Exhibit 10.BU
AGREEMENT to PURCHASE and USE T-HEXX CONCENTRATE
and
T-HEXX TRADEMARK
T-HEXX PRODUCT AGREEMENT Page-2
TABLE OF CONTENTS
1. GRANT OF LICENSE............................................................1
2. OWNERSHIP OF MARKS..........................................................1
3. ADVERTISING COPY/LABELING...................................................1
4. QUALITY MAINTENANCE.........................................................2
5. FORM OF USE.................................................................3
6. USE FEE.....................................................................3
7. INFRINGEMENT PROCEEDINGS....................................................4
8. TERM........................................................................4
9. TERMINATION OF EXCLUSIVE LICENSE FOR NOT ABIDING BY MINIMUM PURCHASES.......4
10. TERMINATION ...............................................................4
11. EFFECT OF TERMINATION......................................................5
12. SUPPLY OF CONCENTRATE......................................................5
13.PATENT LICENSE TO USE.......................................................5
14. INDEMNIFICATION AND INSURANCE..............................................6
15. GENERAL PROVISIONS.........................................................6
Assignment............................................................6
Entire Agreement......................................................6
Not a franchise.......................................................6
Waiver................................................................6
Controlling Law and Place of Suit.....................................6
Exhibit A......................................................................9
Exhibit B.....................................................................10
T-HEXX PRODUCT AGREEMENT Page-3
Exhibit C.....................................................................11
Exhibit D.....................................................................12
Exhibit E.....................................................................17
T-HEXX PRODUCT AGREEMENT Page-4
This Agreement entered into on the 9th day of March, 1999, between:
Hydromer, Inc. ("Hydromer"), a corporation organized and existing under the laws
of New Jersey, located at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, N.J., U.S.A
and
AST, Inc. ("AST"), a Pennsylvania corporation organized and existing under the
laws of Pennsylvania, located at ▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
Hydromer is the owner of the trademarks and service marks (the "Marks"), and
applications and registrations for the Marks, listed in Exhibit A. AST desires
to use the Marks in connection with its business. In consideration of the
foregoing and of the mutual promises set forth in this agreement, the parties
agree as follows:
1. GRANT OF LICENSE
Hydromer grants to AST a conditional exclusive, non-transferable license,
without the right to sub-license, to use the Marks in connection with the goods
and services listed in Exhibit B in the United States of America, Canada and
Mexico. AST accepts the license subject to the following additional terms and
conditions.
2. OWNERSHIP OF MARKS
AST acknowledges that Hydromer owns the Marks and agrees that it will do nothing
inconsistent with such ownership, including but not limited to selling any
product that competes with the goods or services in Exhibit B. All uses of the
Marks by AST shall inure to the benefit of, and be on behalf of Hydromer. AST
will assist Hydromer in recording this agreement with appropriate governmental
authorities. Nothing in this license shall give AST any right, title, or
interest in the Marks, other than the right to use the Marks in accordance with
the terms of this license. AST will not attack the title of Hydromer to the
Marks or attack the validity of this license.
3. ADVERTISING COPY/LABELING
Hydromer at it's own expense will provide all advertising copy and creative
works (which Hydromer claims are copyrights of Hydromer) to AST. AST shall not,
without written permission, place ads, develop sales material, communicate
clinical results or otherwise develop any communications to third parties
relating to the Marks or the goods/services on which the Marks are used
including the labeling and labels used on or with the goods and services.
T-HEXX PRODUCT AGREEMENT Page-5
Hydromer agrees to provide matching funds up to $50,000 per year to be used as
placement fees to HYDROMER APPROVED: NATIONAL journals, papers and magazine to
enable the advertising of the Marks and the Products. AST shall upon request
provide reasonable documentation to substantiate the expenditure of such funds
and a like amount by AST. Such matching funds may be in the form of direct
payment by Hydromer or by a credit memo issued by Hydromer to AST in Hydromer's
sole discretion.
4. QUALITY MAINTENANCE
The nature and quality of all services rendered and goods sold by AST in
connection with the Marks shall conform to standards set by and be under the
control of Hydromer. Standards for product formulation and testing are attached
as Exhibit C. Hydromer has the right to make changes to the formula in its sole
discretion provided such changes could not effect the safety or lessen the
effectiveness of the goods sold by AST.
AST will cooperate with Hydromer in facilitating Hydromer's control of the
quality aspects and will permit reasonable inspection of AST's operation. AST
will supply Hydromer with specimens and test results for each batch of product
which carries the Marks. UNDER NO CIRCUMSTANCES WILL AST RELEASE ANY BATCH OF
T-HEXX FOR SALE until the tests set forth in exhibit C are completed by AST.
Until such release the batch(s) are to be quarantined. Any release of untested,
partially tested or inaccurately tested Product is a material breach of this
Agreement. AST agrees that the safety and effectiveness of the T-HEXX goods made
by AST are the sole responsibility of AST, however Hydromer has the right to
take all reasonable steps to insure that its trademarks are not tainted, clouded
or diluted by a poor quality T-HEXX product.
Any recall of a T-HEXX product shall be done at the expense of AST unless the
defect is caused by the T-HEXX concentrate supplied by Hydromer. The quality of
the T-HEXX concentrate shall be determined by the retained samples kept at
Hydromer.
AST shall comply with all applicable laws and regulations and obtain all
appropriate governmental approvals pertaining to the manufacture, sale,
distribution, and advertising of goods and services covered by this license,
including but not limited to the "National Mastitis Council Recommended Protocol
for Determining Efficacy of a Postmilking Barrier Teat Dip Based on Reduction of
Naturally Occurring New Intramammary Infections" a copy of which is attached to
this contract as Exhibit D. In addition, AST will abide by all other
recommendations of the National Mastitis Council and guidance documents issued
by the U.S. Food and Drug Administration from time to time or the government of
a particular sovereignty as the case may be. AST shall provide all copies of
submissions to, and approvals of
T-HEXX PRODUCT AGREEMENT Page-6
any governments with respect to the PRODUCTS.
Starting May 1, 1999 and ending June 30, 2000 AST will:
a. Follow the specific protocol to test the goods in conformance with
the NMC recommended protocol set forth in Exhibit D. Submit the testing
plan, the investigators identity(s), the schedule and the estimated
cost to Hydromer for approval.
b. Upon approval, test the goods pursuant to the testing plan.
c. Submit the final report and data to Hydromer.
Hydromer agrees to reimburse AST for one half of the cost up to $50,000
(evidenced by paid invoices submitted to Hydromer by AST) of devising a protocol
and performing the testing as devised pursuant to sub-paragraph a. above. Said
reimbursement may be in he form of direct payment by Hydromer or by a credit
memo issued by Hydromer to AST in Hydromer's sole discretion.
Hydromer may terminate this Agreement if the activity in sub-paragraph a, b and
c above is not completed by July 1, 2000, time being of the essence.
In the event that the quality of AST's goods or services with which the Marks
are used falls below acceptable standards established by Hydromer, the FDA or
the National Mastitis Council, or AST fails to submit samples and test results
to Hydromer for each batch, at the sole and exclusive judgment of Hydromer,
which shall be conclusive, Hydromer shall notify AST in writing. AST shall cure
any deficiency in quality within thirty (30) days of receipt of such notice of
deficiency from Hydromer. In the event that such deficiency is not cured within
thirty (30) days, Hydromer shall have the right to terminate this agreement.
5. FORM OF USE
AST will use the Marks only in the form and manner and with appropriate legends
as prescribed from time to time by Hydromer, and will not use any other
trademark or service ▇▇▇▇ in combination with any of the Marks without the prior
written approval of Hydromer.
6. USE FEE
AST agrees to pay a use fee to Hydromer for all uses of the Marks pursuant to
the rate set forth in Exhibit E. The uses of the Marks and the payment of the
use fee must be received by Hydromer within 45 days after the end of any
calendar quarter. In the event Exhibit E contains minimum payments, said
payments will be
T-HEXX PRODUCT AGREEMENT Page-7
so included.
7. INFRINGEMENT PROCEEDINGS
AST agrees to notify Hydromer of any unauthorized use of the Marks by others as
soon as it comes to AST's attention. Hydromer shall have the right and
discretion to bring infringement or unfair competition suit or proceedings
involving the Marks. In the event Hydromer fails to bring such suit or
proceeding, AST shall have the right to bring such suit or proceedings after a
60 day written notice to Hydromer.
8. TERM
This agreement shall continue in full force and effect until June 30, 2000,
("expiration date") unless sooner terminated as provided for in this agreement.
Thereafter this Agreement shall self renew for successive one year periods
("renewed period") unless either party notifies the other 60 days before
expiration date or the end of any renewed period that this agreement shall not
self renew. Nothing in this agreement shall be construed as granting AST or any
other person a perpetual license to the Marks.
9. TERMINATION OF EXCLUSIVE LICENSE FOR NOT ABIDING BY MINIMUM PURCHASES
Starting with the quarter beginning 10/1/99, and for each quarter thereafter,
the quarterly minimum purchases of T-Hexx concentrate shall be as set forth in
Exhibit E. ("the Minimum"). Hydromer reserves the unilateral right to convert
this license to a non-exclusive license if the Minimums are not met after a 30
day written notice, however Hydromer agrees that any other T-HEXX Product
Agreement entered into within the now non-exclusive territory will be at terms
no more favorable then the terms herein.
10. TERMINATION
Hydromer shall have the right to terminate this agreement upon thirty (30) days'
written notice to AST in the event of any affirmative act of insolvency by AST,
or upon the appointment of any receiver or trustee to take the possession of the
properties of AST, or upon the winding-up, sale, consolidation, merger, change
of control or any other sequestration by governmental authority of AST, upon
attaining a total receivable to Hydromer in the amount over $50,000 for more
then 60 days for any product purchased or use fee owed or upon breach of any of
the provisions of this agreement by AST.
Hydromer may also terminate this Agreement if AST commits a material breach and
such breach is not cured after a 30 day notice is sent to AST by Hydromer.
T-HEXX PRODUCT AGREEMENT Page-8
AST shall have the right to terminate this Agreement for any reason upon a 30
day written notice to Hydromer.
11. EFFECT OF TERMINATION
Upon termination of this agreement AST agrees to immediately discontinue all use
of the Marks and any term similar to the Marks. AST agrees to delete the similar
term or ▇▇▇▇ from its corporate or business name, to cooperate with Hydromer or
its appointed agent to apply to the appropriate authorities to cancel recording
of this agreement from all governmental records, and to destroy all printed
material bearing any of the Marks. AST agrees that all rights in the Marks and
the goodwill connected with those Marks shall remain the property of Hydromer.
AST shall have 90 days to liquidate the then existing inventory of T-HEXX Teat
Dip which comply with all the standards in this Agreement including but not
limited to testing and releasing.
12. SUPPLY OF CONCENTRATE
HYDROMER will make the patented T-HEXX 12% concentrate available to AST at $8.20
per Kg., not including use fees. Hydromer reserves the right to increase the
price at a rate not to exceed the increase in the CPI for Northern New Jersey.
Hydromer will give AST a 60 day written notice of any increase. In the event
that the cost increase ratio of any raw material which Hydromer purchases
exceeds the CPI for Northern New Jersey, Hydromer may pass this additional
incremental cost to AST.
All invoices from Hydromer to AST must be paid in 45 days time being of the
essence. If AST fails to pay an invoice in 45 days, such omission is a material
breach of this Agreement.
13. PATENT LICENSE TO USE.
AST recognizes and agrees that the T-Hexx concentrate formula uses art taught by
patents 4,642,267; 5,837,266 and/or 5,851,540 and other patents and patent
applications that are now in existence or will be in existence. Nothing herein
is intended to grant a license to make, sell, offer for sale or import any
chemical or concentrate covered by any Hydromer patents, patent applications or
trade secrets, but only the exclusive right to use T-Hexx concentrate to make
the goods set forth in Exhibit B and selling the goods with the Marks set forth
in Exhibit A.
14. INDEMNIFICATION AND INSURANCE
AST indemnifies Hydromer from all damages resulting from AST's products or
T-HEXX PRODUCT AGREEMENT Page-9
services. AST agrees that it will obtain, at its own expense, product liability
insurance from a recognized insurance company, providing adequate protection (at
least in the amount of $3,000,000/$5,000,000) naming Hydromer as an additional
insured, against any claims, suits, loss, and damage (including reasonable
attorneys' fees arising out of any alleged defects in the goods and services
listed in Exhibit B. As proof of such insurance, a fully paid certificate of
insurance naming Hydromer as an insured party will be submitted to Hydromer by
AST for Hydromer's prior approval before any of the goods and services listed in
Exhibit B are distributed or sold, and at the latest within thirty (30) days
after the commencement of the term of this agreement. Any proposed change in
certificates of insurance shall be submitted to Hydromer for its prior approval.
Hydromer shall be entitled to a copy of the then prevailing certificate of
insurance, which shall be furnished to Hydromer by AST.
15. GENERAL PROVISIONS
Assignment. This agreement shall be binding upon the parties' respective
successors and permitted assignees. AST may not assign this agreement or any
rights or obligations under this agreement without the prior written consent of
Hydromer, and any such attempted assignment shall be void. A change of control
of AST is considered to be an assignment.
Entire Agreement. This agreement contains the entire understanding of the
parties and supersedes all prior written or verbal agreements or
representations. No change or waiver of any provision of this agreement shall be
valid unless in writing and signed by the party against whom such change or
waiver is sought to be enforced. Any signing by Hydromer, Inc. must be done by
the President of the corporation. No employee, agent, or representative of
either party has authority to bind such party by any oral representation or
warranty.
Not a franchise. The parties agree that this Agreement shall not be considered a
franchise and any provision of any state law to the contrary is hereby waived by
both parties to the maximum extent allowed by law. Surviving Clauses. If a court
deems or declares invalid or unenforceable any clause or provision of this
agreement, all other terms and provisions shall remain in full force and effect.
Waiver. No delay or omission by Hydromer to exercise any right or power under
this agreement shall impair any such right or power or be construed as a waiver.
Controlling Law and Place of Suit. This agreement shall be subject to and shall
be interpreted according to the laws of the New Jersey and both parties agree to
the jurisdiction thereof.
T-HEXX PRODUCT AGREEMENT Page-10
The parties execute below this agreement in duplicate by their respective
authorized representatives.
Hydromer, Inc.
By: _____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and CEO
AST, Inc.
BY: __________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
TITLE: President
T-HEXX PRODUCT AGREEMENT Page-11
Exhibit A
T-HEXX
T-HEXX PRODUCT AGREEMENT Page-12
Exhibit B
Teat dip for use on the teats of dairy cows
T-HEXX PRODUCT AGREEMENT Page-13
Exhibit C. Formulation and tests to be performed on each T-HEXX Product.
T-HEXX PRODUCT AGREEMENT Page-14
Exhibit D
National Mastitis Council
Recommended Protocol for Determining Efficacy of a
Postmilking Barrier Teat Dip Based on
Reduction of Naturally Occurring
New Intramammary Infections
Experimental Design
Dip teats of half of the quarters after each milking in the experimental barrier
teat dip being tested. Experimental design can be either a split-udder or
split-herd design. Determine the number of new intramammary infections (IMI) in
quarters with teats dipped in the experimental product and in quarters dipped in
a positive-control germicidal teat dip. Positive-control teat dips should
previously been shown efficacious compared with not dipping in either
experimental challenge or natural exposure trials.
Selecting Experimental Herds, Cows, and Quarters
Trials should be conducted in at least two herds. Conduct trials in herds where
whole-hearted cooperation of managers to comply with experimental procedures can
be attained. Monitor milking equipment and milking management practices
carefully and regularly to minimize machine-mediated infections. This is
especially necessary in commercial herds where constant supervision by the
investigator will not be practical. All quarters are eligible except quarters
with teats that are deformed due to previous injury. Exclude quarters with teats
that are injured during the trial for the remainder of that lactation; such
quarters may re-enter the trial after a dry period if the injury has healed.
Teat Dipping
Dip teats of half the cows in the experimental product in a split-herd design.
Cows in the remainder of the herd serve as positive-controls. In this situation,
take care to ensure that cows are balanced by: 1) parity; 2) stage of lactation;
and 3) bacteriological status of quarters. Ensure that the two groups are milked
in the same facility. When a split-udder design is used, either dip two diagonal
teats or teats on either the right or left side of each udder with the
experimental barrier product. The other two teats on each cow is dipped with the
positive-control germicidal product. Apply teat dips immediately after milking
machine removal.
T-HEXX PRODUCT AGREEMENT Page-15
Sampling Schedule and Procedures
Collect duplicate or two consecutive single quarter milk samples to determine
existing infections in the herd at the beginning of the trial. Obtain a third
sample when results of the first two samples do not agree. Culture single
quarter milk samples monthly during the trial. A second quarter milk sample
should be collected within seven days from all quarters in which the
bacteriological status of the gland had changed from the previous month. Culture
duplicate samples from cows calving and herd additions prior to inclusion in the
trial. When any quarter develops clinical mastitis, collect and culture
duplicate milk samples from all four quarters before any treatment is
administered. Collect and culture duplicate milk samples from individual cows at
drying off or upon leaving the herd. Collect all samples consistently either
immediately before or after a regular milking using standard procedures (1,3).
Criteria for Diagnosing Infections
Examine all milk samples bacteriologically and identify organisms isolated
according to standard procedures (1,3). In determining that a quarter is free of
infection when it enters the trial, no pathogens may be recovered from two of
the initial samples. Diagnose a new IMI when the same bacterial species is
isolated from: 1) both of the duplicate samples taken from clinical quarters or;
2) two consecutive samples taken during the trial. The status of a quarter
should be recorded as a bacteriologically-negative clinical case when
bacteriological results of duplicate samples from a clinical quarter do not
match. Clinical mastitis and IMI diagnosed during the first seven days of
lactation should not be included in data analyses of teat dip efficacy. An
individual quarter is eligible for only one infection per bacterial species
during a lactation (i.e., only one Escherichia coli infection per quarter per
lactation). Quarters infected in one lactation may be included in the trial in
the subsequent lactation if it is determined that the infection was eliminated
during the dry period either spontaneously or as a result of therapy.
Data Presentation
The report of a trial should include: 1) duration of the trial; 2) number of
quarters in the trial at the onset and on the date of each monthly or bimonthly
sampling; 3) number of total new IMI, categorized by bacterial species or type,
that occurred in positive-control and treated quarters; 4) the percentage
differences in total new IMI between treated and control quarters and for each
bacterial species; 5) the number of new clinical cases, categorized by
bacteriological status, that occurred
T-HEXX PRODUCT AGREEMENT Page-16
in control and treated quarters; and 6) the percentage difference in new
clinical cases between treated and control quarters.
Data Analyses
The purpose of the trial must be decided a priori when using a positive-control.
The purpose is most often to determine either: 1) if the experimental product is
more efficacious than the positive-control or; 2) the efficacy of the
experimental product does not vary from that of the positive-control by greater
than a predetermined amount.
Environmental pathogens: Although germicidal teat dips can effectively
reduce incidence of new IMI by the contagious pathogens Staphylococcus
aureus and Streptococcus agalactiae, germicidal teat dips do not reduce
rate of new IMI by environmental pathogens (3). Therefore, to claim an
experimental barrier teat dip is efficacious against environmental
pathogens (i.e., Escherichia coli, Klebsiella spp., Streptococcus
uberis), the efficacy of the experimental product should be greater
than that of the positive-control germicide. To determine if the
efficacy of an experimental product is greater than that of a
positive-control, the hypothesis is formulated and tested as if teats
on control quarters were not being dipped. Data must express the
relation between quarters becoming infected in quarters treated with
the experimental teat dip and in quarters with teats dipped in the
control product. Differences between percent quarters becoming infected
in treatment groups can be tested where t approximates a standard
Student's t statistic:
t = [(x1/n1)-(x2/n2)]/[(x1+x2)/(n1n2)].5
x1 = number new IMI in control quarters
x2 = number new IMI in treated quarters
n1 = (number of control quarters)(time unit)
n2 = (number of treated quarters)(time unit)
The denominators n1 and n2 can be expressed as the summation of either
quarter-days, quarter-months, or quarter-years dependant upon the
experimental design. The percent reduction in new infection rate in the
treated group compared with that in the control group is expressed as:
100 [(x1/n1)-(x2/n2)]/(x1/n1).
Contagious pathogens: The efficacy of an experimental barrier teat dip
against Staphylococcus aureus and Streptococcus agalactiae should not
be less than that of the positive-control teat dip. Experimental
products may be tested to determine if efficacy is "equal" to that of
the positive control.
T-HEXX PRODUCT AGREEMENT Page-17
Equivalence can be evaluated by constructing a confidence interval on
the difference between two proportions. A 95% one-sided confidence
interval for the difference between proportions can be computed using
the normal approximation (1):
LLCI = [(x1/n1)-(x2/n2)] -
[Z"/2][(x1/n1)-(x2/n2)]/[(x1+x2)/(n1n2)].5
x1 = number new IMI in control quarters
x2 = number new IMI in treated quarters
n1 = (number of control quarters)(time unit)
n2 = (number of treated quarters)(time unit)
Z" /2 = 1.645 for a 95% CI
LLCI = lower limit confidence interval
The denominators n1 and n2 can be expressed as the summation of either
quarter-days, quarter-months, or quarter-years dependant upon the
experimental design. Two points of concern about the use of this
computation: 1) the lower limit of CI is the only figure computed. The
upper limit of CI is set at 1 because the issue in question is how much
the efficacy of the positive control is greater than the efficacy of
the experimental product. Therefore, if the CI contains the value 0,
equivalence between dips can be assumed; and 2) this normal
approximation should be used only when x1 and x2 are both > 5.
Trial Duration
Duration of each trial should be at least 12 months to include each season of
the year. The length of a trial required to demonstrate efficacy of a teat dip
will depend on the number of quarters available initially and the rate of new
IMI in the control and treated groups. Guidelines for estimating the number of
quarters required, the probable duration of a trial and the point at which a
trial may be terminated after 12 months are those detailed in (1). These
guidelines are applied to total IMI and separately to each species of bacteria
against which efficacy is tested.
References
1. ▇▇▇▇▇, ▇. ▇., ▇. ▇. ▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇, S. C. ▇▇▇▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇, and
▇. ▇. ▇▇▇▇▇▇. 1990. Protocols for evaluating efficacy of post-milking teat dips.
J. Dairy Sci. 73:2580.
T-HEXX PRODUCT AGREEMENT Page-18
2. Current Concepts of Bovine Mastitis. 1996. National Mastitis Council, Inc.,
Madison WI.
3. Microbiological Procedures for the Diagnosis of Bovine Udder Infection. 1990.
National Mastitis Council, Inc., Madison, WI.
Protocol developed by the National Mastitis Council Research Committee, 1997.
T-HEXX PRODUCT AGREEMENT Page-19
Exhibit E.
(use fees)
$3.50 per Kg. of T-Hexx 12% concentrate purchased by AST in addition to the
standard price. All purchase of T-Hexx concentrate from Hydromer shall be on non
cancelable purchase order for a minimum quantity of 4-55 gallon drums at the
then current price computed in section 11 with at least a 3 week notice, AST to
supply containers/drums. Hydromer shall supply and affix T-Hexx labels.
Minimum quarterly purchases shall be:
4/1/99-6/30/99 1,600 gallons
7/1/99-9/30/99 5,000 "
10/1/99-12/31/99 12,500 "
1/1/2000-3/31/2000 17,500 "
4/1/2000-6/30/2000 23,125 "
7/1/2000-9/30/2000 37,500 "
10/1/2000-12/31/2000 50,0000 "
1/1/2001-3/31/2001 60,000 "
4/1/2001-6/30/2001 75,000
and for each quarter
thereafter 85,000 gallons
