AGREEMENT

Exhibit 4.46

 

AGREEMENT

 

FOR THE DEVELOPMENT OF A PROOF-OF-PRINCIPLE

AUTOMATED TABLET ENCAPSULATING MACHINE

 

 

BioProgress Technology Ltd

Hostmoor Avenue

March

Cambridgeshire

PE15 0AX

COMPANY CONFIDENTIAL

 

1	INTRODUCTION

 

GB Innomech has a unique blend of expertise that closely compliments the requirements of this project. These include conceptual design, development of new production processes, integration of new and existing plant, and innovation of unique solutions, which are reliable, safe and easy to use and maintain. We can provide a turnkey solution from design, (hardware and software), through integration and assembly to installation, commissioning and on into full production, including complete documentation, all handled by our in-house engineering team.

 

We have extensive experience in providing equipment for many industries and have chosen to apply the procedures and practices used when supplying the pharmaceutical industry to all projects. This has resulted in the development of procedures and project management systems which ensure the equipment will work reliably and to specification for applications such as that of your Tablet Encapsulation requirement. Indeed, it is worth noting that we are registered BS ISO 9001:2000 and TickIT for our management systems. We are confident that our offering will provide BioProgess with the best results and optimum benefits associated with a thoroughly considered and comprehensive solution.

 

1.1	Project Scope

 

Because of the significant level of development involved in this project the parties have agreed to break the total job down into smaller parts to make it easier to manage and control. This Agreement therefore comprises a staged estimate covering the various activities associated with the complete design, manufacture, supply and commissioning of a Proof-of-Principle automated Tablet Encapsulation Machine in accordance with the initial User Requirement Specification (URS) produced by BioProgress.

 

As progress is made through each of the project stages, the work content of the subsequent stages becomes clear and enables the parties to accurately determine and agree the costs prior to each stage commencing. The estimate therefore includes a fixed price for stages 1 - 4 and shows our best estimates for the subsequent stages, based on detailed analysis of the initial version of the URS. Although, only estimates, they are expected to be reasonably accurate and they will be reviewed and binding quotations agreed prior to commencement of each stage as they arise.

 

The project is also divided into two phases each representing a variant of the machine as it moves through the development process, with each phase comprising a group of stages, as follows;

 

Phase

1: A three lane version of the machine comprising stages 1 to 11 of the quotation.

 

Phase

2: The full twenty-one lane machine comprising stages 11 to 16 of the quotation.

 

The details of the content and the deliverables of each of the stages are shown in section 6.

 

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COMPANY CONFIDENTIAL

 

2	ISSUE HISTORY

 

 

3

CONTENTS

 

 

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COMPANY CONFIDENTIAL

 

4

SUMMARY

 

This Agreement is made on 2nd March 2005 and sets out the initial terms which have been agreed between GB Innomech (“GBI” or “we”) and BioProgess Technology Ltd (“BPT” or “you”) (whose respective addresses are set out on the front sheet.) It outlines a design proposal for an automated Tablet Encapsulation Machine and provides prices and time scales for the development of the system. Upon signature by the parties, this document will form the basis of the contractual agreement between GBI and BPT and the terms set out herein shall be binding on each party unless and until superseded by a fuller legal agreement.

 

The proposed design is intended to meet the requirements and performance specifications as described in the User Requirements Specification.

 

To ensure safe operation, the system will be designed and inspected in accordance with all relevant European Union health and safety regulations. This will enable the complete system to be taken through EMC and safety certification. The machine will be built to comply with GAMP 4 guidelines and when completed will be ready for the validation process.

 

4.1	References

 

 

Each of the above is subject to final; approval and sign off by BPT

 

4.2	Definitions

 

In this Agreement, unless the context otherwise requires

 

“FMECA” means Failure Mode and Effect and Criticality Analysis

 

“____” means general arrangement of the equipment

 

“GAMP 4” means Good Automated Manufacturing Processes referenced to International Society of Pharmaceutical Engineers

 

“HDS” means hardware design specification “IQ” means Installation Qualification

 

“OQ” means Operational Qualification

 

“PQ” means Process Qualification

 

“SAT” means Site Acceptance Test

 

“SDS” means software design specification

 

“URS” means, until the agreement of the final User Requirement Specification, the initial User Requirement Specification, developed by BPT prior to the date hereof.

 

“CAD” means computer aided design, including graphical representations and finite element analyses.

 

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COMPANY CONFIDENTIAL

 

5	MACHINE OVERVIEW

 

The machine will be a Proof-of-Principle development system of a method of encapsulating tablets with an HPMC film. It will comprise two rotating drums with pockets for retaining the tablets. A small dose of glue will be applied to the tablet using inkjet printing technology and the film will be applied, heated, vacuum formed around the tablet and cut by lasers. This process is then repeated for the opposite side of the tablet and the seam where the two coatings overlap will then be ‘ironed’ to improve bonding and appearance.

 

The initial version of the machine will have 3 lanes of pockets and when the size, shape and other design criteria are successfully achieved then a final 21-lane version will be completed.

 

6	PROJECT BREAKDOWN

 

The parties have agreed to divide the project down into smaller parts to make it easier to manage and control. Below are the breaks and the work content of each stage as currently agreed. As much of GBI’s focus will be on maintaining good progress, it is agreed that on some occasions these stages will overlap, with the prior agreement of BPT. The Parties have also grouped some of the stages to assist with identifying significant milestones and payment points. These are shown in section 9.

 

6.1	Stage 1: Project Definition - Phase 1

 

a) Review of concepts

 

b) Project planning

 

c) Review risks

 

d) Determine main areas of investigation needed to minimise risk

 

e) Discussions with key suppliers on feasibility of process and selection of probable partners

 

f) Agree URS

 

Deliverables;

 

Revised URS

 

Project Timing Plan

 

Quotation and agreement (this document) approved and signed. (Note: price for stages 1 through

 

4 agreed and authorised at £170,000).

 

First release of FMECA

 

6.2 Stage 2: Experimentation

 

a) Define experiments needed to prove concepts

 

b) Build and/or organize suitable methods and means to test and prove the suitability and capability of the concepts.

 

c) Work in conjunction with suppliers

 

d) Review results and practical implementation

 

Deliverables;

 

Written test reports

 

Confirmation by physical demonstration or through analytical means (i.e calculation, CAD models), of key processes

 

Written report identifying critical process and machined design parameters from experiments.

 

6.3 Stage 3: Mechanical Functional Design (to run in parallel with stage 2)

 

a) Layout machine

 

b) Fully investigate in 3D design of risk areas in parallel with experiments

 

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COMPANY CONFIDENTIAL

 

c) Produce 3D design of machine and main structure

 

d) Complete FDS

 

e) FMECA review

 

f) Revise GA if required

 

Deliverables;

 

Machine G A – 1st release

 

Functional Design Specification

 

Mechanical FMECA – 2 ^nd review

 

Process FMECA – 2 ^nd review

 

Firm quotation for stages 5-7 and 8-10

 

6.4 Stage 4: Control System Functional Design (to run in parallel with stage 3)

 

a) Layout control system and block diagram

 

b) Define hardware and software

 

c) Define interfaces

 

d) Complete control system HDS

 

e) Create first draft of SDS

 

f) FMECA review

 

g) Revise specifications if required

 

Deliverables;

 

Hardware Design Specification

 

Software Design Specification

 

Software FMECA – 2 ^nd review

 

6.5 Stage 5: Mechanical Detail Design and release to manufacture

 

a) Complete G A for all parts

 

b) Detail parts and issue for manufacture

 

Deliverables;

 

G A – final release

 

Detailed drawings made available for review if requested by BPT

 

Parts List

 

6.6 Stage 6: Detailed Control and Electrical Design plus coding

 

a) First issue of SDS

 

b) Create control software for modules required for first trials

 

c) Create software for User Interface

 

d) Circuit diagrams

 

Deliverables;

 

Software Design Specification

 

User interface review

 

Circuit Diagrams – 1 ^st issue

 

Draft FAT and SAT qualification document for phases 1 and 2.

 

6.7 Stage 7: Procurement (to overlap with stage 5)

 

a) Create full parts list (including all specified sourced items)

 

b) Order all parts for scheduled build (and test requirements)

 

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COMPANY CONFIDENTIAL

 

Deliverables;

 

Confirmation of order and delivery of parts and effect (if any) on Project Timing Plan

 

6.8 Stage 8: Assembly

 

a) Assemble hardware and electrical equipment

 

Deliverables;

 

Assembly inspection

 

6.9 Stage 9: Integration

 

a) Integrate hardware software and bought out equipment

 

b) Modify code and hardware as required during development

 

Deliverables;

 

Agreed FAT and SAT qualification document for phases 1 and 2

 

Machine ready for in-house testing

 

6.10 Stage 10: Development (some overlap with stage 9)

 

a) Run machine

 

b) Evaluate

 

c) Re-design as required to achieve reliable phase 1 machine

 

d) FMECA review

 

Deliverables;

 

Successful completion of Phase 1 FAT

 

Firm quotation for stages 11 & 12 and 13 - 15

 

6.11 Stage 11: Release to Phase 2

 

Deliverables;

 

Revised G A

 

6.12 Stage 12: Procurement - Phase 2 (to overlap with stage 10)

 

a) Create full parts list (including all specified sourced items)

 

b) Order all parts for scheduled build (and test requirements)

 

Deliverables;

 

Confirmation of order and delivery of parts and effect (if any) on Project Timing Plan

 

6.13 Stage 13: Assembly

 

a) Assemble hardware and electrical equipment

 

Deliverables;

 

Assembly inspection

 

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6.14 Stage 14: Integration

 

a) Integrate hardware software and bought out equipment

 

b) Modify code and hardware as required during development

 

Deliverables;

 

Machine ready for in-house testing

 

6.15 Stage 15: Development (some overlap with stage 9)

 

a) Run machine

 

b) Evaluate

 

c) Re-design as required to achieve reliable phase 2 machine

 

d) FMECA review

 

Deliverables;

 

Successful completion of Phase 2 FAT

 

Comment: Firm quotation for stage 16

 

6.16 Stage 16: Deliver and SAT

 

a) Ship and install

 

b) Complete installation SAT

 

c) Documentation completed

 

Deliverables;

 

Delivery of Machine

 

IQ

 

OQ

 

Machine ready for process development and validation

 

Work by GBI on each stage (or where previously agreed by BPT group of stages) shall only be commenced when expressly authorized in writing by BPT following agreement of the detailed specifications for the deliverables, timescale, milestones fixed price and payment stages for the relevant stage as appropriate;

 

7	PERFORMANCE SPECIFICATION

 

The machine will perform and handle product as per the initial URS. Changes may be required once the final version of the URS has been established at the completion of stage 1. The parties will, so soon as practicable agree full OQ and PQ documentation, in accordance, in the case of PQ, with a detailed brief produced by BPT, which shall form part of the eventual FAT and, together with IQ, the SAT test protocol. GBI will make such modifications to the machine during the course of design and/or assembly as may be necessary to ensure that the machine complies with the URS, the PQ and OQ

 

Upon completion of the manufacture of the machine, GBI shall carry out a FAT on the principles to be agreed in detail prior to the commencement of Stage 7. The purpose of this trial shall be primarily to determine that the machine is compliant with the URS, PQ and OQ Upon satisfactory completion of the FAT, GBI shall deliver a written certification that the machine has passed the FAT and fully meets the URS and the detailed standards agreed. BPT shall work with GBI and observe such FAT. It is understood that all defects in materials, workmanship and design for relevant compliance requirements which may be identified as a result of the FAT will be corrected GBI prior to the issue of the certificate of compliance unless specifically directed to the contrary by BPT.

 

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COMPANY CONFIDENTIAL

 

Upon completion of the installation of the machine, GBI shall carry out a SAT on the principles agreed in detail prior to the commencement of Stage 7 in the presence of and with the co-operation of BPT. Upon satisfactory completion of the SAT, GBI shall deliver a written certification that the machine has passed the SAT and fully meets the URS and the detailed standards agreed.

 

In the event that BPT reasonably believes that the SAT identifies areas of non-conformity with the URS and/or the detailed SAT principles agreed, BPT shall itemize those areas in which the machine has failed to perform acceptably. GBI shall acknowledge such list and, save in the case of bona fide dispute, in which case the provisions set out below shall apply, shall inform BPT in writing as to how and when the non-conformity will be corrected. GBI agrees that such corrections shall be carried out with all reasonable dispatch and at no additional cost to BPT. BPT shall have the right to withhold payment of any outstanding funds due in relation to the project until such time as the machine has fully complied with the URS. Upon completion of the corrections by GBI, GBI shall notify BPT of the same and the SAT shall again be conducted in its entirety should BPT elect to do so. Where BPT does not elect to repeat the SAT or to refer any dispute as to compliance pursuant to dispute resolution within 14 days of such notification, the machine shall be deemed accepted and any sums withheld in respect thereof shall be due and payable.

 

In the event that the parties are unable to agree whether or not the machine has performed acceptably in accordance with the URS and /or the detailed SAT principles agreed, or whether any machine has any prefect in workmanship or materials, the matter may be referred at the insistance of either party to such person as may be appointed by agreement between them, or in default of agreement, nominated on the application of either party to the President for the time being of the Institution of Mechanical Engineers in London (the “Expert”). Such person shall act as an expert and not as an arbitrator and shall be entitled to appoint such technical expert or experts as he considers necessary to assist him in determining the matter referred to him. The decision of the Expert (which shall be given by him in writing stating his reasons) shall, in the absence of manifest error, be final and binding on the parties hereto. Each party shall provide the Expert with such information as he may reasonably require for the purposes of his determination. If any party claims any such information to be confidential to it, then, provided that in the opinion of the Expert that party has properly claimed the same as confidential, the Expert shall not disclose the same to the other party or to any third party. The costs of the Expert (including the cost of any technical experts appointed by him) shall be borne in such proportions as the Expert may determine to be fair and reasonable in all the circumstances or, if no such determination is made by the Expert by the parties hereto, in equal proportions.

 

8	PROJECT MANAGEMENT

 

_______ will assign a project manager to the project. The project manager will develop the Quality Plan and Project Plan for this project for approval by BPT and oversee their implementation. The project manager will keep BPT informed of the progress of the project via regular project meetings and updated project plans at least once per month. BPT will be invited to participate in risk and design reviews at key stages of the project.

 

9	PRICES AND TIMESCALES

 

9.1

Prices

 

GBI shall provide to BPT, upon request, full cost breakdowns of the initial estimates and subsequent firm quotations produced by GBI for any stage requested and shall provide such further detail and explanation as BPT may request.

 

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COMPANY CONFIDENTIAL

 

To provide the equipment as outlined:

 

 

The prices shown are exclusive of VAT, packing and shipping charges.

 

9.2

Validity

 

Stages 1 to 4; prices are fixed and agreed.

 

Validity of the subsequent stages will be agree