Document:

exv10w7

 

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indicates that text has been omitted which is the subject of a
confidential treatment request. This text has been filed separately
with the SEC.

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

 

 

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	 	 	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 Developmentexv10w8

 

[***]
indicates that text has been omitted which is the subject of a
confidential treatment request. This text has been filed separately
with the SEC.

Exhibit 10.8

AMENDING AGREEMENT

This Amending Agreement is made effective November 3, 2003

BETWEEN:

SMITH & NEPHEW, INC.

a corporation pursuant to the laws of the State of Delaware, in the United States of America

-and-

T.J. SMITH & NEPHEW LIMITED

a corporation pursuant to the laws of England and Wales

(all of the above parties being hereinafter collectively referred to as “S&N”)

-and-

NUCRYST PHARMACEUTICALS INC.

a corporation pursuant to the laws of the State of Delaware, in the United States of America

-and-

NUCRYST PHARMACEUTICALS CORP.

a corporation pursuant to the laws of the Province of Alberta, Canada

(the two parties immediately above being hereinafter collectively referred to as “NUCRYST”)

Whereas:

	A.	 	S&N and NUCRYST have entered into the Amended and Restated License and Development
Agreement;
	 
	B.	 	S&N has requested an amendment to Section 5.6 (Non-Competition) of the Amended and Restated
License and Development Agreement to allow the marketing of certain competing products in New
Zealand with the goal of maintaining S&N’s strong wound care market position in New Zealand;
	 
	C.	 	NUCRYST is willing to agree to the amendment of the Amended and Restated License and
Development Agreement requested by S&N, subject to the terms of this Amending Agreement.

NOW THEREFORE THIS AGREEMENT WITNESSETH THAT:

	1.	 	In this Amending Agreement, including in the preambles hereto, capitalized terms which
are not specifically defined herein shall have the meanings given such terms in the Amended
and Restated License and Development Agreement, and the following words shall have the
following meanings:

	 	a.	 	“Amended and Restated License and Development Agreement” shall mean
that Amended and Restated License and Development Agreement made as of the
20th day of February, 2002, among S&N and NUCRYST;

 

 

2

	 	b.	 	“Amending Agreement” shall mean this Amending Agreement made between S&N and
NUCRYST;
	 
	 	c.	 	“Competing Products” shall mean [***] (a [***] dressing with silver) and
[***] (a [***] dressing with silver), both such products being
manufactured by Coloplast A/S;
	 
	 	d.	 	“Royalty” shall mean the sum of all Percentage Manufacturing Profit and
Distribution Royalty plus all additional royalties or payments of any type to be paid
by S&N to NUCRYST pursuant to the Amended and Restated License and Development
Agreement, or pursuant to the Supply Agreement, or pursuant to any amendments or
collateral agreements to the Amended and Restated License and Development Agreement
and the Supply Agreement, plus any amount payable by S&N to NUCRYST pursuant to this
Amending Agreement.

	2.	 	Section 5.6 of the Amended and Restated License and Development Agreement is
hereby amended to read as follows:

	 	 	 	Other than as provided for in this Agreement, and only for so long as S&N has an
exclusive license in respect of a Product (other than Acticoat Product and Acticoat
7 Product with respect to Canada and the United States) during the Term, and except
for sales and activities associated with the sales of [***] and [***] in
New Zealand only, S&N and its Affiliates shall not, either directly or indirectly,
or in partnership or jointly or in conjunction with any Person, firm, association,
syndicate or corporation, as principal, agent, shareholder, partner, member,
beneficiary or in any other capacity or manner whatever, carry on, engage in, be
concerned with or undertake any business or other activities in any way involving
silver-based products, including silver salts, (but excluding silver sulfadiazine
products) in the Field and, except for a period of one year from the date of the
acquisition specified hereafter, where the violation of the foregoing covenant not
to compete is a result of S&N either acquiring a corporation or acquiring assets
comprising all or substantially all of a product line or business of a corporation
that includes products in breach of the foregoing covenant. In the event of a
breach by S&N of the foregoing covenant not to compete, the sole remedy of Westaim
shall be to elect hereunder to withdraw the exclusivity of the license and such
license shall become non-exclusive in respect of all Products (except Acticoat
Product and Acticoat 7 Product with respect to Canada and the United States) on the
90th day after notice in writing hereunder has been received by S&N, and the
provisions of this Agreement shall be deemed to be amended accordingly.

	 	 	but strictly subject at all times to the following conditions:

	 	a.	 	this amendment applies only to sales and activities associated with the sales
of Competing Products in New Zealand;
	 
	 	b.	 	this amendment will be in force for an initial term of five (5) years from
the effective date of this Amending Agreement, shall be subject to review and
discussion between the parties on an annual basis within 90 days prior to each yearly
anniversary during the term of this Amending Agreement, and shall be subject to
termination on any yearly anniversary during the term of this Amending Agreement by
the mutual consent of NUCRYST and S&N;

 

 

3

	 	c.	 	if the Parties develop for sale a New Product in the form of either a foam wound
dressing or a hydrocolloid wound dressing, then S&N shall offer such New Product(s)
for sale in New Zealand as soon as practicably possible and shall also discontinue the
sale of either or both of [***] and [***] (to the extent replaced by the
said New Product(s))in a manner in compliance with existing legal agreements and
regulatory requirements;
	 
	 	d.	 	no Royalty will be payable by S&N to NUCRYST on net sales (calculated in a
manner consistent with Net Sales as defined in the Amended and Restated License and
Development Agreement) of Competing Products in New Zealand as long as such net sales
of Competing Products do not exceed [***] of the Net Sales by S&N of Products within New
Zealand during any calendar year during the term of the Amended and Restated License
and Development Agreement, but all such net sales of Competing Products will in any
event count towards sales milestone payments pursuant to Section 6.5 of the Amended
and Restated License and Development Agreement;
	 
	 	e.	 	if the said net sales of Competing Products in New Zealand exceed [***] of the
Net Sales by S&N of Products within New Zealand during any calendar year during the
term of the Amended and Restated License and Development Agreement then S&N will pay
Royalty to NUCRYST upon all such net sales of the Competing Products in New Zealand,
and all such net sales of the Competing Products will count towards sales milestone
payments pursuant to Section 6.5 of the Amended and Restated License and Development
Agreement;
	 
	 	f.	 	On an annual basis, within 2 months after the end of each calendar year, S&N
will provide NUCRYST with all net sales (as consistent with the definitions with the
Amended and Restated Licence and Development Agreement) data for the Competing
Products in New Zealand (broken out separately for [***] and [***]) for the
previous year.

	3.	 	Under the terms of the Amended and Restated License and Development Agreement, the Parties
will actively consider the development of a New Product in the form of a [***]
dressing. To that end, NUCRYST may, at their cost, choose to provide samples of prototype
dressings made to S&N’s preliminary target specifications in order to facilitate such
development. S&N will provide preliminary target specifications (on a suggested but
non-binding basis) and samples of Competing Products for testing purposes, to Nucryst as soon
as practicable after the signing of this Amending Agreement.
	 
	4.	 	The recital of parties on the first page of the Amended and Restated License and
Development Agreement is hereby amended to read as follows:

	 	 	 	NUCRYST PHARMACEUTICALS CORP. (formerly Westaim Biomedical Corp.), a corporation
incorporated under the laws of Alberta, and NUCRYST PHARMACEUTICALS INC. (formerly
Westaim Biomedical Inc.) a corporation incorporated under the laws of the State of
Delaware in the United States of America
	 
	 	 	 	(hereinafter collectively referred to as “Nucryst”)

	5.	 	The definition of Supply Agreement contained in the Amended and Restated License and
Development Agreement is hereby amended to read as follows:

	 	 	 	“Supply Agreement” means that certain supply agreement of even date herewith among
NUCRYST Pharmaceuticals Corp., S&N and Smith & Nephew Inc.,

 

 

4

	 	 	 	together with all Schedules thereto and any amendments to or restatements
of such supply agreement;

	6.	 	Unless earlier extended by mutual agreement of the parties hereto, or unless terminated
earlier in accordance with the terms hereof, this Amending Agreement and all of its provisions
will expire at the end of the five year term of this Amending Agreement.
	 
	7.	 	On an annual basis, S&N will provide to NUCRYST for NUCRYST’s convenience any
publicly-available information which S&N has in its possession about the Competing Products in
New Zealand during the year in question.
	 
	8.	 	Any failure by S&N to fulfill any of the conditions in Section 2 herein, if such default
continues for a period of thirty (30) days (or such longer period as NUCRYST may agree to in
writing) after written notice of the default in question has been received by S&N, will result
in the immediate termination of this Amending Agreement and result in a return of Section 5.6
of the Amended and Restated License and Development Agreement to its original wording, all of
which shall be NUCRYST’s sole remedy in the event of such breach. In any event however, the
amendments made to the Amended and Restated License and Development Agreement by Sections 4
and 5 of this Amending Agreement shall remain in effect.
	 
	9.	 	S&N represents and warrants to Nucryst that S&N is, at the date hereof, not under contractual
impediment which would prevent S&N from working with Nucryst on the development and product
launch of a New Product as a hydrocolloid wound dressing.
	 
	10.	 	The recitals attached hereto are specifically incorporated herein.
	 
	11.	 	Except as expressly amended pursuant to the terms of this Amending Agreement, the provisions
of the Amended and Restated License and Development Agreement continue in full force and
effect.
	 
	12.	 	The provisions of Sections 1.2, 1.3, 12.1 through 12.6 inclusive, 13.3 through 13.5
inclusive, 13.11 through 13.16 inclusive, and 13.19 of the Amended and Restated License and
Development Agreement are incorporated into this Amending Agreement by reference and apply to
this Amending Agreement as though set forth fully herein.

IN WITNESS WHEREOF the parties hereto have executed these presents by the hands of their duly
authorized officers in that behalf, each of whom have all required authority to bind the parties
they are indicated to represent, effective the date first above written.

	 	 	 	 	 	 	 
	/s/ Scott H. Gills

	 	 	 	/s/ David A. Trollope
	 	 
	 

	 	 	 	 	 	 
	Scott H. Gills

	 	 	 	David A. Trollope	 	 
	Date 10-24-03

	 	 	 	Date 3/11/03	 	 
	President

	 	 	 	Finance Director	 	 
	NUCRYST Pharmaceuticals Inc.

	 	 	 	for Smith & Nephew, Inc. and
T.J. Smith & Nephew Limited	 	 
	NUCRYST Pharmaceuticals Corp.
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Domenic Vatalero

	 	 	 	/s/ Stephen Lang	 	 
	 

	 	 	 	 	 	 
	Domenic Vatalero

	 	 	 	Stephen Lang	 	 
	Date
10/24/03

	 	 	 	Date 30/10/03	 	 
	Vice President Marketing &
Operations

NUCRYST Pharmaceuticals
Inc.
NUCRYST Pharmaceuticals
Corp.

	 	 	 	Director of Business Development

for Smith & Nephew, Inc. and T.J.
Smith
& Nephew Limited

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