CONSULTING AGREEMENT
This CONSULTING AGREEMENT (the "Agreement") is entered into as of
October 10, 1997, by and between BIOSPECIFICS TECHNOLGIES CORP., a Delaware
corporation (the "Company"), and XXXXXXX X. XXXXX, whose principal office is
located at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Consultant").
WHEREAS, the Company deems it useful and in the best interests of the
Company to have the benefit of the Consultant's services and experience as a
consultant; and
WHEREAS, the Consultant has indicated his willingness to provide his
services and experience as a consultant on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing and of the covenants
and agreements contained herein, the parties hereby agree as follows:
1. Engagement. The Company hereby retains the Consulting Services (as
hereinafter defined) of the Consultant, and the Consultant hereby
agrees to do and perform the Consulting Services, upon the terms and
conditions set forth herein.
2. Extent of Service. During the Consulting Term (as hereinafter
defined), the Consultant shall perform and discharge well and
faithfully the consulting services (the "Consulting Services"), which
shall include but not be limited to:
(a) assisting the Company in fostering its relationship with existing
and potential investors;
(b) analyzing the business prospects of the Company and its products
in order to provide strategic advice to the Company and make
recommendations to the officers and directors of the Company
regarding the possibility and advisability of financing the
exploration and development of new products;
(c) seeking financing for, and organizing the structure of, a joint
venture or other entity for the development of new products
relating to a cure for the Dupuytren Contracture and other
products developed by the Company, on terms acceptable to the
Company (collectively, the "New Product Financing"); and
(d) executing and completing such other assignments that are, from
time to time, assigned to the Consultant by the Company in
connection with financial matters relating to the Company's
business.
In performing the Consulting Services, the Consultant shall be
available to the officers and directors of the Company by telephone or
in person at reasonable times, and shall confer at least weekly with
the President and other officers of the Company as to his progress on
any particular project or projects, as well as the time commitment
required for any potential project. It is agreed by the Consultant and
the Company that the Consulting Services will require a time
commitment on the part of the Consultant of no less than 20 hours per
month. The Consultant agrees to keep timely and accurate records
memorializing the amount of time and activities of the Consultant in
providing the Consulting Services. The Consultant agrees to prepare
periodically a plan of action that will be submitted to the Board of
Directors of the Company.
3. Compensation and Expenses. For services rendered pursuant to this
Agreement, the Company shall:
(a) pay the Consultant a fee of $10,000 per month, payable on the
first day of each calendar month (prorated by day for any partial
months) from the date hereof and throughout the Consulting Term
(as defined herein) unless this Agreement is terminated sooner
pursuant to the terms hereof;
(b) grant the Consultant options (the "Initial Options") to purchase
100,000 shares of common stock (the "Shares") of the Company at
an exercise price equal to the greater of (i) the closing price
of the Shares on the date hereof and (ii) the average closing
price of the Shares for the 30 trading days preceding the date
hereof, which options shall not be exercisable, except as
otherwise provided herein, until the one-year anniversary date of
the date hereof and shall expire 90 days after such one-year
anniversary date; provided, however, that if this Agreement is
terminated for cause by the Consultant as a nondefaulting party
in accordance with Section 5, such options will be immediately
exercisable on the date such termination becomes effective and
shall expire 90 days after the one-year anniversary date of the
date hereof; and
(c) promptly after the funding and consummation of the New Product
Financing in an amount satisfactory to the Company (the "Approved
Amount"), which is secured primarily through the efforts of the
Consultant during the Consulting Term, (i) pay the Consultant an
amount in cash equal to 7% of the Approved Amount, or such other
amount as the Company and the Consultant may agree to in writing,
and (ii) grant the Consultant options to purchase an additional
100,000 Shares at an exercise price equal to the average closing
price of the Shares for the 30 trading days preceding the date of
the grant of such options, which options shall be immediately
exercisable on the date of such grant and will expire 90 days
after the one-year anniversary date of the date of such grant
(such cash payment and additional options, the "Additional
Compensation").
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The options to purchase Shares referred to in paragraphs (b) and
(c) of this Section 3 shall include standard capital reorganization
and price protection provisions normally found in stock options.
Notwithstanding the foregoing, the Consultant shall be entitled to the
Additional Compensation if the New Product Financing is consummated
(i) after the Consulting Term but within a period of one year after
the Consulting Term, and (ii) pursuant to an offering memorandum,
prospectus or similar offering document (x) that the Consultant
prepared, or directed the preparation of, or (y) which contains a
proposal or substantially similar proposal to that recommended to the
Company by the Consultant.
The Company shall bear, be responsible and reimburse the
Consultant for all his out-of-pocket and other expenses incurred
connection with rendering the Consulting Services. To the extent
possible, such expenses shall be pre-cleared with the Company.
4. Term. The term of this Agreement (the "Consulting Term") shall
commence on the date hereof, and shall continue for twelve (12) months
from the date hereof, unless this Agreement is terminated in
accordance with the provisions hereof before such time. Unless either
the Consultant or the Company, as the case may be, shall notify the
other party in writing at least 30 days before the expiration of the
Consulting Term (or any extension thereof), that such party does not
wish to continue this Agreement, it shall be renewed for consecutive
one-year periods on the same terms and conditions provided in this
Agreement.
5. Termination for Cause. The nondefaulting party shall have the right to
terminate this Agreement during the Consulting Term (or any extension
thereof) upon the occurrence of any of the following events, and the
expiration of any applicable period of cure: (a) with respect to the
Consultant, any act constituting gross negligence or bad faith, a
criminal conviction; or material non-performance of the Consulting
Services; (b) the failure of a party to comply with any other term or
condition of this Agreement within ten (10) days after written notice
specifying the nature of such default, without cure; and (c) any
attempt by the Consultant to assign or otherwise transfer the
Consultant's rights and obligations hereunder.
6. No Agency. The parties expressly intend and agree that the Consultant
shall not be, and shall not hold himself out as being, an agent of the
Company. The Consultant shall have no authority to bind the Company to
any agreement or obligation, express or implied. The Consultant shall
not have the authority to, and shall not, sell or solicit sales of
products manufactured by the Company.
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7. Independent Contractor. The parties expressly intend and agree that
the Consultant is acting as an independent contractor and not as an
affiliate of the Company nor as an agent of the Company. The
Consultant retains sole and absolute discretion, control, and judgment
in the manner and means of carrying out the assignment. This Agreement
shall not be construed as a partnership agreement. However, this
provision does not preclude the possibility of the Consultant
performing executive duties for the Company such as acting as the
Treasurer of the Company, or becoming a member of the Board of the
Directors of the Company.
8. Indemnification.
(a) The Company agrees to hold the Consultant harmless against, and
indemnify him for any and all losses, claims, damages,
liabilities, obligations, penalties, judgments, awards, costs,
disbursements or expenses (collectively, "Losses") to any such
person in connection with, arising out of, or as a result,
directly or indirectly, of (i) matters arising as a result of the
Consultant's performance of the Consulting Services, or (ii) the
breach by the Company of this Agreement; except that the Company
shall neither hold harmless nor indemnify the Consultant under
this Section 8 in the event that such Losses are finally
judicially determined to have resulted from the gross negligence,
bad faith, unlawful acts or omissions or willful misconduct of
the Consultant.
(b) The Consultant agrees to hold the Company harmless against, and
indemnify the Company for, any Losses incurred by the Company in
connection with, arising out of, or as a result, directly or
indirectly, of (i) the breach by the Consultant of this
Agreement, (ii) the gross negligence, bad faith, unlawful acts or
omissions, or willful misconduct of the Consultant or any of the
Consultant's agents or (iii) disclosure or use of Trade Secrets
of the Company by unauthorized persons in violation of Section 9
of this Agreement.
9. Confidentiality.
(a) The Consultant recognizes the proprietary interest of the Company
in any Trade Secrets of the Company. As used herein, the term
"Trade Secrets" includes all of the Company's confidential or
proprietary information, including without limitation any
confidential information of the Company encompassed in any
reports, investigations, experiments, research or development
work, experimental work, work in progress, drawings, designs,
plans, proposals, codes, marketing and sales programs, financial
projections, cost summaries, pricing formulae, and all concepts
or ideas, materials or information related to the business,
products, or operations of the Company or the Company's customers
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which has not previously been released to the public at large by
duly authorized representatives of the Company, whether or not
such information would be enforceable as a trade secret or the
copying of which would be enjoined or restrained by a court as
constituting unfair competition. The Consultant acknowledges and
agrees, on behalf of himself and his agents, that any and all
Trade Secrets of the Company, learned by the Consultant during
the Consulting Term or otherwise, whether developed by the
Consultant alone or in conjunction with others or otherwise,
shall be and are the sole property of the Company.
(b) The Consultant acknowledges and agrees that the Company is
entitled to prevent the disclosure of Trade Secrets of the
Company. As a portion of the consideration for the appointment of
the Consultant and for the compensation being paid to the
Consultant by the Company, the Consultant, on behalf of himself
and his agents, agrees at all times during the Consulting Term
and thereafter to hold in strictest confidence, and not to
disclose or allow to be disclosed to any person, firm, or
corporation, other than to persons engaged by the Company to
further the business of the Company, and not to use except in the
pursuit of the business of the Company, Trade Secrets of the
Company, without the prior written consent of the Company,
including Trade Secrets developed by the Consultant, unless the
Consultant is required by a court of competent jurisdiction, by
any governmental agency having supervisory authority over the
business of the Consultant, or by any administrative body or
legislative body (including committees thereof) with jurisdiction
to order the Consultant to divulge, disclose or make accessible
such information.
10. Return of Materials at Termination. At the conclusion of the
Consulting Term or at such sooner time as the Agreement shall
terminate, the Consultant will promptly deliver to the Company
originals and copies of all materials, property, documents, data, and
other information belonging to the Company or pertaining to Trade
Secrets. The Consultant shall not take any materials, property,
documents or other information, or any reproduction or excerpt
thereof, belonging to the Company or containing on pertaining to any
Trade Secrets.
11. Remedies Upon Breach. In the event of any breach of this Agreement by
the Consultant, the Company shall be entitled, if it so elects, to
institute and prosecute proceedings in any court of competent
jurisdiction, either in law or in equity, to enjoin the Consultant
from violating any of the terms of this Agreement, to enforce the
specific performance by the Consultant of any of the terms of this
Agreement, and to obtain damages, or any of the above, but nothing
herein contained shall be construed to prevent such remedy or
combination of remedies as the Company may, in his discretion, choose
to invoke. The failure of the Company to promptly institute such
proceedings upon any breach of this Agreement shall not constitute a
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waiver of that or any other breach hereof. In the event of any breach
of this Agreement by the Company, the Consultant shall be entitled, if
he so elects, to institute and prosecute proceedings in any court of
competent jurisdiction, and the failure of the Consultant to promptly
initiate such proceedings shall not constitute a waiver of any breach
hereof.
12. Governing law. This Agreement shall be interpreted, construed,
governed and enforced according to the laws of the State of New York.
13. Attorneys' Fees. In the event of any litigation concerning any
controversy, claim or dispute between the parties hereto arising out
of or relating to this Agreement or the breach hereof, or the
interpretation hereof, the prevailing party shall be entitled to
recover from the losing party reasonable expenses, attorneys' fees,
and costs incurred therein or in the enforcement or collection of any
judgment or award rendered therein. The "prevailing party" means the
party determined by the court to have most nearly prevailed, even if
such party did not prevail in all matters, not necessarily the one in
whose favor a judgment is rendered. In the event of any default by a
party under this Agreement, such defaulting party shall pay all the
expenses and attorneys' fees incurred by the other party in connection
with such default, whether or not any litigation is commenced.
14. Amendments. No amendment or modification of the terms or conditions of
this Agreement shall be valid unless in writing and signed by the
parties hereto.
15. Change in Control; Successors and Assigns.
(a) In the event that any person or entity shall have the right to
elect a majority of the Board of Directors of the Company other
than Xx. Xxxxx X. Xxxxxx, the Chairman and President of the
Company, or his heirs, legatees, devisees or legal
representatives, the Consultant shall have the right to terminate
this Agreement by notifying the Company (or successor thereof) in
writing of the Consultant's intention to terminate the Agreement
and the termination shall become effective when the Company (or
successor thereof) receives such notification.
(b) If the Consultant exercises the termination right provided in
paragraph (a) of this Section 15, (i) he shall be entitled only
to the compensation provided for in paragraph (a) of Section 3
hereof earned by him through the date of such termination, and
(ii) the Initial Options shall become exercisable on the date of
such termination on the same the terms.
(c) The Consultant shall not be entitled to assign any of the
Consultant's rights or obligations under this Agreement.
16. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the appointment of the Consultant.
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17. Notices. All notices, offers, acceptances, approvals, waivers,
requests, demands and other communications hereunder shall be in
writing, and shall be considered as properly given (a) if delivered in
person, (b) if sent by a reputable overnight delivery service, (c) in
the event overnight delivery services are not readily available, if
mailed by first class United States mail, postage prepaid, registered
or certified with return receipt requested, (d) if sent by prepaid
telegram or by telex and transmission facility and confirmed in
writing by any other manner described above. Notice so mailed shall be
effective upon the earlier of actual receipt or the expiration of five
(5) business days after its deposit. Notice given in any other manner
shall be effective upon receipt by the addressee; provided, however,
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that is any notice is tendered to an addressee and the delivery
thereof is refused by such addressee, such notice shall be effective
upon such tender.
18. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
19. Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
BIOSPECIFICS TECHNOLOGIES CORP.
By: ________________________
Name:
Title:
XXXXXXX X. XXXXX
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