Commercial Contract

EXCLUSIVE MANUFACTURING AGREEMENT

Small and Medium Enterprises Development Authority

Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road,
Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
helpdesk@smeda.org.pk

REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

PUNJAB SINDH KPK BALOCHISTAN

3rd Floor, Building No. 3, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Aiwan-e-Iqbal Complex, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Egerton Road Lahore, Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 36304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
helpdesk.punjab@smeda.org.pk helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk

January 2013
Exclusive Manufacturing Agreement
Pro-Gole (Right to do Business)
Legal Services, B&SDS

LEGAL SERVICES, SMEDA

The Legal Services (LS) department is a part of Business & Sector Development
Services Division of the Small Medium Enterprises Development Authority and plays
a key role in providing an overall facilitation and support to the small businesses. The
LS believes that information dissemination among the small businesses on the
existing legal & regulatory environment and business to business and business to
client contracting is of paramount importance and plays a pivotal role in their
sustainable development.

In order to facilitate small businesses, the LS, under the Pro-GOLE (Right to do
business) project, a joint SMEDA-UNDP initiative for supporting the small businesses,
has developed user-friendly contract templates.

Pro-GOLE, (Right to do Business)

The UNDP has partnered with the Small and Medium Enterprises Development
Authority to initiate and execute the Pillar 4 (Right to do business) component of the
UNDP PRO-GOLE project which seeks to enhance the legal awareness and mobility of
marginalized/ informal businesses. Under the project legal services outreach shall be
extended to small businesses including home based enterprises, small shopkeepers,
growers, women entrepreneurs, hawking vendors etc. In addition, small business
shall be mobilized to access legal services.

The Need for Commercial Contracts Templates

In an increasingly complex and competitive industry, it is vital that suppliers and
purchasers are fully protected against legal and commercial risks. To counter such
risks, a viable solution; available as- of the shelf commercial contract templates- will
provide the users with first class ready to use support. With obligations properly set
out and liabilities accurately defined, the users will be in a far better position to look
after their rights and interests and move forward from their marginalized positions to
being active players of the economy. The Legal Service Providers can equally take
benefit of these templates for their professional and business development.

Disclaimer
The information contained in this template is meant to facilitate the businesses in
documenting transactions with reference to manufacturing. However, SMEDA, UNDP
or any of their employees or representatives accept no responsibility and
expressively disclaim any and all liabilities for any and all losses/shortfalls caused by
or motivated by recommendations from the information contained within this
document. Although SMEDA’s ambition is to provide accurate and reliable
information; yet, the document is not an alternative to expert legal advice and
should ideally be used in conjunction with the same. Any person using this document
and or benefiting from the information contained herein shall do so at his/her own
risk and costs and be deemed to have accepted this disclaimer.
All information contained in this document may be freely used provided that relevant
acknowledgement is accurately quoted with each usage.

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B10. EXCLUSIVE MANUFACTURING AGREEMENT

THIS EXCLUSIVE MANUFACTURING AGREEMENT (hereinafter referred to

as the "Agreement") made and entered into at ______ (insert place) on this
____ (insert date) day of _______ (insert month) 20__ (insert year),

BY AND BETWEEN:
M/s [insert Name], a public/private company incorporated under the
Companies Ordinance, 1984, having its registered office at [insert Address]
through its [insert Designation], Mr/Mrs/Ms [insert Name];
OR
M/s [insert Name], a partnership concern of Mr/Mrs/Ms [insert Name] and
Mr/Mrs/Ms [insert Name], having its place of business at [insert Address]
through its Partner, Mr/Mrs/Ms [insert Name];
OR
M/s [insert Name], a sole proprietorship concern of Mr/Mrs/Ms [insert
Name], having its place of business at [insert Address] through Mr/Mrs/Ms
[insert Name];
OR
Mr/Mrs/Ms [insert Name], son/wife/daughter of [insert Name], r/o [insert
Address] CNIC # [insert Number]

(hereinafter referred to as the “Business”, which expression shall, wherever

the context so provides, include its successors, assigns, nominees and
agents)
AND
M/s [insert Name], a public/private company incorporated under the
Companies Ordinance, 1984, having its registered office at [insert Address]
through its [insert Designation], Mr/Mrs/Ms [insert Name];
OR
M/s [insert Name], a partnership concern of Mr/Mrs/Ms [insert Name] and
Mr/Mrs/Ms [insert Name], having its place of business at [insert Address]
through its Partner, Mr/Mrs/Ms [insert Name];
OR
M/s [insert Name], a sole proprietorship concern of Mr/Mrs/Ms [insert
Name], having its place of business at [insert Address] through Mr/Mrs/Ms
[insert Name];
OR
Mr/Mrs/Ms [insert Name], son/wife/daughter of [insert Name], r/o [insert
Address] CNIC # [insert Number]

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(hereinafter referred to as the “Manufacturer”, which expression shall,

wherever the context so provides, include its successors, assigns, nominees
and agents)

(The Business and the Manufacturer are hereinafter collectively referred to as

the “Parties”, and individually as the “Party”).

WHEREAS the Business is involved in the production and sale of [insert

description of products] (hereinafter referred to as the “Products”, and more
particularly described in Schedule I of this Agreement) in Pakistan.

AND WHEREAS the Manufacturer has a manufacturing facility for the

manufacturing of similar products.

AND WHEREAS the Business wishes to engage the Manufacturer for the
manufacturing of the Products on an exclusive basis, within the territorial
boundaries as stated in Clause 4 of this Agreement.

AND WHEREAS the Business has agreed to engage the Manufacturer for the
manufacturing of the Products, and the Manufacturer hereby accepts such
engagement.

NOW THEREFORE the Parties have agreed to the terms and conditions of
this Agreement on the following terms and conditions:

1. TERM

This Agreement shall become effective on [insert date], and shall remain in
full force and effect for a period of [insert number] years unless terminated
earlier by the Parties under the terms and conditions of this Agreement.

2. MANUFACTURING

(1) The Business hereby grants to the Manufacturer an exclusive right to

manufacture the Products.

(2) The Manufacturer shall manufacture the Products in the quantities

mentioned in Schedule I of the Agreement, and the Products shall be
delivered by the Manufacturer to the Business at [insert address] for sale
of the Products.

(3) Apart from the Products given in Schedule I, the Manufacturer shall not
manufacture any of the Business’ Products.

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Pro-Gole (Right to do Business)
Legal Services, B&SDS

(4) In undertaking the manufacturing of the Products, the Manufacturer shall

abide by the quality standards of the Business, as communicated by the
Business to the Manufacturer from time to time. The Business shall have
the right to inspect the quality standards of the Manufacturer’s products
to ensure the strict compliance of the Manufacturer with the Business’
quality standards.

(5) The Manufacturer shall not undertake the sale of the Products to the end
users. Instead, the Manufacturer shall sell the manufactured Products to
the Business against the prices as set out in this Agreement, and subject
to revision with the mutual consent of the Parties.

3. DELIVERY

(1) The Manufacturer shall be responsible for delivering the Products to the
Business, weekly, at the premises of the Business at [insert number] by
the first working day of the week.
(2) Upon receipt of the Products, the Business shall inspect the same. If it is
determined by the Business that any Product does not match with the
specifications or quality standards provided by the Business to the
Manufacturer, the Business may reject and return to the Manufacturer
such Product. The Manufacturer, if required by the Business, shall replace
the same, free of cost, within [insert number] days from the date of
raising the discrepancy, failing which the Manufacturer shall return the
cost of the Product. If such inspection and rejection causes the Business
to incur additional costs, such costs shall be reimbursed by the
Manufacturer to the Business, and may be deducted by the Business from
any money due, or to become due, to the Manufacturer.
(3) All transportation costs for taking delivery of the Products shall be borne
by the Manufacturer.
(4) The Manufacturer shall notify the Business in writing of any actual or
anticipated delays for the delivery of the Products immediately upon
discovery. Such notice shall include an estimated period of delay, cause
and corrective actions being taken by the Manufacturer. In such cases,
the Manufacturer shall give intimation in the form of phone call/email/fax
of the measures taken to avoid further delays or mitigate the effects of
such delay.

4. EXCLUSIVE LICENSE

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Pro-Gole (Right to do Business)
Legal Services, B&SDS

The Business hereby undertakes that the Manufacturer is the exclusive

manufacturer of the Business, and that the Business shall, for the term of
this Agreement, not engage any other person or entity for the
manufacturing of the Products of the Business.

5. PRICE AND PAYMENT TERMS

(1) The prices for the manufacture and delivery of the Products shall be as
per Schedule II hereto.
(2) The Price for each delivery shall be payable by the Business to the
Manufacturer on the [insert number] days of the weekly delivery of the
Products from the Manufacturer to the Business, after the inspection of
the Business with respect to the specifications and quality standards of
the Products

6. STANDARDS
The Manufacturer shall manufacture the Products in accordance with the
principles of good manufacturing practices and shall comply with the safety,
health and environment standards and practices in this regard.

7. NON-COMPETITION

The Manufacturer shall not directly or indirectly, during the term of this
Agreement, and for a period of [insert number] months after the expiry or
termination of this Agreement, manufacture, sell or deliver any product to
any other entity which might reasonably be considered to compete with the
Business’ Products, or enter into any business, in whatsoever capacity, which
may conflict with the interest of the Business.

8. TERMINATION

Either Party may terminate this Agreement, with or without cause, upon
serving a [insert number] months’ prior written notice to the other Party.

9. INDEMNIFICATION

The Manufacturer shall indemnify the Business against any and all claims,
losses, damages, costs, charges and expenses (including court fees and
lawyers fees and expenses) suffered or incurred by the Business as a
consequence of breaching the terms of this Agreement or due to its failure to
abide by the Business’ product specifications and standards.

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Pro-Gole (Right to do Business)
Legal Services, B&SDS

10. CONFIDENTIALITY

(1) Each party shall at all times during the continuance of this Agreement
and after its termination keep confidential all trade secrets, know-how or
other confidential information (hereinafter referred to as the “Confidential
Information”) made available under or in connection with this Agreement.

(2) Notwithstanding the assignment of its rights in accordance with Clause 11

below, the Manufacturer shall be responsible and liable for maintaining
the secrecy of the Confidential Information provided by the Business for
the processing activity and also for ensuring compliance of all the terms
and conditions of this Agreement.

11. ASSIGNMENT

None of the Parties shall assign or transfer or purport to assign or transfer

any of their rights or obligations under this Agreement without the prior
written consent of the other Parties, which consent shall not be unreasonably
withheld.

12. RESOLUTION OF DISPUTES

Any dispute, controversy or claim arising out of or relating to this Agreement

or the breach, termination or invalidity thereof, shall be settled by arbitration
in accordance with the UNCITRAL Arbitration Rules (or any other applicable
laws/ru;es), subject to the exclusive jurisdiction of the Courts of [insert
place].

13. GOVERNING LAW AND EXCLUSIVE JURISDICTION

This Agreement in all respects be read and construed and shall operate as a
contract, in conformity with the laws of [insert country] and the courts at
[insert place] shall have exclusive jurisdiction for adjudicating any dispute
arising hereunder.

14. FORCE MAJEURE

(1) Force Majeure shall mean any event that is beyond the reasonable control
of a Party, or the effects of which adversely affect the performance by
such Party of its obligations under this Agreement, including, but not
limited to, acts of God, sabotage, insurrection, terrorism, riots, hostilities
or war (whether declared or not), acts of the public enemy, civil

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Pro-Gole (Right to do Business)
Legal Services, B&SDS

disturbances, any kind of fire, explosion, flood or accidental damage,

epidemics, landslides, washouts, lightening, storms, earthquakes,
lockouts, blockades, shortage of labor or material, major equipment
failure, or other causes beyond the control of the Party affected.

(2) Notwithstanding anything contained hereinabove, neither Party shall be

liable to the other if it is unable to perform any of its obligations under
this Agreement due to the occurrence of Force Majeure.

(3) The Party affected by the Force Majeure event shall be entitled to suspend
performance of its obligations under the Agreement to the extent that
such performance is impeded or made impossible by the events of Force
Majeure.

(4) Each Party shall give a notice within [insert number] days of the
occurrence of the event of Force Majeure and shall promptly thereafter
consult the other Party for the purpose of finding a mutually acceptable
solution to the Force Majeure event.

15. MISCELLANEOUS

(1) This Agreement represents the complete agreement between the

Parties with regard to the subject matter and supersedes any prior
understanding or agreements, oral or written.

(2) This Agreement may be amended or revised only by an

instrument in writing signed by either the Parties or their duly
authorized representatives.

(3) No provision hereof or breach of any provision may be waived

except by a written waiver, signed by the waiving Party. No
waiver of any right under or breach of this Agreement shall be
construed to be a waiver of any other right or breach under the
Agreement. The failure of either Party to exercise any right provided in
this Agreement shall not be construed as a waiver its right to
subsequently enforce such provision or any other provision of this
Agreement.

(4)Any provision of this Agreement which is prohibited or

unenforceable under any law, rule or regulation applicable in [insert
place] for the time being shall be ineffective only to the extent of such
prohibition or lack of enforceability, and shall not invalidate the
remaining provisions hereof.

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 Exclusive Manufacturing Agreement
Pro-Gole (Right to do Business)
Legal Services, B&SDS

IN WITNESS WHEREOF, the Parties have set their respective hands on

this Agreement at the place, and on the date, mentioned hereinabove.

_________________________ _________________________
For and on behalf of For and on behalf of
The Business The Manufacturer

WITNESS NO. 1 WITNESS NO. 2

Signature: __________________ Signature: __________________

Name: __________________ Name: ______________________

Designation: _________________ Designation: _________________

Date: _______________________ Date:_______________________

SCHEDULE I
List of Products and Quantities

1. [insert description of the Product] [insert quantity per

week]
2. [insert description of the Product] [insert quantity per
week]
3. [insert description of the Product] [insert quantity per
week]

SCHEDULE II
Prices

1. [insert description of the Product] [insert price per

unit]
2. [insert description of the Product] [insert price per
unit]

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Pro-Gole (Right to do Business)
Legal Services, B&SDS

3. [insert description of the Product] [insert price per

unit]

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