Common use of Excess Inventory Clause in Contracts

Excess Inventory. Nortel Networks shall have no obligation or liability to Flextronics with respect to excess and obsolete Inventory, other than as set out herein. For every Product sold to Nortel Networks, Flextronics shall be permitted to charge Nortel Networks an uplift percentage applicable on the Product Price. The Parties will agree to the percentage uplift prior to the Effective Date. The Parties understand that the uplift factor(s) during Year 1 will be greater than for subsequent years due to the purchase of one year’s inventory at the Effective Date by Flextronics. After the first anniversary of the Effective Date, the uplift factor will reflect only the on-going events beyond Flextronics’ control. The Parties agree that the uplift percentage will be reviewed six (6) months after the Effective Date and annually on the anniversary of the Effective Date. In conjunction with each uplift factor review, Flextronics will perform an E & O calculation based on one year’s historical demand, NPI forecast, and known events. During such reviews, the Parties may mutually agree to adjust the uplift percentage. For any increase of the uplift percentage, Flextronics must demonstrate to Nortel Networks that such adjustment is material (greater than 2% of total Inventory) and the result of an act or event outside Flextronics’ control. The table below provides an example of how the uplift percentage shall be applied. Product Price During year Sold Factor Amount Price During year Sold Factor Amount aaaaaaaa $ 1,000 400 $ 400,000 1.0 % 4000 $ 990 400 $ 396,000 1.0 % 3960 bbbbbbb $ 400 98 $ 39,200 1.0 % 392 $ 360 50 $ 18,000 1.0 % 180 ccccccc $ 136 4000 $ 544,000 1.0 % 5440 $ 122 3800 $ 463,600 1.0 % 4636 ddddd $ 300 35 $ 10,500 1.0 % 105 $ 270 30 $ 8,100 1.0 % 81 Two yr sum 18794 On an annual basis, Nortel Networks and Flextronics shall perform the calculations as shown in the examples above and project the uplift percentage required for the following year. In the event that the accumulated uplift fund is greater than the excess Inventory requirements, Flextronics shall agree to reduce the uplift factor to an agreed upon factor for on-going operations under Flextronics control. Thirty days prior to the Effective Date both Parties will jointly meet and agree on the percentage to be used as an uplift factor. Considerations in determining the uplift factor will include analyzing Nortel Networks historical E & O requirements and determining whether these factors are applicable to the inventory model which Flextronics will be operating under after the Effective Date.

Excess Inventory. Nortel Networks shall have no obligation or liability to Flextronics with respect to excess and obsolete Inventory, other than as set out herein. For every Product sold to Nortel Networks, Flextronics shall be permitted to charge Nortel Networks an uplift percentage applicable on the Product Price. The Parties will agree to the percentage uplift prior to the Effective Date. The Parties understand that the uplift factor(s) during Year 1 will be greater than for subsequent years due to the purchase of one year’s inventory at the Effective Date by Flextronics. After the first anniversary of the Effective Date, the uplift factor will reflect only the on-going events beyond Flextronics’ control. The Parties agree that the uplift percentage will be reviewed six (6) months after the Effective Date and annually on the anniversary of the Effective Date. In conjunction with each uplift factor review, Flextronics will perform an E & O calculation based on one year’s historical demand, NPI forecast, and known events. During such reviews, the Parties may mutually agree to adjust the uplift percentage. For any increase of the uplift percentage, Flextronics must demonstrate to Nortel Networks that such adjustment is material (greater than 2% of total Inventory) and the result of an act or event outside Flextronics’ control. The table below provides an example of how the uplift percentage shall be applied. Product Price During year Sold Factor Amount Price During year Sold Factor Amount aaaaaaaa $ 1,000 400 $ 400,000 1.0 % 4000 $ 990 400 $ 396,000 1.0 % 3960 bbbbbbb $ 400 98 $ 39,200 1.0 % 392 $ 360 50 $ 18,000 1.0 % 180 ccccccc $ 136 4000 $ 544,000 1.0 % 5440 $ 122 3800 $ 463,600 1.0 % 4636 ddddd $ 300 35 $ 10,500 1.0 % 105 $ 270 30 $ 8,100 1.0 % 81 Two yr sum 18794 On an annual basis, Nortel Networks and Flextronics shall perform the calculations as shown in the examples above and project the uplift percentage required for the following year. In the event that the accumulated uplift fund is greater than the excess Inventory requirements, Flextronics shall agree to reduce the uplift factor to an agreed upon factor for on-going operations under Flextronics control. Thirty days prior to the Effective Date both Parties will jointly meet and agree on the percentage to be used as an uplift factor. Considerations in determining the uplift factor will include analyzing Nortel Networks historical E & O requirements and determining whether these factors are applicable to the inventory model which Flextronics will be operating under after the Effective Date.

Excess Inventory. Nortel Networks shall have no obligation or liability to Flextronics with respect to excess and obsolete Inventory, other than as set out herein. For every Product sold to Nortel Networks, Flextronics shall be permitted to charge Nortel Networks an uplift percentage applicable on the Product Price. The Parties will agree to the percentage uplift prior to the Effective Date. The Parties understand that the uplift factor(s) during Year 1 will be greater than for subsequent years due to the purchase of one year’s inventory at the Effective Date by Flextronics. After the first anniversary of the Effective Date, the uplift factor will reflect only the on-going events beyond Flextronics’ control. The Parties agree that the uplift percentage will be reviewed six (6) months after the Effective Date and annually on the anniversary of the Effective Date. In conjunction with each uplift factor review, Flextronics will perform an E & O calculation based on one year’s historical demand, NPI forecast, and known events. During such reviews, the Parties may mutually agree to adjust the uplift percentage. For any increase of the uplift percentage, Flextronics must demonstrate to Nortel Networks that such adjustment is material (greater than 2% of total Inventory) and the result of an act or event outside Flextronics’ control. The table below provides an example of how the uplift percentage shall be applied. Product Price During year Current Units Sold Factor Amount Price During year Uplift % Uplift Current Units Sold Factor Amount Uplift % Uplift % aaaaaaaa $ 1,000 400 $ 400,000 1.0 % 4000 $ 990 400 $ 396,000 1.0 % 3960 bbbbbbb $ 400 98 $ 39,200 1.0 % 392 $ 360 50 $ 18,000 1.0 % 180 ccccccc $ 136 4000 $ 544,000 1.0 % 5440 $ 122 3800 $ 463,600 1.0 % 4636 ddddd $ 300 35 $ 10,500 1.0 % 105 $ 270 30 $ 8,100 1.0 % 81 Two yr sum 18794 On an annual basis, Nortel Networks and Flextronics shall perform the calculations as shown in the examples above and project the uplift percentage required for the following year. In the event that the accumulated uplift fund is greater than the excess Inventory requirements, Flextronics shall agree to reduce the uplift factor to an agreed upon factor for on-going operations under Flextronics control. Thirty days prior to the Effective Date both Parties will jointly meet and agree on the percentage to be used as an uplift factor. Considerations in determining the uplift factor will include analyzing Nortel Networks historical E & O requirements and determining whether these factors are applicable to the inventory model which Flextronics will be operating under after the Effective Date.