Charles River Laboratories International Inc · S-1 · On 12/9/99 · EX-10.7

Filed On 12/9/99   ·   SEC File 333-92383   ·   Accession Number 950103-99-1056

Registration Statement (General Form)   ·   Form S-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-1         Registration Statement (General Form)                164    839K 
 2: EX-2.1      Recapitalization Agreement                            59    280K 
 3: EX-2.2      Amend No. 1 to Recapitalization Agt                    5     24K 
 4: EX-3.1.1    Certificate of Incorporation                          11     42K 
 5: EX-3.1.2    By Laws of Charles River Lab. Holdings                17     57K 
 6: EX-4.1      Warrant Agreement                                     54±   218K 
 7: EX-4.2      Investors' Agreement                                  47    171K 
 8: EX-5.1      Opinion of Davis Polk & Wardwell                       2     13K 
 9: EX-10.3     Material Contract                                    132    465K 
10: EX-10.4     Indenture Among Charles River and Trustee            128    638K 
11: EX-10.5     Purchase Agreement -Cr and Dlj                        33    165K 
12: EX-10.7     Material Contract                                     16     52K 
13: EX-10.8     Amended and Restated Spa                              62    285K 
14: EX-10.10    Amended and Restated Distribution Agt                 16     64K 
15: EX-10.11    Supply Agt - Sierra Biomedical and Scientific Res.     4     28K 
16: EX-12.1     Computation of Ratio of Earnings to Fixed Chgs         1     10K 
17: EX-12.2     Computation of Ratio of Total Pro Forma Debt           1      8K 
18: EX-12.3     Computation of Ratio of Adjusted Ebitda                1      8K 
19: EX-21.1     Subsidiaries                                           1      6K 
20: EX-23.2.1   Consent of Independent Accountants                     1      8K 
21: EX-23.2.2   Consent of Independent Accountants                     1      8K 
22: EX-27.1     FDS for Charles River Laboratories                     2±    14K 

EX-10.7   ·   Material Contract
Exhibit Table of Contents

EX-10.7
1st Page of 16
TOC
Top
Previous
Next
Bottom
Just 1st
 
Sponsored Ads...


                                                                    EXHIBIT 10.7

CHARLES RIVER LABORATORTIES, INC. 
Merck Primate Supply Agreement

    This PRIMATE SUPPLY AGREEMENT, by and between Merck & Co., Inc., a
New Jersey corporation with its principal offices at One Merck Drive,           
Whitehouse Station, New Jersey 08889-0100 ("Customer"), and Charles River       
Laboratories, Inc., 251 Ballardvale Street, Wilmington, Massachusetts 01887     
("Charles River"), is made this 30th day of September, 1994.                    

       WHEREAS, Customer desires to obtain colony-reared rhesus primates for
its operations and to acquire an option to purchase such primates under the     
terms and conditions of this Agreement; and                                     

       WHEREAS, Charles River is willing to supply such primates to Customer
and to grant a purchase option to Customer, subject to the terms and            
conditions specified below.                                                     

     Now, therefore, intending to be legally bound, Customer and Charles
River hereby agree as follows;                                                  

1. Supply Commitment; Breeding and Resales.                   

            (a) Charles River will make available for purchase annually by
Customer the number of specific pathogen free, colony raised Macaca mulatta or  
rhesus primates set forth on Schedule I-A hereto (the "Bred Primates"). Any     
and all production in excess of the numbers set forth in Schedule I-A shall be  
the sole property of Charles River and shall be freely saleable by Charles      
River to third parties. Such Bred Primates will be sourced from Charles River's 
breeding colonies located in the State of Florida (collectively, the            
"Colonies"), including those at Key Lois, Raccoon Key and the Mannheimer        
Foundation. The Bred Primates will be made available for delivery to Customer   
in accordance with a shipment schedule to be established quarterly by mutual    
agreement of the parties.                                                       

        (b) Customer may not resell or otherwise transfer to third
parties (other than its affiliates, being corporations in which Customer owns   
at least a 51% equity interest) any Bred Primates it purchases from Charles     
River under this Agreement, except that it may transfer those Bred Primates     
which Customer purchases and takes actual possession of but does not require    
for its then existing research and testing needs pursuant to the "take or pay"  
commitment set forth in paragraph 2 and the inventory purchase option set       
forth in paragraph 6.                                                           

EX-10.7
2nd Page of 16
TOC
1st
Previous
Next
Bottom
Just 2nd

2. Purchase Commitment                                        

             (a) Customer hereby guarantees to purchase annually 100% of the
Bred Primates made available for sale by Charles River, as set forth on         
Schedule I-A (in each case, the "Guaranteed Amount"). To the extent the number  
of Bred Primates made available to Customer is less than the Guaranteed         
Amount, then Customer shall be required to purchase only the actual available   
amount. In no event will Customer have the right to cancel all or any part      
of a given year's guaranteed purchase commitment.                               

             (b) In the event that Customer does not accept delivery of Bred
Primates in accordance with any mutually agreed upon delivery schedule,         
Customer shall nonetheless be deemed to take risk of loss of all Bred primates  
included in such delivery on the scheduled delivery date. Notwithstanding the   
foregoing, all liability associated with said Bred Primates shall remain with   
Charles River until delivery of the Bred Primates to Customer, F.O.B.           
Customer's designated facility. Bred primates for which Customer takes risk of  
loss but not actual possession shall be physically segregated by Charles        
River, such that each Bred Primate owned by Customer may be specifically        
identified as such. Risk of loss shall not vest in Customer as set forth in     
this paragraph in the event that Customer is unable to accept any delivery due  
to any force majeure.                                                           

           (c) To the extent that Customer fails to take delivery of the
Guaranteed Amount during the applicable calendar year, after consultation with  
Customer, Charles River shall use commercially reasonable efforts to sell to    
third-party customers the number of Bred Primates constituting the shortfall,   
at prices to be determined by Charles River (following discussion with          
Customer), and to credit 100% of the proceeds of such sales (net of reasonable  
direct selling expenses) to Customer's account. Charles River's commitment to   
sell Customers Bred Primates shall arise only after Charles River has sold all  
of its excess production not committed to Customer. Except as specifically set  
forth above, in no event shall Customer be released from its annual commitment  
to pay Charles River for the Guaranteed Amount,                                 

         (d) Any Bred Primates not shipped to Customer in accordance
with the quarterly shipment schedule shall be subject to monthly per diem       
maintenance payments until such time as said Bred Primates are shipped to       
Customer. The per them rates shall be as set forth in Schedule 1-B.             

    3. Specifications. Schedule I hereto sets forth the number of Bred
Primates, which shall be 50% male and 50% female, to be supplied by Charles     
River to Customer and comprising the Guaranteed Amount for each of the          
calendar years indicated. Unless otherwise requested by Customer and agreed to  
by Charles River, all the Bred Primates supplied hereunder will be of body      
weight 2.0 to 2.9 kilograms for both males and females, and will meet the       
health specifications set forth in Schedule II. Charles River                   

2 

EX-10.7
3rd Page of 16
TOC
1st
Previous
Next
Bottom
Just 3rd

shall exercise reasonable diligence in maintaining and expanding the Colony to  
meet the quantities specified on Schedule I and the health status specified on  
Schedule II.                                                                    

      4. Prices. Charles River will issue a quarterly written statement to
Customer for each Bred Primate at the time of shipment at the annual per-unit   
prices specified on Schedule III within the desired weight range. An invoice    
for shipping costs (including costs for crates, delivery and any excess per     
diems) will be separately provided to Customer with each shipment. In no event  
will per-unit prices charged to Customer for Bred Primates exceed the           
then-current (i.e., in the same calendar year) price paid by other customers    
purchasing primates sourced from the Colonies at the same male-to-female ratio  
and within the desired (2.0 kg. - 2.9 kg.) weight range.                        

5. Funding of Extraordinary Colony Relocation Costs.          

       (a) Charles River has advised Customer that it intends to
transfer Bred Primates to a land-based colony established at the Mannheimer     
Foundation ("MF") during the course of this Agreement, and Customer has agreed  
to Charles River's designation of MF as the primary site for Charles River's    
land-based colony of Bred Primates. For this purpose, the parties agree that    
MF is a third party beneficiary of this Agreement. To the extent that Customer  
reasonably requests Charles River to relocate Bred Primates to the MF colony    
at a faster rate than currently proposed (i.e., at a rate which accelerates     
Charles River's current 5-year plan to establish a self-sustaining colony of    
900 Bred Primates suitable for breeding at MF's facilities by 1999 in           
accordance with the schedule set forth on the attached Schedule IV), then       
Customer hereby agrees to fully fund the actual additional costs associated     
with any Customer requested accelerated relocation program, on payment terms    
to be mutually agreed to by the parties, and supported by appropriate           
documentation. To the extent that Bred Primates are transferred to the          
land-based MF colony, they will still constitute "Inventory" for purposes of    
Section 6 below.                                                                

          (b) Customer will also support Charles River's program for a
land-based colony at MF by funding construction of "mini-crib" family units     
not to exceed $100,000. Funds will be payable to Charles River upon             
completion of construction of the family units.                                 

6. Inventory Purchase Option.                                 

            (a) Charles River hereby grants Customer an irrevocable option
(the "Option") to purchase all or that portion of the Bred Primates             
constituting the Colonies as set forth in Section 6 (b) hereof (in either       
case, the "Inventory") at the time of expiration of the Initial Term (as        
defined in Section 13 below) at a cash purchase price equal to the inventory    
value of the Bred Primates carried on Charles River's books and records at the  

3 

EX-10.7
4th Page of 16
TOC
1st
Previous
Next
Bottom
Just 4th

time such Option is exercised. In the event this agreement is assigned and    
the Inventory value is "stepped-up" by the assignee, for purposes of this     
provision the Inventory value shall be deemed to exclude any such step-up.    
Inventory will be valued consistent with Charles River's historical           
practices, except that costs of transfers under Paragraph 5 borne by Customer 
will not be included in the inventory value for purposes of calculating the   
Option exercise price, Customer shall be obligated to deliver payment for     
such Inventory no later than thirty (30) days following the expiration of the 
Initial Term, at which time title to the Inventory purchased pursuant to the  
Option shall transfer to Customer. Customer shall not be required to make any 
advance payments in order to secure the Option granted pursuant to this       
Section 6(a) at the time of execution of this Agreement. Continuation of      
payments made under this Agreement, however, shall be deemed to constitute    
current consideration for the continuing offer of such Option. Customer may   
not exercise the Option during the specified exercise period if it is then    
currently in default under the terms of this Agreement.                       

          (b) At its election, Customer may exercise the Option either
(i) for the existing Inventory or (ii) for that part of the Inventory equal to  
the number of Bred Primates necessay to produce offspring to fulfill            
Customer's requirement of 650 equal sex Bred Primates annually. In the event    
that Customer exercises the option for (ii), the number to fulfill such         
requirement will be reduced by the aggregate number of offspring that were      
purchased by Customer in the preceeding year pursuant to Paragraph 2 of this    
agreement (the "take or pay" provision), but were not used for Customer's       
research and testing. In any event, the Customer may not exercise the Option    
for less than 50 percent of the Inventory as of the date of exercise.           

         (c) In the event the Option is not exercised by Customer in
accordance with this Section 6, this Agreement shall automatically renew for    
a two-year period, with annual 10% per-unit price increases to automatically    
take effect during each of the two years included in such renewal period. Such  
price increases shall be applicable to Guaranteed Amounts which shall, for      
each year included in the automatic renewal period, be no less than the         
Guaranteed Amount required to be purchased by Customer during the last full     
year of the Initial Term. In the event of such a renewal, all other terms of    
this Agreement shall remain unchanged (giving effect to expiration of the       
Option).                                                                        

     (d) In the event the Option is exercised by Customer in
accordance with this Section 6, Customer hereby agrees that in connection with  
such exercise, it will simultaneously enter into a two-year primate colony      
management agreement (the "Management Agreement") with Charles River on terms   
mutually agreeable to the parties, pursuant to which CRL will manage (on a      
full cost reimbursement basis plus 10%) the inventory acquired by Customer      
through the exercise of the Option. In the event this Agreement is assigned to  
a non-profit organization, the Management Agreement will be for cost only.      
Said Management Agreement will include (i) indemnification by Charles           

4   

EX-10.7
5th Page of 16
TOC
1st
Previous
Next
Bottom
Just 5th

River of Customer for any environmental liabilities associated with the Bred  
Primates owned by Customer and located on Key Lois or Raccoon Key, and (ii)   
provision for inspection of books and records by Customer to verify costs and 
expenses as the basis for the management fees. The indemnification provided   
under (i), will continue to be provided by Charles River in the event of any  
sale or assignment of this agreement to a third party. Charles River shall    
comply in all material respects with applicable USDA regulations governing    
the care of primates. Charles River will cooperate with Customer in the       
transfer, assignment and recording of all necessary documentation and to take 
such other actions for the transfer of ownership of the Colony at Customer's  
sole expense.                                                                 

         (e) In the event Customer elects to exercise the Option for
less than the entire Colony, then the following conditions shall apply: (i)     
the Bred Primates will be selected by Charles River on a representative cross   
sectional basis, reflecting an equitable distribution of both sex, age, health  
profiles and location and (ii) Charles River shall not be required to sell any  
additional Bred Primates to Customer beginning with date on which the transfer  
of ownership occurs.                                                            

         (f) Customer shall provide Charles River with a non-binding
written notice of its intent to exercise, in whole or in part, the Option no    
later than two years prior to the exercise date, and a binding written notice   
of exercise, in whole or in part, no later than one year prior to the exercise  
date. Said written notices shall specify the quantity of Inventory intended to  
be purchased by Customer, and other relevant information reasonably requested   
by Charles River.                                                               

     7. Tests and Records. All of the Bred Primates supplied to Customer
will be tested by Charles River, in accordance with generally accepted testing  
methods and techniques, to confirm that they meet the health specifications set 
forth in Schedule II. The cost of testing will be charged and invoiced to       
Customer separately only if said testing is not required to initially           
demonstrate that the Bred Primates meet the specifications set forth in         
Schedule II. Charles River shall provide Customer with a medical                
history/record and a valid health certificate of each of the Bred Primates at   
the time of shipment.                                                           

 8. Payment Terms. Within fifteen (15) days of execution of this
Agreement and, thereafter, at the beginning of each quarter throughout each of  
the remaining calendar years included in the term of this Agreement, Customer   
shall pay to Charles River an amount equal to the product of (i) the            
Guaranteed Amount required to be purchased in that quarter and (ii) that        
quarter's per-unit price for Bred Primates. Charles River will ship the Bred    
Primates FOB destination, which will be designated by Customer in advance of    
shipment and will insure the Bred Primates to the destination point. Customer   
will pay all shipping costs (excluding insurance). Shipments will be made in    
accordance with all material applicable state and federal laws. The resulting   
amount shall                                                                    

5 

EX-10.7
6th Page of 16
TOC
1st
Previous
Next
Bottom
Just 6th

constitute advance payment against Customer purchases to be made in that        
quarter, and shall not be refundable to Merck so long as Charles River is       
able to provide Merck with Bred Primates substantially in accordance with the   
delivery schedule mutually agreed to by the parties.                            

     9. Warranty; Disclaimer. Charles River represents and warrants that
each Bred Primate supplied by Charles River under this Agreement (or, if        
applicable, to be transferred following exercise of the Option) shall meet all  
of the specifications set forth in Schedule II hereto. THIS SHALL BE THE        
EXCLUSIVE WRITTEN WARRANTY OF CHARLES RIVER AND THERE ARE NO FURTHER            
WARRANTIES OR REPRESENTATIONS, EXPRESSED OR IMPLIED, INCLUDING AN IMPLIED       
WARRANTY OF MERCHANTABILITY. IN NO EVENT SHALL CHARLES RIVER BE LIABLE FOR      
CONSEQUENTIAL ECONOMIC DAMAGES OR CONSEQUENTIAL DAMAGE TO PROPERTY. If          
Customer determines that any Bred Primate fails to meet such specifications     
upon receipt, or if significant adverse health conditions develop within        
twenty (20) days of receipt, it shall have the right to reject such Bred        
Primate by notifying Charles River not later than twenty (20) days after        
delivery of such Bred Primate to Customer; provided that for tuberculosis the   
notice period shall be seventy (70) days after delivery (so long as the         
TB-infected Bred Primate was not contaminated at Customer's facility).          
Failure to reject any Bred Primate by such time shall constitute acceptance     
thereof. If Customer rejects any Bred Primate hereunder, it shall have the      
right to receive, at its option, either: (i) no charge replacement of such      
Bred Primate from Charles River in accordance with the provisions hereof; or    
(ii) a credit against future purchases equal to the purchase price of the       
rejected Bred Primate and any shipping charges separately invoiced to Customer  
in connection therewith.                                                        

  10. Indemnification. As a condition precedent to the delivery by
Charles River of Bred Primates hereunder, Customer shall execute and deliver    
to Charles River the Primate Customer Indemnity Statement attached as Exhibit   
A.                                                                              

11. Consultation Rights. Charles River shall actively and     
continuously consult with appropriate representatives of Customer on all        
strategic decisions affecting the Colony. Charles River shall also              
periodically provide Customer with written information on the status of the     
Colony, all material SOPs for its maintenance, and such other issues as the     
parties may agree from time to time. In addition, Customer shall have the       
right to direct Charles River's plan for Customer's capital contribution to     
MF as provided in paragraph 5(b). Any input provided by Customer's              
representatives shall not be binding upon Charles River, and Customer shall     
not be liable therefore.                                                        

6   

EX-10.7
7th Page of 16
TOC
1st
Previous
Next
Bottom
Just 7th

      12. Term and Termination. Subject to Section 6 above, this Agreement
shall take effect as of the date set forth above and will terminate on          
December 31, 2000 (such six and one-half year period is referred to herein as   
the "Initial Term"). Either party may terminate this Agreement for an           
unremedied material breach of this Agreement which is not cured within ninety   
(90) days of notice. This Agreement way be renewed by mutual written agreement  
of the parties upon 12 months' prior written notice.                            

13. Miscellaneous Legal Provisions.                           

            (a) It is not the intent of Charles River and Customer to form
any partnership or joint venture, and nothing contained herein shall be         
construed to empower either party to act as agent for the other, The parties    
agree that each of them shall, in relation to its obligations hereunder, be     
acting as an independent contractor.                                            

        (b) No party may assign this Agreement in whole or in part
without the prior written consent of the other parties; except that Charles     
River may assign this Agreement without Customer's consent to (i) a non-profit  
organization for any reason and at any time, and (ii) after December 31, 1995   
to a for-profit organization for any reason; provided, however, that in the     
case of any assignment without Customer's prior consent Charles River shall     
guarantee to Customer that the Colony will be managed by the assignee           
substantially in accordance with all mandatory AAALAC standards applicable to   
such a primate operation. In the event of any assignment to a for-profit by     
Charles River resulting in the sale of the Colony, Customer shall have the      
right to match the terms of said sale upon thirty (30) days written notice,     
Once assigned, all of the provisions of this Agreement and all the rights and   
obligations of the parties hereunder shall be binding upon and inure to the     
benefit of and be enforceable by the successors and assigns of the respective   
parties.                                                                        

            (c) Each party shall hold in confidence information concerning
this Agreement and the terms hereof and shall not make any public statements    
or announcements about it, nor issue news releases relating to the existence    
or implementation hereof. If either party receives requests for information     
about this Agreement from outside organizations, each party will notify the     
other party and in cooperation both parties will formulate a strategy and       
response.                                                                       

           (d) Neither Charles River nor Customer shall be liable to the
other in damages for, nor shall this Agreement be terminable or cancellable by  
reason of, any delay or default in such party's performance hereunder if such   
default or delay is caused by events beyond such party's reasonable control     
including, but not limited to, acts of God, regulation or law or other action   
of any government or agency thereof, war, insurrection, civil commotion,        
destruction of facilities or materials by earthquake, fire, flood or storm,     
labor disturbances, loss of breeding colony due to disease or failure of        

7 

EX-10.7
8th Page of 16
TOC
1st
Previous
Next
Bottom
Just 8th

suppliers, public utilities or common carriers or any actual or de facto import 
embargoes or state import restrictions or limitations,                          

        (e) This Agreement shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Massachusetts (regardless of    
its, or any other jurisdiction's choice of law principles).                     

    (f) All correspondence and invoices pertaining to this
Agreement should be directed to Director, Laboratory Animal Resources,          
WP44-201, Sunneytown Pike, West Point PA 19486 in the case of Customer, and     
Mr. Robert C. Lorette in the case of Charles River.                             

MERCK & CO., INC. )                          CHARLES RIVER LABORATORIES, INC,   

By: /s/ Edward M. Scolnick, M.D.             By: /s/ James C. Foster            
   -------------------------------------        --------------------------------
Edward M. Scolnick, M.D.                     James C. Foster              
Title: Exec. V.P., Science and               President and CEO            
Technology, Merck & Co., Inc. and                             
President, Merck Research Labs                                

8   

EX-10.7
9th Page of 16
TOC
1st
Previous
Next
Bottom
Just 9th

                                                                       Exhibit A

CHARLES RIVER LABORATORIES  
Primate Customer Indemnity Agreement  

        A.       Charles River Laboratories, Inc. ("Charles River") is engaged
in the sale of nonhuman primates, such as cynomolgus and rhesus monkeys, and    
their tissue.                                                                   

      B. These primates may harbor naturally occurring zoonotic infectious
agents, including viruses and bacteria that are dangerous and potentially       
deadly to humans. Charles River employs the best practices commonly used by     
the industry to detect these agents during a quarantine and conditioning        
period and will carry out special supplemental examinations upon request,       
Nevertheless, Charles River cannot guarantee that the primates it sells will    
be free of these agents.                                                        

    C. Primates and primate tissue can be safely handled to avoid risk
to the handler from these harmful agents, but the safe handling of these        
primates or their tissue is out of the control of Charles River after           
shipment. The responsibility for protecting individuals who may come in         
contact with these primates after shipment must therefore, rest with the        
purchaser.                                                                      

     D. Charles River is unwilling to sell primates or primate tissue to
the undersigned (Customer) in light of the potential risk of litigation and     
liability to Charles River without indemnification from Customer.               

      E. Customer wishes to purchase primates or their tissue from Charles
River, and In order to induce Charles River to make such sales, Customer is     
providing Charles River with the following indemnity.                           

In consideration of the foregoing, and intending to be legally
bound, Customer and Charles River agree as follows:                             

1. Indemnity. Customer hereby agrees, to indemnify and hold harmless Charles    
River, its parent subsidiaries and affiliates and their respective officers,    
employees and directors against any and all liability, loss, damage, cost or    
expense (including attorneys' fees and expenses and costs of investigation)     
which any of them may hereafter incur, suffer or be required to pay as the      
result of any damage suffered or alleged to be suffered, including, without     
limitation, death or personal injury and any direct, consequential, special and 
punitive damages, as the result of a Charles River primate or primate tissue    
after such primate or tissue has been delivered to Customer; provided,          
however, that such loss, liability or damage is not attributable to the fraud,  
gross negligence, malfeanance or willful misconduct of Charles River.           

A-1 

EX-10.7
10th Page of 16
TOC
1st
Previous
Next
Bottom
Just 10th

2. Terms and Conditions of Sale. Notwithstanding anything else set forth in     
any other document furnished by Customer to Charles River including any         
purchase order, any sales of primates and primate tissue made by Charles River  
to Customer shall be on Charles River's standard terms and conditions of sale   
as set forth in the Primate Supply Agreement with Customer (the "'Agreement").  
Except as specifically set forth in the Agreement, Charles River makes no       
warranties of any kind with respect to primates or primate tissue it sells;     
ALL OTHER WARRANTIES, INCLUDING BUT NOT LIMITED TO WARRANTIES OF                
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY              
DISCLAIMED. CHARLES RIVER'S LIABILITY IS SPECIFICALLY LIMITED TO REPLACEMENT    
OF PRODUCT SOLD OR REFUND Of PURCHASE PRICE AS PROVIDED IN THE AGREEMENT, AND   
IN THE ABSENCE OF FRAUD, GROSS NEGLIGENCE, MALFEASANCE OR WILLFUL MISCONDUCT    
BY CHARLES RIVER AND IN NO EVENT SHALL CHARLES RIVER BE LIABLE FOR ANY OTHER    
DAMAGES, INCLUDING, WITHOUT LIMITATION, DIRECT, CONSEQUENTIAL, SPECIAL OR       
PUNITIVE DAMAGES.                                                               

3. Miscellaneous. This agreement shall be binding on and inure to the benefit   
of and be enforceable by Charles River and Customer and their respective        
successors and assigns. This Agreement shall be governed by the laws of         
Massachusetts. This Agreement is intended to take effect as a sealed            
instrument.                                                                     

 IN WITNESS WHEREOF, Charles River and Customer have each caused
this Agreement to be executed on their respective behalves under seal by their  
duly authorized officers as of the date below.                                  

CHARLES RIVER LABORATORIES, INC.        MERCK & CO., INC.                       

By: /s/ James C. Foster                 By: /s/ Edward M. Sculnick, M.D.        
   -------------------------------         -------------------------------------
James C. Foster                         Edward M. Sculnick, M.D.          
President and CEO                       Title: Exec. V.P., Science and    
                                                 Technology. Merck & Co., Inc.
                                                 and President, Merck Research
                        Labs
                               Date:  September 30, 1994

A-2   

EX-10.7
11th Page of 16
TOC
1st
Previous
Next
Bottom
Just 11th

                                                                    Schedule I-A

ANNUAL GUARANTEED PURCHASES 

                     Guaranteed Amount
                     of Annual Purchases
 Calendar Year        In Units (Equal Sex)
 -------------        --------------------
1994                       400  
1995                       500  
1996                       550  
1997                       550  
1998                       600  
1999                       600  
2000                       650  

*  164 to be shipped between October 1 and December 31, 1994, of which 80 have  
been prepaid.                                                             

EX-10.7
12th Page of 16
TOC
1st
Previous
Next
Bottom
Just 12th

                                                                    Schedule I-B

PER DIEM PAYMENTS                                                               

Key Lois Facility: $2.00 per day for animals not taken in quarterly             
distribution.                             

                 S4.00 per day for animals ready for shipment but delayed by
customer.                                 

MF                 $2.00 per day for animals not taken in quarterly             
distribution.                             

                $5.00 per day for animals ready for shipment by delayed by
customer.                                 

          These costs increase 5% per calendar year.

EX-10.7
13th Page of 16
TOC
1st
Previous
Next
Bottom
Just 13th

                                                                     SCHEDULE II

SPECIFICATIONS FOR COLONY-REARED PRIMATES     

All Bred Primates provided to Customer must meet the following specifications:  

I  The animals provided must be tested free of the following infectious         
disease-causing agents:                                                   

o     Common pathogenic external and internal hehminth and arthropod      
parasites                                                     
o     Tuberculosis                                                        
o     Salmonella/Shigella                                                 
o     Herpes B virus                                                      
o     SAIDS virus complex (SRV1, SRV2, SIV)                               
o     Rabies                                                              
o     Tetanus                                                             
o     Filovirus                                                           

2. Prior to shipping, vendor must notify Customer of any other known            
significant infectious diseases causing agents in the breeding colony     
of origin, such as hemo- and enteric-protozoal parasites; entetic         
bacterial pathogens, and viral agents such as Hepatitis A, Measles,       
and Monkey Pox.                                                           

3. The following veterinary and husbandry procedures must be performed          
prior to shipment:                                                        

 (a)   Three negative TB tests given at intervals of approximately two weeks
within six weeks of shipment.                                 

 (b)   Rectal cultures just prior to shipment negative for enteric bacterial
pathogens such as Salmonell and Shigella.                     

4. Each animal delivered is to have an individual animal record sent            
with the animal, or under separate cover, which will include such         
information as: month of birth; socialization information, such as        
cage/pen mates; and health information, such as all treatments, test      
results, etc.                                                             

5. Charles River will develop and implement a genetic monitoring plan           
for the Colony.                                                           

EX-10.7
14th Page of 16
TOC
1st
Previous
Next
Bottom
Just 14th

6. All Bred Primates will be permanently identified with a legible tattoo or    
other means such as implantable micro-cbip as agreed to by Customer (chips
will be supplied by Customer).                                            

7. A valid health certificate will be provided for each shipment of animals.    

8. Charles River must notify customer of any known deviation from these         
specifications prior to departure of any shipment of animals to a Merck   
designated site.                                                          

EX-10.7
15th Page of 16
TOC
1st
Previous
Next
Bottom
Just 15th

                                                                    Schedule III

PRICES  

Calendar Year                                 Prices    
-----------------------------------------------------   
1994 (partial)                             $ 3,650
1995                                       $ 4,015
1996                                       $ 4,420
1997                                       $ 4,865
1998                                       $ 5,350
1999                                       $ 5,885
2000                                       $ 6,475

EX-10.7
Last Page of 16
TOC
1st
Previous
Next
Bottom
Just 16th

                                                                     Schedule IV

MANNHEIMER COLONY BUILD-UP PLAN   

                           Number of Bred Primates
Calendar Year                            Comprising Colony            
-------------                        -----------------------          
1995                                      500               
1996                                      650               
1997                                      750               
1998                                      850               
1999                                      900               
2000                                      900               

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This S-1 Filing		Date		First		Last			Other Filings
		9/30/94		10
		12/31/94		11
		12/31/95		7
Filed As Of		12/8/99
Filed On		12/9/99
		12/31/0		7					10-K
Top									List All Filings