EX-10.II.B.4



 









Contract No. WR71050115




Exhibit 10(ii)(B)4




CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT

HAS BEEN OMITTED AND FILED SEPARATELY WITH THE

SECURITIES AND EXCHANGE COMMISSION

PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WITH RESPECT TO THE OMITTED PORTIONS. OMITTED

PORTIONS ARE INDICATED BY [***].




External Manufacturing Services Agreement



Contract No. WR71050115



Between



Lucent Technologies Inc.



And



Celestica Corporation



					
	 	 	 	 	 
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Table of Contents




	 	 	 
	SECTION I — OPERATIONAL TERMS

	 
	 	 
	ARTICLE 1

	 	EFFECTIVE PERIOD OF AGREEMENT
	 
	 	 
	ARTICLE 2

	 	BUSINESS RELATIONSHIP; GUIDING PRINCIPLES; COOPERATION
	 
	 	 
	ARTICLE 3

	 	PRODUCTS AND COMMERCIALLY PURCHASED ITEMS
	 
	 	 
	ARTICLE 4

	 	SERVICES
	 
	 	 
	ARTICLE 5

	 	EXCLUSIVE RIGHT TO PROVIDE MOBILITY PRODUCT REQUIREMENTS
	 
	 	 
	ARTICLE 6

	 	SUPPLIER COMPENSATION
	 
	 	 
	ARTICLE 7

	 	PAYMENT TERMS
	 
	 	 
	ARTICLE 8

	 	TRANSFER OF TITLE AND RISK OF LOSS/DELIVERY TERMS
	 
	 	 
	ARTICLE 9

	 	PURCHASE ORDERS
	 
	 	 
	ARTICLE 10

	 	DELIVERY/ FLEXIBLE DELIVERY ARRANGEMENTS/LATE DELIVERY
	 
	 	 
	ARTICLE 11

	 	PERFORMANCE METRICS AND PERFORMANCE METRICS DEFAULT RESOLUTION PROCESS; “PAY FOR PERFORMANCE”
PROGRAM
	 
	 	 
	ARTICLE 12

	 	EXCESS AND OBSOLETE MATERIAL AND FINISHED GOODS INVENTORY
	 
	 	 
	ARTICLE 13

	 	MATERIAL PROCUREMENT BY SUPPLIER
	 
	 	 
	ARTICLE 14

	 	PURCHASE OF GOODS AND SERVICES BY SUPPLIER UTILIZING COMPANY’S PRICING
	 
	 	 
	ARTICLE 15

	 	PRODUCT FORECASTING AND CAPACITY PLANNING
	 
	 	 
	ARTICLE 16

	 	EMERGENCY BACKUP MANUFACTURING PLAN
	 
	 	 
	ARTICLE 17

	 	NEW PRODUCT INTRODUCTION AND TARGET COSTING
	 
	 	 
	ARTICLE 18

	 	ELECTRONIC COMMERCE
	 
	 	 
	ARTICLE 19

	 	SHIPPING
	 
	 	 
	ARTICLE 20

	 	INTENTIONALLY DELETED
	 
	 	 
	ARTICLE 21

	 	QUALITY
	 
	 	 
	ARTICLE 22

	 	WARRANTY
	 
	 	 
	ARTICLE 23

	 	REPAIRS NOT COVERED UNDER SUPPLIER’S WARRANTY
	 
	 	 
	ARTICLE 24

	 	SCRAP PROCEDURES
	 
	 	 
	ARTICLE 25

	 	QUARTERLY PERFORMANCE REVIEW PROCESS
	 
	 	 
	ARTICLE 26

	 	NOTICES
	 
	 	 
	ARTICLE 27

	 	DISPUTE RESOLUTION PROCESS






					
	 	 	 	 	 
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	SECTION II — GENERAL TERMS

	 
	 	 
	ARTICLE 28

	 	ASSIGNMENT AND SUBCONTRACTING
	 
	 	 
	ARTICLE 29

	 	ATTENDANCE AT SUPPLIER’S FACILITY
	 
	 	 
	ARTICLE 30

	 	AUDIT
	 
	 	 
	ARTICLE 31

	 	BANKRUPTCY AND TERMINATION FOR FINANCIAL INSECURITY
	 
	 	 
	ARTICLE 32

	 	CHOICE OF LAW
	 
	 	 
	ARTICLE 33

	 	COMPANY RESPONSIBILITIES
	 
	 	 
	ARTICLE 34

	 	COMPLIANCE WITH LAWS
	 
	 	 
	ARTICLE 35

	 	CONFIDENTIAL INFORMATION
	 
	 	 
	ARTICLE 36

	 	DEFAULT
	 
	 	 
	ARTICLE 37

	 	DEVELOPED INFORMATION AND INVENTIONS
	 
	 	 
	ARTICLE 38

	 	DOCUMENTATION NEEDED FOR PREFERENTIAL DUTY TREATMENT
	 
	 	 
	ARTICLE 39

	 	DUTY DRAWBACK
	 
	 	 
	ARTICLE 40

	 	ENVIRONMENTAL MANAGEMENT SYSTEMS
	 
	 	 
	ARTICLE 41

	 	ENVIRONMENTALLY HAZARDOUS SUBSTANCES
	 
	 	 
	ARTICLE 42

	 	EXPORT CONTROL
	 
	 	 
	ARTICLE 43

	 	FORCE MAJEURE
	 
	 	 
	ARTICLE 44

	 	IDENTIFICATION
	 
	 	 
	ARTICLE 45

	 	IMPLEADER
	 
	 	 
	ARTICLE 46

	 	INDEMNITY
	 
	 	 
	ARTICLE 47

	 	INFRINGEMENT
	 
	 	 
	ARTICLE 48

	 	INSURANCE
	 
	 	 
	ARTICLE 49

	 	INVOICING FOR PRODUCTS OR COMMERCIALLY PURCHASED ITEMS
	 
	 	 
	ARTICLE 50

	 	INVOICING FOR SERVICES
	 
	 	 
	ARTICLE 51

	 	LIMITATION OF LIABILITY






					
	 	 	 	 	 
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Contract No. WR71050115



	 	 	 
	ARTICLE 52

	 	LIQUIDATED DAMAGES
	 
	 	 
	ARTICLE 53

	 	MANUFACTURING RIGHTS
	 
	 	 
	ARTICLE 54

	 	MARKING
	 
	 	 
	ARTICLE 55

	 	MINORITY, WOMEN, AND DISABLED VETERAN BUSINESS ENTERPRISES
	 
	 	 
	ARTICLE 56

	 	INTENTIONALLY DELETED
	 
	 	 
	ARTICLE 57

	 	OFFSET CREDITS
	 
	 	 
	ARTICLE 58

	 	OFFSETTING OF INVOICES
	 
	 	 
	ARTICLE 59

	 	ORDERING COMPANIES AND SUPPLIER ENTITIES
	 
	 	 
	ARTICLE 60

	 	INTENTIONALLY DELETED
	 
	 	 
	ARTICLE 61

	 	PACKING, LABELING AND SERIALIZATION
	 
	 	 
	ARTICLE 62

	 	POINT OF SALE AND POINT OF USE INFORMATION
	 
	 	 
	ARTICLE 63

	 	PROCESS CERTIFICATION
	 
	 	 
	ARTICLE 64

	 	INTENTIONALLY DELETED
	 
	 	 
	ARTICLE 65

	 	PRODUCT CONFORMANCE
	 
	 	 
	ARTICLE 66

	 	PRODUCT DOCUMENTATION
	 
	 	 
	ARTICLE 67

	 	PRODUCT/SPECIFICATION/PROCESS CHANGES
	 
	 	 
	ARTICLE 68

	 	PUBLICITY
	 
	 	 
	ARTICLE 69

	 	REGISTRATION AND REGISTRATION STANDARDS
	 
	 	 
	ARTICLE 70

	 	RELEASES VOID
	 
	 	 
	ARTICLE 71

	 	RULES OF CONSTRUCTION
	 
	 	 
	ARTICLE 72

	 	SEC DISCLOSURE
	 
	 	 
	ARTICLE 73

	 	SECTIONS AND HEADINGS
	 
	 	 
	ARTICLE 74

	 	SEVERABILITY
	 
	 	 
	ARTICLE 75

	 	SURVIVAL OF OBLIGATIONS
	 
	 	 
	ARTICLE 76

	 	TAXES, DUTIES AND INSURANCE CONTRIBUTIONS PAYABLE BY SUPPLIER
	 
	 	 
	ARTICLE 77

	 	TAXES PAYABLE BY COMPANY
	 
	 	 
	ARTICLE 78

	 	TEST SCOPE
	 
	 	 
	ARTICLE 79

	 	TITLE TO MATERIAL CONSIGNED BY COMPANY
	 
	 	 
	ARTICLE 80

	 	TITLE TO SPECIAL TOOLING AND EQUIPMENT OWNED BY COMPANY
	 
	 	 
	ARTICLE 81

	 	TOXIC SUBSTANCES AND PRODUCT HAZARDS
	 
	 	 
	ARTICLE 82

	 	WAIVER AND AMENDMENT






					
	 	 	 	 	 
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	ARTICLE 83

	 	WAIVER OF JURY TRIAL
	 
	 	 
	ARTICLE 84

	 	INDEMNIFICATION PROCEDURE
	 
	 	 
	ARTICLE 85

	 	ENTIRE AGREEMENT






					
	 	 	 	 	 
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List of Attachments



The following attachments are hereby made part of this Agreement:




Attachment A Definitions




Attachment B Products and Initial Prices




Attachment B1 Commercially Purchased Items




Attachment C Manufacturer Per Unit Pricing Formula Summary




Attachment D Cost Savings Submittal Form:




Attachment E Supplier Service Fees




Attachment F Example Product Plan




Attachment G Flexible Delivery Terms




Attachment H Return And Repair Services




Attachment I Performance Metrics




Attachment J Intentionally Deleted




Attachment K1 Notice of Commercial Engagement




Attachment K2 Company Controlled Material Information




Attachment K3 Material Authorization Letter




Attachment L MWDVBE Definitions




Attachment M Warehousing Services




Attachment N New Product Introduction (NPI) Process




Attachment O Ordering Company Acknowledgement And Agreement




Attachment P Price Administrative Process




Attachment Q Inventory Management Operating Principles




					
	 	 	 	 	 
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Contract No. WR71050115


THIS EXTERNAL MANUFACTURING SERVICES SUPPLY AGREEMENT (“Agreement”) is entered into as of the last
date signed by the parties with effect as of April 1, 2005 (“Effective Date”) by Lucent
Technologies Inc., a Delaware corporation having a principal place of business at 600 Mountain
Avenue, Murray Hill, New Jersey 07974 ("Company") and Celestica Corporation, a Delaware corporation
having a principal place of business at 5325 Hellyer Avenue, San Jose, California 95138
(“Supplier”).



WHEREAS Company and the Ordering Companies desire to purchase from Supplier and its Affiliates
certain Products, Commercially Purchased Items and Services (each as defined below);



NOW THEREFORE, in exchange for mutually beneficial consideration, the sufficiency of which is
hereby acknowledged, Company and Supplier agree as follows:




SECTION I — OPERATIONAL TERMS




ARTICLE 1 — EFFECTIVE PERIOD OF AGREEMENT





	1.1	 	The effective period of this Agreement shall commence on the Effective Date and shall, except
as otherwise provided in this Agreement, continue in effect to and including March 31, 2008
(the “Initial Term”). After the Initial Term, this Agreement shall automatically be renewed
for successive periods of twelve (12) months each (each a “Renewal Term”) on the same
applicable terms and conditions, unless either party elects to terminate this Agreement in
accordance with Article 1.2 by delivering to the other party a written termination notice not
less than one hundred and eighty (180) days prior to the end of the Initial Term or Renewal
Term, as the case may be. The Initial Term, as it may be extended in accordance with this
Article 1.1, is hereinafter referred to as the “Term”.






	1.2	 	If a termination notice is delivered pursuant to Article 1.1, Supplier shall co-operate fully
with Company to effect the transfer of the manufacturing of the Products from Supplier to
Company, or a third party designated by Company, in order to help minimize any potential
disruption of continuity of supply of Products. Supplier shall provide all commercially
reasonable termination assistance (“Termination Assistance”) requested by Company to allow for
the orderly transfer of the manufacturing of the Products from Supplier to Company or such
third party, as the case may be. In the event that such Termination Assistance is required
beyond the termination date pursuant to Article 1.1, the parties shall, acting reasonably and
in good faith, continue to provide such Termination Assistance and extend the Term of this
Agreement on such appropriate terms as the parties may agree for one or more thirty (30) day
periods, until such time as the Termination Assistance is no longer needed by Company.






	1.3	 	Any termination or expiration of this Agreement shall not affect either party’s outstanding
obligations or payments due hereunder prior to such termination or expiration, nor shall it
prejudice any other remedies that the parties may have under this Agreement for events,
actions or occurrences prior to such date.






	1.4	 	All defined terms are as set forth in Attachment A to this Agreement or as defined elsewhere
in this Agreement.





ARTICLE 2 — BUSINESS RELATIONSHIP; GUIDING PRINCIPLES; COOPERATION





	2.1	 	Company and Supplier acknowledge that a strategic relationship is required in order to ensure
the ongoing continuity of supply of Products and services to Company’s end customers. To that
end, the parties have established a Strategic Alliance Team which will meet on a quarterly
basis, coinciding with the Quarterly Performance Review Process, as described in Article 25.
In addition, Supplier shall appoint a senior operations executive and the parties shall agree
on a governance model for managing the relationship including accountability metrics that the
senior operations executive shall meet for Company and Supplier.




					
	 	 	 	 	 
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	2.2	 	It will be the responsibility of the Strategic Alliance Team to establish and document
detailed process and information flows, procedures, and guidelines applicable to the process
management required to facilitate timely delivery of Products, Commercially Purchased Items
and Services as described in this Agreement.






	2.3	 	During the Term, Supplier shall make one of its (or its Affiliates’) employees available to
the Company, for purposes of participating on Company’s customer bid and proposal team and to
collaborate on special pricing arrangements and extended warranty and payment terms where
appropriate in the context of Company’s bids for business from potential end-customers.
Notwithstanding the foregoing, nothing in this Article 2.3, except as may be expressly agreed
by Supplier in writing on a case-by-case basis, shall obligate Supplier to manufacture
Products on any terms different from those set out in this Agreement.






	2.4	 	It is the intention of the parties that the relationship of Supplier to Company shall be that
of an independent third-party supplier. Neither party intends to create a partnership, joint
venture or similar type of legal entity or any entity of any kind, implied or direct.





ARTICLE 3 — PRODUCTS AND COMMERCIALLY PURCHASED ITEMS





	3.1	 	For the purposes of this Agreement, the term “Products” or “Product” shall mean Mobility
Products or a Mobility Product, as applicable, as defined in Attachment A.






	3.2	 	In addition to providing Company with Products pursuant to this Agreement, Company may also
ask Supplier to provide commercially purchased items (“Commercially Purchased Items”).
Commercially Purchased Items include but shall not be limited to the various types of
components, raw materials, cables, and cable assemblies listed in Attachment B1, for which
Supplier adds no customization but purchases such Commercially Purchased Items solely for
resale to Company. The parties may agree in the future that Supplier shall provide to
Company additional Commercially Purchased Items pursuant to this Agreement. Attachment B1
shall be deemed to include all such additional Commercially Purchased Items.






	3.3	 	Products shall be identified by Comcode and manufactured in accordance with the
Specifications identified and incorporated into the applicable Orders. Commercially Purchased
Items shall also be identified by Comcode.





ARTICLE 4 — SERVICES





	4.1	 	Unless otherwise agreed to between the parties, the term “Service” or “Services” refers to
Services in respect of the “Mobility” Product sector and includes but shall not be limited to
development, design, engineering, out of Warranty repair, value-engineering, prototyping,
logistics, fulfillment, distribution, other activities identified as a Service in this
Agreement, as well as other services in respect of the “Mobility” Product sector as Company
may request and Supplier may provide from time to time that may be described in more detail in
various statements of work or Orders. Unless otherwise agreed to between the parties,
Supplier shall perform the Services identified in Attachment E (the “Basic Services”) in
accordance with the Service fees shown in Attachment E. Out-of-Warranty repair services shall
be provided pursuant to Attachment H. Warehousing services shall be provided pursuant to
Attachment M. If Company requires the provision of any Service then, unless Company is
prohibited from doing so pursuant to a binding contractual obligation with an arm’s length
third party in effect on the date hereof, Supplier shall have the right of first refusal to
perform such Service for Company provided that Supplier has the capability to perform such
Service. “Right of first refusal” is defined as follows in this paragraph: Company shall
afford Supplier with an opportunity to submit a quote (a “Quote”) for the provision of such
Service. If the Quote submitted by Supplier is, in the aggregate, competitive with a bona
fide quote for the provision of such Service submitted by a third party for comparable levels
of quality, service and performance (a “Competing Quote”), Company shall award (or shall cause
such Affiliate to award) the provision of such Service to Supplier on the




					
	 	 	 	 	 
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	 	 	terms and conditions of this Agreement and any other terms as the parties may agree. If
Supplier’s Quote is not competitive with the Competing Quote, Company shall so advise
Supplier, shall provide Supplier with all information reasonably requested by Supplier with
respect to the Competing Quote, subject to applicable proprietary information restrictions,
and shall afford Supplier the opportunity to revise and re-submit the Quote (a “Revised
Quote”) to Company within 10 days of delivery of the notice of the Competing Quote to
Supplier and Company. If the Revised Quote is, in the aggregate, competitive with the
Competing Quote, Company shall award (or cause such Affiliate to award) the provision of
such Service to Supplier on the terms and conditions of this Agreement and any other terms
as the parties may agree. If the Revised Quote is not, in the aggregate, competitive with
the Competing Quote, or if Supplier does not submit a Revised Quote within 10 days of
receiving notice from Company of the Competing Quote, Company (or such Affiliate) may award
the provision of such Service to the third party which submitted the Competing Quote on
terms no more favourable to such third party than those set out in the Competing Quote.
Nothing in this Article 4.1 shall prohibit Company or any of its Affiliates from performing
any Service for itself.





ARTICLE 5 — EXCLUSIVE RIGHT TO PROVIDE MOBILITY PRODUCT REQUIREMENTS





	5.1	 	During the Term, Supplier and its Affiliates shall have the exclusive right to manufacture
and provide Company’s and its Affiliates’ requirements for Existing Mobility Products and all
Successor Products and New Products, to the exclusion of all other persons, including without
limitation, Company and its Affiliates, provided however, that the foregoing shall not apply
to the extent that: 1) the [ *** ] is excluded from this Agreement; 2)
Company or its Affiliates do not have manufacturing rights for such Successor Product or New
Product; 3) Company or its Affiliates manufacture itself such Existing Mobility Product on the
date hereof and elects to continue to manufacture such Existing Mobility Product and any
Successor Product to such Existing Mobility Product; or 4) Company or its Affiliates elects to
manufacture itself any New Product, provided that if at any time during the Term Company or
its Affiliates elects to have any such Products as defined in (3) and (4) above manufactured
by a third party, Supplier shall have the exclusive right to manufacture such Product.





ARTICLE 6 — SUPPLIER COMPENSATION





	6.1	 	The parties acknowledge that the price paid by Company and its Affiliates to Supplier and its
Affiliates for the Existing Mobility Products during the period commencing on the Effective
Date to and including the date hereof, were determined based on the prices set out in
Attachment B (the “Initial Prices”), as reduced by the percentages specified below for the
applicable Price Reduction Periods (as defined below). Company represents to Supplier that
the Initial Price for each Product as set forth in Attachment B is the same as the price paid
by Company to a third party manufacturer for such Product immediately prior to the Effective
Date. Subject to Articles 6.2, 6.3 and 6.4, commencing on October 1, 2005, and for each
period referred to in the table below (each, a “Price Reduction Period”), the then current
prices for Mobility Products (including, for certainty, Existing Products, Successor Products
and New Products introduced after the date hereof) shall be reduced by the percentage
specified below, in each case with effect as of the effective date set out below:






			
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	 	 	[ *** ]





     For purposes of this Article 6.1, the percentages in the table above in the column entitled
“UMTS” apply to Products identified as “UMTS” in Attachment B, together with their Successor
Products, and the percentages in the table above in the column entitled “AMPS” apply to all
other Mobility Products, including, for certainty, switching packs. The parties shall
mutually agree on the Products to be defined as UMTS on or prior to December 15, 2005.




	6.2	 	Notwithstanding Article 6.1, during the Price Reduction Period commencing [ *** ], the
parties shall evaluate the financial impact to Supplier of the price reductions set out in
Article 6.1, and shall mutually agree upon the effective dates for the price reductions for
each of the Price Reduction Periods commencing on or after [ *** ] in order to offset the
impact to Supplier of such price reductions in light of the impact of Supplier’s on hand
Material inventory on its Material costs. In addition, at least six months prior to each of [
*** ] and [ *** ], the parties shall review and discuss the price reduction percentages set
out in Article 6.1 in light of then current market conditions and the then current end market
price erosion curve for Mobility Products.






	6.3	 	If during any two consecutive Price Reduction Periods the aggregate gross revenues earned by
Supplier and its Affiliates from the manufacture of Existing Mobility Products, Successor
Products, and New Products under this Agreement are less than [ *** ] per Price Reduction
Period, the parties shall negotiate in good faith a decrease in the price reduction
percentages referred to in Article 6.1 for an equal number of subsequent Price Reduction
Periods, determined in light of the impact of such lower revenues on Supplier’s and its
Affiliates’ labor efficiencies and facility utilization costs. Such reduced price reduction
percentages shall apply until such time as Supplier’s and its Affiliates’ aggregate gross
revenues from the manufacture of Existing Mobility Products, Successor Products, and New
Products under this Agreement for any two consecutive Price Reduction Periods are equal to or
exceed [ *** ] per Price Reduction Period, after which time the price reduction percentages
referred to in Article 6.1 shall once again apply.






	6.4	 	If during any two consecutive Price Reduction Periods the aggregate gross revenues earned by
Supplier and its Affiliates from the manufacture of Existing Mobility Products, Successor
Products, and New Products under this Agreement are greater than [ *** ] per Price Reduction
Period, the parties shall negotiate in good faith an increase in the price reduction
percentages referred to in Article 6.1 for an equal number of subsequent Price Reduction
Periods, determined in light of the impact of such higher revenues on Supplier’s and its
Affiliates’ labor efficiencies and facility utilization costs. Such increased price reduction
percentages shall apply until Supplier’s and its Affiliates’ aggregate gross revenues from the
manufacture of Existing Mobility Products, Successor Products, and New Products under this
Agreement for any two consecutive Price Reduction Periods are less than [ *** ] per Price
Reduction Period, after which time the price reduction percentages referred to in Article 6.1
shall once again apply.








			
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	6.5	 	Company agrees to take reasonable commercial efforts to negotiate reductions in prices of
Company Controlled Material by percentages equal to the price reduction percentages in effect
in the relevant Price Reduction Periods under Article 6.1 (the “Target Reduction Rates”).
Until [ *** ], Company shall not accept any reduction in the price of Company Controlled
Material in any form other than direct decreases in the unit price of such Company Controlled
Material, including, without limitation, in the form of rebates, step discounting, or
application of discounts to other Materials. After the end of each Price Reduction Period
commencing on or after [ *** ], the parties shall determine the WAPRP (as defined below) for
all Company Controlled Materials purchased by Supplier and its Affiliates in such Price
Reduction Period. If for any Price Reduction Period commencing on or after [ *** ]:






	 	(a)	 	the WAPRP for Company Controlled Materials was less than the Target Reduction
Rate, no later than 15 Business Days after determination of the WAPRP for such Price
Reduction Period Company shall pay to Supplier an amount equal to the difference
between the Target Reduction Rate and the Company Controlled Material savings in
dollars; or






	 	(b)	 	the WAPRP for Company Controlled Materials exceeds the Target Reduction Rate,
no later than 15 Business Days after determination of the WAPRP for such Price
Reduction Period Supplier shall pay to Company an amount equal to the amount by which
the Company Controlled Material savings in dollars exceeded the Target Reduction Rate.






	 	 	For purposes hereof, the “WAPRP” for any Price Reduction Period means the weighted average
of the percentage reductions of all prices for the Company Controlled Materials (as
confirmed by Supplier) purchased by Supplier and its Affiliates during such Price Reduction
Period, by comparison to the prices for such Company Controlled Materials in the immediately
preceding Price Reduction Period including the price effect of any Material Value
Propositions as defined in Article 6.12 implemented for Company Controlled Material. WAPRP
shall be calculated as provided below:





[ *** ]







			
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[ *** ]





	6.6	 	On or prior to each Price Reduction Period commencing on or after [ *** ], Supplier shall
prepare and deliver to Company a summary statement and supporting details (the “Recovery
Amount Statement”) setting out the calculation of the amount to be paid by Company to Supplier
pursuant to this Article 6.6 (each, a “Recovery Amount”) in connection with the price
reduction to take effect for such Price Reduction Period pursuant to Article 6.1 (as modified
pursuant to Articles 6.2, 6.3 and 6.4) (each, a “Price Change”). In the event that Supplier
does not prepare and deliver a Recovery Amount Statement within ten (10) Business Days of the
first day of a Price Reduction Period, Supplier shall not be entitled to submit a Recovery
Amount Statement nor recover any finished goods inventory revaluation amounts due under this
Article in respect of such Price Change. Company shall be entitled to object to the finished
goods inventory revaluation calculations in the Recovery Amount Statement within five (5) days
of the delivery thereof by Supplier. In the event that Company does not so notify Supplier of
its objection to the Recovery Amount Statement within such five-day period, the Recovery
Amount Statement as delivered by Supplier to Company shall be final and binding on Company.
In the event that Company objects to the finished goods inventory revaluation calculation in
the Recovery Amount Statement in respect of any Price Change within such five-day period, the
parties shall attempt to resolve any such objection within a further five (5) days from the
date on which Company raises the objection. If the parties are unable to resolve such
objection within such additional five-day period, the dispute shall be escalated to the
Strategic Alliance Team for resolution. If the Strategic Alliance Team is unable to resolve
the dispute within thirty (30) days of the dispute being submitted to it, the Strategic
Alliance Team may either (i) select an auditor from a national certified public accounting
firm, other than Supplier’s or Company’s external auditors, who shall resolve the dispute
within five (5) days of being retained and, if necessary, the finished goods inventory
revaluation calculation will be adjusted in accordance with such auditors’ decision, or (ii)
refer the dispute to the dispute resolution process set forth in Article 27 (provided that the
dispute shall be referred directly to the Executive Committee of the Strategic Alliance Team
pursuant to Article 27.1(b)). On the later to occur of (i) the fifth day after its receipt of
the Recovery Amount Statement; and (ii) the date on which any objection by Company is resolved
or determined as aforesaid, Company shall pay the Recovery Amount for such Price Reduction
Period to Supplier.








			
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	6.7	 	For purposes of Section 6.6, the Recovery Amount for a Price Reduction Period shall be equal
to the aggregate of the Inventory Buy-Down Cost for each finished good Product owned by
Supplier and its Affiliates on the first day of such Price Reduction Period. For purposes
hereof, the “Inventory Buy-Down Cost” for a Product for a Price Reduction Period shall mean an
amount equal to (x) the difference in price for such Product at the end of the immediately
preceding Price Reduction Period and immediately following the Price Change to occur in such
Price Reduction Period, multiplied by (y) the quantity of such Product owned by Supplier and
its Affiliates constituting finished goods inventory resulting from Company’s requirements,
forecast fluctuations and manufacturing schedules on the first day of such Price Reduction
Period. Finished good Products may be at Supplier’s site, Supplier-owned hub either at a
third party location or at a Company location, or in transit.






	6.8	 	The initial price for each Successor Product or New Product introduced by Company or any of
its Affiliates after the date hereof and manufactured by Supplier or its Affiliates under this
Agreement shall be calculated in accordance with the Manufacturer Per Unit Pricing Formula set
out in Attachment C, by using the rates set out in Article 6.9 (the “Manufacturer Per Unit
Pricing Formula Rates”), which vary based on the location of manufacture of the relevant
Product. Unless otherwise agreed by the parties, for each of the two Price Reduction Periods
immediately following the Price Reduction Period in which a New Product or Successor Product
receives production approval by Company, the price for such New Product or Successor Product
shall be recalculated using the Manufacturer Per Unit Pricing Formula and the Manufacturer Per
Unit Pricing Formula Rates. From and after the third Price Reduction Period after the Price
Reduction Period in which a New Product or Successor Product receives production approval by
Company, the then current price for such New Product or Successor Product shall be subject to
the percentage price reductions set out in Article 6.1.






	6.9	 	The Manufacturer Per Unit Pricing Formula Rates for Products manufactured in Suzhou, Peoples’
Republic of China, Thailand, Rajecko, Czech Republic, and Brazil are as set out below:
	 
	 	 	[ *** ]
	 
	 	 	The Manufacturer Per Unit Pricing Formula Rates for cabinets that are Products and are
manufactured in Mexico are as set out below, and vary depending on the applicable Product
program:
	 
	 	 	[ *** ]








			
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	 	 	[ *** ]






	6.10	 	On a [ *** ] basis from the Effective Date of this Agreement, pricing will be adjusted on
a prospective, forward looking basis to capture any changes in foreign exchange rates to the U.S.
dollar in countries where Supplier incurs local currency costs in providing manufacturing and
repair Services for Mobility Products, including New and Successor Products, and Mobility Switching
Packs for Company. The intent of this foreign exchange pricing adjustment is to capture the
changes in price due to foreign exchange variances on the costs that are incurred in a local
currency other than U.S. dollars.
	 
	 	 	The pricing adjustment related to foreign exchange (“Exchange Rate Adjustment Percentage”) for
manufacturing and repair Services will be calculated and implemented in the following way:
	 
	 	 	On a [ *** ] basis from the Effective Date, the Exchange Rate Adjustment Percentage will apply
for the next [ *** ] period based on the following formula:






	 	(i)	 	the percentage variance in the Exchange Rate for each non-U.S. dollar currency from the
“Original FX Average” to the “Current FX Average” as described below. This percentage
variance will be calculated by taking the “Original FX Average” to 1 U.S. dollar less “Current
FX Average” to 1 U.S. dollar divided by the Current FX Average” to 1 U.S. dollar (the
“Exchange Rate Variance”). For example, a strengthening of a foreign currency to U.S. dollar
will result in an increase in price (positive adjustment) as shown in the example below.






	 	 	Multiplied by:






	 	(ii)	 	“Percentage of Price Transacted in the Local Currency” as defined below.






	 	 	Once set, the Exchange Rate Adjustment Percentage shall be fixed for the subsequent [ *** ] period
and shall be used to revise upwards if positive, and downwards if negative, the quarterly unit
pricing in effect prior to applying any Exchange Rate adjustments to such Product pricing for
manufacturing and repair Services. The Exchange Rate Adjustment Percentage will be applicable from
the first day of the [ *** ] period on all Products pulled from a hub or shipped directly to
Company or repaired by Supplier during that period, regardless of purchase order date. For
certainty, the Exchange Rate Adjustment Percentage shall be implemented for manufactured Products
on the Effective Date of the Price Reductions as defined in Article 6.1 for each pricing period,
commencing on [ *** ].The Exchange Rate Adjustment Percentage will be applied to the unit
pricing in effect during that period and will be incorporated into the Product price for invoicing
purposes.
	 
	 	 	The Exchange Rate Adjustment Percentage is calculated based on the local currency of the country
from which the Product or repair Service is shipped or rendered except that the [ *** ] that are provided to Company by Supplier from its facility in Toronto, Canada will be deemed
to be manufactured in Mexico for purposes of calculating this Exchange Rate Adjustment since the
majority of value add costs for [ *** ] are incurred in Mexico.





[ *** ]







			
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[ *** ]



“Original FX Average” shall mean the Exchange Rate calculated in the period beginning [ *** ].



“Current FX Average” shall mean the current calculation of the Exchange Rate. Such calculation
shall be completed in the month immediately preceding the beginning of a semi-annual period.



“Exchange Rate” shall mean the exchange rate for the non-U.S. dollar currencies at the daily
mid-point spot exchange rates taken as an average over the six (6) Business Days of the month
immediately prior to the beginning of the quarter as such rates appear on the website of the US
Federal Reserve Board http://www.federalreserve.gov/releases/ for that day.



“Business Day” shall mean Monday to Friday excluding local public holidays in the U.S.



“Percentage of Price Transacted in the Local Currency” — The parties agree to use a global average
of (i) [ *** ] of all Product prices for manufacturing and (ii) a percentage to be agreed upon by
the parties prior to the [ *** ] pricing period for all prices for repair
Services (“Global Averages”). These Global Averages shall apply to all non-U.S. dollar currencies
as they relate to the Products and repair Services covered under this Agreement. The Global
Average for manufacturing is based on an assumption that [ *** ] of Mobility Products, including
the Mobility Switching Packs, are manufactured in Supplier’s Asian facilities. If this rate
changes, the parties agree to review this Global Average. If the Global Average for repair
Services is not agreed upon prior to [ *** ], any resulting delay in
implementation of the







			
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“Exchange Rate Adjustment Percentage” for repair Services will result in a subsequent true-up
adjustment to incorporate the “Exchange Rate Adjustment Percentage” for repair Services as if it
were in effect as of the first day of such [ *** ] period.





	6.11	 	Supplier agrees to keep abreast of major developments in Supplier’s industry and to advise
Company of any developments which might affect the Product or processes under this Agreement.
Prior to implementing any cost improvements through value-engineering proposals, Material
Value Propositions (as defined in Article 6.12) or otherwise which are developed or
recommended by Supplier, Supplier shall submit such recommendations to Company in writing,
using the formal written communication process outlined in Attachment D. This formal written
communication will address: (a) description of Supplier’s cost reduction recommendation; (b)
the feature or advantage of Supplier’s cost reduction recommendation; (c) financial impact of
Supplier’s cost reduction recommendation to the overall operation; (d) process flow and time
line for Supplier’s cost reduction recommendation implementation; (e) proposed sharing of the
financial expense from the implementation of Supplier’s cost reduction recommendation (other
than Supplier or third party costs where such third party is under Supplier’s control
associated with implementation of a Material Value Proposition which shall be sole
responsibility of Supplier), and (f) proposed sharing of cost reductions (other than cost
reductions arising out of Material Value Propositions the benefit of which shall accrue solely
to Supplier) arising from the implementation of Supplier’s cost reduction recommendation.
Company shall use reasonable commercial effort to review and respond to Supplier’s
recommendation with initial feedback, no later than ten (10) days after receipt of Supplier’s
written recommendation. Company shall notify Supplier in writing whether it approves such
recommendations within a reasonable time period given the volume and complexity of the cost
reduction recommendations submitted by Supplier. Company shall not be entitled to
unreasonably withhold its approval to any cost improvements recommended or developed by
Supplier. If Company unreasonably withholds its approval to any such recommendations, Company
shall be deemed not to have consented to such recommendations, and Supplier shall have the
right, notwithstanding the price reduction percentage then in effect and anything else to the
contrary in this Agreement, to reduce the reduction in Price for the affected Products by an
amount that represents the cost savings foregone by virtue of Company not accepting the cost
reduction recommendation. Any disputes arising under this Article 6.11 shall be referred to
the dispute resolution mechanism in Article 27. Once Supplier and Company have agreed upon
the items referred to in (a) to (f) of this Article 6.11, Supplier shall proceed to implement
such cost reduction recommendation.






	6.12	 	 






	 	1.	 	Notwithstanding Article 6.11, no cost reductions realized with respect to any
Products to which the price reductions set out in Article 6.1 apply shall entitle
Company or any Affiliate to any further reduction in Product prices, if such cost
reductions are realized as a result of the reduction in Material costs due to (i) price
negotiations with the Material vendors, (ii) compatible Material substitutions
requiring no other change in Product, or (iii) amendments to the Approved Vendor List,
in each case, whether conducted or effected by Company or Supplier (collectively,
“Material Value Propositions”).
	 
	 	2.	 	Company and Supplier will form design for cost reduction teams for each Product
line with the objective of meeting market driven target cost for key Products. Company
will be responsible for developing target cost roadmaps for key Products based on
market price erosion expected in Company’s end market. Design for cost reduction teams
will review potential cost reduction ideas for feasibility and identify opportunities
for Supplier to perform design Services on a project-by-project basis. For each
project where Company determines the opportunity for Supplier to perform design
Services is significant, the parties shall structure Supplier’s compensation for the
design Services in the form of a sharing of the cost reduction realized from the
project following the process defined in Article 6.15. For certainty, the Supplier’s
portion of any such cost reduction opportunities may be credited towards but will not
increase Supplier’s Percent Reduction obligations set out in Article 6.1, except as
defined in Article 6.12.3 below. The parties will negotiate a separate addendum to
this Agreement to set out design terms and conditions and a






			
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	 	 	 	compensation model for value engineering opportunities within ninety (90) days of
signing this Agreement.






	 	3.	 	Except for Material Value Propositions, cost reductions with respect to any
Product realized as a result of engineering efforts developed and performed solely by
Company will result in a commensurate reduction in the Product price upon
implementation, following Supplier’s recovery of any implementation costs incurred by
Supplier, and will be in addition to any applicable price reductions set out in Article
6.1 except to the extent the parties have agreed to a sharing of the cost reduction
realized.






	6.13	 	Premium Expedited Services shall be invoiced at cost from Supplier to Company monthly on a
per Product basis. Supplier agrees that no expenses associated with Premium Expedited Services
shall be incurred by Supplier without prior written approval from Company. Supplier agrees not
to pass through to Company those expenses associated with PES if Company’s Orders are within
the upside flexibility delivery limits defined in Attachment G. Purchase Price Variance shall
be invoiced at price calculated in accordance with the Manufacturer Per Unit Pricing Formula
set forth in Attachment C and in accordance with the rate structures set out in Article 6.9.
However if PPV is solely due to the expediting of Orders within the Flexibility Delivery Terms
defined in Attachment G, these PPV costs shall not be passed through to Company.






	6.14	 	Supplier agrees to price Commercially Purchased Items in accordance with the Manufacturer Per
Unit Pricing Formula set forth in Attachment C and in accordance with the rate structures
shown in Article 6.9.






	6.15	 	Company may from time to time submit to Supplier requests for proposals to perform Services
in accordance with Article 4.1. Such requests for proposals shall reference the terms and
conditions of this Agreement and include but not be limited to such information as statements
of work, required milestones, deliverables, methods of compensation and the period of time in
which Supplier will have to respond to Company’s request for proposal. Where fees for such
Services do not already exist in Attachment E, Company and Supplier shall negotiate
appropriate fees in good faith and such fees will be reflected in an Order for such Services
prior to the commencement of any work by Supplier.






	6.16	 	Company requires that all Non-Recurring Engineering charges be itemized, with Supplier
acknowledging that no Profit shall be accrued for NRE charges for hard tooling (such as
stencils, fixtures, backing plates, etc.). NRE charges for such tooling shall be invoiced at
Supplier’s actual cost for such tooling and in accordance with Article 50.






	6.17	 	Company acknowledges and agrees that all information provided by Supplier to Company, and
marked by Supplier as Supplier proprietary and confidential information in connection with
Product prices, including without limitation, in connection with Attachment C, and all
information derived therefrom by Company (collectively, the “Pricing Information”) shall be
Supplier Proprietary Information and deemed to be Confidential Information pursuant to Article
35. Company shall use Pricing Information only for the purpose of establishing and verifying
the price of a Product and Company shall share such Pricing Information only with those
employees within Company’s supply chain management organization who have an expressed need to
know such information in order to perform their job function within Company and Company will
instruct such individuals regarding their obligation to maintain such Pricing Information as
confidential. For certainty, Company will not be in breach of its obligations under this
Article 6.17 to the extent that such information was disclosed by Supplier to persons at
Company as described herein; provided that such information continues to be Confidential
Information and subject to Article 35.





ARTICLE 7 — PAYMENT TERMS





	7.1	 	All payments by Company to Supplier under this Agreement shall be in US dollars, unless
otherwise specified in the applicable Order and provided that the parties have entered into a




					
	 	 	 	 	 
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	 	 	foreign exchange agreement on mutually agreeable terms. Payment terms shall be net [ *** ]
from the date of invoice from Supplier, unless otherwise agreed by the parties.






	7.2	 	If Company fails to make a payment to Supplier in respect of an invoice by the date payment
is due under such invoice, Supplier may, in addition to its other rights and remedies, charge
Company late payment charges on the overdue amount, at a rate of two percent (2%) per month,
charged from the date that such payment is due under such invoice to the date that payment is
received by Supplier from Company pursuant to Article 7.3.






	7.3	 	Supplier shall not charge Company for late payment charges until an invoice which is past
due has first been submitted by Supplier to the Strategic Alliance Team for review. The
Strategic Alliance Team shall review all outstanding invoices submitted to it by Supplier by
the fifth (5th) day of a month and confirm the amount of the outstanding invoices or resolve,
if any, any dispute concerning the amount of the invoices by the fifteenth (15th) day of such
month. Company shall pay all outstanding invoices, together with the applicable late payment
charges in respect of the unpaid amount of such invoices pursuant to this Article 7.3, within
five (5) days of the Strategic Alliance Team confirming the amount of the outstanding invoices
or resolving, if any, the amount of the disputed invoices.






	7.4	 	Throughout the Term of this Agreement, Supplier agrees to maintain EDI capabilities for
invoicing, and Company agrees to maintain EDI capabilities for payment of invoices.





ARTICLE 8 — TRANSFER OF TITLE AND RISK OF LOSS/DELIVERY TERMS; LOGISTICS





	8.1	 	Subject to the Flexible Delivery Terms set forth in Attachment G, and unless otherwise agreed
by the parties: (a) where an Orderable Item is required to be delivered by Supplier to
Company’s or its customer’s integration, repair or distribution center which is at the same
location as Supplier’s facility at which the relevant Product is manufactured or from which
the relevant Commercially Purchased Item is shipped, title and risk of loss and damage to such
Orderable Item shall transfer from Supplier to Company at such time as such Orderable Item has
been delivered by Supplier to the designated receiving area in the integration, repair or
distribution center; (b) in all other cases, title and risk of loss and damage to Orderable
Items shall transfer from Supplier to Company at such time as the relevant Orderable Item has
been delivered by Supplier, at the shipping dock at the facility at which the relevant Product
is manufactured or from which the relevant Commercially Purchased Item is shipped, to Company
or its customer or to Company’s or its customer’s specified carrier, FCA (Incoterms 2000).






	8.2	 	Supplier shall designate one of its employees as a point of contact for Company’s domestic
and international shipment activities, and for Company’s lead logistics provider.






	8.3	 	The parties agree to establish a logistics council comprised of an equal number of
representatives of Supplier, Company and a lead logistics provider mutually agreed by Company
and Supplier, to jointly identify and pursue a means of reducing freight costs.






	8.4	 	Supplier will work with Company to identify opportunities to support Company’s trade
management and compliance processes, including opportunities to leverage Supplier’s existing
tools (e.g. TradeFlow) and existing processes. The fee and the scope of any Services that
arise as a result of Company’s trade management and compliance processes shall be mutually
agreed between Supplier and Company.






	8.5	 	The parties agree from time to time to discuss the establishment of regional stocking
locations at which Supplier will maintain Material and Products at levels mutually deemed
appropriate by the parties. For certainty, all Material and Products located at such regional stocking
locations shall be subject to the provisions of Article 12.







	***	 	 Portions of this page have been omitted pursuant to a Request for Confidential
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ARTICLE 9 — PURCHASE ORDERS





	9.1	 	The parties contemplate that Orders will be placed from time to time by Company and Ordering
Companies, incorporating by reference the terms and conditions of this Agreement. The
pre-printed terms and conditions found on the reverse side of Orders shall be excluded and
deemed deleted. Each Order may set forth the terms and conditions reflecting business
requirements unique to a particular ordering location. In the event of any contradiction
between the terms and conditions of this Agreement and the terms and conditions of an Order,
the terms and conditions of this Agreement shall supersede and override the terms and
conditions of such Order to the extent of such contradiction. Orders will describe in detail
the required Product, Commercially Purchased Item, and/or the Service to be provided by
Supplier and may include, without limitation, the following types of items: statements of
work, drawings, plans, designs, procedures, Specifications (Product, quality, design and
test), BOMs, methods of packaging, marking specifications, repair and return processes,
Flexible Delivery Terms, quantities of units or other equipment to be furnished by Company’s
ordering location, if any, delivery schedules and inspection criteria.






	9.2	 	Company may designate in an Order the particular Supplier facility where the subject Services
will be provided or the subject Product manufactured; provided however, no such designation of
any given facility will be valid unless each of Company and Supplier is reasonably satisfied
that the necessary manufacturing or other capabilities are in place at such facility and that
such facility has passed one or more of Company’s engineering quality evaluations.






	9.3	 	If a notice of rejection of an Order is not received by Company from Supplier within five (5)
Business Days from the date of the issuance thereof, such Order shall be deemed to have been
accepted by Supplier. However, in no event shall Supplier reject an Order due to Company’s
increase in Forecasted or unforecasted Product demand, including if such increase in demand is
in excess of the Flexible Delivery Term limits agreed upon by the parties. In such an event,
Supplier shall use reasonable commercial efforts to meet the delivery dates of such excess
Product, but the failure by Supplier to meet the delivery date requested in such an event
shall not be deemed (i) a breach by Supplier of its obligation to meet the delivery date
requested or (ii) to affect any measure of Supplier’s performance related to the requested
delivery hereunder; provided, however, once the parties agree upon a delivery date, delivery
performance shall be measured in accordance with this Agreement.






	9.4	 	Company may at any time during the course of Supplier’s manufacture of a Product, performance
of a Service, and/or supply of a Commercially Purchased Item require additions to or
deductions or deviations from (each, an “Order Change”) the Product, Commercially Purchased
Item and/or Service ordered. No Order Change shall be considered as an addition to or
deduction or deviation from the Product, Commercially Purchased Item and/or Service provided
by Supplier nor shall Supplier be entitled to any compensation for the Product, Commercially
Purchased Item and/or Service done pursuant to or in contemplation of such change, unless made
pursuant to a written Order Change issued by Company.






	9.5	 	Company may at any time terminate an Order for Commercially Purchased Items without cause, in
whole or in part. Upon notice of Order termination, Supplier agrees to stop work being
performed on the terminated Order consistent with the quantities on the Order being
terminated. In such an event, Company shall be liable to Supplier for (i) any cancellation
charges that Supplier incurs as a result of such termination and (ii) such Commercially
Purchased Item shall be deemed to be Excess Inventory and dealt with pursuant to Article 12.






	9.6	 	Company may at any time terminate an Order for Services without cause, in whole or in part,
upon written notice to Supplier. In such an event, Company’s liability shall be limited to
payment of the amount due for the Services performed up to and including the date on which
such notice of termination is received by Supplier from Company (which amount shall be
supported with proof satisfactory to Company) and no further Services pursuant to such
terminated Order will be rendered by Supplier. Such payment by Company shall constitute a full
and complete release and




					
	 	 	 	 	 
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	 	 	discharge of Company’s obligations in respect of such terminated Order for Services. In no
event shall Company’s liability exceed the price identified in the applicable Order for the
Services being terminated.





ARTICLE 10 — DELIVERY/FLEXIBLE DELIVERY ARRANGEMENTS/LATE DELIVERY





	10.1	 	At Company’s request, Supplier agrees to enter into various flexible delivery arrangements
(“Flexible Delivery Arrangements”), as agreed by the parties, for the Products provided by
Supplier to Company under this Agreement. The Flexible Delivery Terms set out in Attachment G
shall apply to all Flexible Delivery Arrangements unless otherwise agreed to by the parties.
The parties shall also discuss and mutually agree upon a process for delivery of Products by
Supplier directly to Company’s end customers (also known as “drop-shipments”) on an
as-required basis.






	10.2	 	Supplier agrees that all Forecasts provided by Company in relation to a Flexible Delivery
Arrangement are for planning purposes only and shall not be deemed a commitment by Company
except for the liability as set forth in Attachment G and Article 12. Supplier shall use
reasonable commercial efforts to satisfy Company’s purchase requirements that may be in excess
of any delivery flexibility or Forecast change limits agreed to by the parties under a
Flexible Delivery Arrangement, and failure by Supplier to meet the Company’s increased
requirements shall not be deemed (i) a breach by Supplier of its obligation to fulfill
requirements or (ii) to affect any measure of Supplier’s performance related to the requested
delivery hereunder.






	10.3	 	For certain Products or Commercially Purchased Items ordered pursuant to this Agreement,
Supplier and Company shall agree on a stated delivery interval or lead-time. For the purposes
of evaluating Supplier’s delivery performance against lead-time, it is understood by the
parties that lead-time is measured from the time the Order or Product or Commercially
Purchased Item delivery request is received by Supplier in writing or electronically from
Company until the time the conforming Product or Commercially Purchased Item is delivered to
Company pursuant to Article 8. Unless otherwise agreed to by the parties, Products or
Commercially Purchased Items may be delivered by Supplier to Company up to three (3) days
early and zero (0) days late.






	10.4	 	In the event of Supplier’s failure to deliver conforming Product due to causes attributable
to Supplier within the time frame agreed to between the parties in this Agreement or an Order
issued pursuant to this Agreement, Company shall have the right to: (a) cancel such Order; or
(b) extend such delivery time frame to a later date, subject, however, to the right to cancel
as in clause (a) above if delivery is not made or performance is not completed on or before
such extended delivery date. If an Order is canceled by Company pursuant to the above, Company
shall have the right to retain or return any or all Product received by or paid for by Company
under such Order. Within fifteen (15) days of Supplier’s receipt of returned Product, Supplier
shall reimburse Company for the costs of shipping the Product returned to Supplier and for any
amounts, including shipping costs, previously paid by Company for the returned Product.
Company shall pay for any Product it retains at the prices set forth in the Order issued
pursuant to this Agreement and any other deductions as may be allowed in this Agreement. If
Supplier is unable to meet the acknowledged delivery date(s) set forth in an Order, Supplier
shall be responsible for paying all reasonable incremental transportation costs necessary to
deliver the requested Product to Company by the acknowledged delivery date(s) indicated in the
Order.






	10.5	 	Supplier agrees to immediately notify Company’s representative, as identified on the Order,
of any foreseeable condition that would affect Supplier’s ability to meet the acknowledged
delivery date and time and Company’s expected delivery date and time. Supplier’s compliance
with the foregoing does not relieve Supplier of the delivery performance requirements or other
conditions set forth in this Article 10.






			
	ARTICLE 11 — 	 	PERFORMANCE METRICS AND PERFORMANCE METRICS DEFAULT RESOLUTION PROCESS; “PAY FOR
PERFORMANCE” PROGRAM













					
	 	 	 	 	 
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	11.1	 	The performance metrics (“Performance Metrics”) are as set forth in Attachment I. Company
intends to monitor such Performance Metrics on a quarterly basis or on a more frequent basis
as outlined in Attachment I. Supplier agrees to provide any relevant information that the
Strategic Alliance Team may require and in the time frames needed in order to support the
Performance Metrics process. Supplier recognizes that the measurable Performance Metrics as
described in Attachment I represent Company’s current minimum performance requirements and
agrees to the resolution process and consequences, as described in Article 11.2, of not
meeting such defined minimum requirements. The Performance Metrics may be revised periodically
by the parties’ agreement, with the objective of continuous performance improvement. The
Performance Metrics are categorized into three (3) areas: business impacting metrics
(“Business Impacting Metrics”), operational metrics (“Operational Metrics”), and information
only metrics (“Information Only Metrics”).






	11.2	 	In the event Supplier’s performance levels fall below any of the minimum thresholds set forth
in the Business Impacting Metrics identified in Attachment I, other than for reasons
attributable to Company, Company may give notice to Supplier of performance default. After
receipt of such notice, Supplier shall deliver to Company within twenty (20) days a Corrective
Action Plan to correct such default condition within thirty (30) days of receipt of the CAP.
In the event Supplier fails to deliver a Corrective Action Plan within the twenty (20) day
period, or if the Corrective Action Plan is determined to be unacceptable by Company, acting
reasonably, or if the Corrective Action Plan fails to cure the default for such Product or
Commercially Purchased Item within the thirty (30) day period, this shall be deemed a default
under Article 36, and in addition to its other remedies, Company may purchase the Product from
a source other than Supplier by invoking all of its rights under this Agreement, including,
but not limited to, Article 53. In the event of a dispute over Supplier’s failure to meet the
minimum standards or Company’s failure to accept the CAP, the parties shall attempt to resolve
such dispute through the process set forth in Article 27.






	11.3	 	If Company elects to purchase any of the Products in respect of which there has been a
default pursuant to Article 11.2 from a source other than Supplier, Supplier agrees that
Company’s obligations under Article 5 will be reduced by the aggregate value of any such
purchases from an alternate source until such minimum thresholds defined in Article 11.2 are
achieved.






	11.4	 	In the event Supplier’s performance falls below the minimum threshold (“Out of Tolerance
Condition”) set forth in the Operational Metrics, Company may give notice to Supplier that a
Corrective Action Plan is required from Supplier. After receipt of such notice, Supplier
shall respond to Company within twenty (20) days of receipt of such notice with a Corrective
Action Plan to correct such Out of Tolerance Condition within thirty (30) days of receipt of
the CAP. In the event that Supplier fails to deliver a Corrective Action Plan within the
twenty (20) day period, or if the Corrective Action Plan is determined to be unacceptable by
Company, acting reasonably, or if the Corrective Action Plan fails to cure the Out of
Tolerance Condition within the thirty (30) day period or as otherwise agreed to by the
parties, the Out of Tolerance Condition along with Supplier’s proposed Corrective Action Plan
shall be reviewed by the Strategic Alliance Team during the next Quarterly Business Review
Process. The Strategic Alliance Team shall then be responsible for establishing a Corrective
Action Plan to correct the Out of Tolerance condition. In the event the Strategic Alliance
Team fails to agree on a recommended Corrective Action Plan, the parties shall attempt to
resolve such issue through the dispute resolution process set forth in Article 27.






	11.5	 	The Information Only Metrics shall be for information purposes only in order to drive
continuous improvement between the parties. Supplier agrees to provide the information
requested under the Information Metrics in the frequency and manner agreed to by the Strategic
Alliance Team.






	11.6	 	The parties agree to review the current performance metrics in Attachment I and to replace
such metrics with a new set of performance metrics and to establish a “pay for performance
program,” that includes delivery and quality metrics for the manufacturing, New Product
introduction and out of Warranty repair services provided by Supplier and its Affiliates under
this Agreement. The




					
	 	 	 	 	 
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	 	 	parties shall attempt to reach a mutual understanding with respect to the foregoing within
90 days of the date of signature.





ARTICLE 12 — EXCESS AND OBSOLETE MATERIAL AND FINISHED GOODS INVENTORY





	12.1	 	The parties recognize that a key element for reducing inventory liability is to increase the
use of Commercial Material on BOMs. The parties shall work together to achieve this goal.






	12.2	 	Subject in each case to Article 12.2(e):






	 	(a)	 	If at any time the aggregate quantity of any Orderable Item identified by
Comcode (including any Purchased Inventory) that Supplier and its Affiliates own is
greater than the quantity of such Orderable Item forecasted to be consumed by Supplier
and its Affiliates in the manufacture of Products for Company and the Ordering
Companies under this Agreement in the subsequent [***] on
the basis of the Forecast, then such excess quantity of Orderable Items shall be deemed
“Excess Inventory”. Notwithstanding the foregoing, the parties may by express written
agreement modify the method of determination and calculation of Excess Inventory set
out herein. In the event of such a situation, Supplier shall provide Company with a
notice outlining the amount and value of such Excess Inventory and Company shall,
within seven (7) Business Days of receiving such notice, issue an inventory purchase
order to Supplier for such Excess Inventory, pursuant to Article 12.2(f).
	 
	 	(b)	 	If at any time the aggregate quantity of any item of Material (including any
Purchased Inventory) that Supplier and/or its Affiliates own is greater than the
quantity of such Material forecasted to be consumed by Supplier and its Affiliates in
the manufacture of Products for Company and the Ordering Companies under this Agreement
in the subsequent [***] on the basis of the Forecast, then
such excess quantity of Material shall be deemed “Excess Inventory”. Notwithstanding
the foregoing, the parties may by express written agreement modify the method of
determination and calculation of Excess Inventory set out herein.
	 
	 	(c)	 	Supplier shall provide Company with a notice (the “Excess Notice”) on or about
the twentieth (20th) day of the month setting out the amount and value of any Excess
Inventory. Within sixty (60) days of the date on which Company receives such notice
from the Supplier (the “Notice Receipt Date”), Company shall contemporaneously issue to
Supplier (i) an inventory purchase order for such remaining Excess Inventory, pursuant
to Article 12.2(f), and (ii) a purchase order in respect of an inventory carrying
charge (the “Inventory Carrying Purchase Order”) in the amount of two percent (2%) per
month of the average value of such Excess Inventory carried by Supplier during the
period commencing thirty (30) days after the date of the Excess Notice to the date that
the inventory purchase order and the Inventory Carrying Purchase Order for such Excess
Inventory is issued by Company to Supplier. The calculation of such average shall be
based on month ending inventory levels. Supplier acknowledges that there may be unique
circumstances in respect of which Company shall have up to ninety (90) days after the
Notice Receipt Date to issue such purchase orders.
	 
	 	(d)	 	Company shall keep Supplier’s procurement organization apprised of any Material
purchased by Company from Supplier under this Article 12 which is suitable for use in
the manufacture of Products and Supplier shall purchase such Material from Company, on
an as-needed basis, prior to purchasing such Material from Material vendors. The
purchase price of such Material shall be at the cost reflected in the then current
Product pricing set forth in Article 6.
	 
	 	(e)	 	In the event of (i) a complete or partial termination, rescheduling or
cancellation of an Order, (ii) reduction in Forecast, (iii) the termination of all or
any part of this Agreement, or (iv) any other event, including a change in
Specifications or an engineering change, which





					
	 	 	 	 	 
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	 	 	 	results in any Material, including any Material included in Purchased Inventory,
which Supplier has purchased or issued a purchase order to the Material vendor for,
no longer being required by Supplier to manufacture Products (or being otherwise
unsuitable for use in the manufacture of Products due to the passage of time) within
the subsequent [***], such Material shall be considered “Obsolete
Inventory” and Company shall be notified of the same. Company shall, within seven
(7) Business Days of receiving such notice, issue an inventory purchase order to
Supplier for such Obsolete Inventory, pursuant to Article 12.2(f), and may direct
Supplier to deliver such Obsolete Inventory to Company or any third party designated
by Company, or to dispose of such Obsolete Inventory in accordance with Article 24,
all at Company’s cost.
	 
	 	(f)	 	Company will purchase the Excess Inventory, the Obsolete Inventory and/or the
Purchased Inventory, as the case may be, pursuant to an inventory purchase order at the
following prices: (i) in the case of Excess Inventory, at the price reflected in the
current cost of the Products, (ii) in the case of Obsolete Inventory, at the price paid
by Supplier for such Obsolete Inventory, plus the applicable Material mark-up pursuant
to Article 6, and (iii) in the case of Purchased Inventory, at the price paid by
Supplier for such Purchased Inventory. Any Excess Inventory, Obsolete Inventory and
Purchased Inventory, as the case may be, purchased by Company from Supplier pursuant to
an inventory purchase order shall be deemed Company Owned Inventory. The inventory
purchase order shall include the costs of mitigation incurred by Supplier pursuant to
Article 12.2(j), including under-recoveries resulting from the sale of Material at
prices less than the price paid for such Material and costs relating to re-stocking or
return charges, but excluding labor costs incurred by Supplier. With respect to any
Excess Inventory purchased by Company pursuant to an inventory purchase order (other
than pursuant to Article 12.2(a)), Supplier shall, at Company’s option, either store
such Company Owned Inventory pursuant to Attachment M, or dispose of it in accordance
with Article 24, at Company’s cost and direction.
	 
	 	(g)	 	Excess Inventory and Obsolete Inventory will only include inventory that is in
a useable physical condition and that is not otherwise damaged by Supplier.
	 
	 	(h)	 	Notwithstanding the persons designated in Article 26, all notices, inventory
purchase orders and any other communication required to be made or delivered by either
party to the other party pursuant to this Article 12 shall be sent to representatives
agreed to by the parties.
	 
	 	(i)	 	Company shall have no liability for Material not ordered in accordance with
Article 13.4.
	 
	 	(j)	 	Supplier shall in all circumstances take steps to mitigate Company’s liability
for Excess Inventory and/or Obsolete Inventory, including, without limitation, in the
following priority:






	 	(i)	 	attempt to utilize Material for other Products
manufactured for Company;
	 
	 	(ii)	 	attempt to utilize Material for products
manufactured for companies other than Company;
	 
	 	(iii)	 	attempt to return Material to the Material
vendor utilizing all applicable return and sell-back privileges;
	 
	 	(iv)	 	identify opportunities for disposing of Excess
Inventory and/or Obsolete Inventory within Company’s Supply Chain
Portal; and
	 
	 	(v)	 	attempt to sell any of the Commercial Material to
a third party.





					
	 	 	 	 	 
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	 	 	 	Such mitigation efforts shall continue for a period of fourteen (14) days from the date
that Supplier has initiated such mitigation efforts, after which time Supplier may
notify Company of such Excess Inventory and Obsolete Inventory pursuant to Articles
12.2(c) and (e), respectively, unless otherwise agreed by the parties. Following such
mitigation period, Supplier shall provide Company with documentation regarding
mitigation efforts for Material (by Comcode) having a value of greater than $10,000.00.
	 
	 	 	 	If the sale price of any Material disposed of by Supplier pursuant to Articles
12.2(j)(iv) and 12.2(j)(v) as part of the mitigation efforts is less than the price for
such Material under this Agreement, Supplier shall be entitled to receive such
difference (i.e., a variance charge) in respect of such Material. The process for
determining such variance charges shall be as follows: Supplier shall contact
Company’s program manager at the relevant facility to obtain approval for such sale to
a third party. After Supplier completes the sale of such Material to such third party,
Supplier shall enter the variance charge by using the price variance tool used by the
parties for the purpose of facilitating the payment of a variance charge. The variance
charge will have a reason code of “sale to broker” and a note identifying the program
manager who approved such sale and the approved sale price, program and quantity. This
process will provide Company’s program manager with the documentation required to
document the price variance. This documentation will be the record used in the monthly
reconciliation of the price variance charges for such Material. The parties agree to
develop and implement a more detailed variance charge process after the Effective Date.






	12.3	 	In order to attempt to reduce the amount of Excess Inventory from time to time, Supplier and
Company agree to target a minimum of [***], and the parties shall
use reasonable commercial efforts to achieve such target. If Supplier has not achieved an
average of [***] by March 31, 2006, the parties shall work
cooperatively to identify the cause thereof, and to take any necessary corrective actions as
agreed by them to achieve such target.






	12.4	 	Any partial reels of Material shall not be included in Excess Inventory or Obsolete
Inventory, except that:






	 	(a)	 	once each year in September, all partial reels of Material having an aggregate
book value of greater than $2,500 and that would otherwise be categorized as Excess
Inventory pursuant to Article 12.2, shall be considered Excess Inventory, in which case
Company shall issue to Supplier an inventory purchase order and an Inventory Carrying
Purchase Order pursuant to Article 12.2(c); and
	 
	 	(b)	 	twice a year, in March and September, and on the termination or expiration of
this Agreement, any partial reels of Material that have zero demand by Supplier for use
in Products shall be considered Obsolete Inventory, in which case Company shall issue
to Supplier an inventory purchase order for such Obsolete Inventory pursuant to Article
12.2(e) (for certainty, Supplier shall not be required to take any further mitigation
efforts after it has so notified Company of such partial reels).






	12.5(a)	 	Supplier acknowledges that all claims submitted by it to Company for Excess Inventory and
Obsolete Inventory (an “E&O Claim”) shall be supported by the required data specified in
Attachment Q (the “Required Data”). Within thirty (30) days of the Notice Receipt Date under
Article 12.2(c) for Excess Inventory, and within six (6) Business Days of Company’s receipt of
the notice under Article 12.2(a) for Excess Inventory and under Article 12.2(f) for Obsolete
Inventory, Company shall notify and confirm with Supplier (i) the portion of such E&O Claim in
respect of which Company has received sufficient Required Data and which it does not dispute
(the “Agreed Portion”), and (ii) the portion, if any, of such E&O Claim that Company disputes,
acting reasonably, as a result of a deficiency in the Required Data (the “Disputed Portion”).
	 
	***	 	Portions of this page have been omitted pursuant to a request for Confidential
Treatment filed separately with the Securities and Exchange Commission.




					
	 	 	 	 	 
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	 	(b)	 	If Company notifies Supplier within the applicable time-frame specified in
Article 12.5(a), the Agreed Portion shall be dealt with pursuant to Article 12.2 and
the parties shall discuss the deficiencies in the Required Data, and any additional
Required Data required by Company, acting reasonably, with respect to the Disputed
Portion. Company shall provide to Supplier such information in respect of the Disputed
Portion as Supplier may reasonably request in order to evaluate whether or not to
resubmit an E&O Claim for all or a portion of such Disputed Portion. Supplier may from
time to time resubmit an E&O Claim to Company in respect of all or any portion of the
Disputed Portion in accordance with the procedures set out in this Article 12.5 until
such time as the Disputed Portion has been agreed to or resolved in accordance with
this Article 12.5 (including, for certainty, pursuant to Article 12.5(c)) or otherwise.
The parties shall follow the procedures set out in this Article 12.5 for any E&O Claim
that is resubmitted by Supplier from time to time in respect of a Disputed Portion.
	 
	 	(c)	 	If Company does not notify Supplier within the applicable time-frame specified
in Article 12.5(a) in respect of an E&O Claim or a resubmitted E&O Claim, such claim
shall forthwith be submitted to the dispute resolution procedures set out in Article
27.
	 
	 	(d)	 	If it is determined in accordance with the procedures set out in this Article
12.5 that all or a portion of the Disputed Portion as submitted at any time by Supplier
to Company was properly due and payable, Company shall pay to Supplier all accrued
charges and amounts payable with respect to such agreed to Disputed Portion and fulfill
all of its other obligations, pursuant to Article 12.2, from the date an E&O Claim in
respect of such Disputed Portion was first submitted by Supplier to Company together
with such Required Data as should have been sufficient for Company, acting reasonably,
to verify and approve such Disputed Portion, to the date of payment or performance of
such obligation pursuant to Article 12.2.
	 
	 	(e)	 	To the extent there are any disputes between the parties with respect to the
subject matter of this Article 12.5 and/or Article 12.2, such disputes shall forthwith
be submitted to the dispute resolution process set out in Article 27.






	12.6	 	On a weekly basis, Supplier will provide Company with reports on the quantities that Supplier
has on hand of Material, work-in-process inventory, Scrap, inventory of Products to be
reworked or refurbished by Supplier, and on Storeroom Balance Accuracy (as defined in
Attachment H), in such detail as may be reasonably requested by Company and agreed by
Supplier.





ARTICLE 13 — MATERIAL PROCUREMENT BY SUPPLIER 





	13.1	 	Supplier shall adhere to Company’s Approved Vendor List and specific Bills of Materials, as
provided by Company to Supplier, for the procurement of all Material used in the manufacture
or repair of Products unless otherwise agreed to.






	13.2	 	Prior to Supplier manufacturing new products for Company, Supplier agrees to provide Company
with a detailed, itemized costed BOM showing Supplier’s best-negotiated price at the Material
item level. Upon receipt and review of such BOM, Company shall provide Supplier with an
authorized final costed BOM comprised of the best-negotiated prices for Material available to
Company and/or Supplier. Upon verification of pricing and terms and conditions in accordance
with Attachment K2 with vendors of Company Controlled Material, Supplier agrees to pass
through all Material price benefits as a result of Company’s price and terms in accordance
with Attachment K2 negotiations with the vendors of Company Controlled Material directly to
Company. Disclosure by either party of Material pricing under this Article 13.2 shall be
subject to any confidentiality obligations that either party may have to its respective
vendors.






	13.3	 	(a) Parties shall, after entering into this Agreement, promptly agree on the initial
designation of Company Controlled Material and Supplier Controlled Material by part number
and/or





					
	 	 	 	 	 
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	 	 	 	commodity family. Such designation may be revised from time to time by agreement of
the parties. The following shall apply in respect of Supplier Controlled Material:






	 	(i)	 	Company shall immediately following the designation of Material
as a Supplier Controlled Material send a letter substantially in the form
attached as Attachment K1 to each vendor of Supplier Controlled Material, with
a copy to Supplier, advising such vendor that Supplier has control of all
purchasing decisions in respect of such Material (for certainty, Company shall
send a letter to each vendor of the initial Supplier Controlled Material as
soon as possible after the date hereof).
	 
	 	(ii)	 	In the event of significant changes in market conditions,
Supplier shall discuss with Company reasonable expectations of prices for
Supplier Controlled Material. In such cases, Supplier shall advise Company of
the change in market conditions for such Material and respective price
projections and the parties shall negotiate in good faith to amend the price
reduction percentages for the applicable Price Reduction Period.
	 
	 	(iii)	 	Company agrees not to be involved in any manner in any sourcing,
purchasing, pricing and other negotiations with the vendors of Supplier
Controlled Materials. To the extent Company is involved in any sourcing,
purchasing, pricing and other negotiations with the vendors of Supplier
Controlled Materials on the date hereof, it shall immediately withdraw and cease
to be involved in all such activities and provide Supplier with necessary
information in respect of such negotiations to enable the transition of such
negotiations and purchase decision to Supplier. In addition, Company shall not,
directly or indirectly request or accept price quotations, concessions, rebates
or other financial benefits from vendors of Supplier Controlled Materials on the
basis of material volumes which are being negotiated and purchased by Supplier.
	 
	 	(iv)	 	For New Product designs, and where possible in respect of
Engineering Change Orders, Company shall use its reasonable commercial efforts
to (i) include and qualify Supplier preferred Material vendors on the AVL, and
(ii) incorporate Material from Supplier preferred Material vendors to the
greatest extent possible that meet Company quality requirements and are
documented in Company approved sourcing strategies.
	 
	 	(v)	 	Company shall advise Material vendors that New Product designs
will have Materials selected from Supplier preferred Material vendors that meet
Company quality requirements and are documented in Company approved sourcing
strategies.






	 	(b)	 	The following shall apply in respect of Company Controlled Material:






	 	(i)	 	Company will be responsible for all sourcing and price and terms
and conditions (in accordance with Attachment K2) negotiations with the vendors
of Company Controlled Materials provided that such activities are aligned with
the terms and conditions of this Agreement (including but not limited to
warranty, payment, flexibility, etc).
	 
	 	(ii)	 	Company shall provide all necessary information in respect of
pricing and general commercial terms for Company Controlled Material in the
format specified in Attachment K2 not less than two (2) weeks prior to the
commencement of each Pricing Reduction Period.
	 
	 	(iii)	 	Company shall use a “landed cost model” agreed to with Supplier
for all Company Controlled Material sourcing decisions (a landed cost model
means the price for the Material plus all costs and expenses incurred or payable
in respect of duty, transportation, hubbing, and insurance to Supplier’s place
of manufacture).





					
	 	 	 	 	 
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	 	(iv)	 	If any Company Controlled Material is designated as Supplier
Controlled Material pursuant to Article 13.3(a), Company shall advise the
Material vendors in writing and provide Supplier a letter of authorization
substantially in the form set out in Attachment K1 acknowledging the change in
responsibility for such Material.






	 	(c)	 	Supplier and Company may mutually agree to re-designate any Supplier Controlled
Material as Company Controlled Material, or vice versa, effective as of a date that is
not less than six (6) months following the date of such decision.






	13.4	 	Unless otherwise agreed to between the parties, Supplier will purchase all Material that is
required to manufacture the Products pursuant to the AVL. Supplier is authorized to purchase
Material and Commercially Purchased Items, based on the applicable lead-times, minimum order
quantities and economic order quantities, in order to support production and delivery
requirements based on Orders, Flexible Delivery Terms and Forecasts. Supplier shall obtain
written approval from Company’s designated representative prior to purchasing those Materials
or Commercially Purchased Items that have delivery lead times in excess of Company’s
Forecasted demand intervals and/or Flexible Delivery Terms. Supplier shall target a weighted
average lead time for Material of a targeted maximum of 30 days or as otherwise agreed by the
parties and shall use reasonable commercial efforts to achieve such target in order to
minimize Company’s liability pursuant to Article 12. Supplier shall also take all reasonable
commercial steps to manage the ordering, delivery and stocking of Material and Commercially
Purchased Items in a manner that will minimize the potential levels of Excess Inventory or
Obsolete Inventory as described in Article 12. The parties agree to review all Material or
Commercially Purchased Items that have lead times in excess of twelve (12) weeks during the
Quarterly Performance Review Process in order to formulate lead time reduction plans for such
Material or Commercially Purchased Items.






	13.5	 	In the event Supplier receives notification from a third party vendor that a Material item
listed on a BOM for a Product or a Commercially Purchased Item will be discontinued, Supplier
will promptly forward the notification to Company along with a recommended plan of action. In
the event that the Material or Commercially Purchased Item being discontinued does not have a
readily available replacement or substitute identified prior to the time at which the Material
or Commercially Purchased Item can no longer be ordered, pursuant to written authorization
from the Company, Supplier agrees to procure, manage and store such discontinued Material or
Commercially Purchased Items (the “LTB Material”) on behalf of Company to enable the continued
manufacturing of Products or the availability of Commercially Purchased Items until such time
as Company can provide a Material or Commercially Purchased Item substitution or Product
redesign; provided that if at any time Supplier owns LTB Material (excluding LTB Material
designated by the parties for use in Supplier’s repair operations) having an aggregate book
value in excess of an amount (the “LTB Material Threshold
Amount”) equal to [***]
of the aggregate book value of all inventory (raw Material, work-in-process and finished
goods) then owned by Supplier under this Agreement (the amount of the aggregate book value of
LTB Material from time to time in excess of the LTB Material Threshold Amount is referred to
in this Article as the “Excess Amount”), the Supplier may designate any portion of LTB
Material it owns having an aggregate book value equal to such Excess Amount as Excess
Inventory or Obsolete Inventory and Company shall, in the case of Obsolete Inventory, issue to
Supplier an inventory purchase order pursuant to Article 12.2(e), and in respect of Excess
Inventory, issue to Supplier a purchase order and an Inventory Carrying Purchase Order
pursuant to Article 12.2(c), as applicable. All LTB Material shall be excluded from the
Percentage Reduction for Products as defined in Article 6.1. The process to calculate such
LTB Material exclusions shall be mutually agreed by the parties.






	13.6	 	Supplier agrees to allow Company to purchase Material from Supplier for the Products being
manufactured for Company as necessary in such quantities as required for Company’s in-house
Product repair operations. Pricing for such Material purchases shall be in accordance with the
Manufacturer Per Unit Pricing Formula set forth in Attachment C and the rate structure in
Article 6.9, as applicable.




	***  	 	Portions of this page have been omitted pursuant to a
Request for Confidential Treatment filed separately with the
Securities and Exchange Commission.





					
	 	 	 	 	 
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	13.7	 	Prior to ordering Material from a third party Material vendor to support the manufacture of
Products by Supplier for Company, Supplier shall first purchase, at agreed Market-Based Prices
and terms and on an as-required basis, any equivalent conforming Material that is owned by
Company and that Company has communicated to Supplier is for sale to Supplier. Prior to
ordering Material from a third party Material vendor, Company shall first purchase, and shall
use commercially reasonable efforts to cause its suppliers to purchase, at agreed Market-Based
Prices and terms and on an as-required basis, any equivalent conforming Material that is owned
by Supplier and that Supplier has communicated to Company is for sale to Company.






			
	ARTICLE 14 — 	 	PURCHASE OF GOODS AND SERVICES BY SUPPLIER UTILIZING COMPANY’S PRICING









	14.1	 	Prior to the manufacture of any Product for Company by Supplier, Company shall provide
Supplier a Product BOM that will include Material identification information, including the
applicable approved Material vendors. In addition, Company will provide Supplier with
Material identification, including the respective approved Material vendors for Commercially
Purchased Items ordered by Company from Supplier pursuant to this Agreement. At Company’s
option, Company shall with respect to all Company Controlled Material facilitate the purchase
of such designated BOM items or Commercially Purchased Items by Supplier at Company’s
negotiated Material purchase prices with the approved Material vendors, subject to the
following conditions:






	 	(a)	 	Company shall have provided Supplier with a written
authorization in the form of Attachment K3 — Material Authorization Letter,
prior to Supplier purchasing such designated BOM item at the prices set forth
in Company’s purchase agreements with the respective Material vendor;
	 
	 	(b)	 	Supplier shall purchase such Material with the sole intent of
using such Material for the manufacture or repair of Product under this
Agreement or Order(s) issued pursuant to this Agreement or as otherwise
provided in this Agreement;
	 
	 	(c)	 	Supplier shall establish the terms and conditions of purchase
for Company Controlled Material. If requested by Supplier, Company shall use
reasonable commercial efforts to work with and support Supplier in its
negotiations of terms and conditions of purchase and Flexible Delivery
Arrangements with the vendors of Company Controlled Material including, at
Company’s discretion, Company’s participation in the negotiations.
	 
	 	(d)	 	Supplier shall hold in confidence any and all information
related to Company’s purchase agreement(s) with the Material vendors,
including, but not limited to, technical information, forecasts and Company’s
prices. Supplier hereby agrees to use such information only for the purpose of
fulfilling its obligations under this Agreement or any Order placed pursuant to
this Agreement. Supplier shall share such information only in accordance with
and subject to Article 35; and
	 
	 	(e)	 	Supplier agrees to implement a first in first out (“FIFO”)
inventory system for Material purchases under this Article 14.1. Supplier
shall monitor this FIFO inventory system to ensure the Material purchased and
received first by Supplier shall be the Material consumed first during the
manufacture of Products.






	14.2	 	Company and Supplier shall use reasonable commercial efforts to identify and pursue possible
purchasing opportunities with companies which will benefit the respective parties through
volume discounts, process and cost efficiencies for goods and services.




					
	 	 	 	 	 
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ARTICLE 15 — PRODUCT FORECASTING AND CAPACITY PLANNING





	15.1	 	Supplier shall work with Company to maintain a level of Product manufacturing capability and
flexibility that is consistent with Company’s business requirements. Unless otherwise agreed,
Company shall compensate Supplier in the manner set out herein for any costs associated with
replicating existing stencils, fixtures, tooling, assembly and/or test equipment uniquely
required to support Company’s production requirements or building new unique stencils,
fixtures, tooling, assembly, and/or test equipment in support of Company’s production
requirements. Such costs shall, by mutual agreement of the parties either (a) be amortized
over a six (6) month period in the cost of the Product, or (b) be charged by Supplier to
Company as a separately billable non-recurring engineering charge for which Company shall
issue Supplier a purchase order in accordance with Article 9. Prior to fabricating or
procuring any stencils, fixtures, tooling, assembly and/or test equipment that is unique to
the manufacture of Company’s Products, Supplier agrees to review such plans with Company
first. Supplier agrees that all stencils, fixtures, tooling, assembly and/or test equipment
used in the production of Products shall be subject to the terms set forth in Articles 37 and
53.






	15.2	 	Company will use reasonable commercial efforts to provide to Supplier, on a weekly basis, a
fifty-two (52) week rolling forecast, in sufficient detail, for all Products required under
this Agreement (the “Forecast”), or to provide forecasts using other forecasting methods as
may be agreed to by the parties. Except as otherwise provided in this Agreement, all
Forecasts are for planning purposes only and do not constitute a commitment to purchase by
Company. Company’s requirements for Commercially Purchased Items may, at Company’s option, be
included in a Forecast or be ordered on a discrete order basis.






	15.3	 	As part of Company’s and Supplier’s supply chain management process, Supplier agrees to
provide Company’s forecasted requirements to all third party vendors of Material to support
the timely manufacture of Products by Supplier for Company under this Agreement. In addition,
Supplier will, over time, establish with each Material vendor appropriate delivery intervals,
inventory stocking levels, and ordering flexibility arrangements to support Company’s delivery
lead time, inventory stocking levels and ordering flexibility arrangements required of
Supplier. At Company’s request, Supplier shall provide Company with reports and allow Company
to verify that Supplier is satisfactorily complying with this Article 15.3.






	15.4	 	Company shall use reasonable commercial efforts to advise Supplier at least six (6) months
prior to the time at which a Product is scheduled for end-of-life designation. Upon receipt
of such notice, the parties shall work together to prepare an end-of-life plan.





ARTICLE 16 — EMERGENCY BACKUP MANUFACTURING PLAN





	16.1	 	Supplier will update existing Emergency Backup Manufacturing Plans that have been delivered
by Supplier to Company prior to the Effective Date, and Supplier will, within ninety (90) days
of the Effective Date, provide to Company Emergency Backup Manufacturing Plans for those
facilities for which no Emergency Backup Manufacturing Plan has previously been provided by
Supplier to Company. Each Emergency Backup Manufacturing Plan shall, following a catastrophic
event, a condition listed in Article 43.1, or any other condition in which Supplier is unable
to produce and ship Product to meet Company’s requirements for at least thirty (30) Business
Days, allow Supplier to:






	 	(a)	 	manufacture and ship the impacted Product(s) at the levels set forth in Article
16.1(c) from one or more of its other manufacturing facilities upon the written
approval of Company to meet Company’s delivery requirements for such Product(s);
	 
	 	(b)	 	commence shipments of the impacted Product(s) at the levels set forth in
Article 16.1(c) to Company from such other manufacturing facilities no later than
thirty (30) Business Days after the commencement of the catastrophic event or other
condition; and




					
	 	 	 	 	 
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	 	(c)	 	achieve the following levels of shipments from such other manufacturing
facilities:






	 	(i)	 	a minimum of fifty percent (50%) of Company’s then current
Forecast after thirty (30) Business Days of the commencement of the
catastrophic event or other condition;
	 
	 	(ii)	 	a minimum of seventy-five percent (75%) of Company’s then
current Forecast after forty-five (45) Business Days of the commencement of the
catastrophic event or other condition; and
	 
	 	(iii)	 	a minimum of one hundred percent (100%) of Company’s then
current Forecast after sixty (60) Business Days of the commencement of the
catastrophic event or other condition.






	16.2	 	The relevant Emergency Backup Manufacturing Plan(s) will be reviewed and modified by mutual
agreement of the parties, as necessary from time to time.






	16.3	 	In the event that the Emergency Backup Manufacturing Plan fails to achieve its purpose as set
out in Article 16.1, Company may at its option, terminate this Agreement or an Order (with
respect to the Product identified in the Order and affected by such delay or failure) in
accordance with Article 43 at no charge, and/or exercise any other rights and remedies it may
have, pursuant to this Agreement and at law or at equity.





ARTICLE 17 — NEW PRODUCT INTRODUCTION AND TARGET COSTING





	17.1	 	At Company’s request, Supplier agrees to provide the necessary manufacturing assistance to
Company to support the timely development, design, and introduction of new products. As part
of this assistance, Supplier agrees to the terms and processes set forth in Attachment N — New
Product Introduction (NPI) Process and shall keep abreast of major developments in Supplier’s
industry including such areas as new production methods, processes and techniques or materials
and shall regularly advise Company of any developments that could impact Company’s Product
price, performance, quality and time to market objectives.






	17.2	 	At Company’s request, Supplier agrees to participate with Company in utilizing target-costing
methodology for new products introduced into Supplier’s manufacturing process. The methodology
used to perform this target-costing will be established by the Strategic Alliance Team, which
will prepare a specific product cost roadmap. Supplier agrees to target and document cost
reductions in accordance with the specific product cost reduction roadmap. Both parties commit
to work aggressively to pursue the achievement of such target cost reductions.






	17.3	 	The parties will mutually agree in writing on any specific quality plans and requirements in
connection with New Products.





ARTICLE 18 — ELECTRONIC COMMERCE





	18.1	 	Supplier and Company will work diligently to implement and utilize electronic means to issue
Orders, Order acknowledgments, Order changes, forecasts, ship notices, Flexible Delivery Terms
information, view Product and Material inventory information, electronic mail or such other
communications as may be agreed upon by Supplier and Company for the transmission and
receiving of information under this Agreement (“Electronic Commerce”).






	18.2	 	Supplier shall maintain Electronic Commerce capability throughout the Term of this Agreement.
If Company elects to utilize EDI or XML as a means to electronically transmit data, Supplier
and Company shall negotiate in good faith the required specifications, agreements and
timelines for implementation. Such Electronic Commerce shall also include the capability of
transmitting and receiving the items referenced in Articles 18.1 and 18.3 by means of Internet
communications.




					
	 	 	 	 	 
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	18.3	 	In addition to the requirements set forth in Article 18.1, Supplier agrees to provide Company
access, in accordance with and subject to Supplier’s security policies and procedures, to
Supplier’s information systems in order to view and download the following Product data: (a)
test and inspection data, (b) repair data, (c) functional parametric data, (d) component
engineering and component management data, (e) current “build to” production BOMs, and (f)
Supplier and Company Product and Material inventory levels. Supplier will provide to Company
the following, to a common standard for all Company locations, via real-time/near-real-time
Internet transactions: (a) detailed (manufactured and purchased) finished Product/sub-assembly
supply plans to support Company’s end customer available to promise processes, (b) jeopardy
notification and re-promise date(s) if a scheduled item will not ship on the day scheduled,
and (c) hierarchical Product serialization data to support serialization capture processes in
effect at the time.






	18.4	 	The parties hereby agree that Supplier will meet with each Ordering Company to determine the
necessary information systems, software, and configurations that are required to enable each
Ordering Company to electronically transmit the Bill of Material, Specifications, technical
drawings and all other relevant information needed for the manufacture of Product by Supplier
for such Ordering Company. If Company requires different information systems, hardware,
communications technology software or configurations, then the parties agree to negotiate in
good faith the costs associated with the installation of such information systems, hardware,
communications technology software or configurations. These requirements shall be set forth
in writing.






	18.5	 	Supplier shall establish, at Supplier’s expense, appropriate measures (including, but not
limited to, fire walls) to ensure Supplier’s and Company’s Information related to the
manufacture and supply of Product can only be accessed by Supplier and Company. In the event
Supplier is provided access to certain Company information systems, Supplier agrees to (a) use
Information obtained from such systems solely for the purpose of performing its obligations
under this Agreement or an Order placed pursuant to this Agreement and (b) take the necessary
steps at Supplier’s expense, including but not limited to establishing firewalls, secured
modems, etc. in order to ensure Company’s Information (including Company IP as part thereof)
is sufficiently protected.





ARTICLE 19 — SHIPPING





	19.1	 	Unless otherwise specified in an Order, Supplier shall: (a) ship the Product or Commercially
Purchased Item covered by this Agreement or Order complete; (b) ship to the destination
designated in the Order; (c) ship according to routing instructions as set forth in the Order
and provided by Company’s ordering location; (d) identify this Agreement and Order number on
all subordinate documents; (e) enclose a packing memorandum with each shipment, encase the
packing memorandum in a moisture resistant pouch or holder, place the packing memorandum on
the side of the shipping container, and in the case of multiple containers, place it on the
first container and, when more than one package is shipped, identify the package containing
the memorandum; and (f) mark this Agreement and Order number on all packages and shipping
papers. The following information shall be placed on all packing memorandums: (a) Company’s
name; (b) address of shipping location; (c) Order number; (d) Order item or line number; (e)
Company’s Comcode as stated on the Order; (f) Product or Commercially Purchased Item
description as stated on the Order; (g) quantity shipped; (h) unit of measure as stated on the
Order; (i) end customer order number, end customer spec/req number, and end customer item
number when identified on the Order; and (j) if required by Law in the destination country, a
list of all serial numbers for Product or Commercially Purchased Items shipped. Adequate
protective packing shall be utilized, in accordance with the applicable Specifications.
Shipping and routing instructions may be furnished or altered by Company in writing. If
Supplier does not comply with Company’s shipping or routing instructions, Supplier authorizes
Company to deduct from any invoice of Supplier (or to charge back to Supplier) any increased
transportation costs actually incurred by Company as a result of Supplier’s noncompliance,
provided that such increased costs shall be first submitted to Supplier.




					
	 	 	 	 	 
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	19.2	 	Supplier shall provide Company with reasonable notice, by way of an advanced shipping notice
(ASN), for each Orderable Item to be shipped by Supplier to Company.





ARTICLE 20 — INTENTIONALLY DELETED




ARTICLE 21 — QUALITY 





	21.1	 	Supplier shall meet Company’s quality requirements as set forth in Specifications and
otherwise in this Agreement. If within ten (10) days, or as otherwise agreed to by the
parties on a case by case basis, of transfer of title to Product from Supplier to Company,
Company rejects any or all Product for failing to meet any of the Specifications agreed to by
Supplier, Company may exercise one or more of the following remedies: (a) return rejected
Product for full credit at the price charged plus return transportation charges, duties, and
taxes, as may be applicable; (b) accept a conforming part of any shipment; or (c) have
rejected Product replaced by Supplier at the purchase price stipulated in this Agreement or
the applicable Order. If notification of rejection of any or all Product is not received by
Supplier within this ten (10) day period or as otherwise agreed to between the parties, such
Product will be deemed to have been accepted by Company. Company shall obtain a return
materials authorization (“RMA”) number from Supplier prior to returning any Product and shall
return any Product rejected under this Article within fifteen (15) Business Days of such
rejection, unless otherwise agreed between the parties.






	21.2	 	With respect to the facilities at which Supplier or its Affiliates manufacture and repair
Products under this Agreement, Supplier shall maintain facility registration in compliance
with ISO 9001:2000 and/or TL9000:R3.0 as applicable. Supplier commits that all manufacturing
and design operations, including any key sub-contractors which contribute to the design,
development, production, delivery and repair service of Product under this Agreement are ISO
9001:2000 registered by an accredited registrar. When requested by Company, Supplier shall
furnish subsequent to each of its re-certification/surveillance audits, a copy of its quality
policy manual and periodic audit documentation for the locations manufacturing Products or
performing Services under this Agreement. In the event Company requests Supplier to adopt or
comply with other types of quality and similar requirements or certifications to those stated
above in order for Company to sell Products to customers who require such other requirements
or certifications, the parties shall negotiate in good faith the timing and costs associated
with achieving such requirements or certifications.






	21.3	 	Supplier agrees to apply “Six Sigma” and “Lean Principles” in an effort to identify and
minimize waste through improvement in the manufacturing processes under this Agreement.
Supplier shall designate two employees trained in the application of “Six Sigma” processes to
work with Company to assist in the achievement of the following objectives within one year of
the date hereof:






	 	(a)	 	reduction of lead-time for end customer order entry, order
fulfillment and delivery, by a targeted maximum of [ *** ] of such lead-times as of
the Effective Date hereof or as otherwise agreed by the parties;
	 
	 	(b)	 	reduction in average weighted lead-times for Materials, to a
targeted maximum of [ *** ] or as otherwise agreed by the parties; and
	 
	 	(c)	 	target of [ *** ] on-time delivery.






	 	 	The parties agree that the objectives set out in this Article 21.3 are joint goals, and the
failure to achieve such objectives shall not be deemed to be a breach by Supplier of its
obligations under this Agreement, or to affect any measure of Supplier’s performance under
this Agreement.






	21.4	 	Supplier agrees to appoint one employee of Supplier or any of its Affiliates to be
responsible for managing Supplier’s overall quality processes in the manufacture of Products
under this Agreement, and shall appoint one employee of Supplier or any of its Affiliates at
each facility at






			
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	 	 	which Supplier or its Affiliates manufactures Products under this Agreement, to be
responsible for Supplier’s quality processes at such facility. Each employee appointed
under this Article 21.4 shall be either certified by the American Society of Quality, or
shall have received equivalent internal training, including “Six Sigma” certification
training.






	21.5	 	Subject to complying with Supplier’s plant rules and regulations, internal security and
confidentiality requirements, security clearance regulations and other procedures as
applicable, Supplier shall allow on-site quality management system type audits (e.g. ISO 9001,
ANSI/ESD 20.20 and TL 9000) as well as on-site process evaluations by Company or Company’s
designated representative. All such on-site visits shall be at Supplier’s locations and, with
their consent, at the locations of Supplier’s subcontractors who supply Material used in the
manufacture of Product. The timing of such on-site visits shall be at Company’s discretion,
subject to fourteen (14) days’ prior notice to Supplier by Company except in those situations
in which Company has identified a quality problem that would prohibit Company or Supplier from
shipping Products. Supplier agrees to implement and report the status of a Corrective Action
Plan for all unacceptable issues within a time frame agreeable to the parties. Supplier shall
agree to have an improvement program in place, which will allow it to attain and maintain
acceptable ratings or equivalent on all quality management system elements as agreed to by
Company and Supplier.






	21.6	 	Supplier’s internal process controls shall be based on Company requirements set forth in a
specific product plan (“Product Plan”) in a form similar to Attachment F — Product Plan. The
Product Plan will contain Product-specific requirements and will define data reporting
frequencies as agreed to by Company and Supplier. This is a process of “qualifying” Supplier’s
manufacturing location by periodic assessment of processes and Products.






	21.7	 	Subject to complying with Supplier’s plant rules and regulations, internal security and
confidentiality requirements, security clearance regulations and other procedures, as
applicable, Supplier shall permit Company, at Company’s discretion to inspect and test Product
at Supplier’s location (“Source Inspection”). If the Product inspection performance results do
not meet Company’s Specifications, after an agreed upon period of time or number of lots
inspected, as specified in the applicable Product Plan, the cost of continued Source
Inspections shall be borne by Supplier. Source Inspections may be discontinued or reinstated,
depending upon the shipped Product quality level, at the reasonable discretion of Company.






	 	 	Subject to the terms of Article 29, Supplier shall allow Company’s end customer to conduct
onsite evaluations of Product, or allow for inspection of Product by Supplier or Company, in
accordance with Company’s end customer inspection requirements.






	21.8	 	Supplier shall perform a first article inspection and prepare a first article inspection
report whenever any of the following occur in respect of a Product at Supplier’s location:
Specification issue change, Material change, manufacturing location change, new Material
incorporated into Product, new Material vendor added to the AVL, and at Company’s discretion,
acting reasonably, a process change or a Tooling change. The first article inspection report
shall be sent to Company by Supplier on or before arrival of the Product. Supplier shall show
the Comcode, Specification Issue number, and Order number on the top of the first page of the
first article inspection report. The report should identify the specification element
verified, the allowable tolerance, and the actual measurements.






	21.9	 	Prior to Product production approval, Supplier shall make available (on-site at Company’s
discretion and at Company’s request, acting reasonably), a minimum quantity of sample Product
produced in a continuous run on permanent manufacturing equipment to Company’s designated
representative for examination and subsequent approval by Company. Supplier shall not make
any shipments under an Order prior to approval of such sample production units by Company.
Unless otherwise specified in this Agreement, the sample production units shall be retained by
and title shall vest in Company upon delivery in accordance with an Order.




					
	 	 	 	 	 
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	 	 	Upon Company’s request, Supplier is expected to inspect Product samples to all applicable
Specifications, and then to provide this information, along with a certificate of
compliance, to Company.






	21.10	 	Supplier shall meet the Product requirements defined in Specification X-21284, “Lucent
Technologies End Point Requirements for Soldered Electrical and Electronic Subassemblies,
Issue 4, dated March 21, 2001” as it may be modified from time to time by Company through the
issuance of an Engineering Change Order in accordance with Article 67.3 and all other agreed
to Specifications as listed in the applicable Product Plan.
	 
	 	 	Supplier shall perform Environmental Stress Testing (“EST”) as described in the applicable
Product Plan.
	 
	 	 	Supplier commits to establishing verification points throughout its manufacturing and repair
process. Supplier also commits to meeting the verification point requirements described in
the applicable Product Plan. The scope of these verification points shall be to validate
through visual and mechanical inspections and tests, and with the use of statistically valid
sampling plans (e.g., per ANSI/ASQC Z1.4 and Z1.9-1993), that Product conforms to applicable
manufacturing, Product and process Specifications, standards of acceptable workmanship, as
well as other Specifications which may be provided by Company. Supplier shall report
inspection, test and repair data per Company’s Specifications titled “MTRAP Data Collection
Requirements” Issue 9, dated August 4, 2004 and “E-1025 DCF Test Data Format Standard
Reference” Issue 6.0 as may be modified from time to time through issuance of an Engineering
Change Order in accordance with Article 67.3. The frequency for data collection will be
real or near-real time, at least once per day. The parties shall mutually agree on schedule
for deployment of MTRAP reporting if not in place as of the Effective Date. Verification of
in process data and corrective action associated with this data may be requested by Company
periodically. Company reserves the right to make suggestions for improvement based on this
data.
	 
	 	 	Within ninety (90) days of the date of this Agreement, Supplier shall submit to Company a
propose quality plan for inspection of finished goods upon completion (also known as “out of
box inspection”).
	 
	 	 	Supplier shall continuously review Product return data, including data from field returns,
to ensure that the scope of the verification process includes verification of the
requirement(s) or condition(s) under which the returned Product failed. Supplier shall
perform a detailed analysis of all returned Product found to be defective, identify root
cause, and implement any appropriate corrective action. Any Product found to be defective
shall be corrected before shipment to Company.
	 
	21.11	 	Supplier and its subcontractors utilized in the manufacture and repair of Products pursuant
to this Agreement, except as otherwise agreed, shall be ANSI/ESDS20.20 registered by an
accredited registrar as well as compliant with Specification X-21342 Issue 1, dated January
12, 2001, titled “Lucent Technologies Requirements for Electrostatic Discharge (“ESD”)
Mitigation”, as may be modified from time to time by Company through the issuance of an
Engineering Change Order in accordance with Article 67.3. Supplier’s and its subcontractors’
ability to manufacture and handle ESD sensitive (ESD) Material or assemblies, except as
otherwise agreed, shall be evaluated and classified by Specification X-21341 Issue 2, dated
May 1, 2003 entitled “Lucent Technologies Electrostatic Discharge (ESD) Program Analysis
Survey For Non-Lucent Technologies Locations”, as may be modified from time to time by Company
through the issuance of an Engineering Change Order in accordance with Article 67.3 and such
subcontractors shall work to achieve and maintain a scoring classification of “Preferred” as
defined in Specification X-21341.
	 
	21.12	 	Supplier and its subcontractors shall store and handle components per IPC/JEDEC J-STD-033
requirements and Company’s Specification X-21377 entitled “Storage Requirements for Components
used in Lucent Technologies Products.” Any changes to Specification X-21377 will be processed
through the Engineering Change Order in accordance with Article 67.3. At Company’s request,
Supplier agrees to provide an internal document detailing Supplier’s and such




					
	 	 	 	 	 
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	 	 	subcontractor’s component storage and handling procedures and internal audits of such
procedures.






	21.13	 	The procedure for Supplier responding to Company for Product non-conformities detected by
Company shall be as follows:
	 
	 	 	When a Corrective Action Request is initiated by Company, a complaint notification letter
shall be sent by Company by electronic mail directly to Supplier’s program manager (or other
designated person) requesting a response with a Corrective Action Plan. The Corrective
Action Plan response shall include the following information:






	 	(a)	 	the initial actions taken to contain the problem;
	 
	 	(b)	 	a description of the root cause of the problem;
	 
	 	(c)	 	the proposed corrective action or solution to the problem;
	 
	 	(d)	 	the actual or planned implementation date of the corrective action;
	 
	 	(e)	 	the plans for verifying that the corrective action was effective; and
	 
	 	(f)	 	the actual or planned date of the verification of effectiveness.
	 	Supplier’s response to Product non-conformities detected by Company is expected to occur
within the timeframe described in the applicable Product Plan.






	21.14	 	Supplier shall report circuit pack return rates for all Products manufactured by Supplier
for Company. Supplier shall prepare a corrective action report when the circuit pack maximum
return rate as set forth in the applicable Product Plan is exceeded.






	21.15	 	For all Products returned to Supplier by Company, Supplier shall perform a failure mode
analysis, which at a minimum shall be at the Material level. Supplier shall record Material
level failure modes and accumulate failed Material found defective for the purpose of
determining repetitive occurrences. The corrective action status of the analysis of
identified repetitive Material failures shall be reported by Supplier to Company when
requested. If upon analysis Company returned Product is found to be within the Product
workmanship and functional Specifications (i.e., a no trouble found condition), Supplier shall
track these No Trouble Found conditions, invoice Company in accordance with Attachment H and
notify Company of such findings at a frequency described in the applicable Product Plan, so
that the appropriate investigative measures may be taken to determine the root cause of why
returned Product is NTF.






	21.16	 	If [ *** ] after the last shipment date of any Product under this Agreement, Company
notifies Supplier that such Product shows evidence of an Epidemic Condition (as defined
below), Supplier shall prepare and propose a CAP with respect to such Product within five (5)
Business Days, or such extended period as may be agreed to, of such notification, addressing
implementation and procedure milestones for remedying such Epidemic Condition(s). An
extension of this time frame is permissible upon mutual written agreement of the parties.
	 
	 	 	Upon notification by Company of the Epidemic Condition to Supplier, Company shall have
the right to postpone all or part of the shipments of unshipped affected Product, by giving
written notice of such postponement to Supplier, pending correction of the Epidemic
Condition. Such postponement shall temporarily relieve Supplier of its shipment liability
and Company of its shipment acceptance liability.
	 
	 	 	Should Supplier contest the existence of an Epidemic Condition or should Company reject
the CAP, then Company shall have the right to suspend all or part of its unshipped Orders
for the











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	 	 	affected Product, without liability to Company until such time as a mutually acceptable
solution is reached.
	 
	 	 	An Epidemic Condition will be deemed to exist when one or more of the following conditions
occur and the Epidemic Condition is due to the same root cause:






	 	(a)	 	failure reports or statistical samplings show that [ *** ] of Product installed
or shipped during any [ *** ] exhibit a highly objectionable symptom (such as
emissions of smoke, loud noises, deformation of housing) or other symptoms of this
type;
	 
	 	(b)	 	failure reports or statistical sampling show one or more instances of Product
tracked by Company to contain a potential safety hazard (such as personal injury or
death, fire, explosion, toxic emissions, etc.);
	 
	 	(c)	 	return rate data indicates that the observed mean time between failures
(“MTBF”) is not meeting the predicted MTBF. Predicted MTBF shall be calculated using
one of the industry recognized standards including, but not limited to, Bellcore GR332
(version 4, 5 or 6), AT&T Reliability Handbook (ISBN # 0-442-31848-0), Mil Standard
217 E or F, Italtel Reliability Prediction Handbook (IRPH93), or equivalent. When
periodic monitoring of the field data shows that a circuit pack’s MTBF is not being
met, Supplier shall report such condition to Company. At the same time Supplier shall
perform a ninety percent (90%) confidence interval analysis of the field data and
determine if such field data meets the predicted MTBF. If not, then this constitutes
an Epidemic Condition; and
	 
	 	(d)	 	Product dead on arrival (“DOA”) failures exceed a mutually agreed to level, to
be determined within six (6) months of the Effective Date. For the purpose of this
Agreement, DOA shall be defined as any Product that during test, installation or upon
its first use fails to operate in accordance with the Specification. Visual,
mechanical or appearance DOA is defined as any Product containing one or more major
defects that would make the Product unfit for use or installation.






	 	 	Only major functional and visual, mechanical or appearance defects shall be considered in
determining Epidemic Condition. Product may be sampled or, at Company’s option, one hundred
percent (100%) audited at Company’s or Supplier’s warehouses, factories or Company’s end
customer locations. If Product is sampled, the data must have ninety-five percent (95%) or
better statistical confidence.
	 
	 	 	An Epidemic Condition shall not include failures due to Company supplied Specification,
design, test, tooling, Materials, documentation, or instruction.
	 
	 	 	In the event that Supplier develops a remedy for the defect(s) that caused the Epidemic
Condition and Company agrees in writing that the remedy is acceptable, Supplier shall:






	 	(a)	 	incorporate the remedy in the affected Product in accordance with Article 67;
	 
	 	(b)	 	ship all subsequent Product incorporating the required modification correcting
the defect(s) at no additional charge to Company provided that the Epidemic Condition
is due to a cause covered by the Warranty in accordance with Article 22; and
	 
	 	(c)	 	repair and/or replace Product that caused the Epidemic Condition, if determined
by Company to be necessary. In the event that Company incurs costs due to such repair
and/or replacement, including but not limited to labor and shipping costs and the root
cause is caused by Supplier, Supplier shall [***].








			
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	 	 	Supplier and Company shall agree as to the remedy’s implementation schedule. Supplier shall
use reasonable commercial efforts to implement the remedy in accordance with the agreed-upon
schedule.
	 
	 	 	Provided that the Epidemic Condition is due to a cause covered by the Warranty in accordance
with Article 22, if Supplier is unable to develop a mutually agreeable remedy, or does not
adequately take into account the business interests of Company, as reasonably agreed by the
parties, Company may (a) develop and implement such remedy and, in such case, implementation
costs and risk of in-transit loss shall be [ *** ], (b) cancel Orders without
liability and return all Product affected by such Epidemic Condition for [ *** ] after receipt of such returned Product (with
risk of loss or in-transit damage borne by Supplier) and/or (c) terminate this Agreement
without further liability to Company, subject to Article 12.
	 
	21.17.	 	Supplier agrees to establish a traceability process for all its facilities which manufacture
Product for Company under this Agreement. This process shall include a procedure for
preserving the identity and origin of Products and Material incorporated in the Products to
isolate and recall suspect Products from use and trace the cause of failure to specific lots
or units of Products.
	 
	21.18.	 	As part of a program of continuous improvement, Supplier agrees to annually establish
improvement goals for a series of key quality objectives. These key objectives should
include, but are not limited to:






	 	(a)	 	customer return rates and on time delivery as may be mutually agreed upon
by the parties;
	 
	 	(b)	 	certification test and Product workmanship results; and
	 
	 	(c)	 	in-circuit, functional and final system Product test yields.






	 	 	Supplier agrees to track and report performance against goals on at least a monthly basis,
and to commit the resources reasonably necessary for the attainment of these goals.





ARTICLE 22 — WARRANTY





	22.1	 	Supplier shall manufacture the Products in accordance with applicable Specifications and
repair or replace, as the parties may mutually agree, without charge, any Products which are
proved to be defective as a result of Supplier’s workmanship or failure to comply with
applicable Specifications provided that:






	 	(a)	 	Company shall promptly notify Supplier in writing upon discovery of any defect
due to the causes referenced to above; and
	 
	 	(b)	 	such defective Product has been returned, freight charges prepaid, to
Supplier’s designated location within [ *** ] from the original delivery date by
Supplier to Company (the “Warranty Period”). If Supplier repairs any Product pursuant
to this Warranty, this Warranty shall apply to such Product for a period equal to the
greater of (i) six (6) months from the date the repaired Product is delivered to
Company, and (ii) the expiry of the initial Warranty Period for such Product.






	 	 	Commercially Purchased Items are expressly excluded from the Warranty set out in this Article 22.
	 
	22.2	 	Company requires a RMA from the Supplier prior to returning any Products. Such RMA shall not
be unreasonably delayed or withheld. All returned Products shall include documentation
describing the nature of the defect and under what conditions it occurred.








			
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	22.3	 	Company shall bear the cost of the return of Products to Supplier’s premises as designated by
Supplier from time to time. Supplier shall bear the costs of the redelivery to Company’s
premises of all Products which are found by Supplier to be defective as set forth herein. In
respect of any Products which are found by Supplier not to be so defective, Company shall pay
to Supplier an NTF charge in accordance with Attachment H in addition to all redelivery costs.
In the case of Product repair and replacement, title and risk of loss of returned Product
will pass to Supplier upon delivery to Supplier, and title and risk of loss of repaired or
replacement Product will pass to Company upon delivery to Company.






	22.4	 	The Warranty shall not apply to:






	 	(a)	 	Products which Company, Ordering Companies, third parties under Company’s
direction, or Company’s end customers, have (i) caused to have been misused, modified,
damaged, placed in an unsuitable (as determined by the Specifications) physical or
operating environment, (ii) maintained improperly, (iii) caused to fail by any product
not supplied by Supplier, or (iv) caused to fail by any service not supplied by
Supplier;
	 
	 	(b)	 	any Products which have been subjected to any repair not authorized in writing
in advance by Supplier;
	 
	 	(c)	 	any defect caused by Company or a third party or by an error or omission or
design or other fault in any Specification or other drawings, documentation, data,
software, information, know-how or Product provided or specified by Company;
	 
	 	(d)	 	subject to Article 22.5, any defect caused by, or arising directly or
indirectly out of or in connection with a defect in Material; or
	 
	 	(e)	 	Products in respect of which Supplier has been requested by Company not to
perform Supplier’s standard inspection and mutually agreed upon test procedure(s).






	22.5	 	Any Products which are defective as a result of damage caused by Supplier to Material shall
be covered by the Warranty.






	22.6	 	To the extent permissible, Supplier shall extend to Company the rights and warranties that
Supplier received from the original Material vendor for the Material used in the manufacture
of Products. Supplier shall work with Company in good faith on other warranty claims which
Supplier is able to assert against the Material vendors. Supplier shall work together with
Company to develop a mutually agreeable process to review the terms and conditions of the
Material warranties provided by approved vendors in an effort, jointly with Company where
appropriate, to extend the terms of such Material warranties so that the warranty period of
such Material warranties becomes co-extensive with the Warranty Period provided for in Article
22.1 in respect of the Product provided by Supplier to Company.






	22.7	 	Supplier warrants to Company that prototypes and preproduction units of Product, and all
other deliverables will be new, free from defects in workmanship and will conform to and
perform in accordance with the Specifications (to the extent that Supplier is capable of
assuring that prototypes and preproduction units can conform to and perform in accordance with
the Specifications). These warranties shall continue for a period of time agreed to by Company
and Supplier after the deliverable Product is accepted by Company. Supplier also warrants to
Company that any development will be performed in a workmanlike manner and to Company’s
reasonable satisfaction.






	22.8	 	AS RELATED TO PRODUCT WARRANTY, THIS ARTICLE 22 SETS OUT SUPPLIER’S SOLE OBLIGATION AND
LIABILITY (SUBJECT TO THE EPIDEMIC CONDITION PROVISIONS IN ARTICLE 21), AND COMPANY’S
EXCLUSIVE REMEDIES, FOR CLAIMS BASED ON DEFECTS IN OR FAILURE OF ANY PRODUCT AND, TO THE
EXTENT PERMISSIBLE BY APPLICABLE




					
	 	 	 	 	 
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	 	 	LAW, REPLACES ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING IMPLIED CONDITIONS OF
SATISFACTORY QUALITY OR FITNESS FOR A PARTICULAR PURPOSE.





ARTICLE 23  — REPAIRS NOT COVERED UNDER SUPPLIER’S WARRANTY





	23.1	 	In addition to Supplier’s repair and replacement Warranty obligations set forth in Article
22, subject to the availability of Material and Tooling, Supplier shall provide out of
Warranty repair and replacement Services for Mobility Products in accordance with Attachment H
of this Agreement For all Products or programs requiring repair, Company shall first offer
to Supplier the opportunity to effect such repairs in respect of such Product or program. If
Supplier elects not to provide repair services for a particular Product or program, Company
shall be entitled to repair such Products itself or to engage a third party to effect such
repairs. Where rates have not been set forth in Attachment H for a particular geography,
Company shall afford Supplier with an opportunity to submit a Quote for the provision of such
Services in accordance with Article 4.1.






	23.2	 	Company will be responsible for all return transportation costs for Product returned for
repair if such Product is not covered by the Warranty. Company shall assume the risk of loss
and damage until delivery to Supplier’s repair facility and from Supplier’s repair facility
back to Company. Supplier shall assume the risk of loss and damage from the time that the
returned Product arrives at Supplier’s repair facility until delivery at Supplier’s repair
facility to Company, to Company’s selected freight carrier, or, if applicable, delivery to
Company’s integration, repair or distribution center, if such center is at the same location
as Supplier’s repair facility, in accordance with Article 8.






	23.3	 	For purposes of providing repair services hereunder, Supplier shall maintain one repair hub
in each of Asia, Europe and the Americas, at a location agreed between Supplier and Company.






	23.4	 	Where mutually agreed upon by the parties and to the extent available, Supplier agrees to
offer for sale to Company, during the Term, functionally equivalent maintenance, replacement,
and repair parts (“Parts”) for the Products at the prices set forth in Supplier’s then current
agreement with Company for such Parts or, if no such agreement exists, at prices agreed upon
by Company and Supplier. If the parties fail to agree on a price, the price shall be a
reasonably competitive price for such Parts at the time of delivery.






	23.5	 	Supplier agrees to establish and maintain electronic communications facilities accessible by
third party logistics providers to allow such logistics providers to monitor the status of
Products under repair by Supplier.





ARTICLE 24 — SCRAP PROCEDURES





	24.1	 	Material or Products which: (i) fail to meet the required Specifications prior to shipment;
(ii) are considered Obsolete Inventory and Company does not require storage by Supplier of
such Obsolete Inventory, finished Product, work-in-process Product; or (iii) cannot be
repaired (collectively, “Scrap”), will not be sold to a third party by Supplier except as
approved by Company. Disposition of such Scrap shall be in accordance with this Article 24.
Supplier shall advise Company of any Scrap and if the parties agree that such designated Scrap
is not suitable for reuse in the manufacture of Products in whole or in part, such Scrap shall
be provided only to Company’s designated Scrap dealer for reclamation value to be accrued to
Company, unless otherwise instructed by Company. Supplier shall provide upon Company’s request
a report outlining the types and amounts of Scrap provided to Company’s scrap dealer.






	24.2	 	Supplier shall have the sole responsibility for the disposition of any hazardous or regulated
waste in accordance with Article 34.





     ARTICLE 25 — QUARTERLY PERFORMANCE REVIEW PROCESS



					
	 	 	 	 	 
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	25.1	 	Company and Supplier, through their respective representatives on the Strategic Alliance
Team, will participate in mutual performance reviews on a quarterly basis, or as frequently as
needed or requested by either Supplier or Company (the “Quarterly Performance Review Process”)
for the purpose of reviewing the Performance Metrics and other business and technical
information agreed to by the parties.






	25.2	 	The specific details (meeting dates and places, planning horizons, data requirements, etc.)
for the first of these Quarterly Performance Review Process meetings will be agreed to between
the respective parties within ninety (90) Business Days of the date hereof.






	25.3	 	Each party shall be entirely responsible for its own costs associated with participating in
the activities described in Article 25.1.





ARTICLE 26 — NOTICES 





	26.1	 	Unless otherwise specified herein, any notice, approval, request, authorization or other
communication required or permitted to be given hereunder shall be in writing and shall be
delivered in person, transmitted by telecopy or similar means of recorded electronic
communication or sent by registered mail, charges prepaid, addressed as follows:





	 	 	 	 	 	 	 
	 	 	if to Company:	 	Lucent Technologies Inc.
	 	 	 	 	600 Mountain Avenue
	 	 	 	 	Murray Hill, New Jersey 07974
	 

	 	 	 	Attention:
	 	Corporate Counsel
	 

	 	 	 	Telecopier No.:
	 	(908) 582-6869
	 
	 	 	 	 	 	 
	 	 	with a copy to:	 	Lucent Technologies Inc.
	 	 	 	 	67 Whippany Rd
	 	 	 	 	Whippany, NJ 07981
	 

	 	 	 	Attention:
	 	Michael Fahrney
	 

	 	 	 	Telecopier No.:
	 	(973) 386-2876
	 
	 	 	 	 	 	 
	 	 	if to Supplier:	 	Celestica Corporation
	 	 	 	 	9 Northeastern Blvd.
	 	 	 	 	Salem, New Hampshire 03079
	 

	 	 	 	Attention:
	 	General Manager
	 

	 	 	 	Telecopier No.:
	 	603-890-8450
	 
	 	 	 	 	 	 
	 	 	with a copy to:	 	Celestica Inc.
	 	 	 	 	1150 Eglinton Avenue East
	 	 	 	 	Toronto, Ontario
	 	 	 	 	M3C 1H7
	 

	 	 	 	Attention:
	 	Vice President and General Counsel
	 

	 	 	 	Telecopier No.:
	 	(416) 448-2817







	 	 	Any such notice or other communication shall be deemed to have been given and received on
the day on which it was personally delivered or transmitted by telecopier, receipt confirmed
(or, if such day is not a Business Day, on the next following Business Day) or, if mailed,
on the fifth (5th) Business Day following the date of mailing or, if couriered
overnight, on the second (2nd) Business Day following the date of couriering;
provided, however, that, if at the time of mailing or within three (3) Business Days
thereafter there is or occurs a labor dispute or other event which might reasonably be
expected to disrupt the delivery of documents by mail, any notice or other communication
hereunder shall be delivered or transmitted by means of telecopier as aforesaid.






					
	 	 	 	 	 
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	 	 	Either party may change its address for service at any time by giving notice to the other
party in accordance with this Article 26.





ARTICLE 27 — DISPUTE RESOLUTION PROCESS 





	27.1	 	If an unresolved dispute arises out of, or relates to, this Agreement or an Order, the
parties agree to attempt to resolve the dispute in the following manner:






	 	(a)	 	either party shall issue notice to the other party outlining the nature of the
dispute. The Strategic Alliance Team shall have ten (10) Business Days after receipt of
such notice to resolve the dispute;
	 
	 	(b)	 	in the event that the dispute has not been resolved by the Strategic Alliance
Team within such ten (10) Business Day period, the dispute shall be submitted to the
parties’ respective executives supporting the Strategic Alliance Team for resolution;
and
	 
	 	(c)	 	in the event that the dispute is not resolved by the parties’ executives
supporting the Strategic Alliance Team within ten (10) Business Days, the dispute shall
be submitted to Supplier’s Chief Executive Officer and Company’s Chief Procurement
Officer for resolution within a further ten (10) Business Days.






	27.2	 	Nothing in this Article shall be construed to preclude either party from seeking injunctive
or other affirmative relief in order to protect its rights pending dispute resolution in
accordance with Article 27.1.







					
	 	 	 	 	 
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SECTION II — GENERAL TERMS




ARTICLE 28 — ASSIGNMENT AND SUBCONTRACTING





	28.1	 	Supplier shall have the right to subcontract any or all of its obligations under this
Agreement to an Affiliate of Supplier provided Supplier remains responsible for the
performance of such Affiliate. Supplier shall be responsible to Company for all services
performed by Supplier’s subcontractor(s) if connection with the fulfillment of Supplier’s
obligations under this Agreement at any tier. Supplier shall cause its Affiliates to which it
has subcontracted any or all of its obligations under this Agreement in accordance with this
Article 28.1 to abide by the terms and conditions of this Agreement. All references to
Supplier in this Agreement shall be deemed to be, where applicable, a reference to Supplier’s
Affiliates to which Supplier has subcontracted any or all of its obligations under this
Agreement in accordance with this Article 28.1. Supplier shall have the right to subcontract
any of its obligations to any third party subcontractor with the prior written consent of
Company, which consent shall not be unreasonably withheld.
	 
	28.2	 	This Agreement shall inure to the benefit of, and shall be binding on and enforceable by, the
parties and their respective successors and permitted assigns. Neither party may assign this
Agreement or any part thereof without the prior written consent of the other party, which
consent shall not be unreasonably withheld or delayed; provided, however, that either party
may assign any part(s) of this Agreement or this Agreement to any of its Affiliates or to a
successor to all or substantially all of its business, provided that (i) such assignee
executes an agreement with the non-assigning party and the assigning party whereby the
assignee agrees to be bound hereunder, and (ii) where the assigning party is Company, Supplier
is satisfied that the proposed assignee has the financial capacity and creditworthiness to
fulfill its obligations under this Agreement.
	 
	28.3	 	In the event that Company intends to sell all or any part of a Product line or all or a
portion of its business to a third party and Company wishes to maintain continuity of supply
of such Products as part of the terms of such sale, Company shall notify Supplier of such sale
as soon as is reasonably practicable prior to such sale (subject to confidentiality
requirements). Subject to Supplier: (a) executing an interim manufacturing agreement with such
third party, which contains confidentiality and intellectual property terms agreeable to
Supplier and such third party, (b) being satisfied, acting reasonably, that the third party
has the financial capacity and creditworthiness to fulfill its obligations to Supplier under
such agreement, Supplier shall continue to manufacture such Products for such third party
after such sale, on the same economic terms as under this Agreement, for a period of [ *** ]. Supplier agrees to use good-faith efforts to negotiate a new manufacturing supply
agreement with such third party for such Products, prior to the end of such [ *** ]
period.





ARTICLE 29 — ATTENDANCE AT SUPPLIER’S FACILITY 





	 	29.1	 	Upon reasonable prior notice and subject to complying with Supplier’s plant rules and
regulations, internal security and confidentiality requirements, security clearance
regulations and other procedures as applicable, Company may place one or more personnel in
Supplier’s facility at which Supplier manufactures Products for Company under this Agreement
to carry out the functions Company may deem necessary in the portion of the facility in which
Supplier kits Material and manufactures, inspects, repairs, distributes and ships Product.
Compensation for such personnel shall be borne by Company. Supplier agrees to furnish such
personnel with reasonable working facilities, as necessary, to perform their work, which shall
include access during normal working hours to areas where Product is manufactured, repaired,
stored and distributed, all at no charge to Company. If requested by Company, Supplier shall
also provide office space and support services as required at Company’s expense at Supplier’s
actual cost.






			
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ARTICLE 30 — AUDIT





	30.1	 	Supplier shall maintain accurate and complete records including, but not limited to, (i) a
physical inventory, if applicable, of all costs incurred under this Agreement which may
affect: (a) verification, re-determination, or revision of Product prices under this
Agreement; (b) termination charges payable by Company under this Agreement; (c) all costs
incurred for Tooling purchased under this Agreement; (d) Product quality conformance; (e)
compliance with approved manufacturing processes and adherence to Company’s BOM and AVL; (f)
Material inventory used to manufacture Product; (g) conformance with Specifications; and (h)
volumes purchased and purchase prices paid for all Material procured in the performance of
this Agreement; and (ii) at Company’s option, for environmental assessment purposes, all
applicable records relating to the life cycle of any Product manufactured under this
Agreement.
	 
	30.2	 	The records referenced in Article 30.1 shall be maintained in accordance with recognized
commercial accounting practices so they may be readily reviewed in accordance with Article
30.3 and shall be held until all costs and compliance with the terms of this Agreement have
been finally determined and payment or final adjustment of payment under this Agreement or the
necessary corrective action under this Agreement has been taken.
	 
	30.3	 	Company shall, at its cost and expense, have the right
exercisable on a [ *** ] basis upon
reasonable notice to Supplier during Supplier’s normal business hours to examine and audit
(“Audit”) the records described in Article 30.1. The parties agree that such Audits shall
conform to procedures mutually agreed upon by the parties. No such audits shall be made later
than two (2) calendar year(s) after the later of (a) the final delivery date of Product
ordered or completion of Services rendered or (b) two (2) years after the termination of this
Agreement. If Company identifies any issues or concerns related to such records and the
pricing of the Product or the Services, Company shall provide a statement to Supplier setting
out in reasonable detail the nature of such issues or concerns. Supplier and Company shall
attempt to resolve the matters in dispute in a timely manner and make such adjustments, if
any, to the pricing of the relevant Products or Services as may be required. For certainty,
Company acknowledges and agrees that any right to review and Audit under this Article 30.3 may
be limited by and is subject to any confidentiality obligations that Supplier or its
Affiliates may have to Material vendors or other suppliers and subcontractors as well as
limitations imposed by Law or regulatory requirements.





ARTICLE 31 — BANKRUPTCY AND TERMINATION FOR FINANCIAL INSECURITY 





	31.1	 	Either party may terminate this Agreement by notice to the other party (a) if the other party
makes an assignment for the benefit of creditors (other than solely an assignment of moneys
due); or (b) if the other party evidences an inability to pay debts as they generally become
due, unless adequate assurance of its ability to pay is provided within thirty (30) Business
Days of such notice.
	 
	31.2	 	If a proceeding is commenced under any provision of the United States Bankruptcy Code or the
bankruptcy and/or insolvency legislation of any other jurisdiction, voluntary or involuntary,
by or against either party, and this Agreement has not been terminated, the non-debtor party
may file a request with the bankruptcy court to have the court set a date within sixty (60)
Business Days after the commencement of the case, by which the debtor party will assume or
reject this Agreement, and the debtor party shall cooperate and take whatever steps necessary
to assume or reject this Agreement by such date.





ARTICLE 32 — CHOICE OF LAW





	32.1	 	This Agreement and all transactions under it shall be governed by the laws of the State of
New York excluding its choice of laws rules and excluding the Convention for the International
Sale of Goods. Each party agrees to submit to the jurisdiction of any court where an action
is commenced against the other party based on a claim for which such party has agreed to
indemnify the other party under this Agreement. With respect to disputes between the
parties, the parties agree to submit to the jurisdiction of the State and federal courts of
New York.






			
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ARTICLE 33 — COMPANY RESPONSIBILITIES





	33.1	 	Company agrees to provide on a timely basis all Specifications, Material that Company has
agreed to furnish or supply to Supplier, Company Tooling and Company Proprietary Information
required to be furnished or supplied by Company to Supplier in accordance with this Agreement
and the Intellectual Property License Agreement in order for Supplier to fulfill its
obligations under this Agreement, including Attachment H. Such Specifications, Company
Proprietary Information and other items or information shall be accurate and contain all items
and information necessary from Company for Supplier to fulfill its obligations under this
Agreement, failing which the process described in Article 33.2 will be followed.
	 
	33.2	 	Supplier shall address any problems and promptly notify Company of such problems which it (i)
encounters in the performance of its obligations under this Agreement, including Attachment H
and (ii) believes are related to causes attributable to Company. The parties will, on a
timely basis, jointly determine whether such process problems are so attributable to Company.
In such event, the Strategic Alliance Team shall agree on all reasonable costs incurred by
Supplier in connection with such process problems and how such costs shall be addressed.
Where such problems are so attributable to Company, (i) Company shall be responsible for
correcting such problems and implementing solutions with the cooperation of Supplier, (ii) for
causes related solely to such problems, Supplier shall not be deemed in breach of its delivery
obligations under this Agreement, including Attachment H, nor shall any applicable measure of
Supplier’s performance, including performance related to delivery, hereunder be affected, and
(iii) for causes related solely to such problems, Supplier shall have no liability for any
delays in the scheduled delivery date.





ARTICLE 34 — COMPLIANCE WITH LAWS





	34.1	 	Each party and its agents shall, and shall cause its contractors and subcontractors to,
comply in performance of its obligations under this Agreement at their own expense with all
applicable local, federal, regional and international laws, ordinances, regulations and codes,
standards, directives and international conventions and agreements to the extent that any of
the foregoing have the force of law by being directly enforceable by a governmental authority,
by a court or other proper tribunal (collectively, “Laws”).
	 
	34.2	 	Each party will make commercially reasonable efforts to support the other party’s compliance
efforts under Sarbanes — Oxley Act of 2002.





ARTICLE 35 — CONFIDENTIAL INFORMATION





	35.1	 	Any Company Proprietary Information provided or made available by Company or its Affiliates
to or coming into possession of Supplier and its Affiliates and any Supplier Proprietary
Information provided or made available by Supplier or its Affiliates to or coming into the
possession of Company and/or its Affiliates shall be deemed for the purposes of this Agreement
to be “Confidential Information” of the party disclosing (“discloser”) such information to the
other party (“recipient”), except if such information disclosed to recipient is: (i) in or
becomes part of the public domain through no fault of recipient; (ii) disclosed to recipient
by a third party without breach of any obligation or other restriction; (iii) known to
recipient at the time of disclosure and has been so documented prior to receipt thereof; or
(iv) independently developed by recipient without access to any information furnished to it by
discloser and has been or is so documented.
	 
	35.2	 	All Confidential Information shall, as between the parties, be owned and remain the sole and
exclusive property of discloser. All Confidential Information of discloser shall be held in
confidence by recipient, shall be protected from all harm, loss, theft and unauthorized access
and, if in a form
of any physical medium of any kind, returned by recipient upon request of discloser. Upon
the termination or expiration of this Agreement, each party shall return to the other party
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	 	 	Confidential Information of the other party in its possession or certify in writing that
such Confidential Information has been destroyed.






	35.3	 	Recipient shall not use the Confidential Information for any purposes other than those
contemplated under this Agreement.
	 
	35.4	 	The existence and terms of this Agreement shall be treated as Confidential Information;
provided, however, that either of the parties may disclose the existence and terms of this
Agreement to: (i) their respective legal and financial advisors; (ii) their underwriters and
their respective counsel, as part of their due diligence in connection with any offering of
securities of such party; (iii) their lenders and their counsel, as part of their due
diligence in connection with any financings; or (iv) stock exchanges, securities commissions
or other similar bodies (including in public filings), to the extent required by Laws.
	 
	35.5	 	The parties agree that Confidential Information shall be disclosed to only those people
within their respective organizations who have a need to know the information for the purposes
of this Agreement or to those third party consultants, other than those referred to in Article
35.4, and subcontractors who have agreed to be bound by the confidentiality terms contained
herein.
	 
	35.6	 	Each party represents and warrants that it has the right to disclose to the other the
information disclosed under this Agreement. Neither party shall, without consent or approval,
at any time disclose to the other party any information that is confidential or otherwise
restricted by reason of any oral, written or implied agreement or other understanding it has
with any third party.
	 
	35.7	 	Each party acknowledges that monetary damages may provide an inadequate remedy in the event
of a breach of this Article by the other party, and each party shall be entitled to injunctive
or other affirmative relief and/or to give notice of default pursuant to this Agreement, or
both against the other party.





ARTICLE 36 — DEFAULT





	36.1	 	Notwithstanding any other provision of this Agreement, including, but not limited to Article
11 and Article 27, but subject to Article 43.1:






	 	(a)	 	Subject to Article 36.1(c), in the event Supplier shall be in material breach
of any of the terms, conditions, or covenants of this Agreement and such breach shall
continue for a period of thirty (30) Business Days after the giving of written notice
to Supplier thereof by Company, then in addition to all other rights and remedies which
Company may have at law or equity or otherwise, Company shall have the right to
terminate this Agreement without any charge to or obligation or liability of Company
(other than as set forth in Article 12).
	 
	 	(b)	 	Subject to Article 36.1(c), in the event Company shall be in material breach of
any of the terms, conditions, or covenants of this Agreement and such breach shall
continue for a period of sixty (60) Business Days after the giving of written notice to
Company thereof by Supplier, then in addition to all other rights and remedies which
Supplier may have at law or equity or otherwise, Supplier shall have the right to
terminate this Agreement without any charge to or obligation or liability of Supplier.
	 
	 	(c)	 	Prior to issuing a notice of material breach to the other party in accordance
with Article 36.1(a) or (b), as applicable, the notifying party shall have requested an
emergency meeting of the Strategic Alliance Team to consider and resolve the claimed
material breach. Should the Strategic Alliance Team fail to agree on a resolution to
the claimed material breach within seven (7) days of such request, the notifying party
may declare the
other party in material breach and may serve notice in accordance with Article
36.1(a) or (b), as applicable.





					
	 
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ARTICLE 37 — DEVELOPED INFORMATION AND INVENTIONS





	37.1	 	Supplier agrees that Supplier shall and, where applicable, shall have Supplier’s Affiliates,
employees, consultants, subcontractors (but only those subcontractors permitted pursuant to
Article 28.1), representatives or agents (collectively “Supplier Associates”) disclose and
furnish promptly to Company all Company IP. Supplier further agrees that all Company IP,
other than any Background Information incorporated therein, shall be: (i) solely and
exclusively owned (including all right, title and interest thereto) by Company, and Supplier
shall take all reasonable actions which Company may request in order to vest and document such
ownership in Company, (ii) kept in confidence by Supplier and Supplier Associates in
accordance with Article 35, and (iii) used by Supplier and Supplier Associates only for the
purposes of performing Supplier’s obligations in accordance with the terms of this Agreement.
If such Company IP includes, or requires for its use, any Background Information, Supplier
agrees to grant and hereby grants to Company an irrevocable, non-exclusive, royalty-free,
non-transferable, sub-licensable (as provided in Article 37.4) license to use and copy such
Background Information to the extent required for Company to manufacture, distribute, test,
repair or service Products. Ownership of the Background Information shall remain with
Supplier. Company agrees to grant and hereby grants to Supplier a revocable (upon termination
of this Agreement), non-exclusive, royalty-free, non-transferable license to use and copy
Company IP, but only to the extent required for Supplier or Supplier Associates to
manufacture, distribute, test, repair or service Products under this Agreement.
	 
	37.2	 	Any Developed IP which is developed jointly by the parties and which is not Company IP
(“Co-Developed IP”) shall be owned jointly by the parties, each of which shall have an equal
undivided joint interest therein. Company and Supplier agree that they shall each have the
right to use the Co-Developed IP and grant licenses for the use of the Co-Developed IP without
the consent of, and without accounting to, the other party.
	 
	37.3	 	The parties acknowledge and agree that as between Supplier and Company, Supplier shall solely
and exclusively own all right, title and interest in and to all aspects of all Developed IP
originated or developed by Supplier or Supplier Associates which is not Company IP or
Co-Developed IP (“Supplier IP”). Where Supplier IP is necessary to permit Company to ensure
Product continuity, consistency and/or ongoing sources of supply (such Supplier IP being
“Supplier Product IP”), Supplier agrees to grant and hereby grants to Company an irrevocable,
non-exclusive, royalty-free, non-transferable, sub-licensable (as provided in Article 37.4)
license to use and copy such Supplier Product IP, but only to the extent required for Company
to manufacture, distribute, test, repair or service Products.
	 
	37.4	 	Company may grant a sub-license to the Background Information licensed to it in Article 37.1
and/or a sub-license to the Supplier Product IP licensed to it in Article 37.3, but only for
the purpose of any such sub-licensee (“Sublicensee”) manufacturing, distributing, testing,
repairing or servicing Products for Company, provided that any Sublicensee of the Background
Information or the Supplier Product IP acknowledges in writing, for the benefit of Supplier,
that it will observe and be bound by all of Company’s confidentiality obligations under this
Agreement in respect of the sublicensed Background Information or Supplier Product IP, as the
case may be. Background Information and Supplier IP shall be deemed to be Confidential
Information of Supplier pursuant to Article 35.
	 
	37.5	 	The parties agree that this Article 37 shall be subject to the terms and conditions of any
development agreement relating to the subject matter herein, which the parties may enter into
subsequent to the Effective Date, to the extent such terms and conditions are inconsistent
with terms of this Article 37.





ARTICLE 38 — DOCUMENTATION NEEDED FOR PREFERENTIAL DUTY TREATMENT





	38.1	 	Supplier shall provide Company with a valid, accurately completed certificate of origin prior
to the first shipment of Product sufficient to be used by Company as proof of eligibility for
any applicable 




					
	 
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	 	 	duty preferential treatment programs. Supplier further agrees to cooperate with
Company in the substantiation of preferential duty program claims, preparation of responses to
customs inquiries, or other treaty claims that arise out of Product shipped under this
Agreement or any Order. Supplier shall notify Company prior to making any pricing or sourcing
changes for Product that may affect the application of preferential duty treatment programs.





ARTICLE 39 — DUTY DRAWBACK





	39.1	 	Company reserves the right to claim duty drawback on all purchases from Supplier, and
Supplier shall cooperate by providing all documentation (that is required by Company to claim
duty drawback) available to Supplier in its organization for Product which may be subject to
duty drawback; provided that Supplier shall not be required to obtain any additional
documentation from any Material Vendor.





ARTICLE 40 — ENVIRONMENTAL MANAGEMENT SYSTEMS 





	40.1	 	Supplier warrants with respect to Supplier’s manufacturing and repair operations involved in
the performance of Supplier’s obligations under this Agreement that it intends no later than
three (3) years from the date of acquisition of such manufacturing and repair services to
implement elements of an internationally recognized Environmental Management System (“EMS”)
standard, for example ISO 14001: 1996, or the Eco-Management and Audit Scheme (“EMAS”) for
certification by an accredited third party registrar; or, where such certification already
exists, that it will maintain such certification in good standing with the third party
registrar.
	 
	40.2	 	In the event that Company requests Supplier to accelerate the adoption of an EMS standard in
order to enable Company to meet an end customer’s requirement, the parties shall negotiate in
good faith the timing for achieving such standards or certifications.
	 
	40.3	 	Supplier commits to provide to Company, on a regular basis, environmental performance data on
both Products and processes, as may be mutually agreed by the parties.





ARTICLE 41 — ENVIRONMENTALLY HAZARDOUS SUBSTANCES 





	 	 	The parties agree to re-negotiate this Article 41.1 to address Company requirements and any
Services to be provided related to the European Union RoHS directive.
	 
	41.1	 	Supplier warrants to Company that none of the substances that have been banned by Company for
Products, processes and/or packaging materials pursuant to Company Specification # KT
010-160-006-EHS02 Issue 1 dated May 19, 2000, titled “Lucent Technologies’ Listing of Banned
Substances for Products and Packaging”, as may be modified from time to time by Company
through the issuance of an Engineering Change Order in accordance with Article 67.3, is used
or will be used by Supplier in the manufacture, processing or packaging of Product supplied to
Company, or that it is working to reduce and will, in an expeditious manner, eliminate their
use. If Supplier is not the manufacturer of the Material used in the Product, Supplier shall
work with the Material vendor to reduce and will, in an expeditious manner, eliminate the use
of such substances. Upon request, Supplier shall provide to Company Certificates of
Compliance certifying that the packaging and/or packaging Material provided under this
Agreement are in compliance with the requirements set forth above in this Article 41.1.
	 
	41.2	 	For those Products where Supplier has any level of design control (including Material and/or
vendor selection), Supplier shall:






	 	(a)	 	use reasonable efforts to minimize the use of environmentally
hazardous substances in such Products, processes and packing Materials as
listed in Company Specification X-21314 Issue 1 dated January 13, 2000, titled
“Use of Environmentally Hazardous Substances in Product Design”, as may be
modified from time to time by 




					
	 
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	 	 	 	Company through the issuance of an Engineering
Change Order in accordance with Article 67.3;






	 	(b)	 	establish and/or maintain a program of tracking the use of
environmentally hazardous substances, at a minimum covering the substances
referenced in Company Specification X-21314, in any such Products or Services,
including any packing materials, provided to Company by Supplier;
	 
	 	(c)	 	report to Company the use of environmentally hazardous
substances, at a minimum covering the substances referenced in Company
Specification X-21314, in any Products or Services, including any packing
Materials, provided to Company. Updates on usage will be provided to Company
by Supplier on a per change basis; and
	 
	 	(d)	 	upon Company request, provide, within a reasonable time frame,
information on Materials added to Specification X-21314.






	41.3	 	Company represents that immediately prior to August 31, 2001, it was responsible for
procuring the Material and Commercially Purchased Items in the United States for use in the
Products and that it manufactured and processed such Materials and Products in accordance with
Article 41.1.





ARTICLE 42 — EXPORT CONTROL





	42.1	 	Supplier shall not use, distribute, transfer or transmit any Products, software or technical
information (even if incorporated into other Products) provided to it by Company under this
Agreement except in compliance with all applicable export laws and regulations (the “Export
Laws”). Supplier shall not, directly or indirectly, export or re-export the following items to
any country, without the appropriate export authorization, as specified in the applicable
Export Laws: (a) software or technical data disclosed or provided to Supplier by Company or
Company’s Affiliates; or (b) the direct product of such software or technical data. The
obligations stated in this Article 42.1 will survive the expiration, cancellation or
termination of this Agreement or any other related agreement.





ARTICLE 43 — FORCE MAJEURE





	43.1	 	Neither party shall be held responsible for any delay or failure in performance of any part
of this Agreement to the extent such delay or failure is caused by fire, flood, strike, civil,
governmental or military authority, act of God, or other similar causes beyond its control and
without the fault or negligence of the delayed or non-performing party or its subcontractors.
Supplier’s liability for loss of or damage to Company’s Product, Material or Tooling in
Supplier’s possession or control shall not be modified by this Article 43.1. When a party’s
delay or nonperformance due to a cause referred to in this Article 43.1 continues or may be
reasonably expected to continue for a period of at least thirty (30) Business Days, the other
party may terminate, at no charge except for the expressed liabilities set forth in Article
12, any affected Order under this Agreement. When a party’s delay or nonperformance due to a
cause referred to in this Article 43.1 continues or may be reasonably expected to continue for
a period of at least ninety (90) Business Days, the other party may terminate, at no charge
except for the expressed liabilities set forth in Article 12, the Agreement.





ARTICLE 44 — IDENTIFICATION





	44.1	 	Neither party shall, without the other party’s prior written consent or request as set out in
Article 54.2, make public use of any trade name, trademark, logo, or any other designation or
drawing of such other party or its Affiliates.





ARTICLE 45 — IMPLEADER




					
	 
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	45.1	 	Supplier shall not implead or bring an action against Company based on any claim by any
person for personal injury or death to an employee of Company for which Company has previously
paid or is obligated to pay worker’s compensation benefits to such employee or claimant and
for which such employee or claimant could not otherwise bring legal action against Company.





ARTICLE 46 — INDEMNITY





	46.1	 	Supplier shall indemnify, defend and hold harmless Company and its Affiliates against claims
and actions brought by or on behalf of third parties (other than Affiliates of Company) in
respect of any Losses to such third parties that may arise or be asserted, based directly or
indirectly, upon death or personal injury or damage of any kind to any person or property
claimed to have resulted from the gross negligence or willful acts of Supplier or any defect
in Supplier’s workmanship (excluding defects caused by or arising, directly or indirectly, out
of any Specifications or other Company Proprietary Information supplied or written
instructions given by, or on behalf of, the Company) in any of the Product sold to, or
Services supplied to, Company hereunder or due to failure to comply with the Specifications
established hereunder except to the extent that any such Losses are due to the gross
negligence or willful acts of Company or its Affiliates or their respective officers,
employees or agents.
	 
	46.2	 	Company shall indemnify, defend and hold harmless Supplier and its Affiliates against all
claims and actions brought by or on behalf of third parties (other than Affiliates of
Supplier) in respect of any Losses to such third parties that may arise or be asserted, based
directly or indirectly, upon death or personal injury or damage of any kind to any person or
property claimed to have resulted from the gross negligence or willful acts of Company or
where Supplier has complied with the Specifications and/or with the Company Proprietary
Information supplied and Company’s manufacturing processes and written instructions given by,
or on behalf of, the Company in manufacturing the Product, except to the extent that any such
Losses are attributable to the gross negligence or willful act(s) of Supplier or its
Affiliates, and their respective officers, employees or agents.





ARTICLE 47 — INFRINGEMENT





	47.1	 	Supplier shall indemnify, defend and save harmless Company, its Affiliates and their
customers, agents, officers, directors, and employees (all referred to in this Article 47.1 as
“Company”) from and against any Losses that result from any claims (referred to in this
Article 47.1 as “Infringement Claims”) brought against Company by or on behalf of a third
party (other than an Affiliate of Company) of which Supplier is promptly notified in writing
by Company, arising from or in connection with the violation of a third party’s proprietary
rights, including trade-secret, proprietary-information, trademark, copyright or patent
rights, in connection with the performance by Supplier of its obligations under this
Agreement, except for such claims for which Company shall indemnify Supplier in accordance
with Article 47.2. Supplier shall (notwithstanding Article 84.3) be solely in control of
defending or settling, at its own expense, any demand, action, or suit on any such
Infringement Claim. Company shall cooperate in good faith and assist Supplier, at Supplier’s
expense, to defend any such Infringement Claim, and Company shall make no statement or take
any action which might hamper or undermine Supplier’s defense or settlement thereof.
	 
	47.2	 	Company shall indemnify, defend and save harmless Supplier, its Affiliates and their
consultants, representatives, customers, agents, officers, directors, subcontractors (but only
those subcontractors permitted pursuant to Article 28.1) and employees (all referred to in
this Article 47.2 as “Supplier”), from and against any Losses that result from any claims
(referred to in this Article 47.2 as “Infringement Claims”) brought against Supplier by or on
behalf of a third party (other than an Affiliate of Supplier) of which Company is promptly
notified in writing by Supplier, arising from or in connection with the violation of any third
party’s proprietary rights, including trade-secret, proprietary-information, trademark, or
copyright or patent rights, in connection with the performance by Supplier of its obligations
under this Agreement which arise: (i) from the compliance by Supplier with written
Specifications furnished or supplied by Company; (ii) from the combination by Company of a
Product with other equipment, products or apparatus not furnished 




					
	 
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	 	 	by Supplier; (iii) from the
material modification of Product by Company made after delivery by Supplier; (iv) from the
compliance by Supplier with any process or method of manufacture, assembly or testing at the
express written request of Company; or (v) from the use by Supplier of the Licensed Technical
Information, Licensed Trademarks or Licensed Software (as defined in the Intellectual Property
License Agreement) as furnished by Company, but only to the extent that such Infringement
Claim is specifically based on such Licensed Technical Information, Licensed Trademarks or
Licensed Software and not on any other information, software or processes which may be used in
conjunction with the Licensed Technical Information, Licensed Trademarks or Licensed Software.
Company shall (notwithstanding Article 84.3) be solely in control of defending or settling, at
its own expense, any demand, action, or suit on any such Infringement Claim to the extent that
Company has given an indemnity pursuant to this Article 47.2. Supplier shall cooperate in
good faith and assist Company, at Company’s expense, to defend any such Infringement Claim,
and Supplier shall make no statement or take any action which might hamper or undermine
Company’s defense or settlement thereof. Company’s obligations to indemnify Supplier under
subsection (v) of this Article 47.2 shall only apply to Infringement Claims (i) which arise
during the term of this Agreement and (ii) with respect to which an infringement claim is
filed prior to six (6) years after the termination of this Agreement. Except for claims which
(A) fall within the Company indemnity provided for in this Article 47.2, and (B) arise out of
the same subject matter as the claims specifically identified in Schedule 3.12(b) to the Asset
Purchase Agreements (all of which claims shall not be included for the purposes of the
calculation of the limitation of liability provided for under Section 9.3(f) of the Asset
Purchase Agreements), the indemnities provided by Company under this Article 47.2 shall be
subject to the limitation of liability provided for in Section 9.3(f) of the Asset Purchase
Agreements.





ARTICLE 48 — INSURANCE




	 	 	 	 	 
	48.1

	 	(a)
	 	Supplier shall maintain and, unless the parties otherwise agree, cause Supplier’s
subcontractors to maintain the following minimum insurance limits and coverages during the
term of this Agreement:







	 	(i)	 	worker’s compensation insurance as prescribed by the law of the
State or nation in which work is performed by Supplier or Supplier’s
subcontractors under this Agreement; and employer’s liability insurance with
limits of at least $500,000 for each occurrence;
	 
	 	(ii)	 	automobile liability insurance, if the use of motor vehicles is
required in connection with the performance of Supplier’s obligations under this
Agreement, with limits of at least $1,000,000 combined single limit for bodily
injury and property damage for each occurrence;
	 
	 	(iii)	 	commercial general liability (CGL) ISO 1988 or later occurrence
form of insurance including contractual liability, products/completed operations
with limits of at least $1,000,000 combined single limit for bodily injury and
property damage liability for each occurrence. This insurance should be
maintained for a period of at least three (3) years after termination of this
Agreement;
	 
	 	(iv)	 	excess/umbrella liability insurance with limits of at least
$10,000,000 per occurrence and in the aggregate, following form of primary
employer’s liability, automobile liability and commercial general liability
insurance policies;
	 
	 	(v)	 	all-risk property insurance including business interruption in an
amount equal to one-hundred percent (100%) of the replacement cost value of any
building and/or equipment involved under this Agreement. Company shall be named
as a loss payee as its interests may appear under this Agreement; and





					
	 
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	 	(vi)	 	where applicable, transit insurance including inland and ocean
cargo with limits equal to one-hundred percent (100%) of the replacement cost
value of the property being shipped.






	 	(b)	 	All CGL and automobile liability insurance shall designate Company, its
Affiliates and subsidiaries, its directors, officers and employees as additional
insureds.
	 
	 	(c)	 	All such insurance should be primary and non-contributory and is required to
respond and pay prior to any other insurance or self-insurance available. Any other
coverage available to Supplier shall apply on an excess basis. Supplier and its
insurer(s) and anyone claiming by, through, under or on Supplier’s behalf shall have no
claim, right of action or right of subrogation against Company and its end customers
based upon any loss or liability insured against under the foregoing insurance.
	 
	 	(d)	 	Supplier shall, and shall cause its subcontractors to, furnish prior to the
start of work by Supplier and/or Supplier’s subcontractors under this Agreement,
Certificates of Insurance or adequate proof of the foregoing insurance including, if
specifically requested by Company, copies of the endorsements and insurance policies.
Company shall be notified at least thirty (30) Business Days prior to cancellation of
or change in any such policy. Insurance companies providing such coverage shall be
rated by A.M. Best with at least an A- rating.






	48.2	 	Supplier shall allow Company’s representatives and representatives of Company’s insurance
carrier to inspect Supplier’s plant(s) at which work is performed by Supplier under this
Agreement at all reasonable times for fire, flood and other hazards to Company’s property or
to any other property for which Company is or may be responsible or that Company must rely
upon for the performance of this Agreement.





ARTICLE 49 — INVOICING FOR PRODUCTS OR COMMERCIALLY PURCHASED ITEMS





	49.1	 	Orders will be invoiced based on price in effect at time of delivery and shall be paid in
accordance with Article 7.
	 
	49.2	 	Unless otherwise specified in an Order and subject to the Flexible Delivery Terms outlined in
Attachment G, for each delivery or shipment of Products or Commercially Purchased Items,
Supplier shall: (a) render an original invoice, showing Agreement and Order number; (b)
render separate invoices for each shipment within twenty-four (24) hours after the preceding
shipment; and (c) mail invoices to the address shown on the Order. Unless otherwise specified
in an Order, if prepayment of transportation charges is authorized, Supplier shall include the
transportation charges from the delivery point to the destination as a separate item on the
invoice, stating the name of the carrier used.
	 
	49.3	 	Supplier’s invoices for every international shipment of Product or Commercially Purchased
Items will also include the following information for each item shipped: (a) a complete noun
description in English (unless otherwise specified) consistent with the harmonized tariff
schedule, (b) a statement as to the country of origin of the Product or Commercially Purchased
Item, (c) Company’s Comcode for the Product or Commercially Purchased Item, (d) the price paid
or payable by Company for the Product or Commercially Purchase Item shipped, (e) related
assists, (f) an itemization of all charges for services related to the international
shipment of the Product or Commercially Purchased Item and whether these charges are
included in the price paid or payable, (g) Supplier’s identification number, or in the
absence of such number, the full address of Supplier, (h) the terms of sale, and (j) if
required by the Law of the destination country, a list of all serial numbers for Products
shipped.





ARTICLE 50 — INVOICING FOR SERVICES





	50.1	 	Unless otherwise specified in an Order, Supplier’s invoices for Services shall be rendered
upon completion of the Services as defined in the applicable Statement of Work or Order and
shall be 




					
	 
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	 	 	payable in accordance with the terms set forth in Article 7 when the Services as
defined in the applicable Statement of Work or Order have been performed to the reasonable
satisfaction of Company.





ARTICLE 51 — LIMITATION OF LIABILITY 





	51.1	 	NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL
EITHER PARTY BE LIABLE FOR INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES (INCLUDING LOST PROFITS OR LOST REVENUES OF THE OTHER PARTY) OF THE OTHER PARTY, ITS
SUCCESSORS, ASSIGNS OR THEIR RESPECTIVE AFFILIATES, AS A RESULT OF OR ARISING FROM THIS
AGREEMENT, REGARDLESS OF WHETHER SUCH LIABILITY ARISES IN TORT, CONTRACT, BREACH OF WARRANTY,
INDEMNIFICATION OR OTHERWISE. [ *** ]
	 
	51.2	 	Each party shall use commercially reasonable efforts to notify the other party in accordance
with Article 26 upon becoming aware of any claim under this Agreement and agrees to take
commercially reasonable steps to mitigate any Losses that may arise from such claims.





ARTICLE 52 — LIQUIDATED DAMAGES





	52.1	 	Supplier acknowledges and agrees that there may be certain circumstances under which Supplier
may accept liability for a portion of the liquidated damages that may be payable by Company to
its end customers as a result of Supplier’s late delivery of Products. In such an event, the
Strategic Alliance Team will determine the conditions under which some portion of such
liquidated damages may be apportioned to Supplier and the appropriate reward Supplier should
receive in exchange for accepting liability for such damages.





ARTICLE 53 — MANUFACTURING RIGHTS





	53.1	 	If at any time during the Term of this Agreement, Supplier is unable or unwilling to (a)
deliver the Product requested by Company in full compliance with Company’s Specifications
and/or (b) meet, in all material respects, the delivery requirements of Company and at prices
which conform to the terms of this Agreement and/or (c) address Company’s business need
(market or otherwise driven) to establish localized manufacturing in certain countries or
regions of the world or, (d) upon expiration or termination of this Agreement, Supplier agrees
to sell to Company at Company’s request any special tooling, or equipment which has been
purchased by Supplier from Company and is used uniquely by Supplier for the manufacture of
Products for Company. Supplier agrees to sell to Company at Company’s request any other
special tooling or equipment which Supplier owns and is used uniquely by Supplier for the
manufacture of Products for Company, providing that Supplier does not reasonably anticipate
that it shall need such tooling or equipment for the manufacture of products for any other
customer within the subsequent six (6) months. Supplier also agrees to sell to Company at
Company’s request, Material that is uniquely required to either manufacture the Product or to
have the requested Product manufactured elsewhere. Prices charged by Supplier to Company for
such tooling, equipment or Material shall be the net book value thereof at the time of such
transfer from Supplier to Company. Such tooling, equipment or Material shall be removed on a
mutually agreeable basis without a significant delay from Supplier’s facility in a manner
which will minimize interruptions to Supplier’s obligations and commitments to Company and
other customers of Supplier.
	 
	53.2	 	Supplier hereby agrees to maintain, in working condition for the Term of this Agreement,
any such tooling or test equipment purchased from Company which Supplier has continued to use,
performing all routine and other maintenance as may be required in order to maintain the
tooling and test equipment at the same level of functionality as when Supplier purchased such
tooling and test equipment from Company. During the Term of this Agreement, Supplier shall
not sell such tooling and test equipment to any third party without the prior written consent
of Company and Company shall always have the right of first refusal to repurchase the tooling
and test







 




			
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equipment at the net book value thereof. Company shall not incur any additional expenses or costs
as the result of the sale of any equipment initiated by Supplier.




ARTICLE 54 — MARKING





	54.1	 	All Product or Commercially Purchased Items furnished under this Agreement shall be marked
for identification purposes in accordance with the Product and packaging Specifications as set
forth by Company’s ordering location or elsewhere in this Agreement and shall indicate the
following: (a) Product/serial number; (b) month and year of manufacture; and (c) country of
origin.
	 
	54.2	 	Upon Company’s written request, trademarks, trade names, insignia, symbols, decorative
designs or packaging designs of Company, or evidences of Company’s inspection (each,
“Insignia”) shall be properly affixed by Supplier to the Product furnished or its packaging.
Such Insignia shall not be affixed, used or otherwise displayed on the Product furnished or in
connection therewith without written approval by Company. The manner in which such Insignia
will be affixed must be approved by Company in accordance with standards established by
Company. Company shall retain all right, title and interest in any and all packaging designs,
finished artwork and separations furnished to Supplier. This clause does not reduce or modify
Supplier’s obligations under Articles 35 and Article 44 and with respect to the Licensed
Trademarks as set forth in the Intellectual Property License Agreement.





ARTICLE 55 — MINORITY, WOMEN AND DISABLED VETERAN OWNED BUSINESS ENTERPRISES 





	55.1	 	It is Company’s policy that minority, women and disabled veteran owned business enterprises
(“MWDVBEs”) as defined in Attachment L shall have the maximum practicable opportunity to
participate in the performance of this Agreement. Supplier agrees to use its good faith
efforts to award subcontracts to carry out this policy to the fullest extent consistent with
the efficient performance of this Agreement. Supplier agrees that MWDVBEs will be fairly
considered as subcontractors and suppliers under this Agreement.
	 
	55.2	 	Nothing in this Article shall affect or diminish Supplier’s obligations under this Agreement.
	 
	55.3	 	Supplier shall submit to Company monthly reports of work with those qualified MWDVBEs which
have been previously identified in writing by Company as MWDVBEs. Such periodic reports shall
state separately for MBEs, WBEs and DVBEs the subcontracted work that is attributable to
Company. In instances where direct correlations cannot be determined, such MWDVBE payments
may be established by Supplier comparing Company’s payments to Supplier, in that period, to
total payments to Supplier from all of its customers, in that period, and then arriving at
Company’s portion of such MWDVBE payments.
	 
	55.4	 	The parties agree to discuss any MWDVBE requirements that Company’s customers may have for
facilities in the United States where Supplier manufactures and/or repairs Products for
Company.





ARTICLE 56 — INTENTIONALLY DELETED




ARTICLE 57 — OFFSET CREDITS





	57.1	 	Orders issued pursuant to this Agreement are placed with the expectation of current and/or
anticipated future offset and localization obligations of Company or Ordering Companies or
their designated assignees to the government of the country in which the end customer resides
and that requires the provision of offset and localization. Supplier agrees to provide
reasonable assistance to Company or Ordering Companies or their designated assignees in any
reasonable
efforts to secure offset credit from the government of the country in which the end customer
resides in an amount equal to the value of the Orders placed under this Agreement.





					
	 
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ARTICLE 58 — OFFSETTING OF INVOICES





	58.1	 	The parties agree that the process of offsetting invoices (being the process whereby the
first party sets off and applies any indebtedness, liability or obligations of the second
party against any indebtedness, liability or obligations of the first party to the second
party) is not an acceptable process by either party except under extenuating circumstances.
Immediately following the ninetieth (90) day after the date hereof, the parties will establish
a team to mutually agree to those extenuating circumstances under which offsetting of invoices
can occur. If the parties cannot agree to those extenuating circumstances and the processes
under which offsetting of invoices can occur within thirty (30) days of the date that the team
is established, the issue will be escalated to the Strategic Alliance Team which will have an
additional period of thirty (30) days to address this issue and define the appropriate
extenuating circumstances and the processes.
	 
	58.2	 	In no event shall either party offset an invoice against the other party until such time as
the extenuating circumstances and the processes have been agreed to by the parties pursuant to
Article 58.1.





ARTICLE 59 — ORDERING COMPANIES AND SUPPLIER ENTITIES 





	59.1	 	Company may designate in writing from time to time any of its Affiliates as an “Ordering
Company” under this Agreement. Notwithstanding anything to the contrary in this Agreement,
Company may revoke the designation of any entity as an Ordering Company at any time.
	 
	59.2	 	Each Ordering Company shall be eligible to order Products, Commercially Purchased Items and
Services on the same applicable terms and conditions, including the same prices, as set forth
in this Agreement; provided that (i) such Ordering Company shall have executed and delivered
to Supplier a notice in the form of Attachment O, (ii) such Ordering Company shall have
executed and delivered to Supplier such further agreements, documents or instruments as
Supplier may request, acting reasonably, and (iii) Supplier and such Ordering Company shall
have entered into such additional agreements, instruments and other writings as may be
necessary under any applicable Laws. Any reference to Company in this Agreement shall, where
applicable, be deemed to refer to any Ordering Company in respect of which the conditions in
this Article 59.2 have been fulfilled.





	 	 	 	 	 
	59.3

	 	(a)
	 	Company unconditionally and irrevocably guarantees all payment and financial
obligations, including those obligations which, either directly or indirectly, could have a
financial impact on Supplier and/or its Affiliates and which arise directly or indirectly,
from non-performance of an Ordering Company’s obligations to Supplier and/or its Affiliate.
For certainty, such obligations shall include, but not be limited to, obligations in Article
12 relating to Excess Inventory and Obsolete Inventory. In the event that an Ordering Company
fails to perform any of its obligations to Supplier and/or its Affiliates under this
Agreement, Supplier may deliver to Company and such Ordering Company a notice of such
non-performance and Supplier shall use reasonable efforts to resolve such non-performance with
such Ordering Company. If the Ordering Company fails to perform such obligations by the
fifteenth (15th) day following the giving of such notice by Supplier, Supplier may make a
claim against Company under the aforementioned guarantee, and Supplier, if requested by
Company, will use reasonable efforts to assist Company in resolving such non-performance by
such Ordering Company (provided that such assistance by Supplier shall in no way diminish
Company’s obligation to satisfy Supplier’s claim under the guarantee upon receipt of such
claim). Company shall also work with Supplier and/or its Affiliates to ensure that the
Ordering Company meets all of its non-financial obligations under this Agreement to the extent
not performed in a timely manner. The liability of Company as guarantor hereunder shall not
in any way be affected or
modified by (i) failure by Supplier and/or its Affiliates to exercise any of their
respective rights or remedies under this Agreement, any agreement, instrument or
writing with the Ordering Company or at Law, or (ii) any waiver by Supplier and/or
its Affiliates of any of






					
	 
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	 	 	 	their respective rights or remedies under this Agreement,
any agreement, instrument or writing with the Ordering Company or at Law. For
greater certainty, Supplier and/or its Affiliates shall not be required to take any
other steps against the Ordering Company after such fifteen (15) day period prior to
enforcing any of their respective rights or remedies hereunder against Company.







	 	(b)	 	The guarantee of Company under this Article is absolute and unconditional,
subject only to any substantive defense that the Ordering Company is or would have been
entitled to assert against Supplier and/or its Affiliates, and Company and Ordering
Company does assert and prove on a timely basis.
	 
	 	(c)	 	For certainty, the parties acknowledge that (i) Article 27 shall not apply to
any dispute between Supplier and/or its Affiliates and any Ordering Company; and (ii)
any dispute between Company and Supplier in respect of Supplier’s obligations under
Article 59.3(a) shall be subject to Article 27.






	59.4	 	Supplier agrees to permit any person designated by Company as an “Approved Purchaser” to
purchase Products, Commercially Purchased Items and Services from Supplier from time to time
pursuant to terms and conditions to be negotiated by the Approved Purchaser and Supplier. In
the event that such terms and conditions are not negotiated, Supplier’s standard terms and
conditions for the sale of products and services shall apply. Any purchase order issued by
an Approved Purchaser to Supplier shall be issued outside of, and will not be subject to, any
terms and conditions of this Agreement. Such purchases of Products by Approved Purchasers from
Supplier shall be at the prices determined in accordance with this Agreement. Supplier shall
look only to the Approved Purchaser for performance of its respective obligations under such
purchase orders between Supplier and the Approved Purchaser. Company may revoke the
designation of any entity as an Approved Purchaser at any time.





ARTICLE 60 — INTENTIONALLY DELETED




ARTICLE 61 — PACKING, LABELING AND SERIALIZATION





	61.1	 	Supplier shall place Company’s specified bar code labels on all shipping packages and
containers for the Products and Commercially Purchased Items shipped under this Agreement.
Except as otherwise mutually agreed, such bar code labels and the placement thereof shall meet
Company Specifications entitled “Shipping & Receiving Bar Code Label Standard 801-001-105
Issue 4, dated December 12, 1996,” “Bar Code Shipping Label Profile Program 801-001-107 dated
January 15, 1998”, and “Common Language Equipment Identification (“CLEI”) Label KS22002 Issue
27.2 dated June 20, 2005,” as may be modified from time to time by Company through the
issuance of an Engineering Change Order in accordance with Article 67.3.
	 
	61.2	 	Products and Commercially Purchased Items purchased, repaired, replaced, or refurbished under
this Agreement shall, except as otherwise mutually agreed, be packed by Supplier in containers
that meet the requirements of Company Specifications No. PKG91NJ1045 Issue 6, dated April 1,
1998, and No. 801-001-109 Issue 3 dated January 21, 2004, as may be modified from time to time
by Company through the issuance of an Engineering Change Order in accordance with Article 67.3
as well as any other Specification(s) set forth in this Agreement or an Order placed pursuant
to this Agreement.
	 
	61.3	 	For the purpose of tracking Warranty and repair availability on all Product provided by
Supplier, Supplier shall, except as otherwise mutually agreed, conform to Company’s Warranty
Eligibility System (“WES”) requirements stated in Specification entitled “Warranty Eligibility
System (“WES”) Non-Lucent Manufacturers Processing Document Issue 3.5 dated September 8,
2003,” as may be
modified from time to time by Company through the issuance of an Engineering Change Order in
accordance with Article 67.3.





					
	 
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	61.4	 	As specified and routed in the applicable Order, Products and Commercially Purchased Items
destined for export shall, except as otherwise mutually agreed, be packaged in containers to
meet the requirements of Company’s International Export Packaging Specification No. LTP 70.03
dated November 10, 1999 as may be modified from time to time by Company through the issuance
of an Engineering Change Order in accordance with Article 67.3 as well as any other
Specification(s) set forth in this Agreement or an Order placed pursuant to this Agreement
and, except as otherwise mutually agreed, marked in accordance with Company’s International
Export Marking Specification No. LTP 70.04 dated November 10, 1999 as may be modified from
time to time by Company through the issuance of an Engineering Change Order in accordance with
Article 67.3 as well as any other Specification(s) set forth in this Agreement or an Order
placed pursuant to this Agreement.





ARTICLE 62 — POINT OF SALE AND POINT OF USE INFORMATION





	62.1	 	Supplier agrees to provide to Company, on a quarterly or another mutually agreed upon basis,
electronic and/or written reports, the format and content of which shall be agreed upon by the
parties, which demonstrate Supplier’s total volume of actual purchases of Material based upon
Company’s BOM and utilized in the manufacture of Product. This report shall include, but not
be limited to, a complete listing of the Material purchased by Supplier, quantities purchased
by Supplier from the Material vendors including the actual prices paid by Supplier and the
Material prices charged to Company identified by Product identification and/or Order. Subject
to Article 30, Company agrees that any right to receive information under this Article may be
limited by and is subject to any confidentiality obligations that Supplier or its Affiliates
may have to Material vendors.





ARTICLE 63 — PROCESS CERTIFICATION





	63.1	 	Company has the right, subject to the terms of Article 29, to review, inspect, and evaluate
Supplier’s Material and supplies, Supplier’s facilities at which Supplier manufactures
Products for Company under this Agreement, including Material management systems and supply
line management processes and procedures and Supplier’s sources for Material and supplies to
the extent related to Supplier’s performance of its obligations under this Agreement. Company
has the right to specify the types of Material used in the manufacture and/or repair of the
Product and/or suppliers of Material at any time during the Term of this Agreement. If such
selection of Material impacts the previously agreed to Product prices, such subsequent Product
prices shall be negotiated in good faith and mutually agreed to by the parties. All changes
to Material, supplies, sites of manufacture and repair, and vendors must be approved in
writing by Company. In regard to Supplier’s manufacturing and repair process for the Products,
Company reserves the right, subject to the terms of Article 30, to perform periodic quality
audits, surveys, evaluations, and approvals, including, but not limited to, analysis of each
manufacturing, assembly, and/or test position for acceptability of procedures, equipment
calibration, test software including change control, and operator performance, as well as
evaluation of quality control/quality assurance and data collection and analysis procedures,
to the extent related to Supplier’s performance of its obligations under this Agreement.
	 
	63.2	 	Supplier shall conduct appropriate incoming inspection of Material used in the manufacture of
Products in accordance with its standard practices and shall maintain a Supplier control,
approval, and corrective action process. Such standard practices shall be subject to audit
and approval by Company and Company may require Supplier to implement recommended changes in
order to facilitate Supplier’s manufacture of conforming Product. Such practices may be
modified from time to time to address specific conditions as requested by Company.
	 
	63.3	 	Subject to compliance with Article 29, Supplier agrees to provide Company reasonable access,
so as not to interrupt Supplier’s production processes, to applicable test equipment at
Supplier’s facilities at which Products are manufactured under this Agreement in order for
Company to (a) do test program development or (b) do final prove-in or acceptance of any test
programs.





					
	 
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ARTICLE 64 — INTENTIONALLY DELETED




ARTICLE 65 — PRODUCT CONFORMANCE





	65.1	 	Supplier shall establish and maintain agreements with product safety certification bodies or
agencies and/or their assigned representatives as required to support on-going product safety
compliances for Products manufactured for Company under this Agreement. The product safety
certification of Products is the responsibility of Company, unless otherwise specifically
agreed by the parties. Compliance documentation required to support on-going compliance
inspections at Supplier’s manufacturing location(s) will be provided and maintained by
Company. Costs associated with such inspection agreements and for the periodic on-going
inspections are the responsibility of Company. Supplier shall have in place a quality process
or program which specifically focuses on maintaining the on-going product safety compliance of
Company’s certified Products.
	 
	65.2	 	Variations or issues found during product compliance audits by external agencies, bodies or
their assigned representatives are to be immediately forwarded to the organization noted as
the applicant on the certification documentation or other Company personnel as specifically
directed. Supplier shall include such variations or issues as found in these inspections in
its quality system action register or tracking system.
	 
	65.3	 	Supplier agrees to conform with any additional Specifications that Company may require in
order for Company to meet special and unique requirements set by Company’s end customers. In
such an event, any additional cost incurred by Supplier to conform to such additional
Specifications shall be treated in accordance with Article 6.





ARTICLE 66 — PRODUCT DOCUMENTATION





	66.1	 	Company shall furnish, or instruct Supplier to acquire from Company’s designated
documentation vendor at Company’s prices and expense Product documentation, and any changes
thereto, as described in the Specifications. Costs for such Product documentation shall be
reflected in the Product price provided the Product documentation is included in the Product
BOM. Otherwise, the costs for such Product documentation shall be paid separately by Company
to Supplier.





ARTICLE 67 — PRODUCT/SPECIFICATION/PROCESS CHANGES





	67.1	 	Supplier shall not make any changes to the Products, Specifications or BOM (including
engineering changes which affect the Product configurations) or create enhancements to the
Products providing additional features, functions or performance capabilities (such changes
and enhancements referred to collectively in this Article 67.1 as “Change(s)”), without
Company’s prior written consent. Supplier shall promptly provide Company with written notice
of any such proposed Changes by Supplier. Such notice shall include a summary of the likely
impacts of the Change, including likely impacts on pricing, delivery and on the fit, form or
function of the Product. Company shall attempt to notify Supplier, within two (2) days of
receipt of Supplier’s Change request, of Company’s documented approval or disapproval. If
Company agrees to Supplier’s proposed Change, all Product affected by the Change and shipped
after the effective date of the Change shall conform to the Change. Any such Change created
by Supplier, in whole or in part, shall remain the exclusive property of Company.
	 
	67.2	 	Supplier shall not make any process changes that affect the form, fit or function of the
Product, or adversely affect the quality, reliability, or cost of the Product, or relocate the
manufacture or repair of Product to another Supplier location without prior written consent of
Company (“Process Changes”), which consent shall not be unreasonably withheld. If Company,
in its sole discretion, does not agree to the Process Change and Supplier elects to proceed
with the Process Change, Supplier shall be in material breach of this Agreement. In such
an event, in addition to all other rights and remedies at law or equity or otherwise, Company
shall have the right to terminate any 




					
	 
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	 	 	or all Orders for Product affected by such Process
Change. Company may purchase the terminated Product from a source other than Supplier by
invoking all of its rights under this Agreement, including, but not limited to, Article 53.






	67.3	 	Company may at any time during the manufacture or repair of Product by Supplier require
modifications of or deviations to the Specifications (each, an “Engineering Change Order”);
provided, however, that Supplier shall have, after receipt of such Engineering Change Order
and before being required to supply Product in conformance with such Engineering Change Order,
a reasonable period of time to implement such Engineering Change Order. Upon receipt of an
Engineering Change Order from Company, Supplier shall attempt to provide within two (2) days
to Company with the date by which the Engineering Change Order can be implemented and any
Material liability for which Company is responsible for pursuant to the terms of this
Agreement. Supplier will confirm to Company in writing when an Engineering Change Order has
been implemented, and shall report to Company the results of its inspections of the initial
Products manufactured in accordance with such Engineering Change Order. Any price revision of
Product as a result of such Engineering Change Order will be subject to good faith
negotiations among the parties.
	 
	67.4	 	Supplier agrees to perform design for manufacturing (DFM) reviews (as defined in Attachment
N) of all new, pre-release Specifications provided to it by Company, including conducting
“VALOR”-based analysis of all circuit pack designs. Supplier shall provide Company with the
initial results of all “VALOR” analysis within 24 hours of initiation thereof, and shall
concurrently advise Company as to the anticipated date of completion of such analysis, having
regard to the required volume and scope thereof.
	 
	67.5	 	Supplier shall provide prove-in samples to Company upon request, for as long as reasonably
required in order for Company to properly evaluate changes in accordance with Articles 67.1,
67.2 and 67.3. Title for the prove-in samples will remain with Supplier but risk of loss and
damage will pass to Company while the prove-in samples are in Company’s possession. Company
will return the prove-in samples to Supplier upon completion of its evaluation. Prior to
Company requesting prove-in samples, the parties will agree on the allocation of costs for the
prove-in samples in the event that the prove-in samples cannot be used by Supplier in the
production of Products for Company. Provided that if the prove-in samples can be used by
Supplier in the production of the Products for Company, Supplier agrees not to charge Company
for the prove-in samples.
	 
	67.6	 	Supplier shall not make any software or hardware related changes to Supplier’s information
systems that would impede previously established software or hardware interface(s) with
Company’s or Company’s end customers’ information systems, without prior written approval of
Company, which approval shall not be unreasonably withheld.
	 
	67.7	 	Subject to Article 29, Company shall have the right to perform an on-site assessment, upon
Company’s or Supplier’s notification to the other party of such Process Changes or Change(s)
identified in Articles 67.1 and 67.2. Supplier shall be solely responsible for any liability
associated with any such Process Changes or Changes made by Supplier without the written
consent of Company.





ARTICLE 68 — PUBLICITY





	68.1	 	SUBJECT TO ARTICLES 35.4 AND 72, NEITHER PARTY SHALL, WITHOUT THE PRIOR WRITTEN CONSENT OF
THE OTHER PARTY, PUBLICLY ANNOUNCE THE EXISTENCE OF THIS AGREEMENT OR DISCLOSE ITS CONTENTS.





					
	 
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ARTICLE 69 — REGISTRATION AND REGISTRATION STANDARDS





	69.1	 	When Products furnished under this Agreement are subject to any in-country certification and
filing procedures required for countries in which the Products are to be sold, Supplier shall
adhere to Specifications and test instructions for Product to ensure compliance with governing
labeling and end customer requirements. Company may periodically perform on-going compliance
re-testing as defined by Company. Supplier will establish with Company a quality control
program to assure that Products shipped by Supplier under this Agreement comply with the
manufacturing Specifications and test instructions.
	 
	69.2	 	When Products furnished under this Agreement are subject to Part 68, Part 15 or any other
part of the Federal Communication Commission’s Rules and Regulations, as may be amended from
time to time (“FCC Rules”), Supplier will adhere to Specifications and test instructions for
such Products to ensure compliance with FCC Rules governing labeling and end customer
instruction requirements. Company may periodically perform on-going compliance re-testing as
defined by Company. Supplier will establish with Company a quality control program to assure
that the Products shipped by Supplier under this Agreement comply with the manufacturing
Specifications and test instructions.
	 
	69.3	 	When Products furnished under this Agreement are subject to FDA/CDRH laser product and
certification requirements, Supplier will adhere to Specifications and test instructions for
such Product to ensure compliance with governing labeling and end customer requirements.
Company may periodically perform on-going compliance re-testing as defined by Company.
Supplier will establish with Company a quality control program to assure that the Products
shipped by Supplier under this Agreement comply with the manufacturing Specifications and test
instructions.
	 
	69.4	 	Nothing in this Article shall be deemed to diminish or otherwise limit Supplier’s obligations
under Article 22 or any other Article of this Agreement.





ARTICLE 70 — RELEASES VOID





	70.1	 	Neither party shall require (a) waivers or releases of any personal rights or (b) execution
of documents which conflict with the terms of this Agreement from employees, representatives
or customers of the other in connection with visits to its premises and both parties agree
that no such releases, waivers or documents shall be pleaded by them or third persons in any
action or proceeding relating to this Agreement.





ARTICLE 71 — RULES OF CONSTRUCTION





	71.1	 	In this Agreement:






	 	(a)	 	time periods within which a payment is to be made or any other action is to be
taken hereunder shall be calculated excluding the day on which the period commences and
including the day on which the period ends; and
	 
	 	(b)	 	whenever any payment to be made or action to be taken hereunder is required to
be made or taken on a day other than a Business Day, such payment shall be made or
action taken on the next following Business Day.





ARTICLE 72 — SEC DISCLOSURE





	72.1	 	Each party acknowledges that the other party (or an Affiliate of such other party) may, upon
advice of its legal advisors, be required to file this Agreement with the United States
Securities and Exchange Commission (“SEC”). If a party is required to so file, it shall (i)
give notice to the other party of such filing requirement together with a copy of its draft
application to the SEC requesting the redaction of this Agreement as far in advance of such
filing requirement as is reasonably practicable, and (ii) permit such other party’s legal
advisors to participate in the 




					
	 
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	 	 	redaction of this Agreement on a mutually agreeable basis (with
the understanding that each party shall request in its initial application the preferred
redactions being sought by the other party). Each party agrees that it will (i) work in good
faith to include all recommendations of the other party in all subsequent response filings
with the SEC regarding this Agreement and (ii) use all reasonable commercial efforts to ensure
that only such information regarding this Agreement is disclosed as is necessary to meet the
SEC requirements. Each party shall cause its legal counsel to act in a timely and responsive
manner in order to meet the other party’s requirements to meet its filing obligations with the
SEC in a timely manner.





ARTICLE 73 — SECTIONS AND HEADINGS





	73.1	 	The division of this Agreement into Articles and Attachments and the insertion of headings
and a table of contents are for convenience of reference only and shall not affect the
construction or the interpretation of this Agreement. Unless otherwise specified herein, any
reference in this Agreement to an Article or Attachment refers to the specified Article or
Attachment to this Agreement. In this Agreement, the terms “this Agreement”, “hereof”,
“herein”, “hereunder” and similar expressions refer to this Agreement and not to any
particular part, Article or other provision hereof.





ARTICLE 74 — SEVERABILITY 





	74.1	 	If any of the provisions of this Agreement shall be invalid or unenforceable, such invalidity
or unenforceability shall not invalidate or render unenforceable this entire Agreement, but
rather this entire Agreement shall be construed as if not containing the particular invalid or
unenforceable provision or provisions, and the rights and obligations of the parties shall be
construed and enforced accordingly.





ARTICLE 75 — SURVIVAL OF OBLIGATIONS





	75.1	 	The obligations of the parties under this Agreement, which by their nature would continue
beyond the termination, cancellation or expiration of this Agreement, shall survive
termination, cancellation or expiration of this Agreement.





ARTICLE 76 — TAXES, DUTIES AND INSURANCE CONTRIBUTIONS PAYABLE BY SUPPLIER





	76.1	 	Except as otherwise provided in this Agreement, including in Article 77, and unless otherwise
agreed to by the parties, all duties (excluding any duties or fees relating to the shipment of
Products or Commercially Purchased Items), taxes, and all social insurance contributions
arising out of or in connection with Supplier’s performance of this Agreement will be paid by
Supplier (collectively, “Taxes”). The parties agree that the prices or rates stated herein
include all such charges and that such prices or rates will not be changed hereafter as a
result of Supplier’s failure to include therein any applicable duties, taxes or insurance
contributions. Supplier shall indemnify and hold Company harmless from its failure to make
such payment or contributions.





ARTICLE 77 — TAXES PAYABLE BY COMPANY 





	77.1	 	Company shall be responsible for all sales, value added or other similar types of transfer
taxes (referred to herein in this Article 77.1 collectively as “Transfer Taxes”) with respect
to the prices paid for Products, Commercially Purchased Items or amounts paid for Services
under this Agreement, and Company agrees to reimburse Supplier for any such Transfer Taxes
paid by Supplier. Supplier will not charge an otherwise applicable Transfer Tax if the
Product, Commercially Purchased Item or Services pricing is exempt from Transfer Tax and
Company furnishes to Supplier a valid exemption certificate. In particular regard to value
added taxes or other similar taxes on turnover and related charges, Supplier will charge and
Company will pay any particular VAT over and above the stated prices for Products,
Commercially Purchased Items and Services. If Supplier is required by Law to charge VAT,
Supplier will ensure its invoices are in 




					
	 
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	 	 	the proper form to enable Company to claim input VAT
deductions. If Supplier does not need to charge VAT, but Company is required by Law to
account for such VAT (for example, where a “reverse charge” procedure applies), Company
accepts all responsibility and liability for accounting for the VAT properly. Taxes payable
by Company shall be billed as separate items on Supplier’s invoices and shall not be included
in Supplier’s prices or otherwise compensated pursuant to any other provisions of this
Agreement.






	77.2	 	Subject to the provisions of Articles 6 and 77.1, Supplier shall be responsible for all other
Taxes. Notwithstanding any other provision of this Agreement, Supplier shall be solely liable
for Taxes based on Supplier’s net or gross income. Supplier shall indemnify and hold the
Company harmless for Supplier’s failure to timely pay or withhold Taxes resulting from
Supplier’s performance under this Agreement.
	 
	77.3	 	In order for Company to qualify for tax benefits on Products exported from the United States
by Company, Supplier shall, upon request by Company, provide Company with documentation,
within forty-five (45) days of such request, that identifies and substantiates the FMV of the
Product content which is manufactured by Supplier or purchased by Supplier from manufacturers
outside of the United States. If Company shall have requested the aforementioned
documentation, Supplier shall provide Company with timely notice if Supplier has knowledge of
any information that would cause the FMV of the Product content manufactured by Supplier or
purchased by Supplier from manufacturers outside of the United States to either change by ten
percent (10%) or exceed fifty percent (50%) of the selling price charged to Company for each
Product being reported.





ARTICLE 78 — TEST SCOPE





	78.1	 	Unless otherwise agreed to by the parties, Supplier shall manage the execution of the test
process as specified by Company for each Product purchased pursuant to this Agreement, which
includes Supplier testing the Product, providing test capacity planning, and performing
preventative maintenance on the required test equipment. Supplier shall consider upside volume
percentages, preventative maintenance time, the addition of new products and holding
appropriate spare parts when developing its test capacity plan. Company shall compensate
Supplier in the manner set out herein for any costs associated with replicating test equipment
uniquely required to support Company’s production requirements or building new test equipment
in support of Company’s production requirements. Such costs shall, by mutual agreement of the
parties either (a) be amortized over a six (6) month period in the cost of the Product, or (b)
be charged by Supplier to Company as a separately billable non-recurring engineering charge
for which Company shall issue Supplier a purchase order in accordance with Article 9. Prior to
fabricating or procuring any test equipment that is unique to the manufacture of Products,
Supplier agrees to review such plans with Company first. Supplier agrees that all test
equipment used in the production of Products shall be subject to the terms set forth in
Articles 37 and Article 53.
	 
	78.2	 	Supplier shall perform each and every test in conformance to the process and for the
quantities identified in the applicable Specification unless mutually agreed to by the parties
otherwise. All Products delivered to Company and/or its end customers under this Agreement
shall have passed all applicable tests in such Specification. Company shall have the right to
require Supplier to upgrade its test sets in order to conform to requirements of the
Specification.
	 
	78.3	 	Company shall review all fixtures and programs to assure their quality and reliability.
Supplier shall notify Company prior to implementing any change that would impact the test
Specification.
	 
	78.4	 	Supplier shall maintain adequate test equipment inspection/calibration reports and Product
test documents and shall make such documents available to Company upon reasonable request.





ARTICLE 79 — TITLE TO MATERIAL CONSIGNED BY COMPANY




					
	 
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	79.1	 	Except for Purchased Inventory, Supplier acknowledges and agrees that unless otherwise
agreed, Company has and shall have at all times all right, title and interest in Material
furnished directly or indirectly to Supplier by Company under this Agreement (“Lucent
Technologies’ Consigned Material”). Supplier shall, within ten (10) Business Days of receipt
of the Lucent Technologies’ Consigned Material, notify Company of any claims for quantity
variation or quality problems in the Lucent Technologies’ Consigned Material furnished to
Supplier. Supplier assumes responsibility for any loss or damage to such Lucent Technologies’
Consigned Material and shall be liable for the full actual value of the Lucent Technologies’
Consigned Material with the exception of loss due to normal waste, shrinkage, breakage or
other spoilage, reduction in moisture content, etc. Supplier shall store the Lucent
Technologies’ Consigned Material safely, indoors in protected areas approved by Company at
Supplier’s facility. If Supplier removes all or any part of the Lucent Technologies’ Consigned
Material from one building to another, Supplier shall continue to be responsible for loss and
damage and Supplier shall give Company at least ten (10) Business Days advance notice of the
removal except when the removal is required during Supplier’s manufacturing process or to
protect the Lucent Technologies’ Consigned Material from damage or loss.
	 
	79.2	 	Upon reasonable prior notice and subject to the terms of Article 29, Company may inspect,
inventorize and authenticate the account of the Lucent Technologies’ Consigned Material during
Supplier’s normal business hours. Supplier shall provide Company access to the premises,
subject to Article 30, wherein all such Lucent Technologies’ Consigned Material is located.
Wherever practicable, the Lucent Technologies’ Consigned Material shall be kept segregated in
an area marked “PROPERTY OF LUCENT TECHNOLOGIES”.
	 
	79.3	 	Supplier shall use the Lucent Technologies’ Consigned Material only in the manufacture or
repair of Products furnished to Company, or otherwise in performing under this Agreement.
	 
	79.4	 	Supplier shall not allow any security interest, lien, tax lien or other encumbrance
(collectively, “Encumbrances”) to be placed on any Lucent Technologies’ Consigned Material.
Supplier shall give Company immediate written notice should any third party attempt to place
or place an Encumbrance on such Lucent Technologies’ Consigned Material. Supplier shall
indemnify and hold Company harmless from any such Encumbrance. Supplier shall, at Company’s
request, promptly execute a “protective notice” UCC-1 form for Lucent Technologies’ Consigned
Material located in the United States, or such other documents reasonably necessary in non-US
jurisdictions to enable Company to protect its interest in such Lucent Technologies’ Consigned
Material. The parties agree that this Agreement shall constitute the security agreement
required by the UCC of the appropriate state in which the Encumbrance is filed, or the
equivalent type of agreement in non-US jurisdictions.
	 
	79.5	 	The obligations assumed by Supplier with respect to the Lucent Technologies’ Consigned
Material are for the protection of Company’s property. If Supplier defaults in carrying out
Supplier’s obligations with respect to the Lucent Technologies’ Consigned Material under this
Agreement or an Order, then, at no cost to Company and upon twenty-four (24) hours notice to
Supplier, Company may withdraw all or any part of the Lucent Technologies’ Consigned Material.
Supplier shall, at Company’s option, return to Company or hold for Company’s disposition any
or all of such Lucent Technologies’ Consigned Material (including any Scrap produced as a
by-product) in Supplier’s possession at (a) the completion of the Order, (b) expiration,
cancellation or termination of this Agreement, or (c) the withdrawal of Lucent Technologies’
Consigned Material, as provided above.





ARTICLE 80 — TITLE TO SPECIAL TOOLING AND EQUIPMENT OWNED BY COMPANY





	80.1	 	Supplier acknowledges and agrees that Company has and shall have at all times during the Term
of this Agreement all right, title and interest in the special tooling, fixtures, molds, dies,
jigs, production machinery, assembly machinery, testing equipment, and related items
(collectively, 




					
	 
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	 	 	“Tooling” or “Tool(s)”) owned and furnished at no cost by Company to Supplier,
or Tooling that Company has fully paid Supplier to develop, or Tooling that is co-developed at
Company’s expense for use under this Agreement, any Order or subsequent agreements, if any.
Any Tooling supplied by Company to Supplier must be in good working order and comply with all
applicable country-specific safety requirements, codes and standards at the time such
equipment is delivered. Supplier shall:






	 	(a)	 	be responsible for the safekeeping of the Tooling, assume all risks of loss or
damage to the Tooling and be liable for the replacement value of such Tooling except
for reasonable wear and tear;
	 
	 	(b)	 	maintain and use the Tooling in accordance with all applicable country-specific
safety requirements, codes or standards, and keep in force a policy of Workers’
Compensation insurance as prescribed by the Law of the state in which work is being
performed, or such other comparable insurance. Supplier may procure whatever
additional insurance Supplier deems appropriate. Supplier agrees that Supplier,
Supplier’s insurer(s) and anyone claiming by, through, under, or on Supplier’s behalf
shall have no claim, right of action, or right of subrogation against Company or
Company’s end customers based on any loss or liability insured against under any policy
of insurance. Supplier agrees to defend (at Company’s request), indemnify and hold
harmless Company and Company’s end customers from and against any and all Losses
(including but not limited to claims resulting from injuries or death to persons or
damage to property) in any way arising out of or resulting from the maintenance,
ownership, possession, operation, use, condition, storage, or movement of the Tooling
or any accident in connection therewith;
	 
	 	(c)	 	permanently mark or if impracticable to do so, affix labeling stating that the
Tooling is the property of Lucent Technologies. For purposes of this clause, the term
“Lucent Technologies” shall be deemed to mean Lucent Technologies Inc., or the Lucent
Technologies Inc. affiliated or associated company which owns the Tooling, as
applicable;
	 
	 	(d)	 	store such Tools, when not in use, on racks or in sections of Supplier’s
plant(s) located at Supplier’s factory of manufacture, marked “PROPERTY OF LUCENT
TECHNOLOGIES”. If Supplier removes all or any part of the Tooling from one building to
another, Supplier shall continue to be responsible for loss and damage and Supplier
shall give Company at least ten (10) Business Days’ advance notice of the removal
except when the removal is required during Supplier’s manufacturing process or to
protect the Tooling from damage or loss. Supplier shall send to Company on a mutually
agreed to basis, an updated Tooling inventory list, including equipment upgrades;
	 
	 	(e)	 	use the Tooling only in the manufacture or repair of Product or performance of
Services furnished to Company, unless otherwise agreed to by Company, and deliver the
Tooling to Company upon demand, properly packaged and crated for transport, Ex Works
(Incoterms 2000) Supplier’s plant at a mutually agreeable charge for removal, packing,
or crating;
	 
	 	(f)	 	repair or replace parts of the Tooling as needed from time to time, due to
normal wear and tear, without charge to Company. This includes, among other things,
adjusting, replacing punches or die sections, sharpening, and keeping Tools in good
working condition. All repair and replacement parts shall be deemed Tooling and shall
be subject to the terms of this Agreement. At any time when Supplier proposes
replacing the entire Tool because (a) Tool life has been expended or the Tooling is
worn beyond economical repair, or (b) design changes by Company necessitate
modification or complete replacement, Supplier shall first obtain Company’s written
approval, and the resulting replacement Tooling shall be at Company’s expense and
subject to the terms of this Agreement;





					
	 
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	 	(g)	 	Supplier shall not allow any Encumbrance to be placed on any Tooling. Supplier
shall give Company immediate written notice should any third party attempt to place or
place an Encumbrance on such Tooling. Supplier shall indemnify and hold Company
harmless from any such Encumbrance. Supplier shall, at Company’s request, promptly
execute a “protective notice” UCC-1 form for Tooling located in the United States, or
such other documents reasonably necessary in non-US jurisdictions to enable Company to
protect its interest in such Tooling. The parties agree that this Agreement shall
constitute the security agreement required by the UCC of the appropriate state in which
the Encumbrance is filed, or the equivalent type of agreement in non-US jurisdictions;
	 
	 	(h)	 	Company may inspect, inventorize, and authenticate the account of Tooling
furnished under this Agreement during Supplier’s normal business hours. Subject to the
terms of Article 29, Supplier shall provide Company access to the premises where all
such Tooling is located. The obligations assumed by Supplier with respect to Tooling
furnished under this Agreement and/or an Order are for the protection of Company’s
property. If Supplier defaults in carrying out Supplier’s obligations under this
Agreement, then, at no cost to Company and upon twenty-four (24) hours’ notice to
Supplier, Company may withdraw all or any part of the Tooling and Tooling drawings
except as may be required for Supplier to continue to fulfill its ongoing warranty or
support obligations under this Agreement. Supplier shall, at Company’s option, return
to Company or hold for Company’s disposition (free of restrictions), for a reasonable
period of time, any or all of such Tooling and Tooling drawings in Supplier’s
possession at (a) the completion of the applicable Order, (b) expiration, cancellation
or termination of this Agreement, or (c) the withdrawal of Tooling, as provided above;
and
	 
	 	(i)	 	Supplier’s obligations under this clause shall survive the expiration,
cancellation or termination of this Agreement or any Order.






	80.2	 	Where Company has requested Supplier to develop or subcontract on Company’s behalf the
development of Tooling for Company and the parties have agreed to amortize the price of the
Tooling over a mutually agreed to quantity of Products purchased by Company from Supplier
pursuant to this Agreement, title and ownership of the Tooling shall pass to Company once the
price charged by Supplier for such Tooling has been fully paid by Company pursuant to the
agreed to amortization schedule. However, Company shall have the right to take title of the
Tooling at any time by paying in full the agreed to price for such Tooling.





ARTICLE 81 — TOXIC SUBSTANCES AND PRODUCT HAZARDS





	81.1	 	Supplier agrees that, where required by Law, it shall provide to Company for any new products
that are added to this Agreement or changes made to an existing Product furnished under this
Agreement, a product safety data sheet which complies with the requirements of the
Occupational Safety and Health Act of 1970 and all rules and regulations promulgated
thereunder, or a product information sheet required by equivalent international Laws.





ARTICLE 82 — WAIVER AND AMENDMENT





	82.1	 	Waiver by any party of any default by the other party of any provision of this Agreement
shall not be deemed a waiver by the waiving party of any subsequent or other default, nor
shall it prejudice the rights of the other party.
	 
	82.2	 	This Agreement may only be amended in writing by authorized representatives of Company and
Supplier.





ARTICLE 83 — WAIVER OF JURY TRIAL





	83.1	 	Each party hereby waives, to the fullest extent possible by applicable Laws, any right it may
have to a trial by jury in respect of any litigation directly or indirectly arising out of,
under or in 




					
	 
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	 	 	connection with this Agreement. Each party hereto (a) certifies that no
representative, agent or counsel of the other party has represented expressly or otherwise
that the other party would not, in the event of litigation, seek to enforce the foregoing
waiver, and (b) acknowledges that it and the other party hereto have been induced to enter
into this Agreement by, among other things, the mutual waivers and certifications contained in
this Article 83.





ARTICLE 84 — INDEMNIFICATION PROCEDURE





	84.1	 	In the event that any party (the “Indemnified Party”) shall become aware of any Third Party
Claim in respect of which the other party (the “Indemnifying Party”) has agreed to indemnify
the Indemnified Party pursuant to this Agreement, the Indemnified Party shall promptly give
notice thereof to the Indemnifying Party. Such notice shall specify with reasonable
particularity (to the extent that the information is available):






	 	(a)	 	the factual basis for the Claim; and
	 
	 	(b)	 	the amount of the Claim, if known.






	84.2	 	With respect to any First Party Claim, following receipt of notice from the Indemnified Party
of the Claim, the Indemnifying Party shall make such reasonable investigation of the Claim as
is considered necessary or desirable. For the purpose of such investigation, the Indemnified
Party shall make available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other information as the
Indemnifying Party may reasonably request. If both parties agree to the validity and amount
of such Claim, the Indemnifying Party shall immediately pay to the Indemnified Party the full
agreed upon amount of the Claim, failing which the matter shall be referred to dispute
resolution pursuant to the provisions of Article 27.
	 
	84.3	 	With respect to any Third Party Claim, the Indemnifying Party shall have the right, at its
expense, to participate in or assume control of the negotiation, settlement or defence of the
Claim and, in such event, the Indemnifying Party shall reimburse the Indemnified Party for all
the Indemnified Party’s out-of-pocket expenses as a result of such participation or
assumption. Subject to Article 84.4, if the Indemnifying Party elects to assume such control,
the Indemnified Party shall have the right to participate in, but not control, the
negotiation, settlement or defence of such Third Party Claim and to retain counsel to act on
its behalf, provided that the fees and disbursements of such Indemnified Party’s counsel shall
be paid by the Indemnified Party unless the Indemnifying Party consents to the retention of
such counsel. If the Indemnifying Party, having elected to assume
such control, thereafter fails to defend the Third Party Claim within a reasonable time, the
Indemnified Party shall be entitled to assume such control. In such event, the Indemnifying
Party shall be bound by the results obtained by the Indemnified Party with respect to such
Third Party Claim.
	 
	84.4	 	If the Indemnifying Party fails to assume control of the defence of any Third Party Claim in
accordance with Article 84.3, the Indemnified Party shall have the exclusive right to contest,
settle or pay the amount claimed. Whether or not the Indemnifying Party assumes control of
the negotiation, settlement or defence of any Third Party Claim, the Indemnifying Party shall
not settle any Third Party Claim without the written consent of the Indemnified Party, which
consent shall not be unreasonably withheld or delayed.
	 
	84.5	 	The Indemnified Party and the Indemnifying Party shall co-operate fully with each other with
respect to Third Party Claims and shall keep each other fully advised with respect thereto
(including supplying copies of all relevant documentation promptly as it becomes available).
Neither party shall make any statement or take any action which might hamper or undermine the
other party’s defense or settlement of a Third Party Claim.




					
	 
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	84.6	 	The provisions of this Article 84 shall only apply to a Claim in respect of which an
Indemnifying Party has agreed to indemnify the Indemnified Party pursuant to this Agreement
with the intent that all such Claims shall be subject to this Article 84.





ARTICLE 85 — ENTIRE AGREEMENT




	 	 	 	 	 
	85.1

	 	(a)
	 	This Agreement, together with the Attachments and the Transition Agreement, constitute
the entire agreement between the parties with respect to the subject matter hereof and
supersedes all previous communications, and agreements whether verbal or written, including
without limitation, the term sheet between Company and Supplier relating to the subject matter
hereof, the Modcell 4.0 Supply Agreement Term Sheet dated August 27, 2003, and Agreement No.
WR71010010 to the extent it relates to Products and Services to be provided pursuant to this
Agreement. There are no conditions, covenants, agreements, or other provisions, express or
implied, collateral, statutory or otherwise, relating to the subject matter hereof except as
provided herein or in the Attachments, the Asset Purchase Agreements or the Intellectual
Property License Agreement. Orders under this Agreement shall only include Order-specific
terms, conditions, and Specifications, as applicable.
	 
	 

	 	(b)
	 	In the event of a contradiction between the terms of this Agreement and the
terms and conditions of an Attachment, the terms of the Attachment shall prevail to the
extent of such inconsistency.






	85.2	 	The terms and conditions applicable to unique arrangements relating to the subject matter
hereof between the parties will be agreed to in writing between the parties, and included in
an individual Attachment that shall reference this Agreement and be made a part hereof.
	 
	85.3	 	This Agreement and any Orders under this Agreement shall not be modified or rescinded, except
by an instrument in writing signed by both parties.




					
	 
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized
representatives as of the dates below.




	 	 	 	 	 	 	 	 	 	 	 
	CELESTICA CORPORATION	 	 	 	LUCENT TECHNOLOGIES INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Steve Delaney
	 	 	 	By:
	 	/s/ Jose A. Mejia	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Name:

	 	Steve Delaney
	 	 	 	Name:
	 	Jose A. Mejia	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	CEO
	 	 	 	Title:
	 	President, Supply Chain Networks	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	September 30, 2005
	 	 	 	Date:
	 	September 22, 2005	 	 
	 

	 	 
	 	 	 	 	 	 	 	 





					
	 
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External Manufacturing Services Supply Agreement




Attachment A




Definitions



For the purposes of this Agreement and the related Attachments, unless the context otherwise
requires, the following terms shall have the respective meanings set out below and grammatical
variations of such terms shall have corresponding meanings:



“Affiliate” means, in relation to any person, any other person that directly or indirectly
controls, that is directly or indirectly controlled by, or that is under the direct or indirect
common control of, such a person; provided, however, that (i) where one person controls another
person, any other person controlled by the first such person shall be deemed to be an Affiliate of
the second person, and (ii) any corporation in respect of which any person owns beneficially,
directly or indirectly, not less than fifty percent (50%) of such corporation’s voting securities,
shall be deemed to be an Affiliate of such person. For purposes hereof, “control” means, in
respect of any person, the power of authority to direct, or cause the direction of, directly or
indirectly, the management, policies or actions of any other person, whether through the ownership
of equity securities or voting securities or by contract or otherwise;



“Agreed Portion” has the meaning set out in Article 12.5;



“Agreement” means this external manufacturing services supply agreement together with all
Attachments attached hereto, as amended and supplemented from time to time;



“Approved Vendor List” or “AVL” means Company’s approved vendor list;



“Asset Purchase Agreements” means, collectively, the asset purchase agreement in respect of the
Oklahoma City Facility and the asset purchase agreement in respect of the Columbus Facility, each
dated July 23, 2001, made in each case between Company and Supplier;



“Attachments” means any attachment agreed to by the parties and attached to and made part of this
Agreement;



“Audit” has the meaning set out in Article 30.3;



“Background Information” means any Information developed, copyrighted or owned by Supplier prior to
August 31, 2001;



“Basic Services” has the meaning set out in Article 4.1;



“Bill of Material” or “BOM” means a bill of material;



“Blanket Purchase Order” has the meaning set out in Section 3.1 of Attachment G;



“Build to Stock” has the meaning set out in Attachment G;



“Business Day” means a day other than a Saturday, Sunday or a statutory holiday in the State of New
York;



“CAP” or “Corrective Action Plan” means a plan of corrective action to be taken;



“CAR” or “Corrective Action Request” means corrective action request;




					
	 	 	 	 	 
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“Changes” has the meaning set out in Article 67.1;



“Claim” means any claim, action, demand or proceeding;



“Code” means Object Code and Source Code, collectively;



“Co-Developed IP” has the meaning set out in Article 37.2;



“COGS” means cost of goods sold;



“Comcode” means Company’s internal part number;



“Commercial Material” means, at any time during the Term, any Material (identified by the
manufacturer’s unique part number) of which, the annual quantity required at such time by Supplier
to manufacture the Products for Company or Ordering Companies under this Agreement, is less than
seventy percent (70%) of the total annual quantity of Material sold by the manufacturer of such
Material on a worldwide basis. The parties shall agree on the process, methodology, and frequency
for determining which Material meets the definition of Commercial Material;



“Commercially Purchased Item” has the meaning set out in Article 3.2;



“Company” has the meaning set out in the recital to this Agreement;



"Company Controlled Material” means Material procured by Supplier pursuant to Articles 13.4 and 14
in respect of which Company has sole responsibility for managing the purchasing decision in respect
of such Material, including all negotiations with Material vendors in respect of price and general
commercial terms in accordance with Attachment K2;



“Company IP” means any Developed IP originated or developed (i) solely by, or jointly between,
Supplier and any of Supplier’s Associates or (ii) jointly between Company and Supplier or any of
Supplier’s Associates, and which arise in connection with activities performed by Supplier under
this Agreement which are (a) funded by Company through specific project funding and/or NRE fees or
(b) are specifically related to the Products;



“Company Owned Inventory” means inventory that is owned by Company, including raw materials,
finished goods and work-in-process;



“Company Proprietary Information” means Information, including but not limited to, technology,
processes, Specifications or other proprietary property, including trade secrets, know-how, mask
work rights, patent applications and any other non-public information in any form or medium
developed or acquired by Company, its Affiliates or its licensors other than Supplier, but for
greater certainty, does not include Supplier Proprietary Information or the Intellectual Property;



“Competing Quote” has the meaning set out in Article 4.1;



“Developed IP” means any and all Information, inventions, discoveries, improvements, technical
information, computer or other apparatus programs, specifications, drawings, records,
documentation, works of authorship or other creative works, ideas, manufacturing processes or
tooling, knowledge or data, written or otherwise expressed in a material form;



“Disputed Portion” has the meaning set out in Article 12.5(a);



“DOA” has the meaning set out in Article 21.16;



“Documentation” means all documents, whether in human and/or machine-readable form;




					
	 	 	 	 	 
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“EDI” means the electronic transfer, from computer to computer, of commercial and administrative
data using a commonly acknowledged standard for the structuring of messages;



“Effective Date” has the meaning set out in the recitals to this Agreement;



“Electronic Commerce” has the meaning set out in Article 18.1;



“EMAS” has the meaning set out in Article 40.1;



“Emergency Backup Manufacturing Plan” has the meaning set out in Article 16.1;



“EMS” has the meaning set out in Article 40.1;



“Encumbrance” has the meaning set out in Article 79.4;



“Engineering Change Order” has the meaning set out in Article 67.3;



“E&O Claim” has the meaning set out in Article 12.5(a);



“Epidemic Condition” has the meaning set out in Article 21.16;



“ESD” means electrostatic discharge sensitive;



“EST” has the meaning set out in Article 21.10;



“Excess Inventory” has the meaning set out in Article 12;



“Existing Mobility Products” means the printed circuit board assemblies, subsystems, orderable item
kits and full systems listed in Attachment B;



“Export Laws” has the meaning set out in Article 42.1;



“FCC Rules” has the meaning set out in Article 69.2;



“FIFO” has the meaning set out in Article 14.1;



“First Party Claim” means a Claim asserted by one party against the other party to this Agreement
pursuant to Article 84;



“fiscal year” means Company’s fiscal year;



“Flexible Delivery Arrangements” has the meaning set out in Article 10.1;



“Flexible Delivery Terms” means the flexible delivery terms described in Attachment G;



“FMV” means fair market value;



“Forecast” has the meaning set out in Article 15.2 and shall include any other forecast delivered
by Company (or an Ordering Company, as applicable) to Supplier in respect of Products or
Commercially Purchased Items;



“Indemnified Party” has the meaning set out in Article 84.1;



“Indemnifying Party” has the meaning set out in Article 84.1;




					
	 	 	 	 	 
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“Information” means all documented and undocumented information (excluding patents and patent
applications), whether in human and/or machine readable form, including without limitation, Code,
Documentation, technical information, technical memoranda, technical reports, data and drawings of
whatever kind in whatever medium, specifications, tangible and intangible know-how, processes,
formulae, methodologies, production, operating and quality control manuals, blueprints,
instructions, directories, schematics, sketches, photographs, graphs, dies, molds, tools, tooling,
samples, price lists, part lists and descriptions, and any and all notes, analysis, compilations,
studies, summaries, and other material containing or based, in whole or in part, on any information
included in the foregoing;



“Information Only Metrics” has the meaning set out in Article 11.1;



“Infringement Claims” has the meaning set out in Articles 47.1 and 47.2;



“Initial Prices” has the meaning set out in Article 6.1;



“Initial Term” has the meaning set out in Article 1.1;



“Insignia” has the meaning set out in Article 54.2;



“Intellectual Property” means the Licensed Technical Information, Licensed Software, Licensed
Patents and Licensed Trademarks as set out in the Intellectual Property License Agreement;



“Intellectual Property License Agreement” means the intellectual property license agreement dated
as of August 31, 2001, made between Lucent Technologies Inc., Lucent Technologies GRL Corporation
and Celestica Liquidity Management Hungary Limited Liability Company;



"Inventory Buy-Down Cost” has the meaning set out in Article 6.7;



“Inventory Carrying Purchase Order” has the meaning set out in Article 12.2(c);



“Laws” or “laws” has the meaning set out in Article 34.1;



“Licensed Trademarks” has the meaning set out in the Intellectual Property License Agreement;



“LTB Material” has the meaning set out in Article 13.5;



“Losses” means all liability, losses, damages, penalties, costs and expenses (including reasonable
attorney’s fees and disbursements), but excluding any incidental, indirect or any lost profits or
lost revenues or other consequential losses;



“Lucent Technologies’ Consigned Material” has the meaning set out in Article 79.1;



“Manufacturer Per Unit Pricing Formula” means the pricing formula described in Attachment C;



“Manufacturer Per Unit Pricing Formula Rates” has the meaning set out in Article 6.8;



“Market-Based Price” means, with respect to any Material, at any time and from time to time during
the Term, the fixed price that the purchaser of such Material expects to pay for such Material
during the calendar quarter in which the price determination is being made;



“Material” means, collectively, all raw components, parts, and materials (including labels, product
inserts, packaging and other labeling for the Products) required to manufacture the Products in
accordance with the Specifications;



“Material Value Propositions” has the meaning set out in Article 6.12;




					
	 	 	 	 	 
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External Manufacturing Services Supply Agreement



“Mobility Products” means the Existing Mobility Products and all Successor Products and New
Products;



“MWDVBE” has the meaning set out in Article 55.1;



“New Product” means a printed circuit board assembly, subsystem, orderable item kit, full system or
other product introduced by Company or any of its Affiliates during the Term and mutually agreed by
Company and Supplier as within Company’s “Mobility” product sector and that is not an Existing
Mobility Product or a Successor Product;



“Non-Recurring Engineering “ or “NRE” means non-recurring engineering;



“North American Region” means Canada, the United States and Mexico;



“Notice Receipt Date” has the meaning set out in Article 12.2(c).



“NTF” means no trouble found;



“Object Code” means code in machine-readable form generated by compilation, assembly or other
translation of Source Code and contained in a medium which permits it to be loaded into and
operated on by a processor;



“Obsolete Inventory” has the meaning set out in Article 12.2(e);



“Order” means a discrete order issued by Company (or an Ordering Company, as applicable) and
accepted by Supplier under this Agreement and a blanket purchase order issued by Company (or an
Ordering Company, as applicable) and accepted by Supplier under this Agreement;



“Order Change” has the meaning set out in Article 9.4;



“Orderable Item” means a Product or a Commercially Purchased Item;



“Ordering Company” means an Affiliate of Company designated as an Ordering Company pursuant to
Article 59.1;



“Out of Tolerance Condition” has the meaning set out in Article 11.4;



“Parts” has the meaning set out in Article 23.5;



“Performance Metrics” has the meaning set out in Article 11.1;



“PES” or “Premium Expedited Services” means the cost that is over and above the normal costs
associated with expediting the delivery of Material that Supplier would incur due to highly
unusual, unique or extraordinary circumstances brought on solely by Company’s request to procure
the delivery of Material to support Product delivery requirements outside any agreed to Flexible
Delivery Terms. Supplier should not incur any costs associated with Premium Expedited Services
without first getting Company’s prior written approval;



“Price Change” has the meaning set out in Article 6.6;



“Price Reduction Period” has the meaning set out in Article 6.1;



“Pricing Information” has the meaning set out in Article 6.17;




					
	 	 	 	 	 
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“Process Change” has the meaning set out in Article 67.2;



“Product” or “Products” has the meaning set out in Article 3.1;



“Product Plan” has the meaning set out in Article 21.6;



“Profit” means earnings before interest, amortization and taxes;



"PPV” or “Purchase Price Variation” means the price for Material that is over and above the normal
price charged by the Material vendor to Supplier due to highly unusual, unique or extraordinary
circumstances brought on solely by Company’s request to procure the delivery of Material to support
Product delivery requirements outside any agreed to Flexible Delivery Terms. Supplier should not
incur any increases in costs associated with Purchase Price Variation without first getting
Company’s prior written approval;



“Purchased Inventory” means the Material and other inventory purchased by Supplier from Company or
any third party in connection with the transfer of the manufacture of Products to Supplier;



“quarter” means a three (3) month period commencing on the first day of October, January, April and
July;



“Quarterly Performance Review Process” has the meaning set out in Article 25.1;



“Quote” has the meaning set out in Article 4.1;



“Recovery Amount” has the meaning set out in Article 6.6;



“Recovery Amount Statement” has the meaning set out in Article 6.6;



“Renewal Term” has the meaning set out in Article 1.1;



“Required Data” has the meaning set out in Article 12.5(a);



“Revised Quote” has the meaning set out in Article 4.1;



“RMA” means a return materials authorization;



“ROS Profit Rates” means the ROS profit rates set out in Article 6.9;



“Scrap” has the meaning set out in Article 24.1;



“Services” or “Service” has the meaning set out in Article 4.1;



“SG&A” means selling, general and administrative;



“SG&A Rates” means the SG&A rates set out in Article 6.9;



“SIC” means a System Integration Center operated by Company;



“Source Code” means code in any programming language contained in any format, including human and
machine-readable formats, such code including all comments and procedural code plus all related
development documents such as, but not limited to, flow charts, schematics, statements of
principles of operations or any other specifications;



“Source Inspection” has the meaning set out in Article 21.7;




					
	 	 	 	 	 
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“Specifications” means the technical and processing specifications for the development or
manufacture or repair of the relevant Product provided by the Company to Supplier, including all
drawings, models, specifications, documentation, data, product information, engineering standards,
technical and test instructions and test programs, procedures or requirements, functional
information and related data, data files, quality standards, AVL, BOMs, software, design
information, technical manuals, packaging requirements, testing requirements and know-how, as
amended and in effect from time to time;



“Strategic Alliance Team” has the meaning set out in Article 2.1;



“Successor Product” means a printed circuit board assembly, subsystem, orderable item kit, full
system or other product introduced by Company or any of its Affiliates during the Term within
Company’s and its Affiliates’ “Mobility” product sector that provides the same fundamental
functionality or purpose as an Existing Mobility Product at the time of such introduction;



“Supplier” has the meaning set out in the recital to this Agreement;



“Supplier Associates” has the meaning set out in Article 37.1;



“Supplier Controlled Material” means Material procured by Supplier pursuant to Article 13.4 in
respect of which Supplier has sole responsibility for managing the purchasing decision, including
all negotiations with Material vendors in respect of price and general commercial terms;



“Supplier Product IP” has the meaning set out in Article 37.3;



"Supplier Proprietary Information” means Information, including but not limited to, technology,
processes or other proprietary property, including trade secrets, know-how, mask work rights,
patent applications, pricing information, cost information, performance metrics relating to the
manufacture of Products or relating to the operation of Supplier’s facilities and any other
non-public information in any form or medium developed or acquired by Supplier, its Affiliates or
its licensors other than Company, but for greater certainty, does not include the following: (i)
Company Proprietary Information; and (ii) the Specifications;



“Supply Chain Portal” means Company’s Internet web site for supplier documents
(scportal.lucent.com);



"Target Reduction Rate” has the meaning set out in Article 6.5;



“Term” has the meaning set out in Article 1.1;



“Termination Assistance” has the meaning set out in Article 1.2;



“Third Party Claim” means a Claim asserted by a third party against the Indemnified Party as
contemplated in Article 84;



“Tooling” or “Tools” has the meaning set out in Article 80.1;



“Supplier Associates” has the meaning set out in Article 37.1;



“Transition Agreement” means the transition agreement # HO32050323 made between the parties;



“VAT” means value added tax;



“Warranty” means the warranty provided by Supplier to Company for Products pursuant to Article 22;



“Warranty Period” has the meaning set out in Article 22.1;




					
	 	 	 	 	 
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"WAPRP” has the meaning set out in Article 6.5;



“WES” has the meaning set out in Article 61.3;



“XML” means the application profile known as “Extensible Markup Language”.




					
	 	 	 	 	 
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Attachment B




Products and Initial Prices



The attachment embedded below lists all Mobility Products and Mobility Switching Packs with
pricing effective as of [ *** ], including the applicable Percentage Reduction for such pricing
period.



[ *** ]




	 	 	 
	***

	 	Portions of this page have been omitted pursuant to a Request for Confidential Treatment filed
separately with the Securities and Exchange Commission.






					
	 	 	 	 	 
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Attachment B1




Commercially Purchased Items



None.




					
	 	 	 	 	 
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Attachment C




Manufacturer Per Unit Pricing Formula Summary



Overview: Per unit pricing shall be determined and reported using the formula and structure
shown in the following spreadsheet.



[ *** ]












	 	***	 	Portions of this page have been omitted pursuant to a Request for Confidential Treatment filed
separately with the Securities and Exchange Commission.














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Attachment D




Cost Savings Submittal Form:




	 	 	 	 	 	 	 
	 	 	 
	     Supplier Name:	 	Case Number:
	 
	 	 	 	 	 	 
	 	 	 
	Supplier Address:

	 	Submitted To:
	 	Date Submitted:	 	 
	 
	 	 	 	 	 	 
	 	 	 
	Supplier Contact Name:

	 	Coordinator:
	 	Assigned to:	 	 
	 
	 	 	 	 	 	 
	 	 	 





Improvement Program : (Program Type — Check all that apply)




	 	 	 	 	 	 	 	 	 	 	 
	o Cost Reduction	 	o Process Improvement   o Inventory Reduction   o Revenue Generation
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	o Material Cost
	 	 	 	o Business	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	o Labor Cost
	 	 	 	o Manufacturing	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	o Yield Improvement
	 	 	 	o Logistics	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	o Reliability Improvement	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 





	 	 	 	 	 
	Program Effect (Annualized Value)

	 	Project Expenses:	 	 
	 
	 	 	 	 
	Cost Savings ($US Annual)

	 	 	 	Total
	 
	 	 	 	 
	Cost Savings (3 yr. Average)

	 	Labor
	 	Materials
	 
	 	 	 	 
	 

	 	Capital
	 	Other
	 
	 	 	 	 
	 





Description:








 

Proposal:








 

Saving Calculation or Financial Considerations: (Net $)








	 	 	 	 	 
	 
	Accomplishment:
	 	 	 	 
	Measurement Period:

	 	                                                                                                                                        
	 	 Total
	 
	 	 	 	 
	Savings ($M):

	 	                                                                           
                                                             
	 	 Total
	 
	 	 	 	 
	 







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Attachment E

Supplier Service Fees





Service Fees:



The following rates and fees shall apply as of the Effective Date of this Agreement, and may be
amended from time to time upon agreement of the parties. Fees in respect of other Services will be
based on Supplier’s then current fees for such additional Services.



[ *** ]

















*** Portions of this page have been omitted pursuant to a Request for Confidential Treatment filed
separately with the Securities and Exchange Commission.




















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Attachment F




Example Product Plan




THE APPLICABLE PRODUCT PLAN WILL BE DISCUSSED AND MODIFIED

BY THE PARTIES AS NEEDED




PRODUCT PLAN Product Description:

Company Contact:

Supplier Contact:



Note: the information below is provided as an example. The specific requirements and reporting
frequencies should be specified for each particular product plan.




	 	 	 	 	 
	Article Section in Supply	 	 	 	 
	Agreement	 	Specific Requirements	 	Reporting Frequency
	 
	21.2 ISO and
Telecommunication
Requirements

	 	A copy of the Registrar Audit Report and subsequent
corrective action responses.
	 	Quarterly update
and as any
certification
change occurs.
	 
	21.3 Quality Audits

	 	Responses to Corrective Action Requests.
	 	Within 20 days from
completion of each
audit.
	 
	21.5 Source Inspection

	 	Conditions for Transfer of Source Inspection Costs to
Supplier and back to Company: If the Product
inspection performance results do not meet the
Company’s inspection requirements after five (5) lots
per Product number or Product family including the
First Article lot then the costs of Company’s source
inspection shall be paid by Supplier. Once the
Product inspection performance results meet Company’s
inspection requirements for five (5) consecutive
lots, then the costs associated with Company’s source
inspection shall no longer be paid by Supplier.
	 	 
	 

	 	Responses to Corrective Action Requests.	 	Within 30 days.
	 
	 	 	 	 
	 
	21.6 First Article Inspection

	 	Data, samples.
	 	Upon completion.
	 
	21.8 Product and
Manufacturing Quality

	 	1. Manufacturing quality levels as measured by
Supplier.
	 	Monthly.
	 

	 	2. A chart of the test results expressed in percent
defective with upper and lower control limits, Pbar,
and a line set at the Company’s Expected Quality
Level (EQL) of 0.13 percent defective.	 	 
	 

	 	3. A pareto of defects by pack code.	 	 
	 

	 	4. Test process yield data by pack code.	 	 
	 

	 	5. A chart of Defects Per Million Opportunities
(DPMO) by Circuit Pack Code.	 	 
	 

	 	6. A listing of sample sizes, defects, defect
quantities, defect part, by pack code.	 	 
	 

	 	7. An Environmental Stress Test (EST) plan as per
Annex C of X-21173, “Generic Robustness
Classification Method For Telecommunications
Equipment Using Environmental Stress Testing”.
	 	As Requested.
	 







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	 	8. Test and Repair data, “ Test and Repair” at the
serial number level of applicable circuit pack/unit
from applicable test area.	 	 
	 
	 	 	 	 
	 
	21.8 Product and
Manufacturing Quality

	 	1. KS-23490, Label Specification (Serial/Comcode)
	 	No report necessary.
	 

	 	2. KS-20643, Label Specification (Nameplate).	 	 
	 

	 	3. 801-001-105, Shipping and Receiving Barcode Label
Standard.	 	 
	 

	 	4. PKG-91NJ1045, Packaging, Marking, and Labeling
Specification for Purchased Equipment.	 	 
	 
	21.9 Supplier and
Subcontractor ESD
Requirements

	 	Supplier’s internal audit results.
	 	Annually.
	 
	21.10 Supplier and
Subcontractor MSD
Requirements

	 	Per applicable Supplier process instructions for
moisture sensitive devices.
	 	Annually.
	 
	21.11 Nonconforming Product
and corrective action

	 	Corrective action report shall include:
	 	Within 20 days of nonconformance notification.
	procedures

	 	1. The initial action taken to contain the problem.	 	 
	 

	 	2. An explanation of the root cause of the problem.	 	 
	 

	 	3. The proposed corrective action or solution to the
problem.	 	 
	 

	 	4. The actual or planned implementation date of the
corrective action.	 	 
	 

	 	5. The plans for verifying that the corrective action
was effective. Include the actual or planned date of
the verification of effectiveness.	 	 
	 
	21.12 Product Return Rate
Calculations and No Trouble
Found Requirements.

	 	Supplier shall provide TL9000 metrics needed by the
Company, including but not limited to return rates.
See TL9000 Metrics Handbook (ASQ). First year return
rate requirement < 16 returns per normalization
units. Long term return rate requirement < 0.6%.
For those Supplier facilities manufacturing Products
for Company that are not TL9000, Supplier’s Product
return data will be monitored.
	 	Quarterly.
	 
	21.13 Failure Mode Analysis

	 	Corrective action report shall include:
	 	Within 20 days from the request.
	 

	 	1. The initial action taken to contain the problem.	 	 
	 

	 	2. An explanation of the root cause of the problem.	 	 
	 

	 	3. The proposed corrective action or solution to the
problem.	 	 
	 

	 	4. The actual or planned implementation date of the
corrective action.	 	 
	 

	 	5. The plans for verifying that the corrective action
was effective. Include the actual or planned date of
the verification of effectiveness.	 	 
	 







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	21.14 Epidemic Failure
Condition and Corrective

	 	Corrective Action Plan shall include:
	 	Within 5 days of the reported occurrence.
	Action Requirements

	 	1. The initial action taken to contain the problem.	 	 
	 

	 	2. An explanation of the root cause of the problem.	 	 
	 

	 	3. The proposed corrective action or solution to the
problem.	 	 
	 

	 	4. The actual or planned implementation date of the
corrective action.	 	 
	 

	 	5. The plans for verifying that the corrective action
was effective. Include the actual or planned date of
the verification of effectiveness.	 	 
	 
	21.15 Annual Quality
Improvement Goals and

	 	1. Company return rates and on time delivery
performance.
	 	Quarterly.
	Requirements

	 	2. Verification Test and Workmanship results.	 	 
	 

	 	3. In-circuit, functional and final system test
yields.	 	 
	 
	61.3 Warranty: Warranty
Eligibility System (WES) data

	 	Provide data fields: Item serial number, Order
number, Manufacture ship date, Parent serial number,
Product line, Product identification, Circuit pack
code or microcode, Circuit pack series or issue of
microcode, Origination location.
	 	Upon shipment.
	 
	65 Product Conformance

	 	To be determined.
	 	To be determined.
	 
	Product-specific documentation

	 	Inspection Methods of Instruction, Test Design
Requirements.
	 	No report necessary.
	 







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Attachment G




Flexible Delivery Terms




SECTION 1 — BUILD TO STOCK 




1.1 Summary of the Program



At Company’s request and within a mutually agreed upon time frame, Company and Supplier shall
implement a build to stock (“Build to Stock”) ordering program for certain Products ordered by
Company under this Agreement. This program is based on the concept of Supplier manufacturing enough
Products in order to maintain a strategic set of predetermined Supplier finished goods inventory
buffers (“SFGIB”) either to support a Company Flexible Delivery Arrangement such as Dock to Shop or
some other form of Flexible Delivery Arrangement as may be agreed to by the parties.




The intent of the Build to Stock program is for Supplier, at a minimum, to manufacture enough
Products to maintain the SFGIB at a level agreed to by the parties as Supplier, Company, or
Company’s end customers withdraw Products from the SFGIB. The
SFGIB may be physically
located at a Supplier location, a Company location, or at a mutually agreed upon third party
location.



Company may, at its sole option, choose to maintain a Company owned finished goods inventory buffer
(“CFGIB”) that consists of Company owned Products that are waiting to be shipped to Company’s end
customers. Company may, at its sole option, also choose to have Supplier pre-build enough Product
for the CFGIB in order to meet above capacity periodic demands from Company. In the event Company
chooses either option described in this paragraph, this shall not reduce, limit nor change
Supplier’s commitment to maintain the agreed to SFGIB levels.





			
	1.2	 	Establishment of SFGIB levels and Local Delivery Requirements







Specific local pull requirements, replenishment request, ship notification process or other
local logistics processes will be mutually determined between Supplier and Company’s ordering
location(s) and shall be detailed in a local agreement or order.



For each Product, as applicable, the minimum and maximum SFGIB levels shall be as agreed to by the
parties, taking into account the Upside Flexible Delivery Limits set out in Section 4 of this
Attachment.



The SFGIB levels will be reviewed on a monthly basis by the parties and resized quarterly or as
otherwise mutually agreed based upon Company’s demand and actual pulls in the preceding quarter.
Thereafter, the SFGIB levels will be frozen and will be effective until the end of such quarter.
Target algorithms will also be re-evaluated after each quarter. Company and Supplier will review
Forecast, order fill, inventory, and minimum lot sizes each quarter.





			
	1.3	 	Ordering and Fulfillment







Blanket Purchase Orders will be issued by Company to Supplier to cover requirements for the
Products delivered by Supplier under the applicable Flexible Delivery Arrangement.




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Subject to Article 12 of the Agreement, Supplier owns SFGIB inventory until title for the Products
is transferred by Supplier to Company in accordance with the terms of the applicable Flexible
Delivery Arrangement.





			
	1.4	 	Company’s Liability







Company shall be liable to Supplier for finished goods inventory, work-in-process, and Material
pursuant to Article 12 of the Agreement.




SECTION 2 — BUILD TO ORDER 





			
	2.1	 	Summary of the Program







For certain Products ordered pursuant to the Agreement, Supplier and Company may establish
build-to-order lead-times. At a minimum, Supplier will be expected to deliver to Company the
required quantities of Products on an as ordered basis in accordance with the agreed to build to
order lead-times and, where Company has provided a Forecast for the build to order Products, in
accordance with the Upside Flexible Delivery Limits set forth in Section 4.0 of this Attachment.
For each such Product, Company and Supplier will mutually agree to a minimum lot size. Company
will load this minimum lot size quantity into its MRP system and provide “netted” Forecasted demand
to Supplier accordingly. Lot sizes will be evaluated quarterly. In the absence of any Forecasted
demand by Company, Supplier will be expected, at a minimum, to deliver to Company the required
quantities of Products on an as ordered basis in accordance with the agreed to build to order
lead-times.




SECTION 3 — BLANKET ORDERS





			
	3.1	 	Summary of the Program







Blanket Purchase Orders will cover a specific period of time as identified in the applicable Order.
The quantity of Products specified in such Orders is Company’s Forecasted usage for the specified
period. The Forecast is not a commitment. Company’s commitment to Supplier is for the number of
units of Product ordered by Company through the issuance of a release (the “Release”), except as
otherwise stated in this Agreement. Each Release shall specify the number of units of Product to be
shipped by Supplier to Company and the shipment schedule (the “Release Schedule”). Supplier agrees
to ship in accordance with the Release Schedule.




SECTION 4 — UPSIDE FLEXIBLE DELIVERY LIMITS 





			
	4.1	 	Planning Requirements







Unless otherwise agreed to by the parties, in the event that Company delivers to Supplier
requests (the “Additional Quantity Requests”) that Supplier deliver to Company quantities of a
Product in excess of the quantity of such Product Forecasted on the eighty-fourth (84th) day prior
to the Forecast delivery date of such Product (the “Baseline Quantity”), Supplier shall be able to
deliver such additional quantities of Product to Company, subject to the following limitations
(the “Upside Flexible Delivery Limits”):





	 	(a)	 	during the period which is less than eighty-four (84) and more than fifty-six
(56) days prior to the Forecasted delivery date for such Product, Company may deliver
one or more Additional Quantity Requests for up to, in the aggregate, an additional
fifty (50) percent of the Baseline Quantity;
	 
	 	(b)	 	during the period which is less than fifty-five (55) and more than twenty-one
(21) days prior to the Forecasted delivery date for the Product, Company may deliver
one or more Additional Quantity Requests for up to, in the aggregate, an additional
twenty-five (25) percent of the Baseline Quantity; and





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	 	(c)	 	if one or more Additional Quantity Requests are received by Supplier less than
twenty-one (21) days prior to the Forecasted delivery date for the Product, Company may
deliver one or more Additional Quantity Requests for up to an additional aggregate
quantity as supported by the quantity of Product in the SFGIB;






provided, however, that in no event shall Supplier be obligated pursuant to paragraphs (a)
and (b) above to deliver, in the aggregate, more than fifty (50) percent of the Baseline
Quantity under all Additional Quantity Requests received by Supplier.


It is the parties’ mutual objective that Supplier achieve the ability to deliver quantities of
Products in excess of the Upside Flexibility Limits. To that end, Supplier shall develop a plan to
improve Upside Flexible Delivery Limits, for approval by the Strategic Alliance Team, and shall use
reasonable commercial efforts to satisfy Company’s demand in excess of the Upside Flexible Delivery
Limits or within the stated lead time.



Supplier is expected to meet the Upside Flexible Delivery Limit requirements by maintaining an
adequate level of finished goods inventory in accordance with the SFGIB levels agreed to in Section
1 of this Attachment and Material safety stocks. Company will not pay any additional charges for
PPV or PPE to enable Supplier to meet the Upside Flexible Delivery Limit requirements. In no event
shall Company pay or be liable for additional production, handling or other such labor charges to
Supplier for Supplier’s ability to meet or exceed the Upside Flexible Delivery Limit requirements.



In the event the SFGIB levels and component safety stock are consumed by Company’s demand above the
Upside Flexible Delivery Limits: (a) Supplier shall provide Company with a recovery plan, based on
the available supply chain, that will include a projected date for replacing the SFGIB level, and
(b) the measure of Supplier’s performance relating to demand pull metrics shall not be affected.




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Attachment H




Return And Repair Services




	 	 	 	 	 
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TABLE OF CONTENTS 




	 	 	 
	Section 1.0

	 	SCOPE
	Section 2.0

	 	APPLICABLE SPECIFICATIONS
	Section 3.0

	 	GENERAL REPAIR REQUIREMENTS
	Section 4.0

	 	RS&R PROCESS REQUIREMENTS
	Section 5.0

	 	INTENTIONALLY DELETED
	Section 6.0

	 	DELIVERY AND TRANSPORTATION
	Section 7.0

	 	RISK OF LOSS AND DAMAGE AND DELIVERY
	Section 8.0

	 	PRICES
	Section 9.0

	 	INVOICING AND PAYMENT
	Section 10.0

	 	SUPPLIER’S REPAIR WARRANTY
	Section 11.0

	 	CANCELLATION OF REPAIR ORDERS BY COMPANY
	Section 12.0

	 	REPAIR MATERIALS
	Section 13.0

	 	CHANGE CONTROL
	Section 14.0

	 	PROGRAM MANAGEMENT AND PERFORMANCE REPORTING
	Section 15.0

	 	DOCUMENTATION REQUIREMENTS
	Section 16.0

	 	QUARTERLY PERFORMANCE REVIEWS
	Section 17.0

	 	COMMUNICATIONS
	Section 18.0

	 	USE OF SUBCONTRACTORS
	Section 19.0

	 	COMPANY RESPONSIBILITIES CONCERNING THE SCOPE OF THIS ATTACHMENT
	Section 20.0

	 	HEADINGS AND SECTION REFERENCES






LIST OF TABLES




	 	 	 
	I

	 	Supplier’s Documentation Requirements






LIST OF SCHEDULES




	 	 	 
	Schedule 1

	 	Repaired Product Prices
	Schedule 2

	 	Periodic Performance Reports
	Schedule 3

	 	Repair System Interface Requirements






	 	 	 	 	 
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1.0            SCOPE




This Attachment H addresses the repair by Supplier at Company’s request of Products outside of
Supplier’s Warranty obligations to Company as set forth in Article 22 of the External Manufacturing
Services Supply Agreement No. WR71050115 made between Company and Supplier (the “Agreement”), of
which this Attachment is made a part. The terms and conditions of this Attachment hereby
incorporate by reference the terms and conditions of the Agreement. As used in this Attachment H,
“Effective Date” means the effective date (April 1, 2005) of the Agreement.



All capitalized terms used and not otherwise defined in this Attachment shall have the respective
meanings given to such terms in the Agreement. In the event that there is a conflict between the
terms and conditions of this Attachment regarding Supplier’s or Company’s performance pursuant to
this Attachment, as it relates to the repair of Products, and the terms and conditions of the
Agreement, the terms and conditions contained in this Attachment shall prevail to the extent of
such inconsistency.



Overview




Company’s Local Customer Support (“LCS”) organizations located in various regions throughout the
world serve as Company’s repair and logistics hubs for the Products identified in this Attachment.
The LCS organizations are responsible for managing both the Product repairs and upgrades during and
after Company’s warranty period to its end customers. Pursuant to the terms of this Attachment,
Supplier will service Repair Orders from the various LCS organizations throughout the world as
contemplated in Article 23.1 of the Agreement. Supplier may also receive Repair Orders pursuant to
this Attachment from Company’s System Integration Centers. For the purposes of this Attachment,
references to Company’s LCS organizations shall include Company’s System Integration Centers and
other organizations that Company may designate from time to time. Company shall cause its LCS
organizations for which Supplier repairs Products under this Attachment to abide by the terms and
conditions of this Attachment, including, without limitation, Article 23.1 of the Agreement.



Supplier agrees to provide feedback on all Products returned to Supplier pursuant to the terms of
this Attachment. This feedback will allow Company to monitor and improve overall Product quality,
reliability, and cost.



Product Returns received by Supplier though the RS&R process outlined in Section 4 of this
Attachment and Section B in Schedule 5 will consist of Company Owned Products and Products owned
by Company’s end customers needing repairs or Modifications. For those Products for which Company
has determined that Supplier is responsible for performing the repair and/or Modification pursuant
to this Attachment and Article 23.1 of the Agreement, the various LCS organizations will provide a
Repair Order to Supplier authorizing Supplier to make the necessary repairs and/or Modifications
to the Products in accordance with the Specifications.



In addition to providing at Company’s request Return, Service, and Repair services to Company as
contemplated in Article 23.1 of the Agreement, Supplier may also perform at Company’s request,
pursuant to the terms set forth in this Attachment and Article 23.1 of the Agreement, additional
services specific to a Company location. These additional services (“Additional Services”) are set
forth in Schedule 5 to this Attachment.



	 	 	 	 	 
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DEFINITIONS





“Additional Services” shall have the meaning set out in Section 1.0, “Overview”.




“Agreement” has the meaning set out in Section 1.0, as the same may be amended, supplemented
or modified by the parties thereto from time to time.




“ATP” shall mean all tests passed, otherwise known as “No Trouble Found”. A Product Return
will be considered ATP if it passes all tests and procedures specified by Company, without
further Modification or repair, in order to verify compliance of the repair services being
performed by Supplier under this Attachment.




“Attachment” shall mean this Attachment H, as the same may be amended, supplemented or
modified from time to time.




“BOD” shall mean a business object document.




“Class A Changes” shall mean a Product update that must be implemented to correct a Product
condition that results in an inoperative or unsatisfactory operating condition, safety
hazard, or non-conformance to the Product technical Specifications.




“Company Owned Product” shall mean a Product Return owned by Company.




“FMA” shall mean Failure Mode Analysis, which is a situational study requested by Company,
used to diagnose failures.




“Gross Profit” shall mean Supplier’s profit before income taxes.




“Initial Prices” has the meaning set out in Section 8.1.




“LCS” has the meaning set out in Section 1, “Overview”.




“Listed Products” has the meaning set out in Section 8.1.




“Miscellaneous Returns” shall mean a category of Product Returns, which is not otherwise
defined in this Attachment.




“Modification” shall mean a required upgrade or change to a Product as a result of an
Engineering Change Order initiated by Company;




“OEM” shall mean an original equipment manufacturer that owns the control of the design and
manufacture of the OEM Product and will perform the repair on the OEM Products.




“OEM Product” shall mean a Product that is to be returned to the OEM Vendor.




“OEM Vendor” shall mean the vendor of an OEM Product.




“PIM” shall mean a permanent information memorandum.



	 	 	 	 	 
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“Price Reduction Date” has the meaning set out in Section 8.1.




“Prices” has the meaning set out in Section 8.1.




“Product”, for the purposes of this Attachment, refers to those products defined in the
Agreement in addition to those products defined in this Attachment.




“Product Return” shall mean any Product received by Supplier pursuant to this Attachment.




“RDMA” shall mean reliability data management and analysis, a system for repair and
reliability information such as return rate and component removal rate.




“Repaired Product” shall mean a Product Return that has been repaired by Supplier or
Supplier’s Repair Vendor and passed all the required testing set forth in the Specifications.




“Repair Interval” shall mean Repaired Product turnaround time and is measured in days,
starting when the Product Return arrives at Supplier’s dock with complete and correct
documentation and ending when the Repaired Product is either delivered by Supplier to
Company’s designated transportation carrier in accordance with Section 6.2, or declared to be
Unrepairable Product in accordance with Section 3.9.




“Repair Material” shall mean all parts, components and raw materials (including labels,
product inserts, packaging and other labeling for the Products) required and owned by
Supplier to perform the repair of Products or provide the Additional Services described in
Schedule 5 under this Attachment.




“repair of Product” or “repair” shall mean the repair, upgrade, and testing, as applicable,
of a Product to the Specifications by Supplier or Supplier’s Repair Vendor.




“Repair Order” shall mean a purchase order issued by Company to Supplier authorizing Supplier
to perform the repair of Products.




“Repair, Service & Return” or “RS&R” shall mean the receiving, repair and return process
that supports the receipt and shipment of Product Returns to and from Company and customers.




“Repair Warranty” shall have the meaning set out in Section 10.1.




“Returned Goods Memorandum” or “RGM” process covers those Product Returns to Company that
consist primarily of Company installation returns.




“Repeat Return Rate” shall mean the rate, expressed as a percentage of the aggregate amount
of Products repaired by Supplier for Company pursuant to this Attachment during any six (6)
month period, that the same Repaired Product is returned for the same repair as was
previously performed by Supplier at any time during such six (6) month period.




“Repricing Date” has the meaning set out in Section 8.2.



	 	 	 	 	 
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“Specifications” shall mean the technical and processing specifications for the development,
manufacture or repair of the relevant Product provided by Company to Supplier, including all
drawings, models, specifications, documentation, data, product information, engineering
standards, technical and test instructions and test programs, procedures or requirements,
functional information and related data, data files, quality standards, AVL, BOMs, software,
design information, technical manuals, packaging requirements, testing requirements and
know-how, as amended and in effect from time to time.




“Storeroom Balance Accuracy” shall mean the percentage of correct part numbers and counts
found in a storeroom audit performed by either Company or Supplier.




“Substituted Product” shall mean a Product that Supplier has substituted on a Repair Order in
place of the Unrepaired Product (bearing a different serial number) that was originally
supposed to be repaired pursuant to such Repair Order.




“Supplier’s Repair Vendor” shall mean a third party repair vendor approved by Company but
subcontracted by Supplier to perform the repair of Products for those Products not defined as
an OEM Product.




“TF” shall mean trouble found.




“Unrepairable Products” shall mean those Product Returns that have been declared unrepairable
in accordance with Section (3.6 (e)) or Section 3.9.




“Unlisted Products” has the meaning set out in Section 8.2




“Unrepaired Products” shall mean those Product Returns that are assumed to be defective,
regardless of whether or not test data exists confirming such condition and are to be
repaired and tested by Supplier pursuant to the Specifications.




“Unrepairable Rate” shall have the meaning set out in Section 3.9.




“WES” shall mean Company’s warranty eligibility system.



2.0 APPLICABLE SPECIFICATIONS





	2.1	 	The Specifications listed below are hereby incorporated by reference into, and shall be
adhered to, as applicable, by Supplier in its performance of all activities pursuant to, this
Attachment. For clarification, the Specifications applicable to this Attachment include but
are not limited to the following:






	 	(a)	 	drawings, stock lists, change orders, change notices, PIMs, schematics, and test
procedures, copies of which are in Supplier’s possession. These Specifications will be
updated by Company and distributed to Supplier via a database containing Product change
history and detail or via other agreed upon methods;
	 
	 	(b)	 	repair quality assurance requirements: Specification # IPC-A-610 Rev. B Class II,
Acceptability of Electronic Assemblies; and
	 
	 	(c)	 	repair appearance standard: Specification # IPC-A-610 Rev. B Class II,
Acceptability of Electronic Assemblies.






	 	 	 	 	 
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3.0 GENERAL REPAIR REQUIREMENTS





	3.1	 	At Supplier’s option as specified in Article 23.1 of the Agreement, Supplier shall be
entitled to repair all Products listed in Schedule 1 (the “Listed Products”) and perform all
the necessary tests specified by Company in order to verify compliance of the repair services
being performed under this Attachment.






	3.2	 	Unless otherwise specified in the applicable Repair Order, Product Returns that have been
successfully repaired and tested by Supplier shall be packed and labeled by Supplier in
accordance with the applicable Specifications in effect as of the Effective Date, unless
changed in accordance with Article 67 of the Agreement.






	3.3	 	Company shall provide Supplier with a unique location identifier. This location
identifier, along with the date code, shall be incorporated by Supplier into the repair
documentation of all Repaired Products as specified by Company to clearly identify the origin
and date of repair for all Repaired Products.






	3.4	 	Supplier shall, in accordance with Article 61.3 of the Agreement, participate in Company’s
Warranty Eligibility System where applicable for the purpose of tracking Supplier’s Repair
Warranty for all Repaired Product or Substituted Products.






	3.5	 	Subject to Section 3.6(e) and 3.9 in respect of Unrepairable Products, for each Repair Order
accepted by Supplier, Supplier shall complete the repair and deliver the Repaired Product
within a Repair Interval of ten (10) days. Subject to Section 3.6(e) and 3.9 in respect of
Unrepairable Products, in the event that Supplier agrees to repair a Product but fails to
complete the repairs within the time period agreed by Supplier and Company, Supplier shall,
subject to Company’s prior approval, replace the Product Return with a Substituted Product.





3.6 Quality Requirements





	 	(a)	 	Supplier shall have a written quality plan to ensure that Product Returns repaired by
Supplier meet Company’s quality standards. Such quality plan shall, at a minimum,
include the following:







	 	(i)	 	test procedures, documentation, and control;
	 
	 	(ii)	 	quality assurance, documentation, and control;
	 
	 	(iii)	 	final products sampling and inspection audits;
	 
	 	(iv)	 	quality data collection, tracking, and reporting;
	 
	 	(v)	 	corrective actions; and
	 
	 	(vi)	 	workmanship standard.







	 	(b)	 	Supplier shall perform audits, using valid statistical sampling strategies to
ensure that repair of Products is consistent with the Specifications.
	 
	 	(c)	 	Supplier’s ESD program shall be in compliance with Article 21.11 of the
Agreement.
	 
	 	(d)	 	Supplier shall ensure that the Repeat Return Rate within the Repair Warranty
period for all Products repaired by Supplier or Supplier’s Repair Vendor is less than or
equal to [ *** ] on an aggregate basis for Mobility Products. This metric will be
reviewed quarterly and adjusted by mutual agreement of the parties.
	 
	 	(e)	 	Supplier agrees to work with Company in support of Company’s maintenance of its
agreements with its end customers concerning all required tests (“ATP”) replacements and







	 	***	 	Portions of this page have been omitted pursuant to a Request for Confidential
Treatment filed separately with the Securities and Exchange Commission.







	 	 	 	 	 
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	     	 	metrics. Unless otherwise specified by Company in writing, the maximum number of
consecutive occasions on which each Product may be tested without repair or Modification
and for which there is no trouble found, is twice. Products which twice pass tests
without repair or Modification and for which there is no trouble found, shall be deemed
to be Unrepairable Products and Supplier shall: (i) disposition the Product in
accordance with Section 3.9 and bill Company using the NTF price indicated on Schedule 1
of this Attachment, and (ii) at Company’s request and cost and if available, substitute
equivalent (same form, fit and function) Repaired Product on the Repair Order. The
Substituted Product must be noted on the shipping paperwork that Supplier provides
noting the original and replacing serial numbers.







	3.7	 	Company reserves the right to perform, or have Company’s third party representative perform,
periodic audits of Products repaired by Supplier or Supplier’s Repair Vendor under this
Attachment, subject to Article 30 of the Agreement. Company shall provide Supplier advanced
notification of any unscheduled audit at least forty-eight (48) hours prior to such audit.
Company also reserves the right to perform, or have Company’s third party representative
perform, periodic process audits using ISO 9001/9002, TL 9000 and ISO 14000: 1996 or
Eco-Management and Audit Scheme criteria. Company shall ensure that its third party
representative complies with all confidentiality and security terms and conditions that have
been established between Company and Supplier. Should Supplier not pass an audit conducted by
Company or Company’s third party representative, Supplier shall develop, implement, and submit
to Company within an agreed upon time period a formal Corrective Action Plan which is
acceptable to Company, acting reasonably, of sufficient detail to indicate root cause,
corrective action, and a corrective action implementation timeline. Should Supplier fail to
provide Company with a Corrective Action Plan which is acceptable to Company acting reasonably
within the agreed upon time period, or fail to implement the identified corrective action
within the agreed upon time period, Company may consider Supplier to be in default, in
accordance with Article 36 of the Agreement.






	3.8	 	All Repaired Products shall be tested by Supplier or Supplier’s Repair Vendor in sufficient
detail to verify compliance with the Specifications prior to delivery of Repaired Products to
Company or Company’s end customer. To this end, Supplier shall comply with all existing
acceptance test Specifications in place as of the Effective Date unless changed in accordance
with Article 67 of the Agreement. Supplier shall develop and submit for Company’s review and
approval additional acceptance test procedures for any Products not listed on Schedule 1 which
Company requests Supplier to repair (“Unlisted Products”) subsequent to the Effective Date.
To the extent that the costs associated with the foregoing are not included in the Baseline
and/or the overhead for the Facilities, such costs shall be charged by Supplier to Company as
a separate, billable NRE charge for which Company shall issue Supplier a purchase order in
accordance with Article 9 of the Agreement. Company will support, modify and provide test
information from a database, with continued updates and changes. Unless otherwise agreed to
by the parties, any changes to the test processes or Specifications shall be made in
accordance with Article 67 of the Agreement. Such acceptance test procedures shall describe,
step-by-step, directions for preparatory operations, directions for making actual measurements
or observations, and a statement of required values and limits. The acceptance test
procedures shall also specify the test equipment used, test configurations, measurement
tolerances, test conditions, environmental exposures imposed, upgrades and failure, repair,
and Modification information.






	3.9	 	Any Product Return that: (a) Supplier can not repair due to damage to the Product, (b) the
parties mutually agree is beyond economic repair, or (c) Supplier has attempted to repair and
is unable, (an “Unrepairable Product”) shall be identified by Supplier to Company in writing
indicating the Repair Order number, Product description, quantity and reason the Product
Return could not be repaired. Additionally, Supplier shall perform one of the following
steps: (a) If the Repair Order indicates “Return Junk Material —  Yes” then Supplier shall
ship the Unrepairable Product using standard precautions and packaging to the address shown on
the Repair Order; or (b) If the Repair Order indicates “Return Junk Material — No” then such
Unrepairable Product shall be deemed to be Scrap and Supplier shall dispose of it in
accordance with Article 24 of the Agreement. Supplier compensation for Product Returns deemed
to be Unrepairable Product under this Article 3.9 shall be as follows: (i) for damaged Product
and for Product which the parties mutually agree is beyond





	 	 	 	 	 
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	 	 	economic repair, Company shall pay Supplier a flat fee of [ *** ]; and (ii) for Product which
Supplier has been unable to repair, Company shall pay Supplier 80% of the TF price indicated
on Schedule 1 of this Attachment. The compensation for Product Returns deemed to be
Unrepairable Products hereunder shall be reviewed and adjusted if appropriate, by mutual
agreement of the parties.






	3.10	 	With respect to item (c) in Section 3.9, Supplier shall maintain an unsuccessful repair rate
(“Unrepairable Rate”) no greater than [ *** ] on an aggregate basis. For the purposes of this
Attachment, Unrepairable Rate shall be calculated by dividing the total number of Unrepairable
Products by the sum of the total number of Unrepairable Products plus the total number of
Unrepaired Products which Supplier was successful in repairing during a quarter’s period.
This metric shall be reviewed quarterly and adjusted, if appropriate, by mutual agreement of
the parties.






	3.11	 	If Supplier is unable to complete the repair of a Product Return within the required time
period (other than in respect of an Unrepairable Product), Supplier shall be entitled, at its
option, but without any additional compensation beyond the repair price specified in Section
8, to replace any Product Return with an equivalent new or Repaired Product (each, a
“Replacement Product”), subject to prior approval of Company. Supplier shall be entitled to
sell any Product Return that it has replaced with a Replacement Product once such Product
Return has been repaired, provided that if Supplier desires to sell any such repaired Product
Return to any customer, such Product Return shall only be sold to such customer by Company, on
Supplier’s behalf. Company agrees to provide Supplier such assistance as may reasonably be
requested by Supplier in the disposition of repaired Product Returns as contemplated in this
Section 3.11.






	3.12	 	Supplier shall accept the Repair Order number provided by Company to track order status when
an Unrepaired Product is in Supplier’s possession. If Supplier normally requires a RMA number
to provide such tracking, Supplier agrees to waive this RMA requirement.






	3.13	 	Supplier will notify Company when Supplier has established the repair capability for any
newly manufactured Products which Company has requested Supplier to repair, any vintage or
older Products that are not set forth on Schedule 1 and any other Unlisted Products which
Company has requested Supplier to repair, or when it has established a new Modification
process to a Listed Product. This information will be used to maintain Company’s sourcing
database. Company will make commercially reasonable efforts to notify Supplier at least six
(6) months in advance of declaring that repair services are no longer required for a Product
or Product family.






	3.14	 	Upon Company request, Supplier shall provide repair services for all or some portion of the
series, issues and lists of the Listed Products.





3.15
   All Process Changes shall be dealt with in accordance with Article 67.2 of the Agreement.



4.0 RS&R PROCESS REQUIREMENTS





	4.1	 	Unless otherwise requested by Company and agreed to by Supplier, for those Product Returns
which are sent to Supplier by Company’s various LCS organizations or by Company’s end
customers and which are specifically addressed to Supplier as the repair location, Supplier
shall comply with the process requirements set forth in this Section 4.1. The specific tasks
to be performed by Supplier pursuant to this Section 4.1 are as follows:






	 	(a)	 	verify contents of the shipment against the shipping manifest and
notify the applicable LCS organization of any discrepancies in order to reconcile
such discrepancies;
	 
	 	(b)	 	unpack Unrepaired Product and verify that the individual description
and quantity on each Unrepaired Product matches the description and quantity on
the shipping documentation. If the Unrepaired Product does not match the shipping
documents, hold the Unrepaired Product in a separate holding area and notify the
applicable LCS organization in order to reconcile such discrepancy;






	 	***	 	Portions of this page have been omitted pursuant to a Request for Confidential
Treatment filed separately with the Securities and Exchange Commission.





	 	 	 	 	 
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	 	(c)	 	de-trash all incoming Unrepaired Product packaging and dispose of all
resulting trash in an environmentally safe manner through an authorized recycling
vendor approved by Company;
	 
	 	(d)	 	upgrade all Unrepaired Product for all Class A Changes and any
upgrades required to facilitate repair and test;
	 
	 	(e)	 	test and repair Unrepaired Product within the Repair Interval shown
in Schedule 1. If no Repair Interval is shown, Supplier and Company shall agree on
the Repair Interval for the Unrepaired Product. All Unrepaired Products that
cannot be repaired by Supplier shall be dispositioned in accordance with Section
3.8;
	 
	 	(f)	 	pack and ship all Repaired Products as directed on the applicable
Repair Order;
	 
	 	(g)	 	perform any required transportation management services in accordance
with Section 6.0 and notify the appropriate LCS organization of any shipping
issues relating to the shipment by Supplier of Repaired Product to the address
specified on the Repair Order;
	 
	 	(h)	 	transmit warranty information to WES as related to Supplier’s Repair
Warranty; and
	 
	 	(i)	 	provide Company with a copy of Supplier’s open Repair Order report weekly.






	4.2	 	Company will provide a report or dataset of receipt messages for Repaired Products. This
information will be from each Company LCS organization and will be sent to Supplier weekly.






	4.3	 	For all Product Returns received by Supplier under the RS&R process set forth in Section 4.1
above, Supplier shall ship Repaired Products within a Repair Interval of ten (10) days. In the
event that the appropriate LCS organization fails to reconcile discrepancies identified in
Sections 4.1(a) or 4.1(b) above within four (4) hours of the notice specified therein, the
timing of the Repair Interval for such shipment shall be suspended until such time as the
discrepancies are reconciled by the parties.






	4.4	 	Where delivery of Repaired Products is delayed due to the unavailability of any information,
materials or other items to be provided by Company to Supplier, Supplier shall be afforded
relief in the delivery requirement of such Repaired Products. Supplier shall provide to
Company, in writing, as soon as possible but in any event no less than five (5) Business Days
prior to the scheduled delivery date, the cause of any such delay in sufficient detail for
Company to evaluate the appropriate relief in delivery date(s). Company shall notify Supplier
of such relief, in writing, within five (5) Business Days of receipt of Supplier’s request for
a change to delivery dates. Such delays shall not be deemed to affect any measure of
Supplier’s performance in respect of complying with the Repair Interval for such Repaired
Products.





5.0 INTENTIONALLY DELETED




6.0  DELIVERY AND TRANSPORTATION 





	6.1	 	Company or Company’s end customer, as the case may be, shall pay any inbound freight costs
for deliveries to Supplier pursuant to this Attachment.






	6.2	 	For any Products that will be shipped to Supplier pursuant to this Attachment from an
origination point outside of the United States and for which Supplier has been notified by
Company or Company’s end customer of said shipment, Supplier shall, unless otherwise agreed,
be the importer of record for such shipment and be responsible for facilitating directly or
indirectly through a qualified customs broker the importation of the shipped Product into the
United States. In such an event, any applicable duties shall be paid by Supplier and billed
to Company as a separate charge on the Repair Order.





	 	 	 	 	 
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	6.3	 	Supplier shall ship all Repaired Products FCA (Incoterms 2000), to the ship-to location
specified on the Repair Order. All outbound freight shall be routed according to the
instructions on the Repair Order and utilizing Company’s specified transportation services
provider. If no routing instructions are provided on the Repair Order, then Supplier shall
contact Company’s designated transportation services provider for instructions.
	 
	6.4	 	For any Products that will be shipped by Supplier at Company’s request to a destination point
outside of the United States, Company shall be the U.S. principal party in interest (U.S. PPI)
for said export shipment. However, Supplier shall be responsible for facilitating directly or
indirectly (i.e. through a qualified agent) the exportation of the shipped Product outside of
the United States. Prior to the first international shipment by Supplier, Supplier and Company
agree to review the export documentation requirements to make certain both parties are in
compliance with the applicable United States export requirements. Company shall be responsible
for specifying the appropriate freight forwarding and transportation services provider(s)
required to perform the export, and shall be responsible for payment of all fees and
transportation charges associated with such export.
	 
	6.5	 	Supplier shall work with Company’s designated transportation claims company to facilitate the
resolution of all claims for any shipping discrepancies.
	 
	6.6	 	Subject to Article 30 of the Agreement, Company reserves the right to perform, or have
Company’s third party representative perform, periodic audits of export processes, export
procedures, and export documentation for Products repaired and then exported by Supplier under
this Attachment. Company shall ensure that its third party representative complies with the
confidentiality and security terms and conditions that have been established between Company
and Supplier. Company shall provide Supplier advanced notification of any unscheduled audit
at least forty-eight (48) hours prior to said audit. Should Supplier not pass an audit
conducted by Company or Company’s third party representative, Supplier shall submit to Company
a formal corrective action plan of sufficient detail to indicate root cause, corrective
action, and a corrective action implementation timeline.
	 
	7.0	 	RISK OF LOSS AND DAMAGE AND DELIVERY 
	 
	7.1	 	Title to all Product Returns shall remain with Company or Company’s end customers, as the
case may be.
	 
	7.2	 	The terms of Article 79 of the Agreement shall apply to any Product Returns in Supplier’s
possession. Risk of loss and damage for Product Returns shall pass from Company to Supplier
upon receipt of same by Supplier’s at its receiving dock. Risk of loss and damage for Product
Returns shall pass from Supplier to Company upon the occurrence of one of the following
events:






	 	(a)	 	The applicable Repaired Product is delivered by Supplier to Company’s
transportation provider, in accordance with Section 6; or
	 
	 	(b)	 	The applicable Unrepairable Product is scrapped in accordance with
Section 3.8, or otherwise dispositioned in a manner as the parties may mutually
agree.






	8.0	 	PRICES
	 
	8.1	 	The prices for the repair of those Products (the “Prices”) listed in Schedule 1 (the “Listed
Products”) (which shall include ATPs and Modifications) as of the Effective Date are set forth
in Schedule 1 (the “Initial Prices”). The parties acknowledge and agree that the Initial
Prices in respect of repair services provided at Reynosa have been reduced by [ *** ] from the
price charged for the repair of such Products prior to June 1, 2005. The Prices for the
Listed Products shall be reduced by [ *** ] on each of the following dates: [ *** ] (each
such date is referred to hereinafter as the “Price Reduction Date”).
	 
	***	 	Portions of this page have been omitted pursuant to a Request for Confidential Treatment filed
separately with the Securities and Exchange Commission.





			
	 	 	 
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	8.2	 	For Products not set out in Schedule 1 as of the Effective Date (“Unlisted Products”), once
Company has paid Supplier for all applicable NRE expenses associated with the development and
implementation of repair capabilities, processes and procedures for such Unlisted Products, in
accordance with Section 3.7, repair Prices (including Modifications and ATP) for the Unlisted
Products shall be calculated by applying the formulas in Section 8.3 and the Initial Rates.
The Prices for the Unlisted Products shall be reset on a quarterly basis (each a “Repricing
Date”) during the Initial Term by applying the formulas in Section 8.3 and the Initial Rates;
provided that each such Price shall be reduced by [ *** ] on the first Price Reduction Date
that occurs following the [ *** ] the date that a Price was first calculated for such Product,
with further reductions of [ *** ] on each Price Reduction Date thereafter during the Initial
Term.
	 
	 	 	If, on any date on which Prices for the repair of Unlisted Products are to be set or
reset in accordance with this Section 8.2, sufficient data is not available to determine
the cost of Repair Material and the average labor hours as defined in Section 8.3, such
values shall be based upon estimates mutually agreed to by the parties in respect of
such Unlisted Product.
	 
	8.3	 	The Prices for the repair of Unlisted Products shall be determined by applying the formulas
set out below:
	 
	 	 	[ *** ]
	 
	 	 	For the purposes of calculating the Prices in accordance with this Section 8.3:
	 
	 	 	[ *** ]
	 
	***	 	Portions of this page have been omitted pursuant to a Request for Confidential Treatment filed
separately with the Securities and Exchange Commission.





			
	 	 	 
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	8.4	 	For the purposes of calculating Prices for Unlisted Products in accordance with Section 8.3,
the following percentages and rates shall apply (the “Initial Rates”), subject to amendment
pursuant to Section 8.5:
	 
	 	 	[ *** ]
	 
	8.5	 	The Initial rates shall be reviewed and revised, if appropriate, by mutual agreement of
the parties before the second anniversary of the Effective Date, and on a yearly basis
thereafter before each anniversary of the Effective Date. The rates revised in accordance
with the foregoing (the “Revised Rates”) shall take effect on the next Repricing Date
following such revision and shall be applied for purposes of resetting Prices in accordance
with Section 8.3.
	 
	8.6	 	Intentionally deleted.
	 
	8.7	 	For Unlisted Products, in the event that the parties fail to agree upon a revision to the
Initial Rates or the Revised Rates, as applicable, prior to the next Repricing Date, as of the
next Repricing Date Company shall have the right to terminate outstanding Repair Orders with
respect to all Unrepaired Products, other than those quantities of Products subject to the
cancelled Repair Order repaired by Supplier prior to such cancellation, and Company may elect
not to place any further Repair Orders under this Agreement.
	 
	8.8	 	Intentionally deleted.
	 
	8.9	 	Prices for Repair Orders will be calculated in accordance with the formulas and rates in
effect on the date the Unrepaired Product is received by Supplier.
	 
	8.10	 	Any Failure Mode Analysis (“FMA”) Services performed by Supplier at Company’s request and
beyond what is required by Supplier to perform the repair shall be performed in accordance
with Article 4 of the Agreement.
	 
	8.11	 	Any Class A services to be performed by Supplier at Company’s request, which are in excess of
what is required in the standard repair specifications, shall be considered a Service in
accordance with Article 4 of the Agreement.
	 
	8.12	 	Supplier agrees to implement a cost reduction program that will be centered on Supplier’s
implementation of new repair technologies, Repair Material cost reductions, productivity
improvements, and automation of facilities and repair processes. The goal is to reduce
Company’s aggregate repair costs by a minimum of [ *** ] per year; provided that, subject to
Sections 8.1 and 8.2, Supplier will provide a [ *** ] reduction in Prices effective [ *** ] of
each year during the Initial Term ([ *** ]). In support of Supplier’s cost reduction program
efforts, Company agrees to provide commercially reasonable assistance where necessary.
Supplier’s cost reduction program shall be reviewed during the Quarterly Performance Review
process. Supplier agrees to equally share any cost savings implemented by either Supplier or
Company through to Company in the form of lower Prices once the cost of implementing the cost
savings has been recovered.
	 
	***	 	Portions of this page have been omitted pursuant to a Request for Confidential Treatment filed
separately with the Securities and Exchange Commission.





			
	 	 	 
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H



External Manufacturing Services Supply Agreement




	8.13	 	Supplier agrees to produce a transition plan for those Products currently not repaired by
Supplier but by Supplier’s Repair Vendors. Said plan shall detail the Price reduction or
repair performance improvement available to Company as a result of the transition of such
Products to Supplier and shall be presented by Supplier during the first Quarterly Business
Review between the parties.
	 
	9.0	 	INVOICING AND PAYMENT
	 
	9.1	 	Invoicing for Repair of Products: Supplier shall invoice Company for the repair
of Products in accordance with the Prices set out in Section 8 when a Repaired Product has:
(a) been delivered by Supplier to Company’s transportation service provider in accordance with
Section 6, (b) scrapped in accordance with Section 3.8, or (c) otherwise dispositioned in a
manner agreed to by the parties. Unless otherwise requested by Company and agreed to by
Supplier, Supplier’s invoices shall include the quantities, description, process indicator
(TF, ATP, or Modification), Comcode and Price for each of the applicable Products. All
invoices will be prepared and submitted by Supplier in accordance with in Article 49 of the
Agreement.
	 
	9.2	 	Invoicing for RGM Services: Supplier shall invoice Company monthly for any testing or
de-configurations performed by Supplier in support of the RGM process requirements set forth
in Section 5. The monthly invoice shall include the calendar days in which the work was
performed by Supplier, description of the work performed by Supplier on the RGM Products and
the hours incurred (per RGM Product) by Supplier in performing the work. All invoices will be
prepared and submitted by Supplier in accordance with the terms set forth in Article 50 of the
Agreement.
	 
	9.3	 	All invoices issued by Supplier to Company hereunder shall be paid in accordance with the
terms set forth in Article 7 of the Agreement.
	 
	10.0	 	SUPPLIER’S REPAIR WARRANTY
	 
	10.1	 	Repaired Products shall be repaired in accordance with applicable Specifications and the
workmanship of such repairs shall be warranted by Supplier for a period equal to the greater
of (i) six (6) months from the date of repair, and (ii) the remainder of the Warranty Period
for such Product as determined pursuant to Article 22.1 of the Agreement (the “Repair
Warranty”).
	 
	11.0	 	CANCELLATION OF REPAIR ORDERS BY COMPANY
	 
	11.1	 	Company may at any time cancel a Repair Order or Repair Orders in whole or in part, upon
written notice to Supplier and no further repair of Products pursuant to such cancelled Repair
Order or Repair Orders will be rendered by Supplier.
	 
	11.2	 	Company’s liability to Supplier with respect to such cancelled Repaired Order(s) shall be
limited to: (a) for Product Returns on which the repair process has begun, the TF price listed
on Schedule 1 of this Attachment; and (b) for Product Returns on which the repair process has
not yet begun, a flat fee of [ *** ]. However, in no event shall Company’s liability exceed
the Price identified in the applicable Repair Order for the repair of Products that are
cancelled. Such payment by Company shall constitute a full and complete release and discharge
of Company’s obligations to Supplier with respect to the Repair Orders cancelled in accordance
with this Section 11.2.
	 
	11.3	 	Supplier shall deliver to Company any Repair Material, Unrepaired Product, and Repaired
Product for which Company has paid Supplier pursuant to Section 11.2.
	 
	12.0	 	REPAIR MATERIALS
	 
	12.1	 	Supplier shall have financial and operational responsibility and liability for the Repair
Materials storeroom at Supplier’s facilities at which it repairs Products for Company pursuant
to this Attachment, with the exception of any discontinued or “last time buy” Repair Material
which Supplier purchases with Company’s prior written approval (“LTB Repair Material”). Any
quantity of LTB Repair Material which Supplier and its Affiliates have on hand at any time and
which exceeds Supplier’s and its Affiliates’ requirements
for the [***] immediately after
such time shall
	 
	***	 	Portions of this page have been omitted pursuant to a Request for Confidential
Treatment filed separately with the Securities and Exchange Commission.





			
	 	 	 
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	 	 	constitute “Excess Inventory” and shall be dealt with in accordance with the provisions of
Article 12 of the Agreement. Supplier’s material planners will look at historical demand and
place the appropriate purchase orders with the Repair Material vendors, at Supplier’s
expense, to ensure adequate Repair Material stocking levels. Supplier will maintain an
inventory control system for the Repair Materials storeroom at Supplier’s facilities at which
it repairs Products for Company pursuant to this Attachment and will perform all material
handling functions associated with such storeroom.
	 
	12.2	 	Supplier shall procure and store as necessary enough quantities of Repair Material to satisfy
the requirements for the repair of Products by Supplier pursuant to this Agreement. Supplier
shall manage and own the Repair Material inventory. Title to the Repair Material shall pass
from Supplier to Company when the Repaired Products that incorporate said Repair Material is
delivered by Supplier to Supplier’s transportation carrier in accordance with Section 6, or
when Supplier renders Additional Services to Company that incorporates the Repair Material.
	 
	13.0	 	CHANGE CONTROL
	 
	13.1	 	All changes to Products, Specifications or processes by either Supplier or Company under this
Attachment shall be in accordance with Article 67 of the Agreement.
	 
	14.0	 	PROGRAM MANAGEMENT AND PERFORMANCE REPORTING
	 
	14.1	 	Supplier shall be responsible for all matters relating to the performance of any resulting
Repair Order for the repair of Products, and Additional Services set forth in this Attachment,
and shall ensure that the personnel and facilities necessary to perform all required tasks are
assigned and made available at the times and places necessary to comply with the requirements
set forth in this Attachment. A single individual shall be assigned by Supplier to serve as
the Program Manager for managing Supplier’s activities and efforts pursuant to this
Attachment.
	 
	14.2	 	Supplier shall establish and apply a program control system that:






	 	(a)	 	provides for monitoring of all activities pursuant to this
Attachment, clearly identifies and measures all milestones, reporting dates,
completion dates, deliveries, and critical paths; and
	 
	 	(b)	 	provides management mechanisms for the prompt identification and
mitigation of technical, delivery or any performance problems associated with the
repair of Products or Additional Services performed by Supplier.






	14.3	 	Company reserves the right to conduct special program reviews, as necessary, at either
Company or Supplier’s facility as a result of Supplier’s action or in action in regards to
Supplier’s performance of the requirements set forth in this Attachment.
	 
	14.4	 	Not later than noon Eastern Time on each Tuesday, Supplier shall submit a weekly performance
report to Company in accordance with the requirements set out in Schedule 2, covering all
repair of Products and Additional Services performed by Supplier pursuant to this Attachment
during the previous business week. These weekly performance reports may be sent to Company
via electronic or facsimile transmission, as agreed upon by Supplier and Company.
	 
	14.5	 	Supplier shall provide industry-standard non-product specific equipment and processes
required to support the repair of advanced technology products (i.e., 5DX, X-ray, 5DX-X-Ray
and Class Zero ESD). Company will provide any Product-specific equipment and processes
required to support repair of advanced technology products (e.g. ICT fixtures, system test
equipment, etc.).
	 
	15.0	 	DOCUMENTATION REQUIREMENTS
	 
	15.1	 	Supplier shall deliver to Company the documentation and data required in Table I according to
the schedule shown in Table I. Supplier may use electronic means to transfer the required





			
	 	 	 
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	 	 	documentation to Company provided such electronic transfer is coordinated in advance with
Company and is formatted in a manner mutually agreed upon by the parties.
	 
	16.0	 	QUARTERLY PERFORMANCE REVIEWS
	 
	16.1	 	Supplier and Company will regularly review Supplier’s performance under this Attachment in
the Quarterly Performance Reviews set forth in Article 25 of the Agreement. The agenda items
set out below will be reviewed during the Quarterly Performance Reviews:






	 	(a)	 	Performance of Supplier to date based on performance results reported
by Supplier;
	 
	 	(b)	 	Company’s future repair business projections;
	 
	 	(c)	 	Review of Supplier’s cost reduction program;
	 
	 	(d)	 	Suggested improvements to this Attachment; and
	 
	 	(e)	 	Review of Prices for repair and Modifications.






	17.0	 	COMMUNICATIONS
	 
	17.1	 	Communications, correspondence, or direction for day-to-day issues under this Attachment from
Company to Supplier shall be through the appropriate designated Company representative.
	 
	17.2	 	Where delivery of Repaired Products by Supplier to Company or Company’s end customer may be
delayed for any reason, Supplier agrees to promptly notify Company’s designated representative
of any such potential delay and the reason for the potential delay. Company and Supplier will
mutually agree upon the notification method.
	 
	17.3	 	Each party shall provide the other with contact details and information in writing within one
(1) month after the Effective Date and again as necessary thereafter.
	 
	18.0	 	USE OF SUBCONTRACTORS
	 
	18.1	 	In addition to the rights conferred in Article 28 of the Agreement, Company agrees to allow
Supplier to subcontract work performed pursuant to this Attachment to a subcontractor
providing Supplier obtains Company’s prior written approval and promptly furnishes Company
with a written agreement of subcontractor to perform the work in accordance with this
Agreement and to permit Company to exercise all rights and privileges under this Agreement as
if subcontractor had executed this Agreement in Supplier’s place and stead. Supplier shall
indemnify Company against all loss, cost, expense, or liability incurred by Company on account
of Supplier’s failure to furnish such written agreement by subcontractor. This consent to
subcontract does not relieve Supplier of Supplier’s responsibilities for performing its
obligations under this Agreement, and Supplier shall remain liable for compliance by the
subcontractor with all provisions of this Agreement.
	 
	19.0	 	COMPANY RESPONSIBILITIES CONCERNING THE SCOPE OF THIS ATTACHMENT
	 
	19.1	 	As of the Effective Date, Company confirms that all required activities, reporting
requirements and performance levels which have been disclosed to Supplier, specified herein
are being achieved. However, should Supplier determine this not to be the case within a
reasonable period of time after the Effective Date, then Supplier will notify Company in
writing of such case detailing its concern(s) and the parties shall mutually agree to the
resolution of such condition and hereby agree to modify this Attachment accordingly.
	 
	20.0	 	HEADINGS AND SECTION REFERENCES
	 
	20.1	 	The division of this Attachment into Sections and Schedules and the insertion of headings and
a table of contents are for convenience of reference only and shall not affect the
construction or the





			
	 	 	 
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interpretation of this Attachment. Unless otherwise specified herein, any reference in this
Attachment to a Section, Table or Schedule refers to the specified Section, Table or Schedule
to this Attachment. In this Attachment, the terms “this Attachment”, “hereof”, “herein”,
“hereunder” and similar expressions refer to this Attachment and not to any particular part,
Section or other provision hereof.



			
	 	 	 
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External Manufacturing Services Supply Agreement




TABLE I. SUPPLIER’S DOCUMENTATION REQUIREMENTS




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Item	 	 	 	Attachment	 	Submit	 	 	 	 
	No.	 	Description	 	Reference	 	for (a)	 	Qty.	 	Schedule
	1

	 	Quality Plan
	 	 	3.5	 	 	R
	 	 	1	 	 	To be reviewed every 6 months
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2

	 	Repeat Return Rate
	 	 	3.5	 	 	R
	 	 	1	 	 	Within 5 Business Days of
the close of the month
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3

	 	Corrective Action Plan
	 	 	3.6	 	 	A
	 	 	1	 	 	Within 15 Business Days of
audit failure
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4

	 	Acceptance Test Procedures
	 	 	3.7	 	 	A
	 	 	1	 	 	Existing Document(s): To be
reviewed annually

New Documents: To be
reviewed and approved 10
Business Days prior to the
commencement of testing for
all new Products to be
repaired by Supplier
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5

	 	Periodic Performance Reports
	 	Schedule 2
	 	R
	 	 	1	 	 	By Noon Eastern Standard
Time on Tuesday following
the previous week or the
first Tuesday of the fiscal
month.







	 	 	Notes to Table I Deliverable Documentation:
	 
	(a)	 	R = Review by Company
	 
	 	 	A = Approval by Company
	 
	(b)	 	All documents must be in the English language





			
	 	 	 
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External Manufacturing Services Supply Agreement




SCHEDULE 1 — REPAIRED PRODUCT PRICES



     The attachment embedded below lists all Mobility Products and Mobility Switching Products with pricing effective as of April 1st, 2005, including the applicable price reduction for such pricing period. The prices listed in the columns entitled “New Repair Price” and “New NDF Price” are the prices effective as of April 1st, 2005, including the applicable 2.5% price reduction for such pricing period.




[ *** ]





	***	 	Portions of this page have been omitted pursuant to a Request for Confidential Treatment filed
separately with the Securities and Exchange Commission.





			
	 	 	 
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External Manufacturing Services Supply Agreement




SCHEDULE 2 — PERIODIC PERFORMANCE REPORTS



Supplier’s Periodic Performance Reports shall include, but not be limited to the following:





	 	I.	 	REPAIR OF PRODUCTS (Weekly)






	 	a.	 	Quantity of Products repaired by Product Code, further categorized to
indicate whether said repairs were trouble found or all tests passed (ATP) or
Unrepairables;
	 
	 	b.	 	Supplier’s delivery performance which shall include a detailed listing
by Comcode indicating the number of Repaired Products shipped, the required ship
date and the actual ship date;
	 
	 	c.	 	Supplier’s internal quality audit results, if applicable, and results
of any quality audits performed by Company;
	 
	 	d.	 	Supplier’s compliance with the required Repeat Return Rate for all
Repaired Products (monthly), and root cause analysis and summaries if requested by
the Company for any Products that do not meet the specified requirement.






	 	II.	 	RGM PRODUCT PROCESSING (Weekly)






	 	a.	 	A detailed list by Comcode of the quantity of Product Returns
received by Supplier, awaiting disposition, sorted and dispositioned, to include
type of disposition.






	 	III.	 	ACTION ITEM REGISTER (Monthly)






	 	a.	 	Supplier shall develop, maintain and submit to Company as part of its
monthly performance report, an action item register to be used as an archive for
recording issues, regardless of their nature, that require direction, and/or
clarification, and/or resolution from or between the parties. Said action item
register shall include, but not be limited to, a unique register id number, the
issue(s), proposed solution, the Company LCS involved, party and their
representative required accountable for managing the issue(s) and the estimated
completion date.





			
	 	 	 
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External Manufacturing Services Supply Agreement




SCHEDULE 3 — Repair System Interface Requirements



All of the interfaces listed below will be documented and implemented as soon as the mutually
agreed to schedules have been discussed.





	 	1.	 	Company will provide a daily transmission of newly generated Repair Orders
coming out of the Company LCS locations.
	 
	 	2.	 	Supplier will provide daily transmissions covering receipt messages for all
Company LCS locations.
	 
	 	3.	 	Supplier will provide daily transmissions covering scheduling/re-scheduling
messages for all Company LCS locations.
	 
	 	4.	 	Supplier will provide daily transmissions covering shipping messages for all
Company LCS locations.
	 
	 	5.	 	Supplier will provide a daily transmission of newly generated invoices/bills
for Repair Orders originating from Company.
	 
	 	6.	 	Company will pay those invoices for Repair Orders originating from Company
locations electronically.
	 
	 	7.	 	Company will provide a daily transmission of receipt messages for all Repair
Order Products received by the LCS locations.
	 
	 	8.	 	SES — Several interfaces will need to be designed moving in both directions.
Company system planners/developers will provide the Specifications.
	 
	 	9.	 	For the purpose of improving quality and reliability on all Material provided
by Supplier, Supplier shall conform to Company’s TL9000 and testing data requirements
stated in Company Specification E-1025, DCF Test Data Format Standard Reference, as may
be modified by Company pursuant to Article 67.3.





			
	 	 	 
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External Manufacturing Services Supply Agreement




Attachment I





Performance Metrics



















			
	 	 	 
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Celestica Proprietary	Page 22 of 28






 








 










Attachment I


External Manufacturing Services Supply Agreement




“Business Impacting” Metrics




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Minimum	 	Measurement	 	 	 	 	 	 
	Metric Name	 	Goal	 	Threshold	 	Frequency	 	Metric Provider	 	Applicable Clause	 	Definition/Calculation Methodology
	Quality (non-NPI,

Measured at Product

Level)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Incoming Process Yield
at SIC (System Test and
Burn-in) (Not component)

	 	[***]
	 	[***]
	 	Monthly
	 	Lucent
	 	Per Supply
Agreement Article
22.8
	 	Yield at first test within the SIC. Trigger
Points will be 1) if an OI is outside 3 Sigma
Level — code specific CAR will be required

2) if more than 10% of OI’s is
outside 3 Sigma Level — Business Impacting CAR will be required
3) If more than 15% of OI’s is outside 3 Sigma Level and
“epidemic” condition may exist
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Field
Returns (includes
ALL materials provided
by EMS supplier)

	 	[***]
	 	[***]
	 	Monthly
	 	CLS
	 	Per Supply
Agreement Article
22.14
	 	First Year Return Rate (YRR), unnormalized, as
per TL 9000 ver 3.0. 1st month of not meeting
goal issues an alert; 3 consecutive months of
non-compliance results in epidemic condition
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Delivery (orderable item

level)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Delivery vs. Promise Date

	 	 	[***]	 	 	[***]
	 	Measured weekly

Reported monthly
	 	Lucent
	 	Per Supply
Agreement Article 9
	 	Measured at OI level as Qty Delivered/Qty Promised
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock-outs

	 	[***]
	 	 	 	Measured weekly

Reported monthly
	 	Lucent
	 	Per Supply
Agreement
Attachment “I”
	 	The frequency with which the EMS provider fails
to maintain minimum buffer
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Repair, Service and
Return Operations
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Repair
Interval

	 	[***]
	 	[***]
	 	Measured weekly and
Monthly
	 	CLS	 	Per Supply
Agreement
Attachment J
Article 6
	 	Turnaround time, from dock receipt to dock ship.
Calculation = Average Repair Interval Across all
Repair Deliveries
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New Product Introduction
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Prototype/Model
Delivery
Interval

	 	[***]
	 	[***]
	 	Monthly
	 	CLS
	 	Per Supply

Agreement

Attachment P
	 	After all parts & documentation are available.
Limited to 3 NPI apparatus codes simultaneously.
Quantity to ship will be mutually agreed on
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Facility Metrics

(Non-Program Specific)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Facility Registration to
Compliance with ISO9K,
ISO14k, TL9000, ESD ANSI
20.20.

	 	[***]
	 	[***]
	 	Event Driven
	 	CLS
	 	Per Supply
Agreement Article
22.2	 	 







 




			
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Attachment I


External Manufacturing Services Supply Agreement




“Operational” Metrics




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Minimum	 	Measurement	 	Metric	 	 	 	 
	Metric Name	 	Goal	 	Threshold	 	Frequency	 	Provider	 	Applicable Clause	 	Definition/Calculation Methodology
	Repair, Service, and Return operations
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Unrepairable Rate

	 	 	[***]	 	 	 	[***]	 	 	Weekly
	 	CLS
	 	Supply Agreement Attachment J Article 3.8
	 	Rate of unsuccessful repairs
Total # of Unsuccessful Tests /Total # of Tests
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Repair Repeat Return Rate

	 	[***]
	 	[***]
	 	Monthly
	 	CLS
	 	Supply Agreement Attachment J
Article 3.5
	 	Rate of returns of repaired product within six (6)
months of original repair
	 
	 Repair
Cost Reduction

	 	[***]
	 	 	[***]	 	 	Quarterly
	 	CLS
	 	Supply Agreement Attachment J
Article 9
	 	Reduce cost of services for each of the first three (3)
years of the agreement
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New Product Introduction
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Market
Launch Date Variance

	 	 	[***]	 	 	[***]
	 	Monthly
	 	Lucent
	 	Supply Agreement Attachment P
Article 3
	 	Agreement on Launch Date. Number of Days that exceed
beyond launch date Launch date is defined as the date
CLS will be able to provide mutually agreed volume of an
NPI product.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Models & Initial Production Quality

	 	 	[***]	 	 	 	[***]	 	 	Monthly
	 	Lucent
	 	Supply Agreement Attachment P
	 	Meet LU End-point requirements (per X-21284) w/exception
of agreed to relaxations. Lucent to visually
inspect all models, each model can only contribute once to
the measurement
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	DFX Reporting Completeness

	 	 	[***]	 	 	[***]
	 	Monthly
	 	Lucent
	 	Supply Agreement Attachment P
Article 2.1
	 	Check to see if DFM was Completed as requested (yes or
No Measurement) Limited to 3 NPI Apparatus codes per
week. BOM DFX will be minimum of 10 Days, Process
DFX will be 5 Days
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	DFX Reporting Timeliness

	 	 	[***]	 	 	[***]
	 	Monthly
	 	Lucent
	 	Supply Agreement Attachment P
Article 2.1
	 	Results/reports should be available within 5 days of
review and change request are generated. Measured as
whether reports are available within 5 days for Process
NPI. Goal is to have 0% of the DFX’s overdue. BOM DFX
will be available within 10 days of re
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Materials & Asset Management
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Raw Material Inventory — (NC&NR)

	 	 	[***]	 	 	 	[***]	 	 	Monthly (not before 15th
of the Month)
	 	CLS
	 	Supply Agreement Article 14
	 	Non-cancellable/non-returnable material all agreed on
material which is not commercial
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Raw Material — (Non-NC&NR)

	 	 	[***]	 	 	 	[***]	 	 	Monthly (not before 15th
of the Month)
	 	CLS
	 	Supply Agreement Article 14
	 	Material which is agreed on as Commercial material
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Finished Goods Inventory

	 	 	[***]	 	 	 	[***]	 	 	Monthly (not before 15th
of the Month)
	 	CLS
	 	Supply Agreement Article 12
	 	$ on hand & in Hubs
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Days of Stock (DOS)

	 	[***]
	 	[***]
	 	Monthly (not before 15th
of the Month)
	 	CLS
	 	Supply Agreement Article 14
	 	On-hand inventory divided by material output per day.
Output per day is material output forecast for the next
two months, divided by number of days in the financial calendar
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Process Leadership
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 %
Utilization of Vendor Managed Inventory (Leading
Edge Procurement (LEP)

	 	[***]
	 	[***]
	 	Quarterly
	 	CLS
	 	N/A
	 	% utilization of VMI = Qty of Active Parts in Supplier “Pull”
programs / qty of Active Parts *100. Active Part is defined as “has usage in Next 12 Months”
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Facility Metrics (Non-Prgram Specific)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SMWDVBE Participation

	 	[***]
	 	[***]
	 	Bi-annual
	 	CLS
	 	Supply Agreement Article 53
	 	Total $ Purchased from SMWDVBE/ Total Purchsed goods






 




			
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External Manufacturing Services Supply Agreement




“Information Only” Metrics




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Minimum	 	Measurement	 	 	 	 	 	 
	Metric Name	 	Goal	 	Threshold	 	Frequency	 	Metric Provider	 	Applicable Clause	 	Definition/Calculation Methodology
	Materials & Asset Management
	 	 	 	 	 	 	 	 	 	 	 	 
	WIP Inventory

	 	[***]
	 	[***]
	 	Monthly (not before
15th of the Month)
	 	CLS
	 	per Supply Agreement Article 12
	 	$ on hand
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Inventory Turns (IT)

	 	[***]
	 	[***]
	 	Monthly (not before
15th of the Month)
	 	CLS
	 	per Supply Agreement Article 12
	 	Measured as 365/DOS (DOS is Operational Metric)
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Obsolete Inventory Tracking

	 	[***]
	 	[***]
	 	Monthly (not before
15th of the Month)
	 	CLS
	 	per Supply Agreement Article 13
	 	Obsolete inventory is inventory which has no
demand for 365 days or is in excess of the
requirements for the next 365 days
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Excess Inventory Tracking

	 	[***]
	 	[***]
	 	Monthly (not before
15th of the Month)
	 	CLS
	 	 	 	Excess material will be the amount greater than
comparisons of a site’s component usage for
previous 60 days and forecast for next 30 days
versus the quantity on hand
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Lucent Accounts Payables (AP)

	 	[***]
	 	[***]
	 	Monthly (not before
15th of the Month)
	 	CLS
	 	per Supply Agreement Article 7
	 	Lucent Payments to EMS provider (days and balance)
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Process Leadership
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Percent of Commercial vs.
Unique Components

	 	[***]
	 	[***]
	 	Quarterly
	 	CLS
	 	 	 	% Commercial vs unique = Qty of Active Commercial
parts / Qty of Active Parts *100 (Active parts is
defined parts with requirements in next 12
months)
	 
	 	 	 	 	 	 	 	 	 	 	 	 






 




			
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External Manufacturing Services Supply Agreement




Attachment J




Intentionally Deleted




					
	 	 	 	 	 
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Attachment K1




Notice of Commercial Engagement




Name of Supplier: ____________




Attn. _____________________




Address: _______________




Date: _________________




Re: Notice of Commercial Engagement with Supplier for Lucent Mobility product



Dear ___,



The following Notice shall clarify the business relationship between Lucent and Celestica, its
manufacturing partner as it pertains to the supply of components for products manufactured by
Celestica.



Lucent has engaged Celestica in a long term business relationship with respect to the supply of
products for Lucent’s Mobility division. As part of the business relationship, Lucent expects
Celestica to have complete ownership of the supply chain, including the management of price and
general terms and conditions relating to purchase of materials. As such Celestica shall be
negotiating directly with you in the future and will be responsible for meeting Lucent’s price
reductions, quality and supply flexibility expectations. There may be exceptions for specific part
numbers (as attached to this letter).



In the case there are products produced by your company which may be consumed by other Lucent
divisions, Lucent shall continue managing price and terms of execution as is being done today.



Lucent has placed significant expectations on Celestica to achieve cost reductions (leading edge
price reductions), superior quality and improved flexibility. In order for Celestica to meet
Lucent’s expectations, it is critical that you continue to provide price reductions, superior
quality, improved order fulfilment flexibility and responsive service to Celestica in the same
manner as provided to Lucent in the past.



This notice shall also serve as a letter of authorization approving Celestica’s access to existing
commercial terms, specifications and other relevant details for the respective products being
supplied to Celestica for Lucent Mobility.



Sincerely,




Signature:_________________




Name Printed: ______________




Title: ___________________




cc: Celestica




					
	 	 	 	 	 
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Attachment K2




Company Controlled Material Information



Company Controlled Material Numbers



Company will provide the following information to Supplier when communicating Company negotiated
pricing:



Mandatory Fields:





Company Material Part Number

Manufacturer Name

Manufacturer Material Part Number

Currency

Price

Lead Time

Minimum Order Quantity

FOB Point



Optional Fields* :





Cancellation Lead Time

Lot Size

Return Privilege

Business Split

Other relevant Negotiated T& Cs

Inventory Management (SMI & Lean programs)

Shipping instructions (Air or Sea for landed pricing)



* “Optional Fields” will be provided to Supplier by Company, wherever such information is
available.




					
	 	 	 	 	 
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Attachment K3




Material Authorization Letter



DATE




Name of Supplier

Attn. ____________________________

ADDRESS: ____________________________



Re: Authorization for Supplier to Purchase Material at Lucent’s negotiated or contracted prices

Dear ___,




     The purpose of this Material Authorization Letter is to set forth the understanding by and
between ___(“Supplier”) and Lucent Technologies Inc. (“Lucent”) regarding the purchase by
Supplier of Material at Lucent’s negotiated or contracted prices. Lucent, at its sole option,
will seek authorization of certain Material vendors to permit Supplier, a supplier of Lucent, to
purchase Material at the prices set forth in Lucent’s Material purchase agreements with its
Material vendors. Terms and conditions, stated in such Material purchase agreements, applicable to
Lucent, will not be applicable to Supplier. As a condition precedent to Lucent using reasonable
commercial efforts to seek such Material vendor authorizations, Supplier and Lucent, in
consideration of the promises and benefits outlined below, agree as follows:




	 	1.	 	Supplier shall use Materials purchased at the Lucent prices only for the
production or repair of Product sold to Lucent under this Agreement.
	 
	 	2.	 	Savings incurred by Supplier due to the benefit of volume purchase discounts
applicable to Materials purchased under the Lucent Material purchase agreements will be
passed on to Lucent via the Lucent business group placing the purchase order with
Supplier.
	 
	 	3.	 	Company shall have no liability whatsoever to either Supplier or Material
Vendor for the authorization given or the transactions contemplated herein between
Supplier and Material Vendor.
	 
	 	4.	 	Supplier shall hold in confidence any and all information related to the Lucent
Material purchase agreement, including, but not limited to, business information,
specifications, technical information, forecasts, prices; and Supplier hereby agrees to
use such information only for the purpose of fulfilling its obligations with Lucent.
Supplier will use commercial reasonable effort to share such information only with
employees and authorized representatives with a need to know and will instruct such
individuals regarding their obligation to maintain such information as confidential and
as the sole property of Lucent.
	 
	 	5.	 	Lucent will notify Supplier in writing of Material vendors consenting to
extend Lucent’s Material prices to Supplier and will forward appropriate applicable
price appendices. Supplier acknowledges and agrees that Lucent may withdraw its
authorization (which will facilitate Supplier’s purchase described herein) under any or
all of the Lucent Material purchase agreements at any time.
	 
	 	6.	 	Supplier agrees to provide access to Lucent, or its authorized representatives,
to Supplier’s books and records for the purpose of verifying compliance with this
letter agreement.






WHEREFORE, duly authorized representatives of Supplier hereby execute this letter agreement
indicating approval and understanding of the terms set forth above; this letter agreement
shall be effective as of ___.



					
	 	 	 	 	 
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	 	 	Accepted by:
	 	 	 
	LUCENT TECHNOLOGIES INC.	 	SUPPLIER
	 
	 	 
	 

	 	 
	Signature

	 	Signature
	 
	 	 
	 

	 	 
	Name

	 	Name
	 
	 	 
	 

	 	 
	Title

	 	Title
	 
	 	 
	 

	 	 
	Date

	 	Date






					
	 	 	 	 	 
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Attachment L




MWDVBE Definitions





			
	MBE 	 	In general, a minority business is defined as one which is at least 51% owned,
controlled and operated by an ethnic or racial minority group member.
	 	 	 
	 	 	The following groups are considered minorities for MBE as defined by Federal
Acquisition Regulations (FARs):
	 	 	 
	 	 	African American means all persons having origins in any of the Black racial groups.
	 	 	 
	 	 	Asian Pacific American means all persons having origins in Japan, China,
Philippines, Vietnam, Korea, Samoa, Guam, the U.S. Trust Territory of the Pacific
Islands (Republic of Palau), the Northern Mariana Islands, Laos, Kampuchea
(Cambodia), Taiwan, Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei,
Republic of the Marshall Islands, or the Federated States of Micronesia.
	 	 	 
	 	 	Asian Indian American means all persons having origins in India, Pakistan,
Bangladesh, Sri Lanka, Bhutan, or Nepal.
	 	 	 
	 	 	Hispanic American means all persons having origins in Mexico, Puerto Rico, Cuba,
Central, Latin or South America, Portugal, or other Spanish culture or origins.
	 	 	 
	 	 	Native American means American Indians, Eskimos, Aleuts, and native Hawaiians.
	 	 	 
	 	 	Non-Minority American means all persons not covered by the definition of American
minority (MBE) groups above.









			
	WBE 	 	Enterprises that are at least 51% owned, controlled and operated by
women who are not racial or ethnic minorities are women-owned
businesses. Non-minority women-owned businesses are reported
separately from minority businesses.
	 	 	A business owned by a minority woman would be classified as a
minority-owned business only — not counted under both categories.
However, the total number of women enterprises is easily tracked since
minority supplier’s gender information is recorded.









			
	DVBE 	 	Enterprises that are at least 51% owned, controlled and operated by men and women who are
service disabled veterans.








					
	 	 	 	 	 
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Attachment M




Warehousing Services




1.0           SCOPE



1.1           The purpose of this Attachment is to establish the terms and conditions on which Supplier and
its Affiliates will provide warehousing and inventory management services, as set out in Section
5.0 of this Attachment and otherwise identified in this Attachment (the “W&I Services”) on a
worldwide basis for Company under the Agreement and in such other circumstances as the parties may
mutually agree. The parties agree to negotiate, in good faith, a new Attachment M based on the new
requirements of this Agreement. Until such time, the following terms and pricing shall apply.



Supplier shall, where required, provide all W&I Services for Existing Mobility Products, Successor
Products and New Products until termination of this Agreement. For any new W&I Services where
rates have not been set forth in this Attachment M, Company shall afford Supplier with an
opportunity to submit a Quote for the provision of W&I Services in accordance with Article 4.1.



1.2           The W&I Services to be performed by Supplier hereunder will apply to the following types of
goods, inventory and material owned by Company (collectively, the “Goods”), in respect of which
Company issues an Order to Supplier pursuant to Section 4.0 of this Attachment:





	 	(a)	 	Material and finished goods which constitute Excess Inventory, Obsolete
Inventory or Company Owned Inventory under the Agreement;
	 
	 	(b)	 	any Material constituting Lucent Technologies’ Consigned Material that is
intended to be used by Supplier in the manufacture or repair of Products under the
Agreement; and
	 
	 	(c)	 	with Supplier’s prior consent, any other goods or items in respect of which
Company issues an Order for W&I Services.





2.0           DEFINITIONS



Unless otherwise defined herein, capitalized terms used in this Attachment have the respective
meanings set out in this Agreement. In addition, the following terms shall have the respective
meanings set forth below:





“Comcode” means the unique part number assigned to each type of Material and finished goods
by Company.




“Goods” has the meaning set out in Section 1.2 of this Attachment.




“Order Change” has the meaning set out in Section 10.0 of this Attachment.




“Shipment” means: (i) where Goods are physically shipped to Supplier, a shipment of Goods
delivered and for which Supplier issues one delivery receipt, and (ii) where no physical
transportation of Goods occurs, a transaction implemented in Supplier’s system to record the
segregation of Goods within the designated Warehouse.




“Shipment Discrepancy Report” has the meaning set out in Section 8.0 of this Attachment.




“Warehouse” means any warehouse or storage facility owned or operated by Supplier or its
Affiliate, or any third party, at which Supplier stores Goods for Company pursuant to this
Attachment.



					
	 	 	 	 	 
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“W&I Prices” has the meaning set out in Section 7.1 of this Attachment.




“W&I Services” has the meaning set out in Section 1.1 of this Attachment.



3.0            APPENDICES



The following Appendices are attached to and form part of this Attachment:





Appendix I — W& I Prices



4.0           STATEMENT OF WORK



Subject to Section 13.0 of this Attachment, during the Term of the Agreement, Supplier shall
perform W&I Services as requested by Company pursuant to Orders issued to Supplier from time to
time, at Warehouse locations specified in the relevant Orders and approved for such purposes by
Supplier (Supplier acknowledges that Warehouse locations where Goods are currently held by Supplier
for Company shall be deemed to be approved by Supplier for the purpose of storing such Goods).




5.0           MATERIAL HANDLING IN AND OUT OF THE WAREHOUSE



5.1           As part of the W&I Services, Supplier will perform any or all of the following tasks, as
required by Company in the relevant Order: (1) receiving Shipments at the relevant Warehouse(s),
(2) recording the receipt by Supplier of each Comcode in a Shipment, and providing to Company a
report of such receipt in accordance with Section 17.3, (3) placing Goods into, and removing Goods
from, storage at the relevant Warehouse(s), (4) marking, tagging and stenciling the packaging
containing the Goods, (5) loading and unloading of vehicles on which the Goods are delivered when
the carrier of such Goods is not required to perform those functions pursuant to the relevant
delivery terms, (6) preparing bills of lading and other shipping documents as required, (7)
performing a monthly reconciliation of inventory balances with a designated representative of
Company, and (8) tendering Goods for delivery to Company or its carrier upon termination of the W&I
Services in respect of such Goods.



5.2           On removal of Goods from the Warehouse(s) upon termination of the W&I Services in respect of
such Goods, Supplier shall prepare bills of lading and other shipping documents as required, in
triplicate, all copies of which shall be signed by a representative of each of Supplier and Company
or its designated carrier. Supplier shall retain one copy of such shipping documents, furnish one
copy to the carrier, if required, and forward the original copy to Company to the address shown in
Section 17.3 of this Attachment.




6.0           LOCATION



Company’s Order(s) shall specify the city in which the Warehouse(s) at which the W&I Services will
be performed by Supplier from time to time, which location shall previously have been mutually
agreed by both parties. If the W&I Services are to be provided at Warehouse(s) located in multiple
cities, Company will issue a separate Order for each such city.




7.0           COMPENSATION



7.1           During the period commencing on the Effective Date of the Agreement to and including [ *** ],
Company will pay Supplier for the W&I Services described herein according to the prices set forth
in Appendix I to this Attachment, (the “W&I Prices”), which prices shall be calculated in a manner
consistent with the activity report issued by Supplier pursuant to Section 17.1 of this Attachment.
In the event that Company requests that Supplier perform services other than those described
herein, Supplier, on a timely basis, shall submit a quote to Company for the price to be charged to
Company for the requested services. If such quote is acceptable to Company, Company shall issue to
Supplier an Order or Order Change, as applicable, and Supplier shall perform such additional
services at the price stated in Supplier’s quote.






			
	***	 	Portions of this page have been omitted pursuant to a Request for Confidential Treatment filed
separately with the Securities and Exchange Commission.








					
	 	 	 	 	 
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7.2           At any time on or before [ *** ], either party may, by written notice to the other party,
request that the W&I Prices be revised (and such written notice shall set out in reasonable detail
the reasons for the requested change in the W&I Price), effective [ *** ]. If the parties fail to
agree upon revised W&I Prices by [ *** ], the parties shall resolve such dispute in accordance with
Article 27 of the Agreement.




8.0           CARE AND CUSTODY OF PROPERTY AT SUPPLIER FACILITIES



8.1           During the period in which Supplier performs W&I Services in respect of particular Goods,
Supplier shall have the sole and exclusive care, custody and control of all such Goods.
Notwithstanding anything to the contrary, but subject to Section 19 of this Attachment, Company
shall at all times during Supplier’s performance of the W&I Services have title and bear ultimate
risk of loss or damage to such Goods. Supplier shall use its reasonable efforts to target 100
percent inventory accuracy.



8.2           Supplier’s obligation to perform W&I Services hereunder in respect of any particular Goods and
its entitlement for compensation pursuant to Section 7.1 of this Attachment shall commence:





	 	(a)	 	if the relevant Goods are not already in Supplier’s physical
custody, upon delivery of the Goods to the specified Warehouse by Company or
its specified carrier, as the case may be;
	 
	 	(b)	 	if the relevant Goods have been purchased by Company pursuant
to Article 12 of the Agreement and are already in Supplier’s physical custody,
on the date on which such Goods are deemed to be Excess Inventory or Obsolete
Inventory, as applicable, under the Agreement; or
	 
	 	(c)	 	with respect to any other Goods already in Supplier’s physical
possession, upon receipt by Supplier of the Order requesting the W&I Services;




and shall terminate on the earlier of:





	 	(x)	 	the expiration of the Agreement or the termination of this
Attachment (subject to Section 13.0 of this Attachment);
	 
	 	(y)	 	the delivery of the relevant Goods to Company or a third party
designated by Company, in accordance with Company’s direction or pursuant to
the Agreement; and
	 
	 	(z)	 	the time at which Supplier purchases the relevant Goods from
Company or removes the relevant Goods from storage for the purposes of
incorporating such Goods in Orderable Items or other products which it
manufactures or repairs for Company under the Agreement.




8.3           If, when the Goods are delivered to Supplier pursuant to Section 8.2(a), Supplier determines
that damage has occurred to the external packaging of the Goods prior to its receipt thereof (a
“Damage Condition”), or the quantity in the Shipment is higher or lower than the quantity specified
in the shipping documentation (an “Over Condition” and a “Short Condition”, respectively), Supplier
shall promptly note the Damage Condition, Over Condition or Short Condition, as the case may be, on
all copies of the delivery receipt and, in the case of a Damage Condition, shall request the
delivery carrier to inspect the damaged Goods and to provide an inspection report or waiver of
inspection. Supplier shall thereupon notify Company by issuing a shipment discrepancy report in
the form prepared by Company (a “Shipment Discrepancy Report”) pursuant to Section 17 of this
Attachment.



8.4           Upon the expiration or termination (in whole or in part) of this Attachment, Supplier will
co-operate with Company to ensure an orderly transition of the W&I Services to Company or any third
party designated by Company. Such cooperation shall include, without limitation, reasonable
packing and preparation for shipment of any Goods to be removed from a Warehouse and the provision
of reports and






			
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other documentation reasonably necessary for the orderly transition of the W&I Services, and
the parties shall agree to any additional cost to be paid by Company in respect of the transition
of such W&I Services. Except to the extent necessary in order to comply with Supplier’s
confidentiality or security requirements at the relevant Warehouse in which Goods are stored,
Supplier shall not interfere with or hinder the transfer or transportation of Goods by Company upon
termination of the W&I Services in respect of such Goods.




9.0           TRANSFER OF GOODS



Supplier shall not encumber, permit a lien, lease, transfer or otherwise dispose of the Goods,
except as authorized by Company or as required pursuant to the Agreement. Except to the extent
necessary in order to comply with Supplier’s confidentiality or security requirements at the
relevant Warehouse in which Goods are stored, Supplier shall not interfere with or hinder the
transfer or transportation of Goods by Company.




10.0           CHANGES



Company may at any time during Supplier’s performance of the W&I Services require additions,
deductions or deviations (all hereinafter referred to as a “Change”) from the W&I Services, by
issuing a written Change Order to Supplier. Supplier shall not implement any Change, nor shall
Supplier be entitled to any compensation for W&I Services performed pursuant to or in contemplation
of a Change, unless such Change was made pursuant to a Change Order issued by Company and accepted
by Supplier.




11.0           DELIVERY



Goods shall be delivered from Company to the relevant Warehouse DDP (Incoterms 2000) and shall be
shipped from the relevant Warehouse to Company EXW (Incoterms 2000) the relevant Warehouse.




12.0           FIRE INSURANCE INSPECTION



Subject to compliance with Supplier’s safety and confidentiality requirements, and upon reasonable
notice to Supplier, Supplier shall allow Company’s representatives and representatives of Company’s
insurance carrier to inspect the Warehouse(s) at which Supplier performs the W&I Services for
Company during normal business hours for fire, flood and other hazards to the Goods.




13.0           HOLDOVER MATERIAL



Notwithstanding the termination of this Attachment pursuant to Section 7.2 or otherwise, Supplier
shall, at Company’s request, continue to hold the Goods in the Warehouse(s) on the date of such
termination, at the then current W&I Prices and upon the other terms and conditions of this
Attachment, for an additional period not to exceed sixty (60) days after the date of termination of
this Attachment. Company shall arrange for removal of all Goods at Company’s cost by the end of
such additional period. If Company has not arranged for removal of all Goods by the end of such
additional period, Supplier may arrange for delivery of the Goods to Company at Company’s cost.




14.0           INVENTORY CONTROL SYSTEM



As part of the W&I Services, Supplier shall utilize an inventory control system to monitor and
manage inventory balances, daily activity and the physical location and status of Goods.




15.0          STORAGE



Except upon termination of the W&I Services in respect of particular Goods pursuant to Section 8.2
of this Attachment, Goods shall not be removed from the Warehouse to which they were originally
delivered without Company’s written consent, unless (i) such Goods are being moved to a Warehouse
located in the same city as the Warehouse in which they are located at such time, or (ii) Supplier
determines that such removal is necessary to protect the Goods from damage or loss. Unless removal
of Goods from one Warehouse to another Warehouse is at Company’s request (for reasons other than
the protection of such




					
	 	 	 	 	 
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Goods against damage or loss), any such removal of and return Goods shall be at Supplier’s sole cost and expense.



16.0 WAREHOUSE QUALITY PROCESS




Supplier will adhere to practices and standards established by the International Standards
Organization (ISO) and for which it has been qualified at the applicable Warehouse(s). Supplier
shall use a commercially reasonable standard of care in performing the W&I Services. From time to
time upon Company’s request and upon reasonable prior notice, representatives of Supplier will meet
with Company’s representatives to review Company’s assessment of Supplier’s performance of the W&I
Services under this Attachment. Where necessary in order to ensure the safety and/or
confidentiality of the Goods, Supplier will limit access to such Goods to such personnel as it
deems necessary, in its sole discretion, for the provision of the W&I Services.



17.0 REPORTS




17.1 Supplier shall, at the end of each month, submit an activity report to Company’s designated
representative showing monthly transactions in and out of the Warehouse(s) and on-hand inventory
balances of the Goods in storage.



17.2 On a weekly basis, Supplier shall deliver to Company a report listing all Shipments received
for each Comcode in the previous week, at the address below:




Lucent Technologies Inc.

___(Lucent employee position responsible)___




___(complete address)___



17.3 When Supplier receives a Shipment in an Over Condition, Short Condition or Damaged Condition,
it shall issue to Company a Shipment Discrepancy Report within forty-eight (48) hours after
delivery of the Shipment to Supplier. The Shipment Discrepancy Report shall be delivered to Lucent
Technologies Inc., c/o ___(title)___Supervisor, P. O. ___(complete address)___, ___(department or
title name )___and shall be accompanied by:




(a) a photostatic copy of the warehouse receipt;




(b) a copy of the carloading sheets [need explanation];




(c) a copy of the carrier’s freight bill of lading; and




(d) a copy of the list of items shipped [need explanation].



18.0 INSURANCE




Company will, at its sole cost and expense, during the Term of the Agreement, maintain commercial
general liability insurance in respect of the Goods in respect of which Supplier performs the W&I
Services for Company hereunder. To the extent Supplier maintains any insurance in respect of the
Goods in respect of which Supplier performs the W&I Services for Company hereunder, Supplier shall
not provide its insurers any right of subrogation against Company based upon any loss or liability
to Goods stored by Supplier under this Attachment.



19.0 INDEMNITY




19.1 Company will indemnify, defend and hold harmless Supplier from and against any and all Losses
suffered or incurred by Supplier as a result of or arising directly or indirectly out of or in
connection with the performance by Company, its agents, subcontractors or employees, of its
obligations under this Attachment, except where such Losses arise out of the breach by Supplier of
its obligation to use a commercially reasonable standard of care in performing the W&I Services
pursuant to Section 16.0 of this Attachment, unexplained variances in the quantity of Goods stored
(including where such variances are due to theft), damage caused by the Warehouse (including
fixtures thereof) where the W&I Services are performed, or the negligence or willful misconduct of
Supplier, its agents, subcontractors, employees or invitees.



					
	 	 	 	 	 
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19.2 Supplier will indemnify, defend and hold harmless Company from and against any and all Losses
suffered or incurred by Company as a result of or arising directly or indirectly out of or in
connection with the performance by Supplier, its agents, subcontractors or employees, of its
obligations under this Attachment, to a maximum amount of $2,000,000 per occurrence, where such
Losses arise out of or are due to the breach by Supplier of its obligation to use a commercially
reasonable standard of care in performing the W&I Services pursuant to Section 16.0 of this
Attachment, unexplained variances in the quantity of Goods stored (including where such variances
are due to theft), damage caused by the Warehouse (including fixtures thereof) where the W&I
Services are performed, or the negligence or willful misconduct of Supplier, its agents,
subcontractors, employees or invitees.



19.3 The procedures set out in Article 84 of the Agreement shall apply to each claim for
indemnification under Section 19.0 of this Attachment.



20.0 LIMITATION OF LIABILITY




Notwithstanding anything to the contrary in this Attachment, the limitation of liability in Article
51 of the Agreement shall apply to this Attachment.



21.0 SUPPLIER AFFILIATES




In the event that W&I Services are to be provided by an Affiliate of Supplier, all references to
“Supplier” herein shall refer to Supplier and such Affiliate of Supplier, which shall be
represented by Supplier, provided that Supplier shall remain responsible for the performance by
each such Affiliate of its obligations hereunder.



					
	 	 	 	 	 
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Appendix I




W&I Prices




The following prices will be paid by Company for the W&I Services at any Warehouse at which
W&I Services are performed by Supplier under this Attachment, subject to any revision pursuant to
Section 7.2 of this Attachment:




	 	•	 	Receipt into and disbursement from Warehouse: [ *** ] (which price shall be charged by
Supplier (without duplication) upon receipt of the Goods into the Warehouse). Supplier
shall not charge this price to Company for any inventory received by Supplier on
consignment before July 19, 2002
	 
	 	•	 	Exportation Paperwork Preparation : [ *** ]
	 
	 	•	 	Maintenance Fee (cycle count, reporting, etc.): [ *** ]
	 
	 	•	 	Warehouse Storage Fees: [ *** ]
	 
	 	•	 	Insurance Charge: [ *** ]





*** Portions of this page have been omitted pursuant to a Request for Confidential Treatment filed
separately with the Securities and Exchange Commission.



 









 






Attachment N




New Product Introduction (NPI)




Process






External Manufacturing Services Supply Agreement




1.0 New Product Introduction Support by Supplier





	1.1	 	Supplier acknowledges that the execution of an effective New Product Introduction (“NPI”)
process is a critical competitive requirement for Company. As part of Company’s NPI process,
the parties will develop and mutually agree upon a documented Program Plan outlining Program
Goals for each new Product that Company intends for Supplier to manufacture pursuant to this
Agreement. In addition, Supplier and Company shall agree upon a one-stop NPI process to be
implemented by Supplier, that provides timely and scalable support from models through volume
production. As such, the parties shall make commercially reasonable efforts to meet the
Program Goals documented in the Program Plan. Each party’s progress toward meeting the Program
Goals shall be measured by the other party and managed by the responsible party.






	1.2	 	For the purposes of this Attachment, “Program Plan” means Company’s documented plan outlining
the Program Goals for a new Product that Company intends to have Supplier manufacture pursuant
to the terms of the Agreement. An example of a template that could be used as a Program Plan
is shown in Exhibit A to this Attachment. For the purposes of this Attachment “Program Goals”
may mean but are not necessarily limited to Company’s time to volume goals, volume cost goals,
quality goals, time to market goals and target costs as identified in the Program Plan.






	1.3	 	Supplier shall provide dedicated NPI managers and/or engineers to assist in the introduction
of Company’s new Products. Part of their responsibility will be to provide Supplier’s DFx
input to Company and manage the Engineering and NPI Manufacturing Services for Supplier
outlined in Sections 2.0 and 4.0 of this Attachment. At Company’s request, upon mutual
agreement of the parties, Supplier shall co-locate for a mutually agreeable period of time the
appropriate Supplier technical and business personnel with Company’s design teams to assist in
the timely and smooth transfer of new Products from design into Supplier’s manufacturing
process. Such costs shall, by mutual agreement of the parties either (a) be amortized over a
6 month period in the cost of the Product, or (b) be charged by Supplier to Company as a
separately billable NRE charge for which Company shall issue Supplier a purchase order in
accordance with Article 9 of the Agreement.





2.0 Engineering Services





	2.1	 	For any new Products that Company intends to have Supplier manufacture pursuant to the terms
of this Agreement, Supplier agrees to provide the following Services to assist in the timely
and smooth introduction of new Products into Supplier’s manufacturing process (“Engineering
Services”). Such costs shall, by mutual agreement of the parties either (a) be amortized over
a six (6) month period in the cost of the Product, or (b) be charged by Supplier to Company as
a separately billable NRE charge for which Company shall issue Supplier a purchase order in
accordance with Article 9 of the Agreement:






	 	(a)	 	DFx reviews. Within 24 hours of completion of a Prototype, Supplier shall
provide to Company a preliminary report of DFx preview of such Prototype, and shall
provide detailed and complete reports within a mutually agreeable timeframe, with a
targeted delivery date of five (5) Business Days after each design or stock list review
or Prototype or Pilot build to Company and generate any appropriate NPI Engineering
Change Requests. For the purposes of this Attachment, “DFx” means, but is not limited
to, design for manufacturing, design for assembly, design for environment, design for
test, design for ease of transition of manufacturing location, and design for the
supply chain. The intention of DFx feedback is to identify opportunities to improve
manufacturability, quality, and/or to reduce cost and Product introduction interval.
	 
	 	(b)	 	Stock list reviews triggered by receipt of a Material stock list from Company.
Supplier’s report shall outline Material costs, lead times, availability, quality
rating, and risk assessment for the Material identified on the stock list. Any
recommendations for Material





					
	 	 	 	 	 
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substitutions and alternative Material vendors would be provided by Supplier at that
time through appropriate NPI Engineering Change Requests.




	 	(c)	 	Packaging and Labeling. Supplier shall be responsible for developing and
acquiring any new packaging and labeling required for all new Products that Supplier
would manufacture pursuant to the terms of this Agreement.
	 
	 	(d)	 	Nonrecurring Engineering. Unless otherwise agreed to under a separate
development agreement, Supplier shall be responsible for the NRE necessary to develop
any assembly or test processes or in-circuit or functional test software, stencils,
fixtures, tooling, etc. that are required to support the manufacture of any new
Products by Supplier pursuant to the terms of this Agreement. The costs and the
parties’ responsibilities associated with the actual fixtures, tooling, and test sets
are set forth in Section 3.0 of this Attachment.






	2.2	 	In addition to the Engineering Services outlined in Section 2.1 and in accordance with
Article 4 of the Agreement, Supplier agrees to provide the following Services to Company on an
as requested basis. The fees associated with these Services will be agreed to by the parties
prior to the start of the work by Supplier and will not be recovered by Supplier in the Price
of the Product but will be paid by Company to Supplier when the mutually agreed upon
milestones have been met.






(a) Specific component reliability qualification




(b) Compliance testing




(c) Environmental stress testing




(d) Other Services as may be agreed to by the parties



3.0 Fixtures, Tooling and Test Sets





	3.1	 	Unless otherwise agreed to in writing between the parties, Supplier shall be responsible for
funding any costs associated with providing the necessary stencils, fixtures, tooling, and
test sets required to support the manufacture of a new Product by Supplier and such costs
shall, by mutual agreement of the parties either (a) be amortized over a six (6) month period
in the cost of the Product, or (b) charged by Supplier to Company as a separately billable NRE
charge for which Company shall issue Supplier a purchase order in accordance with Article 9
of the Agreement.






	3.2	 	Company agrees to reimburse Supplier at Supplier’s actual incurred cost for any stencils,
fixtures, tooling, and test sets that were used while Supplier was providing NPI Manufacturing
Services to Company but cannot be utilized, through no fault of Supplier, during production.






	3.3	 	Supplier agrees that all stencils, fixtures, tooling, and test sets used in the production of
Products by Supplier shall be subject to the terms set forth in Article 37 and Article 53 of
the Agreement.





4.0 NPI Manufacturing Services





	4.1	 	Supplier shall provide, at Company’s request, NPI Manufacturing Services to Company as part
of the NPI process. For the purposes of this Attachment, “NPI Manufacturing Services” means
manufacturing Services performed by Supplier in the period prior to the commencement of
pre-production or volume manufacture of a Product by Supplier. These Services are in addition
to the Engineering Services described in Section 2.0 of this Attachment. The scope of
Supplier’s NPI Manufacturing Services to Company may include, without limitation, the
following:






     (a) Material stock list procurement and inventory stocking.




     (b) Manufacture of Product Prototype and Pilot build units.




For purposes of this Attachment, “Prototypes” are either: (a) assemblies intended for
laboratory evaluation of performance or software development, or (b) assemblies intended to
evaluate form, fit, and function and must meet Company’s Product Specifications, unless
specific relaxations



					
	 	 	 	 	 
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	 	 	have been agreed to by the parties. “Pilot Builds” are assemblies intended to determine
what, if any, changes might be required to the design, assembly and test processes or the
Specifications before the Product is ready for volume production.
	 	 	 
	4.2	 	Payment for the performance of said NPI Manufacturing Services shall be in accordance with
Section 6.0 of this Attachment.






	4.3	 	Company will provide Supplier with a written statement of requirements that details the
Product Prototype or Pilot build quantities and dates, test requirements, etc. The parties
shall subsequently jointly develop a project plan that includes milestones and relevant due
dates in support of said requirements. During the NPI process, Supplier shall provide to
Company regular written progress reports on at least a weekly basis. All such reports shall
include, but not necessarily be limited to, the following information:






(a) status of Supplier’s progress toward meeting the required
Product Prototype or Pilot build quantities and dates;




(b) short description of problems or potential problems, if any,
preventing Supplier from meeting the said quantities and build dates;




(c) recovery method proposed in order to meet the said quantities
and build dates, if needed, and




(d) any other information related to the NPI Manufacturing Services
as may be reasonably requested by Company.




	4.4	 	Supplier will perform such NPI Manufacturing Services and deliver any requested deliverables
to Company in accordance with the agreed upon schedule applicable to such deliverable.
Additionally, Supplier agrees to:






(a) Deliver Prototype or Pilot build quantities from each build to
Company within a mutually agreed upon timeframe, with a targeted delivery date
of [***].




(b) As required, respond to NPI related Engineering Change Orders
issued by Company in accordance with Article 67 of this Agreement.




	4.5	 	Upon Company’s request in writing, Supplier shall have the responsibility for procuring and
storing all the necessary Material to support the agreed upon Product Prototype, or Pilot
build schedules and quantities. Any Excess Inventory or Obsolete Inventory will be dealt with
in accordance with Article 12 of this Agreement.






	4.6	 	Supplier shall schedule NPI Manufacturing Services in such a manner as to ensure that the
Product Prototype or Pilot build activity will not adversely impact Supplier’s manufacturing
capability to meet Company’s Product Orders.





[ *** ]





	***	 	Portions of this page have been omitted pursuant to a Request for Confidential Treatment
filed separately with the Securities and Exchange Commission.





					
	 	 	 	 	 
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[ *** ]




5.0 Advanced Technology Development





	5.1	 	Company and Supplier will develop means for Company to share its Product technology roadmaps
and future manufacturing technology requirements and for Supplier to share its manufacturing
technology development plans and roadmaps in order to address technology requirements to
support Company’s future products. This exchange may result in identification of
co-development projects whose cost and schedule will be mutually agreed by the parties.
Company and Supplier shall implement a process to establish jointly developed roadmaps which
include the objectives of introduction of new manufacturing technologies and achieving “CpK”
process capability levels identified by Supplier and Company as critical.






	5.2	 	It is expected that the results of applicable Supplier-funded development programs will be
made available to the Company for inclusion into Company’s DFx guidelines, as appropriate.






	5.3	 	Supplier is expected to assist Company in keeping Company’s DFx guidelines up to date, both
through review of Company designs and the DFx change management process. It is understood
that Company’s DFX guidelines will be used for Products made by all of Company’s electronic
manufacturing service providers.





6.0 Pricing





	6.1	 	Unless otherwise agreed to by the parties, prices for Product Prototype quantities and
Pilot quantities delivered to Company by Supplier shall be priced in accordance with the
formula discussed below. The multipliers and quantity price breaks used in the Prototype and
Pilot pricing formula below will be confirmed and agreed to by the parties prior to Company
requesting Supplier to perform such services for the first time under this Attachment. The
parties shall also agree to the period of time in which the agreed to multipliers and quantity
price breaks remain in effect. Pricing for pre-production build quantities shall be
calculated using the Manufacturer Per Unit Pricing Formula Summary in Attachment C and Article
6 of the Agreement. This pricing formula may from time to time be mutually adjusted by the
parties.





Prototype and Pilot Pricing Formula :




The formula will be used by Supplier to generate Prototype and Pilot build pricing based on
the preliminary BOM information provided by Company at the commencement of the Prototype
phase of a program. This pricing formula will be used for the following phases of Prototype
build: P1, P1+ and P2.



[ *** ]




*** Portions of this page have been omitted pursuant to a Request for Confidential Treatment filed
separately with the Securities and Exchange Commission.




					
	 	 	 	 	 
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[ *** ]




*** This page has been omitted pursuant to a Request for Confidential Treatment filed separately
with the Securities and Exchange Commission.




					
	 	 	 	 	 
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Exhibit A




PROGRAM PLAN




EXAMPLE ONLY — 




THE APPLICABLE PROGRAM PLAN WILL BE DISCUSSED AND MODIFIED

BY THE PARTIES AS NEEDED




A. GENERAL PRODUCT AND SUPPLY CHAIN INFORMATION




I. PRODUCTS:




	 	 	 	 	 	 	 
	Name:

	 	Company Part No:
	 	Description:
	 	Delivery Point
	 
	 
	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 
	 





II. SUPPLIER MANUFACTURING SITES :




	 	 	 	 	 	 	 
	Country:

	 	Address:	 	 	 	 
	 
	 
	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 





III. NPI PROJECT MANAGEMENT:




	 	 	 	 	 	 	 
	COMPANY :	 	 	 	SUPPLIER:	 	 
	 	 	 	 	 	 	 
	NPI Project Manager:

	 	 	 	NPI Project Manager:	 	 
	 

	 	 
	 	 	 	 
	Email Address:

	 	 	 	Email Address:	 	 
	 

	 	 
	 	 	 	 
	Phone Number:

	 	 	 	Phone Number:	 	 
	 

	 	 
	 	 	 	 
	Fax Number:

	 	 	 	Fax Number:	 	 
	 

	 	 
	 	 	 	 





					
	 	 	 	 	 
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B. NPI MANUFACTURING SERVICES




I. PROTOTYPE BUILD REQUIREMENTS:




	 	 	 	 	 
	Quantities Required

	 	Target Prototype Build

Star Dates:
	 	Target Prototype Build

Completion Date:
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 





II. PILOT BUILD REQUIREMENTS:




	 	 	 	 	 
	Quantities Required

	 	Target Pilot Build Start

Dates:
	 	Target Pilot Build

Completion Date:
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 





III. PROTOTYPE AND PILOT BUILD SPECIFICATION REQUIREMENTS:




	 	 	 
	Specifications Required

	 	Date Needed
	 
	 
	 	 
	 
	 
	 	 





IV. PROTOTYPE AND PILOT BUILD TEST REQUIREMENTS:




TEST TO BE PERFORMED DURING PROTOTYPE AND PILOT BUILDS
 

 
 





V. AGENCY APPROVALS




	 	 	 	 	 
	 	 	 
	 

	 	Complete as appropriate	 	 






					
	 	 	 	 	 
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	C.	 	PRICING, MATERIALS AND DELIVERY
	 
	I.	 	PRICING SCHEDULE:





	 	 	 	 	 	 	 
	Name:	 	Company Part Number:	 	Prototype Price	 	Prototype Quantity:
	 
	 
	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 
	 






	II.	 	PURCHASE ORDER-RELATED TERMS:






	(a)	 	Order Lead Time: Purchase Order Lead time for the Products, Service Units will be ___(___) days.
	 
	(b)	 	Long Lead-Time Materials (Components with lead-times beyond the above stated PO Lead-time:





	 	 	 	 	 
	Company Part No.	 	Description	 	Material PO Lead-time
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 






	III.	 	UNIQUE MATERIALS: The Company-custom components, ROMs, etc. relative to the Product are as follows:





	 	 	 	 	 
	Part No.	 	Description	 	Supplier
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 







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	D.	 	QUALITY, TEST TECHNOLOGY






	I.	 	SPECIFICATIONS:




The following documents constitute the Specifications for the Product, Service Units described in
this Attachment and are hereby incorporated into this Agreement by reference:




	 	 	 	 	 	 	 
	Title	 	Company Part No:	 	 	 	Date:
	 
	 
	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 
	 






	II.	 	TEST PROCESS SUMMARY

The Test Process Summaries, or brief description of the tests to be performed, for the Product and
Service Units described in this Addendum are referenced below. Actual Test Process Summaries, if
applicable, will be attached to this signed Product Plan and are hereby incorporated into this
Agreement by reference:





	 	 	 	 	 	 	 
	Title or Test Process	 	Company or Supplier	 	Date:	 	 
	 	 	Part No, if applicable:	 	 	 	 
	 
	 
	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 
	 






	III.	 	PRODUCT SPECIFIC QUALITY PLANS AND GOALS MAY BE AGREED UPON AT A LATER DATE AND INCLUDED AS
AN AMENDMENT TO THIS AGREEMENT.
	 
	IV.	 	MANUFACTURING TECHNOLOGY, EQUIPMENT, LABOR, MATERIALS AND FACILITIES: Unless otherwise
agreed in this Section IV, Supplier will provide all technology, equipment, labor, materials
and facilities required to perform the scope of work. Identify any manufacturing technology,
equipment, labor, materials and/or facilities to be provided by Company in connection with the
Products covered by this Addendum.
	 
	 	 	 

	 
	V.	 	TEST EQUIPMENT AND FIXTURES:





	 	 	 
	Description	 	NRE (if any)
	 
	 
	 	 
	 
	 
	 	 
	 






	VI.	 	SPECIALIZED TOOLING: Items of Tooling built and/or used for the Product:





	 	 	 
	Description	 	NRE (if any)
	 
	 
	 	 
	 
	 
	 	 
	 







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	E.	 	PROGRAM GOALS:





	 	 	 
	Objective:	 	Goal:
	 
	Time to Market/General Availability
	 	 
	Target Cost at Mark Introduction
	 	 
	Volume Production Cost Target
	 	 
	Pilot Quality at SIC
	 	 
	 
	Time to Volume Production
	 	 
	 






	F.	 	OTHER AND SIGNATURES






	 	 	OTHER PRODUCT SPECIFIC TERMS AND CONDITIONS






 




                         (Complete as appropriate)



 




      


 




      


 





	 	 	ACCEPTED AND AGREED:





	 	 	 	 	 
	 	 	COMPANY	 	SUPPLIER
	 
	 	 	 	 
	 

	 	By:  

	 	By: 

	 

	 	Name: 

	 	Name: 

	 

	 	Title: 

	 	Title: 

	 

	 	Date: 

	 	Date: 









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Attachment O




Ordering Company Acknowledgement And Agreement





	 	 	TO: CELESTICA CORPORATION (the “Supplier”)





          Reference is made to the External Manufacturing Services Supply Agreement (the “Agreement”)
No. WR71050115 dated n, 2005 made between Supplier and Lucent Technologies Inc. (the
“Company”). Capitalized terms which are defined in the Agreement and which are used and not
otherwise defined herein have the respective meanings ascribed to them in the Agreement.




          WHEREAS the undersigned is an Affiliate of Company and has been designated by Company as an
Ordering Company pursuant to Article 59.1 of the Agreement;




          AND WHEREAS Article 59.2 of the Agreement provides that an Ordering Company may be eligible to
order Products, Commercially Purchased Items and Services from Supplier on the same terms and
conditions, including the same prices, as set forth in the Agreement, provided that the conditions
in Article 59.2 of the Agreement are met;




          NOW THEREFORE the undersigned hereby:





	(1)	 	covenants and agrees to be bound by the Agreement, as the same may be amended from time to
time;
	 
	(2)	 	acknowledges and agrees that Supplier may exercise against the undersigned all of its rights
and remedies which it has against Company under the Agreement; and
	 
	(3)	 	acknowledges and agrees that its designation as an Ordering Company may be revoked by Company
at any time.




DATED the ______ day of ____________, _____.



[NAME OF ORDERING COMPANY]






                                                            

Name:

Title:

An authorized signing officer







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Attachment P




Price Administrative Process




[ *** ]





	***	 	This page has been omitted pursuant to a Request for Confidential Treatment filed
separately with the Securities and Exchange Commission.

















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	EMS Price Administration & Cost Management

Process Timeline
	 	





 




	 	 	 	 	 
	TASKS & MILESTONES	 	OWNER	 	DUE DATE
	1.
Prices of Lucent managed components are updated

	 	SMG
	 	End of
th week
	2. Re-pricing notices are generated by BEVO

	 	EMS
	 	1st day of th week
	3a.
Price trends for EMS managed components

	 	SMG
	 	In 5
th week
	3b.
Price guidelines contractual/target cost
	 	EMS GM
	 	In 5
th week
	4a. CBOM of each OI is re-priced an submitted in BEVO
	 	EMS
	 	From
6th  to 9 th week
	4b.
Re-priced price model of each OI is up-loaded to PMN
	 	EMS
	 	From
6th  to 9 th week
	5a.
CBOM and price model are reviewed & preliminary approved
	 	PM
	 	From
10th to 12th wk
	5b.
Portfolio of all OI prices is reviewed & finally approved

	 	EMS GM
	 	In 12th week
	6.
New prices are loaded into Purchase System
	 	CFO
	 	End of
13th week
	7. [***]
	 	[***]
	 	[***]







***
Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and
Exchange Commission.












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Attachment Q




Inventory Management

Operating Principles



For purposes of Article 12.6 of the Agreement, submittals by Supplier shall include the
following, as applicable and as agreed by the parties, acting reasonably:




	 	 	 	 	 
	GENERAL	 	WHY	 	ACTIONS TAKEN
	COMCODE

	 	JAN SIPP
	 	PUSH/CANCEL
	DESCRIPTION

	 	FEB SIPP
	 	PORTAL
	LEAD-TIME

	 	MAR SIPP
	 	USAGE INSIDE CLS-LU PRODUCT
	WHERE-USED

	 	FEB ACTUAL
	 	USAGE INSIDE CLS-OTHER CLS

CUSTOMERS
	LAST-TIME BUILD Y/N

	 	MAR ACTUAL
	 	BROKERS-% RECOVERY
	LAST-TIME BUY Y/N

	 	APR SIPP
	 	REBALANCED W/IN CLS
	ON-HAND VS ON-ORDER INDICATOR

	 	PORTAL DEMAND
	 	RETURNED TO VENDOR
	WHAT
	 	 	 	 
	OBSOLETE DAY 1

	 	INITIAL AMOUNT
	 	FINAL AMOUNT REQUESTED
	 

	 	REQUESTED	 	 
	OBSOLETE POST DAY 1

	 	OBSOLETE
	 	OBSOLETE
	EXCESS DAY 1

	 	EXCESS
	 	EXCESS
	EXCESS POST DAY 1
	 	 	 	 
	OBSOLETE-LEGACY
	 	 	 	 
	EXCESS-LEGACY

	 	 	 	MISCELLANEOUS COMMENTS
	EDM CASE INFO
	 	 	 	 








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