THIS MANUFACTURING AGREEMENT (the “Agreement”) is made on the
___________200_ (the “Effective Date”) entered by and between ________________________,
hereinafter called "CLIENT", and ___________________________, hereinafter called the
WHEREAS, the CLIENT is engaged in the business of _____________________________
WHEREAS upon and subject to the terms and conditions of this Agreement, CLIENT has
retained MANUFACTURER‟s services to provide manufacturing services for the
______________________________________(“Product”) [Mention the type of Product]
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
The MANUFACTURER hereby agrees and undertakes to manufacture the said Products strictly
in accordance with the know-how, standards and specifications disclosed in compliance with the
Product Specifications described in Schedule I (the “Product Specifications”). Both during the
term and following termination of this Agreement, in perpetuity, MANUFACTURER shall not
supply the Product (or any prototype thereof), or Product Specifications, to any third party
This Agreement shall commence on the effective date, ____, and shall continue for an initial
term of one (1) year. This Agreement shall automatically be renewed for successive one (1) year
increments unless either party requests in writing, at least ninety (90) days prior to the
anniversary date that this Agreement not be so renewed.
3. PRODUCT FORECAST.
CLIENT will provide an annual twelve (12) month forecast and a monthly six (6) month rolling
Product forecast to MANUFACTURER. This section may be modified from time to time by an
addendum and information provided herein shall be treated as Confidential Information as under
4. MATERIAL PROCUREMENT.
4.1 MANUFACTURER is authorized to purchase materials using standard purchasing
practices including, but not limited to, acquisition of material recognizing Economic Order
Quantities, and long lead time component management in order to meet the forecasted
requirements of CLIENT. CLIENT is responsible for material to the extent that (i) material was
purchased by MANUFACTURER to support the Product forecast and agreed upon safety stock;
(ii) MANUFACTURER exercised reasonable business judgment in managing suppliers and lead
times and _____________________________________(Add additional provisions)
5. PURCHASE ORDER; INVENTORY.
5.1 The first three months of the Product forecast will be a firm commitment for
MANUFACTURER to deliver and for CLIENT to accept deliveries. CLIENT shall issue a
purchase order for each lot of product purchased, and shall order in minimum quantities of
_____, (“Units”). The minimum lifetime production shall be _____ Units, not to be purchased
later than ____________. The parties shall cooperate to purchase long lead items and obtain
quantity discounts beyond the three-month rolling forecast. CLIENT shall have the authority to
revise or cancel a purchase order for Product and may also eliminate a component from a
Product. However if any revision or cancellation of a purchase order ("Order"), or elimination
of a component or revision of forecast (downside) by CLIENT causes excess inventory,
MANUFACTURER shall identify all potential liability of CLIENT for material on order,
material on hand, work in process, and finished goods. MANUFACTURER shall undertake
commercially reasonable efforts to minimize charges to CLIENT by cancelling all applicable
material purchase orders and diverting materials for different or alternate programs. CLIENT
agrees to compensate MANUFACTURER for costs incurred for finished goods (including
profit); work in process (including labor performed); material on hand which could not be
returned or used for other clients and at other sites of MANUFACTURER; material on order
which could not be canceled; applicable material supplier's restocking or cancellation fees; and
agreed MANUFACTURER handling charges.
5.2 MANUFACTURER will report its inventory position to CLIENT on a monthly basis,
including the following data: quantity of raw material, work in process and any open orders that
cannot be canceled due to supplier lead time. Report will specifically identify any material on
hand or on order where the quantity exceeds the agreed three (3) month forward looking forecast
plus safety stock.
CLIENT shall pay for development and production of the Product as defined in and in
accordance with the Pricing Schedule (Schedule II).
7.1 MANUFACTURER warrants and represents that it has the requisite and necessary
experience, all necessary licenses and permits, equipment, facilities and personnel to properly
perform the manufacturing services in accordance with the Product Specifications.
MANUFACTURER warrants for a period of ______ months from shipment that all Products
sold to CLIENT shall be free from any defects in MANUFACTURER design, materials, and
workmanship, and shall conform to Product Specifications.
7.2 MANUFACTURER has the corporate and legal right to enter into this Agreement and is not
a party to any other Agreement that would in any way conflict with, or restrict, its ability to
perform the manufacturing services.
7.3 MAUFACTURER further warrants that during the warranty period (as defined in Paragraph
8 MANUFACTURER assumes full responsibility for the repair or replacement of units in the
field whereby greater than 10% of units exhibit one specific failure mechanism (“Catastrophic
7.4 MANUFACTURER shall have no responsibility or obligation to CLIENT under warranty
claims with respect to Products that have been subjected to abuse, misuse, accident, alteration,
neglect or unauthorized repair.
7.5 THE WARRANTIES CONTAINED IN THI