Common use of Default Acceptance Clause in Contracts

Default Acceptance. a) If 3SBio is in default of its material obligations under this Agreement (including failure to meet Specifications), and/or 3SBio fails to perform an activity within the Program in accordance with the requirements in this Agreement (a “Default”), then Selecta, when Selecta has knowledge of a Default, and 3SBio, when 3SBio has knowledge of a Default, shall promptly notify the other Party in writing of any Default. If it is reasonably possible for 3SBio to cure the Default within [***] days of such written notice, then 3SBio shall cure such default as soon as reasonably possible, but within such [***] day period. If it is reasonably possible to cure the Default within such [***] day period, and such curable Default has not been cured within the [***] day period, or another period as mutually agreed in writing, Selecta may terminate this Agreement immediately upon written notice to 3SBio. b) In case of a Default that is curable by re-performance of a (portion of) the Program, 3SBio will re-perform the non-conforming portions of the Program in accordance with the terms as set out in this Agreement (including the Specifications and the Scope), as soon as reasonably possible, with the understanding that 3SBio will use its best efforts to re-initiate such non-conforming portions within the [***]-day period following notice thereof, or, if applicable, in the first available slot in 3SBio’s production schedule. If 3SBio repeats the non-conforming portions of the Program in order to cure a Default, it shall do so at its own cost and expense, including, but not limited to any costs or expenses associated with procuring Materials, Raw Materials, Process Consumables or Filling Components that are required to re-perform the non-conforming portions of the Program. [***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. c) The remedies set forth in this Section 13 do not prejudice any other of Selecta’s remedies, whether under this Agreement, at law or otherwise, with respect to 3SBio’s failure to perform any portion of the Program in accordance with the terms of this Agreement. d) Selecta will accept Drug Substance or Drug Product if manufactured and delivered to Selecta in accordance with this Agreement (including the Specifications). If Selecta, acting reasonably, finds that Drug Substance or Drug Product has not been manufactured or handled or in any other way used in accordance with this Agreement (including the Specifications), Selecta may elect, by giving written notice to 3SBio within [***] days after receipt by Selecta, to not accept such Drug Substance or Drug Product. If Selecta so elects, Selecta will specify in a written notice in reasonable detail the manner in which such Drug Substance or Drug Productfails to conform to the requirements of this Agreement. Failure by Selecta to reject any Drug Substance or Drug Product within such [***] days period will be deemed acceptance by Selecta of the relevant Drug Substance or Drug Product delivered. In the event that Selecta refuses acceptance, Selecta shall, as directed by 3SBio, either (i) hold the nonconforming portion of the shipment for 3SBio’s disposition, or (ii) return the nonconforming portion to 3SBio in accordance with 3SBio’s instructions at 3SBio’s costs. 3SBio shall have [***] days following receipt of Selecta’s written notice within which to reject Selecta’s non-acceptance and specify in a written notice in reasonable detail to Selecta why the Drug Substance or Drug Product does conform to the requirements of this Agreement. If Selecta does not agree with that notice, then the matter shall be referred to, and resolved by, the Joint Steering Committee (“JSC”), as established in Article 4 of the License Agreement. The JSC shall be fully empowered to resolve any disputes under this Section 13(d) as to conformity of the Drug Substance or Drug Product with technical requirements of this Agreement. For clarity, any other dispute than a dispute on conformity of the of Drug Substance or Drug Product with technical requirements of this Agreement, shall be dealt with in accordance with Section 13.6 of the License Agreement. If 3SBio agrees, or the JSC confirms that any Drug Substance or Drug Product has not been manufactured or handled or in any other way used in accordance with this Agreement (including the Specifications), the provisions of Section 13(a)-(c) shall apply with respect to such Drug Substance or Drug Product. e) If the JSC is unable to resolve whether Drug Substance or Drug Product has been manufactured and delivered to Selecta in accordance with this Agreement (including the Specifications) within [***] days of reference to the JSC, either Party will have the right to appoint an independent third party to review the records, test data and perform comparative tests and/or analyses on samples of the alleged defective Drug Substance or Drug Product in accordance with mutually agreed analytical methods that are consistent with the Specifications and the regulatory filings associated with such Drug Substance or Drug Product. The results as to whether or not Drug Substance or Drug Product is defective and the cause of any nonconformity shall be final and binding. Unless otherwise agreed to by the Parties in writing, the costs associated with such testing and review shall be borne by 3SBio if Drug Substance or Drug Product is defective, and otherwise by Selecta. If the independent third party determines that the Drug Substance or Drug Product has not been manufactured or handled or in any other way used in accordance with this Agreement (including the Specifications), the provisions of Section 13(a)-(c) shall apply with respect to such Drug Substance or Drug Product.