Micro-manufacturing Facility Purchase Agreement

10.5 Micro-Manufacturing Facility Purchase Agreement between DenexCorp(TM)/LVPS MicroFacility, Inc. and AO "GIRIYEY"


MICRO-MANUFACTURING FACILITY PURCHASE
AGREEMENT RT 775591697


[Russian translation omitted] THIS AGREEMENT, is made and entered into
as of the 18th day of December, 1996 in
Moscow, Russia by and between
DenexCorp/LVPS MicroFacility with its
principal office at 7755 Center Avenue,
Huntington Beach, California ( in the
person of President/General Director Ron
Pattersonthe "Seller") and AO "GIRIYEY"
with its principal office at 218
Sotsialisticheskaya
St,RostovonDon,344022 Russia ( in the
person of General Director Ovcharenko
N.G.the "Buyer") and is premised upon
the following circumstances (the
"Agreement"):


WHEREAS, Seller is a manufacturer
of modular MicroManufacturing Facilities
which plants are designed to produce
large volume parenteral solutions
("LVPS") in various sized containers;


WHEREAS Buyer desires to purchase
from Seller and Seller desires to sell
to Buyer a MicroManufacturing Facility
upon the terms and conditions
hereinafter set forth.


NOW THEREFORE, in consideration of
the foregoing and in consideration of
the mutual covenants, conditions,and
undertakings herein contained, Seller
and Buyer agree as follows:


1. Purchase of MicroManufacturing
Facility.


1. 1. Seller hereby sells to Buyer and
Buyer hereby purchases from Seller a
Micro-Manufacturing Facility, the
specifications and blueprints (the
"Specifications") for the manufacturing
modules and components which comprise


said facility, and associated equipment
list (the "Equipment List") are more
particularly described in the attached
Exhibit 1, hereinafter referred together
with the inventory of spare parts and
supplies listed in the Specifications,
the "Modules and Components" and as to
the Manufacturing Facility by itself as
the "modules," for delivery to
Rostov-on-Don.


The Modules and Components will include
all equipment necessary for the
production of LVPS including molds for
two (2) sizesin two copies of packaging
and the inventory of Components, but
specifically excludes items such as real
estate, water supply, electrical or
other power of utilities, and general
site preparation, which are Buyer's
responsibility under Section 3.4 below.
The term "Specifications" shall include
the specifications delivered to Buyer by
Seller pursuant to Section 1.3(a) below.


1.2. The Seller represents that the
Modules and Components after final
installation and when property operated
in accordance with Seller's standard
proper operating procedures and with raw
materials meeting and otherwise in
accordance with Seller's specifications,
will enable Buyer to:


(a) Produce quality meeting United
States Food and Drug Administration
("US FDA") Good Manufacturing
Practices in compliance with US FDA
regulations, 21 CFR Pan 211and USP No.
XXIII; and


(b) Produce a minimum of 4,000,000
500ml units of such LVPS per year,
assuming not less than six (6) fully
operational (i.e. with no down time),
24 hour production shifts per week.


1.3. In connections with the production
and sale of the Modules and Components,
Seller shall:


(a) Survey the Modules site selected
and acquired by Buyer in consultation
with Seller (the "Site"), and prepare
specifications for the Site based upon
information provided by Buyer pursuant
to Section 3.4 below relating to
general construction, water sources
(including chilled water supply and
still feed water), electrical power,
steam supply, oilfree compressed air
supply, oil-free vacuum requirements,
communication lines, sewage and waste
disposal transportation of the
Modules,


(b) Manufacture the Modules and
Components in the United States of
America, and upon completion, test the
Modules and Components, and certify in
writing to Buyer that the Modules
meets the production and quality
standards set forth in Section 1.2
above,


(c) Train six (6) of Buyer's personnel
(meeting the requirements set forth
below)(training in Russian language)
in the proper operation and
maintenance of the Modules, and be
responsible for the cost of room and
board for such personnel at a location
to be selected by Seller. Such
training shall last for a period not
to exceed four (4) weeks commencing
upon a date not more than fortyfive
(45) days after Seller's notice to
Buyer that Seller is ready to commence
such training.


(d) Obtain all necessary licenses and
permits in connection with the
shipment of the site with a safe berth
to which the parties may agree,
provided however, that Seller shall
have no obligation to obtain any


license, permits, or other
authorizations, other charges
required, directly or indirectly, in
connection with the transportation or
operation of the Modules and
Components, or the reassembly of the
Modules at the Site, or the
preparation of, provision of utilities
to and/or the construction of the
building and/or improvements on the
Site, and


(e) Arrange for the packaging or
crating, shipment,


(f) Perform its obligations under this
Agreement in accordance with the
Implementation Schedule.


Seller shall be solely responsible for
the selection of the method of
transportation by which the Modules
and Components are shipped, and all
freights and insurance costs and risk
of loss until the Modules and
Components arrive DEQ the dock at the
port of Rostovon- Don.


2. Purchase Price


2.1. U.S. S 550,000.00 Initial Purchase
Deposit will be paid upon execution of
this Agreement. Reimbursement of these
funds will only be by installments on
presentation of invoice in accordance
with Paragraph (4) 4.1 B. below.


The Buyer shall pay to Seller as
consideration of the plant project works
and the other obligations of Seller
pursuant to this Agreement as follows:.


The seller is obliged to present the
reports on use of money resources during
120 days from the moment of payment by
the Buyer of an initial payment
according to the requirements of the
Buyer and Seller on documenting the
bargain.


a) Consulting services,
informativeconsulting services in
marketing and study of opportunities
for optimum reagents deliveries and
components for manufacture of
solutions. The Seller is obliged to
advise the Buyer on all technical
questions and to give at his order
about sufficient volumes the necessary
engineering specifications 90000 US
dollars.


b) Survey of a place of accommodation
of a microfactory for manufacture of
solutions by the experts
DenexCorp/LVPS in Rostovon- Don (4
peoples. on 10 days) 60000 US dollars.


c) Making a shooting of territory by
the experts of DenexCorp1LVPS in
RostovonDon with distribution of the
recommendations on a lining of the
communications to Plant building,
conformity of premises of buildings,
architectonic form of a building in
conformity of the requirements of
norms FDA


(Distribution of the project of a
building part) 180000 US dollars.


d) Training the managers of JSC
"Giriey" to design and operation of a
factory and realization of
examinations on norms FDA
(RostovonDon) on 10 day program-100000
US dollars


e) Administrative and juridical
expenses, financial agreement,
regulation questions with FDA USA on
accordance with law and juridical
norms 100000 USD (f) Test,
certification and state inspection.
Preparation of standard documentation
with agreement20000 USD.


2.2.Buyer shall pay the Purchase Price
to order of Seller as follows:


(a) The balance of U.S. $ 4 950 000.00
shall be paid over a period of ten
(10) years in one hundred and twenty
(120) monthly installments, after
reception of the goods.


Approximately price of the Agreement 5
500 000 USD It is possible to pay for
the Plant purchase before the
appointed time.


Seller shall notify Buyer of the date
of shipment the Modules and Components
from a U.S. port of exit. Thereafter
Buyer shall make such payments to
Seller and/or Seller's agent on the
fifth (5th) business day of each and
every calendar month from the month
following the date of such notice
until paid in full.


Buyer hereby further agrees to grant
to Seller or its nominee an equivalent
of an American real estate mortgage
and/or grant deed, which is to be
recorded according to the Buyer's
local laws, on the Site as well as any
structure thereon in favor of Seller
until such time as the Purchase Price
of the Modules and Components due is
paid in full under Section 2.2(b).
Said titles and guarantees all to be
presented to Seller by the Buyer prior
to shipment of said Module and
Components.


3. Obligations of Buyer.


3. 1 Buyer shall be solely responsible
for the arrangement and expense of
acquiring the Site including, but not
limited to, all construction, water
sources, electrical power, steam supply,
oil-free compressed air supply, oil free
vacuum requirement, communication lines,
off-site warehousing. Buyer will provide
guarantees of government and/or utility
suppliers as to the above prior to
shipment of the Modules and Components
by Seller. Above improvements to Site by
Buyer are to be pledged to the Seller
upon execution of this Agreement until
Seller and/or Seller's agent is paid in
full by Buyer.


3.2.Buyer agrees to sent for training
the next persons:


(a) Two (2) graduate pharmacists who
have graduated from a college or
university acceptable to Seller with a
Bachelors or equivalent degree in
pharmacology


(b) Two (2) entrylevel chemical or
mechanical engineers with a minimum
Bachelor of Science degree from a
college or university acceptable to
Seller, and


(c) Two (2) laboratory technicians
with educational credentials and
laboratory experience acceptable to
Seller.


Buyer hereby acknowledges and agrees
that Seller shall not be r ...