AGREEMENT
THIS AGREEMENT amends and restates herein that Agreement effective the 24th day
of April, 1996, as amended, and is effective as of that 24th day of April, 1996,
by and between Consortium Service Management Group, Inc., a Texas corporation
with offices located at 701 CCNB North Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter "CSMG"), and The L Group, Inc., a Kentucky corporation, with
offices located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "L
Group").
RECITALS:
1. CSMG has expended great effort and money seeking and locating technology and
market opportunities in Ukraine; and
2. CSMG has identified technology it deems viable and has secured an agreement
with the developer of the technology, ▇.▇. ▇▇▇▇▇ Electric Welding Institute of
Kiev, Ukraine ("▇▇▇▇▇"), and International Association Welding of Kiev, Ukraine
("IAW") to test, patent, market, manufacture, distribute and license the "Tissue
Bonding Technology", as defined in paragraph 2(d) ; and
3. ▇▇▇▇▇ and IAW have agreed to assign to CSMG 0 existing and future patent
rights Wanted to ▇▇▇▇▇ and/or IAW, individually, jointly, or with any third
party, with regard to the Tissue Bonding Technology; and
4. CSMG needs funding to meet its obligations under that agreement with ▇▇▇▇▇
and IAW; and
5. The L Group has agreed to provide that needed funding in consideration for
the exclusive right to test, patent, market, manufacture, distribute and license
the Tissue Bonding technology in the Territory, as defined in paragraph 7 below.
NOW THEREFORE, CSMG and L Group deem it to be in their mutual best interests to
enter into this Agreement on the terms and conditions set out below.
Agreement
1. -PURPOSE.
CSMG and L Group agree to enter into this Agreement for the purpose of funding
the obligations of CSMG to ▇▇▇▇▇ and IAW as set forth in that document entitled,
"Exclusive Rights, Disclosure and Non-Circumvent Agreement" dated October 25,
1995, and all subsequent amendments and modifications thereto (attached hereto
as Exhibit A and made part hereof by this reference) and as set forth in that
document entitled "CONTRACT on the realization of the "TISSUE BONDING project",
dated July 9, 1996, and a subsequent amendments and modifications thereto
(attached hereto as Exhibit B and made part hereof by this reference) for
securing the rights set forth *in that document for the benefit of CSMG and L
Group, as set forth below.
2. DEFINITION.
(a) Scientists. All inventors of the Tissue Bonding Technology, as identified on
the Assignment, attached hereto as Exhibit C.
(b) Tissue - Bonding. ▇▇▇▇▇ and IAW have developed equipment and a process that
bonds soft biological tissue. The process of Tissue Bonding employs an
appliance, equipment, and a miniature surgical tool to perform an all-purpose,
seamless bonding of soft biological tissue. The method is characterized by use
of the specialized equipment and manipulation applicable to different surgical
operations and results in a secure bond and rapid restoration
Exhibit 10.2
Page 1 of 8 Pages
of tissue without the formation of coarse scars, It is represented by CSMG to be
a simple manipulation that can be learned without prolonged, special surgical
training.
(c) Tissue Bonding Project. The joint project of CSMG and Louisville Group to
bring 0 the equipment and the process of Tissue Bonding to fruition as a iable
market product.
(d) Tissue Bonding Technology. This shall include all rights related to Tissue
Bonding and the Tissue Bonding Projects which shall 'include (i) those patent
subjects listed in Addendum 4 of the IAW/CSMG contract dated July 9, 1996, (ii)
future rights arising from the research funding described in this Contract, and
(iii) future rights related to the Tissue Bonding Project, whether developed by
both Parties or the USA research and manufacturing group. Rights shall include:
patent applications, patents, substitutions for and divisions, continuations,
patents-in-part, renewals, reissues, extensions and the like; as well as,
confidential information, trade secrets, know-how and technical information,
whether or not of a confidential or patentable nature, relating to the Tissue
Bonding Project.
(e) Net Revenue Net revenue shall mean the revenue received by L Group from
▇▇▇▇▇▇ Medical Development Ltd. ("FMD") for sales of any device employing the
Tissue Bonding Technology as set forth in the L Group/FMD Agreement dated
December 10, 1996, Section 4.04 Royalty Payments.
(f) Net Market Revenue "Net Market Revenue" shall mean the total
revenue received by any sales agent, less the amount of any credits (including
freight, return allowances, and discounts), for devices applying the Tissue
Bonding Technology sold to any end-user.
3. TERM.
This Agreement is effective for one (1) year commencing on the 24th day of
April, 1996, and shall be automatically renewed annually unless terminated by L
Group upon written notice given
given not less than forty-five (45) days prior to the expiration of the initial
one year term, or any subsequent renewal period. The L Group may also terminate
this agreement upon forty-five (45) days written notice if it believes, in its
reasonable opinion, that the Tissue Bonding Project is no longer viable. Upon
such notice of contract termination, L Group shall reassign all rights acquired
under paragraph 5 to CSMG.
4. Consideration
Cons' deration from L Group to CSMG for rights acquired hereunder shah be the
funding of certain facets of the Tissue Bonding Project, as follows:
(a) L &cup shall pay to CSMG the sum of Five Thousand Dollars ($5,000.00) per
month, for a period of thirty-six (36) months, for certain costs of the Tissue
Bonding Project including part of CSMG's costs in operating its offices in
Ukraine and the logistical and travel costs associated with the Tissue Bond
Project. Notwithstanding any other provision in this Agreement, the parties
shall review this cost payment every six (6) months and shall adjust this
payment if circumstances so require. In the event parties are unable to agree as
to the next six (6) months funding terms, the amount shall remain the same as
the then current period provided, however, that CSMG maintains its offices in
the Ukraine with staffing continuing at the same level as in the prior six (6)
months period.
(b) L Group shall pay to CSMG monthly the sum of Sixteen Thousand Two Hundred
Seventeen Dollars ($16,217.00) ("Monthly Funding Amount"), for a period of
thirty-six (36) months, for direct costs of CSMG's obligations to IAW and/or
▇▇▇▇▇ under the agreements attached as Exhibits A and B, respectively. At the
end of the first one-year term, and thereafter at the end of any one-year
renewal periods, this fund payment amount will be reviewed by CSMG and L Group,
and adjusted, if necessary, to an amount the parties believe, in good faith, is
necessary to achieve the purposes set forth in this agreement. Should the
Exhibit 10.2
Page 2 of 8 Pages
parties fail to agree on an adjusted Monthly Funding Amount, the amount shall
remain the same as in the previous one-year period.
(c) The L Group's duty to pay the Monthly Funding Amount shall terminate if at
any time during the initial one-year term or any subsequent renewal period,
CSMG's duty to make monthly payments to IAW and/or ▇▇▇▇▇ shall terminate.
(d) The L Group's duty to make any payments described in this Paragraph 4 shall
terminate if CSMG defaults on any agreement(s) between CSMG and IAW and/or
▇▇▇▇▇, related to Tissue Bonding, the Tissue Bonding Project or Tissue Bonding
Technology and fails to cure within any applicable cure period, unless L Group
elects, in its sole discretion, to exercise the rights granted to 'It in
paragraph 4(f). The terms of this paragraph 4(e) shall not apply if CSMG's
default 'is caused by payment default hereunder by L Group.
(e) The L Group's duty to make payments as set forth in paragraph 4(b) above
shall be partially or fully offset or reduced by the revenue sharing as set
forth in Paragraph 4(D) of that Agreement, as amended, by and between CSMG and
IAW dated July 9, 1996 and attached hereto as Exhibit B. It is agreed, however,
by CSMG and L Group that credit offset shall be equally shared by CSMG and L
Group.
(f) CSMG hereby agrees to give L Group ten (10) days written notice of any
failure by CSMG to make any monthly payment to IAW and/or ▇▇▇▇▇. CSMG agrees
that upon receipt of said notice, L Group may, at its option and in its sole
discretion, make Monthly Funding Amount payments directly to IAW and/or ▇▇▇▇▇,
until such time as CSMG cures said failure. CSMG hereby agrees that any such
direct payments of the Monthly Funding Amount by L Group to IAW and/or ▇▇▇▇▇,
shall not constitute a default by L Group, and such payments to IAW and/or ▇▇▇▇▇
shall be deducted from L Group's obligations as stated in paragraph 4(b) above.
The parties agree that the discretionary rights provided in this paragraph 4(f)
cannot be acquired by L Group as a result of L Group's default in payment.
(g) L Group will pay the additional sum of Ten Thousand Dollars ($10,000.00) to
CSMG, for direct payment by CSMG to IAW, in the event that IAW meets the
schedule (the "Accelerated Development Schedule") as set forth in Exhibit D,
attached hereto, and a commercial product is successfully introduced by L Group
or its assignee to the market in the United States of America, For purposes of
this paragraph 4(g), "successfully introduced" is defined as: the sale of the
initial fifty units to end users.
(h) Payment in full by L Group under the terms of subparagraphs (a) and (b) of
this Section 4 plus the on-going revenue sharing, as set forth in Section 9
below, shall constitute full consideration for the Tissue Bonding Technology.
(i) Each payment required by L Group pursuant to paragraphs 4(a) and 4(b) shall
be made by the 20th day of the month for which the payment is due, by wire
transfer- to the bank account of CSMG pursuant to wire transfer instructions
provided from time to time by CSMG. Such wire transfers shall be sent in a
manner to insure receipt by CSMG by the 25th day of the month.
The L Group's duty to pay the Monthly Funding Amount may, at its
election, terminate if at any time during the initial one-year term or any
subsequent renewal period, any of the Scientists cease working or contributing
to the Tissue Bonding Project.
5. Rights Acquired by L Group.
(a) In return for the consideration provided by L Group to CSMG hereunder, CSMG
hereby grants to L Group the exclusive right to sell, market, manufacture,
license and otherwise distribute the equipment and process derived from Tissue
Bonding Technology in the Territory.
Exhibit 10.2
Page 3 of 8 Pages
(b) In addition, CSMG shall assign to L Group upon execution of this Agreement
any patent applications or patent rights related to Tissue Bonding Technology
exclusively for all areas in the Territory. The Parties further agree that a
final patent applications shall be made in the name of ▇▇▇▇▇ and/or IAW, and
shall be assigned to CSMG within five (5) days of execution by the inventors and
reassigned to L Group within five (5) days thereafter- It is further agreed that
the L Group may reassign its rights, in
the T
whole or in pall, to FMD, or an entity controlled by FMD or its principal
shareholder(s), or such other entity as L Group and CSMG may, in the exercise of
good faith and commercial reasonableness, agree upon. 6. Default
(a) Default by L Group for Failure If CSMG does not
receive the wire transfer to its bank account by the due date for the monthly
funding requirements described in paragraphs 4(a), 4(b) and 4(i). CSMG shall
notify L Group by facsimile transmission sent as provided in paragraph 16. L
Group "I haw until the seventh business day following the sending by CSMG of the
facsimile transmission notifying L Group of its breach of the payment obligation
to cure such breach. If the payment is not received by wire transfer to the CSMG
bank account by the end of the cure period, CSMG may elect to immediately
terminate this contract by refusing any future tender of the payment obligations
and by sending written notice to L Group within ten (10) days of its election to
terminate. The acceptance by CSMG of late payments shall not constitute a waiver
of its rights to insist upon strict compliance by L Group with the payment
obligations of L Group as described in this Agreement.
(b) Default for In the event of a breach by L
Group or CSMG for failure of performance or breach other than as set forth above
in subparagraph 6(a) of this Agreement, the non-breaching party may declare a
default by providing written notice to the other party of the breach and
providing a cure period of at least fourteen (14) days from the date of the
notice received. If the other party fails to cure the breach by the end of the
cure period, the non-breaching party may, at its option, terminate this Ag
Agreement by providing written notice to the other party.
(c) &version of Rights Li Upon Breach. (1) In the event that this Agreement is
terminated either pursuant to the provisions of subparagraph (a) of this
paragraph or by L Group pursuant to the provisions of paragraph 3, all rights
acquired by L Group pursuant to the terms of this Agreement shall automatically
revert to CSMG. Within fifteen (IS) days of such termination, L Group shall
execute a reassignment of the patent applications or patents described in
paragraph 5 to CSMG and shall return to CSMG all documentation relating to the
Tissue Bond Project, without keeping a copy of any such documentation. This
requirement to forward all documentation relating to the Tissue Bond Project
relates to documentation from any source in the possession of L Group, whether
prepared by CSMG, L Group or any third party.
(2) In the event of declaration of default by either party pursuant to the
provisions of subparagraph (b) of this paragraph, and failure to cure by the
notified party, the parties shall each retain all remedies at law or equity and
no action or inaction by either party shall constitute a waiver of any right of
that party.
7. Territory.
The Territory shall be United States of America, Europe and any other portions
of the world to which CSMG acquires the rights from IAW and/or ▇▇▇▇▇ and/or the
Scientists, pursuant to any existing or future agreement or agreements.
Exhibit 10.2
Page 4 of 8 Pages
8. Patents.
(a) L Group, at its expense shall initiate and complete a patent search and
patent application for the equipment and/or application process for Tissue
Bonding Technology in the United States in the name of ▇▇▇▇▇ and/or IAW and/or
individual inventor(s) as identified to L Group by CSMG; all patents and patent
rights shall be assigned exclusively to L Group, (b) L Group shall also apply
for foreign patents in other countries within the Territory which it deems to be
commercially viable markets,
9. Revenue Sharing. L Group and CSMG shall be entitled to a one-half equal share
of Net Revenue but in no event shall CSMG receive less than seven and one-half
(71/2) percent of Net Market Revenue. CSMG shall independently assume any and
all financial responsibility to ▇▇▇▇▇, IAW, the Scientists, and any other
Ukrainian parties with which it contracts.
10.
(a) In addition to other responsibilities of L Group noted herein, L Group
shall:
(1) Conduct patent search, at its own expense, in United States (and,
subject to later agreement of parties regarding countries and costs elsewhere);
(2) Make application, at its own expense, for patent in United States
(and, subject to later agreement of parties re countries and costs, elsewhere);
(3) Bring personnel, equipment and product from Ukraine to USA; (4) If L Group
deems it necessary, bear the expenses to bring engineers
from USA to Ukraine to review equipment and product and to review raw material,
test methods, assembly and any special tools, equipment or processes.
(5) The parties agree that it will be necessary to bring three (3) or four
(4) individuals from CSMG's Ukrainian operations to USA for approximately three
to four weeks to demonstrate Tissue Bonding and work with L Group and patent
counsel, or make other arrangements as the parties may deem advisable. L Group
will pay the agreed compensation plus reasonable expenses (including lowest
available round-trip airfare, lodging and food) for Ukrainian personnel during
stay in USA at the rate of One Thousand Dollars ($1, 000) each per month only.
(6) Ship prototype to United States.
(7) Conduct the Tissue Bonding Project in general accordance with the
Process as outlined in Exhibit E attached hereto (and made part hereof).
(b) In addition to other responsibilities of CSMG noted here, CSMG (1) Maintain
its contractual relations with ▇▇▇▇▇ and IAW on terms set
forth in the July 9, 1996 agreement and not modify, amend, terminate the
existing contractual relations or enter into any new agreements with ▇▇▇▇▇
and/or IAW relating to Tissue Bonding and Tissue Bonding Technology without the
express written consent of the L-Group;
Exhibit 10.2
Page 5 of 8 Pages
(2) Maintain or procure world-wide rights from ▇▇▇▇▇, IAW, the
Scientists, or the successors in interest of ▇▇▇▇▇, IAW, and the Scientists for
the sale, marketing, manufacturing, licensing and distribution of the equipment
and processing of Tissue Bonding and Tissue Bonding Technology;
(3) Prepare and forward to L Group the complete Tissue Bonding
equipment, research and specifications sufficient to enable L Group to initiate
patent search and application, prepare product in accordance with United States
specifications and FDA approval.
(4) Maintain the functioning of the Ukrainian research and
manufacturing operations;
(5) Give written notice to L Group within ten (10) business days of any
default by either ▇▇▇▇▇ or IAW on any agreement between CSMG and ▇▇▇▇▇ and/or
IAW relating to Tissue Bonding, Tissue Bonding Project or Tissue Bonding
Technology; and
(6) Request IAW and ▇▇▇▇▇ to give written notice to L Group within ten
(10) days of any default by CSMG of any agreement between CSMG and ▇▇▇▇▇ and/or
IAW.
(7) Assure the continued participation of Scientists responsible for, and
controlling, the Tissue Bonding and Tissue Bonding Technology.
(c) In addition to other responsibilities set forth herein, CSMG and L
Group agree to jointly make any and all public announcements relating to Tissue
Bonding and the Tissue Bonding Project, or Tissue Bonding Technology.
11. Condition Precedent.
As conditions precedent to any and all obligations of L Group set forth herein,
the parties agree that Agreement dated July 9, 1996, as amended, by and between
CSMG, ▇▇▇▇▇ and IAW, be valid and binding in all respects and grant to CSMG, to
L Group's satisfaction, all rights (except Russia and Ukraine) to the Tissue
Bonding Technology, and grant to CSMG the right to reassign all said rights to L
Group-, and that a copy of that binding agreement and any necessary supporting
documents be delivered to L Group.
12. Assignability
In addition, and supplement to, rights of assignment set forth in paragraph 5(b)
above, the parties agree that L Group may assign any or all of its rights
hereunder to any corporation or entity or group in which any shareholder of L
Group is an officer, shareholder, member or partner and in which the L Group has
a significant interest. For purposes of this paragraph, "significant interest"
is defined to be an initial equity interest equal to or greater than twenty (20)
percent. In the event L Group does so assign, it will advise CSMG in writing at
the address set forth herein.
13. Non-Disclosure and Non-Circumvention
Attached as Exhibit F is a copy of an agreement dated August 4, 1995 between ▇▇.
▇▇▇ ▇▇▇▇▇▇, Dr. '▇▇▇ ▇▇▇▇, and CSMG entitled "Disclosure and NonCircumvent
Agreement." L Group acknowledges that it is successor to the interests ofDr. ▇▇▇
▇▇▇▇▇▇ and ▇▇. ▇▇▇ ▇▇▇▇ in the Disclosure and Non-Circumvent Agreement and
agrees to be bound by the terms of that agreement. CSMG and L Group each hereby
Exhibit 10.2
Page 6 of 8 Pages
represent that they have not violated the terms of the Disclosure and
Non-Circumvent Agreement.
Notwithstanding the foregoing or terms or provisions of the Disclosure and
Non-Circumvent Agreement," the parties agree that any and all discussions,
sharing of information or data by ▇▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇ ▇▇▇▇ and/or L group
with FMD, its officers, employees, or agents is not a violation of that
agreement or its interest. The parties further agree that L Group (or its
officers or agents) is authorized to disclose such aspects of the technology and
its projected marketing as is necessary, in L Group's determination, to offer L
Group's interest for sale to a third party; provided, that L Group shall have
any such third party first execute a disclosure and non-circumvent agreement in
a form acceptable to CSMG and that L Group delivers a copy of any such projected
marketing information to CSMG.
14.
In the event that an initial public offering of equity in L Group or its
assignee is contemplated by L Group in relation to enhancing development or
marketing by L Group or its assignee of Tissue Bonding or Tissue Bonding
Technology, L Group shag notify CSMG as soon as practicable and shall enter into
good faith discussions with CSMG as to participation by CSMG. 15. Amendment.
This Agreement may be amended only in written form executed by both parties.
16. Notice.
Any notice required under or related to this agreement shall be forwarded in
written form either by United States First Class Mail, Certified Mail., Return
Receipt
Requested, or by facsimile transmission as follows:
To CSMG:
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Consortium Service Management Group, Inc. ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ Telecopier: (▇▇▇)-▇▇▇-▇▇▇▇
with copy to:
▇▇▇▇▇▇ Medical Development Ltd. (Attention: President) ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
To L Group:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. The L Group, Inc. ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ Telecopier: (▇▇▇)-▇▇▇-▇▇▇▇ with copy to:
▇▇▇▇▇▇ Medical Development Ltd. (Attention: President) ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇-, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Change in address for notice may be similarly forwarded in writing to the other
party.
17. Entire Agreement,
Exhibit 10.2
Page 7 of 8 Pages
This Agreement represents the entire agreement by and between the parties.
18. Execution by Facsimile
The parties agree that this agreement may be executed in counterpart originals
or by the exchange of execution signatures by facsimile transmission.
19. Good Faith Effort.
The parties agree to act in good faith to move forward the process of the
project and the purpose of this Agreement as quickly as possible in all respects
including among all other agreed aspects, to act without delay to: (1) initiate
operations in Ukraine and Louisville; (2) initiate patent process; (3) complete
marketable tissue bonding prototype; (4) complete final design of tissue bonding
tools, appliances and equipment-, (5) coordinate to complete any research or
materials deemed necessary for patent application(s) and regulatory approval(s);
(6) to act to initiate manufacturing and marketing; and (7) to do any and all
acts to further the purposes and responsibilities set forth in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on this day of
June, 1997, but effective as stated hereinabove.
CSMG Louisville-Group:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and CEO President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Consortium Service Management The L Group, Inc. Group,lnc.
Exhibit 10.2
Page 8 of 8 Pages
