LICENSE AGREEMENT
This Agreement is made effective the 17th day of September, 1996, by
and between Membrex, Inc. (hereinafter called "Membrex"), a corporation
organized and existing under the laws of Delaware, and Clearwater Diagnostics
Company LLC(hereinafter called "CDC"), a limited liability company organized
under the laws of Delaware, together hereinafter called the Parties.
WHEREAS, Membrex has developed certain technology as described in the
"LICENSED TECHNOLOGY" section herein, and Membrex is willing to grant a license
on the LICENSED TECHNOLOGY to CDC;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, the parties covenant and agree as follows:
Section 1: Definitions
1.1 "LICENSED TECHNOLOGY" shall refer to and mean non-flat membrane
plate Vortex Flow Filtration systems and membrane filters used in such systems
to concentrate substances from water samples. Such LICENSED TECHNOLOGY also
shall refer to and include (i) United States Patents: 4,876,013, 4,790,942,
and any additional related patents in the U.S. owned or licensed by Membrex,
(ii) all foreign equivalents thereof.
1.2. "Field of Use" shall mean only the detection of infectious
disease agents such as Cryptosporidium parvum in water sources including ground
water, surface water, drinking water, bottled water, sanitary waste water,
cooling towers and water and waste water in non-food and non-beverage
industrial manufacturing and processing segments. The Field of Use
specifically excludes food and beverage applications, including the testing of
any components thereof in food and beverage manufacturing plants or the testing
of fluids used in the manufacture or processing of such products. Detection of
non-infectious disease agents , including but not limited to, chemicals,
carcinogenic agents, metals, and other contaminants are specifically excluded
from the Field of Use and from this License Agreement.
1.3 "Products" as used herein shall refer to and mean Vortex Flow
Filtration devices.
1..4 "Disposables" as used herein shall refer to and mean Membrane
Filter Cartridges.
1.5 "Membranes" as used herein shall refer to and mean membrane
filters used in the "Disposables"
1.6 "Direct Cost" shall mean direct manufacturing costs
including materials, labor, QA and QC costs, and manufacturing overheads.
1.7 "LLC Agreement" shall mean that certain Limited Liability
Company Agreement between Membrex and ImmuCell Corporation dated
September 17, 1996.
Section 2: Grant
2.1 License: Membrex hereby grants to CDC an exclusive worldwide
royalty free license to make, use, distribute, lease and sell Products,
Disposables, spare parts and services based on the Products and Disposables,
within the scope of LICENSED TECHNOLOGY in the Field of Use but in no other
field of use. Membrex also grants to CDC an exclusive worldwide license to
use, distribute, lease and sell the Membranes within the scope of the LICENSED
TECHNOLOGY in the Field of Use but in no other field of use.
2.2 Sub-licenses. CDC may grant sub-licenses of the LICENSED
TECHNOLOGY in the Field of Use to third parties. Any agreement granting a sub-
license shall require that the sub-license be subject to the terms and
termination of this License Agreement and the LLC Agreement. CDC's sub-
licenses to third parties do not carry any rights to further sub-license the
LICENSED TECHNOLOGY. CDC shall have the same responsibility for the activities
of any sub-licensee as if the activities were directly those of CDC.
2.3 License Fee. CDC agrees to pay a license fee of $100 within
seven days after the date this Agreement is fully executed by both parties.
2.4 Neither CDC nor any Sub-licensee shall obtain rights of any
kind in the LICENSED TECHNOLOGY other than the rights specifically set forth
herein.
Section 3: Supply Of Product And Disposables
3.1 Membrex shall sell to CDC and CDC shall buy from Membrex all of
CDC's order requirements for Membranes for incorporation into its kits,
devices, reagents, parts and services at Membrex's Direct Cost. All sales to
CDC by Membrex are FOB Membrex plant and any shipping cost, insurance, taxes
and other fees are the responsibility of CDC. Membrex may sell to CDC and
CDC may buy from Membrex the order requirements for Product and Disposables for
incorporation into CDC's kits, devices, reagents, parts and services at prices
as may be agreed by the Parties. If CDC elects to buy the order requirements
for Product and Disposables from an outside third party, then CDC will
reimburse Membrex for the direct cost of its production molds.
3.2 CDC shall sell to sub-licensee such Products, Disposables and
Membranes as may be required by the sub-licensee for use in the Field of Use
and buy such Products, Disposables and Membranes from Membrex in accordance
with the terms and conditions contained herein. CDC may alternatively sub-
license the rights to manufacture Products and Disposables, for use in the
Field of Use, but not Membrex Membranes, except as provided in Section 14.
3.3 Forecasts and Orders by CDC: On or before November 15, 1996 and
on or before November 15 of each year thereafter throughout the term of the
Agreement, CDC will provide a written Blanket Purchase Order ('PO') for the
Product and Disposables for the next calendar year. In addition, CDC will
provide a monthly rolling forecast of its requirements for the Product and
Disposables for the next succeeding three month period with the first month of
such forecast representing a firm shipment call-off from the Blanket PO. CDC
will provide such monthly rolling forecast on the first day of the three month
period that it covers.
Upon notification by Membrex of the date of the commencement of Year 1,
CDC will provide its Blanket PO for the balance of the calendar year 1996 and
an initial three month rolling forecast. This forecast will be provided within
one month of notification of the commencement of Year 1 or three months prior
to the commencement of Year 1, whichever is later.
Membrex will not be in default of this Agreement pursuant to Sections 2
and 6 hereof if it fails to meet increased order requirements of the Product by
CDC which exceed ten percent (10%) of the original forecast for any given month
in the three month window of the CDC forecast. Membrex will not be in default
during the first six (6) months of Year one (1) provided it supplies
against firm CDC orders the quantity of Product and Disposables ordered by CDC
or at least 100 units, whichever is less. Membrex will not be in default of
this Agreement pursuant to Sections 2 and 6 hereof if it fails to meet
increased firm orders for the Product and Disposables by CDC for any month that
exceeds one hundred and twenty five percent (125%) of one twelfth (1/12) of the
annual CDC Blanket forecast. Notwithstanding the foregoing, Membrex will make
its best faith efforts to supply sufficient Product and Disposables to meet
CDC's Blanket PO and subsequent monthly Blanket PO call-off's. Membrex will
not be in default of this Agreement if it cannot meet CDC order requirements
based on the timing and/or delays in completing the necessary molds for
the Product and Disposables. Membrex will make a good faith effort to complete
such molds in a timely fashion.
Membrex shall deliver those quantities of the Product and/or
Disposables to CDC ordered by CDC pursuant to a firm PO release no later than
sixty (60) days after the date that CDC issues the firm release, FOB Membrex,
together with an invoice for the Product(s) and/or Disposables. CDC shall pay
such invoice for the Product(s) and/or Disposables within thirty (30) days
after receipt by CDC of quantities of the Product and/or Disposables ordered by
CDC. Notwithstanding the foregoing, in the event CDC notifies Membrex within
ten (10) days of receipt of the Product and/or Disposable of their non-
conformity to the final written specifications for the Product, to be agreed
upon by the Parties, CDC shall be entitled to return such non-conforming goods
to Membrex, and CDC shall not be required to pay any invoices for such non-
conforming goods.
In the event that Membrex makes purchasing commitments to its suppliers
based on CDC Blanket PO's for volume delivery of components as a means of
achieving lower component prices for the Product and / or Disposables and CDC
falls short of purchasing the number of units
of the Product and / or Disposables in the Blanket PO by CDC and Membrex is
unable to satisfy such purchasing commitments to its suppliers for volume
delivery of components and incurs higher component costs as a direct result of
CDC's failure to meet its Blanket PO as noted above, CDC shall pay the Direct
Cost associated with the higher components cost.
Section 4: Direct Cost Auditing
Membrex shall keep written records of Direct Costs for reasonable
periods of time but in no case for a period longer than two (2) fiscal years.
A maximum of two (2) audits per year can be scheduled by CDC's duly authorized
independent auditor acceptable to Membrex. Such records shall be available for
inspection during all reasonable business hours and are subject to the
Confidentiality Agreements signed by Membrex and CDC.
Section 5: Certain Warranties of Membrex
5.1 Membrex warrants that it has no knowledge that would prevent it
from granting the License contemplated by this Agreement. However, nothing in
this Agreement shall be construed as: (i) a warranty or representation by
Membrex as to the validity, enforceability or scope of any LICENSED TECHNOLOGY
or as to its effectiveness or as to any results or advantage to be achieved by
its use, (ii) a warranty or representation that anything made, used, sold or
otherwise disposed of or otherwise commercialized under this Agreement or the
License granted in this Agreement will or will not infringe patents or other
rights of any kind of third parties, (iii) an obligation to bring or prosecute
actions or suits against third parties for infringement of LICENSED TECHNOLOGY,
and (iv) an obligation to obtain, maintain, assert, or defend any intellectual
property rights. Notwithstanding the foregoing, CDC agrees to assist Membrex,
at no cost to itself, including agreeing to be named as a party plaintiff in
any legal action, in the event that Membrex decides to pursue third party
infringers of the Licensed Patents.
5.2 MEMBREX MAKES NO REPRESENTATIONS, EXTENDS NO WARRANTIES
OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND ASSUMES NO RESPONSIBILITIES
WHATSOEVER WITH RESPECT TO USE, SALE, OR OTHER DISPOSITION BY CDC, ITS
SUBLICENSEES OR ITS VENDEES OR OTHER TRANSFEREES OF PRODUCTS, DISPOSABLES OR
MEMBRANES INCORPORATING OR MADE BY USE OF LICENSED TECHNOLOGY UNDER THIS
AGREEMENT.
5.3 Nothing contained in this Agreement shall be construed to convey
to CDC any ownership rights, proprietary interest or other rights or interest
of any kind, except for the non-transferable License and right to use the
LICENSED TECHNOLOGY in the manufacture, distribution, sale and lease of
Products, Disposables and Membranes which is expressly granted by this
Agreement. CDC covenants and agrees that it shall not at any time during the
term of this Agreement challenge or contest the ownership of the LICENSED
TECHNOLOGY, or trademark or tradename used by Membrex ('TRADEMARKS'), including
the trademark and tradename "Membrex." CDC shall not challenge the validity
or enforceability of any of the Patents and/or TRADEMARKS associated with this
License, nor do anything that in any way tarnishes them or otherwise impairs
their value.
Section 6: Term And Termination
6.1 The term of this License shall begin on the effective date of
this Agreement and continue until the earlier of (i) twenty five (25) years
from the effective date of this Agreement or (ii) the date on which CDC is
dissolved, (iii) the inability to obtain sufficient financing within one
(1) year from the effective date of this Agreement to operate CDC's business
for at least eighteen (18) months, or (iv) a petition for bankruptcy is filed
by or against CDC or (v) liquidation or other State proceedings are instituted
by or against CDC.
6.2 CDC may terminate this Agreement at any time by giving at least
thirty (30) days' written notice of such termination to Membrex. In the event
that CDC terminates this Agreement, CDC shall reimburse Membrex for the cost of
any Products, Disposables and spare parts purchased or ordered by Membrex to
meet CDC's Blanket PO's or forecast requirements. In the event that
CDC terminates this Agreement, CDC shall agree to buy any molds used in the
manufacture of Product or Disposables that Membrex chooses to sell for a price
not to exceed their current book value.
6.3 If CDC at any time defaults in the timely payment of any monies
due to Membrex or commits any breach of any other covenant herein contained, and
fails to remedy such breach within ninety (90) days after written notice thereof
by Membrex, Membrex may, at its option, terminate this Agreement by giving
written notice of termination to CDC.
6.4 Upon the termination of this Agreement, CDC shall remain
obligated to pay any outstanding monies owed for Product and Disposables sold
by Membrex to CDC and the following sections shall survive termination or
expiration of this Agreement: Sections 5, 8, 9, 10, 12, 15, and 16.
6.5 Upon the termination of this Agreement, all rights to LICENSED
TECHNOLOGY will revert to Membrex, the license to CDC and any sub-licensees
shall immediately cease, and Membrex shall have no further obligations to sell
product to CDC or any sub-licensee nor shall CDC have any further rights to
grant sub-licenses, manufacture or have manufactured the LICENSED TECHNOLOGY.
Upon the occurrence of any of the events in this Section 6, Membrex shall have
the right to withdraw from CDC and have returned its Capital Account and
Capital Contribution as defined in the LLC Agreement.
Section 7: Assignability
This Agreement may not be transferred or assigned by CDC except with
the prior written consent of Membrex.
Section 8: Patents
8.1 The PATENTS and all new patent applications to be submitted, new
patents to be granted and technology relating to the Product, Disposables
and/or Membranes shall be owned exclusively by Membrex except as provided
herein. Improvements, if patentable, will be owned as provided herein. The
Parties will share the use of any such Improvements to the Product. During
the term of this Agreement, the Parties hereby grant to each other a royalty-
free cross license with respect to the Improvements. With respect to
Improvements that are the result of joint efforts of CDC and Membrex, both
parties shall have the right to use such jointly developed Improvements
in perpetuity, subject to the provisions herein.
Notwithstanding the foregoing provision, the parties hereby
acknowledge and agree that any and all Improvements to the Product made during
the term of this Agreement and for three (3) years thereafter, that can only
reasonably be used with the Product shall be the sole and exclusive property of
Membrex, and all Improvements that can also be used in connection with products
in addition to the Product shall be the sole and exclusive property of the
respective inventing party or parties.
8.2. New Technology: Membrex and CDC may cooperate in the
development of new technology (i.e., not an Improvement to the Product). The
parties shall negotiate in good faith with respect to the funding of the
development of any such new technology. New patentable technology which arises
from such a cooperation will be owned jointly by the Parties and for their
exclusive use, subject to any mutual written consent to the contrary.
Section 9: Confidentiality
CDC and Membrex acknowledge that during the course of this Agreement,
it may be necessary for either party to disclose its confidential, proprietary
information to the other party. Membrex and ImmuCell have previously entered
into Secrecy Agreements dated October 18th, 1994 and October 24, 1994
(hereinafter the "Secrecy Agreement"). The terms of the Secrecy Agreement
are hereby incorporated herein and made binding to CDC as if CDC were a party
to such Secrecy Agreement. CDC and Membrex agree to extend that Secrecy
Agreement effective through December 31, 2001. Notwithstanding the provisions
of that Secrecy Agreement, each party shall have the obligation to identify all
PROPRIETARY INFORMATION (defined as "Information" in the Secrecy Agreement)
that it has disclosed to the other party to date. For PROPRIETARY INFORMATION
disclosed after the date of execution of this Agreement, the parties shall have
the obligation to designate that information that is PROPRIETARY INFORMATION
under the Secrecy Agreement. If PROPRIETARY INFORMATION is disclosed orally,
the disclosing party shall have the obligation to identify the information as
PROPRIETARY INFORMATION at the time of disclosure and confirm that such
information is PROPRIETARY INFORMATION within thirty (30) days after such oral
disclosure.
Section 10: Severability
In the event that any one or more provisions of this Agreement shall be
declared to be illegal or unenforceable under the law, rule or regulation of
any government having jurisdiction over the parties hereto, such illegality or
unenforceability shall not affect the validity or enforceability of the
other provisions hereof, and the parties hereto shall agree upon the
modification of this Agreement with respect to such illegal or unenforceable
provisions to eliminate such illegality or unenforceability.
Section 11: Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same instrument.
Section 12: Product Liability; Conduct of Business
12.1 CDC shall, at all times during the term of this Agreement and
thereafter, indemnify, defend and hold Membrex harmless against all claims and
expenses, including legal expenses, and reasonable attorneys fees, arising out
of the death of or injury to any person or persons or out of any damage to
property and against any other claim, proceeding, demand, expense and liability
of any kind whatsoever (other than patent infringement claims) resulting from
the production, manufacture, sale, use, lease, distribution, consumption or
advertisement of Products, Disposables, Membranes, Test Kits, Reagents, or
Services arising from any right or obligation of CDC or any sub-licensee
hereunder.
12.2 CDC warrants that it now maintains and will continue to maintain
liability insurance coverage appropriate to the risk involved in engaging in
the activities contemplated by this Agreement, including marketing the products
subject to this Agreement, and that such insurance coverage lists and will
continue to list Membrex as additional insured. Upon request, CDC will
present evidence to Membrex that the coverage is being maintained. In
addition, CDC shall provide Membrex with at least 30 days prior written notice
of any change in or cancellation of the insurance coverage.
Section 13: Use of Names
13.1 CDC and its sub-licensee(s) shall not use Membrex's name in
sales promotion, advertising, or any other form of publicity or in any other
way without the prior written approval of Membrex except in CDC and sub-
licensee internal corporate documents or to indicate that CDC is a licensee of
Membrex. In no event shall CDC's or any sub-licensee's use of Membrex's name
suggest any sponsorship by, approval of, or association with Membrex other than
as a licensee. Membrex agrees that CDC can sell the Product under its own
trade mark and/or trade name. CDC also agrees that labels for its Product will
also display the appropriate Membrex patent numbers and the Membrex trademark
as mutually agreed between the parties.
The Products, Disposables and Membranes which are manufactured,
distributed and sold by CDC in accordance with this Agreement and the LLC
Agreement shall contain such patent and trademark marking(s) as Membrex, in its
sole discretion, may determine, by written notice to CDC, are reasonable
necessary or desirable. The Products, Disposables and Membranes which are
manufactured by or for CDC and which bear, are sold under, incorporate, or
otherwise utilize any TRADEMARKS or licensed patents of Membrex shall be of
substantially the same quality as are presently being manufactured by Membrex.
The parties acknowledge that Membrex will have sufficient
control over and right to inspect the particular Products and Disposables which
will be manufactured by or for and/or sold by CDC hereunder to permit Membrex
to assure itself of the quality of the goods and that proper patent and
trademark markings are being applied. CDC shall submit for inspection and
approval by Membrex a representative sample of each type of Product and/or
Disposable which CDC desires to manufacture, have manufactured, sell or lease
and unless Membrex informs CDC of its disapproval in writing within ten (10)
business days after the receipt by Membrex of such sample, Membrex will be
deemed to have consented. Once Membrex has consented with respect to a type
of Product or Disposable, CDC shall not in any way alter the design of or
patent or trademark markings on that Product or Disposable without Membrex's
further consent.
Section 14: Force Majeure
Neither party shall be liable for damages due to delay or failure to
perform any obligation under this Agreement (other than payment of money) if
such delay or failure results directly or indirectly from circumstances beyond
the reasonable control of such party. Such circumstances shall include but
shall not be limited to acts of God, acts of war, civil commotions, riots,
strikes, lockouts or other labor disturbances, accident, fire, water damage,
flood or other natural catastrophe. Any party affected by a condition of Force
Majeure shall use reasonable efforts to remedy such conditions to enable itself
to resume performance, except that no party shall be obligated to settle a
strike, lockout or other labor disturbance on terms other than at its complete
discretion.
Notwithstanding the foregoing, in the event that Membrex fails to
perform any of its obligations under this Agreement for any of the reasons set
forth in this Section, Membrex
shall immediately notify CDC in writing of Membrex's failure to perform. After
such immediate written notification or after notification by CDC to Membrex,
whichever is sooner, Membrex shall be entitled to one hundred and eighty (180)
days to cure its failure to perform. In the event that Membrex has not cured
its failure to perform in this one hundred and eighty (180) day period, CDC
shall then be entitled to exercise its rights pursuant to Section 3. CDC may
also begin to manufacture Membranes for use in the Product and Disposables only
if Membrex fails to cure any non-performance to supply Membranes within 180
days when such non-performance begins. In the event that Membrex is again able
to supply Membrane, CDC will immediately stop manufacturing Membrane and again
purchase Membrane from Membrex.
Section 15: Miscellaneous
This Agreement shall be construed in accordance with the laws of the
State of Delaware. If any provisions of this Agreement are or shall come into
conflict with the laws or regulations of any jurisdiction or any governmental
entity having jurisdiction over the parties or this Agreement, those provisions
shall be deemed automatically deleted, if such deletion is allowed by relevant
law, and the remaining terms and conditions of this Agreement shall remain in
full force and effect. If such a deletion is not so allowed or if such a
deletion leaves terms clearly illogical or inappropriate in effect, the parties
agree to substitute new terms similar in effect to the present terms of this
Agreement as may be allowed under the applicable laws and regulations.
Section 16: Notices
Any notices required to be given pursuant to the provisions of this
Agreement shall be in writing and shall be deemed to have been given at the
earlier of the time when actually received as a consequence of any effective
method of delivery, including but not limited to hand delivery, transmission by
telefax, or delivery by a professional courier service or the time when sent by
certified or registered mail addressed to the party for whom intended at the
address below or at such changed address as the party shall have specified by
written notice, provided that any notice of change of address shall be
effective only upon actual receipt.
(a) Clearwater Diagnostics Company, LLC
Attention: Manager Attention: President
56 Evergreen Drive and 155 Route 46 West
Portland, Maine 04103 Fairfield, NJ 07004
(b) Membrex Inc.
155 Route 46 West
Fairfield, NJ 07004
Section 17: Arbitration
In the event a dispute, claim or controversy shall arise between the
Parties with respect to any provision of this Agreement, or the interpretation
of performance hereof or thereof, and such is declared by written notice from
one party to the other, the Parties agree to negotiate in good faith
toward resolution of the dispute. If such dispute cannot be resolved within a
period of thirty (30) days after such notice is given, either party may submit
the dispute to arbitration. Such dispute shall be settled by arbitration under
the laws of the State of Delaware, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA"). In
rendering its decision, the arbitration tribunal shall apply the substantive
laws of the State of Delaware and interpret this Agreement in accordance with
its terms. The determination of the arbitration tribunal shall be conclusive
and binding upon the Parties hereto. The dispute will be decided by a panel of
three arbitrators to be appointed as provided in Section 13 of the AAA
Commercial Arbitration Rules.
The award of the arbitration tribunal may be, alternatively or
cumulatively, for monetary damages, an order requiring the performance of non-
monetary obligations (including specific performance) or any other appropriate
order or remedy. The arbitrators may issue interim awards and order any
provisions or measures which should be taken to preserve the respective right
of either party. The decision of the arbitrators may be enforced in any
tribunal of competent jurisdiction.
Each party shall bear its own costs and expenses of the arbitration,
and the Parties shall share equally the cost of the arbitrators; provided that
any party instituting a claim or providing a defense under this Section which
the tribunal shall declare to be frivolous shall pay all costs and expenses,
including attorney's fees and costs, incurred in connection with such
arbitration.
The arbitration procedure herein shall be the exclusive remedy
available to the Parties hereunder to resolve any dispute, claim or controversy
arising hereunder.
Section 18: Integration.
This Agreement constitutes the full understanding between the parties
with reference to the subject matter hereof, and no statements or agreements by
or between the parties, whether orally or in writing, except as provided for
elsewhere herein, made prior to or at the signing hereof, shall vary or modify
the written terms of this Agreement. Neither party shall claim any amendment,
modification, or release from any provisions of the Agreement by mutual
agreement, acknowledgment, or otherwise, unless such mutual agreement is in
writing, signed by the other party and specifically states that it is an
amendment to this Agreement.
IN WITNESS THEREOF, the parties hereto have duly executed this Agreement on the
dates indicated below.
Clearwater Diagnostics Company, LLC
By: /s/: Malcolm R. Kahn, /s/: Thomas C. Hatch , its Managers.
Date: 9/17/96 :
Membrex Corporation
By: /s/: Malcolm R. Kahn, its President.
Date: 9/17/96 :