ESI Su p p l I E r Ha n d b o o k a n d Co d E o f Co n d u Ct

Electro Scientific Industries | 13900 NW Science Park Drive Portland, OR 97229-5497

2016

ta b l E o f Co n t E n t S 0.1 In t roduct ion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

0 .2 About ES I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

0 .3 Code of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Hones t and E th i ca l Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Compl iance w i th Laws and Fa i r Dea l ing . . . . . . . . . . 10

Conf l i c t o f In te res t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

F inanc ia l In te res t s in Other Bus iness . . . . . . . . . . . . . . . . 10

Payment f rom Outs ide Pa r t ies . . . . . . . . . . . . . . . . . . . . . . . . 10

Improper Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Ant i -Cor rupt ion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

0.4 Compl iance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Env i ronmenta l Compl iance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 MSDS Requ i rements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Conf l i c t M inera l s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Fa i r Labor S tandards Ac t Compl iance . . . . . . . . . . . . . . . . . 13

Occupat iona l Sa fe ty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

U .S . Government Procurements . . . . . . . . . . . . . . . . . . . . . . . 13 0.5 Genera l Expectat ions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Propr ie ta ry In fo rmat ion & Non-D isc losu re Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

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On T ime De l i ve ry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

In te rna l Cont ro l s and R i sk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Purchase Order Conf i rmat ions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Payment Te rms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Sh ipment Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Te rms & Cond i t ions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Not i f i ca t ion of Produc t Change . . . . . . . . . . . . . . 17

Adver t i s ing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Counte r fe i t Pa r t s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

0.6 Suppl ie r Management . . . . . . . . . . . . . . . .18

Supp l ie r Qua l i f i ca t ion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 F i r s t A r t i c le . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Bus iness Cont inu i ty P lans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Cr i t i ca l / Key Supp l ie r s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Pa r t Qua l i f i ca t ion Requ i rements . . . . . . . . . . . . . . . . . . . . . . . 19

Pa r t Qua l i f i ca t ion Due to a Change Proposed by a Supp l ie r. . . . . . . . . . . . . . . . . . . . . . . 20 Supp l ie r Wa ive r / Dev ia t ion Reques t . . . . . . . . . . . . . . . . . . . . 20

Purchase Spec i f i ca t ions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Mate r ia l Ce r t i f i ca t ions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Nonconfo rming Mate r ia l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

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1

I n t r o d u C t I o n

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ES I supp l ie r,

Thank you fo r tak ing the t ime to rev iew the ES I supp l ie r handbook . As va lued

pa r tne rs i t i s impor tant tha t we sha re a f ramework fo r do ing bus iness . The fo l lowing

i s in tended to supp lement our cont rac t s and te rms and cond i t ions of pu rchase by

a r t i cu la t ing ES I ’s commerc ia l , compl iance and e th i ca l expec ta t ions . The gu ide l ines

w i th in th i s document have been es tab l i shed in the bes t in te res t of ES I supp l ie r s ,

employees , sha reho lders , cus tomers and the pub l i c . These gu ide l ines a re not

des igned to se rve as a comprehens ive rev iew. Ra ther, they a re an overv iew of some

of the most impor tant p r inc ip les tha t re f lec t and suppor t the way we do bus iness . A l l

bus iness conduc ted by ES I employees and agents w i l l be conducted , in a l l p laces and

a t a l l t imes , e th i ca l l y and in con fo rmance w i th app l i cab le l aws . I f you have ques t ions

o r a re concerned regard ing spec i f i c ac t ions , p lease use the p r inc ip les out l ined here

to he lp de te rmine the p roper course of ac t ion , o r contac t ou r D i rec to r of Procurement ,

V i ce Pres ident of Opera t ions o r Ch ie f F inanc ia l O f f i ce r.

S ince re ly,

Rober t DeBakker

Sen io r V i ce Pres ident , G loba l Opera t ions

01. I n t r o d u c t I o n

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a b o u t ES I

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ES I eng ineers in a modula r sys tems s t ruc tu re

to ensure the bes t va lue and f lex ib i l i ty. That

f l ex ib i l i ty a l lows you to change beam paths , l a se r

eng ines , s tages , and o ther components to reuse

spec i f i ed too l s in new ways , on d i f fe rent mate r ia l s ,

and fo r d i f fe rent p rocesses .

ES I can mach ine , mark , s ingu la te and d r i l l to your

most exac t ing spec i f i ca t ions . Th i s cont inues to

d r i ve inc reased wor ldwide adopt ion of ES I sys tems .

Our unders tand ing of the techno logy and the

app l i ca t ions fo r ou r l a se r -based manufac tu r ing

sys tems he lps us des ign fo r min imal cos t of

ownersh ip f rom the s ta r t .

Unders tand ing the cha l lenges our cus tomers face

in p roduc t ion , and p rov id ing the r igh t so lu t ions

to so lve those cha l lenges , i s what se t s ES I apa r t .

Our App l i ca t ion Eng ineer ing team co l labora tes

d i rec t l y w i th cus tomers to app ly the most e f fec t i ve

dep loyment of the i r ES I sys tems .

ES I dep loys hundreds of f i e ld se rv i ce eng ineers

wor ldwide to make su re we have the most

respons ive and capab le team to se rv i ce your

needs . Our reg iona l se rv i ce cente r s p rov ide the

fas tes t response to your suppor t needs ensur ing

equ ipment i s back in p roduc t ion in the shor tes t

poss ib le t ime .

De l i ve r ing low cos t of ownersh ip and ma in ta in ing

h igh y ie lds requ i res sys tems tha t you can depend

on . ES I bu i lds sys tems tha t a re re l i ab le and wi l l

g i ve you the con f idence in knowing tha t you

won ’ t need to sac r i f i ce th roughput fo r mach ine

downt ime .

WHY ?

The Sys tem That F i t s Prec i s ion & Accuracy

Globa l Serv i ce Bu i l t to Las t

Lower Cost of Ownersh ip Wor ld C lass Suppor t

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ES I i s a l ead ing supp l ie r of innovat i ve , l a se r -based manufac tu r ing so lu t ions fo r the

mic ro techno logy indus t ry. Our sys tems enab le p rec i se eng ineer ing and tes t ing of mic ron

to submic ron fea tu res in semiconducto r s , LEDs , mul t i - l aye r ce ramic capac i to r s (MLCCs ) ,

p r in ted c i r cu i t boards (PCBs ) , f l ex c i r cu i t s and o ther h igh-va lue components .

We pa r tne r w i th our cus tomers and supp l ie r s to make b reak th rough techno log ies

poss ib le in the semiconducto r, m ic roe lec t ron i cs and o ther emerg ing h igh- tech

indus t r ies . Founded in 1944 , ES I de l i ve r s wor ld -c lass sys tems exper t i se , w i th g loba l

opera t ions f rom the Pac i f i c Nor thwest to the Pac i f i c R im .

02. A b o u t ES I

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A tiny laser beam can be powerful enough to etch a serial number onto a diamond, the hardest natural substance known to man.

C o d E o f C o n d u C t

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Th is Supp l ie r Code of Conduct and Bus iness Prac t i ces

app l ies to a l l supp l ie r s of ES I and i t s subs id ia r ies . I t i s

essent ia l tha t these bus iness p rac t i ces become the bas i s

fo r a l l ou r bus iness re la t ionsh ips .

H o n E S t A n d E t H I c A l c o n d u c t

I t i s ES I ’s po l i cy to p romote h igh

s tandards of in tegr i ty by conduc t ing

our a f fa i r s in an hones t and e th i ca l

manner. ES I ’s in tegr i ty and reputa t ion

depend on the hones ty, f a i rness and

in tegr i ty of each supp l ie r assoc ia ted w i th us . Uny ie ld ing

in tegr i ty i s the foundat ion of co rpora te in tegr i ty and a

fundamenta l expec ta t ion of th i s Code of Conduct .

c o m p l I A n c E w I t H l A w S A n d F A I r d E A l I n g

Each supp l ie r to ES I sha l l comply w i th a l l app l i cab le

l aws , ru les and regu la t ions and sha l l endeavor to dea l

f a i r l y and in good fa i th w i th ES I cus tomers , sha reho lders ,

employees , supp l ie r s , r egu la to r s , bus iness pa r tne rs ,

compet i to r s and o thers .

c o n F l I c t o F I n t E r E S t

Conf l i c t s of in te res t can be v iewed as any ac t i v i t i es tha t

a re incons i s tent w i th o r opposed to the bes t in te res t s

of ES I , o r any ac t i v i t i es tha t g ive the appearance of

impropr ie ty. Supp l ie r s shou ld note tha t ES I employees

have an a f f i rmat ive duty to avo id s i tua t ions where

the i r loya l t i es may be d iv ided between ES I ’s in te res t s

and the i r own in te res t s . I n th i s regard , supp l ie r s and

ES I employees shou ld avo id even the appearance of

impropr ie ty.

03. c o d E o F c o n d u c t

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F I n A n c I A l I n t E r E S t S I n o t H E r b u S I n E S S

ES I employees may not own a f inanc ia l in te res t in any

ES I supp l ie r (o ther than smal l amounts of s tocks o r bonds

in pub l i c l y - t raded compan ies ) tha t might cause d iv ided

loya l ty o r even the appearance of d iv ided loya l ty.

p Ay m E n t F r o m o u t S I d E p A r t I E S

ES I employees and members of the i r immedia te fami l ies

may not accept any g i f t , payment , loan o r o ther f avor f rom

an ES I supp l ie r.

I m p r o p E r p Ay m E n t S

ES I supp l ie r s shou ld not d i rec t l y o r ind i rec t l y of fe r o r

so l i c i t any k ind of improper payments o r cont r ibu t ions

fo r the purpose of : ( i ) i n f luenc ing ES I employees ; ( i i )

ob ta in ing o r keep ing bus iness ; ( i i i ) pe r suad ing employees

of another company to fa i l to pe r fo rm o r inadequate ly

pe r fo rm the i r du t ies .

A n t I -c o r r u p t I o n

Suppl ie r mus t ensure tha t i t and i t s employees

a re fami l i a r w i th and wi l l s t r i c t l y comply w i th the

requ i rements of ( i ) the FCPA; ( i i ) the UK Br ibe ry Ac t ;

and ( i i i ) a l l o the r app l i cab le l aws , s ta tu tes , regu la t ions

and codes re la t ing to an t i -b r ibe ry and ant i - co r rupt ion .

Supp l ie r s sha l l p roh ib i t any and a l l fo rms of b r ibe ry,

co r rupt ion , ex to r t ion and embezz lement . Supp l ie r s sha l l

ensure tha t the i r employees and agents do not p romise ,

o f fe r, au thor i ze , g i ve o r accept b r ibes o r o ther means of

ob ta in ing undue o r improper advantage . Th i s p roh ib i t ion

covers p romis ing , o f fe r ing , au thor i z ing , g i v ing o r

accept ing any th ing of va lue , e i the r d i rec t l y o r ind i rec t l y

th rough a th i rd pa r ty, i n o rder to obta in o r re ta in

bus iness , d i rec t bus iness to any pe rson , o r o therwise

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By using a good laser, an object at a distance of 1km (0.6 miles) can be illuminated with a dot of around 60 mm (2.3 inches) in radius.

ga in an improper advantage . A l l bus iness dea l ings shou ld

be t ransparent l y pe r fo rmed and accura te ly re f lec ted in

Supp l ie r s ’ bus iness books and records . Supp l ie r s sha l l

implement mon i to r ing and en fo rcement p rocedures to

ensure compl iance w i th ant i - co r rupt ion laws . ES I i s

sub jec t to the p rov i s ions of the Fore ign Cor rupt Prac t i ces

Ac t of 1977 ( “FCPA” o r the “Ac t ” ) (15 U .S .C . § 78dd-1 , e t

seq . ) wh ich i s a Un i ted S ta tes federa l l aw known p r imar i l y

fo r two of i t s ma in p rov i s ions , one tha t addresses

account ing t ransparency requ i rements under the

Secur i t i es Exchange Ac t of 1934 and another concern ing

b r ibe ry of fo re ign of f i c i a l s . The Ac t app l ies to any ac t by

U .S . bus inesses , fo re ign co rpora t ions t rad ing secur i t i es

in the Un i ted S ta tes , Amer i can na t iona l s , c i t i zens , and

res idents whether o r no t they a re phys i ca l l y p resent in

the Un i ted S ta tes . Th i s Ac t makes i t i l l ega l fo r ES I o r

an agent of ES I to of fe r any th ing , o r cause any th ing of

va lue to be of fe red , a s a b r ibe , inc lud ing cash o r non-cash

i tems . As a mat te r of po l i cy, ES I ex tends th i s requ i rement

to i t s supp l ie r s .

l A b o r

Suppl ie r s sha l l no t use fo rced , bonded ( inc lud ing debt

bondage ) o r indentu red labor, i nvo lunta ry p r i son labor, o r

engage in s lave ry o r t ra f f i ck ing of pe r sons . A l l work must

be vo lunta ry and workers sha l l be f ree to leave work a t

any t ime o r te rminate the i r employment . Supp l ie r s sha l l

no t use ch i ld l abor in any s tage of manufac tu r ing o r o ther

opera t ions . The te rm “ch i ld ” re fe r s to any pe rson under

the age of f i f teen (15 ) , o r under the age fo r comple t ing

compulso ry educat ion , o r under the min imum age fo r

employment in the app l i cab le count ry, wh ichever i s

g rea tes t . Except ions may be made fo r use of l eg i t imate

workp lace lea rn ing p rograms tha t comply w i th a l l

app l i cab le l aws and regu la t ions .

C o m p l I a n C E

412

04. c o m p l I A n c E

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E n v I r o n m E n t c o m p l I A n c E

Federa l l aw imposes c r imina l l i ab i l i ty

on any pe rson o r company tha t

contaminates the env i ronment w i th any

haza rdous subs tance tha t cou ld cause

in ju ry to the communi ty o r env i ronment . ES I i s commit ted

to reduce i t s use of haza rdous mate r ia l s , conse rv ing

na tu ra l resources and reduc ing the env i ronmenta l impac t

of was te genera t ions . ES I ins i s t s upon sa fe hand l ing

of haza rdous mate r ia l s by employees , cus tomers and

supp l ie r s to p revent regu la to ry v io la t ions , wh ich can lead

to f ines o r impr i sonment .

mSdS r E q u I r E m E n t S

For any p roduc t conta in ing a haza rdous subs tance , se l le r

sha l l p rov ide ES I , immedia te ly upon acceptance of th i s

pu rchase o rder, a comple te mate r ia l sa fe ty da ta sheet

(MSDS) fo r each haza rdous subs tance fo r wh ich an MSDS

i s requ i red by 29 C .F .R . § 1910 .1200 and any s imi la r

in fo rmat ion requ i red by app l i cab le l aws and regu la t ions

in e f fec t a t the t ime of acceptance of th i s pu rchase o rder.

c o n F l I c t m I n E r A l S

ES I ma in ta ins an ac t i ve con f l i c t minera l mon i to r ing and

compl iance p rocess . Pe r A r t i c le 1502 of US Dodd-F rank

Wal l S t ree t Re fo rm and Consumer Pro tec t ion Ac t : Buyer

i s commit ted to supp ly cha in in i t i a t i ves and overa l l

co rpora te soc ia l respons ib i l i ty tha t works towards a

con f l i c t f ree supp ly cha in . Supp l ie r i s requ i red to take

appropr ia te due d i l igence to ident i f y the i r supp ly cha in

and assoc ia ted count ry of o r ig in fo r minera l s known to

d i rec t l y o r ind i rec t l y f inance o r benef i t a rmed mi l i t an t

g roups in the Democra t i c Repub l i c of Congo o r ad jo in ing

count r ies . Upon reques t , supp l ie r sha l l d i s c lose the

deta i l s of such due d i l igence and sha l l on ly source

minera l s f rom respons ib le sources .

F A I r l A b o r S tA n d A r d S A c t c o m p l I A n c E

Se l le r ag rees and ce r t i f i e s tha t

the goods to be manufac tu red o r

fu rn i shed hereunder have been o r

w i l l be p roduced in compl iance

w i th a l l app l i cab le requ i rements of

Sec t ions 6 , 7 and 12 of the Federa l Fa i r Labor S tandards

Ac t , a s amended , and those regu la t ions and o rders of

the U . S . Depar tment of Labor i s sued under Sec t ion 14

the reof .

o c c u pAt I o n A l S A F E ty

Suppl ie r s sha l l cont ro l worke r exposure to potent ia l

sa fe ty haza rds (e .g . , e lec t r i ca l and o ther energy sources ,

f i r e , veh i c le , and s l ip and fa l l haza rds ) th rough p roper

des ign , eng ineer ing and admin i s t ra t i ve cont ro l s ,

p reventa t i ve ma in tenance and sa fe work p rocedures

( inc lud ing lockout / tagout ) and ongo ing sa fe ty t ra in ing .

Where supp l ie r s cannot adequate ly cont ro l haza rds

by these means , supp l ie r s w i l l p rov ide worke rs w i th

appropr ia te , we l l -ma in ta ined , pe r sona l p ro tec t i ve

equ ipment and educat iona l mate r ia l s

about r i sks to them assoc ia ted w i th

these haza rds . Supp l ie r s w i l l encourage

workers to ra i se sa fe ty concerns .

u.S . g o v E r n m E n t p r o c u r E m E n t S

Suppl ie r s shou ld note tha t ES I i s a U .S . federa l and

s ta te government cont rac to r and the re fo re , ES I and i t s

supp l ie r s a re sub jec t to the app l i cab le s ta tu tes ,

regu la t ions and ru les . Among these a re the ru les

p romulgated by the federa l O f f i ce of Federa l Cont rac t

Compl iance Programs ( “OFCCP” ) . As app l i cab le , th i s

ES I and i t s supp l ie r s a re requ i red to comply w i th the

requ i rements of 41 CFR §§ 60-1 .4 (a ) , 60-300 .5 (a ) and

60-741 .5 (a ) . These regu la t ions p roh ib i t d i s c r iminat ion

aga ins t qua l i f i ed ind iv idua l s based on the i r s ta tus as

p ro tec ted ve te rans o r ind iv idua l s w i th d i sab i l i t i e s , and

p roh ib i t d i s c r iminat ion aga ins t a l l i nd iv idua l s based on

the i r r ace , co lo r, r e l ig ion , sex , sexua l o r ien ta t ion , gender

ident i ty o r na t iona l o r ig in . Moreover, these regu la t ions

requ i re tha t covered p r ime cont rac to r s and subcont rac to r s

take a f f i rmat ive ac t ion to employ and advance in

employment ind iv idua l s w i thout regard to race , co lo r,

r e l ig ion , sex , sexua l o r ien ta t ion , gender ident i ty, na t iona l

o r ig in , p ro tec ted ve te ran s ta tus o r d i sab i l i ty.

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G E n E r a l E x p E C tat I o n S

515

p r o p r I E tA ry I n F o r m At I o n & n o n -d I S c lo S u r E A g r E E m E n t

Al l supp l ie r s a re respons ib le fo r p ro tec t ing the

con f ident ia l i ty of p ropr ie ta ry and o ther con f ident ia l

in fo rmat ion and t rade sec re t s of ES I , i t s cus tomers and

vendors . “Propr ie ta ry and o ther con f ident ia l in fo rmat ion”

inc ludes , bu t i s no t l im i ted to , techno log ies , p roduc t

o r marke t ing s t ra teg ies , a reas of resea rch , new p roduc t

deve lopment da ta , p roduc t ion da ta and desc r ip t ions ,

sa les da ta , i n fo rmat ion about cus tomers o r vendors , and

cus tomer o r vendor - supp l ied in fo rmat ion .

A non-d i sc losu re ag reement (NDA) i s requ i red to p ro tec t

bo th ES I and our supp l ie r s in the event tha t con f ident ia l

in fo rmat ion i s exchanged . The NDA must be in p lace p r io r

to the exchange of con f ident ia l in fo rmat ion .

o n t I m E d E l I v E ry

ES I measures on t ime de l i ve ry as any o rder wh ich a r r i ves

no sooner than 7 ca lendar days ea r l y and 0 day l a te to

the schedu led de l i ve ry. On t ime de l i ve ry i s measured

aga ins t the supp l ie r ’s f i r s t

commit ted de l i ve ry da te .

I n t E r n A l c o n t r o l S A n d r I S k

ES I supp l ie r s shou ld have appropr ia te leve l s of

in te rna l cont ro l s tha t suppor t the in tegr i ty of sys tem

process ing and the in fo rmat ion s to red on sys tems tha t i s

commensura te w i th the assoc ia ted leve l of r i sk .

Th i s shou ld enta i l spec i f i c cons ide ra t ion fo r cybersecur i ty

and su f f i c ien t cont ro l to , a t a min imum:

• Ensure sys tems and in fo rmat ion a re ava i l ab le when

needed , inc lud ing appropr ia te backups

• Reduce the r i sk of compromise of ES I ’s con f ident ia l

in fo rmat ion , inc lud ing

- con f ident ia l pe r sonne l in fo rmat ion ;

- in te l lec tua l p roper ty and ;

- p ropr ie ta ry bus iness da ta

Supp l ie r s a re expec ted to acknowledge rece ip t of the

PO and p rov ide a con f i rmed de l i ve ry da te fo r the fu l l

mate r ia l quant i ty w i th in 96 hours . I f the supp l ie r i s

unab le to meet the con f i rmed quant i ty, p r i ce , o r due da te ,

ES I mus t be in fo rmed immedia te ly upon d i scovery to

con f i rm a new de l i ve ry s chedu le .

p u r c H A S E o r d E r c o n F I r m At I o n S

Suppl ie r s must rece ive a PO f rom ES I fo r a l l pu rchase

i tems o r se rv i ces p r io r to sh ipment o r s ta r t o f work . The

due da te on the PO represents the da te the mate r ia l i s

requ i red to dock a t the sh ip - to address on the PO.

p Ay m E n t t E r m S

ES I s tandard payment te rms a re

Net 60 , o r d i s count te rms wh ich

a re due upon the la te r rece ip t

of a co r rec t invo i ce o r rece ip t of

the p roduc t ( s ) . Payment te rms

a re as re f lec ted on ES I pu rchase o rders .

05. g E n E r A l E x p E c tAt I o n S

16

17

Astronauts on the Apollo 11 space mission in 1969 used a laser to measure the distance between the earth and the moon, their readings were accurate within a fingers width.

S H I p m E n t m E t H o d S

Sh ipments a re to be made

in acco rdance w i th the

sh ipp ing method l i s ted

on the PO. I f a change in the

sh ipment method i s requ i red to

ach ieve OTD, contac t the ES I buyer fo r approva l and

ins t ruc t ions . Fo r any o ther i s sues o r ques t ions regard ing

sh ipment methods , contac t the ES I buyer.

t E r m S & c o n d I t I o n S

Unless o therwise ag reed in wr i t ing , ES I ’s s tandard

Purchas ing Terms and Cond i t ions (T&Cs ) app ly to a l l

pu rchase o rders and bus iness ag reements . Pu rchase o rder

con f i rmat ion cons t i tu tes acceptance of the app l i cab le

T&Cs . A copy of the cu r rent T&Cs can be found a t : h t tp : / /

ww w.es i . com/Suppor t /Po l i c ies /PurchaseTermsCond i t ions .

aspx

n o t I F I c At I o n o F p r o d u c t c H A n g E

Se l le r sha l l p rov ide ES I w i th a t l eas t 12 months advance

wr i t ten not i ce of any p roduc t des ign change o r obso lescence

(End of L i fe ) . Upon rece ip t of such not i ce , an ES I manager

sha l l acknowledge rece ip t of the not i ce in wr i t ing . Fo r a

min imum per iod of 12 months fo l lowing the da te of ES I ’s

wr i t ten acknowledgment , se l le r sha l l cont inue to fu l f i l l ES I

o rde rs fo r the a f fec ted p roduc t .

A d v E r t I S I n g

Se l le r sha l l no t use buyer ’s name o r logo o r re fe r to

buyer d i rec t l y o r ind i rec t l y in any adver t i sement , sa les

p resenta t ion , p ress o r news re lease w i thout buyer ’s p r io r

wr i t ten approva l .

c o u n t E r F E I t p A r t S

ES I expec ts a l l supp l ie r s to use non-counte r fe i t mate r ia l s

and components fo r p roduc ts de l i ve red to ES I . Supp l ie r i s

expec ted to purchase mate r ia l s and components d i rec t l y

f rom the i r manufac tu re r s o r au thor i zed d i s t r ibu to r s and

es tab l i sh and fo l low a p rocess ensur ing the i r au thent i c i ty.

Supp l ie r s a re a l so expec ted to make ava i lab le to ES I , on

reques t , ev idence tha t p roves to ES I ’s sa t i s fac t ion the

authent i c i ty of re levant mate r ia l s and components .

S u p p l I E r m a n a G E m E n t

618

06. S u p p l I E r m A n A g E m E n t

19

Al l supp l ie r s a re expec ted to pe r fo rm and compete

on a bas i s of cos t , qua l i ty and de l i ve ry. However, ES I ’s

supp l ie r management p rocess p rov ides fo r a se lec t

se t of supp l ie r s based on spend , c r i t i ca l i ty of i tems

p rov ided and vo lume of bus iness to fa l l under our ac t i ve

supp l ie r management sys tem . Th i s p rocess measures

supp l ie r s on cos t compet i t i veness , qua l i ty, de l i ve ry

pe r fo rmance as we l l a s a l ignment and suppor t of ES I

des ign and deve lopment ac t i v i t i es . Supp l ie r s f a l l ing

under the supp l ie r management p rocess a re p rov ided wi th

sco re ca rds b i -annua l l y conta in ing both ob jec t i ve and

sub jec t i ve feedback on the i r pe r fo rmance . Supp l ie r s a re

expec ted to deve lop and show cont inuous improvement in

a l l a reas measured .

S u p p l I E r q u A l I F I c At I o n

ES I ma in ta ins an ISO : 9001 :2008 ce r t i f i ca t ion and

re levant p rocesses fo r supp l ie r qua l i f i ca t ion . Supp l ie r s

a re eva lua ted on a l ignment to ES I commerc ia l te rms ,

techno logy capab i l i ty, qua l i ty management sys tems ,

opera t iona l capab i l i ty, geograph ic suppor t , f inanc ia l

hea l th and compet i t i ve cos t . ES I ’s supp l ie r qua l i f i ca t ion

p rocess va r ies depend ing on the na tu re of the se rv i ce o r

p roduc t p rov ided . ES I buyers and g loba l supp ly managers

a re respons ib le to ensure supp l ie r s a re qua l i f i ed pe r ES I

p rocess requ i rements .

F I r S t A r t I c l E

Upon reques t , supp l ie r s w i th new bu i ld - to -p r in t

pa r t s w i l l submi t f i r s t a r t i c les to ES I fo r rev iew and

approva l . Supp l ie r s a re respons ib le fo r document ing

ve r i f i ca t ion resu l t s fo r a l l pa ramete rs , and p rov id ing th i s

documenta t ion w i th the pa r t submiss ion .

b u S I n E S S c o n t I n u I ty p lA n S

Bus iness cont inu i ty p lans a re in tended to keep bus inesses

func t iona l th rough in te r rupt ions of any k ind , such as

power fa i lu res , IT sys tem c rashes , o r na tu ra l d i sas te r s .

Supp l ie r s a re expec ted to ma in ta in supp ly r i sk and

bus iness cont inu i ty p lans to ensure tha t c r i t i ca l

func t ions /se rv i ces can be pe r fo rmed in the event of

an unexpec ted in te r rupt ion . The p lan scope shou ld

inc lude the supp l ie r s , work fo rce , re la ted resources , and

manufac tu r ing s i tes , i nc lud ing in f ras t ruc tu re , p roduc t ion

and tes t equ ipment . The p lan shou ld ensure tha t :

Su f f i c ien t , ac t i ve ly managed , r i sk mi t iga t ion p lans a re

in p lace to p revent s ign i f i cant s lowdown o r s toppage

of supp l ied p roduc ts o r se rv i ces to ES I . A ready- to -

implement response p lan i s in p lace to ensure bus iness

cont inu i ty i s qu i ck ly rees tab l i shed of bus iness cont inu i ty

i s j eopard i zed o r ha l ted .

c r I t I c A l / k E y S u p p l I E r S

ES I de f ined key supp l ie r s as those who p rov ide a

s t ra teg i c i tem tha t i s c r i t i ca l to qua l i ty of a p roduc t ,

i s so le sourced and/or wou ld requ i re a s ign i f i cant re -

eng ineer ing e f fo r t to qua l i f y an a l te rna t i ve source and/

or supp l ie r s who a re deemed c r i t i ca l to ES I success and

cont r ibu te s ign i f i cant l y to ach iev ing our goa l s .

p A r t q u A l I F I c At I o n r E q u I r E m E n t S

Qual i f i ca t ion may be requ i red p r io r to the f i r s t

p roduc t ion sh ipment in the fo l lowing s i tua t ions :

20

prov ided to supp l ie r s and re fe r red to on purchase o rders

when app l i cab le . Supp l ie r s may on ly accept changes

to the purchase spec i f i ca t ions when ES I communica tes

changes th rough a rev i sed purchase o rder o r v ia a s igned

ES I STDA fo rm .

m At E r I A l c E r t I F I c At I o n S

Mater ia l Ce r t i f i ca tes of Confo rmance (CofC ) may be

requ i red fo r c r i t i ca l supp l ie r s on a co r rec t i ve ac t ion p lan

(CAP) , o r when reques ted ( in wr i t ing ) , by ES I . The CofC ,

when requ i red , mus t be inc luded wi th each sh ipment to

ES I , and must inc lude the fo l lowing in fo rmat ion :

• Manufac tu re r ’s name and address

• I tem number / supp l ie r pa r t number

• Lo t /da te code ( s ) a s app l i cab le

• Quant i ty in sh ipment

• S ta tement ce r t i f y ing p roduc t con fo rmance and

t raceab i l i ty

• Name and da te of t ransac t ion

• Purchase o rder number

• Spec i f i ca t ion number and rev i s ion

• Drawing number, i f app l i cab le

• S ignatu re of a supp l ie r techn ica l o r qua l i ty

rep resenta t i ve , w i th typed name , t i t l e , and da te

the ce r t i f i ca t ion was s igned of f . The s igner

must be competent to ce r t i f y tha t the p roduc t

meet spec i f i ca t ions and assume p roduc t qua l i ty

respons ib i l i ty fo r supp l ie r

n o n c o n F o r m I n g m At E r I A l

Nonconfo rming mate r ia l tha t does not meet ES I

spec i f i ca t ions , i s no t f i t fo r use , o r a t the so le d i sc re t ion

of ES I , i s deemed to be nonconfo rming . ES I w i l l no t

accept mate r ia l tha t does not con fo rm to spec i f i ed

requ i rements o r i s no t f i t fo r use . Nonconfo rming mate r ia l

may be re jec ted and re tu rned to the supp l ie r fo r c red i t ,

r ep lacement , o r rework . Nonconfo rming mate r ia l w i l l

be ident i f i ed th rough ES I incoming inspec t ion , in - l ine

re jec t ion , cus tomer re tu rns , a le r t s o r supp l ie r reca l l s .

• A new mate r ia l , se rv i ce , o r p roduc t supp l ie r

• A new mate r ia l , se rv i ce , o r p roduc t not p rev ious ly

supp l ied to ES I

• A mate r ia l , se rv i ce , o r p roduc t mod i f ied by an

eng ineer ing change

• Re-qua l i f i ca t ion of mate r ia l , se rv i ce , o r p roduc t ,

wh ich was d i squa l i f i ed due to a ma jo r qua l i ty

p A r t q u A l I F I c At I o n d u E t o A c H A n g E p r o p o S E d b y A S u p p l I E r

A change in manufac tu r ing of mate r ia l , p roduc t o r se rv i ce

tha t resu l t s in a change in fo rm , f i t o r func t ion , wh ich

may inc lude the fo l lowing :

• A new mate r ia l , se rv i ce o r p roduc t supp l ie r

• A new mate r ia l , se rv i ce o r p roduc t not p rev ious ly

supp l ied to ES I

• A mate r ia l , se rv i ce , o r p roduc t mod i f ied by an

eng ineer ing change

• Re-qua l i f i ca t ion of mate r ia l , se rv i ce , o r p roduc t wh ich

was d i squa l i f i ed due to a ma jo r qua l i ty p rob lem

• A change in mate r ia l

• Source change

• Change in s i te of manufac tu re r

• Change in qua l i ty con fo rmance p rocedure

• Change in hand l ing , packag ing , o r s to rage methods

•

S u p p l I E r w A I v E r / d E v I At I o n r E q u E S t

Suppl ie r s may reques t ( in wr i t ing ) a wa ive r f rom ES I

fo r minor non-confo rmances where the p roduc t may

not comple te ly meet ES I requ i rements , bu t f i t , fo rm , o r

func t ion a re not impac ted . ES I i s under no ob l iga t ion to

approve such reques t s . A l l approved reques t s w i l l be

communica ted by ES I to supp l ie r v ia ES I STDA (Supp l ie r

Techn ica l Dev ia t ion ) p rocess . Supp l ie r s may not make

changes w i thout rece ip t of ES I s igned STDA fo rm .

p u r c H A S E S p E c I F I c At I o n S

ES I has va r ious p roduc t spec i f i ca t ions , wh ich w i l l be

21

ESI w i l l have reasonab le t ime (not l ess than 30 days

a f te r rece ip t ) to comple te acceptance tes t ing and not i f y

the supp l ie r of re jec t ion . ES I ’s payment o r de l i ve ry

rece ip t does not cons t i tu te acceptance of the p roduc ts .

ES I w i l l de te rmine the leve l of response requ i red fo r

nonconfo rming p roduc t . Examples inc lude :

• Supp l ie r Cor rec t i ve Ac t ion Reques t (SCAR) - a

fo rmal l y i s sued compla in t ( in wr i t ing ) to the supp l ie r.

Supp l ie r acknowledgment must be rece ived by ES I

w i th in 48 hours of no t i f i ca t ion . SCAR c losu re and

d i spos i t ion of non confo rming mate r ia l mus t occur

w i th in 3 weeks . I f more than the 3 weeks w i l l be

requ i red to reach reso lu t ion , ES I mus t ag ree ( in

wr i t ing ) to an ex tens ion be fo re the 3 week dead l ine .

• Re jec t ion of mate r ia l - mate r ia l w i l l be sh ipped back

to supp l ie r, o r w i th supp l ie r ’s pe rmiss ion , to a 3 rd

pa r ty fo r repa i r o r rep lacement .

• Cor rec t i ve Ac t ion P lan (CAP) - may inc lude : Ta rget

a rea of improvement , documented improvement p lan ,

goa l s , ownersh ip , t ime l ines , measurement re l i ab i l i ty,

cont ro l p lans , and e f fec t i veness ve r i f i ca t ion . 8D

fo rmat i s requ i red .