Document:

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                                                                    Exhibit 10.1

                         EXECUTIVE EMPLOYMENT AGREEMENT

          THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made as of
the 16th day of September, 2003 by and between David Tierney (the "Executive"),
and Valera Pharmaceuticals, Inc., a Delaware corporation (the "Company").

          WHEREAS, the Company desires to continue to employ the Executive and
the Executive wishes to perform services for the Company pursuant to the terms
of this Agreement; and

          NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained, herein, and intending to be legally bound, the parties,
subject to the terms and conditions set forth herein, agree as follows:

          1. Employment and Term: Service as Board Member.  The Company hereby
employs the Executive, and the Executive hereby accepts employment with the
Company, as the Chief Executive Officer (such position, referred to herein as
the Executive's "Position") for a period commencing on July 1, 2003 (the
"Effective Date") and continuing until the earlier of: (a) the third
anniversary of the Effective Date, or (b) termination of the Executive in
accordance with Section 6 of this agreement (the "Term"). On the third
Anniversary of the Effective Date, unless this Agreement is renewed by written
agreement between the Company and the Executive, the Executive will become an
"at will" employee and his employment may be terminated at any time, for any
reason or no reason, with or without Cause, by him or by the Company; provided,
however, that if the Executive's employment is terminated without Cause or for
Good Reason following such non-renewal, then, subject to the provisions of
Section 6.5 or Section 6.6 of this Agreement (as applicable), the Company will
continue to pay to the Executive his then current Base Salary for the twelve
(12) month period following such date of termination. In addition and for no
additional consideration, Executive hereby agrees to serve as a member of the
Company's Board of Directors (the "Board") to the extent elected by the
shareholders of the Company and consistent with the by-laws of the Company as
they may be amended from time-to-time.

          2. Duties and Responsibilities.

               2.1. Generally.  During the Term, Executive hereby agrees to
serve the Company faithfully and to the best of his ability and shall devote his
full time, attention, skill and efforts to the performance of the duties: (i) as
shall be specified and designated from time-to-time by the Chairman of the
Board; and (ii) customarily performed by the Chief Executive Officer of a
business of the size and nature similar to that of the Company. During the Term,
Executive shall report directly to the Chairman of the Board. Without limiting
the generality of the foregoing, the Executive will be responsible for the
overall well being of the Company.

               2.2. Travel Obligations.  Executive acknowledges that his
Position will require travel from time-to-time for Company business.

               2.3. Primary Location.  On the Effective Date, Executive's
business location of record will be Cranbury, New Jersey.
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          3. Other Business Activities.  During the Term, the Executive will
not, without the prior written consent of the Company, which consent shall not
be unreasonably withheld, directly or indirectly engage in any other business
activity or pursuit whatsoever, except such activities in connection with any
charitable or civic activities or serving as an executor, trustee or in other
similar fiduciary capacity as do not interfere with his performance of his
responsibilities and obligations pursuant to this Agreement.

          4. Compensation.

               4.1. Base Salary.  The Company shall pay the Executive, and the
Executive hereby agrees to accept, as compensation for all services rendered by
Executive in any capacity under this Agreement or otherwise in consideration for
the covenants referenced in Section 5 of this Agreement, base salary at the
annual rate of Two Hundred Seventy-Five Thousand Dollars ($275,000) less
applicable withholding (as the same may hereafter be adjusted, the "Base
Salary"). Base Salary shall be paid in accordance with the Company's payroll
practices in effect from time-to-time. The Board (excluding Executive in his
capacity if a member of the Board), shall review the performance of Executive
annually, on or about the anniversary of the Effective Date and to make
appropriate adjustments to the Executive's Base Salary.

               4.2. Annual Bonus Program.  For each calendar year of the
Agreement, Executive will be eligible to participate in any annual bonus
programs (the "Annual Bonus") established by the Board (excluding Executive in
his capacity if a member of the Board) from time-to-time for the benefit of
Company management, in each case to the extent Executive is eligible under the
terms of such annual bonus program.

               4.3. Benefits and Expenses.  The Executive shall be eligible to
participate in the benefit plans and programs (including without limitation, the
sick leave, holidays and retirement plans or programs) that are available to
other employees of the Company generally on the same terms as such other
employees (excluding any equity-based compensation plan, program or policy), in
each case to the extent that the Executive is eligible under the terms of such
plans or programs. Executive shall be eligible for expense allowances and/or
reimbursements for reasonable expenses incurred in connection with the
performance of his duties hereunder as are consistent with the Company's usual
practice and policies with respect to such allowances and reimbursements.

               4.4. Vacation.  In addition to paid holidays recognized by the
Company from time-to-time, Executive shall be entitled to twenty (20) days of
paid vacation during any calendar year of the Term of this Agreement. Vacation
accrued with respect to any calendar year will be forfeited if Executive does
not take such vacation prior to the last day of such calendar year unless
Executive receives, prior to such last day, written confirmation from the Board
that such vacation will not be forfeited.

               4.5. Withholding.  The Base Salary and all other payments made
under this Agreement are inclusive of all applicable income, social security and
other taxes and charges which are required by law to be withheld from
Executive's wages by the Company, and which

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will be withheld and paid in accordance with applicable law and the Company's
normal payroll practices.

          5. Confidential Information and Non-Competition Agreement.  Executive
acknowledges that, as of the date hereof, he has executed an Employee
Confidentiality and Non-Competition Agreement in the form attached hereto as
Exhibit A (the "Confidentiality Agreement") and he hereby ratifies and reaffirms
his obligations under the Confidentiality Agreement. Executive hereby agrees to
disclose the existence and terms of this Section 5 to any individual or entity
for whom he may work or otherwise provide service for compensation during the
one (1) year period following the termination of his employment with the
Company. In addition, Executive agrees that such disclosure will occur not later
than five (5) business days prior to his accepting an offer to become employed
by or to perform services for any such entity.

          6. Termination.  The Executive's employment hereunder may be
terminated during the Term upon the occurrence of any one of the events
described in this Section 6. Upon termination, the Executive shall be entitled
only to such compensation and benefits as described in this Section 6.

               6.1. Termination for Disability.

                    (a) In the event of the Disability (as hereinafter defined)
of the Executive, the Executive's employment and/or his performance of service
as a member of the Board may be terminated by the Company by notice to the
Executive.

                    (b) In the event of a termination of the Executive's
employment pursuant to Section 6.1 (a): (i) the Executive will be entitled to
receive any accrued and unpaid Base Salary and Annual Bonus through the date of
such termination (and reimbursement for expenses, in accordance with Section
4.3, incurred prior to the termination of employment), including without
limitation, payment prescribed under any disability plan or arrangement in which
he is a participant or to which he is a party in his capacity as an employee of
the Company; and (ii) if the Executive and/or his spouse or eligible dependents
elect continuation of medical and/or dental benefits under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company
will pay the full premium cost of such participation for a period of twenty-nine
(29) months following the date of such termination or until the Executive or his
spouse or dependents cease to be eligible for participation under COBRA,
whichever is shorter. Except as specifically set forth in this Section 6.1, or
to the extent provided under any Company-provided disability benefits policy,
the Company shall have no other liability or obligation to the Executive for
compensation or benefits by reason of such termination.

                    (c) For purposes of this Section 6.1, "Disability" shall
mean a physical or mental condition that entitles the Executive to benefits
under the Company's long-term disability policy which covers the Executive, if
any, or, in the absence of coverage under any such policy, a disability which
prevents the Executive from performing his duties, with or without a reasonable
accommodation, under this Agreement for forty-five (45) days during any 180-day
period. The Company will notify the Executive of commencement of the disability
period, which period cannot commence more than fourteen (14) days prior to the
date of the

                                       -3-
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notice. The determination of whether the Executive has a Disability will be made
by the Board (excluding Executive in his capacity if a member of the Board). Any
dispute as to whether the Executive is or was prevented from performing his
duties under this Agreement because of a physical or mental disability or
incapacitation, whether his disability or incapacity has ceased or whether he is
able to resume his duties under this Agreement shall be finally and conclusively
decided by a licensed physician chosen by the Company, and any such
determination by the physician shall be conclusive and binding on the parties
hereto. The Executive must submit to all tests and examinations and provide all
information the requested by the physician.

          6.2. Termination by Death.  Executive's employment and his performance
of service as a member of the Board shall automatically be terminated on his
death. Executive's executors, legal representatives or administrators shall
receive any accrued and unpaid Base Salary and Annual Bonus through the date of
such termination (and reimbursement for expenses, in accordance with Section
4.3, incurred prior to the termination of employment). In addition, if the
Executive's spouse and/or eligible dependents elect continuation of medical
and/or dental benefits under COBRA, the Company will pay the full premium cost
of such participation for a period of twenty-four (24) months following the date
of the Executive's death or until the Executive's spouse or dependents cease to
be eligible for participation under COBRA, whichever is shorter. Except as
specifically set forth in this Section 6.2, or to the extent provided under any
Company-provided life insurance policy, the Company shall have no other
liability or obligation hereunder to the Executive's executors, legal
representatives, administrators, heirs or assigns or any other person claiming
under or through him by reason of the Executive's death.

          6.3. Termination by the Executive Without Good Reason.  Upon thirty
(30) days' prior written notice to the Board, the Executive may terminate his
employment and his performance of service as a member of the Board with the
Company without Good Reason (as defined below) and for a reason other than those
identified in Section 6.1 or Section 6.2 of this Agreement. In the event of a
termination of the Executive's employment and his performance of service as a
member of the Board pursuant to this Section 6.3, the Executive shall be
entitled to receive any accrued and unpaid Base Salary and Annual Bonus through
the date of such termination (and reimbursement for expenses, in accordance with
Section 4.3, incurred prior to such date). All other Base Salary and Annual
Bonus shall cease at the effective date of such termination. Except as
specifically set forth in this Section 6.3, the Company shall have no other
liability or obligation hereunder by reason of such termination.

          6.4. Termination By the Company for Cause.

               (a) Upon written notice to the Executive from the Board or an
appropriate officer of the Company designated by the Board, the Company may
terminate the Executive's employment and his performance of service as a member
of the Board at any time for Cause as defined in Section 6.4(c) of this
Agreement.

               (b) In the event of a termination of the Executive's employment
and his performance of service as a member of the Board pursuant to Section
6.4(a), the Executive shall be entitled to receive accrued and unpaid Base
Salary and Annual Bonus through the date of such termination (and reimbursement
for expenses, in accordance with Section 4.3, incurred

                                       -4-
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prior to the termination of employment). All other Base Salary and Annual Bonus
shall cease at the effective date of such termination. Except as specifically
set forth in this Section 6.4, the Company shall have no other liability or
obligation hereunder by reason of such termination.

               (c) For purposes of this Agreement, "Cause" shall mean, without
limitation, as determined by the Board in good faith (excluding Executive in his
capacity if a member of the Board): (i) commission by Executive of any act of
fraud or any act of misappropriation or personal dishonesty relating to or
involving the Company in any way; (ii) the Executive's willful failure, neglect
or refusal to perform, or gross negligence in the performance of, his material
duties and responsibilities or any express direction of the Company (other than
the failure, neglect or refusal to perform an unlawful act), or any violation of
any rule, regulation, policy or plan established by the Company from
time-to-time regarding the conduct of its employees and/or its business, if such
violation is not remedied by the Executive within ten (10) days of receiving
notice of such violation from the Company; (iii) Executive's violation of any
obligation of this Agreement or the Confidentiality Agreement that is not
remedied by the Executive within ten (10) days after receiving notice of such
violation from the Company; or (iv) Executive's arrest for, conviction of or
plea of nolo contendere to a crime constituting a felony.

               (d) The Executive shall not, under any circumstances, be deemed
to have been terminated for Cause unless and until there shall have been
delivered to him a copy of a Board resolution (the "Board Resolution") duly
adopted by the affirmative vote of not less than fifty one percent (51%) of the
Board (with Executive not being permitted to vote on this matter) at a meeting
of the Board held for that purpose. Any such Board Resolution, which in the
event of an alleged termination for Cause under Sections 6.4(c)(ii) and (iii)
hereof shall be dated no sooner than ten (10) days after such notice has been
deemed to have been given to the Executive and the Executive shall have had an
opportunity, together with counsel, to be heard before the Board, shall find
that in the good faith opinion of the Board, the Executive was guilty of conduct
constituting Cause and specifying the particulars thereof in detail.

          6.5. Termination by the Company Without Cause.

               (a) Upon written notice to the Executive from the Board or an
appropriate officer of the Company designated by the Board, the Company may
terminate the Executive's employment and his performance of service as a member
of the Board at any time without Cause.

               (b) In the event of a termination of the Executive's employment
and his performance of service as a member of the Board pursuant to Section
6.5(a): (i) the Company will pay to Executive any earned but unpaid Base Salary
through the date of such termination; (ii) the Company will reimburse the
Executive's unreimbursed business expenses pursuant to Section 4.3 for all
expenses incurred in the performance of his duties prior to the date of such
termination; (iii) the Company will pay to Executive any earned and accrued but
unpaid Annual Bonus as of the date of such termination; (iv) commencing on the
day immediately following "the date of such termination, the Company will
continue to pay to the Executive his then current Base Salary until the
expiration of the later of: (a) the third anniversary of the Effective Date, or
(b) the twelve (12) month period following such date of termination without

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Cause; provided, however, that if Executive is terminated without Cause
following a Change in Control (as defined below), the Company will continue to
pay to Executive his then current Base Salary until the expiration of the later
of: (a) the third anniversary of the Effective Date, or (b) the eighteen (18)
month period following such date of termination, which amount shall be paid as
a lump sum within thirty (30) days after the date of termination, or, at the
Company's election, in accordance with the Company's payroll practices in effect
from time-to-time. Except as specifically set forth in this Section 6.5, the
Company shall have no other liability or obligation hereunder by reason of such
termination.

               (c) Notwithstanding any other provision in this Agreement to the
contrary, Executive hereby agrees and acknowledges that he will not be entitled
to and the Company shall have no obligation to pay or provide any amount or
benefit provided under Section 1 or Section 6.5 of this Agreement unless
Executive executes and delivers to the Company and does not revoke a release
satisfactory to the Company in a manner consistent with the requirements of the
Age Discrimination in Employment Act.

          6.6. Termination by the Executive for Good Reason.

               (a) The Executive may terminate the Executive's employment and
his performance of service as a member of the Board at any time for Good Reason
(as hereinafter defined), upon written notice from the Executive to the Company
in connection with his resignation for Good Reason setting forth the effective
date of termination (which shall not be less than thirty (30) business days from
the date such notice is given).

               (b) In the event of a termination of the Executive's employment
for Good Reason pursuant to Section 6.6(a): (i) the Company will pay to
Executive any earned but unpaid Base Salary through the date of such
termination; (ii) the Company will reimburse the Executive's unreimbursed
business expenses pursuant to Section 4.3 for all expenses incurred in the
performance of his duties prior to the date of such termination; (iii) the
Company will pay to Executive any earned and accrued but unpaid Annual Bonus as
of the date of such termination; (iv) commencing on the day immediately
following the date of such termination, the Company will continue to pay to the
Executive his then current Base Salary until the expiration of the later of: (a)
the third anniversary of the Effective Date, or (b) the twelve (12) month period
following such date of termination for Good Reason; provided, however, that if
Executive terminates his employment and performance of service as a member of
the Board for Good Reason following a Change in Control, the Company will pay to
Executive his then current Base Salary until the expiration of the later of: (a)
the third anniversary of the Effective Date, or (b) the eighteen (18) month
period following such date of termination, which amount shall be paid as a lump
sum within thirty (30) days after the date of termination, or, at the Company's
election, in accordance with the Company's payroll practices in effect from
time-to-time. Except as specifically set forth in this Section 6.6, the Company
shall have no other liability or obligation hereunder by reason of such
termination.

               (c) Notwithstanding any other provision in this Agreement to the
contrary, Executive hereby agrees and acknowledges that he will not be entitled
to and the Company shall have no obligation to pay or provide any amount or
benefit provided under Section 1 or Section 6.6 of this Agreement unless
Executive executes and delivers to the

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Company and does not revoke a release satisfactory to the Company in a manner
consistent with the requirements of the Age Discrimination in Employment Act.

               (d)  Definitions.

                    (i) For purposes of this Agreement, "Good Reason" shall
mean, as determined by the Company, the first occurrence of either: (i) any
material alteration by the Company of Executive's positions, functions, duties
or responsibilities that is not remedied by the Company within ten (10) days
after receiving notice of such material alteration from Executive, including any
change that (a) alters Executive's reporting responsibility or (b) causes
Executive's Position with the Company to become of less importance than the
applicable positions; (ii) a material decrease in Executive's Base Salary that
does not apply to substantially all other executives of the Company; (iii)
failure of the Company to perform any of its obligations under this Agreement
that are not remedied by the Company within ten (10) days after receiving notice
of such failure to perform from Executive; or (iv) relocation of the principal
office of the Company outside fifty (50) miles of the greater Cranbury, New
Jersey area; provided, however, that Executive's consent to any event which
would otherwise constitute "Good Reason" shall be conclusively presumed if
Executive does not exercise his rights hereunder within thirty (30) days of the
event.

                    (ii) For purposes of this Agreement, "Change in Control"
means: (i) the sale, transfer, assignment or other disposition (including by
merger or consolidation, but excluding any sales by stockholders made as part of
an underwritten public offering of the common stock of the Company) by
stockholders of the Company, in one transaction or a series of related
transactions, of more than fifty percent (50%) of the voting power represented
by the then outstanding capital stock of the Company to one or more Persons;
(ii) the sale of substantially all the assets of the Company (other than a
transfer of financial assets made in the ordinary course of business for the
purpose of securitization); or (iii) the liquidation or dissolution of the
Company.

          7. Parachute Payments.  Payments under this Agreement shall be made
without regard to whether the deductibility of such payments (or any other
payments) would be limited or precluded by Section 280G of the Internal Revenue
Code of 1986 (the "Code") and without regard to whether such payments would
subject the Executive to the federal excise tax levied on certain "excess
parachute payments" under Section 4999 of the Code; provided, however, that if
the Total After-Tax Payments (as defined below) would be increased by the
limitation or elimination of any amount payable under this Agreement, then the
amount payable under this Agreement will be reduced to the extent necessary to
maximize the Total After-Tax Payments. The determination of whether and to what
extent payments under this Agreement are required to be reduced in accordance
with the preceding sentence will be made at the Company's expense by an
independent, certified public accountant selected by the Executive and
reasonably acceptable to the Company. In the event of any underpayment or
overpayment under this Agreement (as determined after the application of this
Section 7), the amount of such underpayment or overpayment will be immediately
paid by the Company to the Executive or refunded by the Executive to the
Company, as the case may be, with interest at the applicable federal rate
provided for in Section 7872(f)(2) of the Code. For purposes of this Agreement,
"Total After-Tax Payments" means the total of all "parachute payments" (as that
term is defined

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in Section 280G(b)(2) of the Code) made to or for the benefit of Executive
(whether made hereunder or otherwise), after reduction for all applicable
federal taxes (including, without limitation, the tax described in Section 4999
of the Code).

          8. Representations.  The Executive represents and warrants to the
Company that:

               (a) There are no restrictions, agreements or understandings
whatsoever to which the Executive is a party which would prevent or make
unlawful the Executive's execution of this Agreement or the Executive's
employment hereunder, or which is or would be inconsistent or in conflict with
this Agreement or the Executive's employment hereunder, or would prevent, limit
or impair in any way the performance by the Executive of his obligations
hereunder;

               (b) That the Executive's execution of this Agreement and the
Executive's employment hereunder shall not constitute a breach of any contract,
agreement or understanding, oral or written, to which the Executive is a party
or by which the Executive is bound; and

               (c) That the Executive is free to execute this Agreement and to
enter into the employ of the Company pursuant to the provisions set forth
herein.

          9. Survival of Provisions.  The provisions of this Agreement set forth
in Sections 5, 7, 9, 10, 11, 12, 13, 14, 15 16, 17 and 18 hereof shall survive
the termination of the Executive's employment hereunder.

          10. Successors and Assigns.  This Agreement shall inure to the benefit
of and be binding upon the Company and the Executive and their respective
successors, executors, administrators, heirs and/or permitted assigns; provided,
however, that neither the Executive nor the Company may make any assignments of
this Agreement or any interest herein, by operation of law or otherwise, without
the prior written consent of the other party hereto, except that, without such
consent, the Company may assign this Agreement to an Affiliate or any successor
to all or substantially all of its assets and business by means of liquidation,
dissolution, merger, consolidation, transfer of assets, or otherwise, provided
that such successor assumes in writing all of the obligations of the Company
under this Agreement, subject, however, to the Executive's rights as to
termination as provided in Section 6 hereof.

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          11. Notice.  Any notice or communication required or permitted under
this Agreement shall be made in writing and sent by certified or registered
mail, return receipt requested, addressed as follows:

          If to the Executive: David S. Tierney
                               12 Strauss Drive
                               Shrewsbury, NJ 07702

          If to the Company:   James C. Gale
                               Chairman, Valera Pharmaceuticals. Inc
                               8 Clarke Drive
                               Cranbury, NJ 08512

          With a copy to:      Jonathan A. Clark
                               Pepper Hamilton LLP
                               400 Berwyn Park
                               899 Cassatt Road
                               Berwyn, PA 19312-1183
                               Phone: (610)640-7850
                               Fax: (610)640-7835

or to such other address as either party may from time-to-time duly specify by
notice given to the other party in the manner specified above.

          12. Waiver of Personal Liability.  To the extent permitted by
applicable law. Executive hereby acknowledges and agrees that he shall have
recourse only to the Company (and its successors-in-interest) with respect to
any claims he may have for compensation or benefits arising in connection with
his employment, whether or not under this Agreement or under any other plan,
program, or arrangement, including, but not limited to, any agreements related
to the grant or exercise of equity options or other equity rights in the
Company. To the extent permitted by applicable law, the Executive hereby waives
any such claims for compensation, benefits and equity rights against officers,
directors, managers, members, stockholders, or other representatives in their
personal or separate capacities.

          13. Entire Agreement; Amendments.  This Agreement and the
Confidentiality Agreement contain the entire agreement and understanding of the
parties hereto relating to the subject matter hereof, and merges and supersedes
all prior and contemporaneous discussions, agreements and understandings of
every nature between the parties hereto relating to the employment of the
Executive with the Company. This Agreement may not be changed or modified,
except by an agreement in writing signed by each of the parties hereto.

          14. Waiver.  The waiver of the breach of any term or provision of this
Agreement shall not operate as or be construed to be a waiver of any other or
subsequent breach of this Agreement.

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<PAGE>
          15. Governing Law.  This Agreement shall be construed and enforced in
accordance with the laws of the State of New Jersey, without regard to its rules
on conflict of laws.

          16. Invalidity.  In case any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the validity of any other provision of this Agreement, and such
provision(s) shall be deemed modified to the extent necessary to make it
enforceable.

          17. Section Headings.  The section headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.

          18. Legal Fees; Limitations.  If an action at law or in equity is
necessary to enforce or interpret the terms of this Agreement and the Executive
is the prevailing party, he shall be entitled to recover, in addition to any
other relief, all reasonable attorney's fees, costs and disbursements. In the
event that the provisions of Sections 5 or 6 hereof should ever be adjudicated
to exceed the time, geographic, or other limitations permitted by applicable law
in any applicable jurisdiction, then such provisions shall be deemed reformed in
such jurisdiction to the maximum time, geographic, or other limitations
permitted by applicable law.

          19. Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.

                            [Signature Page Follows]

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<PAGE>
          IN WITNESS WHEREOF AND INTENDING TO BE LEGALLY BOUND, the parties have
caused this Agreement to be executed the day and year first written above.

VALERA PHARMACEUTICALS, INC.

By: /s/ James C. Gale
    -----------------------------
    James C. Gale
    Title: Chairman

EXECUTIVE

/s/ David Tierney
---------------------------------
David Tierney

                                      -11-
<PAGE>
                                    EXHIBIT A
                  CONFIDENTIALITY AND NON-COMPETITION AGREEMENT

                                      -12-<PAGE>
                                                                    Exhibit 10.5

                             TERMINATION AGREEMENT,
                             LICENCE BACK AND OPTION

DATED: 21st DECEMBER 2001

BETWEEN:

(1)  HYDRO MED SCIENCES, INC. ("HMS"), a subsidiary of GP Strategies Corporation
     ("GP"), a Delaware corporation with principal offices at 9 West Street,
     57th Street. Suite 4170, New York, NY 10019, USA; and

(2)  Shire US INC., a New Jersey Corporation with principal offices at 7900
     Tanners Gate Drive, Florence, Kentucky 41042, USA ("Shire").

RECITALS:

A.   Hydro Med Sciences, a division of GP (the "HMS Division"), and Shire
     entered into a Licence 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 licence to market such
     product in certain territories (the "Licence 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 Licence Agreement and are in possession of valuable
     development data and know-how in relation to such product.

D.   The HMS Division has assigned the Licence 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 commercialise such
     product or (ii) develop and commercialise such product itself, and Shire
     and HMS have agreed to terminate the Licence Agreement and the
     Manufacturing Agreement and Shire has agreed to licence such development
     data to HMS for this purpose on the terms set out in this Agreement.
<PAGE>
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 Licence 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 Data"        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 authorisation
                               (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 PROVIDED 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
<PAGE>
                               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-Licence 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 PC
                               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.   LICENCE GRANT
<PAGE>
\     2.1 Subject to the terms of the Option, Shire hereby grants to HMS with
          deemed effect from the Transfer Date an exclusive licence in the
          Territory (with the right to grant sub-licences) 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 endeavours to secure a Sub-Licensee or
          Sub-Licensees for the purposes of developing and commercialising 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-Licence Agreement shall be with a
          reputable pharmaceutical company on an arms-length basis and on
          commercial terms as favourable to HMS as is reasonably achievable in
          the circumstances. HMS shall notify Shire in advance of any
          Sub-Licence Agreement being entered into and shall provide Shire with
          a summary of relevant terms of such Sub-Licence Agreement, including
          royalties, up front and milestone payments.

     2.3  The term of the licence 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 licence to the Development Data in the
          Territory in the Field of Use.

     2.4  In the event that HMS concludes a Sub-Licence 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-Licence
          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 IND 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.
<PAGE>
     3.4  HMS shall, for the avoidance of doubt, bear all costs incurred in
          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 licence 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-Licensee 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-Licence
               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
<PAGE>
               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-Licencees 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-Licence 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 of Shire entering into this Agreement and shall expire
          on a country by country basis (where Shire has not previously
          exercised an Option pursuant to Cause 6.1 of this Agreement), at the
          earlier of:

          6.2.1 HMS entering into Sub-Licence Agreement for any country or
               countries within the Territory; or
<PAGE>
          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-Licence 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 Licence 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 the 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 Licence 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 Unreasonably
<PAGE>
          Withheld", "10.08 No Strict Construction" and "10.10 Force Majeure" of
          the Licence Agreement shall be deemed to apply to this Agreement save
          that references in these Sections to Roberts 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
          Chineham
          BASINGSTOKE
          Hampshire
          RG24 BEP
          United Kingdom
          Attention: Ms Tatjana May, General Counsel and Company
          Secretary

SIGNED for and on behalf of
HYDRO MED SCIENCES, INC.

/s/ D S Tierney
----------------------------------------
Name: D S Tierney
Title: President and Chief
       Executive Officer

SIGNED for and on behalf of
Shire US INC.

/s/ Dr J W Totten
----------------------------------------
Name: Dr J W Totten
Title: Group Research & Development Director
<PAGE>
                                  The Schedule

                    Terms of Marketing/Distribution Agreement

1.   Nature of Appointment - sole and exclusive (even as to HMS).

2.   Territory/ies - countries as nominated by Shire pursuant to Option.

3.   Products - any Licensed Product or Licensed Products nominated by Shire
     pursuant to Option Notice.

4.   Supply of the Licensed Products - HMS to supply Licensed Products to Shire
     at a price representing HMS's costs of manufacture but not for the
     avoidance of doubt to include any profit element to Shire's nominated
     premises in the relevant country within the Territory for onward
     distribution in a timely manner, In accordance with cGMP and with any
     applicable technical specification relating to the Licensed Products.

5.   Payment Terms - Shire to pay HMS 13.5% of Shire's Net Sales within 30 days
     of the date of delivery by HMS to Shire.

6.   Product Liability - HMS to indemnify and hold Shire and its Affiliates
     harmless from and against all costs, expenses, claims and liabilities
     arising from the supply or manufacture of the Licensed Products. Shire to
     indemnify and hold HMS and its Affiliates harmless from and against all
     costs, expenses, claims and liabilities arising from the marketing or
     distribution of the Licensed Products.

7.   Insurance and audit - HMS and Shire to carry adequate insurance to cover
     potential liability under distribution agreement. HMS to have right to
     inspect Shire's books and accounts relating to sales of the Licensed
     Product on reasonable notice.

8.   Term and Termination - Term -10 years fixed, termination - for material
     breach or Insolvency.

9.   Governing Law- the laws of New York, USA.

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