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Exhibit 10.3  

 
 

VERIGY LTD.    
    
    2006 EMPLOYEE SHARES PURCHASE PLAN    
    
    (AS ADOPTED
EFFECTIVE                        , 2006)    
    

TABLE OF CONTENTS  

	 
	 	 
	 	Page

	SECTION 1.	 	PURPOSE OF THE PLAN	 	1
	

SECTION 2.	
 	

ADMINISTRATION OF THE PLAN	
 	

1
	 	(a)	 	Committee Composition	 	1
	 	(b)	 	Committee Responsibilities	 	1
	

SECTION 3.	
 	

STOCK OFFERED UNDER THE PLAN	
 	

1
	 	(a)	 	Authorized Shares	 	1
	 	(b)	 	Anti-Dilution Adjustments	 	1
	 	(c)	 	Reorganizations	 	1
	

SECTION 4.	
 	

ENROLLMENT AND PARTICIPATION	
 	

1
	 	(a)	 	Offering Periods	 	1
	 	(c)	 	Enrollment at IPO	 	2
	 	(c)	 	Enrollment After IPO	 	2
	 	(d)	 	Duration of Participation	 	2
	

SECTION 5.	
 	

EMPLOYEE CONTRIBUTIONS	
 	

2
	 	(a)	 	Commencement of Payroll Deductions	 	2
	 	(b)	 	Amount of Payroll Deductions	 	2
	 	(c)	 	Changing Withholding Rate	 	3
	 	(d)	 	Discontinuing Payroll Deductions	 	3
	 	(e)	 	Limit on Number of Elections	 	3
	

SECTION 6.	
 	

WITHDRAWAL FROM THE PLAN	
 	

3
	 	(a)	 	Withdrawal	 	3
	 	(b)	 	Re-Enrollment After Withdrawal	 	3
	

SECTION 7.	
 	

CHANGE IN EMPLOYMENT STATUS	
 	

3
	 	(a)	 	Termination of Employment	 	3
	 	(b)	 	Leave of Absence	 	3
	 	(c)	 	Death	 	3
	

SECTION 8.	
 	

PLAN ACCOUNTS AND PURCHASE OF SHARES	
 	

4
	 	(a)	 	Plan Accounts	 	4
	 	(b)	 	Purchase Price	 	4
	 	(c)	 	Number of Shares Purchased	 	4
	 	(d)	 	Available Shares Insufficient	 	4
	 	(e)	 	Issuance of Stock	 	4
	 	(f)	 	Tax Withholding	 	4
	 	(g)	 	Unused Cash Balances	 	4
	 	(h)	 	Stockholder Approval	 	5
	

SECTION 9.	
 	

LIMITATIONS ON STOCK OWNERSHIP	
 	

5
	 	(a)	 	Five Percent Limit	 	5
	 	(b)	 	Dollar Limit	 	5
	

SECTION 10.	
 	

RIGHTS NOT TRANSFERABLE	
 	

5
	

SECTION 11.	
 	

NO RIGHTS AS AN EMPLOYEE	
 	

6
	

SECTION 12.	
 	

NO RIGHTS AS A STOCKHOLDER	
 	

6
	

SECTION 13.	
 	

AMENDMENT OR DISCONTINUANCE	
 	

6
	

SECTION 14.	
 	

COMMITTEE RULES FOR NON-U.S. JURISDICTIONS	
 	

6
	 	(a)	 	Rules and Procedures	 	6
	 	 	 	 	 

 

	 	(b)	 	Sub-Plans	 	6
	

SECTION 15.	
 	

COMPLIANCE with LAW.	
 	

6
	 	(a)	 	Securities Laws and Regulations	 	6
	 	(b)	 	Governmental Approvals	 	7
	 	(c)	 	Choice of Law	 	7
	

SECTION 16.	
 	

DEFINITIONS	
 	

7
	 	(a)	 	Board	 	7
	 	(b)	 	Code	 	7
	 	(c)	 	Committee	 	7
	 	(d)	 	Company	 	7
	 	(e)	 	Compensation	 	7
	 	(f)	 	Corporate Reorganization	 	7
	 	(g)	 	Eligible Employee	 	7
	 	(h)	 	Exchange Act	 	8
	 	(i)	 	Fair Market Value	 	8
	 	(j)	 	IPO	 	8
	 	(k)	 	Offering Period	 	8
	 	(l)	 	Participant	 	8
	 	(m)	 	Participating Company	 	8
	 	(n)	 	Plan	 	8
	 	(o)	 	Plan Account	 	8
	 	(p)	 	Purchase Price	 	8
	 	(q)	 	Stock	 	8
	 	(r)	 	Subsidiary	 	8

ii

VERIGY LTD.  

 2006 EMPLOYEE SHARES PURCHASE PLAN  

SECTION 1.    PURPOSE OF THE PLAN.  

        The Board adopted the Plan effective as of the date of the IPO. The purpose of the Plan is to provide Eligible Employees with an opportunity to increase their
proprietary interest in the success of the Company by purchasing Shares from the Company on favorable terms and to pay for such purchases through payroll deductions. The Plan is intended to qualify
for favorable tax treatment under section 423 of the Code although the Company undertakes no obligation to maintain such qualification. In addition, this Plan document authorizes the grant of
options to Eligible Employees resident outside of the United States of America pursuant to terms, rules, procedures or sub-plans adopted by the Committee (or its designate) designed to
achieve tax, securities law or other Company objectives but which may not qualify under section 423 of the Code, provided that such terms, rules, procedures or sub-plans shall apply
on a uniform basis to all Eligible Employees employed by a Participating Company if the grants to the Eligible Employees employed by such Participating Company are intended to qualify under
section 423 of the Code. 

SECTION 2.    ADMINISTRATION OF THE PLAN.  

        (a)    Committee Composition.    The Committee shall administer the Plan. The Committee shall consist exclusively of
one or more directors of the Company, who shall be appointed by the Board. 

        (b)    Committee Responsibilities.    The Committee shall have the authority and discretion to interpret the Plan and
make all other policy decisions relating to the operation of the Plan. The Committee may adopt such rules, guidelines and forms as it deems appropriate to implement the Plan. The Committee's
determinations under the Plan shall be final and binding on all persons. 

SECTION 3.    SHARES OFFERED UNDER THE PLAN.  

        (a)    Authorized Shares.    The number of Shares available for purchase under the Plan shall
be                        
(subject to adjustment pursuant to Subsection (b) below). 

        (b)    Anti-Dilution Adjustments.    The aggregate number of Shares offered under the Plan, the
            -share limitation described in Section 8(c) and the price of shares that any Participant has elected to purchase shall be adjusted proportionately for any increase or
decrease in
the number of outstanding Shares resulting from a subdivision or consolidation of Shares or the payment of a share dividend, any other increase or decrease in the outstanding Shares effected without
receipt or payment of consideration by the Company, the distribution of the shares of a Subsidiary to the Company's stockholders, or a similar event. The determination of the basis for, and the
calculation of, any such adjustment shall be made in the discretion of the Committee. 

        (c)    Reorganizations.    Any other provision of the Plan notwithstanding, immediately prior to the effective time of
a Corporate Reorganization, the Offering Period then in progress shall terminate and shares shall be purchased pursuant to Section 8, unless the Plan is continued or assumed by the surviving
corporation or its parent corporation. The Plan shall in no event be construed to restrict in any way the Company's right to undertake a dissolution, liquidation, merger, consolidation or other
reorganization. 

SECTION 4.    ENROLLMENT AND PARTICIPATION.  

        (a)    Offering Periods.    While the Plan is in effect and unless otherwise determined by the Committee, two Offering
Periods shall commence in each calendar year. The Offering Periods shall consist of the six-month periods commencing on each June 1 and December 1, except that: 

          (i)  The
first Offering Period under the Plan shall commence on the date of the IPO and shall end on November 30, 2006; 

 

         (ii)  Prior
to the commencement of any Offering Period, the Committee may in its discretion alter the length of such Offering Period, provided that an Offering Period shall
in no event be longer than 27 months; and 

        (iii)  The
Committee may determine that the first Offering Period applicable to the Eligible Employees of a new Participating Company shall commence on any date specified by
the Committee, provided that an Offering Period shall in no event be longer than 27 months. 

        (b)    Enrollment at IPO.    Each individual who, on the day of the IPO, qualifies as an Eligible Employee shall
automatically become a Participant on such day, and shall initially be deemed to have elected a payroll deduction rate of zero. Each Participant who was automatically enrolled on the day of the IPO
shall confirm their enrollment and participation level in the manner and within the time prescribed by the Company. 

        (c)    Enrollment After IPO.    In the case of any individual who qualifies as an Eligible Employee on the first day
of any Offering Period other than the first Offering Period, he or she may elect to become a Participant on such day by filing the prescribed enrollment form with the Company. The enrollment form
shall be filed at the prescribed location not later than such day. The Company may prescribe electronic enrollment procedures. 

        (d)    Duration of Participation.    Once enrolled in the Plan, a Participant shall continue to participate in the
Plan until he or she: 

          (i)  Reaches
the end of the Offering Period in which his or her employee contributions were discontinued under Section 5(d) or 9(b); 

         (ii)  Is
deemed to withdraw from the Plan under Subsection (b) above; 

        (iii)  Withdraws
from the Plan under Section 6(a); or 

        (iv)  Ceases
to be an Eligible Employee. 

A
Participant whose employee contributions were discontinued automatically under Section 9(b) shall automatically resume participation at the beginning of the earliest Offering Period ending in
the next calendar year, if he or she then is an Eligible Employee. In all other cases, a former Participant may again become a Participant, if he or she then is an Eligible Employee, by following the
procedure described in Subsection (c) above. 

SECTION 5.    EMPLOYEE CONTRIBUTIONS.  

        (a)    Commencement of Payroll Deductions.    A Participant may purchase Shares under the Plan solely by means of
payroll deductions. Payroll deductions shall commence as soon as reasonably practicable after the Company has received the prescribed enrollment form. 

        (b)    Amount of Payroll Deductions.    An Eligible Employee shall designate on the enrollment form the portion of his
or her Compensation that he or she elects to have withheld for the purchase of Shares. Such portion shall be a whole percentage of the Eligible Employee's Compensation, but not more than 10%. 

        (c)    Changing Withholding Rate.    If a Participant wishes to change the rate of payroll withholding, he or she may
do so by filing a new enrollment form with the Company at the prescribed location at any time. The new withholding rate shall be effective as soon as reasonably practicable after the Company has
received such form. The new withholding rate shall be a whole percentage of the Eligible Employee's Compensation, but not less than 1% nor more than 10%. 

        (d)    Discontinuing Payroll Deductions.    If a Participant wishes to discontinue employee contributions entirely, he
or she may do so by filing a new enrollment form with the Company at the 

2

 

prescribed
location at any time. Payroll withholding shall cease as soon as reasonably practicable after the Company has received such form. (In addition, employee contributions may be discontinued
automatically pursuant to Section 9(b).) A Participant who has discontinued employee contributions may resume such contributions by filing a new enrollment form with the Company at the
prescribed location. Payroll withholding shall resume as soon as reasonably practicable after the Company has received such form. 

        (e)    Limit on Number of Elections.    No Participant shall make more than three elections under
Subsection (c) or (d) above during any Offering Period. 

SECTION 6.    WITHDRAWAL FROM THE PLAN.  

        (a)    Withdrawal.    A Participant may elect to withdraw from the Plan by filing the prescribed form with the Company
at the prescribed location at any time before the last day of an Offering Period. As soon as reasonably practicable thereafter, payroll deductions shall cease and the entire amount credited to the
Participant's Plan Account shall be refunded to him or her in cash, without interest. No partial withdrawals shall be permitted. 

        (b)    Deemed Withdrawal.    A Participant shall be deemed to have withdrawn from the Plan where, during an offering
period the Participant has elected to reduce their withholding rate to zero (including, with respect to the first Offering Period, Participants who do not reset their withholding level to a number
above zero) and such election remains in effect at the end of an Offering Period. A withdrawal pursuant to this Section 6(b) will be deemed effective with respect to the Offering Period first
succeeding the Offering Period which ended with a withholding election at the zero level, but will not be deemed a withdrawal from the Offering Period in which the withholding level was reduced to
zero. A former Participant who is deemed to have withdrawn from the Plan shall not be a Participant until he or she re-enrolls in the Plan under Subsection (c) below. Re-enrollment may be
effective only at the commencement of an Offering Period. 

        (c)    Re-Enrollment After Withdrawal.    A former Participant who has withdrawn from the Plan pursuant to
Sections 6(a) or 6(b) shall not be a Participant until he or she re-enrolls in the Plan under Section 4(c). Re-enrollment may be effective only at the
commencement of an Offering Period. 

SECTION 7.    CHANGE IN EMPLOYMENT STATUS.  

        (a)    Termination of Employment.    Termination of status as an Eligible Employee for any reason, including death,
shall be treated as an automatic withdrawal from the Plan under Section 6(a). (A transfer from
one Participating Company to another shall not be treated as a termination of employment.) Determination of Eligible Employee status shall be made by the Committee in its sole discretion. 

        (b)    Leave of Absence.    For purposes of the Plan, employment shall not be deemed to terminate when the Participant
goes on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing. Employment, however,
shall be deemed to terminate 90 days after the Participant goes on a leave, unless a contract or statute guarantees his or her right to return to work. Employment shall be deemed to terminate
in any event when the approved leave ends, unless the Participant immediately returns to work. 

        (c)    Death.    In the event of the Participant's death, the amount credited to his or her Plan Account shall be paid
to a beneficiary designated by him or her for this purpose on the prescribed form or, if none, to the Participant's estate. Such form shall be valid only if it was filed with the Company at the
prescribed location before the Participant's death and is otherwise valid under applicable law. 

3

 

SECTION 8.    PLAN ACCOUNTS AND PURCHASE OF SHARES.  

        (a)    Plan Accounts.    The Company shall maintain a Plan Account on its books in the name of each Participant.
Whenever an amount is deducted from the Participant's Compensation under the Plan, such amount shall be credited to the Participant's Plan Account. Amounts credited to Plan Accounts shall not be trust
funds and may be commingled with the Company's general assets and applied to general corporate purposes unless otherwise determined by the Committee in order to comply with local law. No interest
shall be credited to Plan Accounts. 

        (b)    Purchase Price.    The Purchase Price for each Share purchased at the close of an Offering Period shall be the
lower of: 

          (i)  85%
of the Fair Market Value of one Share on the last trading day before the commencement of such Offering Period or, in the case of the first Offering Period under the
Plan, 85% of the IPO Price; or 

         (ii)  85%
of the Fair Market Value of one Share on the last trading day in such Offering Period. 

        (c)    Number of Shares Purchased.    As of the last day of each Offering Period, each Participant shall be deemed to
have elected to purchase the number of Shares calculated in accordance with this Subsection (c), unless the Participant has previously elected to withdraw from the Plan in accordance with
Section 6(a). The amount then in the Participant's Plan Account shall be divided by the Purchase Price, and the number of shares that results shall be purchased from the Company with the funds
in the Participant's Plan Account. The foregoing notwithstanding, no Participant shall purchase more than            Shares with respect to any Offering Period nor more than the amounts of
Shares
set forth in Sections 3(a) and 9(b). The Committee may determine with respect to all Participants that any fractional share, as calculated under this Subsection (c), shall be
(i) rounded down to the next lower whole share or (ii) credited as a fractional share. 

        (d)    Available Shares Insufficient.    In the event that the aggregate number of shares that all Participants elect
to purchase during an Offering Period exceeds the maximum number of shares remaining available for issuance under Section 3, then the number of shares to which each Participant is entitled
shall be determined by multiplying the number of shares available for issuance by a fraction. The numerator of such fraction is the number of shares that such Participant has elected to purchase, and
the denominator of such fraction is the number of shares that all Participants have elected to purchase. 

        (e)    Issuance of Shares.    Certificates representing the Shares purchased by a Participant under the Plan shall be
issued to him or her as soon as reasonably practicable after the close of the applicable Offering Period, except that the Committee may determine that such shares shall be held for each Participant's
benefit by a broker designated by the Committee (unless the Participant has elected that certificates be issued to him or her). 

        (f)    Tax Withholding.    To the extent required by applicable federal, state, local or foreign law, as determined by
the Committee, a Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not
be required to issue any Shares under the Plan until such obligations are satisfied. 

        (g)    Unused Cash Balances.    An amount remaining in the Participant's Plan Account that represents the Purchase
Price for any fractional share shall be carried over in the Participant's Plan Account to the next Offering Period. Any amount remaining in the Participant's Plan Account that represents the Purchase
Price for whole shares that could not be purchased by reason of Subsection (c) above, Section 3 or Section 9(b) shall be refunded to the Participant in cash, without interest. 

4

 

        (h)    Shareholder Approval.    Any other provision of the Plan notwithstanding, no Shares shall be purchased under
the Plan unless and until the Company's stockholders have approved the adoption of, and the issuance of Shares under, the Plan. 

SECTION 9.    LIMITATIONS ON STOCK OWNERSHIP.  

        (a)    Five Percent Limit.    Any other provision of the Plan notwithstanding, no Participant shall be granted a right
to purchase Shares under the Plan if such Participant, immediately after his or her election to purchase such Shares, would own stock possessing more than 5% of the total combined voting power or
value of all classes of stock of the Company or any parent or Subsidiary of the Company. For purposes of this Subsection (a), the following rules shall apply: 

          (i)  Ownership
of stock shall be determined after applying the attribution rules of section 424(d) of the Code; 

         (ii)  Each
Participant shall be deemed to own any stock that he or she has a right or option to purchase under this or any other plan; and 

        (iii)  Each
Participant shall be deemed to have the right to purchase            Shares under this Plan with respect to each Offering Period. 

        (b)    Dollar Limit.    Any other provision of the Plan notwithstanding, no Participant shall purchase Shares with a
Fair Market Value in excess of the following limit: 

          (i)  In
the case of Shares purchased during an Offering Period that commenced in the current calendar year, the limit shall be equal to (A) $25,000 minus
(B) the Fair Market Value of the Shares that the Participant previously purchased in the current calendar year (under this Plan and all other employee stock purchase plans of the Company or any
parent or Subsidiary of the Company); 

         (ii)  In
the case of Shares purchased during an Offering Period that commenced in the immediately preceding calendar year, the limit shall be equal to (A) $50,000
minus (B) the Fair Market Value of the Shares that the Participant previously purchased (under this Plan and all other employee stock purchase plans of the Company or any parent or Subsidiary
of the Company) in the current calendar year and in the immediately preceding calendar year; or 

        (iii)  In
the case of Stock purchased during an Offering Period that commenced in the second preceding calendar year, the limit shall be equal to (A) $75,000 minus
(B) the Fair Market Value of the Stock that the Participant previously purchased (under this Plan and all other employee stock purchase plans of the Company or any parent or Subsidiary of the
Company) in the current calendar year and in the two preceding calendar years. 

For
purposes of this Subsection (b), the Fair Market Value of Shares shall be determined in each case as of the beginning of the Offering Period in which such Shares is purchased. Employee
stock purchase plans not described in section 423 of the Code shall be disregarded. If a Participant is precluded by this Subsection (b) from purchasing additional Shares under the Plan,
then his or her employee contributions shall automatically be discontinued and shall automatically resume at the beginning of the earliest Offering Period ending in the next calendar year (if he or
she then is an Eligible Employee). 

SECTION 10.    RIGHTS NOT TRANSFERABLE.  

        The rights of any Participant under the Plan, or any Participant's interest in any Shares or moneys to which he or she may be entitled under the Plan, shall not
be transferable by voluntary or involuntary assignment or by operation of law, or in any other manner other than by beneficiary designation or the laws of descent and distribution. If a Participant in
any manner attempts to transfer, assign or otherwise encumber his or her rights or interest under the Plan, other than by beneficiary designation or the laws 

5

 

of
descent and distribution, then such act shall be treated as an election by the Participant to withdraw from the Plan under Section 6(a). 

SECTION 11.    NO RIGHTS AS AN EMPLOYEE.  

        Nothing in the Plan or in any right granted under the Plan shall confer upon the Participant any right to continue in the employ of a Participating Company for
any period of specific duration or interfere with or otherwise restrict in any way the rights of the Participating Companies or of the Participant, which rights are hereby expressly reserved by each,
to terminate his or her employment at any time and for any reason, with or without cause. 

SECTION 12.    NO RIGHTS AS A SHAREHOLDER.  

        A Participant shall have no rights as a stockholder with respect to any Shares that he or she may have a right to purchase under the Plan until such shares have
been purchased on the last day of the applicable Offering Period and issued to the Participant. 

SECTION 13.    AMENDMENT OR DISCONTINUANCE.  

        The Board shall have the right to amend, suspend or terminate the Plan at any time and without notice. Except as provided in Section 3, any increase in the
aggregate number of Shares that may be issued under the Plan shall be subject to the approval of the Company's stockholders. In addition, any other amendment of the Plan shall be subject to the
approval of the Company's stockholders to the extent required by any applicable laws and regulations, and the regulations of any stock exchange or other securities market on which the Company's
securities may then be traded. The Plan shall terminate automatically 20 years after its adoption by the Board, unless (a) the Plan is extended by the Board and (b) the extension
is approved within 12 months by a vote of the stockholders of the Company. 

SECTION 14.    COMMITTEE RULES FOR NON-U.S. JURISDICTIONS.  

        (a)    Rules and Procedures.    The Committee may adopt rules or procedures relating to the operation and
administration of the Plan to accommodate the specific requirements of local laws and procedures. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt
rules and procedures regarding handling of payroll deductions, enrollment/withdrawal procedures, conversion of local currency, payroll tax, withholding procedures and handling of stock certificates
which vary with local requirements. In addition, the Committee may adopt rules regarding the payment of interest on amounts held in Plan Accounts, provided that such rules shall apply on a uniform
basis to all Eligible Employees employed by a Participating Company if the grants to the Eligible Employees employed by such Participating Company are intended to qualify under section 423 of
the Code. 

        (b)    Sub-Plans.    The Committee may also adopt sub-plans applicable to particular
Subsidiaries, which sub-plans may be designed to be outside the scope of Code section 423. The rules of such sub-plans may take precedence over other provisions of this
Plan, with the exception of Section 3(a), but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan shall govern the operation of such
sub-plan. 

SECTION 15.    COMPLIANCE WITH LAW.  

        (a)    Securities Laws and Regulations.    Shares shall not be issued under the Plan unless the issuance and delivery
of such shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the U.S. Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder, state and non-U.S. securities laws and regulations, and the 

6

 

regulations
of any stock exchange or other securities market on which the Company's securities may then be traded. 

        (b)    Governmental Approvals.    This Plan and the Company's obligation to sell and deliver shares of its stock under
the Plan shall be subject to the approval of any governmental authority required in connection with the Plan or the authorization, issuance, sale, or delivery of stock hereunder. 

        (c)    Choice of Law.    This Plan shall be governed by the laws of the Republic of Singapore, without regard to
choice of law rules. 

SECTION 16.    DEFINITIONS.  

        (a)   "Board" means the Board of Directors of the Company, as constituted from time to time. 

        (b)   "Code" means the U.S. Internal Revenue Code of 1986, as amended. 

        (c)   "Committee" means a committee of the Board, as described in Section 2. 

        (d)   "Company" means Verigy Ltd., a Singapore corporation. 

        (e)   "Compensation" means (i) the total compensation paid in cash to a Participant by a Participating Company,
including salaries, wages, bonuses, incentive compensation, commissions, overtime pay and shift premiums, plus (ii) any pre-tax contributions made by the Participant under
section 401(k) or 125 of the Code. "Compensation" shall exclude all non-cash items, moving or relocation allowances, cost-of-living equalization payments,
car allowances, tuition reimbursements, imputed income attributable to cars or life insurance, severance pay, fringe benefits, contributions or benefits received under employee benefit plans, income
attributable to the exercise of stock options, and similar items. The Committee shall determine whether a particular item is included in Compensation. 

        (f)    "Corporate Reorganization" means: 

          (i)  The
consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization; or 

         (ii)  The
sale, transfer or other disposition of all or substantially all of the Company's assets or the complete liquidation or dissolution of the Company. 

        (g)   "Eligible Employee" means any employee of a Participating Company who meets both of the following requirements: 

          (i)  His
or her customary employment is for more than five months per calendar year and for more than 20 hours per week; and 

         (ii)  He
or she has been an employee of a Participating Company for not less than three consecutive months, or such other period as the Committee may determine before the
beginning of the applicable Offering Period. 

The
foregoing notwithstanding, (A) an individual shall be considered an Eligible Employee regardless of whether the individual satisfies the requirements of Paragraphs (i) and (ii) above
where so provided by the law of any country that has jurisdiction over him or her or if he or she is subject to a collective bargaining agreement that so provides and (B) an individual shall
not be considered an Eligible Employee if his or her participation in the Plan is prohibited by the law of any country that has jurisdiction over him or her or if he or she is subject to a collective
bargaining agreement that does not provide for participation in the Plan, provided that the eligibility requirements of the Plan shall apply on a uniform basis to all employees of a Participating
Company if the grants to the Eligible Employees employed by such Participating Company are intended to qualify under section 423 of the Code. 

7

 

        (h)   "Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended. 

        (i)    "Fair Market Value" means the market price of Shares, determined by the Committee as follows: 

          (i)  If
the Shares are traded on The Nasdaq National Market or The Nasdaq SmallCap Market on the date in question, then the Fair Market Value shall be equal to the
last-transaction price quoted for such date by such Market; 

         (ii)  If
the Shares are traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable
composite transactions report for such date; or 

        (iii)  If
none of the foregoing provisions is applicable, then the Committee shall determine the Fair Market Value in good faith on such basis as it deems appropriate. 

Whenever
possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in The Wall Street Journal or as
reported directly to the Company by Nasdaq or a stock exchange. Such determination shall be conclusive and binding on all persons. 

        (j)    "IPO" means the effective date of the registration statement filed by the Company with the U.S. Securities and Exchange
Commission for its initial offering of Shares to the public. 

        (k)   "IPO Price" means the price at which the shares will be first offered to the public (as reflected on the cover page of
the final prospectus prepared in connection with the IPO). 

        (l)    "Offering Period" means a period with respect to which the right to purchase Shares may be granted under the Plan, as
determined pursuant to Section 4(a). 

        (m)  "Participant" means an Eligible Employee who participates in the Plan, as provided in
Section 4. 

        (n)   "Participating Company" means (i) the Company and (ii) each present or future Subsidiary designated by the
Committee as a Participating Company. 

        (o)   "Plan" means this Verigy Ltd. 2006 Employee Shares Purchase Plan, as it may be amended from time to time. 

        (p)   "Plan Account" means the account established for each Participant pursuant to Section 8(a). 

        (q)   "Purchase Price" means the price at which Participants may purchase Shares under the Plan, as determined pursuant to
Section 8(b). 

        (r)   "Shares" means the Ordinary Shares of the Company. 

        (s)   "Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the
Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. 

ADOPTION & AMENDMENT HISTORY 

Approved
by the Board of Directors                        ,    , 2006 

Approved
by the sole shareholder                        ,    , 2006 

8

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Exhibit 10.4  

 
 

GLOBAL MANUFACTURING SERVICES AGREEMENT    
    
    BETWEEN    
    
    AGILENT TECHNOLOGIES INTERNATIONAL SÀRL
  (AGILENT)    
    
    AND    
    
    FLEXTRONICS TELECOM
SERVICES LTD
  (FLEXTRONICS)    
    
    AGREEMENT NUMBER M1-05-099    

 
TABLE OF CONTENTS  

	 
	 	 
	 	 

	1.0	 	SCOPE OF AGREEMENT	 	3
	2.0	 	DEFINITIONS	 	5
	3.0	 	PROTOTYPES	 	10
	4.0	 	OWNERSHIP	 	11
	5.0	 	PRODUCT PURCHASES	 	13
	6.0	 	DELIVERY AND ACCEPTANCE	 	14
	7.0	 	PRICES AND PAYMENT TERMS	 	15
	8.0	 	COST MANAGEMENT	 	16
	9.0	 	COMPONENT PROCUREMENT	 	16
	10.0	 	WARRANTIES	 	18
	11.0	 	RETURN OF NON-CONFORMING PRODUCTS	 	19
	12.0	 	PRODUCT SUPPORT	 	21
	13.0	 	OBSOLESCENCE AND MANUFACTURING RIGHTS	 	21
	14.0	 	INVENTORY MANAGEMENT	 	22
	15.0	 	PERFORMANCE EXPECTATIONS AND QUALITY STANDARDS	 	24
	16.0	 	CHANGE NOTIFICATION	 	25
	17.0	 	AGILENT PROPERTY	 	26
	18.0	 	FLEXTRONICS INTELLECTUAL PROPERTY DEFENSE	 	27
	19.0	 	AGILENT INTELLECTUAL PROPERTY DEFENSE	 	28
	20.0	 	CONFIDENTIAL INFORMATION	 	29
	21.0	 	GOVERNMENTAL COMPLIANCE	 	29
	22.0	 	COUNTRY OF MANUFACTURE AND DUTY DRAWBACK RIGHTS	 	30
	23.0	 	ELECTRONIC DATA INTERCHANGE (EDI) REQUIREMENTS	 	30
	24.0	 	FORCE MAJEURE EVENTS	 	31
	25.0	 	EVENTS OF DEFAULT	 	31
	26.0	 	TERMINATION	 	31
	27.0	 	LIMITATION OF LIABILITY	 	33
	28.0	 	INSURANCE REQUIREMENTS	 	33
	29.0	 	BUSINESS CONTINUITY PLAN	 	34
	30.0	 	MISCELLANEOUS	 	35

2

   GLOBAL MANUFACTURING SERVICES AGREEMENT  

        THIS GLOBAL MANUFACTURING SERVICES AGREEMENT (the "Agreement" or "MSA") is entered into and is effective as of March 2nd, 2006 (the "Effective Date") by
and between AGILENT TECHNOLOGIES INTERNATIONAL Sàrl. ("Agilent"), a Swiss company with principal place of business at Rue de la Gare 27-29, CH-1110 Morges,
Switzerland, and FLEXTRONICS TELECOM SERVICES LTD. ("Flextronics"), a Mauritius corporation with a principal place of business at 802 St. James Court, St. Denis Street, Port
Louis, Mauritius, singularly or collectively referred to as a Party or the Parties. 

        The
Parties hereby agree as follows: 

1.0    Scope of Agreement  

        1.1    Flextronics General Obligations.    This Agreement specifies the terms and conditions under which Flextronics
agrees to manufacture and sell Products described in this Agreement, based on the Product Requirements provided by Agilent. Without limiting any specific obligation specified in this Agreement,
Flextronics will: 

        1.1.1    Maintain
one or more manufacturing processes and production lines, purchase or procure Tools, and source Components and materials as needed to fulfill Flextronics
obligations to manufacture the Products in accordance with the applicable Specifications set forth in Exhibit B and the other Product
Requirements provided by Agilent. 

        1.1.2    Manufacture,
test, pack, ship and sell all Products in accordance with the terms of this Agreement. 

        1.1.3    Apply
its commercially reasonable efforts to continuously reduce its manufacturing costs and, upon request, provide to Agilent information and access to production
cost information to ensure compliance
with this obligation as described in Articles 7 and 8 below, except where prevented by confidentiality agreements with other parties. 

        1.1.4    Meet
the Supplier Performance Expectations described in Article 15 below, and develop and maintain quality
control standards consistent with those standards described in that Article. 

        1.1.5    Offer
Technical Assistance and Support Services, for a fee to be agreed upon by both Parties by separate agreement. Product level approvals and all regulatory and
environmental compliance certifications including RoHS are responsibility of Agilent. Flextronics shall offer such Technical Assistance in these respects as is contained in the Specifications and
pursuant to 1.1.6 below. 

        1.1.6    Obtain
all necessary approvals and certifications to enable Flextronics to manufacture the Products under this Agreement and make all necessary safety standard changes
as required hereunder and in accordance with section 1.1.5. 

        1.1.7    Meet
its warranty obligations and provide support services as described in Articles 10 and 12 below. 

        1.1.8    Put
in place a customer-focused account management team consisting of the Flextronics Global Account Manager, Flextronics Site Specific Program Managers. This team
will be fully dedicated to the Agilent business relationship and may not participate in any similar relationships with third party customers of Flextronics. The performance rating of this team will be
based upon the ongoing success of Agilent's business within Flextronics. 

3

 

        1.2    Agilent General Obligations.    Without limiting any specific obligation required under this Agreement, Agilent
will provide to Flextronics Product Requirements consisting of, but not necessarily limited to: 

        a)    Product
numbers; 

        b)    Bill
of Material ("BOM"); 

        c)     Agilent
Approved Vendor List ("AVL); 

        d)    EPROM
software and code; 

        e)    Board
placement data (Gerber files); 

        f)     Raw
PCB information required to procure Raw PCB; 

        g)     Schematic
drawings, if test required; 

        h)    Assembly
drawings; 

        i)     Packaging
requirements, workmanship and quality specifications; 

        j)     General
Technical Specifications; 

        k)    Buy/Sell
Component List; and 

        l)     Consigned
Component List. 

        m)   Product
Test and Acceptance specifications according to Section 6. 

        1.3    Term of Agreement.    This Agreement will commence as of the Effective Date and will continue for the Term four
(4) years unless otherwise indicated in the Addendum or terminated earlier under the terms of this Agreement. After the initial Term, this Agreement automatically renews for a Contract Year
unless either party notifies the other party in writing within nine months prior to the expiration of the initial term or any additional term. 

        1.4    Eligible Buyers.    Unless otherwise provided in the Addendum, this Agreement enables Agilent and those
Eligible Buyers listed in Exhibit L to purchase the Products from Flextronics under the terms set forth below. All Purchases made by Eligible
Buyers will be governed by the terms and conditions of this Agreement. 

        1.5    Addenda.    Whenever the parties wish to agree additional or different terms and conditions, such terms will be
set forth in an Addendum or other written document, signed by an authorized signatory of Flextronics and the designated Agilent Manager. A form of Addendum is appended hereto as  Exhibit Q. Each
Addendum will be appended to this Agreement and incorporated herein. To the extent of any conflict between the terms of the
Addendum and the terms of this Agreement, the terms of the Addendum will control and take precedence. 

        1.6    Additional Services.    The Parties may agree to add additional services from time to time. Prior to commencing
any such services, Flextronics will provide Agilent a written proposal that will include a description of the services to be performed and the total estimated fees. Flextronics agrees to propose fee
rates on both a time and material and fixed price basis at Agilent's request. As needed, the parties will enter into a Statement of Work ("SOW") signed by both Parties to initiate each service
referencing this Agreement and becoming subject to its terms and conditions. However, to the extent of any conflict between the terms of a SOW and these terms, the terms of the SOW will control and
take precedence. 

        1.7   In
connection with entering into this Agreement, to facilitate the performance of Flextronics' obligations under this Agreement, Agilent and Flextronics, through its
Subsidiary, Flextronics International USA Inc., intend to enter into an Asset Purchase Agreement pursuant to which 

4

 

Flextronics'
Affiliate will purchase certain assets in the United States from Agilent. In addition, Agilent through its Subsidiaries, Agilent Technologies Manufacturing GmbH & Co KG and Agilent
Technologies International Sàrl, and Flextronics, through its Affiliate, Flextronics International Germany GmbH & Co KG, intend to enter into an Asset Purchase Agreement pursuant
to which Flextronics' Affiliate will purchase certain assets in Germany from Agilent's Subsidiary and Agilent's Subsidiary will transfer certain employees to Flextronics' Affiliate. Flextronics
intends to use the assets purchased and employees transferred under each of these Asset Purchase Agreements to perform its obligations under this Agreement. If either of the Asset Purchase Agreements
are not entered into by Agilent or its applicable Agilent Subsidiary or Flextronics Affiliate by March 31, 2006, then either party will have the right to terminate this Agreement upon written
notice to the other party. The effects of termination set forth in Section 26 of this Agreement will not apply in the event of such termination. Instead the provisions of the Memorandum of
Understanding between Agilent and Flextronics, effective December 19, 2005, concerning the transfer of inventory, work in progress, and materials, and the payment obligations of each party in
the event the Project is cancelled or the Parties can not reach a definitive agreement will apply. 

        In
addition, if the return of the property is considered as a transfer of undertaking on the basis of the then applicable laws, Flextronics will compensate Agilent for any pension and
other benefit liabilities related to any re-transferring employees on ABO (accumulated benefit obligation) calculation basis at the time these employees return to Agilent. 

        This
Agreement shall not come into effect until receipt of the clearance from the German Cartel Office to be applied for under the APA and any other contingencies expressly provided in
this Agreement. 

2.0    Definitions  

        The following capitalized terms will have the meanings given for the purposes of this Agreement: 

        2.1   "Acceptable Quality Level (AQL)" means the maximum number of Non-conforming Products allowed by Agilent in
each Lot manufactured by Flextronics. 

        2.2   "Accepted Orders" means orders for which Flextronics has acknowledged receipt of purchase order and has committed to a
firm delivery date. 

        2.3   "Agilent Manager" means that person designated in an Agilent Addendum who will oversee the relationship between
Flextronics and Agilent. The Agilent Manager's role will include conducting performance and quality reviews, receiving and reviewing required reports, plans and notices, implementing changes in the
scope of any services or project, and resolving any conflicts or disputes. 

        2.4   "Agilent Part Number" refers to the unique, Agilent or Agilent-assigned reference number for a particular assembly or
Component. 

        2.5   "Agilent Property" will mean all property that Agilent may provide to Flextronics for assembly into Products, such as
Consigned Component inventories, as well as any designs, documentation, Product Requirements, Tools, Test Fixtures, Test Software, and other test equipment and other materials that Agilent may furnish
to Flextronics or that Agilent may pay for in connection with this Agreement for Flextronics use in performing any of its obligations hereunder. All Agilent Property will be considered
"Bailed Property," which will remain the property of Agilent under the provisions set forth in  Article 17 below. 

        2.6   "Approved Vendor List", also referred to as "AVL", refers to the
confidential list of Agilent Approved Vendors who are qualified Component Suppliers authorized by Agilent for use in the manufacture of Products. 

5

 

        2.7   "Bill of Materials", also referred to as "BOM", means the list of all Components, Agilent Part Numbers, quantity per
assembly, and Flextronics part number where applicable, that is used to assemble each Product. 

        2.8   "Bridge Buy" means the purchase, consignment or other procurement of Components and other Product manufacturing supplies
to meet Agilent current and anticipated demand necessitated by Product discontinuance and/or transfer of manufacturing responsibility to another contract manufacturing service provider. 

        2.9   "Addendum" means that agreement negotiated by Agilent that defines the services to be performed, the Products to be
manufactured, Product Requirements, Product pricing, New Product Introduction criteria, Supplier Managed Inventory programs, demand and order flexibility guidelines, and such other items as may be
referenced in this Agreement or agreed to the Parties. 

        2.10 "Buy/Sell Component" means a Component that Agilent desires to sell to Flextronics for use in the manufacturing of the
Products. There are three categories of Buy/Sell components: 

        a)    Permanent
Buy/Sell: Component Parts that Agilent will sell to Flextronics on an ongoing basis. 

        b)    Shortage
Pull: Component parts that Agilent sells to Flextronics in the event that Flextronics has a shortage scenario, or Agilent has additional inventory available to
sell to Flextronics. 

        c)     Seeding
Buy/Sell: A one-time transition sale of Component parts that Agilent sells to Flextronics for the support of new Product that is scheduled to be
manufactured by Flextronics. 

        2.11 "Change Order", also referred to as a "CO", is the written notification provided to Flextronics by Agilent to modify the
delivery of a Product, as further described in Section 16.2 below. 

        2.12 "Common Components" means industry-standard (i.e., off the shelf, non-custom) Components that can be used by
or sold to multiple customers. 

        2.13 "Component" means the piece parts, subassemblies, software, OEM components and products, and all other materials
incorporated by Flextronics into Products built for Agilent. 

        2.14 "Component Supplier" means qualified suppliers authorized by Agilent for use in the manufacture of Agilent Products. 

        2.15 "Consigned Components" refers to those Components provided to Flextronics for assembly into Products where Agilent
retains all ownership interest and obligations in those Consigned Components. 

        2.16 "Flextronics Site Specific Program Managers" means those managers who oversee and coordinate manufacturing operations at
a specific Flextronics site or facility. 

        2.17 "Flextronics Tactical Program Managers" means those managers who oversee and coordinate specific aspects of Flextronics
manufacturing process, including design, testing, packaging and shipment, procurement and support. 

        2.18 "Contract Year" is a one (1) year period commencing from the Effective Date, and each additional twelve
(12) month period thereafter during the Term of this Agreement. 

        2.19 "Custom Material" means any Components that are purchased or manufactured parts that are not industry standard parts or
purchased or developed by Flextronics specifically to meet Product Requirements. 

        2.20 "Deliverables" refers to Products, Components, Developments, Prototypes, Test Software and other work manufactured by
Flextronics for Agilent as required hereunder. 

6

 

        2.21 "Delivery Date" means the date specified in the Order for delivery of the Products. 

        2.22 "Developments" means any new inventions, discoveries, technologies, processes, or materials (whether or not patentable)
developed in connection with Flextronics performance under this Agreement relating to a Product's Requirements or design. 

        2.23 "Discontinued Product" means a Product Flextronics decided to discontinue to manufacture, supply or support for any
reason other than breach of this Agreement by Agilent. 

        2.24 "EDI" means electronic data interchange. 

        2.25 "Eligible Buyers" means an entity controlled by Agilent Technologies, Inc. either directly or indirectly.
Eligible Buyers are identified in Exhibit L. Agilent or its permitted assignees may be requested by Flextronics to provide Flextronics with a guarantee for its Eligible Buyer by its parent
company or such other Agilent company which is reasonably satisfactory to Flextronics. Alternatively, the Eligible Buyer must meet credit approval criteria reasonably required by Flextronics. 

        2.26 "Eligible Purchasers" means Flextronics as the purchaser for Components under the rules and provisions of
Appendix C of Exhibit Q. 

        2.27 "Eligible Sellers" are the entities, identified in Exhibit K, which shall contract for the services under this
Agreement on behalf of Flextronics, as permitted assignees of Flextronics, to be performed at the Flextronics authorized manufacturing sites and delivered to the Agilent delivery sites identified in
Exhibit K. 

        2.28 "Encumbrance" means any encumbrance, lien, charge, hypothecation, pledge, mortgage, title retention agreement, security
interest of any nature, adverse claim, exception, right of set-off, any matter capable of registration against title, option, right of pre-emption, privilege or any contract to
create any of the foregoing. 

        2.29 "Engineering Changes" means any material electrical, mechanical or chemical changes to the Products proposed by Agilent
or Flextronics that would affect, but not be limited to, Product performance, reliability, safety, environmental compatibility, serviceability, appearance, dimensions, tolerances, or composition. 

        2.30 "Engineering Responsibility" means the set of responsibilities given to Agilent for a Product or Component used within
Agilent, including design, change and configuration control and responsibility for manufacturing, documentation, application, Product safety, international use, Product support and Product
discontinuance. 

        2.31 "ESD" means Electrostatic Discharge. 

        2.32 "Excess Components". Definition referenced in Exhibit Q, Appendix C. 

        2.33 "Forecast" means Agilent's rolling estimate of its Product purchase requirements over a twelve (12) month period
as further described in Section 5.4 below, or such other period designated by the Parties. 

        2.34 "Global Account Managers" or "Alliance Managers" means those persons
designated in Exhibit A to this Agreement responsible for the overall coordination of this Agreement, including monitoring performance,
coordinating reviews, arbitrating conflicts and generally overseeing the relationship between Flextronics and Agilent. 

        2.35 "Governmental Authority" means any federal, state, county, municipal, district or local government or government body,
or any public administrative or regulatory agency, political subdivision, commission, board or body, or representative of any of the foregoing, foreign or domestic, of, or established by any such
government or government body that has authority in respect to a particular matter. 

7

 

        2.36 "Impact Proposal" means the evaluation of the effect of Flextronics proposed Engineering and Manufacturing Changes on,
but not limited to, the price, performance, reliability, manufacturing capacity, lead and delivery times, appearance, and Components of or related to the Products. 

        "Intellectual Property" means all copyrights, patents or patent applications, mask registered designs or registered design applications,
Mask Works, inventions, trade secrets, proprietary technical information (including but not limited to specifications, designs, plans, computer programs in source and object code, flowcharts,
diagrams, drawings and other information), and manufacturing processes, and other similar proprietary information. 

        2.37 "Lead Time" means the minimum period of time between the Order date and the Delivery Date. 

        2.38 "Lifetime Buy" or "LTB" means the process for purchasing discontinued
Components or Products (i.e., those no longer available from Flextronics, a Component Supplier or any other distribution channel) to span Product Life or Support Life requirements, as applicable, for
that Component or Product as described in Article 14 below. 

        2.39 "Lot" means a batch of Products manufactured under the same work order number at Flextronics facility. 

        2.40 "Manufacturing Changes" means any material design changes, geographical relocations of manufacturing processes from one
facility to another, or outsourcing of the manufacturing of sub-processes. 

        2.41 "Marks" means the trademarks, service marks, trademark and service mark applications, trade dress, trade names, logos,
insignia, symbols, designs, domain names, urls or other electronic identifiers or other marks identifying a Party or its products. 

        2.42 "Mask Work" means the pattern used to transfer design and technical information from the Product Requirements onto a
Product or Component. 

        2.43 "New Product Introduction", also referred to as "NPI", means, the
process to introduce a new or existing Product into Flextronics manufacturing process. 

        2.44 "New Product Introduction Support" means, the interaction between Agilent and Flextronics to facilitate the introduction
of new or existing Products into Flextronics manufacturing process. 

        2.45 "Non-Conforming Product" shall have the meaning provided in section 11. 

        2.46 "NRE" means non-recurring engineering expenses. 

        2.47 "Obsolete Inventory" is defined as inventory that is no longer sold to customers or no longer manufactured by Agilent as
agreed in section 1.8 of Appendix C (Flexibility and Inventory) of Exhibit Q. 

        2.48 "Open Purchase Order" or "Open PO" means a written or electronic
purchase order issued by Agilent to Flextronics for the purposes of activating and maintaining Flextronics as an approved vendor in Agilent's electronic purchasing and payment systems; provided,
however, that no such Open PO will be considered a binding Order until Flextronics receives a Release. 

        2.49 "Order" means a written or electronic purchase order (including any attachments thereto) issued to Flextronics by an
Eligible Buyer containing unit quantity; unit price; shipping destination and instructions; Delivery Date; and other instructions or requirements pertinent to the Order. 

        2.50 "Package or Packaging" refers to the material used in the protection of Products and Components while at Flextronics
facility and in transit. 

8

 

        2.51 "Placements" means the number of Components on either an individual or group of printed circuit assembly(s). 

        2.52 "Pre-Existing Intellectual Property" means any Intellectual Property conceived or developed prior to
performance of this Agreement. 

        2.53 "Product Exhibit" means the list of Products to be manufactured by Flextronics hereunder, which will be attached to each
applicable Addenda or attached separately hereto in the absence of such addenda. 

        2.54 "Product Life" has the meaning set forth in Section 12.1. 

        2.55 "Product Requirement" means any requirement for the development or manufacture of Products provided by Agilent to
Flextronics, including all manufacturing information, technical data and manuals, design information, drawings, documentation, packaging requirements, testing requirements, Specifications, or any
other criteria, as agreed in writing between Flextronics and Agilent. 

        2.56 "Products" means those assemblies, sub-assemblies, systems, and other products manufactured by Flextronics
hereunder identified on any Addenda, or absent such addenda, as listed on a Product Exhibit to be appended to this Agreement. New Products may be added to this Agreement or to the Addendum from time
to time by agreement of the Parties. 

        2.57 "Prototype" means the pre-production unit of a Product, packaged in a production package, and manufactured
in accordance with the Product Requirements with full test verification. 

        2.58 "Quarter" means a quarter within each Contract Year, and unless stated otherwise in this Agreement, commencing on the
first day of November, February, May, and August of the Contract Year. 

        2.59 "Release" generally refers to electronically transmitted authorization or instructions to execute against an Order. 

        2.60 "Residual Component Inventory" is defined as either industry standard or Custom Material that is not returnable,
re-saleable, nor readily reusable on other Products or programs. 

        2.61 "Scrap" is defined as any Product or Component, which fails more than three (3) repairs by Flextronics, or is
deemed not usable and saleable pursuant to Articles 10, 11 and 12 and subject to disposition. 

        2.62 "SMI", also known as "Supplier Managed Inventory", means a program initiated between Flextronics and Agilent for
ownership of a mutually agreed level of finished goods inventory at an Agilent location and the processes established to support Agilent's and Flextronics requirements. 

        2.63 "Specifications" means the General Technical Specifications listed in  Exhibit B, along with any other specifications as may be mutually agreed. 

        2.64 "Strategic Suppliers" means the suppliers listed in Exhibit R. 

        2.65 "Subsidiary" means an entity controlled by or under common control with a Party to this Agreement, provided that such
control continues to exist. For purposes of this definition, "control" means the possession, directly or indirectly or as trustee or executor, of the possessor to direct or cause the direction of the
affairs or management of an entity, whether through ownership of voting securities, as trustee or executor, by contract or otherwise, including, without limitation, the ownership, directly or
indirectly, or securities having the power to elect a majority of the board of directors or similar body governing the affairs of such entity. 

9

   
        2.66 "Supplier Performance Expectations" means those quality standards and metrics that have been mutually agreed between the
parties and Flextronics must meet as further described in Section 15.1, Exhibit J, and Exhibit Q Appendix N. 

        2.67 "Support Life" means the period of time for which Flextronics has support responsibility as described in  Section 12.1. 

        2.68 "Technical Assistance" refers to any technical design support given to produce a product for Agilent, including but not
limited to, design feedback to Agilent for improved manufacturability, potential reductions in cost, improved testability and improved assembly yield. 

        2.69 "Technical Manufacturing Information" means the manufacturing information, process and technology used by Flextronics or
third parties under its control to design, develop, test or manufacture the Products including, but not limited to: (i) specifications, software, schematics, drawings, designs, Mask Works,
Topography or other materials pertinent to the most current revision level of manufacturing of the Products; (ii) copies of all inspection, manufacturing, test and quality control procedures
and any other work processes; (iii) jig, fixture and tooling designs; (iv) Flextronics history files; and (v) support documentation. 

        2.70 "Term" means initial term of this Agreement set forth in  Section 1.3 above plus any additional Contract Years added to such initial Term. 

        2.71 "Termination Inventory" means Components on order, Component inventory, work-in-process, and
finished Product inventory at the discontinuance or termination of this Agreement or upon receipt of a Change Order from Agilent, or at the complete or partial termination or cancellation of an Order
or of a Product. 

        2.72 "Test Fixtures" means electrical test equipment tooling, including software applications or programs, provided to
Flextronics from Agilent for the purpose of testing completed printed circuit board assemblies or systems manufactured by Flextronics where Agilent retains all ownership interest and obligations in
such Test Fixtures. 

        2.73 "Test Software" means any programs or code that Flextronics develops to perform test verification for Prototypes,
Components or finished Products. 

        2.74 "Tools" means equipment, jigs and fixtures that may be used by Flextronics in the manufacture of Products. 

        2.75 "Topography" means the three-dimensional pattern, fixed or encoded, formed by the metallic, insulating and semiconductor
material contained in a Product or Component. 

        2.76 "TQRDCEb" means Agilent's Supplier Performance Expectations in the areas of technology, quality, responsiveness,
delivery, cost, environment and business management as set out in Exhibit J. 

        2.77 "Turnkey Components" means a Component that Flextronics procures directly from the Component Supplier or the appropriate
distributor. 

        2.78 "Unique Components" means those Components used only with respect to Products manufactured hereunder (i.e., custom by
fit, form or function) and that are not Common Components. 

        2.79 "Zero Demand Components" means Components for Products that have no current demand by customers but which remain on
Agilent's Customer Price List ("CPL"). 

3.0    Prototypes  

        3.1    Prototype Services.    If applicable and upon Agilent's acceptance of Flextronics quote, Flextronics will
design and develop Prototypes and Test Software for each Product and will perform the additional services set forth below or as otherwise agreed to in the Addendum. Prototypes will be 

10

 

delivered
to the Agilent Business responsible for that Product. If there is no responsible Agilent Business or more than one responsible Business, then the Agilent Global Account Manager will
determine which Agilent Business will receive and test the Prototypes as contemplated below. 

        3.1.1    Flextronics
will utilize the Test Software to test the Prototypes to verify that they comply with and perform to the applicable Product Requirements, and document the
tests conducted and the results obtained. 

        3.1.2    Flextronics
will deliver the mutually agreed number of Prototypes of each Product for acceptance or rejection by Agilent. 

        3.1.3    The
Agilent Manager will provide Flextronics written notice of its acceptance or rejection of the Prototypes within thirty (30) days after receipt. In the event
of the rejection of a Prototype, the Agilent Manager will inform Flextronics of the reasons for the rejection in the written notice. 

        3.1.4    In
the event a Prototype is rejected, Flextronics will use all available resources to remedy the problems, re-test the Prototype and resubmit the Prototype
for review. 

        3.1.5    If
Flextronics is unable to deliver an acceptable Prototype within 20 days, Flextronics will cover the cost of expedite charges should the prototype fail for
manufacturing or workmanship issues. 

        3.2    Return of Prototypes.    Any Prototypes rejected may be returned at the option of the Agilent Manager using the
return processes set forth in Sections 11.3 and 11.4 below or as otherwise agreed between the Agilent Manager and the Flextronics Site Specific
Program Manager. 

        3.3   Prototypes
Services deliverables shall be provided on an "as is" basis and Agilent shall be liable to Flextronics for any use of prototypes for purposes other than for
internal testing. 

4.0    Ownership & Licensing  

        4.1    Pre-Existing Intellectual Property.    Each Party will maintain all right, title and interest in
Pre-Existing Intellectual Property, subject to any licenses granted below. 

        4.2    Licenses.    Agilent hereby grants Flextronics a non-exclusive license to use Agilent's patents,
trade secrets and other Intellectual Property to manufacture all products being manufactured by Agilent's STS division from January 31, 2006 through June 1, 2006. This grant will
continue until the closing date of the spin-off agreements between Agilent and Agilent STS, targeted to be June 1, 2006. This grant will expire on October 1, 2006 and shall
be replaced with a similar license from Agilent STS sublicensing rights it will have received from Agilent necessary to perform Flextronics' obligations under this Agreement. Nothing in this license
grant shall be deemed to permit disclosure by Flextronics of Agilent confidential information in contravention of any and every confidential disclosure agreement between Flextronics and Agilent. 

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

        4.3    Agilent Rights.    

        4.3.1    Subject
to Flextronics rights specified in Section 4.4.1 below, Agilent will own all right, title and interest,
including all Intellectual Property, in and to the Product Requirements and the Deliverables. 

        4.3.2    During
the Term plus any period of support that may survive termination or expiration of this Agreement, Flextronics agrees to inform Agilent promptly of any
Developments. Agilent 

11

 

will
own all Developments and Flextronics hereby assigns all such rights to Agilent. In addition Flextronics will execute any necessary documents and will otherwise assist Agilent, at Agilent's
expense, as reasonably requested, to protect such Developments. 

        4.3.3    Flextronics
Marks. Flextronics agrees and warrants that it will not use any Flextronics or third party Mark (excluding authorized Agilent Technologies, Inc.
Marks) on any Product, Packaging materials or documentation. 

        4.3.4    Upon
request, Flextronics will grant to Agilent a non exclusive, worldwide license under and disclose to Agilent Flextronics such Technical Manufacturing Information
developed by Flextronics subsequent to the transfer of business which is unique to Agilent Products so that Agilent may further develop, improve, test and support such Products. 

        4.4    Flextronics Rights.    

        4.4.1    Flextronics
will own all right, title and interest, in and to Intellectual Property related to Flextronics manufacturing process of the Products that Flextronics
develops solely on its own, without assistance or input from Agilent, including Flextronics Technical Manufacturing Information for the Products, subject to Agilent's rights in Developments under  Section 4.3.2 above, Agilent's license of unique Technical Manufacturing Information under
Section 4.3.4 above, and Agilent's manufacturing rights under Article 13 below. Any
Technical Manufacturing Information developed by Flextronics solely for the purpose of manufacturing Agilent Products and which is unique to Agilent's Products, will be used solely for the design,
development, testing and manufacturing of such Products. Agilent agrees to maintain the confidentiality of Flextronics Technical Manufacturing Information under the terms specified in  Article 20
below. 

        4.4.2    Agilent
grants to Flextronics, a non-exclusive, non-transferable, worldwide, royalty-free license under Agilent Intellectual
Property to use the Product Requirements to design, develop, test and manufacture the Deliverables from January 31, 2006 through June 1, 2006. This grant will continue until the closing
date of the spin-off agreements between Agilent and Agilent STS, targeted to be June 1, 2006. This grant will expire on October 1, 2006 and shall be replaced with a similar
license from Agilent STS sublicensing rights it will have received from Agilent necessary to perform Flextronics' obligations under this Agreement. Flextronics agrees to maintain the confidentiality
of the Product Requirements under the terms specified in Article 20 below. 

        4.5    Trademark Usage.    As a condition of this Agreement Agilent Technologies, Inc. shall grant Flextronics
a license to use the relevant Marks in accordance with the terms shown in Exhibit S. 

MUTUAL INDEMNIFICATION FOR PRODUCT AND ENVIRONMENTAL LIABILITY 

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

        4.6.1    any
actual or threatened injury or damage to any person or property caused, or alleged to be caused, by a Product sold by Flextronics to Agilent hereunder, but solely
to the extent such injury or damage has been caused by the breach by Flextronics, its agents or Subcontractors, of its express limited warranties related to Flextronics', its agents or Subcontractors,
workmanship and manufacture in accordance with the Specifications only as further set forth in Section 10. 

        4.6.2    noncompliance
with any Environmental Regulations but solely to the extent that such non-compliance is caused by a process that Flextronics, its agents or
Subcontractors, uses to manufacture the Products; provided that, Flextronics shall not have any obligation to indemnify 

12

 

Agilent
if such claim would not have arisen but for Flextronics', its agents or Subcontractors, manufacture of the Product in accordance with the Specifications. 

        4.7    Indemnification by Agilent.    Agilent agrees to defend, indemnify and hold harmless, Flextronics and its
affiliates, and all directors, officers, employees and agents (each, a "Flextronics Indemnitee") from and against all Damages incurred by or assessed against any of the foregoing to the extent the
same arise out of, are in connection with, are caused by or are related to third-party claims relating to: 

        4.7.1    any
failure of any Product (and Materials contained therein) sold by Flextronics hereunder to comply with any safety standards and/or Environmental Regulations to the
extent that such failure has not been caused by Flextronics' breach of its express limited warranties set forth in Section 10 hereof; 

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

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

5.0    Product Purchases  

        5.1    Purchase and Sale of Products.    Eligible Buyers may purchase and Flextronics will sell Products pursuant to
the terms and conditions of this Agreement. Flextronics will not sell Products pursuant to this Agreement to any other third party without the prior written approval of the Agilent Manager.
Flextronics will refer non-Agilent buyers, who may desire to purchase Products under this Agreement, to the appropriate Agilent Manager. 

        5.2   Agilent
will contract with Flextronics to manufacture and support the agreed upon current products as referenced in Exhibit Q, Appendix A and successor
products that are currently manufactured at BEI Loveland and Agilent Boeblingen for the term of this Agreement. Order Acknowledgment. Unless otherwise
indicated, purchase of Products will be initiated by issuance of an Order by Eligible Buyers to Flextronics. The Order may be in the form of an Open PO. If an Open PO is used, the Eligible Buyer will
issue periodic Releases to Flextronics. Such Releases against an Open PO will constitute a firm Order. Flextronics will notify the Eligible Buyer within one (1) business day of receipt of the
Order, and inform the Eligible Buyer of the reason, if Flextronics is unable to meet any requested order requirements. Eligible Buyers must on an ongoing basis provide PO's such that Orders are not
released inside of Lead Time. 

        5.3    Forecasts.    Eligible Buyers agree to provide Flextronics with a twelve (12) month rolling Forecast of
projected Product demand segmented into monthly buckets. Except as expressly provided below or otherwise agreed to by the Parties in the Addendum, Product Forecasts supplied to Flextronics from
Eligible Buyers are provided as an accommodation for planning purposes only, and will in no way constitute a commitment on the part of an Eligible Buyer. All Product Forecasts will be 

13

 

considered
Confidential Information pursuant to Article 20. For any Agilent Contract Suppliers for which the terms and conditions drive liability
based on forecast Agilent will be responsible for such liability. 

        5.4    Duty to Fulfill Orders.    Flextronics agrees to fulfill all Accepted Orders in accordance with its terms and
the terms of this Agreement prior to the termination or cancellation of this Agreement, even if the Delivery Dates of Products under such Orders occur after the date of expiration or termination. 

        5.5    Order Allocation.    If for any reason Flextronics is unable to meet an accepted Order, Flextronics will notify
Agilent's Global Account Manager and the responsible Agilent Manager of such failure within two (2) business days of Flextronics discovery of the problem. Flextronics will also provide a
corrective action plan with a timetable describing the problem. Agilent's Global Account Manager and the designated Agilent Managers may, in their discretion, determine an Order allocation
prioritization plan or take such other steps they deem necessary. Any such steps will not be deemed a waiver of any breach on the part of Flextronics. 

        5.6    Lead Time.    Standard Lead Time for Products under this Agreement is between ten (10) work days for
simple products and twenty (20) work days for complex products unless otherwise agreed in the Addendum. Flextronics will notify the Eligible Buyer of any lead time changes, which must be
mutually agreed by both parties and Flextronics will target 30 days advance notice. 

        5.7    Emergency Orders.    If an Eligible Buyer deems it necessary, it may order Products by EDI or facsimile on an
emergency basis (Emergency Order) subject to the availability of such Products in Flextronics inventory. Flextronics will use commercially reasonable efforts to ship the Emergency Order to the
stipulated destinations within mutually agreed upon work hours after the receipt. The Eligible Buyer will pay any reasonable additional expenses related to such Emergency Orders. 

        5.8   Agilent
Obligations related to Transferred Assets 

        5.8.1    Agilent
acknowledges that the assets and resources transferred to Flextronics shall enable Flextronics to perform the requirements set forth in this Agreement for the
work content currently produced by this site. 

        5.8.2    In
the event the assets and resources transferred to Flextronics are insufficient to satisfy the requirements Flextronics will notify Agilent and will present
reasonable proof that will support this determination along with a proposed plan to address any deficiency in a technically efficient and commercially reasonable manner. Agilent shall be liable for
the cost and / or contractual impact of these deficiencies. 

        5.8.3    The
details of the transfer of assets and resources shall be addressed in the APA, stipulating in more detail Agilent's continued liability for severance and pension
claims according to the agreed terms. 

6.0    Delivery and Acceptance  

        6.1    Shipment.    To the extent applicable, if at all, the Parties agree to use the shipping instructions and
logistics processes referenced in attached Exhibit N. The appropriate delivery term is ex works according to INCOTERMS 2000 with delivery to the
designated delivery locations listed in Exhibit K. 

        6.2   Acceptance of the Product shall be based solely on whether the Product passes a mutually agreeable Acceptance Test
Procedure or Inspection designed to demonstrate compliance with the Product Information and General Technical Specifications prior to shipment by Flextronics. 

        6.3    Early Shipment and Over Shipment.    Unless otherwise agreed by the Parties in the Addenda, the Flextronics
will not deliver Product more than three (3) days in advance of the Delivery date specified in the Order, nor will the Flextronics deliver more Product than the quantity specified in the 

14

 

Order.
In the event of early or over shipment, Agilent may, at its sole discretion, either return or retain the Products delivered earlier or in greater quantity than specified in the Order. If the
Products are returned, the return will be in accordance with Sections 11.3 and 11.4. If Agilent elects to retain the Products, Agilent will not
issue payment for the early and additional Products until such time that payment would have been due if Product Orders had been properly fulfilled. 

        6.4    Rejected Products.    Prior to returning any rejected Product, Agilent will obtain a Return Material
Authorization ("RMA") number from Flextronics, and will return such Product in accordance with Sections 11.3 and 11.4.  

7.0    Prices and Payment Terms  

        7.1    Product Pricing.    Specific Product prices, currency and any exchange rate sharing will be agreed upon by
Flextronics and Agilent and set forth either in the applicable Addenda or Product Exhibit to this Agreement. All prices are to be understood to be net of Value Add Tax (VAT). VAT will be added where
applicable. Unless otherwise agreed in the Addendum, the Parties agree to use the pricing models described in Exhibit Q, Appendix B.
Prices will also be subject to any available prompt payment discounts that Flextronics may, at its discretion, offer to its customers. Flextronics and Agilent agree to review and implement adjustments
to Product and Component prices on a semi-annual basis as specified in Exhibit Q, Appendix B. 

        7.2    Adjusted Pricing.    The Parties agree to implement the following pricing methodology to implement new pricing
or price adjustments, whether for a new product or existing Products. To introduce new pricing, Flextronics will issue a quotation to Agilent listing the Product and pricing for each assembly of the
Product. To indicate Agilent's acceptance of the pricing on Flextronics quotation, Agilent will issue new Orders, or revise its existing Orders to reflect the new pricing in Flextronics quotation. 

        7.3    Payment Terms.    Unless otherwise indicated below or as agreed to under the Addendum, Agilent and Flextronics
agree to payment terms of net forty-five (45) for Eligible Buyers from the date of invoice which shall not be earlier than the shipment date. Payment will be made in the currency
stated in Addenda or Order, as applicable. No payment otherwise due with respect to any Product will be payable to Flextronics until the Product has been accepted in writing by the Eligible Buyer or
that Eligible Buyer fails to reject the Product within the designated testing and inspection period. 

        7.4    Additional Charges and Expenses.    Unless otherwise agreed, Flextronics will separately list on its invoices
the following charges and expenses, unless Agilent has paid for such charges or expenses directly or has provided Flextronics with proper evidence of its exemption from such charge: (i) freight
(outbound), export licensing of the Product, or payment of broker's fees, duties, tariffs, or other similar charges; (ii) taxes or charges (other than those based on Flextronics net income or
any other taxes or charges not directly related to the manufacture sale, shipment, storage, "value add" or use of Products to Agilent) imposed by any taxing authority upon the manufacture, sale,
shipment, storage, "value add" or use of the Product that Flextronics is obligated to pay or collect; (iii) cost of compliance with any environmental legislation relating to the return or
disposal of Products at the end of Product Life if Flextronics is required to comply with such environmental legislation; and, (iv) agreed to set-up, tooling, or
non-recurring engineering activities (collectively "NRE Charges"). 

        7.5   If
Flextronics offers a better price to any third party for materially similar products and materially similar volumes, based on a like for like comparison basis,
Flextronics agrees to offer such price or pricing formula to Agilent immediately. Flextronics agrees to fulfill its obligations in this Section in good faith and further agrees that it will not create
any purchasing programs, or other conditions that serve to deny Agilent the benefits of its favored purchaser status. 

15

   
        7.6    Changed Prices.    If, during the Term, changed prices or price formulas are put in effect by mutual
agreement
of Agilent and Flextronics, such prices or price formulas will apply to all open Orders issued by Agilent and accepted by Flextronics per  Section 5 that exist at the time of the effective date of
such prices or price formulas and all new Accepted Orders after the effective date of
such prices or price formulas. If such price changes result in a revaluation of inventory and the cost of this revaluation is mutually agreed, Flextronics will invoice or credit this cost as a
separate line item. 

        7.7    Cost Breakdown.    At Agilent's request, Flextronics agrees to utilize the format outlined in  Exhibit C to respond to
Agilent's requests for quotation on new or additional Products or for any other pricing submissions made to Agilent
(e.g., Product revision pricing submittals). Upon reasonable request, Flextronics agrees to furnish Agilent with a fully-costed Bill of Material and fully detailed Assembly Lead-times for
each Product quoted. All quotations by Flextronics are considered the confidential information of Flextronics. 

        7.8    Electronic Pricing Submittals.    Upon request, Flextronics will provide pricing submittals electronically
using the request for quote models outlined in Exhibit C attached hereto. The Parties will agree to an electronic method to be used for such
submissions. 

8.0    Cost Management  

        8.1    Cost Management Process.    The Parties agree to implement on an on-going basis cost management
processes to manage cost variances due to significant changes, such as Engineering or Manufacturing Changes, Component changes, Agilent approved AVL changes, or any other substantially significant
change in environment. Such processes are described in Exhibit C hereto. 

        8.2    Total Cost of Ownership.    Agilent and Flextronics agree to pursue cost reduction improvements throughout the
supply chain (not limited to Component cost). An annual stretch goal of 10% total cost reduction is the objective, by investigating and improving total supply chain practice; including but not limited
to procurement practices with Component Suppliers and logistics and services providers. 

        8.3    Cost Reduction Sharing.    Flextronics agrees to share any cost savings achieved equally with Agilent for a
period of twelve (12) months and thereafter pass through all such savings to Agilent. Product prices will be amended accordingly. Flextronics will demonstrate cost reduction improvements and
report such results to the appropriate Agilent Manager at a minimum quarterly, unless otherwise indicated in the Addendum. 

        8.4    Cost Model Details.    For the purpose of continuous cost reduction and cost management, Flextronics will
provide upon request (at any time during or after the Product quotation process) additional cost model details, including assembly, test, packaging, NRE and cost of acquisition. 

9.0    Component Procurement  

        9.1    Approved Vendor Lists.    Flextronics agrees to buy all Components from suppliers on the AVL. Use of "brokers"
for Components will require specific approval by Agilent, which approval will not be unreasonably withheld, prior to use by Flextronics. In the event that Flextronics is unable to procure a
Component(s) as a result of the AVL restrictions set forth herein, Agilent and Flextronics agree to negotiate changes to the AVL. Flextronics will use standard purchasing practices, including long
lead-time Component management, minimum and multiple supplier order quantities and SMI programs in order to meet Agilent Forecasts. 

        9.2    Usage Requirements.    All Components or other materials or parts ordered for any Products are to be used to
manufacture Products only. Any other use or substitution of Components or materials must have Agilent's prior written consent. Flextronics is expected to follow commercially reasonable 

16

 

practices
to meet Agilent demand flexibility and assurance of supply while minimizing total inventory exposure, including use of Supplier Managed Inventory or similar methodologies. In the event that
prudent and normal procurement practices are not evident as defined above, in the event of excess due to cancellation, termination or demand reductions, Agilent will not be liable for that portion of
the material purchased in excess of the amount that would have been purchased if such procurement practices had been used. 

        9.3    Component Shortages.    Flextronics agrees to provide appropriate support to target supply of all Components or
families of Components (affecting Products) that may be in limited supply. In the event
of a probable or potential Component shortage or availability problem that may impact assurance of supply, Flextronics will immediately escalate the situation to the affected Eligible Buyer(s). 

        9.4    Purchasing Components from Agilent Contracts.    Flextronics may procure Components through use of existing
Agilent purchase agreements with Component Suppliers. Under such circumstances, the Components may be procured by an Agilent authorized representative and then transferred or resold to Flextronics
pursuant to the consignment or Buy/Sell procedure described below in section 9.8. Alternatively, Agilent will seek authorization for Flextronics to purchase the Components directly from the
Component Supplier under the terms of that Agilent purchase agreement. In such case, any such purchase must be at the price quoted by the Component Supplier, refer to and use the specific Agilent Part
Numbers involved and must be used exclusively for Flextronics performance under this Agreement. Agilent will exercise all reasonable commercial efforts to secure supplier terms and conditions
consistent with those necessary to support the requirements of this agreement including but not limited to SMI Programs, Flexibility agreements and excess and obsolescence liabilities. Flextronics
shall identify to Agilent the impact of any inconsistency between the terms and conditions of this Agreement and Agilent' negotiated terms and conditions with their Suppliers. If the impact identified
has a material affect on cost or performance, Agilent shall either use all reasonable commercial efforts to negotiate such terms and conditions or reach an appropriate and reasonable solution with
Flextronics. If an Agilent Supplier causes a constraint on flexibility which Flextronics cannot resolve itself, using all commercially reasonable efforts, then Flextronics will notify Agilent. The
Parties will work together to achieve a solution with respect to such constraint. 

        9.5    Component Forecasts from Flextronics to Suppliers.    Flextronics will provide to Agilent Strategic Suppliers
on a monthly basis a rolling twelve (12) month forecast of all Turnkey Component requirements. This Component forecast will be updated at least monthly for all planned orders in accordance with
a mutually agreeable forecast implementation plan documented in Exhibit I. A copy of the Component forecast will simultaneously be provided to
Agilent. 

        9.6    Component Forecasts from Flextronics to Agilent.    Flextronics will provide to Agilent on a
bi-monthly basis a rolling twelve (12) month forecast of all Buy/Sell Component requirements in accordance with a mutually agreeable Component forecast implementation plan
documented in Exhibit I. In turn, Agilent will provide a written acknowledgement of all Buy/Sell Components needed within five (5) days. 

        9.7    Use of Agilent Part Number.    For the purposes of Component forecasts, Orders and materials or inventory
management reporting, Flextronics part numbering systems will utilize Agilent's Part Number with an additional prefix/suffix. Flextronics agrees to
assure that the part numbers are recognized at the suppliers. Agilent will not engage in any efforts to change part numbers with pre-suppliers. Flextronics agrees to provide the Agilent
part number in reports. 

        9.8    Purchase of Agilent Component Inventory (Buy/Sell).    For the purposes of ongoing manufacturing,
short-term requirements and the manufacturing of new Products, Flextronics recognizes 

17

 

that
Component material may need to be acquired from Agilent inventories. Flextronics and Agilent agree to the following terms and conditions for the following categories of Buy/Sell Components: 

        a)    Permanent Buy/Sell:    Flextronics will provide Agilent a forecast for these Components as defined in  Section 9.6
above. Agilent will determine the list and the standard cost of the Components to be transferred to Flextronics. If needed, Agilent
may elect to request in writing that a Permanent Buy/Sell Component or a batch of a Permanent Buy/Sell Component shipment should be stored separately or used to manufacture a specific Order or a
Product by Flextronics. 

        b)    Shortage Pull:    Flextronics will submit a list of Components to be acquired from Agilent's inventory. Agilent
must respond to Flextronics request within 24 hours with details as to availability and date of delivery to Flextronics. Agilent will utilize Flextronics standard cost when accounting for the
transfer of ownership of these Components to Flextronics 

        c)    Seeding Buy/Sell:    Agilent and Flextronics will agree to in writing to the terms and conditions that will
govern the transfer of Component inventory to Flextronics for the purpose of the manufacture of new Product. Agilent will determine the standard cost of the material to be transferred to Flextronics. 

        9.9    Purchase Terms.    Flextronics will purchase the Buy/Sell Components under agreed terms and conditions defined
in Exhibit F of this Agreement. 

        9.10    Consigned Components.    Agilent reserves the right to supply through consignment, at its discretion, any
Components to Flextronics related to the production of Product, however such changes are subject to cost model adjustments, including but not limited to material handling fees, which need to be
mutually agreed. Agilent will retain all rights, title, interest, and obligation (including but not limited to, warranty related issues) in the Components furnished to Flextronics as consigned
inventory. Agilent will retain ownership of all such Consigned Components including during the time such Components are used by Flextronics in the manufacturing of Agilent's Products. Percentage
limits on the Consigned Components will be mutually agreed upon by the parties in the Addendum. 

        9.11    Return of Consigned Components.    Flextronics will return, at Agilent's costs, all consigned Components upon
written request from Agilent. If Flextronics fails to identify and return any Components within a timeline agreed upon by the parties, Flextronics will be obligated to buy the
Consigned Components from Agilent at Agilent's purchase price. The Consigned Components will be returned to Agilent in accordance with the written instructions provided by the Agilent Eligible Buyer. 

        9.12    Component Price Auditing.    Agilent reserves the right, at Agilent expense, to conduct an audit of Component
pricing quoted to Agilent for products supplied based on the use of Agilent's AVL. This auditing is limited to a three month (3) historical view. Additionally it is limited where Flextronics
has other confidentiality agreements which prohibit the disclosure. In the event that a negative discrepancy "cost lower than price" is disclosed which is greater then 2% gross, between the prices
charged and the price which should have been charged for the relevant period, Flextronics will pay Agilent the differential for the units shipped in the previous 90 days. In the event that a
positive discrepancy "cost higher than price" is disclosed, that is greater then 2% gross between the price charged and the price which should have been charged for the relevant period, Agilent will
pay Flextronics the differential for the units shipped in the previous 90 days. 

10.0    Warranties  

        10.1    Product Warranty.    Flextronics warrants that all Products will: 

        a)    Be
manufactured, processed and assembled by Flextronics in application of good industry practice, free from defects in workmanship. It is understood that this also
applies in the event of a Product re-manufactured under this warranty, to the extent of the replaced or repaired defective 

18

 

Product
or part of the Product, e.g. a board, which shall be manufactured in a manner that it is functionally equivalent to a newly manufactured Product, with functionally equivalent new components to
replace any defective components, while any of the non-defective components will be re-assembled to the Product. 

        b)    Be
manufactured in accordance with the applicable Specifications. The "Specifications" for each Product or revision thereof, shall include but are not limited to bill of
materials, designs, schematics, assembly drawings, process documentation, test specifications, current revision number, and Approved Vendor List. The Specifications as provided by Agilent and included
in Flextronics' production document management system and maintained in accordance with the terms of this Agreement are incorporated herein by reference as  Exhibit B; 

        c)     Be
free and clear of all Encumbrances and other claims to title or ownership; 

        d)    Be
free from defects in workmanship as specified in the Agilent Acceptability Specification 930.610, as listed in  Exhibit B; and 

        e)    Not
violate or infringe any third party Intellectual Property Rights solely with respect to Flextronics manufacturing processes and Flextronics further warrants that it
is not aware of any facts upon which such claim could be made. If Flextronics learns of any claim or any facts upon which a claim could be made, it will promptly notify Agilent of this information. 

        10.2    Components Warranty.    Flextronics will endeavor to pass on to Agilent all Component Suppliers' warranties to
the extent that they are transferable. Flextronics agrees to ensure that all Components used in the Product are manufactured by suppliers on Agilent's AVL unless otherwise agreed. Flextronics shall
specifically endeavor to obtain and pass through to Agilent the following warranties with regard to the Materials (other than the Production Materials) including but not limited to:
(i) conformance of the Materials with the vendor's specifications and/or with the Specifications; (ii) that the Materials will be free from defects in workmanship; (iii) that the
Materials will comply with environmental regulations as referred to in section 1.1.5; and (iv) that the Materials will not infringe the intellectual property rights of third parties. 

        10.3    No Impediment.    Flextronics warrants that, at the time of execution of this Agreement, there is no pending
or threatened legal action or proceeding by or against it that may have a material adverse effect on its ability to fulfill its obligations under this Agreement. Flextronics further warrants that it
will notify Agilent in writing immediately upon becoming aware of any such action or proceeding. 

        10.4    Survival of Warranties.    Product Warranties will survive any inspection, delivery, acceptance or payment by
Agilent and be in effect for a two (2) year period following the date of shipment of the Product to an Eligible Buyer (the "Warranty Period"). Should there be a breach of any of the Warranties
specified during the two (2) year period, Flextronics will, at its option and its expense, repair, replace, or if repair or replacement is not possible issue a credit for Product found
defective during the Warranty Period. Product Warranties will survive any obsolescence or other Flextronics cessation of the manufacture or support of such Product. 

        10.5    DISCLAIMER.    THE WARRANTIES PROVIDED ABOVE ARE IN LIEU OF ANY OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED,
REGARDING ANY PRODUCTS, OR REGARDING THEIR MERCHANTABILITY OR THEIR FITNESS FOR ANY PARTICULAR PURPOSE. 

11.0    Return of Non-Conforming Products under Warranty  

        11.1    Non-Conforming Product.    Flextronics and Agilent will negotiate together in good faith to reach
agreement on quality standards regarding the return of Non-Conforming Product to which 

19

 

Agilent
is entitled to a remedy under the express limited warranty in section 10 ("Non Conforming Product"). Agilent may return for repair or replacement: 

        a)    each
System that fails acceptance test at customer site or fails at customer site or is not meeting the specifications due to Flextronics workmanship. 

        b)    each
Assembly (e.g. Repair, PCAs manufactured by Flextronics e.g. for upgrade customer orders) that fails or an entire Lot of Products if a tested sample of that lot
contains Non-Conforming Products exceeding the agreed AQL level as per Exhibit Q Appendix G. 

        11.2    Agilent Repair of Non-Conforming Product.    Agilent, at its election, may repair or partially
repair Products at Agilent Customer locations. Agilent will notify Flextronics in advance of Agilent Repair on Non-Conforming Product, and where reasonable Agilent will offer to
Flextronics the ability to participate in the fault analysis, and first give Flextronics the opportunity to repair itself or propose a remedy, to the extent Agilent is entitled to claim under
warranty. Agilent will document costs, including labor and travel, associated with repair of Non-Conforming Products, and may claim such cost where the remedy is required as a result of a
breach of Flextronics' warranty obligations under Section 10: however this cost shall not be higher than the cost that Flextronics would incur repairing it at its own facilities. Additionally
any repairs made that are not in conformance with the Product Specifications and industry accepted best practices shall void Flextronics' remaining warranty liability. Flextronics will review and
validate all documentation and costs. Upon agreement, Agilent will then proceed to invoice Flextronics for said costs net 45 days. 

        11.3    Repair Period.    Unless otherwise specified in an Addenda, Flextronics will return the replacement or
repaired Products as soon as possible but in no event later than twenty (20) calendar days after receipt of the Non-Conforming Product from Agilent. 

        11.4    Return Material Authorization.    Prior to returning any rejected Product, Agilent will make a written request
for a Return Material Authorization ("RMA") number from Flextronics, and will return such Product in accordance with the provisions of this Article or other provisions if mutually agreed to by the
parties in writing and made a part of this Agreement. All returns shall be at Agilent's initial expense. For Non-Conforming Products, Agilent will notify Flextronics in writing of
identified Non-Conforming Products within an average of fifteen (15) days and no greater than thirty (30) days, in any case, of the discovery and completion of analysis of
such Products. Agilent will specify the reason for the return in the RMA authorization request. In the event a Product is rejected by Agilent and it is agreed that the failure is due to Flextronics
workmanship, Flextronics will promptly take corrective action to cure any defect that led to rejection. 

        11.5    Return Process.    Agilent shall be responsible for all repair and transportation costs including inbound and
outbound freight/loss and damage, except for Non-Conforming products for which a Flextronics warranty breach is found. All Non-Conforming Products returned by Agilent to
Flextronics that are in warranty breach, and all replacement or repaired Products shipped by Flextronics to Agilent to replace Non-Conforming Products that are in warranty breach, will be
at Flextronics' expense, including transportation charges (round trip charges for replacement or repaired Products). Flextronics will bear all risk of loss or damage to such Products while in transit. 

        11.6    Line-Down Condition.    Flextronics will replace Non-Conforming Products as specified
above except in those instances where Non-Conforming Product results in a line-down condition for Agilent. In the case of a "line down condition" where an entire Agilent
Product line, e.g. PLAT or PLBG, cannot ship due to a problem solely caused by Flextronics, Flextronics will provide required resources and escalation as needed to accelerate replacement or repair.
The Parties' Global Account Managers will agree upon the accelerated delivery methods and time period. Any so agreed accelerated replacement, repair and delivery will be at Flextronics' expense. 

20

 

12.0    Product Support  

        12.1    Product Life and Support Life.    The "Product Life" is the period beginning on the date of the first shipment
of Product from Flextronics, including NPI activities, and continuing to the date when the Product is deleted from the Agilent Corporate Price List ("CPL"). The "Support Life" is the
ten (10) year period beginning on the date the Product is deleted from the CPL or the term of this agreement, whichever is shorter. 

        12.2    Flextronics Technical Support Obligation.    During the Product Life and Support Life, Flextronics will
maintain technical expertise on Products consistent with services provided immediately upon the Effective Date, including, but not limited to: trained personnel with sufficient training to be able to
repair the Products; Flextronics single point of support contact for Agilent; Tools and equipment needed for the repair of Product; and ready access to historical and most current manufacturing
documents. Fees for Flextronics technical support will be listed in the Addenda or otherwise agreed to by the Parties' Global Account Managers. The Flextronics technical support obligations do not
survive termination of this agreement unless otherwise agreed. For products which are not actively manufactured, the parties will outline and agree on the support required and the cost of such
support. 

        12.3    Product Support Documentation.    Flextronics will use commercially reasonable efforts to review Agilent
documentation for accuracy and provide feedback to Agilent. Flextronics will make a reasonable effort to ensure completeness and accuracy of all documentation provided by Agilent, and notify Agilent
when and if any errors are found. 

        12.4    Class Failures.    Unless otherwise provided in the Addendum, under any of the following circumstances,
Agilent will have the right to call for a joint engineering assessment meeting between Agilent and Flextronics to investigate and assess the severity of the situation: as defined in Exhibit Q
Appendix G 

        Agilent
and Flextronics will mutually agree to the rate of failures in products that will constitute a Class failure rate ("Class Failure") once the product is transferred to Flextronics
China. In the case of Class Failure, Flextronics and Agilent will cooperate to implement the following procedure: (a) Agilent will promptly notify Flextronics upon discovery of the failure and
will supply Flextronics with samples of the failure; (b) within forty-eight (48) hours of receipt of the failed samples Flextronics will give an initial response to Agilent indicating
its preliminary plan for diagnosing and addressing the problem; (c) Flextronics and Agilent will jointly exert all commercially reasonable efforts to diagnose the problem and plan a workaround
or more permanent solution; and (d) if and to the extent the problem is a result of a breach of Flextronics Express Limited Warranty set forth in Section 10, then Flextronics will be
responsible for the reasonable costs incurred in rectifying the Class Failure, Product Recall, including Product repair or replacement costs. 

        Cost
of freight shall be allocated between the parties in accordance with Exhibit E (RMA process). 

        In
the event a Class Failure is determined to exist as described in this section,    Agilent may upon written notice to Flextronics suspend deliveries under any further
Purchase Orders for the relevant affected Products without penalty until Flextronics can demonstrate that the cause of the Class has been corrected in respect of the relevant Purchase Order(s). 

13.0    Obsolescence and Manufacturing Rights  

        13.1    Agilent's Right to Tools and Documents.    

        13.1.1    If
Flextronics seeks to discontinue the supply or support of a Product (Discontinued Product), Flextronics will provide to Agilent the items specified in  Section 26.5 below regarding Agilent's rights
upon termination within ten (10) days of Agilent's written request. Agilent will 

21

 

keep
all Flextronics created documentation confidential in accordance with the terms of Section 20. For items specified in  Section 26.5 and developed
by Flextronics the parties will agree on a reasonable cost to be paid to Flextronics. If Flextronics refuses to
cooperate with its obligations under this Article 13.1, Agilent may charge Flextronics for all reasonable costs to procure or prepare the
documentation. 

        13.1.2    Flextronics
will furnish to Agilent, provided that Agilent pays the associated shipping cost, all Agilent owned Tools within a mutually agreed upon timeline after
Flextronics has received Agilent's written notification to Flextronics of Agilent's exercise of its rights under this Section 13.1. If the
Agilent owned Tools are not delivered within this time period, Flextronics will permit Agilent to enter upon Flextronics' premises to take possession of, assemble and collect such Tools or render them
unusable, or Agilent may require Flextronics to assemble such Tools and make them available at a place Agilent designates in writing to allow Agilent to take possession or dispose of such Tools.
Flextronics will also furnish to Agilent the names and addresses for sources for such Agilent owned Tools in Flextronics' possession. 

        13.1.3    To
the extent not proscribed by non-disclosure agreements between Flextronics and its vendors, Flextronics will furnish to Agilent within seven
(7) days after Agilent's written request, the names and addresses of Flextronics' sources for Components or materials not manufactured by Flextronics, including the appropriate part numbers for
commercially available equivalents of electronic parts. If requested by Agilent and the parties can agree on a reasonable cost to be paid to Flextronics, Flextronics will use commercially reasonable
efforts to assist Agilent in procuring the right to purchase all such components or materials directly from Flextronics' vendors. 

        13.1.4    To
the extent permitted, Flextronics will assign to Agilent any license rights it may have with third parties for software, documentation, or Intellectual Property
used in the manufacture of the Discontinued Product 

14.0    Inventory Management  

        14.1    Inventory Reporting.    Flextronics agrees to provide to Agilent a consolidated listing of all material
inventories utilizing the reporting requirements guidelines set forth in Exhibit H.

        14.2    Management of Allocated Components.    Except for Components supplied by Agilent or for which Agilent takes
specific responsibility under the Addendum, Flextronics will be responsible for managing Component allocations in the supply chain; provided, however, that Agilent retains the right to designate where
the allocated Components are to be used, however limited to Flextronics' various manufacturing locations. As part of this responsibility, Flextronics will furnish the specified quantity of Products to
Agilent on the designated Delivery Date and at the appropriate quality level. A designated Agilent Managers and Flextronics may include additional allocation methods to be used in the manufacture or
design of the Product in the Addendum. 

        14.3    Excess Components Inventory.    Agilent's liability for Excess Components will be as mutually agreed to by the
Parties in Exhibit Q, Appendix C. 

        14.4    Obsolete Component Inventory.    Obsolete Components will be communicated to the Agilent Global Account
Manager or as appropriate to the designated Agilent Managers as part of the monthly Obsolete Component reporting or as soon as possible after forecasted demand is removed. Flextronics will exercise
reasonable efforts to provide such report to Agilent by the last business day of the first full week of each month. For Obsolete Components inventory, Agilent has the option of: (i) purchasing
the Obsolete Components from Flextronics, at Flextronics' current quoted price and having the Obsolete Components returned to Agilent, or a location indicated by Agilent; (ii) authorizing
Flextronics to sell Obsolete Components internally or externally and Agilent, upon review and agreement, pays the difference between the Flextronics current quoted price and selling price; or
(iii) scrapping and 

22

 

disposing
of the Obsolete Components at Flextronics' current quoted price. Upon Agilent's receipt of Flextronics' Obsolete Component report, Agilent will advise Flextronics in writing within twenty
(20) calendar days or less which option Agilent has selected to disposition the Obsolete Components. The process for selection of options by Agilent and disposal of Obsolete Components shall
terminate within 30 calendar days after the termination of the Agreement, after which time Flextronics shall have the right to payment for all remaining obsolete components and inventory. 

        14.5    Component Discontinuances.    If Flextronics receives notice from a Component supplier or Agilent that a
Component will be discontinued, Flextronics will notify Agilent in writing within ten (10) calendar days and will use its best efforts to identify a form, fit and function replacement and in a
reasonable period of time, notify Agilent by submitting in writing a list of alternatives. The Agilent Global Account Manager or, as appropriate, the designated Agilent Managers, and Flextronics will
develop an appropriate action plan, including all sample requirements, product qualifications, updates to the AVL, and schedule changes necessary to reaching a mutually agreeable resolution of the
discontinuance. Additionally, upon Agilent's request, Flextronics will disclose the agreements in place regarding discontinuance notification for all Turnkey Component Suppliers. For components
controlled by Flextronics, Flextronics will make all commercially reasonable efforts to ensure all such suppliers are obligated to provide a minimum of six (6) months notification of any
potential discontinuance to Flextronics. For components controlled by Agilent, Agilent will make all commercially reasonable efforts to ensure all such suppliers are obligated to provide a minimum of
six (6) months notification of any potential discontinuance to Agilent. 

        14.6    Component Lifetime Buys.    In the event that Agilent cannot identify a form, fit and function replacement, or
does not approve a replacement identified by Flextronics, Agilent may purchase the LTB inventory and consign or Buy/Sell such LTB inventory to Flextronics for use in manufacturing Products. By mutual
agreement, Agilent may also have Flextronics purchase the LTB inventory. Agilent will pay any costs associated with the storage or handling of such consigned LTB inventory to Flextronics, and
Flextronics will determine the most appropriate allocation of such inventory among its manufacturing locations. The Parties' Global Account Managers, or designated Agilent Managers as appropriate,
agree to negotiate in good faith the terms of the allocation of such LTB inventory, including associated costs, adhering to the LTB Component Allocation Requirements set forth in  Exhibit P attached
hereto or as otherwise agreed in the appropriate Addenda. Any such LTB Component Allocation agreement will be appended to  Exhibit P, made a part of this Agreement, and incorporated herein
consistent with other exhibits to this Agreement. In addition, Flextronics
agrees to provide a Discontinuance/LTB Report to Agilent as required under Exhibit H and any Addenda. 

        14.7    Supplier Managed Inventory.    Where requested by Agilent, Flextronics and Agilent will jointly implement a
Supplier Managed Inventory Program ("SMI") in a mutually agreeable time frame, and if applicable a mutually agreed cost impact. Any such "SMI' will be specified in the Addendum. A form of SMI
Agreement for a "two-node supply chain" scenario, in which a supplier directly supplies products to Agilent, is provided as an example in  Exhibit B. Elements of SMI will include but not be limited
to: 

        a)    Flextronics
ownership of a mutually agreed level of finished goods inventory at an Agilent location with transfer of ownership to Agilent when material is actually
consumed by Agilent; 

        b)    Processes
established to support Agilent's and Flextronics' requirements, including liability, damage, inventory discrepancy, aging of finished goods inventory, disaster
recovery, COs, etc.; and 

        c)     Invoices
generated at transfer of ownership in accordance with the payment terms in Section 7.3. 

23

   
        14.8    Inventory Valuation.    Unless otherwise agreed in the Addenda, Flextronics agrees to comply with the
inventory valuation requirements and processes set forth in Exhibit H. These requirements and processes will be used for the purposes of
providing the Inventory Material Liability Report to Agilent as required under that exhibit. 

        14.9    Inventory Transfers to Flextronics.    In the event that Agilent adds additional Products to this Agreement,
Flextronics and Agilent will enter into an Inventory Transfer Agreement ("ITA") that will be included within and become a part of the applicable Addendum. The ITA will establish, among other things,
the purchase terms, quantities, delivery, storage, and other obligations of the Parties with respect to the inventory transfer, including Bridge Buys. 

15.0    Performance Expectations and Quality Standards  

        15.1    Continuous Improvement Objectives.    Agilent and Flextronics agree to work together to develop and mutually
agree performance expectations according to Exhibit Q, Appendix N and as outlined in the TQRDCEb example attached hereto as  Exhibit J. Both Parties will meet on at least an annual basis
to review the progress made on the stated performance objectives. Flextronics is
expected to maintain a minimum overall score of three (3.0) on a scale of zero to four (0-4) with no individual attribute below two (2.0). Flextronics agrees to establish and implement
corrective action plans as necessary to correct any deficient score no later than three (3) months from the date that the review results are communicated to Flextronics by Agilent. Flextronics
agrees to discuss and document in the performance review meetings any productivity improvement accomplishments and future plans relating thereto. 

        15.2    Quality Standards.    Flextronics agrees to meet the quality standards and specifications set forth in  Exhibit B to
this Agreement. 

        15.3    Process Improvement.    Flextronics agrees to provide Agilent with Quarterly information on process
improvements. Flextronics will maintain an acceptable documented quality system (e.g., ISO 9002 certified quality program or equivalent) at each authorized Flextronics site specified in  Exhibit K
to manufacture Products and any additional quality requirements agreed by Flextronics and Agilent as specified in the Addendum.
Flextronics' program will include monitoring the manufacturing processes,
statistical process control, corrective action analysis of returned Product and repairs, define failure modes, improving materials and procurement processes, component traceability for critical
Components, and implementation of corrective actions. 

        15.4    Reporting Requirements.    The Parties will mutually agree on those reports required using the Reporting
Requirements Guideline in Exhibit H. The designated Agilent Manager may make appropriate modifications for Agilent. Any reports provided to
Agilent pursuant to this Section will be subject to the provisions of the Confidential Disclosure Agreement attached as Exhibit D to this
Agreement. 

        15.5    ESD Audits.    Flextronics agrees that Agilent may, at least once per year, enter into its manufacturing
facility to conduct ESD audits. Such audits will use the industry standards in the ANSI/ESD, Document No. S-20.20-1999, which is attached as part of  Exhibit B, as the basis for these reviews.
Deficiencies identified in the ESD audit relating to conditions existing as of the Effective Date will
be waived. Such audits will be conducted in accordance with Section 15.7 below. Flextronics further agrees to conduct audits as required by the
ANSI/ESD industry standard noted, at all locations which manufacture Product or store materials for Agilent (using Appendix E of Drawing
No. A-5951-1589-1, Revision H), and make such reports available to Agilent upon Agilent's written request. 

        15.6    Process Quality Problems.    Flextronics will properly monitor, identify and provide immediate notification to
Agilent of Component and Products, or process quality problems that impact Products or Delivery Dates. Flextronics will remedy such issues that are attributable to Flextronics, as required 

24

 

to
effect a full and complete corrective action. In all other cases, Flextronics will assist Agilent in defining an action plan for corrective action. 

        15.7    Inspection.    Agilent will have the right to inspect and audit, at Agilent's expense, Flextronics' plant,
purchasing processes, manufacturing processes, quality program and supporting documentation, including reports, quality test data, training documents and certificates of conformance, and third party
audit results, for the Products at any time during the Term of this Agreement, provided such audit is in accordance with Flextronics' security procedure, occurs during normal business hours, and does
not unduly interfere with Flextronics' operations. Though all efforts will be made to minimize the frequency of audits by Agilent or an Agilent authorized audit firm, in the case of an identified
quality issue, Agilent will have the right to inspect within twenty-four hours (24 hrs) written notice to Flextronics' facility and to review applicable documentation and processes. Normal
written notification for audits will be seven (7) days minimum prior to arrival. Flextronics will provide, at no charge to Agilent, access to such facilities and services as are reasonably
required by Agilent in performing such inspection. All information gathered by Agilent during such audits will be subject to the confidentiality obligations under  Article 20. 

16.0    Change Notification  

        16.1    Flextronics Proposed Changes.    No Engineering or Manufacturing Changes may be made to, or incorporated into,
Products without the prior written approval of the Agilent Global Account Manager and the responsible Agilent Manager. Flextronics will provide Agilent advance notice of any proposed Engineering or
Manufacturing Changes and provide evaluation samples and other appropriate information as may be specified by the Agilent Global Account Manager or by the designated Agilent Manager. Such information
may include possible effects on price, performance, reliability, manufacturing capacity, lead and delivery times, or appearance, and any Obsolete Components (an "Impact Proposal"). The Agilent Global
Account Manager and the affected Agilent Manager must provide written approval of the Impact Proposal prior to any implementation of the Engineering or Manufacturing Change. Agilent shall not withhold
its agreement to reasonably proposed changes by Flextronics which are documented by changed circumstances whether of an economic or technical nature. 

        16.2    Agilent Proposed Changes.    Flextronics acknowledges that Agilent may need to change the Product or processes
or rollover from one product to another during the Term for contractual, engineering or Product related reasons. These changes will be communicated through a Change Order (CO) request. Flextronics is
only to take action when given change instructions in writing from Agilent. After receipt of the CO, Flextronics will provide to Agilent within two (2) business days an acknowledgement of the
CO and promptly thereafter provide an Impact Proposal describing any delivery impact, an implementation date, potential scrap or material exposure and the impact on the cost of the Product due to CO
changes. If the Impact Proposal is acceptable, Agilent will notify the Flextronics Global Account Manager and provide specific instructions to Flextronics on CO implementations. Flextronics will
proceed with such engineering change implementation when the parties have agreed upon the changes to the Specifications, delivery schedule and Product pricing and implementation of such change is
authorized in writing by Agilent Global Account Manager. 

        16.3    Agilent Financial Responsibility.    If Agilent accepts the Impact Proposal, Agilent will assume liability for
any material made obsolete due to a CO implementation per the terms and conditions described in Section 14.4 of this Agreement. In addition,
Agilent will be responsible for increased labor or material charges and any reasonable rework or expedite charges for labor, materials and test resulting from a CO. 

        16.4    Change Monitoring and Tracking.    Upon implementation of an Agilent approved change to a Product under this
Article, Flextronics will provide the appropriate Agilent Managers with the first 

25

 

(1st)
serial number, first shipping date, Order number and quantity of Product to be included in that first shipment of Product incorporating the change. 

        16.5    Emergency Change Request.    Flextronics agrees to acknowledge all emergency change requests within one
(1) business day, such acknowledgments to include at a minimum, a date on which Flextronics will respond to Agilent with the conditions (including but not limited to price and delivery impact)
for implementing the proposed changes. An emergency will be defined as a severe situation, including Product safety, Product quality or a line shut down. Upon both Parties' agreement on the price,
delivery, or any other conditions impacted by the emergency change request, Agilent will issue a Change Order to Flextronics reflecting these new terms and conditions. 

17.0    Agilent Property  

        17.1    Ownership of Agilent Property.    Flextronics hereby acknowledges that Agilent will at all times retain all
right, title and interest in Agilent Property furnished to Flextronics. In addition, Flextronics further acknowledges that such property will, at all times, constitute Bailed Property. Flextronics
hereby grants Agilent its power of attorney to file UCC financing statements or similar notices describing the Agilent Property and the proceeds thereof, wherever Agilent deems appropriate to provide
notice to other parties that the Agilent Property is not property of Flextronics. Should this Agreement or the transactions under this Agreement be deemed for any reason to pass title to the Agilent
Property to Flextronics, Flextronics agrees that Agilent will be deemed to hold, and Flextronics hereby grants to Agilent, a purchase money security interest in the Agilent Property and the proceeds
thereof, to secure all of its obligations to Agilent, including its obligation to return Agilent Property and Flextronics' other obligations under this Agreement. 

        17.2    Agilent Property.    Flextronics agrees to take all necessary steps to ensure that all Agilent Property will
be: 

        17.2.1    clearly
marked as the property of Agilent Technologies; 

        17.2.2    and
remain personal property, and not become a fixture to real property; 

        17.2.3    subject
to inspection by Agilent at any time upon reasonable advance notice in accordance with Sections 15.7 and
17.6; 

        17.2.4    used
only in the performance of this Agreement; 

        17.2.5    kept
free of Encumbrances; 

        17.2.6    at
all times located at Flextronics' manufacturing sites listed in Exhibit K; and 

        17.2.7    kept
separate or identifiable from other materials, Tools or property of Flextronics or held by Flextronics. 

        17.3    Additional Covenants.    Flextronics covenants and agrees that, until termination of this Agreement: 

        17.3.1    Flextronics
will not represent to any other party that it owns Agilent Property; 

        17.3.2    Flextronics
will not modify any Agilent Property in any manner without prior written permission from Agilent; 

        17.4    Maintenance and Calibration.    Flextronics will put in place a system to ensure that Agilent Property
consisting of test equipment provided to Flextronics is calibrated before use. Calibration will be done annually, or as required, and be done to industry acceptable standards (CGMP Standards) or as
otherwise specified by Agilent. Flextronics will be held liable for any repair and replacement costs, normal wear and tear excepted, if damage to such test equipment is solely caused by Flextronics. 

26

 

Maintenance
and calibration costs, and other related direct costs of other Agilent Property are to be mutually agreed to by Agilent and Flextronics. 

        17.5    Return of Agilent Property.    Upon Agilent request, or upon the expiration or termination of this Agreement,
Flextronics will return all Agilent Property to Agilent in good condition, normal wear and
tear accepted. Agilent will determine the manner and procedure for returning the Agilent Property. Agilent Property will be shipped ex works according to INCOTERMS 2000. In the event that Agilent
exercises its right to remove any of the Agilent Property, Flextronics will cooperate fully and will not hinder or obstruct Agilent's actions in any way. 

        17.6    Records and Audits of Agilent Property.    Flextronics will maintain accurate records of the receipt and
location of all Agilent Property, so that it may be identified with particularity. Agilent will have the right to conduct physical inventory audits of all Agilent Property located at Flextronics
facilities with seven (7) days' written notice, provided such audits will be performed within business hours and will not unduly interfere with Flextronics' operations. Such audits will be at
no charge to either Party. 

        17.7    Warranty Disclaimer.    EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ALL AGILENT PROPERTY IS PROVIDED
"AS-IS" WITH NO WARRANTIES WHATSOEVER, EITHER EXPRESSED OR IMPLIED, AND ORAL OR WRITTEN. AGILENT SPECIFICALLY DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. 

        17.8    Risk of Loss.    Flextronics will bear all risk of loss with respect to Agilent Property from receipt until
return to Agilent. 

        17.9    Software.    Any software or firmware provided to Flextronics by Agilent is licensed to Flextronics
non-exclusively for use solely to perform its obligations under this Agreement. Such software and firmware may not be transferred or sublicensed and may not be disassembled or decompiled
without Agilent's express written consent. 

        17.10    Agilent Tools.    Agilent will own all rights in any Tools exclusively paid for by Agilent but legally owned
by Flextronics' or Flextronics' subcontractors. Tools are subject to the provisions regarding Agilent Property specified above. Flextronics will fully qualify all new Tools, after both Parties have
mutually agreed upon the cost for such qualification, and obtain Agilent's written approval before they are used in Flextronics' top-level production line. Flextronics will send Agilent a
copy of its qualification report. In the event that Agilent does not concur with Flextronics' qualification results, Agilent has the right to reject the use of the new Tools until corrective actions
are taken. The cost for such corrective actions shall be mutually agreed upon by both parties. 

        17.11    Tools Maintenance.    As long as the Tools are used in the manufacturing of the Agilent Products, Flextronics
will maintain the Tools in good working condition. In the event that Flextronics considers it necessary to renew the Tools for manufacturing the Agilent Products, or to add alterations to the existing
Tools to meet Agilent's Requirements or requests, Flextronics will notify Agilent for approval prior to the actual implementation. Agilent will not withhold the approval unreasonably. The costs
required for such renewals or alterations will be borne by Agilent. Agilent will own all rights in any modifications or improvements to the Tools and Flextronics agrees to assign over such rights to
Agilent.
Upon request of Agilent Flextronics will transfer title of tools and if required arrange delivery to location specified by Agilent. 

18.0    Flextronics Intellectual Property Defense  

        18.1    Duty to Defend.    Except as provided in Section 18.4,
Flextronics will, at its expense, defend or settle any claim made or any suit or proceeding brought against Agilent based on an allegation that Flextronics' manufacturing processes used in any of the
Deliverables constitute an infringement or 

27

 

unauthorized
use of any third party's Intellectual Property (a "Third Party Claim"). Flextronics will pay all costs, damages and expenses awarded by a court or agreed to in settlement arising from a
Third Party Claim. 

        18.2    Duty to Notify.    Agilent will give Flextronics prompt notice of any Third Party claim, and will give
Flextronics the authority, information, and assistance (at Flextronics' expense) to handle the defense. If Flextronics does not diligently pursue resolution of the claim nor provide Agilent with
reasonable assurance that it will diligently pursue resolution, then Agilent may, without limiting its other rights and remedies, take responsibility for the defense. 

        18.3    Remedies.    If the use of a Flextronics manufacturing process or a Deliverable is enjoined based on a claim
of infringement, Flextronics will, at its sole expense and option: 

        18.3.1    Procure
the right for Flextronics to continue using the process and for Agilent the right to continue using the Deliverables; 

        18.3.2    Replace
the process or Deliverable with a non-infringing process or product of equivalent function and performance; 

        18.3.3    Modify
the process or Deliverable to be non-infringing, without detracting from function or performance of the affected Deliverable; or 

        18.3.4    If
none of these remedies is available after Flextronics expends all reasonable efforts, then terminate part or all of this Agreement. If Flextronics discontinues
supplying a Deliverable as a result of Third Party Claim contemplated under this Section, then Flextronics agrees to reimburse Agilent for its reasonable costs and expenses with migrating its
Requirements to a new manufacturing process with Flextronics, provided that Agilent gives Flextronics sufficient documentation supporting such costs. In the event Flextronics is unable to migrate to a
new manufacturing process within Flextronics the issue will be submitted to the Global Account Managers of both parties for resolution of the consequences in good faith. 

        18.4    Limitation.    Flextronics will be relieved of its obligations hereunder to the extent the claim of
infringement or unauthorized use against Agilent arises from the Product Requirements or Specifications. This Article 18 states Flextronics' entire liability for any Third Party Claims against
Agilent arising hereunder. 

19.0    Agilent Intellectual Property Defense  

        19.1    Duty to Defend.    Except as provided in Section 19.4,
Agilent will, at its own expense, defend or settle any Third Party Claim brought against Flextronics based upon an allegation that the Products, Product Requirements, Marks which are licensed by
Agilent Technologies, Inc. under Exhibit S or Agilent Property provided to Flextronics constitute an infringement or unauthorized use of the third party's Intellectual Property or Marks.
Agilent will pay all costs, damages and expenses awarded by a court or agreed to in settlement arising from such Third Party Claim. 

        19.2    Duty to Notify.    Flextronics will give Agilent prompt notice of any Third Party Claim, and will give Agilent
the authority, information, and assistance (at Agilent's expense) to handle the defense. If Agilent does not diligently pursue resolution of the claim nor provide Flextronics with reasonable
assurances that it will diligently pursue resolution, then Flextronics may, without limiting its other rights and remedies, take responsibility for the defense. 

28

 

        19.3    Remedies.    If use of the Products, Product Requirements (except to the extent that such infringement exists
as a result of Flextronics' manufacturing processes), or Agilent Property is enjoined, Agilent will, at its sole expense and option: 

        19.3.1    Procure
for Flextronics the right to continue using the Products (to the extent required in order to perform the Agreement), Product Requirements or Agilent Property; 

        19.3.2    Replace
the, Product Requirements or Agilent Property so that they are no longer subject to the Third Party Claim; 

        19.3.3    Modify
the, Product Requirements or Agilent Property so that they are no longer subject to the Third Party Claim; or 

        19.3.4    If
none of these options is reasonably available, terminate this Agreement. In addition Agilent will provide for Flextronics continued access to either Agilent
Property or Products in order to enable Flextronics to meet its general obligations under Section 1.1 of this Agreement. 

        19.4    Limitation.    Agilent will be relieved of its obligations hereunder to the extent the claim of infringement
or unauthorized use against Flextronics does not arise from the Product Requirements or out of use of the Agilent Property. This Article states Agilent's entire liability for any Third Party Claims
against Flextronics arising hereunder. 

20.0    Confidential Information  

        20.1    Confidential Information.    During the Term, a Party (the "Recipient") may receive or have access to certain
information of the other Party (the "Discloser") that is marked as "Confidential," including information or data concerning the Discloser's Intellectual Property, products or product plans, business
operations, strategies, customers and related information. The Parties will be bound by the terms of the Confidential Disclosure Agreement (CDA) attached as  Exhibit D. To the extent any term of
this Agreement conflicts with any term in the CDA, the terms of this Agreement will control and take
precedence. Confidential Information, as defined in the CDA, may only be used by those employees or temporary employees of the Recipient who have a need to know such information for purposes related
to this Agreement. The AVL, Bill of Material, Product Forecasts, Component forecasts, Orders, Product Requirements and other information identified in this Agreement as Agilent confidential must be
held in confidence by Flextronics under the terms of the CDA. Notwithstanding the foregoing, Flextronics may provide Agilent's Confidential Information to Flextronics' subcontractors or suppliers,
provided that Flextronics binds such third parties to substantially similar confidentiality obligations. 

        Nothing
contained in this Agreement shall be deemed to prevent disclosure of any of the Confidential Information or any term of this Agreement (including the existence hereof) if such
disclosure is required to be made in a judicial, administrative or governmental proceeding pursuant to a valid subpoena or other applicable order or in order to meet securities laws or other
regulatory requirements. 

21.0    Governmental Compliance  

        21.1    Duty to Comply.    Flextronics agrees to comply with all federal, state, local and foreign laws, rules and
regulations of any Governmental Authority applicable to its manufacturing of the Products. Any approvals necessary to allow for Agilent's sale and customers' use of the Products will be implemented in
mutual consultation but shall be the ultimate responsibility of Agilent, including in respect of costs. Without limiting the generality of the foregoing sentence, Flextronics represents that: 

        21.1.1    Flextronics
will comply with all equal employment opportunity and non-discrimination requirements prescribed by Presidential Executive Orders, including
the requirements of Executive 

29

 

Order
11246, the Vocational Rehabilitation Act, and the Vietnam Era Veterans' Readjustment Assistance Act; 

        21.1.2    Flextronics
does not manufacture Agilent Product with under-age or forced labor as defined by local laws, or, if there are no applicable local laws, basic
international principles relating to labor standards; 

        21.1.3    All
Agilent Products will be prepared for shipping in conformance with government or freight regulations as specified in the Product Requirements and 

        21.1.4    Upon
Agilent's request, Flextronics will provide complete and accurate material safety data sheets. 

        21.2    Procurement Regulations.    For Products purchased under this Agreement for incorporation into products to be
sold under a government contract or subcontract, those applicable procurement regulations that are required by law, statute or regulation to be inserted in such contract or subcontract will be
specified in the associated Order or otherwise set forth the Addendum and thereby made applicable to all Orders for such Addendum. 

        21.3    Ozone Depleting Substances.    Flextronics certifies that their processes used to manufacture any Agilent
Product does not contain any "Class 1 Substance", or "Class 2 Substance", as those terms are defined in 42 USC Section 7671 and implementing regulations of the United States
Environmental Protection Agency at 40 CFR Part 82, as now in existence or hereafter amended. 

22.0    Country of Manufacture and Duty Drawback Rights  

        22.1    Country of Origin Certification.    Upon Agilent's request, Flextronics will provide Agilent with an
appropriate certification stating the country of origin for the Products (including the Components comprising the Products), sufficient to satisfy the requirements of any applicable United States
export licensing regulations. 

        22.2    Country of Origin Marking.    Flextronics will mark each Product, or the container if there is no room on the
Product, with the country or region of origin, as may be required (eg EU). Agilent will outline in its product specifications the exact requirement and details. 

        22.3    Duty Drawback.    If Products delivered under this Agreement are imported, Flextronics will require Agilent to
be the importer of record. If by mutual agreement Agilent is not the importer of record and Flextronics obtains duty drawback rights to such Products, Flextronics will, upon Agilent's request, provide
Agilent with documents required by the customs authorities of the country of receipt to prove importation and to transfer duty drawback rights to Agilent. 

23.0    Electronic Data Interchange (EDI) Requirements  

        23.1    EDI Implementation.    It is Agilent's intent to utilize applicable EDI transactions (ANSI X.12, EDIFACT, or
other similar electronic data exchange) wherever feasible to facilitate the timely
communication of information between Agilent and Flextronics. Agilent and Flextronics agree to provide adequate resources (including personnel and technology) to effectively implement EDI applications
in a timeframe to be mutually agreed to by Agilent and Flextronics. Specific mapping for EDI will include, but not be limited to: 

        a)    Component
forecasts (per the specific requirements as set forth in Exhibit I); 

        b)    Forecasts
to Flextronics, Orders to Flextronics; and 

        c)     Flextronics
shipment notices and invoices (as specifically required by Exhibit N). 

        Exhibit B and the Addenda and Exhibits may contain other EDI requirements and guidelines. 

30

 

        23.2    IT Systems.    Agilent and Flextronics agree to work jointly, in good faith, to co-develop and
implement IT solutions as needed to improve all communications contemplated under this Agreement. 

24.0    Force Majeure Events  

        24.1    Delaying Causes.    Subject to the provisions of this Article, neither Party will be liable for any delay in
performance under this Agreement caused by any "act of God" or other cause beyond that Party's reasonable control and without that Party's fault or negligence, including but not limited to, any act by
any Governmental Authority, act of war, strike, boycott, embargo, riot, lockout, labor dispute, or civil commotion causing delays. Notwithstanding the above, neither Party will be relieved of any
liability for any delay or failure to perform its defense obligations with respect to third party Intellectual Property or furnish remedies for infringement as described in  Articles 18 and 19
above. Except as otherwise more specifically provided for in this Agreement, each Party experiencing a delaying cause will
immediately give the other notice of such delaying cause and an estimate of its duration, and the other Party may act in its sole discretion to terminate this Agreement or any part hereof or suspend
this Agreement in whole or in part for the duration of the delaying cause if such delay exceeds ninety (90) days unless otherwise specified in the Business Continuity Plan. 

        24.2    Resumption of Agreement.    The Parties may resume performance under this Agreement once the delaying cause
ceases and extend the Term up to the length of time the delaying cause endured. Unless a Party gives notice of termination as provided above within thirty (30) days notice of the delaying
cause, that Party will be deemed to have elected to suspend this Agreement for the duration of the delaying cause. 

25.0    Events of Default  

        25.1    Notice of Breach.    If either Party is in Breach of any provision of this Agreement, the
non-breaching Party may, by notice to the breaching Party, except as otherwise prohibited by the United States bankruptcy laws, terminate the whole or any part of this Agreement or any
Order, unless the breaching Party cures the Breach within thirty (30) days after receipt of notice. 

        25.2    Causes of Breach.    For purposes of this Agreement, the term "Breach" includes any: 

        a)    Proceeding,
whether voluntary or involuntary, in bankruptcy or insolvency by or against a Party; 

        b)    Appointment,
with or without a Party's consent, of a receiver or an assignee of a Party for the benefit of creditors; 

        c)     Failure
by Flextronics to make a delivery on Accepted Orders affecting more than 15% of the orders based on a 3 month rolling average for which the failure is
directly attributed to Flextronics' performance and is supported by historical Agilent performance data. Failures which are not considered directly attributed to Flextronics' performance include but
are not limited to the following: a) shipments impacted by Force Majeure; b) shipments impacted by performance of Agilent Strategic Suppliers. 

        e)    Other
failure by a Party to comply with any material provision of this Agreement with additional failure to provide the non-breaching Party, upon request,
with reasonable assurances of future performance. 

26.0    Termination  

        26.1    Termination For Convenience.    After the initial four (4) year term either party may terminate this
Agreement hereunder for any reason at its convenience upon nine (9) months prior written notice. 

31

   
        26.2    Effect of Expiration or Termination.    Upon expiration or termination of this Agreement, the Parties agree
to
the following terms regarding the relevant Agilent Property and Termination Inventory: 

        a)    All
Orders issued prior to the effective date of the termination or expiration will be fulfilled pursuant to and subject to the terms of this Agreement, even if the
Delivery Dates of Products under such Orders are after the effective date of expiration or termination; and 

        b)    All
licenses granted by Agilent to Flextronics to any Agilent Property or Intellectual Property will automatically terminate at the end of the Support Life as set forth
in Section 12.1 or upon earlier termination or expiration of this Agreement. 

        26.3    Survival.    The rights and obligations under the following Articles of this Agreement will survive any
expiration or earlier termination of this Agreement in accordance with their terms: Articles 2 ("Definitions); 4 ("Ownership"); 7 ("Prices and Payment Terms");
10 ("Warranties"); 12 ("Product Support"); 17 ("Agilent Property"); 18 ("Flextronics Intellectual Property Defense"); 19 ("Agilent Intellectual Property Defense");
20 ("Confidential Information"); 21 ("Governmental Compliance"); 26 ("Termination"); 27 ("Limitation of Liability"); and 30 ("Miscellaneous"). 

        26.4    Agilent Obligations upon Complete or Partial Termination.    In the event of a complete or partial termination
of this Agreement by either Party, Agilent will reimburse Flextronics for any mutually agreed non-amortized Flextronics costs associated with Product not originally funded through
Non-Recurring Engineering (NRE) or other charges. In addition, in the event of a complete or partial termination of this Agreement, the Parties agree to take the following actions: 

        26.4.1    Flextronics
will identify any Components in inventory, and Agilent will have the right of first refusal to purchase such Components; 

        26.4.2    Flextronics
will use commercially reasonable efforts to cancel its purchase commitments or return for credit or find other use for all Components intended for use in
the Product (including all Components rendered excess/obsolete by Engineering Changes or Manufacturing Changes, or COs); 

        26.4.3    Flextronics
will cancel all cancelable, pending orders to Component Suppliers within seven (7) business days from the date of notification by Agilent of the
complete or partial termination of this Agreement, and will also notify Agilent in writing of the date the cancellations are completed. Agilent will not be liable for orders with Component Suppliers
where Flextronics has not issued a cancellation notice within this seven (7) business days period unless expressly notified by Flextronics and approved by Agilent in writing; 

        26.4.4    Agilent
will reimburse Flextronics for all validated actual costs, charges and fees incurred to return any portion of the Termination Inventory to Component
Suppliers. All costs will be justified by appropriate documentation; and 

        26.4.5    Agilent
will reimburse Flextronics for Termination Inventory remaining after Flextronics has taken those steps required above. Any such reimbursement will be:
(i) at Flextronics' quoted price for Turnkey Components to Agilent; (ii) at Agilent's selling price to Flextronics for Buy/Sell Components; and (iii) the purchase price in effect
at the date of cancellation for finished Products. 

        26.5    Agilent's Rights Upon Termination.    In the event of termination by Agilent, Flextronics will provide Agilent
the following: 

        a)    All
Agilent Property (unless sold to Flextronics pursuant to the terms of this Agreement or otherwise agreed in the Addendum); 

        b)    Any
other documentation or materials as set forth in Section 13 above; 

32

 

        c)     Product
routings and panelization drawings developed by Flextronics, Agilent or third parties solely for manufacturing Agilent Products as set forth in  Section 13 above; 

        d)    Any
other rights specified in Article 13 above; 

        e)    Developments;
and 

        f)     Any
other information that is unique to the Products and is required to manufacture such Products. 

        In
the event Agilent terminates this Agreement in whole or in part on account of a material breach by Flextronics or if Flextronics ceases to offer manufacturing capabilities
substantially similar to those as of the Effective Date for a particular Product or Products, in addition to the manufacturing rights described in  Section 13 above, Agilent may procure, upon such
terms and in such manner as Agilent reasonably deems appropriate, manufacturing services and
products similar to the Products and services as to which this Agreement is terminated. Flextronics further agrees to continue the performance of this Agreement to the extent not terminated under the
provisions of this Section. 

27.0    Limitation of Liability  

        EXCEPT WITH RESPECT TO INTELLECTUAL PROPERTY INDEMNIFICATION AND CONFIDENTIALITY OBLIGATIONS (PURSUANT TO SECTIONS 18, 19 AND 20), AND THE INDEMNITY
OBLIGATIONS IN SECTIONS 4.6 AND 4.7, NEITHER PARTY WILL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES TO THE OTHER (INCLUDING LOSS OF SAVINGS, PROFITS OR "COVER" DAMAGES)
ARISING OUT OF ANY PERFORMANCE OF THIS AGREEMENT OR IN FURTHERANCE OF THE PROVISIONS OR OBJECTIVES OF THIS AGREEMENT, REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED ON TORT, WARRANTY, CONTRACT OR ANY
OTHER LEGAL THEORY, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING THE ABOVE, EACH PARTY WILL BE RESPONSIBLE FOR ANY DAMAGES OF ANY KIND INCLUDED IN AN AWARD OR SETTLEMENT OF A
THIRD PARTY INTELLECTUAL PROPERTY CLAIM UNDER ARTICLES 18 OR 19, OR ANY DAMAGES ARISING FROM DEATH OR BODILY INJURY. IN ADDITION, EACH PARTY WILL
BE RESPONSIBLE FOR ALL DAMAGES, OF ANY KIND, SUFFERED AS A RESULT OF ANY UNAUTHORIZED DISCLOSURE OF THE OTHER PARTY'S TRADE SECRETS WHERE SUCH DISCLOSURE RESULTS IN ACTUAL DAMAGES. 

28.0    Insurance Requirements  

        During the Term and at all times that Flextronics performs work for Agilent Technologies, Flextronics shall maintain in full force and effect, at Flextronics' own
expense, insurance coverage to include: 

        28.1 Workers
Compensation and Employers Liability. Workers Compensation/Employers Liability insurance will be provided as required by law or regulation where the work under
this Agreement is performed. Employers Liability insurance, for work taking place in the United States, will be provided in amounts of not less than $500,000 per accident for bodily injury by
accident, $500,000 policy limit by disease, and $500,000 per employee for bodily injury by disease. Where permitted by law, such Workers Compensation/Employers Liability policies will contain waivers
by the insurer's subrogation rights against Agilent. 

        28.2    General Liability.    Flextronics will maintain Comprehensive or Commercial General Liability Insurance
(including but not limited to premises and operations, products and completed operations, broad form contractual liability, broad form property damage and personal injury liability). Comprehensive
General Liability policy limits shall be not less than a Combined Single Limit for 

33

 

Bodily
Injury, including death, and Property Damage of US$ 10,000,000 per occurrence. Required limits referenced in this paragraph can be provided by a combination of Comprehensive or Commercial
General Liability and Umbrella or Excess Liability Insurance. 

        Commercial
General Liability (Occurrence) policy limits shall be not less than US$ 10,000,000 per occurrence (combined single limit for bodily injury and property damage) and US$
10,000,000 General Aggregate to the extent that such damages arise from Flextronics's negligent manufacturing of the Products or to the extent such damages is proximately caused by the negligent
and/or intentional acts or omissions of Flextronics under this Agreement. 

        Such
policies will name Agilent, its officers, directors and employees as Additional Insureds and the insurance afforded Additional Insureds will apply as primary insurance and no other
insurance will be called upon to contribute to a loss covered thereunder. In addition, such policies will permit Flextronics to waive, on its own behalf and on behalf of its insurers, any rights of
subrogation against Agilent. Such insurance policies will be written with appropriately licensed and financially responsible insurers, and Flextronics shall endeavor to provide for a minimum of twenty
(20) days written notice to Agilent of any cancellation in coverage. 

AUTOMOBILE LIABILITY INSURANCE 

        Flextronics
shall carry coverage including owned, hired and non-owned autos with a combined single limit of liability for each accident of not less than US$1,000,000, or
statutory limit, whichever is greater. 

PROFESSIONAL LIABILITY 

        Flextronics
shall carry Professional Liability Insurance covering acts, errors or omissions arising out of the rendering of, or failure to render, professional services related to the
work performed or services provided under this Agreement. Such Insurance shall include limits of coverage of not less than US$1,000,000 per occurrence. 

        28.3    Claims Made Coverage.    If any policies have "claims made" coverage, Flextronics will maintain such coverage
for a minimum of three years after termination of this Agreement. Any such coverage must have a retroactive date no later than the date upon which work commenced under this Agreement. 

        28.4    Certificates of Insurance evidencing the required coverage and limits above will be furnished to Agilent before any work
is commenced hereunder. Flextronics will deliver Certificates to the Agilent Agreement Coordinator. 

        28.5    Additional Requirements.    All deductibles on policies providing coverage will be paid by Flextronics. In the
event Flextronics is self insured for matters described above, Flextronics agrees to respond to any claims or losses made against or incurred by Agilent in the same fashion as if insurance had been
purchased with the same or broader coverage terms than what is generally available to similar Flextronics. In no event will the coverage's or limits of any insurance required under this Article, or
the lack or unavailability of any other insurance, be deemed to limit or diminish Flextronics's obligations or liability to Agilent under this Agreement. 

29.0    Business Continuity Plan  

        29.1    Risk Management and Continuity Plans.    Flextronics will develop and keep current a formal Business
Continuity Plan detailing Flextronics' plans, procedures, and designated resources for timely response to and recovery from potential civil, natural, and physical plant disasters that could reasonably
be expected to disrupt production and delivery to Agilent. Upon request, Flextronics will make such 

34

 

plan
available to Agilent's Global Account Manager or its designated representative for review. In addition, the designated Agilent Manager may request a specific Business Continuity Plan. 

        29.2    Notification.    Flextronics agrees to notify Agilent as soon as possible in the event of a crisis that
disrupts manufacturing or delivery of Products. Unless otherwise authorized by Agilent's Alliance Manager, Flextronics will not make any references to Agilent in any public communications about the
crisis and subsequent recovery. 

        29.3    Loss Control.    Flextronics will be responsible for maintaining its facilities and operations in accordance
with applicable fire protection and loss control standards. Flextronics will, with reasonable notice, allow the Agilent Global Account Manager or its designated representatives to visit and conduct
loss control evaluations. 

30.0    Miscellaneous  

        30.1    Notices.    All notices to be given under this Agreement must be in writing addressed to the Party's Global
Account Manager designated in Exhibit A, or to the designated Agilent Manager. Notices are validly given upon the earlier of confirmed receipt by
the receiving Party or seven (7) days after dispatch by reputable courier or certified mail, return receipt requested, postage prepaid, properly addressed to the receiving Party. Notices may
also be delivered by telefax, EDI or other recorded electronic communication and will be validly given upon receipt. Either Party may change its designated contact and address for purposes of notice
by giving notice to the other Party in accordance with these provisions 

        30.2    Exhibits.    Each of the following Exhibits attached to this Agreement is deemed a part of this Agreement and
incorporated herein wherever reference to it is made: 

Exhibit A
Administration and Notices

Exhibit B Agilent General Technical Specifications and Reference Standards

Exhibit C Cost Breakdown—Request for Quote (RFQ) Format

Exhibit D Confidential Disclosure Agreement

Exhibit E Agilent Product Return Billing Process

Exhibit F Flextronics Terms and Conditions

Exhibit G Left blank

Exhibit H Reporting Requirements

Exhibit I Component Forecast Requirements

Exhibit J Flextronics Performance Metrics—TQRDCEb Requirements

Exhibit K Authorized Flextronics Affiliates (Manufacturing Sites and Eligible Sellers)

Exhibit L List of Agilent Eligible Buyers

Exhibit M Left blank

Exhibit N Shipping Instructions

Exhibit O Left blank

Exhibit P Component Allocation Requirements

Exhibit Q Addendum

Exhibit R Strategic Suppliers and Strategic Commodities

Exhibit S Agilent Manufacturing Trademark License Agreement 

        30.3    Reference to Days.    All references in this Agreement to "days" will, unless otherwise specified herein, mean
calendar days. 

        30.4    Independent Contractors.    Each Party represents and warrants to the other that its relationship with the
other under this Agreement will be as an independent contractor and neither Party is a partner, employee, agent or joint venturer of or with the other. 

35

 

        30.5    Severability.    If any provision of this Agreement is determined by a court of competent jurisdiction to be
invalid or unenforceable in any respect, such determination will not impair or affect the validity, legality or enforceability of the remaining provisions hereof, and each provision is hereby declared
to be separate, severable and distinct. To the extent that any such provision is found to be invalid, illegal or unenforceable, the Parties hereto will negotiate in good faith to substitute for such
provision, to the extent possible, a new provision that most nearly effects the Parties' original intent in entering into this Agreement or to provide equitable adjustment in the event no such
provision can be added. The other provisions of this Agreement will remain in full force and effect. 

        30.6    Hierarchy of Documents.    Unless otherwise specifically agreed to by the Parties, in the event of any
conflict between the provisions of this Agreement and Exhibits negotiated either prior to or subsequent to this Agreement, the order of precedence is as follows: (i) any Addendum or SOW and any
Appendices thereto; (ii) this Agreement and its Exhibits; and then (iii) the front of each Order. In the event of any conflict between this Agreement and the APA, this Agreement shall
govern all
manufacturing service related issues, while on any transferred assets and resources related issues, the APA shall prevail. Unless otherwise specifically agreed, the Parties acknowledge that the
pre-printed provisions on the reverse side of any quotation, Order, acknowledgment or invoice will be deemed deleted and of no effect whatsoever. 

        30.7    Entire Agreement.    This Agreement, together with the APA referred to in Section 5.8.3 above, the
Exhibits and Addenda and any SOWs, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether written or oral; for purposes of construction, this Agreement will be deemed to have been drafted by both Parties. No modifications, amendments, or waiver of any term, condition,
or provision of this Agreement will be binding on either Party unless in writing and signed by an authorized representative of each Party. 

        30.8    Governing Law.    This Agreement will be governed in all respects by the laws of the State of Colorado without
reference to the conflict of laws provisions. In the event of any dispute that is not resolved under the dispute resolution procedures provided below, the Parties agree that suit may be brought only
in a court of competent jurisdiction in the State of Colorado. 

        30.9    Arbitration:    Any disputes, differences, controversies and claims arising out of or relating to the
Agreement or any other aspect of the relationship between Flextronics and Customer or their respective affiliates and subsidiaries (collectively, "Disputes") that is not settled by the parties in
accordance with the dispute resolution provision of Section 30.13 shall be referred to arbitration under the rules and procedures of Judicial Arbiter Group, Inc. ("JAG"), who shall act
as the arbitration administrator. The parties shall agree on a single arbitrator (the "Arbitrator"). The Arbitrator shall be a retired judge selected by the parties from a roster of arbitrators
provided by JAG. Unless otherwise mutually agreed to by the parties, the place of arbitration shall be Denver, Colorado. The Federal Arbitration Act shall govern the arbitrability of all Disputes. The
Federal Rules of Civil Procedure and the Federal Rules of Evidence (the "Federal Rules"), to the extent not inconsistent with this Agreement, govern the conduct of the arbitration. The parties may
engage in discovery, the extent of which shall be agreed upon by the parties or determined by JAG if the parties cannot agree. 

        This
Agreement's arbitration provisions are to be performed in Denver, Colorado. Any judicial proceeding arising out of or relating to this Agreement or the relationship of the parties
to review or confirm the award shall be brought exclusively in a court of competent jurisdiction in the county of Denver, Colorado. Each party shall pay their own expenses in connection with the
resolution of Disputes pursuant to this section, including attorneys' fees. 

        IN
THE EVENT OF ANY DISPUTE BETWEEN THE PARTIES, WHETHER IT RESULTS IN PROCEEDINGS IN ANY COURT IN ANY JURISDICTION OR IN ARBITRATION, THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY, AND
HAVING HAD AN 

36

 

OPPORTUNITY
TO CONSULT WITH COUNSEL, WAIVE ALL RIGHTS TO TRIAL BY JURY, AND AGREE THAT ANY AND ALL MATTERS SHALL BE DECIDED BY A JUDGE OR ARBITRATOR WITHOUT A JURY TO THE FULLEST EXTENT PERMISSIBLE
UNDER APPLICABLE LAW. In the event of any lawsuit between the parties arising out of or related to this Agreement, the parties agree to prepare and to timely file in the applicable court a mutual
consent to waive any statutory or other requirements for a trial by jury. 

        Nothing
herein will prohibit either party from seeking injunctive relief, initiating judicial or administrative proceedings if such party would be irreparably harmed by a failure to act
while the parties are attempting to resolve the dispute through negotiation or arbitration. 

        30.10    Assignment.    Neither Party may, directly or indirectly, in whole or in part, by operation of law or
otherwise, assign or transfer this Agreement or delegate any of its obligations under this Agreement without the other party's written consent which shall not unreasonably be withheld. Any attempted
assignment, transfer or delegation without such prior written consent will be void. such consent shall not be withheld where either party or its permitted successive assignees or transferees, wishes
to assign or transfer this Agreement or delegate any rights or obligations hereunder: (1) to any entity controlled by, or under common control with, its current ultimate parent or its permitted
successive assignees or transferees; or (2) in connection with a merger, reorganization, transfer, sale of assets or product lines, or change of control or ownership of a party or its permitted
successive assignees or transferees; provided that in the event of an assignment by Agilent the successor entity shall be required to meet Flextronics Credit Control department criteria and provide
reasonable assurances of creditworthiness. Without limiting the foregoing, this Agreement will be binding upon and inure to the benefit of the parties and their permitted successors and assigns. 

        Agilent
understands that Flextronics will engage related legal entities ("Affiliates") to perform all or part of the services contemplated in this Agreement. As a result, Flextronics may
assign, convey or otherwise transfer its rights and obligations under the Definitive Agreements, in whole or in part, to any of its Affiliates authorized in Exhibit K. 

        30.11    No Publication.    Neither Party may publicize or disclose to any third party, without the written consent of
the other Party, the terms of this Agreement. Without limiting the generality of the foregoing sentence, no press releases may be made without the mutual consent of each Party. 

        Agilent
agrees not to use the Flextronics name or identify Flextronics or any other Flextronics Confidential Information in any advertising, promotion or other public announcement
without the prior express written consent of Flextronics. 

        30.12    Headings.    The section headings in this Agreement are for convenience of reference only. The will not limit
or extend the meaning of any provision of this Agreement, and will not be relevant in interpreting any provision of this Agreement. The plural will be deemed to include the singular, and the singular
will be deemed to include the plural. 

        30.13    Dispute Resolution.    Prior to any Party pursuing legal remedies hereunder, the Parties' Global Account
Managers agree to negotiate in good faith to resolve any disputes arising during the performance of the Agreement that cannot be resolved by Site or Tactical Managers. If such negotiations and
meetings do not resolve the dispute within five (5) business days after notice of the dispute, then a Senior Vice President from each Party will meet face to face within ten
(10) business days or as mutually agreed between them to attempt to resolve such dispute. If the dispute is not resolved to the satisfaction of these executives within three (3) business
days, then either Agilent or Flextronics may terminate this Agreement in whole or in part and commence arbitration in accordance with section 30.9. 

        30.14    Subcontracting;    Agilent acknowledges that Flextronics has right to subcontract any or all of its rights
and obligations under this contract subject to Flextronics remaining liable for the 

37

 

performance
of the agreement. Without limiting the foregoing, Flextronics will, or will cause any subcontractor or other applicable Supplier agent to comply with the terms of this Agreement. 

        IN
WITNESS WHEREOF, the Parties have executed this Global Manufacturing Services Agreement as of the date first written above. 

	AGILENT TECHNOLOGIES INTERNATIONAL SARL	 	FLEXTRONICS TELECOM SERVICES, LTD
 
	

By:	

/s/  ROMAN RAMER      	
 	

By:	

/s/  ALAIN AHKONG      
	 	
	 	 	

	Place and date	 	 	Place and date	 
	 	
	 	 	

	Name:	Roman Ramer	 	Name:	Alain Ahkong
	 	
	 	 	

	Title:	Strategic Procurement Manager	 	Title:	Director, FLEXTRONICS TELECOM SERVICES LTD.
	 	
	 	 	

38

QuickLinks

GLOBAL MANUFACTURING SERVICES AGREEMENT BETWEEN AGILENT TECHNOLOGIES INTERNATIONAL SÀRL (AGILENT) AND FLEXTRONICS TELECOM SERVICES LTD (FLEXTRONICS) AGREEMENT NUMBER M1-05-099

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