EXHIBIT 10.1
December 8, 1999
Mr. Wallace Tsuha
Saturn Electronics & Engineering, Inc.
255 Rex Boulevard
Auburn Hills, MI 48326
RE: Manufacturing and Business Relationship
Dear Wally:
The following represents the terms under which Saturn will manufacture OnLine
Power Supply Products. These terms more specifically address the relationship
under which OnLine will utilize Saturn manufacturing abilities and financial
strengths.
1. Saturn will become the exclusive global manufacturer of the power
supply products developed and sold by OnLine for the duration of the
specific product families (front ends, 48V PWR Supply).
2. OnLine will require financing of material by Saturn to initiate the
start up and production of the products. Saturn agrees to finance these
costs by utilizing OnLine customer purchase orders and accounts
receivable as the underlying security to fund the necessary amounts as
needed. Terms are net 30 days for normal purchases. However, subject to
receipt of payment from OEM customers not to exceed 45 days. An escrow
account will be set up to disburse the funds as received by escrow
agent. For any down payment the disbursement will be split 75% Saturn
and 25% OnLine.
3. When necessary or to its advantage, OnLine agrees to execute first tier
sales agreements with Saturn to facilitate minority owned business
credit customers. Under these circumstances, Saturn will receive a 5%
markup on these sales and will pay OnLine an amount equal to the
difference between the price paid by the customer and the price paid to
OnLine less 5%.
4. If for any reason, OnLine becomes insolvent or unable to pay its debts
to Saturn, OnLine grants Saturn a royalty free license to build out its
inventory position and sell the product directly to OnLine customers
completing existing customer purchase order requirements The license
would exist for the period it takes to liquidate Saturn based
inventory, or in non-cancelable orders for parts. In addition, Saturn
has the first right of refusal on acquiring OnLine's technology,
patents and designs if OnLine becomes insolvent or unable to pay its
debts.
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5. Saturn agrees to be price competitive within a 10% range of other bids
from other comparable manufacturers, offering comparable financing,
design, engineering and quality support.
6. Saturn and OnLine will split any design for manufacturing cost savings.
/s/ Kris Budinger 12/8/99 /s/ Wallace K. Tsuha, Jr. 12/8/99
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Kris Budinger Date Wallace K. Tsuha, Jr. Date
President Chairman, CEO & President
Saturn Electronics & Engineering, Inc.
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