaceuticals, Inc. and (2) Mercury Pharma Group Limited in relation to certain non-US subsidiaries of Intercept Pharmaceuticals, Inc. on or about the date of this agreement;
"Stock" means the stock of finished product together with britestock owned by the Seller for the purposes of the Business as at the Transfer Time;
"Tax" means and includes all forms of taxation and statutory and governmental, state, provincial, local governmental or municipal charges, duties, contributions and levies, withholdings and deductions, in each case wherever and whenever imposed and all related penalties, charges, costs and interest;
" Tax Authority" means any governmental or other authority competent to impose Taxation wherever and whenever;
"Third Party Consent" means any consent, agreement, approval, authorisation or waiver required from a third party for the assignment of any Contract to the Purchaser;
"TOGC" means the transfer of a business or part of a business as a going concern for the purposes of section 49 of the VAT Act and article 5 of the Value Added Tax (Special Provisions) Order 1995;
"Trademark Assignment Agreement" means the master trademark assignment agreement to be entered into on or around the date of this agreement between Intercept Pharmaceuticals, Inc., RXF Technologies, Inc. and Mercury Pharma Group Limited;
"Transaction Documents" shall have the meaning given to that term in the SPA
"Transfer Taxes" means any direct or indirect stamp, stamp duty, stamp duty reserve tax or other documentary, registration or transfer Taxes (including, for the avoidance of doubt, real estate transfer taxes) in the nature of tax imposed, collected or assessed by, or payable to (whether directly or indirectly), a Tax Authority in relation to the agreement to transfer or the transfer of ownership or title to property and all penalties and interest included in or relating to any of the above, including VAT;
"Transfer Time" means immediately prior to the actual time of Completion on the Completion Date;
"VAT" means:
4
a) | any Tax imposed in compliance with the council directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112) or, in respect of the United Kingdom, value added tax; |
b) | any other sales tax, use Tax, consumption Tax and goods and services Tax; and |
c) | any other Tax of a similar nature to such Tax referred to in (a) or (b); and |
"VAT Act" means the Value Added Tax Act 1994.
1.2 | In this agreement (unless the context requires otherwise), any reference to: |
(a) | any gender includes all genders and to the singular includes the plural (and vice versa); |
(b) | a company includes any company, corporation or body corporate, or any other entity having a separate legal personality; a person includes an individual, company, partnership, unincorporated association or authority (whether or not having a separate legal personality); |
(c) | legislation or a legislative provision is to that legislation or provision as in force at the date of this agreement, and any subordinate legislation made under it in force at that date; |
(d) | writing or written includes any method of representing or reproducing words in a legible form; and |
(e) | a clause or schedule is to a clause of or schedule to this agreement and to a part is to a part of a schedule to this agreement. |
1.3 | In this agreement (unless the context requires otherwise): |
(a) | terms defined in the Companies Act 2006 have the same meaning when used in this agreement; |
(b) | "including" or "includes" means including or includes without limitation; and |
(c) | "indemnify" or "indemnifying" any person "against any loss" in connection with or arising out of any matter, fact or circumstance shall include indemnifying such person and holding such person harmless in full for and against all costs, losses, expenses and/or other liabilities incurred or suffered by it from time to time in connection with or arising out of such circumstance (including all payments, reasonable legal and other costs and expenses incurred as a consequence of or which would not have arisen but for such circumstance). |
1.4 | This agreement incorporates the schedule to it. |
1.5 | The contents list and headings are for ease of reference only and shall not affect the construction or interpretation of this agreement. |
5
2.SALE AND PURCHASE OF BUSINESS and assets
2.1 | Subject to the terms of this agreement, the Seller shall sell free from all Encumbrances and the Purchaser shall purchase the Business as a going concern and those of the Assets listed below as at and with effect from the Transfer Time: |
(a) | the Goodwill; |
(b) | the Property; |
(c) | the Business Equipment; |
(d) | the Stock; |
(e) | the benefit (subject to the burden) of the Contracts; |
(f) | its rights in the Business Information; and |
(g) | the Non-Product Business IP |
2.2 | The Seller shall sell the Non-Property Assets free from all Encumbrances at and with effect from the Transfer Time. |
2.3 | The Seller acknowledges that the operation of the Business requires the rights to certain Product IP and has agreed to enter into the Licence Agreement and the Trademark Assignment Agreement in connection with the transfer of the Business. |
2.4 | The Seller covenants with the Purchaser that: |
(a) | it has the right to transfer or to procure the transfer of the full legal and beneficial interest in the Non-Property Assets to the Purchaser on the terms set out in this agreement; and |
(b) | it shall, subject to clause 7 below, procure that all steps and actions are taken in order to vest any of the Non-Property Assets in the Purchaser as required by the Purchaser from time to time or as otherwise may be necessary to give full effect to this agreement. |
2.5 | Part 1 of the Law of Property (Miscellaneous Provisions) Act 1994 shall not apply to the sale and purchase of the Non-Property Assets. |
2.6 | The Property shall be sold and purchased on and subject to the terms of this agreement and the terms and conditions of sale set out in part 2 of schedule 3. |
2.7 | Nothing in this agreement shall operate to transfer any Excluded Asset. |
2.8 | Risk in the Assets shall pass to the Purchaser at the Transfer Time. |
2.9 | Prior to Completion the Purchaser may, by giving written notice to such effect to the Seller, elect that the Contracts and the Stock are transferred to an Affiliate of the Purchaser provided that such Affiliate is in a VAT Group with Mercury Group Pharma Limited. |
6
3.CONSIDERATION
The consideration for the Business and Assets to be transferred hereunder shall be satisfied by the payment by the Purchaser to the Seller of one million US dollars ($1,000,000) ("Consideration") and paid in cash.
The Consideration shall be allocated as such basis as determined by the Purchaser, and the Parties agree to follow such allocation for all relevant Tax purposes.
4. | LIABILITIES |
4.1 | Seller obligations |
The Seller shall:
(a) | remain responsible for the Excluded Liabilities; and |
(b) | indemnify the Purchaser against any Loss which it incurs in connection with or arising out of any Excluded Liability. |
4.2 | Purchaser obligations |
The Purchaser shall:
(a) | With effect from the Transfer Time , observe, perform, pay, discharge or satisft the Assume Liabilities on their respective due dates; and |
(b) | Indemnify the Seller against any loss which it incurs in connection with or arising out of the Purchasers failure to comply with its obligations set out in clause 4.2 (a) |
4.3 | Obligations etc arising before the Transfer Time |
Nothing in this clause 4 shall:
(a)require the Purchaser to observe, perform, pay, discharge or satisfy any debt, obligation or liability of the Seller in respect of any goods supplied or services sold to a person other than a Group Company (as defined in the SPA) by the Seller before the Transfer Time; or
(b)impose any obligation on the Purchaser for or in respect of any goods supplied to a person other than a Group Company (as defined in the SPA) by the Seller before the Transfer Time; or
(c)obligate or otherwise impose responsibility on the Purchaser for any liability in respect of:
(i)any of the Excluded Liabilities;
(ii) | any act, neglect, default or omission in respect of any of the Contracts (including contracts relating to the Property) occurring before Completion; or |
7
(iii) | the performance of any obligation following Completion (including payment for any product delivered or any service provided) which should have been performed by the Seller and/or any other members of the Seller's Group before Completion; or |
(iv) | any other liability or obligation arising in connection with the Business or the Assets (including in respect of the Assumed Employees) which is outstanding on, or is referable to any period before, Completion |
and the Seller shall indemnify the Purchaser and each member of the Purchaser’s Group against any Loss which it suffers or incurs in connection with or arising out of any such matters.
4.4 | As soon as reasonably practicable the Seller shall, and shall procure that relevant members of the Seller’s Group shall, use all reasonable endeavours to ensure that the Purchaser’s Group’s interest in the Business is noted on those insurance policies of the Seller’s Group which relate to the Business or any of the Assets. |
4.5 | The Seller shall and shall procure that each member of the Seller’s Group shall continue in force on the same terms and comply with all pre-existing insurance cover in respect of the Business or the Assets maintained by them up to and including the Transfer Time. |
4.6 | If any insured event occurs before the Transfer Time in relation to the Business or the Assets, the Seller shall use all reasonable endeavours to ensure that recovery is made under the relevant policy before the Transfer Time and that the proceeds are applied in restoring or replacing insured assets or are otherwise transferred to the Purchaser. |
4.7 | With effect from the Transfer Time, all insurance cover previously maintained by the Seller’s Group in respect of the Business or the Assets shall cease, save in respect of insured events occurring before the Transfer Time and on the basis that the Seller shall use all reasonable endeavours to ensure that recovery is made on behalf of the Purchaser’s Group in respect of such events and that the proceeds (net of any Tax that is payable by the Seller Group on such proceeds) are transferred to the Purchaser within five Business Days of their receipt. |
4.8 | The undertakings contained in Clauses 4.4 to 4.7 (inclusive) are given to the Purchaser and each other member of the Purchaser’s Group. |
5. | COMPLETION |
5.1 | This agreement is conditional in all respects on Completion taking place. Notwithstanding any other provision in it, this agreement shall not take effect (and no term in it shall have effect) until |
8
Completion takes place. On and with effect from Completion, this agreement shall have full effect in accordance with its terms. In the event that:
(a) | prior to Completion, the SPA is terminated or otherwise ceases to have effect (whether pursuant to its terms, by agreement of the parties to it or otherwise) (each a "Termination") or |
(b) | Completion has not taken place on or prior to the Longstop Date (as defined in the SPA); on and with effect from the first to occur of: |
(i) | the Longstop Date; and |
(ii) | the date of such Termination, |
this agreement shall automatically terminate and it shall have no effect (as if void when first entered into). On and after automatic termination of this agreement, no party to it shall have any liability to any other party to it pursuant to its terms and/or in respect of a breach of it, whether actual or contingent and whether in relation to the actual time of termination or the period prior to or following termination.
5.2 | Completion of the sale and purchase of the Business and Assets (except for the Property) shall take place conditional upon but with effect immediately prior to Completion. On Completion, the Seller shall deliver to the Purchaser: |
(a) | all the Assets (and all the assets which are leased or hired under the terms of any Contract) and which are capable of passing by delivery; |
(b) | the Business Records; |
(c) | the Licence Agreement duly executed by the Seller; and |
(d) | the title deeds and documents relating to the Property. |
5.3 | On Completion the Purchaser shall: |
(a) | Deliver to the Seller the Licence Agreement duly executed by Mercury Pharma Group Limited: and |
(b) | Pay the Consideration to the Seller (to such account as shall be notified to the Purchaser no later than 3 Business Days prior to Completion) |
5.4 | Completion of the sale and purchase of the Property shall take place in accordance with part 2 of schedule 3. |
5.5 | The Seller undertakes to the Purchaser that it shall procure that, on Completion, each of the Group Companies (as defined in the SPA) holds an amount of Stock which is sufficient to provide 12 months of supply based on the Seller’s reasonable assumptions and the forecasts contained in document 2.2.1 in the Data Room (as defined in the SPA). |
9
6.APPORTIONMENTS
6.1 | Periodical outgoings |
Where any periodical outgoings arising from or attributable to the carrying on of the Business and/or the ownership, occupation and/or use of the Assets (except for the Property) relate to the period both before and after the Transfer Time, they shall be apportioned in accordance with clause 6.3. (Periodical outgoings include rents, rent charges, service charges, rates, insurance premiums, gas, water, electricity and telephone charges, royalties, salaries, wages and other emoluments and all contributions for which the Seller or Purchaser is liable as an employer in respect of any Employee under any contractual or statutory obligation (including holiday pay, holiday entitlement, tax, national insurance contributions and contributions to retirement benefit schemes).)
6.2 | Periodical receivables |
Subject to clause 9, all rents, royalties and other periodical receivables attributable to the carrying on of the Business and/or the ownership, occupation and/or use by the Seller of the Assets (except for the Property) before the Transfer Time shall belong and be payable to the Seller and, as from the Transfer Time, shall belong and be payable to the Purchaser. Where such receivables relate to the period both before and after the Transfer Time, they shall be apportioned in accordance with clause 6.3.
6.3 | Apportionment |
The outgoings and receivables under clauses 6.1 and 6.2 shall, if necessary, be apportioned as follows:
(a) | those which are referable to volume of use shall as far as practicable be apportioned according to the volume used; and |
(b) | all others shall be apportioned on a time basis. |
All expenditure and outgoings in respect of the Business or the Assets and all payments (excluding any amounts in respect of VAT) received in respect of the Business or the Assets which, in each case, cover a period both before and after the Completion Date will be apportioned so that the part of the relevant expenditure or payment that is attributable to a period up to and including the Completion Date will be borne by, or be for the benefit of, the Seller and the part of the relevant expenditure or payment that is attributable to the period after the Completion Date will be borne by, or be for the benefit of, the Purchaser. Where a payment received in respect of the Business or the Assets falls to be apportioned under this paragraph, the VAT received in respect of that payment shall be apportioned to the party that has to account (or whose representative member, where there is a VAT group, has to account) for such VAT.
Any claim for apportionment and payment shall be made by the Seller or the Purchaser, as the case may be, by notice in writing to the other supported by copy documents evidencing the amount of the same and the calculation of the apportionment. All sums due will be paid within 10 Business Days of receipt of such notice of apportionment. If any dispute shall arise between the Seller and the Purchaser as to the amount of any apportionment, such dispute may be referred at the request of either the Seller or the Purchaser for determination by the Expert (as defined in the SPA) in accordance with part 2 of schedule 5 of the SPA mutatis mutandis.
10
6.4 | Property |
In relation to the Property only, this clause 5.5 shall apply to the Property as if each occurrence of the words "Transfer Time" were to the words "Assignment Completion Date".
7.TRANSFER OF CONTRACTS
7.1 | This agreement constitutes an assignment to the Purchaser of the benefit of each Contract: |
(a)which can be assigned by the Seller without any Third Party Consent; and
(b) | which cannot be so assigned, but in respect of which such Third Party Consent has been obtained at or before the Transfer Time, |
in each case, with effect from the Transfer Time.
7.2 | Insofar as the benefit of any of the Contracts cannot effectively be transferred to the Purchaser except by way of novation or with a Third Party Consent to an assignment and such Third Party Consent has not been obtained at or before the Transfer Time: |
(a) | this agreement shall not constitute an assignment or an attempted assignment of such Contract; |
(b) | the Seller shall use all reasonable endeavours to procure that such Contracts are novated or to obtain such Third Party Consent as soon as practicable after the Transfer Time; and |
(c) | upon any such Third Party Consent being obtained, this agreement shall constitute an assignment of the benefit (subject to the burden) of the Contract to which the Third Party Consent relates. |
7.3 | Until each Contract to which clause 7.2 relates has been novated or assigned to the Purchaser or, if earlier, has terminated on the expiry of its term, or otherwise been terminated by the relevant counterparty: |
(a) | the Seller shall: |
(i) | continue to use all reasonable endeavours to obtain that Third Party Consent as soon as possible; |
(ii) | hold the benefit of such Contract on trust for the Purchaser absolutely and shall, as soon as practicable after receipt, account for and pay or otherwise transfer to the Purchaser any monies, goods or other benefits received by the Seller in respect of the Contract without any deduction or set-off; |
(iii) | (so far as it lawfully may) act (without unreasonable delay) in accordance with the reasonable directions of the Purchaser (but at the Purchaser's expense) to provide for the Purchaser the benefits under the Contract; and |
(iv) | at the Purchaser's request and expense, enforce any and all of its rights under the Contract without unreasonable delay; and |
11
(b) | the Purchaser shall, at its own expense, perform and observe all the obligations of the Seller under the Contract to be discharged after the Transfer Time (except when, but only to the extent that, any such obligations are Excluded Liabilities). |
7.4 | In the event that any Contract to which clause 7.3 relates (other than any contract listed in Schedule 4) has not been novated or assigned to the Purchaser within six months of Completion and has not otherwise terminated, the Seller shall be entitled on giving not less than one months’ notice to the Purchaser to give notice of termination of such Contract. |
8.VAT and transfer taxes
8.1 | The consideration for any supply for VAT purposes made or deemed to be made under this agreement, including any non-monetary consideration shall be exclusive of any applicable VAT and/or Transfer Taxes. The party receiving the supply in question shall pay to the party making that supply (in addition to the consideration) all VAT for which the party making the supply is required to account in relation to that supply. |
8.2 | The parties believe that the sale of the Assets will be a TOGC, and they shall use their reasonable endeavours to procure that such sale is so treated by HMRC. This obligation shall not require the Seller to make any appeal against any determination of HMRC that the sale does not amount to a TOGC. As soon as reasonably practicable following signature of this agreement the Seller shall, in conjunction with its third party advisers, prepare for delivery to the Purchaser reasonably detailed analysis with respect to a TOGC and shall liaise with the Purchaser to agree the scope of such information with the intent that such file will include the relevant information in reasonable detail to be provided to any Tax Authority in support of a TOGC. |
8.3 | If it is determined that the sale of any of the Assets under this agreement does not constitute a TOGC, or part of a TOGC, then the VAT chargeable by the Seller to the Purchaser shall be paid within ten Business Days of the receipt by the Purchaser of a valid VAT invoice and a copy of the confirmation from HMRC (such documentation to be delivered by the Seller as soon as possible after receipt from HMRC). |
8.4 | The Seller warrants to the Purchaser that it is registered for UK VAT purposes under the VAT Act. |
8.5 | The Purchaser warrants and undertakes to the Seller that: |
(a) | it is and will at Completion be registered for UK VAT purposes as a member of a VAT group with Mercury Pharma Group Limited; |
(b) | it intends and will at Completion intend to continue the Business as a going concern (using the Product IP for the purposes of such Business); |
(c) | it is not buying the Assets as a nominee of any other person; |
(d) | it will prior to the Completion Date make and properly notify to HMRC a valid Option to Tax (and will provide evidence of the same to the Seller prior to Completion) and will not revoke such Option to Tax; and |
(e) | article 5(2B) of the Value Added Tax (Special Provisions) Order 1995 (as amended) does not apply to the Purchaser in relation to the purchase of the Property, and the Purchaser gives notice to the Seller to such effect, |
12
and acknowledges that, if it is in breach of any such warranties and undertakings, VAT may be payable in relation to the Consideration.
9.Transfer of Employees
The Purchaser acknowledges that, pursuant to the Regulations, at the Transfer Time it will become the employer of the Employees, but not the Excluded Employees. The contracts of employment of the Employees shall transfer automatically to the Purchaser and will have effect as if originally made between the Purchaser and the Employees.
9.1 | Employee liabilities |
All liabilities in relation to salaries, wages and other emoluments, holiday entitlement and all contributions for which the Seller or the Purchaser is liable as an employer in respect of any Employee under any contractual or statutory obligation shall be borne in accordance with clause 4, and all necessary apportionments shall be made in accordance with clause 5.5.
9.2 | Seller indemnity |
The Seller shall indemnify the Purchaser against any Loss which the Purchaser incurs in connection with or arising out of:
(a) | the employment before the Transfer Time and the termination by the Seller of the employment of any of the Employees or the Excluded Employees before the Transfer Time; |
(b) | anything done or omitted to be done by the Seller, or any other event or occurrence, in respect of any of the Employees or the Excluded Employees, in either case at any time before the Transfer Time; |
(c) | any breach of the Regulations; and |
(d) | the Seller not complying in full with its obligations (including its obligations to inform and consult under relevant applicable laws) with representatives of any Employees and/or the Excluded Employees, |
provided that such Loss is not incurred as a result of any act or omission of the Purchaser, including failure by the Purchaser to comply with its obligations under Regulation 13(4) of the Regulations, and provided that the Purchaser shall give credit for any sums it is able to recover in respect of such loss under the terms of an employer’s liability policy transferring by operation of law from the Seller to the Purchaser.
9.3 | If any collective or recognition agreement shall have effect after Completion as if originally made with the Purchaser, the Seller shall indemnify and hold the Purchaser harmless from and against all |
13
Losses suffered or incurred by it arising in connection with such collective or recognition agreement (including in respect of its termination by the Purchaser).
The Seller and the Purchaser shall work together in good faith properly and efficiently to administer for Tax purposes the transfer of the Employees pursuant to this Agreement (including informing and corresponding with the appropriate Taxation Authority).
9.4 | Excluded Employees |
If, within six months of the Transfer Time, any contract of employment of an Excluded Employee is deemed or alleged to have been effected between such Excluded Employee and the Purchaser as a result of the provisions of the Regulations:
(a) | the Purchaser shall, within 10 Business Days of becoming aware of the application or alleged application of the Regulations to any such contract, notify the Seller in writing that such employment contract is deemed or alleged to have effect as if originally made between such Excluded Employee and the Purchaser; |
(b) | no earlier than 10 Business Days and no later than 20 Business Days after compliance with its obligations under clause 9.4(a), the Purchaser may terminate any such Excluded Employee's employment by giving lawful notice and following any applicable statutory and/or contractual dismissal procedure; and |
(c) | provided that the Purchaser has complied with its obligations under clause 9.4(a), the Seller shall indemnify the Purchaser against any loss which the Purchaser incurs in connection with or arising out of: |
(i) | the termination of such Excluded Employee's employment in accordance with clause 9.4(b); and |
(ii) | in relation to any Excluded Employee whose employment is terminated in accordance with clause 9.4(b), salary payable in respect of such Excluded Employee's employment from the Transfer Time to the date of such termination. |
9.5 | Purchaser indemnity |
The Purchaser shall indemnify the Seller against any Loss which the Seller incurs in connection with or arising out of:
(a) | any actual or proposed substantial change by the Purchaser to any of the Employees' working conditions to the material detriment of such Employee; |
(b) | anything done or omitted to be done by the Purchaser, or any other event or occurrence, in relation to the employment of any of the Employees or the Excluded Employees, in either case at any time on or after the Transfer Time; and |
(c) | any breach by the Purchaser of its obligations under Regulation 13(4) of the Regulations, |
provided in each case that such Loss is not incurred as a result of any act or omission of the Seller.
14
9.6 | Claims handling |
Where any Employee Claim is made against a party to this agreement in respect of which one party ("Indemnifying Party") is liable to indemnify the other ("Indemnified Party"), the Indemnified Party shall:
(a) | take such steps and provide at the Indemnifying Party's expense such reasonable assistance as the Indemnifying Party may reasonably require in relation to such Employee Claim; |
(b) | preserve and not waive legal professional privilege or any other privilege attaching to any of the records, documents or other information in relation to such Employee Claim without the prior consent of the Indemnifying Party; |
(c) | not make any admission of liability in relation to such Employee Claim without the prior consent of the Indemnifying Party, such consent not to be unreasonably withheld or delayed; and |
(d) | not enter into any binding agreement or arrangement to settle such Employee Claim without the prior consent of the Indemnifying Party, such consent not to be unreasonably withheld or delayed. |
For the purposes of this clause 9, "Employee Claim" means any action, cost, claim, demand, expense or other liability in respect of a claim brought by an Employee, an employee of the Seller or a former employee of the Seller which the Indemnifying Party may become liable to indemnify the Indemnified Party in accordance with clause 4.1.
10.WARRANITES
10.1 | The Seller warrants to the Purchaser that: |
(a) | it has the legal right, full power and authority and all necessary consents and authorisations to enter into and to perform its obligations under this agreement and each other Acquisition Document to which it is or will be party; |
(b) | this agreement and each other Acquisition Document to which it is or will be party constitutes, or will when executed constitute, legal, valid and binding obligations on it and will be enforceable in accordance with their respective terms (assuming that each such |
15
Acquisition Document has been properly executed by the other parties to it and that their entry into it has been duly authorised);
(c) | the entry into and performance of its obligations under this agreement and each other Acquisition Document will not: |
(i) | conflict with or breach any provision of its constitutional documents; |
(ii) | breach any agreement or instrument to which it is a party or by which it is bound and which is material in the context of the Acquisition; |
(iii) | conflict with or breach any applicable law or any requirement of any Authority to which it is subject or submits which is material in the context of the Acquisition; or |
(iv) | require the consent, approval or authorisation of any Authority; and |
(d) | the Seller is the sole legal and beneficial owner of each of the Non-Property Assets; and |
(e) | the Assets are free from all Encumbrances and there is no agreement or commitment to give or create any Encumbrance over or affecting the Assets and no claim has been made by any person to be entitled to any such Encumbrance. |
10.2 | All disclosures made in or by virtue of the Disclosure Letter (as defined in the SPA) shall have effect in relation to each of the warranties in clause 10.1 to which they appear to be reasonably relevant and if, but only to the extent that, any such disclosures meet the standard of Disclosed (as defined in the SPA). |
10.3 | The Purchaser warrants to the Seller that: |
(a) | it has the legal right, full power and authority and all necessary consents and authorisations to enter into and to perform its obligations under this agreement and each other Acquisition Document to which it is or will be party; |
(b) | this agreement and each other Acquisition Document to which it is or will be party constitutes, or will when executed constitute, legal, valid and binding obligations on it and will be enforceable in accordance with their respective terms (assuming that each such |
16
Acquisition Document has been properly executed by the other parties to it and that their entry into it has been duly authorised); and
(c) | the entry into and performance of its obligations under this agreement and each other Acquisition Document will not: |
(i) | conflict with or breach any provision of its constitutional documents; |
(ii) | breach any agreement or instrument to which it is a party or by which it is bound and which is material in the context of the Acquisition; |
(iii) | conflict with or breach any applicable law or any requirement of any Authority to which it is subject or submits which is material in the context of the Acquisition; or |
(iv) | require the consent, approval or authorisation of any Authority. |
11.POST-COMPLETION
11.1 | Following Completion, the Purchaser shall be entitled to give notice: |
(a) | to all or any past and present customers, suppliers and other business contacts of the Business informing them of the sale of the Business and introducing the Purchaser as the Seller's successor in relation to the Business; and |
(b) | of the assignment of each Contract assigned pursuant to clauses 7.1 and 7.2(c) to the person with whom the Seller has entered into such Contract; |
in the names of both the Purchaser and the Seller, and the Seller authorises the Purchaser to give each such notice on its behalf.
11.2 | The Seller shall procure that all monies belonging to the Purchaser (or apportioned to it under this agreement), orders, enquiries, notices, correspondence and any other communications or items relating to the Business that are received by the any member of the Seller’s Group on or after Completion shall be passed to the Purchaser promptly. |
11.3 | In the event that following Completion the Purchaser or any Group Company receives any payment in respect of any Debt it shall procure that such monies shall be passed to the Seller promptly. |
11.4 | Without prejudice to any other rights or remedies of the Purchaser under this Agreement and subject to clause 7, if any Non-Property Asset (including any contract that relates exclusively to the Business but is in the name of a member of the Seller Group other than the Seller) has not been vested in the Purchaser or another member of the Purchaser’s Group by virtue of the transactions carried out under this Agreement and the other Transaction Documents, the Purchaser may give written notice of this to the Seller. If such notice is given: |
(a)the Seller shall, as soon as practicable at its own cost, transfer or procure the transfer of such Non-Property Asset to the Purchaser for no consideration;
(b)each Party shall provide such assistance to the other Party as is reasonably requested for the purposes of this clause 11.4; and
17
(c)the Seller shall indemnify and hold the Purchaser and each other member of the Purchaser’s Group harmless from and against any and all Losses suffered or incurred by it:
(i) | in relation to any such transfer; or |
(ii) | as a result of not holding any such Non-Property Asset for the period from Completion until the date on which it is transferred to the Purchaser or at the Purchaser’s direction under this clause 11.4; and |
(d)the provisions of this Agreement and, in particular, the Warranties shall extend to such Non-Property Asset.
11.5 | If any Excluded Asset has been vested in the Purchaser by virtue of the transactions carried out under this Agreement and the other Transaction Documents, the Seller may give written notice of this to the Purchaser at any time in the period of two years following the Completion Date. If such notice is given: |
(e) | the Purchaser shall, as soon as practicable at its own cost and so far as it is able, transfer or procure the transfer of such Excluded Assets to the Seller for no consideration; |
(f) | each Party shall provide such assistance to the other Party as is reasonably requested for the purposes of this clause 11.5; and |
(g) | the Seller shall indemnify and hold the Purchaser and each other member of the Purchaser’s Group harmless from and against any and all Losses suffered or incurred by it: |
(i) | in relation to such transfer; or |
(ii) | as a result of holding such Excluded Asset for the period from Completion until the date on which it is transferred to the Seller or at the Seller’s direction under this clause 11.5 |
11.6 | For the period of six years from the Completion Date, (on giving reasonable notice to the Seller) the Purchaser and its agents shall be entitled during normal business hours to have access to, and to reasonably request copies of (at the Purchaser's own expense), any Business Information, any books of account, records (including the VAT records), documents and information of the Seller (in whatever form) exclusively relating to all or any part of the Business, the Assets or the Employees. |
11.7 | For the period of six years from the Completion Date, (on giving reasonable notice to the Purchaser) the Seller and its agents shall be entitled during normal business hours to have access to, and reasonably request copies of (at the Seller's own expense), any of the Business Records. |
12.PAYMENTS
When, but only to the extent that, any payment pursuant to any indemnity or covenant to pay in this agreement is subject to a deduction or withholding required by law in respect of Tax or to a charge to Tax in the hands of the payee, the payer shall simultaneously pay to the payee such additional amount as is required for the aggregate of (a) the net amount received by the payee and (b) any Tax credit, repayment or benefit received or receivable by the payee in respect of such payment to equal the full amount due before the required deduction or withholding or charge to Tax.
18
13.CONFIDENTIALITY AND ANNOUNCEMENTS
Clause 13 of the SPA (confidentiality and announcements) shall apply and be incorporated into this agreement as if set out in full in this agreement (with references to "this agreement" in them being treated as references to this agreement).
14.LIABILITY
The Purchaser acknowledges and agrees that the SPA sets forth a total liability cap in clause 10.1 (financial cap) among the Seller (as defined therein) and all members of the Seller Group (as defined therein) across all Acquisition Documents (as defined therein). Notwithstanding anything herein, in no event shall the total liability of the Seller in this agreement exceed the remaining total liability cap as of the date of such claim. The “remaining total liability cap” shall be the total liability cap reduced by the aggregate amount of claims paid or pending payment from the Seller (as defined therein) and all members of the Seller Group (as defined therein) among all Acquisition Documents (as defined therein).
15.ENTIRE AGREEMENT
15.1 | The Acquisition Documents constitute the entire agreement and understanding between the parties in respect of the transactions contemplated by the Acquisition Documents. They supersede and extinguish all previous agreements, arrangements and understandings between the parties, and any representations and/or warranties previously given by either party in connection with such transactions. |
15.2 | Each party acknowledges that it has not relied on, or been induced to enter into any Acquisition Document by any representation or warranty given by any person (whether a party to this agreement or not) that is not incorporated in any Acquisition Document. |
15.3 | No party shall be liable in equity, contract or tort, under the Misrepresentation Act 1967 or in any other way for any representation or warranty that is not incorporated in any Acquisition Document. |
15.4 | No party shall be liable in tort or under the Misrepresentation Act 1967 for any representation or warranty that is incorporated in any Acquisition Document. |
15.5 | This clause 15 shall not exclude or limit any liability arising as a result of any fraud. |
16.GENERAL
16.1 | No party may assign, transfer, grant any Encumbrance over, declare any trust over or deal in any way with its rights under this agreement without the prior written consent of the other party. This agreement shall be binding on and continue for the benefit of the successors and assignees of each party. |
16.2 | A person who is not a party to this agreement shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement. This clause does not affect any right or remedy of any person which exists or is available otherwise than pursuant to that Act. |
16.3 | Each party shall from time to time, so far as it is reasonably able, do (or procure to be done) all such other things and/or execute and deliver (or procure to be executed and delivered) all such other documents as the other party may reasonably request to give effect to this agreement. |
19
16.4 | Each provision of this agreement (other than any obligation which is fully performed at Completion) shall remain in full force and effect after Completion. |
16.5 | If any provision of this agreement is or becomes illegal, invalid or unenforceable in any respect, that shall not affect or impair the legality, validity or enforceability of any other provision of this agreement. |
16.6 | No variation of this agreement shall be valid unless it is in writing and signed by or on behalf of each party. |
16.7 | No right or remedy under or in respect of this agreement shall be precluded, waived or impaired by: any failure to exercise or delay in exercising it; any single or partial exercise of it; any earlier waiver of it, whether in whole or in part; or any failure to exercise, delay in exercising, single or partial exercise of or earlier waiver of any other such right or remedy. |
16.8 | This agreement may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until each party has executed at least one counterpart. Each counterpart shall constitute an original of this agreement, but all the counterparts shall together constitute one and the same agreement. |
17.NOTICES
17.1 | Interpretation |
In this clause 17 any reference to a time is to the local time in the place at or to which the Notice is delivered or sent.
17.2 | Form and method of giving Notice |
Any notice or other communication to be given or made under or in connection with this agreement ("Notice") shall be in writing in English, sent to the relevant party at the postal or email address and for the attention of the person specified in clause 17.3, and may be delivered:
(a) | by hand or by courier (using an internationally recognised courier company); |
(b) | by prepaid recorded delivery post or equivalent if the Notice is to be received in the same country from which it is sent; or |
(c) | by email, provided that the sender must deliver a copy of such Notice to the recipient otherwise than by email by 5.00 pm on the fifth Business Day after the date on which the original Notice is deemed to have been given in accordance with clause 17.4(b). Failure by the sender to deliver such copy Notice to the recipient shall not invalidate the original Notice or delay the time such Notice is deemed given under clause 17.4(b). |
20
17.3 | Contact details for Notices |
The postal and email addresses and relevant contacts of the parties for the purposes of clause 17.2 are:
Seller: Intercept Pharmaceuticals Inc.
For the attention of: The General Counsel
Address: 305 Madison Avenue, Morristown, NJ 07960, USA
Email: [***]
Purchaser: ADVANZ Pharma Services (UK) Limited
For the attention of: The General Counsel
Address: Capital House, 85 King William Street, London, EC4N 7BL
Email: [***]
with a copy by email to [***]
or, in each case, such other postal or email address or contact in the UK as a party may notify to the other for this purpose in accordance with this clause 17. Notice of any change shall be effective five Business Days after the date on which it is deemed to have been given in accordance with this clause 17, or such later date as may be specified in the Notice.
17.4 | Time Notice is given |
Any Notice which has been delivered in accordance with clause 17.2 shall be deemed to have been given:
(a) | if delivered by hand, by courier or by post, at the time of delivery; or |
(b) | if sent by email, at the time the email is sent, provided that no automated message is received stating that the email has not been delivered. |
However if any Notice would be deemed to have been given after 5.00 pm on a Business Day and before 9.00 am on the next Business Day, such Notice shall be deemed to have been given at 9.00 am on the second of such Business Days.
18.GOVERNING LAW AND JURISDICTION
18.1 | This agreement and any dispute or claim arising out of or in connection with this agreement, its subject matter or formation (including any non-contractual dispute or claim) is governed by and shall be construed in accordance with English law. |
18.2 | Each party irrevocably agrees that the courts of England shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this agreement, its subject matter or formation (including any non-contractual dispute or claim). |
21
Schedule 1 ASSETS AND EXCLUDED ASSETS
Part 1 Assets
1.Goodwill.
2.Property.
3.Business Equipment.
4.Stock
5.Benefit (subject to the burden) of the Contracts.
6.Rights in the Business Information.
7.Business Records.
8.The Non-Product Business IP.
Part 2 Excluded Assets
1. | The statutory books of the Seller. |
2. | The Debts. |
3. | The Product IP. |
4. | The Business Claims. |
5. | The VAT records relating to the Business and the Assets. |
6. | The cash in hand and at bank owned by the Seller at the Transfer Time. |
7. | Any contracts, arrangements, commitments, licences, permissions or rights into by or on behalf of the Seller other than the Contracts. |
8. | Any stock in trade, unfinished goods, raw materials, consumables and work in progress owned by the Seller for the purposes of the Business as at the Transfer Time. |
9. | All and any information which does not relate to the Business, whether such information is oral, in writing, electronic or other form, whether tangible or otherwise, and all and any information which has been or may be derived or obtained from any such information. |
10. | All the books of account, records, documents and information of the Seller (in whatever form held) which do not relate to the Business, the Assets or the Employees. |
11. | All bank accounts operated or used by the Seller in relation to the Business. |
12. | Any right to any repayment of any Tax paid by the Seller from HMRC attributable to the carrying on of the Business and/or the ownership, occupation and/or use of the Assets by the Seller before, on or after the Transfer Time. |
13. | Any other asset which is not an Asset listed in clause 2.1. |
22
Schedule 2 THE EMPLOYEES
[***]
23
Schedule 3 THE PROPERTY
Part 1 Property
[***]
Part 2 Terms and conditions of the sale of the Property
[***]
Schedule 4 CONTRACTS
[***]
24
25
Exhibit 10.5
SAFETY DATA EXCHANGE AGREEMENT
This Safety Data Exchange Agreement (“SDEA”) is entered into as of 5 May, 2022 by and between Intercept Pharmaceuticals, Inc. (“Seller”), and Mercury Pharma Group Limited (“Purchaser”) (each a “Party” and collectively “Parties”).
A.Seller and Purchaser are parties to a Share Purchase Agreement dated as of 5 May, 2022, which provides for the purchase and assumption by Purchaser of certain assets and liabilities from Seller and for certain related transactions (the “Share Purchase Agreement”).
B.The Share Purchase Agreement provides for the Parties to enter into a safety data exchange agreement.
C.The purpose of this SDEA is to describe the procedures and to define the responsibilities of the Parties with regard to pharmacovigilance related activities relating to the Product.
D.In the event of a conflict between the provisions of this SDEA and the Share Purchase Agreement, the provisions of this SDEA shall prevail solely for with respect to pharmacovigilance activities as set forth herein and the Share Purchase Agreement shall prevail in respect of all other matters.
E.Nothing in this SDEA shall limit or restrict either Party’s obligations under or to comply with Applicable Law.
F.Capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Share Purchase Agreement.
1.GLOSSARY OF ABBREVIATIONS AND DEFINITION OF TERMS
Adverse Reaction (“AR”): In the pre-approval clinical experience with a new medicinal product or its new usages, particularly as the therapeutic dose(s) may not be established: all noxious and unintended responses to a medicinal product related to any dose. The phrase “responses to a medicinal product” means that a causal relationship between a medicinal product and an adverse event is at least a reasonable possibility, i.e., the relationship cannot be ruled out. Regarding marketed medicinal products: a response to a drug which is noxious and unintended.
Adverse Event (“AE”): Any untoward medical occurrence in a patient or clinical investigation subject administered a pharmaceutical product and which does not necessarily have to have a causal relationship with this treatment. An Adverse Event can therefore be any unfavorable and/or unintended sign (including an abnormal laboratory finding, for example), symptom, or disease temporally associated with the use of the Product, whether or not considered related to the Product. Adverse Events may also include pre- or post-treatment complications or undesirable events that arise from use of the Product within or outside the terms of the Regulatory Authorisation or from occupational exposure or occur as a result of protocol mandated procedures, lack of efficacy, Overdose or drug abuse/misuse reports or Medication Errors.
Affiliate: In relation to a company, means any other company directly or indirectly controlling,
controlled by or under common control with such company, and “control” for these purposes means (a) holding the majority of the voting rights or share capital of such company or (b) otherwise having the power to direct the management and policies of such company
Applicable Law: All national, federal, state, provincial, local, cantonal and other laws, regulations, guidelines and professional Codes of Conduct, in any jurisdiction, that are applicable to the subject matter of this SDEA and the Share Purchase Agreement, including without limitation, applicable Data Protection Laws and those relating to safety data reporting and Pharmacovigilance. Applicable Law includes, but is not limited to, the U.S. Food Drug and Cosmetic Act, U.S. Public Health Service Act, amendments thereto, and regulations promulgated thereunder including but not limit to 21 C.F.R. 314.80, Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001 on the Community code relating to medicinal products for human use, the related national implementing laws and regulations of the EU Member States, Regulation (EC) No 726/2004 of the European Parliament and of the Council of 31 March 2004 laying down Community procedures for the authorisation and supervision of medicinal products for human and veterinary use and establishing a European Medicines Agency, and the Good Pharmacovigilance Practices issued by the European Medicines Agency or the Medicines and Healthcare products Regulatory Agency, UK.
Business Day: Any day other than a Saturday or Sunday on which commercial banks are open for general business in London and New York.
Calendar Day: All days in a month including weekends and holidays.
Case Report: Spontaneous Reports and Solicited Reports of Adverse Reactions for the Product that occur in a single patient at a specific point of time from all sources.
Product: Ocaliva® (obeticholic acid) that is commercially sold for the treatment of primary biliary cholangitis (PBC) alone or in combination with ursodeoxycholic acid (UDCA).
Data Protection Law(s): Any Applicable Law relating to data protection or privacy. It shall include (a) the U.S. Health Insurance Portability and accountability Act (HIPAA) and regulations promulgated thereunder, (b) ePrivacy Directive 2002/58/EC as implemented by countries within the EEA, (c) the EU General Data Protection Regulation 2016/679, and/or (d) other Applicable Laws that are similar or equivalent to, or that are intended to or implement, the Applicable Laws that are identified above.
Day 0: The date when either Party or any of its representatives (including Affiliates and contracted Third Parties) is made aware of the minimum safety related information that constitutes a valid report (an identifiable patient, an identifiable Reporter, a suspected Adverse Reaction, and a suspect drug).
Development Safety Update Report (DSUR): A common standard for periodic reporting on drugs under development (including marketed drugs that are under further study) among the International Conference on Harmonisation (ICH) regions. The main objective of a DSUR is to present a comprehensive, thoughtful annual review and evaluation of pertinent safety information collected during the reporting period related to a drug under investigation, whether or not it is marketed.
Documentation: All records in any form (including, but not limited to, written, electronic, magnetic and optical records and scans, radiographs and electrocardiograms) that describe or record safety data and safety related activities covered by this SDEA.
EEA: The European Economic Area.
EU: The European Union.
Ex-U.S. Authorisation: The marketing authorisation or license for the Product within an Ex-U.S. Territory.
Ex-U.S. Territory: Every country in the world other than the U.S. Territory.
Falsified Product: Any product with a false representation of (a) its identity, including its packaging and labelling, its name or its composition as regards any of the ingredients including excipients and the strength of those ingredients; (b) its source, including its manufacturer, its country of manufacturing, its country of origin or its Marketing Authorisation Holder; or (c) its history, including the records and documents relating to the distribution channels. This definition does not include unintentional quality defects and is without prejudice to infringements of intellectual property rights.
FDA: The U.S. Food and Drug Administration.
Health Care Provider or HCP: An individual health professional or a health facility organization licensed under Applicable Law to provide health care diagnosis and treatment services including medication, surgery, and medical devices.
Lack of Effect Report: A report of a situation where there is apparent failure of the Product to bring about the intended beneficial effect on individuals in a defined population with a given medical problem, under ideal conditions of use.
Marketing Authorisation: The marketing authorisation or license for the Product within a territory.
Marketing Authorisation Holder (“MAH”): Natural or legal entity in possession of the marketing authorisation or license for the Product within a territory.
Medication Error: Any unintentional error in the prescribing, dispensing, or administration of Product or preventable event that can cause or lead to inappropriate medication use or patient harm while the medication is in the control of an HCP, patient, or consumer.
Off-label Use: Situations where the Product is intentionally used for a medical purpose not in accordance with the terms of the Marketing Authorisation. Examples include the intentional use of a product in situations other than the ones described in the authorized product information, such as a different indication in terms of medical condition, a different group of patients (e.g., a different age group), a different route or method of administration or a different posology. The reference terms for off label use are the terms of Marketing Authorisation in the country where the Product is used.
Overdose: A dose taken of the Product (accidentally or intentionally) exceeding the dose as prescribed by the protocol or the maximal recommended dose as stated in the Product Label, (as it applies to the dose for the subject/patient in question).
Periodic Benefit Risk Evaluation Report (“PBRER”): The ICH standard format and content for providing a periodic benefit-risk evaluation report on the Product, to present a clinical analysis of new or emerging information on the risks of that product and, where pertinent, the benefit in approved indications. It is prepared and submitted by the MAH and facilitates an appraisal of the Product’s overall benefit-risk profile based on how it is used in the Territory.
Periodic Adverse Drug Experience Report (“PADER”): An aggregate safety report required to be submitted by a sponsor or MAH to the US Food and Drug Administration (FDA) after obtaining marketing authorization approval.
Pharmacovigilance (“PV”): The science and activities relating to the detection, collection, recording assessment, understanding, reporting, prevention and/or management of Adverse Events or other Safety Issues related to the Product and its use, including any changes to the Product’s benefit-risk balance.
Privacy Shield Principles: The set of rules, principles and guidance, in each case as may be updated from time to time, governing participating organizations’ processing of personal data received from the EEA under the Privacy Shield Framework as well as the access and recourse mechanisms that participants must provide to individuals in the EEA.
Product Complaints: Complaints alleging deficiencies related to the identity, quality, safety, or effectiveness of a Product or arising from potential deviations in the manufacture, packaging, or distribution of the Product, or from any damage that may occur to the Product while in commercial distribution, including quality defects.
Product Label: The approved physician and/or patient package insert for the Product, or any other summary of use, safety, and effectiveness that is approved by Regulatory Authorities (e.g., Summary of Product Characteristics and Package Leaflet in the EU) for the Product.
QPPV: The qualified person responsible for pharmacovigilance in the European Union / European Economic Area or other applicable jurisdictions.
Reference Safety Information (“RSI”): The Company Core Data Sheet / Company Core Safety Information (CCDS/CCSI), Summary of Product Characteristics (SmPC), Package Insert (PI), or similar reference document based on the accumulated safety information for the Product.
Regulatory Authority: Any applicable United States, EEA, supra-national, federal, national, regional, state, provincial, other local government or local regulatory agencies, departments, authority, bureaus, commissions, instrumentality, court, councilor other government entities, including, but not limited to, the U.S. Food and Drug Administration, the European Medicines Agency, the Medicines and Healthcare products Regulatory Agency, the European Commission, EEA States’ competent authorities (including data protection and supervisory authorities) or any other entity exercising regulatory authority with respect to the development, registration, authorisation, manufacturing, marketing, distribution, transportation, or sale of the Product.
Relevant Personal Data: Any personal data that one Party discloses, provides or otherwise makes available to the other Party under or in connection with this SDEA.
Risk Management Plan: A detailed description of the risk management system for the Product. The risk management plan established by the MAH shall contain the following elements: (a) an identification or characterization of the safety profile of the Product concerned, (b) an indication of how to characterize further the safety profile of the Product concerned, (c) a documentation of measures to prevent or minimize the risks associated with the Product, including an assessment of the effectiveness of those interventions; (d) a documentation of post-authorisation obligations that have been imposed as a condition of the Marketing Authorisation.
Safety Database: A validated relational database that stores data, compiles, integrates, and produces
reports of AEs/SAEs from all reporting sources. Reporting capabilities include individual case safety
reports (ICSR), PBRERs, other periodic safety reports, and customized query reports.
Safety Information: Any safety data, including, but not limited to:
· | spontaneously reported AR from any source |
· | solicited reports of adverse reactions that derive from organized data collection systems, which include non-interventional studies, registries, post approval named patient use programs, other patient support and disease management programs, surveys of patients or HCPs, compassionate use or named patient use, or information gathering on efficacy or patient compliance |
· | product exposure (including maternal, paternal or fetal exposure) associated with a pregnancy with or without an adverse reaction |
· | trans-mammary exposure of an infant (transmission via breast milk) to a product with or without an adverse reaction |
· | abnormal test findings |
· | overdose, accidental or intentional (i.e., administration of a quantity of the Product given per administration or cumulatively which is above the maximum recommended dose according to the authorized product information (note: clinical judgment should always be applied)), with or without an adverse reaction |
· | abuse or misuse (e.g., use for non-clinical reasons) with or without an adverse reaction |
· | Off-label Use with or without an adverse reaction |
· | occupational exposure with or without an adverse reaction |
· | drug interactions |
· | medication errors (i.e., any event that may cause or lead to inappropriate medication use or patient harm while the medication is in the control of the health care professional, patient, or consumer) with or without an adverse reaction |
· | lack of therapeutic efficacy (i.e., “Lack of Effect” reports) |
· | suspected transmission of an infectious agent, which will be classified as a serious adverse reaction |
· | defect in a product |
· | Falsified Product |
· | an unexpected therapeutic or clinical benefit from use of the Product |
· | public health emergency |
Safety Issue: Any information suggesting an emerging safety concern or possible change in the benefit-risk balance for the Product, including information on a possible causal relationship between an Adverse Event and the Product, the relationship being unknown or incompletely documented previously.
Security Event: Any event, circumstance or occurrence of any actual or suspected theft or unauthorized access or use or disclosure, loss, damage or destruction of any Relevant Personal Data or any other improper or unlawful processing of Relevant Personal Data.
Serious Adverse Event (“SAE”) / Serious Adverse Drug Reaction (“SADR”): Is an Adverse Event or Drug Reaction that: (a) results in death; (b) is life-threatening (the term “life- threatening” refers to an event in which the patient was at risk of death at the time of the event; it does not refer to an event
which hypothetically might have caused death if it were more severe); (c) requires in-patient hospitalization or prolongation of existing hospitalization; (d) results in persistent or significant disability/incapacity; (e) results in a congenital anomaly/birth defect; or (f) results in a medically important event or reaction.
Solicited Report: An Adverse Event or experience report obtained as the result of a planned or unplanned interaction with a patient and that is not a Spontaneous Report. Such Solicited Reports may include, but are not limited to, post marketing organized collection activities and, in the US, call center patient support.
Spontaneous Report: An unsolicited communication in any form from any source to Purchaser, Seller, another partner, a Regulatory Authority, or any other organization that describes an Adverse Event or reaction in a patient receiving the Product. For purposes of this definition, Spontaneous Reports include, but are not limited to, lack of expected efficacy, misuse, and abuse associated with uses of the Product not included in the approved Product Label.
Third Party: A party who or which is not a Party to this SDEA.
U.S. Authorisation: The marketing authorisation or license for the Product within a U.S. Territory.
U.S. Territory: The United States of America, including all of its territories.
Valid Case: A case that includes each of the following minimum criteria: an identifiable patient; the name of the suspect product; an identifiable reporting source; and a suspected Adverse Reaction or Adverse Event or outcome.
The terms “data controller”, “data processor”, “data subject”, “personal data”, “processing” and “sensitive personal data” shall have the same meanings ascribed to them under the applicable Data Protection Law(s).
2.SAFETY INFORMATION EXCHANGE
This SDEA shall govern the communication of all Safety Information concerning the Product between Seller and Purchaser, including but not limited to Case Reports, database reconciliation reports, aggregate safety reports, and all regulatory enquiries or actions from all sources for the Product related to safety.
2.1. | General Terms |
2.1.1. | This SDEA will be effective until neither company has a remaining safety reporting obligation for the Product covered by this agreement. |
2.1.2. | Seller is the MAH for the Product in the U.S. Territory and retains the responsibility for the performance of pharmacovigilance obligations for the Product in the U.S. Territory and in the Ex-U.S. Territory during the Interim Closing Period and until the Ex-U.S. Authorisations have been transferred to Purchaser or a designated Third Party, not longer than a period of three (3) months (such time, the “Transfer Time”). |
2.1.3. | As of the Transfer Time, Purchaser is the MAH for Product in the Ex-U.S. Territory and has the responsibility for the performance of pharmacovigilance |
obligations for the Product in the Ex-U.S. Territory.
2.1.4. | Each Party represents that it has established and will maintain during the term of this SDEA (or, as applicable, until the safety and pharmacovigilance obligations intended to survive termination of this SDEA have been fulfilled) such systems, procedures, training programs, and documentation as are necessary and sufficient to perform and comply with its obligations under this SDEA and Applicable Law relating to pharmacovigilance and safety data surveillance, management and exchange in respect of the Product in their respective territory. |
2.1.5. | As of the Transfer Time, Purchaser will assume the role and responsibilities of the QPPV and deputy of QPPV. The Parties agree that nothing in this SDEA shall preclude the QPPV from performing his or her obligations under Applicable Law and no such performance shall, to the extent reasonably required by Applicable Law, constitute a violation by either Party of the SDEA. |
2.1.6. | If national regulations require the nomination of a local QPPV (or similar) in any Ex-U.S. Territory, Purchaser shall assign and register personnel sufficient to meet national requirements under Applicable Law. |
2.1.7. | With the other Party’s prior written consent, each Party may delegate its responsibilities hereunder in whole or in part to its respective Affiliates or Third Parties, provided, that such delegating Party shall remain fully responsible for the compliance of the actions of its Affiliates and such Third Parties with that delegating Party’s related legal and regulatory obligations, and shall cause its Affiliates and such Third Parties to comply with the terms and provisions of this SDEA, including but not limited to confidentiality obligations and the requirements as set out in Section 12. |
2.1.8. | Each Party agrees to follow and comply with all Applicable Laws when performing its obligations under this SDEA and shall use reasonable efforts to notify the other Party of any material changes to Applicable Law of which it becomes aware that could have an impact on the terms of, or performance of, obligations under this SDEA. |
2.1.9. | Each Party agrees to have and maintain suitable Pharmacovigilance procedures to ensure compliance with all Applicable Laws and this SDEA. Each Party will cause its respective Affiliates and Third Parties to implement all reasonable physical, technical and administrative safeguards to protect Safety Information. The Parties shall cooperate and agree on the content of any related notifications made to the Regulatory Authorities if such notifications are required by Applicable Law or the internal policies of either Party. |
2.2. | Rules Relating to the Delivery of Information |
2.2.1. | Seller will hold, create, maintain and exclusively own a validated global Safety Database for the Product. |
2.2.2. | Each Party shall hold a validated Safety Database for the safety case reports. Purchaser shall record all safety case reports received in Ex-U.S. Territory in their database, report to the applicable Ex-U.S. Health Authorities in accordance |
with Applicable Law, and forward a copy of all cases to the Seller via XML files as provided in Section 2.3 below. The Seller shall add all cases reports received from the Purchaser to its Safety Database, and report to the U.S. Territory in accordance with Applicable Law.
2.2.3. | Each Party shall promptly provide to the other Party all Safety Information received by such Party and its Affiliates in its respective territories pursuant to this SDEA in English (unless transmission in the original language is expressly permitted herein) and in the format and within timelines specified herein. |
2.2.4. | All information, including Safety Information, exchanged between the Parties pursuant to this SDEA shall be communicated via secure email channels. |
2.2.5. | Each Party shall own and maintain sole right to all data and information collected by it in fulfillment of its obligations under this SDEA. |
2.3. | Valid Case Reporting |
2.3.1. | Each Party will provide to the other Party Case Reports for the Product that meet the Valid Case criteria as defined in Section 1 of this SDEA. For clarity, Purchaser shall also provide any other Case Reports as required by Applicable Law. |
2.3.2. | The following information shall be included in the report, if available: |
· | Source (e g., reporter’s details) |
· | Lot number of the Product |
· | Verbatim term (e.g., term of the Adverse Event as noted by/in the source of Pharmacovigilance-Relevant Information) (Please note: death is only an outcome and not an acceptable term for Adverse Events; in case of death, the main diagnosis of the event leading to death should be provided, instead) |
· | Date of event (i.e., onset date; stop date) |
· | Seriousness (e.g., death [only if the event is cause of death]; Life- threatening; etc.) |
· | Relationship between the event and Product |
· | Outcome of event |
· | Dose (e.g., mg/kg/day) |
· | Drug dates (start date; stop date; de-challenge date, if applicable; re- challenge date, if applicable) |
· | Action taken with Product (e.g., de-challenge information, if applicable; re-challenge information, if applicable) |
· | Patient’s identifier(s) (e.g., age, sex, etc.) |
· | Date of awareness of Pharmacovigilance-Relevant Information by such Party |
· | Narrative of the case |
2.4. | Day 0 / Receipt Date |
2.4.1. | For the purposes of this SDEA, the “receipt date” is Day 0. |
2.4.2. | Each Party will clearly mark the receipt date on all initial or follow-up information to enable the time clock for regulatory reporting requirements to be calculated by the respective Parties. |
2.5. | Final Determinations for Adverse Events |
Purchaser will make the final determination with respect to the Ex-U.S. Territory regarding (a) whether Adverse Events are related to the Product, (b) the level of seriousness of Adverse Events, and (c) whether Adverse Events are expected or unexpected.
Seller will make the final determination with respect to the U.S. Territory regarding (a) whether Adverse Events are related to the Product, (b) the level of seriousness of Adverse Events, and (c) whether Adverse Events are expected or unexpected.
2.6. | Delivery of Case Reports |
2.6.1. | Each Party will send Case Reports, source documents relating to all AEs and all follow-up or supplementary information to the other Party in accordance with the timelines set out in Exhibit 1. |
2.6.2. | Each Party will be responsible for undertaking appropriate and timely follow-up on Case Reports in such Party’s territory, and for providing all information and documentation obtained or developed from that follow-up to the other Party in accordance with the timelines set out in Exhibit 1. Each Party shall use its best efforts to actively seek additional information relating to the Case Reports, the reported Adverse Events or other safety-related information from those who reported the information (the “Reporter”). Both Parties shall keep written company procedures and reporting forms in place to ensure that accurate collection of the initial and follow-up information takes place in accordance with Applicable Law. |
2.6.3. | Each Party will employ or contract with an HCP or other specifically trained person competent to contact Reporters and to assist in investigating or evaluating the significance of an Adverse Event in such Party’s territory. |
2.6.4. | Each Party shall ensure that information that would, alone or in combination, identify the patient or reveal personal details of the patient in any supplementary supporting data must be appropriately redacted such that the identifying information cannot be recovered and is permanently removed, in accordance with Applicable Law, prior to sending such data to the other Party. |
2.6.5. | In the event of any doubt regarding whether an Adverse Event is a Serious Adverse Event, the Party receiving the Case Report shall treat that Adverse Event as a Serious Adverse Event. Likewise, in the event of any doubt regarding whether an Adverse Event is fatal, life threatening or serious, or whether an Adverse Event is related or unrelated, the Party receiving the Case Report shall classify the Adverse Event in a manner that ensures the shortest relevant reporting timeline. |
2.6.6. | In the event of any doubt regarding whether an event is expected or unexpected, the Parties shall treat the term as unexpected to ensure appropriate reporting |
2.7. | Reports |
2.7.1. | Individual Case Safety Reports |
Purchaser will be responsible for regulatory submission of Case Reports for the Ex-U.S. Territory in accordance with Applicable Law.
Seller will be responsible for regulatory submission of Case Reports for the U.S. Territory in accordance with Applicable Law.
2.7.2. | Literature/Databases/Social Media and Websites |
2.7.2.1. | Screening global literature: Seller will screen worldwide medical and scientific literature no less frequently than weekly for relevant references to the Product as required by Applicable Law. A copy of any relevant publication/report, in its original language and in English, shall be provided to Purchaser within the timelines set forth in Exhibit 1. |
2.7.2.2. | Screening of Local Database(s): If the screening of any local repository/local database for Safety Information is mandatory according to the local rules/requirements, Purchaser shall perform the screening of the local database for Safety Information for the Product following the rules set forth in the local regulation for this activity (e.g., EVDAS / EudraVigilance system on a monthly basis). A copy of any newly identified Safety Information from the database, or a summary review of the safety data shall be provided to Seller within the timelines set forth in Exhibit 1. |
2.7.2.3. | Both Parties will screen their company-sponsored websites, all inbound digital communication channels and digital media under its management on a daily basis for any new PV relevant information. |
2.7.3. | Adverse Events and Product Complaints |
2.7.3.1. | Each Party will report to the other Party all AEs and Product Complaints in such Party’s territory within the timelines set forth in Exhibit 1. |
2.7.3.2. | Follow-up of Product Complaints and AE reports must be carried out according to the same procedures for any other Product Complaint or AE report and delivered to the other Party in the established regulatory format and according to the timelines for delivery of follow-up information provided within this SDEA. |
2.7.3.3. | Each Party will immediately notify the other Party of any confirmed or suspected counterfeit activity or counterfeit Product of which it becomes aware. |
2.7.4. | Special Situations |
2.7.4.1. | For special situations including but not limited to: reports of pregnancy from female patients or partners of male patients exposed to the Product (either through maternal exposure, including breastfeeding, or via semen following paternal exposure), use of a Product in a pediatric or elderly populations, reports of Overdose, abuse, misuse, medication errors, occupational exposure or lack of therapeutic efficacy, the Parties will collect and exchange data on all reports of special situations involving the Product in accordance with the timelines set out in Exhibit 1. |
2.8. | Safety Information Reconciliation |
2.8.1. | On a monthly basis, Seller will send Purchaser a listing of all Safety Information received by Seller during the reference period, and Purchaser will send Seller a listing of all Safety Information received by Purchaser during the reference period, in a format reasonably agreed by the Parties. |
2.8.2. | Purchaser will reply as soon as possible, and no later than seven (7) Calendar Days from the date of receipt of the email from Seller, confirming the Safety Information listed by Seller has either (i) been received as reflected, or (ii) requesting appropriate updates regarding Safety Information believed to be missing. |
2.8.3. | If discrepancies between the Party’s safety data are identified, each Party agrees to inform the other Party and take the necessary actions to prevent reoccurrence. |
2.8.4. | The management of Safety Information n arising from interventional clinical trials and post authorization non-interventional or observational studies is outside of the scope of this SDEA. The management of Safety Information arising from interventional clinical trials and post authorization non-interventional or non-observational studies shall be discussed and agreed by the Parties as a separate agreement. |
2.9. | Signal Management |
2.9.1. | Seller, as Global Safety Database holder, is responsible for detection, validation, prioritization, and assessment of safety signals. |
2.9.2. | Purchaser will promptly notify Seller of any validated safety signal with five (5) calendar days of validation. |
2.9.3. | Each Party will promptly notify the other of any regulatory actions in relation to a confirmed safety signal such as safety variations, safety restrictions and, as appropriate, communications to patients and HCPs. |
2.9.4. | Aggregate Safety Reports |
2.9.4 1. | Seller is responsible for the preparation of any PBRER, PADER, annual safety report, other periodic safety reports, addendum or bridging report (collectively, the “Update Reports”), and Seller is responsible for the preparation of any DSUR. |
2.9.4.2. | Each Party will provide the other Party the necessary data concerning the Product (i.e., relevant sales and/or usage figures and information on relevant nonclinical, clinical or epidemiology studies) that are reasonably required to enable compliance with the preparation and submission of Update Reports and DSURs in accordance with the timelines set forth in Exhibit 1. |
2.9.4.3. | Seller will be responsible for submitting the Update Reports and DSURs to Regulatory Authorities for the U.S. Territory in accordance with Applicable Law, and for submitting the Update Reports to Regulatory Authorities for the Ex-U.S. Territory in accordance with Applicable Law until the Ex-U.S. Authorisations have been transferred to Purchaser or a designated Third Party. |
2.9.4.4. | Purchaser will be responsible for submitting the Update Reports and DSURs to Regulatory Authorities for the Ex-U.S. Territory in accordance with Applicable Law after the Ex-U.S. Authorisations have been transferred to Purchaser or a designated Third Party. |
3. | RISK MANAGEMENT PLAN |
Where required by law or regulation, Purchaser is responsible for establishing and maintaining the Risk Management Plan (“RMP”) for the Product. Seller will transfer Seller’s existing RMP to Purchaser and Purchaser is responsible for maintaining, and, if a new RMP is needed, for developing the RMP. Such plan, and any updates or modifications thereto, shall be promptly provided to Seller. In the event FDA requires a Risk Evaluation and Mitigation Strategy (“REMS”) program, Seller is responsible for establishing and maintaining the REMS for the Product.
4. | PHARMACOVIGILANCE SYSTEM MASTER FILE |
Where required by law or regulation, Purchaser is responsible for maintaining the Pharmacovigilance System Master File (“PSMF”) for the Product, with assistance of the Seller if requested. Seller will transfer Seller’s existing RMP to Purchaser and Purchaser is responsible for maintaining the PSMF. Any updates or modifications thereto, shall be promptly provided to Seller.
5. | REGULATORY INQUIRIES, REGULATORY ACTION |
5.1. | Regulatory Safety Inquiries |
5.1.1. | Each Party will immediately, and in no event longer than 24 hours from becoming aware of the same, notify the other Party of any urgent safety or quality issues with potential human health or market impact. Routine safety-related inquiries, requests for information, or regulatory communication relating to the Product received from a Regulatory Authority will be communicated by the receiving Party to the other Party as soon as possible, but no later than five (5) Business Days from receipt. |
5.1.2. | Responses to Regulatory Authorities with respect to safety-related regulatory inquiry relating to the Product will be undertaken by Seller in the U.S. Territory and by Purchaser in the Ex-U.S. Territories, each with the assistance of the other Party if requested. If a Party’s assistance is more than routine efforts, (e.g., conduct of data analysis, writing for a territory outside the Party’s territory) such assistance shall be at the cost of the other Party. |
5.2. | Regulatory Action |
5.2.1. | Purchaser will inform Seller as soon as possible, but no later than two (2) Business Days from receipt, if Purchaser becomes aware of any intention by a Regulatory Authority to take safety-related regulatory action in relation to the Product in the Ex-U.S. Territory. Seller will inform Purchaser as soon as possible, but no later than two (2) Business Days from receipt, if Seller becomes aware of any intention by a Regulatory Authority to take safety-related regulatory action in relation to the Product in the U.S. Territory. |
5.2.2. | In relation to any safety-related regulatory actions to which this Section 5.2 relates, Purchaser will be solely responsible for all communications to a Regulatory Authority in the Ex-U.S. Territory and Seller will be solely responsible for all communications to a Regulatory Authority in the U.S. Territory. Each Party agrees to provide support to the other Party with respect to any regulatory action if requested by the Party responsible for such communication and will supply all necessary information as is reasonable to deal with the action. |
6. | NON-REGULATORY AUTHORITY/MEDICAL INFORMATION ENQUIRIES |
Medical information enquiries received spontaneously by a Party for which no answer is readily available from the SmPC or PI or RSI will be sent to the contact details specified in Exhibit 2 within one (1) Business Day of receipt of the enquiry. If an Adverse Event or other Safety Information is communicated to a Party during a medical information enquiry, the information should be communicated to the other Party in accordance with the timelines set forth in Exhibit 1.
7. | BENEFIT-RISK ASSESSMENT |
Seller shall be responsible for the global benefit-risk assessment for the Product with the reasonable consultation of the Purchaser. Purchaser shall share responsibility in this activity, through the immediate, and in no later than four (4) calendar days, notification to Seller, of any information which impacts (or could impact) the benefit-risk analysis for the Product. Prompt exchange of information which, in the opinion of Purchaser, significantly impacts the Product benefit-risk analysis, is necessary. Whenever possible, Purchaser shall provide supportive documents such as copies of the local scientific publications, summaries of presentations, or clinical study reports (even if preliminary). Examples of such information which could significantly impact a Product benefit-risk analysis include, but are not limited to:
· | Product-related or Product indication-related publications in local scientific journals or presentations at local scientific conferences. |
· | A major safety finding from a newly completed non-clinical study, which suggests carcinogenicity, teratogenicity, or mutagenicity. |
8. | CORE DATA SHEET |
Seller is responsible for maintaining the RSI and/or company core data sheet (CCDS). Upon signing this SDEA, Seller shall provide Purchaser with the current RSI and/or CCDS. Seller shall inform Purchaser within five (5) calendar days of any revision to the RSI and/or CCDS that requires updates to local labelling. Purchaser is responsible for maintaining the local labeling in line with RSI and CCDS, subject to local authorities’ approval, and for informing Seller within three (3) business days of any updates to local labeling. Should a labeling request be received from the Regulatory Authority in the Territory, Purchaser shall inform Seller immediately and no event later than five (5) business days from receipt of the same.
9. | JOINT GLOBAL SAFETY COMMITTEE |
9.1. | Promptly following the Effective Date, but no later than forty-five (45) days after the Effective Date, the Parties shall establish a joint global safety committee (the “JGSC”) to oversee, review and coordinate the conduct and progress of the activities undertaken by the Parties pursuant to this SDEA. |
9.2. | The JGSC shall have an equal number of representatives from each Party. These representatives shall have appropriate technical credentials, experience and knowledge to the matters to be discussed at the JGSC (e.g., safety experts, pharmacologists, physicians or other HCPs, as well as personnel from non-commercial reporting lines). Commercial personnel may not participate in the JGSC. The exact number of such representatives shall initially be two (2) for each Party, or such other number as the Parties may agree. Either Party may replace its respective committee representatives at any time with prior written notice to the other Party. In the event a JGSC member from either Party is unable to attend or participate in a JGSC meeting, the Party who designated such representative may designate a qualified substitute representative for the meeting in its sole discretion. Each Party will appoint a representative who will serve as such Party’s representative for purposes of this SDEA and who will be responsible for coordinating such Party’s performance of its obligations under this SDEA with the other Party and communicating with the other Party regarding matters relating to this SDEA. |
9.3. | Each Party shall appoint one of its members to the JGSC to co-chair the JGSC’s meetings (each, a “Co-Chair”). The Co-Chairs shall (i) ensure the orderly conduct of the JGSC’s meetings, and (ii) alternate in preparing and issuing (or designate another JGSC representative of such Party to prepare and issue) written minutes of each meeting within thirty (30) days thereafter accurately reflecting the discussions of the JGSC. In the event the Co-Chair from either Party is unable to attend or participate in a JGSC meeting, the Party who designated such Co-Chair may designate a substitute Co-Chair for the meeting in its sole direction. |
9.4. | The JGSC shall meet quarterly or on such other frequency as may be agreed by the Parties. JGSC meetings may be conducted by telephone, videoconference or in person as determined by the Co-Chairs. As appropriate, other employee representatives of the Parties may attend JGSC meetings as non-voting observers if mutually agreed by the Parties. Each Party may also call for special meetings of the JGSC to resolve particular matters requested by such Party and within the areas of responsibility of the JGSC. Each Co-Chair shall ensure that its JGSC members receive adequate notice of such meetings. |
9.5. | The principal purpose of the JGSC shall be to provide a forum for open communication between the Parties with respect to the performance of pharmacovigilance activities relating to the Product under this SDEA, as well as important safety topics that will benefit from joint discussion. The members of JGSC shall collaborate in good faith on the performance of all such activities. In the event the Parties are unable to agree on a matter with respect to the performance of pharmacovigilance activities relating to the Product, or on a safety topic, decision, course or direction, a Party may request a special JGSC meeting to address the dispute. If the JGSC is unable to resolve any dispute or unanimously agree on any changes to the rights responsibilities, or performance of a Party under this SDEA, such dispute shall be referred to the Chief Medical Officer of the Seller and the Chief Medical Officer of the Purchaser for resolution, and the Chief Medical Officers shall use their reasonable and good faith efforts to resolve the matter within five (5) days following such referral. In the event the Chief Medical Officers are unable to reach agreement, the Chief Medical Officer of the Seller shall haver final decision-making authority. |
10. | CONFIDENTIALITY |
Clause 13 of the SPA (confidentiality and announcements) shall apply and be incorporated into this SDEA as if set out in full in this SDEA (with references to "this agreement" in them being treated as references to this SDEA).
11. | DATA PROTECTION |
11.1. | Case Reports shall include HCPs’ contact details (e.g., phone numbers, email addresses, or postal addresses). Where an HCP requires his or her personal details to be excluded from the Case Reports, the receiving Party will maintain local records of the contact information in the source documents and include the phrase “In Confidence” in the report in place of the HCP’s name and, where possible, include the reporter’s occupation. |
11.2. | Each Party: (a) shall comply with its obligations relating to Relevant Personal Data that apply to it under applicable Data Protection Laws; (b) shall keep the Relevant Personal Data confidential and have in place appropriate physical, technical and organizational measures which ensure a level of security appropriate to the harm that might result from a Security Event and which shall at all times be equivalent to or in excess of the protection required under the Data Protection Laws; (c) may process Relevant Personal Data to the extent necessary to accomplish the purposes set out in the Agreement or as authorized by Data Protection Laws; and (d) may transfer and otherwise process the Relevant Personal Data outside of the EEA in accordance with Data Protection Laws. |
11.3. | Each Party shall as soon as practicable after becoming aware of a Security Event, but in any event within twenty-four (24) hours of awareness, provide the other Party with notice of such event, and such further information and assistance as may be reasonably requested by the other Party in connection with the Security Event. |
11.4. | The obligations concerning data protection set out in this SDEA shall survive termination of this SDEA. |
12. | MISCELLANEOUS |
12.1.Notices. Contact and notice information for the respective person responsible for the
obligations within this SDEA are set forth in Exhibit 2. Each Party will agree to notify the other Party in writing within five (5) Business Days of any changes to the identity or contact information for such contacts set forth in Exhibit 2.
12.2.Seller and Purchaser shall each bear the costs associated with conducting their respective obligations hereunder.
12.3. | Counterparts and Signatures. This SDEA may be executed in several counterparts, each of which will constitute an original and all of which, when taken together, will constitute one agreement. |
12.4. | No Assignment. Neither Party may assign any of its rights or interests or otherwise delegate any of its obligations under this SDEA, unless mutually agreed to in writing by the Parties. |
12.5. | Governing Law. This SDEA and any dispute hereunder are governed by and shall be construed in accordance with English law. Each Party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute hereunder. Each Party irrevocably agrees that the courts of England and Wales are the most appropriate and convenient courts to settle disputes hereunder and, accordingly, will not argue to the contrary. Further, each Party irrevocably agrees that a judgment in any legal action or proceedings brought in the courts of England and Wales in relation to a dispute hereunder shall be conclusive and binding on it and may be enforced in the courts of any other jurisdiction. Each Party irrevocably agrees that any process in any legal action or proceedings relating to any dispute hereunder may be served on the contact listed for General Correspondence in Exhibit 2. Nothing in this agreement shall affect the right of either Party to serve any process in any legal action or proceedings relating to any dispute hereunder in any other manner permitted by law. The existence of a dispute pursuant to Section 9.5 above, or this Section 12.5, shall not excuse either Party from any other obligation under this Agreement, including each Party’s obligations to continue to provide conduct activities contemplated hereunder. No provision herein should be construed as precluding a Party from bringing an action for injunctive relief or other equitable relief. |
12.6. | Entire Agreement; Amendment; Precedence. This SDEA (including the Exhibits hereto) and the Share Purchase Agreement constitute, on and as of the Effective Date, the entire agreement of the Parties with respect to Pharmacovigilance/Safety Issues. This SDEA may only be amended by a writing executed by all of the Parties. If one Party believes an amendment is required or desirable for the purposes of this SDEA, the Parties will negotiate in good faith to agree upon mutually acceptable terms. On matters covered under this SDEA, including matters related to Safety Information, Pharmacovigilance of the Product and safety, this SDEA will take precedence over any other agreement between the Parties or Affiliates of the Parties, including but not limited to the Share Purchase Agreement. |
12.7. | Limitation. In this Section 12.7 and in Section 12.8 below, all capitalized terms not defined in this SDEA shall have the means defined in the Share Purchase Agreement. Notwithstanding any other provisions of this SDEA, the Parties acknowledge that the provisions of clause [10.1] of the Share Purchase Agreement shall operate to limit the liability of Purchaser and each member of the Intercept Group pursuant to this SDEA. |
12.8. | Conditionality. This SDEA is conditional in all respects on Completion taking place. |
Notwithstanding any other provision in it, this SDEA shall not take effect (and no term in it shall have effect) until Completion takes place. On and with effect from Completion, this SDEA shall have full effect in accordance with its terms (the “Effective Date”). In the event that: (i) prior to Completion, the Share Purchase Agreement is terminated or otherwise ceases to have effect (whether pursuant to its terms, by agreement of the parties to it or otherwise) (each a “Termination”) or (ii) Completion has not taken place on or prior to the Longstop Date; on and with effect from the first to occur of (a) the Longstop Date; and (b) the date of such Termination, this agreement shall automatically terminate and it shall have no effect (as if void when first entered into). On and after automatic termination of this SDEA, no Party shall have any liability to any other Party to it pursuant to its terms and/or in respect of a breach of it, whether actual or contingent and whether in relation to the actual time of termination or the period prior to or following termination.
[Signature Page Follows]
IN WITNESS WHEREOF, the Parties have caused this SDEA to be executed by their duly authorized representatives, to be effective as of the Effective Date.
INTERCEPT PHARMACEUTICALS, INC. |
| Mercury Pharma Group Limited | ||
| | | | |
By: | /s/ Andrew Saik | | By: | /s/ Andreas Stickler |
| | | | |
Printed: | Andrew Saik | | Printed: | Andreas Stickler |
| | | | |
Title: | Authorized Signatory | | Title: | Director |
Exhibit 1: Timelines for Delivery of Data
Purchaser to Seller
Type of Report/Event | Timeline Following Day 0 (unless otherwise noted) | Format |
Non-serious ICSR | 30 days | XML |
Serious ICSR | 10 days | XML |
Aggregate reports | 15 days before finalization of the report | MS Word |
Validated safety signal | 5 days | MS Word |
Seller to Purchaser
Type of Report/Event | Timeline Following Day 0 (unless otherwise noted) | Format |
Non-serious ICSR | 30 days | XML |
Serious ICSR | 10 days | XML |
Exhibit 2: Contact information for Parties to this SDEA
Seller | Purchaser |
Senior Pharmacovigilance Contact | Senior Pharmacovigilance Contact |
Routine Adverse Event Reporting | Routine Adverse Event Reporting |
Product Complaint Reporting | Product Complaint Reporting |
General Correspondence | General Correspondence |
Local PV Contact Person | Local PV Contact Person |
Regulatory Inspection notification | Regulatory Inspection notification |
Non-Regulatory Authority/Medical Information Enquiry Contact | Non-Regulatory Authority/Medical Information Enquiry Contact |
Each Party will undertake to inform the other of any changes to the contact information reflected here within five (5) Business Days from when that change becomes effective.
Exhibit 10.6
[Certain identified information has been excluded from the exhibit because it is both not material and is the type that the registrant treats as private or confidential.]
Transitional Services Agreement
for the provision and use of Services and Reverse Services
INTERCEPT PHARMACEUTICALS, INC.
ADVANZ PHARMA SERVICES (UK) LIMITED
Date 5 May 2022
Contents
PARTIES | 1 | |
AGREED TERMS | 1 | |
1 | Definitions and interpretation | 1 |
2 | Conditions | 1 |
3 | Services | 2 |
4 | Cooperation | 3 |
5 | Changes and Omitted Services | 3 |
6 | Governance | 4 |
7 | Related Service Providers | 5 |
8 | Supplier Policies | 5 |
9 | Charges and Payment | 6 |
10 | Data Protection | 7 |
11 | Term | 7 |
12 | Termination | 8 |
13 | TSA Exit Plan | 9 |
14 | Representations and Warranties | 9 |
15 | Liability | 10 |
16 | Force Majeure Events | 11 |
17 | Confidentiality | 11 |
18 | Non-Solicitation | 12 |
19 | Technology Continuity Plan | 12 |
20 | IP | 12 |
21 | IP Separation Matters | 13 |
22 | Assignment and other dealings | 15 |
23 | General | 16 |
SIGNATURE PAGE | 30 | |
| | |
| | |
| | |
SCHEDULES | | |
SCHEDULE 1 DEFINITIONS AND INTERPRETATION | 18 | |
Part 1 Definitions | 18 | |
Part 2 Interpretation | 23 | |
SCHEDULE 2 SERVICES | 24 | |
SCHEDULE 3 REVERSE SERVICES | 25 | |
SCHEDULE 4 DATA PROTECTION AND SUB-PROCESSORS | 26 | |
| | |
This Transitional Services Agreement is made on | 5 May 2022 |
(the “Effective Date”) | |
Parties
(1) | INTERCEPT PHARMACEUTICALS, INC. incorporated in Delaware with company number 3565213 whose registered office is at 305 Madison Avenue, Morristown, New Jersey 07960 (“Supplier”) |
(2) | ADVANZ PHARMA SERVICES (UK) LIMITED a company incorporated and registered in England and Wales with number 04678629 which has its registered office at Capital House, 85 King William Street, London EC4N 7BL (“Customer”) |
Supplier and Customer shall be referred to in this Agreement individually as a “Party” and collectively as the “Parties.”
Agreed terms
1Definitions and interpretation
In this Agreement, unless the context otherwise requires, capitalised terms shall have the meanings given to them in Part 1 of Schedule 1 and shall be interpreted in accordance with 0 of Schedule 1.
2Conditions
2.1 | This Agreement is conditional in all respects on Completion taking place. Notwithstanding any other provision in it, this Agreement shall not take effect (and no term in it shall have effect) until Completion takes place. On and with effect from Completion, this Agreement shall have full effect in accordance with its terms. |
2.2 | In the event that: |
(a) | prior to Completion, the SPA is terminated or otherwise ceases to have effect (whether pursuant to its terms, by agreement of the parties to it or otherwise) (each an “SPA Termination”); or |
(b) | Completion has not taken place on or prior to the Longstop Date (as defined in the SPA); on and with effect from the first to occur of the Longstop Date and (b) the date of such SPA Termination, this Agreement shall automatically terminate and it shall have no effect (as if void when first entered into). |
2.3 | On and after automatic termination of this Agreement, no Party to it shall have any liability to any other Party to it pursuant to its terms and/or in respect of a breach of it, whether actual or |
1
2.4 | contingent and whether in relation to the actual time of termination or the period prior to or following termination. |
3Services
3.1The Supplier shall supply, or procure the supply of, each Service from the Completion Date:
(a)to each relevant Service Recipient on the terms and conditions set out in this Agreement;
(b)for the relevant Service Term, subject to any earlier termination of the Service in accordance with the terms and conditions set out in this Agreement;
(c)in accordance with the Performance Standard; and
(d)in accordance with all Applicable Laws.
For clarity, any services to be provided by the Parties or their respective Affiliates under any other Acquisition Documents shall be provided thereunder and none of the Services provided under this Agreement shall include or overlap with any such services provided by the Parties or their respective Affiliates under any other Acquisition Documents.
3.2 | The Supplier shall not be in breach of this Agreement and shall have no liability to the Customer (whether in contract, tort or otherwise) to the extent that: |
(a)its non-performance or delay in performance is caused, or materially contributed to by a Customer Cause; or
(b)the Suppliers failure to perform directly results from the required implementation of the TSA Exit Plan.
3.3 | If a Customer Cause occurs, the Supplier shall take all reasonable steps to comply with its obligations under this Agreement as fully and promptly as possible. |
3.4 | The terms of this Agreement, except clauses 3.5, 3.6 and 21, shall apply mutatis mutandis with respect to the provision of the Reverse Services by the Customer to the Supplier, save that Schedule 4 shall set out the Parties’ understanding of the personal data to be processed by the Customer on behalf of the Supplier as a processor and clause 13.1 to 13.6 (inclusive) shall only apply as and where required in accordance with clause 13.7. |
3.5 | The Supplier acknowledges and accepts that the Customer’s obligation to provide such Reverse Services to Supplier utilizes, and is dependent upon, assets, personnel and rights that Supplier has transferred and provided to Customer and therefore is qualified and limited by the qualities, characteristics and sufficiency of such assets, personnel and rights to support and provide such Reverse Services. The Customer has no obligation to supplement with other assets or rights other than where the Customer has subsequently disposed or transferred the rights or assets transferred to the Customer. Should personnel transferred to the Customer under the SPA subsequently leave engagement with the Customer, the Customer shall use reasonable endeavours to replace the same to continue to support and provide the Reverse Services. |
2
3.6 | Within one (1) month of signing the SPA, the Parties shall discuss in good faith mutual expectations and processes regarding the Services and Reverse Services and each Party shall prepare and provide to the other Party indicative and non-binding budgets for the Services and Reverse Services, representing to the best of their knowledge and belief estimates of Charges (including estimated hours and reasonably foreseeable expenses). It is understood that the Supplier shall assist with the preparation of the Reverse Services budgets, using personnel transferring to the Customer under the SPA. The Parties shall discuss and agree upon any appropriate amendments, modifications and/or updates to the Services and Reverse Services included in Schedule 2 and Schedule 3, respectively, on or before the Completion Date. Notwithstanding the foregoing, the Parties acknowledge and agree that the Charges shall, in any event, be based on actual time spent providing the Services or Reverse Services and/or actual third party charges calculated on a Pass Through Basis and expenses shall, in any event, be based on actual expenses incurred in the provision of the Services and Reverse Services. |
4Cooperation
The Customer shall and shall procure that each Service Recipient, as applicable, shall, at all times use its commercially reasonable efforts to cooperate with the Supplier to facilitate the provision of the Services and promptly provide such reasonable assistance as set forth in this Agreement or otherwise may be reasonably required by the Supplier to enable it to efficiently provide the Services, including, by:
(a) | promptly providing all materials, documentation and information that may be reasonably necessary to this end; and |
(b) | promptly participating in discussions regarding the provision of the Services where reasonably required by the Supplier in order to facilitate decision making (in relation to the Services), |
provided, however, that such cooperation shall not unreasonably disrupt the normal operation of the Customer or a Service Recipient.
5Changes and Omitted Services
5.1 | No change to the terms of this Agreement, except for any Regulatory Change, shall be effective unless agreed by the Parties in writing. A mutual agreement by the Parties will be required for all aspects of any requested change by either Party, including on any related implementation cost or changes to the Charges. The Steering Committee will be responsible for dealing with, and agreeing on, requested changes. Any agreed changes shall be reflected in a written amendment to this Agreement. |
5.2 | Where a governmental Authority or a change in Applicable Laws requires any change to any of the Services for any reason, the Supplier shall, subject to reasonable advance written notice and, to the extent reasonably possible, in consultation with, the Customer, be required to make that change (each such change a “Regulatory Change”) and any increased costs reasonably incurred and |
3
documented by the Supplier in its provision of the Services as a result of such Regulatory Change shall be borne by the Customer.
5.3 | The Customer shall notify the Supplier of all Regulatory Changes that relate to a territory other than the United States promptly upon becoming aware of the Regulatory Change. Thereafter, the Customer shall, upon request from the Supplier, provide such cooperation and information as the Supplier reasonably requires to understand the Regulatory Change and the requirements with respect to the Regulatory Change. |
5.4Notwithstanding clause 5.2, the Supplier shall be entitled to refuse any Regulatory Change where the change:
(a) | presents a material concern to the Supplier with respect to its compliance with Applicable Law, including circumstances where the Customer has not provided the Supplier with sufficient cooperation and/or information to understand the Regulatory Change and/or the requirements with respect to the Regulatory Change; |
(b) | is outside the Supplier’s technical capability or requires infrastructure that is outside the infrastructure of the Supplier; and/or |
(c) | would cause or may cause the Supplier to breach an existing contract with a third party. |
5.5 | If, during the Term, the Customer identifies any Omitted Service, then the Customer may give notice to the Supplier in writing, giving a description of the Omitted Service and requesting that the Omitted Service be incorporated into Schedule 2 (“Omitted Services Request”). |
5.6 | If the Customer serves an Omitted Services Request, the Supplier shall provide, or procure the provision of, the Omitted Service as it they were part of the Services as soon as reasonably practicable, or as otherwise agreed by the Parties; provided however that the Supplier shall not be responsible for any delay to provide any such Omitted Service not caused by the Supplier. The Supplier and the Customer shall act reasonably and in good faith with respect to agreeing to the Charges for the Omitted Services, including for clarity by referencing the costs for the respective Omitted Services to the Supplier and/or another Supplier Group Company to or in respect to the business of the Customer and/or another Customer Group Company during the Reference Period, and any consequential revisions to the terms of this Agreement. |
6Governance
6.1 | The Parties shall maintain a steering committee (the “Steering Committee”) comprising at all times at least two (2) duly appointed non-legal technical representatives of each of the Supplier and the Customer with necessary and appropriate seniority and each Party shall use reasonable endeavours to ensure that representatives of the Customer and the Supplier with the necessary operational and technical experience attend the Steering Committee, as required. The Steering Committee members shall be the reference persons of the respective Party for the performance of the Services and other activities regulated under this Agreement, as well as for the implementation of the TSA Exit Plan. |
4
6.2 | The Steering Committee will be responsible, inter alia, for: |
(a) | discussing potential changes to this Agreement, the Services and the Service levels pursuant to clause 5; |
(b) | overseeing arrangements related to this Agreement generally, with the ability to consult with other individuals within the respective groups of the Supplier and the Customer on specific points of detail; |
(c) | discussing any extension to the Term; |
(d) | discussing the TSA Exit Plan (including any amendments thereto); |
(e) | discussing any adjustments of the Charges in accordance with the provisions of this Agreement; and |
(f) | addressing any issues concerning the provision of the Services or the performance of this Agreement in general before such issues are further escalated in accordance with the provisions of clause 23.1. |
6.3 | The Steering Committee will meet in person or via telephone or video conference at least once a month and more frequently as is agreed between the Parties from time to time in order to (amongst others) make determinations, discuss the Services and the Service levels and monitor the steps taken or to be taken for the implementation of the TSA Exit Plan. |
7Related Service Providers
7.1 | Without prejudice to the Supplier’s obligations to provide the Services and perform its other obligations under this Agreement, if at any time during the Term, the Supplier is required to provide any other co-operation or assistance to Related Service Providers in connection with the supply, or procuring the supply of, the Services or to enable the supply of Related Services by Related Service Providers, then the Customer or the Supplier may give notice to the other in writing, giving a description of the co-operation or assistance required and requesting that the co-operation and/or assistance be incorporated into Schedule 2 or otherwise be supplied under this Agreement (“Related Service Provider Co-operation Request”). |
7.2 | If the Customer or the Supplier serves a Related Service Provider Co-operation Request, this shall be for administrative good practice in terms of the assessment of the scope, timing and associated costs with respect to a Related Service Provider Co-operation Request and any consequential revisions to the terms of this Agreement, and the Customer acknowledges and accepts that the Supplier may, in its absolute discretion, choose to provide such other co-operation and assistance to such Related Service Providers and in connection with Related Services. |
8Supplier Policies
The Customer shall comply with, and shall use reasonable endeavours to procure that its employees, agents and its other service providers and sub-contractors (other than the Supplier, and each other Supplier Group Company and Third Party Suppliers) shall comply with, all written
5
policies, standards and procedures provided by the Supplier from time to time that are reasonable and relevant to the receipt and/or use of the Services.
9Charges and Payment
9.1 | The Supplier shall invoice the Customer for the Charges, reasonably incurred out-of-pocket costs and expenses in connection with providing the Services and any other amounts due to the Supplier under this Agreement, monthly in arrears. Upon request from the Customer, the Supplier shall document any and all out-of-pocket costs and expenses incurred in connection with providing the Services, from time to time. |
9.2 | For clarity, to the extent any portion of the Services are being provided by any Related Service Provider or a Third Party Supplier that is also providing other services to the Supplier that are not Related Services or Services, as applicable, then the costs for the Related Service Provider or Third Party Supplier included in the Charge for the Related Service or Service, as applicable, shall be in proportion and appropriately allocated to only that which is a reasonable allocation of the cost for providing the Related Services or Service, as applicable, without including any cost of the other services being provided to the Supplier. |
9.3 | All invoices issued by the Supplier, except to the extent disputed in good faith, shall become due and payable in full on thirty (30) calendar days end of month payment terms (i.e., at the end of the month following the month in which the invoice is received). |
9.4 | All Charges are exclusive of VAT unless otherwise stated in Schedule 2. |
9.5 | All payments by the Customer or the Supplier under this Agreement shall be made in pounds sterling (£GBP) and transferred by telegraphic (or other similar) transfer to such bank account as is directed by the Customer or the Supplier (as applicable) prior to the relevant due date so that the Customer or the Supplier (as applicable) is in receipt of cleared funds in respect of such amounts on the relevant due date. |
9.6 | Where there is a requirement to convert any Charges payable under this Agreement into pounds sterling (£GBP), any such Charges shall be converted into pound sterling (£GBP) at the relevant currency rate. For the purpose of this clause 9.6, the relevant currency rate shall mean the rate published on XE.com as at the date of the relevant invoice. |
9.7 | All amounts payable to the Customer or the Supplier under this Agreement are to be paid free and clear of (and without deduction or withholding for) any tax (including withholding, sales, use, value added and/or any other tax), duties, currency control restrictions, commissions and/or other withholdings whatsoever and the paying Party shall be solely responsible for any such tax, duties, currency control restrictions, commissions and/or other withholdings. To the extent that a Party makes, pays, deducts and/or withholds any such tax, duties, currency control restrictions, commissions and/or other withholdings (or is required to do the same), then that Party shall: |
(a) | gross up the relevant amount payable under this Agreement so as to ensure that the other Party receives the full amount as expressed in this Agreement; and |
6
(b) | promptly inform the other Party of the amount paid, deducted and/or withheld, and provide that other Party with such certificates and/or other documentation required by that other Party (in a form acceptable to that other Party) which evidences such payments, deductions and/or withholdings. |
9.8 | Without prejudice to any other rights or remedies that the Supplier may have, in the event that the Customer fails to pay any sums due under this Agreement that are not the subject of a bona fide dispute in accordance with clause 9.9, the Supplier shall be entitled to charge interest at a rate of four per cent (4%) per annum above the base rate of the Bank of England from time to time (save that such rate of interest shall be at four per cent (4%) a year for any period when that base rate is below zero per cent (0%)) in respect of the period between the due date and the point at which the invoice is paid in full and cleared funds, which interest shall accrue day to day and be compounded monthly. |
9.9 | If the Customer has a bona fide dispute in respect of the whole or any part of any invoice issued by the Supplier, the Customer shall be entitled to withhold payment of the disputed amount, but shall pay the undisputed part in accordance with this Agreement. |
9.10 | Neither Party shall be entitled to retain or set off any Charges due by one Party to the other Party (and/or any other sums due by that Party to the other Party) against any sums due from one Party to the other Party (including the sums remitted by one Party to the other Party in accordance with the terms of this Agreement). |
10Data Protection
The Supplier and the Customer shall comply with their respective obligations in Schedule 4.
11Term
11.1 | This Agreement shall commence on the Completion Date and, subject to earlier termination as provided for in clause 12, shall continue in force for the Term. |
11.2 | Subject to clause 11.5, the Parties shall discuss in good faith any proposed extension of the Service Terms to be effected by mutual agreement in accordance with clause 5 and subject in any event to the TSA Exit Plan. If an extension of a Service Term is necessary for legal or regulatory reasons in circumstances where compliance with that legal or regulatory reason is dependent upon the continued provision of the Service by the Supplier and compliance could not be achieved by any person other than the Supplier, neither Party shall unreasonably withhold or delay its agreement. |
11.3 | Any extension of the Services will be on the same terms applicable under this Agreement, save as otherwise agreed between the Parties in writing and subject to the Customer’s acknowledgement and acceptance that: |
(a) | the Supplier may apply a reasonable uplift to the Charges for the provision of any Service during any extension of a Service Term; and |
7
(b) | the Customer shall be responsible for any additional one-off costs, expenses, fees, charges or commissions incurred in relation to obtaining any extension of the Service Term in respect of a Service, such as licence costs or similar. |
11.4 | The Supplier shall inform the Customer of any anticipated additional one-off costs, expenses, fees, charges or commissions incurred in relation to obtaining any extension of a Service Term in relation to a Service which the Supplier expects to incur (to the extent possible) as soon as reasonably practicable following the commencement of discussions under clause 11.2. |
11.5 | Notwithstanding anything to the contrary in this Agreement (including Schedule 2 and/or Schedule 3), under no circumstance shall the Service Term in respect of any Services relating to finance (including tax, treasury, accounting and accounts payable), human resources (including resourcing, reward and talent management) or product development, supply chain and quality continue for a period beyond 31 December 2022. |
12Termination
12.1 | Either Party may (without prejudice to any terms which expressly or by implication continue beyond termination) terminate this Agreement as a whole immediately at any time by written notice to the other Party if that other Party commits any material breach of its obligations under this Agreement which is irremediable or if remediable is not remedied in all material respects within thirty (30) days after the service of written notice specifying the breach and requiring it to be remedied. |
12.2 | If the Customer fails to pay an invoice, except to the extent any such invoice is disputed in good faith pursuant to clause 9, under this Agreement within thirty calendar (30) days from the relevant invoice becoming due and payable, then the Supplier may provide written notice, stating the Supplier’s intention to terminate this Agreement. In the event the Customer fails to pay the undisputed amounts in full within seven (7) calendar days of the Supplier’s notice of its intention to terminate this Agreement, the Supplier may serve notice on the Customer to terminate this Agreement with immediate effect. |
12.3 | Without prejudice to any rights that have accrued under this Agreement or any of its rights or remedies, the Customer shall be entitled to early terminate this Agreement for convenience, with respect to the entirety of any individual Service (or any parts thereof) or with respect to some or all Services performed by the Supplier, upon serving at least thirty (30) calendar days prior written notice to the Supplier. |
12.4 | Should the Customer terminate a Service in accordance with clause 12.3 and the Supplier incurs Stranded Costs, the Customer shall pay to the Supplier any and all non-recoverable Stranded Costs caused by such termination, to the extent that the Stranded Costs would not have been incurred but for that termination. The Supplier shall inform the Customer of the anticipated Stranded Costs which the Supplier expects to incur as a result of any such termination (if any, and to the extent possible) as soon as reasonably practicable upon receiving a notice from the Customer under clause 12.3. |
8
13TSA Exit Plan
13.1 | The Parties will, acting in good faith, discuss (via the Steering Committee) and agree upon a plan, on a Service-by-Service basis, at any time during the Term (the “TSA Exit Plan”) to migrate the provision of the Services to the Customer or a new service provider or in any event to terminate the provision of the Services at the end of the relevant Service specific term provided in Schedule 2. |
13.2 | The Customer shall provide a draft TSA Exit Plan for all Services by no later than ninety (90) calendar days after the Completion Date. The TSA Exit Plan shall be agreed upon by the Parties by no later than thirty (30) calendar days after receipt by the Supplier of the draft TSA Exit Plan from the Customer. |
13.3 | The TSA Exit Plan will set out the steps each Party will take to ensure the smooth migration of the Services to the Customer or its appointed third party, or the termination of the provision of the Services at the end of the Term. Each Party shall perform the tasks assigned to it in the TSA Exit Plan within the timeframe set forth therein. |
13.4 | Each Party shall bear its own costs in connection with the creation of the TSA Exit Plan. |
13.5 | The Supplier may, at its discretion, charge the Customer for reasonably incurred out-of-pocket costs and expenses in connection with its implementation of the TSA Exit Plan and the steps required from the Supplier in the TSA Exit Plan, and such costs shall be reduced to the extent they are recovered through, or are already included within, Charges that have been or will be invoiced. |
13.6 | The Supplier shall inform the Customer of any anticipated costs and expenses which the Supplier expects to incur (to the extent possible) in connection with its implementation of the TSA Exit Plan and the steps required from the Supplier in the TSA Exit Plan, as soon as reasonably practicable following the commencement of discussions with respect to the TSA Exit Plan or the steps required from the Supplier in the TSA Exit Plan (as the context requires). |
13.7 | The Supplier may, upon written request, require that the Customer and the Supplier follow the processes and procedures in clauses 13.1 to 13.6 (inclusive) with respect to the Reverse Services, save that any time periods shall commence from the date of the Supplier’s written request. |
14Representations and Warranties
14.1 | Each Party warrants to the other Party that as of the Effective Date: |
(a)it is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized;
(b)it has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby;
(c)all corporate acts and other proceedings required to be taken by that Party to authorize the execution, delivery and performance of this Agreement and to consummate the transactions contemplated hereby and thereby have been duly and properly taken;
9
(d)this Agreement has been duly authorized, executed and delivered by that Party;
(e)this Agreement constitutes a legal, valid and binding obligation of that Party and is enforceable against that Party in accordance with its terms;
(f)the execution and delivery of this Agreement by that Party does not, and the consummation of the transactions contemplated hereby and thereby and compliance by that Party with the terms and conditions hereof and thereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancelation or acceleration of any obligation; and
(g)no consent, waiver, approval, licence, permit, order or authorization of, or registration, declaration or filing with, any governmental Authority is required to be obtained or made by or with respect to that Party in connection with the execution of this Agreement.
14.2 | Except as expressly stated otherwise in this Agreement, all warranties, representations, conditions and other terms implied by statute, at common law, on the basis of usage, custom or the Parties’ previous course of dealings, in fact or otherwise, are hereby excluded to the fullest extent permitted by Applicable Law. |
15Liability
15.1 | Subject to clause 15.3, neither Party (nor any other Group Company of that Party), nor its employees, agents and sub-contractors shall be liable under this Agreement in contract or tort (including negligence and breach of statutory duty) for any: |
(a)indirect or consequential Loss;
(b)loss of anticipated savings;
(c)loss of data (other than the costs of reconstituting data to the last available back-up);
(d)loss of goodwill; and/or
(e)loss of profit, business or revenue,
(in the case of clauses 15.1(a), 15.1(b), 15.1(c), 15.1(d) and 15.1(e) whether direct or indirect) arising under or in connection with this Agreement.
15.2 | Subject to clause 15.1 and clause 15.3, each Party’s (including its Group Companies, and employees) total aggregate liability in contract, tort (including negligence or breach of statutory duty) or otherwise arising under or in connection with this Agreement shall not exceed US$10,000,000. |
15.3Nothing in this Agreement purports to exclude or limit:
(a)either Party’s liability for death or personal injury as a result of its negligence;
(b)either Party’s liability for fraud or fraudulent misrepresentation;
10
(c)either Party’s liability for any liability that cannot be excluded by Applicable Law;
(d)either Party’s liability for breach of clause 17 and/or clause 21 by that Party; or
(e)either Party’s obligation to pay the Charges due and payable under this Agreement.
15.4 | The Parties shall take all reasonable steps to mitigate any Losses which it might incur pursuant to or in connection with this Agreement. |
16Force Majeure Events
16.1 | Notwithstanding any other provision of this Agreement, a Party shall not be in breach of this Agreement if performance of any of its obligations (other than an obligation to make any payment of the Charges or any other amounts due and payable) under this Agreement is prevented or delayed (in full or in part) due to a Force Majeure Event. |
16.2 | If a Force Majeure Event occurs, the affected Party shall: |
(a)inform the other Party in writing as soon as reasonably practical of the impact of the Force Majeure Event (including, if reasonably practicable, the period for which it is estimated that such failure or delay will continue);
(b)take all reasonable steps to comply with the terms of this Agreement as fully and promptly as possible and shall provide updates as frequently as reasonably possible in respect of such Force Majeure Event; and
(c)take all reasonable steps to minimise the impact of the Force Majeure Event.
16.3 | This clause 16 will not apply to a Party affected by a Force Majeure Event if such Party could have avoided the effect of the Force Majeure Event by taking precautions which, having regard to all the matter known to it before the Force Majeure Event, it ought reasonably to have taken, but did not. |
17Confidentiality
17.1 | Each Party shall protect the Confidential Information of the other Party against unauthorised disclosure by using the same degree of care as it takes to preserve and safeguard its own Confidential Information of a similar nature, being at least a reasonable degree of care. |
17.2 | Confidential Information may be disclosed by the receiving Party to its employees, Affiliates and professional advisers, provided that the recipient is bound in writing to maintain the confidentiality of the Confidential Information received. |
17.3 | The obligations set out in this clause 17 shall not apply to Confidential Information which the receiving Party can demonstrate: |
(a) | is or has become publicly known other than through breach of this clause 17; or |
(b) | was in possession of the receiving Party prior to disclosure by the other Party; or |
11
(c) | was received by the receiving Party from an independent third party who has full right of disclosure; or |
(d)was independently developed by the receiving Party; or
(e) | was required to be disclosed by governmental Authority, provided that the Party subject to such requirement to disclose gives the other Party prompt written notice of the requirement. |
18Non-Solicitation
18.1 | The Customer undertakes that it shall not, either solely or jointly with or through any other person, on its own account or as agent, manager, advisor or consultant for any other person or otherwise howsoever during the Restricted Period: |
(a) | induce, solicit, interfere with or endeavour to entice to leave the service or employment of the Supplier (and/or any Supplier Group Company) any Restricted Individual; or |
(b) | employ any Restricted Individual, unless such Restricted Individual responded to a bona-fide, public advertisement for the relevant role without the Customer (and/or any Customer Group Company) directly or indirectly inducing, soliciting, interfering with or endeavouring to entice him or her to do so. |
18.2 | It shall not be a breach of clause 18.1 for the Customer or any other Customer Group Company to advertise publicly in good faith a position or vacancy to which a Restricted Individual may or does respond and which directly results in that Restricted Individual being employed to fill that position or vacancy. |
19Technology Continuity Plan
During the Term, the Supplier shall have and maintain, in accordance with good industry practice, a technology solutions continuity plan and shall operate such plan in accordance with its terms.
20IP
20.1 | All Supplier IPR (including any modifications, enhancements or derivatives thereof) and any and all Intellectual Property Rights in and to Supplier Supplied Materials shall remain vested in the Supplier or another member of the Supplier Group (or their applicable third party licensors). To the extent that any such Supplier IPR does not automatically vest in or transfer to the Supplier upon the conception, creation, reduction to practice or development of the relevant modification, enhancement or derivative, the Customer, at no additional cost to the Supplier and for no additional consideration, hereby assigns (and shall procure the assignment of) all such Supplier IPR to the Supplier, including by way of present assignment of future rights, and the Supplier herewith accepts such assignment. |
20.2 | All Customer IPR (including any modifications, enhancements or derivatives thereof) and any and all Intellectual Property Rights in and to Customer Supplied Materials shall remain vested in the Customer or other Service Recipient (or the applicable third party licensors). To the extent that any such Customer IPR does not automatically vest in or transfer to the Customer upon the conception, |
12
creation, reduction to practice or development of the relevant modification, enhancement or derivative, the Supplier, at no additional cost to the Customer and for no additional consideration, hereby assigns (and shall procure the assignment of) all such Customer IPR to the Customer, including by way of present assignment of future rights, and the Customer herewith accepts such assignment.
20.3 | Without prejudice to clause 21, the Supplier hereby grants to the Customer and each other Service Recipient a non-exclusive, non-transferable licence during the Term to use, and with the prior written consent of the Supplier from time to time to permit Related Service Providers to use Supplier Supplied Materials and any other Supplier IPR supplied to the Customer or another Service Recipient by the Supplier from time to time, solely to the extent reasonably required in order to receive the Services, to enable the Services to interoperate and/or interface with any Related Services and/or to perform the Customer’s obligations (including the provision of Reverse Services) and/or exercise the Customer’s rights under this Agreement. |
20.4 | The Customer hereby grants to the Supplier and each other member of the Supplier Group a non-exclusive, non-transferable licence during the Term to use Customer Supplied Materials and any other Customer IPR supplied to the Supplier or another Supplier Group Company by the Customer or other Service Recipient from time to time, solely to the extent reasonably required in order to receive the Reverse Services and/or to perform the Supplier’s obligations (including the provision of the Services) and/or exercise the Suppliers rights under this Agreement. |
20.5 | Save as set out in this clause 20, nothing in this Agreement transfers or otherwise grants to any Party any right or interest in the other Party’s Intellectual Property Rights, or affects the ownership by a Party of its Intellectual Property Rights from time to time. |
21IP Separation Matters
21.1 | Subject to clause 21.3, the Customer shall not use, and shall procure that its Group Companies shall not use, at any time after Completion, directly or indirectly: |
(a) | any company or trading name, domain name, logo or trade or service mark (whether registered or unregistered) which includes the word “Intercept” or is owned by the Supplier Group at Completion (together, “Supplier Group Names and Marks”); or |
(b) | any word or device which is confusingly similar. |
21.2 | Subject to clause 21.3, within thirty (30) Business Days of the Completion Date, the Customer shall procure that: |
(a) | all references to the Supplier Group Names and Marks and any other wording or signs that suggest any continued association with the Supplier Group are removed from the Group Companies’ websites and all assets owned or used by any Group Company (including products, packaging, marketing materials, business stationery, vehicles and premises); |
(b) | any Group Company whose corporate name includes the word “Intercept” (or any word which is confusingly similar) changes its name to remove them; and |
13
(c) | each Group Company ceases to use any domain name that includes the word “Intercept” (or any word which is confusingly similar). |
21.3 | Subject to the terms and conditions of this Agreement, the Supplier grants to each Service Recipient a fully paid-up, royalty free, non-sublicensable, non-assignable and non-transferable, non-exclusive transitional license to use the Supplier Group Names and Marks in accordance with Supplier’s trademark guidelines from time to time and in all material respects in the same form and manner as used immediately prior to the Completion Date: |
(a)in connection with the Commercialization of Licensed PBC Products and Promotional Materials for a period of time that lasts until (i) the receipt by the Customer on a country-by-country basis of all licences, permits, consents, authorizations, and Regulatory Approvals from the applicable governmental Authority that are required by Applicable Law (the “Product Approvals”) (which the Customer will use commercially reasonable endeavours to seek to change as promptly as reasonably practicable after the Completion Date) to change the trademarks used on any Licensed PBC Product or Promotional Materials therefor from the Supplier Group Names and Marks to trademarks that do not include, and are not similar to, any of the Supplier Group Names and Marks, and (ii) full implementation of such Product Approvals for Licensed PBC Products (such implementation not to be unreasonably delayed), provided however that the Customer will use commercially reasonable endeavours after the Completion Date to make and notify the Supplier of all filings with any governmental Authority and take such other actions necessary to obtain the Product Approvals and, under no circumstance shall the foregoing licence expire later than July 1, 2024;
(b)in connection with continuing on any other tangible assets, documents, or materials not addressed in the foregoing clause (a) that, contain, bear, display or use the Supplier Group Names and Marks as of the date hereof, including stationary, forms, business cards, office signage, contracts or on letter head and other media (including domain names) until the receipt by the Customer of all licences, permits, consents, authorizations, and regulatory approvals from the applicable governmental Authority (“Tradename Approvals”) that are required by Applicable Law to change the corporate names of all Group Companies to names that do not include and are not similar to any of the Supplier Group Names and Marks, which the Customer will use commercially reasonable endeavours to seek to change as promptly as reasonably practicable after the Completion Date and, under no circumstance shall the foregoing licence expire later than six (6) months after the Completion Date,
provided further, that, in each case (a) and (b) of this clause 21.3, all such uses shall be in a manner consistent with the Supplier’s uses immediately prior to the Completion Date and in the case of (b) clause 21.3, the Customer shall use commercially reasonable endeavours to seek to change as promptly as reasonably practicable the corporate entity names, assets, documents, and materials referred to in (b) of this clause 21.3, including stationary, forms, business cards, office signage, domain names and letter head, unless required to
14
wait until receipt of a Tradename Approval or a Product Approval, to refer to the Customer Group or otherwise not refer to the Supplier Group Names and Marks.; and
(c)for the avoidance of doubt, the transitional trademark license under this clause 21 operates as a group of licenses on a country-by-country basis and the Customer will only have and use a transitional trademark license under this clause 21 if needed because of a needed Product Approval (and implementation thereof) or Tradename Approval. After a Product Approval or Tradename Approval is obtained for a particular purpose, the applicable license under this clause 21 for the relevant country(ies) will expire and the Customer will cease to use the Supplier Group Names and Marks in reliance thereon.
22Assignment and other dealings
22.1 | Subject to clause 22.2, neither Party may assign, novate, sub-contract or otherwise dispose of or create any trust in relation to any or all of its rights and/or obligations under this Agreement without the prior written consent of the other (not to be unreasonably withheld or delayed). |
22.2 | The Supplier shall have the right to sub-contract the performance of the Services and any of its other obligations under this Agreement to the Supplier Group and other third parties without the Customer’s prior written approval. |
22.3 | The Customer acknowledges and accepts that the supply of certain Services on the terms and conditions set out in this Agreement may be made through the use of third parties (“Third Party Suppliers”) on behalf of the Supplier under contracts that the Customer and each other Service Recipient are not a party (collectively, “Third Party Contracts”) and may require additional consents, approvals, permissions or licences from the relevant Third Party Supplier (collectively, “Third Party Consents”). |
22.4If required by the Supplier, the Customer shall upon notice from the Supplier:
(a)comply with any terms of a Third Party Contract to the extent that the terms of the Third Party Contract are relevant to the provision of the applicable Services;
(b)provide such cooperation and assistance as is required by the Supplier to obtain the Third Party Consents referred to in clause 22.3; and
(c)comply with any Third Party Consent obtained in connection with such a Third Party Contract,
22.5 | The Supplier shall at all times use commercially reasonable endeavours to negotiate reasonable terms, conditions and costs in any Third Party Contracts. |
22.6 | The Customer shall bear any costs, expenses, fees, charges or commissions to be incurred in connection with obtaining Third Party Consents. The Supplier shall at all times use commercial reasonable endeavours to obtain such Third Party Consents. The Customer shall provide such co-operation and assistance in connection with the Supplier’s procurement of the Third Party Consents, as the Supplier reasonably requires from time to time. |
15
22.7 | If a Third Party Consent with respect to a Service is refused, expires or is subsequently revoked, the Supplier shall inform the Customer as soon as reasonably practicable and the Customer and the Supplier shall (acting reasonably and in good faith) agree as soon as possible: |
(a) | a solution with respect to continuing the supply of the Services for the duration of the relevant Service Term; or |
(b) | an alternative delivery solution with respect to the supply of the Service for the duration of the relevant Service Term. |
22.8 | If the Supplier has complied with clause 22.7, the Supplier shall not be in breach of this Agreement if a Third Party Supplier does not grant a Third Party Consent or if a Third Party Consent expires or is revoked. |
22.9 | Should either Party sub-contract the performance of any of their obligations (and/or in the case of the Supplier, the performance of the Services), the sub-contracting Party shall still be liable under this Agreement for all acts and omissions of such sub-contractors as if such acts and omissions were its own. |
23General
23.1 | This Agreement and any disputes or claims arising out of or in connection with it shall be governed by and construed in accordance with the laws of England and Wales. If a dispute arises between the Parties concerning this Agreement, then such dispute shall be escalated to the executive officers of each Party. The executive officers will meet and confer, as soon as practicable, in an attempt to resolve the dispute. If the Parties are unable to resolve such dispute amicably within ten (10) days from the date of escalation to the executive officers of each Party, then each Party may submit such dispute to the exclusive jurisdiction of the courts of England to settle any such dispute or claim. The existence of a dispute pursuant to clause 6.2(f) above, or this clause 23.1, shall not excuse either Party from any other obligation under this Agreement, including each Party’s obligations to continue to provide Services contemplated hereunder. No provision herein should be construed as precluding a Party from bringing an action for injunctive relief or other equitable relief. |
23.2 | This Agreement constitutes the entire agreement between the Parties and supersedes and extinguishes all previous agreements, understandings or arrangements between them, whether written or oral, relating to its subject matter. |
23.3 | Any notice must be in writing and sent by prepaid first class recorded delivery post (if within the United Kingdom) or by prepaid airmail (if elsewhere). Notices shall be deemed to have been received two (2) Business Days after sending. The addresses for service of notice are as follows: |
Party | Attention of | Address for service of notice |
Supplier | General Counsel | 305 Madison Avenue, Morristown, New Jersey 07960 |
16
Customer | General Counsel | Capital House, 85 King William Street, London, EC4N 7BL |
23.4 | Any variation, modification or amendment to this Agreement shall be in writing and signed by or on behalf of both Parties to this Agreement. |
23.5 | A waiver of any right under this Agreement is only effective if it is in writing, and it applies only to the Party to whom the waiver is addressed and the circumstances for which it is given. No waiver shall be implied by taking or failing to take any other action. |
23.6 | If any provision (or part of a provision) of this Agreement is found by any court or administrative body of competent jurisdiction to be invalid, unenforceable or illegal, the other provisions of this Agreement shall remain in force. If any invalid, unenforceable or illegal provision under this Agreement would be valid, enforceable or legal if some part of it were deleted, the provision shall apply with whatever modification is necessary to give effect to the commercial intention of the Parties. |
23.7Expiry or termination of this Agreement shall not:
(a) | release the Parties from any liability or right of action or claim which at the time of such expiry or termination has already accrued or may accrue to either Party in respect of any act or omission prior to such expiry or termination; or |
(b) | affect the coming into force or the continuance in force of any provision of this Agreement which is expressly or by implication intended to come into or continue in force on or after such expiry or termination (including, for the avoidance of doubt, the obligation of the Customer to pay any Charges with respect to any period prior to expiry or termination). |
23.8This Agreement may be executed in any number of counterparts.
23.9 | This Agreement is made for the benefit of the Parties to it and each Service Recipient and is not intended to benefit, or be enforceable by any other person. Unless the Customer is prevented by Applicable Law, all claims from any Service Recipient arising under or in connection with this Agreement against the Supplier shall be brought by the Customer itself on behalf of the applicable Service Recipient. |
23.10 | The right of the Parties to terminate, rescind, or agree any amendment, variation, waiver or settlement under this Agreement is not subject to the consent of any person who is not a Party to this Agreement. |
17
Schedule 1 Definitions and interpretation
Part 1 Definitions
In this Agreement, unless the context otherwise requires:
“Acquisition Document(s)” has the meaning given to it in the SPA.
“Agreement” means this Transitional Services Agreement (including the Schedules), as amended by agreement of the Parties in writing or as otherwise provided in this Agreement from time to time.
“Affiliates” has the meaning given to it in the SPA.
“Applicable Laws” means all applicable laws, rules, regulations, guidance standards for international, national, state or local governmental Authorities.
“Authority” has the meaning given in the SPA.
“Business Day(s)” has the meaning given in the SPA.
“Charges” means for each Service, the charges to be paid by the Customer in respect of the provision of that Service as calculated, invoiced and payable in accordance with Schedule 2 and clause 9.
“Commercialization” has the meaning given to it in the License Agreement.
“Completion” means completion of the sale and purchase of the Shares in accordance with the SPA.
“Completion Date” has the meaning given in the SPA.
“Confidential Information” means all information whether technical or commercial (including all specifications, drawings and designs, disclosed in writing, on disc, orally or by inspection of documents or pursuant to discussions between the Parties), where the information is identified as confidential at the time of disclosure or ought reasonably to be considered confidential given the nature of the information or the circumstances of disclosure, whether disclosed under or in connection with this Agreement.
“Customer Cause” means an act or omission of the Customer or any other of the Customer’s sub-contractors or agents for whom the Supplier has no responsibility, including any failure to perform or achieve a Dependency.
“Customer Group” means the Customer and each Group Company of the Customer, and reference to “Customer Group Company” shall be construed accordingly.
“Customer IPR” means any and all Intellectual Property Rights owned by the Customer or any other Service Recipient prior to the Completion Date.
“Customer Personal Data” means all personal data (as defined in the Data Protection Legislation) controlled by the Customer which is processed by the Supplier in order to provide the Services.
“Customer Supplied Materials” means any and all materials and documents the Intellectual Property Rights in which are owned by the Customer or any other Service Recipient (or any third party licensor (other
18
than the Supplier or its sub-contractors) to any of the aforesaid) which are made available to the Supplier by the Customer or any other Service Recipient for the purposes of this Agreement.
“Data Protection Legislation” means, as applicable from time to time, the UK Data Protection Act 2018 and the EU General Data Protection Regulation (2016/679) (“GDPR”), and the Privacy and Electronic Communications (EC Directive) Regulations 2003 together with any and all other Applicable Laws relating to the protection of personal data applicable to either Party in any relevant jurisdiction.
“Dependencies” means in relation to a Service, the specific activities specified as the “Dependencies” for that Service set out in Schedule 2.
“Excluded Service” means any service or part of a service that:
(a) | requires the delivery of Services that infringe Applicable Law; |
(b) | is stated to be an excluded service in Schedule 2; or |
(c) | otherwise specifically excluded from any service scope set out in Schedule 2, |
and in each case includes all other services, functions and responsibilities not specifically described in (a), (b) or (c) above that are a necessary part of the provision of an Excluded Service.
“Force Majeure Event” means any event beyond the reasonable control of the affected Party, including: embargoes; war or acts of war, including terrorism insurrections, riots or civil unrest; strikes, lockouts or other labour disturbances; epidemics (including pandemics), the spread of infectious, diseases, and quarantines; pandemics; fire, floods, earthquakes or other acts of nature; impossibility to obtain materials, components, utilities, equipment, supplies, fuel or other required materials (in each case, due to reasons other than the affected Party’s negligence or wilful misconduct or any other cause within the reasonable control of the affected Party).
“Group Company” means in relation to a company, means any other company directly or indirectly controlling, controlled by or under common control with such company, and “control” for these purposes means holding the majority of the voting rights or share capital of such company or otherwise having the power to direct the management and policies of such company.
“Intellectual Property Rights” means:
(a) | patents, utility models, inventions, know-how and, trade secrets, copyright and related rights and allied rights including moral rights, database rights and other rights in and relating to software, registered designs, unregistered design rights, trademarks and service marks, trade names, business names, company names, brand names, logos, rights in get-up, domain names and URLs, goodwill and rights to sue for passing-off (or for unfair competition) and any other intellectual property rights (in each case, whether or not registered, and including all applications to register and rights to apply to register any of them, and all rights to sue for any past or present infringement of them) and renewals or extensions of such rights; and |
(b) | rights having equivalent or similar effect to the above items in any jurisdiction in which any Group Company conducts business. |
19
“Intercept Pharmaceuticals LLC” means Intercept Pharmaceuticals LLC a company incorporated in Delaware with number 6997247 which has its business address at 1209, Orange Street, Wilmington, New Castle 19801.
“License Agreement” has the meaning given to it in the SPA.
“Licensed PBC Products” has the meaning given to it in the License Agreement.
“Longstop Date” has the meaning given in the SPA.
“Loss” means any loss, damage, fine, penalty, cost, expense or other liability (including legal and other professional fees) and reference to Losses shall be construed accordingly.
“Omitted Service” means any service or any element of a service which meets each of the following requirements:
(a) | is not included as a Service in Schedule 2; |
(b) | is not an Excluded Service or a matter for which responsibility is expressly allocated by this Agreement; |
(c) | the Supplier retains the technical capability to provide the service or element of the service as at the date of the relevant Omitted Services Request, provided however, if any Supplier personnel subsequently leave engagement with the Supplier, the Supplier shall use reasonable endeavours to replace the same to support and provide the Omitted Service; |
(d) | was provided by the Supplier and/or another the Supplier Group Company to or in respect of the business of the Customer and/or another Customer Group Company during the Reference Period; and |
(e) | the Customer, acting reasonably and in good faith, considers the service or element of a service necessary to enable the Customer and/or another Customer Group Company to carry on their business in a manner consistent with its practice during the Reference Period. |
“Omitted Services Request” has the meaning given in clause 5.1.
“Pass Through Basis” means the amount required to cover the Supplier’s actual invoiced third party costs in relation to the provision of a Service or Reverse Service, which shall not include any element of margin.
“Performance Standard” means to materially the same standard, materially the same scope and within materially the same time frames as the Service, or services similar to the Service, were provided to the relevant Service Recipient in the Reference Period or otherwise with reasonable skill and care where the Service or services similar to the Service were not provided to the relevant Service Recipient in the Reference Period.
“Product Approvals” has the meaning given to it in clause 21.3(a).
“Promotional Materials” has the meaning given to it in the License Agreement.
20
“Reference Period” means the twelve (12) months immediately prior to the Completion Date.
“Regulatory Approval” has the meaning given to it in the License Agreement.
“Regulatory Change” has the meaning given in clause 5.2.
“Related Service Provider” means any third party which at the relevant time provides Related Services.
“Related Service Provider Co-operation Request” has the meaning given in clause 7.1.
“Related Services” means goods and/or services provided by a Related Service Provider:
(a) | relating to this Agreement; or |
(b) | to provide an alternative delivery solution with respect to services that are identical or materially similar to or in substitution for the Services provided (or to be provided) under this Agreement. |
“Restricted Individual” means any personnel of the Supplier and/or any Supplier Group Company who directly or indirectly provided or was otherwise connected with the provision of the Services under this Agreement.
“Restricted Period” means the period of time starting on the Completion Date and ending on the third anniversary of the Completion Date.
“Reverse Services” means any service set out in Schedule 3 and any Omitted Services that is included pursuant to an approved Omitted Services Request in accordance with clause 5.1.
“Supplier Group Names and Marks” has the meaning given in clause 21.1.
“Service Recipient” means the recipient that the Supplier is to supply, or procure the supply of, the Service to as set out in Schedule 2.
“Service Term” means in relation to a Service, the period of six months from the Completion Date or such other period specified as the “Service Term” for that Service set out in Schedule 2 (or in the case of the Reverse Services, Schedule 3).
“Services” means any service set out in Schedule 2 and any Omitted Services that are included in accordance with clause 5.1.
“Shares” has the meaning given in the SPA.
“SPA” means the share purchase agreement between the Customer, Supplier and Intercept Pharmaceuticals LLC relating to certain non-US subsidiaries of the Supplier.
“SPA Termination” has the meaning given in clause 2.2.
“Steering Committee” has the meaning given in clause 6.1.
“Stranded Costs” means costs calculated according to the following procedure:
21
(a)the starting point is to calculate:
(i) | the costs which, before the notice of termination, the Supplier had contractually committed with any Third Party Supplier to incur in connection with the provision of the Service that is to be terminated; and |
(ii) | any other reasonable, demonstrable and incremental costs and expenses directly and reasonably incurred by the Supplier in connection with terminating the provision of the Service in question, |
in each case which:
A. | the Supplier cannot mitigate in accordance with (c) below; and |
B. | are reasonably documented and substantiated; |
(a) | the costs identified in (a) above shall be reduced to the extent they are recovered through, or are already included within, Charges that have been or will be invoiced; and |
(b) | the Supplier shall in any event use reasonable endeavours to mitigate or avoid such Stranded Costs. |
“Sub-processors” has the meaning given in paragraph 5 of Schedule 4.
“Supplier Group” means the Supplier and each Group Company of the Supplier, and reference to “Supplier Group Company” shall be construed accordingly.
“Supplier IPR” means any and all Intellectual Property Rights owned by the Supplier or any other Supplier Group Company prior to the Completion Date.
“Supplier Supplied Materials” means any and all materials and documents the Intellectual Property Rights in which are owned by the Supplier or any other Supplier Group Company (or any third party licensor (other than the Customer) to any of the aforesaid) which are made available to the Supplier or any other Service Recipient by the Supplier for the purposes of this Agreement.
“Term” means the period commencing on the Completion Date and ending on expiry of the later of:
(a) | the last Service Term or on earlier termination of this Agreement; and |
(b) | the last expiration of the licenses granted in clause 21. |
“Third Party Consents” has the meaning given in clause 22.3.
“Third Party Contracts” has the meaning given in clause 22.3.
“Third Party Suppliers” has the meaning given in clause 22.3.
22
“Tradename Approvals” has the meaning given to it in clause 21.3(b).
“TSA Exit Plan” has the meaning given in clause 13.1.
Part 2 Interpretation
1 | In this Agreement any reference, express or implied, to an enactment (which includes any legislation in any jurisdiction) includes that enactment (and all subordinate legislation made under that enactment) as amended, extended or applied by or under any other enactment before, on or after the date of this Agreement. |
2In this Agreement:
2.1 | any reference to a person includes a body corporate, unincorporated, association of persons (including a partnership), government, state, agency, organisation, and any other entity whether or not having a separate legal personality and an individual, his estate and personal representatives; |
2.2 | subject to clause 22.1, any reference to the Supplier or the Customer includes a reference to the successors or assigns (immediate or otherwise) of that person; |
2.3 | any phrase introduced by the term including, include, in particular, for example or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms; |
2.4 | any reference importing a gender includes the other genders and words in the singular include the plural and in the plural include the singular; |
2.5 | any reference to writing includes typing, printing, lithography and photography and includes any form of Electronic Communication (as defined in the Electronic Communications Act 2000); and |
2.6 | clause, paragraph and Schedule headings do not affect the interpretation of this Agreement. |
3 | If there is any conflict or inconsistency between any of: a term in the main part of this Agreement; a term in any of the Schedules; and any term included in any other document incorporated by reference into this Agreement, the term falling into the category first appearing in the list above shall, unless expressly stated otherwise, take precedence. |
4 | The ejusdem generis rule does not apply to this Agreement. |
23
Schedule 2 Services
[***]
24
Schedule 3 Reverse Services
[***]
25
Schedule 4 Data protection and Sub-processors
1 | In this Schedule 4, the terms process, data controller, data processor and data subject shall have the meanings set out in the Data Protection Legislation. |
2 | The Parties shall each comply with their respective obligations under the Data Protection Legislation as regards the Customer Personal Data. The Parties agree that that the Customer shall be the data controller and the Supplier shall be a data processor of any of the Customer Personal Data. The Customer warrants that its instructions to the Supplier in respect of the Customer Personal Data are lawful. |
3 | Where the Customer provides Customer Personal Data to the Supplier pursuant to this Agreement, the Customer warrants that: |
3.1 | the Customer Personal Data was collected and has been subsequently processed in compliance with Data Protection Legislation, including providing relevant notices to data subjects; |
3.2 | at the time of sharing with the Supplier, the Customer Personal Data is accurate and up-to-date, and has not been processed for longer than is necessary for the purposes for which the Customer Personal Data are processed; and |
3.3 | the Customer has an appropriate lawful basis in accordance with Data Protection Legislation to provide the Supplier with that Customer Personal Data for the provision of the Services and that all necessary data subject consents have been lawfully obtained, and that records of those consents are accurate and up-to-date. |
4 | The Supplier shall: |
4.1 | only process the Customer Personal Data in accordance with the Customer’s documented instructions, including with regard to transfers, unless required to do otherwise by Applicable Law. In which event, the Supplier shall inform the Customer of the legal requirement before processing the Customer Personal Data other than in accordance with the Customer’s instructions, unless legally prohibited from doing so; |
4.2 | ensure that its personnel are subject to appropriate obligations of confidentiality; |
4.3 | taking into account the nature of the Services, provide reasonable assistance to the Customer, insofar as this is possible and at the Customer’s cost, for the fulfilment of the Customer’s obligations under Data Protection Legislation in respect of data security; data breach notification; data protection impact assessments; prior consultation with supervisory authorities; and the fulfilment of data subject’s rights; and |
4.4 | upon expiry or termination of this Agreement, upon the Customer’s request, return or delete the Customer Personal Data, and delete any existing copies in its possession unless required to retain such Customer Personal Data under Applicable Law. |
26
5 | The Customer consents to the Supplier engaging the persons set out in this Schedule 4 to process the Customer Personal Data on its behalf (Sub-processors). the Supplier shall ensure Sub-processors are subject to contractual obligations which are the same as or equivalent to those imposed on the Supplier under this Agreement. the Supplier shall inform the Customer of any intended changes concerning the addition or replacement of any Sub-processor within a reasonable time prior to the implementation of such change. In the event of the Customer objecting to such change, the Supplier shall make reasonable efforts to address the Customer’s concerns (including making reasonable efforts to find an alternative Sub-processor). the Supplier shall be responsible for the performance of its Sub-processors. |
6 | The Customer acknowledges and agrees that the Customer Personal Data may be processed by Sub-processors outside the European Economic Area or the country where the Customer is located in order to carry out the Services and the Customer’s other obligations under this Agreement. the Supplier shall implement a data transfer solution to ensure any such transfers are compliant with the Data Protection Legislation. |
7 | The Supplier shall use appropriate technical and organisational measures to protect the Customer Personal Data stored within infrastructure of the Supplier against unauthorised and unlawful processing and against accidental loss, destruction, disclosure, damage or alteration. The Customer agrees that it is solely responsible for determining whether such technical and organisational measures are appropriate, taking into account the nature, scope, context and purposes of the processing. |
8 | Upon written request, the Supplier shall make available to the Customer such information as is reasonably necessary to demonstrate compliance by the Supplier with its obligations under this Schedule 4. In addition, the Supplier agrees to permit an audit to be conducted of its facilities, by the Customer or the Customer’s representatives (bound by appropriate obligations of confidentiality), provided such an audit is carried out: |
8.1 | during the normal business hours of the Supplier; |
8.2 | in a manner that causes minimal disruption to the business of the Supplier and excludes from its scope any internal pricing information, information relating to other customers of the Supplier or the internal reports of the Supplier; |
8.3 | at the Customer’s own cost; and |
8.4 | no more than once in a calendar year. |
9 | The Supplier shall notify the Customer without undue delay and in any event within 48 hours of becoming aware of any accidental, unauthorised, or unlawful destruction, loss, alteration, or disclosure of, or access to, the Customer Personal Data (Security Breach). the Supplier shall provide the Customer with reasonable assistance in relation to the Security Breach, including the provision of such information as is known to the Supplier regarding the nature of the breach, the categories and approximate number of data subjects and records concerned. |
27
10 | The processing activities carried out by the Supplier under this Agreement may be described as follows: |
Subject matter: The provision of the Services.
Duration: The duration of the Services.
Nature and purpose: To enable the Supplier to provide the Services.
Data categories: Depending on the Services, data categories may include any of the following:
· | Employee data: name, title, gender, job title, date of birth, personal contact details (address, telephone number, email address), work contact details (telephone number, email address), employee number, personal data contained in meeting, telephone or attendance notes, bank details, national ID number, tax code, right to work or passport data, next of kin / emergency contact name and contact details, background checks; and/or |
· | Client and business partner data: name, title, gender, work address, work email, work telephone numbers, job title, interests / marketing list assignments, record of permissions or marketing objections, website data (including IP address, geo-location markers and browser generated information). |
Data subjects: Customer Group employees, former employees and workers. Clients, business partners and/or suppliers of Customer Group.
Sub-processors |
Intercept Pharma Europe Ltd |
Any additional Sub-processors agreed between the Parties as part of discussions under Section 3.6. |
11 | The processing activities carried out by the Customer under this Agreement may be described as follows: |
Subject matter: The provision of the Reverse Services.
Duration: The duration of the Reverse Services.
Nature and purpose: To enable the Supplier to provide the Reverse Services.
Data categories: Depending on the Reverse Services, data categories may include any of the following:
· | Employee data: name, title, gender, job title, date of birth, personal contact details (address, telephone number, email address), work contact details (telephone number, email address), employee number, personal data contained in meeting, telephone or attendance notes, bank |
28
details, national ID number, tax code, right to work or passport data, next of kin / emergency contact name and contact details, background checks; and/or
· | Client and business partner data: name, title, gender, work address, work email, work telephone numbers, job title, interests / marketing list assignments, record of permissions or marketing objections, website data (including IP address, geo-location markers and browser generated information). |
Data subjects: Supplier Group and retained personnel of Intercept Pharma Europe Ltd.
Sub-processors |
Any additional Sub-processors agreed between the Parties as part of discussions under Section 3.6. |
29
Signature page
30
Exhibit 10.7
[Certain identified information has been excluded from the exhibit because it is both not material and is the type that the registrant treats as private or confidential.]
MASTER TRADEMARK ASSIGNMENT AGREEMENT
This Master Trademark Assignment Agreement (this “Assignment”) is made and entered into effective as of May 5, 2022 (the “Execution Date”) and effective as of the Completion (as defined below) (the “Effective Date”) by and among Intercept Pharmaceuticals, Inc., a company incorporated in Delaware, and RXF Technologies, Inc., a company incorporated in Delaware (collectively, the “Sellers”), and Mercury Pharma Group Limited, a company incorporated in England (the “Purchaser”). The Sellers and the Purchaser are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, the Sellers are the sole and exclusive owners in the applicable jurisdiction of the Trademarks set forth on Schedule A attached hereto and made part hereof (collectively, the “Purchased Trademarks”); and
WHEREAS, in connection with (a) that certain Share Purchase Agreement, dated as of May 5, 2022 (the “Share Purchase Agreement”), by and among Intercept Pharmaceuticals, Inc., Intercept Pharmaceuticals LLC and the Purchaser, (b) that certain Sublicense Agreement, dated as of May 5, 2022 (the “Sublicense Agreement”), by and among Intercept Pharma Europe Ltd and the Purchaser, and (c) Intercept Pharma Europe Ltd. and Advanz Pharma Services (UK) Limited are entering into that certain Business Transfer Agreement as of the Execution Date whereby, upon the Completion Date, Licensee shall acquire the business of certain non-US subsidiaries of Intercept, the Purchaser wishes to acquire from the Sellers, and the Sellers wish to assign, transfer, convey and deliver to the Purchaser, the Purchased Trademarks.
NOW, THEREFORE, in consideration of the premises and the mutual promises and conditions hereinafter set forth and set forth in the Share Purchase Agreement and the other Ancillary Agreements, 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:
IN WITNESS WHEREOF, the undersigned have duly executed this Assignment as of the Execution Date.
| | | Intercept Pharmaceuticals, Inc. | |
| | | | |
| | | | |
| | | By: | /s/ Andrew Saik |
| | | Name: | Andrew Saik |
| | | Title: | Authorised Signatory |
| | | | |
| | | | |
| | | Mercury Pharma Group Limited | |
| | | | |
| | | By: | /s/ Andreas Stickler |
| | | Name: | Andreas Stickler |
| | | Title: | Director |
| | | | |
| | | | |
| | | RXF Technologies, Inc. | |
| | | | |
| | | By: | /s/ Rocco Venezia |
| | | Name: | Rocco Venezia |
| | | Title: | President |
Schedule A
Purchased Trademarks
[***]
Exhibit 10.8
[Certain identified information has been excluded from the exhibit because it is both not material and is the type that the registrant treats as private or confidential.]
Dated 26 July 2022
Deed of Amendment
to the Transitional Services Agreement dated 5 May 2022
This Deed is dated 26 July 2022 and made by:
| (1) | INTERCEPT PHARMACEUTICALS, INC, incorporated in Delaware with company number 3565213 whose registered office is at 305 Madison Avenue, Morristown, New Jersey 07960; and |
| (2) | ADVANZ PHARMA SERVICES (UK) LIMITED, a company incorporated and registered in England and Wales with number 04678629 which has its registered office at Capital House, 85 King William Street, London EC4N 7BL, |
together the “Parties”, and each a “Party”.
Whereas
| (A) | The Parties entered into a transitional services agreement dated 5 May 2022 (the “TSA”) which sets out, inter alia, the provision and use of Services and Reverse Services between the Parties (each as defined therein). |
| (B) | The Parties now wish to enter into this Deed to amend the TSA on the terms of this Deed. |
It is agreed as follows:
| 1. | Definitions and Interpretation |
Capitalised terms used in this Deed and not expressly defined herein shall bear their respective meanings in Part 1 of Schedule 1 to the TSA and shall be interpreted in accordance with Part 2 of Schedule 1 to the TSA.
| 2. | Amendment to TSA |
| 2.1 | With effect on and from the date hereof, the TSA shall be amended as follows: |
| (a) | Clause 5.1 of the TSA is deleted in its entirety and replaced with the following: |
5.1 | No change to the terms of this Agreement, except for any Regulatory Change, shall be effective unless agreed by the Parties in writing. A mutual agreement by the Parties will be required for all aspects of any requested change by either Party, including on any related implementation cost or changes to the Charges. Except for changes requested in accordance with clause 5.7, the Steering Committee will be responsible for dealing with, and agreeing on, requested changes. Any agreed changes shall be reflected in a written amendment to this Agreement. |
| (b) | Clause 5 of the TSA is amended by adding the following new clause 5.7 to the end of such clause to read as follows: |
5.7 | If, at any time during the applicable Service Term, Customer requires the Supplier to supply all or any part of the Services included in Schedule 3 of the TSA, then Customer shall provide a written request to the Supplier, giving a description of the required Services. Within two (2) days of receipt of Customer’s written request, Supplier shall, acting reasonably, provide to Customer a cost proposal based upon the estimated hours, the charging principles (if any) and the Charges included for the applicable Service in the Schedule 3 of the TSA. The Parties shall act reasonably and act in good faith with respect to agreeing to the Charges for the required Services. Upon acceptance and agreement of the Charges, Supplier shall |
provide the required Services on the terms and conditions set out in this Agreement and invoice the Customer for the Charges in accordance with clause 9.
| (c) | Clause 21.3 of the TSA is amended by adding the following new sub-clause (d) to the end of such clause to read as follows: |
(d) | Notwithstanding any other provision of this Agreement to the contrary, (i) Customer may continue to sell any inventory of Licensed PBC Products that are manufactured and marked with the Supplier Group Names and Marks prior to such Customer’s receipt of the relevant Product Approvals (including, for clarity, any works-in-process or products for which manufacturing and/or marking with the Supplier Group Names and Marks commenced prior to such Customer’s receipt of the relevant Product Approvals) (such Licensed PBC Products, the “Existing Inventory”); and (ii) Customer shall be required to arrange the recall, relabel, repackage, destroy, or otherwise modify any Existing Inventory of any Licensed PBC Products sold prior to the Customer’s receipt of the relevant Product Approvals. |
| (d) | Schedule 2 (Services) to the TSA shall be deleted in its entirety and replaced with Schedule 2 included as Appendix 1 to this Deed. |
| (e) | Schedule 3 (Reverse Services) to the TSA shall be deleted in its entirety and replaced with Schedule 3 included as Appendix 2 to this Deed. |
| 3. | Miscellaneous |
| 3.1 | The provisions of Clause 23 of the TSA shall apply to this Deed mutatis mutandis as if those provisions had been set out expressly in this Deed. |
| 3.2 | This Deed may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. |
[Signature Pages to follow]
Executed as deed by INTERCEPT PHARMACEUTICALS, INC. acting by Edward Mahaney-Walter, the Assistant Corporate Secretary and an authorized officer | | /s/ Edward Mahaney-Walter | ||
| …………………………….. | |||
| Assistant Corporate Secretary | |||
| | | and authorized officer | |
| | | | |
| | | /s/ Xin Mahaney-Walter | |
| | | ……………………………... | |
| | | Witness | |
| | | XIN MAHANEY-WALTER | |
| | | Address: | |
| | | [***] | |
| | | | |
Executed as a deed by ADVANZ PHARMA SERVICES (UK) LIMITED acting by Andreas Stickler, a director, and Vikram Kamath, a director | | /s/ Andreas Stickler | ||
| …………………………….. | |||
| Andreas Stickler | |||
| Director | |||
| | | ||
| | | /s/ Vikram Kamath | |
| | | ……………………………... | |
| | | Director | |
| | | Vikram Kamath | |
Appendix 2
Schedule 3 Reverse Services
[***]
Exhibit 10.9
Dated 1 July 2022
Deed of Amendment
relating to a Safety Data Exchange Agreement dated 5 May 2022
This Agreement is dated 1 July 2022 and made by:
| (1) | INTERCEPT PHARMACEUTICALS, INC., incorporated in Delaware with company number 3565213 whose registered office is at 305 Madison Avenue, Morristown, New Jersey 07960; and |
| (2) | MERCURY PHARMA GROUP LIMITED, a company incorporated in England with number 02330913 which has its registered office at Capital House, 85 King William Street, London, EC4N 7BL, |
together the “Parties”, and each a “Party”.
Whereas
| (A) | The Parties entered into a safety data exchange agreement dated 5 May 2022 (the “SDEA”) which describes, inter alia, the procedures and defines the responsibilities of the Parties with regard to pharmacovigilance related activities relating to the Product (as defined in a share purchase agreement between the Parties and dated 5 May 2022). |
| (B) | The Parties now wish to enter into this Agreement to amend and restate the SDEA on the terms of this Agreement. |
It is agreed as follows:
| 1. | Definitions and Interpretation |
Capitalised terms used in this Agreement and not expressly defined herein shall bear their respective meanings in the SDEA.
| 2. | Amendment to SDEA |
| 2.1 | Pursuant to Section 12.6 of the SDEA, each Party agrees that with effect on and from the date hereof, Section 2.1.2 of the SDEA shall be deleted in its entirety and replaced as follows: |
| (a) | Seller is the MAH for the Product in the U.S. Territory and retains the responsibility for the performance of pharmacovigilance obligations for the Product in the U.S. Territory and in the Ex-U.S. Territory during the Interim Closing Period and until the Ex-U.S. Authorisations have been transferred to Purchaser or a designated Third Party, not longer than a period of six (6) months (such time, the “Transfer Time”). |
| 2.2 | Except as set out in Clause 2.1 above, the SDEA shall continue in full force and effect. |
| 3. | Miscellaneous |
| 3.1 | The provisions of Section 12 of the SDEA shall apply to this Agreement mutatis mutandis as if those provisions had been set out expressly in this Agreement. |
| 3.2 | This Agreement may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. |
[Signature Pages to follow]
Executed as deed by INTERCEPT PHARMACEUTICALS, INC. acting by Edward Mahaney-Walter, the Assistant Corporate Secretary and an authorized officer | | /s/ Edward Mahaney-Walter | ||
| …………………………….. | |||
| | | Assistant Corporate Secretary | |
| | | and authorized officer | |
| | | | |
| | | /s/ Xin Mahaney-Walter | |
| | | ……………………………... | |
| | | Witness | |
| | | XIN MAHANEY-WALTER | |
| | | Address: | |
| | | [***] | |
| | | | |
Executed as deed by MERCURY PHARMA GROUP LIMITED acting by Andreas Stickler a director, and Vikram Kamath, a director | | /s/ Andreas Stickler | ||
| …………………………….. | |||
| | | Director | |
| | | | |
| | | /s/ Vikram Kamath | |
| | | ……………………………... | |
| | | Director | |
Exhibit 10.10
Dated 1 July 2022
Deed of Amendment
relating to the Share Purchase Agreement dated 5 May 2022
This Agreement is executed and delivered as a deed on 1 July 2022 by:
| (1) | INTERCEPT PHARMACEUTICALS, INC, incorporated in Delaware with company number 3565213 whose registered office is at 305 Madison Avenue, Morristown, New Jersey 07960; and |
| (2) | MERCURY PHARMA GROUP LIMITED, a company incorporated in England with number 02330913 which has its registered office at Capital House, 85 King William Street, London, EC4N 7BL, |
together the “Parties”, and each a “Party”.
Whereas
| (A) | The Parties entered into the share purchase agreement dated 5 May 2022 relating to certain non-US subsidiaries of the Seller (the “SPA”). |
| (B) | The Parties now wish to enter into this Agreement to amend and restate the SPA on the terms of this Agreement. |
It is agreed as follows:
| 1. | Definitions and Interpretation |
Capitalised terms used in this Agreement and not expressly defined herein shall bear their respective meanings in the SPA.
| 2. | Amendment to SPA |
| 2.1 | Pursuant to Clause 22.2 of the SPA, each Party agrees that with effect on and from the date hereof, Clause 15.4 of the SPA shall be deleted in its entirety and replaced as follows: |
| (a) | The Seller undertakes from Completion until the date on which Purchaser puts in place the Replacement Security (as defined below) (such date, the “Replacement Date”): |
| i. | to continue to provide cash collateral as security for the letters of credit issued pursuant to the Seller Group Guarantees Facility as at the date of this Agreement which benefit the Italian Target and/or the Spanish Target and/or the Portuguese Target (the “Relevant Letters of Credit”) for so long as such Relevant Letters of Credit remain outstanding; and |
| ii. | not to terminate the Seller Group Guarantees Facility, |
provided however that in the event of any Relevant Letter of Credit Expiring the Seller shall be under no obligation to provide collateral for any further letter of credit or replacement letter of credit. As Relevant Letters of Credit expire the Seller shall, subject to the terms of the Seller Group Guarantees Facility, be entitled to the return of any cash collateral provided as security for such Relevant Letter of Credit pursuant to the terms thereof.
| (b) | The Purchaser undertakes to: |
| i. | use its reasonable endeavours to replace the Relevant Letters of Credit with letters of credit or other similar facility which is reasonably acceptable to the relevant counterparties secured by the Relevant Letters of Credit or otherwise replace |
| Seller as the provider of security for such letters of credit (the “Replacement Security”) as soon as reasonably practicable following Completion; and |
| ii. | pay to the Seller’s Payment Account in US dollars by transfer of immediately available funds for same day value: |
| A. | interest pursuant to clause 15.4(c) below; |
| B. | an amount equal to any commissions, fees or expenses charged to the Seller pursuant to the Seller Group Guarantees Facility and/or the Relevant Letters of Credit; and |
| C. | in the event the Seller is required to reimburse any payment made to a beneficiary with respect to any Relevant Letter of Credit, the amount of such payment, |
in each case within 30 Business Days of receipt by the Purchaser of reasonable evidence of the obligation of the Seller in respect of the same.
| (c) | The Purchaser shall pay interest on the aggregate outstanding amount of cash collateral required by the Seller to support the Relevant Letters of Credit pursuant to the Seller Group Guarantees Facility (the “Cash Collateral”) until the earlier of (x) the Replacement Date and (y) the six-month anniversary of Completion (such date, the “Cash Collateralization Date”). Interest shall accrue from the date hereof at a per annum rate equal to the Applicable Margin (as defined below), in accordance with the following terms: |
| i. | Interest shall be payable on the last day of each calendar month, commencing with the first full calendar month ending after Completion, in arrears, and on the Replacement Date or the Cash Collateralization Date, as applicable, and shall be computed on the basis of 360 days for the actual number of days elapsed. In addition, whenever any amount of Cash Collateral is returned by HSBC Bank USA (“HSBC”) pursuant to the terms of the Seller Group Guarantees Facility to the Seller upon the expiration of any Relevant Letter of Credit or otherwise as set forth in the Seller Group Guarantees Facility, interest owed but unpaid on the amount of such Cash Collateral shall also be payable on such date of return of such Cash Collateral in accordance with the payment procedures set forth in the last sentence of clause 15.4(b) above. |
| ii. | For purposes of the foregoing, “Applicable Margin” shall mean (x) on or prior to the three-month anniversary of Completion, 5.00% and (y) after the three-month anniversary of Completion and on or prior to the Cash Collateralization Date, 6.50%. |
| (d) | Notwithstanding anything herein to the contrary, to the extent any Cash Collateral remains held by HSBC on the Cash Collateralization Date, the Purchaser shall pay to the Seller’s Payment Account in US dollars by transfer of immediately available funds for same day value an amount equal to the US dollar equivalent of such Cash Collateral held by HSBC on the Cash Collateralization Date. In addition, on the Cash Collateralization Date, interest owed but unpaid on the amount of such Cash Collateral shall also be payable on the Cash Collateralization Date in accordance with the payment procedures set forth in the last sentence of clause 15.4(b) above. |
| (e) | On or after the Cash Collateralization Date, in respect of each calendar month, whenever any amount of Cash Collateral is released by HSBC Bank USA pursuant to the terms of |
| the Seller Group Guarantees Facility to the Seller upon the expiration of any Relevant Letter of Credit or otherwise as set forth in the Seller Group Guarantees Facility, the Seller shall pay an amount equal to the US dollar equivalent of such returned Cash Collateral to the account notified by the Purchaser to the Seller at least three Business Days in advance, in US dollars by transfer of immediately available funds for same day value within 10 Business Days of the last day of such calendar month. |
| 2.2 | Except as set out in Clause 2.1 above, the SPA shall continue in full force and effect. |
| 3. | Miscellaneous |
| 3.1 | The provisions of Clauses 16 to 25 (inclusive) of the SPA shall apply to this Agreement mutatis mutandis as if those provisions had been set out expressly in this Agreement. |
| 3.2 | This Agreement may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. |
[Signature Pages to follow]
Executed as deed by INTERCEPT PHARMACEUTICALS, INC. acting by Andrew Saik as Chief Financial Officer and authorized officer, and Rocco Venezia as Chief Accounting Officer and authorized officer | | | ||
| | |||
| /s/ Andrew Saik ……………………………….. | |||
| Andrew Saik, Chief Financial | |||
| | | Officer and authorized officer | |
| | | | |
| | | | |
| | | /s/ Rocco Venezia | |
| | | ………………………………… | |
| | | Rocco Venezia, Chief | |
| | | Accounting Officer and | |
| | | authorized officer | |
Executed as deed by MERCURY PHARMA GROUP LIMITED acting by Andreas Stickler a director, and Vikram Kamath, a director | | /s/ Andreas Stickler | ||
| …………………………….. | |||
| | | Director | |
| | | | |
| | | /s/ Vikram Kamath | |
| | | ……………………………... | |
| | | Director | |
INTERCEPT PHARMACEUTICALS, INC.
AMENDED AND RESTATED EQUITY INCENTIVE PLAN
Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this Intercept Pharmaceuticals, Inc. Amended and Restated Equity Incentive Plan, have the following meanings:
Administrator means the Board of Directors, unless it has delegated power to act on its behalf to the Committee, in which case the Administrator means the Committee.
Affiliate means a corporation which, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect.
Agreement means an agreement between the Company and a Participant delivered pursuant to the Plan and pertaining to a Stock Right, in such form as the Administrator shall approve (and shall also include a notice from the Company to a Participant in the event the Administrator determines to utilize a notice rather than an agreement).
Board of Directors means the Board of Directors of the Company.
Cause shall mean (i) engaging in (A) willful or gross misconduct or (B) willful or gross neglect; (ii) repeatedly failing to adhere to the directions of superiors or the Board of Directors or the written policies and practices of the Company, or any Affiliate thereof; (iii) the commission of a felony or a crime of moral turpitude, dishonesty, breach of trust or unethical business conduct, or any crime involving the Company, or any Affiliate thereof; (iv) fraud, misappropriation or embezzlement; (v) a material breach of the Participant’s employment, non-competition, non-solicitation, invention, non-disclosure or similar material agreement with the Company or any Affiliate thereof; (vi) acts or omissions constituting a material failure to perform substantially the duties assigned to the Participant after demand for substantial performance is delivered by the Company or any Affiliate specifically identifying the manner in which the Company or an Affiliate believes the Participant has not substantially performed such duties; (vii) any illegal act detrimental to the Company or its Affiliates; or (viii) repeated failure to devote substantially all of Participant’s business time and efforts to the Company or an Affiliate if required by Participant’s employment agreement; provided, however, that, if at any particular time the Participant is subject to an effective employment agreement with the Company or an Affiliate, then, in lieu of the foregoing definition, “Cause” shall at that time have such meaning as may be specified in such employment agreement. The determination of the Administrator as to the existence of Cause will be conclusive on the Participant and the Company.
Code means the United States Internal Revenue Code of 1986, as amended including any successor statute, regulation and guidance thereto.
Committee means the Compensation Committee of the Board of Directors (or such other committee of the Board of Directors to which the Board of Directors has delegated power to act under or pursuant to the provisions of the Plan).
Common Stock means shares of the Company’s common stock, $0.001 par value per share.
Company means Intercept Pharmaceuticals, Inc., a Delaware corporation and, except where the context otherwise requires, any successor thereto.
Consultant means any natural person who is an advisor or consultant that provides bona fide services to the Company or its Affiliates, provided that such services are not in connection with the offer or sale of securities in a capital raising transaction, and do not directly or indirectly promote or maintain a market for the Company’s or its Affiliates’ securities.
Disability or Disabled means permanent and total disability as defined in Section 22(e)(3) of the Code.
Employee means any employee of the Company or of an Affiliate (including, without limitation, an employee who is also serving as an officer or director of the Company or of an Affiliate), designated by the Administrator to be eligible to be granted one or more Stock Rights under the Plan.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Fair Market Value of a Share of Common Stock means the closing price on the applicable date of the Common Stock on the national securities exchange on which the Common Stock is traded (or, if such applicable date is not a trading day, the last market trading day prior to such date) or, if not traded on a national exchange, the last price of the Common Stock on the composite tape or other comparable reporting system for the trading day on the applicable date and if such applicable date is not a trading day, the last market trading day prior to such date (or, if not available or applicable, the average between the last bid and ask, or such other value as determined by the Administrator in good faith).
ISO means an option intended to qualify as an incentive stock option under Section 422 of the Code.
Non-Qualified Option means an option which is not intended to or does not qualify as an ISO.
Option means an ISO or Non-Qualified Option granted under the Plan.
Participant means an Employee, director or Consultant of the Company or an Affiliate to whom one or more Stock Rights are granted under the Plan. As used herein, “Participant” shall include Participant’s Survivors where the context requires.
Plan means this Intercept Pharmaceuticals, Inc. Amended and Restated Equity Incentive Plan.
Predecessor Plan means the Intercept Pharmaceuticals, Inc. 2012 Equity Incentive Plan prior to this amendment and restatement.
Repricing means, with respect to an Option or stock appreciation right, a reduction of the exercise or strike price of the award, including pursuant to a cancellation and regrant or a cash payment in cancellation of the award in an amount exceeding the positive spread in the award at the time of such cancellation, but not including an adjustment effected pursuant to the provisions of Paragraph 24.
Securities Act means the Securities Act of 1933, as amended.
Shares means shares of the Common Stock as to which Stock Rights have been or may be granted under the Plan or any shares of capital stock into which the Shares are changed or for which they are exchanged within the provisions of Paragraph 3 of the Plan. The Shares issued under the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or both.
Stock-Based Award means a grant by the Company under the Plan of an equity award or an equity based award which is not an Option or a Stock Grant, such as a restricted stock unit award (RSU) or a performance restricted stock unit award (PSU).
Stock Grant means a grant by the Company of Shares under the Plan, such as a grant of restricted or unrestricted shares (RSAs) or performance restricted shares (PSAs).
Stock Right means a right to Shares or the value of Shares of the Company granted pursuant to the Plan — an ISO, a Non-Qualified Option, a Stock Grant or a Stock-Based Award.
Survivor means a deceased Participant’s legal representatives and/or any person or persons who acquired the Participant’s rights to a Stock Right by will or by the laws of descent and distribution.
The Plan is intended to encourage ownership of Shares by Employees and directors of and certain Consultants to the Company and its Affiliates in order to attract and retain such people, to induce them to work for the benefit of
the Company or of an Affiliate and to provide additional incentive for them to promote the success of the Company or of an Affiliate. The Plan provides for the granting of ISOs, Non-Qualified Options, Stock Grants and Stock-Based Awards.
The Administrator of the Plan will be the Board of Directors, except to the extent the Board of Directors delegates its authority to the Committee, in which case the Committee shall be the Administrator. Subject to the provisions of the Plan, the Administrator is authorized to:
provided, however, that all such interpretations, rules, determinations, terms and conditions shall be made and prescribed with the intention of not causing any adverse tax consequences under Section 409A of the Code and preserving the tax status under Section 422 of the Code of those Options which are designated as ISOs. Subject to the foregoing, the interpretation and construction by the Administrator of any provisions of the Plan or of any Stock Right granted under it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is the Committee. In addition, if the Administrator is the Committee, the Board of Directors may take any action under the Plan that would otherwise be the responsibility of the Committee.
To the extent permitted under applicable law, the Board of Directors or the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any portion of its responsibilities and powers to any other person selected by it. The Board of Directors or the Committee may revoke any such allocation or delegation at any time. Notwithstanding the foregoing, only the Board of Directors or the Committee shall be authorized to grant a Stock Right to any director of the Company or to any “officer” of the Company as defined by Rule 16a-1 under the Exchange Act.
The Administrator will, in its sole discretion, name the Participants in the Plan; provided, however, that each Participant must be an Employee, director or Consultant of the Company or of an Affiliate at the time a Stock Right is granted. Notwithstanding the foregoing, the Administrator may authorize the grant of a Stock Right to a person not then an Employee, director or Consultant of the Company or of an Affiliate; provided, however, that the actual grant of such Stock Right shall be conditioned upon such person becoming eligible to become a Participant at or prior to the time of the execution of the Agreement evidencing such Stock Right (for example, in the case of grants to newly hired Employees). ISOs may be granted only to Employees who are deemed to be residents of the United States for tax purposes. Non-Qualified Options, Stock Grants and Stock-Based Awards may be granted to any Employee, director or Consultant of the Company or an Affiliate. The granting of any Stock Right to any individual shall neither entitle that individual to, nor disqualify him or her from, participation in any other grant of Stock Rights or any grant under any other benefit plan established by the Company or any Affiliate for Employees, directors or Consultants.
Each Option shall be set forth in writing in an Option Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Administrator may provide that Options be granted subject to such terms and conditions, consistent with the terms and conditions specifically required under this Plan, as the Administrator may deem appropriate including, without limitation, subsequent approval by the shareholders of the Company of this Plan or any amendments thereto, and vesting and exercise conditions. The Option Agreements shall be subject to at least the following terms and conditions:
| (i) | Exercise Price: Each Option Agreement shall state the exercise price (per share) of the Shares covered by each Option, which exercise price shall be determined by the Administrator and shall be at least equal to the Fair Market Value per share of Common Stock on the date of grant of the Option. |
| (ii) | Number of Shares: Each Option Agreement shall state the number of Shares to which it pertains. |
| (iii) | Option Periods: Each Option Agreement shall state the date or dates on which it first is exercisable and the date after which it may no longer be exercised, and may provide that the Option rights accrue or become exercisable in installments over a period of months or years, or upon the occurrence of certain conditions or the attainment of stated goals or events. |
| (iv) | Option Conditions: Exercise of any Option may be conditioned upon the Participant’s execution of a Share purchase agreement in form satisfactory to the Administrator providing for certain protections for the Company and its other shareholders, including requirements that: |
| (A) | The Participant’s or the Participant’s Survivors’ right to sell or transfer the Shares may be restricted; and |
| (B) | The Participant or the Participant’s Survivors may be required to execute letters of investment intent and must also acknowledge that the Shares will bear legends noting any applicable restrictions. |
| (v) | Term of Option: Each Option shall terminate not more than ten years from the date of the grant or at such earlier time as the Option Agreement may provide. |
| (i) | Minimum standards: The ISO shall meet the minimum standards required of Non-Qualified Options, as described in Paragraph 6(a) above, except that clauses (i) and (v) thereunder are modified by this Paragraph 6(b). |
| (ii) | Exercise Price: Immediately before the ISO is granted, if the Participant owns, directly or by reason of the applicable attribution rules in Section 424(d) of the Code: |
| (A) | 10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, the exercise price per share of the Shares covered by each ISO shall not be less than 100% of the Fair Market Value per share of the Common Stock on the date of grant of the Option; or |
| (B) | More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, the exercise price per share of the Shares covered by each ISO shall not be less than 110% of the Fair Market Value per share of the Common Stock on the date of grant of the Option. |
| (iii) | Term of Option: For Participants who own: |
| (A) | 10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than ten years from the date of the grant or at such earlier time as the Option Agreement may provide; or |
| (B) | More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than five years from the date of the grant or at such earlier time as the Option Agreement may provide. |
| (iv) | Limitation on Yearly Exercise: The Option Agreements shall restrict the amount of ISOs which may become exercisable in any calendar year (under this or any other ISO plan of the Company or an Affiliate) so that the aggregate Fair Market Value (determined on the date each ISO is granted) of the stock with respect to which ISOs are exercisable for the first time by the Participant in any calendar year does not exceed $100,000. |
Each Stock Grant to a Participant shall state the principal terms in an Agreement duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, including any applicable vesting conditions, subject to the following minimum standards:
The Administrator shall have the right to grant other Stock-Based Awards based upon the Common Stock having such terms and conditions as the Administrator may determine, including, without limitation, the grant of Shares based upon certain conditions, the grant of securities convertible into Shares and the grant of stock appreciation rights, phantom stock awards or stock units. The principal terms of each Stock-Based Award shall be set forth in an Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, including any applicable vesting conditions.
The Company intends that the Plan and any Stock-Based Awards granted hereunder be exempt from or comply with the requirements of Section 409A of the Code, to the extent applicable, and be operated in accordance with Section 409A so that any compensation deferred under any Stock-Based Award (and applicable investment earnings) shall not be included in income under Section 409A of the Code. Any ambiguities in the Plan shall be construed to effect the intent as described in this Paragraph 8.
An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company or its designee (in a form acceptable to the Administrator, which may include electronic notice), together with provision for payment of the aggregate exercise price in accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon compliance with any other condition(s) set forth in the Option Agreement. Such notice shall be signed by the person exercising the Option (which signature may be provided electronically in a form acceptable to the Administrator), shall state the number of Shares with respect to which the Option is being exercised and shall contain any representation required by the Plan or the Option Agreement. Payment of the exercise price for the Shares as to which such Option is being exercised shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months (if required to avoid negative accounting treatment) having a Fair Market Value equal as of the date of the exercise to the aggregate cash exercise price for the number of Shares as to which the Option is being exercised, or (c) at the discretion of the Administrator, by having the Company retain from the Shares otherwise issuable upon exercise of the Option, a number of Shares having a Fair Market Value equal as of the date of exercise to the aggregate exercise price for the number of Shares as to which the Option is being exercised, or (d) at the discretion of the Administrator,
in accordance with a cashless exercise program established with a securities brokerage firm, and approved by the Administrator, or (e) at the discretion of the Administrator, by any combination of (a), (b), (c) and (d) above or (f) at the discretion of the Administrator, by payment of such other lawful consideration as the Administrator may determine. Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422 of the Code.
The Company shall then reasonably promptly deliver the Shares as to which such Option was exercised to the Participant (or to the Participant’s Survivors, as the case may be). In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance. The Shares shall, upon delivery, be fully paid, non-assessable Shares.
Any Stock Grant or Stock-Based Award requiring payment of a purchase price for the Shares as to which such Stock Grant or Stock-Based Award is being granted shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months (if required to avoid negative accounting treatment) and having a Fair Market Value equal as of the date of payment to the purchase price of the Stock Grant or Stock-Based Award, or (c) at the discretion of the Administrator, by any combination of (a) and (b) above; or (d) at the discretion of the Administrator, by payment of such other lawful consideration as the Administrator may determine.
The Company shall when required by the applicable Agreement, reasonably promptly deliver the Shares as to which such Stock Grant or Stock-Based Award was made to the Participant (or to the Participant’s Survivors, as the case may be), subject to any escrow provision set forth in the applicable Agreement. In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance.
No Participant to whom a Stock Right has been granted shall have rights as a shareholder with respect to any Shares covered by such Stock Right except after due exercise of an Option or issuance of Shares as set forth in any Agreement, tender of the aggregate exercise or purchase price, if any, for the Shares being purchased and registration of the Shares in the Company’s share register in the name of the Participant.
By its terms, a Stock Right granted to a Participant shall not be transferable by the Participant other than (i) by will or by the laws of descent and distribution, or (ii) as approved by the Administrator in its discretion (other than with respect to an ISO) and set forth in the applicable Agreement; provided that no Stock Right may be transferred by a Participant for value. The designation of a beneficiary of a Stock Right by a Participant, with the prior approval of the Administrator and in such form as the Administrator shall prescribe, shall not be deemed a transfer prohibited by this Paragraph. Except as provided above during the Participant’s lifetime a Stock Right shall only be exercisable by or issued to such Participant (or his or her legal representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of any Stock Right or of any rights granted thereunder contrary to the provisions of this Plan, or the levy of any attachment or similar process upon a Stock Right, shall be null and void.
Except as otherwise provided in a Participant’s Option Agreement, in the event of a termination of service (whether as an Employee, director or Consultant) with the Company or an Affiliate before the Participant has exercised an Option, the following rules apply:
Except as otherwise provided in a Participant’s Option Agreement, the following rules apply if the Participant’s service (whether as an Employee, director or Consultant) with the Company or an Affiliate is terminated for Cause prior to the time that all his or her outstanding Options have been exercised:
Except as otherwise provided in a Participant’s Option Agreement:
| (i) | To the extent that the Option has become exercisable but has not been exercised on the date of the Participant’s termination of service due to Disability; and |
| (ii) | In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion of the vesting period through the date of Disability. |
Except as otherwise provided in a Participant’s Option Agreement:
| (i) | To the extent that the Option has become exercisable but has not been exercised on the date of death; and |
| (ii) | In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion of the elapsed vesting period through the date of death. |
In the event of a termination of service (whether as an Employee, director or Consultant) with the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant or a Stock-Based Award and paid the purchase price, if required, such grant shall terminate.
For purposes of this Paragraph 17 and Paragraph 18 below, a Participant to whom a Stock Grant has been issued under the Plan who is absent from work with the Company or with an Affiliate because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide.
In addition, for purposes of this Paragraph 17 and Paragraph 18 below, any change of employment or other service within or among the Company and any Affiliates shall not be treated as a termination of employment, director status or consultancy so long as the Participant continues to be an Employee, director or Consultant of the Company or any Affiliate.
Except as otherwise provided in a Participant’s Stock Grant Agreement, in the event of a termination of service (whether as an Employee, director or Consultant), other than termination for Cause, Disability, or death for which events there are special rules in Paragraphs 19, 20, and 21, respectively, before all forfeiture provisions or Company rights of repurchase shall have lapsed, then such forfeiture or repurchase provisions shall apply.
Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply if the Participant’s service (whether as an Employee, director or Consultant) with the Company or an Affiliate is terminated for Cause:
Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply if a Participant ceases to be an Employee, director or Consultant of the Company or of an Affiliate by reason of Disability: to the extent the forfeiture provisions or the Company’s rights of repurchase have not lapsed on the date of Disability such forfeiture provisions or rights of repurchase shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant through the date of Disability with such proration being based upon the portion of the applicable vesting period prior to the date of Disability.
The Administrator shall make the determination both as to whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.
Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply in the event of the death of a Participant while the Participant is an Employee, director or Consultant of the Company or of an Affiliate: to the extent the forfeiture provisions or the Company’s rights of repurchase have not lapsed on the date of death, such forfeiture provisions or rights of repurchase shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant through the date of death, with such pro-ration being based on the portion of the applicable vesting period elapsed prior to the Participant’s date of death.
Unless the offering and sale of the Shares shall have been effectively registered under the Securities Act, the Company shall be under no obligation to issue Shares under the Plan unless and until the following conditions have been fulfilled:
“The shares represented hereby have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.”
Upon the dissolution or liquidation of the Company, all Options granted under this Plan which as of such date shall not have been exercised and all Stock Grants and Stock-Based Awards which have not been accepted, to the extent required under the applicable Agreement, will terminate and become null and void; provided, however, that if the rights of a Participant or a Participant’s Survivors have not otherwise terminated and expired, the Participant or the Participant’s Survivors will have the right immediately prior to such dissolution or liquidation to exercise or accept any Stock Right to the extent that the Stock Right is exercisable or subject to acceptance as of the date immediately prior to such dissolution or liquidation. Upon the dissolution or liquidation of the Company, any outstanding Stock-Based Awards shall immediately terminate unless otherwise determined by the Administrator or specifically provided in the applicable Agreement.
Upon the occurrence of any of the following events, a Participant’s rights with respect to any Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in a Participant’s Agreement:
With respect to outstanding Stock Grants, the Administrator or the Successor Board, shall make appropriate provision for the continuation of such Stock Grants on the same terms and conditions by substituting on an equitable basis for the Shares then subject to such Stock Grants either the consideration payable with respect to the outstanding Shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity. In lieu of the foregoing, in connection with any Corporate Transaction, the Administrator may provide that, upon consummation of the Corporate Transaction, each outstanding Stock Grant shall be terminated in exchange for payment of an amount equal to the consideration payable upon consummation of such Corporate Transaction to a holder of the number of shares of Common Stock comprising such Stock Grant (to the extent such Stock Grant is no longer subject to any forfeiture or repurchase rights then in effect or, at the discretion of the Administrator, all forfeiture and repurchase rights being waived upon such Corporate Transaction).
In taking any of the actions permitted under this Paragraph 24(b), the Administrator shall not be obligated by the Plan to treat all Stock Rights, all Stock Rights held by a Participant, or all Stock Rights of the same type, identically.
Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to Stock Rights. Except as expressly provided herein, no adjustments shall be made for ordinary dividends paid in cash prior to any issuance of Shares pursuant to a Stock Right.
No fractional shares shall be issued under the Plan and the person exercising a Stock Right shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market Value thereof.
The Administrator, at the written request of any Participant, may in its discretion take such actions as may be necessary to convert such Participant’s ISOs (or any portions thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the Participant is an Employee of the Company or an Affiliate at the time of such conversion. At the time of such conversion, the Administrator (with the consent of the Participant) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Administrator in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give any Participant the right to have such Participant’s ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Administrator takes appropriate action. The Administrator, with the consent of the Participant, may also terminate any portion of any ISO that has not been exercised at the time of such conversion.
In the event that any federal, state, or local income taxes, employment taxes, Federal Insurance Contributions Act withholdings or other amounts are required by applicable law or governmental regulation to be withheld in connection with the issuance of a Stock Right or Shares under the Plan or for any other reason required by law, the Company may withhold from the Participant’s compensation, if any, or may require that the Participant advance in cash to the Company, or to any Affiliate of the Company which employs or employed the Participant, the required amount of such withholdings unless a different withholding arrangement, including the use of shares of the Company’s Common Stock or a promissory note, is authorized by the Administrator (and permitted by law). For purposes hereof, the fair market value of the shares withheld for purposes of payroll withholding shall be determined in the manner set forth under the definition of Fair Market Value provided in Paragraph 1 above, as of the most recent practicable date prior to the date of exercise or delivery. If the Fair Market Value of the shares withheld is less than the amount of payroll withholdings required, the Participant will be required to pay the difference in cash to the Company or the Affiliate employer.
Each Employee who receives an ISO must agree to notify the Company in writing immediately after the Employee makes a Disqualifying Disposition of any Shares acquired pursuant to the exercise of an ISO. A “Disqualifying Disposition” is defined in Section 424(c) of the Code and includes any disposition (including any sale or gift) of such Shares before the later of (a) two years after the date the Employee was granted the ISO, or (b) one year after the date the Employee acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code. If the Employee has died before such Shares are sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.
The Plan will terminate on May 25, 2032. The Plan may be terminated at an earlier date by the Board of Directors; provided, however, that any such earlier termination shall not affect any Agreements executed prior to the effective date of such termination. Termination of the Plan shall not affect any Stock Rights theretofore granted.
The Plan may be amended by the Administrator. Any amendment approved by the Administrator which the Administrator determines requires shareholder approval shall be subject to obtaining such shareholder approval. Any modification or amendment of the Plan shall not, without the consent of a Participant, adversely affect his or her rights under a Stock Right previously granted to him or her. With the consent of the Participant affected, the Administrator may amend outstanding Agreements in a manner which may be adverse to the Participant but which is not inconsistent with the Plan. In the discretion of the Administrator, outstanding Agreements may be amended by the Administrator in a manner which is not adverse to the Participant.
Nothing in this Plan or any Agreement shall be deemed to prevent the Company or an Affiliate from terminating the employment, consultancy or director status of a Participant, nor to prevent a Participant from
terminating his or her own employment, consultancy or director status or to give any Participant a right to be retained in employment or other service by the Company or any Affiliate for any period of time.
This Plan shall be construed and enforced in accordance with the law of the State of Delaware.
Option No. /$GrantID$/
INTERCEPT PHARMACEUTICALS, INC.
AMENDED AND RESTATED EQUITY INCENTIVE PLAN
STOCK OPTION GRANT
Stock Option Grant Notice (Employees and Consultants)
Intercept Pharmaceuticals, Inc. (the “Company”) hereby grants to the participant named below (the “Participant”) an option of the type specified below (this “Option”) to purchase up to the number of shares of the Company’s common stock, par value $0.001 per share (the “Shares”), set forth below at the exercise price set forth below. This Option is subject to all of the terms and conditions set forth in this Stock Option Grant Notice (this “Grant Notice”), the Intercept Pharmaceuticals, Inc. Amended and Restated Equity Incentive Plan (the “Plan”) and the Stock Option Agreement attached hereto (the “Agreement”). Capitalized terms not defined in this Grant Notice but defined in the Agreement or the Plan will have the meanings assigned to such terms in the Agreement or the Plan, as applicable. Except as expressly provided in the Agreement, in the event of any conflict between the provisions of this Grant Notice or the Agreement and those of the Plan, the provisions of the Plan will control.
/$ParticipantAddress$/
/$VestingSchedule$/
See Section 1(b) of the Agreement for vesting in the event of a Change of Control (as defined in the Agreement). The foregoing vesting provisions are cumulative and are subject to the other terms and conditions of the Agreement and the Plan.
By accepting this Option, whether electronically or otherwise, the Participant acknowledges receipt of, and understands and agrees to, this Grant Notice, the Agreement and the Plan. Unless otherwise specified in a written agreement between the Company and the Participant, this Grant Notice, the Agreement and the Plan set forth the entire understanding between the Participant and the Company regarding this Option and supersede all prior oral and written agreements on the terms of this Option.
INTERCEPT PHARMACEUTICALS, INC.
AMENDED AND RESTATED EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
Pursuant to the Stock Option Grant Notice to which this agreement is attached (the “Grant Notice”) and this Stock Option Agreement (this “Agreement”), Intercept Pharmaceuticals, Inc. (the “Company”) has granted to the participant named in the Grant Notice (the “Participant”) an option of the type specified in the Grant Notice (this “Option”), under and for the purposes set forth in the Intercept Pharmaceuticals, Inc. Amended and Restated Equity Incentive Plan (the “Plan”), to purchase up to the number of shares of the Company’s common stock, par value $0.001 per share (the “Shares”), indicated in the Grant Notice at the exercise price indicated in the Grant Notice (as may be adjusted from time to time in accordance with this Agreement and the Plan, the “Exercise Price”). Capitalized terms not defined in this Agreement or in the Grant Notice but defined in the Plan will have the meanings assigned to such terms in the Plan.
The terms and conditions of this Option, in addition to those set forth in the Grant Notice and the Plan, are as follows:
1.EXERCISABILITY OF OPTION.
(a)Subject to the terms and conditions set forth in this Agreement and the Plan, this Option shall become vested and exercisable as set forth in the Grant Notice. This Option shall continue to vest and become exercisable in accordance with its terms for so long as the Participant is an Employee, director or Consultant of the Company or an Affiliate.
(b)Notwithstanding the foregoing, except to the extent specifically provided to the contrary in any employment agreement between the Participant and the Company or an Affiliate, in the event of (i) a Change of Control (as defined below) and the Participant’s service with the Company, the acquiring or succeeding corporation or any Affiliate of any of the foregoing is terminated by such entity for any reason other than for Cause within 12 months of the Change of Control, then, immediately prior to such termination, this Option, to the extent then-outstanding, shall become fully vested and exercisable, or (ii) a Corporate Transaction (as defined in Section 24(b) of the Plan) that is a Change of Control in which the acquiring entity does not assume this Option, then, immediately prior to the Change of Control, this Option, to the extent then-outstanding, shall become fully vested and exercisable.
For purposes of this Agreement, “Change of Control” means the occurrence of any of the following events:
(i)Ownership. Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then-outstanding voting securities (excluding for this purpose any such voting securities held by the Company or its Affiliates or any employee benefit plan of the Company); or
(ii)Merger/Sale of Assets. (A) A merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (B) the sale or disposition by the Company of all or substantially all of the Company’s assets in a transaction requiring stockholder approval; or
(iii)Change in Board Composition. A change in the composition of the Board of Directors, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors”
shall mean directors who either (A) are directors of the Company as of the date of grant, or (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company).
2. | TERM OF OPTION. |
This Option shall terminate on the Option Expiration Date specified in the Grant Notice (provided, that if this Option is designated in the Grant Notice as an ISO and the Participant owns as of the date of grant of this Option more than 10% of the total combined voting power of all classes of capital stock of the Company or an Affiliate, such date may not be more than five years from the date of grant of this Option), but shall be subject to earlier termination as provided herein or in the Plan.
If the Participant ceases to be an Employee, director or Consultant of the Company or an Affiliate for any reason other than the termination of the Participant for Cause (the date of such cessation of service, the “Termination Date”), this Option, to the extent then vested and exercisable, and not previously terminated in accordance with this Agreement, may be exercised by the Participant or, as applicable, the Participant’s Survivors on or prior to the earliest of the following:
The unvested portion of this Option shall not be exercisable and shall expire and be cancelled on the Termination Date; provided, that, in the event that the Participant ceases to be an Employee, director or Consultant of the Company or an Affiliate due to the Disability or death of the Participant, and rights to exercise this Option accrue periodically, a pro rata portion of any additional vesting rights that would have accrued on the next vesting date had the Participant not become Disabled or died shall vest and become exercisable as of the Termination Date. Such proration shall be based upon the number of days accrued in the current vesting period prior to the date of the Participant’s termination of service due to Disability or death.
If the Participant ceases to be an Employee of the Company or an Affiliate but continues after termination of employment to provide services to the Company or an Affiliate as a director or Consultant, this Option shall continue to vest and become exercisable until the Participant is no longer providing services to the Company or an Affiliate as set forth above; provided, that if this Option is designated in the Grant Notice as an ISO, it shall automatically convert and be deemed a Non-Qualified Option as of the date that is three months from termination of the Participant’s employment.
In the event the Participant’s service is terminated by the Company or an Affiliate for Cause, the Participant’s right to exercise any unexercised portion of this Option (even if vested) shall cease immediately as of the time the Participant is notified his or her service is terminated for Cause, and this Option shall thereupon terminate. Notwithstanding anything herein to the contrary, if subsequent to the Participant’s termination, but prior to the exercise of this Option, the Administrator determines that, either prior or subsequent to the Participant’s termination, the
Participant engaged in conduct which would constitute Cause, then the Participant shall immediately cease to have any right to exercise this Option and this Option shall thereupon terminate.
3.METHOD OF EXERCISING OPTION.
Subject to the terms and conditions of this Agreement, this Option may be exercised by written notice to the Company or its designee (in a form designated by the Company, which may include electronic notice) stating the number of Shares with respect to which this Option is being exercised. Payment of the Exercise Price for such Shares shall be made in accordance with Paragraph 9 of the Plan. The Company shall deliver such Shares as soon as practicable after the notice shall be received, provided, however, that the Company may delay issuance of such Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including, without limitation, state securities or “blue sky” laws). The Shares as to which this Option shall have been so exercised shall be registered in the Company’s share register in the name of the person so exercising this Option (or, if this Option shall be exercised by the Participant and if the Participant shall so request in the notice exercising this Option, shall be registered in the Company’s share register in the name of the Participant and another person jointly, with right of survivorship) and shall be delivered as provided above to or upon the written order of the person exercising this Option. In the event this Option shall be exercised, pursuant to Section 2 hereof, by any person other than the Participant, such notice shall be accompanied by appropriate proof of the right of such person to exercise this Option. All Shares that shall be purchased upon the exercise of this Option as provided herein shall be fully paid and nonassessable.
4. | PARTIAL EXERCISE. |
Exercise of this Option to the extent above stated may be made in part at any time and from time to time within the above limits, except that no fractional share shall be issued pursuant to this Option.
5. | PROHIBITIONS ON TRANSFER. |
This Option shall not be transferable by the Participant otherwise than by will or by the laws of descent and distribution. If this Option is a Non-Qualified Option then it may also be transferred pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act or the rules thereunder. Except as provided above in this Section 5, this Option shall be exercisable during the Participant’s lifetime only by the Participant (or, in the event of legal incapacity or incompetency, by the Participant’s guardian or representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of this Option or of any rights granted hereunder contrary to the provisions of this Section 5, or the levy of any attachment or similar process upon this Option shall be null and void.
6. | NO RIGHTS AS STOCKHOLDER. |
The Participant shall have no rights as a stockholder with respect to Shares subject to this Option until registration of the Shares in the Company’s share register in the name of the Participant. Except as is expressly provided in the Plan with respect to certain changes in the capitalization of the Company, no adjustment shall be made for dividends or similar rights for which the record date is prior to the date of such registration.
7. |
This Option, including the number of Shares subject to this Option and the Exercise Price, shall be subject to adjustment from time to time as provided for in the Plan upon the occurrence of certain events described therein.
TAXES. |
The Participant acknowledges that any income or other taxes due from him or her with respect to this Option or the Shares issuable pursuant to this Option shall be the Participant’s responsibility. The Participant acknowledges and agrees that (i) the Participant was free to use professional advisors of his or her choice in connection with his or her acceptance of this Option, has received advice from his or her professional advisors in connection with his or her
acceptance of this Option, understands its meaning and import, and has accepted this Option freely and without coercion or duress; (ii) the Participant has not received and is not relying upon any advice, representations or assurances made by or on behalf of the Company or any Affiliate or any employee of or counsel to the Company or any Affiliate regarding any tax or other effects or implications of this Option, the Shares subject to this Option or other matters contemplated hereby; and (iii) neither the Administrator, the Company, its Affiliates, nor any of its or their officers or directors, shall be held liable for any applicable costs, taxes, or penalties associated with this Option if, in fact, the Internal Revenue Service were to determine that this Option constitutes deferred compensation under Section 409A of the Code.
The Participant agrees that the Company may withhold from the Participant’s remuneration, if any, the amount of federal, state and local withholding taxes attributable to such amount that is considered compensation includable in such person’s gross income in connection with the exercise of this Option and, as a condition to the exercise of this Option, the Participant shall make arrangements satisfactory to the Company to enable it to satisfy all such withholding requirements. Without limiting the generality of the foregoing, at the Company’s discretion, the amount required to be withheld may be withheld in cash from such remuneration, or in kind from the Shares otherwise deliverable to the Participant on exercise of this Option. The Participant further agrees that, to the extent the Company does not withhold an amount from the Participant’s remuneration sufficient to satisfy the Company’s income tax withholding obligation, the Participant will reimburse the Company on demand, in cash, for the amount under-withheld.
9.SECURITIES LAWS COMPLIANCE.
The Participant specifically acknowledges and agrees that this Option and any delivery of Shares hereunder shall be subject to compliance with the requirements of the Securities Act and other applicable securities laws, rules or regulations. In addition, applicable securities laws, rules or regulations may restrict the ability of the Participant to resell Shares delivered hereunder, including due to the Participant’s affiliation with the Company. The Company shall not be obligated to issue the Shares if such issuance would violate any applicable securities law, rule or regulation.
10. | NO OBLIGATION TO MAINTAIN RELATIONSHIP. |
The Participant acknowledges that: (i) the Company is not by the Plan or this Option obligated to continue the Participant as an Employee, director or Consultant of the Company or an Affiliate; (ii) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (iii) the grant of this Option is a one-time benefit which does not create any contractual or other right to receive future grants of options, or benefits in lieu of options; (iv) all determinations with respect to future grants, if any, will be at the sole discretion of the Company; (v) the Participant’s participation in the Plan is voluntary; (vi) the value of this Option is an extraordinary item of compensation which is outside the scope of the Participant’s employment or consulting contract, if any; and (vii) this Option is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
11. | IF OPTION IS INTENDED TO BE AN ISO. |
If this Option is designated in the Grant Notice as an ISO, the Participant (or the Participant’s Survivors) may qualify for the favorable tax treatment provided to holders of options that meet the standards of Section 422 of the Code and any provision of this Option or the Plan which conflicts with the Code such that this Option would not be deemed an ISO shall be null and void, and any ambiguities shall be resolved so that this Option qualifies as an ISO. The Participant should consult with the Participant’s own tax advisors regarding the tax effects of this Option and the requirements necessary to obtain favorable tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements.
Notwithstanding the foregoing, to the extent that this Option is designated in the Grant Notice as an ISO, but would be deemed not to be an ISO pursuant to Section 422(d) of the Code because the Fair Market Value (determined as of the date of grant of this Option) of Shares with respect to which this Option becomes exercisable for the first time during any calendar year, when aggregated with the Fair Market Values (determined as of the respective dates of grant of such ISOs) of Shares with respect to which all other ISOs granted to the Participant become exercisable for
the first time during such calendar year, exceeds $100,000, the portion of this Option representing such excess value shall be treated as a Non-Qualified Option (applied pro-rata over all vesting tranches of this Option in the applicable calendar year) and upon exercise the Participant shall have taxable income measured by the difference between the then Fair Market Value of the Shares received upon exercise and the price paid for such Shares pursuant to this Option.
Neither the Company nor any Affiliate shall have any liability to the Participant, or any other party, if this Option (or any part thereof) is intended to be an ISO but is deemed not to be an ISO or for any action taken by the Administrator, including without limitation the conversion of an ISO to a Non-Qualified Option.
12. | NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION OF AN ISO. |
If this Option is designated in the Grant Notice as an ISO, the Participant agrees to notify the Company in writing immediately after the Participant makes a Disqualifying Disposition of any of the Shares acquired pursuant to the exercise of this Option. A “Disqualifying Disposition” is defined in Section 424(c) of the Code and includes any disposition (including any sale) of such Shares before the later of (a) two years after the date the Participant was granted the ISO or (b) one year after the date the Participant acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code. If the Participant has died before the Shares are sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.
13. |
Any notices required or permitted by the terms of this Agreement or the Plan shall be given by recognized courier service, registered or certified mail, return receipt requested, addressed as follows:
If to the Company:
Intercept Pharmaceuticals, Inc.
305 Madison Avenue
Morristown, NJ 07960
Attention: General Counsel
If to the Participant at the address set forth on the Grant Notice or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given upon the earlier of receipt, one business day following delivery to a recognized courier service or three business days following mailing by registered or certified mail.
The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan and this Option by electronic means. By accepting this Option, whether electronically or otherwise, the Participant consents to receive such documents by electronic delivery and to participate in the Plan through an online or electronic system established and maintained by the Company or another third party designated by the Company.
GOVERNING LAW. |
The Grant Notice and this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under the Grant Notice, this Agreement or the Plan, each of the Company and, by accepting this Option, whether electronically or otherwise, the Participant hereby consents to exclusive jurisdiction in New York and agrees that such litigation shall be conducted in the state courts of New York County, New York or the federal courts of the United States for the District of the Southern District of New York.
15. | BENEFIT OF AGREEMENT. |
Subject to the provisions of the Plan and the other provisions hereof, the Grant Notice and this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.
16. | ENTIRE AGREEMENT. |
The Grant Notice and this Agreement, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in the Grant Notice or this Agreement shall affect or be used to interpret, change or restrict the express terms and provisions of the Grant Notice or this Agreement; provided, however, in any event, the Grant Notice and this Agreement shall be subject to and governed by the Plan. This Option is subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. In addition, this Option (and any compensation paid or shares issued pursuant to this Option) is subject to recoupment in accordance with The Dodd-Frank Wall Street Reform and Consumer Protection Act and any implementing regulations thereunder, any clawback policy adopted by the Company and any compensation recovery policy otherwise required by applicable law.
17. | MODIFICATIONS AND AMENDMENTS. |
The terms and provisions of the Grant Notice and this Agreement may be modified or amended as provided in the Plan.
18. | WAIVERS AND CONSENTS. |
Except as provided in the Plan, the terms and provisions of the Grant Notice and this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of the Grant Notice or this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.
19.DATA PRIVACY.
By accepting this Option, whether electronically or otherwise, the Participant: (i) authorizes the Company and each Affiliate, and any agent of the Company or any Affiliate administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of its Affiliates such information and data as the Company or any such Affiliate shall request in order to facilitate the grant of options and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information or the sharing of such information; and (iii) authorizes the Company and each Affiliate to store and transmit such information in electronic form for the purposes set forth in the Grant Notice and this Agreement.
20.SEVERABILITY.
If all or any part of the Grant Notice, this Award Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of the Grant Notice, this Award Agreement or the Plan not declared to be unlawful or invalid. Any section of the Grant Notice, this Award Agreement or the Plan (or part of such a section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such section or part of a section to the fullest extent possible while remaining lawful and valid.
If the Participant works and/or resides outside of the United States, the applicable terms and conditions set forth in Appendix A shall apply to this Option. In addition, the Company reserves the right to impose other requirements on the Participant to the extent the Company determines that such requirements are necessary or advisable in order to comply with local law or facilitate the administration of the Plan and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
APPENDIX A
INTERCEPT PHARMACEUTICALS, INC.
AMENDED AND RESTATED EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS
This Appendix includes additional or different terms and conditions that govern this Option if the Participant works and/or resides outside of the United States. This Appendix forms part of the Stock Option Agreement to which it is attached (the “Agreement”). Capitalized terms not defined in this Appendix but defined in the Agreement or the Plan will have the meanings assigned to such terms in the Agreement or the Plan, as applicable. References within this Appendix to “you” refer to the Participant.
These terms are general in nature, may not apply to your particular situation and are based on securities, tax and other laws that are often complex and subject to frequent change. As such, the Company strongly recommends that you do not rely on this summary as your only source of information relating to the consequences of your Option and participation in the Plan and further that you consult your personal tax or legal advisors for advice as to how the laws in your country apply to your situation. Note that if you are a citizen or resident of a country other than the one in which you are working, additional requirements, other than those described herein, may be applicable to you.
ALL NON-U.S. PARTICIPANTS
| 1. | Taxes (Replacing Section 8 OF THE AGREEMENT) |
The Participant acknowledges that any income or other taxes due from him or her with respect to this Option or the Shares issuable pursuant to this Option shall be the Participant’s responsibility. The Participant acknowledges and agrees that (i) the Participant was free to use professional advisors of his or her choice in connection with his or her acceptance of this Option, has received advice from his or her professional advisors in connection with his or her acceptance of this Option, understands its meaning and import, and has accepted this Option freely and without coercion or duress; and (ii) the Participant has not received and is not relying upon any advice, representations or assurances made by or on behalf of the Company or any Affiliate or any employee of or counsel to the Company or any Affiliate regarding any tax or other effects or implications of this Option, the Shares subject to this Option or other matters contemplated hereby.
The Participant agrees that the Company may withhold from the Participant’s remuneration, if any, the statutory or contractual amount of any federal, provincial, state, local and personal income taxes, wage tax and social security contributions (including, as applicable, UK National Insurance Contributions of any kind and Canada Pension Plan contributions) required by law or contract to be withheld or that the Participant has elected to bear (including, as applicable, employer National Insurance Contributions) in relation to the grant or exercise of this Option (“Participant Tax Liability”) and, as a condition to the grant or exercise of this Option (as applicable), the Participant shall make arrangements satisfactory to the Company to enable it to satisfy all such withholding requirements. Without limiting the generality of the foregoing, at the Company’s discretion, the amount required to be withheld may be withheld in cash from such remuneration. The Participant further agrees that, to the extent the Company does not withhold an amount from the Participant’s remuneration sufficient to satisfy the Company’s income or wage tax and social security withholding obligation, the Participant will reimburse the Company on demand, in cash, for the amount under-withheld.
| 2. | Waiver Of Rights On Termination (Except France, Portugal, Spain And Denmark) |
The Participant hereby waives all and any rights to compensation or damages in consequence of the termination of his or her office or employment with the Company or his or her employing entity for any reasons whatsoever (whether lawful or unlawful and including, without prejudice to the generality of the foregoing, in circumstances giving rise to a claim for wrongful dismissal) insofar as those rights arise or may
arise from his or her ceasing to have rights under or being entitled to exercise this Option as a result of such termination, or from the loss or diminution in value of any rights or entitlements in connection with the Plan.
The Plan and this Option do not form part of the Participant’s contract of employment. If the Participant ceases to be employed or engaged by the Company or any Affiliate for any reason (including as a result of a repudiatory breach of contract by the Company or its Affiliate), the Participant shall not be entitled, and by participating in the Plan the Participant shall be deemed irrevocably to have waived any entitlement, by way of compensation for loss of employment, breach of contract or otherwise, to any sum or other benefit to compensate the Participant for any rights or prospective rights under the Plan. This exclusion applies equally (and without limitation) to any loss arising from the way in which the discretion is (or is not) exercised under any provision of the Plan even if the exercise (or non-exercise) of such discretion is, or appears to be, irrational or perverse and/or breaches, or is claimed to breach any implied term of the Plan or any other contract between the Participant and the Participant’s employer. Participation in the Plan and any benefits provided under it shall not be pensionable nor will they count as pay or remuneration when calculating salary related benefits (including, but not limited to, pension).
| 3. | Data Privacy (In Addition To Section 19 OF THE AGREEMENT) (Except Italy, Portugal AND SPAIN) |
| (b) | The Participant acknowledges the following: |
| (i) | the Company holds certain personal information about the Participant, including, but not limited to, his or her name, home address and telephone number, work location and phone number, date of birth, hire date, bank and payroll details, social security numbers, details of all awards or any other entitlement to shares awarded, cancelled, exercised, vested, unvested or outstanding in the Participant’s favor, for the purpose of implementing, administering and managing the Plan (“Personal Data”); |
| (ii) | providing or transferring Personal Data to the Company is necessary and essential to the Participant’s participation in the Plan and that the Participant’s refusal to provide Personal Data or withdrawal of consent to the collection, storage or transfer of Personal Data may affect the Participant’s ability to participate in the Plan since it would be impossible for the Company to comply with its contractual obligations under the Plan; |
| (iii) | the Participant’s Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country; |
| (iv) | the Participant has been informed that the Company shall not transfer Personal Data from the Participant’s country without requiring the recipient to comply with the requirements of the General Data Protection Regulation (as applicable) and applicable data protection laws, and that the Participant may request a list with the names and addresses of any potential recipients of the Personal Data by contacting his or her local human resources representative; |
| (v) | Personal Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan and any potential claim made by the Participant in relation to any award; and |
| (vi) | the Participant may, at any time, exercise the right of access, rectification and cancelation of the Participant’s personal data, oppose, request additional information about the storage and processing of Personal Data or refuse to the further processing of the Personal Data by contacting in writing the Participant’s local human resources representative (who can be identified on the Company’s intranet). |
ADDITIONAL COUNTRY-SPECIFIC PROVISIONS
AUSTRALIA
Financial product advice: The Participant acknowledges and agrees that advice provided by the Company (if any) in relation to this Option is of a general nature only and does not take into account the objectives, financial situation or needs of the Participant. The Participant should consider obtaining advice from a person who is licensed by the Australian Securities and Investments Commission to give such advice. The Company is not licensed to provide financial product advice in Australia in relation to options and there is no cooling-off regime in Australia that applies in respect of the grant of options.
Risk of acquiring and holding Common Stock: The Participant acknowledges that there are risks of acquiring and holding Common Stock. Before accepting or exercising this Option, or acquiring the underlying Shares, the Participant should satisfy himself or herself that he or she has a sufficient understanding of these matters and should consider whether Common Stock is a suitable investment for the Participant, having regard to the investment objectives, financial circumstances and taxation position of the Participant.
| (b) | The price at which Common Stock is quoted on the Nasdaq Global Select Market may decrease, even to the extent that the price is less than the price or prices paid for the Shares by the Participant. |
| (c) | There is no guarantee that an active market in Common Stock will continue. The number of potential buyers or sellers of Common Stock on the Nasdaq Global Select Market may vary at any time. This may increase the volatility of the market price of Common Stock. |
| (d) | The Company may not pay dividends on Common Stock at any particular level or at all. If the Company has paid dividends on Common Stock, it may cease to pay such dividends. |
| (e) | Holding Common Stock may have tax implications for the Participant and the tax regime applying to the Participant may change. |
Market price of Common Stock: The Participant could, from time to time, ascertain the market price of Common Stock in Australian Dollars by obtaining the market price from the Nasdaq Global Select Market website, the Company’s website or applicable U.S. publication, and multiplying that market price by a published exchange rate to convert U.S. Dollars into Australian Dollars.
BELGIUM
Timing and calculation basis of taxation. You are required to accept the offer of this Option in writing. If this Option is accepted by you on or prior to the 60th day following the offer, you will recognize taxable income on the 60th day following the date of the offer (date of grant), and you will be required to include the taxable income within your yearly income tax return covering the financial year during which occurred the date of grant. You will not be subject to income tax upon exercise of this Option. The amount of the taxable income is calculated as a certain percentage of the fair market value of the underlying shares at the date of the offer. The income will be taxed as compensation income and subject to income tax and social security contributions.
If this Option is only accepted by you after the 60th day following the date of the offer, you will not recognize taxable income on the date of grant but upon exercise, and you will be required to include the taxable income within your yearly income tax return covering the financial year during which occurred the exercise of this Option. The amount of taxable income will then be calculated on the basis of the fair market value of the stock acquired. The income will be taxed as compensation income and subject to income tax and social security contributions.
Capital gains on sale. The capital gains on the sale of the stock are not taxable to the extent you qualify as a Belgian tax resident.
CANADA
Term of Option. For purposes of Section 2 of the Agreement, “Termination Date” means the later of: (i) the date that is the last day of any statutory notice period applicable to the Participant pursuant to applicable employment standards legislation; and (ii) the date that is designated by the Company or Affiliate to which the Participant provides services as the last day of the Participant’s employment, term of office or engagement with the Company or Affiliate (as applicable); provided, that in the case of termination of employment by voluntary resignation by the Participant, such date shall not be earlier than the date notice of resignation was given. For certainty, except only as expressly required by applicable employment standards legislation, as amended or replaced, or agreed by the Company, no portion of this Option shall vest following the Participant’s Termination Date and no period of notice or payment in lieu of notice in respect of a termination of an office or employment without Cause shall extend such Termination Date.
Method of Exercising Option. Payment of the Exercise Price for the Shares with respect to which this Option is exercised may not be made in either of the forms described in clause (b) or clause (c) of Paragraph 9 of the Plan.
DENMARK
Danish Stock Option Act. In accepting this Option, you acknowledge that you have received an Employer Statement translated into Danish, which is being provided to comply with the Danish Stock Option Act and which sets out the main terms of the Plan applying to you. To the extent more favorable to you and required to comply with the Stock Option Act, the terms set forth in the Employer Statement, including terms regarding vesting and forfeiture in connection with termination of your employment will apply to your participation in the Plan.
Exchange Control Notification. If you establish an account holding Shares or cash outside Denmark, you must report the account to the Danish Tax Administration. The form which should be used in this respect can be obtained from a local bank. (Please note that these obligations are separate from and in addition to the obligations described below.)
Securities and Tax Reporting Notification. You may hold Shares acquired under the Plan in a safety-deposit account (e.g., a brokerage account) with either a Danish bank or with an approved foreign broker or bank. If the Shares are held with a foreign broker or bank, you are required to inform the Danish Tax Administration about the safety-deposit account. For this purpose, you must file a Form V (Erklaering V) with the Danish Tax Administration. Both you and the broker or bank must sign the Form V. By signing the Form V, the broker or bank undertakes an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the Shares in the safety-deposit account. In the event that the applicable broker or bank with which the account is held does not wish to, or pursuant to the laws of the country in question, is not allowed to assume such obligation to report, you will be solely responsible for providing certain details regarding the foreign brokerage or bank account and any Shares acquired in connection with the Plan and held in such account to the Danish Tax Administration as part of your annual income tax return. By signing the Form V, you authorize the Danish Tax Administration to examine the account. A sample of the Form V can be found at the following website: www.skat.dk.
In addition, if you open a brokerage account or a bank account with a U.S. bank, the account will be treated as a deposit account because cash can be held in the account. Therefore, you must also file a Form K (Erklaering K) with the Danish Tax Administration. Both you and the broker must sign the Form K. By signing the Form K, the broker or bank, as applicable, undertakes an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the content of the deposit account. In the event that the applicable financial institution (broker or bank) with which the account is held does not wish to, or pursuant to the laws of the country in question, is not allowed to assume such obligation to report,
you will be solely responsible for providing certain details regarding the foreign brokerage or bank account to the Danish Tax Administration as part of your annual income tax return. By signing the Form K, you authorize the Danish Tax Administration to examine the account. A sample of Declaration K can be found at the following website: www.skat.dk.
FRANCE
Language Consent. By accepting the grant, you confirm that you have read and understood the documents relating to the grant (the Plan, the Grant Notice and the Agreement, including this Appendix) which were provided in the English language. You confirm that you are fluent in English, written and spoken. You accept the terms of these documents accordingly.
Consentement Relatif à la Langue Utilisée. En acceptant l’attribution, vous confirmez avoir lu et compris les documents relatifs à l’attribution (le Plan, l’Avis et le Contrat, y compris cette Annexe) qui ont été communiqués en langue anglaise. Vous acceptez les termes de ces documents en connaissance de cause.
Tax Notification. This Option is not intended to qualify for favorable tax or social security treatment in France.
Exchange Control Notification. If you hold Shares outside of France or maintain a foreign bank account, you are required to report such to the French tax authorities when filing your annual tax return.
GERMANY
Taxes. The following provision supplements Section 1 of this Appendix A:
For the avoidance of doubt, under Section 1 of this Appendix A (which replaces Section 8 of the Agreement), the Company, inter alia, has the authority to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy applicable taxes (including wage taxes (Lohnsteuern), solidarity surcharges (Solidaritätszuschläge), church taxes (Kirchensteuern) and social security contributions (Sozialversicherungsbeiträge)) arising from or relating to the (i) the grant, vesting or exercise of this Option or (ii) the delivery of the Shares. For the avoidance of doubt, Section 1 of this Appendix A shall remain unaffected.
ITALY
Data Privacy. The following provision replaces Section 3 of this Appendix A:
You understand that the Company and/or any Affiliate may hold certain personal information about you, including, without limitation, your name, home address and telephone number, date of birth, social insurance or other identification number, salary, nationality, job title, any Shares or directorships held in the Company or an Affiliate, details of all options, or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the exclusive purpose of implementing, managing, and administering the Plan (“Data”) and in compliance with applicable laws and regulations.
You also understand that providing the Company with Data is necessary for the performance of the Plan and that your refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect your ability to participate in the Plan. The Controller of personal data processing is Intercept Pharmaceuticals, Inc., 305 Madison Avenue, Morristown, NJ 07960 and pursuant to Art. 6 let. b) and c) of the General Data Protection Regulation (“GDPR”) and Legislative Decree no. 196/2003, its representative in Italy.
You understand that Data will not be publicized, but it may be transferred to the Company’s designated broker/third party administrator for the Plan or such other stock plan service provider as may be selected by the Company in the future (any such entity, “Broker”), or other third parties involved in the management
and administration of the Plan. You understand that Data may also be transferred to the independent registered public accounting firm engaged by the Company. You further understand that the Company and its Affiliates will transfer Data amongst themselves as necessary for the purposes of implementing, administering and managing your participation in the Plan, and that the Company and/or any Affiliate may each further transfer Data to third parties assisting the Company in the implementation, administration and management of the Plan, including any requisite transfer of Data to the Broker or other third party with whom you may elect to deposit any Shares acquired under the Plan. Such recipients may receive, possess, use, retain, and transfer Data in electronic or other form, for the purposes of implementing, administering, and managing your participation in the Plan. You understand that these recipients may be located in or outside the European Economic Area, such as in the United States or elsewhere, and in locations that might not provide the same level of protection as intended under Italian data privacy laws. In such case, the Company undertakes to comply with the applicable privacy law in order to ensure that the recipient meets the same standards provided by the European Union legislation, implementing appropriate and suitable safeguards, such as using standard clauses or equivalent safeguard measures as provided for by Art. 46 of the GDPR and paragraph 7 of Legislative Decree no. 196/2003. Should the Company exercise its discretion in suspending all necessary legal obligations connected with the management and administration of the Plan, it will delete Data as soon as it has completed all the necessary legal obligations connected with the management and administration of the Plan.
You understand that Data processing related to the purposes specified above shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data is collected and with confidentiality and security provisions, as set forth by applicable laws and regulations, with specific reference to Art. 6 let. b) and c) of the GDPR and Legislative Decree no. 196/2003.
The processing activity, including communication, the transfer of Data abroad, including outside of the European Economic Area, as herein specified and pursuant to applicable laws and regulations, does not require your consent thereto, as the processing is necessary to performance of contractual obligations related to implementation, administration, and management of the Plan. You understand that, pursuant to Art. 15 of the GDPR and paragraph 7 of Legislative Decree no. 196/2003, you have the right to, without limitation, access, delete, update, correct, or terminate, for legitimate reason, the Data processing. Additionally, you understand that you may exercise the right to portability, within the limits set forth by Art. 20 of the GDPR.
Furthermore, you are aware that Data will not be used for direct-marketing purposes. In addition, Data provided can be reviewed and questions or complaints can be addressed by contacting your local human resources representative.
Grant Document Acknowledgment. In accepting the grant of this Option, you acknowledge that you have received a copy of the Plan, the Grant Notice and the Agreement, including this Appendix, and have reviewed the Plan, the Grant Notice and the Agreement, including this Appendix, in their entirety and fully understand and accepts all provisions thereof.
Foreign Asset Reporting Notification. If you are an Italian resident and, during any fiscal year, hold investments or financial assets outside of Italy (e.g., cash, Shares) which may generate income taxable in Italy (or if you are the beneficial owner of such an investment or asset even if you do not directly hold the investment or asset), you are required to report such investments or assets on your annual tax return for such fiscal year (on UNICO Form, RW Schedule, or on a special form if you are not required to file a tax return).
NORWAY
Securities and Tax Reporting Notification. You may hold Shares acquired under the Plan in a safety-deposit account (e.g., a brokerage account) with either a Norwegian bank or with an approved foreign broker or bank. If the Shares are held with a foreign broker or bank, you are required to inform the Norwegian Tax Administration about the safety-deposit account. You do this on forms RF-1088 and RF-1059 in connection with filing your annual tax return (“selvangivelse”). Shares held with a Norwegian bank will be reported automatically.
PORTUGAL
Language Consent. By accepting the grant of this Option, you confirm that you have read and understood the documents relating to the grant (the Plan, the Grant Notice and the Agreement, including this Appendix) which were provided to you in English language. You confirm that you are fluent in English, written and spoken. You accept the terms of these documents accordingly.
Grant Document Acknowledgment. In accepting the grant of this Option, you acknowledge that you have received a copy of the Plan, the Grant Notice and the Agreement, including this Appendix, and have reviewed the Plan, the Grant Notice and the Agreement, including this Appendix, in their entirety and fully understand and accept all provisions thereof.
Tax Reporting Obligation. If the Shares acquired under the Plan are held with a foreign broker or bank, you are required to inform the Portuguese Tax Authorities about the existence of such account. For this purpose, within the annual submission of your personal income tax return you must file Annex J with the Portuguese Tax Administration, identifying the account by reference to the applicable IBAN – International Bank Account Number and BIC - Bank Identifier Code.
Income arising out of the Plan and/or derived from the Shares is subject to reporting to the Portuguese Tax Authorities.
Data Privacy. The following provision replaces Section 3 of this Appendix A:
You understand that the Company holds certain personal information about you, including, but not limited to, your name, home address and telephone number, work location and phone number, date of birth, hire date, details of all awards or any other entitlement to shares awarded, cancelled, exercised, vested, unvested or outstanding in the Participant’s favor, for the purpose of implementing, administering and managing the Plan (“Personal Data”).
You understand that the providing or transferring of Personal Data to the Company is necessary and essential to your participation in the Plan and that your refusal to provide Personal Data or withdrawal of consent to the collection, storage or transfer of Personal Data may affect your ability to participate in the Plan since it would be impossible for the Company to comply with its contractual obligations under the Plan.
You understand that your Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country.
You were informed that the personal data communicated outside of Portugal will be protected identically as provided for in Law No. 67/98, of 26 October, and that you may request a list with the names and addresses of any potential recipients of the Personal Data by contacting your local human resources representative.
You authorize the recipients to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan.
You understand that Personal Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan and any potential claim of the Participant.
You understand that you may, at any time, exercise of the right of access, rectification and cancelation of your personal data, oppose, request additional information about the storage and processing of Personal Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative (who can be identified on the Company’s intranet).
SPAIN
Taxes. The following provision supplements Section 1 of this Appendix A:
Pursuant to Royal Decree-Law 13/2011 of 16 September (as amended), wealth tax (Impuesto sobre el Patrimonio) has been temporarily restored in Spain. If the Participant’s only foreign assets are the Shares and the value of the Shares on 31 December exceeds the specified threshold the Participant will be required to make a declaration to the Spanish tax authorities between 1 January and 31 March of the immediately following year. The Participant much declare foreign rights and assets including (i) ISIN code of Shares; (ii) the name and corporate domicile of the issuing company; and (iii) the number, class, and value of the Shares held as of 31 December.
Exchange Controls. The Participant is responsible for complying with exchange control regulations in Spain. Declaration of the acquisition of Shares for statistical purposes to the Dirección General de Comercio e Inversiones (DGCI) of Ministerio de Economía is compulsory (i) if the purchase price exceeds the specified threshold; (ii) if the investor holds a stake of at least 10 percent in the Company; or (iii) if the investor belongs to the Company’ s board of directors. If Participants purchase any Shares through the use of a Spanish financial institution, the institution will automatically make the declaration to the DGCI; otherwise the Participant must make the declaration by filing the appropriate form with the DGCI. The Participant must also declare ownership of Shares with the DGCI in January of each year.
Data Privacy. The following provisions replace Section 3 of this Appendix A:
The Participant’s personal data will be processed by Intercept Pharmaceuticals, Inc. (the “Data Controller”) with a corporate domicile at 305 Madison Avenue, Morristown, NJ 07960.
The purpose of the processing is to implement the Grant Notice and the Agreement under the Plan, verify eligibility conditions and develop and perform the contractual and legal obligations arising thereof. The processing of the Participant’s personal data is necessary for such purposes and its legal basis are the execution and development of the contractual relationship and, if applicable, the compliance with legal duties applicable to the Data Controller. Personal data will be processed whilst the Participant holds the relevant awards and, after this, for six years, or, exceptionally, for the period during which any kind of liability may arise from a legal or contractual obligation applicable to the Data Controller.
The Participant’s personal data will be transferred outside the European Economic Area, to the United States, where Intercept Pharmaceuticals, Inc. is located. A copy of the relevant appropriate safeguards subscribed in order to carry out such international data transfer can be requested from human resources. Additionally, the Participant’s personal data may be disclosed only to those group companies which may have a legal basis for processing this personal data.
The Participant may exercise his/her right of access, rights to rectification, erasure, objection, data portability, restriction of processing and any other right recognized by the applicable regulations from time to time, by sending a request to human resources. The Participant may also file any claim or request related to his or her data protection rights with the relevant supervisory authority. The personal data processed for the purposes described above derives from the execution of the Participant’s employment agreement or, in case that the Participant is an independent professional, the relevant services agreement.
UNITED KINGDOM
NIC Joint Election. Unless the Company permits otherwise, this Option may not be exercised unless and until the Company (or the employing entity) has received from the Participant a duly completed joint election with the Company and his or her employing entity (in the form prescribed by the Company from time to time) to the effect that the Participant will become liable, so far as permissible by law, for the whole of employer national insurance contributions which may arise in connection with this Option and the Shares which may be or are acquired on the exercise of this Option.
Taxes. The following provision supplements Section 1 of this Appendix A:
The amount of the Participant Tax Liability may be withheld in cash from such remuneration. The Participant further agrees that, if the Company does not withhold an amount from the Participant’s remuneration sufficient to satisfy the Participant Tax Liability, the Participant will reimburse the Company on demand, in cash, for the amount under-withheld. Without limiting the foregoing, the Participant agrees (i) that the Participant shall, promptly upon being requested to do so by the Company, the Participant’s employer or former employer (as appropriate), elect (using a form approved by HM Revenue & Customs) that the whole or any part of the liability for employer National Insurance Contributions shall be transferred to the Participant; and (ii) to enter into a joint election, under section 431(1) or 431(2) of the Income Tax (Earnings & Pensions) Act 2003, in respect of the Shares delivered pursuant to the award, if required to do so by the Company, the Participant’s employer or former employer, before, on or within 14 days after any date of delivery of such Shares.
Exhibit 10.13
Option No. /$GrantID$/
INTERCEPT PHARMACEUTICALS, INC.
Stock Option Grant Notice for Directors
Stock Option Grant under the
Amended and Restated Equity Incentive Plan
1.Name and Address of Participant:/$ParticipantName$/
/$ParticipantAddress$/
2.Date of Option Grant:/$GrantDate$/
3.Type of Grant:/$GrantType$/
4.Maximum Number of Shares for
which this Option is exercisable:/$AwardsGranted$/
5.Exercise (purchase) price per share:/$GrantPrice$/
6.Option Expiration Date:/$ExpirationDate$/
7.Vesting Start Date:May 25, 2022
8.Vesting Schedule: This Option shall become exercisable (and the Shares issued upon exercise shall be vested) as follows provided the Participant is an Employee, director or Consultant of the Company or of an Affiliate on the applicable vesting date (see vesting schedule below):
/$VestingSchedule$/
Notwithstanding the foregoing, in the event that the Company’s 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”) is held on or prior to May 25, 2023, this Option shall vest and become exercisable in full on the day immediately preceding the date of the 2023 Annual Meeting.
See Section 3 for vesting in the event of a Change of Control (as defined herein).
The foregoing rights are cumulative and are subject to the other terms and conditions of this Agreement and the Plan.
The Company and the Participant acknowledge receipt of this Stock Option Grant Notice and agree to the terms of the Stock Option Agreement attached hereto and incorporated by reference herein, the Company’s Amended and Restated Equity Incentive Plan and the terms of this Option Grant as set forth above.
INTERCEPT PHARMACEUTICALS, INC.
STOCK OPTION AGREEMENT -
INCORPORATED TERMS AND CONDITIONS
AGREEMENT made as of the date of grant set forth in the Stock Option Grant Notice by and between Intercept Pharmaceuticals, Inc. (the “Company”), a Delaware corporation, and the individual whose name appears on the Stock Option Grant Notice (the “Participant”).
WHEREAS, the Company desires to grant to the Participant an Option to purchase shares of its common stock, $0.001 par value per share (the “Shares”), under and for the purposes set forth in the Company’s Amended and Restated Equity Incentive Plan (the “Plan”);
WHEREAS, the Company and the Participant understand and agree that any terms used and not defined herein have the same meanings as in the Plan; and
WHEREAS, the Company and the Participant each intend that the Option granted herein shall be of the type set forth in the Stock Option Grant Notice.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows:
1.GRANT OF OPTION.
The Company hereby grants to the Participant the right and option to purchase all or any part of an aggregate of the number of Shares set forth in the Stock Option Grant Notice, on the terms and conditions and subject to all the limitations set forth herein, under United States securities and tax laws, and in the Plan, which is incorporated herein by reference. The Participant acknowledges receipt of a copy of the Plan.
2.EXERCISE PRICE.
The exercise price of the Shares covered by the Option shall be the amount per Share set forth in the Stock Option Grant Notice, subject to adjustment, as provided in the Plan, in the event of a stock split, reverse stock split or other events affecting the holders of Shares after the date hereof (the “Exercise Price”). Payment shall be made in accordance with Paragraph 9 of the Plan.
3.EXERCISABILITY OF OPTION.
Subject to the terms and conditions set forth in this Agreement and the Plan, the Option granted hereby shall become vested and exercisable as set forth in the Stock Option Grant Notice and is subject to the other terms and conditions of this Agreement and the Plan.
Notwithstanding the foregoing, in the event of a Change of Control (as defined below), then, immediately prior to the Change of Control, all of the Shares subject to this Option shall be deemed vested and exercisable immediately prior to the Change of Control unless this Option has otherwise expired or been terminated pursuant to its terms.
Change of Control means the occurrence of any of the following events:
(i) | Ownership. Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities (excluding for this purpose any such voting securities held by the Company or its Affiliates or any employee benefit plan of the Company) pursuant to a |
transaction or a series of related transactions which the Board of Directors does not approve; or
(ii) | Merger/Sale of Assets. (A) A merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (B) the sale or disposition by the Company of all or substantially all of the Company’s assets in a transaction requiring stockholder approval; or |
(iii) | Change in Board Composition. A change in the composition of the Board of Directors, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date of the grant, or (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company). |
4. | TERM OF OPTION. |
This Option shall terminate on the Option Expiration Date as specified in the Stock Option Grant Notice and, if this Option is designated in the Stock Option Grant Notice as an ISO and the Participant owns as of the date hereof more than 10% of the total combined voting power of all classes of capital stock of the Company or an Affiliate, such date may not be more than five years from the date of this Agreement, but shall be subject to earlier termination as provided herein or in the Plan.
If the Participant ceases to be an Employee, director or Consultant of the Company or of an Affiliate for any reason other than the death or Disability of the Participant, or termination of the Participant for Cause (the “Termination Date”), the Option to the extent then vested and exercisable pursuant to Section 3 hereof as of the Termination Date, and not previously terminated in accordance with this Agreement, may be exercised within one year after the Termination Date, or on or prior to the Option Expiration Date as specified in the Stock Option Grant Notice, whichever is earlier, but may not be exercised thereafter except as set forth below. In such event, the unvested portion of the Option shall not be exercisable and shall expire and be cancelled on the Termination Date.
If this Option is designated in the Stock Option Grant Notice as an ISO and the Participant ceases to be an Employee of the Company or of an Affiliate but continues after termination of employment to provide service to the Company or an Affiliate as a director or Consultant, this Option shall continue to vest in accordance with Section 3 above as if this Option had not terminated until the Participant is no longer providing services to the Company. In such case, this Option shall automatically convert and be deemed a Non-Qualified Option as of the date that is three months from termination of the Participant's employment and this Option shall continue on the same terms and conditions set forth herein until such Participant is no longer providing service to the Company or an Affiliate.
In the event the Participant’s service is terminated by the Company or an Affiliate for Cause, the Participant’s right to exercise any unexercised portion of this Option even if vested shall cease immediately as of the time the Participant is notified his or her service is terminated for Cause, and this Option shall thereupon terminate. Notwithstanding anything herein to the contrary, if subsequent to the Participant’s termination, but prior to the exercise of the Option, the Administrator determines that, either prior or subsequent to the Participant’s termination, the Participant engaged in conduct which would constitute Cause, then the Participant shall immediately cease to have any right to exercise the Option and this Option shall thereupon terminate.
In the event of the Disability of the Participant, as determined in accordance with the Plan, the Option shall be exercisable within one year after the Participant’s termination of service due to Disability or, if earlier, on or prior to the Option Expiration Date as specified in the Stock Option Grant Notice. In such event, the Option shall be exercisable:
(a) | to the extent that the Option has become exercisable but has not been exercised as of the date of the Participant’s termination of service due to Disability; and |
(b) | in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of the Participant’s termination of service due to Disability of any additional vesting rights that would have accrued on the next vesting date had the Participant not become Disabled. The proration shall be based upon the number of days accrued in the current vesting period prior to the date of the Participant’s termination of service due to Disability. |
In the event of the death of the Participant while an Employee, director or Consultant of the Company or of an Affiliate, the Option shall be exercisable by the Participant’s Survivors within one year after the date of death of the Participant or, if earlier, on or prior to the Option Expiration Date as specified in the Stock Option Grant Notice. In such event, the Option shall be exercisable:
(x) | to the extent that the Option has become exercisable but has not been exercised as of the date of death; and |
(y) | in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date had the Participant not died. The proration shall be based upon the number of days accrued in the current vesting period prior to the Participant’s date of death. |
5.METHOD OF EXERCISING OPTION.
Subject to the terms and conditions of this Agreement, the Option may be exercised by written notice to the Company or its designee, in substantially the form of Exhibit A attached hereto (or in such other form acceptable to the Company, which may include electronic notice). Such notice shall state the number of Shares with respect to which the Option is being exercised and shall be signed by the person exercising the Option (which signature may be provided electronically in a form acceptable to the Company). Payment of the Exercise Price for such Shares shall be made in accordance with Paragraph 9 of the Plan. The Company shall deliver such Shares as soon as practicable after the notice shall be received, provided, however, that the Company may delay issuance of such Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including, without limitation, state securities or “blue sky” laws). The Shares as to which the Option shall have been so exercised shall be registered in the Company’s share register in the name of the person so exercising the Option (or, if the Option shall be exercised by the Participant and if the Participant shall so request in the notice exercising the Option, shall be registered in the Company’s share register in the name of the Participant and another person jointly, with right of survivorship) and shall be delivered as provided above to or upon the written order of the person exercising the Option. In the event the Option shall be exercised, pursuant to Section 4 hereof, by any person other than the Participant, such notice shall be accompanied by appropriate proof of the right of such person to exercise the Option. All Shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and nonassessable.
6. | PARTIAL EXERCISE. |
Exercise of this Option to the extent above stated may be made in part at any time and from time to time within the above limits, except that no fractional share shall be issued pursuant to this Option.
7. | NON-ASSIGNABILITY. |
This Option (including any additional Options received by the Participant as a result of stock dividends, stock splits or any other similar transaction affecting the Company’s securities without receipt of consideration) shall not be transferable by the Participant otherwise than (i) by will or by the laws of descent and distribution, (ii) pursuant to a qualified domestic relations order as defined by the Internal Revenue Code or Title I of the Employee Retirement Income Security Act or the rules thereunder or (iii) pursuant to a Permitted Transfer (as defined below). Except as provided above in this paragraph, the Option shall be exercisable, during the Participant’s lifetime, only by the Participant (or, in the event of legal incapacity or incompetency, by the Participant’s guardian or representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of the Option or of any rights granted hereunder contrary to the provisions of this Section 7, or the levy of any attachment or similar process upon the Option shall be null and void. For purposes of this Agreement, a Permitted Transfer shall mean a transfer of this Option not for value following written notice to the General Counsel and Secretary of the Company (which shall include an acknowledgement by the transferee(s) that the Option remains subject to all of its terms and conditions), to a member or members of the Participant's immediate family (consisting of any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships) or to other entities (such as a family limited partnership or a grantor retained annuity trust) solely for the benefit of the Participant and/or immediate family members. Any Permitted Transfer of the Option shall have no effect on the vesting provisions set forth in Section 3 of this Agreement and the Stock Option Grant Notice or the other provisions of the Option, which shall remain in effect notwithstanding any such Permitted Transfer.
8. | NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. |
The Participant shall have no rights as a stockholder with respect to Shares subject to this Agreement until registration of the Shares in the Company’s share register in the name of the Participant. Except as is expressly provided in the Plan with respect to certain changes in the capitalization of the Company, no adjustment shall be made for dividends or similar rights for which the record date is prior to the date of such registration.
9. | ADJUSTMENTS. |
The Plan contains provisions covering the treatment of Options in a number of contingencies such as stock splits and mergers. Provisions in the Plan for adjustment with respect to stock subject to Options and the related provisions with respect to successors to the business of the Company are hereby made applicable hereunder and are incorporated herein by reference.
10. | TAXES. |
The Participant acknowledges that any income or other taxes due from him or her with respect to this Option or the Shares issuable pursuant to this Option shall be the Participant’s responsibility. The Participant acknowledges and agrees that (i) the Participant was free to use professional advisors of his or her choice in connection with this Agreement, has received advice from his or her professional advisors in connection with this Agreement, understands its meaning and import, and is entering into this Agreement freely and without coercion or duress; (ii) the Participant has not received and is not relying upon any advice, representations or assurances made by or on behalf of the Company or any Affiliate or any employee of or counsel to the Company or any Affiliate regarding any tax or other effects or implications of the Option, the Shares or other matters contemplated by this Agreement; and (iii) neither the Administrator, the Company, its Affiliates, nor any of its officers or directors, shall be held liable for any applicable costs, taxes, or penalties associated with the Option if, in fact, the Internal Revenue Service were to determine that the Option constitutes deferred compensation under Section 409A of the Code.
If this Option is designated in the Stock Option Grant Notice as a Non-Qualified Option or if the Option is an ISO and is converted into a Non-Qualified Option and such Non-Qualified Option is exercised, the Participant agrees that the Company may withhold from the Participant’s remuneration, if any, the minimum statutory amount of federal, state and local withholding taxes attributable to such amount that is considered compensation includable in such person’s gross income. At the Company’s discretion, the amount required to be withheld may be withheld in cash from such remuneration, or in kind from the Shares otherwise deliverable to the Participant on exercise of the Option. The Participant further agrees that, if the Company does not withhold an amount from the
Participant’s remuneration sufficient to satisfy the Company’s income tax withholding obligation, the Participant will reimburse the Company on demand, in cash, for the amount under-withheld.
11. | PURCHASE FOR INVESTMENT. |
Unless the offering and sale of the Shares to be issued upon the particular exercise of the Option shall have been effectively registered under the Securities Act, the Company shall be under no obligation to issue the Shares covered by such exercise unless the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act and until the following conditions have been fulfilled:
(a) | The person(s) who exercise the Option shall warrant to the Company, at the time of such exercise, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon any certificate(s) evidencing the Shares issued pursuant to such exercise: |
“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws;” and
(b)If the Company so requires, the Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise in compliance with the Securities Act without registration thereunder. Without limiting the generality of the foregoing, the Company may delay issuance of the Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including without limitation state securities or “blue sky” laws).
12. | RESTRICTIONS ON TRANSFER OF SHARES. |
12.1The Participant agrees that in the event the Company proposes to offer for sale to the public any of its equity securities and such Participant is requested by the Company and any underwriter engaged by the Company in connection with such offering to sign an agreement restricting the sale or other transfer of Shares, then it will promptly sign such agreement and will not transfer, whether in privately negotiated transactions or to the public in open market transactions or otherwise, any Shares or other securities of the Company held by him or her during such period as is determined by the Company and the underwriters, not to exceed 180 days following the closing of the offering, plus such additional period of time as may be required to comply with the rules of the Financial Industry Regulatory Authority, Inc. or similar rules thereto (such period, the “Lock-Up Period”). Such agreement shall be in writing and in form and substance reasonably satisfactory to the Company and such underwriter and pursuant to customary and prevailing terms and conditions. Notwithstanding whether the Participant has signed such an agreement, the Company may impose stop-transfer instructions with respect to the Shares or other securities of the Company subject to the foregoing restrictions until the end of the Lock-Up Period.
12.2The Participant acknowledges and agrees that neither the Company, its shareholders nor its directors and officers, has any duty or obligation to disclose to the Participant any material information regarding the business of the Company or affecting the value of the Shares before, at the time of, or following a termination of the service of the Participant by the Company, including, without limitation, any information concerning plans for the Company to make a public offering of its securities or to be acquired by or merged with or into another firm or entity.
13. | NO OBLIGATION TO MAINTAIN RELATIONSHIP. |
The Participant acknowledges that: (i) the Company is not by the Plan or this Option obligated to continue the Participant as an Employee, director or Consultant of the Company or an Affiliate; (ii) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (iii) the grant of the Option is a one-time benefit which does not create any contractual or other right to receive future grants of options, or benefits in lieu of options; (iv) all determinations with respect to any such future grants, including, but not limited to, the times when options shall be granted, the number of shares subject to each option, the option price, and the time or times when each option shall be exercisable, will be at the sole discretion of the Company; (v) the Participant’s participation in the Plan is voluntary; (vi) the value of the Option is an extraordinary item of compensation which is outside the scope of the Participant’s employment or consulting contract, if any; and (vii) the Option is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
14. | IF OPTION IS INTENDED TO BE AN ISO. |
If this Option is designated in the Stock Option Grant Notice as an ISO so that the Participant (or the Participant’s Survivors) may qualify for the favorable tax treatment provided to holders of Options that meet the standards of Section 422 of the Code then any provision of this Agreement or the Plan which conflicts with the Code so that this Option would not be deemed an ISO is null and void and any ambiguities shall be resolved so that the Option qualifies as an ISO. The Participant should consult with the Participant’s own tax advisors regarding the tax effects of the Option and the requirements necessary to obtain favorable tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements.
Notwithstanding the foregoing, to the extent that the Option is designated in the Stock Option Grant Notice as an ISO and is not deemed to be an ISO pursuant to Section 422(d) of the Code because the aggregate Fair Market Value (determined as of the Date of Option Grant) of any of the Shares with respect to which this ISO is granted becomes exercisable for the first time during any calendar year in excess of $100,000, the portion of the Option representing such excess value shall be treated as a Non-Qualified Option and the Participant shall be deemed to have taxable income measured by the difference between the then Fair Market Value of the Shares received upon exercise and the price paid for such Shares pursuant to this Agreement.
Neither the Company nor any Affiliate shall have any liability to the Participant, or any other party, if the Option (or any part thereof) that is intended to be an ISO is not an ISO or for any action taken by the Administrator, including without limitation the conversion of an ISO to a Non-Qualified Option.
15. | NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION OF AN ISO. |
If this Option is designated in the Stock Option Grant Notice as an ISO then the Participant agrees to notify the Company in writing immediately after the Participant makes a Disqualifying Disposition of any of the Shares acquired pursuant to the exercise of the ISO. A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale) of such Shares before the later of (a) two years after the date the Participant was granted the ISO or (b) one year after the date the Participant acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code. If the Participant has died before the Shares are sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.
16. | NOTICES. |
Any notices required or permitted by the terms of this Agreement or the Plan shall be given by recognized courier service, facsimile, registered or certified mail, return receipt requested, addressed as follows:
If to the Company:
Intercept Pharmaceuticals, Inc.
305 Madison Avenue
Morristown, NJ 07960
Attention: Chief Financial Officer
If to the Participant at the address set forth on the Stock Option Grant Notice or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given upon the earlier of receipt, one business day following delivery to a recognized courier service or three business days following mailing by registered or certified mail.
17. | GOVERNING LAW. |
This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction in New York and agree that such litigation shall be conducted in the state courts of New York County, New York or the federal courts of the United States for the District of the Southern District of New York.
18. | BENEFIT OF AGREEMENT. |
Subject to the provisions of the Plan and the other provisions hereof, this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.
19. | ENTIRE AGREEMENT. |
This Agreement, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement shall affect or be used to interpret, change or restrict, the express terms and provisions of this Agreement, provided, however, in any event, this Agreement shall be subject to and governed by the Plan.
20. | MODIFICATIONS AND AMENDMENTS. |
The terms and provisions of this Agreement may be modified or amended as provided in the Plan.
21. | WAIVERS AND CONSENTS. |
Except as provided in the Plan, the terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.
22.DATA PRIVACY.
By entering into this Agreement, the Participant: (i) authorizes the Company and each Affiliate, and any agent of the Company or any Affiliate administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of its Affiliates such information and data as the Company or any such Affiliate shall request in order to facilitate the grant of options and the administration of the Plan; and (ii) authorizes the Company and each Affiliate to store and transmit such information in electronic form for the purposes set forth in this Agreement.
Exhibit A
NOTICE OF EXERCISE OF STOCK OPTION
[Form for Shares registered in the United States]
To:Intercept Pharmaceuticals, Inc.
IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such time as the Company has filed a Registration Statement with the Securities and Exchange Commission under which the issuance of the Shares for which this exercise is being made is registered and such Registration Statement remains effective.
Ladies and Gentlemen:
I hereby exercise my Stock Option to purchase _________ shares (the “Shares”) of the common stock, $0.001 par value, of Intercept Pharmaceuticals, Inc. (the “Company”), at the exercise price of $________ per share, pursuant to and subject to the terms of that Stock Option Grant Notice dated _______________, 202_.
I understand the nature of the investment I am making and the financial risks thereof. I am aware that it is my responsibility to have consulted with competent tax and legal advisors about the relevant national, state and local income tax and securities laws affecting the exercise of the Option and the purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
Please issue the Shares (check one):
o to me; or
o to me and ____________________________, as joint tenants with right of survivorship,
at the following address:
|
|
|
My mailing address for shareholder communications, if different from the address listed above, is:
|
|
|
| | | Very truly yours, | |
| | | | |
| | | | |
| | | | |
| | | Participant (signature) | |
| | | | |
| | | | |
| | | | |
| | | Print Name | |
| | | | |
| | | | |
| | | | |
| | | Date | |
Exhibit 10.14
Restricted Stock Unit No. /$GrantID$/
INTERCEPT PHARMACEUTICALS, INC.
AMENDED AND RESTATED EQUITY INCENTIVE PLAN
RESTRICTED STOCK UNIT GRANT
Restricted Stock Unit Grant Notice (Employees and Consultants)
Intercept Pharmaceuticals, Inc. (the “Company”) hereby grants to the participant named below (the “Participant”) the number of restricted stock units (“RSUs”) set forth below (this “Award”). This Award is subject to all of the terms and conditions set forth in this Restricted Stock Unit Grant Notice (this “Grant Notice”), the Intercept Pharmaceuticals, Inc. Amended and Restated Equity Incentive Plan (the “Plan”) and the Restricted Stock Unit Agreement attached hereto (the “Agreement”). Capitalized terms not defined in this Grant Notice but defined in the Agreement or the Plan will have the meanings assigned to such terms in the Agreement or the Plan, as applicable. Except as expressly provided in the Agreement, in the event of any conflict between the provisions of this Grant Notice or the Agreement and those of the Plan, the provisions of the Plan will control.
1. | Name and Address of Participant: | /$ParticipantName$/ |
| | |
| | /$ParticipantAddress$/ |
| | |
2. | Date of Grant: | /$GrantDate$/ |
| | |
3. | Number of Shares | /$AwardsGranted$/ |
| | |
4. | Vesting Commencement Date: | [January 1, 2023] |
| 5. | Vesting Schedule: This Award shall vest as follows provided the Participant is an Employee, director or Consultant of the Company or an Affiliate on the applicable vesting date (see vesting schedule below): |
/$VestingSchedule$/
See Section 2(c) of the Agreement for vesting in the event of a Change of Control (as defined in the Agreement).
By accepting this Award, whether electronically or otherwise, the Participant acknowledges receipt of, and understands and agrees to, this Grant Notice, the Agreement and the Plan. Unless otherwise specified in a written agreement between the Company and the Participant, this Grant Notice, the Agreement and the Plan set forth the entire understanding between the Participant and the Company regarding this Award and supersede all prior oral and written agreements on the terms of this Award.
INTERCEPT PHARMACEUTICALS, INC.
AMENDED AND RESTATED EQUITY INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT
Pursuant to the Restricted Stock Unit Grant Notice to which this agreement is attached (the “Grant Notice”) and this Restricted Stock Unit Agreement (this “Agreement”), Intercept Pharmaceuticals, Inc. (the “Company”) has granted to the participant named in the Grant Notice (the “Participant”) a Restricted Stock Unit Award (this “Award”), under and for the purposes set forth in the Intercept Pharmaceuticals, Inc. Amended and Restated Equity Incentive Plan (the “Plan”), for the number of Restricted Stock Units (“RSUs”) indicated in the Grant Notice. Capitalized terms not defined in this Agreement or in the Grant Notice but defined in the Plan will have the meanings assigned to such terms in the Plan.
The terms and conditions of this Award, in addition to those set forth in the Grant Notice and the Plan, are as follows:
1.GRANT OF AWARD.
This Award represents the Participant’s right to receive one share of the Company’s common stock, par value $0.001 per share (the “Shares”), for each RSU that vests. Such Shares shall be delivered by the Company to the Participant within five days of the applicable vesting date and in accordance with this Agreement and the Plan. Except as otherwise provided herein, the Participant will not be required to make any payment to the Company (other than past and future services to the Company) with respect to the Participant’s receipt of this Award, the vesting of the RSUs or the delivery of the Shares to be issued in respect of this Award.
2.VESTING OF AWARD.
(a)Subject to the terms and conditions set forth in this Agreement and the Plan, this Award shall vest as set forth in the Grant Notice. This Award shall continue to vest in accordance with its terms for so long as the Participant is an Employee, director or Consultant of the Company or an Affiliate.
(b)Except as otherwise set forth in this Agreement, if the Participant ceases to be an Employee, director or Consultant of the Company or of an Affiliate for any reason other than the termination of the Participant for Cause (the date of such cessation of service, the “Termination Date”), then as of the Termination Date, all unvested RSUs shall immediately be forfeited at no cost to the Company and this Agreement shall terminate and be of no further force or effect; provided, however, that, in the event that this Award vests in equal annual installments and, following the first anniversary of the Vesting Commencement Date specified in the Grant Notice, the Participant’s employment with the Company or an Affiliate terminates by reason of death or Disability or, other than in the circumstances described in Section 2(c) below, an involuntary termination of employment without Cause, then (i) if the Termination Date is three (3) months or less before the next scheduled vesting date, 75% of the RSUs that were otherwise eligible to vest on such vesting date shall become fully vested as of the Termination Date, (ii) if the Termination Date is more than three (3) months but no more than six (6) months before the next scheduled vesting date, 50% of the RSUs that were otherwise eligible to vest on such vesting date shall become fully vested as of the Termination Date, (iii) if the Termination Date is more than six (6) months but no more than nine (9) months before the next scheduled vesting date, 25% of the RSUs that were otherwise eligible to vest on such vesting date shall become fully vested as of the Termination Date or (iv) if the Termination Date is more than nine (9) months before the next scheduled vesting date, none of such RSUs shall vest and, in each case, any outstanding RSUs that do not vest in accordance with this Section 2(b) shall be forfeited at no cost to the Company as of the Termination Date.
In the event the Participant’s service is terminated by the Company or an Affiliate for Cause, then as of the time the Participant is notified his or her service is terminated for Cause, all unvested RSUs shall immediately be forfeited at no cost to the Company and this Agreement shall terminate and be of no further force or effect.
(c)Notwithstanding the foregoing, except to the extent specifically provided to the contrary in any employment agreement between the Participant and the Company or an Affiliate, in the event of (i) a Change of Control (as defined below) and the Participant’s service with the Company, the acquiring or succeeding corporation or any Affiliate of any of the foregoing is terminated by such entity for any reason other than for Cause within 12
months of the Change of Control, then, immediately prior to such termination, all of the RSUs subject to this Award that are then unvested shall become fully vested, or (ii) a Corporate Transaction (as defined in Section 24(b) of the Plan) that is a Change of Control in which the acquiring entity does not assume this Award, then, immediately prior to the Change of Control, all of the RSUs subject to this Award that are then unvested shall become fully vested.
For purposes of this Agreement, “Change of Control” means the occurrence of any of the following events:
(i)Ownership. Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then-outstanding voting securities (excluding for this purpose any such voting securities held by the Company or its Affiliates or any employee benefit plan of the Company); or
(ii)Merger/Sale of Assets. (A) A merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (B) the sale or disposition by the Company of all or substantially all of the Company’s assets in a transaction requiring stockholder approval; or
(iii)Change in Board Composition. A change in the composition of the Board of Directors, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date of grant, or (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company).
(iv)“Change of Control” shall be interpreted, if applicable, in a manner, and limited to the extent necessary, so that it will not cause adverse tax consequences under Section 409A of the Code.
This Award (including any additional RSUs received by the Participant as a result of stock dividends, stock splits or any other similar transaction affecting the Company’s securities without receipt of consideration) shall not be transferable by the Participant otherwise than (i) by will or by the laws of descent and distribution, or (ii) pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act or the rules thereunder. Except as provided above in this Section 3, the Shares to be issued pursuant to this Award shall be issued during the Participant’s lifetime only to the Participant (or, in the event of legal incapacity or incompetency, to the Participant’s guardian or representative). This Award shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of this Award or of any rights granted hereunder contrary to the provisions of this Section 3, or the levy of any attachment or similar process upon this Award shall be null and void.
4.NO RIGHTS AS STOCKHOLDER.
Subject to Section 5 below, the Participant shall have no rights as a stockholder with respect to the Shares to be issued pursuant to this Award until registration of the Shares in the Company’s share register in the name of the Participant.
5.ADJUSTMENTS AND CASH DIVIDENDS.
(a)This Award, including the number of RSUs subject to this Award, shall be subject to adjustment from time to time as provided for in the Plan upon the occurrence of certain events described therein.
(b)To the extent that the Company declares and pays any cash dividend on its Common Stock while any RSUs subject to this Award are unvested, the Participant shall be eligible to receive upon vesting of such RSUs an amount equal to the amount of such dividend that the Participant would have received had the Shares underlying such RSUs been issued and held by the Participant at the time at which such dividend was declared; it being understood that no such amount shall be payable with respect to any RSUs that are forfeited.
6. | TAXES. |
The Participant acknowledges that any income or other taxes due from him or her with respect to this Award or the Shares issuable pursuant to this Award shall be the Participant’s responsibility. The Participant acknowledges and agrees that (i) the Participant was free to use professional advisors of his or her choice in connection with his or her acceptance of this Award, has received advice from his or her professional advisors in connection with his or her acceptance of this Award, understands its meaning and import, and has accepted this Award freely and without coercion or duress; and (ii) the Participant has not received and is not relying upon any advice, representations or assurances made by or on behalf of the Company or any Affiliate or any employee of or counsel to the Company or any Affiliate regarding any tax or other effects or implications of this Award, the Shares issuable pursuant to this Award or other matters contemplated hereby.
Without limiting the foregoing, the Participant agrees that if under applicable law the Participant will owe taxes upon the vesting of RSUs subject to this Award, the Company shall be entitled to immediate payment from the Participant of the amount of any tax required to be withheld by the Company. Any taxes due shall be paid, at the option of the Company, as follows (or utilizing such other arrangement as may be specified by the Company):
(a)through reducing the number of Shares otherwise entitled to be issued to the Participant on the applicable vesting date in an amount equal to the amount of withholding tax due and payable by the Company;
(b)requiring the Participant to deposit with the Company an amount of cash equal to the amount determined by the Company to be required with respect to the Participant’s estimated total federal, state and local tax obligations or otherwise withholding from the Participant’s remuneration an amount equal to the withholding tax due and payable; or
(c)requiring the Participant to make an automatic sale, effected by a broker-dealer designated by the Company, of a portion of the Shares issued to the Participant on the applicable vesting date sufficient to cover the applicable tax withholding obligation arising upon such vesting, with the proceeds thereof to be remitted to the Company to satisfy such tax withholding obligation. To the extent that the proceeds of such sale exceed the Company’s tax withholding obligation, such excess cash shall be paid to the Participant as soon as practicable. In addition, if such sale is not sufficient to pay the Company’s tax withholding obligation, the Participant agrees to pay to the Company as soon as practicable, including through additional payroll withholding, the amount of any tax withholding obligation that is not satisfied by the sale of Shares. The Participant agrees to hold the Company and the broker-dealer harmless from all costs, damages or expenses relating to any such sale. The Participant acknowledges that the Company and the broker-dealer are under no obligation to arrange for such sale at any particular price. In connection with such sale of Shares, the Participant shall execute any such documents requested by the broker-dealer in order to effectuate the sale of Shares and payment of the proceeds to the Company.
The Company shall not deliver any Shares to the Participant until it is satisfied that all required withholdings have been made.
7.SECURITIES LAWS COMPLIANCE.
The Participant specifically acknowledges and agrees that this Award and any delivery of Shares hereunder shall be subject to compliance with the requirements of the Securities Act and other applicable securities laws, rules or regulations. In addition, applicable securities laws, rules or regulations may restrict the ability of the Participant to
resell Shares delivered hereunder, including due to the Participant’s affiliation with the Company. The Company shall not be obligated to issue the Shares if such issuance would violate any applicable securities law, rule or regulation.
8. | NO OBLIGATION TO MAINTAIN RELATIONSHIP. |
The Participant acknowledges that: (i) the Company is not by the Plan or this Award obligated to continue the Participant as an Employee, director or Consultant of the Company or an Affiliate; (ii) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (iii) the grant of this Award is a one-time benefit which does not create any contractual or other right to receive future grants of awards, or benefits in lieu of awards; (iv) all determinations with respect to future grants, if any, will be at the sole discretion of the Company; (v) the Participant’s participation in the Plan is voluntary; (vi) the value of this Award is an extraordinary item of compensation which is outside the scope of the Participant’s employment or consulting contract, if any; and (vii) this Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
9. | NOTICES. |
Any notices required or permitted by the terms of this Agreement or the Plan shall be given by recognized courier service, registered or certified mail, return receipt requested, addressed as follows:
If to the Company:
Intercept Pharmaceuticals, Inc.
305 Madison Avenue
Morristown, NJ 07960
Attention: General Counsel
If to the Participant at the address set forth on the Grant Notice or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given upon the earlier of receipt, one business day following delivery to a recognized courier service or three business days following mailing by registered or certified mail.
The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan and this Award by electronic means. By accepting this Award, whether electronically or otherwise, the Participant consents to receive such documents by electronic delivery and to participate in the Plan through an online or electronic system established and maintained by the Company or another third party designated by the Company.
10. | GOVERNING LAW. |
The Grant Notice and this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under the Grant Notice, this Agreement or the Plan, each of the Company and, by accepting this Award, whether electronically or otherwise, the Participant hereby consents to exclusive jurisdiction in New York and agrees that such litigation shall be conducted in the state courts of New York County, New York or the federal courts of the United States for the District of the Southern District of New York.
11. | BENEFIT OF AGREEMENT. |
Subject to the provisions of the Plan and the other provisions hereof, the Grant Notice and this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.
12. | ENTIRE AGREEMENT. |
The Grant Notice and this Agreement, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in the Grant Notice or this Agreement shall affect or be used to interpret, change or restrict the express terms and provisions of the Grant Notice or this Agreement; provided, however, in any event, the Grant Notice and this Agreement shall be subject to and governed by the Plan. This Award is subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. In addition, this Award (and any compensation paid or shares issued pursuant to this Award) is subject to recoupment in accordance with The Dodd-Frank Wall Street Reform and Consumer Protection Act and any implementing regulations thereunder, any clawback policy adopted by the Company and any compensation recovery policy otherwise required by applicable law.
13. | MODIFICATIONS AND AMENDMENTS. |
The terms and provisions of the Grant Notice and this Agreement may be modified or amended as provided in the Plan.
14. | WAIVERS AND CONSENTS. |
Except as provided in the Plan, the terms and provisions of the Grant Notice and this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of the Grant Notice or this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.
15.DATA PRIVACY.
By accepting this Award, whether electronically or otherwise, the Participant: (i) authorizes the Company and each Affiliate, and any agent of the Company or any Affiliate administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of its Affiliates such information and data as the Company or any such Affiliate shall request in order to facilitate the grant of awards and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information or the sharing of such information; and (iii) authorizes the Company and each Affiliate to store and transmit such information in electronic form for the purposes set forth in the Grant Notice and this Agreement.
16.SEVERABILITY.
If all or any part of the Grant Notice, this Award Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of the Grant Notice, this Award Agreement or the Plan not declared to be unlawful or invalid. Any section of the Grant Notice, this Award Agreement or the Plan (or part of such a section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such section or part of a section to the fullest extent possible while remaining lawful and valid.
17.SECTION 409A.
This Award is intended to be exempt from the nonqualified deferred compensation rules of Section 409A of the Code as a “short term deferral” (as that term is used in the final regulations and other guidance issued under Section 409A of the Code, including Treasury Regulation Section 1.409A-1(b)(4)(i)), and shall be construed accordingly.
18.NON-U.S. PARTICIPANTS.
If the Participant works and/or resides outside of the United States, the applicable terms and conditions set forth in Appendix A shall apply to this Award. In addition, the Company reserves the right to impose other requirements on the Participant to the extent the Company determines that such requirements are necessary or
advisable in order to comply with local law or facilitate the administration of the Plan and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
APPENDIX A
INTERCEPT PHARMACEUTICALS, INC.
AMENDED AND RESTATED EQUITY INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS
This Appendix includes additional or different terms and conditions that govern this Award if the Participant works and/or resides outside of the United States. This Appendix forms part of the Restricted Stock Unit Agreement to which it is attached (the “Agreement”). Capitalized terms not defined in this Appendix but defined in the Agreement or the Plan will have the meanings assigned to such terms in the Agreement or the Plan, as applicable. References within this Appendix to “you” refer to the Participant.
These terms are general in nature, may not apply to your particular situation and are based on securities, tax and other laws that are often complex and subject to frequent change. As such, the Company strongly recommends that you do not rely on this summary as your only source of information relating to the consequences of your Award and participation in the Plan and further that you consult your personal tax or legal advisors for advice as to how the laws in your country apply to your situation. Note that if you are a citizen or resident of a country other than the one in which you are working, additional requirements, other than those described herein, may be applicable to you.
ALL NON-U.S. PARTICIPANTS
| 1. | TAXES (REPLACING SECTION 6 OF THE AGREEMENT) |
The Participant acknowledges that any income or other taxes due from him or her with respect to this Award or the Shares issuable pursuant to this Award, as well as any amounts in respect of taxes or social security contributions (including, as applicable, employer National Insurance Contributions) that the Participant has elected to bear, shall be the Participant’s responsibility. The Participant acknowledges and agrees that (i) the Participant was free to use professional advisors of his or her choice in connection with his or her acceptance of this Award, has received advice from his or her professional advisors in connection with his or her acceptance of this Award, understands its meaning and import, and has accepted this Award freely and without coercion or duress; and (ii) the Participant has not received and is not relying upon any advice, representations or assurances made by or on behalf of the Company or any Affiliate or any employee of or counsel to the Company or any Affiliate regarding any tax or other effects or implications of this Award, the Shares issuable pursuant to this Award or other matters contemplated hereby.
Without limiting the foregoing, the Participant agrees that if under applicable law the Participant will owe taxes and social security contributions upon the vesting of RSUs subject to this Award, the Company shall be entitled to immediate payment from the Participant of the amount of any federal, provincial, state, local and personal income taxes, wage tax and social security contributions (including, as applicable, Canada Pension Plan) required by law to be withheld by the Company. Any such taxes and social security contributions due shall be paid, at the option of the Company, as follows (or utilizing such other arrangement as may be specified by the Company):
(a) | withholding from the Participant’s paycheck an amount equal to the federal, provincial, state, local and personal income taxes, wage tax and social security contributions required by law or contract to be withheld; or |
(b) | requiring the Participant to make an automatic sale, effected by a broker-dealer designated by the Company, of a portion of the Shares issued to the Participant on the applicable vesting date sufficient to cover the applicable tax or social security withholding obligation arising upon such vesting, with the proceeds thereof to be remitted to the Company to satisfy such tax or social security withholding obligation. To the extent that the proceeds of such sale exceed the Company’s tax or social security withholding obligation, such excess cash shall be paid to the Participant as soon as practicable. In addition, if such sale is not sufficient to pay the Company’s tax or social security withholding |
obligation, the Participant agrees to pay to the Company as soon as practicable, including through additional payroll withholding, the amount of any tax or social security withholding obligation that is not satisfied by the sale of Shares. The Participant agrees to hold the Company and the broker-dealer harmless from all costs, damages or expenses relating to any such sale. The Participant acknowledges that the Company and the broker-dealer are under no obligation to arrange for such sale at any particular price. In connection with such sale of Shares, the Participant shall execute any such documents requested by the broker-dealer in order to effectuate the sale of Shares and payment of the proceeds to the Company.
The Company shall not deliver any Shares to the Participant until it is satisfied that all required withholdings have been made.
| 2. | WAIVER OF RIGHTS ON TERMINATION (EXCEPT FRANCE, PORTUGAL, SPAIN AND DENMARK) |
The Participant hereby waives all and any rights to compensation or damages in consequence of the termination of his or her office or employment with the Company or his or her employing entity for any reasons whatsoever (whether lawful or unlawful and including, without prejudice to the generality of the foregoing, in circumstances giving rise to a claim for wrongful dismissal) insofar as those rights arise or may arise from his or her ceasing to have rights under or being entitled to be issued shares of Common Stock on vesting of the RSUs as a result of such termination, or from the loss or diminution in value of any rights or entitlements in connection with the Plan.
The Plan and this Award do not form part of the Participant’s contract of employment. If the Participant ceases to be employed or engaged by the Company or any Affiliate for any reason (including as a result of a repudiatory breach of contract by the Company or its Affiliate), the Participant shall not be entitled, and by participating in the Plan the Participant shall be deemed irrevocably to have waived any entitlement, by way of compensation for loss of employment, breach of contract or otherwise to any sum or other benefit to compensate the Participant for any rights or prospective rights under the Plan. This exclusion applies equally (and without limitation) to any loss arising from the way in which the discretion is (or is not) exercised under any provision of the Plan even if the exercise (or non-exercise) of such discretion is, or appears to be, irrational or perverse and/or breaches, or is claimed to breach any implied term of the Plan or any other contract between the Participant and the Participant’s employer. Participation in the Plan and any benefits provided under it shall not be pensionable nor will they count as pay or remuneration when calculating salary related benefits (including, but not limited to, pension).
| 3. | Data Privacy (In Addition To Section 15 OF THE AGREEMENT) (Except Italy, Portugal AND SPAIN) |
| (2) | The Participant acknowledges the following: |
| (i) | the Company holds certain personal information about the Participant, including, but not limited to, his or her name, home address and telephone number, work location and phone number, date of birth, hire date, bank and payroll details, social security numbers, details of all awards or any other entitlement to shares awarded, cancelled, exercised, vested, unvested or outstanding in the Participant’s favor, for the purpose of implementing, administering and managing the Plan (“Personal Data”); |
| (ii) | providing or transferring Personal Data to the Company is necessary and essential to the Participant’s participation in the Plan and that the Participant’s refusal to provide Personal |
| Data or withdrawal of consent to the collection, storage or transfer of Personal Data may affect the Participant’s ability to participate in the Plan since it would be impossible for the Company to comply with its contractual obligations under the Plan; |
| (iii) | the Participant’s Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country; |
| (iv) | the Participant has been informed that the Company shall not transfer Personal Data from the Participant’s country without requiring the recipient to comply with the requirements of the General Data Protection Regulation (as applicable) and applicable data protection laws, and that the Participant may request a list with the names and addresses of any potential recipients of the Personal Data by contacting his or her local human resources representative; |
| (v) | Personal Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan and any potential claim made by the Participant in relation to any award; and |
| (vi) | the Participant may, at any time, exercise the right of access, rectification and cancelation of the Participant’s personal data, oppose, request additional information about the storage and processing of Personal Data or refuse to the further processing of the Personal Data by contacting in writing the Participant’s local human resources representative (who can be identified on the Company’s intranet). |
ADDITIONAL COUNTRY-SPECIFIC PROVISIONS
AUSTRALIA
Financial product advice: The Participant acknowledges and agrees that advice provided by the Company (if any) in relation to this Award is of a general nature only and does not take into account the objectives, financial situation or needs of the Participant. The Participant should consider obtaining advice from a person who is licensed by the Australian Securities and Investments Commission to give such advice. The Company is not licensed to provide financial product advice in Australia in relation to restricted stock units and there is no cooling-off regime in Australia that applies in respect of the grant of restricted stock units.
Risk of acquiring and holding Common Stock: The Participant acknowledges that there are risks of acquiring and holding Common Stock. Before accepting this Award, or acquiring the underlying Shares, the Participant should satisfy himself or herself that he or she has a sufficient understanding of these matters and should consider whether Common Stock is a suitable investment for the Participant, having regard to the investment objectives, financial circumstances and taxation position of the Participant.
| (b) | The price at which Common Stock is quoted on the Nasdaq Global Select Market may decrease, even to the extent that the price is less than the price or prices paid for the Shares by the Participant. |
| (c) | There is no guarantee that an active market in Common Stock will continue. The number of potential buyers or sellers of Common Stock on the Nasdaq Global Select Market may vary at any time. This may increase the volatility of the market price of Common Stock. |
| (d) | The Company may not pay dividends on Common Stock at any particular level or at all. If the Company has paid dividends on Common Stock, it may cease to pay such dividends. |
| (e) | Holding Common Stock may have tax implications for the Participant and the tax regime applying to the Participant may change. |
Market price of Common Stock: The Participant could, from time to time, ascertain the market price of Common Stock in Australian Dollars by obtaining the market price from the Nasdaq Global Select Market website, the Company’s website or applicable U.S. publication, and multiplying that market price by a published exchange rate to convert U.S. Dollars into Australian Dollars.
BELGIUM
Timing and calculation basis of taxation. You will recognize taxable income upon vesting of the RSUs, and you will be required to include the taxable income within your yearly income tax return covering the financial year during which vesting occurs. The amount of the taxable income is calculated on the basis of the fair market value of the Shares at the time of vesting. To the extent you are explicitly required to hold the Shares for at least an additional 2 years beyond the date of vesting, then the taxable income may be limited to the difference between 100/120th of the fair market value of the Shares acquired and the price you paid. The income will be taxed as compensation income and subject to income tax and social security contributions.
Capital gains on sale. The capital gains on the sale of the Shares acquired upon vesting are not taxable to the extent you qualify as a Belgian tax resident.
CANADA
Vesting of Award. For purposes of Section 2 of the Agreement, the Participant’s “Termination Date” means the later of: (i) the date that is the last day of any statutory notice period applicable to the Participant pursuant to applicable employment standards legislation; and (ii) the date that is designated by the Company or Affiliate to which the Participant provides services as the last day of the Participant’s employment, term of office or engagement with the Company or Affiliate (as applicable); provided, that in the case of termination of employment by voluntary resignation by the Participant, such date shall not be earlier than the date notice of resignation was given. For certainty, except only as expressly required by applicable employment standards legislation, as amended or replaced, or agreed by the Company, no portion of this Award shall vest following the Participant’s Termination Date and no period of notice or payment in lieu of notice in respect of a termination of an office or employment without Cause shall extend such Termination Date.
Dividends. To the extent that the Company declares and pays any cash dividend on its Common Stock while any RSUs subject to this Award are unvested, the Participant shall be eligible to receive upon vesting of such RSUs an amount equal to the amount of such dividend that the Participant would have received had the Shares underlying such RSUs been issued and held by the Participant at the time at which such dividend was declared; it being understood that no such amount shall be payable with respect to any RSUs that are forfeited.
DENMARK
Danish Stock Option Act. In accepting this Award, you acknowledge that you have received an Employer Statement translated into Danish, which is being provided to comply with the Danish Stock Option Act and which sets out the main terms of the Plan applying to you. To the extent more favorable to you and required to comply with the Stock Option Act, the terms set forth in the Employer Statement, including terms regarding vesting and forfeiture in connection with termination of your employment will apply to your participation in the Plan.
Exchange Control Notification. If you establish an account holding Shares or cash outside Denmark, you must report the account to the Danish Tax Administration. The form which should be used in this respect can be obtained from a local bank. (Please note that these obligations are separate from and in addition to the obligations described below.)
Securities and Tax Reporting Notification. You may hold Shares acquired under the Plan in a safety-deposit account (e.g., a brokerage account) with either a Danish bank or with an approved foreign broker or bank. If
the Shares are held with a foreign broker or bank, you are required to inform the Danish Tax Administration about the safety-deposit account. For this purpose, you must file a Form V (Erklaering V) with the Danish Tax Administration. Both you and the broker or bank must sign the Form V. By signing the Form V, the broker or bank undertakes an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the Shares in the safety-deposit account. In the event that the applicable broker or bank with which the account is held does not wish to, or pursuant to the laws of the country in question, is not allowed to assume such obligation to report, you will be solely responsible for providing certain details regarding the foreign brokerage or bank account and any Shares acquired in connection with the Plan and held in such account to the Danish Tax Administration as part of your annual income tax return. By signing the Form V, you authorize the Danish Tax Administration to examine the account. A sample of the Form V can be found at the following website: www.skat.dk.
In addition, if you open a brokerage account or a bank account with a U.S. bank, the account will be treated as a deposit account because cash can be held in the account. Therefore, you must also file a Form K (Erklaering K) with the Danish Tax Administration. Both you and the broker must sign the Form K. By signing the Form K, the broker or bank, as applicable, undertakes an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the content of the deposit account. In the event that the applicable financial institution (broker or bank) with which the account is held does not wish to, or pursuant to the laws of the country in question, is not allowed to assume such obligation to report, you will be solely responsible for providing certain details regarding the foreign brokerage or bank account to the Danish Tax Administration as part of your annual income tax return. By signing the Form K, you authorize the Danish Tax Administration to examine the account. A sample of Declaration K can be found at the following website: www.skat.dk.
FRANCE
Language Consent. By accepting the grant, you confirm that you have read and understood the documents relating to the grant (the Plan, the Grant Notice and the Agreement, including this Appendix) which were provided in the English language. You confirm that you are fluent in English, written and spoken. You accept the terms of these documents accordingly.
Consentement Relatif à la Langue Utilisée. En acceptant l’attribution, vous confirmez avoir lu et compris les documents relatifs à l’attribution (le Plan, l’Avis et le Contrat, y compris cette Annexe) qui ont été communiqués en langue anglaise. Vous acceptez les termes de ces documents en connaissance de cause.
Tax Notification. This Award is not intended to qualify for favorable tax or social security treatment in France.
Exchange Control Notification. If you hold Shares outside of France or maintain a foreign bank account, you are required to report such to the French tax authorities when filing your annual tax return.
Dividends. To the extent that the Company declares and pays any cash dividend on its Common Stock while any RSUs subject to this Award are unvested, the Participant shall be eligible to receive upon vesting of such RSUs an amount equal to the amount of such dividend that the Participant would have received had the Shares underlying such RSUs been issued and held by the Participant at the time at which such dividend was declared; it being understood that no such amount shall be payable with respect to any RSUs that are forfeited.
GERMANY
Taxes. The following provision replaces Section 1 of this Appendix A:
The Participant acknowledges that any income or other taxes (including solidarity surcharges, social security contributions and church taxes) due from him or her with respect to this Award or the Shares issuable pursuant to this Award shall be the Participant’s responsibility. The Participant acknowledges and agrees that (i) the Participant was free to use professional advisors of his or her choice in connection with his or her acceptance of this Award, has received advice from his or her professional advisors in connection with his or her
acceptance of this Award, understands its meaning and import, and has accepted this Award freely and without coercion or duress; and (ii) the Participant has not received and is not relying upon any advice, representations or assurances made by or on behalf of the Company or any Affiliate or any employee of or counsel to the Company or any Affiliate regarding any tax or other effects or implications of this Award, the Shares issuable pursuant to this Award or other matters contemplated hereby.
Without limiting the foregoing, the Participant agrees that if under applicable law, income by the Participant arising from or in relation to (i) the granting or vesting of this Award or (ii) the delivery of the Shares, is subject to taxes (including solidarity surcharges and church taxes) or social security contributions, the Company shall be entitled to immediate payment from the Participant of the amount of any federal, provincial, state, local and personal income taxes, wage tax (including solidarity surcharges and church taxes) and social security contributions required by law to be withheld by the Company. Any such taxes (including solidarity surcharges and church taxes) and social security contributions due shall be paid to the competent tax or other public authority, at the option of the Company, as follows (or utilizing such other arrangement as may be specified by the Company):
(a) | deduction or withholding from the Participant’s remuneration, or requiring the Participant to remit to the Company, an amount equal to the statutory or contractual amount of any federal, provincial, state, local and personal income taxes, wage tax (including solidarity surcharge and church tax) and social security contributions required by law or contract to be withheld arising from or in relation to (i) the granting or vesting of this Award or (ii) the delivery of the Shares; or |
(b) | requiring the Participant to make an automatic sale, effected by a broker-dealer designated by the Company, of a portion of the Shares issued to the Participant on the applicable vesting date sufficient to cover the applicable tax (including solidarity surcharge and church tax) or social security withholding obligation, with the proceeds thereof to be remitted to the Company to satisfy such tax (including solidarity surcharge and church tax) or social security withholding obligation. To the extent that the proceeds of such sale exceed the Company’s tax (including solidarity surcharge and church tax) or social security withholding obligation, such excess cash shall be paid to the Participant as soon as practicable. In addition, if such sale is not sufficient to pay the Company’s tax (including solidarity surcharge and church tax) or social security withholding obligation, the Participant agrees to pay to the Company as soon as practicable, including through additional payroll withholding, the amount of any tax or social security withholding obligation that is not satisfied by the sale of Shares. The Participant agrees to hold the Company and the broker-dealer harmless from all costs, damages or expenses relating to any such sale. The Participant acknowledges that the Company and the broker-dealer are under no obligation to arrange for such sale at any particular price. In connection with such sale of Shares, the Participant shall execute any such documents requested by the broker-dealer in order to effectuate the sale of Shares and payment of the proceeds to the Company. |
The Company shall not deliver any Shares to the Participant until it is satisfied that all required withholdings have been made. The Participant further agrees that, if the Company does not withhold an amount from the Participant’s remuneration sufficient to satisfy the Company’s income or wage tax (including solidarity surcharge and church tax) and social security withholding obligation, the Participant will reimburse the Company on demand, in cash, for the amount under-withheld.
For the avoidance of doubt, the Company, inter alia, has the authority to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy applicable taxes (including wage taxes (Lohnsteuern), solidarity surcharges (Solidaritätszuschläge), church taxes (Kirchensteuern) and social security contributions (Sozialversicherungsbeiträge)) arising from or relating to the (i) the granting or vesting of this Award or (ii) the delivery of the Shares.
Dividends. To the extent that the Company declares and pays any cash dividend on its Common Stock while any RSUs subject to this Award are unvested, the Participant shall be eligible to receive upon vesting of such RSUs an amount equal to the amount of such dividend that the Participant would have received had the
Shares underlying such RSUs been issued and held by the Participant at the time at which such dividend was declared; it being understood that no such amount shall be payable with respect to any RSUs that are forfeited.
ITALY
Data Privacy. The following provision replaces Section 3 of this Appendix A:
You understand that the Company and/or any Affiliate may hold certain personal information about you, including, without limitation, your name, home address and telephone number, date of birth, social insurance or other identification number, salary, nationality, job title, any Shares or directorships held in the Company or an Affiliate, details of all restricted stock units, or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the exclusive purpose of implementing, managing, and administering the Plan (“Data”) and in compliance with applicable laws and regulations.
You also understand that providing the Company with Data is necessary for the performance of the Plan and that your refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect your ability to participate in the Plan. The Controller of personal data processing is Intercept Pharmaceuticals, Inc., 305 Madison Avenue, Morristown, NJ 07960 and pursuant to Art. 6 let. b) and c) of the General Data Protection Regulation (“GDPR”) and Legislative Decree no. 196/2003, its representative in Italy.
You understand that Data will not be publicized, but it may be transferred to the Company’s designated broker/third party administrator for the Plan or such other stock plan service provider as may be selected by the Company in the future (any such entity, “Broker”), or other third parties involved in the management and administration of the Plan. You understand that Data may also be transferred to the independent registered public accounting firm engaged by the Company. You further understand that the Company and its Affiliates will transfer Data amongst themselves as necessary for the purposes of implementing, administering and managing your participation in the Plan, and that the Company and/or Affiliate may each further transfer Data to third parties assisting the Company in the implementation, administration and management of the Plan, including any requisite transfer of Data to the Broker or other third party with whom you may elect to deposit any Shares acquired under the Plan. Such recipients may receive, possess, use, retain, and transfer Data in electronic or other form, for the purposes of implementing, administering, and managing your participation in the Plan. You understand that these recipients may be located in or outside the European Economic Area, such as in the United States or elsewhere, and in locations that might not provide the same level of protection as intended under Italian data privacy laws. In such case, the Company undertakes to comply with the applicable privacy law in order to ensure that the recipient meets the same standards provided by the European Union legislation, implementing appropriate and suitable safeguards, such as using standard clauses or equivalent safeguard measures as provided for by Art. 46 of the GDPR and paragraph 7 of Legislative Decree no. 196/2003. Should the Company exercise its discretion in suspending all necessary legal obligations connected with the management and administration of the Plan, it will delete Data as soon as it has completed all the necessary legal obligations connected with the management and administration of the Plan.
You understand that Data processing related to the purposes specified above shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data is collected and with confidentiality and security provisions, as set forth by applicable laws and regulations, with specific reference to Art. 6 let. b) and c) of the GDPR and Legislative Decree no. 196/2003.
The processing activity, including communication, the transfer of Data abroad, including outside of the European Economic Area, as herein specified and pursuant to applicable laws and regulations, does not require your consent thereto, as the processing is necessary to performance of contractual obligations related to implementation, administration, and management of the Plan. You understand that, pursuant to Art. 15 of the GDPR and paragraph 7 of Legislative Decree no. 196/2003, you have the right to, without limitation, access, delete, update, correct, or terminate, for legitimate reason, the Data processing. Additionally, you understand that you may exercise the right to portability, within the limits set forth by Art. 20 of the GDPR.
Furthermore, you are aware that Data will not be used for direct-marketing purposes. In addition, Data provided can be reviewed and questions or complaints can be addressed by contacting your local human resources representative.
Grant Document Acknowledgment. In accepting the grant of this Award, you acknowledge that you have received a copy of the Plan, the Grant Notice and the Agreement, including this Appendix, and have reviewed the Plan, the Grant Notice and the Agreement, including this Appendix, in their entirety and fully understand and accepts all provisions thereof.
Foreign Asset Reporting Notification. If you are an Italian resident and, during any fiscal year, hold investments or financial assets outside of Italy (e.g., cash, Shares) which may generate income taxable in Italy (or if you are the beneficial owner of such an investment or asset even if you do not directly hold the investment or asset), you are required to report such investments or assets on your annual tax return for such fiscal year (on UNICO Form, RW Schedule, or on a special form if you are not required to file a tax return).
NORWAY
Securities and Tax Reporting Notification. You may hold Shares acquired under the Plan in a safety-deposit account (e.g., a brokerage account) with either a Norwegian bank or with an approved foreign broker or bank. If the Shares are held with a foreign broker or bank, you are required to inform the Norwegian Tax Administration about the safety-deposit account. You do this on forms RF-1088 and RF-1059 in connection with filing your annual tax return (“selvangivelse”). Shares held with a Norwegian bank will be reported automatically.
PORTUGAL
Language Consent. By accepting the grant of this Award, you confirm that you have read and understood the documents relating to the grant (the Plan, the Grant Notice and the Agreement, including this Appendix) which were provided to you in English language. You confirm that you are fluent in English, written and spoken. You accept the terms of these documents accordingly.
Grant Document Acknowledgment. In accepting the grant of the this Award, you acknowledge that you have received a copy of the Plan, the Grant Notice and the Agreement, including this Appendix, and have reviewed the Plan, the Grant Notice and the Agreement, including this Appendix, in their entirety and fully understand and accept all provisions thereof.
Tax Reporting Obligation. If the Shares acquired under the Plan are held with a foreign broker or bank, you are required to inform the Portuguese Tax Authorities about the existence of such account. For this purpose, within the annual submission of your personal income tax return you must file Annex J with the Portuguese Tax Administration, identifying the account by reference to the applicable IBAN – International Bank Account Number and BIC - Bank Identifier Code. Income arising out of the Plan and/or derived from the Shares is subject to reporting to the Portuguese Tax Authorities.
Data Privacy. The following provision replaces Section 3 of this Appendix A:
You understand that the Company holds certain personal information about you, including, but not limited to, your name, home address and telephone number, work location and phone number, date of birth, hire date, details of all awards or any other entitlement to shares awarded, cancelled, exercised, vested, unvested or outstanding in the Participant’s favor, for the purpose of implementing, administering and managing the Plan (“Personal Data”).
You understand that the providing or transferring of Personal Data to the Company is necessary and essential to your participation in the Plan and that your refusal to provide Personal Data or withdrawal of consent to the collection, storage or transfer of Personal Data may affect your ability to participate in the Plan since it would be impossible for the Company to comply with its contractual obligations under the Plan.
You understand that your Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than the Participant’s country.
You were informed that the personal data communicated outside of Portugal will be protected identically as provided for in Law No. 67/98, of 26 October, and that you may request a list with the names and addresses of any potential recipients of the Personal Data by contacting your local human resources representative.
You authorize the recipients to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan.
You understand that Personal Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan and any potential claim of the Participant.
You understand that you may, at any time, exercise of the right of access, rectification and cancelation of your personal data, oppose, request additional information about the storage and processing of Personal Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative (who can be identified on the Company’s intranet).
SPAIN
Taxes. The following provision supplements Section 1 of this Appendix A:
Pursuant to Royal Decree-Law 13/2011 of 16 September (as amended), wealth tax (Impuesto sobre el Patrimonio) has been temporarily restored in Spain. If the Participant’s only foreign assets are the Shares and the value of the Shares on 31 December exceeds the specified threshold the Participant will be required to make a declaration to the Spanish tax authorities between 1 January and 31 March of the immediately following year. The Participant much declare foreign rights and assets including (i) ISIN code of Shares; (ii) the name and corporate domicile of the issuing company; and (iii) the number, class, and value of the Shares held as of 31 December.
Exchange Controls. The Participant is responsible for complying with exchange control regulations in Spain. Declaration of the acquisition of Shares for statistical purposes to the Dirección General de Comercio e Inversiones (DGCI) of Ministerio de Economía is compulsory (i) if the purchase price exceeds the specified threshold; (ii) if the investor holds a stake of at least 10 percent in the Company; or (iii) if the investor belongs to the Company’ s board of directors. If Participants purchase any Shares through the use of a Spanish financial institution, the institution will automatically make the declaration to the DGCI; otherwise the Participant must make the declaration by filing the appropriate form with the DGCI. The Participant must also declare ownership of Shares with the DGCI in January of each year.
Data Privacy. The following provisions replace Section 3 of this Appendix A:
The Participant’s personal data will be processed by Intercept Pharmaceuticals, Inc. (the “Data Controller”) with a corporate domicile at 305 Madison Avenue, Morristown, NJ 07960.
The purpose of the processing is to implement the Grant Notice and the Agreement under the Plan, verify eligibility conditions and develop and perform the contractual and legal obligations arising thereof. The processing of the Participant’s personal data is necessary for such purposes and its legal basis are the execution and development of the contractual relationship and, if applicable, the compliance with legal duties applicable to the Data Controller. Personal data will be processed whilst the Participant holds the relevant awards and, after this, for six years, or, exceptionally, for the period during which any kind of liability may arise from a legal or contractual obligation applicable to the Data Controller.
The Participant’s personal data will be transferred outside the European Economic Area, to the United States, where Intercept Pharmaceuticals, Inc. is located. A copy of the relevant appropriate safeguards subscribed in
order to carry out such international data transfer can be requested from human resources. Additionally, the Participant’s personal data may be disclosed only to those group companies which may have a legal basis for processing this personal data.
The Participant may exercise his/her right of access, rights to rectification, erasure, objection, data portability, restriction of processing and any other right recognized by the applicable regulations from time to time, by sending a request to human resources. The Participant may also file any claim or request related to his or her data protection rights with the relevant supervisory authority. The personal data processed for the purposes described above derives from the execution of the Participant’s employment agreement or, in case that the Participant is an independent professional, the relevant services agreement.
Dividends. To the extent that the Company declares and pays any cash dividend on its Common Stock while any RSUs subject to this Award are unvested, the Participant shall be eligible to receive upon vesting of such RSUs an amount equal to the amount of such dividend that the Participant would have received had the Shares underlying such RSUs been issued and held by the Participant at the time at which such dividend was declared; it being understood that no such amount shall be payable with respect to any RSUs that are forfeited.
UNITED KINGDOM
Taxes. The following provision replaces Section 1 of this Appendix A:
The Participant acknowledges that any income or other taxes and social security contributions due from him or her in connection with this Award or the Shares to be issued pursuant to this Award, as well as any amounts in respect of taxes or social security contributions (including employer National Insurance Contributions) that the Participant has elected to bear, shall be the Participant’s responsibility (“Participant Tax Liability”). The Participant acknowledges and agrees that (i) the Participant was free to use professional advisors of his or her choice in connection with his or her acceptance of this Award, has received advice from his or her professional advisors in connection with his or her acceptance of this Award, understands its meaning and import, and has accepted this Award freely and without coercion or duress; and (ii) the Participant has not received and is not relying upon any advice, representations or assurances made by or on behalf of the Company or any Affiliate or any employee of or counsel to the Company or any Affiliate regarding any tax or other effects or implications of this Award, the Shares issuable pursuant to this Award or other matters contemplated hereby.
Without limiting the foregoing, the Participant agrees (i) that the Participant shall pay to the Company, the Participant’s employer or former employer (as appropriate) the amount of any Participant Tax Liability; (ii) that the Company, the Participant’s employer or former employer (as appropriate) may, if it so elects by written notice to the Participant, recover the whole or any part of any employer National Insurance Contributions from the Participant; (iii) that the Participant shall, promptly upon being requested to do so by the Company, the Participant’s employer or former employer (as appropriate), elect (using a form approved by HM Revenue & Customs) that the whole or any part of the liability for employer National Insurance Contributions shall be transferred to the Participant; and (iv) to enter into a joint election, under section 431(1) or 431(2) of the Income Tax (Earnings & Pensions) Act 2003, in respect of the Shares delivered pursuant to this Award, if required to do so by the Company, the Participant’s employer or former employer, before, on or within 14 days after any date of delivery of such Shares. Any such Participant Tax Liability due shall be paid, at the option of the Company, as follows (or utilizing such other arrangement as may be specified by the Company):
| (f) | through reducing the number of Shares otherwise entitled to be issued to the Participant on the applicable vesting date in an amount equal to the amount of withholding tax due and payable by the Company; or |
| (g) | withholding from the Participant’s paycheck an amount equal to the Participant Tax Liability. |
Exhibit 10.15
Restricted Stock Unit No. /$GrantID$/
INTERCEPT PHARMACEUTICALS, INC.
Restricted Stock Unit Award Grant Notice for Directors
Restricted Stock Unit Award Grant under the Company’s
Amended and Restated Equity Incentive Plan
1.Name and Address of Participant:/$ParticipantName$/
/$ParticipantAddress$/
2.Date of Grant of
Restricted Stock Unit Award:/$GrantDate$/
3.Maximum Number of Shares underlying
Restricted Stock Unit Award:/$AwardsGranted$/
4.Vesting of Award: This Restricted Stock Unit Award shall vest as follows provided the Participant is an Employee, director or Consultant of the Company or of an Affiliate on the applicable vesting date (see vesting schedule below):
/$VestingSchedule$/
Notwithstanding the foregoing, in the event that the Company’s 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”) is held on or prior to May 25, 2023, this Restricted Stock Unit Award shall vest in full on the day immediately preceding the date of the 2023 Annual Meeting.
See Section 2(d) for vesting in the event of a Change of Control (as defined herein).
The Company and the Participant acknowledge receipt of this Restricted Stock Unit Award Grant Notice and agree to the terms of the Restricted Stock Unit Agreement attached hereto and incorporated by reference herein, the Company’s Amended and Restated Equity Incentive Plan and the terms of this Restricted Stock Unit Award as set forth above.
INTERCEPT PHARMACEUTICALS, INC.
RESTRICTED STOCK UNIT AGREEMENT -
INCORPORATED TERMS AND CONDITIONS
AGREEMENT made as of the date of grant set forth in the Restricted Stock Unit Award Grant Notice between Intercept Pharmaceuticals, Inc. (the “Company”), a Delaware corporation, and the individual whose name appears on the Restricted Stock Unit Award Grant Notice (the “Participant”).
WHEREAS, the Company has adopted the Intercept Pharmaceuticals, Inc. Amended and Restated Equity Incentive Plan (the “Plan”), to promote the interests of the Company by providing an incentive for directors of the Company and its Affiliates;
WHEREAS, pursuant to the provisions of the Plan, the Company desires to grant to the Participant restricted stock units (“RSUs”) related to the Company’s common stock, par value $0.001 per share (“Common Stock”), in accordance with the provisions of the Plan, all on the terms and conditions hereinafter set forth; and
WHEREAS, the Company and the Participant understand and agree that any terms used and not defined herein have the meanings ascribed to such terms in the Plan.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Grant of Award. The Company hereby grants to the Participant the number of RSUs set forth in the Restricted Stock Unit Award Grant Notice (the “Award”) which represents a contingent entitlement of the Participant to receive shares of Common Stock, on the terms and conditions and subject to all the limitations set forth herein and in the Plan, which is incorporated herein by reference. The Participant acknowledges receipt of a copy of the Plan.
2. Vesting of Award.
(a) Subject to the terms and conditions set forth in this Agreement and the Plan, the Award granted hereby shall vest as set forth in the Restricted Stock Unit Award Grant Notice and is subject to the other terms and conditions of this Agreement and the Plan. On each vesting date set forth in the Restricted Stock Unit Award Grant Notice, the Participant shall be entitled to receive such number of shares of Common Stock equivalent to the number of RSUs set forth opposite such vesting date provided that, on such vesting date, the Participant is a director, Employee or Consultant of the Company or an Affiliate. Such shares of Common Stock shall thereafter be delivered by the Company to the Participant within five days of the applicable vesting date and in accordance with this Agreement and the Plan. The purchase price is $0.001 per share payable if and when shares of Common Stock are issued by the Company, which payment will be made by the Company on behalf of the Participant as compensation for the Participant’s prior service to the Company and which amount will be reported as income on the Participant’s W-2 (or other applicable form) in the year of payment.
(b) Except as otherwise set forth in this Agreement, if the Participant ceases to be, for any reason, a director, Employee or Consultant of the Company or an Affiliate (the “Termination”) prior to a vesting date set forth in the Restricted Stock Unit Award Grant Notice, then as of the date on which such relationship is terminated with the Participant, all unvested RSUs shall immediately be forfeited to the Company and this Agreement shall terminate and be of no further force or effect.
(c) Effect of a For Cause Termination. Notwithstanding anything to the contrary contained in this Agreement, in the event the Company or an Affiliate terminates the Participant’s employment or service, as the case may be, for Cause, all of the RSUs then held by the Participant shall be forfeited to the Company immediately as of the time the Participant is notified that his or her employment or service has been terminated for Cause or that he or
she engaged in conduct which would constitute Cause and this Agreement shall terminate and be of no further force or effect.
(d) Change of Control. Notwithstanding the foregoing, in the event of a Change of Control (as defined below), then, immediately prior to the Change of Control, all of the RSUs subject to this Award that are then unvested shall be deemed vested as of immediately prior to such Change of Control and the Participant shall receive immediately prior to such Change of Control such number of shares of Common Stock equivalent to the number of RSUs subject to this Award which have not yet vested under this Agreement.
Change of Control means the occurrence of any of the following events:
(i) Ownership. Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities (excluding for this purpose any such voting securities held by the Company or its Affiliates or any employee benefit plan of the Company) pursuant to a transaction or a series of related transactions which the Board of Directors does not approve; or
(ii) Merger/Sale of Assets. (A) A merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (B) the sale or disposition by the Company of all or substantially all of the Company’s assets in a transaction requiring stockholder approval; or
(iii) Change in Board Composition. A change in the composition of the Board of Directors, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date of grant of this award, or (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company).
(iv) “Change of Control” shall be interpreted, if applicable, in a manner, and limited to the extent necessary, so that it will not cause adverse tax consequences under Section 409A.
3. Prohibitions on Transfer and Sale. This Award (including any additional RSUs received by the Participant as a result of stock dividends, stock splits or any other similar transaction affecting the Company’s securities without receipt of consideration) shall not be transferable by the Participant otherwise than (i) by will or by the laws of descent and distribution, (ii) pursuant to a qualified domestic relations order as defined by the Internal Revenue Code or Title I of the Employee Retirement Income Security Act or the rules thereunder or (iii) pursuant to a Permitted Transfer (as defined below). Except as provided in the previous sentence, the shares of Common Stock to be issued pursuant to this Agreement shall be issued, during the Participant’s lifetime, only to the Participant (or, in the event of legal incapacity or incompetence, to the Participant’s guardian or representative). This Award shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of this Award or of any rights granted hereunder contrary to the provisions of this Section 3, or the levy of any attachment or similar process upon this Award shall be null and void. For purposes of this Agreement, a Permitted Transfer shall mean a transfer of this Award not for value following written notice to the General Counsel and
Secretary of the Company (which shall include an acknowledgement by the transferee(s) that the Award remains subject to all of its terms and conditions), to a member or members of the Participant's immediate family (consisting of any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships) or to other entities (such as a family limited partnership or a grantor retained annuity trust) solely for the benefit of the Participant and/or immediate family members. Any Permitted Transfer of the Award shall have no effect on the vesting provisions set forth in Section 2 of this Agreement or the other provisions of the Award, which shall remain in effect notwithstanding any such Permitted Transfer.
4. Adjustments. The Plan contains provisions covering the treatment of RSUs and shares of Common Stock in a number of contingencies such as stock splits. Provisions in the Plan for adjustment with respect to this Award and the related provisions with respect to successors to the business of the Company are hereby made applicable hereunder and are incorporated herein by reference.
5. Securities Law Compliance. The Participant specifically acknowledges and agrees that any sales of shares of Common Stock shall be made in accordance with the requirements of the Securities Act of 1933, as amended. The Company currently has an effective registration statement on file with the Securities and Exchange Commission with respect to the Common Stock to be granted hereunder. The Company intends to maintain this registration statement but has no obligation to do so. If the registration statement ceases to be effective for any reason or there is a restriction under foreign law, a Participant will not be able to transfer or sell any of the shares of Common Stock issued to the Participant pursuant to this Agreement unless exemptions from registration or filings under applicable securities laws are available. Furthermore, despite registration, applicable securities laws may restrict the ability of the Participant to resell his or her Common Stock, including due to the Participant’s affiliation with the Company. The Company shall not be obligated to either issue the Common Stock or permit the resale of any shares of Common Stock if such issuance or resale would violate any applicable securities law, rule or regulation.
6. Rights as a Stockholder. The Participant shall have no right as a stockholder, including voting and dividend rights, with respect to the RSUs subject to this Agreement.
7. Incorporation of the Plan. The Participant specifically understands and agrees that the RSUs and the shares of Common Stock to be issued under the Plan will be issued to the Participant pursuant to the Plan, a copy of which Plan the Participant acknowledges he or she has read and understands and by which Plan he or she agrees to be bound. The provisions of the Plan are incorporated herein by reference.
8. Tax Liability of the Participant and Payment of Taxes. The Participant acknowledges and agrees that any income or other taxes due from the Participant with respect to this Award or the shares of Common Stock to be issued pursuant to this Agreement or otherwise sold shall be the Participant’s responsibility. Without limiting the foregoing, the Participant agrees that if under applicable law the Participant will owe taxes at each vesting date on the portion of the Award then vested the Company shall be entitled to immediate payment from the Participant of the amount of any tax required to be withheld by the Company. Any taxes due shall be paid, at the option of the Company as follows:
(a) through reducing the number of shares of Common Stock entitled to be issued to the Participant on the applicable vesting date in an amount equal to the amount of minimum withholding tax due and payable by the Company. Fractional shares will not be retained to satisfy any portion of the withholding tax. Accordingly, the Participant agrees that in the event that the amount of withholding tax owed would result in a fraction of a share being owed, that amount will be satisfied by withholding the fractional amount from the Participant’s paycheck;
(b) requiring the Participant to deposit with the Company an amount of cash equal to the amount determined by the Company to be required with respect to the statutory minimum of the Participant’s estimated total federal, state and local tax obligations or otherwise withholding from the Participant’s paycheck an amount equal to the withholding tax due and payable; or
(c) if the Company believes that the sale of shares can be made in compliance with applicable securities laws, authorizing, at a time when the Participant is not in possession of material nonpublic information, the
sale by the Participant on the applicable vesting date of such number of shares of Common Stock as the Company instructs a registered broker to sell to satisfy the Company’s withholding obligation, after deduction of the broker’s commission, and the broker shall be required to remit to the Company the cash necessary in order for the Company to satisfy its withholding obligation. To the extent the proceeds of such sale exceed the Company’s tax withholding obligation the Company agrees to pay such excess cash to the Participant as soon as practicable. In addition, if such sale is not sufficient to pay the Company’s tax withholding obligation the Participant agrees to pay to the Company as soon as practicable, including through additional payroll withholding, the amount of any tax withholding obligation that is not satisfied by the sale of shares of Common Stock. The Participant agrees to hold the Company and the broker harmless from all costs, damages or expenses relating to any such sale. The Participant acknowledges that the Company and the broker are under no obligation to arrange for such sale at any particular price. In connection with such sale of shares of Common Stock, the Participant shall execute any such documents requested by the broker in order to effectuate the sale of shares of Common Stock and payment of the withholding obligation to the Company. The Participant acknowledges that this paragraph is intended to comply with Section 10b5-1(c)(1(i)(B) under the Exchange Act.
The Company shall not deliver any shares of Common Stock to the Participant until it is satisfied that all required withholdings have been made.
9. Participant Acknowledgements and Authorizations.
The Participant acknowledges the following:
(a) The Company is not by the Plan or this Award obligated to continue the Participant as an Employee, director or Consultant of the Company or of an Affiliate.
(b) The Plan is discretionary in nature and may be suspended or terminated by the Company at any time.
(c) The grant of this Award is considered a one-time benefit and does not create a contractual or other right to receive any other award under the Plan, benefits in lieu of awards or any other benefits in the future.
(d) The Plan is a voluntary program of the Company and future awards, if any, will be at the sole discretion of the Company, including, but not limited to, the timing of any grant, the amount of any award, vesting provisions and the purchase price, if any.
(e) The value of this Award is an extraordinary item of compensation outside of the scope of any employment or service. As such, the Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments. The future value of the shares of Common Stock is unknown and cannot be predicted with certainty.
(f) The Participant (i) authorizes the Company and its Affiliates or, if the Participant is not employed by the Company or an Affiliate, his or her employer, to furnish the Company and its Affiliates (and any agent administering the Plan or providing recordkeeping services) with such information and data as it shall request in order to facilitate the grant of the Award and the administration of the Plan, (ii) waives any data privacy rights he or she may have with respect to such information or the sharing of such information, and (iii) authorizes the Company and its Affiliates to store and transmit such information in electronic form.
10. Notices. Any notices required or permitted by the terms of this Agreement or the Plan shall be given by recognized courier service, facsimile, registered or certified mail, return receipt requested, addressed as follows:
If to the Company:
Intercept Pharmaceuticals, Inc.
305 Madison Avenue
Morristown, NJ 07960
Attention: Chief Financial Officer
If to the Participant at the address set forth on the Restricted Stock Unit Award Grant Notice or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given on the earliest of receipt, one business day following delivery by the sender to a recognized courier service, or three business days following mailing by registered or certified mail.
11. Assignment and Successors.
(a) This Agreement is personal to the Participant and without the prior written consent of the Company shall not be assignable by the Participant otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Participant’s legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.
12. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under this Agreement, whether at law or in equity, the parties hereby consent to exclusive jurisdiction in the state of New York and agree that such litigation shall be conducted in the state courts of New York or the federal courts of the United States for the Southern District of New York.
13. Severability. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then such provision or provisions shall be modified to the extent necessary to make such provision valid and enforceable, and to the extent that this is impossible, then such provision shall be deemed to be excised from this Agreement, and the validity, legality and enforceability of the rest of this Agreement shall not be affected thereby.
14. Entire Agreement. This Agreement, together with the Plan, constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement shall affect or be used to interpret, change or restrict the express terms and provisions of this Agreement provided, however, in any event, this Agreement shall be subject to and governed by the Plan.
15. Modifications and Amendments; Waivers and Consents. The terms and provisions of this Agreement may be modified or amended as provided in the Plan. Except as provided in the Plan, the terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.
16. Section 409A. The Award of RSUs evidenced by this Agreement is intended to be exempt from the nonqualified deferred compensation rules of Section 409A of the Code as a “short term deferral” (as that term is used in the final regulations and other guidance issued under Section 409A of the Code, including Treasury Regulation Section 1.409A-1(b)(4)(i)), and shall be construed accordingly.
Exhibit 10.16
Performance Stock Unit No. /$GrantID$/
INTERCEPT PHARMACEUTICALS, INC.
AMENDED AND RESTATED EQUITY INCENTIVE PLAN
PERFORMANCE STOCK UNIT GRANT
Performance Stock Unit Grant Notice
Intercept Pharmaceuticals, Inc. (the “Company”) hereby grants to the participant named below (the “Participant”) the number of performance stock units (“PSUs”) set forth below (this “Award”). This Award is subject to all of the terms and conditions set forth in this Performance Stock Unit Grant Notice (this “Grant Notice”), the Intercept Pharmaceuticals, Inc. Amended and Restated Equity Incentive Plan (the “Plan”) and the Performance Stock Unit Agreement attached hereto (the “Agreement”). Capitalized terms not defined in this Grant Notice but defined in the Agreement or the Plan will have the meanings assigned to such terms in the Agreement or the Plan, as applicable. Except as expressly provided in the Agreement, in the event of any conflict between the provisions of this Grant Notice or the Agreement and those of the Plan, the provisions of the Plan will control.
| 1. | Name and Address of Participant:/$ParticipantName$/ |
/$ParticipantAddress$/
| 2. | Date of Grant:/$GrantDate$/ |
| 3. | Number of PSUs:/$AwardsGranted$/ |
(the “Target Award Amount”)
The following definitions shall apply for purposes of this Grant Notice and the Agreement:
The “Beginning Stock Price” for the Company and each member of the Peer Group shall equal the average closing price for such company’s common equity on the principal exchange on which such equity is traded for each of the trading days in [December 2021] (the month shortly before the date of grant), after adjusting for the Dividend Value, as applicable.
The “Ending Stock Price” for the Company and each member of the Peer Group shall equal the average closing price for such company’s common equity on the principal exchange on which such equity is traded for each of the trading days in [December 2024] (the end of the third year after the date of grant), after adjusting for the Dividend Value, as applicable.
The “Dividend Value” shall mean the value of any dividends paid on a share in [December 2021] (the month shortly before the date of grant) or during the Performance Period, with the payment date deemed to have occurred on the ex-dividend date for such dividend and the amount of such dividend deemed reinvested in shares of the applicable issuer as of the ex-dividend date (based on the closing price of such shares on such date).
The “Performance Period” shall mean the three-year period commencing on [January 1, 2022] (the month shortly before the date of grant) and ending on [December 31, 2024] (the end of the third year after the date of grant).
The “Peer Group” shall consist of the companies that comprised the S&P Biotechnology Select Industry Index as of [January 1, 2022] (the month shortly before the date of grant); provided, however, that any company included in the Peer Group that (i) ceases to be publicly traded during the Performance Period shall be removed from the Peer Group or (ii) subsequently reorganizes under the United States Bankruptcy Code (or any successor or comparable law) shall remain in the Peer Group and all such companies (if any) shall be deemed to be ranked below all other companies in the Peer Group.
“TSR” shall mean the percent return of an applicable share of common equity of the Company or a member of the Peer Group, determined using the following calculation:
TSR = | Ending Stock Price - Beginning Stock Price |
Beginning Stock Price |
Except as otherwise set forth in the Agreement, following the completion of the Performance Period, the vesting of this Award shall be determined by (i) calculating the TSR of the Company and each member of the Peer Group for the Performance Period and (ii) determining the Company’s ranking within the Peer Group based on its TSR for the Performance Period.
The Company’s Percentile Rank within the Peer Group shall be calculated using the formula below, where “N” is the total companies in the Peer Group including the Company and “R” is the Company’s ranking within the Peer Group:
Percentile Rank = | N - R |
N - 1 |
Payment of this Award shall be made as specified in the following chart:
Percentile Rank | Payout Percentage |
75th Percentile and Above | 150% |
50th Percentile | 100% |
25th Percentile | 50% |
Below 25th Percentile | 0% |
There shall be straight line interpolation to determine the Payout Percentage earned for results falling in between the quartiles specified in the above chart. Notwithstanding the above, in the event that the Company’s TSR for the Performance Period is negative, the maximum Payout Percentage for this Award shall be the Target Award Amount.
By accepting this Award, whether electronically or otherwise, the Participant acknowledges receipt of, and understands and agrees to, this Grant Notice, the Agreement and the Plan. Unless otherwise specified in a written agreement between the Company and the Participant, this Grant Notice, the Agreement and the Plan set forth the entire understanding between the Participant and the Company regarding this Award and supersede all prior oral and written agreements on the terms of this Award.
INTERCEPT PHARMACEUTICALS, INC.
AMENDED AND RESTATED EQUITY INCENTIVE PLAN
PERFORMANCE STOCK UNIT AGREEMENT
Pursuant to the Performance Stock Unit Grant Notice to which this agreement is attached (the “Grant Notice”) and this Performance Stock Unit Agreement (this “Agreement”), Intercept Pharmaceuticals, Inc. (the “Company”) has granted to the participant named in the Grant Notice (the “Participant”) a Performance Stock Unit Award (this “Award”), under and for the purposes set forth in the Intercept Pharmaceuticals, Inc. Amended and Restated Equity Incentive Plan (the “Plan”), for the number of Performance Stock Units (“PSUs”) indicated in the Grant Notice. Capitalized terms not defined in this Agreement or in the Grant Notice but defined in the Plan will have the meanings assigned to such terms in the Plan.
The terms and conditions of this Award, in addition to those set forth in the Grant Notice and the Plan, are as follows:
This Award represents the Participant’s right to receive the number of shares of the Company’s common stock, par value $0.001 per share (the “Shares”), as calculated pursuant to the Grant Notice. Such Shares shall be delivered by the Company to the Participant on or prior to the date that is 60 days following the end of the Performance Period (as defined in the Grant Notice) and in accordance with this Agreement and the Plan. Except as otherwise provided herein, the Participant will not be required to make any payment to the Company (other than past and future services to the Company) with respect to the Participant’s receipt of this Award, the vesting of the PSUs or the delivery of the Shares to be issued in respect of this Award.
For purposes of this Agreement, “Change of Control” means the occurrence of any of the following events:
(i)Ownership. Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then-outstanding voting securities (excluding for this purpose
any such voting securities held by the Company or its Affiliates or any employee benefit plan of the Company); or
(ii)Merger/Sale of Assets. (A) A merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (B) the sale or disposition by the Company of all or substantially all of the Company’s assets in a transaction requiring stockholder approval; or
(iii)Change in Board Composition. A change in the composition of the Board of Directors, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date of grant, or (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company).
(iv)“Change of Control” shall be interpreted, if applicable, in a manner, and limited to the extent necessary, so that it will not cause adverse tax consequences under Section 409A of the Code.
This Award (including any additional PSUs received by the Participant as a result of stock dividends, stock splits or any other similar transaction affecting the Company’s securities without receipt of consideration) shall not be transferable by the Participant otherwise than (i) by will or by the laws of descent and distribution, or (ii) pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act or the rules thereunder. Except as provided above in this Section 3, the Shares to be issued pursuant to this Award shall be issued during the Participant’s lifetime only to the Participant (or, in the event of legal incapacity or incompetency, to the Participant’s guardian or representative). This Award shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of this Award or of any rights granted hereunder contrary to the provisions of this Section 3, or the levy of any attachment or similar process upon this Award shall be null and void.
Subject to Section 5 below, the Participant shall have no rights as a stockholder with respect to the Shares to be issued pursuant to this Award until registration of the Shares in the Company’s share register in the name of the Participant.
5.ADJUSTMENTS AND CASH DIVIDENDS.
(a)This Award, including the number of PSUs subject to this Award, shall be subject to adjustment from time to time as provided for in the Plan upon the occurrence of certain events described therein.
(b)To the extent that the Company declares and pays any cash dividend on its Common Stock while any PSUs subject to this Award are unvested, the Participant shall be eligible to receive upon vesting of such PSUs an amount equal to the amount of such dividend that the Participant would have received had the Shares underlying such PSUs been issued and held by the Participant at the time at which such dividend was declared; it being understood that no such amount shall be payable with respect to any PSUs that are forfeited.
6. | TAXES. |
The Participant acknowledges that any income or other taxes due from him or her with respect to this Award or the Shares issuable pursuant to this Award shall be the Participant’s responsibility. The Participant acknowledges and agrees that (i) the Participant was free to use professional advisors of his or her choice in connection with his or her acceptance of this Award, has received advice from his or her professional advisors in connection with his or her acceptance of this Award, understands its meaning and import, and has accepted this Award freely and without coercion or duress; and (ii) the Participant has not received and is not relying upon any advice, representations or assurances made by or on behalf of the Company or any Affiliate or any employee of or counsel to the Company or any Affiliate regarding any tax or other effects or implications of this Award, the Shares issuable pursuant to this Award or other matters contemplated hereby.
Without limiting the foregoing, the Participant agrees that if under applicable law the Participant will owe taxes upon the vesting of PSUs subject to this Award, the Company shall be entitled to immediate payment from the Participant of the amount of any tax required to be withheld by the Company. Any taxes due shall be paid, at the option of the Company, as follows (or utilizing such other arrangement as may be specified by the Company):
(a)through reducing the number of Shares otherwise entitled to be issued to the Participant on the applicable vesting date in an amount equal to the amount of withholding tax due and payable by the Company;
(b)requiring the Participant to deposit with the Company an amount of cash equal to the amount determined by the Company to be required with respect to the Participant’s estimated total federal, state and local tax obligations or otherwise withholding from the Participant’s remuneration an amount equal to the withholding tax due and payable; or
(c)requiring the Participant to make an automatic sale, effected by a broker-dealer designated by the Company, of a portion of the Shares issued to the Participant on the applicable vesting date sufficient to cover the applicable tax withholding obligation arising upon such vesting, with the proceeds thereof to be remitted to the Company to satisfy such tax withholding obligation. To the extent that the proceeds of such sale exceed the Company’s tax withholding obligation, such excess cash shall be paid to the Participant as soon as practicable. In addition, if such sale is not sufficient to pay the Company’s tax withholding obligation, the Participant agrees to pay to the Company as soon as practicable, including through additional payroll withholding, the amount of any tax withholding obligation that is not satisfied by the sale of Shares. The Participant agrees to hold the Company and the broker-dealer harmless from all costs, damages or expenses relating to any such sale. The Participant acknowledges that the Company and the broker-dealer are under no obligation to arrange for such sale at any particular price. In connection with such sale of Shares, the Participant shall execute any such documents requested by the broker-dealer in order to effectuate the sale of Shares and payment of the proceeds to the Company.
The Company shall not deliver any Shares to the Participant until it is satisfied that all required withholdings have been made.
7.SECURITIES LAWS COMPLIANCE.
The Participant specifically acknowledges and agrees that this Award and any delivery of Shares hereunder shall be subject to compliance with the requirements of the Securities Act and other applicable securities laws, rules or regulations. In addition, applicable securities laws, rules or regulations may restrict the ability of the Participant to resell Shares delivered hereunder, including due to the Participant’s affiliation with the Company. The Company shall not be obligated to issue the Shares if such issuance would violate any applicable securities law, rule or regulation.
8. | NO OBLIGATION TO MAINTAIN RELATIONSHIP. |
The Participant acknowledges that: (i) the Company is not by the Plan or this Award obligated to continue the Participant as an Employee, director or Consultant of the Company or an Affiliate; (ii) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (iii) the grant of this Award is a one-time benefit which does not create any contractual or other right to receive future grants of awards, or benefits in lieu of awards; (iv) all determinations with respect to future grants, if any, will be at the sole discretion of the Company; (v) the Participant’s participation in the Plan is voluntary; (vi) the value of this Award is an extraordinary item of compensation which is outside the scope of the Participant’s employment or consulting contract, if any; and (vii) this
Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
9. | NOTICES. |
Any notices required or permitted by the terms of this Agreement or the Plan shall be given by recognized courier service, registered or certified mail, return receipt requested, addressed as follows:
If to the Company:
Intercept Pharmaceuticals, Inc.
305 Madison Avenue
Morristown, NJ 07960
Attention: General Counsel
If to the Participant at the address set forth on the Grant Notice or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given upon the earlier of receipt, one business day following delivery to a recognized courier service or three business days following mailing by registered or certified mail.
The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan and this Award by electronic means. By accepting this Award, whether electronically or otherwise, the Participant consents to receive such documents by electronic delivery and to participate in the Plan through an online or electronic system established and maintained by the Company or another third party designated by the Company.
10. | GOVERNING LAW. |
The Grant Notice and this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under the Grant Notice, this Agreement or the Plan, each of the Company and, by accepting this Award, whether electronically or otherwise, the Participant hereby consents to exclusive jurisdiction in New York and agrees that such litigation shall be conducted in the state courts of New York County, New York or the federal courts of the United States for the District of the Southern District of New York.
11. | BENEFIT OF AGREEMENT. |
Subject to the provisions of the Plan and the other provisions hereof, the Grant Notice and this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.
12. | ENTIRE AGREEMENT. |
The Grant Notice and this Agreement, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in the Grant Notice or this Agreement shall affect or be used to interpret, change or restrict the express terms and provisions of the Grant Notice or this Agreement; provided, however, in any event, the Grant Notice and this Agreement shall be subject to and governed by the Plan. This Award is subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. In addition, this Award (and any compensation paid or shares issued pursuant to this Award) is subject to recoupment in accordance with The Dodd-Frank Wall Street Reform and Consumer Protection Act and any implementing regulations thereunder, any clawback policy adopted by the Company and any compensation recovery policy otherwise required by applicable law.
13. | MODIFICATIONS AND AMENDMENTS. |
The terms and provisions of the Grant Notice and this Agreement may be modified or amended as provided in the Plan.
14. | WAIVERS AND CONSENTS. |
Except as provided in the Plan, the terms and provisions of the Grant Notice and this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of the Grant Notice or this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.
15.DATA PRIVACY.
By accepting this Award, whether electronically or otherwise, the Participant: (i) authorizes the Company and each Affiliate, and any agent of the Company or any Affiliate administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of its Affiliates such information and data as the Company or any such Affiliate shall request in order to facilitate the grant of awards and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information or the sharing of such information; and (iii) authorizes the Company and each Affiliate to store and transmit such information in electronic form for the purposes set forth in the Grant Notice and this Agreement.
16.SEVERABILITY.
If all or any part of the Grant Notice, this Award Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of the Grant Notice, this Award Agreement or the Plan not declared to be unlawful or invalid. Any section of the Grant Notice, this Award Agreement or the Plan (or part of such a section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such section or part of a section to the fullest extent possible while remaining lawful and valid.
17.SECTION 409A.
This Award is intended to be exempt from the nonqualified deferred compensation rules of Section 409A of the Code as a “short term deferral” (as that term is used in the final regulations and other guidance issued under Section 409A of the Code, including Treasury Regulation Section 1.409A-1(b)(4)(i)), and shall be construed accordingly.
18.NON-U.S. PARTICIPANTS.
If the Participant works and/or resides outside of the United States, the applicable terms and conditions set forth in Appendix A shall apply to this Award. In addition, the Company reserves the right to impose other requirements on the Participant to the extent the Company determines that such requirements are necessary or advisable in order to comply with local law or facilitate the administration of the Plan and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
APPENDIX A
INTERCEPT PHARMACEUTICALS, INC.
AMENDED AND RESTATED EQUITY INCENTIVE PLAN
PERFORMANCE STOCK UNIT AGREEMENT
TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS
This Appendix includes additional or different terms and conditions that govern this Award if the Participant works and/or resides outside of the United States. This Appendix forms part of the Performance Stock Unit Agreement to which it is attached (the “Agreement”). Capitalized terms not defined in this Appendix but defined in the Agreement or the Plan will have the meanings assigned to such terms in the Agreement or the Plan, as applicable. References within this Appendix to “you” refer to the Participant.
These terms are general in nature, may not apply to your particular situation and are based on securities, tax and other laws that are often complex and subject to frequent change. As such, the Company strongly recommends that you do not rely on this summary as your only source of information relating to the consequences of your Award and participation in the Plan and further that you consult your personal tax or legal advisors for advice as to how the laws in your country apply to your situation. Note that if you are a citizen or resident of a country other than the one in which you are working, additional requirements, other than those described herein, may be applicable to you.
COUNTRY-SPECIFIC PROVISIONS
UNITED KINGDOM
Taxes. The following provision replaces Section 6 of the Agreement:
The Participant acknowledges that any income or other taxes and social security contributions due from him or her in connection with this Award or the Shares to be issued pursuant to this Award, as well as any amounts in respect of taxes or social security contributions (including employer National Insurance Contributions) that the Participant has elected to bear, shall be the Participant’s responsibility (“Participant Tax Liability”). The Participant acknowledges and agrees that (i) the Participant was free to use professional advisors of his or her choice in connection with his or her acceptance of this Award, has received advice from his or her professional advisors in connection with his or her acceptance of this Award, understands its meaning and import, and has accepted this Award freely and without coercion or duress; and (ii) the Participant has not received and is not relying upon any advice, representations or assurances made by or on behalf of the Company or any Affiliate or any employee of or counsel to the Company or any Affiliate regarding any tax or other effects or implications of this Award, the Shares issuable pursuant to this Award or other matters contemplated hereby.
Without limiting the foregoing, the Participant agrees (i) that the Participant shall pay to the Company, the Participant’s employer or former employer (as appropriate) the amount of any Participant Tax Liability; (ii) that the Company, the Participant’s employer or former employer (as appropriate) may, if it so elects by written notice to the Participant, recover the whole or any part of any employer National Insurance Contributions from the Participant; (iii) that the Participant shall, promptly upon being requested to do so by the Company, the Participant’s employer or former employer (as appropriate), elect (using a form approved by HM Revenue & Customs) that the whole or any part of the liability for employer National Insurance Contributions shall be transferred to the Participant; and (iv) to enter into a joint election, under section 431(1) or 431(2) of the Income Tax (Earnings & Pensions) Act 2003, in respect of the Shares delivered pursuant to this Award, if required to do so by the Company, the Participant’s employer or former employer, before, on or within 14 days after any date of delivery of such Shares. Any such Participant Tax Liability due shall be paid, at the option of the Company, as follows (or utilizing such other arrangement as may be specified by the Company):
| (a) | through reducing the number of Shares otherwise entitled to be issued to the Participant on the applicable vesting date in an amount equal to the amount of withholding tax due and payable by the Company; or |
| (b) | withholding from the Participant’s paycheck an amount equal to the Participant Tax Liability. |
Exhibit 31.1
CERTIFICATION
I, Jerome Durso, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Intercept Pharmaceuticals, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 3, 2022 | By: | /s/ Jerome Durso |
| | Jerome Durso |
| | President and Chief Executive Officer |
| | (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
I, Andrew Saik, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Intercept Pharmaceuticals, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 3, 2022 | By: | /s/ Andrew Saik |
| | Andrew Saik |
| | Chief Financial Officer |
| | (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION
Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Jerome Durso, President and Chief Executive Officer of Intercept Pharmaceuticals, Inc. (the “Company”), and Andrew Saik, Chief Financial Officer of the Company, each hereby certifies that, to the best of his knowledge:
(1) The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2022, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and
(2) The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 3, 2022 | By: | /s/ Jerome Durso |
| | Jerome Durso |
| | President and Chief Executive Officer |
| | (Principal Executive Officer) |
| | |
Date: August 3, 2022 | By: | /s/ Andrew Saik |
| | Andrew Saik |
| | Chief Financial Officer |
| | (Principal Financial Officer) |
A signed original of this written statement required by Rule 13a-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350) has been provided to Intercept Pharmaceuticals, Inc. and will be retained by Intercept Pharmaceuticals, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Intercept Pharmaceuticals, Inc. under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.