Contract
First
Amendment, dated as of the 7th
day of
March, 2007, of the Agreement by and between Scantek Medical, Inc. (“Scantek”)
and Life Medical Technologies Inc. (“Life Medical”), dated the 22nd
day of
August, 2006, which Agreement (the “Definitive Agreement”) amended and restated
the agreement between Scantek and Life Medical dated as of the 3rd
day of
December 2004, and to the Distribution Agreement, the form of which is annexed
to and made a part of the Definitive Agreement as Exhibit “C” (the “Distribution
Agreement”, which Distribution Agreement has not been executed as of the date
hereof, and the option of Life Medical to enter into same has not been
exercised, as of the date of this Amendment)
It
is
agreed that:
1.
Paragraph “B” of Article “4” of the Distribution Agreement is hereby deleted,
and replaced by the following:
“B.
The
balance of one million one hundred fifty thousand ($1,150,000) dollars shall
be
payable in seven (7) equal monthly installments of one hundred sixty four
thousand two hundred eighty five dollars and seventy one cents ($164,285.71),
commencing thirty (30) days after the date of the Exercise Notice; provided,
however, that:
(i)
the
Manufacturer shall receive from the Distributor’s sale of shares at fifty
($0.50) cents per share, which is presently being conducted pursuant to the
Form
D filed with the SEC on January 24, 2007 (the “First Financing”), twenty five
(25%) percent of the funds raised in the First Financing (excluding Life
Medical’s sale of shares to LMTI Holdings, LLC for six hundred thousand
($600,000) dollars in December, 2006), with all such payments to be credited
towards the one million one hundred fifty thousand ($1,150,000) purchase price
for the license due pursuant to this Paragraph “B” of this Article “4” of this
Agreement (“Purchase Price”), applied ratably to the remaining monthly
installments;
(ii)
the
Manufacturer shall receive from the Distributor’s next financing to be conducted
subsequent to the termination of the First Financing, in which the Distributor
is contemplating raising one million five hundred thousand ($1,500,000) dollars
(the “Second Financing”), twenty (20%) percent of the funds raised in the Second
Financing, with all such payments to be credited towards the Purchase Price,
applied ratably to the remaining monthly installments;
(iii)
the
Manufacturer shall receive thirty (30%) percent of all funds raised from any
financings conducted by the Distributor subsequent to the termination of the
Second Financing, with all such payments to be credited towards the Purchase
Price, applied ratably to the remaining monthly installments; and
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(iv)
When
the Distributor has paid the Manufacturer an aggregate of one million one
hundred fifty thousand ($1,150,000) dollars pursuant to Subparagraphs “(i)”,
“(ii)” and “(iii)” of this Paragraph “B” of this Article “4” of this Agreement,
the Purchase Price shall be deemed to have been paid in full, and no further
payments shall be made by the Distributor to the Manufacturer pursuant to
Subparagraphs “(i)”, “(ii)” and “(iii)” of this Paragraph “B” of this Article
“4” of this Agreement.”
2.
The
heading of Article “8” of the Distribution Agreement is hereby deleted, and
replaced by the following:
“8.
Payment
for Product; Delivery of Product.”
3.
Paragraph “A” of Article “8” of the Distribution Agreement is hereby deleted,
and replaced by the following:
A.
The
Distributor shall pay the aggregate sum of the Wholesale Price (as defined
in
Paragraph “C” of this Article “8” of this Agreement) with respect to the Product
it orders or which is placed in Inventory (as defined in Paragraph “D” of this
Article “8” of this Agreement) as follows:
i. Four
($4.00) dollars per unit ordered at the time of the order, or per unit placed
in
Inventory at the time the unit is placed in Inventory; and
ii.
the
remaining balance of the Wholesale Price per unit ordered shall be paid no
later
than ninety (90) days after the units of the Product have been shipped either
to
the Distributor or elsewhere in accordance with the Distributor’s written
instructions; provided, however, if the aggregate unpaid balance with respect
to
units ordered by the Distributor is one million ($1,000,000) dollars or greater,
the Distributor must make full payment for all units ordered at the time of
the
order.
4.
The
Distribution Agreement is hereby amended to add the following Paragraph “D” of
Article “8”:
“D.
The
Manufacturer agrees to commit forty (40%) percent of the output from its two
existing production lines (the “Output Guarantee”) for orders from the
Distributor until such time as (i) all current orders from the Distributor
are
filled and (ii) the Manufacturer has set aside an inventory (the “Inventory”) of
one million (1,000,000) units for the Distributor’s future orders (the “Maximum
Inventory”); provided, however, that the Manufacturer’s obligation to commit the
Output Guarantee to the Distributor is contingent upon (i) the Distributor
paying for storage space sufficient to store the Maximum Inventory regardless
of
the actual size of the Inventory at any time and (ii) the Distributor making
an
advance payment of four ($4) dollars for any unit ordered or placed in inventory
pursuant to Paragraph “A” of this Article “8” of this Agreement.”
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5.
Article “19” of the Distribution Agreement is hereby deleted, and replaced by
the following:
“19.
Inventions
or Improvements by the Distributor.
If,
during the Term, the Distributor makes any improvements in the Product or the
Technology or the mode of using them, including, but not limited to, technical
or commercial improvements, becomes the owner of any such improvements either
through Patents or otherwise, or obtains any rights, benefits or privileges
with
respect to the Product or the Technology, including, but not limited to,
obtaining 510(k) marketing clearance and/or clearance for over-the-counter
sales
(OTC Clearance) from the Food and Drug Administration, then it shall and hereby
does assign such improvements, rights, benefits or privileges to the
Manufacturer (without cost to the Manufacturer) and shall give the Manufacturer
full information with respect thereto, including, but not limited to,
instructions with respect to their use. Notwithstanding the foregoing, during
the Term, the Distributor shall be entitled to use any such improvements,
rights, benefits or privileges in conjunction with all rights which are hereby
granted to the Distributor with respect to the Technology. The Distributor
shall
also provide the Manufacturer with any and all test results arising from tests
of any Product as soon as practicable after such results are
available.”
6.
Article “2” of the Definitive Agreement is hereby deleted, and replaced by the
following:
“2. Loan.
Simultaneously with the December 3, 2004 execution of this Agreement, Life
Medical loaned to Scantek the sum of two hundred fifty thousand ($250,000)
dollars (the “Loan”) pursuant to the terms of a promissory note in the form
annexed hereto and made a part hereof as Exhibit “A” evidencing the Loan (the
“Promissory Note”) which Scantek executed simultaneously with the December 3,
2004 execution of this Agreement. The Loan is hereby deemed satisfied, and
all
accrued and unpaid interest due on the Promissory Note are hereby waived. If
the
US Option is exercised by Life Medical on or prior to the date of expiration
of
the US Option pursuant to Article “4” of this Agreement, the principal amount of
the Loan shall be applied towards the purchase price for the license pursuant
to
Article “4” of the Distribution Agreement. If the US Option is not exercised by
Life Medical on or prior to the date of expiration of the US Option pursuant
to
Article “4” of this Agreement, the principal amount of the Loan shall be deemed
to be a payment to Scantek in consideration of Life Medical receiving the US
Option.”
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7.
Paragraph “D” of Article “4” of the Definitive Agreement is hereby deleted, and
replaced by the following:
“D.
If
the US Option is exercised by Life Medical on or prior to the date of expiration
of the US Option pursuant to this Article “4” of this Agreement, the two hundred
thousand ($200,000) dollars set forth in Paragraph “A” of Article “3” of this
Agreement shall be applied towards the purchase price for the license pursuant
to Article “4” of the Distribution Agreement. If the US Option is not exercised
by Life Medical on or prior to the date of expiration of the US Option pursuant
to this Article “4” of this Agreement, the two hundred thousand ($200,000)
dollars set forth in Paragraph “A” of Article “3” of this Agreement shall be
deemed to be a payment to Scantek in consideration of Life Medical receiving
the
US Option.”
8.
The
Definitive Agreement is hereby amended to add the following Article
“12”:
“12. Payments
to Scantek from Life Medical’s Financings.
Life
Medical agrees that the funds which Life Medical receives from its financings
commencing January 1, 2007 shall result in payments to Scantek as are required
pursuant to Article “1” of this Amendment (“Payments from Financings”)
regardless of whether the Distribution Agreement has been entered into by
Scantek and Life Medical. If the US Option is exercised by Life Medical on
or
prior to the date of expiration of the US Option pursuant to Article “4” of this
Agreement, the Payments from Financings shall be applied to the purchase price
for the license pursuant to Paragraph “B” of Article “4” of the Distribution
Agreement. If the US Option is not exercised by Life Medical on or prior to
the
date of expiration of the US Option pursuant to Article “4” of this Agreement,
the Payments from Financings shall be deemed to be payments to Scantek in
consideration of Life Medical receiving the US Option.”
9.
The
Distribution Agreement is hereby amended to include Canada on the same basis
as
the United States; provided, however, that Scantek shall have the right, in
its
sole and absolute discretion, to direct that Canada be excluded from the
Distribution Agreement and added to the distribution territory of Gibraltar
Global Marketing LLC in the Distribution Agreement dated as of the 7th
day of
March, 2007, by and between Scantek and Gibraltar Global Marketing
LLC.
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10.
Except as modified by this Amendment, all of the terms and conditions of the
Definitive Agreement and the Distribution Agreement shall remain in full force
and effect.
| Scantek Medical, Inc. | ||
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| By: | ||
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Xx. Xxxxxxxx X. Xxxx, President |
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| Life Medical Technologies, Inc. | ||
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| By: | ||
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Xxxxxx
Xxxxxx, President & CEO
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