TERMINATION OF DISTRIBUTION AND LICENSING AGREEMENT
THIS TERMINATION AGREEMENT, made and entered into as of the 1st day of
October, 2002, by and among KAMAR, INC., a Colorado corporation, KAMAR PRODUCTS
LLC, a Colorado limited liability company ("KAMAR LLC") together with any other
subsidiaries or other affiliates of KAMAR, Inc. (collectively, "Kamar"),
IMMUCELL CORPORATION, a Delaware corporation ("ImmuCell"), and KAMAR MARKETING
GROUP, INC., a Colorado corporation and a wholly-owned subsidiary of ImmuCell
("KMG"). ImmuCell and KMG are sometimes hereinafter referred to collectively as
"ImmuCell/KMG."
WITNESSETH:
WHEREAS, Kamar, ImmuCell and KMG are parties to a certain Distribution
and Licensing Agreement dated as of December 3, 1993, as amended by Amendment
No. 1 to Distribution and Licensing Agreement dated as of July 1, 1998 and as
further amended by Amendment No. 2 to Distribution and Licensing Agreement dated
as of September 28, 2000 (the "Agreement"); and
WHEREAS, Kamar, ImmuCell and KMG desire to terminate the Agreement
provided certain terms and provisions are met by each party;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agrees as follows:
1. The Agreement is terminated as of 11:59 P.M. on September 30, 2002
2. The following paragraphs survive the termination of the Agreement
and are enforceable in accordance with this Termination of Distribution and
Licensing Agreement:
1.09 - "Marketing of Similar Products": the first sentence survives as
amended July 1, 1998, provided that Kamar shall fulfill its
obligations under this Termination of Distribution and
Licensing Agreement, and the second sentence is terminated.
2.06 - "Sharing of Risk of Uncollectible Accounts", as amended
September 28, 2000
3.01 - "Maintenance of Records" with a change reducing the period that
Kamar is required to maintain such records from three (3) years
after the period to which the records relate to six (6) months
after Kamar meets its obligations under this Termination of
Distribution and Licensing Agreement
3.02 - "Special Audit" with a change limiting the time period during
which either party may request such a Special Audit to no later
than six (6) months after Kamar meets its obligations under
this Termination of Distribution and Licensing Agreement
3.07 - "Repurchase of Inventory by Kamar upon Termination or
Expiration of Agreement", as amended September 28, 2000
3.09 - "Binding Arbitration"
4.01 - "Notices" with a change in Kamar's address to: Kamar, Inc.,
1821 Kamar Plaza #3, Steamboat Springs, CO 80487
4.03 - "Termination of Prior Agreements"
4.02 - "Assignment"
4.05 - "Modification of Agreement"
4.07 - "Governing Law"
3. Kamar shall pay ImmuCell $200,000.00 on October 1, 2002.
4. Kamar shall pay ImmuCell an additional $730,000 on or before
Thursday, October 31, 2002.
5. The payment due to ImmuCell will be secured by a first security
interest in the Kamar(R) Heamount(R) Detector product and all associated
trademarks and rights. In connection therewith, the parties will enter into a
Trademark Security Agreement in the form of Exhibit A. In addition, in the event
of a default by Kamar of its obligations under this Termination of Distribution
and Licensing Agreement that is not cured within thirty (30) days of written
notice from ImmuCell, Kamar, KAMAR LLC and their respective affiliates shall
agree not to compete in the heat detection business for a period of three years
from the date of default. Kamar and KAMAR LLC agree that any breach of this
agreement not to compete by Kamar and KAMAR LLC or their respective affiliates
would cause ImmuCell substantial and irrevocable damage and therefore, in the
event of such breach, Kamar and KAMAR LLC agree that ImmuCell, in addition to
such other remedies which may be available, shall be entitled to specific
performance and other injunctive relief.
6. All accounts receivable recorded for sales made on or before
September 30, 2002 shall be owned by ImmuCell. Kamar shall collect the cash
receipts associated with these accounts and make a daily deposit of any and all
amounts received into ImmuCell's bank account in the same manner that has been
performed during the term of the Agreement until all cash is received. The
standard accounts receivable listing prepared by Kamar will be used to evidence
this amount and such listing shall be attached to this Termination of
Distribution and Licensing Agreement as Exhibit B as soon after October 1, 2002
as possible. In accordance with Paragraph 2.06 of the Agreement, ImmuCell and
Kamar confirm their existing agreement to share 50/50 in any uncollectible
accounts.
7. In accordance with Paragraph 3.07 of the Agreement as amended
September 28, 2000, for all product ordered on or prior to September 30, 2002,
Kamar represents that it will make every effort possible in good faith to ship
such ordered product on or before September 30, 2002, unless the customer
specifically requests that shipment not be made until after September 30, 2002.
With respect to orders received on or before September 30, 2002 for which the
customer does not specifically request shipment after September 30, 2002, Kamar
shall process such orders on behalf of ImmuCell in accordance with the terms of
the Agreement.
8. In accordance with Paragraph 3.07 of the Agreement, the inventory on
hand and paid for by ImmuCell as of September 30, 2002 will be acquired by Kamar
at cost less an allowance of $3,750 for obsolete items. The value of the
inventory shall be determined by physical observation performed by Kamar with
ImmuCell having the right to independently verify the value. Additionally, the
June 30, 2002 physical balance shall be rolled forward to September 30, 2002 by
adding all purchases and deducting all sales made during the three month period
ended September 30, 2002. If the roll forward balance differs from the amount
determined by the physical observation performed by Kamar by more than 2%, both
parties shall work together diligently in good faith to reconcile the
difference. The resulting amount due from Kamar to ImmuCell shall be net against
the royalties due from ImmuCell to Kamar for the month of September and for the
quarter ended September 30, 2002 and shall be paid or settled on or before
October 15, 2002.
9. For the period from October 1, 2002 until December 31, 2004,
ImmuCell and Kamar agree to cost share 50/50 on certain trade show related
marketing expenses. Applicable costs shall include costs to reserve space at and
transport the demonstration booth round trip from Portland to such shows.
Applicable shows shall include the approximately four to five major shows per
year commonly attended by both parties. ImmuCell will warehouse the booth in
Portland at no charge in between shows. Both parties are responsible for
providing their own full time sales and marketing personnel at such trade shows.
This agreement is made solely for the benefit to both parties of cost sharing of
fees and freight and implies no obligation of either party to market the other
party's product. Additionally, Kamar agrees that it currently owes ImmuCell
$3,351 for its share of certain prepayments made by ImmuCell under this
agreement. This amount due from Kamar to ImmuCell shall be net against the
royalties due from ImmuCell to Kamar for the month of September and for the
quarter ended September 30, 2002 and shall be paid or settled on or before
October 15, 2002. Going forward, ImmuCell will invoice Kamar for cost sharing
expenses when applicable down payments or invoices are paid, and Kamar shall
reimburse ImmuCell promptly. Additionally, Kamar will give serious consideration
to buying the portion of the trade show booth that it does not currently own
from ImmuCell for $4,000 after the last trade show in 2004, and at that time the
booth would be shipped to a domestic location determined by Kamar at Kamar's
cost.
10. ImmuCell warrants that it has met its financial obligation under
Paragraph 1.04(b), as amended September 28, 2000, of the Agreement for the
periods ending September 30, 2002. Kamar agrees that ImmuCell has satisfied such
obligation. Kamar shall assume all future obligations to market the product
including but not limited to the December 2002 advertisement placement in
Hoard's Magazine.
11. ImmuCell affirms its agreement in accordance with Paragraph 3.07 of
the Agreement, as amended September 28, 2000, that it will cease use of the name
"Kamar Marketing Group" upon the termination of the Agreement, except (i) as
needed to collect the accounts receivable outstanding as of September 30, 2002
or (ii) as provided in the Trademark Security Agreement. On or before December
31, 2002, assuming that Kamar meets its obligations under this Termination of
Distribution and Licensing Agreement, ImmuCell will make the necessary filings
with the State of Colorado to dissolve its subsidiary, the Kamar Marketing
Group, Inc. and simultaneously assign all rights in the name to Kamar, to the
extent practicable and permitted by law.
12. ImmuCell and Kamar agree that a final judgement on any arbitration
award under this Termination of Distribution and Licensing Agreement may be
entered by any court having jurisdiction thereof.
13. This Termination of Distribution and Licensing Agreement and the
Trademark Security Agreement contain the entire agreement among the parties
regarding the subject matter hereof and may not be modified in any manner except
by an instrument in writing signed by the party sought to be charged.
14. Kamar, KAMAR LLC and ImmuCell agree that this Termination of
Distribution and Licensing Agreement is final and, with the exception of the
terms and conditions of this Termination of Distribution and Licensing
Agreement, the parties mutually release each other from any obligations, claims
etc.
15. This Termination of Distribution and Licensing Agreement is entered
into as of the date first written above, and is intended to become effective on
October 1, 2002. Except as specifically provided herein, all of the terms and
conditions of the Agreement shall be terminated.
IN WITNESS WHEREOF, the parties have executed this Termination of
Distribution and Licensing Agreement as of the day and year first written above.
KAMAR, INC. IMMUCELL CORPORATION
By: /s/ Carl E. Vail By: /s/ Michael F. Brigham
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Carl E. Vail, President Michael F. Brigham, President
and CEO
KAMAR PRODUCTS, LLC KAMAR MARKETING GROUP, INC.
By: /s/ Stafford C. Walker By: /s/ Michael F. Brigham
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Stafford C. Walker, President Michael F. Brigham, President
and CEO