Exhibit 10.8
AMENDMENT NO. 2 TO TERMINATION AGREEMENT
THIS AMENDMENT NO. 2 TO TERMINATION AGREEMENT (this "SECOND AMENDMENT") is
made and effective on this 31st day of August 2004 by and between Valera
Pharmaceuticals, Inc., a Delaware corporation ("VALERA"), and The Population
Council, Inc., a not-for-profit New York corporation ("THE COUNCIL").
BACKGROUND
GP Strategies Corporation, the successor to National Patent Development
Corporation (collectively "GP STRATEGIES"), and The Council are parties to an
agreement entitled "Termination of Agreement dated September 12, 1990" that was
signed on October 1, 1997 by GP Strategies and September 26, 1997 by The Council
and was subsequently amended by an Amendment dated as of November 29, 2001
(collectively, the "TERMINATION AGREEMENT"). GP Strategies assigned the
Termination Agreement to Valera and Valera accepted all of the rights and
responsibilities of GP Strategies thereunder. Valera and The Council desire to
amend the Termination Agreement as set forth in this Second Amendment.
TERMS
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Valera and The Council agree as
follows:
1. AMENDMENT TO PARAGRAPH 5 OF THE TERMINATION AGREEMENT. Paragraph 5 of the
Termination Agreement is deleted in its entirety and replaced with the
following:
5. Allocation of Royalties and Net Sales.
(a) NPDC shall pay to The Council, within thirty (30) days following
NPDC's receipt of Royalties (as defined in Paragraph 5(d)(vii)), an amount equal
to the following percentages of Royalties:
(i) one hundred percent (100%) of the first thirty five thousand
dollars ($35,000) of Royalties, as a fee for the transfer of the IND sponsorship
to NPDC from The Council;
(ii) after payment in accordance with Paragraph 5(a)(i), thirty
percent (30%) of Royalties from grants of licenses to the LHRH Implant to
Licensees to the extent involving the use or sale of a LHRH Implant in the NPDC
Territory (as defined in Paragraph 5(d)(vi)); and
(iii) after payment in accordance with Paragraph 5(a)(i), five
percent (5%) of Royalties from grants of licenses to the Non-LHRH Implant to
Licensees to the extent involving the use or sale of a Non-LHRH Implant in the
NPDC Territory.
(b) NPDC shall also pay to The Council, on or before the 30th day
following the end of each calendar quarter, the following amounts:
(i) three percent (3%) of NPDC Net Sales received during the just
completed calendar quarter from Commercial Sales (as defined in Paragraph
5(d)(i)) of LHRH Implants; and
(ii) one-half of one percent (0.5%) of NPDC Net Sales received
during the just completed calendar quarter from Commercial Sales of Non-LHRH
Implants.
(c) NPDC shall also cause each Non-NPDC Territory Licensee (as defined
in Paragraph 5(d)(iv)) to pay The Council, on or before sixty (60) days
following the end of each calendar quarter, the following amounts:
(i) four percent (4%) of Non-NPDC Net Sales (as defined in
Paragraph 5(d)(ii)) received during the just completed calendar quarter from
Commercial Sales of LHRH Implants by such Non-NPDC Territory Licensee; and
(ii) two thirds of one percent (0.667%) of Non-NPDC Net Sales
received during the just completed calendar quarter from Commercial Sales of
Non-LHRH Implants by such Non-NPDC Territory Licensee.
(iii) Notwithstanding anything herein to the contrary, NPDC shall
be liable to The Council for payments due to the Council pursuant to Paragraph
5(c) and shall be discharged from the obligation to make any such payment at the
time that such payment is received in full by The Council from the Non-NPDC
Territory Licensee.
(d) For purposes of this Paragraph 5, the following terms shall have
the following meanings:
(i) "Commercial Sale" means, as the context requires (1) a sale
of an Implant by NPDC for commercial use (or resale which will ultimately result
in commercial use) in the NPDC Territory or a sale to a Non-NPDC Territory
Licensee for use or sale in the NPDC Territory but specifically excluding sales
of Implants by NPDC that are used for research, development, investigation,
clinical trials or as samples or that are sold to a Non-NPDC Territory licensee
for use or sale in the Non-NPDC Territory or (2) a sale of an Implant by a
Non-NPDC Territory Licensee to a third party for commercial use (or resale which
will ultimately result in commercial use) in the Non-NPDC Territory but
specifically excluding sales of Implants by a Non-NPDC Territory Licensee that
are used for research, development, investigation, clinical trials or as
samples.
(ii) "Non-NPDC Net Sales" means gross revenues received by
Non-NPDC Territory Licensees with respect to the Commercial Sales of Implants by
Non-NPDC Territory Licensees described in clause (2) of Paragraph 5(d)(i) less
the aggregate of (1) returns and/or credits for returns, (2) sales tax, value
added tax, goods and services tax or any other tax that may be imposed on the
sale of Implants, (3) promotional, cash, trade or volume discounts including
those resulting from governmental or managed care contracts and (4) freight,
transport and delivery (including insurance).
(iii) "Non-NPDC Territory" means the nations and countries within
the European Union, all nations and countries that accede to the European Union
subsequent to the
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date hereof, Australia, Brunei, Cambodia, China, India, Indonesia, Laos,
Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand and
Vietnam.
(iv) "Non-NPDC Territory Licensee" means a Licensee who is
authorized by NPDC to make Commercial Sales in the Non-NPDC Territory.
(v) "NPDC Net Sales" means gross revenues received by NPDC with
respect to the Commercial Sales of Implants by NPDC described in clause (1) of
Paragraph 5(d)(i) less the aggregate of (1) returns and/or credits for returns,
(2) sales tax, value added tax, goods and services tax or any other tax that may
be imposed on the sale of Implants, (3) promotional, cash, trade or volume
discounts including those resulting from governmental or managed care contracts
and (4) freight, transport and delivery (including insurance).
(vi) "NPDC Territory" means all nations and countries of the
world other than the nations or countries comprising the Non-NPDC Territory.
(vii) "Royalties" means revenues (or the fair market value of
non-monetary consideration) received by NPDC from Licensees, whether or not in
the form of royalties, prepaid royalties, advances on royalties, licensing fees,
technology transfer payments or other similar payments, in respect of licenses
for the Implants. Notwithstanding the foregoing, Royalties shall not include
moneys received by NPDC from Licensees and applied to usual and customary
Implant product development costs, including, without limitation, feasibility
studies, pre-clinical studies, animal studies, clinical trials, production
scale-up, and regulatory compliance, research fees, the manufacturing cost of
Implants or moneys that are included in the calculation of NPDC Net Sales.
(e) NPDC shall maintain and shall cause Non-NPDC Territory Licensees
to maintain, in accordance with generally accepted accounting principles
consistently applied, accurate records of all sales or other disposition of any
Implants upon which amounts shall be payable pursuant to this Paragraph 5.
Within one hundred and twenty (120) days after the conclusion of each calendar
year (1) NPDC shall furnish to The Council a certification by its internal
accountants showing the quantity, sales prices, product development costs and
amounts due with respect to sales of any Implants for the preceding year and (2)
NPDC shall cause each Non-NPDC Territory Licensee to furnish to The Council a
certification by its internal accountants showing the quantity, sales prices,
product development costs and amounts due with respect to sales of any Implants
for the preceding year. Should The Council wish to audit such records, it may
engage, at its own expense, independent public accountants reasonably acceptable
to NPDC or the Non-NPDC Territory Licensee, as the case may be, to conduct such
an audit during normal business hours and on reasonable notice to NPDC or the
Non-NPDC Territory Licensee, as the case may be. The Council's right to audit
and bring any action with respect to a particular payment period shall be
limited to the two (2) year period following the issuance of the certification.
The Council agrees to keep confidential all information relating to the business
affairs of NPDC and the Non-NPDC Territory Licensees and to impose on its
accountants a similar obligation.
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(f) Notwithstanding the foregoing, in no event shall amounts paid to
The Council hereunder exceed the aggregate amount of forty million thirty five
thousand dollars ($40,035,000).
2. PATIENT ASSISTANCE PROGRAM. The following provision is added to the
Termination Agreement as Paragraph 10:
10. Patient Assistance Program. NPDC shall establish within one year (1)
after the first commercial sale of the LHRH Implant in the United States for the
treatment of prostate cancer, and maintain for a period ending on the earlier of
(a) ten (10) years after establishment or (b) the cessation of marketing of the
LHRH Implant in the United States for the treatment of prostate cancer (the
"Patient Assistance Program Period"), a patient assistance program substantially
similar to the program described in Exhibit C hereto. During the Patient
Assistance Program Period, within one hundred and twenty (120) days after the
conclusion of each calendar year, NPDC shall furnish to The Council a report
showing the total number of LHRH Implants that were sold in the United States in
the preceding year and the total number of LHRH Implants that were distributed
to patients through the Patient Assistant Program in such preceding year.
3. NO CHANGES. Except as expressly modified or amended by this Second
Amendment, the terms and provisions of the Termination Agreement shall remain in
full force and effect in accordance with the terms thereof; provided, however,
from and after the date of this Second Amendment any reference to the
Termination Agreement shall be deemed and construed as meaning the Termination
Agreement as modified by this Second Amendment.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the parties have caused this Second Amendment to be
executed by their duly authorized representative.
VALERA PHARMACEUTICALS, INC. THE POPULATION COUNCIL, INC.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxx Xxxxxxx Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer Title: Vice President
EXHIBIT C
VANTAS PATIENT ASSISTANCE PROGRAM INFORMATION
The Vantas Patient Assistance Program (the "PAP") is intended to assist patients
with prostate cancer who are prescribed the LHRH Implant but who do not have
health benefits through private insurance or a government-funded program (such
as Medicare or Medicaid) that cover the purchase price for the LHRH Implant and
do not have sufficient income to afford the LHRH Implant. Because the LHRH
Implant is expected to be covered by Medicare, it is expected that the PAP will
be directed to patients younger than 65 years old who are not blind or disabled.
The assistance will involve identifying programs that would cover the purchase
price of the LHRH Implant for the patient and if no such program can be
identified, making the LHRH Implant available to the patient at no cost.
The PAP will be administered by Valera or a third party administrator with
experience with these types of programs such as PAREXEL (the "Administrator").
Valera sales professionals will provide the toll free phone number for the PAP
to physicians and their staff on "leave behind" promotional materials. Sales
representatives will also be trained to make physicians aware of the PAP.
The eligibility requirements for the PAP are as follows:
1. The patient must have been prescribed the LHRH Implant for treatment
of prostate cancer;
2. The patient must be a citizen of or lawfully resident in the United
States;
3. The patient must either have no health benefits from any private or
government program or have been informed that such health benefits do
not cover the purchase price of the LHRH Implant;
4. The patient must have an annual income equal to or less than 200% of
the then- current Federal Poverty Level; and
5. Such other reasonable eligibility requirements that Valera determines
are necessary to limit the PAP to indigent patients in light of
then-current conditions, laws, rules and regulations.
The Administrator will work with any patient referred to the PAP to determine
their eligibility, and the patient will be required to supply documentation
necessary to establish their eligibility for the PAP. For patients that have
health benefits but have been informed that such health benefits do not cover
the purchase price of the LHRH Implant, the Administrator will attempt to verify
coverage from the patient's current plan. The Administrator will also refer
patients to Medicaid, if the patient has no insurance and meets the Medicaid
income guidelines. If, ultimately, no health benefits can be identified to pay
for the LHRH Implant and the patient is otherwise eligible for the PAP, the
Administrator will provide the LHRH Implant at no cost to the patient's
physician for him or her to administer.
The above process for any given patient is expected to take at least 72 hours
but may take several weeks in certain instances. The PAP donation is contingent
on the patient providing all necessary documentation to establish eligibility.
The PAP does not cover any professional fees (such as fees for implantation or
explantation of the LHRH Implant) or supplies not included with the then-current
LHRH Implant kit.
