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EXHIBIT 10.74
MANUFACTURING AND SUPPLY AGREEMENT
This Manufacturing and Supply Agreement ("this Agreement") is made effective on
the 11th day of April, 1996 ("Effective Date") by and between Wilshire
Technologies, Inc. ("WTI"), a California corporation with a place of business at
5441 Avenida Encinas, Suite A, Carlsbad, California 92008 and Advanced Barrier
Technologies, Inc. ("ABT"), a California corporation with a place of business at
3709 Hillview Way, Oceanside, California, 92056.
RECITALS
WHEREAS, WTI is a manufacturer and supplier of polyurethane, breathable gloves
used for specialized applications in the electronics industry;
WHEREAS, ABT is a manufacturer with a production facility in Tijuana, Mexico;
WHEREAS, WTI desires to contract out certain of its glove production
requirements to ABT's Tijuana Facility;
WHEREAS, ABT wishes to utilize certain labor or manufacturing capacity at its
Tijuana Facility to produce WTI's requirements.
NOW THEREFORE, the parties hereto agree as follows:
1.0 DEFINITIONS.
1.1 Product shall mean WTI's proprietary breathable polyurethane glove
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manufactured by ABT for WTI pursuant to the terms of this Agreement, as
described in Exhibit B to this Agreement.
1.2 Tijuana Facility shall mean ABT's Tijuana, Mexico production
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facility.
1.3 WTI Equipment shall mean the special production equipment listed on
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Exhibit A attached hereto owned by WTI and installed at the Tijuana Facility for
the purpose of manufacturing the Product.
1.4 WTI Technology shall mean all inventions, intellectual property,
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technical data and know-how of WTI, including any issued patent and patent
applications, and any extensions and reissues thereof, relating to the method
and process of manufacturing breathable polyurethane gloves.
2.0 TERM.
2.1 The term of the Agreement shall be for a period of three
(3) years commencing on the Effective Date above and ending automatically at the
expiration of this period.
2.2 If WTI and ABT expressly agree in writing to renew this
Agreement prior to the foregoing expiration date, this Agreement shall continue
in full force and effect for one or more successive one (1) year renewal
periods.
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3.0 EQUIPMENT SUPPLY, INSTALLATION AND MATERIALS.
3.1 WTI shall procure the WTI Equipment at its expense. WTI will pay
the WTI Equipment suppliers directly per the terms agreed between such suppliers
and WTI. WTI will maintain a petty cash fund for purchases of small parts needed
to install the WTI Equipment. WTI will pay ABT to install the WTI Equipment in
the Tijuana Facility in accordance with the terms of payment for Phase 1 in
Exhibit C to this Agreement. All title and ownership in the WTI Equipment shall
be retained by WTI, and ABT shall not permit any lien or third party claim to be
asserted with respect to the WTI Equipment. Further, ABT shall cooperate with
WTI to ensure that all WTI Equipment is clearly and conspicuously labeled
"Property of Wilshire Technologies, Inc."
3.2 ABT shall at its expense prepare the site for the WTI Equipment at
the Tijuana Facility consistent with the environmental and other specifications
provided by WTI. Further ABT shall provide at its expense all utilities and
assistance reasonably necessary to facilitate the successful installation and
operation of the WTI Equipment.
3.3 ABT shall ensure that the Tijuana Facility is fully insured against
all risk of loss or damage. WTI shall ensure that the WTI Equipment is fully
insured against all risk of loss or damage.
3.4 The purchase, supply and delivery of the raw materials (i.e.,
polymer resin to be processed by the WTI Equipment) shall be the responsibility
of WTI.
4.0 MANUFACTURING SERVICES AND PAYMENT.
4.1 ABT shall provide at its expense all skilled personnel and related
utilities required to (i) operate and maintain the WTI Equipment, and (ii) mix
the raw materials (together referred to as the "Manufacturing Services"). ABT
shall ensure that the annual rent, insurance and taxes for the Tijuana Facility
are paid on a timely basis. During the production phase, as defined in Exhibit C
to this Agreement, it is anticipated that the WTI Equipment will be operated at
least one work shift daily for a total hourly production cycle of at least forty
eight (48) hours per week but will ramp up to more than one work shift daily
over time.
4.2 The sole and exclusive compensation payable by WTI to ABT for the
Manufacturing Services will be as listed on Exhibit C to this Agreement.
5.0 STANDARD OF PERFORMANCE.
ABT shall ensure that all employees utilizing the WTI Equipment are
adequately trained in the operation and maintenance of the WTI Equipment and
shall use its best efforts to (i) produce the Products in compliance with the
WTI specifications set forth on Exhibit B attached hereto, and (ii) operate in
accordance with Good Manufacturing Practices ("GMP").
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6.0 PRODUCT DELIVERIES.
ABT shall pack all Products in containers approved by WTI and tender
such shipments to WTI's designated carrier at the Tijuana Facility or ABT's
Chula Vista facility, as designated by WTI. Thereafter, WTI shall be responsible
for the shipment and delivery of the Products.
7.0 COST REVIEW.
7.1 No later than six (6) months following the commencement of
commercial production of the Products (the "Six Month Review"), ABT and WTI
shall meet to evaluate all costs associated with the performance of this
Agreement. Thereafter, ABT and WTI shall renegotiate the fees to be paid ABT for
the Manufacturing Services following the Six Month Review.
7.2 In the event that ABT and WTI fail to agree on the fees to be paid
for the Manufacturing Services following the Six Month Review, the dispute shall
be resolved by an arbitrator pursuant to the provisions of Section 13.0 below.
8.0 ON-SITE PERSONNEL.
8.1 ABT acknowledges and agrees that WTI shall be entitled to locate
one or more of its employees at the Tijuana Site for the purpose of monitoring
the operation of the WTI Equipment and the manufacture of the Products.
8.2 ABT shall provide at its expense reasonable office area and related
services (except a telephone and fax line) to be used by such WTI employee(s)
during residence at the WTI Facility. ABT will assist WTI in installing a
telephone and fax line at WTI's expense.
9.0 EXCLUSIVITY.
During the term of this Agreement, and for a period of ten years after
the termination of this Agreement, ABT agrees that it will not manufacture or
produce breathable, polyurethane gloves on behalf of ABT or any third party.
Nothing in this agreement shall prevent ABT from manufacturing a polyurethane
coating for latex gloves for the medical market.
10.0 TECHNOLOGY OWNERSHIP.
ABT acknowledges that WTI holds the exclusive title and ownership in
the WTI Technology. It is further agreed between the parties that all title and
ownership of any inventions, which includes patents as well as know-how, made by
WTI or ABT arising out of or relating to the production of the Products shall
reside exclusively with WTI. ABT agrees to enter into any assignment agreements
with WTI which may be required to perfect such rights, only as it relates to the
production of the Products.
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11.0 CONFIDENTIAL INFORMATION.
11.1 To the extent that WTI and ABT must disclose confidential
information not generally known in the industry to each other as a consequence
of the performance of this Agreement, the parties shall clearly identify such
information upon disclosure. If such disclosure is made in writing, each page
thereof containing such information shall be marked with the legend
"Confidential Information" or similar designation. If such disclosure is made
orally or visually, each party shall identify the data or material disclosed as
"Confidential Information" or similar designation at the time of disclosure, and
such oral or visual disclosure shall be reduced to writing promptly by the
disclosing party no later than thirty (30) days after disclosure. Each party
shall use such Confidential Information only for the purposes of fulfilling its
obligations under this Agreement and shall take reasonable precautions to limit
the disclosure of Confidential Information. Such information shall be disclosed
only to those employees, agents, representatives and suppliers having a need to
know Confidential Information in connection with their performance of this
Agreement.
11.2 Neither WTI nor ABT shall be liable for disclosure or use of
Confidential Information if:
(i) the Information was known to a party prior to its
receipt of the Information from the other party;
(ii) the Information became known or available to a party
from an independent third party source under no obligation of secrecy with
respect thereto;
(iii) the Information became part of the public domain in
any way without breach of the Agreement; and
(iv) the Information was disclosed by a party in
accordance with the written approval of the other party.
12.0 TERMINATION.
Notwithstanding the provisions of Section 2, this Agreement may be
terminated immediately by written notice upon the occurrence of any of the
following events;
(a) by ABT or WTI in the event proceedings are instituted by
or against the other party in bankruptcy or under in solvency laws; or
(b) by ABT or WTI in the event of a breach of any material term of
the Agreement by the other party and failure to cure such breach within ninety
(90) days after such party's receipt of written notice detailing such breach.
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13.0 POST- TERMINATION.
In the event that this Agreement is terminated for any reason (or is
not renewed beyond its specified term), ABT shall (a) grant WTI access to the
Tijuana Facility for a period not to exceed ninety (90) days for the purpose of
dismantling and removing the WTI Equipment and any Products or raw materials,
and (b) promptly return to WTI all WTI Technology and related drawings and
documentation (and retain no copies or duplicates of these materials).
14.0 INDEMNIFICATION.
Each part shall defend and save the other harmless from and against and
shall indemnify the other from any liability, loss, cost, expense or damages
howsoever caused by reason of any "Indemnified Event" described below, and it
shall pay all sums to be paid or discharged in case of any claim, action or
proceeding.
(a) In the case of WTI, an Indemnified Event from which ABT shall be
required to indemnify and hold WTI harmless shall mean any liability arising out
of any ABT employee claim or injury.
(b) In the case of ABT, an Indemnified Event from which WTI shall be
required to indemnify and hold ABT harmless shall mean any liability arising out
the design (including the raw materials), sale or distribution of the Products
by WTI.
15.0 ARBITRATION.
Any and all controversies or disputes between the parties arising under
any Section of this Agreement shall be submitted to an arbitrator for final and
binding resolution in accordance with the commercial arbitration rules of the
American Arbitration Association. The site of the arbitration shall be at San
Diego, California and the law of the State of California shall be applied by the
arbitrators.
16.0 LIMITATION OF LIABILITY.
In no event shall WTI or ABT be liable to the other for any special,
indirect, incidental or consequential damages.
17.0 GENERAL.
17.1 Force Majeure. Neither ABT nor WTI shall be liable for failure to
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perform or for delay in performance due to fire, flood, strike, act or God, act
of any governmental authority, embargo or other reasonably unforeseeable cause.
In the event of delay in performance due to any such cause, the date of delivery
or time for completion will be extended by a period of time reasonably necessary
to overcome the effect of such delay.
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17.2 Notices. All notices permitted or required under this Agreement
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shall be sent via facsimile, certified mail or courier to the signature parties
at the addresses set forth above.
17.3 Independent Contractor Status. Nothing contained in this Agreement
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shall be construed as creating a partnership or joint venture between the
parties. The relationship of ABT to WTI shall at all times be that of an
independent contractor. Neither party to this Agreement shall have any implied
or express rights or authority to assume or create any obligations on behalf of
or in the name of the other party.
17.4 Assignment. This Agreement and the mutual obligations and duties
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of the parties hereunder may not be assigned or transferred by either party
without the prior written consent of the other party to this Agreement.
17.5 Entire Agreement. This Agreement (including the referenced Exhibit
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A) contains the complete understanding of the parties with respect to the
development, manufacture and sale of the Products. This Agreement supersedes all
previous agreements and understandings between the parties with respect to the
subject of the Agreement and may be amended or supplemented only by another
writing signed by the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
WILSHIRE TECHNOLOGIES, INC. ADVANCED BARRIER TECHNOLOGIES, INC.
By: /s/ Stephen P. Scibelli, Jr. By: /s/ Ralph M. Sias
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Stephen P. Scibelli, Jr. Ralph M. Sias
Title: President & CEO Title: President
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Date: 4/11/96 Date: 4/11/96
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MANUFACTURING AND SUPPLY AGREEMENT
BETWEEN WTI AND ABT DATED APRIL 11, 1996
EXHIBIT A
WTI Equipment
Description: Quantity: Estimated Costs:
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Per Unit Total
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DIP/ROTATE STATION 1 & 2
SS Tanks 2 $ 6,500 $ 13,000
Tank raise/lower 2 $ 15,000 $ 30,000
Pallet rotate 2 $ 8,500 $ 17,000
Dip recirculation system 2 $ 4,500 $ 9,000
Air circulation control 2 $ 3,700 $ 7,400
Structure/Cladding 2 $ 7,500 $ 15,000
DRY OVEN 4 BAYS EXPLOSION PROOF
Oven 1 $ 45,000 $ 45,000
Automated door 4 $ 850 $ 3,400
Tracks 4 $ 200 $ 800
DUAL TANK LEACH STATION
SS Tanks 2 $ 6,500 $ 13,000
Tank raise/lower 2 $ 7,500 $ 15,000
Water recirculation system 2 $ 4,500 $ 9,000
Structure/Cladding 1 $ 5,000 $ 5,000
WET STRIP MODULE
Structure/Tracks 1 $ 15,000 $ 15,000
FINAL DRY
Dryer 65Lb 1 $ 9,000 $ 9,000
CASSETTE BATCHING STATION
Structure 1 $ 7,500 $ 7,500
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OTHER
Tracks (ft.) 150 $ 50 $ 7,500
Pallets 10 $ 2,200 $ 22,000
Bars 200 $ 150 $ 30,000
Control Panel 1 $ 15,000 $ 15,000
Misc. ducting, plumbing 1 $ 10,000 $ 10,000
Formers 1600 $ 18 $ 28,800
Former mounts 1600 $ 15 $ 24,000
Building Modifications 1 $ 20,000 $ 20,000
Engineering 750 $ 75 $ 56,250(A)
TOTAL MACHINE $427,650
AUXILIARY EQUIPMENT
Scrubber 1 $340,000 $340,000
Air Handler 1 $ 17,000 $ 17,000
Air Compressor 1 $ 5,000 $ 5,000
Hydraulic Powerpak 1 $ 12,000 $ 12,000
RO Water Treatment 1 $ 15,000 $ 15,000
Drum Roller 2 $ 750 $ 1,500
Mixer 2 $ 3,000 $ 6,000
Storage Tanks 2 $ 4,500 $ 9,000
TOTAL AUXILIARY $405,500
TOTAL PROJECT $833,150
NOTE (A): Includes $30,000 in Milestone Payments and out-of-pocket
costs listed in Exhibit C, Phase 1.
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MANUFACTURING AND SUPPLY AGREEMENT
BETWEEN WTI AND ABT DATED APRIL 11, 1996
EXHIBIT B
Product Specifications (Attached)
Specification No. 13021 - Premium Glove, etc.
Specification No. 05513021 - Glove, Ambidextrous, etc.
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MANUFACTURING AND SUPPLY AGREEMENT
BETWEEN WTI AND ABT DATED APRIL 11, 1996
EXHIBIT C
MANUFACTURING SERVICES PAYMENTS
PHASE 1 - DESIGN, CONSTRUCTION, AND INSTALLATION OF EQUIPMENT
Term: From the Effective Date of this Agreement until the date that
the WTI Equipment has operated for one Shift. A "Shift" is
defined as 48 hours per week.
Payments: WTI will pay ABT the amounts listed below within 30 days of
accomplishment of the respective listed Milestones, except for
Milestone (1), which is payable within three (3) days of
accomplishment:
Milestone Payment
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(1) WTI and ABT sign this Agreement. $ 5,000
(2) WTI approves the design of the WTI Equipment. $10,000
(3) WTI approves the installation of the WTI Equipment
in the Tijuana Facility. $ 5,000
(4) WTI approves the operation and production cycle time
of the WTI Equipment. $10,000
WTI will reimburse ABT for out-of-pocket costs (eg., travel expenses,
engineering fees) which are approved by WTI in advance. The above Milestone
payments and out-of-pocket costs are included in the Engineering Costs listed on
Exhibit A.
PHASE 2 - VALIDATION
Term: From the date WTI approves the installation of the WTI
Equipment in the Tijuana Facility until the date that
the WTI Equipment produces an average of 62,400 Units of
the Product per Shift. A "Shift" is defined as 48 hours
per week. A "Unit" is defined as one glove.
Payments: WTI will pay ABT $1,000 per Shift plus $0.10 per Unit of the
Product produced. The total of the payments will not exceed
$4,080 per Shift.
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At the conclusion of each validation week, ABT shall forward
its invoice for such manufacturing service fees to WTI via
fax. WTI shall pay such invoices on a net 30 day basis from
the date of such invoice.
PHASE 3 - PRODUCTION
Term: From the date that the WTI Equipment produces an average of
62,400 Units of the Product per Shift until this Agreement
is terminated. A "Shift" is defined as 48 hours per week. A
"Unit" is defined as one glove.
Payments: WTI will pay ABT $0.065 per Unit of the Product produced by
the WTI Equipment.
At the conclusion of each production week, ABT shall forward
its invoice for such manufacturing service fees to WTI via
fax. WTI shall pay such invoices on a net 30 day basis from
the date of such invoice.
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