Item 1.01 Entry into a Material Definitive Agreement.
On August 29, 2005, Advanced Energy Industries, Inc. and Applied Materials Inc. entered into a
Global Supply Agreement, or GSA, and a Freight Amendment to the GSA. The GSA, as amended by the
Freight Amendment, sets forth terms and conditions governing sales of specified products, referred
to in the GSA as Items, and services to Applied Materials and its subsidiaries by Advanced Energy
during the term of the GSA, including terms relating to pricing and payment; purchase order,
acceptance and cancellation procedures; shipping and delivery; inventory management; warranty and
repair and support services; and indemnification of Applied Materials by Advanced Energy. The GSA
sets forth base pricing for each of the Items covered by the GSA, as well as the terms and conditions under
which such pricing can be adjusted. The GSA does not require Applied Materials to purchase any level of Items or
services from Advanced Energy. The GSA also provides for categorization of Items and designation
of Advanced Energys and Applied Materials intellectual property rights with respect to the Items
in each category. Such intellectual property rights include Applied Materials rights to royalties
on specified sales of Items in certain categories. The GSA also imposes limitations on Advanced
Energys use and disclosure of confidential and proprietary information relating to Applied
Materials and its business and products. The GSA will expire on August 29, 2008, but is subject to
extension for an additional six months at Applied Materials option, as well as early termination
by Applied Materials in accordance with the terms of the GSA.
Applied Materials is Advanced Energys largest customer, based on sales. Sales to Applied
Materials accounted for 23% of Advanced Energys total sales in the first six months of 2005 and
27% of Advanced Energys total sales in the full year 2004.