POLICY, GUIDELINES AND REQUIREMENTS. Revision 1.3

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1 POLICY, GUIDELINES AND REQUIREMENTS Revision 1.3 7/4/2014

2 1.0 PCI Vision One of PCI s visions is to have a meaningful partnership with Suppliers steering mainly towards progress and development into Top Class Vendors. Top Class Vendors shall have the minimum foundation of: 1) Providing good quality products 2) Being technically competent in their field 3) Being cost competitive and flexible in their services 4) Complying well with international standards and rules 5) Being financially stable These will continue to build up the 2 key pillars of Operations and Infrastructure through standardization of parts, excellent partnership & cooperation, localization of sources, fair and robust performance ranking system, and a perfectly planned out ISP & MRP system. 1.1 Purchasing Policy The purchasing policy shall be as follows: 1) Source the Correct Parts at the Best Price 2) Reduce Purchasing Risks by 25% a. Lead Time Reduction: 25% (Shorten Lead Time through enhanced Supplier Proximity) b. Inventory Reduction: 8 turns c. Currency Hedging: 100% 3) Streamline Vendor Base by 30% 4) 100% On-time Delivery Performance 5) 200 DPPM Quality Performance 1 Page This is not a controlled document if printed.

3 1.2 Supplier Code of Conduct We at PCI are proud of our reputation for excellence; a reputation based on our commitment to the highest ethical standards. We expect our suppliers to meet these standards as well. This code of conduct defines the basic requirements for our suppliers to ensure that each supplier and its employees uphold the highest standards of ethics, is compliant with international and local laws, provide safe working environment, and impart business operations that are environmentally responsible. 1) Ethics and Compliances with Laws: a. Business Integrity: Prohibit any and all forms of corruption, extortion and embezzlement. b. Bribery: Bribes or any other means of obtaining undue or improper advantage are not to be offered or accepted. Supplier shall ensure that its employees will not tolerate or engage in any form of corruption or bribery, including any payment or other form of benefit for the purpose of influencing decision making in violation of the applicable law. c. Disclosure of Information: Information regarding business activities, financial situation, and performance is to be disclosed in accordance with applicable regulations and industry practices. d. Intellectual Property: Intellectual property rights are to be respected and protected from unauthorized disclosure or access. e. Legal: i. Applicable international and local laws are to be followed. ii. Strategic Goods Control All Material suppliers, transportation or distribution provider are to ensure that it s supply chain is not used for illicit or illegal purpose, such as transporting drugs or weapons of mass destruction or in aid of terrorism. 2) Labour: a. Freely Chosen Employment: All work to be voluntary. b. Child Labour Avoidance: Child labour is not to be used in any stage of manufacturing. The term child refers to any person under the age of 15 (or 14 where the law of the country permits), or under the compulsory education, or under the minimum age for employment in the country. c. Working Hours: Comply with the maximum number of working hours as stipulated in the applicable laws. d. Wages and Benefits: Compensation paid to workers shall comply with all applicable wage laws. 2 Page This is not a controlled document if printed.

4 1.3 The Integrated Management System Policy PCI operates its business based on the following Integrated Management System Policy: 1) Commitment: Delivery Quality products on-time at Competitive Cost 2) Continuous Improvement: Continuously improve effectiveness of management system and processes to achieve business excellence. 3) Environment Health and Safety: Promote environmental responsibility and a safe healthy workplace in compliance with legal and industry standards. 4) Labour & Ethics: Uphold human rights and high business ethics in compliance with legal and industry standards. 1.4 The 5S Management System 5S is a workplace organization methodology originated and transliterated from 5 Japanese words. It is a philosophy and way of organizing and managing workspace and work flow with the intent to improve efficiency by eliminating waste, improving flow and reducing process unevenness. The 5S are: 1) Seiri ( 整理 ) Sorting 2) Seiton ( 整頓 ) Straighten or Set in Order 3) Seisō ( 清掃 ) Sweeping or Shining or Cleanliness 4) Seiketsu ( 清潔 ) Standardizing 5) Shitsuke ( 躾 ) Sustaining the discipline PCI Ltd aims to achieve an integrated system with its Suppliers in exercising 5S for better visual control and management in everyday processes. 2.0 The Conflict Mineral Policy PCI Ltd is committed to sourcing components and materials from companies that share our values around human rights, ethics and environmental responsibility and as such aims not to use minerals that fuel conflicts based on the SEC (Securities and Exchange Commission). These rules include requirements related to the sourcing of the tin, tantalum, tungsten, and gold supporting armed conflict in and around the Democratic Republic of Congo (DRC). We strive to work cooperatively with our customers and supply chain partners in implementing conflict minerals compliance program to provide DRC conflict free products by supporting industry-wide efforts to drive transparency in the supply chain and by expecting that our suppliers obtain materials from environmentally and socially responsible sources, including conflict free sources within the DRC and adjoining countries. 3 Page This is not a controlled document if printed.

5 In light of our commitment, the supplier shall: 1) Strive to be in full compliance with conflict minerals laws, including, without limitation, Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 as it may be amended from time to time and any regulations, rules, decisions or orders relating thereto adopted by the Securities and Exchange Commission or successor governmental agency responsible for adopting regulations relating thereto (collectively, ( Dodd-Frank Section 1502 ) by: a. Committing to not knowingly use minerals from the Conflict Mineral Region in our products. b. Tracing material content in the products they supply to us down to a conflict free certified smelter and to provide to us documentation regarding their due diligence efforts. c. Procuring components, parts, or products containing tin, tantalum, tungsten, and/or gold from sources that have been identified to be conflict-free. d. Employing the standardized EICC-GeSI Conflict Minerals Reporting Template to map and monitor our suppliers commitment and activities. If Supplier does not know the original source of the minerals, Supplier agrees to cooperate with us, including disclosing from whom Supplier purchased the minerals and urging others to disclose such information, so that the original source of minerals can be accurately determined and reported. 2) Commit to doing business only with those companies who have our shared values. 3) Commit to communicate this policy to our suppliers and require them to set similar policies for their supply chain. We may reconsider our willingness to partner with suppliers that fail to comply with this Policy. 3.0 C-TPAT Customs Trade Partnership Against Terrorism PCI Ltd strongly recommends supplier to be C-PAT certified. This is to ensure that border crossings are smooth, fast and efficient. C-TPAT is a voluntary United States Customs and Border Protection (CBP) initiative supported by the Department of Homeland Security and U.S. Customs and Border Protection. The initiative forges voluntary cooperative relationships between the CBP and organizations like importers, carriers, brokers and manufacturers who agree to ensure the integrity of their security practices and communicate their security guidelines to trading and supply chain partners. The goal of the anti-terror partnership is to protect supply chains, identify security gaps and implement specific measures to strengthen border security and keep the United States safe. The initiative is based on the premise that Customs can better protect the public with the cooperation of supply chain owners. For more details about C-TPAT, pls refer to 4 Page This is not a controlled document if printed.

6 4.0 Insurance PCI Ltd strongly recommends that the supplier takes out appropriate liability insurance cover for the product liability risks proceeding from the specification in this manual. PCI is to be furnished with evidence of insurance, and in case of any changes in insurance conditions, these are to be reported to PCI without being asked. Furthermore it is recommended that business liability insurance and insurance against accidental breakdowns should be taken out. Evidence of the amount of cover should be provided by the supplier when the purchasing agreement is concluded. 5.0 Warranty 5.1 Product Warranties 1) Unless otherwise agreed by the Parties, the period of warranty for any Product shall be two (2) years from the day of first use by the Customer of any PCI Limited product which incorporates the Product ( Warranty Period ). 2) The Supplier expressly warrants that, during the Warranty Period, the Product shall: a. be free from any defect or Non-conformance in designs, material and workmanship; b. conform with the Supplier s Specifications; c. be new, unused, and of the grade and the quality specified, and fulfil Article (**) hereof, and the Quality Agreement defined in Article (**); d. be merchantable and fit for particular purpose intended by PCI Limited if and to the extent that the Supplier knows or has reason to know the particular purpose for which PCI Limited intends to use the Product; and e. comply with all applicable industry safety standards and have been listed or certified by an independent industry-recognized competent body such as but not limited to UL, TUV, CSA, IEC as having met such standards, and the Supplier agrees to furnish PCI Limited with any information required to confirm that both the Product and Supplier comply with all applicable laws and standards. 3) There are no exclusions, limitations, or disclaimers of warranties other than those expressly provided for in this Agreement. The warranties expressed hereunder shall be construed as consistent and cumulative with one another and with all other warranties, whether express, implied or statutory. 5.2 Supplier s Additional Warranties The Supplier and Supplier s Contractor further warrant at all times hereunder that: 1) It will comply with all government requirements that may apply from time to time; 5 Page This is not a controlled document if printed.

7 2) It has obtained all necessary governmental or other necessary permits and approvals that may apply from time to time; 3) It has sufficient experience and ability to fulfil its obligation; and 4) It is financially solvent 6.0 Non-Disclosure & Confidentiality As PCI Ltd and our Suppliers have come to an agreement to protect each other interest in the course of cooperation, it is important that both parties able to respect the confidentiality of certain materials or knowledge gained that should be restricted to only the cooperation/partnership but not any other uninvolved parties regarding that particular transaction. Our latest revised Non-Disclosure Agreement (NDA) illustrates in detail these key aspects in managing the receipt of confidential and/or proprietary information in the following, but not limited to, these areas: 1) Permitted Use 2) Designation 3) Affiliates 4) No License or Representations 5) No Obligation 6) Return of Information 7) Term and Termination 8) Survivability 9) Notice 10) Injunctive Relief 11) Attorneys Fees 12) Governing Law and Arbitration 13) Counterparts and Facsimile Delivery As described in Process Topic: Supplier Selection & Criteria, the signing and completion of the NDA document is mandatory right at the beginning as we sign the contract for partnership/cooperation with our Suppliers. For more information on the content and details of the NDA document, please refer to PCI Ltd s company website for the online form Non-Disclosure Agreement 6 Page This is not a controlled document if printed.

8 7.0 Basic Standards of Compliance 1) Suppliers shall comply with all applicable laws and government regulations in the conduct of its business with PCI Limited. 2) Suppliers shall comply with Electronics Industry Code of Conduct (EICC) for their adherence in labour, health & safety standards, environmental and ethical efforts. 3) All suppliers shall at least comply with the quality system requirements of ISO9001 and ISO Suppliers shall also comply with the quality system requirements for TS16949, ISO13485 and ISO18001 when necessary. 4) All suppliers have to understand PCI Limited s Integrated Management System (IMS) and purchasing policy. 5) Supplier s delivery performance shall aim to achieve 100% on time delivery. 6) Supplier s quality performance shall meet, and aim to exceed, PCI Limited s and PCI customers minimum quality requirements. Suppliers should target to attain zero PPM with sorting activities avoided at all times. 7) Supplier s audit acceptance shall be consistent with PCI Limited s minimum requirements. 8) Suppliers are required to provide an initial response to requests for corrective action within 24 hours and a final response (including root cause analysis and irreversible corrective action) within 7 working days. 9) Suppliers shall develop & maintain a backup contingency system in production and delivery to respond to emergency situations that may jeopardize the successful flow of processes. 10) Supplier s target price shall be consistent with PCI Limited s and customers agreements. 11) Supplier s cost reductions/price reviews shall be conducted twice a year and targeted to achieve PCI Limited s minimum requirements. 12) Suppliers shall implement aggressive Value Analysis, Value Engineering (VA/VE) processes and be active in cost reduction activities. 13) Suppliers are required to have certain risk/warranty sharing programs, and Mistake/Error-Proofing (MEP) programs in design and manufacturing flows. 7 Page This is not a controlled document if printed.

9 14) Suppliers shall aim to develop a culture of continuous improvement and lean processes. 15) Suppliers shall provide the cost breakdown for tooling costs and piece price during audit and quotation stages. 16) All tooling suppliers (who have the responsibility to verify the part dimensionally) and all component suppliers shall be capable of providing data in accordance with PCI Limited s or customer s requirements. 17) Suppliers shall have any cost-relevant design change approved by the PCI Limited prior to implementation. 18) Suppliers shall agree to PCI Limited s Supplier owned Tooling or Amortization guidelines for prototype and series tooling. 19) Suppliers shall accept and support PCI s e-business activities, e.g. electronic procurement of materials. 20) Suppliers shall agree to PCI Limited payment terms. 21) Suppliers dealing with PCI Limited on automotive parts shall provide PCI with material data stipulated in the IMDS (International Material Data System) in electronic format or obtain such information from their suppliers. 22) Suppliers shall provide for PCI and PCI s customers to access facilities for observing records and relevant materials used upon PCI requests. 23) Suppliers shall provide Statistical Process Control (SPC) Data for Functional Critical Dimensions (FCD) and Process Control Dimensions (PCD) parts and integrate the information into their manufacturing operations (Process Control Plan) when such requirement is indicated in the drawing specifications. 24) Suppliers shall retain record and documentation upon specific requests for certain products. It may be necessary for suppliers to maintain these documentations for a few years after product End-of- Life (EOL) depending on the support needed for these products. 25) Supplier shall support PCI on purchased parts for a period deemed necessary for certain products. It may be necessary for suppliers to sustain this support for a few years after product (EOL) depending on these products. 8 Page This is not a controlled document if printed.

10 8.0 Procurement Management & Process Requirements 9.0 Supplier Performance Evaluation 10.0 Quality & Environment Management and Requirements 9 Page This is not a controlled document if printed.