MANUFACTURING AND SUPPLY AGREEMENT
THIS MANUFACTURING AND SUPPLY 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, pursuant to that certain Collaboration
and License Agreement entered into by the Parties on even date herewith, are
collaborating with each other to utilize GalaGen's proprietary technology to
[***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] and to develop Pediatric Formula Products
and/or Other Products containing [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]; and
WHEREAS, Wyeth-Ayerst desires for GalaGen to manufacture and supply it
with such [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***] for use by Wyeth-Ayerst in the
Manufacture of Pediatric Formula Products and 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;
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PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***].
1.2 "APPROVED FACILITY" shall mean each such Manufacturing facility
referenced in the Regulatory Approvals as an approved site for the
Manufacture of the Ingredient and such term includes all GalaGen's
equipment, machinery and facilities used in the manufacturing, testing
and storage of the Ingredient.
1.3 "BATCH" shall mean a Manufacturing run of Ingredient in an amount to
be agreed upon in writing by the Parties during the course of the
Collaboration.
1.4 "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.
1.5 "CERTIFICATE OF ANALYSIS" shall mean a document identifying the tests
required for Ingredient release, results of those tests for a
specific lot, and the release specifications, in a form agreed to by
the Parties in writing.
1.6 "COLLABORATION" shall mean the research and development program
conducted jointly by the Parties under the License Agreement 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.
1.7 "CURRENT GOOD MANUFACTURING PRACTICE" OR "CGMP" shall mean (i) 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 cGMP.
1.8 "FDA" shall mean the United States Food and Drug Administration.
1.9 "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.
1.10 "INGREDIENT" shall mean [***CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] and are in a form(s) to be specified by Wyeth-
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Ayerst, which form(s) are reasonably necessary to meet Wyeth-Ayerst's
or its Affiliates' or sublicensees' needs for the production of
Products.
1.11 "KNOW-HOW" shall have the meaning assigned to such term in the License
Agreement.
1.12 "LICENSE AGREEMENT" shall mean the Collaboration and License Agreement
which has been entered into by the Parties on even date herewith.
1.13 "MANUFACTURE", "MANUFACTURED" OR "MANUFACTURING" shall mean all
activities involved in the production of Ingredient to be supplied to
Wyeth-Ayerst, its Affiliates or sublicensees under this Agreement,
including, without limitation, the [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***].
1.14 "MANUFACTURING COST" shall mean the costs for those items specified in
Exhibit A which have been incurred by GalaGen in Manufacturing the
Ingredient for Wyeth-Ayerst hereunder, which costs are calculated in
accordance with generally accepted accounting principles.
1.15 "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 [**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 form
Net Sales calculations for all purposes.
1.16 "NET SELLING PRICE" shall mean, with respect to a particular Pediatric
Formula Product, the total Net Sales of such Pediatric Formula
Product, made during a Calendar Quarter divided by the number of units
of such Pediatric Formula Product sold during such Calendar Quarter.
1.17 "OTHER PRODUCT(S)" shall mean any product, other than Pediatric
Formula Products, which contains Ingredient. [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***].
1.18 "PEDIATRIC FORMULA PRODUCT(S)" shall mean any beverage (whether
supplied in liquid form or as a powder to be mixed with water)
containing Ingredient for oral consumption by infants and/or children.
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1.19 "PRODUCT(S)" shall mean any Pediatric Formula Product or any Other
Product.
1.20 "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.
1.21 "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 the Product(s) and/or Ingredient.
1.22 "SPECIFICATIONS" shall mean specifications for or concerning the
Manufacturing, testing, quality assurance and packaging of the
Ingredient as may be agreed upon by the Parties in writing from time
to time, PROVIDED, HOWEVER, that such Specifications shall comply with
all applicable Regulatory Approvals for the manufacture and sale of
Ingredients or Products.
1.23 "THIRD PARTY(IES)" shall mean any person(s) or entity(ies) other than
GalaGen, Wyeth-Ayerst or their Affiliates.
1.24 "TRANSACTION AGREEMENTS" shall mean this Agreement, the License
Agreement and the Warrant Purchase Agreement entered into by the
Parties on even date herewith.
2. MANUFACTURE AND SUPPLY OF INGREDIENT.
2.1 MANUFACTURE OF INGREDIENT. During the term and in accordance with the
provisions of this Agreement, GalaGen shall either manufacture the
Ingredient at GalaGen's own premises, or, upon Wyeth-Ayerst's prior
written consent, sub-contract the Manufacture of the Ingredient to a
Third Party sub-contractor which is acceptable to Wyeth-Ayerst and
which shall have sufficient knowledge and expertise to carry out the
Manufacture of the Ingredient and meet Wyeth-Ayerst's requirements for
the Ingredient.
2.2 SUPPLY OF WYETH-AYERST'S REQUIREMENTS. During the term and in
accordance with the provisions of this Agreement, GalaGen shall
Manufacture and supply to Wyeth-Ayerst and Wyeth-Ayerst shall purchase
from GalaGen its entire requirements of the Ingredient for use in its
manufacture of Products.
2.3 FORECASTS AND ORDERS.
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2.3.1 Not less than twelve (12) months prior to its first purchase
of Ingredient for use in the manufacture of Products to be
sold to Third Parties, Wyeth-Ayerst shall provide GalaGen
with a written forecast (by Calendar Quarter) of the
quantity of Ingredient that Wyeth-Ayerst desires to have
delivered to it during the first twelve (12) month period of
Product sales. Within six (6) months prior to its first
purchase of Ingredient, Wyeth-Ayerst shall provide GalaGen
with an updated forecast for the first twelve (12) month
period (by Calendar Quarter), and by the beginning of such
twelve (12) month period shall provide GalaGen with an
updated forecast for the last three (3) Calendar Quarters of
such twelve (12) month period and for the Calendar Quarter
following immediately thereafter. Thereafter, at least
ninety (90) days before the end of each subsequent Calendar
Quarter, Wyeth-Ayerst shall provide a written updated
forecast (by Calendar Quarter) in accordance with the
provisions of Section 2.3.2 hereof.
2.3.2 Each successive forecast shall update the forecast
previously given for the last three (3) Calendar Quarters
covered and add a forecast for the Calendar Quarter
following immediately thereafter, to enable GalaGen to have
sufficient information to schedule its or its
sub-contractors' manufacturing operations to meet
Wyeth-Ayerst's forecasted requirements of the Ingredient.
GalaGen acknowledges that such forecasts are only estimates
of Wyeth-Ayerst's purchase requirements of the Ingredient
and that Wyeth-Ayerst shall not be bound by any such
estimate, except that after Regulatory Approval the first
Calendar Quarter of each successive forecast so provided
shall represent a binding commitment of Wyeth-Ayerst to
purchase and of GalaGen to supply such forecasted quantity
of Ingredient in a timely manner, subject to adjustment
within the limits set forth in Section 2.3.4 hereof.
2.3.3 Wyeth-Ayerst shall order and maintain reasonable inventories
of the Ingredient, having due regard to its current and
forecasted sales volumes for the Products. Wyeth-Ayerst
shall issue to GalaGen firm purchase orders for each
delivery not later than two (2) months prior to the
requested delivery date. Such purchase orders shall specify
the quantity of Ingredient desired, and the place(s) to
which and the manner and dates by which delivery is to be
made. To the extent the terms of any purchase order or
acknowledgment thereof are inconsistent with the terms of
this Agreement, the terms of this Agreement shall control.
2.3.4 The quantity of Ingredient ordered by Wyeth-Ayerst in any
Calendar Quarter shall not be less than seventy-five percent
(75%) of the quantity specified in the last binding forecast
provided by Wyeth-Ayerst for such Calendar Quarter.
Additionally, GalaGen shall not be obligated to supply that
quantity of Ingredient in any Calendar Quarter that is more
than one hundred and twenty-five percent (125%) of the last
binding forecast provided by Wyeth-Ayerst for the Calendar
Quarter in question; PROVIDED,
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HOWEVER, that GalaGen shall endeavor to take all reasonable
steps to fill purchase orders for the Ingredient in excess
of such amount.
2.3.5 All estimates shall be prepared in good faith in order to
facilitate GalaGen's efficient manufacture and shipment of
the Ingredient in compliance with this Agreement, and except
as set forth in Section 2.3.2 will not be binding upon
Wyeth-Ayerst or GalaGen in any way and Wyeth-Ayerst shall
not be responsible for any loss or expense of GalaGen's
arising from the forecast.
2.3.6 Notwithstanding any other provision of this Agreement,
GalaGen in no event shall be obligated to supply
Wyeth-Ayerst with an amount of Ingredient that exceeds
seventy percent (70%) of GalaGen's total capacity for the
manufacture of Ingredient and all other products. In the
event Wyeth-Ayerst provides GalaGen with good faith
forecasts that exceed such capacity, GalaGen agrees that it
will use its Commercially Reasonable Efforts to seek and
employ subcontractors, as permitted under Section 2.1
hereof, to manufacture such excess amounts of Ingredient on
commercially reasonable terms.
2.4 ALTERNATIVE SUPPLY. At any time, but no later than a reasonable time
(which shall not exceed six (6) months plus any delay associated with
approval of the site of manufacture by a Regulatory Authority) after
Wyeth-Ayerst's annual purchases of the Ingredient attain a level of
fifty percent (50%) of GalaGen's total capacity for the manufacture of
Ingredient and all other products, or if a restriction is imposed upon
(a) Manufacturing that would prevent GalaGen from meeting its supply
obligation hereunder or (b) exporting the Ingredient out of the
country where it is Manufactured, then GalaGen shall use its
Commercially Reasonable Efforts to establish a second source for
supply of the Ingredient which second source of supply must be
reasonably acceptable to Wyeth-Ayerst.
2.5 STORAGE. GalaGen shall cause, at its own expense, the maintenance of
adequate storage accommodations, in accordance with cGMP, for the
quantities of Ingredient being held by or on behalf of GalaGen pending
delivery to a carrier in accordance with Article 4 of this Agreement.
2.6 MANUFACTURING DATE. GalaGen shall conduct appropriate studies in
order to maximize the shelf life of the Ingredient. GalaGen agrees
not to supply Ingredient which was manufactured more than three (3)
months prior to delivery to Wyeth-Ayerst, unless otherwise approved,
in writing, by Wyeth-Ayerst, such approval not to be unreasonably
withheld.
2.7 PERMITTED SUBCONTRACTORS. GalaGen shall ensure that the permitted
subcontractors for the Manufacture of the Ingredient have sufficient
knowledge and expertise to carry out the Manufacture of the Ingredient
and other subcontracted responsibilities. In addition GalaGen shall
ensure that (i) each such subcontractor shall be in
6
compliance with cGMPs and shall be under the inspection of all
relevant Regulatory Authorities and audited to be in compliance
therewith, and (ii) Wyeth-Ayerst will have the right to inspect and
audit each such subcontractor's facilities and records as provided in
Section 3.8 hereof.
3. TESTING AND QUALITY CONTROL.
3.1 FACILITY COMPLIANCE AND RELATED MATTERS.
3.1.1 GalaGen covenants that the Approved Facility shall be
in compliance with all applicable laws, rules and
regulations, including cGMP, at all times during the term of
this Agreement. GalaGen shall be responsible for all costs
and expenses related to the compliance of the Approved
Facility with such laws, rules and regulations related to
the Manufacture of the Ingredient in accordance with the
Specifications. The Ingredient shall be Manufactured at the
Approved Facility and the location thereof shall not be
changed without Wyeth-Ayerst's written consent, which
consent shall not be unreasonably withheld.
3.1.2 For so long as the Approved Facility shall be Manufacturing
the Ingredient, GalaGen shall perform routine audits of the
Approved Facility cleaning, validation and environmental
monitoring programs. GalaGen shall notify Wyeth-Ayerst in
the event of any adverse finding during such audit, or any
cross contamination issue related to the Ingredient.
3.2 SPECIFICATIONS AMENDMENTS. The Specifications shall be amended or
supplemented to comply with cGMPs and to comply with any applicable
Regulatory Authority directive and may also be amended or supplemented
(including, without limitation, for the purpose of incorporating
improvements) from time to time. In the event GalaGen intends to
amend the Specifications, Wyeth-Ayerst shall receive prompt advance
notice of any such amendments. No such amendment shall be filed with
any applicable Regulatory Authority or otherwise become effective
without the prior written mutual approval of Wyeth-Ayerst and GalaGen.
In the event that, after the Parties have initially agreed upon the
Specifications, Wyeth-Ayerst requests that the Specifications be
amended, GalaGen shall receive prompt advance notice of any such
amendment for the purpose of determining what, if any, impact the
proposed amendment would have on the Manufacture of Ingredient for
Wyeth-Ayerst hereunder and Wyeth-Ayerst shall reimburse GalaGen for
the actual costs incurred by GalaGen (provided that such costs are
approved in writing by Wyeth-Ayerst prior to being incurred by
GalaGen) because such amendment requires changes to be made in the
processes, equipment, testing procedures, or components used to
Manufacture the Ingredient for Wyeth-Ayerst hereunder. Such costs may
include, without limitation, validation of new processes, equipment
and facilities, development of testing methods and start-up
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costs. Any costs incurred by GalaGen in implementing an amendment of
the Specifications under this Section 3.2 shall not be included in
GalaGen's Manufacturing Cost.
3.3 QUALITY CONTROL SYSTEM. GalaGen shall maintain and shall use its
Commercially Reasonable Efforts to cause any permitted subcontractor
manufacturing the Ingredient or any component thereof [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] to maintain a quality control
system consistent with cGMP, as required by the Regulatory Authorities
and applicable laws and regulations, and documentation of such quality
control system, as amended or supplemented, shall be made available to
Wyeth-Ayerst during inspections or audits.
3.4 APPROVAL FOR MANUFACTURING CHANGES; THIRD PARTY MANUFACTURING.
GalaGen agrees that no changes will be made to any materials,
equipment or methods of production or testing which are specified in
the Specifications or any Regulatory Approval by any Regulatory
Authority for the Ingredient without Wyeth-Ayerst's prior written
approval, which approval shall not be unreasonably withheld. Under no
circumstances will GalaGen contract out all or any part of the
manufacturing of the Ingredient to a Third Party without prior written
approval from Wyeth-Ayerst, which approval shall not be unreasonably
withheld.
3.5 PRODUCTION SAMPLES, BATCH RECORDS AND CERTIFICATE OF ANALYSIS.
3.5.1 Each Batch of the Ingredient delivered to Wyeth-Ayerst
hereunder will conform to the Specifications. GalaGen shall
perform release testing in a manner consistent with testing
methods agreed upon by the Parties. GalaGen shall provide
to Wyeth-Ayerst a Certificate of Analysis with each shipment
of the Ingredient to Wyeth-Ayerst or its designated
recipient stating that the Ingredient so shipped conforms to
the Specifications. The Certificate of Analysis shall be in
a format agreed upon by the Parties.
3.5.2 GalaGen shall retain production samples and Batch records
from each Batch of Ingredient for the longer of (i) five (5)
years after the manufacture of each such Batch of Ingredient
or (ii) the time period required under cGMP. Upon request,
GalaGen shall provide Wyeth-Ayerst's Quality Control
Department with production samples of the Ingredient and/or
copies of completed Batch records.
3.5.3 Master Batch process documentation will be prepared and
approved by GalaGen as per its normal procedures. The
Parties agree that deviations from master Batch process
documentation may be necessary from time to time. Such
deviations shall be discussed with Wyeth-Ayerst before any
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proposed shipment of the Ingredient. Individual Batch
process documentation shall be photocopied from the approval
master and issued for each Batch as per GalaGen's or its
sub-contractor's routine system. Original Batch records
will be filed securely by GalaGen or its sub-contractor.
GalaGen or GalaGen's sub-contractor will perform all
in-process control tests demanded by the approved Batch
process.
3.6 BATCH FAILURE. GalaGen agrees to notify Wyeth-Ayerst within one (1)
working days of discovery of any Batch failure which could result in
GalaGen's inability to meet Wyeth-Ayerst's requested delivery dates.
3.7 NOTIFICATION OF INSPECTIONS. Each Party agrees to notify the other
within [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] days of its
receipt of notification of any inquiries, notifications, or inspection
activity by any Regulatory Authority, governmental agency or authority
in regard to or affecting the Ingredient. The recipient Party shall
provide a reasonable description to the other Party of any such
governmental inquiries, notifications or inspections promptly (but in
no event later than [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] days) after notification of completion of such visit or
inquiry. The recipient Party shall furnish to the other Party, (i)
within [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] days after
receipt, any report or correspondence issued by the Regulatory
Authority or governmental authority in connection with such visit or
inquiry, including but not limited to, any FDA Form 483, Establishment
Inspection Reports or warning letters and (ii) at the same time it
provides to any Regulatory Authority or governmental authority, copies
of any and all documents, responses or explanations relating to items
set forth above, in each case purged only of trade secrets of the
recipient that are unrelated to the obligations under this Agreement
or the License Agreement or are unrelated to the Ingredient. In the
event such governmental agency or authority requests or requires any
action to be taken to address any citations, the recipient agrees,
after consultation with the other Party, to take such action as
necessary to address such citations, and agrees to cooperate with the
other Party with respect to any such citation and/or action taken with
respect thereto.
3.8 INSPECTION BY WYETH-AYERST. GalaGen shall permit or obtain the right
for Wyeth-Ayerst (at its own expense) to visit, during normal business
hours and with reasonable advance notice [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] GalaGen's, or its sub-contractors'
manufacturing facility(ies) and warehouse, and the Approved Facility,
subject to the confidentiality provisions of this Agreement, for the
purposes of (a) observing the
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Manufacturing, packaging, testing and warehousing of the Ingredient
and to inspect for compliance with cGMPs, applicable regulatory
requirements, the requirements of any applicable Regulatory Approvals,
and environmental monitoring, (b) solving technical or quality
problems, (c) examining the premises, equipment, procedures and
personnel used when producing, testing or controlling the Ingredient
and (d) all books and records relating to (a), (b) or (c). GalaGen
representatives shall be entitled to accompany Wyeth-Ayerst
representatives on any such inspection.
3.9 ENVIRONMENTAL AND OTHER LAWS AND REGULATIONS.
3.9.1 In carrying out its obligations under this Agreement,
GalaGen and/or its sub-contractor shall comply with all
applicable environmental, health and safety laws (current or
as amended or added, collectively "Laws"), and shall be
solely responsible for determining how to comply with same.
GalaGen represents and warrants that it and/or its
sub-contractor(s) have the appropriate skills, personnel,
equipment, permits or approvals necessary to perform its
services under this Agreement in compliance with all
applicable Laws.
3.9.2 GalaGen shall notify Wyeth-Ayerst, in writing, no later than
one (1) business day after the event, of any circumstances,
including the receipt of any notice, warning, citation,
finding, report or service of process, relating to
compliance with the Laws, or the occurrence of any release,
spill, upset or discharge of "Hazardous Substances" as
defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, which
relates to GalaGen's or sub-contractor's ability to
Manufacture or supply the Ingredient. Wyeth-Ayerst reserves
the right to conduct an environmental inspection of
GalaGen's or its sub-contractors' facility, during normal
business hours and with reasonable advance notice, for the
purpose of determining compliance with this Section 3.9, no
more frequently than once per year during the term hereof
and under conditions of confidentiality as provided under
Article 10. Upon GalaGen's request Wyeth-Ayerst shall share
the results of any environmental inspection with GalaGen.
Such inspection, if it occurs, does not relieve GalaGen of
its sole obligation to comply with the Laws and does not
constitute a waiver of any right otherwise available to
Wyeth-Ayerst.
4. DELIVERY
4.1 DELIVERY SITES AND RISK OF LOSS. Delivery of each order of Ingredient
shall be D.D.P. (Incoterms, 1990) to those sites specified by
Wyeth-Ayerst from time to time via a carrier that is mutually
agreeable to the Parties. GalaGen shall pay for freight and shipping
charges, per D.D.P., to all designated sites. Title to and risk of
loss of the Ingredient shall pass to Wyeth-Ayerst at the time of
delivery by GalaGen
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to Wyeth-Ayerst. Wyeth-Ayerst agrees to reimburse GalaGen for
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***] of the delivery costs
incurred by GalaGen in accordance with this Section 4.1. GalaGen
shall promptly invoice Wyeth-Ayerst for all Ingredient tendered, which
invoice shall set forth the purchase price payable by Wyeth-Ayerst
pursuant to Section 6.1 hereof and Wyeth-Ayerst's share of the
delivery costs pursuant to this Section 4.1. Delivery costs incurred
by GalaGen under this Section 4.1 shall not be included as part of
GalaGen's Manufacturing Cost.
4.2 SCHEDULING OF DELIVERY. Subject to the provisions of Section 2.3
hereof, GalaGen shall schedule the timely Manufacture and shipment of
the Ingredient pursuant to Wyeth-Ayerst's firm purchase orders.
4.3 DELAY AND FAILURE TO SUPPLY. Should GalaGen, at any time during the
course of this Agreement, have reason to believe that it will be
unable to meet Wyeth-Ayerst's requested delivery dates, GalaGen will
promptly notify Wyeth-Ayerst in writing setting forth the reasons for
the delay. Such notification will not be deemed a waiver of GalaGen's
obligation set forth in Section 4.3(b). In connection therewith:
(a) If at any time GalaGen experiences a shortage of Ingredient
supply and the available supplies of Ingredient are not
sufficient to satisfy all of Wyeth-Ayerst's requirements for the
Ingredient, GalaGen shall allocate its available worldwide
supplies (including inventory in excess of customary supplies)
first to Wyeth-Ayerst based on Wyeth-Ayerst's binding forecasts
and any excess supplies of Ingredient may thereafter be allocated
among its own requirements and those of its licensees and
distributors.
(b) If at any time GalaGen is of the opinion that it may not be able
to meet future binding orders from Wyeth-Ayerst for Ingredient
(including, but not limited to a situation where as a result of
any intellectual property litigation GalaGen chooses not to
supply Ingredient) it shall notify Wyeth-Ayerst in writing, and
the Parties shall in good faith cooperate and endeavor to make
appropriate arrangements for a continuous and adequate supply of
Ingredient from GalaGen to Wyeth-Ayerst.
4.4 APPOINTMENT OF WYETH-AYERST AS MANUFACTURER.
4.4.1 Subject to terms and provisions of this Agreement,
including, without limitation, GalaGen's right to
manufacture the Ingredient for supply to Wyeth-Ayerst,
GalaGen hereby grants to Wyeth-Ayerst a non-exclusive,
perpetual, world-wide, royalty-free license to manufacture
the Ingredient for use by Wyeth-Ayerst in accordance with
the provisions of the License Agreement. Consistent with
GalaGen's obligations under Section 2.3.4 if GalaGen is
unable to supply at least [**CONFIDENTIAL TREATMENT
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REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] of the quantities of
Ingredient ordered by Wyeth-Ayerst in any two (2)
consecutive Calendar Quarters, based on Wyeth-Ayerst's good
faith estimates of its future requirements, Wyeth-Ayerst
shall be relieved of its obligation to purchase that portion
of its requirements of Ingredient from GalaGen that GalaGen
is unable to supply, until such inability to supply has
ceased and GalaGen may resume the manufacture of
Wyeth-Ayerst's requirements of the Ingredient pursuant to
Section 4.5 hereof, and Wyeth-Ayerst shall have the right,
under the license granted in this Section 4.4.1, to
manufacture, or have manufactured, such portion of the
Ingredient that GalaGen is unable to supply. GalaGen has
the right to approve, in advance, any Third Party
manufacturer utilized by Wyeth-Ayerst pursuant to this
Section 4.4.1, PROVIDED, HOWEVER, that GalaGen's approval
shall not be unreasonably withheld and shall be communicated
to Wyeth-Ayerst within ten (10) days of notice from
Wyeth-Ayerst to GalaGen. If the quantity of Ingredient that
GalaGen is unable to supply is so limited that it would be
an excessive financial burden on Wyeth-Ayerst to
manufacture, or have manufactured, such limited quantity,
the Parties shall meet, after GalaGen is notified by
Wyeth-Ayerst of such circumstance, and in good faith seek to
reasonably resolve the matter. For purposes of this Section
4.4.1, the provision of such Ingredient to Wyeth-Ayerst by
[***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]
or any permitted subcontractor of GalaGen or
[***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]
shall be deemed for purposes of determining whether
Wyeth-Ayerst may exercise its right to manufacture
Ingredient hereunder to be the provision of such Ingredient
by GalaGen. Notwithstanding any other provision hereof, if
GalaGen's failure to supply Ingredient is attributable
solely to its inability to [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] otherwise complete
the manufacture of Ingredient and its not attributable, in
whole or in part, to its inability to [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION***], Wyeth-Ayerst
shall not [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] and GalaGen shall continue to have the right
to be Wyeth-Ayerst's supplier of [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] pursuant to the terms
and conditions of this
12
Agreement, including, without limitation, the purchase price
provisions of Section 6.1 (PROVIDED, HOWEVER, that in such
event the calculation of GalaGen's Manufacturing Cost shall
be based only on [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***]). Notwithstanding the foregoing, in
the event GalaGen is continuing to supply Ingredient to
Wyeth-Ayerst as provided herein, Wyeth-Ayerst shall have the
right to [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] if, for two successive calendar quarters,
GalaGen's inventories of [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] fall below the amount
of [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] needed to manufacture Wyeth-Ayerst's
forecasted needs (as provided in its most recent binding
forecasts pursuant to Section 2.3) of Ingredient.
4.4.2 In the event that GalaGen is unable to supply Ingredient as
provided above, GalaGen shall be responsible for all costs
to qualify Wyeth-Ayerst, or its designated manufacturer, as
a manufacturer of the Ingredient. Such costs include, but
are not limited to, [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***].
4.5 RESUMPTION OF MANUFACTURING BY GALAGEN. At such time as GalaGen
reasonably demonstrates to Wyeth-Ayerst that it is able to again
supply all of Wyeth-Ayerst's requirements on an ongoing basis,
Wyeth-Ayerst shall be permitted to continue to manufacture, or have
manufactured that amount of Ingredient it had been manufacturing
pursuant to Section 4.4 hereof, for such period of time thereafter as
is reasonably necessary for Wyeth-Ayerst and/or any of its Affiliates
and/or any Third Party manufacturer to fully amortize all expenses
that may have been reasonably incurred under such manufacturing
program, using generally accepted accounting principles normally used
by Wyeth-Ayerst in keeping its own books and records. Thereafter,
Wyeth-Ayerst shall purchase its requirements of Ingredient from
GalaGen in accordance with the terms of this Agreement, PROVIDED,
HOWEVER, that Wyeth-Ayerst shall be permitted to continue
manufacturing or purchasing from such Third Party(ies) Ingredient in
amounts equal to the greater of (i) the amount of Wyeth's requirements
of Ingredient that GalaGen is currently unable to supply or (ii)
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***] of Wyeth's
requirements of Ingredient that Wyeth-Ayerst has manufactured or has
purchased from Third Parties [**CONFIDENTIAL
13
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***].
4.6 DISCLOSURE OF GALAGEN KNOW-HOW; TECHNICAL ASSISTANCE. If, pursuant to
Sections 4.4 or 4.5 hereof, Wyeth-Ayerst elects to commence
manufacturing the Ingredient, either itself or through a Third Party,
GalaGen shall promptly disclose to Wyeth-Ayerst all of its Know-How
that is necessary to enable Wyeth-Ayerst to so manufacture the
Ingredient to the extent permitted hereunder. Additionally, GalaGen
shall, at no cost to Wyeth-Ayerst, provide Wyeth-Ayerst with
reasonable technical assistance that may be necessary or useful for
Wyeth-Ayerst to utilize such Know-How and to commence the manufacture
of the Ingredient to the extent permitted hereunder. If GalaGen
discloses Know-How to Wyeth-Ayerst for the purpose of enabling
Wyeth-Ayerst or its designee to manufacture Ingredient, Wyeth-Ayerst
agrees to use such Know-How only for such purpose and such Know-How
shall be treated as Confidential Information in accordance with
Article 10 hereof.
4.7 QUALITY ASSURANCE.
4.7.1 Prior to the shipment of Ingredient to Wyeth-Ayerst, GalaGen
shall test representative samples of each of the lot(s) to
be shipped in accordance with the methods of analysis
defined in the Specifications. GalaGen shall provide
Wyeth-Ayerst with a certificate of analysis for each lot of
Ingredient shipped to Wyeth-Ayerst.
4.7.2 Wyeth-Ayerst shall have the right to test Ingredient to
verify compliance with Specifications and applicable
Regulatory Approvals and GalaGen shall supply Wyeth-Ayerst
with its testing procedures. Wyeth-Ayerst may, by written
notice provided to GalaGen within [**CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] of Wyeth-Ayerst's
receipt of a shipment of Ingredient, reject all or part of
such shipment of Ingredient if, based upon the testing of
such Ingredient conducted under this Section 4.7, such
Ingredient does not comply with the Specifications. If
Wyeth-Ayerst fails to notify GalaGen, within such
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]
period, that it is rejecting such Ingredient, Wyeth-Ayerst
shall be deemed to have accepted such Ingredient.
4.7.3 If GalaGen, after good faith consultation with Wyeth-Ayerst,
disputes any finding by Wyeth-Ayerst that the Ingredient
does not comply with the Specifications, samples of such
Ingredient shall be forwarded to a Third Party jointly
selected by Wyeth-Ayerst and GalaGen for analysis, which
analysis shall be performed in compliance with applicable
regulatory
14
requirements. The findings of such Third Party regarding
whether the Ingredient complies with the Specifications and
the applicable Regulatory Approvals shall be binding upon
the Parties for purposes of this Section 4.7. The cost of
such analysis by such Third Party shall be borne by the
Party whose findings differed from those generated by such
Third Party.
4.7.4 If, as determined in accordance with this Section 4.7, a
shipment of Ingredient does not conform to the
Specifications, GalaGen shall replace such shipment free of
charge with a substitute shipment which meets such
Specifications according to the following time frame: If
the Ingredient is in inventory then conforming Ingredient
will be shipped so as to arrive as soon as practicable. If
the Ingredient is not in inventory, GalaGen will take all
reasonable steps to ensure expeditious Manufacture of
conforming Ingredient which will be shipped on the next
shipping day after completion of Manufacture so as to arrive
as soon as possible thereafter. In the event that testing
at Wyeth-Ayerst indicates that Ingredient does not conform
with Specifications: (i) Wyeth-Ayerst shall immediately
notify GalaGen; (ii) Wyeth-Ayerst and GalaGen shall mutually
agree on an investigation program to determine the cause of
the discrepancy and the outcome of this investigation shall
be used to determine disposition of the Batch; (iii) where
appropriate, given the timetable for the agreed
investigation program, GalaGen shall take all reasonable
steps to ensure expeditious Manufacture and shipment of
conforming Ingredient; and (iv) shipment of such replacement
Ingredient shall take place the next shipping day following
completion of analytical work to demonstrate conformance
with Specifications. Shipment shall be by the quickest
agreed route. At GalaGen's expense and at Wyeth-Ayerst's
sole option: (i) the non-conforming shipment shall be
returned to GalaGen; or (ii) disposed of by Wyeth-Ayerst,
upon final determination in accordance with this Section 4.7
that it does not meet the Specifications.
5. RECALLS
5.1 NOTIFICATION AND RECALL.
5.1.1 In the event that any governmental agency or authority
requests a recall or takes similar action in connection with
the Ingredient or with the Product because of or in
connection with the presence of the Ingredient therein, or
in the event either Party determines an event, incident or
circumstance has occurred which may result in the need for a
recall or market withdrawal, the Party notified of or
calling such recall or similar action shall, within
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND
15
EXCHANGE COMMISSION***], advise the other Party by telephone
or facsimile.
5.1.2 Following notification of a recall, within [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION***], the Parties'
representatives from business, medical, regulatory, quality
assurance and legal functions (and any others deemed
necessary by a Party) (the "Recall Team") shall discuss
whether or not to conduct a recall, and, if so, the timing
of the recall, the breadth, extent and level of customer to
which the recall shall reach, what strategies and
notifications should be used, the responsibility for the
recall expenses, etc. In the event the Recall Team cannot
agree on such decisions, the issues shall be resolved by
[**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***].
In the event such [**CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] cannot agree, Wyeth-Ayerst shall
have the final authority to decide whether a recall of the
Product shall be made.
5.2 RECALL EXPENSES. Wyeth-Ayerst shall bear the expenses of any
recall resulting from breach of its obligations hereunder or
under the License Agreement, from negligent manufacturing,
packaging, storage, shipment, marketing, distribution or sale of
the Product by Wyeth-Ayerst or from any manufacturing defect in a
Product manufactured or sold by Wyeth-Ayerst which manufacturing
defect is not a defect in the Ingredient Manufactured or supplied
by or on behalf of GalaGen or its permitted subcontractors
hereunder. GalaGen shall bear the expenses of any recall
resulting from a breach of its obligations hereunder or under the
License Agreement, from negligent Manufacturing, packaging,
storage, shipment, marketing, distribution or sale of the
Ingredient by GalaGen or from any Manufacturing defect in the
Ingredient. The Parties shall equally divide the costs of any
recall resulting from a latent defect (for example, side effects
of the Ingredient not known by the Parties as of the Effective
Date). For the purposes of this Agreement, expenses of recall
include, without limitation, the expenses incurred by the
affected Party for the investigation, notification, regulatory
reporting and/or destruction or return of the recalled Ingredient
or Product, the sum paid by Wyeth-Ayerst to GalaGen for the
Ingredients recalled, Wyeth-Ayerst's costs relating to the
manufacturing, testing, packaging, shipping and supplying the
Products recalled.
16
6. CONSIDERATION
6.1 PRICE. [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]
6.2 METHOD OF PAYMENT. GalaGen will invoice Wyeth-Ayerst in United States
Dollars for each and every shipment of Ingredient accepted by
Wyeth-Ayerst. Each such invoice shall be accompanied by a statement
specifying the amount of Ingredient delivered to Wyeth-Ayerst, the
total Manufacturing Cost incurred in manufacturing such Ingredient,
and an itemization by category of the cost for each element included
within the Manufacturing Cost. Payment for all such quantities so
shipped shall be made in United States dollars by check or bank
transfer within [**CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of
the date the invoice is received by Wyeth-Ayerst.
6.3 TAXES. GalaGen and Wyeth-Ayerst agree to cooperate reasonably with
each other in connection with the tax (including value-added tax) or
duty-free importation and/or exportation of the Ingredient, whenever
such tax or duty-free treatment is appropriate under the applicable
tax and customs laws and regulations.
6.4 RECORD KEEPING. GalaGen shall keep accurate books and accounts of
record in connection with its Manufacture of the Ingredient in
sufficient detail to permit accurate determination of all figures
necessary for verification of Manufacturing Cost incurred by GalaGen
in the Manufacture of the Ingredient 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.
6.5 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 6.2. Such access shall be conducted after
reasonable prior written notice to GalaGen and during ordinary
business hours and shall not be more frequent than twice 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
17
SECURITIES AND EXCHANGE COMMISSION***] or more of the amount actually
due, GalaGen shall also promptly reimburse Wyeth-Ayerst for the costs
of such audit.
6.6 [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***]
7. REPRESENTATIONS AND WARRANTIES.
7.1 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 do 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.
7.2 REPRESENTATIONS AND WARRANTIES OF GALAGEN. In addition to the
representations and warranties made by GalaGen under Section 7.1
above, GalaGen hereby further represents and warrants to Wyeth-Ayerst
that:
(a) at the time of delivery of the Ingredient to the specified point
of delivery, the Ingredient shall (i) have been Manufactured,
stored and shipped in accordance with cGMPs, as applicable, and
all other applicable laws, rules,
18
regulations or requirements in effect at the time of Manufacture
in the country of Manufacture (for example, in accordance with
the procedures described in the applicable Regulatory Approval);
(ii) conform to the Specifications; (iii) meet the provisions of
the Specifications; (iv) shall not be adulterated or misbranded
as provided for under any applicable law, order or regulation in
effect in the country of Manufacture and the country in which the
Product is being sold pursuant to the License Agreement; (v)
shall have been Manufactured and have shelf-life in accordance
with the provisions of Section 2.6; and (vi) have been shipped in
accordance with approved procedures agreed between Wyeth-Ayerst
and GalaGen;
(b) it shall have good and marketable title to all Ingredient
delivered to Wyeth-Ayerst;
(c) to the best of its knowledge the Manufacture, use and sale of the
Ingredient supplied to Wyeth-Ayerst under this Agreement do not
infringe any intellectual property rights of any Third Party or
in any country where such Ingredient or Product is manufactured
or sold.
7.3 NO INCONSISTENT AGREEMENTS. Except as otherwise provided in Sections
11.3 and 11.4 of the License Agreements, 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.
7.4 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.
8. INDEMNIFICATION AND INSURANCE
8.1 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 covenant,
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 8.1.
Notwithstanding
19
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 willful misconduct or negligent acts or omissions of
GalaGen, its Affiliates, or any of their respective employees,
officers, directors or agents.
8.2 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 covenant, representation or warranty contained in this
Agreement; (ii) the discovery, development, manufacture, promotion,
sale or use of the Ingredient by GalaGen, its Affiliates or their
subcontractors; or (iii) the successful enforcement by a Wyeth-Ayerst
Indemnified Party of its rights under this Section 8.2.
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.
8.3 CONDITIONS TO INDEMNIFICATION. The obligations of the indemnifying
Party under Sections 8.1 and 8.2 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. 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.
8.4 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.
20
8.5 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 8.1
or 8.2, 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***].
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 continue in effect until the later of (i) the expiration of the
License Agreement or (ii) fifteen (15) years after the First
Commercial Sale of a Product (the "Initial Term"). The term of this
Agreement may be extended [**CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] (each a "Renewal Term") at Wyeth-Ayerst's option by
providing GalaGen with written notice of such extension at least three
(3) months prior to the expiration of the Initial Term or any Renewal
Term, as applicable. Notwithstanding the foregoing, in the event that
GalaGen is able to reasonably demonstrate that the continued
manufacture and supply to Wyeth-Ayerst of Ingredient during any such
Renewal Term would not be commercially feasible for GalaGen, then
GalaGen may elect not to so extend the term of this Agreement,
PROVIDED, HOWEVER, that GalaGen must notify Wyeth-Ayerst, in writing,
of such election no later than thirty (30) days after receiving from
Wyeth-Ayerst notice that Wyeth-Ayerst has elected to extend the term,
which notice shall set forth those facts and be accompanied by that
supporting documentation that is necessary to demonstrate that the
continued Manufacture and supply of Ingredient to Wyeth-Ayerst would
not be commercially feasible to GalaGen and provided further that
after providing such notice to Wyeth-Ayerst (a) Wyeth-Ayerst may
exercise its right, under the license granted in the first sentence of
Section 4.4.1, to manufacture, either itself or through a Third Party,
Ingredient and (b) GalaGen shall (i) in accordance with Section 4.6
hereof, promptly disclose to Wyeth-Ayerst all Know-How and information
necessary for Wyeth-Ayerst, its Affiliates or subcontractors to
manufacture Ingredient, (ii) provide reasonable technical assistance,
at GalaGen's expense, that may be necessary for Wyeth-Ayerst, its
Affiliates or subcontractors to manufacture the Ingredient and (iii)
continue to Manufacture and supply Ingredient to Wyeth-Ayerst, under
the terms of this Agreement, until the earlier of (x) the time that
Wyeth-Ayerst, its Affiliates or subcontractors are producing
Wyeth-Ayerst's requirements of the Ingredient or (y) [**CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
21
WITH THE SECURITIES AND EXCHANGE COMMISSION***] after the expiration
of the applicable Initial Term or Renewal Term of this Agreement.
9.2 TERMINATION FOR CAUSE. This Agreement may be terminated on at least
thirty (30) days prior 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***] period 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 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. In the event Wyeth-Ayerst terminates the
License Agreement under section 9.2.1(b) thereof or this
Agreement is otherwise terminated under this Section 9.2(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,
including as set forth in Section 9.6 hereof.
9.3 EFFECT OF TERMINATION OF LICENSE AGREEMENT.
9.3.1 In the event Wyeth-Ayerst terminates the License Agreement under
Section 9.2.1(a) thereof, this Agreement, at Wyeth-Ayerst's sole
option,
22
may either (i) be terminated by Wyeth-Ayerst or (ii) remain
in full force and effect. If Wyeth-Ayerst elects to
terminate this Agreement under Section 9.2(a) hereof,
Wyeth-Ayerst shall have the right, pursuant to the license
granted to it in the first sentence of Section 4.4.1 hereof
to manufacture the Ingredient for use in Products and
GalaGen shall, promptly after receipt from Wyeth-Ayerst of
notice that Wyeth-Ayerst is terminating this Agreement in
accordance with Section 9.2(a) hereof (i) in accordance with
Section 4.6 hereof, disclose to Wyeth-Ayerst all Know-How
and information in GalaGen's possession which is or may be
necessary to enable Wyeth-Ayerst, its Affiliates or
subcontractors to manufacture the Ingredient and (ii)
provide reasonable technical assistance, at GalaGen's
expense, that may be necessary for Wyeth-Ayerst, its
Affiliates or subcontractors to manufacture the Ingredient.
9.3.2 In the event that GalaGen terminates the License Agreement
under Section 9.2.1(a) thereof, this Agreement shall
automatically be terminated.
9.3.3 If Wyeth-Ayerst terminates the License Agreement in its
entirety under Section 9.3 thereof, this Agreement shall
automatically be terminated
9.4 GENERAL CONDITIONS OF EXPIRATION AND TERMINATION.
9.4.1 The provisions of Articles 5, 8 and 10 and Sections 3.5.2,
3.5.3, 4.4.1, 4.6 4.7.2, 4.7.3, 6.4, 6.5, 7.2, 9.6, 11.6 and
11.7 shall survive termination or expiration of this
Agreement.
9.4.2 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
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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
(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.
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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,
registration, Manufacture and marketing of the
Ingredient and/or Products; and
(ii) the right to contract directly with any Third
Party described in (i) to complete the contracted
work.
10. CONFIDENTIALITY.
10.1 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 in
connection with this Agreement (the "Information"), without the prior
written consent of the other Party. The foregoing obligations shall
survive the expiration or earlier termination of this Agreement
[**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;
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(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 or other 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 the
Ingredient 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.
10.2 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.
10.3 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
26
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 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 10.
10.4 PUBLICITY. Subject to Section 10.3, 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.
11. MISCELLANEOUS
11.1 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.
11.2 ASSIGNMENT.
11.2.1 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 11.2.1 by GalaGen of its
rights and/or obligations under this Agreement shall not
relieve GalaGen of its responsibilities for the performance
of its obligations under this Agreement.
11.2.2 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
27
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 11.2.2 by
Wyeth-Ayerst shall not relieve Wyeth-Ayerst of its
responsibilities for the performance of its obligations
under this.
11.2.3 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 11.2 shall be void.
11.3 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.
11.4 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.
11.5 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 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.
11.6 CORRESPONDENCE AND NOTICES.
11.6.1 Correspondence, reports, documentation , and any other
communication in writing between the Parties in the course
of implementation of this Agreement shall be in writing and
sent by prepaid air mail, or by facsimile confirmed by
prepaid registered or certified air mail letter, and shall
be
28
deemed to have been properly served to the addressee upon
receipt of such written communication.
11.6.2 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
and it the case of Wyeth-Ayerst, the proper address for
communications and for all payments shall be:
Wyeth-Ayerst Laboratories
555 Lancaster Avenue
St. Davids, Pennsylvania 19087
Attn: Senior Vice President, Global Business
Development
With a copy to:
American Home Products Corporation
5 Giralda Farms
Madison, New Jersey 07940
Attn: Senior Vice President and General Counsel
11.7 CHOICE OF LAW. This Agreement is subject to and governed by the laws
of the State of Delaware, excluding its conflict of laws provisions.
11.8 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.
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11.9 HEADINGS. The headings and captions used in this Agreement are solely
for the convenience of reference and shall not affect its
interpretation.
11.10 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.
11.11 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 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
30