Exhibit 10.35
LICENSING AND DISTRIBUTION AGREEMENT
THIS AGREEMENT is entered into to be effective as of the 15 day of
March, 1999, by and between GalaGen Inc., a corporation organized under the
laws of the State of Delaware, with its principal place of business at 1275
Red Fox Road, Arden Hills, Minnesota 55112-6943 USA (hereinafter "GalaGen"),
and American Institutional Products, Inc., a corporation organized under the
laws of the State of Minnesota, with its principal place of business at 501
NE 16th Avenue, Austin, Minnesota 55912 (hereinafter "Licensee").
W I T N E S S E T H :
WHEREAS, Licensee is interested and willing to manufacture under
license and distribute certain products developed by GalaGen utilizing
certain ingredients to be purchased from GalaGen by Licensee; and
WHEREAS, GalaGen is willing to license to Licensee the right to
manufacture said certain products for distribution under the terms of this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the receipt and sufficiency of which is hereby
acknowledged, GalaGen and Licensee do hereby agree as follows:
I.
RELATIONSHIP
GalaGen hereby grants Licensee the exclusive right and license to
manufacture or have manufactured, promote, market and sell GalaGen's
proprietary clinical nutrition products described in Exhibit A attached
hereto ("Products"), containing proprietary ingredients described in Exhibit
A which are to be purchased by Licensee from GalaGen ("Ingredients") to
hospitals, nursing homes and other inpatient healthcare facilities (the
"Health Market") located in the United States of America and Canada (the
"Territory"). GalaGen agrees not to grant any third party the right to
manufacture for sale or sell or to itself manufacture for sale or sell
Products to
the Health Market in the Territory, and Licensee agrees that it will not sell
Products other than to the Health Market in the Territory.
[***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
II.
DUTIES AND OBLIGATIONS OF LICENSEE
The services to be performed by Licensee hereunder shall be all of
those services and duties specified herein and said services shall be
performed by Licensee as a Licensee for GalaGen, and neither Licensee nor its
employees shall be considered employees of GalaGen. During the term of this
Agreement:
(a) Licensee agrees that during the term and in accordance with the
provisions of this Agreement, Licensee will have manufactured the
final, complete Products utilizing the proprietary formulas and
specifications and Ingredients supplied by GalaGen. Licensee will
ensure that Products shall be manufactured:
(i) in compliance with all laws and regulations of the USA or any
political subdivision thereof applicable to the manufacture
and/or labeling of finished Products;
(ii) be wholesome and fit for human consumption;
(iii) comply with nutritional information placed on finished
Products; and
(iv) utilize Ingredients purchased from GalaGen; and
(v) comply with any formulas and specifications for Products
provided by GalaGen to Licensee in writing.
2
Provided, however, that Licensee shall be excused from compliance with
its obligations hereunder only to the extent such noncompliance results
from GalaGen's failure to comply with its representations and
warranties in Section V.
(b) Licensee agrees to use its best efforts to introduce, diligently
promote the sale and use of, and secure orders for Products in the
Health Market. [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
(c) Prior to [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***], the
parties will negotiate in good faith reasonable minimum numbers of
units of Products to be sold by Licensee for the following
[***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.***] period. Six (6) months
prior to the expiration of said [***CONFIDENTIAL TREATMENT REQUESTED;
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***] period, and every fifth year thereafter, the parties
will negotiate in good faith reasonable minimum numbers of units of
Products to be sold by Licensee for the next [***CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.***] year period.
(d) The parties agree to develop mutually acceptable [***CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***] month's forecasts.
3
(e) Licensee agrees to obtain GalaGen's prior written approval concerning
any promotional information, materials and other data supplied by
Licensee to customers and potential customers relative to Products.
(f) Licensee shall ensure that Products are sold and advertised in the form
developed by Licensee and approved by GalaGen in writing, and with the
labeling or marking jointly developed with GalaGen and agreed by
Licensee. Licensee shall not alter the same without the express, prior
written consent of GalaGen.
(g) [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
(h) Licensee shall obtain all licenses, permits or certificates which are
required under applicable law to conduct its business and to resell
Products to the Health Market in the Territory, and shall comply with
all laws applicable to its business.
(i) Licensee or Licensee's designated manufacturer agrees to purchase
Ingredients from GalaGen at the delivered price set forth on Exhibit B
attached hereto. [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
GalaGen shall sell and deliver Ingredients to Licensee at Rochester
Minnesota, or other location agreed upon by both parties ("Delivery
Point"). [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
(j) [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
4
(k) [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
(l) This Agreement sets forth the contract terms between the parties
regarding Licensee's purchase of Ingredients from GalaGen. In the event
that there is any inconsistency between the terms and conditions in
this Agreement and those contained in either party's standard terms and
conditions, the terms of this Agreement shall apply.
(m) Licensee shall carry general liability, product liability and property
damage insurance covering all hazards, injuries, losses or damages
caused by or arising out of possession or sale of Products by Licensee
in form and amounts reasonably satisfactory to GalaGen, provided that
Licensee shall be permitted to include a self-insurance retention
feature up to [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
Licensee shall furnish GalaGen with a certificate of insurance
evidencing the same, naming GalaGen as an additional insured and
providing that GalaGen shall receive [***CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.***] days prior written notice of any cancellation
of such insurance.
(n) GalaGen shall maintain during the term of this Agreement a policy of
general liability insurance, including products liability insurance,
business interruption insurance and contractual insurance, with limits
of no less than [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
GalaGen shall furnish Licensee with a certificate of insurance
evidencing the same, naming Licensee as an additional insured and
5
providing that Licensee shall receive [***CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.***] prior written notice of any cancellation of
such insurance.
(o) [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
(p) Licensee shall work with GalaGen to develop and maintain a useful
forecasting procedure to enable GalaGen to efficiently supply
Ingredients in quantities required by Licensee.
III.
DUTIES AND OBLIGATIONS OF GALAGEN
(a) GalaGen shall provide to Licensee, [***CONFIDENTIAL TREATMENT
REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.***], such ongoing technical assistance and
training for Licensee's personnel with regard to the characteristics,
uses, applications and sale techniques of Products as GalaGen
determines, in its sole discretion, to be appropriate. [***CONFIDENTIAL
TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.***].
GalaGen shall provide Licensee with copies of manuals and other
marketing and technical documentation relating to Products as GalaGen
shall determine in its sole discretion are desirable.
6
(b) [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
(c) GalaGen shall provide telemarketing support for Licensee's sales of
Products at such time and in such manner as GalaGen and Licensee may
mutually agree from time to time.
(d) GalaGen shall provide Licensee Ingredients which are suitable for the
manufacture of Products, wholesome and fit for human consumption, and
in compliance with all laws and regulations of the USA or any political
subdivision applicable to the use of Ingredients in the manufacture of
Products.
(e) GalaGen shall provide Licensee GalaGen's proprietary formulas and
specifications for the manufacture of Products utilizing Ingredients
which, if properly applied by Licensee following GalaGen's instructions
and using properly qualified personnel and facilities, will produce
Products which are (i) in compliance with all laws and regulations of
the USA, or any political subdivision thereof, applicable to the
manufacture and/or labeling of Products, (ii) wholesome and fit for
human consumption, and (iii) in compliance with such nutritional
information or other label information or promotional information as
GalaGen has authorized Licensee in writing to use in connection with
the labeling or promotion of Products.
(f) [***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
IV.
TRADEMARKS
The parties intend that the labeling of Products sold by Licensee
will bear certain
7
trademarks owned by GalaGen, [*** CONFIDENTIAL TREATMENT REQUESTED; PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] and
such other trademarks of GalaGen as the parties may from time to time agree in
writing (the "GalaGen Trademarks"), together with certain trademarks owned by
Licensee, including [*** CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] such other
trademarks of Licensee as Licensee may utilize from time to time (the
"Licensee Trademarks"). The parties intend that the Licensee Trademarks will
be the primary trademarks used on Product labels, with GalaGen Trademarks used
in an endorsement position. GalaGen Trademarks and Licensee Trademarks are
referred to collectively as the "Trademarks".
Solely for the purposes of this Agreement, GalaGen grants to
Licensee the right and license to sell Products bearing GalaGen Trademarks
together with Licensee Trademarks, subject in all cases to the following
terms and conditions:
(a) Products shall continue to meet the same high level of quality as
products presently manufactured and sold by Licensee, shall comply with
GalaGen's proprietary formulas, specifications and standards, and shall
utilize Ingredients. Licensee shall not make material changes to
Products without GalaGen's prior written agreement.
(b) Trademarks when used together shall in all cases appear in the label
presentation (size, configuration, color and placement) as agreed to in
writing from time to time between GalaGen and Licensee.
(c) Each party acknowledges that the other party's Trademarks are the other
party's sole and exclusive property, and agrees that all goodwill
arising out of the use of the other party's Trademarks shall inure
exclusively to the benefit of the other party.
(d) GalaGen Trademarks will not be presented or used by Licensee in a
manner to which GalaGen objects in writing.
8
(e) The license granted by GalaGen to Licensee hereunder is for the sole
and limited purpose of Licensee performing its obligations under this
Agreement, and for no other purpose. Licensee shall not use GalaGen
Trademarks except with Products as specifically permitted under this
Agreement.
(f) The license granted by GalaGen to Licensee hereunder shall terminate
when this Agreement terminates, and thereafter, Licensee shall not use
GalaGen Trademarks in any application or for any purpose, except to
permit Licensee to sell Products in its inventory after termination as
provided in Section X(b).
(g) Licensee shall provide GalaGen access, at reasonable times, and in a
reasonable manner and with prior written notice, to inspect facilities
where Products are manufactured and stored.
Licensee shall cooperate with GalaGen in safeguarding the GalaGen Trademarks.
In the event Licensee learns of any actual or threatened infringement of, or
challenge to, Licensee's use of any GalaGen Trademark, Licensee shall notify
GalaGen immediately, and GalaGen shall have sole and absolute discretion to
take such action as it deems appropriate.
V.
GALAGEN REPRESENTATIONS AND WARRANTIES
[***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
VI.
INDEMNIFICATION
[***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
9
VII.
CONFIDENTIALITY
For purposes of this Agreement, the term "Confidential Information"
means any information or compilation of information, not generally known,
which is proprietary to the disclosing party and relates to Products or the
disclosing party's other products or product research, including, without
limitation, information relating to research data, product development,
recipes, manufacturing methods or techniques, marketing data, sales and
marketing plans, customer information, financial information and any other
information about the disclosing party's business which is normally
considered confidential or is indicated in writing by the disclosing party to
be confidential or proprietary. "Confidential Information" specifically
includes any proprietary and confidential formulas and specifications
furnished by GalaGen to Licensee.
The term "Confidential Information" as used herein shall not include
any information:
(a) which was in the public domain at the time of disclosure by the disclosing
party to the receiving party;
(b) which is published or otherwise comes into the public domain after its
disclosure to the receiving party through no violation of this
Agreement by the receiving party;
(c) which is disclosed to the receiving party by a third party not under an
obligation of confidence to the disclosing party; or
(d) which is required to be produced by law or regulation or under order of
a court of competent jurisdiction; provided, however, that the
receiving party provide the disclosing party with prompt written notice
of such request or order of disclosure and that the
10
receiving party cooperate with the disclosing party in seeking to resist
or narrow such request or to secure assurances that the Confidential
Information so disclosed would be kept confidential.
During the term of this Agreement and at all times thereafter, the
receiving party shall hold in strictest of confidence and shall never
disclose, transfer, convey or make accessible to any person any Confidential
Information of the disclosing party. The receiving party agrees not to use
the Confidential Information of the disclosing party except to the extent
necessary to perform its obligations under this Agreement, and agrees not to
allow such Confidential Information to be used for the benefit of anyone
other than the disclosing party. The receiving party agrees to take
reasonable precautions to prevent receiving party's employees,
representatives, agents and others from disclosing or appropriating for their
own use any Confidential Information of the disclosing party.
[***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.***].
VIII.
LICENSEE IS INDEPENDENT CONTRACTOR
In performing any of the services under this Agreement, Licensee
shall be an independent contractor and is not an agent, employee, joint
venturer, partner, franchisee or legal representative of GalaGen for any
purposes whatsoever. Licensee shall not have any right or authority to incur
any indebtedness or liability of any kind on GalaGen's behalf or bind or
purport to bind GalaGen in any manner whatsoever. Licensee shall be
exclusively responsible for the manner in which it performs its duties
hereunder and for the profitability, or lack thereof, of its activities under
this Agreement. Licensee shall be solely responsible to its own employees for
any compensation due them, and for compliance with all applicable laws
imposed by any
11
governmental authority regarding Licensee's employees.
IX.
DURATION - TERMINATION
This Agreement shall begin on the effective date set forth on the
first page of this Agreement, and shall continue in effect until terminated
in accordance with this Section IX, as follows:
[***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
X.
OBLIGATIONS UP0N TERMINATION
[***CONFIDENTIAL TREATMENT REQUESTED; PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
XI.
FORCE MAJEURE
If the performance of the obligations of the parties under this
Agreement is prevented by acts of God, civil insurrection, acts of enemies,
fire, flood, strikes, riots, war, acts of government, laws, orders,
regulations, embargoes, lack or shortage of labor, materials or
transportation, failure of plants or production facilities or other causes
beyond the reasonable control of the parties, the party affected by said
cause or causes shall immediately notify the other as to the existence of
such cause or causes and upon said notification shall be excused from its
obligation during the period of existence of such cause or causes, provided
such party shall exert commercially reasonable efforts to remove said cause
or causes.
XII.
12
ASSIGNMENT
This Agreement may not be assigned or otherwise transferred by
either party hereto, by operation of law or otherwise, without the prior
written consent of the other party; provided, however, that GalaGen may,
without securing the prior written consent of Licensee, assign its rights and
obligations hereunder to a successor in any merger, sale of a controlling
interest of its stock, or sale of all, or substantially all, of its assets.
XIII.
ENTIRE AGREEMENT
This Agreement, together with Exhibits A and B attached hereto,
contains the entire agreement of the parties concerning the subject matter
hereof, and supersedes all prior communications, understandings and
agreements between the parties with respect thereto.
XIV.
AMENDMENT AND WAIVER
No purported amendment, modification, or waiver of any provision
hereof shall be binding unless set forth in a writing in the English language
signed by both parties (in the case of amendments and modifications) or by
the party to be charged thereby (in the case of waivers). Any waiver shall be
limited to the circumstance or event specifically referenced in the written
waiver document, and shall not be deemed a waiver of any other term of this
Agreement or of the same circumstance or event upon any recurrence thereof.
Only officers of GalaGen holding the same title as those who have signed this
Agreement shall have the right to execute any amendment, modification or
waiver document on behalf of GalaGen.
XV.
NOTICES
All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given (i)
when received if delivered by
13
hand; (ii) the next business day after placement with a reputable overnight
carrier for next morning delivery; or (iii) four (4) business days after
deposit, if placed in the US mail for delivery by certified mail, return
receipt requested, postage prepaid, and addressed to the appropriate party at
the address set forth on page one of this Agreement. Each notice shall be
sent to the attention of such party's President. If either party should
change its address, such party shall give written notice to the other party
of the new address in the manner set forth above, but any such notice shall
not be effective until actually received by the addressee.
XVI.
SEVERABILITY
Should any part of this Agreement, for any reason, be declared
invalid, such decision shall not affect the validity of any remaining
portions, and such remaining portion shall remain in full force and effect as
if this Agreement had been executed with the invalid portion eliminated.
XVII.
INJUNCTIVE RELIEF
In addition to any other relief afforded by law, each party shall
have the right to enforce covenants contained in Sections II(e), VII and
IX(c) of this Agreement by specific performance and preliminary, temporary
and permanent injunctive relief against the other party or any other person
concerned thereby. Damages, specific performance and injunctive relief shall
be considered proper modes of relief and are not to be considered alternative
remedies.
XVIII.
APPLICABLE LAW
This Agreement and the rights and obligations of the parties
hereunder shall be governed by, construed and enforced in accordance with the
laws of the State of Minnesota, excluding any choice of law rules which would
refer the matter to the laws of another jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year
14
first above written.
GALAGEN INC. AMERICAN INSTITUTIONAL PRODUCTS,
("GalaGen") INC. ("Licensee")
By: /s/ Henry J. Cardello By: /s/ Dan McHugh
-------------------------- ---------------------------------
Its: President Its: Vice President & General Manager
------------------------- --------------------------------
Date: March 12, 1999 Date: March 15, 1999
------------------------ -------------------------------
15