MARKETING AGREEMENT
This Marketing Agreement (the "Agreement") is made and entered into as
of this 1st day of September, 1998 (the "Effective Date"), by and between
Nutrition Medical, Inc., a Minnesota corporation ("NMI"), and GalaGen Inc., a
Delaware corporation ("GALAGEN"), collectively referred to hereinafter as the
"Parties" or individually as a "Party."
1. PURPOSE OF AGREEMENT.
The purpose of this Agreement is to set forth the relationship of the
Parties in the marketing, sale and distribution of certain critical care
products of NMI. The products of NMI that are subject to this Agreement
(individually a "Product" and together the "Products") are listed on SCHEDULE
1 attached hereto. The Parties acknowledge that this Agreement is entered
into in contemplation of the proposed acquisition by GALAGEN of certain
assets of NMI pursuant to an Asset Purchase Agreement, of even date herewith,
between the Parties (the "Asset Purchase Agreement"). The transactions
contemplated by the Asset Purchase Agreement are hereafter collectively
referred to as the "Acquisition".
2. TERM.
The term of this Agreement (the "Term") shall be from the Effective Date
until December 31, 1998, unless terminated sooner pursuant to SECTION 10
herein.
3. GRANT OF DISTRIBUTION RIGHTS AND ASSIGNMENT OF CONTRACTS.
3.1 GLUTASORB READY TO USE. NMI hereby grants to GALAGEN an exclusive
license to market, sell and distribute, at prices and upon terms to be
determined by GALAGEN, the Product known as "Glutasorb Ready to Use" in the
United States, Japan, France, England, Scotland, Belgium, Holland,
Switzerland, Denmark, Sweden, Norway and Finland.
3.2 ALL OTHER PRODUCTS. NMI hereby grants GALAGEN an exclusive
license to market, sell and distribute, at prices and upon terms to be
determined by GALAGEN, in the United States all Products other than
"Glutasorb Ready to Use".
3.3 ASSIGNMENT OF PURCHASE ORDERS AND CUSTOMER CONTRACTS. In
connection with the licenses granted above, NMI hereby assigns to GALAGEN,
subject to GALAGEN's acceptance, all outstanding customer purchase orders and
other customer purchase contracts received by NMI on or after the Effective
Date relating to the Products originating from customers in those countries
listed above. NMI retains all rights to all customer purchase orders and
other customer purchase contracts received prior to the Effective Date.
4. LICENSE TO USE MARKS.
NMI hereby grants to GALAGEN a royalty-free, exclusive license to use
any trademark, trade name, or identifying slogan of NMI, whether or not
registered (each, a "Xxxx" and collectively, the "Marks") which are affixed
to the Products or any accompanying labels, containers, cartons, or technical
or promotional literature and used in connection with the marketing, sale,
distribution, or service of the Products pursuant to this Agreement. Such
license will be exclusive to GALAGEN in the United States, and with respect
to the Product known as "Glutasorb Ready to Use," will also be exclusive in
those countries listed in Section 3.1 hereof.
5. SALE OF PRODUCTS BY NMI TO GALAGEN.
5.1 OBLIGATIONS OF NMI. During the Term NMI will sell Products to
GALAGEN in sufficient quantities out of available inventory to fill all
orders placed by GALAGEN's customers. Each such sale of a Product from NMI
to GALAGEN will be deemed to occur, and risk of loss and title to the Product
will transfer at the time that, but not before, NMI delivers the Product to a
common carrier for transportation to GALAGEN's customer in satisfaction of an
order placed by such customer, or NMI delivers the Product directly to
GALAGEN's customer in satisfaction of an order placed with GALAGEN.
5.2 PURCHASE PRICE OF PRODUCTS. In consideration of the Products to
be sold by NMI to GALAGEN, GALAGEN will pay to NMI:
(a) the invoice price for each Product, as invoiced by the
Product manufacturer, less any discounts, rebates, refunds, incentives or
other reductions in cost in any form whatsoever granted by the manufacturer
to NMI; plus
(b) NMI's cost (if any) to ship such Product from the
manufacturer to NMI; plus
(c) NMI's cost to ship the Product from NMI to GALAGEN's
customer; plus
(d) NMI's cost (if any) for packaging materials and supplies
used in shipping Products to GALAGEN's customers; plus
(e) NMI's actual direct labor costs for packaging Products
shipped to GALAGEN's customers. For purposes of this provision, direct labor
costs will be limited to the actual amounts paid by NMI to third parties for
packaging services.
5.3 REPORTING AND PAYMENTS. NMI will provide to GALAGEN a weekly
report during the Term, setting forth in reasonable detail the following
information:
(a) the quantity of each Product shipped during the previous
week, by customer;
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(b) the manufacturer's invoice price (in accordance with SECTION
5.2(a) herein) for Products shipped during the previous week;
(c) the Administrative Charge (as defined in SECTION 7 hereof)
for Products shipped during the previous week;
(d) the costs incurred by NMI in each of the categories listed
in SECTION 5.2(b) through (e); and
(e) the aggregate amount payable by GALAGEN relating to Products
shipped during the previous week.
GALAGEN will pay to NMI such aggregate amount at the earlier of (i) 45 days
after the date of the customer invoice or (ii) receipt by GALAGEN of the
customer payment from NMI in accordance with SECTION 6.4 hereunder.
5.4 VOLUME AND INVENTORY. GALAGEN shall not be required to purchase
any minimum amount or quantity of the Products. NMI agrees to use its
reasonable best efforts to maintain sufficient inventory, in accordance with
past practices, to fulfill all orders generated by GALAGEN (including those
assigned by NMI to GALAGEN hereunder) on a timely basis.
5.5 SAMPLES OF GLUTASORB READY TO USE. GALAGEN will have the right to
provide customers or potential customers with free samples of the Product
known as Glutasorb Ready to Use from the inventory of such Product held by
NMI. There will be no charge to GALAGEN for such samples, provided, however,
that GALAGEN may not charge customers or potential customers for such samples.
6. ACCESS TO NMI COMPUTER SYSTEM; ADMINISTRATIVE SERVICES TO BE PROVIDED BY
NMI.
6.1 GENERAL. NMI will make available for use by GALAGEN and employees
of GALAGEN its computer system and databases of customers and prospects.
During the Term, NMI will continue to be responsible for protecting the
integrity and security of such system, including without limitation
performing hardware and software maintenance and maintaining a backup system
in the event of a system failure. NMI will use its best efforts to safeguard
any proprietary data of GALAGEN which may become part of such system and
databases, including restricting access to NMI employees on a need-to-know
basis. NMI will continue to provide off-site storage of back-up computer
files and programs in accordance with current practices (I.E., on a daily
basis).
6.2 CUSTOMER DATA. NMI will make available to GALAGEN and GALAGEN's
employees, at GALAGEN's expense, copies of all customer records and account
information relating to Products sold prior to the Effective Date. GALAGEN
may, at its option, alter the terms of such customer relationship, including
credit terms and discounts, and may add new customers or terminate existing
customers.
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6.3 ORDER PROCESSING. Customer orders will be processed by GALAGEN
employees located at NMI's facility or, at GALAGEN's option, by NMI employees
located at NMI's facility working under the direction of GALAGEN. Such
processing will include: (a) receiving customer orders on NMI phone lines; (b)
entering order information into the NMI computer system; (c) filling customer
orders in accordance with their terms and updating records accordingly; and (d)
after an order has been shipped, invoicing the customer, recording that the sale
is attributable to GALAGEN and specifying payment terms and remittance
instructions determined by GALAGEN.
6.4 ACCOUNTS RECEIVABLE PROCESSING. Accounts receivable records will be
maintained on the NMI computer system. NMI will be responsible for all
collections of accounts receivable and will remit to bank accounts specified by
GALAGEN all customer payments owed to GALAGEN for sales made by GALAGEN
hereunder on a weekly basis. All payments will be applied to open customer
invoices in accordance with the customer's instructions, and if no such
instructions are specified the parties will contact such customer to determine
such instructions. NMI will provide to GALAGEN periodically a list of all open
customer accounts receivable assigned to GALAGEN.
6.5 REPORTS. By the fifth business day after the end of each month
during the Term, NMI will provide to GALAGEN such reports relating to sales
of the Products as GALAGEN may reasonably request to allow GALAGEN to
properly record such sales, maintain its accounting records and manage its
business related to the Products. Such reports may include, without
limitation, sales and cost of sales, collections, accounts receivable
balances, orders placed and order backlog.
7. FACILITIES AND SERVICE PAYMENTS.
7.1 ADMINISTRATIVE CHARGE. In consideration for the services to be
provided by NMI hereunder, GALAGEN will pay to NMI an administrative charge
(the "Administrative Charge") equal to 15% of the price charged by GALAGEN from
its customers for Products sold during the Term. The Administrative Charge
will cover, without limitation, warehouse rent, warehouse support services
(E.G., insurance, personnel, depreciation, etc.), invoicing services and
collection services.
7.2 OFFICE SPACE SERVICE CHARGES. GALAGEN will pay to NMI the expenses
referred to in Section 14.7 of the Asset Purchase Agreement for the services
referred to therein. GALAGEN will make such payments on a monthly basis, in
arrears.
8. WARRANTY CLAIMS.
During the Term, GALAGEN will offer warranties on the Products sold by
GALAGEN hereunder consistent with the warranties offered by NMI, and NMI will
continue to cover warranty claims, consistent with past practices, on Products
sold by it prior to the Effective Date. GALAGEN agrees to obtain NMI's approval
(which approval shall not be unreasonably withheld) prior to offering
replacement Products directly to customers.
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If any Product returned by a customer to GALAGEN cannot be resold under
normal business conditions (for example, if the Product has an expiration
date of six months or less from the date on which it is returned), NMI will
pay GALAGEN an amount equal to the amount of the credit that GALAGEN gave to
the customer for such Product.
9. ADDITIONAL OBLIGATIONS OF THE PARTIES.
9.1 OBLIGATIONS OF GALAGEN. GALAGEN shall:
(a) use reasonable efforts to promote the sale of the Products
and to solicit and obtain orders for the same; and
(b) promote the sale of the Products in a manner consistent with
the specifications, features or capabilities of the Products as described in
the technical and marketing literature provided by NMI and not knowingly make
any false or misleading representations regarding the Products.
9.2 OBLIGATIONS OF NMI. NMI shall:
(a) upon signing this Agreement, immediately deliver to GALAGEN
all Product samples, technical specifications, Product lists, price lists,
Product inventory and availability information, sales literature, customer
lists, customer order history, and all other information useful or necessary
to GALAGEN to carry out its obligations under this Agreement;
(b) provide GALAGEN with the time and cooperation of NMI's
personnel as may be reasonably useful or necessary for GALAGEN to carry out
its obligations under this Agreement;
(c) provide to GALAGEN a certificate of insurance reflecting
GALAGEN as an additional insured party to its coverage for products liability
insurance; and
(d) keep accurate books and records relating to sales of the
Products.
10. EXPIRATION AND TERMINATION OF AGREEMENT.
10.1 AUTOMATIC TERMINATION. This Agreement shall terminate on the
earliest to occur of December 31, 1998, the consummation of the Acquisition
or the termination of the Asset Purchase Agreement.
10.2 OPTION TO TERMINATE. This Agreement may be terminated at any time:
(a) by a written agreement signed by both Parties hereto;
(b) by either Party if the other Party defaults in the
performance of any material term or condition of this Agreement, and if such
default shall continue
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unremedied for a period of ten (10) days after written notice thereof is
given to the defaulting Party by the other Party;
(c) by either Party upon liquidation, dissolution,
reorganization, merger, sale of substantially all of the assets or change in
the voting control or corporate form of the other Party; or
(d) by either Party:
(i) if a receiver is appointed for the other Party or its
property;
(ii) if the other Party becomes insolvent or unable to pay
its debts as they become due or ceases to pay its debts as they become due in
the ordinary course of business or makes an assignment for the benefit of its
creditors; or
(iii) if any proceedings are commenced by or for the other
Party under any bankruptcy, insolvency, or debtor's relief law.
10.3 EFFECT OF TERMINATION. In the event of expiration or termination of
this Agreement:
(a) neither Party shall be liable to the other because of such
expiration or termination for compensation, reimbursement or damages for the
loss of prospective business, customers, profits or anticipated sales on
account of any expenditures, investments, leases or commitments made by
either Party in connection with the business or goodwill of NMI or GALAGEN or
for any other reason whatsoever arising out of such expiration or
termination. Notwithstanding the foregoing, in the event of the termination
of this Agreement, NMI shall fulfill on a timely basis all orders for
Products placed with NMI;
(b) adjustment and payment of all claims (excluding any warranty
or product liability claims) between GALAGEN and NMI arising from orders
accepted and shipped by NMI under this Agreement shall occur no later than
sixty (60) days after the effective date of expiration or termination of the
Agreement;
(c) each Party shall return to the other all property and
proprietary information of the other; and
(d) any default under or breach of this Agreement shall
constitute a default or breach of the Asset Purchase Agreement, and the
parties shall be entitled to all appropriate remedies thereunder.
10.4 SURVIVAL. Upon the termination of this Agreement, all privileges,
rights and obligations herein shall expire, except that NMI's obligations under
SECTION 8 and each
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Party's obligations under SECTIONS 11 through 18 shall survive and continue
in full force and effect.
11. RELATIONSHIP OF PARTIES
The parties are independent contractors under this Agreement and nothing
herein shall be construed to create an employment, partnership, joint venture or
agency relationship between them. Neither Party shall have the power to act
for, bind, or otherwise create or assume any obligation on behalf of the other
Party, express or implied, for any purpose whatsoever. Except as specifically
provided herein, neither Party assumes any liabilities of the other Party.
12. NOTICES
Any notice required hereunder to be given by either Party shall be in
writing and shall be delivered personally or sent by certified or registered
mail, postage prepaid, or by courier service, with written verification of
delivery, or by facsimile transmission (with receipt confirmed) to the other
Party to the address or telephone number set forth below or to such other
address or telephone number as either Party may designate from time to time
according to this provision. A notice delivered personally shall be effective
upon receipt. A notice sent by facsimile transmission shall be effective
twenty-four hours after the dispatch thereof. A notice delivered by mail or by
private courier service shall be effective on the third day after the day of
mailing.
If to NMI: with a copy to
Nutrition Medical, Inc. Xxxxxx & Whitney LLP
0000 00xx Xxx X. 000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000 Xxxxxxxxxxx, XX 00000
Attention: President Attention: Xxxxxxx X. Xxxxxx
If to GALAGEN: with a copy to:
GalaGen Inc. Faegre & Xxxxxx LLP
0000 Xxxxxxxxx Xxxxxx North 0000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000 00 Xxxxx Xxxxxxx Xxxxxx
Attention: Xxxxxx X. Xxxxx Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx Xxxxxx
13. SEVERABILITY
If any provision of this Agreement is found to be unenforceable by a
court of competent jurisdiction, the remaining provisions shall nevertheless
remain in full force and effect.
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14. WAIVER OR MODIFICATION
Any waiver, modification, or amendment of any provision of this
Agreement shall be effective only if in writing in a document that
specifically refers to this Agreement and such document is signed by the
Parties hereto.
15. ENTIRE AGREEMENT
This Agreement constitutes the full and complete understanding and
agreement of the Parties hereto with respect to the license and sale and
distribution of the Products by NMI to GALAGEN during the Term and, except as
specifically provided herein, supersedes all prior oral or written
understandings and agreements with respect thereto.
16. PROPRIETARY INFORMATION
The Parties recognize that certain technical information which may be
disclosed pursuant to this Agreement represents confidential and valuable
proprietary information and therefore, except in accordance with the Asset
Purchase Agreement or any ancillary document, each Party will not, without
the written consent of the other Party, disclose such information to any
person other than those of its employees who have a need to know such
information in order to utilize it for the purposes of this Agreement or use
such information other than for the purposes of this Agreement.
In the event that the Asset Purchase Agreement is terminated, NMI will
retain all customer information relating to sales of the Products hereunder.
In addition, GALAGEN will return all proprietary information of NMI to NMI or
provide certification of destruction thereof, except that GALAGEN may retain
copies of such documents as may be required for GALAGEN to maintain its
corporate records. Any proprietary information of NMI retained by GALAGEN
for its corporate records may not be used by GALAGEN for any purpose other
than as documentation of its past transactions.
17. SUCCESSORS
The rights and liabilities of the Parties hereto shall bind and inure to
the benefit of their respective successors, heirs, executors, and
administrators, as the case may be, except that neither this Agreement nor
the rights or obligations hereunder shall be assignable or transferable by
either Party, either in whole or in part, without the prior written consent
of the other Party.
18. GOVERNING LAW; VENUE
This Agreement shall be governed by and construed in accordance with the
laws of the State of Minnesota without regard to the conflict of laws. The
Parties agree that proper venue and jurisdiction for any action or proceeding
in connection with this Agreement shall be the courts in the State of
Minnesota.
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19. COUNTER PARTS
This Agreement may be executed in counterparts, each of which shall be
considered an original.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives to be effective as of the
date first given above.
NUTRITION MEDICAL, INC. GALAGEN INC.
By /s/ Xxxxx X. Xxxxxxx By /s/ Xxxxxxx Xxxxxx
----------------------------- ------------------------------
Its Corporate Secretary Its Chief Financial Officer
------------------------- --------------------------
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SCHEDULE 1
PRODUCTS
1. Fiber-PRO
2. Glutasorb Ready to Use
3. GlucoPro Vanilla
4. L-Emental Hepatic
5. L-Emental Pediatric
6. L-Emental
7. Nitro-PRO
8. Pro-Peptide for Kids
9. Pro-Peptide Unflavored
10. Pro-Peptide VHN
11. Pro-Peptide Vanilla
12. Nutrition Liquid
13. Nutrition Plus Liquid
14. Instant Nutrition
15. Instant Nutrition (Lactose Free)
16. ISO-PRO
17. ISO-LAN
18. ULTRA-PRO
19. ULTRA-LAN
20. NUTRA-LAN
