EXHIBIT 10.21
MASTER SOURCING AGREEMENT
This MASTER SOURCING AGREEMENT (the "MSA") is entered into as of the
13th day of July, 2001, by and between General Electric Company, a New York
corporation acting through its GE Digital Energy business unit, having a
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
("GE" or "Buyer") and ACTIVE POWER, INC ("Active Power" or "Seller"), a Delaware
corporation, having a principal place of business at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. (GE and ACTIVE POWER being referred to herein
individually as a "Party" and collectively the "Parties").
RECITALS
WHEREAS, GE and ACTIVE POWER and their respective affiliates are
engaged in the manufacture, production, assembly and sale of Power Conditioning
equipment and components and ancillary services (collectively "Equipment"); and
WHEREAS, GE and ACTIVE POWER desire to expand their business
relationship and grow on terms satisfactory to both parties and they hereby
execute this MSA for purposes of confirming the issuance by GE to ACTIVE POWER
of the purchase orders (the "Purchase Orders") for the products defined in
Attachment A in accordance with the pricing schedule defined in Attachment B.
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein the Parties agree as follows:
1. Supply/Purchase of ACTIVE POWER Flywheel Energy Storage System
("FESS") Designed Systems. The Parties hereby enter into this
FESS sourcing agreement, whereby ACTIVE POWER shall supply GE,
and GE shall purchase from ACTIVE POWER, Clean Source 2
Flywheel Energy Storage System on the following conditions:
(a) That the ACTIVE POWER designed FESS systems shall be
manufactured and produced in accordance with and shall comply
with the GE design and specification requirements referenced
in Attachment A [****];
(b) Subject to the Agreement, ACTIVE POWER hereby
appoints and grants to GE and its affiliates, as defined
below, and GE hereby accepts form ACTIVE POWER, a
non-transferable, royalty-free, right and license to: (i)
non-exclusivity purchase, market, distribution and resell the
ACTIVE POWER flywheel products used with uninterruptible power
systems ("UPS") described in Attached B (hereinafter referred
to as the "standard CleanSource products from ACTIVE POWER")
to end-users located world-wide (hereinafter referred to as
the "End Users"); (ii) incorporate private and/or co-labeling
of the ACTIVE POWER products using GE logos (where approved
exclusively by GE). During the term of this Agreement, GE and
it affiliates may hold themselves out to the public as an
authorized reseller of ACTIVE POWER products.
(c) ACTIVE POWER further acknowledges that GE's
willingness to pursue placement of volume of Equipment orders
with ACTIVE POWER is subject to ACTIVE POWER demonstrating to
the satisfaction of GE, among other reasonable requirements
that GE may establish for purchase of the Equipment: (1)
completion of first piece qualification of the Equipment, (2)
that ACTIVE POWER has the necessary capacity, equipment and
resources to timely and properly supply the Equipment, (3)
that ACTIVE POWER can meet the price, Six Sigma quality and
delivery targets and requirements for the Equipment
established by GE, and (4) that the Equipment will conform to
any GE-supplied or approved drawings and specifications issued
for the Equipment. The Parties acknowledge that the quantities
of the
1
**Confidential treatment has been requested for the portions of this agreement
marked by asterisks. Omitted material for which confidential treatment has been
requested has been filed separately with the Securities and Exchange
Commission.**
Equipment identified on Attachment B are GE's current estimate
of its needs for Equipment during the time period specified
and are subject to adjustment to the discretion of GE based on
its actual volume, customer and business requirements. GE
shall provide to ACTIVE POWER at the beginning of each
calendar quarter (by the 15th of the first month), a forecast
of orders for that calendar quarter along with a preliminary
forecast for the following quarter (i.e. on April 1, forecast
for Q2 as well as a preliminary forecast for Q3). Forecasts
provided by GE shall not create any commitment by or
obligation upon GE to place any order. Within 10 business days
of GE submitting such forecast, ACTIVE POWER shall confirm its
capacity to meet forecast demand for the following two
quarters. Upon such confirmation, ACTIVE POWER guarantees to
sell such volume to GE in any quarter upon its request, within
the established lead times defined in Attachment B. The scope,
price, cycle, schedule and other requirements are set forth on
Attachment B hereto;
(d) ACTIVE POWER pricing shall be [****] and mutually
agreed upon by GE, as set forth in Attachment B.
(e) The commercial provisions of this MSA include the
terms of Attachment C "GEDE Master Terms and Conditions -
GEDE-STD-0001 Rev. A";
(f) The Parties may agree to additional provisions
appropriate for a multi-year sourcing agreement between the
Parties, including provisions providing for ACTIVE POWER
on-line access to GE drawings and the extranet, and
confidentiality, compliance with laws and termination for
cause provisions consistent with those set forth in Attachment
C.
(g) ACTIVE POWER agrees to provide application, technical
and engineering support for GE bid proposal activity and
related system design reviews on site, as requested. ACTIVE
POWER shall provide GE with phone support for technical,
service and field installation related questions. ACTIVE POWER
shall provide supervision of start-up and commissioning of
field installations as set forth in Attachment D and
instructed by the GE Purchase Order.
(h) ACTIVE POWER shall provide documentation to GE for
purposes of providing maintenance on ACTIVE POWER products.
ACTIVE POWER shall provide this documentation in both written
and electronic form as well ▇▇▇▇▇ ▇▇ a royalty-free license to
reproduce materials for said maintenance purposes.
(i) ACTIVE POWER shall offer to GE designated
representative(s) factory training at a mutually agreed to
price schedule and intervals as referred to in Attachment D.
2. Effective Date and Agreement Expiration. This MSA shall
commence on the date first written above and, except as
otherwise provided herein, shall continue for an initial term
through October 30, 2002. This Agreement will be extended in
additional one (1) year terms, given the performance by both
parties as outlined in the Agreement, except that either party
may terminate this Agreement by giving the other written
notice of termination not less than sixty (60) days prior to
the expiration of the initial term or any renewal term.
3. Confidentiality. No announcement or statement concerning this
MSA or the subject matter of, or any matter referred to in,
this MSA shall be made or issued by or on behalf of either
Party without the prior written approval of the other,
provided that nothing shall restrict the making by one party
(even in the absence of agreement by the other) of any
statement which may be required by law or called for by the
requirements of any recognized stock exchange on which its
shares or other securities are traded (but then only to the
extent so required).
4. Confidential Information. Each party agrees to protect
information in accordance with Attachment E, Confidentiality
Agreement Dated July 10, 2001.
2
**Confidential treatment has been requested for the portions of this agreement
marked by asterisks. Omitted material for which confidential treatment has been
requested has been filed separately with the Securities and Exchange
Commission.**
5. Counterparts. This MSA may be signed in any number of
counterparts, each of which shall be an original, with the
same effect as if the signatures were upon the same
instrument.
6. Governing Law. This MSA shall be governed and construed in
accordance with the laws of the State of New York, USA
(without regard to the conflicts of law rules of such
jurisdiction).
7. Assignment. Neither Party shall assign its rights and
obligations hereunder to any third party without the prior
written consent of the Party; provided, that either Party may
assign any of its rights and obligations hereunder to any
controlled affiliate of such Party, but such Party shall
remain primarily liable hereunder.
8. Notices. All notices and Orders permitted or required to be
given under this Agreement shall be in writing and shall be
deemed duly given upon personal delivery, transmitted by
facsimile machine or electronically via the internet and duly
acknowledge to the address or facsimile numbers or e-mail
addresses set-forth below. All notices below or to any other
facsimile number or e-mail address as the party may designate
by ten (10) days prior written notice given in accordance with
this provision.
If to ACTIVE POWER: If to GE:
------------------- ---------
Active Power GE Digital Energy
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇-▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Attention: Sourcing Manager
Attention: Vice President Sales ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇ FAX: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Email: ▇▇▇▇▇.▇▇▇▇@▇▇.▇▇.▇▇▇
9. Entire Agreement. This MSA contains the entire agreement of
the Parties with respect to the subject matter hereof. All
prior correspondence, negotiations and agreements, oral or
written, among the Parties with respect to the subject matter
hereof are superseded by this MSA. Notwithstanding the terms
of this MSA, or any issued purchase orders between the Parties
and their affiliates shall remain in full force and effect in
accordance with their terms until such time as they are
modified or amended by separate written agreement by the
Parties or their respective affiliates. No variation,
supplement, deletion or replacement of this MSA or any of its
terms shall be effective unless made in writing and signed by
each of the Parties hereto.
IN WITNESS WHEREOF, the Parties have caused this MSA to be executed by
this respective authorized representatives as of the date first set forth above.
GENERAL ELECTRIC COMPANY ACTIVE POWER, INC.
By: /s/ By: /s/
---------------------------------------- -----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇ ▇▇▇
------------------------------------- --------------------------
Title: Sourcing Leader Title: Vice President,
Sales & Service
------------------------------------ --------------------------
ATTACHMENT A
Flywheel Energy Storage System ("FESS"):
[****]
4
**Confidential treatment has been requested for the portions of this agreement
marked by asterisks. Omitted material for which confidential treatment has been
requested has been filed separately with the Securities and Exchange
Commission.**
ATTACHMENT B
ACTIVE POWER commits to offer [****] on each opportunity GE requests ACTIVE
POWER with a not to exceed price levels noted below:
Product: ACTIVE POWER CleanSource 2 Flywheel Energy Storage System
---------------------------------------------------------
250kW Flywheel Energy Storage Systems
Key Product Features:
o Single flywheel configuration.
o DC power ranges of 40kW for 120 seconds up to 250kW
for 12.5 seconds of ride-through.
o Remote Monitoring Interface and Software
500kW Flywheel Energy Storage Systems
Key Product Features:
o Dual flywheel configuration.
o DC power ranges of 40KW for 120 seconds up to 500KW
for 12.5 seconds of ride-through.
o Remote Monitoring Interface and Software
Produced in Compliance with:
o UL 1778 (CUL), Standards for Uninterruptible Power
Supply Equipment CE ▇▇▇▇
o FCC Rules and Regulation of Part 15, Subpart J, Class
A
o National Electrical Manufacturer's Association (NEMA)
o National Fire Protection Association (NFPA-70)
o National Electrical Code (NEC)
o Occupational Safety & Health Administration (OSHA)
Demand Forecast:
On a quarterly basis, GE shall provide ACTIVE POWER with an
updated forecast of GE's semi-annual product requirements. For
released purchase orders, GE shall provide ACTIVE POWER a firm
90-day delivery requirement schedule.
[****]
5
**Confidential treatment has been requested for the portions of this agreement
marked by asterisks. Omitted material for which confidential treatment has been
requested has been filed separately with the Securities and Exchange
Commission.**
ATTACHMENT B (continued)
Pricing Schedule:
[****]
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General Electric Digital Energy
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Active Power CleanSource 2 Flywheel Quotation
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10-Jul-01
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Item List Price
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CS2/250 Flywheel System [****]
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CS2/500 Flywheel System
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CS2/250 DC Disconnect
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CS2/500 DC Disconnect
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CSView Software
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Total
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Options (Purchased with initial order)
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CS2/250 Year 2 Parts Only Extended Warranty
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CS2/250 Year 3 Parts Only Extended Warranty
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CS2/500 Year 2 Parts Only Extended Warranty
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CS2/500 Year 3 Parts Only Extended Warranty
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Extended Total
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The pricing set forth in the table above is based on GE making the following
Volume Commitment and is fixed for the initial term of this Agreement.
VOLUME COMMITMENT
-----------------
[****]
In the event this volume is not achieved by the end of the contract period,
ACTIVE POWER shall invoice GE for the difference between the commitment and
actual purchases (includes recovery of unearned discounts, future price
adjustments, etc.). ACTIVE POWER'S discount schedule is set forth below the
following example.
[****]
6
**Confidential treatment has been requested for the portions of this agreement
marked by asterisks. Omitted material for which confidential treatment has been
requested has been filed separately with the Securities and Exchange
Commission.**
ATTACHMENT B (continued)
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Active Power
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[****]
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Annual ▇▇▇-▇▇▇ ▇▇▇-▇▇▇
------ ------- -------
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Volume $K Unit Price Unit Price
--------- ---------- ----------
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[****] [****]
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(less than)500
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501-1000
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1001-2000
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2001-4000
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4001-6000
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6001-10000
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10001(and greater)
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Productivity
Continuous Improvement & Six Sigma
----------------------------------
ACTIVE POWER shall commit to a mutually agreed to Continuous
Improvement program addressing product performance, cost
improvement and cycle time reduction. GE shall work with
ACTIVE POWER on Six Sigma projects to support this effort.
Improvements shall be negotiated and mutually shared.
Invoice and Payment Terms
ACTIVE POWER Invoices, in US Dollars, shall be presented at
the time of shipment release, after release from FOB - Austin,
Texas. [****]
Lead Times, Cycle and Delivery Schedule
FESS units order shall be delivered in accordance with
instructions in the released purchase order.
[****]
7
**Confidential treatment has been requested for the portions of this agreement
marked by asterisks. Omitted material for which confidential treatment has been
requested has been filed separately with the Securities and Exchange
Commission.**
ATTACHMENT B (continued)
[****]
8
**Confidential treatment has been requested for the portions of this agreement
marked by asterisks. Omitted material for which confidential treatment has been
requested has been filed separately with the Securities and Exchange
Commission.**
ATTACHMENT C
"GEDE Master Terms and Conditions - GEDE-STD-0001 Rev. B-AP"
(Referenced document attached)
ATTACHMENT D
ACTIVE POWER FESS training
ACTIVE POWER shall offer GE designated representative(s) training on
installation, operation, maintenance and repair of their FESS systems.
Factory Training
ACTIVE POWER offers to provide 1 free training class for GE's training
staff and technical support personnel, such training class shall be for
up to seven people. Active Power will provide GE two free sets of the
tools identified in the table below for the training staff class. GE
may purchase additional sets of tools at a 25% discount from the
identified list price.
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Part Description Active Power List Price QTY
Number
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55520 TOOL, BEARING INSERTION, FLYWHEEL ASSY. $ 155.00 1
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55530 TOOL, BEARING REMOVAL $ 210.00 1
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55521 TOOL, GUIDE PIN, BRG CARTRIDGE $ 40.00 2
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55550 TOOL, ROTOR SHIM, APS ROTOR $ 40.00 4
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90008 KIT, SPARE, SHIM $ 80.00 1
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67002 Software, CS View $ 950.00 1
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Active Power also agrees to provide Training classes at a 25%
discounted rate from ACTIVE POWER published training rates. These rates
are currently set at $4,000 per class of up to seven people. GE shall
be responsible for its own travel and living arrangements during these
sessions.
As required, ACTIVE POWER agrees to work with GE to arrange and support
specific training requirements.
Field Training
Commencing after shipment of the first unit, for six months, or until
the members of the training staff (attendees of free training class)
are certified, whichever is earlier, ACTIVE POWER shall provide free
on-site assistance for 1 working day during the start up, commissioning
and acceptance of a FESS system. If additional on-site assistance is
required after the system acceptance, GE shall pay Active Power's
standard billing rates, less a 25% discount. All travel and lodging
expenses shall be paid in full at their actual cost.
Warranty Service Obligations
GE service personnel shall provide all warranty service for the FESS
systems sold by GE. ACTIVE POWER shall reimburse GE for agreed upon
expenses for labor, and ACTIVE POWER's warranty shall govern costs
related to parts. Within 60 days from the date of this Agreement, the
Parties shall agree on the following:
1. Spare Part Pricing Schedule
2. Spare Part Inventory List
3. Warranty Labor Billing Rates from GEDE back to Active Power
ATTACHMENT E
Mutual Non-Disclosure Agreement
(Referenced document attached)