Common use of MRP Process Clause in Contracts

MRP Process. (1) SANMINA shall take the Order and Forecast and generate a Master Production Schedule (“MPS”) for a [**]-month period in accordance with the process described in this Section. The MPS shall define the master plan on which SANMINA shall base its procurement, internal capacity projections and commitments. SANMINA shall use CUSTOMER’s Order to generate the first [**] months of the MPS and shall use CUSTOMER’s Forecast to generate the subsequent [**] months of the MPS. (2) SANMINA shall process the MPS through industry-standard software that will break down CUSTOMER’s Product requirements into Component requirements. When no Product testing (in-circuit or functional testing) is required by CUSTOMER, SANMINA will use commercially reasonable efforts to schedule delivery of all Components to SANMINA [**] business days before the Products are scheduled to ship to CUSTOMER; in the event Product testing is required, SANMINA will use commercially reasonable efforts to schedule delivery of all Components to SANMINA [**] business days before the Products are scheduled to ship to CUSTOMER. (3) SANMINA will release (launch) purchase orders to Vendors (including other SANMINA facilities) prior to the anticipated date that the Components are needed at SANMINA. The date on which these orders are launched will depend on the lead time determined between the Vendor and SANMINA and SANMINA’s manufacturing or materials planning systems. All purchase orders to Vendors that result in excess of [**] ($[**]) Dollars on a line item basis shall be subject to review and approval by CUSTOMER before release to Vendor by SANMINA. CUSTOMER shall promptly review and approve such purchase orders or provide SANMINA with its reasons for withholding approval. (4) A list of all Components with lead times greater than [**]days (or the Order period, if the Order period is less than [**] days) (“Long Lead-time Components”) is set forth in Exhibit B to this Agreement and/or has previously been provided to CUSTOMER. SANMINA shall use reasonable efforts to update the list of Long Lead-time Components every [**] and present an updated list of Long Lead-time Components to CUSTOMER at the time SANMINA presents the CUSTOMER with the Excess List and Obsolete List described in Section 4.2(e). Each revised Long Lead-time Item list shall be deemed an amendment to Exhibit B, whether or not it has been formally designated as such. In the event SANMINA fails to present an updated list of Long Lead-time Components, (i) the Parties shall continue to rely on the preceding list (as updated in writing by the Parties) and (ii) CUSTOMER will accept responsibility for Long Lead-time Components ordered outside the lead-times set forth in the list provided that SANMINA can demonstrate to CUSTOMER’s reasonable satisfaction that such Components were ordered in accordance with the then-current Vendor lead-times. (CUSTOMER acknowledges that lead-times constantly change and that SANMINA might not always be able to present CUSTOMER with a current Long Lead-time Component List). (5) CUSTOMER acknowledges that SANMINA will order Components in quantities sufficient to support CUSTOMER’s Forecast. In determining the quantity of Components to order, SANMINA divides the Components into three classes, “Class A,” “Class B,” and “Class C.” Typically, Class A Components are comprised of the approximately [**] percent ([**]%) of Components constituting approximately [**] percent ([**]%) of the Product’s total Component cost; Class C Components are comprised of the approximately [**] percent ([**]%) of Components constituting approximately [**] percent ([**]%) of the Product’s total Component cost; and Class B Components are comprised of the remaining [**] percent ([**]%) of Components constituting approximately [**] percent ([**]%) of the Product’s total Component cost. Generally, SANMINA will place orders with its Vendors for approximately [**] worth of Class A Components, [**] worth of Class B Components and [**] worth of Class C Components. A summary of SANMINA’s general purchase practices is set forth in the table below. The foregoing notwithstanding, CUSTOMER will be responsible only for Components purchased to fulfill Orders, Long Lead-time items, safety stock (as mutually agreed) and NCNR , in accordance with this Section. Part Class Expected Percentage of Total Parts Expected Percentage of Total Value (of Gross Requirements) Periods Worth of Supply to be Bought with Each Order A [**] [**] [**] B [**] [**] [**] C [**] [**] [**] (6) CUSTOMER acknowledges that SANMINA will be required to order Components in accordance with the various minimum buy quantities, tape and reel quantities, and multiples of packaging quantities required by the Vendor. In addition, CUSTOMER acknowledges that there is a lag time between any CUSTOMER cancellation and the cancellation of the Components required to support production. (7) CUSTOMER acknowledges that the Vendor lead-times can be significant, and understands that it is possible for SANMINA to have Components on order pursuant to Section 4.2(c)(4) above which would support the [**] of CUSTOMER’s Forecast. For example, assuming a Vendor lead-time of [**] and a “B” Component, SANMINA would place an order for [**] worth (see table above) of such Component approximately [**] weeks prior to the date on which the first Component is expected to be used.

MRP Process. (1) . SANMINA shall take the Order and Forecast and generate a Master Production Schedule (“MPS”) for a [**]-month twelve-month period in accordance with the process described in this Section. The MPS shall define the master plan on which SANMINA shall base its procurement, internal capacity projections and commitments. SANMINA shall use CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. THE REDACTED TERMS HAVE BEEN MARKED WITH THREE ASTERISKS [***] CUSTOMER’s Order to generate the first [**] three (3) months of the MPS and shall use CUSTOMER’s Forecast to generate the subsequent [**] nine (9) months of the MPS. (2) . SANMINA shall process the MPS through industry-standard software that will break down CUSTOMER’s Product requirements into Component requirements. When no Product testing (in-circuit or functional testing) is required by CUSTOMER, SANMINA will use commercially reasonable efforts to schedule delivery of all Components to SANMINA [**] eleven business days before the Products are scheduled to ship to CUSTOMER; in the event Product testing is required, SANMINA will use commercially reasonable efforts to schedule delivery of all Components to SANMINA [**] sixteen (16) business days before the Products are scheduled to ship to CUSTOMER. (3) . SANMINA will release (launch) purchase orders to Vendors (including other SANMINA facilities) prior to the anticipated date that the Components are needed at SANMINA. The date on which these orders are launched will depend on the lead time determined between the Vendor and SANMINA and SANMINA’s manufacturing or materials planning systems. All purchase orders to Vendors that result in excess of [**] ($[**]) Dollars on a line item basis shall be subject to review and approval by CUSTOMER before release to Vendor by SANMINA. CUSTOMER shall promptly review and approve such purchase orders or provide SANMINA with its reasons for withholding approval. (4) . A list of all Components with lead times greater than [**]ninety days (or the Order period, if the Order period is less than [**] ninety days) (“Long Lead-time Components”) is set forth in Exhibit B to this Agreement and/or has previously been provided to CUSTOMER. SANMINA shall use reasonable efforts to update the list of Long Lead-time Components every [**] quarter and present an updated list of Long Lead-time Components to CUSTOMER at the time SANMINA presents the CUSTOMER with the Excess List and Obsolete List described in Section 4.2(e). Each revised Long Lead-time Item list shall be deemed an amendment to Exhibit B, whether or not it has been formally designated as such. In the event SANMINA fails to present an updated list of Long Lead-time Components, (i) the Parties shall continue to rely on the preceding list (as updated in writing by the Parties) and (ii) CUSTOMER will accept responsibility for Long Lead-time Components ordered outside the lead-times set forth in the list provided that SANMINA can demonstrate to CUSTOMER’s reasonable satisfaction that such Components were ordered in accordance with the then-current Vendor lead-times. (CUSTOMER acknowledges that lead-times constantly change and that SANMINA might not always be able to present CUSTOMER with a current Long Lead-time Leadtime Component List). (5) . CUSTOMER acknowledges that SANMINA will order Components in quantities sufficient to support CUSTOMER’s Forecast. 6. In determining the quantity of Components to order, SANMINA divides the Components into three classes, “Class A,” “Class B,” and “Class C.” Typically, Class A Components are comprised of the approximately [**] percent ([**]%) of Components constituting approximately [**] percent ([**]%) of the Product’s total Component cost; Class C Components are comprised of the approximately [**] percent ([**]%) of Components constituting approximately [**] percent ([**]%) of the Product’s total Component cost; and Class B Components are comprised of the remaining [**] percent ([**]%) of Components constituting approximately [**] percent ([**]%) of the Product’s total Component cost. Generally, SANMINA will place orders with its Vendors for approximately [**] worth of Class A Components, [**] worth of Class B Components and [**] worth of Class C Components. A summary of SANMINA’s general purchase practices is set forth in the table below. The foregoing notwithstanding, CUSTOMER will be responsible only for Components purchased to fulfill Orders, Long Lead-time items, safety stock (as mutually agreed) and NCNR , in accordance with this Section. Part Class Expected Percentage of Total Parts Expected Percentage of Total Value (of Gross Requirements) Periods Worth of Supply to be Bought with Each Order A [**] [**] [**] B [**] [**] [**] C [**] [**] [**] (6) CUSTOMER acknowledges that SANMINA will may be required to order Components in accordance with the various minimum buy quantities, tape and reel quantities, and multiples of packaging quantities required by the Vendor. In addition, CUSTOMER acknowledges that there is may be a lag time between any CUSTOMER cancellation and the cancellation of the Components required to support production. (7) . CUSTOMER acknowledges that the Vendor lead-times leadtimes can be significant, and understands that it is possible for SANMINA to have Components on order pursuant to Section 4.2(c)(4) above which would support the [**] last week of CUSTOMER’s Forecast. For example, assuming a Vendor lead-time of [**] and a “B” Component, SANMINA would place an order for [**] worth (see table above) of such Component approximately [**] weeks prior to the date on which the first Component is expected to be used.