Settlement Agreement PREAMBLE
FINAL
PREAMBLE
This
Settlement 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 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (“Chembio”),
and
StatSure
Diagnostic Systems, Inc.,
(f/k/a
Saliva Diagnostic Systems) a Delaware corporation having its principal
place of
business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (“SDS”)
(Chembio and SDS are each referred to herein as a “Party” and jointly as the
“Parties”).
RECITALS
Chembio
has brought an action against SDS (Civil Action No. 04-CV-1149) in the
United
States District Court for the Eastern District of New York seeking a
declaration
of invalidity of the SDS Patents, a declaration of unenforceability of
the SDS
Patents and a declaration of non-infringement of the SDS Patents by the
HIV
Barrel Product (the “Pending Litigation”). SDS has filed an Answer and
Counterclaim alleging that the HIV Barrel Product infringes the SDS Patent
Number 5,935,854 and has sought leave to amend its pleading to assert
that
Chembio has breached the Manufacturing Agreement between SDS and Chembio
dated
January __, 2001, (the “SDS/Chembio Manufacturing Agreement”), among other
things (the “Counterclaim”).
SDS
and
Chembio with to dismiss with prejudice the Pending Litigation and the
Counterclaim as set forth herein.
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”).
SDS
and
Chembio intend to provide for joint Exploitation of products in the Barrel
Field
for the diagnosis or detection of HIV infection pursuant to the 3-Way
Agreement
and upon its expiration or termination through a separate agreement between
them
(“Joint HIV Barrel Product Commercialization Agreement”).
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.
For
purposes of this Agreement, in addition to the terms that are defined
on first
use herein, capitalized terms herein shall have the meanings defined
in the
3-Way Agreement unless otherwise defined herein except that the 3-Way
Agreement
shall be a Related Document for purposes of this Agreement; provided,
however,
that no amendment of any definition in the 3-Way Agreement will amend
any
definition in this Agreement unless the Parties expressly agree in
writing.
2.
Settlement
of Pending Litigation
2.1.
Dismissal
of Pending Litigation. Chembio
and SDS will execute and file, within five business days of the effective
date
of this Agreement, a stipulation of dismissal in the form of Exhibit
A hereto,
dismissing the Pending Litigation. Nothing in this Agreement or in any
of the
Related Documents shall preclude any party from asserting res judicata,
collateral estoppel, or law of the case with respect to any ruling(s)
previously
made in the Pending Litigation. Nothing herein shall grant any rights
under any
SDS Patents to Chembio for any products other than HIV Barrel
Products.
2.2.
SDS
Agreement Not to ▇▇▇. SDS
agrees not to bring (and shall cause its Affiliates not to bring) an
infringement action under the SDS Patents against Chembio with respect
to any
product in the Barrel Field for the diagnosis or detection of HIV infection
that
is being jointly marketed and sold by SDS and Chembio under the 3-Way
Agreement
or the Joint HIV Barrel Product Commercialization Agreement.
2.3.
Chembio
Agreement Not to ▇▇▇.
Chembio
agrees not to bring (and shall cause its Affiliates not to bring) an
action
against SDS alleging that any product in the Barrel Field for the diagnosis
or
detection of HIV infection that is being jointly marketed and sold by
SDS and
Chembio under the 3-Way Agreement or the Joint HIV Barrel Product
Commercialization Agreement does not infringe any of the SDS
Patents.
2.4.
Limitations
on Agreement Not to ▇▇▇.
The
obligations of SDS and Chembio under Section 2.2 and 2.3, or any other
provisions in this Agreement, shall not extend to any product that is
not an HIV
Barrel Product, including any product in the Barrel Field for the detection
or
diagnosis of any target other than HIV.
3.
Agreements
and Obligations
of the Parties.
3.1.
Patent
Validity.
Chembio,
having investigated and analyzed the SDS Patents during the course of
the
Pending Litigation, hereby acknowledges that each of the SDS Patents
is valid
and enforceable.
3.2.
No
Validity Challenge.
(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.
3.3.
SDS/Chembio
Manufacturing Agreement.
Effective upon execution of this Agreement, neither Party shall have
any rights
or obligations under the SDS/Chembio Manufacturing Agreement. Each Party
hereby
irrevocably releases the other Party with respect to any prior breach
of the
SDS/Chembio Manufacturing Agreement.
4.
Press
Release.
The
parties agree that each will issue, in its customary fashion, a press
release in
mutually agreed form.
5.
Representations
and Warranties.
5.1.
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.
5.2.
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, 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) except
in the case
of the Existing SDS Agreements and the Existing Chembio Agreements, 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.
5.3.
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.
6.
General.
6.1.
Term.
Unless
otherwise terminated by agreement of the Parties, this Agreement shall
continue
in effect perpetually.
6.2.
Waivers
and Amendments.
(a)
This
Agreement may be amended, modified or supplemented only by a written
instrument
executed by the Parties hereto.
(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.
6.3.
Entire
Agreement.
This
Agreement and the Related Documents, including all schedules or attachments,
taken together, 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.
6.4.
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.
6.5.
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:
(a)
if to
Chembio, to:
Chembio
Diagnostic Systems, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Telecopier
No.: (▇▇▇) ▇▇▇-▇▇▇▇
with
a
copy to:
Ruskin
Moscou Faltischek, P.C.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq,
Telecopier
No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b)
if to
SDS, to:
StatSure
Diagnostic Systems, Inc.
One
▇▇▇▇▇’▇ Hill
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
Chief Executive Officer
Telecopier
No.:
with
a
copy to:
Mintz,
Levin, Cohn, Ferris,
Glovsky
and Popeo, P.C.
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier
No.: 617-542-2241
or
at
such other address for a Party as shall be specified by like
notice.
6.6.
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.
6.7.
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 each 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
of the
Parties shall be legal, valid and binding execution and delivery of such
document for all purposes.
6.8.
Further
Assurances.
Each
Party agrees to execute, acknowledge and deliver such further instructions,
and
to do all such other acts, as may be necessary or appropriate in order
to carry
out the purposes and intent of this Agreement.
6.9.
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.
6.10.
Injunctive
Relief.
Each
Party acknowledges that any breach or threatened breach of any of the
terms
and/or conditions set forth in this Agreement will result in substantial,
continuing and irreparable injury to the other Party. Therefore, each
Party
hereby agrees that, in addition to any other remedy that may be available
to the
other Party, the other Party shall be entitled to injunctive or other
equitable
relief by a court of appropriate jurisdiction in the event of any breach
or
threatened breach of the terms of this Agreement.
6.11.
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.
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:
StatSure
Diagnostic Systems, Inc.
By:
Title:
Exhibit
A
IN
THE
UNITED STATES DISTRICT COURT
FOR
THE
EASTERN DISTRICT OF NEW YORK
---------------------------------------------------------------x
:
CHEMBIO
DIAGNOSTIC SYSTEMS INC. :
:
Plaintiff, :
v. :
Civil
Action No. 04-CV-1149-JS-ETB
SALIVA
DIAGNOSTIC SYSTEMS INC. :
:
Defendant. :
:
---------------------------------------------------------------x
STIPULATION
OF DISMISSAL
It
is
hereby stipulated, by and between the parties through their respective
counsel,
that that above litigation, and all claims and counterclaims asserted
therein,
is hereby dismissed. Such dismissal shall be with prejudice with respect
to the
claims of the Plaintiff and without prejudice with respect to the counterclaims
of the Defendant, all pursuant to and subject to the terms and conditions
of a
Settlement Agreement dated September 29, 2006.
Each
party shall bear its own costs and fees arising out of or related to
this
action.
[signatures
to be inserted]
TRA
2203497v.3