Contract Manufacturing Agreement

CONTRACT MANUFACTURING AGREEMENT


THIS CONTRACT MANUFACTURING AGREEMENT (the "Agreement") is made this 6th day of November, 1997, by and between Ecogen Inc., a Delaware corporation ("Ecogen") and Archer-Daniels-Midland Company, a Delaware corporation ("ADM").


W I T N E S S E T H


WHEREAS, Ecogen desires to obtain from ADM certain fermentation and centrifugation services for its Bacillus thuringiensis based ("Bt") biorational insecticide products and its Aspire yeast product; and


WHEREAS, ADM as the operator of the Biochem II facility, desires to provide and operate one seed fermenter, one main fermenter, and one westphalia centrifuge, plus support equipment, to produce the Products.


NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein, it is agreed as follows:


I. RESPONSIBILITIES


1.01 ADM shall provide the facility as described in Article II for
the production of products as described in Article III (the
"Product").


1.02 In connection with the contract manufacturing of the Products
for Ecogen, ADM shall provide the following:


(a) Management, manufacturing and laboratory operations
personnel with specific responsibility for the
Products;


(b) Utilities;


(c) Maintenance;


(d) Operating permits;


(e) Records of production from process control systems,
samples per schedule 1.02(e), shipping records and
weigh tickets;


(f) Waste disposal of by-products and failed batches;


(g) Notification to Ecogen should any more toll
manufacturing be


1


2


introduced to the facility;


(h) Quality control supervision and shipping of samples;
and


(i) Storage of raw materials and cultures.


1.03 In connection with such contract manufacturing, Ecogen shall
provide the following:


(a) Technical personnel when required;


(b) All operating and quality control protocols an
example of which is shown on Schedule 1.03(b);


(c) Cultures;


(d) Raw materials (to be purchased from ADM when efficacy
is competitive);


(e) Product specifications;


(f) Safety and usage information relative to the raw
materials and the Products;


(g) Transportation from the subject facility (ADM
Trucking to be used where applicable and
competitive); and


(h) Production scheduling.


II. FACILITY


2.01 In order to provide the Products, ADM intends to use the
facility known as BioChem II when used for producing ADM's own
products (the "Facility"). The following equipment at the
Facility will be used to produce the Products.


(a) one nominal 21,500 gal fermenter;


(b) one nominal 2,000 gal seed fermenter;


(c) westphalia centrifuge; and


(d) support equipment, as necessary to operate this
equipment.


If the westphalia centrifuge is down for maintenance, then a
second centrifuge will be provided to complete centrifugation
before next batch is


2


3


completed.


2.02 If during the term of this Agreement, Ecogen has product
demand which requires additional fermenters and centrifuges
and if ADM has available additional fermenters and
centrifuges, the parties agree to negotiate in good faith the
providing of the second fermenter or centrifuge and a price to
do so. Whether a fermenter or centrifuge is considered
available is within ADM's sole and absolute discretion.


III. PRODUCTS


3.01 Products to be produced by ADM for Ecogen are to be Ecogen's
own Bt products and Ecogen's Aspire yeast product.


IV. TERM OF AGREEMENT


4.01 The term of this Agreement shall commence on July 1, 1997 (the
"Effective Date") and shall continue through December 31, 1999
unless earlier terminated in accordance with the provisions of
this Agreement. The term of this Agreement shall be extended
for additional periods of one year (up to a maximum of five
additional years) unless either party provide written notice
to the other of its intention to terminate the Agreement, such
notice to be given at least eleven months prior to the end of
the then current term for ADM, and two months prior to the end
of the current term for Ecogen.


4.02 Ecogen may terminate this Agreement on July 1, 1998, July 1,
1999 or December 31, 1999 with two (2) months written notice.


4.03 In the event of a material breach of this Agreement, the
non-breaching party may terminate this Agreement by providing
written notice to the other party of the nature of the breach
and intent to terminate. Termination will be effective thirty
(30) days (ten (10) days in the case of non-payment of an
invoice) after such notice unless the breach has been
corrected by that time; in the event any such breach can not
be reasonably cured within thirty (30) days, the parties may,
but need not, agree in writing upon an alternative Schedule to
cure such breach.


4.04 In the event of (i) the institution by or against either party
of insolvency, receivership, bankruptcy, or similar
proceedings; (ii) either party making an assignment for the
benefit of creditors; or (iii) either party's dissolution, the
other party may terminate this Agreement by providing written
notice to the other party.


V. PAYMENT


5.01 ACCESS FEE REIMBURSEMENT. As consideration for the services
provided


3


4


under this Agreement, Ecogen shall pay to ADM an access fee in
the amount of * per year


The total amount of the annual access fee is due and owing in
advance from Ecogen on July 1 of each year this Agreement is
in effect. Payment shall be made monthly in advance in 1/12th
increments. Payment is guaranteed by a letter of credit fixed
at * and a second letter of credit fixed at * to cover
operating cost exposure. During the final six (6) months of
the contract the * letter of credit may decline by 1/6th of
its value ea ...