exv10w27



 






[ * ] = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.




Exhibit 10.27




ENDWAVE-NGC PRIVATE / PROPRIETARY




SUPPLY AGREEMENT




     THIS SUPPLY AGREEMENT is effective as of June 30, 2006 (the “Effective Date”) by and between
Endwave Corporation (“Buyer”) and Northrop Grumman Space & Mission Systems Corp., acting through
its Northrop Grumman Space Technology sector (“NGST”).



     WHEREAS, Buyer desires to purchase and NGST desires to provide, the Products as specified in
Exhibit 1A to this Agreement and the parties desire to define the terms and conditions under which
the same will be furnished.



     NOW, THEREFOR, in consideration of the foregoing, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:



Article 1

Definitions and Priority




     1.1 Definitions: The following words and phrases shall have the meanings set forth
below:



	 	 	 	 	 	 	 
	 	 	Agreement:	 	This Supply Agreement between NGST and Buyer including the following Exhibits,
attached hereto and made a part hereof:
	 
	 	 	 	 	 	 
	 

	 	 	 	Exhibit A:
Exhibit B:
Exhibit C:
Exhibit D:
	 	List of Products and Services

List of Deliverables, Quantity Commitments, and
Buyer’s Site

Buffer Inventory

(Document [ * ])
	 
	 	 	 	 	 	 
	 	 	Buffer Inventory:	 	Defined in Section 5.5.
	 
	 	 	 	 	 	 
	 	 	Contract Price:	 	Defined in Section 4.1.
	 
	 	 	 	 	 	 
	 	 	Delivery Date(s):	 	The date on which a Product leaves the NGST Plant.
	 
	 	 	 	 	 	 
	 	 	NGST Plant:	 	Each of the factories or establishments of NGST and its suppliers
located in the United States.
	 
	 	 	 	 	 	 
	 	 	Products:	 	The products and services described in Exhibit A to be supplied by NGST.
	 
	 	 	 	 	 	 
	 	 	Site:	 	Buyer’s facility or other location identified in Exhibit B as the
destination to which transportation is to be arranged for deliverable items.
	 
	 	 	 	 	 	 
	 	 	Term	 	Defined in Article 3.






1









 






     1.2 Priority: In case of any inconsistencies between this Agreement and any of the
Exhibits, the text of this Agreement shall prevail.



Article 2

Subject Matter of Supply; Requirements; Use of Products




     2.1 Supply: NGST hereby agrees to sell to Buyer and Buyer hereby agrees to buy from
NGST, on and subject to the terms and conditions contained in this Agreement, the Products listed
in Exhibit A. During the Term, Buyer may elect to purchase optional Products as described in
Exhibit A under the terms and conditions set forth in this Agreement. To the extent that Buyer
wishes to purchase more than the maximum quantities of the Products as provided in Exhibit B, NGST
may, but is under no obligation to, provide Buyer such excess quantities. For the purchase of
products not described by this Agreement (including Exhibit A), a separate purchase order shall be
used by Buyer.



     2.2 Use of Products: Buyer understands and agrees that the Products to be sold
by NGST hereunder are neither designed nor warranted for use in medical devices with life support
functions, safety equipment (or similar applications where component failure would result in loss
of life or physical harm), and military or space applications or environments. Any use of Products
in these applications or environments is at Buyer’s sole and exclusive risk.



Article 3

Effective Date and Term




     This Agreement shall be effective and binding on the parties as of the Effective Date and
shall remain in force and effect until September 30, 2008, unless the parties hereto choose to
extend the term of this Agreement (the period between the Effective Date and the termination of
this Agreement shall be hereinafter referred to as the “Term”).



Article 4

Contract Price, Taxes

Transportation, Expenses and Charges




     4.1 Price: Buyer shall pay to NGST, as and for the performance of NGST’s obligations
hereunder, the prices for Products stated in Exhibit A in accordance with the provisions of Article
5. The aforementioned price is hereinafter referred to as the “Contract Price.”



     4.2 Taxes: All taxes (excluding income, but including stamp, withholding, value added
and turnover taxes), duties, fees, charges, or assessments of any nature levied by any governmental
authority in connection with this transaction, whether levied against Buyer or NGST, or employees
of NGST as a result of Products provided by NGST under this Agreement, shall be for Buyer’s account
and shall be paid directly by Buyer to the governmental authority concerned. If NGST is required
by law or otherwise to pay any such levy and/or fines, penalties, or assessments in the first
instance, or as a result of Buyer’s failure to comply with any applicable laws or regulations
governing the payment of such levies by Buyer, as NGST’s exclusive remedy for claims under this
Section 4.2, the amount of any payments so made by NGST shall be reimbursed by Buyer to NGST upon
submission of NGST’s invoices and written documentation justifying NGST’s invoices.



     4.3 Transportation Expenses: Buyer shall pay for all expenses of handling, freight,
in-transit insurance, and other transportation expenses including, without limiting the foregoing,
all special handling charges for air shipment incurred in connection with the delivery of Products
from the NGST Plant to the Site. Buyer will provide NGST with a common carrier account number
for NGST’s use hereunder.




2


 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.











 





Article 5

Orders, Forecasts, and Buffer Inventory 




     5.1 Orders: For its convenience, Buyer shall use forms to order Products or to
specify subsequent changes to Products which reference this Agreement and specify the desired
Delivery Date(s) for Products (“Orders”). Any such Order shall not contain any preprinted or
written terms and conditions, and, to the extent that it does, Buyer and NGST hereby agree that
such terms and conditions of sale shall have no effect whatsoever and shall not be binding on the
parties and that only the terms and conditions contained in this Agreement shall govern any sale
between the parties regarding the Products.



     5.2 Acceptance of Orders: NGST shall give Buyer written acknowledgment of its
receipt and notice of its acceptance or rejection of any Order within [ * ] days after receipt of
such Order. If NGST rejects any such Order, it shall specify in such notice the reasons for
rejection and the conditions upon which it would consider accepting such Order. NGST shall use
reasonable commercial efforts to accept and supply all Orders for Products which Buyer submits
hereunder, and unless otherwise agreed, NGST shall deliver Products so ordered on or before the
Delivery Dates specified in each Order. Notwithstanding the foregoing, NGST shall have no
obligation to accept and shall not be deemed to have accepted, unless signed by NGST, any Order (i)
for any Products not listed in Exhibit A hereto or revisions thereof; (ii) for any quantity of
Products in excess of the quarterly maximum quantities specified in Exhibit B hereto or revisions
thereof; or (iii) that does not comply with Sections 5.3 and/or 5.4. The parties’ key contacts for
management of Orders shall be:


Endwave: [ * ]

NGST:     [ * ]




     5.3 Forecast Orders: Commencing on the Effective Date and thereafter on a mutually
agreed upon business day of each week during the Term hereof, Buyer shall submit to NGST a rolling,
written forecast of its best estimate of its requirements for Products during the next succeeding [
* ] week period. Unless otherwise agreed by the parties, the forecast shall be in the form of an
Email file attachment and shall represent a firm, non-cancelable Order for Products from Buyer for
the first [ * ] weeks of each such forecast period, and Buyer’s best estimates of its requirements
for Products for the balance of the forecast period. The weekly Forecast Order shall list
separately for each week during the period covered by the forecast the amounts of Products which
Buyer expects to purchase during such period by Product part numbers, quantities of Products, and
Delivery Dates. Although the timing of delivery and quantity of Products may be altered by Buyer
for the [ * ] weeks of each forecast period (weeks [ * ]) as provided in Section 5.4 below, such
alteration of the forecast for weeks [ * ] shall not relieve NGST or Buyer from their respective
supply or purchase requirements. Buyer’s Product and delivery requirements for Weeks [ * ],
inclusive, of each forecast represent Buyer’s best estimate of its Product needs for that period,
are for planning purposes only, and are non-binding on Buyer or NGST. As part of its acceptance of
an Order as set out in Section 5.2 above, NGST shall provide Buyer a written shipment plan.



     5.4 Forecast Delivery Changes: Buyer may either increase or defer a Product’s
delivery quantity for any Order for Weeks [ * ] by [ * ] from the original [ * ] Order forecast
therefor (the “Baseline Quantity”) upon giving NGST notice in the next weekly Order forecast.
Buyer may defer a Product’s delivery quantity Subject to the aforementioned limitation of [ * ]
from the Baseline Quantity, Buyer may defer deliveries of Products ordered for up to [ * ] from the
date first stated in Buyer’s Baseline Quantity Order therefor. Subject to the aforementioned
quantity limitation of [ * ] and the availability of Products, Buyer may accelerate deliveries of
Products from the date stated in Buyer’s initial Order forecast. NGST may fill the requested
increase from either NGST’s existing inventory or from the Buffer Inventory. If NGST elects to use
the Buffer Inventory, then
the procedure described in Section 5.5 shall apply. NGST will promptly notify Buyer if it is
unable to accelerate the delivery of Products as requested by Buyer.



3



 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.













 





     5.5 Establishment and Use of Buffer Inventory: NGST shall establish and maintain an
inventory of the Products identified in Exhibit A in the quantities set forth in Exhibit C (“Buffer
Inventory”). NGST shall insure that [ * ] of the Buffer Inventory for each Product is available
for shipment within [ * ] days of NGST’s receipt of Buyer’s written Order therefor; the remaining [
* ] of the Buffer Inventory for each Product shall be available for delivery by NGST to Buyer
within [ * ] days of Buyer’s Order therefor. Prior to the acceptance by NGST of any Buffer
Inventory Order, Buyer shall specify in writing that the Order constitutes either: (a) an increase
in a forecast Order as set forth in Section 5.4 above that is to be met by a temporary decrease in
Buffer Inventory levels and subsequent replenishment of such Buffer Inventory by NGST to the
previously authorized maximum; or (b) a permanent drawdown by Buyer of Buffer Inventory. Unless
otherwise directed in writing in the Buffer Inventory Order that such Order constitutes a permanent
drawdown of Buffer Inventory by Buyer, NGST shall replenish Buffer Inventory as soon as practicable
following receipt and fulfillment of a Buffer Inventory Order.



     5.6 Purchase of Buffer Inventory: Upon expiration of the Term, Buyer shall purchase
all Products remaining in the Buffer Inventory at the Contract Price promptly upon receipt of
NGST’s invoice; provided, however that if, in [ * ] day period during the Term, Buyer fails to
purchase a minimum of [ * ] of an individual Product’s Buffer Inventory level, Buyer shall purchase
the entire Buffer Inventory of that Product at the Contract Price promptly upon receipt of NGST’s
invoice.



Article 6

Payment




     Payment for Products shall be [ * ] days from the date of NGST’s invoice. Payment of other
charges, if any, provided for in this Agreement shall be due and payable with immediately available
funds within [ * ] days after the date of NGST’s invoice therefor. Payment shall be made by
electronic funds transfer (EFT) to NGST’s account of immediately available funds as follows:



	 	 	 
	 

	 	[ * ]






Article 7

Shipment, Title, and Risk of Loss; Export of Products




     7.1 Delivery of Products: NGST shall place Products in the possession of a common
carrier at a time and date reasonably calculated to effect delivery to Buyer on or before the date
or dates specified in each Order therefor for delivery to Buyer, FOB NGST’s Plant to the Site
specified in Exhibit B. NGST shall place Products in the possession of a common carrier pursuant
to the Delivery Date(s) specified in each Order, but no more frequently than once a week. The
cost of such shipping shall be borne by Buyer.



     7.2 Protection and Packing of the Products: NGST shall arrange to have all Products
suitably packaged in accordance with good commercial practices. Unless otherwise provided, all
packing containers used by NGST shall be non-returnable.



     7.3 Risk of Loss and Title: Notwithstanding any provisions for payment of freight or
insurance, or the form of shipping documents, or the breach or default by NGST at the time of loss,
title and risk of loss for Products shall pass to Buyer on delivery to the carrier at the NGST
Plant. Title and risk of loss of Products sent to NGST for adjustment shall remain with Buyer
until such are received by NGST. Neither (i) the time, method, place, or medium of payment
provided for herein, or any combination of the foregoing, nor (ii) the manner of
consignment provided for, whether to, or to the order of, Buyer or its agent, shall in any way
limit or modify the rights of NGST as the owner of the Products, to have control over the right to
possession of the Products until title thereto passes to Buyer as provided herein.



4



 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.













 





     7.4 Shipping Documents: After Products have been shipped, NGST shall deliver to Buyer
one (1) copy of the packing list. Electronic delivery of the packing list is authorized.



     7.5 Export of Products: All sales hereunder shall at all times be subject to the
export control laws and regulations of the United States and any amendments thereto. Buyer agrees
that it shall not make any disposition, by way of transshipment, re-export, diversion or otherwise,
except as such laws and regulations may expressly permit, of Products. Further, Buyer agrees that
it shall not knowingly sell, transfer, or deliver, directly or indirectly, any part or portion of
the Products or related documentation supplied by NGST pursuant to this Agreement to any person or
organization in any country where such sale, transfer, or delivery by Buyer would be prohibited by
law or regulation now or hereafter in effect which imposes any restrictions on United States trade
with foreign countries.



     7.6 Acceptance of Products: A signed air bill or other common carrier documentation
indicating receipt by Buyer of the Products constitutes proof of delivery. Buyer will provide NGST
with written notice of acceptance of the Products that conform to the applicable Order within ten
(10) business days of receipt; provided, however, if Buyer fails to provide NGST with either
written notice of acceptance or a formal statement of rejection and the reasons therefore within
ten (10) business days of receipt, such Products shall be deemed accepted upon expiration of the
ten (10) business day period. Acceptance shall be definitive and final in all cases, absent fraud.
Following such acceptance, Buyer’s only remedy for defective Products shall be as provided in
Article 8.



Article 8

Warranty




     8.1 Warranty:



     (a) NGST warrants that for a period of 24 months after the Delivery Date all Products sold
hereunder (i) are made from new materials and (ii) meets the production circuit screening criteria
set forth in the then current and applicable test D-document for that Product, as identified in
Exhibit A hereof, at the time on wafer circuit screening occurred. NGST further warrants that
(iii) no less than [ * ] of the total number of Products shipped from each wafer meet the
requirements of [ * ] attached hereto as Exhibit D. For each Product that fails to satisfy the
requirements of (i), (ii) or (iii) above, NGST shall, at its option, either issue a credit to
Buyer, repair, or replace such Product with a similar Product, in all cases free from defect
without charge and with reasonable promptness. NGST’s obligation to credit to Buyer, repair, or
replace defective Products with a similar Product shall not apply to defective Products subject to
(iii) above unless less than [ * ] of the total number of Products shipped from each wafer satisfy
completely the requirements stated in Exhibit D, and, in the event of such failure, NGST’s sole
obligation to credit to Buyer, repair or replace Products shall be limited to those number of
Products necessary to achieve the [ * ] requirement. For purposes of clarity, if NGST ships to
Buyer [ * ] Products from a wafer, and [ * ] Products fail to satisfy the requirements of Exhibit
D, NGST will be obligated to credit to Buyer, repair or replace one [ * ] Product; if NGST ships
to Buyer [ * ] Products from a wafer, and [ * ] Products fail to satisfy the requirements of
Exhibit D, NGST will have no obligation to credit to Buyer, repair or replace any Products
hereunder. Buyer must promptly give NGST notice of all warranty claims hereunder and affirm that
the defect is of a type specified in (i) , (ii), or (iii) above; Buyer must obtain NGST’s prior
written authorization via NGST’s issuance of an RMA number before returning defective Products to
NGST. For each Product, NGST shall make all repairs or replacements at NGST’s Plant. NGST
shall return replacements for defective Products to Buyer at the place where the defective Product
was located when shipped to NGST and shall prepay at its sole expense all freight and insurance of
such return shipment. Under no circumstances will NGST compensate Buyer for post-pay field return
costs incurred by Buyer in returning defective Products to NGST. All defective Products replaced
by NGST as herein provided shall become the property of NGST when the replacement occurs, unless
held for analysis by Buyer with NGST’s prior written consent. All Products repaired or replaced by
NGST shall remain under





5



 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.













 




warranty for the remainder of the warranty period on the Products. The
warranty specified in this Section 8.1 does not extend (i) to Products which fail or are damaged
due to use or storage by Buyer in a manner or environment not conforming to NGST’s published
instructions and specifications in effect at the time such Products are delivered to Buyer; or,
(ii) to Products that are modified by Buyer or any person other than NGST. Buyer and NGST agree
that circuit screening in accordance with the applicable test D-document is the sole method of
determining the presence or absence of a defect affecting electrical performance in individual
Products on wafer as warranted in (ii) above.




     (b) NGST warrants that title to all Products delivered to Buyer hereunder will be free and
clear of all liens, encumbrances, security interests and other restrictions.



     8.2 Exclusion: OTHER THAN THE WARRANTY FOR THE PRODUCTS SET FORTH IN SECTION 8.1
HEREOF, NGST DOES NOT MAKE ANY WARRANTY, GUARANTEE OR MAKE ANY REPRESENTATIONS, EITHER EXPRESS OR
IMPLIED, INCLUDING MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, WHETHER ARISING BY LAW,
CUSTOM, CONDUCT OR USAGE OF TRADE, AND THE RIGHTS AND REMEDIES PROVIDED HEREIN ARE EXCLUSIVE AND IN
LIEU OF ANY OTHER RIGHT OR REMEDIES. PRODUCTS USED IN APPLICATIONS FOR WHICH THEY ARE NOT INTENDED
AS SET FORTH IN SECTION 2.2 HEREOF, ARE SOLD WITHOUT WARRANTY AND ON AN “AS – IS,” “WITH ALL
FAULTS” BASIS.



Article 9

Delays




     9.1 Force Majeure: No failure or omission on the part of either party to carry out or
observe any of the terms or provisions of this Agreement or any Order hereunder (except the payment
of money) shall be deemed a breach of this Agreement or such Order if same shall arise or result
from force majeure or from any cause reasonably beyond the control of Buyer or
NGST, as the case may be, including but without limitation, acts of God, acts (including delay or
failure to act) of any governmental authority (de jure or de
facto), war (declared or undeclared) riot, revolution, fires, labor disputes, sabotage or
epidemics. Should such delay occur, the date or dates of performance by the affected party shall
be extended for a period equal to the extent of the delay expected as a result of the force
majeure event. The affected party shall give the other party written notice of such delay
within five (5) working days after identification of the delay.



     9.2 NGST Delays: If at any time NGST discovers that is unable (whether for reasons
set out in Section 8.1 or otherwise) to deliver any Products to Buyer on the scheduled delivery
date, NGST shall give Buyer written notice within [ * ] days of such discovery, which notice shall
specify the delivery date on which NGST shall be able to deliver such Products to Buyer. If the
delivery date proposed by NGST is more than [ * ] days after the scheduled delivery date, Buyer
shall have the right, without liability, to cancel (in whole or in part) its Order for such
Products, by giving NGST notice of cancellation within [ * ] days of receipt of NGST’s notification
of delay. To the extent that there are NGST delays as described herein or NGST resulting delays as
described herein, there shall be made equitable adjustments to the purchasing and pricing
provisions hereof.



Article 10

Transfers and Assignments




     10.1 Transfer: Neither party shall, without the consent in writing of the other
party, which shall not be unreasonably withheld, assign or transfer this Agreement or the benefits
or obligations thereof or any part thereof to any other person other than a subsidiary wholly owned
by such party; provided that this shall not affect any right of either party to assign, either
absolutely or by way of charge, any moneys due or to become due to it or which may become payable
to it under this Agreement; further provided, that no consent



6



 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.













 




shall be necessary to the extent that
either party is acquired by merger or other acquisition or either party sells all or substantially
all of its assets relating to this Agreement to a third party.




     10.2 Release of Obligations: No assignment or transfer of any right or duty hereunder
by either party shall constitute a novation or otherwise release or relieve such party of its
obligations hereunder.



Article 11

Default




     11.1 Event of Default: An Event of Default on the part of either party shall exist
under this Agreement if:



          (a) Such party fails to pay the other party any amount required to be paid hereunder when due
and payable; or




          (b) Such party fails to perform its purchase or supply obligations (as the case may be
hereunder) specified in Section 2.1 during the Term hereof, or otherwise fails to perform any other
material obligation required to be performed by it under any provision of this Agreement within [ *
] days after the time specified or within [ * ] days after written notice from the other party that
such performance has become due; provided, however, Buyer shall have no right to terminate this
Agreement for NGST’s default so long as corrective action is being diligently pursued by NGST in a
manner that reasonably demonstrates that NGST’s obligations hereunder shall be completed in
sufficient time to allow Buyer to reasonably meet its end-use requirements for Products without
incurring additional costs or penalties (as reasonably determined by Buyer), and NGST discloses to
Buyer in writing such corrective action(s).




     11.2 Remedies Available for Default: Subject to other provisions hereof which
expressly limit the remedies available hereunder, if an Event of Default as defined in Section 10.1
exists on the part of either party, then the other party may terminate this Agreement upon giving
written notice of termination and pursue any other remedies available at law or in equity.



Article 12

Limitation of Liability; Damages




     12.1 Limitation of Liability: NGST’s liability to Buyer on any claim of any kind
(excluding bodily injury or death), whether based on contract, warranty, tort (including
negligence), strict liability or otherwise, for any loss or damage arising out of, connected with,
or resulting from this Agreement or any Order, or from the performance or breach thereof, or from
all Products covered by or furnished under this Agreement or any Order hereunder, shall in no case
exceed the sum of [ * ] for a single claim, or [ * ] in the aggregate for all claims arising
during the Term. Buyer’s liability to NGST on any claim of any kind (excluding bodily injury or
death), whether based on contract, warranty, tort (including negligence), strict liability or
otherwise, for any loss or damage arising out of, connected with, or resulting from this Agreement
or any Order, or from the performance or breach thereof, or from all Products covered by or
furnished under this Agreement or any Order hereunder, shall in no case exceed the price of the
specific individual Product that gives rise to the claim.



     12.2 Damages: In no event shall either party be liable for any special, indirect,
incidental or consequential damages, however caused, whether by such party’s sole or concurrent
negligence or otherwise, including but not limited to costs and expenses incurred in connection
with labor, overhead, transportation, installation, or removal of Products or substitute facilities
or supply sources.




7


 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.













 





Article 13

Notices




     All notices, requests, consents, and other communications required or permitted to be given
under this Agreement must be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified; (ii) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient; (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (iv) one (1) day after deposit with a
nationally recognized overnight courier, special next day delivery, with written verification of
receipt, addressed as follows:



	 	 	 	 	 	 	 
	 	 	If to NGST:	 	Northrop Grumman Space Technology
	 	 	 	 	One Space Park Drive, D1-1024
	 	 	 	 	Redondo Beach, California 90278
	 	 	 	 	Attention: Kathleen E. Hogan, Contracts
	 

	 	 	 	Phone:
	 	(310) 813-1168
	 

	 	 	 	FAX:
	 	(310) 812-7011
	 	 	 	 	kathleen.hogan@ngc.com






	 	 	 	 	 	 	 
	 	 	If to Buyer:	 	Endwave Corporation
	 	 	 	 	776 Palomar Avenue
	 	 	 	 	Sunnyvale, CA 94085
	 

	 	 	 	Attention:
	 	James R. Crossen
	 

	 	 	 	Phone:
	 	(408) 522-3177
	 

	 	 	 	Fax:
	 	(408) 522-3181
	 	 	 	 	jim.crossen@endwave.com






Article 14

Contract Change Procedure




     14.1 Changes: Any changes to this Agreement after the Effective Date which relate to:
(i) the deletion of Products; (ii) adding additional Products; (iii) changing or modifying
Products; or (iv) making other changes which do not materially alter the scope of this Agreement
shall be made in accordance with the procedures set forth in this Article 14.



     14.2 Contract Changes: Every [ * ] during the Term hereof, the parties shall revisit
the maximum quantity commitments and pricing of the Products. Based on changes in Buyer’s
contracts and production forecasts, the parties may, but shall not be obligated to, negotiate
changes to the production commitments.



     14.3 Contract Change Notice: If the parties mutually agree to implement a change
request, a standard form Contract Change Notice (“CCN”) shall describe the change. Execution of a
CCN by both parties shall constitute a modification hereof and shall be binding on both parties
hereto.



     14.4 Exception: Substitutions relative to Products which are purchased items not
manufactured by NGST may be made by NGST without the consent of Buyer if such substitutes are of
like quality and are available at the same or lower cost to Buyer.



8



 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.













 





Article 15

Intellectual Property




     15.1 Proprietary Information: For the purpose of this Agreement:



          (a) “Proprietary Information” shall mean all drawings, documents, ideas, know-how and other
information supplied by one party to another (whether disclosed orally, or in documentary form, by
demonstration or otherwise) for the purpose of achieving the objectives of this Agreement.




          (b) “Proper Use” shall mean use of the Proprietary Information solely by the recipient for the
objectives of this Agreement.




     15.2 Nondisclosure: All Proprietary Information furnished shall remain the property
of the disclosing party and shall be treated by the recipient in strict confidence, shall not be
used except for Proper Use, shall be disclosed by the recipient only to persons within the
recipient’s company (including companies directly or indirectly more than fifty percent (50%) owned
or controlled by the recipient) who are directly concerned in the Proper Use, and shall not be
disclosed to consultants or by the recipient to any other party without the disclosing party’s
prior written consent, except for Proprietary Information that was:



          (a) In the public domain at the time it was disclosed; or




          (b) Known to the recipient without restriction at the time of receipt; or




          (c) Published or becomes available to others without restriction through no act or failure to
act on the part of the recipient; or




          (d) Known to the recipient from a source other than the disclosing party without breach of
this Agreement by the recipient; or




          (e) Subsequently designated by the disclosing party in writing as no longer proprietary; or




          (f) Independently developed by the recipient without reference to the Proprietary Information;
or




          (h) Disclosed after [ * ] years from the date of delivery by the disclosing party to the
recipient, which [ * ] year period shall survive the termination of this Agreement; provided,
however, that if Buyer, as a result of an agreement with a customer, requires a longer
nondisclosure period, the parties shall agree to such longer nondisclosure periods with regard to
Proprietary Information applicable to such customer’s contract.




     If any portion of Proprietary Information falls within any one of these exceptions, the
remainder shall continue to be subject to the foregoing prohibitions and restrictions. The
recipient of Proprietary Information shall inform its employees of the confidential nature of the
Proprietary Information and shall prohibit them from making copies of any of it except where such
copies are necessary for the purposes of Proper Use, unless agreed upon by the disclosing party.
The recipient of Proprietary Information shall exercise the same degree of care in protecting such
Proprietary Information as it takes to preserve and safeguard its own proprietary information,
and in no event less than a degree of care a reasonable recipient would use to protect its own
proprietary information.



     15.3 Marking: Proprietary Information made available in written form by one party to
the other party shall be marked with the legend:



9



 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.













 





	 	 	 
	 	 	“ENDWAVE PROPRIETARY INFORMATION”
	or -
	 	“NGST PROPRIETARY INFORMATION”





as the case may be, or an equivalent conspicuous legend. No sheet or page of any written material
shall be so labeled which is not, in good faith, believed by the disclosing party to contain
Proprietary Information. A recipient of Proprietary Information hereunder shall have no obligation
with respect to any portion of any written material which is not so labeled or any information
received orally unless it is identified as proprietary and a written summary of such oral
communication, specifically identifying the items of Proprietary Information, is furnished to the
recipient within thirty (30) days of such disclosure.




          The individuals identified below are the only persons authorized to receive Proprietary
Information on behalf of the parties:



For Endwave:    [ * ]

For NGST:        [ * ]




          By written notice to the other parties, these representatives may be replaced by another person
from the same party.




     15.4 Compensation: The parties shall not be obligated to compensate each other for
the transfer of any Proprietary Information under this Agreement and agree that no warranties of
any kind are given with respect to such Proprietary Information or any use thereof. No license is
hereby granted under any patent, trademark or copyrights with respect to any Proprietary
Information.



     15.5 Survival: The obligations of the parties concerning confidentiality set forth in
this Article 14 shall survive termination or completion of this Agreement.



     15.6 Ownership of Masksets: NGST shall retain ownership and sole possession of any
and all glass plates utilized for photolithographic semiconductor processing of MMIC (as defined in
Section 15.7 below) designs (“Masksets”) developed or procured by NGST under this Agreement.



     15.7 Ownership of MIMIC Designs: NGST shall retain sole ownership rights to its
solely developed designs for monolithic microwave integrated circuit (“MMIC”) designs. NGST shall
also retain sole ownership rights to individual circuit elements, design libraries, design rule
manuals, and MIMIC fabrication processes for all MMIC designs. Buyer shall retain sole ownership
rights to its solely developed designs for MMICs, including all associated documentation. If any
MMIC design work or maskset fabrication was or will be performed by NGST on behalf of Buyer under a
separate design and development agreement, the terms of such separate agreement shall determine the
parties’ respective rights to such MMIC designs.



10



 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.













 





Article 16

Indemnification




     16.1 Indemnification by NGST: In the event any Products to be furnished under this
Agreement are not to be made in accordance with drawings, samples, or manufacturing specifications
designated by Buyer, but rather are the design of NGST, NGST agrees that it shall, at its own
expense and at its option, defend or settle any claim, suit, or proceeding brought against Buyer,
based on an allegation that the Products furnished under this Agreement constitute a direct or a
contributory infringement of any claim of any patent, mask work, copyright or any other
intellectual property right. This obligation shall be effective only if Buyer shall have made all
payments then due and if NGST is notified of said allegation promptly in writing and given
authority, information, and assistance for the settlement or defense of said claim, suit, or
proceedings. NGST shall pay all damages and costs assessed in such suit or proceedings. In the
event of a final adjudication by a court of competent jurisdiction that its Products or any part
thereof infringes or violates any third party intellectual property right or if the use or sale
thereof is enjoined, or if the provisions of any negotiated settlement agreement prohibit the use
of the Products, NGST shall at its sole option and its own expense, either:



     (a) Procure for Buyer the right to continue using the Product; or



     (b) Replace the Products with substantially equivalent non-infringing Products; or



     (c) Modify the Products so they become non-infringing but substantially equivalent; or



     (d) To the extent that the options set forth in clauses (a), (b) and (c) above are not
reasonably available, terminate the Buyer’s right to use the Product and return to the Buyer and
return to the Buyer the price originally paid by Buyer to NGST for the Product.



     The foregoing indemnity does not apply to the following:




1. Infringement by a combination of Products furnished under this Agreement with other
products not furnished hereunder unless NGST is a contributory infringer;




2. Infringement resulting from changes or modifications made to or from the Products by the
Buyer; and




3. Any settlements of a claim, suit, or proceeding made without NGST’s written consent.



     The foregoing states the entire liability of NGST with respect to infringement or violation of
third party intellectual property rights in connection with Products furnished under this
Agreement.



          16.2 Indemnification by Buyer: In the event any Products to be furnished under this
Agreement are to be made in accordance with drawings, samples, or manufacturing specifications
designated by Buyer and are not the design of NGST, Buyer agrees that it shall, at its own expense
and at its option, defend or settle any claim, suit, or proceeding brought against NGST, based on
an allegation that the Products furnished under this Agreement constitute a direct or a
contributory infringement of any claim of any patent, mask work, copyright or any other
intellectual property right.




Article 17

Miscellaneous




     17.1 Headings: The headings and titles to the articles, sections, and paragraphs of
this Agreement are inserted for convenience only and shall not be deemed a part hereof or affect
the construction or interpretation of any provision hereof.



     17.2 Remedies: Unless otherwise expressly provided herein, the rights and remedies
hereunder are in addition to, and not in limitation of, other rights and remedies under the
Agreement, at law or in equity, and exercise of one right or remedy shall not be deemed a waiver of
any other right or remedy.



11



 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.













 





     17.3 Modification and Waiver: No cancellation, modification, amendment, deletion,
addition, or other change in the Agreement or any provision hereof, or waiver of any right or
remedy herein provided, shall be effective for any purpose unless specifically set forth in a
writing signed by the party to be bound thereby. No waiver of any right or remedy in respect of any
occurrence or event on one occasion shall be deemed a waiver of such right or remedy in respect of
such occurrence or event on any other occasion.



     17.4 Entire Agreement: This Agreement supersedes all other agreements, oral or
written, heretofore made with respect to the subject hereof, and the transactions contemplated
hereby and contains the entire agreement of the parties.



     17.5 Severability: Any provision hereof prohibited by or unlawful or unenforceable
under any applicable law of any jurisdiction shall as to such jurisdiction be ineffective without
affecting any other provision of the Agreement. To the full extent, however, that the provisions of
such applicable law may be waived, they are hereby waived, to the end that the Agreement be deemed
to be a valid and binding agreement enforceable in accordance with its terms.



     17.6 Controlling Law: All questions concerning the validity and operation of this
Agreement and the performance of the obligations imposed upon the parties hereunder shall be
governed by the laws of the State of California applicable to contracts entered into and wholly to
be performed in such jurisdiction.



     17.7 Successors and Assigns: The provisions of this Agreement shall be binding upon
and for the benefit of NGST and Buyer and their respective successors and assigns. This provision
shall not be deemed to expand or otherwise affect the limitation on assignment and transfers set
forth in Article 10 and no party is intended to or shall have any right or interest under this
Agreement, except, as provided in Article 10.



     17.8 Counterparts: This Agreement has been executed in several counterparts, each of
which shall be deemed to be an original, and all such counterparts together shall constitute but
one and the same instrument.



     17.9 Language: If a translation of this Agreement is required or otherwise made, the
English version shall be the official version and shall control in the event of differences. All
communications relating to this Agreement shall be in English.



     17.10 Negotiated Terms: All terms of this Agreement were negotiated between the
parties at arm’s length. The parties agree that in the event a dispute arises in connection with
this Agreement, the terms contained in this Agreement shall be given their plain meaning, and that
no term shall be construed in favor of one party over the other by virtue of one party having
drafted a term in this Agreement.



     17.11 Disputes: All disputes between the parties in connection with or arising out of
the existence, validity, construction, performance and termination of this Agreement (or any terms
hereof), which the parties are unable to resolve amicably shall be finally settled by binding
arbitration, preceded by pre-arbitration mediation if the parties so mutually agree at the time.
The arbitration or any pre-arbitration mediation shall be held in Redondo Beach, California, or
such other venue as the parties may agree, and administered by the American Arbitration
Association under its Commercial Mediation Procedures, or if failing settlement, under its
Arbitration Procedures for Large, Complex Commercial Disputes by three arbitrators appointed in
accordance with the rules. Subject to Article 12, the arbitrators shall have authority to provide
any relief available in law or
equity. Judgment on the arbitral award may be entered in any court or tribunal having jurisdiction
thereof. Each party shall be responsible for its own attorney fees and costs. Each party shall be
responsible for its own attorney fees and court costs.




12


 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.














 





(signature page follows)




     IN WITNESS WHEREOF, the parties have executed this Agreement in English as of the Effective
Date..



	 	 	 	 	 	 	 
	 	 	ENDWAVE CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James Crossen
 

	 	 
	 
	 	 	 	 	 	 
	 	 	NORTHROP GRUMMAN SPACE &
MISSION SYSTEMS CORP.

Northrop Grumman Space Technology	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Miriam Varend	 	 
	 

	 	 	 	 	 	 






13



 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.














 





EXHIBIT A

PRODUCTS AND PRICING




1. Products




[ * ]



2. Optional Products. Buyer may elect to purchase additional Products in wafer form at prices and
cycle times to be determined by NGST and agreed to by the parties at the time Buyer exercises such
option.



3. Engineering Support. Engineering support for failure analysis, device troubleshooting, test or
component characterization, mask layouts, and related support, shall be billed per NGST’s hourly
rates then in effect. Material shall be billed as incurred.



14



 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.













 








EXHIBIT B

LIST OF DELIVERABLES, QUANTITY COMMITMENTS,

DELIVERY SCHEDULE AND BUYER SITE




1. Deliverables



During the Term, NGST will supply Buyer with MMICs from either [ * ] Wafers, to be determined by
the parties.



NGST will ensure that all Products delivered to Buyer come from wafers that meet NGST’s PCM
specifications and have passed NGST’s commercial wafer-level sample visual screen criteria.



NGST will perform RF test on the wafers, and will dice the wafers and pick the die into waffle
packs. Die pick and waffle pack may be performed by qualified vendors on behalf of NGST.



NGST will deliver the Products in waffle packs.



Buyer will be responsible for performing visual inspection of the Products upon receipt, and will
bear all costs and yield losses for such tasks.



To minimize re-traying work for NGST, Buyer agrees that NGST may ship Products in either multiples
that coincide with particular full tray quantities for each Product, or quantities rounded up or
down to reasonably meet both Buyer’s forecast and use any remaining partially filled tray.




2. Quantity Commitments



NGST’s maximum quarterly MMIC quantity during the Term shall not exceed [ * ] MMICs per quarter.




3. Delivery Schedule. Not to exceed one shipment per week.




4. Buyer Sites




	 	 	 	 	 	 	 
	Billing and Notices:

	 	Delivery of Products
	 	Engineering/Procurement:
	 	 
	Endwave Corporation

	 	Endwave Corporation
	 	Endwave Corporation	 	 
	776 Palomar Avenue

Sunnyvale CA 94085

	 	6425 Capitol Avenue, Bldg 2

Diamond Springs CA 95619
	 	776 Palomar Avenue

Sunnyvale CA 94085	 	 
	Att: [ * ]

	 	Att: [ * ]
	 	Att: [ * ] (unless otherwise specified in the Order)	 	 
	Phone: [ * ]

	 	Phone: [ * ]
	 	Phone: [ * ]	 	 





15



 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.














 





EXHIBIT C

BUFFER INVENTORY



Quantities of Products in the Buffer Inventory described in Article 5 of the Agreement are as
follows:




[ * ]



Replenishment Rate: When Buyer issues a purchase order to pull Products from the Buffer Inventory,
nominal refresh time (fab cycle) is [ * ] weeks.



Pull Rate is within [ * ] days





16



 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.














 








EXHIBIT D

[ * ]




[ * ]





17


 




			
	[ * ]  = Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.