AGREEMENT
This is an agreement as of 16 September 2005 between Dan Q. Fang ("Fang")
whose address is 9564 Daines Drive, Temple City, California 91780 and
CardioBioMedical Corporation ("CBM") whose address is 2 Briar Lane, Natick,
Massachusetts 01760. Fang and CBM may be collectively referred to as the
"Parties".
This Agreement is made under the following circumstances.
A. On July 8, 2003 Fang and CBM entered into two agreements, a "License
Agreement" and another Agreement simply called "Agreement" (hereinafter referred
to as the "03 Agreement", both agreements collectively referred to as the
"Agreements").
B. Certain disputes arose in connection with the Agreements.
C. By this Agreement the parties intend to resolve those disputes and
enter into this Agreement in lieu of the Agreements. The terms of this Agreement
may be elaborated on in further written agreements consistent with the terms and
conditions set forth herein.
The Parties therefore agree as follows.
1. The Parties acknowledge that the Agreements are of no further force or
effect except for claims already matured under them and that, for example, Fang
has no further right to be a director of CBM, to vote CBM shares, or to
designate directors for CBM.
2. Fang shall return to CBM all of the shares of CBM he owns or has any
rights to (16,500,000 shares in all).
3. In lieu of the exclusive sales license in the License Agreement, CBM
shall have a non exclusive sales license to sell the CBM/ CSD device presently
offered for sale by CBM ("Product") in the United States, Canada and Mexico (the
"Territory"), until the expiration U.S. Patents No. 6,148,228 and 6,638,232. No
licensed products may be sold to destinations outside the Territory or to
persons CBM should reasonably believe intends to purchase them for sale or use
outside the Territory.
4. The Parties agree that CBM may not sublicense its rights under this
agreement and that any sales licenses granted by Fang will neither give nor
permit a sublicense.
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5. The Parties agree that there is due Fang US$310,000 under the
Agreements and that sum shall paid at the end of each quarter in installments of
US$50,000 beginning for the quarter starting July 1, 2006.
6. The name "CSD" remains the property of Fang, but CBM shall have the non
exclusive use of it. If Fang shall not have registered the trademark "CSD" in
his or his designee's name by December 31, 2006, then CBM shall have the right
to register it in its name, but with Fang retaining the non exclusive right to
its use.
7. For the sales license provided herein, CBM shall pay Fang a royalty of
5% of the sales price of each and every item sold to a customer within the
Territory. The minimum royalty per year, beginning in 2006, shall be US$250,000,
payable every two months beginning on the last day of February, 2006. At each
two month minimum payment there shall be included the overage over the minimum,
if any, for royalties earned but not paid in the prior two months' period. Fang
may cancel CBM's license for failure to pay the annual minimum royalty and past
due money set forth in paragraph 5. Fang acknowledges that this is the most
favorable royalty or minimum annual royalty per year which will be given to a
non exclusive licensee in the Territory if all substantial terms and conditions
are the same. CBM shall not have the right to review Fang's licenses.
8. CBM hereby issues to Fang a standard warrant to purchase 6,500,000 of
its common shares at a price of US$.01 per share at any time during the period
from January 1, 2008 until December 31, 2014.
9. Fang will assure that CBM will have the benefit of pricing that is as
favorable as that received by other sales licensees customers of the same
products on comparable terms and conditions, to the extent permitted by law.
10. At the request of CBM Fang will perform such consulting services as
may reasonably be requested by CBM at his usual consulting rate of US$200 per
hour, including travel time, or US$1500 per day for time spent outside Southern
California, plus out of pocket expenses, including, without limitation, travel,
lodging, and meals. Fang shall not be required to provide this service as
requested if to do so would unreasonably interfere with his other, previously
committed, consulting activities. All intellectual property developed as a
result of such consulting shall remain the sole and exclusive property of Fang,
but CBM shall have the right to include it as a part of its non-exclusive
license without additional payment so long as it otherwise falls within the
scope of the existing license. Fang shall be paid out of pocket expenses, but
not consulting fees for services in connection with clinical trials, but the
results of such trials, including trials currently in progress, shall be
available for the information and use of Fang and other licensees who are
willing to make the results of their clinical trials available to CBM.
11. Fang may license up two companies to sell Product in the Territory
except he may not license any company that has, or is a part of a group of
companies linked by substantial equity ownership which have, (1) a
capitalization in excess of US$900,000,000, or (2) annual sales in excess of
US$300,000,000. Beginning on January 1, 2008 Fang may license to any number of
companies free of any such restriction. In addition, the foregoing exceptions
shall not apply to companies that CBM has introduced both the CSD and Fang as
may be defined in ancillary agreements.
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12. The Parties agree that in the event that all CSD orders can not be
filled, CBM's orders will be allocated on a pro-rated basis with other customers
whose orders can not be completely filled.
13. Fang may not sell the CSD to any customer of CBM as may be defined in
the ancillary agreements.
14. The Parties will execute such ancillary agreements as may be necessary
to effectuate the intent of this Agreement, such as licenses, settlement
agreements, pricing arrangements, etc.
Dan Q. Fang
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CardioBioMedical Corporation
By
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James F. Mongiardo,
Chief Executive Officer
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