Exhibit 10.26
TERMINATION AGREEMENT
LICENSE BACK AND OPTION
DATED: December 21, 2001
BETWEEN:
(1) HYDRO MED SCIENCES, INC. ("HMS"), a subsidiary of GP Strategies Corporation
("GP"), a Delaware corporation with principal offices at ▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇, and
(2) SHIRE US INC., a New Jersey Corporation with principal offices at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ("Shire").
RECITALS:
A. Hydro Med Sciences, a division of GP (the "HMS Division"), and
Shire entered into a License Agreement dated 24 March 1998
whereby Shire agreed to undertake the development of a
pharmaceutical product containing Histrelin as an active
pharmaceutical ingredient for the treatment of human prostatic
carcinoma and was granted an exclusive license to market such
product in certain territories (the "License Agreement").
B. The HMS Division and Shire entered into a manufacturing supply
agreement dated 24 March 1998 in which the HMS Division agreed
to supply Shire with research and commercial quantities of
such product (as amended, the "manufacturing Agreement").
C. Shire and its Affiliates have undertaken certain development
activities pursuant to the License Agreement and are in
possession of valuable development data and know-how in
relation to such product.
D. The HMS Division has assigned the License Agreement and the
Manufacturing Agreement to HMS.
E. HMS has agreed to use its reasonable endeavors to either (i)
seek a third party licensee to continue such development and
to commercialize such product or (ii) develop and
commercialize such product itself, and Shire and HMS have
agreed to terminate the License Agreement and the
Manufacturing Agreement and Shire has agreed to license such
development data to HMS for this purpose on the terms set out
in this Agreement.
OPERATIVE PROVISIONS
1. INTERPRETATION
1.1 Terms used in this Agreement shall (unless the context
otherwise requires or unless specifically defined herein) have
the same meanings as set out in the License Agreement.
1.2 In this Agreement the following words shall have the following
meanings unless the context otherwise requires:
"Commercial Sale" means a sale to a third party (other than an
Affiliate or a Sub-Licensee) for commercial use of any
Licensed Product in any country within the Territory to
include for the avoidance of doubt a sale by a co-marketing
partner or through a contract sales force on reasonably
standard terms;
"Development Date" means all data, know-how and other information
relating to the Licensed Product generated in connection with
the Development Program in the possession or control of Shire
as at the date of this Agreement;
"Development Program" means the development program for the Licensed
Product previously agreed by the Parties;
"IND" means the Investigational New Drug authorization (No. 40,772)
given for the Licensed Product by the Food and Drug
Administration of the United States of America;
"Net Sales" means "Net Sales" as defined in the License Agreement
with the additional deduction of the PC Royalty and PROOVIDED
THAT sales by co-marketing partners or through a contract
sales force on reasonably standard terms shall additionally
constitute Net Sales for the purposes of this definition;
"PC Royalty" means any royalty payment properly paid by HMS to the
Population Council in respect of a sale of a Licensed Product
pursuant to the Termination of Agreement dated September 12,
1990, dated September 26 and October 1, 1997, as amended,
entered into by GP and the Population Council;
"Option" means the option granted by HMS to Shire to market and
distribute the Licensed Product in each country of the
Territory outside of the United States of America as more
particularly set out in Clause 6 of this Agreement;
"Sub-Licensee" any person, firm or company (excluding Affiliates, Shire
pursuant to the exercise of the Option and third parties who
co-market the Licensed Product in the Territory on reasonably
standard terms) licensed or appointed by HMS to supply the
Licensed Product in any country within the Territory;
"Sub-License Agreement" means an agreement with a Sub-Licensee relating
to the development, use or sale of Licensed Products;
"Royalty Income" all royalty or other income received by HMS or an
Affiliate from any Sub-Licensee relating to the sale or use of
any part of the Development Data, the Hydro Med Intellectual
Property Rights and/or the Licensed Product less the deduction
of any PO Royalty paid in respect of any sales of Licensed
Product by any such Sub-Licensee;
"Transfer Date" shall mean 23 April 2001.
1.3 Except where the context otherwise requires, words denoting the
singular include the plural and vice versa.
1.4 Unless otherwise stated, a reference to a Clause is a reference to
a Clause of this Agreement.
1.5 Clause headings are for ease of reference only and do not affect
the interpretation of this Agreement.
1.6 This Agreement includes the Recitals.
2. LICENSE GRANT
2.1 Subject to the terms of the Option, Shire hereby grants to HMS with
deemed effect from the Transfer Date an exclusive license in the Territory (with
the right to grant sub-licenses) in the Field of Use to the Development Data for
the development, manufacture, use, supply and sale of the Licensed Product.
2.2 HMS shall use its reasonable endeavors to secure a Sub-Licensee or
Sub-Licensees for the purposes of developing and commercializing the Licensed
Product; provided that, in the United States of America, HMS may market the
Licensed Product itself including by co-marketing or contract force
arrangements. Any Sub-License Agreement shall be with a reputable pharmaceutical
company on an arms-length basis and on commercial terms as favorable to HMS as
is reasonably achievable in the circumstances. HMS shall notify Shire in advance
of any Sub-License Agreement being entered into and shall provide Shire with a
summary of relevant terms of such Sub-License Agreement, including royalties, up
front and milestone payments.
2.3 The term of the license granted in Clause 2.1 shall continue for so
long as royalties are payable pursuant to Clause 4; thereafter HMS shall have a
fully paid up license to the Development Data in the Territory in the Field of
Use.
2.4 In the event that HMS concludes a Sub-License Agreement outside of
the United States of America, then the Option shall lapse in respect of the
relevant territory or territories (a) set out in such Sub-License and (b) where
Shire has not previously exercised its rights under the Option in such territory
or territories.
3. TRANSFER OF DEVELOPMENT DATA
3.1 Shire shall with effect from the Transfer Date cease all on-going
activities under the Development Program and use all reasonable efforts to
effect an orderly transfer to HMS of such activities.
3.2 Each party agrees to act in good faith and to provide all
reasonable co-operation to the other in order to transfer the Development Data
and NDA to HMS (or its Sub-Licensee) in a timely and efficient manner pursuant
to this Clause 3.
3.3 Shire shall grant HMS access to the pre-clinical data set out in
Shire's NDA for Supprelin (NDA No. 19836) as is reasonably necessary to secure
FDA approval for the Licensed Product as soon as is reasonably practicable
following written request being made by HMS to Shire.
3.4 HMS shall, for the avoidance of doubt, bear all costs incurred I
filing, prosecuting and maintaining all patents and patent applications
encompassed within the Hydro Med Intellectual Property Rights and HMS shall use
all its reasonable commercial efforts to file, prosecute and maintain any such
patents and patent applications in a prudent and efficient manner.
3.5 In respect of the use or sale of the Licensed Product from the
Transfer Date, HMS shall maintain comprehensive general liability insurance,
including product liability insurance in such amount as is reasonable in all the
circumstances. HMS shall provide Shire with a certificate from the insurance
company verifying the above upon request being made by Shire.
4. ROYALTIES
4.1 In consideration for the license granted hereunder, and in further
consideration of the transfer of the IND HMS shall pay to Shire:
4.1.1 in the event of a Sub-Licenses being appointed, twenty per
cent (20%) of Royalty Income;
4.1.2 in the event of a Sub-Licensee being appointed, twenty per
cent (20%) of milestones received by HMS or an Affiliate relating
to the Licensed Product subject to a cap of US$5 million, PROVIDED
THAT such cap shall only apply where HMS is entitled to receive a
royalty on Net Sales of at least 10% pursuant to any Sub-License
Agreement; and
4.1.3 in the event of a Commercial Sale of Licensed Product by HMS
or its Affiliates including by co-marketing partners or through a
contract sales force, two per cent (2%) of Net Sales in the
Territory.
4.2 Royalties due to Shire pursuant to this Clause 4 shall be:
4.2.1 payable for the period in respect of which Royalty Income is
received by HMS or an Affiliate of HMS;
4.2.2 payable for a period of ten (10) years from the date of first
Commercial Sale where HMS or an Affiliate makes Commercial Sales of
Licensed Product;
4.2.3 payable on the later of the following (i) sixty (60) days of
the end of each calendar quarter in respect of sales of Licensed
Product made during such quarter or (ii) 30 days from receipt of
payment by HMS;
4.2.4 exclusive of value added tax or other sales taxes or duties
and made in full without deduction of income or other taxes;
4.2.5 made in US dollars to the credit of a bank account to be
designated in writing by Shire to HMS; and 4.2.6 accompanied by a
statement including a detailed calculation of the payment due.
5. RECORDS AND REPORTS
5.1 HMS and its Affiliates shall, and HMS shall procure that its or its
Affiliate's Sub-Licensees shall, maintain accurate and up to date records of
Royalty Income received or Net Sales, as appropriate.
5.2 HMS and its Affiliates shall on reasonable notice from Shire make
such records available for inspection by Shire (or an independent accountant
appointed by Shire) for the purpose of verifying the accuracy of any statement
or report given by HMS to Shire and/or the amount of royalties due thereunder.
In the event an independent accountant concludes that additional royalties are
payable to Shire, such additional sums shall be due and payable immediately and,
in the event that the inaccuracy is greater than 5% on any royalty statement,
HMS shall be liable for the reasonable fees of any such accountant so appointed.
6. OPTION AGREEMENT
6.1 Subject to HMS's rights to enter into Sub-License Agreements, HMS
hereby grants to Shire an exclusive, irrevocable option, exercisable at any time
by notice in writing from Shire to HMS on a country by country basis, to market
and distribute the Licensed Product in each country of the Territory outside of
the United States of America in accordance with a distribution agreement based
upon the terms set out in the Schedule to this Agreement. 6.2 The Option is
granted with effect from the Transfer Date in consideration Shire entering into
this Agreement and shall expire on a country by country basis (where Shire has
not previously exercised an Option (pursuant to Clause 6.1 of the Agreement), at
the earlier of:
6.2.1 HMS entering into Sub-License Agreement for any country or
countries within the Territory; or
6.2.2 180 days following the date of regulatory approval in each
country of the Territory for the Licensed Product.
6.3 HMS shall be at liberty to market the Licensed Product itself
including by co-marketing or contract force arrangements in the United States of
America or, after the Option has expired with respect to such country, in any
other country within the Territory
6.4 Upon exercise of an Option the following milestone payments shall
be payable in respect of the relevant countries set out in the Shire notice
exercising the Option:
6.4.1 US$2 million in respect of the European Union;
6.4.2 US$0.5 million in respect of any other countries within the
Territory (to be reduced by US$0.25 million should HMS enter into a Sub-License
Agreement within the European Union);
Such milestones to be payable upon the date that a product approval for
marketing of the Licensed Product is given within the relevant country or
countries set out in the Shire Option notice.
7. RELEASE AND WAIVER
Each party and its Affiliates hereby irrevocably releases, waives and
foregoes all claims, actions or demands that it may have against the other party
and/or its Affiliates in relation to the development of the Licensed Product or
under either the License Agreement or the Manufacturing Agreement.
8. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto with respect to the transactions provided for herein and contains all of
the agreement between he parties hereto and there are no verbal agreements or
understandings between the parties to this Agreement that are not reflected in
this Agreement. Subject to Clause 9 below, this Agreement supersedes the Heads
of Agreement entered into on 23 April 2001 by the parties and both the License
Agreement and the Manufacturing Agreement each of which are hereby terminated
with effect from the Transfer Date.
9. MISCELLANEOUS PROVISIONS
9.1 Notwithstanding Clause 8 above, Sections "10.01 Amendment", "10.03"
Severability", "10.04 Notices", "10.05 Governing Law", "10.06 Assignment",
"10.07 Consents not to be Reasonably Withheld", "10.08 No Strict Construction"
and "10.10 force Majeure" of the License Agreement shall be deemed to apply to
this Agreement save that references in these Sections to ▇▇▇▇▇▇▇ shall be deemed
to be to Shire and Shire's address for service of notices shall be:
Shire US Inc
c/o Shire Pharmaceuticals Group plc
Hampshire international Business Park
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Attention: Ms. Tatjana May, General Counsel and Company Secretary
SIGNED for and on behalf of HYDRO MED SCIENCES, INC.
Name:
Title:
SIGNED for and on behalf of SHIRE US INC.
Name:
Title: