EXHIBIT 10.36.2
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AMENDMENT
TO
FeLV DISTRIBUTION AGREEMENT
This "Amendment" is entered into by Synbiotics Corporation, a California
corporation ("Synbiotics") and Bio-Trends International, Inc., a California
corporation ("BTI") as of August 22, 1996. The parties hereby agree to amend
the Distribution Agreement dated February 7, 1990 between Synbiotics and BTI
(the "FeLV Agreement") as follows.
1. The FeLV Agreement is hereby amended to give Synbiotics a non-exclusive
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right to distribute the FeLV Product in South America subject to the terms of
the FELV Distribution Agreement.
2. Section 9.1 of the FeLV Agreement is hereby amended to read: "This Agreement
shall terminate on December 31, 2004." The maximum continuation period
contemplated in Section 9.4 of the FeLV Agreement is extended to December 31,
2004.
3. Synbiotics agrees to provide BTI with all current and future agreements with
respect to FeLV vaccine (or any other vaccine in which FeLV constitutes a
fraction), but only if the agreement contains specific terms and or performance
criteria relating to the FeLV vaccine, as opposed to Synbiotics generic
contracts for distribution of its entire product line. Should Synbiotics
contemplate entering into any such agreement with any third party, it shall
provide BTI, in advance and in confidence, the documents and terms of such
contemplated agreement insofar as it pertains, in any way, to the FeLV Product
or to the sales and/or marketing thereof by Synbiotics or any third party. BTI
may consult with Synbiotics with regard to any contemplated agreement, but the
decision whether or not to enter into the agreement (and on which terms) shall
belong exclusively to Synbiotics, in its sole and absolute discretion. This
provision shall in no way relieve or excuse Synbiotics from fulfilling its
obligation to use its reasonable best efforts to sell the FeLV vaccine.
4. With regard to section 1.3 of the FeLV Agreement, the parties agree
Commonwealth Serum Laboratories is an appropriate candidate with whom to
commence discussions as the designated FeLV vaccine manufacturer/seller for
Australia and New Zealand. Final approval of this company as such will be
subject to the mutual acceptance of the terms of such a manufacturing/sales
agreement by both BTI and Synbiotics.
5. For purposes of Section 8.1 of the FeLV Agreement relating to insurance,
indemnification, defense and hold harmless, all doses of the FeLV Product sold
in the over-the-counter market ("OTC Products") shall be deemed Products covered
by such Section. In addition, Synbiotics shall, with respect to such OTC
Products, indemnify, defend and hold harmless BTI from and against all claims,
actions, damages, expenses and awards resulting from any actual or alleged
"packaging related incidents", such as a child injuring himself or another with
a needle or contracting an infection or disease as a result thereof. Further
examples shall include situations that may occur as a result of a "veterinary
non-professional" administering the vaccines.
6. BTI is in the process of upgrading its facilities to meet UK (MAFF facility
standards) and OMP facility standards as required by the EU (hereafter "EU
Standards"). In the event BTI is hereafter "unable" to manufacture the FeLV
Product in accordance with EU Standards, or at such earlier time as BTI has
received final notice from the applicable EU facility licensing authorities that
its facility does not and will not, even after modifications or
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[*] Certain confidential portions of this Exhibit were omitted by means of
blackout of 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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corrections, meet EU Standards, BTI shall begin and diligently continue
information and technology transfer to RMI-Lyon who will then act as the "third
party manufacturer" of the FeLV Product for sales solely within the EU Market,
provided satisfactory terms can be reached with RMI-Lyon at such time. In the
event RMI-Lyon is utilized as a third party manufacturer, BTI and Synbiotics
shall equally divide the gross profits from all RMI-Lyon manufactured doses of
FeLV in accordance with the examples set forth in Section 7 hereof. For purposes
of this section, BTI only shall be considered "unable" to manufacture the FeLV
vaccine in accordance with EU Standards if BTI is prevented by the appropriate
EU authorities from continuing to supply the FeLV Product to the EU market in
the ordinary course of business.
In the event, at the time compliance for EU Standards is required, BTI is
"unable" to manufacture the FeLV Product to EU Standards and satisfactory terms
cannot be reach with RMI-Lyon to act as the third patty manufacturer, BTI shall
begin and diligently continue an information and technology transfer to such
other third party manufacturer as Synbiotics and BTI may mutually agree.
For purposes of this Amendment the term "third party manufacturer" shall mean
the party responsible to supply the FeLV Product, either in bulk or finished
form, to both Synbiotics' distributors and RMI-Lyon. BTI shall be responsible
for controlling the technology transfer, as well as negotiating the term of
manufacturer, and all additional provisions with respect to the manufacture of
the Product, except that Synbiotics and BTI must jointly agree to a mutually
acceptable contract manufacturing price from the "third party manufacturer".
BTI shall initially be responsible to pay all costs associated with the
technology transfer, however, BTI shall be entitled to full reimbursement for
any and all such costs BTI reasonably and actually incurs, prior to the division
of any profits pursuant to Section 7 hereof; provided that Synbiotics and BTI
shall agree in advance as to the approximate dollar level of such expenditures.
Except as BTI may otherwise agree with the "third party manufacturer", BTI shall
have the absolute right, at any time and from time to time, to designate a
replacement third party manufacturer, or commence manufacturing the Product
itself for either or both the EU or the UK markets when BTI's facilities become
at least conditionally licensed, provided no significant interruption in Product
manufacture or supply results from any such change.
Notwithstanding any of the foregoing provisions, BTI shall have the absolute
right to continue to manufacture and supply the FeLV Product for any and all non
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EU or UK portions of the "Territory" as defined in the FeLV Distribution
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agreement.
Notwithstanding the foregoing, BTI shall also have the right to continue to
manufacture and supply FeLV Product to all EU portions of the Territory provided
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it is not prohibited from doing so by EU regulatory authorities.
BTI will continue to enjoy its rights under 7.2 of the current FeLV Distribution
agreement with respect to ownership of product licenses in foreign countries.
In certain instances, as in the EU, where a product license is a combination of
the "product technology and know-how" contained in a product dossier (owned in
this case by BTI), and initiated in each country through payment of fees to
obtain a "Marketing Acknowledgment" (in this case by Synbiotics or its
distributors), BTI and Synbiotics will be jointly named as the holders of any
such Marketing Acknowledgments or other form of product licenses.
7. EU Profit Sharing. In the event a "third party manufacturer" is utilized to
manufacture and Supply the FeLV Product to the EU and/or UK markets, Synbiotics
agrees to pay BTI, with respect to all product purchased by Synbiotics from such
"third party manufacturer", [*] incurred by Synbiotics, calculated in accordance
with the following example (Note: the numbers quoted below are meant only as
examples to assist in demonstrating the profit sharing formula):
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[*]
8. Synbiotics agrees at all times set forth in this Section 8, to place firm
orders to purchase at least [*] of calendar 1994 doses per year of FeLV vaccine
purchased from BTI [*] on a rolling four-quarter annual basis. This minimum
purchase order requirement shall in no way excuse or relieve Synbiotics from its
obligation to utilize its best efforts to sell the FeLV vaccine.
The first three-month period upon which Synbiotics' purchase orders shall be
tested for compliance with this minimum purchase order requirement shall be the
earlier of (a) the three-month period beginning January 1, 2000; (b) the three-
month period beginning the first day of the tenth month following notice by
either party of termination of the Agreement dated January 1, 1992 between
Synbiotics and RMI-Athens; or (c) the first day of the month following RMI-
Athens commencing to sell or distribute any FeLV vaccine other than BTI's.
Synbiotics and BTI agree to utilize a rolling four-quarter annual basis (a
minimum of [*] doses during the quarter being tested and the three previous
quarters) to evaluate Synbiotics' compliance with the minimum purchase order
requirements.
Once testing of Synbiotics' minimum purchase order begins, if Synbiotics' FeLV
purchase orders during any four-quarter period are below the required minimum,
Synbiotics shall be in default unless it cures such shortfall within the
calendar month immediately following such four-quarter period (the "Cure
Period"). In order to cure any default, Synbiotics must pay BTI sufficient
funds for and place a firm order to purchase enough FeLV vaccine during the Cure
Period to meet the shortfall in its minimum dose requirements (a "Cure
Purchase"). Each Cure Purchase of FeLV doses by Synbiotics shall, for testing
future minimum purchase order compliance, be deemed to have occurred during the
previous quarter, in which the shortfall necessitating the Cure Purchase
occurred, and shall not be counted as a purchase order for FeLV doses in the
following quarter when the purchase order is actually placed.
If at any time Synbiotics fails to timely cure any default, Synbiotics' rights
to promote, use and sell the FeLV Product under the FeLV Agreement shall
automatically become non-exclusive for the remainder of the term of the FeLV
Agreement, as extended by this Amendment. Failure by Synbiotics to meet the
minimum purchase order requirements under this section will not give rise to any
liability of Synbiotics to purchase the shortfall from BTI.
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9. From and after the date of this Amendment, the prices at which Synbiotics
agrees to purchase and BTI agrees to sell FeLV vaccine shall, except as
otherwise modified, adjusted or determined pursuant to this Section 9, be as
follows:
(a) BTI shall sell Bulk FeLV vaccine to Synbiotics, for delivery to a
Synbiotics designated manufacturer, currently Diamond Annual Health, for use
solely in manufacturing OTC FeLV vaccine on behalf of Synbiotics, at a
transfer price of [*] per dose, plus reimbursement to BTI for any "quality
control" costs reasonably and actually incurred by BTI with respect thereto,
and otherwise on the terms and conditions set forth in the FeLV Agreement.
(b) BTI shall sell bulk FeLV vaccine to Synbiotics, for delivery to RMI-
Athens, at a transfer price of [*] per dose through December 31, 1997, and
at [*] per dose from January 1, 1998 through December 31, 2004. Other terms
and conditions shall be as set forth in the FeLV Agreement.
(c) BTI shall sell bulk FeLV vaccine to Synbiotics, for delivery to RMI-
Lyon at a transfer price of [*] per dose until such time as BTI has the
capability and is appropriately licensed to produce the FeLV Product in
accordance with EU Standards. At all times after BTI has the capability and
is appropriately licensed to produce the FeLV vaccine in accordance with EU
Standards, BTI shall sell bulk FeLV vaccine, manufactured to EU Standards,
to Synbiotics for delivery to RMI-Lyon, at a transfer price of [*] per dose.
Other terms and conditions shall be as set forth in the FeLV Agreement.
(d) Except as otherwise specifically set forth in the FeLV Agreement and
this Amendment, the transfer price at which BTI shall sell FeLV vaccine to
Synbiotics, for delivery to any distributor shall, especially for doses of
FeLV vaccine produced for sale outside the United States, shall be
determined based upon the provisions set forth in this Section 9(d) and the
per dose prices shown in the following chart:
Finished Goods
Bulk- FeLV Single and Multi Dose
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FeLV Product purchased from BTI [*] per dose, Mutually agreed to be negotiated
for sale or delivery in "EU Similar F.O.B.West in good faith by the parties, if
Countries" Sacramento necessary, at a later date.
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FeLV Product purchased from BTI [*] per dose, In accordance with the
for sale or delivery in "Non-EU F.O.B.West prevailing
Similar Countries" Sacramento U.S. finished goods prices set
forth in Article 5 of the FeLV
Agreement.
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The parties hereby acknowledge the chart set forth above is intended to
serve as a guideline for determining FeLV Transfer Prices for distributors
other than Diamond, RMI-Athens and RMI-Lyon whose Transfer Prices are
described above in Sections 9(a), (b) and (c), respectively. For purposes
of this Section, the term "EU Similar Countries" shall mean countries whose
regulatory authorities require the FeLV vaccine to be manufactured in
substantial conformance with EU Standards. In contrast, the term "Non-EU
Similar Countries" shall mean countries whose regulatory authorities require
the FeLV vaccine to be manufactured in substantial conformance with or below
the USDA Standards existing as of the date of this Amendment.
The parties anticipate that most countries are likely to adopt a regulatory
standard somewhere between the EU Standards and the current USDA Standards
and, thus, have established the Transfer Prices reflected above as the
current high and low ranges for FeLV Transfer Prices. Further, the parties
intend to establish
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Transfer Prices for each country within the range of [*] to [*] per dose for
Bulk FeLV vaccine (and using the prevailing U.S. finished goods dose prices
as the low range prices for finished goods), based upon whether the
country's regulatory standards more closely resemble EU Standards or current
USDA Standards, and what, if any, additional elements of difficulty, cost or
expense will be encountered in manufacturing, controlling, validating and,
if applicable, filling and labeling the FeLV Product in conformance with
such country's regulatory standards. As to the Transfer Price for each such
country, the parties agree, in good faith, to meet, discuss and reach a
mutually acceptable Transfer Price based upon the range set forth herein,
depending upon the country's regulatory environment.
The parties acknowledge that many uncertainties exist as to the cost of and
potential product returns relating to bottling and labeling the FeLV
Product, particularly in countries where it has been historically difficult
to import biological products, such as Japan. In order to substantially
reduce or eliminate these uncertainties, the parties agree, whenever
possible and contractually acceptable to Synbiotics, to sell Bulk FeLV
vaccine in such markets as opposed to finished goods.
Notwithstanding any other provisions of the FeLV Agreement or this Amendment,
future bulk and finished vaccine pricing from BTI to RMI-Athens, RMI-Lyon,
Diamond Animal Health (for OTC), Synbiotics and any other distributor of the
FeLV Product, shall be adjusted to good faith by the parties, as necessary to
take into account (1) changes in consumer price levels And/or purchasing power,
(2) any improvements to the product, and (3) increases in the cost of producing
the FeLV Product particularly those due to requirements imposed by regulatory
entities or introduction of the FeLV Product into new markets.
10. The parties agree that for purposes of Section 1.1 of the FeLV Agreement,
"improvements" shall include such modifications as additions of new strains of
whole killed FeLV virus; additions of adjuvants or immuno-enhancers to the whole
killed FeLV vaccine Product; changes in growth media or other production
techniques to improve stability or purity of the whole killed FeLV vaccine
Product; freeze drying of Product; changes in concentration of the FeLV virus;
and other similar type changes. Some improvements will require another
negotiated transfer price. It is further agreed that "improvements" shall not
include FeLV antigens that are reduced to recombinant vaccines; modified live
FeLV vaccines; oral/nasal preparations or FeLV vaccine; gene deleted DNA or RNA
vaccines; and any genetically altered or other futuristic types of FeLV virus
vaccines. Finally, It is confirmed that, unless Synbiotics' right to promote,
use and sell the FeLV Product becomes non-exclusive, BTI will not have the right
to sell the conventional whole killed FeLV vaccine Product in combination
vaccines without the express written consent of Synbiotics.
11. The [*] loan by Synbiotics to BTI referred to in Section 10.2 of the PRC
Agreement shall be repaid as follows: effective upon signing this Agreement,
and notwithstanding anything in this Amendment or the FeLV Agreement or the PRC
agreement to the contrary, Synbiotics shall retain, from the purchase price
Synbiotics would otherwise pay BTI for purchases of FeLV vaccine, the sum of [*]
per dose of FeLV vaccine purchased from BTI by Synbiotics. Such [*] per dose
sum retained by Synbiotics shall be applied against and reduce the outstanding
principal balance of the loan until fully repaid, This [*] per dose loan
repayment procedure shall not apply to any FeLV vaccine sold by BTI to
Synbiotics for delivery to RMI-Athens for which Synbiotics must pay in full.
The [*] per dose purchase price retention by Synbiotics shall immediately cease
at such time as the loan has been paid in full.
12. Except as expressly amended by this Agreement, the FeLV Agreement will
remain unchanged and in full force and effect.
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IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of
the date first written above.
SYNBIOTICS CORPORATION, BIO-TRENDS INTERNATIONAL, INC.,
a California corporation a California corporation
By: /s/ KENNETH M. COHEN By: /s/ CHARLES J. YORK
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Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
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