RESEARCH AND DEVELOPMENT AGREEMENT EXHIBIT 10.55
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This Research and Development Agreement (this "Agreement") is made as of March
6, 1996 by and between ENGENE BIOTECHNOLOGIES, INC., a California corporation
("Contractor") and SYNBIOTICS CORPORATION, a California corporation
("Synbiotics").
ARTICLE 1
DEFINITIONS
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The following terms will have the following meanings when used herein:
1.1 Affiliate. "Affiliate" shall mean any corporation or other business entity
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which controls, is controlled by or is under common control with any party. A
corporation or business entity shall be regarded as in control of another
corporation or business entity if it owns directly or directly or indirectly
controls at least fifty percent (50%) of the voting stock of the other
corporation or business entity.
1.2 Development Plan. "Development Plan" shall have the meaning set forth in
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Section 3.1.1 of this Agreement.
1.3 Effective Date. "Effective Date" shall mean March 6, 1996.
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1.4 Initial Project Schedule. "Initial Project Schedule" shall have the
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meaning set forth in Section 3.1.2 of this Agreement.
1.5 Intellectual Property. "Intellectual Property" shall mean all inventions,
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improvements, discoveries, sequences, works of authorship, trade secrets,
technology, ideas, know-how, processes, methods, formulas, data and techniques
arising from Contractor's specific work on the Projects, and all title, patents,
patent rights, copyrights, trade secret rights, and other intellectual property
rights anywhere in the world related thereto.
1.6 License Agreement. "License Agreement" shall mean the agreement so named,
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dated today, between Contractor and Synbiotics.
1.7 PCR Product(s). "PCR Product(s)" shall mean all Synbiotics Product(s)
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specifically incorporating any Rights relating specifically to polymerase chain
reaction based technology.
1.8 Project(s). "Project(s)" shall mean the research and development projects
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specified in the Development Plans attached to the Initial Project Schedule or
any Subsequent Project Schedule.
1.9 Net Sales. "Net Sales" shall mean the total invoice amount for sales to
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unaffiliated entities less (i) normal and customary cash and trade discounts,
returns and allowances, transportation charges or allowances, if any, paid or
allowed by Synbiotics, and (ii) sales, value added and other similar taxes paid
by Synbiotics with respect to the sale of a product, if included in the selling
price. In the event of a transaction between Synbiotics
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[*] Certain confidential portions of this exhibit have been omitted by means of
blacking out the text (the "Mark"). This exhibit has been filed separately
with the Secretary of the Commission without the Mark pursuant to the
Company's Application Requesting Confidential Treatment under Rule 24b-2
under the Securities Exchange Act of 1934, as amended.
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and an Affiliate, "Net Sales" shall be deemed to be the total gross amount
invoiced by Synbiotics if that amount is the same as the amount invoiced for
similar sales to non-affiliated third parties and otherwise the amount of Net
Sales shall be the amount invoiced by the Affiliate on its sale of the item, in
either case less (i) normal and customary cash and trade discounts, returns and
allowances, transportation charges or allowances, if any, paid or allowed by
Synbiotics, and (ii) sales, value added and other similar taxes paid by
Synbiotics with respect to the sale of the product, if included in the selling
price.
1.10 Research Agreement. "Research Agreement" shall mean the agreement so
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named, dated September 6, 1994, between Synbiotics and Contractor.
1.11 Rights. "Rights" shall mean any inventions, improvements, discoveries,
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sequences, works of authorship, trade secrets, technology, ideas, know-how,
processes, methods, formulas, data and techniques, patents, patent rights, trade
secrets and other intellectual property rights licensed to Synbiotics pursuant
to Article 3 of the License Agreement.
1.12 Specifications. "Specifications" shall mean the specifications established
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by Synbiotics for each Synbiotics Product (including, without limitation,
sensitivity, size, shape, color, tolerances, materials, labelling, packaging,
etc.)
1.13 Subsequent Product Schedule. "Subsequent Product Schedule" shall have the
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meaning set forth in Section 3.1.2 of this Agreement.
1.14 Synbiotics Product(s). "Synbiotics Product(s)" shall mean any vaccine,
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construct, probe, diagnostic test or automatable assay technique incorporating
any Rights developed for Synbiotics by Contractor hereunder. Without limitation
Synbiotics Product(s) shall also include any vaccine, construct, probe,
diagnostic test or automatable assay technique incorporating the Rights (i) for
use in detecting [*] utilizing the unique sequence of [*] characterized by
Contractor and (ii) set forth on attached Exhibit B.
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ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PARTIES
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2.1 Representations and Warranties of Synbiotics. Synbiotics represents and
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warrants to Contractor that as of the Effective Date:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of the State of California;
(b) all corporate acts required to execute and deliver this Agreement have
been duly taken by Synbiotics; the execution, delivery and performance
hereof by Synbiotics have been duly authorized; and this Agreement, as so
executed and delivered, is a valid and binding obligation of Synbiotics,
enforceable against it in accordance with its terms; and
(c) the execution and delivery of this Agreement by Synbiotics, and the
performance of its obligations hereunder, do not require the consent of any
third party and will not violate, with or without notice, the lapse of time
or both, any agreement, contract, license or permit to which Synbiotics is
a party or its organizational documents.
2.2 Representations and Warranties of Contractor. Contractor represents and
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warrants to Synbiotics that as of the Effective Date:
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(a) it is a corporation duly organized, validly existing and in good
standing under the laws of the State of California;
(b) all corporate acts required to execute and deliver this Agreement have
been duly taken by Contractor; the execution, delivery and performance
hereof by Contractor have been duly authorized; and this Agreement, as so
executed and delivered, is a valid and binding obligation of Contractor,
enforceable against it in accordance with its terms;
(c) the execution and delivery of this Agreement by Contractor, and the
performance of its obligations hereunder, do not require the consent of any
third party and will not violate, with or without notice, the lapse of time
or both, any agreement, contract, license or permit to which Contractor is
a party or its organizational documents;
(d) it has the right and title to grant the present and future rights and
assignments in favor of Synbiotics contained in this Agreement;
(e) neither it nor anyone authorized to act on its behalf has entered into
any agreement or understanding with any third party that grants rights,
licenses, assignments, immunities or options of any kind which would
interfere with its ability to perform its obligations under this Agreement;
and
(f) each of its employees has entered into a contract which provides for
assignment to Contractor of all inventions and intellectual property made
by him or her during the course of his or her employment, and non-
disclosure of confidential information of Contractor and of others to which
access is gained through Contractor.
2.3 Covenants of Contractor. Contractor covenants and agrees that for the
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duration of this Agreement:
(a) subject to the terms hereof, it will maintain at all times all relevant
regulatory approvals and licenses for its research and laboratory
facilities in its reasonable judgment sufficient in capacity to allow
Contractor to perform the work contemplated by this Agreement within the
timeframe contemplated in this Agreement;
(b) if during the conduct of work on any Project any of Contractor's
employees or consultants shall, to the knowledge of Contractor, make a
discovery, improvement or invention relating to work on the Project or
otherwise create Intellectual Property, Contractor will promptly make the
fact of such discovery, improvement or invention or Intellectual Property
known to Synbiotics;
(c) it shall not take, or omit to take, or suffer to occur, any action
which would result in any representation or warranty made by Contractor in
Section 2.2 from becoming at any future date untrue (assuming it were made
on and as of such future date);
(d) it shall not enter into any agreement or take or fail to take any
action which shall restrict its legal right to grant to Synbiotics the
rights contemplated under this Agreement or the License Agreement;
(e) it shall promptly, but in no event more than three (3) business days,
notify Synbiotics, and provide copies or transcriptions, of any action,
request, order, instruction, communication, complaint, notice, public
announcement or inquiry by the United States Department of Agriculture
("USDA") or any submission, filing, letter or other communication by
Contractor to the USDA with respect to any of the Synbiotics Products which
is sent by or is received by or which comes to the attention of Contractor,
including but not limited to field actions, investigations or recalls of
the Synbiotics Products; and
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(f) it will use its best efforts to, as soon as practicable, after
receiving a request from Synbiotics to manufacture any Synbiotics Products
pursuant to Section 4.1, establish a USDA licensed manufacturing facility
sufficient in size to allow it to perform its manufacturing obligations
under Section 4.1, and shall maintain and expand such facility, as
necessary to perform its obligations, for so long as it continues to
manufacture any Synbiotics Products.
ARTICLE 3
RESEARCH SERVICES TO BE PROVIDED
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3.1 Contractor's Research Obligations.
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3.1.1 Development Plan. Contractor shall use its best efforts to complete
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each Project, in accordance with the development plan therefor, which shall
include the Specifications, development schedule, deliverables, and other
conditions of the proposed development (the "Development Plan"). All
Development Plans shall be contain commercially reasonable terms and shall
be prepared by Synbiotics after reasonable consultation with Contractor.
3.1.2 Contractor's Development Obligations. Synbiotics shall provide to
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Contractor within thirty (30) days following the Effective Date, a schedule
setting forth at least two (2) Projects that Synbiotics intends to fund
(the "Initial Project Schedule"), together with a Development Plan with
respect to each such Project. During the fourth calendar quarter of each
calendar year during the term of the Agreement, Synbiotics shall present to
Engene an additional schedule setting forth each of the Projects that
Synbiotics intends to fund during the ensuing calendar year ("Subsequent
Project Schedule"), together with a Development Plan with respect to each
such Project. In connection with each of the Projects set forth in a
Subsequent Product Schedule, Contractor covenants to make available to
Synbiotics a development group comparable in size and experience to the
development group committed to each of the Projects identified in the
Initial Project Schedule.
3.1.3 Termination of Project.
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(a) Synbiotics may terminate any Project or Projects, at any time
upon delivering written notice of such termination to Contractor
("Termination Notice"). Upon any such termination, Synbiotics shall
have no obligation to compensate Contractor for any further work
conducted on such Project after the end of the calendar month in
which the Termination Notice was sent to Contractor.
(b) In the event that any Project is terminated pursuant to this
Section 3.1.3, Synbiotics shall have the right (but not the
obligation) to (i) undertake or continue, the Project independently
of Contractor and (ii) cause Contractor to resume work on the
Project whether or not Synbiotics has performed or continues to
perform any work on the Project. If Synbiotics elects to undertake
or continue the Project, Contractor shall make available to
Synbiotics any and all work product produced in connection with such
Project.
3.2 Synbiotics' Obligations. Synbiotics shall not contract with any third
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party to perform any research project where such project calls for a PCR Product
as a deliverable unless Contractor has first been offered an opportunity to
conduct such research project. Nothing contained in this Section 3.2 shall be
interpreted to restrict Synbiotics ability to carry on any research project
independent from Contractor.
3.3 Records and Notes. Contractor shall, in accordance with its established
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practice, keep complete, accurate and authentic accounts, notes, data and
records of the work performed under this Agreement. Contractor shall
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promptly and fully disclose to Synbiotics any and all information, data and
results obtained from conducting the Projects. Synbiotics may, upon prior
written notice and at reasonable times, inspect and make copies of such
accounts, notes, data and records at Contractor's facilities.
3.4 Reports and Meetings. Synbiotics may appoint a liaison who shall have full
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access to Contractor's facilities to monitor and otherwise obtain knowledge and
information about the research on the Projects. Synbiotics' liaison shall meet
with Contractor on a semimonthly basis. During such meetings Contractor shall
orally communicate to the Synbiotics liaison information obtained through work
on the Projects being monitored. Contractor shall in addition, within ten (10)
days following the completion of each calendar month, provide Synbiotics
separate written status reports detailing the information obtained through work
accomplished in the most recently completed calendar month on respective
Projects (the "Project Monthly Reports"). Within thirty (30) days of the
completion of the work with respect to a Project, the parties shall jointly
author a final report summarizing the work accomplished and identifying all
inventions conceived and reduced to practice and all other Intellectual
Property.
3.5 Work for Third Parties. Nothing contained in this Agreement (except as set
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forth in Sections 3.1, 3.2 and 4.2) prohibits or constrains either party from
cooperating or working with third parties; provided, however, that Contractor
agrees to remain exclusively available to Synbiotics for further consultation,
and correspondingly agrees for the term of this Agreement and for three years
following the expiration or termination of this Agreement pursuant to Article 9,
not to perform any research for Contractor's own account or for any other person
relating to the Rights. If any such research is proposed to Contractor by any
person, Contractor shall immediately notify Synbiotics in writing, giving all
specifics.
3.6 Good Laboratory Practices. Contractor shall conduct all nonclinical
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laboratory research or studies and/or manufacturing in accordance with Good
Laboratory Practice standards and Good Manufacturing Practices standards, and
will document the adherence of its facilities, equipment, personnel, methods,
practices, records and controls to the applicable standards and regulations.
3.7 QA/QC. Contractor shall be the sole party responsible for quality
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assurance and quality control in the manufacturing of any Synbiotics Products
pursuant to the Projects.
ARTICLE 4
MANUFACTURING SERVICES
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4.1 Option to Cause Contractor to Manufacture. Contractor hereby agrees, upon
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the request of Synbiotics, to manufacture any or all of the primer sets required
by Synbiotics for the Synbiotics Products. The price at which Synbiotics will
purchase primer sets manufactured by Contractor pursuant to this Section 4.1 and
the terms and conditions upon which such primer sets will be provided to
Synbiotics shall be negotiated by Contractor and Synbiotics in good faith, and
shall reflect industry average prices and standard terms and conditions for the
manufacture of such products. Synbiotics has no obligation to request
Contractor to manufacture if, and to the extent, Synbiotics chooses to
manufacture by itself.
4.2 Use of Third Party Manufacturers. Prior to contracting with any third
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party for the manufacture of any primer sets for a Synbiotics Products,
Synbiotics shall first notify Contractor in writing of its desire to cause
Contractor to manufacture such primer sets (the "Written Notice") and then for
thirty (30) days after Contractor's receipt of the Written Notice, negotiate
with Contractor (and not with anyone else) in good faith toward a definitive
manufacturing agreement on terms as contemplated by Section 4.1 and otherwise
mutually agreeable to Contractor and Synbiotics.
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ARTICLE 5
COMPENSATION FOR SERVICES
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5.1 Contractor Compensation. Contractor shall be compensated during the term
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of each Project at the rate of [*] per month for the first Project performed
under this Agreement (except that for so long as any project is being performed
pursuant to the Research Agreement the compensation for the first Project to be
performed under this Agreement shall be [*] per month) and [*] per month for
each additional Project (the "Fee"). The Fee during each of the first twelve
(12) consecutive months of this Agreement, including payments made to Contractor
pursuant to the Research Agreement, shall be at least [*] per month. The Fee
with respect to each Project shall be paid in arrears on the last day of each
month and shall be prorated if a Project is completed in mid-month.
5.2 Milestone Payments. As partial consideration for the research and
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development efforts of Contractor under this Agreement, Synbiotics shall pay
Contractor milestone payments (subject to Contractor executing an Investment
Representation in the form attached hereto as Exhibit A prior to each payment)
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at the times set forth below.
5.2.1 [*] shares of Synbiotics Common Stock, no par value, upon Synbiotics
achieving aggregate Net Sales of PCR Products of at least [*] prior to the
first anniversary of the Effective Date.
5.2.2 [*] shares of Synbiotics Common Stock, no par value, upon Synbiotics
achieving aggregate Net Sales of PCR Products of at least [*] during the
one-year period commencing on the first anniversary of the Effective Date.
5.2.3 [*] shares of Synbiotics Common Stock, no par value, upon Synbiotics
achieving Net Sales of PCR Products of at least [*] during the one-year
period commencing on the second anniversary of the Effective Date.
5.3 "Royalty" Payments.
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5.3.1 Synbiotics shall pay to Contractor a payment in the nature of a
royalty on its Net Sales of all Synbiotics Products. The royalty rate
shall be [*] of Net Sales for each Synbiotics Product, to the extent
permitted by law. Synbiotics' royalty obligations will continue throughout
the entire useful life of each Synbiotics Product. Royalties shall be paid
within forty-five (45) days of the end of each calendar quarter with
respect to royalty-bearing sales occurring in that quarter. Synbiotics
shall keep and maintain detailed and accurate books and records with regard
to Net Sales, royalties and calculation thereof.
5.3.2 If a law or governmental regulation requires withholding of taxes on
any royalty payment due hereunder, such taxes shall be deducted from any
amount to be remitted hereunder and shall be paid to the proper taxing
authority, and proof of payment shall be provided to the party on whose
behalf such taxes were paid as evidence of such payment in such form as
required by the tax authorities having jurisdiction.
5.3.3 Each royalty payment shall be accompanied by a written report,
prepared and signed by a financial officer of Synbiotics, showing for the
quarter for which payment is being made, the Net Sales of each Synbiotics
Product sold and the royalties which shall have accrued with respect
thereto and currency conversion calculations, if any. In the event that,
for any quarter following the first quarter in which a Synbiotics Product
is sold for which such a royalty would be payable, no such royalty is due,
Synbiotics shall report the same to Contractor.
5.3.4 At the request and expense of Contractor, Synbiotics shall permit an
independent certified public accountant appointed by Contractor and
reasonably acceptable to Synbiotics, at reasonable times and upon
reasonable notice (but not exceeding once in any twelve (12) month period),
to examine those records as may be necessary (with respect to any calendar
year ending not more than three (3) years prior to such
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party's request) to: (i) determine the correctness of any report or payment
under this Agreement; or (ii) obtain information as to the Synbiotics
Product sales for such calendar year. Said independent certified public
accountant shall verify to the requesting party only the amount of payment
due or costs incurred hereunder and disclose no other information revealed
in its audit. Results of any such examination shall be made available to
the parties. Any amount of deficiency, or overcharge, shall be paid or
refunded promptly to Contractor, plus interest at the commercial prime
lending rate of Citibank, N.A., New York (or equivalent banking
institution) until the date paid. Contractor shall bear the full cost of
the performance of any such audit unless such audit discloses a variance of
more than five percent (5%) from the amount of the original report, royalty
or payment calculation, in which case Synbiotics shall bear the full cost
of the performance of such audit.
5.4 No Reimbursement. Synbiotics shall have no obligation to purchase for
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Contractor or reimburse Contractor for the expense of purchasing any equipment
or supplies needed to perform the Projects.
ARTICLE 6
OWNERSHIP OF INTELLECTUAL PROPERTY
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6.1 Assignment and Perfection of Intellectual Property Rights. All right,
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title and interest in and to Intellectual Property and other results, whether
patentable or not, conceived by Contractor or any employee, consultant or agent
of Contractor in the course of performing work on a Project (including, without
limitation, any Synbiotics Products) shall be the property of Synbiotics, and
Contractor shall assign to Synbiotics (at such times and using such forms of
instrument as Synbiotics may request) any and all rights Contractor or any such
person may have or may assert to any such Intellectual Property. Upon request
of Synbiotics, Contractor shall use its best efforts to cause any such employee,
consultant or agent to make application for a patent with respect to any
Intellectual Property conceived of, and resulting from the research with regard
to the Projects conducted by such employee, consultant or agent pursuant to this
Agreement. Any such application(s) shall be made and prosecuted at the expense
of Synbiotics and through attorneys named by Synbiotics. Synbiotics shall have
complete control of the patent prosecution process, including whether or not to
file a patent application. Any and all expenses, including travel for or in
connection with the preparation, filing, prosecution, assignment and recording
of such application shall be paid by Synbiotics without reference to sums
otherwise provided in this Agreement.
6.2 Further Acts; Enforcement. Contractor agrees to perform, during and after
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the term of this Agreement, all acts deemed necessary or desirable by Synbiotics
to permit and assist Synbiotics, at Synbiotics' sole expense (including
compensating Contractor at $100 per hour for the time of Contractor's
professionals, plus reimbursement of Contractor's out-of-pocket expenses), in
evidencing, obtaining, maintaining, defending and enforcing Synbiotics' rights
with respect to Intellectual Property and/or Contractor's assignment with
respect to Intellectual Property in any and all countries. Such acts may
include, but are not limited to, execution of documents and assistance or
cooperation in legal proceedings. Contractor hereby irrevocably designates and
appoints Synbiotics and its duly authorized officers and agents, as Contractor's
agents and attorneys-in-fact to act for and in behalf and instead of Contractor,
to execute and file any documents and to do all other lawfully permitted acts to
further the above purposes with the same legal force and effect as if executed
by Contractor.
ARTICLE 7
CONFIDENTIALITY
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7.1 Confidential Information. Contractor agrees that it shall maintain (and
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shall cause its employees, consultants and agents to maintain) in confidence any
information regarding Synbiotics or its Intellectual Property received before or
during the term of this Agreement and identified as confidential or otherwise
protected and any information regarding the results of Contractor's work on any
Project (hereinafter, such information shall collectively be referred
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to as "Confidential Information"), and without the express written permission
of Synbiotics shall neither use, publish, disseminate nor disclose such
Confidential Information except for the furtherance of the purposes of this
Agreement. Subject to the next sentence, the foregoing obligations of
confidentiality and non-use shall survive the expiration or termination of this
Agreement. The obligations of the first sentence shall not apply to any
information which: (i) is now or hereafter comes into the public domain
otherwise than by breach of this Agreement, or (ii) is brought to Contractor by
a third party who rightfully obtained and possesses it and does not require that
it be maintained confidential by the receiving party (and who does not thereby
breach any contract). Furthermore, the obligations of the first sentence shall
not apply to any information (excluding any information relating to Rights)
which is shown by written records to be already in the possession of Contractor
other than as a result of having received it from Synbiotics.
7.2 Publication of Results of Work. Contractor shall have no right to publish
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information regarding the results of its work on a Project without the express
written consent of Synbiotics. Contractor shall likewise restrict and prevent
its employees, consultants and agents from so publishing the results of work on
a Project.
ARTICLE 8
PUBLICATION OF CONTRACTOR'S AFFILIATION WITH SYNBIOTICS
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8.1 Limitations with Respect to Publicity. Neither party to this Agreement
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shall without the express written consent of the other use the name of the other
either expressly or by implication in any advertising, sales or financial
promotional materials. Notwithstanding the foregoing sentence, Synbiotics may
use Contractor's name in connection with Synbiotics' disclosures made (i) to
prospective and current investors in Synbiotics' shareholder reports, business
plans, offering materials and other financing documents and (ii) to satisfy the
Company's reporting requirements under United States federal or state securities
laws.
8.2 Marketing. Notwithstanding the provisions of Section 8.1 above, Contractor
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will endeavor to recommend informally, and to use reasonable efforts to further
the business of, diagnostic products developed and/or marketed by Synbiotics.
ARTICLE 9
INDEMNITIES AND "WARRANTY"
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9.1 Contractor Indemnification. Contractor agrees to and shall defend,
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indemnify and hold Synbiotics, its officers, directors, employees, agents and
shareholders harmless (including attorneys fees to defend, and any damages,
penalties, settlements, costs or expenses awarded or incurred) from and against
any claim, liability, suit or proceeding based upon negligence, warranty, strict
liability or violation of government regulation, (but specifically excluding,
without limitation any claim, liability, suit or proceeding initiated by or on
behalf of a third party based upon infringement of patent or other proprietary
rights,) arising from or occurring as a result of any development or use of the
Rights or Synbiotics Products (including, without limitation, any manufacture of
the Synbiotics Products) by Contractor.
9.2 Synbiotics Indemnification. Synbiotics agrees to and shall defend,
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indemnify and hold Contractor, its officers, directors, employees, agents and
shareholders harmless (including attorneys fees to defend, and any damages,
penalties, settlements, costs or expenses awarded or incurred) from and against
any claim, liability, suit or proceeding initiated by or on behalf of a third
party based upon negligence, warranty, strict liability or violation of
government regulation, (but specifically excluding, without limitation any
claim, liability, suit or proceeding based upon infringement of patent or other
proprietary rights,) arising from or occurring as a result of any development or
use of the Rights or Synbiotics Products (including, without limitation, any
manufacture of the Synbiotics Products) by Synbiotics.
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9.3 Defense of Claims. If any lawsuit or enforcement action is filed against
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any indemnified person, written notice thereof shall be given to the
indemnifying company as promptly as practicable (and in any event within fifteen
(15) days after the service of the citation or summons); provided that the
failure of any indemnified person to give timely notice shall not affect rights
to indemnification hereunder except to the extent that the indemnifying company
demonstrates actual damage caused by such failure. After such notice, if the
indemnifying Company shall acknowledge in writing to such indemnified person
that the indemnifying company shall be obligated under the terms of its
indemnity hereunder in connection with such lawsuit or action, then the
indemnifying company shall be entitled, if it so elects, to take control of the
defense and investigation of such lawsuit or action and to employ and engage
attorneys of its own choice (subject to the approval (for competence,
experience, independence and absence of conflict of interest) of the indemnified
person) to handle and defend the same, at the indemnifying company's cost, risk
and expense; and such indemnified person shall thereafter cooperate in all
reasonable respects with the indemnifying company and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. The fees of such attorneys, and all amounts payable by the
indemnifying company under this Section, shall be payable as incurred and on
demand. The indemnified person may also, through independent counsel and at its
own cost, participate in such investigation, trial and defense of such lawsuit
or action and any appeal arising therefrom.
9.4 Settlements. An indemnifying company shall have the absolute right to
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effect a settlement of any action or claim against an indemnified person where
the settlement calls only for money to be paid on behalf of an indemnified
person, provided the indemnifying company makes all such payments directly to
the third party. However, no settlement calling for anything to be done (or not
done) by an indemnified person other than the payment of money (or calling for
the payment of money directly by the indemnified person) may be effected by the
indemnifying company without the prior written approval of the indemnified
person. No indemnified person shall enter into a settlement calling for or
necessitating the payment of money (under this Section or otherwise), or for any
other thing, by the indemnifying company without the prior written approval of
the indemnifying company.
9.5 Warranty. If a Project deliverable is a construct or a probe, and such
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construct or probe proves unsatisfactory for any reason at any time before USDA
licensure of a related diagnostic product, Synbiotics may, at its option,
require Contractor to create and deliver a replacement construct or probe.
ARTICLE 10
TERM AND TERMINATION
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10.1 Term. The initial term of this Agreement shall commence of the Effective
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Date and, unless earlier terminated in accordance with the express terms of this
Agreement, shall expire on the third anniversary of the Effective Date. At the
end of the initial term, this Agreement shall automatically be renewed for
additional terms of one (1) year, unless either party provides the other written
notice of termination at least ninety (90) days prior to the commencement of an
additional term.
The term of this Agreement shall begin on the Effective Date and, unless earlier
terminated in accordance with the express terms of this Agreement, shall expire
on the third anniversary of the Effective Date. This Agreement shall be
automatically renewed for additional one (1) year terms after the initial term,
unless either party is otherwise notified by the other in writing at least
ninety (90) days prior to the termination of the initial term.
10.2 Termination. If either party materially breaches or defaults in the
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performance of this Agreement and such breach or default is not cured within
thirty (30) days after the giving of notice of default by the other party
specifying such breach or default, then the party giving such notice may, in
addition to all other remedies available at law or in equity, terminate this
Agreement immediately for cause and such termination shall be effective on the
date when a notice of termination is received by the breaching or defaulting
party.
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10.2.1 The failure of a party to assert its rights for any material
breach or default of this Agreement shall not be deemed a waiver of such
rights nor shall any waiver be implied by the making or acceptance of
any payment.
10.2.2 Termination shall only relieve the parties of obligations which
would have arisen under this Agreement after the effective date of
termination and shall in no way relieve the parties of any obligations
existing on the date of such termination.
10.3 Survival. All obligations under Sections 3.4, 5.2, 5.3, 6.1, 6.2, 10.3 and
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Articles 7 and 9 shall continue notwithstanding any termination or expiration of
this Agreement.
ARTICLE 11
NOTICES
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All notices or other communications provided for in this Agreement shall be in
writing and shall be considered delivered upon the latest of actual receipt, or
personal or courier delivery, or sending by facsimile with confirmation of
receipt in good order requested and received, or on the third business day after
--
they are deposited in the United States mail, certified first class postage
prepaid, addressed to the respective parties as follows:
(a) If to Synbiotics: Synbiotics Corporation
11011 Via Frontera
San Diego, CA 92127
Attention: Chief Executive Officer
Facsimile Number: (619) 451-5719
with a copy to: Brobeck, Phleger & Harrison
550 West C Street, Suite 1300
San Diego, CA 92101
Attention: Hayden J. Trubitt, Esq.
Facsimile Number: (619) 234-3848
(b) If to Contractor: Engene Biotechnologies, Inc.
16236 San Dieguito Road
Suite 4-21
Rancho Santa Fe, CA 92067
Attention: J. Kevin Steele
Facsimile Number: (619) 759-9434
with a copy to: Huth, Lynett and Scudi
5440 Morehouse Drive, Suite 4400
San Diego, CA 92121
Attention: Morgan Scudi, Esq.
Facsimile Number: (619) 558-1122
The parties may, at any time, change their addresses or other information in
this Article by written notice delivered under this Article.
10
ARTICLE 12
ASSIGNMENT
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Neither party shall assign this Agreement nor delegate any of its duties
hereunder to another without the prior written consent of the other party;
provided, however, that either party may (even without such consent) assign this
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Agreement to a successor in ownership of all or substantially all of its
business assets to which this Agreement pertains whether by sale of assets,
merger, consolidation or otherwise; provided further, that consent to assignment
----------------
to or delegation to a party's Affiliate shall not be unreasonably withheld; and
provided further, that the party assigning its rights or delegating its
- ----------------
obligations hereunder shall remain primarily liable for its obligations
hereunder. Any other purported assignment shall be void. This Agreement shall
be a binding obligation of the successors and permitted assigns of each party
hereto.
ARTICLE 13
SEVERABILITY
------------
All provisions contained herein are severable and in the event that any of them
shall be held to be to any extent invalid or otherwise unenforceable by any
court of competent jurisdiction, such provision shall be construed as if it were
written so as to effectuate to the greatest possible extent the parties'
expressed intent; and in every case the remainder of this Agreement shall not be
affected thereby and shall remain valid and enforceable, as if such affected
provision were not contained herein.
ARTICLE 14
HEADINGS
--------
The Article, Section and paragraph headings herein are for convenience only and
shall not affect the construction or interpretation of this Agreement.
ARTICLE 15
RELATIONSHIP OF PARTIES
-----------------------
The relationship of the parties to this Agreement is that of independent
contractors. The parties are not, by virtue of this Agreement or otherwise, in
an employer-employee, principal-agent, joint venture or partnership relationship
with each other. Each party agrees not to represent to any other person, or to
assert in any form or forum, that the parties' relationship is an employer-
employee, principal-agent, joint venture or partnership relationship. Each
party acknowledges that it has no authority to make representations on behalf of
or to bind or commit the other party, and each party covenants and agrees not to
purport to make any representation on behalf of the other party or to purport to
bind or commit the other party in any way. Each party acknowledges that it is
responsible for its own tax withholding and other obligations with regard to its
own employees, and that the other party has no responsibility whatsoever for
withholding tax and other employment obligations of the first party.
ARTICLE 16
LAW GOVERNING AND DISPUTE RESOLUTION
------------------------------------
16.1 Law Governing. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of California.
11
16.2 Equitable Remedies. Each party acknowledges and agrees that the legal
------------------
remedies available to the other party in the event the first party violates the
covenants and agreements made in this Agreement would be inadequate and that the
other party shall be entitled, without posting any bond or other security, to
temporary, preliminary and permanent injunctive relief, specific performance and
other equitable remedies in the event of such a violation, in addition to any
other remedies which the other party may have at law or in equity.
ARTICLE 17
ENTIRE AGREEMENT, MODIFICATION, ETC.
------------------------------------
17.1 Entire Agreement. This instrument, including the Project Master Schedule,
----------------
contains the entire and only agreement between the parties respecting the
subject matter hereof and supersedes all prior or contemporaneous negotiations,
understandings or agreements (provided that the Research Agreement, the License
Agreement and any and all written agreements regarding secrecy, confidentiality,
nondisclosure and non-use shall not be superseded and shall remain in full force
and effect); and, any representation, promise or condition in connection
therewith not incorporated herein shall not be binding on either party.
17.2 Modification. No alteration, amendment, modification, renewal or extension
------------
of this Agreement shall be valid unless made in writing and signed by a duly
authorized representative of Synbiotics and Contractor.
17.3 Waiver. No waiver of any provision of this Agreement shall be binding
------
unless and until set forth expressly in writing and signed by duly authorized
officer of the waiving party. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
preceding or succeeding breach of the same or any other term or provision, or a
waiver of any contemporaneous breach of any other term or provision, or a
continuing waiver of the same or any other term or provision. No failure or
delay by a party in exercising any right, power, or privilege hereunder or other
conduct by a party shall operate as a waiver thereof, in the particular case or
in any past or future case, and no single or partial exercise thereof shall
preclude the full exercise or further exercise of any right, power, or
privilege. No action taken pursuant to this Agreement shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained herein.
17.4 No Third Party Rights. This Agreement is for the benefit of the parties
---------------------
hereto and is not intended to, and shall not be construed as benefitting or
creating rights in any person or entity other than the signatories hereto.
17.5 Interpretation. Each party has cooperated in the drafting and preparation
--------------
of this Agreement and therefore, in any construction hereof, this Agreement
shall not be construed against any party as the draftsman thereof.
17.6 Further Assurances. Each of the parties hereto shall execute and deliver
------------------
all additional documents and instruments and shall do any and all acts and
things reasonably requested or otherwise necessary (a) in connection with the
performance of the obligations undertaken in the Agreement, (b) to perfect and
evidence the transactions contemplated by this Agreement, and/or (c) otherwise
to effectuate in good faith the intent of the parties.
17.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original, and all of which counterparts, taken together,
shall constitute one and the same instrument.
[Remainder of This Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.
SYNBIOTICS CORPORATION
By: /s/ Robert L. Widerkehr
-----------------------
Its: President and CEO
Date: March 6, 1996
ENGENE BIOTECHNOLOGIES, INC.
By: /s/ J. Kevin Steele
----------------------
Its: President
Date: March 6, 1996
I hereby agree to be bound by Sections 3.5 and 7.2 hereinabove, as if the word
"Contractor" therein referred to me personally.
/s/ J. Kevin Steele
-----------------------
/s/ David Telford
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[SIGNATURE PAGE TO RESEARCH AND DEVELOPMENT AGREEMENT]
EXHIBIT A
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INVESTMENT REPRESENTATION
Synbiotics Corporation,
a California corporation
Engene Biotechnologies, Inc., a California corporation ("Engene") is acquiring
the number of shares of common stock of Synbiotics Corporation, a California
corporation, indicated below (the "Securities") in its own name and for its own
account (or for a trust account if it is a trustee), and no other person has any
interest in or right with respect to the Securities, nor has Engene agreed to
give any person any such interest or right in the future.
Engene is acquiring the Securities for investment and not with a view to or for
sale in connection with any distribution of the Securities. Engene recognizes
that the Securities have not been registered under the Federal Securities Act of
1933 or qualified under the California Corporate Securities Law of 1968, or the
securities laws of any other state, that any disposition of the Securities is
subject to restrictions imposed by federal and state law, and that the
certificates representing the Securities will bear a restrictive legend. Engene
also recognizes that it cannot dispose of the Securities absent registration and
qualification, or an available exemption from registration and qualification,
and that no undertaking has been made with regard to registering or qualifying
the Securities in the future. Engene understands that the availability of any
exemption in the future will depend in part on circumstances outside its control
and that Engene may be required to hold the Securities for a substantial period.
Engene recognizes that no public market exists with respect to the Securities
and no representation has been made to me that such a public market will exist
at a future date. Engene understands that neither the California Commissioner
of Corporations nor any other state commissioner of corporations has made any
finding or determination relating to the fairness for investment of the
Securities offered by Synbiotics Corporation and that no commissioner of
corporations of any state has or will recommend or endorse the Securities.
ENGENE BIOTECHNOLOGIES, INC.
By: /s/ J. Kevin Steele
-------------------
Title: President
###-##-####
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Taxpayer Identification or
Social Security Number
Address: 16236 San Dieguito Road
Suite 4-21
Rancho Santa Fe, CA 92067
Date: March 6, 1995
Number of Shares purchased: [*]
A-1
EXHIBIT B
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EXISTING PRODUCTS
[*]
B-1