Common use of Competitive Criteria Clause in Contracts

Competitive Criteria. If Flextronics fails to remain Competitive with its competitors with respect to any Product, then Nortel Networks may source such Product from another supplier. Records of any such deductions from the Minimum Commitment will be made in writing and exchanged between the Parties for full verification and agreement each quarter. Notwithstanding the foregoing, Nortel Networks will not transfer the Product(s) if Flextronics becomes Competitive within forty-five (45) days from notification by Nortel Networks that Flextronics has failed to remain Competitive, as defined below. For the purposes of this Section, “Competitive” means terms and conditions taken as a whole that are more favourable to Nortel Networks, as determined in a “bona fide benchmarking” exercise or as provided in a bona fide quote from a third party considering price, product quality, lead times, delivery, warranty, technical support, and other criteria identified by Nortel Networks in writing to Flextronics. A “bona fide benchmarking exercise” shall be considered to be one performed by an independent recognized benchmarking firm which is (i) selected by Nortel Networks from those companies which are regularly engaged in the industry related to the Transferred Business, or other consultant as agreed between the Parties, (ii) is not a competitor of Flextronics and (iii) which has executed a non-disclosure agreement reasonably satisfactory to Flextronics. All fees and charges paid to such benchmarking firm shall be borne by Nortel Networks, and such fees and charges shall not be contingent upon reaching a conclusion favourable to Nortel Networks. Each party shall have the opportunity to advise the benchmarking firm of any information or factors that it deems relevant to the conduct of the benchmarking, with the intention of providing an “apples to apples” comparison, so long as such information is disclosed to the other Party. The benchmarking firm shall provide the written reports and the core data resulting from the benchmarking to both Nortel Networks and Flextronics, including the factors actually used to perform the benchmarking, data on participants and confidence factors related to the accuracy of the data and the benchmarking methodology. Flextronics will be entitled to challenge the accuracy of the results of the benchmarking exercise pursuant to the Issue Resolution and Escalation Process. Notwithstanding the above, the Parties agree that transformation costs for Products produced in legacy Nortel Networks System Houses will not be subject to the cost portion of the “Competitive” criteria will not be factored into the determination of whether Flextronics is Competitive for a period of [•] after the applicable VSHA Effective Date. The parties will review the transformation costs for such products after such [•] time period to determine whether this exception will apply in the final [•] of the Amended Term.