Digico Fabrication Électronique - Manufacturing Agreement
MANUFACTURING AGREEMENT
SECTION 0.0 PREFACE AND PARTIES
This Manufacturing Agreement (“Agreement”) is made and entered into as of ________, 20__ by and between
______________________ (____________), having its place of business at __________________________
_____________________________________, and Digico Fabrication Électronique. (DIGICO) having its
place of business at 950 rue Bergar, Laval, Québec, Canada.
SECTION 1.0 AGREEMENT TO MANUFACTURE
1.1 Scope of Work. During the term of and subject to this agreement, ____________ shall purchase from
DIGICO an annual quantity of Product Units at the prices attached to this agreement as Exhibit A. The
units will be produced according to ____________’s specifications, and a description of the products and
their specifications shall be attached as Exhibit B. ____________ agrees to purchase from DIGICO all
products manufactured in accordance with the terms of this agreement. ____________ shall issue a blanket
purchase order, attached to this agreement as Exhibit C for the purchase of the total quantity for the Product
Units in accordance with Exhibit A.
1.2 Client-supplied Materials. Upon notice to DIGICO, ____________ may supply materials to DIGICO.
All materials will be delivered to DIGICO in sufficient time and in sufficient quantities, including normal
attrition levels, to allow DIGICO to meet scheduled delivery dates for the applicable products. All
consigned materials shall be in good condition and working order. ____________ assumes complete
liability for the quality of all such materials and DIGICO shall not be responsible for any defects or
deficiencies therein. In such cases, the customer shall be considered a supplier. DIGICO will issue a
purchase order for the subject material at ____________’s standard cost.
SECTION 2.0 PURCHASING AND CANCELLATIONS
2.1 Purchase Orders. ____________ will order products by issuing Purchase Orders to DIGICO. Purchase
Orders may be delivered to DIGICO by any reasonable means, including but not limited to postal delivery,
courier delivery, facsimile transmission, and electronic mail. Purchase Orders sent via facsimile or
electronic mail may be confirmed by DIGICO, but DIGICO shall have no obligation to do so. No Purchase
Order shall be binding upon DIGICO unless and until it is accepted by DIGICO in writing. Within 2 days
of receipt of a Purchase Order, DIGICO shall either accept or reject the same. If DIGICO is unable to meet
the delivery schedule set forth in a proposed Purchase Order or finds the same to be unacceptable for some
other reason, DIGICO and ____________ shall negotiate in good faith to resolve the disputed matter(s).
2.2 Purchase Order Releases. ____________ shall issue DIGICO firm purchase order releases a minimum of
12 weeks prior to the required delivery date. In addition, ____________ shall provide DIGICO with a 12
month non-binding rolling forecast on a monthly basis to be used for procurement planning purposes.
DIGICO shall only make purchase commitments to suppliers based upon the written Purchase Orders
received from ____________.
2.3 Purchase Order Contents. ____________ shall specify the Product Units to be delivered by DIGICO
under the terms of this Agreement by issuing written purchase order releases as stated in Item 2.2. These
releases shall contain the following information:
A.
B.
C.
D.
E.
The quantity and type of Product Units to be shipped.
The Product Unit price.
The Product Unit revision level.
The delivery schedule.
Destination.
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Digico Fabrication Électronique - Manufacturing Agreement
F. Required method of shipment.
G. Reference to this Agreement.
2.4 Rescheduling of Released Orders. ____________ may reschedule delivery of Product by sending
DIGICO a written change order. Deliveries may be rescheduled in accordance with the following schedule:
Number of Business Days Advance Notice
0 - 20
21 - 35
36 - 50
51 - 65
66 - 90
% of Shipment Rescheduled
NONE
0 - 15%
16 - 25%
26 - 50%
51 - 100%
____________ shall assume full burdened inventory responsibility for DIGICO purchases of components within
the purchase order periods plus any long lead or non-cancelable/ non-returnable (NCNR) items purchased on
____________’s behalf with ____________’s prior authorization. . ____________ responsibility shall include
any premium charges for expedites. Should one or more shipments be rescheduled with a delay of greater than
30 days, inventory carrying charges of 1.5% per month will accrue.
2.5 Engineering Design Changes. DIGICO will advise within 2 days, how soon and at what cost Engineering
Change Orders can be implemented. ____________ agrees to take financial responsibility for any increase
in costs due to an Engineering Change Order.
2.6 Cancellations. In the event that ____________ wishes to cancel some quantity of Product Units ordered
pursuant to this Agreement, DIGICO upon receipt of such written notice, shall stop work to the extent
specified therein. ____________'s termination liability shall be limited to the following.
A. Payment for all Products delivered to ____________ and in transit, plus finished Products in inventory
prior to, and including, the effective date of termination at unit prices applicable to the order;
B. Payment for all "work-in-process" based upon percentage of completion, as determined by DIGICO,
multiplied by the unit price of the Product per Exhibit A, including Products which were in process
prior to receipt of notice of cancellation and that could not be completed by the cancellation date. The
total unit price for work in process units will not exceed the total unit price for a completed assembly.
Additional charges may be incurred as a result of the stop-work. ____________ may request DIGICO
to complete and deliver all Product included in work-in-process.
C. Payment for the cost plus burden and profit in accordance with agreed material prices of inventory in
house and on order which cannot be canceled or returned, provided that such inventory is in support of
____________ purchase orders.
D. Payment of any restocking charges, "bill-backs," and cancellation charges received by DIGICO from
suppliers for components ordered for the manufacture of Products or to ____________ forecast plus a
5% handling fee.
DIGICO shall use its best efforts to minimize cancellation charges by returning inventory and material for credit,
canceling material on order and applying material to other DIGICO projects (when possible, at the sole
discretion of DIGICO) and minimizing all work-in-process and finished goods to support the final production
schedule. Upon payment of the cancellation charges, all Product Units, work-in-process, and nonreturnable/non-cancelable components in house or on order shall be delivered to, and become the property of
____________, EX-WORKS DIGICO.
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Digico Fabrication Électronique - Manufacturing Agreement
SECTION 3.0 PAYMENT AND SHIPPING TERMS
3.1 Invoices and Payment. DIGICO shall invoice ____________ upon shipment. Payment is due net thirty
(30) days from date of shipment. Should ____________ fail to make payment within sixty (60) days after
date of invoice, DIGICO may, at its option, (1) cease shipments to ____________ immediately; and/or (2)
make some or all future shipments C.O.D.
3.2 Packaging and Shipping. DIGICO shall package each Product Unit to ____________’s specifications, or,
if not specified by ____________, to good commercial standards. All shipments made by DIGICO to
____________ shall be Ex-Works. DIGICO. Title, risk of loss and damage shall pass from DIGICO to
____________ upon delivery to the ____________ designated carrier. Shipments will be made in
accordance with ____________’s specific routing instructions, including method of carrier to be used, and
all special and incidental charges resulting from the choice of freight carrier shall be borne by
____________.
SECTION 4.0 WARRANTY
4.1 Warranty. DIGICO warrants to ____________ that items assembled or manufactured by DIGICO will
conform to mutually agreed upon specifications and be free from defects in workmanship under normal use
and service for a period of 90 days after shipment by DIGICO. DIGICO’s responsibility shall be limited to
procurement of materials, incoming inspection, and safe handling of the components while in-house at
DIGICO. When vendors are expressly specified by ____________, ____________ assumes responsibility
for the selection of all materials, as well as ensuring the quality of the vendors and the compatibility of the
components. Customer is also responsible for designing a product which does not unduly stress the
components being used. DIGICO's obligation under this warranty is limited to replacing, repairing, or
issuing credit for any said items that after inspection are deemed defective by DIGICO. All defective
products shall be returned to DIGICO manufacturing facility, FCA. ____________, with reference to a
DIGICO supplied Returned Materials Authorization number (“RMA”). A shipping and handling charge
will be assessed for invalid returns or those where no defect is found.
THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES WHETHER STATUTORY,
EXPRESS OR IMPLIED, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR PARTICULAR PURPOSE AND FOR ALL OTHER OBLIGATIONS OR LIABILITIES
ON DIGICO’S PART.
DIGICO neither assumes nor authorizes any other person to assume for DIGICO any other liability in
connection with the sale of the said items. This warranty shall not apply to any of such products which
shall have been repaired or altered except by DIGICO or which shall have been subject to misuse,
negligence, or accident. A prior written authorization must be obtained from DIGICO before any items
can be returned to DIGICO pursuant to a warranty claim. DIGICO is not liable for incidental,
consequential or special damage of any kind or for personal injury resulting directly or indirectly from
the design, material, workmanship, operation or installation of the items being assembled under this
agreement.
SECTION 5.0 RESPONSIBILITY FOR ADDITIONAL COSTS AND EXCESS INVENTORY
5.1 Excess Inventory. In the event that DIGICO purchases or orders Materials or Parts in order to meet
____________’s requirements as set forth in any Purchase Order(s), ____________ shall be required to
purchase the unused portion from DIGICO upon demand if (i) ____________ fails to purchase Products in
accordance with such Purchase Orders(s) and (ii) DIGICO cannot reasonably return, cancel the order for, or
otherwise use such Materials or Orders at no cost to itself. The cost of such purchase by ____________
shall equal total cost(s) plus a 15% handling fee.
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Digico Fabrication Électronique - Manufacturing Agreement
____________ shall also bear full burdened inventory responsibility for unconsumed material caused by
supplier’s standard package or minimum order quantities. If such inventories are not consumed within 90
days of the last purchase order, DIGICO will invoice ____________ for the unused balances.
5.2 Additional Costs. Product Unit pricing shall remain firm for Products on ____________ purchase orders
which have been accepted by DIGICO except as follows:
A. In the event there is an increase in the cost of materials which affects the Product Unit price, DIGICO
shall document such increase in material cost to ____________ so that both parties may mutually
pursue alternative pricing in order to retain the original cost. If such an alternative cannot be attained
within a reasonable period of time, the prices in Exhibit A shall be adjusted to reflect the actual cost of
the increase.
B. ____________ will be responsible for certain charges defined as those charges constituting costs and
expenses not contained in the quoted contract price, where the cause is due to ____________'s actions,
including but not limited to:
1. Overtime charges and actual expenses incurred as a result of delays in the normal production or
interruption in the work flow process where such delays or interruption are caused by: (a)
____________ change in product specification or product test which impacts a build in progress,
or (b) failure to provide sufficient quantities or a reasonable quality level of consigned materials
where applicable to sustain the production schedule.
2. Any inventory rendered obsolete as a result of a ____________ engineering, field,
manufacturing, design, test, or other change. Such obsolete inventory shall be invoiced at the
total cost plus 15% handling, and shall be packaged and delivered to ____________ by DIGICO,
EX-WORKS DIGICO shipping point, within 30 days of the change effective date.
3. Expenses incurred due to ____________'s packaging requirements.
SECTION 6.0 TERM AND TERMINATION
6.1 Term and Termination. The initial term of this Agreement shall commence on the date of execution
hereof and extend for five years with automatic bi-annual renewals (every 2 years) unless terminated
according to one or more of the following provisions:
A. At any time upon the mutual written agreement of both parties;
B. At the end of the Initial Term or any subsequent one-year term by either party upon written notice to the
other party received not less than sixty (60) days prior to the expiration of any such term;
C. By either party upon thirty (30) days written notice to the other party following a material breach of the
Agreement by the other party and the breaching party’s failure to cure such breach with reasonable
promptness in light of all surrounding circumstances;
D. By either party upon the other party seeking an order for relief under the bankruptcy laws of Canada or
similar laws of any other jurisdiction, a composition with or assignment for the benefit of creditors, or the
dissolution or liquidation.
Upon any such termination, ____________ shall be liable, in the event of any cancellation of current purchase
orders with DIGICO, according to Section 2.0, Item 2.6, “Cancellations.”
SECTION 7.0 INDEMNIFICATION
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Digico Fabrication Électronique - Manufacturing Agreement
7.1 Product Indemnification. ____________ agrees that it will fully indemnify DIGICO against any and all
claims, liabilities, damages or causes of action hereafter brought or asserted by any person or entity arising
out of the design, installation or use of any Product(s) manufactured by DIGICO under this Agreement.
Such indemnification shall include attorney's fees and all other costs incurred by DIGICO in the defense of
such claims, asserted liabilities or causes of actions.
7.2 Patents, Copyright, Trade Secret and Other Proprietary Rights. ____________ agrees to defend at its
expense any suit brought against DIGICO based upon a claim that finished Product(s) manufactured by
DIGICO under this Agreement infringes on a patent, copyright, trade secret and other proprietary right,
foreign or domestic, and to pay the amount of any settlement or the costs and damages finally awarded
provided that DIGICO promptly notifies ____________ and provides ____________ with reasonable
assistance in the defense of any such action.
8.0 MISCELLANEOUS
8.1 Entire Agreement. This Agreement shall constitute the entire Agreement between the Parties with respect
to the transactions contemplated hereby and supersedes all prior agreements and understandings between the
Parties relating to such transactions. The Exhibits listed below are considered to be a part of this Agreement:
Exhibit A
Exhibit B
Exhibit C
Product Quantities, Unit Pricing, and Non-Recurring Expense
Description and specifications of the Products
____________ Purchase Order.
____________ and DIGICO shall comply with all terms and conditions stated in this Agreement and with all
product specifications contained in customer issued purchase orders. In the event of inconsistency, the order of
precedence shall be as follows:
1) This Agreement
2) Exhibits to this Agreement
3) Product Specifications on the face of ____________’s Purchase Order(s)
8.2 Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns. Neither party hereto shall in any way sell, transfer, assign, or
otherwise dispose of any of the rights, privileges, duties and obligations granted or imposed upon it under
this Agreement; provided however, that DIGICO shall have the right to assign its right, duties and
responsibilities under this Agreement to any affiliate of DIGICO. An affiliate of DIGICO means any
corporation partnership or other business entity which controls or is controlled by, or is under common
control with DIGICO.
8.3 Severability. In case any one or more of the provisions contained in this Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect, except in those instances where removal or
elimination of such invalid, illegal, or unenforceable provision or provisions would result in a failure of
consideration under this Agreement, such invalidity, illegality or unenforceability shall not affect any other
provision hereof, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision
had never been contained herein.
8.4 Force Majeure. DIGICO shall not be liable for any delay in performance or failure to perform, in whole or
in part when due to labor dispute, strike, war or act of war (whether an actual declaration is made or not),
insurrection, riot civil commotion, act of public enemy, accident, fire, flood, or other act of God, act of any
governmental authority, judicial action, or similar causes beyond the reasonable control of DIGICO. If an
event of force majeure occurs, DIGICO shall promptly notify ____________.
8.5 Independent Contractor. DIGICO and ____________ are and shall be independent contractors to one
another, and nothing herein shall be deemed to cause this agreement to create an agency, partnership, or
joint venture between the parties.
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Digico Fabrication Électronique - Manufacturing Agreement
8.6 Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the
8.7
province of Québec, Canada. The federal or provincial courts located in Canada will have exclusive
jurisdiction to hear any dispute under this Agreement.
Language.
This Agreement has been drafted in English at the express wish of the parties. Ce contrat a été rédigé en
anglais à la demande expresse des parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date first above written.
Digico Fabrication Électronique Inc.
By:
____________
By:
_____________________________
Name (signature)
_____________________________
Name (signature)
Title
_____________________________
Title
_____________________________
Date:
_____________________________
Date:
_____________________________
Addendum 1. Value added services
Last Revision: Mai 10th, 2010