exv10w27



 







Exhibit 10.27



DISTRIBUTION AGREEMENT




DATED: January 16,2006




PARTIES:



1. Sutura,
Inc. (“The Company”) a Company incorporated in the State of Delaware, USA.



2. The Lifemed Group Inc. (The Distributor) a Company incorporated in Canada having its registered
office at 40 Eglinton Avenue East, Suite 307, Toronto, Ontario M4P 3A2.




WITNESSETH



Whereas, Sutura Inc. manufactures, markets and sells vascular stitching devices, whereas the
Distributor represents that it has the knowledge and skills to market Sutura Ine.’s products and
intends to purchase Sutura Inc.’s products for sale in
Canada.




AGREEMENT



The parties hereby agree as follows:





	 	1.	 	In this agreement where the context so admits or requires the following expressions
shall have the following meanings respectively:





	 	 	 	 	 
	 

	 	“The Company’s Products”
	 	means such products as the Company is prepared to supply to
the Distributor upon the terms of this Agreement. Such
products are initially those described in the price list
contained in the first schedule hereto but the company
may, from time to time by reasonable notice in writing to
the Distributor for good reason, add other products or
delete products.
	 
	 	 	 	 
	 

	 	“The Territory”
	 	Canada
	 
	 	 	 	 
	 

	 	“The Patents”
	 	means the registered patents and
applications therefore for the
time being registered in the name of or, as the case may
be applied for, by Sutura Inc., its
subsidiaries/parent/holding or associated companies and
any future patents granted to or applications made
therefore by or on behalf of Sutura Inc.
	 
	 	 	 	 
	 

	 	“The Trade Marks”
	 	means the registered trade marks and applications therefore
for the time being registered in the name of, or as the
case may be, applied for by Sutura Inc. or its
subsidiaries/parent/holding or associated companies and
any future trade marks and applications therefore
registered in the name of or applied for by Sutura Inc. or
its subsidiaries/parent/holding or associated companies.
	 
	 	 	 	 
	 

	 	“The Trade Names”
	 	means the unregistered trade names belonging to the Company
	 
	 	 	 	 
	 

	 	“The Commencement Date”
	 	means February 1, 2006







The singular includes the plural and vice-versa, words imparting the masculine gender only
shall include the feminine gender and words imparting persons shall include corporations.



DISTRIBUTOR’S
RIGHTS AND OBLIGATIONS




 









 






	2.	 	The Company hereby grants to the Distributor during the term of this Agreement and the
Distributor hereby accepts subject to the provisions hereinafter
contained, the right to
purchase
from the Company, the Company’s Products for resale within the Territory.
	 
	3.	 	The Distributor agrees:
	 
	 	 	Sales






	 	(1)	 	At its own expense to promote and increase in every reasonable manner
possible to the reasonable satisfaction of the Company the sale of the Company’s Products in the
Territory and to purchase from the Company in each period of 12 (twelve) months,
beginning on the commencement date, Company Products to a total value of at least the
value stipulated in the second schedule hereto or such other value as shall be agreed
from time to time in writing.
	 
	 	(2)	 	To keep the Company informed of all its marketing activities with
regard to the Company’s Products and also of any developments in market conditions within the
Territory and to submit a bi-annual Marketing Report.
	 
	 	(3)	 	Not to seek customers or otherwise directly or indirectly to solicit orders
for the Company’s Products outside the Territory or knowingly sell to a third party who intends
to sell the Company’s Products outside the Territory.
	 
	 	(4)	 	To comply with or, as the case may be, to assist the Company to comply
with any procedure or regulation laid down or imposed by any governmental body or agency
which affects any of the Company’s Products within the Territory.
	 
	 	 	 	The Distributor agrees that in carrying out its duties under this Agreement, it will
neither undertake nor cause or permit to be undertaken any activity which is illegal
under any laws in or outside the Territory. In particular, the Distributor covenants
and warrants that it shall comply in all respects with all laws, decrees, rules and
regulations of the Territory. The Distributor warrants thai it is duly licensed or
otherwise authorized by all laws applicable in the Territory and accepts all liability
for breach of this warranty.






	 	 	Conflict of Interest






	 	(5)	 	That it shall not during the subsistence of this Agreement without the
written consent of thc Company be interested in or concerned either directly or indirectly in the
purchase, sale, manufacture or introduction into the Territory of any goods which compete with or
perform the same function as any of the Company’s Products.
	 
	 	(6)	 	Subject to the provisions of Clause 3 (7) hereof during the term of the
Agreement and at its own expense to advertise the Company’s
Products throughout the Territory to such an
extent and in such a manner as is reasonably satisfactory to the Company.
	 
	 	(7)	 	Not to produce, exhibit, circulate or permit any servant or agent to produce,
exhibit or circulate any literature or advertising material other than that supplied to it under
Clause 4(4) thereof, without the prior written approval of the Company.






	 	 	Service






	 	(8)	 	To carry out after-sales service and follow-up sufficient for return purposes,
for any of the Company’s Products to a standard of the workmanship reasonably
acceptable to the Company and to provide itself at its own expense with such proper
equipment and facilities as shall, in the Company’s reasonable opinion, be adequate
for this purpose.






	 	 	Stocks and Staff










 









 












	 	(9)	 	To maintain such stocks of the Company’s Products, including, as appropriate
and as may be reasonably necessary to enable the Distributor to comply with its
obligations hereunder.
	 
	 	(10)	 	To employ such qualified, trained sales and technical personnel as shall be necessary to
provide for the proper sales, service, and follow-up of the
Company’s Products.






	 	 	Payment






	 	(11)	 	To pay for the Company’s Products in such a manner as the Company may from time to
time prescribe and at the applicable prices specified in the Company’s price list
currently in effect upon receipt of the Distributor’s order,
less the discount mentioned in the
first schedule herein or as otherwise agreed in writing between the Company and the
Distributor and to pay all charges involved in transferring payments in full and not to
have the amount due to the company exceeding the limit as established from time to time
by the Company.






	 	 	Industrial Property Rights and Confidentiality






	 	(12)	 	Not without the consent in writing of the Company to use or permit the use of any of
the Company’s Patents, Trade Marks or Trade Names either during the term of this
Agreement or any continuance thereof, or at any time thereafter, except for the purpose of
selling the Company’s Products under this Agreement. The Distributor must ensure that
each reference to and use of the Trade Marks or Trade Names by the Distributor is in a
manner approved by Company and, where appropriate, is accompanied by an
acknowledgment, in a form approved by Company, that the same is a registered trade
mark of Company.
	 
	 	(13)	 	Not to effect or permit the removal of, or any alteration or addition to any of the
Patent numbers or serial numbers affixed to any of the Company’s Products without prior
written consent of the Company.
	 
	 	(14)	 	Not to use any of the Company’s Trade Marks or Trade Names or any word or words
closely resembling them or any of them as part of any corporate name and not to use the
Trade Marks or Trade Names in any way which might prejudice the validity of
Company’s goodwill in them.
	 
	 	(15)	 	To keep confidential and safeguard with special care all confidential technical
information, know-how, data and specifications relating to the Company’s Products or
their manufacture supplied to it by the Company and not to use or disclose the same to
any third party without the prior written consent of the Company except to the extent
necessary to enable its employees to carry out their duties; and to take all necessary
steps to ensure that its employees become bound not to use or disclose the same except as
aforesaid.
	 
	 	(16)	 	Not to modify, alter or add to any of the Company’s Products without prior
written consent of the Company and to disclose to the Company full details of any such
modifications, alterations or additions carried out on receipt of such approval.
	 
	 	(17)	 	At Company’s expense, the Distributor will take all steps which Company reasonably
requires to assist in maintaining the validity and enforceability of the Company’s
exclusive rights to the use of the Patents, Trade Marks or Trade Names during the term of
this Agreement. The Distributor must not do, omit or permit the doing or omission of,
anything which might invalidate or be inconsistent with the Company’s rights in the
Patents, Trade Marks or Trade Names.










 









 












	 	(18)	 	The Distributor must promptly and fully inform Company if the
Distributor becomes aware of: (a) any actual, threatened or suspected
infringement of the Company’s rights in the Patents, Trade Marks or Trade Names;
and (b) any claim that the sale of the Company’s Product infringes any rights of
any Other person.





THE COMPANY’S RIGHTS AND OBLIGATIONS 





	4.	 	The Company agrees during the period of this Agreement:
	 
	 	 	Sales






	 	(1)	 	Subject to the provision of Clause 5 (3) hereof, not during the term of the
Agreement, or any continuance thereof, to appoint any other person as distributor of the Company’s
Products within the Territory nor to authorize any person to sell the Company’s Products within
the Territory.
	 
	 	(2)	 	Subject to the provisions of Clause 3(12) to 3(18) hereof, to permit the
Distributor to use the Patents, Trade Marks and Trade Names for the purpose of selling the Company’s Products
in accordance with the terms of this Agreement.
	 
	 	(3)	 	Subject to the provisions of Clause 6 (6) hereof, to sell the Company’s
Products to the Distributor at the Company’s prices from time to time current for sales to its
distributors, specified in the Company’s price list(s) current at the date of delivery less the
discount.
	 
	 	Advertising Materials and Catalogues
	 
	 	(4)	 	To supply the Distributor with the instruction books, catalogues, circulars
and other promotional and advertising material in such quantities as the Company deems necessary
and to the extent that the same are reasonably available.






	 	5.	 	The Company at its sole discretion may:






Design
Changes




(1) Improve, discontinue or replace any of the Company’s Products at any time without
incurring any obligation to replace or make corresponding changes in any of the Company’s Products
previously delivered to the Distributor and without incurring any other obligation or
liability provided such improvement, discontinuation or replacement applies to all Company
distribution.




Application of Funds




(2) Apply or procure to he applied from time to time any funds of or credits to the
Distributor in the possession or custody of the Company against any debts of the Distributor owing to the
Company.




Adequate Representation/Participation




(3) By not less than 60 day’s notice in writing to the Distributor to withdraw the selling
rights granted to the Distributor in respect of any part of the Territory if the Distributor fails
to give representation reasonably acceptable to the Company in such part, and appoint forthwith any
other person as Distributor in respect of such part, Service of notice as aforesaid shall be
without prejudice (a) to the validity of this Agreement in respect of those parts of the Territory
not being the subject of the said notice and (b) any rights as to the payment of money or to the
provision of service or repair in respect of any Company Product supplied hereunder accruing to either
party prior to the date thereof in respect of such part.




 









 









The Company at its sole discretion may sell directly or permit any subsidiary, parent or
associated company of the Company or any other party to sell directly any of the Company’s Products
to government agencies within the territory. However, in case of direct selling by any referenced
party, the Company shall pay to the Distributor an amount equal to the difference between the sale
price to the customer and the Company price to the Distributor. The Distributor price of such
Product will be referenced on the price list current at the date upon which such order was
accepted.




Assignment




(4) The Company may assign to any subsidiary, parent or associated company of the Company or to any
other party its rights made under this Agreement or the benefit of any term or provision hereof.




ORDERS
AND CONDITION OF SALE




6.
The following provisions shall apply to any order that the Distributor places for any of
the Company’s Products:




Placing
an Acceptance of Orders




	 	(1)	 	All orders must be addressed by the Distributor to the registered office
for the time being of the Company or to such other address as the Company shall notify to the
Distributor.
	 
	 	(2)	 	An order addressed to the Company shall not be deemed to have been accepted
until a formal written acceptance has been dispatched to the Distributor by the Company.
	 
	 	(3)	 	All orders shall be placed upon and subject to the terms and conditions of
this Agreement and shall be deemed to be accepted upon and subject to such terms and
conditions to the exclusion of all other conditions of sale or purchase. If any
purchase order or acceptance of order shall make any reference to any standard or
printed or other terms and conditions of purchase or sale, such order and acceptance
shall be construed and the rights and liabilities of the parties respectively shall be
ascertained as if such reference had been deleted.






Warranties 




	 	(4)	 	The Company warrants that all the Company’s Products supplied to the Distributor
will be of the standard quality normally supplied by the Company. The Company
does not give any warranty in respect to the Company’s Products except for the
foregoing warranty which is given expressly in lieu of and to the exclusion of all
other warranties and conditions expressed or implied whether under law or otherwise
and also to the exclusion of every form of liability for loss or damage direct or
consequential. The Company does not accept any liability under the foregoing
warranty or on any other grounds for damages in an aggregate amount greater than
the Company’s price to the Distributor for the Company Product involved.
	 
	 	(5)	 	The Company hereby warrants that itself or its subsidiaries, parent,
holding or division companies are the registered proprietors of the Patents and Trade Marks but
no other express or implied warranty is given by the Company with respect to the
validity of any of the Patents or Trade Marks.






Prices and Payment



 









 






	 	(6)	 	The Company reserves the right to alter from time to time the prices of the
Company’s Products stated in the Company’s price list by giving to the Distributor at
least 60 day’s notice in writing to that effect. Where any of the company’s products
are on order but remain undelivered at a time when the Company notifies the
Distributor of any alteration in the price thereof, they will be delivered at the
prices in effect at the time the order was received by the Company, unless agreed to the
contrary by the Company.
	 
	 	(7)	 	The Distributor will pay for all orders of the Company’s Products in US
dollars or in such other currency as the Company shall specify, and all such payments are due net
within thirty (30) days from the date of shipment and invoicing after the initial six
(6) month period in which all orders shall be prepaid.
	 
	 	(8)	 	The Company’s prices are for delivery ex the Company’s warehouse at Sutura,
Fountain Valley, USA. Delivery shall be deemed for all purposes to take place and
the risk of loss shall be deemed to have transferred to the Distributor when the
Company’s Products leave the Company’s warehouse and are delivered to the
Distributor, his servant or agent or to the carrier or other bailee for the purpose of
transmission to the Distributor. If the Company agrees to the request of the
Distributor to arrange transport and/or insurance, the Company shall be deemed to do
so as the agent for the Distributor and at the Distributor’s expense in all respects.
In such event, the Company shall not be responsible in any manner whatsoever to the
Distributor either in negligence or otherwise for any failure on the part of the
Company to comply with such request correctly or at all.
	 
	 	(9)	 	The Company shall be entitled to withhold delivery of any goods ordered by
the Distributor for so long as payment for any goods previously delivered hereunder is
outstanding and in default and/or credit limits are exceeded.






Title and risk in the goods




	 	(10)	 	The risk of goods ordered by the Distributor will be transferred to the
Distributor upon delivery, but the ownership of such goods will only be transferred to
the Distributor when it has paid all amounts owed to the Company, no matter on what
grounds such amounts are owed. The Company shall not be responsible for failure or
delay in delivery of any of the Company’s Products to the Distributor, and the Company
reserves the right to make delivery by installments or partial deliveries with respect
to any order placed by the Distributor which the Company is unable to make in one
delivery.






GENERAL CONDITIONS




	 	7.	 	The following general conditions shall apply to this Agreement:






	 	(1a)	 	All disputes arising in connection with the present contract shall be settled
amicably, Failing this, the dispute shall be referred to the Jurisdiction of
California Courts.
	 
	 	(1b)	 	The provisions herein contained shall be construed and take effect in accordance
with USA law.
	 
	 	(2)	 	This Agreement is personal to the Distributor, which may not assign the
whole or any part of its rights or obligations hereunder without the Company’s prior written
consent.
	 
	 	(3)	 	The Distributor acknowledges that the relationship between itself and the Company
is that of buyer and seller, and agrees that it will not represent itself to be the
agent of






 









 









	 
	 	 	 	the Company for any purpose whatsoever, that i will not pledge the credit of the
Company and that it will not incur any other obligation on behalf of
the Company.
	 
	 	(4)	 	The parties hereto acknowledge that this Agreement does not constitute a
partnership or joint venture between them.
	 
	 	(5)	 	No departure from or waiver of the provisions of this Agreement shall be
deemed to authorize any prior or subsequent departure or waiver, and the Company shall not be
obliged to continue any departure or waiver or to permit any subsequent departure or
waiver.
	 
	 	(6)	 	Notwithstanding that any of the provision of this Agreement may prove to be
illegal or unenforceable, the remaining provisions thereof shall continue in full force and
effect, provided that such severance is permitted under US law.
	 
	 	(7)	 	No rights to manufacture the Company’s Products are granted to the
Distributor by this agreement.
	 
	 	(8)	 	The headings to clauses and paragraphs of the Agreement are inserted for the
purpose of convenience only and shall not affect the construction of this
Agreement.






TERMINATION




	 	8.	 	(1) This Agreement shall be deemed to have effect from
the commencement date and
subject to the provisions of clause 5 (3) hereof and as hereinafter provided shall remain
in force for a period of three years from that date and thereafter from year to year
unless terminated by either party giving to the other not less than 6 months written
notice of its intent that the Agreement shall expire at the end of the then current term.






	 	(2)	 	Notwithstanding the provisions of Clause 8 (1) hereof, this Agreement
may be terminated immediately:






	 	(a)	 	upon written notice to the other party if that other
party shall suspend payment or become insolvent or suffer a receiver or trustee of any of its
property to be appointed for the benefit of creditors of that other party.
	 
	 	(b)	 	upon written notice to the other party if that other
party shall commit any material breach of any of its obligations hereunder and shall fail to remedy
such breach within 28 days after being called upon to do so by notice in
writing given by the party not in default.
	 
	 	(c)	 	upon 28 days written notice from the Company to the
Distributor if the latter fails to realize the sales volume minimum purchase
requirements mentioned or referred to under Clause 3(1).
	 
	 	(d)	 	upon written notice from the Company to the Distributor.






	 	1.	 	In the event of the assignment or attempted assignment by Distributor
of all or any of its rights or obligations hereunder without the
previous written consent of the Company
	 
	 	2.	 	If any change occurs in the constitution or circumstances of the
Distributor which, in the opinion of the Company, is materially
detrimental to the interests of the Company and, without limiting the
generality of the foregoing, if any interest in the Distributor is
acquired, directly or indirectly, by any other company, person, firm or
association





 









 






	 	 	 	engaged in any business which, in the opinion of the
Company, competes or will compete with the business of the
Company.






	 	(3)	 	Upon the effective date of any such notice of termination, the Company
may then appoint, accept orders from and deliver to customers in the Territory
after the effective date of such termination and no allowance shall be payable
to the Distributor in respect to the Company’s Products delivered to the new
distributor.
	 
	 	(4)	 	In the event that the Company is acquired by or merged with another company,
the
Company has the right to terminate the distribution agreement before the end of the
contract period. If the distribution agreement is terminated due to acquisition or
merger prior to the end of the contract period, the Company will compensate the
Distributor for the loss of future margin over the remaining term of the contract to a
maximum of 12 months. The compensation to the distributor will be calculated
based on the average level of units sold in the six months preceding the termination
times a margin of 50 Dollars.
	 
	 	(5)	 	In the event that the company is acquired by or merged with another company
within
the first six months of the distribution agreement, the Company will provide
liquidating damages to the distributor. The amount of liquidating damages, will be
based on the following formula:





	 	 	 	 	 
	 

	 	distributor’s year one unit purchasing commitment     X      50 Dollars

	 

	 	 	2	 
	 
	 	 	 	 
	 

	 	(1000/2) X 50 Dollars =

	 
	 	 	 	 
	 

	 	500 units X 50 Dollars = Dollars 25,000








	 	 	 	For purposes of this Clause, a “merger or
acquisition” shall mean the sale of all or
substantially all of the assets of the Company or the acquisition of the Company by
another entity by means of a merger, consolidation or other reorganization in which
the shareholders of the Company immediately prior to such transaction will own less,
as a result of the transaction, than a majority of the outstanding shares of the
surviving company.






RESULTS OF TERMINATION




	 	9.	 	Upon termination of this Agreement on any ground, the following provisions shall apply:






	 	(1)	 	All unfulfilled orders for the Company’s Products made by the Distributor
may be cancelled at the discretion of the Company
	 
	 	(2)	 	Any outstanding debts owed by the Distributor to the Company shall become
payable immediately.
	 
	 	(3)	 	The Distributor shall forthwith discontinue the use of all stationary, advertising and
other material, which would make it appear to the public that it is still acting as a
Distributor of the Company’s Products.
	 
	 	(4)	 	The Distributor shall immediately cease to use the Company’s Patents, Trade Marks
and Trade Names, and will return or destroy all price lists, advertising literature
and any other materials supplied by the Company upon demand.
	 
	 	(5)	 	All rights granted by the Company to the Distributor hereunder
shall cease immediately










 









 












	 	(6)	 	(a) If the Company terminates the Agreement at any time and for whatever cause,
the Distributor shall have the right, if it so desires, to have the Company
repurchase
from the Distributor such stock of the Company’s Products as at
that time are in the
ownership of the Distributor and which at that time in the opinion of the Company
are in good saleable condition. The price to be paid by the Company under these
conditions shall be the price at which those products were sold to the Distributor
inclusive of all cost of carriage, insurance, packing and duties pertaining to these
products.






(b)If the Distributor terminates the Agreement at any time and for whatever cause,
the Company shall have the right, if it so desires, to repurchase from the
Distributor such stock of the Company’s Products as at that time are in the ownership
of the Distributor and which at that time in the opinion of the Company are in good
saleable condition. The price to be paid by the Company under these conditions shall
be the price at which those products were sold to the Distributor plus all costs of
carriage, insurance, packing and duties pertaining to those products. Any of the
Company’s Products that are in the Distributor’s possession but for which payment has
not yet been received by the Company at the time of termination shall be returned to
the Company a the Distributor’s expense.




	 	(7)	 	Such termination shall be without prejudice to any rights or obligations,
which shall have accrued to either party prior to such termination, but neither party shall be
liable to the other for loss or damage arising from such termination.
	 
	 	(8)	 	Such termination shall not prejudice or affect the term in force of any
provision of this Agreement, or any continuance thereof, which is expressly or by implication
intended to continue in force after such termination.






NOTICE




10.
Any notice to be given by either party hereto to the other may be given by sending the same by
prepaid registered airmail post or by telex or cablegram or telefax or confirmed e-mail addressed
to the registered office for the time being of the other party. Any notices sent shall, if sent by
post, be deemed to have been served at the latest, within seven days after the same shall have been
posted and if sent by telex/telefax, e-mail or cablegram be deemed to have been served at the
latest within 24 hours after the same shall have been dispatched. In proving such service, it shall
be sufficient to prove that the letter containing the notice or the telex, cablegram or e-mail was
properly addressed and posted or dispatched. Without prejudice to the effect of a notice given by
telex, telefax, cablegram or e-mail, a copy thereof shall, within 24 hours of its dispatch, be sent
to the addressee by prepaid registered airmail




FINAL PROVISIONS




	11.	 	This Agreement, the authoritative text of which shall be that in English language
set out herein, is executed in three counterparts; a copy is delivered to each of the
parties. The third counterpart, duly attested, shall eventually be used for registration
purposes.






AS WITNESS the hands of the duly authorized officers of the parties hereto the day and year first
above written.



	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Attest:
	 	/s/ [ILLEGIBLE]	 	By:	 	2-13-06	 	 
	 

	 	 	 	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Attest:
	 	/s/ [ILLEGIBLE]	 	By:	 	2-13-06	 	 
	 

	 	 	 	 
	 	 	 	 	 	 






 









 








SCHEDULE 1

Price List




	 	 	 	 	 
	Catalog Number	 	Product Description	 	Distributor Price
	 
	06-15-04

	 	6Fr Standard Length
	 	135.00 USS
	08-15-04

	 	8Fr Standard Length
	 	135.00 USS





Pricing
and discount structures for future products, including the 6, 8 and
12Fr versions
with guide wire included, will be established prior to commercialization.




 









 








SCHEDULE 2

Minimum 12-Month Purchase Levels



The
Lifemed Group Inc. (Distributor) agrees to purchase 100 units


of the SuperStitch Vascular Suturing Device as an initial stocking order. The total minimum
purchasing volume for the first year, including the initial stocking
order, is 1000 units. The
units to be purchased are to be comprised of any combination of the catalog numbers described in
Schedule 1.




	 	 	 
	First Year

	 	1,000 units
	    Second Year

	 	2,000 units
	Third Year

	 	3,000 units





At the end of each year the Company will review the Distributor’s performance to these
purchasing goals as a prerequisite for continuation of the distribution agreement.