CONSULTING AND INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT

THIS CONSULTING AND INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT (“Agreement”) is made and entered into as of the 11th day of January, 2006, by and between Henvil Corp., an Ontario Canada corporation (“Henvil”) , and Steve Livneh , its sole shareholder and principal, (collectively “ Consultants”) as parties of the first part , and Bovie Medical Corporation , organized and existing under the laws of the State of Delaware, (“ Bovie”) , as party of the second part.

WHEREAS:   Consultants have experience and expertise in the medical device engineering and product development fields; and

WHEREAS Livneh is the creator, owner and inventor of proprietary inventions in the nature of reusable ergonomic modular disposable and re-usable hand instrumentation  and the ideas, designs and concepts therefor, as more fully and particularly described in Exhibits A and B   hereto (collectively, the “Inventions”), and WHEREAS Consultants wish to develop and cause to be developed detailed designs, specifications, quality standards, plans and drawings, computer renderings, models and designs, improvements and modifications, and prototype and pre-production test versions of the Inventions, to facilitate Bovie’s marketing and distribution of the products derived from the Inventions in the United States and throughout the world including such other devices that substantially reflect the Patents and Inventions hereunder (collectively the “Products”).

            WHEREAS Consultants are willing to assign to Bovie all right title and interest in the Inventions and Products pursuant to the terms hereinafter set forth; and

WHEREAS:   On the terms and conditions set out herein, Bovie is willing to engage Consultants to assist Bovie and Consultants are willing to assist Bovie, in developing detailed designs, specifications, quality standards, plans and drawings, computer renderings, models and designs, improvements and modifications, and prototype and pre-production test versions, of the Inventions and Products while protecting Bovie’s  intellectual property and trade secret rights in and to the Inventions, and certain related confidential information.

NOW, THEREFORE, in consideration of the mutual undertakings and covenants set out herein, the parties expressly acknowledge and agree as follows:

1.             Consultants’ Services

1.1            Engagement :  Bovie hereby engages Consultants to perform, and Consultants agree to perform, the services enumerated herein, for the Term set forth herein, unless the engagement is sooner terminated.

1.2            Provision of Equipment and Machinery:   Bovie shall, within thirty (30) days after the date hereof, but subject to Force Majeure, purchase (and/or lease) and cause to be delivered to Henvil’s facility in Canada, if readily available, the necessary equipment and machinery valued at $400,000 which is listed and described on Exhibit C for use by Consultants in performing their Services and Scope of Work (as hereafter defined), subject to Section 1.2.2 below. Consultants acknowledge that for all purposes herein, Bovie is the owner of the equipment and machinery, with owner’s prerogative to exercise all indicia of ownership in any manner and for any reason, including but not limited to, removal of such equipment to its manufacturing location in Florida or elsewhere, on 90 days notice to Consultants.

1.2.1         Standard of care :  Consultants shall utilize the machinery and equipment in conformity with good design and manufacturing practices exercising the appropriate standard of care for the proper maintenance of the machinery and equipment and the safety of the personnel operating same.

1.2.2         Use for other Purposes :  In the event the equipment is used for any purpose other than what is contemplated by this Agreement, Consultants shall notify Bovie in writing of the nature of the use and shall compensate Bovie on terms and amount to be agreed upon prior to such intended use.

1.2.3         Insurance:   For as long as the equipment and machinery is located at consultants’ facility, Consultants shall purchase and keep in effect property insurance  covering the equipment and machinery  specified in Exhibit C in an amount equal to the greater of $400,000 or the actual value thereof, with Bovie as a named insured.

1.3            Standard of Performance :  Consultants acknowledge that Bovie is entrusting to them with highly sensitive confidential and commercially-valuable information, not generally known, and relying expressly on Consultants’ discretion, experience, and expertise:  (a) to develop detailed designs, specifications, quality standards, plans and drawings, computer renderings, models and designs, improvements and modifications, and prototype and pre-production test versions, of the Inventions, in a good and professional manner, consistent with best practices and the standard of care in the medical device design and engineering industry, taking into account time and budgetary constraints imposed by Bovie; and (b) to keep confidential and to preserve Bovie’s trade secrets and confidential information, and that, in consequence, they will occupy a special position of trust and confidence with respect to Bovie. Consultants hereby agree that, in the course of performing the services enumerated herein, they will at all times use reasonable efforts to advance Bovie’s interests, and loyally and faithfully, subject to Force Majeure, to perform their obligations for Bovie’s benefit.

1.4            Services :  Subject to Force Majeure events, Consultants hereby agree to perform the services set out in the Scope of Work, attached hereto as Exhibit D hereto, not later than the times specified for completion of the Scope of Work, as the same may be amended by mutual agreement of the parties from time to time (the “Services”). The Scope of Work and delivery date may be modified or augmented from time to time by mutual, written agreement signed by the parties, acting reasonably.

1.5            Limitations on Consultants Authority in Respect of Dealings with  Third Parties : Each  Consultant shall have no authority or power to bind Bovie to any obligations or undertakings with third parties, nor shall Consultants represent that they have, or hold themselves out as having; or imply or suggest that he has; such authority or power.  All negotiations and negotiating positions with any third parties are subject to approval by Bovie.  All agreements, understandings and contracts with third parties must be in writing, and duly executed by an officer of Bovie in order to be effective against Bovie. Consultants shall disclose to third parties the foregoing limitations on their authority where and when reasonably necessary to avoid creating misapprehensions or misunderstandings on the part of such third parties as to the scope of Consultants’ authority.

1.6            Independent Contractor Status :   Consultants and Bovie are contractors independent of one another, and Consultants shall not be considered the employee, partner or joint venturer of Bovie, or subject to the execution and performance hereof, the owner of any interest in the Inventions or business associated with it.  Subject to the provisions of this Agreement, Consultants shall be free to perform the services required hereunder at the times, in the places, and in the manner they deem fit. Except as expressly  provided herein and subject to the provisions of section 2.1 hereof, Consultants shall provide, at their cost and expense, all transportation, personnel, equipment, insurance and supplies needed to perform the Services.  Bovie is contracting for the results set out in the Scope of Work, and Consultants shall control the details of their performance. Consultants shall be liable for and responsible for payment of any and all taxes that may be due upon compensation earned by them under this Agreement.

1.7            Bovie’s Efforts to Exploit the Inventions:   Bovie agrees that it shall use reasonable efforts to exploit commercially the Inventions, and that Bovie shall bear all costs of marketing of the Products. Bovie shall have sole, exclusive, and unfettered discretion as to the means by, and terms and conditions under, which Bovie shall endeavor to exploit the Inventions and Bovie does not guarantee or make any warranties or representations whatsoever to Consultants that such efforts will be successful, or will result in any level of revenue, income or profit.

2.             COMPENSATION

2.1           Development Compensation :   Bovie shall pay to Consultants, monthly for a period of twelve (12) months, the sum of thirty thousand ($30,000) or for less than a month, an appropriately pro-rated portion thereof (“Consulting Fee”) commencing with the execution hereof, in support of Consultants’ preparations and performance of their Services and Scope of Work hereunder plus the cost of tools and molds up to a maximum cost of $120,000.00 if required for the Scope of Work, all of which is subject to approval of Bovie which shall be the owner of such tools and equipment.

2.2            Royalty Fee :  Commencing with the period immediately following one year after the date of the first sale or commercial delivery of the Product for use and continuing for a period of four years thereafter, Bovie shall pay on a quarterly basis to Livneh, or an entity designated by him in writing, which is at least 50% owned and controlled by Livneh, a minimum royalty (“Initial Minimum Royalty”) consisting of the greater of $35,000 per year or 3% of Adjusted Gross Revenues received (as hereinafter defined) inclusive of Product delivery for use and such other device(s) that substantially reflect the work performed by Consultants hereunder, namely variants of the reusable ergonomic modular disposable and re-usable hand instrumentation, embodied by the Inventions, during the Term, if any.  Commencing with the quarterly period following the end of the aforesaid four-year period and continuing thereafter for the balance of Term of this Agreement, Bovie shall pay to Livneh, or his designee, a royalty payment (“Ongoing Royalty”) equal to 2.5% of such Adjusted Gross Revenues.  Except as expressly provided in this Agreement, no Royalty shall be payable on account of sale, licensing or otherwise of any other Bovie services or product other than the Products, or on account of any other revenue or income received or accrued by Bovie, from whatever source derived.

2.2.1         Adjusted Gross Revenues :  As used herein, the term “Adjusted Gross Revenues” shall mean   Bovie’s gross sales (the gross amount billed Bovie customers inclusive of distributors) of the Products on account of the sale or delivery for use of the Products and any other device that substantially embodies the Inventions and work performed by Consultants hereunder less (i) shipping costs and (ii) commissions payable to third parties (not including employees, consultants or contractors of Bovie) (iii) returns, and (iv) royalty payable on demo models supplied.

2.2.2       Payment Terms; Content of Fee Statements :   The Royalty shall be payable to Consultants on a calendar quarterly basis.  Not later than thirty (30) days after the last day of the previous calendar quarter, Bovie shall remit to Consultants the amount of the Royalty due on Gross Revenues actually received and credited on account of the sales of the Products during the previous quarter, if any.  With each such payment, Bovie shall deliver to Consultants a statement, showing, for the previous calendar quarter, the total amount of revenues received by Bovie on account of the sales or delivery for use of the Products derived from the Inventions including such other device that substantially embodies the work performed by Consultants hereunder, the amount of gross revenues received and royalty payable for such quarter.   Consultants and their agents shall be entitled not more than once per calendar year during the Term of this Agreement, on ten (10) days prior written notice, to inspect, audit and copy the books and records of Bovie relevant to the Royalty, in Bovie's premises during Bovie’s normal business hours. If such inspection reveals an error in an amount equal to or greater than $1000 concerning the calculation of the Royalty, then Bovie shall pay any amount due and promptly reimburse the actual and reasonable costs of Consultants in connection with such inspection and audit.  Bovie shall promptly correct any such accounting error upon discovery, whether pursuant to such an inspection or audit or otherwise and advise the Consultants accordingly.

2.3            Stock Options :   As additional compensation for Steve Livneh, Bovie shall, subject to Section 2.3.1 below, issue to Livneh, a company owned 50% or more by him or to a family member designated by him, when requested, a total of 100,000 restricted stock options to purchase 100,000 restricted shares of Common Stock of Bovie, exercisable at the closing price for Bovie’s Common Stock on the American Stock Exchange as of at the close of business on the date requested.

2.3.1         Vesting of Options : The aforesaid stock options shall not vest until such time as Bovie formally receives section 510K approval from the FDA for each of the Arthroscopic and Lap Choly classes of instrumentation subject to the application, at the rate of 50% each (or a total of 50,000 options shall vest for each class of instrumentation so approved); provided that Bovie, at its expense, shall apply for section 510K approval within a reasonable period after Henvil's delivery of drawings for each class of Products described in Exhibit A and B .

2.3.2        Consultants acknowledge that such options shall be restricted stock options which are acquired for investment and shall have a term of five years.

2.3.3        Exercise of the restricted stock options shall give the holder of such options the right to acquire restricted shares of common stock of Bovie and future transfer and/or sale of the shares so purchased may only be made in compliance with the Securities Act of 1933, as amended.

2.4            Payment of Fees Ordinary Contractual Obligation of Bovie; No Trust :  Bovie’s obligations to pay Royalty to Consultants shall be regarded as an ordinary contractual obligation of Bovie’s only, and Bovie shall not be deemed, expressly or by implication, to hold any part of its revenues or income derived on account of sale of Product derived from the Inventions as a trust for the benefit of Consultants.

2.5            Transmission of Payments .  Bovie agrees to transmit all payments due Consultants under this Agreement to Henvil or Steve Livneh, as directed by Henvil in writing .

3.             CONFIDENTIAL INFORMATION:

3.1            Mutual Nondisclosure Agreement .   Consultants and Bovie acknowledge that, by virtue of this Agreement, each will have access to confidential information belonging to the other.  Accordingly, the parties agree to respect and fulfill at all times the terms and conditions of the Mutual Nondisclosure Agreement attached hereto as Exhibit E , which is incorporated herein by reference.

3.2            Inventions and Consultants’ Work Product  Proprietary to Bovie Consultants acknowledge that upon execution of this Agreement, the Inventions and all  designs, plans, drawings, standards, specifications, modifications, technical information, prototypes, test versions, and models associated with the Inventions as conceived or developed by Consultants (both before and after the execution of the agreement) and the work to be performed by Consultants for Bovie under this Agreement shall become the exclusive intellectual property of Bovie and shall be subject to the protections of applicable United States and international trademark trade secret, copyright and patent law.  Consultants further acknowledge that all original works of authorship which are made by Consultants (solely or jointly with others) within the Scope of Work and during the Term of this Agreement which are protectable copyright law are “works made for hire,” as that term is defined in the United States Copyright Act, as amended.

3.3            Injunctive Relief :      Consultants further acknowledge that unauthorized disclosure or use of Confidential Information or Trade Secrets or infringement of Bovie’s intellectual property rights in and to the Inventions or Products would result in great harm and injury to Bovie, which would not be readily compensable in money damages.  Accordingly, Consultants agrees that, without waiving any additional rights and remedies otherwise available to Bovie at law, in equity, or by statute, Bovie shall be entitled to preliminary and permanent injunctive and other equitable relief, and waive bond or other security as a condition of such preliminary relief, in the event of Consultants’ breach or threatened breach of any covenant contained in this section 3.

3.3.1        Bovie acknowledges that during the term of agreement, unauthorized disclosure or use of confidential information or Trade Secrets provided by Consultants or infringement of Consultants' intellectual property rights would result in great harm and injury to Consultants, which would not be readily compensable in money damages. Bovie further acknowledge that unauthorized disclosure or use of Confidential Information or Trade Secrets or infringement of Consultants intellectual property rights in and to Consultant’s inventions, would result in great harm and injury to Consultants, which would not be readily compensable in money damages.  Accordingly, Bovie agrees that, without waiving any additional rights and remedies otherwise available to Consultants at law, in equity, or by statute, Consultants shall be entitled to preliminary and permanent injunctive and other equitable relief, and waive bond or other security as a condition of such preliminary relief, in the event of Bovie’s breach or threatened breach of any covenant contained in this section 3

4.            ASSIGNMENT OF INVENTIONS AND TECHNOLOGY:

4.1              Assignment of  Work Product and Intellectual Property  to Bovie. Consultants agrees to, and hereby does, without any additional consideration, irrevocably and unconditionally assign and transfer outright all their respective right, title and interest in and to (a) any and all materials and work product created or developed by Livneh in the course of performing services under this Agreement (“Work Product”); (b) any and all Inventions,  improvements, modifications (whether or not the same be reduced to written or computer-readable form) derived from the Inventions, the Services performed or Work Product created by Consultants hereunder, including but not limited to designs, drawings, specifications and standards, improvements and modifications and pictorial or graphic representations of images, prototypes models and test versions; and (c) any and all copyrights, trademarks, patents and patent rights, and applications therefor, if any, and any and all other intellectual property and/or industrial property rights in and to any and all of the foregoing (collectively Intellectual Property”).

4.2            Disclosure of Work Product.       Consultants agree to execute any instruments, applications, and documents, and to do all other things reasonably