Exhibit 10.20
MANUFACTURING AGREEMENT
This Manufacturing Agreement ("Agreement") is effective this 22 day of May 2003
by and between Luther Needlesafe Products, Inc.., a California corporation
("LNP") located at 0000 Xxxxxxx Xxxx Xxxxx Xxxxx Xxxx C.A. 92626 and Plastics
Engineering & Development, Inc., a California corporation ("PEDI") located at
0000 Xxxxxx Xxxxxx Xxxx Xxxxxxxx, C.A. 92008, LNP and PEDI are sometimes
hereinafter referred to individually as "party" and collectively as "parties."
RECITALS
A. LNP owns the right, title and interest, to a medical device referred to as
the Luther Safety Xxxxx Needle ("Products").
B. PEDI has certain knowledge and expertise in manufacturing including but not
limited to injection molding, assembling, packaging and sterilizing, FDA Federal
and State regulatory requirements (See Exhibit A) to supply LNP with finished
goods of their Products.
C. LNP desires to engage PEDI to manufacture the Products and PEDI desires to
manufacture the Products on the terms and condition set forth in the Agreement.
OPERATIVE PROVISIONS
1. Incorporation of Recitals: The Recitals are incorporated herein and
by this reference made a part hereof.
2. Agreement to Manufacture: During the term of and subject to the
terms and Conditions of this Agreement, PEDI shall manufacture the Products and
LNP shall purchase from PEDI the Products in such quantities as stated in the
purchase orders submitted by LNP and at the prices set forth in this agreement.
The Products shall be manufactured in accordance with LNP's standard
specification for the Products. LNP shall provide PEDI with the standard
specifications, Master Device Flies (MDF) for the Products prior to the
manufacture of the Products subject to the confidentiality provision set forth
in Section 12 below. In the event LNP requests an alteration to the standard
specifications, PEDI shall provide LNP with revised Products pricing. Upon LNP
acceptance of the revised pricing, and the appropriate changes made to the MDF,
PEDI will implement the requested alterations. At which time LNP will assume
immediate responsibility for the agreed additional cost.
i) Manufacturing Capacity: PEDI is currently capable of
manufacturing two hundred thousand, (200, 000) units of
Products for LNP on a monthly basis beginning with the first
delivery date. For each addition increase of fifty thousand,
(50,000) units monthly LNP will give PEDI thirty (30) days
prior notice in order to adequately expand its manufacturing
capability to meet LNP future needs.
ii) Manufacturing Efficiency: PEDI will notify LNP of any price
reductions as a result of PEDI manufacturing efficiency. Such
saving will be shared equally between LNP and PEDI.
iii) Right to manufacturing: LNP will grant PEDI exclusive rights
to manufacture LNP Products based on the following:
(A) PEDI is capable of meeting demand for the Products, (LNP
will give PEDI adequate time to ramp-up its
manufacturing to meet any additional demand for its
products as stated in 2i above).
(B) PEDI can continue to compete with pricing for the
products.
3. Term/Shipping: The term of this agreement shall commence on the date when
the first finished Products are delivered FOB to LNP, (at the above address for
LNP) and continue for a period of two (2) years subject to the terms and
conditions of this Agreement. LNP shall have two (2) options to renew this
Agreement for a period of two (2) years for each option.
4. Price Per Unit: LNP shall pay PEDI One Dollar and Twenty Cents ($1.20)
for each unit of Product without a needleless Y site. LNP shall pay PEDI One
Dollar and Sixty-four Cents ($1.64) for each unit of Products with a needleless
Y site. These prices are based on average monthly orders of one hundred
thousand, (100,000) units of Products. The above prices are inclusive of
complete assembly, packaged and boxed including Gamma Sterilization.
5. Materials and Labor Cost Increased/Decreased: PEDI will guarantee all
pricing for the first year of this agreement to LNP. Thereafter all material
cost increased/decreases associated with the manufacture of the Products will be
passed on to LNP immediately. Upon written or verbal request, PEDI will provide
proof of material increased/decreases as received from the vendor. Prior to any
labor cost increase associated with the production of Products PEDI will give
LNP 90 days notice. In the event LNP does not agree with the price increase, LNP
may elect to move the business to an alternative manufacturer. In the event LNP
elects to move the production, LNP will give PEDI ninety days notice. In the
event LNP elects to move the business to an alternative manufacturer and/or
ramp-down its production, LNP will pay PEDI for all of the open invoices for
Products, and will pay PEDI for all of the components and materials PEDI has in
its inventory.
6. Purchase Orders/Forecast/Payment: LNP will submit to PEDI Purchase Orders,
(PO's) for all Products ordered. Each PO will consist of Products order numbers,
description and quantities in cases. Each case shall contain four (4) boxes
consisting or twenty-five (25) units of Products per box, for a total of one
hundred, (100) units of Products in each case, LNP will provide PEDI a forecast
and product mix to the best of LNP to estimate Products volume based on three,
(3) month rolling average. These forecasts may be adjusted for a change from
time to time based on new products information.
7. Contractual Termination: LNP will be liable for any raw materials, (as
stated in #5 above), and finished Products, to include Products at the
sterilizer.
8. Injection Molding Tooling Charge: NP will pay Thirty-Five Thousand Four
Hundred dollars, ($35,400) to PEDI to create three, (3) eight, (8) cavity-molds
to produce the housing for the LNP Products device. LNP will pay this amount in
three, (3) equal installments. These installments will be made as follows:
A) One-Third (1/3) down before work begins on the tool.
B) One-Third (1/3) upon receipt of first articles.
C) One-Third (1/3) upon acceptance of first article, but not to
exceed 30 days from receipt of final first article.
After the 3rd installment payment for this tool it will become the property of
LNP.
9. Validation Reports: PEDI will provide LNP with all necessary Validation
Reports. LNP will reimburse PEDI for direct charges incurred. These charges will
be reasonable and in accordance with industry standards.
10. Force Majeure: PEDI failure to perform its obligations hereunder shall be
excused to the extent and for the period of time said non-conformance is caused
by the occurrence of war, invasion, fire, explosion, flood, riot, strikes, acts
of God, delays or defaults of carriers, emergency shortages, or other causes
PEDI, (and their suppliers), reasonable control.
11. Compliance with Law: PEDI shall comply with all applicable laws and
regulations related to the manufacturing of the Products, LNP shall comply with
all rules and regulations related to its securing of patents, trademarks,
tradenames and licenses and the sale and distribution of the Products.
12. Warranties: The Products sold to LNP under this Agreement are warranted by
PEDI (1) confirm to the specifications applicable to the Products MDF at the
time of its manufacture, and (2) free and clear of all encumbrances and that
PEDI shall convey good and marketable title to the Products to LNP. In the event
that any Products fail to conform to the warranties set forth herein, PEDI
shall, at PEDI sole cost and expense, either credit LNP for any nonconformity
(not to exceed the purchase order amount) or replace, repair or correct the
affected Products. The foregoing remedies against PEDI shall be LNP's sole and
exclusive remedies for breach of any warranty claims hereunder. PEDI shall have
no responsibility or obligation to LNP for warranty claims with respect to
Products that have been subjected to alteration, misuse, neglect, accident or
other actions or omissions outside the control of PEDI.
13. Assignment: LNP has the right to assign this Agreement without the prior
consent of PEDI in writing. Assignee must agree to adhere to all terms and
conditions of this agreement period.
14. Confidentiality: PEDI in its capacity hereunder shall not at any time
during or after its engagement with LNP reveal, divulge or make known to any
person, firm or corporation any confidential knowledge or information or any
confidential facts concerning any patents, agreements, methods, developments,
schedules, lists or plans of or relating to the Products, and will retain all
confidential knowledge and information which it has acquired or which it will
acquire during its engagement hereunder relating to such patents, agreements,
methods, developments, schedules, lists or plans of or relating to the Products
for the sole benefit
of LNP, its successors, and assign. LNP shall not at any time during or after is
engagement with PEDI, reveal, divulge or make known to any person, firm or
corporation any confidential knowledge or information or any confidential facts
concerning any patents, manufacturing processes, product specifications, product
groupings, supplies, customers, methods, processes, developments, schedules,
lists or plans of or relating to the business of PEDI, and will retain all
confidential knowledge and information which it has acquired or which it will
acquire during its engagement hereunder relating to such patents, manufacturing
processes, product specifications, product groupings, suppliers, customers,
methods, processed, developments, schedules, lists or plans in the business of
PEDI for the sole benefit of PEDI, its successors and assigns. LNP shall not
reverse engineer or otherwise attempt to duplicate PEDI's patents, patent
processes, product specifications or product groupings for its own use.
The confidentiality restrictions of both parties hereunder shall not apply to
any knowledge; information or fact held by or know which is generally available
to the public, was already known by the receiving party, was disclosed to the
receiving party other than under an obligation of confidentiality by a third
party who had no confidentiality obligations relating to such information, or as
otherwise required to be disclosed by legal authority.
15. Intellectual property: No party hereto grants, either expressly or
impliedly, to the other a license or fight to the party's intellectual property
rights under this Agreement. Each party shall retain full ownership of all its
inventions, patents copyrights, trademark rights or other intellectual property
rights and the other party shall have no rights therein under this Agreement
including any license to use such intellectual property except as otherwise
agreed by the parties in writing.
16. Notice: Any notice to be given by either party to the other shall be in
writing and may be transmitted either by personal delivery, overnight courier or
by mail (registered or certified, postage prepaid with return receipt requested)
to the recipients parties address set forth below:
PEDI: Plastics Engineering & Development, Inc
Attn:
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
LNP: Luther Needlesafe Products, Inc.
Attn: Xxxxxx X. Xxxxxxxxx
0000 Xxxxxxx Xxxx Xxxxx
Xxxx X
Xxxxx Xxxx, XX 00000
Notices delivered by personal delivery or overnight courier shall be deemed
communicated upon receipt. Notices delivered by mail in accordance with this
Section shall be deemed communicated as of the second business day following the
date of mailing. Either party may change its notice herein by notice of such
change given in accordance with this Section.
17. Governing Law: This Agreement shall be governed by and construed in
accordance with the internal laws of this State of California.
18. Attorney's Fees: If any legal action is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees, reasonable expert witness fees, costs, and necessary
disbursements in addition to any other relief to which that party may be
entitled.
19. Entire Agreement: This Agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to the
obligations contained herein and contains all of the covenants and agreements
between them with respect to this Agreement. LNP and PEDI each acknowledge that
no representations, promises, or agreements, oral or otherwise, have been made
by either party or anyone acting on behalf of either party which are not
embodied in this Agreement are null and invalid.
20: Modifications. Modifications of this Agreement shall be effective only if
contained in writing signed by both LNP and PEDI.
21: Waiver. The failure of LNP to insist on strict compliance with any of the
terms, conditions or covenants of this Agreement shall not be deemed a waiver of
that term, condition or covenant nor shall any waiver or relinquishment of any
right or power to any one time or times be deemed a waiver or relinquishment of
that right or power for all or any other times.
22: Invalidity. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force without being impaired or
invalidated in any way.
23: Relationship. The legal relationship between LNP and PEDI is a contractual
one as independent contractors to one another, as strictly as set forth in the
terms of this Agreement, and nothing herein shall be deemed to create an agency,
joint venture or partnership between the parties.
24: Captions. The section captions in this Agreement are for convenience only
and shall not govern, limit or aid in the interpretation of the provisions of
this Agreement.
25: Counterparts. This Agreement may be executed in counterparts which, taken
together, shall constitute one of the same agreement.
IN WITNESS WHEREOF, LNP and PEDI have executed this Agreement on the date first
above written.
LUTHER NEEDLESAFE PRODUDUCTS, INC., PLASTIC ENGINEERING &
DEVELOPMENT, INC.,
a California corporation a California corporation
By: /s/Xxxxxx X. Xxxxxxxxx By: /s/Xxxx X. Xxxxxxxx
------------------------ -----------------------
Xxxxxx X. Xxxxxxxxx XXXX X. XXXXXXXX
Its: President and CDO Its: President
Exhibit A
Sterility
Criteria - Sterility Assurance Level of 10(-6) . Note: process must be
validated. If any chemical system of sterilization's used, residual
testing requirements will also apply.
Bacterial Endotoxins (Pyrogens)
Criteria - Less than 0.5 EU/ml based upon LAL test.
Process
Criteria - Validation
Packaging
Criteria - No leaks using ASTM dye penetration test
Pressure
Criteria - Ability to hold with no loss, at least 15 psi
of air for 15 seconds.
Pull Test
Criteria - All product connections must withstand at least a 5 lb pull
test with no failures.
