<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 February 28, 1998
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 incorporation (I.R.S. Employer
or organization Identification No.)
8561 154th Avenue North East, Redmond WA 98052
- ----------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code .......... (425) 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 February 28, 1998: 2,625,882, net of Treasury Stock.
<PAGE>
ALCIDE CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . PAGE
----
Condensed Balance Sheets - February 28, 1998 (Unaudited)
and May 31, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . 3
Unaudited Condensed Statements of Operations - For the three
months and nine months ended February 28, 1998 and February 28,
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Unaudited Condensed Statements of Cash Flows - For the nine
months ended February 28, 1998 and February 28, 1997 . . . . . . . 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
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . 10
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2
<PAGE>
ALCIDE CORPORATION CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
February 28, 1998 May 31, 1997
----------------- ------------
(Unaudited)
---------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 8,868,297 $ 6,723,154
Short term investments 3,645,091 2,086,900
Accounts receivable - trade 2,819,916 2,498,981
Inventory 1,288,904 1,115,627
Prepaid expenses and other current assets 185,088 285,971
----------- -----------
Total Current Assets 16,807,296 12,710,633
----------- -----------
Equipment and leasehold improvements:
Office equipment 106,722 100,010
Laboratory and manufacturing equipment 143,367 132,404
Leasehold improvements 56,152 56,152
Less: Accumulated depreciation and amortization (187,505) (143,604)
----------- -----------
Total equipment and leasehold improvements, net 118,736 144,962
Deferred income tax asset 775,527 1,090,229
Other assets 648,921 1,167,848
----------- -----------
TOTAL ASSETS $18,350,480 $15,113,672
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $425,607 $329,808
Accrued expenses and taxes payable 272,242 493,046
----------- -----------
TOTAL LIABILITIES 697,849 822,854
----------- -----------
COMMITMENTS AND CONTINGENCIES:
Redeemable Class B Preferred Stock -
$.01 par value: authorized 1,664,581 shares;
issued and outstanding:
May 31, 1997 - 88,802
February 28, 1998 - 81,119 212,936 233,105
----------- -----------
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, 1997 - 2,799,408
February 28, 1998 - 2,871,613 28,716 27,994
Treasury stock at cost (3,452,403) (3,191,425)
Additional paid-in capital 19,535,385 18,302,377
Accumulated surplus (deficit) 1,192,690 (1,216,540)
----------- -----------
Total Shareholders' Equity 17,439,695 14,057,713
----------- -----------
TOTAL LIABILITIES, AND SHAREHOLDERS' EQUITY $18,350,480 $15,113,672
----------- -----------
----------- -----------
See notes to Unaudited Condensed Financial Statements.
</TABLE>
3
<PAGE>
ALCIDE CORPORATION UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
-------------------------- -------------------------
February 28 February 28
----------- -----------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $3,189,789 $2,963,436 $9,613,461 $7,750,532
Expenditures
Cost of goods sold 1,040,386 1,107,109 3,167,841 2,623,447
Royalty expense 62,160 67,188 219,225 243,830
Research and development expense 287,625 375,499 1,313,439 1,246,057
Depreciation and amortization 14,225 14,280 43,901 42,548
Consulting expense to related parties 21,000 21,000 75,012 75,014
Other selling, general and administrative expense 583,364 523,279 1,621,851 1,390,983
---------- ---------- ---------- ----------
Total Expenditures 2,008,760 2,108,355 6,441,269 5,621,879
---------- ---------- ---------- ----------
Operating income 1,181,029 855,081 3,172,192 2,128,653
Royalty and other income 8,073 106,452 23,836 119,286
Interest income 160,936 112,129 454,320 309,820
---------- ---------- ---------- ----------
Total Non-Operating Income 169,009 218,581 478,156 429,106
---------- ---------- ---------- ----------
Income before provision for income tax 1,350,038 1,073,662 3,650,348 2,557,759
Provision for income taxes 459,013 366,118 1,241,118 872,196
---------- ---------- ---------- ----------
Net income $ 891,025 $ 707,544 $2,409,230 $1,685,563
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic earnings per common share $ .34 $ .27 $ .93 $ .65
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Diluted earnings per common share $ .31 $ .25 $ .85 $ .60
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average Common Shares outstanding and Common 2,842,135 2,790,716 2,823,818 2,798,325
Share equivalents ---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See Notes to Unaudited Condensed Financial Statements.
4
<PAGE>
ALCIDE CORPORATION UNAUDITED C0NDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
FEBRUARY 28,
-------------------------
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $2,409,230 $1,685,563
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 43,901 42,548
Deferred income tax benefit 1,160,811 800,578
Decrease (increase) in assets:
Inventory (173,277) (176,946)
Accounts receivable - trade (320,935) (226,382)
Prepaid expenses and other assets and security deposits 125,885 (42,519)
Increase (decrease) in liabilities:
Accounts payable 95,799 2,932
Accrued expenses and taxes payable (220,804) (860,488)
---------- ----------
Total adjustments 711,380 (460,277)
---------- ----------
Net cash generated by (used in) operating activities 3,120,610 1,225,286
---------- ----------
INVESTING ACTIVITIES:
Redemption (acquisition) of U.S. Treasury Instruments (1,016,980) 564
Acquisition of fixed and other assets (64,960) (39,626)
---------- ----------
Net cash used in investing activities (1,081,940) (39,062)
---------- ----------
FINANCING ACTIVITIES:
Exercise of Stock Options 387,620 70,044
Redemption of Class B Preferred Stock (20,169) (16,275)
Purchase of Alcide Common Stock (260,978) (586,106)
---------- ----------
Net cash generated by (used in) financing activities 106,473 (532,337)
---------- ----------
Net increase (decrease) in cash and cash equivalents 2,145,143 653,887
---------- ----------
Cash and cash equivalents at beginning of period 6,723,154 5,365,895
---------- ----------
Cash and cash equivalents at end of period $8,868,297 $6,019,782
---------- ----------
---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest --- ---
Cash paid for income taxes $ 71,625 $ 41,000
</TABLE>
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 three month and nine month periods
ended February 28, 1998 and February 28, 1997 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, 1997. 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 three month or nine month periods are not
necessarily indicative of the results to be expected for the full year.
2. Inventories
Inventory consisted of the following:
<TABLE>
<CAPTION>
FEBRUARY 28, 1998 MAY 31, 1997
<S> <C> <C>
Finished products $ 273,875 $ 141,720
Raw materials 1,015,029 973,907
---------- ----------
Total $1,288,904 $1,115,627
---------- ----------
---------- ----------
3. Accounts Receivable - Trade consisted of the following:
<CAPTION>
FEBRUARY 28, 1998 MAY 31, 1997
<S> <C> <C>
ABS Global, Inc. $1,555,617 $1,660,489
International Distributors 505,138 672,983
Novus International, Inc. 585,507 ---
Other Receivables 173,654 165,509
---------- ----------
Total Accounts Receivable $2,819,916 $2,498,981
---------- ----------
---------- ----------
</TABLE>
4. Taxes
The income tax provision for the nine month period ended February 28, 1998
consists of:
<TABLE>
<CAPTION>
TAXES PAYABLE REDUCTION OF TOTAL TAX
DURING FISCAL DEFERRED TAX ASSET PROVISION
YEAR
<S> <C> <C> <C>
Federal Income
Taxes $80,307 $1,160,811 $1,241,118
</TABLE>
6
<PAGE>
5. Orders for Future Delivery
At February 28, 1998 and February 28, 1997 the Company had orders for future
delivery of $2,679,916 and $2,960,674 respectively, of which $1,164,062 is from
ABS Global, Inc., and $744,840 from Heemskerk b.v. at February 28, 1998. The
$2,679,916 orders are scheduled for shipment during the period March, 1998
through June, 1998.
6. Marketable Securities
On September 19, 1997 the Company invested $504,961 to purchase a U.S. Treasury
Note having a redemption value of $500,000 at August 31, 2002 maturity, yielding
6.01%.
On October 16, 1997 the Company redeemed for cash $1,107,000 U.S. Treasury Bills
which it had purchased on October 18, 1996 for $1,049,436.
On October 16, 1997 the Company invested $1,051,751 to purchase U.S. Treasury
Bills having a redemption value of $1,110,000 at October 15, 1998 maturity,
yielding 5.48%.
On January 15, 1998 the Company redeemed for cash a $1,000,000 U.S. Treasury
Note which it had purchased on November 23, 1994.
On February 5, 1998 the Company invested $949,800 to purchase U.S. Treasury
Bills having a redemption value of $1,000,000 at February 4, 1999 maturity,
yielding 5.23%.
On February 5, 1998 the Company invested $617,468 to purchase U.S. Treasury
Bills having a redemption value of $650,000 at February 4, 1999 maturity,
yielding 5.21%.
7. Series 2 Redeemable Class B Preferred Stock
On September 15, 1997 the Company redeemed 7,683 shares of Series 2 stock for
$20,169 in cash out of a sinking fund equal to 0.7% of the Company's FY 1997 net
income, as required by the terms of the stock issue.
7
<PAGE>
ALCIDE CORPORATION
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Class "A" Common Stock Additional Common Treasury Accumulated Total
Preferred Stock Paid in Stock Surplus Shareholders'
Capital (Deficit) Equity
- -----------------------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance May 31, 1997 1,000 $135,307 2,799,408 $27,994 $18,302,377 (240,719) ($3,191,425) ($1,216,540) $14,057,713
Exercise of Stock Options 40,906 409 178,918 179,327
Tax Benefit from Exercise
of Non-Qualified Stock
Options 313,841 313,841
Net Income 723,050 723,050
- -----------------------------------------------------------------------------------------------------------------------------------
Balance August 31, 1997 1,000 $135,307 2,840,314 $28,403 $18,795,136 (240,719) ($3,191,425) ($493,490) $15,273,931
Exercise of Stock Options 17,423 174 139,294 139,468
Purchase Treasury Stock (1,000) (55,812) (55,812)
Tax Benefit from Exercise
of Non-Qualified Stock
Options 286,193 286,193
Net Income 795,155 795,155
- -----------------------------------------------------------------------------------------------------------------------------------
Balance November 30, 1997 1,000 $135,307 2,857,737 $28,577 $19,220,623 (241,719) ($3,247,237) $301,665 $16,438,935
Exercise of Stock Options 13,876 139 68,687 68,826
Purchase Treasury Stock (4,012) (205,166) (205,166)
Tax Benefit from Exercise
of Non-Qualified Stock
Options 246,075 246,075
Net Income 891,025 891,025
- -----------------------------------------------------------------------------------------------------------------------------------
Balance February 28, 1998 1,000 $135,307 2,871,613 $28,716 $19,535,385 (245,731) ($3,452,403) $1,192,690 $17,439,695
----- -------- --------- ------- ----------- ------- ---------- ---------- -----------
----- -------- --------- ------- ----------- ------- ---------- ---------- -----------
</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 three month period ended February 28, 1998 were $3,189,789, an
increase of 8% over the equivalent period one year ago. Net sales for the nine
month period ended February 28, 1998 were $9,613,461, an increase of 24% over
the equivalent period one year ago. Alcide's established udder care and surface
disinfectant business recorded sales of $7,762,759, an increase of $12,227 over
last year. In addition, the Company sold $1,850,702 of Sanova-TM-, its new
antimicrobial for poultry processing plants, to Novus International, Inc.
On January 9, 1998, the United States Department of Agriculture approved
Alcide's request for the use of Sanova in poultry processing. This approval is
the final regulatory step and has led to commercial introduction of the product
during the Company's fiscal third quarter.
Cost of goods as a percentage of net sales decreased to 33% during the nine
month period ended February 28, 1998 from 34% for the same nine month period
last year. The reduction was caused entirely by product mix. Contractually
required payments by Novus International for Sanova had the overall effect of
reducing cost of goods as a percentage of sales by 3 points.
Research and development expenses of $1,313,439 for the nine months ended
February 28, 1998 were $67,382, 5% higher than the corresponding nine months
last year, entirely as a result of commercial plant testing related to Sanova.
Other selling general and administrative expenses of $1,621,851 for the nine
months ended February 28, 1998 were $230,868, 17% higher than for the same
period last year. The increase primarily reflects the impact of higher
salaries, payroll taxes, employee benefits and bonus accruals ($288,000 higher)
offset by lower legal and travel expenses ($83,000).
Royalty and other income was $23,836 for the nine month period ended February
28, 1998, as compared to $119,286 for the same period last year. During the
third quarter last year Alcide received a one-time payment of $100,000 from
Novus International to secure the negotiating rights to Sanova.
Interest income of $454,320 for the nine months ended February 28, 1998 was
$144,500, 47% higher than interest income for the equivalent period last year.
The increase is attributable to the Company's improved cash and marketable
securities position.
LIQUIDITY
Management believes that the Company will continue to operate profitably in
fiscal 1998 and that this coupled with the Company's cash, cash equivalents,
short term investments and U.S. Treasury instruments will be sufficient to meet
its anticipated operating needs.
NEW ACCOUNTING PRONOUNCEMENTS
In February, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share (SFAS 128), which is
effective for interim periods beginning after December 15, 1997. SFAS 128
establishes new standards for computing and presenting earnings per share (EPS)
and Alcide now reports Basic earnings per share and Diluted earnings per share
as contrasted with "Fully Diluted earnings per share" which was reported in the
past. For Alcide, Fully Diluted EPS and Diluted EPS are the same.
9
<PAGE>
PART II.
OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBIT 10.24*
Distributor agreement by and between the Company and Ingenieursbureau Ir.
P.C. Heemskerk b.v., dated June 1, 1997, covering territories of The
Netherlands, Denmark, Belgium, Germany, Luxembourg, Sweden and Finland.
EXHIBIT 10.25*
Distributor agreement by and between the Company and Ingenieursbureau Ir.
P.C. Heemskerk b.v., dated September 4, 1997, covering the territory of
France.
EXHIBIT 10.26*
Distributor agreement by and between the Company and Universal Marketing
Services, Inc., dated January 30, 1998, covering territories of The United
Kingdom, Spain, and the Republic of Ireland.
EXHIBIT 11.
Computation of Earning for Common Share.
EXHIBIT 27.
Financial Data Schedule.
* Confidential treatment has been requested for these Exhibits.
10
<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: April 9, 1998 By s/
-------------------------------------
John P. Richards
Executive Vice President
Chief Financial Officer
11
<PAGE>
EXHIBIT 10.24
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 [*].
1
<PAGE>
EXHIBIT 10.24
"Confidential Treatment Requested. The
redacted material has been separately
filed with the Commission."
DISTRIBUTOR AGREEMENT
This agreement is entered into this 1st day of June, 1997 by and between Alcide
Corporation, a Delaware corporation whose offices are located at 8561 154th Ave.
N.E., Redmond, Washington (hereinafter "Supplier") and Ingenieursbureau lr. P.C.
Heemskerk b.v. (hereinafter "Distributor").
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 stated on Schedule A
attached hereto.
1.2 "Products" shall mean Alcide-Registered Trademark- external udder
care products including UDDERgold-Registered Trademark- Germicidal Barrier Teat
Dip, 4XLA-Registered Trademark- Pre- and Post-Milking Teat Dip and
Pre-Gold-Registered Trademark- Pre-Dip. Products shall include any refinements
or improvements to the existing udder care product line and any new teat dips
introduced into the Territories by Alcide Corporation during the term of this
Agreement.
1.3 "Territories" shall be as defined by the attached Schedule B.
2. Appointment of Distributor
2.1 Subject to the terms and conditions of this Agreement, Supplier
hereby appoints Distributor as exclusive distributor of the Products for the
Territories. Distributor hereby accepts said appointment and agrees to actively
promote and sell the Products.
2.2 In accepting this appointment, Distributor agrees that it and its
affiliates shall not, directly or indirectly, sell or distribute:
(a) Any other external udder care product/teat dip [*].
2
<PAGE>
"Confidential Treatment Requested. The
redacted material has been separately filed
with the Commission."
(b) Any product containing acidified chlorite as its active
ingredient [*].
2.3 Distributor may appoint agents, dealers or sales representatives
to act on Distributor's behalf for sales of the Products in the Territories,
provided that any compensation to such agents, dealers or representatives shall
be solely Distributor's responsibility.
2.4 Subject to the terms and conditions of this Agreement,
Distributor is authorized to sell the Products purchased from Supplier in such
manner, at such prices and upon such terms as Distributor shall determine.
Distributor is an independent contractor, not an agent or representative of
Supplier. Distributor shall not assume or create any obligation in the name of
Supplier or make any representation, warranty or guarantee on behalf of or in
the name of Supplier.
2.5 Labeling of the Products shall be determined exclusively by
Supplier.
In any of the Distributor's activities relating to the promotion
and sale of the Products, Supplier's name and trademark shall always be
prominently displayed in order to protect Supplier's rights and goodwill in the
same. Whenever Supplier's name and trademark are used in advertising and
promotional programs, Supplier retains the right to review and approve same.
2.6 All registrations, trade names, trademarks and product names
under which the Products are sold shall be the property of Supplier. In the
event any registrations (e.g., Product registrations) are taken or issued in the
name of Distributor, Distributor shall, upon request, but in no event later than
upon termination of this Agreement, transfer such registrations to Supplier or
Supplier's designee and provide any documents and assistance reasonably required
in connection therewith.
2.7 This Agreement shall not be construed as establishing a
franchise.
2.8 Supplier and Distributor each represent and warrant to the other
that it is authorized to enter into and perform this Agreement and that this
Agreement does not and shall not conflict with any other agreements it may have.
3. Terms and Conditions of Sale
3.1 All of Distributor's orders for the Products shall be subject to
the terms and conditions set forth in this Section 3 and in the attached
Schedule D which provides product pricing and discounts; no additional or
different terms set forth in Distributor's or Supplier's purchase order,
acknowledgment or other forms or correspondence (other than an amendment to
3
<PAGE>
"Confidential Treatment Requested. The
redacted material has been separately filed
with the Commission."
this Agreement pursuant to Section 8.1 hereof) shall govern any sales of the
Products by Supplier to Distributor.
3.2 Supplier shall be responsible for labeling, packing and shipping
all Products ordered in a form agreed upon between Supplier and Distributor as
being appropriate for the Territory and suitable for ready sale to the end user
in the Territories. All deliveries shall be [*].
3.3 Supplier and Distributor have agreed to goal amounts of Products
(as set forth in Schedule A attached) to be purchased by Distributor during the
Contract Term. Goals will be [*] so that appropriate marketing strategies can
be developed and implemented to facilitate attainment of the goal. If goal
amounts are not established for any Contract Term, such goal amounts shall be
[*] than the goal amounts for the preceding Contract Term. [*]
3.4 Distributor shall make payments to Supplier for Products ordered
by wire transfer within [*].
3.5 Supplier provides the Limited Warranty as described in Schedule
C.
3.6 Prices shown in Schedule D may be revised by Supplier at any time
during the Term of this Agreement following sixty (60) days prior written
notice to Distributor from Supplier.
4. Promotional Activities
4.1 Distributor shall undertake such advertising and promotional
activity relating to Products as is deemed appropriate by Distributor and
Supplier to actively promote sales. Such advertising and promotional activity
shall be solely at Distributor's expense unless otherwise agreed to in writing
by Supplier. All advertising and promotional materials developed by Distributor
shall be in accordance with descriptions of Products provided by Supplier and,
to the best of Distributor's knowledge, shall be accurate in all material
respects. Upon request, Supplier shall have the right to review and approve all
advertising and promotional materials developed by Distributor.
4.2 [*] A list of major meetings, annual shows, seminars and
training programs at which Supplier's participation is desired shall be
submitted ninety (90) days in advance by Distributor.
4.3 A tabulation of Distributor sales by Product and Territory shall
be provided by Distributor to Supplier at the end of each fiscal quarter.
4
<PAGE>
"Confidential Treatment Requested. The
redacted material has been separately filed
with the Commission."
5. Term and Termination
5.1 Ninety (90) days prior to expiration of this Agreement,
Distributor and Supplier shall meet to discuss their intentions regarding a new
or extended agreement.
5.2 Distributor's exclusive rights for any Territory may be
terminated by Supplier if Distributor fails to purchase during the contract year
at least [*] for such Territory. Supplier may then add additional distributors
for the Territory.
5.3 This Agreement may also be terminated by either party, effective
immediately upon notice to the other, in the event the party to which such
notice is sent becomes the subject of any bankruptcy or insolvency proceedings.
5.4 This Agreement may be terminated by either party in the event
there is a material breach of this Agreement by the other party. The injured
party shall give written notice of the breach. The party in breach shall then
have 60 days to cure the breach. If the breach is not cured within 60 days,
this Agreement shall be terminated.
5.5 The provisions of Sections 2.2(b), 2.6, and 7 and any accrued
obligations shall survive termination of this Agreement.
6. Applicable Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Washington, regardless of its or any other
jurisdiction's choice of law principles. The 1980 U.N. Convention on Contracts
for the International Sale of Goods shall not apply to this Agreement.
Distributor shall not make any claim or institute any litigation against
Supplier in connection with this Agreement or any invoice other than in the
courts of the State of Washington, U.S.A., King County, or the United States
District Court for the Western District of Washington. Distributor hereby
irrevocably consents and submits to the jurisdiction of the courts of the State
of Washington and the United States District Court for the Western District of
Washington.
7. Confidential Information
7.1 A. Supplier and Distributor agree, with respect to any
confidential information received from the other and identified as confidential
information, that:
(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
5
<PAGE>
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) Receiving party shall 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.
B. 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.
C. Upon expiration or termination of this Agreement,
Distributor and Supplier shall each, upon the written request of the other,
return or destroy all materials, copies thereof and extracts therefrom which
include any information designated as confidential by the other pursuant to
Section 7.1.A. Each may, however, retain for legal archival purposes only, one
(1) copy of all such material.
D. The provisions of this Section 7.1 shall survive termination
of this Agreement and remain in full force and effect for a period of three (3)
years as to any item of confidential information.
8. Miscellaneous
8.1 This Agreement constitutes the entire agreement between
Distributor and Supplier and may be amended only by a written document signed by
both parties hereto.
8.2 All notices, requests or other communications under this
Agreement shall be given in the English language and will be deemed properly
given if in writing and delivered in person, sent via international courier
service or by confirmed facsimile transmission to the intended recipient at the
address specified below, or to such other address as a party may specify in
writing:
If to Supplier: Alcide Corporation
Attn: Joseph A. Sasenick
6
<PAGE>
If to Distributor: Ingenieursbureau lr. P.C.
Heemskerk b.v.
Attn: E.N.A. Heemskerk
8.3 The failure by either party to enforce any term or provision of
this Agreement shall not constitute a waiver of the same.
8.4 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and one and the same document.
8.5 The rights of Distributor hereunder shall not be assigned or
transferred, either voluntarily or by operation of law, without the prior
written consent of Supplier, nor shall the duties of Distributor hereunder be
delegated in whole or in part. Any such assignment, transfer or delegation
shall be of no force or effect. Any change in control of Distributor shall be
deemed an impermissible assignment and entitle Supplier to terminate this
Agreement. This Agreement shall be binding upon and inured to the benefit of
Supplier, its successors and assigns.
8.6 If any provision of this Agreement is or becomes invalid, illegal
or unenforceable, the remaining provisions shall remain in full force and
effect, and for the invalid, illegal or unenforceable provision shall be
substituted a valid, legal and enforceable provision which shall be as similar
as possible in economic and business objectives as intended by the parties.
8.7 Distributor shall comply with all applicable laws and regulations
in performing under this Agreement and reselling Products, including the U.S.
Foreign Corrupt Practices Act.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
ALCIDE CORPORATION
("Supplier")
By /s/ Joseph Sasenick
Ingenieursbureau lr. P.C.
Heemskerk b.v.
("Distributor")
By /s/ Eric N.A. Heemskerk
President
7
<PAGE>
"Confidential Treatment Requested. The
redacted material has been separately filed
with the Commission."
SCHEDULE A
(1) Contract Term
(2) Goals
(1) The Contract Term shall be a two year period commencing June 1, 1997, and
ending May 31, 1999.
(2) Goal amounts of Product to be purchased by Distributor from Supplier [*]
after commencement of the Contract Term are as follows:
Year 1 -- [*]
Year 2 -- [*]
8
<PAGE>
SCHEDULE B
Territories
The countries of:
Netherlands
Denmark
Belgium
Germany
Luxembourg
Sweden
Finland
9
<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 and buyer's sole remedy for any defect or failure to meet
such requirements or labeling shall be limited to replacement without cost
(except all costs for shipping and handling which shall be Distributor's
responsibility) of any quantity of the Product sold.
THE WARRANTY PROVIDED HEREIN AND THE OBLIGATIONS AND LIABILITIES OF ALCIDE
CORPORATION HEREUNDER ARE EXCLUSIVE AND IN LIEU OF, AND BUYER HEREBY WAIVES ALL
OTHER REMEDIES, WARRANTIES, GUARANTIES OR LIABILITIES, EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY AND ANY
REMEDIES OR LIABILITIES FOR LOST PROFITS OR CONSEQUENTIAL DAMAGES). 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 ALCIDE CORPORATION MAKES NO WARRANTIES OTHER THAN ON THE FACE HEREOF.
10
<PAGE>
"Confidential Treatment Requested. The
redacted material has been separately filed
with the Commission."
SCHEDULE D
[*]
Discount levels determined [*] based on [*].
[*] Volume/Gallons
Discount Rate
[*]
11
<PAGE>
EXHIBIT 10.25
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 [*].
1
<PAGE>
EXHIBIT 10.25
"Confidential Treatment Requested. The
redacted material has been separately filed
with the Commission."
DISTRIBUTOR AGREEMENT
This agreement is entered into this 4th day of September, 1997 by and between
Alcide Corporation, a Delaware corporation whose offices are located at 8561
154th Ave. N.E., Redmond, Washington (hereinafter "Supplier") and
Ingenieursbureau lr. P.C. Heemskerk b.v. (hereinafter "Distributor").
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 stated on Schedule A
attached hereto.
1.2 "Product" shall mean Alcide-Registered Trademark- 4XLA-Registered
Trademark- Pre- and Post-Milking Teat Dip. Product shall include any
refinements or improvements to 4XLA by Alcide Corporation during the term of
this Agreement.
1.3 "Territory" shall be as defined by the attached Schedule B.
2. Appointment of Distributor
2.1 Subject to the terms and conditions of this Agreement, Supplier
hereby appoints Distributor as non-exclusive distributor of the Product for the
Territory. Distributor hereby accepts said appointment and agrees to actively
promote and sell the Product.
2.2 In accepting this appointment, Distributor agrees that it and its
affiliates shall not, directly or indirectly, sell or distribute:
(a) Any other external udder care product/teat dip [*].
(b) Any product containing acidified chlorite as its active
ingredient [*].
2
<PAGE>
2.3 Distributor may appoint agents, dealers or sales representatives
to act on Distributor's behalf for sales of the Product in the Territory,
provided that any compensation to such agents, dealers or representatives shall
be solely Distributor's responsibility.
2.4 Subject to the terms and conditions of this Agreement,
Distributor is authorized to sell the Product purchased from Supplier in such
manner, at such prices and upon such terms as Distributor shall determine.
Distributor is an independent contractor, not an agent or representative of
Supplier. Distributor shall not assume or create any obligation in the name of
Supplier or make any representation, warranty or guarantee on behalf of or in
the name of Supplier.
2.5 Labeling of the Product shall be determined exclusively by
Supplier.
In any of the Distributor's activities relating to the promotion
and sale of the Product, Supplier's name and trademark shall always be
prominently displayed in order to protect Supplier's rights and goodwill in the
same. Whenever Supplier's name and trademark are used in advertising and
promotional programs, Supplier retains the right to review and approve same.
2.6 All registrations, trade names, trademarks and product names
under which the Product is sold shall be the property of Supplier. In the event
any registrations (e.g., Product registrations) are taken or issued in the name
of Distributor, Distributor shall, upon request, but in no event later than upon
termination of this Agreement, transfer such registrations to Supplier or
Supplier's designee and provide any documents and assistance reasonably required
in connection therewith.
2.7 This Agreement shall not be construed as establishing a
franchise.
2.8 Supplier and Distributor each represent and warrant to the other
that it is authorized to enter into and perform this Agreement and that this
Agreement does not and shall not conflict with any other agreements it may have.
3. Terms and Conditions of Sale
3.1 All of Distributor's orders for the Product shall be subject to
the terms and conditions set forth in this Section 3 and in the attached
Schedule D which provides product pricing and discounts; no additional or
different terms set forth in Distributor's or Supplier's purchase order,
acknowledgment or other forms or correspondence (other than an amendment to this
Agreement pursuant to Section 8.1 hereof) shall govern any sales of the Products
by Supplier to Distributor.
3
<PAGE>
"Confidential Treatment Requested. The
redacted material has been separately filed
with the Commission."
3.2 Supplier shall be responsible for labeling, packing and shipping
all Product ordered in a form agreed upon between Supplier and Distributor as
being appropriate for the Territory and suitable for ready sale to the end user
in the Territory. All deliveries shall be [*].
3.3 Supplier and Distributor have agreed to goal amounts of Product
(as set forth in Schedule A attached) to be purchased by Distributor during the
Contract Term. Goals will be [*] so that appropriate marketing strategies can
be developed and implemented to facilitate attainment of the goal. If goal
amounts are not established for any Contract Term, such goal amounts shall be
[*] than the goal amounts for the preceding Contract Term. [*]
3.4 Distributor shall make payments to Supplier for Product ordered
by wire transfer within [*].
3.5 Supplier provides the Limited Warranty as described in
Schedule C.
3.6 Prices shown in Schedule D may be revised by Supplier at any time
during the Term of this Agreement following sixty (60) days prior written
notice to Distributor from Supplier.
4. Promotional Activities
4.1 Distributor shall undertake such advertising and promotional
activity relating to Product as is deemed appropriate by Distributor and
Supplier to actively promote sales. Such advertising and promotional activity
shall be solely at Distributor's expense unless otherwise agreed to in writing
by Supplier. All advertising and promotional materials developed by Distributor
shall be in accordance with descriptions of Product provided by Supplier and, to
the best of Distributor's knowledge, shall be accurate in all material respects.
Upon request, Supplier shall have the right to review and approve all
advertising and promotional materials developed by Distributor.
4.2 [*]
4.3 [*] A list of major meetings, annual shows, seminars and
training programs at which Supplier's participation is desired shall be
submitted ninety (90) days in advance by Distributor.
4.4 A tabulation of Distributor sales by Product and Territory shall
be provided by Distributor to Supplier at the end of each fiscal quarter.
Distributor shall maintain records of sales to customers for a period of at
least two years and, upon request, provide Supplier with copies of such records.
4
<PAGE>
"Confidential Treatment Requested. The
redacted material has been separately filed
with the Commission."
5. Term and Termination
5.1 Ninety (90) days prior to expiration of this Agreement,
Distributor and Supplier shall meet to discuss their intentions regarding a new
or extended agreement.
5.2 This Agreement may be terminated by Supplier if Distributor fails
to purchase during the contract year at least [*].
5.3 This Agreement may also be terminated by either party, effective
immediately upon notice to the other, in the event the party to which such
notice is sent becomes the subject of any bankruptcy or insolvency proceedings.
5.4 This Agreement may be terminated by either party in the event
there is a material breach of this Agreement by the other party. The injured
party shall give written notice of the breach. The party in breach shall then
have 60 days to cure the breach. If the breach is not cured within 60 days,
this Agreement shall be terminated.
5.5 The provisions of Sections 2.2(b), 2.6, 4.4 and 7 and any accrued
obligations shall survive termination of this Agreement.
6. Applicable Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Washington, regardless of its or any other
jurisdiction's choice of law principles. The 1980 U.N. Convention on Contracts
for the International Sale of Goods shall not apply to this Agreement.
Distributor shall not make any claim or institute any litigation against
Supplier in connection with this Agreement or any invoice other than in the
courts of the State of Washington, U.S.A., King County, or the United States
District Court for the Western District of Washington. Distributor hereby
irrevocably consents and submits to the jurisdiction of the courts of the State
of Washington and the United States District Court for the Western District of
Washington.
7. Confidential Information
7.1 A. Supplier and Distributor agree, with respect to any
confidential information received from the other and identified as confidential
information, that:
(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
5
<PAGE>
(b) Receiving party shall 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.
B. 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.
C. Upon expiration or termination of this Agreement,
Distributor and Supplier shall each, upon the written request of the other,
return or destroy all materials, copies thereof and extracts therefrom which
include any information designated as confidential by the other pursuant to
Section 7.1.A. Each may, however, retain for legal archival purposes only, one
(1) copy of all such material.
D. The provisions of this Section 7.1 shall survive termination
of this Agreement and remain in full force and effect for a period of three (3)
years as to any item of confidential information.
8. Miscellaneous
8.1 This Agreement constitutes the entire agreement between
Distributor and Supplier and may be amended only by a written document signed by
both parties hereto.
8.2 All notices, requests or other communications under this
Agreement shall be given in the English language and will be deemed properly
given if in writing and delivered in person, sent via international courier
service or by confirmed facsimile transmission to the intended recipient at the
address specified below, or to such other address as a party may specify in
writing:
If to Supplier: Alcide Corporation
Attn: Joseph A. Sasenick
6
<PAGE>
If to Distributor: Ingenieursbureau lr. P.C.
Heemskerk b.v.
Attn: Eric N.A. Heemskerk
8.3 The failure by either party to enforce any term or provision of
this Agreement shall not constitute a waiver of the same.
8.4 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and one and the same document.
8.5 The rights of Distributor hereunder shall not be assigned or
transferred, either voluntarily or by operation of law, without the prior
written consent of Supplier, nor shall the duties of Distributor hereunder be
delegated in whole or in part. Any such assignment, transfer or delegation
shall be of no force or effect. Any change in control of Distributor shall be
deemed an impermissible assignment and entitle Supplier to terminate this
Agreement. This Agreement shall be binding upon and inured to the benefit of
Supplier, its successors and assigns.
8.6 If any provision of this Agreement is or becomes invalid, illegal
or unenforceable, the remaining provisions shall remain in full force and
effect, and for the invalid, illegal or unenforceable provision shall be
substituted a valid, legal and enforceable provision which shall be as similar
as possible in economic and business objectives as intended by the parties.
8.7 Distributor shall comply with all applicable laws and regulations
in performing under this Agreement and reselling Product, including the U.S.
Foreign Corrupt Practices Act.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
ALCIDE CORPORATION
("Supplier")
By: /s/ Joseph Sasenick
Ingenieursbureau lr. P.C.
Heemskerk b.v.
("Distributor")
By /s/ Eric N.A. Heemskerk
President
7
<PAGE>
"Confidential Treatment Requested. The
redacted material has been separately filed
with the Commission."
SCHEDULE A
(1) Contract Term
(2) Goals
(1) The Contract Term shall be a two year period commencing June 1, 1997, and
ending May 31, 1999.
(2) Goal amounts of Product to be purchased by Distributor from Supplier [*]
after commencement of the Contract Term are as follows:
Year 1 -- [*]
Year 2 -- [*]
8
<PAGE>
SCHEDULE B
Territory
France
9
<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 and buyer's sole remedy for any defect or failure to meet
such requirements or labeling shall be limited to replacement without cost
(except all costs for shipping and handling which shall be Distributor's
responsibility) of any quantity of the Product sold.
THE WARRANTY PROVIDED HEREIN AND THE OBLIGATIONS AND LIABILITIES OF ALCIDE
CORPORATION HEREUNDER ARE EXCLUSIVE AND IN LIEU OF, AND BUYER HEREBY WAIVES ALL
OTHER REMEDIES, WARRANTIES, GUARANTIES OR LIABILITIES, EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY AND ANY
REMEDIES OR LIABILITIES FOR LOST PROFITS OR CONSEQUENTIAL DAMAGES). 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 ALCIDE CORPORATION MAKES NO WARRANTIES OTHER THAN ON THE FACE HEREOF.
10
<PAGE>
"Confidential Treatment Requested. The
redacted material has been separately filed
with the Commission."
SCHEDULE D
[*]
Discount levels determined [*] based on [*].
[*] Volume/Gallons
Discount Rate
[*]
11
<PAGE>
EXHIBIT 10.26
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 [*].
1
<PAGE>
EXHIBIT 10.26
"Confidential Treatment Requested.
The redacted material has been
separately filed with the
Commission."
DISTRIBUTOR AGREEMENT
This agreement is entered into this 30th day of January, 1998 by and between
Alcide Corporation, a Delaware corporation whose offices are located at 8561
154th Ave. N.E., Redmond, Washington (hereinafter "Supplier") and Universal
Marketing Services, Inc., 5545 Avenida de los Robles, Visalia, CA 93291
(hereinafter "Distributor"), and supersedes all previous agreements between the
parties.
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 stated on Schedule A
attached hereto.
1.2 "Products" shall mean Alcide-Registered Trademark- external udder
care products including UDDERgold-Registered Trademark- Germicidal Barrier Teat
Dip, 4XLA-Registered Trademark- Pre- and Post-Milking Teat Dip and
Pre-Gold-Registered Trademark- Pre-Milking Teat Dip. Products shall include any
refinements or improvements to the existing udder care product line and any new
teat dips introduced into the Territories by Alcide Corporation during the term
of this Agreement.
1.3 "Territories" shall be as defined by the attached Schedule B.
2. Appointment of Distributor
2.1 Subject to the terms and conditions of this Agreement, Supplier
hereby appoints Distributor as exclusive distributor of the Products for the
Territories. Distributor hereby accepts said appointment and agrees to actively
promote and sell the Products.
2.2 In accepting this appointment, Distributor agrees that it and its
subsidiaries shall not, directly or indirectly, sell or distribute in the
Territories:
(a) Any other external udder care disinfectant product [*].
2
<PAGE>
"Confidential Treatment Requested.
The redacted material has been
separately filed with the
Commission."
(b) Any product containing acidified chlorite, chlorous acid or
chlorine dioxide as its active ingredients or degradents [*].
2.3 Distributor may appoint agents, dealers or sales representatives
to act on Distributor's behalf for sales of the Products in the Territories,
provided that any compensation to such agents, dealers or representatives shall
be solely Distributor's responsibility.
2.4 Subject to the terms and conditions of this Agreement,
Distributor is authorized to sell the Products purchased from Supplier in such
manner, at such prices and upon such terms as Distributor shall determine.
Distributor is an independent contractor, not an agent or representative of
Supplier. Distributor shall not assume or create any obligation in the name of
Supplier or make any representation, warranty or guarantee on behalf of or in
the name of Supplier.
2.5 Labeling of the Products shall be determined exclusively by
Supplier.
In any of the Distributor's activities relating to the
promotion and sale of the Products, Supplier's name and trademark shall always
be prominently displayed in order to protect Supplier's rights and goodwill in
the same. Whenever Supplier's name and trademark are used in advertising and
promotional programs, Supplier retains the right to review and approve same.
Distributor will have the right to review all Product labels
prior to final approval by Supplier, and Distributor's name and trademark shall
be displayed on all labels for product delivered in the Territories.
Distributor shall reimburse Supplier for art work related to labels making
specific reference to Distributor or Sub-distributors and, upon termination of
this Agreement, Distributor shall purchase such labels from Supplier at the cost
incurred by Supplier.
2.6 All registrations, trade names, trademarks and product names
under which the Products are sold shall be the property of Supplier. In the
event any registrations (e.g., Product registrations) are taken or issued in the
name of Distributor, Distributor shall, upon request, but in no event later than
upon termination of this Agreement, transfer such registrations to Supplier or
Supplier's designee and provide any documents and assistance reasonably required
in connection therewith.
2.7 This Agreement shall not be construed as establishing a
franchise.
2.8 Supplier and Distributor each represent and warrant to the other
that it is authorized to enter into and perform this Agreement and that this
Agreement does not and shall not conflict with any other agreements it may have.
3
<PAGE>
"Confidential Treatment Requested.
The redacted material has been
separately filed with the
Commission."
3. Terms and Conditions of Sale
3.1 All of Distributor's orders for the Products shall be subject to
the terms and conditions set forth in this Section 3 and in the attached
Schedule D which provides product pricing and discounts; no additional or
different terms set forth in Distributor's or Supplier's purchase order,
acknowledgment or other forms or correspondence (other than an amendment to this
Agreement pursuant to Section 8.1 hereof) shall govern any sales of the Products
by Supplier to Distributor.
3.2 Supplier shall be responsible for labeling, packing and shipping
all Products ordered in a form agreed upon between Supplier and Distributor as
being appropriate for the Territory and suitable for ready sale to the end user
in the Territories. All deliveries shall be [*].
3.3 Schedule A (attached) sets forth goal amounts of products to be
purchased by Distributor from Supplier during the initial year of the contract.
Ninety (90) days prior to the start of subsequent contract years, Distributor
and Supplier will meet to revise Schedule A and establish product purchase goals
for the next contract year. In the event that Distributor and Supplier cannot
agree on goal amounts the new goals will be arbitrarily set at [*].
[*]
[*]
3.4 Distributor shall make payments to Supplier for Products [*]
ordered by Supplier if product is sourced from the United States; [*] if sourced
from Europe. Invoice will not be issued by Supplier until Product is
manufactured and ready for shipment with proper notification of availability
provided to Distributor. [*].
3.5 Supplier provides the Limited Warranty as described in Schedule
C.
3.6 Prices shown in Schedule D may be revised by Supplier at any time
during the Term of this Agreement following sixty (60) days prior written notice
to Distributor from Supplier.
3.7 Supplier shall have Distributor named as an additional insured
under Supplier's Product Liability Insurance policy at all times during the term
of this Agreement.
4. Promotional Activities
4
<PAGE>
"Confidential Treatment Requested.
The redacted material has been
separately filed with the
Commission."
4.1 Distributor shall undertake such advertising and promotional
activity relating to Products as is deemed appropriate by Distributor to
actively promote sales. Such advertising and promotional activity shall be
solely at Distributor's expense unless otherwise agreed to in writing by
Supplier. All advertising and promotional materials developed by Distributor
shall be in accordance with descriptions of Products provided by Supplier and,
to the best of Distributor's knowledge, shall be accurate in all material
respects. Upon request, Supplier shall have the right to review and approve all
advertising and promotional materials developed by Distributor. Such approval
will not be unreasonably withheld and will automatically be given if Supplier
does not respond to the request within seven (7) working days.
4.2 Distributor's marketing plans shall be provided to Supplier [*].
A list of major meetings, annual shows, seminars and training programs at which
Supplier's participation is desired shall be submitted ninety (90) days in
advance by Distributor.
4.3 A tabulation of Distributor sales by Product and Territory shall
be provided by Distributor to Supplier at the end of each fiscal quarter.
Distributor shall maintain records of sales to Sub-distributors or customers for
a period of at least two years and, upon request, provide Supplier with copies
of such records.
5. Term and Termination
5.1 This Agreement may be terminated by Supplier [*] in the event
that Distributor fails to:
(a) comply fully with Sections 3 and 4 of the Agreement;
(b) [*]
(c) [*]
5.2 Distributor's exclusive rights for any Territory may be
terminated by Supplier if Distributor fails to purchase during the contract year
at least [*]. Supplier may then, at its sole option, add additional
distributors for the Territory. If Supplier chooses to add additional
distributors in the Territory, the Distributor will be notified sixty (60) days
prior to actual start of Product sales by the additional distributors, and the
Distributor will have the right to terminate this Agreement with sixty (60) days
notice.
5.3 This Agreement may also be terminated by either party, effective
immediately upon notice to the other, in the event the party to which such
notice is sent becomes the subject of any bankruptcy or insolvency proceedings.
5
<PAGE>
5.4 In any case where a party claims the other party is in breach of
the provisions of this Agreement (other than a failure to purchase at least the
goals set forth in Schedule A), this Agreement may be terminated by either party
in the event there is a material breach of this Agreement by the other party.
The injured party shall give written notice of the breach. The party in breach
must commence curing the breach within sixty (60) days of receiving notice
thereof. If the breach is not cured within one hundred and twenty (120) days,
this Agreement shall be terminated.
5.5 The provisions of Sections 2.2, 2.6, and 7 and any accrued
obligations shall survive termination of this Agreement.
5.6 No later than one hundred and fifty (150) days prior to
expiration of this Agreement, Distributor and Supplier shall meet to discuss
their intentions regarding a new or extended agreement.
6. Applicable Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Washington, regardless of its or any other
jurisdiction's choice of law principles. The 1980 U.N. Convention on Contracts
for the International Sale of Goods shall not apply to this Agreement.
Distributor shall not make any claim or institute any litigation against
Supplier in connection with this Agreement or any invoice other than in the
courts of the State of Washington, U.S.A., King County, or the United States
District Court for the Western District of Washington. Distributor hereby
irrevocably consents and submits to the jurisdiction of the courts of the State
of Washington and the United States District Court for the Western District of
Washington.
7. Confidential Information
7.1 (a) Supplier and Distributor agree, with respect to any
confidential information received from the other and identified as confidential
information, that:
(i) 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
(ii) receiving party shall 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.
(b) Neither party shall have any obligation with respect to any
information disclosed by the other party:
6
<PAGE>
(i) which is already in the possession of the receiving
party at the time of its receipt from the disclosing party;
(ii) 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
(iii) which is or becomes published or otherwise publicly
available through no act or omission of the receiving party.
(c) Upon expiration or termination of this Agreement,
Distributor and Supplier shall each, upon the written request of the other,
return or destroy all materials, copies thereof and extracts therefrom which
include any information designated as confidential by the other pursuant to
Section 7.1.(a). Each may, however, retain for legal archival purposes only,
one (1) copy of all such material.
(d) The provisions of this Section 7.1 shall survive termination
of this Agreement and remain in full force and effect for a period of three (3)
years as to any item of confidential information.
8. Miscellaneous
8.1 This Agreement constitutes the entire agreement between
Distributor and Supplier and may be amended only by a written document signed by
both parties hereto.
8.2 All notices, requests or other communications under this
Agreement shall be given in the English language and will be deemed properly
given if in writing and delivered in person, sent via international courier
service or by confirmed facsimile transmission to the intended recipient at the
address specified below, or to such other address as a party may specify in
writing:
If to Supplier: Alcide Corporation
Attn.: Joseph A. Sasenick
If to Distributor: Universal Marketing Services, Inc.
Attn.: Willard G. Clark
8.3 The failure by either party to enforce any term or provision of
this Agreement shall not constitute a waiver of the same.
8.4 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and one and the same document.
8.5 The rights of Distributor hereunder shall not be assigned or
transferred, either voluntarily or by operation of law, without the prior
written consent of Supplier, nor shall the
7
<PAGE>
duties of Distributor hereunder be delegated in whole or in part. Any such
assignment, transfer or delegation shall be of no force or effect. Any change
in control of Distributor shall be deemed an impermissible assignment and
entitle Supplier to terminate this Agreement. This Agreement shall be binding
upon and inure to the benefit of Supplier, its successors and assigns.
Distributor has the right to assign its obligations under this Agreement to
World-Wide Sires, Inc., to Willard G. Clark, or to any entity in which
World-Wide Sires, Inc. or Willard G. Clark has an ownership interest of 51% or
more.
8.6 If any provision of this Agreement is or becomes invalid, illegal
or unenforceable, the remaining provisions shall remain in full force and
effect, and for the invalid, illegal or unenforceable provision shall be
substituted a valid, legal and enforceable provision which shall be as similar
as possible in economic and business objectives as intended by the parties.
8.7 Distributor shall comply with all applicable laws and regulations
in performing under this Agreement and reselling Products, including the U.S.
Foreign Corrupt Practices Act.
8.8 Neither party shall be responsible for non-performance or delay
in performance arising from force majeure except the term of this Agreement
shall not be extended as a consequence thereof. Force majeure shall be deemed
to include, but not be limited to, those circumstances, if any, whereby
Distributor shall be prevented from meeting minimum purchase requirements set
forth in Schedule A as a consequence of acts and omissions of Supplier.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
ALCIDE CORPORATION
("Supplier")
By /s/ John Richards
UNIVERSAL MARKETING SERVICES,INC.
("Distributor")
By /s/ Willard G. Clark
President
8
<PAGE>
"Confidential Treatment Requested.
The redacted material has been
separately filed with the
Commission."
SCHEDULE A
(1) Contract Term
(2) Goals
(1) The Contract Term shall be a three year period commencing January 1, 1998,
and ending December 31, 2000.
(2) Goal amounts of Product to be purchased by Distributor from Supplier for
each Territory [*] after commencement of the Contract Term are as follows:
United Kingdom [*]
Spain [*]
Republic of Ireland [*]
9
<PAGE>
SCHEDULE B
Territories
1) United Kingdom
2) Spain
3) Republic of Ireland
10
<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 and buyer's sole remedy for any defect or failure to meet
such requirements or labeling shall be limited to replacement without cost
(except all costs for shipping and handling which shall be Distributor's
responsibility) of any quantity of the Product sold.
THE WARRANTY PROVIDED HEREIN AND THE OBLIGATIONS AND LIABILITIES OF ALCIDE
CORPORATION HEREUNDER ARE EXCLUSIVE AND IN LIEU OF, AND BUYER HEREBY WAIVES ALL
OTHER REMEDIES, WARRANTIES, GUARANTIES OR LIABILITIES, EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY AND ANY
REMEDIES OR LIABILITIES FOR LOST PROFITS OR CONSEQUENTIAL DAMAGES). 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 ALCIDE CORPORATION MAKES NO WARRANTIES OTHER THAN ON THE FACE HEREOF.
11
<PAGE>
"Confidential Treatment Requested.
The redacted material has been
separately filed with the
Commission."
SCHEDULE D
[*]
Discount levels determined [*] based on [*].
[*] Volume/Gallons
Discount Rate
[*]
12
<PAGE>
EXHIBIT 11
(a) Computation of Earnings Per Common Share
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
February 28 February 28
----------- -----------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $891,025 $707,544 $2,409,230 $1,685,563
Weighted average number of Common Shares outstanding 2,620,950 2,589,305 2,602,633 2,596,914
Basic EPS $.34 $.27 $.93 $.65
Assuming exercise of options reduced by the number of
shares which could have been purchased with the proceeds
from exercise of such options 221,185 201,411 221,185 201,411
--------- --------- --------- ---------
Weighted average Common Shares outstanding and Common Share
equivalents 2,842,135 2,790,716 2,823,818 2,798,325
--------- --------- --------- ---------
--------- --------- --------- ---------
Diluted EPS $ .31 $ .25 $ .85 $ .60
</TABLE>
REPORTS ON FORM 8-K
None.
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> FEB-28-1998
<CASH> 8,868,297
<SECURITIES> 0
<RECEIVABLES> 2,819,916
<ALLOWANCES> 0
<INVENTORY> 1,288,904
<CURRENT-ASSETS> 16,807,296
<PP&E> 306,241
<DEPRECIATION> (187,505)
<TOTAL-ASSETS> 18,350,480
<CURRENT-LIABILITIES> 697,849
<BONDS> 0
0
212,936
<COMMON> 28,716
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 18,350,480
<SALES> 3,189,789
<TOTAL-REVENUES> 3,358,798
<CGS> 1,040,386
<TOTAL-COSTS> 2,008,760
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,350,038
<INCOME-TAX> 459,013
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 891,025
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0.31
</TABLE>
