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Manufacturing Support And Supply Agreement

Manufacturing Agreement

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 This Manufacturing Agreement involves

SPHERIX INC | Biospherics, Inc

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Governing Law: Maryland     Date: 12/18/2009
Industry: Computer Services     Sector: Technology

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Exhibit 10.1




This Manufacturing Support and Supply Agreement (the “Agreement”) is entered into this day of December 15 th , 2009 by and between Biospherics, Inc. (“Biospherics”), a Delaware Corporation, with its principal place of business located at 6430 Rockledge Drive, Westmoreland Building #503, Bethesda, Maryland 20817, United States of America and Inalco S.p.A. (“Inalco”), an Italian corporation, with its principal place of business located at Via Calabiana 18, 20139 Milano, Italy. Biospherics and Inalco are hereinafter individually referred to as the “Party” and collectively as the “Parties.”




WHEREAS , Biospherics is currently conducting a phase 3 clinical trial of D-tagatose (“Product”) for the treatment of type 2 diabetes and such clinical trial is expected to be complete in 2010;


WHEREAS , Biospherics anticipates filing a New Drug Application (“NDA”) with the U.S. Food and Drug Administration (“FDA”) for Product to treat type 2 diabetes in 2011;


WHEREAS , Inalco desires to support Biospherics’ NDA for the Product and to act as Biospherics’ manufacturer and supplier of Product; and


WHEREAS , Biospherics desires to retain Inalco as its manufacturer and supplier of Product.


NOW, THEREFORE , in consideration of the mutual premises and covenants set forth below, the Parties agree as follows:




1.1                                  Inalco’s Obligations . Inalco shall (i) maintain the Drug Master File (“DMF”) and support the Chemistry, Manufacturing, and Controls part of Biospherics’ NDA for Product; (ii) manufacture and deliver Product to Biospherics in accordance with this Agreement; and (iii) perform all other applicable requirements and obligations as set forth herein.


1.2                                  Biospherics’ Obligations . Biospherics shall: (i) subject to the terms of this Agreement, order a minimum of 25 Metric Tons (“MT”) of Product from Inalco in accordance with the terms specified in this Agreement, and (ii) perform all other applicable requirements and obligations as set forth herein.




2.1                                  Support of NDA . Inalco shall (i) establish and maintain active DMF Types I-III for Product as required by the FDA in accordance with 21 CFR 314.420(c) and the FDA Guidance for Drug Master Files as provided on the FDA’s website and provide Biospherics with access to and copies of all relevant files; (ii) supply Biospherics with a Letter of Authorization,



in accordance with the FDA Guideline for Drug Master Files as provided on the FDA’s website, naming Biospherics as a sponsor permitted to incorporate by reference the specific information contained in the DMF; (iii) allow FDA inspections of its facilities which produce Product; and (iv) cooperate with Biospherics to address any inquiries and concerns from the FDA in regards to the DMF.


2.2                                  Annual Reports . Inalco will provide an annual report to the FDA on the anniversary date of the original submission of the DMF (the “Annual Report”). The Annual Report should contain the required list of persons authorized to incorporate information in the DMF by reference in accordance with 21 CFR 314.420(d). Inalco will update this list in the Annual Report. The updated list will contain Inalco’s name, DMF number, and the date of the Annual Report. The Annual Report should also identify (i) by name or code, the information that each person is authorized to incorporate and give the location of that information by date, volume, and page number, and (ii) all changes and additional information incorporated into the DMF since the previous Annual Report. If the subject matter of the DMF is unchanged, Inalco will provide a statement that the subject matter of the DMF is current.


2.3                                  Supply of Product . Inalco agrees to manufacture and deliver to Biospherics, in accordance with orders issued under this Agreement, specified quantities of Product, which must conform, in all respects, to the United States Pharmacopeia—National Formulary (“USP–NF”) standards for D-tagatose.


2.4                                  Form of Product . Unless otherwise agreed upon by the Parties, Product will be provided in powder form and delivered in sealed PE-HD (high-density polyethylene) cans.


2.5                                  Compliance with Laws . Inalco agrees that it will produce and deliver Product under this Agreement in conformance with all applicable laws and regulations, including those regulations established by the FDA.


2.6                                  Certificates of Analysis . For each delivery of Product, Inalco shall provide Certificates of Analysis conforming to International Standards Organization (ISO) Guide 34 for the Product provided. The analysis must have been conducted according to the USP monograph for D-tagatose and include High Performance Liquid Chromatography testing to identify, among any other relevant information, the type and quantity (to 0.1%) of any residual other sugars.


2.7                                  Certification . Inalco shall submit a Certification with each order certifying that: (i) the Inalco DMF has not been determined by the FDA to be deficient, and (ii) the Product was produced in a manner compatible with the FDA’s current Good Manufacturing Practices requirements for similar products such as lactose.


2.8                                  Bank Guarantee .


A.                                    Upon Biopherics’ request, Inalco shall provide a bank guarantee (the “Guarantee”) in amounts and currencies equal to the amount of any Advance Payment. The Guarantee shall be issued by an entity and from within a country (or other jurisdiction) approved




by Biospherics, and shall be in the form included in Attachment A or in another form approved by Biospherics.


B.                                      Inaleo shall ensure that the Guarantee is valid and enforceable until the Advance Payment has been repaid or Biospherics certifies in writing that it has accepted the Products for which the Advance Payment has been made. If the terms of the Guarantee specify an expiration date, and the Advance Payment has not been repaid, or Biospherics has not certified acceptance of Product as stated above, by the date 28 days prior to the expiration date, Inalco shall extend the validity of the Guarantee for a period reasonably acceptable to Biospherics.




3.1                                  Order Quantity . Biospherics agrees to an order of twenty-five (25) MT of Product (the “Initial Order”) and to negotiate in good faith another agreement to order a minimum of three hundred (300) MT of Product under mutually agreeable terms among the Parties.


3.2                                  Ordering . Biospherics shall order Product pursuant to Article 1V .


3.3                                  Payment . Biospherics will make payment for orders pursuant to Article V .


3.4                                  Status of NDA . Biospherics agrees to take reasonable steps to apprise Inalco of the status and progress of the NDA process, including responding to reasonable inquiries made by Inalco.




4.1                                  Initial Order . By execution of this Agreement, Biospherics orders twenty-five (25) MT of Product at the price specified in Article 5.1 . Production and delivery of Product purchased pursuant to this Initial Order will not take place until requested in writing by Biospherics. Upon receipt of such a request, Inalco will have sixty (60) days to deliver Product to the address specified by Biospherics.


4.2                                  Subsequent Orders . Biospherics shall submit all subsequent orders for Product to Inalco via a purchase order (“Purchase Order”) sent to the e-mail address or facsimile number set forth in Section 12.5 . The price per MT of Product for all subsequent orders will be as specified in Article 5.1 . As soon as practicable after receipt of a Purchase Order, Inalco will notify Biospherics in writing that the Purchase Order has been received and the date on which delivery is expected to be made (the “Acceptance Notice”). Upon issuance by Inalco of the Acceptance Notice, the Purchase Order and Acceptance Notice shall constitute a contract in accordance with the terms and conditions of this Agreement. In the event of a conflict between the terms of a Purchase Order and Acceptance Notice and the terms of this Agreement, the terms of this Agreement shall govern.


4.3                                  Delivery and Shipment . The location for delivery of Product will be specified by Biospherics in each Purchase Order. Delivery will be F.O.B. Destination: [Delivery Address].




Inalco shall hear responsibility for all costs of delivery including, without limitation, shipping costs, customs charges, duties, taxes, and other fees. The time specified for delivery of Product will not be less than 45 days unless agreed to by Inalco.


4.4                                  Title and Risk of Loss and Damages . Title to Product and risk of loss and damage to Product passes to Biospherics upon delivery of Product to the address specified in each Purchase Order.


4.5                                  Acceptance . Biospherics shall inspect the Product promptly upon receipt thereof and may reject any Product which is not in full conformance with the terms of this Agreement. Product not rejected by written notification to Inalco within fourteen (14) days of receipt shall be deemed to have been accepted. Rejected Product shall be returned freight prepaid to Inalco within ten (10) calendar days of rejection. As soon as possible, but in no case later than ten (10) days, Inalco may, at its option and expense, replace such rejected Product. Inalco shall prepay transportation costs back to Biospherics and shall reimburse Biospherics for any costs of transportation incurred by it in connection with the return to Inalco of such properly rejected Product.




5.1                                  Purchase Price . The price for Product purchased by Biospherics shall be: (i) $44/kg for the Initial Order of twenty-five (25) MT of Product, and (ii) $29.70/kg for all subsequent orders of Product. Each Purchase Order will specify the quantity of Product ordered. Except expressly stated otherwise, the prices set forth in this Section 5.1 include any existing or future taxes, tariffs, fees, duties, or levies whatsoever applicable to Product sold under this Agreement.


5.2                                  Payment Terms . Except as specified below, Biospherics shall make payment to lnalco within thirty (30) days following acceptance of Product. All payments to Inalco for Product in accordance with this Section 5.2 shall be made to:




Account: IT94 E030 6909 5071 6100 9362 895

Name of account: Inalco S.p.A.


5.3                                  Advance Payment . In connection with the Initial Order, Biospherics shall make the following payments to Inalco in advance of delivery of Product (each, an “Advance Payment”):


A.                                    Within three business days following execution of this Agreement, Biospherics will make an advance payment of five hundred thousand dollars (US$500,000) to Inalco.


B.                                      Within six months thereafter, provided that Inalco has in place the required bank guarantee described in Section 2.8 , Biospherics will make payment for the balance of the Initial Order in the amount of five hundred thousand dollars (US$500,000).






6.1                                  Term . This Agreement shall come into effect on the date set forth in the Preamble and shall have a term of five (5) years.




7.1                                  Termination . This Agreement may be terminated:


A.                                    by written notice that Biospherics will no longer pursue FDA approval of the NDA for the Product;


B.                                      by either Party upon thirty (30) days written notice if the other Party commits a material breach of the Agreement and fails to cure the breach within such thirty (30) day period; or


C.                                      automatically if either Party ceases to operate its business in the ordinary course, files for bankruptcy or has an order for relief entered against it in an involuntary bankruptcy case, files any proceeding for insolvency, reorganization, liquidation, receivership, or dissolution or there is an assignment for the benefit of creditors.


7.2                                  Effect of Termination .


A.                                    Upon termination, the Parties agree to perform the following within thirty (30) days after termination: (i) Biospherics shall pay Inalco all fees due and unpaid with respect to Product delivered to Biospherics; (ii) Inalco shall deliver, to the location specified by Biospherics, Product which has already been paid for by Biospherics; and (iii) Inalco shall deliver the DMF to Biospherics.


B.                                      Except in cases of bad faith by either Biospherics or Inalco, neither Biospherics or Inalco shall be liable to the other solely because of the termination of this Agreement, for compensation, reimbursement, or damages due to the loss of prospective profits or anticipated sales. Notwithstanding the foregoing, Biospherics and Inalco, as applicable, shall remain liable for any obligations for unpaid balances or credits for Product and for damages, indemnities or other compensations due to breach of this Agreement prior to termination.


C.                                      The provisions of Sections 7.2 , 12.1 , 12.3 , 12.4 , 12.5 , 12.7 , 12.8 , 12.11 and Articles VIII , I X , and X shall survive any termination or expiration of this Agreement.




8.1                                  Confidential Information . In negotiating and implementing this Agreement, either Party may transmit to the other Party (for the purpose of this clause, the “Recipient”) or




Recipient’s representative (for the purpose of this clause, the “Representative”) certain proprietary and confidential information regarding the Product (the “Confidential Information”). Such Confidential Information is defined as all non-public information which is furnished by the other Party or its representatives, regardless of whether specifically identified as proprietary or confidential together with all proprietary data on (without limitation) prices, volumes, quality, trade secrets, know-how, ideas, principles, analyses, techniques, methodologies or other documents that may be reasonably regarded as confidential under the circumstances. A Recipient’s Representative shall be deemed to include each person that is or becomes (i) a subsidiary or other affiliate of Recipient, or (ii) an officer, director, employee, partner, attorney, advisor, accountant, agent or representative of Recipient or any of Recipient’s subsidiaries or other affiliates. The term person will be broadly interpreted to include any individual and any corporation, partnership, entity or group. Each Party agrees that, for the term of this Agreement and a period of [three (3)] years after expiration or termination of this Agreement, it shall not disclose any information it receives from the other Party to any other third party, person, corporation or entity; nor shall either Party use Confidential Information for its own benefit, except as provided herein. Nothing contained in this Article VIII shall grant or imply any rights by license, estoppel or otherwise. Confiden

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