EXHIBIT 10.35

 

ARTERICICYTE
MEDICAL SYSTEMS

Title: Distribution Agreement
Stocking — CPM Medical

NO. 20100225.7

 

This Distribution Agreement is entered into on May 13, 2010 by Arteriocyte
Medical Systems, Inc. (the "Company" or "AMS"), A Delaware Corporation, located
at 11000 Cedar Avenue, Suite 270, Cleveland, OH 44106 and CPM Medical, a Texas
Corporation ("Distributor"), located at 3004 Nottingham Dr., McKinney, TX 75070
(collectively the "Parties" or singularly the "Party"),

RECITALS

Whereas, Company is engaged in the business of manufacturing, distributing, and
marketing the Magellan® Autologous Platelet Separator ("Magellan") and
respective disposable units approved by the U.S. Food and Drug Administration to
be sold for use with the Magellan ("Disposables) (collectively "the Products").

Whereas, Company owns the Products,

Whereas, Distributor has employed a qualified and experienced sales staff in the
Territory, and Company desires to secure the services of Distributor in the
Territory upon the terms and conditions set forth below, and Distributor desires
to be so retained by the Company.

Accordingly, the Parties agree as follows:

1.

DEFINITIONS. The terms listed in this Section shall have the meaning described
or referenced below:

 

1.1.

"Agreement" means this agreement, together with all attachments hereto now or
hereafter signed by the Parties [all of which are incorporated herein by
reference], as it may be modified, amended or supplemented in writing by the
Parties.

 

1.2.

"Bailed Equipment" means any Magellan unit(s) provided by Company to Distributor
under this Agreement, which Distributor may use to sell the Products to End
Users.

 

1.3.

"Company" shall have the meaning set forth above in the preamble.

 

1.4.

"Confidential Information" means information not generally known to the public
and marked "Confidential", including but not limited to: technology, software,
technical and non-technical materials, models, drawings, financial plans,
protocols, knowledge, data, know-how, samples, and other tangible or
non-tangible material constituting confidential research and development,
business plans or operations, manufacturing methods, processes, techniques,
applications for technologies, materials and designs constituting a trade
secret, which arc confidential and proprietary, provided by the Parties under
this Agreement, whether disclosed orally, pictorially, in writing, by
demonstration, by viewing or other means.

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CPM Medical 20100224.7

 

1.5.

"Consent" means written authorization by a Company authorized representative,

 

1.6.

"Disposable?' shall have the meaning set forth in the recitals.

 

1.7.

"Distributor" shall have the meaning set forth in the preamble.

 

1.8.

"Effective Date" means the date set forth-in the preamble

 

1.9.

"End-User means a person or entity that purchases Products for its internet
business use within the Territory (as defined below) and not for resale,
sublease, or sublicense,

 

1.10.

"Field of Use" means general orthopedic, spinal and podiatric procedures and
surgeries.

 

1.11.

"Magellan" means the Magellan® Autologous Platelet Separator Instrument.

 

1.12.

"Medical Specialists" means licensed medical doctors or physicians, accredited
and/or licensed hospitals or medical clinics, accredited medical schools, and/or
applicable government agencies, excluding practitioners of cardiac medicine.

 

1.13.

"Nonexclusive" means Company, and/or any party Company appoints, shall have the
right to sell Products directly in the Territory.

 

1.14.

"Net Sales" means the price at which the Products are actually invoiced by
Company, exclusive of transportation and packaging costs, insurance, duties,
taxes and other governmental charges, commercial, trade and cash discounts or
commissions, returns, and adjustments and allowances actually granted by
Company, for any Products Distributor sales to a third party purchaser.

 

1.15.

"Price(s)" means the amount Distributor may sell the Products to End Users,
described in Exhibit A.

 

1.16.

"Products" means the Magellan' Autologous Platelet Separator Instrument and
respective disposable units, described in exhibit A.

 

1.17.

"Reports" shall have the meaning set forth in §3.2 below.

 

1.18.

"Stocking Distributor" means the Distributor shall order and stock as inventory
the Products to adequately supply End User demand.

 

1.19.

"Sub-Distributor" means the assigned rights under this Agreement to the
companies named in 11.1.

 

1.20.

"Sub-Field of Use" means the field of use assigned to a Sub-Distributor as
described in §11.1. 1.21.

 

1.21.

"Sub-Territory" means the geographic area assigned to Sub-Distributor as
described in §11.1. 1.22.

 

1.22.

"Term" means the maximum duration of this Agreement, which is one (1) year,
beginning on the Effective Date.

 

1.23.

"Territory" means the geographic area described in Exhibit B, attached hereto
and incorporated herein.

 

1.24.

"Trademarks" means the trademarks owned by Company listed on Exhibit D, attached
hereto and incorporated herein.

 

1.25.

"Vendor Approved Hospital" means the hospitals and/or clinics where Distributor
is an approved vendor before the execution of this Agreement, as described in
Exhibit C.

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CPM Medical 20100224.7

2.

APPOINTMENT.

 

2.1.

Company appoints Distributor, and Distributor accepts appointment, as Company's
Nonexclusive Stocking Distributor for the Vendor Approved Hospitals within the
Territory during the Term, subject to all terms and conditions in this
Agreement.

 

2.2.

Distributor shall not market or sell Products outside of Distributor's
Territory. Except as provided herein, Distributor shall not have the authority
to authorize others to resell, sublicense, Or market Products and any such
authorization will be void without prior written authorization.

 

2.3.

Upon Consent, Distributor may add new hospitals in the Territory as Vendor
Approved Hospitals.

 

2.4.

Company shall have the right to change Distributor's Territory, Vendor Approved
Hospitals and Fields of Use upon providing written notice to Distributor. Any
soch change  in Distributor's Territory strait become effective on the date
specified irr said-notice,

 

2.5.

Company expressly reserves the right to engage, directly or to contract with
other to market, sell, sublicense, or service the Products in the Territory,
within the Field of Use, and to Vendor Approved Hospitals. Distributor shall not
receive any commissions or fees for sales of the Products by the Company or
third party. Any Company or third party sales shall not be accounted towards Net
Sales or the minimum sales requirement described in § 3.1(g) herein.

 

2.6.

Distributor shall not represent Company in connection with the following:

 

a)

sales of Company's products not listed in Exhibit A;

 

b)

sales of Company's products to any person or entity specializing in cardiac
medicine;

 

c)

sales of Company's private brand products; and,

 

d)

sales to employees of Company or to any associated or related division, parent
group, or subsidiary or to any other affiliated person or entity.

 

2.7.

Intended Use of Products. Distributor shall not, without written authorization
from Company, use or knowingly sell the Products for any purpose other than for
their intended purpose, which includes preparing platelet rich plasma, or using
Equine-Stem® and MarOlul.

 

2.8.

Independent Contractor. The Parties establish an independent contractor
relationship. Distributor shall not have any authorization, neither express or
implied, to incur any obligations or commitment on behalf of Company.
Distributor shall employ its own personnel and shall be responsible for them and
their acts. Company shall not be in anyway liable to Distributor, its employees
or third parties, for any losses, injuries, damages or the like occasioned by
Distributor's activities in connection with this Agreement.

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CPM Medical 20100224.7

 

2.8.1

Distributor's Expenses. Distributor shall bear all expenses of every kind,
nature and description incurred as in the business of an independent contractor.

 

2.8.2

Use of Company's Name. Without limiting the generality of the foregoing,
Distributor shall not use or list Company's name in any advertising or in any
other manner that might be construed to indicate that Distributor is other than
Company's independent contractor.

 

2.9.

Resale to U.S. Government. Distributor shall not market or sell Products to any
office, department agency, or defense installation of the United States
Government.

3.

DISTRIBUTOR OBLIGATIONS.

 

3.1.

Distributor shall use best efforts and diligence to advertise, distribute,
market, promote, sell and encourage the purchase of the Products by End Users.
Best efforts includes:

 

a)

employ a competent and aggressive sales and technical support organization, and
provide appropriate facilities, tools, and equipment to sell the Products;

 

b)

conduct activities reasonably appropriate for the sale of the Products in the
Territory, including making sales calls, placing advertising, and participating
in trade shows, fairs, and exhibitions;

 

c)

comply with the terms and conditions of this Agreement;

 

d)

promptly forward to Company for approval and acceptance any and all orders
obtained from End Users;

 

e)

furnish to Company any information-Distributor acquires relative to the credit
rating and financial position of any End Users-for-the products;

 

f)

maintain in good working order, for display, demonstration, and to fulfill End
User demand an inventory of the basic Products including Bailed Equipment;

 

g)

meet the following minimum sales requirement;

 

i.

Distributor shall purchase a minimum of $90,000 per quarter.

 

h)

submit to Company the Reports outlined in §3.2 herein;

 

i)

enable key sales persons to attend sales and servicing training at a Company
designated facility;

 

j)

forward all customer complaints to Company's customer service immediately upon
receipt by emailing customerservice@arteriocyte.corn, or any other reasonable
means requested by Company;

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CPM Medical 20100224.7

 

k)

hire, train, and maintain a staff of sales persons, at Distributor's expense, to
actively sell to Vendor Approved Hospitals in the Territory;

 

l)

be responsible for End User satisfaction for all Distributor activities with its
End Users;

 

m)

install the Products at End User's locations;

 

n)

offer proposals and quotations to all prospective and current End Users at the
Vendor Approved Hospitals; and,

 

o)

provide educational training seminars, in-hospital demonstrations, and training
of End User personnel in the use of the Products.

 

3.2.

Record Keeping.

 

3.2.1

Distributor shall maintain true and accurate records in accordance with
generally accepted accounting principles and industry standards of all Products
sold by Distributor. Distributor shall prepare and forward to Company, on a
quarterly basis [except where designated below] the following Reports including:

 

a)

sales history of the Products in Vendor Approved Hospitals;

 

b)

a list of current End Users and Vendor Approved Hospitals;

 

c)

any information related to competitive products sold in the Territory;

 

d)

a report of sales activities and market conditions;

 

e)

a detailed report of all account activity, including both active and prospective
accounts as reasonably required by Company;

 

f)

any customer complaints, sent to Company within two (2) business days; and

 

g)

a Magellan location report form, available by emailing
customerservice@arteriocyte.com.

 

3.2.2

Company shall have the right, upon reasonable notice, to examine all records
described in this Section. These reporting obligations shall survive for a
period of five (5) years following the termination of this Agreement.

 

3.3.

Ouarterly Sales Review. Company may conduct a sales review with Distributor on a
quarterly basis. Company may assist Distributor in analyzing and strategizing
Distributor's business development.

 

3.4.

Distributor shall make no allowance or adjustments in accounts owing to Company,
nor shall Distributor authorize any return of the Products without prior written
authorization from-a Company representative.

 

3.5.

Without specific Consent, Distributor shall make no collections on behalf of
Company, or request any End User deposits.

 

3.6.

Compliance with Laws. Distributor shall, at all times in conducting its
activities under this Agreement, comply with the following:

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CPM Medical 20100224.7

 

a)

all applicable laws, rules, regulations and governmental orders now or hereafter
in effect in the Territory, including the Foreign Corrupt Practices Act, as
amended (15 U.S.C. §§ 78dd-1, et seq.), the Federal "Anti-Kickback" statute (42
U.S.C. 1320a-7b(b)) and any state or foreign equivalent of either of the
foregoing;

 

b)

payment of any and all fees and other charges as required by such laws, rules,
regulations and orders;

 

c)

applicable and proper licenses, permits, authorizations, registrations and
qualifications from all governmental ministries and agencies in the Territory to
the extent necessary or appropriate; and,

 

d)

provide Company notice of any change in any applicable law, rule, regulation or
governmental order, which Distributor has knowledge of that may affect either
Party's performance of its respective obligations hereunder.

4.

PRICING AND PAYMENTS.

 

4.1.

Prices. Distributor shall pay Company for the Products according to the Prices,
minus a percent discount from the list price or pay a certain price as outlined
below:

 

4.1.1

Distributor shall receive a nineteen (19) percent discount for AMS100.

 

4.1.2

Distributor shall receive a fifty (50) percent discount for AMS350, AMS600,
AMS604, AMS607 and AMS700.

 

4.1.3

Distributor shall purchase AMS300 at one hundred and eighty-seven dollars ($187)
per disposable kit.

 

4.1.4

Distributor shall purchase AMS310 at the following prices:

 

a)

If Distributor buys one hundred (100) or more kits on one order, Distributor
shall pay two hundred dollars ($200) per disposable kit,

 

b)

If Distributor buys under one hundred (100) on one order; Distributor shall pay
two hundred and fifty dollars ($250) per disposable kit

 

4.1.5

Distributor shall purchase Mar01 at six hundred and fifty dollars ($650) per
disposable kit.

 

4.1.6

Distributor shall purchase AMS305 at one hundred and seventy-five dollars ($175)
per disposable kit.

 

4.2.

Shipping. Distributor shall not pay any shipping charges on any orders that
require palate shipping. For all other orders, Distributor shall pay shipping
charges.

 

4.3.

Discount Modification. Company reserves the right to modify the percent discount
the Distributor receives on any and all Products with thirty (30) days notice to
Distributor before the change is enforced. If Distributor breaches any
provisions of this Agreement, including but not limited to the minimum sales
requirement described in §3.1(g), Company shall have the right. to change the
percent discount immediately upon notification to the Distributor.

 

4.4.

Price Modification, Company reserves the right to modify the prices described in
Exhibit A. If Company changes the Prices, then Company shall provide thirty

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CPM Medical 20100224.7

 

(30)_days notice to Distributor - before- the price change is enforced. Any new
price effectuated after the execution of this Agreement, shall supersede the
prices listed in Exhibit A and the new price shall apply to all mention of Price
in this Agreement.

 

4.5.

Payment Terms. Distributor shall make all payment; in U.S. Dollars, to Company
under this Agreement via electronic wire transfer to an account at a bank
designated by Company. Distributor shall make all payments within sixty (60)
days from the date on invoice. Any payments received after the due date
specified, shall be subject to a monthly service charge. The service charge will
accrue against the sum of all late payments for such month, plus outstanding
amounts due from previous months (if applicable). The monthly rate at which the
service charge will be computed will be two (2) percent of the amount due, or
the highest rate permitted by applicable law, whichever is less.

 

4.6.

Taxes. Where applicable, Distributor shall pay all taxes, duties, tariffs,
import deposits, foreign exchange permits, fees, assessments and other
governmental charges.

5.

EQUIPMENT.

 

5.1.

Agreements for Products. Distributor shall ensure proper execution of ali
standard Company agreements (including Consignment, Evaluation and Service
Agreements) with each End User. Distributor shall send Company a properly
executed copy of each agreement before Company will ship the Products to any
Customer. All applicable Company Agreements are available by emailing
legaldept@arteriocyte.com. Distributor shall properly execute a Consignment
Agreement and/or an Evaluation Agreement for each Magellan placed with an End
User but not purchased outright.

 

5.2.

Bailed Magellan.

 

5.2.1

Company shall provide Distributor Bailed Equipment, for the life of this
Agreement, as a bailment to enable Distributor to comply with their obligations
under this Agreement. Company shall retain title to the Bailed Equipment for the
entire contract term.

 

5.2.2

Although Company shall retain title, the Parties agree that Company shall have
the rights of a secured party under the Uniform Commercial Code during the life
of this Agreement, including the right to enter the premises of the Distributor
and removing the Bailed Equipment if Distributor defaults under terms and
conditions of this Agreement.

 

5.2.3

Distributor shall not permit any attachment, encumbrance, lien, or security
interest to be filed against the Bailed Equipment while Company retains title
and Distributor shall promptly notify if any of the foregoing is filed or
claimed and shall indemnify Company for any loss or damage as the result of any
of the foregoing actions.

 

5.3.

Disposable Purchase. Distributor shall pay for all Disposables used during the
term of this Agreement according to the Price listed in this Agreement unless
Company Consents to another amount.

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CPM Medical 20100224.7

 

5.4.

Care of Equipment.

 

5.4.1

Distributor shall use reasonable care in safeguarding and maintaining the Bailed
Equipment in good working order over the course of the Agreement. Distributor
shall not abuse, misuse, or make use of the Bailed Equipment for other than the
intended purposes.

 

5.4.2

Distributor shall pay the cost of any damage to the Bailed Equipment caused by
Distributor's carelessness, abuse, alteration, improper use of the Equipment, or
by any service performed by unauthorized personnel:1f a Company representative
determines that damage is caused by any of the above action, including but not
limited to dropping the Bailed Equipment or failing to use proper electrical
surge protection, Company, may at their discretion, charge the Distributor the
price of the repair and/or the price of replacement Bailed Equipment. Company
shall document all damage and shall provide it to the Distributor upon their
request.

 

5.4.3

Distributor shall not remove any labels, signs, symbols, or serial numbers
affixed to the Bailed Equipment.

 

5.4.4

If the Bailed Equipment Is lost or stolen, Distributor shall pay Company the
value of the Bailed Equipment as determined by Company.

 

5.5.

Bailed Equipment Return.

 

5.5.1

At the end of this Agreement, Distributor shall return the Bailed Equipment to
Company or purchase the equipment outright.

 

5.5.2

At the end of this Agreement, Distributor shall prepare the Bailed Equipment for
shipment back to Company by decontaminating the Bailed Equipment and packing it
in its original packaging. Distributor shall return the Bailed Equipment to
Company using a reliable shipping company. All shipments of' returned Bailed
Equipment shall be FOB Destination to Company.

 

5.5.3

Company shall not accept Bailed Equipment as officially returned until Company's
service engineer can inspect the Bailed Equipment to insure that it is in proper
working order.

 

5.5.4

A list of accessories will be delivered with the Bailed Equipment and
Distributor shall return these accessories with the Bailed Equipment. If any
accessories are missing, Company shall charge Distributor for these missing
accessories at their Price.

 

5.6.

Servicing of the Bailed Equipment.

 

5.6.1

Distributor shall notify Company if it determines that the Bailed Equipment
needs maintenance and/or servicing. Company shall service and repair the Bailed
Equipment according to the terms and conditions of this Agreement.

 

5.6.2

Upon notification, Company shall send Distributor replacement Bailed Equipment,
which may be refurbished, in exchange for the original Bailed Equipment provided
under this Agreement. Distributor shall send the

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CPM Medical 20100224.7

 

original Bailed Equipment to Company for maintenance and repair. Company, may at
its discretion, send the original Bailed Equipment back to Distributor in return
for the replacement Bailed Equipment or Company may require that Distributor
keep the replacement Balled Equipment. If Company elects to have Distributor
keep the replacement Bailed Equipment, then all provisions of this Agreement
apply to the replacement Bailed Equipment.

 

5.6.3

All shipments related to the servicing of Bailed Equipment, as described in this
§5.5, shall be FOB Origin.

 

5.7.

Security Interest.

 

5.7.1

Company shalt retain ownership title and a security interest in each Magellan
unit bailed to Distributor or distributed to an End User on a Consignment
Agreement, unless and until ownership changes as described in the Consignment
Agreement.

 

5.7.2

If Distributor and/or End User defaults in its payment obligations as described
herein, Company may, at its discretion, declare all such payment obligations
immediately due and payable:- Company shall have all rights-and-remedies
of-a-secured party under the Uniform-- --Coinmercial Coda ("UCC"). Diffribtior
shall fiilly cooperate with Company's exercise of—its rights under this Section,
including the turnover of all information required by Company to enforce its
security interests under this Agreement. Distributor shall promptly sign and
return to Company all documents that Company deems to be necessary or prudent to
perfect or protect the priority, validity, and continuity of the security
interest granted herein.

 

5.8.

No Product Modification. Distributor shall sell or use the Products and Bailed
Equipment supplied by Company as delivered and shall not modify, alter, or cause
any additions or subtractions from the Products. Distributor shall not sell the
Products under any manufacturers or model name other than what Company affixes
to them.

 

5.9.

Product Servicing. Distributor shall service and maintain the Products and
Bailed Equipment as recommended in the Magellan owner's manual. Distributor may,
at its own discretion, purchase a service contract from Company.

6.

TERMS AND CONDITIONS OF SALE.

 

6.1.

Standard Terms. All sales of the Products by Distributor to any End User shall
be subject to the Terms and Conditions of this Agreement. These terms and
conditions of Product sales replace in their entirety any and all of the
preprinted order terms and conditions appearing on Distributor's or End User's
"Purchase Order" forms irrespective of whether this Agreement is referenced by
said "Purchase Order". Company expressly rejects any additional terms and
conditions contained in Distributor's or End User's "Purchase Order," regardless
of any language therein stating Company's acceptance of the order constitutes
Company's acceptance of the

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CPM Medical 20100224.7

 

inclusion of such additional terms and conditions. Company reserves the right to
change or modify the terms and conditions of Product sales.

 

6.2.

Purchase Orders.

 

6.2.1

Distributor and/or End User shall submit Product Orders to Company using a
Purchase Order, which shall contain at least the following:

 

a)

an identification of the Products ordered;

 

b)

quantities;

 

c)

models;

 

d)

sizes;

 

e)

requested delivery dates; and,

 

f)

shipping instructions, including shipping addresses within the Territory.

 

6.2.2

Company shall sell the Products to Distributor and ship directly to Distributor
by means of individual Purchase Orders and amendments as issued by Company.
Distributor shall write all Product orders with Company as seller. Purchase
Orders will be considered accepted, upon written acknowledgement by Company;
however, Company may revoke or alter its acknowledgement and acceptance at any
time within five (5) business days after acceptance. Company may also withhold
shipment of Products to Distributor at any time, if Distributor fails to make
timely payments for any previous invoices for Products.

 

6.2.3

Distributor shall deliver all Purchase Orders to Company by personal delivery,
telephone, electronic email or telefax. Distributor shall ensure that Company
receives each Purchase Order at least five (5) business- days-prior to the
delivery dates requested in that-order.

 

6.3.

Orders. Distributor shall promptly forward to Company all orders for the
Products with all shipping and other relevant information. Company shall, at its
sole discretion, accept or reject all orders. Company shall not be bound until
Company accepts the order.

 

6.4.

Acceptance of Purchase Orders.

 

6.4.1

Company, or Company's authorized representative, shall accept each Purchase
order at their discretion, upon receipt of said Purchase Order from Distributor
and/or End User.

 

6.4.2

Each Purchase Order shall be considered an offer by Distributor or End User to
purchase the Products listed therein.

 

6.4.3

Company may modify any Purchase Order with reasonable notice to Distributor.

 

6.5.

Cancellation, In the event that Distributor cancels an accepted Purchase Order,
Distributor shall pay for all material, labor, and shipping commitments incurred
by Company.

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CPM Medical 20100224.7

7.

PRODUCT LITERATURE.

 

7.1.

Upon request, Company shall provide to Distributor a reasonable amount of
product literature at no charge. Distributor shall pay all applicable shipping
and handling charges.

 

7.2.

Distributor may purchase, at its own expense, any additional Company authorized
literature to promote the Products at the Price for use in advertising,
promoting, marketing, distributing, and selling the Products in the Territory
during the Term.

 

7.3.

Upon Consent, Distributor may produce additional sales and marketing materials
at Distributor's own expense for use in advertising, promoting, marketing,
distributing, and selling the Products in the Territory during the Term.

 

7.4.

Distributor shall solely bear all costs and expenses incurred by Distributor
with respect to creating advertising and promotional materials, including
advertising and marketing the Products.

8.

WARRANTY.

 

8.1.

Company extends to Distributor a warranty in terms identical to the applicable
warranty enclosed and delivered with each Product. Company may change such
warranty at its sole discretion upon written notice. No employees, agent, or
representative of Distributor shall have any authority to bind Company to any
additional affirmation, representation, or warranty concerning the Products.

 

8.2.

Company shall not be held responsible under the warranties contained in this
Standard Written Warranty and any such warranty shall be null and void if:

 

a)

the Products are used in other than their normal and customary manner;

 

b)

the Products have been subject to misuse, accident or neglect other than by
Company;

 

c)

unauthorized alterations, modifications or repairs have been made, or unapproved
parts used in the assembly of the products by persons other than Company;

 

d)

the Products have been improperly handled, maintained, installed or used by
Distributor; or,

 

e)

the Products have been improperly disinfected or sterilized.

 

8.3.

The- particulars of any defect complained of must be notified to Company in
writing promptly after it has been discovered. Notification must contain all
pertinent information in the relevant customer file.

 

8.4.

Company shall not guarantee the sale of any Products in the Territory and shall
not accept any returns of defective Products except: Distributor (or End User)
shall use commercially reasonable efforts to inspect each Product package and
notify Company of any observable defect within thirty (30) days of receipt of
the Product(s).

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CPM Medical 20100224.7

9.

NONCOMPETITION.

 

9.1.

Distributor shall not directly compete with other independent Company authorized
dealer outside the Territory.

 

9.2.

During the Term of this Agreement, if Distributor becomes aware, or should
reasonably become aware of any competition, then the Distributor shall obtain
written approval from Company before engaging in any competitive activity with
Company Product providers.

10.

CONFIDENTIALITY.

 

10.1.

Distributor shall not analyze, duplicate, copy or reproduce the Confidential
Information received under this Agreement.

 

10.2.

Distributor shall receive and hold all Confidential Information with the same
degree of care they hold their own confidential and proprietary information.

 

10.3.

Distributor shall not disclose or use Confidential Information, in whole or in
part, directly or indirectly, for any purposes other than those expressly
permitted herein, and shall not disclose any Confidential Information for its
own benefit or for the benefit of any third party except as permitted herein.

 

10.4.

Distributor shall disclose such Confidential Information only to such
professional advisors and personnel, whom Company approves in advance, who has
agreed in writing to be bound by the terms of this Agreement.

 

10.5.

Distributor shall keep the terms and prices contained herein in strict
confidence between Company and employees of Distributor. If Distributor breaches
this section (§10), the Company reserves the right to cancel this Agreement.

11.

Sub-Distributor Rights.

 

11.1.

Company gives Distributor the limited and revocable right to appoint the
following Sub-Distributor(s) in the following Sub-Territory and Sub-Fields of
Use.

 

11.1.1

Precision Orthopedics, A Medical Corporation

 

a)

Address: 1800 Vistillas Rd, Altadena, CA 91001.

 

b)

Sub-Territory: Sub-Distributor shall operate in their current geographic area,
defined and limited to the following three digit zip codes in the State of
California: 900, 902, 905, 910, 912, 913, and 917.

 

c)

Sub-Field of Use: General orthopedic, spinal and pediatric procedures and
surgeries.

 

11.1.2

Fuzion Medical

 

a)

Address: 12139 Kingswood Court, Riverside, CA 92503.

 

b)

Sub-Territory: Sub-Distributor, shall operate in their current geographic area,
defined and limited to the following three digit zip codes  in the State of
California-900;902--905, 910, 912, 913, and 917.

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CPM Medical 20100224.7

 

c)

Sub-Field of Use: General orthopedic, spinal and pediatric procedures and
surgeries.

 

11.1.3

Evologics, Inc.

 

a)

Address: 4766 Research Dr., San Antonio, TX 78240

 

b)

Sub-Territory: Sub-Distributor shall operate in their current geographic area,
defined and limited to the following three digit zip codes in the States of
Texas, Iowa and Wisconsin: 503, 547, 750, 752, 756, 760, and 782.

 

c)

Sub-Field of Use: General orthopedic, spinal and podiatric procedures and
surgeries.

 

11.1.4

Phoenix Surgical

 

a)

Address: 163 Oldfield Rd., Fairfield, CT, 06824

 

b)

Sub-Territory: Sub-Distributor shall operate in their current geographic area,
defined and limited to the following three digit zip codes in the State of New
York: 107

 

c)

Sub-Field of Use: Spinal and neurological procedures and surgeries.

 

d)

Products: Phoenix Surgical shall be limited to sales of Mar01 and no other
Products despite the rights given to the Distributor and other Sub-Distributors.

 

11.2.

Company, at their discretion, may allow for the appointment of additional
sub-representatives upon written notification and amendment of this Agreement by
Distributor.

 

11.3.

Distributor shall execute a separate sub-distributor agreement with each
Sub-Distributor that must be approved by Company. Distributor shall incorporate
the provisions of this Agreement into each sub-distributor agreement.
Distributor shall ensure that the sub-distributor agreements specify that the
rights granted to the Sub-Distributors are non-exclusive and Company expressly
reserves the right to engage, directly or to contract with others to market,
sell, sublicense, or service the Products in the Sub-Territories, for the
Sub-Fields of Use.

 

11.4.

Sub-Distributors shall not engage in any activity that would violate the terms
of this Agreement.

 

11.5.

Distributor shall indemnify and hold Company harmless from:

 

a)

All damages, losses, costs, liability, infringement or expenses relating to or
arising out of the appointment of any Sub-Distributors, including any acts or
omissions; and,

 

b)

Any claim or liability for any benefits or privileges the Distributor may grant
to any Sub-Distributors that are in excess of those Company grants to
Distributer in this Agreement. 11.6. Company shall not knowingly sell directly
to existing and identified Sub-Distributors of Distributor. If Distributor and
Sub-Distributor end

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CPM Medical 20100224.7

 

their business relationship, then Company may, at their discretion, enter in
negotiations with said Sub-Distributor to have the Sub-Distributor become a
distributor.

12.

INTELLECTUAL PROPERTY RIGHTS.

 

12.1.

Company grants to Distributor a non-exclusive and royalty-free right and license
to use the Trademarks contained in Exhibit D in advertising, promotion,
marketing and distribution of the Products in the Territory during the Term.

 

12.2.

Distributor shall not acquire any right, title or interest in the Trademarks
other than the license granted in §12.1.

 

12.3.

Distributor shall not use the Trademarks as part of Distributor's corporate or
trade name or permit any third party to do so without prior written
authorization from Company.

 

12.4.

Distributor shall not remove, alter or in any way change the labeling of the
Products shipped by Company without prior written authorization from Company.

 

12.5.

Company may revoke, at any time, the non-exclusive license granted to
Distributor in §12.1.

 

12.6.

Distributor shall not file any patent application or other intellectual property
rights, in any country, relating to the Confidential Information received under
this Agreement.

 

12.7.

Distributor shall avoid engaging in any conduct that adversely affects Company's
Trademarks and the goodwill of its brands.

13.

TERM AND TERMINATION.

 

13.1.

Termination without Cause. The Parties may terminate this Agreement without
cause, at any time, upon providing ninety (90) days written notice to the other
Party.

 

13.2.

Termination for Breach. Either Party may terminate this Agreement for material
breach or default of any term or condition of this Agreement, if such breach or
default is not cured within thirty (30) days of written notice of said breach or
default from the non-breaching party. In the event for termination for
Distributor's material breach, Company may cancel any pending Purchase Orders
from Distributor.

 

13.3.

Upon termination of this Agreement, Distributor shall immediately discontinue
all representations, which a third party may infer that any relationship exists
between the Parties. Distributor shall not take any action in an attempt to
discredit Company or the Products.

 

13.4.

Duties upon Termination, If the Parties terminate this Agreement for any reason,
the following conditions shall apply:

 

a)

Company shall only make such further deliveries for the Products to Distributor
as required to comply with Distributor's outstanding obligations to its
customers before the date of termination;

 

b)

Distributor shall immediately return all Company owned equipment or Product,
including Bailed Equipment and any other unpurchased Products; and,

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CPM Medical 20100224.7

 

c)

Distributor shall immediately cease use of all intellectual property and any
licenses granted in §12.1 herein shall be revoked.

 

13.5.

The Parties considered the possibility of making expenditures in preparing to
perform their respective obligations herein, including the possibility of loss
and damage resulting from the termination thereof. The Parties shall not hold
the other Party liable, and hereby waives all potential claims against the other
for any compensation for the termination of this Agreement according to this
section, including but not limited to:

 

a)

severance compensation;

 

b)

termination compensation;

 

c)

payment for goodwill;

 

d)

loss of prospective profits;

 

e)

damages;

 

f)

investments; and,

 

g)

expenditures.

 

13.6.

Company shall have the right and access to review, remove and/or retain all
Distributor files related to the sale or distribution of the Products.

 

13.7.

Distributor shall, within five (5) business days after termination of this
Agreement, according to §13 herein, return to Company all catalogs, Bailed
Equipment, Magellan units, unused Products, price sheets, manuals, samples,
advertising and promotional materials related to the Products. Distributor shall
bear all shipping expenses incurred in the return of the Products and materials
described herein.

 

13.8.

For a period of one (1) year following the date of termination, according to §13
herein, Distributor shall not directly or indirectly solicit prospective or
current Customers for the purpose of selling or placing the Products that
Company deems Competitive to the Products.

 

13.8.1

In §13.8, "Customer" means any entity with a written quotation or proposal from
Distributor prior to the date of termination as defined in §13.

 

13.8.2

In §13.8, "Competitive" means any product that fractionates blood or body
tissues to obtain cells or plasma.

14.

INDEMNIFICATION. Distributor shall indemnify, defend and hold harmless Company,
its subsidiaries, officers, directors, employees, shareholders, and suppliers
from all demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, interests, penalties, costs, and expenses including
reasonable legal fees and disbursements and any amount arising from any action,
suit, proceeding, claim, appeal, demand, assessment or judgment resulting from
any breach of representation, warranty, and agreement including indirect,
incidental or consequential damages based on any negligent handling or improper
use of the Products, whether based on warranty, contract, patent or trademark
infringement, tort or otherwise,

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CPM Medical 20100224.7

15.

MISCELLANEOUS.

 

15.1.

Severability Clause. If any provision of this Agreement is illegal or
unenforceable, that provision is severed from this Agreement and all other
provisions remain in force,

 

15.2.

Entire Agreement. This Agreement constitutes the entire agreement among the
Parties and supersedes any prior or contemporaneous understanding or agreement
with respect to the transaction contemplated.

 

15.3.

Modification. The Parties may only modify this Agreement by a writing signed by
both Parties.

 

15.4.

Non-waiver. No claim or right arising out of a breach of this Agreement is
discharged in whole or in part by a waiver or renunciation of the claim or right
unless the waiver or renunciation is supported by consideration and is in
writing signed by the aggrieved party.

 

15.5.

Assignment and Delegation. Except as described herein, Distributor shall not
assign nor delegate any right or interest in this Agreement without Company's
written permission. Any attempted assignment or delegation, without Company's
consent, is considered void. Company is entitled to assign the Agreement, in
whole or in part, without Distributor's consent.

 

15.6.

Successorship. This Agreement is binding on the heirs, representatives and
assigns of the Parties.

 

15.7.

Force Majeure. Neither Party is held responsible if the fulfillment of any terms
or provisions of this Agreement are delayed or prevented by revolution or other
disorders, wars, acts of enemies, strikes, fires, floods, acts of God, or
without limited the foregoing, by any other cause not within the control of the
party whose performance is interfered with, and which by the exercise of
reasonable diligence, the party is unable to prevent, whether of the above class
of causes or not.

 

15.8.

Choice of Law. The validity, interpretation and performance of this Agreement is
controlled by and construed under the law of the State of Ohio.

 

15.9.

Attorney's Fees. The prevailing party in any lawsuit arising under this
Agreement is entitled to recover reasonable attorney's fees from the
non-prevailing party,

 

15.10.

Arbitration. Notwithstanding anything to the contrary herein, the Parties shall
settle any controversy or claim arising out of or relating to this contract, or
breach thereof, by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof.  The arbitration shall take place in Hopkinton, Massachusetts.

 

15.11.

Notice. Any notices required or permitted hereunder shall be given appropriate
Party at its address specified above or at such other address as the Party shall
specify In writing. Such notice shall be deemed given upon personal delivery, or
sent by certified or registered mail, postage prepaid, three (3) days after the
date of mailing or sent by express delivery service, delivery fee prepaid, two
(2) days after the sending.

 

15.12.

Counterparts. This Agreement may be executed in any number of counterparts, each
of which, when executed, shall be deemed to be an original and all of which
together shall constitute one and the same document. The Parties may execute
this Agreement by facsimile or electronically transmitted signatures.

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CPM Medical 20100224.7

 

15.13.

Negotiation. This contract was the result of negotiation between the Parties.
The Parties agree that for the purpose of interpreting this Agreement, they
shall be deemed to have jointly authored each and every provision.

 

15.14.

Delivery. Any delivery times quoted by Company or Its personnel are estimates
only and Company shall not be liable for any delays in delivery.

 

15.15.

Heading. The paragraph headings used in this Agreement are for convenience and
reference purposes only and do not add to, limit, or in any manner affect the
subject matter.

 

15.16.

Exhibits. All Exhibits attached to this Agreement are incorporated as part of
this Agreement.

 

15.17.

Construction. Whenever the singular number is used in this Agreement and when
required by the context, that number includes the plural and vice versa, and the
masculine gender includes the feminine and neuter genders and vice versa. All
pronouns and variations thereof refer to masculine or feminine genders, singular
or plural, as the identity of the person may require. The words "include,"
"including" and "includes" as used in this Agreement are deemed to be followed
by the words "without limitation."

 

15.18.

Consents. Any approval, authorization or consent required by this Agreement must
be in writing, duly signed by an authorized representative of the granting
Party. The withholding of an approval, authorization or consent for regulatory,
quality, or competitive reasons shall not be deemed unreasonable.

 

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EXHIBIT 10.35

IN WITNESS WHEREOF, the Parties or authorized representatives of the Parties
have executed this Agreement as of the date first written above.

CPM Medical

 

Arteriocyte Medical Systems, Inc.

By:

 

By:

Name: Mark Brooks

 

Name: Donald Brown

Its: Principle

 

Its: Chief Executive Officer

 

 

 

By:

 

 

Name:  Chris Reeg

 

 

Its:  Principle

 

 

Sales Representative Name: James Regester

 

Bailed Magellan Serial Number(s):

 

 

 

 

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EXHIBIT 10.35

Exhibit A

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EXHIBIT 10.35

Exhibit B

Distributor's Territory

Distributor shall operate in their current geographic area, defined and limited
to the following three digit zip codes in the States of California, Iowa, New
York, Texas and Wisconsin:

107, 503, 547, 750, 752, 756, 750 761, 762, 763, 765, 778, 789, 782, 900, 902,
905, 910, 912, 913, 917

 

 

 

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EXHIBIT 10.35

Exhibit C

Distributor's Vendor Approved Hospitals

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CPM Medical 20100224.7

[gh2uzoicvnc0000003.jpg]

 

 

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EXHIBIT 10.35

Exhibit D

Company's Trademarks

AMS owns the following trademarks filed or registered with the United States
Patent & Trademark Office:

 

•

Arterlocyte™

 

•

Arteriocyte Medical Systems, Inc.™

 

•

Magellan®

 

•

Stem-Log™

 

•

Prep-Log™

 

•

Equine-Stem®

 

•

Mar01™

 

•

Mar02™

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