EXHIBIT 10.1
Technical Service Contract
Party A: Hainan Sunshine Marine Bioengineering Co. Ltd.
Address: HaitangwanTown, Sanya City, Hainan Province, PRC
Legal Representative: Huaguoqiang
Party B: Mera Pharmaceutical Inc.
Address: Kailua-Kona, Hawaii, USA
Legal Representative: Xxxxxxx Xxxxxxx
Party A is a Joint Venture formed to construct and operate a facility in Sanya,
Hainan lsland (the "Hainan Facility"), for microalgal cultivation and
astaxanthin extraction and health care product production, specifically for
Haematococcus pluvialis ("HP"). Party A will have general responsibility for
hiring the contractors and overseeing the construction of the Hainan Facility.
Party B is entrusted by Party A for providing the technical service for using
Party B's patented technology and special techniques (the "Mera Technology"),
which include the design and engineering, equipment specifications, final
adjustments, testing of systems and facilities, meeting good manufacturing
practice ("GMP") certification requirements, recommending staffing & recruitment
and providing a training program to Party A's employees, which services will be
paid for by Party A.
Based on the principal of THE CONTRACT LAW OF THE PEOPLE'S REPUBLIC OF CHINA,
and after mutual fair and friendly discussions with the respect of mutual
willingness, both parties reached an agreement in the form of this contract,
which shall be fully respected and obeyed by each party. The details of this
contract are as follows:
1. The scope of work of technical service and responsibility of Party B
1.1 The purpose of the technical service agreement "TSA"
To help party A build the Hainan Facility as an efficient, high quality and high
quantity HP cultivation plant and astaxanthin processing facility at the lowest
reasonable cost, and to train party A's staff and operators completely in the
use of Mera Technology for HP cultivation and astaxanthin processing and
production.
1.2 The content of technical service and work scope of Party B. Party B agrees
to do the following things (the "Technical Services"):
1.2.1 To provide the layout and construction blue prints for the production
facility in Hainan and to provide the conceptual design for the civil work and
structures of the buildings of the Hainan Facility (which should include design
requirements, data, drawings, notes and explanations sufficient to let Party A
carry out the engineering drawing design for use in construction (the "Design
Layout"). The content of the Design Layout is set forth in more detail in
Appendix A.
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1.2.2 To provide guidance and supervision and advice to Party A's civil
engineering and construction contractors which can enable them to build the
Hainan Facility so that it can meet the Production Requirement (see detail
below).
1.2.3 To provide a list of all cultivation, processing and production equipment
(the "CPP Equipment" and specifications to assist party A to finish the
procurement of the CPP equipment and to help Party A with CPP equipment layout,
installation and testing. Should any of the equipment be supplied by Mera itself
"Mera Equipment", Mera will be responsible for its installation (for details:
see the Equipment Purchasing Contract).
1.2.4 To provide all P&ID drawings, and final blueprints of mechanical
engineering, electrical engineering and process control system engineering (the
"Party B Construction Plans," attached as Appendix B). The Party B Construction
Plans shall contain all related design and engineering scheme, data, drawings,
technical explanations and descriptions needed for Party A's contractors to use
them in constructing those portions of the Hainan Facility. The Party B
Construction Plans will be based on a complete and final set of construction
plans and blueprints for all site work and construction delivered by Party A
(the "Party A Construction Plans)" attached as Appendix C.
1.2.5 To supervise the installation, and to supervise and install Mera
Equipment, of the CPP Equipment included in 1.2.3 and to assure that it will
operate in a way that the Hainan Facility meets the Production Requirement.
1.2.6 To provide process control system software that enables the Hainan
Facility to meet the Production Requirement.
1.2.7 To provide complete testing of the whole production system at the Hainan
Facility and to make any necessary adjustments to guarantee that it operates in
accordance with specifications.
1.2.8 In order to insure that all product produced at the Hainan Facility will
be able to be imported into the United States for sale, Mera will assist party A
in obtaining all necessary US approvals. In addition, Party B will help Party A
meet those requirements that Party A provides to Party B for compliance with
Chinese regulations.
1.2.9 To provide the production procedure Manual for the Hainan Facility,
including all the standard procedures for microalgal cultivation and astaxanthin
production, and the technology and analysis procedure for quality control from
Lab to the finished products.
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1.2.10. To provide individual working position's job descriptions and
qualification requirement for each position (to include description,
requirements, responsibilities and number of personnel required in each
position).
1.2.11 To provide 3 month's technical training in Kona for recruited technical
personnel hired by Party A sufficient to assure that all trainees will be able
to master the technology and the techniques necessary for the production of
astaxanthin and will be able to operate all the specific parts of the Hainan
Facility independently, and to be qualified to train additional support
personnel in Sanya. Party B will train up to fifteen of Party A's personnel.
Training of additional personnel will be an Additional Cost, defined below.
1.2.12 To provide a Hainan Facility procedure manual and personnel training
manual in English. Party B will also provide all other training documents that
already exist, like videos, photographs and project lighting materials for
training.
1.2.13 To provide the following to optimize the production of the Hainan
Facility,
(1) Software to run the control system for the new Hainan Facility;
(2) Hardware to run the control system for the new Hainan Facility
Module;
(3) All changes, if any, to the Mera Growth Module ("MGM") so that
it functions as well in Sanya as it does in Kona;
(4) Upgrading of production process and analysis control for Sanya
facility in order to increase the production efficiency and product
quality;
(5) All Data on all upgrades of Mera Technology will be provided
free of charge. If any additional training of Sanya employees is
required by Party A, the parties shall discuss the terms under which
they will be provided;
(6) Mera agrees, for the period of 1 year after the Hainan Facilty
begins production, (after the testing and acceptance of Hainan
facility by both parties) that it will fix, at its own cost, any
problems with its Mera software or hardware.
2. The necessary target must be reached for the technical services (The
"Production Requirement")
The Technical Services shall be considered delivered in full upon: (a) the
production of the three batches of qualified microalgal powder with astaxanthin
content not less than 3.2% prior to extraction (the "Production Requirement");
The extraction rate should be no less than 95%; and (b) the demonstration that
all production procedures conducted at the Hainan Facility initially satisfy
USFDA GMP requirements, and any other approvals necessary for importation into
the United States from any other relevant agency in the US. In addition, Party
B will assist Party A in obtaining its regulatory approvals from the Chinese
authorities.
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3. Amount, Timing of Payment and way of payment by party A
3.1 Total amount cost of Technical Services: US dollars one million ($1,000,000)
before Tax.
3.2 The travel budget for Party B's technical service personnel is up to US
dollars four hundred thousand ($400,000) (from USA to Sanya city, Hainan, China;
flight class level is economy class, (exceptions may be made by the Working
Team)). Party A shall either arrange for the tickets to be delivered to Kona for
travel by the appropriate Mera personnel (e-tickets, paper tickets, DHL, etc.)
Party B shall be responsible for any amount over $400,000. All lodging fees and
accommodation fees of technical service people, ground transportation costs and
air travel costs within China will be the responsibility of Party A during their
technical service stay in Sanya.
3.3 Terms of payment and payment schedule. Terms of payment to each contractor
or individual will be determined and performed by the "Working Team" (see
details below).
4. Party A will be responsible for trainee's travel expense to Kona and
accommodation and food expenses during their staying in Kona. Other costs
related to training will be the responsibility of Party B. Party B will also be
responsible for helping to make arrangements for any business visitors or
surveying team from Party A, but the costs and expenses for all such visits and
related activities fees will be incurred by Party A.
5. Both parties agree to set the following standard and target for technical
service inspection:
Party B shall provide instructions that, if followed, will ensure that all
production equipment, facility, process control systems, and quality control
specifications will meet with FDA GMP guidelines and any other approvals
necessary for importation into the United States from any other relevant agency
in the US. Party B's training shall be sufficient to enable all trained
personnel after training to understand and command the specified procedures
required by USFDA GMP specification and to produce the qualified astaxanthin
product.
6. Party B will make guarantee to Party A as follows:
6.1 All MERA Technology provided by party B under this contract is the most
recent available, and Party A will be entitled to use any upgraded and improved
Mera Technology after completion of this contract.
6.2 All technical documents provided are correct, complete, clarified and
reliable for HP microalgal cultivation and astaxanthin production.
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6.3 All technical services provided by Party B will insure that Party A will be
able to conduct the normal production operations for the qualified astaxanthin
product production and to reach the planned Production Requirement, and the
planned plant total output.
6.4 The training delivered will enable all qualified and adequately skilled
trained personnel to command the production technology of astaxanthin and
know-how of HP microalgal cultivation. Party B will guarantee that the content
and delivery of such training will be adequate to insure that the microalgal
cultivation can occur as promised.
6.5 Party B will not provide any kind of technical service to any third party
during the term of this technical service agreement with regard to the
cultivation or processing of HP.
7. The Working Team shall send a written report on the progress of the project
to Party A and Party B every 2 weeks.
8. Arbitration
All disputes arising from the execution of this contract shall be negotiated and
settled through coordination and negotiation. In case no settlement through
consultation can be reached, the dispute shall be submitted to the China
International Trade Arbitration Committee for arbitration. The arbitration award
will be final and binding upon both parties, the arbitration fee will be borne
by the loser unless other ruled by the arbitration law.
9. Both parties agree that this contract can be terminated when the following
happens:
(1) Force Majeure;
(2) Party A decided to cancel the investment of astaxanthin production
project.
10. This TSA Contract and the previously signed TSA Agreement have equal weight
under the law. However, if there are any differences between the two documents,
this contract shall govern.
Since it is in both Parties best interest to complete the entire Hainan project
as quickly and inexpensively as possible, the parties have agreed to form a
"Working Team" to work as a single unit. This Working Team shall be led by Mr.
Wah, and will include Xx. Xx and [a Mera representative]. Mr. Wah will have
overall responsibility for the project in its entirety, while [the Mera
representative] will be responsible for assuring that all of the Mera technology
is transferred and incorporated into the Hainan project in the best possible
manner. The Working Team shall decide which personnel, either employees or
contactors, either in the US or China, will be responsible for providing each
particular deliverable in the project. The working team shall conduct all of its
activities in accordance with the principals of this Technology Services
agreement. In addition, The Working Team may, with the consent of both parties,
adjust the budget.
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11. This contract has original copy of four and all are legally effective.
12. This contract is written in both English and Chinese, and each are equally
valid.
13. Any Amendment to this contract must be discussed, written, and agreed to by
both parties.
14. This contract will be effective after signing (stamp) by representatives of
each party.
15. Attachments outlining scope of work, descriptions, and timelines will be
attached to this Contract and will be an integral part of the terms and
conditions of the Contract.
Party A: Hainan Sunshine Marine Bioengineering Co. Ltd.
Legal Representative: /s/ Huaguoqiang
Date: 11/9/02
Party B: Mera Pharmaceutical Inc.
Legal Representative: /s/ Xxxxxxx X. Xxxxxxx
Date: 11/9/02
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