EXHIBIT 10.5
MANUFACTURING AGREEMENT
Between
HARMAC MEDICAL PRODUCTS, INC.
&
UNIVEC, INC.
Effective December 4, 1996, Harmac Medical Products, Inc., 0000 Xxxxxx Xxxxxx,
Xxxxxxx, XX 00000-0000 and UNIVEC, Inc., 000 Xxxxxxxx Xxxxxx, Xxxxxx Xxxx, XX
00000 agree to enter into a MANUFACTURING AGREEMENT whereby Harmac will assemble
and package a single use syringe for UNIVEC.
1. Length of Agreement:
The length of the agreement is December 4, 1996 through December 31, 1997.
Each year thereafter the agreement is automatically renewable for an
additional calendar year unless either party notifies the other in writing
within ninety (90) days of the end of the agreement period that it wishes
to terminate the agreement.
2. Pricing
A. Price for initial order (8,857,400 units; PO# 01318) is estimated at
per thousand finished units. The price is made up of two
components:
o Packaging Materials * per thousand units
o Value Added Component * per thousand units
This price is subject to modification based on a review of the
assumptions relating to throughput, labor requirements and scrap costs
described in 2B., to be determined when the assembly machine is
completed and qualified prior to starting production of the initial
order.
B. The estimated price of * is based upon the following assumptions:
o All components except packaging materials are to be supplied by
UNIVEC and will meet agreed upon Product Specifications. Harmac
will be notified in advance of any planned changes in
specifications.
o Packaging material costs were based on estimates made by UNIVEC.
o Assembly and packaging labor requirements were based on estimates
provided by UNIVEC as follows:
1. Assembly machine requires two (2) operators per 8-hour shift
yielding 14,040 units per hour with a 90% efficiency factor.
2. Packaging machine requires four (4) operators per 8-hour
shift yielding 13,500 units per hour with a 90% efficiency
factor.
3. Two (2) material handlers will be required per shift.
o Production scrap is estimated at 2.5% of Harmac's cost.
o UNIVEC will be responsible for all costs associated with outside
storage and handling of components and finished products.
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* Confidential treatment has been sought by the Company for the omitted
portions and such material has been filed separately with the Commission.
1
MANUFACTURING AGREEMENT Page 2
Harmac Medical Products, Inc.
& UNIVEC, Inc.
C. If necessary, Harmac will revise pricing after the initial order for
deliveries made during the balance of the agreement period, subject to
approval by UNIVEC, to reflect actual costs incurred during production
of the initial order, including packaging material costs. If Harmac
revises the pricing for the balance of the agreement period, it will
provide UNIVEC a letter explaining the increase or decrease in terms
of assumptions affecting packaging materials and value added component
(2A and 2B). In the event UNIVEC does not approve of price revisions,
this agreement may be terminated by Harmac after completion of the
initial order.
After the first agreement period, prices will be adjusted annually by
mutual consent of both parties.
3. Payment Terms
A. For the initial order, UNIVEC will advance Harmac an amount equal to
35% of the value of Harmac purchase commitments for Packaging
Materials; advances to be made at the time Harmac makes purchase
commitments. In addition UNIVEC will advance Harmac an amount equal to
35% of the Value Added Component ( * per thousand units) of the
first month's shipments; advance shall be no less than $25,000 and is
to be made prior to the first shipment of product.
B. Terms of payment for product shall be net 30 days after the date of
invoice. The maximum amount of accounts receivable from UNIVEC at any
time shall be no greater than $50,000. Prices do not include sales,
use, excise or similar taxes or tariffs or duties, all of which shall
be the responsibility of UNIVEC.
C. Products shall be delivered F.O.B. Harmac plant of manufacture.
4. Limited Warranty and Disclaimer
A. Harmac warrants that all Products supplied will meet the Product
Specifications for such products as provided in writing by UNIVEC and
agreed to by Harmac.
Additionally, Harmac warrants that procedures as documented by Harmac
Quality Assurance Specifications will be executed and that such
execution can be evidenced to UNIVEC's reasonable satisfaction.
---------
* Confidential treatment has been sought by the Company for the omitted
portions and such material has been filed separately with the Commission.
MANUFACTURING AGREEMENT Page 3
Harmac Medical Products, Inc.
& UNIVEC, Inc
B. The foregoing warranty is in lieu of all other warranties, expressed
or implied, AND NO OTHER WARRANTIES ARE GRANTED INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE. If the Product does not conform to the warranty
set forth herein, Harmac's sole liability and obligation shall be to
replace the Product or refund the purchase price as Harmac may elect.
Harmac's liability under the above warranty with respect to the
Products or their use (including liability for negligence or
otherwise) is limited exclusively to the remedies provided above and
no other right or remedy will be available to UNIVEC or any other
person. Harmac will in no event be liable to any person for any
special, incidental or consequential damages to person or property
arising from or under the above warranty or otherwise from or under
the agreement, except to the extent mandated by applicable state law.
C. UNIVEC shall have a period of thirty (30) days from the date of
receipt to inspect and reject any shipment of Products on the grounds
that it does not conform with the Product Specifications, provided
UNIVEC confirms such non-compliance through generally acceptable
quality control procedures. UNIVEC shall have the right to return any
Product for which non-conformance to Product Specifications has been
confirmed and receive, at its option, credit, replacement or refund.
Products returned for failure to conform to the Specifications will
not be accepted for credit unless the Products are returned in
accordance with Harmac's instructions accompanied by an explanation of
the nature of the failure that is satisfactory to Harmac.
5. Confidentiality
Harmac will keep confidential all information related to UNIVEC'S patents
and manufacturing processes. This information includes knowledge discovered
while implementing or providing manufacturing services to UNIVEC. UNIVEC
also agrees to keep confidential all information and knowledge related to
Harmac's manufacturing processes.
6. Documentation
All documentation relating to UNIVEC'S patents and manufacturing processes
shall become the property of UNIVEC regardless of who produces the
documentation.
MANUFACTURING AGREEMENT Page 4
Harmac Medical Products, Inc.
& UNIVEC, Inc
7. Insurance
Both parties shall maintain adequate insurance coverage for workers'
compensation, property, casualty and product liability. Policies will be
available for inspection upon request. Certificates of insurance will be
provided upon request and both parties agree to notify each other in the
event of changes in coverage.
8. UNIVEC Equipment
Harmac will be responsible for both routine and preventative maintenance on
equipment owned by UNIVEC and used by Harmac. UNIVEC will be responsible
for costs associated with any design flaws in equipment and with normal
wear and tear on equipment.
9. Capacity
Harmac will provide sufficient labor and floor space for one syringe line
for the length of the agreement. A syringe line consists of a clip
manufacturing station, an assembly station and a packaging station.
UNIVEC will keep Harmac advised of plans to expand its assembly and
packaging capacity by adding new syringe lines. UNIVEC shall provide Harmac
with the right of first refusal to manage additional syringe lines and
Harmac will respond within a reasonable time with its intentions to provide
sufficient capacity to handle additional lines.
10. Right to Inspect
Harmac shall permit UNIVEC or its designee the right as reasonable
requested to enter the manufacturing and storage facilities of Harmac
during regular business hours to inspect and spot check Products, goods
tools and molds, in order to confirm Harmac's compliance with the terms of
this Agreement. Harmac shall make available an authorized representative of
its organization to facilitate UNIVEC's exercise of the foregoing
inspection rights.
MANUFACTURING AGREEMENT Page 5
Harmac Medical Products, Inc.
& UNIVEC, Inc.
11. Termination
A. Right to Termination. In the event that either party breached, in any
material respects, any of the terms of this Agreement or defaults in
the performance of any of its duties or obligations hereunder, in any
material respects, and such breach or default is not remedied within
sixty (60) days after delivery of written notice of such breach or
default, the other party may immediately terminate this Agreement by
giving written notice of termination. In the event of the liquidation,
bankruptcy, proceedings under a debtor's relief law, inability to meet
debts as they mature or insolvency of either party, or in the event
that either party's business or assets or any part thereof are seized
or expropriated by judicial or governmental process, this agreement
shall automatically terminate.
B. Effect of Termination
Termination of this Agreement shall not relieve either party of any of
its obligations which have matured as of the date of termination. Upon
expiration or termination of this Agreement, all tooling, equipment,
molds and/or other material owned by UNIVEC shall be crated and
shipped to UNIVEC promptly as directed by UNIVEC and at UNIVEC's
expense. In addition, all amounts owed to Harmac by UNIVEC will become
due and payable immediately upon termination of the Agreement.
12. Other Terms
The Standard Terms and Conditions of Sale stated on the attached invoice
shall apply to sales made pursuant to this Agreement. In the event of any
conflict between the terms of this Agreement and such invoice, the terms of
this Agreement shall control.
AGREED TO:
Harmac Medical Products, Inc. UNIVEC, Inc.
/s/ Xxxxx X. Xxxxxx /s/ Xxxxx Xxxxxx
Xxxxx X. Xxxxxx Xxxxx Xxxxxx
Chief Financial Officer Chief Financial Officer
Date: 12/4/96 Date: 1/7/97
