exv10w7



 






Exhibit 10.7








March 14, 2002



Smith & Nephew, Inc.



and



T.J. Smith & Nephew Limited



Dear Sirs:




	 	 	 	 	 
	Re:

	 	-
	 	Amended and Restated License and Development Agreement made as of February 20,
2002 (“License and Development Agreement”)

	 

	 	-
	 	Distribution in Japan





This letter agreement is to confirm that the Japanese Distribution Agreement (as
defined in the License and Development Agreement) is to be terminated and as a
result thereof, upon such termination, S&N will be entitled to exercise the
rights provided for in the License and Development Agreement in relation to Japan
as if the exceptions with respect thereto were not included in the License and
Development Agreement, all in accordance with the terms and conditions set out in
this letter agreement.



It is agreed that:





	1.	 	Any capitalized terms that are not otherwise defined in this
letter agreement shall have the meaning as set out in the License and
Development Agreement. In this letter agreement:






	 	(a)	 	“Japan Term” means a period of six (6) years, commencing
on the date of the first commercial sale into the Japanese market by
S&N of Japan Acticoat Product to an end user, arms-length party; and
	 
	 	(b)	 	“Japan Acticoat Product” means any and all Acticoat
Product and any Improvements (as defined in the Japanese Distribution
Agreement) thereto which S&N is permitted to use, distribute, market,
promote and/or sell in Japan and its territories pursuant to the
License and Development Agreement purely and only as a result of the
termination of the Japanese Distribution Agreement and the expansion of
the S&N Field as a result thereof, by reason of the field specified in
the Japanese Distribution Agreement no longer constituting an Excluded
Use to the S&N Field in the License and Development Agreement.





	 	 	 	 	 
	 
	NUCRYST Pharmaceuticals Corp.

	 	 	 	NUCRYST Pharmaceuticals Inc.
	10102–114 Street

	 	 	 	50 Audubon Road, Suite B
	Fort Saskatchewan, AB T8L 3W4 Canada

	 	 	 	Wakefield, MA 01880 USA
	Telephone: 780-992-5500 Fax: 780-992-5501

	 	 	 	Telephone: 781-224-1444 Fax: 781-246-6002






 









 






-2-





	2.	 	Except to the extent otherwise provided in this letter agreement, the
provisions of the License and Development Agreement shall govern and apply to the
use, marketing, promotion, distribution and sale of Japan Acticoat Product. For
greater certainty, upon the termination of the Japanese Distribution Agreement
Section 1.1.16.14 of the License and Development Agreement shall (as specified
therein) no longer apply and, as a result; not only will the definition of
Excluded Uses be modified, but there will be resulting modifications for
definitions such as Field which reference Excluded Uses. As a consequence, the
license grant by Westaim to S&N in Section 2.1 of the License and Development
Agreement will include Japan Acticoat Product. Further, upon termination of the
Japanese Distribution Agreement, the provisions of Section 5.5.1.1.2, and
Sections 5.5.1.2, 5.5.1.4 and 5.5.1.5 (as those sections relate to Japan and the
reference to Japanese product) of the License and Development Agreement shall no
longer apply.
	 
	3.	 	As specified in the License and Development Agreement, T.J. Smith &
Nephew Limited shall pay from the United Kingdom to Nucryst Pharmaceuticals Inc.
(formerly, Westaim Biomedical Inc.) in the United States the Distribution Royalty
on the Net Sales of Japan Acticoat Product. In addition, during the Japan Term,
unless Westaim elects otherwise in accordance with paragraph 4 below, the
Distribution Royalty payable on Net Sales of Japan Acticoat Product shall be
increased in accordance with the provisions of Section 6.2 of the License and
Development Agreement except that:






	 	(a)	 	Japan Acticoat Product shall be treated separately (i.e.,
without reference to the rest of world Product sales), for purposes of
calculating any increase in the Distribution Royalty under Section 6.2 of
the License and Development Agreement; and
	 
	 	(b)	 	the maximum increase of [***] (to an
aggregate maximum Distribution Royalty of [***]) as specified in Section 6.2.1 of the License and Development
Agreement shall not apply.






	 	 	Further, in the event that, during a given calendar quarter, the Net Sales
for the volume and mix of Japan Acticoat Product sold is equal to or greater
than [***] of the Net Sales of the equivalent
volume and mix of Acticoat Product in the rest of the world, then the
Distribution Royalty payable on the Net Sales of Japan Acticoat Product shall
be increased to the greater of [***] or the
amount that would otherwise be payable as a result of the increase in the
Distribution Royalty as set forth in the immediately preceding portion of
this paragraph 3.
	 
	4.	 	Westaim may elect, in its sole discretion, on a quarterly basis during
the Japan Term, to forego its rights to the separate increase in the Distribution
Royalty as set forth in paragraph 3 above and instead include the sale of Japan
Acticoat Product in the rest of the world sales such that such sale is included
with all other sales of Product for purposes of Section 6.2 of the License and
Development Agreement.
	 
	5.	 	For greater certainty, all sales of Japan Acticoat Product shall be
counted towards both the calculation of all sales milestones for purposes of
Section 6.5 of the License and Development Agreement and the calculation of Net
Sales for the purpose of determining Product Sales required by Schedule D
pursuant to Section 5.3.2 of the License and Development Agreement.
	 
	6.	 	S&N shall pursue, in accordance with Sections 4.2, 4.3, 4.5 and 4.6 of
the License and Development Agreement, the regulatory approvals needed to
distribute, market, promote and sell




 









 











-3-





	 	 	the Japan Acticoat Product in Japan (and pay all costs associated
therewith) and the marketing, promotion and sale of such product in Japan.
	 
	7.	 	For greater certainty, upon expiration of the Japan Term, paragraphs 3
and 4 of this letter agreement shall cease to apply as a modification to the
terms of the License and Development Agreement.
	 
	8.	 	Except as amended by this letter agreement, the License and Development
Agreement shall remain in full force and effect.




This letter agreement shall come into effect from and after the date hereof. The
termination of the Japanese Distribution Agreement shall be evidenced by a
termination agreement with respect thereto executed and delivered by Westaim and
Century Medical, Inc.



Please execute the duplicate copy of this letter agreement signifying your
agreement with the above.



Sincerely,




	 	 	 	 	 	 	 	 	 	 	 
	NUCRYST Pharmaceuticals Corp.	 	 	 	Smith & Nephew, Inc.	 	 
	(formerly, Westaim Biomedical Corp.)	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Per:

	 	/s/ Scott H. Gillis
	 	 	 	Per:
	 	/s/ David A. Trollope	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Scott H. Gillis	 	 	 	 	 	 	 	 
	 

	 	President	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Per:

	 	/s/ Barry M. Heck
	 	 	 	Per:
	 	/s/ Stephen Lang	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Barry M. Heck	 	 	 	 	 	 	 	 
	 

	 	Vice President, Corporate Development	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	NUCRYST Pharmaceuticals Inc.	 	 	 	T. J. Smith & Nephew Limited	 	 
	(formerly, Westaim Biomedical Inc.)	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Per:

	 	/s/ Scott H. Gillis
	 	 	 	Per:
	 	/s/ David A. Trollope	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Scott H. Gillis	 	 	 	 	 	 	 	 
	 

	 	President	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Per:

	 	/s/ Barry M. Heck
	 	 	 	Per:
	 	/s/ Stephen Lang	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Barry M. Heck	 	 	 	 	 	 	 	 
	 

	 	Vice President, Corporate Development