ROYALTY AGREEMENT

This Royalty Agreement (the “Agreement”), dated as of September 29, 2009 (“Effective Date”), is by and between Resorbable Orthopedic Products, LLC, a New Jersey limited liability company (the “Company”), and RSI-ACQ Acquisition, LLC, a Texas limited liability company (“RSI-ACQ”), in connection with that certain Asset Purchase Agreement dated as of the date hereof (the “Asset Purchase Agreement”), by and among the Company, RSI-ACQ, and Wound Management Technologies, Inc., a Texas corporation (“WMT”). Capitalized terms used, but not defined in this Agreement, shall have the respective meanings given such terms in the Asset Purchase Agreement.

BACKGROUND:
 

A.     Simultaneously with the execution of this Agreement, RSI-ACQ will acquire substantially all of the assets of the Company pursuant to the terms of the Asset Purchase Agreement, and this Agreement is a component of the Purchase Price for the Assets.

AGREEMENTS:
 

NOW, THEREFORE, in consideration of the premises, covenants, and obligations provided in this Agreement, the Parties agree as follows:

1.     Definitions.

1.1     “Affiliate” means any legal entity directly or indirectly controlling, controlled by, or under common control with a party. For purposes of this Agreement, “control” means the direct or indirect ownership of more than fifty percent (50%) of the outstanding voting securities of a legal entity, or the right to receive more than fifty percent (50%) of the profits or earnings of a legal entity, or the right to direct the policy decisions of a legal entity.

1.2     “Net Revenues” means the gross amounts received from third parties in connection with the sale, use, sublicense or other disposition of a Patented Product anywhere in the world, less (a) any allowances actually made and taken for returns, (b) shipping, packaging (excluding usual packaging of the product), and insurance costs actually paid; (c) cash discounts and promotional allowances actually allowed in amounts and for purposes customary in the trade; and (d) import, export, excise, value added, sales, use, and excise taxes, shipping charges, and tariffs and custom duties incurred in connection with any such sale, use or other disposition.

1.3     “Related Intellectual Property” means patent rights (including the right to apply therefor), patent applications (including the right to claim priority under applicable international conventions) and all patents issuing thereon, industrial property rights, inventions (whether or not patentable), together with all utility and design, know how, specifications, mask work rights, trade secrets, moral rights, author's rights, algorithms, rights in packaging, goodwill, and other intellectual and industrial property rights, as may now exist, related to the Patent and all renewals and extensions thereof, and any derivative patents, regardless of whether any of such rights arise under the laws of the United States or of any other state, country or jurisdiction.

1.4     “Patent” means U.S. Patent No. 7,074,425, Hemostatic Compositions and Methods.

1.5    “Patented Products” means any product licensed, leased, sold, used or otherwise distributed or commercialized by RSI-ACQ or any of