Exhibit 10.61
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT ("Termination Agreement") is made and
entered into this the 10th day of December, 1998, by and among IGI, INC., a
Delaware corporation, having a principal place of business at Wheat Road &
Lincoln Avenue, Buena, New Jersey 08310, IGEN, INC., a Delaware
corporation, having a principal place of business at 103 Springier
Building, 3411 Silverside Road, Wilmington, Delaware (hereinafter referred
to as "Igen"), IMMUNOGENETICS, INC., a Delaware corporation, having a
principal place of business at Wheat Road & Lincoln Avenue, Buena, New
Jersey 08310 (hereinafter referred to as "Immunogenetics") [IGI, Inc. and
its Affiliates (including but not limited to Igen and Immunogenetics) are
hereinafter collectively referred to as "IGI"], and GLAXO WELLCOME, INC., a
North Carolina corporation, having a principal place of business at Five
Moore Drive, Research Triangle Park, North Carolina 27709 (hereinafter
referred to as "GW").
W I T N E S S E T H :
WHEREAS, IGI and GW have previously entered into a certain Amended
and Restated Exclusive Supply Agreement, dated as of January 27, 1997, as
amended by Amendment No. 1 to the Amended and Restated Exclusive Supply
Agreement, dated as of April 7, 1998, relating to the manufacture and
supply by IGI, and the purchase by GW, of certain facial health products
sold by GW under the WellSkin(R) trademark (such agreement, as amended,
hereinafter referred to as the "Supply Agreement"); and
WHEREAS, IGI and GW now mutually desire to terminate the Supply
Agreement, subject to the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises, the mutual
covenants contained herein and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, IGI and GW hereby agree
as follows:
1. Definitions. Except as otherwise defined herein, all
capitalized terms used herein but not defined herein shall have the
meanings ascribed to such terms in the Supply Agreement.
2. Termination of the Agreement. IGI and GW hereby agree that the
Supply Agreement is terminated in its entirety effective at the close of
business on December 18, 1998 (the "Effective Date") and, accordingly, all
of their respective rights, obligations and duties under the Agreement
shall be terminated as of the Effective Date and shall thereafter no longer
have any force and effect, except as specifically set forth in this
Termination Agreement. Without limiting the foregoing, the parties agree
that all rights granted by IGI to GW with respect to the NOVASOME(r)
trademark pursuant to Section 2 of the Supply Agreement shall terminate as
of the Effective Date.
3. Confidential Information. Upon the Effective Date, each party
shall promptly terminate all use of any Confidential Information of the
other party. The parties agree that the Confidentiality provisions
contained in Section 8 of the Supply Agreement shall survive for a period
of three (3) years from the Effective Date.
4. Debt Owed From Operations. (a) The parties acknowledge that
certain amounts are owed by one party to the other party due to the
operating business relationship established by the Supply Agreement,
including but not limited to the purchase of Product, the return of
Product, shipping and delivery costs with respect to the Product,
elimination of duplicate payments for the Product, additional funds due
with respect to pricing modifications for the Products, determination of
Target Inventory Amounts, and all amounts determined under Sections 3.2,
3.3, 3.4 and 3.5 of the Supply Agreement (such amounts to be hereinafter
referred to as 'Operational Debt"). The parties hereby agree that all
amounts owed by IGI to GW as Operational Debt, approximately Five Hundred
Eighty-Four Thousand Five Hundred Dollars ( $584,500) (the "IGI Operational
Debt"), and all amounts owed by GW to IGI, approximately One Hundred
Seventy-Two Thousand Dollars ($172,000) (the "GW Operational Debt"), shall
be written-off, forgiven and cancelled. The parties agree that the terms
Operational Debt, IGI Operational Debt and GW Operational Debt do not
include, and do not refer to, amounts which relate to (i) the Royalty
Advance or the Remaining Royalty Advance, or the calculation thereof (ii)
the Trademark Assignment (as defined below), (iii) the purchase of the
Inventory, (iv) the transfer of the Promotional Materials and the Clinical
Studies, and (v) the transfer of Product to the GW company outlet, all of
which items are addressed in separate provisions of this Agreement.
(b) GW hereby releases and forever discharges IGI from any and all
manner of claims related to, or arising out of the IGI Operational Debt.
(c) IGI hereby releases and forever discharges GW from any and all
manner of claims related to, or arising out of the GW Operational Debt.
5. Royalty Advance. Reference is made to Section 3.1 of the Supply
Agreement, pursuant to which GW paid to IGI the Royalty Advance of One
Million Dollars ($1,000,000), and to Section 13.2 of the Supply Agreement,
pursuant to which IGI was to repay to GW the Remaining Royalty Advance as
such term is defined in the Supply Agreement. The parties hereby agree that
the Remaining Royalty Advance is Six Hundred and Eight Thousand Dollars
($608,000). IGI agrees to repay the Remaining Royalty Advance to GW
according to the terms and conditions contained in the secured promissory
note, a copy of which is attached hereto as Exhibit A (the "Royalty
Promissory Note"). On the Effective Date, IGI shall execute and deliver the
Royalty Promissory Note to GW.
6. Assignment of WellSkin(R) Trademark. GW agrees to transfer its
interest in the WELLSKIN(R) trademark in the United States to IGI pursuant
to the form of trademark assignment attached hereto as Exhibit B (the
"Trademark Assignment"). On the Effective Date, or on such other date as
the parties may agree, GW shall execute and deliver the Trademark
Assignment to IGI. It is understood and agreed, however, that the
obligation on behalf of GW to assign the WELLSKIN(r) trademark to IGI, shall
be expressly conditioned upon the execution and delivery by IGI of the
Security Agreement, the Subordination Agreement (as such term is defined
below) and the Royalty Promissory Note to GW.
7. Purchase of Inventory. (a) GW shall transfer to IGI, and IGI
shall accept delivery of GW's entire stock of inventory of Product listed
on Exhibit C hereof (the "Inventory"). The parties hereby agree that the
aggregate consideration to be paid to GW with respect to the purchase of
the Inventory shall be Two Hundred Thousand Dollars ($200,000), and IGI
agrees to pay such amount to GW according to the terms and conditions
contained in the secured promissory note, a copy of which is attached
hereto as Exhibit D (the "Inventory Promissory Note"). On the Effective
Date, IGI shall execute and deliver the Inventory Promissory Note to GW. It
is understood and agreed that the purchase price of the Inventory (and the
corresponding principal amount of the Inventory Promissory Note) shall be
adjusted by the value of any material deviations from reasonable FIFO
inventory management practices. Any adjustments shall be by mutual consent
and agreement, and the principal amount of the Inventory Promissory Note
shall be amended only in accordance with such agreement.
(b) IGI shall use its best efforts to move all of the inventory to
an IGI warehouse by December 15, 1998. Time is of the essence with respect
to this obligation. If IGI fails to take title to, and physical possession
of, the Inventory by December 18, 1998, then in such case the Inventory
shall be transferred to a third party storage facility with all costs of
transfer and storage of the Inventory to be paid by IGI.
(c) Upon the execution of this Agreement, the customers shall be
informed to send any Product returns to IGI, and IGI shall have sole
responsibility for managing the returns of the Product by issuing credits
to such customers who return Product, or by shipping replacement Product to
such customers out of the Inventory of Product being transferred to IGI
pursuant to this Section.
(d) Each of GW and IGI acknowledge that the inventory of the
Product owned by GW was manufactured by IGI under the terms of the Supply
Agreement. THE INVENTORY OF PRODUCT TO BE TRANSFERRED TO IGI HEREUNDER
SHALL BE SUPPLIED "AS IS" AND GW MAKES NO WARRANTIES OR REPRESENTATIONS,
EXPRESS OR IMPLIED, WITH RESPECT THERETO.
(e) The parties acknowledge that the Inventory contains markings
and labeling which indicate that GW is the marketer or distributor of the
Products. IGI promises and agrees that it shall not sell or distribute any
portion of the Inventory which is damaged or for which the expiration date
has occurred. GW shall not be liable to IGI, or any other third party, for
any claims, damages, liabilities or costs associated with the sale,
marketing or distribution of the Products after the Effective Date. In no
event shall GW be liable to IGI, or any third party, for any claims,
damages, liabilities or costs associated with the manufacture of the
Products regardless of when such Product was manufactured. The parties
agree that the provisions of this Section do not constitute an obligation
to indemnify each other.
8. Security Agreement. In order to secure the obligations
evidenced by each of the Royalty Promissory Note and the Inventory
Promissory Note, as well as the obligations of IGI contained herein, IGI
shall enter into a security agreement, the form of which is attached hereto
as Exhibit E (the "Security Agreement"). IGI shall use its best efforts to
obtain from its current lenders, Fleet Bank, N.A. and Mellon Bank, N.A.
(collectively referred to as the "Lenders") by the Effective Date, an
executed and delivered subordination agreement, which will provide, among
other things, that IGI, GW and the Lenders agree that GW shall have a first
priority lien with respect to the WELLSKIN(R) trademark, and that the
Lenders' interest in the WELLSKIN(R) trademark, if any, shall be
subordinated to the GW interest in the WELLSKIN(R) trademark in all
respects (the "Subordination Agreement"). On the Effective Date, IGI shall
execute and deliver the Security Agreement and the Subordination Agreement
to GW. It is understood and agreed, however, that the obligation on behalf
of GW to execute and deliver the Trademark Assignments to IGI, shall be
expressly conditioned upon the execution and delivery by IGI of the
Security Agreement, the Subordination Agreement and the Royalty Promissory
Note to GW.
9. Promotional Materials and Clinical Studies. (a ) On the
Effective Date, GW shall transfer to IGI all of GW's inventory of marketing
materials and electronic promotional pieces which were used by GW for
promoting and marketing the Products as well as the copies of the results
from the clinical studies referenced on Exhibit F attached hereto
(together, the "Materials").
(b) The parties acknowledge that IGI may, at its option, desire to
use the printed advertising and promotional materials previously prepared
by GW with respect to the Products. If IGI requests the use of such
materials, IGI shall affix a non-removable sticker to each and every
promotional piece which covers all references to GW and Glaxo Dermatology
in its entirety.
10. Company Store. IGI agrees that subsequent to the Effective
Date, on an annually renewable basis, it shall continue to supply products
to the GW company employee outlets (the "Company Store") owned and operated
by Aramark on such terms and at such prices as IGI and Aramark shall agree,
provided, however, that the parties understand that the pricing for such
Products sold to Aramark shall be generally in accordance with the prices
charged by IGI to physicians for such Products.
11. Misdirected Payments. The parties agree that all proceeds of
product sold prior to the Effective Date are the property of GW, while all
proceeds of Product sold on or subsequent to the Effective Date are the
property of IGI. If IGI shall receive payment with respect to Product which
was sold prior to the Effective Date, IGI shall promptly transfer such
amounts to GW. If GW shall receive payment with respect to Product which
was sold on or subsequent to the Effective Date, GW shall promptly transfer
such amounts to IGI.
12. In-Bound Product Requests. GW agrees that, subsequent to the
Effective Date, it will refer all in-coming inquiries with respect to
requests for the WELLSKIN(R) product line directly to the telemarketing
phone number maintained by IGI or its designee. In addition, GW shall
advise NeoStrata Company, Inc. ("NeoStrata"), the former distributor of the
WELLSKIN(R) product line, that all in-coming inquiries with respect to the
WELLSKIN(R) product line shall be directly, immediately and only referred
to the telemarketing phone number maintained by IGI or its designee. The
obligations referred to in the previous two sentences shall be expressly
conditioned upon the provision by IGI of the telemarketing phone number
with respect to the WELLSKIN(R) product line to GW.
13. Representations. (a) IGI represents and warrants to GW that:
(i) The execution and delivery of the Termination Agreement and all
other documents and agreements related to the termination of the
Supply Agreement (including but not limited to the Royalty Promissory
Note, the Trademark Assignment, the Inventory Promissory Note and the
Security Agreement) have been duly authorized by all necessary
corporate action and constitute the legal, valid and binding
obligations of IGI enforceable in accordance with their terms.
(ii) The officer executing and delivering the Termination Agreement
and all other documents and agreements related to the termination of
the Supply Agreement (including but not limited to the Royalty
Promissory Note, the Trademark Assignment, the Inventory Promissory
Note and the Security Agreement), on behalf of each IGI entity
executing this Termination Agreement, is duly authorized by such IGI
entity, and has the full power and authority to execute these
agreements and instruments.
(b) GW represents and warrants to IGI that:
(i) The execution and delivery of the Termination Agreement and all
other documents and agreements related to the termination of the
Supply Agreement (including but not limited to the Royalty Promissory
Note, the Trademark Assignment, the Inventory Promissory Note and the
Security Agreement) have been duly authorized by all necessary
corporate action and constitute the legal, valid and binding
obligations of GW enforceable in accordance with their terms.
(ii) The officer executing and delivering the Termination Agreement
and all other documents and agreements related to the termination of
the Supply Agreement (including but not limited to the Royalty
Promissory Note, the Trademark Assignment, the Inventory Promissory
Note and the Security Agreement), on behalf of GW is duly authorized
by GW, and has the full power and authority to execute these
agreements and instruments.
14. Press Release. Except as may be required by law or stock
exchange regulation, any public announcements regarding the transactions
contemplated hereby shall be made only with the mutual consent of IGI and
GW. In the event that a public announcement is required by law or stock
exchange regulation, the party subject to such law or regulation shall
deliver an advance copy of such public announcement to the other party for
purposes of review and comment.
15. Headings. All headings are for reference purposes only and
shall not in any way affect the meaning or interpretation of this
Termination Agreement.
16. Notices . Any notice required or permitted to be given
hereunder shall be either delivered by hand or mailed by certified or
registered mail or delivered by nationally recognized courier service, to
the party to whom such notice is required or permitted to be given
hereunder. Any notice shall be deemed to have been given when delivered, if
delivered by hand, or when received by the other party if otherwise mailed
or delivered.
All notices to GW shall be addressed as follows:
Glaxo Wellcome, Inc. Glaxo Wellcome, Inc.
Five Moore Drive Five Moore Drive
Research Triangle Park, NC 27709 Research Triangle Park, NC 27709
Attn: Vice President-Dermatology Attn: General Counsel
All notices to IGI shall be addressed as follows:
IGI, Inc. IGI, Inc.
Wheat Road &Lincoln Avenue Wheat Road & Lincoln Avenue
Buena, NJ 08310 Buena, NJ 08310
Attn: President Attn: General Counsel
17. Successors and Assigns. This Termination Agreement shall bind,
inure to the benefit of, and be enforceable by the successors and assigns
of the parties hereto.
18. Expenses. IGI and GW shall each bear their own fees, costs and
expenses incurred by them in connection with the negotiation, execution and
performance of this Agreement.
19. Entire Agreement. This Termination Agreement (and the Royalty
Promissory Note, the Trademark Assignment, the Inventory Promissory Note
and the Security Agreement) constitutes the entire agreement and
understanding between the parties with respect to the termination of the
Agreement. There are no collateral understandings, agreements or other
representations, expressed or implied, between the parties relating to such
termination. Any previous discussions, agreements or understandings between
the parties regarding such termination are hereby superseded by this
Termination Agreement (and the Royalty Promissory Note, the Trademark
Assignment, the Inventory Promissory Note and the Security Agreement). This
Termination Agreement may not be modified, altered or amended except by
written agreement of authorized representatives of the parties.
20. Governing Law. This Termination Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware
applicable to agreements made and to be fully performed therein, without
regard to principles of conflict of law.
21. Counterparts. This Termination Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Termination
Agreement to be executed as of the date first above written.
GLAXO WELLCOME, INC. IGI, INC.
By: /s/ Dean J. Mitchell By: /s/ Paul Woitach
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Dean J. Mitchell, Vice President - Paul Woitach, President
Business Development and Planning
General Manager, Specialty Division
IGEN, INC. IMMUNOGENETICS, INC.
By: /s/ Paul Woitach By: /s/ Paul Woitach
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Paul Woitach, President Paul Woitach, President
