Exhibit 10.24
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.
TECHNOLOGY TRANSFER AGREEMENT
Made this 18 day of April, 2002
BETWEEN
Shanxi Weiqida Pharmaceutical Co., Ltd., herein represented by ▇▇. ▇▇▇▇▇▇ ▇▇▇,
hereinafter referred as "SW" , is a company registered under the laws of CHINA
AND
Alpha Process Trust Reg., herein represented by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, hereinafter
referred as "AP", is a company registered under the laws of LIECHTENSTEIN
1. PREAMBLE
1.1 SW is dedicated to set up a plant ("Plant") in China to produce
Cephalosporin C Potassium or Cephalosporin C Sodium ("the Product"), a
pharmaceutical chemical intermediate;
1.2 AP possesses the latest industrial technology to produce "the
Product".
1.3 AP has agreed to supply to SW the process know-how and assistance to
realize the production at SW Plant of the Product by using the latest
technology it possesses.
1.4 The parties therefore agree that AP shall supply such process Know-how
including the process and technical assistance to SW on the following
terms and conditions.
2. PRODUCTS AND PROCESSES
2.1 The Products covered by this Agreement is Cephalosporin C Potassium or
Cephalosporin C Sodium
2.2 The final Product, Clavulanate Potassium, will comply with the
specification of Appendix 1 (a) and 1 (b).
3. Plant
The plant will be designed by AP in accordance with 9 (nine) fermentors of
156 m3, and will meet the production capacity of 1,044,000 kg Cephalosporin
C per year (365 days).
4. Technology and Services Supplied by AP
AP will supply:
4.1 Fermentation process and relevant maintenance documents to ensure the
production in industrial plant and laboratory.
4.2 Detailed step-by-step description of the process (fermentation,
extraction, and recycling) in industrial plant production and
laboratory.
4.3 Specification in the process of production.
4.4 List and specifications of all equipment (equipment construction
drawings provided by the relevant manufactures)
4.5 Assistance in equipment procurement from different international
suppliers.
4.6 Analytical methods and quality specification for raw materials, finish
products and intermediates.
4.7 Preliminary construction drawings for workshop, and layout for
equipment installation (detailed drawings for all workshops provided
by a local design institute).
4.8 Preliminary flow-sheets of the process (detailed flow-sheets and
installation drawings provided by local design institute).
4.9 Inspection during equipment installation.
4.10 Inspection during pilot validation.
4.11 Requirements and specifications of utility systems.
4.12 Preliminary project information, technical parameters, and process of
dissolvent recycling.
4.13 List and specifications of laboratory equipment ( about 3/5 m3
fermentor and extraction equipment in laboratory size).
4.14 Process improvement and technology development within 2 years after
starting production.
4.15 A project team to cooperate with SW.
2
5. Verification Technical Parameters
In case that SW follows all AP's instruction and technology supplied by AP
under this Agreement, SW shall obtain the following production technical
parameters:
5.1 Technical Parameters
Following AP's process, SW shall obtain the following technical
parameters:
Fermentation yield = more than * * * kg product per m3 per fermentor
per month
Extraction yield = more than * * *
5.2 Guaranteed Parameters:
AP guarantees that SW shall obtain the following parameters:
5.2.1 Fermentation of Cephalosporin C: more than * * * kg product
per m3 per fermentor per month
5.2.2 Extraction yield: more than * * * kg of Cephalosporin C
Potassium from *** kg Cephalosporin C
5.2.3 Extraction yield of Cephalosporin C Sodium is equal to * * *
of Cephalosporin C Potassium
5.3 The Cephalosporin C Potassium produced with AP's technology shall meet
the standards specified in Appendix 1.
5.4 The quantities of raw materials necessary for the production of 1kg of
Product are specified in Appendix 2.
5.5 The times of AP personnel visiting SW Plant are specified in Appendix
3.
6. SERVICES TO BE PROVIDED BY SW
SW will provide or perform following services at no cost to AP.
6.1 Organize a project team with engineers, chemists and biologists which
shall receive and use the process documentation supplied by AP. The
number of the persons of the team may be increased to meet future
requirement.
*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.
3
6.2 Purchase in due time all the equipment in accordance with the lists,
specifications and relevant drawings of such equipment which shall be
confirmed by AP. Procure all relevant services to finalize the design
regarding civil engineering and installation of the equipment. Such
design should be based on the basic documentation and specifications
as provided by AP under this Agreement.
6.3 Procure in due time all the raw materials and reagents of the required
specifications for production and laboratory test.
6.4 Arrange jobs in accordance with the specifications supplied by AP, so
that at the various phases of the implementation of the project, the
personnel which is required by AP, is available and trained in due
time to be familiar with project, equipments, and instruments. The
personnel referred to above include engineers, chemists, technicians,
foremen and workers.
6.5 Equipment drawings will be provided by manufacturer specified by SW.
6.6 Detailed structure drawings of each workshop will be provided by
company specified by SW.
6.7 Detailed installation drawings will be provided by company specified
by SW.
6.8 Organize a project team and assign a team leader to cooperate with
technical team of AP.
7. AP has asserted to SW that AP owns the processes of production under this
agreement legally.
All disputes related to the ownership of the processes of production under
this agreement will be dealt with by AP in China or other countries. SW is
eligible for claims.
After AP transfers the processes of production under this agreement
successfully, SW will own the processes of production under this agreement
legally. However, SW is not allowed to transfer the processes of production
under this agreement to any one else without the prior written approval by
AP.
8. DURATION
The Agreement shall be effective for a period of 2 (two) years from the
date of signing of this Agreement or 1 (one) year after production,
whichever occurs later.
4
9. PAYMENT
9.1 AP will provide SW with the above mentioned technical know-how,
drawings, designs, documentation and services under this Agreement, SW
shall pay to AP an amount of US$ 650,000 in accordance with the
following terms:
US $600,000 for technical know-how and US $50,000 as consulting fee 1
(one) year after production.
US $600,000 for technical know-how includes:
US $450,000 for technical know-how
US $50,000 for designs
US $100,000 for technical services
9.2 $600,000 technical know-how will be paid by SW alongside with the
milestones completed by AP as following schedules:
9.2.1 10% after the signing of Agreement.
9.2.2 15% within 30 days after AP send out preliminary
information (referred to 4.4, 4.7, 4.8, 4.11 and 4.12)
9.2.3 15% within 30 days after AP send out all testing
documentation (referred to 4.4, 4.7, 4.8, 4.11 and
4.12)
9.2.4 25% within 30 days after AP send out all process
documentation (referred to 4.1, 4.2, 4.3 and 4.6)
9.2.5 20% within 30 days after SW complete the verification of the
process of fermentation and extraction
9.2.6 10% within 30 days after SW complete the verification of
equipment
9.2.7 15% within 30 days after starting production of SW
9.2.8 Consulting fee of $50,000 will be paid out 1 year after
production
9.3 SW will provide services, free of charge to on-site technicians
deputed by AP
9.3.1 Suitable hotel accommodation and meals
9.3.2 Necessary ground and air transportation in China
9.3.3 On-site office
9.3.4 Business class flight tickets between Europe and China
9.4 In case that the project is delayed for reasons not caused by AP, and
provided that AP has fulfilled all its full obligations and
responsibilities, SW will pay the remaining amounts not later than one
year after expiring of this Agreement.
5
10. VERIFICATION
10.1 The test period for the trial runs to verify the technical parameters
will be decided by SW and AP
10.2 Verification completions is referred to when SW personnel with the
assistance of AP is able to manufacture 3 (three) batches of
Celphosporin C Potassium obtaining the technical parameters in
accordance with the ones guaranteed by AP in term 5.2 a and 5.2 b. The
yields and technical parameters shall be calculated as the average of
3 (three) batches. Batches showing abnormalities due to mechanical
problems, breakdowns of utilities or any other reason which are
clearly identified and are beyond the reasonable control of
responsibility of AP will however be excluded from calculation the
average.
10.3 If the result of the verification can reach the guaranteed technical
parameters in the contract, the both sides should sign the
verification certification.
10.4 All test runs for demonstration/validation of the processes in
laboratory, pilot plant and industrial plant shall be performed with
local raw materials. In case that the local raw materials do not meet
the requirements specified by AP, then AP shall try to help SW to
adapt the process with local raw materials.
11. FORCE MAJOUR
No failure to carry out or observe any of the stipulation or conditions of
the Agreement shall, except as herein expressly proved to the contrary,
give rise to any claim against either party or be deemed a breach of the
Agreement if such failure arises form fire, earthquake, volcanic eruption,
explosion, strikes, lockouts, other labour disputes, lake or failure of
transportation facilities, epidemics, storms, floods, drought, war declared
or undeclared, hostilities, revolution, civil commotion, blockades, embargo
accidents or from any other cause whatsoever, beyond the control of the
party involved.
12. ARBITRATION
Any dispute arising out of the Agreement that cannot be settled by the
parties themselves shall be settled by arbitration. Arbitration will be
executed by Chamber of Commerce in Zurich, Switzerland.
13. EFFECTIVENESS OF THE CONTRACT
After the contract being signed by both parties, the contract should become
effective.
14. CONFIDENTIALITY
14.1 SW agrees not to use any of the information supp1ied under this
Agreement except for the purpose of producing the Products at Plant.
6
14.2 Information supplied under this Agreement shall not be disclosed to
any third parties except SW's employees who are required to have
knowledge of such information secrecy for the purpose hereof and who
shall be bound to AP by the same obligation of confidentiality.
15. TRANSFER AND ASSIGNMENT
SW is not allowed to sub-license or assign or otherwise transfer the
manufacture of products or any technology or know-how provided to it under
this Agreement, to any one else without the prior written approval by AP.
This provision shall remain in force also 5 years after the termination or
expire of this Agreement.
Alpha Process Trust Reg. Shanxi Weiqida Pharmaceutical Co., Ltd.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇
--------------------------------- ----------------------------------
7
Appendix 1(a)
Speciafication of Cephalosporin C Potassium:
Cephalosporin C Potassium produced by the process of AP, can be easily
transferred to 7-ACA in chemical method or enzyme method, and complies with the
following standards:
Name Cephalosporin C Potassium
Formula C16H20KN3O8S
Molecular Weight * * *
Appearance * * *
HPLC * * *
Assay * * *
3-Desacetyl-Cef.C * * *
3-Desacetoxy-Cef.C * * *
Desacetyl and Desacetoxy * * *
Water * * *
Appendix 1 (b)
Speciafication of Cephalosporin C Sodium:
Same as (a) except:
Name Cephalosporin C Sodium
Formula C16H20KNaO8S
Molecular Weight * * *
Assay * * *
*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.
8
Appendix 2
Raw Material Unit Consumption of 1.0 Kg Cephalosporin C Potassium (Broth
activity is 20000, extraction yield is 75%)
Name KG (+/-5%)
Corn Steep Liquor * * *
Sucrose * * *
Ammonia Solution (30%) * * *
SAG471 * * *
Nixolen * * *
Calcium Carbonate * * *
Ammonia Sulphate * * *
Sulphate * * *
Bean Oil * * *
Monobasic Potassium Phosphate * * *
NaOH (30%) * * *
Methionine DL * * *
Urea * * *
Fat * * *
Sulfuric Acid (50% w/v) * * *
Filtration Aid * * *
Methanol * * *
Folic Acid * * *
Ammonium Acetate * * *
Isopropanol * * *
Potassium Acid Carbonate * * *
*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.
9
Appendix 3
A For the execution of the Agreement and completion of all services provided
by AP, AP agrees to send its technicians (engineers, chemists, etc.) to
perform the following on-site services:
A1 1 (one) technician for 1 (one) week during the first phase of project
elaboration;
A2 1 (one) technician for 1 week during the end period of detailed design
for final approval of the detailed drawings;
A3 1 (one) technician for 1 week during fermentation and extraction
laboratory tests;
A4 1 (one) technician for 1 week during equipment installation;
A5 2 (two) technicians for 1 week during pilot production;
A6 1 (one) technician for 1 week 6 months after production;
The above expenses are taken by SW (see 9.3)
B In case that SW requires AP to visit SW's site for technical assistance
beyond the above-mentioned visit schedule in terms of times of visit and
number of people (not due to the AP's responsibility), then SW should take
the following expenses:
1. Accommodation and meal;
2. Round trip air tickets between Europe and China;
3. Local transportation;
4. Service charge (US$300 per day per person) starting from the date of
AP's personnel arriving Datong site to that of leaving Datong.
10