Exhibit 10.22
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 6th day of August, 2002
BETWEEN
SHANXI WElQIDA PHARMACEUTICAL CO. LTD
SHANXI PROVINCE DATONG ECONOMIC AND TECHNOLOGY DEVELOPMENT AREA; P.R. 037300
CHINA hereinafter referred as `SW' which is a company registered under the laws
of CHINA
AND
ALPHA PROCESS TRUST REG.
IM ZIEL-430, POST FACR-146, MAUREN, FL 9493, LIECHENSTEIN hereinafter referred
as `AP' which is a company registered under the laws of LIECHENSTEIN
1. PREAMBLE
1.1 SW is desirous to perform in his pharmaceutical plant (`Plant') in
China the fermentation of CLAVULANIC ACID and then the recovery of the
POTASSIUM CLAVULANATE, CK, hereafter indicated as `Product'.
1.2 AP possesses the industrial technology of "Product",
1.3 AP has agreed to supply to SW the process know-how and assistance to
realize the production at SW Plant of Product (as hereinafter defined)
by using the latest processes AP possesses.
1.4 The parties therefore agree that AP sha1l supply such Know-how
including the Strain and technical assistance to SW on the following
terms and conditions.
2. PRODUCTS AND PROCESSES
2.1 The products covered by this Agreement are:
- CLAVULANIC ACID by fermentation,
- POTASSIUM CLAVULANATE, CK. recovered from the fermentation broth
of CLAVULANIC ACID.
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2.2 The final Product, Potassium Clavulanate, CK, will comply with the
specification of Appendix 1.
2.3 The technical process of this agreement includes:
A) Strain preparation process:
- The strains selection technology for stabilising the
production.
- All the related information about the strains selection.
B) Fermentation process:
- The formulation and raw material specification of each
culture media.
- Fermentation processes in fermentors.
- Steri1izatizon process, testing method, control and disposal
method.
C) Filtering process
- Pre-treatment and filtering technology of the fermentation
broth.
- The filtering and concentration method of the fermentation
broth, optimized filtering speed and the quality control of
filtered liquid.
D) Recovery process
- The specification and requirement of the extraction, and the
preparation of the extractive solvent.
- The extraction control point
E) Refine and crystallization
- Crystalization process and control method.
- Drying method and key operation points.
- Milling-screening and package officia1 product.
F) Raw material consumption:
- The consumption of fermentation and recovery raw materials
for each Kilogram of product.
G) Quality Control
- The specification, testing method and analysis methods of
the raw materials, intermediates and final product.
- Analysis and analysis method of the fermentation both
composition and "in process".
H) Equipment
- Production process flow diagram;
- Equipment specifications: all, equipment construction
drawings will be provided by the equipment suppliers.
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- If SW needs, AP wi1l provide the detailed specifications and
sketches of non-standard equipment (including supplier
name).
- General and preliminary layout of all buildings and all main
equipment main equipment; piping drawings will be prepare by
a local engineering company and, if requested by SW,
approved by AP.
- Relative information about the prefabricate equipment
(including suppliers name).
3. THE STRAIN
A. The Strain and its process-know-how could reach in fermentation about
* * * based on fermentation cycle of 90 / 100 hours.
B. The Extraction process can reach about * * * calculated as Kg of
Pottassium Clavulanate from * * * Kg-Activity in harvest broth.
4. TECHNOLOGY and SERVICES PROVIDED BY AP
For the Product AP will provide.
A) Preliminary data of economical evaluation of the know-how.
B) Detailed step-by-step description of the process in industrial plant,
including Strains maintenance, block diagrams and preliminary
flow-sheets of the process.
C) List and specifications of all equipment. Equipment construction
drawings will be prepared by the relevant manufacturers with AP
technical assistance.
D) Assistance in equipment procurement from different suppliers.
E) Analytical methods and quality specification for raw materials finish
products and intermediates.
F) Technical assistance and supervision during the production in
laboratory and pilot plant.
5. VERIFICATION TECHNICAL PARAMETERS
In case that SW follows all AP's instruction and specification of processes to
be supplied by AP under this Agreement, SW shall obtain the following production
technical parameters:
5.1 Technical Parameters
A) Fermentation in * * * (net fermentation cycle excluding discharge and
feeding of fermentor): * * *.
*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.
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Guaranteed fermentation yield in* * * hours(net fermentation cycle); * * *.
B) Extraction yield from fermentation broth calculated as Kg of Potassium
Clavulanate (CK) from * * * Kg Activity in harvest broth: * * *
Guaranteed yield: * * * Kg of CK from * * * Kg Activity of in harvest
broth.
C) Fermentors capacity utilization ratio: 75%
5.2 The quality of Potassium Clavulante, CK, produced with AP's technology
shall conform to US Pharmacopoeia The quantities of raw materials and
reagents necessary for the production of 1.00 kg of Potassium Clavulanate
are specified in Appendix 2.
6. SERVICE TO BE PROVIDED BY SW
SW will provide or perform following services at no cost to AP.
A) Organize a project team with a minimum number of engineers, chemists
and biologists which shall receive the process documentation supplied
by AP. The number of the persons of the team may be increased
according to future requirement.
B) Purchase in due time all the equipment according to the lists
specifications and relevant drawings of such equipment which shall be
supplied by AP. Procure all relevant services to finalize the design
regarding civil engineering and installation of the equipment. Such
design shall be based on the basic documentation and specifications as
provided by AP under this Agreement.
C) Procure in due time all the raw materials and reagents of the required
specifications for the performance of test runs and verification
batches.
D) Take all the necessary steps in accordance with the specifications, to
be furnished by AP at least 3 (three) months in advance, so that at
the various phases of the implementation of the project, the personnel
which is required according to AP's recommendations, is available. The
personnel referred to above includes engineers, chemists, technicians,
foremen and workers.
7. DURATION
The duration of this Agreement shall be for a period of 3 (three) years
from the date of signing of this Agreement.
*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.
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8. PAYMENT
8.1 AP will provide SW with the above mentioned strain, technical
know-how, drawings, designs, documentation. etc., services under this
Agreement, SW shall pay' to AP an amount of US$ 600,000, net and free
of any tax. All the contract payment should be paid in US$ free of
tax. SW will pay the domestic taxes and bank charges in China, and AP
will pay the taxes and bank charge outside of China.
8.2 The above mentioned lump sum amount will be paid as following times:
1) SW shall remit fifteen percent (15 %) that is 90,000 US$ of the
contract value to AP as down payment at the contract signing.
2) Payment of twenty percent (20 %) that is 120,000 US$ of the contract
value will be paid by SW after receiving the strain and all documents
required to verify in laboratory (FLASK+SHECKER) that strain is
CLAVULANIC ACID. The strain is verified when its yield/potency in
laboratory will be more than * * * of Clavulanic Acid. The maximum
industria1 yield and potency will be then verified as indicated on
next step 8.23).
3) Payment of thirty percent (30 %) that is 180,000 US$ of the contract
value will be paid by SW after Laboratory or Pilot plant validation of
fermentation according to the procedure specified in the contract.
4) Payment of twenty five percent (25 %) that is 150,000 US$ of the
contract value will be paid by SW after Laboratory or Pilot plant
validation of Recovery, according to the procedure specified in the
contract.
5) Payment of ten percent (10 %) that is 60,000 US$ of the contract value
will be paid by SW after Industrial production verification according
to contract procedure and after SW receives qualified certificate
letter with both parties
8.3 SW shall provide, free of charge to personnel deputed by AP to provide
A) Technical assistance at SW's sites,
B) Suitable hotel accommodation and meal,
C) Necessary ground transportation in China,
*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.
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D) At site office services,
E) Air tickets Europe-China-Europe, in business class,
8.4 In case that SW requires that AP technicians will be present at site
days, or persons in addition of what indicated in Appendix 3, SW will
pay to AP, in addition of the expenses above indicated, also: 500 US $
per day/person.
8.5 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.
9. PATENT
AP has presented to SW that the processes and the products of this contract are
not patented by AP. AP is not responsible for any patent infringement in China
or in any other country where SW may export the products.
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 regard as when SW personnel with the
assistance of AP is able to manufacture 3 (three) batches of the
Products obtaining the technical parameters yields corresponding at
least to the ones guaranteed by AP in Article 5. 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 of the average.
10.3 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
conform the requirements specified by AP, then AP shall try to help SW
to adapt the process with local raw materials. But if AP realized that
some of local raw materials cannot be in accordance with requested
characteristics after AP's assistance, the verification test shall be
repeated using some imported raw material suggested by AP.
10.4 Industry verification processes performance as below:
A) The industrial fermentation will be performed in * * *. The
fermentation period is * * *: the average yield is calculated on
*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.
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3 batches and the average yield must reach the ensured yield as
indicated in item 5.1.
B) During the verification period, AP should use all the necessary
ways to assistant SW learning all the producing process of
CLAVULANIC ACJD.
C) The verification time of industrial production should be
determined by both sides. If the result of the verification can
reach the guaranteed technical parameters in the contract, the
both sides should sign the verification certification.
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. CONFIDENTIALITY
13.1 SW agrees not to use any of the information supp1ied under this
Agreement except for the purpose of producing Products at Plant.
13.2 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 for the purpose hereof and who shall be
bound to AP by the same obligation of confidentiality.
14. 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 after the termination or expire of this
Agreement.
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15. TAXES
Each part will pay the taxes in connection with the execution of this
Contract in his country; AP in Liechtenstein and SW in China.
16. EFFECTIVENESS OF THE CONTRACT
16.1 After the contract being signed by both parties, and SW informed AP in
writing, the contract should become effective. The contract shall
written in two originals, one for each party. Both English and Chinese
versions are of the same effectiveness.
16.2 The attachments of this contract shall form an integral part of the
contract.
Alpha Process Trust Reg. Shanxi Weiqida Pharmaceutical Co. Ltd.
/s/ Wang Jian /s/ Han Yanlin
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APPENDIX 1
CLAVULANIC ACID Raw materials consumption for 1.0 kg of
Potassium Clavulanate (CK)
Raw Materials Kg
FERMENTATION
Ammonium hydroxide 30% sol. * * *
Ammonium suplhate * * *
Antifoam (PPG2000) * * *
Calcium chloride * * *
Copper sulphate * * *
Corn starch * * *
Dextene * * *
Ferric chloride * * *
Glucerol * * *
Glucerol trioleate * * *
Magnesium sulphate * * *
Manganese sulphate * * *
Potassium phosphate dibasic * * *
Potassium phosphate monobasic * * *
Soybean meal * * *
Ures * * *
Zinc sulphate * * *
RECOVERY
z-Ethyl-exanoic acid * * *
Acetic acid 80% sol. * * *
Decolorising carbon * * *
Filter acid * * *
Fozmaldeide 25% sol. * * *
n-Buthyl alcohol * * *
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APPENDIX 2
Clavulanate Potassium
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Non sterile hygroscopic powder
FORMULA C2H8KNO5
M.W. 237.3
Specifications
Description : White or almost white crystalline powder,
hydroscopic (UPS).
Identification : passes test (USP).
Assay by HPLC : * * * on the anhydrous substance (USP)
(HPLC) : * * *
Water content : * * *
pH (1% water) : * * *
pH (1%) : * * *
Specific optical rotation: * * * on the anhydrous substance (USP).
Absorbance at 278 nm : * * *
Standard packaging : stainless steel drums
Storage condition : the product must be protected from light and
moisture in well closed container: Store at a
temperature between +2 and +8(0)C
Warning : The product is highly flammable and
may cause explosion by contact with free
flames and/or Electrostatic charges.
*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.
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APPENDIX 3
A. For the execution of the Agreement and completion of all Services provided
by AP, AP guarantees the following assistance with its technicians in
(Engineers, Chemists, etc..)
A.1 One technician for four days during the first phase of project
elaboration.
A.2 One technician for 1 week during the end period of detailed design for
final approval of the detailed drawings.
A.3 One technicians for 1 week during Fermentation pilot tests and
laboratory tests for Clavulanic Acid and Recovery of Potassium
Clavulanate.
A.4 Two technicians for one week during production start up.
The expenses of air tickets Europe-Beijing-Europe), for the local
transportation, accommodation, meal, office will be borne by SW.
B. In case that SW requests AP to come to SW's site for technical assistance
beyond the visit duration and number of people the above-mentioned visit service
schedule (not due to the AP's responsibility), then SW shall bear, in addition
of all costs mentioned above also:
- service charge: - $ 500/day/man
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