CONTRIBUTION AND ROYALTY AGREEMENT

(a) Contributor does hereby irrevocably contribute, transfer, assign and convey to Corporation, its successors and assigns, free and clear of any Encumbrances, to have and hold forever, all of Contributor's right, title and interest in and good and marketable title to the Contributed Assets.

 

(b) Corporation hereby accepts the contribution, transfer, assignment and conveyance to it of the Contributed Assets. Corporation agrees that the Contributed Assets shall be a contribution to the capital of Corporation by Contributor.

 

(c) On or prior to the Effective Date, Contributor shall deliver to Corporation all tangible embodiments of the Contributed Assets.

(d) Contributor shall execute and cause to be delivered to the Corporation such instruments and other documents, and shall take such other actions, as the Corporation may reasonably request for the purpose of carrying out or evidencing any of the transactions contemplated by this Agreement, including instruments of transfer and conveyance for recordation with the United States Patent Office ("USPTO") to evidence the transfer of the Patent to the Corporation, in the form attached hereto as Exhibit A. Contributor is signing such Patent Assignment contemporaneously with the execution of this Agreement, to be delivered to the USPTO on or after the Closing Date. If the Closing Date does not occur within six (6) months following the Effective Date, then Contributor shall have the right, exercisable within ten (10) days thereafter by written notice to the Corporation, to rescind the transactions contemplated by this Agreement, and thereafter the Corporation shall convey, transfer and assign the Contributed Assets to Contributor, free and clear of any Encumbrances, and Contributor shall convey, transfer and assign to the Corporation of all of Contributor's right, title, and interest in and to the Stock, which the Corporation shall be entitled to cancel on its books and records upon receipt of the rescission notice.

 

(e) Contributor shall not itself, nor shall it directly or indirectly assist or permit any Third Party to, Practice in any respect the Debrider Device or any device or product competitive therewith or any Intellectual Property Rights described or disclosed in the Patent or represented thereby.

 

(f) The Corporation shall own all right, title and interest in and to all Improvements, Improvement Patents and Intellectual Property Rights therein developed by Contributor (whether in whole or in part) including without limitation: all preliminary designs and drafts, all other writings and works of authorship, all copies of such works in whatever medium such copies are fixed or embodied, all inventions, all derivative works and patentable and unpatentable inventions and improvements, all programs and processes, program modifications, ideas or creations, devices, techniques, and all worldwide copyrights, trademarks, patents or other intellectual property rights in and to such works. Corporation shall own and may seek to obtain Improvement Patents in its own name. In the event any right, title or interest in and to any of the Improvements, Improvement Patents or Intellectual Property Rights therein does not vest automatically in and with the Corporation, Contributor agrees to and hereby does irrevocably assign, convey, and otherwise transfer to the Corporation, and the Corporation's respective successors and assigns, all such right, title and interest therein and thereto with no requirement of further consideration from or action by Contributor or the Corporation. The Corporation shall have the exclusive worldwide right to register, in all cases as "claimant" and when applicable as "author", all copyrights in and to any copyrightable element of the Improvements, Improvement Patents or Intellectual Property Rights therein, and file any and all applicable renewals and extensions of such copyright registrations. The Corporation shall also have the exclusive worldwide right to file applications for and obtain (i) patents on and for any of the Improvements, Improvement Patents or Intellectual Property Rights therein in Contributor's name or otherwise and (ii) assignments for the transfer of the ownership of any such patents to the Corporation.

3.              Equity Issuance. In consideration for the contribution of the Contributed Assets under Section 2 of this Agreement and the payment of all sums due under the Subscription Agreement between Contributor and the Corporation, Corporation shall issue to Contributor Seven Hundred Seventy-Five Thousand (775,000) shares of Corporation's Common Stock (the "Stock") subject to the terms of the Common Stock Term Sheet dated on or about January 18, 2013 and the conditions set forth therein, including the execution by Contributor of all agreements contemplated thereby.

 

4. Royalty.

 

(a) The Corporation shall, as additional consideration for the assignment of the Contributed Assets to the Corporation, pay to Contributor a royalty in the amount of 1% of Revenue actually received by the Corporation during the Royalty Period from sales of the Debrider Device ("Royalty"). In the event the Corporation grants to any Third Party the right to Practice the Debrider Device, such Third Party shall be obligated to pay the Royalty to Contributor in accordance with the terms hereof, on all Revenue received by such Third Party from sales of the Debrider Device during the Royalty Period. Notwithstanding anything herein to the contrary, Corporation shall pay only one Royalty, and Contributor shall not receive double or multiple Royalties from the sale of the same Debrider Device.

 

(b) The Royalty is earned when the Revenue derived from the sale of a Debrider Device is paid to the Corporation. The Royalty shall be payable within thirty (30) days after the end of each calendar Quarter during the Royalty Period based on Revenues received by the Corporation during the preceding Quarter. The Royalties shall be payable by check or by wire transfer at Corporation's option.

 

(c) Notwithstanding anything to the contrary herein, the Royalty shall be offset and reduced, dollar for dollar, by the amount of any expenses incurred and royalties or license fees paid by the Corporation to any third party in connection with or in order to obtain the right to Practice the Debrider Device or the Intellectual Property Rights described or disclosed in the Patent.

 

5. Audits.

 

(a) Corporation shall generate and maintain in an accurate, complete, and organized manner all such records (the "Records") as are reasonably necessary to substantiate the Corporation's compliance with the terms and conditions of this Agreement regarding the determination and payment of the Royalty pursuant to Article 4 (the "Purpose"). Such Records shall be retained by Corporation for a period of not less than five (5) years after the last day of the Quarter to which they pertain.

 

(b) During the Royalty Period and for a period of not less than one (1) year after the last day of the Royalty Period, Corporation shall make all of the Records available for inspection and audit by Contributor or its authorized representatives for the Purpose (each, an "Audit") on not less than ten (10) business days' prior written notice to Corporation. In this regard, Contributor and its authorized representatives shall be permitted reasonable access to Corporation's accounting offices during normal business hours and such Records as are reasonably necessary for the Purpose.

(c) Contributor may not conduct an Audit more than twice during each twelve (12) month period after the Effective Date unless such Audit reveals errors, omissions, and/or non-compliance by Corporation with its obligations to pay to Contributor any portion of the Royalty to which Contributor is entitled under Article 4, or with regard to any prior period greater than eight consecutive Quarters. The period audited shall be referred to herein as the "Audited Period."

 

(d) Contributor shall bear the cost of each Audit in the first instance unless as a result of such Audit it is determined that there is a deficiency of five percent (5%) or more in the total amount of the Royalty paid by Corporation for the Audited Period, in which case Corporation shall be obligated to reimburse Contributor for its reasonable costs and expenses actually incurred in connection with such Audit.

(e) Corporation shall be obligated to pay to Contributor, within thirty (30) days after its receipt of written notice demanding the same with supporting details, any deficiency found to exist in the payment of the Royalty pursuant to Article 4 and, if applicable pursuant to Section 5(d), the costs of the Audit pursuant to the presentation of an invoice therefor.

 

6.Representations and Warranties of Contributor. Contributor represents and

warrants to Corporation as follows:

 

(a) This Agreement constitutes the valid and legally binding obligation of Contributor, enforceable against Contributor in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or others laws of general application relating to or affecting the enforcement of creditors' rights generally and (ii) the effect of rules of law governing the availability of equitable remedies.

 

(b) The execution, delivery of, and performance of the obligations of Contributor under this Agreement does not (i) violate or conflict with, or cause a default under any agreement, instrument, order or decree to which Contributor is a party or by which Contributor is bound, and (ii) violate any statute, regulation, rule or other law.

 

(c) Contributor owns and has good and marketable title to each item of the Contributed Assets, free and clear of any Encumbrances, and has the capacity and authority and unrestricted right to transfer such assets to the Corporation as provided herein.

 

7.Representations and Warranties of Corporation. Corporation represents and

 

warrants to Contributor as follows:

 

(a) Corporation is a corporation, duly organized, validly existing and in good standing under the laws of the State of Florida, and has all requisite corporate power and authority to own its properties and assets and to carry on its business as now conducted and as presently proposed to be conducted.

 

(b) The execution, delivery of, and the performance of the obligations of Corporation under this Agreement has been authorized by all necessary corporation action prior to the date hereof and this Agreement constitutes the valid and legally binding obligation of Corporation, enforceable against Corporation in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or others laws of general application relating to or affecting the enforcement of creditors' rights generally and (ii) the effect of rules of law governing the availability of equitable remedies.

 

(c) The execution, delivery of, and performance of the obligations of

Corporation under this Agreement does not (i) violate or conflict with, or cause a default under any agreement, instrument, order or decree to which Corporation is a party or by which Corporation is bound, and (ii) violate any statute, regulation, rule or other law.

 

8. Indemnification.

 

(a) Contributor agrees to indemnify and hold harmless Corporation, and its employees, officers and directors from and against all claims, damages, losses, liabilities, costs and expenses, including, without limitation, reasonable attorneys' fees that relate to or arise out of any breach by Contributor of its representations, warranties or covenants in this Agreement.

 

(b) Corporation agrees to indemnify and hold harmless Contributor from and against all claims, damages, losses, liabilities, costs and expenses, including, without limitation, reasonable attorneys' fees that relate to or arise out of any breach by Corporation of its representations, warranties or covenants in this Agreement.

 9.Taxes Cooperation. Contributor and Corporation shall cooperate with each other in good faith with respect to tax audits, investigations, litigation and other tax proceedings and tax matters, including, without limitation, the preparation and filing of tax returns and tax workpapers.

 

 

(a) Neither party may assign its rights or delegate its duties under this Agreement either in whole or in part without the prior written consent of the other party, except that either party may assign all of its rights and delegate all of its duties under this Agreement, without such consent, to: (i) the surviving entity in a merger, acquisition, consolidation or other such combination; or (ii) to an entity that acquires all or substantially all of the assigning party's assets. Any attempted assignment or delegation without such consent will be void.

 

(b) If any action is necessary to enforce the terms of this Agreement, the substantially prevailing party will be entitled to reasonable attorneys' fees, costs and expenses in addition to any other relief to which such prevailing party may be entitled.

 

(c) This Agreement will be governed by and construed in accordance with the laws of the state of Florida excluding that body of law pertaining to conflict of laws. If any provision of this Agreement is for any reason found to be unenforceable, the remainder of this Agreement will continue in full force and effect.

(d) All notices, consents, waivers, requests, instructions, or other communications required or permitted hereunder shall be in writing or by written electronic transmission, and shall be deemed to have been duly given if (i) delivered personally (effective upon delivery), (ii) sent by a reputable, established international courier service that guarantees delivery within three (3) business days (effective upon receipt), (iii) mailed by certified mail, return receipt requested, postage prepaid (effective upon receipt), or (iv) sent by e-mail with confirmation of receipt (effective upon receipt), addressed as follows (or to such other address as the recipient may have furnished to the other Party for such purpose and pursuant to this Section 10(d)):

(e) This Agreement, together with its exhibits, constitutes the complete and exclusive understanding and agreement of the parties and supersedes all prior understandings and agreements, whether written or oral, with respect to the subject matter hereof. All representations and warranties set forth herein shall survive the termination of this Agreement indefinitely. Any waiver, modification or amendment of any provision of this Agreement will be effective only if in writing and signed by the parties hereto.

 

1. Assignor does hereby sell, assign and transfer unto Assignee the full, exclusive and entire right, title and interest: (i) in and to all inventions and improvements disclosed and described in the Patent listed on the attached Annex A (hereinafter the "Patent"); (ii) in and to said Patent; (iii) in and to all divisional, continuation, and continuation-in-part applications describing in whole or in part the said inventions and improvements, preparatory to obtaining patents of the United States therefor; (iv) in and to all patents of the United States which may be granted on the Patent and all reissues and extensions thereof; (v) in and to any provisional patent applications filed in the United States describing in whole or in part the said inventions and improvements, from which priority has been or may be claimed under Title 35 of the United States Code to said Patent; (vi) in and to the right to claim any applicable foreign and domestic priority rights arising from the Patent and/or from any of the further afore-mentioned patent applications; and (vii) in and to any causes of action for infringement of any of the foregoing and the right to sue for and collect for past infringement of such patents. Assignor does hereby request the Commissioner of Patents to issue any and all patents of the United States resulting from any of the foregoing to Assignee, for its interest and for the sole use and benefit of Assignee and its assigns and legal representatives;

 

Assignor, by these presents does sell, assign and transfer to Assignee the full, exclusive and entire right, title and interest in and to any and all applications for industrial property protection, including without limitation, all applications for patents, utility models, inventors' certificates and designs, (the "Foreign Applications") filed or which are hereafter filed in countries foreign to the United States and describing in whole or in part the aforesaid inventions and improvements, in and to any patents and similar protective rights granted on said Foreign Applications, and in and to the right to file such applications and the right to claim any applicable priority rights arising from or required for said Foreign Applications under the terms of any applicable conventions, treaties, statutes, or regulations; said Foreign Applications to be filed and issued in the name of Assignee or its respective designees, insofar as permitted by applicable law;

 

Assignor agrees to communicate to Assignee, its successors, legal representatives and assigns, any facts known to Assignor respecting said invention, sign all lawful papers, execute all divisional, continuation, continuation-in-part, reissue and other applications, make all assignments and rightful oaths, and generally do everything possible to aid Assignee, its successors, assigns, and nominees, to obtain and enforce proper protection for all said inventions and improvements in all countries throughout the world.

 

2. Assignor hereby authorizes and requests the Commissioner of Patents and Trademarks of the United States, and any Official of any country foreign to the United States whose duty it is to issue patents on applications as aforesaid, to record this assignment, and to issue all Letters Patents for the Patent to Assignee, its successors, legal representatives and assigns, in accordance with the terms of this assignment.

 

3. Assignor hereby represents and warrants that Assignor has full right to convey the entire interest herein assigned without conflict with the rights of others, and that Assignor has not executed, and will not execute, any agreement, assignment, sale or encumbrance in conflict herewith.

 

4. Assignor hereby further covenants and agrees that Assignor will communicate to Assignee, its successors, legal representatives and assigns, any facts and documents known to Assignor respecting the Patent, and will testify in any legal proceeding, sign all lawful papers, execute all divisional, continuing and reissue applications, make all rightful oaths and generally do everything possible to aid Assignee, its successors, legal representatives and assigns, to obtain and enforce proper patent protection for the Patent in all countries provided that any costs reasonably incurred by Assignor in fulfilling its obligations under this paragraph shall be fully reimbursed by Assignee.

 

5. The Assignee shall be responsible for all costs and actions for transfer of the Patent and registration of patent assignments. The Assignor agrees that it will at any time, upon request of the Assignee, execute and deliver any papers prepared and provided by the Assignee that are reasonably necessary to confirm the assignment made herein.

 

6. This Assignment shall inure to the benefit of the Parties and their respective successors and permitted assigns. This Assignment may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. The exchange of copies of this Assignment and of executed signature pages by facsimile transmission or by email transmission in portable document format (PDF), or similar format, shall constitute effective execution and delivery of such instrument(s) as to the Parties and may be used in lieu of the original Assignment for all purposes.