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Manufacturing Agreement

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GENEREX BIOTECHNOLOGY CORP | GENEREX BIOTECHNOLOGY CORPORATION

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Title: MANUFACTURING AND SUPPLY AGREEMENT
Date: 12/11/2009
Industry: Biotechnology and Drugs     Sector: Healthcare

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REDACTED – AS FILED

Exhibit 10.2

 

THE MARKED PORTIONS OF THIS AMENDMENT HAVE BEEN OMITTED

AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO

A REQUEST FOR CONFIDENTIAL TREATMENT


 

RECOMBINANT HUMAN INSULIN ACTIVE INGREDIENT

 

MANUFACTURING AND SUPPLY AGREEMENT

 

BETWEEN

 

GENEREX BIOTECHNOLOGY CORPORATION

 

AND

 

SANOFI-AVENTIS DEUTSCHLAND GMBH

 

DATED : NOVEMBER 24, 2009

 

 


 

 

TABLE OF CONTENTS

 

Article

 

Title

 

Page

 

 

 

 

 

1

 

Definitions

 

1

2

 

Manufacture, Sale and Purchase of Active Ingredient

 

5

3

 

Coordinators

 

6

4

 

Packaging

 

6

5

 

Specification Changes

 

7

6

 

Forecasts and Orders

 

8

7

 

Registration of the Product

 

9

8

 

Deliveries; Inspections

 

9

9

 

Price; Price Adjustments; Payment Terms

 

11

10

 

SAD’s Representations, Warranties and Covenants

 

11

11

 

General Representations and Warranties

 

12

12

 

Term; Termination

 

13

13

 

Claims; Recalls

 

15

14

 

Indemnification

 

17

15

 

Insurance

 

18

16

 

Limitation of Liability

 

18

17

 

Confidentiality

 

19

18

 

Ownership of Property

 

20

19

 

Intentionally omitted.

 

20

20

 

Cooperation with Governmental Requirements

 

20

21

 

Force Majeure

 

20

22

 

Independent Contractors

 

21

23

 

Further Actions

 

21

24

  

Miscellaneous

  

21

 

TABLE OF SCHEDULES

 

Exhibit

 

Title

 

 

 

1

 

Territories:  Exclusive

1A

 

Territories:  Non-Exclusive

2

 

Active Ingredient Prices

3

 

Packaging Specifications

4

 

Active Ingredient Specifications

5

 

Minimum Purchase Commitments

6

  

In-Vitro Physio-Chemical Characterizations

 


 

MANUFACTURING AND SUPPLY AGREEMENT

PAGE i

  

 


 

  

 

REDACTED – AS FILED

Exhibit 10.2

 

THE MARKED PORTIONS OF THIS AMENDMENT HAVE BEEN OMITTED

AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO

A REQUEST FOR CONFIDENTIAL TREATMENT


 

RECOMBINANT HUMAN INSULIN ACTIVE INGREDIENT

 

MANUFACTURING AND SUPPLY  AGREEMENT

 

(RECOMBINANT HUMAN INSULIN COMMERCIAL QUANTITIES)

 

            THIS MANUFACTURING AND SUPPLY AGREEMENT (the “ Agreement ”) is made effective as of November 24, 2009 (the “ Effective Date ”) between:

 

generex biotechnology corporation, a Delaware corporation having a place of business at 33 Harbour Square, Suite 202, Toronto, Ontario, Canada M5J 2G2 (“ Generex ”); and

 

Sanofi-Aventis Deutschland GmbH , a company existing under the laws of Germany, located at Industriepark Hoechst, 65926 Frankfurt am Main, Germany (  “SAD” ).

 

Generex and SAD are individually referred to herein as a “ Party ” and are collectively referred to herein as the “ Parties ”.

 

Background

 

           A.           Generex wishes to engage SAD to perform services for Generex, as more specifically set forth herein, in connection with the manufacturing and supply of Active Ingredient for use in the Product.

 

           B.           SAD wishes to perform such services subject to the terms and conditions set forth in this Agreement.

 

Covenants

 

           In consideration of the mutual covenants and promises set forth herein, and intending to be legally bound hereby, the Parties agree as follows:

 

ARTICLE 1

DEFINITIONS

 

           The following terms, whether used in the singular or plural, shall have the meanings assigned to them below for purposes of this Agreement:

 

           “ Acquisition Cost ” shall mean the actual invoiced price actually paid by SAD to any Third Party for materials, components and packaging materials required to manufacture and package the Active Ingredient hereunder, including, but not limited to, shipping and handling costs, taxes and customs duties incurred and paid by SAD to any Third Party in connection with the acquisition of such materials and components, as the case may be.

 


 

MANUFACTURING AND SUPPLY AGREEMENT

PAGE 1

 

 


 

 

           “ Active Ingredient ” shall mean Recombinant Human Insulin as manufactured by SAD in accordance with the Active Ingredient Specifications, for use in the Product.

 

           “ Active Ingredient Price(s) ” shall have the meaning set forth in Article 9 hereof.

 

           “ Active Ingredient Specifications ” shall mean the specifications for the Active Ingredient attached hereto as Exhibit 4 and made a part hereof, as determined in accordance with the analytical methodology set forth therein, as such specifications may be amended from time to time by mutual agreement of the Parties in accordance with the terms and conditions of the Quality Agreement.

 

           “ Affiliate ” shall mean any corporation or non-corporate entity which controls, is controlled by, or is under common control with a Party.  A corporation or non-corporate entity shall be regarded as in control of another corporation if it owns or directly or indirectly controls at least fifty percent (50%) of the voting stock of the other corporation or (a) in the absence of the ownership of at least fifty percent (50%) of the voting stock of a corporation or (b) in the case of a non-corporate entity, the power to direct or cause the direction of the management and policies of such corporation or non-corporate entity, as applicable.

 

           “ Agreement ” shall mean this Manufacturing and Supply Agreement, as it may hereafter be amended or supplemented from time to time in accordance with the terms hereof.

 

            “ [REDACTED] ” shall have the meaning set forth in Section 2.4 hereof.

 

cGMPs ” shall mean applicable standards for current good manufacturing practices of active ingredients specified in (i) the ICH Guidelines, and (ii) the FDA’s “Guidance for Industry Q7A Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients”.  For clarity, such definition of cGMPs shall not include other country-specific regulatory requirements.

 

Certificate of Analysis ” shall mean a document, signed by an authorized representative of SAD, certifying the Specifications for, and testing methods applied to, the Active Ingredient, and the results thereof, and which includes the Active Ingredient date of manufacture, date for re-testing or expiration date as appropriate.

 

Certificate of GMP Compliance ” shall mean a document, signed by an authorized representative of SAD, certifying that the Active Ingredient being delivered to Generex has been manufactured in conformity with cGMPs.

 


 

MANUFACTURING AND SUPPLY AGREEMENT

PAGE 2

   

 


 

 

           “ Confidential Information ” shall mean, as the case may be, any and all information, relating to the Active Ingredient, of a confidential nature not known to the public or to the recipient of the information before its disclosure belonging to either Party in written, electronic or any other form. This includes, but is not limited to, Know-How, operational methods, formulae, samples, Specifications, analytical methods as well as any details of commercial, technical, pharmaceutical, scientific and industrial nature. The terms of this Agreement shall also be deemed Confidential Information.  Confidential Information shall not include information, materials, technical data or know-how which: (i) is in a receiving Party’s possession at the time of disclosure as evidenced by the receiving Party’s written records immediately prior to the time of disclosure; (ii) is in the public domain at the time of disclosure; (iii) becomes part of the public domain by publication or otherwise after disclosure hereunder other than by breach of this Agreement by a receiving Party; (iv) is disclosed to a receiving Party by a third party having the right to disclose such information without any violation of any rights of or obligations to the disclosing Party; or (v) is independently developed by an employee or agent of a receiving Party without knowledge of the disclosing Party’s Confidential Information as evidenced by the receiving Party’s written records.

 

           “ Contract Year ” shall mean a twelve (12) month period during the Term, beginning with January 1 and ending on December 31, except that the first “Contract Year” shall be understood to be from November 1, 2009 through December 31, 2009 and the last “Contract Year” for the initial Term shall be understood to run from January 1, 2016 through October 31, 2016..

 

           “ Coordinators ” shall have the meaning set forth in Article 3 hereof.

 

FDA ” shall mean the United States Food and Drug Administration or any successor entity thereto.

 

FDCA ” shall mean the Federal Food, Drug and Cosmetic Act (21 U.S.C. §  et seq. ), as the same may be amended from time to time, together with any rules and regulations promulgated thereunder, and any foreign counterpart.

 

Forecast ” shall have the meaning set forth in Section 6.1 hereof.

 

           “ Force Majeure Event ” shall have the meaning set forth in Section 21.1 hereof.

 

           “ ICH Guidelines ” shall mean the document titled “Q7A - Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients” endorsed by the International Conference on Harmonization of Technical Requirements for Registrations of Pharmaceuticals for human use.

 

           “ Initial Term ” shall have the meaning set forth in Section 12.1 hereof.

 

           “ Invention ” shall mean information relating to any innovation, improvement, development, discovery, computer program, device, trade secret, method, know-how, process, technique or the like, whether or not written or otherwise fixed in any form or medium, regardless of the media on which contained and whether or not patentable or copyrightable.

 

Know-How ” shall mean all confidential and identified technical and scientific information and data, irrespective of its subject-matter and form, including, but not limited to, processes, formulae, designs and data as well as Inventions and improvements whether patentable or not.

 


 

MANUFACTURING AND SUPPLY AGREEMENT

PAGE 3

 

 


 

 

Minimum Purchase Commitments ” shall have the meaning set forth in Section 2.2 hereof.

 

           “ Packaging Specifications ” shall mean the packaging and labeling specifications for the Active Ingredient attached hereto as Exhibit 3 and made a part hereof, as such specifications may be amended from time to time by mutual agreement of the Parties in accordance with the terms and conditions of the Quality Agreement.

 

Product ” shall mean Generex’s proprietary “Generex Oral-lyn™” product, formulated as a buccal insulin spray device containing a proprietary formulation that includes the Active Ingredient, marketed by Generex (or its licensee(s)) under the registered trademark “GENEREX ORAL-LYN” (or otherwise).

 

Production Site ” or “ Production Sites ” shall mean (i) the active pharmaceutical ingredient facility owned by SAD or an Affiliate of SAD (both directly or indirectly under the control of Sanofi-Aventis, SA, the French parent company) located at Industriepark Hoechst, 65926, Frankfurt am Main, Germany, and (ii) such other facilities owned by SAD or an Affiliate of SAD, if any, as the Parties may mutually agree to in writing from time to time.

 

           “ Quality Agreement ” shall mean the Quality Agreement which the parties shall in good faith negotiate and execute within thirty (30) days after the execution of this Agreement, and which shall be made part hereof.

 

           “ Recall ” shall have the meaning set forth in Section 13.2(a) hereof.

 

           “ Regulatory Change ” shall have the meaning set forth in Section 21.2 hereof.

 

           “ Renewal Term ” shall have the meaning set forth in Section 12.1 hereof.

 

           “ Specifications ” shall mean the Active Ingredient Specifications and the Packaging Specifications.

 

           “ Term ” shall have the meaning set forth in Section 12.1 hereof.

 

Territory ” shall mean, collectively, those territories set forth on Exhibit 1 and Exhibit 1A  attached hereto.

 

Third Party ” shall mean any person or entity other than Generex, SAD and their respective Affiliates.

 

           “ Third Party Claims ” shall have the meaning set forth in Section 14.1 hereof.

 

Third Party Offer ” shall be a third party’s documented offer for the sale of recombinant human insulin to Generex for commercial production of the Product.

 


 

MANUFACTURING AND SUPPLY AGREEMENT

PAGE 4

 

 


 

 

           “ USA ” shall mean the United States of America, including its territories and possessions.

 

ARTICLE 2

MANUFACTURE, SALE AND PURCHASE OF ACTIVE INGREDIENT

 

2.1            Generally .  Subject to the terms and conditions of this Agreement, SAD shall manufacture and supply to Generex and Generex shall purchase from SAD, the Active Ingredient during the Term of this Agreement for the Territory and as specified in Section 2.2 below.


 

           2.2            Purchase Commitments .  Generex shall observe and perform the minimum purchase commitments specified and defined in Exhibit 5 hereto (the “ Minimum Purchase Commitments ”) from the Effective Date through December 31, 2011.  SAD shall be the exclusive supplier of Active Ingredient to Generex during such period and thereafter through the Term of this Agreement for those territories listed in Exhibit 1, and as a non-exclusive supplier of Active Ingredient to Generex for those territories listed in Exhibit 1A, unless otherwise agreed to be mutual agreement of the parties or in accordance with the terms of this Agreement.    

 

2.3            Quality Agreement . The Parties shall comply in all respects with their obligations under the Quality Agreement.

 

           2.4            Capacity .  Under no circumstances shall SAD be obliged to accept orders or deliver the Active Ingredient in quantities which, in the aggregate, are in [REDACTED] . Starting January 1, 2012 and thereafter, should Generex’s rolling forecast(s) (as outlined in Article 6 below), be in [REDACTED] , the parties shall discuss such forecast(s) and SAD shall have the right, at its sole discretion, to deny or accept such [REDACTED] forecast(s) or other terms discussed by the parties as set forth above.  Should SAD elect not to supply the [REDACTED] , Generex shall have the right to purchase Active Ingredient from another supplier but only to the extent to obtain the quantities in the forecast not provided by SAD. 

 

2.5            Suppliers .  SAD shall have the discretion to determine sources and suppliers for all materials and components used in the manufacture of the Active Ingredient, subject to Article 5 hereof.

 

2.6            First Right of Refusal .

 

(a) During the Term, Generex will not accept any Third Party Offer or enter into any arrangement pursuant to which Generex agrees to purchase the Active Ingredient from a Third Party on an exclusive basis for Product to be sold in [REDACTED] without first giving SAD a first right to refuse to exclusively supply Active Ingredient to Generex for Product to be sold in [REDACTED] on substantially the same terms as the Third Party Offer without material variance.

 

(b)           Upon receipt by Generex of a bona fide Third Party Offer that Generex is prepared to accept, Generex shall apprise SAD in writing of the terms of the Third Party Offer.

 


 

MANUFACTURING AND SUPPLY AGREEMENT

PAGE 5

 

 


 

 

(c)           SAD will have a period of thirty (30) days to from the date of delivery of the Third Party Offer to deliver to Generex an offer in writing (the “ SAD Offer ”) to sell Active Ingredient to Generex on an exclusive basis for Product to be sold in [REDACTED] upon the same terms as are contained in the Third Party Offer, which SAD Offer shall be deemed accepted by Generex once received by Generex.  Failure to deliver the SAD Offer shall be deemed to be a waiver by SAD indicating declination to exercise the first right of refusal set forth herein.  The parties shall execute an amendment to this Agreement which shall reflect the SAD Offer and relevant terms related thereto.

 

(d)           If SAD fails to submit the SAD Offer, Generex will be entitled, for a period of six (6) months after the expiry of the time provided for delivery of the SAD Offer, to execute and deliver contractual documentation formalizing the Third Party Offer with such Third Party on and subject to the terms contained in the Third Party Offer without material variance.

 

ARTICLE 3

COORDINATORS

 

           Within ten (10) days after the Effective Date, Generex and SAD shall each appoint one or more authorized representatives (“ Coordinators ”) for the exchange of all communications, other than formal notices hereunder, related to the manufacture and supply the Active Ingredient. Each Party shall provide notice to the other Party as to the name and title of the individuals so appointed. Each Party may replace its Coordinators at any time for any reason by providing written notice to the other Party in accordance with Section 24.1 hereof.

 

ARTICLE 4

PACKAGING

 

           SAD shall procure all packaging materials and components for, and shall package, the Active Ingredient in accordance with the Packaging Specifications as set forth in Exhibit 3 attached hereto.  Typical packaging materials and components are described in the Drug Master File in respect of the Active Ingredient and the use thereof is supported by extant stability data.

 


 

MANUFACTURING AND SUPPLY AGREEMENT

PAGE 6

 

 


 

 

ARTICLE 5

SPECIFICATION CHANGES

 

Upon any change in the Active Ingredient Specifications or Packaging Specifications requested by Generex (“Generex Specification Changes”), including the addition of new packaging configurations, Generex shall promptly advise SAD in writing of any requested Generex Specification Changes, and SAD shall promptly advise Generex as to the feasibility of the Generex Specification Changes, and if in SAD’s reasonably exercised discretion, the Generex Specification Changes are found to be commercially reasonable and feasible, SAD will inform Generex of any scheduling and/or price adjustments which may result from the Generex Specification Changes.    Prior to implementation of Generex Specification Changes, the Parties shall negotiate in good faith in an attempt to reach agreement on (a) the new Active Ingredient Price for any Active Ingredient which embodies the Generex Specification Changes, (b) any amounts to be reimbursed by Generex to SAD as described in the next sentence of this paragraph, and (c) any other amendments to this Agreement which may be necessitated by the Generex Specification Changes (i.e., an adjustment to the lead time for purchase orders). Generex shall reimburse SAD for the mutually agreed upon reasonable expenses incurred by S AD as a result of the Generex Specification Changes, including, but not limited to, reimbursing SAD for its mutually agreed validation and development costs, capital expenditure costs and costs for any reasonable inventory of packaging components or other materials maintained by SAD for purposes of this Agreement and consistent with any then-current Forecast, and rendered unusable as a result of the Generex Specification Changes.  If during the Term, Generex, in accordance with this Article 5, causes the amendment of the Active Ingredient Specifications or Packaging Specifications so as to render obsolete reasonable quantities of the Active Ingredient and/or materials and components used to manufacture and package the Active Ingredient pursuant to this Agreement on hand at SAD, Generex shall purchase from SAD (i) all such obsolete Active Ingredient at the Active Ingredient Prices then in effect, (ii) all work-in-progress of the Active Ingredient at SAD’s actual cost thereof, and (iii) at SAD’s Acquisition Cost, all such obsolete materials and components obtained by SAD pursuant to its normal procurement policies to manufacture quantities of the Active Ingredient pursuant to Generex’ forecasts under Section 6.1.  SAD’s normal procurement policies for purposes of the preceding sentence of this Article 5 shall be considered to be quantities of materials and components corresponding to the following six (6) months of Generex’s forecasted Active Ingredient demand.  For greater certainty, the foregoing provisions of this Article 5 shall not apply in respect of any change in the Active Ingredient Specifications or Packaging Specifications made by SAD other than pursuant to a Generex request.  SAD shall provide Generex with not less than six (6) months’ prior written notice of SAD’s implementation of any intended significant change(s) to its manufacturing processes for the Active Ingredient, which might affect the quality of the Active Ingredient (“Change Notice”) (e.g. Any change in the Active Ingredient Specifications or Packaging Specifications made by SAD other than pursuant to a Generex request).  If a significant change implemented by SAD and Generex provides SAD with demonstrable evidence that the utility (i.e. the conditions of being useful as a pharmaceutical product in connection with the manufacture and performance of the Product) of the Active Ingredient is significantly altered in that there is no similar bioequivalence (to Active Ingredient before the significant change) or similar Product specifications when formulated in the final Product formulation (together, “Utility Loss”), the parties shall exert their best commercial efforts to resolve issues related to the Utility Loss in order to continue operating under this Agreement.  If the parties cannot reach agreement and resolution regarding Utility Loss Generex shall have the option to provide sixty (60) days written notice of termination of this Agreement to SAD.

 


 

MANUFACTURING AND SUPPLY AGREEMENT

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ARTICLE 6

FORECASTS AND ORDERS

 

           6.1            Communication of Forecasts and Purchase Orders by Generex .

 

Generex shall by the end of each calendar quarter (commencing with the calendar quarter ending December 31, 2009) provide SAD with its non-binding forecast of its Active Ingredient requirements for the succeeding twelve (12) calendar months (each a “Forecast”).  Generex shall provide firm and binding Active Ingredient purchase orders for 100% of the Q1 and Q2 amounts in each Forecast, 75% of the Q3 amounts in each Forecast, and 50% of the Q4 amounts in each Forecast. In addition, Generex shall furnish SAD with a non-binding rolling forecast of its Active Ingredient requirements for a subsequent twelve (12) month period (for a total of twenty-four (24) months). Generex shall make its commercially reasonable efforts to provide forecasts at least eighteen (18) months in advance for annual orders that will [REDACTED] . Generex shall use its commercially reasonable efforts to provide accurate Forecasts.  Forecasts and SAD obligations to supply are subject to [REDACTED] set forth in Section 2.4 above.

 

Generex shall place with SAD firm purchase orders not later than three (3) months prior to the desired delivery date.

 

For purchase orders less than or equal to nine (9) kilograms, the minimum quantity in such purchase order shall not be less than three (3) kilograms.  For quantities from ten (10) kilograms up to and including one hundred (100) kilograms, the minimum quantity in such purchase order shall not be less than ten (10) kilograms and multiples of ten (10) thereafter.  For quantities greater than one hundred (100) kilograms, Generex shall order full batches.  Under no circumstances shall SAD be obliged to accept purchase orders or deliver the Active Ingredient pursuant thereto in quantities smaller than the minimum order quantities set out above.

 

6.2            Confirmation by SAD ; Order Confirmation .  No later than fifteen (15) business days after receipt of Generex’s purchase orders, SAD shall confirm that it can fulfill the monthly quantities specified in such orders, and shall confirm for each relevant portion of such monthly quantities the expected delivery date within the month specified.

 

6.3            Additional Quantities .   If the purchase order quantities are in excess of the Forecast quantities by more than twenty five percent (25%), then SAD shall use commercially reasonable efforts to manufacture and supply the excess quantities up to [REDACTED] , with the express understanding that any failure or delay in the delivery of such excess amounts shall not subject SAD to any penalties or other liabilities.  Unless otherwise agreed to by SAD before such orders [REDACTED] were placed, SAD, at its sole discretion, may elect whether or not to manufacture and supply the excess quantities [REDACTED] for such orders, subject to the terms set out in Section 2.4 above and otherwise set forth in this Agreement.

 

6.4            Long-Term Planning Forecasts .  Within one month after the first day of each Contract Year (Y), Generex will supply SAD with a written four (4) year non-binding rolling forecast reflecting Generex’s projected annual Active Ingredient demand for the four (4) Contract Years (Y+1) to (Y+4) following the Contract Year in which such planning forecast is provided to SAD. Such planning forecasts shall represent Generex’s most current estimates for planning purposes only, and shall not be considered to be purchase commitments.

 


 

MANUFACTURING AND SUPPLY AGREEMENT

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ARTICLE 7

REGISTRATION OF THE PRODUCT

 

7.1            General . Generex shall diligently use good faith commercially reasonable efforts to receive necessary governmental approvals which allow the sale of Product in all territories which comprise the Territory for the Product.

 

7.2            Cooperation of the Parties .  The Parties shall diligently cooperate in good faith to conduct the registration activities required for Product Approval (such Product containing SAD provided Active Ingredient) approval by the regulatory agencies in the countries in the Territory or any countries the Parties contemplate adding to the Territory for the Product containing the Active Ingredient, which costs (i.e.; registration fees) shall be paid solely by Generex. For this purpose, SAD will provide Generex with a letter of reference to its Drug Master File in respect of the Active Ingredient as submitted to the FDA and other relevant governmental regulatory authorities for the Term.   In addition, SAD shall provide the specific regulatory agency within a particular territory with a copy of open parts of the Drug Master Files with respect to the Active Ingredient, as submitted to the regulatory agencies of the respective territories comprising the Territory.  For clarification, under no circumstance is SAD required to provide any information, data, or other material which SAD, in good faith and at SAD’s sole discretion, determines is proprietary or deemed to be the closed parts of the Drug Master File, and by not providing such information, data or other materials, SAD is not in violation of the terms outlined herein and in this Agreement; provided, however, that in the event that Generex is unable to procure Product approval in any territory in the Territory as a consequence of SAD’s failure to provide such information, data or other materials related to the Active Ingredient, then this Agreement shall be deemed to be amended by deleting such territory (and, by extension, any Minimum Purchase Commitments in respect of such territory) from Exhibit 1 or Exhibit 1A annexed hereto (such that such territory will no longer be included in the Territory).

 

ARTICLE 8

DELIVERIES; INSPECTIONS

 

           8.1            Purchase Quantities . SAD will use commercially reasonably efforts to ship the quantities specified in a particular monthly purchase order.  Should it be anticipated that there will be a quantity variation (between what is available for shipment and what is outlined in a purchase order) above or below five percent (5%), the parties shall negotiate in good faith on the actual quantity to be shipped.  Variations in shipments as outlined herein shall be deemed to be in compliance with such purchase order; provided , however , that Generex shall only be invoiced and required to pay for the quantities of Active Ingredient which SAD actually ships to Generex.  It is understood and accepted by Generex that quantities shipped are subject to the Packaging Specifications set out in Exhibit 3 hereto.

 

           8.2            Active Ingredient Release .  No Active Ingredient shall be released to Generex without a Certificate of Analysis and Certificate of GMP Compliance, both of which shall be supplied to Generex by SAD.  SAD shall conduct such quality assurance testing for the Active Ingredient as is required by the Specifications, cGMPs and the Quality Agreement.  SAD shall conduct in parallel on-going stability studies of the Active Ingredients.

 


 

MANUFACTURING AND SUPPLY AGREEMENT

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           8.3            Delivery Terms . Shipment of the Active Ingredient will be to one location as designated by Generex.  Generex will select and pay the carrier to be used.  The Active Ingredient will be shipped with the requisite Certificates of Analysis and Certificate of cGMP Compliance FCA Production Site (Incoterms 2000), freight class, Class 70 (Class of Commodity for Food and Pharmaceutical Compound).  Loading of the Active Ingredient shall be performed at no cost by SAD, but under the responsibility and liability of Generex.  All shipments of the Active Ingredient to Generex shall be made via such carrier(s) as Generex may direct.  Title and risk of loss shall pass to Generex upon delivery to the carrier.  Freight charges shall be billed ship collect.

 

           8.4            Shipping; Dating and Customs Costs .  SAD shall make commercially reasonable efforts to cause Active Ingredient delivered hereunder to have eighteen (18) months until expiration, but in any event, SAD shall deliver Active Ingredient hereunder with at least twelve (12) months until expiration.  For clarity, costs for the shipment of Active Ingredient from the Production Site and all customs tariffs and duties shall be for the account of Generex.

 

           8.5            Inconsistencies . In the event of any inconsistencies between the terms of this Agreement and any purchase order issued by Generex hereunder or any acceptance thereof by SAD, the terms of this Agreement shall govern.

 

           8.6            Inspections by Generex .  Upon reasonable prior written notice, the single Generex designated agent which is reasonably agreed to by SAD, together with up to two (2) Generex employees, shall have the right to inspect those portions of the manufacturing, storage and warehouse facilities of a Production Site where Active Ingredient is being manufactured or stored, during regular business hours, to verify compliance with the terms and provisions of this Agreement or for insurance inspection purposes.  Unless for reasonable cause, Generex agrees to not inspect a Production Site more often than one (1) time in three (3) calendar years.

 

           8.7            Governmental Inspections .  If SAD is notified that the Active Ingredient or the Production Site will be subject to an inspection, related to the Active Ingredient, by any governmental authority for a particular territory listed in Exhibit 1 or 1A, SAD shall promptly inform Generex of such inspection and shall cooperate with and allow such inspection to the extent required by applicable laws.  Generex shall not have the right to be present at any meetings or events related to such inspection.  Subject to being excluded due to restrictions under confidentiality obligations of SAD to Third Parties, and to SAD’s determination that particular information and/or documentation is confidential in nature, SAD shall provide information related to inspection outcomes to Generex resulting from such inspection to the extent relevant to the Active Ingredient.  SAD will promptly inform Generex whether any Form FDA 483 or warning letters or citations are issued to SAD (by the FDA or any other governmental authority for a particular territory listed in Exhibit 1 or Exhibit 1A) which are related to or impact the supply of the Active Ingredient.

 


 

MANUFACTURING AND SUPPLY AGREEMENT

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ARTICLE 9

PRICE; PRICE ADJUSTMENTS; PAYMENT TERMS

 

           9.1            Price .  The per-kilogram price(s) payable by Generex for all quantities of the Active Ingredient ordered hereunder (the “ A ctive Ingredient Price(s)”) shall be as specified in the pricing schedule in Exhibit 2 hereto; as such prices may be revised from time to time pursuant to Article 5 and Article 9.

 

9.2            Price Adjustments . The Active Ingredient Price through December 31, 2012 shall be as  specified in the pricing schedule in Exhibit 2 attached hereto.  Subject to Article 5 hereof, the Active Ingredient Price(s) listed in Exhibit 2 for each Contract Year thereafter shall be equal to the Active Ingredient Price(s) in effect at the end of the immediately preceding Contract Year, increased (or decreased, as the case may be) by a percentage equal to fifty percent (50%) of the percentage increase (or the decrease, as the case may be) in the Producer Price Index of the Federal Republic of Germany (the “PPI”) over the course of the immediately preceding Contract Year, calculated as the average of the twelve (12) monthly PPI data reports of the Federal Statistical Office Germany during the immediately preceding Contract Year.

 

9.3            Payment Terms . SAD shall invoice Generex for all quantities of the Active Ingredient purchased hereunder concurrently with SAD’s shipment thereof to Generex. Subject to Section 13.1, and Section 8.3, all amounts properly invoiced by SAD hereunder shall be due and payable [REDACTED] days from the date of such invoice, except that for the first two Contract Years (for the Minimum Purchase Commitments only and payment thereof in 2009 and 2010), Generex shall submit payment within [REDACTED] days from the date of invoice.  SAD shall deliver invoices to Generex on the date the invoice is issued. Payment may be made by Generex’s corporate check or by wire transfer of funds to such account as SAD may designate.  Orders, invoices and payments under this Agreement shall be made in Euros.  Invoices shall reflect the actual quantities shipped and Generex shall be responsible for payment for such actual quantities shipped in accordance with this Agreement and the Packaging Specifications set out in Exhibit 3 hereto.

 

ARTICLE 10

SAD’S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

SAD represents, warrants and covenants to Generex as follows:

 

           10.1            Active Ingredient . The Active Ingredient, at the time of sale and shipment to Generex by SAD, (a) will conform to the Specifications, as then in effect, (b) will have dating until re-evaluation of not less than that which is set forth in Section 8.4 above, (c) will have been manufactured in all material respects in accordance with cGMP in effect at the time of manufacture, (d) will not be adulterated or mis-branded within the meaning of the FDCA, (e) will not have been manufactured, sold or shipped in violation of any applicable laws in any material respect, (f) will be conveyed with good title, free and clear of all security interests, liens or encumbrances, and (g) as may be appropriate or applicable, will have been approved by any and all requisite governmental and regulatory authorities.

 


 

MANUFACTURING AND SUPPLY AGREEMENT

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10.2            Manufacturing Standards . SAD shall manufactu


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