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DEVELOPMENT AND MANUFACTURING AGREEMENT

Manufacturing Agreement

DEVELOPMENT AND MANUFACTURING AGREEMENT | Document Parties: DRAGON PHARMACEUTICAL INC You are currently viewing:
This Manufacturing Agreement involves

DRAGON PHARMACEUTICAL INC

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Title: DEVELOPMENT AND MANUFACTURING AGREEMENT
Governing Law: Florida     Date: 3/2/2005
Industry: Biotechnology and Drugs     Law Firm: Ferskos LLC,     Sector: Healthcare

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                                                                   Exhibit 10.20

                                                               Portions redacted

                                     * Certain information on this page has been

                                        omitted and filed separately with the

                                       Securities and Exchange Commission.

                                       Confidential treatment has been requested

                                        with respect to the omitted portions.

 

                     DEVELOPMENT AND MANUFACTURING AGREEMENT

 

THIS AGREEMENT is made as of October 31, 2003.

 

BETWEEN:

 

     Dragon Pharmaceutical, Inc., a corporation duly incorporated under the laws

     of the state of Florida,   USA,   having an office at 1900-1055 West Hastings

     St., Vancouver,   British Colombia, Canada, and duly licensed to do business

     there.

 

     ("Dragon")

 

AND:

 

     Polymun   Scientific   lmmunbiologische   Forschung   GmbH, a corporation   duly

     incorporated under the laws of the Republic of Austria having its principal

     place of business at Nussdorfer Laende 11, 1190 Vienna,   Austria,   and duly

     licensed to do business there.

 

     ("Polymun")

 

WHEREAS:

 

(A)   Dragon   does   not   presently    have   either   the    technical    Know-How   or

manufacturing capacity for manufacturing   therapeutic cytokines for European and

international markets, and has commercial interest in developing both technology

and capacity that will enable it to do so.

 

(B)   Polymun   has   both   technical   Know-How   and   manufacturing    capacity   for

development and manufacture of therapeutic biopharmaceuticals.

 

NOW THEREFORE,   in furtherance of and in   consideration   of the premises and the

mutual covenants,   terms and conditions   contained herein and for other good and

valuable consideration,   the receipt and adequacy of which are acknowledged, the

Parties hereby agree as follows:

 

                                     PART 1

                         DEFINITIONS AND INTERPRETATION

 

Definitions

 

1.1   In this Agreement, except as otherwise expressly provided or as the context

otherwise requires:

 

     (a) "Additional Taxes" has the meaning as set out in Section 3.2(b).

 

     (b)   "Affiliate(s)"   means any entity that directly or indirectly   owns, is

     owned by or is under   common   ownership   with,   a Party to this   Agreement,

     where "Own" or "Ownership" means direct or indirect   possession of at least

     fifty percent (50%) of the outstanding   voting   securities of a corporation

     or a comparable ownership in any other type of entity,  

 

                                       1

<PAGE>

 

     PROVIDED, HOWEVER, that if the law of the jurisdiction in which such entity

     operates does not allow fifty percent (50%) or greater ownership by a Party

     to this Agreement,   such ownership interest shall be the direct or indirect

     ownership   by a Party of the maximum   amount   permitted   by the law of such

     jurisdiction of outstanding voting securities of such entity.

 

     (c)   "Business   Information"   means any and all   information   belonging   to

     either Party concerning the methods of manufacturing   EPO, as well as steps

     taken for its subsequent commercialization.

 

     (d) "CGMP" means current good manufacturing   practices as determined by and

     promulgated as guidance by the   International   Conference on   Harmonization

     (ICH).

 

     (e) "CHO" has the meaning as set out in Section 2.1(a).

 

     (f) "CMC" has the meaning as set out in Section 2.3(a).

 

     (g)   "Commercial   EPO   Availability   Date"   means   the   date   when   Polymun

     successfully produces the * * * consistent batch of EPO at industrial scale

     and under CGMP conditions.

 

     (h)   "Commercially   Reasonable   Efforts"   shall mean efforts and   resources

     commonly used in the   pharmaceutical   industry,   taking into   consideration

     safety and efficacy,   cost of   development,   availability of funds to carry

     out operations,   the relative competitive   positions of parties as a result

     of   alternative    products,    proprietary    positions)   the   likelihood   of

     regulatory   approval   and all other   relevant   factors   that go into making

     reasonable, informed business decisions.

 

     (i) "Confidential Information" has the meaning as set out in Section 5.1.

 

     (j) "EPO" means recombinant human erythropoietin, in bulk purified form.

 

     (k) "Exclusive License" has the meaning as set out in Section 2.1(b).

 

     (1)   "Exclusive   Period"   means the period from   signing of this   Agreement

     until the end of the first 3-year period   subsequent to the   Commercial EPO

     Availability   Date,   during which Dragon is granted the   Exclusive   License

     under Section 2.1.

 

     (m) "Financial Information" means any and all information concerning costs,

     prices,   royalties,   payments and any other commercial information relevant

     in the context of this Agreement.

 

     (n) "FOB" has the meaning as set out in Section 3.2(a).

 

     (o) "Improvement," as used in this Agreement, refers to an improvement that

     is new, useful and unobvious over the subject matter of the first patent.

 

     (p)   "Know-How"   shall   mean any and all   technical,   scientific   and other

     Know-How and   information,   Trade Secrets,   knowledge,   technology,   means,

     methods, processes, practices, formulae, instructions,   skills, techniques,

     procedures,   experiences,   ideas, technical assistance,   designs, drawings,

     assembly procedures, computer programs apparatuses,   specifications,   data,

     results   and   other   material,    including   clinical   data,   patient   data,

     improvements and/or Technical Information.

 

  * * * CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

 

                                        2

<PAGE>

 

     (q) "Licensed Cell Line" has the meaning as set out in Section 2.1(a).

 

     (r) "Licensed   Intellectual Properly" has the meaning as set out in Section

     2.1 (b).

 

     (s) "Manufacturing Orders" has the meaning as set out in Section 3.4.

 

     (t) "Market Area" means all countries of the world excluding only * * *.

 

     (u) "Master   Cell Bank" or "MCB"   means a   collection   of vials   containing

     copies of the Licensed Cell Line.

 

     (v) "3-Month-Period" has the meaning as set out in Section 3.6.

 

     (w) "Most Favored Pricing" is the euro price per gram, subject to the terms

     and conditions set forth in Annex C hereto and made a part hereof.

 

     (x) "Net Sales"   means the invoice   price,   net of sales tax   discount   and

     rebate,   of EPO   products   made   incorporating   or   developed   by using the

     Licensed   Intellectual   Property   sold by Dragon or its   Affiliates   to any

     party in the Market   Area.   A sale to an   Affiliate   that is an end-user is

     included   in   the   ambit   of Net   Sales.   Notwithstanding   anything   to the

     contrary,   no   deduction   against   the   invoice   price   shall be given   for

     commission, stocking allowance or marketing and promotional expenses.

 

     (y) "Non-Competition List" has the meaning as set out in Section 5.11(a).

 

     (z) "Non-Exclusive License" has the meaning as set out in Section 2.3(a).

 

     (aa) "Non-Exclusive Period" means the four (4) year period after the expiry

     of the Exclusive   Period,   during which Dragon is granted the Non-Exclusive

     License under Section 2.1.

 

     (bb) "Non-Signers" has the meaning as set out in Section 5.8.

 

     (cc) "Notice" has the meaning as set out in Section 9.9.

 

     (dd)   "Party" or   "Parties"   refers to either   Dragon or Polymun or both as

     required by the context.

 

     (ee) "Prior Agreement" has the meaning as set out in Section 5.9.

 

     (ff) "Process" has the meaning as set out in Section 8.3.

 

     (gg) "Product   Specifications" means the minimum passing specifications for

     EPO in   bulk   purified   form as   described   in the   European   Pharmacopoeia

     version 4.2, * * *.

 

     (hh) "Reasonable Efforts," as used herein, means a lower standard than that

     of Commercially Reasonable Efforts, but it implies that Parties will try to

     do what is necessary to comply with the provisions of this Agreement   where

     such a standard is called for and in no way act in an unreasonable fashion.

 

     (ii) "Recipient(s)" has the meaning as set out in Section 5.2.

 

 

  * * * CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

 

                                       3

<PAGE>

 

     (jj) "Royalty   Reporting Period" has the meaning set out in Annex B Section

     2.

 

     (kk) "Scope of Work" has the meaning set out in Section 7 .3(b).

 

     (ll) "Semi.Exclusive   License" has the meaning set out in Annex B Section 1

     (a).

 

     (mm) "Technical   Information"   means any and all   information   relevant for

     CHO-technology platform as used to manufacture EPO.

 

     (nn) "Term" has the meaning as set out in Section 7 .1.

 

     (oo) "Trade Secrets" means that secret compilation (the secrecy of which is

     guarded by Polymun) of   information   that Polymun has to develop a CHO cell

     line suitably   transfected with the human   erythropoietin   gene and adapted

     for use in cell culture for the manufacture of EPO in industrial quantities

     and   enables   the    optimization    of   both   cell   culture   and   downstream

     purification   processes for the   manufacture of EPO. But for the grant of a

     license to use the Trade Secrets,   it would take an immense amount of time,

     effort and money for others to   innocently   acquire   the   information   that

     gives Polymun an advantage   over   competitors   who do not possess the Trade

     Secrets.

 

     (pp) "Transferred Technology" has the meaning as set out in Section 2.4(a).

 

     (qq)   "Therapeutically   Equivalent   Recombinant Proteins" means recombinant

     proteins   having    molecular    structure,    bio-activity,    and   method   of

     manufacture   significantly   similar   to   like   innovator   recombinant   drug

     products currently under patent and marketed by other companies.

 

Interpretation

 

1.2   In this Agreement, except as otherwise expressly provided or as the context

otherwise requires,

 

     (a) "this Agreement" means this agreement as from time to time supplemented

     or   amended   by   one   or   more   agreements   entered   into   pursuant   to the

     applicable provisions of this Agreement,

 

     (b) a reference   to a "Part" is to a Part of this   Agreement,   and the word

     "Section"   followed by a number or some   combination of numbers and letters

     refers to the section, paragraph, subparagraph, clause or subclause of this

     Agreement so designated,

 

     (c) headings are solely for   convenience   of reference and are not intended

     to be   complete   or   accurate   descriptions   of   content or to be guides to

     interpretation of this Agreement or any part of it)

 

     (d) an   accounting   term   not   otherwise   defined   herein   has the   meaning

     assigned to it, and every   calculation   to be made hereunder is to be made,

     in accordance ,with accounting   principles generally accepted in the United

     States applied on a consistent basis,

 

     (e) a reference to currency means European Union Euros,

 

                                      5

<PAGE>

 

     (f) a reference to a statute includes all regulations made thereunder,   all

     amendments to the statute or   regulations   in force from time to time,   and

     every statute or regulation that   supplements or supersedes such statute or

     regulations unless otherwise indicated,

 

     (g) a reference to an entity includes any successor to that entity, whether

     by   merger,   acquisition,   or any other   means by which the   entity   may be

     succeeded by another

 

     (h) a word importing the masculine gender includes the feminine and neuter,

     a word in the singular   includes the plural,   a word   importing a corporate

     entity includes an individual, and vice versa, and

 

     (i) a reference to "approval",   "authorization"   or "consent" means written

     approval, authorization or consent.

 

                                     PART 2

                                   SCOPE OF WORK

 

2.1   Development of EPO Cell Line and downstream process by Polymun and Dragon

 

     (a)   Subject   to the   terms   of   this   Agreement,   Polymun   undertakes   the

     development of a Chinese Hamster Ovary (CHO) cell line suitably transfected

     with the human   erythropoietin gene and adapted for use in cell culture for

     the manufacture of EPO in industrial quantities (the "Licensed Cell Line").

     This   Licensed   Cell   Line   shall   be   developed   in   compliance   with   ICH

     guidelines   for cell substrate   safety.   This Licensed Cell Line as well as

     associated    manufacturing    processes   shall   be   clearly   and   distinctly

     different   from any previous   cell line   developed by Polymun for any other

     client,   and in that respect it is not subject to any claim of ownership by

     any third party in   connection   with making,   using,   selling,   offering to

     sell, importing and/or exporting EPO.

 

     (b) Polymun hereby grants to Dragon an exclusive,   royalty bearing license,

     to the   Licensed   Cell   Line,   Know-How,   Technical   Information   and Trade

     Secrets   associated   with   the cell   culture   and   downstream   purification

     processes for EPO (the   "Licensed   Intellectual   Property")   to make,   use,

     sell, offer to sell, import and/or export EPO in the Market Area during the

     Exclusive period ("Exclusive License").   At the expiration of the Exclusive

     Period   Polymun   hereby   grants   Dragon   a   non-exclusive   license   for the

     Non-Exclusive   period   subject   to   the   terms   and   conditions   set   forth

     hereinafter   to the   Licensed   Intellectual   Property   (the   "Non-Exclusive

     License").   During the Non-Exclusive Period, Polymun grants Dragon the Most

     Favored   Pricing   and   Polymun   agrees   to   abide   by   the   non-competition

     provisions set forth in Sections 5.10, 5.11 and 5.12.

 

     (c) Polymun   will develop and   optimize   both cell   culture and   downstream

     purification   processes for the manufacture of EPO. Polymun shall integrate

     selected   technical staff from Dragon or its Affiliates into the process of

     optimizing and finalizing the downstream purification process and establish

     a manufacturing   technology in a bioreactor   scale of up to * * * in volume

     that    shall   be    satisfactory    to    fulfil    the    following    technical

     specifications:

 

          (i)   Manufacture   not less than * * * EPO per litre of raw supernatant

          using   Polymun's    proprietary   low   cost   serum-free    cultivation   &

          production medium.

 

  * * * CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

 

                                       5

<PAGE>

 

 

          (ii) Apply a downstream   processing   procedure for purification of raw

          supernatant   leading   to a yield of not less than * * */litre   of bulk

          purified EPO meeting or surpassing Product Specifications.

 

          (iii)   Transfer   to Dragon   not less than * * * of bulk   purified   EPO

          manufactured during the pilot manufacture process.

 

     (d) Dragon will pay Polymun for development   work milestones has undertaken

     according to the schedule set forth in Annex A, within   thirty (30) days of

     having been   informed by Polymun that the milestone has been met and Dragon

     has informed   Polymun in writing   that the   milestone   is   acceptable,   and

     acknowledges that it satisfies the criteria stated in the Agreement. Dragon

     shall have the right to audit   records and   inspect the work and   determine

     completion   to its   satisfaction   prior to its   acceptance of the milestone

     being met.   Payment   will be by wire   transfer   to   accounts   specified   by

     Polymun.

 

     (e) Upon   Polymun's   receipt of all the   milestone   payment as per Annex A,

     Dragon may use the Licensed Cell Line for   manufacturing   directly executed

     by   Dragon   and   its   Affiliates   using   its own   cell   culture   media   and

     processes.   Polymun will also make available any and all Licensed Cell Line

     development   documentation   needed for regulatory filings to any regulatory

     body to which Dragon may apply for registration of EPO.

 

2.2   Polymun to manufacture EPO for Dragon

 

     (a) During the Term of this   Agreement,   Polymun shall   manufacture EPO for

     Dragon   in   Polymun's   Austrian-certified   facilities   in   accordance   with

     Section 2 of this   Agreement.   Polymun will   manufacture the BPO under CGMP

     conditions   and bear the costs of batch   releases,   tests and   assays to be

     undertaken in accordance with the Product Specifications.

 

     For and in consideration   of Dragon entering into this Agreement)   Dragon's

     price per gram is in accordance   with the terms and conditions set forth in

     Annex C.

 

     (b) During the Term of this   Agreement,   Polymun   shall   reserve and Dragon

     shall purchase CGMP manufacturing   capacity to manufacture a minimum of * *

     * grams   and a   maximum   of * * * grams   of bulk   purified   EPO per year in

      ccordance with the Product Specifications in the Agreement.

 

     (c) During the Exclusive Period of the Term of this Agreement, Dragon shall

     have the exclusive right to be supplied by Polymun, in the Market Area with

     EPO which   will be used by Dragon in   accordance   with the   rights   granted

     hercunder   in the Market   Area.   Dragon   agrees that it will   purchase   the

     minimum   quantities   of EPO   manufactured   by Polymun for Dragon during the

     Exclusive Period and Non Exclusive Period as follows:

 

          -     * * * of EPO for the first twelve (12)-month after the Commercial

               EPO Availability Date,

 

          -     * * *    of   EPO   for   the   second   twelve   (12)-month   after   the

               Commercial EPO Availability Date,

 

          -     * * * of EPO for the third twelve (12) month after the Commercial

               EPO Availability Date.

 

    

       * * * CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE

                                  COMMISSION.

 

                                       6

<PAGE>

 

          -     * * * grams   of EPO for   each   year of the   Non-exclusive   Period

               until its expiry.

 

     (d) During the Non-Exclusive Period of the Term of this Agreement,   Polymun

     is free to sell and market   its EPO to any   customers   in the Market   Area,

     other   than * * * subject   to the terms and   conditions   set forth   herein,

     including    but   not   limited   to,   the   Most    Favored    Pricing   and   the

     non-competition clause in Section 5 of this Agreement.

 

2.3   Polymun to provide documentation and technical advice to Dragon

 

     (a) Polymun will provide   Dragon with all   necessary   documentation   in its

     custody   and   control   required   by   regulatory   authorities   in a chemical

     manufacturing   controls (CMC)   documentation   for the   registration   of the

     Licensed Cell Line and the associated   EPO. No obligation is established to

     provide data with respect to toxicology,   experiences in human   application

     or any other   data   beyond the   ICH-specifications.   In the event that this

     documentation contains information proprietary to Polymun, such information

     shall be transmitted at Dragon's request to relevant regulatory authorities

     for   submission as a "closed   part" of a submission   for   registration   and

     approval.   Costs for   provision   of this   documentation   are to be borne by

     Polymun.

 

     (b) Polymun,   by virtue of its prior   experience   of   developing   drugs and

     biological   products   from   recombinant   proteins,   will   provide   advisory

     assistance   to   Dragon   during   the   time   Polymun   is   developing   the EPO

     manufactured at its own facilities. Such advisory assistance shall apply to

     issues of outsourcing of tests and assays for protein   characterization and

     preclinical studies. Polymun will provide this advice at no cost to Dragon,

     PROVIDED,   HOWEVER,   it will do so on a basis whereby   Polymun's   qualified

     expert staff members do not encounter disruption of their normal duties.

 

2.4   Transfer of Technology from Polymun to Dragon

 

     (a) Subject to the   conditions   set forth in Annex B,   Dragon,   in its sole

     discretion, can pay Polymun, as specified in Annex B, to transfer to Dragon

     the   Polymun-developed   cell   culture   and   downstream   processes   for   the

     manufacture   of EPO with the   Licensed   Cell   Line for   manufacture   in any

     facility designated by Dragon ("Transferred Technology"). Polymun agrees to

     render   any   and   all   assistance   necessary   in   the   localization   of the

     Transferred   Technology   in   the   Dragon-designated    facility,    PROVIDED,

     HOWEVER,   Dragon   pays   Polymun's   fees   and   expenses   for   rendering   the

     aforesaid    assistance,    should    Polymun's    fees   and   expenses    exceed

     (euro)200,000 (TWO HUNDRED THOUSAND EUROS) in the case of Dragon's exercise

     rights described in Annex B:1.(a) or (euro)50,000 (FIFTY THOUSAND EUROS) in

     the case of Dragon's exercise of rights described in Annex B:1.(b). Polymun

     shall   advise   Dragon   of the   amount   of these   fees in   writing   within a

     reasonable   time after   Polymun's fees and/or   expenses   exceed the amounts

     enumerated   above and Dragon shall remit   payment to Polymun   within thirty

     (30) days.

 

     (b) Limitation on Dragon's usage of Polymun technology and its products

 

          (i) If Dragon obtains the   Transferred   Technology in accordance   with

          Section 2.4(a),   immediately preceding this section, it is agreed that

          Dragon will not make, use, offer to sell,   sell,   import and/or export

          the Transferred   Technology in, to, or from * * *. With this exception

          Dragon's rights pertaining to the Transferred   Technology apply in the

          remainder of the Market Area.

 

 

  * * * CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

 

                                       7

<PAGE>

 

2.5   Both parties to share unilaterally developed information

 

      (a) Polymun will, under the provisions set forth in Section 2.1 through 2.4

     disclose   to Dragon all   improvements   and/or   developments   to the process

     applicable   to   the   Licensed   Cell   Line,    cell   culture   and   downstream

     purification process for manufacturing and/or producing EPO. The results of

     such technology   Improvements   will be immediately   disclosed to Dragon and

     made   available   for its use at no cost,   however,   these   will be owned by

     Polymun and its   Affiliates and Dragon agrees that it will not transfer any

     such Improvements and/or developments to any third parties.

 

     (b) Dragon acknowledges   Polymun's intent to sell certain amounts of EPO in

     * * * and will   support   this   effort   by   providing   any   data   concerning

     preclinical and clinical   development of the EPO into a therapeutic drug to

     * * * regulatory   authorities   via Polymun.   Subject to this Section 2.5(b)

     this information otherwise remains Dragon's exclusive property.

 

2.6   Option of First Information

 

     (a)   Polymun   hereby   grants to   Dragon   an   option   to obtain   information

     pertinent to the making, using, offering to sell, selling, importing and/or

     exporting and subsequent   commercialization   of additional   Therapeutically

     Equivalent Recombinant Proteins,   subject to obligations of confidentiality

     imposed   upon   Polymun   by   third    parties,    if   any.    Such    subsequent

     commercialization   shall   be the   subject   of a   separate   development   and

     manufacturing agreement.

 

2.7   Nothing   in this   Agreement   confers   on Dragon   any   additional   interest,

license,   or right in respect of either the   Licensed   Cell Line or the Licensed

Intellectual   Property,   other than as set out in Sections   2.1 through 2.6, and

Annexes A-C.

 

                                     PART 3

                           PRICING, ORDERS AND PAYMENT

 

Price of EPO Manufactured by Polymun for Dragon

 

3.1   Polymun will sell the   manufactured   EPO to Dragon at the prices set out in

Annex C, such prices to be in effect for the entire seven (7)-year period of the

agreement.

 

3.2   (a) Prices are FOB (* * * International Airport) exclusive of sales tax and

import duties, or any other taxes and duties now existing or hereinafter imposed

by national   authorities or those of any political   subdivision thereof upon the

sale of EPO by   Polymun to   Dragon,   which are to be paid by Dragon,   along with

costs of transportation and insurance to cover the risk of loss.

 

3.2   (b)   Prices as set forth in Annex C are also   exclusive   of   customs   fees,

excise   and   sales   taxes   in the   importing   country,   and   other   taxes in the

importing   country in the nature of a sales tax,   now   existing   or   hereinafter

imposed by national   authorities or those of any political   subdivision   thereof

upon the sale of EPO by Polymun   to Dragon.   In the event any such fee or tax is

imposed on, or assessed against, Polymun as a result of the sale and delivery of

EPO hereunder,   (the "Additional Taxes"),   Polymun shall separately itemize such

Additional Taxes on the applicable   invoices and Dragon shall pay the Additional

Taxes within thirty (30) days after receiving such invoices from Polymun.

 

 

 

* * * CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

 

                                       8

<PAGE>

 

3.3   Notwithstanding   any change in the EPO pricing set out in Annex C, no price

change   will   effect the price of any EPO for which a   Manufacturing   Order,   as

defined in Section 3.4 hereinafter, has been issued and accepted.

 

Manufacturing Orders

 

3.4   Dragon will   prepare   Manufacturing   Orders for all EPO and each such order

will   specify the   quantity of EPO and any other   information   that either Party

considers necessary   ("Manufacturing   Orders"). Such Manufacturing Orders cannot

be amended without the consent of Dragon.

 

3.5   Polymun will acknowledge receipt of all Manufacturing Orders by a facsimile

sent within five   business days after   receipt of the   Manufacturing   Order from

Dragon.

 

Delivery Times

 

3.6   Polymun   will   start   the   production   of EPO   within a   3-month   period of

receiving a Manufacturing Order from Dragon (the "3-Month-Period").   Thereafter,

depending   upon   Polymun's   available   capacity,    it   will   at   minimum   fulfil

Manufacturing   Orders   received   from   Dragon up to the   first * * * within   six

(6)-months   from the   3-Month-Period   and within   12-months   for any   additional

amount over * * *, not to exceed * * *. If Polymun is able to deliver the EPO in

a shorter period of time than specified in the   Manufacturing   Order,   PROVIDED,

the Manufacturing Order takes the foregoing time periods into consideration,   it

will notify Dragon of such earlier delivery date.

 

3.7   Notwithstanding   Section   3.6,   if Polymun   for any   reason   canno meet the

delivery times in a   Manufacturing   Order, it will notify Dragon of the expected

delivery date when it confirms the Manufacturing   Order pursuant to Section 3.5.

Upon receipt of Polymun's notice of the expected   delivery date,   Dragon may, on

notice   delivered to Polymun   within five business   days of Dragon's   receipt of

Polymun's   confirmation of the Manufacturing   Order,   withdraw the Manufacturing

Order.   If the   Manufacturing   Order is not   withdrawn,   the   delivery   times in

Section   3.6 will be   deemed   to be   amended   to the   time set out in   Polymun's

confirmation of the Manufacturing Order.

 

Payment

 

3.8   Dragon will make full payment for EPO shipped to it by Polymun on or before

sixty (60) days after the date of shipment   provided   that   Dragon has   received

from Polymun the following documents:

 

         (a)    Polymun's detailed invoice;

 

         (b)    customs' invoice;

 

         (c)    air way


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