gtph_ex1036





  Exhibit 10.36











 



AGREEMENT BETWEEN SHANDONG YAOBUA MEDICAL INSTRUMENT CORPORATION
AND GUIDED THERAPEUTICS, INC.


 



CONFIDENTIAL,



 FINAL



 24 JULY 2019


 


 


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).


 


A. Determine
the true likelihood of treatable cervical disease that may lead to
cancer in women aged 16 years and over who have been screened for
cervical cancer and have an abnormal result


B. Be
used as a screening tool both in the developed and developing world
where Papanicolau test and/or the Human Papilloma Virus tests are
not widely available


 


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:


 




A.

Make
payments in the sum of $1,000,000 to GTI in exchange for GTI
stock








B.


Establish
a schedule for the initial purchase of the LuViva product,
and








C.


Establish
a schedule for minimum sales of the product








D.


Establish
a manufacturing capability for the manufacture of LuViva and the
Disposables with the technical assistance of GTI.









E. 


Apply
for and receive Chinese Food and Drug Administration (CFDA) 
approval
for LuViva.







 

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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

 






A.

Made
payments of $1,000,000 in which GTI has received $885,144.34 after
the payment of Chinese taxes    










B.


In
2017, ordered five (5) LuViva devices and associated
Disposables. 








C.


In
2018, SMI ordered parts for five additional LuViva devices for
final assembly at SMI. GTI has received a partial payment for these
parts and pursuant to the Purchase Order, will ship the parts once
all payments are received.
 








D.


Established
an SMI capability to manufacture the Lu Viva device, except for
assembly of the handheld and base units, and is in process of
establishing the capability to manufacture the
Disposables
 









E. 


Apply
for and receive Chinese Food and Drug Administration (CFDA) 
approval
for LuViva.





  


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


 


To
date, GTI has

 









A.



Delivered five (5) LuViva Devices and associated Disposables
disposables
 








B.




Provided all documents and data, including manufacturing transfer
plan, product production, guidance documents, product quality
standards, relevant patent certificates, fixed costs of products,
personnel data, etc. as reasonably required.









C.


 Provided
technical advice and completed approximately 95% of the
Sinicization of the LuViva device
 








D.



Paid
for the first samples of Disposables and made specific
recommendations to SMI in order for the Disposable specifications
to be met





  


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:


 


A. SMI
shall complete the payment for the parts, per the existing Purchase
Order, for the five additional LuViva devices.



	








2 GTI transfer of
stock:


 


A. In
consideration for the $885,144.34 that GTI received, GTI shall
issue 12,147


shares
of GTI stock to SMI


B. SMI
shall provide the necessary information for the issuance of the
stock to GTI within two weeks after the signing of this
Agreement


 


3. 2019-2020
Orders:
2019-2020



A. SMI shall honor all existing purchase orders it has
executed to date with GTI in order to maintain Jurisdiction sales
and distribution rights_



B. If
SMI needs to order single use Cervical Guides or other parts,
assemblies or supplies directly from GTI instead of manufacturing
them in China, the prices shall be at cost, inclusive of labor,
plus ten percent (10%) markup.


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.


 



 

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Full
year following CFDA

Approval

 

	
 
Number
of Devices placed or sold per year

 

	
 
Number
of tests per day per Device

 

	
 
Days
per week

 

	
 
Weeks
per year

 

	
 
Resulting
Minimum Cervical Guide Chip Purchase Orders

 


	
  1 

	
  200 

	
  20 

	
  5 

	
  48 

	
 $1824000 


	
  2 

	
  500 

	
  30 

	
  5 

	
  48 

	
 $8664000 


	
  3 

	
  1000 

	
  30 

	
  5 

	
  48 

	
 $22344000 


	
  4 

	
  1250 

	
  30 

	
  5 

	
  48 

	
 $39444000 







 


Cost of CFDA
Approval:


 


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


FDA.


 


A. SMI,
shall arrange, at its sole cost, for a manufacturer in China to
build tooling to support manufacture.


B. The
price payable by GTI for each Device and each Packet of Disposable
supplied by the manufacturer for resale by GTI outside the
Territories will be no higher than the then current internal cost
to GTI for manufacturing the Device and the then current price by
GTI to its current supplier of Disposable


C. In
the event that this not possible, the Parties agree to discuss the
following options:


 


D. SMI
retains the right to manufacture for China, Hong Kong, Macau and
Taiwan, where SMI has distribution and sales rights.


 


1) SMI
elects to manufacture just the Cervical Guides which is anticipated
to be able to be at a lower price in China


 


a. SMI
buys the devices and Cervical Guides, or just the devices from
GTI.


 


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


 


E. If
SMI fails to achieve manufacturing capabilities for the Devices,
except for assembly of the hand.held and base units, and
Disposables in accordance with ISO 13485 for medical devices by 12
months after the completion of Sinicization of the product by GTI,
SMI shall no longer have any rights to manufacture, distribute or
sell LuViva


 



Technical Assistance for Manufacturing and Sales:


 


A. Both
GTI and SMI recognize the need for technical assistance (1) to set
up


 


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.


 



 

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B. GTI
will ensure that the inventor is kept knowledgeable about the GTI
and SMI cooperation. Where practicable, GTI will facilitate the
availability of the inventor for consultation and promotion of the
LuViva product within the Jurisdiction


C. SMI
shall send over its manufacturing expert to GTI at SMI's expense to
learn the manufacturing process. GTI will be responsible for all
in-country (US) expenses.


D. GTI
shall send over its technical expert within 30 days of a request or
as soon as reasonably possible from SM1 to SMI at GTI's expense to
assist with the establishment of the manufacturing and sales
protocols in China. SMI will be responsible for all in-country
(China) expenses.


 


E. GTI
shall provide technical support and training for product upgrades
consistent with the technical support provided to other
international distributors of LuViva.


 


F. GTI
shall provide the Sinicized service with regards to the LuViva
product and software. In the event of a delay in delivery of
Sinicized service, the
schedules for commercialization of the product will be adjusted
through mutual agreement of GTI and SMI, and both
parties agree to use efforts to mitigate the schedule and
commercial
impact of any delays.


 


G. GTI
shall ensure that the LuViva hardware and software work compatibly
with the Cervical Guide RFID chip.


 


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.


 


A. SMI
agrees to protect GTI IP and trade secrets, so as to prevent
unauthorized disclosure or advantage going to a competitor or
competitive technology.


9. Trademark
within the Jurisdiction:


 


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.


 



	

10.
Royalties









 


A. For
each single-use Cervical Guide chip sold by SMI in the
Ju1isdictions, SMI shall transfer funds to the Escrow Agent at a
rate of $1.90 per chip in the amount equaling the number of chips
sold. Funds shall he transferred monthly. SMI shall be responsible
for paying any taxes and tariffs associated with the transfer of
the funds.


 


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.


 



 

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11. Commercialization:


 


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:


 


A. Filing
an application with the CFDA for approval of LuViva


 


B. Any
assembly or manufacture of the Device or Disposables that begins in
China


C. Purchase
of at least 10 Devices and associated Disposables for clinical
evaluations and regulatory use and or sales in the Jurisdictions,
according to the schedule described in Section 3
above.


12. Rights
Maintenance and Ongoing Business Operation
Coordination


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.


 


13. Breach
or Failure to Perform:


 


A. Under
the following circumstances, SMI shall forfeit this License and
shall no longer have any rights to manufacture, distribute or sell
LuViva in the Jurisdictions if SMI is unable to cure in a timely
manner:


 


1) A
material breach of any of SMI's obligations set forth in this
section


2) Failure
to achieve CFDA approval within 18 months after completion of
Sinicination of the Device by GTL To complete the CFDA approval
within 18 months, GTI is required to assist SMI in the whole
process of registration


B. In
the event of Breach or Failure to Perform


 


1) GTI
shall provide written notification of the breach or failure to
perform. GTI


 


 


2) SMI
shall be given a 45 days period in which. to cure the breach or
failure to perform.


 


3) If
the breach or failure to perform is not cured, SMI shall return to
GTI, at SMI's cost, all samples, data, hardware, software,
regulatory documents, bench and clinical test results and all other
information pertaining to LuViva in the Jurisdictions


 



 

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14. Termination:


 


A. Termination
for Breach. If either party breaches a material provision of this
Agreement and does not cure the breach within 45 days after written
notice from the other party, the non-breaching party shall have the
right to: (i) suspend performance or payment until the breach is
cured; (ii) terminate this Agreement; or (iii) seek such other
remedies as are available at law or equity except as limited by the
terms of this Agreement.


 


B. Termination
for Insolvency. In the event either party (i) makes an assignment
for the benefit of creditors; (ii) files or bas filed against it a
petition in bankruptcy or seeking reorganization; (iii) has a
receiver appointed; or (iv) institutes any proceedings for
liquidation or winding up, then the other party may, in addition to
other rights and remedies it may have, terminate this Agreement
immediately by written notice.


1) In
the case of insolvency by GTL GTI shall endeavor to ensure that SMI
is able to maintain its rights for global manufacture. and for sale
and distribution within the Jurisdiction, and have access to the IP
either through purchase or license.


 


2) In
the case of insolvency by SMI, SMI shall endeavor that all
trademark, regulatory and customer account information is
transferred to GTI.


 



C. Effect of Termination. Upon termination of this
Agreement, the rights and obligations of the parties shall cease
except as expressly set forth in this Agreement.


 


15. Notices
and Communications:


 


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


 


16. Relationship
of Parties:


 


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


 



 

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17. Dispute
Resolution:


 


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.


 


18. Applicable
Law:


 


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.


 


19. Waivers
of Breach:


 


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


 


20. Warrants
and Representations:


 


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.


 


21. Interpretation:


 


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.


 



 

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22. Assignment:


 


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.


 


23. Effective
Agreement:


 


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.


 


24. Entire
Agreement:


 


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




 

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