Common use of Defective Services Clause in Contracts

Defective Services. 9.1 Notwithstanding any other provision of the Agreement, TiGenix may, by notice in writing to the Supplier (the “Step In Notice”), either itself or by a Third Party nominated by TiGenix, take over management/performance of the Services or any affected part of the Services if (each of the following constituting a “Defective Service”): 9.1.1 TiGenix is entitled to serve a termination notice pursuant to Section 17.4.1 or Section 18; 9.1.2 TiGenix demonstrates acts of fraud or wilful misconduct are being committed in relation to the Services; and/or 9.1.3 TiGenix is required to exercise its step in rights pursuant to this Section 9 in order to comply with any requirements imposed on it by a Government Competent Authority which cannot be fulfilled or which cannot be fulfilled within the required timelines by Supplier and/or PharmaCell. 9.2 Without prejudice to TiGenix’s rights to terminate the Agreement at the end of the Step In Period, the Parties agree that TiGenix cannot at the same time issue a Step In Notice as well as terminate this Agreement, it being understood that following a termination notice, TiGenix has the right to (continue to) Step In. 9.3 As soon as practicable following receipt of the Step in Notice, served under this Section 9, the Steering Committee shall discuss how the Supplier proposes to remedy the event giving rise to TiGenix’s right to step in, to the satisfaction of TiGenix and, failing an agreement within five (5) Business Days of the Step In Notice, how TiGenix shall exercise its step in rights including how it will engage any Third Party to act on its behalf. 9.4 In exercising its right of step in, TiGenix may itself provide, or may employ a Third Party to manage/perform, the affected Services or any part thereof. 9.5 The Supplier shall co-operate fully with and provide all reasonable assistance to TiGenix and any Third Party engaged by TiGenix to exercise TiGenix’s rights under this Section 9. The Supplier’s assistance shall include: 9.5.1 allowing TiGenix or the Third Party to communicate to the management of the Supplier the relevant instructions to have them implemented by the relevant personnel of the Supplier to enable TiGenix’s or Third Party’s management/performance of the affected Services; 9.5.2 allowing TiGenix or the Third Party reasonable access to the Facility and the Supplier’s equipment as needed to manage/perform the Services; and 9.5.3 allowing TiGenix or the Third Party reasonable access to such management records and systems which relate to the affected Services as is reasonably necessary to enable management/performance of the same. 9.6 By exercising its rights under this Section 9: 9.6.1 TiGenix shall not be obliged to pay or make any payments (whether by way of the Price or otherwise) to the Supplier for the Services in so far as TiGenix is managing/performing those Services for the duration of the Step In Period, save that if TiGenix or the Third Party appointed by it uses any assets, resources or employees of the Supplier, the Supplier shall be entitled to charge for the costs associated with such use on a time and materials basis. The Parties agree that these costs cannot exceed the Price that would have been paid for the provision of the affected Services; 9.6.2 the Supplier shall be liable to pay any additional costs directly incurred by TiGenix as a result of the exercise of this right by TiGenix (without prejudice to TiGenix’s other rights and remedies under the Agreement or Applicable Laws, but subject to the limitation of its right to terminate in accordance within Section 9.2); 9.6.3 TiGenix shall be exclusively liable towards patients and other Third Parties instead of Supplier, and shall indemnify Supplier against all claims, demands, loss damages, liabilities, settlement amounts, costs or expenses whatsoever (including reasonable attorneys’ fees and costs) arising from a claim, action or proceeding solely based on acts and omissions of itself, Supplier’s personnel and other persons acting under its supervision and complying fully with TiGenix’ direct instructions in performance of its rights under this Section 9; 9.6.4 TiGenix shall ensure that any Third Party appointed by it that has access to any premises, information, persons or materials pursuant to Section 9 is subject to reasonable confidentiality undertakings at least equivalent to those applicable under the Agreement and will abide by such security, health and safety requirements as the Supplier may reasonably require; and 9.6.5 The period during which TiGenix may exercise its step in rights following its issuing of a Step In Notice (“Step In Period”) shall initially be set at three (3) months, which period can be shortened or extended by mutual consent of the Parties. TiGenix and the Supplier shall meet weekly during the Step In Period to draft an action plan containing reasonable conditions directed towards quick resolving of the event which gave rise to the Step In Notice (to be completed by TiGenix within two weeks following the date of the Step In Notice) and discuss progress towards remedying or resolving the event which gave rise to the Step In Notice, if at all possible, including to decide whether or not the affected Services can be returned to the Supplier. As soon as the conditions laid down in the action plan are fulfilled and the Supplier has demonstrated the same to TiGenix, the Parties may mutually agree for the Step In Period to come to an end. If the conditions laid down in the action plan could not be fulfilled within the Step In Period, TiGenix has the option to terminate this Agreement.