Document:

Exhibit 10.2

 

Exhibit 10.2

JLG INDUSTRIES, INC.

2005 RESTATED ANNUAL MANAGEMENT INCENTIVE PLAN

Section 1.     Purpose

     
The purpose of the JLG Industries, Inc. 2005 Restated Annual
Management Incentive Plan (the “Plan”) is to provide
annual incentive awards in order to motivate certain executive
officers and key employees of JLG Industries, Inc., a
Pennsylvania corporation, and its Subsidiaries to put forth
maximum efforts toward the growth, profitability and success of
the Company and its Subsidiaries and to encourage such
individuals to remain in the employ of the Company or a
Subsidiary.

Section 2.     Definitions

     
In this Plan document, unless the context clearly indicates
otherwise, words in the masculine gender shall be deemed to
include a reference to the female gender, any term used in the
singular also shall refer to the plural, and the following
terms, when capitalized, shall have the meaning set forth in
this Section 2:

		
	 	     
    1. “Award” means a potential cash benefit
    payable or cash benefit paid to a person in accordance with the
    terms and conditions of the Plan.
	 
	 	     
    2. “Beneficiary” means the person or
    persons designated in writing by the Grantee as his beneficiary
    in respect of an Award; or, in the absence of an effective
    designation or if the designated person or persons predecease
    the Grantee, the Grantee’s Beneficiary shall be the person
    or persons who acquire by bequest or inheritance the
    Grantee’s rights in respect of an Award. In order to be
    effective, a Grantee’s designation of a Beneficiary must be
    on file with the Company before the Grantee’s death. Any
    such designation may be revoked and a new designation
    substituted therefor at any time before the Grantee’s death.
	 
	 	     
    3. “Board of Directors” or
    “Board” means the Board of Directors of the
    Company.
	 
	 	     
    4. “Code” means the Internal Revenue Code
    of 1986, as amended from time to time.
	 
	 	     
    5. “Committee” means a committee appointed
    by the Board for the purpose of administering the Plan. The
    Committee shall consist of two or more members of the
    Compensation Committee of the Board, each of whom shall qualify,
    at the time of appointment and thereafter, as an “outside
    director” within the meaning of Section 162(m) of the
    Code (or a successor provision of similar import), as in effect
    from time to time.
	 
	 	     
    6. “Company” means JLG Industries, Inc.
	 
	 	     
    7. “Covered Executive” means an individual
    who is determined by the Committee to be reasonably likely to be
    a “covered employee” under Section 162(m) of the
    Code as of the end of the Company’s taxable year for which
    an Award to the individual will be deductible and whose Award
    would exceed the deductibility limits under Section 162(m)
    if such Award is not Performance-Based Compensation.
	 
	 	     
    8. “Disability” or “Disabled”
    means having a total and permanent disability as defined in
    Section 22(e)(3) of the Code.
	 
	 	     
    9. “Grantee” means an executive officer or
    key employee of the Company or a Subsidiary to whom an Award has
    been granted under the Plan.
	 
	 	     
    10. “Performance Objective” means the goal
    or goals identified by the Committee that will result in an
    Award if the target for the Performance Year is satisfied.
	 
	 	     
    11. “Performance Year” means the fiscal
    year beginning August 1 and ending July 31.
	 
	 	     
    12. “Performance-Based Compensation” means
    compensation that is intended to qualify as
    “performance-based compensation” under
    Section 162(m) of the Code and the regulations thereunder.

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    13. “Plan” means the JLG Industries, Inc.
    2005 Restated Annual Management Incentive Plan, as set forth
    herein and as amended from time to time.
	 
	 	     
    14. “Retirement” means retirement pursuant
    to the JLG Industries, Inc. Employees’ Retirement Savings
    Plan, as amended from time to time.
	 
	 	     
    15. “Subsidiary” means a corporation,
    association, partnership, limited liability company, joint
    venture, business trust, organization, or business of which the
    Company directly or indirectly through one or more
    intermediaries owns at least 50% of the outstanding capital
    stock (or other shares of beneficial interest) entitled to vote
    generally in the election of directors or other managers of the
    entity.

Section 3.     Administration

     
(a) The Plan shall be administered by the Committee. The
Committee shall have all the powers vested in it by the terms of
the Plan, such powers to include authority (within the
limitations described herein) to select the persons to be
granted Awards under the Plan, to determine the time when Awards
will be granted, to determine whether performance objectives and
other conditions for earning Awards have been met, to determine
whether Awards will be paid at the end of the Performance Year
or deferred to a later date, and to determine whether an Award
or payment of an Award should be reduced or eliminated. The
Committee is authorized, subject to the remaining provisions of
the Plan, to establish such rules and regulations as it deems
necessary for the proper administration of the Plan and to make
such determinations and interpretations and to take such action
in connection with the Plan and any Awards granted hereunder as
it deems necessary or advisable. All determinations and
interpretations made by the Committee shall be binding and
conclusive on all persons participating in the Plan and their
legal representatives.

     
(b) The Committee may not delegate to any individual the
authority to make determinations concerning that
individual’s own Awards, or the Awards of any Covered
Executive. Except as provided in the preceding sentence, the
Committee may delegate to one or more of its members, or to one
or more executive officers of the Company, including the Chief
Executive Officer, authority (i) to select key employees to
receive Awards under the Plan, and (ii) to make all other
determinations in respect of such Awards. In addition, the
Committee may delegate to such persons such administrative
duties as it deems advisable. References herein to the Committee
shall include any delegate described under this paragraph,
except where the context or the regulations under Code
Section 162(m) otherwise require.

     
(c) The Committee, or any person to whom it has delegated
duties as described herein, may employ one or more persons to
render advice with respect to any responsibility the Committee
or such person may have under the Plan (including such legal or
other counsel, consultants, and agents as it may deem desirable
for the administration of the Plan) and may rely upon any
opinion or computation received from any such counsel,
consultant, or agent. Expenses incurred in the engagement of
such counsel, consultant, or agent shall be paid by the Company.

Section 4.     Eligibility

     
The Committee may grant Awards under the Plan to such executive
officers and key employees of the Company as it shall select for
participation pursuant to Section 3 above.

Section 5.     Awards;
Limitations on Awards

     
(a) Each Award granted under the Plan shall represent an
amount payable in cash by the Company to the Grantee upon
achievement of one or more or a combination of Performance
Objectives in a Performance Year, subject to all other terms and
conditions of the Plan and to such other terms and conditions as
may be specified by the Committee. The grant of Awards under the
Plan to Covered Executives shall be evidenced by Award letters
in a form approved by the Committee from time to time which
shall contain the terms and conditions, as determined by the
Committee, of a Grantee’s Award; provided, however, that in
the event of any conflict between the provisions of the Plan and
any Award letters, the provisions of the Plan shall prevail. An
Award shall be determined by multiplying the Grantee’s
target percentage of base salary with respect to a

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Performance Year by applicable factors and percentages based on
the achievement of Performance Objectives, subject to the
discretion of the Committee provided in Section 6 hereof.

     
(b) The maximum amount of an Award granted to any one
Grantee in respect of a Performance Year shall not exceed
$3.5 million. This maximum amount limitation shall be
measured at the time of settlement of an Award under
Section 7.

     
(c) Annual Performance Objectives shall be based on the
performance of the Company, one or more of its Subsidiaries or
affiliates, one or more of its units or divisions and/or the
individual for the Performance Year. The Committee shall use one
or more of the following business criteria to establish
Performance Objectives for Grantees who are Covered Executives:
increase in net sales; pretax income before allocation of
corporate overhead and bonus; budget; earnings per share; net
income; attainment of division, group or corporate financial
goals; return on stockholders’ equity; return on assets;
attainment of strategic and operational initiatives;
appreciation in or maintenance of the price of the common stock
or any other publicly-traded securities of the Company; increase
in market share; gross profits; earnings before interest and
taxes; earnings before interest, taxes, depreciation and
amortization; economic value-added models; comparisons with
various stock market indices; or reductions in costs. The
Performance Objective for any Covered Executive shall be
sufficiently specific that a third party having knowledge of the
relevant facts could determine whether the objective is met; and
the outcome under the Performance Objective shall be
substantially uncertain when the Committee establishes the
objective. In the case of a Grantee who is not a Covered
Executive, the Committee may establish Performance Objectives
using the criteria listed above in this Section 5(c), or
the Committee may use any other measure of performance that it
shall approve in its discretion.

Section 6.     Grant Of
Awards

     
(a) The Committee shall grant Awards to any Grantees who
are Covered Executives not later than 90 days after the
commencement of the Performance Year. If a Covered Executive is
initially employed by the Company or a Subsidiary after the
beginning of a Performance Year, the Committee may grant an
Award to that Covered Executive with respect to a period of
service following the Covered Executive’s date of hire,
provided that no more than 25% of the relevant service period
has elapsed when the Committee grants the Award and the
Performance Objective otherwise satisfies the requirements
applicable to Covered Executives. The Committee shall select
Grantees other than Covered Executives for participation in the
Plan and shall grant Awards to such Grantees at such times as
the Committee may determine. In granting an Award, the Committee
shall establish the terms of the Award, including the
Performance Objective and the maximum amount that will be paid
(subject to the limit in Section 5) if the Performance
Objective is achieved. The Committee may establish different
payment levels under an Award based on different levels of
achievement under the Performance Objective.

     
(b) After the end of each Performance Year, the Committee
shall determine the amount payable to each Grantee in settlement
of the Grantee’s Award for the Performance Year. The
Committee, in its discretion, may reduce the maximum payment
established when the Award was granted, or may determine to make
no payment under the Award. The Committee, in its discretion,
may increase the amount payable under the Award (but not to an
amount greater than the limit in Section 5) to a Grantee
who is not a Covered Executive. The Committee shall certify in
writing, in a manner conforming to applicable regulations under
Section 162(m) of the Code, prior to the settlement of each
Award granted to a Covered Executive, that the Performance
Objectives and other material terms of the Award upon which
settlement of the Award was conditioned have been satisfied.

     
(c) The Committee may adjust or modify Awards or terms of
Awards (1) in recognition of unusual or nonrecurring events
affecting the Company or any business unit, or the financial
statements or results thereof, or in response to changes in
applicable laws (including tax, disclosure, and other laws),
regulations, accounting principles, or other circumstances
deemed relevant by the Committee, (2) with respect to any
Grantee whose position or duties with the Company change during
a Performance Year, or (3) with respect to any person who
first becomes a Grantee after the first day of the Performance
Year; provided, however, that no

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adjustment to an Award granted to a Covered Executive shall be
authorized or made if, and to the extent that, such
authorization or the making of such adjustment would contravene
the requirements applicable to Performance-Based Compensation.

Section 7.     Settlement
Of Awards

     
(a) Except as provided in this Section 7, each Grantee
shall receive payment of a cash lump sum in settlement of his or
her Award, in the amount determined in accordance with
Section 6, as promptly as practicable following the time
such determination in respect thereof has been reached by the
Committee. No Award to a Covered Executive for a Performance
Year commencing after July 31, 2005, shall be settled until
the shareholders of the Company have approved the Plan in a
manner that satisfies the requirements of Section 162(m) of
the Code.

     
(b) Each Grantee shall have the right to defer his or her
receipt of part or all of any payment due in settlement of an
Award under and in accordance with the terms and conditions of
any deferred compensation plan or arrangement of the Company
unless otherwise specified by the Committee.

Section 8.     Termination
Of Employment

     
Except as otherwise provided in any written agreement between
the Company and a Grantee, if a Grantee ceases to be employed by
the Company prior to the end of a Performance Year for any
reason other than death, Disability, or Retirement, any Award
for such Performance Year shall be forfeited. If such cessation
of employment results from such Grantee’s death,
Disability, or Retirement, the Committee shall determine, in its
sole discretion and in such manner as it may deem reasonable,
subject to Section 9, the extent to which the Performance
Objectives for the Performance Year or portion thereof completed
at the date of cessation of employment have been achieved, and
the amount payable in settlement of the Award based on such
determinations. The Committee may base such determination on the
performance achieved for the full year, in which case its
determination may be deferred until following the Performance
Year. Such determinations shall be set forth in a written
certification, as specified in Section 6. Such Grantee or
his or her beneficiary shall be entitled to receive settlement
of such Award at the earliest time such payment may be made
without causing the payment to fail to be deductible by the
Company under Section 162(m) of the Code.

Section 9.     Status Of
Awards Under Section 162(m)

     
It is the intent of the Company that Awards granted to Covered
Executives for Performance Years commencing after July 31,
2005, shall constitute Performance-Based Compensation, if at the
time of settlement the Grantee remains a Covered Executive.
Accordingly, the Plan shall be interpreted in a manner
consistent with Section 162(m) of the Code and the
regulations thereunder. If any provision of the Plan relating to
a Covered Executive or any Award letter evidencing such an Award
to a Covered Executive does not comply with, or is inconsistent
with, the provisions of Section 162(m)(4)(C) of the Code or
the regulations thereunder (including Treasury Regulation
§ 1.162-27(e)) for Performance-Based Compensation,
such provision shall be construed or deemed amended to the
extent necessary to conform to such requirements.

Section 10.     Transferability

     
Awards and any other benefit payable under, or interest in, this
Plan are not transferable by a Grantee except upon a
Grantee’s death by will or the laws of descent and
distribution, and shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any such attempted action shall be
void.

Section 11.     Withholding

     
All payments relating to an Award, whether at settlement or
resulting from any further deferral or issuance of an Award
under another plan of the Company in settlement of the Award,
shall be net of any amounts required to be withheld pursuant to
applicable federal, state and local tax withholding requirements.

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Section 12.     Tenure

     
A Grantee’s right, if any, to continue to serve the Company
as a Covered Executive, officer, employee, or otherwise, shall
not be enlarged or otherwise affected by his or her designation
as a Grantee or any other event under the Plan.

Section 13.     No
Rights To Participation or Settlement

     
Nothing in the Plan shall be deemed to give any eligible
employee any right to participate in the Plan except upon
determination of the Committee. Until the Committee has
determined to settle an Award under Section 7, a
Grantee’s selection to participate, the grant of an Award,
and other events under the Plan shall not be construed as a
commitment that any Award will be settled under the Plan. The
foregoing notwithstanding, the Committee may authorize legal
commitments with respect to Awards under the terms of an
employment agreement or other agreement with a Grantee, to the
extent of the Committee’s authority under the Plan,
including commitments that limit the Committee’s future
discretion under the Plan, but in all cases subject to
Section 9.

Section 14.     Unfunded
Plan

     
Grantees shall have no right, title, or interest whatsoever in
or to any specific assets of the Company, or to any investments
that the Company may make to aid in meeting its obligations
under the Plan. Nothing contained in the Plan, and no action
taken pursuant to its provisions, shall create or be construed
to create a trust of any kind, or a fiduciary relationship
between the Company and any Grantee, beneficiary, legal
representative or any other person. To the extent that any
person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of
an unsecured general creditor of the Company. All payments to be
made hereunder shall be paid from the general funds of the
Company. The Company shall not be required to establish any
special or separate fund, or to segregate any assets, to assure
payment of such amounts. The Plan is not intended to be subject
to the Employee Retirement Income Security Act of 1974, as
amended.

Section 15.     Other
Compensatory Plans And Arrangements

     
Nothing in the Plan shall preclude any Grantee from
participation in any other compensation or benefit plan of the
Company or its Subsidiaries. The adoption of the Plan and the
grant of Awards hereunder shall not preclude the Company or any
Subsidiary from paying any other compensation apart from the
Plan, including compensation for services or in respect of
performance in a Performance Year for which an Award has been
made. If an Award to a Covered Executive may not be settled
under the terms of the Plan, however (for example, because the
Covered Executive has not achieved the Performance Objective or
because shareholders have not approved the Plan), neither the
Company nor a Subsidiary may pay any part of the Award to the
Covered Executive outside the Plan.

Section 16.     Duration,
Amendment And Termination Of Plan

     
No Award may be granted in respect of any Performance Year
commencing after July 31, 2010. The Board may amend the
Plan from time to time (either retroactively or prospectively),
and may suspend or terminate the Plan at any time, provided that
any such action shall be subject to shareholder approval if and
to the extent required to ensure that compensation under the
Plan will qualify as Performance-Based Compensation, or as
otherwise may be required under applicable law.

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Section 17.     Governing
Law

     
The Plan, Awards granted hereunder, and actions taken in
connection herewith shall be governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania
(regardless of the law that might otherwise govern under
applicable Pennsylvania principles of conflict of laws).

Section 18.     Effective
Date

     
The Plan shall be effective as of August 1, 2004; provided,
however, that Awards granted for Performance Years commencing
after July 31, 2005, shall be subject to approval of the
shareholders of the Company at an annual meeting or any special
meeting of stockholders of the Company before settlement of
Awards for the Performance Year ending on July 31, 2006, so
that compensation will qualify as Performance-Based
Compensation. Awards for the Performance Year ending
July 31, 2005, are not intended to qualify as Performance
Based Compensation and therefore are not subject to shareholder
approval. In addition, the Board may determine to submit the
Plan to shareholders for reapproval at such time, if any,
required in order that compensation under the Plan shall qualify
as Performance-Based Compensation.

6Exhibit 10.1

   Document of Understanding Between Advanced Energy Industries and Affiliates
                            MicroPac Industries Inc.
                              Contract Number: 1009

1. PREAMBLE

This  agreement  is made as of this  01st day of  February  2003 by and  between
Advanced  Energy  Industries,  Inc. &  Affiliates  (hereinafter  referred  to as
"Buyer") and MicroPac  Industries  Inc.  (hereinafter  referred to as "Seller"),
under which services shall be performed.  Affiliates  shall mean any person,  or
entity directly or indirectly controlled by, controlling or under common control
with  Advanced  Energy  Industries,  Inc.  This  contract will be reviewed on an
annual basis and unless  terminated by either party,  as provided for in Section
19, shall continue to be in force.

2. TERMS AND CONDITIONS

No terms and  conditions  other than the terms and  conditions set forth in this
document  in  conjunction  with the  general  terms  and  conditions  placed  on
http:\\www.advanced-energy.com/terms   &  conditions  shall  be  binding  unless
specifically  accepted  by both  the  Buyer's  authorized  Purchasing  Agent  or
Commodity  Manager and the Seller's  authorized  agent. Any terms and conditions
set forth in any  document  attached to or  incorporated  by  reference  in this
contract  shall be binding  unless  specifically  accepted  by both the  Buyer's
authorized  Purchasing  Agent or Commodity  Manager and the Seller's  Authorized
agent.  This  contract is intended as the complete  and final  agreement of both
parties and exclusive statement of its terms and may not be changed,  altered or
modified, except in writing by agreement of both parties.

3. WARRANTY

The Seller  warrants the goods and materials  furnished  under this Contract for
workmanship,  material and compliance with all  specifications,  for a period of
twelve (12) months. The Seller shall comply with all applicable  Colorado State,
Federal and local  laws,  rules and  regulations.  The  exclusive  venue for any
litigation  concerning this matter shall be in the Larimer County District Court
in Fort Collins, Colorado.

4. LIABILITY

The Seller agrees that the  relationship  established by this order  constitutes
the Seller as an  independent  contractor  and that, no tax  assessment or legal
liability of the Seller or of his agents or employees becomes, by reason of this
order, an obligation of the Buyer.

5. REMEDY

Seller will not be responsible for incidental or consequential damages. Seller's
entire remedy will be the value of the product sold to Buyer.

6. BUYER CHANGES

Buyer shall have the right to make changes to existing  orders.  Purchase  order
changes  will be allowed only if  authorized  by Buyer.  If such change  affects
delivery,  quality or amount to be paid by Buyer,  Seller  shall notify Buyer of
such changes in writing.

                                      1 of 7

<PAGE>

     Document of Understanding Between Advanced Energy Industries and Affiliates
                            MicroPac Industries Inc.
                              Contract Number: 1009

7. ENGINEERING CHANGE ORDERS AND BUYER CHANGES

All engineering  change orders will be communicated to Seller via an Engineering
Change Order (ECO). If such change affects delivery, quality or the amount to be
paid by Buyer,  Seller  shall notify  Buyer  immediately.  The charges for scrap
and/or rework resulting from any change submitted via Buyer's ECO process, shall
be  limited  to the  materials  in  process at the time of the change and within
Seller's manufacturing cycle, as defined in the related addendum.  These charges
will be communicated in their entirety in writing, to Buyer, within fifteen (15)
working  days of receipt of ECO.  Buyer  will not be  responsible  for any costs
associated  with the change  order which are not  identified  within the fifteen
(15) working day window.

8. DELIVERY

Seller is to schedule  non-Kanban  part  shipments,  as defined in the addendum,
such that  deliveries are received no more than 3 days earlier than the due date
and zero (0) days late. The date specified in a purchase  order,  or required in
an  addendum,  is the date  due in  house.  A Kanban  part,  as  defined  in the
addendum,  may be delivered  only after the supplier is signaled in the business
system software. Kanban parts may be delivered anytime prior to the due date and
zero (0) days late,  where the due date is defined  in the  addendum.  Seller is
responsible for all costs  associated  with expedited  delivery when the need to
expedite is due to the  Seller's  inability  to meet  Buyer's  demand.  The only
exception is when Buyer pulls in demand within Seller's lead-time window.

9. PACKAGING

Identification of the goods shall occur when they are placed in the hands of the
Carrier.  Title shall pass to Buyer upon  delivery to Carrier.  Seller agrees to
insure that  shipments are properly  packaged and  described in accordance  with
specifications and/or applicable carrier regulations.  Seller is responsible for
packing any shipment  correctly based on the  carrier/mode  utilized.  Seller is
responsible  for all  shipments  that are  damaged  in transit  due to  improper
packaging,  improper  judgment,  or any other  act of  omission  of the  seller.
Charges for packing and crating shall be deemed part of the purchase price,  and
no  additional  charges will be made unless  specifically  requested by Advanced
Energy.  Seller agrees to ship via the carrier  specified by Advanced Energy. If
no carrier is specified by Advanced Energy,  then the seller will ship best way.
Shipments will be made at the lowest freight charges. All Kanban or PC shipments
received  shall have either a copy of the AE Kanban  signal or PC enclosed  with
the packing slip or the following information listed on the outside of the box:

      .     AE Part Number
      o     # of parts in shipment
      o     box # of total boxes (i.e. 3 of 5)
      o     Indicate type KB for Kanbans of PC for Purchase Orders
      o     Kanban Bin Size
      o     Container #

                                     2 of 7

<PAGE>

   Document of Understanding Between Advanced Energy Industries and Afiliates
                            MicroPac Industries Inc.
                              Contract Number: 1009

10. SHIPPING

The goods described herein shall be delivered FOB Garland TX. Buyer's Purchasing
Agent or Commodity Manager shall authorize means of shipment.  If seller chooses
alternative  method  of  shipment  without  Buyer's  authorization,   Seller  is
responsible for any incremental shipping charges.

11. KANBAN PULL PROCESS

Seller will  participate in a Kanban pull process for  specifically  agreed upon
part  numbers,  as listed in  addendum.  This list will be  updated as parts are
added to or deleted from the Kanban  program,  with agreement  between Buyer and
Seller.

Buyer's authorized  Purchasing Agent or Commodity Manager and Seller shall agree
on the Kanban quantity and replenishment  strategy for each part number.  Kanban
quantities  for all part  numbers  will be  reviewed  by Buyer on an as required
basis and  adjusted  accordingly.  Buyer's  quantity of  Finished  Goods Bins is
subject  to change  dependent  upon  Seller's  ability  to reduce  manufacturing
lead-time.  Changing the quantity of Finished Goods Bins at the buyer's facility
does not  necessitate  re-negotiation  of this  contact.  Seller  agrees that no
shipments will be made to Buyer unless authorized by Buyer.

12. PURCHASE ORDER

Buyer  will also be  entitled  to issue  purchase  orders for  individual  items
separate  from the Kanban Pull process and the Schedule  Agreement  Process,  as
quoted by Seller and agreed to in writing by Buyer.

13. SCHEDULE AGREEMENT

Schedule  Agreements  will be issued  with  agreement  by Buyer and Seller for a
specific time frame, by part number, negotiated price and estimate annual usage.
Buyer shall provide  Seller with demand  information as part of the planning and
forecasting  process,  to be updated  periodically  as agreed  upon by Buyer and
Seller.  This report is for use as a planning tool only.  Seller is  responsible
for any and all material purchased beyond the agreed upon liabilities, as stated
in addendum.

14. LIMITATION OF MATERIAL LIAB1LITY

The extent and limitation of Buyer's liability for materials purchased by Seller
are as defined in the  addendum.  On all  standard  or non-NCNR  parts,  AE will
assume

No liability. When the size of a bin is reduced, the inventory liability will be
a  function  of the old bin size  minus  pulls.  The goal is to  consume  excess
inventory  driven  by the old bin size  down to the new bin size  liability.  At
which point,  this would become the contractual  addendum amount AE is liable to
purchase.  AE's  expectation  is that the  seller's  supply  chain be  decreased
accordingly and consistently.

                                        3 of 7

<PAGE>

   Document of Understanding Between Advanced Energy Industries and Affiliates
                            MicroPac Industries Inc.
                              Contract Number: 1009

15. PRICING

Buyer and Seller agree to the price(s)  set forth in the  appropriate  addendum.
Any  change in the  contracted  price  must have  written  approval  by  Buyer's
Commodity  Manager or Purchasing  Agent,  prior to  implementation.  Seller will
establish a cost reduction  program,  which will be reviewed on an annual basis.
Cost changes will be reflected in price  adjustments  and a revised  addendum to
this document.

16. PAYMENT TERMS

Terms of payment are net 30 days for each shipment  invoiced,  unless  otherwise
expressly provided for and confirmed in writing by the Seller. Method of payment
for goods  receipt is  electronic  receipt  settlement  (ERS).  Seller shall use
standard invoicing for charges on any items that do not require a goods receipt.

17. PROPRIETARY INFORMATION

It is  understood  that the Buyer may  provide  proprietary  information  to the
Seller,  likewise,  Seller may provide  proprietary  information to Buyer in the
performance  of this  contract.  "Proprietary  Information"  shall be  deemed to
include all  information  conveyed by one party to the other  party  orally,  in
writing, by demonstration or by magnetic or other media. If the disclosure is in
other  than  written  form,  the  information  shall not be  deemed  Proprietary
Information  after  thirty  (30) days unless  within that period the  disclosing
party has identified it as such in written summary communicated to the receiving
party.  Proprietary  Information may also include, by way of example but without
limitations, data, know-how, formulas, algorithms,  processes, design, sketches,
photographs,  plans, drawings,  specifications,  samples,  reports, customer and
distributor  names,  pricing  information,  market  definitions,  inventions and
ideas.

Proprietary  Information  shall not  include  information,  which can be clearly
demonstrated to be:

      a)    generally  known  or  available  to the  public,  through  no act of
            omission on the part of the receiving party; or
      b)    known  to  the  receiving  party  prior  to  disclosure  under  this
            agreement; or
      c)    provided  to the  receiving  party  by a  third  party  without  any
            restriction  on disclosure  and without  breach of any obligation of
            confidentiality to a party.

Both  parties to this  agreement,  agree to return to the  forwarding  party all
documents containing  propriety  information and to retain no copies thereof. In
addition,  ownership and  possession of all product  assembly and test fixtures,
tooling, test programs,  Non-Recurring Engineering (NRE) tooling, test equipment
and consigned  equipment,  shall revert to Buyer.  Both parties to the agreement
agree that the obligation to protect  proprietary  information  shall be ongoing
and shall riot cease upon completion or termination of this contract.

                                     4 of 7

<PAGE>

   Document of Understanding Between Advanced Energy Industries and Affiliates
                            MicroPac Industries Inc.
                              Contract Number: 1009

18. COPY EXACT

Technical expectation for Design Confrol and Change Management

Design  Changes and  Resolution
o A supplier shall not make changes to a design that alters the  specifications,
manufacturing  process,  form, fit, or function of such items. A supplier may be
allowed to submit a change request to an item using Advanced  Energy's  Supplier
Callback Process (FPOO16).  This change cannot be implemented until the supplier
has received  written  approval from Advanced Energy via Supplier  Callback Form
(QFOO6O).

Process Changes and Resolution
o The supplier  shall obtain  approval  from  Advanced  Energy of any process or
sub-tier  suppliers'  changes,  including without  limitation any changes in the
manufacturing process of a sub-tier supplier, even when specifications are being
met The supplier must receive  approval in writing from  Advanced  Energy before
implementing such changes. If required by Advanced Energy, the supplier must use
special process suppliers from the list of approved suppliers.

Suppliers Subcontracts
o A supplier shall not  sub-contract  any components  and/or  processes  without
Advanced Energy's prior written approval.

19. SUPPLIER CERTIFICATION

The Commodity Team will grade the Seller on a Quarterly  basis as part of the AE
Supplier  Certification  Program.  The Seller's performance will be graded based
upon their Quality, Delivery, Cost, and Service. If the Seller meets the minimum
scores  in each  category,  the  Seller  will be  classified  as a AE  Certified
Supplier for a period of 1 year.

20. REVIEWS

Buyer and  Seller  agree to conduct  Quarterly  Business  Reviews,  at an agreed
venue.  Such  reviews  shall be conducted  by the Buyer's  Commodity  Manager or
authorized  Purchasing Agent.  Pricing will be reviewed annually,  by the Seller
and the Buyer's Commodity Manager or authorized  Purchasing Agent. Supplier will
establish and maintain a formal cost reduction  program.  Material or labor cost
savings  identified by the Seller shall be  implemented  immediately  and shared
equally between the Buyer and the Seller.

21. DEFECTIVE MATERIAL RETURN POLICY

The Buyer will issue a DMR to the Seller  prior to returning  failed  product to
the  Seller.  Seller  shall  acknowledge  Buyer  DMR with an RMA  number  within
twenty-four  (24) hours.  Seller shall repair or replace  failed  products under
warranty in 15 working days, at Seller's  discretion,  at Seller's expense.  The
Seller  will pay  freight on goods  returned  to the Buyer  which are covered by
warranty.

                                    5 of 7

<PAGE>

     Document of Understanding Between Advanced Energy Industries and Affiliates
                            MicroPac Industries Inc.
                              Contract Number: 1009

22. QUALITY ASSURANCE

All sold to  Advanced  Energy  by the  seller  will be  built  and  packaged  in
accordance  with the Advanced Energy  Workmanship  Manual Revision AA. All parts
and/or  materials may be subject to an incoming  inspection  criteria of AQL=1.5
C=0 to the applicable  manufacturer  and/or AE drawings  and/or  specifications.
Seller, when acting as a Distributor,  will ship only those parts listed on AE's
Approved   Vendor  List  (AVL).   Furthermore,   Seller   shall  meet   specific
qualification  requirements and agree to follow all quality procedures specified
in the AE material specifications.  Supplier shall o Participate in the Supplier
Certification  Program if  applicable o Allow annual  Supplier  Audits o Provide
within 10 working days a response to all  Supplier  Corrective  Action  Requests
(SCAR) o Generate  any  Supplier  Action  Plans  (SAPs) as requested by SQE/CE o
Utilize  Supplier Call Back  Procedure for any change request or issues o Ensure
that when verbal instructions are given, a Supplier Callback Form is sent with 5
working days to AE to document the  instructions o Comply with all first article
requirements listed in First Article Procedure (FP0125)

MicroPac Quality Contact is ______________.

23. COMPLETE AGREEMENT

This  contract is intended as the complete  and final  agreement of ~the parties
and exclusive statement of its terms. This contract may not be changed,  altered
or modified,  except in writing by the party against whom enforcement is sought.
Either  party  with  (thirty  (30))  days  written  notice  may  terminate  this
agreement. This clause is subject to review after one year.

24. MATERIAL PIPELINE REQUIREMENTS

The Seller is  responsible  setting up and  maintaining  a pipeline  of finished
goods for the items listed in the addendum that will meet the following demands:

      a.    Be able to provide product to the Buyer in the specified  quantities
            and delivery times set forth in the Kanban agreements
      b.    Be able to meet and sustain the demands of a 50% ramp immediately
      c.    Be able to meet and sustain the demands of a 100% ramp in 8 weeks.

The Seller is solely  responsible  for managing this pipeline and ensuring their
ability to meet the  requirements  listed above. The Buyer may at its discretion
audit the Seller's material pipeline if problems arise with the On Time Delivery
(OTD) or quantity of product delivered.

                                       6 of 7

<PAGE>

   Document of Understanding Between Advanced Energy Industries and Affiliates
                            MicroPac Industries Inc.
                              Contract Number: 1009

25. SIGNATURE PAGE:

Signature  attests that the parties have reviewed this agreement and concur with
the parameters:

Advanced Energy Industries, Inc.                             MicroPac Industries

By: /s/ Scott Burton                                         By: /s/ Connie Wood
--------------------------------                             -------------------
Scott Burton, SRVP of Operations                             Connie J. Wood,
                                                             CEO & President

                                     7 of 7

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