Exhibit 99.2
PRODUCT SUPPLY & PURCHASE AGREEMENT
Computerized Thermal Imaging Inc., a Nevada corporation having its
principal place of business at ▇▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇, ▇.▇.▇. (herein "CTI"), and NanDa Thermal Medical Technology,
Inc., (("NanDa"), a limited liability company formed under the laws of the
People's Republic of China, having its principal offices at ▇▇.▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 210024,
("MANUFACTURER"), agree as follows.
RECITALS
CTI is an Oregon-based company which has licensed certain IP Rights to
MANUFACTURER for production of CTI's line of computerized infrared imaging and
therapy equipment for medical use ("PRODUCTS") under a MANUFACTURING LICENSE
AGREEMENT dated 17 June 2003 ("LICENSE AGREEMENT").
MANUFACTURER owns and operates modern manufacturing facilities in China
and wishes to sell and supply LICENSED PRODUCTS manufactured under the LICENSE
AGREEMENT to CTI.
CTI and MANUFACTURER wish to contract on the terms below for
MANUFACTURER to be the exclusive independent manufacturer in the Territory of
LICENSED PRODUCT to CTI.
ARTICLE 1 - DEFINITIONS
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As used in this Agreement, the following words and phrases shall have
the following meanings:
1.1 "LICENSED Products" shall mean the product or products listed on
Attachment A, including products which may be added thereto by mutual agreement
between CTI and MANUFACTURER, from time to time all of which products are
covered by patents and/or embody other IP Rights, including CTI's know-how in
their design, structure, composition or manufacture.
1.2 "CTI IP Rights" and "LICENSED IP Rights" shall mean the designs,
copyrights, patent rights, trade secrets, software source and object code,
documentation, know-how, specifications, tradenames and trademark rights
relating to Licensed Products, as set forth more specifically in Attachment B.
1.3 "CTI Patents" shall mean the patents and patent applications owned
by or licensed to CTI, and such other patents and patent applications owned by
or licensed to CTI in the future and any and all patents which may issue from
any such patent application.
1.4 "CTI Trade Secrets" shall mean all manufacturing techniques,
specifications, methods, materials and processes of working, technical data,
engineering and design information, sketches, plans and drawings, testing
methods and protocols and other information and data heretofore developed or
acquired by CTI relating to CTI Products, all of which are trade secrets of CTI.
1.5 "CTI Names" shall mean all trademarks (including words, symbols,
designs and devices), service marks, domain names, and trade names adopted, used
and/or registered by CTI, or used by CTI pursuant to license from a third party.
1.6 "Facilities" shall mean the facility or facilities owned or
controlled by MANUFACTURER in China which are located at Nanjing, JiangSu, PRC,
or such other facilities as may be agreed by the parties, which shall be
designated in advance in writing and approved by CTI as suitable and acceptable
for the manufacture of LICENSED PRODUCT.
1.7 "Inspection" shall mean the inspection of unfinished and finished
LICENSED PRODUCTS as manufactured by MANUFACTURER, conducted by an authorized
representative of CTI at MANUFACTURER's FACILITIES, for the purposes of quality
control and conformance to specifications.
1.8. "Testing" shall mean the process of examination of LICENSED
PRODUCTS at MANUFACTURER's FACILITIES by CTI's representative for conformance to
design and performance specifications.
ARTICLE 2 - LIMITED LICENSE FOR IP RIGHTS
-----------------------------------------
The terms of the LICENSE AGREEMENT shall apply to the CTI IP RIGHTS in
CTI's PRODUCT, whether in finished or unfinished form, and the protection and
enforcement of such Rights. The terms of the LICENSE AGREEMENT are incorporated
herein as though fully set forth, and shall govern MANUFACTURER'S use
manufacture and sale of LICENSED PRODUCTS hereunder, including but not limited
to CTI NAMES, LICENSED IP RIGHTS, sub-licensing, customer reports,
confidentiality, warranties, quality control and inspections, and all other
obligations and protections with respect to the protection and safeguard of the
LICENSED IP RIGHTS as defined in the LICENSE AGREEMENT
ARTICLE 3 - COVENANT NOT TO COMPETE
-----------------------------------
MANUFACTURER expressly represents that it does not now manufacture any
Product that competes with LICENSED PRODUCT. For the duration of this Agreement
and for a period of three (3) years thereafter, MANUFACTURER covenants that it
will not manufacture, directly or indirectly, for itself or for any other party
any products other than LICENSED PRODUCTS which are substantially similar to or
which compete with LICENSED PRODUCTS.
ARTICLE 4 - MARKINGS ON PRODUCT
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MANUFACTURER agrees that MANUFACTURER shall cause to be placed on all
CTI LICENSED PRODUCTS manufactured by MANUFACTURER under this Agreement using
CTI names, any and all applicable patent, trademark and trade name notices as
authorized by law and specified by CTI.
ARTICLE 5 - MANUFACTURING, PRODUCTION SCHEDULE, DELIVERY
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5.1 During the term of this Agreement, MANUFACTURER agrees to
manufacture, and CTI agrees to purchase from MANUFACTURER such quantities of
LICENSED PRODUCTS as CTI may from time to time order from MANUFACTURER, at the
prices set forth in Attachment B. CTI may place additional orders, at its
option. MANUFACTURER agrees to sell and deliver such quantities of LICENSED
PRODUCT to CTI as CTI may order during the term of this Agreement. Orders shall
be placed by CTI on a quarterly basis on CTI's standard form of purchase order,
specifying price, quantity, payment, shipment dates and method, and delivery
terms.
5.2 CTI agrees to place orders on a quarterly basis with MANUFACTURER
to purchase three hundred (300) TIP Systems and three hundred (300) Photonic
Stimulators from MANUFACTURER, and MANUFACTURER agrees to sell and supply such
Systems to CTI, within three (3) years of product certification as provided in
5.2(a) below, provided that MANUFACTURER meets all of the following terms and
subject also to the provisions of paragraph 5.3 below:
a) MANUFACTURER's TIP System is formally certified by the relevant
governmental granting authorities as meeting or exceeding UL, CSA and
CE product certification standards and MANUFACTURER is certified as
meeting GMP standards and satisfied all other requirements of the US
Food and Drug Administration for the product to be re-sold in the
United States and elsewhere in the world in CTI's key markets; and
b) MANUFACTURER's Production facilities are operating according to a
forecasted Production Schedule sufficient to meet CTI's minimum order,
and MANUFACTURER meets the mutually agreed Delivery Schedules for
PRODUCT and.
c) Each TIP System and Photonic Stimulator manufactured by MANUFACTURER
shall meet CTI's quality acceptance test protocols, and
d) MANUFACTURER shall supply US$300,000 (US Three Hundred Thousand
dollars) of LICENSED PRODUCT to CTI to fulfill the technology license
fee credits granted to CTI under the LICENSE AGREEMENT, against such
orders as CTI may request.
5.3.1 In addition, CTI's obligation under this section 5 is
subject to:
a) CTI receives USFDA approval for its BCS 2100 Product, and,
b) US import duties on PRODUCT do not exceed 30% of the price.
5.4 MANUFACTURER shall purchase and provide at its sole expense any
special tools or equipment required to manufacture LICENSED PRODUCT.
5.5 MANUFACTURER agrees that all LICENSED PRODUCTS manufactured by it
under this Agreement other than its own private label Product, shall bear any
applicable patent, trademark and trade name notices as authorized by law and as
specified by CTI. CTI shall designate the form, content and method of affixing
required markings on each Product and on packaging for the purposes of full
compliance with United States Customs requirements.
5.6 Subject to the requirements set forth at 5.2 above, the parties
have agreed on an initial minimum production schedule for Product ("Production
Schedule") which is attached as Attachment C. CTI commits to purchase from
MANUFACTURER at least the quantity of Product stated in Article 5.2 In exchange
therefore, and in consideration of all other terms and conditions of this
Agreement, MANUFACTURER agrees to give priority to CTI's orders and shall
maintain the capability to increase, and shall so increase, production of
Product above the quantity stated in such Production Schedule by up to fifty
percent (50%) at any time, on receipt of sixty (60) days advance written notice
from CTI requesting such an increase.
5.7 Delivery by MANUFACTURER of any LICENSED PRODUCT ("Delivery")
ordered by CTI hereunder to CTI shall be at such port or ports in Mainland China
as designated by CTI.
ARTICLE 6 - PRICES, PAYMENTS AND REPORTS
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6.1 For the manufacture of LICENSED PRODUCT hereunder, which is
accepted by CTI following Inspection, Testing, and Delivery, CTI shall pay
MANUFACTURER the FCA (Incoterms 2000) designated port price according to the
price list ("Price List") attached as Attachment B.
6.2 CTI shall make payment as due within thirty (30) days from the date
of MANUFACTURER'S Delivery of LICENSED PRODUCT to CTI's designated Delivery
point. All payments by CTI to MANUFACTURER required under this Agreement shall
be made by bank check or bank wire in U.S. dollars to such account(s) as
designated by MANUFACTURER.
6.3 MANUFACTURER shall retain a security interest in all Product until
fully paid.
6.4 Title to the Products shall transfer at the time of Delivery, FCA
INCOTERMS 2000 which shall be deemed to occur when Product is placed in the
possession of CTI's designated carrier at the Delivery port, cleared for export.
ARTICLE 7 - MANUFACTURER'S WARRANTY AND INDEMNITY
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MANUFACTURER agrees to manufacture all LICENSED PRODUCTS under this
Agreement in strict accordance with the standards and specifications as to the
nature, characteristics and qualities of the PRODUCTS communicated to it by CTI,
as set forth herein and as they may be modified from time to time by written
amendment to this Agreement, and shall indemnify and hold CTI free and harmless
against all loss or damage to persons or property and all liability and claims
arising out of the defective manufacture by MANUFACTURER of CTI's PRODUCTS or
the failure by MANUFACTURER to meet such standards and specifications.
ARTICLE 8 - TERM AND TERMINATION
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8.1 Either party shall have the right to terminate this Agreement on
thirty (30) days' written notice in the event the other party fails to observe
or perform any of the terms and conditions of this Agreement required on its
part to be observed or performed and does not remedy such failure during the
thirty (30) days following the date of the written notice.
8.2 Manufacturer shall notify LICENSOR of any changes of ownership of
more than 10% within 30 days of said event.
8.3 Either party shall have the right to terminate this Agreement
immediately on written notice in the event the other party (i) files a voluntary
petition in bankruptcy, (ii) is adjudged bankrupt, (iii) has its assets placed
under bankruptcy or reorganization, (iv) has a trustee or receiver appointed by
a court for all or a substantial portion of its assets, or (v) becomes
insolvent, suspends business, is unable to pay its bills in due course, or
assigns its assets for the benefit of creditors.
8.4 Upon termination of this Agreement, in accordance with its terms,
with or without cause, CTI shall not be liable to MANUFACTURER for any damages,
expenditures, loss of profits or prospective profits of any kind or nature
sustained or arising out of or alleged to have arisen out of such termination.
The termination of this Agreement shall not, however, relieve or release either
party from making any payments which may be owing or fulfilling other
obligations with respect to warranties, IP protections, government regulatory
compliance and FDA reports under this Agreement, which survive termination.
ARTICLE 9 - GOVERNMENT APPROVAL, EXPORT RESTRICTIONS
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MANUFACTURER shall obtain any required license, authorization or
approval required for the export of LICENSED PRODUCT to CTI. MANUFACTURER shall
not export or re-export LICENSED PRODUCT from the Territory to any entity other
than CTI.
ARTICLE 10 - MISCELLANEOUS PROVISIONS
-------------------------------------
10.1 This Agreement is not divisible and cannot be assigned or
transferred by MANUFACTURER in full or in part.
10.2 No provision of this Agreement or action of either party shall
constitute acting as agent of the other.
10.3 All written notices under this Agreement shall be considered as
given when sent by registered international air courier fully prepaid and
addressed to the respective parties at their addresses above noted, or at such
other addresses which may have been substituted by written notice from the
affected party to the other.
10.4 This Agreement shall be construed and interpreted in accordance
with the Uniform Commercial Code and any other applicable laws of the State of
Oregon, USA, excluding the laws of conflict. CTI may act in any manner deemed
necessary in any jurisdiction of the world to seek injunctive or other summary
relief or remedy to protect its IP Rights hereunder. Any dispute arising out of
or in connection with this Agreement shall be submitted for resolution to final
and binding arbitration before a panel of three (3) neutrals, acting in
accordance with the rules and under the auspices of The British Columbia
Arbitration Center in Vancouver, B.C., Canada. The venue for arbitration shall
be Vancouver. Each party shall appoint one arbitrator and those two shall choose
the third from a roster of arbitrators qualified in international trade and
intellectual property. The award shall be deemed a U.S. award and shall be
enforceable in any court or forum having jurisdiction.
10.5 If legal action is necessary to interpret or enforce any term of
this Agreement, the prevailing party shall be entitled to payment by the other
party of reasonable attorneys' fees, in addition to any judgment or award.
10.6 This Agreement contains all of the terms and conditions agreed to
by the parties and constitutes the sole agreement between them regarding the
subject matter of this Agreement, and supersedes all understandings and
agreements, whether oral or in writing, previously entered into by them with
respect thereto.
10.7 This Agreement has been negotiated in the American usage of the
English language usage by parties who represent that they are competent to fully
understand the terms hereof.
10.8 Both parties acknowledge that the obligations of performance
hereunder shall be expressly conditioned upon compliance with all applicable
laws and regulations of the United States, and the PRC, including but not
limited to import and export licensing, foreign currency control, and national
security regulations, securities regulations, Export Licensing Controls of the
US Departments of Commerce, Treasury, and Defense, and the requirements of the
U.S. Securities and Exchange Commission.
10.9 Neither party shall be responsible for delays or failures in
performance resulting from acts beyond the control of such party. Such acts
shall include but not limited to acts of god, strikes or other labor disputes,
riots, acts of war, terrorism, governmental regulations superimposed after the
fact, execution, communication line failures, power failures, fire, flood or
other disasters.
10.10 The parties agree to consult with and obtain the written approval
of the other party prior to the issuance of any public statement or press
release concerning these agreements.
10.11 This Agreement is written and has been negotiated and executed in
English. MANUFACTURER has authorized a Chinese translation for its internal
purposes in the Territory. However, the English language version is the
operative Agreement and shall prevail in event of conflict, discrepancy or
ambiguity. This Agreement shall have six (6) sets of originals, and may be
signed in counterparts.
The parties have duly executed this Agreement as of the date first
written above.
Computerized Thermal Imaging, Inc. NanDa Thermal Medical, Inc.
__________________________________ ____________________________________
Signature Signature
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ Lin Jun
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
Title: Chief Executive Officer Title: Chairman
Attachment A
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LICENSED PRODUCTS AND LICENSED NAMES
1. THERMAL IMAGE PROCESSOR ("TIP" SYSTEM) - WHICH MAY BE MARKETED USING
THE LICENSED NAME "▇▇▇▇▇ SCIENTIFIC TIP SYSTEM" OR "▇▇▇▇▇ SCIENTIFIC
THERMAL IMAGE PROCESSOR".
The TIP Systems purchased by CTI from MANUFACTURER shall include the
following completed TIP System components:
o Infrared Thermal Imager/Scanner;
o Power Distribution Unit for Infrared Thermal Imager/Scanner;
o Communication Cable;
o Power Cable;
o Taxi-4 Interface Card;
o Serial Pass-Thru Cable;
o Camera Support Unit (CSU)
The TIP Systems purchased by CTI from MANUFACTURER shall not include the
following TIP System components:
o TIP Application Software;
o Computer central processor unit (CPU) with dual-video card,
network interface controller, disk drives, memory keyboard, mouse,
operating system software;
o Surge protector;
o Computer monitor(s) and monitor cables;
o System documentation
2. PHOTONIC STIMULATOR (COMPLETE EXCEPT FOR SYSTEM DOCUMENTATION) - WHICH
MAY BE MARKETED USING THE LICENSED NAME ."▇▇▇▇▇ PHOTONIC STIMULATOR"
Attachment B
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MANUFACTURER'S PRICE LIST
All prices for PRODUCTS to be supplied to CTI hereunder by MANUFACTURER
are to be agreed and shall be based on MANUFACTURER's actual costs study,
including for purposes of calculating the fee credits provided by NanDa under
5.2 (d) to CTI, and shall be quoted by MANUFACTURER, FCA CTI's designated point,
Mainland China (Incoterms 2000) unless otherwise agreed by the parties, and
shall include proper packing for surface and air transportation.
The quantity of the LICENSED PRODUCTS worth $300,000.00, which shall be
sent to CTI to fulfill the MANUFACTURER's obligation under 5.2 (d) of this
agreement, shall be calculated based on the actual cost.
Thereafter, MANUFACTURER shall quote and supply PRODUCTS at "most
favored customer" rate.
Attachment C
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PRODUCTION SCHEDULE
[Insert production schedule here when known.]
