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Manufacturing Agreement


The following terms shall have the meanings hereby assigned to them unless the context would obviously require otherwise:

Agreementmeans this agreement, consisting of the parts, specified in clause 2.3 executed by the parties.

BOMshall mean a list of Components applicable to Manufacturing of Good(s), which list is binding to SUPPLIER. The BOM for each Good is declared in Appendix 1.

“Business days” means the normal business days (excluding Saturdays, Sundays including Bank Holidays in Republic of Lithuania) of the SUPPLIER having received a purchase order for the Goods.

“BUYER” means BUYER, specified in Special terms and conditions of this Agreement.

"Buyer Documentation”  means any BUYER design and any other drawings, technical documents, software programs or other documents in whatever medium or format submitted to the SUPPLIER by the BUYER or any Authorized Buying Company, and any documents related to any BUYER Tools.

"Code of Conduct" a set of requirements for the supply chain of BUYER for SUPPLIER qualification, SUPPLIER approval and continuous SUPPLIER development.

 Componentsshall mean the parts and components necessary for the Manufacturing, as such parts and components are identified in the applicable BOM. Components may be classified as “Low risk”, “Moderate risk” and “Critical” components.

Critical Componentsshall mean any Component that are identified by SUPPLIER and designated as Critical Components in the BOM or otherwise specified as Critical. SUPPLIER and BUYER shall agree separately how to purchase or order the Critical Components in Appendix 2.

“Delivery Date” means the date when the Goods are available exercising mutually agreed and executed under Incoterm 2020.

“ECO” means Engineering Change Order, which must be submitted in writing to the SUPPLIER before change implementation, major changes in production process, changes of new sub material suppliers/subcontractors.

Forecastshall mean a document that expresses BUYER’S estimated product, part and/or service demand, typically in monthly frame, further defined in Appendix 2.

“Goods”  means any components, equipment, parts, merchandise or other assets manufactured or otherwise produced by the SUPPLIER for purchase by the BUYER or Authorized Buying Company under this Agreement and the applicable Notice of Proposed Amendment.

Intellectual Propertymeans any and all intellectual property rights including, but not limited to, patents, copyrights, trademarks, trade name rights, trade secret rights, know-how, source and object codes, algorithms, mask works, designs, utility models, and all improvements and amendments thereof, as well as all registrations, applications, renewals, extensions, continuations, divisions or reissues thereof now or hereafter in force.

Lead Timemeans latency between the initiation and completion of a process, including the first effort to initiate acquisition of Goods.

“Low risk components” shall be ordered and monitored according to purchasing process.

Manufacturingshall mean any and all of the operations in a factory that are required to manufacture Goods; from acceptance inspection of Components until the packing of Goods.

“Moderate risk components” shall be ordered and monitored according to purchasing process. However, they will be monitored with second priority after critical risk components.

No Demand componentsprocured by SUPPLIER based on BUYER’s authorization and planned or foreseen for Goods manufacturing that are not utilized within thirty (30) calendar days after arrival on SUPPLIER’S premises.


2.1 Scope The purpose of this Agreement is to agree upon the general terms and conditions, which shall apply when SUPPLIER provides Manufacturing and related services to BUYER. General conditions shall be a part of Agreement under which the Parties may agree on supply of Goods defined in Appendix 1 to be entered into between the Parties.

2.2 Goods and Services The Goods to be manufactured and supplied hereunder are specified and listed in the Appendix 1. The Parties may amend (or replace as the case may be) the Appendix 1 to include any new Goods to this co-operation by a new or amended Annex.

In addition to the Manufacturing services, SUPPLIER may provide to BUYER also logistics and supply chain management services as separately agreed. If the Parties agree that SUPPLIER shall also provide additional services to BUYER, the terms and conditions applicable to such services shall be separately agreed in the Appendix 1.

2.3 Agreement Documents and Priority The Agreement structure looks as follows:

(i)  Special terms and conditions;

(ii)  General terms and conditions;

(iii)  Appendixes, specified in Special terms and conditions, or other latter written agreements

between Parties.

In the event of a conflict between the provisions of Agreement and any Appendices, Agreement shall prevail. In the event of a conflict between the provisions of General terms and conditions and Special terms and conditions of this Agreement, Special conditions shall prevail. For the sake of clarity, any and all pre-printed standard terms (e. g. on a purchase order, order acknowledgement, or invoice) shall not have any applicability unless the other Party has expressly accepted the relevant term in writing and duly signed by the authorized representative of the respective Party. All proposed amendments or additional agreed conditions should be signed as appendix to the Agreement and numbered in consecutive order.


3.1 Ordering BUYER may place Purchase Orders electronically to SUPPLIER. SUPPLIER shall send a written confirmation of such Purchase Order promptly and in any case not later than five (5) business days after its receipt. In case SUPPLIER considers that the proposed delivery date cannot be met due to reasons related to transportation and / or other issues which are out of SUPPLIER’s control, the Parties must agree on a new delivery date in writing with updated Purchasing Order from BUYER.

A contract between SUPPLIER and BUYER shall be considered concluded when SUPPLIER has received Purchase Order and acknowledged it with Order Confirmation.

BUYER shall be entitled to change Purchase Order quantities and delivery date as agreed in the Appendix 2 of Special terms and conditions. Changes to placed Purchase Orders requested by BUYER shall be confirmed by SUPPLIER with an Order Confirmation.

BUYER shall deliver a 12 months’ Forecast which the SUPPLIER undertakes to confirm by a Forecast Confirmation within five (5) business days, as further described in Special terms and conditions and Appendix 2 (Ordering and Forecasting). Based on BUYER Forecasts, the SUPPLIER shall provide BUYER a list of Critical components. Letter of authorization may also be provided by SUPPLIER to BUYER requesting authorization to procure Critical Components. This applies also to last-time-buy Components or Components where procurement of minimum lot quantities of Components is required however lot quantity is larger than total demand within six (6) months covered by Purchasing Orders.

3.2 Components supplied by BUYER

In case SUPPLIER is required to order components from BUYER to manufacture Goods under Agreement, SUPPLIER and BUYER shall abide procedure and process devised by SUPPLIER titled ‘Requirements for customer’s components’ and ‘Requirements for components packaging’ of latest revision.

SUPPLIER is obligated to provide BUYER with latest revision of above process documents prior to or on the day of current Agreement signing and notify BUYER in writing, in case of revision change providing the updated process documentation.


4.1Delivery Time and Delivery Term

Unless otherwise set out in the Appendix 1 (Pricing) the terms of delivery shall be settled in Special terms and conditions as defined in Incoterms 2020.

Partial deliveries, defined as deliveries of less than 98% of original purchasing order quantity, are subject to BUYER’s prior written consent.


Should SUPPLIER discover that the delivery date cannot be met, SUPPLIER shall immediately notify BUYER in writing, stating the reasons for the delay and its best estimate of when the delivery can be made. Parties agree that SUPPLIER’s delay due to objective reasons, shall not be considered a breach of Agreement, or as a reason to impose penalties to SUPPLIER, or making claims or demands, including claims for any (direct or indirect) losses, or damages.


5.1 Prices

Prices for the Goods shall be set forth in the Appendix 1 (Pricing). The prices shall be reviewed by the Parties on either request or at least every twelve (12) months. Any changes in the prices shall be mutually agreed in writing between the Parties.

New prices for the Goods shall be agreed within four (4) weeks after request for review is received by either of the Parties by singing of updated Appendix 1 (Pricing). Parties agree to dedicate sufficient resources, time and proactively cooperate to investigate and arrange signing of new Appendix 1 (Pricing). New prices shall apply latest from forthcoming calendar quarter after date of signing of new Appendix 1 (Pricing).

5.2 Currency

If as a result of fluctuations in currency exchange rates, the total cost of BOM in EURO currency per Goods (one product or all) changes by more than 2.1% from the total cost of BOM in EURO currency on the date of signing of Appendix 1, SUPPLIER or BUYER has the right to initiate review of prices. Goods price change due to fluctuation of currency exchange rates must be reviewed by both Parties within two (2) weeks from initiation by either of the Parties. New Goods prices and Appendix 1, must be agreed, signed within two (2) weeks and become valid no later than the next calendar month from initiation of review of prices.

5.3 Continued Price Reductions

It is the Parties’ intention that SUPPLIER’s pricing applicable to BUYER is at all times competitive and the Parties believe that price reductions may be achieved by effective co-operation. The Parties shall use their best efforts to achieve price reductions in relation to the prices existing at each point of time. The Parties shall jointly and openly work to reduce the total costs of the Goods taking however into account the agreed quality requirements.

5.4 Terms of Payment

SUPPLIER shall be entitled to invoice BUYER for delivered Purchase Orders. The terms of payment shall be set forth in the Special terms and conditions. If the BUYER shall not comply the payment terms, SUPPLIER shall have the right to impose penalties, settled in Special terms and conditions.


6.1 Goods

Parties agree to work based on ordering procedure outlined in clause 3.1 of General terms and conditions, and supplemented by Appendix 2 (Ordering and Forecasting). In the event Goods remain at SUPPLIERS premises for more than fourteen (14) calendar days from BUYERS wanted date declared in initial Purchasing Order related to Goods in question, SUPPLIER has the right to invoice BUYER a Goods keeping cost. The Goods keeping cost of 0,04% of total cash value of Goods applicable since the 15th calendar day to 44th calendar days (Goods keeping cost is applicable for the maximum 30 (thirty) calendar days, exceeding the 14 (fourteen) calendar days term with no keeping fee), if Goods remain on premises of SUPLLIER’S. If the Goods remain at SUPPLIERS premises longer than for forty-four (44) calendar days from BUYER’S wanted date, declared in initial Purchasing Order, penalties, settled in Special terms and conditions can be applicable to BUYER.

6.2 Components

Components procured by SUPPLIER based on BUYER’S authorization and planned or foreseen for Goods manufacturing that are not utilized within thirty (30) calendar days after arrival on SUPPLIER’S premises are identified as components in storage and SUPPLIER has right to invoice BUYER a keeping cost at the amount of 1.2% of total cash value of components per thirty (30) calendar days period or 0.04% per calendar day if components remain unutilized less than sixty (60) calendar days from initial arrival. If the Components remain unutilized longer than sixty (60) calendar days from initial arrival, penalties, settled in Special terms and conditions can be applicable to BUYER.

6.3 No Demand Components

No Demand Components due to BUYERS actions such as, but not limited to, changes in Goods Specification, Cancelation of a Purchasing Order or Termination of Goods manufacturing resulting in no foreseen requirement for component at SUPPLIERS facility. BUYER accepts responsibility for all such components and commits to buy all No Demand components at cost cash value paid by SUPPLIER with additional 5 % of total value for handling cost. Agreement and transaction must be complete by BUYER and SUPPLIER within thirty (30) calendar days after notification of such component’s existence by SUPPLIER.


All Goods shipped by SUPPLIER to BUYER will conform to the existing Specifications.

SUPPLIER have the right to change the Specifications of Goods under the request of BUYER, if Parties agree upon changes in written (hereinafter “Engineering Change Order”) in a form TELTONIKA EMS; Engineering Change Order Form, of latest revision.

If any changes in Specifications of Goods, agreed by the Parties, occurs that affects the price, delivery, terms, quality or performance of the Goods, reasonable adjustment will be negotiated and agreed between the Parties in written prior to the implementation of any changes. Any changes must be agreed no later than thirty (30) calendar days after the initiation of changes of Specifications, i.e, the respective Appendix 1 (Pricing) shall be revised and replaced.

Upon receiving notice from BUYER of an Engineering Change Order that affects existing open Purchase Orders or volume that BUYER has committed according to Purchasing Orders or Forecast, that results in a Component or assembly becoming obsolete SUPPLIER accepts full liability for such components. Within a reasonable period after receiving such notice, SUPPLIER will provide BUYER with an analysis of BUYER’s liability to SUPPLIER for Components acquired or scheduled to be acquired to manufacture Goods. BUYER must buy from SUPPLIER all obsolete components or assemblies within thirty (30) calendar days from receiving SUPPLIERS notification.

Changes in Specifications of Goods can be agreed:

(i)  if SUPPLIER have not manufactured the Goods under the existing Specifications; or

(ii)  if BUYER have started manufacturing the Goods under the existing Specifications. In this case

BUYER is liable to pay the agreed price of work in progress (Goods) and the additional cost of implementing the changes to work in progress. However, SUPPLIER will assist BUYER to determine whether current work in progress should be completed, scrapped or shipped "as is".

After an agreed date between the Parties for implementing changes in Specification of Goods, all Goods

shipped by SUPPLIER will conform to the changed Specifications.


8.1 Ownership of Intellectual Property

SUPPLIER acknowledges that Intellectual Property, which may be made available to SUPPLIER hereunder, is BUYER’s trade secrets and confidential information. BUYER shall have all title and interest in such Intellectual Property and SUPPLIER shall acquire no right to such Intellectual Property save as explicitly set out herein.

For avoidance of doubt, these terms shall not have any effect on any Intellectual Property rights either Party may have previously owned or possessed prior to and/or which have no relevance for the co-operation under the Agreement.

8.2 Use of Intellectual Property

SUPPLIER shall not have any right to use, sell or otherwise dispose or utilize the Intellectual Property or any materials provided by BUYER under this Agreement without prior written consent of BUYER, except for the purpose of providing the Manufacturing and related services hereunder.

BUYER shall not have any other right to use, sell or otherwise dispose or utilize the SUPPLIER’s Intellectual Property or other SUPPLIER’s material or information, without prior written consent of SUPPLIER, except as provided in the Agreement.

8.3 Indemnities

Each Party shall be liable for any infringement or alleged infringement of any Intellectual Property rights of a third party by its actions under Agreement. The indemnity obligation of SUPPLIER shall not apply to the extent the infringement of third party’s rights is due to written express instructions or material provided by BUYER for the Manufacturing.

BUYER shall defend the SUPPLIER against claims, suits and/or actions that the Goods when manufactured in accordance with the Specifications infringe any of the Intellectual Property Rights of a third party which are in force in country and (or) the territory, mentioned in Special terms and conditions. The SUPPLIER promptly notifies BUYER in writing of such claims, suits and/or actions and permits BUYER to defend or settle any claims, suits and/or actions so arising and gives BUYER all necessary information, assistance and authorizations, which are necessary to BUYER. BUYER shall reimburse SUPPLIER all payments awarded by competent court as a consequence of such infringement.


9.1 Authorisation

SUPPLIER and BUYER represents and warrants having the power and authority to enter into Agreement and to carry out the Purchase Orders and other transactions pursuant to Agreement. Agreement shall be validly executed by both Parties and the provisions of Agreement constitute legal, valid and binding obligations of both Parties enforceable against both Parties. The relationship of BUYER and SUPPLIER shall be that of independent contractors.

9.2 Compliance with Laws and Regulations and SUPPLIER’s Code of Conduct

SUPPLIER hereby represents and warrants that it shall perform its responsibilities under Agreement in a manner that complies with all applicable laws and regulations (including applicable international treaties) and that the performance of such responsibilities does not infringe any third party’s rights. If each Party is charged with a violation or infringement of, or non-compliance with, any laws, regulations or third party’s rights and such violation or non-compliance is relevant to the scope of Agreement, the other Party shall promptly notify BUYER of such charge in writing.

SUPPLIER hereby represents and warrants that it shall perform its responsibilities under Agreement in a manner that fully complies with SUPPLIER’s Code of Conduct.


10.1 Quality and Occupational Health and Safety Management System

SUPPLIER shall operate an ISO 9001:2015 certified quality system for Goods manufacturing.

SUPPLIER shall with its quality management system, processes and procedures assure that every delivered unit of Goods meet the requirements in this Agreement.

SUPPLIER shall comply with requirement for ISO 45001:2018 certification.

10.2 Environmental Management System

SUPPLIER shall operate according to ISO 14001:2015 certified environmental management systems for the site where the Goods to BUYER are manufactured.

10.3 Testing

The price of Goods contains the Test Procedures that were valid on effective date. Both Parties are entitled to propose updates to Test Procedures during the delivery of manufacturing services. These updates will become effective when approved in written by both Parties.

10.4 Traceability System

Information of Component manufacturers and types used to Goods may be traced by serial numbers of Goods. This traceability information may be stored for six (6) months after the manufacturing of the respective Goods, and access to all available information must be permitted to BUYER not later thirty (30) business days after BUYER’s written request.

10.5 Code of Conduct

SUPPLIER shall all the time comply with latest version of the Code of Conduct, to the extent permitted by local laws. The version valid on the signature date of this Agreement is enclosed as Appendix 3. If there’s a conflict between the Code of Conduct and the terms and conditions of Agreement, Agreement shall prevail.


Standard Warranty Terms

SUPPLIER warrants that Goods shall be at the Date of Delivery new and unused and, during the warranty period:

(i)  remain free from all defects, faulty manufacturing or workmanship; and

(ii)  conform to the Specifications or other requirements of Agreement.

The warranty period starts from the generated invoice for Goods to BUYER. The warranty term

of Goods is defined in Special terms and conditions of the Agreement.


12.1 Limitation of Liability

Unless otherwise agreed elsewhere in Agreement, neither Party shall in any event be liable to the other Party under Agreement for any special indirect or consequential damages, whether or not the possibility of such damages could have been reasonably foreseen.

12.2 Exclusions

The limitation set forth in Article 12.1 shall not apply where (i) confidentiality obligations set forth in Article 13 are breached; (ii) liability arises from product liability claim set forth in Article 11; (iii) SUPPLIER 13


violates any of the BUYER’s Intellectual Property rights; or (iv) liability is caused by gross negligence or intentional misconduct of either Party.

Each Party shall take all commercially reasonable steps to mitigate any of its losses (including, to the extent consistent with sound business judgment, incurring costs only to the minimum extent necessary to remedy the breach which gives rise to the losses) upon becoming aware of any event which would reasonably be expected to, or does, give rise thereto. The Parties shall cooperate with each other with respect to resolving any claim or liability with respect to which one Party is obligated to indemnify the other Party hereunder, including by making commercially reasonable efforts to mitigate or resolve any such claim or liability.


Each Party undertakes, without any limitation in time, not to disclose to any third party any “Confidential Information”, which the Party receives from the other Party according to this Agreement.

For the purpose of this provision, Confidential Information shall mean every information - technical, commercial or of any other kind - regardless of whether the information has been documented or not, with the exception of:

a)  information which is in the public domain or which becomes part of the public domain other than through

breach by the receiving Party of Agreement;

b)  information which the receiving Party can show was already known by the receiving Party prior to the

disclosure from the other Party;

c)  and information which the receiving Party has received or will receive from a third party without being

bound by a secrecy obligation towards such party.

However, with regard to Section 13 (c) above, the receiving Party shall not be entitled to disclose to a

third party that the same information also has been received from the other Party according to Agreement.

Each Party undertakes to ensure that the Party’s employees, consultants, board members and other representatives do not forward any Confidential Information to third parties. In this respect, each Party shall see to it that persons which may come in contact with Confidential Information are bound to hold such information confidential to the same extent as the Party is according to Agreement.

For avoidance of doubt, any information or materials which BUYER has received from SUPPLIER as an outcome from Manufacturing or other services by this Agreement are not deemed as SUPPLIER’s confidential information with the effect of preventing BUYER from utilizing such information or materials in its business operations.

Each Party may use Confidential Information disclosed by the other Party solely for the effectuation of the Parties’ collaboration according to Agreement.

The Parties’ obligations under this Article 13 shall survive any termination or expiration of Agreement and shall continue in force until five (5) years after the date of termination or expiration of Agreement for whatever reason. Nothing herein limits SUPPLIER’s obligation to protect BUYER’s trade secrets as set forth in the applicable laws.


14.1 Term

Agreement is valid for the term, settled in Special terms and conditions.
Each Party shall have the right to terminate Agreement by written prior notice of six (6) months.

14.2 Termination of Agreement with Immediate Effect

Either Party may terminate Agreement and all applicable Appendices with immediate effect by a prior notice in writing to the other Party on the occurrence of any of the following events:

(i)  if the other Party has committed a material breach of any provisions in this Agreement and has

failed to remedy the breach within a period of thirty (30) calendar days after the receipt of a

written notice specifying the breach;

(ii)  if a material breach is not capable of being remedied;

(iii)  if bankruptcy or insolvency proceedings are instituted against the other Party and such

proceedings are not dismissed within thirty (30) calendar days from the date of the proceedings;


(iv)  due to a force majeure event as further defined in accordance with the provisions of Article 16.1.

14.3 Effect of Termination

SUPPLIER shall continue to provide Manufacturing services and supply Goods upon BUYER orders during the termination period until the termination takes effect. Upon termination:
(i) any outstanding unconfirmed Purchase Orders shall, at BUYER’s option, be completed;
(ii) SUPPLIER shall assist BUYER in collecting SUPPLIER’s documentation in order to enable

BUYER or a party appointed by BUYER to transfer the manufacturing to a third party

Such transfer assistance shall take place for a period of one (1) month after the termination of

Agreement. In such event SUPPLIER shall be entitled to compensation on time and material basis.


This Agreement shall be governed by law, settled in Special terms and conditions without reference to the conflict of law principles.

The Parties shall use their best efforts to settle by amicable negotiations any difference, which may occur between them in connection with Agreement. If the Parties fail to reach such an amicable settlement, either Party may refer such differences to dispute resolution as provided.

Any dispute, controversy or claim arising out of or in connection with Agreement, or a breach, termination or invalidity thereof, shall be finally settled as defined in Special terms and conditions.


16.1 Force Majeure

Either Party shall be relieved from the performance or punctual performance of any of its obligations under Agreement and such obligations shall be extended by a period reasonable under the circumstances if the performance thereof is prevented or delayed by industrial disputes or any cause beyond the affected Party's reasonable control which, without in any way limiting the generality of the foregoing, shall include acts of God, riots, wars, accident, embargo or requisition (acts of government).

In case of force majeure, the affected Party shall promptly notify the other Party in writing and furnish all relevant information thereto.

Should a cause of force majeure continue for more than three (3) months, either Party shall have the right to terminate this Agreement on written notice to the other Party, with immediate effect.

16.2 Assignment

Neither Party shall have the right to assign Agreement without the prior written consent of the other Party.

16.3 Notices

All notices required by Agreement shall be furnished in English and shall be sent by Parties e-mail addresses, settled in Special terms and conditions of Agreement, and, in addition, can be set by registered post. In either case, such notice shall be sent to the addresses, defined in Special terms and conditions. Parties are obliged to inform each other about any changes in contact information.

16.4 Severability

If any provision of Agreement at any time would be held invalid or unenforceable under applicable law the remaining provisions of Agreement shall not be affected thereby and shall be binding upon the Parties and enforceable. The Parties shall endeavor to amend such provision to the extent necessary to render such provision valid and enforceable and to reflect the intent of the Parties.

16.5 Waiver

The failure by either BUYER or SUPPLIER to insist upon strict performance of any of the provisions contained in Agreement shall not constitute a waiver of its rights at law or otherwise, or a waiver of any other provisions or subsequent default by the other Party in the performance or compliance with any of the terms and conditions set forth in Agreement.

16.6 Subcontracting

With respect to any obligations of either Party under Agreement performed by subcontractors, both

Parties shall be liable for such obligations, for the acts and omissions of all such subcontractors and for subcontractor compliance with the terms and conditions of Agreement to the same extent the Parties would be responsible for their own compliance with the terms and conditions of Agreement. The SUPPLIER shall be responsible for BUYER’s sole point of contact regarding the Manufacturing.

16.7 Personal data

The Parties to the Agreement represent that they have provided, or will provide within the set time limits, information on the transfer of personal data and the related data processing according to Articles 13 and 14 of the EU General Data Protection Regulation No 2016/679 to the their representatives and contact persons specified in the Agreement, other employees of the Parties and other natural persons whose personal data will be disclosed or otherwise transferred to the other Party during the term of this Agreement. Such information shall include the Parties’ details, the purpose of the data transfer (i. e. the conclusion and carrying out of Agreement, the grounds for the data transfer (Article 6 (1) (b) and (c) of the GDPR), granting access to the data for the IT and server service providers and other companies of the Group, the rights of the data subject (the right to familiarise himself/herself with his/her personal data; the right to request to rectify the data; the right to request to destroy the data or to stop the data processing operations (except storage); the right to request to restrict the data processing; the right to data portability; the right to file a complaint to the State Data Protection Inspectorate). The undersigned representatives of the Parties confirm that they have familiarised themselves with the information about their personal data processing. Each Party shall furnish the other Party, at the latter’s request, with evidence of fulfilment of this obligation.

16.8 English Language

English language in which this Agreement and the Appendices hereto have been drafted shall also be the language to be used in all documents and correspondence related to the execution of Agreement unless specifically otherwise agreed between the Parties.

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