Exhibit 10.42
Exhibit 10.42
SUPPLY AGREEMENT
BETWEEN
ESTEE LAUDER, INC.
AND
GALAGEN INC.
DATED: JULY 11, 2000
TABLE OF CONTENTS
SECTION PAGE
1. Definitions..........................................................1
2. Purchase and Sale; Ingredient Specifications.........................2
3. Price; Payment; Miscellaneous Terms and Conditions of Sale...........3
4. Trademarks...........................................................3
5. Forecasts; Shipments; Orders.........................................3
6. Inspection of Shipments..............................................5
7. Trade Secrets and Confidentiality....................................5
8. Safety and Health-Responsible Care...................................7
9. Quality of the Ingredient; Certain Regulatory Matters................7
10. Indemnification......................................................9
11. Term and Termination................................................10
12. Dispute Resolution..................................................11
13. Publicity...........................................................12
14. Force Majeure.......................................................12
15. Assignability.......................................................12
16. Waiver; Severability................................................13
17. Governing Law.......................................................13
18. Notices.............................................................13
19. Headings............................................................14
20. Entire Agreement....................................................14
21. Parties' Relationship...............................................14
22. Counterparts........................................................14
SUPPLY AGREEMENT
This Supply Agreement, including all attached Annexes which are
incorporated and made a part hereof, dated this 11th day of July, 2000 (the
"EFFECTIVE DATE"), by and between ESTEE LAUDER, INC., a Delaware corporation
(together with its Affiliates "EL"), and galagen Inc., a Delaware corporation
("GALAGEN"), sets forth the terms and conditions for the commercial supply of
the Ingredient (as defined herein);
WHEREAS, GalaGen owns or has rights to certain patents and know-how
applicable to the Ingredient;
WHEREAS, GalaGen has the requisite experience and facilities to
manufacture and package the Ingredient; and
WHEREAS, EL and its Affiliates wish to purchase commercial quantities
of the Ingredient from GalaGen, and GalaGen is willing to supply the Ingredient
to EL and its Affiliates for use in the Field of Use (as defined herein) upon
the terms and conditions set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS
The following terms shall have the meanings set forth below, or where
indicated, for purposes of this Agreement.
"ACT" means the U.S. Food, Drug and Cosmetic Act and the regulations
promulgated thereunder, as amended from time to time and all other applicable
laws and regulations in any other jurisdiction.
"AFFILIATE(S)" means, in the case of either party, any corporation,
joint venture, or other business entity which directly or indirectly controls,
is controlled by, or is under common control with that Party. "Control," as used
in this definition, means having the power to direct, or cause the direction of,
the management and policies of an entity, whether through ownership of voting
securities, by contract or otherwise.
"COMMERCIAL QUANTITIES" means quantities of the Ingredient sufficient
for launch of products containing the Ingredient and on-going market supply
consistent with the forecasting mechanism set forth in Section 4 of this
Agreement.
"EL MANUFACTURING FACILITY" shall mean a manufacturing and/or packaging
facility of EL or an EL Affiliate.
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"FIELD OF USE" means cosmetic and skin care products.
"INGREDIENT" means the spray dried colostrum ingredient specified in
ANNEX A to this Agreement.
"MANUFACTURING PROCESS" means the processes, means and procedures used
by GalaGen in the manufacture and production of the Ingredient.
"TECHNICAL INFORMATION" means all know how, trade secrets, inventions,
data, technology and other information now owned or licensed by GalaGen or
hereafter acquired or licensed by GalaGen during the term of this Agreement that
are necessary or useful to the manufacture, packaging, use or sale of Ingredient
including, but not limited to, (i) medical, chemical and other scientific data,
(ii) processes and analytic methodology used in the validation, stability
testing and other testing or analysis of such Ingredient and (iii) packaging and
manufacturing data and processes.
2. PURCHASE AND SALE; INGREDIENT SPECIFICATIONS
2.1 (a) During the term of this Agreement, and subject to the
provisions hereof, GalaGen agrees to manufacture, package, and supply the
Ingredient for use in the Field of Use to EL and its Affiliates in sufficient
quantities to meet the total requirements, consistent with the forecasting and
ordering provisions set forth in Section 5 of this Agreement, of EL and its
Affiliates, and EL agrees to purchase from GalaGen all of its requirements for
the Ingredient for the term of this Agreement so long as GalaGen is able to
supply quantities of the Ingredient ordered by EL in accordance with the
forecasting and ordering provisions set forth in Section 5 of this Agreement.
(b) GalaGen retains the right to manufacture, package and
supply to additional parties Ingredient and products for use in the Field of
Use, and EL retains the right to purchase colostrum from third-party sources if
GalaGen is unable to supply quantities of the Ingredient ordered by EL in
accordance with the forecasting and ordering provisions set forth in Section 5
of this Agreement.
2.2 (a) GalaGen shall manufacture and package the Ingredient
supplied to EL in accordance with mutually agreed upon specifications to be
attached as ANNEX A to this Agreement (the "SPECIFICATIONS"), as ANNEX A is
updated from time to time. Once established, no change in the specifications,
methods, processes and/or procedures set forth in ANNEX A may be made unless (i)
EL agrees in writing thereto or (ii) such change is required by any regulatory
agency that has jurisdiction over EL, GalaGen or the Ingredient; PROVIDED THAT,
GalaGen shall notify EL in writing prior to making any such required change.
Ingredient provided in accordance with such Specifications shall be
substantially identical, in all relevant aspects, to the samples of Ingredient
with which GalaGen has previously supplied EL.
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3. PRICE; PAYMENT; MISCELLANEOUS TERMS AND CONDITIONS OF SALE
3.1 Pricing for Commercial Quantities of the Ingredient shall be
$[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***]/kg.
3.2 GalaGen will invoice EL for each shipment of the Ingredient
delivered to EL. Payment for all such invoices shall be made by check or bank
transfer within thirty (30) days of the date of the invoice.
3.3 GalaGen shall deliver all orders on a business day to EL
F.O.B. GalaGen. Title and risk of loss to all shipments of the Ingredient shall
pass to EL upon delivery of the Ingredient by GalaGen to the carrier, but
passage of title shall not constitute acceptance of the Ingredient.
4. TRADEMARKS
4.1 The parties agree to work together to develop a mutually
acceptable trademark ("Trademark") to be used in association with the
Ingredient. The trademark shall be displayed prominently on the packaging of EL
products containing the Ingredient. The Trademark shall be jointly owned by
GalaGen and EL. During the term of this Agreement and any renewals, EL shall
have the right to use the Trademark on its products containing the Ingredient.
During the term of this Agreement and any renewals, GalaGen shall be permitted
to use the Trademark in its own advertising, promotions and press releases
relating to the Ingredient, subject to prior approval by EL of the content of
such advertising, promotions and press releases. Upon termination of this
Agreement and any renewals, neither EL nor GalaGen will make any further use of
the Trademark.
4.2 GalaGen acknowledges that it is not permitted to use any EL
Trademark except for the Trademark, and further agrees not to use, or permit to
be used, the Trademark in connection with any third party.
4.3 EL agrees not to use the Trademark in connection with any EL
product that does not contain the Ingredient, or in any product containing
colostrum not purchased from GalaGen.
5. FORECASTS; SHIPMENTS; ORDERS
5.1 (a) In order to assist GalaGen in planning its production, EL
will provide GalaGen with a six month rolling forecast of the quantities of
Ingredient required by EL, by month, for the following six months. The forecast
shall be made in good faith and shall constitute EL's best estimates of future
orders, but shall not be binding on EL; PROVIDED THAT, the aggregate amount of
Ingredient to be shipped under firm purchase orders provided by EL in accordance
with Section 5.1(b) hereof shall, for any given month, be no more than 110%, and
no less than 90%, of the forecasted shipments for such month as indicated in the
forecast provided by EL in the month
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immediately preceding the month in which the purchase order is issued.
EL shall provide its first six month forecast within 90 days after the
Effective Date and each subsequent update will be provided no later
than five (5) business days prior to the beginning of the next monthly
period. GalaGen shall, no later than ten (10) business days after
receipt of each such forecast, notify EL in writing of any prospective
problems of which GalaGen is aware that might prevent GalaGen from
meeting EL's forecasted order quantities or estimated delivery dates.
Except as provided elsewhere in this Agreement and unless GalaGen has
previously identified to EL potential problems in meeting EL's
forecasted requirements, GalaGen shall use its best efforts to deliver
all of the Ingredient ordered during any month, pursuant to purchase
orders provided under Section 5.1(b).
(b) EL will provide GalaGen with its firm purchase orders at
least one month prior to the anticipated delivery date for the Ingredient and in
accordance with the batch size increments specified in ANNEX B. To facilitate
GalaGen's responsiveness to changes in EL's requirements, while minimizing
exposure to obsolescence, GalaGen is authorized to procure necessary materials
based upon forecast by mutual agreement. Manufacturing and procurement lead
times, and the authorized procurement horizon are delineated in ANNEX B,
attached hereto and made part hereof, as may be amended from time to time by
mutual agreement of both parties. EL agrees to accept partial shipments of
Ingredient should, for any reason, it become necessary to ship in advance of
order completion.
(c) EL agrees to be held liable for all obsolescence of
materials resulting from changes in Ingredient or purchase order requirements,
provided GalaGen has ordered in accordance with the authorized procurement
horizons specified in Section 5.1(a) and/or standard container sizes and/or
minimum order quantities. GalaGen will use all reasonable commercial efforts to
mitigate obsolescence potential. GalaGen will submit supporting documentation on
all claims of obsolescence and requests for reimbursement thereof.
5.2 Each purchase order will specify the quantity of the
Ingredient ordered and the required delivery date; PROVIDED THAT, such purchase
order shall not specify a delivery date sooner than one month from the date the
telecopied purchase order is sent by EL; PROVIDED, FURTHER, THAT, the aggregate
amount of Ingredient to be shipped under firm purchase orders provided by EL in
accordance with Section 5.1(b) hereof shall, for any given month, be no more
than 110%, and no less than 90%, of the forecasted shipments for such month as
indicated in the forecast provided by EL in the month immediately preceding the
month in which the purchase order is issued; PROVIDED, FURTHER, THAT, GalaGen
shall use commercially reasonable efforts to accommodate "Rush" orders from EL.
EL shall bear the reasonable incremental costs of "Rush" orders. Transportation
details will be coordinated between EL and GalaGen.
5.3 If for any reason GalaGen experiences a shortage of materials
required to manufacture products and GalaGen is therefore unable to supply EL
with the full quantity of the Ingredient ordered by it and accepted by GalaGen,
EL shall be entitled to the same proportionate quantity of available GalaGen
product as the quantity of the Ingredient purchased by EL from
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GalaGen in the twelve (12) months preceding the supply shortage bears to all
orders for applicable products received by GalaGen from other customers.
5.4 If GalaGen fails to deliver the Ingredient in the quantities
requested by EL within twenty (20) business days of the date of delivery as
specified in a purchase order issued in accordance with Section 5.1(a), then EL
shall have the right to cancel the amount of the purchase order that is
unfulfilled. Said right shall apply only to the extent that such purchase order
is unfulfilled.
6. INSPECTION OF SHIPMENTS
GalaGen shall provide EL with a certificate of analysis of the
Ingredient with each shipment, with which such shipment is presumed to conform.
EL will have the right to inspect shipments of the Ingredient and verify their
conformity to the order. If EL determines that the Ingredient does not conform
to the applicable specifications and agreements or there are other delivery
errors, EL will notify GalaGen in writing of all nonconformities that existed at
the time of delivery of the Ingredient. Such notification shall be made as soon
as reasonably possible after discovery of the nonconformity, but not later than
thirty (30) days after delivery of the lot. Such notice shall specify the
reasons for rejection. If EL does not reject a shipment of the Ingredient within
thirty (30) days after delivery, EL will be deemed to have accepted the
shipment. After notice of rejection is received by GalaGen, EL shall cooperate
in good faith with GalaGen in determining whether rejection is necessary or
justified. If GalaGen accepts EL's determination that the shipment of Ingredient
is nonconforming, EL's remedy shall be as set forth in Section 9.2. If GalaGen
does not accept EL's determination that the Ingredient are nonconforming, EL or
GalaGen may seek resolution of the dispute in accordance with Section 12.
7. TRADE SECRETS AND CONFIDENTIALITY
7.1 Both GalaGen and EL agree that, subject to the limitations set
forth in Section 7.3, all information disclosed to the other party, whether in
oral, written or graphic form, and identified in writing by the disclosing party
as confidential shall be deemed "CONFIDENTIAL INFORMATION" of the disclosing
party. In particular, Confidential Information shall be deemed to include, but
not be limited to any patent application or drawing or potential patent claim,
trade secrets, information, ideas, inventions, samples, processes, procedures,
methods, formulations, packaging designs and materials, test data, future
development plans, launch dates for products including the Ingredient,
technological know-how and engineering, manufacturing, regulatory, marketing,
servicing, sales, financing or human resources matters relating to the
disclosing party and its business.
7.2 Both parties will take the precautions it normally takes with
its own confidential and proprietary information to prevent disclosure of
Confidential Information to third parties.
7.3 Both GalaGen and EL agree that, notwithstanding the above, the
obligations of confidentiality shall not be deemed to apply to:
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7.3.1 Information that at the time of disclosure is or
thereafter becomes generally known or available to the public, through no
wrongful act or failure to act on the part of the receiving party.
7.3.2 Information that was known by or in the possession of
the receiving party at the time of receiving such information from the
disclosing party as evidenced by written records.
7.3.3 Information obtained by the receiving party from a
third-party source who is not breaching a commitment of confidentiality to the
disclosing party by revealing such information to the receiving party.
7.3.4 Information that is independently developed by the
receiving party without use of Confidential Information of the other party as
evidenced by written records.
7.3.5 Information that is the subject of a granted written
permission to disclose that is issued by the disclosing party to the other
party.
7.3.6 Information that is required to be disclosed pursuant to
the law (including SEC regulations), but only to the extent required to be
disclosed; PROVIDED THAT, the disclosing party notifies the other party in
writing and gives the other party reasonable time to comment on the same prior
to disclosure.
7.4 During the term of this Agreement and for a period of five (5)
years after the expiration or termination of this Agreement each party shall
maintain all Confidential Information in trust and confidence and shall not
disclose any Confidential Information to any third party or use any such
information for any unauthorized purpose, other than as authorized in Section
7.3 or as necessary to accomplish the purpose of this Agreement subject to an
appropriate binder of confidentiality as set forth in Section 7.5. Each party
may use such Confidential Information only to the extent required to accomplish
the purposes of this Agreement. Confidential Information shall not be used for
any purpose or in any manner that is not consistent with this Agreement or that
would constitute a violation of any laws or regulations including, without
limitation, the export control laws of the United States. Each party hereby
agrees that it will not in any way attempt to obtain, either directly or
indirectly, any information regarding any Confidential Information from any
third party who has been employed by, provided consulting services to, or
received in confidence information from, the other party.
7.5 Both parties will make diligent efforts to ensure that all
employees, consultants, agents, subcontractors and manufacturing contractors who
may have access to Confidential Information of the other party, and any other
third parties who might have access to Confidential Information, will use such
information in a manner consistent with the terms of this Agreement and will be
bound by the terms set forth in this Section 7. No Confidential Information
shall be
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disclosed to any employees, subcontractors, agents or consultants who do not
have a need to receive such information.
7.6 Except as required by law or as provided by Section 4.2, each
party to this Agreement agrees not to disclose to any third party the terms of
this or any other agreement, business relationship or negotiations with the
other party to this Agreement except in press releases approved in writing by
both parties prior to their release. This shall not preclude either party from
communicating with its directors, officers or other representatives who, in the
course of their responsibilities for that party, need to know the information
referred to in this Section 7.6 and who are advised of, and agree to, the
provisions of this Section 7.6.
7.7 To the extent either party discloses confidential information
of the other party to an employee, consultant, subcontractor or manufacturing
contractor (an "AGENT") or permits an Agent to have access to such confidential
information, such party shall indemnify the other party for any claims, damages,
losses, liabilities, costs or expenses, including reasonable attorneys' fees,
incurred by the other party as a result of the indemnifying party's Agent
further disclosing or misusing such confidential information.
8. SAFETY AND HEALTH-RESPONSIBLE CARE
8.1 From time to time GalaGen may provide EL with safety and
health information, including, without limitation, warnings, material safety
data sheets, precautionary safety measures, and instructions on proper care, use
and handling, storage, and disposal of the Ingredient. EL agrees to observe all
precautions and instructions provided by GalaGen and to communicate all such
environmental, safety and health information to its employees.
8.2 Both parties shall follow safe handling, storage,
transportation, use, and disposal practices with respect to the Ingredient,
including, but not limited to, those required by U.S. federal, state, and local
laws, regulations, and ordinances.
9. QUALITY OF THE INGREDIENT; CERTAIN REGULATORY MATTERS
9.1 GalaGen hereby represents and warrants that:
(a) no Ingredient constituting any shipment to EL shall be at
the time of shipment (i) adulterated or misbranded within the meaning of the
Act, or the rules and regulations promulgated thereunder, as such law, rule or
regulation is constituted and in effect at the time of any such shipment or (ii)
an article which may not, under the provisions of Sections 404, 505 or 512 of
the Act, be introduced into interstate commerce;
(b) it has complied with, and during the term of this
Agreement will continue to comply with, the laws, rules and regulations which
affect the ability of GalaGen to manufacture and
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package the Ingredient in Commercial Quantities for use and sale in the Field of
Use in the United States of America;
(c) it shall obtain and maintain all necessary permits,
registrations and licenses required to manufacture, package and supply the
Ingredient and it shall produce the Ingredient and dispose of all waste in
compliance with all applicable environmental laws, regulations, and standards.
GalaGen makes no representations with respect to the waste disposal practices of
its suppliers.
(d) all Ingredient delivered hereunder will comply with the
specifications set forth in ANNEX A, as it may be amended from time to time by
mutual agreement of the parties;
(e) its production and sale of Ingredient to EL, and EL's
purchase and distribution of products containing Ingredient, does not, to the
best of GalaGen's knowledge, as of the date of this Agreement, infringe upon any
US patent or violate any valid rights of any person or applicable law, rule, or
regulation;
(f) there is no investigation by any governmental body of
which it is aware, or any action, suit, proceeding or claim pending against it,
or, to its knowledge, threatened against it with respect to the transactions
contemplated by this Agreement or the Ingredient; and
(g) it shall not provide any bovine-derived materials derived
from the maximum Bovine Spongiform Encephalopathy ("BSE") risk group (e.g.,
brain, eye, spinal cord) and that any such bovine-derived materials shall be
sourced from non-BSE countries following World Health Organization guidelines.
The foregoing warranties are the only warranties made by GalaGen with
respect to the Ingredient delivered hereunder, and may only be modified or
amended by a written instrument signed by a duly authorized officer of GalaGen
and a duly authorized officer/employee of EL. EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED IN THIS AGREEMENT, EACH PARTY MAKES NO WARRANTY, EXPRESS OR IMPLIED,
CONCERNING THE INGREDIENT, OR THE MERCHANTABILITY OR FITNESS THEREOF FOR ANY
PURPOSE. The preceding sentence shall not be construed to limit any
representation or warranty of GalaGen with respect to the quality or compliance
with the specification of any Ingredient.
9.2 Any Ingredient delivered to EL by GalaGen that do not conform
to the specifications and are rejected after delivery as set forth in Section 6,
or that are otherwise not in compliance with the warranty made in Section 9.1,
will be replaced, or EL's account may be credited, at EL's election. The remedy
of replacement or credit is available only if such nonconformance was not caused
by EL's misuse, unauthorized modifications, neglect, improper testing or
improper storage, including without limitation storage at inappropriate
temperatures, transportation, use beyond any dating provided, by accident, fire
or other hazard. THE EXPRESS OBLIGATIONS STATED IN THIS SECTION 9.2 AND IN
SECTIONS 6 AND 10 ARE IN LIEU OF ALL OTHER
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LIABILITIES OR OBLIGATIONS OF GalaGen FOR DAMAGES, INCLUDING BUT NOT LIMITED TO
DIRECT OR CONSEQUENTIAL DAMAGES, ARISING OUT OF OR IN CONNECTION WITH THE
DELIVERY, USE OR PERFORMANCE OF THE INGREDIENT.
9.3 If requested in writing by EL, GalaGen shall supply at EL's
reasonable expense Technical Information and methods of manufacture and
packaging to EL to enable EL to fulfill its obligations under this Agreement or
to the extent that such information, in EL's judgment, is necessary to enable it
to comply with any statutory or regulatory requirements, or with a request by
any governmental or regulatory authority.
9.4 (a) If requested in writing by EL, GalaGen will permit EL to
inspect, twice per year, during normal business hours and hours during which
GalaGen is manufacturing Ingredient, GalaGen's facilities and records to the
extent EL deems reasonably necessary to enable EL to verify compliance by
GalaGen with its obligations under this Agreement in relation to the Ingredient
and to verify compliance with any statutory or regulatory requirements to which
EL is subject and that are applicable to the manufacture and/or packaging of the
Ingredient. Notwithstanding the foregoing, EL shall have the right to inspect
GalaGen's facilities and records at any time without prior written notice, in
the event that there is a quality or regulatory problem or other manufacturing
problem with the Ingredient.
(b) If, as a result of any such inspection, EL concludes that
GalaGen is not in compliance with any of the foregoing obligations or
requirements, it shall so notify GalaGen in writing, specifying such areas of
noncompliance in reasonable detail and GalaGen shall provide a problem
resolution plan within thirty (30) days of EL's request. GalaGen shall use its
best efforts to remedy and/or provide an action plan with an actual time line
for the problems identified within a reasonably mutually agreed upon time frame.
10. INDEMNIFICATION
10.1 GalaGen agrees to and hereby does indemnify, defend and hold
EL, EL's Affiliates, its officers, directors and shareholders, and its
successors and assigns (collectively the "EL INDEMNIFIED PARTIES") harmless from
and against all claims, liabilities, suits and proceedings, and all damages
(other than consequential, incidental, special or indirect damages), losses,
costs, recoveries and expenses, including reasonable legal expenses and costs
(including attorney's fees) that the EL Indemnified Parties may incur, arising
out of any third party claim of property damage or personal injury or death
arising from (i) GalaGen's negligent or willful misconduct in its performance
under this Agreement or (ii) GalaGen's breach of any obligation, representation
or warranty hereunder.
10.2 EL agrees to and hereby does indemnify, defend and hold
GalaGen, GalaGen's Affiliates, its officers, directors and shareholders, and its
successors and assigns (collectively the "GALAGEN INDEMNIFIED PARTIES") harmless
from and against all claims, liabilities, suits and proceedings, and all damages
(other than consequential, incidental, special or indirect damages), losses,
costs, recoveries and expenses, including reasonable legal expenses and costs
(including
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attorneys' fees) that the GalaGen Indemnified Party may incur, arising out of
any third party claim of property damage or personal injury or death arising
from (i) EL's negligent or willful misconduct in its performance under this
Agreement or in the marketing and/or sale of the products containing the
Ingredient or (ii) EL's breach of any obligation, representation or warranty
hereunder.
10.3 The foregoing indemnification obligations of EL and GalaGen
are subject to the following: (a) the indemnifying party must be notified by or
on behalf of the indemnified party in writing promptly after a claim is made, a
suit is filed or an action or investigation is initiated (each, a "PROCEEDING")
against the indemnified party; (b) the indemnifying party shall be permitted, at
its own cost, to defend, control, conduct and prosecute, in the indemnifying
party's sole discretion and by counsel of the indemnifying party's choosing, the
defense of such Proceeding brought against the indemnified party; (c) except as
may otherwise be required by law, the indemnified party shall not compromise the
position of the indemnifying party by admission, statements, disclosure or
conduct (collectively, "DISCLOSURE") in a way that could prejudice the defense,
control, conduct or prosecution of said cause of action (it being understood
that no indemnified party shall be deemed to have violated this provision so
long as such party has acted in good faith to fulfill its obligations under this
provision); and (d) the indemnified party shall cooperate with the indemnifying
party in the defense, conduct, prosecution or termination of the Proceeding,
including the furnishing of information and the assistance from employees of the
indemnified party at the indemnifying party's reasonable request and at no
charge to the indemnifying party. With respect to clause (c) above, the
indemnified party will provide the indemnifying party with prompt written notice
in advance of any such Disclosure being made to permit the indemnifying party to
seek an appropriate protective order, restriction on response or withdrawal of
the request for Disclosure. If, however, any such request for relief by the
indemnifying party is denied or is otherwise unavailable, the relevant
indemnified party may make the disclosure without any liability to the
indemnifying party.
11. TERM AND TERMINATION
11.1 The initial term of this Agreement shall begin as of the
Effective Date and shall remain in effect for three years, unless earlier
terminated as provided herein. Thereafter, this Agreement shall renew
automatically for consecutive one year renewal periods, unless EL provides
GalaGen with six (6) months prior written notice of its intention not to renew
upon the expiration of the initial term or relevant renewal period.
11.2 In the event that GalaGen fails to supply conforming
Ingredient for three (3) consecutive months, for reasons other than force
majeure, on more than one (1) occasion, EL shall have the right to terminate
this Agreement immediately at no cost, the second time GalaGen fails to supply
conforming Ingredient for three (3) consecutive months, for reasons other than
force majeure.
11.3 In the event either party commits a material breach or
defaults in the performance or observance of any of the material provisions of
this Agreement, and such breach is not cured within ninety (90) days after the
receipt of written notice thereof from the other party specifying such
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breach or default, the party not in breach or default shall be entitled (without
prejudice to its other rights) to terminate this Agreement without additional
penalty, termination fee or cost by giving notice to take effect immediately.
11.4 Either party may terminate this Agreement with written notice
to the other party, effective the date of such notice, in the event of
insolvency, assignment for the benefit of creditors, failure to pay in the
ordinary course of business debts as they come due, or bankruptcy proceedings by
or against the other party.
11.5 The termination of this Agreement shall not release EL from
the obligation to pay any sum that may be owed to GalaGen or operate to
discharge any liability that had been incurred by any party prior to any such
termination, including sums incurred in connection with the manufacture of
Ingredient in process at the time of the termination. The termination of this
Agreement shall be without prejudice to and shall not affect the right of either
party to recover any and all damages to which it may be entitled, or to exercise
any other remedies which it might otherwise have under this Agreement.
11.6 Notwithstanding any termination of this Agreement, the
provisions of Sections 4, 7, 9, 10 and 12 shall remain in effect.
12. DISPUTE RESOLUTION
If a claim of breach, nonperformance, nonpayment or repudiation should
arise related to or in connection with this Agreement (a "DISPUTE"), the parties
shall attempt to resolve the matter (a) within sixty (60) days from the date
that the party raising the Dispute notifies the other party in writing of the
Dispute, or (b) if this Agreement specifies a cure period for the subject of the
Dispute, (b) within such cure period. If the parties do not resolve the Dispute
within the sixty (60) day period or relevant cure period, as appropriate, then
the parties agree to submit the Dispute to mediation before a mediator mutually
acceptable to both parties. GalaGen and EL agree to make available to the
mediator on a confidential basis any information, test results, or research in
either party's possession related to the subject of the Dispute in addition to
supplying any other information requested or necessary to allow the mediator to
facilitate the mediation. If the parties do not resolve the Dispute through
mediation within forty five (45) days after the Dispute is submitted to
mediation, the parties agree to submit the Dispute to binding arbitration
administered by the American Arbitration Association under its Commercial
Arbitration Rules by a panel of three qualified arbitrators. GalaGen and EL
agree to make available to the arbitrators on a confidential basis any
information, test results, or research in either party's possession related to
the subject of the Dispute in addition to supplying any other information
requested or necessary to allow the arbitrators to deliver an opinion, which
shall be rendered within forty-five (45) days of selection of the full panel or
such additional time as the arbitrators reasonably need. The arbitrators shall
base their decision on governing law in accordance with Section 17 and shall be
required to provide to the parties a written summary of their findings and the
facts and law on which their decision is based.
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13. PUBLICITY
Except as provided by Section 4.1, GalaGen and EL agree not to issue
any press release or other public statement disclosing the existence of or
relating to this Agreement without prior written consent of the other party;
PROVIDED, HOWEVER, THAT, neither GalaGen nor EL shall be prevented from
complying with any duty of disclosure it may have pursuant to law (including SEC
regulations) subject to notifying the other party in writing and giving such
other party reasonable time to comment on proposed disclosure prior to its
issuance.
14. FORCE MAJEURE
14.1 No party shall be responsible or liable to the other hereunder
for failure or delay in the performance of this Agreement due to factors beyond
its reasonable control, including without limitation, any war, fire, accident,
earthquake or other casualty, or any act of God or the public enemy. Upon the
occurrence of an event of force majeure, the party failing or delaying
performance, shall promptly notify the other party, in writing, setting forth
the nature to the occurrence, its expected duration and how such party's
performance is affected. In the event of the applicability of this Section 14,
the party failing or delaying performance shall use its best efforts to
eliminate, cure and overcome any such causes and resume the performance of its
obligations as soon as practicable under the circumstances.
14.2 Neither party hereto shall be liable for damages for failure
in the performance of its obligations hereunder in the event such performance is
prevented by a cause beyond its reasonable control, including, without
limitation, acts of God, act, regulation, or law of any government, war, civil
commotion, destruction of production facilities or material by fire, earthquake
or storm, labor disturbances, and failure of public utilities or common
carriers; PROVIDED, HOWEVER, THAT, such failure on the part of either party
shall not prevent the other party from exercising its right to terminate this
Agreement in accordance with the provisions of this Agreement.
15. ASSIGNABILITY
Neither party hereto shall assign or otherwise transfer any of its
rights or obligations under this Agreement, in whole or in part, without the
prior written consent of the other party, except that either party may, without
the necessity for such consent, assign this Agreement or any interest herein or
any right hereunder, to any of its Affiliates or successors by merger or sale of
all or substantially all of its business unit to which this Agreement relates;
PROVIDED, HOWEVER, THAT, GalaGen may not, without EL's prior written consent,
assign this Agreement, or its rights and obligations hereunder, to any entity
listed on ANNEX C hereto, or to any Affiliate of any such entity. This Agreement
shall be binding upon any permitted assignee or successor of either party. Any
assignment that is not in accordance with this Section 15 will be void.
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16. WAIVER; SEVERABILITY
16.1 Each party acknowledges and agrees that any party's failure to
enforce at any time any of the provisions of this Agreement shall not be deemed
to be a waiver of such provisions or of the right of such other party or parties
thereafter to enforce each and every such provision.
16.2 The rights and remedies set forth herein shall be the
exclusive rights and remedies of the parties, except that nothing herein shall
limit the right of GalaGen to be paid for shipments of the Ingredient delivered
to, and deemed accepted by, EL.
16.3 If and to the extent that any provision of this Agreement is
determined by any legislature, court or administrative agency to be in whole or
in part invalid or unenforceable, such provision or part thereof shall be deemed
to be surplusage and, to the extent not so determined to be invalid or
unenforceable, each provision hereof shall remain in full force and effect
unless the purposes of this Agreement cannot be achieved. In the event any
provisions shall be held invalid, illegal or unenforceable the parties shall use
commercially reasonable efforts to substitute a valid, legal and enforceable
provision which insofar as practical implements the purposes hereof.
17. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of Delaware as though made and to be fully
performed in said State.
18. NOTICES
All notices required or permitted hereunder shall be given in writing
and sent by facsimile transmission, or mailed postage prepaid by first class
certified or registered mail, or hand delivered to the following addresses:
EL: Estee Lauder, Inc.
125 Pinelawn Road
Melville, New York 11747
Attention: Senior Vice President Research &
Development
GalaGen: GalaGen Inc.
1275 Red Fox Road, MS 7420
Arden Hills, Minnesota 55112
Attention: President
or to such other addresses as the parties may hereafter advise each other in
writing. Any notice, if sent properly addressed, postage prepaid, shall be
deemed made seven (7) days after the date of mailing as indicated on the
certified or registered mail receipt, or on the next business day if sent by
express courier service or if hand delivered or sent by facsimile transmission.
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19. HEADINGS
The headings of each section in this Agreement are intended for
guidance only and shall not be considered part of this written understanding
between the parties hereto.
20. ENTIRE AGREEMENT
20.1 This Agreement, represents and incorporates the entire
understanding among the parties hereto with respect to the subject matter of
this Agreement, and each party acknowledges that there are no warranties,
representations, covenants or understandings of any kind, nature or description
whatsoever made by any party to the other or others, except such as are
expressly herein above set forth.
20.2 This Agreement shall not be subject to change or modification
unless specifically agreed to in writing by both parties.
20.3 The parties recognize that, during the term of this Agreement,
a purchase order, acknowledgment form or similar routine document (collectively
"FORMS") may be used to implement or administer provisions of this Agreement.
Therefore, the parties agree that the terms of this Agreement prevail in the
event of any conflict between this Agreement and the printed provisions of such
Forms, or typed provisions of Forms that add to, vary, modify or are at conflict
with the provisions of this Agreement.
21. PARTIES' RELATIONSHIP
Nothing in this Agreement shall create among the parties a partnership,
joint venture or principal-agent relationship and, for the avoidance of doubt,
both parties now confirm they are independent contractors trading for and on
their own behalf.
22 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original, and all of which taken together shall constitute one and the
same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ESTEE LAUDER, INC. GALAGEN INC.
By /s/Harvey Gedson By /s/ Henry J. Cardello
------------------------------- -----------------------
Name Harvey Gedson Name Henry J. Cardello
----------------------------- ---------------------
Its Sr.VP R&D Its President & CEO
------------------------------ -----------------------
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ANNEX A
Specifications
PHYSICAL
Spray Dried Bovine Colostrum Fraction
Identity (Total Bovine IgG) ### % minimum
Moisture ### % to ### %
MICROBIOLOGY
Total Aerobic Plate Count ### maximum cfu/gram
Yeast/Mold ### maximum cfu/gram
S. AUREUS < ### MPN1/gram
###- [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
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Exhibit 10.42
ANNEX B
EL will issue Purchase Orders for the Ingredient produced by GalaGen Purchase
Orders will be issued at least one month before the desired delivery date. The
minimum order quantity is 20 kgs and quantities shall be ordered in multiples of
20 kgs.
EL assumes full financial responsibility for obsolete raw materials purchased
and received in support of EL Purchase Orders, down payments, if required, to
reserve contracted manufacturing services in support of EL Purchase Orders, and
cancellation fees, if any for contracted manufacturing services scheduled to
support EL Purchase Orders. Limitations are as follows:
Raw Materials - Liability is limited to those raw materials purchased
specifically to manufacture Licensed Ingredients for EL. Raw Materials
in excess of this amount are the responsibility of GalaGen.
Safety Stock - Inventories as mutually agreed to by both parties are
the liability of EL. Safety stocks maintained by GalaGen, but not
agreed to by EL, are the liability of GalaGen.
EL recognizes the necessity for GalaGen to commit to selected raw materials
based upon forecasts, as provided by EL, beyond the lead-times covered by the
formal Purchase Order process. Maximum forward coverage is 6 months for
colostrum raw material. Any changes to the agreed upon coverage shall be
communicated to EL and require prior written approval by EL. Limitations are as
follows:
EL accepts liability for quantities of materials GalaGen committed to
in accordance with mutually agreed upon purchase polices in support of
forecasted requirements. Liability is limited to actual costs incurred
as of the date that a change in requirements or specifications is
officially communicated in writing to GalaGen. GalaGen agrees to use
all viable means of mitigating the obsolescence, including use of the
materials for other GalaGen products.
Liability for raw materials not covered by the lead-time for issuance of EL
Purchase Orders, mutually agreed purchase policies, or the previously stated
exceptions are the responsibility of GalaGen.
ANNEX C
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***].
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