Manufacturing and Supply Agreement

MANUFACTURING AND SUPPLY AGREEMENT

STATE OF TEXAS

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This Manufacturing and Supply Agreement ("Agreement") is entered into as of [__/__/____] ("Effective Date") by and between:

BUYER:

Name: [________________________________]

Address: [________________________________]

City, State, ZIP: [________________________________]

Texas Entity Type: [________________________________]

("Buyer")

AND

SUPPLIER/MANUFACTURER:

Name: [________________________________]

Address: [________________________________]

City, State, ZIP: [________________________________]

Texas Entity Type: [________________________________]

("Supplier")

Buyer and Supplier are each referred to herein as a "Party" and collectively as the "Parties."

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RECITALS

WHEREAS, Supplier is engaged in the business of manufacturing and supplying [________________________________] ("Products"); and

WHEREAS, Buyer desires to purchase from Supplier, and Supplier desires to manufacture and sell to Buyer, certain Products on the terms and conditions set forth herein; and

WHEREAS, the Parties intend this Agreement to constitute a binding contract for the sale of goods governed by the Texas Uniform Commercial Code, Tex. Bus. & Com. Code Chapter 2;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

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ARTICLE 1: DEFINITIONS

1.1 "Affiliate" means any entity that directly or indirectly controls, is controlled by, or is under common control with a Party, where "control" means ownership of more than fifty percent (50%) of the voting securities or equivalent ownership interest.

1.2 "Business Day" means any day other than Saturday, Sunday, or a day on which banks are authorized or required to be closed in the State of Texas.

1.3 "Confidential Information" means all non-public information disclosed by one Party to the other, whether orally, in writing, or by inspection, including but not limited to technical data, trade secrets, know-how, research, product plans, products, services, customers, markets, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, marketing, finances, and other business information.

1.4 "Conforming Products" means Products that meet all Specifications, quality requirements, and other requirements set forth in this Agreement and the applicable Purchase Order.

1.5 "Defective Products" means Products that fail to conform to the Specifications or contain defects in materials, workmanship, or design.

1.6 "Delivery Date" means the date on which Products are to be delivered as specified in the applicable Purchase Order.

1.7 "Forecast" means Buyer's non-binding estimate of anticipated Product requirements for a specified future period.

1.8 "Intellectual Property" or "IP" means all patents, copyrights, trademarks, trade secrets, know-how, inventions, designs, drawings, specifications, processes, techniques, and other intellectual property rights.

1.9 "Lead Time" means the period between Supplier's acceptance of a Purchase Order and the required Delivery Date.

1.10 "Non-Conforming Products" means Products that do not meet the Specifications or the requirements of the applicable Purchase Order.

1.11 "Products" means the goods described in Exhibit A attached hereto and incorporated herein by reference.

1.12 "Purchase Order" means a written order issued by Buyer to Supplier for the purchase of Products pursuant to this Agreement.

1.13 "Specifications" means the technical specifications, drawings, quality standards, and other requirements for the Products as set forth in Exhibit A.

1.14 "Tooling" means all molds, dies, jigs, fixtures, patterns, gauges, test equipment, and other tools, equipment, and manufacturing aids used in the production of Products.

1.15 "UCC" means the Texas Uniform Commercial Code, Tex. Bus. & Com. Code, as amended from time to time.

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ARTICLE 2: PRODUCTS AND SPECIFICATIONS

2.1 Products. Supplier agrees to manufacture and sell to Buyer, and Buyer agrees to purchase from Supplier, the Products described in Exhibit A in accordance with the terms and conditions of this Agreement.

2.2 Specifications. All Products shall strictly conform to the Specifications set forth in Exhibit A. The Specifications include, without limitation:

☐ Technical drawings and engineering specifications

☐ Material specifications and approved material sources

☐ Performance and functional requirements

☐ Dimensional tolerances

☐ Surface finish and appearance standards

☐ Packaging and labeling requirements

☐ Applicable industry standards (e.g., ASTM, ISO, SAE)

☐ Regulatory compliance requirements

2.3 Changes to Specifications. Buyer may request changes to the Specifications by providing written notice to Supplier. Supplier shall, within [____] Business Days of receiving such request, provide Buyer with:

(a) A written assessment of the impact on pricing, Lead Time, and delivery schedules;

(b) Any required changes to Tooling;

(c) The timeline for implementing the changes; and

(d) Any minimum order quantities for existing inventory.

No change to Specifications shall be effective unless agreed to in writing by both Parties through an Engineering Change Order ("ECO") signed by authorized representatives of both Parties.

2.4 No Substitutions. Supplier shall not substitute any materials, components, or manufacturing processes without Buyer's prior written approval. Any unauthorized substitution shall constitute a material breach of this Agreement.

2.5 Sample Approval. Prior to commencing production of any new Product or implementing any approved changes to Specifications, Supplier shall submit samples to Buyer for written approval. Supplier shall not commence production until Buyer has provided written approval of samples.

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ARTICLE 3: FORECASTS AND ORDERS

3.1 Rolling Forecasts. Buyer shall provide Supplier with a rolling forecast of anticipated Product requirements covering [____] months, updated on a [☐ weekly / ☐ bi-weekly / ☐ monthly] basis ("Forecast"). Forecasts are provided for planning purposes only and do not constitute a commitment to purchase.

3.2 Binding Forecast Portion. Notwithstanding Section 3.1, the first [____] months of each Forecast shall be binding ("Firm Zone"), and Buyer commits to purchase at least [____]% of the quantities shown in the Firm Zone.

3.3 Purchase Orders. Buyer shall submit Purchase Orders to Supplier specifying:

(a) Product identification and quantity;

(b) Unit price per Exhibit B;

(c) Requested Delivery Date;

(d) Delivery location and shipping instructions;

(e) Any special requirements; and

(f) Purchase Order number for reference.

3.4 Purchase Order Acceptance. Supplier shall accept or reject each Purchase Order within [____] Business Days of receipt. Failure to respond within such period shall constitute acceptance. Supplier may reject a Purchase Order only if:

(a) The requested quantities exceed the Forecast by more than [____]%;

(b) The requested Lead Time is shorter than the agreed Lead Time in Exhibit A; or

(c) Buyer has outstanding undisputed invoices more than [____] days past due.

3.5 Minimum Order Quantity. The minimum order quantity ("MOQ") for each Product is set forth in Exhibit A. Buyer may place orders for quantities less than the MOQ with Supplier's consent, which shall not be unreasonably withheld, subject to a small lot surcharge of [____]%.

3.6 Lead Times. Standard Lead Times for each Product are set forth in Exhibit A. Supplier shall use commercially reasonable efforts to accommodate expedited delivery requests, subject to an expedite fee of [____]% of the order value.

3.7 Order Cancellation. Buyer may cancel a Purchase Order or reduce quantities upon written notice, subject to the following cancellation charges:

(a) Cancellation more than [____] days before Delivery Date: No charge;

(b) Cancellation [____] to [____] days before Delivery Date: [____]% of order value;

(c) Cancellation less than [____] days before Delivery Date: [____]% of order value plus Supplier's actual costs for work-in-progress and raw materials that cannot reasonably be used for other purposes.

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ARTICLE 4: PRICING AND PAYMENT

4.1 Prices. The unit prices for Products are set forth in Exhibit B ("Price Schedule"). All prices are in United States Dollars and are:

☐ EXW (Ex Works) Supplier's facility

☐ FCA (Free Carrier) [________________________________]

☐ FOB (Free on Board) [________________________________]

☐ DDP (Delivered Duty Paid) Buyer's facility

☐ Other: [________________________________]

4.2 Price Adjustments. Prices shall remain fixed for the initial [____] months of the Term. Thereafter, either Party may request a price adjustment upon [____] days' written notice, not more than once per calendar year, based on:

(a) Documented changes in raw material costs exceeding [____]%;

(b) Changes in labor costs;

(c) Changes in regulatory or compliance requirements; or

(d) Currency fluctuations (if applicable).

Any price adjustment shall be subject to good faith negotiation, and no adjustment shall exceed [____]% per year absent mutual written agreement.

4.3 Volume Discounts. Buyer shall be entitled to volume discounts as follows:

(a) Annual purchases of $[________________________________] or more: [____]% discount;

(b) Annual purchases of $[________________________________] or more: [____]% discount;

(c) Annual purchases of $[________________________________] or more: [____]% discount.

4.4 Invoicing. Supplier shall invoice Buyer upon shipment of Products. Each invoice shall include:

(a) Invoice date and number;

(b) Purchase Order number;

(c) Description and quantity of Products shipped;

(d) Unit price and extended price;

(e) Applicable taxes; and

(f) Supplier's remittance instructions.

4.5 Payment Terms. Buyer shall pay all undisputed invoices within:

☐ Net 30 days from invoice date

☐ Net 45 days from invoice date

☐ Net 60 days from invoice date

☐ Other: [________________________________]

4.6 Disputed Invoices. Buyer shall notify Supplier in writing of any disputed invoice items within [____] days of invoice receipt, specifying the nature of the dispute. Buyer shall pay all undisputed amounts by the due date. The Parties shall work in good faith to resolve disputes within [____] days.

4.7 Late Payment. Late payments shall bear interest at the lesser of (a) [____]% per month, or (b) the maximum rate permitted under Texas law.

4.8 Taxes. Prices do not include sales, use, excise, or similar taxes. Buyer shall pay all applicable taxes or provide Supplier with valid exemption certificates.

4.9 Set-Off. Buyer may set off against amounts owed to Supplier any amounts owed by Supplier to Buyer under this Agreement, including credits for rejected Products, warranty claims, or indemnification obligations.

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ARTICLE 5: DELIVERY AND SHIPPING

5.1 Delivery. Supplier shall deliver Products to the location specified in each Purchase Order on or before the Delivery Date. Time is of the essence with respect to delivery.

5.2 Delivery Terms. Unless otherwise specified, delivery terms shall be interpreted in accordance with Incoterms 2020.

5.3 Title and Risk of Loss. Title to and risk of loss for Products shall pass to Buyer in accordance with the delivery terms specified in Section 4.1.

5.4 Packaging. Supplier shall package all Products in accordance with:

(a) Buyer's packaging specifications set forth in Exhibit A;

(b) Good commercial practice to prevent damage during transit;

(c) All applicable transportation and safety regulations; and

(d) Environmental and sustainability requirements as specified by Buyer.

5.5 Labeling. Each shipment shall be labeled with:

(a) Buyer's Purchase Order number;

(b) Product identification and part numbers;

(c) Quantity;

(d) Date of manufacture;

(e) Lot or batch number for traceability;

(f) Country of origin; and

(g) Any required regulatory markings.

5.6 Shipping Documents. Supplier shall provide with each shipment:

(a) Packing slip;

(b) Bill of lading or air waybill;

(c) Certificate of conformance;

(d) Certificate of origin (if required);

(e) Material certifications (if applicable); and

(f) Any other documents specified in the Purchase Order.

5.7 Partial Shipments. Supplier shall not make partial shipments without Buyer's prior written consent unless otherwise agreed in the Purchase Order.

5.8 On-Time Delivery Performance. Supplier shall maintain an on-time delivery rate of at least [____]%. "On-time" means delivery within [____] days of the Delivery Date. Failure to maintain required delivery performance may result in:

(a) Supplier providing a corrective action plan within [____] days;

(b) Liquidated damages of [____]% of order value per week of delay, up to a maximum of [____]%; or

(c) Buyer's right to terminate for cause per Article 14.

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ARTICLE 6: QUALITY AND INSPECTION

6.1 Quality Management System. Supplier shall maintain a quality management system that:

☐ Is certified to ISO 9001:2015 or later version

☐ Is certified to AS9100 (aerospace)

☐ Is certified to IATF 16949 (automotive)

☐ Is certified to ISO 13485 (medical devices)

☐ Meets industry standards for [________________________________]

☐ Meets Buyer's quality requirements as specified in Exhibit C

6.2 Quality Requirements. Supplier shall:

(a) Implement and maintain documented quality control procedures;

(b) Perform all required inspections and tests before shipment;

(c) Maintain statistical process control where applicable;

(d) Provide certificates of conformance with each shipment;

(e) Maintain traceability records for all materials and processes;

(f) Notify Buyer immediately of any quality issues that may affect Products; and

(g) Participate in Buyer's supplier quality programs as reasonably requested.

6.3 Inspection Upon Delivery. Buyer shall have [____] days from receipt to inspect Products for visible damage and quantity discrepancies ("Initial Inspection Period"). Buyer shall notify Supplier of any discrepancies within [____] days after the Initial Inspection Period.

6.4 Latent Defects. Notwithstanding Section 6.3, Buyer may reject Products for latent defects discovered within [____] months after delivery or within [____] months after the defect is discovered, whichever occurs first.

6.5 Right to Audit. Buyer and its representatives shall have the right, upon [____] days' prior written notice, to:

(a) Inspect Supplier's facilities, processes, and quality systems;

(b) Audit Supplier's records relating to Products, including quality records, production records, and subcontractor records;

(c) Witness manufacturing processes and testing; and

(d) Conduct supplier audits as part of Buyer's quality assurance program.

Supplier shall provide reasonable access and cooperation for such audits at no additional charge to Buyer.

6.6 Testing. Supplier shall perform all tests required by the Specifications and shall maintain testing records for [____] years. Upon request, Supplier shall provide Buyer with test data and reports.

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ARTICLE 7: REJECTION AND CURE

7.1 Right to Reject. Pursuant to Tex. Bus. & Com. Code § 2.601, if Products fail in any respect to conform to this Agreement, Buyer may:

(a) Reject the whole shipment;

(b) Accept the whole shipment;

(c) Accept any commercial unit or units and reject the rest; or

(d) Require Supplier to cure the non-conformity.

7.2 Manner of Rejection. Pursuant to Tex. Bus. & Com. Code § 2.602, rejection must be made within a reasonable time after delivery and is not effective unless Buyer seasonably notifies Supplier. Buyer's notice of rejection shall specify:

(a) The nature of the non-conformity;

(b) The quantity of Non-Conforming Products;

(c) The Purchase Order and lot numbers affected; and

(d) Whether Buyer requires replacement, repair, or credit.

7.3 Supplier's Right to Cure. Pursuant to Tex. Bus. & Com. Code § 2.508, Supplier may cure any non-conformity as follows:

(a) If time for performance has not expired, Supplier may seasonably notify Buyer of its intention to cure and deliver Conforming Products within the contract time; or

(b) If Supplier had reasonable grounds to believe the tender would be acceptable, Supplier may, upon seasonable notice to Buyer, have a reasonable time to substitute conforming tender.

7.4 Cure Period. Supplier shall have [____] days from receipt of rejection notice to cure the non-conformity by:

(a) Repairing the Non-Conforming Products at Supplier's facility or Buyer's facility (at Buyer's election);

(b) Replacing the Non-Conforming Products with Conforming Products; or

(c) Issuing a credit to Buyer for the Non-Conforming Products.

7.5 Return of Rejected Products. Upon Buyer's request, Supplier shall provide return material authorization ("RMA") within [____] Business Days. Supplier shall bear all costs associated with the return of Non-Conforming Products, including shipping, insurance, and customs duties.

7.6 Failure to Cure. If Supplier fails to cure within the cure period, Buyer may:

(a) Procure replacement goods from alternative sources at Supplier's expense;

(b) Repair the Non-Conforming Products and charge Supplier for repair costs;

(c) Return the Non-Conforming Products for a full refund; or

(d) Exercise any other remedies available under this Agreement or applicable law.

7.7 Chronic Non-Conformance. If Supplier's rejection rate exceeds [____]% over any [____]-month period, Supplier shall:

(a) Provide a written root cause analysis within [____] days;

(b) Submit a corrective action plan within [____] days;

(c) Implement corrective actions within [____] days; and

(d) Bear Buyer's inspection costs until quality levels improve.

Chronic non-conformance may be grounds for termination under Article 14.

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ARTICLE 8: WARRANTIES

8.1 Express Warranty. Supplier expressly warrants that all Products shall:

(a) Conform to the Specifications;

(b) Be free from defects in materials, workmanship, and design (to the extent of Supplier's design responsibility);

(c) Be new and not refurbished or remanufactured (unless otherwise specified);

(d) Be fit for their intended purpose as communicated by Buyer;

(e) Be manufactured in accordance with good manufacturing practices;

(f) Comply with all applicable laws, regulations, and industry standards; and

(g) Perform in accordance with any samples or models provided by Supplier.

8.2 Warranty Period. The warranty period shall be the longer of:

(a) [____] months from delivery to Buyer;

(b) [____] months from delivery to Buyer's end customer; or

(c) The warranty period provided by Buyer to its end customers.

8.3 Warranty of Title. Pursuant to Tex. Bus. & Com. Code § 2.312, Supplier warrants that:

(a) Title to the Products shall be good and transfer shall be rightful;

(b) The Products shall be delivered free from any security interest, lien, or encumbrance of which Buyer has no knowledge; and

(c) The Products shall be delivered free from any rightful claim of infringement by any third party.

8.4 Implied Warranties. The implied warranties of merchantability (Tex. Bus. & Com. Code § 2.314) and fitness for a particular purpose (Tex. Bus. & Com. Code § 2.315) shall apply to all Products to the extent consistent with this Agreement.

8.5 Warranty Remedies. Upon notification of any breach of warranty during the warranty period, Supplier shall, at Buyer's option:

(a) Repair the defective Products at no cost to Buyer;

(b) Replace the defective Products with conforming Products at no cost to Buyer;

(c) Refund the purchase price of the defective Products; or

(d) Reimburse Buyer for the cost of repair or replacement if performed by Buyer or a third party.

8.6 Warranty Costs. Supplier shall bear all costs associated with warranty claims, including:

(a) Transportation and insurance costs;

(b) Inspection and testing costs;

(c) Labor costs for removal and reinstallation;

(d) Buyer's administrative costs; and

(e) Costs incurred by Buyer in connection with claims by Buyer's customers.

8.7 Extension of Warranty. The warranty period for repaired or replaced Products shall be the longer of (a) the original warranty period or (b) [____] months from the date of repair or replacement.

8.8 No Limitation. THESE WARRANTIES ARE IN ADDITION TO ANY OTHER WARRANTIES PROVIDED BY LAW. PURSUANT TO TEX. BUS. & COM. CODE § 2.719(b), IF THE REMEDIES PROVIDED HEREIN FAIL OF THEIR ESSENTIAL PURPOSE, BUYER MAY PURSUE ANY REMEDY AVAILABLE UNDER THE UCC OR OTHER APPLICABLE LAW.

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ARTICLE 9: INTELLECTUAL PROPERTY

9.1 Buyer's IP. Buyer retains all right, title, and interest in and to:

(a) Specifications, drawings, designs, and technical information provided by Buyer;

(b) Tooling owned by Buyer pursuant to Article 10;

(c) Buyer's trademarks, trade names, and logos; and

(d) Any improvements, modifications, or derivative works created by Supplier based on Buyer's IP.

9.2 Supplier's IP. Supplier retains all right, title, and interest in and to:

(a) Supplier's pre-existing intellectual property;

(b) Supplier's proprietary manufacturing processes and know-how;

(c) Supplier's trademarks and trade names; and

(d) Improvements to Supplier's pre-existing IP that do not incorporate Buyer's IP.

9.3 License to Buyer. Supplier grants to Buyer a non-exclusive, royalty-free, worldwide license to use Supplier's IP solely to the extent incorporated in the Products and necessary for Buyer to use, sell, service, and support the Products and Buyer's end products.

9.4 License to Supplier. Buyer grants to Supplier a non-exclusive, royalty-free license to use Buyer's IP solely for the purpose of manufacturing Products for Buyer under this Agreement. This license shall terminate upon expiration or termination of this Agreement.

9.5 No Other Rights. Except as expressly provided herein, neither Party grants the other Party any right or license to any IP.

9.6 IP Indemnification. Supplier shall indemnify, defend, and hold harmless Buyer from any claim that the Products or their use infringe any patent, copyright, trademark, trade secret, or other IP right of any third party, except to the extent the infringement arises from:

(a) Specifications or designs provided by Buyer; or

(b) Modifications made by Buyer without Supplier's authorization.

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ARTICLE 10: TOOLING OWNERSHIP

10.1 Buyer-Owned Tooling. Tooling that is:

(a) Provided by Buyer;

(b) Paid for by Buyer; or

(c) Developed by Supplier at Buyer's expense

shall be and remain the sole property of Buyer ("Buyer-Owned Tooling").

10.2 Identification. Supplier shall clearly mark all Buyer-Owned Tooling as "Property of [Buyer's Name]" and maintain a current inventory of all Buyer-Owned Tooling.

10.3 Use Restrictions. Supplier shall:

(a) Use Buyer-Owned Tooling exclusively for manufacturing Products for Buyer;

(b) Not use Buyer-Owned Tooling to manufacture products for any third party without Buyer's prior written consent;

(c) Not grant any lien, security interest, or encumbrance on Buyer-Owned Tooling;

(d) Store Buyer-Owned Tooling in a secure location; and

(e) Not relocate Buyer-Owned Tooling without Buyer's prior written consent.

10.4 Maintenance. Supplier shall, at its expense:

(a) Maintain Buyer-Owned Tooling in good working condition;

(b) Perform all necessary preventive maintenance;

(c) Repair or refurbish Tooling as necessary to maintain quality standards;

(d) Notify Buyer promptly if Tooling requires replacement; and

(e) Maintain records of all maintenance performed.

10.5 Insurance. Supplier shall insure Buyer-Owned Tooling against loss, damage, or destruction at replacement value and name Buyer as loss payee.

10.6 Return of Tooling. Upon Buyer's request or termination of this Agreement, Supplier shall return all Buyer-Owned Tooling to Buyer in good working condition, normal wear and tear excepted, at Buyer's expense.

10.7 Supplier-Owned Tooling. Tooling paid for by Supplier shall remain Supplier's property. If Buyer contributes to Tooling costs, ownership shall be determined as follows:

☐ Joint ownership proportional to contribution

☐ Buyer ownership with Supplier having manufacturing rights

☐ Other: [________________________________]

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ARTICLE 11: INDEMNIFICATION

11.1 Supplier Indemnification. Supplier shall indemnify, defend, and hold harmless Buyer, its Affiliates, and their respective officers, directors, employees, agents, successors, and assigns ("Buyer Indemnitees") from and against any and all claims, demands, actions, suits, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) ("Claims") arising out of or relating to:

(a) Any breach of this Agreement by Supplier;

(b) Any defect in Products, including product liability claims;

(c) Personal injury or property damage caused by Products;

(d) Infringement of any third party's IP rights by Products (except as provided in Section 9.6);

(e) Supplier's violation of any applicable law, regulation, or order;

(f) Supplier's negligence or willful misconduct;

(g) Any claim by Supplier's employees, agents, or subcontractors; and

(h) Any environmental liability arising from Supplier's operations.

11.2 Buyer Indemnification. Buyer shall indemnify, defend, and hold harmless Supplier, its Affiliates, and their respective officers, directors, employees, agents, successors, and assigns ("Supplier Indemnitees") from and against any Claims arising out of or relating to:

(a) Any breach of this Agreement by Buyer;

(b) Specifications or designs provided by Buyer that cause third-party IP infringement;

(c) Buyer's modification of Products without Supplier's authorization;

(d) Buyer's negligence or willful misconduct; and

(e) Buyer's violation of any applicable law.

11.3 Indemnification Procedures. The indemnified Party shall:

(a) Promptly notify the indemnifying Party of any Claim;

(b) Provide the indemnifying Party with sole control of the defense and settlement;

(c) Cooperate with the indemnifying Party in the defense; and

(d) Not settle any Claim without the indemnifying Party's prior written consent.

Failure to provide prompt notice shall not relieve the indemnifying Party of its obligations except to the extent the indemnifying Party is prejudiced by such failure.

11.4 No Limitation. The indemnification obligations of this Article 11 shall not be subject to the limitations of liability set forth in Article 12 with respect to claims by third parties.

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ARTICLE 12: LIMITATION OF LIABILITY

12.1 Limitation on Consequential Damages. EXCEPT AS PROVIDED IN SECTION 12.3, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES, INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS, LOSS OF REVENUE, LOSS OF DATA, LOSS OF BUSINESS OPPORTUNITY, OR COST OF PROCUREMENT OF SUBSTITUTE GOODS, ARISING OUT OF OR RELATING TO THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION OR THEORY OF LIABILITY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

12.2 Cap on Liability. EXCEPT AS PROVIDED IN SECTION 12.3, EACH PARTY'S TOTAL CUMULATIVE LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL NOT EXCEED THE GREATER OF:

(a) THE TOTAL AMOUNT PAID OR PAYABLE BY BUYER TO SUPPLIER UNDER THIS AGREEMENT DURING THE TWELVE (12) MONTHS PRECEDING THE CLAIM; OR

(b) $[________________________________].

12.3 Exclusions. THE LIMITATIONS IN SECTIONS 12.1 AND 12.2 SHALL NOT APPLY TO:

(a) Supplier's indemnification obligations under Section 11.1;

(b) Claims arising from a Party's gross negligence or willful misconduct;

(c) Claims arising from breach of confidentiality obligations;

(d) Claims arising from IP infringement;

(e) Claims for personal injury or death;

(f) Supplier's warranty obligations;

(g) Claims covered by insurance required under this Agreement; and

(h) Amounts owed for Products delivered and accepted.

12.4 Essential Purpose. PURSUANT TO TEX. BUS. & COM. CODE § 2.719(b), THE PARTIES ACKNOWLEDGE THAT THE LIMITATIONS HEREIN ARE AN ESSENTIAL ELEMENT OF THE BARGAIN AND THAT THE PRICING REFLECTS SUCH ALLOCATION OF RISK. IF ANY LIMITATION OF REMEDY FAILS OF ITS ESSENTIAL PURPOSE, THE REMAINING LIMITATIONS SHALL CONTINUE TO APPLY.

12.5 Texas Law. PURSUANT TO TEX. BUS. & COM. CODE § 2.719(c), THE PARTIES ACKNOWLEDGE THAT LIMITATION OF CONSEQUENTIAL DAMAGES WHERE THE LOSS IS COMMERCIAL IS NOT UNCONSCIONABLE.

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ARTICLE 13: INSURANCE

13.1 Required Coverage. Supplier shall maintain, at its sole expense, the following insurance coverages throughout the Term:

(a) Commercial General Liability: $[________________________________] per occurrence and $[________________________________] aggregate, including products-completed operations, personal injury, and contractual liability coverage;

(b) Products Liability: $[________________________________] per occurrence and $[________________________________] aggregate;

(c) Workers' Compensation: As required by Texas law, with Employer's Liability of at least $[________________________________] per accident;

(d) Commercial Automobile Liability: $[________________________________] combined single limit for owned, hired, and non-owned vehicles;

(e) Umbrella/Excess Liability: $[________________________________] per occurrence and aggregate; and

(f) Property Insurance: Covering Buyer-Owned Tooling at full replacement value.

13.2 Additional Insured. Supplier shall name Buyer as an additional insured under its Commercial General Liability and Umbrella policies.

13.3 Certificate of Insurance. Supplier shall provide Buyer with certificates of insurance evidencing the required coverage within [____] days of the Effective Date and upon each policy renewal.

13.4 Notice of Cancellation. Supplier shall provide Buyer with at least [____] days' prior written notice of any cancellation, non-renewal, or material change in coverage.

13.5 Deductibles. Supplier shall be responsible for all deductibles and self-insured retentions.

13.6 No Limitation. Supplier's insurance obligations shall not limit or diminish Supplier's other obligations under this Agreement.

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ARTICLE 14: CONFIDENTIALITY

14.1 Confidentiality Obligations. Each Party (as "Receiving Party") agrees to:

(a) Hold all Confidential Information of the other Party (as "Disclosing Party") in strict confidence;

(b) Not disclose Confidential Information to any third party except as permitted herein;

(c) Use Confidential Information only for the purposes of this Agreement;

(d) Protect Confidential Information using at least the same degree of care it uses to protect its own confidential information, but in no event less than reasonable care; and

(e) Limit access to Confidential Information to employees, contractors, and agents who have a need to know and are bound by confidentiality obligations at least as protective as those herein.

14.2 Exclusions. Confidential Information does not include information that:

(a) Was known to the Receiving Party prior to disclosure;

(b) Is or becomes publicly available through no fault of the Receiving Party;

(c) Is rightfully received from a third party without restriction;

(d) Is independently developed by the Receiving Party without use of Confidential Information; or

(e) Is approved for release by the Disclosing Party in writing.

14.3 Required Disclosure. The Receiving Party may disclose Confidential Information if required by law, regulation, or court order, provided that the Receiving Party:

(a) Gives the Disclosing Party prompt written notice (if legally permitted);

(b) Cooperates with the Disclosing Party's efforts to obtain protective treatment; and

(c) Discloses only the minimum information required.

14.4 Return of Confidential Information. Upon termination of this Agreement or the Disclosing Party's request, the Receiving Party shall promptly return or destroy all Confidential Information and certify such return or destruction in writing.

14.5 Duration. Confidentiality obligations shall survive termination of this Agreement for [____] years, except that obligations regarding trade secrets shall continue for as long as the information remains a trade secret under applicable law.

14.6 Injunctive Relief. The Parties acknowledge that breach of this Article 14 may cause irreparable harm for which monetary damages are inadequate. The Disclosing Party shall be entitled to seek injunctive relief without the necessity of proving actual damages or posting bond.

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ARTICLE 15: TERM AND TERMINATION

15.1 Initial Term. This Agreement shall commence on the Effective Date and continue for [____] years ("Initial Term"), unless earlier terminated in accordance with this Article 15.

15.2 Renewal. Upon expiration of the Initial Term, this Agreement shall automatically renew for successive [____]-year periods ("Renewal Terms") unless either Party provides written notice of non-renewal at least [____] days prior to the end of the then-current term.

15.3 Termination for Cause. Either Party may terminate this Agreement upon written notice if:

(a) The other Party materially breaches this Agreement and fails to cure such breach within [____] days after receiving written notice specifying the breach;

(b) The other Party becomes insolvent, files for bankruptcy, makes an assignment for the benefit of creditors, or has a receiver appointed for its assets;

(c) The other Party ceases to conduct business in the normal course; or

(d) The other Party is acquired by a competitor of the terminating Party.

15.4 Termination by Buyer for Convenience. Buyer may terminate this Agreement for convenience upon [____] days' prior written notice to Supplier.

15.5 Termination by Buyer for Quality or Delivery Failure. Buyer may terminate this Agreement immediately upon written notice if:

(a) Supplier's on-time delivery rate falls below [____]% for [____] consecutive months;

(b) Supplier's quality rejection rate exceeds [____]% for [____] consecutive months;

(c) Supplier fails to maintain required certifications or insurance; or

(d) Supplier is subject to a product safety recall involving Products.

15.6 Effect of Termination. Upon termination or expiration:

(a) All outstanding Purchase Orders shall be fulfilled unless otherwise agreed;

(b) Buyer shall pay for all Conforming Products delivered and accepted;

(c) Supplier shall deliver all work-in-progress at Buyer's option;

(d) Each Party shall return the other Party's Confidential Information;

(e) Supplier shall return all Buyer-Owned Tooling;

(f) Supplier shall provide reasonable transition assistance for up to [____] days; and

(g) All accrued rights and obligations shall survive.

15.7 Survival. The following provisions shall survive termination or expiration: Article 1 (Definitions), Article 8 (Warranties), Article 9 (Intellectual Property), Article 11 (Indemnification), Article 12 (Limitation of Liability), Article 14 (Confidentiality), Section 15.6 (Effect of Termination), Article 16 (Force Majeure), and Article 17 (Governing Law; Dispute Resolution).

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ARTICLE 16: FORCE MAJEURE

16.1 Definition. "Force Majeure Event" means any event beyond a Party's reasonable control that prevents or delays performance, including:

(a) Acts of God, including earthquake, flood, hurricane, tornado, or other natural disaster;

(b) War, terrorism, riot, civil commotion, or armed conflict;

(c) Government action, including embargo, sanction, or export restriction;

(d) Epidemic, pandemic, or quarantine;

(e) Fire, explosion, or accident;

(f) Labor disputes or strikes (other than involving the affected Party's employees);

(g) Failure of third-party telecommunications or power supply; and

(h) Transportation disruption affecting supply chains.

16.2 Exclusions. Force Majeure Events do not include:

(a) Economic hardship, changes in market conditions, or inability to obtain supplies at favorable prices;

(b) Failure of Supplier's subcontractors unless caused by a Force Majeure Event;

(c) Events that could have been avoided through reasonable precaution; or

(d) Events foreseeable at the time of contract formation.

16.3 Notice. The affected Party shall notify the other Party in writing within [____] days of the Force Majeure Event, specifying:

(a) The nature of the event;

(b) The expected duration;

(c) The steps being taken to mitigate the impact; and

(d) The Products or obligations affected.

16.4 Effect. During a Force Majeure Event:

(a) The affected Party's obligations shall be suspended to the extent affected;

(b) The affected Party shall use reasonable efforts to mitigate the impact and resume performance;

(c) The affected Party shall keep the other Party informed of developments; and

(d) Delivery schedules shall be extended by the duration of the delay.

16.5 Allocation. If a Force Majeure Event limits Supplier's production capacity, Supplier shall allocate available production among its customers in a fair and non-discriminatory manner, provided that Buyer shall receive at least its pro rata share based on historical purchases.

16.6 Termination. If a Force Majeure Event continues for more than [____] days, either Party may terminate this Agreement upon [____] days' written notice without liability, except for obligations accrued prior to termination.

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ARTICLE 17: GOVERNING LAW AND DISPUTE RESOLUTION

17.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, including the Texas Uniform Commercial Code (Tex. Bus. & Com. Code), without regard to its conflict of laws principles.

17.2 Exclusive Jurisdiction. The Parties irrevocably submit to the exclusive jurisdiction of the state and federal courts located in [________________________________] County, Texas for any dispute arising out of or relating to this Agreement.

17.3 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTY WAIVES ITS RIGHT TO A JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

17.4 Dispute Resolution. Prior to initiating litigation, the Parties shall attempt to resolve any dispute as follows:

(a) Negotiation: The Parties' designated representatives shall meet within [____] days to attempt resolution through good faith negotiation;

(b) Escalation: If not resolved within [____] days, the dispute shall be escalated to each Party's senior executive for resolution;

(c) Mediation: If not resolved within [____] days of escalation, the Parties shall engage in non-binding mediation before a mutually agreed mediator in [________________________________], Texas; and

(d) Litigation: If mediation is unsuccessful, either Party may pursue litigation in the courts specified in Section 17.2.

17.5 Injunctive Relief. Notwithstanding Section 17.4, either Party may seek injunctive or other equitable relief from any court of competent jurisdiction to protect its Confidential Information or IP rights without first engaging in the dispute resolution procedures.

17.6 Attorneys' Fees. The prevailing Party in any litigation shall be entitled to recover its reasonable attorneys' fees and costs from the non-prevailing Party.

17.7 Statute of Limitations. Any action arising out of or relating to this Agreement must be commenced within [____] years after the cause of action accrues.

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ARTICLE 18: GENERAL PROVISIONS

18.1 Entire Agreement. This Agreement, including all Exhibits, constitutes the entire agreement between the Parties with respect to its subject matter and supersedes all prior or contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written.

18.2 Amendments. This Agreement may be amended only by a written instrument signed by authorized representatives of both Parties. Pursuant to Tex. Bus. & Com. Code § 2.209, a signed agreement that excludes modification except by signed writing cannot be otherwise modified.

18.3 Waiver. No waiver of any provision of this Agreement shall be effective unless in writing and signed by the waiving Party. No failure or delay in exercising any right shall operate as a waiver thereof.

18.4 Severability. If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall continue in full force and effect. The invalid or unenforceable provision shall be modified to the minimum extent necessary to make it valid and enforceable.

18.5 Assignment. Neither Party may assign this Agreement without the other Party's prior written consent, except that Buyer may assign this Agreement to an Affiliate or in connection with a merger, acquisition, or sale of substantially all its assets. Any attempted assignment in violation of this Section shall be void.

18.6 Notices. All notices shall be in writing and delivered by hand, overnight courier, or certified mail, return receipt requested, to the addresses set forth above or such other address as a Party may designate in writing. Notices shall be effective upon receipt.

18.7 Independent Contractors. The Parties are independent contractors. Nothing in this Agreement creates any agency, partnership, joint venture, or employment relationship.

18.8 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties and their permitted successors and assigns. Nothing herein confers any rights upon any third party.

18.9 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one instrument. Electronic signatures shall have the same effect as original signatures.

18.10 Interpretation. Headings are for convenience only and shall not affect interpretation. "Including" means "including without limitation." References to statutes include all amendments and successor statutes.

18.11 Order of Precedence. In the event of conflict between documents, the following order of precedence shall apply: (a) this Agreement; (b) Exhibits; (c) Purchase Orders; and (d) Supplier's acknowledgments.

18.12 Compliance with Laws. Each Party shall comply with all applicable federal, state, and local laws, regulations, and orders in performing its obligations under this Agreement.

18.13 Export Compliance. Supplier shall comply with all applicable export control laws and regulations, including the Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR).

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ARTICLE 19: SIGNATURE BLOCKS

IN WITNESS WHEREOF, the Parties have executed this Manufacturing and Supply Agreement as of the date first written above.

BUYER:

Signature: [________________________________]

Printed Name: [________________________________]

Title: [________________________________]

Date: [__/__/____]

SUPPLIER:

Signature: [________________________________]

Printed Name: [________________________________]

Title: [________________________________]

Date: [__/__/____]

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EXHIBIT A: PRODUCTS AND SPECIFICATIONS

A.1 Product Description

Product ID	Description	Unit of Measure	MOQ	Lead Time (Days)
[________________________________]	[________________________________]	[________________________________]	[________________________________]	[________________________________]
[________________________________]	[________________________________]	[________________________________]	[________________________________]	[________________________________]
[________________________________]	[________________________________]	[________________________________]	[________________________________]	[________________________________]

A.2 Technical Specifications

☐ Engineering drawings attached as Exhibit A-1

☐ Material specifications attached as Exhibit A-2

☐ Performance requirements attached as Exhibit A-3

☐ Quality standards attached as Exhibit A-4

☐ Packaging specifications attached as Exhibit A-5

A.3 Applicable Standards

The Products shall comply with the following standards:

Standard	Description	Applicable Products
[________________________________]	[________________________________]	[________________________________]
[________________________________]	[________________________________]	[________________________________]

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EXHIBIT B: PRICING SCHEDULE

B.1 Unit Prices

Product ID	Description	Unit Price (USD)	Effective Date
[________________________________]	[________________________________]	$[________________________________]	[__/__/____]
[________________________________]	[________________________________]	$[________________________________]	[__/__/____]
[________________________________]	[________________________________]	$[________________________________]	[__/__/____]

B.2 Volume Discount Tiers

Annual Volume (USD)	Discount Percentage
$[________________________________] - $[________________________________]	[____]%
$[________________________________] - $[________________________________]	[____]%
$[________________________________] and above	[____]%

B.3 Tooling Costs

Tooling Description	Cost (USD)	Ownership	Amortization
[________________________________]	$[________________________________]	☐ Buyer ☐ Supplier	[________________________________]
[________________________________]	$[________________________________]	☐ Buyer ☐ Supplier	[________________________________]

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EXHIBIT C: QUALITY REQUIREMENTS

C.1 Quality Management System

☐ Supplier's quality management system certification: [________________________________]

☐ Certification expiration date: [__/__/____]

☐ Registrar/Certifying body: [________________________________]

C.2 Inspection and Testing Requirements

Test/Inspection	Frequency	Acceptance Criteria	Documentation Required
[________________________________]	[________________________________]	[________________________________]	[________________________________]
[________________________________]	[________________________________]	[________________________________]	[________________________________]

C.3 Statistical Process Control Requirements

☐ Process capability (Cpk) minimum: [________________________________]

☐ Control charts required for: [________________________________]

☐ Sampling plan: [________________________________]

C.4 Traceability Requirements

☐ Lot/batch traceability required

☐ Material certifications required

☐ Process parameter documentation required

☐ Retention period for quality records: [____] years

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EXHIBIT D: APPROVED SUBCONTRACTORS AND MATERIAL SOURCES

D.1 Approved Subcontractors

Subcontractor Name	Location	Approved Processes
[________________________________]	[________________________________]	[________________________________]
[________________________________]	[________________________________]	[________________________________]

D.2 Approved Material Sources

Material	Approved Supplier(s)	Specification
[________________________________]	[________________________________]	[________________________________]
[________________________________]	[________________________________]	[________________________________]

☐ Supplier may not change subcontractors or material sources without Buyer's prior written approval.

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ACKNOWLEDGMENT OF EXHIBITS

The Parties acknowledge receipt of and agreement to Exhibits A through D attached hereto.

BUYER:

Initials: [____] Date: [__/__/____]

SUPPLIER:

Initials: [____] Date: [__/__/____]

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This Manufacturing and Supply Agreement is governed by Texas law. All parties should consult with qualified legal counsel before execution.