Common use of Report Card Clause in Contracts

Report Card. Flextronics shall complete report cards, which shall be used as a method to measure against the goals of quality, service and cost and shall deliver such report cards to Nortel Networks on a monthly basis coinciding with the monthly reviews provided for in Section 2.4. The metrics used to derive the report card scores and the formats for the report cards shall be as set out in Exhibit 5. For each Metric, there will be two performance criteria: “Minimum Performance” and “Continuous Improvement”. Minimum Performance criteria will be used to measure whether the process is in control and meeting the minimum performance expectations. Continuous Improvement criteria will be used to assess improvement of the average performance of the applicable process and reduction of process variations. The “Minimum Performance Baseline” and “Continuous Improvement Baseline” will be established for each breachable metrics as follows, unless otherwise mutually agreed. (a) an operational definition of each metric will be outlined in Exhibit 5, (b) Minimum Performance Baseline: (i) Initial Minimum Performance Baseline will be: Historical data from the [•] prior to the Effective Date will be used to calculate the average performance and standard deviation. In the event that [•] of historical data is not available, Flextronics will measure the metric for [•] before establishing the average and standard deviation. The calculation will be done at the Product Family level. 1. For a process that should be maximized (where a higher metric value is better), the [•]. 2. For a process that should be minimized, (where a lower metric value is better), the [•]. (ii) The Minimum Performance Baseline will be reviewed and adjusted each calendar year as follows; 1. For a process that should be maximized, the [•] will be the Minimum Performance Baseline. However, this adjustment will not be lower than the Initial Minimum Performance Baseline established at the date of each Product transfer or any Minimum Performance Baseline in following years, which ever is better. 2. For a process that should be minimized, the [•] will be the Minimum Performance Baseline. However, this adjustment will not be higher than the Initial Minimum Performance Baseline established at the date of each Product transfer or any Minimum Performance Baseline in following years, which ever is better. (c) Continuous Improvement Baseline: (i) The initial Continuous Improvement Baseline will be the [•] prior to the Effective Date. In the event that [•] of historical data is not available, Flextronics will measure the metric for [•] before establishing the average and standard deviation. The calculation will be done at the Product Family level. (ii) The Continuous Improvement Baseline will be reviewed and adjusted each calendar year as follows; 1. For a process that should be maximized, the [•] will be the Continuous Improvement Baseline. However, this adjustment will not be lower than the Initial Continuous Improvement Baseline established at the date of each Product transfer or any Continuous Improvement Baseline in following years, which ever is better. 2. For a process that should be minimized, the [•] will be the Continuous Improvement Baseline. However, this adjustment will not be higher than the Initial Continuous Improvement Baseline established at the date of each Product transfer or any Continuous Improvement Baseline in following years, which ever is better.

Report Card. Flextronics shall complete report cards, which shall be used as a method to measure against the goals of quality, service and cost and shall deliver such report cards to Nortel Networks on a monthly basis coinciding with the monthly reviews provided for in Section 2.4. The metrics used to derive the report card scores and the formats for the report cards shall be as set out in Exhibit 5. For each Metric, there will be two performance criteria: “Minimum Performance” and “Continuous Improvement”. Minimum Performance criteria will be used to measure whether the process is in control and meeting the minimum performance expectations. Continuous Improvement criteria will be used to assess improvement of the average performance of the applicable process and reduction of process variations. The “Minimum Performance Baseline” and “Continuous Improvement Baseline” will be established for each breachable metrics as follows, unless otherwise mutually agreed. (a) an operational definition of each metric will be outlined in Exhibit 5, (b) Minimum Performance Baseline: (i) Initial Minimum Performance Baseline will be: Historical data from the [•• ] prior to the Effective Date will be used to calculate the average performance and standard deviation. In the event that [•• ] of historical data is not available, Flextronics will measure the metric for [•• ] before establishing the average and standard deviation. The calculation will be done at the Product Family level. 1. For a process that should be maximized (where a higher metric value is better), the [•]. 2. For a process that should be minimized, (where a lower metric value is better), the [•]. (ii) The Minimum Performance Baseline will be reviewed and adjusted each calendar year as follows; 1. For a process that should be maximized, the [•• ] will be the Minimum Performance Baseline. However, this adjustment will not be lower than the Initial Minimum Performance Baseline established at the date of each Product transfer or any Minimum Performance Baseline in following years, which ever is better. 2. For a process that should be minimized, the [•• ] will be the Minimum Performance Baseline. However, this adjustment will not be higher than the Initial Minimum Performance Baseline established at the date of each Product transfer or any Minimum Performance Baseline in following years, which ever is better. (c) Continuous Improvement Baseline: (i) The initial Continuous Improvement Baseline will be the [•• ] prior to the Effective Date. In the event that [•• ] of historical data is not available, Flextronics will measure the metric for [•• ] before establishing the average and standard deviation. The calculation will be done at the Product Family level. (ii) The Continuous Improvement Baseline will be reviewed and adjusted each calendar year as follows; 1. For a process that should be maximized, the [•• ] will be the Continuous Improvement Baseline. However, this adjustment will not be lower than the Initial Continuous Improvement Baseline established at the date of each Product transfer or any Continuous Improvement Baseline in following years, which ever is better. 2. For a process that should be minimized, the [•• ] will be the Continuous Improvement Baseline. However, this adjustment will not be higher than the Initial Continuous Improvement Baseline established at the date of each Product transfer or any Continuous Improvement Baseline in following years, which ever is better.