MANUFACTURING AGREEMENT

MANUFACTURING AGREEMENT


AGREEMENT entered into May 7, 1996, effective as of April 30, 1996 by and between E.I. DU PONT DE NEMOURS AND COMPANY ("DuPont"), and DADE CHEMISTRY SYSTEMS INC. ("Dade").


WHEREAS, DuPont is a manufacturer of the parts described on Schedule A
---------- attached hereto and made a part hereof (together with any other parts to be manufactured by DuPont for Dade, the "Parts"); and


WHEREAS, DuPont's Sorvall Centrifuge business (the "Centrifuge Business") manufactured the Parts for and sold the Parts to DuPont's In Vitro Diagnostic business (the "IVD Business") prior to the sale of the IVD Business by DuPont to Dade; and


WHEREAS, Dade desires to continue to purchase the Parts from DuPont, and DuPont desires to continue to sell the Parts to Dade, all in accordance with the terms set forth in this Agreement.


NOW, THEREFORE, the parties agree as follows:


1. SUPPLY OF PARTS. (a) DuPont agrees to sell to Dade all of Dade's
--------------- requirements for the Parts; provided, that, unless otherwise agreed to in
-------- writing by DuPont, DuPont shall not be required to supply more than one hundred fifty percent (150%) of the minimum requirement for any Part as set forth on Schedule A in any Contract Year (as defined in Paragraph 2 below). - ----------


(b) The Dade engineering drawings and/or specifications for the Parts have been heretofore furnished to and are currently being used by DuPont in the manufacturing of the Parts. Unless such specifications are modified as described in Paragraph 4 below, DuPont agrees to manufacture the Parts in accordance with the specifications heretofore provided by Dade.


2. PERIOD OF AGREEMENT. (a) Unless terminated as provided for under
------------------- subparagraphs (b), (c) or (d) below, this Agreement shall commence on the date set forth above and continue in effect for three (3) years ending on April 30, 1999, and thereafter, this Agreement shall continue in effect from Contract Year to Contract Year. For the purposes of this Agreement, each twelve (12) month period commencing on May 1 and ending on April 30 during the term of this Agreement shall be referred to as a "Contract Year", with the first Contract Year commencing on the date hereof and ending on April 30, 1997.


(b) This Agreement may be terminated by either party providing to the other party at least twelve (12) months prior written notice; provided, that the
-------- first date on which a notice of termination can become effective is at the end of the third Contract Year. No later than six (6) months prior to the effective date of any termination of this Agreement, Dade may submit to DuPont an order report (as described in Paragraph 3


below) for the period immediately following such effective date, which period shall not exceed twelve months (the "Extension Period"), and the provisions of this Agreement shall remain in effect for such period except that there shall be no minimum Total Utilized Hours (as defined in Paragraph 3(b)(i) below) for the Extension Period. Dade agrees that such order report shall not provide for Parts in excess of the purchases of Parts made during the Contract Year immediately preceding the Contract Year in which such report was delivered. Dade shall be required to purchase, and DuPont shall be required to sell, the Parts described in such order report on the terms set forth in this Agreement, except as otherwise described above. Without limiting DuPont's obligation in the immediately preceding sentence, Dade shall, in good faith, consult with DuPont in establishing its order report (if any) so that DuPont may plan its production requirements for the Extension Period.


(c) Either party shall have the right to terminate this Agreement upon the breach or default by the other party of any of its obligations hereunder if such breach or default is not cured within sixty (60) days after written notice thereof.


(d) In the event of termination of this Agreement, for any reason, (i) DuPont shall complete all Parts then ordered, and Dade shall purchase from DuPont such quantities of raw materials on hand as a result of Dade's commitments and forecasts under Paragraph 3 below, at DuPont's cost thereof, and those Parts then completed and thereafter completed in accordance with the terms of this Agreement, and (ii) DuPont agrees to provide to Dade up to an average of four (4) working man hours of reasonable assistance per Part to facilitate the transfer of the manufacturing of the Parts to a manufacturer selected by Dade. If DuPont is required to provide more than an average of four (4) working man hours of such assistance per Part, Dade agrees to pay DuPont for such assistance at a rate to be mutually agreed upon by Dade and DuPont at that time.


3. QUANTITY. (a) Dade's estimated purchase requirements of Parts are
-------- listed on Schedule A. In order for DuPont to properly support Dade's production
---------- requirements, no later than sixty five (65) days prior to the beginning of each calendar month, Dade shall provide to DuPont an order report, which sets forth (i) a firm order for Parts for that calendar month to be supplied subject to the lead time set forth on Schedule A, which shall be designated as the "Placed
---------- Orders", and constitute a firm commitment by Dade to DuPont, and (ii) a forecast of the Parts that Dade anticipates purchasing during the twelve (12) month period following the calendar month, which shall be designated as the "Planned Orders" and is for DuPont's production planning purposes only and shall not constitute a commitment by Dade to purchase. DuPont shall promptly advise Dade of any proposed increase or decrease in lead time so that, if acceptable, Dade's commitments hereunder can be adjusted to maintain optimum


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flexibility while preventing supply interruption or delay. DuPont will monitor Dade's planned orders and maintain an adequate supply of raw materials to support the planned requirements at its own risk. The parties agree to update Schedule A to reflect any additions and deletions of Parts or any change in the - ---------- annual minimum number of any such Part as provided in this Section 3. Reference in this Agreement to Schedule A shall mean such schedule as updated from time to
---------- time.


(b) (i) Immediately following each Contract Year regardless of any breach by DuPont after the end of such Contract Year, Dade and DuPont shall compute the total number of standard hours for all of the Parts and other production parts order by Dade for that Contract Year (the "Total Hours Utilized") which shall be equal to the total of all of the Individual Part Hours (as hereinafter deferred) for that Contract Year. For the purposes of this Agreement, the term "Individual Part Hours" shall mean the product resulting from (A) the total number of each Part or other production part ordered by Dade during the Contract Year in question, multiplied by (B) the standard hours for such Part or other production part, as the case may be.


(ii) If the Total Hours Utilized are less than 37,000 standard hours, Dade shall either (A) pay to DuPont an amount equal to such deficit multiplied by DuPont's average standard cost for labor and cash overhead charges for all Parts and other production parts for such Contract Year, or (B) order a sufficient number of Parts within sixty (60) days of the determination of such deficit so that such deficit is reduced to zero. If Dade elects to order Parts as described in clause (B) above, the standard hours associated with such Parts shall not be applied to the minimum requirements for the Contract Year in which such Parts are ordered, and all standard hours associated with Parts ordered during such Contract Year shall first reduce such deficit and then be applied to the minimum standard hours for such Contract Year.


4. MODIFICATIONS. At any time Dade may propose, in writing,
------------- modifications to the drawings and/or specifications related to the Parts, in which event both parties agree to promptly negotiate, in good faith, the inclusion of those modifications into this Agreement, and the cost thereof shall be determined in accordance with Paragraph 5(d) below. DuPont shall not make any modification to any Part without the prior written consent of Dade.


5. PRICE. (a)(i) Subject to the discount and surcharge described in
----- subparagraph (b) and (c) below, the price for each Pa ...