Document:

Exhibit 10.1

 

Dated 2 April 2014

(as amended and restated on 23 April 2014 and again on 28 May 2014)

 

 

TIGENIX NV

 

and

 

SWEDISH ORPHAN BIOVITRUM AB (publ)

 

 

DISTRIBUTION AGREEMENT

 

 

DISTRIBUTION AGREEMENT

 

Between:

 

TiGenix NV, a company incorporated under the laws of Belgium, with registered office at Romeinse straat 12 bus 2, 3001 Leuven, Belgium, registered with the register of legal entities of Leuven under number 0471.340.123, hereinafter referred to as “TiGenix”;

 

and

 

Swedish Orphan Biovitrum AB (publ), a company incorporated under the laws of Sweden, with registered office at SE-112 76 Stockholm, registered under number 556038-9321, hereinafter referred to as “Sobi”;

 

Whereas:

 

(A)                            TiGenix is engaged in the development, manufacturing and distribution of regenerative medicinal products for the treatment of damaged and osteoarthritic joints, inflammatory and autoimmune conditions;

 

(B)                            TiGenix has developed a medicinal product, ChondroCelect, as defined below, 10000 cells/μl, an implantation suspension intended for repair of single symptomatic cartilage defects of the femoral condyle of the knee (International Cartilage Repair Society [ICRS] grade III or IV) in adults;

 

(C)                            The active substance of ChondroCelect consists of characterised viable autologous chondrocytes (cartilage-forming cells) expanded ex vivo expressing specific marker proteins, a cell-based medicinal product;

 

(D)                            The chondrocytes are taken from a small biopsy of healthy cartilage from the patient at the hospital to be transported in an appropriate biopsy-kit to the Manufacturing Facility, where they are expanded, thereafter transported by an approved carrier back to the hospital in an Implantation-kit and then re-implanted during surgery with the aim to repair cartilage defects by the formation of durable cartilage;

 

(E)                             ChondroCelect has been approved by a Marketing Authorization in the EU. As part of the Marketing Authorization for ChondroCelect, a risk management system was required including an educational programme and a controlled distribution system. ChondroCelect must be administered by appropriately qualified health professionals and is restricted to hospital use only;

 

(F)                              Sobi has the expertise to register and distribute medicinal products in the Territory, as defined below;

 

(G)                            Sobi has an interest in acting as TiGenix’ exclusive distributor of ChondroCelect in the Territory, based on the terms and conditions agreed in this agreement (hereinafter together with the schedules referred to as the “Agreement”).

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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The Parties agree as follows:

 

1                                      Definitions

 

1.1                            For purposes of this Agreement, the following terms shall have the following meaning, both in plural and in singular:

 

1.1.1                   “Affiliates” means any Person directly or indirectly controlled by, controlling or under common control with, a Party, but only for so long as such control shall continue. For purposes of this definition, “control” (including, with correlative meanings, “controlled by”, “controlling” and “under common control with”) shall be presumed to exist with respect to a Person in the event of the possession, direct or indirect, of (i) the power to direct or cause the direction of the management and policies of such Person (whether through ownership of securities, by contract or otherwise), or (ii) at least fifty percent (50%) of the voting securities or other comparable equity interests. For the avoidance of doubt, neither of the Parties shall be deemed to be an “Affiliate” of the other;

 

1.1.2                   “Agreement” has the meaning as set out in recital (G);

 

1.1.3                   “Assigned Agreements” means the agreements listed in Schedule 6;

 

1.1.4                   “Assigned Hospitals” means Hospitals that have consented to the assignment to Sobi as of the Closing Date;

 

1.1.5                   “ATMP” means an advanced therapy medicinal product, as defined under European Parliament and Council Regulation 1394/2007, or, where applicable, the equivalent in the Territory of an advanced therapy medicinal product as defined under European Parliament and Council Regulation 1394/2007;

 

1.1.6                   “Biopsy” or “Procurement” means the extraction of Knee Cartilage, being the process by which the Knee Cartilage becomes available;

 

1.1.7                   “Biopsy-kit” means TiGenix’ biopsy-kit described in the User Manual;

 

1.1.8                   “cGMP” means current Good Manufacturing Practices as promulgated in EU Commission Directive 2003/94/EC (EU cGMP Guidelines), EU Commission Directive 2001/20/EC (Clinical Trials), EU Regulation EC 1394/2007 (Advanced Therapy medicinal Products (ATmP)), EU Directive 2001/83/EC (Medicinal Products for Human Use), and national implementation of the foregoing, and applicable International Conference on Harmonisation guidelines as well as any applicable regulatory guidelines issued by Government Competent Authorities in particular relevant guidance on good manufacturing practices contained in Volume 4 of the Rules Governing Medicinal Products in the European Union and the national implementations of these rules.

 

1.1.9                   “ChondroCelect” or “Product” means a cell-based medicinal product, consisting of characterized viable autologous cartilage cells (initially taken from a healthy region of a Patient’s articular knee cartilage), expanded ex vivo (outside the body) expressing specific

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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marker proteins, and finally re-implanted during surgery. ChondroCelect was approved by Marketing Authorization no EU/1/09/563/001 dated 5 October 2009;

 

1.1.10            “ChondroCelect Personal Data” means Personal Data processed by Sobi on behalf of TiGenix (i) in the framework of the ChondroCelect Process (including but not limited to personally identifiable information regarding Patients, Healthcare Providers and Surgeons processed in the framework of the ChondroCelect Process) or (ii) in connection with the Product (including but not limited to personally identifiable information processed in the framework of pharmacovigilance, such as for the global safety database for the Product, and personally identifiable information processed for traceability purposes); in respect of personally identifiable information regarding Patients, Sobi should only receive the Unique Code and coded Patient data (whereby “coded Patient data” means data that do not allow Sobi to identify the Patient concerned without intervention of the Hospital which holds the key to the Unique Code); for the avoidance of doubt, both the Unique Code and coded Patient data constitute ChondroCelect Personal Data to which clause 22.2 shall apply.

 

1.1.11            “ChondroCelect Process” has the meaning as set out in clause 5 and is further detailed in Schedule 4;

 

1.1.12            “ChondroCelect Specifications” means the ChondroCelect specifications set out in the applicable Marketing Authorization;

 

1.1.13            “ChondroCelect Training” means the training of healthcare providers and surgeons provided by Sobi (after accreditation by TiGenix) (or prior to the Closing Date, by TiGenix) pursuant to the training material provided and/or approved by TiGenix;

 

1.1.14            “Claim” has the meaning as set out in clause 19.1;

 

1.1.15            “Closing Date” means June 1, 2014;

 

1.1.16            “Commencement Date” means April 2, 2014;

 

1.1.17            “Confidential Material” has the meaning as set out in clause 17.2;

 

1.1.18            “Control” means, when used in reference to intellectual property, other intangible property, or materials, that a Party owns or has a license or sublicense to such intellectual property, other intangible property or materials, and has the ability to grant a license or sublicense or other right to use such intellectual property, other intangible property or materials, as applicable, as provided for herein, without (i) requiring the consent of a Third Party or (ii) violating the terms of any agreement or other arrangement with any Third Party;

 

1.1.19            “Data Controller” has the meaning as set out in clause 22.1;

 

1.1.20            “Data Processor” has the meaning as set out in clause 22.1;

 

1.1.21            “Data Subject” has the meaning as set out in clause 22.1;

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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1.1.22            “Default” means (i) a breach, default or violation, (ii) the occurrence of an event that with or without the passage of time or the giving of notice, or both, would constitute a breach, default or violation or cause an Encumbrance to arise, or (iii) with respect to any Contract, the occurrence of an event that with or without the passage of time or the giving of notice, or both, would give rise to a right of termination, modification, renegotiation, acceleration, cancellation, or a right to receive damages or a payment of penalties;

 

1.1.23            “Designated Laboratory” means the laboratory designated by TiGenix.

 

1.1.24            “Disclosing Party” has the meaning as set out in clause 17.1.1;

 

1.1.25            “Encumbrance” means any claim, mortgage, pledge, assessment, security interest, option, deed of trust, lease, lien, levy, restriction on transferability, defect in title, charge or other encumbrance of any kind, whether voluntarily incurred or arising by operation of Law or any conditional sale or title retention agreement or other agreement to give any of the foregoing in the future. For avoidance of doubt, Encumbrances shall not include licenses;

 

1.1.26            “Excluded Liabilities” has the meaning as set out in clause 12.2;

 

1.1.27            “Governmental Authority” means any multinational, federal, state, local, municipal or other governmental authority of any nature (including any governmental division, prefecture, subdivision, department, agency, bureau, branch, office, commission, council, court or other tribunal), in each case, having jurisdiction over the applicable subject matter;

 

1.1.28            “Healthcare Provider” means a healthcare provider working at a Hospital who has followed the ChondroCelect Training, as evidenced by a training record signed by the trainer(s) and the healthcare provider and whose training is still valid;

 

1.1.29            “Hospital” means a hospital in the Territory ordering ChondroCelect from Sobi pursuant to a Hospital Agreement or pursuant to an Assigned Agreement;

 

1.1.30            “Hospital Agreement” means the agreements entered into by Sobi with the Hospitals in accordance with clause 10.3.2, excluding the Assigned Agreements;

 

1.1.31            “Hospital Agreement Requirements” has the meaning as set out in clause 10.3.2;

 

1.1.32            “Implantation” means the surgical procedure for implanting ChondroCelect in the knee;

 

1.1.33            “Implantation-kit” means TiGenix’ implantation-kit described in the User Manual;

 

1.1.34            “Indemnification Claim Notice” has the meaning as set out in clause 19.8.1;

 

1.1.35            “Indemnified Party” has the meaning as set out in clause 19.8.1;

 

1.1.36            “Indemnifying Party” has the meaning as set out in clause 19.8.1;

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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1.1.37            “Indemnitee(s)” has the meaning as set out in clause 19.8.1;

 

1.1.38            “Indication” means the repair of single symptomatic cartilage defects of the femoral condyle of the knee (International Cartilage Repair Society [ICRS] grade III or IV) in adults;

 

1.1.39            “Informed Consent Form” means the consent form to be filled out and signed by the Patient, a template of which is included in the User Manual and which may be modified from time to time by TiGenix or Sobi if so required by laws, regulations or necessary permits, such as for example in the event of a process change;

 

1.1.40            “IPR” means Patents, copyrights, software rights, registered and unregistered design rights, trade marks, trade and business names, trade secrets, know-how, database rights, domain names, other intellectual property rights and all other similar or corresponding proprietary rights (whether registered or unregistered) and all applications for and rights to apply for the same, anywhere in the world;

 

1.1.41            “Knee Cartilage” means the cartilage extracted from the knee of a Patient using the Biopsy-kit;

 

1.1.42            “Laboratory Testing” means the laboratory tests to be performed by the Designated Laboratory;

 

1.1.43            “Liabilities” means any liability, indebtedness, obligation, claim, loss, damage, deficiency, penalty, cost, expense, guarantee or commitment, including any liability for taxes;

 

1.1.44            “License for Pharmaceutical Wholesale Distribution” means a valid license for the wholesale distribution of pharmaceuticals in the Territory;

 

1.1.45            “Losses” has the meaning as set out in clause 19.1;

 

1.1.46            “Manufacturing Facility” means the cGMP manufacturing facility, approved by the Regulatory Authority for manufacturing of the Product, at which the Product is manufactured;

 

1.1.47            “Marketing Authorization” means the approval of a Regulatory Authority necessary for the marketing and sale of the Product in a given country or regulatory jurisdiction (but shall not include any pricing approvals);

 

1.1.48            “Minimum Binding Volumes” has the meaning as set out in Schedule 2a;

 

1.1.49            “Minimum Sales” has the meaning as set out in clause 13.2.1;

 

1.1.50            “Net Sales” means the sales proceeds invoiced by Sobi, its Affiliates, and its sub-licensees in respect of sales to any Third Party of the Products less: (i) rebates granted in connection with reimbursement agreements with local, regional or national health authorities; (ii) discounts (e.g. trade discounts/cash discounts/quantity discounts) with a limit of 10% of the gross sales proceeds invoiced by Sobi; (iii) sales, value-added, excise

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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taxes, tariffs and duties directly related to the sale of the Product, to the extent actually borne by Sobi without reimbursement from any Third Party (but not including taxes assessed against the income derived from such sale); (iv) goods returned (e.g. rejections, defects, recalls, returns) with a limit of 10% of the gross sales invoiced by Sobi and only to the extent that the Product was initially invoiced by Sobi and therefore included in the “sales proceeds”; (v) transportation costs; (vi) the cost for assembly of both the Biopsy-kit and the Implantation-kit; and (vii) [***].

 

1.1.51            “Non-Assigned Hospitals” means hospitals listed in Schedule 6 that have not yet consented to the assignment to Sobi as of the Closing Date;

 

1.1.52            “Notified Product” has the meaning as set out in clause 6.1;

 

1.1.53            “Order” has the meaning as set out in clause 4.1 of Schedule 4;

 

1.1.54            “Party” means TiGenix or Sobi, jointly referred to as the “Parties”;

 

1.1.55            “Patents” means patents and patent applications and all substitutions, divisions, continuations, continuations-in-part, any patent issued with respect to any such patent applications, any reissue, re-examination, utility models or designs, renewal or extension (including any supplementary protection certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent, and all counterparts thereof in any country;

 

1.1.56            “Patient” means a person admitted at a Hospital for treatment with ChondroCelect;

 

1.1.57            “Person” means a corporation, limited or general partnership, limited liability company, joint venture, trust, unincorporated association, governmental body, authority, bureau or agency, any other entity or body, or an individual;

 

1.1.58            “Personal Data” has the meaning as set out in clause 22.1;

 

1.1.59            “Procurement” shall have the same meaning as Biopsy;

 

1.1.60            “Product” shall have the same meaning as ChondroCelect;

 

1.1.61            “Receiving Party” has the meaning as set out in clause 17.1;

 

1.1.62            “Regulatory Approvals” means all necessary approvals (including Marketing Authorization, pricing approvals, import permits, and, in each case any supplements and amendments thereto), licenses, registrations or authorizations of any Governmental Authority, necessary for the development, manufacture, distribution, use, promotion and sale of the Product in a given country or regulatory jurisdiction;

 

1.1.63            “Regulatory Authority” means, in a particular country or regulatory jurisdiction, any applicable Governmental Authority involved in granting Regulatory Approval in such country or regulatory jurisdiction, including, without limiting the foregoing, the European

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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Medicines Agency, the European Commission and relevant national medicines regulatory authorities;

 

1.1.64            “Results” means the results, including any data, information, creative ideas, inventions, know-how, discoveries, developments, whether patentable or not, discovered, conceived or reduced to practice during and in connection with ChondroCelect and its application by a Hospital;

 

1.1.65            “SAE” and “SAR” have the meaning provided in the applicable local legislation, where applicable implementing the European Directive and/or local directive on SAEs (Serious Adverse Events) and SARs (Serious Adverse Reactions);

 

1.1.66            “Sobi Background IPR” has the meaning as set out in clause 15.1.1;

 

1.1.67            “SOP” means a standard operating procedure described in the User Manual. TiGenix shall inform Sobi of any proposed amendments to existing SOP’s or the introduction of any proposed new SOP’s in advance and shall give Sobi the opportunity to review and provide comments on the proposed amendments or new SOPs and TiGenix shall take into account any reasonable comments. Changes to an SOP which are required by applicable laws and regulations (including the date as of which such changes shall be applicable) are in TiGenix sole discretion to include. Changes to an SOP which are not required by applicable law or regulations (including the date as of which such changes shall be applicable)require Sobi’s prior approval, such approval not to be unreasonably withheld. If Sobi’s prior approval is required, Sobi shall review the proposed amendments or new SOPs and provide comments to TiGenix within ten (10) working days from receipt. If no changes are required to be made to the proposed amendments or new SOPs, Sobi shall give approval within ten (10) working days from receipt. In the event changes are required to be made to the proposed amendments or new SOPs, TiGenix shall provide Sobi with revised documents, which Sobi will subsequently review as soon as practicably possible and in any case within ten (10) working days from receipt of the revised documents. This is repeated until Sobi has no more comments on the proposed amendments or new SOPs, after which Sobi shall give approval within five (5) working days from receipt of the last revised documents. In no event shall any proposed amendments or new SOPs be considered approved without the explicit written approval of Sobi. In the event any change to an SOP has a material effect on Sobi, the Parties shall negotiate the consequences of such change in good faith;

 

1.1.68            “Surgeon” means a surgeon working at a Hospital who has successfully completed the ChondroCelect Training, who has obtained the related certificate from Sobi (or prior to the Closing Date, from TiGenix) signed by the trainer(s) and the surgeon and whose certificate is still valid;

 

1.1.69            “Technology” means any Confidential Material, IPR (excluding domain names) and Patent in and to the Product and in and to the ChondroCelect Process, that is (i) Controlled by TiGenix (or its Affiliates) as of the Closing Date, or (ii) that comes under the Control of TiGenix during the term of the Agreement;

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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1.1.70            “Territory” means, subject to clause 2.5, the current members of the European Union (excluding Finland), Switzerland, Norway, Russia, Turkey and other countries located in Europe (as defined by the Council of Europe), Iran, Iraq, Saudi Arabia, Yemen, Syria, UAB (United Arab Emirates), Israel, Jordan, Palestine, Lebanon, Oman, Kuwait, Qatar, Bahrain, Egypt, Algeria, Libya, Morocco, Sudan, Tunisia and Western Sahara. Sobi has an option to include [***] in the Territory according to clause 2.3;

 

1.1.71            “Third Party” means any Person other than the Parties or their respective Affiliates;

 

1.1.72            “Tissue Establishment” means the entity that, where legally required, will hold the Tissue Establishment License in the relevant part of the Territory for the donation, procurement, import, export, testing and release of primary material for the production of an ATMP;

 

1.1.73            “Tissue Establishment License” means, where legally required, a license in the relevant part of the Territory for the donation, procurement, import, export, testing and release of primary material for the production of an ATMP;

 

1.1.74            “Transitional Phase” means the period between Commencement Date and Closing Date;

 

1.1.75            “Trade Marks” means any registered and unregistered trade marks in the Territory that are (i) Controlled by TiGenix (or its Affiliates) as of the Closing Date, or (ii) that comes under the Control of TiGenix during the term of the Agreement, in each case of (i) or (ii) which is related to the Product and/or the Process in the Territory, except for TiGenix’ corporate, trade or domain names;

 

1.1.76            “Uncapped Hospital Agreement” has the meaning set out in clause 19.5;

 

1.1.77            “Unique Code” has the meaning as set out in clause 8.2;

 

1.1.78            “User Manual” means the manual attached as Schedule 1, which is used as a reference guide for the ChondroCelect Process and which is provided to Sobi by TiGenix. TiGenix shall inform Sobi of any proposed amendments to the User Manual in advance and shall give Sobi the opportunity to review and provide comments on the proposed amendments and TiGenix shall take into account any reasonable comments. Changes to the User Manual which are required by applicable laws and regulations (including the date as of which such changes shall be applicable) are in TiGenix sole discretion to include. Changes to the User Manual which are not required by applicable law or regulations (including the date as of which such changes shall be applicable) require Sobi’s prior approval, such approval not to be unreasonably withheld. If Sobi’s prior approval is required, Sobi shall review the proposed amendments to the User Manual and provide comments to TiGenix within ten (10) working days from receipt. If no changes are required to be made to the proposed amendments to the User Manual, Sobi shall give approval within ten (10) working days from receipt. In the event changes are required to be made to the proposed amendments to the User Manual, TiGenix shall provide Sobi with revised documents, which Sobi will subsequently review as soon as practicably possible and in any case within ten (10) working days from receipt of the revised documents. This is repeated until Sobi has no more comments on the proposed amendments to the User Manual, after which Sobi shall give approval within five (5)

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

8

 

 

working days from receipt of the last revised documents. In no event shall any proposed amendments to the User Manual be considered approved without the explicit written approval of Sobi. In the event any change to the User Manual has a material effect on Sobi, the Parties shall negotiate the consequences of such change in good faith;

 

1.1.79            “Works” has the meaning as set out in clause 15.2.2.

 

2                                      Appointment and Scope

 

2.1                            TiGenix hereby grants to Sobi, including Affiliates, and Sobi, including Affiliates, hereby accepts, the exclusive (subject to clause 3) right to sell, distribute, market, promote and file for pricing and reimbursement of the ChondroCelect Process and the Product (upon the terms and conditions as set out in clause 5) in the Territory, solely for the treatment of the Indication.

 

2.2                            In addition to Sobi’s right to sub-contract rights under the Hospital Agreements, Sobi shall have the right, on the terms and conditions of this Agreement, to sublicense or subcontract to Third Parties the performance of sales, marketing, promotion and filing for pricing and reimbursement in such countries of the Territory where Sobi does not act through its own Affiliates. Any such sublicense or subcontract shall (a) be subject to TiGenix’ prior written approval of the identity of the sublicensee, and (b) be subject to an appropriate written agreement that imposes on any such sublicensee or subcontractor all applicable terms, conditions and obligations under this Agreement, including the reporting, audit, inspection and confidentiality provisions hereunder, and (c) contain a provision prohibiting such sublicensee or subcontractor from further sublicensing and subcontracting and (d) not in any way diminish, reduce or eliminate any of Sobi’s obligations under this Agreement. For the avoidance of doubt, Sobi will remain directly responsible for the acts of its sublicensees and subcontractors, including for all amounts owed to TiGenix under this Agreement.

 

2.3                            Sobi shall not be entitled to actively sell ChondroCelect outside the Territory. The Parties may in the future agree to expand the Territory by mutual agreement. Provided Sobi has the necessary Regulatory Approvals in accordance with clause 10.1.1, Sobi shall have the right to include [***] in the Territory by providing written notice to TiGenix, in which case clause 2.6 shall apply.

 

2.4                            Outside of the scope of this Agreement, Sobi has the intention to evaluate and potentially offer employment to certain commercial staff of TiGenix, who have been working with the Product at TiGenix prior to the Commencement Date of this Agreement, on an individual basis, and TiGenix has no objections against Sobi doing so. In case (i) Sobi would decide not to offer employment to certain commercial staff of TiGenix as listed in Schedule 3bis (or offer employment but not effectively enter into an employment agreement with such commercial staff), (ii) such commercial staff would be dismissed by TiGenix, and (iii) Sobi would nevertheless hire such staff within 12 (twelve) months after the Closing Date, Sobi shall reimburse TiGenix for the costs of said dismissal.

 

2.5                            Sobi acknowledges that TiGenix is bound by an existing distribution agreement for certain parts of the Middle East and Northern Africa (Saudi Arabia, UAE, Kuwait, Bahrain, Qatar, Oman, Lebanon, Jordan, Syria, Iraq, Iran and Egypt). TiGenix undertakes to use commercially reasonable efforts to terminate this existing agreement as soon as possible after the Commencement Date. Until termination of the existing agreement will be effective, the Territory

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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will not include said parts of the Middle East and Northern Africa. Upon termination of said existing agreement, the Territory will include said parts of the Middle East and Northern Africa.

 

2.6                            [***].

 

3                                      Non-Compete - Conflicts of interest

 

3.1                            During the term of this Agreement, and for a period of 24 (twenty-four) months after termination of this Agreement (unless applicable law provides a shorter maximum term, in which case such shorter maximum term shall apply), Sobi shall not, whether directly or indirectly, (i) actively or inactively develop or market in the Territory any cell-based therapies for the treatment of cartilage lesions in the knee without TiGenix’ prior written approval, or (ii) actively develop or sell the Products outside the Territory.

 

4                                      Prices, Royalties, Costs and Payment thereof

 

4.1                            Price

 

4.1.1                   Sobi will procure the Product from TiGenix for a price in accordance with a table of volume dependent prices as set forth in Schedule 2a.

 

4.1.2                   In addition, Sobi will also pay for:

 

(i)                                  the Biopsy-kits that are in consignment stock at the Hospitals on the Closing Date as listed in Schedule 2e,

 

(ii)                               the materials used in/for and the assembly of the Biopsy-kits,

 

(iii)                            the materials used in/for and the assembly of the Implantation-kits, and

 

(iv)                           all costs of transportation in relation to the Product (including transportation of Biopsy-kits, Biopsies and Implantation-kits),

 

as set forth in Schedule 2a.

 

4.1.3                   TiGenix will issue one or more invoices to Sobi, on a monthly basis, on the last day of each month:

 

(i)                                  for all Biopsy-kits ordered by Sobi and shipped to a Hospital during that month (including the cost of the materials used in/for the Biopsy-kit, and the cost for the assembly of the Biopsy-kit) (including for Biopsy-kits that were shipped to a Hospital in replacement of expired or discarded Biopsy-kits), as set out in Schedule 2a;

 

(ii)                               for all Products shipped to a Hospital during that month (including the cost of the materials used in/for the Implantation-kit, and the cost for the assembly of the Implantation-kit), as set out in Schedule 2a; and

 

(iii)                            for all transportation costs made during the last month (Biopsy-kits, Biopsies, Implantation-kits) and for which TiGenix has already received the corresponding invoice from the transportation company; invoices which are not timely received

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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from a transportation company to include them in the monthly invoice from TiGenix to Sobi, will be added to the next monthly invoice.

 

4.2                            Royalties

 

4.2.1                   For as long as this Agreement is in force, and as a consideration for the rights granted to Sobi under it, TiGenix shall also obtain a royalty on Net Sales from Products in the Territory, as per the following royalty rate:

 

The royalty rate shall be 22% (twenty two percent) on Net Sales for the first full 12 months, and thereafter 20% (twenty percent) on Net Sales.

 

4.2.2                   Sales and royalties shall be calculated in Euros by use of the exchange rate ECB EXR on the invoice date. The transfer or sale of Products by Sobi to an Affiliate shall not be considered a sale for the purpose of calculating the royalties.

 

4.2.3                   The royalties shall be paid monthly. At the end of each calendar month, Sobi shall send a financial report over the calculation of such calendar month’s Net Sales to TiGenix, who shall subsequently issue the related invoice. Payment of the royalties shall be made by Sobi to TiGenix within sixty (60) days from the end of each calendar month.

 

4.3                            Costs

 

4.3.1                   Sobi will reimburse TiGenix for:

 

(i)                                  costs related to the regulatory activities required to fulfil the obligations towards EMA to maintain the Marketing Authorization (excluding the EMA annual fee which shall be borne by TiGenix), including the costs for the ongoing registry studies in Belgium and the Netherlands, up to a cap of [***] EUR ([***] euros) in total for the ongoing registry study in Belgium (protocol number TGX001-2011), up to a cap of [***] EUR ([***] euros) in total for the ongoing registry study in the Netherlands (where data relating to ChondroCelect are obtained via the surgeon who coordinates the Dutch national register) and up to a cap of [***] EUR ([***] euros) per year for all other regulatory activities.

 

The payment of the registry studies cost will be made during the years 2014—2018 in accordance with clause 4.3.2(i), based on the quarterly indicative estimates set out in Schedule 2a;

 

(ii)                               costs related to the holding by TiGenix of the Belgian Tissue Establishment License (“production establishment license”), for [***] EUR ([***] euros) per year,

 

(iii)                            costs related to central pharmacovigilance activities up to a cap of [***] EUR ([***] euros) per year;

 

(iv)                           costs related to customer support for Belgium and the Netherlands and the management of the logistical co-ordination provided by TiGenix for [***] ([***] ) FTE’s, up to a cap of [***] EUR ([***] euros), such amount as the case may be increased due to indexation pursuant to Belgian law.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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Parties acknowledge that the total capacity (number of batches) that can be managed by [***] FTEs will depend on the number of batches for which full customer support will be provided (in Belgium and the Netherlands) plus the number of batches for which only logistical co-ordination will be provided, as well as on the distribution of the batches throughout the year (even vs. uneven/peak distribution during the year).

 

Parties shall regularly monitor whether [***] FTEs are sufficient to manage the effective requirements (both in view of the mix of batches requiring full customer support and the batches requiring only logistical co-ordination, as well as in view of the even vs. uneven distribution of the bathes throughout the year) and shall meet to discuss in good faith when either Party is of the opinion that additional resources are needed to provide the required customer support and/or logistical co-ordination. If such resources are deemed best delivered in the form on an employee, the employee will be hired by TiGenix but the costs of the employee should be reimbursed by Sobi to TiGenix as from the hiring of such additional employee (it being understood that the cap of [***] EUR will not apply to such additional employee).

 

Parties agree to meet 12 months following the Closing Date to review the set up of the customer support and the logistical co-ordination.

 

4.3.2                   TiGenix will invoice the reimbursement of the costs in clause 4.3.1 to Sobi as follows:

 

(i)                                  in respect of the costs listed in clauses 4.3.1(i) and 4.3.1(iii): on a monthly basis, based on real costs and/or invoices received by TiGenix from third parties,

 

(ii)                               in respect of the cost listed in clause 4.3.1(ii): on a quarterly basis, with the fixed annual fee split evenly over the year, and

 

(iii)                            in respect of the cost listed in clause 4.3.1(iv): on a monthly basis, with the fixed annual fee split evenly over the year.

 

4.3.3                   For the avoidance of doubt, other than according to 4.3.1(i) and (ii), each Party will bear the costs related to the renewal/upholding of such Regulatory Approvals and other licenses which it must hold pursuant to this Agreement for which it is responsible in accordance with Schedule 3 (Responsibilities) without reimbursement from the other Party.

 

4.3.4                   If the costs listed in clause 4.3.1 would increase due to an increase in volume of Products sold to Sobi under this Agreement, Parties will discuss in good faith how to handle the increased costs.

 

4.4                            Payment

 

4.4.1                   Except as otherwise specified in this Agreement, payment of TiGenix invoices shall be made in full, in euro, net of bank charges, within 30 (thirty) days of the date of the invoice.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

12

 

4.4.2                   All taxes or other levies imposed in the Territory directly or indirectly in connection with sales of ChondroCelect and payments to TiGenix under this Agreement shall be borne by Sobi.

 

4.4.3                   TiGenix may decide to refuse new Orders if prior invoices are not paid in full by Sobi within 30 (thirty) days from due date.

 

4.4.4                   In case Sobi fails to settle its invoices on the due date, these will automatically, and without there being a need for TiGenix to issue a notice in this respect, bear an interest at a rate of (i) 1% (one percent) per month, or (ii) the highest possible interest rate permitted under applicable law, whichever is the lowest.

 

4.5                            Records and Inspection

 

4.5.1                   Each Party, their Affiliates, subcontractors or sublicensees, shall keep full and accurate records and books of account with respect to all elements that determine the Net Sales, the price (clause 4.1) and costs (clause 4.3), in sufficient detail to permit computation of the royalties and other amounts payable by Sobi to TiGenix hereunder.

 

4.5.2                   Each Party has the right, at any time during the term of this Agreement and for a period of two years thereafter, at its expense, to have inspected by a certified accounting firm as such Party may designate, the other Party’s records and books of account with respect to all elements that determine the Net Sales, the price (clause 4.1) or costs (clause 4.3) during reasonable business hours , so as to verify compliance by the other Party with the terms and conditions of this Agreement.

 

4.5.3                   In the event any report of royalties or other amounts payable submitted or stated to the other Party hereunder is determined in the course of any inspection to be inaccurate in any material respect prejudicial to either TiGenix or Sobi, the owing Party shall pay or refund any such royalties due or other amounts payable with interest according to clause 4.4.4 hereof and, if applicable, shall reimburse the other Party for the costs of such inspection under clause 4.5.2.

 

4.5.4                   Each Party shall render all necessary assistance and cooperation to facilitate such inspection and shall make available to the other Party’s representatives all records and books of account with respect to all elements that determine the Net Sales, the price (clause 4.1) and costs (clause 4.3) and shall instruct its employees to act accordingly.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

13

 

4.6                            No further payments

 

4.6.1                   Except as herein specifically set forth, neither Party shall be obliged to reimburse the other Party for any services or assistance, the other Party’s performance of its obligations hereunder, use of resources, or any other costs, fees or similar.

 

5                                      The ChondroCelect Process

 

5.1                            The ChondroCelect Process consists of the following steps/procedure, which are set out in more detail in Schedule 3 and Schedule 4:

 

5.1.1                   Transportation of the Biopsy-kit from the Manufacturing Facility to the Hospital, under a valid Tissue Establishment License if and where such license is legally required, by a validated carrier (more details set out below under clause 2 of Schedule 4);

 

5.1.2                   Donation and Procurement of Knee Cartilage from a Patient by a Surgeon at the Hospital (more details set out below under clause 3 of Schedule 4);

 

5.1.3                   Collection of the Knee Cartilage and blood samples in the Biopsy-kit, under a valid Tissue Establishment License if and where such license is legally required (more details set out below under clause 3 of Schedule 4);

 

5.1.4                   Ordering of the Product (more details set out below under clause 4 of Schedule 4);

 

5.1.5                   Transportation of the Knee Cartilage and the blood samples in the Biopsy-kit from the Hospital to the Manufacturing Facility, under a valid Tissue Establishment License if and where such license is legally required, by a validated carrier (more details set out below under clause 4 of Schedule 4);

 

5.1.6                   Donor testing by the Designated Laboratory, under a valid Tissue Establishment License if and where such license is legally required (more details set out below under clause 5 of Schedule 4);

 

5.1.7                   Acceptance and release of the Knee Cartilage by the relevant Tissue Establishment for processing to ChondroCelect (more details set out below under clause 5 of Schedule 4);

 

5.1.8                   Processing by the manufacturer at the Manufacturing Facility of the Knee Cartilage to ChondroCelect (more details set out below under clause 6 of Schedule 4);

 

5.1.9                   Release of the Product for sale by the Marketing Authorisation holders’ qualified person responsible for batch certification and release in accordance with the Marketing Authorisation;

 

5.1.10            Transportation of ChondroCelect in an Implantation-kit from the Manufacturing Facility to the Hospital, by a validated carrier (more details set out below under clause 7 of Schedule 4); and

 

5.1.11            Autologous Implantation of ChondroCelect in the Patient at the Hospital by a Surgeon.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

14

 

6                                      Product Specification Compliance

 

6.1                            If Sobi or the Hospital has reasonable cause to believe that a particular ChondroCelect batch (the “Notified Product”) is deficient (i.e., is suspected not to meet quality or safety requirements), Sobi must notify TiGenix thereof in accordance with clause 9.2 upon becoming aware of this presumed deficiency and document the reasons for the suspected deficiency. TiGenix shall be entitled to request to examine the ChondroCelect batch concerned, if appropriate.

 

6.2                            If the Parties fail to agree whether the Notified Product(s) is/are deficient, the Parties shall mutually select an independent expert, who will be subject to confidentiality obligations at least as stringent as the ones included in this Agreement, to evaluate whether the Notified Product(s) has/have been appropriately released according to Eudralex Volume 4, annex 16. During this evaluation and in the conclusion, the independent expert shall not disclose any Confidential Material of TiGenix that was not already disclosed to Sobi in the framework of this Agreement. The evaluation of the independent expert shall be binding on the Parties.

 

6.3                            If it is determined by TiGenix or by the independent expert in accordance with clause 6.2 that the ChondroCelect batch concerned was effectively deficient at the time of delivery of the Product to the Hospital, then TiGenix will at Sobi’s discretion, either:

 

6.3.1                   replace the Notified Product and reimburse all costs directly related to the Notified Product borne by Sobi, or

 

6.3.2                   allow a full credit to Sobi in respect of the Notified Product and all costs directly related to the Notified Product borne by Sobi.

 

6.4                            If Sobi has reasonable cause to believe that a systematic and consistent breach of cGMP guidelines occurs during manufacturing, Sobi must notify TiGenix thereof upon becoming aware of this presumed systematic and consistent breach of cGMP guidelines, and document the reasons for the suspected breach. If the Parties fail to agree on this presumed breach, the Parties shall mutually select an independent expert, who will be subject to confidentiality obligations at least as stringent as the ones included in this Agreement, to evaluate the existence and extent of this presumed breach. During this evaluation and in the conclusion, the independent expert shall not disclose any Confidential Material of TiGenix that was not already disclosed to Sobi in the framework of this Agreement. The evaluation of the independent expert shall be binding on the Parties. If a breach has been determined by the independent expert, both Parties shall discuss implementation of corrective actions and TiGenix shall ensure implementation of such corrective actions within a time as agreed by the Parties.

 

7                                      Adverse event reporting

 

7.1                            Sobi shall inform TiGenix about all safety information which comes to its attention within three (3) calendar days from first awareness. TiGenix shall maintain the global safety database for the Product. TiGenix shall maintain the pharmacovigilance system for the Product according to European legislation, including the establishment of a European qualified person for pharmacovigilance. TiGenix shall be responsible for all regulatory reporting in the EU. Sobi shall be responsible for regulatory reporting in countries in the Territory outside the EU. In addition to the aforementioned, the Parties shall enter into a separate pharmacovigilance agreement, setting

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

15

 

out the Parties’ further mutual obligations in respect of pharmacovigilance, in accordance with applicable laws, rules and regulations.

 

8                                      Traceability

 

8.1                            Sobi shall, and shall in the Hospital Agreements oblige the Hospitals to, comply with all applicable laws and regulations relating to the traceability of the Knee Cartilage and ChondroCelect for the time it is under Sobi’s or the Hospital’s control and that the applicable SOP on traceability is complied with.

 

8.2                            TiGenix shall set up a unique coding system, based on a unique lot number (recorded on the Biopsy-kit) combined with the Patient number and Patient initials (the “Unique Code”). TiGenix shall through the Unique Code have traceability on which unique lot has been sent to which Hospital.

 

8.3                            Sobi shall, and shall in the Hospital Agreements oblige the Hospitals to, each for the part of the information under their control, establish and maintain a system of traceability that contains sufficient detail to allow linking of each ChondroCelect to the Patient who received it and vice versa, and can at all times be linked to the Unique Code which refers to the Knee Cartilage (as indicated on the Biopsy-kit) and the medicinal product resulting from it. The Unique Code shall be the only code communicated to TiGenix at any given time.

 

8.4                            Sobi shall, and shall in the Hospital Agreements oblige the Hospitals to, each for the part of the information under their control, ensure that at least the following information can be retrieved by using the Unique Code: (i) the Patient’s relevant personal data, (ii) the institution where the tissue material was retrieved, (iii) the date and time of the retrieval of the tissue material, (iv) the characteristics of the tissue material, (v) the purpose for which the tissue material may be used (i.e. treatment of the Patient with ChondroCelect), (vi) the necessary instructions for storage and use, (vii) adverse events if any, (viii) substances and materials used for transport, if arranged by the Hospital according to requirements under applicable law, (ix) the batch number, (x) the provider of the tissue material and (xi) the name and address of the institution to which the tissue material was delivered (i.e. TiGenix). In this respect, Sobi should only receive the Unique Code and coded Patient data (whereby “coded Patient data” means data that do not allow Sobi to identify the Patient concerned without intervention of the Hospital which holds the key to the Unique Code). Any other personally identifiable information regarding Patients should be communicated directly between the Hospital and TiGenix (for purposes of which Sobi shall include appropriate provisions in the Hospital Agreements).

 

8.5                            Sobi shall in the Hospital Agreements oblige the Hospital to keep the key for decoding the data of the Patient, including at least (i) donor identification, (ii) age and sex, (iii) signed Informed Consent Form and (iv) copy of the Laboratory Test results, for a period of 30 (thirty) years after clinical use.

 

8.6                            Sobi undertakes, and shall in the Hospital Agreements oblige the Hospitals to undertake, unless required by law not to communicate to any Third Party any data identifying the Patient other than the Unique Code and to process any Patient data pursuant to the applicable law.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

16

 

9                                      ChondroCelect Recall and Complaints

 

9.1                            Each Party shall inform the other immediately by telephone (immediately confirmed in writing) in the event of any circumstances giving rise to a possible or actual recall of any ChondroCelect in the Territory, in accordance with the applicable SOP.

 

9.2                            Sobi shall report to TiGenix any product complaints related to the Product and keep a list hereof. Sobi shall report the Product complaints to TiGenix as soon as possible but no later than 2 (two) working days after becoming aware of such Product complaints using the applicable complaint form.

 

9.3                            TiGenix has the right (irrespective of any power granted by law to the Regulatory Authority or any other authority in the Territory) on the grounds of public health and safety to recall any ChondroCelect at any time, and Sobi shall promptly carry out such a recall requested by TiGenix.

 

9.4                            Sobi shall cooperate with TiGenix for the purpose of effecting any recall of ChondroCelect, which in TiGenix’ opinion is necessary.

 

9.5                            Sobi shall inform the local authorities about any Product defects after information received from TiGenix in conformity with the local administrative regulations.

 

9.6                            TiGenix shall bear all costs and expenses of a recall, save for such recalls in the Territory resulting from the negligence or breach of this Agreement by Sobi. For the purposes of this Agreement, costs and expenses of a recall include the expenses of notification and destruction or return of the ChondroCelect recalled.

 

10                               Sobi’s additional duties and obligations

 

10.1                     Regulatory and Procedures

 

10.1.1            Sobi shall be the holder of and maintain (i) a Tissue Establishment License, if and where legally required in the Territory, (ii) a License for Pharmaceutical Wholesale Distribution; and (iii) any other Regulatory Approvals, including corresponding analysis, licenses or other permits, required to perform its obligations under this Agreement in the Territory and comply with all related local legislation.

 

10.1.2            The Parties recognize that the national requirements for Tissue Establishment Licenses (including import/export of Knee Cartilage and Biopsy-kits) may be different and when determining which Party between Sobi and TiGenix might be obliged to hold a Tissue Establishment License, this will be determined based on the Parties’ respective obligations under this Agreement. Notwithstanding the aforementioned, the decision to obtain any new Tissue Establishment License after the Commencement Date shall be the sole decision of each Party. In the event a Tissue Establishment License is necessary in a country in the Territory and the Party who, after the Commencement Date and based on the Parties’ respective obligations under this Agreement, should obtain the Tissue Establishment License decides not to obtain it, then Products will not be sold in such country.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

17

 

10.1.3           The Parties recognize that certain countries in the Territory may require import or export licenses for the Product.. If a country requires a license for import or export in a country in the Territory, Parties shall determine which Party between Sobi and TiGenix should hold such license based on the Parties’ respective obligations under this Agreement. Notwithstanding the aforementioned, the decision to obtain any such license shall be the sole decision of each Party. In the event a license for import or export is necessary in a country in the Territory and the Party who, based on the Parties’ respective obligations under this Agreement, should obtain the license decides not to obtain such license (and no Third Party will hold it), then Products will not be sold in such country.

 

10.1.4           Sobi acknowledges that the Product is currently only registered in the EU. TiGenix shall decide in its sole discretion if, when and where it wishes to register the Product outside the EU.

 

10.1.5           Outside of the EU, but within the Territory, Sobi is allowed to sell the Product in compliance with applicable laws and all of Sobi’s obligations under this Agreement, to the extent this does not require registration of the Product by TiGenix outside of the EU.

 

10.1.6           In addition to the above, if Sobi wishes that TiGenix registers the Product in any country outside the EU where TiGenix has not yet registered the Product, the Parties will meet to discuss the matter in good faith. For the avoidance of doubt, TiGenix shall be under no obligation to register the Product in any country outside the EU.

 

10.1.7           Sobi shall collaborate with TiGenix and provide to TiGenix as soon as reasonably possible upon a request thereto by TiGenix any information and/or documentation that TiGenix may require from Sobi in order to comply with the Belgian production establishment legislation. This includes (without being limited to):

 

(i)                                  Information regarding Hospitals, training of Sobi personnel, Surgeons and Healthcare Providers (more in particular: confirmation of all training delivered to Hospitals and list of trained Surgeons), donor selection, informed consent, storage conditions of Biopsy-kits and Biopsies, etc.

 

(ii)                               Information regarding traceability, quality and confidentiality of data management, etc.

 

10.1.8           Sobi shall comply with TiGenix’ logistics and documentation systems, as included in the applicable SOPs and the User Manual, and in the Hospital Agreements oblige the Hospitals that any Hospitals involved in the administration of ChondroCelect to patients also implement the currently valid SOP’s, including but not limited to the SOP’s on Procurement, Biopsy and Traceability (as attached as Schedule 4).

 

10.1.9           Sobi shall ensure that, or in the Hospital Agreements oblige the Hospitals to ensure that, as applicable, all requirements necessary for TiGenix to start with the processing of the Knee Cartilage, as set out in the relevant SOPs, are fulfilled, including, but not limited to:

 

(i)                                  the confirmation that the Informed Consent Form was signed by the Patient prior to the Biopsy; and

 

(ii)                               the confirmation that the patient order form was signed by a Surgeon.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

18

 

10.2                     Marketing of ChondroCelect

 

10.2.1           Sobi shall determine the price to the market of the Product. Sobi shall where commercially reasonable and by using commercially reasonable efforts to maintain existing pricing and reimbursement approvals, and, where commercially reasonable, to obtain additional pricing and reimbursement approval where applicable in the Territory.

 

10.2.2           Sobi may make the Product available for sale in countries in the Territory without Marketing Authorization and apply for and manage the necessary approvals to sell or otherwise make available the Product in these countries, including named patient and compassionate use programs.

 

10.2.3           Sobi shall use its commercially reasonable efforts to perform market development activities to promote, market and sell ChondroCelect in the Territory for the Indication, to achieve at least the Minimum Sales agreed upon, and to stimulate and increase interest in ChondroCelect in the Territory in accordance with market practices.

 

10.2.4           Sobi will annually create a brand plan for the marketing and sales of the Product, including without limiting strategic plans for marketing campaigns and expansion into new countries.

 

(i)

 

10.2.5           Sobi shall submit to TiGenix, on a quarterly basis, the following information:

 

(i)                                  an inventory of the contacts with Hospitals;

 

(ii)                               the topline summary of the promotional initiatives undertaken;

 

(iii)                            any negative publicity, Regulatory Authority’s observations, technical problems and suggestions for improvements;

 

(iv)                           topline summary of the planned promotional initiatives;

 

(v)                              the overall state of the market; and

 

(vi)                           a report of quarterly sales.

 

10.2.6           Sobi shall enter into contracts with Hospitals (as specified under 10.3), manage orders from (as specified under Schedule 3 and Schedule 4) and invoices to the Hospitals, organise medical training of and provide proper instructions to Hospitals regarding the use of Products.

 

10.3                     Relations with Hospitals

 

10.3.1           Sobi agrees to act in accordance with the User Manual and applicable SOPs and shall conduct and maintain its business in strict compliance with all applicable laws, regulations and rules of any and all applicable government authorities.

 

10.3.2           Sobi shall, with a view to selling the Product to customers to perform the ChondroCelect Process, contract hospitals in the Territory in accordance with the requirements in Schedule 7 (the “Hospital Agreement Requirements”).

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

19

 

10.3.3           Sobi shall make available technically skilled staff which will be trained by TiGenix in accordance with the User Manual, to enable said staff to train surgeons and other healthcare providers in the Hospitals in accordance with the applicable SOPs.

 

10.3.4           Sobi shall comply with TiGenix’ logistics and documentation systems as set out in the relevant SOPs and under the Hospital Agreements oblige the Hospitals involved in the administration of ChondroCelect to Patients to implement the applicable SOPs including but not limited to the SOPs on Procurement, Biopsy and Traceability.

 

10.3.5           Sobi shall under the Hospital Agreements oblige the Hospitals and facilitate implementation of all required procedures, reporting and communication by the Hospital.

 

10.3.6           Except for Hospitals in Belgium and the Netherlands (where TiGenix shall provide local customer support):

 

(i)                                  Sobi shall provide local customer support and act as link between the Hospitals and TiGenix, and

 

(ii)                               TiGenix shall not be in contact directly with the Hospitals (except for receiving and verifying personal patient data required under the Tissue Establishment License and/or as otherwise agreed between the Parties), but only with central customer support at Sobi.

 

Communication between TiGenix and Sobi will be in English.

 

10.3.7           Sobi shall grant TiGenix the right to inspect on its own expense the Hospital facilities within working hours and with reasonable notice.

 

10.3.8           Sobi shall make sure that the Hospital Agreements shall include:

 

(i)                                  all obligations of the Hospitals contained in this Agreement, and

 

(ii)                               that the Hospitals shall comply with all legislation applicable to them.

 

10.4                     General

 

10.4.1           Sobi shall, based on materials provided by TiGenix hereunder, develop all training material, documentation, forms, manuals, official documents and marketing material. Any such documents and materials which shall be used towards a Third Party shall be approved by TiGenix as Marketing Authorisation holder in accordance with the conditions of the Marketing Authorisation and applicable law and in accordance with the following review and approval process:

 

(i)                                  Sobi can from pre-existing materials develop translations of pre-existing and signed-off documents (e.g. detail-aid, user manual, technical guides, patient guide, etc) without TiGenix approval but subject to notification of the materials to TiGenix, so that TiGenix is at all times aware of what is being communicated to Third Parties, and

 

(ii)                               Sobi can x) propose changes to the User Manual and y) develop new materials (e.g. invitation for congress, symposium slide show, interview with expert in local medical paper, new detail-aid, new patient materials, etc) only with the prior

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

20

 

written approval of (the responsible person promotional communications within) TiGenix

 

TiGenix shall review such documents and materials and provide comments to Sobi within ten (10) working days from receipt. If no changes are required to be made, TiGenix shall give approval within ten (10) working days from receipt. In the event changes are required, Sobi shall provide TiGenix with revised documents and materials, which TiGenix will subsequently review as soon as practicably possible and in any case within ten (10) working days from receipt of the revised documents and materials. This is repeated until TiGenix has no more comments on the documents and materials, after which TiGenix shall give approval within five (5) working days from receipt of the last revised documents and materials. In no event shall any documents or materials be considered approved without the explicit written approval of TiGenix. Where Sobi develops educational materials in languages other than the languages for which TiGenix has provided/approved the materials, it shall be responsible for the correct translation and, if applicable outside of the scope of TiGenix’ current Marketing Authorisation, for obtaining approval by the relevant Regulatory Authority of the materials in such other languages.

 

10.4.2           Sobi shall ensure that all marketing materials are in line with the scientific data and applicable legislation. Sobi will keep local catalogue texts in the Territory, if applicable, updated.

 

10.4.3           Sobi shall respect TiGenix’ limitations of liability and indemnification, as well as TiGenix’ limited warranties as indicated on the Product and in this Agreement, and not make any representation (regarding the ChondroCelect Process or anything else) to any Third Party (including Hospitals and Patients) that is broader than TiGenix’ liability or TiGenix’ representations and warranties as set out on the Product or in this Agreement.

 

10.4.4           In no event shall Sobi, unless duly authorised, act in any way whatsoever to pledge TiGenix’ credit, make any promise, warranty or representation on behalf of TiGenix or express any opinion on behalf of TiGenix.

 

10.4.5           Sobi shall be solely responsible for all approvals, registrations, filings, social security contributions, insurance fees, taxes, charges or any other dues related to or arising out of the performance of this Agreement by Sobi in the Territory. Sobi shall in accordance with clause 10.1.1 hold Regulatory Approvals necessary for the performance of its obligations under this Agreement. TiGenix shall at its own expense co-operate fully with and assist Sobi if such co-operation or assistance is necessary to permit Sobi to fulfil these obligations, including giving Sobi such regulatory support and provide Sobi with such documentation as may be required by local laws and regulations (provided that TiGenix shall not be obliged to produce any documentation it does not already have or is obliged to have according to applicable laws and regulations). All statements made by Sobi regarding ChondroCelect or the ChondroCelect Process with regard to said Regulatory Approvals shall be subject to prior written approval (which can be given by e-mail) from TiGenix.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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11                               TiGenix’ additional duties and obligations

 

11.1                     Regulatory and Procedures

 

11.1.1           TiGenix shall be Marketing Authorization holder of the Product in the European Union, and shall maintain ownership over the Marketing Authorization in the European Union. In accordance with clause 10.1.4, TiGenix shall decide in its sole discretion if, when and where it wishes to register the Product in the remainder of the Territory. As long as TiGenix decides not to register the Product in any country outside the European Union, it may be that there is no Marketing Authorization holder of the Product in the remainder of the Territory.

 

11.1.2           Sobi has an option to take over the Marketing Authorization for ChondroCelect after 2 (two) years, in which event the Parties will negotiate in good faith a separate amendment to this Agreement. Such amendment shall include, without limiting, amendments and revisions of provisions regarding assignment of the Marketing Authorization and efforts to effectuate such transfer, indemnification, financial compensation between the Parties including Royalty Rate and costs, pharmacovigilance, quality, recalls, release of Product, audits and Hospital Agreement Requirements. Should Sobi wish to exercise the option to acquire the Marketing Authorization, it shall notify TiGenix and the Parties shall without undue delay initiate good faith negotiations to amend this Agreement accordingly.

 

11.1.3           TiGenix shall be the holder of and maintain (i) a Tissue Establishment License, if and where legally required in the Territory to perform its obligations under this Agreement in the Territory and comply with all related local legislation. The Parties recognize that the national requirements for Tissue Establishment Licenses may be different and when determining which Party between Sobi and TiGenix might be obliged to hold a Tissue Establishment License, this will be determined based on the Parties’ respective obligations under this Agreement. Notwithstanding the aforementioned, the decision to obtain any new Tissue Establishment License after the Commencement Date shall be the sole decision of each Party. In the event a Tissue Establishment License is necessary in a country in the Territory and the Party who, after the Commencement Date and based on the Parties’ respective obligations under this Agreement, should obtain the Tissue Establishment License decides not to obtain it, then Products will not be sold in such country.

 

11.1.4           Notwithstanding clause 11.1.3, TiGenix shall be the holder of and maintain a Tissue Establishment License in Belgium (known as “production establishment license”), for as long as a Belgian production establishment license is required for purposes of this Agreement and comply with all related legislation.

 

11.1.5           TiGenix shall be responsible for management of supply and logistics (to the extent specified below), as well as for manufacturing and release of the Product.

 

11.1.6           TiGenix shall be responsible for all central regulatory and pharmacovigilance duties derived from being Marketing Authorization holder and shall fulfil any regulatory and/or other obligations or requirements imposed by EMA with a view to maintaining the Marketing Authorization including without limiting central pharmacovigilance

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

22

 

responsibilities (as specified in the pharmacovigilance agreement to be entered into between the Parties prior to the Closing Date) and post marketing commitments, with the exception that, if [***], the Parties will determine together the economic feasibility and responsibility of such a request and, if no agreement can be reached, be entitled to terminate this agreement.

 

11.1.7           TiGenix shall provide Sobi with (i) all relevant Product information (including but not limited to medical information including medical Q&A) (provided that TiGenix shall not be obliged to produce any documentation it does not already have or is obliged to have according to applicable laws and regulations), and (ii) with information about any variations submitted to Regulatory Authorities which may affect the manufacturing, distribution, marketing or sales of the Product, as needed for Sobi to fulfil its responsibilities according to this Agreement.

 

11.1.8           TiGenix shall provide to Sobi the marketing materials used by TiGenix at the Commencement Date and any marketing guidelines regarding promotion of the Product and the ChondroCelect Process and use of the Trade Marks.

 

11.2                     Manufacturing and Logistics

 

11.2.1           TiGenix shall be responsible for manufacturing and release of the Product in accordance with the ChondroCelect Specifications and cGMP. TiGenix shall ensure that prior to pick-up of the Implantation-kit, the Product has been released by the qualified person in accordance with the Marketing Authorization.  Manufacturing will only commence after the Knee Cartilage Biopsy has been released by the Tissue Establishment according to the currently valid SOP and all other requirements have been fulfilled, including but not limited to the verification of the Informed Consent Form of the Patient and verification of the Laboratory Test results.

 

11.2.2           TiGenix shall provide local customer support for Hospitals in Belgium and the Netherlands.

 

11.2.3           TiGenix shall manage logistical co-ordination with the courier (for the transportation of Biopsy-kits, Biopsies, and Products in Implantation-kit), the Manufacturing Facility and Sobi’s central customer support. .

 

11.2.4           TiGenix shall perform initial ChondroCelect Training on the Product to Sobi key personnel, as specified in Schedule 8 and thereafter as mutually agreed between the Parties.

 

11.2.5           TiGenix shall provide Sobi with general training material, documentation, forms and updates thereof as needed for the Biopsy and Implantation in English with the understanding that Sobi shall remain responsible for all national documentation needed in the Territory as specified in clause 10.4.1

 

11.2.6           All transportation of Biopsy-kits, Knee Cartilage and/or the Product shall be carried out in accordance with applicable laws including cGDP, the User Manual, and the then valid SOPs.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

23

 

11.2.7           In the event the logistical partners used by TiGenix raise material concerns in terms of quality of service or because their prices are unreasonably high, the Parties shall discuss and in good faith try to find a solution.

 

11.2.8           TiGenix shall inform Sobi of any proposed amendments to existing courier agreements or the introduction of any proposed new couriers in advance and shall give Sobi the opportunity to review and provide comments on the proposed amendments or new couriers and TiGenix shall take into account any reasonable comments. Changes to a courier agreement which are required by applicable laws and regulations are in TiGenix sole discretion to include. Changes to a courier agreement which are not required by applicable law or regulations require Sobi’s prior approval, such approval not to be unreasonably withheld.

 

11.3                     General

 

11.3.1           TiGenix shall in all obligations under this Agreement act in accordance with the User Manual and applicable SOP’s and shall conduct and maintain its business in strict compliance with all laws, regulations and administrative rules of any competent Governmental Authority, including without limiting applicable to or governing or controlling the processing of knee cartilage in any relevant jurisdiction, including manufacturing (or having manufactured) ChondroCelect in accordance with the requirements of good manufacturing practice (CGMP) and the ChondroCelect Specifications.

 

11.3.2           TiGenix shall promptly inform Sobi of any material facts or opinions relevant to the marketing of ChondroCelect in the Territory that it has become aware of.

 

11.3.3           In no event shall TiGenix, unless duly authorised, act in any way whatsoever to pledge Sobi’s credit, make any promise, warranty or representation on behalf of Sobi or express any opinion on behalf of Sobi.

 

11.3.4           Any personnel performing the obligations TiGenix has assumed under this Agreement are employed, subcontracted, managed, controlled and the sole responsibility of TiGenix. Sobi’s sole compensation to TiGenix for its performance of these obligations is specified under clause 4 of this Agreement. Without limiting the generality of the aforementioned, Sobi does not assume any Liabilities under or relating to (A) any employee benefit plan, or relating to wages, bonuses, payroll, vacation, sick leave, workers’ compensation, unemployment benefits, pension benefits, employee stock option or profit sharing plans, health care plans or benefits, phantom stock, deferred compensation or other similar plan or arrangement, or any other employee plans or benefits of any kind, in each case, which TiGenix has entered into, maintains or administers to which TiGenix has or may have any Liability, and, (B) any actual or alleged violation by TiGenix of any equal employment or employment discrimination laws.

 

12                               Closing and Assigned Agreements

 

12.1                     Upon the terms and subject to the conditions set forth in this Agreement, at the Closing Date, TiGenix assigns to Sobi all its right, title and interest in the Assigned Agreements, excluding the Excluded Liabilities, and Sobi accepts such assignment from TiGenix.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

24

 

12.2                     Notwithstanding anything contained in this Agreement to the contrary, TiGenix shall retain and be fully responsible for paying, performing and discharging when due, and Sobi shall not assume or have any responsibility for any of the following Liabilities which shall be excluded from the assignment in clause 12.1 (“Excluded Liabilities”):

 

12.2.1           any Liabilities arising out of any claim for injury to any Person that resulted from the use of Products manufactured and sold (or otherwise provided by TiGenix for patient use) prior to the Closing Date; and

 

12.2.2           any Liabilities for rebates, discounts, chargebacks, adjustments and returns of Product sold prior to the Closing Date.

 

12.3                     At the Closing Date, TiGenix shall deliver to Sobi (i) an unredacted, fully executed copy of each of the Assigned Agreements and (ii) such other instruments of conveyance or documents, in form and substance reasonably acceptable to TiGenix and Sobi, as may be necessary to convey the Assigned Agreements from TiGenix to Sobi.

 

12.4                     TiGenix recognizes that the Assigned Agreements have been drafted without consideration to this Agreement and that certain obligations are not included in the Assigned Agreements, including the Hospital Agreement Requirements and other obligations under this Agreement which require that the Hospitals perform certain obligations. Sobi shall not in any way be liable for any failure to comply with the provisions of this Agreement if compliance with such provisions would require performance of the Hospitals under the Assigned Agreements and such Assigned Agreement(s) do not impose the necessary obligations on the Hospital(s).

 

12.5                     Any hospitals listed under Schedule 6 which as of the Closing Date have not been assigned shall be governed by the provisions in Schedule 8 bis.

 

12.6                     Unless otherwise explicitly set forth under this Agreement, the following clauses shall not be applicable until the Closing Date: 2.1-3, 4, 7, 8, 9, 10.1-3, 10.4.3-5, 11.2.1-2, 11.2.5-7, 12.1-4, 13, 15.3-4, 21 and 22.

 

13                               Forecasts, ordering, delivery and minimum sales

 

13.1                     Sobi shall provide TiGenix with binding forecasts and non-binding estimates of the volumes of Products to be purchased, as set in Schedule 2b.

 

13.2                     Minimum Sales

 

13.2.1           The minimum quantity of Products to be sold in the Territory (“Minimum Sales”) is set forth in a table in Schedule 11.

 

13.2.2           If the Minimum Sales are not met during 2 (two) consecutive years, TiGenix is entitled to unilaterally render this Agreement non-exclusive towards Sobi or terminate this Agreement. In such case, Sobi shall use commercially reasonable efforts to transfer the pricing reimbursements, as well as any pricing and reimbursement approvals, permits or other authorizations which may have been obtained in the name of Sobi or jointly in the name of TiGenix and Sobi

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

25

 

pursuant to this Agreement, to either TiGenix or any other Third Party to whom TiGenix would grant a license for the Territory, as quickly as possible.

 

13.2.3           Ordering of the Product is made in accordance with the process specified in Schedule 2c and Schedule 4.

 

14                               Technical Information

 

14.1                     TiGenix, at its expense, will make available to Sobi all information relating to the Product and the Technology which is required for the performance under this Agreement and to the extent TiGenix has the right to divulge the information, including without limiting information necessary to obtain pricing and reimbursement for the Product and the ChondroCelect Process.

 

14.2                     Nothing in this Agreement shall oblige TiGenix to make available to Sobi any information, technical or otherwise, which is in any way referable to the manufacture or formulation of ChondroCelect or the processing of the Knee Cartilage unless otherwise required by applicable laws or regulations or necessary permits, including but not limited to the License for Pharmaceutical Wholesale Distribution.

 

14.3                     Sobi may use any technical information made available to it pursuant to this clause only for fulfilling its obligations under this Agreement. Sobi must not use any of the technical information made available to it for any purpose after this Agreement unless otherwise required by applicable laws or regulations or necessary permits, including but not limited to the License for Pharmaceutical Wholesale Distribution.

 

15                               Intellectual Property Rights

 

15.1                     Ownership of Sobi IPR

 

15.1.1           TiGenix recognises that Sobi, or its Affiliates, may own or Control certain IPR related to subject matter that was created by or on behalf of Sobi outside of the performance of this Agreement or under the performance of this Agreement but not relating to the Product or the ChondroCelect Process, whether or not prior to or during the term of this Agreement (“Sobi Background IPR”) and that such Sobi Background IPR remains the exclusive property of Sobi or, where applicable, of Sobi’s Affiliates.

 

15.1.2           If under the performance of this Agreement and within the scope of the license provided under clause 15.3.1, Sobi, or its Affiliates, create IPR which can be used in respect of the Product or the ChondroCelect Process and such IPR was created based on Sobi Background IPR, hence qualifying as an improvement to the Sobi Background IPR, then such IPR remains the exclusive property of Sobi or, where applicable, of Sobi’s Affiliates.

 

15.1.3           TiGenix, its Affiliates, subcontractors or sublicensees shall not register any of the Sobi Background IPR or any of the IPR referred to in clause 15.1.2 (in particular Sobi’s unregistered IPR).

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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15.1.4           Unless expressly provided otherwise in this Agreement, no provision of this Agreement shall constitute or be deemed to constitute a grant to TiGenix, its Affiliates, subcontractors or sublicensees, of any license or full or partial assignment of Sobi Background IPR.

 

15.1.5           Only in case Sobi, or its Affiliates, would apply (part of) the Sobi Background IPR or the IPR referred to in clause 15.1.2 for the rendering of services under this Agreement, Sobi, or its Affiliates, hereby grants to TiGenix a non-exclusive, sub-licensable, non-assignable, fully paid up license to use such Sobi Background IPR and the IPR referred to in clause 15.1.2 (i) during the term of this Agreement to the extent necessary or useful for TiGenix to perform its obligations or enjoy its rights under this Agreement (it being understood that TiGenix cannot sub-license such IPR to competitors of Sobi) and (ii) following the term of this Agreement to the extent necessary or useful for TiGenix to sell, have sold, distribute, market and promote the Product.

 

15.2                     Ownership of TiGenix IPR

 

15.2.1           Sobi, as well as its Affiliates, recognize that (i) the Technology and the Trade Marks; and (ii) any other IPR from TiGenix or TiGenix’ Affiliates, are and remain the exclusive property of TiGenix or where applicable of TiGenix’ Affiliates.

 

15.2.2           All documents, data, drawings, plans, designs, documentation, texts, manuals, reports, tools, know how, and all other work that have come or will come into existence as a result of the performance of this Agreement and which relate to the Product or the ChondroCelect Process and which is not Sobi Background IPR or IPR referred to in clause 15.1.2, and whether or not created through the joint intervention of TiGenix, Sobi, its Affiliates, subcontractors or sublicensees or otherwise following the directions of TiGenix (hereinafter referred to as “Works”) belong exclusively to and remain with TiGenix. All IPR in the Works are immediately and exclusively transferred and assigned to TiGenix as from their coming into existence. Sobi shall, at its own cost, perform (or procure the performance of) all further acts and things, and execute and deliver (or procure the execution and/or delivery of) all further documents, required by law or which TiGenix requests to vest in TiGenix the full benefit of the right, title and interest assigned to TiGenix under this Agreement. Such transfer and assignment of all IPR include but is not limited to the transfer and assignment of the right to reproduce, adapt, translate, modify, distribute, rent, lend, make available the Works to the public, partially or completely, in each and any way, whether private or public, for internal - including but not limited to research and development - and external use. The transfer and assignment of rights is valid for commercial or non-commercial purposes, final for each and every form of exploitation and for all countries. Sobi shall grant to TiGenix such rights on IPR owned or controlled by Sobi or licensed to Sobi by a Third Party sufficient to allow TiGenix the full benefit of the terms of this Agreement. Sobi and its Affiliates are hereby granted a license for the Term of this Agreement to use the Works for the performance under this Agreement.

 

15.2.3           Sobi, its Affiliates, subcontractors or sublicensees shall not register any of the Technology (in particular TiGenix’ unregistered IPR) or Trade Marks.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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15.2.4           Unless expressly provided otherwise in this Agreement, no provision of this Agreement shall constitute or be deemed to constitute a grant to Sobi, its Affiliates, subcontractors or sublicensees, of any license or full or partial assignment of IPR of TiGenix or of its Affiliates.

 

15.3                     License

 

15.3.1           Sobi is hereby during the term of this Agreement granted a sole sub-licensable license to apply the Technology and to use the Trade Marks as is necessary or useful to sell, have sold, promote, market and distribute the Product in the Territory in accordance with the terms of this Agreement. For the avoidance of doubt:

 

(i)                                  In accordance with clause 2.1, Sobi, including its Affiliates, shall have the exclusive right (exclusive even to TiGenix) to sell, distribute, market, promote and file for pricing and reimbursement of the Product in the Territory;

 

(ii)                               TiGenix shall not be restricted from itself using the Technology and the Trade Marks, whether inside or outside of the Territory; and

 

(iii)                            TiGenix shall be allowed to outsource and subcontract its rights and obligations under this Agreement to Third Parties, whether inside or outside of the Territory; For the avoidance of doubt, TiGenix shall remain directly responsible for the acts of its subcontractors.

 

15.3.2           The license granted under 15.3.1 shall be sublicensable to any other third party (i) upon the prior written consent of TiGenix, (ii) under the same limitations as the license granted to Sobi in this Agreement, and (iii) on the terms of clause 2.2, it being understood that these conditions apply cumulatively.

 

15.3.3           Unless expressly agreed otherwise with TiGenix, Sobi shall not apply the Technology or use the Trade Marks for any purpose other than in the performance of Sobi’s duties under this Agreement. In particular, Sobi shall not use the Technology for research, development or improvement purposes.

 

15.3.4           Sobi shall not impair the Technology or the Trademarks.

 

15.4                     Use of name and marks

 

15.4.1           Sobi shall not employ as part of its trade or corporate name or identification, or identify its business premises, vehicles or documents with any name, mark, symbol or other identifying characteristic owned by or designating TiGenix, other than to perform its obligations under this Agreement. Sobi shall properly identify and accurately describe as a product of TiGenix any of the products manufactured or assembled by TiGenix or which bear a Trade Mark. Sobi shall not alter, remove, deface or mark over a Trade Mark on a Product and, except with prior written consent by TiGenix, shall not add to a Product any other or additional trade mark.

 

15.4.2           Sobi must not use any trade marks which are confusingly similar to the Trade Marks and/or which are likely to cause deception or confusion.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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15.4.3           Sobi shall only apply the Technology and use the Trade Marks as approved by TiGenix in writing (including but not limited in accordance with TiGenix’ brand guidelines, to be added in Schedule 10).

 

15.4.4           Sobi shall not use, reference to, or otherwise employ the TiGenix’ corporate name, except as expressly authorized by TiGenix in writing.

 

15.5                     Third Party infringements and claims

 

15.5.1           Sobi shall promptly notify TiGenix of any actual or suspected infringement of any of the Technology or Trade Marks that comes to its attention. Sobi shall, at TiGenix expense, reasonably co-operate with TiGenix, in connection with any infringement, including, without limitation, legal proceedings. TiGenix shall be responsible for the cost of any legal proceedings it instigates against Third Parties, and, without limiting the applicability of clause 19.1, is entitled to any damages, account of profits and awards of costs recovered.

 

15.5.2           TiGenix shall promptly notify Sobi if it receives notice or is aware of a Third Party claim that the use of the Technology or of the Trade Marks by Sobi would be in breach of such Third Party’s IPR.

 

16                               Publications

 

16.1                     If Sobi wants to publish any publication, presentation or manuscript about TiGenix, the Product and/or the ChondroCelect Process, it shall notify TiGenix at least 60 (sixty) days before submission of the proposed publication, presentation or manuscript and TiGenix shall have the right to review and comment on the proposed publication presentation or manuscript. Sobi shall consider any reasonable comments made by TiGenix, delete any confidential information from the proposed publication, presentation or manuscript and delay the publication with maximum 90 (ninety) days if necessary to protect intellectual property of TiGenix.

 

16.2                     Sobi shall oblige the Hospitals in the Hospital Agreements that if a Hospital wants to publish any publication, presentation or manuscript about TiGenix, the Product and/or the ChondroCelect Process, it shall notify Sobi at least 60 (sixty) days before submission of the proposed publication, presentation or manuscript and TiGenix shall have the right to review and comment on the proposed publication presentation or manuscript. Sobi shall further oblige the Hospitals in the Hospital Agreements to consider any reasonable comments made by TiGenix, to delete any confidential information from the proposed publication, presentation or manuscript and to delay the publication with maximum 90 (ninety) days if necessary to protect intellectual property of TiGenix.

 

16.3                     Whenever one of the Parties has cause for a press release or some other public communication on a subject matter related to the activities governed by this Agreement, then the other Party has the right to review and have final authorisation on the use of their name, any trade marks, or any other sensitive information that is likely to have an impact on their reputation or ability to carry out their business.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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16.4                     TiGenix shall ensure that Sobi is notified in writing of any potential publication, presentation or manuscript in the Territory about the Product and/or the ChondroCelect Process at least 60 (sixty) days before submission.

 

17                               Confidentiality

 

17.1                     The Party receiving Confidential Material (the “Receiving Party”) shall:

 

17.1.1           keep all Confidential Material disclosed to it by or on behalf of the disclosing Party (including through the Hospitals) (the “Disclosing Party”) confidential;

 

17.1.2           use the Confidential Material only for the purpose of this Agreement;

 

17.1.3           not permit Confidential Material to be disclosed other than in confidence to its Affiliates, employees, the Hospitals and subcontractors to the extent strictly necessary for the purposes of this Agreement and under provisions of confidentiality;

 

17.1.4           not copy or reduce to writing the Confidential Material except as reasonably necessary for the purposes of this Agreement or unless otherwise required by applicable laws or regulations or necessary permits, including but not limited to the License for Pharmaceutical Wholesale Distribution;

 

17.1.5           maintain the Confidential Material in a way which provides adequate protection from unauthorized disclosure, copying or use; and

 

17.1.6           destroy or return promptly to the Disclosing Party all documents and materials (and all copies thereof) containing Confidential Material at the end of this Agreement or upon request by the Disclosing Party unless otherwise required by applicable laws or regulations or necessary permits, including but not limited to the License for Pharmaceutical Wholesale Distribution, and provided that the Receiving Party may retain one copy of the Confidential Material for the sole purpose of ensuring compliance with and to the extent required by the terms of this Agreement.

 

17.2                     “Confidential Material” means all information relating to the Disclosing Party’s operations, processes, plans, intentions, product information, know-how, data, formulae, expertise, methodology, drawings, specifications, design rights, trade secrets, market opportunities and business affairs, and any new and novel combinations thereof, disclosed by or on behalf of the Disclosing Party to the Receiving Party in the framework of this Agreement, whether disclosed in writing, verbally or by any other means.

 

17.3                     Confidential Material excludes information which (i) was in the possession of the Receiving Party prior to disclosure hereunder; or (ii) was in the public domain at the time of disclosure or later became part of the public domain without breach of the confidentiality obligations herein contained; or (iii) was disclosed by a Third Party without breach of any obligation of confidentiality owed to the Disclosing Party; (iv) is independently developed by personnel of the Receiving Party; or (v) is required to be disclosed by law or by order of a court of competent jurisdiction, provided, however, that, in so far as is lawful and reasonably practical, the Disclosing Party is

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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granted due advance notice of such a requirement in order to be able to contest the same and then only to the minimum extent of disclosure so required.

 

17.4                     Obligations of non-use and non-disclosure of the Confidential Material shall be in effect during the term of this Agreement and for 3 (three) years after termination or expiration of this Agreement.

 

18                               Representations and warranties

 

18.1                     Each Party represents and warrants that it is a company or corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction in which it is incorporated, and has full corporate power and authority and the legal right to own and operate its property and assets and to carry on its business as it is now being conducted and as contemplated in this Agreement, including the right to grant the licenses granted by it hereunder.

 

18.2                     Each Party represents and warrants that it has the full corporate power and authority to enter into this Agreement and that this Agreement constitutes the binding legal obligation of such Party.

 

18.3                     Each Party represents and warrants that the execution, delivery and performance of this Agreement does not: (i) conflict with, nor result in any violation of or Default under, any agreement, to which it is a Party; (ii) conflict with any rights granted to any Third Party or breach any obligation towards any Third Party; nor (iii) violate any law or regulation.

 

18.4                     Each Party represents and warrants that it and its staff members have all governmental consents, registrations, licenses, permits, approvals, permissions and similar governmental authorizations necessary to conduct the activities to be conducted by it under this Agreement and to fulfil its obligations under this Agreement in a professional manner. In particular, Each Party represents and warrants that it has no knowledge of anything that may be a hinder to obtain or maintain the necessary regulatory approvals for the distribution of ChondroCelect in the Territory, the import of the Biopsy-kit, the export of the Knee Cartilage and the blood samples, and the import of the Product in the Implantation-kit in the Territory and the subsequent release of the Product into the market of the Territory or any other required permits or licenses.

 

18.5                     Each Party represents and warrants that its business is carried on in compliance with all applicable legislative conditions and conditions of any applicable governmental authorisations and there are no circumstances or events which prevent full compliance with such conditions of any of the governmental authorizations.

 

18.6                     Additional representations, warranties and covenants by TiGenix. TiGenix hereby represents, warrants and covenants to Sobi that, as of the Commencement Date:

 

18.6.1           To the best of its knowledge, TiGenix is the owner of or Controls the Trade Marks in the Territory and is the owner of or Controls the Technology necessary to make, promote, distribute, sell and use the Product within the Territory;

 

18.6.2           Neither TiGenix nor its Affiliates, nor, to TiGenix’s knowledge, its subcontractors, has received any notice in writing or otherwise has knowledge of any facts which have led TiGenix to believe that any of the Regulatory Approvals relating to the Product are not currently in good standing with the EMA or other Regulatory Authorities;

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

31

 

18.6.3           To the knowledge of TiGenix, (a) the Technology consists of valid and enforceable IPR, and (b) there are no facts which would render the IPR encompassed within the Technology, invalid or unenforceable. To the knowledge of TiGenix, no Third Party (i) is infringing any such Technology or has misappropriated any Technology or (ii) has successfully challenged the ownership, scope, duration, validity, enforceability, priority of the Technology;

 

18.6.4           TiGenix (or its Affiliates) is the owner of or Controls the Trade Marks. It has no knowledge of any trade marks or other rights which would prevent the use of the Trade Marks in any of the countries of the Territory;

 

18.6.5           As of the Commencement Date, there are no claims, judgments or settlements against or owed by TiGenix, nor any pending reissue, reexamination, interference, opposition or similar proceedings with respect to the Trade Marks, and TiGenix has not received notice as of the Commencement Date of any threatened claims or litigation or any reissue, reexamination, interference, opposition or similar proceedings seeking to invalidate or otherwise challenge the rights in the Technology or in the Trade Marks;

 

18.6.6           To the knowledge of TiGenix, the use, sale, offer for sale, or importation by TiGenix or Sobi (or their respective Affiliates), as applicable, of the Product in compliance with the terms of this Agreement, (i) does, at the Commencement Date, not infringe any issued Patent of any Third Party and (ii) does not misappropriate any know-how of any Third Party;

 

18.6.7           All Products manufactured and supplied hereunder by, or under authority of, TiGenix shall be manufactured and supplied such that the Product furnished by TiGenix to Sobi under this Agreement:

 

(a)                       shall be manufactured, handled, stored and shipped by TiGenix, in accordance with, and shall conform to, the applicable ChondroCelect Specifications; and

 

(b)                       shall be manufactured, handled, stored and shipped by TiGenix in compliance with all applicable laws including CGMPs and GDPs.

 

18.6.8           All Assigned Agreements in effect as of the Commencement Date are listed in Schedule 6. Each of the Assigned Agreements is legal, valid and in full force and effect, and enforceable in accordance with its terms by TiGenix against the other parties thereto and TiGenix has not received any written notice, or, to the knowledge of TiGenix, other notice, of the intention of any party to terminate any Assigned Agreement. TiGenix has performed all material obligations required to be performed by TiGenix under the Assigned Agreements and is not in material Default under any Assigned Agreements and, to the knowledge of TiGenix, no other party to any Assigned Agreements is in material Default thereunder. As per the Commencement Date, TiGenix has not received written notice of any material claim arising out of any claim for injury to any Person which resulted from, or was alleged to have resulted from, the use of Products or the ChondroCelect Process (excluding adverse events routinely reported to Regulatory Authorities which are not expected to result in claims against TiGenix or any of its Affiliates for compensation). Neither TiGenix, any of its Affiliates, nor, to TiGenix’s

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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knowledge, any other party to any of the Assigned Agreements has waived any of its material rights thereunder or modified any material terms thereof. Complete and correct copies of all Assigned Contracts and amendments thereto have been disclosed to Sobi.

 

19                               Indemnification

 

19.1                     Indemnification by TiGenix.  Subject to the terms and conditions of this Agreement, and to the extent finally determined pursuant to clause 23.12, TiGenix hereby shall be held liable for and agrees to save, indemnify, defend and hold Sobi, its Affiliates, and their respective directors, officers, agents and employees harmless from and against any and all losses, damages, liabilities, costs and expenses (including reasonable attorneys’ fees and expenses) (collectively, “Losses”) arising in connection with any and all charges, complaints, actions, suits, proceedings, hearings, investigations, claims, demands, judgments, orders, decrees, stipulations or injunctions by a Third Party (each a “Claim”) resulting or otherwise arising from (a) any breach by TiGenix of any of its representations, warranties, covenants or obligations pursuant to this Agreement, (b) the negligence or willful misconduct by TiGenix or its Affiliates or their respective officers, directors, employees, agents or consultants in performing any obligations under this Agreement, (c) infringement in Third Party’s IPR when selling, distributing, marketing and promoting the Product or the ChondroCelect Process in accordance with the requirements specified under this Agreement, (d) the Excluded Liabilities, or (e) any matter related to the Product hereunder (including, for clarity, product liability Losses including defects in design and failure to warn, in each case resulting therefrom) by TiGenix or its Affiliates or their respective officers, directors, employees, agents, consultants or sublicensees; in each case except to the extent that such Losses are subject to indemnification by Sobi pursuant to clause 19.6.

 

19.2                     Sobi shall make sure that the Hospital Agreements shall provide provisions that (i) the Hospital and the Surgeon shall ensure that the Patient does or did not start with or use any other treatment, or procedure, unless with the prior explicit approval of the Surgeon and upon his instruction; (ii) the Hospital must sufficiently inform the Patient that the Patient must immediately inform the Surgeon of any injury and of any other unforeseeable or unexpected adverse event and (iii) the Surgeon on his turn must immediately notify Sobi of such injury or other adverse event.

 

19.3                     Sobi shall further ensure that the Hospital Agreements limit the liability for injuries that (i) are inflicted as a consequence of the underlying illness/injury of the Patient, (ii) result from diagnostic or therapeutic measures not specifically required or necessary to use or administer ChondroCelect in accordance with this Agreement, or (iii) result from negligence of the Surgeon or any other surgeon, or Hospital clinical staff member or from the Hospital’s facilities. With respect to points (ii) and (iii), Parties acknowledge that this is not under the control of either TiGenix or Sobi, but Sobi shall make sure that the Hospital Agreements shall provide that the Hospital shall be liable for injuries resulting from situations set out in points (ii) and (iii).

 

19.4                     Sobi shall further ensure, to the extent not prohibited by applicable law, that the liability of Sobi and TiGenix under the Hospital Agreements is capped at [***] EUR per occurrence. For the purpose of this clause, if the word “occurrence” is interpreted by a court or similar authority as a result of a liability arising under a Hospital Agreement, the Parties agree to interpret the word “occurrence” similarly between themselves as such court.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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19.5                     To the extent a Hospital Agreement does not provide for a limited liability of Sobi and TiGenix as provided for under clause 19.4 (an “Uncapped Hospital Agreement”), while it was legally permitted to include such cap, TiGenix’ liability towards Sobi for claims from a Hospital under such an Uncapped Hospital Agreement shall be limited to the cap that should have been provided for in the Hospital Agreement.

 

19.6                     Indemnification by Sobi.  Subject to the terms and conditions of this Agreement, and to the extent finally determined pursuant to clause 23.12, Sobi hereby shall be held liable for and agrees to save, indemnify, defend and hold TiGenix, its Affiliates, and their respective directors, agents and employees harmless from and against any and all Losses arising in connection with any and all Claims resulting or otherwise arising from (a) any breach by Sobi of any of its representations, warranties, covenants or obligations pursuant to this Agreement, (b) the negligence or willful misconduct by Sobi or its Affiliates or their respective officers, directors, employees, agents, consultants or sublicensees in performing any obligations under this Agreement, or (c) infringement in Third Party’s IPR when selling, distributing, marketing and promoting the Product or the ChondroCelect Process in breach of the requirements specified under this Agreement or (d) any matter related to the commercialization of the Product hereunder (including, for clarity, product liability Losses including defects in design and failure to warn, in each case resulting therefrom) by Sobi or its Affiliates or their respective officers, directors, employees, agents or consultants; in each case except to the extent that such Losses are subject to indemnification by TiGenix pursuant to clause 19.1.

 

19.7                     Insurance.  Each Party shall (provided that either Party shall be allowed to self-insure), as of the Closing Date, procure and maintain insurance, including product liability insurance, adequate to cover its obligations hereunder and which is consistent with normal business practices of prudent companies similarly situated at all times during which the Product is being commercially distributed or sold by such Party pursuant to this Agreement, and the coverage shall in no event be less than [***] Euro (€[***]) per loss occurrence and [***] Euro (€[***]) in the aggregate. It is understood that such insurance shall not be construed to create a limit of either Party’s liability with respect to its indemnification obligations under this clause 19. Each Party shall provide the other Party with written evidence of such insurance upon the other Party’s request.

 

19.8                     Indemnification Procedures

 

19.8.1           Notice of Claim.  All indemnification claims in respect of any indemnitee seeking indemnity under clause 19, as applicable (collectively, the “Indemnitees” and each an “Indemnitee”) will be made solely by the corresponding Party (the “Indemnified Party”). The Indemnified Party will give the indemnifying Party (the “Indemnifying Party”) prompt written notice (an “Indemnification Claim Notice”) of any Losses and any legal proceeding initiated by a Third Party against the Indemnified Party as to which the Indemnified Party intends to make a request for indemnification under clause 19, as applicable, but in no event will the Indemnifying Party be liable for any Losses that result from any delay in providing such notice which materially prejudices the defense of such proceeding. Each Indemnification Claim Notice shall contain a description of the claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss are known at such time). Together with the Indemnification Claim Notice, the Indemnified Party will furnish promptly to the Indemnifying Party copies of all notices and

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

34

 

documents (including court papers) received by any Indemnitee in connection with the Claim.

 

19.8.2           Control of Defense.  At its option, the Indemnifying Party may assume the defense of any Claim subject to indemnification as provided for in clause 19.1 or 19.2, as applicable, by giving written notice to the Indemnified Party within thirty (30) days after the Indemnifying Party’s receipt of an Indemnification Claim Notice. Upon assuming the defense of a Claim, the Indemnifying Party may appoint as lead counsel in the defense of the Claim any legal counsel it selects, and such Indemnifying Party shall thereafter continue to defend such Claim in good faith. Should the Indemnifying Party assume the defense of a Claim (and continue to defend such Claim in good faith), the Indemnifying Party will not be liable to the Indemnified Party or any other Indemnitee for any legal expenses subsequently incurred by such Indemnified Party or other Indemnitee in connection with the analysis, defense or settlement of the Claim, unless the Indemnifying Party has failed to assume the defense and employ counsel in accordance with this clause 19.8.

 

19.8.3           Right to Participate in Defense.  Without limiting clause 19.8.2, any Indemnitee will be entitled to participate in the defense of a Claim for which it has sought indemnification hereunder and to employ counsel of its choice for such purpose; provided, however, that such employment will be at the Indemnitee’s own expense unless (a) the employment thereof has been specifically authorized by the Indemnifying Party in writing, or (b) the Indemnifying Party has failed to assume the defense (or continue to defend such Claim in good faith) and employ counsel in accordance with this clause 19.8, in which case the Indemnified Party will be allowed to control the defense.

 

19.8.4           Settlement.  With respect to any Losses relating solely to the payment of money damages in connection with a Claim and that will not result in the Indemnitee becoming subject to injunctive or other relief or otherwise adversely affect the business of the Indemnitee in any manner, and as to which the Indemnifying Party will have acknowledged in writing the obligation to indemnify the Indemnitee hereunder, the Indemnifying Party will have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, on such terms as the Indemnifying Party, in its reasonable discretion, will deem appropriate (provided, however, that such terms shall include a complete and unconditional release of the Indemnified Party from all liability with respect thereto), and will transfer to the Indemnified Party all amounts which said Indemnified Party will be liable to pay prior to the time of the entry of judgment. With respect to all other Losses in connection with Claims, where the Indemnifying Party has assumed the defense of the Claim in accordance with clause 19.8.2, the Indemnifying Party will have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, provided it obtains the prior written consent of the Indemnified Party (which consent will be at the Indemnified Party’s reasonable discretion). The Indemnifying Party that has assumed the defense of (and continues to defend) the Claim in accordance with clause 19.8.2 will not be liable for any settlement or other disposition of a Loss by an Indemnitee that is reached without the written consent of such Indemnifying Party. Regardless of whether the Indemnifying Party chooses to defend or prosecute any Claim, no Indemnitee will admit any liability with respect to, or settle, compromise or discharge, any Claim without first offering to the Indemnifying Party the opportunity to assume the defense of the Claim in accordance with clause 19.8.2.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

35

 

19.8.5           Cooperation.  If the Indemnifying Party chooses to defend or prosecute any Claim, the Indemnified Party will, and will cause each other Indemnitee to, cooperate in the defense or prosecution thereof and will furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection with such Claim. Such cooperation will include access during normal business hours afforded to the Indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Claim, and making Indemnitees and other employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the Indemnifying Party will reimburse the Indemnified Party for all its reasonable out-of-pocket expenses incurred in connection with such cooperation.

 

19.8.6           Expenses of the Indemnified Party.  Except as provided above, the reasonable and verifiable costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party in connection with any Claim will be reimbursed on a calendar quarter basis by the Indemnifying Party, without prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event the Indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party.

 

19.9                     Limitation of Liability.  NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL, INCIDENTAL, LOST PROFITS, PUNITIVE, OR INDIRECT DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES, PROVIDED HOWEVER THAT NOTHING IN THIS AGREEMENT SHALL EXCLUDE OR RESTRICT THE LIABILITY OF EITHER PARTY FOR DEATH OR PERSONAL INJURY RESULTING FROM ITS NEGLIGENCE OR IN ANY CIRCUMSTANCES WHERE LIABILITY MAY NOT BE SO LIMITED UNDER ANY APPLICABLE LAW.

 

20                               Term and Termination

 

20.1                     This Agreement will begin on the Commencement Date and shall continue in effect for an initial term of 10 (ten) years.

 

20.2                     Unless either Party gives to the other Party a written notice of non-renewal at least 6 (six) months prior to the expiration of the current term of this Agreement, this Agreement shall be automatically renewed for successive terms of 2 (two) years, provided however that the terms of the Agreement may be renegotiated in connection with such renewal upon either Party’s request and, if the Parties fail to reach agreement on terms, the Agreement may be terminated by written notice by either Party (such termination to be effective as of the expiry of the then current term or effective immediately if the expiry of the term is passed in time while negotiations were still on-going).

 

20.3                     Either Party may immediately terminate this Agreement by giving to the other Party written notice to terminate on the date specified in the notice:

 

20.3.1           in the event of insolvency of the other Party, or the filing of a petition in bankruptcy by or against the other Party, or the appointment of a receiver for the other Party or the other

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

36

 

Party’s property, or an assignment by the other Party for the benefit of the creditors, or liquidation or dissolution proceedings of the other Party or any other proceedings with a view to discontinuing the business of the other Party;

 

20.3.2           if the other Party assigns or tentatively assigns this Agreement without the prior written consent of the other Party; or

 

20.3.3           if the other Party waives or tries to waive any right to an indemnity in violation of its indemnification obligations under this Agreement.

 

20.4                     Either Party may further terminate this Agreement by providing 6 (six) months written notice in the event the business interest under this Agreement becomes commercially non-viable despite commercially reasonable efforts and the Parties fail to re-negotiate terms reasonably satisfactory to both Parties. “Commercially non-viable” under this clause shall mean that a Party, despite best commercial efforts and after the 5th year of the Agreement, has made or can show that it will make a loss over a consecutive two year term and that this situation is not just temporary. For clarity, the earliest notice of termination under this clause 20.4 would be after five years from the Closing Date. In case of a change by a Regulatory Authority in the Territory that renders the business case for ChondroCelect no longer commercially viable (whereby “commercially non-viable” means that a Party, despite best commercial efforts, has made or can show that it will make a loss over a consecutive two year term and that this situation is not just temporary), each Party may terminate this Agreement subject to a [***] written notice.

 

20.5                     Either Party may also terminate this Agreement with immediate effect without intervention of a court upon a 60 (sixty) days written notice to the other Party if the other Party breaches this Agreement in a material way and fails to remedy such breach within three (3) months of a written notice regarding the breach.

 

20.6                     TiGenix is entitled to terminate the Agreement according to clause 13.2.2.

 

20.7                     At the termination of this Agreement:

 

20.7.1           Sobi shall, upon TiGenix’ request and at TiGenix expense, promptly return to TiGenix, and agree with the Hospital that the Hospital undertakes to return to Sobi (who shall forward the information to TiGenix) all TiGenix’ Confidential Material, as well as all promotional and advertising materials and all technical information relating to this Agreement in its possession or in the possession of the Hospital and Sobi will not keep any copies except for 1 (one) copy for archival purposes as well as any copy or copies as required by applicable laws, regulations or permits;

 

20.7.2           Sobi shall, upon request by TiGenix, immediately perform all required actions to transfer or assign any product registrations, licenses, permits or other authorizations which may have been obtained in the name of Sobi or jointly in the name of TiGenix and Sobi pursuant to this Agreement, to TiGenix or another party appointed by TiGenix who can legally distribute the Product in the Territory, and to terminate the status of legal representative of TiGenix in the Territory. All information required to effect such transfer or assignment, as well as any other relevant documentation, including documentation on donor and patient traceability, will be handed over to TiGenix;

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

37

 

20.7.3           TiGenix shall, upon Sobi’s request and at Sobi’s expense, promptly return to Sobi all Sobi’s Confidential Material in its possession and TiGenix will not keep any copies except for 1 (one) copy for archival purposes as well as any copy or copies as required by applicable laws, regulations or permits;

 

20.7.4           Sobi shall not be entitled to compensation for goodwill which may have accrued to ChondroCelect in the Territory. TiGenix may make such other arrangements for marketing ChondroCelect as it thinks fit in order to preserve such goodwill;

 

20.7.5           In the event that Sobi should be found in breach of contract, then TiGenix shall be further entitled to use the translations (described in clause 10.4.1) for a duration of 10 (ten) years after termination of this Agreement for any reason whether itself or through Third Parties. In the event that this Agreement is terminated for a reason which does not constitute breach of contract by Sobi, then TiGenix shall be entitled to use these translations only with the consent of Sobi.

 

20.8                     Termination will not affect any other rights or obligations which may have accrued prior to termination.

 

21                               Audits

 

21.1                     Sobi shall under the Hospital Agreements oblige the Hospitals to allow TiGenix (a) to conduct quality assurance audits of the Hospitals’ facilities and the procedures implemented in connection with the Hospital Agreement and/or (b) to be present at such audits performed by Sobi, in each time at reasonable times and upon reasonable notice. If Sobi intends to perform an audit of a Hospital, it shall give reasonable notice thereof to TiGenix. .

 

21.2                     Sobi shall notify the Hospitals of any serious quality deficiencies identified in any such audit, and Sobi shall under the Hospital Agreements oblige the Hospitals to remedy such deficiency as soon as practicable and in any case within not more than 30 (thirty) days from the date of notification. Sobi shall provide in the Hospital Agreements that, in the event that a Hospital does not remedy such deficiencies within 60 (sixty) days, such failure to remedy the deficiencies shall constitute a breach by the Hospital of the Hospital Agreement and that Sobi shall no longer sell the Product to such Hospital until the deficiencies have been satisfactorily resolved.

 

21.3                     Sobi and TiGenix will cooperate, and Sobi shall under the Hospital Agreements oblige the Hospitals to cooperate with Sobi, in organising and reporting the audits in a manner that also the requirements set for Tissue Establishments in the Territory, if applicable, are fulfilled.

 

21.4                     Sobi shall under the Hospital Agreements oblige the Hospitals to fully cooperate with any inspections by regulatory authorities, to notify Sobi (who will forward this information to TiGenix) as soon as they become aware of an inspection relating to the Product of their or their suppliers’ facilities by a Regulatory Authority, and to allow a representative from TiGenix to attend such inspection.

 

21.5                     Sobi shall under the Hospital Agreements oblige the Hospitals to provide Sobi (who will forward this information to TiGenix) with copies of (i) any audits (other than financial or tax audits) conducted by any Regulatory Authority associated with this Agreement or the Hospital

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

38

 

Agreements; and (ii) any written communication by any Regulatory Authority alleging a failure to comply with any applicable law or regulation associated with this Agreement or the Hospital Agreements.

 

21.6                     Sobi shall ensure that TiGenix, at reasonable times and upon reasonable notice (at least thirty day notice), may visit Sobi’s facilities to conduct quality assurance audits of these facilities and the procedures implemented in connection with this Agreement. At its option TiGenix may elect to use a third party to conduct such audit provided such Third Party is reasonably acceptable to Sobi and that such Third Party enters into confidentiality obligations in a confidentiality agreement with Sobi. Sobi shall cooperate as far as is reasonable with such audit.

 

22                               Data Protection

 

22.1                     General

 

For the purposes of this Agreement, the terms “Personal Data”, “Data Controller”, “Data Processor”, “Data Subject” and “process” shall have the same meaning and interpretation as set out in Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data.

 

22.2                     ChondroCelect Personal Data

 

22.2.1           TiGenix (in its capacity of Data Controller) has chosen Sobi (in its capacity of Data Processor) to process ChondroCelect Personal Data on behalf and upon instruction of TiGenix and Sobi has agreed to process ChondroCelect Personal Data on behalf and upon instruction of TiGenix.

 

22.2.2           In connection with the processing of ChondroCelect Personal Data, Sobi warrants that:

 

(i)                                  it has in place appropriate technical and organizational measures against accidental or unlawful destruction or accidental loss, alteration, unauthorized disclosure or access and adequate security programs and procedures to ensure that unauthorized persons will not have access to the data processing equipment used to process the ChondroCelect Personal Data;

 

(ii)                               it has in place appropriate security measures, which reflect the nature of the ChondroCelect Personal Data and the level of harm that might be suffered by a Data Subject as a result of unauthorized access or disclosure of the ChondroCelect Personal Data; and

 

(iii)                            each of its employees, agents or subcontractors are and shall be made aware of its obligations with regard to the security and protection of the ChondroCelect Personal Data and that they enter into binding obligations with Sobi in order to maintain the levels of security and protection provided for in this Agreement.

 

22.2.3           In connection with the processing of ChondroCelect Personal Data, Sobi undertakes to:

 

(i)                                  act only on behalf and upon instruction of TiGenix;

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

39

 

(ii)                               do such actions as are necessary to ensure it has fulfilled, and will continue to fulfil, the warranties set out in clause 22.2.2;

 

(iii)                            submit its data processing facilities, data files and documentation needed for processing to auditing and/or certification by TiGenix (or other duly qualified auditors of inspection authorities not reasonably objected to by Sobi and approved by TiGenix) to ascertain compliance with the warranties and undertakings in this Agreement;

 

(iv)                           adequately protect any ChondroCelect Personal Data that may become accessible to Sobi against disclosure, whether directly or indirectly, to any Third Party and shall use such data only for the performance of its obligations under this Agreement and for no other purpose. All ChondroCelect Personal Data that is no longer required for Sobi’s performance of its obligations under this Agreement shall be deleted or returned to TiGenix, at the option of TiGenix. Sobi shall immediately report any violation of data protection laws identified by Sobi to TiGenix.

 

(v)                              ensure by written contract that any agent or subcontractor employed by Sobi to process ChondroCelect Personal Data to which this Agreement relates also provides Sobi with a plan of the technical and organizational means it has adopted to prevent unauthorized or unlawful processing or accidental loss or destruction of the ChondroCelect Personal Data and confirms to Sobi the implementation of those means;

 

(vi)                           provide reasonable assistance to TiGenix in order to enable the latter to comply with its obligations as Data Controller vis-à-vis Data Subjects; and

 

(vii)                        comply with all applicable data protection laws when performing its obligations under this Agreement. In the event Sobi is unable to do so, it shall forthwith notify TiGenix and TiGenix shall be entitled to terminate this Agreement, unless the Parties have agreed or forthwith agree to take such steps as shall enable Sobi to so comply.

 

22.2.4           In the event of termination of this Agreement, Sobi must return all Personal Data and all copies of the ChondroCelect Personal Data to TiGenix forthwith or, at TiGenix’ choice, will destroy all copies of the same and certify to TiGenix that it has done so, unless Sobi is prevented by law from destroying all or part of such ChondroCelect Personal Data, in which event the ChondroCelect Personal Data will be kept confidential and will not be processed for any purpose. Sobi irrevocably agrees with TiGenix that, if so requested by TiGenix, it will allow TiGenix access to any of its premises to verify that this has been done or will allow access for this purpose by any duly authorized representative of TiGenix.

 

22.3                     Other Personal Data

 

In respect of the processing of Personal Data other than ChondroCelect Personal Data in the framework of or in connection with this Agreement, each of the Parties shall, as Data Controller, comply with applicable data protection (privacy) laws and regulations, including but not limited to national legislation and regulation implementing Directive 95/46/EC of the European Parliament

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

40

 

and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data.

 

23                               Miscellaneous

 

23.1                     No waiver of any provision of this Agreement will be of any force or effect unless confirmed in writing and signed by the Parties.

 

23.2                     The invalidity or unenforceability of any provision of this Agreement will not affect the validity and enforceability of all other provisions which are self-sustaining and capable of separate enforcement.

 

23.3                     This Agreement constitutes the entire agreement and understanding between the Parties with respect to this subject matter. It replaces all previous agreements between the Parties with respect to its subject matter. Without limiting the generality of the aforementioned, the initial execution copy of this Agreement, executed and duly signed by the Parties on April 2, 2014, as restated on April 23, 2014, is replaced in its entirety by the current execution copy, dated as of the last date set forth below.

 

23.4                     This Agreement, including this clause, can only be changed by written agreement duly signed by authorized representatives of the Parties.

 

23.5                     Unless expressly provided elsewhere in this Agreement, the relationship between the Parties is that of independent Parties and will not be deemed to be that of joint venture, agent, partnership or otherwise. Neither Party is authorized to act on behalf of the other Party. Sobi acts as an independent contractor buying for itself and selling in its own name and its own risk.

 

23.6                     Clauses 1, 3, 8, 15, 16, 17, 19, 20, 22, 23 and 24 will continue to apply after this Agreement ends.

 

23.7                     Neither Party is liable for any failure or delay in the performance of its obligations under this Agreement to the extent that such failure or delay arises from any circumstances beyond its control including any strikes, lock-outs or labour disputes (“Force Majeure”). Where such failure or delay continues for a period exceeding 6 (six) months, the Party not experiencing such failure or delay may terminate this Agreement without penalty by written notice.

 

23.8                     Neither this Agreement nor any obligation, commitment or liability hereunder may be assigned by either Party without the other Party’s express written consent, except that either Party may assign or transfer all or part of its obligations under this Agreement to its Affiliates or to any Party that acquires all or substantially all of the business to which this Agreement pertains.

 

23.9                     Headings are for convenience only and shall not affect the interpretation of this Agreement.

 

23.10              The following Schedules are attached to this Agreement:

 

Schedule 1: User Manual

 

Schedule 2a: Price

 

Schedule 2b:Forecast

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

41

 

Schedule 2c: Peak capacity

 

Schedule 2d: Calculation example: management of flexibility for ChondroCelect

 

Schedule 2e: Biopsy-kits in consignment

 

Schedule 3: Responsibilities

 

Schedule 3bis: TiGenix staff

 

Schedule 4: ChondroCelect Process

 

Schedule 5: SOP’s on Procurement, Biopsy and Traceability

 

Schedule 6: Assigned Agreements

 

Schedule 7: Hospital Agreement Requirements

 

Schedule 8: Transitional Phase

 

Schedule 8bis: Non-Assigned Hospitals

 

Schedule 9: Pharmacovigliance Agreement

 

Schedule 10: Trade Marks and Branding guidelines

 

Schedule 11: Minimum Sales

 

Schedules constitute an integral part of this Agreement. In case of discrepancies between this Agreement and Schedules, the provisions of this Agreement shall prevail provided however that the Quality Agreement shall prevail in matters relating to quality and the Pharmacovigliance agreement shall prevail in matters relating to pharmacovigliance.

 

23.11              This Agreement and any non-contractual obligations arising out of or in connection with it are governed by, and shall be interpreted in accordance with, Swedish law excluding the UN Convention on the International Sale of Goods (CISG).

 

23.12              Dispute Resolution and Arbitration

 

23.12.1    Disputes.  The Parties recognize that, from time to time during the Term, disputes may arise as to certain matters which relate to either Party’s rights and/or obligations hereunder. It is the objective of the Parties to establish procedures to facilitate the resolution of disputes arising under this Agreement in an expedient manner by mutual cooperation and without resort to litigation. To accomplish this objective, the Parties agree to follow the procedures set forth in this clause 23.12 to resolve any controversy or claim arising out of, relating to or in connection with any provision of this Agreement.

 

23.12.2    Dispute Resolutions. With respect to all disputes arising between the Parties, including any alleged failure to perform, or breach, of this Agreement, or any issue relating to the interpretation or application of this Agreement, if the Parties are unable to resolve such dispute within thirty (30) days after such dispute is first identified by either Party in writing to the other, the Parties shall refer such dispute to the designated senior officers of each of the Parties, or a designee from senior management with decision-making authority for attempted resolution by good-faith negotiations within thirty (30) days after such notice is received. If the designated officers are not able to resolve such dispute referred to them

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

42

 

within such thirty (30) day period, then either Party shall have right to initiate arbitration according to clause 24.12.3.

 

23.12.3    Arbitration. Any disputes which may arise out of or in connection with this Agreement (including a dispute relating to non-contractual obligations arising out of or in connection with this Agreement) and which has not been settled between the Parties according to 23.12.2 shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce. The arbitral tribunal shall be composed of three arbitrators. The seat of arbitration shall be London (UK). The language to be used in the arbitral proceedings shall be English. The arbitrators shall determine the allocation of the costs of the arbitration between the Parties.

 

23.12.4    Injunctive Relief.  Nothing herein may prevent either Party from seeking a preliminary injunction or temporary restraining order, in any court of competent jurisdiction, so as to prevent any Confidential Material from being disclosed in violation of this Agreement.

 

24                               Notices

 

Any written notice required under this Agreement must meet all of the following:

 

24.1                     be given by pre-paid post, personal delivery or facsimile transmission; a notice may also be given by e-mail, it being understood that as long as no acknowledgement of receipt is received by the sender of the e-mail, the e-mail notice will not be deemed received. If within 24 hours of sending the e-mail, no acknowledgement of receipt is received by the sender of an e-mail, the notice should be repeated by pre-paid post or personal delivery; and

 

24.2                     be sent to the following addresses, contact persons and/or facsimile numbers (or any other address, contact person and/or facsimile number previously advised in writing by the recipient):

 

If the notice is sent to TiGenix:

 

Address:

Romeinse straat 12, box 2

3001 Leuven

Belgium

 

For the attention of: Legal Counsel

Telephone number: +32 16 39 60 60

E-mail:           an.moonen@tigenix.com

 

If the notice is sent to Sobi:

 

Address: Swedish Orphan Biovitrum AB (publ)

SE-112 76 Stockholm

Sweden

 

For the attention of: General Counsel

Telephone number: +46 8 697 20 00

E-mail: legal@sobi.com

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

43

 

The Parties hereto have caused this Agreement to be executed in duplicate, as of the Commencement Date, by their duly authorised representatives.

 

 

	
TiGenix   NV
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Eduardo Bravo
    	
 
    
	
 
    	
 
    
	
Eduardo Bravo, CEO
    	
 
    
	
 
    	
 
    
	
Date:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Swedish   Orphan Biovitrum AB (publ)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Anders   Edvell
    	
 
    
	
 
    	
 
    
	
Anders Edvell
    	
 
    
	
 
    	
 
    
	
Head of Global   Marketing and Sobi Partner Products
    	
 
    
	
 
    	
 
    
	
Date:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Fredrik   Berg
    	
 
    
	
 
    	
 
    
	
Fredrik Berg,   General Counsel
    	
 
    
	
 
    	
 
    
	
Date:
    	
 
    

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

44

 

Schedule 1 - User Manual

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

45

 

Schedule 2a — Price

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

46

 

Schedule 2b — Forecast

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

47

 

Schedule 2c — Peak capacity

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

48

 

Schedule 2d — Calculation example: management of flexibility for ChondroCelect

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

49

 

Schedule 2e — Biopsy-kits in consignment

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

50

 

Schedule 3 — Responsibilities

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

51

 

Schedule 3bis — TiGenix staff

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

52

 

Schedule 4 — ChondroCelect Process

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

53

 

Schedule 5 - SOP’s on Procurement, Biopsy and Traceability

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

54

 

Schedule 6 — Assigned Agreements

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

55

 

Schedule 7 — Hospital Agreement Requirements

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

56

 

Schedule 8 — Transitional Phase

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

57

 

Schedule 8bis — Non Assigned Hospitals

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

58

 

Schedule 9 — Pharmacovigilance Agreement

 

To be agreed (in writing) between the Parties during the Transition Phase.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

59

 

Schedule 10 — Trade Marks and Branding Guidelines

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

60

 

Schedule 11:    Minimum Sales

 

[***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

61Exhibit 10.3

 

Share Purchase Agreement

 

	
Between:
    	
(1)
    	
TiGenix NV, a company   organised and existing under the laws of Belgium, having its registered   office at Romeinse Straat 12, box 2, 3001 Heverlee (Leuven), Belgium,   registered with the Register of Legal Entities (Leuven) under number   0471.340.123,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
represented for the purposes of this Agreement by   Mr. Eduardo Bravo, CEO and attorney-in-fact,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
hereinafter referred to as the “Seller”;
    
	
 
    	
 
    	
 
    
	
And:
    	
(2)
    	
PharmaCell B.V., a company organised and existing under the laws of the Netherlands,   having its registered office at Oxfordlaan 70, 6229EV Maastricht, the   Netherlands, registered with the Commercial Register (KvK) under number   14083599,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
represented for the purposes of this Agreement by   Mr. A.A.A.M. Vos, CEO and attorney-in-fact,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
hereinafter referred to as the “Purchaser”.
    

 

The parties referred to above under (1) and (2) are individually also referred to as a “Party” and jointly as the “Parties”.

 

Whereas:

 

(A)                            The Seller owns 18,000 shares in TiGenix B.V., a company organised and existing under the laws of the Netherlands, having its registered office at Urmonderbaan 20b, 6167RD Geleen, the Netherlands, registered with the Commercial Register (KvK) under number 14121664 (hereinafter referred to as the “Target Company”).

 

(B)                            The Seller’s shareholding in the Target Company represents 100% of the share capital of the Target Company.

 

(C)                            On [***], the Purchaser entered into a confidentiality agreement with the Seller (the “Confidentiality Agreement”).

 

(D)                            The Purchaser and its representatives have been provided with and had access to extensive information on the Target Company and its business and have performed an extensive analysis and due diligence investigation (including but not limited to access to the Data Room (as defined below), site visits and Q&A) of the Target Company and its business covering, among other things, financial, real estate, environmental, regulatory, commercial, contract, technical, IT, HR, pensions, tax and legal matters. All written  information and documents provided to the Purchaser have been included in the Data Room. Attached as Schedule (D) is a copy of the Data Room index setting out all such written information and documents which were made available to the Purchaser. For the 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

1

 

purposes of its analysis and due diligence the Purchaser has had the opportunity to submit further questions to and receive answers from the Seller and the management of the Seller and the Target Company in any matter it deemed proper or necessary in view of entering into the Transaction (as defined below).

 

(E)                             On [***], the Parties signed a term sheet in relation to the Transaction (as defined below) (the “Term Sheet”).

 

(F)                              The Seller wishes to sell to the Purchaser and the Purchaser wishes to purchase from the Seller all 18,000 shares in the Target Company, upon the terms and subject to the conditions set forth in this Agreement.

 

It is agreed as follows:

 

1                                      Definitions and Interpretation

 

1.1                            Definitions

 

1.1.1                   For the purposes of this Agreement and in addition to the terms defined elsewhere in this Agreement (including in the Recitals and the Schedules), the following terms shall have the meanings specified or referred to in this Clause 1.1.1:

 

“Adjustment Documents” has the meaning as set forth in Clause 3.2.6.

 

“Affiliated Company” or “Affiliate” means with reference to a person or entity, any entity that such person or entity directly or indirectly controls, is controlled by or is under common control with such person and if such person is an individual, any member of the immediate family (including parents, spouse and children) of such individual. For the purposes of this definition, a person or entity shall be deemed to “control” a company if such person or entity holds (directly or indirectly) the majority of the voting shares attached to the issued share capital of said company or otherwise has the right to appoint or dismiss the majority of the directors of said company.

 

“Agreement” means this Share Purchase Agreement.

 

“Annual Accounts” means each of the Annual Accounts 2012 and, if available on or prior to the Closing Date, the Annual Accounts 2013.

 

“Annual Accounts 2012” means the annual accounts of the Target Company for the financial year ending 31 December 2012.

 

“Annual Accounts 2013” means the annual accounts of the Target Company for the financial year ending 31 December 2013.

 

“Authority” means the Ministry of Public Health, Welfare and Sports (Ministerie van Volksgezondheid, Welzijn en Sport), acting through the “CIBG”.

 

“Bank Guarantee Date” means the date 6 months prior to the third (3rd) anniversary of the Closing Date.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

2

 

“Breach of Representations” means, in respect of any Representations, that the facts stated therein are not true or accurate.

 

“Business Day” means any day of the week except a Saturday, Sunday or any public holiday in Belgium or the Netherlands.

 

“CAPEX Program” means the capital expenditure (if any) related to the Target Company’s facility in Sittard-Geleen as may be required for obtaining the GMP License Extension.

 

“Claim” means any claim of the Purchaser under Clause 11.

 

“Closing” means the transfer of ownership of the Shares and completion of the Seller’s Closing Obligations and the Purchaser’s Closing Obligations pursuant to Clauses 5.2 and 5.3, respectively.

 

“Closing Accounts” has the meaning set forth in Clause 3.2.4.

 

“Closing Date” means the date on which the Closing shall take place pursuant to Clause 5.1.

 

“Closing Date CAPEX Amount” means the amount spent by the Target Company as per the Closing Date on the CAPEX Program, as finally determined in accordance with Clause 3.2, whereby an amount relating to the CAPEX Program shall be deemed spent if such amount has been paid or if such amount has been booked or provided for in the Closing Accounts.

 

“Closing Date Intra-group Indebtedness Amount” means the amount calculated in accordance with Schedule 1.1.1 (i) on the basis of the relevant G/L Code items as set forth in the Closing Accounts, as finally determined in accordance with Clause 3.2.

 

“Closing Date Working Capital Amount” means the amount calculated in accordance with Schedule 1.1.1 (ii) on the basis of the relevant G/L Code items as set forth in the Closing Accounts, as finally determined in accordance with Clause 3.2.

 

“Closing Obligations” means the Seller’s Closing Obligations and the Purchaser’s Closing Obligations as set forth in Clauses 5.2 and 5.3 respectively.

 

“CMO Contract” means the ChondroCelect manufacturing and supply agreement to be entered into between the Parties and the Target Company on the Closing Date, substantially in the form of the draft attached as Schedule 1.1.1(iii).

 

“Confidentiality Agreement” has the meaning set forth in recital (C).

 

“Debt/WC Statements” has the meaning as set forth in Clause 3.2.6.

 

“Deposit Agreement” has the meaning set forth in Clause 6.2.2.

 

“Data Room” means the electronic data room established by the Seller. The index of the Data Room as per the date of this Agreement is attached as Schedule (D). On the Closing Date, each Party shall receive a copy of a DVD containing a copy 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

3

 

of the documents available in the Data Room (including any documents added in accordance with Clauses 7.9 or 10.3.2). A copy of this DVD will be deposited with a Belgian notary for a term of six years in accordance with the Deposit Agreement.

 

“Dutch Notary” means Mr Bartholomeus Johannes Kuck, civil law notary in Amsterdam, the Netherlands, or his deputy or successor, of Linklaters LLP in Amsterdam, Seller’s lawyers.

 

“Encumbrance” means any mortgage, charge, pledge, lien, hypothecation, security interest, title retention or any other agreement or arrangement the effect of which is the creation of security or any other encumbrance of any kind, or any agreement or arrangement to create any of the same, in each case other than those provided for by applicable law.

 

“First Tranche” has the meaning set forth in Clause 3.3.1.

 

“GMP License Extension” has the meaning set forth in Clause 4.1.

 

“Indemnities” has the meaning set forth in Clause 11.5.1.

 

“Independent Expert” has the meaning set forth in Clause 3.2.12.

 

“Loss” means (subject to Clause 11.1) any damage, loss, undertaking, liability, penalty or payment incurred, borne or made by the relevant legal entity or individual.

 

“Notice of Objection” has the meaning set forth in Clause 3.2.8.

 

“Parties” means the Seller and the Purchaser (each of them being referred to individually as a “Party”).

 

“Price Adjustment Amount” has the meaning set forth in Clause 3.2.1.

 

“Purchase Price” means the aggregate price for the Shares as defined in Clause 3.1.

 

“Purchaser’s Closing Obligations” means the obligations to be fulfilled by the Purchaser on the Closing Date, as set out in Clause 5.3.

 

“Purchaser’s Representations” means the representations made by the Purchaser to the Seller pursuant to Schedule 9.

 

“Representations” means the representations made by the Seller to the Purchaser pursuant to Schedule 10.

 

“Second Tranche” has the meaning set forth in Clause 3.3.2.

 

“Seller’s Closing Obligations” means the obligations to be fulfilled by the Seller on the Closing Date, as set out in Clause 5.2.

 

“Shares” means the 18,000 shares in the Target Company, numbered from 1 to 18,000, representing 100% of the issued share capital of the Target Company, which are being sold by the Seller to the Purchaser under this Agreement.

 

“Target Company” means TiGenix B.V., as further defined in recital (A).

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

4

 

“Taxes” means (and “Taxation” refers to) all taxes, however denominated, including any interest, penalties, additions to tax or additional taxes that may become payable in respect thereof, which taxes shall include, without limiting the generality of the foregoing, all income taxes, registration taxes, real estate and personal property taxes, VAT, “parafiscal” charges, customs duties, withholding taxes, environmental taxes, local taxes and social security contributions (i.e. employees’ and national insurance contributions paid on behalf of any employee or former employee) .

 

“Tax Return Period” means any taxable period, including any accounting period and any period in respect of which a Tax return is required to be submitted to any Tax Authority in connection with the assessment of a company’s liability to Tax.

 

“Term Sheet” has the meaning set forth in recital (E).

 

“Third Party Claim” has the meaning set out in Clause 13.2.1.

 

“TiGenix Group” means the Seller and its subsidiaries (excluding the Target Company as from the Closing).

 

“Transaction” means (i) the sale of the Shares by the Seller to the Purchaser and the corresponding purchase of the Shares by the Purchaser from the Seller, subject to the terms and conditions of this Agreement and (ii) the entry into by the Parties and the Target Company of the CMO Agreement.

 

“Transfer Deed” has the meaning set out in Clause 5.2.2;

 

“VAT” means, within the European Union, such Taxation as may be levied in accordance with (but subject to derogations from) Directive 2006/112/EC and, outside the European Union, any Taxation levied by reference to added value or sales.

 

“Verification Period” has the meaning set forth in Clause 3.2.8.

 

1.1.2                   For all purposes under this Agreement, except for the purpose of Clauses 1.1.3, a legal entity (including any of the Parties as applicable) shall be deemed to have knowledge of a particular fact if any of the directors, executive officers or other executives of the legal entity has knowledge of that fact.

 

1.1.3                   Whenever a Representation is made “to the Seller’s knowledge” or is qualified by any similar expression, it is agreed that such a Representation is made by the Seller only on the basis of the facts of which the persons whose names are set out in Schedule 1.1.3 have actual knowledge at the date of this Agreement.

 

1.2                            Interpretation

 

1.2.1                   The titles and headings included in this Agreement are for convenience only and shall not be taken into account in the interpretation of the provisions of this Agreement.

 

1.2.2                   The Schedules to this Agreement form an integral part hereof and any reference to this Agreement includes the Schedules and vice versa.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

5

 

1.2.3                   The original version of this Agreement has been drafted in English. Should this Agreement be translated into Dutch or any other language, the English version shall prevail among the Parties to the fullest extent permitted by the laws of the Netherlands, provided, however, that whenever Dutch translations of certain words or expressions are contained in the original English version of this Agreement, such translations shall be conclusive in determining the Dutch legal concept(s) to which the Parties intended to refer.

 

1.2.4                   Unless a contrary indication appears, references to the “Netherlands” or “Dutch” refer to the European part of the Netherlands only. References to any Dutch legal term shall, in respect of any jurisdiction other than the Netherlands, be construed as references to the term or concept which most nearly corresponds to it in that jurisdiction.

 

1.2.5                   When using the expressions “shall use its best efforts” or “shall use its best endeavours” (or any similar expression or any derivation thereof) in this Agreement, the Parties intend to refer to the Dutch legal concept of “inspanningsverplichting”.

 

1.2.6                   The words “herein”, “hereof”, “hereunder”, “hereby”, “hereto”, “herewith” and words of similar import shall refer to this Agreement as a whole and not to any particular clause, paragraph or other subdivision.

 

1.2.7                   The words “include”, “includes”, “including” and all forms and derivations thereof shall mean including but not limited to.

 

1.2.8                   Words denoting the singular shall include the plural and vice versa, unless otherwise defined in this Agreement. Words denoting one gender shall include the other gender.

 

1.2.9                   All periods of time set out in this Agreement shall be calculated from midnight to midnight. They shall start on the day following the day on which the event triggering the relevant period of time has occurred. The expiration date shall be included in the period of time. If the expiration date is a Saturday, a Sunday or a public holiday in Belgium or the Netherlands, the expiration date shall be postponed until the next Business Day. Unless otherwise provided herein, all periods of time shall be calculated in calendar days. All periods of time consisting of a number of months (or years) shall be calculated from the day in the month (or year) when the triggering event has occurred until the eve of the same day in the following month(s) (or year(s)).

 

1.2.10            Unless otherwise provided herein, all references to a fixed time of a day shall mean Central European Time (CET).

 

2                                      Sale and Purchase

 

2.1                            The Shares

 

2.1.1                   Subject to the terms and conditions of this Agreement (including in particular the conditions precedent set out in Clause 4.1), the Seller hereby sells the Shares to 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

6

 

the Purchaser and the Purchaser hereby purchases all of the Shares from the Seller.

 

2.1.2                   The ownership of the Shares shall be transferred to the Purchaser on the Closing Date against payment of the First Tranche in accordance with Clause 3.3.1.

 

2.1.3                   On the Closing Date, the Purchaser shall acquire the Shares free and clear of all pledges, security interests, usufructs, options, or any other third party rights or encumbrances of any kind.

 

2.1.4                   The sale contemplated hereunder is indivisible and shall be valid only if it applies to all of the Shares. No partial enforcement of this Agreement shall be allowed.

 

2.1.5                   The Shares shall be sold together with all rights attaching thereto, including the right to the full amount of all dividends which might be allocated to the Shares in respect of the current financial year (which started on 1 January 2013).

 

3                                      Purchase Price

 

3.1                            Aggregate Amount of the Purchase Price

 

3.1.1                   The aggregate amount of the purchase price for the Shares shall be four million and two hundred fifty thousand euro (EUR 4,250,000) (the “Purchase Price”), payable by the Purchaser in two tranches in accordance with Clause 3.3.

 

3.1.2                   The Purchase Price shall be adjusted pursuant to the price adjustment procedure set out in Clause 3.2.

 

3.2                            Post-Closing Purchase Price Adjustment

 

3.2.1                   Without prejudice to Clause 3.2.2, the Purchase Price shall be adjusted after the Closing Date on a euro-per-euro basis by an amount that shall be the result of applying the following formula (the “Price Adjustment Amount”):

 

(i)                                the amount, if any, by which the Closing Date Intra-group Indebtedness falls short of EUR 0.00;

 

minus

 

(ii)                             the amount, if any, by which the Closing Date Intra-group Indebtedness exceeds EUR 0.00;

 

plus

 

(iii)                          the amount, if any, by which the Closing Date Working Capital exceeds EUR 0.00;

 

minus

 

(iv)                         the amount, if any, by which the Closing Date Working Capital falls short of EUR 0.00;

 

plus

 

(v)                              the Closing Date CAPEX Amount, if any.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

7

 

3.2.2                   The Price Adjustment Amount shall be determined by the Parties or, as the case may be, by the Independent Expert in accordance with the procedure set out in this Clause 3.2, provided that if the Price Adjustment Amount is a positive number it shall for the purpose of this Agreement never exceed (and, as the case may be, be limited to) the sum of [***] euro (EUR [***]) plus the Closing Date CAPEX Amount.

 

3.2.3                   If the Price Adjustment Amount is a positive number, the Purchase Price shall be adjusted upwards by such amount. If the Price Adjustment Amount is a negative number, the Purchase Price shall be adjusted downwards by such amount.

 

3.2.4                   Closing Accounts. The Seller shall prepare and deliver prior to, on or within twenty (20) Business Days after the Closing Date, to the Purchaser draft accounts of the Target Company, with the Closing Date as reporting date, drawn up in accordance with Clause 3.2.5 (the “Closing Accounts”).

 

3.2.5                   The Closing Accounts shall be prepared in the following order of priority (1st priority appearing first):

 

(i)                                in a manner consistent with the Annual Accounts;

 

(ii)                             by applying the valuation rules (including the rules and practices on the level of provisions) of the Target Company attached as Schedule 3.2.5(ii); and

 

(iii)                          by applying Dutch generally accepted accounting principles and Dutch laws and regulations, applied on a basis consistent with the Annual Accounts.

 

For the sake of clarity the Parties stipulate that, in case of a conflict between any of the requirements set out above in this Clause 3.2.5, the requirement with a higher priority shall take precedence over a requirement with a lower priority (according to the aforementioned ranking).

 

The Closing Accounts shall be prepared in the format set forth in Schedule 3.2.5.

 

3.2.6                   Debt/WC Statements. Concurrently with establishing the Closing Accounts, the Seller shall prepare statements derived from the Closing Accounts showing the Closing Date Intra-group Indebtedness, the Closing Date Working Capital Amount and the Closing Date CAPEX Amount (these statements herein collectively referred to as the “Debt/WC Statements”). Together with the Closing Accounts, the Seller shall deliver to the Purchaser the Debt/WC Statements and a calculation of the Price Adjustment Amount (all three elements together referred to as the “Adjustment Documents”).

 

3.2.7                   Co-operation and access to information. As of the Closing, the Purchaser shall instruct and cause the management of the Target Company to fully co-operate with the Seller and its advisors and to provide reasonable access during normal business hours to the employees of the Target Company and to the accounts and other financial information of the Target Company as the Seller may reasonably request to enable it to prepare the Closing Accounts and the Debt/WC Statements and to determine the Price Adjustment Amount, and to verify, assess and comment 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

8

 

on any objections made by the Purchaser in the framework of the procedures set out in the following Clauses.

 

3.2.8                   Verification by the Purchaser. The Purchaser shall within twenty (20) Business Days after the delivery to the Purchaser of the Adjustment Documents (the “Verification Period”), cause such verification as the Purchaser shall deem useful to be performed with respect to the Adjustment Documents, at the Purchaser sole expense. On the basis of that review, the Purchaser may during a five (5) Business Days period following the Verification Period propose to the Seller in writing (the “Notice of Objection”) such adjustments, if any, as shall in the Purchaser judgement be required to determine the Closing Accounts, Debt/WC Statements and the Price Adjustment Amount, if any, in accordance with the rules set out in this Clause 3.2. The Notice of Objection shall contain a statement of the basis of the Purchaser’s objection.

 

3.2.9                   If within five (5) Business Days following the Verification Period the Purchaser has not given the Seller a Notice of Objection, then the Purchaser shall be deemed to agree with the Price Adjustment Amount as shown in the Adjustment Documents and that amount shall constitute the final and binding Price Adjustment Amount for the purposes of this Clause 3.2.

 

3.2.10            If the Purchaser has given the Seller a Notice of Objection in accordance with Clause 3.2.8, the Parties shall attempt to resolve the disputed issues and to agree on the Closing Accounts and the Debt/WC Statements (and the calculation of the corresponding Price Adjustment Amount, if any), in which case the Price Adjustment Amount, if any, so agreed between the Parties shall constitute the final and binding Price Adjustment Amount for the purposes of this Clause 3.2.

 

3.2.11            Without prejudice to Clause 12.6, the absence of any Notice of Objection or, as the case may be, the agreement between the Seller and the Purchaser on any objections in accordance with Clause 3.2.10 shall not constitute a waiver of any condition based on the accuracy of any Representation.

 

3.2.12            Any objections upon which the Seller and the Purchaser do not reach an agreement in accordance with Clause 3.2.10 above within fifteen (15) Business Days from delivery of the notification of the Notice of Objection, shall be decided upon by a written opinion of [***] acting as independent expert (such person or, as the case may be, the expert appointed as its replacement, is referred to hereinafter as the “Independent Expert”). The disputed issues may be submitted by either the Seller or the Purchaser, for resolution by written notice to the Independent Expert and the Purchaser or the Seller, respectively.

 

If the Independent Expert should (for whatever reason) not be available for rendering such opinion, the Seller and the Purchaser shall agree upon another expert within ten (10) Business Days after they have become aware of the Independent Expert’s unavailability. The other expert shall (a) be an auditor from a major international audit firm, (b) declare in writing that he and his team members have not worked on matters for or against any of the Parties (or their Affiliates) or the Target Company in a way that would prohibit him to perform his expert mandate 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

9

 

in an independent manner and in compliance with applicable professional rules and that he and his firm have put in place adequate information barriers or other measures to protect the Parties’ and the Target Company’s confidential information that he and his team members may receive during their intervention, and (c) be sufficiently available to render his opinion on short term. If the Seller and the Purchaser do not agree on another expert within this time period, then such other expert shall be appointed by the President of the Institute of Chartered Accountants in the Netherlands (Nederlandse Beroepsorganisatie van Accountants) upon application of either the Seller or the Purchaser.

 

The rules, policies, standards, methods and other criteria agreed to be applicable in accordance with Clause 3.2.5 shall also apply to the Independent Expert’s opinion. The Independent Expert shall only determine issues that are disputed between the Purchaser and the Seller.

 

Each of the Parties shall (and the Purchaser shall procure that the Target Company shall) fully cooperate with the Independent Expert and shall provide the Independent Expert reasonable access to their respective books, records, working papers and other documents and data as the Independent Expert may reasonably request for the performance of his assignment.

 

The Independent Expert shall give the Seller and the Purchaser a reasonable opportunity to make written or oral statements in respect of the objections of the Purchaser or, as the case may be, the Seller and shall send copies of such statements to the Purchaser and the Seller, respectively. The Independent Expert shall give the Seller and the Purchaser the opportunity to be present and/or send representatives when oral statements in respect of objections are made.

 

Any balance sheet assessments or valuations determined in the Independent Expert’s opinion within the scope of the Independent Expert’s mandate shall be incorporated into the Closing Accounts. The Independent Expert shall determine the amount of the Closing Date Intra-group Indebtedness; the Closing Date Working Capital and the Closing Date CAPEX Amount (and the corresponding Price Adjustment Amount, if any), based on the disputed issues and the undisputed parts of the Closing Accounts and Debt/WC Statements, and shall notify the Purchaser and the Seller of its decision (it being understood that such notice shall include a statement of the basis of the Independent Expert’s decision) within twenty (20) Business Days after the date on which the disputed issues have first been submitted to the Independent Expert (or, as the case may be, within twenty (20) Business Days after the date of appointment of the replacement Independent Expert). The Closing Accounts, the Debt/WC Statements and the amounts of the  Closing Date Intra-group Indebtedness; the Closing Date Working Capital; and the Closing Date CAPEX Amount (and the corresponding Price Adjustment Amount, if any), in each case as determined by the Independent Expert, shall in the absence of fraud or manifest error be final and binding upon the Parties (in accordance with section 7:900 et seq. of the Dutch Civil Code) and shall constitute the Closing Date Intra-group Indebtedness; the Closing Date Working Capital and the Closing Date CAPEX Amount for the purposes of this Clause 3.2. The notice of the Independent

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

10

 

Expert shall also state the Price Adjustment Amount, if any, which shall be equally final and binding upon the Parties.

 

The Parties shall each bear fifty percent (50%) of the Independent Expert’s fees and expenses and shall each bear their own costs and the costs of their advisers and counsel.

 

3.2.13            The Price Adjustment Amount shall bear interest at the rate equal to two percent (2%) per year, calculated on the basis of a year of 365 days, commencing as from (and including) the Closing Date up to (and excluding) the date of payment.

 

3.3                            Payment of the Purchase Price

 

3.3.1                   Subject to the terms of this Agreement (including in particular the conditions precedent set out in Clause 4.1), the Purchaser shall pay on the Closing Date an amount equal to three million and five hundred thousand euro (EUR 3,500,000) (the “First Tranche”) to the Seller by wire transfer of immediately available funds to the following third party account (“derdengeldenrekening”) of the Dutch Notary:

 

·                                       Bank: [***]

 

·                                       Account name:[***]

 

·                                       IBAN: [***]

 

·                                       BIC: [***]

 

3.3.2                   Without prejudice to Clause 3.4.2, the Purchaser shall pay on the first Business Day following the date of the third (3rd) anniversary of the Closing Date the remainder of the Purchase Price, i.e. an amount equal to seven hundred fifty thousand euro (EUR 750,000) (the “Second Tranche”) to the Seller by wire transfer of immediately available funds to the following bank account or any other bank account notified by the Seller to the Purchaser for such purposes:

 

·                                       Bank: [***]

 

·                                       IBAN: [***]

 

·                                       BIC: [***]

 

3.3.3                   Payment of the Price Adjustment Amount

 

(i)                                  If the Purchase Price is adjusted upwards, the Purchaser shall pay the Price Adjustment Amount, together with any interest thereon, to the Seller on the fifth (5th) Business Day after the final determination of the Purchase Price Amount in accordance with Clause 3.2, by wire transfer of  immediately available funds to the Seller’s bank account referred to in Clause 3.3.2 or any other bank account notified by the Seller to the Purchaser for such purposes.

 

(ii)                               If the Purchase Price is adjusted downwards, the Seller shall pay the Price Adjustment Amount, together with any interest thereon, to the Purchaser on the fifth (5th) Business Day after the final determination of the Purchase 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

11

 

Price Amount in accordance with Clause 3.2, by wire transfer of immediately available funds to the following bank account or any other account notified by the Purchaser to the Seller for such purposes:

 

·                                Bank: [***]

 

·                                IBAN: [***]

 

·                                BIC: [***]

 

3.4                            Bank guarantee

 

3.4.1                   The Purchaser shall cause a top tier Dutch or Belgian credit institution to issue prior to or on the Bank Guarantee Date an irrevocable and unconditional bank guarantee in an amount of seven hundred fifty thousand euro (EUR 750,000), which is on first demand as of the third (3rd) anniversary of the Closing Date and expires three (3) months after the third anniversary of the Closing Date to the benefit of the Seller, securing the Purchaser’s obligation to pay the Second Tranche of the Purchase Price in accordance with Clause 3.3.2 of this Agreement.

 

3.4.2                   In case the Purchaser fails to obtain the bank guarantee by the Bank Guarantee Date in accordance with Clause 3.4.1, the Second Tranche of the Purchase Price shall on the Bank Guarantee Date automatically become due and payable by the Purchaser to the Seller by wire transfer of immediately available funds to the Seller’s bank account referred to in Clause 3.3.2 or any other bank account notified by the Seller to the Purchaser for such purposes.

 

4                                      Conditions Precedent

 

4.1                            General Principles

 

The obligations of the Purchaser to purchase the Shares from the Seller and to pay the Purchase Price as set out in Clauses 2 and 3, and the obligation of the Seller to transfer the Shares to the Purchaser as set out in Clause 2 are subject to the satisfaction of the following conditions precedent:

 

4.1.1                   the Target Company shall have obtained from the IGZ a written confirmation essentially stating that the Target Company’s manufacturing facility in Geleen is authorized to produce other cell therapy products under the Target Company’s current EU GMP license provided that GMP controls are instigated to satisfy the IGZ (the “GMP License Extension”) whereby the aggregate amount of the capital expenditure related to that facility required for obtaining such extension does not exceed [***] euro (EUR [***]) (excluding VAT); and

 

4.1.2                   [***] shall have confirmed in writing that the actual execution [***] of the financing agreements [***] will take place.

 

4.2                            Best Efforts concerning the Satisfaction of the Conditions Precedent

 

4.2.1                   Each of the Parties shall use its reasonable best efforts to ensure the due satisfaction of the conditions precedent set out in Clause 4.1 as soon as possible.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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4.2.2                   Without prejudice to the above, the Target Company (for which the Seller warrants performance) is responsible for filing the GMP License Extension request with the Authority. The Purchaser undertakes to cooperate in good faith with the Target Company in connection with the ongoing preparation of the GMP License Extension request as swiftly as possible after the date of this Agreement. The Purchaser shall provide all assistance reasonably requested by the Seller with a view to obtaining the GMP License Extension. All the Parties’ costs and expenses in relation to the filing of such GMP License Extension request shall be borne by the relevant Party.

 

4.2.3                   Without prejudice to the above, the Purchaser in consultation with the Seller shall use its best endeavours with a view to obtaining the satisfaction of the condition precedent set forth in Clause 4.1.2 as swiftly as possible after the date of this Agreement.

 

4.3                            Non-Satisfaction

 

4.3.1                   Each Party shall have the right to terminate this Agreement, by written notice to the other Party on or prior to the Closing Date, in each of the following circumstances:

 

(i)                                  If the condition precedent set out in Clause 4.1.1 is not satisfied, or waived by both Parties, within the period of six (6) months starting on the date on which the application for the GMP License Extension was submitted; or if the Authority has formally indicated to the Parties or the Target Company that it will not grant the GMP License Extension; or

 

(ii)                               If the condition precedent set out in Clause 4.1.2 is not satisfied, or waived by both Parties, within six (6) months after the date of this Agreement.

 

4.3.2                   If this Agreement is terminated pursuant to this Clause 4.3:

 

(i)                                  all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to the other Party, save for any claims that any Party may have against the other Party arising from a breach by such other Party of any of its obligations under Clause 4.2;

 

(ii)                               the provisions of Clause 15 shall apply.

 

5                                      Closing

 

5.1                            Date and Place

 

The Closing shall take place at the offices of Linklaters LLP in Amsterdam on the fifth (5th) Business Day after the date on which all conditions precedent are satisfied or, as the case  may be, waived (the “Closing Date”) or at such other place or on such other date as may be agreed between the Parties.

 

5.2                            Seller’s Closing Obligations

 

On the Closing Date, the Seller shall do all of the following (the “Seller’s Closing Obligations”):

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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5.2.1                   the Seller shall deliver to the Purchaser the letters of resignation of the Target Company’s managing directors and the Target Company’s supervisory directors, in accordance with Clause 7.4.

 

5.2.2                   after fulfilment of the Seller’s Closing Obligations and the Purchaser’s Closing Obligations set forth in respectively Clause 5.2.1 and Clause 5.3.2 and after confirmation by the Dutch Notary to the Seller and the Purchaser of receipt of the First Tranche, the Seller or a duly authorised attorney-in-fact of the Seller shall sign a deed of transfer before the Dutch Notary and the Seller shall procure that the Target Company or a duly authorised attorney-in-fact of the Target Company shall sign a deed of transfer before the Dutch Notary, who shall execute such deed of transfer, thus effecting the transfer of the Shares, substantially in the form as attached hereto as Schedule 5.2.2 (the “Transfer Deed”), after which the Dutch Notary shall be requested to update the shareholders’ register of the Target Company.

 

5.3                            Purchaser’s Closing Obligations

 

On the Closing Date, the Purchaser shall do all of the following (the “Purchaser’s Closing Obligations”):

 

5.3.1                   the Purchaser shall pay the First Tranche in accordance with Clause 3.3.1;

 

5.3.2                   the Purchaser shall deliver to the Seller evidence that the guarantee provided by the Seller for the benefit of [***] has been fully released, in accordance with Clause 8.2.

 

5.3.3                   after fulfilment of the Seller’s Closing Obligations and the Purchaser’s Closing Obligations set forth in respectively Clause 5.2.1 and Clause 5.3.2 and after confirmation by the Dutch Notary to the Seller and the Purchaser of receipt of the First Tranche, the Purchaser or a duly authorised attorney-in-fact of the Purchaser shall sign a deed of transfer before the Dutch Notary who shall execute such deed of transfer, thus effecting the transfer of the Shares, substantially in the form as attached hereto as Schedule 5.2.2, after which the Dutch Notary shall be requested to update the shareholders’ register of the Target Company;

 

5.3.4                   the Purchaser shall hold a general meeting of the Target Company in accordance with Clause 8.1.

 

5.4                            Waiver of Closing Obligations

 

5.4.1                   The Purchaser may at any time waive some or all of the Seller’s Closing Obligations by giving five (5) Business Days’ advance notice to the Seller.

 

5.4.2                   The Seller may at any time waive some or all of the Purchaser’s Closing Obligations by giving five (5) Business Days’ advance notice to the Purchaser.

 

5.5                            Breach of Closing Obligations

 

5.5.1                   The effectiveness of each of the Purchaser’s Closing Obligations is conditional upon the fulfilment of all of the Seller’s Closing Obligations and vice versa.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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5.5.2                   If a Party fails to comply with any of its material Closing Obligations, then all Closing Obligations that have already been fulfilled shall be deemed null and void with the exception of the Dutch notarial deed recording the transfer of the Shares, and if such deed has been executed, the Seller and the Purchaser shall carry out any remedial steps or actions required to ensure that the Shares will be transferred back to the Seller, and the non-breaching Party shall have the right (in addition to and without prejudice to all other rights and remedies available):

 

(i)                                  to terminate this Agreement by giving ten (10) Business Days’ advance notice to the other Party within five (5) Business Days after the Closing Date, provided that, after this five (5) Business Days period, the non-breaching Party shall be deemed to have waived its right to terminate this Agreement under this Clause 5.5.2;

 

(ii)                               to effect the Closing so far as practicable having regard to the defaults which have occurred; or

 

(iii)                            to fix a new date for the Closing (not being more than ten (10) Business Days after the agreed Closing Date) but provided that such deferral may only occur once.

 

5.5.3                   The provisions of Clause 15 shall apply in case of termination of this Agreement pursuant to Clause 5.5.2.

 

6                                      Undertakings of all Parties prior to or at the Closing Date

 

6.1                            Filings with Public Authorities

 

6.1.1                   As soon as practicable after the date of this Agreement, the Parties shall comply with all public authority filing and notification formalities and other formalities required in order to consummate the transactions contemplated in this Agreement, including notifications to the European Medicines Agency (in connection with the Seller’s marketing authorisation for ChondroCelect), the relevant Dutch authorities (in connection with the Target Company’s GMP license and tissue establishment license) and the Seller shall cause the Target Company to provide all assistance necessary for such formalities.

 

6.1.2                   The Parties shall consult with each other in so far as is reasonably practicable before making such filings and notifications or complying with all requests from any public authority.

 

6.2                            Other Agreements

 

On the Closing Date, the Parties shall execute (or shall cause their relevant Affiliates to executed) the following agreements:

 

6.2.1                   the CMO Contract, substantially in the form of the draft attached as Schedule 1.1.1(iii);

 

6.2.2                   a deposit agreement, substantially in the form attached hereto as Schedule 6.2.2, to deposit the DVD containing the Data Room, supplemented as the case may be with additional disclosures made by the Seller and which must be included on the 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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DVD in accordance with Clause 10.3.2, with the Dutch Notary (the “Deposit Agreement”); and the Parties shall within ten (10) Business Days after the Closing Date, through their authorized representatives or attorneys-in-fact, hand over the DVD to the Dutch Notary.

 

7                                      Undertakings of the Seller prior to or at the Closing Date

 

7.1                            Collaboration

 

To the extent permitted under applicable legislation and regulations, between the date of this Agreement and the Closing Date, the Seller and the Purchaser shall collaborate in order to prepare and facilitate the change of control over the Target Company and the Target Company’s integration into the Purchaser’s group.

 

7.2                            Operation of the Business

 

Between the date of this Agreement and the Closing Date, the Seller shall ensure that the Company’s business will be carried on in the ordinary and usual course and substantially in the same manner as at the date of this Agreement.

 

7.3                            Restrictions on the Seller and the Target Company

 

7.3.1                   Between the date of this Agreement and the Closing Date, the Seller agrees and undertakes not to approve any of the following resolutions at any shareholders’ meeting of the Target Company, without the Purchaser’s prior written consent (which consent shall not be unreasonably withheld or delayed):

 

(i)                                declaring any dividends;

 

(ii)                             increasing or decreasing the Target Company’s capital, or making any other amendment to its Articles of Association, provided that at any time the Seller shall be allowed to perform any share premium contribution (agiostorting) it deems appropriate in order to convert debt owed by the Target Company to the Seller into capital by means of a settlement of the payment obligation of the Seller pursuant to the share premium contribution (agiostorting) with the payment obligation of the Company to the Seller pursuant to the outstanding debt;

 

(iii)                          approving the contribution or the sale by the Target Company of its business as a whole; or

 

(iv)                         winding up, merging or splitting up the Target Company.

 

7.3.2                   Between the date of this Agreement and the Closing Date, the Seller shall cause the Target Company (acting through its management body) not to do any of the following without the Purchaser’s prior written consent (which consent shall not be unreasonably withheld or delayed):

 

(i)                                incur any capital expenditure in excess of EUR 25,000 per item;

 

(ii)                             incur any capital expenditure in connection with the CAPEX Program;

 

(iii)                          acquire (in any manner whatsoever) any shares or other securities in any corporation, company or partnership;

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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(iv)                         declare any dividend or interim dividend by a Board resolution;

 

(v)                            acquire or dispose of (in any manner whatsoever) any division or material assets of the Target Company;

 

(vi)                         enter into, amend or terminate any lease agreement in respect of any real property leased by it as lessee;

 

(vii)                      recruit any new employee, except as communicated by the Seller to the Purchaser in writing prior to the date of this Agreement;

 

(viii)                   dismiss any employee or change the terms of service of any employee;

 

(ix)                         enter into any borrowing or indebtedness, other than intra-group borrowings or indebtedness vis-à-vis the Seller or its Affiliates;

 

(x)                            enter into any agreement or arrangement which establishes any guarantee, indemnity, suretyship, form of comfort or support (whether or not legally binding) given by the Target Company in respect of the obligations or solvency of any third party;

 

(xi)                         repay any borrowing or indebtedness, other than intra-group borrowings or indebtedness vis-à-vis the Seller or its Affiliates, in advance of its stated maturity;

 

(xii)                      cancel, waive, release, assign or discontinue any debts or claims;

 

(xiii)                   change its accounting policies or valuation rules;

 

(xiv)                  enter into any agreement or commitment to do any of the above.

 

7.4                            Directors’ Resignation

 

The Seller shall procure that all of the Target Company’s current managing directors and supervisory directors, shall resign from their position under the condition precedent of the execution of the Transfer Deed and shall execute a letter of resignation, substantially in the form of the draft attached as Schedule 7.4, on or before the Closing Date.

 

7.5                            Replacement of insurance coverage

 

The Purchaser acknowledges and agrees that (a) prior to the Closing Date certain insurance policies covering the Target Company and its business are maintained by the Seller, (b) such insurance policies will be terminated with respect to the Target Company and its business effective as of the Closing Date and (c) upon such termination, the Target Company and its business will cease to be covered under such policies and the Purchaser will have to obtain replacement coverage.

 

7.6                            Intra-group services

 

The Purchaser acknowledges and agrees that (a) prior to the Closing Date certain legal, HR, finance, IT, corporate QA, regulatory and other intra—group services are being provided to the Target Company by the Seller or any of its Affiliated Companies, and (b) such services will be terminated with respect to the Target Company and its business effective as of the Closing Date unless otherwise agreed between the Parties and the Purchaser or the Target Company will have to obtain replacement services.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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7.7                            Intragroup indebtedness

 

The Seller shall (and shall cause the Target Company to) use best efforts to arrange that, on the Closing Date, there will be no financial indebtedness (being the G/L Code items referred to in Schedule 1.1.1(i)) owed by the Target Company to the Seller or any Affiliate of the Seller.

 

7.8                            Release of guarantees

 

The Seller warrants that all guarantees and security interests given by the Target Company in respect of any liability of the Seller or any Affiliated Company of the Seller shall be fully released by the beneficiaries of such guarantees or security interests on or before the Closing Date.

 

7.9                            Annual Accounts 2013

 

Provided that the Closing occurs on or after 15 February 2014, the Seller shall cause the Target Company to draw up the Annual Accounts 2013 and to have the Annual Accounts 2013 approved by the shareholders’ meeting of the Target Company prior to or on the Closing Date. In such event the Seller shall provide the Purchaser with a copy of the Annual Accounts 2013, which shall be deemed included in the Data Room and shall be included on the DVD referred to in Clause 6.2.2.

 

In the event that the Closing would occur prior to 15 February 2014, the Seller shall make best efforts to do the same prior to or on the Closing Date.

 

8                                      Undertakings of the Purchaser prior to or at the Closing Date

 

8.1                            General Meeting of the Target Company

 

On the Closing Date and prior to the Closing, the Seller shall hold a general meeting of the Target Company with the agenda set out below, and shall adopt the resolutions approving each item on such agenda:

 

·                                       resignation of each of the a managing directors and of each of the supervisory directors under the condition precedent of the execution of the Transfer Deed;

 

·                                       release of liability to be granted to the resigning directors for the management conducted by them up to and including the date of their resignation;

 

·                                       appointment of new director(s) under the condition precedent of the execution of the Transfer Deed.

 

8.2                            Release of Seller’s Guarantee for the benefit of [***]

 

The Purchaser shall procure that the guarantee [***] shall be fully released by [***] on or before the Closing Date.

 

9                                      Purchaser’s Representations

 

The Purchaser warrants to the Seller that the representations set out in Schedule 9 (the “Purchaser’s Representations”) are true and accurate as at the date of this Agreement 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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or, as the case may be, any such earlier date as of which any Purchaser’s Representation is expressly made.

 

10                               Seller’s Representations

 

10.1                     General Principles

 

10.1.1            The Seller warrants to the Purchaser that the representations set out in Schedule 10 (the “Representations”) are true and accurate as at the date of this Agreement or, as the case may be, any such earlier date as of which any Representation is expressly made.

 

10.1.2            For the avoidance of any doubts, save as otherwise provided herein (and in particular in the relevant Representations), the Representations are made only in respect of events, matters or circumstances which occurred or arose on or before the date of this Agreement.

 

10.1.3            The Purchaser acknowledges and agrees that the Seller does not make any representation as to the accuracy of the explicit forecasts, estimates, projections or statements of intent provided to the Purchaser or any of its directors, officers, employees, agents or advisors on or prior to the date of this Agreement, in the documents provided in the Data Room, during management presentations, during Q&A sessions or otherwise.

 

10.1.4            The Purchaser acknowledges and agrees that it has not entered into this Agreement in reliance upon any representation or information other than the Representations set out in Schedule 10 and the information contained in this Agreement.

 

10.1.5            The Purchaser acknowledges and agrees that it does not rely when entering into this Agreement on any of the representations implied by Dutch law including Section 7:17 of the Dutch Civil Code.

 

10.2                     Non Conformity

 

The applicability of Sections 7:17 and 7:20 to 7:23 inclusive of the Dutch Civil Code is hereby excluded.

 

10.3                    Seller’s Disclosures

 

10.3.1            All Representations are made subject to the following matters, which shall therefore limit the contents and scope of such Representations, provided that such matters are disclosed in sufficient detail to enable a diligent purchaser assisted by professional advisors to assess their impact on the Target Company:

 

(i)                                  any matter which is contained or referred to in this Agreement or clearly known from the information provided in the Data Room. The information in the Data Room can be qualified as “clearly known” if the respective information has been laid out in a manner enabling a diligent purchaser assisted by professional advisors to assess the impact of such matter on the Target Company and the Representations; and

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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(ii)                               all matters which are publicly available regarding the Target Company or its business before or at the date of this Agreement.

 

10.3.2            Additional disclosures

 

(i)                                  Between the date of this Agreement and the Closing Date the Seller shall be allowed to make additional disclosures to the Purchaser relating to facts or matters occurred or arisen between the date of this Agreement and the Closing Date. Such additional disclosures shall be notified in writing by the Seller to the Purchaser (the “Additional Disclosure Notification”).

 

(ii)                               In the event that the additional disclosures would relate to facts or matters constituting a material Breach of Representations, the Purchaser shall within a period of ten (10) Business Days after receipt of the Additional Disclosure Notification have the right to notify the Seller in writing that it rejects the relevant additional disclosures, unless the material Breach of Representations would be the result of the Seller having followed a specific instruction from the Purchaser, such specific instruction having been given by the Purchaser contrary to the recommended action proposed by the Seller (the “Rejection Notification”).

 

(iii)                            In case a Rejection Notification is sent by the Purchaser, the Parties shall discuss whether a reduction of the Purchase Price is appropriate in view of the Additional Disclosure Notification. If the Parties agree that a reduction of the Purchase Price is appropriate and have agreed in writing on the amount of such reduction, the additional disclosures notified by way of the relevant Additional Disclosure Notification will be deemed included in the Data Room and shall be included on the DVD referred to in Clause 6.2.2. If no reduction of the Purchase Price is agreed between the Parties within ten (10) Business Days after receipt of the Rejection Notice, at the option of the Seller: (a) the additional disclosures notified by way of the relevant Additional Disclosure Notification shall not be deemed to be included in the Data Room and shall not be included on the DVD referred to in Clause 6.2.2; or (b) the Seller shall have the right to terminate this Agreement by written notice to the Purchaser.

 

(iv)                           In the event that the additional disclosures would relate to facts or matters not constituting a material Breach of Representations or in the event that the Purchaser does not send a Rejection Notice within the timeframe specified in Clause 10.3.2(ii), such additional disclosures will be deemed included in the Data Room and shall be included on the DVD referred to in Clause 6.2.2.

 

(v)                              Notwithstanding any other Clauses in this Agreement, any Breach of Representations shall solely for the purpose of this Clause 10.3.2 be deemed to be “material” if it involves a liability (of any nature whatsoever) in excess of EUR 35,000 in aggregate, for the Target Company.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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10.3.3           The Seller shall have no obligation to indemnify the Purchaser in respect of any Claim to the extent that the relevant events, matters or circumstances giving rise to the Claim were disclosed to the Purchaser pursuant to Clause 10.3.1 or deemed included in the Data Room pursuant to Clauses 7.9 or 10.3.2.

 

10.3.4           Save in the case of fraud or intentional misrepresentations or misconduct, the Seller hereby agrees to waive with effect from the Closing Date any rights or remedies which it may have against the Target Company or any of its employees in respect of any inaccuracy or omission in any information supplied by the Target Company or any of its employees in connection with assisting the Seller in the making of any Representation or the preparation of the Data Room.

 

10.4                     Updating of Representations to Closing

 

10.4.1           Without prejudice to Clause 10.3.2, the Seller warrants to the Purchaser that the Representations shall be true and accurate on the Closing Date, as if they had been repeated on that date except to the extent that any Representation is expressly made as of a particular date or for a particular period of time (in which case such Representation shall not be deemed to be repeated on the Closing Date).

 

10.4.2           The Seller shall have no obligation to indemnify the Purchaser under Clause 11 in respect of any Loss arising in consequence of an event occurring or matter arising between the date of this Agreement and the Closing Date and constituting a Breach of Representations, if such event or matter has been disclosed by the Seller to the Purchaser and is deemed included in the Data Room pursuant to Clause 10.3.2.

 

10.5                     Purchaser’s Knowledge of certain Matters

 

10.5.1           The Purchaser acknowledges that it has no knowledge of any Breach of Representations on the date of this Agreement.

 

10.5.2           The Seller shall have no obligation to indemnify the Purchaser in respect of any Claim for Breach of Representations to the extent that, prior to the date of this Agreement, the Purchaser had knowledge of such a Breach of Representations.

 

10.6                     Notification by the Purchaser of Breaches of Representations

 

If after the date of this Agreement and before the Closing Date:

 

(i)                                  the Purchaser shall become aware that there was a material Breach of Representations as of the date of this Agreement; or

 

(ii)                               any event shall occur or any matter shall arise of which the Purchaser becomes aware which results or can reasonably be expected to result in a material Breach of Representations on the Closing Date;

 

the Purchaser shall promptly notify the Seller setting out all details that are available to it, and the Seller shall make any investigation concerning the event or matter, at its own cost, as the Purchaser may reasonably require.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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11                               Indemnification

 

11.1                     General Principle

 

11.1.1           Subject to the limitations set out in Clause 12, the Seller agrees and undertakes to indemnify the Purchaser for any Loss incurred by the Purchaser, arising from any Breach of Representations, i.e. any Loss incurred by the Target Company or the Purchaser, which would not have been incurred by them if all facts stated in the Representations had been true and accurate.

 

11.1.2           The Losses shall not include any reputational damages of the Purchaser or the Target Company, nor any fees or expenses of any advisers or other professionals hired by the Purchaser or the Target Company in connection with any Claim against the Seller, nor the internal costs such as employment cost of the managers or other employees of the Purchaser or the Target Company for their work in connection with the Claim. Without prejudice to the foregoing, the Losses shall include any reasonable fees of external lawyers and other professional advisors hired by the Purchaser or the Target Company in response to any Claim.

 

11.1.3           Under no circumstances whatsoever, shall the multiplier or any other ratio that may have been used, directly or indirectly, for calculating the Purchase Price be taken into account.

 

11.1.4           For the purposes of this Clause 11, any Loss incurred by the Target Company shall be deemed to be incurred by the Purchaser in the same amount.

 

11.2                     Double Claims

 

The Purchaser shall not be entitled to be indemnified more than once for the same Loss.

 

11.3                     Nature of any Payment to the Purchaser

 

Any amount paid by the Seller to the Purchaser under this Clause 11 shall constitute a reduction of the Purchase Price.

 

11.4                     No Assignment of Indemnification Rights to any Subsequent Transferee of the Shares

 

The Purchaser’s rights under this Clause 11 are personal to the Purchaser and, accordingly, no buyer or other transferee of all or part of the Shares other than an Affiliated Company of the Purchaser shall be entitled to make any Claim under this Clause 11 against the Seller.

 

11.5                    Specific Indemnities

 

11.5.1           Subject to the limitations set out in Clause 12, except for Clauses 12.2 and  12.3, and without prejudice to Clause 12.11.2, the Seller agrees and undertakes to indemnify and hold  the Purchaser harmless on a euro for euro basis for the following (the “Indemnities”):

 

(i)                                  any full or partial repayment that would be imposed on the Target Company in connection with the amount of EUR [***] that the Target Company has received as a part of the grant of EUR [***] that was awarded by the [***] in connection with the facility;

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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(ii)                               any full or partial repayment that would be imposed on the Target Company in connection with the grant that was awarded to the Target Company for [***] by [***]; and

 

(iii)                            any of the following Tax liabilities relating to the period before the Closing Date for which the Target Company is liable: (i) any Tax liability for which the Target Company is liable as a result of any event occurring before or on the Closing Date or in respect of any profits earned or revenues realized before or on the Closing Date; (ii) any Tax liability of any person for which the Target Company was jointly and severally liable or secondary liable before the Closing Date, (iii) any Tax Liability for which the Target Company is liable as a result of “transfer pricing” before or on the Closing Date, (iv) any Tax liability for which any person other than the Target Company is liable, in particular the liabilities mentioned in (i), (ii) and (iii), as a result of any event occurring before the Closing Date, that on the basis of article 24 of the Dutch Collection Tax Act (Invorderingswet 1990) is offset against a receivable in respect of Tax of the Target Company by a Tax authority, and (v) any costs or expenses reasonably incurred by the Purchaser in connection with any action taken in defending against or settling any Tax liability as referred to in (i), (ii), (iii) and (iv) above.

 

11.5.2           In case any amount could be claimed under both a Representation and an Indemnity, the Indemnity shall prevail, but the Seller will in such case only be liable for the Indemnity.

 

11.5.3           No matter disclosed against any of the Representations or any other knowledge (actual or constructive) on the part of the Purchaser and no investigation by or on behalf of the Purchaser shall prejudice any claim made by the Purchaser pursuant to an Indemnity or affect or reduce any liability of the Seller pursuant to an Indemnity.

 

12                               Limitation of Seller’s Liability

 

12.1                     Time Limitations

 

The Seller shall have no obligation to indemnify the Purchaser in respect of any Claim unless it is given by the Purchaser to the Seller in accordance with Clause 13.1:

 

12.1.1           in the case of any Claim for Breach of the Representations in respect of ownership of the Shares as set out in Section 2.2 of Schedule 10, within twenty (20) years following the Closing Date;

 

12.1.2           in the case of any Claim for Indemnity under Clause 11.5.1(iii) or any Claim for Breach of the Representations in respect of Tax matters as set out in Section 5  of Schedule 10, within six (6) months after the date upon which the right of the Tax authorities or any other competent authorities to assess or claim any Taxes or  social security contributions in respect of the matters giving rise to such a Claim is barred by all applicable statutes of limitation;

 

12.1.3           in the case of any Claim for Indemnity under Clauses 11.5.1(i) or 11.5.1(ii), within five (5) years following the Closing Date;

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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12.1.4           in the case of any other Claim, within 18 months following the Closing Date.

 

12.2                     Minimum Claims

 

12.2.1           The Seller shall have no obligation to indemnify the Purchaser in respect of any Claim arising from any single Loss where the amount which would otherwise be recoverable under this Agreement in that respect does not exceed thirty-five thousand euro (EUR 35,000) and provided that, if that amount is exceeded, subject as provided elsewhere in this Clause 12, the aggregate amount shall be recoverable from the Sellers and not only the excess.

 

12.2.2           Series of Claims arising from substantially identical facts shall be aggregated for the purposes of this Clause 12.2.

 

12.3                     Aggregate Minimum Claims

 

12.3.1           The Seller shall have no obligation to indemnify the Purchaser in respect of any Claim unless the aggregate amount for which the Seller would otherwise be liable under this Agreement in respect of all Claims made by the Purchaser exceeds one hundred thousand euro (EUR 100,000) and provided that, if that amount is exceeded, subject as provided elsewhere in this Clause 12, the aggregate amount shall be recoverable from the Sellers and not only the excess.

 

12.3.2           Once the above-mentioned amount has been exceeded, this Clause 12.3 shall no longer apply to subsequent Claims (if any).

 

12.4                     Maximum Liability

 

Notwithstanding any other provision in this Agreement,

 

12.4.1           the aggregate liability of the Seller under this Agreement, including Claims based on Clause 11, other than Claims based on a Breach of Representations in respect of ownership of the Shares as set out in Section 2.2 of Schedule 10, shall not exceed [***] euro (EUR [***]).

 

12.4.2           without prejudice to Clause 12.4.1, the overall aggregate liability of the Seller under this Agreement, including all Claims based on Clause 11 (including Claims based on a Breach of Representations in respect of ownership of the Shares as set out in Section 2.2 of Schedule 10), shall not exceed one hundred percent (100%) of the Purchase Price.

 

12.5                     Contingent Liabilities

 

The Seller shall have no obligation to indemnify the Purchaser in respect of any liability which is contingent unless and until such contingent liability becomes an actual liability and is due and payable provided, however, that this Clause 12.5 shall not have the effect of preventing the Purchaser from validly making a Claim in respect of a contingent liability  within the Claim period as set forth in Clause 12.1, even though it has not yet become an actual liability.

 

12.6                     Adjustment of the Purchase Price

 

The Seller shall have no obligation to indemnify the Purchaser in respect of any Claim if and to the extent that:

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

24

 

12.6.1           (a) the matter giving rise to such Claim is properly accounted or provided for in the Closing Accounts by means of a liability, a depreciation or a provision specifically related to the matter in question and (b) the amount of any such liability, depreciation or provision has effectively lead to a decrease of the Price Adjustment Amount; and/or

 

12.6.2           (a) the Loss relating to such Claim consists of a payment already made by the Target Company on or prior to the Closing Date and (b) the amount of any such payment has effectively lead to a decrease of the Price Adjustment Amount.

 

12.7                     Tax Savings arising from the Losses

 

12.7.1           Any amount for which the Seller would otherwise have been liable in respect of any Claim shall be reduced by the amount of any Tax savings for the Target Company or the Purchaser arising from the Loss in respect of which the Claim has been made.

 

12.7.2           If the amount of the Tax savings is determined after payment by the Seller of any amount in discharge of the Claim, the Purchaser shall pay, or shall procure that the Target Company pays, to the Seller an amount equal to the difference between:

 

(i)                                  the amount paid by the Seller to the Purchaser; and

 

(ii)                               the amount that the Purchaser would have received if such Tax savings had been taken into account in determining the amount due by the Seller in accordance with this Clause 12.7.

 

12.7.3           For the purposes of this Clause 12.7, “Tax savings” means the amount by which any Tax for which the Purchaser or the Target Company would otherwise have been liable is actually directly reduced or extinguished.

 

12.8                     Insurance Proceeds and Other Recoveries from Third Parties

 

12.8.1           The Seller shall have no obligation to indemnify the Purchaser in respect of any Claim if and to the extent that the Losses in respect of which the Claim is made:

 

(i)                                  are covered by an insurance policy in force at the Closing Date;

 

(ii)                               are recovered from any other third party.

 

12.8.2           Accordingly, any amount for which the Seller would otherwise have been liable in respect of any Claim shall be reduced by the amount of any insurance proceeds, indemnification or other payment from any insurance company or any other third party in respect of the Loss which is the subject matter of the Claim.

 

12.8.3           If, before the Seller pays an amount in discharge of any Claim, the Target Company or the Purchaser is entitled to recover from any insurance company or  any other third party a sum which indemnifies or compensates the Target Company or the Purchaser (in whole or in part) in respect of the Loss which is the subject matter of the Claim, the Purchaser shall procure that all reasonable steps are taken to enforce such recovery against the third party.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

25

 

12.8.4           If the Seller pays an amount in discharge of any Claim and the Purchaser or the Target Company subsequently recovers from any insurance company or any other third party a sum relating to the subject matter of the Claim, the Purchaser shall pay, or shall procure that the Target Company pays, to the Seller an amount equal to the difference between:

 

(i)                                  the amount paid by the Seller to the Purchaser or the Target Company; and

 

(ii)                               the amount that the Purchaser or the Target Company would have received if the amount of such recovery had been taken into account in determining the amount due by the Seller in accordance with this Clause 12.8.

 

12.8.5           If the Seller pays an amount in respect of any Claim, the Purchaser shall, and shall cause the Target Company to, assign to the Seller all of its rights arising from the Loss which is the subject matter of that Claim against any insurance company or other third party, to the extent such assignment is permitted.

 

12.9                     Matters Arising Subsequent to this Agreement

 

The Seller shall have no obligation to indemnify the Purchaser in respect of any Losses to the extent that the same would not have occurred but for:

 

12.9.1           any action taken by the Seller (or any of its Affiliates) after the date of this Agreement, pursuant to this Agreement or otherwise at the written request or with the written approval of the Purchaser;

 

12.9.2           any change made after the Closing Date to the Target Company’s valuation rules or policies or practices in respect of accounting, Tax matters;

 

12.9.3           any other action of the Target Company or the Purchaser (or any of its Affiliates), after the Closing Date, taken or omitted otherwise than within the scope of the Target Company’s ordinary course of business and in the knowledge that such action would give rise to a Loss; or

 

12.9.4           the passing of, or any change in, any law, regulation or standards (including any increase in any Tax rates) after the Closing Date.

 

12.10              Fraud

 

None of the limitations on the liability of the Seller set out in Clause 12 or 13 (whether as to the quantum of the Claim, the time limit for notification of the Claim, the procedures or requirements for making a Claim, or otherwise) shall apply to any Claim against the Seller to the extent that the liability of the Seller in respect of that Claim arises from fraud or wilful default on the part of the Seller..

 

12.11              Mitigation of Losses

 

12.11.1    The Purchaser shall procure that all reasonable steps are taken to avoid or mitigate any Losses which might give rise to a Claim against the Seller.

 

12.11.2    Without prejudice to the generality of Clause 12.11.1, the Purchaser shall (and shall cause the Target Company to) use commercially reasonable best efforts after the Closing Date to avoid that any full or partial repayment would be imposed on the Target Company in connection with the amount of EUR [***] that the Target 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

26

 

Company has received as a part of the grant of EUR [***] that was awarded by [***] in connection with [***]. For the purposes of this Clause 12.11.2, best efforts does not include an obligation of the Purchaser to [***]. The Purchaser shall promptly inform the Seller of any communication received by the Purchaser (or by the Target Company) from [***] regarding this subject matter and shall consult with the Seller on the strategy and communication to [***] in respect thereof.

 

13                               Claims by the Purchaser

 

13.1                     Notification of Claims

 

13.1.1           In order to make a Claim against the Seller, the Purchaser shall give a notice of such Claim to the Seller within sixty (60) days after it or any director of the Target Company, appointed on or after the Closing Date, becomes aware of any event, matter or circumstance that gives rise to the Claim and within the time limitations provided in Clause 12.1. Such notice shall set out full details to the extent available of the legal and factual basis of the Claim, together with a first estimate of the amount of the Losses. A copy of all documents establishing the basis of the Claim shall be enclosed in the notice.

 

13.1.2           If the Purchaser fails to give such a notice within sixty (60) days it or any director of the Target Company, appointed on or after the Closing Date, has become aware of any event, matter or circumstances, the Seller shall be relieved from any liability it may have under Clause 11 in respect of the relevant event, matter or circumstances, unless and to the extent that the Purchaser establishes that the Seller has not been prejudiced by such failure.

 

13.1.3           The notice shall be deemed invalid and hence not to be given, if it does not contain each of the elements required by Clause 13.1.1.

 

13.2                     Third Party Claims

 

13.2.1           If the events, matters or circumstances that may give rise to a Claim against the Seller occur or arise as a result of or in connection with a claim by or a liability to a third party (a “Third Party Claim”), then:

 

(i)                                  the Purchaser shall, or shall cause the Target Company to, provide the Seller with copies of all documents and correspondence from that third party, and all other correspondence and documents relating to the Third Party Claim as the Seller may reasonably request, within fifteen (15) days following receipt of such documents and correspondence by the Target Company or the Purchaser, subject to the Seller agreeing to keep all such information and documents confidential and to use them only for the purpose of dealing with the Third Party Claim;

 

(ii)                               the Seller shall promptly and not later than fifteen (15) days thereafter notify to the Purchaser whether or not it desires to defend the Purchaser or the Target Company against such Third Party Claim;

 

(iii)                            if the Seller informs the Purchaser that it desires to assume the defence against the Third Party Claim, the Seller shall have the right to assume and 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

27

 

control the defence of such Third Party Claim by appropriate proceedings at the Seller’s sole cost and expense, provided that (i) the Seller shall keep the Purchaser informed on the development of the Third Party Claim, (ii) that no admission of liability shall be made by the Seller, (iii) the Third Party Claim shall not be settled without the Purchaser’s prior written consent which consent may not be unreasonably refused or delayed and (iv) the Seller shall take into account reasonable requests of the Purchaser regarding the defence of the Third Party Claim;

 

(iv)                           if the Seller informs the Purchaser that it does not desire to assume the defence against the Third Party Claim, the Purchaser shall, or shall cause the Target Company to, take into account reasonable requests of the Seller and keep the Seller informed on the development of the Third Party Claim; and

 

(v)                              no admission of liability shall be made by the Purchaser or the Target Company and the Third Party Claim shall not be settled without the Seller’s prior written consent which consent may not be unreasonably refused or delayed.

 

13.2.2           If the Purchaser breaches any of its obligations under Clause 13.2, the Seller shall be relieved from any liability it may have under Clause 11 in respect of the Third Party Claim.

 

13.3                     Seller’s Access to the Target Company

 

In connection with any Claim made by the Purchaser against the Seller, and without prejudice to Clause 13.2, the Purchaser shall, and shall cause the Target Company to:

 

13.3.1           afford the Seller and its advisers access to the Target Company’s registered office and to any other premises owned or leased by any Target Company, upon reasonable advance notice and during normal business hours and, to the extent relevant, in accordance with the “standard operating procedures” of the Target Company;

 

13.3.2           allow the Seller and its advisers to meet with the Target Company’s management and employees, upon reasonable advance notice and during normal business hours;

 

13.3.3           allow the Seller and its advisers to investigate the events, matters or circumstances alleged to give rise to such Claim, as the Seller or its advisers may reasonably deem necessary or desirable, provided that no such investigation shall interfere with the Target Company’s business; and

 

13.3.4           allow the Seller and its advisers to examine and copy all such contracts, books and records, and other documents and data relating to the events, matters or circumstances referred to in the Claim, as the Seller and its advisers may reasonably request, subject to the Seller agreeing to keep all such information and documents confidential and to use them only for the purpose of investigating and defending such Claim.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

28

 

13.4                     Notification of Seller’s Objections

 

13.4.1           If the Seller objects to any Claim made by the Purchaser in accordance with Clause 13.1, it shall give a notice to the Purchaser objecting to the Claim within sixty (60) days following notification of such Claim. Such notice shall contain a statement of the basis of the Seller’s objections.

 

13.4.2           The Seller shall be deemed to accept any Claim made by the Purchaser in accordance with Clause 13.1 if it fails to give a notice of objection to the Purchaser pursuant to Clause 13.4.1, unless and to the extent that the Seller establishes that the Purchaser has not been prejudiced by such failure.

 

13.5                     Disagreement on a Claim

 

13.5.1           If the Seller and the Purchaser are unable to reach agreement on the amount payable by the Seller within sixty (60) days following notification of the Seller’s objections in accordance with Clause 13.4, the matter shall be decided in accordance with Clause 16.12 (Jurisdiction).

 

13.5.2           The Purchaser shall be deemed to have withdrawn its Claim, unless it has taken all necessary actions to submit the matter to the competent court in accordance with Clause 16.12 (Jurisdiction) within twelve months after the thirty-day time period set out in Clause 13.5.1 has elapsed.

 

13.6                     Payment by the Seller

 

13.6.1           If the Seller has accepted the amount claimed by the Purchaser or if the Seller and the Purchaser have agreed on another amount, the Seller shall pay such amount (subject to the limitations set out in Clause 12) within fifteen (15) Business Days of such acceptance or agreement.

 

13.6.2           If the matter giving rise to a Claim has been decided by any competent court or tribunal in accordance with Clause 16.12 (Jurisdiction) and the Seller has been ordered to pay any amount pursuant to any judgement not subject to appeal, the Seller shall pay such amount on the date on which it has become due and payable.

 

13.6.3           All payments shall be made in accordance with such instructions as shall be notified to the Seller by the Purchaser.

 

14                               Undertakings of the Parties Extending after the Closing Date

 

14.1                     Payment of Intra-group Indebtedness by the Target Company

 

The Purchaser shall cause all financial indebtedness (being the payables referred to in Schedule 1.1.1(i)) owed on the Closing Date by the Target Company to the Seller or any Affiliate of the Seller to be paid to the Seller in full (including any accrued but unpaid  interest as per that date)on the fifth (5th) Business Day after the final determination of the Purchase Price Amount in accordance with Clause 3.2.

 

14.2                     Payment of the Second Tranche

 

The Purchaser undertakes to timely pay the Second Tranche in accordance with Clause 3.3.2.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

29

 

14.3                     Further Assurances

 

The Parties agree and undertake to furnish to each other such further information, to execute such other documents, and to do such other things (before or after the Closing Date), as any other Party may reasonably request for the purposes of carrying out the intent of this Agreement.

 

14.4                     Confidentiality and Announcements

 

14.4.1           This Clause shall be without prejudice to the Confidentiality Agreement dated 10 November 2011, which shall continue notwithstanding this Agreement.

 

14.4.2           The existence, subject matter and contents of this Agreement are confidential, and subject to Clause 14.4.4, each Party is prohibited from disclosing all or any part of this Agreement, or even its existence, at any time (including after the Closing Date).

 

14.4.3           Subject to Clauses 14.4.4 and 14.4.5:

 

(i)                                  each Party shall treat as strictly confidential and not disclose or use any information obtained in connection with the negotiations relating to the Transaction; and

 

(ii)                               the Purchaser shall treat as strictly confidential and not disclose or use any information relating to the business and financial affairs (including future plans and targets) of the Seller and the Seller’s Affiliated Companies.

 

14.4.4           Clauses 14.4.2 and 14.4.3 shall not prohibit disclosure or use of any information if and to the extent that:

 

(i)                                  the disclosure or use is necessary in order to allow any Party to comply with any legal requirement to make any announcement or to provide information to any public authority or Stock Exchange;

 

(ii)                               the disclosure or use is required for the purposes of any judicial or arbitration proceedings arising out of or in connection with this Agreement;

 

(iii)                            the disclosure is made to professional advisers of any Party on condition that such professional advisers undertake to comply with the provisions of Clauses 14.4.2 and 14.4.3 in respect of such information as if they were a party to this Agreement;

 

(iv)                           the information is or becomes publicly available (other than as a result of any breach of the Confidentiality Agreement or this Agreement);

 

(v)                              the information becomes available to the Party bound by this Clause 14.4 from a source which is not bound by any obligation of confidentiality in  relation to such information (as can be demonstrated by such Party’s written records and other reasonable evidence); or

 

(vi)                           the other Party has given prior written approval to the disclosure or use,

 

it being understood, however, that any Party that intends to disclose information pursuant to this Clause 14.4.4 shall to the extent not prohibited by applicable laws 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

30

 

or regulations, prior to making such disclosure, consult with the other Party on the form, content and timing of such disclosure.

 

14.4.5           On or shortly after the date of this Agreement, the Seller and the Purchaser shall be allowed to issue a press statement announcing the Transaction, substantially in the form as the drafts attached as Schedule 14.4.5.

 

14.4.6           Without prejudice to Clause 14.4.5, no announcement in connection with the existence or the subject matter of this Agreement (including any announcement to the Target Company’s employees, customers or suppliers) shall be made without the prior written consent of all Parties (which consent shall not be unreasonably withheld or delayed), and the Parties shall consult with each other concerning the means by which the Target Company’s employees, customers and suppliers, and others having dealings with the Target Company, shall be informed of this Agreement. The Purchaser shall have the right to be present when any such communication is made.

 

14.4.7           The Parties shall take all necessary actions to ensure that no accidental or unauthorised disclosure of the existence or contents of this Agreement occurs.

 

14.5                     Tax Returns regarding Pre-Closing Date Tax Return Periods

 

14.5.1           The Purchaser shall (i) timely consult with the Seller with a view to prepare the Tax returns of the Target Company for all Tax Return Periods ended on or prior to the Closing Date to the extent that they have not been prepared before the Closing Date, and (ii) take into account any reasonable comments made by the Seller in respect of such Tax returns.

 

14.5.2           The Purchaser shall and shall cause the Target Company to retain all books and records with respect to Taxes pertaining to the Target Company following the Closing Date for as long as required under applicable law.

 

14.6                    Use of the name “TiGenix”

 

14.6.1           The Purchaser agrees and undertakes that the name “TiGenix” shall be deleted from the Target Company’s corporate name not later than one (1) month after the Closing Date.

 

14.6.2           The Purchaser further agrees and undertakes not to use, and to cause the Target Company to permanently stop the use of, as soon as practicable and in any event within one (1) month following the Closing Date, (a) the name “TiGenix” or any similar expression or any derivative or abbreviation thereof, and/or (b) any of the logos attached as Schedule 14.6.2 (or any other logos incorporating the words “TiGenix”, “ChondroCelect” or “ChondroCelect Harvester”) in any manner whatsoever, including any commercial documentation and signs, except:

 

(i)                                  to the extent such name and/or logos are part of the packaging and labelling of the product “ChondroCelect”, for as long as the product “ChondroCelect” will continue to be manufactured by the Target Company, and

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

31

 

(ii)                               that such name and/or logos must be maintained on all documents (including but not limited to SOPs, WINs and other forms) that constitute “Licensed Technology” as defined in the CMO Contract, of which the Seller is (and will remain after the Closing Date) the exclusive owner.

 

14.7                     Standstill

 

The Purchaser undertakes that it shall not, and the Purchaser shall procure that its Affiliated Companies and its officers, directors, employees agents and advisors (and those of its Affiliated Companies) shall not until the expiry of a period of two (2) months following the Closing Date (or, as the case may be, following the date of termination of this Agreement in accordance with Clause 15), whether directly or indirectly, through intermediaries, persons or entities acting in concert, or otherwise, purchase or sell, offer to purchase or sell, agree to purchase or sell, or otherwise acquire or transfer, offer to acquire or transfer, or in any way assist any other person in acquiring or transferring, directly or indirectly, any shares, securities or other financial instruments of the Seller, or advise, assist or encourage or enter into any discussions, negotiations, agreements or arrangements with any other persons in connection with the foregoing. The Purchaser acknowledges that a breach of this Clause 14.7 may also constitute a violation of insider dealing and market abuse regulations applicable in Belgium or abroad and give rise to administrative and/or criminal sanctions.

 

14.8                     Reorganisation

 

The Purchaser agrees and undertakes not to (and shall cause the Target Company not to) dismiss or terminate the employment or services of any of the Target Company’s employees, temporary workers or consultants during a period of six (6) months after the Closing Date other than for serious cause, provided that the Seller complies with the terms and conditions of the CMO Contract.

 

15                               Termination

 

15.1                     Termination Events

 

15.1.1            This Agreement may be terminated at any time by mutual consent of the Seller and the Purchaser.

 

15.1.2            This Agreement may be terminated by the Seller in accordance with Clause 4.3.1 or Clause 10.3.2.

 

15.1.3            This Agreement may be terminated by any Party in accordance with Clause 5.5.2 (if any other Party does not fulfil its Closing Obligations).

 

If a termination notice has been given in accordance with Clause 5.5.2, this Agreement shall terminate on the expiration date of the notice period, unless the breach alleged by the terminating Party has been cured to the reasonable satisfaction of the terminating Party on or before such expiration date.

 

15.2                     Consequences of a Failure to Terminate this Agreement

 

No failure by a Party to exercise its right to terminate this Agreement under this Clause 15 shall constitute a waiver of any other rights and remedies available to that Party under this Agreement.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

32

 

15.3                     Effect of Termination

 

If this Agreement is terminated pursuant to this Clause 15:

 

15.3.1            all further obligations of the Parties under this Agreement shall terminate, except that the obligations set out in Clauses 14.4 (Confidentiality and Announcements), 16.6 (Expenses), 16.10 (Governing law) 16.12 (Jurisdiction) shall survive;

 

15.3.2            each Party shall be under the obligation to reimburse or return to the other Parties (or, as the case may be, to the Target Company) any sum of money or other assets it has received from the other Parties (or, as the case may be, from the Target Company) pursuant to this Agreement; and

 

15.3.3            each Party shall be under the obligation to return to the other Party (or, as the case may be, to the Target Company) any confidential information relating to the other Party (or, as the case may be, to the Target Company) it has received from the other Party (or, as the case may be, from the Target Company) during the due diligence or the negotiation of this Agreement or pursuant to this Agreement.

 

16                               Miscellaneous

 

16.1                     Rights and Remedies of the Parties

 

Each of the Parties agrees and acknowledges that its only right and remedy in relation to any representation, warranty or undertaking made or given in connection with this Agreement shall be for breach of the terms of this Agreement and each of the Parties hereby waives all other rights and remedies (including those in tort or arising under statute) in relation to any such representation, warranty or undertaking.

 

16.2                     Amendments and Waivers

 

16.2.1            No amendment to this Agreement shall be effective unless it is made in writing and signed by all Parties or their duly authorised representatives.

 

16.2.2            Except as otherwise provided herein, no failure or delay of a Party to exercise any right or remedy under this Agreement shall be considered as a waiver of such right or remedy, or any other right or remedy under this Agreement, nor shall any partial exercise of any right or remedy under this Agreement preclude any further exercise thereof or the exercise of any other right or remedy under this Agreement.

 

16.2.3            Except as otherwise provided herein, no waiver shall be effective unless it is given in writing and signed by the Party that gives the waiver or its duly authorised representative(s).

 

16.3                     Notices

 

16.3.1            Any notice in connection with this Agreement must be in writing in English and shall be validly given with respect to each Party if:

 

(i)                                  delivered by hand (with written confirmation of receipt) to the persons listed hereinafter;

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

33

 

(ii)                               sent by e-mail (with confirmation by registered mail or an internationally recognised courier company within three Business Days) to the e-mail addresses and postal addresses set out hereinafter; or

 

(iii)                            sent by registered mail or an internationally recognised courier company to the addresses set out hereinafter;

 

or to such other addressee, e-mail address or postal address as a Party may notify to the other Parties in accordance with this Clause 16.3.

 

	
If to   the Seller:
    	
Name:
    	
TiGenix NV
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    	
Romeinse Straat 12, box   2, 3001 Heverlee (Leuven), Belgium
    
	
 
    	
 
    	
 
    
	
 
    	
Attention:
    	
Mr. Eduardo Bravo
    
	
 
    	
 
    	
 
    
	
 
    	
E-mail:
    	
eduardo.bravo@tigenix.com
    
	
 
    	
 
    	
 
    
	
With a copy to:
    	
[***]
    	
 
    
	
 
    	
 
    	
 
    
	
If to   the Purchaser:
    	
Name:
    	
PharmaCell B.V.
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    	
Oxfordlaan 70, 6229EV   Maastricht, the Netherlands
    
	
 
    	
 
    	
 
    
	
 
    	
[***]:
    	
 
    
	
 
    	
 
    	
 
    
	
With a copy to:
    	
[***]
    	
 
    

 

16.3.2            Any notice shall be effective upon receipt and shall be deemed to have been received:

 

(i)                                  at the time of delivery, if delivered by hand or a courier company;

 

(ii)                               on the next Business Day (in the place to which it is sent) if sent by e-mail (provided, however, that if no confirmation is received within three (3) Business Days, the notice shall be deemed to have been received on the date when such confirmation is actually received);

 

(iii)                            on the first Business Day following the date of posting if sent by registered mail, provided that both the sender and the addressee reside or have their registered office in either Belgium or the Netherlands; or

 

(iv)                           on the third Business Day (in the place to which it is sent) following the date of posting if sent by registered mail where either the sender or the  addressee does not reside or have its registered office in Belgium or the Netherlands.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

34

 

16.4                     Interest on Overdue Amounts

 

Interest shall accrue automatically (without any formal notice to pay being required) on any overdue amount under this Agreement at the rate of two percent (2%) per year, calculated on the basis of a year of 365 days, from the due date up to the date of payment.

 

16.5                     Assignment of Rights and Obligations — Third Party Rights

 

16.5.1            Except as otherwise provided herein, no Party may assign all or part of its rights and obligations under this Agreement to any third party (through a sale, a contribution, a donation or any other transaction, including the sale or contribution of a division or of a business as a whole, a merger or a split) without the prior written consent of the other Parties (which consent shall not be unreasonably withheld or delayed). As long as such consent has not been obtained, the assigning Party shall continue to be liable for all obligations that it intended to assign (without prejudice to any other right or remedy that the other Parties may have for breach of this Clause 16.5.1).

 

16.5.2            However, notwithstanding the foregoing, any Party shall be allowed to assign all or part of its rights and obligations under this Agreement to any Affiliated Company, provided that such assignment is expressly stated to have effect only for so long as the assignee remains an Affiliated Company of the assigning Party.

 

16.5.3            Save as expressly otherwise stated, this Agreement does not contain any stipulation in favour of a third party (“derdenbeding”).

 

16.5.4            Subject to the assignment restrictions set out in this Clause 16.5, this Agreement is concluded for the benefit of the Parties and their respective successors and permitted assigns, and nothing herein is intended to or shall implicitly confer upon any other person any legal right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement, except to the extent expressly stated otherwise in this Agreement.

 

16.6                     Expenses

 

16.6.1            Each Party shall bear all costs and expenses incurred or to be incurred by it in connection with the negotiation, execution and performance of this Agreement.

 

16.6.2            The Purchaser bears the cost of all notarial fees and all registration, stamp and transfer taxes and duties or their equivalents in all jurisdictions where such fees, taxes and duties are payable as a result of the transactions contemplated by this Agreement. The Purchaser is responsible for arranging the payment of all such fees, taxes and duties, including fulfilling any administrative or reporting obligation imposed by the jurisdiction in question in connection with such payment. The Purchaser shall indemnify the Seller against any Loss suffered by the Seller as a result of the Purchaser failing to comply with its respective obligations under this Clause 16.6.2.

 

16.7                     Dutch Notary

 

The Parties are aware that the Dutch Notary holds office with Linklaters LLP, the Seller’s legal adviser in connection with the transaction contemplated by this Agreement. The 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

35

 

Parties hereby acknowledge that they have been informed of the existence of the Ordinance Containing Rules of Professional Conduct and Ethics (Verordening beroeps- en gedragsregels) of the Royal Professional Organisation of Civil Law Notaries (Koninklijke Notariële Beroepsorganisatie) and explicitly agree and acknowledge that:

 

16.7.1            Linklaters LLP may advise and act on behalf of the Seller with respect to this Agreement and the deed of transfer of the Shares, and any agreements or any disputes related to or resulting from this Agreement and/or the deed of transfer of the Shares;

 

16.7.2            the Dutch Notary shall execute the deed of transfer of the Shares pursuant to which the Shares will be transferred; and

 

16.7.3            the Dutch Notary shall act as “Depositary” under the Deposit Agreement.

 

16.8                     Severability

 

16.8.1            If any provision in this Agreement is held to be illegal, invalid or unenforceable, in whole or in part, under any applicable law, then such provision or part of it shall be deemed not to form part of this Agreement, and the legality, validity or enforceability of the remainder of this Agreement shall not be affected.

 

16.8.2            In such case, each Party shall use its best efforts to immediately negotiate in good faith a valid replacement provision that is as close as possible to the original intention of the Parties and has the same or as similar as possible economic effect.

 

16.9                     Entire Agreement

 

16.9.1            This Agreement (together with the documents referred to herein) contains the entire agreement between the Parties with respect to its subject matter.

 

16.9.2            Without prejudice to Clause 14.4.1, it replaces and annuls all prior agreements, communications, offers, proposals or correspondence, oral or written, exchanged or concluded between the Parties (including the Term Sheet) relating to the same subject matter.

 

16.10              Waiver of Rescission, Nullification and Amendment

 

Each Party waives any right to wholly or partly dissolve (“ontbinden”) or nullify (“vernietigen”) this Agreement or to demand the whole or partial dissolution (“ontbinding”) or nullification (“vernietiging”) in legal proceedings thereof pursuant to Sections 6:265 through 6:272 of the Dutch Civil Code and Section 6:228 of the Dutch Civil Code respectively, and waives any right to request amendment of the legal consequences of this Agreement pursuant to Section 6:230, subsection 2, of the Dutch Civil Code.

 

16.11              Governing Law

 

This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with the laws of the European part of the Netherlands.

 

16.12              Jurisdiction

 

Any and all disputes arising out of or in connection with this Agreement (including a dispute relating to non-contractual obligations arising out of or in connection with this Agreement) 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

36

 

shall be — unless any imperative rule of law dictates otherwise — submitted to the exclusive jurisdiction of the authorized court in the district Limburg, location Maastricht, the Netherlands without prejudice to the right of appeal and that of appeal to the Supreme Court.

 

16.13              Counterparts

 

This Agreement may be signed in counterparts, in the number of originals stated hereinafter on the signature page. When taken together, the counterparts signed by all Parties shall constitute one and the same instrument.

 

16.14              Proxy to initial the Agreement and the Schedules

 

The Seller hereby gives a power-of-attorney to Mrs. An Moonen, its legal counsel, to initial on its behalf the pages of this Agreement and the Schedules to this Agreement.

 

This Agreement has been signed on 23 January 2014, in two (2) originals (one for the Seller and one for the Purchaser).

 

Each Party acknowledges receipt of its own original of this Agreement.

 

	
TiGenix NV
    represented   by:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Eduardo Bravo
    	
 
    
	
Name:
    	
Eduardo Bravo
    	
 
    
	
Title:
    	
CEO and attorney-in-fact
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
PharmaCell   B.V.
    represented by:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Alexander Vos
    	
 
    
	
Name:
    	
Alexander Vos
    	
 
    
	
Title:
    	
CEO and attorney-in-fact
    	
 
    

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

37

 

Index of Schedules

 

	
Schedule (D)
    	
 
    	
Index of the Data Room
    
	
Schedule 1.1.1(i)
    	
 
    	
Closing Date Intra-group   Indebtedness
    
	
Schedule 1.1.1(ii)
    	
 
    	
Closing Date Working   Capital
    
	
Schedule 1.1.1(iii)
    	
 
    	
Draft CMO Contract
    
	
Schedule 1.1.3
    	
 
    	
Definition of Seller’s   knowledge (list of persons)
    
	
Schedule 3.2.5
    	
 
    	
Format of Closing   Accounts
    
	
Schedule 3.2.5(ii)
    	
 
    	
Valuation rules
    
	
Schedule 5.2.2
    	
 
    	
Dutch deed re: transfer   of the Shares
    
	
Schedule 6.2.2
    	
 
    	
Deposit Agreement
    
	
Schedule 7.4
    	
 
    	
Form of resignation   letter
    
	
Schedule 9
    	
 
    	
Purchaser’s   Representations
    
	
Schedule 10
    	
 
    	
Seller’s Representations
    
	
Schedule 14.4.5.
    	
 
    	
Press release
    
	
Schedule 14.6.2
    	
 
    	
Logos
    

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

38

 

Schedule (D): [***]

 

Schedule 1.1.1(i): [***]

 

Schedule 1.1.1(ii): [***]

 

Schedule 1.1.1(iii):

 

Agreement

 

for

 

the Manufacturing

 

of

 

ChondroCelect®

 

Between

 

TIGENIX B.V.

 

and

 

TIGENIX NV

 

and

 

PHARMACELL B.V.

 

 

[•] 2014

 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

39

 

Schedule 1.1.1(iii): 

 

TiGenix 23 January 2014

 

Agreement

 

for

 

the Manufacturing

 

of

 

ChondroCelect®

 

Between

 

TIGENIX B.V.

 

and

 

TIGENIX NV

 

and

 

PHARMACELL B.V.

 

 

[•] 2014

 

 

40

 

THIS AGREEMENT FOR THE MANUFACTURING OF CHONDROCELECT® is made

 

BETWEEN:

 

(1)                     TiGenix B.V., a corporation duly incorporated and existing under the laws of the Netherlands, having its registered office at Urmonderbaan 20b, 6167RD Geleen, the Netherlands, registered with the commercial register (KvK Limburg) under number 14121664 (hereafter referred to as the “Supplier”),

 

AND:

 

(2)                     TiGenix NV, a corporation duly incorporated and existing under the laws of Belgium, having its registered office at Haasrode Researchpark 1724, Romeinse straat 12 box 2, 3001 Leuven, Belgium, registered with the register of legal entities (Leuven) under number BE 0471 340 123 (hereafter referred to as “TiGenix”),

 

TiGenix and the Supplier being referred to individually as a “Party” and together as the “Parties”,

 

IN THE PRESENCE OF:

 

PharmaCell B.V., a corporation duly incorporated and existing under the laws of the Netherlands, having its registered office at Oxfordlaan 70, 6201 BH Maastricht, the Netherlands, registered with the commercial register (KvK Limburg) under number 14083599 (hereafter referred to as “PharmaCell”).

 

WHEREAS:

 

(A)                   PharmaCell is in the business of providing biotechnology and cell therapy development services, including without limitation process development, validation, scale up services, production and product manufacturing services, quality assurance, regulatory support, analytical development, fill and finish services and quality control analysis under EU GMP conditions in respect of intermediate and final drug products.

 

(B)                   On or about the date of this Agreement, PharmaCell acquired all shares in the Supplier.

 

(C)                   TiGenix is active in the discovery, development, manufacturing and commercialization of pharmaceutical cell therapy products for human use.

 

(D)                   In 2012, the Supplier successfully completed and validated the Facility for GMP-production and obtained the applicable GMP license (fabrikantenvergunning) for the commercial production of the ATMP-classified product ChondroCelect® from the competent Dutch authorities. This GMP license was recently extended to a license enabling the Supplier to work with multiple products in the Facility. In addition, the Supplier holds a tissue establishment license (erkenning als weefselinstelling) issued by the competent Dutch authorities.

 

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(E)                   TiGenix holds a marketing authorisation to market ChondroCelect®, including the right to produce it at the Facility, obtained from the EMA in 2012.

 

(F)                    Prior to the date of this Agreement, Parties have conducted the “information exchange” as set out in Schedule 1.

 

(E)                   TiGenix wishes to engage and contract with the Supplier for the provision of the Services, including the commercial GMP production of ChondroCelect® and Supplier wishes to provide such Services to TiGenix.

 

IT IS AGREED AS FOLLOWS:

 

1                 DEFINITIONS

 

For purposes of this Agreement, the terms defined in this Section shall have the respective meanings set forth below:

 

1.1                          “Adverse Condition” has the meaning as set out in Section 17.5;

 

1.2                          “Affiliate” means any person, corporation, partnership, firm, joint venture or other entity which, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, either Party, as the case may be. An entity will be regarded as under “Control” of another entity for purposes of this definition if it owns or controls more than fifty per cent (50%) of the shares of the subject entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority) or otherwise possesses the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of the outstanding voting rights or by contract or otherwise;

 

1.3                          “Agreement” means this agreement for the manufacturing of the Product in its entirety, including all Schedules;

 

1.4                          “Applicable Laws” means all legislations, regulations, orders, of whatever nature or origin (national, supranational, etc.), that are legally enforceable;

 

1.5                          “Audit” means the review, discussion, verification and/or inspection, by TiGenix’s representatives, of the Facility, of the Supplier’s standard operating procedures, of the Supplier’s compliance with EU GMP in the performance of the Services, and/or of the Supplier’s compliance with the terms of this Agreement, in accordance with the terms of the Quality Technical Agreement as set out in Schedule 4;

 

1.6                          “Batch Conformity” means the completion by a Qualified Person of Supplier of the review of all necessary testing and production records, and the confirmation that a batch of Product has been manufactured in accordance with GMP, the Specification, the procedures relating to the Product and the Quality Technical Agreement;

 

1.7                          “Batch Conformity Statement” means a statement signed by a Qualified Person of the Supplier confirming that at the time of issue of the statement the Product meets GMP,

 

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the Specification, the procedures relating to the Product and the Quality Technical Agreement;

 

1.8                          “Business Day” means any day which is not a Saturday, a Sunday or a Dutch or Belgian public holiday and references to any time shall be to Dutch time (GMT+ one hour);

 

1.9                          “Calendar Year” means a period of twelve (12) months commencing on 1 January and ending on 31 December;

 

1.10                   “GMP” means current Good Manufacturing Practices as promulgated in EU Commission Directive 2003/94/EC (EU GMP Guidelines), EU Commission Directive 2001/20/EC (Clinical Trials), EU Regulation EC 1394/2007 (Advanced Therapy medicinal Products (ATmP)), EU Directive 2001/83/EC (Medicinal Products for Human Use), and national implementation of the foregoing, and applicable International Conference on Harmonisation guidelines as well as any applicable regulatory guidelines issued by Government Competent Authorities in particular relevant guidance on good manufacturing practices contained in Volume 4 of the Rules Governing Medicinal Products in the European Union and the national implementations of these rules. For the avoidance of doubt, the Supplier’s operational quality standards are defined in internal GMP documents which shall always be coherent with and adequately reflect current international applicable GMP guidelines and allow GMP manufacturing of investigational biopharmaceutical products and products for cellular therapies;

 

1.11                   “Change of Control” when applied to any person will be deemed to have occurred on each occasion on which any person or persons other than those who Control such person at the Effective Date subsequently acquire Control of it, whether directly or indirectly;

 

1.12                   “Confidential Information” means all information or material that has or could have commercial value or constitutes sensitive information in the business or prospective business of a Party’s company or its Affiliates, whether or not such information is identified as Confidential Information;

 

1.13                   “Control” has the meaning as set out in Section 1.1;

 

1.14                   “Data Controller” has the meaning as set out in Section 16.1;

 

1.15                   “Data Processor” has the meaning as set out in Section 16.1;

 

1.16                   “Data Subject” has the meaning as set out in Section 16.1;

 

1.17                   “Defaulting Party” has the meaning as set out in Section 17.4

 

1.18                   “Defective Product” has the meaning as set out in Section 8.1; “Defect” shall be construed accordingly;

 

1.19                   “Defective Service” has the meaning as set out in Section 9.1

 

1.20                   “Disclosing Party” has the meaning as set out in Section 15.1;

 

1.21                   “Due Date” has the meaning as set out in Section 10.4;

 

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1.22                   “Effective Date” means 30 May 2014;

 

1.23                   “EMA” means the European Medicines Agency;

 

1.24                   “Exclusive Territory” means the countries currently belonging to the European Union as well as any new member states thereof;

 

1.25                   “Facility” means the manufacturing facility located at Urmonderbaan 20b, 6167RD Geleen, the Netherlands;

 

1.26                   “Force Majeure Event” has the meaning as set out in Section 18.1;

 

1.27                   “Government Competent Authorities” means any applicable supra-national, federal, national, regional, state, provincial or local regulatory agencies, departments, bureaus, commissions, councils or other government entities regulating or otherwise exercising authority with respect to use, transport (including import and export), manufacturing or storage of the TiGenix Materials or the provision of the Services in any country;

 

1.28                   “Group” means the relevant Party together with its Affiliates;

 

1.29                   “Intellectual Property Rights” means all intellectual property rights, including (without limitation) patents, supplementary protection certificates, utility models, trade marks, database rights, rights in designs, copyrights and topography rights (whether or not any of these rights are registered, and including applications and the right to apply for registration of any such rights) and all inventions, know-how, trade secrets, techniques and confidential information and other proprietary knowledge and information, and all rights and forms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world, in each case for their full term, and together with any continuations, continuations-in-part, divisionals, renewals, reissues or extensions;

 

1.30                   “Licensed Technology” means TiGenix’s Intellectual Property Rights in and to the Product and in and to the Process as well as other processes and/or products necessary to produce the Product, as further identified in Schedule 7;

 

1.31                   “Marketing Authorisation” means the marketing authorisation for ChondroCelect® with number EU/1/09/563/001 issued by the European Commission on 5 October 2009;

 

1.32                   “Material Breach” means a breach of any obligation or warranty contained in this Agreement which has or is in the near future likely to have a material effect on the interests of the other Party to this Agreement. For the avoidance of doubt, a Force Majeure Event is not a Material Breach;

 

1.33                   “Non-Defaulting Party” has the meaning as set out in Section 17.4;

 

1.34                   “Non-Exclusive Territory” means the following countries, to the extent not included in the definition of Exclusive Territory: Saudi Arabia, United Arab Emirates, Kuwait, Bahrain, Qatar, Oman, Lebanon, Jordan, Syria, Iraq, Iran, Israel and Egypt;

 

1.35                   “Personal Data” has the meaning as set out in Section 16.1;

 

44

 

1.36                   “Permitted Recipients” means the directors, officers, employees, agents, Third Party Contractors or professional advisers of the relevant Party who are required, on a strict need to know basis, in the course of their duties, to receive and consider the Confidential Information for the purpose of enabling the relevant Party to perform its obligations under this Agreement provided that such persons are under obligations of confidence no less onerous than those contained in Section 15 which are imposed on the Receiving Party;

 

1.37                   “Price” means the price for the Services as defined in Schedule 2;

 

1.38                   “Process” means the method of manufacturing the Product, including quality control and quality assurance;

 

1.39                   “Product” means ChondroCelect®, a cell-based medicinal product based on characterized viable autologous cartilage-forming cells expanded ex vivo expressing specific marker proteins as active ingredient, in its current and possible future form or expression;

 

1.40                   “Production” means the commercial manufacturing and GMP production of the Product;

 

1.41                   “Qualified Person” means the person (in accordance with Article 48 of Directive 2001/83/EC and with Article 13(2) of Directive 2001/20/EC), qualified to perform batch certification and Batch Conformity;

 

1.42                   “Quality Technical Agreement” means the agreement between the Parties that further defines the roles and responsibilities of the Parties with respect to the Services, and the processes and communications flows to be followed, as set out in Schedule 4;

 

1.43                   “Receiving Party” has the meaning as set out in Section 15.1;

 

1.44                   “Representative(s)” has the meaning as set out in Section 11.1;

 

1.45                   “Schedule” means the schedule (or schedules as appropriate) to this Agreement which specify the Services, payment terms and other relevant details referred to under this Agreement;

 

1.46                   “Services” means any or all parts of the services to be rendered by the Supplier, including the Production, under this Agreement as more fully described in Schedule 2;

 

1.47                   “Specification” means the criteria to be met by Supplier in respect of the Product as set out in Schedule 5;

 

1.48                   “SPOC” (or single point of contact) means the designated representative from each Party who will be responsible for management of the overall performance of this Agreement. Each Party will designate one person as a SPOC to the other Party in writing. Each Party shall be entitled to change its respective designated SPOC at any time and shall promptly give written (or e-mail) notice of the change to the other Party including the new contact details of the new representative(s) in any event no less than seven (7) Business Days after the change has been implemented;

 

1.49                   “Steering Committee” means the body organised in accordance with and pursuant to what is set out in Section 11.1;

 

45

 

1.50                   “Step In Notice” has the meaning as set out in Section 9.1;

 

1.51                   “Step In Period” has the meaning as set out in Section 9.6.5;

 

1.52                   “Technical Meeting(s)” has the meaning as set out in Section 11.4;

 

1.53                   “Term” has the meaning as set out in Section 17.1;

 

1.54                   “Territory” means both the Exclusive Territory and the Non-Exclusive Territory;

 

1.55                   “Third Party” means any person or entity, which is not a Party or an Affiliate of any Party to this Agreement;

 

1.56                   “Third Party Contractor” means any Third Party instructed by the Supplier and pre-approved by TiGenix pursuant to Section 3.5;

 

1.57                   “TiGenix Materials” means the materials to be provided by or on behalf of TiGenix, TiGenix’s Affiliates, TiGenix’s agents or TiGenix’s other suppliers to Supplier, remaining the property of TiGenix as listed in Schedule 6;

 

1.58                   “Warrant” (‘garanderen’) means that the warranting Party accepts liability towards the other Party for the (damage suffered as a result of) the absence of occurrences, acts or facts explicitly warranted in this Agreement;

 

1.59                   “Works” has the meaning as set out in Section 7.5.

 

2                 INTERPRETATION

 

In this Agreement, except to the extent that the context requires otherwise:

 

2.1                          references to this Agreement include its Schedules and any annexes;

 

2.2                          references in the singular shall include references in the plural and vice versa;

 

2.3                          headings shall be ignored in construing this Agreement;

 

2.4                          in computing any period of time under this Agreement the day of the act, event or default from which such period begins to run shall be included;

 

2.5                          the language which governs the interpretation of this Agreement is the English language. All notices to be given by any Party, shall be in the English language; and

 

2.6                          the words “include” and “including” are to be construed without limitation.

 

3                 PROVISION OF SERVICES

 

3.1                          The Supplier undertakes and agrees to render the Services (including the Production of the Product) to (the benefit of) TiGenix in accordance with the terms and conditions of this Agreement. The Price for the Services is set out in Schedule 2, which Schedule also covers applicable payment terms in relation to the advantaged pricing discounts of

 

46

 

1.500.000 EUR (one million five hundred thousand euros) in aggregate that are granted by the Supplier to TiGenix over a three year period as of the Effective Date.

 

3.2                          The Supplier will perform the Services diligently using its professional skill and care through personnel appropriately skilled in the manufacturing and production of cell culture-based therapeutics and in accordance with professional standards. The Supplier will use all commercially reasonable efforts to meet the estimated timelines for the completion of the Services and the required quality set out in the relevant Schedules, whether as regards the Product or — more generally — the Services. If (the Supplier has reasons to believe that) such timelines or quality cannot be met, the Supplier will promptly inform TiGenix in writing (or by e-mail) of the (i) estimated term of the delay or quality failure and (ii) the reasons for the delay or quality failure. The Supplier shall devote all commercially reasonable efforts to avoid and/or remedy (threatened) delays.

 

3.3                          The Supplier will, at TiGenix’s written (or e-mail) request at the times and in the quantities ordered by TiGenix, manufacture the Product for TiGenix, in accordance with the Specification, terms and conditions of this Agreement (including all Schedules), GMP and any Applicable Laws.

 

3.4                          The Services will comply with GMP. New and/or changing interpretations of any GMP requirements will be discussed and recorded in writing by the Parties as soon as one or both of the Parties becomes aware of any such new and/or changing interpretation, making whatever modifications to the Services as may be required therewith. The Supplier shall ensure that new EU GMP requirements are brought to the attention of TiGenix and will outline their impact on the Process.

 

3.5                          In the performance of the Services, the Supplier may subcontract certain part(s) of the Services to one or more Third Party Contractors only after having obtained the prior written consent of TiGenix, through its SPOC, with respect to each Third Party Contractor at stake and with respect to the tasks proposed to be subcontracted. The Supplier warrants and procures that the Third Party Contractor is bound by a written agreement containing terms protective of TiGenix at least as stringent as those contained in this Agreement, taking into account the tasks to be performed by the Third Party Contractor. The Supplier shall procure such support by the Third Party Contractor as is required to comply with the Supplier’s obligations under this Agreement. The Supplier shall at all times remain fully responsible and liable for the performance of the Agreement and for the acts and omissions of any Third Party Contractor, even if the latter has been authorized by TiGenix.

 

3.6                          TiGenix acknowledges that the Supplier has the obligation to maintain its GMP infrastructure and systems on a regular basis in order to secure continuity of operation for TiGenix and other clients and to maintain its licenses. TiGenix thus acknowledges that the Supplier may schedule temporary shut-downs of its operation to perform such maintenance, it being understood that such temporary shut-downs are limited to maximum half a day of interruption of the Process and that even during such shut-downs, the air conditioning (HVAC) will continue to run at all times, be it at a reduced level. Said limited shut downs may be scheduled up to two (2) times a year (once during summer, once most likely during the Christmas period). TiGenix and the Supplier will schedule their activities taking these maintenance periods into account, and the Supplier will notify TiGenix at least three (3) months in advance of its proposed shut-downs.

 

3.7                          When reasonably required by the Supplier (i.e., in case a specific expertise is not available within the Supplier’s organisation) or where stipulated in a Schedule, TiGenix

 

47

 

shall, at its own cost and expense, make available to the Supplier suitably skilled, educated employees or representatives with knowledge of the Process and the Product for the purpose of facilitating and discussing the performance by the Supplier of the Services hereunder. To the extent such employees or representatives have access to the Facility, TiGenix shall ensure that such employees or representatives will (i) be subject to enforceable obligations of confidentiality preventing them from using any information of the Supplier of a confidential nature which they acquire during such visit other than as permitted by this Agreement; and (ii) obey the rules at the Facility with regard to health and safety and GMP, provided the Supplier has provided TiGenix’s employees and representatives with copies of the same in writing.

 

4                 EXCLUSIVITY

 

4.1                          During the term of this Agreement, the Supplier will be the only manufacturer and supplier for Products to be sold in the Exclusive Territory. In the Non-Exclusive Territory, TiGenix may at any time appoint one or more Third Parties in addition to or other than Supplier for the manufacturing and the supply of Products. In case of Material Breach of the Agreement by the Supplier, after having been put on notice in accordance with Section 17.4.1 allowing the Supplier to remedy such Material Breach, TiGenix shall have the option to put an immediate end to such exclusivity in the Exclusive Territory, by serving a written notice to the Supplier to that effect and without indemnities to the Supplier.

 

4.2                          During the term of this Agreement, the Supplier, PharmaCell or any of their Affiliates will not produce any knee cartilage product for any Third Party.

 

5                 DELIVERABLES

 

5.1                          TiGenix will order, and the Supplier will manufacture and package, the Products in accordance with Schedule 2.

 

5.2                          TiGenix will provide to the Supplier, at no cost, the TiGenix Materials, which the Supplier shall store and use with proper care, and which the Supplier shall only use in accordance with TiGenix’s instructions and generally in accordance with this Agreement and for the purposes of the provision of the Services. TiGenix will ensure that the Supplier is provided with sufficient TiGenix Materials based on stock overviews that will be supplied from time to time by the Supplier to TiGenix or will otherwise be provided by the Supplier upon TiGenix’s request. In case any of the TiGenix Materials would become unusable for their intended purpose, the Supplier shall promptly inform TiGenix thereof and to the extent that the TiGenix Materials became unusable due to any improper use or storage by the Supplier, the Supplier shall reimburse TiGenix for the cost of any such affected TiGenix Materials.

 

5.3                          The Supplier shall purchase from Third Parties such other materials as are required for the provision of the Services in addition to the TiGenix Materials, as also listed in Schedule 6. Schedule 6 shall also list for each of the materials required for the provision of the Services, the safety stock and (where relevant) the suppliers from which such materials should be purchased.

 

48

 

5.4                          Supplier shall assemble the biopsy-kits and the implantation kits relating to the Product in accordance with TiGenix’ instructions and using among other the TiGenix Materials.

 

5.5                          In all cases (including those where the Product manufactured would qualify as Defective), the Supplier will deliver the Product and/or any other deliverables resulting from the performance of the Services to TiGenix or, at TiGenix’s discretion, to a Third Party (e.g. a courier appointed by TiGenix for the shipment of the Product) Ex Works the Facility (Incoterms 2010, as supplemented by this Agreement) on the agreed delivery date and in accordance with TiGenix’s instructions and the procedures in effect (including but not limited to those instructions and procedures made available to Supplier during the information exchange as set out in Schedule 1) or as approved in writing after the Effective Date by the Steering Committee and in accordance with the Specification.

 

5.6                          The Supplier shall be responsible for the safe custody and storage of the Product until delivery of the Product. Risk and title in respect of the Product delivered to TiGenix pursuant to this Agreement shall pass upon delivery.

 

5.7                          At the latest one hour before the communicated time of delivery of the Product to TiGenix in accordance with Section 5.5, a Qualified Person of the Supplier shall perform the Batch Conformity of the Product, and shall provide TiGenix with a Batch Conformity Statement (in PDF form by e-mail) and such other documents as may be required pursuant to the Quality Technical Agreement.

 

5.8                          Schedule 3 sets out the responsibilities of Supplier as Tissue Establishment (“weefselinstelling”). In case after the Effective Date of this Agreement, the relevant authorities decide and notify the Supplier of the fact that the Supplier no longer needs to comply with any Tissue Establishment requirements, Schedule 3 will cease to apply.

 

6                 CHANGES AND MODIFICATIONS

 

6.1                          Without prejudice to the application of Section 6.2, TiGenix shall be entitled to request additions or modifications to the Services (including — without limitation — as regards the Process and/or the Product, as well as the Price). The Supplier undertakes to devote all reasonable efforts to accommodate such requests if and to the extent Supplier agrees to such additions or modifications, it being understood that — where relevant — additional payment will be made to the Supplier at market prices for such additions or modifications. Any such request should, if possible, be made four (4) weeks in advance of commencement of the modified or additional Services, to which the Supplier will respond within two (2) weeks of such request. Such additions or modifications to the Services together with the applicable timelines and Price, shall be discussed and, if it decides so, approved in writing by the Steering Committee, prior to commencement of such modified or additional Services.

 

6.2                          Any additions, omissions or modifications to the Services required as a result of changes to regulatory requirements imposed by Government Competent Authorities will be referred to the Steering Committee for discussion, including to determine how the Services and timelines should be modified and if such additions, omissions or modifications require additional (or less) and unforeseen expenditure by the Supplier specific to the Product or the Services in order to comply with the revised regulatory requirements. Such additions, omissions or modifications to the Services together with

 

49

 

the applicable timelines and Price, shall be approved and decided in writing by the Steering Committee.

 

6.3                          Any modification, extension or variation of this Agreement (or any document entered into pursuant to or in connection with this Agreement), other than those expressly covered by this Section 6 shall be valid only if confirmed in writing (excluding email) and signed by or on behalf of each of the Parties to this Agreement.

 

7                 INTELLECTUAL PROPERTY

 

7.1                          The Parties acknowledge and agree that any Intellectual Property Rights owned or controlled by a Party or licensed to a Party by a Third Party prior to the Effective Date shall remain the sole and absolute property of that Party or license right held by that Party.

 

7.2                          Unless expressly provided otherwise in this Agreement, no Section or provision of this Agreement or its Schedules will imply or may be construed or interpreted as a right to use, a licence or other full or partial assignment of the Intellectual Property Rights of TiGenix, its Affiliates or its licensors to the Supplier.

 

7.3                          TiGenix hereby grants to the Supplier, for the term of this Agreement, a limited, non-exclusive, royalty-free, revocable, non-transferable and non-sublicensable license to use the Licensed Technology, for the sole purpose of producing the Product at the Facility to the exclusive benefit of TiGenix and of delivering the same to TiGenix, in accordance with the terms of this Agreement.

 

7.4                          Unless expressly agreed otherwise with TiGenix, the Supplier shall not use the Licensed Technology for (internal or external) research, development or improvement purposes.

 

7.5                          Without prejudice to the terms of Sections 7.1 and 7.4, all documents, data, drawings, plans, designs, documentation, texts, manuals, reports, tools, know how, and all other work that have come or will come into existence as a result of the performance of this Agreement by the Supplier or any Third Party Contractor or following the directions of TiGenix, (hereinafter referred to as “Works”) belong exclusively to and remain with TiGenix. Without prejudice to the terms of Sections 7.1 and 7.4, all Intellectual Property Rights in the Works are immediately and exclusively transferred and assigned to TiGenix as from their coming into existence. The Supplier shall, at its own cost, perform (or procure the performance of) all further acts and things, and execute and deliver (or procure the execution and/or delivery of) all further documents, required by law or which TiGenix requests to vest in TiGenix the full benefit of the right, title and interest assigned to TiGenix under this Agreement. Such transfer and assignment of all Intellectual Property Rights and other property rights include but is not limited to the transfer and assignment of the right to reproduce, adapt, translate, modify, distribute, rent, lend, make available the Works to the public, partially or completely, in each and any way, whether private or public, for internal - including but not limited to research and development - and external use. The transfer and assignment of rights is valid for commercial or non-commercial purposes, final for each and every form of exploitation and for all countries. The Supplier shall regularly inform TiGenix of all Works coming into existence as a result of the performance of this Agreement by the Supplier or any Third Party Contractor, or following the directions of TiGenix. The Supplier shall grant to TiGenix such rights on Intellectual Property Rights owned or controlled by the Supplier or licensed to the

 

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Supplier by a Third Party prior to the Effective Date sufficient to allow TiGenix the full benefit of the terms of this Agreement.

 

7.6                          The Supplier shall promptly notify TiGenix of any actual or suspected infringement of any of the Licensed Technology that comes to its attention. The Supplier shall co-operate fully with TiGenix in taking all steps required by TiGenix, in TiGenix’s sole discretion, in connection with any infringement, including, without limitation, legal proceedings. TiGenix shall be responsible for the cost of any legal proceedings it instigates against Third Parties, and is entitled to any damages, account of profits and awards of costs recovered.

 

7.7                          TiGenix shall promptly notify the Supplier if it receives notice or is aware of a Third Party claim that the use of the Licensed Technology by the Supplier would be in breach of such Third Party’s Intellectual Property Rights.

 

8                 DEFECTIVE PRODUCTS

 

8.1                          Defective Product

 

If the Supplier determines that a batch of Product does not conform to the Specification and/or such Product is not otherwise in conformity with this Agreement (each a “Defective Product”), then the Supplier shall immediately inform TiGenix’s SPOC and TiGenix’s quality representative thereof by telephone, and shall confirm the same by e-mail/in writing immediately thereafter.

 

8.2                          Remedies

 

8.2.1         In case of a Defective Product for which the cause is attributable to (“toerekenbaar aan”) Supplier, the Supplier shall, at TiGenix’s option either:

 

(i)             supply TiGenix with a conforming (quantity of) Product at the Supplier’s expense (which will require the patient to consent to a new biopsy); or

 

(ii)          reimburse TiGenix for the Price paid by TiGenix with respect to such Defective Product (if already paid) or, if TiGenix has not already paid, issue a credit note against the appropriate invoice for the relevant Defective Product.

 

8.2.2         In addition, and notwithstanding any other provision of this Agreement for each Defective Product for which the cause is attributable to Supplier, Supplier shall pay to TiGenix, as a compensation for costs made and damages suffered:

 

(i)        EUR [***], in case no conforming Product for the Defective Product is requested by TiGenix in accordance with Section 8.2.1 (i) above (including but not limited to the event where the patient concerned refuses a new biopsy), or

 

(ii)          EUR [***], in case a conforming Product is requested by TiGenix in accordance with Section 8.2.1 (i) above.

 

The contractual fine payable under this Section constitutes Supplier’s entire liability towards TiGenix in case of a Defective Product but is without prejudice to the Supplier’s liability to compensate for any damages claim (other than the direct costs related to the mere replacement of the biopsy) by a Third Party. Without limiting the generality of the foregoing, in case a new biopsy is required to enable the Supplier to supply TiGenix with a conforming Product as provided

 

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under Section 8.2.1 (i) above, then the Supplier shall reimburse TiGenix for any reasonable costs charged to or claimed from TiGenix by the relevant hospital or patient (including for extra surgeon and operating room time and additional patient’s costs) as a result of or in connection with such Defective Product.

 

9                 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

 

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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.

 

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10          PRICE AND PAYMENT TERMS

 

10.1                   In exchange for the Services (including the Production and delivery of the Product), TiGenix shall pay to the Supplier, following the receipt of an invoice for the same:

 

10.1.1  the Price as specified in Schedule 2;

 

10.1.2  value added tax, excise duties and similar taxes imposed by or under the authority of any government or public authority on the provision of the Services (other than taxes on the Supplier’s income).

 

10.2                   The Price and all other amounts are in Euro and all invoices will be issued in Euro and will be paid in Euro.

 

10.3                   The Price cannot be modified, except further to a specific written agreement of TiGenix and the Supplier to that effect.

 

10.4                   Notwithstanding clause 10.3, the Supplier can adjust the variable part of the Price (i.e. [***] EUR on the Effective Date) for an increase (respectively a decrease) of the consumer price index (as determined by the Central Bureau for Statistics in the Netherlands; www.cbs.nl - table “Consumentenprijzen”, category “00000 Totaal bestedingen”) as follows: if at the end of the first anniversary of the Effective Date, the consumer price index shows an increase (respectively a decrease) of at least 2% compared to the level of the index on the Effective Date, or if at the end of any following anniversary of the Effective Date, the consumer price index shows an increase (respectively a decrease) of at least 2% compared to the level of the index on the previous anniversary of the Effective date, the Supplier shall increase (respectively decrease) the variable part of the Price with half (50%) of the increase (respectively decrease) of the consumer price index.

 

10.5                   All invoices of the Supplier shall be issued according to the payment schedule set out in Schedule 2. All invoices issued are net, which TiGenix will pay within thirty (30) days upon receipt of the invoice (“Due Date”) without any right to suspend or set-off invoiced amounts against any (counter)claim, except (i) where such set-off is being specifically agreed in Schedule 2, and further except that (ii) TiGenix may suspend payment of any invoices beyond the Due Date in those cases set out under Section 10.6.

 

10.6                   In case the Supplier has not provided the Services with the required professional skill and care, with the required Product quality and/or within the applicable timelines, in case TiGenix has an outstanding financial claim against the Supplier and/or in case the Supplier is otherwise in breach of its obligations under this Agreement, TiGenix is entitled to withhold an appropriate and proportionate part of any payment(s) due having been directly charged for the Product or Services concerned, as long as the Supplier has not remedied any such shortcoming, without any interests or penalty being incurred by TiGenix.

 

10.7                   In the event that the Supplier does not receive the full payment on the Due Date and except for rightfully withheld payments (including as per Section 10.6) it may, at its discretion, and without prejudice to its other statutory rights and remedies, charge statutory commercial interest (‘wettelijke handelsrente’) as yearly published in the Dutch Bulletin of Acts and Decrees (‘Staatsblad’) on the outstanding amount of the invoice until

 

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payment is received in full. Interest shall only start accruing ten (10) Business Days after the receipt by TiGenix of a written notice of late payment from the Supplier.

 

11          ORGANISATION

 

11.1                   Steering Committee and Representatives

 

The Parties shall set up a Steering Committee, which shall comprise a minimum of two (2) of their representatives (“Representatives”) or of their respective Affiliates (and in any event with an equal number of Representatives for the Parties). Each Party shall notify the other of its elected Representatives. Each Representative shall carry an equal vote and proxy votes may be granted by Representatives to their fellow Representative(s) if they are unable to attend meetings. Each Party, irrespective of the number of Representatives attending each relevant meeting, shall have an equal vote.

 

Each Party shall be entitled to change their respective nominated Representatives at any time and shall promptly give written (or e-mail) notice of the change to the other Party including the new contact details of the new Representative(s) in any event no less than seven (7) Business Days after the change has been implemented.

 

11.2                   Role of the Steering Committee

 

The primary role of the Steering Committee is to ensure the ongoing communication between the Parties and to discuss and resolve any issues arising under the Agreement. Either Party agrees that its Representatives will endeavour to attend each Steering Committee meeting and to discuss in good faith all topics and issues relevant to ensure the successful performance of this Agreement.

 

In addition to the primary role described above, the Steering Committee shall also:

 

(a)              discuss and seek resolution of issues regarding the performance of the Services;

(b)              agree on and monitor compliance of deadlines and milestones for the performance of the Services;

(c)               discuss and agree on any changes to the Services (in accordance with the terms of Section 6 ); and

(d)              discuss and agree on any matters referred to it in accordance with Section 9.

 

11.3                   Meetings and decision of the Steering Committee

 

11.3.1           The Representatives of the Steering Committee shall meet in person or by phone as often as required but at least once per calendar quarter, at alternating locations. Except if otherwise foreseen in this Agreement (including in Section 9), each meeting shall be called with an advance written (or e-mail) notice of minimum ten (10) Business Days by either TiGenix or the Supplier.

 

11.3.2           The Steering Committee shall only be able to make valid and binding decisions if an equal number of Representatives for each Party attend the meeting where the decision is to be made and cast their vote. In addition, to be valid and binding, a

 

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decision of the Steering Committee must be set out in writing and signed by the Representatives having made the decisions.

 

11.3.3           If the Steering Committee is unable to reach an agreement on any issue ten (10) Business Days after the issue has first been raised at a Steering Committee meeting, the CEO of the Supplier and the CEO of TiGenix shall promptly meet to try to solve the issue in the interest of both Parties. In case particular issues can not be settled through escalation at the level of the CEOs, Parties agree to appoint an independent expert with a view to obtaining a non-binding advice on the issue. In case Parties are unable to agree on the appointment of, or the procedure to be followed by, the independent expert, or if they are still unable to agree on the matter after having obtained the advice of the expert, each of the Parties may resort to initiating legal proceedings in accordance with Section 19.

 

11.4                   Technical Meetings

 

At least once a month during the Term, at a fixed date to be agreed by the Parties (e.g. the first Monday of the month), and as often as the Parties deem necessary (provided an advance written (or e-mail) notice of no less than five (5) Business Days is served by one of the Parties), the Parties’ respective employees or Representatives (which should include the SPOC and the Quality Persons of both Parties) shall meet (in person or by phone) to follow-up with scientific and/or technical issues relating to the Services (“Technical Meetings”).

 

11.5                   Witnessing

 

In addition to the Technical Meetings and without prejudice to any Audits, the Supplier shall permit, free of charge, upon no less than five (5) Business Days’ written (or e-mail) notice and during reasonable times, a maximum of two (2) named qualified employees or Representatives of TiGenix (TiGenix shall be responsible for ensuring that each such person adheres to the confidentiality obligations imposed on TiGenix pursuant to Section 15) to enter the Facility or those areas of premises of the Supplier concerned with the Services, including “B cleanroom areas”, for the sole purpose of observing and inspecting the performance of the Services and those records of the Supplier specific to the Services subject to the employees and Representatives obeying and adhering to the rules and regulations in place at the Facility or the Supplier’s premises concerning security, health and safety, GMP, quality and customer confidentiality. The Supplier shall in advance notify in writing or instruct TiGenix’s employees and Representatives about the current rules and regulations of the Facility or Supplier’s other premises.

 

11.6                   Documentation and reporting

 

Unless specifically agreed otherwise, all documentation relevant to and produced for the Services will be prepared in the English language and will be owned and controlled by TiGenix, in accordance with the terms of Section 7.5. The Supplier agrees to provide TiGenix upon request with any documentation relevant to and produced for or in relation to the Services. All documentation relating to Services shall comply with the applicable GMP requirements, the Quality Technical Agreement and all other Applicable Laws. Schedule 8 and the Quality Technical Agreement specify when and of which documents the Supplier shall send copies to TiGenix.

 

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11.7                   Regulatory  Inspections and Applications

 

11.7.1           The Supplier is entitled to reimbursement of reasonable costs, on a time and materials and pass-through basis, in connection with any Inspections which are specific to the Production of the Product, it being understood that Inspections related to the tissue establishment license (“erkenning als weefselinstelling”) and the GMP manufacturing license (“fabrikantenvergunning”) are not specific to the Production of the Product.

 

11.7.2           The Supplier is entitled to reimbursement of reasonable costs, on a time and materials and pass-through basis, in connection with its assistance with applications for any and all (marketing) authorizations from any Government Competent Authorities throughout the Territory in respect of the Product.

 

12          WARRANTIES

 

12.1                   TiGenix Warrants to the Supplier that, at the Effective Date:

 

12.1.1           it is legally incorporated and in good standing in its country of incorporation and that it has the right to enter into this Agreement;

 

12.1.2           it is solvent and financially in good standing and able to pay its debts when due;

 

12.1.3           it has the right during the Term to license and disclose to the Supplier, to the extent necessary for the performance of the Services by the Supplier in accordance with this Agreement, the Licensed Technology to the Supplier; and

 

12.1.4           the Process is suitable and adequate for the performance of the Services.

 

12.2                   The Supplier Warrants to TiGenix that:

 

12.2.1           it is legally incorporated and in good standing in its country of incorporation and that it has the right to enter into this Agreement;

 

12.2.2           it is solvent and financially in good standing and able to pay its debts when due;

 

12.2.3           it has at the Effective Date, and will ensure it has during the term of this Agreement, based on information provided by TiGenix regarding the Services, the resources reasonably necessary to perform the Services in such a way that the Supplier can render the Services within the estimated and/or agreed timelines;

 

12.2.4           to the best of the Supplier’s knowledge, from an internal corporate compliance and scientific point of view, based on current information available at the Effective Date, the Supplier is able to perform the Services including any GMP parts hereunder;

 

12.2.5           it has at the time of the conclusion of this Agreement, and will use its best efforts to continue to have during the term of this Agreement, the necessary permits, approvals, consents, licences, and permissions for the performance of its obligations under this Agreement, including permits for work in a GMP environment and a tissue establishment license;

 

12.2.6           it has or will establish facilities and technically qualified employees that are required for the performance of the Services; and

 

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12.2.7           it does not and will not misuse, sell or unlawfully disclose to a Third Party the Licensed Technology, nor transfer, supply or sell the Product to a Third Party in whole or in part.

 

13          LIABILITY AND INDEMNIFICATIONS

 

13.1                   Indemnification

 

13.1.1           The Supplier shall be completely and solely responsible:

 

(a)                                for the performance of its obligations under this Agreement, whether or not (part of) such performance (of part of these obligations) would be carried out by an authorised Third Party Contractor;

 

(b)                                for the Product manufactured and supplied by it to TiGenix under this Agreement;

 

(c)                                 for all direct loss, damage or costs, in any way caused by itself, by acts or negligence, by its personnel or by involved Third Party Contractors, or by their personnel, to TiGenix, or to the Product; and.

 

(d)                                for all indirect loss, damage or costs (including reputational damage to TiGenix), in any way caused by itself, by its personnel or by involved Third Party Contractors, or by their personnel, to TiGenix, or to the Product, to the extent that such would be caused by fraud or fraudulent misrepresentation, gross negligence or wilful misconduct or deliberate acts.

 

13.1.2           Insofar as not covered by Section 13.2, the Supplier shall defend, indemnify and hold TiGenix, its Affiliates and officers, directors and employees of each, harmless from and 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 of a Third Party as a result of (i) a Defective Product for which the cause is attributable to the Supplier; (ii) a Defective Service for which the cause is attributable to the Supplier; (iii) the late delivery of a Product for which the cause is attributable to the Supplier; and/or (iv) the Supplier’s intentional or negligent act or omission in performing its obligations under this Agreement.

 

13.1.3           Nothing in this Agreement shall purport or attempt or serve to exclude or restrict any liability of either Party for (i) fraud or fraudulent misrepresentation (‘bedrog’), (ii) breach of implied undertakings which cannot be excluded or limited by contract such as, and without limitation, warranties as to title; or (iii) gross negligence or wilful misconduct or deliberate acts (‘grove schuld of opzetttelijk handelen/nalaten’) of that Party or its directors, officers, Affiliates, employees and sub-contractors.

 

13.1.4           TiGenix shall only be held liable for damage to the Supplier and/or PharmaCell: (i) in accordance with Section 9.6.3, (ii) in accordance with Section 10; (iii) in accordance with Section 13.1.3, and (iv) in the event of Material Breach by TiGenix of any other of its obligations under this Agreement.

 

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13.2                   Third Party Claims

 

13.2.1           If any claim is made against a Party arising out of or in connection with the performance of the obligations by the other Party under this Agreement the Party in connection with whose performance the claim is made, shall indemnify the other Party against all damages or other compensation awarded against the first Party in connection with the claim or paid or agreed to be paid by the first Party in settlement of the claim and all legal or other expenses incurred by the first Party in the defence or settlement of the claim. The affected Party shall notify the other Party as soon as possible after becoming aware of the claim, and take all action reasonably requested by the other Party to avoid, compromise or defend the claim and any proceedings in respect of the claim, subject to the other Party being indemnified and secured to its reasonable satisfaction against all costs and expenses which may be incurred in doing so.

 

13.2.2           If any claim is made against the Supplier arising out of or in connection with any of the following:

 

(a)                                the authorised use of the Licensed Technology or the Confidential Information; or

(b)                                any Defect in the Product resulting from a defect in the Specification,

 

TiGenix shall indemnify or have indemnified the Supplier against all damages or other compensation awarded against the Supplier in connection with the claim or paid or agreed to be paid by the Supplier in settlement of the claim and all legal or other expenses incurred by the Supplier in the defence or settlement of the claim. The Supplier shall notify TiGenix as soon as possible after becoming aware of the claim, and take all action reasonably requested by TiGenix to avoid, compromise or defend the claim and any proceedings in respect of the claim, subject to the Supplier being indemnified and secured to its reasonable satisfaction against all costs and expenses which may be incurred in doing so.

 

13.3                   Limitation of Liability

 

Either Party’s liability to the other under this Agreement shall be limited to the higher of:

 

13.3.1           EUR five (5) million; or

 

13.3.2           the amount equal to (n * p) – y

 

whereby

 

n equals the number of Products committed to be purchased from the Supplier by TiGenix and/or any Third Party for the twelve (12) months following the event giving rise to the Party’s liability;

 

p equals the average sales price for said Products; and

 

y equals the price paid by TiGenix and/or any Third Party to Supplier for said Products;

 

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or

 

13.3.3           the amount covered by the liable Party’s liability insurance.

 

14          GUARANTEE

 

14.1                   PharmaCell will use maximal efforts to do all things necessary, including the provision of funds to the Supplier, to ensure that the Supplier at all times performs and is able to perform its obligations under this Agreement, whether these obligations be for the payment of money, the performance of any activity, the taking of any step, or otherwise. Without prejudice to any other remedy TiGenix may have under this Agreement or otherwise against the Supplier, PharmaCell hereby unconditionally and irrevocably guarantees to TiGenix, on the terms and conditions herein, that if there is any Material Breach by the Supplier of any of its obligations under this Agreement which is capable of being remedied; PharmaCell shall use maximal efforts to complete, or cause to be completed, such obligation(s), subject to all limitations and defences available to the Supplier. This guarantee shall not be construed to impose upon PharmaCell any obligations greater than, in addition to, or other than, the obligations expressly assumed by the Supplier under this Agreement.

 

14.2                   If it has been established by court or arbitration judgment or binding amicable settlement between TiGenix and the Supplier that TiGenix is entitled to any damages or other payment from the Supplier, and the Supplier does not pay those damages or does not make that other payment to TiGenix as required under this Agreement, PharmaCell will pay or cause to pay those damages or make that other payment to TiGenix on demand.

 

14.3                   TiGenix is obligated to exhaust its recourse against the Supplier before being entitled to call on PharmaCell to perform its obligations under this Section 14, it being understood that TiGenix shall be deemed to have exhausted its recourse against the Supplier after having reached a settlement with the Supplier or having obtained a first judgment against the Supplier followed by one unsuccessful enforcement attempt to recover from the Supplier.

 

14.4                   TiGenix and the Supplier may at any time change one or more of the provisions of this Agreement (in accordance with Section 6) without the consent of, but with a prior notice to, PharmaCell, it being understood that TiGenix and the Supplier cannot create additional obligations on the part of PharmaCell without the prior written approval of PharmaCell.

 

15          CONFIDENTIAL INFORMATION

 

15.1                   Each Party (the “Receiving Party”) shall treat any and all Confidential Information that it receives from the other Party (the “Disclosing Party”) under this Agreement as strictly confidential and shall not disclose the same to any Third Party or use it except to the extent strictly necessary to perform its obligations or exercise its rights under this Agreement without the prior written consent of the Disclosing Party. In consideration of the Disclosing Party making available Confidential Information to the Receiving Party, the Receiving Party undertakes that it shall, and shall procure that each of its Permitted Recipients, shall:

 

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15.1.1           treat and safeguard as private and confidential all the Confidential Information;

 

15.1.2           use the Confidential Information only for those purposes reasonably required or anticipated under this Agreement and, without prejudice to the generality of the foregoing, not use any Confidential Information to obtain any commercial advantage over the Disclosing Party or to use the Confidential Information to compete with the Disclosing Party in any way;

 

15.1.3           ensure the proper and secure storage of all Confidential Information applying standards of due care reasonably expected and no less stringent than standards applied to protection of Receiving Party’s own Confidential Information;

 

15.1.4           not at any time without the Disclosing Party’s prior written consent disclose or reveal, whether directly or indirectly any of the Confidential Information to any person whatsoever save its Permitted Recipients, and then on a limited need to know basis, who shall be informed by it of the confidential nature of the Confidential Information and of the confidentiality terms of this Agreement and for whom it hereby accepts full responsibility in the event that any such person shall breach the duty of confidence imposed upon them; and

 

15.1.5           not at any time have any discussion, correspondence or contact with any Third Party concerning the Confidential Information without the prior written consent of the Disclosing Party.

 

15.2                   The obligations in this Agreement do not apply to information:

 

15.2.1           which, at the time of its disclosure by the Disclosing Party, is available to the public;

 

15.2.2           which becomes generally available to the public after disclosure other than by reason of a breach of any of the undertakings in this Agreement or any breaches of confidence by the Receiving Party;

 

15.2.3           which is provided to a Receiving Party by a Third Party which is lawfully in possession of such information without any breach of any confidentiality undertakings, as evidenced by Receiving Party’s written records, or

 

15.2.4           to the extent that the Receiving Party (or any of its Permitted Recipients) is compelled to disclose the Confidential Information by Applicable Laws or by any stock exchange or other regulatory authority having jurisdiction over it or them (but, for the avoidance of doubt, only to that extent and provided that Receiving Party, to the extent lawful, gives prior notice to Disclosing Party and provides sufficient time to Disclosing Party to assert any exclusions or privileges that may be available by Applicable Laws).

 

15.3                   Other than the limited and restricted rights of use set out in this Section 15, nothing in this Agreement intends to or has the effect of granting any right, title, licence or interest in or to the Receiving Party in respect of the Disclosing Party’s Confidential Information — except for the grant of license under Section 7.

 

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15.4                   Except as otherwise provided for in this Agreement or otherwise required by law or administrative authorities, neither Party shall disclose any terms or conditions of the Agreement to any Third Party without the prior written consent of the other Party.

 

15.5                   Upon termination of this Agreement or at the request of the Disclosing Party, each Party shall promptly return to the other, at the other’s request, any and all confidential Information of the other (including copies of documents, computer records and records on all other media) then in its possession or under its control except where such Confidential Information is covered under surviving licence rights between the Parties.

 

15.6                   PharmaCell hereby expressly undertakes to comply with the provisions of this Section 15 and is deemed to constitute, for the purpose of this Section 15 only, a “Party”.

 

15.7                   The terms of this Section 15 shall survive the termination of this Agreement on any ground whatsoever for a period of five (5) years.

 

16          DATA PROTECTION

 

16.1                   For the purposes of this Agreement, the terms “Personal Data”, “Data Controller”, “Data Processor”, “Data Subject” and “process” shall have the same meaning and interpretation as set out in the Belgian Data Protection Act (wet bescherming persoonlijke levenssfeer van 8 december 1992).

 

16.2                   TiGenix (in its capacity of Data Controller) has chosen the Supplier (in its capacity of Data Processor) to process Personal Data on behalf and upon instruction of TiGenix and the Supplier has agreed to process Personal Data on behalf and upon instruction of TiGenix.

 

16.3                   The Supplier warrants that:

 

16.3.1           it has in place appropriate technical and organizational measures against accidental or unlawful destruction or accidental loss, alteration, unauthorized disclosure or access and adequate security programs and procedures to ensure that unauthorized persons will not have access to the data processing equipment used to process the Personal Data;

 

16.3.2           it has appropriate security measures, which reflect the nature of the Personal Data and the level of harm that might be suffered by a Data Subject as a result of unauthorized access or disclosure of Personal Data.

 

16.3.3           each of its employees, agents or subcontractors are and shall be made aware of its obligations with regard to the security and protection of the Personal Data and that they enter into binding obligations with the Supplier in order to maintain the levels of security and protection provided for in this Agreement;

 

16.4                   The Supplier undertakes to:

 

16.4.1           act only on behalf and upon instruction of TiGenix;

 

16.4.2           do such actions as are necessary to ensure it has fulfilled, and will continue to fulfil, the warranties set out in Section 16.3;

 

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16.4.3           submit its data processing facilities, data files and documentation needed for processing to auditing and/or certification by TiGenix (or other duly qualified auditors of inspection authorities not reasonably objected to by the Supplier and approved by TiGenix) to ascertain compliance with the warranties and undertakings in this Agreement;

 

16.4.4           shall adequately protect any Personal Data that may become accessible to the Supplier against disclosure, whether directly or indirectly, to any Third Party and shall use such data only for the provision of its Services hereunder and for no other purpose. All Personal Data that is no longer required for the Supplier’s performance of its obligations under this Agreement shall be deleted or returned to TiGenix, at the option of TiGenix. The Supplier shall immediately report any violation of data protection laws identified by the Supplier to TiGenix.

 

16.4.5           ensure by written contract that any agent or subcontractor employed by the Supplier to process Personal Data to which this Agreement relates also provides the Supplier with a plan of the technical and organizational means it has adopted to prevent unauthorized or unlawful processing or accidental loss or destruction of the Personal Data and confirms to the Supplier the implementation of those means;

 

16.4.6           comply with all applicable data protection laws when performing the Services under this Agreement. In the event the Supplier is unable to do so, it shall forthwith notify TiGenix and TiGenix shall be entitled to terminate this Agreement, unless the Parties have agreed or forthwith agree to take such steps as shall enable the Supplier to so comply.

 

16.5                   In the event of termination of this Agreement, the Supplier must return all Personal Data and all copies of the Personal Data to TiGenix forthwith or, at TiGenix’ choice, will destroy all copies of the same and certify to TiGenix that it has done so, unless the Supplier is prevented by law from destroying all or part of such Personal Data, in which event the Personal Data will be kept confidential and will not be processed for any purpose. The Supplier irrevocably agrees with TiGenix that, if so requested by TiGenix, it will allow TiGenix access to any of its premises to verify that this has been done or will allow access for this purpose by any duly authorized representative of TiGenix.

 

17          TERM AND TERMINATION, REMEDIES FOR BREACH

 

17.1                   This Agreement shall commence on and become effective on the Effective Date provided that it has been lawfully executed by all Parties and will expire after a term of ten (10) years, i.e. on [31 May  2024] (the “Term”). In respect of any part(s) of the Services which have been performed before the Effective Date, the Parties agree that the performance of those part(s) shall be deemed to have been performed during the Term and governed by the terms of this Agreement.

 

17.2                   After the expiration of the Term, this Agreement shall be automatically renewed for consecutive one (1) year periods, unless a Party gives written notice to the other Party with at least three (3) years prior to the expiration of the initial Term or any consecutive renewal period.

 

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17.3                   Unless explicitly allowed or stated otherwise in this Agreement, each Party hereby waives its right to rescind (‘vernietigen’) or dissolve (‘ontbinden’) this Agreement in whole or in part, except in the event of fraud (‘bedrog’).

 

17.4                   Notwithstanding Section 17.1, either Party (“Non-Defaulting Party”) may terminate this Agreement before expiry of the Term with immediate effect upon written notice to the other Party (“Defaulting Party”) if:

 

17.4.1           the Defaulting Party committed a Material Breach of its obligations under this Agreement and, if the breach is capable of remedy, fails to remedy it during the period of thirty (30) calendar days starting on the date of receipt of notice from the Non-Defaulting Party identifying the breach and requiring it to be remedied;

 

17.4.2           the Defaulting Party is deemed unable to pay its debts, meaning that the Defaulting Party receives suspension of payment or, whether voluntarily or involuntarily, is declared bankrupt or if such Party becomes permanently unable to perform its obligations hereunder for reasons other than suspension of payment or bankruptcy, such as, for example, liquidation, dissolution or winding-up.

 

17.5                   Change of Control

 

17.5.1           Without prejudice to its other rights and remedies and to the maximum extent legally possible, TiGenix may terminate this Agreement upon written notice to the Supplier with immediate effect, without any further formality and without any indemnity in the event the Supplier is subject to a Change of Control, provided that after such Change of Control, a risk (“Adverse Condition”) to the continuity of supply or business for the Product shall exist or is likely to emerge and such risk cannot be cured. For purposes of this Section, “Adverse Condition” shall mean (a) that after the Change of Control the Supplier (or its surviving entity) is controlled by an entity that is a direct competitor of TiGenix for the Product; or (b) the existence of any condition which is in the reasonable opinion of TiGenix reasonably likely to cause Supplier (or its surviving entity) to be unable to fulfil the obligations under this Agreement. Such Adverse Condition may include but is not limited to a situation where the controlling party has a lack of financial stability or a history of regulatory intervention in its manufacturing operations for quality reasons.

 

17.5.2         The Supplier shall inform TiGenix in writing of any Change of Control within ten (10) Business Days of a Change of Control being decided. This written notice shall make explicit reference to this Section of this Agreement and the need for TiGenix to inform the Supplier of its intention to possibly invoke its termination rights. Within ten (10) Business Days of having been informed of such a decision, TiGenix shall give notice of its intention to invoke its termination right under this Section, specifying the nature of the Adverse Condition(s) it has identified and stating — supported by arguments — whether the Adverse Condition is capable of being cured. If Supplier decides to do so, Supplier or the intended new owner of Supplier shall be given the opportunity to cure the Adverse Condition within twenty (20) Business Days of TiGenix’ notice, by all measures it deems fit.

 

17.5.3         The Adverse Condition shall be deemed to be cured when the risk to the continuity of supply or the business of the Product has effectively been addressed (e.g. by divestiture of a competitive product or a capital increase or otherwise) within thirty (30) days after TiGenix has given notice of its intention to invoke its termination

 

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rights , provided that Supplier gives written notice to TiGenix of all measures that have been taken to cure the Adverse Condition and further provided that TiGenix confirms in writing that the Adverse Condition has indeed been cured.

 

17.6                   Subject to a 12 months written notice, TiGenix may terminate this Agreement in case a decision is taken to cease its ChondroCelect® business in the Territory either (1) due to a change in European regulatory conditions or a decision of the EMA that renders the business case for ChondroCelect® no longer commercially viable (a “Regulatory Reason”), or (2) based on a situation that the ChondroCelect® business, in the sole opinion of TiGenix, does not prove commercially viable (a “Commercial Reason”).

 

17.6.1           A termination for a Regulatory Reason is possible at any time after the Effective Date.

 

17.6.2           A termination for a Commercial Reason is only possible as of the second anniversary of the Effective Date (i.e. the notice can be given at the earliest on the second anniversary of the Effective Date, with the Agreement to terminate at the third anniversary of the Effective Date).

 

17.6.3           Supplier shall cease Production in mutual agreement with TiGenix, but at the latest 6 months prior to the end of the notice period (i.e. the last 6 months of the 12 months notice period, Supplier will no longer be required to provide the Services under the Agreement). During the first 6 months of the 12 months notice period, Supplier shall continue the Services under the Agreement, unless TiGenix agrees otherwise.

 

17.6.4           In case of a termination of the Agreement pursuant to this Section 17.6, the Supplier’s sole remedy shall be in the form of the payment by TiGenix to Supplier of an amount equal to the Price that TiGenix would otherwise have had to pay to the Supplier based on the binding capacity reservation volumes for the twelve (12) month period following the written notification of termination, as set out in Schedule 2, of which amount all saved out-of-pocket expenses of Supplier related to such binding capacity reservation volume, as also set out in Schedule 2, shall be deducted. TiGenix will pay this amount in monthly instalments, in accordance with the invoicing and payment schedule set out in Schedule 2.

 

17.6.5           In addition, in case of a termination of the Agreement for a Regulatory Reason for which the termination would become effective prior to the third anniversary of the Effective Date, the obligation of PharmaCell BV to pay the deferred part of the purchase price in the amount of EUR 750,000 pursuant to the share purchase agreement entered into between TiGenix and PharmaCell BV for the acquisition of the shares of Supplier, will be waived by written notification to PharmaCell BV. For the avoidance of doubt, in case of a termination of the Agreement for a Commercial Reason, said deferred payment of part of the purchase price will remain due by PharmaCell BV.

 

17.7                   In the event that this Agreement is terminated in accordance with this Agreement prior to the expiry of the Term and with the exception of Supplier’s remedy under Section 17.6, neither Party shall incur any future liability towards the other Party other than:

 

17.7.1           in respect of any accrued rights; and

 

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17.7.2           the payment by TiGenix to the Supplier of sums due in respect to those parts of the Services that have been delivered at the time of termination of the Agreement;

 

17.8                   Termination of this Agreement for whatever reason shall not affect the accrued rights of either the Supplier or TiGenix arising under or out of this Agreement. Upon termination and provided TiGenix has paid all due amounts according to Section 9 (to the exception of rightfully withheld amounts), the Supplier will deliver the Product and/or any other deliverables arising out of the performance of the Services then held by the Supplier as well as all reports, information and documentation in connection with such Services, to the extent that such material, report, information and documentation refer to the Services up to and including the date of termination of this Agreement. All provisions which are expressed to survive this Agreement and the provisions of Sections 12, 13, 14, 15, 16 and 19 shall survive termination or expiry of this Agreement and remain in full force and effect to the extent required to give effect to such provisions.

 

18     FORCE MAJEURE

 

18.1                   Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached the Agreement for failure or delay in fulfilling or performing any term of the Agreement or the Services to the extent, and for so long as, such failure or delay is caused by or results from causes beyond the reasonable control of the relevant Party, including but not limited to earthquakes, floods, embargoes, wars, acts of war (whether war is declared or not), terrorist acts, insurrections, riots, civil commotion, acts of God or other acts, omissions or delays in acting by any administrative authority or other party, to the exclusion of strikes, problems with Third Party Contractors and lock-outs (“Force Majeure Event”).

 

18.2                   The Party affected by a Force Majeure Event shall immediately notify in writing the other Party of the details and consequences of said Force Majeure Event. If a Force Majeure Event continues for more than one (1) month, and it is adversely affecting the performance of this Agreement, each Party will have the right to terminate this Agreement by serving a written termination notice to the other Party, to be effective at the earliest upon expiration of such one (1) month period, it being understood that both Parties may decide to have the effect of termination kick-in prior to the expiration of this one (1) month period in case it can be established that the Event of Force Majeure will last for more than this one (1) month period. In the case of such termination (i) TiGenix will have a right to seek reimbursement for any sums paid under this Agreement or any claim for damages as a result of the termination of the Agreement or non-performance of the Services but shall account to the Supplier for any sums due under this Agreement in respect of Services performed up to and including the day of the Force Majeure Event and (ii) the Supplier will not have any right for any termination compensation or any other claim for damages as a result of the termination of the Agreement or non-performance of the Services.

 

19     APPLICABLE LAW, JURISDICTION AND DISPUTE RESOLUTION

 

This Agreement, including the construction, validity and performance of this Agreement shall be governed by the laws of the Netherlands. All disputes arising out of or in connection with this Agreement and any other agreement(s) shall be submitted to the competent court of Amsterdam.

 

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20     MISCELLANEOUS

 

20.1                   Insurance

 

Each Party as well as PharmaCell undertakes to maintain appropriate levels of insurance in commercially reasonable amounts (covering at least the liability referred to in Section 13.3) with financially capable carriers and/or through self-insurance programs as is customary in the pharmaceutical industry for the programs and activities to be conducted by it and/or as a result of the Services and shall maintain adequate levels of insurance to satisfy its respective obligations under this Agreement. Copies of certificates of insurance in effect on the Effective Date shall be exchanged between the Parties on the Effective Date; renewals or replacements of insurances shall be provided to either Party on the other Party’s request.

 

20.2                   Assignment

 

20.2.1           Without prejudice to Section 20.2.2, neither Party may assign (parts of) its rights under this Agreement to any Third Party without the prior written consent (which consent cannot be unreasonably withheld) of the other, except to Affiliates of the assigning Party, for as long as the assignee remains an Affiliate of the assigning Party.

 

20.2.2           As from the third anniversary of the Agreement, TiGenix is entitled to assign, subject to written notification to the Supplier, (parts of) its rights under this Agreement to any Third Party as part of a wider decision by TiGenix to transfer (by way of sale, license or otherwise) (part of) its ChondroCelect® business, unless the Supplier demonstrates that such Third Party would be unable to fulfil the obligations assigned to the Third Party. In case of such an event, the Supplier shall continue the performance of this Agreement towards the Third Party transferee, purchaser, assignee or licensee in substantially the same way as conducted prior to such notification.

 

20.3                   Entire Agreement

 

This Agreement, and the Schedules and documents referred to in it (including the Quality Technical Agreement), constitute the entire agreement and understanding of the Parties and supersede any previous agreement between the Parties relating to the subject matter of this Agreement. If there is any conflict, overlap or ambiguity between the operative provisions of this Agreement and the Quality Technical Agreement, then the relevant operative provisions of the Quality Technical Agreement shall to the extent relating to regulatory or quality issues prevail over the relevant provisions in this Agreement. If there is any conflict, overlap or ambiguity between the provisions of the body of this Agreement and the provisions of any of its Schedules (other than the Quality Technical Agreement), then the relevant provisions of the body of this Agreement shall prevail, unless the derogating provision of the Schedule makes an explicit reference to the provision of the body of this Agreement that is derogated from.

 

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20.4                   Severability

 

If any provision of this Agreement shall be found invalid or unenforceable, such invalidity or unenforceability shall not affect the other provisions of this Agreement which shall remain in full force and effect. The Parties agree to attempt to substitute to any invalid or unenforceable provision a valid or enforceable provision which achieves, to the greatest extent possible, the same effect as would have been achieved by the invalid or unenforceable provision.

 

20.5                   PR and communication

 

20.5.1           TiGenix may issue press releases regarding the conclusion or performance of the Agreement, provided that it, to the extent lawful and practicable, submits any draft press release to the Supplier for comment purposes prior to issuing the same and that it considers any Supplier’s reasonable comments in good faith (provided these were submitted within a reasonable period of time).

 

20.5.2           Any press release or public reference in relation to this Agreement contemplated by the Supplier must be reviewed and approved in writing (or by e-mail) by TiGenix prior to such press release or public reference (including as regards the wording and timing of such press release or reference), it being understood that TiGenix will agree to the issuance of a press release by the Supplier in relation to this Agreement within a period of maximum four (4) weeks after the Effective Date.

 

20.5.3           TiGenix shall be allowed, in the framework of its public relations, to conduct site visits with Third Parties of the parts of the Facility that are related to the rendering of the Services, with full support of the Supplier, subject to reasonable advance written (or e-mail) notice to the Supplier and provided that such visits shall not interfere with the activities of the Supplier. This also includes access and use by TiGenix and such third parties of meeting rooms and facilities at the Facility.

 

20.6                   No Partnership

 

Nothing in this Agreement is intended to or shall operate to create a partnership or joint venture of any kind between the Parties or to authorise either Party to act as agent for the other, and no Party shall have authority to act in the name or on behalf of or otherwise to bind the other in any way (including but not limited to the making of any representation or Warranty, the assumption of any obligation or liability and the exercise of any right or power).

 

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THIS AGREEMENT has been executed by or on behalf of the Parties in three (3) original copies

 

 

	
Signed on behalf of
    	
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TiGenix B.V.
    	
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by
    	
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Name :
    	
 
    	
 
    	
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Position :
    	
 
    	
 
    	
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Date:
    	
 
    	
 
    	
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Signed on behalf of
    	
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TiGenix NV
    	
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by
    	
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Name :
    	
 
    	
 
    	
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Position :
    	
 
    	
 
    	
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Date:
    	
 
    	
 
    	
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In the presence of

 

 

	
Signed on behalf of
    	
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PharmaCell B.V.
    	
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by
    	
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Name :
    	
 
    	
 
    	
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Position :
    	
 
    	
 
    	
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Date:
    	
 
    	
 
    	
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1.              SCHEDULE 1 —

 

TO THE AGREEMENT FOR THE MANUFACTURING OF CHONDROCELECT INFORMATION EXCHANGE PHASE

 

[***]

 

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SCHEDULE 2 TO THE AGREEMENT FOR THE MANUFACTURING OF CHONDROCELECT EFFECTIVE DATE 30 MAY 2014 
 CAPACITY RESERVATION AND FEES
  [***]

 

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SCHEDULE 3 — QUALITY TECHNICAL AGREEMENT

[***]

 

72

 

SCHEDULE 4 — QUALITY TECHNICAL AGREEMENT FOR THE

CONTRACT MANUFACTURE OF CHONDROCELECT

[***]

 

73

 

SCHEDULE 5 — SPECIFICATION

 

[***]

 

74

 

SCHEDULE 6 — MATERIALS

 

[***]

 

75

 

SCHEDULE 7 — LICENCED TECHNOLOGY

 

[***]

 

76

 

SCHEDULE 8 — DOCUMENTATION AND REPORTING

 

[***]

 

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Schedule 1.1.3: [***]

 

Schedule 3.2.5: [***]

 

Schedule 3.2.5(ii): [***]

 

Schedule 5.2.2: [***]

 

Schedule 6.2.2: [***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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Schedule 7.4: [***]

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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Schedule 9: Purchaser’s Representations

 

The Purchaser’s Representations set out in this Schedule are subject to the satisfaction of the conditions precedent set out in Clause 4.1 of the Agreement, which shall therefore limit their contents and scope.

 

(i)                                  This Agreement has been duly executed by the Purchaser and constitutes valid and binding obligations of the Purchaser, which are enforceable in accordance with its terms.

 

(ii)                               The Purchaser has taken all necessary corporate actions to approve or authorize, the entering into, and the execution and performance of this Agreement.

 

(iii)                            The execution and performance of this Agreement and the consummation of the transactions contemplated by this Agreement (a) do not violate any judgment applicable to the Purchaser or any agreement, obligation, or covenant to which the Purchaser is subject or a party, and/or (b) do not require the Purchaser to obtain any consent or approval from any public authority or other third party in connection with this Agreement, other than such approval and consent to which a specific reference is made in this Agreement or any such approval or consent which has been obtained and/or (c) will not, on Closing, conflict with, or result in any violation of the articles of association, by-laws or other corporate governance documents of the Purchaser.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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Schedule 10: Seller’s Representations

 

The Representations set out in this Schedule are subject to the matters referred to in Clause 10.3 of the Agreement (including the Data Room) and the satisfaction of the conditions precedent set out in Clause 4.1 of the Agreement, which shall therefore limit the contents and scope of the Representations.

 

1                                      Binding Effect of this Agreement

 

(i)                                  This Agreement has been duly executed by the Seller and constitutes valid and binding obligations of the Seller, which are enforceable in accordance with its terms.

 

(ii)                               The Seller has taken all necessary corporate actions to approve or authorize, the entering into, and the execution and performance of this Agreement.

 

(iii)                            The execution and performance of this Agreement and the consummation of the transactions contemplated by this Agreement (a) do not violate any judgment applicable to the Seller or any agreement, obligation, or covenant to which the Seller is subject or a party, and/or (b) do not require the Seller to obtain any consent or approval from any public authority or other third party in connection with this Agreement, other than such approval and consent to which a specific reference is made in this Agreement or any such approval or consent which has been obtained and/or (c) will not, on Closing, conflict with, or result in any violation of the articles of association, by-laws or other corporate governance documents of the Seller.

 

2                                      Corporate

 

2.1                            Existence and Organisation of the Target Company

 

(i)                                  The Target Company has been duly incorporated and is validly existing under the laws of the Netherlands.

 

(ii)                               The Shares constitute the whole share capital of the Target Company and have been fully paid up.

 

(iii)                            The Target Company has not been dissolved by any shareholders’ resolution or resolution of any other competent corporate body and no shareholders’ meeting or meeting of any other competent corporate body has been called for that purpose.

 

(iv)                           The Target Company has not been annulled or dissolved by any judicial decision. It has not been declared insolvent, bankrupt nor has it obtained a judicial restructuring.

 

2.2                            Ownership of and rights attached to the Shares

 

(i)                                  The Seller has full and exclusive ownership of the Shares.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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(ii)                               The Shares are free and clear of all pledges, security interests, usufructs or any other third party rights of any kind, except as provided for by law or the articles of association of the Target Company.

 

(iii)                            There are no restrictions affecting the rights attached to the Shares, other than those provided for by law or in the articles of association of the Target Company.

 

2.3                            Free Transferability of the Shares

 

Except as set out in the articles of association of the Target Company, the Shares are freely transferable and no shareholder or third party may exercise any right of first refusal in connection with the sale of the Shares to the Purchaser, or any call option on all or part of the Shares or any similar right.

 

3                                      Annual Accounts

 

(i)                                  The Annual Accounts were prepared in accordance with the law and regulations and generally accepted accounting principles of the Netherlands as applicable at the date as of which the Annual Accounts have been drawn up;

 

(ii)                               The Annual Accounts give a fair view of the assets, financial condition and results of the Target Company as per the date of the Annual Accounts;

 

(iii)                            The rate of depreciation adopted in the Annual Accounts is sufficient for each of the fixed assets of the Target Company to be written down to nil by the end of its expected useful life.

 

(iv)                           The stock of trade goods included in the Annual Accounts is valued on the basis of last known purchase prices.

 

(v)                              The method of valuing stock and the basis of depreciation and amortisation adopted in the Annual Accounts were the same as those adopted in the annual accounts for the two preceding financial years.

 

(vi)                           All dividends and distributions declared, made or paid by the Target Company at any time were, when declared, made or paid, in accordance with the requirements of general law and the articles of association of the Target Company.

 

4                                      Absence of Changes since the Date of the Annual Accounts 2012

 

Between the date of the Annual Accounts 2012 and the date of the Agreement:

 

(i)                                  the Target Company has not declared or paid any dividends or otherwise agreed to distribute any funds to any of its directors, shareholders or other securities holders;

 

(ii)                               the Target Company has not entered into any transaction or carried on any business outside the ordinary course of business;

 

(iii)                            the Target Company has not acquired or disposed of any material asset, except within the scope of its daily management or the ordinary course of business;

 

(iv)                           no unusual trade discounts or other unusual special terms have been incorporated into any contract entered into by the Target Company;

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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(v)                              in the Target Company there has been no material increase or decrease in the levels of debtors or creditors or in the average collection or payment periods for the debtors and creditors respectively;

 

(vi)                           the Target Company has not incurred borrowings or indebtedness other than intra-group borrowings or indebtedness vis-à-vis the Seller or its Affiliates and the Target Company has not entered into any agreement or arrangement which establishes any guarantee, indemnity, suretyship, form of comfort or support (whether or not legally binding) given by the Target Company in respect of the obligations or solvency of any third party;

 

(vii)                        there has been no interruption or alteration in the nature, scope or manner of the Target Company’s business which business has been carried out in the ordinary and usual course of business in accordance with past practice;

 

(viii)                     the Target Company has not dismissed any employee and the Target Company is under no contractual obligation to change the terms of service of any employee.

 

(ix)                           there has been no change to the Target Company’s accounting policies or valuation rules.

 

5                                      Assets

 

(i)                                  All of the assets owned by the Target Company are the sole, absolute property of the Target Company and there is not outstanding any Encumbrance over the whole or any part of assets owned by the Target Company.

 

(ii)                               Without prejudice to Clause 7.6, the assets of the Target Company and the facilities and services to which the Target Company has an ownership or contractual right include all rights, properties, assets, facilities and services necessary for the carrying on of the business of the Target Company in the manner in which it is carried on as per the date of this Agreement.

 

(iii)                            All the plant, machinery, equipment and vehicles used by the Target Company in the conduct of its business:

 

(a)                              are, subject to normal wear and tear, in a good and safe state of repair and condition, are in good working order and have been regularly and properly maintained in accordance with the appropriate and material technical specifications, material safety regulations and the material terms and conditions of any applicable agreement;

 

(b)                              are capable of performing properly the function for which they are currently used; and

 

(c)                               are, to the Sellers’ knowledge, not obsolete or in need of renewal or expected to require replacement or repair within the six months following the date of this Agreement save as in the ordinary course of business.

 

(iv)                           None of the plant, machinery, equipment and vehicles included in the Annual Accounts 2012 has been sold or disposed.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

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(v)                              The stock held by the Target Company is not excessive and is adequate in relation to the current trading requirements of the Target Company. None of that stock is obsolete, unusable, unmarketable or inappropriate to the current business of the Target Company and is all capable of being sold or used by the Target Company in the ordinary course of its business.

 

6                                      Taxes

 

(i)                                  The Target Company has filed with all competent Tax authorities all Tax returns and other documents that are required to be filed by it or to be made available in respect of all Taxes.

 

(ii)                               To the Seller’s knowledge, no audit or investigation with respect to Tax matters of the Target Company by any Tax authority is ongoing and the Seller has not been informed in writing by a Tax authority that it intends to conduct any such audit or investigation.

 

(iii)                            The Target Company is not a party to any agreement or arrangement with any Tax authority extending the period for the filing of any Tax return, or for the assessment or payment of any Taxes.

 

(iv)                           No dispute between the Target Company and the Tax authorities is ongoing.

 

(v)                              All Taxes which are due with respect to the Target Company have been timely paid or, where applicable, deducted, withheld or collected by it, except Taxes disputed in good faith and for which adequate reserves have been established.

 

7                                     Material Agreements

 

(i)                                  For the purposes of this Section 7 of this Schedule 10, an agreement shall be deemed to be a “Material Agreement” if (a) it involves a liability (of any nature whatsoever) for the Target Company in excess of twenty-five thousand euro (EUR 25,000) in aggregate, or (b) it is not capable of being terminated by the Target Company without compensation at any time with less than twelve (12) months’ notice.

 

(ii)                               To the Seller’s knowledge all Material Agreements are in full force and effect (subject to any applicable insolvency laws).

 

(iii)                            To the Seller’s knowledge, the Target Company has complied with the terms and conditions of the Material Agreements, except for such non-compliance that cannot reasonably be expected to have a material adverse effect on the Target Company.

 

(iv)                           The execution of and compliance with the terms of this Agreement will not conflict with or result in a breach of the terms of any existing agreement, arrangement or instrument binding on the Target Company, including the lease agreement of the facility.

 

8                                      Government Permits

 

(i)                                  The Target Company has obtained all material permits, licences, consents, approvals, registrations and authorisations that are required under any applicable 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

84

 

law to permit the Target Company to conduct its current business and to use its respective assets and property (the “Government Permits”). The Government Permits include at least:

 

·                                       the GMP certificate;

 

·                                       the manufacturing license (fabrikantenvergunning); and

 

·                                       the tissue establishment licence (erkenning als weefselinstelling).

 

(ii)                               The Target Company has not received any written notice from any public authority or other third party regarding any material violation of the terms of any Government Permit by the Target Company.

 

(iii)                            The Government Permits are in full force and effect, are not subject to any unusual conditions and have been complied with in all material respects.

 

(iv)                           To the Seller’s knowledge, as per the date of this Agreement there are no circumstances which indicate that any of the Government Permits will or are likely to be suspended, cancelled or revoked or not renewed, in whole or in part, in the ordinary course of events (whether as a result of the acquisition of the Shares by the Purchaser or otherwise).

 

(v)                              Since its incorporation, the Target Company has complied in all material respects with all applicable fire safety rules.

 

9                                      Environmental

 

(i)                                  For the purposes of this Section 9 of this Schedule 10:

 

“Environmental Laws” means all applicable laws, statutes and regulations concerning the protection of the environment or the generation, transportation, storage, treatment or disposal of Hazardous Substances.

 

“Hazardous Substance” means any natural or artificial substance which is likely to cause significant damage to the environment.

 

(ii)                               The Target Company has not received a written notice that it is in violation of any Environmental Laws.

 

(iii)                            The Target Company is not under the obligation to carry out any clean-up work or other remedial work with respect to any of the properties owned, leased or otherwise used by it.

 

10                               Properties

 

(i)                                  The Data Room contains a reference to all real property owned, leased or otherwise used by the Target Company.

 

(ii)                               The properties referred to in the Data Room are the only premises owned, controlled, used or occupied by the Target Company in connection with its existing business. There are no material disputes affecting any of such properties in which the Target Company is involved.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

85

 

11                               Employment Matters

 

For the purpose of Sections 11 and 12 of this Schedule 10 the following words and expressions shall have the following meanings:

 

“Employees” means the persons employed by the Target Company on the basis of an employment contract with the Target Company;

 

“Employment Law” means all and any laws relating to or connected with the employment of employees and/or their health and safety at work;

 

“Employed Person” means any past or present officer or employee of the Target Company, including any person who is on secondment overseas; and

 

“Pension Arrangements” means each of the pension, retirement gratuity and termination indemnity schemes, plans or arrangements set out in the Data Room under documents numbered 6.1.3 to and including 6.1.16 (including all sub-numbers in this range).

 

(i)                                  As per 16 January 2014, the Target Company has no Employees other than listed under document number 6.5.37 of the Data Room, which also contains an overview of the age, functions, salaries and date of commencement of employment of Employees of the Target Company.

 

(ii)                               The Data Room contains details of (a) all remuneration and emoluments (including any bonus or commission entitlements or study commitments or car lease) payable and any other benefits (including, for the avoidance of doubt, permanent health insurance) provided by the Target company or which the Target Company is bound to provide to all Employees, together with the terms on which such remuneration emoluments and benefits are payable; and (b) any other material terms and conditions of employment or engagement of such persons.

 

(iii)                            There is no dispute between the Target Company and any trade union, employees’ representatives body or other organisation formed for a similar purpose representing any Target Company employee existing or pending.

 

(iv)                           Save as set out in the Data Room, there is no collective agreement (other than national or industry wide collective agreements) or other arrangement to which the Target Company is a party. The Target Company does not have a works council.

 

(v)                              The Target Company has not been notified in writing of any pending governmental investigations relating to employment matters before or by any commission, inspection or other administrative or governmental authority involving the Target Company.

 

(vi)                           There are no pending or, to the Seller’s knowledge, threatened claims of any type against the Target Company by any existing or former Employees or directors of the Target Company or by any existing or former consultants of the Target Company. More specifically no claim has been made against the Target Company for:

 

(a)                              breach of any contract of employment with any of its employees;

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

86

 

(b)                              breach of a statutory employment right; or

 

(c)                               failure to comply with any order for the reinstatement or re-engagement of any of its current or former employees.

 

(vii)                        The Target Company has not breached any obligations imposed on it by Employment Law or any relevant collective agreements, recognition agreements and any employment contract applying to the Target Company, except for such non-compliance that cannot reasonably be expected to have a material adverse effect on the Target Company.

 

(viii)                     All bonus entitlement of the Employees over 2013, and earlier, accrued before the Closing Date are paid or will be paid by the Target Company prior to the Closing Date or will be provided for in the Closing Accounts.

 

(ix)                           As per the date of this Agreement, there are no Employees reported on long term illness leave (langdurig ziek) save as set forth under document numbers 6.5.24 and 6.5.37 of the Data Room.

 

(x)                              The Target Company is not involved in negotiations (whether with Employees or any trade union or other employees’ representatives) to vary the terms and conditions of employment or engagement of any of its Employees or consultants, nor has it made any representations, promises, offers or proposals to any of its Employees or consultants or to any trade union or other employees’ representatives concerning or affecting the terms and conditions of employment or engagement of any of its Employees or consultants.

 

(xi)                           The Target Company has not granted any incentive scheme, share option scheme (other than warrants issued by the Seller) or profit sharing or commission scheme to any of its Employees.

 

(xii)                        No Employee has resigned in the last three months preceding the date of this Agreement, nor has the Target Company received any notice of resignation from any Employee that has not expired on the date of this Agreement.

 

(xiii)                     The Target Company has discharged its obligations in full in relation to salary, wages, fees, commission, bonuses, overtime pay, holiday pay, sick pay and all other benefits and emoluments due and payable relating to its Employees, directors and consultants in respect of all periods preceding the date of this Agreement.

 

(xiv)                    As per the date of this Agreement no circumstances have arisen under which the Target Company is likely to be required to pay damages for wrongful dismissal or breach of contract, to make any contractual or statutory redundancy payment or make or pay any compensation in respect of unfair dismissal or to reinstate or re-engage any former Employee.

 

12                               Pensions

 

(i)                                  Other than any mandatory government or social security pension arrangements and the Pension Arrangements, there is no scheme, arrangement or agreement to 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

87

 

which the Target Company is a party or by which it is bound or under which it has an obligation or liability (whether actual, contingent or prospective) to contribute or to provide funding for the provision of life assurance, retirement, death, disability or other similar benefits (in the form of a pension, lump sum, gratuity or otherwise) in respect of any Employed Person.

 

(ii)                               Details of the estimates of all benefits payable or contingently payable in respect of all Employed Persons under each of the Pension Arrangements, including any augmentations of benefits and details of any additional undertakings with regard to the provision of such benefits, have been disclosed.

 

(iii)                            The Target Company has complied with its obligations under the governing documentation of the relevant Pension Arrangement, except for such non-compliance that cannot reasonably be expected to have a material adverse effect on the Target Company.

 

(iv)                           Each of the Pension Arrangements complies with and has at all times complied with the provisions of the relevant legislation and Tax requirements governing or applicable to that Pension Arrangement, except for such non-compliance that cannot reasonably be expected to have a material adverse effect on the Target Company.

 

(v)                              Each of the Pension Arrangements which are pre-funded (whether by means of a book reserve or otherwise) have been funded to the extent recommended by the relevant actuarial person appointed in respect of the Pension Arrangement.

 

(vi)                           All amounts due and payable in respect of each of the Pension Arrangements or to any insurance company or other relevant third party in connection with each of the Pension Arrangements have been paid.

 

13                               Insurance Policies

 

(i)                                  To the Seller’s knowledge, all insurance policies contracted by the Target Company are in full force and effect.

 

(ii)                               Without prejudice to Clause 7.5 of this Agreement, all material assets of an insurable nature owned by the Target Company on the Closing Date are adequately insured against fire and other risks customarily insured against by companies conducting a business similar to the business conducted by the Target Company.

 

(iii)                            No notification has been received with regard to the non-renewal of any insurance policy contracted by the Target Company or continuation or renewal on less favourable terms and conditions.

 

14                               Intellectual Property

 

(i)                                  For the purposes of this Section 14 “Intellectual Property” means all intellectual property rights, whether protected, created or arising under the laws of the Netherlands or any other jurisdiction anywhere in the world, including:

 

(a)                              patent registrations and applications;

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

88

 

(b)                              design registrations, unregistered design rights and design application;

 

(c)                               copyright registrations, non-registered copyrights and applications;

 

(d)                              registrations of and applications for trade names, trademarks, service names and service marks;

 

(e)                               technology; and

 

(f)                                domain names.

 

(ii)                               Except for the logos, names and any derivatives thereof referred to in Clause 14.6 of the Agreement, to the Seller’s knowledge, the Target Company owns or has the right to use all Intellectual Property currently used for the operation of its business.

 

(iii)                            To the Seller’s knowledge the Target Company has not received any formal notice alleging that it infringes any Intellectual Property rights of third parties in the course of its business.

 

15                               Litigation

 

To the Seller’s knowledge and except as claimant in the collection of debt arising in the ordinary course of business,  no material lawsuit, arbitration, administrative proceedings or other legal proceedings involving the Target Company is pending before any court, arbitral tribunal or any other competent authority.

 

16                               Information

 

(i)                                  The Data Room has been prepared by the Seller in good faith and the information contained in the Data Room is true and accurate.

 

(ii)                               To the Seller’s knowledge, on the date of this Agreement there is no fact that would be materially relevant to a professional and experienced person interested in purchasing the Shares, which has not been disclosed to the Purchaser in this Agreement, in the Data Room, or during the site visits, expert sessions or Q&A process and which, if it had been disclosed, can reasonably be expected to cause such person not to proceed with purchasing the Shares.

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

89

 

Schedule 14.4.5: Press Release

 

DRAFT — REGULATED INFORMATION

JANUARY XX, 2014

 

TiGenix to sell Dutch manufacturing

facility to PharmaCell

 

Leuven (BELGIUM) — January XX, 2014 — TiGenix (NYSE Euronext: TIG), a leader in the field of cell therapy, announced today that it has signed an agreement for the sale of its state-of-the-art Dutch production facility to PharmaCell B.V for a total consideration of EUR 5.75 million. PharmaCell, a leading European-based contract manufacturing organization active in the area of cell therapy and regenerative medicine, is to acquire the shares of TiGenix’s wholly owned subsidiary TiGenix B.V., which holds the Dutch manufacturing facility.

 

Under the terms of the agreement, TiGenix will receive an upfront payment of EUR 3.5 million when the sale becomes effective and a final payment of EUR 750,000 after three years. In addition, ChondroCelect will continue to be manufactured at the facility under a long-term manufacturing agreement, under the terms of which TiGenix will benefit from a cost relief of EUR 1.5 million during the first three years, the largest portion of which will fall in the first year.

 

The sale of TiGenix B.V. is expected to become effective in the coming months. Closing of the transaction is subject to confirmation by the relevant authority that TiGenix B.V. is authorized to produce other products than ChondroCelect, as well as confirmation in respect of the financing of the transaction by PharmaCell.

 

“The agreement with PharmaCell strengthens our balance sheet, reduces our organizational complexity and eliminates an important part of our fixed costs while keeping intact the continuity of our product supply,” said Eduardo Bravo, CEO of TiGenix. “We keep diligently delivering on our action plan and securing the means to be able to execute our strategy.”

 

In 2012, TiGenix’s state-of-the-art manufacturing facility in Sittard Geleen, the Netherlands, successfully passed cGMP inspection by the Dutch authorities, and obtained approval from the European Medicines Agency for the production of ChondroCelect, the company’s commercial cell therapy product for cartilage repair in the knee.

 

For more information:

 

	
Eduardo   Bravo
    	
Claudia   D’Augusta
    
	
Chief   Executive Officer
    	
Chief   Financial Officer
    
	
eduardo.bravo@tigenix.com
    	
claudia.daugusta@tigenix.com
    

 

Hans Herklots

Director Investor & Media Relations

hans.herklots@tigenix.com

+32 16 39 60 97

 

90

 

About TiGenix

 

TiGenix NV (NYSE Euronext Brussels: TIG) is a leading European cell therapy company with a marketed product for cartilage repair, ChondroCelect®, and a strong pipeline with clinical stage allogeneic adult stem cell programs for the treatment of autoimmune and inflammatory diseases. TiGenix is based out of Leuven (Belgium) and has operations in Madrid (Spain), and Sittard-Geleen (the Netherlands). For more information please visit www.tigenix.com.

 

Forward-looking information

 

This document may contain forward-looking statements and estimates with respect to the anticipated future performance of TiGenix and the market in which it operates. Certain of these statements, forecasts and estimates can be recognised by the use of words such as, without limitation, “believes”, “anticipates”, “expects”, “intends”, “plans”, “seeks”, “estimates”, “may”, “will” and “continue” and similar expressions. They include all matters that are not historical facts. Such statements, forecasts and estimates are based on various assumptions and assessments of known and unknown risks, uncertainties and other factors, which were deemed reasonable when made but may or may not prove to be correct. Actual events are difficult to predict and may depend upon factors that are beyond TiGenix’ control. Therefore, actual results, the financial condition, performance or achievements of TiGenix, or industry results, may turn out to be materially different from any future results, performance or achievements expressed or implied by such statements, forecasts and estimates. Given these uncertainties, no representations are made as to the accuracy or fairness of such forward-looking statements, forecasts and estimates. Furthermore, forward-looking statements, forecasts and estimates only speak as of the date of the publication of this document. TiGenix disclaims any obligation to update any such forward-looking statement, forecast or estimates to reflect any change in TiGenix’ expectations with regard thereto, or any change in events, conditions or circumstances on which any such statement, forecast or estimate is based, except to the extent required by Belgian law.

 

91

 

Schedule 14.6.2: Logos

 

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

92

 

Table of Contents

 

	
1
    	
Definitions   and Interpretation
    	
2
    
	
 
    	
 
    	
 
    
	
1.1
    	
Definitions
    	
2
    
	
1.2
    	
Interpretation
    	
5
    
	
 
    	
 
    	
 
    
	
2
    	
Sale and   Purchase
    	
6
    
	
 
    	
 
    	
 
    
	
2.1
    	
The   Shares
    	
6
    
	
 
    	
 
    	
 
    
	
3
    	
Purchase Price
    	
7
    
	
 
    	
 
    	
 
    
	
3.1
    	
Aggregate   Amount of the Purchase Price
    	
7
    
	
3.2
    	
Post-Closing   Purchase Price Adjustment
    	
7
    
	
3.3
    	
Payment   of the Purchase Price
    	
11
    
	
3.4
    	
Bank   guarantee
    	
12
    
	
 
    	
 
    	
 
    
	
4
    	
Conditions   Precedent
    	
12
    
	
 
    	
 
    	
 
    
	
4.1
    	
General   Principles
    	
12
    
	
4.2
    	
Best   Efforts concerning the Satisfaction of the Conditions Precedent
    	
12
    
	
4.3
    	
Non-Satisfaction
    	
13
    
	
 
    	
 
    	
 
    
	
5
    	
Closing
    	
13
    
	
 
    	
 
    	
 
    
	
5.1
    	
Date and   Place
    	
13
    
	
5.2
    	
Seller’s   Closing Obligations
    	
13
    
	
5.3
    	
Purchaser’s   Closing Obligations
    	
14
    
	
5.4
    	
Waiver   of Closing Obligations
    	
14
    
	
5.5
    	
Breach   of Closing Obligations
    	
14
    
	
 
    	
 
    	
 
    
	
6
    	
Undertakings   of all Parties prior to or at the Closing Date
    	
15
    
	
 
    	
 
    	
 
    
	
6.1
    	
Filings   with Public Authorities
    	
15
    
	
6.2
    	
Other   Agreements
    	
15
    
	
 
    	
 
    	
 
    
	
7
    	
Undertakings   of the Seller prior to or at the Closing Date
    	
16
    
	
 
    	
 
    	
 
    
	
7.1
    	
Collaboration
    	
16
    
	
7.2
    	
Operation   of the Business
    	
16
    
	
7.3
    	
Restrictions   on the Seller and the Target Company
    	
16
    
	
7.4
    	
Directors’   Resignation
    	
17
    
	
7.5
    	
Replacement   of insurance coverage
    	
17
    
	
7.6
    	
Intra-group   services
    	
17
    
	
7.7
    	
Intragroup   indebtedness
    	
18
    
	
7.8
    	
Release   of guarantees
    	
18
    
	
7.9
    	
Annual   Accounts 2013
    	
18
    
	
 
    	
 
    	
 
    
	
8
    	
Undertakings   of the Purchaser prior to or at the Closing Date
    	
18
    
	
 
    	
 
    	
 
    
	
8.1
    	
General   Meeting of the Target Company
    	
18
    
	
8.2
    	
Release   of Seller’s Guarantee for the benefit of [***]
    	
18
    

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

93

 

	
9
    	
Purchaser’s   Representations
    	
18
    
	
 
    	
 
    	
 
    
	
10
    	
Seller’s Representations
    	
19
    
	
 
    	
 
    	
 
    
	
10.1
    	
General   Principles
    	
19
    
	
10.2
    	
Non Conformity
    	
19
    
	
10.3
    	
Seller’s Disclosures
    	
19
    
	
10.4
    	
Updating   of Representations to Closing
    	
21
    
	
10.5
    	
Purchaser’s   Knowledge of certain Matters
    	
21
    
	
10.6
    	
Notification   by the Purchaser of Breaches of Representations
    	
21
    
	
 
    	
 
    	
 
    
	
11
    	
Indemnification
    	
22
    
	
 
    	
 
    	
 
    
	
11.1
    	
General   Principle
    	
22
    
	
11.2
    	
Double Claims
    	
22
    
	
11.3
    	
Nature   of any Payment to the Purchaser
    	
22
    
	
11.4
    	
No   Assignment of Indemnification Rights to any Subsequent Transferee of the   Shares
    	
22
    
	
11.5
    	
Specific   Indemnities
    	
22
    
	
 
    	
 
    	
 
    
	
12
    	
Limitation of   Seller’s Liability
    	
23
    
	
 
    	
 
    	
 
    
	
12.1
    	
Time   Limitations
    	
23
    
	
12.2
    	
Minimum   Claims
    	
24
    
	
12.3
    	
Aggregate   Minimum Claims
    	
24
    
	
12.4
    	
Maximum   Liability
    	
24
    
	
12.5
    	
Contingent   Liabilities
    	
24
    
	
12.6
    	
Adjustment of the Purchase   Price
    	
24
    
	
12.7
    	
Tax   Savings arising from the Losses
    	
25
    
	
12.8
    	
Insurance   Proceeds and Other Recoveries from Third Parties
    	
25
    
	
12.9
    	
Matters   Arising Subsequent to this Agreement
    	
26
    
	
12.10
    	
Fraud
    	
26
    
	
12.11
    	
Mitigation   of Losses
    	
26
    
	
 
    	
 
    	
 
    
	
13
    	
Claims by the   Purchaser
    	
27
    
	
 
    	
 
    	
 
    
	
13.1
    	
Notification   of Claims
    	
27
    
	
13.2
    	
Third   Party Claims
    	
27
    
	
13.3
    	
Seller’s   Access to the Target Company
    	
28
    
	
13.4
    	
Notification   of Seller’s Objections
    	
29
    
	
13.5
    	
Disagreement   on a Claim
    	
29
    
	
13.6
    	
Payment   by the Seller
    	
29
    
	
 
    	
 
    	
 
    
	
14
    	
Undertakings   of the Parties Extending after the Closing Date
    	
29
    
	
 
    	
 
    	
 
    
	
14.1
    	
Payment   of Intra-group Indebtedness by the Target Company
    	
29
    
	
14.2
    	
Payment   of the Second Tranche
    	
29
    
	
14.3
    	
Further   Assurances
    	
30
    
	
14.4
    	
Confidentiality   and Announcements
    	
30
    
	
14.5
    	
Tax Returns regarding   Pre-Closing Date Tax Return Periods
    	
31
    
	
14.6
    	
Use of   the name “TiGenix”
    	
31
    
	
14.7
    	
Standstill
    	
32
    
	
14.8
    	
Reorganisation
    	
32
    

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

94

 

	
15
    	
Termination
    	
32
    
	
 
    	
 
    	
 
    
	
15.1
    	
Termination Events
    	
32
    
	
15.2
    	
Consequences   of a Failure to Terminate this Agreement
    	
32
    
	
15.3
    	
Effect   of Termination
    	
33
    
	
 
    	
 
    	
 
    
	
16
    	
Miscellaneous
    	
33
    
	
 
    	
 
    	
 
    
	
16.1
    	
Rights   and Remedies of the Parties
    	
33
    
	
16.2
    	
Amendments   and Waivers
    	
33
    
	
16.3
    	
Notices
    	
33
    
	
16.4
    	
Interest   on Overdue Amounts
    	
35
    
	
16.5
    	
Assignment   of Rights and Obligations — Third Party Rights
    	
35
    
	
16.6
    	
Expenses
    	
35
    
	
16.7
    	
Dutch   Notary
    	
35
    
	
16.8
    	
Severability
    	
36
    
	
16.9
    	
Entire   Agreement
    	
36
    
	
16.10
    	
Waiver   of Rescission, Nullification and Amendment
    	
36
    
	
16.11
    	
Governing   Law
    	
36
    
	
16.12
    	
Jurisdiction
    	
36
    
	
16.13
    	
Counterparts
    	
37
    
	
16.14
    	
Proxy to   initial the Agreement and the Schedules
    	
37
    
	
 
    	
 
    	
 
    
	
Index of Schedules
    	
38
    
	
 
    	
 
    
	
Schedule 1.1.1(i): Closing Date Intra-Group   Indebtedness
    	
39
    
	
 
    	
 
    
	
Schedule 1.1.1(ii): Closing Date Working Capital
    	
39
    
	
 
    	
 
    
	
Schedule 1.1.3: Definition of Seller’s Knowledge (list of   persons)
    	
78
    
	
 
    	
 
    
	
Schedule 7.4: Form of Resignation Letter
    	
79
    
	
 
    	
 
    
	
Schedule 9: Purchaser’s Representations
    	
80
    
	
 
    	
 
    
	
Schedule 10: Seller’s Representations
    	
81
    
	
 
    	
 
    	
 
    
	
1
    	
Binding Effect   of this Agreement
    	
81
    
	
 
    	
 
    	
 
    
	
2
    	
Corporate
    	
81
    
	
 
    	
 
    	
 
    
	
2.1
    	
Existence   and Organisation of the Target Company
    	
81
    
	
2.2
    	
Ownership   of and rights attached to the Shares
    	
81
    
	
2.3
    	
Free   Transferability of the Shares
    	
82
    

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

95

 

	
3
    	
Annual   Accounts
    	
82
    
	
 
    	
 
    	
 
    
	
4
    	
Absence of   Changes since the Date of the Annual Accounts 2012
    	
82
    
	
 
    	
 
    	
 
    
	
5
    	
Assets
    	
83
    
	
 
    	
 
    	
 
    
	
6
    	
Taxes
    	
84
    
	
 
    	
 
    	
 
    
	
7
    	
Material   Agreements
    	
84
    
	
 
    	
 
    	
 
    
	
8
    	
Government Permits
    	
84
    
	
 
    	
 
    	
 
    
	
9
    	
Environmental
    	
85
    
	
 
    	
 
    	
 
    
	
10
    	
Properties
    	
85
    
	
 
    	
 
    	
 
    
	
11
    	
Employment   Matters
    	
86
    
	
 
    	
 
    	
 
    
	
12
    	
Pensions
    	
87
    
	
 
    	
 
    	
 
    
	
13
    	
Insurance   Policies
    	
88
    
	
 
    	
 
    	
 
    
	
14
    	
Intellectual   Property
    	
88
    
	
 
    	
 
    	
 
    
	
15
    	
Litigation
    	
89
    
	
 
    	
 
    	
 
    
	
16
    	
Information
    	
89
    
	
 
    	
 
    	
 
    
	
Schedule 14.6.2: Logos
    	
92
    
	
 
    	
 
    
	
Table of Contents
    	
93
    

 

[***] Certain information has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to omitted portions.

 

96

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