[*] -- Certain information omitted and filed separately with the
Commission pursuant to a confidential treatment request under Rule 24b-2
of the Commission.
SUPPLY AGREEMENT
between
CREE RESEARCH, INC.
("Seller")
SHIN-ETSU HANDOTAI CO. LTD.
("Purchaser")
and
SUMITOMO CORPORATION
SUMITOMO CORPORATION OF AMERICA
( collectively, "Sumitomo")
Dated September 30, 1996
TABLE OF CONTENTS
1. CONTRACT DOCUMENTS; DEFINITIONS........................1
1.1. Documents...................................1
1.2. Definitions.................................1
2. PURCHASE AND SALE......................................2
2.1. Purchase of Products........................2
2.2. Price.......................................3
2.3. Payment Terms...............................3
3. ORDERING, SHIPMENT AND DELIVERY........................3
3.1. Orders......................................3
3.2. Shipment....................................3
3.3. Packaging...................................4
3.4. Manner of Shipment..........................4
4. NON-CONFORMING SHIPMENTS...............................4
4.1. Reporting of Claims.........................4
4.2. Remedies for Non-Conforming Shipments.......4
4.3. Compliance with Instructions................4
5. WARRANTIES.............................................4
5.1. Limited Warranty............................4
5.2. Warranty Disclaimer.........................5
6. LIMITATIONS OF LIABILITY...............................5
7. CONFIDENTIAL INFORMATION...............................5
7.1. Definition and Identification...............5
7.2. Confidentiality Obligations.................6
7.3. Survival....................................6
8. TERM AND TERMINATION...................................6
8.1. Term........................................7
8.2. Termination.................................7
8.3. Effect of Termination.......................7
9. ADDITIONAL UNDERTAKINGS................................7
9.1. Confidentiality of Terms....................7
9.2. Publicity...................................7
9.3. Record-Keeping..............................7
9.4. Export Regulation...........................8
-i-
10. ASSIGNMENT............................................8
11. FORCE MAJEURE.........................................8
12. GENERAL...............................................8
12.1. Notices....................................8
12.2. Authority; No Conflicting Obligations......9
12.3. Relationship of the Parties................9
12.4. Dispute Resolution.........................9
12.5. Severability...............................9
12.6. Amendments; Waiver.........................9
12.7. No Implied License........................10
12.8. Enforcement Costs.........................10
12.9. Governing Law.............................10
12.10. Construction.............................10
12.11. United Nations Convention................10
12.12. Fair Trade Commission Action.............10
12.13. Entire Agreement.........................10
-ii-
SUPPLY AGREEMENT
SUPPLY AGREEMENT (this "Agreement"), made and effective as of the 30th day of
September, 1996 (the "Effective Date"), by and between CREE RESEARCH, INC., a
corporation organized and existing under the laws of the State of North Carolina
and having offices at 2810 Meridian Parkway, Suite 176, North Carolina 27713,
USA (referred to below as "Seller"); SHIN-ETSU HANDOTAI CO. LTD., a corporation
organized and existing under the laws of Japan and having offices at Togin
Bldg., 4-2, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100, Japan (referred to below
as "Purchaser"); SUMITOMO CORPORATION, a corporation organized and existing
under the laws of Japan and having offices at 2-2, Hitotsubashi 1-chome,
Chiyoda-ku, Tokyo 100, Japan (referred to below as "SC"); and SUMITOMO
CORPORATION OF AMERICA, a corporation organized and existing under the laws of
the State of New York and having offices at 345 Park Avenue, New York, New York
10154 (referred to below as "SCOA") (SC and SCOA being referred to below
collectively as "Sumitomo").
Recitals
WHEREAS, concurrently with the execution of this Agreement, Seller and Purchaser
have entered into a License and Technology Transfer Agreement (the "License
Agreement") pursuant to which Seller has licensed certain technology to
Purchaser for the manufacture and sale of LED die products defined in the
License Agreement as the "Licensed Products"; and
WHEREAS, the parties have agreed on the terms and conditions under which Seller
will supply certain substrates, both with and without epitaxial coatings, for
use by Purchaser in manufacturing the Licensed Products under the License
Agreement, and the parties desire to memorialize such terms and conditions in
this Agreement; and
WHEREAS, pursuant to separate arrangements between Purchaser and Sumitomo,
Sumitomo has undertaken to act on behalf of Purchaser in purchasing products
from Seller under this Agreement and exporting such products to Purchaser;
NOW, THEREFORE, in consideration of the foregoing and the mutual obligations
undertaken in this Agreement, the parties agree as follows:
1. CONTRACT DOCUMENTS; DEFINITIONS
1.1. Documents.
The following documents are annexed to and made a part of this
Agreement:
(a) Schedule 1 -- Quantity Commitment
(b) Schedule 2 -- Price
1.2. Definitions.
For purposes of this Agreement, the terms defined in this
Section 1.2 shall have the meaning specified and such
definitions shall apply to both singular and plural forms:
(a) "Affiliates" of a designated corporation, company or other
entity means all entities which control, are controlled
by, or are under common control with the named entity,
whether directly or through one or more intermediaries.
For purposes of this definition "controlled" and "control"
mean ownership of more than fifty percent
(50%) of the voting capital stock or other interest
having voting rights with respect to the election of the
board of directors or similar governing authority.
(b) "Confidential Information" shall have the meaning defined
in Section 7.1.
(c) "License Agreement" means the License and Technology
Transfer Agreement between Seller and Purchaser executed
concurrently with this Agreement, as the same may be
amended from time to time by mutual written agreement of
the parties thereto.
(d) "Licensed Products" shall have the meaning defined in the
License Agreement.
(e) "Product Specifications" means the specifications of
Products Seller uses for its own internal production of
Licensed Products or such other specifications as the
parties may mutually agree upon in writing from time to
time. Seller will deliver to Purchaser the specifications
Seller uses for its own internal production of Licensed
Products as part of the documentation to be delivered
pursuant to Paragraph A(6) of Schedule 3 of the License
Agreement.
(f) The specifications for all Products supplied under this
Agreement shall in all events be of at least the same
quality as those Seller then uses for its own internal
production of Licensed Products.
(g) "Products" means Bare Wafers and Epi Wafers, collectively.
"Bare Wafers" means silicon carbide wafers, without
epitaxial coatings, which conform to the applicable
Product Specifications. "Epi Wafers" means silicon
carbide wafers, with epitaxial coatings, which conform to
the applicable Product Specifications.
2. PURCHASE AND SALE
2.1. Purchase of Products.
(a) Subject to and in accordance with the terms and conditions
of this Agreement, Purchaser will purchase from Seller,
and Seller will sell to Purchaser, the applicable
percentage specified in Schedule 1 of all Products
required by Purchaser and its Affiliates for the
manufacture of Licensed Products during the term hereof.
(b) Purchaser will provide to Seller, not later than ninety
(90) days before the beginning of each calendar quarter, a
forecast of the quantity of Products required by Purchaser
and its Affiliates during that quarter and the immediately
succeeding quarter and showing the percentage to be
purchased under this Agreement in accordance with Schedule
1. The first quarter included in each forecast will
constitute a binding commitment to purchase at least
eighty percent (80%) of the quantities projected to be
purchased under this Agreement. The second quarter will
be nonbinding. In the event this Agreement is terminated
in accordance with Section 8.2 due to a breach or other
event of default with respect to Seller, Purchaser shall
have no further obligation under the commitment provided
for in this paragraph.
(c) All sales of Products under this Agreement shall be made
by Seller to SC or SCOA, and SC and SCOA (as the case may
be) shall export the same solely to Purchaser for use by
Purchaser in accordance with this Agreement. Products
Page 2
purchased under this Agreement shall be used by Purchaser
and its Affiliates in the manufacture of Licensed Products
pursuant to the License Agreement and shall not be resold
or used for any other purpose without Seller's prior
written consent, which Seller may withhold in its sole
discretion.
2.2. Price.
(a) The purchase price of Products shall be determined as set
forth in Schedule 2.
(b) The prices stated in this Agreement do not include
transportation costs, or the cost of insurance against
loss or damage in transit, all of which shall be the
responsibility of Sumitomo and Purchaser. Any such amounts
paid by Seller with the prior consent of SC or SCOA will
be invoiced to SC or SCOA (as the case may be) and
reimbursed to Seller.
(c) The prices stated in this Agreement do not include sales,
use, excise or other taxes, duties, fees or assessments
imposed by any jurisdiction. All such amounts imposed with
respect to the purchase of the Products (other than taxes
on Seller's net income) will be the responsibility of
Sumitomo and Purchaser, and any such amounts paid by
Seller will be invoiced to SC or SCOA (as the case may be)
and reimbursed to Seller.
2.3. Payment Terms.
(a) Products purchased under this Agreement will be invoiced
to SC or SCOA, whichever submitted the order. Payment
shall be made, in accordance with the terms set forth in
Schedule 2, in U.S. dollars by wire transfer to an account
designated in writing by Seller, without reduction for any
currency exchange, wire transfer or other similar charges.
(b) Any amounts to be paid under this Agreement which are not
paid at the later of the date due or the expiration of any
stated grace period shall accrue interest from the date
due until the date paid at a rate equal to one percent
(1%) plus the prime rate as published by the Chase
Manhattan Bank (N.A.), New York, New York or any successor
bank thereof.
3. ORDERING, SHIPMENT AND DELIVERY
3.1. Orders.
All sales of Products under this Agreement shall be made
pursuant to written purchase orders submitted by SC or SCOA to
Seller and accepted in writing by Seller. The terms and
conditions of this Agreement shall govern the purchase of all
Products hereunder notwithstanding any contrary provisions of
such purchase orders. Purchase orders must be received at
least forty-five (45) days prior to the requested shipping
date.
3.2. Shipment.
Seller will use all commercially reasonable efforts to ship
Products in accordance with the shipping dates requested in
orders submitted in accordance with Section 3.1. If Seller
fails to ship ordered Products within thirty (30) days after a
shipping date agreed to in writing by Seller, Purchaser may at
any time upon written notice to Seller cancel the unshipped
portion of such order. Seller's obligations to fill orders
under this Agreement
Page 3
shall be subject to Article 11 and all other provisions of
this Agreement.
3.3. Packaging.
Seller will ship Products in Seller's standard packaging or
packaged in such other manner as the parties may mutually
agree in writing.
3.4. Manner of Shipment.
Products shall be shipped F.O.B. Seller's manufacturing
facilities. Products shall be deemed delivered when delivered
to the transportation company at the shipping point. Title and
risk of loss or damage shall pass to SC or SCOA (whichever
submitted the order) upon delivery.
4. NON-CONFORMING SHIPMENTS.
4.1. Reporting of Claims.
Except for warranty claims under Article 5, in the event any
shipment does not conform to the ordered amount and type of
Product or is otherwise non-conforming in a manner
discoverable upon reasonable inspection (such as, by way of
illustration, broken wafers), such non-conformity will be
reported in writing to Seller as soon as possible and in any
event no later than thirty (30) days after the date Products
are delivered to the carrier at Seller's facilities. In all
other cases, the non-conformity shall be reported in writing
no later than ninety (90) days after such delivery date. Any
non-conformity not reported as required by this paragraph
shall be deemed waived.
4.2. Remedies for Non-Conforming Shipments.
Seller's sole obligation with respect to shipments
determined to be non-conforming shall be, at its option,
to replace the non-conforming Products (with shipment at
Seller's expense) or to issue a credit to SC or SCOA, as
the case may be, in the amount of the price paid for such
Products with interest calculated at the rate specified in
Section 2.3 from the date of payment to the date of
credit. This paragraph states the exclusive remedy of
Sumitomo and Purchaser with respect to non-conforming
shipments. After acceptance of any shipment the sole
remedies for defects in such shipment shall be as provided
in the warranty provisions of this Agreement.
4.3. Compliance with Instructions.
In addition to such other duties as may be imposed by law,
Sumitomo and Purchaser will comply with all of Seller's
reasonable instructions regarding rejected goods. If
Sumitomo or Purchaser incurs any expenses in complying
with such instructions, including without limitation
shipping expenses incurred in returning any rejected goods
to Seller, Seller shall reimburse such expenses promptly
upon receipt of a written request therefor.
5. WARRANTIES
5.1. Limited Warranty.
(a) Seller warrants to Sumitomo and Purchaser that Products
purchased from Seller under this Agreement will meet the
applicable Product Specifications.
Page 4
(b) This warranty is extended only to Sumitomo and
Purchaser and does not constitute a warranty to any
other person. This warranty shall not apply to any
defect or failure to perform resulting in whole or in
part from improper use or application, and Seller
shall have no liability of any kind for failure of or
defects in any items manufactured using the Products.
(c) All claims under this warranty must be reported in
writing to Seller (with such report accompanied by
the Product claimed to be defective) as soon as
possible, but in any event no later than three
hundred sixty (360) days after the date Products are
delivered to the carrier at Seller's facilities. If
not so reported, such claims shall be waived.
(d) Seller's sole obligation with respect to Products
determined not to meet the terms of this warranty
shall be, at its option, to replace such Products or
to issue a credit or refund in the amount of the
price received by Seller for the Products. This
paragraph states the exclusive remedy against Seller
with respect to breach of the warranty given herein
or other alleged defects in the Products.
(e) This Section 5.1, as limited by Section 5.2 and other
applicable terms and conditions of this Agreement,
shall survive the expiration or any termination of
this Agreement with respect to Products purchased
prior to such expiration or termination.
5.2. Warranty Disclaimer.
THE WARRANTY IN SECTION 5.1 ABOVE IS GIVEN IN LIEU OF ALL
OTHER WARRANTIES, WHETHER ORAL OR WRITTEN, EXPRESS OR
IMPLIED, OR IMPOSED BY STATUTE OR OTHERWISE. ALL IMPLIED
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND
MERCHANTABILITY ARE EXPRESSLY DISCLAIMED BY SELLER.
6. LIMITATIONS OF LIABILITY
No party will have any liability to the others for any consequential,
incidental, indirect or special damages arising out of or in
connection with this Agreement (including, but not limited to, loss
of profits, revenue or business) resulting from or in any way related
to this Agreement, or the termination of this Agreement, or arising
out of or alleged to have arisen out of breach of this Agreement or
the use or performance of any Products, even if advised of the
possibility of such damages. This limitation applies regardless of
whether such damages are sought based on breach of contract,
warranty, negligence, strict liability or other legal theory.
7. CONFIDENTIAL INFORMATION
7.1. Definition and Identification.
(a) "Confidential Information" means any information
concerning the transactions covered by this Agreement
received by a party (the "receiving party") from another
party or its Affiliates (the "disclosing party") and which
the receiving party has been informed or has a reasonable
basis to believe is confidential to the disclosing party.
(b) "Confidential Information" shall not extend to
information: (1) was known to the receiving party prior
to receipt from the disclosing party; (2) was lawfully
available
Page 5
to the public prior to receipt from the disclosing
party; (3) becomes lawfully available to the public
after receipt from the disclosing party, through no
act or omission on the part of the receiving party;
(4) corresponds in substance to any information
received in good faith by the receiving party from
any third party without restriction as to
confidentiality; or (5) is independently developed by
an employee or agent of the receiving party who has
not received or had access to such information.
(c) Information which the disclosing party wishes to have
treated as Confidential Information under this Agreement
shall be identified at the time of disclosure as
"confidential" by marking, or in the case of oral
disclosures, shall be confirmed as such in writing within
thirty (30) days following the oral disclosure. However,
if not so identified, the receiving party before making
use of any such information that could reasonably be
assumed to be Confidential Information for any purpose,
other than the performance of this Agreement, shall
inquire of the disclosing party as to the status of such
information and shall designate and treat the same as
Confidential Information if so requested.
7.2. Confidentiality Obligations.
(a) Each party agrees to maintain received Confidential
Information in confidence and not to use such Confidential
Information for any purpose other than the performance of
this Agreement. Neither party shall disclose any
Confidential Information without the prior written
approval of the disclosing party, except as required to
comply with any order of a court or any applicable rule,
regulation or law of any jurisdiction or as provided in
Section 9.1. In the event that a receiving party is
required by judicial or administrative process to disclose
Confidential Information of the disclosing party, it shall
promptly notify the disclosing party and to the extent
permitted by the circumstances allow the disclosing party
a reasonable time to oppose such process.
(b) Each party shall protect Confidential Information of the
other by using the same degree of care, but not less than
a reasonable degree of care, to prevent unauthorized
disclosure or use as that party uses to protect its own
confidential information of like nature. Within each
party, Confidential Information shall be disclosed only to
employees to whom disclosure is reasonably necessary to
the performance of this Agreement. Each party shall limit
the number of copies made of any item of received
Confidential Information.
(c) Each party shall appropriately notify each employee, agent
or consultant to whom any disclosure of received
Confidential Information is made and shall obtain their
agreement that they will maintain Confidential Information
in confidence in accordance with the provisions set forth
herein. Each party represents and warrants to the others
that its employees, agents and consultants to whom any
disclosure of received Confidential Information is made
shall be subject to a valid, binding and enforceable
agreement to maintain such Confidential Information in
confidence in accordance with the provisions set forth
herein.
7.3. Survival.
The obligations of confidentiality set forth in this
Article 7 shall continue for so long as the Confidential
Information continues to come within the definition
thereof set forth in Section 7.1 and shall survive the
expiration or any termination of this Agreement.
Page 6
8. TERM AND TERMINATION
8.1. Term.
The term of this Agreement shall commence on the Effective
Date and, unless earlier terminated in accordance with
Section 8.2, shall continue for a period ending seven (7)
years after the Effective Date.
8.2. Termination.
Either of the parties may terminate this Agreement by
giving written notice of termination to the other parties
(for purposes of this Section 8.2 the phrase "either of
the other parties" shall mean, with respect to termination
by Seller, any of the Purchaser or SC or SCOA, and shall
mean, with respect to a termination by any of the
Purchaser or SC or SCOA, Seller alone):
(a) if either of the other parties commits a material
breach of its obligations under this Agreement or the
License Agreement and does not cure such breach within
thirty (30) after receipt of written notice of the
breach from the nonbreaching party (which notice shall
give reasonable particulars of the breach and of the
intention of the party serving the notice to terminate
this Agreement unless the breach is cured); or
(b) if either of the other parties becomes insolvent, or
any voluntary or involuntary petition for bankruptcy
or for reorganization is filed by or against either
of the other parties, or a receiver is appointed with
respect to all or any substantial portion of the
assets of either of the other parties, or a
liquidation proceeding is commenced by or against
either of the other parties; provided that, in the
case of any involuntary petition or proceeding filed
or commenced against a party, the same is not
dismissed within sixty (60) days.
8.3. Effect of Termination.
Except as expressly provided otherwise in this Agreement,
no termination of this Agreement shall release a party
from any liability or obligation which has theretofore
accrued and remains to be performed as of the date of such
termination.
9. ADDITIONAL UNDERTAKINGS
9.1. Confidentiality of Terms.
The parties agree that the terms of this Agreement shall
be treated as Confidential Information of each other
subject to Article 7; provided, however, that either party
may, upon notice to the other, make such public
disclosures regarding this Agreement as in the opinion of
counsel for such party are required by applicable
securities laws or regulations.
9.2. Publicity.
The parties agree to cooperate in the preparation of a
mutually acceptable joint press release announcing the
relationship established hereby, to be issued promptly
following execution of this Agreement, but shall otherwise
make no public announcement regarding the terms of this
Agreement.
Page 7
9.3. Record-Keeping.
Purchaser shall keep and maintain, and shall cause its
Affiliates to keep and maintain, sufficient records to
demonstrate that Purchaser has complied with the obligations
under this Agreement to purchase from Seller the specified
percentage of the requirements of Purchaser and its Affiliates
for Products required for use in the manufactured of Licensed
Products. Purchaser shall permit Seller's duly authorized
representative, reasonably acceptable to Purchaser, to examine
such records at all reasonable business hours to the extent
and insofar as it is necessary to verify compliance with the
purchase commitment under this Agreement. Seller shall have
the right to designate a firm of certified public accountants,
reasonably acceptable to Purchaser, to audit such records to
the extent and insofar as it is necessary to verify compliance
with the purchase commitment under this Agreement. The expense
of the audit shall be Seller's unless the audit shall
demonstrate a discrepancy (in Purchaser's favor) greater than
five percent (5%) between the quantities actually purchased
hereunder and those which were due to be purchased, in which
event the audit expenses shall be borne by Purchaser.
9.4. Export Regulation.
Sumitomo and Purchaser shall comply in all respects with
all laws and regulations of the United States government
or any agency thereof pertaining to exports.
10. ASSIGNMENT
Neither this Agreement nor any of the rights or
obligations created herein is assignable by any of the
parties hereto without the prior written consent of the
other parties, except that Seller or Purchaser may assign
this Agreement to any permitted assignee of the License
Agreement; provided, however, that any such assignment
shall require the delivery to the other parties of the
assignee's written agreement to accept such assignment and
be bound by this Agreement. Any purported assignment in
violation of this paragraph shall be void. No assignment
shall relieve the assignor of responsibility for the
performance of its obligations hereunder.
11. FORCE MAJEURE
If the performance of this Agreement or any obligations
under this Agreement is prevented, restricted, or
interfered with by reason of fire, flood, explosion, or
other casualty, accident, or act of God; strikes or labor
disturbances; war, whether declared or not, or other
violence; sabotage; any law, or order, proclamation,
regulation, ordinance, demand, or requirement of any
government agency; or any other event beyond the
reasonable control of the parties, whether similar or
dissimilar to the foregoing and whether or not foreseen,
the affected party, upon giving prompt notice to the other
parties, shall be excused from such performance to the
extent of such prevention, restriction or interference.
The affected party shall use its reasonable efforts to
avoid or remove such cause of non-performance or to limit
the impact of the event on such party's performance and
shall continue performance with the utmost dispatch
whenever such causes are removed.
12. GENERAL
12.1. Notices.
All notices under this Agreement shall be in writing and
sent by prepaid airmail post, by reputable courier
service, or by facsimile message (with a confirmation copy
concurrently dispatched by prepaid airmail post or courier
service), to the addresses of the respective
Page 8
parties as set forth by their signatures below or to such
other address as the party may hereafter specify by
written notice so given. Notices shall be effective upon
receipt at the location of the specified address.
12.2. Authority; No Conflicting Obligations.
(a) Each party warrants that its has all requisite power
and authority to enter into and perform this
Agreement, and that it has no agreement with any third
party or commitments or obligations which conflict in
any way with its obligations hereunder.
(b) Each party warrants to the other that all approvals of
any governmental agency required for such party to
enter into and perform its obligations under this
Agreement have been obtained prior to the execution
hereof.
12.3. Relationship of the Parties.
The relationship of the parties under this Agreement is
intended to be that of independent contractors. Nothing
herein shall be construed to create any partnership, joint
venture or agency relationship of any kind. No party has
any authority under this Agreement to assume or create any
obligations on behalf of or in the name of any other party
or to bind any other party to any contract, agreement or
undertaking with any third party, except that SC and SCOA
are authorized to act on behalf of the Purchaser as
contemplated by this Agreement.
12.4. Dispute Resolution.
Any disputes or claims arising from this Agreement or its
breach shall be submitted to and resolved exclusively by
arbitration conducted in accordance with the Rules of
Conciliation and Arbitration of the International Chamber
of Commerce. The arbitration shall be conducted by three
(3) arbitrators appointed in accordance with such rules.
The place of arbitration shall be in San Francisco,
California. An award rendered in the arbitration shall be
final and binding upon the parties and judgment may be
entered thereon in any court of competent jurisdiction.
The arbitrators shall apply the laws specified in this
Agreement in determining the rights, obligations and
liabilities of the parties and shall not have the power to
alter, modify, amend, add to or subtract from any term or
provision of this Agreement nor to rule upon or grant any
extension, renewal or continuance of this Agreement, nor
to award damages or other remedies expressly prohibited by
this Agreement, nor to grant injunctive relief, including
interim relief, of any nature, notwithstanding any
contrary provisions of the Rules of Conciliation and
Arbitration specified above. If, under applicable law,
this arbitration provision is not enforceable as to a
particular claim brought by one party against the other,
then legal proceedings involving only that claim may be
instituted solely in the United States District Court of
the Eastern District of North Carolina or, if such court
may not exercise jurisdiction, a court of the State of
North Carolina. For all purposes of this Agreement, all
parties hereby irrevocably consent to the jurisdiction of
such court and waive any defense based on improper or
inconvenient venue or lack of personal jurisdiction.
12.5. Severability.
If any provision of this Agreement is found invalid or
unenforceable, the remaining provisions will be given
effect as if the invalid or unenforceable provision were
not a part of this Agreement.
Page 10
12.6. Amendments; Waiver.
This Agreement may not be amended except in a writing
signed by the authorized representatives of the parties.
No waiver of any provision of this Agreement shall be
effective unless made in writing and signed by the party
sought to be charged therewith. The failure of either
party to enforce any provision of this Agreement shall not
constitute or be construed as a waiver of such provision
or of the right to enforce it at a later time.
12.7. No Implied License.
Nothing in this Agreement shall be construed to convey any
license under any patent, copyright, trademark or other
proprietary rights owned or controlled by either party,
whether relating to the Products sold or any other matter.
12.8. Enforcement Costs.
The prevailing party in any arbitration or judicial action
brought to enforce the provisions of this Agreement shall
be entitled to recover its costs and expenses, including
reasonable attorneys' fees, incurred in filing and
prosecuting or defending such action.
12.9. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina,
without regard to conflicts of laws principles.
12.10. Construction.
The captions contained in this Agreement are for reference
only and shall not be used in its construction or
interpretation. The provisions of this Agreement shall be
construed and interpreted fairly to both parties without
regard to which party drafted the same.
12.11. United Nations Convention.
The United Nations Convention on Contracts for the
International Sale of Goods shall not apply to this
Agreement.
12.12. Fair Trade Commission Action.
In the event that the Fair Trade Commission of Japan
should advise or recommend modification, amendment and/or
deletion of any terms and conditions of this Agreement
pursuant to the "Law relating to Prohibition of Private
Monopoly and Methods of Preserving Fair Trade" of Japan,
Purchaser and Sumitomo shall immediately inform Seller in
writing of such advice or recommendation and the parties
hereto agree to negotiate in good faith to modify, amend,
and/or delete the terms and conditions concerned in this
Agreement in accordance with the said advice or
recommendation. In the event that the parties are unable
to agree in writing within thirty (30) days after
Purchaser and Sumitomo inform Seller of the action of the
Fair Trade Commission, any of the parties hereto may upon
written notice to the others terminate this Agreement
without incurring any liability.
Page 10
12.13. Entire Agreement.
This Agreement sets forth the entire agreement between the
parties with respect to the subject matter hereof and
supersedes all previous agreements and understandings
between the parties, whether oral or written, relating to
such subject matter.
(The remainder of this page is intentionally left blank.)
Page 11
IN WITNESS WHEREOF, the parties, through their respective duly authorized
officers, have executed this Agreement to be effective as of the Effective Date
set out in the preamble hereto.
CREE RESEARCH, INC.
By /s/ F. Neal Hunter
---------------------------------
Name F. Neal Hunter
--------------------------------
Title President
------------------------------
Date September 30, 1996
-----------------------------
Address for Notices
Cree Research, Inc.
2810 Meridian Parkway, Suite 176
Durham, North Carolina 27713
USA
Attention: President
Fax No: (919) 361-4630
SUMITOMO CORPORATION OF AMERICA
By /s/ Toshiaki Hatsuo
-------------------------------
Name Toshiaki Hatsuo
-----------------------------
Title Senior Vice President & Gen. Mgr.
----------------------------------
Date September 30, 1996
----------------------------------
Address for Notices
Sumitomo Corporation of America
345 Park Avenue
New York, New York 10154
USA
Attention: Michael Vitale
-------------------
Fax No: 415-984-3365
----------------------
SHIN-ETSU HANDOTAI CO. LTD.
By /s/ Ryuichi Hiraishi
-------------------------
Name Ryuichi Hiraishi
-----------------------
Title Director
----------------------
Date
------------------------
Address for Notices
Shin-Etsu Handotai Co. Ltd.
Togin Bldg.
4-2, Marunouchi 1-chome, Chiyoda-ku
Tokyo 100, Japan
Attention: Director, Compound Semiconductor
----------------------------------
Fax No: 03-3214-0017 Division
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SUMITOMO CORPORATION
By /s/ K. Takaishi
---------------------------
Name K. Takaishi
------------------------
Title General Manager
------------------------
Date Electronic Materials & Equipment Dept.
------------------------------------------
Address for Notices
Sumitomo Corporation
2-2, Hitotsubashi 1-chome, Chiyoda-ku
Tokyo 100, Japan
General Manager
Attention: Electronic Materials & Equipment Dept.
---------------------------------------
Fax No: 03-3217-6802
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Page 12
SCHEDULE 1
Quantity Commitment
A. Epi Wafers
Purchaser, acting through SC or SCOA, will purchase from Seller the
percentage specified below of all Epi Wafers required by Purchaser
and its Affiliates for the manufacture of Licensed Products during
the term of this Agreement:
Agreement Year* % of Requirements
Year 1 *****%
Year 2 ***** %
Year 3 ***** %
Year 4 ***** %
Year 5 ***** %
Year 6 ***** %
Year 7 ***** %
*As used in this Agreement, "Agreement Year" refers
to the successive twelve-month periods commencing
with the Effective Date, and "Year 1," "Year 2,"
"Year 3" and so forth refer to the first, second,
third, etc. of the Agreement Years.
B. Bare Wafers
1. Subject to Paragraph 2 below, Purchaser, acting through SC or
SCOA, will purchase from Seller ********************* % of all
Bare Wafers required by Purchaser and its Affiliates for the
manufacture of Licensed Products during the term of this
Agreement.
2. If in Purchaser's view Seller's Bare Wafer products become
noncompetitive with substrates offered by other suppliers
in respect of price or specifications, or Seller is unable
to deliver Bare Wafers adequate to meet Purchaser's
requirement under this Agreement, and in either case
Purchaser furnishes Seller reasonably adequate evidence of
such facts, then upon Purchaser's request representatives
of the parties shall meet and in good faith discuss and
endeavor to agree upon an appropriate amendment to this
Agreement or other action to address Purchaser's
reasonable concerns.
3. Without limiting Paragraph 2 above, if during Year 4
through Year 7 any third party supplier (other than an
Affiliate of Purchaser) extends a bona fide written offer
to supply Bare Wafers under terms and conditions at least
as favorable to Purchaser as those contained in this
Agreement but at a price lower than the price charged by
Seller hereunder, Purchaser may purchase the quantity
offered by such supplier pursuant to the offer, provided
that (i) such third party substrates meet or exceed the
applicable Product Specifications under this Agreement,
(ii) Purchaser gives Seller written notice of the terms of
the third party offer and Seller does not, within thirty
(30) days thereafter, agree to supply such quantity under
the terms and conditions of this Agreement but at the
price and in accordance with the delivery schedule stated
in the third party offer, and (iii) the aggregate quantity
of such substrates (measured by nominal wafer area)
purchased by Purchaser and its Affiliates from third party
suppliers during each Agreement Year does not exceed the
aggregate quantity purchased from Seller during such
period.
Page 13
SCHEDULE 2
Price
A. Epi Wafers
1. The prices for Epi Wafers purchased under this Agreement
will be as follows:
Price Per Nominal
Agreement Year* Wafer Area (US$)**
Year 1 $ ******** per wafer
Year 2 $ ******** per sq. in.
Year 3 $ ******** per sq. in.
Year 4 $ ******** per sq. in.
Year 5 $ ******** per sq. in.
Year 6 $ ******** per sq. in.
Year 7 $ ******** per sq. in.
*As defined in Schedule 1.
**Seller will deliver wafers in the diameter then
being used by Seller for its own internal production
of Licensed Products. In Year 1 the price will be the
same regardless of the wafer diameter. The wafer
diameter in Year 1 will not be less than 1.6 inches.
2. The prices in Paragraph 1 above are firm and may be revised
only upon mutual agreement, except that if Seller's
fully-loaded manufacturing costs during Years 6 or Year 7,
divided by 0.5, are greater than the price listed above Seller
may charge a higher price up to a maximum of $******** per
square inch for purchases during such year.
B. Bare Wafers
1. The anticipated prices for Bare Wafers purchased under this
Agreement are as follows:
Price Per Nominal
Agreement Year Wafer Area (US$)*
Year 1 $ ******** per wafer
Year 2 $ ******** per sq. in.
Year 3 $ ******** per sq. in.
Year 4 $ ******** per sq. in.
Year 5 $ ******** per sq. in.
Year 6 $ ******** per sq. in.
Year 7 $ ******** per sq. in.
*Seller will deliver wafers in the diameter then
being used by Seller for its own internal production
of Licensed Products. In Year 1 the price will be the
same regardless of the wafer diameter. The wafer
diameter in Year 1 will not be less than 1.6 inches.
2. Except for the prices for Year 1, which are firm, the
foregoing are estimated prices only.
Actual prices applicable to each year will be negotiated
and agreed upon in writing in advance of such year. The
obligation of the parties to purchase and sell Bare Wafers
during each Agreement Year is subject to the condition that
the parties mutually agree as to the price applicable to
such purchases. In negotiating the price each year, the
parties shall not be bound by the prices stated in this
Agreement and shall not be bound by the prices agreed to
with respect to any prior year.
3. Seller will extend to Purchaser its "most favored customer"
pricing for Bare Wafers, meaning that the prices applicable
to orders for Bare Wafers under this Agreement will be the
lowest price at which Seller at any time prior to shipment
of such order has sold Bare Wafers to any customer in the
world for use in manufacturing Licensed Products.
C. Other Price and Payment Terms
1. Except as otherwise provided in Paragraph B(3) above, the
applicable price will be the price in effect at the time of
receipt of the order under Section 3.1, provided that the
order requests delivery within ninety (90) days from the
order date. In all other cases the applicable price will be
the price in effect at the time of shipment.
2. Purchases will be invoiced upon shipment. Invoiced amounts
will be due and payable thirty (30) days from the invoice
date.
3. At the time the prices set forth in this Schedule 2 were
determined the exchange rate between Japanese yen and U.S.
dollars was a ratio of 110 Japanese yen per one U.S. dollar.
In the event the exchange rate increases or decreases more
than twenty percent (20%) from such ratio, the parties shall
in good faith discuss adjustments to the prices stated in
this Schedule 1. No such adjustments will be effective
unless mutually agreed upon writing.