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FINAL
 
Joint HIV Barrel Product Commercialization Agreement
 
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 3661 Horseblock Road, Medford, NY 11763 (“Chembio”), and StatSure
Diagnostic Systems, Inc., (f/k/a Saliva Diagnostic Systems) a Delaware
corporation having its principal place of business at One Clarks Hill,
Framingham, MA 01702 (“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 Lawrence A. Siebert, Steve M. Peltzman 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.
3661 Horseblock Road
Medford, New York 11763
Attention: Lawrence A. Siebert, President
Telecopier No.: (631) 924-6033

with a copy to:

Ruskin Moscou Faltischek, P.C.
1425 Reckson Plaza
15th Floor, East Tower
Uniondale, New York 11556
Attention: Michael L. Faltischek, Esq,
Telecopier No.: (516) 663-6640

If to SDS, to:

StatSure Diagnostic Systems, Inc.
One Clark’s Hill
Framingham, MA 01702
Attention: Chief Executive Officer
Telecopier No.:

with a copy to:

Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Attention: Jeffrey M. Wiesen, 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: 
 
StatSure Diagnostic Systems, Inc.
 
By: 
 
Title: 
 
 
 
 

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