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HIV Cassette License, Marketing and Distribution Agreement

Execution Version

 

 

 
HIV Cassette License, Marketing and Distribution Agreement
 
Dated As Of
 
September 29, 2006
 
Between
 
Inverness Medical Innovations, Inc.
 
And
 
Chembio Diagnostic Systems, Inc.
 

 

 

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Table of Contents

1. Definitions. 
  2
1.1. Certain Definitions 
  2
1.2. Additional Definitions 
  7
2. HIV Cassette Product: Exclusive Licenses and Manufacturing and Distribution
Arrangements. 
  7
2.1. Exclusive Right to Manufacture for United States Sale 
  7
2.2. Exclusive Right to Purchase and Exploit in the United States 
  7
2.3. Non-Exclusive License under Inverness Lateral Flow Patents 
  8
2.4. Patent Marking 
  8
2.5. SDS Access 
  8
2.6. Termination of Licenses Upon Challenge of Validity 
  8
3. Termination of Exclusivity in event of Competition. 
  9
4. Limits to Scope of Inverness Licenses 1
10
5. Royalties and Payments. 
10
5.1. Exclusive Payment Arrangements 
10
5.2. Pricing of HIV Cassette Products 
10
5.3. Inverness Sale of HIV Cassette Products - Division of Net Sales 
11
5.4. Payment Mechanism for HIV Cassette Products Sold by Inverness 
11
5.5. Royalties Payable by Chembio on Inverness Lateral Flow Patents 
11
5.6. Payment by Inverness for Samples 
12
5.7. Reporting and Calculation of Payments.
12
6. Regulatory and License Matters. 
14
6.1. Facility Registration/Inspections 
14
6.2. Regulatory Filings 
14
6.3. Bio-Rad Laboratories, Inc 
15
7. Manufacture and Sale. 
15
7.1 Chembio Efforts 
15
7.2 Forecasts 
15
7.3 Purchase Orders 
16
7.4 Shipment Terms 
16
7.5 Acceptance 
16
7.6 Sales Effort 
16
7.7 Inverness Responsibilities; Rights 
16
7.8 Marketing Plans and Budgets 
17
8. Trademarks 
17
8.1. Trademark License 
17
8.2. Compliance with Law; Registration 
17
8.3. Termination 
17
8.4. Labeling 
17
9. Prosecution and Enforcement of Licensed Intellectual Property. 
18
9.1. Prosecution 
18
9.2. Enforcement of Licensed Patents 
18
10. Confidentiality. 
18
10.1. Limited Disclosure and Use 
18
10.2. Exceptions 
19
10.3. Use of Name; Disclosure of Terms of the Agreement 
19
10.4. Effect of Termination 
19
10.5. Survival 
19
11. Representations; Warranties. 
20
11.1. Corporate Power 
20
11.2. No Default or Violation
20
11.3. Licensed Intellectual Property 
20
11.4. Regulatory Matters 
20
11.5. Product Quality 
20
11.6. Exclusion of Other Representations and Warranties 
21
12. Indemnification 
21
12.1. By Manufacturer 
21
12.2. By Sellers 
22
12.3. Notice of Claims 
22
12.4. Disputes 
23
13. Term and Termination
23
13.1. Term of Agreement
23
13.2. Material Breach 
23
13.3. Section 365(n); Agreement to Deliver Embodiments 
24
13.4. Effect of Termination for Breach by Inverness 
24
13.5. Effect of Termination for Breach by Chembio 
25
13.6. Survival 
25
14. Limitation of Liability
25
14.1. Exclusion of Liability for Certain Damages 
25
14.2. Limitation on Liability for Direct Damages 
26
15. General. 
26
15.1. Waivers and Amendments. 
26
15.2. Entire Agreement 
26
15.3. Severability 
26
15.4. Relationship of the Parties 
26
15.5. No Election of Remedies 
27
15.6. Notices 
27
15.7. Governing Law 
27
15.8. Dispute Resolution 
28
15.9. Waiver of Jury Trial 
28
15.10. Counterparts 
28
15.11. Assignment 
28
15.12. Force Majeure 
28
15.13. Further Assurances 
29

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HIV Cassette License, Marketing and Distribution Agreement
 
PREAMBLE
 
This HIV Cassette License, Manufacturing and Distribution 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, New York 11763, (“Chembio”)
and Inverness Medical Innovations, Inc., a Delaware corporation having its
principal place of business at 51 Sawyer Road, Waltham, MA 02453 (“Inverness”).
 
RECITALS
 
Certain capitalized terms used in these Recitals but not defined in the Preamble
or upon first use are defined in Section 1.1.
 
Inverness, among other activities, is in the business of developing, marketing
and selling products used to diagnose various diseases, including HIV, and owns
or has rights to grant licenses to a number of patents pertaining to HIV
diagnosis, including the Inverness Lateral Flow Patents. Inverness asserts that
the HIV Cassette Product is within the scope of the claims of the Inverness
Lateral Flow Patents.
 
Chembio, among other things, is in the business of developing, marketing and
selling products used to diagnose various diseases, including HIV, and has
designed and developed the HIV Cassette Product, and has received approval of
its pre-market application to the FDA for the HIV Cassette 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.
 
During the Term, Inverness wishes to be the exclusive United States marketer and
distributor of the HIV Cassette Product and to license the Inverness Lateral
Flow Patents to Chembio for the purpose of manufacturing the HIV Cassette
Product for sale by Inverness in the United States and to allow Chembio to
manufacture, market and sell the HIV Cassette Product outside the United States,
and Chembio wishes to obtain such licenses to the extent such licenses are
necessary.
 
During the Term, Chembio also wishes to grant Inverness an exclusive United
States license to market and sell the HIV Cassette Products, to the extent such
license is required and, as provided herein, to covenant not to manufacture the
HIV Cassette Products for, or sell the HIV Cassette Products to, any Person
other than Inverness in the United States and Inverness wishes to obtain such
license subject to such covenant.
 
The Parties are simultaneously entering into certain other agreements, licenses
and covenants, including an agreement between the Parties and StatSure
Diagnostic Systems, Inc. (“SDS”).
 
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 Inverness hereby agree as follows:
 
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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, such audit to be conducted 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 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 20 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 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.
 
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(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 by, the use,
sale, distribution, import or export of the HIV Cassette Products, whether now
in existence or in the future, including but not limited to those as listed on
Schedule A.
 
(g) “Chembio Listed Patents” shall mean the patents and patent applications
listed on Schedule A.
 
(h) “Chembio Trademarks” shall mean the Trademarks listed on Schedule B.
 
(i) “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 any Party
hereto to any other.
 
(j) “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 (other than an Affiliate) existing at the time such Party would be
required hereunder to grant another Party such access or license or sublicense.
 
(k) “Costs” shall mean Chembio’s costs, calculated in accordance with GAAP and
attributed on a per-unit-of-HIV Cassette Product basis, of manufacturing and
shipping the HIV Cassette Products provided to Inverness hereunder, obtaining
and maintaining regulatory approvals for the HIV Cassette Products to the extent
set forth in Section 6.2, and obtaining and maintaining licenses from any Third
Parties to manufacture, market, distribute or sell the HIV Cassette Products and
the amortization over the period during which HIV Cassette Products are sold to
Inverness of the cost in procuring such licenses. The term “Costs” shall also
include costs associated with (1) compliance, (2) complaint handling and (3)
quality control. Such costs shall be restricted to costs incurred by Chembio
after the Effective Date, except that license fees paid for those licenses
listed in Schedule C obtained prior to the Effective Date will be amortized as
set forth in Schedule C over the period during which HIV Cassette Products are
sold to Inverness.
 
(l) “Developing Countries” means those countries listed on Schedule J.
 
(m) “Distributor” shall mean any Third Party, other than an Affiliate of
Inverness, to which Inverness or Chembio grants a limited sublicense under the
rights granted Inverness under Section 2.2 or granted Chembio under Section 2.3
for the purpose of reselling or distributing HIV Cassette Products.
 
(n) “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.
 
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(o) “FDA” means the U.S. Food and Drug Administration.
 
(p) “First Commercial Sale” shall mean, with respect to a product, the first
sale to any non-Affiliate.
 
(q) “GAAP” means United States Generally Accepted Accounting Principles, as
applicable to the Party in question.
 
(r) “GMP” means current Good Manufacturing Practices as promulgated by the FDA.
 
(s) “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, which is
the subject of a Related Document.
 
(t) “HIV Cassette Product” means the Chembio product currently known as HIV 1/2
STAT PAK(TM) as described in Chembio’s PMA on file with the FDA and further
described in the HIV 1/2 STAT PAK(TM) package insert, Catalog #HIV 102, attached
hereto as Schedule E, together with any improvements thereto.
 
(u) “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.
 
(v) “Inverness Lateral Flow Patents” shall mean any Patent Rights in the patents
and patent applications identified on Schedule E.
 
(w) “Inverness Trademarks” are the trademarks listed on Schedule F.
 
(x) Net Sales.
 
(i) “Net Sales” shall mean, with respect to any HIV Cassette Product, the gross
amount received by the seller or its Affiliates or Sublicensees on bona fide
sales of such HIV Cassette Product to Third Parties, less the following items
(to the extent the gross amount received by them otherwise reflects such items):
(i) credits and allowances for price adjustment, rejection, recall or return of
the HIV Cassette Product; (ii) amounts for transportation, insurance, handling
or shipping charges; (iii) taxes, duties and other governmental charges levied
on or measured by the sale of the HIV Cassette Product, but not franchise or
income taxes of any kind whatsoever; (iv) quantity and other trade discounts,
credits or allowances actually allowed and taken; (v) charge back payments
and/or rebates for the HIV Cassette Product provided to managed health care
organizations, international organizations, or federal, state, local or other
governments, including, in the United States, Medicare and Medicaid; or
(vi) license fees, royalties or similar amounts paid to Third Parties to allow
the seller or its Affiliates or Sublicensees to Exploit the relevant Licensed
Product without infringement of Third Party (other than an Affiliate of the
seller) Intellectual Property Rights. Net Sales shall not include any
consideration received for demonstrations, test marketing, clinical trial
purposes or compassionate or similar use. All of the amounts specified in the
definition of Net Sales shall be determined from the books and records of seller
of the HIV Cassette Product, its Affiliates and Sublicensees, maintained in
accordance with GAAP, consistently applied.
 
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(ii) Bundling. In the event that any particular HIV Cassette Product is sold as
part of a bundle or kit with products other than the HIV Cassette Product, the
Net Sales allocated to such HIV Cassette Product shall be determined by
multiplying the net selling price (that is, the gross selling price less such
applicable deductions as are permitted in the calculation of Net Sales) of the
bundle or kit by the fraction A ÷ (A + B) where A is the average selling price
during the period in question in the country in question in quantities similar
to the sale in question for the HIV Cassette Product sold separately and B is
the average selling price during the period in question in the country in
question in quantities similar to the sale in question for the remaining
products in the bundle or kit, when such products are sold separately from the
HIV Cassette Product (in each case as the average sellling price is documented
by the seller or its Affiliates or Sublicensees’ records). In the event that any
products contained in the bundle or kit are not sold separately, the Net Sales
from sales of such bundle or kit allocated to HIV Cassette Products shall be
determined in a fair and equitable manner by mutual agreement of the parties.
 
(iii) Sales to Distributors. It is understood and agreed that all sales of HIV
Cassette Product by the seller, its Affiliates and Sub-licensees to any
Distributor shall be treated as Net Sales hereunder, and that subsequent sale of
HIV Cassette Product by any such Distributor shall not be treated as Net Sales
hereunder.
 
(y) “Party” or “Parties” shall mean each of Inverness and Chembio (but not their
Affiliates).
 
(z) “Patent Costs” shall mean the costs and expenses paid to outside legal
counsel and other Third Parties, allocated in-house costs of legal counsel, and
filing and maintenance expenses, incurred in connection with preparing, filing,
prosecuting, obtaining and maintaining Patent Rights, including costs and
expenses of patent interference, re-examination, reissue, opposition or similar
proceedings.
 
(aa) “Patent Prosecution Action” shall mean any and all actions that may be
taken in connection with preparing, filing, prosecuting, obtaining and
maintaining throughout the world patent protection for Patent Rights licensed
hereunder, including patent applications and other related material submissions
and correspondence with any patent authorities.
 
(bb) “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, continuations, 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.
 
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(cc) “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.
 
(dd) “POC” or “Point of Care” shall mean an environment where sampling and
testing is performed in the presence or near-presence of the patient.
 
(ee) “QSRs” means current Quality Systems Regulations as promulgated by the FDA.
 
(ff) “Related Documents” shall mean the Settlement Agreement and HIV Barrel
Product Commercialization Agreement between SDS and Chembio, the License and
Distribution Agreement between SDS and Inverness, the Non-Exclusive License,
Marketing and Distribution Agreement between Chembio and Inverness, and the HIV
Barrel License, Marketing and Distribution Agreement between Chembio and
Inverness.
 
(gg) “Rest of the World” means worldwide, excluding the United States.
 
(hh) “Specifications” shall mean the information contained in Schedule D
regarding the HIV Cassette Product and the together with any and all other
related documentation or procedures in possession by Chembio that substantiate
or support the information contained within Schedule E .
 
(ii) “Sublicensee” shall mean any sublicensee of any of the rights granted to
Inverness under Section 2.2, other than an Affiliate or a Distributor.
 
(jj) “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).
 
(kk) “Third Party” shall mean any Person other than Inverness or Chembio.
 
(ll) “United States” means the United States of America and its territories and
possessions, including without limitation Puerto Rico and the U.S. Virgin
Islands.
 
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(mm) “Valid Claim” shall mean a claim of an issued and unexpired patent that has
not been  permanently revoked, held unenforceable or invalid by a final,
nonappealable decision of a court or other governmental agency of competent
jurisdiction (the term “final, nonappealable decision” includes decisions that
become final through exhaustion of all permissible avenues for rehearing or
review by a superior tribunal and decisions that become final through expiration
of the time allowable for appeal), or  admitted by the patentee to be invalid or
unenforceable through reissue, reexamination, disclaimer or otherwise.
 
(nn) “Visual-Read HIV Test” shall mean a rapid, non-digital diagnostic test for
antibodies to HIV designed primarily to be read by the naked eye and to be used
in a Point of Care environment. A “Visual-Read HIV Test” expressly excludes
digital tests that include a reading device or integrated digital technology to
aid in the interpretation or indication of the result.
 
1.2. Additional Definitions
 
. Certain additional capitalized terms are defined below in the body of this
Agreement.
 
2. HIV Cassette Product: Exclusive Licenses and Manufacturing and Distribution
Arrangements. 
 
2.1. Exclusive Right to Manufacture for United States Sale
 
. Inverness, on and subject to the terms and conditions contained herein, hereby
grants to Chembio and Chembio hereby accepts from Inverness an exclusive license
during the Term under the Inverness Lateral Flow Patents to manufacture the HIV
Cassette Product solely for sale to Inverness pursuant to this Agreement.
Chembio shall manufacture the HIV Cassette Product itself or may subcontract the
manufacture of the HIV Cassette Product to the extent permitted by applicable
law, but may not sublicense such manufacturing right. In the event Chembio
subcontracts its manufacturing right, Chembio shall enter a written agreement
with such contractor consistent with the terms of this Agreement, and Chembio
shall remain primarily liable for performance of this Agreement.
 
2.2. Exclusive Right to Purchase and Exploit in the United States
 
. Chembio, on and subject to the terms and conditions contained herein,
including, without limitation, Section 2.2(b) hereof, hereby grants to Inverness
and Inverness hereby accepts from Chembio the exclusive right to purchase from
Chembio and the exclusive right and license under any and all of the Chembio IP
to Exploit, throughout the United States, during the Term, the HIV Cassette
Product and may do so utilizing Inverness Trademarks. This right shall be deemed
to include a grant to Inverness of the right and license to sell through any
Affiliate of Inverness and through Distributors of Inverness or of any Affiliate
of Inverness.
 
(a) Subject to Section 2.2(b) hereof, the foregoing rights and licenses are
exclusive (even as to Chembio) to Inverness in connection with marketing,
distributing and selling in the United States, and Chembio shall not itself
Exploit, or grant any rights to any Third Party to Exploit, the HIV Cassette
Product in the United States. Chembio acknowledges and agrees that such
exclusivity is of critical importance to Inverness, and that without such
exclusivity, Inverness would not have entered into this Agreement.
 
(b) Chembio represents and warrants that Chembio has not as at the Effective
Date granted licenses under the Chembio IP with respect to, and/or entered into
agreements regarding, the Exploitation of the HIV Cassette Product in the United
States.
 
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2.3. Non-Exclusive License under Inverness Lateral Flow Patents
 
. Inverness, on and subject to the terms and conditions contained herein, hereby
grants to Chembio and Chembio hereby accepts a non-exclusive, royalty-bearing
license during the Term, under the Inverness Lateral Flow Patents, to
manufacture and to Exploit the HIV Cassette Products in the Rest of the World.
This license: (i) may not be sublicensed or otherwise delegated without
Inverness’ prior written consent, which consent shall not be unreasonably
withheld; (ii) includes the right for Chembio to subcontract the manufacture of
the HIV Cassette Product, subject to the provisions of Section 2.1; and (iii)
shall be deemed to include a grant to Chembio of the right and license to sell
through any Affiliate of Chembio and through Distributors of Chembio or of any
Affiliate of Chembio.
 
(a) Inverness and Chembio acknowledge that the license in this Section 2.3 is
subject to the limitation that the Charlton Lateral Flow Patents (as described
on Schedule E) are not licensed for the Over-The-Counter market; such Charlton
Lateral Flow Patents are licensed only with respect to products for sale through
any channels for use by licensed professional health-care providers (including
hospitals, physicians acting as such and licensed professional health-care
centers).
 
2.4. Patent Marking
 
. Chembio will include the patent numbers of the Inverness Lateral Flow Patents
and indicate Inverness’ and its licensors ownership of such patents on the
packaging for all HIV Cassette Products, as set forth in Section 8.4.
 
2.5. SDS Access
 
. It is understood by the Parties that SDS shall not be entitled to receive
copies of this agreement and any amendments as if and when effected.
 
2.6. Termination of Licenses Upon Challenge of Validity
 
. In all jurisdictions where such agreement is permitted by law, and to the
maximum extent so permitted: (a) Chembio agrees not to Challenge any Patent
Rights of Inverness or its Affiliates in the Inverness Lateral Flow Patents
listed on Schedule E; and (b) Inverness agrees not to Challenge any Patent
Rights in the Chembio Listed Patents. In addition to the foregoing, and whether
or not the foregoing prohibition is permissible or otherwise enforceable, in the
event that Inverness Challenges any Patent Rights in the Chembio Listed Patents,
or Chembio Challenges any Patent Rights in the Inverness Lateral Flow Patents,
the Party whose right is Challenged shall have the right, in its sole discretion
and immediately on written notice to terminate this Agreement for cause. In the
event that such termination arises: (a) due to Challenge by Inverness, Section
13.4 shall apply; (b) due to Challenge by Chembio, Section 13.5 shall apply.
Each Party shall cause its Affiliates to refrain from any Challenge that the
Party agrees not to make and the consequences of a Challenge by a Party’s
Affiliate shall be the same as a Challenge by the Party itself.
 
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3. Termination of Exclusivity in Event of Competition.
 
(a) Chembio acknowledges that Inverness may Exploit any product that competes
with the HIV Cassette Product, other than a Visual-Read HIV Test in the Barrel
Field (a “Permitted Competing Product”). Without limitation of the foregoing,
any Visual-Read HIV Test that does not fall within the Barrel Field, whether or
not Exploitation of such Visual-Read HIV Test by a Third Party would infringe
the Inverness Lateral Flow Patents, is a Permitted Competing Product. Inverness
shall give Chembio written notice of its intention to Exploit a Permitted
Competing Product. Such notice shall be given by Inverness by the later of: (i)
60 days before such Permitted Competing Product is first shipped by Inverness to
a US customer or Distributor, and (ii) the time that Inverness is first able to
give such notice without violation of applicable law, regulation, agreement, or
the rules of any securities exchange on which its securities are listed. Chembio
specifically acknowledge that nothing in this Agreement shall be construed as
limiting Inverness’ right to acquire, develop, import, sell and/or manufacture
Permitted Competing Products.
 
(b) At any time after receipt of notice from Inverness pursuant to Section 3(a),
or after First Commercial Sale of a Permitted Competing Product , Chembio may
either:
 
(i) by written Non-Exclusivity Notice to Inverness (a “Non-Exclusivity Notice”),
convert Inverness’s exclusive right to distribute the HIV Cassette Product in
the United States into a non-exclusive right, in which case the non-exclusive,
royalty-bearing license set forth in Section 2.3 shall automatically be expanded
to allow Chembio to manufacture the HIV Cassette Product for sale in the United
States, and to appoint Third Party Distributors to Exploit the HIV Cassette
Product in the United States, subject to payment of royalties as set forth in
Section 5.5; or
 
(ii) by written notice to Inverness, terminate the Cassette Agreement, such
termination to take effect 60 days after written notice of termination is given,
in which case Section 13.4 shall apply.
 
(c) Notwithstanding anything in this Section 3 to the contrary, Inverness’s
continued sales outside the United States of products for which a First
Commercial Sale has been made as of the Effective Date of this Agreement, and
improvements to such products, that compete with the HIV Cassette Products
(whether or not they constitute Visual-Read HIV Tests, are in a cassette format,
and/or are within the scope of the claims of any of the Inverness Lateral Flow
Patents) shall not trigger Inverness’s loss of exclusivity hereunder.
 
(d) For the avoidance of doubt, Inverness will have the right to acquire,
develop, import, sell and/or manufacture any competing product (whether or not a
Permitted Competing Product) without loss of its exclusivity pursuant to Section
3(b) if Chembio breaches its obligation to supply Inverness’ requirements for
HIV Cassette Products hereunder, but only for so long as any breach remains
uncured.
 
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4. Limits to Scope of Inverness Licenses
 
(a) The parties acknowledge that: (a) the HIV Products may be divided into the
“Existing Products”, meaning the HIV Cassette Product as it exists on the
Effective Date, and the “Future Products”, meaning any modifications to, or
future versions of, the HIV Cassette Product made after the Effective Date; and
(b) the Inverness Lateral Flow Patents may be divided into “Current Lateral Flow
Patents” and “Future Lateral Flow Patents”. The “Current Lateral Flow Patents”
are: (i) the patents and patent applications on Schedule F; (ii) any
continuations and divisionals of the patents and patent applications on Schedule
F; (iii) any continuations-in-part of the patents and patent applications on
Schedule F to the extent the claims thereof are directed to subject matter
specifically described in (i) and (ii) above; and (iv) any foreign counterparts
of the patents and patent applications described in (i) (ii) and (iii) above.
The “Future Lateral Flow Patents“ means any continuation-in-part of the Current
Lateral Flow Patents not described in (iii) above, and any foreign counterpart
of such continuation-in-part. All licenses granted by Inverness in this
Agreement grant licenses to the Current Lateral Flow Patents with respect to
both Existing Products and Future Products. The licenses granted by Inverness in
this Agreement grant licenses to Future Lateral Flow Patents: (a) for Existing
Products; and (b) for Future Products, but only with respect to claims in the
Future Lateral Flow Patents that are infringed by the making, using, selling or
importing of any Existing Product. Otherwise, Inverness grants no right or
license to any Future Lateral Flow Patents under this Agreement, including
without limitation any license to any Future Lateral Flow Patent except as
described in the foregoing sentence.
 
(b) The Parties acknowledge that any licenses to the Inverness Lateral Flow
Patents are subject to the limitation that the Charlton Lateral Flow Patents (as
described on Schedule F) are not licensed for the Over-The-Counter market; such
Charlton Lateral Flow Patents are licensed only with respect to products for
sale through any channels for use by licensed professional health-care providers
(including hospitals, physicians acting as such and licensed professional
health-care centers).
 
5. Royalties and Payments.
 
5.1. Exclusive Payment Arrangements
 
. This Article 5 describes the manner in which the Parties will share revenues
derived from the sale of HIV Cassette Products. Except as set forth in Section
13.4, no other fees, payments or royalties are due from any Party to any other
Party with respect to the licenses and rights set forth in this Agreement.
 
5.2. Pricing of HIV Cassette Products
 
. Subject to the limitations set forth in this Article 5, each Party that sells
any HIV Cassette Products hereunder may set the prices at which it sells such
HIV Cassette Products in its sole and absolute discretion. 
 
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5.3. Inverness Sale of HIV Cassette Products - Division of Net Sales
 
(a) The Parties shall share Net Sales of HIV Cassette Products in accordance
with the formula set forth in Schedule K.
 
(b) In the event that the Chembio Profit Share (the amount identified by (iii)
on Schedule K) is less than 15% of Costs no sale shall occur unless both parties
consent.
 
(c) Shares of Net Sales will be separately calculated and reported on a
quarterly basis, and not on an order-by-order basis.
 
5.4. Payment Mechanism for HIV Cassette Products Sold by Inverness
 
. Inverness shall pay Chembio its Costs of HIV Cassette Products in accordance
with the following procedure:
 
(a) For the six months following the Effective Date, the parties agree that the
estimated per-unit amount representing Chembio’s Costs for HIV Cassette Products
to be supplied by Chembio to Inverness (“Deemed Cost”) shall be the amount set
forth on Schedule L, and the estimated per-unit amount representing Inverness’
Net Sales for HIV Cassette Products sold by Inverness (“Deemed Price”) shall be
the amount set forth on Schedule L. For the remainder of the Term, the Deemed
Cost and Deemed Price shall be adjusted each quarter based on the actual
per-unit Cost of HIV Cassette Products, and the actual per-unit Net Sales for
HIV Cassette Products, in the latest quarter for which actual Costs and Net
Sales have been reported pursuant to Section 5.7.
 
(b) Each shipment of HIV Cassette Products by Chembio shall be accompanied by an
invoice, in a form reasonably satisfactory to Inverness, for the HIV Cassette
Products in the shipment at the then-current Deemed Cost (as hereinafter
defined). Within thirty (30) days of receipt of a duly issued invoice for HIV
Cassette Product shipped by Chembio in accordance with this Agreement, Inverness
shall pay Chembio, for such HIV Cassette Products, the Deemed Cost of such HIV
Cassette Products, and any additional amount due to Chembio pursuant to Schedule
K, based on the then-current Deemed Cost and Deemed Price.
 
(c) Any adjustments to actual Costs for overpayments or underpayments made by
Inverness shall be made pursuant to the quarterly accountings set forth in
Section 5.7. For purposes of these calculations, Cost of HIV Cassette Product
will be matched to sales on a FIFO basis.
 
5.5. Royalties Payable by Chembio on Inverness Lateral Flow Patents
 
. Chembio shall pay Inverness royalties of: (a) five percent (5%) of Net Sales
of HIV Cassette Products sold by Chembio and its Affiliates in Developing
Countries; and (b) eight and a half percent (8.5%) of Net Sales of HIV Cassette
Products sold by Chembio and its Affiliates in the Rest of the World excluding
Developing Countries. For the purposes of this paragraph, HIV Cassette Products
are “sold” in a particular region, such as a Developing Country, when a sale is
made to a Distributor that is located in such region; provided, however that
Inverness reserves the right to charge the higher royalty rate if it can
reasonably show that a Distributor located in a Developing Country is selling
HIV Cassette Products to a purchaser located in a non-Developing Country, and
Inverness shall charge the lower royalty rate if Chembio can reasonably
demonstrate that its Distributor or purchaser located in a non-Developing
Country has purchased goods for sale or distribution in a Developing Country.
 
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(a) No royalties shall be payable unless the HIV Cassette Product infringes a
Valid Claim of the Inverness Lateral Flow Patents in the country in which the
HIV Cassette Product is manufactured or the country in which the HIV Cassette
Product is sold. 
 
(b) Only one royalty shall be due Inverness for any HIV Cassette Product
regardless of the number of Valid Claims of the Inverness Later al Flow Patents
that would be infringed.
 
(c) The obligation to pay royalties on Net Sales of HIV Cassette Product shall
be imposed only once with respect to each HIV Cassette Product, even if such HIV
Cassette Product is sold more than once in the course of its transfer to the
ultimate end-user.
 
(d) The above royalties on HIV Cassette Products are not payable by Chembio with
respect to HIV Cassette Products distributed by Inverness, for which the revenue
sharing arrangements set forth in Section 5.3 are the sole and exclusive payment
arrangements between the parties.
 
5.6. Payment by Inverness for Samples
 
. Inverness shall pay Chembio 110% of the Costs associated with the manufacture
by Chembio of HIV Cassette Products that are used by Inverness for
demonstrations, testing, clinical trials, sample and compassionate or similar
use.
 
5.7. Reporting and Calculation of Payments.
 
(a) For any calendar quarter for which payments under Section 5.3 are due to
Chembio, Inverness shall deliver to Chembio, within sixty (60) days after the
end of such calendar quarter, reasonably detailed written accountings of Net
Sales of the HIV Cassette Products during such calendar quarter. Such report
shall indicate Net Sales on a country-by-country and HIV Cassette Product-by-HIV
Cassette Product basis (and not on an order-by-order basis).
 
(b) Within seventy-five (75) days of the end of each calendar quarter during the
Term, Chembio shall deliver to Inverness a complete and accurate accounting of
all Costs and a determination of the cost per unit for all HIV Cassette Products
sold to Inverness pursuant to this Agreement. The Costs reflected shall be the
basis for payments to Chembio to be made by Inverness pursuant to Schedule K.
The per-unit allocation of Costs to products sold shall be determined on a FIFO
basis. Cost so determined shall remain in effect until the next such accounting.
 
(c) Within ninety (90) days after the end of any calendar quarter for which
reports have been delivered pursuant to sub-paragraphs (a) and (b) above,
Inverness shall deliver Chembio a report showing the calculation of the amounts
due to Chembio pursuant to Schedule K, and any payments to be made hereunder.
Such payments may be payable from either Inverness or Chembio, depending on
whether Chembio has been underpaid or overpaid pursuant to the procedure set
forth in Section 5.4, and shall be made no later than seven days after delivery
of such report. With respect to Net Sales invoiced in a currency other than
United States Dollars, Net Sales and royalties payable shall be expressed in
their United States dollar equivalent, calculated using an average exchange rate
for buying United States dollars published by The Wall Street Journal during the
calendar quarter. All payments due to Chembio hereunder shall be made from the
United States in United States dollars by transfer to such bank account as
Chembio may designate.
 
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(d) For any calendar quarter for which payments are due under Section 5.5 or
Section 13.4(c) to Inverness, Chembio shall deliver Inverness, within sixty (60)
days after the end of such calendar quarter, reasonably detailed written
accountings of Net Sales of the HIV Cassette Products during such calendar
quarter. Such report shall indicate Net Sales on a country-by-country and HIV
Cassette Product-by-HIV Cassette Product basis, and the calculation of the
royalty due to Inverness, and any payments to be made hereunder. When Chembio
delivers such accountings, it shall also deliver all payments due under this
Agreement to Inverness for such calendar quarter. With respect to Net Sales
invoiced in a currency other than United States Dollars, Net Sales and royalties
payable shall be expressed in their United States dollar equivalent, calculated
using an average exchange rate for buying United States dollars published by The
Wall Street Journal during the calendar quarter. All payments due from Chembio
hereunder shall be made from the United States in United States dollars by
transfer to such bank account as Inverness may designate.
 
(e) Chembio shall keep complete and accurate records of the latest two (2) years
of Costs of HIV Cassette Products sold to Inverness hereunder. For the sole
purpose of verifying Costs to be reimbursed to Chembio, Inverness shall have the
right once per calendar year to retain an independent certified public
accountant, selected by Inverness and reasonably acceptable to Chembio, to
conduct an Audit in the location(s) where such records are maintained upon
twenty (20) days prior written notice and during regular business hours, with
all information disclosed being deemed Confidential Information hereunder. The
cost of the Audit shall be paid by Inverness. Such Audit shall be completed
within fifteen (15) business days, subject to extension by the auditor if the
auditor reasonably determines in good faith that data or information it requires
is not available and identifies the data or information required. Results of
such review shall be made available to Chembio and Inverness. Inverness shall
recalculate the payments made to the Parties and any Party overpaid shall
promptly reimburse any underpaid Party. If a recalculation of Costs is equal to
or greater than five (5%) percent of the correctly-calculated Costs, Inverness
shall be entitled to have Chembio pay the reasonable out-of-pocket costs
incurred by Inverness to retain such independent certified public accountant to
conduct such review.
 
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(f) Each Party due to make payments based on Net Sales hereunder (“Payer”) shall
keep complete and accurate records of the latest two (2) years of sales of HIV
Cassette Products to which royalties or shares of Net Sales attach hereunder.
For the sole purpose of verifying payments due to the payee Party (“Payee”),
said Payee shall have the right, once per calendar year, to retain an
independent certified public accountant, selected by said Payee and reasonably
acceptable to the Payer, to conduct an Audit in the location(s) where such
records are maintained upon twenty (20) days prior written notice and during
regular business hours, with all information disclosed being deemed Confidential
Information of the Payer. Such Audit shall be completed within fifteen (15)
business days, subject to extension by the auditor if the auditor reasonably
determines in good faith that data or information it requires is not available
and identifies the data or information required. Whichever Party requests the
Audit shall bear the costs thereof. Results of such review shall be made
available to the Payer and the relevant Payee. If the Audit reflects an
underpayment of amounts due, such underpayment shall be promptly remitted to the
appropriate Payee by the Payer. If the underpayment is equal to or greater than
five (5%) percent of the amount that was otherwise due, the Payee shall be
entitled to have the Payer pay the reasonable out-of-pocket costs incurred by
the Payee to retain such independent certified public accountant to conduct such
review.
 
(g) Whenever reports upon which payments are based are to be made by any Party,
they shall be certified as correct by the Chief Financial Officer of the Party.
In addition, to the extent required of a Party by the provisions of the
Sarbanes-Oxley Act, each of the Parties shall make available information as may
be required for proper certification in accordance with Section 404 and any
rules promulgated thereunder.
 
6. Regulatory and License Matters.
 
6.1. Facility Registration/Inspections
 
. Chembio shall, if it has not done so prior to the Effective Date, register, at
its expense, with FDA, in accordance with the Act, each establishment in which
it intends to manufacture any HIV Cassette Product and maintain, at its expense,
all such establishment registrations during the term of this Agreement. Chembio
shall permit FDA and Inverness to inspect each such establishment for purposes
of verifying Chembio’s compliance with the Act, including GMPs and QSRs, and for
purposes of verifying that all items being manufactured by Chembio for sale to
Inverness hereunder are being manufactured in accordance with the applicable
Specifications; Inverness’ participation in such inspections shall be at
Inverness’ cost. Any such inspection by Inverness shall be conducted upon
reasonable advance notice to Chembio during the normal business hours of the
facility to be inspected. Chembio acknowledges and agrees that no inspection by
Inverness pursuant to this Section 6.1 shall relieve or diminish any of
Chembio’s obligations hereunder.
 
6.2. Regulatory Filings
 
. Subject to sub-paragraph (a) immediately below, Chembio shall be responsible
for (1) obtaining and maintaining, and (2) paying for the obtaining and
maintaining of, regulatory approvals required for the lawful distribution and
sale of HIV Cassette Products in the applicable territories, including the costs
of the CLIA waiver for the HIV Cassette Product in the United States, provided
however that Inverness acknowledges that Chembio is under no obligation to
obtain approval for Over-The-Counter sales of the HIV Cassette Product in the
United States.
 
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(a) In the event that the FDA issues a regulation providing for the lawful sale
of the HIV Cassette Product for Over-The-Counter uses in the United States,
Chembio may issue Inverness a written notice requiring Inverness to decide
whether or not Inverness wishes to pursue obtaining FDA approval to sell the HIV
Cassette Product for Over-The-Counter uses in the United States, with costs for
obtaining such approval to be shared equally between Inverness and Chembio.
Inverness shall have until the last to occur of (i) 12 months after the FDA
formally promulgates the relevant regulation, and (ii) three (3) months after
such notice is given by Chembio (“Notice Response Period”), to respond to such
notice by informing Chembio whether it wishes to pursue such approval. If
Inverness fails within the Notice Response Period to notify Chembio that it
wishes to pursue Over-The-Counter approval for the HIV Cassette Product, Chembio
may pursue such approval itself, at its own cost, and may Exploit the HIV
Cassette Product in the Over-The-Counter market itself or through any Third
Party Distributor; in such event, the Over-The-Counter market shall be excluded
from the exclusive license granted by Chembio in Section 2.2, and the license
granted by Inverness in Section 2.3 shall be expanded to include the
Over-The-Counter market in the United States, subject always to payment by
Chembio of royalties as set forth in Section 5.5.
 
6.3. Bio-Rad Laboratories, Inc
 
. Inverness shall use reasonable commercial efforts to obtain and maintain
licenses for any and all intellectual property necessary from Bio-Rad
Laboratories Inc. to permit Inverness to Exploit the HIV Cassette Products in
the United States, provided any license fees or royalties payable may be
deducted from gross sales pursuant to sub-paragraph (vi) of the definition of
“Net Sales” as set forth herein. Inverness is aware of the royalties requested
by Bio-Rad Laboratories, Inc. and agrees that it will pay appropriate royalties
if a license can be obtained.
 
7. Manufacture and Sale. 
 
7.1 Chembio Efforts
 
. Chembio shall use commercially reasonable efforts to manufacture the HIV
Cassette Product and to supply all of Inverness’ requirements for such product,
in accordance with the published specifications for each such HIV Cassette
Product (the “Specifications”) and the supply requirements and limitations set
forth in this Section 7.
 
7.2  Forecasts
 
. During the Term, Inverness shall provide Chembio, on a quarterly basis, with
forecasts of Inverness’s anticipated orders for the HIV Cassette Product during
the succeeding three (3) quarters. The initial forecast shall be produced and
delivered by Inverness to Chembio by the later of 60 days after the Effective
Date or 60 days after the CLIA waiver is obtained. Chembio hereby acknowledges
and agrees that Inverness shall have the right to revise any quarterly forecast
issued pursuant to this Section at any time upon notice given to Chembio not
less than three months before the forecast delivery date for any products; any
forecasts for delivery less than three months from the forecast date shall be
binding on both parties. Inverness shall issue purchase orders and accept
delivery of not less than ninety (90%) percent of the forecast quantity. Chembio
shall not be required to timely deliver more than one hundred and twenty-five
(125%) percent of the forecast quantity, but shall deliver not less than 100% of
the quantity required by Inverness’ binding forecasts.
 
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7.3 Purchase Orders
 
. All sales and purchases of the HIV Cassette Product, if any, hereunder shall
be initiated pursuant to Inverness’s purchase order for the same placed with
Chembio. Such purchase orders shall include relevant details of the order such
as quantity, the current Costs of each HIV Cassette Product, destination,
billing and shipping information, and requested delivery date(s) (a “Purchase
Order”). Chembio shall accept Purchase Orders by written notice to Inverness
within five (5) days of receipt. In the event that Chembio cannot comply with a
delivery date requested by Inverness in any Purchase Order, Chembio may request
an alternative delivery date, which shall be not more than forty-five (45) days
after the date requested by Inverness. Any terms and conditions contained in any
Purchase Order or written acceptance of a Purchase Order, invoice or other
writing delivered by Chembio to Inverness or by Inverness to Chembio that are
inconsistent with the terms and conditions of this Agreement shall be null and
void and of no effect unless agreed to in a writing executed by an authorized
representative of Inverness and Chembio. At any time up to ten (10) days prior
to the delivery date set forth in any Purchase Order, Inverness may issue an
alteration to a Purchase Order in order to (i) change a location for delivery,
(ii) correct typographical or clerical errors, or (iii) reschedule a delivery.
In such event, Inverness shall reimburse Chembio for all reasonable resulting
costs incurred by Chembio and notified by Chembio to Inverness within seven (7)
days after alteration of the purchase order.
 
7.4 Shipment Terms
 
. HIV Cassette Product ordered by Inverness shall be shipped FOB, point of
manufacture, with the carrier and to the destination specified in the Purchase
Order.
 
7.5 Acceptance
 
. Within twenty (20) days after receipt of any HIV Cassette Products, Inverness
shall inspect and, in its discretion, test the HIV Cassette Products to
determine whether they conform in all material respects to the Specifications.
In the event an HIV Cassette Product does not so conform, Inverness may within
such twenty (20) day period (i) continue to test the HIV Cassette Product, or
(ii) return the non-conforming HIV Cassette Product and Documentation to
Chembio, at Chembio’s expense, and any amounts paid by Inverness for the HIV
Cassette Product returned shall be refunded by Chembio to Inverness. If
Inverness does not return a non-conforming HIV Cassette Product within such
twenty (20) day period, it is deemed accepted.
 
7.6 Sales Effort
 
. Inverness shall use commercially reasonable efforts to launch, promote,
develop a demand for the HIV Cassette Product, and to Exploit the HIV Cassette
Products to the markets for which regulatory approvals have been obtained in the
United States and perform such responsibilities diligently, with the objective
of maximizing the sales potential of those products and promoting the benefits
thereof in the most commercially beneficial manner.
 
7.7 Inverness Responsibilities; Rights
 
. In connection with its responsibilities for distribution, marketing and sales
of the HIV Cassette Products (as permitted in this Agreement), Inverness shall
provide all sales force (including, without limitation, sales administration and
training), order entry, customer service, reimbursement management, medical
affairs, medical information, marketing (including all advertising and
promotional expenditures), warehousing, physical distribution, invoicing, credit
and collections, production forecasting and other related facilities and
services as it deems necessary or desirable for such distribution, marketing and
sales.
 
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7.8 Marketing Plans and Budgets
 
. Inverness shall prepare proposed marketing and promotional plans for the HIV
Cassette Products (as permitted in this Agreement), which shall include plans
related to the prelaunch, launch, promotion and sales of the HIV Cassette
Products and which shall include but not be limited to pricing strategy, sales
targets, forecasts for the number of sales representatives, copies of
promotional materials and a reasonably descriptive overview of the marketing and
advertising campaigns proposed to be conducted (the "Marketing Plans").
Inverness shall review the proposed Marketing Plans with Chembio as soon as
practicable after preparation and as frequently as may be required based upon
Inverness’ usual marketing campaign cycles, but in no case less that once each
calendar year during the Term. Inverness shall consider comments from Chembio on
the Marketing Plans in good faith, but Chembio shall have no right of approval
with respect to such Marketing Plans. Inverness shall meet with Chembio at their
request but no more than on a quarterly basis to discuss sales activity and
results in each market segment.
 
8. Trademarks
 
8.1. Trademark License
 
. Chembio hereby grants Inverness, to the extent that Chembio possesses such
rights, a worldwide, royalty-free license during the Term to use the Chembio
Trademarks in connection with any advertisement and promotion of the HIV
Cassette Products authorized hereunder. All such use of the Chembio Trademarks
shall inure to the benefit of Chembio. Inverness hereby grants Chembio a
non-exclusive, non-transferable license to use the Inverness Trademarks, but
only for the purpose of labeling and packaging the HIV Cassette Products for
sale to Inverness. All such use of the Inverness Trademarks shall inure to the
benefit of Inverness. Neither party shall use or alter such marks in a manner
which may jeopardize or diminish the other party’s rights to use them, and all
notices of rights therein and all notices of any patent and/or patent pending
rights to the HIV Cassette Products shall be clearly designated in all written
materials in which such marks are used.
 
8.2. Compliance with Law; Registration
 
. Each Party, in using the other Party’s trademarks, shall use such marks and/or
names only in such manner as will comply with the provisions of applicable
trademark laws. Any and all trademark applications which are filed in any
jurisdiction for a Party’s trademarks shall be filed by that Party and that
Party shall bear all costs incurred in connection with such trademark
applications and registrations. No trademark costs incurred by Chembio shall be
included in Costs.
 
8.3. Termination
 
. The licenses granted under Section 8.1 shall terminate upon any termination of
this Agreement, and thereafter neither party shall use the other party’s trade
names, service marks, or trademarks except in connection with sale by Inverness
of HIV Cassette Products purchased prior to the termination of this Agreement.
 
8.4. Labeling
 
. Inverness shall develop, produce and provide all labeling for the HIV Cassette
Products, subject to Chembio’s approval. All materials referring or relating to
the HIV Cassette Products shall include the following in legible font:
“Manufactured by Chembio Diagnostic Systems, Inc., Medford, NY for Inverness
Medical Innovations under [patents no.s of Inverness Lateral Flow Patents] owned
or licensed by Inverness Medical Innovations, Inc.”.
 
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9. Prosecution and Enforcement of Licensed Intellectual Property.
 
9.1. Prosecution
 
. The owner or Controller of Intellectual Property Rights (the “Patent Owner”)
(for example, Inverness in the case of the Inverness Lateral Flow Patents and
Chembio in the case of the Chembio IP) shall have the sole right to prepare,
file, prosecute, obtain and maintain throughout the world, and otherwise take
all Patent Prosecution Actions with respect to its Intellectual Property Rights
as such Patent Owner shall deem to be appropriate in its discretion. Each Patent
Owner shall pay all Patent Costs incurred by it in connection with the foregoing
activities and such Patent Costs shall not be deemed Costs hereunder. If it
becomes necessary or desirable, the other Parties shall fully cooperate with the
Patent Owner, at the Patent Owner’s request and expense, in connection with all
Patent Prosecution Actions; provided that no Party shall be obligated to provide
such cooperation if, in its reasonable business judgment, such cooperation would
be adverse to its interests outside this Agreement.
 
9.2. Enforcement of Licensed Patents
 
. The Patent Owner shall have the sole right to enforce and defend any of its
Intellectual Property Rights licensed hereunder, at its own expense.
Notwithstanding the foregoing, each of the Parties shall inform the other
Parties promptly in writing of any alleged infringement, misuse or
misappropriation by any Person of any Intellectual Property Rights licensed
hereunder that affects the Exploitation of HIV Cassette Products or other
products licensed hereunder, and the Parties shall reasonably consult with each
other with respect to the strategy to resolve the alleged infringement, misuse
or misappropriation. In the event that a Patent Owner shall initiate an
infringement action or defend an action in accordance with this Section, the
other Parties shall fully cooperate and supply such assistance as reasonably
requested by the Patent Owner; provided that no Party shall be obligated to
provide such cooperation if, in its reasonable business judgment, such
cooperation would be adverse to its interests outside this Agreement.
 
10. Confidentiality.
 
10.1. Limited Disclosure and Use
 
. Each of Inverness and Chembio shall hold in confidence any Confidential
Information disclosed by any other Party or otherwise obtained by such Party
from any other as a result of this Agreement, and each of Inverness 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. 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.
 
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10.2. Exceptions
 
. The obligations set forth in Section 10.1 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 protect
Intellectual Property Rights to which such Party has a license hereunder, to
prosecute or defend litigation, to comply with applicable law or regulation, 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.
 
10.3. Use of Name; Disclosure of Terms of the Agreement
 
. Except as authorized in Section 8 hereof or otherwise required by applicable
law, regulation or the rules of any securities exchange on which such Party’s
securities are listed, no Party shall use the names of the other Parties in any
publicity or advertising without the prior written approval of the other
Parties, except that any Party may disclose that they have entered into this
Agreement. Except as may be required by applicable law, regulation or the rules
of any securities exchange on which such Party’s securities are listed, no Party
shall disclose any terms or conditions of this Agreement without the prior
written consent of the other Parties, 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 15.11), 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.
 
10.4. Effect of Termination
 
. Each Party shall, upon termination of this Agreement, immediately discontinue
use of the other’s Confidential Information. Within a reasonable time after
termination of this Agreement, but in no event later than thirty (30) days
thereafter, all materials containing such Confidential Information shall be
returned by the receiving Party or (with the disclosing Party’s prior written
consent) destroyed, provided, however, that each Party may retain copies of
Confidential Information in which the Party has a licensed interest that
survives termination (e.g., as provided in Section 13.4 through 13.6).
 
10.5. Survival
 
. The confidentiality obligations set forth in this Section 10 shall survive any
termination or expiration of this Agreement in perpetuity .
 
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11. Representations; Warranties.
 
11.1. Corporate Power
 
. Each Party represents to the other Parties 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.
 
11.2. No Default or Violation
 
. Each Party represents and warrants to the other Parties 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) 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.
 
11.3. Licensed Intellectual Property
 
. Each Party licensing any Intellectual Property Rights (a “Licensor”) to any
other Party hereunder (a “Licensee”) represents and warrants to each such
Licensee that: (a) it has the full right, title and authority to grant to
Licensee the licenses granted hereunder; and (b) to the best of the Licensor’s
knowledge and except as otherwise disclosed to the Licensee, all such licensed
Patent Rights existing as of the Effective Date are valid and enforceable, and
all patents, if any, issuing on any of the pending patent applications of the
Patent Rights existing of the Effective Date will be valid and enforceable.
 
11.4. Regulatory Matters
 
. Chembio represents and warrants to Inverness that, at the time when HIV
Cassette Products are delivered, it will have obtained regulatory approval under
the Act which is required to permit Chembio to manufacture the HIV Cassette
Products and sell the HIV Cassette Products to qualified customers in the United
States professional market for use by such customers in accordance with and
subject to the limitations contained within the information contained within
Schedule D hereof and information related to the HIV Cassette Products that is
listed by the FDA. Chembio represents and warrants that, with respect to the
manufacture of the HIV Cassette Products, Chembio will comply with the
requirements of the Act, and to the best of its knowledge, all other applicable
federal and state laws.
 
11.5. Product Quality
 
. Chembio represents and warrants that:
 
(a) Each unit of HIV Cassette Product sold to Inverness hereunder shall be
manufactured in accordance with and shall comply, at the time of delivery to
Inverness, in all material respects with the applicable Specifications therefor,
shall perform as intended in all material respects, and shall otherwise be free
from defects in material and workmanship; and each unit of HIV Cassette Product
sold to Inverness hereunder will not, at the time of delivery, be adulterated or
misbranded within the meaning of the Act or within the meaning of any
jurisdiction in which the definitions of misbranding and adulteration are
substantially the same as in the Act, nor will any such unit of HIV Cassette
Product, at the time of delivery to Inverness, be an article which may not,
under the Act, be introduced into interstate commerce. 
 
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(b) In the event any unit(s) of HIV Cassette Product does not conform with a
warranty set forth in Section 11.5(a) applicable thereto, Inverness or an
Affiliate of Inverness may return such unit(s) of HIV Cassette Product within
twenty (20 days of its receipt to Chembio and, in the event Inverness or an
Affiliate of Inverness does so, Chembio, within thirty (30) days of its receipt
of the return, shall either; (a) refund or credit Inverness’s account in an
amount equal to the purchase price paid by Inverness for such unit(s) of
non-conforming HIV Cassette Product, as the case may be, plus freight and
insurance charges incurred by Inverness and/or its Affiliate incident to the
original and return shipment, as documented by Inverness, or (b) replace,
without charge, the non-conforming unit(s) of HIV Cassette Product, as the case
may be, with an equivalent number of like unit(s) HIV Cassette Product, as the
case may be, conforming with the applicable warranties set forth in Section
11.5(a) and refund or credit Inverness’s account in an amount equal to said
original and return freight and insurance charges incurred as documented by
Inverness. The cost of returned units and freight and insurance charges
hereunder shall not be included in Costs.
 
11.6. Exclusion of Other Representations and Warranties
 
. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NO 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. NO PARTY WARRANTS THAT THE OTHER PARTIES WILL
RECEIVE ANY PARTICULAR AMOUNT, OR ANY, REVENUES OR PROFITS AS A RESULT OF
ENTERING INTO THE BUSINESS ARRANGEMENTS DESCRIBED IN THIS AGREEMENT.
 
12. Indemnification
 
12.1. By Manufacturer
 
. Each Party that manufactures, either directly or through a contract
manufacturer, any HIV Cassette Product hereunder (a “Manufacturer”) hereby
agrees to indemnify, defend (using counsel selected by the Manufacturer which is
reasonably acceptable to the other Party) and hold harmless the other Party, its
Affiliates and their respective Distributors and customers, from and against any
and all liabilities, losses, (exclusive of lost profits) damages, costs and
expenses (including, without limitation, reasonable attorneys’ fees, court
costs, and out-of pocket expenses) suffered or incurred which arise or result
from: (i) the material breach of any warranty or representation of the
Manufacturer contained in this Agreement; (ii) any third party claim of personal
injury (including death) or property damage arising in connection with any HIV
Cassette Product manufactured by or for the Manufacturer; (iii) any material
failure by the Manufacturer to perform any of the covenants, agreements or
obligations of the Manufacturer contained in this Agreement; or (iv) any third
party claim alleging that the manufacture, use, sale, offer for sale, import or
export of the HIV Cassette Products manufactured by or for the Manufacturer
infringes the proprietary rights of the third party claimant.
 
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12.2.  By Sellers
 
. Each seller of any HIV Cassette Product hereunder (a “Seller”) hereby agrees
to indemnify, defend (using counsel selected by the Seller which is reasonably
acceptable to the other Party) and hold harmless the other Party from and
against any and all liabilities, losses (exclusive of lost profits), damages,
costs, and expenses (including, without limitation, reasonable attorneys’ fees,
court costs, and out-of pocket expenses) suffered or incurred by the other Party
which arise or result from: (i) the material breach of any warranty or any
representation of the Seller contained in this Agreement; (ii) any material
failure by the Seller to perform any of its covenants, agreements, or
obligations contained in this Agreement; or (iii) the promotion and sale by the
Seller or any Affiliate or Distributor of the Seller of any HIV Cassette
Product, except to the extent covered by the Manufacturer’s defense and
indemnification obligations under Section 12.1.
 
12.3.  Notice of Claims
 
. Within thirty (30) days after a Person seeking indemnification hereunder
(hereinafter the “Indemnified Party”) has received notice of or has acquired
knowledge of any claim by any Person not a Party to this Agreement of the
commencement or threatened commencement of any action or proceeding by any
Person not a Party to this Agreement (“third party claim”) or has acquired
knowledge of any other claim hereunder against another Party hereto (“first
party claim”) the Indemnified Party shall, if such claim is indemnifiable by the
other Party pursuant hereto (hereinafter the “Indemnifying Party”), give the
Indemnifying Party written notice of such claim and the commencement or
threatened commencement of such action or proceeding, if any. Such notice shall
state the nature and basis of such claim, and, if ascertainable, the amount
thereof. Notwithstanding the foregoing, the failure of the Indemnified Party to
give such notice shall not excuse the Indemnifying Party’s obligation to
indemnify and, in the case of a third party claim, defend the Indemnified Party,
except to the extent the Indemnifying Party has suffered damage or prejudice by
reason of the Indemnified Party’s failure to give or delay in giving such
notice. Within ten (10) business days of receipt of any notice issued by the
Indemnified Party pursuant to this Section 12.3, the Indemnifying Party shall
notify the Indemnified Party whether the Indemnifying Party acknowledges its
indemnification obligation and, in the case of a third party claim, its defense
obligation with respect to the claim which was the subject of the Indemnified
Party’s notice or whether it disclaims such obligations. In the event the
Indemnifying Party disclaims or fails to timely acknowledge its obligations with
respect to any claim by the Indemnified Party relating to any third party claim,
the Indemnified Party shall have the right to defend such claim, with counsel of
its own selection, and compromise such claim without prejudice to its right to
indemnification hereunder. In the event the Indemnifying Party timely
acknowledges its obligations hereunder with respect to any third party claim,
the Indemnifying Party shall defend the same with counsel in accordance with
this Section. Where the Indemnifying Party shall have acknowledged in writing
its obligations hereunder with respect to any third party claim, the Indemnified
Party may, at its expense, participate in the defense of such third party claim
and no such third party claim shall be settled by the Indemnified Party without
the prior written consent of the Indemnifying Party which consent shall not be
unreasonably withheld or delayed. At any time after the Indemnifying Party
acknowledges its obligations hereunder with respect to any third party claim,
the Indemnifying Party may request the Indemnified Party to agree in writing to
the payment or compromise of such third party claim (provided such payment or
compromise has been previously approved in writing by the third party claimant),
and, in the event the Indemnifying Party does so, the Indemnified Party shall
promptly agree in writing to such settlement, unless such settlement would
involve a remedy or remedies, other than the payment of money damages by the
Indemnifying Party, to which the Indemnified Party reasonably objects.
 
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12.4. Disputes
 
. In the event any party to this Agreement makes a claim against another Party
under this Section 12 or in any way relating to or arising under this Agreement
and further in the event the Party receiving notice of such claim fails to
timely acknowledge its obligations hereunder with respect to such claim or
disclaims such obligations, the relevant Parties, within forty (40) days of the
date of issuance of notice by the Party making such claim, shall meet and
attempt to resolve in good faith the dispute between or among the Parties with
respect to such claim. If the Parties fail to resolve such dispute within
seventy-five (75) days of the date of issuance of notice by the Party making
such claim, the Party making such claim may thereafter commence to arbitrate the
claim in accordance with the provisions set forth in Section 15.8. Upon
resolution of any claim referred to in this Section 12, whether by agreement
between the Parties to this Agreement or the rendering of a final arbitration
award, the appropriate Party under such agreement or the Party against which the
arbitration award is rendered shall, within ten (10) days of such resolution,
pay over and deliver to the other Party funds in the amount of any claim as
resolved.
 
13. Term and Termination.
 
13.1. Term of Agreement
 
. Unless otherwise terminated as expressly provided herein or with respect to
any perpetual licenses granted herein, with respect to each HIV Cassette
Product, the licenses granted and appointments made hereunder shall commence on
the Effective Date and continue until May 31, 2016 (the “Term”).
 
13.2. Material Breach
 
. If a Party:
 
(a) materially breaches this Agreement in a manner which cannot be cured;
 
(b) materially breaches this Agreement in a manner that can be cured and a Party
has failed to take steps to begin to cure within ninety (90) days following
written notice of breach by the Party or Parties affected by the breach or is
not diligently pursuing a cure thereafter; or
 
(c) 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 a substantial part of the Party’s assets,
and such petition, assignment or appointment, if involuntary, is not dismissed
or vacated within ninety (90) days (each an “Insolvency Event”),
 
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then, on each such occasion, the non-breaching Party shall have the right to
exercise one or more of the following remedies: (x) upon written notice by the
non-breaching Party to the breaching Party within thirty (30) days of the end of
the applicable cure period (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), the non-breaching Party shall have the right to
seek monetary damages for such material breach within the limitations set forth
in Section 14 hereof and/or equitable relief to prevent such material breach
from continuing or occurring again in the future; and, at its option, the
non-breaching Party shall have the right to terminate the rights of the
breaching Party licensed hereunder upon written notice to breaching Party.
Notwithstanding the foregoing, the obligations of the breaching Party, including
the licenses granted and appointments made hereunder to the non-breaching
Parties shall continue unless the non-breaching Party agrees that such licenses
and appointments shall terminate. Notwithstanding the foregoing, if Chembio
shall be enjoined from supplying HIV Cassette Products to Inverness because of a
lawsuit regarding Intellectual Property Rights of a Third Party, or Inverness
shall be enjoined from selling HIV Cassette Products because of a lawsuit
regarding Intellectual Property Rights of a Third Party, and such injunction
shall in either case cause a material breach of this Agreement, the
non-breaching Party shall not have the right to seek monetary damages for such
material breach. Whenever a breach occurs and such breach can be cured in a
timely manner, the non-breaching Party shall cooperate with the Party in breach
and take reasonable steps (at the cost of the breaching Party) to allow the
breaching Party to cure the breach.
 
13.3. Section 365(n); Agreement to Deliver Embodiments
 
. 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 Title 11,
U.S. Code (the “Bankruptcy Code”), licenses of rights to “intellectual property”
as defined in the Bankruptcy Code. The Parties agree that the licensee of such
rights shall retain and may fully exercise all of its rights and elections under
the Bankruptcy Code. Chembio agrees during the term of this Agreement to create
and maintain current copies or, if not amenable to copying, detailed
descriptions or other appropriate embodiments, of all intellectual property and
Technology used in the manufacture of the HIV Cassette Products (“Escrow
Materials”). Chembio hereby grants to Inverness, with effect from the Effective
Date, a non-exclusive, royalty-free, perpetual license under the Chembio IP to
use the Escrow Materials to Exploit the HIV Products, and, if Chembio fails to
supply HIV Products to Inverness as required by this Agreement, to manufacture
and have manufactured the HIV Products; provided however that Inverness shall
not exercise such license unless Chembio suffers an Insolvency Event. In the
event that Inverness obtains the right to manufacture the HIV Cassette Products
in accordance with this Agreement, Inverness shall be entitled to copies of all
Escrow Materials. All rights, powers and remedies of the Inverness provided
under this Section 13.3 are in addition to and not in substitution for any and
all other rights, powers and remedies now or hereafter existing at law or in
equity in the event of any such commencement of a bankruptcy proceeding by or
against the Chembio. 
 
13.4.  Effect of Termination for Breach by Inverness
 
. Upon any termination made in accordance with Section 3(b)(ii) by Chembio for
sale of a Permitted Competing Product, or in accordance with Section 13.2(a) or
13.2(b) by Chembio for breach by Inverness:
 
(a) The license grants contained in Section 2.2, and the non-compete obligations
in Section 3, shall terminate;
 
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(b) Inverness may sell any inventory of HIV Cassette Products in its possession
at the effective date of termination, but shall have no further right to Exploit
the HIV Cassette Products; and
 
(c) on and subject to the limitations set forth in this Agreement, Chembio shall
have a perpetual, irrevocable, non-transferable, non-exclusive, license, without
right to sub-license, under the Inverness Lateral Flow Patents to Exploit the
HIV Cassette Product in the United States itself or through Third parties, at a
royalty of 8.5% of Net Sales in the United States, subject to the royalty
payment limitations set forth in 5.5(a), 5.5(b) and 5.5(c).
 
13.5.  Effect of Termination for Breach by Chembio
 
. Upon any termination made in accordance with Section 13.2(a) or 13.2(b) by
Inverness for breach by Chembio:
 
(a) The license grant contained in Sections 2.2 shall automatically be expanded
to permit Inverness to manufacture or have manufactured the HIV Cassette
Product, and such licenses shall continue after termination and shall be
perpetual and irrevocable, subject to payment of royalties of five percent (5%)
of Net Sales in Developing Countries, and eight and a half percent (8.5%) of Net
Sales in the Rest of the World excluding Developing Countries; and
 
(b) Chembio shall, at the written request of Inverness and at no cost to
Inverness, provide copies of all technical information, including all Technology
in the Chembio IP, reasonably necessary for Inverness to manufacture, have
manufactured and Exploit the HIV Cassette Products.
 
13.6. 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 5.7, 9, 10, 11.5(b), 12,
13.3, 13.4, 13.5, 13.6, 14 and 15  shall survive and shall continue in full
force and effect in accordance with their respective terms.
 
14. Limitation of Liability.
 
14.1. Exclusion of Liability for Certain Damages
 
. EXCEPT FOR BREACHES OF ITS CONFIDENTIALITY OBLIGATIONS HEREUNDER AND FOR
VIOLATIONS OF ANOTHER 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 THE 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. THIS SECTION 14
SHALL NOT BE CONSTRUED TO LIMIT ANY PARTY’S INDEMNIFICATION OBLIGATIONS UNDER
SECTION 12 HEREOF.
 
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14.2. Limitation on Liability for Direct Damages
 
. EXCEPT FOR BREACHES OF ITS CONFIDENTIALITY OBLIGATIONS HEREUNDER AND FOR
VIOLATIONS OF ANOTHER PARTY’S INTELLECTUAL PROPERTY RIGHTS, FOR DAMAGES CAUSED
BY A PARTY’S GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT, OR FOR ANY PARTY’S
INDEMNIFICATION OBLIGATIONS UNDER SECTION 12 HEREOF, EACH PARTY’S MAXIMUM
AGGREGATE LIABILITY TO THE OTHER PARTY SHALL IN NO EVENT EXCEED THE AMOUNT OF $1
MILLION, WHETHER SUCH DAMAGES ARISE IN CONTRACT, TORT (INCLUDING NEGLIGENCE),
STRICT LIABILITY OR OTHERWISE.
 
15. General.
 
15.1. 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
any 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 any 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.
 
15.2. Entire Agreement
 
. This Agreement, the Schedules hereto and the Related Documents constitute the
entire agreement among the Parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings, whether written or
oral, among the Parties, or any of the Parties, in connection with such subject
matter.
 
15.3. 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.
 
15.4. Relationship of the Parties
 
. This Agreement shall not constitute any Party the agent or legal
representative of any other Party for any purpose whatsoever, and no Party shall
hold itself out as an agent of any other Party. This Agreement creates no
relationship of joint venturers, partners, associates, employment or principal
and agent between or among the Parties, and each of the Parties is acting as an
independent contractor. No 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 any other Party. No Party shall have any authority to bind any
other Party to any contract, whether of employment or otherwise, and each Party
shall bear all of their 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.
 
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15.5. 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.
 
15.6. 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:
 
(a) 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
 
(b) if to Inverness, to:
 
Inverness Medical Innovations, Inc.
51 Sawyer Road,
Waltham MA 02454
Attention: General Counsel’s office
Telecopier: (781) 314 4073

or at such other address for a Party as shall be specified by like notice.
 
15.7. 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. 
 
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15.8. Dispute Resolution
 
. In the event of any dispute or disagreement between or among any of 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
any Party, shall be referred to mediation and arbitration in accordance with the
procedures set forth in Schedule  H to this Agreement.
 
15.9. 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.
 
15.10. 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 each of the Parties and delivered to the
other Parties, it being understood that all Parties need not sign the same
counterpart. Facsimile execution and delivery of this Agreement by any of the
Parties shall be legal, valid and binding execution and delivery of such
document for all purposes.
 
15.11. Assignment
 
. This Agreement is personal to each of the Parties, and no Party shall assign
any of its rights or delegate any of its obligations hereunder, including
without limitation by operation of law, Change of Control or otherwise, without
the prior written consent of the other Party, which consent shall not be
unreasonably withheld or delayed, provided, however, that without the consent of
Chembio, Inverness 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 Inverness to which this Agreement relates, or to any Affiliate
of such Party, if the assignee shall assume Inverness’ 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, Inverness or its corporate parent to, or the merger or consolidation of
Inverness or its corporate parent with or into, any other Person. In this
paragraph, “Change of Control” means any sale of the equity securities of a
Party following which the equity holders of such Party immediately prior to such
sale own, directly or indirectly, less than 50% of the combined voting power of
the outstanding voting securities of such Party, other than in a transaction
involving a sale of equity securities for the purpose of raising capital to a
group of financial investors in which not less than 50% of such equity
securities are purchased by a recognized venture capital or private equity fund
or funds and where the management of the selling Party before the financing is
substantially the same as the management of such Party after the financing.
 
15.12. Force Majeure
 
. No 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 ability of the Party affected thereby to
foresee and avoid, and without such party’s fault or negligence (“Force
Majeure”), provided that any Party claiming the existence of Force Majeure shall
give notice to the other parties not more than seven (7) days after the
commencement of the event of Force Majeure, and shall use prompt and diligent
efforts to mitigate the effects of Force Majeure. In the event that any event of
Force Majeure prevents performance for sixty (60) days or more, any other party
may terminate this Agreement on written notice to all parties.
 
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15.13. Further Assurances
 
. Each Party hereto will, upon the request of the other Party and without
further consideration, execute and deliver such other instruments, and take such
other actions, as such other Party may reasonably request, and at the other
Party’s expense, to more effectively and efficiently carry out the covenants,
licenses and agreements of the Parties set forth in this Agreement and
consummate the transactions contemplated by this Agreement. Without limitation
of the foregoing, each exclusive licensee of rights granted hereunder shall have
the right, at its sole cost and expense, to register, record and otherwise
document such exclusive license in any country where there are any pending or
issued Patent Rights. Such licensee may require that the other Party execute a
“short form” license in order to effect the foregoing registration, recordal or
other documentation in any such country, and may record such short form license,
but no short form license shall in any way alter or otherwise affect the rights
and obligations of the Parties hereunder.
 
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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: 
 
Inverness Medical Innovations, Inc.
 
By: 
Title: 
 
[Signature page to HIV Cassette License, Marketing and Distribution Agreement]
 

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