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EXHIBIT
10.1
JOINT VENTURE
CONTRACT
on the establishment
of
“SHIJIAZHUANG –
UNIGENE PHARMACEUTICAL CORPORATION LIMITED”
between
Shijiazhuang Pharmaceutical
Group Company, Ltd.
And
Unigene Laboratories,
Inc.
June 15, 2000
TABLE OF
CONTENTS
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Chapter I GENERAL PROVISIONS
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Chapter II CONTRACTING
PARTIES
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Chapter III ESTABLISHMENT OF THE JOINT
VENTURE
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Chapter IV PURPOSE, SCOPE AND SCALE OF
OPERATION
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Chapter V TOTAL INVESTMENT AND
REGISTERED CAPITAL
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Chapter VI RESPONSIBILITIES OF CONTRACT
PARTIES
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Chapter VII TECHNOLOGY
CONTRIBUTION
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Chapter VIII SALES OF
PRODUCTS
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Chapter IX BOARD OF DIRECTORS
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Chapter X MANAGEMENT
ORGANIZATION
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Chapter XI PURCHASE OF
EQUIPMENT
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Chapter XII MANAGEMENT OF
LABOR
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Chapter XIII TRANSFER OF JV
RIGHTS
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Chapter XIV TAXATION, ACCOUNTING AND
AUDITING
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Chapter XV PROFITS AND LOSSES
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Chapter XVI REPRESENTATIONS, WARRANTIES
AND COVENANTS
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Chapter XVII TERM OF JOINT VENTURE
CONTRACT
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Chapter XVIII EFFECT OF CONTRACT
EXPIRATION OR TERMINATION
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Chapter XIX INSURANCE
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Chapter XX CONTRACT AMENDMENT,
ALTERATION AND TERMINATION
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Chapter XXI RESPONSIBILITIES OF CONTRACT
BREACH
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Chapter XXII FORCE MAJEURE
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Chapter XXIII APPLICABLE LAWS
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Chapter XXIV RESOLUTION OF
DISPUTES
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Chapter XXV LANGUAGES
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Chapter XXVI MISCELLANEOUS
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Chapter I GENERAL
PROVISIONS
This contract for the establishment of
an equity joint venture in Shijiazhuang, Hebei Province,
People’s Republic of China (the “PRC”), is
entered into on June 15, 2000, through friendly negotiation
based on principles of equality and mutual benefits, by and between
Shijiazhuang Pharmaceutical Group Company, Ltd.(“Party
A”) and Unigene Laboratories, Inc.(“Party B”)
pursuant to the Law of the PRC on Joint Ventures Using Chinese and
Foreign Investment (the “Law”) and other relevant laws
and regulations.
Chapter II CONTRACTING
PARTIES
ARTICLE 1. Parties to the
Contract
1.1. Party A is Shijiazhuang
Pharmaceutical Group Company, Ltd. , a legal person established
under the laws of the PRC, registered with the Administrative
Bureau for Industry and Commerce of Shijiazhuang, Hebei Province,
PRC.
Legal Address: 276 Zhongshan West Road
Shijiazhuang, Hebei Province, PRC
Legal Representative: Mr. Cai Dong
Chen
Position: Chairman and
President
Nationality: Chinese
1.2. Party B is Unigene Laboratories,
Inc. , established and registered under the laws of the State
of Delaware, United States of America (USA).
Legal Address: 110 Little Falls Road,
Fairfield, New Jersey, 07004, USA,
Legal Representative:
Dr. Warren P. Levy
Position: President
Nationality: American
1.3. Party A and Party B are each
referred to as a “JV Party” and collectively referred
to as the “JV Parties”.
Chapter III ESTABLISHMENT
OF THE JOINT VENTURE
ARTICLE 2. Establishment of
JV
Party A and Party B hereby establish
“Shijiazhuang—Unigene Pharmaceutical Corporation
Limited” (hereafter referred to as the “JV”) in
the PRC pursuant to this Contract, the Law and other relevant PRC
laws and regulations.
ARTICLE 3. Name and Address of the
JV
3.1 The name of the JV in Chinese is
“
”; and the name of the JV in English is “
Shijiazhuang—Unigene Pharmaceutical Corporation
Limited.”
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3.2 The JV’s legal address is High
and New Technology Industrial Development Zone, Shijiazhuang, Hebei
Province.
ARTICLE 4. The JV is established under
the Law of the PRC and all activities of the JV shall conform to
the pertinent laws, decrees, rules and regulations of the
PRC.
ARTICLE 5. The JV takes the form of a
limited liability company. Party A and Party B are liable up to
amount of their respective capital contribution subscribed. Each
party is entitled to the profits and liable to the risks and losses
equivalent to such party’s Distribution Ratio (as defined
below), as set forth in Article 56.
ARTICLE 6. The JV shall be deemed to
have been established as of the date its business license is issued
pursuant to the Law (the “Establishment Date”). This
Contract shall be effective as of the date it is approved by the
National Administration of High and New Technology Industrial
Development Zone, Shijiazhuang, Hebei Province (the
“Effective Date”).
ARTICLE 7. Promptly following the
Establishment Date, the parties hereto shall cause the JV to ratify
this Contract, whereby the JV shall agree to be bound by the
provisions of this Contract as if it were a party hereto in its own
right. An instrument evidencing such ratification shall be
furnished to each of the parties.
ARTICLE 8. The JV Parties hereby adopt
and shall execute the Articles of Association for the
JV.
ARTICLE 9. Promptly after the first
capital contributions required by Article 15.1(a) and 15.2(a) have
been made by each party, the JV and Party B shall execute a
Technology Transfer Agreement (the “Technology Transfer
Agreement”) pursuant to which Party B will (a) license
the Technology to the JV (as defined in the Technology Transfer
Agreement); (b) agree to sell to the JV its requirements of AE
(as defined below); and (c) agree to sell to the JV its
requirements of JV Products and bulk Calcitonin until such time as
the JV can manufacture such JV Products and Calcitonin at the JV
Facility, all in accordance with the terms and conditions of the
Technology Transfer Agreement.
Chapter IV PURPOSE, SCOPE
AND SCALE OF OPERATION
ARTICLE 10. In the spirit of
strengthening economic cooperation and technological exchanges, the
purpose of the JV is to use advanced technology and scientific
operational management expertise to carry out the manufacture of
pharmaceutical-grade recombinant salmon calcitonin (the
“Calcitonin”) in injectable and nasal formulations (the
“JV Products”), using the processes of Party B that
include the use of an amidating enzyme that the JV will purchase
from Party B (the “AE”) in accordance with the
Technology Transfer Agreement, and the distribution and sale of JV
Products in the PRC and such other regions as decided by the Board
of Directors of the JV (the “Territory”) in order to
obtain a satisfactory return on investment for all parties and to
build up competitiveness in both domestic and international markets
(collectively, the “JV Business”).
ARTICLE 11. The business scope of the JV
is (a) to construct, equip, own, manage, and operate a
manufacturing facility in the PRC that complies with all
regulations and guidelines applicable
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to such a manufacturing facility
(“Applicable Regulations”) and that has the capacity to
manufacture Calcitonin in accordance with the terms and conditions
of the Contract (the “JV Facility”) and prepare, fill,
label and package injectable and nasal formulations thereof; and
(b) to market, distribute and sell the JV Products in the
Territory.
ARTICLE 12. In order to fully utilize
the time necessary for construction of the JV Facility and nurture
the market for the JV Products, the production and operation of the
JV shall be carried out in two (2) phases, which are as
follows:
Phase I: The JV shall import finished JV
Products from Party B and package and distribute, market and sell
such JV Products in the PRC and shall import bulk Calcitonin from
Party B, formulate JV Products therefrom, and distribute, market
and sell such JV Products in the Territory.
Phase II: The JV shall import AE from
Party B and manufacture bulk Calcitonin therefrom, formulate JV
Products therefrom, and distribute, market and sell such JV
Products in the Territory.
The JV shall actively explore market
opportunities outside the PRC as provided in Article 31 to
accumulate foreign exchange.
ARTICLE 13. Once the JV has begun Phase
II, the intended scale of production for the JV Facility shall be
as follows:
13.1 An annual output of four and half
(4.5) kilograms of bulk Calcitonin, as well as JV Products in the
following approximate quantities:
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Forty million
(40,000,000) ampoules for the 50 I.U. injectable
product.
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Twenty-six
million (26,000,000) ampoules for the 100 I.U. injectable
product.
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Four million
(4,000,000) vials (14 doses) for the 200 I.U. nasal spray
product.
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13.2 Both parties agree that full
consideration shall be given to the possibility for future
expansion during planning, designing and construction. Proper
adjustment will be made to reflect the development of operations
and market changes.
Chapter V TOTAL INVESTMENT
AND REGISTERED CAPITAL
ARTICLE 14. The total investment of the
JV will be Fifteen Million U.S. Dollars
(US$15,000,000.00).
ARTICLE 15. The registered capital of
the JV will be Six Million U.S. Dollars ($6,000,000.00).
Party A shall contribute Three Million
and Three Hundred Thousand US Dollars (US$3,300,000.00) in cash for
an equity share of 55%;
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Party B shall contribute cash and
technology valued, in the aggregate, at Two Million and Seven
Hundred Thousand US Dollars (US$2,700,000.00) for an equity share
of 45%.
Party A and Party B shall make their
respective capital contributions in the following
manner.
15.1 Party A shall contribute the
Renminbi equivalent of Three Million Three Hundred Thousand US
Dollars (US$3,300,000.00), in cash. Such contribution shall be made
as follows:
(a) No later than ninety (90)
days after the Establishment Date, Party A shall deposit the
Renminbi equivalent of Four Hundred Ninety Five Thousand US Dollars
(US$495,000.00) in cash into a bank account designated by the JV in
the name of the JV; and
(b) No later than two (2)
years after the Establishment Date, Party A shall deposit the
Renminbi equivalent of Two Million Eight Hundred Five Thousand US
Dollars (US$2,805,000.00) in cash into a bank account designated by
the JV in the name of the JV.
15.2 Party B shall contribute cash and
technology valued, in the aggregate, at Two Million Seven Hundred
Thousand US Dollars (US$2,700,000.00). Such contribution shall be
made as follows:
(a) No later than ninety
(90) days after the Establishment Date, Party B shall deposit
Four Hundred Five Thousand US Dollars (US$405,000.00) in cash into
a bank account designated by the JV in the name of the
JV;
(b) No later than two
(2) years after the Establishment Date, Party B shall deposit
Four Hundred Ninety Five Thousand US Dollars ($495,000.00) in cash
into a bank account designated by the JV in the name of the
JV;
(c) Pursuant to the
Technology Transfer Agreement, Party A shall transfer the
Technology to the JV, which shall be deemed a contribution valued
at One Million Eight Hundred Thousand US Dollars (US$1,800,000.00)
made upon execution of the Technology Transfer Agreement. All data,
documentation and information required for the Technology transfer
must be provided by Party B according to the terms of the
Technology Transfer Agreement and within two (2) years of the
Establishment Date.
15.3 All cash capital contributions
shall be denominated in US Dollars. Cash contribution of Renminbi
shall be valued in terms of US Dollars at the official exchange
rate published by the PRC Administration of Foreign Exchange
Control for the purchase of US Dollars with Renminbi on the day
payment is made.
ARTICLE 16. Party A shall arrange, on
behalf of the JV, such third-party financing as the JV may
reasonably require in connection with the establishment and
operation of the JV , in an amount not to exceed Nine Million US
Dollars (US$9,000,000.00). Party A shall provide any guarantees
required by the lenders.
ARTICLE 17. In the event that the Board
of Directors of the JV unanimously determines that the JV requires
capital in addition to the contributions and financing provided for
in Articles 15 and 16, the Board shall solicit additional capital
contributions from the JV Parties in proportion to the Distribution
Ratios (as defined below) in effect at the time. No JV Party shall
have any obligation to make any such capital contributions. In the
event that the additional capital
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contributions made in response to such
solicitation shall fall short of the amount of additional capital
required by the JV, Party A shall arrange for third-party financing
of the shortfall, provided , however , that such
financing shall be sought only in extraordinary circumstances and
only with the prior unanimous written approval of the Board of
Directors. No capital increase after the establishment of the JV
shall impact the Distribution Ratio of any JV Party. All financial
loans by the JV shall be guaranteed by Party A, as set forth in
Article 16.
Chapter VI
RESPONSIBILITIES OF CONTRACT PARTIES
ARTICLE 18. In addition to any other
express obligations of either JV Party under this Contract, the
Articles of Association or the Technology Transfer Agreement, the
responsibilities of Party A and Party B shall include the
following:
18.1 Party A shall, at its sole cost and
expense:
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Offer support to the JV not inferior to other substantially
similar joint ventures in which Party A is currently engaged or
will be engaged in the future; |
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Prepare the feasibility study concerning the JV Business,
providing Party B with an English translation thereof, and
submitting the feasibility study to the appropriate PRC government
authorities after Party A and Party B have jointly agreed on the
text thereof; |
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Obtain all licenses and approvals necessary, and render all
necessary assistance, (i) for the establishment of the JV as a
legal person with limited liability; (ii) for the
establishment of the JV Facility; (iii) for the manufacture
and marketing of the JV Products in the PRC; (iv) for the
purchase of AE by the JV from Party B; and (v) to enable the
JV to secure sufficient foreign exchange for the payments to be
made to Party B by the JV and to enable Party B to repatriate such
amounts; |
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Endeavor to entitle the JV to all the preferences granted under
Chinese laws including but not limited to taxation and market
promotion preferences, and ensure to the greatest extent possible
that the JV qualifies for (i) such “tax holidays”
and other most favorable tax treatment as may be available to
foreign investment enterprises from time to time, and (ii) a
tax rate (without regard to the tax holiday) that is not greater
than the most preferential income tax treatment available to
foreign investment enterprises in the region; |
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Transfer to the JV, and arrange any other formalities with the
Land Department related to, the land use right for the JV Facility,
contract for the design and construction of the JV Facility and
purchase all equipment and other materials needed for the
production of the JV Products; |
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Assist the JV Facility in building, validating and operating
the JV Facility in full compliance with all Applicable Regulations
and in causing the JV Facility to be fully operational under such
Applicable Regulations; |
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Assist the JV in arranging adequate supply of water,
electricity and transportation and other infrastructure
facilities; |
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Facilitate the acquisition and staffing of the JV with local
Chinese managers, technicians, workers and other types of
workforce; |
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Facilitate entry visas, work permits and other travel
formalities for foreign staff of the JV and Party B; |
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Assist the JV in developing a national network for the
distribution of JV Products in the PRC, including, without
limitation, developing effective marketing plans and strategies for
each of the JV Products, securing suitable advertising for the JV
Products, and generally promoting the market for the JV Products;
and |
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Perform other matters entrusted to Party A by the
JV. |
18.2 Party B shall, at its sole cost and
expense, except as otherwise expressly provided:
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Offer support to the JV not inferior to other substantially
similar joint ventures in which Party B is currently engaged or
will be engaged in the future; |
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Provide the JV with bulk Calcitonin and AE necessary for the
production of Calcitonin at the cost defined in the Technology
Transfer Agreement; |
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Provide technical guidance and assistance with respect to the
Technology and with respect to equipment installation, testing and
validation for Phase II production, as set forth in the Technology
Transfer Agreement; |
| (d) |
Facilitate entry visas to the United States for employees of
Party A and the JV; |
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Provide training to the technicians and workers of the JV with
respect to the Technology, as set forth in the Technology Transfer
Agreement; |
| (f) |
Transfer the Technology, which shall meet the designed capacity
and quality requirements defined by the Technology Transfer
Agreement; |
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Assist the JV in developing an international network for the
distribution of JV Products in areas in the Territory but outside
the PRC, including, without limitation, developing effective
marketing plans and strategies for each of the JV Products,
securing suitable advertising for the JV Products, and generally
promoting the market for the JV Products; and |
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Perform such other matters entrusted to Party B by the JV and
accepted by Party B. |
Chapter VII TECHNOLOGY
CONTRIBUTION
ARTICLE 19. For the purposes of the JV
Business, Party A and Party B agree that Party B will provide
advanced technology including product designs, manufacturing
processes, testing methods, material recipe, quality standard and
training as set forth in the Technology Transfer
Agreement.
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ARTICLE 20. Party B agrees to provide
certain guarantees regarding the Technology.
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Provided that the JV constructs and operates the JV Facility,
and manufactures the Calcitonin and the JV Products, all in strict
conformance with the requirements, specifications, Technology and
training provided by Party B from time to time and as set forth in
the Technology Transfer Agreement, Party B will guarantee, as set
forth in the Technology Transfer Agreement: (A) that the
Technology is identical to that in use by Party B in manufacturing
the JV Products on a commercial basis at the time when the
Technology Transfer Agreement enters into force; (B) that the
Technology is suitable for the achievement of the JV’s
business purpose; (C) that the Technology is suitable for the
achievement of the product quality and production capacity required
by this Contract. |
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Party B will provide the JV with the Technology. |
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Party B will provide the JV with a list of the Technology and
technical assistance calculated as capital
contribution. |
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Party B will promptly deliver the designs, technical know-how
and other detailed materials as part of the Technology, as required
by the Technology Transfer Agreement. |
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Party B will contribute its proprietary Technology for the
production of Calcitonin. |
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Party B will guarantee that it is not aware of any current
legal disputes in any format affecting its use of the Technology in
the PRC, or of any infringement by its proposed use of the
Technology in the PRC on any third party patent or intellectual
property rights. If Party B fraudulently concealed such legal
disputes or infringement, Party B shall be liable for damages thus
caused to Party A or the JV. |
ARTICLE 21. In the event that the JV
constructs and operates the JV Facility, and manufactures the
Calcitonin and the JV Products, all in strict conformance with the
requirements, specifications, Technology and training provided by
Party B from time to time and as set forth in the Technology
Transfer Agreement, but, as a result of fraudulent concealment on
the part of Party B in not providing the Technology in accordance
with the Technology Transfer Agreement, the Technology fails to
reach the originally designed capacity set forth in the Technology
Transfer Agreement, Party B shall be liable for the damages to the
JV as set forth in the Technology Transfer Agreement.
ARTICLE 22. Party B is free from
responsibility for damages to the JV that result, in whole or in
part, from non-compliance with the requirements, specifications,
Technology, training, guidelines and standards provided to the JV
by Party B with regard to the construction and operation of the JV
Facility and the manufacture of Calcitonin and the JV
Products.
ARTICLE 23. The Technology is regarded
as conforming to the contract specifications if it can meet the
technical indexes listed by Party B for three (3) consecutive
batches after the Technology is officially put into trial
operation, which will be jointly confirmed by representatives from
Party A, Party B and the JV.
ARTICLE 24. Both Party A and Party B are
under the obligation to keep the Technology confidential in
accordance with the Confidentiality Agreement between the parties
dated October 29, 1998.
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ARTICLE 25. Party A and the JV shall not
provide in any format to any third party the Technology after Party
B has provided the Technology to the JV unless unanimously agreed
by the JV Board. Party B shall not transfer the Technology to any
third party in the Territory after the Establishment
Date.
ARTICLE 26. The JV will have access to
improvements to the Technology developed by Party B after Party B
has provided the Technology to the JV to the extent permitted by,
and on the terms and conditions provided in, the Technology
Transfer Agreement.
ARTICLE 27. The JV shall be entitled to
any new improvements developed through its own efforts on basis of
the Technology. No party shall use or transfer or release any such
new technology to any third party without the permission of the JV.
Party B shall have a right to use such improvements outside the
Territory in accordance with the Technology Transfer
Agreement.
ARTICLE 28. The JV has right of first
refusal to other products independently developed by Party B for
use in the PRC. New products developed by the JV shall belong to
the JV, shall be considered JV Products, and Party B shall have a
right of first refusal to such products outside the Territory. If
the new products developed by the JV entail the use of AE, Party B
or its successor shall provide the JV’s AE requirements for
such new products under the terms of the Technology Transfer
Agreement provided there is no conflict with any obligation of
Party B.
ARTICLE 29. Without the written
permission from the other party after the establishment of the JV,
neither Party A nor Party B as well as their subs
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