East West Manufacturing, LLC And BK Technologies, Inc., Sign Master Supply Agreement Effective As Of November 6, 2023

Author: Benzinga Newsdesk | November 08, 2023 09:26am

MASTER SUPPLY AGREEMENT

 

THIS MASTER SUPPLY AGREEMENT (this "Agreement") is between East West Manufacturing, LLC, a Georgia limited liability company ("Supplier"), and BK Technologies, Inc., a Nevada corporation ("Buyer"), and is effective as of November 6, 2023. Supplier and Buyer are collectively referred to in this Agreement as the "Parties," and each individually as a "Party."

 

RECITALS

 

A. Supplier has agreed to be engaged for the design, production manufacturing and sale of certain products for the benefit of Buyer (as further described herein, each a "Product", together the "Products").

 

B. Supplier and Buyer desire to enter into this Agreement to provide master terms and conditions under which, to the extent provided in agreed Purchase Orders (as defined below), Supplier may agree to sell, and Buyer may agree to purchase, Products.

 

For and in consideration of the mutual promises, conditions and agreements contained herein, the sufficiency of which is hereby acknowledged, and the specifications and provisions set forth in any exhibits attached and hereby incorporated, the Parties mutually agree as follows:

 

1. Nature of the Agreement; Forecasts; Procurement; Cooperation

 

1.1 Nature of the Agreement. This Agreement will be a "cost-plus" agreement under which the Parties may enter into multiple specific transactions for the purchase and sale of Products by executing a Purchase Order ("Purchase Order") for Products, which shall include (a) a list of Products to be purchased, (b) the quantity of each of the Products ordered, (c) the requested delivery date, (d) the unit price for each of the Products to be purchased, (e) the billing address, and (f) the delivery location. No Purchase Order will be binding on the Supplier until it has been accepted by the Supplier in writing. No Party may terminate an accepted Purchase Order, except as set forth in Section 7.1; provided, however, that Buyer may change a scheduled delivery date in an accepted Purchase Order by up to sixty (60) days in the future by providing written notification to Supplier at least thirty (30) days in advance of the original delivery date. All additional terms and conditions included within any Purchase Order provided by the Buyer shall not apply and this Agreement shall govern the purchase and sale of Products in all respects. If there is a conflict between the terms of a Purchase Order and the terms of this Agreement, the terms of this Agreement control.

 

1.2 Specifications. All Products shall be produced and delivered by Supplier in strict conformity with all Specifications. "Specifications" means the guidelines, testing plans or procedures, drawings, requirements, laws and regulations for the design, composition, safety assurance, manufacture, packaging, or quality control of any Products and components as provided by Buyer to Supplier in writing from time to time prior to or during the term of this Agreement, it being acknowledged that, after the date hereof and subject to Section 2.3, certain changes may be made by Buyer to such Specifications. As of the date hereof, the applicable Specifications are attached hereto as Schedule 1.

 

1.3 Forecasts & Required Purchase Orders. On a monthly basis, Buyer will provide Supplier with a rolling twelve (12) month Purchase Order forecast ("Forecast") for its Products ("Forecast Period"). Except as otherwise provided in this Section, the Forecast is non-binding on either Party and to be used for planning purposes only. Supplier will procure components per the provided Forecast and Buyer will be financially responsible for all such material in accordance with Exhibit A. In connection with each Forecast, Buyer shall submit Purchase Orders for Product requirements, in weekly increments for the following one (1) month period and in monthly increments for the subsequent two (2) month period.

 

1.4 Material Procurement and Inventory.

 

(a) Exhibit A shall apply to the procurement of Materials and is incorporated herein. Supplier will not procure Materials from vendors or suppliers other than those specified in writing in connection with the Specifications provided from time to time by Buyer to Supplier or otherwise approved in writing by Buyer ("Approved Vendors"). Supplier shall not use any vendors (including any Approved Vendor) without such approval being delivered by Buyer for the specific Materials that have been approved. For purposes of clarity and avoidance of doubt, a supplier or vendor shall only be an Approved Vendor with respect to the Materials that Buyer has specified or granted its written approval and that any approval of an Approved Vendor for one instance shall not constitute an approval of any such supplier or vendor for any other Materials. Notwithstanding the foregoing, Supplier shall be permitted to purchase electronics Materials with approved manufacturer part numbers from any Authorized Vendor.

 

(b) During the Term, Supplier shall perform (i) periodic cycle counts and (b) annual physical counts of Materials (as defined in Exhibit A) and finished goods inventory of the Products.

 

1.5 Initial Material Purchase. Supplier shall purchase from Buyer all of Buyer's on hand materials and components related to the production of the Products ("On Hand Materials") subject to the provisions of this Section 1.5.

 

(a) For the purposes of this Section 1.5, the On Hand Materials shall be valued at the price for such On Hand Materials used in calculating the applicable Purchase Price for the Products pursuant to Exhibit B and the associated applicable Product quotations provided by Supplier to Buyer.

 

(b) All On Hand Materials must be new and unused and not damaged or expired.

 

(c) Supplier shall only be obligated to purchase On Hand Materials which are necessary for a current bill of materials for the Products.

 

(d) The aggregate amount of On Hand Materials cannot be more than twelve (12) months of Buyer's demand for the products as reflected in Purchase Orders.

 

(e) Supplier shall not be obligated to purchase more than Twelve Million Dollars ($12,000,000) in aggregate On Hand Materials.

 

(f) Supplier shall purchase and pay for the On Hand Materials pursuant to the following process:

 

(i) Supplier shall purchase the On Hand Materials in the following tranches: (A) no later than the one (1) month anniversary of the execution of this Agreement, (B) the second no later than the four (4) month anniversary of the execution of this Agreement and (C) subsequent purchases on each of the following one (1) month anniversaries of the execution of this Agreement up to the one (1) year anniversary of the execution of this Agreement (each an "OHM Purchase"). For the avoidance of doubt, Supplier shall make ten (10) total OHM Purchases.

 

(ii) Prior to each OHM Purchase, Buyer shall deliver to Supplier a statement setting forth all On Hand Materials (the "OHM Availability Statement").

 

(iii) Prior to each OHM Purchase, Supplier shall identify those On Hand Materials on the OHM Availability Statement that Supplier desires to purchase for such OHM Purchase (the "OHM Selection Statement"). Subject to the requirements of this Section 1.5, (A) in the initial OHM Purchase, Supplier shall purchase not less than the quantity of On Hand Materials necessary to manufacture Products for ninety (90) days pursuant to Purchase Orders received by Supplier and (B) Buyer shall purchase all un-purchased On Hand Materials in the final OHM Purchase. The purchase price for the OHM Purchases shall be set-off against (i) the amount of any outstanding accounts payable by Buyer to Supplier and (ii) the amount of any excess or obsolete inventory of Buyer currently held by Supplier (solely to the extent not otherwise taken into account pursuant to Section 3.1(b)).

 

(iv) Not later than five (5) business days after receipt of the OHM Selection Statement, Buyer shall deliver, or cause to be delivered, to Supplier's Juarez, Mexico facility the On Hand Materials on the OHM Selection Statement.

 

(v) Not later than five (5) business days after receipt of the applicable On Hand Materials pursuant to Section 1.5(f)(iv), Supplier shall count and sort all materials and components received and deliver to Buyer a statement (the "Non-Qualifying Materials Statements") identifying any materials and components received which do not qualify as On Hand Materials pursuant to Section 1.5 (the "Non-Qualifying Materials"). Buyer shall have five (5) business days to review the Non-Qualifying Materials Statement and object to any material or component which Buyer believes should qualify as On Hand Materials. If Buyer does not object to the Non-Qualifying Materials Statement within such five (5) business day period, then it shall be deemed accepted. If Buyer does object to the Non-Qualifying Materials Statement within such five (5) business day period, then the Parties shall work together in good faith to resolve such disagreement and, if not resolved, the Parties may mutually agree to select an independent third-party to resolve such disagreement or otherwise resolve such dispute pursuant to Section 8.2. Supplier shall make any Non-Qualifying Materials available to Buyer for pick-up or shipment at Buyer's cost and expense. The value of any Non-Qualifying Materials purchased by Supplier pursuant to an OHM Purchase shall be deducted from the payment for the final OHM Purchase.

 

(vi) Supplier shall pay for the On Hand Materials delivered to Supplier pursuant to each OHM Purchase within sixty (60) calendar days of receipt of such On Hand Materials.

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