CONFIDENTIAL MATERIALS OMITTED
AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. BRACKETED ASTERISKS ([* *]) DENOTE
OMISSIONS.
This Global
Supply Agreement is entered into as of this 29
th day of August, 2005 (the “Effective
Date”) by and between APPLIED MATERIALS, INC., a Delaware
corporation, with places of business in Santa Clara, California,
and Austin, Texas, and Advanced Energy Industries, a Delaware
corporation, with its principal place of business in Fort Collins,
Colorado.
In consideration
of the mutual promises and other valuable consideration set forth
in this Agreement the Parties agree as follows:
In addition to
those definitions set forth elsewhere in this Agreement, the
following capitalized terms shall have the meanings specified
below:
(a) “ Agreement ” means
(i) this Global Supply Agreement, (ii) Attachment 1
hereto, (iii) Exhibit A hereto and (iv) all Authorized
Demand Signals, as each may be amended from time to
time.
(b) “ Applied ” means
Applied Materials, Inc., including its subsidiaries existing on or
after the Effective Date.
(c) “ Applied Web Site ”
means that portion of the password-protected Web Site, including
the supplier filing cabinet database maintained by Applied and
located at http://gmox.amat.com, Supplier Filing Cabinet. to which
Supplier may be given access for the purpose of performing under
this Agreement.
(d) “ Attachment ” means
any document that is referenced in this Global Supply Agreement and
either attached hereto or located on the Applied Web Site. All
Attachments are deemed to be incorporated into this Agreement by
this reference.
(e) “ Authorized Demand Signal
” means an order for Item(s) communicated pursuant to this
Agreement by Applied to Supplier via (i) a purchase order
(whether in hardcopy or electronic form), (ii) EDI or other
electronic transmission, or (iii) Applied’s designated
on-line purchasing system. All Authorized Demand Signals are deemed
to be incorporated into this Agreement by this
reference.
(f) “ Business Processes
” means those processes, requirements and forms applicable
generally to Applied’s supply chain, pertaining to ordering,
payments, packaging, delivery, shipment, crating and repair of
Items, among other things. All Business Processes shall be
communicated to Supplier through posting on the Applied Web site.
Certain Business Processes referred to in this Agreement are
identified by their title in italics .
(g) “ Business day ” and
“ business hour ” shall mean those days and
those hours on which Supplier’s Ft. Collins, Colorado
facility is normally open for business and between 8:00 am and 5:00
pm local time for such facility.
(h) “ Internal Applied Data
” means planning data, product engineering or manufacturing
data, information, forecasts, Specifications or Confidential
Information that is recorded, displayed, maintained or accessed on
the Applied Web Site or other Applied internal databases or
intranets.
Applied Materials Confidential
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Page 1
(i) “ Item ” means a
component, equipment, material, subassembly or other good and
related software and services specified in (i) Attachment 1,
(ii) an Authorized Demand Signal; or (iii) a purchase
order delivered by Applied to Supplier prior to the Effective Date
and undelivered as of such date.
(j) “ Parties ” means
Applied and Supplier and “Party” shall mean either
Applied or Supplier as appropriate.
(k) “ Services ” means
the repair, refurbishment, exchange or upgrade of Items and those
other services performed by Supplier under this
Agreement.
(l) “ Specifications ”
means such drawings, designs, instructions, technical or
performance requirements or other technical information relating to
the design, development, manufacture, installation, assembly,
testing and/or use of one or more Items.
(m) “ Sub-tier Supplier
” means a member of Supplier’s direct or indirect
sub-tier supply base (including, without limitation, subcontractors
and vendors of Supplier) that provides goods and/or services in
connection with an Item.
(n) “ Supplier ” means
Advanced Energy Industries, Inc. and those of its subsidiaries and
affiliates authorized in writing by Applied to perform under this
Agreement.
2. Scope
of Agreement; Term .
(a)
Scope of Agreement . This Agreement sets forth the terms and
conditions governing the purchase and sale of Items, the
relationship between Applied and Supplier, and compliance with
Applied’s Business Processes. Applied Materials, Inc. and its
subsidiaries shall be entitled to purchase Items from Supplier
under this Agreement, and shall have all of the rights of
“Applied” under this Agreement. As to any purchase of
Items under this Agreement by Applied Materials, Inc., all
obligations under this Agreement are the sole obligations of
Applied Materials, Inc. As to any purchase of Items under this
Agreement by a subsidiary of Applied, all obligations under this
Agreement are the sole obligations of such subsidiary.
Notwithstanding the foregoing, if an Applied subsidiary [*
*] ; Supplier notifies Applied Materials, Inc. in writing of
[* *] , and Applied Materials, Inc. [* *] submitted
by Supplier, Applied Materials, Inc. will either [* *] .
This Agreement shall not apply to Applied’s purchase, and
Supplier’s sale, of any goods or services pursuant to
(i) a purchase order or other agreement where the purchase
order or other agreement is expressly accepted in writing by
Supplier which expressly identifies this Global Supply Agreement
and states that the terms and conditions of the purchase order or
other agreement, rather than this Agreement, shall govern the
transaction; or (ii) a joint development or license agreement,
except to the extent expressly provided therein.
(b)
Term. This Agreement shall commence on the Effective Date
and, unless extended as set forth in this Section 2 or
terminated as set forth in Section 21, shall expire on
August 28, 2008 (the “Term”). At any time prior to
expiration of the Term, Applied may, at its sole option, extend the
Term for one (1) additional period not to exceed [* *]
by delivering written notice to Supplier of such extension no less
than [* *] prior to the expiration of the Term of this
Agreement. The Parties acknowledge that after the Term they may
desire to renew this Agreement or enter into a similar volume
supply agreement. If Supplier decides during the Term that it does
not wish to enter into such renewal or volume supply agreement,
Supplier shall provide notice thereof to Applied at least [*
*] prior to the expiration of the Term.
(c)
Compliance with Business Processes . Applied has
implemented, and from time to time updates and revises, Business
Processes applicable generally to Applied’s supply chain.
Descriptions of all Business Processes shall be provided to
Supplier through posting on the Applied Web Site. Supplier agrees
to comply with all Business Processes identified in this Agreement
that are in effect as of the Effective Date and as may be amended
in accordance with this subsection. If Applied desires to amend a
Business
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Process, it
shall give notice thereof either by e-mail directed to either
Supplier’s contacts noted in this document or
Supplier’s contacts designated on the Applied Web Site, or to
their successors or by referring Supplier to the Applied Web Site,
to access such amended Business Process. Supplier agrees to
regularly access the Applied Web Site to review any amended
Business Processes. No amendment to a Business Process described in
Sections 11(o) ( Technology Escrow Agreement ) or 14 (
Supplier Performance Plan ) shall become effective unless
Supplier consents thereto in writing. Amendments to all other
Business Processes shall be deemed accepted by Supplier if Supplier
fails to object thereto in writing within [* *] days after
the date on which the amended Business Process is communicated to
Supplier.
(d)
Amendments to Attachment 1 . The Contract Prices set forth
in Attachment 1 represent the Parties’ agreed upon pricing
for those Items that have been awarded to Supplier through a
request for quotation or other business award process (‘Award
Process’). Any conditions included in the Award Process that
are relevant to the Contract Price shall also be included in
Attachment 1. Notwithstanding the order of precedence set forth in
Section 26(s) Entire Agreement, the Parties hereby agree that with
respect to Contract Prices, if there is a conflict between the
terms of Attachment 1 and the GSA, the terms of Attachment 1 shall
control. In addition, in the event of a change in business
conditions not contemplated by the Parties at the time of the
execution of the Agreement, either Party may request further
amendments to Attachment 1. Upon such request the Parties shall, in
good faith, meet and discuss the proposed amendment and upon the
Parties’ mutual agreement to any change, amend Attachment 1
accordingly.
(e)
[* *] . Subject to [* *] ‘s compliance
with the requirements of this Section 2(e) Supplier may [*
*] if an Item qualifies as an [* *] Item, [* *]
Item or a [* *] Item.
(f) [*
*] Item means an Item for which a [* *] is no longer
available either because the [* *] is no longer [* *]
or the [* *] .
(g) [*
*] Item means an Item which has [* *] and consistently
[* *] resulting in a significant [* *] .
(h) [*
*] Item means an Item for which the [* *] have
significantly [* *] resulting in a [* *] of either
(a) [* *] for an Item which has a Contract Price of [*
*] ; or (b) [* *] for an Item which has a Contract Price
of [* *] .
(i) Once
[* *] determines an Item to be [* *] , [* *]
or [* *] , [* *] shall notify [* *] in writing
of such determination.
(j) For
[* *] Items [* *] ‘s notification to [*
*] must be in the form of a completed [* *] . Upon the
expiration of [* *] months following the submission of a
completed [* *] , [* *] may pursue the [* *] .
Thereafter, unless otherwise agreed by the Parties, [* *]
may continue to purchase [* *] Items until such time as
[* *] has qualified a [* *] and the [* *] Item
is [* *] . If, after the expiration of [* *] months
following the [* *] submission, [* *] chooses not to
pursue the [* *] , [* *] may within [* *] days
after the expiration of the [* *] months following the [*
*] submission purchase a [* *] . Any [* *] will
be subject to availability and unless otherwise agreed by the
Parties will not exceed an amount equivalent to [* *]
.
(k) For
[* *] Items and [* *] Items, [* *] ‘s
written notification to [* *] of the classification of these
Items will include a request for [* *] . If following such
[* *] the Parties are [* *] may submit a [* *]
. Upon expiration of [* *] months following the submission
of a completed [* *] , [* *] may pursue the [*
*] . Thereafter, unless otherwise agreed by the Parties, [*
*] may continue to purchase [* *] and/or [* *]
Items until such time as [* *] has qualified a [* *]
and the [* *] Item is [* *] . If, after the
expiration of [* *] months following the [* *]
submission, [* *] chooses not to pursue the [* *] may
purchase a [* *] . Any [* *] will not exceed an
amount equivalent to [* *] , unless otherwise agreed by the
Parties. Alternatively, the Parties may agree to [* *]
.
(a)
Orders . All orders for Items shall be in the form of an
Authorized Demand Signal. An Authorized Demand Signal shall
(i) identify the Item(s) requested; (ii) state the
quantity, date, time and place of delivery, and price of the
Item(s) requested (unless previously specified in Attachment 1,
which shall
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control); and
(iii) specify if it is for a Spares Down Order (as defined in
this Agreement). Supplier shall accept communications of Authorized
Demand Signals in the format designated by Applied.
(b)
Acceptance/Rejection of Orders . Supplier shall promptly
communicate its acceptance or rejection of an Authorized Demand
Signal. Supplier shall not, however, reject an Authorized Demand
Signal for Items set forth on Attachment 1 so long as the
Authorized Demand Signal conforms to the terms and conditions of
this Agreement. Any notice of rejection shall state the specific
grounds for such rejection. Certain Authorized Demand Signals shall
be deemed to be accepted as follows:
(i) An
Authorized Demand Signal that is for a “Spares Down
Order” will be [* *] accepted by Supplier upon the
[* *] after its receipt by Supplier unless Supplier objects
by electronic or telephonic notice within said [* *] period.
Any telephonic notice of rejection shall be followed by the
delivery of written or electronic notice to Applied within [*
*] of delivery of the rejected Authorized Demand
Signal.
(ii) An
Authorized Demand Signal for an Item identified as “ [*
*] ,” “ [* *] ” or similar designation
on Attachment 1 sent via EDI or other electronic transmission will
be [* *] accepted by Supplier upon the expiration of [*
*] after its receipt by Supplier, unless Supplier objects by
electronic notice within said [* *] .
(iii) An
Authorized Demand Signal for an Item set forth on Attachment 1 that
is an Applied purchase order (whether in hard copy or electronic
form) shall be accepted upon the terms specified within such order,
provided that the Authorized Demand Signal conforms to the terms of
this Agreement and Attachment 1; or if the Authorized Demand Signal
does not conform to the terms of this Agreement and Attachment 1
such Authorized Demand Signal shall be accepted upon the terms
specified within such order provided that Supplier has [* *]
the Authorized Demand Signal within [* *] . For any other
Authorized Demand Signal that is an Applied purchase order (whether
in hard copy or electronic form) such Authorized Demand Signal
shall be accepted upon the terms specified within such Authorized
Demand Signal, provided that (a) the Authorized Demand Signal
was submitted to [* *] set forth in the Applied Web-Site
database, (b) Supplier has failed to reject the Authorized
Demand Signal within [* *] and (c) the Item is a
product that [* *] has, within the [* *] either to
[* *] or to any [* *] and the Item is not a product
that [* *] has designated as [* *] or [* *] .
For items that have not been sold and delivered within the
preceding [* *] , Supplier will make commercially reasonable
efforts to accept within the [* *] window, but failure to do
so will not cause [* *] . Nothing in this Section 3(b) shall
require Supplier to provide to Applied products that are subject to
an exclusivity agreement between Supplier and a third party, and
for which the third party has not granted any consent to
Supplier’s sale of such products to Applied for the purpose
of supporting an Applied customer service agreement.
In all events,
any objection by Supplier to the terms of an Authorized Demand
Signal shall be deemed waived upon Supplier’s delivery of
Items.
(c)
Order Adjustments . Supplier acknowledges that, due to the
highly cyclical nature of the semiconductor equipment industry and
other factors, Applied may be required to modify Authorized Demand
Signals from time to time. Applied may increase the quantity of
Items in any Authorized Demand Signal at any time prior to the
scheduled delivery date and, provided such increase falls within
the Quantity Flexibility Matrix set forth below, (i) Supplier
will deliver such increased quantity with [* *] charges
including [* *] or the like except as may be provided for in
Attachment 1, and (ii) such increase will not affect the
delivery schedule of Items previously ordered. This Section 3(c)
shall not apply to orders for Items that are not set forth on
Attachment 1 unless the Authorized Demand Signal accepted by
Supplier as set forth in this Section 3 incorporates this
Section 3 by reference.
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Delivery Date
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Flexibility
of Quantity of Items in an Authorized Demand Signal
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If Applied
requires an increase in the quantity of Items in any Authorized
Demand Signal for Items in Attachment 1 and such increase does not
fall within the Quantity Flexibility Matrix set forth above, then,
if feasible and as mutually agreed upon by the Parties, Supplier
will provide such increased Items in accordance with the modified
Authorized Demand Signal and Applied shall pay costs resulting
therefrom, provided such costs are (i) reasonable;
(ii) authorized by Applied in writing in advance of delivery;
and (iii) identified separately from the unit price on
Supplier’s invoice to Applied.
(d)
Reduction or Cancellation of an Authorized Demand Signal .
If Applied requires a reduction in the quantity of Items in any
Authorized Demand Signal, or cancels any Authorized Demand Signal,
the Parties’ respective rights and obligations shall be as
specified in Section 21.
(e)
Purchases by Authorized Third Party . Certain Items may be
incorporated into subassemblies or other products made for Applied
by a third party. In such event, Applied may designate the third
party as authorized to purchase such Item(s) from Supplier and,
upon Supplier’s receipt of notice thereof, Supplier shall
enter into an agreement with such third party to sell such Item(s)
to such third party on terms (including [* *] ) [* *]
the terms set forth in this Agreement specifically for use on
subassemblies or other products that such third party will sell
directly to Applied.
(f) No
Volume Commitment. Applied does not commit to purchase a
specific volume of any Item from Supplier except as specified in an
Authorized Demand Signal and, subject to [* *] Rights (as
defined in Section 11(b)), or unless otherwise agreed in
writing, Applied may manufacture or buy goods and/or services from
Third Parties that are identical or similar to the
Items.
(a)
Contract Price . “Contract Price” means the
domestic and/or export price in U.S. Dollars for an Item as set
forth on Attachment 1; provided, that if a price for an Item is not
specified on Attachment 1, then the Contract Price shall be the
price set forth in an Authorized Demand Signal that is accepted by
Supplier in accordance with this Agreement. The Contract Price for
each Item shall remain in effect throughout the Term, except for
any price changes mutually agreed to by the Parties from time to
time in writing. In the event Applied desires to purchase an Item
not listed in Attachment 1, authorized representatives of Applied
and Supplier will agree upon the price and delivery date in writing
as a separate transaction, but subject to the terms of this
Agreement.
(b)
Pricing Components. The Contract Price, and any quotations
for Items, shall include all finishing, testing, inspecting and
packaging fees, applicable royalties and all applicable taxes
(excluding sales, use and similar taxes). Any quotations for Items
shall include all costs relating to warranties. Under typical
circumstances, quotations for Items shall not include any amounts
relating to (i) initial set-up charges; (ii) costs for
special dies, tools, patterns or test fixtures; and
(iii) non-recurring engineering fees amortized into the per
unit price, unless separately identified and itemized. Quotations
for prototypes shall reflect the total value of Applied’s
business with Supplier. In this regard, Supplier shall consider
providing a specific number of prototype Items [* *] and/or
pricing prototypes [* *] .
(c)
Transportation Costs . For Items to be delivered to a
destination within the country from which the shipment originated,
pricing in a quotation or as set forth in Attachment 1 shall not
include any transportation costs, other than insurance expense,
which will be separately identified and itemized,
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provided that
Applied’s Transportation Routing Guide then in effect
for such Items offers Supplier a direct bill-to-Applied option for
such transportation costs in accordance with Section 6(b)(i).
If Applied’s Transportation Routing Guide then in
effect for such Items does not offer Supplier a direct
bill-to-Applied option for such transportation costs in accordance
with Section 6(b)(i), all transportation costs shall be
separately identified and itemized in a quotation. For Items to be
delivered outside the country from which the shipment originated,
all costs for shipping, import/export fees, customs, insurance and
other transportation expenses shall be separately identified and
itemized in a quotation, except in cases where Applied’s
Transportation Routing Guide then in effect for such Items
offers Supplier a direct bill-to-Applied option for such
transportation costs in accordance with
Section 6(b)(i).
(d)
Price Adjustments . Supplier shall implement all committed
price [* *] set forth in this Agreement and on Attachment 1.
All quantities of Items purchased by Applied and its subsidiaries
purchasing under this Agreement will be aggregated for purposes of
calculating applicable price adjustments. Any change in
circumstances (such as a change in Applied’s [* *] or
a change in industry conditions), may result in a review of
Agreement terms and/or negotiated adjustment in the Contract Price.
Subject to Section 11(f) and 11(g) of this Agreement regarding
prohibited activities and confidentiality, if [* *] any good
which is [* *] , at a [* *] price than the Contract
Price, then [* *] agrees to notify [* *] thereof and,
if acceptable to [* *] , to [* *] .
(e)
Taxes . Applied will pay any applicable sales, use or
similar tax imposed in connection with the sale of Items to
Applied; provided, that Supplier shall not charge or collect, and
Applied shall have no liability for, taxes on any sale of Items for
which Applied has provided Supplier with an appropriate resale
certificate or other documentation evidencing an exemption from
such taxes. For all sales of Items upon which tax reimbursement to
Supplier is applicable, Supplier shall separately identify and
itemize all applicable taxes on invoices submitted to
Applied.
(f)
[* *] . Subject to Section 11(f) and Section 11(g) of
this Agreement, Supplier warrants and agrees that, if such sales
are permitted, it [* *] which offer the [* *] as any
Items [* *] . When making the determination as to whether
[* *] , Supplier shall take into account the [* *] .
If Supplier enters into an agreement and [* *] , then
Supplier will provide prompt notice to Applied, and if agreed upon
by Applied, this Agreement [* *] . If, as a result of any
such [* *] , the [* *] of an Item is [* *] ,
Supplier will [* *] . Notwithstanding the foregoing, in no
event shall Supplier offer or sell Items to Applied at prices or on
terms that would be unlawfully discriminatory under applicable
law.
(a)
Delivery Requirements .
Time is of the essence as to the delivery of all Items ordered
under this Agreement. Supplier shall meet the (i) negotiated
lead time; (ii) order adjustment requirements as set forth in
Section 3; and (iii) time, date, location and other delivery
requirements for Items, as specified in Attachment 1 or, if not set
forth in Attachment 1, as set forth in the Authorized Demand Signal
for said Items, irrespective of which Applied organization or
division has issued the Authorized Demand Signal. Delivery will be
considered timely only if Items are delivered in the correct
quantity, and at the time, date and location specified in the
Authorized Demand Signal. If necessary for Supplier to meet its
delivery requirements, Supplier at its expense, will use expedited
delivery methods to complete and deliver the Items within the lead
times specified in Attachment 1. Supplier will also use expedited
delivery methods to complete and deliver Items outside of the lead
times specified in Attachment 1 if such terms have been accepted by
Supplier in accordance with Section 3(b) of this Agreement and, in
such instances, Supplier may, in addition to the price of the
Items, charge Applied and expedited delivery fee; provided that
Applied has agreed to such fee prior to Supplier’s acceptance
of the Authorized Demand Signal. If Applied requests a change to
the delivery date set forth in an Authorized Demand Signal and
Supplier agrees to such change Supplier may use expedited delivery
methods to complete and deliver the Items in accordance with the
revised delivery date, and may charge Applied an expedited delivery
fee, provided that Applied has agreed to such fee prior to
Supplier’s acceptance of the revised delivery
date.
Applied Materials Confidential
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(b)
Delivery Requirements for Spares Down Orders. Supplier
acknowledges that it may be necessary to provide expedited support
and delivery Service for the division of Applied responsible for
furnishing spare parts and Service to Applied’s customers,
referred to as Customer Productivity Support (“CPS”) or
its successor entity. As to any Authorized Demand Signal identified
as a “Spares Down Order,” Supplier shall
(i) respond (via telephonically or
electronically) within [* *] to any Applied inquiry relating
to a Spares Down Order if such Order is submitted to [* *]
for the Item in question;
(ii) for
any Authorized Demand Signal accepted by Supplier, ship the Items
set forth in the Spares Down Order within
i. [* *]
following receipt of a Spares Down Order if such Order is submitted
to [* *] for the Item in question, and acknowledged by
Supplier before [* *] Supplier local time; or if the Spares
Down Order is acknowledged by Supplier after [* *] Supplier
local time, then before [* *] Supplier local time the
following [* *] ;
ii. [*
*] following receipt of a Spares Down Order if such Order is
submitted to [* *] for the Item in question, and
acknowledged by Supplier before [* *] Supplier local time;
or, if the Spares Down Order is acknowledged by Supplier after
[* *] Supplier local time, then before [* *] Supplier
local time the following business day; and
(iii) notify (via telephone or
electronically) Applied when the Item set forth in the Spares Down
Order leaves the Supplier’s facility. If Supplier cannot meet
all of Applied’s delivery requirements for Items ordered,
then Supplier shall (A) provide notice to Applied of such
event, and (B) prioritize Items set forth in a Spares Down
Order over other Items ordered via any other Authorized Demand
Signal. Supplier shall comply with any special packaging and
labeling requirements as to any Spares Down Order, as set forth in
the Packaging Specification (0250 00098), Unit Packaging
Label Specifications (0250-60124) and Packaging (0250-00098
& 0251-05100) and Marking (0250-01033) located on
the Applied Web Site.
(c)
Remedies. If Supplier fails to deliver any Item at the time
and place as set forth in an Authorized Demand Signal accepted by
Supplier in accordance with this Agreement, Applied shall have the
right, at its sole option, to (i) require Supplier, at [*
*] ‘s expense, to [* *] to complete and deliver
the Items; (ii) allocate or redirect the Supplier’s
deliveries of Items to certain Applied facilities; or (iii) [*
*] and charge Supplier with [* *] , which cost may
include [* *] . If Applied elects to [* *] above,
then Applied agrees that the [* *] for which the Supplier
will be liable, including the [* *] .
6.
Shipping and Risk of Loss .
(a)
Shipping and Packaging Requirements .
(i) Unless
otherwise agreed in writing by the Parties, Supplier will ship all
Items in accordance with Transportation Routing Guide
located on the Applied Web Site, including use of approved carriers
as may be applicable given the classification of the shipment
(i.e., domestic or international).
(ii) Supplier shall comply with any special packaging and
labeling requirements for Items as set forth in Unit Packaging
Label Specifications (0250-60124) and Packaging (0250-00098
& 0251-05100) and Marking (0250-01033) located on
the Applied Web Site. In the event such Business Processes are not
applicable to an Item, the Item shall be packaged, marked and
labeled in accordance with best commercial practices. In all
events, however, Supplier must include a valid packing slip number
or package ID on each package or shipment of Items.
Applied Materials Confidential
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(b)
Shipments and Insurance .
(i) Shipping
Costs . For all Items, [* *] shall be responsible for
all costs and expenses (other than insurance) to deliver the Items
to the applicable destination point once such Items have been
tendered to the carrier, provided that [* *] complies with
[* *] then in effect. All delivery costs and expenses for
such shipment shall be specified as “ [* *] ” on
bills of lading or shipping receipts, to be paid directly by [*
*] . Unless specifically approved by [* *] in advance,
[* *] shall not be responsible for delivery costs and
expenses (i) in excess of the costs determined under [*
*] ; (ii) payable to carriers not approved under [*
*] , (iii) incurred as a result of [* *] ‘s
need to [* *] , or (iv) incurred in connection with the
transportation of Items between [* *] or any other
supplier.
(ii) Insurance
and Risk of Loss . In all events, Supplier shall be responsible
to insure or self insure such Item during transport up to at least
the Contract Price of such Item. Supplier shall be responsible for
the risk of loss to an Item until delivered to the applicable
destination point and accepted by Applied. In addition,
Supplier’s responsibility for risk of loss continues with
respect to any Item rejected by Applied, or as to any Item for
which acceptance is revoked, except if such loss is caused by the
gross negligence of Applied’s employees acting within the
scope of their employment.
7.
Acceptance and Title Transfer .
(a)
Acceptance and Title Transfer. Title to an Item will
transfer to Applied upon acceptance of an Item, which shall occur
in the event that: i) Applied or its designee has received the Item
as the specified destination point; and ii) either 1) Applied or
its designee has entered the Item into Applied’s internal
systems, or 2) a period of [* *] from the delivery of the
Item has elapsed, whichever period of time is [* *] .
Applied may reject and return any Item that does not conform to the
applicable Specifications and incur no liability or obligation
related to such Item. As to Items that are rejected and returned,
Applied may recover and offset or adjust payments in respect of
such Items, including any costs or fees related to shipping and
insuring such Items.
(b)
Payment Upon Consumption Model. “Payment Upon
Consumption” means a payment process by which Supplier would
retain title to all Items until such time as Applied has fully
integrated such Items into the products manufactured by Applied.
Upon Applied’s request to implement a Payment Upon
Consumption process, Supplier will not unreasonably refuse to do
so, and the Parties agree to negotiate in good faith to enter into
an agreement setting forth the terms and conditions of such
process.
(a)
Payment Terms . Payment by Applied for an Item will be made
[* *] from the later of the date of (i) Applied’s
receipt of an invoice for the Item consistent with the terms of
this Agreement and (ii) Applied’s acceptance of the
Item. Applied is authorized by Supplier to make payments under this
Agreement by either check or electronic funds transfer, and
Supplier shall provide Applied with the information necessary for
electronic funds transfer capability.
(b)
Invoices . Upon Applied’s request, Supplier shall not
unreasonably refuse to participate in Applied’s Evaluated
Receipts Settlement (“ERS”) Program, whereby Supplier
is paid based on the quantity of Items received and the Contract
Price for such Items, without Supplier providing an invoice. The
terms and conditions of the ERS Program are as set forth in ERS
Program Requirements located on the Applied Web Site. If the
Parties agree that Supplier will not participate in the ERS
Program, then Supplier will remit an Item invoice to Applied no
earlier than when the Item is shipped to Applied and adhere to the
requirements for invoices section of Invoicing Requirements for
Non-ERS Suppliers located on the Applied Web Site.
(c)
Effect of Payment and [* *] . Applied’s payment
for an Item shall not affect the [* *] nor shall it preclude
[* *] . All payments shall be subject to adjustment for
[* *] . Applied may at any time [* *] .
Applied Materials Confidential
Information
Page 8
(d)
Reconciliation of Payment Discrepancies . As to any payment
discrepancy, including any claim by Supplier against Applied for
payment, nonpayment, damages or other adjustments as to delivered
Items (a “Payment Discrepancy”), Supplier must, as a
condition precedent to any such claim, give notice of its Payment
Discrepancy claim by properly completing and delivering to Applied
a Payment Discrepancy notification for all delivered Items within
[* *] from the earliest of any of the following which
discloses a Payment Discrepancy: (i) the issuance of an ERS
report under the ERS Program; (ii) the date on which an
invoice is returned to Supplier; (iii) the date of partial
payment or (iv) the date of delivery of notice to Supplier of
a Payment Discrepancy. The required Payment Discrepancy form,
submission procedures and contact information are as set forth in
Supplier Payment Discrepancy Claims Process located on the
Applied Web Site.
9.
Confidentiality and Prohibited Activities .
(a)
General . “Applied Confidential Information”
means all information obtained by, disclosed to, or developed by
Supplier and that is based on, incorporates, constitutes or derived
from any of the following: (i) samples, schematics, drawings,
designs, Specifications, manuals, Applied Forecasts or other
forecasts, Authorized Demand Signals, customer information and
other technical, business, financial or trade secret information
obtained from or through Applied including Internal Applied Data;
and (ii) all other proprietary, technical, business, financial
or trade secret information obtained by Supplier from or through
Applied during the term of Applied and Supplier’s business
relations, or in connection with the negotiation, performance or
enforcement of this Agreement; provided that the information
disclosed to Supplier by Applied or upon which Supplier based or
derived such information was clearly marked as ‘Applied
Materials Confidential’ or with some similarly restrictive
legend. Confidential Information does not include information that
(A) is or becomes a matter of public knowledge through no
fault or act of Supplier; (B) is rightfully received by
Supplier from a third party not subject to restriction on
disclosure of such information; (C) is independently developed
by Supplier without the use of any Confidential Information of
Applied’s; or (D) was rightfully in the possession of
Applied prior to its disclosure by or on behalf of Supplier;
provided, however, that such information shall be Confidential
Information to the extent that (1) such information
constitutes specific information, even if it is embraced by more
general information which is a matter of public knowledge or in the
possession of Supplier, or (2) such information is a
combination of individual items of information, even if that
combination could be reconstructed from non-confidential sources if
none of the non-confidential sources shows the whole combination
and its principle of operation; and, provided further, that the
sale or unrestricted disclosure of an Item or other article or
product made through a confidential manufacturing process of
Supplier shall not be deemed to constitute a public disclosure of
the process. Supplier shall use reasonable care to protect the
confidentiality of Confidential Information of Applied and in any
event, shall use at least that degree of care that such Supplier
uses to protect its own like information.
(b) Permitted and Prohibited
Activities . Except as
expressly set forth in this Section 9(b) or agreed to by Applied in
writing, Supplier (i) may use Confidential Information solely
for the purpose of providing Items to Applied and may provide
Confidential Information only to those individuals who need to know
such Confidential Information to provide Items to Applied, provided
that it is clearly marked as “Applied Materials Confidential
Information;” and (ii)shall not use or disclose any Applied
Confidential Information for any purpose, including:
(a) reverse engineering the Items; (b) developing,
designing, manufacturing, engineering, refurbishing, selling or
offering for sale, any good or service in violation of Subsections
11(g) and (h) of this Agreement; or (c) assisting any
third party in any manner to perform any such activities. Subject
to Section 11 below, in addition, Supplier shall not make or
sell to any third party any good or service that may be used or
sold as a replacement for any Item or other good provided or sold
by Supplier for which Applied provided Supplier with Confidential
Information at any time, including modifications to Items.
Supplier’s obligations under this Section 9 shall not
apply to any disclosure required by applicable law, court order or
legal process, provided that (1) with respect to any
disclosure required under the securities laws, Supplier shall
(a) promptly notify Applied of its intent to make such
disclosure, which notice shall be in writing and delivered at least
[* *] ‘ prior to the intended disclosure (or such
shorter period as necessary to comply with applicable law),
(b) seek confidential treatment from the
Applied Materials Confidential
Information
Page 9
Securities and
Exchange Commission (SEC) for any agreements or other
documents filed with the SEC by proposing redactions for all
financial terms and such other terms as agreed by the Parties after
conferring in good faith and consistent with applicable law;
(2) with respect to any disclosure required pursuant to court
order or legal process, Supplier shall provide Applied with at
least [* *] advance written notice to permit Applied to seek
a protective order and shall reasonably cooperate with the Applied
in connection therewith; and (3) with respect to any other
disclosure required by applicable law, Supplier will use reasonable
efforts to provide Applied with reasonable advance written notice
of such required disclosure, use reasonable efforts to secure
confidential treatment of the Confidential Information prior to its
disclosure, reasonably cooperate with Applied in connection
therewith, and disclose only the minimum amount of information
necessary to comply with such requirements.
(c)
Other NDA’s . During the business relationship between
Supplier and Applied one or more NDA’s may be, or may have
been, entered into. In the event of an apparent conflict between or
among provision(s) of this Agreement and any NDA, such provisions
shall be read in a mutually consistent way, or if no such reading
is reasonably possible, the provision(s) that are most protective
of the confidential information of either Party shall take
precedence over conflicting or less protective
provision(s).
(d)
Equitable Relief. Supplier agrees that Applied would suffer
irreparable harm for which monetary damages are an inadequate
remedy, and that equitable relief is appropriate, if Supplier were
to breach or threaten to breach any obligations in this
Section 9.
(e)
Press Releases/Publicity Not Authorized. Except as specified
in Section 9(b) above, Supplier will not issue any press release,
advertising, publicity or public statement or in any way engage in
any other form of public disclosure that indicates Applied’s
relationship with Supplier or implies any endorsement by Applied of
Supplier or Supplier’s products or Services, without the
prior written approval of Applied.
(f)
Disposal of Confidential Information . Upon the termination
or expiration of the Agreement, and otherwise upon the request of
Applied, Supplier will promptly return to Applied all Applied
Confidential Information and all documentation that reveal or are
based in any way on Applied Confidential Information, and
permanently eliminate the same from all of its computer and
information storage systems. Thereafter, Supplier shall cease all
use of Applied Confidential Information. Supplier may, however,
with Applied’s prior written approval, destroy any Applied
Confidential Information or documentation, provided that Supplier
certifies to Applied the destruction of such Confidential
Information or documentation reflecting same. In addition, Supplier
agrees it will immediately return to Applied any materials provided
to it to facilitate electronic access to Internal Applied Data,
including any SecureID® key, documents, software or other
items.
10.
Electronic Access to Internal Applied Data .
(a)
General . If Supplier is granted access to Internal Applied
Data then, in addition to Supplier’s obligations under
Sections 9 and 11, the terms and conditions of this Section
shall apply. Supplier’s access to the Internal Applied Data
is subject to compliance with (i) the terms of use, if any, of
the Applied Web Site or such other database or intranet, as
applicable, and (ii) any technical and security requirements of
Applied, including the issuance of passwords and requirements
related to using Applied’s Virtual Private Network and [*
*] . Applied may terminate Supplier’s right of access or
change the method of access to the Internal Applied Data at any
time. In no event shall Supplier facilitate or enable access to
Internal Applied Data by any Sub-tier Supplier or other third
party.
(b)
Use . If Applied grants Supplier access to the Internal
Applied Data, then Supplier shall have the limited right to
download, store, display and use Applied Internal Data for the sole
purpose of performing its obligations under this Agreement in
connection with the design, manufacture and sale of Items to
Applied. Supplier may not use the Applied Internal Data in any
other way, commercially or otherwise. Unless otherwise notified by
Applied, Supplier may store copies of Internal Applied Data on
Supplier’s
Applied Materials Confidential
Information
Page 10
networks and
information storage systems, provided, such Internal Applied Data
is stored either on hardware that is dedicated solely to Applied,
or otherwise separated from other information of Supplier, so that
the Internal Applied Data is not accessible to individuals except
as authorized by this Agreement. If Applied provides Supplier with
any recommendations for establishing an interface or other methods
of accessing the Internal Applied Data, Supplier assumes all risk
in implementing any such recommendation. Supplier acknowledges that
the Internal Applied Data may be made available via a software
program which, for convenience, may identify Supplier as the
“Design Owner” or “Owner” in certain
instances, or use other terms which may appear to be inconsistent
with the terms of Section 11 (Intellectual Property Rights).
Such inconsistent terms will not apply to nor affect the terms of
Section 11 of this Agreement.
(c)
Consent to Monitoring . Supplier agrees that its access to
and use of Internal Applied Data and all acts in connection with
Applied’s internal systems are recorded and may be monitored.
Supplier expressly consents to such recording and monitoring. If
such recording or monitoring reveals possible evidence of criminal
activities involving any individual, then Applied may provide such
evidence to the appropriate law enforcement organization and take
any other appropriate action.
11.
Intellectual Property Rights .
(a) “ [* *]
Rights ” means all rights, whether registered or
unregistered, arising from or relating to patents, copyrights,
confidential information or trade secrets, trademarks, service
marks, trade names, mask works, moral rights and other proprietary
rights in any jurisdiction in and to all [* *] that are
[* *] , whether prior to or after the [* *] , or as
to which [* *] . [* *] owns all right, title and
interest in [* *] Rights.
(b) “ [* *]
Rights ” means all rights, whether registered or
unregistered, arising from or relating to patents, copyrights,
confidential information or trade secrets, trade marks, service
marks, trade names, mask works, moral rights and other proprietary
rights in any jurisdiction in and to all [* *] that [*
*] , whether prior to or after the [* *] , or as to
which [* *] . [* *] owns all right, title and
interest in [* *] Rights.
(c)
Categorization of Items on Attachment 1 [* *] .
Applied and Supplier acknowledge that Items provided by Supplier
pursuant to this GSA may contain, to varying degrees, [* *]
. Supplier further acknowledges that [* *] . Applied and
Supplier agree that [* *] , each Item provided to Applied by
Supplier shall be designated as falling into one of the following
categories, each of which shall be exclusive of the others: (i)
[* *] Items; (ii) [* *] Items; (iii) [* *]
Items; and (iv) [* *] Items. This categorization will be
documented in a separate column on Attachment 1 to this Agreement.
Once the Parties have executed Attachment 1, neither Party may
change the categorization of any Item on Attachment 1 without the
prior written agreement of the other Party.
(d) Categorization of Items [*
*] . If any [*
*] Items are to be [* *] which of the four categories
shown in 11(c) above apply to the proposed additional Item
(“IP Categorization”). The Parties shall [* *] .
If [* *] the IP Categorization of an Item, then Supplier
shall not manufacture such Item for Applied, and Applied shall not
[* *] for such Item. If [* *] , the Parties shall
document [* *] in writing in the form set forth on
Exhibit A attached hereto and incorporated herein (the
‘IP Categorization Agreement’). The Parties will
execute the IP Categorization Agreement prior to
(A) Applied’s request that [* *] with respect to
any Item and (B) Supplier’s decision to [* *] any
particular Item. Once the Parties have executed the IP
Categorization Agreement, neither Party may change the
categorization of such Item without the prior written agreement of
the other Party. The Parties shall also document the IP
Categorization in an amended Attachment 1 to this
Agreement.
(e)
[* *] Items. Supplier will have the right to
manufacture and sell [* *] Items to Applied and/or [*
*] .
(f)
[* *] Items. Subject to the payment of
Royalties to Applied, pursuant to Section 11(j) below, Supplier
will have the right to manufacture and sell [* *] Items to
[* *] . In the event that [* *] . Supplier has
no
Applied Materials Confidential
Information
Page 11
obligation to
provide Applied with [* *] if Supplier developed the
Modified Item for the exclusive benefit of another customer of
Supplier. If Applied elects to [* *] the Parties shall agree
in writing to the [* *] and shall categorize the [*
*] Item in accordance with Section 11(d) above. Supplier shall
pay Applied Royalties for all Modified Items sold directly or
indirectly to [* *] , after Applied notifies Supplier that
it has [* *] , [* *] the Modified Items were sold
prior to Applied’s [* *] of the Modified
Item.
(g)
[* *] Items. Supplier shall [* *] Item
to [* *] . Supplier’s manufacture or sale of [*
*] Items to [* *] is subject to the [* *] .
Supplier shall not make [* *] to any [* *] Items
[* *] . If Supplier makes any [* *] to any [*
*] Items without [* *] , then Applied [* *] shall
have a [* *] . At Applied’s request, Supplier shall
[* *]
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