Oem Global Purchase Agreement

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 ...