UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

 
BroTech Corporation, et al.,
 
Plaintiffs,
 
-against-
 
White Eagle International Technologies Group, Inc. et al.,
 
Defendants.
 
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Civil Action No. 03-232
 
STIPULATED ORDER AND SETTLEMENT AGREEMENT

STIPULATED ORDER AND SETTLEMENT AGREEMENT

by and between

BRO-TECH CORPORATION and PUROLITE INTERNATIONAL LTD.

AND

MEDASORB CORPORATION

Effective August 7, 2006

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THIS STIPULATED ORDER AND SETTLEMENT AGREEMENT is made and deemed effective this
7th day of August, 2006, by and between Bro-Tech Corporation (“Bro-Tech”), a
Delaware corporation, and Purolite International Ltd. (“PIL”), a United Kingdom
corporation, and any Affilates (collectively, “Purolite”), and MedaSorb
Corporation, successor to MedaSorb Technologies, LLC, a Delaware limited
liability company formerly known as RenalTech International, LLC, together with
White Eagle International Technologies Group and any Affiliates and successors
to any of the foregoing (collectively, “MedaSorb”).
 
WHEREAS, Purolite, through its various affiliates, manufactures polymeric resin,
particularly ion exchange products; and
 
WHEREAS, MedaSorb is the owner of the MedaSorb Patents (as hereafter defined)
and of proprietary Know-How (as hereafter defined) relating to certain adsorbent
polymers (the “Products,” as hereafter defined) and the use thereof, and is in
the process of seeking FDA approval for certain uses of such Products; and
 
WHEREAS, both PIL and MedaSorb have entered into agreements with Vadim Davankov
for the performance of certain services; and
 
WHEREAS, Purolite has instituted a civil action in the United States District
Court for the Eastern District of Pennsylvania, Civil Action No. 03-232, against
MedaSorb, inter alia, challenging ownership rights in certain of the MedaSorb
patents and for other complained of actions; and
 
WHEREAS, MedaSorb has denied any wrongdoing; and
 
WHEREAS, the Parties wish to settle the aforementioned litigation on mutually
agreeable terms without any admission of liability or wrongdoing; and
 
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NOW, THEREFORE, in consideration of the mutual promises herein contained and
intending to be legally bound, the Parties agree as follows:

1.  
DEFINITIONS

 
As used in this Agreement, the following words and phrases shall have the
following meanings:
 
“Affiliate” shall mean, with respect to any Person, any other Person which
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
 
“Agreement” shall mean the present Stipulated Order and Settlement Agreement
including all Exhibits.
 
“Civil Action” shall mean Civil Action No. 03-232 now pending in the United
States District Court for the Eastern District of Pennsylvania.
 
“Competitive Product” shall mean a product incorporating a hemocompatible porous
polymer designed or formulated to be used in connection with blood, and intended
to be used in the medical treatment of a patient involving the extra-corporeal
perfusion of the blood of that patient to remove toxic compounds from the blood
of the patient, which product has been approved or applied for use with the US
Food and Drug Administration for a specified indication. “Competitive Product”
shall exclude any product currently under development by Purolite with any Third
Party. To Purolite’s knowledge, they are not currently developing any product
with a third party intended for the medical treatment of a patient for sepsis or
renal disease.
 
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“Dale and Nikitin Assignment” shall mean the assignment to MedaSorb of Dale’s
and Nikitin’s interests, if any, in certain inventions as specified in Section
2(a) below.
 
“Governmental Authority” shall mean any court, agency, authority, department,
regulatory body or other instrumentality of any government or country or of any
national, federal, state, provincial, regional, county, city or other political
subdivision of any such government or any supranational organization of which
any such country is a member, including, without limitation, the Food and Drug
Administration, the Securities and Exchange Commission and any other regulatory
agency that now regulates or may regulate MedaSorb.
 
“Know-How” shall mean any and all proprietary technical information, know-how,
data, test results, knowledge, techniques, discoveries, inventions,
specifications, designs, trade secrets, regulatory filings, and other
information (whether or not patentable or patented) which is now or hereafter
during the Term of this Agreement owned or controlled (for purposes of
licensing) by, or is otherwise licensable by, MedaSorb, its predecessors,
successors or assigns or its Affiliates.

“Licensee Sales” shall mean all arm’s length royalties, fees or other
consideration paid, equitably attributable to or recognized by MedaSorb (or any
successors or assigns) for licensing, sublicensing or continuing a license
(other than any implied agreement by MedaSorb incident to the sale of Products)
to permit a licensee or sublicensee to use the MedaSorb Patents or MedaSorb’s
Know-How to make Products. Licensee Sales shall exclude revenue recognized and
value received by such licensee or sublicensee in connection with sales of
Product by such licensee or sublicensee but shall include, among other things,
any royalties paid to MedaSorb in connection with such sales. Licensee Sales
shall exclude revenue recognized and value received for the arm’s length sale,
lease, distribution or other disposition of Products to a licensee or
sublicensee. Licensee Sales shall also exclude any fees, consideration or other
value recognized by MedaSorb in connection with the absolute and total sale of
all its right and interests in the MedaSorb Patents and Know-How if MedaSorb
assigns this Agreement to the assignee and the assignee agrees that it is bound
under the terms of the Agreement in MedaSorb’s place.
 
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“MedaSorb Assignment” shall mean the assignment to Bro-Tech of equal, undivided
interests in certain of MedaSorb’s inventions as specified in Section 3(a)
below.
 
“MedaSorb License” shall mean the exclusive patent license granted by Purolite
to MedaSorb as specified in Section 4(a) below.
 
“Party” shall mean MedaSorb, Purolite, and their respective Affiliates.
 
“Person” shall mean and include an individual, shareholder, partnership, joint
venture, limited liability company, a corporation, a firm, a trust, an
unincorporated organization and a government or other department or agency
thereof.
 
“Products” shall mean biocompatible porous polymer or polymer based or derived
product used in direct contact with blood, including, without limitation,
CytoSorbÔ and BetaSorbÔ, that are manufactured by or for MedaSorb, its
licensees, and sublicensees for the use, application and/or treatment of medical
conditions and/or use in such applications including, without limitation,
sepsis, the prevention of post-operative complications of cardiac surgery, the
harvesting of organs from brain-dead donors, homeland security and battlefield
applications, renal disease and veterinary applications. For the avoidance of
doubt, “Products” shall include the porous polymer or polymer based or derived
product which, if sold as part of an integral or unified device, shall include
only the device which incorporates or retains the polymer suitable for sale
directly to end users or for incorporation into a larger device or kit.
 
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“Purolite Unpatented Technology” shall mean any of Purolite’s confidential or
proprietary information, if any, currently in MedaSorb’s possession and
necessary for the manufacture of a Product subject to payments to Purolite under
Section 4 of this Agreement, but excluding any patents, trademarks, service
marks, trade names, trade dress, domain names, logos and other source
indicators. 
 
“MedaSorb Patent Applications” shall mean the patent applications at issue in
the Civil Action, namely U.S. Pat. App. Ser. No. 11/255,132; U.S. Pat. App. Ser.
No. 11/105,140; U.S. Pat. App. Ser. No.10/981,055; U.S. Pat. App. Ser.
No.10/980,510; U.S. Pat. App. Ser. No. 10/038,053.
 
“MedaSorb Patents” shall mean the patents at issue in the Civil Action, namely
U.S. Patent No. 6,878,127; U.S. Patent No. 6,303,702; U.S. Patent No. 6,159,377;
U.S. Patent No. 6,156,851; U.S. Patent No. 6,153,707; U.S. Patent No. 6,136,424;
U.S. Patent No. 6,133,393; U.S. Patent No. 6,114,466; U.S. Patent No. 6,087,300;
U.S. Patent No. 5,904,663; U.S. Patent No. 6,127,311; and U.S. Patent No.
5,773,384.
 
“Replacement Product” shall mean a Product that replaces or substitutes for a
Product for which there has already been a commercial sale, and that has been
designed or formulated by MedaSorb and that is marketed and promoted by MedaSorb
for the use, application and/or treatment of the same medical condition and/or
use in the same application (including, without limitation, sepsis, the
prevention of post-operative complications of cardiac surgery, the harvesting of
organs from brain-dead donors, homeland security and battlefield applications,
renal disease and veterinary applications) as the Product that it replaces or
for which it substitutes. A new Product shall also be deemed a Replacement
Product, even if it was not so intended, if at least 45% of the Sales of a
Product for which there has already been a commercial sale are replaced or
substituted by Sales of such new Product.

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“Sales” shall mean all revenue recognized and value received by MedaSorb for the
first arm’s length sale, lease, distribution or other disposition of Products in
the Territory to an unrelated Third Party less sales and use taxes actually
paid, import or export duties actually paid, transportation prepaid or allowed,
and amounts allowed or credited due to returns, with such revenue recognized and
value received being determined in accordance with US GAAP consistently applied.
If MedaSorb recognizes revenue or receives value for the sale, lease,
distribution or other disposition of Products sold in combination with other
products, MedaSorb’s average selling price for the Products as actually sold on
a standalone basis will be used for purposes of calculating Sales revenue. If
MedaSorb does not have an average selling price for a Product sold on a
standalone basis, then Sales revenue will be calculated by subtracting 120%
percent of the cost of goods of the other products with which the Products are
sold in combination from the total revenue recognized or value received for the
sale, lease, distribution or other disposition of Products combined with other
products.
 
“Sales Reports” shall mean a written report showing MedaSorb’s revenue
recognized in connection with any Products for the for the applicable reporting
period, broken down by category/product, including a separate category for all
Sales and Licensee Sales.
 
The “Term” of this Agreement shall commence as of the date hereof and, subject
to earlier termination in event of breach, shall continue in full force and
effect for a term of eighteen years from the Effective Date of this Agreement.
 
“Territory” shall be worldwide.
 
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“Third Party” shall mean any Person who is not a Party or an Affiliate,
predecessor, or successor.

 
“Unpatented Technology License” shall mean the non-exclusive license to the
Purolite Unpatented Technology granted by Purolite to MedaSorb as specified in
Section 4(b) below.
 

2.  
DALE AND NIKITIN ASSIGNMENT

 
a.  Assignment. Dr. James Dale and Mr. Nikita Nikitin (who are currently
employed by Purolite) and Purolite hereby irrevocably sell, assign, and transfer
to MedaSorb all their right, title and interest, if any, for the United States
and its territorial possessions and in all foreign countries to (and the right
to claim priority of) the inventions which are claimed in the MedaSorb Patents
and to the inventions which are the subject of the MedaSorb Patent Applications.
 

3.  
MEDASORB ASSIGNMENT

 
a.  Assignment. MedaSorb hereby irrevocably sells, assigns, and transfers to
Bro-Tech an equal, undivided ownership interest for the United States and its
territorial possessions and in all foreign countries to the inventions which are
claimed in the MedaSorb Patents and to the inventions which are disclosed in the
MedaSorb Patent Applications.
 

4.  
LICENSES AND PAYMENT

 
a.  Exclusive Patent License. Bro-Tech hereby grants to MedaSorb and its
Affiliates an exclusive license in, under and to all of Purolite’s right, title
and interest in the MedaSorb Patents and the MedaSorb Patent Applications, with
the right to sublicense. Such license shall be exclusive even as to Purolite,
and, subject to the provisions of Section 6, shall continue for the Term of this
Agreement. During such period as the MedaSorb License is exclusive, MedaSorb
shall have the sole right to enforce the MedaSorb Patents and any patents
issuing from the MedaSorb Patent Applications, and Purolite shall provide any
further assurances as may be needed to confirm MedaSorb’s sole right. The Court,
having retained jurisdiction, shall be empowered to order Purolite to provide
such further assurances.
 
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b.  Unpatented Technology License. Subject to payment of amounts owed under
subsection (c) below, Purolite hereby grants to MedaSorb a perpetual, worldwide,
irrevocable, non-exclusive license to practice under the Purolite Unpatented
Technology for manufacture of Products. This license may be sublicensed only to
a Person manufacturing Product solely on MedaSorb’s behalf for commercial sale
by MedaSorb or otherwise with Purolite’s consent. Purolite acknowledges that the
disclosures in the MedaSorb Patents and in the MedaSorb Patent Applications
shall not be included within the definition of Purolite Unpatented Technology,
and that MedaSorb shall not require a license from Purolite to use any or all of
the information and other disclosures in the MedaSorb Patents and in the
MedaSorb Patent Applications for all purposes.

c.  Know-How License. Effective only upon the conditions set forth in Section
6(f) below, Purolite is hereby granted an irrevocable, fully paid-up, worldwide,
non-exclusive license to use and practice under all of MedaSorb’s Know-How for
the manufacture or sale of Products as it then exists on the date of a final
order of a court rejecting or terminating this Agreement. In furtherance of this
grant MedaSorb agrees that upon Purolite’s receipt of the notice specified in
Section 6(f) below of MedaSorb’s intention to file a voluntary petition under
the Bankruptcy Code Purolite shall have the right to demand that MedaSorb fully
disclose its Know-How. Within thirty (30) days of the notice specified in
Section 6(f) below or before the filing of the voluntary petition (whichever is
earlier), MedaSorb shall fully disclose to an Escrow Agent reasonably acceptable
to the parties and take such other further steps as reasonably necessary to make
available to such Escrow Agent the Know-How necessary or useful for the
manufacture of Products. If MedaSorb fails to provide the notice required under
Section 6(f) below, the Know-How shall immediately and automatically be
considered held by the United States District Court for the Eastern District of
Pennsylvania as a substitute escrow agent so as to permit it to effectuate the
purposes of this Stipulated Order and Settlement Agreement and to the extent
such occurs, shall not be considered a breach by MedaSorb. The Escrow Agent
shall be instructed that upon a termination or rejection specified in Section
6(f) and the effectiveness of the license granted in this Section, the escrow
agent shall deliver such Know-How to Purolite. If no such termination or
rejection occurs, the Escrow Agent shall return all information relating to the
Know-How to MedaSorb. If, in providing the Know-How to Purolite under this
license, MedaSorb identifies certain Know-How as confidential, then Purolite
will maintain such Know-How in strictest confidence for so long as MedaSorb
continues to identify that Know-How as confidential.
 
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d.  Royalties for Sales. MedaSorb will pay Purolite a royalty on all Sales by
MedaSorb during the Term of this Agreement as follows:
 

i.  
2.5% of Sales of each Product for three (3) years beginning with the first
commercial Sale of each defined Product;

   

ii.  
4% of Sales of each Product for the two (2) years after the completion of the
period defined in (i) above for each defined Product;

   

iii.  
5% of Sales of each Product for the six (6) years after the completion of the
period defined in (ii) above for each defined Product;

   

iv.  
4% of Sales of each Product for the four (4) years after the completion of the
period defined in (iii) above for each defined Product; and

   

v.  
2.5% of Sales of each Product for the remainder of the Term after the completion
of the period defined in (iv) above for each defined Product.

    

e.  Royalties for Replacement Products. Upon Purolite first becoming aware of a
first commercial sale of any new Product or Replacement Product, Purolite shall
have the right to request and obtain from MedaSorb sufficient details concerning
the Product and its intended marketing and promotion to evaluate whether or not
it is a Replacement Product. The royalty rate for a Replacement Product shall be
the same as the royalty rate for the Product that it replaces or for which it
substitutes. Upon the first commercial sale of a Replacement Product, that
Replacement Product shall be deemed to be a Product for all other purposes under
this Agreement. If Purolite is of the reasonable opinion that a new Product
should be deemed a Replacement Product, then it shall provide notice to MedaSorb
as provided in Section 12(f) below, and the parties shall meet and confer in
good faith to seek to amicably resolve the matter. If the parties are unable to
resolve the matter, the dispute shall be submitted exclusively by motion to the
United States District Court for the Eastern District of Pennsylvania (or a
Magistrate Judge in that District) for a binding, non-appealable determination.
 
f.  Payments to Purolite for Licensee Sales. MedaSorb will pay Purolite 20% of
all Licensee Sales received by MedaSorb for the duration of the Term, and 20% of
all Licensee Sales owed to but not received by MedaSorb before the expiration or
termination of this Agreement when received by MedaSorb provided that MedaSorb
uses commercially reasonable efforts to collect such monies owed.
 
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g.  Payment Terms. The royalties and payments payable under Sections 4(c) and
(d) above shall be paid in arrears by MedaSorb to Purolite by wire transfer of
immediately available funds to an account specified by Purolite within
forty-five (45) days of the end of every calendar quarter for the Term of this
Agreement beginning with the end of the first calendar quarter in which MedaSorb
first makes a commercial Sale of any Product. MedaSorb shall also submit a Sales
Report to Purolite within forty-five (45) days of the end of each such calendar
quarter.
 
h.  Yearly Audits. During the Term of this Agreement and for such period
reasonably necessary to conduct the final audit for examination, after the close
of each fiscal year, Purolite’s auditors may, within forty-five (45) days of the
close of each fiscal year provide reasonable prior written notice identifying
the date, time and scope of the audit, audit MedaSorb’s books and records
relating to Sales of Products, Licensee Sales and any other revenue relating to
Products to verify MedaSorb’s Sales Reports. Each such audit shall be limited to
the immediately preceding fiscal year, shall be strictly limited in scope to
that necessary to accomplish the stated objective of verifying MedaSorb’s Sales
Reports, and shall be completed promptly with the least disruption to MedaSorb
as is reasonable under the circumstances. If Purolite does not provide the
required notice within forty-five (45) days of any given fiscal year, it shall
not be entitled to audit MedaSorb’s books and records for that fiscal year,
provided however, that in the event any audit uncovers an understatement of
Sales of Licensee Sales of more than 7.5%, Purolite shall have the right to
audit any previously un-audited years books. In no event shall Purolite have the
right to contact, involve or interfere with MedaSorb’s customers as part of such
audit or examination.
 
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i.  Audit Costs. All costs of any such audit shall be borne by Purolite,
provided that if any audit reveals an understatement of Sales of more than 7.5%
of the correct amount, MedaSorb shall reimburse Purolite’s reasonable costs of
such audit.
 

5.  
PUROLITE’S NON-COMPETITION

   

a.  Non-Competition Agreement. During the term of the Agreement, Purolite will
not sell or offer for sale any Competitive Product to any Third Party intended
for use in the approved or applied for indication: For the thirty-six month
period beginning with the Effective Date of this Agreement, Purolite will not
sell or offer for sale a Competitive Product to any Third Party. If, by the
expiration of that thirty-six month period, MedaSorb has paid Purolite Two
Million Five Hundred Thousand ($2,500,000) Dollars in royalties or other
payments, then Purolite will not sell or offer for sale any Competitive Product
to any Third Party intended for use in the approved or applied for indication
for the succeeding twelve month period between the third and fourth
anniversaries of the Effective Date of this Agreement. If, by the end of each
twelve month period thereafter MedaSorb has paid Purolite Two Million Five
Hundred Thousand ($2,500,000) Dollars for that twelve month period, then
Purolite will not sell or offer for sale Competitive Product to any Third Party
intended for use in the approved or applied for indication for the succeeding
twelve month period. For the purpose of determining whether MedaSorb has paid
Purolite Two Million Five Hundred Thousand ($2,500,000) Dollars in any twelve
month period after the fourth anniversary of the Effective Date of this
Agreement, there shall be added to the amount actually paid to Purolite in that
twelve month period the difference, if any, between what MedaSorb actually paid
Purolite in the immediately preceding twelve month period and Two Million Five
Hundred Thousand ($2,500,000) Dollars. For example, if in the twelve month
period between the fourth and fifth anniversaries of the Effective Date of this
Agreement MedaSorb actually paid Purolite Three Million ($3,000,000) Dollars,
MedaSorb can satisfy the Two Million Five Hundred Thousand ($2,500,000) Dollar
requirement for the twelve month period between the fifth and sixth
anniversaries of the Effective Date of this Agreement by adding a Five Hundred
Thousand ($500,000) credit from the prior twelve month period ($3,000,000 minus
$2,500,000) to Two Million ($2,000,000) Dollars in actual payments to Purolite
in the twelve month period between the fifth and sixth anniversaries of the
Effective Date of this Agreement.  
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b.  Termination of Non-Competition Agreement. Purolite can terminate its
non-competition obligation at any time by notifying MedaSorb as provided in
Section 12(f) below of such termination. Upon delivery of such notice by
Purolite, MedaSorb will owe no further royalties under Section 4(c) above or
payments specified in Section 4(d) above, and subject to payment of any amounts
owed and outstanding at the date of delivery of the notice, the MedaSorb License
and Unpatented Technology License will be deemed fully paid-up. All other terms
of this Agreement will remain in force, unchanged. Without prejudice to
MedaSorb’s rights in the event of a material breach, no other termination of
Purolite’s covenant not to compete, for any reason, shall in any way relieve
MedaSorb’s payment obligations hereunder.
 
c.  Nothing in Sections 5(a) or (b) above which may otherwise permit Purolite to
sell or offer for sale Competitive Products without violation of its covenant
not to compete shall be construed as granting any right or permission for
Purolite to practice under any patent that is otherwise enforceable by MedaSorb
(including the MedaSorb Patents and any patents that issue from the MedaSorb
Patent Applications).
 
 

6.  
TERMINATION

 
a.  No Termination. This Agreement cannot be terminated before the end of the
Term defined in Section 1 above, except with the consent of both Parties or as
provided in this Section 6.
 
b.  Bankruptcy. All rights and licenses granted under or pursuant to this
Agreement are, and shall otherwise be deemed to be, for purposes of Section
365(n) of the U.S. Bankruptcy Code and any similar laws in any other country in
the Territory, licenses of rights to “intellectual property” as defined under
Section 101(35A) of the U.S. Bankruptcy Code. The Parties agree that all
intellectual property rights licensed hereunder, including, without limitation,
any patents or patent applications in any country of a Party covered by the
license grants under this Agreement, are part of the “intellectual property” as
defined under Section 101(35A) of the Bankruptcy Code subject to the protections
afforded the non-terminating Party under Section 365(n) of the Bankruptcy Code,
and any similar law or regulation in any other country.
 
c.  Material Breach. In the event either Party materially breaches this
Agreement, the non-breaching Party may terminate this Agreement upon 30 days
notice if during such notice period the breach has not been fully cured.
 
d.  Willful Non-Payment. If, after the expiration of any cure period as
specified in Section 6(c) above, the Parties disagree whether there has been a
default in payment by MedaSorb which has failed to be cured in a timely manner
(regardless of the cause for disagreement or non-payment), Purolite shall have
the right to bring a legal action in the United States District Court for the
Eastern District of Pennsylvania seeking an award of damages and remedies that
would be available to it for breach of contract under Pennsylvania law as well
as an order that the “exclusive” Patent License grant of Section 4(a) be
converted to a “non-exclusive” grant.
 
 
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i.  
If, as a result of a final ruling of that Court, MedaSorb is found to have
willfully failed to pay Purolite amounts due under this Agreement and that such
failure to pay was not as a result of a good faith disagreement concerning
whether one Party has materially breached and failed to cure in a timely manner
one or more obligations of this Agreement, then, in addition to all the remedies
which may otherwise be available under applicable law, the exclusivity provision
in the MedaSorb License shall be cancelled. If the exclusivity provision in the
MedaSorb License is cancelled under this Section 6(d)(i), Purolite will not
offer to license or license any rights in, under or to the MedaSorb Patents or
the MedaSorb Patent Applications to any existing licensee of MedaSorb with whom
there is an existing, valid license, nor to any Third Party for any product that
competes with any Product manufactured, sold or offered for sale by any Third
Party under an existing and subsisting exclusive license from MedaSorb, so long
as any such MedaSorb Third Party licensee pays directly to Purolite the payments
to which Purolite would otherwise be entitled from MedaSorb under this Agreement
as a result of such license from MedaSorb to such Third Party. The provisions of
this Section 6(d)(i) shall apply only if MedaSorb willfully fails to pay
Purolite amounts due under this Agreement, and shall not apply if there is a
good faith dispute between MedaSorb and Purolite about the amounts due under
this Agreement, even if the Court should find that MedaSorb owes Purolite
additional amounts as a result of that good faith dispute. Nothing in this
Section 6(d)(i) shall grant or be construed to grant Purolite any license in or
other right to use MedaSorb’s Know-How nor is anything in this Section 6.d.
intended to limit or restrict Purolite from enforcing this Stipulated Order and
Settlement Agreement .

  

ii.  
The remedies available to Purolite under this Section shall not include
terminating the MedaSorb License and Purolite shall not be entitled to terminate
the MedaSorb License even if, as a result of a final ruling of the Court,
MedaSorb is found to have willfully failed to pay Purolite amounts due under
this Agreement.

   

iii.  
If, in the course of a legal action pursuant to Section 6(d)(i), the Court finds
a Party’s conduct to be sanctionable, then the Parties agree that the Court
could award as a sanction an upward or downward prospective adjustment in the
royalties specified in Section 4(d) above or the payments specified in Section
4(f) above.

 
 
e.  Effect of Termination. Subject to the provisions of Section 6(d), upon
termination or expiration of this Agreement all rights and licenses granted
hereunder terminate, with the exception only of the Purolite Unpatented
Technology License under Section 4(b) and the license to Know-How provided for
in Section 4(c), which shall not terminate. Upon such termination the Parties
shall immediately cease using any patented or proprietary technology belonging
entirely to the other Party which is no longer the subject of a license granted
hereunder.

 
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f.  MedaSorb’s Bankruptcy. If MedaSorb voluntarily files a petition for
reorganization under the Bankruptcy Code, it will do so only in the United
States District Court for the Eastern District of Pennsylvania, and only upon at
least twenty-four (24) hours prior notice to Purolite of its intention to do so.
MedaSorb or its receiver or trustee shall have the absolute right to assume this
Agreement and all its provisions in accordance with the applicable bankruptcy
laws for the assumption of executory contracts, and Purolite hereby consents to
such assumption by MedaSorb or its receiver or trustee. If this Agreement is
terminated or rejected by MedaSorb or its receiver or trustee under applicable
bankruptcy laws in whole or in part in any respect that substantially impairs
Purolite’s material rights under this Agreement by a final order of a court of
competent jurisdiction in connection with MedaSorb’s bankruptcy following a
filing by MedaSorb of a voluntary petition for reorganization under Chapter 11
of the Bankruptcy Code, then in addition to all other remedies that it might
have under applicable state or federal law, Purolite’s right and license under
Section 4(c) above shall become fully and automatically effective.
 

7.  
EXPANDED DEFINITION OF PRODUCTS.

 
a.  At any time after the Effective Date of this Agreement, MedaSorb may, at its
option and in its sole discretion, provide Purolite with notice as provided in
Section 12(f) below of its intention to revise the definition of “Products” to
that stated in Section 7(c) below. Effective immediately upon the notice having
been deemed given as provided in Section 12(f) below, the revised definition of
“Products” as stated in Section 7(c) shall be deemed to be the applicable
definition of “Products” for all purposes under this Agreement for the remainder
of the Term of this Agreement.
 
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b.  If MedaSorb’s first commercial sale to a Third Party is of a product that
would otherwise fall within the definition of “Product” except that it is used
in direct contact with a physiological fluid other than blood, then the revised
definition of “Products” as stated in Section 7(c) shall be deemed to be the
applicable definition of “Products” for all purposes under this Agreement for
the remainder of the Term of this Agreement.
c.  The revised definition of “Products” as provided in Sections 7(a) or 7(b)
above shall be:
 
“Products” shall mean biocompatible porous polymer or polymer based or derived
product or device used in direct contact with physiological fluids, including,
without limitation, CytoSorbÔ and BetaSorbÔ, that are manufactured by or for
MedaSorb, its licensees, and sublicensees for the use, application and/or
treatment of medical conditions and/or use in such applications including,
without limitation, sepsis, the prevention of post-operative complications of
cardiac surgery, the harvesting of organs from brain-dead donors, homeland
security and battlefield applications, renal disease and veterinary
applications.  For the avoidance of doubt, “Products” shall include the porous
polymer or polymer based or derived product which,if sold as part of an integral
or unified device, shall include only the device which incorporates or retains
the polymer suitable for sale directly to end users or for incorporation into a
larger device or kit.
 

8.  
WARRANTIES

 
a.  Due Organization, Valid Existence and Due Authorization. Each Party hereto
represents and warrants to the other Party as follows: (a) it is duly organized
and validly existing under the laws of its place of organization; (b) it has
full power and authority and has taken all action necessary to enter into and
perform this Agreement; (c) the execution and performance by it of its
obligations hereunder will not constitute a breach of, or conflict with, its
organizational documents nor any other material agreement or arrangement,
whether written or oral, by which it is bound; (d) it has complied in all
respects with all laws applicable to it; (e) this Agreement is its legal, valid
and binding obligation, enforceable in accordance with the terms and conditions
hereof; and (f) no broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee in connection with this Agreement or the
transactions contemplated hereby based on arrangements made by it or on its
behalf.
 
b.  Purolite’s and MedaSorb’s Current Activity. Purolite represents and warrants
that it is not currently developing any product with any Third Party which, to
Purolite’s knowledge, is related to the treatment of sepsis or renal dialysis.
MedaSorb represents and warrants that it is not currently developing any product
which, to MedaSorb’s knowledge, is intended to be used in connection with
physiological fluids other than blood.
 
c.  Disclaimer. Except as expressly set forth herein, no Party makes any express
or implied warranties, statutory or otherwise, concerning the value, adequacy,
freedom from fault of, quality, efficiency, stability, characteristics or
usefulness of, or merchantability, or fitness for a particular purpose of the
Products or the Unpatented Purolite Technology.
 
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9.  
CONFIDENTIALITY

a.  Confidentiality. This Agreement and each of its terms, the Unpatented
Purolite Technology and the Know-How are confidential, and will be kept strictly
confidential by the parties.
 
b.  Exceptions. The foregoing obligations of confidentiality shall not prevent
the disclosure:
 

i.  
of the Unpatented Purolite Technology by Purolite or of MedaSorb’s Know-How by
MedaSorb;

   

ii.  
of information in order to defend or enforce any of its rights or of information
required by any Governmental Authority;

   

iii.  
of any amount directly payable by a Third Party to Purolite under Section
6(d)(i); or

iv.  
of information that is or becomes available to the public through no fault of
the party seeking to disclose or was known to a party prior to its disclosure by
the other Party or an Affiliate.

 
c.  Survival. The obligations of confidentiality set forth in this Section shall
survive the termination of this Agreement.
 
d.  General Statement of End of Dispute. The Parties shall have the right to
publicly disclose that they have achieved an amicable resolution to the Civil
Action.
 

10.  
THE RUSSIAN SCIENTISTS
 

a.  Until the earlier of the termination or breach giving rise to termination of
this Agreement or the expiration of the Term, and notwithstanding any
conflicting contractual rights that Purolite might have (but subject to any
other Third Party contractual rights and any existing or future obligations of
confidentiality owed to Purolite), MedaSorb is free to engage the Russian
Scientists (Vadim Davankov, Maria Tsyurupa, Ludmilla Pavlova and Dzidra Tur) as
consultants restricted to the area of Products, and Purolite will not seek to
enter into any arrangement with the Russian Scientists that would preclude
MedaSorb from working with them in the area of Products. Purolite acknowledges
that MedaSorb is free to engage the A. N. Nesmeyanov Institute of
Element-Organic Compounds (known as “INEOS”) without restriction (but subject to
any other Third Party contractual rights and any existing or future obligations
of confidentiality owed to Purolite), other than for the services of the Russian
Scientists, who may be engaged by MedaSorb, directly or through INEOS, only as
provided in the preceding sentence.
  
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b.  Purolite shall not claim any right, title or interest in any MedaSorb
Know-How solely because MedaSorb has engaged the Russian Scientists or INEOS as
consultants as provided in Section 10(a) above.
 
c.  Purolite and MedaSorb each acknowledge that there is a risk that the Russian
Scientists may, as a result of their consulting work for both parties, transfer
confidential or proprietary technology belonging to one party to the other
party. The parties shall put reasonable safeguards in place to minimize the
transfer of any such confidential or proprietary technology. Notwithstanding the
above, each party reserves their rights to their existing contractual
relationships with the Russian Scientists and INEOS to protect confidentiality
and trade secrets in all areas of non-Products.
 

11.  
DISMISSAL OF CIVIL ACTION
 

a.  Dismissal With Prejudice. Upon the execution of this Agreement, the Parties
shall instruct their outside counsel to execute and file a dismissal of the
Civil Action with prejudice, substantially in the form of Attachment A hereto.
 

12.  
GENERAL
 

a.  Waiver. The failure of either Party to insist upon the performance of any of
the provisions of this Agreement shall not be considered a waiver with respect
to any breach or relinquishment of future compliance therewith; nor shall a
waiver by either Party of any breach at one time of any provision operate as a
waiver of any other provision or as a continuing waiver of such provision.
 
b.  Written Changes. This Agreement may not be altered, modified, changed or
amended, or waived, in whole or in part, except in writing signed by the Parties
and except as expressly set forth herein.  
 
c.  Governing Law and Jurisdiction.
 
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i.  
This Agreement and the performance hereof shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, USA which would be
applicable to transactions executed and to be wholly performed in the
Commonwealth of Pennsylvania, USA, among residents of the Commonwealth of
Pennsylvania, USA.

   

ii.  
This Agreement upon stipulation and adoption by the Court will be deemed entered
as a final, binding, non-appealable order of the Court, and the United States
District Court for the Eastern District of Pennsylvania will retain exclusive
jurisdiction of the Parties and of this Agreement to enforce its terms and to
resolve any dispute arising under this Agreement. The Parties agree that they
will not begin any legal action relating to or arising from this Agreement, its
enforcement or the resolution of any dispute except in the United States
District Court for the Eastern District of Pennsylvania.

   

d.  Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the Parties with respect to its subject matter and
supersedes any prior agreement, statement, representation, warranty or
understanding with respect thereto.
 
e.  Force Majeure. Neither Party shall be held responsible for any failure of
performance hereunder or for damages caused by any delay or default due to any
contingency beyond its control preventing performance hereunder, including,
without limitation, war, laws, embargoes, export, shipping or remittance
restrictions implemented by governmental authorities, strikes, lockouts,
accidents, fires, delays or defaults caused by carriers, floods or seizure, or
control or rationing imposed by Governmental Authorities; provided, however,
that such Party shall immediately notify the other Party hereto in writing of
the occurrence of the event of force majeure (with reasonable particulars);
provided further, that such Party shall thereafter take all commercially
reasonable efforts with a view to its performance hereunder being resumed within
the shortest possible time.
 
f.  Notices. Notices required hereunder shall be in writing and shall be deemed
to be given one business day after delivery to an overnight courier service
(such as Federal Express) or upon transmission by telefax (provided that in each
instance there is written evidence of delivery or transmission) to the following
addresses or to such other address as either Party may designate by notice given
in accordance herewith:
 
 
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If to Purolite:

Bro-Tech Corporation
150 Monument Road
Bala Cynwyd, PA 19004
Attention: Mr. Steve Brodie
Fax No.: (610) 688-8139

With copies (which shall not constitute notice) to:

White & Case, LLP
1155 Avenue of the Americas
New York, NY 10036-2787  
Attention: Steven M. Betensky, Esq.
Fax No.: (212) 354-8113

If to MedaSorb:

MedaSorb International, LLC
7 Deer Park Drive
Suite K
Monmouth Junction, NJ 08852
Attention: Mr. Al Kraus
Fax: (732) 329-8650

With copies (which shall not constitute notice) to:

Rubin, Bailin, Ortoli, Mayer, Baker & Fry LLP
405 Park Avenue, 15th Floor
New York, New York 10022-4405
Attention: Joseph Rubin, Esq.
Fax: (212) 826-9307
 
g.  Binding Effect; Assignment. This Agreement and all the provisions hereof
shall be binding upon and shall inure to the benefit of the Parties hereto and
their respective successors and permitted assigns. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned,
directly or indirectly, including, without limitation, by operation of law, by
any Party hereto without the prior written consent of the other Party hereto,
provided, however, that either Party may (i) assign any or all of its rights and
interests hereunder to one or more of its Affiliates; (ii) assign this Agreement
in its entirety in connection with a merger, consolidation or sale involving a
transfer of all or substantially all of the assets of the business of MedaSorb,
or the business of Bro-Tech; and (iii) assign its rights under this Agreement to
any of its or its Affiliates’ lenders as collateral security. Before any change
in control (whether by merger, sale, reorganization or otherwise), MedaSorb will
obtain and provide to Purolite the new owner’s written consent to assume the
obligations under this Settlement Agreement.
 
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h.  Headings. Headings used in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
 
i.  English. This Agreement is entered into the English language and all notices
and communications pursuant to this Agreement to be considered effective shall
be in the English language. Should a translation of this Agreement into any
other language be made for any reason, all matters involving interpretation
shall be governed by the English text, except to the extent required by
applicable law.
 
j.  Severability. If one or more provisions of this Agreement are found by a
court or arbitrator of competent jurisdiction, or any Governmental Authority
with competent jurisdiction over the Parties hereto, to be illegal, invalid or
unenforceable, in whole or in part, the remaining terms and provisions of this
Agreement shall remain in full force and effect disregarding such illegal,
invalid or unenforceable portion and such court, arbitrator or Governmental
Authority shall be empowered to modify such illegal, invalid or unenforceable
provision to the extent necessary to make this Agreement enforceable in
accordance with the intent and purposes of the Parties expressed in this
Agreement to the fullest extent practicable and as permitted by applicable law.
 
k.  Joint Drafting. This Agreement shall be deemed to have been drafted jointly
by the Parties hereto and no presumption or rules of construction based upon
drafting this Agreement shall be made in any legal proceedings arising in
relation hereto.
 
l.  Expenses. Except as otherwise specifically provided herein or expressly
agreed in writing by the Parties, each Party shall be responsible for its own
costs and expenses related to its performance of this Agreement.
 
m.  Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same agreement.
 
n.  Attachments. All attachments attached hereto are incorporated into this
Agreement, as such exhibits and schedules may be amended in accordance with the
terms hereof.
 
 
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
 
 
BRO-TECH CORPORATION
 
By: __________________________
 
Name: ________________________
 
Title: _________________________
 
PUROLITE INTERNATIONAL LTD.
 
By: __________________________
 
Name: ________________________
 
Title: _________________________

MEDASORB CORPORATION
 
By: __________________________
 
Name: ________________________
 
Title: _________________________

AS TO SECTION 2 ONLY:

__________________________
James Dale

__________________________
Nikita Nikitin

This Stipulated Order and Settlement Agreement is approved by the Court and
adopted as a Final Order, this _____ date of , 2006

___________________________
U.S.D.J
 

 
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UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

 
BroTech Corporation, et al.,
 
Plaintiffs,
 
-against-
 
White Eagle International Technologies Group, Inc. et al.,
 
Defendants.
 
)
)
)
)
)
)
)
)
)
)
 
 
 
 
Civil Action No. 03-232
 
STIPULATION OF DISMISSAL  WITH PREJUDICE

Plaintiffs BroTech Corporation and Purolite International, Ltd. and defendants
White Eagle International Technologies Group, Inc., White Eagle International
Technologies, L.P. and RenalTech International, LLC (which has been succeeded by
Medasorb Corporation) hereby stipulate, by and through their undersigned
counsel, to request the Court to enter the attached Stipulated Order and
Settlement Agreement, which has been executed by the parties. Upon the Court's
entry of the Stipulated Order as the Court's final judgment on the merits in the
above- captioned action, the Court's dismissal of this action on July 24, 2006,
under local Rule 41.1 (b) pursuant to parties' settlement will now become final
and with prejudice. Notwithstanding the dismissal of the above-captioned action
with prejudice, this Court retains jurisdiction over this matter to enforce the
Stipulated Order and Settlement Agreement pursuant to the terms provided
therein. The parties will bear their own costs

 
 
 

 
EXHIBIT A

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.
 
 
________________________________
SPECTOR GADON & ROSEN, P.C.
Paul R. Rosen, Esquire
Bruce Thall, Esquire
1635 Market Street, 7th Floor
Philadelphia, PA 19103
(215) 241-8872
 
Attorneys for Plaintiffs
 
 
________________________________
WHITE & CASE
Steven M. Betensky, Esquire
1155 Avenue of the Americas
New York, NY 10036-2787
(212) 819-2497
 
Attorneys for Plaintiffs
 
 
________________________________
ABELMAN, FRAYNE & SCHWAB
Jeffrey A. Schwab, Esquire
Richard L. Crisona, Esquire
666 Third Avenue
New York, New York 10017
(212) 949-9022
 
Attorneys for Defendants

 
 
SO ORDERED:

_____________________
U.S.D.J.

EXHIBIT A
 
 
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