1
Exhibit 10.131
CONTRACT MANUFACTURING AGREEMENT
THIS CONTRACT MANUFACTURING AGREEMENT (the "Agreement") is made this
6th day of November, 1997, by and between Ecogen Inc., a Delaware corporation
("Ecogen") and ▇▇▇▇▇▇-▇▇▇▇▇▇▇-Midland Company, a Delaware corporation ("ADM").
W I T N E S S E T H
WHEREAS, Ecogen desires to obtain from ADM certain fermentation and
centrifugation services for its Bacillus thuringiensis based ("Bt") biorational
insecticide products and its Aspire yeast product; and
WHEREAS, ADM as the operator of the Biochem II facility, desires to
provide and operate one seed fermenter, one main fermenter, and one westphalia
centrifuge, plus support equipment, to produce the Products.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, it is agreed as follows:
I. RESPONSIBILITIES
1.01 ADM shall provide the facility as described in Article II for
the production of products as described in Article III (the
"Product").
1.02 In connection with the contract manufacturing of the Products
for Ecogen, ADM shall provide the following:
(a) Management, manufacturing and laboratory operations
personnel with specific responsibility for the
Products;
(b) Utilities;
(c) Maintenance;
(d) Operating permits;
(e) Records of production from process control systems,
samples per schedule 1.02(e), shipping records and
weigh tickets;
(f) Waste disposal of by-products and failed batches;
(g) Notification to Ecogen should any more toll
manufacturing be
1
2
introduced to the facility;
(h) Quality control supervision and shipping of samples;
and
(i) Storage of raw materials and cultures.
1.03 In connection with such contract manufacturing, Ecogen shall
provide the following:
(a) Technical personnel when required;
(b) All operating and quality control protocols an
example of which is shown on Schedule 1.03(b);
(c) Cultures;
(d) Raw materials (to be purchased from ADM when efficacy
is competitive);
(e) Product specifications;
(f) Safety and usage information relative to the raw
materials and the Products;
(g) Transportation from the subject facility (ADM
Trucking to be used where applicable and
competitive); and
(h) Production scheduling.
II. FACILITY
2.01 In order to provide the Products, ADM intends to use the
facility known as BioChem II when used for producing ADM's own
products (the "Facility"). The following equipment at the
Facility will be used to produce the Products.
(a) one nominal 21,500 gal fermenter;
(b) one nominal 2,000 gal seed fermenter;
(c) westphalia centrifuge; and
(d) support equipment, as necessary to operate this
equipment.
If the westphalia centrifuge is down for maintenance, then a
second centrifuge will be provided to complete centrifugation
before next batch is
2
3
completed.
2.02 If during the term of this Agreement, Ecogen has product
demand which requires additional fermenters and centrifuges
and if ADM has available additional fermenters and
centrifuges, the parties agree to negotiate in good faith the
providing of the second fermenter or centrifuge and a price to
do so. Whether a fermenter or centrifuge is considered
available is within ADM's sole and absolute discretion.
III. PRODUCTS
3.01 Products to be produced by ADM for Ecogen are to be Ecogen's
own Bt products and Ecogen's Aspire yeast product.
IV. TERM OF AGREEMENT
4.01 The term of this Agreement shall commence on July 1, 1997 (the
"Effective Date") and shall continue through December 31, 1999
unless earlier terminated in accordance with the provisions of
this Agreement. The term of this Agreement shall be extended
for additional periods of one year (up to a maximum of five
additional years) unless either party provide written notice
to the other of its intention to terminate the Agreement, such
notice to be given at least eleven months prior to the end of
the then current term for ADM, and two months prior to the end
of the current term for Ecogen.
4.02 Ecogen may terminate this Agreement on July 1, 1998, July 1,
1999 or December 31, 1999 with two (2) months written notice.
4.03 In the event of a material breach of this Agreement, the
non-breaching party may terminate this Agreement by providing
written notice to the other party of the nature of the breach
and intent to terminate. Termination will be effective thirty
(30) days (ten (10) days in the case of non-payment of an
invoice) after such notice unless the breach has been
corrected by that time; in the event any such breach can not
be reasonably cured within thirty (30) days, the parties may,
but need not, agree in writing upon an alternative Schedule to
cure such breach.
4.04 In the event of (i) the institution by or against either party
of insolvency, receivership, bankruptcy, or similar
proceedings; (ii) either party making an assignment for the
benefit of creditors; or (iii) either party's dissolution, the
other party may terminate this Agreement by providing written
notice to the other party.
V. PAYMENT
5.01 ACCESS FEE REIMBURSEMENT. As consideration for the services
provided
3
4
under this Agreement, Ecogen shall pay to ADM an access fee in
the amount of * per year
The total amount of the annual access fee is due and owing in
advance from Ecogen on July 1 of each year this Agreement is
in effect. Payment shall be made monthly in advance in 1/12th
increments. Payment is guaranteed by a letter of credit fixed
at * and a second letter of credit fixed at * to cover
operating cost exposure. During the final six (6) months of
the contract the * letter of credit may decline by 1/6th of
its value each month.
Until the end of 1997 an alternate to a letter of credit would
be to prepay service fees also at the estimated usage for the
month of fermenter runs, ADM raw materials and CRYMAX dryer
pounds.
5.02 SERVICE FEE REIMBURSEMENT. As consideration for the services
provided under this Agreement, ADM shall invoice Ecogen on a
monthly basis in arrears for the number of successful batches
produced. Successful batches are defined as batches which meet
the specifications listed in Schedule 5.02. The exception is
that batches which are not successful per Schedule 5.02, but
are used (not discarded) are considered successful.
(a) The invoice quantity per batch is * plus the previous
months average market price for all raw materials
provide from ADM and the actual cost of any other raw
materials purchased by ADM. Provided at month's end
the average batch gives finished concentrated active
ingredient totals in excess of the following:
(i) CRYMAX: *
(ii) Cutlass: *
(iii) Lepinox: *
(iv) Condor: *
(v) Aspire: *
-----------------
* Confidential Treatment Requested
(b) If the average finished concentrated active
ingredient totals per batch is less than the 90%
number listed in 5.02(a) (i) - (v) the *
4
5
invoice plus the average actual raw material cost
defined in 5.02(a) prorated by the ratio of the
actual average batch total as the numerator and the
standard average shown in 5.02(a) (i) - (iv) as the
denominator.
(c) CRYMAX will be billed to Ecogen at * per pound until
the drier is moved. Ecogen will use its best efforts
to move the drier as soon as possible.
5.03 INFLATION ADJUSTMENTS. The service fee to be paid by Purchaser
for fermentation batches, ordered by Purchaser for delivery
after December 31, 1997 shall be determined for each
subsequent calendar year by multiplying the Prices set forth
in 5.02 by a fraction, the denominator of which is the
Producer Price Index figure published for June, 1997 (which
the parties agree was 146.9) and the numerator of which is the
Producer Price Index published on or most immediately prior to
January 1 of the calendar year for which Prices are being
determined. The Producer Price Index used shall be the United
States Department of Labor, Bureau of Labor Statistics
Producer Price Index, Manufacturing Industries, Chemical and
Allied Products Group, Code 28 or the successor index thereto.
5.04 INVOICE PAYMENT TERMS. Ecogen shall make full payment, without
setoff, within twenty (20) days from the date of invoice;
provided, however, in the event an invoice is disputed, Ecogen
shall within said period, pay the undisputed amount and
provide ADM with a written position on the disputed portion.
5.05 Ecogen required improvements to the facility described in 2.01
shall be completed by ADM as soon as reasonably possible and
shall be paid for by Ecogen when invoiced per section 5.04.
VI. LICENSE, AND MANUFACTURING RIGHTS
6.01 Ecogen grants ADM a non-exclusive license to use but no rights
to sublicense, during the term of this Agreement, all
proprietary rights of Ecogen required by ADM to carry out its
obligations under this Agreement.
-----------------
* Confidential Treatment Requested
VII. PERFORMANCE OBLIGATIONS
5
6
7.01 ADM and Ecogen shall use their best efforts to perform their
respective obligations hereunder in a manner which will allow
the successful production of Products under this Agreement.
VIII. TITLE TO PRODUCT
8.01 Ecogen shall take title to Products at the point such Products
are shipped from the Facility.
8.02 Title to the Facility shall at all times be and remain in ADM.
IX. LIABILITY
9.01 ADM shall have no liability for the Products or their use, if
any or the performance or activities of its employees provided
to Ecogen. Ecogen shall defend, indemnify and hold ADM, its
affiliated companies and their respective directors, officers,
employees and agents harmless from and against any and all
claims, actions, causes of action, judgments, awards,
penalties, costs and fees (including reasonable attorneys
fees) arising out of the use of or in any way connected with
the Products or the operation of the Facility pursuant to this
Agreement.
X. INSURANCE
10.01 Ecogen shall maintain the certificate of general liability and
product liability insurance coverage as shown on Schedule 10
or if canceled, provide ADM with another certificate of
general liability and product liability insurance evidencing
Two Million Dollars ($2,000,000) of coverage with a reputable
company or companies. ADM shall be named as an additional
insured party on all such policies. In addition, if allowed by
law, Ecogen shall cause its workers compensation carrier to
waive subrogation against ADM, its affiliated companies and
their respective directors, officers, employees and agents.
XI. FORCE MAJEURE
11.01 Neither party shall be liable to the other for delay or
failure in the performance of its obligations contained in
this Agreement to the extent such failure results from any one
or more of the following: (a) acts of God, or public enemy or
war (declared or undeclared); (b) acts of governmental or
quasi-governmental authorities of the United States or any
foreign country, or any political subdivision thereof, or of
any department or agency thereof, or regulations or
restrictions imposed by law or by court action, except as they
may result from the unreasonable failure of the party to
perform as required hereunder; (c) acts of persons engaged in
subversive activities or sabotage; (d) fires, floods,
explosions or other
6
7
catastrophes; (e) epidemics or quarantine restrictions; (f)
strikes, or similar labor disruptions; (g) freight embargoes,
or interruption of transportation; (h) unusually severe
weather; (i) any other extraordinary causes, similar or
dissimilar, beyond the reasonable control of the party
concerned; and provided that the due diligence is exercised to
cure such cause and resume performance, and the time for
performance by such party shall be extended by a period of any
such delay. The party affected by force majeure shall promptly
notify the other of the existence and expected duration of the
force majeure condition.
11.02 During the term of this Agreement and for the period of five
(5) years after the termination or expiration of this
Agreement, ADM agrees to treat as confidential all information
of Ecogen and its manufacturing partners relative to the
Products manufactured by ADM for Ecogen under this Agreement,
shall not use such information except as contemplated herein,
and shall not disclose such information to any third party,
except to the extent that the information (a) was already
known to ADM at the time of disclosure by Ecogen, (b) is in or
through no fault of ADM enters the public domain, (c) is
received without obligations of confidentiality or limited use
from a third party having the right to disclose the same to
ADM, (d) is independently developed by ADM, or (e) is required
to be disclosed pursuant to a valid court order or lawful
subpoena provided notice was given to Ecogen in sufficient
time for Ecogen to seek a protective order or other relief.
12.03 During the term of this Agreement and for a period of five (5)
years after the termination or expiration of this Agreement,
Ecogen agrees to treat as confidential all information of ADM
and its manufacturing partners provided to Ecogen by ADM in
connection with this Agreement, shall not use such information
except as contemplated herein, and shall not disclose such
information to any third party, except to the extent that the
information (a) was already known to Ecogen at the time of
disclosure by ADM, (b) is in or through no fault of Ecogen
enters the public domain, (c) is received from a third party
having the right to disclose the same to Ecogen, (d) is
independently developed by Ecogen, or (e) is required to be
disclosed pursuant to a valid court order or lawful subpoena.
XIII. NOTICE
13.01 Any notices required or permitted hereunder shall be effective
on the mailing thereof if placed in the U.S. mail, certified
or registered mail, return receipt requested and deposited
postage prepaid, addressed to:
ADM: ▇▇▇▇▇▇-▇▇▇▇▇▇▇-Midland Company
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President, Bio-Products Division
7
8
with a copy to:
▇▇▇▇▇▇-▇▇▇▇▇▇▇-Midland Company
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Ecogen: Ecogen Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
Ecogen Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
XIV. ASSIGNMENT
14.01 This Agreement will be binding and inure to the benefit of the
parties hereto and their respective successors and assigns. No
assignment (including assignment by operation of law),
delegation or other use of any right or duty under this
Agreement may be made by either party without the written
consent of the other party, except that either party may at
any time assign and delegate its mutual rights and duties to a
purchaser of all or substantially all of its stock or assets
or to the surviving entity in a merger, consolidation or other
corporate reorganization in which the party participates, as
long as such surviving entity or purchaser shall expressly
assume in writing the performance of this Agreement.
XV. SEVERABILITY.
15.01 If any part of this Agreement is found invalid or
unenforceable, that part will be amended to achieve, as nearly
as possible, the same economic effect as the original
provision and the remainder of this Agreement shall remain in
full force.
XVI. GOVERNING LAW.
16.01 This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, excluding
any conflict of law principles of the State of Illinois which
may require the application of the laws of another
jurisdiction. The courts of the State of Illinois, the
personal
8
9
jurisdiction to which each of the parties of this Agreement
voluntarily submits, shall have the exclusive jurisdiction to
hear and decide any dispute or controversy concerning this
Agreement.
XVII. ARBITRATION.
17.01 In the event of a dispute between the parties arising out of
this Agreement or any part of it, or their performance under
it, the dispute shall be submitted to binding arbitration in
Chicago, Illinois, in accordance with the Commercial Rules
then in effect of the American Arbitration Association.
XVIII. ANNOUNCEMENTS.
18.01 Neither party shall make any announcements relative to the
Agreement without the prior written consent of the other party
except as required by law.
XIX. Entire Agreement.
19.01 This Agreement constitutes the entire agreement between the
parties relating to this subject matter and supersedes all
prior agreements and understandings. This Agreement cannot be
amended or modified except in writing duly executed by each
party.
9
10
IN WITNESS WHEREOF, the parties have executed this Agreement in
duplicate as of the date first above written.
▇▇▇▇▇▇-▇▇▇▇▇▇▇-MIDLAND COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
ECOGEN INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Chairman & Chief Executive Officer
10