EXHIBIT 10.1
[CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED BY WJ COMMUNICATIONS, INC. CONFIDENTIAL PORTIONS OF THIS
DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.]
SUPPLY
AGREEMENT
THIS SUPPLY AGREEMENT
(“ Supply Agreement
”) is made and entered into as of the 18 th day of
June, 2004 (the “ Closing Date ”), by and
between EiC CORPORATION, a California corporation, having an
address of 45738 Northport Loop West Fremont, CA 94538 (“
EiC ”), and WJ COMMUNICATIONS, INC. , a
Delaware corporation, having an address of 401 River Oaks Parkway,
San Jose, California 95134 (“ WJCI
”).
W I T N
E S S E
T H :
WHEREAS , EiC, WJCI and EiC Enterprises, Limited
(“ Enterprises ”) have entered into an Asset
Purchase Agreement of even date herewith (the “ Purchase
Agreement ”) pursuant to which EiC has sold, transferred,
licensed and assigned to WJCI and WJCI has purchased and received
certain rights in and to EiC’s inventions, patents and
processes (the “ Technology ”) used in
EiC’s business of designing and manufacturing power
amplifiers for wireless infrastructure and handset applications
(the “ Business ”);
WHEREAS , EiC desires to continue to engage in the
portion of the Business relating to the EiC’s “
Terminal Field of Use ” as set forth in Exhibit
A (“ Terminal Business ”), and desires
to acquire certain of its product requirements for the
semiconductor wafers (“ PAM Wafers ”), as
specified in the EiC specification control drawings referenced in
Exhibit B (“ Specifications ”)
from WJCI on the terms and conditions set forth herein;
and
WHEREAS , it is a condition precedent to EiC’s
obligation to consummate the transactions contemplated by the
Purchase Agreement that the parties enter into this Supply
Agreement.
NOW, THEREFORE
, for and in consideration of the
premises, the mutual covenants and agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE I-MANUFACTURE AND SALE
OF PRODUCTS
1.1
During the term (as defined herein)
of this Supply Agreement, WJCI agrees to manufacture sell, invoice
(“ Invoice(s) ”) and deliver shipments of PAM
Wafers (“ Shipment(s) ”) to EiC, and accept
written purchase orders (“ Purchase Orders ”)
from EiC for EiC’s requirements for PAM Wafers, and EiC
agrees to purchase and receive from WJCI, a minimum number of PAM
Wafers, upon the terms and subject to the conditions set forth in
this Supply Agreement.
1.2
EiC agrees that it shall purchase and receive Invoices and
Shipments from WJCI, for a total of not fewer than 1000 PAM Wafers
for a period of up to one (1) year from the date hereof (the
“ Term ”), and EiC shall purchase and receive
Invoices and Shipments, for no less than 250 PAM Wafers per quarter
during the Term of this Supply Agreement. The Term of this
Supply Agreement may be renewed upon mutual consent of the
parties.
1.3
During the first three (3) quarters of this Supply Agreement,
commencing on the date hereof and ending March 31, 2005, if EiC
fails to submit Purchase Orders, receive and accept Invoices and
Shipments for at least 750 PAM Wafers, WJCI shall have the right to
refuse to accept additional Purchase Orders for PAM Wafers from EiC
thereafter.
1.4
The Parties may, upon mutual
agreement, amend Exhibit B to include any new item
to, or to delete any item from, the definition of PAM
Wafers.
ARTICLE II-
ORDERING, FORECASTING, SHIPMENT, AND ACCEPTANCE OF
PRODUCTS
2.1
During the Term of this Supply
Agreement, EiC shall order PAM Wafers from WJCI through the
issuance of Purchase Orders, and WJCI shall deliver Invoices and
Shipments of PAM Wafers to EiC. The terms and conditions of
this Supply Agreement shall be applicable to all Purchase Orders
for and Invoices and Shipments of PAM Wafers specified in
Exhibit B delivered to EiC and, in the event of
conflict, will supersede either EiC’s or WJCI’s general
terms and conditions of sale. Each Purchase Order EiC issues
shall specify the type and quantity of PAM Wafers ordered, the
shipment destination, the shipment method, and the delivery
date. Purchase Orders shall be in writing and may be sent via
facsimile to WJCI’s then current, designated facsimile
number, which is confirmed, or by such other method to which EiC
and WJCI may mutually agree.
2.2
In the event EiC’s Purchase
Order, WJCI’s confirmation of Purchase Order, or WJCI’s
Invoice contains terms and conditions which are in conflict with,
or attempt to amend, or change in any way this Supply Agreement,
such terms and conditions shall be regarded as null and void,
unless otherwise mutually agreed.
2.3
Each Purchase Order shall be
accepted or rejected by WJCI in writing within five (5) business
days after WJCI’s receipt of such Purchase Order. If
WJCI fails to notify EiC of its acceptance of any Purchase Order
within such five (5) day period, such Purchase Order shall be
deemed accepted. WJCI may not reject any Purchase Order that
is placed ninety (90) days or more in advance of the requested
delivery date.
2.4
EiC shall order and WJCI shall
produce and deliver Invoices and Shipments of PAM Wafers, totaling
a minimum of 250 PAM Wafers in each three (3) month period
commencing on the Closing Date. The maximum number of PAM
Wafers WJCI shall be obligated to produce in any three (3) month
period is 300 PAM Wafers. If EiC desires to order PAM Wafers
in excess of 300 in a three (3) month period, each request shall be
reviewed by WJCI on a case-by-case basis so that WJCI can ascertain
its ability to meet EiC’s requested quantity of PAM Wafers
for delivery on the requested delivery date, using its reasonable
efforts to do so.
2.5
EiC may not change any of the
drawings, Specifications or instructions for work covered by an
accepted Purchase Order.
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2.6
WJCI shall Invoice and deliver
Shipments of PAM Wafers F.C.A WJCI’s facility in Fremont,
California. WJCI shall Invoice and deliver Shipments of PAM
Wafers described in EiC’s Purchase Order to EiC or its
designated carrier in sufficient time for the PAM Wafers to be
Invoiced and Shipped to EiC’s Fremont, CA facility on the
requested delivery date (-3, +0 days) set forth in the Purchase
Order. EiC is not obligated to take the PAM Wafers into its
possession before the agreed upon delivery date.
2.7
The PAM Wafers shall be packaged and
labeled in a manner appropriate for Shipment, unless special
packaging and/or labeling requirements are specified in the
Purchase Order, in which case the PAM Wafers shall be so packaged
and labeled and any additional costs attributable to such special
packaging and labeling shall be at EiC’s cost and
expense. WJCI shall indicate EiC’s Purchase Order
number on all packaging, labeling, Invoices, and other
communications relating to the Purchase Order.
2.8
Title to the PAM Wafers shall pass
upon delivery to EiC’s receiving facility.
2.9
If WJCI cannot Invoice and deliver
Shipments of PAM Wafers in accordance with EiC’s Purchase
Order, and on the mutually agreed delivery date, then WJCI shall as
soon as it becomes or should have become, using reasonable efforts,
aware of the delay, inform EiC thereof in writing. Such
notice shall be entitled “Notice of Delay” and signed
by WJCI, and shall also include:
(a)
identification of the type and quantity of PAM Wafers that
will be delayed;
(b)
the anticipated duration of delay for each type and
quantity;
(c)
the cause(s) of the delay;
(d)
the actions that WJCI is taking and will take to remedy or shorten
the delay; and
(e)
a proposal of a new delivery date for each type and quantity of the
delayed PAM Wafers, which shall be no later than seven (7) weeks
after the agreed delivery date, together with a clear, firm
commitment to treat such new delivery date as contractual and to
make the deliveries by such date.
If WJCI fails to meet the new
delivery date, EiC’s total minimum purchase requirement
hereunder shall be reduced by the number of PAM Wafers whose
delivery was delayed.
2.10
EiC may inspect PAM Wafers upon
delivery to ascertain correct quantities and visible damage or
deviation from the Purchase Order in the PAM Wafers
delivered. EiC is entitled to treat the Purchase Order as
discharged, either in whole or in part, or if EiC so requires, WJCI
agrees to replace all damaged or incorrect PAM Wafers and deliver
additional PAM Wafers in order to meet the correct quantities
without delay. Such replacement and/or additional deliveries
shall be completed within a mutually agreed upon time from the
receipt by WJCI of EiC’s notice. Any return of the PAM
Wafers shall be at WJCI’s expense. Any acceptance of
the PAM Wafers by EiC shall not reduce WJCI’s obligation to
warrant the PAM Wafers as provided in this Supply
Agreement.
2.11
In order to enhance WJCI’s
ability to better meet EiC’s requested delivery dates in line
with the 90-day leadtime, EiC will provide WJCI with a non-binding
forecast of its requirements for PAM Wafers for the entire Term of
the Supply Agreement. This forecast will be updated
on
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the first (1 st ) day of each
calendar month and will cover the remaining Term of the Supply
Agreement.
ARTICLE III-
PRICES AND PAYMENT TERMS FOR PAM WAFERS, LOT CHARGE, AND
TAXES
3.1
EiC shall pay WJCI
***
Dollars ($ *** ) for each PAM Wafer Invoiced and Shipped to
EiC. Prices and Invoices shall be stated and delivered with
the PAM Wafers on the requested delivery date. Payment by EiC
for the PAM Wafers to WJCI shall be made in United States Dollars
within thirty (30) days from the receipt of WJCI’s
Invoice.
3.2
On the date of Closing of the
Purchase Agreement, EiC shall provide WJCI with a Purchase Order
for 250 PAM Wafers for Invoice and Shipment to EiC within the first
three (3) month period of the Term of this Supply Agreement.
Thereafter, in the event EiC fails to purchase, receive and accept
Invoices and Shipments of at least 250 PAM Wafers in any three (3)
month period as provided in Section 2.4 herein (allowing for
adjustments as provided in Section 2.9), EiC shall pay a Lot
Charge, within thirty (30) days from the end of such three (3)
month period, to WJCI which equals the following:
[Lot Charge] = [$***(1)] X [(250 PAM Wafers)
(N o )]
N o = Number of PAM Wafers actually
purchased and Invoiced in a three (3) month period
(1) In the event EiC fails to accept
Invoices and Shipments for 250 PAM Wafers in the first (1
st ) quarter of the Term of this Supply Agreement,
$ *** shall be used to calculate the Lot
Charge.
In the event EiC orders, purchases, and accepts,
and WJCI Invoices and delivers Shipments of 250 or more PAM Wafers
in a three (3) month period, there shall be no Lot Charge. In
the event EiC orders, purchases, and accepts, and WJCI Invoices and
delivers Shipments of more than 250 PAM Wafers in each of the first
three (3) quarters of the Term of this Supply Agreement, the total
amount in excess shall be credited towards the number of PAM Wafers
ordered, purchased, and accepted by EiC, and Invoiced and Shipped
by WJCI, in the fourth (4 th ) quarter of the Term of
this Supply Agreement. If the credit applied brings the
fourth (4 th ) quarter total to 250 PAM Wafers, then
there shall be no Lot Charge as provided in this Section 3.2.
The credit applicable to this Section 3.2 is further set out in
Exhibit C .
3.3
The price set forth in Sections 3.1
and 3.2 above is exclusive of all applicable taxes (including, but
not limited to, sales, use, and value added taxes, but not
including taxes imposed on the income of WJCI generally), imposed
as a result of the existence or operation of this Supply Agreement,
all of which are the responsibility of EiC. EiC agrees to pay
WJCI such taxes simultaneously with EiC’s payments in the
method prescribed in Section 3.1, unless otherwise agreed by EiC
and WJCI.
***
CONFIDENTIAL MATERIAL REDACTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND SEPARATELY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
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ARTICLE
IV-QUALITY
4.1
WJCI warrants that it shall manufacture the PAM Wafers in
accordance with the Specifications as provided by EiC and as set
forth specifically in Exhibit B . WJCI does not
warrant to the manufacture of PAM Wafers pursuant to any other
specifications.
4.2
WJCI shall not transfer the
manufacture of the PAM Wafers to another factory of WJCI without
the prior written consent of EiC; and such consent shall not be
unreasonably withheld.
4.3
Each PAM Wafer that WJCI delivers
hereunder must conform to all of the requirements (including but
not limited to the Specifications) set forth under this Supply
Agreement.
4.4
WJCI shall provide, upon EiC’s
written request during the term of this Supply Agreement,
WJCI’s reliability and quality data (including, but not
limited to, fab and test lot traceability data) regarding PAM
Wafers produced for EiC for the purpose of maintaining consistent
quality and reliability standards for such PAM Wafers.
4.5
At any time, EiC may request WJCI to
perform failure analysis for the PAM Wafers for which EiC provides
conclusive evidence that they do not comply with the acceptance
criteria as set forth in Exhibit B (“
Acceptance Criteria ”). Upon written request
from EiC, WJCI will perform failure analysis of PAM Wafers returned
to WJCI with a WJCI-issued Return Material Authorization (“
RMA ”) number. In such event, EiC shall send to
WJCI the failure analysis sample together with evidence documenting
the claimed non-compliance. All PAM Wafers for which refund
and/or replacement is sought, and all returns, shall be marked with
an RMA number issued by WJCI. WJCI shall analyze authorized
returns within two (2) working weeks from receipt by WJCI, and WJCI
shall provide EiC with a written report detailing the results of
the analysis. WJCI and EiC shall reasonably cooperate in good
faith to resolve all matters concerning returns, failure analysis
and WJCI’s compliance with its obligations under this Supply
Agreement.
ARTICLE V-FACILITY
SURVEYS
5.1
EiC reserves the right, by itself or
through its appointed representative(s), at its sole cost, during
regular business hours, following reasonable notice to WJCI and
without interfering in WJCI’s operations, to inspect
WJCI’s physical facilities or quality control procedures, or
to conduct environmental management system audits, both prior to
the first delivery of PAM Wafers under this Supply Agreement and
periodically thereafter, in order to verify compliance with the
Specifications and other standard industry practices and
procedures.
ARTICLE VI-REPRESENTATIONS AND
WARRANTIES
6.1
WJCI represents and warrants to EiC
that upon Invoice and Shipment to EiC and for a period of six (6)
months, the PAM Wafers will (i) conform in all material respects to
the Specifications set forth in Exhibit B ; (ii) be
of consistent kind and quality; (iii) be new and not used,
remanufactured, reconditioned, or refurbished; (iv) be free from
all defects in material and workmanship; (v) not be prohibited or
otherwise restricted from being introduced or delivered for
introduction or shipment in commerce within the United States, and
not be subject to any customs, duties, tariffs, or penalties in
connection therewith; (vi) have received all required
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governmental and regulatory
approvals, licenses, permits, and consents necessary for marketing,
promotion, sale, distribution, and use within the United States;
(vii) be produced and manufactured in compliance with, meet the
minimum standards of, and be packaged, labeled, and Invoiced in
accordance with and otherwise comply with all applicable laws,
rules, regulations, and other regulatory requirements within the
United States; and (viii) have been manufactured in an ISO-9001
certified or at least equivalent quality system.
6.2
During the first eight (8) months of
the Term of this Supply Agreement, any PAM Wafer that fails to meet
the warranty provided in Section 6.1(i) or (iv) will be replaced by
WJCI. Thereafter, if any PAM Wafer fails to meet the warranty
provided in Section 6.1(i) or (iv), at its option and expense, WJCI
shall replace such non-conforming PAM Wafer or provide a refund for
the
