Annual Report — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K Form 10-K for Fiscal Year End December 31, 1999 75 357K
2: EX-4.2 Indenture Dated 11/1/99 105 473K
3: EX-10.2 Oem Global Purchase Agreement 18 75K
4: EX-21.1 Subsidiaries of the Registrant 1 5K
5: EX-23.1 Consent of Arthur Andersen LLP 1 6K
6: EX-23.2 Consent of Kpmg LLP 1 6K
7: EX-27.1 Financial Data Schedule 1 6K
EX-10.2 — Oem Global Purchase Agreement
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EXHIBIT 10.2
OEM
GLOBAL PURCHASE AGREEMENT
Agreement Number: 20016
This Global Purchase Agreement ("GPA" or "Agreement") is entered into by
ADVANCED ENERGY INDUSTRIES, INC. (referred to as "Supplier", "you" or "your")
and LAM RESEARCH CORPORATION and any of its wholly-owned subsidiaries (referred
to as "Lam") as of the following date: October 12, 1999 ("Effective Date"). Each
of the words "parties", "us", "we" or "our" collectively refers to both Supplier
and Lam.
1. RECITALS:
1.1. Purpose: This GPA documents our agreement for our customer-supplier
relationship. It includes standard terms for Lam's purchase of goods
and services. Although these purchase terms will cover most
situations, attachments to this GPA may be included to address
specific circumstances.
1.2. Prior Review: Prior to signing this GPA, Lam requests that you review
it with your point of contact at Lam, and Lam assumes that you have
reviewed it and that you understand it thoroughly so that your and our
performance requirements will be met.
In consideration of the mutual obligations and benefits set forth in this GPA,
the parties agree as follows:
2. GENERAL MATTERS:
2.1. Scope: This GPA applies to any purchase of your Products or Services
by Lam ("Order") during the term of this GPA, whether or not this GPA
is referenced in the documentation of such Order. For Orders issued
but not fulfilled prior to expiration of this GPA, the terms of this
GPA shall continue to apply.
2.2. Term: The term of this GPA is three (3) years from the Effective Date.
This agreement may be extended for additional one (1) year terms at
the GPA's anniversary, if both parties agree in writing within 60 days
of the termination date.
2.3. Definitions: Words in this GPA, which are defined either when they
first appear or in the "Definitions" section at the end of this GPA,
shall be interpreted throughout the GPA consistent with those
definitions.
3. YOUR OBLIGATIONS AND RIGHTS:
3.1. Product and Process Quality: Lam has chosen to do business with you
based upon your reputation, quality of Products, ability to perform or
other business reasons which support Lam's expectation of your
reliability in Product and process quality. As part of your continuing
commitment to quality, you agree to the performance requirements
described in this GPA.
3.2. Specifications and Quality Protocols: Lam shall provide you with
technical specifications and/or drawings for each Product
("Specifications"), as well as quality control criteria pertaining to
your Products and processes ("Quality Requirements"). You must comply
with the Specifications and Quality Requirements at all times. If
mutually agreed, you may be required to verify compliance through
testing, inspection and/or issuance of a certificate of compliance.
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3.3. Technical Support Documents: Supplier shall furnish one complete set
of the required documents listed in Schedule 1 of this Agreement
applicable to your products sold to Lam. These documents shall be
provided at no cost to Lam. Delivery of these documents is a critical
performance objective. Reference Section 25.16.
3.4. Critical Components: You agree to abide by for all Critical Components
listed in the "Critical Components List" of Attachment E. If no
Critical Components are listed, then Attachment E does not apply to
you.
3.5. Continued Service and Parts Supply: Subject to your rights to
discontinue availability of Products under the "Cancellation" section
of this GPA (see paragraph 21.1), you grant Lam the option to continue
to purchase service and support, and replacement parts from you in
support of Products for a period of seven (7) years after Lam's last
purchase of such Product.
3.6. Production Lines; Change Control Requirements: Lam reserves the right
periodically to review and inspect your facilities, manufacturing
processes, materials and subcontractors; and you shall give Lam 90
days prior written notice of any reasonably significant changes made
or anticipated in such items. If you fail to obtain Lam's prior
approval for significant changes and continue to ship Product or
perform Services, Lam may, at its option and in addition to all other
remedies do one of the following: 1) return such Product or suspend
such Services without further liability to Lam; 2) accept such Product
or Services but with a deduction in the price Lam must pay you, if
any, as mutually agreed; or 3) inspect and approve such changes with
appropriate notice, or 4) terminate this Agreement.
3.7. Engineering Change Notification (ECN): Supplier must provide prompt
notice to Lam of Significant Changes to processes and/or design of
Product. This notification shall be sent either by Supplier's e-mail,
service bulletin, facsimile, or mail. The ECN will provide complete
written details along with drawings so that Lam will have complete
understanding of proposed change(s). Upon receipt of the proposed ECN,
Lam will have ten (10) working days to review and respond either
approving or disapproving the proposed change(s). If no response is
received within ten (10) working days, Supplier will notify Lam of the
consequences and Supplier's planned actions. Supplier agrees not to
ship to Lam any proposed changes without obtaining Lam's written
approval in advance. Supplier understands and agrees that an oral
change authorization from any Lam employee is not sufficient and Lam
has no liability for changed Product, absent Lam's written approval
for the changes. If you fail to obtain Lam's prior approval for
Significant Changes and continue to ship Product or perform Services,
Lam may, at its option and in addition to all other remedies do one of
the following: 1) return such Product or suspend such Services without
further liability to Lam; 2) accept such Product or Services but with
a deduction in the price Lam must pay you, if any, as mutually
agreed;or 3) inspect and approve such changes with appropriate notice,
or 4) terminate this Agreement.
3.8. Provision of Services: You agree to provide those Services set forth
in the Order and in the Description of Services and/or Support
attached as Attachment A (and Attachment B if applicable), which is
incorporated here by reference. Your Services shall be performed by
qualified, certified and adequately supervised personnel. As mutually
agreed, you may be required to verify compliance of the Services
through testing, inspection and/or issuance of a certificate of
compliance. If no Services are set forth in Attachment A and B, then
Attachment A and/or B do not apply to you.
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4. DELIVERY:
4.1. Force Majeure: Neither party shall be liable for any costs, losses,
damages, claims or liabilities ("Damages") due to non-performance
caused by events totally beyond its control ("Force Majeure");
provided that the non-performing party provides prompt written notice
to the other party of anticipated or existing Force Majeure events and
uses all reasonable diligence to perform during and after the Force
Majeure event.
4.2. Delivery: Delivery of Products shall be (i) on the delivery date
specified in the Order, (ii) FOB your dock, (iii) in accordance with
Lam's packaging specifications, and (iv) via carrier specified in the
Order (or, if no carrier is specified, then a common carrier from
Lam's Authorized Traffic Guide). You shall notify Lam immediately of
any anticipated late deliveries or facility shutdowns. If necessary to
ensure timely delivery, you shall deliver via expedited transit at
your cost, except that Lam will pay such cost if necessitated solely
by either Lam's delay or Lam's request.
4.3. Accompanying Materials: One complete set of documentation and/or
operating and maintenance manuals for each Product supplied to Lam
will be furnished at no cost to Lam. Supplier will not be required to
ship a manual with each unit delivered to Lam. Supplier shall provide
updated documents when made available by the Supplier at no cost to
Lam.
4.4. Non-conforming Deliveries: Any Products not in conformance with the
Order on the date of delivery may be rejected and returned at your
expense. Any Services not in conformance with the Order or Attachment
A or Attachment B on the date of performance may be rejected and
suspended. Lam shall notify you of the grounds for rejection. Lam may
(i) permit you to cure the non-conformance, (ii) cancel such
non-conforming Products or Services without cost or liability to Lam,
(iii) or accept them with a reasonable reduction in the purchase price
owed by Lam, as mutually agreed.
5. DELIVERY AND QUALITY GOALS:
5.1. Delivery and Quality Goals: Complying with scheduled delivery dates,
Specifications and Quality Requirements is a critical performance
objective. All Products shipped by you must meet Lam's goals for
consistency in Specifications, Quality Requirements and scheduled
delivery dates ("Goals"). Lam may review and adjust these Goals
periodically based upon Lam's business needs.Reference Section 25.16.
6. QUALITY; ACCEPTANCE; RELIABILITY:
6.1. Criteria: All Products supplied shall comply with Product
Specifications and Quality Requirements. Supplier shall demonstrate
such compliance and Lam's personnel may witness any related test.
Supplier shall make available appropriate technical support. Lam shall
have the right to make any inspection or appropriately test that Lam
shall deem advisable before and after shipment of Product to insure
that the Product meets mutually agreed upon specifications. Payment of
Supplier's invoices shall not constitute acceptance, approval or
certification by Lam, and shall not relieve Supplier of any warranty
or other obligation set forth herein or under the Law.
6.2. Non-conforming Product: With respect to any new Product delivery which
Lam determines is non-conforming to mutually agreed specifications,
Lam may, at its option: (i) within 30 days of receipt of non-consigned
Product or within 30 days of removal of Product from the consignment
inventory, reject and return the Product, provided that Lam shows
future usage, to Supplier (in which case Supplier shall bear the risk
of loss or damage during transit from Lam's manufacturing facility to
Supplier's local service facility). After 30 days only options (ii)
and (iii) will apply; (ii) make the Product available for correction
at Lam's facility.
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Supplier shall promptly correct any defect at its expense, either by
repairing or replacing any defective part(s) or by replacing the
Product within ten (10) working days after your receipt of the
rejected Products; or (iii) accept or keep the Product with a
deduction in the price of the Product, as reasonably determined by the
parties. Any Products or portions thereof replaced by you shall become
your property. Lam agrees to pay Supplier for all charges associated
with the return and testing of Products which pass all Supplier's
tests without any corrective action and are determined to meet the
mutually agreed specifications (at time of original shipment). See
Attachment D for schedule of agreed upon charges.
6.3. Reliability: Product reliability in the field will also meet all
reliability portions of Product Specifications. In addition, certain
specifications may require that Lam and/or its customer will have
access to spares locally. All reliability performance specifications
(e.g. uptime or availability, MTBFp, MTBAp) will be defined and
mutually agreed upon by the parties; a resulting Reliability
Performance Specifications will be mutually signed and attached hereto
as Schedule 2 of the GPA. In those specific cases where Products are
shown to provide less than the agreed reliability performance
specifications over a period of time, Lam and Supplier will work
together to define mutually acceptable corrective actions to remedy
the situation.
6.4. Reliability Road Map: If a product listed in Schedule 2 of this
Agreement does not meet the required reliability specification,
Supplier shall provide to Lam Commodity Manager a road map identifying
steps Supplier will take, including milestones, to ensure that the
product meets the required reliability specification.
7. INSPECTION AND TESTING:
7.1. Procedures: Supplier shall maintain calibrated, capable inspection and
test equipment, and associated inspection procedures. Supplier must
not proceed with production until all appropriate means for inspecting
and testing per mutually agreed upon Specifications and Quality
Requirements are met. Lam may reject any material produced without
proper verification of compliance to mutually agreed upon
Specifications and Quality Requirements.
7.2. Inspection Records: Supplier shall, on request by Supplier Quality
Engineering, provide evidence showing that Supplier's inspection and
testing methods are consistent with Lam's quality guidelines on
correlation between Lam and Supplier inspection and test results.
8. ACCEPTANCE SAMPLING AND SCREENING:
8.1. Change in Quality Requirements: Lam reserves the right to alter its
quality requirements for acceptance and to change accordingly the
acceptable quality levels. In conjunction with this, Lam agrees to
provide Supplier with written advance notification of changes to the
stated requirements.
9. SOURCE INSPECTION:
9.1. Source Inspection Requirements: Supplier must support Lam Source
Inspection as designated by Lam, and per the "Lam Source Inspection
Procedure for Suppliers". Supplier must provide ample space, access to
inspection equipment, and availability of inspection personnel as
needed for Lam Source Inspection. The Lam Inspector will not proceed
with inspection unless Supplier has demonstrated that all requirements
have been met.
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9.2. Certificate of Conformance: You will provide a Certificate Of
Conformance (COC) with each Product, including repaired Products,
certifying that the original or repaired Product meets or exceeds the
mutually agreed upon Specification and Quality Requirements.
10. FAILURE REPORTING:
10.1. Failure Reporting: Whenever requested by Lam, and with respect to
specific identified failed Products, you will provide to Lam's
Commodity Management a worldwide Failure Analysis identifying the
following:
10.1.1. Percentage of No-Trouble-Found ("NTF") of the failed Product
over the past six months
10.1.2. Total number of assemblies of the failed Product repaired in
the past six months
10.1.3. Component or assemblies you replaced in the failed Product
that fixed the cause of the failure
10.1.4. Pareto of defective components used to repair the failed
Product over the past six months
10.1.5. Engineering changes that have been released that would have
affected the failure
10.1.6. Revision level of the Product assembly when received by
Supplier
10.1.7. Latest revision level of the repairs to the failed Product
10.1.8. Date received by the Supplier
10.1.9. Date original Product was shipped to Lam
10.2. Root Cause/Failure Analysis Report: You will provide upon request a
Root Cause Analysis report on failed Product. The Root Cause Analysis
report will be sent to Lam's Commodity Manager containing the
following information:
10.2.1. Testing before any repair activity and document failure
symptoms
10.2.2. Percentage of No-Trouble-Found (NTF) of the failed Product
over the past six months
10.2.3. Total number of assemblies of the failed Product repaired in
the past six months
10.2.4. Component or assemblies replaced that fixed the problem
10.2.5. Pareto of defective components used to repair the failed
Product over the past six months
10.2.6. A detailed analysis of the cause of the failure to the
component level including photographs
10.2.7. Engineering changes that have been released that would
affect this failure
10.2.8. Revision level of the assembly when received by Supplier
10.2.9. Latest revision level of the repairs to the failed Product
10.2.10. Date received by the Supplier
10.3. Corrective Action Report: Supplier shall provide upon specific
request a Corrective Action Report detailing the required steps to
prevent future recurrence of the same failure. This request must be
received prior to receipt of the defective unit from Lam. This report
is due within ten working days after issuance of the final Root
Cause/Failure Analysis report. Lam reserves the right to approve the
permanent corrective action steps prior to implementation.
10.4. Delivery of Reports: Supplier shall provide upon specific request a
preliminary Root Cause/Failure Analysis within fifteen days after Lam
has returned the defective product to Supplier. A detailed Root Cause/
Failure Analysis will be available within 30 days after the defective
product is received by Supplier. Supplier shall also provide a Failure
Report on a monthly basis.Reference Section 25.16.
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11. PACKAGING AND LABELING:
11.1. Clean Room Requirements: Clean room parts will be cleaned and
packaged to Lam's clean room specifications. For clean room guidelines
refer to Lam Product Protection Procedure (Part Number:
505-100342-001). This section does not apply to Advanced Energy.
11.2. Packaging and Crating Guidelines: Both new Product and Repaired
product will be shipped (one per) in Lam approved packaging
appropriate for shipping anywhere in the world by surface or air
without damage to the part. The packaging material will contain no
foam "peanuts" or chips. For crating guidelines, see Lam's Crating
Instructions (Part Number: 505-100294-001). For repaired product
packaging guidelines, see Lam's Packaging Instructions (Part Number:
603-090436-001). Lam reserves the right to review the packaging method
used by Supplier to ship the Product. Supplier's packaging and
shipping practices shall be designed to protect the product against
damage, adjustment, change in calibration, etc., and impairment of the
Product's functional integrity as originally shipped to Customer.
11.3. Bar Code Requirement: Supplier shall be required to affix to one end
of the approved packing a Bar Code label with readable/legible
markings for all shipments. This process shall be implemented by
3/01/00.
11.4. ESD Requirement: Lam and Supplier shall be required to utilize
processes, procedures and packaging that protects the Product against
Electrostatic Discharge (ESD) damage.
12. WARRANTY:
12.1. Form, Fit and Function Warranty: You warrant that all of your
Products conform to proper form, fit and initial function reasonably
intended as of both the date of the Order and date of shipment.
12.2. Material, Workmanship and Specifications Warranty: You warrant that
all of your Products are free from defects in workmanship and material
and conform to mutually agreed upon Specifications and Quality
Requirements for a period of twenty four (24) months from the date of
shipment to Lam. This warranty shall be effective on shipments after
11/01/99.
12.3. Service Warranty: Unless otherwise agreed in writing by both of us,
you warrant that any Services performed by you shall be free from all
defects in workmanship for a period of ninety (90) days from the date
you completed such Services.
12.4. Software Warranty: Software is warranted as being free from defects
in design, workmanship and material for a period of ninety (90) days
from the date of delivery.
12.5. Breach of Warranty: In addition to your obligations described in
paragraph 6.2, following the date the defective Product has been made
available to you, you shall, at your expense, (1) submit a detailed,
written corrective action plan (if applicable and mutually agreed upon
by both parties) to Lam within thirty (30) days, and (2) use your best
efforts immediately to correct the defect and complete delivery of the
repaired Product and/or corrected Service. If you cannot correct the
defect, then you shall, at your option, either (a) replace the
defective Product or (b) refund Lam the price of the defective Product
or Service. For new units which are deemed "defective" at Lam's
manufacturing facility, you shall bear the risk of loss or damage
during transit to Supplier's local service facility. This warranty
covers materials,
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parts, labor, travel, and all other related costs needed to inspect,
replace or correct design, material and/or workmanship defects. In
these cases, you agree during the warranty period that you will not
charge Lam any fees or expenses whatsoever you incur in connection
with your warranty obligations. You shall own any defective Products
once replaced under this warranty provision. Lam's rights under this
Warranty are in addition to any other rights or remedies to which Lam
may be entitled under this Agreement or applicable law.
12.6. Limitations on Your Warranty Obligations: These warranties will not
apply if: (a) the Product was not properly installed or operated by
Lam or its Customer under reasonable manufacturer-recommended
conditions, (b) Lam fails to notify you in writing of the defect in
question during the warranty period, (c) Lam fails to make the item
available for correction within a reasonable time, (d) we reasonably
agree after examination of the Product that such claimed defect or
nonconformity does not exist, (e) the Product was manufactured or
modified to Lam's detailed design and such design is the contributory
cause of the defect, or (f) the Product is utilized for an
application for which it is not suited or intended by the
manufacturer. In these cases only, Lam agrees to reimburse you your
reasonable fees and expenses incurred in connection with your
demonstration to Lam that the Product complies with the Specification
and Quality Requirements. Further, any software you supply to Lam is
not warranted as free from errors or "bugs," and your sole obligation
shall be to use reasonable efforts to supply Lam with a corrected
version promptly after Lam notifies you of the defect. The original
warranty period shall not be extended by your acts in compliance with
this section. The foregoing warranties are exclusive of all other
warranties, whether written, oral, expressed or implied, including
any warranty of merchantability or fitness for a particular purpose.
13. SUPPLIER EFFICIENCY:
13.1. Supplier Efficiency: In exchange for Lam's commitment to purchase
Products, you will use your best efforts to reduce lead times,
manufacturing cycle times and costs of Products during our
relationship. We anticipate that this can be accomplished by
implementing better business practices, improved processes, value
engineering or by other methods.
13.2. Lead Time Reductions: With respect to new product Our goal is that no
more than four weeks will elapse between Lam's placement of an Order
and your delivery of the Product, unless there is an Excused Event or
Lam's Order specifies a longer delivery schedule. Our lead-time goal
for repaired Product is separately described in Attachment A. In the
event any new Product lead time exceeds four weeks, then you agree to
submit a detailed written plan in ten working days, to reduce such
lead times to four weeks within a six month period. You agree to use
your best efforts to meet such lead time reduction goals. Lam agrees
to provide Supplier with a detailed forecast for Products released
for Lam production. Supplier will have the right to request "Excused
Event" if there are extensive short term changes in the forecast or
actual consumption versus forecast.
13.3. Cost Reductions:
13.3.1. Reduced Aggregate Cost for All Products: Our goal is to
achieve a seven percent annual reduction in the aggregate
purchase price of all Products purchased by Lam. Upon
request, you shall submit a detailed written plan to meet
this goal through design changes, Product introduction or
improved efficiencies and you agree to use your best efforts
to meet such cost reduction goals.
13.3.2. Volume Discount: High volume purchasing by Lam shall be
rewarded annually on a calendar year basis. If at anytime the
monetary value of Lam's total purchases of all products
within a calendar year exceeds the Total Dollar Volume
Thresholds listed in
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the table attached in Attachment C, then Lam shall be
entitled to the corresponding Volume Discount on the amount
by which the Threshold was exceeded during that calendar
year. The discount shall be credited to Lam after all
invoices for product delivered to and fully accepted by Lam
have been paid for that calendar year. Volume discounts
earned by Lam for purchases during a given year shall be
reset to zero at the end of that year, and shall not carry
over to affect pricing in the subsequent year. If Attachment
C does not have specified volume discounts listed, then this
paragraph does not apply to you.
14. INTELLECTUAL PROPERTY:
14.1. Intellectual Property: You agree to indemnify, hold harmless and
defend (with counsel reasonably approved by Lam), Lam and its
affiliates, shareholders, directors, officers, employees and agents
from and against any claims, fees, costs, awards, judgments,
liabilities and or damages (including without limitation court costs
and reasonable fees of attorneys and other professionals) ("Damages")
arising out of a claim as to a Product asserted within ten (10) years
from the date of its sale under this Agreement that the Product (as a
stand alone unit) infringes, directly or contributorily, any patent,
copyright, maskwork right, trade secret or similar right of any third
party. You also agree to provide Lam prompt and reasonable written
notice of bona fide claims made with respect to your Products.
Notwithstanding these obligations, you may at your expense and at
your option: (i) procure for Lam and/or its customers the ownership,
use or distribution rights granted with respect to the Products; (ii)
modify the infringing item to remove the infringement, without
impairing compliance with the Quality Requirements and
Specifications; or (iii) replace the infringing item with a
non-infringing item, without impairing compliance with the Quality
Requirements and Specifications; however, if you have used reasonable
efforts and cannot accomplish options (i), (ii) or (iii), then you
shall refund to Lam the amount paid for the infringing Products, less
reasonable depreciation. Lam agrees to use reasonable efforts to
facilitate the exercising of options (i), (ii) or (iii). This
indemnification clause does not apply when the Products are
manufactured or modified to Lam's design, quality requirements and/or
specifications, and such design, quality requirements and/or
specifications results in the Damages.
15. LAM SUPPLY PROGRAMS:
15.1. Lam Supply Programs: The manner in which you supply Products to Lam
may vary depending on the type of Lam Supply Program your Products
are assigned to by Lam. The Lam Supply Programs include: purchases
through issuance of direct purchase orders; the Automatic Part Pull
System ("APPS"); the Ship To Point of Use Program ("STP"); Freestock,
the Consignment Inventory Agreement (CIA); or other program which, as
a result of future experience, Lam decides to implement. During the
course of our relationship, Lam may decide to assign or re-assign
your Products to one of these Lam Supply Programs. Prior to
assignment to one of these programs, your Lam contact will discuss
the program with you. Each of these Lam Supply Programs has different
requirements for the performance of our respective obligations. Your
responsibility is to discuss and understand why and how any Lam
Supply Program is applicable to you. Your agreement to support and
comply with the specific requirements of any applicable Lam Supply
Program to which your Product is assigned must be provided in writing
prior to your inclusion in the program or shall be deemed given the
first time you ship Product after inclusion in the program.
16. CUSTOMS & INSURANCE DOCUMENTATION:
16.1. Customs & Insurance Documentation: Upon request, you shall provide
(a) a completed manufacturer's affidavit and/or other documentation
as may be required by US Customs or
8
other governmental authorities with respect to your Products, and (b)
proof, in form and substance reasonably requested by Lam, of any
insurance policies that we might mutually agree you must carry.
17. SECURITY AND SAFETY MATTERS:
17.1. Security and Safety Matters: Each party may enter the premises of the
other party during normal business hours with respect to the
performance of this Order, subject to facility security regulations
and US Government clearance requirements, if applicable. Each party
may, in its sole discretion, remove from its premises any employee,
contractor or agent of the other not in compliance with such
regulations. You shall not introduce any substance which is regulated
by any governmental authority as being a threat to health, safety or
the environment onto Lam's premises without prior written approval,
and then only in compliance with law. You shall immediately notify
Lam if the Products or Services violate any law or have a defect
threatening health, safety or the environment. Replacements,
modifications, associated service calls or other acts or items
required to remedy such defect or violation shall be provided
promptly and at no cost to Lam or its Customers.
18. LAM TOOLS:
18.1. Lam Tools: Any equipment, materials or other items provided or paid
for by Lam as part of either parties' performance under this GPA (i)
shall remain the property of Lam, (ii) shall be used by you only in
performance of Lam's Orders, and (iii) shall be returned to Lam upon
request.
19. LAM'S OBLIGATIONS AND RIGHTS:
19.1. Orders; Electronic Transmission of Documents: Lam will issue you an
Order to purchase Products. The Order is subject to your acceptance.
Your acceptance of the Order will be evidenced by the earlier of
either your return of a signed Order acknowledgment or your delivery
of any Products and/or Services pursuant to the Order. Orders and
other related documents may be issued by Lam in document or
electronic form, including via electronic data interchange ("EDI"),
provided that we have established an EDI program between us.
19.2. Forecasts Generally: Lam will give you forecasts (for Products
released for Lam production) of estimated quantities of Products it
may purchase ("Forecast"). The Forecasts are for information purposes
only, and are simply Lam's estimate at that time of its anticipated
needs. However, Forecasts may change and may differ significantly
from Lam's actual Orders. Forecasts are neither commitments to
purchase nor authorizations by Lam to deliver Product.
19.3. Payment: Payment shall be made in U.S. dollars (unless otherwise
agreed) with the following terms: net thirty (30) days after receipt
of your invoice. At Lam's discretion, any payment you are owed may be
set off by amounts you otherwise owe to Lam. Any tax, duty, or other
charge imposed by any taxing authority, shall, upon demand by you, be
paid by Lam, except where Lam timely provides you with an applicable
tax exemption certificate.
19.4. Pricing: Unless otherwise agreed between us, Lam will pay you for
Product at prices determined according to the terms as stated in
paragraph 19.3.
19.5. Agreed Prices: Subject to any volume discounts, the agreed purchase
price for Products shall be as set forth in the most recent Order,
unless set forth in the "Price List" attached as Attachment D. Such
price may be periodically revised by our mutual written agreement.
Any prices set forth in such price list shall supersede prices in
Orders. Prices for ordered Products or Services shall not exceed the
lowest prices offered to your other customers for like Products or
Services under like terms and circumstances.
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19.6. Changes in Requirements: Lam may at any time require changes to an
Order, any Specifications, shipment or packing methods, time or place
of delivery, and the like ("Change"). A Change is only effective upon
issuance of a Change Order. If any Change causes a variation in your
costs or the time required for performing under an Order, a mutually
agreeable, equitable adjustment will be made in the Order price,
delivery dates or both, based upon your written, itemized request for
an adjustment substantiated by evidence reasonably satisfactory to
Lam; provided that no adjustment will be made unless an actual Change
Order has been issued.
19.7. Audit: At reasonable times and upon reasonable prior notice, Lam may,
with Supplier approval, examine your operations and processes which
pertain to the ordered Products or Services to verify conformance
with this GPA.
19.8. Inventions: Any new ideas, creations, works or inventions
("Inventions") created by you as part of the specific course and
scope of engineering design efforts under this agreement (and
separately paid for apart from product sales) shall be jointly owned
by the parties. In such matters, each party shall cooperate
reasonably with the other to pursue any patent, copyright or
trademark which either party deems appropriate to pursue. Each party
shall separately own any Invention to the extent arising from its own
efforts outside of this agreement, except that Lam shall have an
irrevocable, permanent, fully paid up, royalty free and
non-transferable license to use, make and have made any of Supplier's
Inventions to the extent based on, derivative of, or arising from
Lam's separately created designs; provided that Lam agrees not to
make or have made any products from such Inventions unless Supplier
ceases to be a commercially reasonable source of supply for such
products. In this regard, and without limitation, if Supplier does
not offer Lam the same price (or lower) that Supplier offers to other
customers on such products containing the Inventions, Supplier will
not be deemed a "commercially reasonable source of supply" to Lam.
20. BOTH OF OUR OBLIGATIONS:
20.1. Advertising: Neither party shall, without the prior written consent
of the other, (i) use any identifying names, logos or other
commercial or product designations of the other party, (ii) make
reference to the other party in any advertising or other promotion,
or (iii) disclose the existence of this transaction.
20.2. Assignment; Subcontracting Approvals: Neither your nor our rights or
obligations may be assigned to any other person or entity in whole or
in part, unless the party proposing such assignment has obtained the
other's prior written consent.
21. CANCELLATION
21.1 Cancellation by Supplier: Supplier and Lam agree to work
cooperatively towards Product consolidation and elimination of slow
moving Products. Supplier may discontinue availability of slow moving
Products at any time by giving Lam prior written notice
("Discontinuation Notice") offering Lam the opportunity to place a
"last buy" purchase order. Upon request from Lam, Supplier will
provide Lam
10
up to six (6) months from date of Discontinuation Notice for
placement of "last buy" purchase order with deliveries not to exceed
nine (9) months from date of Discontinuation Notice. Upon request,
Lam agrees to provide Supplier with a forecast for Products which
Supplier deems to be slow moving. Supplier agrees to provide Lam with
the same time period when a Discontinuation Notice is issued by the
Supplier when the business relationship is truncated by the Supplier.
Supplier also agrees to continue to provide products that meets the
mutually agreed upon specification and quality requirements and
agrees to deliver product per the mutually agreed upon schedule.
21.1.
21.2. Cancellation for Default: Either of us may cancel this GPA or any
Order, in whole or in part, immediately without any cost or liability
if the other party has (1) failed to perform fully any obligation of
this GPA and (2) has not cured such failure within thirty (30) days,
or within a reasonable period if the failure is not curable in thirty
(30) days, from the date of written notice of the failure to perform.
If you repeatedly fail to meet scheduled delivery dates,
Specifications or Quality Requirements, then Lam may, but is not
obligated to, cancel any Order without cost or liability, and
exclusive of any other remedy Lam may have under the GPA or
applicable law.
21.3. Lam's Commitment for Cancellations for Convenience: Lam may at any
time cancel for convenience any Order, in whole or in part, upon
prior written notice or facsimile ("Cancel Notice"). If Lam's Cancel
Notice is issued three (3) months or more prior to the scheduled
delivery date, then Lam shall have no liability whatsoever for such
canceled Products and/or Services. If Lam issues a Cancel Notice less
than three (3) months in advance of a scheduled delivery date or
makes a Change, either of which renders your Product inventory or any
Service performed obsolete, then, with respect to such obsoleted
inventory or Service, the parties shall negotiate in good faith to
determine the amount to be paid by Lam. If the parties fail to agree,
Lam commits to pay your claims for the following enumerated items as
your sole and exclusive remedy for such cancellation or Change, up to
a maximum amount not to exceed in any case the total purchase price
for all Products and/or Services canceled or Changed:
21.3.1. Completed Products or Services: (i) the purchase price for
any such Products or Services Lam has not yet paid for,
which are completed in accordance with an Order prior to the
date of Lam's Cancel Notice or Change ("Notice Date"), to the
extent such Products comply with the applicable Quality
Requirements and Specifications in effect prior to the Notice
Date, and to the extent such Services comply with the Order
or Attachment A (as applicable); provided, however, that Lam
will not pay for any Products or Services completed after the
Notice Date.
21.3.2. Product WIP and Raw Materials: and, with respect to Products
only, (ii) the actual costs incurred by you prior to the
Notice Date for Raw Materials and WIP which are allocable to
the canceled or changed portion of the Order, less any
salvage value. However, in all cases your recovery will be
limited as follows: (a) you will only be reimbursed for Raw
Materials and WIP which are not cancelable, salable, or
otherwise usable by you; (b) the reasonable manufacturing
cycle time period for the Products in question will be the
maximum period for which you may claim WIP costs prior to the
Notice Date; and (c) the reasonable lead time necessary to
order Raw Materials for the Products in question will be the
maximum period for which you may claim Raw Materials' costs
prior to the Cancel Date. "WIP" means all labor performed and
material that has been transformed, altered or processed by
you, your contractors, agents or consultants pursuant and
directly allocable to the Order. "Raw Materials" mean
materials, excluding WIP, that have been purchased or
committed to by you in good faith for the Order.
11
22. Your Obligations Upon Notice of Cancellation or Specification Change:
Immediately following your receipt of a Cancellation Notice or notice of a
Change (as defined previously), you must (i) stop all work, (ii) incur no
further costs, and (iii) protect all property in which Lam has or may
acquire an interest or for which you feel Lam is obligated to pay. You are
also required to use reasonable efforts to minimize any Damages to you
which could result from the cancellation or Change. Lam's liability under
this GPA will be decreased to the extent you fail to take such actions. In
the event of cancellation or Change, Lam may require you promptly to
transfer and assign title and immediately deliver to Lam any completed
Products, WIP, Raw Materials, Lam Tools, Intellectual Property,
confidential information and other items that you have produced or acquired
for the performance of the canceled or Changed portions of the Order. All
claims by you for any cancellation or Change must be substantiated with
evidence in form and substance reasonably satisfactory to Lam.
22.1. In no event will Lam be liable to you any consequential, special,
indirect or punitive damages of any kind.
23. CONFIDENTIAL INFORMATION:
23.1. Confidential Information: In the course of performing our obligations
under this GPA, we may obtain or be provided with each other's
confidential information. We will in all cases attempt to enter into
specific non-disclosure agreements to protect each other's
confidential information from unauthorized disclosure and use.
However, in the absence of such non-disclosure agreements, you agree,
for five years from the date you receive Lam's confidential
information, neither to use the confidential information in any
manner which would result in a disclosure to third parties (except as
necessary to perform your obligations under this GPA), nor disclose
it to any third party (except to your employees with a need to know
and who previously sign an agreement protecting Lam's rights). You
also agree to limit your use of such information as needed to carry
out your obligations under this Agreement. You shall prevent
unauthorized disclosure by using the same degree of care you use to
prevent disclosure of your own confidential information, but not less
than a reasonable degree of care. Lam confidential information shall
be immediately returned upon request. Either party providing the
other with confidential information shall clearly mark it as such or,
in the event of oral or intangible information, may identify it in
writing as confidential within a reasonable time. In the event either
party inadvertently discloses any item of confidential information
not so marked or identified, the other party's sole recourse shall be
to prevent any further disclosure of such information.
24. INDEMNITY:
24.1. Indemnity: Subject to other provisions herein, each party agrees to
defend, indemnify and hold the other party harmless from and against
all Damages (including without limitation court costs and reasonable
fees of attorneys and other professionals) arising out of the
indemnifying party's acts or omissions or breach of any term in this
GPA.
25. MISCELLANEOUS:
25.1. Relationship of the Parties: You are an independent contractor under
this GPA. This GPA is not to be construed as creating an employment,
agency, partnership, joint venture or any other relationship or form
of legal association between us.
25.2. Insolvency: In the event that a party: (i) becomes insolvent or
unable to pay its debts or perform its obligations as they mature;
(ii) becomes the subject of any voluntary or involuntary proceeding
in liquidation, dissolution, receivership, attachment, composition or
general assignment for the benefit of creditors; or (iii) pursues any
other remedies under any other law relating to relief for debtors,
then such party will provide prompt notice to the other and
reasonable assurances therefore, as may be requested from the other
party from time to
12
time, that it can and will perform its obligations under an Order or
this GPA. If such notices or assurances are not received in a timely
manner or are not reasonably satisfactory to the party receiving the
assurances, then such party may terminate any Order or this GPA in
whole or in part without any cost or liability.
25.3. Entire Agreement: This GPA, together with all attachments,
constitutes our entire understanding and agreement with respect to
the subject matter of this GPA, and supersedes all prior and
contemporaneous understandings, representations and agreements,
whether written or oral, with respect to such subject matter. Any
other terms or conditions, including those in either party's purchase
orders, invoices, confirming documents and the like, are deemed
deleted unless attached hereto or separately agreed to in writing to
be a part of this Agreement. This GPA may only be modified by our
written agreement.
25.4. Notices: All notices must be in writing and are deemed effective on
the earlier of: the date of personal delivery, the receipt of
confirmed telex or fax; or, if given by mail, three business days
after the date deposited in the United States mails, postage prepaid,
registered or certified, with return receipt requested. Notices will
be addressed to Lam and Supplier at their respective addresses
appearing in the signature block of this GPA, but each party may
change its address by prior written notice.
25.5. Governing Law: This GPA will be governed and construed in all
respects by the laws of the State of California without regard to
conflict of laws considerations. Unless otherwise agreed,
implementation and jurisdiction of any litigation or other dispute
resolution modality will be in Santa Clara County, California.
25.6. Disputes: If either one of us is aware of a dispute, controversy or
claim arising out of this GPA or the Products or Services provided
("Dispute"), then that party will immediately give written notice to
the other. We will first try to resolve the Dispute through good
faith negotiation and by whatever escalation policies are agreed
between us. However, if we cannot resolve the Dispute by negotiation,
then, within 90 days after written request from either of us to the
other ("Arbitration Notice"), the Dispute shall be submitted to
binding arbitration administered in accordance with the American
Arbitration Association's Commercial Arbitration Rules and
Supplementary Procedures for Large Complex Disputes ("Rules").
Arbitration proceedings shall be conducted in English by a single
arbitrator selected by the parties, who must have at least ten (10)
years' of dispute resolution experience in related industry matters,
or be either a retired judge or a practicing lawyer. Each party may
conduct such discovery as it deems necessary; however the arbitrator
may limit the conduct of such discovery as appropriate. The
arbitrator may only provide remedies available under California law,
and in no event in excess of those permitted under this GPA. The
arbitrator may not fashion any provisional or other equitable relief.
The award shall be final and binding on the parties, and each party
waives, to the fullest extent permitted by law, any appeal right it
may have in any jurisdiction. The existence, proceedings, discovery
and results of the arbitration may not be disclosed, without prior
written consent of both parties. Filing a judicial action for
recording a notice of pending action, order of attachment,
receivership, injunction or other provisional remedies shall not
waive or diminish these arbitration rights.
25.7. Attorneys Fees: In any judicial or arbitration proceeding arising out
of this GPA, or the Products or Services provided, the prevailing
party is entitled to recover all reasonable costs incurred pertaining
to such proceeding, including without limitation reasonable costs and
fees of attorneys or other professionals ("Expenses"), except that
(i) if the prevailing party has at any time refused a settlement
offer pertaining to such dispute which is equal to or greater than
the prevailing party's actual recovery as determined in such judicial
or arbitration proceeding, then no such Expenses will be awarded, and
(ii) if the prevailing party has at any time refused a settlement
offer pertaining to such dispute which is less than the prevailing
party's actual
13
recovery as determined in such judicial or arbitration proceeding,
then any such Expenses associated with recovering the difference
between the refused settlement offer and the actual recovery must
bear a reasonable relation to such difference.
25.8. Order of Precedence: The following list of documents is the order of
precedence which will govern any situation where there is a conflict
of terms and conditions among these documents or obligations of the
parties: (i) any supplemental terms or instructions on the face of
Lam's Orders accepted by you will govern first and foremost; then
(ii) the terms of this GPA (including any modifications or addenda)
then (iii) the Specifications; and then (iv) the Quality
Requirements.
25.9. Severability: To the extent any part of this GPA is determined to be
unenforceable, the remaining provisions will remain in effect and be
interpreted and enforced to effectuate the intent of the parties.
25.10. Counterparts; Successors: This GPA may be signed in counterparts.
This GPA binds and inures to the benefit of the parties' respective
successors or permitted assignees.
25.11. Survival: The following sections of this GPA (as denoted by the
following list of corresponding captions) and related subsections,
if any, shall survive expiration or early termination of this GPA:
Warranty; Intellectual Property; Customs; Advertising; Cancellation;
Compliance with Laws; Confidential Information; Indemnity; Security
Procedures; Attorneys Fees; Disputes; Entire Agreement; Force
Majeure; Governing Law; Notices; Order of Precedence; Severability;
Successors; Survival; Waiver; and Definitions.
25.12. Waiver: Failure by a party to take affirmative action with respect
to any breach of these terms by the other party shall not be
construed as a waiver of that breach or of future breaches.
25.13. Addenda: Proposed addendum(a) or modification(s) shall be mutually
agreed upon in writing by local management and forwarded to the Lam
Commodity Manager (CM), who shall review the addendum or
modification for consistency with this Agreement. Upon acceptance by
both Lam and Supplier, the proposed addendum(a) or modification(s)
shall be incorporated into this Agreement. If the proposed
addendum(a) or modification(s) is rejected by either party, the CM
shall return it to the originator and identify the reason for
rejection.
25.14. Limitation of Liability: In no event will either party be liable to
the other party for any consequential, special, indirect or punitive
damages.
25.15. Miscellaneous: Neither the section headings nor the recitals are
intended to be terms of this GPA or used to interpret the terms of
this GPA, or any attachment hereto.
25.16. Corrective Action : If Lam is dissatisfied with performance for
(3.3) Technical Support Documents; or (5.1) Delivery and Quality
Goals; or (6.4) Reliability Road Map; or (10.4) Delivery of Report;
then Supplier will put in place a mutually agreed upon corrective
action plan that will address the issue.
26. DEFINITIONS: As used in this GPA, the following capitalized terms have the
following meanings:
26.1. "Excused Event" means a breach of your obligations under this GPA
which is either waived
14
in writing by Lam, caused by a force majeure event, caused by a Lam
change order, or otherwise caused solely by Lam.
26.2. "Order" shall mean any purchase order, change order or other
document requesting Supplier to provide Products or Services. The
terms and conditions of this Agreement are hereby incorporated by
reference into any such Order.
26.3. "Product" means all Products and other items ordered by Lam from
you, including, without limitation, assemblies, parts, spare parts,
software, hardware and upgrades.
26.4. "Service" means work to be performed by Supplier pursuant to an
Order or this GPA, including, without limitation, installation,
qualification, maintenance, warranty repair, service call,
upgrades/modification, refurbishment, retrofits, spares and service
contract work.
26.5. "Refurbishment" shall mean replacement of non-defective components
in the repair process that have: 1) known reliability problems; 2)
wear due to usage that will likely cause the FRU to fail within one
year after installation; 3) high failure rates based upon the FRU
component failure data; or are a part of preventative maintenance.
26.6. "Upgrade" shall mean a component or part that can be added to the
FRU to enhance its performance to the current revision level.
26.7. "Retrofit" shall mean to replace a Product's components or parts to
insure that the Product meets the applicable Specification and
Quality Requirements.
26.8. "PM" shall mean Preventative Maintenance.
26.9. "FRU" shall mean "Field Replaceable Unit", which is the assembly or
part used to repair products in the field.
26.10. "NTF" shall mean No Trouble Found.
26.11. "Significant Change" shall mean any change that affects Fit, Form
or Function.
ATTACHMENTS:
Documents, attachments, schedules, exhibits which are attached and
incorporated by reference into this Agreement are referenced below:
Yes General Agreement
Yes Attachment A - Global In-Country Repair/Exchange Support Agreement
No Attachment B - Global On-site/Repair Support Agreement
Yes Attachment C - Volume Discounts
Yes Attachment D - Price List
No Attachment E - Critical Components
Yes Attachment F - Consigned Inventory Agreement (CIA)
No Attachment G - Software Agreement
No Other _____________________________________________________
15
The parties have caused this GPA to be executed by their duly authorized
representatives.
[Download Table]
ADVANCED ENERGY INDUSTRIES, INC. LAM RESEARCH CORPORATION
Principal Place of Business: Principal Place of Business:
1625 Sharp Point Drive Cushing Parkway
Fort Collins, Colorado 80525, USA Fremont, California 94538, USA
/s/ Allen G. Vallei /s/ Manuel C. Carreira, Jr.
---------------------- ---------------------------
Signature Signature
Allen G. Vallei Manuel C. Carreira, Jr.
Printed Name Printed Name
Western Region Manager Sr. Commodity Mgr.
Title Title
10/12/99 10/12/99
Dated Dated
16
1 OF 2
SCHEDULE 1 TO OEM
GLOBAL PURCHASING AGREEMENT
Technical Support Requirement Specification
Purpose: To define Lam`s Technical Support requirements to Suppliers for
documentation and support materials on equipment sold to Lam Research Corp.
Documentation Requirements: All documents/procedures must be printed on regular
paper (clean room paper available at extra cost) and available in PDF electronic
format.
Categories: The types of documentation required to support Lam's Technical
Support Group is as follows:
I. Support Documentation
II. Documentation Distribution List
III. Training
I. SUPPORT DOCUMENTATION
DELIVERABLES
- Theory of operations showing design criteria, functionality of the
component/system and performance specifications
o Safety - Provide necessary information to conform to CE-Mark/S2
requirements, including but not limited to:
- Safety Features/Precautions
- EMO description with block diagram and interface and interconnect
schematic
- Hardware and software Interlocks
- Lockout/tag-out of hazardous voltages
- Labeling of hazards and cautions
o Configuration/Operation Instructions for proper operation:
- Pre-run Checklist
- Specification defining all software I/O points including default
values for each configuration type.
o Indicators:
- Category/definitions
- Causes for each indicator
- Recovery steps for each indicator
o Installation/Startup Procedures:
- A comprehensive Installation/Startup manual must depict how to
Prepare, Install and Startup the component/system
o Schematics:
- All non-proprietary schematics are available in hard copy only but are
not included in the manual (available upon request)
- Schematics must be available for but not limited to: cables, PC boards
and interconnect drawings
o Maintenance Procedures:
- Procedures necessary for preparation of the system
o Troubleshooting Guide:
- A comprehensive Troubleshooting Guide must be provided in the form of
a decision tree or table
17
II. DOCUMENTATION DISTRIBUTION LIST
DELIVERABLES
o Documentation Distribution:
- Lam Commodity Management (or designee) must receive copies of all
proposed ECN's
III. TRAINING DOCUMENTATION
DELIVERABLES
o Training classes must be made available prior to first Product shipment.
Additional training classes can be provided at an additional cost. Lam may
have the authority to video tape any training course provided by Supplier.
Training classes must include the following:
- Maintenance Procedures
- Calibration Procedures
- FRU Replacement Procedures
- Serviceability Procedures
18
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘10-K’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| Filed on: | | 3/20/00 | | | | | | | None on these Dates |
| For Period End: | | 12/31/99 |
| | 10/12/99 | | 1 |
| List all Filings |
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