License Agreement dated March 27, 2010 between the Company and Zachary Gerut, M.D

Exhibit 10.8

Confidential treatment requested under 17 C.F.R. §§ 200.80(b)(4) and 240.24b-2.  The confidential portions of this exhibit have been omitted and are marked accordingly.  The confidential portions have been filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

 

 

This LICENSE AGREEMENT (the “Agreement”), effective as of March 27, 2010 (the “Effective Date”), is entered into by and between BioSpecifics Technologies Corp., a corporation organized and existing under the laws of Delaware (“BTC”), and Zachary Gerut, M.D. (“Gerut”). BTC and Gerut shall sometimes be referred to herein individually as a “Party” and collectively as “Parties.”

 

 

WHEREAS, BTC has developed an injectable form of collagenase that has been used in a number of clinical applications, including, among other things, the treatment of fat and for which BTC owns patents, under EPO Patent #EPO721781B1 (Edwin H. Wegman, Burton Bronsther, and Erwin T. Jacob, “Reduction of Adipose Tissue Using Collagenase”) and U.S. Patent #6,958,150 (B2), (Edwin H. Wegman, Burton Bronsther, and Erwin T. Jacob, “Reduction of Adipose Tissue”) (collectively, the “BTC Patents”); and

 

WHEREAS, Gerut has performed clinical studies with injectable collagenase pertaining to the treatment of fat in accordance with the accepted principles of Good Clinical Practices and the clinical protocols for such studies have been reviewed and found to be satisfactory by the Food and Drug Administration (the “FDA”) and BTC; and

 

WHEREAS, BTC and Gerut have entered into various agreements concerning the subject matter of this Agreement over the years (the “Previous Agreements”); and

 

WHEREAS, this Agreement shall supersede the Previous Agreements but shall have no effect upon the <OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION>; and

 

WHEREAS, concurrently herewith, BTC and Gerut are entering into a side letter agreement in connection with this Agreement (the “Side Letter”); and

 

WHEREAS, concurrently herewith, BTC and Gerut are entering into an investigator agreement for a Phase II clinical trial for injectable collagenase for the treatment of fat (the “Investigator Agreement”); and

 

WHEREAS, Gerut is now willing to license the Licensed Know-How (hereinafter defined) to BTC, and BTC wishes to license the Licensed Know-How from Gerut, on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth below, the Parties agree as follows:

 

 

For the purposes of this Agreement, the following capitalized words and phrases, whether used in the singular or plural, shall have the following meanings:

 

1.1              “Affiliate” means any corporation or other business entity controlled by, controlling, or under common control with another entity, with “control” meaning direct or indirect beneficial ownership of more than 50% (or such lesser percent provided that ownership is accompanied by the power to direct the management or policies of the entity) of (a) the voting stock in the case of a corporation, or (b) the profits interest or decision-making authority in the case of an unincorporated business entity.

 

1.2              “Auxilium” means Auxilium Pharmaceuticals, Inc., a corporation organized and existing under the laws of Delaware.

 

1.3              “Auxilium License Agreement” means the agreement dated as of June 3, 2004 by and between BTC and Auxilium, as amended on May 10, 2005 and amended and restated on December 11, 2008, and as may be subsequently amended from time to time, under which BTC granted to Auxilium certain licenses, as defined therein.

 

1.4              “BTC Patents” has the meaning set forth above in the recitals.

 

1.5              “Combination Product” means any product containing both an agent or ingredient which constitutes a Licensed Product and one or more other active agents or ingredients which do not constitute Licensed Products.

 

1.6              “Development Program” means the preliminary research and pre-clinical, clinical, regulatory, process development and manufacturing work previously performed by Gerut and the Clinical Study (as defined in the Investigator Agreement) to be conducted by Gerut pursuant to the Investigator Agreement, with injectable collagenase pertaining to treatment of fat, as described more fully in Article II hereof.

 

1.7              “EMEA” means the European Medicines Evaluation Agency, which coordinates the scientific review of human pharmaceutical products under the centralized licensing procedure of the European Community, and includes any successor agency.

 

1.8              “Enzyme” means an enzyme constituted of collagenase obtained by fermentation of Clostridium histolyticum, purified by chromatography, lyophilized and substantially free from other proteinases, and any variants or derivatives thereof.

 

1.9              “FDA” has the meaning set forth above in the recitals.

 

1.10            “Field” means the removal or treatment of fat in humans or in animals.

 

1.11            “First Commercial Sale” means (a) the date of first sale following FDA or other regulatory approval of the NDA, MAA (as defined below) or equivalent marketing license application filed for a Licensed Product in any country, or (b) if regulatory approval is not required the first commercial sale of a Licensed Product, in either case to an independent party who is not an Affiliate, Sublicensee or subagent of the seller.

 

 

1.12            “Information” means (a) techniques, technology, practices, methods, procedures, inventions, discoveries, knowledge, know-how, trade secrets, skill, experience, gene or protein sequences, technical data, test data, analytical and quality control data, formulas or software programs, and (b) all compounds, compositions of matter, cells, cell lines, assays, and all other biological or chemical materials and samples.

 

1.13            “Joint Inventions” means any inventions in the Field, whether patentable or not, which are jointly conceived, discovered, developed or otherwise made, during the Development Program by at least one BTC employee or person contractually required to assign or license the intellectual property rights covering such inventions to BTC and to Gerut or an employee or person contractually required to assign or license the intellectual property rights covering such inventions to Gerut.

 

1.14            “Licensed Know-How” means (i) any proprietary Information or materials related to the manufacture, preparation, formulation, use or development of the Enzyme, the Licensed Products or injectable collagenase pertaining to the treatment of fat and shall include formulations, processes, techniques, formulas, biological, chemical, assay control and manufacturing, technical, pre-clinical, clinical or other data, methods, know-how, and trade secrets; (ii) all Information, not generally known, which is owned by Gerut or is rightfully held with right to sublicense as of the Effective Date, or which was developed, discovered, conceived, reduced to practice, or acquired by Gerut or assigned to Gerut as a result of the Development Program and which (a) relates to the Licensed Products or (b) relates to the methods, processes or techniques for the manufacture or use of the Licensed Products or (c) relates to injectable collagenase pertaining to the treatment of fat and (iii) any Joint Inventions.

 

1.15            “Licensed Products” means pharmaceutical products containing Enzyme as an active ingredient and any reformulation, improvement, enhancement, combination, refinement, or modification thereof, which are made, used and sold in the Field; provided however, the Licensed Products shall specifically exclude dermal formulations labeled for topical administration.

 

1.16            “MAA” means a Marketing Authorization Application filed with the EMEA.

 

1.17             “NDA” means a New Drug Application, Biologics License Application or a Product License Application filed with the FDA.

 

1.18             “Net Sales” means

 

(a)           with respect to sales of Licensed Products by BTC or its Affiliates, or any other entity to which BTC has sold, assigned rights, merged with or has become acquired by, the gross sales price actually received less the following items to the extent they are paid and included in the invoice price provided that in no event shall the following amounts, in aggregate, exceed 15% of the gross sales price:

 

 

(i)

customary trade discounts actually allowed;

(ii)

packing, freight, and insurance costs;

(iii)

sales, use, value-added and excise taxes;

(iv)

import, export and customs duties and taxes;

(v)

credit for returns, allowances or trades actually allowed; and

(vi)

government mandated rebates, if any; and

 

(b)           with respect to sales of Licensed Products by a Sublicensee (as defined below) where BTC has elected not to supply the Licensed Product, the net sales price as required to be reported to BTC by the Sublicensee pursuant to the written sublicense agreement between them. For purposes of clarification, if Auxilium or any other entity acquires BTC, then notwithstanding any termination of the Auxilium License Agreement, the Net Sales price shall be the price that would have been reported by Auxilium to BTC under the Auxilium License Agreement as if the Auxilium License Agreement had remained in effect.

 

(c)           with respect to sales of Licensed Products by a Sublicensee (as defined below) where BTC has elected to supply the Licensed Product, the net sales price as required to be reported to BTC under the Supply Agreement entered into between them.

 

In the case of (a) and (b) above, sales by BTC, its Affiliates and Sublicensees to resellers or others for further formulation, processing, repackaging or relabeling shall be excluded, and only the subsequent resale to independent customers shall be deemed Net Sales.

 

In the case of Combination Products for which the agent or ingredient constituting a Licensed Product and each of the other active agents or ingredients not constituting a Licensed Product have established market prices when sold separately, Net Sales shall be determined by multiplying the Net Sales for each such Combination Product by a fraction, the numerator of which shall be the established market price for the Licensed Products contained in the Combination Product and the denominator of which shall be the sum of the established market price(s) for the Licensed Products plus the wholesale cost of other active agents or ingredients contained in the Combination Product. When separate market prices are not established, then the Parties shall negotiate in good faith to determine a fair and equitable method of calculating Net Sales for the Combination Product in question, taking into account factors such as relative cost and relative therapeutic or diagnostic contribution.

 

1.19            “Sublicensee” means Auxilium or any person or entity who receives in the future a sublicense from BTC pursuant to Article III hereof.

 

1.20            “Territory” means all countries of the world.

 

 

2.1             Development Program. Pursuant to the Previous Agreements, Gerut, individually or collectively together with his employees, performed certain preliminary research and pre-clinical, clinical, regulatory, process development and manufacturing work and will conduct the Clinical Study (as defined in the Investigator Agreement) pursuant to the Investigator Agreement, related to injectable collagenase pertaining to the treatment of fat.

 

 

 

3.1              License Grant. Gerut hereby grants to BTC and its Affiliates a worldwide exclusive license with right to sublicense the Licensed Know-How. Gerut further grants to BTC and its Affiliates a worldwide exclusive license with right to sublicense to use the Licensed Know-How to make, use and sell in any manner Licensed Products. Ownership of the Licensed Know-How shall be retained by Gerut subject to the license granted herein. Nothing in this Agreement shall be construed in any way to limit the right of Gerut, as a physician and independent contractor, to use XIAFLEXTM for any purpose to pursue any medical, business and/or clinical advancements, including, but not limited to, teaching or providing medical services.

 

3.2              Sublicenses.

 

(a)           BTC shall be entitled to grant sublicenses of its rights hereunder, with right to further sublicense, provided that any Net Sales of Licensed Products by a BTC Sublicensee shall be deemed to be Net Sales of BTC for purposes of royalty payments due hereunder, and BTC shall remain obligated to pay all royalties due with respect to Licensed Products sold by any Sublicensee. If BTC shall grant any sublicenses in addition to the Auxilium License Agreement under this Agreement, then it shall obtain the written commitment of such additional Sublicensees to abide by all applicable terms and conditions of this Agreement and BTC shall remain fully responsible to Gerut for the performance of all such terms by such additional Sublicensees. Upon the termination of this Agreement, each additional Sublicensee shall have the option to convert its sublicense to a direct license with Gerut on the same terms as in the sublicense agreement.

 

(b)           Gerut hereby acknowledges and consents to the sublicense that BTC has previously granted to Auxilium pursuant to the Auxilium License Agreement in respect of the Licensed Products.

 

3.3              Subagents. It is agreed that BTC has the right to take the following actions, none of which shall constitute a sublicense hereunder and none of which shall be subject to Section 3.2 herein:

 

(a)           appointing an agent or distributor to market, sell or otherwise dispose of Licensed Products; and

 

(b)           subcontracting the development, manufacture or packaging of Licensed Products.

 

 

4.1              Royalties. <OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION>.

 

 

4.2              Royalty Period. The royalty obligations of BTC shall commence upon the date of the First Commercial Sale and continue until June 3, 2016 or such longer period as BTC continues to receive royalties for the Licensed Product; provided, however, that if BTC ceases on a country-by-country basis to receive royalties for the Licensed Product as a result of a sale of the royalty stream in respect of the Licensed Product in exchange for one or more cash payment(s) then <OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION>.

 

4.3              Currency; Conversion; Taxes. Royalty payments shall be paid in U.S. Dollars at the address of Gerut set forth in Section 10.7 below, or such other place as Gerut may reasonably designate in writing, consistent with applicable laws and regulations. Any taxes which BTC or its Affiliates or Sublicensees shall be required by law to withhold or pay upon remittance of the royalty payments shall be deducted from the royalty payable to Gerut and paid on its behalf as required. BTC shall furnish the original of any official receipts for such taxes. If any currency conversion shall be required in connection with the payment of royalties hereunder, such conversion shall be made by using the average of the daily exchange rates for such currency quoted by the Wall Street Journal’s (New York edition) foreign exchange desk for each of the last three (3) banlcing days of each calendar quarter, or, in the case of sales by Sublicensees, using the exchange rates provided for in the written agreements between BTC and such Sublicensees.

 

4.4              Currency Transfer Restrictions. If in any country in the Territory the payment or transfer of royalties on Net Sales in such country is prohibited by law or regulation, BTC shall notify Gerut of the conditions preventing such transfer, and shall deposit the blocked payments in local currency in a recognized banking institution in the relevant country for the credit of Gerut and such deposits shall belong solely to Gerut.

 

4.5              Payments by Others. With respect to any sales of Licensed Products by BTC, its Affiliates or Sublicensees, BTC shall have the right to cause any Affiliate, Sublicensee or other designee to make direct payment to Gerut of the royalties otherwise due for such sales. Gerut shall accept such payments and the amount of royalties to be paid by BTC shall be reduced by the amount of such payments actually received directly by Gerut.

 

4.6              Special Payment for <OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION>.

 

 

5.1              Royalty Reports and Payments. BTC agrees to make written reports and royalty payments to Gerut within 90 days after the close of each calendar quarter during the term of this Agreement, beginning with the quarter in which the First Commercial Sale occurs. These reports shall show for the calendar quarter in question all Net Sales of Licensed Products and the royalty due thereon, together with the same information for Licensed Products sold by Affiliates and Sublicensees (if applicable). With respect to sales of Licensed Products by Sublicensees, reports need only include information reflected in the reports required by Section 5.4 below which are actually received during the calendar quarter in question. Concurrently with the making of each report, BTC shall remit any royalty payment due for the period covered by the report. BTC will make a good faith attempt, using commercially reasonable biotech industry practices, to differentiate between Net Sales of Licensed Products and sales of similar products outside of the Field in calculating the amount of the royalty due hereunder to Gerut. Absent manifest error, BTC’s good faith differentiation shall be binding and conclusive on the Parties.

 

 

5.2              Termination Report. Within ninety (90) days after the date on which BTC and its Affiliates and Sublicensees last sell any Licensed Products, BTC shall make a final termination report containing the same quarterly information required above.

 

5.3              Accounting. BTC agrees to keep written or digitally stored records for a period of three (3) years from the end of each reporting period in sufficient detail to enable the royalties payable to be determined, and further agrees to permit its books and records to be examined during normal business hours by an independent accounting firm, selected by Gerut and reasonably satisfactory to BTC, from time-to-time on reasonable notice, but not more often than once per year. Such examination must be made confidentially and the auditing firm shall be required to enter into reasonable confidentiality agreements. The expense of such examination shall be borne by Gerut except that in the event the results of the audit reveal a discrepancy in Gerut’s favor of 7.5% or more, then reasonable out-of-pocket audit fees shall be paid by BTC. Any discrepancy will be promptly corrected by a payment or refund, as appropriate.

 

5.4             Third Party Reports. BTC agrees to require, as a term of any sublicense agreement, that the Sublicensee shall render written reports to BTC of Net Sales of Licensed Products no less frequently than twice per year and in sufficient detail to enable the royalties payable by BTC hereunder to be determined (“Third Party Reports”). BTC shall also require Sublicensees to keep records concerning Net Sales for a period of at least three (3) years, and to permit reasonable examination of such records by an independent accounting firm selected by BTC. Notwithstanding the foregoing, nothing in this Agreement shall be construed as enlarging, or requiring BTC to modify, Auxilium’s, its Affiliate’s or its Sublicensee’s existing reporting and record keeping obligations pursuant to the Auxilium License Agreement.

 

5.5              Confidentiality of Reports. Gerut agrees that the information set forth in (a) the reports required by Sections 5.1 and 5.2, (b) the records subject to examination under Section 5.3, and (c) all Third Party Reports, shall be maintained in confidence by Gerut and any independent accounting firm selected under Section 5.3, shall not be used for any purpose other than verification of the performance by BTC of its obligations hereunder, and shall not be disclosed by Gerut or such accounting firm to any other person.

 

 

6.1              Title; Authority. Gerut represents and warrants that he owns all of the rights pertaining to the Licensed Know-How licensed to BTC hereunder and that therefore has the full unrestricted legal right to enter into this Agreement and to grant the licenses granted hereunder.

 

 

6.2              No Other Licenses Granted. Gerut represents and warrants that he has not granted any license pertaining to the Licensed Know-How to any party other than to BTC pursuant to this Agreement.

 

6.3              No Known Infringement. As of the Effective Date, Gerut has not received any notice of infringement of or conflict with any patent, trade secret, copyright, trademark or other intellectual property right of any other person with respect to the Licensed Know-How.

 

6.4              No Warranty of Non-Infringement. Nothing in this Agreement shall be construed as a warranty or representation that any Licensed Products made, used or sold pursuant to any license granted hereunder is or will be free from infringement of patents, copyrights, trademarks, trade secrets or other intellectual property rights of third parties.

 

6.5              Indemnification by Gerut. Notwithstanding the absence of any warranty of non-infringement, Gerut shall, during the term of this Agreement and thereafter, indemnify and hold harmless BTC, its Affiliates, Sublicensees and its and their directors, officers, agents and employees, from any losses, damages, expenses and liabilities of any kind (including legal expenses and reasonable attorneys’ fees and costs ) resulting from Gerut’s gross negligence or willful misconduct in connection with:

 

(a)           the action or inaction of Gerut, his agents or his employees or

 

(b)           any breach of this Agreement by Gerut, his agents or his employees.

 

6.6              Indemnification by BTC. BTC shall, during the term of this Agreement and thereafter, indemnify and hold harmless Gerut his agents and his employees, from any losses, damages, expenses, and liability of any kind whatsoever (including legal expenses and reasonable attorneys’ fees and costs) resulting from BTC’s (and its Affiliates’ and Sublicensees’) gross negligence or willful misconduct in connection with the manufacture, use, testing, sale or advertisement of Licensed Products; provided, however, that in no case will the foregoing indemnity obligation apply to the extent that such claim, proceeding, loss, expense, or liability is the result of:

 

(a)           any action or inaction of Gerut, his agents or his employees, or their agents constituting medical malpractice; or

 

(b)           any alleged or actual infringement by the Licensed Know-How of any patents, copyrights, trademarks, trade secrets or other intellectual property rights of third parties; or

 

(c)           any breach of this Agreement by Gerut, his agents or his employees.

 

 

7.1              Term. Unless earlier terminated in accordance with this Article VII, this Agreement and the licenses granted hereunder shall continue in effect until the termination of BTC’s royalty obligations. Thereafter, all licenses granted shall become fully paid-up, irrevocable exclusive licenses.

 

 

7.2              Termination by Gerut for Default. Gerut may terminate this Agreement if BTC commits any material default of any of BTC’s material obligations, by notice to BTC specifying in reasonable detail the nature of the default, provided that such default has not been remedied within 90 days of such notice.

 

7.3              Termination by BTC. BTC may terminate this Agreement (a) on thirty (30) days’ notice to Gerut if BTC elects to cease utilizing all license rights granted hereunder; (b) if Gerut or any of his agents or employees is in material default of any of Gerut’s material obligations or covenants, which default has not been remedied within 90 days’ of notice to Gerut specifying in reasonable detail the nature of the default.

 

7.4              Termination for Bankruptcy. If voluntary or involuntary proceedings in bankruptcy by or against Gerut are instituted under any insolvency law, or a receiver or custodian is appointed for Gerut, or proceedings are instituted by or against Gerut, which proceedings shall not have been dismissed within 60 days after the date of filing, or if Gerut makes an assignment for the benefit of creditors, or substantially all of the assets of Gerut are seized or attached and not released within 60 days thereafter, BTC may immediately terminate this Agreement by notice to Gerut. However, in the event that BTC elects not to terminate the Agreement, the Parties intend that the rights and licenses granted under this Agreement shall be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code (or any equivalent provision of applicable foreign law), licenses or rights to “intellectual property” as defined under Section 101(52) of the U.S. Bankruptcy Code. BTC, as a licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code, subject to performance by Gerut of his preexisting obligations under this Agreement.

 

7.5              Rights and Obligations Upon Termination. If for any reason, and subject to the right to convert in accordance with 3.2(a), following termination of this Agreement, nothing herein shall be construed to release either Party from any obligation that arose prior to the date of such termination. After termination, BTC and its Affiliates and Sublicensees may complete Licensed Products in the process of manufacture at the date of termination and sell them along with any other Licensed Products in inventory, provided that BTC and its Sublicensees shall pay royalties as required by Article IV and shall submit the reports required by Article V for such Licensed Products.

 

7.6              Return of Confidential Information. Upon termination of this Agreement, BTC shall return or destroy all Licensed Know-How that is written, to Gerut, provided that BTC may retain one copy of all written materials for legal and archival purposes only.

 

 

 

8.1              Confidentiality.

 

(a)           During the term of this Agreement and for a period of five (5) years following its expiration or termination, each Party shall maintain in confidence all Information disclosed by the other Party which is marked or identified as confidential or which the receiving Party has reason to know is confidential or proprietary (referred to herein as “Confidential Information”), and shall not disclose Confidential Information to anyone except those Affiliates, further Sublicensees, employees, subagents, consultants, or subcontractors having a “need to know” in order to carry out the receiving Party’s activities as contemplated by this Agreement. Each receiving Party shall obtain written agreements to the extent applicable, from its Affiliates, Sublicensees, employees, subagents, consultants or subcontractors, prior to disclosure to them of Confidential Information, obligating them to hold in confidence and not use any Confidential Information except as permitted by this Agreement. Notwithstanding the foregoing sentence, if employees or consultants of a receiving Party have previously signed general confidentiality agreements in favor the receiving Party as employer, and if those agreements bind the employees or consultants to protect Information disclosed hereunder to at least the same extent required by this Section, then it shall be sufficient for the employing Party to (i) notify the employees or consultants of the fact that Information disclosed hereunder is governed by such confidentiality agreements and (ii) identify to such employees or consultants the specific Information so governed. Each Party shall use the same degree of effort used to protect its own most valuable proprietary Information from unauthorized use or disclosure, and shall be responsible for ensuring compliance with these obligations by its Affiliates, Sublicensees, employees, subagents, consultants and subcontractors. Each Party shall promptly notify the other upon discovery of any unauthorized use or disclosure of the other’s Confidential Information.

 

(b)           The receiving Party shall not use Confidential Information for any purpose, including for the development of products in the Field, except as contemplated by this Agreement.

 

8.2              Exceptions. The obligation of confidentiality and non-use in this Article shall not apply to the extent that:

 

(a)           either Party (the “Recipient”) is required to disclose Confidential Information by law, order or regulation of a governmental agency or a court of competent jurisdiction, or

 

(b)           the Recipient can demonstrate that (i) the disclosed Information was, at the time of disclosure to the Recipient, already in the public domain or which, after disclosure, becomes part of the public domain other than as a result of action of the Recipient, its Affiliates, Sublicensees, employees, subagents, consultants or subcontractors in violation hereof; (ii) the Recipient can demonstrate that the disclosed Information was rightfully known or independently developed by the Recipient or its Affiliates prior to the date of disclosure to the Recipient, or (iii) the disclosed Information was received by the Recipient or its Affiliates on an unrestricted basis from a source unrelated to any Party to this Agreement and not under a duty of confidentiality to the other Party or

 

(c)           the disclosure is made to the FDA, EMEA or other regulatory agency as part of a product approval process.

 

 

8.3              Legally Compelled Information. In the event that either Party becomes legally compelled to disclose any Confidential Information belonging to the other Party, it shall notify the other Party prior to disclosure so that the other Party can seek a protective order or other appropriate remedy.

 

8.4             Publications. Prior to public disclosure of or submission for publication of an abstract, manuscript or oral presentation describing the results of any aspect of the Development Program or other scientific activity between BTC and Gerut, the Party disclosing or submitting such abstract, manuscript or oral presentation (“Disclosing Party”) shall send the other Party (“Responding Party”) by a recognized delivery service for next day delivery a copy of the abstract, manuscript or oral presentation materials to be submitted. The Responding Party shall have 10 days, in the case of an abstract or oral presentation materials, or 30 days, in the case of a manuscript, from the date of receipt of the abstract, manuscript or oral presentation materials. If the Responding Party believes the subject matter of such abstract, manuscript or oral presentation contains Confidential Information or a patentable invention of significant commercial value to the Responding Party, then prior to the expiration of the relevant period, the Responding Party shall notify the Disclosing Party in writing of its determination and the basis for its conclusion. Upon receipt of such notice, the Disclosing Party shall delay public disclosure of or submission of abstract, manuscript or oral presentation for an additional period of 60 days to permit preparation and filing of a patent application on the disclosed subject matter. No publication or presentation shall be made by the Disclosing Party unless and until the Responding Party’s comments have been addressed and any information determined by the Responding Party to be Confidential Information of the Responding Party has been removed. Determination of authorship for any paper or inventorship for any patent shall be in accordance with accepted scientific practice or patent law, as appropriate. Should any questions of authorship or inventorship arise, they will be determined by good faith consultation between Gerut and BTC.

 

 

9.1              Exclusive Remedy. The Parties agree that the terms of this Article shall be the exclusive means of resolving any dispute, controversy or claim (a “Dispute”) arising out of or relating to this Agreement, except that either Party may seek injunctive relief or other provisional remedies from a court of competent jurisdiction if necessary to protect such Party’s name, intellectual property rights, or to prevent irreparable harm.

 

9.2              Good Faith Negotiations. In the event of any Dispute arising out of or relating to or in connection with any provision of the Agreement, or the rights or obligations hereunder, the Parties shall try to settle their differences amicably between themselves. Either Party may initiate such informal dispute resolution by sending written notice of the dispute to the other Party, and within ten (10) business days after such notice appropriate representatives of the Parties shall meet for attempted resolutions by good faith negotiations. If such representatives are unable to resolve such disputed matters, they shall be referred to the senior management of BTC, for discussion and resolution. If they are unable to resolve the dispute within thirty (30) days (or such longer period of time as the Parties may agree to in writing) of initiating such negotiations, then the Parties may resort to binding arbitration, as set forth in Section 9.3 below.

 

 

9.3              Binding Arbitration. Any Dispute not so resolved may be submitted, by a written notice of request to arbitrate given by either Party, to final and binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) then in force except as modified in accordance with the provisions of this Section. The arbitration proceedings shall be held in the City of New York in New York State.

 

9.4              Arbitrators. The arbitral tribunal shall be composed of three arbitrators, one appointed by each Party within 15 days, and the two arbitrators so appointed shall, within 15 days of their appointment, appoint a third arbitrator who shall act as Chairperson of the tribunal. If the Dispute involves scientific or technical matters, at least 2 of the 3 arbitrators chosen shall have educational training and/or experience sufficient to demonstrate a reasonable level of knowledge in the field of biotechnology.

 

9.5              Procedures.

 

(a)           Prompt resolution of any Dispute is important to both Parties; and the Parties agree that the arbitration of any Dispute shall be conducted expeditiously. The arbitrators shall be instructed and directed to assume management initiative and control over the arbitration process (including scheduling of events, pre-hearing discovery and activities, and the conduct of the hearing), in order to complete the arbitration as expeditiously as is reasonably practical for obtaining a just resolution of the Dispute. The arbitrators shall be directed that any arbitration shall be completed within 1 year from the filing of notice of a request for such arbitration.

 

(b)           The arbitrators shall determine what discovery shall be permitted, consistent with the goal of limiting the cost and time which the Parties must expend for discovery; provided that the arbitrators shall permit such discovery as they deem necessary to permit an equitable resolution of the Dispute.

 

(c)           In arriving at decisions, the arbitrators shall apply the terms and conditions of this Agreement in accordance with the rules of law of the state of New York. The arbitrators are empowered to render the following awards in accordance with any provision of this Agreement: (i) enjoining a Party from performing any act prohibited, or compelling a Party to perform any act required, by the terms of this Agreement or any related agreement, and (ii) ordering such other legal or equitable relief, including any provisional legal or equitable relief, or specifying such procedures as the arbitrator deems appropriate, to resolve any Dispute submitted for arbitration. Any monetary award made and shall be payable in U.S. Dollars free of any tax or any deduction. The arbitrators shall issue to both Parties a written explanation in English of the reasons for the award and a full statement of the facts as found and the rules of law applied in reaching the decision. An award rendered in connection with an arbitration pursuant to this Article shall be the sole, exclusive, final and binding remedy between the Parties regarding the Dispute and any counterclaims made, and judgment upon any award may be entered and enforced in any court of competent jurisdiction.

 

9.6              Expenses. The award rendered by the arbitrators shall include the costs of arbitration, arbitrator fees, reasonable attorneys’ fees and reasonable costs for expert and other witnesses.

 

 

9.7              Confidentiality of Proceedings. The arbitration proceedings shall not be made public without the joint consent of the Parties, and each Party shall maintain the confidentiality of such proceedings and decision unless otherwise required by law or permitted in writing by the other Party.

 

 

10.1            <OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION>.

 

10.2            Indemnification Procedures.In the event either Party seeks indemnification under any provision for indemnification afforded by this Agreement, the following procedures shall be followed:

 

(a)           Notice of Claim. The Party seeking indemnification (the “Indemnitee”) shall give the other Party (the “Indemnifying Party”) prompt notice of any losses or of the discovery of facts upon which a request for indemnification may be made. The Indemnifying Party shall not be liable for any losses that it can show resulted from any delay in providing such notice. The notice must contain a description of the claim and the nature and amount of the loss (to the extent known), and shall include copies of all papers and official documents received in respect of any losses.

 

(b)           Control of Defense. At its option, the Indemnifying Party may assume the defense of any third party claim by giving written notice to the Indemnitee within thirty (30) days of the Indemnitee’s notice. The assumption of the defense of a third party claim by the Indemnifying Party shall not be construed as an acknowledgment that the Indemnifying Party is liable to the Indemnitee. Upon assuming the defense of a third party claim, the Indemnifying Party shall have the right to choose legal counsel and direct and control the defense in its sole discretion. In the event that it is ultimately determined that the Indemnifying Party is not obligated to indemnify the Indemnitee from the claim, the Indemnitee shall reimburse the Indemnifying Party for all costs and expenses incurred.

 

(c)           Right to Participate in Defense. The Indemnitee shall be entitled to participate in, but not control, the defense of a third party claim and to employ counsel of its choice for such purpose; provided, however, that such participation shall be at the Indemnitee’s own expense unless the indemnifying Party has failed to assume the defense, in which case the Indemnitee shall control the defense.

 

(d)           Settlement. If the Indemnifying Party has acknowledged in writing the obligation to indemnify the Indemnitee for losses requiring only the payment of money damages in connection with a third party claim, and that will not result in the Indemnitee’s becoming subject to injunctive or other, the Indemnifying Party shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such claim on such terms as the Indemnifying Party deems appropriate in its sole discretion. With respect to all other claims or losses, the Indemnifying Party shall have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such claim or loss provided it obtains the prior written consent of the Indemnitee (which consent shall not be unreasonably withheld or delayed). Regardless of whether the Indemnifying Party chooses to defend or prosecute any third party claim, no Indemnitee shall admit any liability with respect to, or settle, compromise or discharge, any such claim without the prior written consent of the Indemnifying Party.

 

 

(e)           Cooperation of Indemnitee.Regardless of whether the Indemnifying Party chooses to defend or prosecute any third party claim, the Indemnitee shall cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested. Such cooperation shall include access to and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such third party claim, and making the Indemnitee’s employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Indemnifying Party shall reimburse the Indemnitee for all its reasonable out-of-pocket expenses in connection therewith.

 

(f)           Reimbursement of Expenses. The verifiable costs and expenses, including fees and disbursements of counsel, incurred by the Indemnitee in connection with any claim shall be reimbursed quarterly by the Indemnifying Party, without prejudice to the Indemnifying Party’s right to contest its indemnification obligations, and such reimbursements shall be subject to refund in the event the Indemnifying Party is ultimately held not to be obligated to indemnify the Indemnitee.

 

10.3            Assignment; Successors. This Agreement may not be assigned by either Party without the prior written consent of the other, except that BTC may assign this Agreement to a party which acquires (whether by merger, sale of assets or otherwise) all or substantially all of that portion of BTC’s business to which this Agreement pertains. Any entity to whom BTC assigns its rights under this Agreement, is merged with or is acquired by shall be bound the terms of this Agreement, including the obligation to pay royalties to Gerut and no assignment shall relieve BTC of its obligations hereunder without the prior written consent of Gerut.

 

10.4            Entire Agreement. This Agreement, the Side Letter and the Investigator Agreement, together with all corresponding Exhibits, constitute the entire agreement between the Parties with respect to the subject matter hereof, and supersede all Previous Agreements, whether written or oral, but shall have no effect upon the Existing Options. This Agreement or any corresponding Exhibit may not be modified orally, but only by an instrument in writing signed by both Parties.

 

10.5            Choice of Law. The validity, performance, construction and effect of the Agreement shall be governed by the substantive laws of the state of New York without reference to conflicts of laws provisions.

 

10.6            Severability. If any provision of this Agreement is declared invalid or unenforceable by an arbitrator pursuant to Section 9.5 (or by a court whose decision is final and binding pursuant to subsection 9.1) that provision shall be deemed fully severable. The remaining provisions of this Agreement shall remain in full force and effect and will be construed as if the invalid or unenforceable provision had been deleted.

 

 

10.7            Notices. Any notice or report required or permitted to be given shall be in writing and delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier as provided herein), sent by nationally-recognized overnight courier, or sent by registered or certified mail, postage prepaid, return receipt requested. Such notices and reports shall be sent to the following addresses and persons (or such other address or person as a Party may provide by a communication complying with this section), and shall be effective upon personal delivery or 5 days after dispatch by mail or courier, whichever is applicable:

 

If to BTC,

 

BioSpecifics Technologies Corp.

35 Wilbur Street

Lynbrook, New York 11563

Fax: (516) 593-7039

Attn: President

 

with a copy to:

 

Carl A. Valenstein

Bingham McCutchen LLP

2020 K Street, N.W.

Fax: (202) 373-6448

 

If to Gerut,

 

1245 Colonial Road

Hewlett, NY 11557

Fax No.: (516) 295-2487

 

with a copy to:

 

Stanley D. Friedman

McAloon & Friedman, P.C.

123 William Street

New York, New York 10038

Fax ###-###-####

 

10.8            Waiver. The delay or failure of any Party to require performance of any provision in any one instance shall not be deemed a waiver and shall not affect the right to enforce the provision later or in any other instance. The observance of any term or condition may be waived, either generally or in a particular instance by the Party entitled to enforce such term or condition, but shall only be effective if in writing and signed by such Party.

 

10.9            Force Majeure. If either Party shall be delayed, interrupted in or prevented from the performance of any obligation hereunder (other than an obligation to make a payment) by reason of force majeure, including an act of God, fire, flood, earthquake, war (declared or undeclared), acts of terrorism, public disaster, strike or labor unrest, governmental act, rule or regulation, or any other cause beyond such Party’s control, such Party shall not be liable to the other therefore and the time for performance of such obligation shall be extended for a period equal to the duration of the contingency which occasioned the delay, interruption or prevention. The Party invoking such force majeure rights must notify the other Party within a period of 15 days from the first and last day of the force majeure unless it renders such notification impossible, in which case, notification shall be made as soon as possible. If the resulting delay exceeds 4 months, both Parties shall consult in good faith to determine an appropriate course of action.

 

 

10.10           Independent Contractors. It is expressly agreed that the Parties shall be independent contractors and that the relationship shall not constitute a partnership or agency of any kind. Neither Party may bind the other or make statements on behalf of the other without prior written consent.

 

10.11           Publicity. Neither Party shall use the name of the other Party in any publicity release without the prior written permission of the other, which shall not be unreasonably withheld. Except as required by law, neither Party shall publicly disclose the terms and conditions of the Agreement without the prior written consent of the other Party.

 

10.12           Headings. The captions used in this Agreement are inserted for convenience of reference only and shall not be construed to create obligations, benefits or limitations.

 

10.13           Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date set forth above.

 

BIOSPECIFICS TECHNOLOGIES CORP.
By:	/s/ Thomas L. Wegman		/s/ Zachary Gerut
Name: Thomas L. Wegman			Zachary Gerut
Title: President

 

Signature Page to License Agreement

 

 

 

<OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION>

 

 

CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.