Document:

exv10w1

Exhibit 10.1

Employment Agreement

     This Employment Agreement (the “Agreement”) dated as of February 4, 2009 (the
“Effective Date”), is made by and between Vought Aircraft Industries, Inc., a Delaware
corporation, (together with any successor thereto, the “Company”) and Mark Jolly (the
“Employee”).

RECITALS

	A.	 	It is the desire of the Company to assure itself of the services of the Employee by entering
into this Agreement.
	 
	B.	 	The Employee and the Company mutually desire that the Employee provide services to the
Company on the terms herein provided.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and
agreements set forth below the parties hereto agree as follows:

1. Employment.

	 	(a)	 	General. The Company shall employ the Employee and the Employee shall
enter the employ of the Company, for the period set forth in Section 1(b), in
the position set forth in Section 1(c), and upon the other terms and conditions
herein provided.
	 
	 	(b)	 	Employment Term. The initial term of employment under this Agreement
(the “Initial Term”) shall be for the period beginning on February 4, 2009 and
ending at the end of the day on February 4, 2010, unless earlier terminated as provided
in Section 3. The employment term hereunder shall automatically be extended
for successive one-year periods (“Extension Terms” and, collectively with the
Initial Term, the “Term”) unless either party gives notice of non-extension to
the other no later than ninety (90) days prior to the expiration of the then-applicable
Term and subject to earlier termination as provided in Section 3.
	 
	 	(c)	 	Position and Duties. The Employee shall serve as the Corporate
Controller of the Company with such customary responsibilities, duties, and authority
as may from time to time be assigned to the Employee by the Chief Financial Officer of
the Company or his designee. The Employee shall devote substantially all his working
time and efforts to the business and affairs of the Company (which may include service
to its Affiliates). The Employee agrees to observe and comply with the rules and
policies of the Company as adopted by the Company from time to time. During the Term,
it shall not be a violation of this Agreement for the Employee to (i) serve on industry
trade, civic or charitable boards or committees; (ii) deliver lectures or fulfill
speaking engagements; (iii) manage his personal investments and affairs; and (iv) serve
on the board of directors of for-profit enterprises with the Chief Financial Officer’s
prior consent, as long as such activities do not materially interfere with the
performance of the Employee’s duties and responsibilities as an employee of the
Company. During his employment and following termination of his employment with the
Company, (x) the Employee agrees not to disparage in any material respect the Company,
any of its products or practices, or any of its directors, officers, agents,
representatives, stockholders or Affiliates, either orally or in writing, and (y) the
Company agrees to disclose only mutually-agreed information regarding Employee’s
employment.

 

2. Compensation and Related Matters.

	 	(a)	 	Annual Base Salary. During the Term, the Employee shall receive a base
salary at a rate of $200,044.00 per annum (the “Annual Base Salary”), which
shall be paid in accordance with the customary payroll practices of the Company,
subject to adjustment as determined by the Company based upon periodic formal
merit/performance review and goal-setting processes.
	 
	 	(b)	 	Annual Bonus. During the Term, the Employee will be eligible to
receive annual bonuses based upon achieving annual financial plan, individual goals,
and organization metrics to be determined by the Board of Directors of the Company,
with a target bonus of 35% of Annual Base Salary for calendar year 2009, prorated for
actual service. Future bonus targets shall be subject to adjustment as determined by
the Board. The Employee is eligible to receive a guaranteed minimum payment of $75,000
under the 2009 management incentive compensation plan. Any annual bonus that becomes
payable pursuant to this Section 2(b) shall be paid no later than March 15th
of the year following the year in which such annual bonus is earned. Provided,
however, that if the Board shall determine that it is administratively impracticable,
which may include inability of the Company to gain certification of its financial
statements, to make such annual bonus payment by March 15th, any such
payment shall be made as soon as reasonably practicable after such period and in no
event later than December 31st of the year following the year for which such
annual bonus was earned.
	 
	 	(c)	 	Relocation Benefits. The Employee will receive relocation benefits as
described in the attached document entitled “Relocation Benefit Summary — Plan 2.”
During relocation, the Employee will be provided with local temporary housing and
return trips to the Employee’s previous home as needed.
	 
	 	(d)	 	Incentive Award Plan. The Employee will be granted an incentive award
of 2,500 Restricted Stock Units (RSUs) under the Company’s Incentive Award Plan. The
awards will be subject to vesting based upon the achievement of predefined Company
performance metrics, and shall be subject to such other terms and conditions as are set
forth in the agreements governing such awards.
	 
	 	(e)	 	Benefits. During the Term, the Employee shall be entitled to
participate in applicable employee benefit plans, programs and arrangements of the
Company, as may be amended from time to time, that are made available to eligible
employees of the Company.
	 
	 	(f)	 	Vacation. During the Term, the Employee shall be entitled to
participate in the Company’s vacation policy as follows: (i) upon commencement of
employment, the Employee will be credited with one hundred twenty (120) hours of
vacation time, and (ii) following his one-year anniversary date, the Employee will
begin to accrue additional vacation time at the rate applicable to employees with
fifteen or more years of service (currently 120 hours annually). Any vacation shall be
taken at the reasonable and mutual convenience of the Company and the Employee.

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	 	(g)	 	Expenses. During the Term, the Company shall reimburse the Employee
for all reasonable travel and other business expenses incurred by him in the
performance of his duties to the Company in accordance with the Company’s expense
reimbursement policy. To the extent that any reimbursements, including without
limitation any reimbursements pursuant to Section 2(c) above and/or pursuant to this
Section 2(g), are determined to constitute taxable compensation to the Employee, then
reimbursement requests with respect to such expenses must be timely submitted by the
Employee and, if timely submitted, such expenses shall be reimbursed no later than
December 31st of the year following the year in which the expense was
incurred. In no event shall the Employee be entitled to receive any such reimbursement
payments after December 31st of the year following the year in which the
expense was incurred. The amount of any such expenses reimbursed in one year shall not
affect the amount eligible for reimbursement in any subsequent year, except for the
reimbursement of medical expenses referred to in Section 105(b) of the Internal Revenue
Code of 1986, as amended (the “Code”), and the Employee’s right to
reimbursement of any such expenses shall not be subject to liquidation or exchange for
any other benefit.
	 
	 	(h)	 	Indemnification. The Employee shall be indemnified and held harmless
by the Company to the fullest extent authorized by the Company’s certificate of
incorporation or bylaws against all costs, expenses, liabilities and losses reasonably
incurred or suffered by the Employee with respect to any bona fide claim against the
Employee or the Company, where such claim is based on actions taken by the Employee in
good faith and in his capacity as an officer of the Company. Notwithstanding the
foregoing, no amounts shall be paid or advanced in accordance with this Section 2(h) to
the extent that any such amounts would fail to be exempt from the application of
Section 409A (as defined below) in accordance with Treasury Regulation 1.409A-1(b)(10).

3. Termination.

     The Employee’s employment hereunder may be terminated by the Company or the Employee, as
applicable, without any breach of this Agreement only under the following circumstances:

	 	(a)	 	Circumstances.

	 	(i)	 	Termination for Cause. The Company may terminate the
Employee’s employment for Cause.
	 
	 	(ii)	 	Termination without Cause. The Company may terminate
the Employee’s employment without Cause.
	 
	 	(iii)	 	Non-extension of Term by the Company. The Company may
give notice of non-extension to the Employee pursuant to 

Section
1(b). 
	 
	 	(iv)	 	Non-extension of Term by the Employee. The Employee
may give notice of non-extension to the Company pursuant to 

Section
1(b).
	 
	 	(v)	 	Resignation for Good Reason. The Employee may resign
his employment for Good Reason.
	 
	 	(vi)	 	Resignation without Good Reason. The Employee may
resign his employment without Good Reason.

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	 	(b)	 	Notice of Termination. Any termination of the Employee’s employment by
the Company or by the Employee under this Section 3 shall be communicated by a
written notice to the other party hereto indicating the specific termination provision
in this Agreement relied upon, setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee’s employment
under the provision so indicated, and specifying a Date of Termination which, for
terminations under paragraphs (a) (ii) or (vi), shall be at least sixty (60) days
following the date of such notice (a “Notice of Termination”); provided,
however, that the Company may, in its sole discretion, advance the Date of Termination
to any date following the Company’s receipt of the Notice of Termination. A Notice of
Termination (except pursuant to paragraph (a) (ii)) submitted by the Company may
provide for a Date of Termination on the date the Employee receives the Notice of
Termination, or any date thereafter elected by the Company in its sole discretion. The
failure by the Employee or the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Cause or Good Reason shall not
waive any right of the Employee or the Company hereunder or preclude the Employee or
the Company from asserting such fact or circumstance in enforcing the Employee’s or the
Company’s rights hereunder.
	 
	 	(c)	 	Company obligations upon termination. Upon termination of the
Employee’s employment, the Employee shall be entitled to receive the sum of the
Employee’s Annual Base Salary through the Date of Termination not theretofore paid; any
expenses owed to the Employee under Section 2(g), any accrued vacation pay owed
to the Employee pursuant to Section 2(f), and any amount accrued and arising
from the Employee’s participation in, or benefits accrued under any employee benefit
plans, programs or arrangements under Section 2(e), which amounts, if any,
shall be payable in accordance with the terms and conditions of such employee benefit
plans, programs or arrangements, and such other or additional benefits as may be, or
become, due to him under the applicable terms of applicable plans, programs,
agreements, corporate governance documents and other arrangements of the Company and
its subsidiaries (collectively, the “Company Arrangements”). The Employee
shall not be entitled to any other payments or benefits, except as specifically
provided in Section 4.

4. Severance Payments.

	 	(a)	 	Termination for Cause, Resignation by Employee Without Good Reason, or upon
Non-extension of Term by the Company or the Employee. If the Employee’s employment
shall be terminated by Company pursuant to Section 3(a)(i) for Cause, or by
Employee pursuant to Section 3(a)(vi) without Good Reason, or pursuant to
Sections 3(a)(iii) or 3(a)(iv) due to Non-extension of the Term by the Company
or the Employee, the Employee shall not be entitled to any additional severance payment
or severance benefits under this Agreement or under any other Company plan, policy, or
arrangement.

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	 	(b)	 	Termination without Cause by Company or with Good Reason by Employee.
If, during the Term, the Employee incurs a “separation from service” from the Company
(within the meaning of Section 409A(a)(2)(A)(i) of the Code and Treasury Regulation
Section 1.409A-1(h)) (a “Separation from Service”) by reason of a termination
of the Employee’s employment by Company without Cause pursuant to Section
3(a)(ii), or by Employee with Good Reason pursuant to Section 3(a)(v), the
Company shall, subject to the Employee signing and not revoking, within thirty (30)
days following the Separation from Service, a release of claims in substantially the
form attached hereto as Exhibit A:

	 	(i)	 	pay to the Employee a lump-sum amount equal to the Annual Base
Salary that the Employee would have been entitled to receive if the Employee
had continued his employment hereunder for a period of twelve (12) months
following the Date of Termination, including any guaranteed minimum payment
under the management incentive compensation plan for calendar year 2009 that
remains unpaid as of the Date of Termination, which amount shall be subject to
applicable withholding and payable on the Company’s first payroll date
occurring on or after the 30th day following the Separation from
Service (the “First Payroll Date”), and any amounts that would
otherwise have been paid pursuant to this Section 4(b)(i) prior to such
payroll date shall be paid in a lump-sum on the First Payroll Date; and
	 
	 	(ii)	 	pay to the Employee a lump-sum amount equal, as determined by
the Company, to twelve months of the Company’s regular share of the total
aggregate annual premium costs for group medical, dental and vision benefit
coverage for the Employee and the Employee’s spouse and dependents, in each
case, as in effect with respect to each such individual immediately prior to
such Separation from Service, which payment shall be made on the First Payroll
Date and which payment may be applied by the Employee, in his discretion, to
the purchase of comparable coverage. For the avoidance of doubt, the payment
described in this Section 4(b)(ii) shall be subject to withholding of any
federal, state, local or foreign withholding or other taxes or charges which
the Company is required to withhold.

	 	(b)	 	Survival. The expiration or termination of the Term shall not impair
the rights or obligations of any party hereto, which shall have accrued prior to such
expiration or termination.
	 
	 	(c)	 	409A. Notwithstanding anything to the contrary in this Section
4, no payments in this Section 4 will be paid during the six-month period
following the Employee’s Separation from Service unless the Company determines, in its
good faith judgment, that paying such amounts at the time or times indicated in this
Section would not cause the Employee to incur an additional tax under Section 409A (in
which case such amounts shall be paid at the time or times indicated in this Section).
If the payment of any amounts are delayed as a result of the previous sentence, on the
first day following the end of the six-month period (or such earlier date upon which
such amount can be paid under Section 409A without being subject to such additional
taxes, including upon the Employee’s death), the Company will pay the Employee a
lump-sum amount equal to the cumulative amount that would have otherwise been
previously paid to the Employee under this Agreement.

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	5.	 	Unfair Competition.

     The Company agrees to provide Employee, upon commencement of employment, with immediate access
to Confidential Information as defined below, including Confidential Information of third parties
such as customers, suppliers, and business affiliates; specialized training and information
regarding the Company’s methodologies and business strategies; and/or support in the development of
goodwill such as introductions, information and reimbursement of customer development expenses
consistent with Company policy. The foregoing is not contingent on continued employment, but upon
Employee’s use of the access, specialized information and training, and goodwill support provided
by Company for the exclusive benefit of the Company and upon Employee’s full compliance with the
restrictions on Employee’s conduct provided for in this Agreement.

     Ancillary to the rights provided to Employee as set forth in this Agreement and any addenda or
amendments to this Agreement, the Company’s provision of Confidential Information, specialized
training, and/or goodwill support to Employee, and Employee’s agreements regarding the use of same,
and in order to protect the value of any equity-based compensation, training, goodwill support
and/or the Confidential Information described above, the Company and Employee agree to the
following provisions against unfair competition:

	 	(a)	 	The Employee recognizes and agrees that in order to assure that the Employee
devotes all of the Employee’s professional time and energy to the operations of the
Company while employed by the Company, and that during and after such employment in
order to adequately protect the Company’s investment in its proprietary information and
trade secrets (“Confidential Information”) and to protect such information and
secrets and all other confidential information from disclosures to competitors and to
protect the Company from unfair competition, separate covenants not to compete, not to
solicit, and not to recruit the Company’s employees for the duration and scope set
forth below, are necessary and desirable. The Employee understands and agrees that the
restrictions imposed in these covenants represent a fair balance of the Company’s
rights to protect its business and the Employee’s right to pursue employment.
	 
	 	(b)	 	The Employee shall not, at any time during the Term or during the 12-month
period following the Date of Termination (the “Non-Compete Period”), directly
or indirectly engage in, have any equity interest in, or manage or operate any person,
firm, corporation, partnership or business (whether as director, officer, employee,
agent, representative, partner, security holder, consultant or otherwise) that engages
in any business which competes with any Business (as defined below) of the Company or
its Affiliates anywhere in the world where the Company conducts business or, on the
Date of Termination, has plans to conduct business in the twelve (12) month period
following the Employee’s Date of Termination; provided, however, that
the Employee shall be permitted to acquire a passive stock interest in such a business
provided the stock acquired is publicly traded and is not more than two percent (2%) of
the outstanding interest in such business.
	 
	 	(c)	 	During the Non-Compete Period, the Employee shall not, directly or indirectly,
recruit or otherwise solicit, encourage, or induce any employee, customer, subscriber
or supplier of the Company (i) to terminate its employment or arrangement with the
Company, (ii) to otherwise change its relationship with the Company or (iii) to
establish any relationship with the Employee or any of his affiliates for any business
purpose competitive with the Business of the Company.
	 
	 	(d)	 	In the event the terms of this Section 5 shall be determined by any
court of competent jurisdiction to be unenforceable by reason of its extending for too
great a period of time or over too great a geographical area or by reason of its being
too extensive or restrictive in any other respect, it will be interpreted to extend
only over the maximum period of time for which it may be enforceable, over the maximum
geographical area as to which it may be enforceable, or to the maximum extent in all
other respects as to which it may be enforceable, all as determined by such court in
such action.

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	 	(e)	 	As used in this Section 5, (i) the term “Company” shall include
the Company and its direct or indirect parents, if any, and subsidiaries, and (ii) the
term “Business” shall mean the development, production, sale, maintenance and
support for aerostructures with respect to commercial, military and business jet
aircraft, including (but not limited to) fuselages, wings and wing assemblies,
empennages, aircraft doors, nacelle components and control surfaces, as such business
may be expanded or altered by the Company during the Term.
	 
	 	(f)	 	It is recognized and acknowledged by the Employee that a breach of the
covenants contained in this Section 5 may cause irreparable damage to Company
and its goodwill, the exact amount of which will be difficult or impossible to
ascertain, and that the remedies at law for any such breach will be inadequate.
Accordingly, the Employee agrees that in the event of a breach of any of the covenant
contained in this Section 5, in addition to any other remedy which may be
available at law or in equity, the Company will be entitled to seek specific
performance and injunctive relief.

	6.	 	Intellectual Property and Confidential Information.

     The Employee agrees to enter into the Company’s standard Intellectual Property Agreement (the
“Intellectual Property Agreement”) upon commencing employment hereunder. 

	7.	 	Cooperation.

     The Employee may respond to a lawful and valid subpoena or other legal process regarding the
Company but shall give the Company the earliest possible notice thereof, shall, as much in advance
of the return date as possible, make available to the Company and its counsel the documents and
other information sought and shall assist such counsel at Company’s expense in resisting or
otherwise responding to such process. As used in this Section 7, the term “Company” shall include
the Company and its direct or indirect parents, if any, and subsidiaries. 

	8.	 	Assignment and Successors.

     The Company may assign its rights and obligations under this Agreement to any successor to all
or substantially all of the business or the assets of the Company (by merger or otherwise and
including any Affiliates), and may assign or encumber this Agreement and its rights hereunder as
security for indebtedness of the Company and its Affiliates. This Agreement shall be binding upon
and inure to the benefit of the Company, the Employee and their respective successors, assigns,
personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and
legatees, as applicable. None of the Employee’s rights or obligations may be assigned or
transferred by the Employee, other than the Employee’s rights to payments hereunder, which may be
transferred only by will or operation of law. Notwithstanding the foregoing, the Employee shall be
entitled, to the extent permitted under applicable law and applicable Company Arrangements, to
select and change a beneficiary or beneficiaries to receive compensation hereunder following his
death by giving written notice thereof to the Company.

	9.	 	Certain Definitions.

	 	(a)	 	Affiliate. An “Affiliate” shall mean any entity which owns or
controls, is owned or controlled by, or is under common control with, the Company.
	 
	 	(b)	 	Cause. The Company shall have “Cause” to terminate the Employee’s
employment hereunder upon:

	 	(i)	 	The Company’s good faith determination that the Employee failed
to substantially perform his duties as an employee of the Company (other than
any such failure resulting from the Employee’s Disability) which failure has
not been cured within thirty (30) days after Employee’s receipt of notice
thereof from the Company;

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	 	(ii)	 	the Employee’s willful misconduct, gross negligence or a breach
of fiduciary duty that, in each case or in the aggregate, results in material
harm to the Company;
	 
	 	(iii)	 	willful and material breach of this Agreement or the bylaws of
the Company which has not been cured within thirty (30) days after Employee’s
receipt of notice thereof from the Board;
	 
	 	(iv)	 	the Employee’s having been the subject of any order, judicial
or administrative, obtained or issued by the Securities Exchange Commission,
for any securities violation involving fraud, including, for example, any such
order consented to by the Employee in which findings of facts or any legal
conclusions establishing liability are neither admitted nor denied;
	 
	 	(v)	 	the Employee’s conviction, plea of no contest, plea of nolo
contendere, or imposition of unadjudicated probation for any felony or crime
involving moral turpitude;
	 
	 	(vi)	 	the Employee’s unlawful use (including being under the
influence) or possession of illegal drugs while on the Company’s premises or
while performing the Employee’s duties and responsibilities under this
Agreement; or
	 
	 	(vii)	 	the Employee’s commission of an act of fraud, embezzlement, or
misappropriation against the Company or involving Company assets.

	 	(c)	 	Date of Termination. “Date of Termination” shall mean (i) if the
Employee’s employment is terminated pursuant to Section 3(a)(i), (ii) (v) or
(vi)), the date indicated in the Notice of Termination; or (ii) if the Employee’s
employment is terminated pursuant to Section 3(a)(iii) or (iv), the expiration
of the then-applicable Term.
	 
	 	(d)	 	Good Reason. The Employee shall have “Good Reason” to resign his
employment within ninety (90) days following the occurrence of any of the following
events:

     (A) a material diminution in the nature or scope of the Employee’s
responsibilities, authorities or duties or the assignment of duties and
responsibilities materially inconsistent with those normally associated with
the Employee’s position;

     (B) a material reduction in the amount of the Employee’s Annual Base
Salary;

     (C) any material breach of this Agreement by the Company or any
Affiliate; or

     (D) any purported termination by the Company of Employee’s employment
other than as expressly provided under this Agreement.

     Notwithstanding the foregoing, the Employee may not resign his employment for Good Reason
unless (E) the Executive provided the Company with at least 30 days’ prior written notice of his
intent to resign for Good Reason; and (F) the Company has not remedied the alleged violation(s)
within the 30-day period.

	10.	 	Governing Law.

     This Agreement shall be governed, construed, interpreted and enforced in accordance with its
express terms, and otherwise in accordance with the substantive laws of the State of Texas, without
reference to the principles of its conflicts of law, and where applicable, the laws of the United
States.

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	11.	 	Validity.

     The invalidity or unenforceability of any provision or provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement, which shall remain
in full force and effect.

	12.	 	Notices.

     Any notice, request, claim, demand, document and other communication hereunder to any party
shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered
personally or sent by facsimile or certified or registered mail, postage prepaid, as follows:

	 	(a)	 	If to the Company:
	 
	 	 	 	Vought Aircraft Industries, Inc.

P.O. Box 655907

Dallas, TX 75265

Attn: Kevin P. McGlinchey, General Counsel, M/S 49R-09

Facsimile: (972) 946-5642
	 
	 	(b)	 	If to the Employee:
	 
	 	 	 	To his current residence address on file with Company

or at any other address as any party shall have specified by notice in writing to the other party.

	13.	 	Counterparts.

     This Agreement may be executed in several counterparts, each of which shall be deemed to be an
original, but all of which together will constitute one and the same Agreement. Signatures
delivered by facsimile shall be deemed effective for all purposes.

	14.	 	Entire Agreement.

     The terms of this Agreement, including the terms of the Intellectual Property Agreement, are
intended by the parties to be the final expression of their agreement with respect to the
employment of the Employee by the Company and supersede all prior understandings and agreements,
whether written or oral. The parties further intend that this Agreement shall constitute the
complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be
introduced in any judicial, administrative, or other legal proceeding to vary the terms of this
Agreement.

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15. Amendments; Waivers.

     This Agreement may not be modified, amended, or terminated except by an instrument in writing,
signed by the Employee and a duly authorized officer of Company. By an instrument in writing
similarly executed, the Employee or a duly authorized officer of the Company may waive compliance
by the other party or parties with any specifically identified provision of this Agreement that
such other party was or is obligated to comply with or perform; provided, however, that such waiver
shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise and no delay in exercising any right, remedy, or power hereunder preclude any
other or further exercise of any other right, remedy, or power provided herein or by law or in
equity. Except as otherwise set forth in this Agreement, the respective rights and obligations of
the parties under this Agreement shall survive any termination of Employee’s employment. In
addition, Sections 2(h), 3(c), 4, and 5 through 21 shall survive beyond the end of the Term in
accordance with their terms.

16. No Inconsistent Actions.

     The parties hereto shall not voluntarily undertake or fail to undertake any action or course
of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it
is the intent of the parties hereto to act in a fair and reasonable manner with respect to the
interpretation and application of the provisions of this Agreement.

17. Construction.

     This Agreement shall be deemed drafted equally by both the parties. Its language shall be
construed as a whole and according to its fair meaning. Any presumption or principle that the
language is to be construed against any party shall not apply. The headings in this Agreement are
only for convenience and are not intended to affect construction or interpretation. Any references
to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless
the context clearly indicates to the contrary. Also, unless the context clearly indicates to the
contrary, (a) the plural includes the singular and the singular includes the plural; (b) “and” and
“or” are each used both conjunctively and disjunctively; (c) “any,” “all,” “each,” or “every” means
“any and all,” and “each and every”; (d) “includes” and “including” are each “without limitation”;
(e) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the
entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (f)
all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine,
neuter, singular or plural as the identity of the entities or persons referred to may require.

18. Arbitration.

     Any dispute or controversy arising under or in connection with this Agreement, other than
disputes or controversies arising under or in connection with the provisions of Section 5
or the provisions in the Intellectual Property Agreement, shall be settled exclusively by
arbitration, conducted before an arbitrator in Dallas, Texas in accordance with the National Rules
for the Resolution of Employment Disputes of the American Arbitration Association then in effect.
Judgment may be entered on the arbitration award in any court having jurisdiction. Only
individuals who are on the AAA register of arbitrators shall be selected as an arbitrator. Within
20 days of the conclusion of the arbitration hearing, the arbitrator(s) shall prepare written
findings of fact and conclusions of law. It is mutually agreed that the written decision of the
arbitrator(s) shall be valid, binding, final and non-appealable, provided however, that the parties
hereto agree that the arbitrator shall not be empowered to award punitive damages against any party
to such arbitration. Each party shall pay its own attorney’s fees and expenses.

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19. Enforcement.

     If any provision of this Agreement is held to be illegal, invalid or unenforceable under
present or future laws effective during the term of this Agreement, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a portion of this Agreement; and the remaining
provisions of this Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore,
in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as
part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.

20. Withholding.

     The Company shall be entitled to withhold from any amounts payable under this Agreement any
federal, state, local or foreign withholding or other taxes or charges which the Company is
required to withhold. The Company shall be entitled to rely on an opinion of counsel if any
questions as to the amount or requirement of withholding shall arise.

21. Section 409A. To the extent that the Company reasonably determines that any
compensation or benefits payable under this Agreement are subject to Section 409A, this Agreement
shall incorporate the terms and conditions required by Section 409A reasonably determined by the
Company and the Employee. To the extent applicable, this Agreement shall be interpreted in
accordance with Section 409A of the Code and Department of Treasury regulations and other
interpretative guidance issued thereunder, including without limitation any such regulations or
other such guidance that may be issued after the Effective Date (“Section 409A”). Notwithstanding
any provision of this Agreement to the contrary, in the event that following the Effective Date the
Company reasonably determines that any compensation or benefits payable under this Agreement may be
subject to Section 409A, the Company and the Employee shall work together to adopt such amendments
to this Agreement or adopt other policies or procedures (including amendments, policies and
procedures with retroactive effective), or take any other commercially reasonable actions necessary
or appropriate to (a) preserve the intended tax treatment of the compensation and benefits payable
hereunder, to preserve the economic benefits of such compensation and benefits, and/or to avoid
less favorable accounting or tax consequences for the Company and/or (ii) to exempt the
compensation and benefits payable hereunder from Section 409A or to comply with the requirements of
Section 409A and thereby avoid the application of penalty taxes thereunder; provided, however, that
this Section 21 does not, and shall not be construed so as to, create any obligation on the part of
the Company to adopt any such amendments, policies or procedures or to take any other such actions
or to indemnify the Employee for any failure to do so.

11

 

22. Employee Acknowledgement.

     The Employee acknowledges that he has read and understands this Agreement, is fully aware of
its legal effect, has not acted in reliance upon any representations or promises made by the
Company other than those contained in writing herein, and has entered into this Agreement freely
based on his own judgment.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above
written.

	 	 	 	 	 
	 	VOUGHT AIRCRAFT INDUSTRIES, INC.

 	 
	 	By:  	/s/ Thomas F. Stubbins
 	 
	 	 	Name:  	Thomas F. Stubbins 	 
	 	 	Title:  	Vice President, Human Resources 	 
	 

	 	 	 	 	 
	 	EMPLOYEE

 	 
	 	By:  	/s/ Mark Jolly
 	 
	 	 	Name:  	Mark Jolly 	 
	 	 	 	 
	 

12exv10w1

Exhibit 10.1

MASTER SERVICES AGREEMENT

Between

IXIA

And

PLEXUS

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	1. Definitions
	 	 	1	 
	 
	 	 	 	 
	2. Product Development and Manufacturing Services
	 	 	4	 
	 
	 	 	 	 
	2.1 Overview
	 	 	4	 
	2.2 Subcontractors
	 	 	4	 
	2.3 Sample Forms
	 	 	5	 
	 
	 	 	 	 
	3. Materials
	 	 	5	 
	 
	 	 	 	 
	3.1 Components
	 	 	5	 
	3.2 Prudent Procurement Practices
	 	 	5	 
	3.3 Consigned Items
	 	 	6	 
	3.4 Special Inventory
	 	 	6	 
	 
	 	 	 	 
	4. Forecasting, Ordering, and Manufacture of Products
	 	 	6	 
	 
	 	 	 	 
	4.1 Product Forecast
	 	 	6	 
	4.2 Lead Time
	 	 	6	 
	4.3 Requirements
	 	 	7	 
	4.4 Change Orders
	 	 	7	 
	4.5 Engineering Changes
	 	 	8	 
	4.6 Electronic Industry Code of Conduct
	 	 	9	 
	4.7 Security
	 	 	9	 
	 
	 	 	 	 
	5. Shipment of Products
	 	 	9	 
	 
	 	 	 	 
	5.1 Shipments and Delivery
	 	 	9	 
	5.2 Performance Incentive
	 	 	9	 
	5.3 Packaging Instructions
	 	 	9	 
	5.4 Freight Terms; Title and Risk of Loss
	 	 	10	 
	5.5 Importer of Record
	 	 	10	 
	5.6 Damage to Units/Replacement of Damaged Units
	 	 	10	 
	 
	 	 	 	 
	6. Testing and Inspections
	 	 	10	 
	 
	 	 	 	 
	6.1 Facility Inspection
	 	 	10	 
	6.2 Testing
	 	 	10	 
	6.3 Final Inspection
	 	 	10	 
	6.4 Final Acceptance
	 	 	11	 
	 
	 	 	 	 
	7. Pricing
	 	 	11	 
	 
	 	 	 	 
	7.1 Prices
	 	 	11	 
	7.2 Quarterly Price Reviews
	 	 	11	 
	7.3 Best Price
	 	 	12	 
	7.4 Rebates
	 	 	12	 
	7.5 Performance Suspension
	 	 	12	 
	 
	 	 	 	 
	8. Payment Terms and Procedures
	 	 	12	 
	 
	 	 	 	 
	8.1 Invoices
	 	 	12	 

i

 

	 	 	 	 	 
	 	 	Page	 
	 
	9. Warranties
	 	 	13	 
	 
	 	 	 	 
	9.1 Product and Service Warranties
	 	 	13	 
	9.2 Additional Warranties
	 	 	14	 
	 
	 	 	 	 
	10. Product Return Processes
	 	 	14	 
	 
	 	 	 	 
	10.1 Return Materials Authorization
	 	 	14	 
	10.2 Return Charges
	 	 	14	 
	10.3 Committed Repair Time
	 	 	15	 
	10.4 Duty To Remove Company Marks or Destroy Returned Products
	 	 	15	 
	 
	 	 	 	 
	11. Epidemic Failures and Product Recalls
	 	 	15	 
	 
	 	 	 	 
	11.1 Definitions of Epidemic Failures and Product Recall
	 	 	15	 
	11.2 Epidemic Failure Remedies
	 	 	15	 
	11.3 Termination with Respect to Affected Products
	 	 	16	 
	11.4 Epedemic Failure and Produt Recall Costs
	 	 	16	 
	 
	 	 	 	 
	12. Quality, Performance and Goals
	 	 	16	 
	 
	 	 	 	 
	12.1 Quality Performance
	 	 	16	 
	12.2 Performance Goals
	 	 	16	 
	12.3 Quality Review and Continuous Improvement Meetings
	 	 	17	 
	12.4 Corrective Action
	 	 	17	 
	 
	 	 	 	 
	13. Discontinuance and Manufacturing Rights
	 	 	17	 
	 
	 	 	 	 
	14. Audits
	 	 	17	 
	 
	 	 	 	 
	14.1 Financial Condition
	 	 	17	 
	14.2 Procedural Audit
	 	 	17	 
	14.3 Qualified Manufacturing Site
	 	 	17	 
	14.4 Company Financial Condition
	 	 	17	 
	 
	 	 	 	 
	15. Disaster Recovery Plan; Loss Control
	 	 	18	 
	 
	 	 	 	 
	16. Insurance
	 	 	18	 
	 
	 	 	 	 
	17. Intellectual Property Ownership and Licenses
	 	 	18	 
	 
	 	 	 	 
	17.1 License
	 	 	18	 
	17.2 Rights
	 	 	18	 
	17.3 Prior Technologies
	 	 	19	 
	17.4 Cooperation to Secure Rights
	 	 	19	 
	17.5 Records
	 	 	19	 
	17.6 Trademarks
	 	 	20	 
	 
	 	 	 	 
	18. Confidential Information
	 	 	21	 
	 
	 	 	 	 
	18.1 Obligations
	 	 	21	 
	18.2 Disclosure by Law
	 	 	22	 
	18.3 Third-Party Information
	 	 	22	 
	18.4 Injunctive Relief
	 	 	22	 
	 
	 	 	 	 
	19. Indemnification
	 	 	22	 
	 
	 	 	 	 
	19.1 Providers’s Indemnity
	 	 	22	 

ii

 

	 	 	 	 	 
	 	 	Page	 
	 
	19.2 Company’s Indemnification
	 	 	23	 
	19.3 Indemnification Related to Customs Declaration
	 	 	23	 
	19.4 Defense and Resolution of Clain
	 	 	23	 
	19.5 Third-Party Liens
	 	 	23	 
	 
	 	 	 	 
	20. Term
	 	 	24	 
	 
	 	 	 	 
	20.1 Term
	 	 	24	 
	20.2 Termination for Convenience
	 	 	24	 
	20.3 Termination for Cause
	 	 	24	 
	20.4 Remedies upon Termination for Cause
	 	 	24	 
	20.5 No Liability if a Provider Defaults
	 	 	25	 
	20.6 No Actual Default
	 	 	25	 
	20.7 Obligations of Provider Upon Termination
	 	 	25	 
	 
	 	 	 	 
	21. Notices
	 	 	26	 
	 
	 	 	 	 
	21.1 General Notice Requirements
	 	 	26	 
	 
	 	 	 	 
	22. Exclusion of Damages
	 	 	27	 
	 
	 	 	 	 
	23. Certifications and Compliance
	 	 	27	 
	 
	 	 	 	 
	24. Government Matters
	 	 	27	 
	 
	 	 	 	 
	24.1 Applicable Laws
	 	 	27	 
	24.2 Ethics and Conflict of Interest
	 	 	28	 
	24.3 Use of Small Enterprises
	 	 	28	 
	 
	 	 	 	 
	25. Miscellaneous
	 	 	28	 
	 
	 	 	 	 
	25.1 Standards and Codes
	 	 	28	 
	25.2 Taxes and Duties
	 	 	28	 
	25.3 Modifications
	 	 	28	 
	25.4 No Exclusivity
	 	 	28	 
	25.5 Assignment
	 	 	29	 
	25.6 Governing Law
	 	 	29	 
	25.7 Venue, Jurisdiction
	 	 	29	 
	25.8 Publicity
	 	 	29	 
	25.9 Waiver
	 	 	29	 
	25.10 Severability
	 	 	29	 
	25.11 Survival
	 	 	30	 
	25.12 Entire Agreement
	 	 	30	 
	25.13 Gratuities
	 	 	30	 
	25.14 Third-Party Beneficiaries
	 	 	30	 
	25.15 Remedies Cumulative
	 	 	30	 
	25.16 Headings
	 	 	30	 
	25.17 Counterparts
	 	 	30	 
	25.18 Construction
	 	 	30	 
	25.19 Precedence
	 	 	31	 
	25.20 Other Interpretive Provisions
	 	 	31	 
	25.21 Force Majeure
	 	 	31	 

iii

 

EXHIBIT A — INSURANCE REQUIREMENTS

EXHIBIT B — SUPPLIER CORRECTIVE ACTION REQUEST

EXHIBIT C — METRICS AND REPORTING

EXHIBIT D — ELECTRONIC INDUSTRY CODE OF CONDUCT

EXHIBIT E — IXIA NOMENCLATURE

EXHIBIT F — SAMPLE BILL OF MATERIAL

EXHIBIT G — COST BREAKDOWN SPREADSHEET

EXHIBIT H — SAMPLE FORECAST SPREADSHEET

EXHIBIT I  —  INVENTORY DEPOSIT AGREEMENT

iv

 

     THIS MASTER SERVICES AGREEMENT is entered into as of 26 day of January, 2009 (the “Effective
Date”), by and between Ixia, a California corporation (“Company”) with an address at 26601 W.
Agoura Road, Calabasas, CA 91302 and Plexus Services Corp and its Affiliates and subsidiaries
(“Provider”), with an address at 55 Jewelers Park Drive, Neenah, WI 54957.

RECITALS

     WHEREAS, Company designs, develops, markets, and distributes test and measurement products.

     WHEREAS, Provider is a provider of manufacturing and related services.

     WHEREAS, Company desires to engage Provider to manufacture Company’s Products and may wish to
engage Provider to render other mutually agreed upon services and Provider is willing to provide
such services, in which this Agreement shall serve as a basis for the negotiations concerning such
additional Services.

     NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained
and other goods and valuable consideration, the receipt and sufficiency of which are acknowledged,
the parties agree as follows:

1. Definitions

     The following defined terms are used in this Agreement and shall the meanings set forth below.
Any terms defined elsewhere in this Agreement shall be given equal weight and importance as though
set forth in this Section.

     1.1 “Affiliate” means any entity, however organized, that, directly or indirectly, controls,
is controlled by or is under common control with an entity. For purposes of this definition,
“control” shall be defined as ownership of a majority of the voting power or other equity interests
of the entity under consideration.

     1.2 “Agreement” means this agreement, including the recitals and exhibits hereto, and any
Purchase Orders and SOWs, and Modifications issued hereunder.

     1.3 “Applicable Law” means (i) any country, federal, state, provincial, commonwealth, local
government law, statute, rule, regulation, code, regulation, permit, ordinance, authorization or
other such governmental requirement and interpretation and guidance of the same by a governmental
authority as applicable to Provider or this Agreement; and (ii) any of Company’s compliance, safety
and security rules, programs and policies as agreed to by Provider in this Agreement.

     1.4 “Approved Manufacturers List” or “AML” means a Company-provided list of one or more
third-party vendors who are authorized to provide Components to Provider.

1

 

     1.5 “Business Day(s)” means each weekday, Monday through Friday, excluding any U.S. federal
holidays and Provider’s manufacturing location national holidays and the period of any previously
scheduled shutdowns of either party, provided that the party experiencing the shutdown has notified
the other party in writing at least ninety (90) days prior to the shutdown, unless such shutdown
was due to a Force Majeure event.

     1.6 “Change Order” means a written document executed by the Parties describing a change to
Services to be provided under a SOW or Products to be provided under a Purchase Order.

     1.7 “Component Lead Time” means the number of calendar days between the date upon which
Provider orders a Component from its supplier and the date upon which the relevant Component will
be delivered to Provider.

     1.8 “Components” means any parts, material, components, consumables or other items that are
used in the manufacture and/or assembly of Products.

     1.9 “Confidential Information” means all information, unless specifically identified by either
party as non-confidential, regardless of how communicated or stored, concerning Company or
Provider, including without limitation confidential or proprietary information, trade secrets,
data, drafts, documents, communications, plans, pricing, supply models, know-how, negative
know-how, formulas, improvements, designs, estimates, calculations, test results, specimens,
schematics, drawings, tracings, studies, specifications, surveys, facilities, photographs,
documentation, software, equipment, processes, programs, reports, orders, maps, models, agreements,
ideas, methods, discoveries, inventions, concepts, research, development, and business and
financial information.

     1.10 “Consigned Items” means items (e.g., Components and/or Equipment) owned by Company which
Company retains all rights, title and ownership that are consigned by Company to Provider solely
for use in the manufacturing and/or assembly of the Products.

     1.11 “Costed BOM” means a report setting forth the mutually agreed upon purchasing parameters
for Components.

     1.12 “Intellectual Property” means any and all of the following (by whatever name or term
known or designated) now known or hereafter existing anywhere in the world: (i) rights associated
with works of authorship, including, without limitation, all exclusive exploitation rights,
copyrights, moral rights, and mask work rights; (ii) trade secret rights and other Confidential
Information; (iii) patents (including, without limitation, reissues, divisions, reexaminations,
extensions, provisionals, continuations, and continuations-in-part thereof), designs, and other
industrial property rights; (iv) source code, object code, formulas, ideas, concepts, mask works,
methods, know-how, processes, devices, and the like, whether or not any of the foregoing are
protectable under law; (v) all registrations, applications, renewals, extensions, continuations,
divisions, reissues, and the like, and (vi) all other intellectual property and proprietary rights
of every kind and nature, including trademark, trade dress, and other works based on designation of
source or origin, whether arising by operation of law, contract, license, or otherwise.

2

 

     1.13 “Interim Period” means, for a given Product, the first ninety (90) days of production of
that type of Product; provided that the ninety (90) day period of production of a modified, new, or
varied version of a given Product will not constitute an Interim Period.

     1.14 “Modification” means a duly executed (i) written amendment to the Agreement or any
Purchase Order; (ii) Change Order; or (iii) Company-written order for a minor change not requiring
a Change Order pursuant to this Agreement.

     1.15 “Purchase Order” means a written purchase order issued by Company to Provider via EDI or
other mutually agreed to means for the purchase of Products or Components at a stated quantity,
unit price, and delivery date.

     1.16 “Part Number” means Company’s part number.

     1.17 “Party” means either Company or Provider. “Parties” means both Company and Provider.

     1.18 “Price” means the price for the Products or Services, mutually agreed upon by both
Parties and set forth in a Purchase Order.

     1.19 “Product Lead Time” means the number of calendar days communicated by Provider and
mutually agreed upon by Company necessary to kit Components and manufacture a particular product.
The Product Lead Time does not include transit time.

     1.20 “Product” means any product manufactured by Provider for Company per this Agreement and
in accordance with Company’s Specifications.

     1.21 “Representatives” means, with respect to a Party, such Party’s directors, officers,
employees, agents and any other persons or entities (excluding the other Party) who contribute to
the performance of such Party’s obligations under this Agreement. For purposes hereunder,
Provider’s Representatives shall include any and all Subcontractors and such Subcontractors’
directors, officers, employees and agents if applicable.

     1.22 “Requirements” means the requirements for the Products or Services and shall include but
is not limited to Schedule, Purchase Order requirements, Product Specifications, SOW requirements,
bill of materials (“BOM”), designs, schematics, assembly drawings, process documentation, test
specifications, qualification requirements, Standard of Workmanship, Standard of Care, current
revision number, and Approved Manufacturer List.

     1.23 “Schedule” means all timing, including without limitation due dates, milestones and
deadlines, associated with performance of Provider’s obligations under this Agreement, including
without limitation all commitments and requirements regarding the commencement, prosecution and
completion of such obligations set forth in a Purchase Order or SOW.

     1.24 “Services” means any services provided by Provider to Company.

3

 

     1.25 “Special Inventory Components” means Components that require a minimum order quantity
(“MOQ”) or pre-set packaging quantities per the supplier or a Component with a Component Lead Time
greater than the Product Lead Time.

     1.26 “Specifications” means the specifications for the Products as supplied by Company and
acknowledged in writing by Provider.

     1.27 “Standard of Care” means (i) the commercially reasonable and industry standard of
diligence, care, timeliness, trust, dependability, safety, efficiency, and economy and (ii)
compliance with all Applicable Laws.

     1.28 “Standard of Workmanship” means services performed in accordance with the latest
versions of IPC/EIA J-STD-001, IPC-A-610 Class 2, successor standards thereto, and or other
Company-specified standard.

     1.29 “Statement of Work” or “SOW” means a written description of Services and any associated
compensation.

     1.30 “Subcontractor” means a person or entity who has been retained by Provider to perform all
or a portion of Provider’s obligations hereunder, excluding commercially available Component
suppliers. 

2. Product Development and Manufacturing Services

     2.1 Overview.

          (a) Manufacturing Services. Provider shall manufacture Products to the Requirements
for each Product as set forth in a Purchase Order or SOW.

          (b) Product Development and Other Services. Provider may provide other Services to
Company under mutually agreed upon terms determined at the time the additional Services are
requested. Notwithstanding the previous statement, this Agreement shall serve as a basis for the
negotiations concerning such additional Services.

     2.2 Subcontractors. Provider shall not engage Subcontractors, whether third parties
or Affiliates of Provider, but excluding any contract or temporary employees, without the prior
written consent of Company in each instance. Provider agrees that the provisions of any
subcontracts will be subject to Company’s prior written approval and shall incorporate Provider’s
obligations under this Agreement. Relevant sections of any such subcontract, pertaining to the
Services, will be provided to Company. Provider will properly supervise all such Subcontractors,
including making regular site visits to inspect the compliance by such Subcontractor with its
agreement entered into with Provider and with the Requirements. In regards to the Services,
Provider shall qualify each Subcontractor prior to engagement to verify Subcontractor’s ability to
perform the Services to be subcontracted. Provider acknowledges full responsibility for the full
performance of all Subcontractors. Such qualification shall also include the obligation of such
Subcontractor to obtain and maintain all necessary authorizations to conduct the activities it

4

 

undertakes to perform in connection with this Agreement and to comply with all Applicable
Laws, including but not limited to laws relating to customs clearance and duties, sales taxes, VAT,
and other taxes. No Subcontractor shall be permitted to subcontract any part of its obligations.
The term “Provider” in this Agreement, when used with respect to obligations of Provider, shall
also apply to, and be deemed to include, all Subcontractors.

     2.3 Sample Forms. In performing its obligations under this Agreement, Provider shall
materially conform to the examples, procedures, and nomenclature set forth on Exhibits E, F, G, and
H.

3. Materials

     3.1 Components. Unless otherwise agreed by the Parties in writing, Provider shall be
solely responsible for sourcing and acquiring all Components needed for the manufacture of the
Products and for purchasing such Components in conformance with the applicable AML, drawings and
Specification requirements.

     3.2 Prudent Procurement Practices.2.2  Provider shall purchase Components and
Special Inventory Components, according to the AML, unless otherwise approved in writing by
Company.

          (a) Provider will purchase Components to support Company’s Orders and react to support the
variations in demand for such Purchase Orders to deliver Products to Company in accordance with
specified Delivery Dates. Prudent Procurement Practices include, but are not limited to, the
following:

          (b) Following Provider’s ABC classification (A = 80% 7 days, B = 15% 14 days, C = 5% 28 days

          (c) Utilizing minimum order quantities as defined by Component Suppliers

          (d) Ordering and buying Components as required to meet Manufacturing Assembly Lead-times,
taking into account Component Lead Times and Provider’s internal manufacturing lead times;

          (e) Exercising return and cancellation privileges as allowed by agreements with Component
Suppliers.

          (f) Company understands that Provider will not be procuring Components in a typical
Buy-to-Order fashion. Instead, Provider will procure Components based upon initializing and
maintaining a properly calculated buffer of Component safety stock, not to exceed two (2) percent
of monthly material cost, to meet the potential upsize requirements as specified in Section 4.4.
Provider shall issue a report stating this buffer stock of Components monthly.

In the event that Prudent Procurement Practices are not evident, in the event of excess inventory
due to cancellation, termination or demand reductions, Company will not be liable for that portion
of the inventory purchased in excess of the amount that would have been purchased if Prudent
Procurement Practices had been used.

5

 

In the event that Prudent Procurement Practices have been used, in the event of excess inventory
due to cancellation, termination or demand reductions Company will be liable for any inventory held
on hand in excess of ninety (90) days for the first year of the Agreement and in excess of sixty
(60) days for the remaining 4 years of the Agreement. The disposition of excess inventory will be
managed pursuant to Exhibit I.

     3.3 Consigned Items. Company may provide its Consigned Items to Provider in accordance
with this Section. Provider shall keep all Consigned Items segregated and in a secure location.
Provider shall provide Company with a schedule listing all Consigned Items and their location as
Company requests. The Consigned Items shall only be used in performance of this Agreement.
Provider shall send Company a monthly consigned inventory report. Provider assumes liability for
Consigned Items in its possession and will pay the Company for any lost or damaged Consigned Item.
Provider shall return Consigned Items to Company if any when requested, at Company’s cost. Provider
may at the request of Company maintain, repair, calibrate, or upgrade Consigned Items as
appropriate. Company will pay for any such services on a time and materials basis. Labor charges
will be billed at Provider’s then current billing rate. Replacement parts for test equipment will
be charged at Provider’s cost plus fifteen (15) percent. If Company requests the return of any
Consigned Items from Provider and the return of such Consigned Items prevents Provider from
providing Products or warranty service to Company, then Provider shall be relieved of such
obligations.

     3.4 Special Inventory. Provider may use Special Inventory Components in Products only
upon prior written approval by Company. Special Inventory Components ordered without Company’s
prior written approval are the sole responsibility of the Provider. Provider shall document all
Special Inventory Components used in any Products and Provider shall submit such documentation to
Company on a monthly basis, or as agreed to by Parties, and shall be included in the quarterly
pricing reviews using a form agreed upon by the Parties, containing the minimum information
requirements set forth in Exhibit C.

4. Forecasting, Ordering, and Manufacture of Products

     4.1 Product Forecast. Company will provide to Provider a monthly, rolling twelve (12)
month forecast for all Products. All forecasts are non-binding. Company reserves the right to
modify any Forecast as necessary to support evolving business needs. All Forecasts are
Confidential Information of Company.

     4.2 Lead Time. Each month, Provider will provide to Company a lead time report
stating the Product Lead Time and Component Lead Time for all ordered Products. Provider agrees to
only purchase Components to meet the Component Lead Time. Components ordered beyond the Component
Lead Time without Company’s prior written approval are the sole responsibility of the Provider.

          (a) Purchase Orders. From time to time during the Term, at its sole and exclusive
option, Company may issue Purchase Orders to Provider for Products, which Provider shall fulfill if
accepted by Provider. Subject to Provider’s compliance with its obligations under

6

 

this Agreement, Company shall use reasonable efforts to place Purchase Orders for the coming
four (4) months on a thirty-day rolling basis or as mutually agreed by the Parties, but Company may
decline to do so in its sole discretion. All Purchase Orders for Product by Company pursuant to
this Agreement shall be subject to the terms and conditions set forth in this Agreement, unless
agreed to in writing by both Parties. Proposed Purchase Orders shall specify the quantity of
Product ordered and shall specify a requested shipment date and the delivery point(s) for such
Product.

          (b) Purchase Order Process. The Provider will respond with its acceptance or
rejection of a Purchase Order upon submission if such Purchase Order materially conforms to this
Agreement, including the applicable Forecast and Product and Component Lead Time. For all Purchase
Orders which are not accepted, the Provider must advise Company in writing within five (5)
Business Days of receipt that Provider cannot fulfill such Purchase Order or else it will be deemed
accepted. If Company receives such notice within such time period, then Provider and Company
shall work in good faith to agree on the terms of such Purchase Order which do not conform to the
terms of this Agreement. Provider will use commercially reasonable efforts to accommodate Purchase
Orders which do not so conform.

     4.3 Requirements. Provider shall manufacture the Product in accordance with the
Requirements. Provider shall manage and be responsible for the supply chain process in the
manufacture of Products.

     4.4 Change Orders. Any changes to Purchase Order must be reflected in a Change Order;
provided, however that Company requests an (i) increase in the quantity of Products or
(ii) reschedule of the quantity of Products, not to exceed one (1) reschedule per Purchase Order,
and the respective shipment date for accepted Purchase Order and such requests shall conform to the
table below.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	No. of days	 	 	 	 	 	 	 	 	 
	Before Shipment	 	 	 	 	 	 	 	 	 
	Date on Purchase	 	Quantity	 	 	Reschedule	 	 	Reschedule	 
	Orders	 	Increases	 	 	Quantity	 	 	Period	 
	0-30
	 	 	0	%	 	 	30	%	 	30 days
	31-60
	 	 	50	%	 	 	50	%	 	60 days
	61-90
	 	 	75	%	 	 	75	%	 	90 days

     Further, Company may cancel, reschedule, or reduce any shipment due under any accepted
Purchase Order, provided that written notice is provided to Provider at least ten (10) Business
Days prior to the scheduled date of such shipment unless Product is already in transit; and
provided further, that Company may modify delivery dates at any time. In the event of permanent
cancellation of shipments under an accepted Purchase Order, cancellation shall be in accordance
with Section 20.2 (“Termination for Convenience”).

7

 

     4.5 Engineering Changes.

          (a) Change Requests. Company may request that Provider incorporate engineering
changes into a Product by providing Provider with a description of the proposed engineering change.
Provider agrees to respond to Company’s notice with an initial engineering change review within
three (3) business days and provide a report of the potential impact on inventories, pricing,
delivery schedules, and production within seven (7) business days. Provider will proceed with
engineering changes when the Parties have agreed upon the changes to the specifications, delivery
schedule, inventory disposition and Product pricing in a Change Order. Engineering change request
process charges are part of Product Prices and, accordingly, Provider will not charge Company for
such administrative related processing.

          (b) Evaluation of Engineering Changes. If Company wants to further implement any
engineering change, pursuant to Section 4.5a, the Parties will develop a schedule which specifies
the responsibilities of each Party with respect to such proposed engineering change. Such schedule
may involve producing such prototypes or evaluation samples and other appropriate information as
the Parties agree.

          (c) Engineering Change Order. If Company, in its sole discretion, requires Provider
to implement an engineering change, then Company will issue to Provider a Change Order approving
such change incorporating any additional costs or delays resulting from the engineering change
order and describing the related action items.

          (d) Treatment of Obsolete/End of Life Material. Upon receiving notice from Company
of an engineering change order or order cancellation which results in any Product, Component or
assembly becoming Obsolete or has reached end-of-life, Provider will, within a reasonable period
after receiving such notice, provide Company with an analysis of Company’s liability to Provider
for Components and materials acquired or scheduled to be acquired to manufacture such Product.
Company’s liability shall include the price of finished Product and Provider’s costs, (including
cancellation fees and charges), work in progress, and materials and Components on hand or on order
within applicable lead-times. Not withstanding the foregoing, Company shall not pay profit for any
materials and components on hand or on order rendered obsolete hereunder. Company shall pay landed
cost and/or material overhead and profit for finish products and any work in process. Provider
will use commercially reasonable efforts to assist Company in minimizing Company’s liability by
taking the following steps;

	 	•	 	As soon as is commercially practical reduce or cancel Component and material
orders to the extent contractually permitted.
	 
	 	•	 	Return all Components and materials to the extent contractually permitted.
	 
	 	•	 	Make all commercially reasonable efforts to sell Components and materials to
third parties.
	 
	 	•	 	Assist Company to determine whether current work in progress should be
completed, scrapped or shipped “as is”.

8

 

     4.6 Electronic Industry Code of Conduct. Provider shall materially comply, unless
prohibited or allowed by local law, to the Electronic Industry Code of Conduct as provided in
Exhibit D, as may be updated from time to time by Company.

     4.7 Security. Provider shall manufacture Products in a secure facility where access
is controlled, only authorized Provider employees can enter, visitors are escorted at all times,
and security is otherwise ensured.

5. Shipment of Products

     5.1 Shipments and Delivery. All Purchase Orders will be shipped in accordance with
the accepted Purchase Order Schedule. Provider will give Company prompt notice if Provider
anticipates that it cannot meet a delivery date for all or any part of the Products. If a partial
shipment is acceptable to Company, Provider will ship the available Products. Except as otherwise
specified in a Purchase Order, on time delivery, (“OTD”) means zero (0) days late through three (3)
Business Days early for the applicable delivery date set forth in such a Purchase Order.

     5.2 Performance Incentive. Provider performance is defined as: (i) OTD to Provider’s
commit date by a quantity greater than ninety eight percent (98%) and (ii) ninety nine point seven
percent (99.7%) quality as measured in RMA relative to ship quantity in same period. Unacceptable
Provider performance is defined as OTD to Provider’s commit by quantity of ninety percent (90%) or
lower or ninety eight percent (98%) or lower as measured in RMA quantity where the defects must be
within Provider’s control and measured to the applicable IPC standard required in the
Specifications relative to ship quantity in same period. If Provider’s performance reaches
unacceptable status due to factors within Provider’s control in a month, then Provider agrees to
provide a discount of a half percent (1/2%) on the Price. Products and such discount shall be
applied on the Products shipped in the following month. Provider agrees to increase the discount
by one percent (1%) for each consecutive month where Provider’s performance remains in the
unacceptable level with a maximum of a three percent (3%) discount. If Provider’s performance
exceeds the required level in any one month, then Company agrees to pay a half percent (1/2%) bonus
on the Price of such units shipped in the following month. This Section 5.2 will not apply during
the Interim Period.

     5.3 Packaging Instructions. Products that are shipped by Provider shall be packaged in
accordance with standard ETSI EN 300 019-2-2 and/or as specified by Company in the Requirements
and/or Specifications at no additional charge to Company. Provider is solely responsible for
damage to Products resulting from Provider’s negligent packaging. Company shall pay the reasonable
and actual additional expenses resulting from Company’s request for special packaging, handling,
routing or shipping, except when special shipping is required to expedite delivery delayed solely
due to reasons within the control of Provider. Unless instructed otherwise by Company, Provider
shall (i) ship complete orders of fully assembled Products; (ii) ensure that all packages and
documents conspicuously bear the Agreement and applicable Purchase Order number; and (iii) include
a packing slip with each shipment identifying company part number and quantity of Products shipped;
(iv) documents the date of shipment; (vi) country of origin; and (vii) bear such other information
as is required under Applicable Law.

9

 

     5.4 Freight Terms; Title and Risk of Loss. All shipments shall be Delivered Duty Paid
(DDP) to Company’s location in Calabasas, CA USA, INCOTERMS 2000. Title to and risk of loss for
all Products sold by Provider to Company shall pass to Company upon delivery of the Products by
Provider to the named place of destination, and in all cases risk of loss or damage to any such
Products in transit, to the named place of destination without regard to the person designated as
consignee, shall fall upon Provider, whose responsibility it shall be to file claims with the
carrier. Provider shall meet the Schedule for all Product shipments. For any deliveries delayed
five (5) days beyond Schedule due to reasons within Provider’s control, Company may require, and
Provider hereby agrees to pay for, air shipment on an expedited basis.

     5.5 Importer of Record. Provider shall serve as the Product’s “Importer of Record”,
for United States Customs (“Customs”) purposes, subject to the terms of Section 19.3. Company shall
provide the Harmonized Tariff Schedule (“HTS”) classification numbers and the Export Control
Classification Numbers (“ECCN”) necessary for Provider to complete the applicable Customs documents
relating to the Products designed by Ixia. In preparing and submitting Customs entries, import
declarations, applications, documentation and/or import data to the United States and/or a third
party, Provider shall rely on the correctness of the HTS numbers and ECCNs, whether in written or
electronic format, furnished by Company. Provider will, however, offer reasonable assistance to
Company in regards to determination of these HTS numbers and ECCNs.

     5.6 Damage to Units/Replacement of Damaged Units. If Product arrives at the delivery
point damaged, Company shall promptly notify Provider through Provider’s Return Material
Authorization process. Provider shall confirm receipt of notice within twenty-four (24) hours.
Repair or replacement of the Product shall be under Provider’s warranty, as provided for in this
Agreement, or on a time and material basis, as applicable.

6. Testing and Inspections 

     6.1 Facility Inspection. Company and its duly authorized Representatives shall have
the right, during normal business hours and upon reasonable prior notice to and consent of Provider
which Provider will not reasonable withhold, to inspect all facilities utilized by Provider with
the manufacture, storage or distribution of the Products and to examine the Products in the process
of manufacture, to evaluate and ensure that the manufacturing methods, processes, and Product
conform to the Requirements.

     6.2 Testing. Upon the completion of the manufacture of each product, Provider will
ship Products which have been tested successfully according to such applicable test specifications
as provided for in the Requirements.

     6.3 Final Inspection. Notwithstanding any prior inspection or payment by Company, all
Products and Services shall be subject to final inspection by Company to verify the following
conditions during the Warranty period: (a) the Products and/or Services conform to the Agreement
and Requirements; and (b) the Services are consistently performed as required under the Agreement
without significant failure or interruption. The foregoing conditions shall constitute warranted
conditions that, to the extent found nonconforming, Provider shall be obligated to cure in
accordance with the Warranty provisions in this Agreement. If any Products

10

 

and/or Services are determined by Company to be defective due to a Provider’s workmanship
issue or not in conformance with the Agreement, Company will notify Provider. Provider shall
promptly evaluate the non-conforming Products and report findings within seven (7) business days of
receipt of the notification. Upon confirmation by Provider of the non-conformance due to a
Provider workmanship issue, Provider shall repair or replace such Products at no cost to Company
or, at Provider’s option, provide Company with a refund of the purchase price for such Products in
exchange for the return of the Products. The cost of transportation of defective Products, which
are subject to Provider’s warranty, from Company to Provider and of repaired or replacement
Products from Provider to Company shall be borne by Provider. The cost of shipment for Products
which are subsequently determined to be “no defect found” or not subject to the Provider’s warranty
shall be refunded to Provider. Provider shall have the same warranty liability for Products which
have been provided as replacements. The warranty period for such replacement Products shall begin
on the date of Company’s receipt of the replacement Products. If Provider fails to report findings
within seven (7) business days, Company, upon mutual agreement of the Parties, may accept such
Products and/or Services instead of requiring Provider to cure such defect or nonconformity, in
which case the Price shall be reduced as appropriate and equitable. Such adjustment shall be
effected whether or not final payment has been made.

     6.4 Final Acceptance. Final acceptance or rejection of the Products and/or Services
shall be made by Company after completion of all inspection and testing of the Product,
notwithstanding the title transfer provisions of the delivery terms. No inspections or testing
conducted by Company, or lack thereof, or any other approval shall in any way release, waive or
limit Provider from any of Provider’s obligations under the Agreement.

7. Pricing

     7.1 Prices. The agreed upon Prices for Products will be set forth in accepted
Purchase Orders. Any additional Products and/or Services will be agreed upon in good faith by the
Parties. Provider shall not charge for, and Company shall have no obligation to pay any fees or
expenses other than the Prices, including, without limitation, overtime or expedite charges unless
such charges are not due to a Provider controlled delay and are requested by Company and agreed to
by Provider.

     7.2 Quarterly Price Reviews. Provider and Company shall meet during each Company
fiscal quarter to review Prices of each Product and determine if any Price adjustment is required.
The previous quarters Prices will be increased or decreased to reflect changes to the costs of the
Products and/or Services. Provider agrees to target quarterly cost reductions of not less than
three percent (3%) of the overall Company spend with Provider each quarter. Any cost reductions
initiated by Company will not necessarily count towards Provider’s 3% quarterly cost reduction.
Provider agrees to provide updated Prices thirty (30) days before the end of each quarter that
reflect the quarterly Product Price reduction. If the Provider cannot achieve the required cost
reduction in any one quarter, the Provider must present the Costed BOM(s) and other relevant
material with explanations as to why the cost reduction cannot be achieved in that quarter to the
Company thirty (30) days before the end of the quarter. Any Price

11

 

adjustments or inventory revaluation shall be mutually agreed to by the Parties and
implemented in the next quarter.

     7.3 Best Price. Provider represents and warrants the Prices charged to Company for
any Product or Service will always be Provider’s best price to support the same scope, Product,
level of business, terms, complexity, supply model and turn level, and services performed. If
Provider sells any Product or Service that can be determined to be the same scope, Product, level
of business, terms, complexity, supply model and turn level, and service performed, to any customer
at a price that is lower than the applicable Price, the Price will be immediately reduced to the
lower price retroactively to the Effective Date. Such lower Price will also apply to all
outstanding and future invoices for such Products or Services

     7.4 Rebates. Provider shall disclose to Company all rebates it receives from its
suppliers specific to the Services provided hereunder.

     7.5 Performance Suspension. In the event the Parties have a material dispute in
regards to a Party’s obligations under this Agreement, a Party shall provide written notice to the
other Party of the nature of the dispute and a plan to resolve such dispute. The Party receiving
this notice shall have thirty (30) days to either resolve the dispute or enter into good faith
discussions with the sending party. If the material dispute has not been cured upon the expiration
of the thirty (30) day notice period, the sending party may suspend performance of its obligations
under this Agreement until such time as the dispute is resolved.

8. Payment Terms and Procedures

     8.1 Invoices. Provider shall submit for payment a written invoice after delivery of,
Products or Services to Company. Provider shall submit such invoice for payment to the following
address:

Ixia

Accounts Payable

26601 W. Agoura Road

Calabasas, CA 91302

Each invoice shall contain information, including, at a minimum, the following information:

Purchase Order numbers;

Part Number and revision level;

Packing slip numbers related to invoiced shipments;

Percent of total Purchase Order completed, assuming that no more than one
type of Product is on a Purchase Order;

12

 

A statement asserting that all Prices are inclusive of applicable taxes
unless otherwise provided for in the Agreement.

Country of Origin

     Amounts listed in an invoice shall specify the amounts in US currency. Company may require
additional information for any amounts stated on an invoice, including without limitation evidence
that all parties furnishing labor or materials to Provider in connection with the performance of
Provider’s obligations hereunder have been paid. Provider shall respond to Company’s request for
additional information in connection with an invoice promptly, but in no event any later than five
(5) Business Days after delivery of Company’s request thereof; provided, however, if Provider
reasonably requires additional time to respond to Company’s request for information, Provider may
request Company to agree to an extension of the above deadline.

     If Company disputes an amount stated in an invoice, Company will notify Provider in writing of
the dispute and the basis thereof. Upon receipt of such notification, Provider shall submit a
revised invoice stating only undisputed amounts. Upon resolution of disputed amounts, Provider
shall submit an invoice pursuant to this Section for the amounts that the Parties mutually agree
are no longer in dispute. Following receipt of an invoice stating only undisputed amounts
(“Correct Invoice”), Company will pay Provider such amounts in accordance with this Section.
Payment by Company does not constitute acceptance of the Provider’s performance hereunder or an
admission of liability. All payment terms shall be net thirty (30) after the date of such Correct
Invoice and payment shall be made via wire transfer or other electronic payment. Company shall
have no obligation to pay Provider any amounts stated on an invoice other than a Correct Invoice.
The credit limit provided to the Company shall be at such an amount that it does not reduce the
payment terms stated above.

9. Warranties

     9.1 Product and Service Warranties. Provider warrants that the Products and Services
supplied to Company pursuant to this Agreement shall conform to the Requirements during the
Warranty period. Although Company reserves the rights to change Requirements from time to time
Provider warrants that at no time will it ship Product that does not comply with the Requirements
in place at the time of shipment. Provider further warrants all Products to be free from defects
in workmanship (i.e., manufactured in accordance with the Standard of Care and Workmanship) for a
period of eighteen (18) months from the date of receipt of the Products by Company. With respect
to Components and/or materials, Provider will assign to Company any assignable Component and/or
material warranties received from the supplier thereof. If Components and/or materials are returned
under a supplier’s warranty, Provider will, on Company’s behalf and without additional charge,
manage the return of any such Components and/or materials to the supplier thereof for repair,
replacement, or reimbursement. If any unit of such Product should prove to be defective and if
Company shall have so notified Provider, specifying in such notice the alleged defects and/or
failures, then Company shall return the allegedly defective Product to Provider upon the receipt of
a return material authorization (“RMA”) number from Provider as further described in Section 10.
Provider shall promptly

13

 

evaluate the defective samples and make best efforts to report findings within ten (10) days
of receipt of the Product. Upon confirmation by Provider of the workmanship defect, Provider
shall, at its discretion, repair or replace such Products at no cost to Company or upon mutual
agreement of the Party’s provide Company with a refund of the purchase Price for such Products in
exchange for the return of the Products. The cost of transportation of defective Products from
Company to Provider and of repaired or replaced Products from Provider to Company shall be borne by
Provider. Provider shall have the same warranty liability and obligations for Products which have
been provided as replacements. The warranty period for such replacement Products shall be the
remainder of the original warranty as of the date the Product was originally shipped to Provider or
ninety (90) days which ever is longer. The above warranty will not apply to any Product (i) which
has been altered, except by Provider or with Provider’s consent, or (ii) which have been subjected
to abuse or improper maintenance, or negligence. For purposes of clarity, the above warranty does
not apply to defects in materials, defects in design and software.

     9.2 Additional Warranties. Provider represents and warrants that: (i) it has the
right to enter into this Agreement and to bind itself with respect to its obligations hereunder;
(ii) it is under no obligation or restriction, nor will it assume any such obligation or
restriction, that does or would in any way interfere or conflict with, or that does or would
present a conflict of interest concerning the performance to be rendered by Provider or the rights
granted Company hereunder; (iii) it shall, in the performance of its obligations under this
Agreement, comply with all Applicable Laws (including but not limited to obtaining any and all
government approvals, permits or licenses in connection with the performance of its obligations
under this Agreement); (iv) Provider shall not, directly or indirectly, in the name of, on behalf
of, or for the benefit of Company offer, promise, or authorize to pay, or pay any compensation, or
give anything of value to, any official, agent, or employee of any government or governmental
agency, or to any political party or officer, employee, or agency thereof, or any candidate for
political office; (vi); and (vii) it shall require each of its directors, officers, employees, and
agents to comply with the provisions of the Foreign Corrupt Practices Act of 1977 (FCPA) of the
United States, 15 U.S.C. § 78dd-1 et. seq. Any breach of this section shall entitle Company to
terminate this Agreement effective immediately upon written notice to Provider. Provider shall
promptly notify Company of the occurrence of any event that would or may result in any breach of
any of the foregoing representations or warranties.

10. Product Return Processes

     10.1 Return Materials Authorization. Products returned by Company to Provider must be
accompanied by a RMA number. Provider will supply an RMA number within two (2) Business Days of
receipt of the Company’s part numbers and the serial numbers for the Products to be returned.

     10.2 Return Charges. All Products returned by Company to Provider in accordance with
Section 9 and all replacement or repaired Products shipped by Provider to Company to replace such
returned Products, will be at such Provider’s risk and expense. Company will issue debit memo to
Provider referencing the RMA number. Any Products returned to Provider under Section 9 herein which
are determined to be “no defect found” or not subject to Provider’s

14

 

warranty shall be at the risk and expense of Company. Provider shall provide to Company a
written quote for the evaluation cost associated with the no defect found Product. Company shall,
within thirty (30) days of receipt of Provider’s invoice, remit payment for the shipping and
evaluation costs related to the Products.

     10.3 Committed Repair Time. Provider will repair or replace each Product that does
not conform to the Requirements pursuant to Provider’s Warranty within five (5) Business Days (the
“Committed Repair Time”). Such five (5) day period shall start on the day the Provider receives the
non-conforming Product and exclude any transit time. Company shall return defective Products within
a reasonable timeframe of receipt.

THE FOREGOING CONSTITUTES COMPANY’S SOLE REMEDIES AGAINST PROVIDER FOR BREACH OF WARRANTY CLAIMS.
EXCEPT AS PROVIDED IN THIS SECTION, PROVIDER MAKES NO WARRANTIES WITH RESPECT TO THE PRODUCTS OR
ITS SERVICES HEREUNDER, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES RESPECTING
NONINFRINGEMENT, OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY IMPLIED WARRANTIES
ARISING FROM A COURSE OF PERFORMANCE, A COURSE OF DEALING, OR TRADE USAGE.

     10.4 Duty To Remove Company Marks or Destroy Returned Products. Provider shall not
sell, transfer, distribute or otherwise convey any Component (including Components relating to any
terminated or discontinued item), product, or service bearing or incorporating Company trademarks,
part numbers or other Company identifiers, including any Company packaging, copyrighted material or
code, to any person or entity, other than Company. Provider will remove from all rejected,
returned or un-purchased Components and Products any such Company Marks or Company identifiers,
even if such removal requires destruction of the Components or Products. Upon Company’s request,
Provider will provide a certificate of destruction authorized by an officer of Company.

11. Epidemic Failures and Product Recalls

     11.1 Definitions of Epidemic Failures and Product Recall. An “Epidemic Failure” means
that the rate of failures in a particular Product (or series or family of Products) exceeds ten
percent (10%) of the Products delivered by Provider over a consecutive three (3) month period and
due to the same root cause attributable to Provider’s workmanship (the “Epidemic Failure Rate”).
A “Product Recall” is a systematic effort by Company to locate, in transit, in stock or in the
field, Products and to repair or replace such Products.

     11.2 Epidemic Failure Remedies. If a Product exhibits an Epidemic Failure, Company
may select any one or more of the following remedies at its discretion:

          (a) Provider Analysis. Provider will provide Company, no later than seven (7)
business days following discovery and/or acknowledgement by Provider of the Epidemic Failure, a
root cause analysis and corrective action plan. Company will make available such information and
assistance as are reasonably required to enable Provider to conduct its root cause analysis and
provide its corrective action report. Once approved by Company, Provider will incorporate the
corrective action in all future affected Products.

15

 

          (b) Product Recall or Retrofit or Other Remedies. If Company determines that the
Epidemic Failure necessitates a field stocking recall or customer based recall or retrofit, it may
at its option elect to have the affected and potentially affected Products: (i) returned to
Provider for repair or replacement under the terms of the Warranty in Section 9; or (ii) Provider
shall send representatives to Company’s US site in order to conduct sorting and, if applicable,
testing of the returned defective Products; or (iii) ship to Provider’s facility, at Provider’s
expense, Products subject to the Epidemic Failure for testing, repair and/or replacement..

          (c) Product Recall. Company may perform a Product Recall in order to: (a) remedy a
breach of Provider’s warranties with respect to such Product; (b) comply with the law or other
governmental requirements; (c) prevent or remedy any health or safety risk; or (d) maintain
Company’s reputation for quality in the marketplace.

     11.3 Termination with Respect to Affected Products. To the extent Provider is liable
for Epidemic Failure or Product Recall costs as set forth in Section 11, Company may terminate its
Purchase Orders not yet fulfilled by Provider for Products affected by such Epidemic Failure or
Product Recall.

     11.4 Epidemic Failure and Product Recall Costs.

          (a) Provider Liability. Except as set forth below, all costs (including materials,
labor, shipping and inventory replacement costs) arising from an Epidemic Failure or a Product
Recall will be mutually agreed upon by both parties. 

          (b) Exclusions from Provider Liability. Provider is not liable for Epidemic Failure
or Product Recall costs to the percentage extent that the cause of such Epidemic Failure or Product
Recall is not due to Provider’s workmanship. In addition, Provider is not liable for such cost to
the extent that the cause of Epidemic Failure or Product Recall is due to: (i) compliance with the
related Requirements to the extent actually provided by Company, if all implementations thereof
would result in such problem and the Provider was unaware of such problem; (ii) Consigned Items
that are incorporated into the Products or used in the manufacture or testing of the Products and
but for such incorporation or use there would not be an Epidemic Failure or Recall; or (iii) a
change in the law or other governmental requirement after the date of manufacture.

12. Quality, Performance and Goals

     12.1 Quality Performance. Provider shall show evidence and perform within a certified
quality system to ensure Product conformance to Specification requirements in conjunction with
process certification(s) listed in Section 23. All services provided shall be in accordance with
the latest versions of IPC/EIA J-STD-001, IPC-A-610 Class 2 (or other standard specified by Company
and agreed to in writing by Provider). Provider shall have system(s) in place that can provide lot
code trace ability to component level for all assemblies and sub-assemblies.

     12.2 Performance Goals. Performance goals for the metrics utilized shall be mutually
agreed to by the Parties in writing prior to the first shipment of each Product. Provider and

16

 

Company shall work together to endeavor to continually improve their performance against the
goals and targets.

     12.3 Quality Review and Continuous Improvement Meetings. Provider agrees to provide
monthly reporting of performance metrics to Company. The list of metrics and reports are listed in
Exhibit C, Metrics and Reporting. Provider and Company agree to meet quarterly for a Quarterly
Business Review (“QBR”), as described on such Exhibit. Provider and Company will agree to the
performance metrics and information to be presented at the QBRs by each Party. Action items and
status to completion will be reviewed at each meeting.

     12.4 Corrective Action. Within two (2) business days of request by Company, Provider
will provide Company with a completed Supplier Corrective Action Request Form as identified in
Exhibit B.

13. Discontinuance and Manufacturing Rights

     Company may elect to discontinue any of its Products at any time in its sole discretion. If
Company elects to place a final Purchase Order for such Product, the Provider, upon agreeing to the
Purchase Order, will satisfy such Purchase Order according to this Agreement. After all Purchase
Orders for such Product are filled, the Provider will conduct a prompt and orderly shutdown of the
Product production. Such shutdown will include the return to Company all Company property used in
connection with the production of such Product. However, the discontinuance of a Product shall not
affect a Provider’s obligation to provide Services for such Product unless the return of any
Company property prevents Provider from providing Products or warranty service to Company, then
Provider shall be relieved of such obligations.

14. Audits

     14.1 Financial Condition. Company may review Provider’s financial condition quarterly.
Provider will make available to Company within a reasonable period of time, not to exceed ten (10)
days, any financials generally made known to the public. If the financial condition of Provider
materially and adversely changes from its financial condition as of the Effective Date, then
Company may request reasonable assurance of future performance.

     14.2 Procedural Audit. Upon five (5) Business Days’ prior written notice and during
Provider’s ordinary business hours and subject to Provider’s consent which will not be unreasonable
withheld, Company shall have the right to audit Provider’s operational processes and procedures in
connection with Services provided. Provider shall work with Company to facilitate any audit, if
applicable.

     14.3 Qualified Manufacturing Site. Provider shall not change the Company approved
manufacturing site without written approval from the Company.

     14.4 Company Financial Condition. Provider may review Company’s financial
condition quarterly. Company shall make available to Provider within a reasonable period of time,
not to exceed ten (10) days, any financials generally made known to the public. If the

17

 

financial condition of Company materially and adversely changes from its financial condition as of
the Effective Date, then Provider may request reasonable assurances relating to credit or other
financial terms extended by Provider.

15. Disaster Recovery Plan; Loss Control 

     Provider will develop and keep current a formal disaster recovery plan (a “DRP”), that details
strategies for response to, and recovery from, a broad spectrum of potential disasters. Provider
will make its DRP and its annual evaluation thereof available to Company for its review. Provider
will be responsible for maintaining its facilities and operations according to applicable and
prudent safety, security, and fire protection standards and its DRP. Provider will allow Company
and their designated representatives to visit and perform loss control audits of the facilities and
operations and Provider will implement reasonable recommendations made.

16. Insurance

     From the Effective Date and until the date specified on Exhibit A for all Products has
terminated, Provider will maintain the insurance coverage specified in Exhibit A (Insurance
Requirements). In addition, portions of such insurance must be maintained after such date as
further set forth in such Exhibit A.

17. Intellectual Property Ownership and Licenses

     17.1 License. Company also hereby grants to Provider, and Provider hereby accepts,
solely for the Term, a limited, non-exclusive, terminable, revocable, license to use Intellectual
Property that Company elects to provide and/or disclose to Provider solely for the purpose of
manufacturing the Products and providing the Services under this Agreement. Provider shall only
use the Intellectual Property as expressly authorized under this Agreement and/or any Purchase
Order or SOW and will not use the Intellectual Property, or any portion thereof, for any other
purpose whatsoever and, further, will not sell, distribute, transfer, convey, deliver, or otherwise
provide any goods or product made using any portion of such Intellectual Property to any other
entity or person whatsoever.

     17.2 Rights. The Parties understand, acknowledge and agree that any and all
Intellectual Property developed, conceived, prepared, created, made, discovered, learned, produced
or otherwise generated by Provider, excluding any manufacturing processes, under this Agreement
shall be and remain a “work made for hire” for the sole and exclusive benefit of Company according
to the copyright laws of the United States, China, and any other country in the world, including,
but not limited to, Sections 101 and 201 of Title 17 of the United States Code. In the event that
Provider acquires, by operation of law or otherwise, any right, title or interest in and to any
such Intellectual Property or such Intellectual Property is not a “work made for hire”, then
Provider hereby agrees to assign, and hereby does assign, to Company any and all right, title and
interest in, to and under all Intellectual Property. Provider represents and warrants that it will
not use any of the Intellectual Property for any purpose other than as expressly provided in this
Agreement and will not use any of the Intellectual Property on behalf of itself or any other person
or entity, unless it first obtains Company’s prior express written

18

 

consent. Without limiting the generality of the foregoing, Company shall have the sole and
exclusive right to seek patents and register the copyright(s) in all such Intellectual Property in
its name as the owner and author of such works and shall have the exclusive rights conveyed under
17 U.S.C. § 106 and 106A, and any similar rights granted under any other country’s laws, including,
but not limited to, the right to make all uses of the works in which attribution or integrity
rights may be implicated. Additionally, without in any way limiting the foregoing, Provider hereby
assigns, transfers, and conveys to Company any and all right, title or interest that it may now
have, or may acquire in the future, in or to any and all such Intellectual Property, excluding any
manufacturing processes related Intellectual Property. Provider expressly and forever waives any
and all rights and claims that it may have arising under 17 U.S.C. § 106A, and any rights arising
under any other laws, or under the laws of any countries, that conveys rights which are similar in
nature to those conveyed under 17 U.S.C. § 106A, or any other type of moral right or droit moral.
Provider acknowledges and agrees that payment by Company under Purchase Orders for Provider’s
performance of its obligations hereunder constitute full and adequate compensation for such waiver.

     17.3 Prior Technologies. Notwithstanding Section 17.2, any Intellectual Property
relating to the manufacturing processes used by Provider in the manufacture of Product, that it
owned prior to the Effective Date (“Prior Technology”) shall remain its property, unless otherwise
agreed upon between the parties. Provider shall have a duty to advise Company and obtain Company’s
prior written consent before incorporating in whole or in part, any Prior Technology on or into any
Product. In the event Provider fails to procure Company’s written consent prior to incorporating,
in whole or in part, any Prior Technology on or into any Product, Provider hereby assigns, conveys,
and transfers to the Company all right, title, and interest in, to, and under such Intellectual
Property and technology and the first sentence in this Section 17.3 shall not be applicable.

     17.4 Cooperation to Secure Rights. Provider agrees to fully cooperate and assist
Company, and any of its designees, in taking any and all steps to preserve, protect, and secure
Company’s rights in, to, and under any Intellectual Property theory, or other Intellectual Property
rights relating thereto, including, but not limited to, timely preparing, executing, filing, and
prosecuting patent, copyright, trademark, and trade dress applications throughout the world, and
oaths, declarations, assignments, and all other instruments relating thereto, which Company may
deem beneficial or necessary. Provider agrees that its obligations to cooperate and execute, or
cause to be executed, any documents, instruments, or papers under this Section 17.4 shall survive
the termination and/or expiration of this Agreement. Company shall reimburse Provider for its
reasonable out-of-pocket expenses in connection with the performance of Provider’s obligations
under this Section 17.4.

     17.5 Records. Provider agrees to keep and maintain accurate, current, and witnessed
written records of any and all Intellectual Property developed, conceived, prepared, created, made,
discovered, learned, produced, used, or otherwise generated by Provider (solely or jointly with
others) related to any Product during the term of this Agreement and/or its engagement with
Company. The records will be in the form of notes, sketches, drawings, and any other suitable
format, and will be made available to and accessible by Company at all times.

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     17.6 Trademarks. The Parties agree to the following provisions regarding the
trademarks, trade names, trade dress, logos, slogans, symbols, emblems, insignias, domain names and
all applications, grants, registrations of Company which are to be used in or on the Products at
Company’s direction during the Term (the “Company Trademarks”):

          (a) Provider acknowledges and agrees that the Company owns all right, title and interest in,
to and under Company Trademarks and to any variation, modification, or embodiment thereof that is
confusingly similar to or dilutive of any of Company Trademarks, throughout the world, and that
Company also owns the goodwill related to such marks and to the business and goods in relation to
which such marks have been or will be used. Provider will not at any time directly or indirectly
do or suffer to be done any act or thing that might in any way adversely affect any rights Company
in, to, or under any of such marks, any registrations or applications for registration therefor, or
which might reduce the value thereof or detract from their reputation, image or prestige.

          (b) Provider shall not place any Company Trademarks, or any variation thereof, on any product
or any other goods, packaging, materials or in any other manner including, but not limited to,
advertising, promotions or other goods or services, without Company’s prior written consent. After
receiving Company’s written approval of use of any Company Trademarks on the Product, Provider may
not alter, in any way or manner, the form and manner of mark approved for use on such goods.

          (c) Provider shall not register or file, caused to be registered or filed, or prosecute a
trademark or service mark application or applications to register any of Company Trademarks or any
trademark, name or other mark confusingly similar thereto for any goods or services anywhere.
Provider shall not, during the term of this Agreement, or thereafter: (i) contest Company’s title,
right, ownership or other interest in or to any of Company Trademarks, or any variations thereof,
in any jurisdiction, or in any way attack the validity or enforceability of any of Company
Trademarks anywhere; or (ii) contest the fact that Provider’s rights to use Company Trademarks
under this Agreement, or otherwise, is solely limited to the manufacture of Product solely on
behalf of, and only for sale to Company, and no one else, and that such limited rights shall
immediately terminate upon the expiration and/or termination of this Agreement.

          (d) Provider shall, and hereby does, assign any and all right, title, and interest that it
may acquire in, to, or under any of the Company Trademarks, and/or any variations or modifications
thereof, and any and all goodwill associated therewith, to the Company.

          (e) Provider shall cooperate fully and in good faith with Company for the purpose of
securing, preserving and protecting Company’s rights in and to Company Trademarks. Any trademarks
used on any Product and all goodwill associated therewith, shall be owned exclusively by Company.
At the request of Company, Provider shall execute and deliver to Company any and all documents and
do all other acts and things which are necessary or which Company deem appropriate to make fully
effective or to implement the provisions of this Agreement relating to the ownership or
registration of any and all of Company Trademarks.

          (f) Except as otherwise expressly provided herein, Provider shall not, without the prior
written consent of Company, use or display any of Company Trademarks or Company’s trademarks, trade
dress, logos, trade names, corporate names or other proprietary

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rights (including, without limitation, any logo or logos associated therewith), or any
variations or modifications thereof, in any manner.

          (g) In the event Provider shall learn of any infringement or imitation of any of Company
Trademarks anywhere, it shall immediately advise Company of all such knowledge of facts.

          (h) All Products made by Provider under this Agreement, including, but not limited to, all
Product bearing any of Company Trademarks, shall be shipped, delivered and sent solely to Company
unless directed otherwise by Company. Provider shall use its best efforts to ensure that no
Product is diverted by any of its employees, contractors, subcontractors, business partners, or the
like, including, without limitation, the unauthorized sale or distribution of any Product to anyone
other than Company. Such efforts shall include, without limitation, the utilization of such
processes, controls, identification methods and reporting and auditing procedures as the parties
may from time to time agree upon in good faith.

          (i) Provider acknowledges and agrees that any tooling, fixtures, molds, forging dies,
stamps, and prototypes that Company has paid Provider to create, or which embody or bear any of
Company Trademarks (in any way or manner), are to be used solely by Provider in producing the
Product for Company, and no one else. Further, Provider acknowledges and agrees that any and all
such tooling, fixtures, molds, forging dies, stamps, prototypes, or the like, will be delivered to
Company at the end of the Term upon Company’s request and at Company’s expense.

          (j) At the end of the Term, Provider shall immediately discontinue manufacture of the
Product, any and all use of Company Trademarks and Intellectual Property, and shall take any and
all actions that may requested or required by Company to dispose of or deliver to Company materials
in Provider’s possession or control, including without limitation, all materials, documents and
items having any Company Trademarks or Intellectual Property.

18. Confidential Information

     18.1 Obligations. The Parties shall use, disclose, or copy, the Confidential
Information of the other Party only for the purposes of, and only as necessary to perform under,
this Agreement. The Parties shall use the same degree of care as it uses to protect its own
Confidential Information of a similar nature, but no less than reasonable care, to prevent the
unauthorized use and disclosure of the Confidential Information. A Party may disclose the
Confidential Information only to its employees and Subcontractors who: (i) have a need to know
such Confidential Information for purposes of carrying out this Agreement but only to the extent
that such Confidential Information is needed to perform their obligations under this Agreement and
(ii) have agreed in writing in advance to be bound by a written confidentiality agreement at least
as protective of the Confidential Information as the provisions of this Agreement. Each Party
agrees that it shall be responsible for ensuring that all of its respective employees,
Subcontractors, or Representatives engaged by it who assist or contribute to a Party’s duties,
obligations or performance, as the case may be, under this Agreement comply with the provisions of
this Section. Each Party shall require its employees, Representatives, and Subcontractors to use
dedicated and segregated office files, notebooks, computer files and the like in that Party’s
duties, obligations or performance, wherein such dedicated office files,

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notebooks, computer files and the like do not contain information unrelated to the performance
of this Agreement. A Party shall notify the other Party immediately in the event of any
unauthorized use, disclosure, or publication of any Confidential Information.

     18.2 Disclosure by Law. The Parties shall have the right to disclose Confidential
Information as required by law or legal process or under the applicable rules of a securities
market or exchange; provided, however, that the disclosing Party shall use reasonable efforts to
give the other Party a reasonable opportunity to intervene to prevent such disclosure or to obtain
a protective order, and that any Confidential Information so disclosed otherwise remains subject to
the confidentiality obligations set forth in this Section. Additionally, The Parties agree that it
will reasonably cooperate with the other Party’s efforts to retain the confidential nature of any
such Confidential Information.

     18.3 Third-Party Information. Each Party represents and warrants that it will not
employ, incorporate, apply, or in any way use, any other entities’ or persons’ confidential
information, Intellectual Property or other proprietary rights or information on or in connection
with any of the Product including, but not limited to, the manufacture or sale of the Product.

     18.4 Injunctive Relief. The Parties acknowledge that money damages would not be a
sufficient remedy for any breach of this Section 18 or other infringement or misappropriation of
that Party’s Intellectual Property Rights. Accordingly, in the event of any such breach or
threatened breach, a Party, in addition to any other remedies at law or in equity that it may have,
will be entitled, without the requirement of posting a bond or other security, to obtain equitable
relief, including injunctive relief and specific performance.

19. Indemnification

     19.1 Provider’s Indemnity. Provider shall, to the fullest extent permitted by law,
indemnify, defend and hold harmless Company and its Affiliates, and their respective directors,
officers, employees, agents, Representatives, successors and assigns
(“Company Indemnified
Parties”) from and against any and all suits, actions, legal or administrative proceedings, claims,
liens, demands, damages , liabilities, losses, costs, fees, penalties, fines and expenses
(including without limitation reasonable attorneys’ fees and costs of investigation, litigation,
settlement, and judgment) (altogether referred to as “Claims”), arising out of or in connection
with (i) the breach of Provider’s representations, warranties or covenants contained herein other
than breach of Provider’s representations, warranties or covenants contained in Sections 5
(regarding “delivery” and “quality”), 6 (regarding “non-conforming Products”), 9 (regarding
“warranty claims”), 10 (regarding warranty returns of Product), 11 (regarding “Epidemic Failures”),
and 20 (regarding “Termination”), for which breach(es) a remedy is expressly identified as the
sole and exclusive remedy; (ii) employment-related issues relating to Provider’s employees,
including without limitation income tax withholding, employment taxes, employment benefits,
employer contributions, actual or alleged violation of employment-related Applicable Laws including
without limitation those regarding discrimination, harassment, retaliation, termination, and
payment of overtime or wages; (iii) injury to or death of persons (including without limitation
Provider’s or Provider’s Representatives’ employees) arising out of Provider’s

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breach of this Agreement, negligence, or willful and wanton misconduct; and (iv) Provider’s
gross negligence or willful and wanton misconduct.

     19.2 Company’s Indemnification. Company shall, to the fullest extent permitted by
law, indemnify, defend and hold harmless the Provider and its Affiliates, and their respective
directors, officers, employees, agents, Representatives, successors, and assigns, (Collectively
“Provider Indemnified Parties”) from and against any and all Claims asserted by third parties
related to the sale or use of the Products, the design of the Products, or violation or
infringement of any patent, copyright, trademark, service mark, trade secret, or other third party
Intellectual Property Right relating to the Products (“Infringement Claim”).

     19.3 Indemnification related to Customs Declarations. Company shall be responsible
for furnishing to Provider the correct Harmonized Tariff Schedule (“HTS”) classification
numbers and ECCNs for the Products of Ixia design and will indemnify the Provider for penalties, if
any, imposed by US Customs or any other governmental agency, that are directly attributable to a
failure by Ixia to provide correct HTS and ECCNs classification numbers for such Products. The
process for indemnification shall be as set forth in Section 19.4. The confiscation or detention
of the Products by any governmental authority due to incorrect HTS or ECCN classifications shall
not affect or diminish the liability of Company to Provider to pay all charges or other fines due
related to the incorrect classification of the Products.

     19.4 Defense and Resolution of Claim. The Indemnifying Party, at its expense,
shall assume control of the defense and resolution of each Claim using legal counsel approved by
the Indemnified Party and keep the Indemnified Party fully and timely informed of the progress of
such defense and resolution. With respect to each Claim, the Indemnified Party shall have the
right to retain independent legal counsel and monitor such Claim’s defense and resolution. The
Indemnifying Party and its legal counsel shall fully cooperate with the Indemnified Party and its
legal counsel in providing such information as they may request. If both Provider and Company are
named parties in any Claim and representation of both Provider and Company by the same legal
counsel would be inappropriate due to the actual or potential differing interests between them,
then each Party shall, at their own expense, have the right to be represented by separate counsel
of that Party’s choosing. If the Indemnified Party, in its sole discretion, determines that the
Indemnifying Party has failed to (i) defend a Claim to the Indemnified Party’s satisfaction or
(ii) take timely and reasonable steps to resolve a Claim, the Indemnified Party shall have the
right, but not the obligation, to assume control of the defense and resolution of such Claim, and
the Indemnifying Party shall be bound by the results obtained by the Indemnified Party with respect
to the Claim. The Indemnifying Party shall not confess judgment or settle, compromise or resolve
any Claim without the written consent of the Indemnified Party.

     19.5 Third-Party Liens. If a lien affecting any of Company’s rights is filed by any
third-party provider of goods or services purchased by Provider, Provider must remove the lien
within ten (10) days of notice of lien or of written demand from Company, whichever is earlier. If
Provider fails to remove the lien, Company may: (i) pay the amount of the lien; (ii) bond the
removal of the lien; or (iii) take any other step necessary to remove the lien. Provider shall
immediately reimburse Company for the cost of removal of any such lien, including without
limitation all attorneys’ fees and costs, upon receipt of written demand from Company. If Provider
fails to reimburse Company, Company may back charge or withhold the cost of

23

 

removal, including without limitation all attorneys’ fees and costs, from any amount that
Company may be required to pay to Provider for performance of its obligations hereunder.

20. Term

     20.1 Term. The term of this Agreement (“Term”) shall begin on the Effective Date and
expire on the fifth (5) anniversary of the Effective Date; provided, however, that, unless
terminated by Company for cause as provided below, this Agreement shall remain in effect with
respect to any then-pending accepted Purchase Order(s) with regard to any Products scheduled to be
delivered up until two (2) months from the effective date of termination. Expiration of the Term
shall not limit any warranty or other obligations of Provider or Company which by their nature
would survive the expiration of the Term. Company, upon mutual written agreement, may extend the
Term by providing written notice to Provider prior to the expiration of the initial or then current
Term.

     20.2 Termination for Convenience. Company shall have the right, at any time, to
terminate with or without cause, this Agreement, in whole or in part, upon ninety (90) days written
notice to Provider. Provider shall have the right, at any time, to terminate, with or without
cause, this Agreement, in whole or in part, upon one-hundred eighty (180) days written notice to
Company. In the event of termination for convenience, Provider shall be entitled to compensation in
accordance with the terms of this Agreement up to the date of termination. Upon payment of
compensation to which Provider is entitled hereunder, Company shall have no further obligations to
Provider under this Agreement or otherwise in connection with such terminated Purchase Order or, in
the event the entire Agreement is terminated, with respect to this Agreement or any canceled
Purchase Order placed thereunder. In no event shall either Party be liable to the other for any
direct, indirect, special or consequential damages, lost profits, penalties or costs arising out of
any termination for convenience.

     20.3 Termination for Cause. Both Parties shall have the right to terminate this
Agreement, in whole or in part, by written notice to the other at any time if: (i) the other Party
shall fail to perform any covenant, representation, warranty or obligation hereunder that is not
cured within thirty (30) days from notice thereof; (ii) upon a Party’s reasonable request, a Party
fails to furnish the requesting Party with assurances satisfactory to the Party giving notice
evidencing ability to complete its obligations hereunder in compliance with all of the requirements
of this Agreement; (iii) a Party makes a general assignment for the benefit of its creditors, or a
petition in bankruptcy is filed by or against that Party, or a receiver shall be appointed on
account of a Party’s insolvency; (iv) a Party transfers, sells, assigns or otherwise disposes of
(a) all or substantially all of its assets or (b) any controlling interest in its business (whether
in the form of stock or otherwise); (v) a Party consolidates with or merges into another
corporation or entity, or permits the consolidation with or merger into another entity; or
(vi) there is a material adverse change in a Party’s business, financial condition or prospects
which in the other Party’s reasonable judgment may result in a delay in the performance of a
Party’s obligations hereunder, or a reduction in the quality of such performance.

     20.4 Remedies upon Termination for Cause. In the event of termination for cause by
Company, Provider shall, unless directed otherwise by Company, complete all outstanding

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Purchase Orders as of the effective date of the notice for termination. Provider will
reasonably assist Company with transitioning the manufacture of the Products to another entity and
work with Company regarding the disposal of Components and materials. .

     20.5 No Liability if a Provider Defaults. If Company terminates for any reason,
Provider agrees to exercise commercially reasonable efforts to mitigate Company’s exposure to
excess inventory. If Company terminates a Purchase Order for convenience, then Company will have
liability with respect to Components and work in process related to such Purchase Order as
specified by the Component Lead Time and forecast flexibility guidelines.

     20.6 No Actual Default. If, after termination for cause under this Section 20, it is
determined for any reason that Provider was not in default, the rights and obligations of the
Parties shall be the same as if the notice of termination had been issued as a termination for
convenience under Section 20.2.

     20.7 Obligations of Provider Upon Termination. Upon receipt of notice of termination,
Provider shall do the following unless otherwise specified by Company:

          (i) Incur no further obligations, including without limitation placement of orders or
subcontracts for Components, services or facilities;

          (ii) Discontinue, and cause all of its Representatives to discontinue, performance hereunder
to the extent specified in Company’s notice;

          (iii) Promptly make every reasonable effort to obtain termination or assignment to Company or
Company’s designee, upon terms satisfactory to Company, of all obligations, including without
limitation orders or subcontracts, to the extent such relate to the performance of such terminated
performance;

          (iv) Mitigate costs associated with any such termination;

          (v) Preserve any performance that is in progress or completed and the data relating thereto
until Company or Company’s designee takes possession thereof;

          (vi) Turn over Products and Components in accordance with Company’s instructions; and

          (vii) Provide to Company reasonable assistance to facilitate the orderly transfer of such
obligations. Reasonable assistance shall include without limitation: (a) obtaining any required
consents from third parties and thereafter assigning to Company or its designee subcontracts; and
(b) obtaining any necessary rights and making available to Company or its designee pursuant to
reasonable conditions any third party services then being utilized by Provider in the performance
of its obligations hereunder. Company will reimburse Provider for actual documented costs incurred
in providing such assistance and Provider will provide an estimate of such costs in advance to
Company; provided that Company shall not have any

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reimbursement obligations if Provider terminates for convenience within two (2) years of the
Effective Date.

     No later than ninety (90) days following the date of termination for convenience of this
entire Agreement, or date of last shipment to Company, Provider shall deliver to Company a complete
invoice reflecting unpaid compensation, if any, payable for actual performance of its obligations
hereunder up to the date of termination. Failure of Provider to submit such complete invoice in
accordance herewith and with the invoice requirements hereunder shall constitute a waiver by
Provider of a claim for any compensation not paid by Company prior to the date of termination.

21. Notices

     21.1 General Notice Requirements.

     All notices pursuant to this Agreement must be in writing, referencing this Agreement number,
and delivered personally or sent by courier, certified mail (return receipt requested), Either
Party may specify a different address to receive notices by providing a notice in accordance with
this Section. Notices sent by courier or certified mail are effective upon receipt or five days
after dispatch, whichever occurs first

Notices to Company related to the terms and conditions of this Agreement must be addressed to the
following:

Ixia

26601 W. Agoura Road

Calabasas, CA 91302

Attention: Strategic Sourcing Manager

Facsimile No.: (818) 444-3101

with a copy to:

Ixia

26601 W. Agoura Road

Calabasas, CA 91302

Attention: General Counsel

Facsimile No.: (818) 871-1805

Notices to Provider related to the terms and conditions of this Agreement must be addressed to
the following:

Plexus Services Corp

55 Jewelers Park Drive

Neenah, WI 54957

Attention: General Counsel

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     22. Exclusion of Damages

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, WITH THE EXCEPTION OF INDEMNIFICATION
OBLIGATIONS ARISING OUT OF OR RELATED TO (i) A BREACH OF A PARTY’S CONFIDENTIALLITY OBLIGATIONS
HEREIN , (ii) INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS ARISING UNDER SECTION 19.2 OF THIS
AGREEMENT OR (iii) CLAIMS ARISING OUT OF 19.1 (iii) OR 19.1 (iv), UNDER NO CIRCUMSTANCES, SHALL
EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, WHETHER OR
NOT FORESEEABLE, INCURRED OR SUFFERED BY THE OTHER PARTY RESULTING FROM THIS AGREEMENT, INCLUDING
WITHOUT LIMITATION LOST REVENUE, LOST PROFITS, LOSS OF INCOME, OR LOSS OF BUSINESS ADVANTAGE, OR
ANY OTHER TYPE OR KIND OF SUCH CONSEQUENTIAL OR SPECIAL DAMAGES, EVEN IF A PARTY, OR AN AUTHORIZED
REPRESENTATIVE OF THAT PARTY, HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND
NOTWITHSTANDING THE FAILURE OR ESSENTIAL PURPOSE OF ANY REMEDY.

23. Certifications and Compliance

     Provider represents that Provider and any Subcontractors presently have the minimum
certifications and be in compliance with the latest ISO 9000, ISO 14000, TL 9000, Reach, and WEEE
requirements, which are specifically applicable to Provider or any Subcontractor under this
Agreement, as well as any obligations required by Applicable Law. If an additional requirement is
needed in order to manufacture or sell Products in a different region, Provider and Company will
work together to comply with the requirement within a reasonable time period. Relative to the
certification requirements, Provider with provide to Company a report of all minor non-conformance
related to Company’s Products and all major non-conformances to such standards. Provider, if
requested by Company, shall assist in the review of certification requirements and advise as to the
effect of the requirements on the manufacturing process. Company acknowledges that Provider shall
incur no liability based on or resulting from the actions in this Section 23.

     Company shall be responsible for determining the extent to which the Products must comply with
the European Union Restriction on the Use of Certain Hazardous Substances (Directive
2002/95/EC)(“ROHS”). Provided Provider receives written notification from Company of the need for
Product compliance (in whole or in part) with ROHS, Provider declares that (i) Provider’s
manufacturing processes will be ROHS compliant to the extent required by such notification, except
as otherwise may be specified in writing by Company, and (ii) Provider will procure Components used
in the manufacture of such Product in compliance with the Company supplied bill of materials,
approved manufacturer’s list and other Company-approved documentation.

     24. Government Matters

          24.1 Applicable Laws. Each Party shall notify the other of any changes or
anticipated changes in Applicable Laws of which a Party is aware or should be aware, the

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impact of such changes on performance of a Party’s obligations hereunder and the intent of the
Agreement, and recommendations for modifications to such performance subject to the other Party’s
approval pursuant to a Change Order.

          24.2 Ethics and Conflict of Interest. In its performance of its obligations
hereunder, the Parties shall adhere to business practices that meet and are in the spirit of
Applicable Laws and ethical principles as follows without limitation:

               (i) All transactions undertaken in connection with Provider’s obligations hereunder will be
accurately reflected in Provider’s records; and

               (ii) Provider shall perform its obligations hereunder and conduct itself with respect to
Subcontractors and third parties so as to avoid loss or embarrassment to Company including loss or
embarrassment due to any real or apparent conflict of interest.

          24.3 Use of Small Enterprises. Provider represents and warrants that it has submitted
to Company a plan to use small business enterprises, small minority-owned business enterprises, and
small women-owned business enterprises in performing their obligations herein. All changes to such
a plan must be submitted to Company at least thirty (30) days prior to the effective date of such
amendment.

25.  Miscellaneous 

     25.1 Standards and Codes. References in this Agreement to standards or codes in
accordance with which Provider is to perform its obligations hereunder are to the edition or
revision of the standards or codes current on the effective date of the Agreement and shall apply
unless otherwise expressly stated. In case of conflict between any referenced standards or codes
and the Agreement, the most stringent requirement shall govern unless Company indicates otherwise.

     25.2 Taxes and Duties. This Agreement provides for DDP (Incoterms 2000) Calabasas,
California. In the event Provider is required to pay any additional duties or taxes which are
enacted after the Effective Date of this Agreement or which are considered unforeseen incremental
variable charges (i.e., customs duty and tax, customs inspection, customs penalties, customs
overtime, storage, truck vehicle detention) not attributable to an act or omission of Provider, the
Parties shall negotiate in good faith the liability for and the allocation of such additional tax
or duty.

     25.3 Modifications. No Modifications to this Agreement shall be binding unless in
writing and signed by the Parties, with the exception of changes made pursuant to the Change Orders
provision of this Agreement which are binding pursuant to the terms thereunder.

     25.4 No Exclusivity. Nothing contained herein shall (i) obligate Company to any
exclusive relationship with Provider; (ii) restrict or preclude Company from contracting with any
competitor of Provider; or (iii) obligate Company to purchase any minimum amount of tangible or
intangible goods or services from Provider.

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     25.5 Assignment. Company has specifically contracted with Provider because of its
unique experience, expertise and qualifications; and, therefore, Provider may not assign or
delegate Provider’s obligations under this Agreement, either in whole or in part, without the prior
written consent of Company. Any attempt by Provider to assign or delegate this Agreement, in whole
or in part, without Company’s prior written consent, shall be deemed a default hereunder and such
assignment or delegation shall be voidable at the option of Company. Company may assign this
Agreement at any time upon the prior written consent of Provider, which shall not be unreasonably
withheld. Any assignment of Provider’s obligations hereunder by operation of law, order of any
court, or pursuant to any plan of merger, consolidation or liquidation, shall be deemed an
assignment for which prior written consent of Company is required and any such assignment made
without any such consent shall be voidable at the option of Company. This Agreement shall be
binding on the Parties and their respective successors and permitted assigns.

     25.6 Governing Law. This Agreement shall be governed by the laws of the State of
California, excluding conflict of law rules. The sale of Assemblies hereunder shall not be governed
by, or subject to, the United Nations Convention on Contracts for the International Sale of Goods.

     25.7 Venue, Jurisdiction. With respect to any dispute arising out of, under, or in
connection with this Agreement or the transactions contemplated hereby, the Parties hereby
irrevocably and unconditionally submit to the exclusive jurisdiction and venue (and waive any claim
of forum non conveniens) of (i) the state or federal court of competent jurisdiction sitting in Los
Angeles County, California; or (ii) if such court does not have jurisdiction, the United States
District Court for the Central District of California.

     25.8 Publicity. Except for the purposes of performance hereunder, Provider shall not
use, or allow Provider’s Representatives or Subcontractors to use, Company’s name, the names of
Company’s subsidiaries or parent (if any), or any derivatives thereof without Company’s prior
written consent, which may be withheld at Company’s sole discretion. This prohibition of use shall
include without limitation use in any publicity or advertising, including without limitation media
releases, public announcements, or public disclosures. Provider shall immediately provide notice
to Company if it becomes aware of any violation of this prohibition and, at Provider’s sole
expense, take such steps necessary to cease and cure such violation to Company’s satisfaction.

     25.9 Waiver. No action or inaction by either Party shall be construed as a waiver of
a Party’s rights under this Agreement or as provided by law. None of the terms of this Agreement
may be waived except by an express agreement in writing signed by the waiving Party. The failure
or delay of a Party in enforcing any of its rights under this Agreement shall not be deemed a
continuing waiver of such right. The waiver of one breach hereunder shall not constitute the
waiver of any other or subsequent breach.

     25.10 Severability. In the event any provision of this Agreement conflicts with the
law under which this Agreement is to be construed or if any such provision is held illegal, invalid
or unenforceable, in whole or in part, by a competent authority, such provision shall be deemed to

29

 

be restated to reflect as nearly as possible the original intentions of the parties in
accordance with Applicable Law. The legality, validity and enforceability of the remaining
provisions shall not be affected thereby and shall remain in full force and effect.

     25.11 Survival. The following sections shall survive such expiration or termination
of this Agreement: 1, 9, 11, 16, 17, 18, 19, 20.7, 21, 22, 24, and 25.

     25.12 Entire Agreement. This Agreement shall constitute the entire agreement between
the Parties and set forth the entire terms and conditions under which this Agreement will be
performed. There are no other agreements, oral or written, with respect to the subject matter of
this Agreement, and all oral and written correspondence relating to the subject matter hereof is
superseded by this Agreement.

     25.13 Gratuities. Provider, its employees, agents or representatives represent and
warrant that they have not and will not offer or give to an officer, official or employee of
Company gifts, entertainment, payments, loans or other gratuities in order to or that may influence
the award of a contract or obtain favorable treatment under a contract.

     25.14 Third-Party Beneficiaries. Except as expressly provided for in this Agreement,
(i) this Agreement is entered into solely between, and may be enforced only by, Company and
Provider; and (ii) this Agreement shall not be deemed to create any rights in third parties,
including without limitation Subcontractors, or to create any obligations of a Party to any such
third parties.

     25.15 Remedies Cumulative. Unless otherwise expressly provided hereunder, no remedy
or election hereunder shall be deemed exclusive but shall, whenever possible, be cumulative, in
addition to, and not in lieu of any other remedies available at law or in equity.

     25.16 Headings. Section headings are for reference purposes only and shall not be
considered in the construing of this Agreement.

     25.17 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original and all of which together shall constitute one and the same
document, binding on all Parties notwithstanding that each of the Parties may have signed different
counterparts.

     25.18 Construction. The Parties acknowledge that each Party is of equal bargaining
strength, has actively participated in the preparation and negotiation of this Agreement. Each
Party is entering into this Agreement on its own free will and is not acting under duress or
coercion of any kind or nature whatsoever. Each Party has had the right and opportunity to consult
with legal counsel of its choice in connection with this Agreement; and each Party has either done
so, or has voluntarily declined to do so free from duress or coercion. Any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall not apply in the
interpretation of this Agreement, any portion hereof, or any Modifications hereto.

30

 

     25.19 Precedence. In the event of a conflict between the terms and conditions set
forth in this Agreement and the terms and conditions set forth in any Purchase Order or SOW or in
the event that the Purchase Order or SOW introduce new obligations to a party, the terms and
conditions set forth in this Agreement will control unless expressly stated otherwise and agreed to
in writing by both Parties. In the event of a conflict between the terms and conditions set forth
in a Purchase Order and the terms and conditions set forth in any SOW, the terms and conditions set
forth in a mutually agreed to Purchase Order, where both parties expressly agree to the specific
terms and conditions, will control unless expressly stated otherwise. No subcontract shall alter
the intent of this Agreement or bind Company in any respect whatsoever. Where conflicts occur
between the Subcontractor agreements and this Agreement and such conflicts regard the quantity or
quality of goods or services, unless otherwise specified by Company in writing, the greatest
quantity and highest quality shall govern at no additional cost to Company. With respect to any
other conflicts between any Subcontractor agreement and this Agreement, the terms and conditions of
this Agreement shall govern. Provider must notify Company immediately of any conflicts described in
this Section.

     25.20 Other Interpretive Provisions. The words “include” and “including” and words of
similar import will not be construed to be limiting or exclusive. Except as provided in particular
context, the word “or” when used in this Agreement may mean each as well as all alternatives.
Unless expressly stated otherwise, periods of time are based on their passage on the calendar
(e.g., a “quarter” is a “calendar quarter”).

     25.21 Force Majeure. In the event that either party is prevented from performing or is
unable to perform any of its obligations under this Agreement due to any act of God, fire,
casualty, flood, earthquake, war, strike, lockout, epidemic, riot, insurrection, or similar events
beyond the reasonable control of the party invoking this section (collectively, a “Force Majeure
Event”), 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.

31

 

     IN WITNESS WHEREOF, this Master Services Agreement is effective as of the Effective Date and
has been executed by the duly authorized representatives of Company and Provider on the respective
dates indicated below.

	 	 	 	 	 	 	 	 	 
	Provider	 	 	 	Company
	 
	 	 	 	 	 	 	 	 
	By:
	 	/s/  Todd Kelsey	 	 	 	By:	 	/s/  Thomas B. Miller
	 
	 	 

	 	 
	 	 	 	 

	Name:

	 	Todd Kelsey	 	 	 	Name:	 	Thomas B. Miller
	 

	 	 

	 	 
	 	 	 	 

	Title:

	 	Sr. Vice President — Global Customer Services	 	 	 	Title:	 	CFO
	 

	 	 

	 	 
	 	 	 	 

	Date:

	 	January 29, 2009	 	 	 	Date:	 	January 26, 2009
	 

	 	 

	 	 
	 	 	 	 

32

 

EXHIBIT A

INSURANCE REQUIREMENTS

Coverage Requirements. Without limiting any of the obligations or liabilities of Provider,
Provider will maintain, at their own expense, until the later of the termination of the warranty
period for all Products and/or Services and one (1) year following the expiration or termination of
this Agreement, insurance policies of the kind and limits listed below:

     (a) Worker’s Compensation Insurance. Workers Compensation Insurance as required by
applicable law having jurisdiction over such entity’s employees wherever work is to be performed
under this Agreement.

     (b) Employer’s Liability Insurance. Employer’s Liability Insurance in an amount which
is in keeping with the applicable law having jurisdiction over such entity’s employees wherever
work is to be performed under this Agreement or $1,000,000, whichever is greater.

	 	(c)	 	General Liability Insurance. Comprehensive or Commercial General
Liability Insurance (including but not limited to premises and operations, products and
completed operations, contractual liability and personal injury liability (with a
minimum limit of $2,000,000 combined single limit per occurrence and $10,000,000 in the
aggregate. This policy obtained by Provider will include a waiver of subrogation in
favor of the Company and its officers, directors, employees and subsidiaries.
	 
	 	(d)	 	Professional Liability Insurance. Professional Liability Insurance
covering liability imposed by law of contract arising out of an error, omission or
negligent act in performance, or lack thereof, of professional services, with a limit
of not less than $10,000,000 per claim and in the aggregate.
	 
	 	(e)	 	Property. Business Interruption and extra expense coverage with a
minimum limit of $15,000,000. Property Insurance on a replacement cost basis including
coverage for property of others in Provider’s care, custody, and control and Company
shall be named as a loss payee under Provider’s applicable insurance policy.

Claims Made Coverage. If any policies have “claims made” coverage, Provider will maintain such
coverages for a minimum of three years after the permitted date of termination specified above.
Any such coverage must have a retroactive date no later than the date upon which work commenced
under this Agreement.

Additional Requirements. All deductibles on policies providing coverage will be paid by Provider.
If Provider is self insured for any matter, such entity agrees to respond to any claims or losses
made against or incurred by Company and indemnified by Provider under this Agreement in the same
fashion as if insurance had been purchased with the same or broader coverage terms as what is
generally available to similar entities in the same line of business. In no event will the
coverages or limits of any insurance required under this Exhibit, or the lack or

33

 

unavailability of any other insurance, be deemed to limit or diminish in any way any Provider
obligations or liability to Company under this Agreement.

All insurance policies will be written by a company with a minimum AM Best Rating of at least A-7
and by authorized to do business in the territory and jurisdiction relevant to the particular
coverage. All insurance policies will be written with appropriately licensed and financially
responsible insurers.

Certificate of Insurance. Provider will furnish Certificates of Insurance acceptable to the Company
before any Products and/or Services are produced or Services performed under this Agreement by
Provider. The Certificate of Insurance will provide that there will be no cancellation or
reduction of coverage without thirty (30) days’ prior written notice to Company.

34

 

EXHIBIT B

Supplier Corrective Action Request

35

 

EXHIBIT C

Metrics and Reporting

Provider agrees to provide reports in the following manner unless there is a current standard
report used by the Provider that is mutually acceptable to both Parties.

Quarterly Cost Reduction Report

Provider agrees to update quarterly pricing using the following formats:

     Product pricing summary:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Test	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Extended	 	Material	 	Assembly	 	Test	 	Labor	 	 	 	 	 	 	 	 	 	Freight &	 	 
	Part Number	 	Qty Per	 	Material	 	Material	 	Overhead	 	Labor	 	Labor	 	Overhead	 	SGA	 	Profit	 	Duties	 	Total
	860-XXXX-XX
	 	 	1	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	 	 	 	 	 	 	 
	850-XXXX-XX-XX
	 	 	1	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	 	 	 	 	 	 	 
	850-XXXX-XX-XX
	 	 	1	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	 	 	 	 	 	 	 
	850-XXXX-XX-XX
	 	 	4	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	 	 	 	 	 	 	 
	Total
	 	 	 	 	 	 	 	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 

     Price variance summary

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Test	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Extended	 	Material	 	Assembly	 	Test	 	Labor	 	 	 	 	 	 	 	 	 	Freight &	 	 
	Part Number	 	Qty Per	 	Material	 	Material	 	Overhead	 	Labor	 	Labor	 	Overhead	 	SGA	 	Profit	 	Duties	 	Total
	860-XXXX-XX
	 	 	1	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	 	 	 	 	 	 	 
	850-XXXX-XX-XX
	 	 	1	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	 	 	 	 	 	 	 
	850-XXXX-XX-XX
	 	 	1	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	 	 	 	 	 	 	 
	850-XXXX-XX-XX
	 	 	4	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	 	 	 	 	 	 	 
	Total
	 	 	 	 	 	 	 	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 

36

 

On-time Delivery Report

     Company agrees to measure and report delivery performance with Provider’s on a monthly
basis for all Products. Report will include Product number, Quantity, Purchase Order due date,
Date received, Quantity received. Provider agrees to provide a Pareto chart of reasons for any
late deliveries.

     WIP Status Report

Provider will provide to Company access to real time work in process data showing from work in
process (shop floor), through test, through finished goods, through in-transit and through
delivery. Preferred delivery method is through web portal.

Quality Performance

Provider agrees to provide quality metrics per process by Product in a format as agreed to by
Company. Metrics to include specific failure information to component and operator level if
applicable. Monthly quality metrics will be submitted to Company by Provider within five (5)
Business Days of calendar end of each month. Metric history to be maintained by Provider for a
minimum period of one (1) year from the time of submission to Company. Metrics will include but
not limited to:

Incoming Material inspection yield

Assembly process yields

Inspection yields

Test yields

End to End process yield (after first pass)

Total assembly yield (after attrition)

RMA/Return yield

Payment Performance

     Provider agrees to provide metrics (e.g. accounts receivable aging report) related to
payment progress as per the agreed upon payment terms. Report to also include unapplied debit
memos.

Material Exposure Report

Within five (5) business days after receipt of a Purchase Order Provider will provide Company
with a report identifying material exposure to the Purchase Order term and approved special
inventory exposure outside the Purchase Order term.

Engineering Change Order Impact Report

Within three (3) business days after receipt of an engineering change order identifying but not
limited to the following;

37

 

Inventory impact including on hand, on order, work in process, finished goods, and in transit
quantities with non-cancelable, non-returnable parts identified.

Test impact

Assembly and/or production impact

Product lead time impact

Product Lead-time Report

Provider will provide Company with a quarterly lead-time report for each Product. The report
will list the part number (some part numbers may be aggregated as mutually agreed), brief
description, average monthly usage, lead-time.

Waterfall Chart

Provider will provide to Company on a monthly basis a waterfall chart identifying schedule
changes with a minimum window of 12 mos.

Supply Chain Quarterly Report

Provider will provide to Company Provider’s supplier rating report for suppliers engaged on
Company’s program.

Meetings

	 	•	 	Quarterly Business Review

	 	o	 	Monthly Business Review items
	 
	 	o	 	Price Review
	 
	 	o	 	Quality reporting
	 
	 	o	 	Provide A/R Aging including unapplied debit memos
	 
	 	o	 	Material Exposure items
	 
	 	o	 	Quarterly Price Review (~5th of month)

	 	•	 	Quarterly Cost Reduction Meeting
	 
	 	•	 	Monthly Business Review (~15th of month)

	 	o	 	Forecast/PO
	 
	 	o	 	Exceptions
	 
	 	o	 	OTD, Recovery Plan, Pareto
	 
	 	o	 	Mat’l Exposure Report
	 
	 	o	 	Leadtime (Product)
	 
	 	o	 	Quality Reports
	 
	 	o	 	ECO

	 	•	 	Quality Metrics Review — Monthly
	 
	 	•	 	Defect Reduction Team Meeting — Bi-weekly

38

 

EXHIBIT D

Electronic Industry Code of Conduct

Version 2.0.1 October 2007

ELECTRONIC INDUSTRY CODE OF CONDUCT

The Electronic Industry Code of Conduct outlines standards to ensure that working conditions in the
electronics industry supply chain are safe, that workers are treated with respect and dignity, and
that manufacturing processes are environmentally responsible.

Considered as part of the electronics industry for purposes of this Code are Original Equipment
Manufacturers (OEMs), Electronic Manufacturing Services (EMS) firms and Original Design
Manufacturers (ODMs) including contracted labor that may design, market, manufacture and/or provide
goods and services that are used to produce electronic goods. The Code may be voluntarily adopted
by any business in the electronics sector and subsequently applied by that business to its supply
chain and subcontractors.

To adopt the Code and become a participant (“Participant”), a business shall declare its support
for the Code and seek to conform to the Code and its standards in accordance with a management
system as set forth in the Code.

For the Code to be successful, it is acknowledged that Participants should regard the code as a
total supply chain initiative. At a minimum, participants shall require its next tier suppliers to
acknowledge and implement the Code.

Fundamental to adopting the Code is the understanding that a business, in all of its activities,
must operate in full compliance with the laws, rules and regulations of the 1countries in which it
operates. The Code encourages Participants to go beyond legal compliance, drawing upon
internationally recognized standards, in order to advance social and environmental responsibility.

The Electronic Industry Code Participants are committed to obtaining regular input from
stakeholders in the continued development and implementation of the Electronic Industry Code of
Conduct (EICC).

The Code is made up of five sections. Sections A, B, and C outline standards for Labor, Health and
Safety, and the Environment, respectively. Section D outlines the elements of an acceptable system
to manage conformity to this Code. Section E adds standards relating to business ethics.

 

			
	1	 	The Code is not intended to create new and additional third party rights, including for employees

39

 

A. LABOR

Participants are committed to uphold the human rights of workers, and to treat them with dignity
and respect as understood by the international community.

Recognized standards such as the Universal Declaration of Human Rights (UDHR), Social
Accountability International (SAI) and the Ethical Trading Initiative (ETI) were used as references
in preparing the Code and may be a useful source of additional information.

The labor standards are:

	 	1.	 	Freely Chosen Employment
	 
	 	 	 	Forced, bonded or indentured labor or involuntary prison labor is not to be used. All work
will be voluntary, and workers should be free to leave upon reasonable notice. Workers shall
not be required to hand over government-issued identification, passports or work permits as
a condition of employment.
	 
	 	2.	 	Child Labor Avoidance
	 
	 	 	 	Child labor is not to be used in any stage of manufacturing. The term “child” refers to any
person employed under the age of 15 (or 14 where the law of the country permits), or under
the age for completing compulsory education, or under the minimum age for employment in the
country, whichever is greatest. The use of legitimate workplace apprenticeship programs,
which comply with all laws and regulations, is supported. Workers under the age of 18 should
not perform hazardous work and may be restricted from night work with consideration given to
educational needs.
	 
	 	3.	 	Working Hours
	 
	 	 	 	Studies of business practices clearly link worker strain to reduced productivity, increased
turnover and increased injury and illness. Workweeks are not to exceed the maximum set by
local law. Further, a workweek should not be more than 60 hours per week, including
overtime, except in emergency or unusual situations. Workers shall be allowed at least one
day off per seven-day week.
	 
	 	4.	 	Wages and Benefits
	 
	 	 	 	Compensation paid to workers shall comply with all applicable wage laws, including those
relating to minimum wages, overtime hours and legally mandated benefits. In compliance with
local laws, workers shall be compensated for overtime at pay rates greater than regular
hourly rates. Deductions from wages as a disciplinary measure shall not be permitted.
	 
	 	 	 	The basis on which workers are being paid is to be provided in a timely manner via pay stub
or similar documentation.
	 
	 	5.	 	Humane Treatment
	 
	 	 	 	There is to be no harsh and inhumane treatment, including any sexual harassment, sexual
abuse, corporal punishment, mental or physical coercion or verbal abuse of workers: nor is
there to be the threat of any such treatment.

40

 

	 	6.	 	Non-Discrimination
	 
	 	 	 	Participants should be committed to a workforce free of harassment and unlawful
discrimination. Companies shall not engage in discrimination based on race, color, age,
gender, sexual orientation, ethnicity, disability, pregnancy, religion, political
affiliation, union membership or marital status in hiring and employment practices such as
promotions, rewards, and access to training. In addition, workers or potential workers
should not be subjected to medical tests that could be used in a discriminatory way.
	 
	 	7.	 	Freedom of Association
	 
	 	 	 	Participants are to respect the rights of workers as established by local law to associate
freely on a voluntary basis, seek representation, join or be represented by Works Councils,
and join or not join labor unions and bargain collectively as they choose. As provided by
law, employees who become worker representatives shall not be the subject of discrimination
and shall have access to management and coworkers in order to carry out their representative
functions. Workers shall be able to communicate openly with management regarding working
conditions without fear of reprisal, intimidation or harassment. In saying that worker
rights are to be respected as established or provided by local law, what HP means is that in
countries that have legal systems that support those rights, they are to be understood in
the context of the definitions, conditions and procedures that local law provides. However,
basic worker rights to open communication, direct engagement and humane and equitable
treatment must be respected even in countries where they are not given meaningful legal
protection. Where worker representation and collective bargaining are restricted by law,
participants are to facilitate open communication and direct engagement between workers and
management as alternative ways of ensuring that workers’ rights, needs and views are
considered and acted upon appropriately and in good faith. Open communication and direct
engagement between workers and management are the most effective ways to resolve workplace
and compensation issues.

B. HEALTH and SAFETY

Participants recognize that the quality of products and services, consistency of production and
workers’ morale are enhanced by a safe and healthy work environment. Participants also recognize
that ongoing worker input and education is key to identifying and solving health and safety issues
in the workplace.

Recognized management systems such as OHSAS 18001 and ILO Guidelines on Occupational Safety and
Health were used as references in preparing the Code and may be a useful source of additional
information.

The health and safety standards are:

	 	1.	 	Occupational Safety
	 
	 	 	 	Worker exposure to potential safety hazards (e.g., electrical and other energy sources,
fire, vehicles, and fall hazards) are to be controlled through proper design, engineering
and administrative controls, preventative maintenance and safe work procedures (including
lockout/tagout). Where hazards cannot be adequately controlled by these means, workers are
to be provided with appropriate personal protective equipment. Workers shall not be
disciplined for raising safety concerns.

41

 

	 	2.	 	Emergency Preparedness
	 
	 	 	 	Emergency situations and events are to be identified and assessed, and their impact
minimized by implementing emergency plans and response procedures, including: emergency
reporting, employee notification and evacuation procedures, worker training and drills,
appropriate fire detection and suppression equipment, adequate exit facilities and recovery
plans.
	 
	 	3.	 	Occupational Injury and Illness
	 
	 	 	 	Procedures and systems are to be in place to manage, track and report occupational injury
and illness, including provisions to: a) encourage worker reporting; b) classify and record
injury and illness cases; c) provide necessary medical treatment; d) investigate cases and
implement corrective actions to eliminate their causes; and d) facilitate return of workers
to work.
	 
	 	4.	 	Industrial Hygiene
	 
	 	 	 	Worker exposure to chemical, biological and physical agents is to be identified, evaluated,
and controlled. When hazards cannot be adequately controlled by engineering and
administrative means, workers are to be provided with appropriate personal protective
equipment.
	 
	 	5.	 	Physically Demanding Work
	 
	 	 	 	Worker exposure to physically demanding tasks, including manual material handling and heavy
lifting, prolonged standing and highly repetitive or forceful assembly tasks is to be
identified, evaluated and controlled.
	 
	 	6.	 	Machine Safeguarding
	 
	 	 	 	Physical guards, interlocks and barriers are to be provided and properly maintained for
machinery used by workers.
	 
	 	7.	 	Dormitory and Canteen
	 
	 	 	 	Workers are to be provided with clean toilet facilities, access to potable water and
sanitary food preparation and storage facilities. Worker dormitories provided by the
Participant or a labor agent are to be clean, safe, and provide emergency egress, adequate
heat and ventilation and reasonable personal space.

C. ENVIRONMENTAL

Participants recognize that environmental responsibility is integral to producing world class
products. In manufacturing operations, adverse effects on the community, environment and natural
resources are to be minimized while safeguarding the health and safety of the public.

Recognized management systems such as ISO 14001, the Eco Management and Audit System (EMAS) were
used as references in preparing the Code and may be a useful source of additional information.

The environmental standards are:

	 	1.	 	Environmental Permits and Reporting

42

 

	 	 	 	All required environmental permits (e.g. discharge monitoring) and registrations are to be
obtained, maintained and kept current and their operational and reporting requirements are
to be followed.
	 
	 	2.	 	Pollution Prevention and Resource Reduction
	 
	 	 	 	Waste of all types, including water and energy, are to be reduced or eliminated at the
source or by practices such as modifying production, maintenance and facility processes,
materials substitution, conservation, recycling and re-using materials.
	 
	 	3.	 	Hazardous Substances
	 
	 	 	 	Chemical and other materials posing a hazard if released to the environment are to be
identified and managed to ensure their safe handling, movement, storage, recycling or reuse
and disposal.
	 
	 	4.	 	Wastewater and Solid Waste
	 
	 	 	 	Wastewater and solid waste generated from operations, industrial processes and sanitation
facilities are to be monitored, controlled and treated as required prior to discharge or
disposal.
	 
	 	5.	 	Air Emissions
	 
	 	 	 	Air emissions of volatile organic chemicals, aerosols, corrosives, particulates, ozone
depleting chemicals and combustion by-products generated from operations are to be
characterized, monitored, controlled and treated as required prior to discharge.
	 
	 	6.	 	Product Content Restrictions
	 
	 	 	 	Participants are to adhere to all applicable laws and regulations regarding prohibition or
restriction of specific substances including labeling laws and regulations for recycling and
disposal. Participants are also to adhere to processes to comply with each agreed-upon
customer-specific restricted and hazardous materials list.

D. MANAGEMENT SYSTEM

Participants shall adopt or establish a management system whose scope is related to the content of
this Code. The management system shall be designed to ensure (a) compliance with applicable laws,
regulations and customer requirements related to the participant’s operations and products; (b)
conformance with this Code; and (c) identification and mitigation of operational risks related to
this Code. It should also facilitate continual improvement.

The management system should contain the following elements:

	 	1.	 	Company Commitment
	 
	 	 	 	Corporate social and environmental responsibility statements affirming Participant’s
commitment to compliance and continual improvement.
	 
	 	2.	 	Management Accountability and Responsibility
	 
	 	 	 	Clearly identified company representative[s] responsible for ensuring implementation and
periodic review of the status of the management systems.

43

 

	 	3.	 	Legal and Customer Requirements
	 
	 	 	 	Identification, monitoring and understanding of applicable laws, regulations and customer
requirements.
	 
	 	4.	 	Risk Assessment and Risk Management
	 
	 	 	 	Process to identify the environmental, health and safety2 and labor practice risks
associated with Participant’s operations. Determination of the relative significance for
each risk and implementation of appropriate procedural and physical controls to ensure
regulatory compliance to control the identified risks.
	 
	 	5.	 	Performance Objectives with Implementation Plan and Measures
	 
	 	 	 	Written standards, performance objectives, targets and implementation plans including a
periodic assessment of Participant’s performance against those objectives.
	 
	 	6.	 	Training
	 
	 	 	 	Programs for training managers and workers to implement Participant’s policies, procedures
and improvement objectives.
	 
	 	7.	 	Communication
	 
	 	 	 	Process for communicating clear and accurate information about Participant’s performance,
practices and expectations to workers, suppliers and customers.
	 
	 	8.	 	Worker Feedback and Participation
	 
	 	 	 	Ongoing processes to assess employees’ understanding of and obtain feedback on practices and
conditions covered by this Code and to foster continuous improvement.

 

			
	2	 	Areas to be included in a risk assessment for health and safety are warehouse and storage
facilities, plant/facilities support equipment, laboratories and test areas, sanitation facilities
(bathrooms), kitchen/cafeteria and worker housing /dormitories.

44

 

	 	9.	 	Audits and Assessments
	 
	 	 	 	Periodic self-evaluations to ensure conformity to legal and regulatory requirements, the
content of the Code and customer contractual requirements related to social and
environmental responsibility.
	 
	 	10.	 	Corrective Action Process
	 
	 	 	 	Process for timely correction of deficiencies identified by internal or external
assessments, inspections, investigations and reviews.
	 
	 	11.	 	Documentation and Records
	 
	 	 	 	Creation of documents and records to ensure regulatory compliance and conformity to company
requirements along with appropriate confidentiality to protect privacy.

E. ETHICS

To meet social responsibilities and to achieve success in the marketplace, Participants and their
agents are to uphold the highest standards of ethics including:

	 	1.	 	Business Integrity
	 
	 	 	 	The highest standards of integrity are to be expected in all business interactions.

Any and all forms of corruption, extortion and embezzlement are strictly prohibited
resulting in immediate termination and legal actions.
	 
	 	2.	 	No Improper Advantage
	 
	 	 	 	Bribes or other means of obtaining undue or improper advantage are not to be offered or
accepted.
	 
	 	3.	 	Disclosure of Information
	 
	 	 	 	Information regarding business activities, structure, financial situation and performance is
to be disclosed in accordance with applicable regulations and prevailing industry practices.
	 
	 	4.	 	Intellectual Property
	 
	 	 	 	Intellectual property rights are to be respected; transfer of technology and know how is to
be done in a manner that protects intellectual property rights.
	 
	 	5.	 	Fair Business, Advertising and Competition
	 
	 	 	 	Standards of fair business, advertising and competition are to be upheld. Means to safeguard
customer information should be available.
	 
	 	6.	 	Protection of Identity
	 
	 	 	 	Programs that ensure the protection of supplier and employee whistleblower confidentiality
are to be maintained.
	 
	 	7.	 	Community Engagement
	 
	 	 	 	Community engagement is encouraged to help foster social and economic development.

45

 

References: The following standards were used in preparing this Code and may be a useful source of
additional information. The following standards may or may not be endorsed by each Participant.

ILO Code of Practice in Safety and Health

www.ilo.org/public/english/protection/safework/cops/english/download/e000013.pdf

National Fire Protection Agency

www.nfpa.org/catalog/home/AboutNFPA/index.asp

ILO International Labor Standards

www.ilo.org/public/english/standards/norm/whatare/fundam/index.htm

OECD Guidelines for Multinational Enterprises

www.oecd.org

United Nations Convention Against Corruption

www.unodc.org/unodc/en/crime_convention_corruption.html

United Nations Global Compact

www.unglobalcompact.org

Universal Declaration of Human Rights

www.un.org/Overview/rights.html

ISO 14001

www.iso.org

SA 8000

www.cepaa.org/

SAI

www.sa-intl.org

Ethical Trading Initiative

www.ethicaltrade.org/

OHSAS 18001

www.bsi-global.com/index.xalter

Eco Management & Audit System

www.quality.co.uk/emas.htm

46

 

EXHIBIT E

IXIA Nomenclature

 

 

EXHIBIT F

Sample Bill of Material

 

 

EXHIBIT G

Cost Breakdown Spreadsheet

     Cost Breakdown Sheet:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Test	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Extended	 	 	Material	 	 	Assembly	 	 	Test	 	 	Labor	 	 	 	 	 	 	 	 	 	 	Freight &	 	 	 	 
	Part Number	 	Qty Per	 	 	Material	 	 	Material	 	 	Overhead	 	 	Labor	 	 	Labor	 	 	Overhead	 	 	SGA	 	 	Profit	 	 	Duties	 	 	Total	 
	860-XXXX-XX
	 	 	1	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	 	 	 	 	 	 	 
	850-XXXX-XX-XX
	 	 	1	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	 	 	 	 	 	 	 
	850-XXXX-XX-XX
	 	 	1	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	 	 	 	 	 	 	 
	850-XXXX-XX-XX
	 	 	4	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	 	 	 	 	 	 	 
	Total
	 	 	 	 	 	 	 	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 

49

 

EXHIBIT H

Sample Forecast Spreadsheet

 

 

EXHIBIT I

INVENTORY DEPOSIT AGREEMENT

	1)	 	Provider and Company will agree on the Excess inventory dollars to be claimed.
	 
	2)	 	The following terms will apply for the disposition of Excess Inventory through an inventory
deposit.

	 	a.	 	Provider has full rights to offset the deposit against the agreed Excess
inventory, if the inventory is not otherwise paid for by Company.
	 
	 	b.	 	A mutually agreed upon reconciliation (either monthly or quarterly) will be
carried out on the variance between the current agreed excess inventory dollars and the
established inventory deposit as follows:

	 	i.	 	If the agreed Excess balance exceeds the current inventory
deposit, the additional amount will be funded from Company to Provider as an
incremental deposit.
	 
	 	ii.	 	If the agreed Excess balance is less than the current
inventory deposit, the difference will be refunded from Provider to Company
as a reduction of the deposit.
	 
	 	iii.	 	Payment Flow: The party, which will receive the payment
based on the agreeable variance, will issue an invoice to the counter party.
Upon receiving the invoice, the counter party shall make the payment on the
next available routine payment date.

	 	c.	 	In the case of termination of contract initiated by either Provider or Company,
the accumulated deposit balance will be repaid by Provider to Company, to the extent
that the inventory has been otherwise paid for by Company. Company will issue an
invoice to Provider. Upon receiving the invoice, Provider shall make payment on the
next available routine payment date.

51

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