exhibit_10-7.htm


    
      EXHIBIT
        10.7


        [*CONFIDENTIAL
          MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT IS INDICATED
          WITHIN
          THIS EXHIBIT BY THE USE OF THE FOLLOWING (**)]

        


        Flextronics
          Manufacturing Services Agreement

         

        This
          Flextronics Manufacturing Services Agreement (“Agreement”) is
          entered into this 18 day of September 2007 (the “Effective
          Date”) by and between Electroglas, Inc. having
          its place of business at 5729 Fontanoso Way, San Jose, CA 95138
          ("Customer") and Flextronics Industrial Ltd., having its place
          of business at Level 3, Alexander House, 35 Cybercity, Ebene, Mauritius
          ("Flextronics").

        


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

         

        1.  DEFINITIONS

         

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

         

        2.  MANUFACTURING
          SERVICES

         

        2.1.  Work.  Customer
          hereby engages Flextronics to perform the work (hereinafter
          "Work").  “Work” shall mean to
          procure Materials and to manufacture, assemble, and test products (hereinafter
          "Product(s)") pursuant to detailed written
          Specifications.  The “Specifications” for each
          Product or revision thereof, shall include but are not limited to bill
          of
          materials, designs, schematics, assembly drawings, process documentation,
          test
          specifications, current revision number, and Approved Vendor
          List.  The Specifications as provided by Customer and included in
          Flextronics’s production document management system and maintained in accordance
          with the terms of this Agreement are incorporated herein by reference as
          Exhibit
          2.1.  The initial Specifications shall be reflected in Flextronics’s
          production document management system no later than five (5) business days
          following the date such Specifications are provided by Customer, and changes
          to
          the Specifications as mutually agreed upon in accordance with this Agreement
          shall be reflected in Flextronics’s production document management system no
          later than five (5) business days following the date of such mutual
          agreement.  This Agreement does not include any new product
          introduction (NPI) or product prototype services related to the
          Products.  In the event that Customer requires any such services, the
          parties will enter into a separate agreement.  In case of any conflict
          between the Specifications and this Agreement, this Agreement shall
          prevail.

         

        2.2.  Engineering
          Changes. Customer may request that Flextronics incorporate
          engineering changes into the Product by providing Flextronics with a description
          of the proposed engineering change sufficient to permit Flextronics to
          evaluate
          its feasibility and cost (“Engineering Change Request” or
“ECR”).  Upon receipt of an ECR, Flextronics
          will
          provide Customer with a response within five (5) business days of receipt
          advising Customer of the likely impact of an ECR (including, but not limited
          to,
          the impact on the delivery schedule and Product pricing).  Flextronics
          will proceed with engineering changes when the parties have agreed upon
          the
          changes to the Specifications, delivery schedule and Product pricing
          (“Engineering Change Order” or “ECO”) and the
          Customer has issued a purchase order for the implementation
          costs.  Neither party will unreasonably withhold or delay agreement to
          an ECO and the parties agree to use commercially reasonable efforts to
          implement
          as soon as possible emergency ECO’s relating to personal or product safety or to
          avoid infringement.

         

        2.3.  Tooling;
          Non-Recurring Expenses; Software. Customer shall pay for or obtain
          and consign to Flextronics any Product-specific tooling, equipment or software
          and other reasonably necessary non-recurring items, to be mutually agreed
          upon
          by the parties in writing and incorporated herein by reference as Exhibit
          2.3
          (collectively, “Consigned Equipment”).  All software
          that Customer provides to Flextronics or any test software that Customer
          engages
          Flextronics to develop is and shall remain the property of
          Customer.  Flextronics shall not reverse engineer, disassemble or
          decompile any software Customer provides to Flextronics, except to the
          extent
          expressly permitted by applicable law, and then only after Flextronics
          has
          notified Customer in writing of its intended activities.  Title to
          Consigned Equipment remains at all times with Customer, and Flextronics
          shall
          not permit any lien or encumbrance created by or through Flextronics to
          exist on
          the Consigned Equipment.  Customer shall be the importer of record of
          the Consigned Equipment, but Flextronics shall assist Customer to obtain
          all
          permits, licenses, approvals and registrations that are required for the
          importation of the Consigned Equipment.  Flextronics shall bear
          responsibility for any damage or loss of Consigned Equipment due to Flextronics’
negligence or willful misconduct while such Consigned Equipment is on the
          premises of Flextronics.  Upon reasonable notice, Customer shall have
          the right to access the facility at which the Consigned Equipment is located
          for
          the purpose of inspecting, installing, testing, repairing and maintaining
          such
          Consigned Equipment.  Upon termination or expiration of this
          Agreement, Flextronics shall promptly return at Customer’s cost and expense or
          otherwise make available to Customer all Consigned Equipment.

         


        
          
            
            

          

          
            1

            
              

            

          

          
            
            

          

        


        2.4.  Cost
          Reduction Projects.  Flextronics agrees to seek ways to
          reduce the cost of manufacturing Products by methods such as elimination
          of
          Materials, redefinition of Specifications, and re-design of assembly or
          test
          methods.  Flextronics will present to Customer any proposal for cost
          reduction projects and will implement such projects only with the prior
          written
          approval of Customer.  Upon implementation of such ways that have been
          initiated by Flextronics and approved by Customer, each of Flextronics
          and
          Customer will receive 50% of the demonstrated cost reduction for the first
          twelve months of this Agreement, and Customer shall thereafter receive
          100% of
          the demonstrated cost reduction.  Customer will receive 100% of the
          demonstrated cost reduction upon implementation of such ways initiated
          by
          Customer.  Customer and Flextronics will discuss cost reductions in
          conjunction with the quarterly fee review set forth in Section
          3.4(c).

         

        2.5.  Flextronics
          Facility.  Flextronics shall perform the Work at the
          Flextronics facility located at No. 77 Yong Sheng Road, Ma Lu, Jiading,
          ,
          Shanghai 201801, People’s Republic of China (the “Flextronics
          Facility”).  Flextronics may perform the work at another
          location located in the People’s Republic of China without Customer’s prior
          written approval; provided that Flextronics notifies Customer in writing
          at
          least ninety (90) days prior to performing work at another Chinese location
          and
          provided further that such location change does not substantially affect
          the
          fees, taxes or other amounts payable by Customer
          hereunder.  Flextronics shall notify Customer in the event it performs
          the assembly or test work at such another Chinese
          location.  Flextronics shall not, without prior written approval by
          Customer, perform the work at a location other than the Flextronics Facility
          or
          such other Chinese location as permitted by this Section 2.5.

         

        2.6.  Quality
          Standards.  Flextronics will maintain quality management
          systems for the control of material quality, processing, assembly, testing,
          packaging and shipping, and Customer shall have the right, at Customer’s
          expense, to inspect such quality management systems upon reasonable
          request.  The Flextronics Facility shall be certified ISO 9001:2000
          and ISO 14001:2004 and such certification shall be maintained at all times
          during the term of this Agreement.  Flextronics shall notify Customer
          promptly if the Flextronics Facility loses or fails to renew its ISO 9001:2000
          and ISO 14001:2004 certification.

         

        2.7.  Resource
          Shortage.  Excluding cases where Flextronics is excused
          entirely from performance under this Agreement or applicable law, in the
          event
          Flextronics is in a position to require the allocation of materials, facilities,
          equipment or personnel (collectively “Resources”) due to
          shortages, Flextronics shall fairly allocate, in a commercially reasonable
          manner, Resources for the period of time during which the cause of the
          shortages
          persists; provided however, that any such allocation shall allocate Resources
          to
          Customer in a manner that is at least as favorable to Customer as to other
          of
          Flextronics’s other similarly situated customers who provide the same or lesser
          amount of business at the facility where Products are manufactured for
          Customer.  For purposes of determining whether another customer
          provides the same or lesser amount of business, such factors as monthly
          volume,
          the economic value of purchases, types of products and Inventory, level
          of
          variance between forecasts and actual demand shall be taken into
          account.

         

        2.8.  No
          Sales to Third Parties.  Flextronics shall not sell
          Products to any third party without Customer’s prior written
          approval.

         

        3.  FORECASTS;
          ORDERS; FEES; PAYMENT

         

        3.1.  Forecast.  Customer
          shall provide Flextronics, on a monthly basis, (a) a rolling twelve (12)
          month
          forecast indicating Customer’s monthly Product requirements for base systems,
          including without limitation the 200mm standard 4090 prober and the 300mm
          standard EG6000 prober (each a “Base System”), and (b) a
          rolling three (3) month forecast indicating Customer’s monthly Product
          requirements for (i) special systems, including without limitation the
          200mm
          Pathfinder prober, the 200mm SMIF prober, the 200mm Mini-e prober and the
          300mm
          EG6000e prober (each a “Special System”), (ii) options for
          final system configuration, and (iii) upgrade kits.  Such forecasts
          shall be non-binding, except with respect to the purchase of Special Inventory
          pursuant to Section 4.1, and the first ninety (90) days of a forecast will
          constitute Customer’s written purchase order for all Work to be completed within
          the first ninety (90) day period.  Such purchase orders will be issued
          in accordance with Section 3.2 below.

         

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

         

        3.3.  Purchase
          Order Acceptance.  Purchase orders shall be deemed
          accepted by Flextronics, provided however that Flextronics may reject any
          purchase order: (a) that is an amended order in accordance with Section
          5.2
          below because the purchase order is outside of the Flexibility Table; (b)
          if the
          fees reflected in the purchase order are inconsistent with the parties’
agreement with respect to the fees; (c) if the purchase order represents
          a
          significant deviation from the forecast for the same period, unless such
          deviation is within the parameters of the Flexibility Table; or (d) if
          a
          purchase order would extend Flextronics’s liability beyond Customer’s approved
          credit line; provided that Flextronics does not reduce such credit line
          other

         


        
          
            
            

          

          
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        3.4.  than
          in
          accordance with Flextronics’ standard policies and procedures applicable to
          similar customers.  Flextronics shall notify Customer of rejection of
          any purchase order within five (5) business days of receipt of such purchase
          order.

         

        3.5.  Fees;
          Changes; Taxes.

         

        (a)  The
          fees
          will be agreed by the parties and will be indicated on the purchase orders
          issued by Customer and accepted by Flextronics. The initial fees shall
          be as set
          forth on the Fee List attached hereto and incorporated herein as Exhibit
          3.4
          (the “Fee List”).  If a Fee List is not attached or
          completed, then the initial fees shall be as set forth in purchase orders
          issued
          by Customer and accepted by Flextronics in accordance with the terms of
          this
          Agreement.

         

        (b)  Customer
          is responsible for (i) additional fees and costs mutually agreed upon as
          set
          forth in Section 2.2 due to changes to the Specifications; (ii) additional
          fees
          and costs mutually agreed upon by Customer and Flextronics due to failure
          of
          Customer or its subcontractor to cure within thirty (30) days of written
          notice
          a failure to timely provide sufficient quantities or a reasonable quality
          level
          of Customer Controlled Materials where applicable to sustain the production
          schedule; and (iii) any pre-approved expediting charges reasonably necessary
          because of a change in Customer's requirements.

         

        (c)  The
          fees
          may be reviewed quarterly by the parties.  Any changes and timing of
          changes shall be agreed by the parties in writing, such agreement not to
          be
          unreasonably withheld or delayed.  By way of example only, the fees
          may be increased upon the written agreement of the parties if the market
          price
          of fuels, Materials, equipment, labor and other production costs, increase
          beyond normal variations in pricing or currency exchange rates as demonstrated
          by Flextronics; or if the actual volume of Products ordered by Customer
          is
          greater than or less than the volume anticipated by the parties as of the
          Effective Date.

         

        (d)  All
          fees
          are exclusive of federal, state and local excise, sales, use, VAT, and
          similar
          transfer taxes, and any duties, and Customer shall be responsible for all
          such
          items.  This subsection (d) does not apply to taxes on Flextronics’s
          net income.

         

        (e)  (i)
          All
          payments to Flextronics incurred for the Products delivered and Work conducted
          under this Agreement shall be made in the “Payment Currency” by electronic funds
          transfer into Flextronics’s designated bank account. “Payment Currency” means
          the currency specified in Section 3.5 for payment of amounts due hereunder
          which
          shall be based on the currency in which most of the costs of the Work will
          be
          incurred, provided however, if the currency in which most of the costs
          of the
          Work will be incurred is not (x) the local currency of the location of
          one of
          the parties or (y) the “functional currency” of one of the parties for
          accounting purposes, then the “Payment Currency” will be the currency which
          satisfies either (x) or (y) in which the greatest portion of the costs
          of the
          Project will be incurred. 

         

        


        (ii)                 To
          the extent any costs included in the calculation of the amount due to
          Flextronics hereunder are paid by Flextronics in a currency other than
          the
          Payment Currency and must be converted into the Payment Currency for calculation
          of the amount due under this Agreement, the amounts payable under this
          Agreement
          will be set on a quarterly basis for the upcoming quarter based on exchange
          rate(s) calculated as follows: (1) for currencies for which Flextronics
          has
          obtained a forward contract to hedge its exposure to currency fluctuations,
          the
          hedge rate, and (2) for currencies for which Flextronics has not hedged,
          the
          closing currency exchange rate(s) as reported on Reuters' page USDFIX on
          the
          25th day of the last month of each calendar quarter (or the business day
          immediately following such date if such date is not a business day). Costs
          incurred in the Payment Currency shall not be hedged.  Costs that are
          incurred in currencies other than the Payment Currency will be hedged unless
          insignificant in amount.  No more than ten percent (10%) of the costs
          incurred in currencies other than the Payment Currency shall be
          unhedged.  In the event the actual costs in a quarter are less than
          projected and, as a consequence, Flextronics has over hedged any currency,
          the
          over hedged portion may be used for the following quarter for purposes
          of
          calculating the conversion into the Payment Currency. In the event the
          actual
          costs in a quarter are higher than projected and, as a

        consequence,
          Flextronics has to conclude additional foreign currency hedges, such
          a

        difference
          will be settled by one party in favor of the other party, as applicable.
          Hence,
          any cost savings for Flextronics out of a favorable Non-USD movement will
          be
          passed on to Customer as a credit note; likewise, any cost increase based
          on an
          unfavorable Non-USD movement will be settled by means of a debit note.
          Such
          credit/debit notes are payable within thirty  (30) days of
          issuance.  Upon request Flextronics shall provide Customer with copies
          of the bank confirmations for the hedge contracts for the currencies described
          in subsection (i) above and the basis for its calculation of the exchange
          rate
          for currencies described in this subsection.

        


         

        3.6.  Payment.  Customer
          agrees to pay all invoices in U.S. Dollars within thirty (30) days of the
          date
          of Customer’s receipt of the invoice.  Flextronics shall keep and
          maintain complete and accurate books, records and accounts relating to
          this
          Agreement.

         

         

         


        
          
            
            

          

          
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        Late
          Payment.  Customer agrees to pay one and one-half percent
          (1.5%) monthly interest on all late payments.  Furthermore, if
          Customer is late with payments and Customer has not remedied such late
          payment
          within five (5) days of receipt of written notice of such late payment,
          Flextronics may (a) stop all Work under this Agreement until assurances
          of
          payment satisfactory to Flextronics are received or payment is received;
          (b)
          demand prepayment for purchase orders; (c) delay shipments; and (d) to
          the
          extent that Flextronics’s personnel cannot be reassigned to other billable work
          during such stoppage, invoice Customer for additional reasonable labor
          fees
          before the Work can resume.  Customer agrees to provide all necessary
          financial information reasonably required by Flextronics from time to time
          in
          order to make a proper assessment of the creditworthiness of
          Customer.

         

        3.7.  Letter
          of Credit.  Within forty-five (45) days
          of Flextronics’s request made at any time during the term of this Agreement,
          Customer agrees to obtain and maintain a stand-by letter of credit  or
          such other financial instrument mutually agreed upon by the parties on
          behalf of
          Flextronics to support Customer’s payment obligations set forth in this
          Agreement and to minimize the financial risk to Flextronics for its performance
          of the Work under this Agreement. The stand-by letter of credit or other
          mutually agreed upon financial instrument shall be for a minimum period
          of time
          of six (6) months and shall be for a total amount that is equal to the
          total
          value of the risks associated with Inventory, Special Inventory, and the
          accounts receivable from Customer.  The calculation shall be based
          upon the forecast provided by Customer pursuant to Section 3.1.  The
          draw down procedures under the stand-by letter of credit or other mutually
          agreed upon financial instrument shall be determined solely by
          Flextronics.  Flextronics will, in good faith, review Customer's
          creditworthiness periodically and may provide more favorable terms once
          it feels
          it is prudent to do so.

         

        4.  MATERIALS
          PROCUREMENT; CUSTOMER RESPONSIBILITY FOR MATERIALS

         

        4.1.  Authorization
          to Procure Materials, Inventory and Special
          Inventory.  Customer's accepted purchase orders and
          forecast will constitute authorization for Flextronics to procure, without
          Customer’s prior approval, (a) Inventory to manufacture the Products covered by
          such purchase orders based on the Lead Time and (b) certain Special Inventory
          based on Customer’s purchase orders and forecast as follows: Long Lead-Time
          Materials as required based on the Lead Time when such purchase orders
          are
          placed and Minimum Order Inventory as required by the
          supplier.  Flextronics will only purchase Economic Order Inventory
          with the prior written approval of Customer.  Flextronics will provide
          Customer with updates of Lead Times for all Materials upon Customer’s reasonable
          request.

         

        4.2.  Customer
          Controlled Materials.  Customer may direct Flextronics to
          purchase Customer Controlled Materials in accordance with the Customer
          Controlled Materials Terms.  Customer acknowledges that the Customer
          Controlled Materials Terms will directly impact Flextronics’s ability to perform
          under this Agreement and to provide Customer with the flexibility Customer
          is
          requiring pursuant to the terms of this Agreement.  In the event that
          Customer Controlled Materials Terms create an additional cost that is not
          covered by this Agreement, then Flextronics will notify Customer and the
          parties
          will agree to either (a) compensate Flextronics for such additional costs,
          (b)
          amend this Agreement to conform to the Customer Controlled Materials Terms
          or
          (c) amend the Customer Controlled Materials Terms to conform to this Agreement,
          in each case at no additional charge to Flextronics.  Customer agrees
          to provide copies to Flextronics of all Customer Controlled Materials Terms
          upon
          the execution of this Agreement and promptly upon execution of any new
          agreements with suppliers from whom Customer directs Flextronics to purchase
          Customer Controlled Materials.  Customer agrees not to make any
          modifications or additions to the Customer Controlled Materials Terms or
          enter
          into new Customer Controlled Materials Terms with suppliers that will negatively
          impact Flextronics’s procurement activities, without thirty days prior written
          notice.  Customer and Flextronics shall negotiate in good faith a
          separate agreement relating to the sale, consignment or other transfer
          of
          certain Materials in Customer’s possession as of the Effective Date and other
          Customer Controlled Materials to be provided by Customer (including without
          limitation terms and conditions relating to forecasts, delivery and
          pricing).

         

        4.3.  Preferred
          Supplier.  Customer shall provide to Flextronics and
          maintain an Approved Vendor List.  Flextronics shall purchase from
          vendors on a current AVL the Materials required to manufacture the
          Product.  Customer shall give Flextronics every opportunity to be
          included on AVL’s for Materials that Flextronics can supply, and if Flextronics
          is competitive with other suppliers with respect to reasonable and unbiased
          criteria for acceptance established by Customer, Flextronics shall be included
          on such AVL’s.  If Flextronics is on an AVL and its prices and quality
          and other terms and conditions of sale (e.g., cancellation policy, Lead
          Times)
          are competitive with other vendors, Customer will raise no objection to
          Flextronics sourcing Materials from itself.  For purposes of this
          Section 4.3 only, the term “Flextronics” includes any Flextronics
          Affiliate.    Customer shall give Flextronics every
          opportunity to include Flextronics’s strategic suppliers on AVL’s for Materials
          that such Flextronics suppliers can supply.  If such a Flextronics
          supplier is competitive with other suppliers with respect to reasonable
          and
          unbiased criteria for acceptance established by Customer, such Flextronics
          supplier shall be included on such AVL’s.  If such Flextronics
          supplier is on an AVL and its prices and quality and other terms and conditions
          of sale (e.g., cancellation policy, Lead Times) are competitive with other
          vendors, Customer will raise no objection to Flextronics sourcing Materials
          from
          such Flextronics supplier.

         


        
          
            
            

          

          
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        4.4.  Customer
          Responsibility for Inventory and Special
          Inventory.  Customer is responsible under the conditions
          provided in this Agreement for all Materials, Inventory and Special Inventory
          purchased by Flextronics in accordance with Section 4.1 with respect to
          the
          forecast and any purchase orders accepted by Flextronics from
          Customer.

         

        4.5.  Materials
          Warranties.  Without limiting the
          Flextronics warranties provided pursuant to Section
          6.2, Flextronics shall endeavor to obtain and pass through
          to Customer the following warranties with regard to the Materials (other
          than
          the Production Materials): (i) conformance of the Materials with the vendor’s
          specifications and/or with the Specifications; (ii) that the Materials
          will be
          free from defects in workmanship; (iii) that the Materials will comply
          with
          Environmental Regulations; and (iv) that the Materials will not infringe
          the
          intellectual property rights of third parties.

         

        5.  SHIPMENTS,
          SCHEDULE CHANGE, CANCELLATION, STORAGE

         

        5.1.  Shipments.  All
          Products delivered pursuant to the terms of this Agreement shall be suitably
          packed for shipment in accordance with the Specifications and marked for
          shipment to Customer's destination specified in the applicable purchase
          order.  Shipments will be made EXW (Ex works, Incoterms 2000)
          Flextronics Facility, at which time risk of loss and title will pass to
          Customer.  All freight, insurance and other shipping expenses, as well
          as any special packing expenses not included in the original quotation
          for the
          Products, will be paid by Customer.  In the event Customer designates
          a freight carrier to be utilized by Flextronics, Customer agrees to designate
          only freight carriers that are currently in compliance with all applicable
          laws
          relating to anti-terrorism security measures and to adhere to the C-TPAT
          (Customs-Trade Partnership Against Terrorism) security recommendations
          and
          guidelines as outlined by the United States Bureau of Customs and Border
          Protection and to prohibit the freight carriage to be sub-contracted to
          any
          carrier that is not in compliance with the C-TPAT
          guidelines.  Flextronics shall promptly notify Customer if Flextronics
          becomes aware of any delay in shipment of Products under this Agreement.
          In the
          event of late delivery of more than (**) business days after
          the schedule delivery date solely caused by Flextronics, Flextronics shall
          expedite the shipment of such order upon Customer’s request and at Flextronic’;s
          solee expense.  (**).  The remedies set
          forth in this Section 5.1 are Customer’s sole and exclusive remedies with
          respect to a late delivery; (**).

         

        5.2.  Quantity
          Increases, Quantity Decreases and Shipment Schedule
          Changes.

         

        (a)  For
          any
          accepted purchase order, Customer may (i) increase the quantity of Products
          or
          (ii) reschedule the quantity of Products and their shipment date as provided
          in
          the flexibility tables attached as Exhibit 5.2(a) (each a “Flexibility
          Table”).

         

        Any
          decrease in quantity is considered a cancellation, unless the decreased
          quantity
          is rescheduled for delivery at a later date in accordance with the Flexibility
          Table.  Quantity cancellations are governed by the terms of Section
          5.3 below.  Any purchase order quantities increased or rescheduled
          pursuant to this Section 5.2 (a) may not be subsequently increased or
          rescheduled.

         

        (b)  All
          reschedules to push out delivery dates outside of the Flexibility Table
          require
          Flextronics’s prior written approval, which, in its sole discretion, may or may
          not be granted.  If Customer does not request prior approval from
          Flextronics for such reschedules, or if Customer and Flextronics do not
          agree in
          writing to specific terms with respect to any approved reschedule, then
          Customer
          will pay Flextronics the Monthly Charges for any such reschedule, calculated
          as
          of the first day in excess of the Flexibility Table for such reschedule
          for any
          Inventory and/or Special Inventory (whether in raw form or work in process)
          that
          was procured by Flextronics to support the original delivery schedule that
          is
          not used to manufacture Product pursuant to an accepted purchase order
          within
          thirty (30) days of the first day in excess of the Flexibility Table for
          such
          reschedule.  In addition, if Flextronics notifies Customer that such
          Inventory and/or Special Inventory has remained in Flextronics’s possession for
          more than ninety (90) days since the first day in excess of the Flexibility
          Table for such reschedule, then Customer agrees to immediately purchase
          any
          affected Inventory and/or Special Inventory upon receipt of the notice
          by paying
          the Affected Inventory Costs.  In addition, any fully configured and
          tested Products that have already been manufactured to support the original
          delivery schedule will be treated as cancelled as provided in Sections
          5.3 and
          5.4 below.

         

        (c)  Flextronics
          will use reasonable commercial efforts to meet any quantity increases,
          which are
          subject to Materials and capacity availability.  All reschedules or
          quantity increases outside of the Flexibility Table require Flextronics’s
          approval, which, in its sole discretion, may or may not be
          granted.  If Flextronics agrees to accept a reschedule to pull in a
          delivery date or an increase in quantities in excess of the Flexibility
          Table
          and if there are extra costs to meet such reschedule or increase, Flextronics
          will inform Customer for its acceptance and approval in advance.

         

        (d)  Any
          delays in the normal production or interruption in the workflow process
          caused
          by Customer's changes to the Specifications as mutually agreed upon in
          accordance with Section 2.2 or failure of Customer or its subcontractor
          after
          written notice specifying such failure to provide sufficient quantities
          or a
          reasonable quality level of Customer Controlled Materials where applicable
          to
          sustain the production schedule, will be considered a reschedule of any
          affected
          purchase orders for

         


        
          
            
            

          

          
            5

            
              

            

          

          
            
            

          

        


        (e)  purposes
          of this Section 5.2 for the period of such delay.  In addition,
          Customer shall be responsible for costs related to adjusting foreign currency
          hedging contracts due to changes in cash flows resulting from such
          delays

         

        (f)  For
          purposes of calculating the amount of Inventory and Special Inventory subject
          to
          subsection (b), the “Lead Time” shall be calculated as the Lead
          Time at the time of procurement of the Inventory and Special
          Inventory.

         

        5.3.  Cancellation
          of Orders and Customer Responsibility for Inventory.

         

        (a)  Customer
          may not cancel all or any portion of Product quantity of an accepted purchase
          order without Flextronics’s prior written approval, which, in its sole
          discretion, may or may not be granted.  If Customer does not request
          prior approval for cancellation, or if Customer and Flextronics do not
          agree in
          writing to specific terms with respect to any approved cancellation, then
          Customer will pay Flextronics Monthly Charges for any such cancellation,
          calculated as of the first day after such cancellation for any Inventory
          or
          Special Inventory (whether in raw form or work in process) procured by
          Flextronics to support the original delivery schedule.  In addition,
          if Flextronics notifies Customer that such Inventory and/or Special Inventory
          has remained in Flextronics’s possession for more than thirty (30) days since
          such cancellation, then Customer agrees to immediately purchase from Flextronics
          such Inventory and/or Special Inventory by paying the Affected Inventory
          Costs.  If any fully configured and tested Products have already been
          manufactured to support the original delivery schedule, then Customer agrees
          to
          immediately purchase from Flextronics such Products by paying the Affected
          Inventory Costs.   In addition, Flextronics shall calculate the
          cost or gain of unwinding any currency hedging contracts entered into by
          Flextronics to support the cancelled purchase order(s).  Should the
          unwinding result in a loss to Flextronics, Customer agrees to cover such
          loss
          amount for Flextronics immediately upon receipt of an invoice for such
          amount.  Should the unwinding result in a gain to Flextronics, a
          credit note will be immediately issued to Customer.

         

        (b)  If
          the
          forecast for any period is less than the previous forecast supplied over
          the
          same period, that amount will be considered canceled and Customer will
          be
          responsible for any Special Inventory purchased or ordered by Flextronics
          in
          accordance with Section 4.1 to support such amount.

         

        (c)  Products
          that have been ordered by Customer and that have not been picked up in
          accordance with the agreed upon shipment dates shall be considered cancelled
          and
          Customer will be responsible for such Products in the same manner as set
          forth
          above in Section 5.3(a).

         

        (d)  For
          purposes of calculating the amount of Inventory and Special Inventory subject
          to
          subsection (a), the “Lead Time” shall be calculated as the Lead
          Time at the time of (i) procurement of the Inventory and Special Inventory;
          (ii)
          cancellation of the purchase order or (iii) termination of this Agreement,
          whichever is longer.

         

        5.4.  Mitigation
          of Inventory and Special Inventory.  Prior to invoicing
          Customer for the amounts due pursuant to Sections 5.2 or 5.3, Flextronics
          will
          use reasonable commercial efforts for a period of thirty (30) days, to
          return
          unused Inventory and Special Inventory and to cancel pending orders for
          such
          inventory, and to otherwise mitigate the amounts payable by
          Customer.  Customer shall pay amounts due under this Section 5 within
          thirty (30) days of receipt of an invoice.  Flextronics will ship the
          Inventory and Special Inventory paid for by Customer under this Section
          5.4 to a
          location designated by Customer (subject to export or other government
          restrictions) promptly upon said payment by Customer.  Customer agrees
          to pay all reasonable freight, insurance, other shipping expenses (including
          without limitation any special packing expenses), taxes and duties in connection
          with such shipment.  In the event Customer does not pay within thirty
          (30) days, Flextronics will be entitled, subject to Customer’s prior written
          consent, not to be unreasonably withheld or delayed, to dispose of such
          Inventory and Special Inventory in a commercially reasonable manner and
          credit
          to Customer any monies received from third parties.  Flextronics shall
          then submit an invoice for the balance amount due and Customer agrees to
          pay
          said amount within thirty (30) days of its receipt of the invoice.

         

        5.5.  No
          Waiver.  Flextronics shall invoice Customer for any of
          the charges set forth herein within six (6) months of the date of shipment
          of
          Products or accrual of charges hereunder, as applicable.

         

        6.  PRODUCT
          ACCEPTANCE AND EXPRESS LIMITED WARRANTY

         

        6.1.  Product
          Acceptance.  The Products delivered by Flextronics will
          be inspected and tested as required by Customer within ten (10) days of
          receipt
          at the “ship to” location on the applicable purchase order.  If
          Products do not comply with the express limited warranty set forth in Section
          6.2 below, Customer has the right to reject such Products during said
          period.  If Flextronics delivers Products in excess of the quantity
          ordered by Customer, Customer has the right to reject such excess Products
          during said period.  If Flextronics delivers a Product that was not
          ordered by Customer, Customer has the right to reject such incorrect Product
          during said period.  Products not rejected during said period will be
          deemed accepted.  Customer may return defective Products, freight
          collect, after obtaining a return material authorization number from Flextronics
          to be displayed on the shipping container and completing a failure
          report.  Rejected Products will be promptly repaired or replaced, at
          Flextronics’s option, and returned freight pre-paid. Customer shall bear all
          reasonable costs and expenses associated with Products that have been returned
          to Flextronics for which there is no defect found.

         


        
          
            
            

          

          
            6

            
              

            

          

          
            
            

          

        


        6.2.  Express
          Limited Warranty.  This Section 6.2 sets forth
          Flextronics’s sole and exclusive warranty and Customer’s sole and exclusive
          remedies with respect to a breach by Flextronics of such warranty.

         

        (a)  Flextronics
          warrants that the Products will have been manufactured in accordance with
          the
          applicable Specifications and will be free from defects in workmanship
          for a
          period of (**) from the date of shipment.  In
          addition, Flextronics warrants that the Production Materials are in compliance
          with Environmental Regulations. 

         

        (b)  Notwithstanding
          anything else in this Agreement, this express limited warranty does not
          apply
          to, and Flextronics makes no representations or warranties whatsoever with
          respect to: (i) Materials and/or Customer Controlled Materials; (ii) defects
          resulting from the Specifications or the design of the Products; (iii)
          Product
          that has been abused, damaged, altered or misused by any person or entity
          after
          title passes to Customer; (iv) first articles, prototypes, pre-production
          units,
          test units or other similar Products; (v) defects resulting from tooling,
          designs or instructions produced or supplied by Customer, or (vi) the compliance
          of Materials (other than Production Materials) or Products with any
          Environmental Regulations.  Customer shall be liable for reasonable
          costs or expenses incurred by Flextronics for shipping, testing, repair
          or
          replacement of Products returned to Flextronics to the extent due to the
          foregoing exclusions to Flextronics’s express limited warranty.

         

        (c)  Upon
          any
          failure of a Product to comply with this express limited warranty, Flextronics’s
          sole obligation, and Customer's sole remedy, is for Flextronics, at its
          option,
          to promptly repair or replace such unit and return it to Customer freight
          prepaid.  Customer shall return Products (or components thereof)
          covered by this warranty freight collect after completing a failure report
          and
          obtaining a return material authorization number from Flextronics (not
          to be
          unreasonably withheld or delayed) to be displayed on the shipping
          container.  Customer shall bear all reasonable costs and expenses
          associated with Products that have been returned to Flextronics for which
          there
          is no defect found.  In addition, Flextronics will use commercially
          reasonable efforts to complete an initial failure analysis on all Products
          returned pursuant to Section 6.2, within fifteen (15) days of receipt of
          such
          Products.

         

        (d)  Customer
          will provide its own warranties directly to any of its end users or other
          third
          parties.  Customer will not pass through to end users or other third
          parties the warranties made by Flextronics under this
          Agreement.  Furthermore, Customer will not make any representations to
          end users or other third parties on behalf of Flextronics, and Customer
          will
          expressly indicate that the end users and third parties must look solely
          to
          Customer in connection with any problems, warranty claim or other matters
          concerning the Product.  For purposes of clarity, nothing in this
          subsection (d) limits Customer’s ability to return Products (or components
          thereof) to Flextronics which are covered by Flextronics’ warranty under this
          Agreement that end users have returned to Customer under Customer’s warranty to
          the end user.

         

        6.3.  Additional
          Warranties.  Flextronics warrants that the Products
          delivered to Customer shall be free and clear of all liens and similar
          encumbrances.

         

        6.4.  No
          Representations or Other Warranties.  EXCEPT AS EXPRESSLY
          SET FORTH HEREIN, FLEXTRONICS MAKES NO REPRESENTATIONS AND NO OTHER WARRANTIES
          OR CONDITIONS ON THE PERFORMANCE OF THE WORK, OR THE PRODUCTS, EXPRESS,
          IMPLIED,
          STATUTORY, OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR COMMUNICATION
          WITH
          CUSTOMER, AND FLEXTRONICS SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OR
          CONDITION OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
          NON-INFRINGEMENT.  EXCEPT AS EXPRESSLY SET FORTH HEREIN, CUSTOMER
          MAKES NO REPRESENTATIONS AND NO OTHER WARRANTIES OR CONDITIONS RELATED
          TO THIS
          AGREEMENT, EXPRESS, IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION OF THIS
          AGREEMENT OR COMMUNICATION WITH FLEXTRONICS, AND CUSTOMER SPECIFICALLY
          DISCLAIMS
          ANY IMPLIED WARRANTY OR CONDITION OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
          PURPOSE OR NON-INFRINGEMENT.

         

        7.  INTELLECTUAL
          PROPERTY LICENSES

         

        7.1.  Licenses.  Customer
          hereby grants Flextronics a non-exclusive, non-transferable, non-sublicensable
          (except to Flextronics’s Affiliates, to the extent necessary for Flextronics to
          perform its obligations under this Agreement during the term of this Agreement),
          limited license during the term of this Agreement to use Customer's patents,
          trade secrets and other intellectual property solely to manufacture, assemble
          and test Products as necessary to perform Flextronics’s obligations under this
          Agreement during the term of this Agreement.

         

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

         

        7.3.  Ownership
          of Specifications and Designs.  Customer
          will be the sole and exclusive owner of all right, title and interest
          (including, without limitation, all intellectual property rights) in and
          to the
          Specifications, the design of the Products, the Consigned Equipment and
          any
          processes or technology provided by Customer to Flextronics.  The
          Parties agree

         


        
          
            
            

          

          
            7

            
              

            

          

          
            
            

          

        


        7.4.  that
          any
          material development by Flextronics of:  (a) Specifications or
          improvements thereto, (b) the design of the Products or improvements thereto,
          or
          (c) improvements to any Consigned Equipment, processes or technology provided
          by
          Customer to Flextronics (collectively, “Flextronics Improvements”), shall be
          beyond the scope of this Agreement, and any such material development shall
          be
          performed by Flextronics pursuant to a separate written agreement between
          the
          Parties.  Such written agreement shall include an agreement by
          Flextronics that, upon Flextronics’s receipt of Customer’s payment of mutually
          agreed upon fees for the applicable design services, all Flextronics
          Improvements made or conceived by Flextronics during the course of performing
          the design services will be assigned to Customer, subject to Flextronics’s
          ownership in its know how, design tools, methodologies, software, algorithms,
          or
          other means that may be used to design, manufacture, assemble or test
          products.  Except with respect to such Flextronics Improvements,
          Customer will be the sole and exclusive owner of (and Flextronics hereby
          assigns
          and agrees to assign to Customer) all right, title and interest (including,
          without limitation, all intellectual property rights) in and to any improvements
          developed during the term of this Agreement to the Specifications, the
          design of
          the Products, the Consigned Equipment and any processes or technology provided
          by Customer to Flextronics.

         

        8.  TERM
          AND TERMINATION

         

        8.1.  Term.  The
          term of this Agreement shall commence on the date hereof above and shall
          continue for five (5) years thereafter until terminated as provided in
          Section
          8.2 (Termination) or 10.12 (Force Majeure). After the expiration of the
          initial
          term hereunder (unless this Agreement has been terminated), this Agreement
          shall
          be automatically renewed for separate but successive one-year terms unless
          either party provides written notice to the other party that it does not
          intend
          to renew this Agreement one (1) year or more prior to the end of any
          term.

         

        8.2.  Termination.  This
          Agreement may be terminated by either party (a) for convenience upon
(**) prior written notice to the other party, but in no event
          shall any such termination notice be provided before(**) of
          this Agreement, (b) if the other party defaults in any
          material payment to the terminating party and such default continues without
          a
          cure for a period of fifteen (15) days after the delivery of written notice
          thereof by the terminating party to the other party, (c) if the other party
          defaults in the performance of any other material term or condition of
          this
          Agreement and such default continues unremedied for a period of thirty
          (30) days
          after the delivery of written notice thereof by the terminating party to
          the
          other party, or (d) pursuant to Section 10.12 (Force Majeure).

         

        8.3.  Effect
          of Expiration or Termination.  Expiration or termination
          of this Agreement under any of the foregoing provisions: (a) shall not
          affect
          the amounts due under this Agreement by either party that exist as of the
          date
          of expiration or termination, and (b) as of such date the provisions of
          Sections
          5.2, 5.3, and 5.4 shall apply with respect to payment and shipment to Customer
          of finished Products, Inventory, and Special Inventory in existence as
          of such
          date, and (c) shall not affect Flextronics’s express limited warranty in Section
          6.2 above.  Sections 1, 3.5, 3.6, 4, 5.2, 5.3, 5.4, 6.2, 6.3, 6.4, 7,
          8, 9, and 10 shall be the only terms that shall survive any termination
          or
          expiration of this Agreement.

         

        9.  INDEMNIFICATION;
          LIABILITY LIMITATION

         

        9.1.  Indemnification
          by Flextronics.  Flextronics agrees to
          defend, indemnify and hold harmless, Customer and its Affiliates, and all
          directors, officers, employees, and agents (each, a “Customer
          Indemnitee”) from and against all claims, actions, losses, expenses,
          damages or other liabilities, including reasonable attorneys’ fees
          (collectively, “Damages”) incurred by or assessed against any
          of the foregoing, but solely to the extent the same arise out of third-party
          claims relating to:

         

        (a)  any
          actual or threatened injury or damage to any person or property caused,
          or
          alleged to be caused, by a Product sold by Flextronics to Customer hereunder,
          but solely to the extent such injury or damage has been caused by the breach
          by
          Flextronics of its express limited warranties related to Flextronics’s
          workmanship and manufacture in accordance with the Specifications only
          as
          further set forth in Section 6.2;

         

        (b)  any
          infringement of the intellectual property rights of any third party but
          solely
          to the extent that such infringement is caused by a process that Flextronics
          uses to manufacture, assemble and/or test the
          Products.  Notwithstanding the foregoing, Flextronics shall not have
          any obligation to indemnify Customer to the extent such infringement arises
          from
          Flextronics’s compliance with the Specifications or specific Customer
          instructions for the manufacture, assembly or test of the Product, provided
          that
          such claim would not have arisen but for such compliance.

         

        (c)  noncompliance
          with any Environmental Regulations but solely to the extent that such
          non-compliance is caused by a process or Production Materials that Flextronics
          uses to manufacture, assemble and/or test the
          Products.  Notwithstanding the foregoing, Flextronics shall not have
          any obligation to indemnify Customer to the extent such noncompliance arises
          from Flextronics’s compliance with the Specifications or specific Customer
          instructions for the manufacture, assembly or test of the Product, provided
          that
          such claim would not have arisen but for such compliance.

         

        9.2.  Indemnification
          by Customer. Customer agrees to defend, indemnify
          and hold harmless, Flextronics and Flextronics Affiliates, and all directors,
          officers, employees and agents (each, a “Flextronics
          Indemnitee”) from and against

         


        
          
            
            

          

          
            8

            
              

            

          

          
            
            

          

        


        9.3.  all
          Damages incurred by or assessed against any of the foregoing to the extent
          the
          same arise out of third-party claims relating to:

         

        (a)  any
          failure of any Product (and any Materials contained therein) sold by Flextronics
          hereunder to comply with any safety standards and/or Environmental Regulations,
          except to the extent such failure is the responsibility of Flextronics
          pursuant
          to Section 9.1(c) above;

         

        (b)  any
          actual or threatened injury or damage to any person or property caused,
          or
          alleged to be caused, by a Product sold by Flextronics to Customer hereunder,
          but solely to the extent such injury or damage has not been caused by
          Flextronics’s breach of its express limited warranties related to Flextronics’s
          workmanship and manufacture in accordance with the Specifications only
          as
          further set forth in Section 6.2 hereof; or

         

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

         

        9.4.  Procedures
          for Indemnification.  With respect to
          any third-party claims, either party shall give the other party prompt
          notice of
          any third-party claim and cooperate with the indemnifying party at its
          expense.  The indemnifying party shall have the right to assume the
          defense (at its own expense) of any such claim through counsel of its own
          choosing by so notifying the party seeking indemnification within thirty
          (30)
          calendar days of the first receipt of such notice.  The party seeking
          indemnification shall have the right to participate in the defense thereof
          and
          to employ counsel, at its own expense, separate from the counsel employed
          by the
          indemnifying party.  The indemnifying party shall not, without the
          prior written consent of the indemnified party, agree to the settlement,
          compromise or discharge of such third-party claim.

         

        9.5.  Sale
          of Products Enjoined. Should the use of any Products be enjoined
          for a cause stated in Section 9.1(b) or 9.2(c) above, or in the event the
          indemnifying party desires to minimize its liabilities under this Section
          9, in
          addition to its indemnification obligations set forth in this Section 9,
          the
          indemnifying party’s responsibility is to either substitute a fully equivalent
          Product or process (as applicable) not subject to such injunction, modify
          such
          Product or process (as applicable) so that it no longer is subject to such
          injunction, or obtain the right to continue using the enjoined process
          or
          Product (as applicable).  In the event that the use of any Products be
          enjoined for a cause stated in Section 9.1(b) or 9.2(c) above and any of
          the
          foregoing remedies cannot be effected on commercially reasonable terms,
          then,
          all accepted purchase orders and the current forecast for such Products
          will be
          considered cancelled and Customer shall purchase all Products, Inventory
          and
          Special Inventory as provided in Sections 5.3 and 5.4
          hereof. Any changes to any Products or process must be
          made in accordance with Section 2.2 above; provided that any changes due
          to a
          cause stated in Section 9.1(b) shall be at Flextronics’
expense.  Notwithstanding the foregoing, in the event that a third
          party makes an infringement claim, but does not obtain an injunction, the
          indemnifying party shall not be required to substitute a fully equivalent
          Product or process (as applicable) or modify the Product or process (as
          applicable) if the indemnifying party obtains an opinion from competent
          patent
          counsel reasonably acceptable to the other party that such Product or process
          is
          not infringing or that the patents alleged to have been infringed are
          invalid.  This Section 9.4 shall not be construed to limit either
          party’s obligations pursuant to Sections 9.1 and 9.2.

         

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

         

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

         

        10.  MISCELLANEOUS

         

        10.1.  Confidentiality.  Each
          party shall refrain from using any and all Confidential Information of
          the
          disclosing party for any purposes or activities other than those specifically
          authorized in this Agreement.  Except as otherwise specifically
          permitted herein or pursuant to written permission of the party to this
          Agreement owning the Confidential Information, no party shall disclose
          or
          facilitate disclosure of Confidential Information of the disclosing party
          to
          anyone without the prior written consent of the disclosing party, except
          to its
          employees and Flextronics Affiliates who need to know such information
          for
          carrying out the activities contemplated by this Agreement and who have
          agreed
          in writing to confidentiality terms that are no less restrictive than the
          requirements of this Section.  Notwithstanding the foregoing, the
          receiving party may disclose

         


        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        


        10.2.  Confidential
          Information of the disclosing party pursuant to a subpoena or other court
          process only (i) after having given the disclosing party prompt notice
          of the
          receiving party’s receipt of such subpoena or other process and (ii) after the
          receiving party has given the disclosing party a reasonable opportunity
          to
          oppose such subpoena or other process or to obtain a protective
          order.  Confidential Information of the disclosing party in the
          custody or control of the receiving party shall be promptly returned or
          destroyed, at the disclosing party’s option, upon the earlier of (i) the
          disclosing party's written request or (ii) termination of this
          Agreement.  The Specifications and any other information, including a
          formula, pattern, compilation, program, device, method, technique, or process,
          that derives independent economic value, actual or potential, from not
          being
          generally known to the public or other persons who can obtain economic
          value
          from its disclosure or use that is disclosed by Customer pursuant to this
          Agreement shall be maintained confidential for the term of this Agreement
          and
          thereafter in perpetuity.  All other Confidential Information
          disclosed pursuant to this Agreement shall be maintained confidential for
          the
          term of this Agreement and for a period of three (3) years after its expiration
          or termination.  The terms of this Agreement shall be confidential in
          perpetuity, provided that either party may disclose the terms of this Agreement
          (A) as required by applicable securities laws, including, without limitation,
          requirements to file a copy of this Agreement (redacted to the extent reasonably
          permitted by applicable law) or to disclose information regarding the provisions
          hereof or performance hereunder to applicable regulatory authorities; (B)
          in
          confidence, to legal counsel; (C) in confidence, to accountants, banks,
          and
          financing sources and their advisors; (D) in confidence, to a potential
          acquirer; and (E) in connection with the enforcement of this Agreement
          or any
          rights hereunder.

         

        10.3.  Use
          of Name is Prohibited.  Customer may not use
          Flextronics’s name or identity or any other Confidential Information in any
          advertising, promotion or other public announcement without the prior express
          written consent of Flextronics.  Flextronics may not use Customer’s
          name or identity or any other Confidential Information in any advertising,
          promotion or other public announcement without the prior express written
          consent
          of Customer.

        


        10.4.  Specifications
          Safeguards.  Flextronics acknowledges and agrees that the
          Specifications are not publicly available and are of significant value
          to
          Customer as trade secrets.  Notwithstanding anything to the contrary
          herein and in addition to the obligations set forth in Section 10.1, Flextronics
          shall comply with the following restrictions and obligations with regard
          to the
          access, use and security of the Specifications:

         

        (a)  Flextronics
          shall designate a management-level Flextronics employee (the
“Responsible Manager”) who shall have responsibility for
          preserving the security of the Specifications at all times.

         

        (b)  The
          Responsible Manager shall authorize Flextronics employees to access the
          Specifications (whether physically or through computer system access) solely
          on
          a “need to know” basis (referred to herein collectively, including the
          Responsible Manager, as “Authorized
          Personnel”).  Flextronics shall not allow anyone other than
          Authorized Personnel to have access to the Specifications at any
          time.  No Authorized Personnel shall have access to the Specifications
          unless and until he or she has been apprised of and acknowledges the
          confidential and proprietary nature of the Specifications and has been
          trained
          with respect to the procedures designed to preserve its confidentiality,
          and is
          subject to a binding and enforceable obligation neither to use the
          Specifications (other than for purposes expressly permitted by this Agreement)
          nor to disclose the Specifications to any person other than a person similarly
          authorized to access such materials.

         

        (c)  To
          the
          extent the Specifications are stored electronically in an information processing
          system, such system shall meet the following requirements:  (i) such
          system will have password-controlled access; (ii) each user will have a
          unique
          user id and associated password; (iii) only Authorized Personnel shall
          be issued
          password access; (iv) each such password will be randomly selected and
          nonobvious; and (v) displaying and printing of passwords will be either
          inhibited or masked.

         

        (d)  The
          Responsible Manager shall maintain a record of all persons who have access
          to
          the Specifications and the computer system shall maintain a record of each
          time
          a user accessed the Specifications and the id of such
          user.  Flextronics shall record and investigate all unauthorized
          attempts to gain access to the Specifications and shall promptly notify
          Customer
          of any loss, theft, or unauthorized use or disclosure of the
          Specifications.  Flextronics shall make such records available to
          Customer at Customer’s request.

         

        (e)  Flextronics
          shall conduct periodic reviews to ensure compliance with the foregoing
          security
          requirements.  Customer shall have the right to conduct a review to
          ensure compliance with the foregoing security restrictions, including an
          interview of the Responsible Manager and inspection of the records maintained
          by
          Flextronics pursuant to subsection (d) above, on three (3) business days’
written notice.

         

        10.5.  (**).

         

        10.6.  Injunctive
          Relief.  Flextronics agrees that, due to the unique
          nature of the Customer’s Confidential Information, the unauthorized disclosure
          or use of such Confidential Information of Discloser will cause irreparable
          harm
          and significant injury to Customer, the extent of which is difficult to
          ascertain and for which there will be no adequate remedy at
          law.  Accordingly, Flextronics agrees that Customer, in addition to
          any other available remedies, shall have the right to seek an

         


        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        


        10.7.  immediate
          injunction and other equitable relief enjoining any breach or threatened
          breach
          of Sections 10.1, 10.3 or 10.4 of this Agreement.  Flextronics shall
          notify Customer in writing immediately upon becoming aware of any such
          breach or
          threatened breach.

         

        10.8.  Compliance
          with Laws.  Each party shall comply with all federal,
          state, local and foreign laws, rules and regulations applicable to such
          party’s
          performance under this Agreement.  Without limiting the foregoing,
          Flextronics shall obtain and maintain during the term of this Agreement
          all
          local permits, licenses, approvals and registrations in the country of
          the
          Flextronics Facility that are required for its performance under this
          Agreement.  To the extent that Customer has to obtain any local
          permits, licenses, approvals and registrations in the country of the Flextronics
          Facility, Flextronics shall fully cooperate with Customer in order to assist
          Customer to file any documentation with or obtain any such permits, licenses,
          approvals and registrations from the appropriate governmental
          authorities.

         

        10.9.  Entire
          Agreement; Severability.  This Agreement constitutes the
          entire agreement between the Parties with respect to the transactions
          contemplated hereby and supersedes all prior agreements and understandings
          between the parties relating to such transactions.    If the
          scope of any of the provisions of this Agreement is too broad in any respect
          whatsoever to permit enforcement to its full extent, then such provisions
          shall
          be enforced to the maximum extent permitted by law, and the parties hereto
          consent and agree that such scope may be judicially modified accordingly
          and
          that the whole of such provisions of this Agreement shall not thereby fail,
          but
          that the scope of such provisions shall be curtailed only to the extent
          necessary to conform to law.

         

        10.10.  Amendments;
          Waiver.  This Agreement may be amended only by written
          consent of both parties. The failure by either party to enforce any provision
          of
          this Agreement will not constitute a waiver of future enforcement of that
          or any
          other provision.  Neither party will be deemed to have waived any
          rights or remedies hereunder unless such waiver is in writing and signed
          by a
          duly authorized representative of the party against which such waiver is
          asserted.

         

        10.11.  Independent
          Contractor.  Neither party shall, for any purpose, be
          deemed to be an agent of the other party and the relationship between the
          parties shall only be that of independent contractors.  Neither party
          shall have any right or authority to assume or create any obligations or
          to make
          any representations or warranties on behalf of any other party, whether
          express
          or implied, or to bind the other party in any respect whatsoever.

         

        10.12.  Expenses.  Each
          party shall pay their own expenses in connection with the negotiation of
          this
          Agreement.    All fees and expenses incurred in connection
          with the resolution of Disputes shall be allocated as further provided
          in
          Section 10.15 below.

         

        10.13.  Insurance.  Flextronics
          and Customer agree to maintain appropriate insurance to cover their respective
          risks under this Agreement with coverage amounts commensurate with levels
          in
          their respective markets.  Customer specifically agrees to maintain
          insurance coverage for any finished Products or Materials the title and
          risk of
          loss of which passes to Customer pursuant to this Agreement and which is
          stored
          on the premises of Flextronics.

         

        10.14.  Force
          Majeure.  In the event that either party is prevented
          from performing or is unable to perform any of its obligations under this
          Agreement (other than a payment obligation) due to any act of God, acts
          or
          decrees of governmental or military bodies, fire, casualty, flood, earthquake,
          war, strike, lockout, epidemic, destruction of production facilities, riot,
          insurrection, Materials unavailability beyond the reasonable control of
          the
          party invoking this section, or any other cause beyond the reasonable control
          of
          the party invoking this section and not due to such party’s gross negligence or
          willful misconduct (collectively, a “Force Majeure”), and if
          such party shall have used its commercially reasonable efforts to mitigate
          its
          effects, such party shall give prompt written notice to the other party,
          its
          performance shall be excused, and the time for the performance shall be
          extended
          for the period of delay or inability to perform due to such
          occurrences.  Regardless of the excuse of Force Majeure, if such party
          is not able to perform within ninety (90) days after such event, the other
          party
          may terminate the Agreement.

         

        10.15.  Successors,
          Assignment.  This Agreement shall be binding upon and
          inure to the benefit of the parties hereto and their respective successors,
          permitted assigns and legal representatives.  Neither party shall have
          the right to assign or otherwise transfer its rights or obligations under
          this
          Agreement except with the prior written consent of the other party, not
          to be
          unreasonably withheld; provided, however, either party may assign or otherwise
          transfer its rights and obligations under this Agreement without the prior
          written consent of the other party solely in connection with a merger,
          consolidation, corporate reorganization, sale of all or substantially all
          of
          such party’s assets of the business to which this Agreement relates, sale of all
          or substantially all of such party’s stock, or similar
          event.  Notwithstanding the foregoing, Flextronics may assign some or
          all of its rights and obligations under this Agreement to a Flextronics
          Affiliate.

         

        10.16.  Notices.  All
          notices required or permitted under this Agreement will be in writing and
          will
          be deemed received (a) when delivered personally; (b) when sent by confirmed
          facsimile; (c) five (5) days after having been sent by registered or certified
          mail, return receipt requested, postage prepaid; or (d) one (1) day after
          deposit with a commercial

         


        
          
            
            

          

          
            11

            
              

            

          

          
            
            

          

        


        10.17.  overnight
          carrier.  All communications will be sent to the addresses set forth
          above or to such other address as may be designated by a party by giving
          written
          notice to the other party pursuant to this section.

         

        10.18.  Disputes
          Resolution; Waiver of Jury Trial.

         

        (a)  Except
          as
          otherwise provided in this Agreement or for actions for injunctive or other
          equitable relief (which may be brought in any court of competent jurisdiction),
          the following binding dispute resolution procedures shall be the exclusive
          means
          used by the parties to resolve all disputes, differences, controversies
          and
          claims arising out of or relating to the Agreement or any other aspect
          of the
          relationship between Flextronics and Customer or their respective Affiliates
          (collectively, “Disputes”).  Either party may, by
          written notice to the other party, refer any Disputes for resolution in
          the
          manner set forth below.

         

        (b)  Any
          and
          all Disputes shall be referred to arbitration under the Comprehensive
          Arbitration Rules and Procedures of JAMS, who shall act as the arbitration
          administrator (the “Arbitration Administrator”).

         

        (c)  The
          parties shall agree on a single arbitrator (the
“Arbitrator”).  The Arbitrator shall be a retired
          judge selected by the parties from a roster of arbitrators provided by
          the
          Arbitration Administrator. If the parties cannot agree on an Arbitrator
          within
          seven (7) days of delivery of the demand for arbitration
          (“Demand”) (or such other time period as the parties may
          agree), the Arbitration Administrator will select an independent
          Arbitrator.

         

        (d)  Unless
          otherwise mutually agreed to by the parties, the place of arbitration shall
          be
          San Jose, California.

         

        (e)  The
          Federal Arbitration Act shall govern the arbitrability of all
          Disputes.  The Federal Rules of Civil Procedure and the Federal Rules
          of Evidence (the “Federal Rules”), to the extent not
          inconsistent with this Agreement or the Comprehensive Arbitration Rules
          and
          Procedures of JAMS, govern the conduct of the arbitration.  To the
          extent that the Federal Arbitration Act and Federal Rules and the Comprehensive
          Arbitration Rules and Procedures of JAMS do not provide an applicable procedure,
          California law shall govern the procedures for arbitration and enforcement
          of an
          award, and then only to the extent not inconsistent with the terms of this
          Section.  Disputes between the parties shall be subject to arbitration
          notwithstanding that a party to this Agreement is also a party to a pending
          court action or special proceeding with a third party, arising out of the
          same
          transaction or series of related transactions and there is a possibility
          of
          conflicting rulings on a common issue of law or fact.

         

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

         

        (i)  Non-Expert
          Discovery.  Each party may (1) conduct three (3) non-expert
          depositions of no more than five (5) hours of testimony each, with any
          deponents
          employed by any party to appear for deposition in San Jose, California;
          (2)
          propound a single set of requests for production of documents containing
          no more
          than twenty (20) individual requests; (3) propound up to twenty written
          interrogatories; and (4) propound up to ten (10) requests for
          admission.

         

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

         

        (iii)           Additional
          Discovery.  The Arbitrator may, on application by either party,
          authorize additional discovery only if deemed essential to avoid
          injustice.  In the event that remote witnesses might otherwise be
          unable to attend the arbitration, arrangements shall be made to allow their
          live
          testimony by video conference during the arbitration hearing.

         

        (g)  The
          Arbitrator shall render an award within six (6) months after the date of
          appointment, unless the parties agree to extend such time. The award shall
          be
          accompanied by a written opinion setting forth the findings of fact and
          conclusions of law.  The Arbitrator shall have authority to award
          compensatory damages only, and shall not award any punitive, exemplary,
          or
          multiple damages.  The award (subject to clarification or correction
          by the arbitrator as allowed by statute and/or the Federal Rules and/or
          the
          Comprehensive Arbitration Rules and Procedures of JAMS) shall be final
          and
          binding upon the parties, subject solely to the review procedures provided
          in
          this Section.

         

        (h)  Either
          party may seek arbitral review of the award pursuant to the JAMS Optional
          Arbitration Appeal Procedure.  Arbitral review may be had as to any
          element of the award as allowed by the JAMS Optional Arbitration Appeal
          Procedure.

         

        (i)  This
          Agreement’s arbitration provisions are to be performed in San Jose,
          California.  Except for actions for injunctive or other equitable
          relief (which may be brought in any court of competent jurisdiction), any
          judicial proceeding arising out of or relating to this Agreement or the
          relationship of the parties, including without limitation any proceeding
          to
          enforce this Section or to review or confirm the award in arbitration,
          shall be
          brought exclusively in a court of competent jurisdiction in the county
          of Santa
          Clara, California (the “Enforcing Court”).  Any
          judgment of the Enforcing Court may be enforced any court of competent
          jurisdiction.  By execution and delivery of this Agreement, each party
          accepts the jurisdiction of the Enforcing Court.

         


        
          
            
            

          

          
            12

            
              

            

          

          
            
            

          

        


        (j)  Each
          party shall pay their own expenses in connection with the resolution of
          Disputes
          pursuant to this Section, including attorneys’ fees.

         

        (k)  Notwithstanding
          anything contained in this Section to the contrary, in the event of any
          Dispute,
          prior to referring such Dispute to arbitration pursuant to Subsection (b)
          of
          this Section, Customer and Flextronics shall attempt in good faith to resolve
          any and all controversies or claims relating to such Disputes promptly
          by
          negotiation commencing within ten (10) calendar days of the written notice
          of
          such Disputes by either party, including referring such matter to Customer’s
          then-current President and Flextronics’s then current executive in charge of
          manufacturing operations in the region in which the primary activities
          of this
          Agreement are performed by Flextronics.  The representatives of the
          parties shall meet at a mutually acceptable time and place and thereafter
          as
          often as they reasonably deem necessary to exchange relevant information
          and to
          attempt to resolve the Dispute for a period of four (4) weeks.  In the
          event that the parties are unable to resolve such Dispute pursuant to this
          Subsection (k), the provisions of Subsections (a) through (j) of this Section,
          inclusive, as well as Subsections (l), (m) and (n) of this Section shall
          apply.

         

        (l)  The
          parties agree that the existence, conduct and content of any arbitration
          pursuant to this Section shall be kept confidential and no party shall
          disclose
          to any person any information about such arbitration, except (i) as may
          be
          required by law or by any governmental authority or for financial reporting
          purposes in each party’s financial statements, or (ii) solely with respect to
          the existence of the arbitration, to Flextronics’s suppliers or Customer’s
          suppliers who need to know such information for carrying out the activities
          related to this Agreement, or to Customer’s customers who need to know such
          information because the orders such customers have placed with Customer
          are
          directly affected by such arbitration.

         

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

         

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

         

        10.19.  Even-Handed
          Construction.  The terms and conditions as set forth in
          this Agreement have been arrived at after mutual negotiation, and it is
          the
          intention of the parties that its terms and conditions not be construed
          against
          any party merely because it was prepared by one of the parties.

         

        10.20.  Controlling
          Language.  This Agreement is in English only, which
          language shall be controlling in all respects. All documents exchanged
          under
          this Agreement shall be in English.

         

        10.21.  Controlling
          Law.  This Agreement shall be governed and construed in
          all respects in accordance with the domestic laws and regulations of the
          State
          of California, without regard to its conflicts of laws provisions; except
          to the
          extent there may be any conflict between the law of the State of California and
          the Incoterms of the
          International Chamber of Commerce, 2000 edition, in which case the Incoterms
          shall be controlling.  The parties specifically agree that the 1980
          United Nations Convention on Contracts for the International Sale of Goods,
          as
          may be amended from time to time, shall not apply to this Agreement.  The
          parties further acknowledge and confirm that the selection of the governing
          law
          is a material term of this Agreement.

         

        10.22.  Counterparts.  This
          Agreement may be executed in counterparts.

         

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

         

        CUSTOMER:                                                                                     FLEXTRONICS:

        
 

         

        By:                                                                   
          By:                                                                

         

        Title:                                                                Title:                                                                

         


        
          
            
            

          

          
            13

            
              

            

          

          
            
            

          

        


        Exhibit
          1

         

        Definitions

        [*CONFIDENTIAL
          MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT IS INDICATED
          WITHIN
          THIS EXHIBIT BY THE USE OF THE FOLLOWING (**)]

        


        
          	
                  “Affected
                    Inventory Costs”

                	
                  shall
                    mean: (i) (**) of the Cost of all affected Inventory and
                    Special Inventory in Flextronics’s possession and not returnable to the
                    vendor or reasonably usable for other customers, whether in raw
                    form or
                    work in process, less the salvage value thereof, (ii)
                    (**)of the Cost of all affected Inventory and Special
                    Inventory on order and not cancelable, (iii) any reasonable vendor
                    cancellation charges incurred with respect to the affected Inventory
                    and
                    Special Inventory accepted for cancellation or return by the
                    vendor, (iv)
                    the then current fees for any affected Product, and (v) expenses
                    reasonably incurred by Flextronics related to labor and equipment
                    specifically put in place to support the purchase orders and
                    forecasts
                    that are affected by such reschedule or cancellation (as
                    applicable).

                
	
                  “Affiliate”

                	
                  shall
                    mean, with respect to a party, a corporation, partnership or
                    other entity
                    controlling, controlled by or under common control with such
                    party, but
                    only so long as such control continues to exist.  For purposes
                    of this definition, “control” means ownership, directly or indirectly, of
                    at least fifty percent (50%) of the voting rights in such entity
                    (or, in
                    the case of a noncorporate entity, equivalent rights).

                
	
                  “Approved
                    Vendor List” or “AVL”

                	
                  shall
                    mean the list of suppliers currently approved to provide the
                    Materials
                    specified in the bill of materials for a Product.

                
	
                  “Confidential
                    Information”

                	
                  shall
                    mean (a) the terms of this Agreement and all information concerning
                    the
                    unit number and fees for Products and Inventory/Special Inventory,
                    (b) the
                    Specifications and (c) any other information that is marked “Confidential”
                    or the like or, if delivered verbally, confirmed in writing to
                    be
                    “Confidential” within 30 days of the initial disclosure, or provided under
                    circumstances reasonably indicating it is
                    confidential.  Confidential Information does not include
                    information that (i) the receiving party can prove it already
                    knew at the
                    time of receipt from the disclosing party; or (ii) has come into
                    the
                    public domain without breach of confidence by the receiving party;
                    (iii)
                    was received from a third party without restrictions on its use;
                    (iv) the
                    receiving party can prove it independently developed without
                    use of or
                    reference to the disclosing party's data or information; or (v)
                    the
                    disclosing party agrees in writing is free of such
                    restrictions.

                
	
                  “Cost”

                	
                  shall
                    mean the cost represented on the bill of materials supporting
                    the most
                    current fees for Products at the time of cancellation, expiration
                    or
                    termination, as applicable.

                
	
                  “Customer
                    Controlled Materials”

                	
                  shall
                    mean those Materials provided by Customer or by suppliers with
                    whom
                    Customer has a commercial contractual or non-contractual
                    relationship.

                
	
                  “Customer
                    Controlled Materials

                    Terms”

                	
                  shall
                    mean the terms and conditions that Customer has negotiated with
                    its
                    suppliers for the purchase of Customer Controlled Materials that
                    Customer
                    directs Flextronics to purchase.

                
	
                  “Customer
                    Indemnitees”

                	
                  shall
                    have the meaning set forth in Section
                    9.1.

                


        


        
          
            
            

          

          
            14

            
              

            

          

          
            
            

          

        


        


        
          	
                  “Damages”

                	
                  shall
                    have the meaning set forth in Section 9.1.

                
	
                  “Disputes”

                	
                  shall
                    have the meaning set forth in Section 10.15(a)

                
	
                  “Economic
                    Order Inventory”

                	
                  shall
                    mean Materials purchased in quantities, above the required amount
                    for
                    purchase orders, in order to achieve price targets for such
                    Materials.

                
	
                  “Engineering
                    Change Order” or “ECO”

                	
                  shall
                    have the meaning set forth in Section 2.2.

                
	
                  “Engineering
                    Change Request” or “ECR”

                	
                  shall
                    have the meaning set forth in Section 2.2.

                
	
                  “Environmental
                    Regulations”

                	
                  Shall
                    mean any hazardous substance content laws and regulations including,
                    without limitation, those related to the EU Directive 2002/95/EC
                    about the
                    Restriction of Use of Hazardous Substances (RoHS).

                
	
                  “Fee
                    List”

                	
                  shall
                    have the meaning set forth in Section 3.4.

                
	
                  “Flexibility
                    Table”

                	
                  shall
                    have the meaning set forth in Section 5.2.

                
	
                  “Flextronics
                    Indemnitee”

                	
                  shall
                    have the meaning set forth in Section 9.2.

                
	
                  “Force
                    Majeure”

                	
                  shall
                    have the meaning set forth in Section 10.12.

                
	
                  “Inventory”

                	
                  shall
                    mean any Materials that are used to manufacture Products that
                    are ordered
                    pursuant to a purchase order from Customer.

                
	
                  “Lead
                    Time(s)”

                	
                  shall
                    mean the Materials Procurement Lead Time plus the manufacturing
                    cycle time
                    required from the delivery of the Materials at Flextronics’s facility to
                    the completion of the manufacture, assembly and test
                    processes.

                
	
                  “Long
                    Lead Time Materials”

                	
                  shall
                    mean Materials with Lead Times exceeding the period covered by
                    the
                    accepted purchase orders for the Products.

                
	
                  “Materials”

                	
                  shall
                    mean components, parts and subassemblies that comprise the Product
                    and
                    that appear on the bill of materials for the Product.

                
	
                  “Materials
                    Procurement Lead Time”

                	
                  shall
                    mean with respect to any particular item of Materials, the longer
                    of (a)
                    lead time to obtain such Materials as recorded on Flextronics’s MRP system
                    or (b) the actual lead time, if a supplier has increased the
                    lead time but
                    Flextronics has not yet updated its MRP system.

                
	
                  “Minimum
                    Order Inventory”

                	
                  shall
                    mean Materials purchased in excess of requirements for purchase
                    orders
                    because of minimum lot sizes available from the
                    supplier.

                
	
                  “Monthly
                    Charges”

                	
                  shall
                    mean a finance carrying charge of (**) and a storage and
                    handling charge of (**), in each case of the Cost of the
                    Inventory and/or Special Inventory and/or of the fees for the
                    Product
                    affected by the reschedule or cancellation (as applicable) per
                    month until
                    such Inventory and/or Special Inventory and/or Product is returned
                    to the
                    vendor, used to manufacture Product or is otherwise purchased
                    by
                    Customer.

                
	
                  “NCNR”

                	
                  shall
                    mean non-cancellable and non-returnable.

                
	
                  “Product”

                	
                  shall
                    have the meaning set forth in Section
                    2.1.

                


        


        
          
            
            

          

          
            15

            
              

            

          

          
            
            

          

        


        


        
          	
                  “Production
                    Materials”

                	
                  shall
                    mean Materials that are consumed in the production processes
                    to
                    manufacture Products including without limitation, solder, epoxy,
                    cleaner
                    solvent, labels, flux, and glue.  Production Materials do not
                    include any such production materials that have been specified
                    by the
                    Customer or any Customer Controlled Materials.

                
	
                  “Special
                    Inventory”

                	
                  shall
                    mean any Long Lead Time Materials and/or Minimum Order Inventory
                    and/or
                    Economic Order Inventory.

                
	
                  “Specifications”

                	
                  shall
                    have the meaning set forth in Section 2.1.

                
	
                  “Work”

                	
                  shall
                    have the meaning set forth in Section
                    2.1.

                


        

        


         


        
          
            
            

          

          
            16

            
              

            

          

          
            
            

          

        


        EXHIBIT
          2.1

         

        SPECIFICATIONS

         

        Incorporated
          by reference only

         


        
          
            
            

          

          
            17

            
              

            

          

          
            
            

          

        


        EXHIBIT
          2.3

         

        CONSIGNED
          EQUIPMENT

         

        Incorporated
          by reference only

         


        
          
            
            

          

          
            18

            
              

            

          

          
            
            

          

        


        


         

        EXHIBIT
          3.4

         

        FEES
          LIST

         

        [*CONFIDENTIAL
          MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT IS INDICATED
          WITHIN
          THIS EXHIBIT BY THE USE OF THE FOLLOWING (**)]

        


         

        


         

        
          	
                  Cost
                    Model

                	 	 	
                  Rates

                	 
	 	 	 	 	 
	 	(	**)	 	 	(	**)%
	 	(	**)	 	$	(	**)
	 	(	**)	 	$	(	**)
	 	(	**)	 	 	(	**)%
	 	(	**)	 	 	(	**)%


        

        


         

        (**)

         

        


         

        


         


        
          
            
            

          

          
            19

            
              

            

          

          
            
            

          

        


        


         

        EXHIBIT
          5.2

         

        FLEXIBILITY
          TABLES

         

        [*CONFIDENTIAL
          MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT IS INDICATED
          WITHIN
          THIS EXHIBIT BY THE USE OF THE FOLLOWING (**)]

        


         

        200mm
          Base Systems:

         

        
          	
                  Maximum
                    Allowable Variance From Accepted Purchase Order Quantities/Shipment
                    Dates

                
	 	
                  Run
                    rate per quarter

                	 	 	 
	
                  #
                    of days before

                  Shipment
                    Date

                  on
                    Purchase Order

                	
                  <(**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  >(**)

                	
                  Allowable

                  Quantity

                  Increases
                    and Decreases

                	
                  Maximum

                  Reschedule

                  Quantity

                	
                  Maximum

                  Reschedule

                  Period

                
	
                  (**)

                	
                  (**)%

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	
                  (**)%

                	
                  (**)%

                	
                  (**)

                
	
                  (**)

                	
                  (**)%

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	
                  (**)%

                	
                  (**)%

                	
                  (**)

                
	
                  (**)

                	
                  (**)%

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	
                  (**)%

                	
                  (**)%

                	
                  (**)
                    days

                
	
                  (**)

                	
                  (**)%

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	
                  (**)%

                	
                  (**)%

                	
                  (**)days

                
	
                  >(**)

                	
                  (**)%

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
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                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	
                  (**)%

                	
                  (**)%

                	
                  (**)days

                


        

        


        


        300mm
          Base Systems:

         

        
          	
                  Maximum
                    Allowable Variance From Accepted Purchase Order Quantities/Shipment
                    Dates

                
	 	
                  Run
                    rate per quarter

                	 	 	 
	
                  #
                    of days before

                  Shipment
                    Date

                  on
                    Purchase Order

                	
                  <(**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  >(**)

                	
                  Allowable

                  Quantity

                  Increases
                    and Decreases

                	
                  Maximum

                  Reschedule

                  Quantity

                	
                  Maximum

                  Reschedule

                  Period

                
	
                  (**)

                	
                  (**)%

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	
                  (**)%

                	
                  (**)%

                	
                  (**)

                
	
                  (**)

                	
                  (**)%

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	
                  (**)%

                	
                  (**)%

                	
                  (**)

                
	
                  (**)

                	
                  (**)%

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	
                  (**)%

                	
                  (**)%

                	
                  (**)days

                


        


        
          
                  

                                pa-1199494              
    

            
            

          

          
            20

            
              

            

          

          
            
            

          

        


        


        
          	
                  (**)

                	
                  (**)%

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	
                  (**)%

                	
                  (**)%

                	
                  (**)days

                
	
                  >(**)

                	
                  (**)%

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	
                  (**)%

                	
                  (**)%

                	
                  (**)days

                


        

        


        


        Special
          Systems:

        


        
          	
                  Maximum
                    Allowable Variance From Accepted Purchase Order Quantities/Shipment
                    Dates

                
	 	
                  Run
                    rate per quarter

                	 	 	 
	
                  #
                    of days before

                  Shipment
                    Date

                  on
                    Purchase Order

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  >(**)

                	 	
                  Allowable

                  Quantity

                  Increases
                    and Decreases

                	
                  Maximum

                  Reschedule

                  Quantity

                	
                  Maximum

                  Reschedule

                  Period

                
	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	 	
                  (**)%

                	
                  (**)%

                	
                  (**)

                
	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	 	
                  (**)%

                	
                  (**)%

                	
                  (**)

                
	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	 	
                  (**)%

                	
                  (**)%

                	
                  (**)days

                
	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	 	
                  (**)%

                	
                  (**)%

                	
                  (**)
                    days

                
	
                  >(**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)

                	
                  (**)%

                	 	
                  (**)%

                	
                  (**)%

                	
                  (**)
                    days

                


        

        


        


        Other
          Products:

        


        
          	
                  Maximum
                    Allowable Variance From Accepted Purchase Order Quantities/Shipment
                    Dates

                
	
                  #
                    of days before

                  Shipment
                    Date

                  on
                    Purchase Order

                	
                  Allowable

                  Quantity

                  Increases
                    and Decreases

                	
                  Maximum

                  Reschedule

                  Quantity

                	
                  Maximum

                  Reschedule

                  Period

                
	
                  (**)

                	
                  (**)%

                	
                  (**)%

                	
                  (**)

                
	
                  (**)

                	
                  (**)%

                	
                  (**)%

                	
                  (**)

                
	
                  (**)

                	
                  (**)%

                	
                  (**)%

                	
                  (**)
                    days

                
	
                  (**)

                	
                  (**)%

                	
                  (**)%

                	
                  (**)
                    days

                


        

        


        



        
          
            
            

          

          
            21