Common use of Material Procurement Clause in Contracts

Material Procurement. 4.1 FQS is authorized to purchase materials using standard purchasing practices including, but not limited to, acquisition of material recognizing Economic Order Quantities, Envivio buy policy and long lead time component management in order to meet the forecasted requirements of Customer if FQS feels it is necessary to meet the delivery lead time commitment to Customer. FQS shall purchase parts from only vendors on the Customer’s approved vendor list. Customer will provide an approved vendor list including Customer product number, manufacturer product number, description, sources, and price. Customer recognizes its financial responsibility for the custom material purchased by FQS on behalf of Customer. Customer is responsible for material to the extent that (i) material was purchased by FQS to support the Product forecast and agreed upon safety stock (yet to be agreed); (ii) FQS exercised reasonable business judgment in managing suppliers and lead times; (iii) FQS complied with Customer cancellation instructions in a timely manner (canceled all open orders within one (1) week of receiving instructions); and (iv) such materials cannot be used by FQS for other customers and at other sites of FQS. 4.2 Customer may revise or cancel a purchase order for Product and may also eliminate a component from a Product. If Customer revises or cancels a purchase order (“Order”), or eliminates a component causes excess inventory, FQS shall identify all potential liability of Customer for material on order, material on hand, work in process, and finished goods. FQS shall undertake commercially reasonable efforts to cancel all applicable component purchase orders and reduce component inventory through return for credit programs or allocate components for alternate programs to minimize charges to Customer. Customer agrees to compensate FQS for costs incurred for finished goods (including profit); work in process (including labor performed); material on hand which could not be returned or used for other customers and at other sites of FQS; material on order which could not be canceled; applicable material supplier’s restocking or cancellation fees; and agreed FQS handling charges. 4.3 FQS will report its inventory position to Customer on a bi-weekly basis and at month’s end within three (3) business days, including the following data: quantity of raw material, work in process and any open orders that cannot be canceled due to supplier lead time. Report will specifically identify any material on hand or on order where the quantity exceeds the agreed three (3) month forward looking forecast plus safety stock. 4.4 FQS shall undertake reasonable efforts to cancel all applicable component purchase orders and reduce component inventory through return for credit programs or allocate components for alternate programs if applicable. 4.5 Customer shall be liable for FQS parts costs only up to an amount not to exceed the inventory agreed upon between the parties in writing (“Agreed Inventory”) (yet to be agreed). FQS shall be solely liable for any inventory exceeding the “Agreed Inventory”. FQS shall minimize carrying cost by utilizing consigned and bonded inventory from suppliers. The “Agreed Inventory” can be modified only with the written agreement of the Customer’s Chief Financial Officer. Customer may decrease the amount of the “Agreed Inventory” without penalty upon written notice to FQS provided that the revised “Agreed Inventory” is not less than the then existing inventory held by FQS. 4.6 FQS shall provide Customer with an Inventory report on a bi-weekly basis and at month’s end within three (3) business days. The report shall include Customer Product number, manufacturer product number, description, quantity, and location, price per piece, and total cost for each Product. 4.7 FQS shall notify Customer immediately upon notification of end of life for any parts. FQS shall formally review parts life with each manufacturer on a quarterly basis and provide the review results to Customer.

Material Procurement. 4.1 FQS The Customer has been informed and gave his consent, that the material procurement undertaking, pursuant to this Agreement, will be carried-out by RH Electronics Ltd. of Nazareth Illit for the Contractor. Consequently, the following clauses (7.1 - 7.5) should not be construed as misrepresentation by the Contractor. NEVERTHELESS, THE CONTRACTOR CARRIES FULL RESPONSIBILITY TO THE MATERIAL PROCUREMENT. 7.1 Contractor is authorized to purchase materials using standard purchasing practices including, but not limited to, to acquisition of material materials recognizing Economic Order QuantitiesQuantity, Envivio ABC buy policy and long lead time component management components management, in order to meet the forecasted requirements of Customer if FQS feels it is necessary to meet the delivery lead time commitment to Customer. FQS shall purchase parts from only vendors on the Customer’s approved vendor list. Customer will provide an approved vendor list including Customer product number, manufacturer product number, description, sources, 's orders and priceforecasts. Customer recognizes its financial responsibility for the custom material materials purchased by FQS Contractor on behalf of Customer according to the target prices of material and components and to the orders and forecasts properly issued by Customer. Contractor shall not be allowed to receive any payment, credit or other consideration or benefit from the vendors. Any such payment, credit or other consideration or benefit shall belong to Customer. 7.2 Customer reserves the right to purchase and/or produce some of the required materials. Nonetheless, the Contractor shall be responsible for delivery of the said materials to its premises for the purpose of manufacturing Customer's Products. The list of the said materials will be stipulated when and if such a situation will arise and may be updated from time to time by the Customer. 7.3 Contractor is responsible for material monitoring supplier's quality, according to the extent that specifications provided by Customer for all purchased materials. 7.4 Customer may terminate or cancel a Purchase Order or orders. In such event, and/or in case of discontinuance of A Product, or excess materials created by an Engineering Change, Customer agrees to compensate Contractor for unused Products and material inventory as follows: (i) material was purchased by FQS to support the Product forecast and agreed upon safety stock (yet to be agreed); prevailing contract price of all Products, ready for delivery in Contractor's possession, (ii) FQS exercised reasonable business judgment in managing suppliers and lead times; (iii) FQS complied with Customer cancellation instructions in a timely manner (canceled all open orders within one (1) week the cost of receiving instructions); and (iv) such materials cannot be used by FQS for other customers and at other sites of FQS. 4.2 Customer may revise or cancel a purchase order for Product and may also eliminate a component from a Product. If Customer revises or cancels a purchase order (“Order”), or eliminates a component causes excess material inventory, FQS shall identify all potential liability of Customer for material on order, material on hand, whether in raw form or work in process, and finished goods. FQS not returnable to the vendor, or usable for other Contractor's customer. (iii) the cost of materials on order which cannot be cancelled. 7.5 Contractor shall undertake commercially reasonable all possible efforts to cancel all applicable component materials purchase orders and reduce component materials inventory through return for credit programs or allocate components materials for alternate programs to minimize charges to Customer. Customer agrees to compensate FQS for costs incurred for finished goods (including profit); work in process (including labor performed); material on hand which could not be returned or used for other customers and at other sites of FQS; material on order which could not be canceled; applicable material supplier’s restocking or cancellation fees; and agreed FQS handling charges. 4.3 FQS will report its inventory position to Customer on a bi-weekly basis and at month’s end within three (3) business daysprograms, including the following data: quantity of raw material, work in process and any open orders that cannot be canceled due to supplier lead time. Report will specifically identify any material on hand or on order where the quantity exceeds the agreed three (3) month forward looking forecast plus safety stock. 4.4 FQS shall undertake reasonable efforts to cancel all applicable component purchase orders and reduce component inventory through return for credit programs or allocate components for alternate programs if applicable. 4.5 Customer shall be liable for FQS parts costs only up to an amount not to exceed the inventory agreed upon between the parties in writing (“Agreed Inventory”) (yet to be agreed). FQS shall be solely liable for any inventory exceeding the “Agreed Inventory”. FQS shall minimize carrying cost by utilizing consigned and bonded inventory from suppliers. The “Agreed Inventory” can be modified only with the written agreement of the Customer’s Chief Financial Officer. Customer may decrease the amount of the “Agreed Inventory” without penalty upon written notice to FQS provided that the revised “Agreed Inventory” is not less than the then existing inventory held by FQS. 4.6 FQS shall provide Customer with an Inventory report on a bi-weekly basis and at month’s end within three (3) business days. The report shall include Customer Product number, manufacturer product number, description, quantity, and location, price per piece, and total cost for each Product. 4.7 FQS shall notify Customer immediately upon notification of end of life for any parts. FQS shall formally review parts life with each manufacturer on a quarterly basis and provide the review results to Customer.

Material Procurement. 4.1 FQS The material procurement undertaking, pursuant to this Agreement, will be carried-out by the Contractor. The Contractor carries full responsibility to the material procurement. 7.1 Contractor is authorized to purchase materials using standard purchasing practices including, but not limited to, to acquisition of material materials recognizing Economic Order QuantitiesQuantity, Envivio ABC buy policy and long lead time component management components management, in order to meet the forecasted requirements of Customer if FQS feels it is necessary Customer's orders and forecasts. Economic Order Quantity for items which are un-returnable to meet vendor or un-usable for other clients of the delivery lead time commitment to Contractor must be pre-approved by Customer. FQS shall purchase parts from only vendors on Long lead items may be ordered taking into the Customer’s approved vendor list. Customer account the Forecast, provided that orders of long lead items for the Forecast Period will provide an approved vendor list including Customer product number, manufacturer product number, description, sources, and pricebe pre-approved. Customer recognizes its financial responsibility for the custom material materials purchased by FQS Contractor on behalf of Customer and according to the orders and forecasts properly issued by Customer. 7.2 Customer reserves the right to purchase and/or produce some of the required materials and give the said materials to Contractor for the purpose of manufacturing Customer's Products. Customer The list of the said materials will be stipulated when and if such a situation will arise. Transportation of any tools and materials during the work process between Customer's and Contractor's sites shall be carried out by Contractor immediately when the need arises at the Contractor's cost and responsibility. 7.3 Contractor is responsible for material monitoring supplier's quality, according to the extent that specifications provided by Customer for all purchased materials. 7.4 Subject to section 15 hereto, in the event of termination of this Agreement or a cancellation of a Purchase Order, and/or discontinuance of a Product, or excess materials created by an Engineering Change, Customer agrees to compensate Contractor for unused Products and material inventory which are affected by such termination, cancellation or discontinuance, as follows: (i) material was purchased by FQS to support the Product forecast and agreed upon safety stock (yet to be agreed); The prevailing contract price of all Products, ready for delivery in Contractor's possession; (ii) FQS exercised reasonable business judgment in managing suppliers and lead times; (iii) FQS complied with Customer cancellation instructions in a timely manner (canceled all open orders within one (1) week The cost of receiving instructions); and (iv) such materials cannot be used by FQS for other customers and at other sites of FQS. 4.2 Customer may revise or cancel a purchase order for Product and may also eliminate a component from a Product. If Customer revises or cancels a purchase order (“Order”), or eliminates a component causes excess material inventory, FQS shall identify all potential liability of Customer for material on order, material on hand, whether in raw form or work in process, which are not returnable to the vendor, or usable for other Contractor's customers, including economic order quantities of unique parts. ** REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED. (iii) the cost of materials on order which cannot be cancelled. (iv) to the above applicable compensation, the Contractor shall be entitled to a handling fee of 3% of the compensation due. (v) payment shall be made to Contractor against delivery of the compensated Products and finished goodsmaterials to Customer. FQS The above compensation shall be the sole compensation due to Contractor as a result thereof. 7.5 Contractor shall undertake commercially reasonable all possible efforts to cancel all applicable component materials purchase orders and reduce component materials inventory through return for credit programs or allocate components materials for alternate programs to minimize charges to Customer. Customer agrees to compensate FQS for costs incurred for finished goods (including profit); work in process (including labor performed); material on hand which could not be returned or used for other customers and at other sites of FQS; material on order which could not be canceled; applicable material supplier’s restocking or cancellation fees; and agreed FQS handling charges. 4.3 FQS will report its inventory position to Customer on a bi-weekly basis and at month’s end within three (3) business daysprograms, including the following data: quantity of raw material, work in process and any open orders that cannot be canceled due to supplier lead time. Report will specifically identify any material on hand or on order where the quantity exceeds the agreed three (3) month forward looking forecast plus safety stock. 4.4 FQS shall undertake reasonable efforts to cancel all applicable component purchase orders and reduce component inventory through return for credit programs or allocate components for alternate programs if applicable. 4.5 Customer shall be liable for FQS parts costs only up to an amount not to exceed the inventory agreed upon between the parties in writing (“Agreed Inventory”) (yet to be agreed). FQS shall be solely liable for any inventory exceeding the “Agreed Inventory”. FQS shall minimize carrying cost by utilizing consigned and bonded inventory from suppliers. The “Agreed Inventory” can be modified only with the written agreement of the Customer’s Chief Financial Officer. Customer may decrease the amount of the “Agreed Inventory” without penalty upon written notice to FQS provided that the revised “Agreed Inventory” is not less than the then existing inventory held by FQS. 4.6 FQS shall provide Customer with an Inventory report on a bi-weekly basis and at month’s end within three (3) business days. The report shall include Customer Product number, manufacturer product number, description, quantity, and location, price per piece, and total cost for each Product. 4.7 FQS shall notify Customer immediately upon notification of end of life for any parts. FQS shall formally review parts life with each manufacturer on a quarterly basis and provide the review results to Customer.

Material Procurement. 4.1 FQS In order to meet Customer's Purchase Order and Product Forecast requirements and additional agreed upon flexibility requirements, Solectron is authorized to purchase materials and make commitments to suppliers using standard purchasing practices including, but not limited to, acquisition of material recognizing Economic Order QuantitiesABC order policy from Solectron, Envivio buy policy and long lead time component management in Solectron's supplier imposed minimum order to meet the forecasted requirements of Customer if FQS feels it is quantities. Such materials should not exceed those reasonably necessary to meet the delivery lead time commitment to Customer. FQS shall purchase parts from only vendors on the Customer’s approved vendor list. Customer will provide an approved vendor list including Customer product number, manufacturer product number, description, sources, Purchase Order and priceProduct Forecast requirements under Section 3 of this Agreement or any addendum relating thereto. Customer recognizes its financial responsibility for the custom material purchased by FQS Solectron on behalf of Customer. Customer is responsible for material to the extent that (i) material was purchased by FQS to support the Product forecast and agreed upon safety stock (yet to be agreed); (ii) FQS exercised reasonable business judgment in managing suppliers and lead times; (iii) FQS complied with Customer cancellation instructions in a timely manner (canceled all open orders within one (1) week of receiving instructions); and (iv) such materials cannot be used by FQS for other customers and at other sites of FQS. 4.2 In the event where the Customer cancels any Purchase Orders, the Customer and Solectron agree to the following cancellation terms: Standard Manufacturing Agreement Solectron Confidential # DAYS FROM THE DAY OF NOTICE CUSTOMER CANCELLATION LIABILITY: ------------- -------------------------------- 0 - 30 days The Customer is liable for 100% of the purchase price of Products scheduled to be delivered within 0-30 days of the date of cancellation. 61+ days The Customer may revise or cancel a purchase order any orders scheduled greater than sixty (60) days from the date of cancellation without liability except for Product custom inventory approved by the Customer. Cancellation liability shall not apply to orders which are rescheduled by Customer and may also eliminate a component from a Product. If Customer revises or cancels a purchase order (“Order”)Solectron, or eliminates a component causes excess inventorywhich are otherwise subject to cancellation charges. Furthermore, FQS any liability is subject to Solectron's efforts to minimize such charges to the Customer pursuant to Sections 3.7 and 4.3 of this Agreement. Additionally, in determining actual cost to Solectron of components, Solectron shall identify all potential liability of provide any information reasonably requested by Customer for material on order, material on hand, work in process, and finished goods. FQS this regard. 4.3 Solectron shall undertake commercially reasonable commercial efforts to cancel all applicable component purchase orders and reduce component inventory through return for credit programs or allocate components for alternate programs to minimize charges to Customer. Customer agrees to compensate FQS for costs incurred for finished goods (including profit); work in process (including labor performed); material on hand which could not be returned or used for other customers and at other sites of FQS; material on order which could not be canceled; applicable material supplier’s restocking or cancellation fees; and agreed FQS handling charges. 4.3 FQS will report its inventory position to Customer on a bi-weekly basis and at month’s end within three (3) business days, including the following data: quantity of raw material, work in process and any open orders that cannot be canceled due to supplier lead time. Report will specifically identify any material on hand or on order where the quantity exceeds the agreed three (3) month forward looking forecast plus safety stock. 4.4 FQS shall undertake reasonable efforts to cancel all applicable component purchase orders Purchase Orders and reduce component inventory through return for credit programs or allocate components for alternate programs if applicable. It is the goal of both Customer and Solectron to implement VMI programs wherever possible to achieve the cost and lead-time objectives. 4.5 Customer shall be liable for FQS parts costs only up to an amount not to exceed the inventory agreed upon between the parties in writing (“Agreed Inventory”) (yet to be agreed). FQS shall be solely liable for any inventory exceeding the “Agreed Inventory”. FQS shall minimize carrying cost by utilizing consigned and bonded inventory from suppliers. The “Agreed Inventory” can be modified only with the written agreement of the Customer’s Chief Financial Officer. Customer may decrease the amount of the “Agreed Inventory” without penalty upon written notice to FQS provided that the revised “Agreed Inventory” is not less than the then existing inventory held by FQS. 4.6 FQS shall provide Customer with an Inventory report on a bi-weekly basis and at month’s end within three (3) business days. The report shall include Customer Product number, manufacturer product number, description, quantity, and location, price per piece, and total cost for each Product. 4.7 FQS shall notify Customer immediately upon notification of end of life for any parts. FQS shall formally review parts life with each manufacturer on a quarterly basis and provide the review results to Customer.