COLLABORATION AND LICENSE AGREEMENT
BY AND BETWEEN
GALAGEN INC.
AND
AMERICAN HOME PRODUCTS CORPORATION
ACTING THROUGH ITS
WYETH-AYERST LABORATORIES DIVISION
OCTOBER 15, 1998
COLLABORATION AND LICENSE AGREEMENT
THIS COLLABORATION AND LICENSE AGREEMENT (the "Agreement") is entered into
as of the 15th day of October, 1998 (the "Effective Date"), by and between
GALAGEN INC., a company incorporated under the laws of the State of Delaware,
with its principal place of business at 4001 Lexington Avenue North, Arden
Hills, Minnesota 55126 USA ("GalaGen"), AND AMERICAN HOME PRODUCTS CORPORATION,
acting through its WYETH-AYERST LABORATORIES DIVISION, a company incorporated
under the laws of the State of Delaware, with its principal place of business at
555 East Lancaster Avenue, St. Davids, Pennsylvania 19087, USA
("Wyeth-Ayerst"). Both GalaGen and Wyeth-Ayerst are referred to herein
individually as a "Party" and collectively as the "Parties".
WHEREAS, GalaGen has developed proprietary technology with respect to
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***]; and
WHEREAS, GalaGen and Wyeth-Ayerst desire to collaborate with each other to
utilize GalaGen's proprietary technology to obtain [***CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] and to develop Pediatric Formula Products and/or Other Products
containing such [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]; and
WHEREAS, Wyeth-Ayerst desires to obtain the worldwide rights to
manufacture and sell such Pediatric Formula Products and/or Other Products.
NOW THEREFORE, in consideration of the foregoing premises and the mutual
promises, covenants and conditions contained in this Agreement, the Parties
agree as follows:
1. DEFINITIONS.
For the purposes of this Agreement, the capitalized terms hereunder shall
have the meanings defined below:
1.1 "AFFILIATE(S)" shall mean, 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 Section 1.1, shall mean 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. [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
1
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***].
1.2 "BUDGET" shall have the meaning set forth in Section 2.6.1 hereof.
1.3 "CALENDAR QUARTER" shall mean the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30
or December 31, for so long as this Agreement is in effect.
1.4 "COLLABORATION" shall mean the research and development program
conducted jointly by the Parties hereunder for the purpose of
optimizing the production of [***CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] and developing and obtaining Regulatory Approval for
Pediatric Formula Products.
1.5 "COMMERCIALLY REASONABLE EFFORTS" shall mean efforts and resources
normally used by a Party for a compound or product owned by it or to
which it has rights, which is of similar market potential at a similar
stage in its product life, taking into account the competitiveness of
the marketplace, the proprietary position of the compound or product,
the regulatory structure involved, the profitability of the applicable
products, and other relevant factors.
1.6 "CONTROL" OR "CONTROLLED" shall mean licensed with the right to grant
sublicenses without violating the terms of any Third Party agreement.
1.7 "DEVELOPMENT PLAN" shall have the meaning set forth in Section 2.1.
1.8 "FIRST COMMERCIAL SALE" shall mean, on a Product by Product basis,
the first sale of such Product in any country of the Territory after
such Product has been granted Regulatory Approval by the competent
authorities in such country.
1.9 "GALAGEN GROSS INCOME" shall mean all income, calculated in
accordance with generally accepted accounting procedures, GalaGen or
its Affiliates receives from Third Parties in connection with an Other
Product to which GalaGen obtains rights pursuant to Section 3.3
hereof, including, without limitation,
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***]
2
1.10 "GALAGEN KNOW-HOW" shall mean Know-How owned or Controlled by GalaGen
or its Affiliates at any time during the term of this Agreement.
1.11 "GALAGEN PATENT RIGHTS" shall mean all Patent Rights owned or
Controlled by GalaGen. A list of the GalaGen Patent Rights existing
as of the Effective Date is set out in Exhibit A hereto.
1.12 "GALAGEN TRADEMARK" shall mean the trademark(s) used by GalaGen in
connection with the [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***], including, without limitation, Proventra-TM-.
1.13 "GOOD CLINICAL PRACTICE" OR "GCP" shall mean the then current
standards for clinical trials for pharmaceuticals, as set forth in the
United States Federal Food, Drug and Cosmetics Act and applicable
regulations promulgated thereunder, as amended from time to time, and
such standards of good clinical practice as are required by the
European Union and other organizations and governmental agencies in
countries in which the Products are intended to be sold, to the extent
such standards are not inconsistent with United States GCP.
1.14 "GOOD LABORATORY PRACTICE" OR "GLP" shall mean the then current
standards for laboratory activities for pharmaceuticals, as set forth
in the United States Federal Food, Drug and Cosmetics Act and
applicable regulations promulgated thereunder, as amended from time to
time, and such standards of good laboratory practice as are required
by the European Union and other organizations and governmental
agencies in countries in which the Products are intended to be sold,
to the extent such standards are not inconsistent with United States
GLP.
1.15 "GOOD MANUFACTURING PRACTICE" OR "GMP" shall mean the current
standards for the manufacture of pharmaceuticals, as set forth in the
United States Federal Food, Drug and Cosmetics Act and applicable
regulations promulgated thereunder, as amended from time to time, and
such standards of good manufacturing practice as are required by the
European Union and other organizations and governmental agencies in
countries in which the Products are intended to be sold, to the extent
such standards are not inconsistent with United States GMP.
1.16 "INTELLECTUAL PROPERTY RIGHTS" shall mean all Patent Rights,
trademarks, copyrights, Know-How and/or trade secrets which are owned
or Controlled by one Party hereto (with the right to license) or
jointly by the Parties, with regard to the development, manufacture,
importing, use, marketing and/or sale of any Product.
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1.17 "INVENTION" shall mean an invention conceived in the course of the
performance of and within the scope of this Agreement.
1.18 "JOINT DEVELOPMENT COMMITTEE" OR "JDC" shall mean the committee
appointed by the Parties as set forth in Section 2.2.
1.19 "KNOW-HOW" shall mean all know-how, processes, information and data
including any copyright relating thereto owned or Controlled by either
Party (with the right to have or disclose) as of the Effective Date or
acquired during the term of this Agreement relating to:
(a) [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***];
(b) [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***];
(c) any Product containing (a) or (b);
(d) methods of making any of (a), (b) or (c);
(e) any component of (a), (b) or (c);
(f) any method of using any of (a), (b), (c) or (e); and/or
(g) any use of (a), (b), (c) or (e).
The term "Know-How", however, shall not include any know-how,
processes, information and data which is, as of the Effective Date or
later becomes, generally available to the public.
1.20 [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***]
1.21 "MANUFACTURING AND SUPPLY AGREEMENT" shall have the meaning set forth
in Section 4.1 hereof.
1.22 "NET SALES" shall mean proceeds from sales of Pediatric Formula
Products by Wyeth-Ayerst, its Affiliates or sublicensees, as
appropriate, to Third Parties, less the sum of (a) and (b) where (a)
is a provision, determined under generally accepted accounting
principles in the United States, for
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[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***].
Sales of Pediatric Formula Products by and between a Party and its
Affiliates are not sales to Third Parties and shall be excluded from
Net Sales calculations for all purposes.
1.23 "OTHER PRODUCT(S)" shall mean any product, other than Pediatric
Formula Products, which contains [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***]. For the sake of clarity, Other Products shall include
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***].
1.24 "PATENT RIGHTS" shall mean all patents or patent applications, and
all divisional, continuations, continuations-in-part, reissues,
extensions, supplementary protection certificates and foreign
counterparts thereof, existing as of the Effective Date or filed or
issuing during the term of this Agreement, at least one claim of which
covers:
(a) [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***];
(b) [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***];
(c) any Product containing (a) or (b);
(d) methods of making any of (a), (b) or (c);
(e) any component of (a), (b) or (c);
(f) any method of using any of (a), (b), (c) or (e); and/or
(g) any use of (a), (b), (c) or (e).
1.25 "PEDIATRIC FORMULA PRODUCT(S)" shall mean any beverage (whether
supplied in liquid form or as a powder to be mixed with a liquid)
containing [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES
5
AND EXCHANGE COMMISSION***] for oral consumption by infants and/or
children.
1.26 "PREFERENTIAL OTHER PRODUCT" shall have the meaning set forth in
Section 3.3.1 hereof.
1.27 "PRODUCT" shall mean any Pediatric Formula Product or any Other
Product.
1.28 "R&D EXPENSES" shall mean the sum of (i) the reasonable out-of-pocket
costs incurred by GalaGen in performing its obligations under the
Collaboration and [***CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] per man-hour expended by GalaGen's employees who are
performing activities pursuant to the Development Plan.
1.29 "REGULATORY APPROVAL" shall mean all authorizations by the competent
authorities which are required for the regular marketing, promotion,
pricing and sale of a Product in a given country or regulatory
jurisdiction.
1.30 "REGULATORY AUTHORITY" shall mean any national, supra-national (e.g.,
the European Commission, the Council of the European Union, or the
European Agency for the Evaluation of Medicinal Products), regional,
state or local regulatory agency, department, bureau, commission,
council or other governmental entity involved in the granting of
Regulatory Approval for a Product.
1.31 [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***]
1.32 "TERRITORY" shall mean the world.
1.33 "THIRD PARTY(IES)" shall mean any person(s) or entity(ies) other than
GalaGen, Wyeth-Ayerst or their Affiliates.
1.34 "TRANSACTION AGREEMENTS" shall mean this Agreement, the Manufacturing
and Supply Agreement and the Warrant Purchase Agreement.
1.35 "USA" shall mean the United States of America, its territories and
possessions and the Commonwealth of Puerto Rico.
6
1.36 "VALID CLAIM" shall mean an unexpired claim of an issued patent
forming part of the GalaGen Patent Rights, which claim has not been
declared invalid by a court or other tribunal of competent
jurisdiction.
1.37 "WARRANT" OR "WARRANT PURCHASE AGREEMENT" shall have the meaning set
forth in Section 5.3 hereof.
1.38 "WYETH-AYERST KNOW-HOW" shall mean Know-How owned or Controlled by
Wyeth-Ayerst.
1.39 "WYETH-AYERST PATENT RIGHTS" shall mean all Patent Rights owned or
Controlled by Wyeth-Ayerst. A list of the Wyeth-Ayerst Patent Rights
existing as of the Effective Date is set out in Exhibit B hereto.
1.40 "WYETH-AYERST TRADEMARK" shall mean the trademark(s) (other than the
GalaGen Trademark) used by Wyeth in connection with the marketing of
any Product.
2. COLLABORATION.
2.1 GENERAL OBLIGATIONS. The Parties have designed and agreed upon a
joint development plan (the "Development Plan") pursuant to which they
will conduct the Collaboration hereunder. A copy of the Development
Plan is attached hereto as Exhibit C. The Development Plan may be
updated or revised, in writing, from time to time by the JDC. During
the term of the Collaboration, each Party agrees to use its respective
Commercially Reasonable Efforts to perform its obligations under the
Development Plan and this Agreement in a timely manner.
2.2 JOINT DEVELOPMENT COMMITTEE. The Parties agree that the Collaboration,
including the development of the [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] and the Pediatric Formula Products, will be managed by
a Joint Development Committee (the "JDC").
2.2.1 COMPOSITION. No later than thirty (30) days after the
Effective Date, each of the Parties will appoint two (2)
representatives to the JDC. The chairperson of the JDC will
be one of the Wyeth-Ayerst representatives. A Party may
change any of its representatives at any time by giving
written notice to the other Party.
2.2.2 RESPONSIBILITIES. The JDC will:
7
(a) monitor the progress of and compliance with the
Development Plan and approve any change in the
Development Plan;
(b) select [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] studies and [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***] for
evaluation in animal models and/or human volunteers;
(c) develop research protocols and define the primary
endpoint for the clinical trials;
(d) review and evaluate the results of studies performed in
connection with the Collaboration; and
(e) determine the most appropriate regulatory pathway and
develop appropriate strategy to obtain Regulatory
Approval for the [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION***] and the Pediatric Formula
Product.
2.2.3 MEETINGS OF THE JDC. The chairperson of the JDC shall call
meetings when deemed appropriate, currently anticipated to
be no less frequently than once every three (3) months. If
possible, the meetings shall be held in person, or where
appropriate, by video or telephone conference. When held in
person, the location of such meetings shall alternate
between Wyeth-Ayerst's facilities and GalaGen's facilities.
The chairperson shall determine the form of and agenda for
the meeting. Additional participants may be invited by any
member to attend meetings where appropriate (e.g.,
representatives of regulatory affairs or outside
consultants). Such additional participants shall have no
vote. Minutes of each meeting of the JDC shall be exchanged
for review and comment by the members. Thereafter, they
shall be signed by the chairperson and distributed to each
of the Parties. Each Party shall be responsible for the
expenses incurred by its representatives in attending such
meetings.
8
2.2.4 VOTING. The JDC shall make decisions by majority vote, with
at least one consenting vote of each Party's JDC members.
If the required majority decision cannot be found and all
the members of each Party take the same opposing positions
in a matter which either Party deems to be of major
importance, the matter shall be handled pursuant to Section
2.2.6. Voting by proxy is permissible. Urgent matters
(including regulatory and adverse event matters) may be
decided by unanimous vote of the chairperson and a
representative designated by GalaGen.
2.2.5 ROLE OF CHAIRPERSON. Except as explicitly set forth herein,
in no event shall the chairperson of the JDC have any
additional powers or responsibilities beyond those delegated
to such person by virtue of such person's membership on the
JDC. Without limiting the foregoing, it is understood that,
except as a voting member of the JDC, the chairperson shall
not have the power to control or dictate decisions or to
veto any decisions reached by the committee under the
decision-making processes set forth in Section 2.2.4.
2.2.6 DISPUTE RESOLUTION. If the JDC is unable to resolve, after
thirty (30) days, a dispute regarding any issue presented to
it or arising in it, such dispute will be referred to
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***].
If such dispute is not resolved by the end of
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]
period, the Parties shall be free to pursue any legal or
equitable remedy available to them.
2.3 SUPPLY OF [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]. GalaGen
shall provide Wyeth-Ayerst with [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***], from time to time and in amounts specified by
Wyeth-Ayerst, for use by Wyeth-Ayerst, its Affiliates and sublicensees
in the development of Products, including, without limitation, the
manufacture of Products for use in conducting clinical trials to
obtain Regulatory Approval for Products. [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***]
2.4 RECORDS, REPORTS, AND INFORMATION EXCHANGE.
9
2.4.1 TECHNOLOGY AND INFORMATION TRANSFER. GalaGen will provide
to Wyeth-Ayerst all GalaGen Know-How as Wyeth-Ayerst deems
necessary to carry out its responsibilities in the
Collaboration and to manufacture and obtain Regulatory
Approval for Products. Wyeth-Ayerst will provide to GalaGen
all Wyeth-Ayerst Know-How as Wyeth-Ayerst deems necessary
for GalaGen to carry out its responsibilities in the
Collaboration. All information transferred, provided or
exchanged under this Section 2.4.1 will be subject to the
confidentiality requirements set forth in Article 12 hereof.
2.4.2 RECORD KEEPING. Each Party will maintain records in
sufficient detail and in good scientific manner appropriate
for Regulatory Approval and patent purposes.
2.4.3 COMMUNICATION REGARDING THE DEVELOPMENT PROGRESS. Within
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***],
each Party shall provide the JDC with a written report
summarizing the status of the activities it conducted in
furtherance of the Collaboration during such [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION***].
2.4.4 R&D EXPENSES. Within [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***], GalaGen shall submit to
Wyeth-Ayerst a written report setting forth a detailed
accounting of the R&D Expenses incurred by GalaGen during
such Calendar Quarter and indicating the R&D Expenses which
are to be reimbursed by Wyeth-Ayerst pursuant to Section 2.6
hereof. [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***].
2.4.5 OTHER PRODUCTS. Periodically throughout the term of this
Agreement, Wyeth-Ayerst shall provide the JDC with a list of
Other Products for which Wyeth-Ayerst has either initiated
development activities or plans to initiate development
activities.
2.5 COMPLIANCE. Each of the Parties shall comply with all applicable GLP,
GCP and GMP in the conduct of the Collaboration.
10
2.6 FUNDING OF THE COLLABORATION.
[***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***]
2.7 [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***]
2.8 REGULATORY APPROVALS. Wyeth-Ayerst shall file all regulatory dossiers
for the [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] and the
Product(s) under its or its Affiliates' names. Wyeth-Ayerst shall own
all Regulatory Approvals for the [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] and Product(s), except for those Products to which
GalaGen obtains rights in accordance with Section 3.3 hereof.
Wyeth-Ayerst shall be responsible for all communications with
regulatory agencies with respect to the Product(s) (other than
Products to which GalaGen obtains rights in accordance with Section
3.3 hereof), subject to its obligation to keep the JDC informed. In
the event that GalaGen obtains rights to an Other Product in
accordance with the provisions of Section 3.3 hereof, Wyeth-Ayerst
shall permit GalaGen to have access to such applications for
Regulatory Approval and related documents solely as such applications
and documents relate to the use of [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***], PROVIDED, HOWEVER, that GalaGen's use of such
applications and documents shall be limited to obtaining and
maintaining Regulatory Approval for such Other Product.
2.9 EXCLUSIVITY. GalaGen covenants that, except as otherwise permitted in
accordance with the provisions of Section 3.3 hereof, during the term
of this Agreement, it will not conduct any research and development
activities, either independently or with Third Parties, with respect
to Products and that it will not provide [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] to any Third Party for the purpose of
conducting research and development activities or commercializing any
Product. Notwithstanding, the foregoing, GalaGen and Wyeth-Ayerst
each recognize that, from time to time, it may be desirable or
necessary to retain consultants to assist the Parties in the
11
Collaboration. In such event, the Parties together shall enter into a
consulting agreement with each such consultant, which consulting
agreement shall, in both form and substance, be reasonably acceptable
to each of the Parties.
2.10 TERM OF COLLABORATION. The term of the Collaboration shall commence
on the Effective Date and, unless terminated earlier, shall expire
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***] or such later date as
may be agreed upon by majority vote of the JDC. The Collaboration
shall automatically terminate upon termination of this Agreement
pursuant to either of Sections 9.2 or 9.3 hereof.
3. GRANT OF RIGHTS.
3.1 EXCLUSIVE LICENSE.
3.1.1 PEDIATRIC FORMULA PRODUCTS. Subject to the other provisions
of this Agreement, GalaGen hereby grants to Wyeth-Ayerst an
exclusive license (exclusive even as to GalaGen) in the
Territory, under GalaGen's Intellectual Property Rights and
GalaGen's interest in any Intellectual Property Rights
jointly owned by the Parties, to develop, manufacture, have
manufactured, import, export, use, market, offer for sale
and sell Pediatric Formula Products and to use the GalaGen
Trademarks on the packaging of and in promotional materials
for Pediatric Formula Products, PROVIDED, HOWEVER, that,
except as provided in Article 4 of the Manufacturing and
Supply Agreement, nothing herein shall confer upon
Wyeth-Ayerst any rights to manufacture [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION***] for use in
Pediatric Formula Products.
3.1.2 OTHER PRODUCTS. Subject to the other provisions of this
Agreement, GalaGen hereby grants to Wyeth-Ayerst an
exclusive license (exclusive even as to GalaGen except as
provided in Section 3.3 hereof) in the Territory, under
GalaGen's Intellectual Property Rights and GalaGen's
interest in any Intellectual Property Rights jointly owned
by the Parties, to develop, manufacture, have manufactured,
import, export, use, market, offer for sale and sell Other
Products and to use the GalaGen Trademarks on the packaging
of and in promotional materials for Other Products,
12
PROVIDED, HOWEVER, that, except as provided in Article 4 of
the Manufacturing and Supply Agreement, nothing herein shall
confer upon Wyeth-Ayerst any rights to manufacture
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]
for use in Other Products.
3.2 SUBLICENSING. Wyeth-Ayerst shall have the right to sublicense all or
any part of the rights granted to it under Section 3.1 to its
Affiliates or Third Parties. Wyeth-Ayerst shall notify GalaGen of its
intent to grant a sublicense to a Third Party prior to granting such
sublicense under this Section 3.2, but Wyeth-Ayerst shall not be
required to obtain GalaGen's consent to grant any such sublicense
except in the case where Wyeth-Ayerst is sublicensing, to a Third
Party, the right to develop and commercialize an Other Product
included in the list of Preferential Other Products established by the
JDC in accordance with Section 3.3.1 hereof, in which event,
Wyeth-Ayerst may grant such sublicense to such Third Party only after
obtaining GalaGen's prior written consent, which consent shall not be
unreasonably withheld. In the event that GalaGen's consent is
required, in accordance with the preceding sentence, for Wyeth-Ayerst
to grant a sublicense to a Third Party to develop and commercialize a
Preferential Other Product and GalaGen elects to withhold such
consent, GalaGen shall notify Wyeth-Ayerst, in writing and within
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***] after Wyeth-Ayerst's
request for such consent, that GalaGen is withholding such consent,
which notice shall state the reason(s) such consent is being withheld
and provide documentary or other evidence GalaGen has in support of
its position that such reason(s) reasonably warrant the withholding of
such consent. If Wyeth-Ayerst does not receive such written notice
within such [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] period,
GalaGen shall be deemed to have provided its consent for Wyeth-Ayerst
to grant such sublicense.
3.3 GALAGEN RIGHTS TO OTHER PRODUCTS.
3.3.1 IDENTIFICATION OF PREFERENTIAL OTHER PRODUCTS. GalaGen,
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***],
shall notify the JDC and Wyeth-Ayerst, each in writing, of
those Other Products that GalaGen reasonably believes it
would both desire and have the ability to develop and
commercialize, either itself or in
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collaboration with a Third Party, PROVIDED, HOWEVER, that
such list of Other Products shall not include
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***].
Each such notice shall include a proposed development plan
for each Other Product included on such list. Within
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]
after receiving the first such list the JDC shall meet to
consider the list and proposed development plan(s) provided
by GalaGen and any concerns that Wyeth-Ayerst has with the
inclusion of any particular Other Product(s) on such list,
and based on such considerations, the JDC shall establish a
list of Other Products for which Wyeth-Ayerst must seek
GalaGen's consent, in accordance with Section 3.2 hereof,
prior to granting to one or more Third Parties a
sublicense(s) to develop and commercialize such Other
Products (the "Preferential Other Products"). Once each
year the JDC shall meet [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] (i) to review the then current list
of Preferential Other Products and GalaGen's progress in
developing such Other Product in accordance with the
development plan accepted by the JDC for such Other Product,
and (ii) to consider the list of any Other Products provided
by GalaGen and any concerns that Wyeth-Ayerst has with the
inclusion of any particular Other Product(s) on the list of
Preferential Other Products. Based on such review and
considerations, the JDC shall revise the then current list
of Preferential Other Products, PROVIDED, HOWEVER, that if
GalaGen has failed to use reasonable efforts to develop any
Other Product in accordance with the development plan
accepted by the JDC for such Other Product, such Other
Product shall be removed from the list of Preferential Other
Products unless the JDC agrees to accept from GalaGen a
revised development plan for such Other Product.
3.3.2 ACQUISITION OF SUBLICENSE BY GALAGEN. In the event GalaGen
desires to develop and commercialize an Other Product
(whether or not such Other Product is a Preferential Other
Product), either itself or in collaboration with a Third
Party, GalaGen may, by written notice to Wyeth-Ayerst,
request that Wyeth-Ayerst grant to GalaGen a sublicense of
the rights granted to Wyeth-Ayerst under Section 3.1.2
hereof solely for the development and commercialization of
such Other Product. After the receipt of such
14
notice, Wyeth-Ayerst may elect whether or not to grant such
sublicense and will not unreasonably refuse to grant such a
sublicense to GalaGen, PROVIDED, HOWEVER, that in no event
will Wyeth-Ayerst be required to grant a sublicense to
GalaGen for the development and/or commercialization of such
an Other Product if
(i) Wyeth-Ayerst has initiated the development and/or
commercialization of the same or a similar Other
Product;
(ii) Wyeth-Ayerst has advised the JDC pursuant to
Section 2.4.5 hereof, that it intends to initiate
the development of the same or a similar Other
Product;
(iii) Wyeth-Ayerst has, in accordance with Section 3.2
hereof, granted to a Third Party the right to
develop and/or commercialize the same or a similar
Other Product;
(iv) Wyeth-Ayerst reasonably believes that the
development and/or commercialization of such an
Other Product would adversely affect the
commercial potential of any Pediatric Formula
Product that Wyeth-Ayerst has developed, is
developing, plans to develop, is commercializing
or plans to commercialize;
(v) Wyeth-Ayerst is able to reasonably demonstrate
that the development and/or commercialization of
such an Other Product would have a material
adverse effect on the commercial potential of any
Other Product that Wyeth-Ayerst has developed, is
developing or is commercializing;
(vi) Wyeth-Ayerst is able to reasonably demonstrate
that the development and/or commercialization of
such an Other Product would have a material
adverse effect on the commercial potential of any
Other Product which Wyeth-Ayerst has advised the
JDC, pursuant to Section 2.4.5 hereof, that it
intends to initiate the development of;
(vii) Wyeth-Ayerst is able to reasonably demonstrate
that the development and/or commercialization of
such an Other Product would have a material
adverse
15
effect on the commercial potential of any product
that is being developed or commercialized by
Wyeth-Ayerst in one of Wyeth-Ayerst's core
business areas; or
(viii) [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***]. Wyeth-Ayerst will notify
GalaGen of such election within [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] of receiving such notice from
GalaGen. In the event that Wyeth-Ayerst elects to
grant such a sublicense to GalaGen the Parties
shall use their respective Commercially Reasonable
Efforts to negotiate, in good faith, a definitive
sublicense agreement containing terms and
conditions (including, without limitation, whether
such sublicense will be exclusive even as to
Wyeth-Ayerst or exclusive except as to
Wyeth-Ayerst) mutually acceptable to the Parties,
PROVIDED, HOWEVER, that such sublicense, INTER
ALIA, shall provide that (i) GalaGen shall pay to
Wyeth-Ayerst [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] and (ii)
Wyeth-Ayerst will be granted a right of first
refusal to obtain the right to commercialize such
Other Product(s) in the event GalaGen elects to
license or otherwise transfer such responsibility
to a Third Party, PROVIDED, HOWEVER, that
Wyeth-Ayerst shall be required to waive its right
to exercise such right of first refusal if (x)
GalaGen, in its written notice requesting such
sublicense, identifies a Third Party to whom
GalaGen intends to further sublicense the right to
commercialize such Other Product and (y) GalaGen,
in fact, grants such a further sublicense to such
Third Party within [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION***] after
Wyeth-Ayerst grants to
16
GalaGen a sublicense to develop and/or
commercialize such Other Product. The mechanism
and timing for exercising such right of first
refusal shall be mutually agreed upon by the
Parties and shall be set forth in the definitive
sublicense agreement, provided, however, that such
sublicense agreement shall provide that
Wyeth-Ayerst's acquisition of rights under such
right of first refusal shall be substantially
equivalent to the terms and conditions that
GalaGen had negotiated, in good faith, with a
Third Party. For purposes of this Section 3.3, a
material adverse effect on a product shall
include, without limitation, a forecasted decline
of [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] in unit sales or revenues
from the sale of such product.
3.3.3 FAILURE TO CONCLUDE NEGOTIATION OF SUBLICENSE. If
Wyeth-Ayerst has used its Commercially Reasonable Efforts to
negotiate a sublicense agreement with GalaGen pursuant to
Section 3.3.2 hereof and the Parties fail to sign such a
definitive sublicense agreement within [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION***] after
Wyeth-Ayerst has notified GalaGen of its election to
negotiate such an agreement for the grant to GalaGen of a
sublicense to develop and/or commercialize such Other
Product (or such longer period of time as may be mutually
agreed upon by the Parties in writing), Wyeth-Ayerst may, by
written notice to GalaGen, revoke its election to negotiate
and/or grant such a sublicense to GalaGen.
3.3.4 REFUSAL TO GRANT SUBLICENSE. In the event that Wyeth-Ayerst
elects, for the reasons set forth in Section 3.3.2(ii)
and/or Section 3.3.2(vi) above, not to grant to GalaGen a
sublicense to develop and/or commercialize an Other Product
and within [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] making such election Wyeth-Ayerst fails to
either initiate the development of such Other Product or
sublicense to a Third Party the right to develop and/or
commercialize such Other Product, GalaGen, within
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION
17
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] after the expiration of such [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION***] period, may, by
written notice to Wyeth-Ayerst, request that such sublicense
be granted and, in such event, Wyeth-Ayerst shall thereafter
grant to GalaGen a sublicense to develop and commercialize
such Other Product subject to the negotiation of a
definitive sublicense agreement with GalaGen as provided in
Section 3.3.2 hereof.
3.4 [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***]
4. MANUFACTURE, SUPPLY AND COMMERCIALIZATION OF PRODUCTS.
4.1 MANUFACTURE AND SUPPLY OF [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***]. GalaGen shall manufacture or have manufactured and
supply to Wyeth-Ayerst and Wyeth-Ayerst shall purchase from GalaGen
its requirements of the [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***], for use in manufacturing Products to be sold to Third
Parties, in accordance with the terms and provisions of the
Manufacturing and Supply Agreement signed by the Parties on even date
with the Effective Date, which agreement shall be substantially in the
form which is attached hereto as Exhibit F.
4.2 MANUFACTURE OF PRODUCTS. Wyeth-Ayerst, either directly or through a
Third Party manufacturer of its choosing, shall be responsible for
manufacturing its requirements of the Products using the
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***] supplied by GalaGen
pursuant to Section 4.1 hereof.
4.3 REGISTRATION AND COMMERCIALIZATION OF PRODUCTS. Wyeth-Ayerst shall
use its Commercially Reasonable Efforts to obtain Regulatory Approval
for, and to promote, market and sell a Pediatric Formula Product in
those countries of the Territory where Wyeth-Ayerst, in its sole
discretion, deems it commercially reasonable to do so. If within
18
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***], an application for
Regulatory Approval has not been filed seeking Regulatory Approval for
the sale of a Pediatric Formula Product in the United States, the
Parties, upon GalaGen's written request, shall meet to discuss
Wyeth-Ayerst's plans for obtaining Regulatory Approval for and
commercializing (either directly or through one or more Affiliates,
sublicensees or distributors) Pediatric Formula Products in the United
States, PROVIDED, HOWEVER, that if there has been a delay in either
(a) the completion of the research and development activities to be
performed under the Development Plan or (b) the supply by GalaGen to
Wyeth-Ayerst of Wyeth-Ayerst's requirements of the [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] for use in the development of
Pediatric Formula Products, such [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***]. In addition, if, after having had the discussions
described in the preceding sentence, Wyeth-Ayerst, [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***], fails to either
(i) file an application seeking Regulatory Approval for at least
one (1) Pediatric Formula Product in the United States, or
(ii) grant a sublicense to one or more Third Parties to develop
and/or commercialize at least one (1) Pediatric Formula
Product in the United States,
Wyeth-Ayerst shall, upon GalaGen's written request, grant to GalaGen
an exclusive (exclusive, except as to Wyeth-Ayerst) sublicense of the
rights granted to Wyeth-Ayerst hereunder, to develop, make, have made,
use, import, market, promote, offer for sale, and sell Pediatric
Formula Products (and not any Other Products) in the United States,
PROVIDED, HOWEVER, that if there has been a delay [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] in either (x) the completion of
the research and development activities to be performed under the
Development Plan or (y) the supply by GalaGen to Wyeth-Ayerst of
Wyeth-Ayerst's requirements of [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] for use in the development of Pediatric Formula
Products such [**CONFIDENTIAL TREATMENT
19
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***]. Further, if Wyeth-Ayerst has not made its
First Commercial Sale of a Pediatric Formula Product in the United
States within [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] after
obtaining Regulatory Approval for the first Pediatric Formula Product
in the United States, Wyeth-Ayerst shall, upon GalaGen's written
request, grant to GalaGen an exclusive (exclusive, even as to
Wyeth-Ayerst) sublicense of the rights granted by GalaGen to
Wyeth-Ayerst hereunder, to use GalaGen's Intellectual Property Rights
and GalaGen's interest in any Intellectual Property Rights jointly
owned by the Parties to develop, make, have made, use, import, market,
promote, offer for sale, and sell Pediatric Formula Products (and not
any Other Products) in the United States only. In the event that
Wyeth-Ayerst is required, in accordance with this Section 4.3, to
grant a sublicense to GalaGen the Parties shall within the
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***] after GalaGen's
written request, use their respective Commercially Reasonable Efforts
to negotiate, in good faith, a definitive sublicense agreement
containing terms and conditions mutually acceptable to the Parties,
provided, however, that in no event will Wyeth-Ayerst be required to
grant to GalaGen a license under any of Wyeth-Ayerst's Intellectual
Property Rights..
5. CONSIDERATION TO GALAGEN.
5.1 LICENSE FEE. [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]
5.2 ADDITIONAL LICENSE FEES. [***CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***]
5.3 PURCHASE OF WARRANTS. Simultaneously with the execution of this
Agreement, GalaGen will issue to Wyeth-Ayerst a stock purchase
warrant(the "Warrant" or the "Warrant Purchase Agreement") permitting
Wyeth-Ayerst to purchase up to two hundred thousand (200,000) shares
of GalaGen's common stock at the price set forth therein. The Warrant
shall be in the form that is attached hereto as Exhibit G.
20
5.4 METHOD OF PAYMENT. [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***].
6. ACCOUNTS AND RECORDS; WITHHOLDING TAX.
6.1 RECORD KEEPING BY GALAGEN. GalaGen shall keep accurate books and
accounts of record in connection with the activities conducted by it
as part of the Collaboration in sufficient detail to permit accurate
determination of all figures necessary for verification of the R&D
Expenses incurred by GalaGen in the Collaboration hereunder. GalaGen
shall maintain such records for a period of [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] after the end of the year in which they were
generated.
6.2 AUDIT BY WYETH-AYERST. Wyeth-Ayerst, through an independent certified
public accountant reasonably acceptable to GalaGen, shall have the
right, at its own expense, to access the books and records of GalaGen
for the sole purpose of verifying the statements furnished by GalaGen
pursuant to Section 2.4.4. Such access shall be conducted after
reasonable prior written notice to GalaGen and during ordinary
business hours and shall not be more frequent than once per calendar
year. Wyeth-Ayerst agrees to keep in strict confidence all
information learned in the course of such audit, except when it is
necessary to reveal such information in order to enforce its rights
under this Agreement. Wyeth-Ayerst's right to have such records
examined shall survive termination or expiration of this Agreement.
In the event such audit reveals an overpayment GalaGen shall promptly
refund to Wyeth-Ayerst the amount of such overpayment. In the event
such audit reveals an overpayment of [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] of the amount actually due, GalaGen shall also
promptly reimburse Wyeth-Ayerst for the reasonable out-of-pocket
expenses incurred by Wyeth-Ayerst in conducting such audit.
6.3 RECORD KEEPING BY WYETH-AYERST. Wyeth-Ayerst shall keep accurate
books and accounts of record in connection with the sale by or for it
of the Products in sufficient detail to permit accurate determination
of all figures necessary for verification of payments required to be
paid hereunder. Wyeth-Ayerst shall maintain such records for a period
of [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND
21
EXCHANGE COMMISSION***] after the end of the year in which they were
generated.
6.4 AUDIT BY GALAGEN. GalaGen, through an independent certified public
accountant reasonably acceptable to Wyeth-Ayerst, shall have the
right, at its own expense, to access the books and records of
Wyeth-Ayerst for the sole purpose of determining whether a payment
under either Section 5.1 or Section 5.2 has become due. Such access
shall be conducted after reasonable prior written notice to GalaGen
and during ordinary business hours and shall not be more frequent than
once per calendar year. Wyeth-Ayerst may require such independent
certified public accountant to sign a customary confidential
disclosure agreement prior to permitting such independent certified
public accountant to have access to its books, records or facilities.
The Parties agree that such independent certified public accountant
shall disclose to GalaGen only whether the payments due under Section
5.1 or Section 5.2 hereof were made on time in accordance with the
provisions of Article 5 hereof and the specific details concerning any
late payments. GalaGen agrees to keep in strict confidence all
information learned in the course of such audit, except when it is
necessary to reveal such information in order to enforce its rights
under this Agreement. GalaGen's right to have such records examined
shall survive termination or expiration of this Agreement. In the
event that such an audit reveals that a payment by Wyeth-Ayerst to
GalaGen under Section 5.1 or Section 5.2 hereof was paid to GalaGen
more than [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] to GalaGen
in accordance with Article 5 hereof, Wyeth-Ayerst shall reimburse
GalaGen for the reasonable out-of-pocket expenses incurred by GalaGen
in conducting such audit.
6.5 WITHHOLDING. All taxes, assessments and fees of any nature levied or
incurred on account of any payments accruing under this Agreement, by
national, state or local governments, will be assumed and paid by
Wyeth-Ayerst, except taxes levied thereon as income to GalaGen and if
such taxes are required to be withheld by Wyeth-Ayerst they will be
deducted from payments due to GalaGen and will be timely paid by
Wyeth-Ayerst to the proper taxing authority for the account of
GalaGen. A receipt or other proof of payment therefor shall be
secured and sent to GalaGen as soon as practicable.
6.6 FOREIGN EXCHANGE. For the purpose of computing Net Sales for Products
sold in a currency other than United States Dollars, such currency
shall be converted into United States Dollars in accordance with
Wyeth-Ayerst's customary and usual translation procedures,
consistently applied.
22
7. TRADEMARKS.
7.1 TRADEMARKS FOR PRODUCTS. Wyeth-Ayerst shall select and own the
Wyeth-Ayerst Trademarks for marketing Products in the Territory. All
expenses for (i) registration of such Trademarks and (ii) bringing,
maintaining and prosecuting any action to protect or defend such
Trademarks shall be borne by Wyeth-Ayerst and Wyeth-Ayerst shall
retain all recoveries therefrom. At the termination of this
Agreement, Wyeth-Ayerst shall continue to have unrestricted ownership
of such Trademark(s) in the Territory.
7.2 TRADEMARKS [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]. Subject
to the license granted to Wyeth-Ayerst under Section 3.1 hereof,
GalaGen, in consultation with Wyeth-Ayerst, shall select and own the
GalaGen Trademarks for marketing the [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] in the Territory. All expenses for (i)
registration of such Trademarks and (ii) bringing, maintaining and
prosecuting any action to protect or defend such GalaGen Trademarks
shall be borne by GalaGen and GalaGen shall retain all recoveries
therefrom. If permitted by applicable laws and regulations
Wyeth-Ayerst shall signify that the Product includes a [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] by including the GalaGen
Trademark, in a visible and readable form, on the label or package for
the Product and GalaGen shall provide Wyeth-Ayerst with camera ready
artwork of such GalaGen Trademark for such purpose. The location and
size of the GalaGen Trademark on such label or package shall be
determined by Wyeth-Ayerst. Wyeth-Ayerst shall not and shall not
authorize any of its Affiliates or sublicensees to (i) use the GalaGen
Trademarks on any product other than Products or (ii) use any
trademark that is confusingly similar to the GalaGen Trademarks, in
either case without the prior written consent of GalaGen. Each Party
agrees to notify the other Party, in writing, of any claim or action
for infringement or unfair competition relating to the GalaGen
Trademarks which are threatened or brought against such Party by a
Third Party, and of any conflicting uses of, applications or
registrations for, or acts of infringement or unfair competition
involving the GalaGen Trademarks promptly after such Party learns of
any such matter. The Parties shall cooperate in the defense or
prosecution of any
23
such claims, which cooperation shall include, without limitation,
providing to the other Party all records, documents and specimens in
its possession relating to such claim or action and causing its
employees to give testimony relating to such claim or action,
8. PROSECUTION, MAINTENANCE AND INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS.
8.1 PATENTABLE INVENTIONS.
8.1.1 OWNERSHIP OF PATENTABLE INVENTIONS. Wyeth-Ayerst shall own
all Inventions made solely by its employees and agents, and
all patent applications and patents claiming such
Inventions. GalaGen shall own all Inventions made solely by
its employees and agents, and all patent applications and
patents claiming such Inventions. All Inventions made
jointly by employees or agents of GalaGen and employees or
agents of Wyeth-Ayerst and all patent applications and
patents claiming such Inventions shall be owned jointly by
GalaGen and Wyeth-Ayerst. All determinations of
inventorship under this Section 8.1.1 shall be in accordance
with United States law.
8.1.2 PATENT PROCUREMENT. Wyeth-Ayerst and GalaGen shall each
disclose to the other and discuss any Inventions and the
desirability of filing a United States patent application
covering the Invention, as well as any foreign counterpart
patent applications. The Party owning the Invention shall
make the final decision with respect to any such filings and
shall have the right to select patent counsel and to take
such other actions as are reasonably appropriate to prepare,
file, prosecute and maintain patent protection with respect
to its Inventions arising under this Section 8.1. With
respect to jointly owned Inventions, the Parties shall meet
to determine in what countries, if any, patent applications
claiming such joint Inventions should be filed. In the
event that either Party does not wish to share in the
expenses of both filing and prosecuting patent applications
claiming such joint Inventions in any country of the
Territory, such Party shall promptly assign or cause to be
assigned to the other Party all of its right, title and
interest in and to such joint Invention and thereafter such
joint Invention shall be treated as an Invention solely
owned by such other Party for all purposes of this
Agreement. In the event both Parties desire to share in the
expenses of applying for, obtaining and maintaining patents
claiming such a joint Invention in one or more countries of
the
24
Territory Wyeth-Ayerst shall file and prosecute any patent
applications thereon in such countries and the out-of-pocket
expenses incurred by Wyeth-Ayerst in preparing, filing, and
prosecuting such joint patent applications and in
maintaining any patents issued therefrom shall be shared
equally by the Parties. GalaGen shall reimburse
Wyeth-Ayerst for its share of such expenses pursuant to
invoices submitted to GalaGen by Wyeth-Ayerst and shall pay
to Wyeth-Ayerst the amount due for each such invoice within
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]
of GalaGen's receipt of such invoice.
8.2 PROSECUTION AND MAINTENANCE OF PATENT RIGHTS. Each Party shall be
responsible for prosecuting and maintaining its own Patent Rights
throughout the Territory, subject to Section 8.1.2. To facilitate
such decision-making, each Party will appoint a "patent coordinator",
who will have the authority to make such decision on behalf of such
Party. Except as otherwise provided in Section 8.1.2, all expenses
for filing, prosecuting and maintaining a Party's Patent Rights shall
be borne in full by such Party.
8.3 PATENT EXTENSIONS. The Party holding a Patent Right, if requested by
and with the assistance of the other Party, shall apply in a timely
manner for such patent term extensions or patent term restoration
certificates for such Patent Right as are available under the Federal
Drug Price Competition and Patent Term Restoration Act of 1984 (Pub.
L. No. 98-417), and any amendments thereof or any successor acts
thereto in the USA or similar legislation in other countries of the
Territory. All expenses incurred in connection with such patent term
extensions or patent restoration certificates shall be borne in full
by the Party holding such Patent Right.
8.4 COOPERATION. Each of the Parties shall execute or have executed by
its appropriate employees, representatives, agents and contractors
such documents as may be necessary to obtain, perfect or maintain any
Patent Rights filed or to be filed pursuant to this Agreement, and to
cooperate with the other Party so far as reasonably necessary with
respect to furnishing all information and data in its possession
reasonably necessary to obtain or maintain such Patent Rights.
8.5 INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS.
8.5.1 PROSECUTION OF INFRINGEMENT.
(a) If either Party should become aware of any infringement
or
25
threatened infringement or misappropriation, as the
case may be, in any country of the Territory, of any
Intellectual Property Rights of the other Party, it
shall promptly notify such other Party in writing. As
soon as practicable the Parties shall confer on the
particulars of such infringement or misappropriation
and the possible courses of action to be taken. The
Party holding the affected Intellectual Property Rights
shall have the right, but not the obligation, to
institute, prosecute and control any legal proceedings
in its own name by its own counsel and at its own
expense, subject to Section 8.5.1(d), to prevent or
restrain such infringement, and the other Party shall
have the right, at its own expense, to be represented
in such action by its own counsel. If one Party brings
any such action or proceeding, the other Party hereby
consents to being joined as a party plaintiff where
necessary and, in case of joining, such other Party
agrees to give the first Party reasonable assistance
and authority to file and to prosecute such suit, at
the expense of the Party bringing such suit.
(b) Notwithstanding the foregoing, the Parties shall
jointly determine which Party shall have the primary
right and responsibility (but not the obligation) to
institute, prosecute, and control any action or
proceeding with respect to infringement or
misappropriation of jointly owned Intellectual Property
Rights and the other Party shall have the right, at its
expense, to be represented by its counsel. Each Party
hereby consents to the filing of any such action by the
other Party with respect to any jointly owned Patent
Rights in accordance with this Section 8.5.1(b).
(c) If one Party alone prosecutes an infringement or
misappropriation of Intellectual Property Rights, after
payment of its legal costs and expenses, any damages
and costs recovered in any proceedings or by way of
settlement under Sections 8.5.1(a) and 8.5.1(b) above
or Section 8.5.2 shall belong to the Party bringing
such action, subject to payment therefrom to the other
Party of a reasonable sum to compensate the latter for
loss of profits, as applicable.
(d) If both Parties participate in prosecuting an
infringement or misappropriation of Intellectual
Property Rights, any damages and costs recovered in any
proceedings or by way
26
of settlement under this Section 8.5.1 shall be shared
by the Parties as follows:
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]
8.5.2 OTHER PARTY'S RIGHT TO PROSECUTE INFRINGEMENT. If the Party
having the primary right to institute, prosecute, and
control such infringement or misappropriation action under
Section 8.5.1 fails to do so within a period of
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]
after receiving notice of the infringement, or if that
Party, after initiating an action, determines to discontinue
such action, the other Party shall have the right, but not
the obligation, to bring and control or take over any such
action by counsel of its own choice, and its own expense,
subject to Section 8.5.1(c) unless prevented from doing so
by the laws of the country where the infringement or
misappropriation occurred or is threatened.
8.5.3 SETTLEMENTS. In connection with any proposed settlement in
respect of any infringement or threatened infringement of
any Intellectual Property Rights, the Party intending to
settle shall notify and consult with the other Party as to
the terms of settlement, whose written consent shall be
required prior to any such settlement, such consent not to
be unreasonably withheld.
8.5.4 COOPERATION. In connection with any action taken by either
Party against a Third Party to protect or enforce any
Intellectual Property Rights, the other Party shall, if
requested, consult with the Party taking such action, and
make available as witnesses its employees or as evidence any
materials, and/or data as are reasonably necessary for the
furtherance of such action. The expenses in connection with
the providing of witnesses and/or the making available of
any materials and/or data shall be borne by the Party
incurring them, and reimbursed pursuant to Section 8.5.1(d).
8.6 INFRINGEMENT OF THIRD PARTY PATENT RIGHTS.
8.6.1 INFRINGEMENT OF THIRD PARTY PATENTS. If Wyeth-Ayerst should
be of the opinion that it cannot make, import, use, market
and/or sell a Product in any country of the Territory under
its own Intellectual Property Rights or those licensed to it
by GalaGen under this
27
Agreement without infringing a Third Party's patent, it
shall notify GalaGen. Both Parties then shall seek an
opinion of patent counsel acceptable to both Parties. If
such patent counsel concurs with Wyeth-Ayerst's opinion,
they shall, at Wyeth-Ayerst's sole option, jointly or
independently endeavor to secure a license from the Third
Party on terms that are reasonably acceptable to both
Parties.
8.6.2 OPINION OF COUNSEL. If, in the opinion of patent counsel
selected under Section 8.6.1, the Third Party patent, if
litigated, would be found invalid or not infringed by the
manufacture, use or sale of Product or if the Parties
otherwise mutually agree to obtain a license to such Third
Party patent, the Parties shall proceed in accordance with
the terms of this Agreement, unless an action for
infringement is brought against one or both Parties.
8.6.3 DEFENSE AGAINST CLAIM OF INFRINGEMENT. If either Party is
sued for infringement of any Third Party patents arising out
of the manufacture, use, sale or importation of a Product in
any country of the Territory, the Parties shall promptly
meet to discuss the course of action to be taken to resolve
or defend any such infringement litigation. Each Party
shall provide the other with such assistance as is
reasonably necessary and shall cooperate in the defense of
any such action. If the allegation of infringement is due
to or based on the use of [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] in a Product then,
the cost/expense of defending such action incurred by
Wyeth-Ayerst and any damages and/or other compensation
imposed on Wyeth-Ayerst, by settlement or otherwise, in such
country shall be shared equally by the Parties. GalaGen
shall pay its share of such amounts pursuant to invoices
submitted periodically by Wyeth-Ayerst which invoices shall
be due and payable within thirty (30) days of GalaGen's
receipt thereof. In the event that Wyeth-Ayerst has not
made all payments due to GalaGen under this Agreement,
Wyeth-Ayerst may deduct amounts due to Wyeth-Ayerst from
GalaGen under this Section 8.6.3 from any amounts otherwise
due GalaGen under this Agreement.
9. TERM AND TERMINATION.
9.1 TERM. This Agreement shall be effective as of the Effective Date and
unless terminated earlier by mutual written agreement of the Parties
or pursuant to Sections 9.2 or 9.3 below, the Term of this Agreement
shall
28
continue in effect until the later of (i) expiration of the last to
expire GalaGen Patent Right incorporating a Valid Claim which, but for
the license granted under Section 3.1.1 hereof, would be infringed by
the manufacture, use or sale of a Product by Wyeth-Ayerst hereunder or
(ii) ten (10) years after the First Commercial Sale of a Product. Upon
the expiration of this Agreement pursuant to this Section 9.1,
Wyeth-Ayerst's licenses pursuant to Section 3.1 shall become fully
paid-up, perpetual, exclusive licenses subject only to any sublicenses
granted by Wyeth-Ayerst that are in effect at such time, including,
without limitation, any sublicenses granted to GalaGen under either
Section 3.3 or 4.3 hereof, which sublicenses shall also survive the
expiration of this Agreement in accordance with their respective
terms. The right of GalaGen to obtain additional sublicenses with
respect to Other Products in accordance with Section 3.3 hereof shall
also survive the expiration of this Agreement.
9.2 TERMINATION FOR CAUSE.
9.2.1 TERMINATION FOR CAUSE. This Agreement may be terminated by
written notice by either Party at any time during the Term
of this Agreement:
(a) for material breach by the other Party, which breach
remains uncured for [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] in the case of
nonpayment of any amount due and [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***] for all
other breaches, each measured from the date written
notice of such breach is given to the breaching Party,
or, if such breach is not susceptible of cure within
such [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] and the breaching Party uses
diligent good faith efforts to cure such breach, for
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] after written notice to the breaching
Party; or
(b) upon the filing or institution of bankruptcy,
reorganization, liquidation or receivership
proceedings, or upon an assignment of a substantial
portion of the assets for the
29
benefit of creditors by the other Party, or in the
event a receiver or custodian is appointed for such
Party's business, or if a substantial portion of such
Party's business is subject to attachment or similar
process; PROVIDED, HOWEVER, that in the case of any
involuntary bankruptcy proceeding such right to
terminate shall only become effective if the proceeding
is not dismissed within [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] after the filing
thereof.
9.2.2 EFFECT OF TERMINATION FOR CAUSE ON LICENSE.
(a) In the event Wyeth-Ayerst terminates this Agreement
under Section 9.2.1(a), Wyeth-Ayerst's licenses
pursuant to Section 3.1 shall become fully paid-up,
perpetual licenses.
(b) In the event that GalaGen terminates this Agreement
under Section 9.2.1(a), then the rights and licenses
granted to Wyeth-Ayerst under Section 3.1 of this
Agreement shall terminate and all rights to the GalaGen
Patent Rights and [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION***] shall revert to GalaGen.
Additionally, the Parties will negotiate, in good
faith, the grant by Wyeth-Ayerst of a license to
GalaGen, on appropriate commercial terms, of any of
Wyeth-Ayerst's Patent Rights or Know-How solely as such
Patent Rights or Know-How relate to GalaGen's rights to
manufacture and sell the [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] for use in
Products.
(c) In the event Wyeth-Ayerst terminates this Agreement
under Section 9.2.1(b) or this Agreement is otherwise
terminated under Section 9.2.1(b), the Parties agree
that Wyeth-Ayerst, as a licensee of rights to
intellectual property under this Agreement, shall
retain and may fully exercise all of its rights and
elections under Title 11 (as such term is defined in
Section 9.6.1 hereof), including as set forth in
Section 9.6 hereof.
9.3 UNILATERAL TERMINATION BY WYETH-AYERST. Wyeth-Ayerst shall have the
right to unilaterally terminate this Agreement, on a country by
country and
30
Product by Product basis, upon [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] written notice to GalaGen. In the event of such
termination by Wyeth-Ayerst, all Wyeth-Ayerst's rights to use the
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***] in such Products in
such country shall revert to GalaGen. If Wyeth-Ayerst terminates this
Agreement with respect to Pediatric Formula Products, Wyeth-Ayerst
shall not be obligated to make any other payments under Section 5.1 of
this Agreement for events which occur after the effective date of such
termination and, in such event payments made by Wyeth-Ayerst to
GalaGen under Article 5 hereof prior to such date shall be
non-refundable.
9.4 GENERAL CONDITIONS OF EXPIRATION AND TERMINATION.
9.4.1 EFFECT ON SUBLICENSEES. Any permitted sublicenses granted
by Wyeth-Ayerst hereunder shall automatically terminate or
expire at the same time as this Agreement expires (insofar
as they have not already terminated), except where, and to
the extent, any license granted hereunder survives
expiration of this Agreement, as expressly provided in this
Agreement. Upon early termination of this Agreement, for
any reason, with respect to a particular Product in a given
country or countries if any permitted sublicensee of such
Product in such country(ies) is not then in default under
its sublicense agreement with Wyeth-Ayerst, then such
sublicensee shall automatically have a license under this
Agreement as a direct licensee of GalaGen with respect to
such Product in such country(ies), on economic terms as are
set forth herein with respect to Wyeth-Ayerst and otherwise
with the same rights and obligations as Wyeth-Ayerst under
this Agreement.
9.4.2 EFFECT ON RIGHTS TO OTHER PRODUCTS. Except for a
termination of this Agreement by GalaGen pursuant to Section
9.2.1(a) hereof, the expiration or termination of this
Agreement shall not affect the rights of GalaGen or
Wyeth-Ayerst under Section 3.3 of this Agreement or under
any sublicense granted to GalaGen under Section 4.3 of this
Agreement.
9.4.3 SURVIVAL. The provisions of Articles 6, 10, 12 and Sections
2.6.3, 2.8, 3.3, 7.1, 8.1, 9.4, 13.6, 13.7, and 13.11 shall
survive termination or expiration of this Agreement.
31
9.4.4 PRIOR OBLIGATIONS; REMEDIES. Termination or expiration of
this Agreement shall not operate to deprive either Party of
any rights or remedies either at law or in equity or to
relieve either Party of any of its obligations incurred
prior to the effective date of such termination or
expiration.
9.5 NO LIMIT ON REMEDIES. Nothing herein shall exclude or limit any
remedies or entitlements whatsoever which the law confers to either
Party in the event of a breach of contractual obligations by the other
Party.
9.6 INSOLVENCY.
9.6.1 EFFECT ON LICENSES. All rights and licenses granted under
or pursuant to this Agreement by GalaGen to Wyeth-Ayerst
are, for all purposes of Section 365(n) of Title 11 of the
United States Code ("Title 11"), licenses of rights to
"intellectual property" as defined in Title 11. GalaGen
agrees that Wyeth-Ayerst, as licensee of such rights under
this Agreement shall retain and may fully exercise all of
its rights and elections under Title 11. GalaGen agrees
during the Term of this Agreement to create and maintain
current copies or, if not amenable to copying, detailed
descriptions or other appropriate embodiments, to the extent
feasible, of all such intellectual property. If a case is
commenced by or against GalaGen under Title 11, GalaGen (in
any capacity, including debtor-in-possession) and its
successors and assigns (including, without limitation, a
Title 11 Trustee) shall,
(i) as Wyeth-Ayerst may elect in a written request,
immediately upon such request:
(A) perform all of the obligations provided
in this Agreement to be performed by
GalaGen including, where applicable and
without limitation, providing to
Wyeth-Ayerst portions of such
intellectual property (including
embodiments thereof) held by GalaGen and
such successors and assigns or otherwise
available to them; or
(B) provide to Wyeth-Ayerst all such
intellectual property (including all
embodiments thereof) held by GalaGen and
such successors and assigns or otherwise
available to them; and
32
(ii) not interfere with the rights of Wyeth-Ayerst
under this Agreement, or any agreement
supplemental hereto, to such intellectual property
(including such embodiments), including any right
to obtain such intellectual property (or such
embodiments) from another entity.
9.6.2 RIGHTS TO INTELLECTUAL PROPERTY. If a Title 11 case is
commenced by or against GalaGen, and this Agreement is
rejected as provided in Title 11, and Wyeth-Ayerst elects to
retain its rights hereunder as provided in Title 11, then
GalaGen (in any capacity, including debtor-in-possession)
and its successors and assigns (including, without
limitation, a Title 11 Trustee) shall provide to
Wyeth-Ayerst all such intellectual property (including all
embodiments thereof) held by GalaGen and such successors and
assigns, or otherwise available to them, immediately upon
Wyeth-Ayerst's written request. Whenever GalaGen or any of
its successors or assigns provides to Wyeth-Ayerst any of
the intellectual property licensed hereunder (or any
embodiment thereof) pursuant to this Section 9.6,
Wyeth-Ayerst shall have the right to perform the obligations
of GalaGen hereunder with respect to such intellectual
property, but neither such provision nor such performance by
Wyeth-Ayerst shall release GalaGen from any such obligation
or liability for failing to perform it.
9.6.3 WYETH-AYERST'S RIGHTS. All rights, powers and remedies of
Wyeth-Ayerst provided herein are in addition to and not in
substitution for any and all other rights, powers and
remedies now or hereafter existing at law or in equity
(including, without limitation, Title 11) in the event of
the commencement of a Title 11 case by or against GalaGen.
Wyeth-Ayerst, in addition to the rights, power and remedies
expressly provided herein, shall be entitled to exercise all
other such rights and powers and resort to all other such
remedies as may now or hereafter exist at law or in equity
(including, without limitation, Title 11) in such event.
The Parties agree that they intend the foregoing
Wyeth-Ayerst rights to extend to the maximum extent
permitted by law, including, without limitation, for
purposes of Title 11:
(i) the right of access to any intellectual property
(including all embodiments thereof) of GalaGen, or
any Third Party with whom GalaGen contracts to
perform an obligation of GalaGen under this
Agreement, and, in the case of the Third Party,
which is necessary for the development,
33
registration, manufacture and marketing of
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] and/or Products; and
(ii) the right to contract directly with any Third
Party described in (i) to complete the contracted
work.
10. INDEMNIFICATION AND INSURANCE.
10.1 INDEMNIFICATION BY WYETH-AYERST. Wyeth-Ayerst shall indemnify, defend
and hold harmless GalaGen and its Affiliates, and each of its and
their respective employees, officers, directors and agents (each, a
"GalaGen Indemnified Party") from and against any and all liability,
loss, damage, cost, and expense (including reasonable attorneys' fees)
(collectively, a "Liability") which the GalaGen Indemnified Party may
incur, suffer or be required to pay resulting from or arising in
connection with (i) the breach by Wyeth-Ayerst of any representation
or warranty contained in this Agreement; (ii) the manufacture,
promotion, distribution, use, testing, marketing, sale or other
disposition of Products by Wyeth-Ayerst, its Affiliates or
sublicensees; or (iii) the successful enforcement by a GalaGen
Indemnified Party of its rights under this Section 10.1.
Notwithstanding the foregoing, Wyeth-Ayerst shall have no obligation
under this Agreement to indemnify, defend or hold harmless any GalaGen
Indemnified Party with respect to claims, demands, costs or judgments
which result from either (x) the failure of [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] supplied by GalaGen or its Affiliates or
subcontractors to comply with the specifications as set forth in the
Manufacturing and Supply Agreement or the applicable Regulatory
Approvals or (y) the willful misconduct or negligent acts or omissions
of GalaGen, its Affiliates, or any of their respective employees,
officers, directors or agents.
10.2 INDEMNIFICATION BY GALAGEN. GalaGen shall indemnify, defend and hold
harmless Wyeth-Ayerst and its Affiliates, and each of its and their
respective employees, officers, directors and agents (each, a
"Wyeth-Ayerst Indemnified Party") from and against any Liability which
the Wyeth-Ayerst Indemnified Party may incur, suffer or be required to
pay resulting from or arising in connection with (i) the breach by
GalaGen of any representation or warranty contained in this Agreement;
(ii) the
34
discovery, development, manufacture, promotion, sale or use of
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***] or Other Products by
GalaGen, its Affiliates or their subcontractors or permitted
sublicensees; or (iii) the successful enforcement by a Wyeth-Ayerst
Indemnified Party of its rights under this Section 10.2.
Notwithstanding the foregoing, GalaGen shall have no obligation under
this Agreement to indemnify, defend, or hold harmless any Wyeth-Ayerst
Indemnified Party with respect to claims, demands, costs or judgments
which result from willful misconduct or negligent acts or omissions of
Wyeth-Ayerst, its Affiliates, or any of their respective employees,
officers, directors or agents.
10.3 CONDITIONS TO INDEMNIFICATION. The obligations of the indemnifying
Party under Sections 10.1 and 10.2 are conditioned upon the delivery
of written notice to the indemnifying Party of any potential Liability
promptly after the indemnified Party becomes aware of such potential
Liability, PROVIDED, HOWEVER, that the failure to give such notice
promptly shall not impair a Party's rights to indemnification under
this Article 10 unless the delay in providing such notice has a
material adverse effect on the ability of the indemnifying Party to
defend against such Liability. The indemnifying Party shall have the
right to assume the defense of any suit or claim related to the
Liability if it has assumed responsibility for the suit or claim in
writing; however, if in the reasonable judgment of the indemnified
Party, such suit or claim involves an issue or matter which could have
a materially adverse effect on the business operations or assets of
the indemnified Party, the indemnified Party may waive its rights to
indemnity under this Agreement and control the defense or settlement
thereof, but in no event shall any such waiver be construed as a
waiver of any indemnification rights such Party may have at law or in
equity. If the indemnifying Party defends the suit or claim, the
indemnified Party may participate in (but not control) the defense
thereof at its sole cost and expense.
10.4 SETTLEMENTS. Neither Party may settle a claim or action related to a
Liability without the consent of the other Party, if such settlement
would impose any monetary obligation on the other Party or require the
other Party to submit to an injunction or otherwise limit the other
Party's rights under this Agreement. Any payment made by a Party to
settle any such claim or action shall be at its own cost and expense
except in the event that such payment was made with the prior written
consent of the indemnifying Party, in which case such payment will be
subject to the indemnification obligations of the Parties as set forth
in this Article 10.
35
10.5 INSURANCE. Each Party further agrees to use reasonable commercial
efforts to obtain and maintain, during the term of this Agreement,
Comprehensive General Liability Insurance, including Products
Liability Insurance, with reputable and financially secure insurance
carriers to cover its indemnification obligations under Sections 10.1
or 10.2, as applicable, or, in the case of Wyeth-Ayerst,
self-insurance, in each case with limits of not less than
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***].
11. REPRESENTATIONS AND WARRANTIES.
11.1 REPRESENTATIONS AND WARRANTIES OF EACH PARTY. Each of GalaGen and
Wyeth-Ayerst hereby represents, warrants and covenants to the other
Party hereto as follows:
(a) it is a corporation or entity duly organized and validly existing
under the laws of the state or other jurisdiction of
incorporation or formation;
(b) the execution, delivery and performance of this Agreement by such
Party has been duly authorized by all requisite corporate action
and does not require any shareholder action or approval;
(c) it has the power and authority to execute and deliver this
Agreement and to perform its obligations hereunder;
(d) the execution, delivery and performance by such Party of this
Agreement and its compliance with the terms and provisions hereof
does not and will not conflict with or result in a breach of any
of the terms and provisions of or constitute a default under (i)
a loan agreement, guaranty, financing agreement, agreement
affecting a product or other agreement or instrument binding or
affecting it or its property; (ii) the provisions of its charter
or operative documents or bylaws; or (iii) any order, writ,
injunction or decree of any court or governmental authority
entered against it or by which any of its property is bound; and
(e) it shall comply with all applicable material laws and regulations
relating to its activities under this Agreement.
11.2 REPRESENTATIONS AND WARRANTIES OF GALAGEN. In addition to the
representations and warranties made by GalaGen under Section 11.1
above, GalaGen hereby further represents and warrants to Wyeth-Ayerst
that:
36
(a) As of the Effective Date, the GalaGen Patent Rights and Know-How
are existing and, to the best of its knowledge, are not invalid
or unenforceable, in whole or in part;
(b) it has the full right, power and authority to grant all of the
right, title and interest in the licenses granted under Article 3
hereof;
(c) it has not, prior to the Effective Date, previously assigned,
transferred, conveyed or otherwise encumbered its right, title
and interest in any of the [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***], Products, the GalaGen Patent Rights or Know-How
or the GalaGen Trademarks, with respect to which Wyeth-Ayerst has
been granted a license or other rights hereunder;
(d) it is the sole and exclusive owner of the GalaGen Patent Rights
and Know-How and GalaGen Trademarks existing as of the Effective
Date, all of which are free and clear of any liens, charges and
encumbrances, and no other person, corporate or other private
entity, or governmental entity or subdivision thereof, has or
shall have any claim of ownership with respect to the GalaGen
Patent Rights or Know-How or the GalaGen Trademarks existing as
of the Effective Date, whatsoever;
(e) to the best of its knowledge the GalaGen Patent Rights and
Know-How, and the development, manufacture, use, distribution,
marketing, promotion and sale of [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION***] or Products do not, as of the
Effective Date, interfere or infringe on any intellectual
property rights owned or possessed by any Third Party;
(f) as of the Effective Date, there are no claims, judgments or
settlements against or owed by GalaGen or, to the best of its
knowledge, pending or threatened claims or litigation relating to
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***], the
GalaGen Patent Rights or Know-How and the GalaGen Trademarks;
37
(g) during the Term of this Agreement it will use diligent efforts
not to diminish the rights under the GalaGen Patent Rights and
Know-How and the GalaGen Trademarks licensed to Wyeth-Ayerst
hereunder, including without limitation, by not committing or
permitting any actions or omissions which would cause the breach
of any agreements between itself and Third Parties which provide
for Intellectual Property Rights applicable to the development,
manufacture, use or sale of [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] and/or Products, that it will provide Wyeth-Ayerst
promptly with notice of any such alleged breach, and that as of
the Effective Date, it is in compliance in all material respects
with any agreements with Third Parties relating to the GalaGen
Patent Rights and Know How, the GalaGen Trademarks, the
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] and/or
the Products.
11.3 REPRESENTATIONS AND WARRANTIES OF WYETH-AYERST. In addition to the
representations and warranties made by Wyeth-Ayerst under Section 11.1
above, Wyeth-Ayerst hereby further represents and warrants to GalaGen
that the Products manufactured and sold by Wyeth-Ayerst hereunder,
which Products contain [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***], manufactured by GalaGen in accordance with the
Specifications (as such term is defined in the Manufacturing and
Supply Agreement) and supplied to Wyeth-Ayerst by GalaGen under the
Manufacturing and Supply Agreement, shall:
(a) be manufactured, stored and shipped in accordance with GMPs, as
applicable and all other applicable material laws, rules,
regulations or requirements in effect at the time of the
manufacture of such Product; and
(b) not be adulterated or misbranded as provided for under any
applicable law, order or regulation then in effect in the country
in which such Product is being sold as of the time that
Wyeth-Ayerst sells such Product to a Third Party.
11.4 [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***]
38
11.5 NO INCONSISTENT AGREEMENTS. Except as otherwise provided in Section
11.4 above, neither Party has in effect and after the Effective Date
neither Party shall enter into any oral or written agreement or
arrangement that would be inconsistent with its obligations under this
Agreement.
11.6 REPRESENTATION BY LEGAL COUNSEL. Each Party hereto represents that it
has been represented by legal counsel in connection with this
Agreement and acknowledges that it has participated in the drafting
hereof. In interpreting and applying the terms and provisions of this
Agreement, the Parties agree that no presumption shall exist or be
implied against the Party which drafted such terms and provisions.
12. CONFIDENTIAL INFORMATION; PUBLICATIONS; PUBLICITY
12.1 NONDISCLOSURE OBLIGATION. Each of GalaGen and Wyeth-Ayerst shall use
only in accordance with this Agreement and shall not disclose to any
Third Party any information received by it from the other Party (the
"Information"), without the prior written consent of the other Party.
The foregoing obligations shall survive [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***]. These obligations shall not apply to
Information that:
(i) is known by the receiving Party at the time of its receipt,
and not through a prior disclosure by the disclosing Party,
as documented by business records;
(ii) is at the time of disclosure or thereafter becomes published
or otherwise part of the public domain without breach of
this Agreement by the receiving Party;
(iii) is subsequently disclosed to the receiving Party by a Third
Party who has the right to make such disclosure;
(iv) is developed by the receiving Party independently of the
Information received from the disclosing Party and such
independent development can be documented by the receiving
Party;
(v) is disclosed to any institutional review board of any entity
conducting clinical trials or any governmental or other
regulatory agencies in order to obtain patents or to gain
approval to conduct clinical trials or to market
[**CONFIDENTIAL TREATMENT REQUESTED;
39
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] and/or Products, but such disclosure
may be made only to the extent reasonably necessary to
obtain such patents or authorizations; and, in which case
reasonable effort shall be taken to maintain the
confidentiality of such Information, or
(vi) is required by law, regulation, rule, act or order of any
governmental authority or agency to be disclosed by a Party,
PROVIDED that notice is promptly delivered to the other
Party in order to provide an opportunity to seek a
protective order or other similar order with respect to such
Information and thereafter the disclosing Party discloses to
the requesting entity only the minimum Information required
to be disclosed in order to comply with the request, whether
or not a protective order or other similar order is obtained
by the other Party.
12.2 PERMITTED DISCLOSURES. Information may be disclosed to employees,
agents, consultants, sublicensees or suppliers of the recipient Party
or its Affiliates, but only to the extent required to accomplish the
purposes of this Agreement and only if the recipient Party obtains
prior agreement from its employees, agents, consultants, sublicensees
or suppliers to whom disclosure is to be made to hold in confidence
and not make use of such Information for any purpose other than those
permitted by this Agreement. Each Party will use at least the same
standard of care as it uses to protect proprietary or confidential
information of its own to ensure that such employees, agents,
consultants, sublicensees or suppliers do not disclose or make any
unauthorized use of the Information.
12.3 DISCLOSURE OF AGREEMENT. Neither GalaGen nor Wyeth-Ayerst shall
release to any Third Party or publish in any way any non-public
information with respect to the terms of this Agreement or concerning
their cooperation without the prior written consent of the other,
which consent will not be unreasonably withheld or delayed, PROVIDED,
HOWEVER, that either Party may disclose the terms of this Agreement to
the extent required to comply with applicable laws, including without
limitation the rules and regulations promulgated by the United States
Securities and Exchange Commission and the Party intending to disclose
the terms of this Agreement shall provide the nondisclosing Party an
opportunity to review and comment on the intended disclosure which is
reasonable under the circumstances. Notwithstanding any other
provision of this Agreement, each Party may disclose the terms of this
Agreement to lenders, investment bankers and other financial
institutions of its choice solely for purposes of financing the
business operations of such Party
40
either (i) upon the written consent of the other Party or (ii) if the
disclosing Party uses reasonable efforts to obtain a signed
confidentiality agreement with such financial institution with respect
to such information on terms substantially similar to those contained
in this Article 12.
12.4 PUBLICITY. Subject to Section 12.3, all publicity, press releases and
other announcements relating to this Agreement or the transactions
contemplated hereby shall be reviewed in advance by, and shall be
subject to the approval of, both Parties.
12.5 PUBLICATION. The Parties shall cooperate in appropriate publication
of the results of research and development work performed pursuant to
this Agreement, but subject to their predominating interest in
obtaining patent protection for any patentable subject matter. The
determination of authorship for any paper shall be in accordance with
accepted scientific practice. Notwithstanding anything in this
Section 12.5 to the contrary, all publication and presentations of the
results of research and development work performed pursuant to this
Agreement must be approved in advance by both Parties.
13. MISCELLANEOUS.
13.1 FORCE MAJEURE. Neither Party shall be liable to the other for delay
or failure in the performance of the obligations on its part contained
in this Agreement if and to the extent that such failure or delay is
due to circumstances beyond its control which it could not have
avoided by the exercise of reasonable diligence. It shall notify the
other Party promptly should such circumstances arise, giving an
indication of the likely extent and duration thereof, and shall use
all Commercially Reasonable Efforts to resume performance of its
obligations as soon as practicable.
13.2 ASSIGNMENT.
13.2.1 ASSIGNMENT BY GALAGEN. GalaGen may assign any of its rights
or obligations under this Agreement in any country to any of
its Affiliates, for so long as they remain Affiliates.
GalaGen may also assign its rights and obligations under
this Agreement in connection with a merger or similar
reorganization or the sale of all or substantially all of
its assets. GalaGen shall not otherwise assign any of its
rights or obligations under this Agreement without the prior
written consent of Wyeth-Ayerst, which consent may be
provided or withheld in Wyeth-Ayerst's sole discretion. Any
assignment under this Section 13.2.1 by GalaGen of its
rights and/or obligations under this Agreement shall not
relieve GalaGen
41
of its responsibilities for the performance of its
obligations under this Agreement.
13.2.2 ASSIGNMENT BY WYETH-AYERST. Wyeth-Ayerst may assign any of
its rights or obligations under this Agreement in any
country to any of its Affiliates or to one or more Third
Parties. Wyeth-Ayerst shall notify GalaGen, in writing,
upon making any such assignment. In the event Wyeth-Ayerst
assigns any of its rights or obligations under this
Agreement in connection with a merger or similar
reorganization or the sale of all or substantially all of
its assets or a sale of that part of its business relating
to the subject matter of this Agreement, no intellectual
property rights of the acquiring corporation shall be
included in the technology licensed hereunder. Any
assignment under this Section 13.2.2 by Wyeth-Ayerst shall
not relieve Wyeth-Ayerst of its responsibilities for the
performance of its obligations under this Agreement.
13.2.3 BINDING NATURE OF ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the successors and
permitted assigns of the Parties. Any assignment not in
accordance with this Section 13.2 shall be void.
13.3 NO WAIVER. The failure of either Party to require performance by
the other Party of any of that other Party's obligations
hereunder shall in no manner affect the right of such Party to
enforce the same at a later time. No waiver by any Party hereto
of any condition, or of the breach of any provision, term,
representation or warranty contained in this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of
any such condition or breach, or of any other condition or of the
breach of any other provision, term, representation or warranty
hereof.
13.4 SEVERABILITY. If a court or other tribunal of competent
jurisdiction should hold any term or provision of this Agreement
to be excessive, or invalid, void or unenforceable, the offending
term or provision shall be deleted, and, if possible, replaced by
a term or provision which, so far as practicable achieves the
legitimate aims of the Parties.
13.5 RELATIONSHIP BETWEEN THE PARTIES. Both Parties are independent
contractors under this Agreement. Nothing herein contained shall
be deemed to create an employment, agency, joint venture or
partnership relationship between the Parties hereto or any of
their agents or employees, or any other legal arrangement that
would impose liability upon one Party for the act or failure to
act of the other Party. Neither Party shall have any express or
implied power to enter into any contracts
42
or commitments or to incur any liabilities in the name of, or on
behalf of, the other Party, or to bind the other Party in any
respect whatsoever.
13.6 CORRESPONDENCE AND NOTICES.
13.6.1 ORDINARY NOTICES. Correspondence, reports,
documentation, and any other communication in writing
between the Parties in the course of ordinary
implementation of this Agreement shall be delivered by
hand, sent by facsimile, or by airmail to any one
member of the JDC appointed by the Party which is to
receive such written communication, or any other way as
the JDC deems appropriate.
13.6.2 EXTRAORDINARY NOTICES. Extraordinary notices and
communications (including, without limitation, notices
of termination, force majeure, material breach, change
of address) shall be in writing and sent by prepaid
registered or certified air mail, or by facsimile
confirmed by prepaid registered or certified air mail
letter, and shall be deemed to have been properly
served to the addressee upon receipt of such written
communication.
13.6.3 ADDRESSES FOR NOTICES. In the case of GalaGen, the
proper address for communications and for all payments
shall be:
GalaGen Inc.
4001 Lexington Avenue North
Arden Hills, Minnesota 55126 USA
Attn: Chief Executive Officer
Fax: (612) 481-2380
and in the case of Wyeth-Ayerst, the proper address for
communications and for all payments shall be:
Wyeth-Ayerst Laboratories
555 East Lancaster Avenue
St. Davids, Pennsylvania 19087
Attn: Senior Vice President, Global Business
Development
Fax: (610) 688-9498
With a copy to:
American Home Products Corporation
5 Giralda Farms
Madison, New Jersey 07940
43
Attn: Senior Vice President and General
Counsel
Fax: (973) 660-7156
13.7 CHOICE OF LAW. This Agreement is subject to and governed by the laws
of the State of Delaware, excluding its conflict of laws provisions.
13.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with the other
Transaction Agreements, including the Exhibits and Schedules hereto
and thereto and all the covenants, promises, agreements, warranties,
representations, conditions and understandings contained herein and
therein sets forth the complete, final and exclusive agreement between
the Parties and supersedes and terminates all prior and
contemporaneous agreements and understandings between the Parties,
whether oral or in writing. There are no covenants, promises,
agreements, warranties, representations, conditions or understandings,
either oral or written, between the Parties other than as are set
forth in the Transaction Agreements. No subsequent alteration,
amendment, change, waiver or addition to this Agreement shall be
binding upon the Parties unless reduced to writing and signed by an
authorized officer of each Party. No understanding, agreement,
representation or promise, not explicitly set forth herein, has been
relied on by either Party in deciding to execute this Agreement.
13.9 HEADINGS. The headings and captions used in this Agreement are solely
for the convenience of reference and shall not affect its
interpretation.
13.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be an original and all of which shall
constitute together the same document.
13.11 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all other acts, as may be
necessary or appropriate in order to carry out the purposes and intent
of this Agreement including, without limitation, any filings with any
antitrust agency which may be required.
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
representatives of the Parties as of the date first set forth above.
AMERICAN HOME PRODUCTS CORPORATION GALAGEN INC.
/s/ Tuan Ha-Ngoc /s/ Robert A. Hoerr
- ----------------------------------- ----------------------------------
Name: Tuan Ha-Ngoc Name: Robert A. Hoerr
Title: Vice President - Strategic Title: President & CEO
Development
44