License Agreement Modification, dated as of July 24, 2019, by and between Guided Therapeutics, Inc. and Shandong Medical Instrument Corporation

 

 

This Agreement supersedes. any and all statements, representations or agreements other than existing Purchase Orders between Guided Therapeutics, Inc, a Georgia, United States of American corporation ("GTI') located at 5835 Peachtree Comers East, Suite D, Norcross, Georgia 30092 and Shan.dong Yaohua Medical Instrument Corporation, located at No. 5 Zhuijian Street, High-Tech Development Zone, Laiwu Shandong, Peoples Republic of China ("SMI). This agreement is dated 24 July 2019

 

WHEREAS GTI had previously asserted that they had developed a platform technology for the early detection of disease that leads to cancer;

WHEREAS GTI had previously asserted that their first non-invasive cancer detection product is the LuViva® Advanced Cervical Scan device (the "Device") and the related disposable cervical guides (the "Disposables" and, with the Device. "LuViva"). Luviva is designed to: GTI – LuViva (Device).

 

 

WHEREAS LuViva is currently in use in Canada, Latin America, Europe, Turkey, Asia

and Africa.

 

WHEREAS GTI had previously asserted that they own the worldwide manufacturing, distribution and intellectual property ("IP") rights to Lu Viva, and

 

WHEREAS GTI asserts that they have the rights to license the global manufacturing rights, excepting the Disposable Cervical Guides in the Republic of Turkey and final assembly rights of the Device in Hungary, and the rights to license the distribution and sales rights for LuViva in the People's Republic of China, Macau, Hong Kong and Taiwan (herein after collectively referred to as the "Jurisdictions"

 

WHEREAS SMI is a medical device company in China with an established distribution and sales capability and bas indicated a capability and willingness to manufacture for the global market, and distribute and sell LuViva in the Jurisdictions,

 

WHEREAS SMI, in order to obtain license to the license for global manufacturing rights and exclusive distribution and sales, of LuViva within the Jurisdictions, previous agreed to:

 

WHEREAS BOTH PARTIES have acted in good faith, there have nonetheless been circumstances that necessitate revisions and additions to the original agreement.

To date, SMI has

  

SMI has paid in full for five devices and associated disposables.

 

To date, GTI has

 

  

IT IS HEREBY AGREED AS FOLLOWS between SMI and GTI that SMI is granted (1) exclusive manufacturing rights, excepting the Disposable Cervical Guides for the

Republic of Turkey, and the final assembly rights for Hungary, and (2) exclusive distribution and sales rights for LuViva in the Jurisdictions, subject to the following terms and conditions:

 

1. Payments by SMI for Outstanding Purchase Order:

 

2 GTI transfer of stock:

 

shares of GTI stock to SMI

 

3. 2019-2020 Orders: 2019-2020

C           For clinical trials, GTI agrees to supply 200 Cervical Guides at no cost

 

4. Minimum Sales:

People’s Republic of China (Beginning first full calendar year following CFDA approval).

Both Parties will make best efforts to help SMI achieve the targets in the Table of

Minimum Sales and Orders for Cervical Guide Chip Purchases. If a shortfall in minimum Cervical Guide Chip Purchase Orders occurs, the Parties agree to compensate by altering the royalty on chips and the markup on Cervical Guides or other parts, assemblies or supplies ordered from GTI.

The second year sale includes the first year sale, the third year sale includes the first Year and the second year sales, the fourth year sale includes the first year the second year and the third year sales.

 

 

 

Cost of CFDA Approval:

 

SMI shall underwrite the entire cost of securing approval of LuViva with Chinese

FDA.

 

 

 

 

 

d. Other options that may be identified and available to find a mutually satisfactory solution

 

 

Technical Assistance for Manufacturing and Sales:

 

 

Manufacturing, (2) to establish sales protocols and marketing materials and to

 

 

develop, and (3) to install a Chinese language interface on the LuViva product. To that end, both parties pledge cooperation in helping to establish the manufacturing and sales in China.

 

 

 

 

 

 

l) If the Cervical Guide chip provided by GTI is defective, GTI will provide SMI with a replacement at no cost to SM1.

2) lf there is a configuration change to the LuViva hardware and software, GTI will ensure that the Cervical Guide RFID chips delivered to SMI are compatible with the new configuration baseline.

 

Protection of the IP:

 

GTI agrees to protect its sole ownership of the LuViva IP, so as to ensure that the global manufacturing rights for Lu Viva, and the distribution rights and sales rights for LuViva within the Jurisdictions that GTI assigns to SMI remain legally defensible as exclusive. GTI will coordinate its IP protection with SMI and keep SMI apprised of any actions for IP protection within the Jurisdictions.

 

GTI agrees with the use of the Trademark of Zhenguang (in Chinese",'') instead of LuViva with the above Jurisdictions during the period of manufacturing, distribution and sale.

 

 

 

B . The Parties agree to reassess these royalty amounts at the end of the second year of commercial sales in the Jurisdictions to determine if an adjustment to the royalty amounts, up or down, is warranted. Any adjustments to the royalty amounts must be mutually agreeable.

 

 

 

If within 18 months of this License's Effective Date, SMI fails to achieve commercialization of LuViva (as defined below) in China. SMI shall no longer have any rights to manufacture, distribute or sell LuViva.

 

Commercialization of LuViva is defined as SMI achieving all of the following:

 

 

The Rights described herein must be maintained by diligent development and commercial efforts. Both Parties agree to use their best efforts to maximize the success of the business within the Jurisdictions contemplated herein. Both parties agree to hold quarterly reviews to discuss the business operations within the Jurisdictions, address areas for improved operations and agree on forecasts for orders.

In order for SMI to maintain the licensing rights for the commercialization of the LuViva technology within the Jurisdictions beyond the third year of commercialization, the third quarter review of each year, following year two of commercialization, shall be used to establish commercially reasonable, and mutually agreed to sales commitment and royalty adjustment for the following year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All notices and other communications required by this Agreement will be effective upon deposit in the mail, postage prepaid and addressed to the parties at their respective addresses set forth below until such notice that a different person or address shall have been designated:

 

If to SMI

No. 5 Zhuijian Street, High-Tech Development Zone, Laiwu Shandong, People's Republic of China

 

If to GTI:

 

5835 Peachtree Comers East, Suite D,

Norcross, GA 30092, USA

 

 

The Parties to this Agreement are and shall remain independent contractors and nothing herein shall be construed to create a partnership, agency or joint venture between the parties. Each party shall be responsible for wages, hours and conditions of employment of its personnel during the term of, and under this Agreement

 

 

 

In the event a dispute arises out of or in connection with this Agreement, the parties will attempt to resolve the dispute through friendly consultation. If the dispute is not resolved within a reasonable period then any or all outstanding issues may be submitted to mediation in acc-0rdance within any statutory rules of mediation. If mediation is not successful in resolving the entire dispute or is unavailable, any outstanding issues will be submitted to final and binding arbitration in the State of Georgia in accordance with the laws of the State of Georgia, United States of America. The arbitrator’s award will be final, and judgment may be entered upon it by any Court having jurisdiction within the State of Georgia, United States of America. Each party shall choose one (1) arbitrator and the two (2) chosen arbitrators shall select a third arbitrator, who shall be the Chairman of the Arbitration Panel. As soon as the mediation process has been unsuccessful, either party may select an arbitrator by sending the name of the arbitrator, in writing, to the other party. The party receiving the name of the said arbitrator shall, within fifteen (15) days of receipt, select their arbitrator and shall send their selection, in writing, to the other party. Should that party fail to select their arbitrator within fifteen (15) days of receipt of the name of the first party's arbitrator, the initial party may seek Court appointment of the receiving party's arbitrator and the latter shall be responsible for the initial party's reasonable attorney's fees and costs in connection with the Court appointment. If the two (2) appointed arbitrators fail to select the third arbitrator within thirty (30) days from the appointment of the second arbitrator, either party, or the parties jointly, may seek Court appointment of the third arbitrator.

 

All questions concerning the validity, operation, interpretation and construction of this Agreement will be governed by and determined in accordance with the laws of the State of Georgia, United States of America.

 

 

No waiver by either Party of any breach of any provision shall constitute a waiver of any other breach of that provision or any other provision hereof

 

 

Each Party represents and warrants that the terms of this Agreement are not inconsistent with any other contractual or legal obligations it may have or with the

policies of any institution or company with which such Party is associated.

 

 

The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event of an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue

of the authorship of any the provisions of this agreement.

 

 

 

SMI may not assign this Agreement in whole or in part, other than manufacturing, without GTI's consent, that shall not be unreasonably be withheld SMI may outsource all or parts of the manufacturing at their discretion, provided that SMI is able to maintain and verify that the quality of the manufacturing maintains CFDA, TSO 14485 and other regulatory standards that GTI may rely upon in sourcing LuViva.

 

 

This Agreement may be signed by the parties via facsimile or electronic signatures.

This Agreement will constitute an effective Agreement when signed by both Parties.

 

 

This Agreement, sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges all prior discussions between them; and neither party shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein. This Agreement may not be modified or altered except in writing by an instrument duly executed by authorized officers of both -parties.

 

IN WITNESS WHEREOF, the parties here to have caused this Agreement to be duly executed by their duly authorized officers as of the 24th day of July 2019.

 

 

GTI

 

 

/s/ Gene Cartwright

Gene Cartwright

Chief Executive Officer, Guided Therapeutics Inc.

 

 

SMI

 

 

/s/Li Yaohua

Chairman, Shandong Yaohua Medical Instrument Corporation