Harman International Industries, Incorporated
Obsolescence Policy
October 31, 2017

Obsolescence Policy and Procedure
The following Obsolescence Policy and Procedure (the “Policy”) governs the submission
and processing of obsolescence claims submitted to Harman Becker Automotive
Systems Manufacturing Kft. (“Harman”) by its direct material suppliers (“Supplier”).
A. DEFINITIONS.
1. “Cumulative Quantity” means the highest quantity of finished parts requested byHarman for a part number based on the Lead Time standard. Only material
quantities within the Lead Time will be considered in the allowable quantitiescalculation.
2. “Lead Time” means the standard amount of time as determined by Harman’s
global standard commodity lead time.
3. “Material Manager” means the Harman employee who will act as conduit tofacilitate prompt payment and closure of a claim for both Harman and Supplier.
B. POLICY.
1. Allowable obsolescence reimbursement will be based on highest quantity in thelead time window.
2. Allowable obsolescence reimbursement will be based on the lead time agreed toin a signed contract with Harman. Subsequent amendments to lead time will notbe valid unless agreed by Harman in writing.
3. Claims for obsolescence must be submitted to Harman within ninety (90) days ofofficial obsolescence notification from Harman.
4. This policy document is subject to change at Harman’s discretion. Any
material changes to the document will be communicated directly to all
Suppliers by Harman.
C. HOW TO SUBMIT A CLAIM.
1. Supplier must notify Harman Material Manager for the respective plant of thematerial in question when the obsolescence occurs.
2. Supplier must submit a claim to Harman within ninety (90) days of the claimed loss.
Claims submitted after this date will be rejected.

Harman International Industries, Incorporated
Obsolescence Policy
October 31, 2017

3. Harman will allow claims only for finished goods, raw materials, and work inprocess (WIP). It is the responsibility of Supplier to adjust its operations inaccordance with Harman’s requirements in order to minimize the potential for
obsolescence. Supplier is responsible to review the latest requirements schedules
provided by Harman, as well as any notifications communicated by Harman(pending design changes, shut downs, etc.). Supplier is responsible to validate
whether or not subject material is suitable for use in other Harman products or for
another customer before submitting for obsolescence reimbursement.
4. Supplier must provide all documents required by Harman in evaluating a claim
before a claim can be paid. Failure to provide requested information and/ordocumentation may result in claim denial. The submission form is included in thisPolicy.
5. Claims for reimbursement of obsolete material from a tiered supplier (Supplier’ssupplier) must be submitted by Supplier. Requests for reimbursement from subsuppliers will be rejected.
6. Harman will review the claim within 60 days after receiving all necessary
documentation.
7. Claims that cannot be processed due to one or more of the following reasons will
be rejected and returned to Supplier (with a copy to the responsible planner):a. Invalid contract, part number, vendor number, etc.
b. Claims that fail to meet submission guidelines
c. Claims that have been processed and rejected
8. Claims that have been rejected as non-compliant or incomplete (e.g. missing data,invalid data, etc.) may be resubmitted within 30 days of rejection. If Supplier does
not resubmit the claim within 30 days the claim will be denied and all future
submission for the same obsolescence will be rejected. Supplier may resubmit aclaim only once.
9. Material being claimed for obsolescence must be physically available to a Harman
auditor if requested by Harman.
10. A certificate of destruction must be produced for materials that Harman does not
require to be physically audited.
11. Supplier must notify the Materials Manager of any dispute within 30 days in orderto facilitate escalation within Harman. Dispute of a previously closed claim notreceived within 30 days will be rejected on this basis.

Harman International Industries, Incorporated
Obsolescence Policy
October 31, 2017

D. CALCULATION OF ALLOWABLE OBSOLESCENCE PAYMENT. Harman will
use the following guidelines to determine the appropriate obsolescence payment.
Harman’s liability for obsolescence claims will be limited to the values
derived from this calculation method.
1. Harman will apply a standard lead time of up to 12 weeks (or less per current
agreement with Harman). Any variations above this standard must be
documented at the time of contract approval, or subsequent writtenagreement with Harman.
2. Within this maximum of 12 weeks, Harman will be responsible for no more than
two weeks of fabricated material (semi or finished goods) stocks.
3. After determining appropriate lead time, Harman will compare Supplier’ssubmission to Harman’s appropriate schedule documents for each part in theclaim. Supplier will be required to correct any discrepancies in their submission.
4. Harman will calculate the allowable quantity for each part submitted, which will be
the highest single value indicated within the established time frame, per material.
5. Harman’s payment for obsolescence shall not exceed the cumulative quantity
within the lead time, less the quantity shipped to Harman (either delivered orcurrently in-transit), multiplied by the unit price in effect at the time of submission.
6. For materials claimed as work-in-process, reasonable unit cost will be reimbursed
based on the stage of production the material is in.
7. Claims for the following costs relating to the obsolete material claim will not be
considered in the calculation for reimbursement:a. Containers
b. Disposal
c. Packaging
d. Expedited Freighte. Supplier Scrap
f. Toolingg. Warehousing
h. Re-work
E. CLAIM AUDIT PROCESS. All claims will require an audit to accomplish thefollowing:
1. Determine maximum allowed quantity to be reimbursed (based on calculation
criteria specified within this document).

Harman International Industries, Incorporated
Obsolescence Policy
October 31, 2017

2. Communicate with supplier to arrange dates for physical audits (if necessary) andrequirements for such audit;
3. Complete audit process within 60 days, depending on cooperation of Supplier inproviding necessary documentation, facilitation of Harman plant visit, etc.
4. Payment to Supplier to be processed after audit completion, in accordance withstandard payment terms.
F. EXCEPTIONS. Exceptions to this Policy shall be handled on a case-by-casebasis. Requests for an exception to the Policy, which claim is otherwise coveredby the Policy, shall be rejected (e.g. requesting an exception to submission window
due to supplier’s inaction). It is the expectation of Harman that Suppliers will workwithin this Policy to facilitate a mutually agreeable reimbursement process for allparties. Requests for an exception should be directed to the responsible Harmanbuyer.

Harman International Industries, Incorporated
Obsolescence Policy
October 31, 2017OBSOLESCENCE CLAIM FORM
Supplier Name: _________________________________________________
Date of Claim: _________________________________________
Supplier Contact Name: _______________________________________
Supplier Contact Phone: _____________________________
Supplier Contact Email: _______________________________________
Supplier Contact Fax: ________________________________
Harman Plant Involved: ____________________________________
Harman Material Manager: __________________________
Harman Material Number: ____________________________________
Material Description: ___________________________________________
Scheduling Agreement Number: ______________________________
Scheduling Agreement Item Number: _____________
Release Number from Latest Delivery Schedule Provided By Harman: ____________________
Material Location: _____________________________________________
Material Available for Audit: YES: _______ NO: _______
Quantity Raw Material: ___________________
Unit Price: _____________________
Value of Material: __________________________
Quantity Work-In-Process: _______________
Unit Price: _____________________
Value of Material: __________________________
Quantity Finished Goods: _________________
Unit Price: _____________________
Value of Material: __________________________
Cumulative Release Quantity in Lead Time Window (provide waterfall analysis):_________________________________________________________________
Shipments Against Cumulative Release Quantity in Lead Time Window:_________________________________________________

Harman International Industries, Incorporated
Obsolescence Policy
October 31, 2017

Total Quantity Eligible for Consideration (Cum. minus shipments to Harman):_____________________________
Total Value of Material Being Claimed (Harman Plant Local Currency):_______________________________________
Additional Information (may be used for Harman to determine best disposition formaterial deemed obsolete):
Scrap Value of Raw Material Claimed:______________________________________________
Scrap Value of Work-in-Process Claimed: __________________________________________
Scrap Value of Finished Goods Claimed: ___________________________________________
Are there other uses or potential sales opportunities for this material? YES: _____

NO: _____

Requestor Name: _____________________
Requestor Signature: _________________________
Date: _______________________
NOTE: PLEASE PROVIDE ALL SUPORTING DOCUMENTATION AT THE TIME OFSUBMISSION, INCLUDING CONTRACT, WATERFALL ANALYSIS OF HARMAN RELEASESTO SUPPLIER, AND ANY OTHER PERTINENT DOCUMENTS.