Document of Understanding Between Advanced Energy Industries and Advanced Power Technologies Contract Number: 1010
Exhibit 10.26
Document of Understanding Between Advanced Energy Industries and
Advanced Power Technologies
Contract Number: 1010
1. PREAMBLE
This agreement is made on this 15th day of Jan 2001 by and between Advanced Energy Industries, Inc. & Affiliates (hereinafter referred to as “Buyer”) and Advanced Power Technologies, (hereinafter referred to as “Seller”), under which services shall be performed. This contract is in effect through the 15th day of Jan 2002.
2. TERMS AND CONDITIONS
No terms and conditions other than the terms and conditions set forth in this document and such terms and conditions as are set forth in any document attached to or incorporated by reference in this contract shall be binding unless specifically accepted by both the Buyer’s authorized Purchasing Agent or Commodity Manager and the Seller’s authorized agent. This contract will be reviewed on an annual basis and unless terminated by either party, as provided for in Section 19, shall continue to be in force. This contract is intended as the complete and final agreement of both parties and exclusive statement of its terms and may not be changed, altered or modified, except in writing by agreement of both parties.
3. WARRANTY
[ * ]. The Seller shall comply with all applicable Colorado State, Federal and local laws, rules and regulations. The exclusive venue for any litigation concerning this matter shall be in the Larimer County District Court in Fort ▇▇▇▇▇▇▇, Colorado.
4. LIABILITY
The Seller agrees that the relationship established by this order constitutes him as an independent contractor and that, no tax assessment or legal liability of the Seller or of his agents or employees becomes, by reason of this order, an obligation of the Buyer.
5. REMEDY
Seller will not be responsible for incidental or consequential damages. Seller’s entire remedy will be the value of the product sold to Buyer.
6. BUYER CHANGES
Buyer shall have the right to make changes to existing orders. Purchase order changes will be allowed only if authorized by Buyer. If such change affects delivery, quality or amount to be paid by Buyer, Seller shall notify Buyer of such changes in writing.
[ * ] = CONFIDENTIAL TREATMENT REQUESTED
1
7. ENGINEERING CHANGE ORDERS AND BUYER CHANGES
All engineering change orders will be communicated to Seller via an Engineering Change Order (ECO). If such change affects delivery, quality or the amount to be paid by Buyer, Seller shall notify Buyer immediately. The charges for scrap and/or rework resulting from any change submitted via Buyer’s ECO process, shall be limited to the materials in process at the time of the change and within Seller’s manufacturing cycle, as defined in the related addendum. These charges will be communicated in their entirety in writing, to Buyer, within fifteen (15) working days of receipt of ECO. Buyer will not be responsible for any costs associated with the change order which are not identified within the fifteen (15) working day window.
8. DELIVERY
The goods described herein shall be delivered FOB point of origin. Buyer’s Purchasing Agent or Commodity Manager shall authorize means of shipment. Preferred means of shipment is UPS Ground. If seller chooses alternative method of shipment without Buyer’s authorization, Seller is responsible for any incremental shipping charges.
[ * ].
Identification of the goods shall occur when they are placed in the hands of the Carrier. Title shall pass to Buyer upon delivery to Carrier. The goods shall be placed in suitably protected containers, the nature of which may be determined by the Buyer.
9. KANBAN PULL PROCESS
Seller will participate in a Kanban pull process for specifically agreed upon part numbers, as listed in addendum. This list will be updated as parts are added on to or deleted off of the Kanban program, with agreement between Buyer and Seller.
Buyer’s authorized Purchasing Agent or Commodity Manager and Seller shall agree on the Kanban quantity and replenishment strategy for each part number. Kanban quantities for all part numbers will be reviewed by Buyer on an as required basis and adjusted accordingly. Buyer’s quantity of Finished Goods Bins is subject to change dependent upon Seller’s ability to reduce manufacturing lead-time. Changing the
[ * ] = CONFIDENTIAL TREATMENT REQUESTED
2
quantity of Finished Goods Bins at the buyer’s facility does not necessitate re-negotiation of this contact. Seller agrees that no shipments will be made to Buyer unless authorized by Buyer.
10. PURCHASE ORDER
Buyer will also be entitled to issue purchase orders for individual items separate from the Kanban Pull process and the Schedule Agreement Process, as quoted by Seller and agreed to in writing by Buyer.
11. SCHEDULE AGREEMENT
Schedule Agreements will be issued with agreement by Buyer and Seller for a specific time frame, by part number, negotiated price and estimate annual usage. Buyer shall provide Seller with demand information as part of the planning and forecasting process, to be updated periodically as agreed upon by Buyer and Seller. This report is for use as a planning tool only. Seller is responsible for any and all material purchased beyond the agreed upon liabilities, as stated in addendum.
12. LIMITATION OF MATERIAL LIABILITY
The extent and limitation of Buyer’s liability for materials purchased by Seller are as defined in the addendum.
13. PRICING
Buyer and Seller agree to the price(s) set forth in the appropriate addendum. Any change in the contracted price must have written approval by Buyer’s Commodity Manager or Purchasing Agent, prior to implementation. Seller will establish a cost reduction program, which will be reviewed on an annual basis. Cost changes will be reflected in price adjustments and a revised addendum to this document.
14. PAYMENT TERMS
Terms of payment are net [ * ] days for each shipment invoiced, unless otherwise expressly provided for and confirmed in writing by the Seller. Method of payment for goods receipt is electronic receipt settlement (ERS). Seller shall use standard invoicing for charges on any items that do not require a goods receipt.
15. PROPRIETARY INFORMATION
It is understood that the Buyer may provide proprietary information to the Seller, likewise, Seller may provide proprietary information to Buyer in the performance of this contract. “Proprietary Information” shall be deemed to include all information conveyed by one party to the other party orally, in writing, by demonstration or by magnetic or other media. If the disclosure is in other than written form, the information shall not be
[ * ] = CONFIDENTIAL TREATMENT REQUESTED
3
deemed Proprietary Information after thirty (30) days unless within that period the disclosing party has identified it as such in written summary communicated to the receiving party. Proprietary Information may also include, by way of example but without limitations, data, know-how, formulas, algorithms, processes, design, sketches, photographs, plans, drawings, specifications, samples, reports, customer and distributor names, pricing information, product demand information, market definitions, inventions and ideas.
Proprietary Information shall not include information, which can be clearly demonstrated to be:
a) generally known or available to the public, through no act of omission on the part of the receiving party; or
b) known to the receiving party prior to disclosure under this agreement; or
c) provided to the receiving party by a third party without any restriction on disclosure and without breach of any obligation of confidentiality to a party.
Both parties to this agreement, agree to return to the forwarding party all documents containing propriety information and to retain no copies thereof. In addition, ownership and possession of all product assembly and test fixtures, tooling, test programs, Non-Recurring Engineering (NRE) tooling, test equipment and consigned equipment, shall revert to Buyer. Both parties to the agreement agree that the obligation to protect proprietary information shall be ongoing and shall not cease upon completion or termination of this contract.
16. REVIEWS
Buyer and Seller agree to conduct Annual Business Reviews, at an agreed venue. Such reviews shall be conducted by the Buyer’s Commodity Manager or authorized Purchasing Agent. Pricing will be reviewed annually, by the Seller and the Buyer’s Commodity Manager or authorized Purchasing Agent. Supplier will establish and maintain a formal cost reduction program. Material or labor cost savings identified by the Buyer in conjunction with and verified by the Seller shall be implemented immediately and shared equally between the Buyer and the Seller.
17. DEFECTIVE MATERIAL RETURN POLICY
The Buyer will issue a DMR to the Seller prior to returning failed product to the Seller. Seller shall acknowledge Buyer DMR with an RMA number within twenty-four (24) hours. Seller shall repair or replace failed products under warranty in a timely manner, at Seller’s discretion, at Seller’s expense. The Seller will pay freight on goods returned to the Buyer which are covered by warranty..
[ * ] = CONFIDENTIAL TREATMENT REQUESTED
4
18. QUALITY ASSURANCE
APT’s Quality must meet all applicable Seller’s specifications. The Buyer shall inspect the goods not later than the time permitted by the carrier for inspection and assertion of claims, which may be related to shipping and handling. The failure of the Buyer to report any damage or claims within two (2) weeks of the Buyer’s receipt shall constitute the Buyer’s admission of receipt of the goods in an undamaged condition and that such goods are in full conformity with the contract. The Seller will utilize the Supplier Call Back process to document all issues and concerns. Seller agrees to
participate in continuous improvement plans and programs as defined by Buyer and Seller. .
19. COMPLETE AGREEMENT
This contract is intended as the complete and final agreement of the parties and exclusive statement of its terms. This contract may not be changed, altered or modified, except in writing by the party against whom enforcement is sought. Either party with thirty (30) days written notice may terminate this agreement. This clause is subject to review after one year.
20. MATERIAL PIPELINE REQUIREMENTS
The seller is responsible setting up and maintaining a pipeline of finished goods for the items listed in the addendum that will meet the following demands:
a. Be able to provide product to the customer in the specified quantities and delivery times set forth in the Kanban agreements
b. Be able to meet and sustain the demands of a 50% ramp immediately
[ * ] = CONFIDENTIAL TREATMENT REQUESTED
5
21. SIGNATURE PAGE:
Signature attests that the parties have reviewed this agreement and concur with the parameters:
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Advanced Energy Industries, Inc. |
Advanced Power Technologies |
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[ * ] = CONFIDENTIAL TREATMENT REQUESTED
6
APT Addendum
Part Number Pricing and Liability Information
|
Plant |
|
AE P/N |
|
Class |
|
EAU 00 |
|
EAU 01 |
|
Unit Price |
|
01 Price |
|
Est. Annual S ‘00 |
|
Est. Annual $‘01 |
|
||||
|
UCM1 |
|
1501258 |
|
A |
|
1200 |
|
1800 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UCM1 |
|
1541036 |
|
A |
|
1300 |
|
900 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UCM1 |
|
1541097 |
|
A |
|
2200 |
|
2400 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UCM1 |
|
1541107 |
|
A |
|
250 |
|
400 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UCM1 |
|
1541108 |
|
A |
|
1000 |
|
1800 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UCM1 |
|
8100014 |
|
A |
|
179 |
|
1000 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UCM1 |
|
8100021 |
|
A |
|
6231 |
|
500. |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UCM1 |
|
8705113 |
|
A |
|
1300 |
|
3800 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UGS1 |
|
8705109 |
|
A |
|
1200 |
|
1400 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
1501227 |
|
A |
|
3797 |
|
6000 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
1501232 |
|
A |
|
8915 |
|
13500 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
1501257 |
|
.A |
|
1379 |
|
1400 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
1501258 |
|
A |
|
239 |
|
1800 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
1501260 |
|
A |
|
682 |
|
4500 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
1501291 |
|
A |
|
4500 |
|
7200 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
1541031 |
|
A |
|
3600 |
|
3600 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
1541052 |
|
A |
|
43587 |
|
39000 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
1541064 |
|
A |
|
977 |
|
600 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
1541083 |
|
A |
|
2691 |
|
3600 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
1541088 |
|
A |
|
4601 |
|
22000 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
1541095 |
|
A |
|
789 |
|
1800 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
1541098 |
|
A |
|
14078 |
|
27600 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
1541118 |
|
A |
|
1300 |
|
7200 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
8705109 |
|
A |
|
9665 |
|
14400 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP01 |
|
8705111 |
|
A |
|
6100 |
|
22000 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP03 |
|
1541031 |
|
A |
|
10000 |
|
10200 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
UP03 |
|
1541134 |
|
B |
|
— |
|
7300 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
[ * ] |
|
$ |
[ * ] |
|
|
|
UP04 |
|
1541088 |
|
A |
|
4801 |
|
1000 |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
$ |
[ * ] |
|
|
|
|
|
|
|
|
136361 |
|
208700 |
|
|
|
|
|
$ |
[ * ] |
|
$ |
[ * ] |
|
||
Total Liability 11%
|
Plant |
|
Bin Size |
|
NCNR |
|
Bins FGI |
|
Bins WIP |
|
Bins of Die |
|
Total $ |
|
Cycle |
|
Delta |
|
||
|
UCM1 |
|
100 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UCM1 |
|
65 |
|
Y |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14wks |
|
$ |
[ * ] |
|
|
UCM1 |
|
100 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14wks |
|
$ |
[ * ] |
|
|
UCM1 |
|
26 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UCM1 |
|
100 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UCM1 |
|
80 |
|
Y |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14wks |
|
$ |
[ * ] |
|
|
UCM1 |
|
50 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14wks |
|
$ |
[ * ] |
|
|
UCM1 |
|
135 |
|
Y |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UGS1 |
|
40 |
|
Y |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UP01 |
|
265 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UP01 |
|
825 |
|
N |
|
2 |
|
2 |
|
.2 |
|
$ |
[ * ] |
|
14wks |
|
$ |
[ * ] |
|
|
UP01 |
|
50 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UP01 |
|
100 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UP01 |
|
180 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
15 wks |
|
$ |
[ * ] |
|
|
UP01 |
|
310 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UP01 |
|
250 |
|
Y |
|
,2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UP01 |
|
2000 |
|
Y |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UP01 |
|
72 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UP01 |
|
200 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14wks |
|
$ |
[ * ] |
|
|
UP01 |
|
885 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UP01 |
|
100 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UP01 |
|
1600 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UP01 |
|
315 |
|
Y |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14 wks |
|
$ |
[ * ] |
|
|
UP01 |
|
800 |
|
Y |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14wks |
|
$ |
[ * ] |
|
|
UP01 |
|
610 |
|
Y |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14wks |
|
$ |
[ * ] |
|
|
UP03 |
|
500 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14wks |
|
$ |
[ * ] |
|
|
UP03 |
|
500 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14wks |
|
[ * ] |
|
|
|
UP04 |
|
125 |
|
N |
|
2 |
|
2 |
|
2 |
|
$ |
[ * ] |
|
14wks |
|
$ |
[ * ] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
[ * ] |
|
|
|
$ |
[ * ] |
|
Cost Savings -4%
AE is ONLY liable for Power Mos IV parts and NCNR parts that APT has no other customers (FGI and WIP)
* Does not include Die Buffer Stock
New Parts to be Added
|
Plant |
|
APT P/N |
|
Class |
|
EAU 00 |
|
EAU 01 |
|
Unit |
|
01 Price |
|
Est. Annual $ |
|
Est. Annual |
|
|
|
UP01 |
|
50M65JVFR |
|
|
|
— |
|
— |
|
|
|
$ |
[ * ] |
|
|
|
|
|
|
Plant |
|
Bin Size |
|
NCNR |
|
Bins FGI |
|
Bins WIP |
|
Bins of |
|
Total $ |
|
Cycle |
|
Delta |
|
|
UP01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[ * ] = CONFIDENTIAL TREATMENT REQUESTED