EXHIBIT 10.63
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SUPPLY AGREEMENT
AGREEMENT, by and between SYNBIOTICS CORPORATION, a corporation organized and
existing under the laws of California, having a place of business at 11011 Via
Frontera, San Diego, California 92127-1702 ("SC") and American Home Products
Corporation, a corporation of Delaware, acting through its Fort Dodge Animal
Health division, having a place of business at 9401 Indian Creek Parkway, Suite
1500, Overland Park, Kansas 66225-5945 ("FDL").
A. FDL and SC have concurrently herewith entered into a license agreement
("License Agreement") wherein FDL granted SC [*] rights under certain U. S.
patents relating to modified live canine corona vaccines and their production.
B. FDL has experience and expertise in the manufacture and supply of commercial
vaccines.
C. FDL desires to manufacture and supply to SC [*] vaccine components as
hereinafter defined and SC desires to have FDL manufacture and supply it with
such components.
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
1.1 "[*] Vaccines" shall mean a vaccine containing, as its only antigen, a [*].
1.2 "Products" shall mean any of the [*] vaccine components listed on Exhibit A
hereto and as may be amended in writing by the parties.
1.3 "Specifications" shall mean all specifications for or concerning the
testing, manufacturing, storage, handling, packaging and quality assurance of
Products in bulk form as set forth in Exhibit B hereto, or as may be agreed upon
by the parties in writing from time to time.
1.4 "USDA" means the United States Department of Agriculture, or any of its
successor agencies or departments.
1.5 "Territory" shall mean the United States of America and its territories and
possessions.
1.6 "Affiliate(s)" shall mean any company(ies) directly or indirectly
controlling, controlled by, or under common control with a respective party.
For purposes of this definition, "control" shall mean possession of the power to
direct or cause the direction of the management and policies of the company,
whether pursuant to the ownership of voting securities, by contract, or
otherwise.
1.7 "Effective Date" shall mean the effective date of the License Agreement.
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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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1.8 "$" shall mean United States dollars.
ARTICLE II
SUPPLY OF PRODUCTS
2.1 Except as provided below, during the term of this Agreement, FDL shall
manufacture for and supply to SC all quantities of the Products as may be
required of FDL by SC in the Territory, and SC shall purchase all of its
requirements for the Products in the Territory from FDL.
2.2 Within thirty (30) days after the Effective Date and thereafter within three
(3) months of the first day of each calendar quarter, SC shall provide FDL with
a non-binding estimate of its expected purchases of each of the Products in each
of the following four (4) calendar quarters. SC may amend its quarterly
forecast up to sixty (60) days prior to the applicable calendar quarter after
which time such forecast shall become binding (except as provided under Section
2.4 hereof).
2.3 SC shall place purchase orders for each of the Products with FDL from time
to time specifying the quantities of the Products desired, and the place(s) to
which and the manner and dates by which delivery is to be made; said delivery
dates to be no earlier than thirty (30) days from the purchase order date. All
orders on a per vial or per dose basis shall be in [*] dose lots or as otherwise
agreed to by the parties. To the extent the terms of any purchase order or
acknowledgement thereof are inconsistent with the terms of this Agreement, this
Agreement shall control.
2.4 (a) SC shall order at least [*]% and not more than [*]% of its binding
quarterly forecast of Products within the applicable calendar quarter.
(b) FDL shall have no obligation to supply more than [*]% of SC's quarterly
forecast of Products in that calendar quarter. However, in instances wherein SC
orders more than [*]% of its quarterly forecast of Products, FDL agrees to use
commercially reasonable efforts to supply up to [*]% of SC's quarterly forecast
of Products during that calendar quarter.
2.5 FDL shall execute all purchase orders by delivery of all ordered quantities
of the Products no later than the delivery dates provided in SC's purchase
orders to the destinations directed by SC. Title and risk of loss will pass to
SC when each order of Products is delivered to SC's designated carrier.
2.6 As of the time of delivery by FDL, each lot of the Products will conform to
the Specifications. FDL shall provide to SC a certificate of analysis with each
shipment of the Products to SC stating that the Products conform to the
Specifications.
ARTICLE III
MANUFACTURE OF PRODUCTS
3.1 FDL agrees to keep complete records of all direct and ancillary operations
in the manufacture and supply of the Products to SC which shall upon reasonable
advance notice be available to examination, audit and copying by SC and its
representatives. FDL further agrees to promptly advise SC of its receipt from
the USDA of any correspondence relating to the Products and/or their
manufacture, and to supply SC with copies of said correspondence upon the
request of SC.
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3.2 SC shall have the right to inspect at all reasonable times during normal
business hours, and on reasonable prior notice, the operations and facilities of
FDL wherein the Products are manufactured, packaged, inspected, tested,
labelled, stored or shipped.
ARTICLE IV
PURCHASE PRICE
4.1 SC shall purchase and FDL shall sell to SC all quantities of the Products as
may be ordered by SC at prices per dose as set forth in Exhibit A.
4.2 SC shall pay all actual freight, insurance and government sales tax imposed
on purchasers for resale, and import and export duties and other fees (except
tax on income to FDL) incurred in connection with the sale and shipment of the
Products to SC.
4.3 On January 1, 1998, and on each twelve-month anniversary of that date, the
prices set forth in Section 4.1 may be adjusted by FDL to reflect (1) any
increase or decrease in FDL's cost of raw materials required for the manufacture
of the Products and (2) any increase or decrease in FDL's cost of manufacturing
such Products (so long as FDL complies with the following sentence). FDL shall
notify SC of any such increases or decreases at least ninety (90) days prior to
such anniversary dates and provide SC with documentation for cost adjustments
relating to changes in FDL's costs of raw materials under Section 4.3(1) above.
Price adjustments shall become effective on all quantities of Products ordered
by SC for delivery after such adjustment date.
4.4 FDL shall keep complete records of FDL's costs of manufacturing the
Products, and shall permit SC's independent auditors at SC's expense to inspect
and review such records during normal business hours and upon reasonable prior
notice in order to verify or determine such costs and whether an increase or
decrease in such costs has occurred. The auditors may not disclose to SC
specific manufacturing cost breakdowns, but only whether or not the increase or
decrease in FDL's costs of manufacturing reported by FDL are correct. SC shall
bear the costs and fees associated with such inspections and reviews unless it
is determined that such price adjustment was unjustified, in which case FDL
shall bear the costs and fees of such audit.
4.5 Payments to FDL for the purchase price of delivered Products shall be made
by SC within thirty (30) days after the date of actual delivery thereof to the
destination specified by SC, except as to Product orders which are not accepted
by SC or which the parties dispute are nonconforming to Specifications.
ARTICLE V
INSPECTION OF PRODUCT
5.1 Acceptance of Products delivered to SC shall be subject to inspection and
approval by SC,s quality assurance personnel or such other technical
representatives as SC may select, with respect to whether each lot of the
Products conforms to the Specifications.
5.2 SC shall as promptly as practical, but not more than thirty (30) working
days after actual receipt of a Product order, notify FDL of any disapproval of
samples of such Product inspected and its nonacceptance of the Product order, or
portion thereof.
5.3 If FDL disputes any finding by SC that a Product sample fails to conform to
the Specifications, such dispute shall be resolved by an independent, USDA
approved laboratory selected by FDL, acceptable to SC. All fees and
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disbursements incurred in connection with the independent determination shall be
borne by the party which determined incorrectly that the Product sample does or
does not conform to the Specifications.
5.4 FDL shall replace any Product order, or portion thereof, not conforming to
the Specifications, (unless such non-conformance is due to any negligent or
wrongful act or omission by SC or its agents or subcontractors), at its cost and
expense, including shipping costs, forthwith.
5.5 SC may return, at FDL's expense including shipping costs, any Product order,
or portion thereof, which does not conform to the Specifications and FDL agrees
to accept such returned Product.
ARTICLE VI
WARRANTIES AND INDEMNITIES
6.1 (a) Except as may be modified by Section 6.1(b) hereof, FDL warrants that
the Products conform to the Specifications. THE FOREGOING WARRANTY IS
EXCLUSIVE, AND IS IN LIEU OF ALL OTHER WARRANTIES (WHETHER WRITTEN, ORAL OR
IMPLIED) INCLUDING A WARRANTY OF MERCHANTABILITY IN OTHER RESPECTS THAN
EXPRESSLY SET FORTH ABOVE AND A WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
(b) The warranty set forth in Section 6.1(a) relating to any desiccated
component shall be valid only if the desiccated component of the Products are
prepared and dried by FDL.
6.2 FDL shall indemnify, defend and hold SC, its officers, directors,
shareholders, Affiliates, subsidiaries, employees, agents and representatives
harmless from any claims, losses, liabilities, costs, expenses (including
reasonable attorney's fees) and damages, including any related to property or
personal injury, arising out of or in any way related to (a) FDL's
representations, warranties or covenants contained herein or breach thereof; or
(b) any violation by FDL of any applicable Federal, State or local regulation,
statute or order in the manufacture of Products. However, FDL shall have no
obligations to SC under this Section unless SC (i) gives FDL prompt notice of
any claim or lawsuit or other action for which it seeks to be indemnified under
this Agreement and (ii) cooperates fully with FDL and its agents in defense of
the claims or lawsuit or other action. SC shall have the right to participate
in the defense of any such claim, complaint, suit, proceeding or cause of action
referred to in this section utilizing attorneys of its choice. SC shall bear
the costs associated with its participation.
6.3 SC shall indemnify, defend and hold FDL, its officers, directors,
shareholders, Affiliates, subsidiaries, employees, agents and representatives
harmless from any claims, losses, liabilities, costs, expenses (including
reasonable attorney's fees) , costs, liabilities or any other loss as the result
of claims for personal injury or property damage to third parties arising out of
or in connection with SC's activities occurring in the course of its sales
efforts related to sale of Products, provided that, SC shall not be liable
hereunder for any matter that may be covered by FDL's indemnity above. SC shall
have no obligations under this Section unless FDL (i) gives SC prompt notice of
any claim or lawsuit or other action for which it seeks to be indemnified under
this Agreement, and (ii) cooperates fully with SC and its agents in defense of
the claims or lawsuit or other action. FDL shall have the right to participate
in the defense of any such claim, complaint, suit, proceeding or cause of action
referred to in this Section utilizing attorneys of its choice. FDL shall bear
the costs associated with its participation.
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ARTICLE VII
INSURANCE
SC shall obtain and maintain at all times during the term of this Agreement
Comprehensive General Liability Insurance, including Products Liability, naming
FDL as an additional insured, with limits of liability of not less than [*]
Dollars ($[*]) per occurrence. SC shall provide FDL with a Certificate of
Insurance evidencing this coverage within thirty (30) days of the Effective
Date.
ARTICLE VIII
VACCINE RECALLS
8.1 In the event of a recall of any Product required by a governmental agency or
authority of competent jurisdiction or if recall of any Product is jointly
deemed advisable by FDL and SC, such recall shall be promptly implemented and
administered by SC in a manner which is appropriate and reasonable under the
circumstances and in conformity with accepted trade practices. The costs of any
such recall shall be borne by the party or parties whose actions caused the
recall to be necessary. FDL will have no obligation to pay costs of recalls of
Products caused by actions of third parties occurring after such Product is sold
by SC.
8.2 The provisions and obligations of this Article VIII shall survive any
termination of this Agreement.
ARTICLE IX
CONTRACTUAL RELATIONSHIP
The relationship of the parties under this Agreement is that of independent
contractors and not as agents of each other or partners or joint venturers, and
neither party shall have the power to bind the other in any way with respect to
any obligation to any third party unless a specific power of attorney is
provided for such purpose. Each party shall be solely and exclusively
responsible for its own employees and operations.
ARTICLE X
TERM AND TERMINATION
10.1 This Agreement shall become effective upon the Effective Date and, unless
earlier terminated as provided below, shall remain in full force and effect for
a period of five (5) years ("Initial Term"). This Agreement will automatically
renew and continue in force for successive one (1) year renewal(s) term(s) until
terminated at the expiration of the Initial Term or thereafter upon at least one
(1) year's written notice by either party.
10.2 FDL may terminate this Agreement, except as limited hereinafter,
immediately upon written notice, in the event (a) SC fails to make any payment
due and owing within sixty (60) days after notice thereof; or (b) SC commits
breach of any material provision of this Agreement which is not cured within
sixty (60) days after notice thereof. This right of termination, however,
cannot be exercised by FDL if at any time during said sixty (60) days period, SC
advises FDL in writing that it challenges the alleged payment owed or breach.
In such event the parties will negotiate in good faith to resolve the dispute
concerning the alleged payment owed or breach.
10.3 SC may terminate this Agreement immediately upon written notice in the
event FDL commits breach of any material provision of this Agreement which is
not cured within sixty (60) days after notice thereof.
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10.4 Either party may terminate this Agreement if the other party is declared
insolvent or bankrupt by a court of competent jurisdiction, or files a voluntary
petition of bankruptcy in any court of competent jurisdiction, or shall make or
execute an assignment of substantially all its assets for the benefit of
creditors.
10.5 This Agreement will automatically terminate upon termination of the
License Agreement.
10.6 Termination of this Agreement for any cause shall not release either party
from any obligation theretofore accrued.
10.7 The failure on the part of either party to exercise or enforce any right
conferred upon it hereunder shall not be deemed to be a waiver of any such right
nor operate to bar the exercise or enforcement thereof at any time thereafter.
10.8 Upon termination of this Agreement for any reason, FDL shall fill all
outstanding orders of SC for the Products, unless otherwise instructed by SC.
ARTICLE XI
ASSIGNABILITY
SC shall not at any time assign or transfer this Agreement to any person, firm,
organization or company whomsoever without the prior written consent of FDL
(such consent not to be unreasonably withheld or delayed) except that SC may
assign this Agreement to any Affiliate without any such consent.
ARTICLE XII
SEVERABILITY
The illegality or invalidity of any provisions of this Agreement shall not
impair, affect or invalidate the other provisions of this Agreement.
ARTICLE XIII
GOVERNING LAW
This Agreement shall be governed by and interpreted according to the laws of the
State of New Jersey without regard to principles of conflict of laws. The
appropriate state and federal courts of the State of New Jersey shall have
exclusive jurisdiction over any dispute between the parties, and each party
unconditionally submits to the jurisdiction of such courts.
ARTICLE XIV
NOTICES
Any notice required or permitted under this Agreement shall be deemed to have
been sufficiently provided and effectively made as of the delivery date if hand-
delivered, or as of the mailing date if mailed by registered mail, postage-
prepaid, and addressed to the receiving party at the following respective
address:
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FORT DODGE ANIMAL HEALTH
9401 Indian Creek Parkway, Suite 1500
Overland Park, KS 66225-5945
Attention: President
With a copy to:
AMERICAN HOME PRODUCTS CORPORATION
Five Giralda Farms
Madison, New Jersey 07940
Attention: Senior Vice President and General Counsel
SYNBIOTICS CORPORATION
11011 Via Frontera
San Diego, CA 92127-1702
Attention: President
or such other address which the receiving party has given notice pursuant to the
terms of this Article XIV.
ARTICLE XV
ANNOUNCEMENTS
Unless required by law, neither party shall, without the other party's prior
written consent, make any announcement or other disclosure regarding the
existence or terms of this Agreement.
ARTICLE XVI
CONFIDENTIALITY
16.1 During the term hereof, SC agrees not to disclose to any third party or
use for any purpose not required of SC under either this Agreement or the
License Agreement any and all proprietary information of FDL (hereinafter
"INFORMATION"). INFORMATION shall not include information which:
a. Is in or comes into the public domain, provided that such information
does not come into the public domain through any act, negligence or
fault of SC; or
b. Can be shown by competent proof to have been in the possession of SC
at or prior to the date of disclosure by FDL; or
c. Is properly provided to SC without restriction by an independent third
party under no obligation of confidentiality to FDL; or
d. Is disclosed by FDL on a non-confidential basis to third parties.
16.2 That all rights, title and interest in or to INFORMATION is at the date
hereof, and shall at all times remain exclusively in FDL, and that SC shall not
at any time claim any right, title, license under or interest in or to the
INFORMATION for itself or on behalf of any other entity or person.
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16.3 SC shall keep the INFORMATION strictly secret and confidential, shall not
make any use thereof except for purposes permitted under this Agreement and/or
the License Agreement, and shall maintain this confidentiality for a period of
five (5) years from the termination date of this Agreement.
16.4 The obligations of confidentiality and non-use set forth in this Article
16 shall supersede all other such obligations between the parties.
ARTICLE XVII
FORCE MAJEURE
17.1 Neither party shall be liable for delay in performance or non-performance
caused by circumstances beyond the reasonable control of the party affected,
including, but not limited to, acts of God, fires, floods, acts of war or
violence, labor disputes or shortages, plant shutdown, governmental actions, or
inability to obtain material, equipment or transportation.
17.2 SC acknowledges that FD's ability to supply Product and meet its
obligations hereunder is contingent upon FDL's possession of all required USDA
approvals.
ARTICLE XVIII
ENTIRE UNDERSTANDING
Except as set forth in the License Agreement, this Agreement represents the
entire understanding between FDL and SC, and supersedes all other understandings
and agreements, express or implied, concerning the supply of the Products. Any
modification or waiver of this Agreement to be effective must be in writing,
specifically refer to this Agreement, and be signed by both parties.
AMERICAN HOME PRODUCTS CORPORATION, ACTING THROUGH ITS FORT DODGE
ANIMAL HEALTH DIVISION
By: /s/ E. Thomas Corcoran
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Title: President - Fort Dodge Animal Health
SYNBIOTICS CORPORATION
By: /s/ Kenneth M. Cohen
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Title: President and Chief Executive Officer
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EXHIBIT A
PRODUCTS and PURCHASE PRICE
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Product: per dose equivalent 1x virus fluid $[*]
EXHIBIT B
SPECIFICATIONS
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1x Fluid
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Sterility - Passes 9 C.F.R. 113.27
Mycoplasma - Passes 9 C.F.R. 113.28
Minimum Titer - 5.3 (log 10)
Identity - Passes 9 C.F.R. 113.300(c)
Conforms to 9 C.F.R. 113.300