AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT to that certain Asset Purchase Agreement dated
September 1, 1998 (the "Purchase Agreement") by and between GalaGen Inc., a
Delaware corporation ("Buyer"), and Nutrition Medical, Inc., a Minnesota
corporation ("Seller"), is made as of this 28th day of October, 1998.
Capitalized terms not otherwise defined herein are used with the meaning given
such terms in the Purchase Agreement.
RECITALS
The Purchase Agreement provides for Buyer to acquire certain assets of
Seller subject to the terms and conditions thereof.
The Purchase Agreement contemplates that prior to the Closing Date,
Buyer will enter into an International Marketing Agreement with an International
Marketing Entity whereby, effective upon the Closing, Buyer will license to the
International Marketing Entity the exclusive right to market, sell and
distribute certain Products in certain countries other than the United States in
return for the International Marketing Consideration. The Purchase Agreement
further provides that the International Marketing Consideration to be received
by Buyer from the International Marketing Entity pursuant to the International
Marketing Agreement will be delivered or assigned to Seller.
Buyer and Seller no longer anticipate that Buyer will enter into the
International Marketing Agreement and wish to provide that Buyer will retain all
international marketing, sales and distribution rights related to the Products
in exchange for making certain payments to Seller in lieu of the International
Marketing Consideration.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and conditions contained herein, the parties do hereby amend
the Purchase Agreement as follows:
1. Section 2.1(a) is amended and restated in its entirety to read as follows:
(a) Cash in the amount of $206,000, adjusted as set forth in Section 2.4
hereof, by wire transfer of immediately available funds to the cash account
or accounts as may be specified by Seller, and;
2. Section 2.2 is amended and restated in its entirety to read as follows:
2.2 INTERNATIONAL ROYALTY. Buyer will pay to Seller an international
royalty (the "International Royalty") (a) of five percent (5%) of net
International Sales (as defined herein), reduced by uncollectible accounts,
of the Products in excess of $200,000 during the year ending on the first
anniversary of the Closing Date, and (b) of two and one half percent (2
1/2%) of net International Sales, reduced by uncollectible accounts, of the
Products in excess of $200,000 during the year ending on the second
anniversary of the Closing Date. Buyer will make payment, if any, of the
Intentional Royalty no later than 120 days after the end of the year to
which such royalty relates, accompanied by such documentation as may be
agreed upon by Buyer and Seller. "International Sales" as used herein
means sales of the Product known as "Glutasorb Ready to Use" in all
countries except the United States, Japan, France, England, Scotland,
Belgium, Holland, Switzerland, Denmark, Sweden, Norway and Finland and
sales of all Products other than "Glutasorb Ready to Use" in all countries
except the United States.
3. Section 2.3 is amended and restated in its entirety to read as follows:
2.3 DOMESTIC ROYALTY. Buyer will pay Seller a domestic royalty (the
"Domestic Royalty") of nine percent (9%) of net Domestic Sales (as defined
herein), reduced by uncollectible accounts, of the Products in excess of
(a) $5,000,000 during the year ending December 31, 2000, (b) $6,000,000
during the year ending December 31, 2001, and (c) $7,500,000 during the
year ending December 31, 2002. Buyer will make payment, if any, of the
Domestic Royalty no later than 120 days after the end of the year to which
such royalty relates, accompanied by such documentation as may be agreed
upon by the parties. Buyer will promptly inform Seller if it discontinues
sales of any of the Products for any reason, including due to development
of alternative products. "Domestic Sales" as used herein means all sales
of the Products except International Sales.
4. Section 4 is amended and restated in its entirety to read as follows:
4. CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Faegre &
Benson LLP, Minneapolis, Minnesota, at 10:00 a.m. on the seventh business
day following fulfillment or appropriate waiver of all of the conditions
specified in Sections 10 and 11 hereof, or such other date as Buyer and
Seller may mutually agree (the "Closing Date"). At the Closing (a) Buyer
shall (i) pay to Seller cash in the amount specified in Section 2.1(a)
hereof, (ii) deliver to Seller a certificate for the number of Shares as
specified in Section 2.1(b) hereof, and (iii) deliver to Seller the various
certificates, instruments and documents referred to in Section 11 hereof,
and (b) Seller shall (i) deliver to Buyer such bills of sale, assignments
and other documents of transfer reasonably required to transfer to Buyer
the interest of Seller in the Assets and
(ii) deliver to Buyer the various certificates, instruments and documents
referred to in Section 10 hereof.
5. Section 11.11 and all references thereto are deleted and Sections 11.12 and
11.13 and all references thereto are renumbered 11.11 and 11.12,
respectively.
6. Section 14.3 and all references thereto are deleted and Sections 14.4,
14.5, 14.6, 14.7 and 14.8 and all references thereto are renumbered 14.3,
14.4, 14.5, 14.6 and 14.7, respectively.
7. A new Section 14.8 is added and reads in its entirety as follows:
14.8 PROHIBITED SALES. After the Closing Buyer will not sell any Products
to Prime Companies or to any companies affiliated with Dr. Samin until
Buyer receives notice from Seller that all amounts owed by Prime Companies
to Seller have been paid.
8. Except as expressly set forth herein, the terms and conditions of the
Purchase Agreement remain unmodified and in full force and effect.
9. This Amendment may be executed in counterparts, each of which shall be
considered an original.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized representatives to be effective as of the date
first given above.
NUTRITION MEDICAL, INC. GALAGEN INC.
By /s/ Richard J. Hegstrand By /s/ Gregg A. Waldon
------------------------------ ------------------------------
Its COO Its CFO
--------------------------- ----------------------------