1
[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT
HAVE BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION]
EXHIBIT 10.9
December 31, 1993
MANUFACTURING AND SUPPLY AGREEMENT
This Manufacturing and Supply Agreement ("Agreement") is made and entered into
as of December 31, 1993 between and among Diamond Animal Health, Inc. ("DAH"),
Agrion Corporation ("Agrion"), Diamond Scientific Co. ("Diamond Scientific")
and Miles Inc. ("Miles").
WITNESSETH:
WHEREAS, on the date hereof Miles and DAH have entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement") pursuant to which Miles has sold to
DAH one hundred percent (100%) of the issued and outstanding stock of Agrion;
WHEREAS, Diamond Scientific is a wholly-owned subsidiary of Agrion and is a
manufacturer of biological and pharmaceutical animal health care products and
operates a manufacturing facility with licenses from the USDA;
WHEREAS, pursuant to the Stock Purchase Agreement, DAH, Diamond Scientific and
Miles have agreed to enter into this Agreement, whereby Diamond Scientific will
manufacture and supply to Miles certain biological veterinary products,
including those identified on Exhibit A hereto.
NOW, THEREFORE, the parties hereby agree as follows:
I. DEFINITIONS.
1.1 General. All capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings assigned to them in the Stock Purchase
Agreement. In addition, the following terms shall have the meanings set forth
below:
1.2 "Affiliate" shall mean, with respect to any party, an entity controlling,
controlled by or under common control with, such party. The concept of
"control," as used in this definition means the power, whether by stock
ownership or otherwise, to direct at least fifty-one percent (51%) of the
voting power of the relevant entity.
1.3 "Plant" shall mean the Diamond Scientific animal health care manufacturing
facility located in Des Moines, Iowa, and the research facility located in
Carlisle, Iowa.
1.4 "Products" shall mean those biological veterinary products identified on
Exhibit A hereto, and for which there is an USDA/APHIS approved Outline of
Production in place on December 31, 1993 (but also including BRSV VAC F3LP,
Horizon X, Compass 4 and Compass 9).
1.5 "New Products" shall mean biological veterinary products that (i) are
manufactured pursuant to specifications agreed upon by Miles and Diamond
Scientific, (ii) require a new or revised Outline
of Production or license from the USDA (except for BRSV VAC F3LP, Horizon X,
Compass 4 and Compass 9, which are considered to be Products), and (iii) are
manufactured for Miles at the request of Miles and incorporate research to
which Miles has contributed after the date of this Agreement.
1.6 "Specifications" shall mean, as the context may require, either one or both
of the following, which have been mutually agreed upon by the parties: (i)
certified appropriate quantitative and qualitative particulars for all raw
materials including active and non-active
2
excipients that are used to prepare all components represented in and by final
Products or New Products or Purchase Commitment Products, and (ii) a filed and
approved USDA Outline of Production describing in detail the manufacturing
process applicable for each Product or New Product or Purchase Commitment
Product, and the testing and release criteria applicable to each Product or New
Product or Purchase Commitment Product.
1.7 "Net Sales" shall mean the gross sales price invoiced or charged
purchasers, less any of the following: (a) sales or excise taxes paid directly
or indirectly by Diamond Scientific; (b) any shipping costs separately itemized
by Diamond Scientific; and (c) normal and customary trade discounts, returns
and allowances.
1.8 "Outline of Production" means an APHIS approved document which delineates
(i) all of the manufacturing steps which have been evaluated and confirmed (via
testing) for a product and (ii) defines all release testing criteria required
and/or developed by the firm to release satisfactory product to the market,
approval of which is required prior to issuance of a USDA product license.
1.9 "Purchase Commitment Products" shall mean Products and those biological
veterinary products whose transfer prices apply against Miles' minimum annual
purchase commitment as provided in Section 5.2.
II. MANUFACTURE AND SALE OF PRODUCTS.
2.1 Purchase and Sale. For each calendar year during the term of this Agreement
commencing with calendar year 1994 and subject to the provisions hereof, Miles
agrees to place orders with Diamond Scientific for Products for shipment within
such calendar year, at an annual aggregate cost of not less than [
] (such amount to be calculated in
accordance with Article IV hereof and subject to reduction as described
therein); it being understood that in the event Miles shall fail to place
orders for shipment of Products within any calendar year aggregating at least
[ ] (or an amount reduced
pursuant to Section 4.2), then Miles nevertheless shall be obligated to make
payment to Diamond Scientific as described in Section 5.1 hereof. In the event
this Agreement is not renewed at the expiration of its initial term, then
Diamond Scientific and Miles agree that the provisions of this section 2.1
shall be deemed to apply to the first half of calendar year 1996, but the
amount of [ ] shall be
substituted for each reference to [
]. Diamond Scientific agrees to manufacture and supply Products as
provided herein. Diamond Scientific shall have no obligation to manufacture and
supply any New Product or any Purchase Commitment Product (other than Products)
to Miles unless the sale and purchase thereof is mutually agreed upon by the
parties. Moreover, Diamond Scientific shall not be obligated to manufacture and
supply Products in any given calendar year having an aggregate transfer price
of greater than [ ] unless otherwise agreed by
Diamond Scientific. The parties acknowledge that purchase orders relating to
shipments of Products during the first five (5) months of the calendar year
1994 have previously been delivered by Miles and accepted by Diamond
Scientific.
2.2 Production Arrangement. During the term of this Agreement, Diamond
Scientific shall finish all labor, equipment, facilities, raw materials (except
as may otherwise be agreed between the parties in connection with any split
manufacturing arrangements) and packaging materials necessary to manufacture
the Products, New Products, or Purchase Commitment Products (collectively,
"Contract Products") in accordance with the Specifications. Diamond Scientific
shall also analyze for quality control, store and package the Contract Products
in accordance with USDA/APHIS regulations and shall ship the
-2-
3
Contract Products in accordance with instructions from Miles. Miles shall
furnish the necessary specifications for labeling to Diamond Scientific, which
labeling shall be affixed by Diamond Scientific as provided in Article XI
hereof.
2.3 Orders. Each purchase order hereunder delivered from forecasts specified in
Sections 3.1 and 3.2 from Miles for the Products shall specify the desired
quantities and the delivery dates therefor and shall be submitted to Diamond
Scientific at least five (5) months prior to the requested delivery date unless
Diamond Scientific agrees to accept the order on shorter notice. Each purchase
order shall be binding upon Miles upon written acknowledgment by Diamond
Scientific. A purchase order may be amended or modified following written
acknowledgment only with the written consent of Diamond Scientific. Revisions
to specified filling, labeling or packaging configurations may be made by Miles
not later than two (2) months prior to the specified delivery date unless
otherwise agreed by Diamond Scientific. Miles will endeavor to order Products
and New Products in standard batch sizes as shown on Exhibit B. If specified
order amounts for Products and New Products would result in a batch which is
thirty percent (30%) below the relevant standard batch size, Miles will be
notified and at Miles' option (i) the parties will mutually agree to an
increased transfer price for the ordered Products and New Products; (ii) Miles
will agree to take the entire standard batch size of the ordered Products and
New Products, or (iii) Miles may submit a revised purchase order for a quantity
of Products and New Products within the permitted parameters.
2.4 Non-exclusive Purchase Obligation. It is hereby understood and agreed that
Miles shall have no obligation to purchase Products or New Products solely from
Diamond Scientific, but instead shall be free to place orders for Products or
New Products with other suppliers in Miles' sole discretion.
2.5 Non-Competition Agreement. It is hereby understood and agreed that DAH,
Agrion and Diamond Scientific, or any Affiliate thereof, will not, directly or
indirectly, during the period beginning on the date of this Agreement and
ending on December 31, 1995 use, manufacture, supply, market or sell to
customers other than Miles, or Affiliates of Miles, any biological veterinary
product containing any one or more of the antigens used in the manufacture of
the Products or New Products. Notwithstanding the foregoing, Diamond Scientific
may (i) manufacture or use the Products or New Products for research purposes
and (ii) manufacture any new biological product described in the next sentence
prior to January 1, 1996 to be held for inventory, provided such new products
may be marketed and sold only after January 1, 1996 subject to the provisions
of the next sentence. On or after January 1, 1996, DAH, Agrion or Diamond
Scientific, or any Affiliate thereof, may use, manufacture, supply, market or
sell to customers other than Miles, or Affiliates of Miles, the Bovine Products
(as defined in the Bovine Technology Agreement described in Section 2.6) and
any new biological product whose application is for the prevention of bovine
disease and which contains one or more of the antigens used in the manufacture
of the Bovine Products, provided that during the period commencing on January
1, 1996 and ending on December 31, 1998, Diamond Scientific agrees to pay to
Miles a fee of [ ] of Net Sales of Bovine Products
or such new biological products sold anywhere in the Western Hemisphere or
Europe, which fee shall be payable quarterly by the 15th day following quarter
end. Diamond Scientific shall prepare and submit with each quarterly payment a
report supporting the calculation of the fee, which shall be subject to audit
in accordance with Section 10.2.
2.6. Technology Agreements. In accordance with a certain Non- Bovine Technology
Agreement between Miles and DAH of even date herewith (collectively, the
"Technology Agreements"), Miles has licensed designated technology to Diamond
Scientific solely for the purpose of allowing Diamond Scientific to manufacture
Non-Bovine Products
-3-
4
designated therein under this Agreement. In accordance with a certain
Non-Bovine Technology Agreement and Bovine Technology Agreement, both between
Miles and DAH of even date herewith, Diamond Scientific has agreed during the
periods therein described to assist Miles, or firms designated by Miles, to
obtain a sublicense from the USDA of Diamond Scientific's USDA licenses to
permit Miles, its Affiliates, or third-party suppliers to manufacture
designated Products or New Products on Miles' behalf. In accordance with the
Bovine Technology Agreement, Miles has deeded and conveyed designated
technology relating to Bovine Products to DAH, and Diamond Scientific has
agreed to grant a perpetual, transferable, non-exclusive license in designated
technology to Miles to manufacture Bovine Products designated therein. Diamond
Scientific agrees that upon termination of this Agreement it will take steps
requested by Miles in order to terminate Diamond Scientific's USDA license
rights to manufacture the Non-Bovine Products designated in the Non-Bovine
Technology Agreement. The provisions of the Technology Agreements described in
this Section 2.6 shall apply with full force and effect to the subject matter
hereof that are governed thereby and they are incorporated by reference herein.
In the event of any conflict between the Technology Agreements and this
Agreement, the provisions of the Technology Agreements shall control.
2.7 Warranties. Diamond Scientific warrants to Miles that (i) Contract Products
shall be manufactured in accordance with the applicable Specifications, and
(ii) all raw materials supplied by Diamond Scientific shall comply with
USDA/APHIS standards and all applicable Specifications and shall be free of any
defect, and fit for the use or purpose for which they are supplied. Diamond
Scientific makes no warranty that the Products are (or that any Contract
Product will be) merchantable or fit for any particular purpose. Diamond
Scientific makes no representations and extends no warranties of any kind with
respect to use, sale, or other disposition by Miles or its vendees or other
transferees of any Contract Products. The warranties in this Section 2.7 are
expressly made in lieu of any and all other warranties, provided this sentence
shall not be construed to limit any identification obligation of Diamond
Scientific under Section 9.1(a). It is further agreed that the specifications
for products or any new products that Diamond Scientific may manufacture or
sell to customers other than Miles or Affiliates of Miles may differ from the
Specifications for the same Products or Contract Products sold to Miles or
Affiliates of Miles.
2.8 EU Compliance. Diamond Scientific may prior to January 1, 1996, for the
sole purpose of European Unity compliance, initiate procedures that would
enable a third party to manufacture Bovine Products on behalf of Diamond
Scientific on or after January 1, 1996, subject to the provisions of Section
2.5.
2.9 Contract Manufacture. Miles acknowledges that Diamond Scientific may at any
time manufacture animal health care products having any application for other
manufacturers, suppliers or vendees using the third party's licenses and/or
technology.
III. FORECASTS.
3.1 First Year Forecast. Within fifteen (15) days after the date hereof, Miles
shall submit to Diamond Scientific a written forecast of the quantities and
types of Products that Miles anticipates it will order from Diamond Scientific
hereunder during each of the first twelve (12) months of this Agreement.
3.2 Rolling Monthly Forecast. Commencing with the month of February, 1994, and
each month thereafter, Miles will submit to Diamond Scientific within fifteen
(15) business days after the first day of each month written estimates of the
quantities of the Products
-4-
5
that Miles anticipates it will order from Diamond Scientific during each of the
succeeding twelve (12) months.
3.3 Non-binding Estimates. The forecasts provided by Miles to Diamond
Scientific hereunder shall not be deemed binding commitments on the part of
Miles to order Products or New Products in the quantities specified therein,
but are solely for the purpose of enabling Diamond Scientific to more
effectively schedule the use of its facilities.
3.4 Status Reports. Diamond Scientific shall furnish a monthly order status
report to Miles not later than the 15th calendar day of each month.
IV. CALCULATION OF MILES' PURCHASE COMMITMENT.
4.1 Products Pricing. Transfer prices for each Product set forth on Exhibit A
hereto shall be in effect for Products having specified delivery dates prior to
April 1, 1995. Transfer pricing to be in effect for the Products to be
delivered during the period commencing April 1, 1995 and ending on June 30,
1996 and during subsequent twelve (12) month periods commencing July 1, 1996
and each July 1 thereafter shall be negotiated by the parties in good faith,
taking into account such factors as, but not limited to, cost changes, volume
changes and plant utilization. In the event revised transfer prices are not
agreed upon, then the transfer price previously agreed upon shall remain in
effect until the parties reach agreement thereon.
4.2 Savings Resulting from Process Improvements. Process improvements that
result in New Products as defined herein and that are attributable in whole or
in part to research that has been paid for by Miles shall entitle Miles to a
corresponding reduction in the transfer price of such products mutually agreed
to between Miles and Diamond Scientific negotiated by the parties in good
faith. The aggregate reduction to which Miles is entitled hereunder in a
calendar year shall apply toward satisfaction of Miles' [
] minimum annual purchase commitment for
such calendar year. The portion of any such reduction to which Miles is
entitled in an calendar month shall be set off against the monthly payments due
from Miles to Diamond Scientific pursuant to Section 5.1 hereof.
4.3 Delay Fee. In the event of a failure by Diamond Scientific to deliver (i)
at least seventy percent (70%) during the calendar year 1994 or (ii) at least
eighty percent (80%) during each subsequent calendar year, of the value of
Purchase Commitment Products (calculated on the basis of the transfer prices
times the quantity ordered) ordered by Miles within thirty (30) days following
the specified delivery date ("Minimum Delivery Amount"), Miles shall be
entitled, on the 31st day, to an amount from Diamond Scientific equal to ten
percent (10%) of the difference between the Minimum Delivery Amount and the
value of the Purchase Commitment Products actually delivered. Such amount shall
be set off against the next monthly payment due from Miles to Diamond
Scientific pursuant to Section 5.1 hereof. The delay fee described in this
Section 4.3 shall not be applicable during any month in which Miles has
suspended payments pursuant to Section 4.4.
4.4 Suspension of Monthly Payments. In the event of a failure by Diamond
Scientific to deliver Purchase Commitment Products on their specified delivery
date or dates having a value (calculated on the basis of the transfer prices
times the quantities ordered) equal to or greater than [
], then Miles shall be entitled to suspend further
monthly payments otherwise due under Section 5.1 until such time that the value
of the Purchase Commitment Products that have not been delivered by their
specified delivery dates shall have been reduced to an amount of less than [
] at which time, all suspended
-5-
6
monthly payments shall be paid to Diamond Scientific. DAH agrees to ship oldest
orders first unless otherwise directed by Miles.
4.5 Termination of Monthly Payments. In the event a Material Default (as
defined below) shall have occurred under the Lease of even date between Miles
and DAH, Miles shall be entitled to terminate further monthly payments
otherwise due under Section 5.1. From and after the date of such termination,
payment terms for Contract Products shall be net twenty (20) days. Miles shall
be entitled to a reimbursement from Diamond Scientific of the amount by which
the monthly payments theretofore made by Miles during the preceding twelve (12)
months exceeds the aggregate transfer price of Purchase Commitment Products
theretofore delivered by Diamond Scientific during such twelve (12) month
period. The reimbursement amount shall be payable by Diamond Scientific in
equal monthly payments over a twelve (12) month period following the date of
such termination. As used in this section, the term "Material Default" means
that (i) an "Event of Default" (as defined in the Lease) on the part of DAH
shall have occurred and be continuing, and (ii) the damages caused to Miles by
reason of such Event of Default shall equal or exceed $100,000.
V. PAYMENT TERMS.
5.1 Monthly Payments. Payment to Diamond Scientific for Products and any other
agreed upon Purchase Commitment Products scheduled for delivery during the term
of this Agreement shall be made by Miles in equal monthly installments, on the
first business day of each month during the term hereof in advance, commencing
on January 3, 1994. The amount of each monthly installment shall be [
] subject, however, to reduction by set-off pursuant
to Sections 4.2 and 4.3 hereof. If during any calendar year Diamond Scientific
shall have delivered to Miles a total of [
] worth of Purchase Commitment Products based on the
transfer prices therefor), then any additional Purchase Commitment Products
having an aggregate transfer price up to [
] and a specified delivery date during such calendar year shall have a
purchase price equal to their unit transfer prices less a fifteen percent
discount and the payment terms for such additional Purchase Commitment Products
shall be net twenty (20) days. The amount of $[ ] described above shall be
increased by the amount Miles shall be entitled to credit against its minimum
annual purchase commitment pursuant to Section 4.2. Products scheduled for
delivery after the expiration of this Agreement shall be net twenty (20) days.
5.2 New Product Payments. The purchase by Miles from Diamond Scientific of any
biological veterinary products that contain one or more antigens used in the
manufacture of the Products (regardless whether such products fit within the
definition of "New Products") shall apply against the [
] minimum purchase commitment described in Section
5.1, and the transfer prices thereof shall be negotiated by the parties in good
faith. The purchase by Miles from Diamond Scientific of any biological
veterinary products that do not contain any of the antigens used in the
manufacture of the Products (regardless whether such products fit within the
definition of "New Products") shall not apply against the [
] minimum purchase commitment described in
Section 5.1 during the first twelve (12) months that they are specified for
delivery (but any such products that are specified for delivery thereafter
shall apply against the minimum purchase commitment). The purchase price of
biological veterinary products that do not contain any of the antigens used in
the manufacture of the Products will be negotiated in good faith by the parties
and the payment terms for such biological veterinary products shall be net
twenty (20) days.
-6-
7
VI. DELIVERY AND TITLE.
6.1 Delivery. Diamond Scientific shall ship Contract Products at Miles' expense
in accordance with Miles' instructions. Miles shall make direct payment to the
common carrier for shipping costs. For purposes of this Agreement, delivery of
any Contract Products by Diamond Scientific shall be deemed to have taken
place, and (except as provided in Section 6.2 hereof) title to such Contract
Products shall pass to Miles, upon delivery by Diamond Scientific F.O.B. Des
Moines to the common carrier selected by Miles for delivery to a designated
Miles warehouse or warehouses. Diamond Scientific will endeavor to ship
Contract Products having the longest possible dating. Unless approved by Miles
prior to shipment, Diamond Scientific agrees that Products will have a dating
at time of shipment of not less than the minimum shown on Exhibit C; provided
that in the event retesting is required for a Product, the minimum dating
otherwise required shall be reduced by a period of sixty (60) days. With
respect to Contract Products that are available for delivery on the date
specified in the order and not picked up by the common carrier within thirty
(30) days following the date specified on the purchase order, Diamond
scientific shall charge a warehousing fee of one percent (1%) per month of the
aggregate prices of the relevant Contract Products.
6.2 Title in the Event of Split Manufacturing.
(a) In the event that Miles orders Contract Products from Diamond
Scientific that will be manufactured using raw materials supplied by
Miles, title to all such raw materials shall at all times remain in
Miles. However, Diamond Scientific shall assume all liability for any
casualty loss from destruction while such raw materials are in its
custody. Miles will provide proper documentation (i.e. copy of USDA/APHIS
Form 2008) to Diamond Scientific for all materials owned by Miles and
transferred to Diamond Scientific for further manufacturing to assure
their quality and acceptability to Diamond Scientific quality assurance.
Miles warrants to Diamond Scientific that all raw materials supplied by
Miles shall comply with USDA/APHIS standards and all applicable
Specifications and shall be free of any defect, and fit for the use or
purpose for which they are supplied;
b) In the event Miles orders products in process from Diamond Scientific
for finishing by Miles, title to all such products in process shall
transfer to Miles upon delivery. Diamond Scientific will provide proper
documentation (i.e. copy of USDA/APHIS Form 2008) to Miles for all
materials owned by Diamond Scientific and transferred to Miles for
further manufacturing to assure their quality and acceptability to Miles
quality assurance. Diamond Scientific warrants to Miles that all products
in process supplied by Diamond Scientific shall comply with USDA/APHIS
standards and all applicable Specifications and shall be free of any
defect, and fit for the use or purpose for which they are supplied.
VII. TERM AND TERMINATION.
7.1 Term. The term of this Agreement, unless it is earlier terminated pursuant
to Section 7.2 hereof, shall be thirty (30) months, and shall automatically
renew on July 1, 1996, for an eighteen (18) month term and automatically
thereafter on an annual basis unless either Miles or Diamond Scientific gives
the other eighteen (18) months prior written notice that it does not wish to
renew this Agreement.
7.2 Termination. Without prejudice to any rights or remedies otherwise
available to the parties hereto, each of Miles and Diamond Scientific shall
have the right to terminate this
-7-
8
Agreement prior to expiration of its term by giving the other party written
notice thereof only in the event:
(a) the other party fails to perform or violates any provision of this
Agreement in any material respect other than a failure of Diamond
Scientific to make delivery of any Contract Products hereunder, and such
failure or violation continues unremedied for a period of thirty (30)
days after the date the non-defaulting party gives notice to the
defaulting party of such failure or violation hereunder;
(b) Diamond Scientific shall fail to deliver Purchase Commitment Products
to Miles so as to entitle Miles to suspend monthly payments pursuant to
Section 4.4 and such failure shall continue unremedied for an additional
period of ninety (90) days from the date Miles was permitted to suspend
its monthly payments; provided that Diamond Scientific shall have had at
least one hundred fifty (150) days following the specified delivery date
in which to cure any late delivery caused by product failure;
(c) the other party (or, in the case of Diamond Scientific, either DAH,
Agrion or Diamond Scientific) is declared insolvent or bankrupt by a
court of competent jurisdiction, or a voluntary petition in bankruptcy is
filed against such party in any court of competent jurisdiction and is
not terminated within 90 days, or a receiver is appointed for such party
or such party makes an assignment for the benefit of creditors; or
(d) DAH shall be in default under the Promissory Note referred to in
Section 5.05 of the Stock Purchase Agreement relating to the purchase of
the Inventory (as defined therein), such default shall not be cured or
waived within the period of grace, if any, applicable thereto and Miles
shall have given notice of acceleration thereof to Diamond Scientific.
7.3 Conduct in the Event of Termination. Upon termination of this Agreement for
any reason (whether due to breach or otherwise), Diamond Scientific shall
furnish to Miles a complete inventory of all stock on hand of the raw
materials, if any, provided by Miles, the work in progress for the manufacture
of the Contract Products, and the Contract Products manufactured for Miles
hereunder. Without limitation to the remedies otherwise available to the
parties, unless otherwise agreed to between the parties, the parties shall act
as follows as soon as practicable:
(a) If this Agreement is terminated due to breach by Diamond
Scientific, Miles shall be entitled to reimbursement from Diamond
Scientific the amount by which the monthly payments theretofore made by
Miles during the preceding twelve (12) months exceeds the aggregate
transfer price of Purchase Commitment Products theretofore delivered by
Diamond Scientific during such twelve (12) month period;
(b) Products and New Products manufactured on or prior to the date of
termination pursuant to orders from Miles shall be delivered by Diamond
Scientific to Miles as promptly as practicable, and Miles shall pay
Diamond Scientific therefor within ten (10) days of delivery; provided,
however, that except if this Agreement is terminated due to breach by
Miles, the amount otherwise payable to Diamond Scientific shall be set off
against the amount owed by Diamond Scientific pursuant to (a) above; and
(c) All raw materials and labeling furnished by Miles shall be
returned to Miles at Miles' expense (or if this Agreement is terminated
due to breach by Diamond Scientific, at its expense) not less than ten
(10) business days after the date of termination.
-8-
9
7.4 The expiration or termination of this Agreement shall not operate to
release any party from any liability incurred prior to or upon termination
hereof.
VIII. CONFIDENTIALITY.
8.1 Protection of Information. DAH, Diamond Scientific, Agrion and Miles shall
treat as confidential all information provided hereunder (including without
limitation information related to Specifications, forecasts, production yields
and pricing) in accordance with the confidentiality provisions of the
Technology Agreements and they shall take such precautions with respect to such
information as they normally take with regard to their own proprietary
information to prevent disclosure to third parties, and such disclosure shall
be made only as provided in the Technology Agreements.
8.2 Use of Information. All information and materials (including materials made
from Miles- provided materials and materials made in accordance with Miles
information) required to be kept confidential pursuant to the Technology
Agreements shall be used by DAH, Diamond Scientific and Agrion only pursuant to
and in accordance with this Agreement and the Technology Agreements. All
information and materials (including materials made in accordance with Diamond
Scientific information) required to be kept confidential pursuant to the
Technology Agreements shall be used by Miles only pursuant to and in accordance
with this Agreement and the Technology Agreements.
IX. INDEMNIFICATION, INSURANCE AND REGULATORY MATTERS.
9.1 Indemnification.
(a) DAH, Agrion and Diamond Scientific each hereby agrees to defend,
indemnify and hold Miles, its Affiliates and their respective officers,
directors, agents and employees harmless from and against, and DAH, Agrion
and Diamond Scientific each agrees that Miles will not defend, indemnify
or hold DAH, Agrion and Diamond Scientific harmless from or against any
loss, claim, action, damage, expense or liability (including defense costs
and attorneys fees and the costs of any recall) arising out of or related
to (i) DAH's, Agrion's or Diamond Scientific's failure to manufacture
Contract Products in accordance with the Specifications, (ii) the
negligence or reckless or willful misconduct of DAH, Agrion, Diamond
Scientific or their respective officers, directors, agents or employees;
(iii) any breach or default by Diamond Scientific of this Agreement; (iv)
any liability arising out of any defect in raw materials supplied by
Diamond Scientific or if they are not fit for the particular use or
purpose for which they were supplied; (v) any liability arising out of the
removal or disposal of hazardous waste generated in connection with the
manufacture of the Contract Products following the date of this Agreement,
other than merthiolate; (vi) any alleged patent infringement in respect to
raw materials Diamond Scientific supplies; (vii) any liability, whether
for bodily injury, property damages, consequential damages or otherwise,
arising out of the defective manufacturing of Contract Products by Diamond
Scientific; or (viii) any liability arising from the contamination of a
Contract Product (excluding field contamination). Notwithstanding the
foregoing, in the event a Contract Product fails by reason of stability
within its approved dating, the sole liability of Diamond Scientific shall
be to reimburse Miles the transfer price of such failed product that
remains in the distribution channels.
(b) Miles hereby agrees to defend, indemnify and hold DAH, Agrion and
Diamond Scientific, its Affiliates and their respective officers,
directors, agents and employees harmless from and against the loss, claim,
action, damage, expense liability (including defense costs and attorney
fees and the costs of any recall, arising out of or related to (i)
-9-
10
the sale to or use by any person or entity of any of the Contract
Products manufactured by Diamond Scientific in compliance with the
Specifications (except as described in (a)(viii) above, (ii) any alleged
patent or trademark infringement in respect to Products or New Products or
raw materials Miles supplies, (iii) any breach or default by Miles of this
Agreement, or (iv) arising out of or related to the negligence or reckless
or willful misconduct of Miles or its officers, directors, agents or
employees. Miles agrees that Diamond Scientific will not defend, indemnify
and hold Miles harmless from losses, judgments, claims, actions, damages,
expenses, defense costs or attorney's fees arising out of or relating to
the sale or use by any person or entity of any of the Contract Products
manufactured by Diamond Scientific pursuant to the Specifications, which
arise out of, concern or relate to:
1) any design defect or other defect in the Specifications;
2) any liability arising out of any express warranty by or for Miles,
its officers, directors, agents, employees or its distributors of
Contract Products unauthorized by Diamond Scientific in writing;
3) any liability arising out of any failure by Miles to warn product
distributors, purchasers, consumers or users of any hazards or
dangerous conditions which related to, concern or result from the
Contract Products;
4) any liability arising out of professional services performed by
Miles, its officers, directors, agents, employees or its
distributors, unless such liability results from the defective
manufacturing of the Contract Products by Diamond Scientific;
5) any liability for bodily injury or property damage arising out of
labeling, relabeling, repackaging or use as a container, part or
ingredient in any other thing or substance by or for Miles, its
officers, directors, agents, employees, or its distributors of said
Contract Products, unless such labeling, relabeling, repackaging or
use has been expressly authorized in writing by Diamond Scientific;
6) any liability arising out of any implied warranty of
merchantability or fitness for a particular use or purpose that
Miles, its officers, directors, agents, employees or its distributors
may extend to third party purchasers of the Contract Products;
7) any bodily injury or damage arising out of any acts of Miles, its
officers, directors, agents, employees, or its distributors of the
Contract Product which changes the condition of the Contract Product
or, if any of the following are customarily performed by the
officers, directors, agents, employees or vendors or distributors of
Miles, any failure to inspect, adjust or service the Contract
Products, whether liability therefor is based on negligence or breach
of warranty;
8) any liability arising out of any defect in raw materials supplied
by Miles or if they are not fit for the particular use or purpose for
which they were supplied;
9) any liability arising out of removal or disposal of merthiolate.
9.2 Indemnification Procedure. Each party of this Agreement shall give
immediate written notice to the other of any and all actions, claims, suits or
proceedings brought against the party giving such notice which relate to or
concern possible payments or obligations under Section 9.1 hereof. In the event
that a party asserts a claim for indemnification pursuant to Section 9.1
hereof, it shall give prompt written notice to the other party. Upon prompt
written acknowledgment by a party that it is obligated to
-10-
11
indemnify the party or parties hereunder, it shall have the right at its own
expense to defend any action, suit or proceeding brought against the other
party. The indemnified party also shall have the right to participate in such
proceeding and to employ its own counsel in any such case at its expense and,
whether or not the indemnified party elects to so participate, the other party
shall keep it fully informed of any such action, suit or proceeding at all
stages thereof.
9.3 Insurance. Diamond Scientific shall maintain during the term of this
Agreement at its cost and at the request of Miles for a period of five (5)
years thereafter, comprehensive liability insurance and product liability
insurance coverage reasonably acceptable to Miles. Diamond Scientific agrees
that such insurance shall not be canceled or materially altered without the
express written consent of Miles. Diamond Scientific shall provide certificates
of insurance evidencing such coverage to Miles within ten (10) days from the
date hereof and on each anniversary of the insurance policy during the term
hereof.
9.4 Regulatory Matters. Diamond Scientific shall be responsible for
manufacture, processing, packaging and holding of the Contract Products in
compliance with USDA/APHIS standards. Miles shall be responsible for compliance
with USDA/APHIS standards of an raw materials supplied by Miles, Specifications
relating to the Contract Products manufactured for Miles pursuant to this
Agreement, and labeling components. Diamond Scientific shall be responsible for
compliance with USDA/APHIS standards of any raw materials supplied by Diamond
Scientific. Each party shall provide reasonable assistance to the others, at no
charge, if necessary to respond to USDA audits, inspections, inquiries or
requests concerning the Contract Products.
(a) Diamond Scientific shall not make any modifications to the
Specifications, manufacturing processes, suppliers, test methods, sampling
procedures or SOPs for the Contract Products manufactured for Miles
pursuant to this Agreement, without obtaining from Miles, prior written
consent and Diamond Scientific shall notify Miles in the event any such
modifications are mandated by the USDA;
(b) With respect to licenses owned by Miles as designated in the
Technology Agreements, Miles shall have the right at all times to review,
and to make changes that it reasonably deems necessary to, all regulatory
filings and other communications between Diamond Scientific and the USDA
that could affect the Contract Products, and Miles shall be able to
review, prior to their submission, and to make changes that it reasonably
deems necessary to, any regulatory filings relating to the Contract
Products and shall have the right to stop any regulatory submissions if
Miles reasonably deems it advisable to do so for any reason;
(c) Diamond Scientific shall advise Miles in advance of any planned
changes to any regulatory filings or documents, and shall notify Miles
within one (1) Business Day of any adverse finding by the USDA that could
affect the Contract Products, and Miles shall have the right to make,
prevent or modify any such changes if it reasonably deems advisable to do
so;
(d) Diamond Scientific shall allow representatives of Miles to inspect the
Plant and shall notify Miles immediately of any impending USDA inspection;
(e) Diamond Scientific shall inform Miles of its plans to come into
compliance with any USDA requirements and continue to keep Miles informed
of its progress until compliance has been attained;
-11-
12
(f) Miles shall have the right at any time to purchase samples of Contract
Product components at Diamond Scientific's cost;
(g) Diamond Scientific shall notify Miles immediately in the event of any
of the following: (1) any procedural deviation or test failure noted in
the manufacture of the Contract Products; (2) Diamond Scientific obtains
any information that suggests the Contract Products or any of the raw
materials supplied by Diamond Scientific may not be safe, efficacious or
otherwise not in compliance with applicable laws and regulation or (3) the
failure of the Contract Products or any raw materials supplied by Diamond
Scientific to meet any of the applicable Specifications. Unless otherwise
obligated by law, Diamond Scientific shall consult with Miles before
taking action in connection with any of the above events. Diamond
Scientific shall further agree, at its sole expense, to identify and
correct any Contract Product deficiencies that are related to Diamond
Scientific's performance under this Agreement;
(h) Miles shall notify Diamond Scientific immediately in the event of any
of the following: (1) Miles obtains any information that suggests any of
the raw materials supplied by Miles may not be safe, efficacious or
otherwise not in compliance with applicable laws and regulations; or (2)
Miles obtains any information regarding the failure of the Contract
Products to meet any of the applicable Specifications. Unless otherwise
obligated by law, Miles shall consult with Diamond Scientific before
taking action in connection with any of the above events;
(i) Miles agrees to provide a quarterly report to Diamond Scientific that
delineates any complaints or failures in the field relating to Contract
Products.
X. RECORDS AND AUDITS.
10.1 Records. During the term of this Agreement and for seven (7) years
thereafter, Diamond Scientific shall maintain records of orders received, raw
materials furnished, Contract Products manufactured, work in progress, Contract
Products analyses and quality control tests. Such records shall be kept at the
Plant or such other location as may be designated by Diamond Scientific in
writing. Diamond Scientific shall not destroy any records relating to Contract
Products liability, regulatory compliance or quality assurance without giving
Miles notice and an opportunity to take possession of or copy such records as
Miles may designate.
10.2 Access: Audits. Diamond Scientific shall allow Miles representatives, upon
reasonable notice and at reasonable intervals, to enter the Plant for the
purpose of taking inventories of raw materials (if any) supplied by Miles.
Diamond Scientific shall further allow Miles representatives, upon reasonable
notice and at such intervals as may be reasonably necessary at Miles' expense,
to examine, audit and copy the records mentioned in Section 10.1 during
business hours for product liability, regulatory and quality control purposes,
together with all records relating to fees payable pursuant to Section 2.5.
XI. TRADEMARKS AND LABELING.
11.1 Miles' Trademarks. Diamond Scientific shall affix labeling to the Contract
Products as specified by Miles, which labeling shall bear one or more Miles
trademarks. Nothing contained herein shall give Diamond Scientific, Agrion, DAH
or any of their Affiliates any right to use any Miles trademark except on
Contract Products for Miles or its Affiliates, and neither Diamond Scientific,
Agrion, DAH nor their respective Affiliates shall obtain any right, title or
interest in any Miles trademark by virtue of this Agreement or Diamond
Scientific's performance of services hereunder.
-12-
13
11.2 Label. The Contract Products labeling shall in addition contain the
notation "Manufactured by Diamond Scientific License 213, distributed by Miles
Inc.," or such similar notation as may be required by Miles and in accordance
with applicable state and federal law. Diamond Scientific will work with its
approved vendors to develop all artwork, plates and label copy and will forward
the xxxxxxxx on to Miles. Miles will be responsible or all costs involved in
label changes, updates, and any other Miles requested changes. Miles will
reimburse Diamond Scientific for all obsolete label stock in inventory that
will not be used up by existing purchase orders, subject to the reimbursement
amount being negotiated in good faith between Miles and Diamond Scientific.
XII. COVENANTS.
12.1 Compliance. Subject to the provisions of the Lease of even date between
Miles and DAH, Diamond Scientific shall comply with any applicable law,
regulation or ordinance applicable to the Plant or the Contract Products,
including but not limited to, federal and state occupational safety and health
laws and federal, state and local waste disposal laws, provided, however, that
Miles shall be responsible for the removal and disposal of any merthiolate at
Miles' cost and expense. Miles shall comply or cause its agents or independent
contractors to comply with any applicable law, regulation or ordinance
applicable to laws governing the transportation of merthiolate.
12.2 Permits. Diamond Scientific shall maintain in effect all required
governmental permits, licenses, orders, applications and approvals regarding
the Contract Products and the use of the Plant to produce such Contract
Products, and Diamond Scientific shall produce Contract Products in the Plant
in accordance with all such permits, licenses, orders, applications and
approvals.
XIII. NOTICES.
13.1 Correspondence. Unless otherwise provided herein, any notice, report or
other correspondence (except orders, estimates and invoices) (hereinafter
collectively referred to as "Correspondence") required or permitted to be given
hereunder shall be mailed by certified mail, postage prepaid, or delivered by
and to the party to whom such Correspondence is required or permitted to be
given hereunder. If mailed, any such Correspondence shall be deemed to have
been given when received, as evidenced by certified receipt. If delivered by
hand, any such Correspondence shall be deemed to have been given when received
by the party to whom such Correspondence is given, as evidenced by written and
dated receipt of the receiving party.
13.2 Addressee. All Correspondence to Miles shall be addressed as follows:
Miles Inc.
Agriculture Division
Animal Health Products
Xxx 000
Xxxxxxx Xxxxxxx, Xxxxxx 00000-0000
Attention: Xxxx Xxxxxxxxx
With a copy to:
Xxxxx X. Xxxxxxxx, Esq.
Xxxxx, Day, Xxxxxx & Xxxxx
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
-13-
14
All Correspondence to DAH or Diamond Scientific shall be addressed as follows:
Diamond Animal Health, Inc.
0000 X.X. 00xx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attention: Xxxxx X. Van Daele
With a copy to:
Xxxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Either party may change the address to which any Correspondence to it is to be
addressed by notification to the other party as provided herein.
XIV. MISCELLANEOUS.
14.1 Relationship of Parties. It is not the intent of the parties hereto to
form any partnership or joint venture. Diamond Scientific shall, in relation to
its obligations hereunder, act as an independent contractor.
14.2 Assignment and Delegation. Miles may at its sole discretion and without
the approval of Diamond Scientific:
(a) Assign or transfer its interest or any part thereof under this
Agreement to a third party; or
(b) Designate and cause a third party to perform all or part of its
obligations hereunder, or to have the benefit of all or part of its rights
hereunder.
14.3 Devolution. This Agreement shall not be assignable or transferable by any
of DAH, Agrion or Diamond Scientific, other than by merger into one another,
except with the prior consent in writing of Miles.
Any assignment or transfer in violation of the provisions of this Agreement
shall be void and of no effect and shall constitute a material breach hereof.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective allowable successors and assigns.
14.4 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the substantive laws of the State of Iowa.
14.5 Force Majeure. No party hereto shall be liable to any other in damages
for, nor shall this Agreement be terminable by reason of, any delay or default
in such party's performance hereunder if such delay or default is caused by
conditions beyond such party's reasonable control including, but not limited
to, acts of God, regulation or law or other action of any government or any
agency thereof, war, insurrection, civil commotion, destruction of Production
facilities or materials by earthquake, fire, flood or storm, labor
disturbances, epidemic, or failure of public utilities or common carriers;
provided, however:
(a) upon the occurrence of an event of force majeure that prevents Diamond
Scientific in any material respect from supplying Contract Products to
Miles in accordance with the terms hereof, Miles may suspend its monthly
payment obligations commencing on
-14-
15
the earlier of (i) the date Diamond Scientific's business interruption
insurance coverage becomes effective or (ii) thirty (30) days after the
occurrence of the event of force majeure, and continuing until such time
as Diamond Scientific is no longer prevented from supplying products to
Miles, and during such time period Miles shall not be authorized to submit
further purchase orders hereunder; and
(b) the occurrence of an event of force majeure that prevents Miles from
performing its obligations under this Agreement or its sale or
distribution of Contract Products shall not suspend or relieve Miles from
its monthly payment obligations under this Agreement following the earlier
of the dates referred to in (a)(i) and (a)(ii) above.
14.6 Captions. The captions in this Agreement are solely for convenience of
reference and shall not be used for purposes of interpreting or construing the
provisions hereof.
14.7 Severability. Should any part or provision of this Agreement be held
unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction, the invalid or unenforceable part or provision shall be replaced
with a provision which accomplishes, to the extent possible, the original
business purpose of such part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the parties
hereto.
14.8 Waiver. No failure on the part of any party hereto to exercise, and no
delay in exercising, any right, privilege or power hereunder shall operate as a
waiver or relinquishment thereof; nor shall any single or partial exercise by
any party hereto of any right, privilege or power hereunder preclude any other
or further exercise thereof, or the exercise of any other right, privilege or
power.
14.9 Entire Agreement. This Agreement, the Exhibits hereto and the Technology
Agreements referred to herein, shall constitute the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and shall supersede any prior agreements, negotiations, understandings,
representations, statements and writings relating thereto. This Agreement shall
not be amended or modified unless such amendment or modification is made in
writing and executed by a duly authorized officer or agent of each party
hereto.
14.10 Cooperative Conduct of Parties. The parties hereby acknowledge that their
intent is to promote a mutually beneficial commercial relationship during the
term of this Agreement. In the event the performance of any provision of this
Agreement should become impracticable or otherwise impose an undue hardship on
a party, upon request of a party, the parties agree to meet to discuss the
circumstances which gave rise to such impracticability or hardship, and
potential solutions. Each party acknowledges that the impracticability or
hardship of performing a provision of this Agreement shall not excuse
performance thereof.
14.11 Change in Management. During the term of this Agreement, Diamond
Scientific agrees that except with the prior written consent of Miles, it shall
not permit both Louis Van Daele and Xxxxxx Xxxxxxxx to cease to be materially
involved in the day to day operations of Diamond Scientific or its successors.
-15-
16
IN WITNESS WHEREOF, the parties have caused this Agreement to be entered into
by their duly authorized representatives, to be effective as of the date first
above written.
DIAMOND ANIMAL HEALTH, INC.
By /s/ XXXXX X. VAN DAELE
------------------------------
Xxxxx X. Van Daele, President
AGRION CORPORATION
By /s/ XXXXX X. VAN DAELE
------------------------------
Xxxxx X. Van Daele, President
DIAMOND SCIENTIFIC CO.
By /s/ XXXXX X. VAN DAELE
------------------------------
Xxxxx X. Van Daele, President
MILES INC.
By /s/ XXXXXXX X. XXXXXX
------------------------------
Xxxxxxx X. Xxxxxx, Executive
Vice President
-16-
17
EXHIBIT A
DIAMOND ANIMAL HEALTH
CONTRACT PRICING FOR MILES ANIMAL HEALTH
1994 1994
PRODUCT FORECAST CONTRACT CONTRACT
DESCRIPTION QUANTITY PRICE REVENUE
----------- -------- ----- -------
[
BRSV VAC lODS
BRSV VAC 50DS
BRSV VAC 3 10 DS
BRSV VAC 3 50 DS
XXXX XXX 0 0XX
XXXX XXX 0 00XX
XXXX VAC 4 50DS
BRSV VAC 9 5DS
BRSV VAC 9 10 DS
BRSV VAC 9 50 DS
TOTAL BRSV
HORIZON I+VAC 3 10DS
HORIZON l+VAC 3 50DS
HORIZON IV 5DS
HORIZON IV 10DS
HORIZON IV 50DS
HORIZON VII 10DS
HORIZON VII 25DS
HORIZON IX 5DS
HORIZON IX 10DS
HORIZON IX 25DS
TOTAL HORIZON
ECOLI GUARD 10DS
ECOLI GUARD 50DS
NEO VAC 725 DS
CONCORD V 10DS
CONCORD V 50DS
TGE VAC 10D
TGE/ECOLI VAC 4C 10DS
TGE NEO VAC 7 10DS
TOTAL SWINE ]
Page 1 of 3
18
EXHIBIT A
DIAMOND ANIMAL HEALTH
CONTRACT FILING FOR MILES ANIMAL HEALTH
1994 1994
PRODUCT FORECAST CONTRACT CONTRACT
DESCRIPTION QUANTITY PRICE REVENUE
----------- -------- ----- -------
[
LEXTRON VAC 10DS
LEXTRON VAC 50DS
LEXTRON VAC 3 10DS
LEXTRON VAC 3 50DS
LEXTRON VAC 4 10DS
LEXTRON VAC 4 50DS
LEXTRON VAC 9 10DS
LEXTRON VAC 9 50DS
LEXTRON CONQUEST 1+3 10DS
LEXTRON CONQUEST 1+3 50DS
LEXTRON CONQUEST IV 10DS
LEXTRON CONQUEST IV 50DS
LEXTRON CONQUEST IX 10DS
LEXTRON CONQUEST IX 25DS
LEXTRON IBR/POMONA 50DS
TOTAL LEXTRON
ECOLI GUARD 10DS CANADA
CONCORD V 10DS CANADA
TGE/ECOLI 10DS CANADA
TGE NEO VAC 7 10DS CANADA
TOTAL SWINE (CANADA)
XXXX XXX 00XX XXXXXX
XXXX XXX 00XX XXXXXX
XXXX XXX 0 00XX XXXXXX
XXXX XXX 0 00XX XXXXXX
HORIZON IV 10DS CANADA
HORIZON IV 50DS CANADA
HORIZON IX 10DS CANADA
HORIZON IX 25DS CANADA
TOTAL BOVINE (CANADA)
SUBTOTAL ]
**ADDITIONAL PRODUCTS:
BRSV VAC F3LP, RESPACINE BVD,
HORIZON X, COMPASS 4,
COMPASS 9 AND COVENANT
BULK INCLUDING INTERNATIONAL
(LABELED AND UNLABELED) $ [ ]
----------
TOTAL ALL PRODUCTS $[ ]
BOVINE PRODUCTS ARE THOSE PRODUCTS DESIGNATED IN SECTIONS 1, 2, 4 AND
6 OF THIS EXHIBIT A.
**OUTLINES OF PRODUCTION ARE IN PROCESS.
Page 2 of 3
19
EXHIBIT A
DIAMOND ANIMAL HEALTH
CONTRACT PRICING FOR BAYER VT EXPORT
LABELED CONTRACT PRICE
------- --------------
LEPTO5 20 ML [
HORIZON IV 20 ML
HORIZON IV 100 ML
HORIZON IX 30 ML
HORIZON IX 75 ML
UNLABELED
---------
ECOLI 4C 20 ML
TGE VAC 20 ML
HORIZON II 20 ML
NEO VAC 7 30 ML
BRSV VAC 100 ML
BRSV VAC 20 ML
BRSC VAC 2 20 ML
DILUENT 20 ML ]
Page 3 of 3
20
EXHIBIT B
STANDARD BATCH SIZES
Product Batch Size
------- ----------
Bovine
------
BRSV Vac 10ds 7,600
BRSV Vac 50ds 3,520
BRSV Vac 2 5ds 3,600
BRSV Vac 2 10ds 6,900
BRSV Vac 2 25ds 3,600
BRSV Vac 2 50ds 3,600
BRSV Vac 3 l0ds 7,200
BRSV Vac 3 50ds 3,600
BRSV Vac 3 Feedlot l0ds 7,600
XXXX Xxx 0 Xxxxxxx 00xx 3,600
BRSV Vac 4 5ds 5,000
BRSV Vac 4 l0ds 7,300
BRSV Vac 4 50ds 3,600
Compass 4 l0ds 10,000
Compass 4 25ds 5,000
Compass 4 50ds 5,000
Compass 9 l0ds 10,000
Compass 9 50ds 6,000
Horizon I l0ds 10,000
Horizon I 50ds 5,600
Horizon II 5ds 3,500
Horizon II l0ds 10,000
Horizon II 50ds 5,600
Horizon VII 5ds 5,000
Horizon VII l0ds 10,000
Horizon VII 25ds 5,000
Horizon VIII 5ds 5,000
Horizon VIII l0ds 10,000
Horizon VIII 25ds 5,000
IBR 50ds 3,600
Lepto 5 5ds 4,800
Lepto 5 l0ds 10,000
Lepto 5 50ds 5,700
Lepto Pomona 50ds 5,700
Respacine BVD 50ds 3,600
Swine
-----
Concord l0ds 5,000
Concord 50ds 5,000
Ecoli Guard l0ds 10,000
Ecoli Guard 50ds 2,900
NeoVac 7 l0ds 10,000
Neovac 7 25ds 6,000
TGE Vac l0ds 7,600
21
EXHIBIT C
Expiration Date Guideline:
* Products released for sale with 24 months dating will be shipped to Miles
with a minimum of 18 months dating remaining.
* Products released for sale with 18 months dating will be shipped to Miles
with a minimum of 14 months dating remaining.
* Products released for sale with 12 months dating will be shipped to Miles
with a minimum of 9 months dating remaining.
* In all cases noted above, there will be a 60 day grace period allowed for
products that require a retest prior to release and shipment.
22
MANUFACTURING AND SUPPLY AGREEMENT AMENDMENT AND EXTENSION
This Manufacturing and Supply Agreement Amendment and Extension (the
"Agreement") is made and entered into as of September 1, 1995 by and among
DIAMOND ANIMAL HEALTH, INC. ("Diamond"), an Iowa corporation and BAYER
CORPORATION ("Bayer") (formerly known as Miles, Inc.), an Indiana corporation.
WITNESSETH
WHEREAS, Diamond, Agrion Corporation ("Agrion"), Diamond Scientific Co.
("Diamond Scientific"), and Bayer (then known as Miles Inc.) entered into a
Manufacturing and Supply Agreement (the "Agreement") dated as of December 31,
1993 in connection with a certain Stock Purchase Agreement dated as of December
31, 1993 by and between Bayer and Diamond, whereby Bayer sold to Diamond one
hundred percent (100%) of the issued and outstanding stock of Agrion; and
WHEREAS, Agrion and Diamond Scientific were merged into and with Diamond which
is the surviving corporation; and
WHEREAS, the parties have agreed to extend the term of the Agreement to June
30, 1999 and to amend the Agreement on the terms and conditions of this
Amendment.
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, the parties agree to amend the Agreement as follows:
1. ANNUAL PURCHASE COMMITMENT.
BAYER's minimum annual aggregate purchase commitment of [
] is hereby reduced effective
January 1, 1996 to [ ]
23
[ ]. All references in
Sections 2.1, 4.2 and 5.2 and elsewhere in the Agreement to such
[ ] purchase
commitment shall be deemed changed effective January 1, 1996 to [
].
2. PURCHASE AND SALE
In addition to the amendment described in Paragraph 1 above, Section
2.1 of the Agreement is further amended as follows:
a) The second sentence of Section 2.1 is deleted in its entirety
and the following is substituted in its place:
In the event this Agreement is not renewed at the
expiration of the initial term or any extended term
hereof, then Diamond and Bayer agree that the
provisions of this Section 2.1 shall be deemed to
apply to any partial year in such initial or
extended term, provided that Bayer's annual
aggregate pur chase commitment described above shall
be prorated for any such partial year.
b) The fifth sentence of Section 2.1 is hereby deleted in its
entirety.
2
24
3. NON-COMPETITION AGREEMENT.
Section 2.5 of the Agreement is hereby deleted in its entirety and the
following is substituted in its place:
It is hereby understood and agreed that Diamond, or
any Affiliate thereof, will not, directly or
indirectly, during the period beginning on the date
of this Agreement and ending on December 31, 1996
use, manufacture, supply, market or sell to
customers other than Bayer, or Affiliates of Bayer,
any biological veterinary product containing any one
or more of the antigens used in the manufacture of
the Products or New Products. Notwithstanding the
foregoing, Diamond may (i) manufacture or use the
Products or New Products for research purposes and
(ii) manufacture any new biological product whose
application is for the prevention of bovine disease
and which contains one or more of the antigens used
in the manufacture of the Bovine Products (as
defined in the Bovine Technology Agreement de
scribed in Section 2.6), prior to January 1, 1997 to
be held for inventory, provided such new products
may be marketed and sold only after January 1, 1997.
3
25
Notwithstanding the foregoing, on or after July 1,
1996, Diamond, or any Affiliate thereof, may supply,
market or sell to Lextron any bovine Product,
provided that during the period commencing on July
1, 1996 and ending on December 31, 1996, Diamond
agrees to pay to Bayer a fee of [ ]
percent ([ ]%) of Net Sales of bovine Products sold
or supplied to Lextron, except for sales of MLV-IBR
Lepto-P on which no fee will be due. Fees due to
Bayer shall be payable quarterly by the 15th day
following the quarter end. Diamond shall prepare and
submit with each quarterly payment a report
supporting the calculation of the fee, which shall
be subject to audit in accordance with Section 10.2.
4. EU COMPLIANCE .
Section 2.8 of the Agreement is amended by changing the date of
January 1, 1996 to January 1, 1997 in both instances where it appears.
5. PRODUCT PRICING .
a) Exhibit A to the Agreement is hereby deleted in its
entirety and Exhibit A which is attached to this
Amendment is substituted in its place.
4
26
b) Section 4.1 of the Agreement is deleted in its entirety and in
its place is substituted the following:
Effective as of September 1, 1995, transfer prices
for each Product set forth in Exhibit A hereto shall be in
effect for Products having specified delivery dates prior to
September 1, 1996. Transfer prices to be in effect for the
Products to be delivered during subsequent twelve (12) month
periods commencing September 1, 1996 and each September 1
thereafter shall be negotiated by the parties in good faith,
taking into account such factors as, but not limited to, cost
changes, volume changes and plant utilization. In the event
revised transfer prices are not agreed upon, then the transfer
price previously agreed upon shall remain in effect until the
parties reach agreement thereon.
6. MONTHLY PAYMENTS.
Section 5.1 of the Agreement is deleted in its entirety and the
following is substituted in its place:
Payment to Diamond for Products and any other agreed upon
Purchase Commitment Products scheduled for delivery during the
term of this
5
27
Agreement shall be made by Bayer in equal monthly
installments on the first business day of each month
during the term hereof in advance, commencing on
January 3, 1994. The amount of each monthly
installment shall be [
] subject, however, to reduction by set-off
pursuant to Sections 4.2 and 4.3 hereof. Com mencing
January 1, 1996, the amount of each monthly
installment shall be reduced to [
] subject, however, to reduction by set-off
pursuant to Sections 4.2 and 4.3 hereof. Products
scheduled for delivery after the expiration of this
Agreement shall be net twenty (20) days.
7. NEW PRODUCT PAYMENTS .
In addition to the amendment to Section 5.2 set forth in Paragraph I
above, Section 5.2 of the Agreement is further amended as follows:
a) The reference to Section 5.1 in the first and second sentences
of Section 5.2 is hereby changed to "Section 2.1".
b) The following sentence is added immediately after the first
sentence of Section 5.2:
6
28
The purchase by Bayer of non-BRSV containing Bovine Products
shall apply against the annual minimum purchase commitment
described in Section 2.1.
8. TERM AND TERMINATION .
a) Section 7.1 of the Agreement is deleted in its entirety and in
its place is substituted the following:
The term of this Agreement, unless it is earlier terminated
pursuant to Section 7.2 hereof, shall be for a period of five
(5) years and six (6) months, through and including June 30,
1999, and shall automatically renew thereafter on an annual
basis unless either Bayer or Diamond gives the other eighteen
(18) months prior written notice that it does not wish to renew
this Agreement.
b) Section 7.2 of the Agreement is amended by adding "; or" at the
end of subsection (d) and by adding the following at the end of
section 7.2:
(e) Diamond shall be in default under the Promissory Note dated
on or about the date hereof in the original principal
amount of Four Hundred Thousand dollars ($400,000) payable
to Bayer, such default shall not be cured or waived
7
29
within the period of grace, if any, applicable thereto and
Bayer shall have given notice of acceleration thereof to
Diamond.
10. NAME CHANGE .
All references in the Agreement to Miles shall hereafter be deemed
references to Bayer and all references in the Agreement to Diamond, Agrion
or Diamond Scientific shall hereafter be deemed references to Diamond.
11. DEFINED TERMS .
All capitalized terms not otherwise defined in this Amendment shall have
the same meaning given to them in the Agreement. All references to the
Technology Agreements and the Lease dated as of December 31, 1993 shall be
deemed to mean those documents as amended from time to time.
12. BINDING EFFECT .
This Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and (in the case of Diamond
permitted) assigns.
13. CONFLICT OF TERMS .
Except as specifically set forth herein, the terms of the Agreement are
unchanged and in full force and effect. In the event of any conflict
between the terms of this Amendment and the terms of the Agreement, the
letter agreement dated August 18, 1995 between the parties or the letter
8
30
agreement dated September 7, 1995 between the parties, the terms of this
Amendment shall govern.
IN WITNESS WHEREOF, the parties have caused this Amendment to be entered into
by their duly authorized representatives, to be effective as of the date first
above written.
BAYER CORPORATION DIAMOND ANIMAL HEALTH, INC.
AGRICULTURE DIVISION
BY:/s/ XXXX X. XXXXXXXXX BY:/s/ LOUIS VAN DAELE
-------------------------- --------------------------
NAME: Xxxx X. Xxxxxxxxx NAME: Louis Van Daele
------------------------ ------------------------
Vice President New
TITLE: Business Development TITLE: President
----------------------- -----------------------
9
31
EXHIBIT A - FOR MANUFACTURING AND SUPPLY AGREEMENT
DIAMOND AH CONTRACT PRICING FOR XXXXX XX
EFFECTIVE SEPTEMBER 1, 1995
MAH DAH
CODE CODE DESCRIPTION COST
0093 57305 ASPEN CONQUEST 1+VAC 3, 10DS [
0094 57304 ASPEN CONQUEST 1+VAC 3, 50DS
0087 57311 ASPEN IBP-RS VAC, 10DS
0088 57310 ASPEN IBP-RS VAC, 50DS
0089 57309 ASPEN IBP-RS-L5 VAC, 10DS
0090 57308 ASPEN IBP-RS-L5 VAC, 50DS
0085 57312 ASPEN IP-RS VAC, 10DS
0086 57313 ASPEN XX-XX XXX, 00XX
0000 00000 XXXXX XX VAC, 10DS
0084 57314 XXXXX XX XXX, 00XX
0000 00000 XXXX VAC, 10DS
0072 57316 XXXX XXX, 00XX, XXXX-XXXXX
0000 00000 XXXX VAC, 50DS
0071 57320 XXXX XXX, 00XX, XXXX-XXXXX
0000 00000 XXXX VAC 2, 10DS, EXPT-UNLBL
0104 57317 XXXX XXX 0, 00XX, XXXX-XXXXX
0000 00000 XXXX XXX 0, 00XX
0000 00000 XXXX VAC 3, 50DS
1319 57075 XXXX XXX 0, 0XX
0000 00000 XXXX VAC 4, 10DS
0075 57319 XXXX XXX 0, 00XX, XXXX-XXXXX
1325 57146 XXXX XXX 0, 00XX
0000 00000 XXXX XXX, 50DS, EXPT-UNLBL
1326 57076 XXXX XXX 0, 0XX
0000 00000 XXXX XXX 0, 00XX
0000 00000 XXXX VAC 9, 10DS ]
MAH DAH
CODE CODE DESCRIPTION COST
0139 57254 XXXX XXX X0XX, 00XX [
0140 57255 BRSV VAC F3LP, 50DS
0103 57221 DILUENT, 100ML, EXPT-UNLBL
0102 57219 DILUENT, 20ML, EXPT-UNLBL
0058 57220 HORIZON 1, 10DS, EXPT-UNLBL
1360 57212 HORIZON 1VAC 3, 10DS
1365 57213 HORIZON 1 VAC 3, 50DS
0059 57170 HORIZON 2, 10DS, EXPT-UNLBL
1341 57144 HORIZON 4, 5DS
1340 57180 HORIZON 4, 10DS
0179 57260 HORIZON 4, 00XX, XXXXXX
1345 57181 HORIZON 4, 50DS
0181 57261 HORIZON 4, 00XX, XXXXXX
1351 57211 HORIZON 9, 5DS
1350 57176 HORIZON 9, 10DS
0182 57262 HORIZON 9, 00XX, XXXXXX
1352 57177 HORIZON 10, 5DS
0183 57263 XXXXXXX 0, 00XX, XXXXXX
0114 57238 HORIZON 10, 5DS
0115 57217 HORIZON 10, 10DS
0261 57354 HORIZON 10, 00XX, XXXXXX
0116 57237 HORIZON 10, 25DS
0262 57355 HORIZON 10, 00XX, XXXXXX
0052 47143 LEPTO 5, 20ML, EXPT-UNLBL
0155 47150 LEPTO 5, 20ML, MEXICO ]
