ATLAS COPCO
SUPPLY AGREEMENT
ATLAS COPCO AIRPOWER
SUPPLY AGREEMENT
Except for quotations of short passages for the purposes of review and
criticism, no part of this agreement may be reproduced or transmitted in any
form or by any means electronic, mechanical, photocopying, recording or
otherwise without the prior written permission of the assigned Purchase
Departments of the Atlas Copco Airpower Industrial Air and Oil-free Air
Divisions, and Prima Electronics SpA.
This agreement is a common document; it remains the property of both Atlas Copco
Airpower and Prima Electronics SpA. If no longer used, this agreement should be
returned to:
Atlas Copco Airpower NV Atlas Copco Airpower NV
Industrial Air Division Oil-free Air Division
Purchase Department Purchase Department
Boomsesteenweg 057 Xxxxxxxxxxxxxx 000
XX Xxx 000 PO Box 104
B-2610 Wilrijk X-0000 Xxxxxxx
Xxxxxxx Belgium
Modifications to this document shall be made in writing and agreed upon by both
Atlas Copco Airpower and Prima Electronics SpA. Agreed modifications will be
filed in this Agreement. The document control is the responsibility of the
Purchase department at Atlas Copco Airpower and of the General Manager at Prima
Electronics SpA.
Derived (operational) documents are subjected to document control as Quality
record (cfr ISO 9003).
The Supply Agreement is a document drawn up jointly. Both Prima Electronics SpA
and Atlas Copco Airpower set out the principles of and practical arrangements
for their cooperation herein.
Further in this text the Atlas Copco Airpower Industrial Air and Oil-free Air
Divisions are called "Atlas Copco" or "ACA", and Prima Electronics SpA is
further called "Supplier".
TABLE OF CONTENTS
1. PRINCIPLE OF COOPERATION AND SPECIFIC CONDITIONS..................... 1
1.1 PURPOSE AND SCOPE ................................................... 2
1.2 PRODUCTS ............................................................ 4
1.3 PRICES .............................................................. 5
1.3.1 Price agreement ............................................ 5
1.3.2 Price validity and evolution ............................... 5
1.3.3 Confidential nature of the price agreement ................. 5
1.3.4 Price List ................................................. 6
1.4 AFTER SALES ......................................................... 7
1.4.1 Warranty ................................................... 7
1.4.2 Warranty handling .......................................... 8
1.4.3 Spare parts ................................................ 8
1.5 TOOLING ............................................................. 8
1.6 PRODUCT LIABILITY ................................................... 9
1.6.1 Product liability .......................................... 9
1.6.2 Limitation of liability .................................... 9
1.7 PRODUCT SPECIFICATION ............................................... 9
1.7.1 Product specification ...................................... 9
1.7.2 Supplier product specification ............................. 10
1.8 TECHNICAL COOPERATION ............................................... 10
1.8.1 Spirit ..................................................... 10
1.8.2 Product modifications ...................................... 10
1.8.3 Product development ........................................ 11
1.9 EXCLUSIVITY AND CONFIDENTIALITY ..................................... 11
1.9.1 Exclusivity ................................................ 11
1.9.2 Confidentiality ............................................ 11
1.9.3 Industrial property rights ................................. 12
1.10 PRODUCTION .......................................................... 12
1.11 QUALITY POLICY ...................................................... 12
1.12 FINANCIAL STATUS AND STABILITY ...................................... 13
1.12.1 Financial status ........................................... 13
1.12.2 Financial stability ........................................ 13
1.3 BREACH OF CONTRACT .................................................. 13
1.13.1 Stipulations ............................................... 13
1.13.2 Tooling .................................................... 14
1.13.3 Application of law ......................................... 14
1.13.4 Arbitration ................................................ 14
2. PRACTICAL ARRANGEMENTS .............................................. 15
2.1 CONTACTS AND RESPONSIBILITIES........................................ 17
2.1.1 Organization ............................................... 17
2.1.2 ACA contacts ............................................... 17
2.1.2.1 Industrial Air Division ......................... 17
2.1.2.2 Oil-free Air Division ........................... 18
2.1.3 Supplier contacts .......................................... 19
2.2 PRODUCT SPECIFICATION AND IDENTIFICATION ............................ 20
2.2.1 Validity ................................................ 20
2.2.2 Accessibility and deviations ............................... 20
2.2.3 Modification procedure ..................................... 21
2.3 DELIVERY ORGANIZATION ............................................... 21
2.3.1 Logistic organization ...................................... 21
2.3.1.1 KANBAN deliveries ............................... 21
2.3.1.2 Call-off ........................................ 22
2.3.1.3 Late deliveries ................................. 22
2.3.2 Packing .................................................... 22
2.3.3 Transport .................................................. 23
2.4 PAYMENT TERMS ....................................................... 23
2.5 QUALITY POLICY ...................................................... 24
2.5.1 General requirements ....................................... 24
2.5.2 Quality Assurance System ................................... 24
2.5.3 Quality Plan ............................................... 24
2.5.4 Zero Defect Supply - ZDS ................................... 25
2.5.4.1 Purpose ......................................... 25
2.5.4.2 ZDS status ...................................... 25
2.5.4.3 Rejected products ............................... 25
2.5.4.4 Evaluation ...................................... 26
2.5.4.5 Problem reporting ............................... 26
2.5.4.6 Duty to disclose ................................ 26
2.5.5 Definition of product quality requirement .................. 27
2.5.6 First sample inspection .................................... 27
2.6 TOOLING ........................................................... 28
2.6.1 Property ................................................... 28
2.6.2 Liability .................................................. 28
2.6.3 Replacement ................................................ 28
2.6.4 Period of holding .......................................... 28
2.6.5 Payment .................................................... 28
2.6.6 Life time .................................................. 28
2.7 PRODUCT LIFE CYCLE .................................................. 29
2.7.1 Pilot batch ................................................ 29
2.7.2 Production start-up ........................................ 29
2.7.3 Series production .......................................... 29
2.7.4 Series production phase-out ................................ 29
2.7.5 Spare part production & end of life cycle .................. 30
2.8 PURCHASE DOCUMENT ................................................... 30
3. ADDENDUM 1: LIST OF TOOLING ........................................ 31
1. PRINCIPLE OF COOPERATION AND
SPECIFIC CONDITIONS
1.1 PURPOSE AND SCOPE
Supplier remains in all circumstances responsible for product availability and
product. This Supply Agreement records the agreements for the supply of goods
and services between party for the first part,
Supplier: Prima Electronics SPA
here represented by: Xx. X. Xxxxxxxx
and party of the second part, Atlas Copco Airpower NV (Atlas Copco), for the
Industrial Air Division, Purchase Department,
here represented by: Xx. X. Xxxxxxx,
for the Oil-free Air Division, Purchase Department,
here represented by: Mr. G. Van Gucht
These agreements are aimed at bringing about clarity and creating an
understanding of the cooperation between the two organizations.
Amendments to these agreements must be ratified by parties signing below or
their representatives.
These agreements in no way replace the numerous contacts between the two
organizations; they constitute the background to and the structure within which
these contacts can take place. However, to the extent such contacts affect or
alter the terms and conditions in this agreement, they should be documented in
amendments hereto.
For Prima Electronics SpA Atlas Copco Airpower NV
Industrial Air Division
D. Peiretti, G. Follens,
General Manager Purchasing Manager
Atlas Copco Airpower NV
Oil-free Air Division
G. Van Gucht
Purchasing Manager
This Supply Agreement confirms and succeeds the Supply Agreement of 13.04.1992
as well as it's attached document Practical Arrangements.
The purpose of this Agreement is:
- to confirm the co-operation as established in the above
mentioned first agreement
- to establish a new basis for the product prices and price
evolution
- to define the prolonged term of the Agreement
- to update the text of the Agreement for those clauses for
which the relevant date and/or conditions have already expired
- to update the practical arrangements of the co-operation
The Supply Agreement covers the supply of products as mentioned in this
Agreement by Supplier until 31.12.2001.
Prima Electronics SpA will be the preferred Supplier as sole source for the
duration of the project.
The Supply Agreement is therefore subject to confirmation from 1.1.2002 onwards,
for agreed upon period(s) of time.
1.2 PRODUCTS
This Supply Agreement covers the products referred to as:
========================================== -------------------------------- --------------------------------------
Reference ACA Part Number Product Reference
========================================== -------------------------------- --------------------------------------
Basic Regulator * standard product
------------------------------------------ -------------------------------- --------------------------------------
High Range Regulator 4x16 * standard product
------------------------------------------ -------------------------------- --------------------------------------
High Range Regulator 4x40 * standard product
------------------------------------------ -------------------------------- --------------------------------------
Relay Expansion Module * optional product
------------------------------------------ -------------------------------- --------------------------------------
Sensor I/O Expansion Module * standard & optional product
------------------------------------------ -------------------------------- --------------------------------------
Digital I/O Expansion Module * optional product
------------------------------------------ -------------------------------- --------------------------------------
Communication Expansion * standard product
Module type 1 optional product
------------------------------------------ -------------------------------- --------------------------------------
Communication Expansion * optional product
Module type 2
------------------------------------------ -------------------------------- --------------------------------------
Communication Expansion * optional product
Module type 3
------------------------------------------ -------------------------------- --------------------------------------
High Range Regulator 4x40 * optional product
dedicated version 1
------------------------------------------ -------------------------------- --------------------------------------
High Range Regulator 4x40 * optional product
dedicated version 2
------------------------------------------ -------------------------------- --------------------------------------
Sensor I/O Expansion Module * optional product
dedicated version 1
------------------------------------------ -------------------------------- --------------------------------------
Sensor I/O Expansion Module * optional product
dedicated version 2
------------------------------------------ -------------------------------- --------------------------------------
The products are defined by the relevant ACA and Supplier specifications
emanating from the development agreement ref.
733/010.027
dd.27.02.1990
with addenda
1) 771/110.037/336.799
dd.26.04.1991
2) 771/210.023/348.576
dd.04.03.1992
and subsequent derived specifications.
1.3 PRICES
1.3.1 PRICE AGREEMENT
Prices recorded in the table below (see 1.3.4) shall be considered as maximum
prices until 31.12.1997. Changes must always be ratified after introduction of a
new Price List under the modification procedures agreed upon for this Supply
Agreement.
A detailed price break-down of each Product will be made available for ACA at
release and at each update, and at each modification of the prices in the Price
List.
The price is defined for delivery Free Carrier (F.C.A.) Moncalieri (TO) (I),
individual transport packing included.
The price agreement to be considered valid under normal conditions of trade,
economy, political stability and currency exchange in the Western World, and
with the exclusion of Acts of God regarding the company and the country.
Change of indicated quantities due to negative effects of fluctuations of
business cycles and economic conditions shall not affect the Product prices,
provided such effects do not exceed +/- 20% of the quantity of each standard
Product, and +/- 20% of the indicative total quantity of the optional modules,
as indicated in the Price List (see 1.3.4). The effects of larger deviations
shall be negotiated when and if this happens.
1.3.2 PRICE VALIDITY AND EVOLUTION
The Product prices in this Agreement are based on following components:
1.3.3 CONFIDENTIAL NATURE OF THE PRICE AGREEMENT
No element whatsoever of the former or present price agreement shall be
disclosed to third parties, except to the extent that such disclosure may be
requested by competent authorities through mandatory provisions of law; in such
cases ACA must be informed of the request and subsequent disclosure.
Exceptions from this can only be authorized subject to written confirmation from
the purchase departments of ACA and Supplier.
1.3.4 PRICE LIST
================================== ================================================ ==================================
ACA Indicated yearly Price
Part Number quantity ((pound)it)
================================== ================================================ ==================================
* * *
* * *
* * *
* * *
* * *
* * *
* * *
* * *
* * *
* * *
* * *
* * *
* * *
================================== ================================================ ==================================
Remark (1): prices of these products are based on single orders;
indicated yearly quantities can be determined when more
extensive production history has been gathered.
1.4 AFTER SALES
1.4.1 WARRANTY
A warranty period of nineteen (19) months from date of delivery is guaranteed by
Supplier.
During the warranty period Supplier shall be liable to:
1. full replacement free-of-charge of every defective Product in case it can be
proven that the failure was caused by Supplier, and not by misuse nor as a
result of malfunctioning of other external components;
2. costs of transport of the defective Product from the field location to
Supplier's premises.
The above shall fully exhaust Supplier's warranty liability except in case the
field failure rate exceeds .5% of the total quantity of each type of Product
delivered during the warranty period. In such case Supplier shall be liable to
pay, additional to the above, 50% of the field intervention cost per defective
Product. The time basis for the calculation of the average field failure rate
will be an evolving period of six (6) months. The amount of the field
intervention cost has been fixed at 12 000 BEC for 1996. The amount of the field
intervention cost has to be communicated by ACA to Supplier at the beginning of
every year for the duration of the Supply Agreement. The last amount thus
communicated remains valid until a new field intervention cost has been given.
ACA involves Supplier in its after-sales activities.
Supplier undertakes to grant full worldwide technical assistance including
on-the-spot repairs if required by and under instruction and supervision of ACA.
If such intervention is required as a result of a field failure rate below 0.5%,
ACA will compensate for Supplier's intervention at normal market rates for
manhour and transportation.
If such intervention is required as a result of a field failure rate exceeding
0.5% and it has been established that the cause of the intervention was a
defective Supplier's Product, then all costs for field intervention will be at
Supplier's charge, whereby the charge of intervention cost outside Europe will
be decided upon case-by-case.
1.4.2 WARRANTY HANDLING
Written reporting will be sufficient for approval of warranty claims when the
failure rate remains below the level of 0.5%.
Above 0.5% approval of warranty claims will be based upon the written reports
and field returns of defective products from the selected representative group
of reporting countries.
Until further notice from ACA the reporting countries are: Belgium, the
Netherlands, France, Germany, Switzerland and the USA.
1.4.3 SPARE PARTS
Supplier assures the availability of replacement products as well as spare parts
to the Products under this Agreement for at least ten years after series
production has ceased of the last compressor equipped with the product(s)
covered by this Agreement.
Functional replacement is acceptable after this period.
1.5 TOOLING
ACA pays for the tooling dedicated to the project, according to the development
agreement with addenda (ref.: 733/010.027, 771/110.037/336.799,
771/210.023/348.576), and to the products under this Agreement.
As a consequence hereof ACA becomes and remains owner of this tooling.
Supplier shall keep the tooling in perfect workable condition at his charge.
The tooling hereby referred to is listed in addendum 1.
1.6 PRODUCT LIABILITY
1.6.1 PRODUCT LIABILITY
Supplier remains in all circumstances responsible for product availability and
product quality as defined in the relevant specifications.
Supplier undertakes only to deliver products complying with all applicable
safety legislation and regulations.
In accordance with EEC directive 85/374/EEC "Liability for defective products",
Supplier shall be liable for damage caused by a defect in his product.
1.6.2 LIMITATION OF LIABILITY
Supplier shall be liable for material damages and pecuniary loss which ACA
and/or its customer may suffer and for which Supplier is responsible, the
liability being limited to 5 000 000 BEC for each event of damage or loss.
Supplier shall not be liable for loss of production, interruption of business
and loss of profit.
Supplier shall, in accordance with the prevailing legal regulations, be liable
for personal damages which ACA and/or its customer may suffer and for which
Supplier is responsible.
1.7 PRODUCT SPECIFICATION
1.7.1 PRODUCT SPECIFICATION
ACA informs Supplier of the product specifications of the goods to be supplied
by the sole official document: "Identification Sheet" (see 2.2)
ACA undertakes to provide all required information together with the
specifications mentioned in the Identification Sheet. Supplier is to ensure that
he understands and comprehends the specifications and information contained in
the Identification Sheet. When the production capabilities are such that it is
not possible to deliver in accordance with these, Supplier is to inform ACA
thereof by return.
Supplier must supply in accordance with the details of the Identification Sheet.
Deviations from these can only be made subject to a written acceptance from ACA.
1.7.2 SUPPLIER PRODUCT SPECIFICATION
Supplier will, after the original development and after each adaptation and/or
update of one of the products, present detailed and full specifications,
drawings, parts lists as well as complete Software specifications.
The parts list will contain approved vendors for the components for each
Product. For critical components (such as - but not exclusively - IC's, relays,
displays, connectors) alternative vendors will be identified whenever possible.
If a component becomes no longer available from an original vendor, Supplier
will request and substantiate its replacement alternative in writing.
If testing is necessary in the opinion of Supplier and/or ACA in order to
approve a component from a new vendor, then such costs as may result from such
testing shall be carried by Supplier. After written confirmation by ACA the
component may be sourced from the new vendor.
1.8 TECHNICAL COOPERATION
1.8.1 SPIRIT
ACA and Supplier declare to work jointly and continuously towards product
improvement.
ACA implements a policy of sole sourcing and early supplier involvement. To this
effect ACA requires Supplier to provide engineering capacity, prototype
services, pilot batch production facilities as well as continuous quality
checking.
Flexibility in connection with production of prototypes is by consequence an
essential requirement.
1.8.2 PRODUCT MODIFICATIONS
Supplier may make no modifications to the products under this Agreement without
first consulting and approval of ACA in writing.
If changes in the Product appear to be necessary due to non availability of
certain components or any other reason except for change of specification by
ACA, Supplier will redesign the product at his own cost as long as the Supply
Agreement is valid.
In all cases the written approval of ACA is essential.
This approval will result in a renewed product specification Identification
Sheet.
1.8.3 PRODUCT DEVELOPMENT
The representatives of ACA and Supplier will contact each other for the purpose
of co-operation regarding development of modified products.
The execution of the modifications follow the same routines and project handling
as product development projects, as specified in the development Agreement (ref.
733/010.027) and other relevant ACA instructions.
ACA undertakes to involve Supplier in an early stage of the development of
product modifications.
Supplier has the right and duty to propose improvements to the design relative
to performance, product cost and ease of production on the basis of his own
capabilities.
1.9 EXCLUSIVITY AND CONFIDENTIALITY
1.9.1 EXCLUSIVITY
Supplier is not allowed to perform any development and/or production services
for any competitor of Atlas Copco Airpower nv during the term of this Agreement
and two years thereafter.
1.9.2 CONFIDENTIALITY
All information concerning compressors and the company Atlas Copco of
confidential nature will be disclosed to Supplier in order to allow Supplier to
evaluate such information for the purpose of determining his course of action in
establishing a technical and business relationship with Atlas Copco in respect
of developing and producing within the frame of this agreement.
No item of this information may be disclosed by Supplier to any third party
unless ACA gives its permission in writing.
The name of Atlas Copco Airpower may not be used in any publication of any kind
without the written consent of ACA.
1.9.3 INDUSTRIAL PROPERTY RIGHTS
All industrial property rights to the design, modifications and updates of the
products covered by this Agreement, including films, masks, patterns, drawings,
combination of components reflecting technical specifications and software; as
well as tooling, test equipment and related software dedicated to the project
and production are the property of ACA. Supplier is not allowed to convey any of
the above to other parties or use it in any similar application without the
written consent of ACA.
All inventions relating to the products covered by this Agreement are the
property of ACA. When applicable, patent applications shall be filed in the name
of the Supplier's inventor with ACA as the stated owner.
1.10 PRODUCTION
Procedures and routines concerning production are covered in Part 2: Practical
Arrangements, of this Agreement.
1.11 QUALITY POLICY
ACA requires Supplier to establish and put into effect a Quality Assurance
System. ACA requires Supplier to establish and put into effect a Quality Plan
for (each of) the products covered by this agreement.
The Quality Assurance System and Quality Plan shall be implemented for the
production of all products delivered to ACA.
Supplier undertakes to supply products in accordance with technical
specifications and other specified features.
ACA undertakes to specify the technical specifications and features and to
provide corresponding documentation.
Supplier undertakes to maintain systems which result in the achievement of the
technical specifications and features in a documented manner.
Supplier undertakes to improve the quality of the production processes and hence
the products on a continuous basis.
Supplier undertakes to supply the products according to the ZDS system with a
maximum allowed monthly ppm rating of 600. Supplier shall be liable for all
costs due to replacement of faulty products on the ACA assembly lines when the
monthly ppm rating exceeds the 600 limit.
1.12 FINANCIAL STATUS AND STABILITY
1.12.1 FINANCIAL STATUS
The continuity of this agreement is also dependent on sound financial conditions
of the parties involved.
For this reason Supplier shall submit copies of the following officially
published financial reports to ACA:
* the annual accounts deposited with the central filing organization
for Supplier
* the Annual Report of the parent company of Supplier
These reports are to be supplied within 2 months of their public filing.
1.12.2 FINANCIAL STABILITY
Since, in the longer term, the interests of both parties are convergent,
Supplier will inform ACA at the first hint of financial difficulties.
In the event of suspicions of financial problems or when there are serious
suspicions about oncoming financial difficulties it must be possible for
representatives of the ACA financial department to obtain access upon request to
the financial accounts of supplier in order to investigate and discuss this
problem openly.
Suitable steps will be taken to safeguard the interests of both parties.
1.13 BREACH OF CONTRACT
1.13.1 STIPULATIONS
The agreement cannot be terminated by either party before 31.12.2001, unless by
mutual consent.
From 1.1.2002 and for the duration of the term of this agreement, either party
has the right to terminate this agreement on eighteen (18) months written notice
to the other party.
If Supplier however cannot perform according to the agreement, and/or cannot
guarantee:
* the prices defined in the Price List
* the quality requirements
* the logistic requirements
* the after sales service requirements
as defined in or referred to by this agreement, this will be considered as
breach of contract by Supplier. In such case Supplier will be held liable to pay
the transfer costs of change of supplier to the amount of 10 000 000 BEC.
The date of the written notice of termination defines the date of termination.
Should Supplier end up having financial problems that effect the prices,
quality, supply efficiency or services, then ACA reserves the right to terminate
this Agreement giving three (3) months notice in advance.
1.13.2 TOOLING
In case of termination of this Agreement for any reason all tooling or other
production items paid for and owned by ACA (see 1.5) shall be returned to ACA
unless an alternative arrangement has been agreed upon.
1.13.3 APPLICATION OF LAW
Parties acknowledge formally that for this agreement the Belgian Law, excluding
its conflict of law rules, is applicable.
1.13.4 ARBITRATION
All disputes arising out of or in connection with this agreement, including any
question regarding its existence, validity or termination, shall be settled by
an amicable effort of both parties to the
agreement. An attempt to arrive at a settlement shall be deemed to have failed
as soon as one of the parties to the contract so notifies the other party in
writing.
If an attempt at settlement has failed, then the dispute shall be finally
settled under the Rules of Arbitration of the International Chamber of Commerce
in Paris by three arbitrators appointed in accordance with said Rules.
The place of arbitration shall be Brussels. The procedural law of this place
shall apply where the arbitration Rules are silent.
Litigation will be carried out in the French or English language.
2. PRACTICAL ARRANGEMENTS
This second part of the agreement defines and describes the practical
arrangements under which the cooperation shall be organized.
Procedures and routines outlined in documents which are not contained within
this Agreement but to which this part refers, are to be considered binding to
the same extent as the Agreement.
2.1 CONTACTS AND RESPONSIBILITIES
2.1.1 ORGANIZATION
The authorized contact person at ACA is the representative within the Purchasing
Department.
It is this Purchaser Representative who makes decisions on behalf of ACA. For
specific matters this Purchaser Representative will be assisted by various
functions and departments within ACA.
It is through this Purchaser Representative that Supplier is to cooperate with
other departments of ACA.
2.1.2 ACA CONTACTS
Below are given the names and coordinates for the Purchaser Representative and
for the various applicable departments:
2.1.2.1 INDUSTRIAL AIR DIVISION
Atlas Copco Airpower NV
Industrial Air Division
Address Xxxxxxxxxxxxxx 000
X-0000 Xxxxxxx
P. O. Box 103
Belgium
Purchase Department Xxx. Xxxxx Xxxxxxx
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
Quality Department Mr. Louis Van der Jeught
tel: Belgium (0) 3/870 22 49
fax: Belgium (0)3/000 00 00
Engineering Department Mr. Xxxxx Van Turnhout
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
Financial Department Xx. Xxxxxxx Xxxxxxx
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
Order Handling Line GA 5-10
Xx. Xxxx Xxxxxxxxxxx
tel: Belgium (0) 3/870 23 14
fax: Belgium (0)3/000 00 00
Line GA 11-22
Xx. Xxxxx Xxxxxxxx
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
Line GA 30-45
Xx. Xxxxx Xxxxxxxxx
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
Line GA 55-75
Xx. Xxxxx Xx Xxxxxx
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
2.1.2.2 OIL-FREE AIR DIVISION
Atlas Copco Airpower NV
Oil-free Air Division
Address Xxxxxxxxxxxxxx 000
X-0000 Xxxxxxx
PO Box 104
Belgium
Purchase Department Xxx. Xxxxxx xxx Xxxxxxxx
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
Quality Department Xx. Xxxx Xxxxxxxxxx
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
Engineering Department Mr. Hans Magits
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
Financial Department Mr. Xxxxxx Xxxxx
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
Order Handling planner E
Mrs. Renild de Clercq
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
planner C
Xxx. Xxx Xxx Xxxxx
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
planner B
Mr. Marc d'Aes
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
planner I
Xx. Xxxxx Xxxxxxxx
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
planner Q
Xx. Xxxxxxxx Van den Eynde
tel: Belgium (0)3/000 00 00
fax: Belgium (0)3/000 00 00
2.1.3 SUPPLIER CONTACTS
Supplier shall appoint a responsible representative who makes decisions on
behalf of Prima Electronics SpA. For specific matters this representative will
be assisted by various functions and departments within Supplier's organization.
Below are given the names and coordinates for the various applicable contacts:
Prima Electronics SpA
Address Xxxxxx Xxxxxxxxx 00/0
X-00000 Xxxxxxxxxx (XX)
Xxxxx
tel: Italy (0)11/64 41 44
Representative Xxx. X. Xxxxxx
tel: Italy (0)11/64 41 44
fax: Italy (0)11/000 00 00
Quality Department Xx. X. Xxxxxxxxx
tel: Italy (0)11/64 41 44
fax: Italy (0)11/000 00 00
Engineering Department Xx. X. Xxxxxxx
tel: Italy (0)11/64 41 44
fax: Italy (0)11/000 00 00
Financial Department Xx. X. Xxxxxx
tel: Italy (0)11/64 41 44
fax: Italy (0)11/000 00 00
Order Handling Xxx. X. Xxxxxx
tel: Italy (0)11/64 41 44
fax: Italy (0)11/000 00 00
2.2 PRODUCT SPECIFICATION AND IDENTIFICATION
2.2.1 VALIDITY
The ACA product Identification Sheet is valid as from the date it is received by
Supplier, and remains valid until replaced by an Identification Sheet with
specifications reflecting a later edition.
2.2.2 ACCESSIBILITY AND DEVIATIONS
The Identification Sheet must be understood by Supplier's personnel responsible
for costing, production and quality.
When there is doubt about the completeness or clarity of the specification(s),
the Purchaser must be contacted without delay. The implementation of the product
concerned shall be postponed until a response is received from the Purchaser
representative.
If no questions are asked within a period of 14 days from the date of receipt of
an Identification Sheet it is assumed that the information given therein has
been understood and accepted by Supplier.
Any deviation by Supplier from the information given in the Identification Sheet
must be approved by ACA in writing prior to the implementation thereof by
Supplier.
2.2.3 MODIFICATION PROCEDURE
Any modification of a product specified in an Identification Sheet shall always
be communicated to Supplier together with a new Identification Sheet covering
the modification and the new specifications.
To the extent required, Supplier and the Purchaser Representative shall consult
with each other prior to the release of a new Identification Sheet based on the
modification of a product.
2.3 DELIVERY ORGANIZATION
The logistic organization described below applies to the Industrial Air
Division. The logistic organization for the Oil-free Air Division will be
communicated to Supplier through a separate document.
2.3.1 LOGISTIC ORGANIZATION
Supplier's products are to be delivered under two logistic systems:
1. KANBAN system
2. CALL-OFF system
Supplier will be informed separately for each product under which system the
product has to be delivered.
2.3.1.1 KANBAN DELIVERIES
The KANBAN products are packed in the specified packing with fixed quantity per
packing, e.g. a standard Atlas Copco pallet with 2 rings (P2) containing 42
products.
ACA has a buffer of each type of KANBAN product.
This buffer is calculated assuming a reaction time (including transport) at
Supplier of 10 working days.
The KANBAN card is scanned each time a standard packing is moved from the buffer
to its assembly line location.
The contents of the scanned KANBAN cards is transmitted to Supplier every night.
ACA can always generate demand for an extra (manual) KANBAN, additional to the
automatic (scanned) KANBAN.
Supplier will collect all transmitted orders, from all relevant order handling
contacts, over 5 (working) days, i.e. from Wednesday through Tuesday. These
orders will be combined into a single delivery which is collected at Supplier's
location each week on Friday.
I.e. the system functions as follows:
* scanning during day 1 through 5 (Wednesday = day 1 through Tuesday =
day 5)
* transfer of orders during the night from day 1 to day 5, orders are
at Supplier by the morning 7.00 hrs of each subsequent day
* Supplier combines the orders transmitted from day 1 through 5
* delivery is at the latest by the afternoon 17.00 hrs of day 8 (e.g.
next Friday)
* the products are available at the ACA assembly line in the morning of
day 8 + 2 (e.g. next Tuesday morning)
2.3.1.2 CALL-OFF
Call-off orders are transmitted when ACA has a customer order for such product.
Call-off is transferred together with the KANBAN contents.
These call-off products are packed in pallet(s) separately, and may not be mixed
in the same packing with KANBAN products.
Call-off products are to be delivered with maximum 16 working days of call-off.
Call-off products will be shipped together with the regular KANBAN transport,
unless explicitly otherwise indicated by the relevant ACA order handling
responsible.
2.3.1.3 LATE DELIVERIES
Supplier shall carry the transport cost for late deliveries with regard to the
established logistic system and delivery schedule.
In case ACA cannot keep its scheduled delivery date for a compressor containing
Supplier's product due to late delivery, Supplier shall be liable to the cost of
2 500 BEC per man hour lost on the ACA assembly line.
2.3.2 PACKING
Packing is specified through the ACA packing specification.
The packing shall be identified by the bar-code packing label according to the
relevant ACA specification.
Supplier is responsible for the suitable packing of the products, according to
the packing specification, thereby ensuring that the products arrive in ACA in
the specified condition.
2.3.3 TRANSPORT
Transport is organized by ACA.
Dispatching, coordination and transport insurance are ACA responsibilities.
Supplier is responsible for timely delivery of the products F.C.A. (Free
Carrier).
F.C.A. shall be interpreted in accordance with INCOTERM 1990 with the passing of
risk and cost taking place when the products are safely put on a truck or
similar at Supplier's production site, warehouse or any other agreed upon site.
The transport company in charge of ACA transport organization is:
ADES nv
Dynamicalaan 16
X.X. 000
X-0000 Xxxxxxx
Xxxxxxx
Contact: Xx. X. Xxxxxx
Tel.: Belgium (0)3/825 25 95
Fax.: Belgium (0)3/825 25 26
Unless agreed upon in a separate agreement, air freight of products to ACA can
only be allowed after explicite instructions from the Purchaser Representative
or the Order Handling responsible from ACA.
Unless changed through separate agreement, deliveries will be collected at
Supplier's premises each FRIDAY.
Deliveries will be collected at Thursday when Friday is not available through
holiday closure. In such case Supplier will contact the transport forwarder at
his own initative.
2.4 PAYMENT TERMS
The payment condition for this agreement is 60 days end-of-month of arrival of
good in ACA-Wilrijk.
2.5 QUALITY POLICY
2.5.1 GENERAL REQUIREMENTS
The purpose of the Quality Policy is to achieve a Zero Defect Supply cooperation
between ACA and the Supplier.
To achieve this effect, the Supplier shall continuously and completely control
his production processes, product quality and product quality procedures.
In order to achieve such level of control ACA requires the Supplier to pursue
and implement a policy of continuous improvement of the quality system, the
process(es) and product(s).
ACA evaluates the performance of its Supplier in accordance with the ISO 9000
standard series on quality systems.
Thus ACA suppliers shall endeavor to have a quality system structure and
production process in accordance with these ISO standards.
2.5.2 QUALITY ASSURANCE SYSTEM
ACA requires its Supplier to establish, implement and maintain a Quality
Assurance System.
The performance of Supplier's Quality Assurance System will be audited by ACA in
accordance with the ISO 9001 standard.
Each audit will result in a written audit report of which the Supplier will get
a copy.
Failure to reach the required standard level will result in specifications from
ACA regarding actions to be taken within a stated period of time established
after consultations with the Supplier. Failure to reach the standard level may
lead to the decision by ACA that no further orders will be placed until
corrective actions have been taken resulting in the achievement of the standard.
2.5.3 QUALITY PLAN
ACA requires its Suppliers to establish, implement and maintain a Quality Plan
for each of the products subject to a Supply Agreement or other cooperation with
ACA.
Such Quality Plan must at least cover:
* a complete and comprehensive description of the production process
* all critical product and process parameters affecting the product
quality; these parameters will be utilized to assess the quality
level achieved in the production process
* methods and criteria for establishing and evaluating the critical
product and process parameters
The Quality Plan shall be approved by ACA.
Quality Plans shall be continuously evaluated and improved by the Supplier.
2.5.4 ZERO DEFECT SUPPLY - ZDS
2.5.4.1 PURPOSE
ACA and Supplier agree to operate in a ZDS (Zero Defect Supply) system with the
purpose of guaranteeing delivery of faultless parts directly to the ACA assembly
lines in accordance with the technical and packing specifications and with an
agreed delivery schedule.
To this effect ACA requires and expects Supplier to guarantee complete control
of process, product quality and logistic organization.
2.5.4.2 ZDS STATUS
The Supplier acquires ZDS after:
* approval of the Quality Assurance System
* approval of the Quality Plan(s)
* three consecutive faultless deliveries of any one product
When these three parameters have been complied with products shall be supplied
directly to the assembly lines and ACA will not make an entry inspection until
further notice.
2.5.4.3 REJECTED PRODUCTS
Rejected products are products that have been found not to comply with the
product specification as established in the Identification Sheet.
Following procedure will be applied to rejected products:
- Supplier will be informed by fax regarding the occurrence of rejected
products; such fax will contain ACA Part Number(s), quantity per part
number and ACA rejected product report reference, i.e. the HK
reference.
- rejected products will be returned to Supplier unless explicitly
otherwise agreed
- if the products are rejected due to Supplier's cause, then Supplier
will be charged with the product cost, handling cost, and the costs of
packing and transport of the rejected products; depending on the amount
to be charged, such invoices will be grouped per month or per quarter
- if the products are rejected due to ACA cause or transport mishandling,
then Supplier will invoice ACA with the product cost of the replacing
products at delivery, and/or with the cost of repair (if applicable) on
a separate invoice which contains the HK reference of the rejected
products;
- Supplier can choose to fetch the rejected products at his own expense
if he so prefers; in this case Supplier must notify ACA within 2
working days of receiving the fax;
- a specific or general agreement can be made to scrap rejected products
at ACA; Supplier will be charged with the product cost of the scrapped
products in case the products have been rejected due to Supplier's
cause.
2.5.4.4 EVALUATION
The evaluation of the Supplier's performance in the area of product quality is
based on rejection reports and/or problem reports in which the rejection rate is
calculated.
Rejection rate is expressed in parts per million (ppm) per month, i.e. the
overall rejection of any one product on the assembly line is divided by the
number of such products delivered during the same month multiplied by 10
to the sixth power.
ACA will provide the Supplier with a ppm report every month in case there are
rejected products; otherwise the ppm report will be provided twice per year
(June/December).
The present maximum rejection rate ppm limit for ACA is 600, whereas the target
is zero rejection rate.
2.5.4.5 PROBLEM REPORTING
In addition to the rejection rate report provided by ACA in the monthly ppm
report, flagrant quality problems shall be reported directly to the Supplier
General Manager.
This reporting will take the form of a Problem Report.
Supplier must then reply stating which actions will be taken to eliminate,
completely and effectively, the reported problems, as well as which improvements
to the system will be implemented in order to exclude a repetition of the
problems reported.
2.5.4.6 DUTY TO DISCLOSE
The common objective of achieving a viable ZDS cooperation can only be reached
through an intensive and complete exchange of information between the Supplier
and ACA.
This exchange of information shall cover reporting of mutual problems as well as
identification of opportunities for quality improvement and the implementation
thereof.
In this respect both parties have the duty to disclose all information necessary
to achieve the above defined objective.
2.5.5 DEFINITION OF PRODUCT QUALITY REQUIREMENT
Supplier has the right and duty to specify the product quality requirements
These requirements shall be established in cooperation with ACA, and all
agreements relating thereto shall be in writing and be kept by the Supplier.
These product quality requirements can be obtained in:
* functional (technical) specifications
* certificates
* specific preventive operations or treatment instructions
* specific packing instructions
In the Identification Sheet reference to the relevant documents must be made.
2.5.6 FIRST SAMPLE INSPECTION
Control in conjunction with the introduction of new products and the
introduction of modifications to existing products is a key issue in ACA's
product control system. The procedure of First Sample Inspection is the key
element of the introduction control system.
Specific instructions relating to First Sample Inspection will be provided to
the Supplier together with the Identification Sheet for each new or modified
product.
Such instructions will specify the applicability of requirements concerning:
* the Quality Plan
* pilot batch production
* reports and/or certificates to be furnished by the Supplier
* inspection of the first sample at the Supplier production site
* qualification tests on the product or parts of it.
The first sample to be inspected must be produced using the tooling and
production methods which will be used for serial production. Exceptions to this
rule can only be applied under special circumstances and are subject to written
approval by the ACA Quality Department.
2.6 TOOLING
2.6.1 PROPERTY
Tooling ordered and paid for by ACA remains the property of ACA. Supplier may
not use it for carrying out work for other contractors or projects. Such tooling
shall be marked "Property of Atlas Copco Airpower nv."
2.6.2 LIABILITY
Supplier shall keep the tooling deposited with him in accordance with the
customary rules.
2.6.3 REPLACEMENT
Supplier shall inform ACA within 90 days when this tooling requires replacement
as a result of end-of-lifetime. Supplier may proceed to replace only after
receiving written agreement from ACA. The cost of replacement is chargeable to
ACA.
2.6.4 PERIOD OF HOLDING
Supplier is required to manufacture spare parts for a period of 10 years after
end of serial production. Supplier is authorized to keep this tooling for the
time necessary to carry out this obligation.
2.6.5 PAYMENT
The tooling will be paid by ACA after the acceptance of the first samples by the
quality department of ACA division concerned and after receiving the property
rights. These rights are identified by and contain the drawings, pictures and
identification of the tooling through the part number(s) with edition of the
products produced with the tooling. Only these tooling costs will be paid which
have been officially ordered by ACA.
2.6.6 LIFE TIME
The life time (in number of units of the product(s)) of the tooling has to be
confirmed by Supplier.
2.7 PRODUCT LIFE CYCLE
2.7.1 PILOT BATCH
Pilot batch products will be considered and produced as series production
products, i.e. manufactured at Supplier" series production line using series
production tooling. Deviations from this principle can only be allowed after
written approval from ACA.
Pilot batch products will be delivered at series product prices.
2.7.2 PRODUCTION START-UP
The products will be available in all their variants at the moment of series
production start-up, in the quantities defined in the relevant delivery schedule
and/or according to agreements with the ACA order handling responsible.
2.7.3 SERIES PRODUCTION
The agreements and arrangements contained in this Supply Agreement apply to
their full extent as long as series production runs.
Exceptions to regular arrangements can only be allowed as far as defined in this
Agreement.
Series production deliveries must be guaranteed under the logistic system
established in this Agreement through the whole calendar year, since ACA does
not have a period of collective factory closure.
2.7.4 SERIES PRODUCTION PHASE-OUT
ACA undertakes to notify Supplier three months in advance of series production
phase-out due to change of compressor model or compressor end-of-lifetime.
In such case ACA does not bear any costs of overstock of complete products or
material.
In case the notification of phase-out is shorter than three months, then ACA
will accept charges for material and/or complete products to a maximum amount of
1 000 000 BEC, provided it can be proven that the overstock was due to short
notification.
2.7.5 SPARE PART PRODUCTION & END OF LIFE CYCLE
Time of availability of products and spare parts for the products under this
Agreement, after series production phase-out and during the ACA spare part
period, is defined in part 1.4.3 of this Agreement.
Supplier will notify ACA at least three months in advance in case Supplier plans
production phase-out of the products during the spare part period.
In such case, Supplier will make available to ACA replacement product(s) and/or
spare parts to the product(s) which are functionally identical as well as
interchangeable.
2.8 PURCHASE DOCUMENT
Procedures and routines outlined in documents which are not contained within the
agreement but to which this part refers, are to be considered binding to the
same extent as the agreement.
ACA reserves the right to amend and modify the procedures and requirements
stated in this part: Practical Arrangements.
3. ADDENDUM 1: LIST OF TOOLING
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