<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1996
-----------------
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from to
-------------------
----------------.
Commission File Number: 0-12395
ALCIDE CORPORATION
Delaware 22-2445061
- ---------------------------------------- ------------------------------------
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
8561 154th Avenue North East, Redmond WA 98052
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code . . . . . (206) 882-2555
-------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
---------- ---------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of November 30, 1996: 2,601,071, net of Treasury Stock.
---------
<PAGE>
ALCIDE CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements . . .. . . . . . . . . . . . . . . . . . .PAGE
----
Condensed Balance Sheets - November 30, 1996 (Unaudited)
and May 31, 1996. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Unaudited Condensed Statements of Operations - For the
three months and six months ended November 30, 1996 and
November 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Unaudited Condensed Statements of Cash Flows - For the
six months ended November 30, 1996 and November 30, 1995. . . . . . . 5
Notes to the Unaudited Condensed Financial Statements . . . . . . . . 6
Statements of Changes in Shareholders' Equity . . . . . . . . . . . . 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 11
SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2
<PAGE>
ALCIDE CORPORATION CONDENSED BALANCE SHEETS
NOVEMBER 30, 1996 MAY 31, 1996
------------------ -------------
ASSETS: (Unaudited)
-----------
Current assets:
Cash and cash equivalents $ 6,089,069 $ 5,365,895
Short term investments 1,056,472 1,032,634
Accounts receivable - trade 2,330,316 2,585,427
Inventory 1,192,358 928,500
Prepaid expenses and other current assets 81,477 125,547
----------- ----------
Total Current Assets 10,749,692 10,038,003
----------- ----------
Equipment and leasehold improvements:
Office equipment 97,033 92,656
Laboratory and manufacturing equipment 132,404 132,404
Leasehold improvements 56,152 56,152
Less accumulated depreciation and
amortization (114,850) (86,582)
----------- ----------
Total equipment and leasehold improvements, net 170,739 194,630
----------- ----------
Deferred income tax asset 1,956,669 2,421,191
----------- ----------
Other assets 1,163,227 1,114,790
TOTAL ASSETS $14,040,327 $13,768,614
----------- ----------
----------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $332,462 $374,440
Accrued expenses and taxes payable 488,858 1,083,840
----------- ----------
TOTAL LIABILITIES 821,320 1,458,280
----------- ----------
COMMITMENTS AND CONTINGENCIES:
Redeemable Class B Preferred Stock -
noncumulative convertible
$.01 par value: authorized 1,664,581
shares;
issued and outstanding:
May 31, 1996 - 95,002
November 30, 1996 - 88,802 233,105 249,380
----------- ----------
Shareholders' equity:
Class A Preferred Stock - no par value
authorized 1,000 shares;
issued and outstanding 1,000 shares 135,307 135,307
Common Stock $.01 par value; authorized
100,000,000 shares;
issued and outstanding:
May 31, 1996 - 2,791,538
November 30, 1996 - 2,799,408 27,994 27,915
Treasury stock at cost (2,336,961) (2,213,845)
Additional paid-in capital 18,279,377 18,209,412
Accumulated Deficit (3,119,815) (4,097,835)
----------- ----------
Total Shareholders' Equity 12,985,902 12,060,954
----------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $14,040,327 $13,768,614
----------- ----------
----------- ----------
See notes to Unaudited Condensed Financial Statements.
3
<PAGE>
ALCIDE CORPORATION UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
November 30 November 30
----------- -----------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $2,744,874 $2,980,208 $4,787,096 $5,588,954
- --------- ---------- ---------- ---------- ----------
Expenditures
Cost of goods sold 893,913 964,773 1,516,338 1,866,074
Research and development expense 434,377 407,281 870,558 675,729
Depreciation and amortization 14,207 11,841 28,268 23,682
Consulting expense to the
related parties 21,000 15,000 54,014 30,000
Royalty expense 103,496 222,934 176,642 427,669
Other selling, general and
administrative expense 474,237 511,567 867,703 1,024,364
---------- ---------- ---------- ----------
Total Expenditures 1,941,230 2,133,396 3.513,523 4,047,518
---------- ---------- ---------- ----------
Operating income 803,644 846,812 1,273,573 1,541,436
Royalty and other income 6,075 5,719 12,834 11,041
Interest income 103,368 64,783 197,691 135,646
---------- ---------- ---------- ----------
Total Non-Operating
Income 109,443 70,502 210,525 146,687
Income before provision for
income tax 913,087 917,314 1,484,098 1,688,123
Provision for income taxes 311,363 317,356 506,078 584,026
---------- ---------- ---------- ----------
Net income $601,724 $ 599,958 $978,020 $1,104,097
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income per share $ .22 $ .21 $ .35 $ .39
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average Common Shares
outstanding and Common Share
equivalents 2,793,802 2,849,035 2,793,334 2,852,388
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See Notes to Unaudited Condensed Financial Statements.
<PAGE>
4
<PAGE>
ALCIDE CORPORATION UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the Six Months Ended November 30,
-------------------------------------
1996 1995
---- ----
OPERATING ACTIVITIES:
Net income $978,020 $1,104,098
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 28,268 23,682
Deferred income tax benefit 464,522 566,407
---------- ----------
1,470,810 1,694,187
---------- ----------
Decrease (increase) in assets:
Inventory (263,858) (529,957)
Accounts receivable - trade 255,111 (628,797)
Prepaid expenses and other
assets and security deposits (6,729) 76,333
Increase (decrease) in
liabilities:
Accounts payable (41,978) (168,496)
Accrued expenses and taxes
payable (594,982) 146,465
---------- ----------
Total adjustments (652,436) (1,104,452)
---------- ----------
Net cash generated by (used in)
operating activities 818,374 589,735
---------- ----------
INVESTING ACTIVITIES:
Redemption/Acquisition U.S.
Treasury Bill 564 ---
Acquisition of fixed and other assets (26,417) (20,609)
---------- ----------
Net cash used in investing activities (25,853) (20,609)
---------- ----------
FINANCING ACTIVITIES:
Exercise of Stock Options 70,044 ---
Redemption of Class B Preferred Stock (16,275) (11,642)
Purchase of Alcide Common Stock (123,116) (772,713)
---------- ----------
Net cash used in financing activities (69,347) (784,355)
---------- ----------
Net increase (decrease) in cash and
cash equivalents 723,174 (215,229)
Cash and cash equivalents at beginning
of period 5,365,895 2,770,157
---------- ----------
Cash and cash equivalents at end
of period $6,089,069 $2,554,928
---------- ----------
---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for interest --- ---
Cash paid for income taxes --- $36,500
See notes to Unaudited Condensed Financial Statements.
5
<PAGE>
ALCIDE CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
In the opinion of management, the accompanying unaudited financial statements of
Alcide Corporation (the "Company") for the six-month periods ended November 30,
1996 and 1995 have been prepared in accordance with the instructions to Form
10-Q. Certain information and disclosures normally included in notes to
financial statements have been condensed or omitted according to the rules and
regulations of the Securities and Exchange Commission, although the Company
believes that the disclosures are adequate to make the information presented
not misleading. The accompanying unaudited condensed financial statements
should be read in conjunction with the financial statements contained in
the Company's Annual Report on Form 10-K for the year ended May 31, 1996. In
the opinion of management, the accompanying unaudited condensed financial
statements contain all adjustments (consisting of only normal recurring
accruals) considered necessary for a fair presentation. The results of
operations for the six-month period are not necessarily indicative of the
results to be expected for the full year.
2. Inventories
Inventory consisted of the following:
NOVEMBER 30, 1996 MAY 31, 1996
Finished products $222,752 $120,155
Raw materials $969,606 $808,345
---------- --------
Total $1,192,358 $928,500
---------- --------
---------- --------
3. Accounts Receivable - Trade consisted of the following:
NOVEMBER 30, 1996 MAY 31, 1996
ABS Global, Inc. $1,482,569 $1,879,670
International Distributors $689,415 $611,286
Other Receivables $158,332 $94,471
---------- ----------
Total Accounts Receivable $2,330,316 $2,585,427
---------- ----------
---------- ----------
4. Taxes
The income tax provision for the six-month period ended November 30, 1996
consists of:
TAXES PAYABLE DURING REDUCTION OF DEFERRED TOTAL TAX
FISCAL YEAR TAX ASSET PROVISION
Federal Income Taxes $41,556 $464,522 $506,078
-------- --------- --------
5. Orders for Future Delivery
At November 30, 1996 and 1995 the Company had orders for future delivery of
$2,626,879 and $2,735,992 respectively, of which $1,101,714 is from ABS Global,
Inc. and $1,037,643 is from Heemskerk B.V. at November 30, 1996. The $2,626,879
orders are scheduled for shipment during the period December, 1996 through
November, 1997.
6
<PAGE>
6. Marketable Securities
On October 17, 1996 the Company redeemed the $1,050,000 U.S. Treasury Bills
which it had purchased on November 2, 1995 for $996,610.
On October 18, 1996 the Company invested $1,049,436 to purchase U.S. Treasury
Bills having a redemption value of $1,107,000 at October 16, 1997 maturity,
yielding 5.49%.
7. Series 2 Redeemable Class B Preferred Stock
On September 16, 1996 the Company redeemed 6,200 shares of Series 2 stock for
$16,275 in cash out of a sinking fund equal to 0.7% of the Company's FY 1996 net
income as required by the terms of the stock issue.
7
<PAGE>
<TABLE>
<CAPTION>
ALCIDE CORPORATION
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
CLASS "A" PREFERRED STOCK COMMON STOCK ADDITIONAL COMMON TREASURY ACCUMULATED TOTAL
PAID IN STOCK DEFICIT SHAREHOLDERS'
CAPITAL EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE MAY 31, 1996 1,000 $135,307 2,791,538 $27,915 $18,209,412 (192,337) ($2,213,845) ($4,097,835) $12,060,954
STOCK OPTION EXERCISE 5,100 51 50,949 51,000
PURCHASE TREASURY STOCK (3,000) (66,182) (66,182)
NET INCOME 376,296 376,296
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AUGUST 31, 1996 1000 $135,307 2,796,638 $27,966 $18,260,361 (195,337) ($2,280,027) ($3,721,539) $12,422,068
STOCK OPTION EXERCISE 2,770 28 19,016 19,044
PURCHASE TREASURY STOCK (3,000) (56,934) (56,934)
NET INCOME 601,724 601,724
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE NOVEMBER 30,1996 1,000 $135,307 2,799,408 $27,994 $18,279,377 (198,337) ($2,336,961) ($3,119,815) $12,985,902
----- -------- --------- ------- ----------- --------- ------------ ------------ -----------
----- -------- --------- ------- ----------- --------- ------------ ------------ -----------
</TABLE>
8
<PAGE>
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net sales for the six month period ended November 30, 1996 were $4,787,096, a
decrease of 14% from the equivalent period one year ago. The sales reduction is
primarily the result of a 25%, $896,322 sales reduction of udder care products
to ABS Global, Inc., Alcide's distributor in North and South America. During
the first quarter ABS Global reduced its inventories of Alcide product by
approximately $700,000. Sales performance was also adversely affected by a new
competitive teat dip by Babson Brothers Company. Alcide believes the Babson
Brothers InterSept product infringes Alcide's patent and consequently Alcide
filed a patent infringement lawsuit against Babson Brothers and moved for a
preliminary injunction against further sales of InterSept. The injunction was
issued against Babson Brothers on September 19, 1996.
Neither the Babson Brothers infringement nor ABS inventory reduction continued
in Alcide's second quarter and, consequently, sales performance for the second
quarter improved by $702,652 vs. the first quarter results.
Cost of goods as a percentage of net sales decreased to 31.7% during the six
months period ended November 30, 1996 from 33.4% for the first half last year.
The cost improvement as a percentage of net sales results primarily from a
reduction in the cost of glycerin and other large-use raw materials.
Research and development expenses of $870,558 for the first half of fiscal 1997
increased $194,829, 29% as compared to the first six months last year. The
increase reflects expenditures associated with pre-clinical and clinical testing
as part of the Company's response to FDA requirements for additional data to
support Alcide's preoperative skin antiseptic New Drug Application. Other
significant expenditures incurred during the quarter related to USDA mandated
commercial plant evaluations of the Company's poultry antimicrobial and to
clinical testing of Alcide's anti-infective oral medication in the United
Kingdom.
Royalty expense of $176,642 for the six month period ended November 30, 1996
reflects actual royalties earned for the six month period, while the $427,669
royalty expense for the first six months last year included $269,400 for the
purpose of establishing a reserve for litigation.
Other selling, general and administrative expenses of $867,703 for the FY '97
first half were $156,661, 15% lower than the first half last year. The expense
reduction reflects a $139,000 reduction in the provision for executive bonuses
consistent with lower first half sales performance and a $55,000 reduction in
shared promotional support for ABS, consistent with the ABS sales short fall.
LIQUIDITY
The Company's cash, cash equivalents, short term investments and U.S. Treasury
instruments totaled $8,253,086 on November 30, 1996, an amount $744,648 higher
than at the end of the fiscal year ended May 31, 1996. Management believes that
the Company's cash, cash equivalents and short term investments are sufficient
to meet its anticipated operating needs.
LITIGATION COST
During the six month period ended November 30, 1996, the Company incurred legal
fees and other costs totaling $431,694 in connection with a suit brought by some
of the individuals who have rights to receive royalties relating to certain
patents assigned to the Company. The entire $431,694 was charged to a reserve
previously established for this purpose. On November 30, 1996 the unutilized
reserve balance was $227,306. The Company has denied any wrongdoing in
connection with the matters that have been alleged and intends to continue to
vigorously defend its position.
9
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Shareholders voted on three proposals described in the Company's proxy statement
dated October 15, 1996.
1. Votes for election of Directors of the Corporation for the ensuing
year were as follows:
FOR WITHHELD
--- AUTHORITY
---------
Thomas L. Kempner 2,277,253 9,722
Kenneth N. May 2,243,636 43,389
Joseph A. Sasenick 2,277,720 9,305
William G. Spears 2,278,710 8,315
Aaron Stern 2,276,288 10,737
2. Votes to approve a Stock Option Plan for Nonemployee Directors were as
follows:
FOR AGAINST ABSTAIN NOT VOTED
--- ------- ------- ---------
1,872,926 363,664 11,812 38,623
3. Votes for the ratification of the Board's selection of Arthur Andersen
LLP as independent auditors of the Company for the fiscal year ending May 31,
1997, were as follows:
FOR AGAINST ABSTAIN
--- ------- -------
2,275,224 5,600 6,201
10
<PAGE>
PART II.
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBIT 10.20
Distributor Agreement by and between the Company and ABS Global, Inc.,
dated October 30, 1996, covering the United States.
EXHIBIT 10.21
Distributor Agreement by and between the Company and ABS Global, Inc.,
dated October 30, 1996, covering several international markets.
EXHIBIT 11
(a) Computation of Earnings Per Common Share
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
------------- --------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average number of Common Shares outstanding 2,601,186 2,612,979 2,600,718 2,616,332
Assuming exercise of options reduced by the number of
shares which could have been purchased with the proceeds
from exercise of such options 192,616 236,056 192,616 236,056
--------- --------- --------- ---------
Weighted average Common Shares outstanding and Common
Share equivalents 2,793,802 2,849,035 2,793,334 2,852,388
--------- --------- --------- ---------
--------- --------- --------- ---------
Net Income per share $.22 $.21 $.35 $.39
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
REPORTS ON FORM 8-K
None.
11
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ALCIDE CORPORATION
The Registrant
Date: January 13, 1997 By s/
---------------------------------
John P. Richards
Executive Vice President
Chief Financial Officer
12
<PAGE>
DISTRIBUTOR AGREEMENT EXHIBIT 10.20
Pages where confidential treatment has been requested are stamped "Confidential
Treatment Requested. The redacted material has been separately filed with the
Commission." The appropriate section has been marked at the appropriate place
with a star (*).
13
<PAGE>
DISTRIBUTOR AGREEMENT EXHIBIT 10.20
This Distributor Agreement (the "Agreement") is made this 30th day of October,
1996, by and between Alcide Corporation ("Alcide"), a Delaware corporation whose
offices are located in Redmond, Washington, and ABS Global, Inc. ("ABS"), a
Delaware corporation whose offices are located in DeForest, Wisconsin.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
1. DEFINITIONS
As used herein, the term
1.1 "Contract Term" shall mean that period referenced in Schedule A
attached hereto, which Schedule may be revised annually during the term of this
Agreement pursuant to Section 5.1.
1.2 "Product" shall refer to Alcide external teat dip products.
1.3 "Territory" shall mean the United States of America.
2. APPOINTMENT AND AUTHORITY OF ABS
2.1 Subject to the terms and conditions of this Agreement, Alcide
hereby appoints ABS as the exclusive distributor of the Product for the markets
listed in Schedule B (the "Exclusive Markets") and as non-exclusive distributor
of the Product for the balance of the markets (the "Non-Exclusive Markets") in
the Territory. Regarding the Exclusive Markets, Alcide shall not license or
appoint any other person, corporation or other entity, or authorize any other
person, corporation or other entity to act as a distributor for the Product.
Additionally, Alcide shall not deliver Product to another distributor's facility
located in the Exclusive Markets. Regarding the Non-Exclusive Markets, Alcide
shall not sell the Product to members of the ABS representative organization in
the United States, or to competitive semen organizations or to milk cooperatives
in the Territories. ABS hereby accepts said appointments and agrees to actively
promote and sell the Product in the Territory. ABS shall not sell a competing
teat dip product in the Territory during the term of this Agreement. The
parties acknowledge that ABS is marketing a pre-moistened towel product which
shall not be considered a breach of this Agreement.
2.2 ABS may appoint agents, dealers, or sales representatives to act
on ABS's behalf for sales of the Product in the Territory provided that any
compensation to such agents, dealers, or representatives shall be solely ABS's
responsibility.
14
<PAGE>
2.3 Subject to the terms and conditions of this Agreement, ABS is
authorized to sell the Product in such manner, at such prices and upon such
terms as ABS shall determine. ABS is an independent contractor, not an agent or
employee of Alcide. ABS may continue to supply accessories (cups, pumps, etc.)
relating to the Product.
2.4 A. Labeling of the Product shall be as mutually determined by
Alcide and ABS but shall include a notice of distribution by ABS including ABS's
trade names and trademark. Any changes to Product labels shall be mutually
agreed upon by Alcide and ABS. ABS agrees to reimburse Alcide for the design,
plates and printing costs of any labels changed and/or remaining at the
termination of this Agreement.
B. In any of ABS's activities relating to the promotion and sale
of the Product, Alcide's corporate name and trademark shall always be
prominently displayed to protect Alcide's rights and goodwill in the same.
Whenever Alcide's name and trademark are used in advertising and promotional
programs, Alcide retains the right to review and approve same.
2.5 All trade names, trademarks and product names (the "Intellectual
Property"), excluding the ABS and American Breeders Service trademarks, under
which Product is sold shall be the property of Alcide.
2.6 A. If Alcide shall develop additional external teat dip
products, Alcide shall give ABS the right of first refusal to market these
Products in the Territory covered by this Agreement on the same basis of
exclusive or non-exclusive markets.
B. If Alcide shall develop and distribute additional bovine
health products through distributors other than ABS, Alcide shall not establish
trade name(s) for such product(s) or promotional and/or advertising programs
with respect to such product(s) which could be reasonably construed by the end
user as associating such product(s) with ABS.
2.7 If this Agreement is terminated prior to its scheduled termination
date, ABS will not introduce or market a product formulated with technology
covered by Alcide patents or products sold by ABS under this Agreement, provided
however, in such event, ABS will be permitted to distribute a competitive line
of uddercare products.
3. TERMS AND CONDITIONS OF SALES
3.1 All of ABS's orders for the Product shall be subject to the terms
and conditions set forth in this Section 3; no additional or different terms set
forth in ABS's or Alcide's purchase order, acknowledgment or other forms or
correspondence (other than an amendment to this Agreement pursuant to
Section 7.1 hereof) shall govern any sales of the Product by Alcide to ABS.
15
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED.
THE REDACTED MATERIAL HAS BEEN SEPARATELY
FILED WITH THE COMMISSION.
3.2 Alcide and ABS will make a good faith effort to agree upon goal
amounts of Product to be purchased from Alcide by ABS for the Territory during
this Contract (Schedule A). Goals will be reviewed quarterly so appropriate
marketing strategies can be developed and implemented to facilitate attainment
of goals. ABS has provided a [*] forecast of anticipated Product purchases [*]
which will be used solely to facilitate Alcide's planning. [*] purchase orders
will be issued to Alcide by ABS [*]. Alcide shall provide the Product in a
timely manner and in the amounts requested.
3.3 Alcide shall be responsible for appropriately packaging all
Product in packages suitable for use by ABS's customers. All shipments shall be
F.O.B. Manufacturing Plant location. Shipping costs shall be at ABS's expense
and ABS shall be responsible for arranging transportation. Alcide shall make a
good faith effort to accommodate unscheduled orders. In addition, with each
unit of Product, Alcide shall provide, at Alcide's sole expense, with respect to
the Products covered by that shipment:
(i) all necessary or appropriate instructions as to proper use of
Product;
(ii) warnings on product limitations/safety as deemed appropriate;
and
(iii) limited warranty statements in the form attached hereto as
Schedule C.
3.4 Alcide provides the limited warranty described in Schedule C and
warrants that Product delivered to ABS will be manufactured under Good
Manufacturing Practices standards as defined by the U.S. Food and Drug
Administration and will be free from defects. Alcide's sole obligation under
this warranty shall be limited to replacement without cost (except all costs for
shipping and handling) of any quantity of the Product sold. Alcide also
warrants that Alcide is authorized to enter into this Agreement and to grant ABS
the distribution rights provided for in Section 2.1. ABS warrants that all
advertising and promotional material developed by ABS will be in accordance with
the descriptions of Product provided by Alcide and to the best of ABS's
knowledge will be accurate in all material respects. ABS warrants that ABS is
authorized to enter into this Agreement and this Agreement does not and will not
infringe upon any other agreements it may have.
3.5 The agreed upon purchase prices for Products for the Contract Term
shall be specified in Schedule D and may only be revised by Alcide with sixty
(60) days prior written notice to ABS.
3.6 Provided that the Product has been distributed by ABS in
accordance with this Agreement, Alcide shall indemnify ABS and ABS's officers,
directors, employees, agents, dealers
16
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED.
THE REDACTED MATERIAL HAS BEEN SEPARATELY
FILED WITH THE COMMISSION.
and sales representatives against any claims which may arise due to Product
defects or defects in instruction and warnings as provided by Alcide or which
may arise due to any other breach by
Alcide of its warranties set forth in Sections 3.3 and 3.4 hereof and attached
Schedule C. ABS agrees to indemnify Alcide against any claims which may arise
due to ABS, its officers, directors or employees advising the use of the Product
in a manner inconsistent with the stated instructions and warnings on the
Product label. Alcide and ABS shall give prompt notice to the other of any
claim, threatened claim or litigation which in any way relates to the Product
distributed under this Agreement. Alcide and ABS shall provide reasonable
cooperation and assistance to each other in the defense of any claim or
litigation relating to the use of Product distributed under this Agreement.
3.7 Payment terms shall be [*]. ABS agrees and understands that
interest shall be charged [*].
4. PROMOTIONAL ACTIVITIES; MARKETING
4.1 Alcide shall regularly advise ABS of any new developments
concerning Product availability and formulation.
4.2 ABS will undertake such advertising and promotional activity
relating to Product as is deemed appropriate by ABS. Alcide may participate
with ABS and other distributors in jointly sponsored promotional programs and
continue to sponsor with ABS the annual Presidents Club meetings. ABS will be
responsible for whatever operational expenses it incurs in connection with the
sale and distribution of the Product.
4.3 The parties acknowledge that in the non-exclusive territories high
performing reps should be incentivised to maintain and improve their share of
market. Such incentives, while not specifically defined in this Agreement, may
include programs sponsored individually or jointly by the parties. For any such
incentive program, payment shall be made quarterly for the preceding quarter's
performance.
4.4 Alcide shall have the right to use all promotional material for
which it has partially reimbursed ABS, provided ABS approves such use in
writing. Such approval will not be unreasonably withheld.
4.5 ABS's marketing plans for Product shall be provided to Alcide [*].
A list of meetings, seminars and training programs at which Alcide's
participation is desired will be submitted ninety (90) days in advance by ABS.
17
<PAGE>
4.6 A tabulation of ABS's sales by Products shall be provided by ABS
to Alcide at the end of each calendar quarter.
4.7 Thirty days after each ABS fiscal quarter ABS will meet with
Alcide to discuss (i) sales performance by business unit, which is summarized by
strategic business unit and market/Territory; (ii) promotional and marketing
activity and the results of the activity; and (iii) appraisal of competitive
activity, new products, etc.
5. TERM AND TERMINATION
5.1 This Agreement may be extended upon the mutual agreement of both
parties.
5.2 Either party may terminate this Agreement at any time in the case
of a material breach of this Agreement by the other party; provided that written
notice, specifying the alleged breach in reasonable detail, shall have been
given to the party breaching this Agreement not less than ninety (90) days prior
to the effective date of such termination and provided further than the party to
which such notice is sent shall have failed to cure such breach within thirty
(30) days following such notice. Upon termination of this Agreement, ABS shall
sell its inventory of Alcide's Product on the open market or otherwise dispose
of the Product.
5.3 This Agreement may also be terminated by either party, effective
immediately upon notice to the other, if the party to which such notice is sent
becomes the subject to any bankruptcy, insolvency or similar proceeding.
6. CONFIDENTIALITY
6.1 Confidential Information
Alcide and ABS agree, with respect to any confidential information
received from the other and identified as confidential information that:
A. This Section 6.1, Confidential Information, including all
subsections, supersedes all previous agreements between ABS and Alcide, in
writing or otherwise, with regard to confidential information, except that
confidential information disclosed and properly identified as such pursuant to
the previous agreements between the parties shall remain subject to the
confidentiality obligation provided for therein.
B. With respect to the disclosure of information by either party
to the other pursuant to this Agreement, the disclosure of any portion of such
information which the disclosing party regards as confidential information will
be made subject to the following conditions:
18
<PAGE>
(a) The information must be in writing or in drawing or on
some other permanent record and must be clearly marked or identified as being
confidential information and must identify such confidential information as
being:
(i) marketing;
(ii) technological;
(iii) chemical.
(b) If confidential information is verbally disclosed, as
may happen during meetings of representatives of the parties, then, within ten
(10) working days after such disclosure, the disclosing party will deliver to
the other party a letter specifically identifying the confidential information
so disclosed and indicating that the information is to be treated as
confidential information.
Neither party shall have any obligation to the other with respect to
information disclosed but not identified as confidential information pursuant to
this Section 6.1.B.
C. With respect to any confidential information received from the
other and identified as confidential information pursuant to Section 6.1.B:
(a) the receiving party shall use reasonable care to prevent
disclosure of the confidential information to any third party without the prior
written consent of the disclosing party, and the degree of care taken by the
receiving party shall be at least as great as the degree of care which the
receiving party takes in protecting its own confidential information; and
(b) the receiving party will not use confidential information
disclosed by the other party for any commercial purpose other than pursuant to
this Agreement, or publish or disclose it to third persons without the prior
written consent of the disclosing party.
D. Neither party shall have any obligation with respect to any
information disclosed by the other party:
(a) which is already in the possession of the receiving party at
the time of its receipt from the disclosing party;
(b) which the receiving party lawfully receives from another
person whose disclosure thereof to the receiving party does not violate any
rights of the disclosing party; or
(c) which is or becomes published or otherwise publicly available
through no act or omission of the receiving party.
E. ABS's obligation to consider as confidential information disclosed
by Alcide for which ABS has been granted rights under this Agreement shall not
prevent ABS from using such information to carry out the purposes and intent of
this Agreement.
19
<PAGE>
F. Upon termination of this Agreement, ABS and Alcide shall each,
upon the written request of the other, return or destroy all material, copies
thereof and extracts therefrom which include any information designated as
confidential by the other pursuant to Section 6.1.B. Each may, however, retain,
for legal archival purposes only, one copy of all such material.
G. The provisions of this Section 6.1 shall survive termination of
this Agreement and remain in full force and effect as to any item of
confidential information for:
(a) three (3) years if such item of confidential information is
marketing information;
(b) five (5) years if such item of confidential information is
technological information; or
(c) ten (10) years if such item of confidential information is
chemical information.
7. MISCELLANEOUS
7.1 This Agreement constitutes the entire agreement between ABS and
Alcide relating to the Territory, superseding all previous agreements and may be
amended only by a written document signed by both parties hereto.
7.2 All notices, elections, demands or other communications required
or permitted to be made or given pursuant to this Agreement shall be in writing
and shall be considered as properly given or made if sent by pre-paid first-
class mail, overnight courier or delivery service, or if transmitted by any
telecommunication device (e.g., telex or telecopier) and addressed or sent to
the respective parties' addresses specified below. Either party may change its
address by giving prior written notice to the other party of its new address.
If to Alcide: Alcide Corporation
8561 154th Avenue, N.E.
Redmond, Washington 98052
Attn: Joseph A. Sasenick
with a copy to: James R. Lisbakken
Perkins Coie
1201 Third Avenue
Seattle, Washington 98101
If to ABS: ABS Global, Inc.
6908 River Rd., P.O. Box 459
DeForest, Wisconsin 53532
Attn: President
20
<PAGE>
with a copy to: Peter C. Langenus, Esquire
General Counsel
Schnader, Harrison, Segal & Lewis
330 Madison Avenue
New York, New York 10017
7.3 Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of Delaware except that, as to those matters, if any,
as to which law would be superseded by the federal law of the United States of
America, that law shall control.
IN WITNESS HEREOF, the parties have executed this Agreement on the date
first above written.
Alcide Corporation
By:s/
------------------------------------
John P. Richards
Executive Vice President
Hereunto Duly Authorized
ABS Global, Inc.
By:s/
------------------------------------
Dennis McCormick
President, CEO
Hereunto Duly Authorized
21
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED.
THE REDACTED MATERIAL HAS BEEN SEPARATELY
FILED WITH THE COMMISSION.
SCHEDULE A
Contract term shall mean the two-year period commencing November 1, 1996 and
running through and including October 31, 1998.
Goal amounts of product purchased from Alcide by ABS for each contract year
in gallons is [*] for all territories, both domestic and international.
22
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED.
THE REDACTED MATERIAL HAS BEEN SEPARATELY
FILED WITH THE COMMISSION.
SCHEDULE B
EXCLUSIVE MARKETS
ABS Business Units
[*]
* ABS's right to an exclusive market is dependent on [*].
** ABS's right to an exclusive market is dependent on [*].
23
<PAGE>
SCHEDULE C
LIMITED WARRANTY
Alcide Corporation warrants to all purchasers of this Product that it has been
manufactured in accordance with U.S. regulatory requirements, is free of
defects, and is as described in all labeling affixed hereto. Alcide's sole
obligation under this warranty shall be limited to replacement without cost
(except all costs for shipping and handling) of any quantity of the Product
sold.
THE WARRANTY PROVIDED HEREIN AND THE OBLIGATIONS AND LIABILITIES OF ALCIDE
CORPORATION THEREUNDER ARE EXCLUSIVE AND IN LIEU OF, AND BUYER HEREBY WAIVES ALL
OTHER REMEDIES, WARRANTIES, GUARANTEES OR LIABILITIES, EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE (INCLUDING WITHOUT LIMITATION ANY OBLIGATIONS OF
ALCIDE CORPORATION WITH RESPECT TO FITNESS, MERCHANTABILITY AND CONSEQUENTIAL
DAMAGES). THE BUYER ACKNOWLEDGES THAT HE IS NOT RELYING ON THE JUDGMENT OF
ALCIDE CORPORATION TO SELECT OR FURNISH COMPONENTS OR MATERIALS SUITABLE FOR ANY
PARTICULAR PURPOSE AND THAT THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THE
DESCRIPTION ON THE FACE HEREOF.
24
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED.
THE REDACTED MATERIAL HAS BEEN SEPARATELY
FILED WITH THE COMMISSION.
SCHEDULE D
Commencing [*] Product will be discounted as follows depending on the
quarterly amount of Product that ABS purchases whether for sale within or
outside the United States and whether pursuant to this Agreement or any other
agreement relating to Product:
[*]
Discounts levels determined quarterly based on [*].
25
<PAGE>
DISTRIBUTOR AGREEMENT EXHIBIT 10.21
Pages where confidential treatment has been requested are stamped "Confidential
Treatment Requested. The redacted material has been separately filed with the
Commission." The appropriate section has been marked at the appropriate place
with a star (*).
26
<PAGE>
DISTRIBUTOR AGREEMENT EXHIBIT 10.21
This Distributor Agreement (the "Agreement") is made this 30th day of
October, 1996, by and between Alcide Corporation ("Alcide"), a Delaware
corporation whose offices are located in Redmond, Washington, and ABS Global,
Inc. ("ABS"), a Delaware corporation whose offices are located in DeForest,
Wisconsin.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. DEFINITIONS
As used herein, the term
1.1 "Contract Term" shall mean that period referenced in Schedule A
attached hereto, which Schedule may be revised annually during the term of this
Agreement pursuant to Section 5.1.
1.2 "Product" shall refer to Alcide external teat dip products.
1.3 "Territories" shall mean those countries outside the U.S. that
are set forth on Schedule B. Other territories may be added by agreement
between Alcide and ABS and said agreement shall be in writing and appended to
this contract.
2. APPOINTMENT AND AUTHORITY OF ABS
2.1 Subject to the terms and conditions of this Agreement, Alcide
hereby appoints ABS as the exclusive distributor of the Product for the
Territories. Alcide shall not license or appoint any other person, corporation
or other entity, or authorize any other person, corporation or other entity to
act as a distributor for the Product in the Territories. ABS hereby accepts
said appointments and agrees to actively promote and sell the Product in the
Territories. ABS shall not sell a competing teat dip product in the Territories
during the term of this Agreement. The parties acknowledge that ABS is
marketing a pre-moistened towel product which shall not be considered a breach
of this Agreement.
2.2 ABS may appoint agents, dealers, or sales representative to act
on ABS's behalf for sales of the Product in the Territories provided that any
compensation to such agents, dealers, or representatives shall be solely ABS's
responsibility.
2.3 Subject to the terms and conditions of this Agreement, ABS is
authorized to sell the Product in such manner, at such prices and upon such
terms as ABS shall determine. ABS is an
27
<PAGE>
independent contractor, not an agent or employee of Alcide. ABS may continue to
supply accessories (cups, pumps, etc.) relating to the Product.
2.4 A. Labeling of the Product shall be as mutually determined by
Alcide and ABS but shall include a notice of distribution by ABS including ABS's
trade names and trademark. Any changes to Product labels shall be mutually
agreed upon by Alcide and ABS. ABS agrees to reimburse Alcide for the design,
plates and printing costs of any labels changed and/or remaining at the
termination of this Agreement.
B. In any of ABS's activities relating to the promotion and
sale of the Product, Alcide's name and trademark shall always be prominently
displayed to protect Alcide's rights and goodwill in the same. Whenever
Alcide's corporate name and trademark are used in advertising and promotional
programs, Alcide retains the right to review and approve same.
2.5 All trade names, trademarks and product names (the "Intellectual
Property"), excluding the ABS and American Breeders Service trademarks, under
which Product is sold shall be the property of Alcide.
2.6 All product registrations shall be in the name of Alcide, if
possible, or if not, then the name of ABS, or Alcide's and ABS's mutually agreed
designee. If this Agreement is terminated with respect to any Territory or
portion thereof for any reason, ABS will promptly and fully cooperate with the
transfer of product registrations to Alcide's designee for such Territory.
2.7 A. If Alcide shall develop external teat dip products, Alcide
shall give ABS the right of first refusal to market these Products in each
Territory covered by this Agreement.
B. If Alcide shall develop and distribute additional bovine
health products through distributors other than ABS, Alcide shall not establish
trade name(s) for such product(s) or promotional and/or advertising programs
with respect to such product(s) which could be reasonably construed by the end
user as associating such product(s) with ABS.
2.8 If this Agreement is terminated by ABS prior to its scheduled
termination date, ABS will not introduce or market a product formulated with
technology covered by Alcide patents or products sold by ABS under this
Agreement, provided however, in such event, ABS will be permitted to distribute
a competitive line of uddercare products.
3. TERMS AND CONDITIONS OF SALES
3.1 All of ABS's orders for the Product shall be subject to the
terms and conditions set forth in this Section 3; no additional or different
terms set forth in ABS's or Alcide's purchase order, acknowledgment or other
forms or correspondence (other than an amendment to this Agreement pursuant to
Section 7.1 hereof) shall govern any sales of the Product by Alcide to ABS.
28
<PAGE>
3.2 Alcide shall be responsible for appropriately packaging all
Product in packages suitable for use by ABS's customers. All shipments shall be
F.O.B. Manufacturing Plant location. Shipping costs shall be at ABS's expense
and ABS shall be responsible for arranging transportation. Alcide shall make a
good faith effort to accommodate unscheduled orders. In addition, with each
unit of Product, Alcide shall provide, at Alcide's sole expense, with respect to
the Products covered by that shipment:
(i) all necessary or appropriate instructions as to proper use of
the Product;
(ii) warnings on product limitations/safety as deemed appropriate;
and
(iii) limited warranty statements in the form attached hereto as
Schedule C.
3.3 Alcide provides the limited warranty described in Schedule C and
warrants that Product delivered to ABS will be manufactured under Good
Manufacturing Practices standards as defined in the U.S. Food and Drug
Administration and will be free from defects. Alcide's sole obligation under
this warranty shall be limited to replacement without cost (except all costs for
shipping and handling) of any quantity of the Product sold. Alcide also
warrants that Alcide is authorized to enter in this Agreement and to grant ABS
the distribution rights provided for in Section 2.1. ABS warrants that all
advertising and promotional material developed by ABS will be in accordance with
the descriptions of Product provided by Alcide and to the best of ABS's
knowledge will be accurate in all material respects. ABS warrants that ABS is
authorized to enter into this Agreement and this Agreement does not and will not
infringe upon any other agreements it may have.
3.4 Provided that the Product has been distributed by ABS in
accordance with this Agreement, Alcide shall indemnify ABS and ABS's officers,
directors, employees, agents, dealers and sales representatives against any
claims which may arise due to Product defects or defects in instruction and
warnings as provided by Alcide or which may arise due to any other breach by
Alcide of its warranties set forth in Sections 3.2 and 3.3 hereof and attached
Schedule C. ABS agrees to indemnify Alcide against any claims which may arise
due to ABS, its officers, directors or employees advising the use of the Product
in a manner inconsistent with the stated instructions and warnings on the
Product label. Alcide and ABS shall give prompt notice to the other of any
claim, threatened claim or litigation which in any way relates to the Product
distributed under this Agreement. Alcide and ABS shall provide reasonable
cooperation and assistance to each other in the defense of any claim or
litigation relating to the use of Product distributed under this Agreement.
3.5 The agreed upon purchase prices for Product for the Contract
Term shall be specified in Schedule D and may only be revised by Alcide with
sixty (60) days prior written notice to ABS.
29
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED.
THE REDACTED MATERIAL HAS BEEN SEPARATELY
FILED WITH THE COMMISSION.
3.6 Payment terms shall be [*]. ABS agrees and understands that
interest shall be charged [*].
4. PROMOTIONAL ACTIVITIES
4.1 Alcide shall regularly advise ABS of any new developments
concerning Product availability and formulation.
4.2 ABS will undertake such advertising and promotional activity
relating to Product as is deemed appropriate by ABS. Alcide may participate
with ABS and other distributors in jointly sponsored promotional programs and
continue to sponsor with ABS the annual Presidents Club meetings. ABS will be
responsible for whatever operational expenses it incurs in connection with the
sale and distribution of the Product.
4.3 Alcide shall have the right to use all promotional material for
which it has partially reimbursed ABS, provided ABS approves such use in
writing. Such approval will not be unreasonably withheld.
4.4 ABS's marketing plans for Product shall be provided to Alcide
[*] and shall be reviewed [*] with regard to events requiring Alcide's financial
participation. A list of meetings, seminars and training programs at which
Alcide's participation is desired will be submitted ninety (90) days in advance
by ABS.
4.5 A tabulation of ABS's sales by Product shall be provided by ABS
to Alcide at the end of each calendar quarter.
4.6 Thirty days after each ABS fiscal quarter ABS will meet Alcide
to discuss (i) sales performance by business unit, which is summarized by
strategic business unit and market/Territory; (ii) promotional and marketing
activity and the results of the activity; and (iii) appraisal of competitive
activity, new products, etc.
5. TERM AND TERMINATION
5.1 This Agreement may be extended upon the mutual agreement of both
parties.
5.2 Either party may terminate this Agreement at any time in the
case of a material breach of this Agreement by the other party; provided that
written notice, specifying the alleged breach in reasonable detail, shall have
been given to the party breaching this Agreement not less than ninety (90) days
prior to the effective date of such termination and provided further that the
party to which such notice is sent shall have failed to cure such breach within
thirty (30) days following such
30
<PAGE>
notice. Upon termination of this Agreement, ABS shall sell its inventory of
Alcide's Product on the open market or otherwise dispose of the Product.
5.3 This Agreement may also be terminated by either party, effective
immediately upon notice to the other, if the party to which such notice is sent
becomes the subject of any bankruptcy, insolvency or similar proceeding.
5.4 Individual Territories (as defined in Section 1.3) may be
removed from this contract by mutual agreement.
6. CONFIDENTIALITY
6.1 Confidential Information
Alcide and ABS agree, with respect to any confidential
information received from the other and identified as confidential information
that:
A. This Section 6.1, Confidential Information, including all
subsections, supersedes all previous agreements between ABS and Alcide, in
writing or otherwise, with regard to confidential information, except that
confidential information disclosed and properly identified as such pursuant to
the previous agreements between the parties shall remain subject to the
confidentiality obligation provided for therein.
B. With respect to the disclosure of information by either
party to the other pursuant to this Agreement, the disclosure of any portion of
such information which the disclosing party regards as confidential information
will be made subject to the following conditions:
(a) The information must be in writing or in drawing or on
some other permanent record and must be clearly marked or identified as being
confidential information and must identify such confidential information as
being:
(i) marketing;
(ii) technological;
(iii) chemical.
(b) If confidential information is verbally disclosed, as
may happen during meetings of representatives of the parties, then, within ten
(10) working days after such disclosure, the disclosing party will deliver to
the other party a letter specifically identifying the confidential information
so disclosed and indicating that the information is to be treated as
confidential information.
Neither party shall have any obligation to the other with
respect to information disclosed but not identified as confidential information
pursuant to this Section 6.1.B.
31
<PAGE>
C. With respect to any confidential information received from the
other and identified as confidential information pursuant to Section 6.1.B:
(a) the receiving party shall use reasonable care to prevent
disclosure of the confidential information to any third party without the prior
written consent of the disclosing party, and the degree of care taken by the
receiving party shall be at least as great as the degree of care which the
receiving party takes in protecting its own confidential information; and
(b) the receiving party will not use confidential information
disclosed by the other party for any commercial purpose other than pursuant to
this Agreement, or publish or disclose it to third persons without the prior
written consent of the disclosing party.
D. Neither party shall have any obligation with respect to any
information disclosed by the other party:
(a) which is already in the possession of the receiving party
at the time of its receipt from the disclosing party;
(b) which the receiving party lawfully receives from another
person whose disclosure thereof to the receiving party does not violate any
rights of the disclosing party; or
(c) which is or becomes published or otherwise publicly
available through no act or omission of the receiving party.
E. ABS's obligation to consider as confidential information
disclosed by Alcide for which ABS has been granted rights under this Agreement
shall not prevent ABS from using such information to carry out the purposes and
intent of this Agreement.
F. Upon termination of this Agreement, ABS and Alcide shall each,
upon the written request of the other, return or destroy all material, copies
thereof and extracts therefrom which include any information designated as
confidential by the other pursuant to Section 6.1.B. Each may, however, retain,
for legal archival purposes only, one copy of all such material.
G. The provisions of this Section 6.1 shall survive termination of
this Agreement and remain in full force and effect as to any item of
confidential information for:
(a) three (3) years if such item of confidential information is
marketing information;
(b) five (5) years if such item of confidential information is
technological information; or
(c) ten (10) years if such item of confidential information is
chemical information.
32
<PAGE>
7. MISCELLANEOUS
7.1 This Agreement constitutes the entire agreement between ABS and
Alcide relating to the Territories, superseding all previous agreements and may
be amended only by a written document signed by both parties hereto.
7.2 All notices, elections, demands or other communications required
or permitted to be made or given pursuant to this Agreement shall be in writing
and shall be considered as properly given or made if sent by pre-paid first-
class mail, overnight courier or delivery service, or if transmitted by any
telecommunication device (e.g. telex or telecopier) and addressed or sent to the
respective parties' addresses specified below. Either party may change its
address by giving prior written notice to the other party of its new address.
If to Alcide: Alcide Corporation
8561 154th Avenue, N.E.
Redmond, Washington 98052
Attn: Joseph A. Sasenick
with a copy to: James R. Lisbakken
Perkins Coie
1201 Third Avenue
Seattle, Washington 98101
If to ABS: ABS Global, Inc.
6908 River Rd., P.O. Box 459
DeForest, Wisconsin 53532
Attn: President
with a copy to: Peter C. Langenus
General Counsel
Schnader, Harrison, Segal & Lewis
330 Madison Avenue
New York, New York 10017
7.3 Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of Delaware except that, as to those matters, if any,
as to which law would be superseded by the federal law of the United States of
America, that law shall control.
33
<PAGE>
IN WITNESS HEREOF, the parties have executed this Agreement on the
date first above written.
Alcide Corporation
By:s/
--------------------------------------
John P. Richards
Executive Vice President
Hereunto Duly Authorized
ABS Global, Inc.
By:s/
--------------------------------------
Dennis McCormick
President, CEO
Hereunto Duly Authorized
34
<PAGE>
SCHEDULE A
Contract term shall mean the two-year period commencing November 1, 1996
and running through and including October 31, 1998.
Goal amounts of product are as determined by and fixed in U.S.
Territory Agreement.
35
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED.
THE REDACTED MATERIAL HAS BEEN SEPARATELY
FILED WITH THE COMMISSION.
SCHEDULE B
[*]
Other territories may be added by agreement between Alcide and ABS and
said agreement shall be in writing and appended to this contract.
- -------------------------------------
[*]
36
<PAGE>
SCHEDULE C
LIMITED WARRANTY
Alcide Corporation warrants to all purchasers of this Product that it has
been manufactured in accordance with U.S. regulatory requirements, is free of
defects, and is as described in all labeling affixed hereto. Alcide's sole
obligation under this warranty shall be limited to replacement without cost
(except all costs for shipping and handling) of any quantity of the Product
sold.
THE WARRANTY PROVIDED HEREIN AND THE OBLIGATIONS AND LIABILITIES OF ALCIDE
CORPORATION THEREUNDER ARE EXCLUSIVE AND IN LIEU OF, AND BUYER HEREBY WAIVES ALL
OTHER REMEDIES, WARRANTIES, GUARANTEES OR LIABILITIES, EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE (INCLUDING WITHOUT LIMITATION ANY OBLIGATIONS OF
ALCIDE CORPORATION WITH RESPECT TO FITNESS, MERCHANTABILITY AND CONSEQUENTIAL
DAMAGES). THE BUYER ACKNOWLEDGES THAT HE IS NOT RELYING ON THE JUDGMENT OF
ALCIDE CORPORATION TO SELECT OR FURNISH COMPONENTS OR MATERIALS SUITABLE FOR ANY
PARTICULAR PURPOSE AND THAT THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THE
DESCRIPTION ON THE FACE HEREOF.
37
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED.
THE REDACTED MATERIAL HAS BEEN SEPARATELY
FILED WITH THE COMMISSION.
SCHEDULE D
[*] Product will be discounted as follows depending on the quarterly
amount of Product that ABS purchases whether for sale within or outside the
United States and whether pursuant to this Agreement or any other agreement
relating to Product:
[*]
[*]
38
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> NOV-30-1996
<CASH> 6,089,069
<SECURITIES> 0
<RECEIVABLES> 2,330,316
<ALLOWANCES> 0
<INVENTORY> 1,192,358
<CURRENT-ASSETS> 10,749,692
<PP&E> 285,589
<DEPRECIATION> 114,850
<TOTAL-ASSETS> 14,040,327
<CURRENT-LIABILITIES> 821,320
<BONDS> 0
0
233,105
<COMMON> 27,944
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14,040,327
<SALES> 2,744,874
<TOTAL-REVENUES> 2,854,317
<CGS> 893,913
<TOTAL-COSTS> 1,941,230
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 913,087
<INCOME-TAX> 311,363
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 601,724
<EPS-PRIMARY> 0
<EPS-DILUTED> .22
</TABLE>
