Joint Development Agreement

This Agreement is made and effective as of the 10th day of July, 1995 by and between



Teijin Limited, a Japanese corporation, having its registered office and principal place of business at 6-7, Minami-hommachi 1-chome, Chuo-ku, Osaka 541, Japan ("Teijin")





SpectRx Inc., a Delaware corporation, having its registered office at 6025A Unity Drive, Norcross, GA 30071, U.S.A. ("SpectRx").





WITNESSETH:





WHEREAS, both parties hereto are engaged in the design, development, production and sale of certain health care medical equipment;



WHEREAS, SpectRx, as a research and development company, believes it has enough expertise and capacity to develop and/or produce the non-invasive HbAlc monitoring product;



WHEREAS, Teijin is interested in the commercialization of such product in Japan and in other Asian and Oceania countries and has enough capacity to commercialize such product; and



WHEREAS, both parties hereto are willing to conduct the joint development of such product on terms and conditions set forth herein,



NOW, THEREFORE, the parties hereto agree as follows:





ARTICLE 1





1.1 As used in this Agreement:



"Product" shall mean a non-invasive HbAlc monitoring product developed by both parties hereto under this Agreement and using SpectRx's established basic quantitative technology. The SpectRx's basic quantitative technology is based on the measurement of fluorescent intensity and the Raleigh scattering properties of the cornea aqueous and lens tissue of the eye.













ARTICLE 2



Subject Matter



2.1 Subject to the terms and conditions of this Agreement, both parties hereto shall collaborate with each other in carrying out the Development Program as described in Exhibit A attached hereto for the commercialization of the Product. The Development Program will be scheduled over a period of twenty-four (24) months commencing the date hereof.



2.2 Each party hereto will give the other party such technical and/or business information as useful to research, develop, manufacture, use and/or sell the Product during the term of this Agreement.



ARTICLE 3



Assignment of Joint Development



3.1 During the term of this Agreement, each party hereto shall take its share separately of the Development Program;



for Teijin: Testing and evaluating the Product

(including the prototype model), and conduct

of necessary procedures (including clinical

trials) for the commercialization of the

Product in Japan, and giving financial

support to SpectRx described herein,



for SpectRx: Research, designing, pre-producing and

producing of the Product.





Notwithstanding the foregoing, the basic design and final evaluation of the Product shall be made jointly by both parties hereto.



ARTICLE 4



Design and Pre-Production



4.1 SpectRx shall design the Product and shall produce some of the prototype models of the Product at its facility in accordance with the specifications separately agreed upon between the parties hereto and applicable regulatory requirements.













ARTICLE 5



Evaluation and Acceptance



5.1 Teijin shall test and evaluate the prototype model of the Product produced by SpectRx. If satisfactory, Teijin shall apply to the Japanese Ministry of Health and Welfare for an import and/or manufacturing approval of the Product with assistance of SpectRx in terms of necessary documents.



5.2 If the prototype models of the Product are in accordance with the specifications, but found to be unsatisfactory to Teijin, Teijin may request SpectRx to continue the development of the Product, for which terms and conditions shall be separately negotiated.



ARTICLE 6



Funds and Share of Cost



6.1 Teijin shall provide SpectRx with funds totaling one million five hundred thousand US dollars ($1,500,000) for the development of the Product and rights to distribute the Product in Japan and in other Asian and Oceania countries. Provision of the funds shall be made by interbank telegraphic transfer in U.S. dollars to Wachovia Bank, Oakbrok Parkway, Norcross, Georgia; Routing #061-00-00-10; SpectRx Inc. in accordance with the following schedule:



1)First payment: Two hundred thousand U.S. dollars

($200,000) upon the execution of this

Agreement;

2)Second payment: Three hundred thousand U.S. dollars

($300,000) upon the completion of the pilot

study in the Development Program;

3)Third payment: Two hundred fifty thousand U.S. dollars

($250,000) upon the mutually agreed decision

of the specifications of the Product;

4)Forth payment: Five hundred thousand U.S. dollars

($500,000) upon the completion and delivery

of the prototype models of the Product; and

5)Fifth payment: Two hundred fifty thousand U.S. dollars

($250,000) upon the obtainment of the import

approval of the Product from the Japanese

Ministry of Health and Welfare.



6.2 Teijin shall have the right to evaluate the progress and result of the Development Program at any milestone described in Section 6.1 hereof. If such progress and result are unsatisfactory to Teijin, Teijin may terminate the Development Program at any milestone in spite of Section 16.1 hereof, thereafter Teijin will have no obligation to pay the remainder of the above funding and SpectRx will have no obligation to pay royalty or refund any of the money hereunder and all terms and conditions of this Agreement will be terminated except Article 14 hereof.



6.3 Each party hereto shall bear any cost arising from its own activities hereunder.













ARTICLE 7



Purchase of Prototype Model



7.1 Teijin will purchase at least one set of the prototype model of the research grade Product from SpectRx. The price of such prototype model does not exceed eighty-five thousand U.S. dollars ($85,000) per set. A deposit of fifty percent (50%) of the purchase price, forty-two thousand five hundred U.S. dollars ($42,500) in case of one set order, is required with the order, delivery to be one hundred twenty (120) days from receipt of the order and deposit for each hand research instrument made by SpectRx hereunder.



ARTICLE 8



Result and Patent



8.1 The result made solely by Teijin by non-invasive testing using the research instrument made by SpectRx hereunder in the eye will be jointly owned by both parties hereto. The result made jointly by Teijin and SpectRx using the research instrument made by SpectRx hereunder in the eye shall be jointly owned by both parties hereto.



8.2 The patent on jointly owned result (hereinafter "Joint Patent") shall be filed by both parties hereto in any country. Any expenses to be incurred in filing and maintaining the Joint Patent shall be born equally by both parties hereto. If either of the parties hereto has no intention to file the Joint Patent in a country or countries, such party (hereinafter "Non-desiring party") shall notify its intentions to the other party as soon as possible. After receipt of such notice from the Non-desiring party or after failure of either party to notify the other party of its intention to join within thirty (30) days from the delivery of written notice by such other party expressing its desire to file the Joint Patent in a country or countries (hereinafter "Desiring Party"), whichever comes earlier, the Desiring party has the right to file the Joint Patent in its single name in such country or countries.



8.3 Should either party hereto intend to withdraw or abandon its patent, the party shall notify the other party of its intentions and provide an opportunity for such other party to acquire the subject patent in its single name.













ARTICLE 9



Product Infringement of Intellectual Property Rights



9.1 SpectRx agrees to produce the Product without knowingly infringing any third party patent, patent application and/or other intellectual property rights, and indemnify an ...