**Exhibit 10.6**

 

**Flextronics Manufacturing Services Agreement**

 

This Flextronics Manufacturing Services Agreement (“**Agreement**”) is entered into this 14th dayof April 2008 by and between MPC Corporation having its place of businessat 906 East Karcher Road, Nampa, Idaho 83687 (“**Customer**”) and Flextronics Computing Mauritius Limited,having its place of business at210 St. James Court, Rue St. Denis, Port LouisMauritius (“**Flextronics**”).

 

Customer desires to engage Flextronics to perform manufacturingservices as further set forth in this Agreement.  The parties agree as follows:

 

1.     **DEFINITIONS**

 

Flextronics and Customer agree that capitalized terms shall have themeanings set forth in this Agreement and Exhibit 1 attached hereto andincorporated herein by reference.

 

2.     **MANUFACTURING SERVICES**

 

2.1.          **Work**. Customer hereby engages Flextronics to perform the work (hereinafter “**Work**”). “**Work**” shall mean toprocure Materials and to manufacture, assemble, and test products (hereinafter “**Product(s)**”) pursuant to detailed writtenSpecifications.  The “**Specifications**” for each Product orrevision thereof, shall include but are not limited to bill of materials,designs, schematics, assembly drawings, process documentation, testspecifications, current revision number, and Approved Vendor List.  The Specifications as provided by Customerand included in Flextronics’s production document management system andmaintained in accordance with the terms of this Agreement are incorporatedherein.  This Agreement does not includeany new product introduction (NPI) or product prototype services related to theProducts.  In the event that Customerrequires any such services, the parties will enter into a separate agreement.  In case of any conflict between theSpecifications and this Agreement, this Agreement shall prevail.

 

2.2.          **Move. **Customer currentlymanufactures the Products in the United States (“**MPC Manufacturing Operations**”).  Flextronics will initially manufacture theProducts in Juarez, Mexico (“**Juarez**”).  A timeline covering key events associatedwith the move to Juarez (the “**Timeline**”)is incorporated herein by reference as Exhibit 2.2.  The Timeline can be modified as mutuallyagreed to by the parties.  The move isexpected to be completed by August 31, 2008 (The “**Move Completion Date**”).   Transition costs associated with moving the required equipment and/ormaterials from MPC ManufacturingOperations to Juarez will beallocated as follows:  [*] The parties agree to use commercially reasonable efforts to adhere to the Timelinein Exhibit 2.2.  Each party isresponsible for reviewing the actions needed and agreeing to a timeline by April 18th,2008.  At this time the timeline in Exhibit 2.2will be updated and will be the governing timeline for this agreement.  Each party is responsible for closing itsaction items by the date committed to on the Timeline.

 

2.3.          **Engineering Changes**. Customer mayrequest that Flextronics incorporate engineering changes into the Product byproviding Flextronics with a description of the proposed engineering changesufficient to permit Flextronics to evaluate its feasibility and cost.  Flextronics will proceed with engineeringchanges when the parties have agreed upon the changes to the Specifications,delivery schedule and Product pricing and the Customer has issued a purchaseorder for the implementation costs.

 

2.4.          **Tooling; Non-Recurring Expenses; Software**.Customer shall pay for or obtain and consign to Flextronics anyProduct-specific tooling, equipment or software and other reasonably necessarynon-recurring expenses, to be set forth in Flextronics’s quotation.  Software is limited to products currentlyused in Customer Manufacturing Operations for the specific purpose of test andimaging processes.  Items paid for byCustomer will only be used for the performance of Customer Work and not for anyother Flextronics customer, unless otherwise approved by Customer. All softwarethat Customer provides to Flextronics or any test software that Customerengages Flextronics to develop is and shall remain the property of Customer.

 

2.5.          **Cost Reduction Target**.  The Cost Reduction Target is expected to berealized in the 12 month period after the Move Completion Date.  The achievement of the Cost Reduction Targetrequires both parties participation and both parties agree to use commerciallyreasonable efforts to jointly and actively work together to achieve the CostReduction Target in the 12 month timeframe. The Cost Reduction Target review process will be conducted during thequarterly business review or as otherwise agreed to by the parties.

 

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* Confidential treatment hasbeen requested for certain portions of this document pursuant to an applicationfor confidential treatment sent to the Securities and Exchange Commission.  Such portions are omitted from this filingand filed separately with the Securities and Exchange Commission.

 

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The Cost Reduction Target has been established based on and achievementof the Cost Reduction Target relies on the following conditions:

 

[*]

 

3.     **FORECASTS; ORDERS; FEES; PAYMENT**

 

3.1.          **Forecast**.  Customer shall provide Flextronics, on aweekly basis, a rolling [*] week forecast indicating Customer’s Productrequirements.

 

3.2.          **Purchase Orders; Precedence**.  Customer may use its standard purchase orderform for any notice provided for hereunder; provided that all purchase ordersmust reference this Agreement and the applicable Specifications.  The parties agree that the terms andconditions contained in this Agreement shall prevail over any terms andconditions of any such purchase order, acknowledgment form or other instrument.

 

3.3.          **Purchase Order Acceptance**.  Purchase orders shall normally be deemedaccepted by Flextronics, provided however that Flextronics may reject any purchaseorder: (a) if the fees reflected in the purchase order are inconsistentwith the parties’ agreement with respect to the fees; (b) if a purchaseorder would extend Flextronics’s liability beyond Customer’s approved creditline.  While[*], Flextronics shall notifyCustomer of rejection of any purchase order within [*] of receipt of suchpurchase order.

 

3.4.          **Fees; Changes; Taxes**.

 

(a)   The fees will be agreed by the parties andwill be indicated on the purchase orders issued by Customer and accepted by Flextronics.The initial fees shall be as set forth on the Fee List attached hereto andincorporated herein as Exhibit 3.4 (the “**FeeList**”).  If a Fee List is notattached or completed, then the initial fees shall be as set forth in purchaseorders issued by Customer and accepted by Flextronics in accordance with theterms of this Agreement.

 

(b)   Customer is responsible for additional feesand costs due to: (a) changes to the Specifications; (b) failure ofCustomer or its subcontractor to timely provide sufficient quantities or areasonable quality level of Customer Controlled Materials where applicable tosustain the production schedule; and (c) any pre-approved expeditingcharges reasonably necessary because of a change in Customer’s requirements.

 

(c)   The fees may be reviewed periodically by theparties.  Any changes and timing ofchanges shall be agreed by the parties, such agreement not to be unreasonablywithheld or delayed.  By way of exampleonly, the fees may be increased or decreased if the market price of fuels,Materials, equipment, labor and other production costs, change  beyond normal variations in pricing orcurrency exchange rates as demonstrated by Flextronics.

 

(d)   All fees are exclusive of federal, state andlocal excise, sales, use, VAT, and similar transfer taxes, and any duties, andCustomer shall be responsible for all such items.  Flextronics shall use commercially reasonableefforts to provide accurate cost information for all applicable federal, stateand local excise, sales, use, VAT, and similar transfer taxes, and any dutiesin the Flextronics’s quotation.  Thissubsection (d) does not apply to taxes on Flextronics’s net income.

 

(e)   The Fees List will be based on the exchangerate(s) for converting the purchase price for Inventory denominated in theParts Purchase Currency(ies) into the Functional Currency.  The fees will be adjusted, on a monthly basisbased on changes in the Exchange Rate(s) as reported on the last businessday of each month, for the following month to the extent that such ExchangeRates change more than +/- .75% from the prior month (the “Currency Window”).  “Exchange Rate(s)” is defined as the closingcurrency exchange rate(s) as reported on Reuters’ page FIX on thelast business day of the current month prior to the following month.  “Functional Currency” means the currency inwhich all payments are to be made pursuant to Section 3.5 below.  “Parts Purchase Currency(ies)” means U.S.Dollars, Japanese Yen and/or Euros to the extent such currencies are differentfrom the Functional Currency and are used to purchase Inventory needed for theperformance of the Work forecasted to be completed during the applicablemonth.

 

3.5.          **Payment**.  Customer agrees to pay all invoices in U.S.Dollars within thirty (30) days of the date of the invoice.  [*]

 

3.6.          **Late Payment**.  Customer agrees to pay one and one-halfpercent (1.5%) monthly interest on all late payments.  Furthermore, if Customer is late withpayments, or Flextronics has reasonable cause to believe Customer may not be ableto pay, Flextronics may (a) stop all Work under this Agreement untilassurances of payment satisfactory to Flextronics are received or payment isreceived; (b) demand prepayment for purchase orders; (c) delayshipments; and (d) to the extent that 

 

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* Confidential treatment has been requested for certain portions ofthis document pursuant to an application for confidential treatment sent to theSecurities and Exchange Commission.  Suchportions are omitted from this filing and filed separately with the Securitiesand Exchange Commission.

 

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Flextronics’spersonnel cannot be reassigned to other billable work during such stoppage and/orin the event restart cost are incurred, invoice Customer for additional feesbefore the Work can resume.  Customeragrees to provide all necessary financial information required by Flextronicsfrom time to time in order to make a proper assessment of the creditworthinessof Customer.

 

3.7.          **Credit Line.**  Flextronics has provided a line of credit of$20,000,000 and agrees to extend this line to $25,000,000 once Customer shows evidence that it has obtainedcredit risk insurance or a Letter of Credit, in a form reasonably acceptable toFlextronics, in the amount of $5,000,000 in favor of Flextronics.  Flextronics’s offer to extend the credit lineis based on data provided by Customer. Flextronics agrees to review the credit line terms on a monthly basis.

 

4.     **MATERIALS PROCUREMENT; CUSTOMER RESPONSIBILITY FOR MATERIALS**

 

4.1.          **Authorization to ProcureMaterials, Inventory and Special Inventory**.  Thecustomers forecast will constitute authorization for Flextronics to procurematerials[*], without Customer’s prior approval. Customer’s accepted purchaseorder will constitute authorization for Flextronics to procure and manufacturewithout Customer’s prior approval. Once a purchase order, for a configuredproduct, has been accepted by Flextronics, the Customer cannot not make anycancellations and/or changes other than shipping instructions without prioragreement from Flextronics or Change/Cancellation Fees may apply.

 

4.2.          **Customer Controlled Materials**.  Customer may direct Flextronics to purchaseCustomer Controlled Materials in accordance with the Customer ControlledMaterials Terms.  Customer acknowledgesthat the Customer Controlled Materials Terms will directly impact Flextronics’sability to perform under this Agreement and to provide Customer with theflexibility Customer is requiring pursuant to the terms of this Agreement.  In the event that Flextronics reasonablybelieves that Customer Controlled Materials Terms will create an additionalcost that is not covered by this Agreement, then Flextronics will notifyCustomer and the parties will agree to either (a) compensate Flextronics forsuch additional costs, (b) amend this Agreement to conform to the CustomerControlled Materials Terms or (c) amend the Customer Controlled MaterialsTerms to conform to this Agreement, in each case at no additional charge toFlextronics.  Customer agrees to providecopies to Flextronics of all Customer Controlled Materials Terms upon theexecution of this Agreement and promptly upon execution of any new agreementswith suppliers.  Customer agrees not tomake any modifications or additions to the Customer Controlled Materials Termsor enter into new Customer Controlled Materials Terms with suppliers that willnegatively impact Flextronics’s procurement activities.

 

4.3.          **Preferred Supplier**.  Customershall provide to Flextronics and maintain an Approved Vendor List (“AVL”). Flextronics shall purchase from vendors on a current AVL the Materials requiredto manufacture the Product.  Customer shall give Flextronics theopportunity to be included Product AVL’s for Materials that Flextronics cansupply.  If Flextronics is competitivewith other suppliers with respect to reasonable criteria for acceptanceestablished by Customer, Flextronics shall be included on such Product AVL’s. If Flextronics is on an AVL and its prices, quality and performance arecompetitive with other vendors, Customer will raise no objection to Flextronicssourcing Materials from itself.  For purposes of this Section 4.3only, the term “Flextronics” includes any companies affiliated withFlextronics.

 

4.4.          **Customer Responsibility for Inventory and SpecialInventory**.  Customer isresponsible under the conditions provided in this Agreement for all Materials,Inventory and Special Inventory purchased by Flextronics under this Section 4.

 

4.5.          **Materials Warranties. **[*] Flextronics will pass through to the Customer the following warrantieswith regard to the Materials (other than the Production Materials): (i) conformanceof the Materials with the vendor’s specifications and/or with theSpecifications; (ii) that the Materials will be free from defects inworkmanship; (iii) that the Materials will comply with EnvironmentalRegulations; and (iv) that the Materials will not infringe theintellectual property rights of third parties (v) Customer and Flextronicsto discuss and negotiate legacy warranty support.  [*]

 

4.6.  **MoveMaterials. **As part of themove to Juarez, Flextronics will, on a one time basis only and pursuant to theterms of this Section 4.6, purchase materials on hand (the “**Move Materials**”) from Customer at [*].  TheMove Materials will be purchasedby Flextronics as long as the current aging is [*] months or less and only ifit is within a demanded lead-time.  TheMove Materials will: a) be new and unused; b) perform inaccordance with all applicable specifications; and c) be free from defects inworkmanship.  Customer willprovide an itemized list of the Move Materials, including itemized prices.  Flextronics, 

 

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* Confidential treatment has been requestedfor certain portions of this document pursuant to an application for confidentialtreatment sent to the Securities and Exchange Commission.  Such portions are omitted from this filingand filed separately with the Securities and Exchange Commission.

 

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in its solediscretion, will approve the list and authorize the purchase.  If Flextronics does not use the MoveMaterials during the [*] following the purchase of the Move Materials, Customerwill buy back the Move Materials [*].

 

4.7.          **CustomerPurchase Order Assignment.**   During the timeframe indicated in theTimeline in Exhibit 2.2 (“**P.O. AssignmentTimeframe**”), Customer will provide Flextronics with a list ofoutstanding purchase orders with its vendors. Flextronics will evaluate the list and determine which purchase ordershave been placed within verified component lead times.  Flextronics will provide Customer with a listof the open purchase orders for which it will accept assignment fromCustomer.  For components with PO’splaced beyond verified lead-time Customer and Flextronics agree to review andassign to Flextronics following Flextronics approval.  This purchase order assignment process willoccur only during the P.O. Assignment Timeframe.  After the P.O. Assignment Timeframe,going forward Flextronics will procure Materials, Inventory and SpecialInventory pursuant to the terms of this Section 4.

 

**5.     SHIPMENTS,SCHEDULE CHANGE, CANCELLATION, STORAGE**

 

5.1.          **Shipments**.  All Products delivered pursuant to the termsof this Agreement shall be suitably packed for shipment in accordance with theSpecifications and marked for shipment to Customer’s destination specified inthe applicable purchase order.  Unlessotherwise mutually agreed, shipments will be made EXW (Ex works, Incoterms2000)  Flextronics’s facility orFlextronics designated El Paso warehouse, at which time risk of loss and titlewill pass to Customer.  All freight,insurance and other shipping expenses, as well as any special packing expensesnot included in the original quotationfor the Products, will be paid by Customer. In the event Customer designates a freight carrier to be utilized byFlextronics, Customer agrees to designate only freight carriers that arecurrently in compliance with all applicable laws relating to anti-terrorismsecurity measures and to adhere to the C-TPAT (Customs-Trade PartnershipAgainst Terrorism) security recommendations and guidelines as outlined by theUnited States Bureau of Customs and Border Protection and to prohibit the freight carriage to be sub-contracted to anycarrier that is not in compliance with the C-TPAT guidelines.

 

5.2.          QuantityIncreases and Shipment Schedule Changes.

 

(a)   For any accepted purchase order,Customer may (i) increase the quantity of Products or (ii) reschedulethe quantity of Products and their shipment date as provided in the flexibilitytable below (the “**Flexibility Table**”);provided, however, that if the Specifications contain a flexibility table andsuch Specifications specifically reference this Section 5.2(a) andstate the such flexibility table takes precedence over the Flexibility Tableset forth below, then the flexibility table in the Specifications shall be theFlexibility Table for such Product for all purposes hereunder:

 
| **# of days before  Forecasted Shipment  Date** | ** ** | **Allowable  Quantity  Increases** |
|-------------------------------------------------|------------|------------------------------------|
| ** **                                      | ** ** | ** **                         |
| [*]                                             |       | [*]                                |
| [*]                                             |       | [*]                                |
| [*]                                             |       | [*]                                |

 

(i)            Flextronicswill use reasonable commercial efforts to meet any quantity increases outsideof the table in subsection (a) which are subject to Materials and capacityavailability.  All quantity increasesoutside of the table in subsection (a) may be subject to extra costs tomeet such increase; Flextronics will inform Customer for its acceptance andapproval in advance.

 

(b)   Any delays in the normal production orinterruption in the workflow process caused by Customer’s changes to theSpecifications or failure to provide sufficient quantities or a reasonablequality level of Customer Controlled Materials where applicable to sustain theproduction schedule, will be considered a reschedule of any affected purchaseorders for purposes of this Section 5.2 for the period of such delay.

 

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* Confidentialtreatment has been requested for certain portions of this document pursuant toan application for confidential treatment sent to the Securities and ExchangeCommission.  Such portions are omittedfrom this filing and filed separately with the Securities and ExchangeCommission.

 

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5.3.          **Cancellation of Orders, Reduction in Forecast andCustomer Responsibility for Inventory**.

 

(a)   Cancelation of Orders.  Customer may not cancel all or any portion ofProduct quantity of an accepted purchase order without Flextronics’s priorwritten approval, which, in its sole discretion, may or may not begranted.  If Customer does not requestprior approval, or if Customer and Flextronics do not agree in writing tospecific terms with respect to any approved cancellation, then Customer willpay Flextronics Monthly Charges for any such cancellation, calculated as of thefirst day after such cancellation for any Product or Inventory or SpecialInventory procured by Flextronics to support the original deliveryschedule.  In addition, if Flextronicsnotifies Customer that such Product, Inventory and/or Special Inventory hasremained in Flextronics’s possession for more than [*] days since suchcancellation, then Customer agrees to immediately purchase from Flextronicssuch Product, Inventory and/or Special Inventory by paying the AffectedInventory Costs.

 

(b)   Reduction of Forecast.  If the forecast for any period is less thanthe previous forecast supplied over the same period and such change results inan on-hand and/or on order non-cancelable Inventory in excess of the Inventoryneeded to support the forecasted demand for that such period based upon Inventorycalculated at Lead Time plus two weeks, then Customer shall be responsible forall affected Inventory and/or on order non-cancelable Inventory pursuant to Section 5.3.If Flextronics is holding Inventory or Special Inventory that does not have anydemand then Customer shall purchase such Inventory or Special Inventory thathas been on hand more then [*] days subject to Section 5.3. If Flextronicsis holding Inventory or Special Inventory subject to a min/max agreement orschedule then Customer shall purchase such Inventory or Special Inventory thatis in excess of the agreed maximum and/or has been on hand more then thirty [*]subject to Section 5.3.

 

(i)    Subjectto Section 5.3, Customer shall purchase Inventory and Special Inventorypurchased in support of Customer forecast that is on hand for [*] months ormore.  Further, Flextronics shall invoiceCustomer monthly and Customer agrees to pay Inventory Carry Fee of [*] permonth for any Inventory or Special Inventory in excess of [*] months demand.

 

(c)   Flextronics shall perform an Inventoryrevaluation of on-hand and on-order Inventory on a monthly basis.  In the event of a reduction in Inventorypurchase price, Flextronics shall not pass such reduction on to Customer untilall on-hand and on order Inventory that is not subject to the price reductionhas been consumed.  In the alternative,Customer may elect to buy-down the difference in the price paid by Flextronicsfor the Inventory and the new price.  Inthe event that Customer makes such election, Flextronics shall issue a PurchaseOrder to Customer for the difference in the purchase price and the new priceand upon payment of such amount by Customer the new purchase price shall bepassed on to Customer.

 

(d)   For purposes of calculating the amount ofInventory and Special Inventory subject to Section 5.3, the “**Lead Time**” shall be calculated as the LeadTime at the time of (i) procurement of the Inventory and SpecialInventory; (ii) cancellation of the purchase order or (iii) terminationof this Agreement, whichever is longer.  In addition, “**Minimum Order Quantity**”shall be calculated as the Minimum Order Quantity at the time of (i) procurementof the Inventory and Special Inventory; (ii) cancellation of the purchaseorder or (iii) termination of this Agreement.

 

5.4.  **Mitigation of Inventory and Special Inventory**.  Prior to invoicing Customer for the amountsdue pursuant to Sections 5.3 Flextronics will use reasonable commercial effortsfor a period of [*] days, to return unused Inventory and Special Inventory andto cancel pending orders for such inventory, and to otherwise mitigate theamounts payable by Customer.  In theevent that Flextronics can not return such Inventory without incurring fees,Customer shall pay amounts due under this Section 5, including withoutlimiting any restocking and return freight fees, within ten (10) days ofreceipt of an invoice.  Flextronics willship the Inventory and Special Inventory paid for by Customer under this Section 5.4to Customer promptly upon said payment by Customer.  In the event Customer does not pay within ten(10) days, Flextronics will be entitled to dispose of such Inventory andSpecial Inventory in a commercially reasonable manner and credit to Customerany monies received from third parties. Flextronics shall then submit an invoice for the balance amount due andCustomer agrees to pay said amount within ten (10) days of its receipt ofthe invoice.  In the event that it isdemonstrated that a portion of the Inventory or Special Inventory purchased byFlextronics is not authorized pursuant to the terms of this Agreement, Customershall not be liable for such portion of the Inventory or Special Inventory notpurchased as authorized herein.

 

5.5.          **No Waiver**.  For the avoidance of doubt, Flextronics’sfailure to invoice Customer for any of the charges set forth in this Section 5does not constitute a waiver of Flextronics’s right to charge Customer for thesame event or other similar events in the future.

 

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* Confidential treatment hasbeen requested for certain portions of this document pursuant to an applicationfor confidential treatment sent to the Securities and Exchange Commission.  Such portions are omitted from this filingand filed separately with the Securities and Exchange Commission.

 

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**6.             EXPRESS LIMITEDWARRANTY AND PRODUCT ACCEPTANCE**

 

6.1.          **Express Limited Warranty**.  This Section 6.3 sets forth Flextronics’ssole and exclusive warranty and Customer’s sole and exclusive remedies withrespect to a breach by Flextronics of such warranty.

 

a)     Flextronics warrants that the Products willhave been manufactured in accordance with the applicable Specifications andwill be free from defects in workmanship for a period of [*] from thedate of shipment, [*].  In addition,Flextronics warrants that Production Materials are in compliance withEnvironmental Regulations.

 

b)    Notwithstanding anything else in thisAgreement, this express limited warranty does not apply to, and Flextronicsmakes no representations or warranties whatsoever with respect to: (i) Materialsand/or Customer Controlled Materials; (ii) defects resulting from theSpecifications or the design of the Products; (iii) Product that has beenabused, damaged, altered or misused by any person or entity after title passesto Customer; (iv) first articles, prototypes, pre-production units, testunits or other similar Products; (v) defects resulting from tooling,designs or instructions produced or supplied by Customer, or (vi) thecompliance of Materials or Products with any Environmental Regulations.  Customer shall be liable for costs orexpenses incurred by Flextronics related to the foregoing exclusions toFlextronics’s express limited warranty.

 

c)     Customer will provide its own warrantiesdirectly to any of its end users or other third parties.  Customer will not pass through to end usersor other third parties the warranties made by Flextronics under thisAgreement.  Furthermore, Customer willnot make any representations to end users or other third parties on behalf ofFlextronics, and Customer will expressly indicate that the end users and thirdparties must look solely to Customer in connection with any problems, warrantyclaim or other matters concerning the Product, except as expressly agreed uponby Flextronics and Customer.

 

d)    [*]

 

6.2.          **Product Acceptance**.  [*]

 

6.3.          **No Representations or Other Warranties**.FLEXTRONICS MAKES NO REPRESENTATIONS AND NO OTHER WARRANTIES OR CONDITIONS ONTHE PERFORMANCE OF THE WORK, OR THE PRODUCTS, EXPRESS, IMPLIED, STATUTORY, ORIN ANY OTHER PROVISION OF THIS AGREEMENT OR COMMUNICATION WITH CUSTOMER, ANDFLEXTRONICS SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OR CONDITION OFMERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.

 

**7.     INTELLECTUALPROPERTY LICENSES**

 

7.1.          **Licenses**.  Customer hereby grants Flextronics anon-exclusive license during the term of this Agreement to use Customer’spatents, trade secrets and other intellectual property as necessary to performFlextronics’s obligations under this Agreement.

 

7.2.          **No Other Licenses. **Except as otherwise specifically providedin this Agreement, each party acknowledges and agrees that no licenses orrights under any of the intellectual property rights of the other party aregiven or intended to be given to such other party.

 

7.3.          Flextronics shallnot use, copy, modify or distribute any Customer or Customer Third PartyProprietary Items or any copy, adaptation or other derivative work thereof(electronically or otherwise) any software, tools processes provided byCustomer.  Flextronics is prohibited fromcausing or permitting the reverse engineering, disassembly or de-compilation ofthe Customer (or Customer’s 3rd Party software/tools) Proprietary Items as thesame are modified, enhanced, corrected, improved or otherwise altered.  Third Party Proprietary Items are defined astools and applications used in Customer software download, imaging anddiagnostic process.  Withoutlimiting the generality of the foregoing, and except as otherwise expresslyprovided in this Agreement, (i) Flextronics shall not sell, assign,sublicense or otherwise transfer or authorize the use of all or any part of theCustomer Proprietary Items or the license rights granted hereunder to anyperson or entity, and (ii) Flextronics is prohibited from using Customer orCustomer’s 3rd Party Proprietary Items, to process its own information and toprovide service bureau services or to otherwise provide services to otherparties except with the prior written agreement of Customer. Flextronics shallcause its employees to comply with the non-disclosure and other obligationsrequired hereunder and shall be responsible for the breach thereof by anyFlextronics employee.

 

**8.     TERMAND TERMINATION**

 

8.1.          **Term**. The term of this Agreement shall commence on the date hereof above andshall continue for five (5) years thereafter until terminated as providedin Section 8.2 (Termination) or 10.10 (Force Majeure). After theexpiration of the 

 

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* Confidentialtreatment has been requested for certain portions of this document pursuant toan application for confidential treatment sent to the Securities and ExchangeCommission.  Such portions are omittedfrom this filing and filed separately with the Securities and ExchangeCommission.

 

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initial termhereunder (unless this Agreement has been terminated), this Agreement shall beautomatically renewed for separate but successive one-year terms unless eitherparty provides written notice to the other party that it does not intend torenew this Agreement ninety (90) days or more prior to the end of any term.

 

8.2.          **Termination**.  This Agreement may be terminated by eitherparty (a) for convenience upon [*]days written notice to the other party,or (b) if the other party defaults in any payment to the terminating partyand such default continues without a cure for a period of thirty (30) daysafter the delivery of written notice thereof by the terminating party to theother party, (c) if the other party defaults in the performance of anyother material term or condition of this Agreement and such default continuesunremedied for a period of thirty (30) days after the delivery of writtennotice thereof by the terminating party to the other party,  (d) pursuant to Section 2.5 (CostReduction Target) or (e) pursuant to Section 10.10 (Force Majeure).

 

8.3.          **Effect of Expiration or Termination**.  Expiration or termination of this Agreementunder any of the foregoing provisions: (a) shall not affect the amountsdue under this Agreement by either party that exist as of the date ofexpiration or termination, and (b) as of such date the provisions ofSections 5.2, 5.3, and 5.4 shall apply with respect to payment and shipment toCustomer of finished Products, Inventory, and Special Inventory in existence asof such date, and (c) shall not affect Flextronics’s express limitedwarranty in Section 6.2 above. Termination of this Agreement, settling of accounts in the manner setforth in the foregoing sentence shall be the exclusive remedy of the partiesfor breach of this Agreement, except for breaches of Section 6.2, 9.1,9.2, or 10.1.  Sections 1, 3.5, 3.6, 3.7,4, 5.3, 5.3, 5.4, 6.2, 6.3, 7, 8, 9, and 10 shall be the only terms that shallsurvive any termination or expiration of this Agreement.

 

**9.     INDEMNIFICATION;LIABILITY LIMITATION**

 

9.1.          **Indemnification byFlextronics.**  Flextronics agrees to defend, indemnify andhold harmless, Customer and all directors, officers, employees, and agents (each, a “**Customer Indemnitee**”)from and against all claims, actions, losses, expenses, damages or otherliabilities, including reasonable attorneys’ fees (collectively, “**Damages**”) incurredby or assessed against any of the foregoing, but solely to the extent the samearise out of third-party claims relating to:

 

(a)   any actual or threatenedinjury or damage to any person or property caused, or alleged to be caused, bya Product sold by Flextronics to Customer hereunder, but solely to the extentsuch injury or damage has been caused by the breach by Flextronics of itsobligations under this Agreement, including but not limited to the expresslimited warranties related to Flextronics’s workmanship and manufacture inaccordance with the Specifications only as further set forth in Section 6.2;

 

(b)   any infringement of the intellectual propertyrights of any third party but solely to the extent that such infringement iscaused by a process that Flextronics uses to manufacture, assemble and/or testthe Products; provided that, Flextronics shall not have any obligation toindemnify Customer if such claim would not have arisen but for Flextronics’smanufacture, assembly or test of the Product in accordance with theSpecifications; or

 

(c)   noncompliance with any EnvironmentalRegulations but solely to the extent that such non-compliance is causedby a process or Production Materials that Flextronics uses to manufacture theProducts; provided that, Flextronics shall not have any obligation to indemnifyCustomer if such claim would not have arisen but for Flextronics’s manufactureof the Product in accordance with the Specifications.

 

9.2.          **Indemnification byCustomer.**Customeragrees to defend, indemnify and hold harmless, Flextronics and its affiliates,and all directors, officers, employees and agents (each, a “**Flextronics Indemnitee**”) from and against all Damages incurred by or assessed against any of the foregoing to the extent thesame arise out of, are in connection with, are caused by or are related tothird-party claims relating to:

 

(a)   any failure of any Product(and Materials contained therein) sold by Flextronics hereunder to comply withany safety standards and/or Environmental Regulationsto the extent that such failurehas not  been caused by Flextronics’sbreach of its express limited warranties set forth in Section 6.2 hereof;any actual or threatened injury or damage to any person or property caused, oralleged to be caused, by a Product, but only to the extent such injury ordamage has not been causedFlextronics’s breach of its express limited warranties related to Flextronics’sworkmanship and manufacture in accordance with the Specifications only asfurther set forth in Section 6.2 hereof ; or

 

(b)   any infringement of theintellectual property rights of any third party by any Product except to theextent such infringement is the responsibility of Flextronics pursuant to Section 9.1(b) above.

 

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* Confidentialtreatment has been requested for certain portions of this document pursuant toan application for confidential treatment sent to the Securities and ExchangeCommission.  Such portions are omittedfrom this filing and filed separately with the Securities and ExchangeCommission.

 

7

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9.3.          **Procedures for Ind****emnification. **Withrespect to any third-party claims, either party shall give the other partyprompt notice of any third-party claim and cooperate with the indemnifyingparty at its expense.  The indemnifyingparty shall have the right to assume the defense (at its own expense) of anysuch claim through counsel of its own choosing by so notifying the partyseeking indemnification within thirty (30) calendar days of the first receiptof such notice.  The party seekingindemnification shall have the right to participate in the defense thereof andto employ counsel, at its own expense, separate from the counsel employed bythe indemnifying party.  The indemnifyingparty shall not, without the prior written consent of the indemnified party,agree to the settlement, compromise or discharge of such third-party claim.

 

9.4.          **Sale of Products Enjoined**. Should the use of any Products be enjoinedfor a cause stated in Section 9.1(b) or 9.2(c) above, or in theevent the indemnifying party desires to minimize its liabilities under this Section 9,in addition to its indemnification obligations set forth in this Section 9,the indemnifying party’s sole responsibility is to either substitute a fullyequivalent Product or process (as applicable) not subject to such injunction,modify such Product or process (as applicable) so that it no longer is subjectto such injunction, or obtain the right to continue using the enjoined processor Product (as applicable).  In the eventthat any of the foregoing remedies cannot be effected on commerciallyreasonable terms, then, all accepted purchase orders and the current forecastwill be considered cancelled and Customer shall purchase all Products,Inventory and Special Inventory as provided in Sections 5.3 and 5.4hereof.  Any changes to any Products orprocess must be made in accordance with Section 2.3 above.  Notwithstanding the foregoing, in the eventthat a third party makes an infringement claim, but does not obtain aninjunction, the indemnifying party shall not be required to substitute a fullyequivalent Product or process (as applicable) or modify the Product or process(as applicable) if the indemnifying party obtains an opinion from competentpatent counsel reasonably acceptable to the other party that such Product orprocess is not infringing or that the patents alleged to have been infringedare invalid.

 

9.5.          **No Other Liability**. **EXCEPT WITH REGARD TO A BREACH OF SECTIONS 9.1 AND 9.2ABOVE OR SECTION 10.1 BELOW, IN NO EVENT SHALL EITHER PARTY BE LIABLE TOTHE OTHER FOR ANY “COVER” DAMAGES (INCLUDING INTERNAL COVER DAMAGES WHICH THEPARTIES AGREE MAY NOT BE CONSIDERED “DIRECT” DAMAGES), OR ANY INCIDENTAL,CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES OF ANY KIND OR NATURE ARISING OUT OFTHIS AGREEMENT OR THE SALE OF PRODUCTS, WHETHER SUCH LIABILITY IS ASSERTED ONTHE BASIS OF CONTRACT, TORT (INCLUDING THE POSSIBILITY OF NEGLIGENCE OR STRICTLIABILITY), OR OTHERWISE, EVEN IF THE PARTY HAS BEEN WARNED OF THE POSSIBILITYOF ANY SUCH LOSS OR DAMAGE, AND EVEN IF ANY OF THE LIMITED REMEDIES IN THISAGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE.**

 

**THE FOREGOING SECTION 9 STATES THEENTIRE LIABILITY OF THE PARTIES TO EACH OTHER CONCERNING INFRINGEMENT OFPATENT, COPYRIGHT, TRADE SECRET OR OTHER INTELLECTUAL PROPERTY RIGHTS.**

 

**10.  MISCELLANEOUS**

 

10.1.                **Confidentiality**.  Each party shall refrain from using any andall Confidential Information of the disclosing party for any purposes oractivities other than those specifically authorized in this Agreement.  Except as otherwise specifically permittedherein or pursuant to written permission of the party to this Agreement owningthe Confidential Information, no party shall disclose or facilitate disclosureof Confidential Information of the disclosing party to anyone without the priorwritten consent of the disclosing party, except to its employees, consultants,parent company, and subsidiaries of its parent company who need to know suchinformation for carrying out the activities contemplated by this Agreement andwho have agreed in writing to confidentiality terms that are no lessrestrictive than the requirements of this Section.  Notwithstandingthe foregoing, the receiving party may disclose Confidential Information of thedisclosing party pursuant to a subpoena or other court process only (i) is required to be disclosed by law or a validorder by a court or other governmental body, provided that the receiving partyprovides the disclosing party with prior written notice of such disclosure inorder to permit the disclosing party to seek confidential treatment of suchinformation  and (ii) after the receiving party has giventhe disclosing party a reasonable opportunity to oppose such subpoena or otherprocess or to obtain a protective order. Confidential Information of the disclosing party in the custodyor control of the receiving party shall be promptly returned or destroyed uponthe earlier of (i) the disclosing party’s written request or (ii) terminationof this Agreement.  ConfidentialInformation disclosed pursuant to this Agreement shall be maintainedconfidential for a period of three (3) years after the disclosure thereof.  The existence and terms of this Agreementshall be confidential in perpetuity.

 

10.2.                **RFQ Participation.**  Customer agrees to allow Flextronics a rightof first refusal in all original design manufacture product RFQs, provided thatFlextronics’s products meet Customer’s customer requirements, meet requiredproduct specifications, timeline, price and quality.  Customer will source these products fromFlextronics for 5 years. Customer agrees to allow Flextronics the opportunityto participate in additional opportunities within Customer’s business,including the following: notebook depot work, vertical integrationopportunities, National Service Provider work (outsourced customization), andProduct engineering/development work.

 

8

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10.3.                **Use of Flextronics Name isProhibited.**  Theexistence and terms of this Agreement are Confidential Information andprotected pursuant to Section 10.1 above. Accordingly, neither Customer nor Flextronics may not use the other’sname or identity or any other Confidential Information in any advertising,promotion or other public announcement without the prior express writtenconsent of such party.  Notwithstanding the foregoing, in the eventthat Flextronics or Customer isrequired to disclose such information by law or a valid order by a court orother governmental body, Flextronics or Customer may disclose such informationprovided that the party provides the other party with prior written notice ofsuch requirement and permits the such party the good faith opportunity to seekconfidential treatment of such information.

 

10.4.        **Entire Agreement;Severability****. **This Agreement constitutes theentire agreement between the Parties with respect to the transactionscontemplated hereby and supersedes all prior agreements and understandingsbetween the parties relating to such transactions.  If the scope of any of the provisions of thisAgreement is too broad in any respect whatsoever to permit enforcementto its full extent, then such provisions shall be enforced to the maximumextent permitted by law, and the parties hereto consent and agree that suchscope may be judicially modified accordingly and that the whole of suchprovisions of this Agreement shall notthereby fail, but that the scope of such provisions shall be curtailed only tothe extent necessary to conform to law.

 

10.5.        **Amendments; Waiver**.  ThisAgreement may be amended only by written consent of both parties.  The failure by either party to enforce anyprovision of this Agreement will not constitute a waiver of future enforcementof that or any other provision.  Neitherparty will be deemed to have waived any rights or remedies hereunderunless such waiver is in writing and signed by a duly authorized representativeof the party against which such waiver is asserted.

 

10.6.        **Independent Contractor**.  Neither party shall, for any purpose, bedeemed to be an agent of the other party and the relationship between theparties shall only be that of independent contractors.  Neither party shall have any right orauthority to assume or create any obligations or to make any representations orwarranties on behalf of any other party, whether express or implied, or to bindthe other party in any respect whatsoever.

 

10.7.        **Expenses**.  Each party shall pay their own expenses inconnection with the negotiation of this Agreement.  All fees and expenses incurred in connectionwith the resolution of Disputes shall be allocated as further provided in Section 10.13below.

 

10.8.        **Insurance**.  Flextronics and Customer agree to maintainappropriate insurance to cover their respective risks under this Agreement withcoverage amounts commensurate with levels in their respective markets.  Customer specifically agrees to maintaininsurance coverage for any finished Products or Materials the title and risk ofloss of which passes to Customer pursuant to this Agreement and which is storedon the premises of Flextronics.    Eachparty shall furnish certificates of insurance and such other appropriatedocumentation (including evidence of renewal of insurance) evidencing allinsurance coverage’s set forth in this Section 10.9.  Such certificates of insurance and otherdocumentation shall name the other party and its officers, directors andemployees as additional insured and will provide at least thirty (30) daysprior written notice of any cancellation or material alteration of theinsurance coverage set forth in this Section 10.9.

 

10.9.        **Force Majeure**.  In the event that either party is preventedfrom performing or is unable to perform any of its obligations under thisAgreement (other than a payment obligation) due to any act of God, acts ordecrees of governmental or military bodies, fire, casualty, flood, earthquake,war, strike, lockout, epidemic, destruction of production facilities, riot,insurrection, Materials unavailability, or any other cause beyond thereasonable control of the party invoking this section (collectively, a “**Force Majeure**”), and if such party shallhave used its commercially reasonable efforts to mitigate its effects, suchparty shall give prompt written notice to the other party, its performanceshall be excused, and the time for the performance shall be extended for theperiod of delay or inability to perform due to such occurrences.  Regardless of the excuse of Force Majeure, ifsuch party is not able to perform within ninety (90) days after such event, theother party may terminate the Agreement.

 

10.10.      **Successors, Assignment**.  This Agreement shall be binding upon andinure to the benefit of the parties hereto and their respective successors,assigns and legal representatives. Neither party shall have the right to assign or otherwise transfer itsrights or obligations under this Agreement except with the prior writtenconsent of the other party, not to be unreasonably withheld.  Notwithstanding the foregoing, Flextronicsmay assign some or all of its rights and obligations under this Agreement to anaffiliated Flextronics entity.

 

10.11.      **Notices**.  All notices required or permitted under thisAgreement will be in writing and will be deemed received (a) whendelivered personally; (b) when sent by confirmed facsimile; (c) five (5) daysafter having been sent by registered or certified mail, return receiptrequested, postage prepaid; or (d) one (1) day after deposit with acommercial overnight carrier.  Allcommunications will be sent to the addresses set forth above or to such otheraddress as may be designated by a party by giving written notice to the other partypursuant to this section.

 

9

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10.12.      **Disputes Resolution; Waiver of Jury Trial**.

 

(a)   Except as otherwise provided in thisAgreement, the following binding dispute resolution procedures shall be theexclusive means used by the parties to resolve all disputes, differences,controversies and claims arising out of or relating to the Agreement or anyother aspect of the relationship between Flextronics and Customer or theirrespective affiliates and subsidiaries (collectively, “**Disputes**”).  Either party may, by written notice to theother party, refer any Disputes for resolution in the manner set forth below.

 

(b)   Any and all Disputes shall be referred toarbitration under the rules and procedures of Judicial Arbiter Group, Inc.(“**JAG**”), who shall act as the arbitrationadministrator (the “**Arbitration Administrator**”).

 

(c)   The parties shall agree on a singlearbitrator (the “**Arbitrator**”).  The Arbitrator shall be a retired judgeselected by the parties from a roster of arbitrators provided by theArbitration Administrator. If the parties cannot agree on an Arbitrator withinseven (7) days of delivery of the demand for arbitration (“**Demand**”) (or such other time period as the parties mayagree), the Arbitration Administrator will select an independent Arbitrator.

 

(d)   Unless otherwise mutually agreed to by theparties, the place of arbitration shall be Denver, Colorado , although thearbitrators may be selected from rosters outside Denver.

 

(e)   The Federal Arbitration Act shall govern thearbitrability of all Disputes.  TheFederal Rules of Civil Procedure and the Federal Rules of Evidence(the “**Federal Rules**”), to the extent notinconsistent with this Agreement, govern the conduct of the arbitration.  To the extent that the Federal ArbitrationAct and Federal Rules do not provide an applicable procedure, Colorado lawshall govern the procedures for arbitration and enforcement of an award, andthen only to the extent not inconsistent with the terms of this Section.  Disputes between the parties shall be subjectto arbitration notwithstanding that a party to this Agreement is also a partyto a pending court action or special proceeding with a third party, arising outof the same transaction or series of related transactions and there is apossibility of conflicting rulings on a common issue of law or fact.

 

(f)    Unless otherwise mutually agreed to by theparties, each party shall allow and participate in discovery as follows:

 

(i)            Non-ExpertDiscovery.  Each party may (1) conductthree (3) non-expert depositions of no more than five (5) hours oftestimony each, with any deponents employed by any party to appear fordeposition in Denver, Colorado; (2) propound a single set of requests forproduction of documents containing no more than twenty (20) individualrequests; (3) propound up to twenty written interrogatories; and (4) propoundup to ten (10) requests for admission.

 

(ii)           ExpertDiscovery. Each party may select a witness who is retained or speciallyemployed to provide  expert testimony andan additional expert witness to testify with respect to damages issues, if any.The parties shall exchange expert reports and documents under the samerequirements as Federal Rules of Civil Procedure 26(a)(2) &(4).

 

(iii)          AdditionalDiscovery.  The Arbitrator may, onapplication by either party, authorize additional discovery only if deemedessential to avoid injustice.  In theevent that remote witnesses might otherwise be unable to attend thearbitration, arrangements shall be made to allow their live testimony by videoconference during the arbitration hearing.

 

(g)   The Arbitrator shall render an award withinsix (6) months after the date of appointment, unless the parties agree toextend such time. The award shall be accompanied by a written opinion settingforth the findings of fact and conclusions of law.  The Arbitrator shall have authority to awardcompensatory damages only, and shall not award any punitive, exemplary, ormultiple damages.  The award (subject toclarification or correction by the arbitrator as allowed by statute and/or theFederal Rules) shall be final and binding upon the parties, subject solely tothe review procedures provided in this Section.

 

(h)   Either party may seek arbitral review of theaward.  Arbitral review may be had as toany element of the award.

 

(i)    This Agreement’s arbitration provisions areto be performed in Denver, Colorado.  Anyjudicial proceeding arising out of or relating to this Agreement or therelationship of the parties, including without limitation any proceeding to enforcethis Section, to review or confirm the award in arbitration, or for preliminaryinjunctive relief, shall be brought exclusively in a court of competentjurisdiction in the county of Denver, Colorado (the “**EnforcingCourt**”).  By execution anddelivery of this Agreement, each party accepts the jurisdiction of theEnforcing Court.

 

(j)    Each party shall pay their own expenses inconnection with the resolution of Disputes pursuant to this Section, includingattorneys’ fees.

 

(k)   Notwithstanding anything contained in this Section tothe contrary, in the event of any Dispute, prior to referring such Dispute toarbitration pursuant to Subsection (b) of this Section, Customer andFlextronics shall attempt in

 

10

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good faith to resolve any and all controversies or claims relating tosuch Disputes promptly by negotiation commencing within ten (10) calendardays of the written notice of such Disputes by either party, includingreferring such matter to Customer’s then-current President and Flextronics’sthen current executive in charge of manufacturing operations in the region inwhich the primary activities of this Agreement are performed byFlextronics.  The representatives of theparties shall meet at a mutually acceptable time and place and thereafter asoften as they reasonably deem necessary to exchange relevant information and toattempt to resolve the Dispute for a period of four (4) weeks.  In the event that the parties are unable toresolve such Dispute pursuant to this Subsection (k), the provisions ofSubsections (a) through (j) of this Section, inclusive, as well asSubsections (l), (m) and (n) of this Section shall apply.

 

(l)     The parties agree that the existence, conduct and content of anyarbitration pursuant to this Section shall be kept confidential and noparty shall disclose to any person any information about such arbitration,except as may be required by law or by any governmental authority or forfinancial reporting purposes in each party’s financial statements.

 

(m)   IN THE EVENT OF ANY DISPUTE BETWEEN THE PARTIES, WHETHER ITRESULTS IN PROCEEDINGS IN ANY COURT IN ANY JURISDICTION OR IN ARBITRATION, THEPARTIES HEREBY KNOWINGLY AND VOLUNTARILY, AND HAVING HAD AN OPPORTUNITY TOCONSULT WITH COUNSEL, WAIVE ALL RIGHTS TO TRIAL BY JURY, AND AGREE THAT ANY ANDALL MATTERS SHALL BE DECIDED BY A JUDGE OR ARBITRATOR WITHOUT A JURY TO THEFULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW.

 

(n)   In the event of any lawsuit between the parties arising out of orrelated to this Agreement, the parties agree to prepare and to timely file inthe applicable court a mutual consent to waive any statutory or otherrequirements for a trial by jury.

 

10.12.      **Even-Handed Construction**.  The terms and conditions as set forth in thisAgreement have been arrived at after mutual negotiation, and it is theintention of the parties that its terms and conditions not be construed againstany party merely because it was prepared by one of the parties.

 

10.13.      **Controlling Language**.  This Agreement is in English only, whichlanguage shall be controlling in all respects. All documents exchanged underthis Agreement shall be in English.

 

10.14.      **Controlling Law**.  This Agreement shall be governed andconstrued in all respects in accordance with the domestic laws and regulationsof the State of Colorado, without regard to its conflicts of laws provisions;except to the extent there may be any conflict between the law of the State ofColorado and the Incoterms of the International Chamber of Commerce, 2000edition, in which case the Incoterms shall be controlling.  The parties specifically agree that the 1980United Nations Convention on Contracts for the International Sale of Goods, asmay be amended from time to time, shall not apply to this Agreement.  Theparties acknowledge and confirm that they have selected the laws of the Stateof Colorado as the governing law for this Agreement in part because jury trialwaivers are enforceable under Colorado law. The parties further acknowledge and confirm that the selection of thegoverning law is a material term of this Agreement.

 

10.15.      **Counterparts**.  This Agreement may be executed incounterparts.

 

**IN WITNESS WHEREOF, the parties have caused this Agreementto be duly executed by their duly authorized representatives as of theEffective Date.**

** **
| MPC CORPORATION: |                                                                                                                                       | FLEXTRONICS: |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------|--------------|
|             |                                                                                                                                       |         |
|             |                                                                                                                                       |         |
| By:              |       /s/               Jeffrey E. Fillmore |         | By: |       /s/               Manny Marimuthu |
|             |                                                                                                                                       |         |
| Title:           |  COO                                                                                                                                  |         | Title: |   |
|                  |                                                                                                                                            |              |  |  |  |  |

 

11

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##### **Exhibit 1**

#####  

**Definitions**

 
| “**Affected Inventory Costs**”                    |   | shall  mean: (i) [*] of the Cost of all affected Inventory and Special  Inventory in Flextronics’s possession and not returnable to the vendor or  reasonably usable for other customers, whether in raw form or work in  process, less the salvage value thereof, (ii) [*] of the Cost of all  affected Inventory and Special Inventory on order and not cancelable,  (iii) any vendor cancellation charges incurred with respect to the  affected Inventory and Special Inventory accepted for cancellation or return  by the vendor, (iv) the then current fees for any affected Product, and  (v) expenses incurred by Flextronics related to labor and equipment  specifically put in place to support the purchase orders and forecasts that are  affected by such reschedule or cancellation (as applicable).                                                                                                                                    |
|-------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “**Approved Vendor List**” or “**AVL**” |   | shall  mean the list of suppliers currently approved to provide the Materials  specified in the bill of materials for a Product.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “**Confidential Information”**                    |   | shall  mean (a) the existence and terms of this Agreement and all information  concerning the unit number and fees for Products and Inventory/Special  Inventory and (b) any other information that is marked “Confidential” or  the like or, if delivered verbally, confirmed in writing to be “Confidential”  within 30 days of the initial disclosure. Confidential  Information does not include information that (i) the receiving party  can prove it already knew at the time of receipt from the disclosing party;  or (ii) has come into the public domain without breach of confidence by  the receiving party; (iii) was received from a third party without  restrictions on its use; (iv) the receiving party can prove it  independently developed without use of or reference to the disclosing party’s  data or information; or (v) the disclosing party agrees in writing is  free of such restrictions. |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “**Cost**”                                        |   | shall  mean the cost represented on the bill of materials supporting the most  current fees for Products at the time of cancellation, expiration or  termination, as applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “**Customer  Controlled Materials**”              |   | shall  mean those Materials provided by Customer or by suppliers with whom Customer  has a commercial contractual or non-contractual relationship.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “**Customer  Controlled Materials****Terms**”     |   | shall  mean the terms and conditions that Customer has negotiated with its suppliers  for the purchase of Customer Controlled Materials.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “**Customer Indemnitees**”                        |   | shall  have the meaning set forth in Section 9.1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “**Damages**”                                     |   | shall  have the meaning set forth in Section 9.1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “**Disputes**”                                    |   | shall  have the meaning set forth in Section 10.13(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “**Economic Order Inventory**”                    |   | shall  mean Materials purchased in quantities, above the required amount for  purchase orders, in order to achieve price targets for such Materials.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **“Environmental Regulations”**                   |   | Shall  mean any hazardous  substance content laws and regulations including, without limitation, those  related to the EU Directive 2002/95/EC about the Restriction of Use of  Hazardous Substances (RoHS).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

 

----

##### * Confidential treatment has been requested for certain portions ofthis document pursuant to an application for confidential treatment sent to theSecurities and Exchange Commission.  Suchportions are omitted from this filing and filed separately with the Securitiesand Exchange Commission.

 

12

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| “**Fee List**”                        |   | shall  have the meaning set forth in Section 3.4.                                                                                                                                                                                                                                                                                                                                                                           |
|-------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “**Flextronicsibility Table**”        |   | shall  have the meaning set forth in Section 5.2.                                                                                                                                                                                                                                                                                                                                                                           |
|                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “**Flextronics Indemnitee**”          |   | shall  have the meaning set forth in Section 9.2.                                                                                                                                                                                                                                                                                                                                                                           |
|                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “**Force Majeure**”                   |   | shall  have the meaning set forth in Section 10.10.                                                                                                                                                                                                                                                                                                                                                                         |
|                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “**Inventory**”                       |   | shall  mean any Materials that are used to manufacture Products that are ordered  pursuant to a purchase order from Customer.                                                                                                                                                                                                                                                                                                    |
|                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “**Lead Time(s)**”                    |   | shall  mean the Materials Procurement Lead Time plus the manufacturing cycle time  required from the delivery of the Materials at Flextronics’s facility to the  completion of the manufacture, assembly and test processes.                                                                                                                                                                                                |
|                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “**Long Lead Time Materials**”        |   | shall  mean Materials with Lead Times exceeding the period covered by the accepted  purchase orders for the Products.                                                                                                                                                                                                                                                                                                            |
|                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “**Materials**”                       |   | shall  mean components, parts and subassemblies that comprise the Product and that  appear on the bill of materials for the Product.                                                                                                                                                                                                                                                                                             |
|                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “**Materials Procurement Lead Time**” |   | shall  mean with respect to any particular item of Materials, the longer of  (a) lead time to obtain such Materials as recorded on Flextronics’s MRP  system or (b) the actual lead time, if a supplier has increased the lead  time but Flextronics has not yet updated its MRP system.                                                                                                                          |
|                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “**Minimum Order Inventory**”         |   | shall  mean Materials purchased in excess of requirements for purchase orders  because of minimum lot sizes available from the supplier.                                                                                                                                                                                                                                                                                         |
|                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “**Monthly Charges**”                 |   | shall  mean a finance carrying charge of [*]and a storage and handling charge of  [*], in each case of the Cost of the Inventory and/or Special Inventory  and/or of the fees for the Product affected by the reschedule or cancellation  (as applicable) per month until such Inventory and/or Special Inventory  and/or Product is returned to the vendor, used to manufacture Product or is  otherwise purchased by Customer. |
|                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **“Move Completion Date”**            |   | shall  have the meaning set forth in Section 2.2.                                                                                                                                                                                                                                                                                                                                                                           |
| ** **                                      |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “**Product**”                         |   | shall  have the meaning set forth in Section 2.1.                                                                                                                                                                                                                                                                                                                                                                           |
|                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **“Production Materials”**            |   | shall  mean Materials that are consumed in the production processes to manufacture  Products including without limitation, solder, epoxy, cleaner solvent,  labels, flux, and glue. Production Materials do not include any such  production materials that have been specified by the Customer or any Customer  Controlled Materials.                                                                                           |
| ** **                                      |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “**Special Inventory**”               |   | shall  mean any Long Lead Time Materials and/or Minimum Order Inventory and/or  Economic Order Inventory.                                                                                                                                                                                                                                                                                                                        |
|                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “**Specifications**”                  |   | shall  have the meaning set forth in Section 2.1.                                                                                                                                                                                                                                                                                                                                                                           |
|                                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “**Work**”                            |   | shall  have the meaning set forth in Section 2.1.                                                                                                                                                                                                                                                                                                                                                                           |

#####  

##### 

##### * Confidential treatment has been requested for certain portions ofthis document pursuant to an application for confidential treatment sent to theSecurities and Exchange Commission.  Suchportions are omitted from this filing and filed separately with the Securities andExchange Commission.

 

13

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##### EXHIBIT 2.2

#####  

TIMELINE

 

14

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EXHIBIT 3.4

 

FEES LIST

 

Thefollowing transformation fees apply to a standard configuration. Any specialconfigurations which significantly increase the manufacturing used to calculatethese fees will be quoted separately prior to acceptance of the purchase order.

 

TransformationCosts Landed El Paso

 
| **Platform** | ** ** | **Product**      | ** ** | **Family**   | ** ** | **Trans/Cost** |
|--------------|------------|------------------|------------|--------------|------------|----------------|
| Notebook     |       | M285  / S7225    |       | Viper  C     |       | [*]            |
| Notebook     |       | E295  / S7235    |       | Viper  SR    |       | [*]            |
| Notebook     |       | E100  / S7110    |       | Cyclops  C   |       | [*]            |
| Notebook     |       | E155  / S7125    |       | Phoenix      |       | [*]            |
| Notebook     |       | M465  / S7310    |       | Mystique  C  |       | [*]            |
| Notebook     |       | E265  / S7220    |       | Phantom      |       | [*]            |
| Notebook     |       | E475  / S7320    |       | Orion        |       | [*]            |
| Notebook     |       | M685  / S7410    |       | Sonic  C     |       | [*]            |
|         |       |             |       |         |       |           |
| Desktop      |       | E-1500  / S-5105 |       | E-1500       |       | [*]            |
| Desktop      |       | E-2600  / S-5205 |       | E-2600       |       | [*]            |
| Desktop      |       | E-2610  / S-5215 |       | E-2610       |       | [*]            |
| Desktop      |       | E-4610  / S-5405 |       | E-4610       |       | [*]            |
| Desktop      |       | E-4620           |       | E-4620       |       | [*]            |
| Desktop      |       | E-6610  / S-5615 |       | E-6610       |       | [*]            |
| Desktop      |       | E-6620  / S-6625 |       | E-6620       |       | [*]            |
| Desktop      |       | Profile  6.0 / S |       | Profile  6.0 |       | [*]            |
| Desktop      |       | Profile  6.5 / S |       | Profile  6.5 |       | [*]            |

 

Change/CancellationCosts

 
| **Level** | ** ** | **Description**          | ** ** | **Applies to** | ** ** | **Cost** |
|-----------|------------|--------------------------|------------|----------------|------------|----------|
| Stage  1  |       | Post  Kit/Pre Assembly   |       | All  Products  |       | [*]      |
| Stage  2  |       | Post  Assembly/Pre Test  |       | All  Products  |       | [*]      |
| Stage  3  |       | Post  Test/Pre Packaging |       | All  Products  |       | [*]      |
| Stage  4  |       | Post  Packaging          |       | All  Products  |       | [*]      |

 

Anychanges/cancellations which may require more time to disposition and resolvewill be billed at a factory rate of [*] Customer will be notified in advance ofany special circumstance which requires an hourly charge.

 

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*Confidential treatment has been requested for certain portions of this documentpursuant to an application for confidential treatment sent to the Securitiesand Exchange Commission.  Such portionsare omitted from this filing and filed separately with the Securities andExchange Commission.

 

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