Manufacturing Services Agreement

Exhibit 10.28

CONFIDENTIAL TREATMENT REQUESTED

MANUFACTURING SERVICES AGREEMENT Table of Contents

Body of Contract

1.0 Delivery

2.0 Product Forecasts and Orders

3.0 Flexibility

4.0 Cancellation of Shipments

5.0 Material Procurement and Inventory Management 6.0 Excess and Obsolete Inventory

7.0 Quality

8.0 Engineering Changes

9.0 Warranty

10.0 Pricing

11.0 Payment Terms

12.0 Administration and Reports (Shipping) 13.0 Notices

Exhibits A - Definitions

B - General

C - Statement of Work

D - Data Domain Bill of Material including AVL and NCNR Parts (Excel File)

E - Manufacturer Warranty for Data Domain Parts. (Excel File to be attached.)

F - Data Domain Cost Model (Excel File to be attached) G - Field Replaceable Unit (FRU) RMA Procedure / Agreement for Logistics Services (to be attached). H - Agreement for Export/Import Services (to be attached).

MANUFACTURING SERVICES AGREEMENT Solectron USA, Inc., a Delaware corporation, dba Fine Pitch Technology (" Fine Pitch" ), with a place of business at 401 Kato Terrace, Fremont, California 94539 and Data Domain a Delaware corporation, (" Customer' ) with a principal place of business at 3400 Hillview Avenue, Palo Alto, CA 94304 in their desire to formulate a strategic business relationship and to define their expectations regarding this relationship, enter into this Manufacturing Services Agreement (" Agreement" ) and hereby agree as set forth below.

The parties acknowledge that the terms as set forth in this Agreement apply to the current business model for assembly and test only and if Data Domain desires Fine Pitch to provided manufacturing services for PCBA' s, then material liability, excess and obsolete liability, cancellation liability, flexibility parameters and other applicable sections will be renegotiated as needed to correspond to that business model prior to additional services being provided.

1.0 Delivery

1.1 Fine Pitch will target 100% on time delivery, defined as delivery of Product by Fine Pitch to a common carrier for shipment to Data Domain' s customer within a window of *** early and *** late (of acknowledged delivery date).

1.2 Fine Pitch will promptly notify Customer of any potential delivery delays and the cause of the delay. 1.3 If Fine Pitch fails to make deliveries at the specified time and such failure is caused by Fine Pitch, Fine Pitch will ***. 1.4 Fine Pitch will handle, pack, mark, ship and deliver product in accordance with Customer' s written instructions communicated to Fine Pitch, or if none are provided or arc silent in a particular area, in accordance with Fine Pitch' s normal practice, provided that such practice is consistent with industry standards, is acceptable to common carriers for shipment and is adequate to ensure safe arrival.

1.5 Each shipment shall be accompanied by a packing slip that includes Customer' s part numbers, Purchase Order number, Quantity shipped and shipping documentation.

2.0 Product Forecasts and Orders

2.1 Customer will provide Fine Pitch, on a monthly basis, a non-binding, rolling *** Product Forecast. The rolling Forecast is for convenience only, and neither party shall be bound or obligated thereby other than as provided in Section


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5.0 Material Procurement and Inventory Management, 6.0 Excess and Obsolete Inventory. Other than as provided for herein, Customer will not be bound by the Forecast or other sales information that it may provide to Fine Pitch.

2.2 Fine Pitch shall treat all such forecasts as confidential pursuant to any existing Non-Disclosure Agreements in place. 2.3 Customer will issue its Purchase Orders (" Orders" ) for Finished Goods at least *** in advance of delivery. Customer shall separately place Orders for Non-Cancelable Non-Returnable (NCNR) components, or sign for liability, with Fine Pitch based upon the market lead time at the time of Order placement.

2.4 As an alternative to firm Purchase Orders, Customer may issue Blanket Purchase Orders consistent with the accepted Forecast to Fine Pitch for Products. The value of such Blanket Purchase Orders will generally cover at least a *** of forecasted Products. Fine Pitch will build the Products up to a level of finished goods pursuant to the quantities and due dates stated on accepted Blanket Purchase Orders. Customer shall issue Material Releases (" Releases" ) against Blanket Purchase Orders for individual Products to be shipped, *** in advance of delivery. Material releases will contain any required information for the completion of the configuration of the Finished Goods, in addition to the information stated in section 2.5 below. Customer may transmit Purchase Orders Releases in writing, by facsimile or other means of electronic transfer agreed to by the parties. Customer shall be invoiced for Product on a weekly basis

2.5 Orders shall contain: (1) Product description including Customer part number and revision (rev) level, (2) quantity, (3) requested Delivery Date(s), (4) shipping destination, and (5) confirmation of price. Orders may be issued in writing, by mail or facsimile, or by any electronic means on which the parties agree from time to time. 2.6 Fine Pitch will acknowledge receipt of Orders within ***, and will notify Customer of acceptance, rejection or adjustment of Purchase Orders within three (3) business days. If Fine Pitch fails to notify Customer within ***, the Purchase Order will be deemed accepted as delivered.

3.0 Flexibility

3.1 To optimize delivery flexibility within the constraints of other factors (e.g., cost and inventory liability), Fine Pitch and Customer will agree upon a manufacturing model (e.g., build to Forecast, built to order, configure to order, etc.) and design of supply chain (e.g., vendor managed inventory, safety stock, etc.).

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3 3.2 Customer may reschedule individual shipments of Product(s) (increases and decreases) as follows: 3.2.1 Upside Flexibility: Fine Pitch will use reasonable efforts to accommodate such requests on a case-by-case basis. Requests for increased quantities will be subject to additional charges and will be contingent upon manufacturing and materials assembly cycle time, availability of material, personnel and capacity resources. Such charges shall be reviewed and approved by Customer prior to the upside being implemented. Customer acknowledges that upside flexibility for material measured within *** prior to a delivery date is *** of the *** forecast and that continual upside demand to use these materials will create a gap in the supply chain at some point.

3.2.2 Downside Reschedules: Downside reschedules of Purchase Orders will be subject to the limitations set forth below and to the terms and conditions set forth in Sections 4.0 Cancellation of Shipments and 6.0 Excess and Obsolete Inventory.


Days before

Delivery Date

Allowable reschedule amounts (% of original order)

Maximum allowable

reschedule period

0-30 *** ***

31-60 *** ***

3.3 Customer will not change or reschedule a submitted Purchase Order more than ***. Reschedules that result from failure to pay for earlier shipments will be subject to additional charges, including a mutually agreed inventory carrying cost

4.0 Cancellation of Shipments 4.1 In the event of a termination or cancellation of a Purchase Order and/or discontinuance of Product or excess material created by an engineering change, Customer agrees to compensate Fine Pitch for Products and material inventory in accordance with the terms and conditions set forth in Sections 5.0 Material Procurement and Inventory Management and Section 0 Excess and Obsolete Inventory of this Agreement, and as set forth as follows:

4.2 Cancellation charges will be assessed as follows:

(i) Finished product : The Purchase order price

(ii) Work in Process : cost of Material and added value for stage of assembly.

(iii) Non-Cancelable, Non-Returnable Material Non-Cancelable, Non Returnable Material as defined herein and as set forth in Section " 5.1" and Section 6.0 Excess and Obsolete Inventory.


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4 (iv) Excess and Obsolete Material- as defined herein and pursuant to Section 6.0 Excess and Obsolete Inventory (v) Returned Material/Charges- any vendor cancellation charges incurred with respect to Material canceled or returned to the vendor including any broken packages or partially used packages that are non-returnable to vendor.

Charges will be based upon the date written notice of a cancellation is received at Fine Pitch.

4.3 Fine Pitch shall use commercially reasonable efforts to provide Customer with reasonable documentation to support all such charges within ***, and shall immediately cease all value-add work on canceled Orders.

4.4 Where cancellation of a previously rescheduled shipment has occurred, the cancellation charge may be computed as if the previously requested reschedule had instead been a request for cancellation.

4.5 Orders for tooling, equipment or non-recurring services are firm and not cancelable.

4.6 Open Orders placed by Fine Pitch with suppliers to support Customer' s requirements shall be canceled by Fine Pitch not later than *** after notification by Customer.

5.0 Material Procurement and Inventory Management

5.1 Fine Pitch is authorized to purchase materials using standard purchasing practices including, but not limited to, acquisition of material recognizing Minimum Order Quantities, ABC buy policy, kanban, attrition allowance and long lead time component management in order to meet the forecasted requirements of Customer. Pursuant to Section 6.0 Excess and Obsolete Inventory, Customer recognizes and accepts financial responsibility for material purchased by Fine Pitch on behalf of Customer provided that Fine Pitch follows standard industry purchasing practices

5.2 Fine Pitch agrees to procure that Material specified by Customer in the Bill of Materials only from manufacturers listed on the Customer' s (" AVL"' ). Customer will provide Fine Pitch with an AVL for each product identified by Customer (" Product" ). Fine Pitch will not deviate from the AVL without Customer' s prior written approval and Customer agrees to communicate to Fine Pitch, in writing and electronically, any and all changes to the AVL. Any changes to the AVL will not affect any Materials procured by Fine Pitch prior to the date of the notification of change to AVL. 5.3 Fine Pitch agrees to use commercially reasonable efforts to manage inventory and purchase Materials in a manner that is cost effective. However, in the event of a significant increase in Material costs, Fine Pitch will notify Customer within *** of the increase.


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5 5.4 Intentionally deleted

5.5 Intentionally deleted

5.6 Material cost reductions will be reviewed at the price reviews pursuant to Section 10.3 herein, and will be mutually agreed to by Customer and Fine Pitch and included in an addendum to this Agreement

5.7 Customer agrees to pay all Non-Recurring Expenses (NRE) incurred by Fine Pitch during the set up of the supply chain that have been pre-approved by the Customer

5.8 Fine Pitch will charge Customer for any purchase premiums, expediting fees or special freight costs incurred as a result of a Customer caused occurrence, including, but not limited to, Customer demand of Products beyond the agreed upon flexibility guidelines, Customer demand inside Lead Time, and non-performance of Suppliers controlled by Customer 5.9 Customer and Fine Pitch agree to define procurement roles and responsibilities where Customer controls any terms and conditions of the AVL supply chain. A Procurement Responsibility Matrix may be included as an Addendum to this Agreement

5.10 Customer agrees to pay carrying costs at a monthly rate of *** calculated on the cost of Materials that have been procured by Fine Pitch and cannot be used in manufacturing due to a Customer-controlled material shortage.

5.11 Minimum production lot sizes will be reviewed and mutually agreed upon on a periodic basis. 5.12 Fine Pitch and Customer shall review material lead-times no less frequently than quarterly, or more frequently if requested by Customer in writing. Updates shall be made to Fine Pitch' s MRP system upon Purchase Order acknowledgement no less than monthly for the purposes of avoiding excess or insufficient inventory

5.13 Fine Pitch shall maintain a " first-in, first-out" inventory system, and shall ensure that all new and repaired product shipped to, or on behalf of, Customer is at the latest Product revision cycle as indicated in the corresponding Purchase Order. Revisions to products shall be handled by Engineering Changes as set forth in Section 8.0 5.14 ***


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6 5.15 Fine Pitch and Customer shall agree on, and maintain an approved listing of Minimum Order Quantity components to be updated quarterly. 6.0 Excess and Obsolete Inventory

6.1 Customer shall have liability only for *** as defined herein, and as described in this Section 6.0 Liability related to Order cancellations and/or re-schedules shall be determined pursuant to Section 3.0 Flexibility Requirements and 4.0 Cancellation of Shipments.

6.2 Finished goods and raw Material liability will be evaluated monthly or as mutually agreed by the parties. Liability will be assessed to the Customer immediately following identification of Excess and/or Obsolete inventory as defined and identified below.

6.3 Customer liability for *** is to be assessed as follows:

6.3.1 Excess Inventory:

6.3.1.1 Fine Pitch will carry raw Material inventory for up to *** of demand at no charge to the Customer. 6.3.1.2 Customer will be charged a monthly carrying charge of *** on the inventory value (on a part number by part number basis) exceeding *** of demand from the date it is reported as Excess until *** from receipt by Fine Pitch when it will be dispositioned pursuant to Section 6.3.2 below.

6.3.2 Obsolete Inventory. Customer shall take receipt of the inventory within *** of notification, at current material cost plus *** cost of acquisition.

6.4 Fine Pitch will undertake reasonable efforts to reduce Excess Material liability through open order cancellations, return for credit programs or allocation to alternative programs for a period not to exceed *** beyond Customer demand change. Fine Pitch will provide evidence of demand reduction and mitigation efforts on high dollar parts upon Customer' s request. Customer agrees that Fine Pitch is not required to continue mitigation of Customer Material liabilities beyond a *** period from the date of the initial written notification from Fine Pitch to Customer of the potential Material liability

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7 6.5 Fine Pitch will invoice Customer for any charges incurred under this Section 6.0 and Customer and Fine Pitch agree to payment terms of *** from receipt of invoice.

6.6 Both parties shall meet regarding excess and obsolete situations to determine the best method to mitigate Customer' s potential liability under this Section 6.0.

7.0 Quality

7.1 Fine Pitch shall manufacture the Products in accordance with Customer' s specifications including: bill of material, approved manufacturer list, and test and assembly instructions. A mutually agreed upon quality goal will be defined for driving the continuous improvement initiatives among all parties. Fine Pitch shall work with Customer to establish a quality review process where process yield data will be reviewed bi-weekly. Monthly test yield reports and associated quality data will be provided by Fine Pitch to Customer for trend analysis to monitor the effectiveness of these quality improvement actions. 8.0 Engineering Changes

8.1 Customer may, upon advance written notice to Fine Pitch, submit engineering changes (EC) for incorporation into the Product. Customer will use its best efforts to provide thirty (30) day written notice for all ECO' s with the exception of those which are related to safety issues, and urgent business necessity. This notification shall include documentation of the change to effectively support an investigation of the impact of the engineering change. Fine Pitch will make a reasonable effort to (i) acknowledge receipt of the EC within 24 hours, and (ii) review the engineering change and report the impact of the EC to Fine Pitch production to Customer within three (3) business days and the impact of the EC to Fine Pitch open purchase orders within five (5) business days so that Customer can approve, in writing, any required disposition of the materials. If any such change affects the price, delivery, or quality performance of said Product, an equitable adjustment will be negotiated between Fine Pitch and Customer prior to implementation of the change. Any ECN related to personal or product safety will be implemented without delay. Excess and obsolete inventory created as a result of the EC shall be resolved in accordance with Section 6.0 Excess and Obsolete Inventory. Fine Pitch will implement the EC upon the approval of the Customer. In the event Customer requests that a change be implemented prior to Fine Pitch' s evaluation of pricing and schedule impact, Fine Pitch will undertake reasonable efforts to perform as directed and Customer will be liable for all costs associated with such implementation, including excess and obsolete inventory.

8.2 Fine Pitch agrees not to undertake significant process changes, design changes, or process step discontinuance affecting electrical performance and/or mechanical form and fit without prior written notification and concurrence of the Customer.


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8 8.3 Until an EC and its associated impact on any outstanding Orders have been agreed to in writing, both parties will continue to perfor ...