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 18th 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


 


3

















 


the first (1st) 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)  (No)]


 


No
= 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 (1st)
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 (4th) quarter of the Term of this Supply Agreement.  If the credit applied brings the fourth (4th)
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.


 


4

















 


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


 


5

















 


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 entire purchase price for such non-conforming PAM Wafer.  Prior to returning PAM Wafers for
replacement or refund, EiC shall obtain from WJCI a RMA number, which shall be
indicated on all packaging, labeling, and other communications relating to the
return.  If WJCI requires that the PAM
Wafers be evaluated prior to issuing an RMA number, WJCI agrees to evaluate
such PAM Wafers returned for failure analysis and issue an RMA number within
forty-eight (48) hours of receipt if the PAM Wafers are found to be
defective.  Once WJCI confirms the
nonconformity or the defect, then WJCI shall accept return of such PAM Wafers
with no further liability of EiC to WJCI for such PAM Wafers and, if requested
by EiC, ship to EiC replacement, conforming PAM Wafers or a refund for such
non-conforming PAM Wafers as promptly as possible.


 


6.3          PAM
Wafers not in good operating condition due to one or more of the following
causes are not covered by the warranty provided in Section 6.1(i) or (iv) and
will be replaced or refunded only upon the payment of additional charges: an
alteration or modification not made or approved by WJCI; EiC’s or any third
party’s negligence or intentional acts; misuse or abuse, including the failure
to operate PAM Wafers in accordance with their Specifications and improper
handling, installation, testing, or use; fire originating outside of the PAM
Wafers; and acts of God or other types of catastrophic damage.


 


6.4          THE REPRESENTATION
AND WARRANTY PROVIDED IN SECTION 6.1 IS THE SOLE AND EXCLUSIVE REPRESENTATION
AND WARRANTY MADE BY WJCI TO EIC WITH RESPECT TO THE PAM WAFERS.  WJCI DISCLAIMS ANY AND ALL OTHER
REPRESENTATIONS, WARRANTIES, AND CONDITIONS (STATUTORY, EXPRESS, OR IMPLIED,
ORAL OR WRITTEN), WITH RESPECT TO THE PAM WAFERS, INCLUDING, BUT NOT LIMITED
TO, ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY, ACCURACY,
AND FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE (WHETHER OR NOT EIC
KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF
ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR
USAGE IN THE TRADE, OR BY COURSE OF DEALING.


 


6.5          WJCI expressly
disclaims any representation, warranty, or condition to any person other than
EiC with respect to the PAM Wafers, including but not limited to, EiC’s
customers.  EiC shall indemnify, defend
and hold WJCI harmless from and against any claim, suit, action, or proceeding
(each a “Claim”) alleging, arising from, or related to a breach of any
representation or warranty made by EiC to its customer regarding PAM Wafers to
the extent such


 


6

















 


representation or warranty is inconsistent with or in excess of the
limited representations and warranties made by WJCI in this Supply Agreement.


 


ARTICLE VII-LIMITATION OF LIABILITY


 


7.1          IN NO EVENT SHALL
WJCI BE LIABLE TO EIC UNDER OR IN CONNECTION WITH THIS SUPPLY AGREEMENT FOR ANY
INCIDENTAL, CONSEQUENTIAL (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, BUSINESS,
OR OTHER PECUNIARY LOSS), INDIRECT, PUNITIVE, OR SPECIAL DAMAGES ARISING OUT OF
OR IN ANY MANNER INCIDENT, RELATING, PERTAINING, OR ATTRIBUTABLE TO PAM WAFERS,
EVEN IF WJCI HAS BEEN ADVISED OR IS OR SHOULD BE AWARE OF THE POSSIBILITY OF
SUCH DAMAGES.


 


VIII-INDEMNIFICATION


 


8.1          EiC shall indemnify,
defend, and hold WJCI harmless from and against any claim, demand, suit,
action, or proceeding (each a “Claim”) alleging that the PAM Wafers sold to
EiC, to the extent manufactured using EiC’s Technology, infringe a third
party’s United States patent or copyright or misappropriate a third party’s
trade secrets, provided that WJCI (i) promptly notifies EiC in writing of the
Claim, (ii) provides EiC with all requested information that it has concerning
the Claim, (iii) reasonably cooperates with and assists EiC in defending the
Claim, and (iv) provides EiC with sole control of the defense or settlement of
the Claim.


 


8.2          WJCI shall
indemnify, defend, and hold harmless EiC from and against any Claim that is
asserted against EiC as a result of bodily injury or death to any person, or
damage to any property, to the extent that such injury, death, or damage is
caused by the willful or negligent acts or omissions of WJCI in connection with
the manufacture and sale of PAM Wafers or is based in products strict
liability, provided that EiC (i) promptly notifies WJCI in writing of the
Claim, (ii) provides WJCI with all requested information that it has concerning
the Claim, (iii) reasonably cooperates with and assists WJCI in defending the
Claim, and (iv) provides WJCI with sole control of the defense or settlement of
the Claim.


 


8.3          Each party shall
indemnify, defend, and hold the other harmless from and against any and all
cost, loss, damage, and liability of whatsoever kind or nature arising out of
or resulting from its own breach of any of its representations, warranties,
covenants, obligations, agreements, or duties under this Supply Agreement.


 


8.4          EiC shall indemnify,
defend, and hold WJCI harmless from and against any Claim alleging that the use
of the EiC Trademarks on the PAM Wafers infringe a third party’s trademark,
service mark, or trade name rights, provided that WJCI (i) promptly notifies
EiC in writing of the Claim, (ii) provides EiC with all requested information
that it has concerning the Claim, (iii) reasonably cooperates with and assists
EiC in defending the Claim, and (iv) provides EiC with sole control of the
defense or settlement of the Claim.


 


8.5          If a final
injunction is issued against the marketing, sale, or use by a party or its
customers of PAM Wafers in any suit, action, or proceeding for which a party
(the “Indemnitor”) must indemnify the other party (the “Indemnitee”) under this
Article VIII herein, the Indemnitor may, at its option and expense and without
being considered in default in the performance of its obligations under this
Supply Agreement, and as Indemnitee’s sole remedy against Indemnitor for


 


7

















 


such Claim, either (i) procure for Indemnitee and its customers the
right to continue marketing, selling, and using the PAM Wafers, (ii) modify
such PAM Wafers so that they become non-infringing without any reduction in
quality or capability, or (iii) replace such PAM Wafers with non-infringing products
of substantially identical quality and capabilities.


 


IX-CONFIDENTIAL INFORMATION


 


9.1          The parties
acknowledge that they will exchange certain confidential information pursuant
to this Supply Agreement, including, but not limited to, product specifications,
product and pricing information, customer information, written and unwritten
marketing plans, techniques, methods, and data, sales and transaction data, and
other similar materials, and that they consider the terms of this Supply
Agreement to also be strictly confidential (collectively, “Confidential Information”).


 


9.2          Either
party receiving Confidential Information (a “Receiving Party”) from the
other party (a “Conveying Party”) shall hold all Confidential Information of
the Conveying Party in the strictest confidence and shall protect all
Confidential Information of the Conveying Party with at least the same degree
of care that the Receiving Party exercises with respect to its own proprietary
information.  Without the prior written
consent of the Conveying Party, the Receiving Party shall not disclose,
divulge, or disseminate any such Confidential Information (specifically
including the terms of this Supply Agreement) to any other person or entity,
nor shall it use such Confidential Information in any way other than in
furtherance of the transactions contemplated by this Supply Agreement, except
to the extent such Confidential Information (i) is or becomes within the public
domain through no act of the Receiving Party in breach of this Supply Agreement,
(ii) except with respect to the terms of this Supply Agreement itself, was
lawfully in the possession of the Receiving Party without any restriction on
use or disclosure prior to its disclosure hereunder, (iii) is lawfully received
from another source subsequent to the date of this Supply Agreement without any
restriction on use or disclosure, or (iv) is required to be disclosed by order
of any court of competent jurisdiction or other governmental authority
(provided in such latter case, however, that the Receiving Party shall timely
inform the Conveying Party of all such legal or governmental proceedings so
that the Conveying Party may attempt by appropriate legal means to limit such
disclosure, and the Receiving Party shall further use its best efforts to limit
the disclosure and maintain confidentiality to the maximum extent possible).


 


9.3          Subject
to the other provisions of this Supply Agreement, press releases, advertising,
promotional materials, and other publicity materials relating to the relationship
of the parties or transactions contemplated by this Supply Agreement shall be
released only after review and with the consent of both parties, which consent
shall not be unreasonably withheld or delayed.


 


9.4          Each
party acknowledges that in the event of its breach, or threatened breach, of
this Article, the Conveying Party’s remedy at law might be inadequate, and that
the damages flowing from such breach might not be readily susceptible of being
measured in monetary terms. 
Accordingly, in the event of either party’s breach, or threatened
breach, of this Article, the Conveying Party, in addition to any monetary
damages, shall be entitled to seek immediate injunctive relief restraining any
threatened or further breach.


 


9.5          WJCI
shall not by virtue of this Supply Agreement or the transactions contemplated
by this Supply Agreement be deemed to have conveyed any right, title, or
interest in or to any intellectual


 


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property rights, including, but not limited to, patent rights,
copyrights, trade secret rights, or other similar property rights, incorporated
into or used in the manufacture of the PAM Wafers.  All such rights are expressly reserved by WJCI.  WJCI will not manufacture the PAM Wafers for
or sell the PAM Wafers to any party other than EiC.


 


ARTICLE X-TERM AND TERMINATION


 


10.1        The term of this
Supply Agreement shall commence on the Closing Date and shall continue for a
period of one (1) year, unless earlier terminated as provided in this Supply Agreement.  Thereafter, this Supply Agreement shall be
extended for an additional time period only by mutual agreement.


 


10.2        Except as otherwise
provided in this Supply Agreement, if either party shall (i) default in the
payment of any sums to be paid under this Supply Agreement or pursuant to any
Purchase Order when due and such default continues for more than thirty (30)
days subsequent to the due date of such payment, (ii) default in the
observation or performance of any other covenant or agreement contained in this
Supply Agreement and such default continues for more than thirty (30) days
subsequent to receipt of the other party’s notice (unless such default is not
such that it can be cured with the exercise of reasonable efforts within such
thirty (30) day period and the defaulting party commences to cure such default
within such thirty (30) day period and thereafter continues to use its diligent
efforts to complete such cure); or (iii) becomes insolvent or seeks protection
under any bankruptcy, receivership, trust deed, creditors arrangement,
composition or comparable proceeding, or if any such proceeding is instituted
against the other party and not dismissed within ninety (90) days, then the
non-defaulting party may, in addition to any of its other remedies and in its
sole and absolute discretion, terminate this Supply Agreement effective
immediately upon providing written notice of such termination to the defaulting
party.  Notice of default shall specify
(A) the nature of such default, (B) the particular numbered article setting
forth the covenant or agreement purportedly not observed or performed, and (C)
the specific act or acts which the non-defaulting party contends would, if
undertaken, correct such default.


 


10.3        All financial
obligations that had accrued but were unpaid as of the effective date of
expiration or termination shall survive expiration or termination, however, all
financial obligations that would have accrued after the effective date of
termination, and all Purchase Orders and forecasts outstanding as of the
effective date of termination, shall terminate upon termination of this Supply
Agreement.


 


10.4        Upon expiration or
early termination of this Supply Agreement, each party shall promptly return to
the other all of the other’s Confidential Information in tangible form in its
possession, custody, or control.


 


10.5        The terms of Articles
VI, VII, VIII, IX, X and XI shall survive the termination of this Supply
Agreement.


 


ARTICLE XI-MISCELLANEOUS


 


11.1        Force Majeure.  Except for the payment of any amounts due
under this Supply Agreement or any Purchase Orders, neither party shall be
considered in default in the performance of its obligations under this Supply
Agreement if prevented or delayed from such performance by any cause, existing
or future, which is beyond the reasonable control and without the fault or
negligence


 


9

















 


of that party, including, but not limited to, insurrections, riots,
wars and warlike operations, explosions, governmental or military acts,
epidemics, failure of contractors or subcontractors to perform (provided WJCI
makes commercially reasonable efforts to obtain other sources, contractors, or
subcontractors), strikes, fires, floods, earthquakes, severe weather, import quotas,
punitive duties, accidents, acts of any public enemy, embargoes, blockades, or
inability to obtain required materials, qualified labor, or
transportation.  The parties shall use
their best efforts to avoid, remove, or cure any such event of force majeure.  Any party temporarily excused from its
performance under this Supply Agreement by any such circumstances shall resume
performance with utmost dispatch when such event of force majeure is avoided,
removed, or cured.  Any party claiming
an event of force majeure as an excuse for delay in performance shall give
prompt notice in writing thereof to the other party.  Notwithstanding the foregoing, if any event of force majeure
continues for more than ninety (90) days, either party may terminate this
Supply Agreement with no further liability effective upon providing written
notice to the other party.


 


11.2        Relationship
of the Parties.  The relationship between the parties
pursuant to this Supply Agreement shall be solely that of vendor/vendee
and independent contractors.  No
partnership, joint venture, principal/agent, franchisor/franchisee,
employer/employee, or other representative relationship shall arise between the
parties pursuant to this Supply Agreement. 
Neither party shall have any authority whatsoever, whether express or
implied, to assume, create, or incur any obligation or liability whatsoever on
behalf or in the name of the other, or to bind the other in any manner
whatsoever.


 


11.3        Export
Control.  EiC will not without the prior
approval, if required, of all applicable governmental entities, including, but
not limited to, the Bureau of Industry and Security of the United States
Department of Commerce, (i) export, directly or indirectly, the PAM Wafers to
any country outside the United States, (ii) transfer the PAM Wafers to any
third party for export, directly or indirectly, to any country outside the
United States, or (iii) disclose any technology incorporated into or used in
the manufacture of the PAM Wafers to any national or resident of any country
outside the United States.  EiC further
agrees that it will obtain, at its own cost and expense, any and all necessary
export licenses for any approved export, transfer, or disclosure.


 


11.4        Governing Law.  This
Supply Agreement shall be governed by and construed in accordance with the
state laws of the State of California and in all respects be interpreted,
enforced, and governed under the internal and domestic laws of such state,
without giving effect to the principles of conflicts of laws of such state.


 


11.5        Arbitration.  Any dispute arising out of or related to
this Supply Agreement which is not settled amicably shall be finally settled by
arbitration in San Jose, California in accordance with the applicable rules of
the American Arbitration Association governing commercial disputes.  Each of the parties shall appoint one
arbitrator and the two so nominated shall, in turn, choose a third
arbitrator.  If the arbitrators chosen
by the parties cannot agree on the choice of the third arbitrator within a
period of ten (10) business days after their nomination, then the third
arbitrator shall be appointed by the American Arbitration Association.  The arbitrators shall use their best efforts
to resolve any dispute within thirty (30) calendar days.  In any such arbitration arising out of or
relating to this Supply Agreement, the prevailing party shall be entitled to
recover all costs and reasonable attorneys’ fees incurred, including, without
limitation, costs and fees incurred in any investigations, mediations, trials,
bankruptcies, and appeals.


 


10

















 


The arbitration award shall be final and binding,
shall be the sole and exclusive remedy regarding any and all claims and
counterclaims presented, and may not be reviewed by or appealed to any court
except for the purpose of enforcement.  Judgment
upon the award rendered by the arbitrator may be entered in any court having jurisdiction
thereof.


 


All information relating to or disclosed by any party
in connection with the arbitration of any dispute relating to this Supply Agreement
shall be treated by the parties and the arbitration panel as confidential information
and no disclosure of such information shall be made by either party or the
arbitration panel without the prior written authorization of the party
furnishing such information.


 


11.6        Notices.  Whenever any notice, request,
consent, approval, or other communication is required or permitted under the
terms of this Supply Agreement, the same shall be sent by hand delivery,
nationally recognized overnight courier, or certified mail, first class postage
prepaid, return receipt requested, and if intended for WJCI shall be sent to:


 


WJ Communications, Inc.


401 River Oaks Parkway


San Jose, California 95134


Attn:  Thomas
Kritzer


Telephone: 
(408) 577-6287


Facsimile: 
(408) 577-6621


 


with a copy to:


 


W. Thompson Thorn, III, Esquire


Shumaker, Loop & Kendrick, LLP


101 East Kennedy Boulevard


Suite 2800


Tampa, Florida 33602


Telephone: 
(813) 229-7600


Facsimile: 
(813) 229-1660


 


and if intended for EiC shall be sent to:


 


EiC Semiconductor Corp.


45738 Northport Loop West


Fremont, CA 94538


Attn: Jerry Curtis


Telephone: (510) 979-8981


Facsimile: (510) 979-8901


 


or to such other
person and/or address of which either party may give notice to the other
pursuant to the terms of this Article. 
Notice pursuant to the terms of this Article shall be deemed given when
delivered and receipted for by the party receiving the notice if sent by hand
delivery, on the day after sending if sent by overnight courier, and on the
third day after mailing if sent by certified mail.


 


11

















 


11.7        Waiver.  No failure or delay on the part of either
party in exercising any right or remedy with respect to a breach of this Supply
Agreement by the other party shall operate as a waiver thereof or of any prior
or subsequent breach of this Supply Agreement by the breaching party, nor shall
the exercise of any such right or remedy preclude any other or future exercise
thereof or exercise of any other right or remedy in connection with this Supply
Agreement.  Any waiver must be in
writing and signed by the waiving party.


 


11.8        Severability.  If any Article, subsection, or provision or
the application of such section, subsection, or provision of this Supply
Agreement is held invalid, illegal, or unenforceable, the remainder of this
Supply Agreement and the obligation of such section, subsection, or provision
to persons or circumstances other than those to which it is held invalid,
illegal, or unenforceable shall not be affected by such invalidity, illegality,
or unenforceability.


 


11.9        Assignability.  Neither this Supply Agreement, nor any
rights or duties under this Supply Agreement, may be assigned or delegated,
directly or indirectly by operation of law or otherwise, by EiC or WJCI without
the prior written consent of the other, which consent shall not be unreasonably
withheld, delayed, or conditioned.


 


11.10      Construction.  This Supply Agreement shall not be construed
more strictly against any party regardless of who is responsible for its
drafting.  Unless the context of this
Supply Agreement otherwise clearly requires, references to the plural include
the singular and the singular include the plural.  Wherever the context so requires, the masculine shall refer to
the feminine, the feminine shall refer to the masculine, the masculine or the
feminine shall refer to the neuter, and the neuter shall refer to the masculine
or the feminine.  The captions of this
Supply Agreement are for convenience and ease of reference only and in no way
define, describe, extend, or limit the scope or intent of this Supply Agreement
or the intent of any of its provisions.


 


11.11      Counterparts.  This Supply Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original
instrument, but both of which taken together shall constitute one document.


 


11.12      Binding Effect.  This Supply Agreement shall be binding upon
and inure to the benefit of the parties and their respective legal
representatives, successors, and permitted assigns.


 


11.13      Entire Agreement.  This Supply Agreement constitutes the entire
agreement between the parties relating to the subject matter hereof.  All prior understandings and agreements
between the parties relating to the subject matter hereof are merged in this
Supply Agreement, which alone and completely expresses their understanding.
This Supply Agreement may not be altered, amended, or changed except by written
instrument signed on behalf of each of the parties.


 


[the remainder of this page has been intentionally left
blank]


 


12

















 


IN WITNESS WHEREOF,
the parties have caused this Supply Agreement to be executed by their duly
authorized representatives as of the Closing Date.


 


	
   

  	
  “EiC”

  
	
   

  	
   

  
	
   

  	
  EIC
  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jerry Curtis

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Jerry Curtis

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
  President and COO

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  June 18, 2004

  
	
   

  	
   

  
	
   

  	
  “WJCI”

  
	
   

  	
   

  
	
   

  	
  WJ
  COMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Michael Farese

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Michael Farese

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
  President and CEO

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  June 18, 2004

  
	
   

  	
   

  
								



 


 


SIGNATURE
PAGE FOR SUPPLY AGREEMENT


 


13

















 


EXHIBIT A

TERMINAL
FIELD OF USE


 


EiC’s “Terminal Field of Use” shall mean the
design, manufacture, and sale of integrated circuits, semiconductor modules or
electronic components solely for use in equipment used by End Users including
but not limited to wireless telephones and pagers, 802.11 a, b, and g
applications, Wi-Fi Max (802.16) applications, wireless enabled personal
digital assistants, and wireless enabled computers.  Further, EiC’s Terminal Field of Use also includes the design,
manufacture, and sale of integrated circuits, or electronic components for use
in equipment used by telecommunications service providers specifically for use
in 802.11 a, b, and g applications, Wi-Fi Max (802.16) applications, wireless
enabled personal digital assistants, and wireless enabled computers.


 


14

















 


EXHIBIT B

EIC SPECIFICATION CONTROL DRAWINGS


 


***


 


 












***                           CONFIDENTIAL MATERIAL
REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND SEPARATELY FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION.


 


15

















 


EXHIBIT C

SECTION 3.2 CREDIT


 


Example 1


 




	
   

  	
   

  	
  QUARTER 1

  	
   

  	
  QUARTER 2

  	
   

  	
  QUARTER 3

  	
   

  	
  QUARTER 4

  	
   

  
	
  No. of PAM
  Wafers Invoiced & Shipped

  	
   

  	
  300

  	
   

  	
  300

  	
   

  	
  250

  	
   

  	
  150

  	
   

  
	
  No. of PAM
  Wafers required to be Invoiced & Shipped

  	
   

  	
  250

  	
   

  	
  250

  	
   

  	
  250

  	
   

  	
  250

  	
   

  
	
  Excess No. of
  PAM Wafers Invoiced & Shipped

  	
   

  	
  +50

  	
   

  	
  +50

  (Q1 + Q2=+100)

  	
   

  	
  0

  	
   

  	
  -100

  	
   

  
	
  Cumulative
  Credit PAM Wafers

  	
   

  	
  50

  	
   

  	
  50

  	
   

  	
  0

  	
   

  	
  +100

  	
   

  
	
  PAM Wafers used
  to calculate lot charge

  	
   

  	
  250

  	
   

  	
  250

  	
   

  	
  250

  	
   

  	
  250

  	
   

  
	
  Lot Charge

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  






 


Example 2


 




	
   

  	
   

  	
  QUARTER 1

  	
   

  	
  QUARTER 2

  	
   

  	
  QUARTER 3

  	
   

  	
  QUARTER 4

  	
   

  
	
  No. of PAM Wafers
  Invoiced & Shipped

  	
   

  	
  300

  	
   

  	
  250

  	
   

  	
  225

  	
   

  	
  150

  	
   

  
	
  No. of PAM
  Wafers required to be Invoiced & Shipped

  	
   

  	
  250

  	
   

  	
  250

  	
   

  	
  250

  	
   

  	
  250

  	
   

  
	
  Excess No. of
  PAM Wafers Invoiced & Shipped

  	
   

  	
  +50

  	
   

  	
  0

  	
   

  	
  -25

  	
   

  	
  -100

  	
   

  
	
  Cumulative
  Credit PAM Wafers

  	
   

  	
  50

  	
   

  	
  (Q1 + Q2=+50)

  	
   

  	
  50*

  	
   

  	
  +50

  	
   

  
	
  PAM Wafers used
  to calculate lot charge

  	
   

  	
  250

  	
   

  	
  250

  	
   

  	
  225

  	
   

  	
  200

  	
   

  
	
  Lot Charge

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  $***

  	
   

  	
  $***

  	
   

  






 












*                                         Credit
PAM Wafers can only be used to offset Lot Charge in QUARTER 4.


 


 


***                           CONFIDENTIAL
MATERIAL CONSISTING OF 25 PAGES REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.


 


16