Jewelry Manufacturing Agreement
This Jewelry Manufacturing Agreement (“Agreement”) is entered into as of the
day of , (“Effective Date”) by and between
(“Designer”) and ___________________ (“Manufacturer”).
Recitals
A. Designer has created and own designs, copyrights, patents, trade secrets and
trademarks for use in fine and costume jewelry and wishes to have Manufacturer make various
jewelry items, including rings, necklaces, charms, brooches, earrings and pendants incorporating
these designs, copyrights, patents, trade secrets and trademarks (“Products”).
B. Manufacturer wishes to make Products incorporating these designs, copyrights,
patents, trade secrets and trademarks and deliver them to Designer.
In consideration of the foregoing and of the mutual covenants contained herein, the
parties agree as follows:
1. Definitions.
1.1 “Products” means solely the products of Designer specified on Exhibit “A”
attached hereto and incorporated herein by reference. Designer shall determine, in
its sole discretion, whether a particular product or article falls within the definition
of Product and Designer reserves the right, in its sole discretion, to eliminate any
product or article as Product at any time so long as the product or article is
eliminated generally from the Product line. Designer also reserves the right to add
new products or articles as Products.
1.2 “Design Rights” means the rights, without limitation, including copyrights, trade
secrets, know-how, trademarks and/or patents, as well as, without limitation,
rights with respect to product materials, colors, patterns, style, in and to any
designs for Products, and to any package designs, labels, advertising or
promotional material and any other designs using or used in conjunction with the
Marks.
1.3 “Marks” means the trademarks of Designer as set forth on Exhibit “B” attached
hereto and incorporated herein by reference.
1.4 “Property” means the intellectual property rights of Designer relating to the
Products that Designer determines, in its sole discretion, to be desirable or
necessary for Manufacturer to exercise the rights granted in this Agreement.
1.5 “Rights” means collectively the Marks and Property.
1
2. Production and Manufacturing.
2.1 Standards and Goodwill. Manufacturer acknowledges that Designer has made a
substantial investment in developing Products of high quality and design and
developing and fostering an image and reputation of high quality, design, prestige
and integrity under the Marks and Property and that the consuming public and
industry now associate the Marks and Property with products of consistently high
quality and design. Manufacturer further acknowledges that the terms and
conditions of this Agreement are reasonable and necessary to assure that all
Products sold under this Agreement consistently conform to the high quality and
design standards.
2.2 Manufacturing. Manufacturer shall manufacture all of the Products in accordance
with the high quality and design standards prescribed by Designer, consistent with
the best practices of the jewelry industry. In this regard, Manufacturer shall
exercise its best efforts to cooperate with Designer at all times in the coordination
of Products manufactured by Manufacturer so that they are consistent with the
style, image, design and quality of other products sold under the Rights. If any
Products manufactured by Manufacturer fail to conform to such standards, solely
as reasonably determined by Designer, then Designer, in its sole discretion, may
prohibit Manufacturer from using any Rights in connection with such non-
conforming Products. Manufacturer shall supply Designer with a Certificate of
Inspection verifying that all Products manufactured by Manufacturer were
manufactured to Designer’s standards.
2.3 Samples. As early as possible, and in any event prior to the commencement of
any production run, Manufacturer shall furnish to Designer, at no expense to
Designer, one sample of each Product that Manufacturer intends to manufacture
under the Rights. Once the initial sample is approved by Designer, Manufacturer
shall then furnish to Designer one complete final sample for each style to be made
by Manufacturer. Designer shall have the right to exercise quality control and line
content over the Products manufactured and sold by Manufacturer by making any
changes or corrections in such samples as may be required, in Designer's sole and
reasonable determination, to maintain the high quality and design standards
prescribed by Designer, and Manufacturer shall make and incorporate such
changes or corrections at Manufacturer's sole cost and expense. Manufacturer
shall not make any changes to any sample after approval by Designer without
resubmitting the sample for approval.
2.4 Top of Production Samples. As soon as possible after completion of the first
production run of a Product, Manufacturer shall furnish to Designer, at no expense
to Designer, one top sample from the first production run of such Product.
Designer shall have the absolute right, in its sole discretion, to approve or
2
disapprove of such production samples. Manufacturer shall not make any changes
to any sample after approval by Designer without resubmitting the sample for
approval pursuant to Section 2.3. If Designer rejects any sample, Manufacturer
shall discontinue the production of the Product and shall coordinate with
Designer, at Manufacturer's expense, to make changes and corrections to conform
the Product to the high quality and design standards and shall resubmit a sample
for approval pursuant to Section 2.3. In addition, to ensure consistent quality of
production runs, Manufacturer shall furnish to Designer, at no expense to
Designer, two additional production samples of Products [in any given season] as
Designer may, from time to time, request for the purpose of comparison with
earlier samples. If Designer requires more than two such additional samples
Manufacturer shall provide such excess additional samples to Designer at
Manufacturer's regular wholesale price, reduced by any normal trade discounts
given by Manufacturer for sample sales.
3. Services. Designer will furnish to Manufacturer samples and Design Rights necessary for
the services under this Agreement. Designer will designate approved materials of which
Manufacturer will order and take delivery only from approved vendors. Manufacturer
agrees to perform services for Designer including finishing Products. Manufacturer will
provide counter-samples and production samples for approval by Designer. All Products
will be made strictly in accordance with the applicable Production Ticket, Quality
Audit/Release form and approved samples. Designer may also provide specifications,
which must be used. All construction materials, colors, accessories, and finishes must be
delivered as ordered. Products will be packed strictly in accordance with the instructions
from Designer. If the Products are packed in any other manner, the invoice price will be
reduced by the cost of repacking.
4. Shipping and Delivery. Unless otherwise stated by Designer in writing, all shipments
shall have 60 day net term. Manufacturer shall adhere to all Designer delivery dates and
cancellation dates. If Manufacturer meets Designer’s cancellation date, Designer shall be
entitled to 60 day net terms. All shipments shall be invoiced by Manufacturer prior to
shipping, and the invoices shall be sent to Designer’s corporate department for approval.
All shipments by Manufacturer shall include an accurate packing list, and all production
orders shall have a receipt confirmation. All finished Products will be returned to
Designer no later than the cancellation date stated on the Production Ticket. If they are
not, Designer may cancel the order on the Production Ticket. No extensions of time will
be honored unless in writing and signed by Designer. Manufacturer understands that
Designer has made or will make commitments to its customers for delivery of the
completed Products on the basis of timely completion by Manufacturer. Financial
adjustments will be assessed for late deliveries as follows:
4.1 Shipments received by Designer 10 days or more late: 20% deduction from the
price.
3
4.2 Shipments received by Designer 30 days or more late: 100% deduction from the
price (i.e., the shipment is of no value to Designer and Manufacturer
acknowledges and agrees it has harmed Designer and will provide it with credit of
____% of the purchase price for subsequent shipments.
These reductions are reasonable estimates of the costs which Designer would incur; these
costs are difficult to fix precisely.
5. Payment. The price is stated on the Production Ticket and is landed duty paid, Designer’s
warehouse in . All unit prices include delivery to Designer’s warehouse
in , and all shipments, unless they are direct shipments, will be sent
there. If Designer’s customers return Products because they are defective, Manufacturer
will be allowed to inspect them. Designer may deduct the full cost of such Products from
any outstanding invoice, if they are in part a result of Manufacturer’s poor quality.
6. Approval of Work. "Defective" means Products which do not conform strictly to the
approved samples, are not strictly in the size scale specified, have not been manufactured
in accordance with the instructions provided by Designer, or has been assembled and
sewn by Manufacturer with production-work from different materials. Designer will not
pay for Products which are Defective. Manufacturer must deliver all Products, including
Defective Products.
A production run may be rejected if more than 10% of the ordered quantity is Defective
with a variety of minor defects. A production run may be rejected if more than 4% of the
ordered quantity is Defective with a variety of major defects. A production run will be
rejected if the Products have defects which make them unsafe. If an entire production run
is rejected by Designer, Manufacturer will refund the amount of the letter of credit for its
services on that production run. Designer will have no obligation to pay Manufacturer for
its services on that production run. If the inspection discloses defects in excess of the
established AQL (Acceptable Quality Level), Manufacturer will pay Designer’s entire
cost of a 100% inspection. If there are Defective Products and Designer elects not to
reject the production run, Designer may repair the Defective Products. Manufacturer will
pay for all cost incurred by Designer to repair defective Products.
7. Care of Samples and Products.
7.1 Manufacturer will keep the Designer samples at its principal business address and
will not move them elsewhere without notifying Designer.
7.2 Manufacturer will insure the Designer Products as provided in Section 18 below.
7.3 Upon request, Manufacturer will return all samples. If there is a dispute between
Designer and Manufacturer, and Designer pays the cost, Manufacturer will send
the samples to Designer.
4
7.4 Manufacturer will provide Designer a monthly report of inventory of: items
bearing the Designer trademark within fifteen (15) days of the end of each
calendar month. Manufacturer will promptly provide to Designer a weekly
activity report and, if so requested by Designer, a biweekly work-in-process
report.
8. Term and Termination.
8.1 Term. This Agreement is in effect for as long as Designer issues Production
Tickets