MANUFACTURING AND SUPPLY AGREEMENT between the company Willi Elbe Gelenkwellen GmbH + Co. KG represented by ............................... Hofäckerstraße 10, 71732 Tamm - hereinafter referred to as "WET" - and the company ............ represented by its managing director .............. ................................. , ......................... - hereinafter referred to as the "Supplier" - nachfolgend Lieferant genannt - Annex 1 to the Manufacturing and Supply Agreement = Requirement Specification Annex 2 to the Manufacturing and Supply Agreement = Quality Assurance Agreement Annex 3 to the Manufacturing and Supply Agreement = Environmental Compatibility Agreement Annex 4 to the Manufacturing and Supply Agreement = Price List Annex 5 to the Manufacturing and Supply Agreement = Agreement on Liability for Defects Annex 6 to the Manufacturing and Supply Agreement = General Terms and Conditions of Purchase Preliminary Remarks WET develops, manufactures and/or supplies products as a supplier to various automotive OEMs which install the products on vehicles to be distributed on a world-wide basis in compliance with contractual requirements. The Supplier is ......................... In order to ensure the present and future fulfilment of WET's supply obligation towards ………… (customer), the parties hereto enter into the following agreement on the manufac-turing of, and supply with, …………, which manufacturing and supply shall be performed to achieve highest quality standards and absolute reliability in every respect. Now therefore, and in order to lay down the provisions governing the relation with the Sup-plier in accordance with the rights and duties of WET under the supply agreement with .........................., the parties hereby agree as follows: §1 Subject Matter of the Agreement (1) The subject-matter of this Agreement is the manufacturing of, and supply with, …………, by the Supplier pursuant to the product description contained in the requirement specification (Annex 1) which manufacturing and supply shall be performed to achieve highest quality standards and absolute reliability in every respect. The requirement specification is an integral part of this Agreement. (2) WET may, at its reasonable discretion and taking into account the Supplier's interests, request modifications and additions to the products at any time. The Supplier shall be obliged to propose to WET the modifications or additions it considers necessary or expedient to respond to amendments to the relevant statutory or other mandatory provisions or for any other reason. (3) Any modifications or additions and their effect on the costs shall be recorded by the Supplier using WET's form "Part / Cost History" (Teile-/ Kostenlebenslauf) at the time of submission of the modification and/or addition proposal by the Supplier, or, if the modification and/or addition is requested by WET, immediately upon receipt of said request by the Supplier. At the moment of recording, the Supplier shall submit a supplement proposal containing detailed proof of the modifications' or additions' expected cost effectiveness. (4) The parties shall mutually agree on the effects of modifications or additions on the remunera-tion and the time schedule, and document any modifications or additions by way of amend-ments of drawings to be adopted by mutual agreement. In order to compensate additional costs caused by modifications or additions, the Supplier agrees to assist WET when introduc-ing measures aiming at reducing piece prices. §2 Tools (1) The tools required for manufacturing the products, including the related drawings and techni-cal documents shall be the property of WET. The Supplier undertakes to affix an unmistak-able, i.e. permanent, clearly legible label, on all parts of tools to identify them as WET's prop-erty. The Supplier will take all appropriate legal steps to prevent any attempts by any third party to claim WET's property for the purposes of security or execution, and it will promptly notify WET of any such attempt. The same shall apply mutatis mutandis to tools owned by a third party. (2) WET shall be entitled to demand restitution of all tools, including drawings and documents, at any time. The Supplier acknowledges and agrees that the tools including the related drawings and technical documents constitute considerable development-related knowledge and that WET has a particular interest in preserving secrecy in this regard. The parties agree that the Supplier shall have no claim to restitution or retention of the tools, including the related drawings and technical documents, at any time or for any legal reason whatsoever. (3) The Supplier undertakes to use the tools only for manufacturing products for WET. The Supplier shall abstain from providing the tools, drawings or documents to any third party. Upon termination of the Manufacturing and Supply Agreement, the Supplier ceases to be entitled to use the tools or any related drawings or technical documents. The Supplier is obliged, at WET's choice, to return the tools, the related drawings, and technical documents to WET or any third party named by WET and/or to store them appropriately and at its own expense prior to restitution for a period of up to 15 years after expiry of series delivery regarding the products. (4) The Supplier shall bear the costs of maintenance and repairs (including, without limitation, the tools' dimensional accuracy) and appropriate storage of the tools, the related drawings, and technical documents and shall protect the tools, including the drawings and documents, from damage or destruction of any kind whatsoever during the period of use and/or storage. Wet shall be entitled to verify compliance with these provisions by the Supplier at any time during the Supplier's working hours. (5) If the Supplier has manufactured the tools for manufacturing and supply in accordance with a corresponding purchase order, the Supplier warrants full defectfree operational reliability of said tools when used for supplying WET in compliance with the Supplier's contractual obligation. If tools are supplied to the Supplier, the Supplier undertakes to thoroughly inspect the tools and any accessories at the moment of receipt for correct quantity and suitability for the contractually agreed manufacturing, to document the inspection results in writing and pictures, and to submit said documentation to WET without undue delay. If required, the Supplier undertakes to submit, together with said documentation, a written proposal regarding necessary repair works. Upon inspection of the tools and/or execution of repair works, the Supplier warrants full defect-free operational reliability of the tools when used for manufac-turing the products for WET. (Required insurance cover to be provided by the Supplier??) §3 Manufacturing Services (1) The manufacturing services due shall include the Supplier's compliance with the requirement specification and the quality assurance agreement (Annex 2) on the Supplier's own responsibility by using its best efforts and utmost care, by taking advantage of the latest state-of-the-art of science and technology. The manufacturing services due further include that the most environment-compatible and economic process is used for the manufacturing and materials recycling of the products or their components in compliance with the requirements under environmental law, as applicable at the moment of delivery (including, without limitation, the complete avoidance of hexavalent chrome and lead). The requirements regarding measures with respect to environmental compatibility (Annex 3) are an integral part hereof. (2) The supplier shall ensure a minimum manufacturing and supply capacity of ….. (in words: …..) …. per calendar year. The number of pieces stated in the foregoing sentence only refers to the manufacturing and supply capacities to be provided by the Supplier and shall, in particular, not be conceived to create any obligation on the part of WET to purchase the respective quantities. (3) During the term hereof, the Supplier undertakes to actively and unconditionally participate in any and all of WET's supplier programmes aiming at achieving quality, time, and costs targets as well as ensuring process reliability. Participation in said programmes does not release the Supplier from its obligation to fulfil the Agreement properly and on its own responsibility. §4 Deliveries, Passing of Risks (1) The parties agree that demand for the products will be variable. WET will place binding orders specifying of the quantities and composition of products to be supplied as well as the due date of delivery by RDT. The Supplier acknowledges and agrees that the orders shall not be conceived as fixed quantities to be compulsorily supplied over the entire term of agreement, but that orders are placed according to WET's current demand and may change at any time. The parties have not agreed on any fixed purchase quantities. (2) The Supplier is obliged to accept the binding order within 8 working days by written confirmation of the order. (3) Deliveries shall be made in compliance with the further requirements laid down in the quality assurance agreement (Annex 2), by homogeneous product categories, upon adequate advance notice given by the Supplier, on the due date of delivery indicated in the respective order, and during WET's working hours. (4) The Supplier shall be responsible for arranging, performing, and bearing the costs of, the transport. Packaging of the products shall comply with WET's packaging requirements (Annex 2). The risk shall pass from the Supplier to WET upon delivery of the products on WET's business premises. For the purposes of logistics management, the parties agree as follows: Place of manufacturing (Supplier): ............ Supply plant (Supplier): ............ Delivery place: WET, ........... (5) The Supplier undertakes to bear, at first request, all costs (including, without limitation, retrofitting costs and other expenses from business interruption and consequential third-party claims) caused by non-fulfilment of its obligation to duly perform deliveries. To the extent that the Supplier infringes upon its obligation to duly perform deliveries, and fails to promptly remedy such infringement within 4 weeks as of complaint at latest, WET shall be entitled to demand restitution of all tools, drawings, and documents required for manufacturing the pro-ducts so as to enable WET to either produce the products themselves or have the products produced by a third party. The costs of the relocation or replacement purchase shall be borne by the Supplier. The right to cancel the Agreement for good cause shall remain unaffected. (6) The Supplier warrants that it will make available replacement parts for a period of at least 15 years after discontinuation of supplies for series production regarding the products (supply obligation). Prior to the expiry of said supply obligation, the Supplier shall send a written notification to WET giving WET the opportunity to order for the last time a last-order quantity. During the term of this Agreement, the price of the products shall be determined in accordance with the prices for serial parts (A price) as laid down in § 5 hereof. In the case of complex assemblies (modules / systems) all individual parts required to be provided as replacement parts shall be individually quoted in the proposal. Upon discontinuation of sup-plies for series production, the price for replacement parts shall be …. percent of the last price valid during series production. (7) If the Suppliers fails to meet its obligation to supply during or after discontinuation of supplies for series production for any reason for which WET is not responsible, the Supplier undertakes to return and make available to WET in an appropriate written and/or electronic form, at WET's first request, all documents required for manufacturing the products, including, without limitation, an overview of proprietary rights and licences, drawings, connection schemes, amended drawings management, descriptions of manufacturing processes, software, source codes and supplier details. The documents required for assuring manufacturing must be stored by the Supplier in an appropriate form. In such case, the Supplier hereby grants WET a non-exclusive right of use and enjoyment of all proprietary rights required for the manufacturing and use, without limitation in terms of time or place and without charge to WET. By way of precaution, the Supplier authorises WET to purchase the parts required for manufacturing the products from subcontractors. §5 Prices, Terms of Payment (1) The Supplier's proposal of ….. (price list pursuant to Annex 4) shall constitute the basis for the calculation of the purchase prices of the products and shall apply without any deduction, i.e. excluding the statutory value-added tax. Annex 4 is an integral part of this Agreement. The parties agree that the price list shall be binding at least until ………… (2) The purchase prices will be paid by WET with a 2% discount for early payment if payment is made within 14 days or without discount if payment is made on the last day of the month following the month of delivery, calculated, in each case, as of delivery of the products on the WET's premises and issuance of the respective invoice by the Supplier. §6 Confidentiality, Outsourcing (1) The parties undertake to treat confidentially any and all information directly or indirectly received from the respective other party in the context of this Agreement and to use such information only for the purpose of fulfilling the respective agreement. In particular, they mutually agree that they will neither disclose such information to any third party nor make such information available to any third party in any other form and to take all reasonable measures to prevent any third party from accessing such information. (2) Confidentiality includes, without limitation, any insights into the internal circumstances and operations of the respective other party, as well as any other technical or economic information, in particular, non-published proprietary rights, the description of the manufacturing and supply project and time schedules. (3) In connection with inventions, the parties shall ensure that no circumstances that are possibly prejudicial to novelty, as defined in Section 3 of the German Patent Act (Patentgesetz; "PatentG"), prevent or jeopardize the grant of a patent. (4) The duty to maintain confidentiality shall not apply to any document, knowledge or information for which it can be proven that it has become generally known to the public for any reason beyond the parties' control, that the respective knowledge or information was already known to the party prior to receiving it from the other party, that it already belonged or belongs to general knowledge, or that it is required to be disclosed under mandatory legal provisions. (6) The Contractor undertakes to impose this obligation of confidentiality on every employee or other third party, who may have gained exploitable information as a result of their work. (5) The Contractor shall be required to obtain WET's prior written consent if it wishes to engage a third-party by way of outsourcing or to change a sub-contractor. §7 Quality, System Responsibility (1) The Supplier undertakes to inform WET immediately of any circumstances indicating that quality problems might occur. Even if WET gives its approval for a subcontractor by way of exception in the individual case, the Supplier remains entirely responsible for due performance of the Agreement. Any claims to which WET might be entitled due to defects and claims under product liability shall remain unaffected thereby. (2) Further requirements to be met by the Supplier concerning the quality management with respect to the performance of the contract are laid down in Annex 2 hereto. §8 Inspection of Defects, Obligation to Give Notice of Defects, Liability for Defects The provisions of Annex 5 (Agreement Regarding the Liability for Defects) shall apply. It is an integral part of this Agreement. Adaptation of terms of liability to BMW requirements in the individual case. §9 Proprietary Rights The parties agree that any and all proprietary rights and the know-how arising from or in connection with manufacturing the products shall be the property of …… With regard to any proprietary rights during the development of the products, the development framework agreement concluded between the parties shall apply. § 10 Term of Agreement and Cancellation (1) This Agreement shall enter into force on the date of its execution and shall last until the end of series production …………. (presumably, ….), unless previously cancelled or otherwise terminated. Alternative: This Agreement shall enter into force upon its execution and may be terminated by either party subject to a notice period of 6 months taking effect at month-end. (2) Either party shall be entitled to an extraordinary cancellation for good cause. In addition, WET shall be entitled to an extraordinary cancellation if WET's contractual partner that purchases the products from WET, cancels its contractual relation with WET regarding the products concerned. The Supplier shall not be entitled to any claims for fulfilment or damages on the basis of cancellation. (3) Any cancellation shall be made in writing to be effective. (4) Provisions which, by their nature, should remain in effect beyond termination of this Agreement, shall survive its termination to the extent required. (5) Upon termination of this Agreement, for any legal reason whatsoever, the Supplier shall be obliged to return any and all documentations (technical drawings and other documents) in connection with manufacturing the products, including, without limitation, any tools provided by WET or any third party to WET or a third party named by WET. Further reasons for cancellation are laid down in the Development Framework Agreement (and/or the combined Development and Supply Agreement according to BMW) § 11 Place of Performance, Place of Jurisdiction, Choice of Law (1) The place of performance is the place of business of WET in Tamm, Germany. (2) The place of jurisdiction is the place of business of WET in Tamm, Germany. (3) In the event of any disputes arising from or in connection with this Agreement or any individual agreement concluded on the basis of this Agreement, the law of the Federal Republic of Germany shall be the governing law. The Vienna United Nations Convention on Contracts for the International Sale of Goods of 11/04/1980 shall hereby be excluded. (4) Should any claims for compensation of damage to person or property be filed in court against WET, in any foreign country by any third party, due to a product defect, WET may, at its sole discretion, institute before said foreign court the legal proceedings required to enforce any claims for exemption or recourse against the Supplier. In such case, the rights and obligations of the parties shall be exclusively governed by the law applicable at the foreign place of jurisdiction. § 12 Miscellaneous, Severability Clause (1) Any amendments to this Agreement as well as any collateral agreements shall be made in writing to be effective. The foregoing shall also apply to any amendments to this requirement of written form. (2) In addition to this contractual Agreement WET's general terms and conditions of purchase, which are attached hereto as Annex 6, shall apply but be subordinate to this Agreement. (3) The Supplier shall be entitled to comment on the products in the context of its public relations activities or other forms of communication with the public or governmental authorities only upon WET's prior written consent, unless disclosure is required under mandatory legal provi-sions. Even in such case, the Supplier shall notify WET of the statement concerned in a timely manner. (4) Should one or several provisions of this Agreement be ineffective or should any omission occur herein, the remaining provisions hereof shall remain in full force and effect. The ineffective provision shall be replaced, and the omission filled, by a provision that comes closest to the parties' intent at the moment of conclusion of the ineffective or omitted provision. (5) The following Annexes are attached to this Agreement: Annexes: 1 Requirement Specification 2 Quality Assurance Agreement 3 Environmental Compatibility Agreement 4 Price List 5 Agreement on Liability for Defects 6 General Terms and Conditions of Purchase Executed in Tamm, on .......................... ........................, on ................................ ................................................................. ................................................................ WET Supplier DRAFT