Joint HIV Barrel Product Commercialization Agreement PREAMBLE
FINAL
PREAMBLE
This
Joint HIV Barrel Product Commercialization Agreement (the “Agreement”)
is
made as of September 29, 2006 (“Effective
Date”),
by
and between Chembio
Diagnostic Systems, Inc.,
a
Delaware corporation having its principal place of business at 0000 Xxxxxxxxxx
Xxxx, Xxxxxxx, XX 00000 (“Chembio”),
and
StatSure
Diagnostic Systems, Inc.,
(f/k/a
Saliva Diagnostic Systems) a Delaware corporation having its principal
place of
business at Xxx Xxxxxx Xxxx, Xxxxxxxxxx, XX 00000 (“SDS”)
(Chembio and SDS are each referred to herein as a “Party” and jointly as the
“Parties”).
RECITALS
Chembio,
among other things, is in the business of developing, marketing and selling
products used to diagnose various diseases, including HIV, and has designed,
developed or is in the process of developing products for the diagnosis
or
detection of HIV or HIV infection (“HIV
Products”) and has received approval of a pre-market application to the FDA for
the HIV Barrel Product for manufacture by Chembio at its facility in
Medford,
New York and for Chembio to market to clinical laboratories and hospitals
in the
United States
SDS,
among other activities, is in the business of developing, manufacturing
and
marketing medical diagnostic products and owns the SDS Patents.
SDS,
Chembio and Inverness Medical Innovations, Inc., a Delaware corporation,
(“Inverness”) have entered into a License, Marketing and Distribution Agreement
of even date herewith (the “3-Way Agreement”), pursuant to which Inverness has
been granted the worldwide exclusive right to market and distribute the
HIV
Barrel Product.
During
the Term, to the extent such license is necessary, SDS wishes to license
the SDS
Patents to Chembio on an exclusive basis with respect to the HIV Barrel
Product,
and Chembio wishes to accept such license without acknowledging or agreeing
to
its necessity with respect to the HIV Barrel Product, on an exclusive
basis,
with respect to manufacture of the HIV Barrel Products solely for resale
by
Inverness as long as the 3-Way Agreement is in effect or, in the event
of
termination of the 3-Way Agreement, as otherwise set forth herein.
The
Parties may also enter into such other ancillary agreements, licenses
and
covenants as may be appropriate to permit the parties to fulfill the
business
objectives of this Agreement.
Chembio
and SDS wish to collaborate exclusively with each other, and to agree
to work
only with each other and not alone, to develop and commercialize products
in the
Barrel Field for the diagnosis or detection of HIV or HIV infection in
order to
facilitate introduction, distribution and sale of such products in the
market.
NOW,
THEREFORE, in consideration of the premises and the mutual promises,
covenants
and conditions hereinafter set forth, the receipt and adequacy of which
are
hereby acknowledged, Chembio and SDS hereby agree as follows:
1.
Definitions.
1.1.
Certain
Definitions.
For
purposes of this Agreement, in addition to the terms that are defined
on first
use herein, the following terms shall have the following meanings:
(a)
The
“Act”
shall
mean the Federal Food, Drug and Cosmetic Act, as amended, and all relevant
federal regulations pertaining thereto.
(b)
“Affiliate”
shall
mean any Person that controls, is controlled by, or is under common control
with
a Party hereto. For purposes of this definition, “control” shall mean (i) in the
case of corporate entities, direct or indirect ownership of a majority
of the
stock or shares having the right to vote for the election of directors,
and (ii)
in the case of non-corporate entities, direct or indirect ownership of
a
majority of the equity interest with the power to direct the management
and
policies of such non-corporate entities.
(c)
“Audit”
shall
mean examination of each and every document relating to the licenses
and rights
granted herein, including but not limited to books, records, agreements,
communications, shipping records, purchase orders, invoices, credit memos
and
record of payments received or made by a nationally recognized public
accounting
firm.
(d)
“Barrel
Field”
means
diagnostic testing for the presence of HIV antibodies utilizing an integrated
in-vitro diagnostic testing device that (i) is a single-use disposable
device,
(ii) collects a physiologic sample from a patient directly into the device
using
a tip at one end of the device and delivers that sample into a system
contained
in the device, where the reaction reagent medium (for example, a reagent
strip)
is enclosed in a barrel or other container with a transparent portion
which
allows the results of the reaction to be visible, designed to protect
the user
from contact with its contents, (iii) produces a visually readable result
in
less than twenty minutes, and (iv) is primarily designed to be used in
a Point
of Care environment or for self-testing by consumers.
(e)
“Challenge”
means,
with respect to Patent Rights, to challenge the validity or enforceability
of
any Patent Rights, including without limitation by (i) filing a declaratory
judgment action in which Patent Rights are alleged to be invalid or
unenforceable; (ii) citing prior art pursuant to 35 U.S.C. Sec. 301,
making a
request for re-examination of Patent Rights pursuant to 35 U.S.C. Sec.
302
and/or 311, or provoking or becoming party to an interference with an
application for Patent Rights pursuant to 35 U.S.C. Sec. 135; or (iii)
filing or
commencing any opposition, cancellation, nullity or similar proceedings
against
Patent Rights in any country.
(f)
“Chembio
IP”
shall
mean all proprietary rights and Intellectual Property Rights, including
but not
limited to Patent Rights, owned or Controlled by Chembio, which are necessary
or
useful for, or would be infringed or that Chembio asserts would be infringed,
by
the manufacture, use, sale, distribution, import or export of the HIV
Barrel
Products or New HIV Barrel Products, whether in existence now or in the
future,
including but not limited to those listed on Schedule A.
(g)
“Confidential
Information”
shall
mean all Technology and ideas and information of any kind, whether in
written,
oral, graphical, machine-readable or other form, whether or not marked
or
identified as confidential or proprietary, which are transferred, disclosed
or
made available by either Party hereto to the other.
(h)
“Control”
or
“Controlled
by”
shall
mean, in the context of Patent Rights or other Intellectual Property
Rights,
possession of the ability on the part of a Party to grant access to or
a license
or sublicense as provided for herein without violating the terms of any
agreement or other arrangement with any Third Party existing at the time
such
Party would be required hereunder to grant another Party such access
or license
or sublicense.
(i)
“Distributor”
shall
mean any Third Party to which a Party grants a right to resell or distribute
HIV
Barrel Products or New HIV Barrel Products.
(j)
“Exploit”
or
“Exploitation”
shall
mean to sell, offer for sale, import, export, transport, register, distribute,
promote and market, together with other activities typically associated
with
maximizing the market penetration, profit margins and commercialization
of a
diagnostic medical product that is marketed to hospitals and clinical
laboratories for professional use and to doctors’ offices, insurance companies,
military facilities, and other Point of Care clinics, as well as to the
public
for self-testing.
(k)
“FDA”
means
the U.S. Food and Drug Administration.
(l)
“First
Commercial Sale”
shall
mean, with respect to a product, the first sale to any Third Party.
(m)
“GAAP”
means
United States Generally Accepted Accounting Principles, as applicable
to the
Party in question.
(n)
“GMP”
means
current Good Manufacturing Practices as promulgated by the FDA.
(o)
“HIV
Barrel Product”
means
the product for HIV testing known as SURE CHECK(R)
HIV 1/2
as described in Chembio’s PMA on file with the FDA and further described in the
SURE CHECK(R)
HIV 1/2
package insert, Catalog #HIV202, attached hereto as Schedule A, together
with
any improvements thereto.
(p)
“Intellectual
Property Rights”
shall
mean (i) Patent Rights; (ii) rights associated with works of
authorship including copyrights, copyright applications and copyright
registrations; and (iii) rights relating to the protection of trade
secrets, know-how and Confidential Information, but shall not include
any rights
to trade marks, trade names, or other distinctive brand names or logos.
(q)
“New
HIV Barrel Product”
means
(i) the patent pending product in the Barrel Field for the diagnosis
or
detection of HIV or HIV infection currently being
designed and developed by Chembio which Chembio describes as set forth
in
Schedule D, and/or (ii) any other new product in the Barrel Field for
the
diagnosis or detection of HIV or HIV infection Controlled by SDS or
Chembio.
(r)
“Patent
Rights”
shall
mean all patents, patent applications and inventions on which patent
applications are filed and all patents issuing therefrom worldwide, all
disclosures of inventions, together with any extensions, registrations,
confirmations, reissues, divisionals, continuations, continuations-in-part,
reexamination certificates, substitutions or renewals, supplemental protection
certificates, term extensions (under applicable patent law or other law),
provisional rights and certificates of inventions.
(s)
“Person”
shall
mean an individual, corporation, partnership, limited partnership, limited
liability company, unincorporated association, trust, joint venture or
other
organization or entity, including a governmental authority.
(t)
“POC”
or
“Point
of Care”
means
an environment where sampling and testing is performed in the presence
or
near-presence of the patient.
(u)
“Related
Documents”
shall
mean the
3-Way
Agreement, the Settlement Agreement between SDS and Chembio, the License
and
Distribution Agreement between SDS and Inverness, the License and Distribution
Agreement between Chembio and Inverness, and the HIV Cassette Agreement
between
Chembio and Inverness.
(v)
“SDS
Patents”
shall
mean all Patent Rights owned or Controlled by SDS that would be infringed,
or
that SDS asserts would be infringed, by the manufacture, use, sale,
distribution, import or export of the HIV Barrel Products or New HIV
Barrel
Products, whether in existence now or in the future, including but not
limited
to those listed in Schedule B.
(w)
“Sell”
shall
mean to sell, offer for sale, market, promote, transport, export and
use in
furtherance of sales activities.
(x)
“Settlement
Agreement”
shall
mean the Settlement Agreement of even date herewith between the
Parties.
(y)
“Sublicensee”
shall
mean any sublicensee of any of the rights granted to a Party under this
Agreement, other than an Affiliate or a Distributor.
(z)
“Technology”
shall
mean all techniques, inventions, practices, procedures, knowledge, improvements,
designs, processes, protocols, compositions, products, methods, works
of
authorship, know-how, data, clinical data, preclinical data, research
and
creations (whether or not subject to protection by any Intellectual Property
Rights).
(aa)
“Third
Party”
shall
mean any Person other than SDS or Chembio or an Affiliate of either of
them.
(bb)
“United
States”
means
the United States of America and its territories and possessions, including
without limitation Puerto Rico and the U.S. Virgin Islands.
1.2.
Additional
Definitions.
Certain
additional capitalized terms are defined in the Preamble or the Recitals
or
below in the body of this Agreement and, if not otherwise defined, shall
have
the meaning as set forth in the 3-Way Agreement.
2.
Joint
Exploitation of HIV Products in the Barrel Field.
2.1 In
General.
The
Parties shall act together in all matters relating to the Exploitation
of the
HIV Barrel Product and any New HIV Barrel Product, with a goal of maximizing
the
commercial value of the HIV Barrel Product and any New HIV Barrel Product,
both
in geographic markets and in customer market segments.
2.2 Under
the 3-Way Agreement.
The
Parties shall act together in all matters under the 3-Way Agreement,
other than
Chembio’s right and obligation to manufacture and supply the HIV Barrel Product
thereunder. Without limiting the generality of the foregoing:
(a)
Neither Party shall (i) give any notice to Inverness under the 3-Way
Agreement,
(ii) terminate or attempt to terminate the 3-Way Agreement, or (iii)
modify or
amend the 3-Way Agreement without the prior written consent of the other
Party.
For clarity, if the Parties do not both agree to take an action described
in the
preceding sentence, then such action shall not be taken.
(b)
In
order to keep SDS properly informed, Chembio shall forward all forecasts,
Purchase Orders or alterations thereof received from Inverness pursuant
to
Section 7.2 or 7.3 of the 3-Way Agreement to SDS within five (5) business
days
of receipt thereof by Chembio.
(c)
In
the event either Party makes sales of HIV Barrel Products to a Third
Party
(other than Inverness) as permitted by the 3-Way Agreement, the selling
Party
shall pay the other Party a royalty of five percent (5%) of the Net Sales
(as
defined in the 3-Way Agreement) thereof. Sections 5.6 (other than subsections
(a) and (d)) and Section 5.7 (other than subsections (b), (c), and (e))
shall
apply to such royalties with appropriate adjustments to reflect the differences
in Payer and Payee.
2.3 Outside
the 3-Way Agreement.
In the
event of any termination or expiration of the 3-Way Agreement, SDS and
Chembio
agree that they will jointly seek a qualified Third Party to replace
Inverness
as the Distributor of the HIV Barrel Product and any New HIV Barrel Product
and
will enter into a written agreement with respect thereto. SDS and Chembio
further agree that neither Party will Exploit the HIV Barrel Product
or any New
HIV Barrel Product except pursuant to this Agreement or another written
agreement with the other Party, and neither Party will enter into a license
agreement, a distribution agreement, a joint venture, or any other agreement
with a Third Party involving the Exploitation of a product in the Barrel
Field
for the diagnosis or detection of HIV or HIV infection without the prior
written
agreement of the other Party. If any royalties are due to Inverness pursuant
to
Section 5.6 of the 3-Way Agreement as a result of any Exploitation pursuant
to
this Section 2.3, then the sharing of such royalties will be determined
in
accordance with the agreement for such Exploitation executed pursuant
to this
Section 2.3.
2.4 Non-Competition.
Neither
Party shall manufacture, promote, market, distribute, sell, offer for
sale,
import, export, seek or obtain regulatory approval of the HIV Barrel
Product or
any New HIV Barrel Product except under this Agreement and neither Party
shall
grant any license to, or in any way assist, any Affiliate or Third Party
to do
so. Each Party acknowledges and agrees that the exclusivity resulting
from this
Section is of critical importance to the other Party, and that without
such
exclusivity, the other Party would not have entered into this
Agreement.
2.5 Joint
Operating Committee.
(a)
The
JOC.
Promptly
after the execution of the 3-Way Agreement, the Parties shall establish
a Joint
Operating Committee (“Joint
Operating Committee”
or
“JOC”),
which
shall be responsible for planning and coordinating activities under this
Joint
Exploitation Agreement. The JOC shall be composed of three (3) members, one
designated by each Party and one agreed upon by the two Parties, who
(in the
case of the third member) shall have no affiliation or relationship with
either
Party. Either Party may replace its representative at any time upon prior
written notice to the other Party. If a Party’s representative is unable to
attend a meeting, such Party may designate an alternate to attend such
meeting
and perform the functions of such representative.
(b)
Responsibilities
of JOC.
The
Joint Operating Committee shall have the authority to make all decisions
under
Article 2 and Article 5 of this Agreement, including without limitation
all
actions under the 3-Way Agreement or outside the 3-way Agreement in the
event of
termination or expiration of the 3-way Agreement, as set forth in Sections
2.2
and 2.3. Neither Party shall take any action under the 3-Way Agreement
or any
action to Exploit the HIV Barrel Product or any New HIV Barrel Product
except
pursuant to a specific decision of the JOC.
(c)
Decision
Making Authority.
With
respect to the responsibilities of the Joint Operating Committee, each
member
(or alternate designated by a Party if a member representing a Party
is unable
to attend) shall have one (1) vote in all decisions. All decisions
shall be
made
by majority vote and
be
memorialized.
(d)
Meetings;
Minutes.
The
Joint Operating Committee shall meet quarterly, or more often as otherwise
agreed by the Parties, at such locations as the Parties agree. The JOC
may meet
in person, by teleconference, videoconference or as otherwise agreed.
Minutes of
the JOC meetings shall be taken, and shall, at a minimum, record all
decisions
made. A draft of such minutes shall be promptly provided to and approved
by both
Parties in accordance with a formal approval process established by the
JOC. A
Party may, with the prior consent of the other Party, invite a reasonable
number
of non-voting employees, consultants or scientific advisors to attend
the
meetings of the JOC, provided that such invitees are bound by appropriate
confidentiality obligations. Decisions shall be effective upon execution
of a
consent or approval agreed by a majority of the Joint Operating
Committee.
(e)
Other
Communications. In
addition to formal meetings, the Joint Operating Committee representatives
shall
communicate as necessary to ensure the appropriate joint Exploitation
of the HIV
Barrel Product and any New HIV Barrel Product. Each Party shall have
reasonable
access to the other Party’s facilities and personnel to facilitate joint
Exploitation of the HIV Barrel Product and any New HIV Barrel Product,
upon
reasonable notice.
(f)
Initial
Members.
The
Initial Members of the Joint Operating Committee shall be Xxxxxxxx X.
Xxxxxxx,
Xxxxx X. Xxxxxxxx and a third person to be agreed upon by SDS and
Chembio.
(g)
Public
Announcements. Except
as
authorized in this Agreement or otherwise required by applicable law,
regulation
or the rules of any securities exchange or other trading market on which
such
Party’s securities are listed, all public communications relating to the actions
of the Joint Operating Committee shall be subject to the approval of
the
Parties.
3. Licenses
and Intellectual Property Matters.
3.1 Exclusive
Right to Manufacture.
SDS, on
and subject to the terms and conditions contained herein and in the 3-Way
Agreement, hereby grants to Chembio, and Chembio hereby accepts from
SDS,
without acknowledging or agreeing to its necessity with respect to the
HIV
Barrel Product, a worldwide exclusive license to manufacture the HIV
Barrel
Products for
resale by Inverness under the 3-Way Agreement or, in the event of termination
of
the 3-Way Agreement, as otherwise set forth herein.
3.2 Technology.
Subject
to Article 4, the Parties will give each other access to their respective
know-how and Technology relevant to the HIV Barrel Product and any New
HIV
Barrel Products in order to optimize manufacturing processes and quality
and
reduce manufacturing costs. Notwithstanding the foregoing, neither Party
has any
obligation to disclose its intellectual property, including the Chembio
IP,
except as may be required to purchase, supply and assemble hardware components
related to the HIV Barrel Product and any New HIV Barrel Product.
3.3 Patent
Validity.
Chembio,
having investigated and analyzed the SDS Patents, hereby acknowledges
that each
of the SDS Patents is valid and enforceable.
3.4 No
Validity Challenge.
In order
to assure the orderly Exploitation of the HIV Barrel Product and New
HIV Barrel
Products and to make such products available to the public to address
medical
needs:
(a)
Chembio agrees not to (and to cause its Affiliates not to) Challenge
Patent
Rights in the SDS Patents,
or
to
assist
any Third Party in doing so.
(b)
SDS
agrees not to (and to cause its Affiliates not to) Challenge any Patent
Rights
included in the Chembio IP or
to
assist any party in doing so,
unless
such Patent Rights are enforced or threatened to be enforced against
SDS or an
SDS customer or partner for infringement resulting from an SDS product
or
service other than a product in the Barrel Field that diagnoses or detects
HIV
or HIV infection which SDS product or service is sold in violation of
this
Agreement or the 3-Way Agreement. SDS further agrees not to challenge
Chembio’s
right to continued use for manufacture of the HIV Barrel Product of the
Confidential Information or Technology utilized by Chembio in the manufacture
of
the HIV Barrel Product.
(c)
Neither Party has investigated the Confidential Information or Technology
utilized by the other party in connection with the manufacture of the
HIV Barrel
Product, and nothing contained herein shall be construed as an admission
by
either Party that such Confidential Information or Technology is or is
not
covered by the SDS Patents or the Chembio IP.
3.5 Consequences
of Violation.
If
either Party Challenges the Patent Rights of the other Party in violation
of
Section 3.4, then the Party whose rights were the subject of the Challenge
(the
“Challenged Party”), may, by written notice to the Party violating Section 3.4
(the “Challenging Party”):
(i)
terminate this Agreement or terminate any or all rights and licenses
granted to
the Challenging Party hereunder, and
(ii)
if
the 3-Way Agreement is in effect at the time of the violation of Section
3.4,
then if the Challenging Party is Chembio, reduce Chembio’s share of the
SDS/Chembio share of Net Sales for the HIV Barrel Product or any New
HIV Barrel
Product under the 3-Way Agreement to 20% from 50% permanently; and if
the
Challenging Party is SDS, reduce SDS’s share of the SDS/Chembio share of Net
Sales for the HIV Barrel Product or any New HIV Barrel Product under
the 3-Way
Agreement to 20% from 50% permanently. The Challenged Party shall have
the right
to notify Inverness of any action taken under this Section, and the Parties
agree that Inverness shall have no liability for any action taken to
distribute
the SDS/Chembio share of Net Sales in accordance with such notice. In
the event
the alleged Challenging Party disputes in good faith that it has Challenged
the
Patent Rights of the other Party, then the matter will be resolved in
accordance
with Section 10.8 and the amounts of the foregoing reductions will be
placed in
escrow until the matter is resolved.
4.
Confidentiality.
4.1 Limited
Disclosure and Use.
Each of
Chembio and SDS shall hold in confidence any Confidential Information
disclosed
by the other Party or otherwise obtained by such Party from the other
Party as a
result of this Agreement or the Settlement Agreement, and each of SDS
and
Chembio shall protect the confidentiality thereof with the same degree
of care
that it exercises with respect to its own information of a like nature,
but in
no event less than reasonable care. Without the prior written consent
of the
disclosing Party, a receiving Party shall not use, disclose, or distribute
any
Confidential Information, in whole or in part, except as required to
perform
such Party’s obligations or exercise such Party’s rights hereunder or under the
Settlement Agreement. Access to the disclosing Party’s Confidential Information
shall be restricted to the receiving Party’s employees and agents, who, in each
case, need to have access to carry out a permitted use and are bound
in writing
to maintain the confidentiality of such Confidential Information.
4.2 Exceptions.
The
obligations set forth in Section 4.1 shall not apply to any portion of
the
Confidential Information that the receiving Party can demonstrate by
legally
sufficient evidence: (i) now or hereafter, through no act or failure to act
on the part of the receiving Party, is or becomes generally available;
(ii) is known to the receiving Party at the time of receiving such
Confidential Information and not subject to an obligation of confidentiality
to
a Third Party; (iii) is hereafter furnished to the receiving Party by a
Third Party as a matter of right (and without violating any agreement
with the
disclosing Party) without restriction on use or disclosure; or (iv) is
independently developed by the receiving Party without use of any Confidential
Information received from the other
Party.
In addition, each receiving Party may disclose Confidential Information
to the
extent such disclosure is reasonably necessary to prosecute or defend
litigation, to comply with applicable law or regulation or the rules
of any
securities exchange or other trading market on which such party’s securities are
listed, to protect Intellectual Property Rights, to obtain necessary
or
desirable regulatory approvals, to respond to a valid order of a court
or other
governmental body or any political subdivision thereof, or to conduct
preclinical or clinical trials, provided that, other than with respect
to
disclosure for protecting Intellectual Property Rights, the receiving
Party
shall use reasonable efforts to secure confidential treatment of such
Confidential Information required to be disclosed.
4.3 Use
of Name; Disclosure of Terms of the Agreement.
Except
as
authorized in this Agreement or otherwise required by applicable law,
regulation
or the rules of any securities exchange or other trading market on which
such
Party’s securities are listed, neither Party shall use the name of the other
Party in any publicity or advertising without the prior written approval
of the
other Party, except that either Party may disclose that it has entered
into this
Agreement and the Settlement Agreement. Except as may be required by
applicable
law, regulation or the rules of any securities exchange or other trading
market
on which such Party’s securities are listed, neither Party shall disclose any
terms or conditions of this Agreement or the Settlement Agreement without
the
prior written consent of the other Party, provided that a Party may disclose
such terms and conditions to any Third Party with whom such Party has
entered
into or proposes to enter into a business relationship (including any
transaction that would result in a permitted assignment in accordance
with the
terms and conditions of Section 9.11 hereof), provided any such Third Party
is informed of the confidentiality restrictions herein with respect to
such
terms and conditions and agrees to abide by such restrictions.
4.4 Survival.
The
obligations set forth in this Article 4 shall survive any termination
or
expiration of this Agreement in perpetuity (with respect to trade secrets)
and
for a period of five (5) years (with respect to all other data and
information).
5. Manufacturing
5.1 SDS
Manufacturing Equipment.
SDS
will lease a one-head assembler to Chembio. Chembio will make lease payments
to
SDS in accordance with Schedule C.
5.2 Reduction
of Manufacturing Costs.
Chembio
will use commercially reasonable efforts to reduce Cost (as defined in
the 3-Way
Agreement) of the HIV Barrel Product for supply to Inverness under the
3-Way
Agreement, taking into consideration regulatory and quality obligations.
The
Parties will review all operations involved in such manufacturing and
consult on
appropriate changes in the process. Without limiting the generality of
the
foregoing, the Parties will consider (through the JOC) use of a Third
Party
manufacturer if significant cost savings can be achieved, as long as
such Third
Party manufacture is in compliance with applicable regulations, will
not impair
quality obligations or cause a material change in registrations or product
approvals.
5.3 Manufacturing
Failures Under the 3-Way Agreement.
In the
event Chembio does not supply the quantity and/or quality of HIV Barrel
Products
required under the 3-Way Agreement, then the Joint Operating Committee,
with the
assistance of the Parties, will develop appropriate reasonable business
strategies to fulfill such requirements.
6. Joint
Patent Rights.
The
Parties do not intend to engage in joint research activities and acknowledge
that they have no obligation to do so. Nonetheless, in the course of
activities
hereunder, patentable inventions may be made. As between the Parties,
ownership
of Patent Rights shall be determined in accordance with inventorship.
The
determination of inventorship for Patent Rights shall be made in accordance
with
applicable laws relating to inventorship set forth in the patent laws
of the
United States. As between the Parties, SDS shall own any invention that
is
conceived or reduced to practice by an employee of SDS solely (or jointly
with a
Third Party subcontractor of SDS), and Chembio shall own any Invention
that is
made solely by an employee of Chembio (or jointly with a Third Party
subcontractor of Chembio). Any invention that is made jointly by both
an
employee of SDS (or a Third Party subcontractor of SDS) and an employee
of
Chembio (or a Third Party of Chembio) shall be jointly owned by the Parties
(“Joint
Patent Rights”).
Each
Party retains an undivided one-half interest in and to the Joint Patent
Rights.
Joint Patent Rights shall only be utilized in the Barrel Field under
this
Agreement. The Parties shall jointly control the filing and prosecution
of
patent applications for Joint Patent Rights, using mutually agreed counsel.
Each
Party may independently exercise its ownership rights in and to such
Joint
Patent Rights, for any other field, and including the right to license
and
sublicense or otherwise to exploit, transfer or encumber its ownership
interest,
without an accounting or obligation to, or consent required from, the
other
Party.
7. Representations
and Warranties.
7.1 Corporate
Power.
Each
Party represents to the other Party that it has full corporate power
and
authority to enter into this Agreement and to carry out the provisions
hereof.
Each Party represents to the other that this Agreement constitutes a
valid and
binding agreement, enforceable against it in accordance with its
terms.
7.2 No
Default or Violation.
Each
Party represents and warrants to the other Party that the execution,
delivery
and performance of this Agreement does not (i) violate or require any
registration, qualification, consent, approval, or filing under, (1)
any law,
statute, ordinance, rule or regulation applicable to it, or (2) any judgment,
injunction, order, writ or decree of any court, arbitrator, or governmental
entity by which such Party or any of its assets or properties may be
bound or
(ii) conflict with, require any consent, approval, or filing under, result
in
the breach or termination of any provision of, constitute a default under,
result in the acceleration of the performance of any obligations under,
result
in the vesting or enhancement of any other Person’s rights under, or result in
the creation of any lien upon any of such Party’s properties, assets, or
businesses pursuant to (x) its organizing documents or By-Laws or (y)
any
material indenture, mortgage, deed of trust, license, permit, approval,
consent,
franchise, lease, contract, or other instrument or agreement to which
such Party
is a party or by which such Party or any of such Party’s properties or assets is
bound.
7.3 Exclusion
of Other Representations and Warranties.
EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION
ANY REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR NON-INFRINGEMENT. NEITHER PARTY WARRANTS THAT THE OTHER PARTY
WILL
RECEIVE ANY PARTICULAR AMOUNT, OR ANY, REVENUES OR PROFITS AS A RESULT
OF
ENTERING INTO THE BUSINESS ARRANGEMENTS DESCRIBED IN THIS
AGREEMENT.
8. Term
and Termination.
8.1 Term
of Agreement.
Unless
otherwise terminated by agreement of the Parties, this Agreement shall
continue
in effect perpetually with respect to all products in the Barrel Field
for the
diagnosis or detection of HIV or HIV infection.
8.2 Material
Breach. If
there
is a:
(i)
material breach by a Party of this Agreement which cannot be cured;
or
(ii)
material breach by a Party of this Agreement that can be cured and such
Party
has failed to take steps to begin to cure the breach within sixty (60)
days
following written notice specifying the material breach by the Party
affected by
the breach or is not diligently pursuing a cure thereafter, or
(iii)
is
subject to a petition for relief under any bankruptcy legislation, or
makes an
assignment for the benefit of creditors, or is subject to the appointment
of a
receiver for all or substantially part of the Party’s assets, and such petition,
assignment or appointment, if involuntary, is not dismissed or vacated
within
ninety (90) days.
then,
an
Event of Default shall be deemed to have occurred. Upon an Event of Default,
the
non-breaching Party shall have the right to exercise one or more of the
following remedies upon written notice by the non-breaching Party to
the
breaching Party within thirty (30) days of an Event of Default (if any)
(assuming that the non-breaching Party has not already given such a notice
upon
the occurrence of a prior material, uncured breach by the breaching Party):
(i)
to seek monetary damages for such material breach within the limitations
set
forth in Section 9 hereof; (ii) to seek equitable relief to prevent such
material breach from continuing or occurring again in the future; (iii)
if the
Event of Default can be cured, to effect a cure and be reimbursed for
the costs
incurred or (iv) at its option, to terminate this Agreement upon written
notice
to the breaching Party; provided, however, that in the event the alleged
breaching Party in good faith challenges the allegation of breach, then
the
matter shall be resolved in accordance with Section 10.8, and the cure
period
set forth in Section 8.2(ii), which shall be reduced to thirty (30) days,
shall
only commence upon a decision pursuant to Section 10.8 that such breach
has
occurred.
8.3 Survival.
No
expiration or termination of this Agreement shall affect any rights or
liabilities of the Parties which may have accrued prior to the date of
expiration or termination. Notwithstanding anything herein to the contrary,
upon
any expiration or termination of this Agreement, in addition to any provisions
that by their terms survive, the provisions of Sections [to
be updated]
shall
survive and shall continue in full force and effect in accordance with
their
respective terms.
9. Limitation
of Liability.
9.1 EXCEPT
FOR BREACHES OF ITS CONFIDENTIALITY OBLIGATIONS HEREUNDER AND FOR VIOLATIONS
OF
THE OTHER PARTY’S INTELLECTUAL PROPERTY RIGHTS AND FOR DAMAGES CAUSED BY A
PARTY’S GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT, IN NO EVENT SHALL A PARTY
BE
LIABLE TO ANY OTHER PARTY FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
INCLUDING, WITHOUT LIMITATION, DAMAGES RESULTING FROM LOSS OF USE, PROFITS,
BUSINESS OR GOODWILL, WHETHER OR NOT THE PARTY ALLEGEDLY CAUSING THE
DAMAGE HAS
BEEN ADVISED OF THE POSSIBILITY THEREOF.
10. General.
10.1 Waivers
and Amendments.
(a)
This
Agreement may be amended, modified or supplemented only by a written
instrument
executed by the Parties hereto. For clarity, the Joint Operating Committee
shall
have no power to amend or modify this Agreement.
(b)
No
waiver of any provision of this Agreement, or consent to any departure
from the
terms hereof, shall be effective unless the same shall be in writing
and signed
by the Party waiving or consenting thereto. No failure on the part of
either
Party to exercise, and no delay in exercising, any right or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
of
any such right or remedy by such Party preclude any other or further
exercise
thereof or the exercise of any other right or remedy. The waiver by either
Party
hereto of a breach of any provision of this Agreement shall not operate
as a
waiver of any subsequent breach. All rights and remedies hereunder are
cumulative and are in addition to and not exclusive of any other rights
and
remedies provided by law.
10.2 Entire
Agreement.
This
Agreement, the Schedules hereto and the Related Documents constitute
the entire
agreement between the Parties hereto with respect to the subject matter
hereof
and supersede all prior agreements and understandings, whether written
or oral,
between the Parties in connection with such subject matter.
10.3 Severability.
If any
provision of this Agreement is found invalid or unenforceable by a court
of
competent jurisdiction, such provision shall be enforced to the maximum
extent
permissible by law and the other provisions of this Agreement shall remain
in
full force and effect.
10.4 Relationship
of the Parties.
This
Agreement shall not constitute either Party the agent or legal representative
of
the other Party for any purpose whatsoever, and neither Party shall hold
itself
out as an agent of the other Party. This Agreement creates no relationship
of
joint venturers, partners, associates, employment or principal and agent
between
the Parties and each of the Parties is acting as an independent contractor.
Neither Party is granted herein any right or authority to, and shall
not attempt
to, assume or create any obligation or responsibility for or on behalf
of the
other Party. Neither Party shall have any authority to bind the other
Party to
any contract, whether of employment or otherwise, and each Party shall
bear all
of its respective expenses for its operations, including, without limitation,
the compensation of its employees and salespersons and the maintenance
of its
offices, service and warehouse facilities. Each Party shall each be solely
responsible for its own employees and salespersons and for their acts
and the
things done by them.
10.5 No
Election of Remedies.
The
rights and remedies accorded herein are cumulative and in addition to
those
provided by law, and may be exercised separately, concurrently, or
successively.
10.6 Notices.
All
notices and other communications hereunder shall be in writing and shall
be
deemed given if delivered personally, telecopied (with confirmation)
or mailed
by registered or certified mail (return receipt requested) or delivered
by
recognized courier service providing evidence of delivery to the Parties
at the
following addresses:
If
to
Chembio, to:
Chembio
Diagnostic Systems, Inc.
0000
Xxxxxxxxxx Xxxx
Xxxxxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxxx X. Xxxxxxx, President
Telecopier
No.: (000) 000-0000
with
a
copy to:
Ruskin
Moscou Faltischek, P.C.
0000
Xxxxxxx Xxxxx
00xx
Xxxxx,
Xxxx Xxxxx
Xxxxxxxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxx X. Xxxxxxxxxx, Esq,
Telecopier
No.: (000) 000-0000
If
to
SDS, to:
One
Xxxxx’x Hill
Xxxxxxxxxx,
XX 00000
Attention:
Chief Executive Officer
Telecopier
No.:
with
a
copy to:
Mintz,
Levin, Cohn, Ferris,
Glovsky
and Popeo, P.C.
Xxx
Xxxxxxxxx Xxxxxx
Xxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxxx, Esq.
Telecopier
No.: 617-542-2241
or
at
such other address for a Party as shall be specified by like
notice.
10.7 Governing
Law.
This
Agreement shall be governed by, and construed and enforced in accordance
with,
the substantive laws of the State of New York , without giving effect
to its
conflicts of laws rules.
10.8 Dispute
Resolution.
In
the
event of any dispute or disagreement between the Parties as to the
interpretation of any provision of this Agreement or the performance
of any
obligations hereunder, the matter, upon written request of either Party,
shall
be referred to [mediation
and]
arbitration in accordance with the procedures set forth in Schedule F
to this
Agreement.
10.9 Waiver
of Jury Trial.
The
Parties each hereby irrevocably and unconditionally waives all rights
to trial
by jury in any legal action, proceeding or counterclaim with respect
to any
matter whatsoever arising out of or in connection with or related to
this
Agreement or the enforcement thereof.
10.10 Counterparts.
This
Agreement may be executed in two or more counterparts, all of which shall
be
considered one and the same agreement and shall become effective when
two or
more counterparts have been signed by both of the Parties and delivered
to the
other Party, it being understood that both Parties need not sign the
same
counterpart. Facsimile execution and delivery of this Agreement by either
Party
shall be legal, valid and binding execution and delivery of such document
for
all purposes.
10.11 Assignment.
This
Agreement is personal to each of the Parties, and neither Party shall
assign any
of its rights or delegate any of its obligations hereunder without the
prior
written consent of the other Party, which consent may be withheld for
any
reason, provided,
however, that without
the consent of the other Party, each Party may (i) assign its rights
under this
Agreement and delegate its obligations hereunder, in whole or in part,
to any
Person that shall acquire the business of such Party to which this Agreement
relates, or to any Affiliate of such Party, if the assignee shall assume
such
Party’s obligations hereunder in writing, and (ii) assign this Agreement in
connection with a sale or transfer of substantially all of the assets
of, or a
majority interest in the voting shares of, such Party or its corporate
parent
to, or the merger or consolidation of such Party or its corporate parent
with or
into, any other Person.
10.12 Force
Majeure.
Neither
Party shall be liable for failure to perform any of its obligations under
this
Agreement when such failure is due to fire, flood, strikes, labor troubles
or
other industrial disturbances, legal restriction, riot, insurrection,
or any
other cause beyond the reasonable control of the Party affected
thereby.
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*
*
*
IN
WITNESS WHEREOF, the Parties have executed, or caused their duly authorized
representatives to execute, this Agreement under seal as of the date
first
written above.
Chembio
Diagnostic Systems, Inc.
By:
Title:
By:
Title:
