Research and Development Contract
Exhibit 10.60
Party A:
Sanming Huajian Bioengineering Co., Ltd.
Party B:
Fudan University
The
Parties have, following amicable consultation, entered into this Contract on the
development of technologies for extracting high-purity solanesol, and its
downstream products nicotine, coenzyme Q10 and organic fertilizers, in
accordance with the Contract
Law of the People’s Republic of China. The Parties agree as
follows:
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I.
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Project
Description: Contents, Form and
Requirements
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This
project involves the development of technologies for extracting high-purity
solanesol, and its downstream products nicotine, coenzyme Q10 and organic
fertilizers. Solanesol is a compound extracted from scrap tobacco for
synthesizing coenzyme Q10 and other compounds. Party A intends to use the
techniques to be developed by Party B, namely the techniques for extracting two
solanesol of different purities (75% and 90% respectively) and nicotine,
synthesizing coenzyme Q10 with solanesol, and manufacturing of organic
fertilizers with scrap tobacco, in order to realize green production. It is
envisaged that Party A’s annual output of solanesol, nicotine, coenzyme Q10 and
organic fertilizers will amount to 50, 1,000, 20 and 20,000 tons respectively,
representing an annual revenue of some 500 million yuan, and that Party A can
also manufacturing nicotine with a purity of over 95%.
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II.
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Party
A’s Rights and Obligations
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(1)
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Party
A shall provide Party B with an initial technical service fee of 1.8
million yuan for the clean extraction of high purity solanesol and
complete transfer of the patent, and 800,000 yuan annually thereafter as
the service fee for development of downstream products and coenzyme
Q10.
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(2)
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The
ownership to the patent right (including other related patents being
applied) of clean extraction of high purity solanesol shall be vested in
both Parties.
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(3)
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Both
Parties shall have access to the patent right of clean extraction of high
purity solanesol, regardless of time or space factors. Without the prior
approval of Party A, Party B shall not transfer the said patent to any
third party.
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(4)
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Party
A shall be the solely eligible for the application and ownership of any
patent rights for any follow-up modifications of the said refining
technique.
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(5)
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Party
A shall be the solely eligible for the application of patent rights for
and the ownership of downstream products, including nicotine, coenzyme
Q10, and organic fertilizers.
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III.
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Party
B’s Rights and Obligations
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(1)
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Party
B shall provide Party A with the following technical data within seven (7)
business days following the receipt of technical service fees: 1)
documents related to the development of clean extraction of high-purity,
including work plan, plain layout of the factory, device purchase list,
personnel training and trial production plans, and the plan for a two-week
internship of inspection personnel in the Environmental Science and
Engineering Task Force; 2) list of equipment used for extraction of
low-purity and high-purity solanesol and manufacturing of intermediate
products; and 3) the work flow
chart.
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(2)
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During
the performance hereof, Party B shall provide Party A with the following
technical guidance and services:
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--Technical
support: Party B shall conclude the development of techniques for
extracting solanesol of different purity (15%, 75% and 90% respectively),
manufacturing of nicotine sulphate, nicotine with a purity of 95% and
fertilizers, and synthesizing coenzyme Q10;
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--Frequency
of technical support: Party B shall send special personnel to provide
guidance on site within three business days, as
necessary.
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--Duration
of technical support: commencing on the date the project is implemented,
and lasting till the final products are verified
qualified.
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--Contemplated
outcome: after applying the techniques, Party A’s annual output of 90%
purity solanesol, nicotine sulphate, organic fertilizers and coenzyme Q10
will amount to 50, 1,000, 20,000, and 20 tons respectively; and Party A’s
manufacturing process will be greener and conforming to environmental
protection standards.
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(3)
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Party
B shall ensure the practicability, reliability and stability of the
technique that it develops, and that Party A can achieve the pre-set
production capacity target with the equipment that it purchases
itself.
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(4)
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Party
B shall help Party A with the sales of at least 90% of the solanesol,
nicotine sulphate, coenzymeQ10, organic fertilizers, at prices of the
same-breed products available in the domestic
market.
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IV.
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Technical
indicators and parameters
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1.
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With
sufficient supply of raw materials, the annual output of solanesol,
nicotine sulphate, organic fertilizers and coenzyme Q10 shall amount to
50, 1,000, 20,000 and 20 tons respectively.
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2.
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The
purity of solanesol shall be over 90.0%, with other indicators meeting
requirements f the international market; the nicotinecontent of nicotine
sulphate shall be over 40%; the organic fertilizers shall
conform to the national standard; andcoenzymeQ10 shall meet the standard
of the 2005
Pharmacopoeia of People’s Republic of China.
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3.
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The
technique shall be green and clean enough to meet environmental protection
requirements.
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V.
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R&D
Plan
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| Following receipt of project payment, Party B shall | |
| (1) Complete purchase, debugging, and commissioning of research equipment within 3 months; | |
| (2) Complete the test for mass production of solanesol products and successful manufacture such products with a purity of over 90% and organic fertilizers that meet national standards within 6 month; |
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(3)
Complete the test for mass production of nicotine sulphate and successful
manufacture such product with a purity rate of 40% within 12-18
months;
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(4)
Complete the test for mass production of coenzyme Q10 within 3
years;
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(5)
Expand the scale of research following the mass production test, to
deliver on the expected output; and
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(6)
Optimize the production technique so as to improve the yield
rate.
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VI.
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Settlement
of R&D Budget, Remuneration and Other
Payments
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1.
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Definition:
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R&D
budget refers to the costs needed for completing the research project;
while remuneration refers to the compensation to the research personnel
for their research in the project.
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The
R&D budget and remuneration for this research project is 1.8 million yuan.
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2.
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Payment
of R&D budget and remuneration
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The
total amount of 1.8 million yuan for transfer of the solanesol technique
and the patent shall be settled in two phases: 1.2 million yuan within
seven (7) business days following the execution hereof, and the remaining
600,000 yuan following the completion of the first batch of
products.
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Party
A shall pay Party B 800,000 yuan annually in two stages for the research
and development of downstream products, namely nicotine sulphate,
coenzymeQ10 and organic
fertilizers.
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VII.
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Ownership
of Devices and Apparatuses Purchased with R&D Budget and
Research-Related Data
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The
ownership shall be vested in Party A, while Party A shall be entitled to use
them.
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VIII.
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Term
and Content of Cooperation
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The term
hereof shall commence on July 28, 2005 and end on July 27, 2010. The Parties
shall cooperate in the research and development of on-site production technique,
and in production.
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IX.
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Confidentiality
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Both
Parties shall be responsible for keeping the project-relation information
confidential.
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X.
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Risk
Sharing
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The
Parties shall share on a 50/50 basis the risks of any losses and damages
resulting from failure of the project, in whole or part, due to technical
restrictions or difficulties.
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XI.
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Acceptance
Standard
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The
research outcomes will be confirmed qualified only when meeting the technical
standards and passing the test of real-time production.
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XII.
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Breach
of Contract
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Either
Party in breach hereof shall be liable for a liquidated damage in
accordance with applicable provisions of the Contract Law of the People’s
Republic of China.
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(1)
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In
the event of breaching Article VI hereof, Party A shall be held liable for
compensation of part of the technique development
costs.
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(2)
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In
the event of breaching Article I hereof, Party B shall return or part of
all of the development fees.
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(3)
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In
the event of breaching Article IX hereof, Party B shall return the R&D
budget and be held liable for a liquidated damage of 200,000
yuan.
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XIII.
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Settlement
of Disputes
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The
Parties shall settle through consultation any dispute arising from performance
hereof. In the event that the consultation fails, either Party may submit the
dispute to its local people’s court for settlement.
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XIV.
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Definitions
of terms
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solanesol:
an organic compound that naturally occur in tobacco;
nicotine
sulphate an alkaloid that represents the biggest component of
tobacco;
coenzymeQ10:
an adjunctive drug for curing cardiovascular diseases.
Clean
Production Technologies: technologies that cause no pollution of emission of
hazardous substances when applied in production.
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XV.
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Miscellaneous
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The
Parties shall settle through consultation other matters not mentioned herein,
including the rights and obligations of any intermediaries, service costs and
method of payment, deposits, property mortgage, warranty, among other
things.
Party
A: Sanming Huajian Bioengineering Co., Ltd.
Legal
representative: Zhao Min
Agency:
Contact
(attn.): Zhao Min
Date:
Address:
Telephone:
Bank:
Bank
a/c.:
Party
B: Fudan University
Legal
representative:
Agency:
Xxxx Xxxxxxx
Contact
(attn.): Xxxx Xxxxxxx
Date:
Address:
000 Xxxxxx Xxxx, Xxxxxxxx
Telephone:
000-00000000
Bank:
Agricultural Bank, Wujiaochang Branch
Bank
a/c.: 033267- 08017003441
Supplemental
Agreement
Party A:
Sanming Huajian Bioengineering Co., Ltd.
Party B:
Fudan University
In
accordance with the Article VI (2) of the Contract on the development of
technologies for extracting high-purity solanesol, and its downstream products
nicotine, coenzyme Q10 and organic fertilizers, entered into on July 28, 2005,
Party A shall settle the 600,000 yuan for technique development with Party B.
Now, following amicable consultation, the Parties hereby decide to apply for the
funding from the special fund for Shanghai Plan for Digestion of Introduced
Technology and Innovation set up by Shanghai Economic and Trade Commission. The
support funding obtained from the Fund, worth 600,000 yuan, is used to offset
the amount payable to Party B and transferred to the bank account of Fudan
University for the purpose of research in support of Party A’s project. Party B
confirms the receipt of the amount on June 23, 2006 and deems it as having paid
off the technique development costs.
This
supplemental agreement shall be have the same legal binding force as the
Contract, and shall enter into force upon execution by the Parties.
| Party A: Sanming Huajian Bioengineering Co., Ltd. | Party B: Fudan University |
| Date: June 29, 2008 | Date: June 29, 2008 |
