1
EXHIBIT 10.3
AGREEMENT
VERIDIEN CORPORATION
&
HORIZON PHARMACEUTICAL INC.
A. SUBLEASE - 00000 00XX XXXXXX XXXXX, XX. XXXXXXXXXX, XXXXXXX
Term: 2 years commencing August 1, 1998 (or such earlier
date as agreed)
Space: - 5 offices on the upper level (furnished)
- shared use of the upper level boardroom
- shared manufacturing/warehouse space
[specifics of the integration of Horizon's
manufacturing into the warehouse space to be
determined]
- shared staff kitchen & washroom facilities
Base Rent: Initially $ 7,500.00 per month plus
2% of Horizon's Sales of $4,000,000; where
Sales are defined as sale of product at 100%
plus service fees for contract fill services
at 10% actual fees and where for low margin
business (ie. business with less than 10%
margin - "Margin") the incremental
calculation shall be the lessor of 2% of 20%
of Horizon's Margin.
In addition to Base Rent, Horizon will pay 50% of all
utilities for the property. Utilities charged to
Horizon will be adjusted to account for Horizon's use
of the property, causing the utility charges for the
property to increase over current levels. Base Rent
and percentage of utilities will be adjusted for
additional space as requested/required by Horizon.
Maximum Base Rent plus utilities paid by Horizon
shall not exceed the total Veridien pays in rent (&
other payments to the landlord), direct expenses and
utilities for the property.
Other: - right to signage on the building (comparable to
Veridien's current signage) / subject to city
approval
- any leasehold improvements are for Horizon's
account (including relocating Veridien's existing
sample room if Horizon wishes to use this area)
- Horizon will provide office cleaning services for
the whole building
B. RELATED SERVICES
i) Lab Services - rates to be negotiated for Horizon's business
(excluding Veridien Contract fill related lab services which
shall be for Veridien's own account)
ii) Reception Services - 50% sharing costs of receptionist
services (costs to modify/upgrade phone system are for
Horizon's account)
2
-2-
(cont)
iii) Accounting/Administrative services - to be discussed if
Horizon is interest in same
C. CONTRACT FILL
Horizon will provide contract fill services for Veridien for the price
of:
First $ 1,000,000 = Cost of Goods Sold* plus 10%
above first $ 1,000,000 = Cost of Goods Sold* plus 10%
* where Cost of Goods Sold is defined as raw materials and direct labor
/ at Veridien's request COGS shall be set from time to time between the
parties / Horizon will use their best efforts to obtain the best
possible prices for raw materials / any of Veridien's inventory used by
Horizon to build Veridien's products will be purchased from Veridien at
cost.
In the event Veridien does not provide Horizon with the ability to
produce the majority of its contact fill business, then Veridien
commits to provide either '[a]' or '[b]' below, or a pro-rated
combination thereof.
[a] a minimum of $ 1.5 million in contract fill business
for its products (or other products) over the 2 years of this
agreement
[b] Veridien will direct business netting Horizon a
minimum of $ 150,000 in revenue to Horizon
Veridien will be treated as Horizon's primary client (specifically in
regards to their responsiveness to Veridien's orders), if Horizon is
Veridien's primary contract filler.
Terms will be net 30 days.
Horizon will maintain reasonable levels of inventory of Veridien
product. Such levels will be agreed between the parties from time to
time. Veridien guarantees to purchase from Horizon any inventory of
Veridien products that they have built at Veridien's request.
Horizon will utilize GMP in the production of Veridien's products and
conform to EPA and FDA manufacturing standards (as applicable). Horizon
will use Veridien's existing manufacturing equipment and will maintain
same in a good working state of repair. Horizon and Veridien will
negotiate rent for Veridien's equipment should Horizon determine any
additional usage for same (ie. other contract fill business).
Veridien will provide its own lab services for Quality Control of
products produced for Veridien.
D. OTHER POSSIBLE JOINT VENTURES
i) other contract fill joint ventures
ii) sale of Veridien's product line through Horizon's existing
customer base
iii) jointly purchasing the building (11800 00xx Xxxxxx Xxxxx, Xx.
Xxxxxxxxxx)
iv) sale of Horizon's product line through Veridien's existing
customer base
3
-3-
(cont)
v) Veridien and Horizon will work together to attempt to utilize
the barter credits that Veridien has on account to reduce the
costs of raw materials.
The Parties agree that they shall execute all necessary documents and take all
necessary actions required to carry out and effectuate the terms of this
Agreement.
AGREED AND ACCEPTED.
VERIDIEN CORPORATION
---------------------------- Per:
Witness
---------------------------- ----------------------------
(Please Print Name)
Date:
---------------------------- -----------------------
Witness
----------------------------
(Please Print Name)
AGREED AND ACCEPTED.
HORIZON PHARMACEUTICAL INC.
----------------------------
Witness Per:
---------------------------- ----------------------------
(Please Print Name)
Date:
---------------------------- -----------------------
Witness
----------------------------
(Please Print Name)
