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MASTER SUPPLY AGREEMENT

This Master Supply Agreement (the "Agreement") is entered into as of June 1, 2023 (the "Effective Date"), by and between:

SUPPLIER: Precision Components Manufacturing, Inc., a Delaware corporation with its principal place of business at 1500 Industrial Parkway, Detroit, MI 48201 ("Supplier")

CUSTOMER: Aurora Automotive Systems, LLC, a California limited liability company with its principal place of business at 2800 Innovation Drive, Fremont, CA 94538 ("Customer")

RECI

{
  "document_type": "master_supply_agreement",
  "parties": [
    "Precision Components Manufacturing, Inc. (Supplier)",
    "Aurora Automotive Systems, LLC (Customer)"
  ],
  "effective_date": "2023-06-01",
  "deal_value": "$50,000,000 annual minimum purchase commitment",
  "change_of_control": {
    "present": true,
    "clause_text": "7.3 Change of Control Consent Requirement. In the event of a Change of Control of either party: (a) The party undergoing the Change of Control shall provide written notice to the other party at least ninety (90) days prior to the anticipated closing of the Change of Control transaction. (b) The non-affected party shall have the right, in its sole and absolute discretion, to either: (i) consent to the Change of Control and continuation of this Agreement; or (ii) terminate this Agreement effective upon the closing of the Change of Control transaction.",
    "triggers": [
      "Merger, consolidation, or reorganization with another entity",
      "Sale of all or substantially all assets",
      "Acquisition of more than 40% of voting securities or equity interests",
      "Change of ultimate controlling person(s)"
    ],
    "consequence": "Non-affected party may terminate at sole discretion upon closing",
    "mitigation": "90 days advance notice required; consent process available",
    "consent_standard": "Sole and absolute discretion",
    "risk_level": "critical",
    "deal_blocker": true
  },
  "consent_requirements": [
    {
      "type": "assignment_consent",
      "from_party": "Non-affected counterparty",
      "standard": "Sole and absolute discretion (no reasonableness standard)",
      "restrictions": [
        "No assignment to competitors",
        "90 days advance notice required"
      ]
    },
    {
      "type": "change_of_control_consent",
      "from_party": "Non-affected counterparty",
      "standard": "Sole and absolute discretion",
      "restrictions": [
        "Automatic termination right if consent not obtained",
        "Competitor transactions prohibited"
      ]
    },
    {
      "type": "ip_licensing_consent",
      "from_party": "Joint IP co-owner",
      "standard": "Prior written consent required",
      "restrictions": [
        "Cannot license or assign jointly developed IP without consent"
      ]
    }
  ],
  "key_terms": {
    "exclusivity": {
      "present": true,
      "scope": "Exclusive supplier for brake systems and steering assemblies",
      "geographic_area": "North American manufacturing facilities",
      "purchase_commitment": "80% of requirements"
    },
    "minimum_purchase": {
      "amount": "$50,000,000 annually",
      "shortfall_penalty": "15% of difference between actual and minimum"
    },
    "term": {
      "initial_term": "7 years",
      "renewal": "Automatic 2-year renewals",
      "notice_for_non_renewal": "12 months"
    },
    "termination_fee": {
      "amount": "$10,000,000",
      "trigger": "Unauthorized change of control"
    }
  },
  "representations_warranties": [],
  "conditions_precedent": [],
  "mac_clause": {
    "present": false,
    "triggers": [],
    "consequences": []
  },
  "non_compete_provisions": [
    {
      "duration": "Term of agreement",
      "scope": "Assignment and change of control prohibited with competitors",
      "geographic_area": "Not specified"
    }
  ],
  "risk_flags": [
    {
      "type": "change_of_control",
      "severity": "critical",
      "description": "Sole discretion termination right for counterparty upon any CoC, with 40% threshold lower than typical 50%"
    },
    {
      "type": "automatic_termination",
      "severity": "critical",
      "description": "Agreement automatically terminates if CoC consent not obtained, plus $10M termination fee and damages"
    },
    {
      "type": "competitor_restriction",
      "severity": "high",
      "description": "Any assignment or CoC to a 'Competitor' is void and prohibited, with broad competitor definition"
    },
    {
      "type": "minimum_commitment",
      "severity": "high",
      "description": "$50M annual minimum with 15% shortfall penalty creates significant ongoing financial obligation"
    },
    {
      "type": "exclusivity",
      "severity": "medium",
      "description": "Exclusive supply arrangement for critical components may limit post-acquisition flexibility"
    },
    {
      "type": "long_term",
      "severity": "medium",
      "description": "7-year initial term with automatic renewal creates long-term commitment that survives acquisition"
    },
    {
      "type": "joint_ip",
      "severity": "medium",
      "description": "Joint IP ownership with consent requirement for licensing may complicate technology strategy"
    },
    {
      "type": "liability_carveout",
      "severity": "low",
      "description": "Liability cap specifically excludes CoC breaches, exposing acquirer to unlimited damages"
    }
  ],
  "deal_blockers": [
    {
      "type": "change_of_control_consent",
      "description": "Counterparty has sole discretion to terminate upon any change of control; no reasonableness standard",
      "financial_impact": "$10M termination fee plus present value of remaining minimum commitments plus unlimited damages",
      "recommendation": "Negotiate CoC consent as condition precedent to closing; seek reasonableness standard or pre-signing waiver"
    },
    {
      "type": "competitor_restriction",
      "description": "Transaction with any competitor is void; acquirer's product line may trigger competitor definition",
      "financial_impact": "Potential loss of critical supply agreement",
      "recommendation": "Obtain legal opinion on competitor definition applicability; negotiate carve-out or amendment"
    },
    {
      "type": "minimum_purchase_liability",
      "description": "Present value of remaining minimum commitments accelerates upon unauthorized CoC",
      "financial_impact": "Up to $350M (7 years x $50M) plus 15% shortfall penalties",
      "recommendation": "Include indemnity from seller; negotiate cap on CoC-related liabilities"
    }
  ],
  "overall_risk_level": "critical",
  "recommendations": [
    "Immediately engage counterparty to negotiate CoC consent or waiver before signing definitive agreement",
    "Obtain detailed analysis of whether acquirer qualifies as 'Competitor' under agreement definition",
    "Include CoC consent as express closing condition in acquisition agreement",
    "Negotiate seller indemnification for any damages arising from CoC provisions",
    "Consider purchase price adjustment to reflect CoC termination risk",
    "Request amendment to add reasonableness standard to consent requirement",
    "Evaluate alternative suppliers in case consent cannot be obtained",
    "Review joint IP inventory and assess impact of consent requirement on technology strategy"
  ]
}