Exhibit 10.78

 

Nortel-Flextronics    Agreement dated January 13, 2009

AMENDING AGREEMENT

This Amending Agreement (“Agreement”) is entered into and made effective as of
January 13, 2009 (the “Effective Date”) by and between on the one hand Nortel
Networks Limited (“Nortel”), and on the other hand Flextronics Telecom Systems
Ltd. (“FTS”) and Flextronics Corporation (f/k/a Solectron Corporation, “FC”)
(FTS and FC, collectively, “Flextronics”), on the terms and conditions set forth
below.

WHEREAS, pursuant to the Amended and Restated Master Contract Manufacturing
Services Agreement by and between Nortel and FTS, dated June 29, 2004 (as
previously amended by the parties before the Effective Date, the “Flex MCMSA”),
the agreement dated October 13, 2006 between Nortel and FTS (the “October
Agreement”) and the Master Contract Manufacturing Services Agreement by and
between Nortel and FC, dated September 30, 2003 previously amended by Nortel and
FC before the Effective Date) (the “SLR MCMSA”) (the Flex MCMSA and SLR MCMSA
and the October Agreement are each an “MCMSA” and are collectively referred to
as the “MCMSAs”), the parties hereto are engaged in a complex contract
manufacturing relationship whereby Flextronics purchases materials and
components, assembles the materials into higher-level components and finished
goods, stores and delivers such finished components and goods to Nortel based on
Nortel’s forecasts and demands;

AND WHEREAS, parties hereto are parties to (i) the Master Repair Services
Agreement dated June 29, 2004, between Nortel and FTS, as amended by the parties
thereto before the Effective Date, (ii) the Master Contract Logistics Services
Agreement dated June 29, 2004, between FTS and Nortel, as amended by the parties
thereto before the Effective Date, and (iii) the Master Contract Repair Services
Agreement dated June 3, 2000, between Nortel and FT[sic], as amended by the
parties thereto before the Effective Date, (collectively the foregoing
agreements are referred to as the “Related Services Agreements”);

AND WHEREAS, the parties desire by this Agreement to amend the MCMSAs, to
address certain outstanding obligations between them and to modify the terms on
which the parties engage in their relationship;

NOW, THEREFORE, in consideration of the foregoing, the consideration recited
below and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by all parties, the parties agree as follows:

1. Purchase of Inventories. The parties have been engaged in ongoing discussions
regarding the identification of various inventories that Flextronics currently
holds on behalf of Nortel (individually and collectively, the “Inventory” or
“Inventories”). Nortel will purchase the Inventories identified in the attached
Schedule A, in the amount of $120 million (U.S. dollars) (the “Inventory
Purchase Amount”); Flextronics will deliver and transfer title for such
Inventory to Nortel within 30 days of each payment made by Nortel as set forth
below (e.g., following the first payment of $25 million, Flextronics will
deliver and transfer title to Nortel Inventory priced at $25 million under the
applicable pricing between the parties). Nortel will pay the Inventory Purchase
Amount in advance of delivery by Flextronics in accordance with the following
schedule:

$25 million shall be paid by wire transfer initiated on January 14, 2009

$50 million due and payable in full on January 20, 2009

$25 million due and payable in full on April 1, 2009

$20 million due and payable in full on July 1, 2009

The obligation of Flextronics to deliver and transfer title to up to $120
million dollars in Inventory set forth in this Agreement shall not be subject to
any claims of set off or counterclaim by Flextronics howsoever arising, in
respect of any claim Flextronics may have as of, or prior to, the Effective
Date.

Except as set out herein, all amounts owing to Flextronics by Nortel as of the
date of Bankruptcy (as hereinafter defined) shall be subject to, and dealt with,
in accordance with such a Bankruptcy and the court orders issued in connection
therewith.

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Nortel-Flextronics    Agreement dated January 13, 2009

 

The Inventory Purchase Amount will include a 3% cost of acquisition of Material
and no additional charges or adders will be payable Flextronics agrees that
Inventory to be delivered will be in compliance with the applicable
Specification. Flextronics agrees to cooperate with Nortel, including by
segregating Inventory and allowing access for Nortel, to provide a reasonable
amount of time to validate the Inventory being transferred, such validation to
be completed no later than 30 days after the date of payment.

2. Accounts Receivable. For the term of any Bankruptcy (as defined below), with
respect to any amounts that come due for Products, Materials and services
delivered or provided after the Effective Date, notwithstanding the payment
terms set forth in the MCMSAs and the Related Services Agreements, Nortel will
pay on a weekly basis, to be received by Flextronics the Wednesday of each week
(unless the Wednesday is not a Business Day, in which case the payment will be
the next Business Day) by wire transfer, all amounts due for Products,
Materials, services or other items delivered or provided by Flextronics during
the immediately previous week (Monday through Sunday).

3. Pricing and Claims Processes. After the Effective Date, the parties agree
that the mechanisms for adjustments to pricing (including ROIC) and claims
processes, other than the uplift percentage for underconsumption of liability
pursuant to the SLR MCMSA, will remain in effect pursuant to the processes in
place immediately prior to the Effective Date. Flextronics agrees that current
transformation prices under the MCMSAs and Related Services Agreements, as
applicable, will remain fixed during the term of any Bankruptcy (as defined
below) through the end of calendar year 2009; if any Bankruptcy continues past
such time, then the parties will negotiate pricing in accordance with the
MCMSAs.

4. Excess Inventory Obligations.

(a) On the first day of each calendar quarter (i.e., January 1, April 1, July 1
and October 1), beginning April 1, 2009, and with respect to the current
calendar quarter as soon as the parties can identify the applicable amounts (but
with effect from January 1, 2009), Flextronics will provide to Nortel a report
of the following inventories: (i) all Materials and Products in Flextronics’s
inventory that are in excess of Nortel’s then-current forecast (i.e., the
forecast loaded into Flextronics’s MRP system by Nortel as of the first day of
the quarter) for the next 6 months’ of demand by Nortel (regardless of aging);
(ii) all Materials and Products for which there is zero demand in the
then-current forecast; (iii) all finished Products then in Flextronics’s
inventory and built in accordance with the MCMSAs (individually and
collectively, such items identified in (i)-(iii), other than Materials and
Products acquired before the Effective Date (“Quarterly E&O”).

(b) Nortel will provide Flextronics with a purchase order covering such
Quarterly E&O (the “QEO Order”) no later than the first day of the second month
of each calendar quarter,; payment for the Quarterly E&O will be due in full in
accordance with the terms for payment set forth above. Flextronics will deliver
such Quarterly E&O to Nortel or a designated storage facility or third party.

(c) Nortel shall not be liable to purchase Quarterly E & O that either (or both)
(i) does not comply with applicable Specifications in accordance with the
MCMSAs, or (ii) Nortel can demonstrate was not acquired using prudent purchasing
practices in accordance with the MCMSAs, provided in either case (i.e., (i) or
(ii)) that Nortel provides evidence of the basis for objection within 30 days of
identification of such Quarterly E&O to Nortel.

5. Changes to Supplier Terms. Nortel will compensate Flextronics (and adjust
terms with Flextronics as necessary) to address any changes to the terms for
purchases of any NC Supplier or NCD Supplier.

6. Transfers of Operations. With respect to planned and previously-discussed
transfers of operations (which include transfers from Flextronics to different
Flextronics facilities, transfers from Flextronics to Nortel and transfers from
Flextronics to third parties) (individually and collectively, “Transfers”):

(a) All Transfers currently subject to agreed-upon plans of record (e.g., PP15K,
Calgary, M1 PCBA, Option 11) will remain subject to such plans of record, unless
otherwise mutually agreed.

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Nortel-Flextronics    Agreement dated January 13, 2009

 

(b) The parties agree to consider specifically the discussed transfer of
fastflow from Calgary to Flextronics operations in Columbia, South Carolina and
M1 to Monkstown, and to evaluate the desirability of such potential Transfers.

7. Available Remedies. For the term of any Bankruptcy, if Nortel breaches any
obligations set forth in this Agreement (and such breach continues for more than
2 Business Days following notice from Flextronics), including, without
limitation, late payment on any amounts due to Flextronics, then Flextronics
may, in addition to any other remedies available, at its option, stop shipment
on any pending orders, suspend the Production Effort, cancel outstanding orders
for Materials and demand pre-payments before accepting any additional Purchase
Orders, after notice to Nortel of such breach.

8. Filing to Court, Approval of Agreement. Due to the central and strategic
nature of Flextronics’s services for Nortel, without which Nortel would be
substantially impaired in its operations, in the event that Nortel files for any
bankruptcy, reorganization or similar protections under the laws of Canada (any
such proceeding individually and in combination, a “Bankruptcy”), Nortel will
within 7 days following any filing petition the court, cooperate with
Flextronics and otherwise use Nortel’s best efforts to have this Agreement
approved (or recognized, accepted or any similar designation as may be
applicable) by the court with respect to such filing by Nortel. The objective of
such efforts is to establish the enforceability of this Agreement in the context
of the Bankruptcy and authorize Nortel to make the payments provided for
herein. Nortel agrees that it will not, during the pendency of the Bankruptcy,
treat any supplier or vendor of goods or services any better than the treatment
afforded to Flextronics hereunder, in respect of pre-filing claims; provided,
however, that this provision shall not apply to payments to be made by Nortel to
other suppliers and vendors of goods or services in an amount of up to $30
million in the aggregate during the pendency of the Bankruptcy. As part of such
filing, Nortel will describe in such petition(s) and approval(s) the terms and
conditions in this Agreement or Nortel will attach a copy of this Agreement to
such filings. Nortel agrees that Flextronics may, in its sole discretion, submit
this Agreement to any court, monitor or similar authority in support of and as
evidence Nortel’s agreement and obligations hereunder.

9. General. Terms not defined herein will have the meanings provided in the
applicable MCMSAs. To the extent of any conflict, inconsistency or ambiguity
between and among this Agreement and the MCMSAs and October Agreement, this
Agreement will control. Except as set forth herein, this Agreement is not a
waiver or release of any rights or remedies available to either at law or in
equity. Except as amended herein, the MCMSAs will continue to govern the
relationship of the parties and will continue in effect in accordance with their
respective terms; however, this Agreement will not in any way effect or negate
the notice of termination of the SLR MCMSA that Flextronics provided to Nortel
on January 12, 2009. If any of the provisions or terms of this Agreement are
deemed unenforceable for any reason, then the parties agree that the rest of the
Agreement should be given full force and effect to the greatest extent
permissible under applicable law, and that the court interpreting such provision
is entitled to amend or substitute a provision that gives effect to the original
intent and meaning of the unenforceable provision to the greatest extent
possible. This Agreement may be executed in counterparts, and each party hereto
may affirm its assent by any electronic or facsimile means. This Agreement will
be governed by the laws of the Province of Ontario and the federal laws of
Canada applicable therein.

[REST OF PAGE INTENTIONALLY LEFT BLANK – SIGNATURES FOLLOW]

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Nortel-Flextronics    Agreement dated January 13, 2009

 

IN WITNESS WHEREOF, each party, by its respective duly-authorized representative
identified below, acknowledges and agrees to the terms and conditions of this
Amending Agreement.

 

Nortel Networks Limited     Flextronics Telecom Systems Ltd.

                    /s/ Gordon A. Davies

   

                    /s/ Manny Marimuthu

Signed     Signed

                    Gordon A. Davies

   

                    Manny Marimuthu

Print Name     Print Name

Chief Legal Officer and Corporate Secretary

   

                    Director

Title     Title Nortel Networks Limited     Flextronics Corporation

                /s/ Anna Ventresca

   

                    /s/ Michael Clarke

    Signed                     Anna Ventresca    

                    Michael Clarke

    Print Name                     Assistant Secretary    

President, FlexInfrastructure

    Title

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Nortel-Flextronics    Agreement dated January 13, 2009

 

Schedule A

Identification of Inventory

The parties acknowledge and agree that the specific inventory amounts, Materials
and Products have been the subject of ongoing discussions, updates and
negotiations and that the following breakdowns represent the agreements among
the parties as to the nature of the Inventory that Nortel is purchasing.
Flextronics will select the specific items to be delivered from the following
identified categories, the details of which will be provided to Nortel.

Flextronics will select the specific items to be delivered based on the
schedules of such items that have been delivered to and discussed with Nortel.

The parties agree that the Inventory purchase by Nortel will include (without
limitation) the following:

 

  •  

MEN (MD and other)

 

  •  

PP15K (RoHS and non-RoHS)

 

  •  

PP15K bonepile (Flextronics will continue debug efforts until June, 2009)

Flextronics will identify the applicable Inventory based on a snapshot of all
Inventory currently held by Flextronics as of the Effective Date