Document:

License Agreement between Convatec and BioProgress Technology International, Inc

EXHIBIT 10.37 
 

 
LICENSE AGREEMENT 
 

 
between 
 
CONVATEC, A DIVISION OF E.R. SQUIBB & SONS, L.L.C. 
 
and 
 
BIOPROGRESS TECHNOLOGY INTERNATIONAL INC. 
 
Dated 27th August 2002 
 
 
*Denotes material omitted pursuant to a request for
confidential treatment. Such material is filed separately with the Securities and Exchange Commission. 
 

1 

 

	 Article Number

	  	 Title

	  	 Page

	 I.
	  	 DEFINITIONS
	  	 4

	 II.
	  	 DISCLOSURE
	  	 7

	 III.
	  	 PRODUCT DELIVERY MILESTONE PROGRAM
	  	 7

	 IV.
	  	 GRANT OF LICENSE
	  	 9

	 V.
	  	 ROYALTIES AND PERFORMANCE
	  	 10

	 VI.
	  	 REPORTS
	  	 13

	 VII.
	  	 TIMES AND CURRENCIES OF PAYMENT
	  	 15

	 VIII.
	  	 INFRINGEMENT
	  	 16

	 IX.
	  	 PATENT APPLICATIONS
	  	 18

	 X.
	  	 REISSUE
	  	 19

	 XI.
	  	 FUTURE DEVELOPMENTS
	  	 21

	 XII.
	  	 PRODUCT TESTING AND COMPLIANCE
	  	 21

	 XIII.
	  	 DEVELOPMENT RECOGNITION
	  	 23

	 XIV.
	  	 CONFIDENTIALITY
	  	 23

	 XV.
	  	 EFFECTIVE DATE AND TERM
	  	 24

	 XVI.
	  	 TERMINATION FOR CAUSE
	  	 25

	 XVII
	  	 RIGHTS AND OBLIGATIONS UPON TERMINATION
	  	 26

	 XVIII.
	  	 ASSIGNMENT
	  	 27

	 XIX.
	  	 NOTICES
	  	 28

	 XX.
	  	 ENTIRE AGREEMENT AND AMENDMENTS
	  	 29

	 XXI.
	  	 GOVERNING LAW
	  	 29

	 XXII.
	  	 REVIEW AND COMMENT
	  	 29

 

2 

DEVELOPMENT AND LICENSE AGREEMENT 
 
This Agreement, made as of the 27th day of August, 2002 by and between
BioProgress Technology International, Inc. having an address of 9055 Huntcliffe Trace, Atlanta, GA 30350 (hereinafter referred to as “LICENSOR”) and CONVATEC, a Division of E.R. Squibb & Sons, L.L.C., with offices at 200 Headquarters
Park Drive, Skillman, New Jersey 08558 USA (hereinafter referred to as “CONVATEC”). 
 
WITNESSETH: 
 
WHEREAS, LICENSOR represents and warrants that it owns all of the right, title and interest in and to certain patent rights and information pertaining to a device (such rights and device hereinafter defined); and 
 
WHEREAS, LICENSOR and CONVATEC desire to undertake and
complete a program to provide Product based upon said device; and 
 
WHEREAS, CONVATEC is desirous of obtaining certain rights and licenses from LICENSOR relating to the aforementioned patent rights and information; and 
 
WHEREAS, LICENSOR is willing to grant such licenses and rights 
 

3 

upon the conditions hereof; 
 
NOW THEREFORE, for and in consideration of the premises and the mutual promises hereinafter contained, and
other good and valuable consideration, the parties hereto have mutually agreed as follows: 
 
ARTICLE I. DEFINITIONS 
 
The following terms as used in this Agreement shall, unless the context clearly indicates to the contrary, have the meanings set forth in this Article: 
 

	A.	 	“Device” shall mean the medical article described in Attachment A hereto. 

 

	B.	 	“Licensed Patents” shall mean the patent(s) and/or patent application(s) specified in Attachment B hereto and any and all other patents and/or patent
applications in the Territory now or hereafter during the term of this Agreement owned or controlled by LICENSOR and disclosing and claiming the Device, together with any and all patents that may issue or may have issued therefrom in the Territory
including any and all renewals, divisions, 

 

4 

continuations, continuations-in-part, confirmations, reissues, substitutions,
registrations, revalidations, revisions, extensions or additions of or to any of the aforesaid patents and patent applications. From time to time during the term of this agreement, LICENSOR will provide CONVATEC, upon request, with an updated
version of Attachment B. 
 

	C.	 	“Net Sales Price” shall mean the gross invoice price at which Product is sold, less commissions allowed to distributors, discounts allowed dealers, cash
discounts, refunds, replacements or credits allowed to purchasers for return of Product or as reimbursment for damaged Product, freight, postage, insurance and other shipping charges, sales and use taxes, customs duties and any other governmental
charges imposed on the production, importation, use or sale of Product. 

 

	D.	 	“Product” shall mean any device the manufacture, use or sale of which would, but for this Agreement, infringe a Valid Claim or any device incorporating, or
the manufacture, use or sale of which utilizes Technology. 

 

	E.	 	“Subsidiary” shall mean any corporation directly or indirectly owning, owned by, or under common ownership 

 

5 

with the party in question to the extent of at least fifty percent (50%) of the voting
shares, including directors’ qualifying shares owned beneficially by such party, having the power to vote for directors. 
 

	F.	 	“Technology” shall mean all information, technical data, or other know-how which relates to the manufacture, use or sale of the Device (including clinical
data, medical uses and methods, product forms, specifications and manufacturing data) which LICENSOR has heretofore developed or acquired, or may hereafter develop or acquire, and possesses at any time during the term of this Agreement and which
LICENSOR is free to disclose and furnish to CONVATEC hereunder. 

 

	G.	 	“Territory” shall mean all countries of the world, without exception. 

 

	H.	 	“Valid Claim” shall be deemed to mean a claim pending in a patent application or in an unexpired patent included within the Licensed Patents which has not
been held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time 

 

6 

allowed for appeal, and which has not been admitted to be invalid or unenforceable through
reissue or disclaimer. If in any country there should be two or more such decisions conflicting with respect to the validity of the same claim, the decision of the higher or highest tribunal shall thereafter control; however, should the tribunals be
of equal rank, then the decision or decisions upholding the claim shall prevail when the conflicting decisions are equal in number, and the majority of decisions shall prevail when the conflicting decisions are unequal in number. 
 
ARTICLE II. DISCLOSURE 
 
Promptly after the effective date of this Agreement and from
time to time thereafter during the term of this Agreement, LICENSOR shall, to the extent that it has not already done so, disclose and furnish to CONVATEC, in writing or other form acceptable to CONVATEC, Technology which is then known or possessed
by LICENSOR. 
 
ARTICLE III. PRODUCT DELIVERY MILESTONE PROGRAM

 

	A.	 	Commencing upon the effective date of this Agreement, LICENSOR shall undertake a program to provide Product 

 

7 

based upon the Device described in Attachment A hereto and the Licensed Patents described
in Attachment B hereto. CONVATEC shall provide licensing payments based upon the achievement of specific milestones by LICENSOR and corresponding payments set forth below: 
 
Upon signing of the License Agreement: $* 
 
Upon Delivery to CONVATEC of one thousand (1,000) clinical trial samples of Product meeting the criteria CONVATEC for use in
human clinical trials, including CE marking, plus provision of such market research materials as shall be agreed by LICENSOR and CONVATEC: $* 
 
Upon completion of final packaging and Product specifications and production of inventory for first market(s) launch: $* 
 
Upon first sale by CONVATEC of a Product in any country of the Territory: $*

 
These initial four (4) licensing payments will be made by
electronic transfer to the bank account of BioProgress 
 

8 

Technology International Inc. as follows: 
 

	 Bank: 
	 Bank of America 

	 Address: 
	 8755 Roswell Road 

	 	 Atlanta, GA 30350 USA 

	 Account Title: 
	 BioProgress Technology International Inc. 

	 Account Number: 
	 003261231908 

	 Routing Code: 
	 061000052 

 

	B.	 	CONVATEC may in its sole discretion determine to discontinue the licensing payments set forth in Article III, Paragraph A, above, at any time, in which case it shall
notify LICENSOR in writing of its election to discontinue licensing payments and to conclude any further participation in the program, without penalty or further obligation of CONVATEC to LICENSOR. In the event of such a discontinuance of licensing
payments, all rights of CONVATEC under the Licensed Patents granted by this Agreement shall immediately terminate and/or revert to LICENSOR, which shall have no further obligation to CONVATEC hereunder. 

 
ARTICLE IV. GRANT 
 

9 

LICENSOR hereby grants to CONVATEC and its Subsidiaries an exclusive worldwide license,
including the right to grant sublicenses, under Licensed Patents and to use Technology, to make, have made, use and sell Product. 
 
ARTICLE V. ROYALTIES AND PERFORMANCE 
 

	A.	 	In consideration of the licenses and rights granted by LICENSOR to CONVATEC hereunder, CONVATEC will pay or cause to be paid to LICENSOR, for each calendar year or
fraction thereof during the term of this Agreement, a royalty equal to the following percentages of the Net Sales Price of Product, the manufacture, use or sale of which is covered by a Valid Claim, sold by CONVATEC and its Subsidiaries and
sublicensees: 

 

	 Upon yearly sales of Product
 up to and including $*:
	  	 *%

	
	 Upon yearly sales of Product
 exceeding $*
 up to and including $*:
	  	 *%

	
	 Upon yearly sales of Product
 exceeding $*:
	  	 *%

 
MINIMUM ROYALTIES:

 

	 Year 1* 
	 S* 

 

	 Year 2* 
	 S* 

 

10 

*For purposes of the computation of minimum royalties, “Year 1” shall be deemed
to include the first twelve (12) calendar months following first sale by CONVATEC of a Product in any country of the Territory and “Year 2” shall be deemed to include the next subsequent twelve (12) calendar months following “Year
1”. 
 

	B.	 	The obligation to pay royalties to LICENSOR under this Article is imposed only once with respect to the same unit of Product regardless of the number of Valid Claims
and Licensed Patents covering the same. There shall be no obligation to pay LICENSOR under this Article on sales of Product between CONVATEC and its Subsidiaries and sublicensees or between any of them but in such instances the obligation to pay
royalties shall arise upon the sale by CONVATEC or its Subsidiaries or sublicensees to unrelated third parties. Payments due under Paragraph A or this Article shall be deemed to accrue when Product is shipped or billed, whichever event shall first
occur. 

 

	C.	 	If a patent or patents of a third party who is not a Subsidiary of CONVATEC should exist during the term of this Agreement in any country covering the manufacture,

 

11 

use or sale of any Product, and if it should prove, in CONVATEC’s judgment,
impractical or impossible for CONVATEC or its Subsidiaries or sublicensees to continue the activity or activities licensed hereunder without obtaining a royalty-bearing license from such third party under such patent or patents, then CONVATEC shall
be entitled to a credit against the payments due hereunder of any amount equal to the royalty paid to such third party arising from the manufacture, use or sale of Product in said country. 
 

	D.	 	If at any time or from time to time a third party in any country shall, under right of a compulsory license granted or ordered to be granted by a competent
governmental authority, manufacture, use or sell any Product with respect to which royalties shall be payable pursuant to Paragraph A of this Article, then CONVATEC, upon notice to LICENSOR and during the period such compulsory license shall be
effective, shall have the right to reduce such royalty on each unit of Product sold in such country to an amount no greater than the amount payable by said third party in consideration of its compulsory license. 

 

12 

	E.	 	The royalty rates set forth in this Article V, Paragraph A, above, for Product sold in a country of the Territory shall be reduced by fifty percent (50%) in the
event that at any time or from time to time a third party or third parties not having a license under the Licensed Patents from LICENSOR shall make, use or sell in any such country the Licensed Device; provided however, that such reduction shall be
applicable only during such periods of manufacture, use or sale by such third party. 

 

	F.	 	In the absence of a Licensed Patent covering a Product licensed to CONVATEC under this Agreement and notwithstanding any other provisions of this Agreement, the
royalties payable under Paragraph A of this Article V shall terminate at any time LICENSOR ceases or is unable to provide the aid and assistance required in Article XII hereunder. 

 
ARTICLE VI. REPORTS 
 
Within ninety (90) days after the close of each calendar
quarter of each year during the term of this Agreement (including the last day of any such calendar quarter following the expiration date of this Agreement), CONVATEC shall report to LICENSOR all 
 

13 

payments actually accruing under Article V during such calendar quarter. Such quarterly reports shall
indicate for such calendar quarter the Net Sales Price of the Product sold by CONVATEC and its Subsidiaries and sublicensees with respect to which payment is due and the amount of such payment. In case no payment is due for any such period, CONVATEC
shall so report. CONVATEC shall keep, and it shall cause its Subsidiaries and sublicensees to keep, accurate records in sufficient detail to enable the aforesaid payment due under Article V to be determined. Upon the request of LICENSOR, CONVATEC
and its Subsidiaries and sublicensees shall permit an independent certified public accountant selected by LICENSOR to have access, once in each calendar year during regular business hours and upon reasonable notice to CONVATEC, to such of the
records of CONVATEC and its Subsidiaries and sublicensees as may be necessary to verify the accuracy of the reports made during the previous calendar year, except that: said accountant shall meet the prior approval of CONVATEC or its Subsidiary or
its sublicensee in question, which approval shall not be unreasonably denied, and; said accountant shall not disclose to LICENSOR any information except that which should properly have been contained in such reports, and; said audit right may not be
exercised more than once in any one calendar year. The records from which the royalty reports are prepared need not be retained by CONVATEC longer than CONVATEC's then current records retention policy for such 
 
 

14 

documents. 
 
ARTICLE VII. TIMES AND CURRENCIES OF PAYMENT 
 
Payments shown to have accrued by each of the quarterly reports provided for under Article VI above shall be due and payable on the date
such report is due shall be paid in United States Dollars, or at CONVATEC’s election, in the currency of the country in which the Product was sold. CONVATEC or its Subsidiaries as agents for LICENSOR will deduct or withhold from such payments
and pay to the proper taxing authority all taxes or fees required by law or regulation to be deducted or withheld with respect to such payments and proof of payment secured and sent to LICENSOR as evidence of such payment. The rate of exchange to be
used computing the amount of local currency equivalent to the United States Dollars due to LICENSOR as royalty shall be the commercial exchange rate in effect in New York, New York on the last business day of the calendar quarter for which payment
is being made. If at any time conditions or legal restrictions exist in any country where Product is sold by CONVATEC or its Subsidiaries or sublicensees, which legal restrictions prevent the prompt remittance of the royalties due to LICENSOR,
CONVATEC shall have the right and option to make such payments by depositing the amount thereof, subject to an appropriate adjustment due to the 
 

15 

inability to obtain appropriate tax deduction, in local currency to LICENSOR's account in a bank or other
depository selected by LICENSOR. CONVATEC shall be excused from remitting such royalties in accordance with the provisions of this Article during the pendency of such legal restrictions. 
 
ARTICLE VIII. INFRINGEMENT 
 

	A.	 	In the event that a third part appears to be infringing one or more of the Licensed Patents, CONVATEC shall bring such infringement to the attention of LICENSOR. If
LICENSOR does not institute infringement proceedings against such third party within ninety (90) days after written notice from CONVATEC that such third party appears to be infringing one or more of the Licensed Patents, CONVATEC shall have the
right to take whatever steps in its own and sole discretion it shall deem advisable, including but not limited to, settlement or the filing of suit for damages or to enjoin such sales or offers for sale by such third party. LICENSOR agrees to
perform all acts which may become necessary or desirable to vest in CONVATEC the right to institute any such suit and shall, upon reasonable notice, cooperate and, to the 

 

16 

extent deemed necessary or desirable by CONVATEC and at CONVATEC’s expense,
participate in any suit to enjoin such infringement and to collect, for the benefit of CONVATEC, damages, profits and awards of any nature recoverable for such infringement. The costs and expenses of such suit or settlement shall be borne by
CONVATEC. Recovery of damages in any such suit or settlement with any third party shall inure to the benefit of CONVATEC; however, CONVATEC shall after first recouping its reasonable attorneys' fees and costs incurred in connection with such suit or
settlement apply any excess recovered damages to reimbursing LICENSOR, to the extent of such excess, the royalties that would have been payable to LICENSOR but for application of Article V, Paragraph E, hereof. 
 

	B.	 	LICENSOR agrees should a third party institute a patent infringement suit in any country of the Territory against CONVATEC or a Subsidiary or sublicensee of CONVATEC
predicated on CONVATEC’s or its Subsidiaries' or sublicensees’ manufacture, use or sale of Product, CONVATEC shall have the right to reduce by fifty percent (50%) royalties due to LICENSOR in such country hereunder with respect to such
Product. In the event such third 

 

17 

party suit is successfully defended by CONVATEC, it shall, upon final determination
thereof, pay to LICENSOR all royalties that would have been payable to LICENSOR if such suit had not been instituted, less reasonable attorneys’ fees and costs incurred by CONVATEC in connection with such suit, which shall not exceed the total
amount of royalties payable to LICENSOR by virtue of said successful defense and final determination. 
 
ARTICLE IX. PATENT APPLICATIONS 
 

	A.	 	CONVATEC shall have the right to have patent applications covering the Device filed at its own expense in those countries which CONVATEC in its sole discretion deems
advisable in view of its commercial operations. LICENSOR agrees to execute or cause to be executed all documents necessary or desirable for the purpose of applying for and obtaining patents thereon. All such applications will be owned by LICENSOR.
LICENSOR shall control the prosecution of all patent applications within the Licensed Patents but shall provide or cause to be provided to CONVATEC a copy of all correspondence to and from the patent authorities of each country of the Territory in
which such patent application has been 

 

18 

filed, so as to afford CONVATEC sufficient time to comment and advise. The cost of filing
patent applications in a country of the Territory where the filing was made by CONVATEC or at CONVATEC’s request as well as the expense incurred by LICENSOR in prosecuting and in maintaining such application, shall be paid by CONVATEC.
CONVATEC's obligation to pay for patent prosecution expenses shall not require CONVATEC to pay for expenses of prosecution or appeal other than in the patent office of the country concerned. 
 

	B.	 	It is expressly understood and agreed that patent applications may be filed by LICENSOR at LICENSOR’s expense in any country in which CONVATEC elects not to
file a patent application and that all such patent applications filed by LICENSOR are included within the Licensed Patents. LICENSOR shall advise CONVATEC of the filing of each such patent application and LICENSOR will cause same to be prosecuted
diligently and in good faith at its own expense. 

 
ARTICLE X. REISSUE 
 
In the event
CONVATEC requests that LICENSOR file an 
 

19 

application for reissue of a Licensed Patent of the United States to correct an infirmity and with such
request, in support thereof, provides to LICENSOR a written legal opinion of independent patent counsel, then LICENSOR within sixty (60) days of receipt of such request shall either instruct patent counsel of its choice to file such an application
for reissue, or advise CONVATEC that it chooses not to file such an application. If LICENSOR chooses not to file an application for reissue, then LICENSOR and CONVATEC shall mutually agree upon independent patent counsel, who shall review
LICENSOR’s request and reasons given in support thereof and shall provide to LICENSOR and CONVATEC an opinion as to the necessity or desirability for the filing of such an application. 
 
If such independent patent counsel selected by LICENSOR and
CONVATEC recommends that the application for reissue be filed and LICENSOR elects to file for reissue, then LICENSOR shall direct patent counsel of its choice to file such an application, and the cost of such independent counsel’s opinion and
the costs of filing said application shall be shared equally by the LICENSOR and CONVATEC. In the event that LICENSOR elects not to file for reissue contrary to the recommendation of independent patent counsel, then CONVATEC shall have the option to
terminate this Agreement, or to convert the exclusive license granted in Article III above to a non-exclusive license and to reduce by one-half the 
 

20 

royalties provided for in Article IV above, effective upon the date CONVATEC elects to convert the license
to non-exclusive. 
 
ARTICLE XI. FUTURE DEVELOPMENTS 
 
LICENSOR will disclose to CONVATEC all improvements relating
to the Device which are invented, developed or otherwise acquired by LICENSOR during the term of this Agreement. CONVATEC shall automatically have, subject to all of the terms and conditions of this Agreement but without any additional royalty, a
worldwide exclusive license, including the right to grant sublicenses, with respect to and under any patents or patent applications which LICENSOR may secure or file thereon or in connection therewith. All such patents and patent applications shall
be added to the Licensed Patents. LICENSOR shall provide CONVATEC with access to Technology developed or acquired by LICENSOR relating to said Technology developed or acquired by LICENSOR relating to said improvements and CONVATEC shall
automatically have, subject to all the terms and conditions of this Agreement but without any additional royalty, a worldwide exclusive license to use such Technology. 
 
ARTICLE XII. PRODUCT TESTING AND COMPLIANCE 
 
At CONVATEC’s request, LICENSOR shall aid and assist CONVATEC: 
 

21 

	 	(1)	 	in conducting laboratory and clinical evaluations of Product, and; 

 

	 	(2)	 	in preparing accurate labels, labeling, and advertising for Product as those terms are defined in the Federal Food, Drug and Cosmetic Act, and;

 

	 	(3)	 	in securing the approval of any state or federal regulatory agency which approval may be necessary to commence or continue sales of Product, and;

 

	 	(4)	 	in defending Product before any state or federal regulatory agency which may seek to seize, ban or prevent the introduction of Product into commerce.

 
It is agreed and understood by and
between the parties that the foregoing aid, education and assistance shall not be financial, but shall be given by way of review of protocols, materials and data, personal consultations, preparation of written statements, presentations and oral
testimony. CONVATEC shall reimburse LICENSOR for all reasonable out-of-pocket expenses which LICENSOR may incur by reason of the foregoing and CONVATEC shall have the exclusive and sole right to use or disclose information and data 
 

22 

resulting from such aid and assistance. No honorariums will be paid for such aid, education and
assistance. 
 
ARTICLE XIII. DEVELOPMENT RECOGNITION 
 
LICENSOR hereby grants to CONVATEC and its Subsidiaries the
right to use LICENSOR’s name in labeling, advertising and promotional literature, to acknowledge that Product was developed by or in cooperation with LICENSOR. Such grant shall continue for so long as CONVATEC and its Subsidiaries shall
manufacture, distribute or sell Product in accordance with the terms of this Agreement. 
 
ARTICLE XIV. CONFIDENTIALITY 
 
Each party undertakes to keep secret and confidential and not to disclose to any third party, except as it is necessary in carrying out the purpose of this Agreement, during the term of this Agreement and for a period of five (5)
years thereafter any information, data or know-how disclosed to it by the other party except: 
 

	 	(1)	 	information, data and know-how which at the time of 

 

23 

	 	disclosure	 	is in the public domain or publicly known or available; 

 

	 	(2)	 	information, data or know-how which, after disclosure, becomes part of the public domain or publicly known or available by publication or otherwise, except by breach
of this Agreement by the receiving party; 

 

	 	(3)	 	information, data or know-how which the receiving party can establish by competent proof was in its possession at the time of disclosure by the other party;

 

	 	(4)	 	information, data and know-how which the receiver receives from a third party; provided, however, that such information was not obtained by said third party from the
other party; and 

 

	 	(5)	 	information, data and know-how which is derived by or on behalf of the receiver independently of such disclosure. 

 
ARTICLE XV. EFFECTIVE DATE AND TERM 
 

	A.	 	This Agreement will become effective on the day and year first written above and will remain in effect until and 

 

24 

expire upon the expiration of the last to expire of the patents licensed hereunder. After
such expiration of this Agreement, CONVATEC shall have the right to make, use and sell Product without the further payment of royalty of otherwise accounting to LICENSOR. 
 

	B.	 	CONVATEC shall have the right to terminate this Agreement with respect to any country or countries upon sixty (60) days notice to LICENSOR. If CONVATEC should
exercise such right to terminate this Agreement, CONVATEC’s license under any patents or patent applications in such country or countries licensed under Article III hereof shall terminate, as shall its right to make further use in such country
or countries of the Technology acquired from LICENSOR under this Agreement, and which CONVATEC is obliged to hold in confidence pursuant to Article XIII of this Agreement, either in Product sold in any such country or in manufacturing processes
carried out in any such country. 

 
ARTICLE XVI.
TERMINATION FOR CAUSE 
 
Failure by LICENSOR or
CONVATEC or of any of its Subsidiaries to comply with any of the obligations and conditions herein 
 

25 

contained, unless such failure results from or is caused by applicable laws or regulations, shall entitle
the other party to give to the party in default notice requiring it to make good such default. If such default is not made good within ninety (90) days after receipt of such notice, the notifying party shall be entitled (without prejudice to any of
its other rights conferred on it by this Agreement) to terminate this Agreement by giving notice to take effect immediately. The right of either party to terminate this Agreement, as hereinabove provided, shall not be affected in any way by its
waiver of, or failure to take action with respect to, any previous default. 
 
ARTICLE XVII. RIGHTS AND OBLIGATIONS UPON TERMINATION 
 
Termination of this Agreement for any reason shall be without prejudice to: 
 

	 	(1)	 	LICENSOR’s right to receive all royalties accrued under Article V and unpaid on the effective date of such termination. 

 

	 	(2)	 	the rights and obligations provided in Articles VI and 

 

26 

	 	XIV	 	hereof, and 

 

	 	(3)	 	any other remedies which either party may then or thereafter have hereunder or otherwise. 

 
Upon the termination of this Agreement prior to the completion of the term provided for in Paragraph A of
Article XV, CONVATEC may notify LICENSOR of the amount of Product that CONVATEC, its Subsidiaries and sublicensees, then have on hand and CONVATEC, its Subsidiaries and sublicensees, shall then be permitted by LICENSOR to sell that amount of
Product, but no more, provided that CONVATEC shall pay royalties thereon at the rate and at the time herein provided and render reports thereon in the manner herein provided. 
 
ARTICLE XVIII. ASSIGNMENT 
 
CONVATEC may assign its rights under this Agreement in whole or in part to any Subsidiary or Subsidiaries, which shall be substituted
directly for it hereunder. At CONVATEC’s request, LICENSOR shall enter into a separate counterpart agreement with any such Subsidiary. Such counterpart agreement shall be in the same form as this Agreement except for any necessary change in
Licensed Patents to reflect the extent of the assignment, the substitution 
 

27 

of the Subsidiary’s name, and the effective date of the assignment. This Agreement shall not
otherwise be assignable by either party without the prior written consent of the other party, except by CONVATEC to the successor or assignee of substantially all of its business related to medical products. It is expressly understood and agreed,
however, that the assignor of any rights hereunder shall remain bound by the obligations hereof. 
 
ARTICLE XIX. NOTICES 
 
Any notice or report required or permitted to be given or made under this Agreement by one of the parties hereto to the other shall be in writing and shall be deemed to have been sufficiently given or made for all purposes
if mailed by registered mail, postage prepaid, addressed to such other party at its respective address as follows: 
 

	 To LICENSOR:
	  	 BioProgress Technology International Inc.

	 	  	 9055 Huntcliffe Trace

	 	  	 Atlanta, GA 30350 USA

	 	  	 Attention: Managing Director, BioProgress

	 	  	 Technology Ltd.

	
	 To CONVATEC:
	  	 ConvaTec, a division of E.R. Squibb & Sons, L.L.C.

	 	  	 200 Headquarters Park Drive

	 	  	 Skillman, New Jersey 08558 USA

	 	  	 Attention: Vice President, External Development

 

28 

or to such other address as the addressees shall have theretofore furnished in writing to the addressor.

 
ARTICLE XX. ENTIRE AGREEMENT AND AMENDMENTS 
 
This Agreement contains the entire understanding of the
parties with respect to the matter contained herein. The parties hereto may, from time to time during the continuance of this Agreement, modify, vary or alter any of the provisions of this Agreement, but only by an instrument duly executed by both
parties hereto. 
 
ARTICLE XXI. GOVERNING LAW 
 
This Agreement shall be construed in accordance with the laws
of the United States, State of New Jersey. 
 
ARTICLE XXII. REVIEW
AND COMMENT 
 
CONVATEC and LICENSOR shall afford
to one another reasonable opportunity to review and comment upon any of their proposed press releases or other public documents wherein the name of the other party is mentioned. Any such proposed press release or other document shall be deemed to be
Confidential Information within the meaning of Article XIV of this Agreement until publicly released by CONVATEC OR LICENSOR, as the case may be. This Article shall not require the review and comment of LICENSOR upon Product promotional

 

29 

materials of CONVATEC. 
 
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first above written.

 

	 BioProgress Technology International Inc.
	 	 	 	 CONVATEC, a Division of E.R. Squibb & Sons, L.L.C.

	
	 By:
	 	 /s/ Graham Robert Mason Hind
	 	 	 	 By:
	 	 /s/ Gary C. Restani

	 	
	 	 	 	 	

	 Title:
	 	 Graham Robert Mason Hind
 Director
	 	 	 	 Title:
	 	 Gary C. Restani
 President

	
	 Date:
	 	 Aug 27, 2002
	 	 	 	 Date:
	 	 Aug 23, 2002

 

	
	 WITNESS:
	 	 /s/ Joe Muncaster

	 	 	 J. Muncaster
 53 The Oaks
 Milton
 Cambr
 CB4 62G

 

30 

ATTACHMENT A 
 
drainage bag for receiving bodily waste, so constructed as to dissolve and disperse in water after the application of a
solvent, invented by LICENSOR, and which is disclosed and claimed in the Licensed Patents specified in Attachment B as of the date of execution of this Agreement. 
 

31 

ATTACHMENT B 
 
United States Patent Number: US 6,217,562 B1 
 
Date of Patent: April 17, 2001 
 
OSTOMY1 
 
WATER-DISPERSIBLE DISPOSABLE ENCLOSURE 
 
GB—GRANTED (SOLVENT INVENTION) 
DIV
GB9610947.5 
APPN NO. GB9906522.9 
APPN DATE 23.3.99 
PUBN NO. GB2333462 
PUBN DATE 28.7.99 
GRANT DATE 1.12.99 
 
US—GRANTED 
APPN NO. 08/952,915 
APPN DATE 24.5.96 
GRANT NO. 6217562 
GRANT DATE 17.4.2001 
 
EP—EXAMINED (SOLVENT INVENTION) 
APPN NO. 96919913.2 
APPN DATE 24.5.96 
PUBN NO EP0833596 
 
WO—Examined 
APPN NO. PCT/GB96/01267 
APPN DATE 24.5.96 
PUBN NO. WO 96/37171 
 
Copies to be attached 
 

32 

FIRST AMENDMENT TO LICENSE AGREEMENT 
 
AND NOW, this 11th day of November, 2002, it is hereby agreed
by and between ConvaTec, a division of E. R. Squibb & Sons, L.L.C., 200 Headquarters Park Drive, Skillman, New Jersey 08558 (hereinafter “CONVATEC”) and BioProgress Technology International, Inc., 9055 Huntcliffe Trace, Atlanta, GA
30350 (hereinafter “LICENSOR”) as follows: 
 
WHEREAS, by the agreement of August 27, 2002 (hereinafter “Agreement”) by and between LICENSOR and CONVATEC, a program to provide Product (as that term is defined in the Agreement) was established and LICENSOR granted to
CONVATEC certain rights and licenses relating to patent rights and information of the LICENSOR concerning said Products; and 
 
WHEREAS, the LICENSOR and CONVATEC have undertaken their respective rights and obligations under the said Agreement and continue to do so
to date; and 
 
WHEREAS, the LICENSOR and CONVATEC
wish to amend the Agreement of August 27, 2002 in certain particulars: 
 

33 

NOW THEREFORE, the License Agreement of LICENSOR and CONVATEC of August 27, 2002 is
amended as follows, effective upon the date of execution specified hereinabove: 
 

	 	1.	 	ARTICLE III (“PRODUCT DELIVERY MILESTONE PROGRAM”) of the Agreement is hereby amended so as to delete the language: 

 
“Upon Delivery to CONVATEC of one thousand (1000)
clinical trial samples of Product meeting the criteria of CONVATEC for use in human clinical trials, including CE marking, plus provision of such market research materials as shall be agreed by LICENSOR and CONVATEC: $*” 
 
In the place of said deleted language shall be
substituted the following language: 
 
“Upon complete execution of this First Amendment to License Agreement: $* 
 
Upon Delivery to CONVATEC of one thousand (1000) clinical trial samples of Product meeting the criteria of CONVATEC for
use in human clinical trials, including CE marking, plus provision of such market research materials as shall be agreed by LICENSOR and CONVATEC: $*.” 
 

34 

	 	2.	 	The amended payments as provided for in paragraph One (1) of this First Amendment to License Agreement shall each be subject to the electronic transfer payment
provision of Article III of the Agreement. 

 

	 	3.	 	ATTACHMENT B (LICENSED PATENTS) to the Agreement is hereby amended so as to substitute the revised ATTACHMENT B (which is hereunto attached to this First Amendment
to License Agreement) for the original version of ATTACHMENT B which was attached to the Agreement. 

 

	 	4.	 	In all other respects, the Agreement of August 27, 2002 is affirmed and ratified. 

 
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to License Agreement on the day
first above written. 
 

	 BIOPROGRESS TECHNOLOGY INTERNATIONAL INC.
	 	 	 	 CONVATEC, a Division of E.R. Squibb & Sons, L.L.C.

	
	 By:
	 	 /s/ Graham Robert Mason Hind
	 	 	 	 By:
	 	 /s/ Gary C. Restani

	 	
	 	 	 	 	

	 Title:
	 	 Graham Robert Mason Hind
 Director
	 	 	 	 Title:
	 	 Gary C. Restani
 President

	
	 Date:
	 	 December 14, 2002
	 	 	 	 Date:
	 	 

 

	
	 WITNESS:
	 	 /s/ Joe Muncaster

	 	

	 	 	 

 

35 

ATTACHMENT B 
 
United States Patent Number: US 6,217,562 B1 
 
Date of Patent: April 17, 2001 
 
OSTOMY 1 
 
WATER-DISPERSIBLE DISPOSABLE ENCLOSURE 
 
GB—GRANTED (SOLVENT INVENTION) 
DIV
GB9610947.5 
APPN NO. GB9906522.9 
APPN DATE 23.3.99 
PUBN NO. GB2333462 
PUBN DATE 28.7.99 
GRANT DATE 1.12.99 
 
US—GRANTED 
APPN NO. 08/952,915 
APPN DATE 24.5.96 
GRANT NO. 6217562 
GRANT DATE 17.4.2001 
 
EP—EXAMINED (SOLVENT INVENTION) 
APPN NO. 96919913.2 
APPN DATE 24.5.96 
PUBN NO EP0833596 
 
WO Examined 
APPN NO. PCT/GB96/01267 
APPN DATE 24.5.96 
PUBN NO. WO 96/37171 
 
GB FILED (DRAINAGE BAG) 
APPN NO. GB0121422.1 
APPN DATE 5.9.01 
 
PCT FILED (DRAINAGE BAG) 
APPN NO PCT/GB02/04005 
APPN DATE 30.8.02 
PRIORITY APPN GB0121422.1 
PRIORITY DATE 5.9.01 
 
Copies to be attached 
 

36Memorandum of Variation between BioProgress Tech and Cons EcoProgress Inc

 
Exhibit 10.43

 
MEMORANDUM OF VARIATION #7 
(the “Agreement” herein) 
 
Dated as of August 22nd,
2002 
 
BETWEEN: 
 
BIOPROGRESS TECHNOLOGY INTERNATIONAL, INC.
(“BTI”), a corporation registered in the State of Nevada, having offices situated at 9055 Huntcliff Trace, Atlanta, GA 30350; 
 
and 
 
CONSOLIDATED ECOPROGRESS TECHNOLOGY INC. (“CET”), a corporation registered in British Columbia having offices situated at
Suite 910-885 Dunsmuir Street, Vancouver, B.C. V6C 1N5 
 
Together
the “Parties” 
 
WHEREAS: 
 

	 	A.	 	These recitals shall form part of this Agreement; 

 

	 	B.	 	A summary of the full legal name, country of incorporation and short form as used herein of the Parties and various other companies is set out in Schedule
“A” attached hereto; 

 

	 	C.	 	A list of several agreements between the Parties and various other companies which are related, directly or indirectly, to the matters covered in this Agreement are
set out in Schedule “B” attached hereto; 

 

	 	D.	 	By way of agreement dated April 5, 1999 (“Memorandum of Variation #5”), CET acquired from BTI the right to acquire the exclusive license to the world
rights to those products known as the Ostomy Products; 

 

	 	E.	 	The Parties now wish to amend the terms of Memorandum of Variation #5 so that CET shall relinquish any and all rights it would otherwise have in the Ostomy Products
and BTI shall pay a royalty to CET on any sales of Ostomy Products; 

 

	 	F.	 	By way of agreement dated March 23, 1999 (the “R&D Agreement”), CET agreed with BTI to make certain payments to BTI for research and development work
on certain products acquired from BTI and certain products owned and developed by CET as more specifically set out in the R&D Agreement; 

 

	 	G.	 	The Parties now wish to cancel the terms of the R&D Agreement and to forgive and release CET from any and all amounts owing or payable to BTI under the terms of
the R&D Agreement; 

 

	 	H.	 	The Parties wish to amend the Exclusive License Agreement as modified in the various Memorandums of Variation so as to eliminate any royalty payments owed by CET now
or in the future to BTI or other parties. 

 
NOW
THEREFORE IT IS AGREED as follows: 
 
1. The
Parties wish to acknowledge that minor errors, incorrect legal names and inconsistencies were made in various previous agreements of which the Parties, and others, were signatories and hereby wish to, as far as possible as it relates to this
Agreement and to any past or future transaction between the Parties, agree to amend those minor errors, incorrect legal names and inconsistencies, which are as follows: 
 

	 	a)	 	The disclosure in the R&D Agreement incorrectly refers to the “Extended License” between CET and BTI (referred to herein as Memorandum of Variation #5)
as being dated March 23, 1999 when in fact this agreement was signed on and dated as of April 5, 1999; 

 
2. The Parties agree to amend the terms of Memorandum of Variation #5 as follows: 
 
Section 1.2 is hereby deleted in its entirety and replaced by the following clause (bolding added only to
assist in showing terms added or amended): 
 
1.2
Products, as defined in the Exclusive License, shall include disposable absorbent products (feminine hygiene products, baby diapers, adult incontinence pads and sheets, and such like), disposable medical gowns, drapes, utensils, wipes and solids for
removal and recycling of hazardous materials, and a processor system for the dissolution, and any and all products that have an orifice and which can be used for the containment or handling of materials and powders and for the avoidance of doubt
this expressly excludes Ostomy Products, Encapsulation Technologies and Encapsulation Products. 
 
3. In sole and final consideration of CET forthwith and irrevocably relinquishing (a) any and all rights to acquire the exclusive license to the world rights to Ostomy Products, and (b) any and all
rights to sell, market or otherwise deal in the Ostomoy Products anywhere in the world, the Parties agree that BTI shall pay a royalty (the “Ostomy Royalty”) to CET on any sales of Ostomy Products. The terms of the Ostomy Royalty shall be
as follows: 
 

	 	a)	 	The Ostomy Royalty payable shall be a payment equal to 5 % (five percent) of all proceeds received by BTI or any successor person or corporate entity—from the
sale, license or sales of the Ostomy Products or any rights to the Ostomy Products, or any part thereof up to a maximum cumulative amount of US$1,000,000; 

 

	 	b)	 	BTI shall pay the Ostomy Royalty to CET wthin ten (TEN) working days of the last working day of each quarter during which BTI receives money from the sale, license
or sales of the Ostomy Products. 

 

	 	c)	 	Upon reasonable notice and during normal working hours CET or its nominee may inspect the financial records of BTI insofaras they relate to the Ostomy Products.

 
BTI shall use its best endeavours to maximise the
commercial exploitation of the Ostomy 

Products to maximum benefit to the Parties. BTI hereby warrants that CET’s right to the Ostomy
Royalty shall survive any transfer by BTI of any rights to Ostomy Products, whether such transfer is by way of sale, license or otherwise. 
 
4. CET is currently obligated to make certain royalty payments to BTI further to section 7 of the Exclusive License Agreement, and as modified in the
various Memorandums of Variation (the Royalty Payments). BTI hereby agrees to forever remise, forgive and release CET from any and all Royalty Payments deferred, owed or otherwise payable by CET to BTI or other parties. 
 
For greater certainty, the Parties agree that the release of CET from any and
all Royalty Payments in no way reduces or changes any rights or entitlements that CET has received under the terms and conditions of the Exclusive License Agreement and in the various Memorandums of Variance, including this Agreement. 
 
5. The Parties agree that the agreement dated March 23, 1999 (the
“R&D Agreement”), between them is hereby cancelled and BTI agrees to forever remise, forgive and release CET from any and all amounts owing to or payable to BTI under the terms of the R&D Agreement. 
 
For greater certainty, the Parties agree that CET has already earned a right,
through prior payments or share issuances made under the terms and conditions of the R&D Agreement and the Exclusive License Agreement and the various Memorandums of Variation, to use certain intellectual property or knowledge regarding resin
formula blends developed by the BTI research team. 
 
6. BTI shall,
upon execution of this Agreement, deliver to CET a complete technical binder summarizing the specific B9 or PVA or other resin formula blends (the “Formula” or “Formulas”) that have been used to build the Products described in
section 2 above, as well as plastic tubing, bottles, cloth, fem-hy films, diapers etc. To the extent that such information exists and or is appropriate the technical binder shall, for each separate Formula, describe the transition of the Formula
from hot water to cold water solubility and the points of variation beyond which the sample products failed. 
 
CET agrees that all information set out in the technical binder shall be held as confidential between the Parties and shall only be released by CET for the purposes of advancing further research and
development of the applications pertinent to CET’s rights and shall never be released or used in anyway to implement any products within the field of Ostomy, Encapsulation Technology and Encapsulation Products. 
 
BTI undertakes, represents and warrants that none of the Ostomy or
Encapsulation technologies use or will use any resin, resin formulations, intellectual property or technical data employed in the CET licensed technologies, nor were any of the same developed or worked on in any way using funds provided by CET under
the R&D Agreement. 
 
7. In the event of conflict between the
terms, conditions and expressions of this Agreement and the terms, conditions and expressions of the Exclusive License, then the terms, conditions and expressions of this Agreement shall prevail upon the Parties in all respects. 
 
8. All other terms and conditions of the Exclusive License and the various
Memorandums of Variation, including governing law, remain unchanged and in full force and effect other than 

as amended above. 
 
The parties hereto have the day first written above signed this agreement. 
 

	 BioProgress Technology International, Inc.
  
 Per: /s/ Malcolm Brown
         Authorized Signatory
 Name: Malcolm Brown
  
 Title: Chief Technical Officer
	 	 Consolidated EcoProgress Technology Inc.
  
 Per: /s/ Greame Haggard
         Authorized Signatory
 Name: Greame Haggard
  
 Title: President

 
SCHEDULE A

 
List of Parties and various companies referred to in this
Agreement 
 

	 Full Legal Name

	  	 Country/State of
Incorporation

	    	 Short Form as used in this
Agreement

	 Allmed International Investments, Inc.
	  	 B.C., Canada
	    	 AII

	 BioProgress Technology International, Inc.
	  	 Nevada, U.S.A.
	    	 BTI

	 BioProgress Technology, Inc.
	  	 Colorado, U.S.A.
	    	 BTIsub

	 Bioprogress Technology Limited
	  	 U.K.
	    	 BTL

	 Consolidated Ecoprogress Technology Inc.
	  	 B.C., Canada
	    	 CET

	 Ecoprogress International, Limited
	  	 Georgia, U.S.A
	    	 EIL

	 EcoProgress Limited
	  	 U.K.
	    	 EL

	 EcoProgress, Inc.
	  	 U.S.A.
	    	 ECO

	 Envirofilm Technology Inc.
	  	 Georgia, U.S.A.
	    	 ETI

	 Trutona International, Inc.
	  	 Delaware, U.S.A.
	    	 TI

 
SCHEDULE “B” 
 
The Parties and
the companies set out above have been signatories to those various agreements as briefly summarized below: 
 

	 Signatories to the agreement (as
shown in that agreement)

	  	 Date of Contract

	  	 Short Form for Contract as used in this
Agreement

	 EL and ETI
	  	 Feb. 14, 1994
	  	 Initial License

	 EL, ETI and AII
	  	 Nov. 28, 1994
	  	 Exclusive License Agreement

	 AII and EL
	  	 Nov. 12, 1996
	  	 Memorandum of Variation #1

	 CET and EIL
	  	 April 22, 1997
	  	 Memorandum of Variation #2

	 TI and ECO
	  	 Sept. 19, 1997
	  	 Memorandum of Variation #3

	 CET, EIL and TI
	  	 August 31, 1998
	  	 Memorandum of Variation #4

	 BTI and TI
	  	 Feb. 15, 1999
	  	 
	 BTI and CET.
	  	 March 23, 1999
	  	 R&D Agreement

	 BTI and CET.
	  	 April 5, 1999
	  	 Memorandum of Variation #5

	 BTI and CET.
	  	 June 23, 2000
	  	 Memorandum of Variation #6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}]]