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EXHIBIT 10.4
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT dated as of March 27, 1995 by and between
Engelhard/ICC, a Pennsylvania General Partnership (hereinafter referred to as
the "Supplier") and Xxxxx-Xxxx Electric and Machinery Manufacturing
Corporation, a corporation duly incorporated under the laws of the Republic of
China (hereinafter referred to as "Buyer").
W I T N E S S E T H:
WHEREAS, the Buyer desires to purchase from Supplier, and Supplier
desires to sell to the Buyer, Buyer's Requirements (as hereinafter defined)
for Rotor Products (as hereinafter defined); and
WHEREAS, the Buyer may purchase from Supplier, and Supplier may sell to
the Buyer, certain Ancillary Products (as hereinafter defined);
NOW, THEREFORE, for and in consideration of the mutual premises and the
terms and conditions hereinafter set forth, the Buyer and Supplier, with the
intent to be bound thereby, agree to the following.
ARTICLE I - DEFINITIONS
As used herein, the following terms have the meanings ascribed to them in
this Article (except as otherwise expressly provided) and include the plural
as well as the singular:
1.1 "Agreement" or "Supply Agreement": This agreement as of the date
first above written, as the same may be amended from time to time pursuant to
the terms hereof, including Schedules A, B. C, and D.
1.2 "Order": A written request by the Buyer to Supplier to supply a
specific quantity and type of Product on a requested delivery date or an oral
request by the Buyer to Supplier to supply a specific quantity and type of
Product on a requested delivery date provided however that any oral request is
confirmed by facsimile sent by the Buyer to Supplier within five (5) days of
the date of the oral request followed with mail confirmation.
1.3 "Products": Ancillary Products and Rotor Products.
"Rotor Products": Any and all rotors or cassettes which include a
desiccant or drying material or agent or that is capable of use for heat
exchange or any other purpose, that is used or to be used in any
heating/air conditioning/treatment system. It is the intent of the
parties that Buyer
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purchases its requirements of the main components (i.e., Rotor Products)
from the Supplier.
"Ancillary Products": Additional ancillary components, full systems or
Rub-systems that may also be purchased at the request of Buyer.
Initially, the Products supplied by Supplier will meet the specifications set
forth in Schedule A. Schedule A will be amended from time to time to reflect
additional, improved or changed Product specifications.
1.4 "Requirements": All Rotor Products that the Buyer may require in
connection with the conduct of its business or that is used in any manner in
connection with any activities under the Technology License Agreement (as
hereinafter defined), including but not limited to Rotor Products sold,
purchased, leased, loaned, conveyed or transferred, directly or indirectly, by
or to the Buyer, and whether separately or in combination with other
materials.
1.5 "Technology License Agreement": The Technical Information, Trademark
and Patent License Agreement dated March 27, 1995, between the parties
hereto, as the same may be amended from time to time pursuant to the terms
thereof.
ARTICLE II - SUPPLY OF PRODUCTS
2.1 Supply. Subject to the terms of this Agreement, the Buyer will
purchase exclusively from Supplier all of the Buyer's total Requirements for
Rotor Products available from the Supplier. Subject to the terms of this
Agreement, Supplier will sell to the Buyer the Buyer's total Requirements for
Rotor Products. If Supplier ceases to manufacture Rotor Products, Buyer may
purchase Rotor Products elsewhere. Supplier shall accept and fill Orders for
replacement parts or workable substitutions for Rotor Products manufactured
under the terms of this Agreement for a period of seven (7) years from the
date of last manufacture of each such Rotor Product at pricing in accordance
with Section 2.4. In addition, the Buyer may purchase from supplier such
Ancillary Products as the Buyer chooses. However, the Buyer is not required to
place any Orders and the Supplier is not required to supply any Orders for
Ancillary Products, except as each party chooses. Each month during the term
of this Agreement the Buyer will provide Supplier in writing with its best
preliminary estimate of the Buyer's Requirements for Rotor Products for each
of the next three (3) to six (6) months as well as an indication of its
anticipated Ancillary Products purchases for the next three (3) to six (6)
months. All such estimates will be non-binding. However, in no event will
Supplier be obligated to fill Orders or deliver
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quantities of Rotor Products in any month in excess of One Hundred Fifty
Percent (150%) of the estimated Requirements for that month provided at least
three months earlier. Each month during the term of this Agreement Supplier
will provide the Buyer in writing with its best preliminary estimate of
Supplier's production capacity and lead time for Rotor Products for each of
the next three (3) to six (6) months. All such figures will be nonbinding, to
be used only for general planning purposes and as set forth in the last two
sentences of Section 2.2 below. Supplier's present intention is to supply
Buyer's anticipated needs of Rotor Products. To this end, such practices and
procedures as are set forth in Schedule B will be maintained during the term
of this Agreement.
2.2 Orders. The Buyer will place with Supplier all Orders at least sixty
(60) days prior to the requested delivery date for Rotor Products. Each Order
constitutes an irrevocable obligation of the Buyer to purchase from Supplier
the quantity and type of Rotor Product set forth in such Order on the terms
and conditions set forth in this Agreement. Supplier will not be required to
fill any Order to the extent it exceeds Supplier's capacity or lead times
communicated pursuant to Section 2.1 above. However, Supplier will exercise
reasonable efforts to meet urgent or emergency Orders.
2.3 Price: Payment. (a) The pricing for Rotor Products is set forth in
Schedule C. The price may be adjusted at any time upon mutual agreement
between Supplier and Buyer. Supplier understands that Buyer is very interested
in cost-competitiveness with other Suppliers. Supplier agrees to continue to
work to control the price of Rotor Products and to achieve cost efficiencies,
whether through volume, re-engineering, different manufacturing techniques and
other methods. From time to time, in the event there is a major change in the
market, Supplier and Buyer will meet to discuss price issues and attempt to
resolve any differences.
(b) Each invoice for Supplier issued under this Agreement will be paid
by the Buyer within thirty (30) days of the date of such invoice. Buyer will
establish and/or maintain a Letter of Credit for payments to Seller. The price
does not include freight, insurance or sales, use, excise or other taxes or
duties, assessments, levies or other governmental charges (except as set forth
in Section 2.5 below) and, accordingly, in addition to the price specified
herein, the amount of any freight, insurance or sales, use, excise or other
taxes or any duties, assessments, levies or other governmental charges (except
as set forth in Section 2.5 below) applicable to the transaction herein shall
be paid by the Buyer.
2.4 Warranty. (a) Supplier's warranty is set forth in Schedule D.
Supplier's liability for breach of warranty shall be limited to, as agreed by
both parties (i) replacing such non-
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conforming Product or (ii) refunding the sales price received by Supplier for
such non-conforming Product. All claims for breach of warranty must be made by
Buyer in writing to Supplier within sixty (60) days of Buyer's knowledge.
Where the non-conforming Product is replaced by Supplier or where Supplier
refunds the sales price received from Buyer for such Product, Buyer shall
return the non-conforming Product to Supplier at Supplier's cost strictly in
accordance with Supplier's written instructions concerning handling, shipping,
insurance, mode of transportation, and other matters as to which Supplier
issues instructions. In no event shall Supplier be liable for: (1) Products
damaged in shipment or otherwise without fault of Supplier; (2) defects in
Products due to negligence (other than that of Supplier), accident, abuse,
improper care or storage, abnormal condition of temperature or moisture; (3)
damage to Products which have been tampered with or altered in any way other
than by Supplier; or (4) expenses incurred by the Buyer in attempting to
correct any defects in Products.
(b) Supplier warrants to the Buyer that any Product sold by Supplier to
Buyer hereunder will not infringe the claim of any U.S. or Republic of China
patent owned by a third party covering the Product itself and agrees to
indemnify the Buyer against liability for any alleged infringement, provided,
however, that the Buyer shall notify Supplier within ten (10) days after
receipt by the Buyer of any such claim of alleged infringement or any notice
of commencement of any suit based on such alleged infringement, and provided
further, that Supplier shall control and remain in control of any and all
proceedings taken in defending such suit, including without limitation
utilization solely of counsel of Supplier's own selection to defend such suit.
Supplier does not warrant against infringement by reason of use of any Product
by the Buyer, except to the extent stated in the Technology License Agreement.
Supplier also represents that it has no knowledge at the date hereof that
would indicate that Products would infringe any patent owned by a third party.
(c) Recommendations by Supplier, if any, covering the utilization,
properties or qualities of Products delivered hereunder or with respect to
services performed are believed reliable but Supplier makes no warranty
whatever with respect thereto. Use or application of the Products sold by
Supplier to the Buyer hereunder is at the discretion of the Buyer without any
liability or obligation on the part of Supplier, except to the extent stated
in the Technology License Agreement.
(d) THESE WARRANTIES ARE EXCLUSIVE AND ARE IN LIEU OF ANY AND ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, ARISING BY LAW OR CUSTOM, INCLUDING BUT NOT BY
WAY OF LIMITATION, THE IMPLIED WARRANTY OF MERCHANTABILITY AND THE IMPLIED
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
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2.5 Delivery. All Products supplied hereunder will be delivered and all
risk of loss and damage and title to Products will pass to the Buyer FOB port
of departure (Incoterms l990) which is currently anticipated to be
Philadelphia, Pennsylvania, Miami, Florida or any other location specified by
Supplier. Buyer will be responsible for all freight, insurance and import into
the Republic of China and the payment of all costs, duties and taxes related
thereto.
ARTICLE III - GENERAL
3.1 Notifications. Any notice which either party may be required or
desires to give to the other party hereunder, except when otherwise provided
for, shall be deemed to be duly given: (i) when received if sent by mail or
other delivery service to the other party at the following addresses or any
other address of addressee subsequently designated in writing by the duly
authorized representative of the party or (ii) when sent by facsimile and
receipt is acknowledged to the other party at the following telephone numbers
or to any other telephone number subsequently designated in writing by the
respective duly authorized representative of the party:
To the Supplier: Engelhard/ICC
000 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Chief Executive Officer
Fax No: (000) 000-0000
with a copy to:
To Buyer: Xxxxx-Xxxx Electric & Machinery
Manufacturing Corporation
25, Wen-Te Rd., Lo Shan Tsun,
Kwei Xxxx Xxxxxx,
Taoyuan Hsien, Taiwan, ROC
Attention: Division General Manager
Air Conditioning Products Division
Fax No. 000-0-0000000
with a copy to:
3.2 Term. This Agreement shall become effective as of the date hereof
and shall continue thereafter for an initial term of five (X) years and shall
be renewed automatically from year to year thereafter; provided, however, that
after the initial term of this
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Agreement, either Supplier or Buyer may terminate this Agreement on December
31 of any year by giving to the other at least six (6) months prior written
notice.
3.3 Termination for Breach. If either party is in material breach of
this Agreement, then the other party may, upon at least ninety (90) days'
prior written notice, terminate this Agreement, unless within such notice
period for breach is cured, in which event the notice of termination becomes
ineffective.
3.4 Limitation of Liability. Notwithstanding anything to the contrary in
this Agreement or otherwise, in no event shall Supplier be liable for
indirect, incidental, consequential or special damages incurred by the Buyer
arising out of or relating to this Agreement or any transactions hereunder
even if Supplier has been apprised of or is aware of the possibility of such
damages. In no event shall the aggregate liability of Supplier to the Buyer
arising out of or relating to any supply of Products or the transactions
contemplated hereunder exceed the purchase price paid by the Buyer with
respect to the Products in respect of which such claim is made. It is
understood by the Supplier that applicable laws may prohibit attempted
limitations on Supplier's liability to certain consumers who are not parties
to this Agreement.
3.5 Force Majeure. The failure or delay of any party hereto to perform
any obligation under this Agreement solely by reason of acts of God, acts of
government (except as otherwise enumerated herein), riots, wars, strikes,
lockouts, accidents in transportation or other causes beyond its control shall
not be deemed to be a breach of this Agreement; provided, however, that the
party so prevented from complying herewith shall continue to take all actions
within its power to comply as fully as possible herewith. Except where the
nature of the event shall prevent it from doing so, the party suffering such
force majeure shall notify the other party in writing within fourteen (14)
days after the occurrence of such force majeure and shall in every instance,
to the extent it is capable of doing so, use its best efforts to remove or
remedy such cause with all reasonable dispatch.
3.6 Assignment. (a) Neither party shall have the right to transfer or
assign its interest or rights in this Agreement or delegate its obligations
under this Agreement without the prior written consent of the other party.
(b) The provisions of Section 3.6(a) above notwithstanding, either party
may freely assign its interest and rights in this Agreement to an entity that
acquires substantially all of the business assets of the assigning party to
which this Agreement applies.
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3.7 Unenforceable Terms. Buyer and Supplier each warrant to the other
that it is not aware of any term or provision of this Agreement that is
invalid, illegal or unenforceable. In any event any term or provision of this
Agreement shall for any reason be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not effect the
validity of any remaining portion which shall remain in full force and effect
as if the invalid portion was never a part of this Agreement when it was
executed. Should the severance of any such part of this Agreement materially
affect any other rights and obligations of the parties hereunder, the parties
hereto will negotiate in good faith to amend this Agreement in a manner
satisfactory to the parties. Failing agreement on such amendment, either party
may by notice in writing terminate this Agreement forthwith subject to the
provisions of this Agreement relating to consequence of termination.
3.8 Construction. Article and Section headings are for convenience of
reference only and shall not affect the interpretation of any of the
provisions of this Agreement. None of the provisions of this Agreement shall
be for the benefit of or enforceable by any third party.
3.9 Entire Agreement. This Agreement contains the entire understanding
between the parties with respect to the within subject matter and shall be
controlling to the exclusion of all terms and conditions on any purchase
order, acknowledgment form or any other documents which may be issued by the
parties hereto on or after the date hereof. This Agreement may not by modified
or amended except in a writing signed by the parties hereto. No waiver or
indulgence of any breach or default hereunder shall be construed as a waiver
of any subsequent breach of the same or any other provision of this Agreement.
3.10 Prior Agreements. This agreement cancels and supersedes all other
written or verbal agreements which may have been in effect prior to this
Agreement relating to the within subject matter.
3.11 Jurisdiction. The construction, validity, and performance of this
Agreement shall be governed in all respects by the laws of Singapore
(excluding any such laws that may direct the application of the laws of
another jurisdiction). The parties hereby submit to the exclusive jurisdiction
of the Singapore Courts for all purposes in relation to this Agreement and
waive any objections to such jurisdiction on the grounds of venue or forum non
conveniens or similar grounds.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their duly authorized representatives, as of the date first above
written.
ENGELHARD/ICC XXXXX-XXXX ELECTRIC AND MACHINERY
MANUFACTURING CORPORATION
By: /s/ XXXXXX X. XXXXXXXXXXXX By: /s/ PAO-SHAN KU
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Xxxxxx X. Xxxxxxxxxxxx Pao-Shan Ku
Title: Co-Chairman Title: President
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