Contract No. WR71050115
Exhibit 10(ii)(B)4
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WITH RESPECT TO THE OMITTED
PORTIONS. OMITTED
PORTIONS ARE INDICATED BY [***].
External Manufacturing Services Agreement
Contract No. WR71050115
Between
Lucent Technologies Inc.
And
Celestica Corporation

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 1

--------------------------------------------------------------------------------

 

Contract No. WR71050115
Table of Contents

      SECTION I — OPERATIONAL TERMS

 
   
ARTICLE 1
  EFFECTIVE PERIOD OF AGREEMENT
 
   
ARTICLE 2
  BUSINESS RELATIONSHIP; GUIDING PRINCIPLES; COOPERATION
 
   
ARTICLE 3
  PRODUCTS AND COMMERCIALLY PURCHASED ITEMS
 
   
ARTICLE 4
  SERVICES
 
   
ARTICLE 5
  EXCLUSIVE RIGHT TO PROVIDE MOBILITY PRODUCT REQUIREMENTS
 
   
ARTICLE 6
  SUPPLIER COMPENSATION
 
   
ARTICLE 7
  PAYMENT TERMS
 
   
ARTICLE 8
  TRANSFER OF TITLE AND RISK OF LOSS/DELIVERY TERMS
 
   
ARTICLE 9
  PURCHASE ORDERS
 
   
ARTICLE 10
  DELIVERY/ FLEXIBLE DELIVERY ARRANGEMENTS/LATE DELIVERY
 
   
ARTICLE 11
  PERFORMANCE METRICS AND PERFORMANCE METRICS DEFAULT RESOLUTION PROCESS; “PAY
FOR PERFORMANCE” PROGRAM
 
   
ARTICLE 12
  EXCESS AND OBSOLETE MATERIAL AND FINISHED GOODS INVENTORY
 
   
ARTICLE 13
  MATERIAL PROCUREMENT BY SUPPLIER
 
   
ARTICLE 14
  PURCHASE OF GOODS AND SERVICES BY SUPPLIER UTILIZING COMPANY’S PRICING
 
   
ARTICLE 15
  PRODUCT FORECASTING AND CAPACITY PLANNING
 
   
ARTICLE 16
  EMERGENCY BACKUP MANUFACTURING PLAN
 
   
ARTICLE 17
  NEW PRODUCT INTRODUCTION AND TARGET COSTING
 
   
ARTICLE 18
  ELECTRONIC COMMERCE
 
   
ARTICLE 19
  SHIPPING
 
   
ARTICLE 20
  INTENTIONALLY DELETED
 
   
ARTICLE 21
  QUALITY
 
   
ARTICLE 22
  WARRANTY
 
   
ARTICLE 23
  REPAIRS NOT COVERED UNDER SUPPLIER’S WARRANTY
 
   
ARTICLE 24
  SCRAP PROCEDURES
 
   
ARTICLE 25
  QUARTERLY PERFORMANCE REVIEW PROCESS
 
   
ARTICLE 26
  NOTICES
 
   
ARTICLE 27
  DISPUTE RESOLUTION PROCESS

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 2

--------------------------------------------------------------------------------

 

Contract No. WR71050115

      SECTION II — GENERAL TERMS

 
   
ARTICLE 28
  ASSIGNMENT AND SUBCONTRACTING
 
   
ARTICLE 29
  ATTENDANCE AT SUPPLIER’S FACILITY
 
   
ARTICLE 30
  AUDIT
 
   
ARTICLE 31
  BANKRUPTCY AND TERMINATION FOR FINANCIAL INSECURITY
 
   
ARTICLE 32
  CHOICE OF LAW
 
   
ARTICLE 33
  COMPANY RESPONSIBILITIES
 
   
ARTICLE 34
  COMPLIANCE WITH LAWS
 
   
ARTICLE 35
  CONFIDENTIAL INFORMATION
 
   
ARTICLE 36
  DEFAULT
 
   
ARTICLE 37
  DEVELOPED INFORMATION AND INVENTIONS
 
   
ARTICLE 38
  DOCUMENTATION NEEDED FOR PREFERENTIAL DUTY TREATMENT
 
   
ARTICLE 39
  DUTY DRAWBACK
 
   
ARTICLE 40
  ENVIRONMENTAL MANAGEMENT SYSTEMS
 
   
ARTICLE 41
  ENVIRONMENTALLY HAZARDOUS SUBSTANCES
 
   
ARTICLE 42
  EXPORT CONTROL
 
   
ARTICLE 43
  FORCE MAJEURE
 
   
ARTICLE 44
  IDENTIFICATION
 
   
ARTICLE 45
  IMPLEADER
 
   
ARTICLE 46
  INDEMNITY
 
   
ARTICLE 47
  INFRINGEMENT
 
   
ARTICLE 48
  INSURANCE
 
   
ARTICLE 49
  INVOICING FOR PRODUCTS OR COMMERCIALLY PURCHASED ITEMS
 
   
ARTICLE 50
  INVOICING FOR SERVICES
 
   
ARTICLE 51
  LIMITATION OF LIABILITY

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 3

--------------------------------------------------------------------------------

 

Contract No. WR71050115

     
ARTICLE 52
  LIQUIDATED DAMAGES
 
   
ARTICLE 53
  MANUFACTURING RIGHTS
 
   
ARTICLE 54
  MARKING
 
   
ARTICLE 55
  MINORITY, WOMEN, AND DISABLED VETERAN BUSINESS ENTERPRISES
 
   
ARTICLE 56
  INTENTIONALLY DELETED
 
   
ARTICLE 57
  OFFSET CREDITS
 
   
ARTICLE 58
  OFFSETTING OF INVOICES
 
   
ARTICLE 59
  ORDERING COMPANIES AND SUPPLIER ENTITIES
 
   
ARTICLE 60
  INTENTIONALLY DELETED
 
   
ARTICLE 61
  PACKING, LABELING AND SERIALIZATION
 
   
ARTICLE 62
  POINT OF SALE AND POINT OF USE INFORMATION
 
   
ARTICLE 63
  PROCESS CERTIFICATION
 
   
ARTICLE 64
  INTENTIONALLY DELETED
 
   
ARTICLE 65
  PRODUCT CONFORMANCE
 
   
ARTICLE 66
  PRODUCT DOCUMENTATION
 
   
ARTICLE 67
  PRODUCT/SPECIFICATION/PROCESS CHANGES
 
   
ARTICLE 68
  PUBLICITY
 
   
ARTICLE 69
  REGISTRATION AND REGISTRATION STANDARDS
 
   
ARTICLE 70
  RELEASES VOID
 
   
ARTICLE 71
  RULES OF CONSTRUCTION
 
   
ARTICLE 72
  SEC DISCLOSURE
 
   
ARTICLE 73
  SECTIONS AND HEADINGS
 
   
ARTICLE 74
  SEVERABILITY
 
   
ARTICLE 75
  SURVIVAL OF OBLIGATIONS
 
   
ARTICLE 76
  TAXES, DUTIES AND INSURANCE CONTRIBUTIONS PAYABLE BY SUPPLIER
 
   
ARTICLE 77
  TAXES PAYABLE BY COMPANY
 
   
ARTICLE 78
  TEST SCOPE
 
   
ARTICLE 79
  TITLE TO MATERIAL CONSIGNED BY COMPANY
 
   
ARTICLE 80
  TITLE TO SPECIAL TOOLING AND EQUIPMENT OWNED BY COMPANY
 
   
ARTICLE 81
  TOXIC SUBSTANCES AND PRODUCT HAZARDS
 
   
ARTICLE 82
  WAIVER AND AMENDMENT

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 4

--------------------------------------------------------------------------------

 

Contract No. WR71050115

     
ARTICLE 83
  WAIVER OF JURY TRIAL
 
   
ARTICLE 84
  INDEMNIFICATION PROCEDURE
 
   
ARTICLE 85
  ENTIRE AGREEMENT

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 5

--------------------------------------------------------------------------------

 

Contract No. WR71050115
List of Attachments
The following attachments are hereby made part of this Agreement:
Attachment A Definitions
Attachment B Products and Initial Prices
Attachment B1 Commercially Purchased Items
Attachment C Manufacturer Per Unit Pricing Formula Summary
Attachment D Cost Savings Submittal Form:
Attachment E Supplier Service Fees
Attachment F Example Product Plan
Attachment G Flexible Delivery Terms
Attachment H Return And Repair Services
Attachment I Performance Metrics
Attachment J Intentionally Deleted
Attachment K1 Notice of Commercial Engagement
Attachment K2 Company Controlled Material Information
Attachment K3 Material Authorization Letter
Attachment L MWDVBE Definitions
Attachment M Warehousing Services
Attachment N New Product Introduction (NPI) Process
Attachment O Ordering Company Acknowledgement And Agreement
Attachment P Price Administrative Process
Attachment Q Inventory Management Operating Principles

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 6

--------------------------------------------------------------------------------

 

Contract No. WR71050115
THIS EXTERNAL MANUFACTURING SERVICES SUPPLY AGREEMENT (“Agreement”) is entered
into as of the last date signed by the parties with effect as of April 1, 2005
(“Effective Date”) by Lucent Technologies Inc., a Delaware corporation having a
principal place of business at 600 Mountain Avenue, Murray Hill, New Jersey
07974 ("Company") and Celestica Corporation, a Delaware corporation having a
principal place of business at 5325 Hellyer Avenue, San Jose, California 95138
(“Supplier”).
WHEREAS Company and the Ordering Companies desire to purchase from Supplier and
its Affiliates certain Products, Commercially Purchased Items and Services (each
as defined below);
NOW THEREFORE, in exchange for mutually beneficial consideration, the
sufficiency of which is hereby acknowledged, Company and Supplier agree as
follows:
SECTION I — OPERATIONAL TERMS
ARTICLE 1 — EFFECTIVE PERIOD OF AGREEMENT

1.1   The effective period of this Agreement shall commence on the Effective
Date and shall, except as otherwise provided in this Agreement, continue in
effect to and including March 31, 2008 (the “Initial Term”). After the Initial
Term, this Agreement shall automatically be renewed for successive periods of
twelve (12) months each (each a “Renewal Term”) on the same applicable terms and
conditions, unless either party elects to terminate this Agreement in accordance
with Article 1.2 by delivering to the other party a written termination notice
not less than one hundred and eighty (180) days prior to the end of the Initial
Term or Renewal Term, as the case may be. The Initial Term, as it may be
extended in accordance with this Article 1.1, is hereinafter referred to as the
“Term”.

1.2   If a termination notice is delivered pursuant to Article 1.1, Supplier
shall co-operate fully with Company to effect the transfer of the manufacturing
of the Products from Supplier to Company, or a third party designated by
Company, in order to help minimize any potential disruption of continuity of
supply of Products. Supplier shall provide all commercially reasonable
termination assistance (“Termination Assistance”) requested by Company to allow
for the orderly transfer of the manufacturing of the Products from Supplier to
Company or such third party, as the case may be. In the event that such
Termination Assistance is required beyond the termination date pursuant to
Article 1.1, the parties shall, acting reasonably and in good faith, continue to
provide such Termination Assistance and extend the Term of this Agreement on
such appropriate terms as the parties may agree for one or more thirty (30) day
periods, until such time as the Termination Assistance is no longer needed by
Company.

1.3   Any termination or expiration of this Agreement shall not affect either
party’s outstanding obligations or payments due hereunder prior to such
termination or expiration, nor shall it prejudice any other remedies that the
parties may have under this Agreement for events, actions or occurrences prior
to such date.

1.4   All defined terms are as set forth in Attachment A to this Agreement or as
defined elsewhere in this Agreement.

ARTICLE 2 — BUSINESS RELATIONSHIP; GUIDING PRINCIPLES; COOPERATION

2.1   Company and Supplier acknowledge that a strategic relationship is required
in order to ensure the ongoing continuity of supply of Products and services to
Company’s end customers. To that end, the parties have established a Strategic
Alliance Team which will meet on a quarterly basis, coinciding with the
Quarterly Performance Review Process, as described in Article 25. In addition,
Supplier shall appoint a senior operations executive and the parties shall agree
on a governance model for managing the relationship including accountability
metrics that the senior operations executive shall meet for Company and
Supplier.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 7

--------------------------------------------------------------------------------

 

Contract No. WR71050115

2.2   It will be the responsibility of the Strategic Alliance Team to establish
and document detailed process and information flows, procedures, and guidelines
applicable to the process management required to facilitate timely delivery of
Products, Commercially Purchased Items and Services as described in this
Agreement.

2.3   During the Term, Supplier shall make one of its (or its Affiliates’)
employees available to the Company, for purposes of participating on Company’s
customer bid and proposal team and to collaborate on special pricing
arrangements and extended warranty and payment terms where appropriate in the
context of Company’s bids for business from potential end-customers.
Notwithstanding the foregoing, nothing in this Article 2.3, except as may be
expressly agreed by Supplier in writing on a case-by-case basis, shall obligate
Supplier to manufacture Products on any terms different from those set out in
this Agreement.

2.4   It is the intention of the parties that the relationship of Supplier to
Company shall be that of an independent third-party supplier. Neither party
intends to create a partnership, joint venture or similar type of legal entity
or any entity of any kind, implied or direct.

ARTICLE 3 — PRODUCTS AND COMMERCIALLY PURCHASED ITEMS

3.1   For the purposes of this Agreement, the term “Products” or “Product” shall
mean Mobility Products or a Mobility Product, as applicable, as defined in
Attachment A.

3.2   In addition to providing Company with Products pursuant to this Agreement,
Company may also ask Supplier to provide commercially purchased items
(“Commercially Purchased Items”). Commercially Purchased Items include but shall
not be limited to the various types of components, raw materials, cables, and
cable assemblies listed in Attachment B1, for which Supplier adds no
customization but purchases such Commercially Purchased Items solely for resale
to Company. The parties may agree in the future that Supplier shall provide to
Company additional Commercially Purchased Items pursuant to this Agreement.
Attachment B1 shall be deemed to include all such additional Commercially
Purchased Items.

3.3   Products shall be identified by Comcode and manufactured in accordance
with the Specifications identified and incorporated into the applicable Orders.
Commercially Purchased Items shall also be identified by Comcode.

ARTICLE 4 — SERVICES

4.1   Unless otherwise agreed to between the parties, the term “Service” or
“Services” refers to Services in respect of the “Mobility” Product sector and
includes but shall not be limited to development, design, engineering, out of
Warranty repair, value-engineering, prototyping, logistics, fulfillment,
distribution, other activities identified as a Service in this Agreement, as
well as other services in respect of the “Mobility” Product sector as Company
may request and Supplier may provide from time to time that may be described in
more detail in various statements of work or Orders. Unless otherwise agreed to
between the parties, Supplier shall perform the Services identified in
Attachment E (the “Basic Services”) in accordance with the Service fees shown in
Attachment E. Out-of-Warranty repair services shall be provided pursuant to
Attachment H. Warehousing services shall be provided pursuant to Attachment M.
If Company requires the provision of any Service then, unless Company is
prohibited from doing so pursuant to a binding contractual obligation with an
arm’s length third party in effect on the date hereof, Supplier shall have the
right of first refusal to perform such Service for Company provided that
Supplier has the capability to perform such Service. “Right of first refusal” is
defined as follows in this paragraph: Company shall afford Supplier with an
opportunity to submit a quote (a “Quote”) for the provision of such Service. If
the Quote submitted by Supplier is, in the aggregate, competitive with a bona
fide quote for the provision of such Service submitted by a third party for
comparable levels of quality, service and performance (a “Competing Quote”),
Company shall award (or shall cause such Affiliate to award) the provision of
such Service to Supplier on the

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 8

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    terms and conditions of this Agreement and any other terms as the parties
may agree. If Supplier’s Quote is not competitive with the Competing Quote,
Company shall so advise Supplier, shall provide Supplier with all information
reasonably requested by Supplier with respect to the Competing Quote, subject to
applicable proprietary information restrictions, and shall afford Supplier the
opportunity to revise and re-submit the Quote (a “Revised Quote”) to Company
within 10 days of delivery of the notice of the Competing Quote to Supplier and
Company. If the Revised Quote is, in the aggregate, competitive with the
Competing Quote, Company shall award (or cause such Affiliate to award) the
provision of such Service to Supplier on the terms and conditions of this
Agreement and any other terms as the parties may agree. If the Revised Quote is
not, in the aggregate, competitive with the Competing Quote, or if Supplier does
not submit a Revised Quote within 10 days of receiving notice from Company of
the Competing Quote, Company (or such Affiliate) may award the provision of such
Service to the third party which submitted the Competing Quote on terms no more
favourable to such third party than those set out in the Competing Quote.
Nothing in this Article 4.1 shall prohibit Company or any of its Affiliates from
performing any Service for itself.

ARTICLE 5 — EXCLUSIVE RIGHT TO PROVIDE MOBILITY PRODUCT REQUIREMENTS

5.1   During the Term, Supplier and its Affiliates shall have the exclusive
right to manufacture and provide Company’s and its Affiliates’ requirements for
Existing Mobility Products and all Successor Products and New Products, to the
exclusion of all other persons, including without limitation, Company and its
Affiliates, provided however, that the foregoing shall not apply to the extent
that: 1) the [ *** ] is excluded from this Agreement; 2) Company or its
Affiliates do not have manufacturing rights for such Successor Product or New
Product; 3) Company or its Affiliates manufacture itself such Existing Mobility
Product on the date hereof and elects to continue to manufacture such Existing
Mobility Product and any Successor Product to such Existing Mobility Product; or
4) Company or its Affiliates elects to manufacture itself any New Product,
provided that if at any time during the Term Company or its Affiliates elects to
have any such Products as defined in (3) and (4) above manufactured by a third
party, Supplier shall have the exclusive right to manufacture such Product.

ARTICLE 6 — SUPPLIER COMPENSATION

6.1   The parties acknowledge that the price paid by Company and its Affiliates
to Supplier and its Affiliates for the Existing Mobility Products during the
period commencing on the Effective Date to and including the date hereof, were
determined based on the prices set out in Attachment B (the “Initial Prices”),
as reduced by the percentages specified below for the applicable Price Reduction
Periods (as defined below). Company represents to Supplier that the Initial
Price for each Product as set forth in Attachment B is the same as the price
paid by Company to a third party manufacturer for such Product immediately prior
to the Effective Date. Subject to Articles 6.2, 6.3 and 6.4, commencing on
October 1, 2005, and for each period referred to in the table below (each, a
“Price Reduction Period”), the then current prices for Mobility Products
(including, for certainty, Existing Products, Successor Products and New
Products introduced after the date hereof) shall be reduced by the percentage
specified below, in each case with effect as of the effective date set out
below:

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 9

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    [ *** ]

     For purposes of this Article 6.1, the percentages in the table above in the
column entitled “UMTS” apply to Products identified as “UMTS” in Attachment B,
together with their Successor Products, and the percentages in the table above
in the column entitled “AMPS” apply to all other Mobility Products, including,
for certainty, switching packs. The parties shall mutually agree on the Products
to be defined as UMTS on or prior to December 15, 2005.

6.2   Notwithstanding Article 6.1, during the Price Reduction Period commencing
[ *** ], the parties shall evaluate the financial impact to Supplier of the
price reductions set out in Article 6.1, and shall mutually agree upon the
effective dates for the price reductions for each of the Price Reduction Periods
commencing on or after [ *** ] in order to offset the impact to Supplier of such
price reductions in light of the impact of Supplier’s on hand Material inventory
on its Material costs. In addition, at least six months prior to each of [ *** ]
and [ *** ], the parties shall review and discuss the price reduction
percentages set out in Article 6.1 in light of then current market conditions
and the then current end market price erosion curve for Mobility Products.

6.3   If during any two consecutive Price Reduction Periods the aggregate gross
revenues earned by Supplier and its Affiliates from the manufacture of Existing
Mobility Products, Successor Products, and New Products under this Agreement are
less than [ *** ] per Price Reduction Period, the parties shall negotiate in
good faith a decrease in the price reduction percentages referred to in
Article 6.1 for an equal number of subsequent Price Reduction Periods,
determined in light of the impact of such lower revenues on Supplier’s and its
Affiliates’ labor efficiencies and facility utilization costs. Such reduced
price reduction percentages shall apply until such time as Supplier’s and its
Affiliates’ aggregate gross revenues from the manufacture of Existing Mobility
Products, Successor Products, and New Products under this Agreement for any two
consecutive Price Reduction Periods are equal to or exceed [ *** ] per Price
Reduction Period, after which time the price reduction percentages referred to
in Article 6.1 shall once again apply.

6.4   If during any two consecutive Price Reduction Periods the aggregate gross
revenues earned by Supplier and its Affiliates from the manufacture of Existing
Mobility Products, Successor Products, and New Products under this Agreement are
greater than [ *** ] per Price Reduction Period, the parties shall negotiate in
good faith an increase in the price reduction percentages referred to in
Article 6.1 for an equal number of subsequent Price Reduction Periods,
determined in light of the impact of such higher revenues on Supplier’s and its
Affiliates’ labor efficiencies and facility utilization costs. Such increased
price reduction percentages shall apply until Supplier’s and its Affiliates’
aggregate gross revenues from the manufacture of Existing Mobility Products,
Successor Products, and New Products under this Agreement for any two
consecutive Price Reduction Periods are less than [ *** ] per Price Reduction
Period, after which time the price reduction percentages referred to in
Article 6.1 shall once again apply.

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 10

--------------------------------------------------------------------------------

 

Contract No. WR71050115

6.5   Company agrees to take reasonable commercial efforts to negotiate
reductions in prices of Company Controlled Material by percentages equal to the
price reduction percentages in effect in the relevant Price Reduction Periods
under Article 6.1 (the “Target Reduction Rates”). Until [ *** ], Company shall
not accept any reduction in the price of Company Controlled Material in any form
other than direct decreases in the unit price of such Company Controlled
Material, including, without limitation, in the form of rebates, step
discounting, or application of discounts to other Materials. After the end of
each Price Reduction Period commencing on or after [ *** ], the parties shall
determine the WAPRP (as defined below) for all Company Controlled Materials
purchased by Supplier and its Affiliates in such Price Reduction Period. If for
any Price Reduction Period commencing on or after [ *** ]:

  (a)   the WAPRP for Company Controlled Materials was less than the Target
Reduction Rate, no later than 15 Business Days after determination of the WAPRP
for such Price Reduction Period Company shall pay to Supplier an amount equal to
the difference between the Target Reduction Rate and the Company Controlled
Material savings in dollars; or

  (b)   the WAPRP for Company Controlled Materials exceeds the Target Reduction
Rate, no later than 15 Business Days after determination of the WAPRP for such
Price Reduction Period Supplier shall pay to Company an amount equal to the
amount by which the Company Controlled Material savings in dollars exceeded the
Target Reduction Rate.

    For purposes hereof, the “WAPRP” for any Price Reduction Period means the
weighted average of the percentage reductions of all prices for the Company
Controlled Materials (as confirmed by Supplier) purchased by Supplier and its
Affiliates during such Price Reduction Period, by comparison to the prices for
such Company Controlled Materials in the immediately preceding Price Reduction
Period including the price effect of any Material Value Propositions as defined
in Article 6.12 implemented for Company Controlled Material. WAPRP shall be
calculated as provided below:

[ *** ]

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 11

--------------------------------------------------------------------------------

 

Contract No. WR71050115
[ *** ]

6.6   On or prior to each Price Reduction Period commencing on or after [ *** ],
Supplier shall prepare and deliver to Company a summary statement and supporting
details (the “Recovery Amount Statement”) setting out the calculation of the
amount to be paid by Company to Supplier pursuant to this Article 6.6 (each, a
“Recovery Amount”) in connection with the price reduction to take effect for
such Price Reduction Period pursuant to Article 6.1 (as modified pursuant to
Articles 6.2, 6.3 and 6.4) (each, a “Price Change”). In the event that Supplier
does not prepare and deliver a Recovery Amount Statement within ten
(10) Business Days of the first day of a Price Reduction Period, Supplier shall
not be entitled to submit a Recovery Amount Statement nor recover any finished
goods inventory revaluation amounts due under this Article in respect of such
Price Change. Company shall be entitled to object to the finished goods
inventory revaluation calculations in the Recovery Amount Statement within five
(5) days of the delivery thereof by Supplier. In the event that Company does not
so notify Supplier of its objection to the Recovery Amount Statement within such
five-day period, the Recovery Amount Statement as delivered by Supplier to
Company shall be final and binding on Company. In the event that Company objects
to the finished goods inventory revaluation calculation in the Recovery Amount
Statement in respect of any Price Change within such five-day period, the
parties shall attempt to resolve any such objection within a further five
(5) days from the date on which Company raises the objection. If the parties are
unable to resolve such objection within such additional five-day period, the
dispute shall be escalated to the Strategic Alliance Team for resolution. If the
Strategic Alliance Team is unable to resolve the dispute within thirty (30) days
of the dispute being submitted to it, the Strategic Alliance Team may either
(i) select an auditor from a national certified public accounting firm, other
than Supplier’s or Company’s external auditors, who shall resolve the dispute
within five (5) days of being retained and, if necessary, the finished goods
inventory revaluation calculation will be adjusted in accordance with such
auditors’ decision, or (ii) refer the dispute to the dispute resolution process
set forth in Article 27 (provided that the dispute shall be referred directly to
the Executive Committee of the Strategic Alliance Team pursuant to
Article 27.1(b)). On the later to occur of (i) the fifth day after its receipt
of the Recovery Amount Statement; and (ii) the date on which any objection by
Company is resolved or determined as aforesaid, Company shall pay the Recovery
Amount for such Price Reduction Period to Supplier.

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 12

--------------------------------------------------------------------------------

 

Contract No. WR71050115

6.7   For purposes of Section 6.6, the Recovery Amount for a Price Reduction
Period shall be equal to the aggregate of the Inventory Buy-Down Cost for each
finished good Product owned by Supplier and its Affiliates on the first day of
such Price Reduction Period. For purposes hereof, the “Inventory Buy-Down Cost”
for a Product for a Price Reduction Period shall mean an amount equal to (x) the
difference in price for such Product at the end of the immediately preceding
Price Reduction Period and immediately following the Price Change to occur in
such Price Reduction Period, multiplied by (y) the quantity of such Product
owned by Supplier and its Affiliates constituting finished goods inventory
resulting from Company’s requirements, forecast fluctuations and manufacturing
schedules on the first day of such Price Reduction Period. Finished good
Products may be at Supplier’s site, Supplier-owned hub either at a third party
location or at a Company location, or in transit.

6.8   The initial price for each Successor Product or New Product introduced by
Company or any of its Affiliates after the date hereof and manufactured by
Supplier or its Affiliates under this Agreement shall be calculated in
accordance with the Manufacturer Per Unit Pricing Formula set out in Attachment
C, by using the rates set out in Article 6.9 (the “Manufacturer Per Unit Pricing
Formula Rates”), which vary based on the location of manufacture of the relevant
Product. Unless otherwise agreed by the parties, for each of the two Price
Reduction Periods immediately following the Price Reduction Period in which a
New Product or Successor Product receives production approval by Company, the
price for such New Product or Successor Product shall be recalculated using the
Manufacturer Per Unit Pricing Formula and the Manufacturer Per Unit Pricing
Formula Rates. From and after the third Price Reduction Period after the Price
Reduction Period in which a New Product or Successor Product receives production
approval by Company, the then current price for such New Product or Successor
Product shall be subject to the percentage price reductions set out in
Article 6.1.

6.9   The Manufacturer Per Unit Pricing Formula Rates for Products manufactured
in Suzhou, Peoples’ Republic of China, Thailand, Rajecko, Czech Republic, and
Brazil are as set out below:       [ *** ]       The Manufacturer Per Unit
Pricing Formula Rates for cabinets that are Products and are manufactured in
Mexico are as set out below, and vary depending on the applicable Product
program:       [ *** ]

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 13

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    [ *** ]

6.10   On a [ *** ] basis from the Effective Date of this Agreement, pricing
will be adjusted on a prospective, forward looking basis to capture any changes
in foreign exchange rates to the U.S. dollar in countries where Supplier incurs
local currency costs in providing manufacturing and repair Services for Mobility
Products, including New and Successor Products, and Mobility Switching Packs for
Company. The intent of this foreign exchange pricing adjustment is to capture
the changes in price due to foreign exchange variances on the costs that are
incurred in a local currency other than U.S. dollars.       The pricing
adjustment related to foreign exchange (“Exchange Rate Adjustment Percentage”)
for manufacturing and repair Services will be calculated and implemented in the
following way:       On a [ *** ] basis from the Effective Date, the Exchange
Rate Adjustment Percentage will apply for the next [ *** ] period based on the
following formula:

  (i)   the percentage variance in the Exchange Rate for each non-U.S. dollar
currency from the “Original FX Average” to the “Current FX Average” as described
below. This percentage variance will be calculated by taking the “Original FX
Average” to 1 U.S. dollar less “Current FX Average” to 1 U.S. dollar divided by
the Current FX Average” to 1 U.S. dollar (the “Exchange Rate Variance”). For
example, a strengthening of a foreign currency to U.S. dollar will result in an
increase in price (positive adjustment) as shown in the example below.

    Multiplied by:

  (ii)   “Percentage of Price Transacted in the Local Currency” as defined
below.

    Once set, the Exchange Rate Adjustment Percentage shall be fixed for the
subsequent [ *** ] period and shall be used to revise upwards if positive, and
downwards if negative, the quarterly unit pricing in effect prior to applying
any Exchange Rate adjustments to such Product pricing for manufacturing and
repair Services. The Exchange Rate Adjustment Percentage will be applicable from
the first day of the [ *** ] period on all Products pulled from a hub or shipped
directly to Company or repaired by Supplier during that period, regardless of
purchase order date. For certainty, the Exchange Rate Adjustment Percentage
shall be implemented for manufactured Products on the Effective Date of the
Price Reductions as defined in Article 6.1 for each pricing period, commencing
on [ *** ].The Exchange Rate Adjustment Percentage will be applied to the unit
pricing in effect during that period and will be incorporated into the Product
price for invoicing purposes.       The Exchange Rate Adjustment Percentage is
calculated based on the local currency of the country from which the Product or
repair Service is shipped or rendered except that the [ *** ] that are provided
to Company by Supplier from its facility in Toronto, Canada will be deemed to be
manufactured in Mexico for purposes of calculating this Exchange Rate Adjustment
since the majority of value add costs for [ *** ] are incurred in Mexico.

[ *** ]

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 14

--------------------------------------------------------------------------------

 

Contract No. WR71050115
[ *** ]
“Original FX Average” shall mean the Exchange Rate calculated in the period
beginning [ *** ].
“Current FX Average” shall mean the current calculation of the Exchange Rate.
Such calculation shall be completed in the month immediately preceding the
beginning of a semi-annual period.
“Exchange Rate” shall mean the exchange rate for the non-U.S. dollar currencies
at the daily mid-point spot exchange rates taken as an average over the six
(6) Business Days of the month immediately prior to the beginning of the quarter
as such rates appear on the website of the US Federal Reserve Board
http://www.federalreserve.gov/releases/ for that day.
“Business Day” shall mean Monday to Friday excluding local public holidays in
the U.S.
“Percentage of Price Transacted in the Local Currency” — The parties agree to
use a global average of (i) [ *** ] of all Product prices for manufacturing and
(ii) a percentage to be agreed upon by the parties prior to the [ *** ] pricing
period for all prices for repair Services (“Global Averages”). These Global
Averages shall apply to all non-U.S. dollar currencies as they relate to the
Products and repair Services covered under this Agreement. The Global Average
for manufacturing is based on an assumption that [ *** ] of Mobility Products,
including the Mobility Switching Packs, are manufactured in Supplier’s Asian
facilities. If this rate changes, the parties agree to review this Global
Average. If the Global Average for repair Services is not agreed upon prior to [
*** ], any resulting delay in implementation of the

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 15

--------------------------------------------------------------------------------

 

Contract No. WR71050115
“Exchange Rate Adjustment Percentage” for repair Services will result in a
subsequent true-up adjustment to incorporate the “Exchange Rate Adjustment
Percentage” for repair Services as if it were in effect as of the first day of
such [ *** ] period.

6.11   Supplier agrees to keep abreast of major developments in Supplier’s
industry and to advise Company of any developments which might affect the
Product or processes under this Agreement. Prior to implementing any cost
improvements through value-engineering proposals, Material Value Propositions
(as defined in Article 6.12) or otherwise which are developed or recommended by
Supplier, Supplier shall submit such recommendations to Company in writing,
using the formal written communication process outlined in Attachment D. This
formal written communication will address: (a) description of Supplier’s cost
reduction recommendation; (b) the feature or advantage of Supplier’s cost
reduction recommendation; (c) financial impact of Supplier’s cost reduction
recommendation to the overall operation; (d) process flow and time line for
Supplier’s cost reduction recommendation implementation; (e) proposed sharing of
the financial expense from the implementation of Supplier’s cost reduction
recommendation (other than Supplier or third party costs where such third party
is under Supplier’s control associated with implementation of a Material Value
Proposition which shall be sole responsibility of Supplier), and (f) proposed
sharing of cost reductions (other than cost reductions arising out of Material
Value Propositions the benefit of which shall accrue solely to Supplier) arising
from the implementation of Supplier’s cost reduction recommendation. Company
shall use reasonable commercial effort to review and respond to Supplier’s
recommendation with initial feedback, no later than ten (10) days after receipt
of Supplier’s written recommendation. Company shall notify Supplier in writing
whether it approves such recommendations within a reasonable time period given
the volume and complexity of the cost reduction recommendations submitted by
Supplier. Company shall not be entitled to unreasonably withhold its approval to
any cost improvements recommended or developed by Supplier. If Company
unreasonably withholds its approval to any such recommendations, Company shall
be deemed not to have consented to such recommendations, and Supplier shall have
the right, notwithstanding the price reduction percentage then in effect and
anything else to the contrary in this Agreement, to reduce the reduction in
Price for the affected Products by an amount that represents the cost savings
foregone by virtue of Company not accepting the cost reduction recommendation.
Any disputes arising under this Article 6.11 shall be referred to the dispute
resolution mechanism in Article 27. Once Supplier and Company have agreed upon
the items referred to in (a) to (f) of this Article 6.11, Supplier shall proceed
to implement such cost reduction recommendation.

6.12    

  1.   Notwithstanding Article 6.11, no cost reductions realized with respect to
any Products to which the price reductions set out in Article 6.1 apply shall
entitle Company or any Affiliate to any further reduction in Product prices, if
such cost reductions are realized as a result of the reduction in Material costs
due to (i) price negotiations with the Material vendors, (ii) compatible
Material substitutions requiring no other change in Product, or (iii) amendments
to the Approved Vendor List, in each case, whether conducted or effected by
Company or Supplier (collectively, “Material Value Propositions”).     2.  
Company and Supplier will form design for cost reduction teams for each Product
line with the objective of meeting market driven target cost for key Products.
Company will be responsible for developing target cost roadmaps for key Products
based on market price erosion expected in Company’s end market. Design for cost
reduction teams will review potential cost reduction ideas for feasibility and
identify opportunities for Supplier to perform design Services on a
project-by-project basis. For each project where Company determines the
opportunity for Supplier to perform design Services is significant, the parties
shall structure Supplier’s compensation for the design Services in the form of a
sharing of the cost reduction realized from the project following the process
defined in Article 6.15. For certainty, the Supplier’s portion of any such cost
reduction opportunities may be credited towards but will not increase Supplier’s
Percent Reduction obligations set out in Article 6.1, except as defined in
Article 6.12.3 below. The parties will negotiate a separate addendum to this
Agreement to set out design terms and conditions and a

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 16

--------------------------------------------------------------------------------

 

Contract No. WR71050115

      compensation model for value engineering opportunities within ninety
(90) days of signing this Agreement.

  3.   Except for Material Value Propositions, cost reductions with respect to
any Product realized as a result of engineering efforts developed and performed
solely by Company will result in a commensurate reduction in the Product price
upon implementation, following Supplier’s recovery of any implementation costs
incurred by Supplier, and will be in addition to any applicable price reductions
set out in Article 6.1 except to the extent the parties have agreed to a sharing
of the cost reduction realized.

6.13   Premium Expedited Services shall be invoiced at cost from Supplier to
Company monthly on a per Product basis. Supplier agrees that no expenses
associated with Premium Expedited Services shall be incurred by Supplier without
prior written approval from Company. Supplier agrees not to pass through to
Company those expenses associated with PES if Company’s Orders are within the
upside flexibility delivery limits defined in Attachment G. Purchase Price
Variance shall be invoiced at price calculated in accordance with the
Manufacturer Per Unit Pricing Formula set forth in Attachment C and in
accordance with the rate structures set out in Article 6.9. However if PPV is
solely due to the expediting of Orders within the Flexibility Delivery Terms
defined in Attachment G, these PPV costs shall not be passed through to Company.

6.14   Supplier agrees to price Commercially Purchased Items in accordance with
the Manufacturer Per Unit Pricing Formula set forth in Attachment C and in
accordance with the rate structures shown in Article 6.9.

6.15   Company may from time to time submit to Supplier requests for proposals
to perform Services in accordance with Article 4.1. Such requests for proposals
shall reference the terms and conditions of this Agreement and include but not
be limited to such information as statements of work, required milestones,
deliverables, methods of compensation and the period of time in which Supplier
will have to respond to Company’s request for proposal. Where fees for such
Services do not already exist in Attachment E, Company and Supplier shall
negotiate appropriate fees in good faith and such fees will be reflected in an
Order for such Services prior to the commencement of any work by Supplier.

6.16   Company requires that all Non-Recurring Engineering charges be itemized,
with Supplier acknowledging that no Profit shall be accrued for NRE charges for
hard tooling (such as stencils, fixtures, backing plates, etc.). NRE charges for
such tooling shall be invoiced at Supplier’s actual cost for such tooling and in
accordance with Article 50.

6.17   Company acknowledges and agrees that all information provided by Supplier
to Company, and marked by Supplier as Supplier proprietary and confidential
information in connection with Product prices, including without limitation, in
connection with Attachment C, and all information derived therefrom by Company
(collectively, the “Pricing Information”) shall be Supplier Proprietary
Information and deemed to be Confidential Information pursuant to Article 35.
Company shall use Pricing Information only for the purpose of establishing and
verifying the price of a Product and Company shall share such Pricing
Information only with those employees within Company’s supply chain management
organization who have an expressed need to know such information in order to
perform their job function within Company and Company will instruct such
individuals regarding their obligation to maintain such Pricing Information as
confidential. For certainty, Company will not be in breach of its obligations
under this Article 6.17 to the extent that such information was disclosed by
Supplier to persons at Company as described herein; provided that such
information continues to be Confidential Information and subject to Article 35.

ARTICLE 7 — PAYMENT TERMS

7.1   All payments by Company to Supplier under this Agreement shall be in US
dollars, unless otherwise specified in the applicable Order and provided that
the parties have entered into a

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 17

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    foreign exchange agreement on mutually agreeable terms. Payment terms shall
be net [ *** ] from the date of invoice from Supplier, unless otherwise agreed
by the parties.

7.2   If Company fails to make a payment to Supplier in respect of an invoice by
the date payment is due under such invoice, Supplier may, in addition to its
other rights and remedies, charge Company late payment charges on the overdue
amount, at a rate of two percent (2%) per month, charged from the date that such
payment is due under such invoice to the date that payment is received by
Supplier from Company pursuant to Article 7.3.

7.3   Supplier shall not charge Company for late payment charges until an
invoice which is past due has first been submitted by Supplier to the Strategic
Alliance Team for review. The Strategic Alliance Team shall review all
outstanding invoices submitted to it by Supplier by the fifth (5th) day of a
month and confirm the amount of the outstanding invoices or resolve, if any, any
dispute concerning the amount of the invoices by the fifteenth (15th) day of
such month. Company shall pay all outstanding invoices, together with the
applicable late payment charges in respect of the unpaid amount of such invoices
pursuant to this Article 7.3, within five (5) days of the Strategic Alliance
Team confirming the amount of the outstanding invoices or resolving, if any, the
amount of the disputed invoices.

7.4   Throughout the Term of this Agreement, Supplier agrees to maintain EDI
capabilities for invoicing, and Company agrees to maintain EDI capabilities for
payment of invoices.

ARTICLE 8 — TRANSFER OF TITLE AND RISK OF LOSS/DELIVERY TERMS; LOGISTICS

8.1   Subject to the Flexible Delivery Terms set forth in Attachment G, and
unless otherwise agreed by the parties: (a) where an Orderable Item is required
to be delivered by Supplier to Company’s or its customer’s integration, repair
or distribution center which is at the same location as Supplier’s facility at
which the relevant Product is manufactured or from which the relevant
Commercially Purchased Item is shipped, title and risk of loss and damage to
such Orderable Item shall transfer from Supplier to Company at such time as such
Orderable Item has been delivered by Supplier to the designated receiving area
in the integration, repair or distribution center; (b) in all other cases, title
and risk of loss and damage to Orderable Items shall transfer from Supplier to
Company at such time as the relevant Orderable Item has been delivered by
Supplier, at the shipping dock at the facility at which the relevant Product is
manufactured or from which the relevant Commercially Purchased Item is shipped,
to Company or its customer or to Company’s or its customer’s specified carrier,
FCA (Incoterms 2000).

8.2   Supplier shall designate one of its employees as a point of contact for
Company’s domestic and international shipment activities, and for Company’s lead
logistics provider.

8.3   The parties agree to establish a logistics council comprised of an equal
number of representatives of Supplier, Company and a lead logistics provider
mutually agreed by Company and Supplier, to jointly identify and pursue a means
of reducing freight costs.

8.4   Supplier will work with Company to identify opportunities to support
Company’s trade management and compliance processes, including opportunities to
leverage Supplier’s existing tools (e.g. TradeFlow) and existing processes. The
fee and the scope of any Services that arise as a result of Company’s trade
management and compliance processes shall be mutually agreed between Supplier
and Company.

8.5   The parties agree from time to time to discuss the establishment of
regional stocking locations at which Supplier will maintain Material and
Products at levels mutually deemed appropriate by the parties. For certainty,
all Material and Products located at such regional stocking locations shall be
subject to the provisions of Article 12.

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 18

--------------------------------------------------------------------------------

 

Contract No. WR71050115

ARTICLE 9 — PURCHASE ORDERS

9.1   The parties contemplate that Orders will be placed from time to time by
Company and Ordering Companies, incorporating by reference the terms and
conditions of this Agreement. The pre-printed terms and conditions found on the
reverse side of Orders shall be excluded and deemed deleted. Each Order may set
forth the terms and conditions reflecting business requirements unique to a
particular ordering location. In the event of any contradiction between the
terms and conditions of this Agreement and the terms and conditions of an Order,
the terms and conditions of this Agreement shall supersede and override the
terms and conditions of such Order to the extent of such contradiction. Orders
will describe in detail the required Product, Commercially Purchased Item,
and/or the Service to be provided by Supplier and may include, without
limitation, the following types of items: statements of work, drawings, plans,
designs, procedures, Specifications (Product, quality, design and test), BOMs,
methods of packaging, marking specifications, repair and return processes,
Flexible Delivery Terms, quantities of units or other equipment to be furnished
by Company’s ordering location, if any, delivery schedules and inspection
criteria.

9.2   Company may designate in an Order the particular Supplier facility where
the subject Services will be provided or the subject Product manufactured;
provided however, no such designation of any given facility will be valid unless
each of Company and Supplier is reasonably satisfied that the necessary
manufacturing or other capabilities are in place at such facility and that such
facility has passed one or more of Company’s engineering quality evaluations.

9.3   If a notice of rejection of an Order is not received by Company from
Supplier within five (5) Business Days from the date of the issuance thereof,
such Order shall be deemed to have been accepted by Supplier. However, in no
event shall Supplier reject an Order due to Company’s increase in Forecasted or
unforecasted Product demand, including if such increase in demand is in excess
of the Flexible Delivery Term limits agreed upon by the parties. In such an
event, Supplier shall use reasonable commercial efforts to meet the delivery
dates of such excess Product, but the failure by Supplier to meet the delivery
date requested in such an event shall not be deemed (i) a breach by Supplier of
its obligation to meet the delivery date requested or (ii) to affect any measure
of Supplier’s performance related to the requested delivery hereunder; provided,
however, once the parties agree upon a delivery date, delivery performance shall
be measured in accordance with this Agreement.

9.4   Company may at any time during the course of Supplier’s manufacture of a
Product, performance of a Service, and/or supply of a Commercially Purchased
Item require additions to or deductions or deviations from (each, an “Order
Change”) the Product, Commercially Purchased Item and/or Service ordered. No
Order Change shall be considered as an addition to or deduction or deviation
from the Product, Commercially Purchased Item and/or Service provided by
Supplier nor shall Supplier be entitled to any compensation for the Product,
Commercially Purchased Item and/or Service done pursuant to or in contemplation
of such change, unless made pursuant to a written Order Change issued by
Company.

9.5   Company may at any time terminate an Order for Commercially Purchased
Items without cause, in whole or in part. Upon notice of Order termination,
Supplier agrees to stop work being performed on the terminated Order consistent
with the quantities on the Order being terminated. In such an event, Company
shall be liable to Supplier for (i) any cancellation charges that Supplier
incurs as a result of such termination and (ii) such Commercially Purchased Item
shall be deemed to be Excess Inventory and dealt with pursuant to Article 12.

9.6   Company may at any time terminate an Order for Services without cause, in
whole or in part, upon written notice to Supplier. In such an event, Company’s
liability shall be limited to payment of the amount due for the Services
performed up to and including the date on which such notice of termination is
received by Supplier from Company (which amount shall be supported with proof
satisfactory to Company) and no further Services pursuant to such terminated
Order will be rendered by Supplier. Such payment by Company shall constitute a
full and complete release and

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 19

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    discharge of Company’s obligations in respect of such terminated Order for
Services. In no event shall Company’s liability exceed the price identified in
the applicable Order for the Services being terminated.

ARTICLE 10 — DELIVERY/FLEXIBLE DELIVERY ARRANGEMENTS/LATE DELIVERY

10.1   At Company’s request, Supplier agrees to enter into various flexible
delivery arrangements (“Flexible Delivery Arrangements”), as agreed by the
parties, for the Products provided by Supplier to Company under this Agreement.
The Flexible Delivery Terms set out in Attachment G shall apply to all Flexible
Delivery Arrangements unless otherwise agreed to by the parties. The parties
shall also discuss and mutually agree upon a process for delivery of Products by
Supplier directly to Company’s end customers (also known as “drop-shipments”) on
an as-required basis.

10.2   Supplier agrees that all Forecasts provided by Company in relation to a
Flexible Delivery Arrangement are for planning purposes only and shall not be
deemed a commitment by Company except for the liability as set forth in
Attachment G and Article 12. Supplier shall use reasonable commercial efforts to
satisfy Company’s purchase requirements that may be in excess of any delivery
flexibility or Forecast change limits agreed to by the parties under a Flexible
Delivery Arrangement, and failure by Supplier to meet the Company’s increased
requirements shall not be deemed (i) a breach by Supplier of its obligation to
fulfill requirements or (ii) to affect any measure of Supplier’s performance
related to the requested delivery hereunder.

10.3   For certain Products or Commercially Purchased Items ordered pursuant to
this Agreement, Supplier and Company shall agree on a stated delivery interval
or lead-time. For the purposes of evaluating Supplier’s delivery performance
against lead-time, it is understood by the parties that lead-time is measured
from the time the Order or Product or Commercially Purchased Item delivery
request is received by Supplier in writing or electronically from Company until
the time the conforming Product or Commercially Purchased Item is delivered to
Company pursuant to Article 8. Unless otherwise agreed to by the parties,
Products or Commercially Purchased Items may be delivered by Supplier to Company
up to three (3) days early and zero (0) days late.

10.4   In the event of Supplier’s failure to deliver conforming Product due to
causes attributable to Supplier within the time frame agreed to between the
parties in this Agreement or an Order issued pursuant to this Agreement, Company
shall have the right to: (a) cancel such Order; or (b) extend such delivery time
frame to a later date, subject, however, to the right to cancel as in clause
(a) above if delivery is not made or performance is not completed on or before
such extended delivery date. If an Order is canceled by Company pursuant to the
above, Company shall have the right to retain or return any or all Product
received by or paid for by Company under such Order. Within fifteen (15) days of
Supplier’s receipt of returned Product, Supplier shall reimburse Company for the
costs of shipping the Product returned to Supplier and for any amounts,
including shipping costs, previously paid by Company for the returned Product.
Company shall pay for any Product it retains at the prices set forth in the
Order issued pursuant to this Agreement and any other deductions as may be
allowed in this Agreement. If Supplier is unable to meet the acknowledged
delivery date(s) set forth in an Order, Supplier shall be responsible for paying
all reasonable incremental transportation costs necessary to deliver the
requested Product to Company by the acknowledged delivery date(s) indicated in
the Order.

10.5   Supplier agrees to immediately notify Company’s representative, as
identified on the Order, of any foreseeable condition that would affect
Supplier’s ability to meet the acknowledged delivery date and time and Company’s
expected delivery date and time. Supplier’s compliance with the foregoing does
not relieve Supplier of the delivery performance requirements or other
conditions set forth in this Article 10.

ARTICLE 11 —   PERFORMANCE METRICS AND PERFORMANCE METRICS DEFAULT RESOLUTION
PROCESS; “PAY FOR PERFORMANCE” PROGRAM

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 20

--------------------------------------------------------------------------------

 

Contract No. WR71050115

11.1   The performance metrics (“Performance Metrics”) are as set forth in
Attachment I. Company intends to monitor such Performance Metrics on a quarterly
basis or on a more frequent basis as outlined in Attachment I. Supplier agrees
to provide any relevant information that the Strategic Alliance Team may require
and in the time frames needed in order to support the Performance Metrics
process. Supplier recognizes that the measurable Performance Metrics as
described in Attachment I represent Company’s current minimum performance
requirements and agrees to the resolution process and consequences, as described
in Article 11.2, of not meeting such defined minimum requirements. The
Performance Metrics may be revised periodically by the parties’ agreement, with
the objective of continuous performance improvement. The Performance Metrics are
categorized into three (3) areas: business impacting metrics (“Business
Impacting Metrics”), operational metrics (“Operational Metrics”), and
information only metrics (“Information Only Metrics”).

11.2   In the event Supplier’s performance levels fall below any of the minimum
thresholds set forth in the Business Impacting Metrics identified in Attachment
I, other than for reasons attributable to Company, Company may give notice to
Supplier of performance default. After receipt of such notice, Supplier shall
deliver to Company within twenty (20) days a Corrective Action Plan to correct
such default condition within thirty (30) days of receipt of the CAP. In the
event Supplier fails to deliver a Corrective Action Plan within the twenty
(20) day period, or if the Corrective Action Plan is determined to be
unacceptable by Company, acting reasonably, or if the Corrective Action Plan
fails to cure the default for such Product or Commercially Purchased Item within
the thirty (30) day period, this shall be deemed a default under Article 36, and
in addition to its other remedies, Company may purchase the Product from a
source other than Supplier by invoking all of its rights under this Agreement,
including, but not limited to, Article 53. In the event of a dispute over
Supplier’s failure to meet the minimum standards or Company’s failure to accept
the CAP, the parties shall attempt to resolve such dispute through the process
set forth in Article 27.

11.3   If Company elects to purchase any of the Products in respect of which
there has been a default pursuant to Article 11.2 from a source other than
Supplier, Supplier agrees that Company’s obligations under Article 5 will be
reduced by the aggregate value of any such purchases from an alternate source
until such minimum thresholds defined in Article 11.2 are achieved.

11.4   In the event Supplier’s performance falls below the minimum threshold
(“Out of Tolerance Condition”) set forth in the Operational Metrics, Company may
give notice to Supplier that a Corrective Action Plan is required from Supplier.
After receipt of such notice, Supplier shall respond to Company within twenty
(20) days of receipt of such notice with a Corrective Action Plan to correct
such Out of Tolerance Condition within thirty (30) days of receipt of the CAP.
In the event that Supplier fails to deliver a Corrective Action Plan within the
twenty (20) day period, or if the Corrective Action Plan is determined to be
unacceptable by Company, acting reasonably, or if the Corrective Action Plan
fails to cure the Out of Tolerance Condition within the thirty (30) day period
or as otherwise agreed to by the parties, the Out of Tolerance Condition along
with Supplier’s proposed Corrective Action Plan shall be reviewed by the
Strategic Alliance Team during the next Quarterly Business Review Process. The
Strategic Alliance Team shall then be responsible for establishing a Corrective
Action Plan to correct the Out of Tolerance condition. In the event the
Strategic Alliance Team fails to agree on a recommended Corrective Action Plan,
the parties shall attempt to resolve such issue through the dispute resolution
process set forth in Article 27.

11.5   The Information Only Metrics shall be for information purposes only in
order to drive continuous improvement between the parties. Supplier agrees to
provide the information requested under the Information Metrics in the frequency
and manner agreed to by the Strategic Alliance Team.

11.6   The parties agree to review the current performance metrics in Attachment
I and to replace such metrics with a new set of performance metrics and to
establish a “pay for performance program,” that includes delivery and quality
metrics for the manufacturing, New Product introduction and out of Warranty
repair services provided by Supplier and its Affiliates under this Agreement.
The

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 21

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    parties shall attempt to reach a mutual understanding with respect to the
foregoing within 90 days of the date of signature.

ARTICLE 12 — EXCESS AND OBSOLETE MATERIAL AND FINISHED GOODS INVENTORY

12.1   The parties recognize that a key element for reducing inventory liability
is to increase the use of Commercial Material on BOMs. The parties shall work
together to achieve this goal.

12.2   Subject in each case to Article 12.2(e):

  (a)   If at any time the aggregate quantity of any Orderable Item identified
by Comcode (including any Purchased Inventory) that Supplier and its Affiliates
own is greater than the quantity of such Orderable Item forecasted to be
consumed by Supplier and its Affiliates in the manufacture of Products for
Company and the Ordering Companies under this Agreement in the subsequent [***]
on the basis of the Forecast, then such excess quantity of Orderable Items shall
be deemed “Excess Inventory”. Notwithstanding the foregoing, the parties may by
express written agreement modify the method of determination and calculation of
Excess Inventory set out herein. In the event of such a situation, Supplier
shall provide Company with a notice outlining the amount and value of such
Excess Inventory and Company shall, within seven (7) Business Days of receiving
such notice, issue an inventory purchase order to Supplier for such Excess
Inventory, pursuant to Article 12.2(f).     (b)   If at any time the aggregate
quantity of any item of Material (including any Purchased Inventory) that
Supplier and/or its Affiliates own is greater than the quantity of such Material
forecasted to be consumed by Supplier and its Affiliates in the manufacture of
Products for Company and the Ordering Companies under this Agreement in the
subsequent [***] on the basis of the Forecast, then such excess quantity of
Material shall be deemed “Excess Inventory”. Notwithstanding the foregoing, the
parties may by express written agreement modify the method of determination and
calculation of Excess Inventory set out herein.     (c)   Supplier shall provide
Company with a notice (the “Excess Notice”) on or about the twentieth (20th) day
of the month setting out the amount and value of any Excess Inventory. Within
sixty (60) days of the date on which Company receives such notice from the
Supplier (the “Notice Receipt Date”), Company shall contemporaneously issue to
Supplier (i) an inventory purchase order for such remaining Excess Inventory,
pursuant to Article 12.2(f), and (ii) a purchase order in respect of an
inventory carrying charge (the “Inventory Carrying Purchase Order”) in the
amount of two percent (2%) per month of the average value of such Excess
Inventory carried by Supplier during the period commencing thirty (30) days
after the date of the Excess Notice to the date that the inventory purchase
order and the Inventory Carrying Purchase Order for such Excess Inventory is
issued by Company to Supplier. The calculation of such average shall be based on
month ending inventory levels. Supplier acknowledges that there may be unique
circumstances in respect of which Company shall have up to ninety (90) days
after the Notice Receipt Date to issue such purchase orders.     (d)   Company
shall keep Supplier’s procurement organization apprised of any Material
purchased by Company from Supplier under this Article 12 which is suitable for
use in the manufacture of Products and Supplier shall purchase such Material
from Company, on an as-needed basis, prior to purchasing such Material from
Material vendors. The purchase price of such Material shall be at the cost
reflected in the then current Product pricing set forth in Article 6.     (e)  
In the event of (i) a complete or partial termination, rescheduling or
cancellation of an Order, (ii) reduction in Forecast, (iii) the termination of
all or any part of this Agreement, or (iv) any other event, including a change
in Specifications or an engineering change, which

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 22

  ***   Portions of this page have been omitted pursuant to a request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

--------------------------------------------------------------------------------

 

Contract No. WR71050115

      results in any Material, including any Material included in Purchased
Inventory, which Supplier has purchased or issued a purchase order to the
Material vendor for, no longer being required by Supplier to manufacture
Products (or being otherwise unsuitable for use in the manufacture of Products
due to the passage of time) within the subsequent [***], such Material shall be
considered “Obsolete Inventory” and Company shall be notified of the same.
Company shall, within seven (7) Business Days of receiving such notice, issue an
inventory purchase order to Supplier for such Obsolete Inventory, pursuant to
Article 12.2(f), and may direct Supplier to deliver such Obsolete Inventory to
Company or any third party designated by Company, or to dispose of such Obsolete
Inventory in accordance with Article 24, all at Company’s cost.     (f)  
Company will purchase the Excess Inventory, the Obsolete Inventory and/or the
Purchased Inventory, as the case may be, pursuant to an inventory purchase order
at the following prices: (i) in the case of Excess Inventory, at the price
reflected in the current cost of the Products, (ii) in the case of Obsolete
Inventory, at the price paid by Supplier for such Obsolete Inventory, plus the
applicable Material mark-up pursuant to Article 6, and (iii) in the case of
Purchased Inventory, at the price paid by Supplier for such Purchased Inventory.
Any Excess Inventory, Obsolete Inventory and Purchased Inventory, as the case
may be, purchased by Company from Supplier pursuant to an inventory purchase
order shall be deemed Company Owned Inventory. The inventory purchase order
shall include the costs of mitigation incurred by Supplier pursuant to
Article 12.2(j), including under-recoveries resulting from the sale of Material
at prices less than the price paid for such Material and costs relating to
re-stocking or return charges, but excluding labor costs incurred by Supplier.
With respect to any Excess Inventory purchased by Company pursuant to an
inventory purchase order (other than pursuant to Article 12.2(a)), Supplier
shall, at Company’s option, either store such Company Owned Inventory pursuant
to Attachment M, or dispose of it in accordance with Article 24, at Company’s
cost and direction.     (g)   Excess Inventory and Obsolete Inventory will only
include inventory that is in a useable physical condition and that is not
otherwise damaged by Supplier.     (h)   Notwithstanding the persons designated
in Article 26, all notices, inventory purchase orders and any other
communication required to be made or delivered by either party to the other
party pursuant to this Article 12 shall be sent to representatives agreed to by
the parties.     (i)   Company shall have no liability for Material not ordered
in accordance with Article 13.4.     (j)   Supplier shall in all circumstances
take steps to mitigate Company’s liability for Excess Inventory and/or Obsolete
Inventory, including, without limitation, in the following priority:

  (i)   attempt to utilize Material for other Products manufactured for Company;
    (ii)   attempt to utilize Material for products manufactured for companies
other than Company;     (iii)   attempt to return Material to the Material
vendor utilizing all applicable return and sell-back privileges;     (iv)  
identify opportunities for disposing of Excess Inventory and/or Obsolete
Inventory within Company’s Supply Chain Portal; and     (v)   attempt to sell
any of the Commercial Material to a third party.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 23

***   Portions of this page have been omitted pursuant to a request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

--------------------------------------------------------------------------------

 

Contract No. WR71050115

      Such mitigation efforts shall continue for a period of fourteen (14) days
from the date that Supplier has initiated such mitigation efforts, after which
time Supplier may notify Company of such Excess Inventory and Obsolete Inventory
pursuant to Articles 12.2(c) and (e), respectively, unless otherwise agreed by
the parties. Following such mitigation period, Supplier shall provide Company
with documentation regarding mitigation efforts for Material (by Comcode) having
a value of greater than $10,000.00.         If the sale price of any Material
disposed of by Supplier pursuant to Articles 12.2(j)(iv) and 12.2(j)(v) as part
of the mitigation efforts is less than the price for such Material under this
Agreement, Supplier shall be entitled to receive such difference (i.e., a
variance charge) in respect of such Material. The process for determining such
variance charges shall be as follows: Supplier shall contact Company’s program
manager at the relevant facility to obtain approval for such sale to a third
party. After Supplier completes the sale of such Material to such third party,
Supplier shall enter the variance charge by using the price variance tool used
by the parties for the purpose of facilitating the payment of a variance charge.
The variance charge will have a reason code of “sale to broker” and a note
identifying the program manager who approved such sale and the approved sale
price, program and quantity. This process will provide Company’s program manager
with the documentation required to document the price variance. This
documentation will be the record used in the monthly reconciliation of the price
variance charges for such Material. The parties agree to develop and implement a
more detailed variance charge process after the Effective Date.

12.3   In order to attempt to reduce the amount of Excess Inventory from time to
time, Supplier and Company agree to target a minimum of [***], and the parties
shall use reasonable commercial efforts to achieve such target. If Supplier has
not achieved an average of [***] by March 31, 2006, the parties shall work
cooperatively to identify the cause thereof, and to take any necessary
corrective actions as agreed by them to achieve such target.

12.4   Any partial reels of Material shall not be included in Excess Inventory
or Obsolete Inventory, except that:

  (a)   once each year in September, all partial reels of Material having an
aggregate book value of greater than $2,500 and that would otherwise be
categorized as Excess Inventory pursuant to Article 12.2, shall be considered
Excess Inventory, in which case Company shall issue to Supplier an inventory
purchase order and an Inventory Carrying Purchase Order pursuant to
Article 12.2(c); and     (b)   twice a year, in March and September, and on the
termination or expiration of this Agreement, any partial reels of Material that
have zero demand by Supplier for use in Products shall be considered Obsolete
Inventory, in which case Company shall issue to Supplier an inventory purchase
order for such Obsolete Inventory pursuant to Article 12.2(e) (for certainty,
Supplier shall not be required to take any further mitigation efforts after it
has so notified Company of such partial reels).

12.5(a)   Supplier acknowledges that all claims submitted by it to Company for
Excess Inventory and Obsolete Inventory (an “E&O Claim”) shall be supported by
the required data specified in Attachment Q (the “Required Data”). Within thirty
(30) days of the Notice Receipt Date under Article 12.2(c) for Excess Inventory,
and within six (6) Business Days of Company’s receipt of the notice under
Article 12.2(a) for Excess Inventory and under Article 12.2(f) for Obsolete
Inventory, Company shall notify and confirm with Supplier (i) the portion of
such E&O Claim in respect of which Company has received sufficient Required Data
and which it does not dispute (the “Agreed Portion”), and (ii) the portion, if
any, of such E&O Claim that Company disputes, acting reasonably, as a result of
a deficiency in the Required Data (the “Disputed Portion”).   ***   Portions of
this page have been omitted pursuant to a request for Confidential Treatment
filed separately with the Securities and Exchange Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 24

--------------------------------------------------------------------------------

 

Contract No. WR71050115

  (b)   If Company notifies Supplier within the applicable time-frame specified
in Article 12.5(a), the Agreed Portion shall be dealt with pursuant to
Article 12.2 and the parties shall discuss the deficiencies in the Required
Data, and any additional Required Data required by Company, acting reasonably,
with respect to the Disputed Portion. Company shall provide to Supplier such
information in respect of the Disputed Portion as Supplier may reasonably
request in order to evaluate whether or not to resubmit an E&O Claim for all or
a portion of such Disputed Portion. Supplier may from time to time resubmit an
E&O Claim to Company in respect of all or any portion of the Disputed Portion in
accordance with the procedures set out in this Article 12.5 until such time as
the Disputed Portion has been agreed to or resolved in accordance with this
Article 12.5 (including, for certainty, pursuant to Article 12.5(c)) or
otherwise. The parties shall follow the procedures set out in this Article 12.5
for any E&O Claim that is resubmitted by Supplier from time to time in respect
of a Disputed Portion.     (c)   If Company does not notify Supplier within the
applicable time-frame specified in Article 12.5(a) in respect of an E&O Claim or
a resubmitted E&O Claim, such claim shall forthwith be submitted to the dispute
resolution procedures set out in Article 27.     (d)   If it is determined in
accordance with the procedures set out in this Article 12.5 that all or a
portion of the Disputed Portion as submitted at any time by Supplier to Company
was properly due and payable, Company shall pay to Supplier all accrued charges
and amounts payable with respect to such agreed to Disputed Portion and fulfill
all of its other obligations, pursuant to Article 12.2, from the date an E&O
Claim in respect of such Disputed Portion was first submitted by Supplier to
Company together with such Required Data as should have been sufficient for
Company, acting reasonably, to verify and approve such Disputed Portion, to the
date of payment or performance of such obligation pursuant to Article 12.2.    
(e)   To the extent there are any disputes between the parties with respect to
the subject matter of this Article 12.5 and/or Article 12.2, such disputes shall
forthwith be submitted to the dispute resolution process set out in Article 27.

12.6   On a weekly basis, Supplier will provide Company with reports on the
quantities that Supplier has on hand of Material, work-in-process inventory,
Scrap, inventory of Products to be reworked or refurbished by Supplier, and on
Storeroom Balance Accuracy (as defined in Attachment H), in such detail as may
be reasonably requested by Company and agreed by Supplier.

ARTICLE 13 — MATERIAL PROCUREMENT BY SUPPLIER

13.1   Supplier shall adhere to Company’s Approved Vendor List and specific
Bills of Materials, as provided by Company to Supplier, for the procurement of
all Material used in the manufacture or repair of Products unless otherwise
agreed to.

13.2   Prior to Supplier manufacturing new products for Company, Supplier agrees
to provide Company with a detailed, itemized costed BOM showing Supplier’s
best-negotiated price at the Material item level. Upon receipt and review of
such BOM, Company shall provide Supplier with an authorized final costed BOM
comprised of the best-negotiated prices for Material available to Company and/or
Supplier. Upon verification of pricing and terms and conditions in accordance
with Attachment K2 with vendors of Company Controlled Material, Supplier agrees
to pass through all Material price benefits as a result of Company’s price and
terms in accordance with Attachment K2 negotiations with the vendors of Company
Controlled Material directly to Company. Disclosure by either party of Material
pricing under this Article 13.2 shall be subject to any confidentiality
obligations that either party may have to its respective vendors.

13.3   (a) Parties shall, after entering into this Agreement, promptly agree on
the initial designation of Company Controlled Material and Supplier Controlled
Material by part number and/or

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 25

--------------------------------------------------------------------------------

 

Contract No. WR71050115

      commodity family. Such designation may be revised from time to time by
agreement of the parties. The following shall apply in respect of Supplier
Controlled Material:

  (i)   Company shall immediately following the designation of Material as a
Supplier Controlled Material send a letter substantially in the form attached as
Attachment K1 to each vendor of Supplier Controlled Material, with a copy to
Supplier, advising such vendor that Supplier has control of all purchasing
decisions in respect of such Material (for certainty, Company shall send a
letter to each vendor of the initial Supplier Controlled Material as soon as
possible after the date hereof).     (ii)   In the event of significant changes
in market conditions, Supplier shall discuss with Company reasonable
expectations of prices for Supplier Controlled Material. In such cases, Supplier
shall advise Company of the change in market conditions for such Material and
respective price projections and the parties shall negotiate in good faith to
amend the price reduction percentages for the applicable Price Reduction Period.
    (iii)   Company agrees not to be involved in any manner in any sourcing,
purchasing, pricing and other negotiations with the vendors of Supplier
Controlled Materials. To the extent Company is involved in any sourcing,
purchasing, pricing and other negotiations with the vendors of Supplier
Controlled Materials on the date hereof, it shall immediately withdraw and cease
to be involved in all such activities and provide Supplier with necessary
information in respect of such negotiations to enable the transition of such
negotiations and purchase decision to Supplier. In addition, Company shall not,
directly or indirectly request or accept price quotations, concessions, rebates
or other financial benefits from vendors of Supplier Controlled Materials on the
basis of material volumes which are being negotiated and purchased by Supplier.
    (iv)   For New Product designs, and where possible in respect of Engineering
Change Orders, Company shall use its reasonable commercial efforts to
(i) include and qualify Supplier preferred Material vendors on the AVL, and
(ii) incorporate Material from Supplier preferred Material vendors to the
greatest extent possible that meet Company quality requirements and are
documented in Company approved sourcing strategies.     (v)   Company shall
advise Material vendors that New Product designs will have Materials selected
from Supplier preferred Material vendors that meet Company quality requirements
and are documented in Company approved sourcing strategies.

  (b)   The following shall apply in respect of Company Controlled Material:

  (i)   Company will be responsible for all sourcing and price and terms and
conditions (in accordance with Attachment K2) negotiations with the vendors of
Company Controlled Materials provided that such activities are aligned with the
terms and conditions of this Agreement (including but not limited to warranty,
payment, flexibility, etc).     (ii)   Company shall provide all necessary
information in respect of pricing and general commercial terms for Company
Controlled Material in the format specified in Attachment K2 not less than two
(2) weeks prior to the commencement of each Pricing Reduction Period.     (iii)
  Company shall use a “landed cost model” agreed to with Supplier for all
Company Controlled Material sourcing decisions (a landed cost model means the
price for the Material plus all costs and expenses incurred or payable in
respect of duty, transportation, hubbing, and insurance to Supplier’s place of
manufacture).

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 26

--------------------------------------------------------------------------------

 

Contract No. WR71050115

  (iv)   If any Company Controlled Material is designated as Supplier Controlled
Material pursuant to Article 13.3(a), Company shall advise the Material vendors
in writing and provide Supplier a letter of authorization substantially in the
form set out in Attachment K1 acknowledging the change in responsibility for
such Material.

  (c)   Supplier and Company may mutually agree to re-designate any Supplier
Controlled Material as Company Controlled Material, or vice versa, effective as
of a date that is not less than six (6) months following the date of such
decision.

13.4   Unless otherwise agreed to between the parties, Supplier will purchase
all Material that is required to manufacture the Products pursuant to the AVL.
Supplier is authorized to purchase Material and Commercially Purchased Items,
based on the applicable lead-times, minimum order quantities and economic order
quantities, in order to support production and delivery requirements based on
Orders, Flexible Delivery Terms and Forecasts. Supplier shall obtain written
approval from Company’s designated representative prior to purchasing those
Materials or Commercially Purchased Items that have delivery lead times in
excess of Company’s Forecasted demand intervals and/or Flexible Delivery Terms.
Supplier shall target a weighted average lead time for Material of a targeted
maximum of 30 days or as otherwise agreed by the parties and shall use
reasonable commercial efforts to achieve such target in order to minimize
Company’s liability pursuant to Article 12. Supplier shall also take all
reasonable commercial steps to manage the ordering, delivery and stocking of
Material and Commercially Purchased Items in a manner that will minimize the
potential levels of Excess Inventory or Obsolete Inventory as described in
Article 12. The parties agree to review all Material or Commercially Purchased
Items that have lead times in excess of twelve (12) weeks during the Quarterly
Performance Review Process in order to formulate lead time reduction plans for
such Material or Commercially Purchased Items.

13.5   In the event Supplier receives notification from a third party vendor
that a Material item listed on a BOM for a Product or a Commercially Purchased
Item will be discontinued, Supplier will promptly forward the notification to
Company along with a recommended plan of action. In the event that the Material
or Commercially Purchased Item being discontinued does not have a readily
available replacement or substitute identified prior to the time at which the
Material or Commercially Purchased Item can no longer be ordered, pursuant to
written authorization from the Company, Supplier agrees to procure, manage and
store such discontinued Material or Commercially Purchased Items (the “LTB
Material”) on behalf of Company to enable the continued manufacturing of
Products or the availability of Commercially Purchased Items until such time as
Company can provide a Material or Commercially Purchased Item substitution or
Product redesign; provided that if at any time Supplier owns LTB Material
(excluding LTB Material designated by the parties for use in Supplier’s repair
operations) having an aggregate book value in excess of an amount (the “LTB
Material Threshold Amount”) equal to [***] of the aggregate book value of all
inventory (raw Material, work-in-process and finished goods) then owned by
Supplier under this Agreement (the amount of the aggregate book value of LTB
Material from time to time in excess of the LTB Material Threshold Amount is
referred to in this Article as the “Excess Amount”), the Supplier may designate
any portion of LTB Material it owns having an aggregate book value equal to such
Excess Amount as Excess Inventory or Obsolete Inventory and Company shall, in
the case of Obsolete Inventory, issue to Supplier an inventory purchase order
pursuant to Article 12.2(e), and in respect of Excess Inventory, issue to
Supplier a purchase order and an Inventory Carrying Purchase Order pursuant to
Article 12.2(c), as applicable. All LTB Material shall be excluded from the
Percentage Reduction for Products as defined in Article 6.1. The process to
calculate such LTB Material exclusions shall be mutually agreed by the parties.

13.6   Supplier agrees to allow Company to purchase Material from Supplier for
the Products being manufactured for Company as necessary in such quantities as
required for Company’s in-house Product repair operations. Pricing for such
Material purchases shall be in accordance with the Manufacturer Per Unit Pricing
Formula set forth in Attachment C and the rate structure in Article 6.9, as
applicable.

***     Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 27

--------------------------------------------------------------------------------

 

Contract No. WR71050115

13.7   Prior to ordering Material from a third party Material vendor to support
the manufacture of Products by Supplier for Company, Supplier shall first
purchase, at agreed Market-Based Prices and terms and on an as-required basis,
any equivalent conforming Material that is owned by Company and that Company has
communicated to Supplier is for sale to Supplier. Prior to ordering Material
from a third party Material vendor, Company shall first purchase, and shall use
commercially reasonable efforts to cause its suppliers to purchase, at agreed
Market-Based Prices and terms and on an as-required basis, any equivalent
conforming Material that is owned by Supplier and that Supplier has communicated
to Company is for sale to Company.

ARTICLE 14 —   PURCHASE OF GOODS AND SERVICES BY SUPPLIER UTILIZING COMPANY’S
PRICING

14.1   Prior to the manufacture of any Product for Company by Supplier, Company
shall provide Supplier a Product BOM that will include Material identification
information, including the applicable approved Material vendors. In addition,
Company will provide Supplier with Material identification, including the
respective approved Material vendors for Commercially Purchased Items ordered by
Company from Supplier pursuant to this Agreement. At Company’s option, Company
shall with respect to all Company Controlled Material facilitate the purchase of
such designated BOM items or Commercially Purchased Items by Supplier at
Company’s negotiated Material purchase prices with the approved Material
vendors, subject to the following conditions:

  (a)   Company shall have provided Supplier with a written authorization in the
form of Attachment K3 — Material Authorization Letter, prior to Supplier
purchasing such designated BOM item at the prices set forth in Company’s
purchase agreements with the respective Material vendor;     (b)   Supplier
shall purchase such Material with the sole intent of using such Material for the
manufacture or repair of Product under this Agreement or Order(s) issued
pursuant to this Agreement or as otherwise provided in this Agreement;     (c)  
Supplier shall establish the terms and conditions of purchase for Company
Controlled Material. If requested by Supplier, Company shall use reasonable
commercial efforts to work with and support Supplier in its negotiations of
terms and conditions of purchase and Flexible Delivery Arrangements with the
vendors of Company Controlled Material including, at Company’s discretion,
Company’s participation in the negotiations.     (d)   Supplier shall hold in
confidence any and all information related to Company’s purchase agreement(s)
with the Material vendors, including, but not limited to, technical information,
forecasts and Company’s prices. Supplier hereby agrees to use such information
only for the purpose of fulfilling its obligations under this Agreement or any
Order placed pursuant to this Agreement. Supplier shall share such information
only in accordance with and subject to Article 35; and     (e)   Supplier agrees
to implement a first in first out (“FIFO”) inventory system for Material
purchases under this Article 14.1. Supplier shall monitor this FIFO inventory
system to ensure the Material purchased and received first by Supplier shall be
the Material consumed first during the manufacture of Products.

14.2   Company and Supplier shall use reasonable commercial efforts to identify
and pursue possible purchasing opportunities with companies which will benefit
the respective parties through volume discounts, process and cost efficiencies
for goods and services.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 28

--------------------------------------------------------------------------------

 

Contract No. WR71050115

ARTICLE 15 — PRODUCT FORECASTING AND CAPACITY PLANNING

15.1   Supplier shall work with Company to maintain a level of Product
manufacturing capability and flexibility that is consistent with Company’s
business requirements. Unless otherwise agreed, Company shall compensate
Supplier in the manner set out herein for any costs associated with replicating
existing stencils, fixtures, tooling, assembly and/or test equipment uniquely
required to support Company’s production requirements or building new unique
stencils, fixtures, tooling, assembly, and/or test equipment in support of
Company’s production requirements. Such costs shall, by mutual agreement of the
parties either (a) be amortized over a six (6) month period in the cost of the
Product, or (b) be charged by Supplier to Company as a separately billable
non-recurring engineering charge for which Company shall issue Supplier a
purchase order in accordance with Article 9. Prior to fabricating or procuring
any stencils, fixtures, tooling, assembly and/or test equipment that is unique
to the manufacture of Company’s Products, Supplier agrees to review such plans
with Company first. Supplier agrees that all stencils, fixtures, tooling,
assembly and/or test equipment used in the production of Products shall be
subject to the terms set forth in Articles 37 and 53.

15.2   Company will use reasonable commercial efforts to provide to Supplier, on
a weekly basis, a fifty-two (52) week rolling forecast, in sufficient detail,
for all Products required under this Agreement (the “Forecast”), or to provide
forecasts using other forecasting methods as may be agreed to by the parties.
Except as otherwise provided in this Agreement, all Forecasts are for planning
purposes only and do not constitute a commitment to purchase by Company.
Company’s requirements for Commercially Purchased Items may, at Company’s
option, be included in a Forecast or be ordered on a discrete order basis.

15.3   As part of Company’s and Supplier’s supply chain management process,
Supplier agrees to provide Company’s forecasted requirements to all third party
vendors of Material to support the timely manufacture of Products by Supplier
for Company under this Agreement. In addition, Supplier will, over time,
establish with each Material vendor appropriate delivery intervals, inventory
stocking levels, and ordering flexibility arrangements to support Company’s
delivery lead time, inventory stocking levels and ordering flexibility
arrangements required of Supplier. At Company’s request, Supplier shall provide
Company with reports and allow Company to verify that Supplier is satisfactorily
complying with this Article 15.3.

15.4   Company shall use reasonable commercial efforts to advise Supplier at
least six (6) months prior to the time at which a Product is scheduled for
end-of-life designation. Upon receipt of such notice, the parties shall work
together to prepare an end-of-life plan.

ARTICLE 16 — EMERGENCY BACKUP MANUFACTURING PLAN

16.1   Supplier will update existing Emergency Backup Manufacturing Plans that
have been delivered by Supplier to Company prior to the Effective Date, and
Supplier will, within ninety (90) days of the Effective Date, provide to Company
Emergency Backup Manufacturing Plans for those facilities for which no Emergency
Backup Manufacturing Plan has previously been provided by Supplier to Company.
Each Emergency Backup Manufacturing Plan shall, following a catastrophic event,
a condition listed in Article 43.1, or any other condition in which Supplier is
unable to produce and ship Product to meet Company’s requirements for at least
thirty (30) Business Days, allow Supplier to:

  (a)   manufacture and ship the impacted Product(s) at the levels set forth in
Article 16.1(c) from one or more of its other manufacturing facilities upon the
written approval of Company to meet Company’s delivery requirements for such
Product(s);     (b)   commence shipments of the impacted Product(s) at the
levels set forth in Article 16.1(c) to Company from such other manufacturing
facilities no later than thirty (30) Business Days after the commencement of the
catastrophic event or other condition; and

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 29

--------------------------------------------------------------------------------

 

Contract No. WR71050115

  (c)   achieve the following levels of shipments from such other manufacturing
facilities:

  (i)   a minimum of fifty percent (50%) of Company’s then current Forecast
after thirty (30) Business Days of the commencement of the catastrophic event or
other condition;     (ii)   a minimum of seventy-five percent (75%) of Company’s
then current Forecast after forty-five (45) Business Days of the commencement of
the catastrophic event or other condition; and     (iii)   a minimum of one
hundred percent (100%) of Company’s then current Forecast after sixty
(60) Business Days of the commencement of the catastrophic event or other
condition.

16.2   The relevant Emergency Backup Manufacturing Plan(s) will be reviewed and
modified by mutual agreement of the parties, as necessary from time to time.

16.3   In the event that the Emergency Backup Manufacturing Plan fails to
achieve its purpose as set out in Article 16.1, Company may at its option,
terminate this Agreement or an Order (with respect to the Product identified in
the Order and affected by such delay or failure) in accordance with Article 43
at no charge, and/or exercise any other rights and remedies it may have,
pursuant to this Agreement and at law or at equity.

ARTICLE 17 — NEW PRODUCT INTRODUCTION AND TARGET COSTING

17.1   At Company’s request, Supplier agrees to provide the necessary
manufacturing assistance to Company to support the timely development, design,
and introduction of new products. As part of this assistance, Supplier agrees to
the terms and processes set forth in Attachment N — New Product Introduction
(NPI) Process and shall keep abreast of major developments in Supplier’s
industry including such areas as new production methods, processes and
techniques or materials and shall regularly advise Company of any developments
that could impact Company’s Product price, performance, quality and time to
market objectives.

17.2   At Company’s request, Supplier agrees to participate with Company in
utilizing target-costing methodology for new products introduced into Supplier’s
manufacturing process. The methodology used to perform this target-costing will
be established by the Strategic Alliance Team, which will prepare a specific
product cost roadmap. Supplier agrees to target and document cost reductions in
accordance with the specific product cost reduction roadmap. Both parties commit
to work aggressively to pursue the achievement of such target cost reductions.

17.3   The parties will mutually agree in writing on any specific quality plans
and requirements in connection with New Products.

ARTICLE 18 — ELECTRONIC COMMERCE

18.1   Supplier and Company will work diligently to implement and utilize
electronic means to issue Orders, Order acknowledgments, Order changes,
forecasts, ship notices, Flexible Delivery Terms information, view Product and
Material inventory information, electronic mail or such other communications as
may be agreed upon by Supplier and Company for the transmission and receiving of
information under this Agreement (“Electronic Commerce”).

18.2   Supplier shall maintain Electronic Commerce capability throughout the
Term of this Agreement. If Company elects to utilize EDI or XML as a means to
electronically transmit data, Supplier and Company shall negotiate in good faith
the required specifications, agreements and timelines for implementation. Such
Electronic Commerce shall also include the capability of transmitting and
receiving the items referenced in Articles 18.1 and 18.3 by means of Internet
communications.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 30

--------------------------------------------------------------------------------

 

Contract No. WR71050115

18.3   In addition to the requirements set forth in Article 18.1, Supplier
agrees to provide Company access, in accordance with and subject to Supplier’s
security policies and procedures, to Supplier’s information systems in order to
view and download the following Product data: (a) test and inspection data,
(b) repair data, (c) functional parametric data, (d) component engineering and
component management data, (e) current “build to” production BOMs, and (f)
Supplier and Company Product and Material inventory levels. Supplier will
provide to Company the following, to a common standard for all Company
locations, via real-time/near-real-time Internet transactions: (a) detailed
(manufactured and purchased) finished Product/sub-assembly supply plans to
support Company’s end customer available to promise processes, (b) jeopardy
notification and re-promise date(s) if a scheduled item will not ship on the day
scheduled, and (c) hierarchical Product serialization data to support
serialization capture processes in effect at the time.

18.4   The parties hereby agree that Supplier will meet with each Ordering
Company to determine the necessary information systems, software, and
configurations that are required to enable each Ordering Company to
electronically transmit the Bill of Material, Specifications, technical drawings
and all other relevant information needed for the manufacture of Product by
Supplier for such Ordering Company. If Company requires different information
systems, hardware, communications technology software or configurations, then
the parties agree to negotiate in good faith the costs associated with the
installation of such information systems, hardware, communications technology
software or configurations. These requirements shall be set forth in writing.

18.5   Supplier shall establish, at Supplier’s expense, appropriate measures
(including, but not limited to, fire walls) to ensure Supplier’s and Company’s
Information related to the manufacture and supply of Product can only be
accessed by Supplier and Company. In the event Supplier is provided access to
certain Company information systems, Supplier agrees to (a) use Information
obtained from such systems solely for the purpose of performing its obligations
under this Agreement or an Order placed pursuant to this Agreement and (b) take
the necessary steps at Supplier’s expense, including but not limited to
establishing firewalls, secured modems, etc. in order to ensure Company’s
Information (including Company IP as part thereof) is sufficiently protected.

ARTICLE 19 — SHIPPING

19.1   Unless otherwise specified in an Order, Supplier shall: (a) ship the
Product or Commercially Purchased Item covered by this Agreement or Order
complete; (b) ship to the destination designated in the Order; (c) ship
according to routing instructions as set forth in the Order and provided by
Company’s ordering location; (d) identify this Agreement and Order number on all
subordinate documents; (e) enclose a packing memorandum with each shipment,
encase the packing memorandum in a moisture resistant pouch or holder, place the
packing memorandum on the side of the shipping container, and in the case of
multiple containers, place it on the first container and, when more than one
package is shipped, identify the package containing the memorandum; and (f) mark
this Agreement and Order number on all packages and shipping papers. The
following information shall be placed on all packing memorandums: (a) Company’s
name; (b) address of shipping location; (c) Order number; (d) Order item or line
number; (e) Company’s Comcode as stated on the Order; (f) Product or
Commercially Purchased Item description as stated on the Order; (g) quantity
shipped; (h) unit of measure as stated on the Order; (i) end customer order
number, end customer spec/req number, and end customer item number when
identified on the Order; and (j) if required by Law in the destination country,
a list of all serial numbers for Product or Commercially Purchased Items
shipped. Adequate protective packing shall be utilized, in accordance with the
applicable Specifications. Shipping and routing instructions may be furnished or
altered by Company in writing. If Supplier does not comply with Company’s
shipping or routing instructions, Supplier authorizes Company to deduct from any
invoice of Supplier (or to charge back to Supplier) any increased transportation
costs actually incurred by Company as a result of Supplier’s noncompliance,
provided that such increased costs shall be first submitted to Supplier.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 31

--------------------------------------------------------------------------------

 

Contract No. WR71050115

19.2   Supplier shall provide Company with reasonable notice, by way of an
advanced shipping notice (ASN), for each Orderable Item to be shipped by
Supplier to Company.

ARTICLE 20 — INTENTIONALLY DELETED
ARTICLE 21 — QUALITY

21.1   Supplier shall meet Company’s quality requirements as set forth in
Specifications and otherwise in this Agreement. If within ten (10) days, or as
otherwise agreed to by the parties on a case by case basis, of transfer of title
to Product from Supplier to Company, Company rejects any or all Product for
failing to meet any of the Specifications agreed to by Supplier, Company may
exercise one or more of the following remedies: (a) return rejected Product for
full credit at the price charged plus return transportation charges, duties, and
taxes, as may be applicable; (b) accept a conforming part of any shipment; or
(c) have rejected Product replaced by Supplier at the purchase price stipulated
in this Agreement or the applicable Order. If notification of rejection of any
or all Product is not received by Supplier within this ten (10) day period or as
otherwise agreed to between the parties, such Product will be deemed to have
been accepted by Company. Company shall obtain a return materials authorization
(“RMA”) number from Supplier prior to returning any Product and shall return any
Product rejected under this Article within fifteen (15) Business Days of such
rejection, unless otherwise agreed between the parties.

21.2   With respect to the facilities at which Supplier or its Affiliates
manufacture and repair Products under this Agreement, Supplier shall maintain
facility registration in compliance with ISO 9001:2000 and/or TL9000:R3.0 as
applicable. Supplier commits that all manufacturing and design operations,
including any key sub-contractors which contribute to the design, development,
production, delivery and repair service of Product under this Agreement are ISO
9001:2000 registered by an accredited registrar. When requested by Company,
Supplier shall furnish subsequent to each of its re-certification/surveillance
audits, a copy of its quality policy manual and periodic audit documentation for
the locations manufacturing Products or performing Services under this
Agreement. In the event Company requests Supplier to adopt or comply with other
types of quality and similar requirements or certifications to those stated
above in order for Company to sell Products to customers who require such other
requirements or certifications, the parties shall negotiate in good faith the
timing and costs associated with achieving such requirements or certifications.

21.3   Supplier agrees to apply “Six Sigma” and “Lean Principles” in an effort
to identify and minimize waste through improvement in the manufacturing
processes under this Agreement. Supplier shall designate two employees trained
in the application of “Six Sigma” processes to work with Company to assist in
the achievement of the following objectives within one year of the date hereof:

  (a)   reduction of lead-time for end customer order entry, order fulfillment
and delivery, by a targeted maximum of [ *** ] of such lead-times as of the
Effective Date hereof or as otherwise agreed by the parties;     (b)   reduction
in average weighted lead-times for Materials, to a targeted maximum of [ *** ]
or as otherwise agreed by the parties; and     (c)   target of [ *** ] on-time
delivery.

    The parties agree that the objectives set out in this Article 21.3 are joint
goals, and the failure to achieve such objectives shall not be deemed to be a
breach by Supplier of its obligations under this Agreement, or to affect any
measure of Supplier’s performance under this Agreement.

21.4   Supplier agrees to appoint one employee of Supplier or any of its
Affiliates to be responsible for managing Supplier’s overall quality processes
in the manufacture of Products under this Agreement, and shall appoint one
employee of Supplier or any of its Affiliates at each facility at

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 32

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    which Supplier or its Affiliates manufactures Products under this Agreement,
to be responsible for Supplier’s quality processes at such facility. Each
employee appointed under this Article 21.4 shall be either certified by the
American Society of Quality, or shall have received equivalent internal
training, including “Six Sigma” certification training.

21.5   Subject to complying with Supplier’s plant rules and regulations,
internal security and confidentiality requirements, security clearance
regulations and other procedures as applicable, Supplier shall allow on-site
quality management system type audits (e.g. ISO 9001, ANSI/ESD 20.20 and TL
9000) as well as on-site process evaluations by Company or Company’s designated
representative. All such on-site visits shall be at Supplier’s locations and,
with their consent, at the locations of Supplier’s subcontractors who supply
Material used in the manufacture of Product. The timing of such on-site visits
shall be at Company’s discretion, subject to fourteen (14) days’ prior notice to
Supplier by Company except in those situations in which Company has identified a
quality problem that would prohibit Company or Supplier from shipping Products.
Supplier agrees to implement and report the status of a Corrective Action Plan
for all unacceptable issues within a time frame agreeable to the parties.
Supplier shall agree to have an improvement program in place, which will allow
it to attain and maintain acceptable ratings or equivalent on all quality
management system elements as agreed to by Company and Supplier.

21.6   Supplier’s internal process controls shall be based on Company
requirements set forth in a specific product plan (“Product Plan”) in a form
similar to Attachment F — Product Plan. The Product Plan will contain
Product-specific requirements and will define data reporting frequencies as
agreed to by Company and Supplier. This is a process of “qualifying” Supplier’s
manufacturing location by periodic assessment of processes and Products.

21.7   Subject to complying with Supplier’s plant rules and regulations,
internal security and confidentiality requirements, security clearance
regulations and other procedures, as applicable, Supplier shall permit Company,
at Company’s discretion to inspect and test Product at Supplier’s location
(“Source Inspection”). If the Product inspection performance results do not meet
Company’s Specifications, after an agreed upon period of time or number of lots
inspected, as specified in the applicable Product Plan, the cost of continued
Source Inspections shall be borne by Supplier. Source Inspections may be
discontinued or reinstated, depending upon the shipped Product quality level, at
the reasonable discretion of Company.

    Subject to the terms of Article 29, Supplier shall allow Company’s end
customer to conduct onsite evaluations of Product, or allow for inspection of
Product by Supplier or Company, in accordance with Company’s end customer
inspection requirements.

21.8   Supplier shall perform a first article inspection and prepare a first
article inspection report whenever any of the following occur in respect of a
Product at Supplier’s location: Specification issue change, Material change,
manufacturing location change, new Material incorporated into Product, new
Material vendor added to the AVL, and at Company’s discretion, acting
reasonably, a process change or a Tooling change. The first article inspection
report shall be sent to Company by Supplier on or before arrival of the Product.
Supplier shall show the Comcode, Specification Issue number, and Order number on
the top of the first page of the first article inspection report. The report
should identify the specification element verified, the allowable tolerance, and
the actual measurements.

21.9   Prior to Product production approval, Supplier shall make available
(on-site at Company’s discretion and at Company’s request, acting reasonably), a
minimum quantity of sample Product produced in a continuous run on permanent
manufacturing equipment to Company’s designated representative for examination
and subsequent approval by Company. Supplier shall not make any shipments under
an Order prior to approval of such sample production units by Company. Unless
otherwise specified in this Agreement, the sample production units shall be
retained by and title shall vest in Company upon delivery in accordance with an
Order.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 33

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    Upon Company’s request, Supplier is expected to inspect Product samples to
all applicable Specifications, and then to provide this information, along with
a certificate of compliance, to Company.

21.10   Supplier shall meet the Product requirements defined in Specification
X-21284, “Lucent Technologies End Point Requirements for Soldered Electrical and
Electronic Subassemblies, Issue 4, dated March 21, 2001” as it may be modified
from time to time by Company through the issuance of an Engineering Change Order
in accordance with Article 67.3 and all other agreed to Specifications as listed
in the applicable Product Plan.       Supplier shall perform Environmental
Stress Testing (“EST”) as described in the applicable Product Plan.      
Supplier commits to establishing verification points throughout its
manufacturing and repair process. Supplier also commits to meeting the
verification point requirements described in the applicable Product Plan. The
scope of these verification points shall be to validate through visual and
mechanical inspections and tests, and with the use of statistically valid
sampling plans (e.g., per ANSI/ASQC Z1.4 and Z1.9-1993), that Product conforms
to applicable manufacturing, Product and process Specifications, standards of
acceptable workmanship, as well as other Specifications which may be provided by
Company. Supplier shall report inspection, test and repair data per Company’s
Specifications titled “MTRAP Data Collection Requirements” Issue 9, dated
August 4, 2004 and “E-1025 DCF Test Data Format Standard Reference” Issue 6.0 as
may be modified from time to time through issuance of an Engineering Change
Order in accordance with Article 67.3. The frequency for data collection will be
real or near-real time, at least once per day. The parties shall mutually agree
on schedule for deployment of MTRAP reporting if not in place as of the
Effective Date. Verification of in process data and corrective action associated
with this data may be requested by Company periodically. Company reserves the
right to make suggestions for improvement based on this data.       Within
ninety (90) days of the date of this Agreement, Supplier shall submit to Company
a propose quality plan for inspection of finished goods upon completion (also
known as “out of box inspection”).       Supplier shall continuously review
Product return data, including data from field returns, to ensure that the scope
of the verification process includes verification of the requirement(s) or
condition(s) under which the returned Product failed. Supplier shall perform a
detailed analysis of all returned Product found to be defective, identify root
cause, and implement any appropriate corrective action. Any Product found to be
defective shall be corrected before shipment to Company.   21.11   Supplier and
its subcontractors utilized in the manufacture and repair of Products pursuant
to this Agreement, except as otherwise agreed, shall be ANSI/ESDS20.20
registered by an accredited registrar as well as compliant with Specification
X-21342 Issue 1, dated January 12, 2001, titled “Lucent Technologies
Requirements for Electrostatic Discharge (“ESD”) Mitigation”, as may be modified
from time to time by Company through the issuance of an Engineering Change Order
in accordance with Article 67.3. Supplier’s and its subcontractors’ ability to
manufacture and handle ESD sensitive (ESD) Material or assemblies, except as
otherwise agreed, shall be evaluated and classified by Specification X-21341
Issue 2, dated May 1, 2003 entitled “Lucent Technologies Electrostatic Discharge
(ESD) Program Analysis Survey For Non-Lucent Technologies Locations”, as may be
modified from time to time by Company through the issuance of an Engineering
Change Order in accordance with Article 67.3 and such subcontractors shall work
to achieve and maintain a scoring classification of “Preferred” as defined in
Specification X-21341.   21.12   Supplier and its subcontractors shall store and
handle components per IPC/JEDEC J-STD-033 requirements and Company’s
Specification X-21377 entitled “Storage Requirements for Components used in
Lucent Technologies Products.” Any changes to Specification X-21377 will be
processed through the Engineering Change Order in accordance with Article 67.3.
At Company’s request, Supplier agrees to provide an internal document detailing
Supplier’s and such

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 34

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    subcontractor’s component storage and handling procedures and internal
audits of such procedures.

21.13   The procedure for Supplier responding to Company for Product
non-conformities detected by Company shall be as follows:       When a
Corrective Action Request is initiated by Company, a complaint notification
letter shall be sent by Company by electronic mail directly to Supplier’s
program manager (or other designated person) requesting a response with a
Corrective Action Plan. The Corrective Action Plan response shall include the
following information:

  (a)   the initial actions taken to contain the problem;     (b)   a
description of the root cause of the problem;     (c)   the proposed corrective
action or solution to the problem;     (d)   the actual or planned
implementation date of the corrective action;     (e)   the plans for verifying
that the corrective action was effective; and     (f)   the actual or planned
date of the verification of effectiveness.   Supplier’s response to Product
non-conformities detected by Company is expected to occur within the timeframe
described in the applicable Product Plan.

21.14   Supplier shall report circuit pack return rates for all Products
manufactured by Supplier for Company. Supplier shall prepare a corrective action
report when the circuit pack maximum return rate as set forth in the applicable
Product Plan is exceeded.

21.15   For all Products returned to Supplier by Company, Supplier shall perform
a failure mode analysis, which at a minimum shall be at the Material level.
Supplier shall record Material level failure modes and accumulate failed
Material found defective for the purpose of determining repetitive occurrences.
The corrective action status of the analysis of identified repetitive Material
failures shall be reported by Supplier to Company when requested. If upon
analysis Company returned Product is found to be within the Product workmanship
and functional Specifications (i.e., a no trouble found condition), Supplier
shall track these No Trouble Found conditions, invoice Company in accordance
with Attachment H and notify Company of such findings at a frequency described
in the applicable Product Plan, so that the appropriate investigative measures
may be taken to determine the root cause of why returned Product is NTF.

21.16   If [ *** ] after the last shipment date of any Product under this
Agreement, Company notifies Supplier that such Product shows evidence of an
Epidemic Condition (as defined below), Supplier shall prepare and propose a CAP
with respect to such Product within five (5) Business Days, or such extended
period as may be agreed to, of such notification, addressing implementation and
procedure milestones for remedying such Epidemic Condition(s). An extension of
this time frame is permissible upon mutual written agreement of the parties.    
  Upon notification by Company of the Epidemic Condition to Supplier, Company
shall have the right to postpone all or part of the shipments of unshipped
affected Product, by giving written notice of such postponement to Supplier,
pending correction of the Epidemic Condition. Such postponement shall
temporarily relieve Supplier of its shipment liability and Company of its
shipment acceptance liability.       Should Supplier contest the existence of an
Epidemic Condition or should Company reject the CAP, then Company shall have the
right to suspend all or part of its unshipped Orders for the

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 35

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    affected Product, without liability to Company until such time as a mutually
acceptable solution is reached.       An Epidemic Condition will be deemed to
exist when one or more of the following conditions occur and the Epidemic
Condition is due to the same root cause:

  (a)   failure reports or statistical samplings show that [ *** ] of Product
installed or shipped during any [ *** ] exhibit a highly objectionable symptom
(such as emissions of smoke, loud noises, deformation of housing) or other
symptoms of this type;     (b)   failure reports or statistical sampling show
one or more instances of Product tracked by Company to contain a potential
safety hazard (such as personal injury or death, fire, explosion, toxic
emissions, etc.);     (c)   return rate data indicates that the observed mean
time between failures (“MTBF”) is not meeting the predicted MTBF. Predicted MTBF
shall be calculated using one of the industry recognized standards including,
but not limited to, Bellcore GR332 (version 4, 5 or 6), AT&T Reliability
Handbook (ISBN # 0-442-31848-0), Mil Standard 217 E or F, Italtel Reliability
Prediction Handbook (IRPH93), or equivalent. When periodic monitoring of the
field data shows that a circuit pack’s MTBF is not being met, Supplier shall
report such condition to Company. At the same time Supplier shall perform a
ninety percent (90%) confidence interval analysis of the field data and
determine if such field data meets the predicted MTBF. If not, then this
constitutes an Epidemic Condition; and     (d)   Product dead on arrival (“DOA”)
failures exceed a mutually agreed to level, to be determined within six
(6) months of the Effective Date. For the purpose of this Agreement, DOA shall
be defined as any Product that during test, installation or upon its first use
fails to operate in accordance with the Specification. Visual, mechanical or
appearance DOA is defined as any Product containing one or more major defects
that would make the Product unfit for use or installation.

    Only major functional and visual, mechanical or appearance defects shall be
considered in determining Epidemic Condition. Product may be sampled or, at
Company’s option, one hundred percent (100%) audited at Company’s or Supplier’s
warehouses, factories or Company’s end customer locations. If Product is
sampled, the data must have ninety-five percent (95%) or better statistical
confidence.       An Epidemic Condition shall not include failures due to
Company supplied Specification, design, test, tooling, Materials, documentation,
or instruction.       In the event that Supplier develops a remedy for the
defect(s) that caused the Epidemic Condition and Company agrees in writing that
the remedy is acceptable, Supplier shall:

  (a)   incorporate the remedy in the affected Product in accordance with
Article 67;     (b)   ship all subsequent Product incorporating the required
modification correcting the defect(s) at no additional charge to Company
provided that the Epidemic Condition is due to a cause covered by the Warranty
in accordance with Article 22; and     (c)   repair and/or replace Product that
caused the Epidemic Condition, if determined by Company to be necessary. In the
event that Company incurs costs due to such repair and/or replacement, including
but not limited to labor and shipping costs and the root cause is caused by
Supplier, Supplier shall [***].

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 36

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    Supplier and Company shall agree as to the remedy’s implementation schedule.
Supplier shall use reasonable commercial efforts to implement the remedy in
accordance with the agreed-upon schedule.       Provided that the Epidemic
Condition is due to a cause covered by the Warranty in accordance with
Article 22, if Supplier is unable to develop a mutually agreeable remedy, or
does not adequately take into account the business interests of Company, as
reasonably agreed by the parties, Company may (a) develop and implement such
remedy and, in such case, implementation costs and risk of in-transit loss shall
be [ *** ], (b) cancel Orders without liability and return all Product affected
by such Epidemic Condition for [ *** ] after receipt of such returned Product
(with risk of loss or in-transit damage borne by Supplier) and/or (c) terminate
this Agreement without further liability to Company, subject to Article 12.  
21.17.   Supplier agrees to establish a traceability process for all its
facilities which manufacture Product for Company under this Agreement. This
process shall include a procedure for preserving the identity and origin of
Products and Material incorporated in the Products to isolate and recall suspect
Products from use and trace the cause of failure to specific lots or units of
Products.   21.18.   As part of a program of continuous improvement, Supplier
agrees to annually establish improvement goals for a series of key quality
objectives. These key objectives should include, but are not limited to:

  (a)   customer return rates and on time delivery as may be mutually agreed
upon by the parties;     (b)   certification test and Product workmanship
results; and     (c)   in-circuit, functional and final system Product test
yields.

    Supplier agrees to track and report performance against goals on at least a
monthly basis, and to commit the resources reasonably necessary for the
attainment of these goals.

ARTICLE 22 — WARRANTY

22.1   Supplier shall manufacture the Products in accordance with applicable
Specifications and repair or replace, as the parties may mutually agree, without
charge, any Products which are proved to be defective as a result of Supplier’s
workmanship or failure to comply with applicable Specifications provided that:

  (a)   Company shall promptly notify Supplier in writing upon discovery of any
defect due to the causes referenced to above; and     (b)   such defective
Product has been returned, freight charges prepaid, to Supplier’s designated
location within [ *** ] from the original delivery date by Supplier to Company
(the “Warranty Period”). If Supplier repairs any Product pursuant to this
Warranty, this Warranty shall apply to such Product for a period equal to the
greater of (i) six (6) months from the date the repaired Product is delivered to
Company, and (ii) the expiry of the initial Warranty Period for such Product.

    Commercially Purchased Items are expressly excluded from the Warranty set
out in this Article 22.   22.2   Company requires a RMA from the Supplier prior
to returning any Products. Such RMA shall not be unreasonably delayed or
withheld. All returned Products shall include documentation describing the
nature of the defect and under what conditions it occurred.

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 37

--------------------------------------------------------------------------------

 

Contract No. WR71050115

22.3   Company shall bear the cost of the return of Products to Supplier’s
premises as designated by Supplier from time to time. Supplier shall bear the
costs of the redelivery to Company’s premises of all Products which are found by
Supplier to be defective as set forth herein. In respect of any Products which
are found by Supplier not to be so defective, Company shall pay to Supplier an
NTF charge in accordance with Attachment H in addition to all redelivery costs.
In the case of Product repair and replacement, title and risk of loss of
returned Product will pass to Supplier upon delivery to Supplier, and title and
risk of loss of repaired or replacement Product will pass to Company upon
delivery to Company.

22.4   The Warranty shall not apply to:

  (a)   Products which Company, Ordering Companies, third parties under
Company’s direction, or Company’s end customers, have (i) caused to have been
misused, modified, damaged, placed in an unsuitable (as determined by the
Specifications) physical or operating environment, (ii) maintained improperly,
(iii) caused to fail by any product not supplied by Supplier, or (iv) caused to
fail by any service not supplied by Supplier;     (b)   any Products which have
been subjected to any repair not authorized in writing in advance by Supplier;  
  (c)   any defect caused by Company or a third party or by an error or omission
or design or other fault in any Specification or other drawings, documentation,
data, software, information, know-how or Product provided or specified by
Company;     (d)   subject to Article 22.5, any defect caused by, or arising
directly or indirectly out of or in connection with a defect in Material; or    
(e)   Products in respect of which Supplier has been requested by Company not to
perform Supplier’s standard inspection and mutually agreed upon test
procedure(s).

22.5   Any Products which are defective as a result of damage caused by Supplier
to Material shall be covered by the Warranty.

22.6   To the extent permissible, Supplier shall extend to Company the rights
and warranties that Supplier received from the original Material vendor for the
Material used in the manufacture of Products. Supplier shall work with Company
in good faith on other warranty claims which Supplier is able to assert against
the Material vendors. Supplier shall work together with Company to develop a
mutually agreeable process to review the terms and conditions of the Material
warranties provided by approved vendors in an effort, jointly with Company where
appropriate, to extend the terms of such Material warranties so that the
warranty period of such Material warranties becomes co-extensive with the
Warranty Period provided for in Article 22.1 in respect of the Product provided
by Supplier to Company.

22.7   Supplier warrants to Company that prototypes and preproduction units of
Product, and all other deliverables will be new, free from defects in
workmanship and will conform to and perform in accordance with the
Specifications (to the extent that Supplier is capable of assuring that
prototypes and preproduction units can conform to and perform in accordance with
the Specifications). These warranties shall continue for a period of time agreed
to by Company and Supplier after the deliverable Product is accepted by Company.
Supplier also warrants to Company that any development will be performed in a
workmanlike manner and to Company’s reasonable satisfaction.

22.8   AS RELATED TO PRODUCT WARRANTY, THIS ARTICLE 22 SETS OUT SUPPLIER’S SOLE
OBLIGATION AND LIABILITY (SUBJECT TO THE EPIDEMIC CONDITION PROVISIONS IN
ARTICLE 21), AND COMPANY’S EXCLUSIVE REMEDIES, FOR CLAIMS BASED ON DEFECTS IN OR
FAILURE OF ANY PRODUCT AND, TO THE EXTENT PERMISSIBLE BY APPLICABLE

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 38

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    LAW, REPLACES ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING IMPLIED
CONDITIONS OF SATISFACTORY QUALITY OR FITNESS FOR A PARTICULAR PURPOSE.

ARTICLE 23 — REPAIRS NOT COVERED UNDER SUPPLIER’S WARRANTY

23.1   In addition to Supplier’s repair and replacement Warranty obligations set
forth in Article 22, subject to the availability of Material and Tooling,
Supplier shall provide out of Warranty repair and replacement Services for
Mobility Products in accordance with Attachment H of this Agreement For all
Products or programs requiring repair, Company shall first offer to Supplier the
opportunity to effect such repairs in respect of such Product or program. If
Supplier elects not to provide repair services for a particular Product or
program, Company shall be entitled to repair such Products itself or to engage a
third party to effect such repairs. Where rates have not been set forth in
Attachment H for a particular geography, Company shall afford Supplier with an
opportunity to submit a Quote for the provision of such Services in accordance
with Article 4.1.

23.2   Company will be responsible for all return transportation costs for
Product returned for repair if such Product is not covered by the Warranty.
Company shall assume the risk of loss and damage until delivery to Supplier’s
repair facility and from Supplier’s repair facility back to Company. Supplier
shall assume the risk of loss and damage from the time that the returned Product
arrives at Supplier’s repair facility until delivery at Supplier’s repair
facility to Company, to Company’s selected freight carrier, or, if applicable,
delivery to Company’s integration, repair or distribution center, if such center
is at the same location as Supplier’s repair facility, in accordance with
Article 8.

23.3   For purposes of providing repair services hereunder, Supplier shall
maintain one repair hub in each of Asia, Europe and the Americas, at a location
agreed between Supplier and Company.

23.4   Where mutually agreed upon by the parties and to the extent available,
Supplier agrees to offer for sale to Company, during the Term, functionally
equivalent maintenance, replacement, and repair parts (“Parts”) for the Products
at the prices set forth in Supplier’s then current agreement with Company for
such Parts or, if no such agreement exists, at prices agreed upon by Company and
Supplier. If the parties fail to agree on a price, the price shall be a
reasonably competitive price for such Parts at the time of delivery.

23.5   Supplier agrees to establish and maintain electronic communications
facilities accessible by third party logistics providers to allow such logistics
providers to monitor the status of Products under repair by Supplier.

ARTICLE 24 — SCRAP PROCEDURES

24.1   Material or Products which: (i) fail to meet the required Specifications
prior to shipment; (ii) are considered Obsolete Inventory and Company does not
require storage by Supplier of such Obsolete Inventory, finished Product,
work-in-process Product; or (iii) cannot be repaired (collectively, “Scrap”),
will not be sold to a third party by Supplier except as approved by Company.
Disposition of such Scrap shall be in accordance with this Article 24. Supplier
shall advise Company of any Scrap and if the parties agree that such designated
Scrap is not suitable for reuse in the manufacture of Products in whole or in
part, such Scrap shall be provided only to Company’s designated Scrap dealer for
reclamation value to be accrued to Company, unless otherwise instructed by
Company. Supplier shall provide upon Company’s request a report outlining the
types and amounts of Scrap provided to Company’s scrap dealer.

24.2   Supplier shall have the sole responsibility for the disposition of any
hazardous or regulated waste in accordance with Article 34.

     ARTICLE 25 — QUARTERLY PERFORMANCE REVIEW PROCESS

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 39

--------------------------------------------------------------------------------

 

Contract No. WR71050115

25.1   Company and Supplier, through their respective representatives on the
Strategic Alliance Team, will participate in mutual performance reviews on a
quarterly basis, or as frequently as needed or requested by either Supplier or
Company (the “Quarterly Performance Review Process”) for the purpose of
reviewing the Performance Metrics and other business and technical information
agreed to by the parties.

25.2   The specific details (meeting dates and places, planning horizons, data
requirements, etc.) for the first of these Quarterly Performance Review Process
meetings will be agreed to between the respective parties within ninety
(90) Business Days of the date hereof.

25.3   Each party shall be entirely responsible for its own costs associated
with participating in the activities described in Article 25.1.

ARTICLE 26 — NOTICES

26.1   Unless otherwise specified herein, any notice, approval, request,
authorization or other communication required or permitted to be given hereunder
shall be in writing and shall be delivered in person, transmitted by telecopy or
similar means of recorded electronic communication or sent by registered mail,
charges prepaid, addressed as follows:

                  if to Company:   Lucent Technologies Inc.         600 Mountain
Avenue         Murray Hill, New Jersey 07974
 
      Attention:   Corporate Counsel
 
      Telecopier No.:   (908) 582-6869
 
                with a copy to:   Lucent Technologies Inc.         67 Whippany
Rd         Whippany, NJ 07981
 
      Attention:   Michael Fahrney
 
      Telecopier No.:   (973) 386-2876
 
                if to Supplier:   Celestica Corporation         9 Northeastern
Blvd.         Salem, New Hampshire 03079
 
      Attention:   General Manager
 
      Telecopier No.:   603-890-8450
 
                with a copy to:   Celestica Inc.         1150 Eglinton Avenue
East         Toronto, Ontario         M3C 1H7
 
      Attention:   Vice President and General Counsel
 
      Telecopier No.:   (416) 448-2817

    Any such notice or other communication shall be deemed to have been given
and received on the day on which it was personally delivered or transmitted by
telecopier, receipt confirmed (or, if such day is not a Business Day, on the
next following Business Day) or, if mailed, on the fifth (5th) Business Day
following the date of mailing or, if couriered overnight, on the second (2nd)
Business Day following the date of couriering; provided, however, that, if at
the time of mailing or within three (3) Business Days thereafter there is or
occurs a labor dispute or other event which might reasonably be expected to
disrupt the delivery of documents by mail, any notice or other communication
hereunder shall be delivered or transmitted by means of telecopier as aforesaid.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 40

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    Either party may change its address for service at any time by giving notice
to the other party in accordance with this Article 26.

ARTICLE 27 — DISPUTE RESOLUTION PROCESS

27.1   If an unresolved dispute arises out of, or relates to, this Agreement or
an Order, the parties agree to attempt to resolve the dispute in the following
manner:

  (a)   either party shall issue notice to the other party outlining the nature
of the dispute. The Strategic Alliance Team shall have ten (10) Business Days
after receipt of such notice to resolve the dispute;     (b)   in the event that
the dispute has not been resolved by the Strategic Alliance Team within such ten
(10) Business Day period, the dispute shall be submitted to the parties’
respective executives supporting the Strategic Alliance Team for resolution; and
    (c)   in the event that the dispute is not resolved by the parties’
executives supporting the Strategic Alliance Team within ten (10) Business Days,
the dispute shall be submitted to Supplier’s Chief Executive Officer and
Company’s Chief Procurement Officer for resolution within a further ten
(10) Business Days.

27.2   Nothing in this Article shall be construed to preclude either party from
seeking injunctive or other affirmative relief in order to protect its rights
pending dispute resolution in accordance with Article 27.1.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica
Proprietary   Page 41

--------------------------------------------------------------------------------

 

Contract No. WR71050115
SECTION II — GENERAL TERMS
ARTICLE 28 — ASSIGNMENT AND SUBCONTRACTING

28.1   Supplier shall have the right to subcontract any or all of its
obligations under this Agreement to an Affiliate of Supplier provided Supplier
remains responsible for the performance of such Affiliate. Supplier shall be
responsible to Company for all services performed by Supplier’s subcontractor(s)
if connection with the fulfillment of Supplier’s obligations under this
Agreement at any tier. Supplier shall cause its Affiliates to which it has
subcontracted any or all of its obligations under this Agreement in accordance
with this Article 28.1 to abide by the terms and conditions of this Agreement.
All references to Supplier in this Agreement shall be deemed to be, where
applicable, a reference to Supplier’s Affiliates to which Supplier has
subcontracted any or all of its obligations under this Agreement in accordance
with this Article 28.1. Supplier shall have the right to subcontract any of its
obligations to any third party subcontractor with the prior written consent of
Company, which consent shall not be unreasonably withheld.   28.2   This
Agreement shall inure to the benefit of, and shall be binding on and enforceable
by, the parties and their respective successors and permitted assigns. Neither
party may assign this Agreement or any part thereof without the prior written
consent of the other party, which consent shall not be unreasonably withheld or
delayed; provided, however, that either party may assign any part(s) of this
Agreement or this Agreement to any of its Affiliates or to a successor to all or
substantially all of its business, provided that (i) such assignee executes an
agreement with the non-assigning party and the assigning party whereby the
assignee agrees to be bound hereunder, and (ii) where the assigning party is
Company, Supplier is satisfied that the proposed assignee has the financial
capacity and creditworthiness to fulfill its obligations under this Agreement.  
28.3   In the event that Company intends to sell all or any part of a Product
line or all or a portion of its business to a third party and Company wishes to
maintain continuity of supply of such Products as part of the terms of such
sale, Company shall notify Supplier of such sale as soon as is reasonably
practicable prior to such sale (subject to confidentiality requirements).
Subject to Supplier: (a) executing an interim manufacturing agreement with such
third party, which contains confidentiality and intellectual property terms
agreeable to Supplier and such third party, (b) being satisfied, acting
reasonably, that the third party has the financial capacity and creditworthiness
to fulfill its obligations to Supplier under such agreement, Supplier shall
continue to manufacture such Products for such third party after such sale, on
the same economic terms as under this Agreement, for a period of [ *** ].
Supplier agrees to use good-faith efforts to negotiate a new manufacturing
supply agreement with such third party for such Products, prior to the end of
such [ *** ] period.

ARTICLE 29 — ATTENDANCE AT SUPPLIER’S FACILITY

  29.1   Upon reasonable prior notice and subject to complying with Supplier’s
plant rules and regulations, internal security and confidentiality requirements,
security clearance regulations and other procedures as applicable, Company may
place one or more personnel in Supplier’s facility at which Supplier
manufactures Products for Company under this Agreement to carry out the
functions Company may deem necessary in the portion of the facility in which
Supplier kits Material and manufactures, inspects, repairs, distributes and
ships Product. Compensation for such personnel shall be borne by Company.
Supplier agrees to furnish such personnel with reasonable working facilities, as
necessary, to perform their work, which shall include access during normal
working hours to areas where Product is manufactured, repaired, stored and
distributed, all at no charge to Company. If requested by Company, Supplier
shall also provide office space and support services as required at Company’s
expense at Supplier’s actual cost.

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 42

--------------------------------------------------------------------------------

 

Contract No. WR71050115
ARTICLE 30 — AUDIT

30.1   Supplier shall maintain accurate and complete records including, but not
limited to, (i) a physical inventory, if applicable, of all costs incurred under
this Agreement which may affect: (a) verification, re-determination, or revision
of Product prices under this Agreement; (b) termination charges payable by
Company under this Agreement; (c) all costs incurred for Tooling purchased under
this Agreement; (d) Product quality conformance; (e) compliance with approved
manufacturing processes and adherence to Company’s BOM and AVL; (f) Material
inventory used to manufacture Product; (g) conformance with Specifications; and
(h) volumes purchased and purchase prices paid for all Material procured in the
performance of this Agreement; and (ii) at Company’s option, for environmental
assessment purposes, all applicable records relating to the life cycle of any
Product manufactured under this Agreement.   30.2   The records referenced in
Article 30.1 shall be maintained in accordance with recognized commercial
accounting practices so they may be readily reviewed in accordance with Article
30.3 and shall be held until all costs and compliance with the terms of this
Agreement have been finally determined and payment or final adjustment of
payment under this Agreement or the necessary corrective action under this
Agreement has been taken.   30.3   Company shall, at its cost and expense, have
the right exercisable on a [ *** ] basis upon reasonable notice to Supplier
during Supplier’s normal business hours to examine and audit (“Audit”) the
records described in Article 30.1. The parties agree that such Audits shall
conform to procedures mutually agreed upon by the parties. No such audits shall
be made later than two (2) calendar year(s) after the later of (a) the final
delivery date of Product ordered or completion of Services rendered or (b) two
(2) years after the termination of this Agreement. If Company identifies any
issues or concerns related to such records and the pricing of the Product or the
Services, Company shall provide a statement to Supplier setting out in
reasonable detail the nature of such issues or concerns. Supplier and Company
shall attempt to resolve the matters in dispute in a timely manner and make such
adjustments, if any, to the pricing of the relevant Products or Services as may
be required. For certainty, Company acknowledges and agrees that any right to
review and Audit under this Article 30.3 may be limited by and is subject to any
confidentiality obligations that Supplier or its Affiliates may have to Material
vendors or other suppliers and subcontractors as well as limitations imposed by
Law or regulatory requirements.

ARTICLE 31 — BANKRUPTCY AND TERMINATION FOR FINANCIAL INSECURITY

31.1   Either party may terminate this Agreement by notice to the other party
(a) if the other party makes an assignment for the benefit of creditors (other
than solely an assignment of moneys due); or (b) if the other party evidences an
inability to pay debts as they generally become due, unless adequate assurance
of its ability to pay is provided within thirty (30) Business Days of such
notice.   31.2   If a proceeding is commenced under any provision of the United
States Bankruptcy Code or the bankruptcy and/or insolvency legislation of any
other jurisdiction, voluntary or involuntary, by or against either party, and
this Agreement has not been terminated, the non-debtor party may file a request
with the bankruptcy court to have the court set a date within sixty (60)
Business Days after the commencement of the case, by which the debtor party will
assume or reject this Agreement, and the debtor party shall cooperate and take
whatever steps necessary to assume or reject this Agreement by such date.

ARTICLE 32 — CHOICE OF LAW

32.1   This Agreement and all transactions under it shall be governed by the
laws of the State of New York excluding its choice of laws rules and excluding
the Convention for the International Sale of Goods. Each party agrees to submit
to the jurisdiction of any court where an action is commenced against the other
party based on a claim for which such party has agreed to indemnify the other
party under this Agreement. With respect to disputes between the parties, the
parties agree to submit to the jurisdiction of the State and federal courts of
New York.

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 43

--------------------------------------------------------------------------------

 

Contract No. WR71050115
ARTICLE 33 — COMPANY RESPONSIBILITIES

33.1   Company agrees to provide on a timely basis all Specifications, Material
that Company has agreed to furnish or supply to Supplier, Company Tooling and
Company Proprietary Information required to be furnished or supplied by Company
to Supplier in accordance with this Agreement and the Intellectual Property
License Agreement in order for Supplier to fulfill its obligations under this
Agreement, including Attachment H. Such Specifications, Company Proprietary
Information and other items or information shall be accurate and contain all
items and information necessary from Company for Supplier to fulfill its
obligations under this Agreement, failing which the process described in
Article 33.2 will be followed.   33.2   Supplier shall address any problems and
promptly notify Company of such problems which it (i) encounters in the
performance of its obligations under this Agreement, including Attachment H and
(ii) believes are related to causes attributable to Company. The parties will,
on a timely basis, jointly determine whether such process problems are so
attributable to Company. In such event, the Strategic Alliance Team shall agree
on all reasonable costs incurred by Supplier in connection with such process
problems and how such costs shall be addressed. Where such problems are so
attributable to Company, (i) Company shall be responsible for correcting such
problems and implementing solutions with the cooperation of Supplier, (ii) for
causes related solely to such problems, Supplier shall not be deemed in breach
of its delivery obligations under this Agreement, including Attachment H, nor
shall any applicable measure of Supplier’s performance, including performance
related to delivery, hereunder be affected, and (iii) for causes related solely
to such problems, Supplier shall have no liability for any delays in the
scheduled delivery date.

ARTICLE 34 — COMPLIANCE WITH LAWS

34.1   Each party and its agents shall, and shall cause its contractors and
subcontractors to, comply in performance of its obligations under this Agreement
at their own expense with all applicable local, federal, regional and
international laws, ordinances, regulations and codes, standards, directives and
international conventions and agreements to the extent that any of the foregoing
have the force of law by being directly enforceable by a governmental authority,
by a court or other proper tribunal (collectively, “Laws”).   34.2   Each party
will make commercially reasonable efforts to support the other party’s
compliance efforts under Sarbanes — Oxley Act of 2002.

ARTICLE 35 — CONFIDENTIAL INFORMATION

35.1   Any Company Proprietary Information provided or made available by Company
or its Affiliates to or coming into possession of Supplier and its Affiliates
and any Supplier Proprietary Information provided or made available by Supplier
or its Affiliates to or coming into the possession of Company and/or its
Affiliates shall be deemed for the purposes of this Agreement to be
“Confidential Information” of the party disclosing (“discloser”) such
information to the other party (“recipient”), except if such information
disclosed to recipient is: (i) in or becomes part of the public domain through
no fault of recipient; (ii) disclosed to recipient by a third party without
breach of any obligation or other restriction; (iii) known to recipient at the
time of disclosure and has been so documented prior to receipt thereof; or
(iv) independently developed by recipient without access to any information
furnished to it by discloser and has been or is so documented.   35.2   All
Confidential Information shall, as between the parties, be owned and remain the
sole and exclusive property of discloser. All Confidential Information of
discloser shall be held in confidence by recipient, shall be protected from all
harm, loss, theft and unauthorized access and, if in a form of any physical
medium of any kind, returned by recipient upon request of discloser. Upon the
termination or expiration of this Agreement, each party shall return to the
other party all

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 44

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    Confidential Information of the other party in its possession or certify in
writing that such Confidential Information has been destroyed.

35.3   Recipient shall not use the Confidential Information for any purposes
other than those contemplated under this Agreement.   35.4   The existence and
terms of this Agreement shall be treated as Confidential Information; provided,
however, that either of the parties may disclose the existence and terms of this
Agreement to: (i) their respective legal and financial advisors; (ii) their
underwriters and their respective counsel, as part of their due diligence in
connection with any offering of securities of such party; (iii) their lenders
and their counsel, as part of their due diligence in connection with any
financings; or (iv) stock exchanges, securities commissions or other similar
bodies (including in public filings), to the extent required by Laws.   35.5  
The parties agree that Confidential Information shall be disclosed to only those
people within their respective organizations who have a need to know the
information for the purposes of this Agreement or to those third party
consultants, other than those referred to in Article 35.4, and subcontractors
who have agreed to be bound by the confidentiality terms contained herein.  
35.6   Each party represents and warrants that it has the right to disclose to
the other the information disclosed under this Agreement. Neither party shall,
without consent or approval, at any time disclose to the other party any
information that is confidential or otherwise restricted by reason of any oral,
written or implied agreement or other understanding it has with any third party.
  35.7   Each party acknowledges that monetary damages may provide an inadequate
remedy in the event of a breach of this Article by the other party, and each
party shall be entitled to injunctive or other affirmative relief and/or to give
notice of default pursuant to this Agreement, or both against the other party.

ARTICLE 36 — DEFAULT

36.1   Notwithstanding any other provision of this Agreement, including, but not
limited to Article 11 and Article 27, but subject to Article 43.1:

  (a)   Subject to Article 36.1(c), in the event Supplier shall be in material
breach of any of the terms, conditions, or covenants of this Agreement and such
breach shall continue for a period of thirty (30) Business Days after the giving
of written notice to Supplier thereof by Company, then in addition to all other
rights and remedies which Company may have at law or equity or otherwise,
Company shall have the right to terminate this Agreement without any charge to
or obligation or liability of Company (other than as set forth in Article 12).  
  (b)   Subject to Article 36.1(c), in the event Company shall be in material
breach of any of the terms, conditions, or covenants of this Agreement and such
breach shall continue for a period of sixty (60) Business Days after the giving
of written notice to Company thereof by Supplier, then in addition to all other
rights and remedies which Supplier may have at law or equity or otherwise,
Supplier shall have the right to terminate this Agreement without any charge to
or obligation or liability of Supplier.     (c)   Prior to issuing a notice of
material breach to the other party in accordance with Article 36.1(a) or (b), as
applicable, the notifying party shall have requested an emergency meeting of the
Strategic Alliance Team to consider and resolve the claimed material breach.
Should the Strategic Alliance Team fail to agree on a resolution to the claimed
material breach within seven (7) days of such request, the notifying party may
declare the other party in material breach and may serve notice in accordance
with Article 36.1(a) or (b), as applicable.

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 45

--------------------------------------------------------------------------------

 

Contract No. WR71050115

ARTICLE 37 — DEVELOPED INFORMATION AND INVENTIONS

37.1   Supplier agrees that Supplier shall and, where applicable, shall have
Supplier’s Affiliates, employees, consultants, subcontractors (but only those
subcontractors permitted pursuant to Article 28.1), representatives or agents
(collectively “Supplier Associates”) disclose and furnish promptly to Company
all Company IP. Supplier further agrees that all Company IP, other than any
Background Information incorporated therein, shall be: (i) solely and
exclusively owned (including all right, title and interest thereto) by Company,
and Supplier shall take all reasonable actions which Company may request in
order to vest and document such ownership in Company, (ii) kept in confidence by
Supplier and Supplier Associates in accordance with Article 35, and (iii) used
by Supplier and Supplier Associates only for the purposes of performing
Supplier’s obligations in accordance with the terms of this Agreement. If such
Company IP includes, or requires for its use, any Background Information,
Supplier agrees to grant and hereby grants to Company an irrevocable,
non-exclusive, royalty-free, non-transferable, sub-licensable (as provided in
Article 37.4) license to use and copy such Background Information to the extent
required for Company to manufacture, distribute, test, repair or service
Products. Ownership of the Background Information shall remain with Supplier.
Company agrees to grant and hereby grants to Supplier a revocable (upon
termination of this Agreement), non-exclusive, royalty-free, non-transferable
license to use and copy Company IP, but only to the extent required for Supplier
or Supplier Associates to manufacture, distribute, test, repair or service
Products under this Agreement.   37.2   Any Developed IP which is developed
jointly by the parties and which is not Company IP (“Co-Developed IP”) shall be
owned jointly by the parties, each of which shall have an equal undivided joint
interest therein. Company and Supplier agree that they shall each have the right
to use the Co-Developed IP and grant licenses for the use of the Co-Developed IP
without the consent of, and without accounting to, the other party.   37.3   The
parties acknowledge and agree that as between Supplier and Company, Supplier
shall solely and exclusively own all right, title and interest in and to all
aspects of all Developed IP originated or developed by Supplier or Supplier
Associates which is not Company IP or Co-Developed IP (“Supplier IP”). Where
Supplier IP is necessary to permit Company to ensure Product continuity,
consistency and/or ongoing sources of supply (such Supplier IP being “Supplier
Product IP”), Supplier agrees to grant and hereby grants to Company an
irrevocable, non-exclusive, royalty-free, non-transferable, sub-licensable (as
provided in Article 37.4) license to use and copy such Supplier Product IP, but
only to the extent required for Company to manufacture, distribute, test, repair
or service Products.   37.4   Company may grant a sub-license to the Background
Information licensed to it in Article 37.1 and/or a sub-license to the Supplier
Product IP licensed to it in Article 37.3, but only for the purpose of any such
sub-licensee (“Sublicensee”) manufacturing, distributing, testing, repairing or
servicing Products for Company, provided that any Sublicensee of the Background
Information or the Supplier Product IP acknowledges in writing, for the benefit
of Supplier, that it will observe and be bound by all of Company’s
confidentiality obligations under this Agreement in respect of the sublicensed
Background Information or Supplier Product IP, as the case may be. Background
Information and Supplier IP shall be deemed to be Confidential Information of
Supplier pursuant to Article 35.   37.5   The parties agree that this Article 37
shall be subject to the terms and conditions of any development agreement
relating to the subject matter herein, which the parties may enter into
subsequent to the Effective Date, to the extent such terms and conditions are
inconsistent with terms of this Article 37.

ARTICLE 38 — DOCUMENTATION NEEDED FOR PREFERENTIAL DUTY TREATMENT

38.1   Supplier shall provide Company with a valid, accurately completed
certificate of origin prior to the first shipment of Product sufficient to be
used by Company as proof of eligibility for any applicable

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 46

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    duty preferential treatment programs. Supplier further agrees to cooperate
with Company in the substantiation of preferential duty program claims,
preparation of responses to customs inquiries, or other treaty claims that arise
out of Product shipped under this Agreement or any Order. Supplier shall notify
Company prior to making any pricing or sourcing changes for Product that may
affect the application of preferential duty treatment programs.

ARTICLE 39 — DUTY DRAWBACK

39.1   Company reserves the right to claim duty drawback on all purchases from
Supplier, and Supplier shall cooperate by providing all documentation (that is
required by Company to claim duty drawback) available to Supplier in its
organization for Product which may be subject to duty drawback; provided that
Supplier shall not be required to obtain any additional documentation from any
Material Vendor.

ARTICLE 40 — ENVIRONMENTAL MANAGEMENT SYSTEMS

40.1   Supplier warrants with respect to Supplier’s manufacturing and repair
operations involved in the performance of Supplier’s obligations under this
Agreement that it intends no later than three (3) years from the date of
acquisition of such manufacturing and repair services to implement elements of
an internationally recognized Environmental Management System (“EMS”) standard,
for example ISO 14001: 1996, or the Eco-Management and Audit Scheme (“EMAS”) for
certification by an accredited third party registrar; or, where such
certification already exists, that it will maintain such certification in good
standing with the third party registrar.   40.2   In the event that Company
requests Supplier to accelerate the adoption of an EMS standard in order to
enable Company to meet an end customer’s requirement, the parties shall
negotiate in good faith the timing for achieving such standards or
certifications.   40.3   Supplier commits to provide to Company, on a regular
basis, environmental performance data on both Products and processes, as may be
mutually agreed by the parties.

ARTICLE 41 — ENVIRONMENTALLY HAZARDOUS SUBSTANCES

    The parties agree to re-negotiate this Article 41.1 to address Company
requirements and any Services to be provided related to the European Union RoHS
directive.   41.1   Supplier warrants to Company that none of the substances
that have been banned by Company for Products, processes and/or packaging
materials pursuant to Company Specification # KT 010-160-006-EHS02 Issue 1 dated
May 19, 2000, titled “Lucent Technologies’ Listing of Banned Substances for
Products and Packaging”, as may be modified from time to time by Company through
the issuance of an Engineering Change Order in accordance with Article 67.3, is
used or will be used by Supplier in the manufacture, processing or packaging of
Product supplied to Company, or that it is working to reduce and will, in an
expeditious manner, eliminate their use. If Supplier is not the manufacturer of
the Material used in the Product, Supplier shall work with the Material vendor
to reduce and will, in an expeditious manner, eliminate the use of such
substances. Upon request, Supplier shall provide to Company Certificates of
Compliance certifying that the packaging and/or packaging Material provided
under this Agreement are in compliance with the requirements set forth above in
this Article 41.1.   41.2   For those Products where Supplier has any level of
design control (including Material and/or vendor selection), Supplier shall:

  (a)   use reasonable efforts to minimize the use of environmentally hazardous
substances in such Products, processes and packing Materials as listed in
Company Specification X-21314 Issue 1 dated January 13, 2000, titled “Use of
Environmentally Hazardous Substances in Product Design”, as may be modified from
time to time by

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 47

--------------------------------------------------------------------------------

 

Contract No. WR71050115

      Company through the issuance of an Engineering Change Order in accordance
with Article 67.3;

  (b)   establish and/or maintain a program of tracking the use of
environmentally hazardous substances, at a minimum covering the substances
referenced in Company Specification X-21314, in any such Products or Services,
including any packing materials, provided to Company by Supplier;     (c)  
report to Company the use of environmentally hazardous substances, at a minimum
covering the substances referenced in Company Specification X-21314, in any
Products or Services, including any packing Materials, provided to Company.
Updates on usage will be provided to Company by Supplier on a per change basis;
and     (d)   upon Company request, provide, within a reasonable time frame,
information on Materials added to Specification X-21314.

41.3   Company represents that immediately prior to August 31, 2001, it was
responsible for procuring the Material and Commercially Purchased Items in the
United States for use in the Products and that it manufactured and processed
such Materials and Products in accordance with Article 41.1.

ARTICLE 42 — EXPORT CONTROL

42.1   Supplier shall not use, distribute, transfer or transmit any Products,
software or technical information (even if incorporated into other Products)
provided to it by Company under this Agreement except in compliance with all
applicable export laws and regulations (the “Export Laws”). Supplier shall not,
directly or indirectly, export or re-export the following items to any country,
without the appropriate export authorization, as specified in the applicable
Export Laws: (a) software or technical data disclosed or provided to Supplier by
Company or Company’s Affiliates; or (b) the direct product of such software or
technical data. The obligations stated in this Article 42.1 will survive the
expiration, cancellation or termination of this Agreement or any other related
agreement.

ARTICLE 43 — FORCE MAJEURE

43.1   Neither party shall be held responsible for any delay or failure in
performance of any part of this Agreement to the extent such delay or failure is
caused by fire, flood, strike, civil, governmental or military authority, act of
God, or other similar causes beyond its control and without the fault or
negligence of the delayed or non-performing party or its subcontractors.
Supplier’s liability for loss of or damage to Company’s Product, Material or
Tooling in Supplier’s possession or control shall not be modified by this
Article 43.1. When a party’s delay or nonperformance due to a cause referred to
in this Article 43.1 continues or may be reasonably expected to continue for a
period of at least thirty (30) Business Days, the other party may terminate, at
no charge except for the expressed liabilities set forth in Article 12, any
affected Order under this Agreement. When a party’s delay or nonperformance due
to a cause referred to in this Article 43.1 continues or may be reasonably
expected to continue for a period of at least ninety (90) Business Days, the
other party may terminate, at no charge except for the expressed liabilities set
forth in Article 12, the Agreement.

ARTICLE 44 — IDENTIFICATION

44.1   Neither party shall, without the other party’s prior written consent or
request as set out in Article 54.2, make public use of any trade name,
trademark, logo, or any other designation or drawing of such other party or its
Affiliates.

ARTICLE 45 — IMPLEADER

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 48

--------------------------------------------------------------------------------

 

Contract No. WR71050115

45.1   Supplier shall not implead or bring an action against Company based on
any claim by any person for personal injury or death to an employee of Company
for which Company has previously paid or is obligated to pay worker’s
compensation benefits to such employee or claimant and for which such employee
or claimant could not otherwise bring legal action against Company.

ARTICLE 46 — INDEMNITY

46.1   Supplier shall indemnify, defend and hold harmless Company and its
Affiliates against claims and actions brought by or on behalf of third parties
(other than Affiliates of Company) in respect of any Losses to such third
parties that may arise or be asserted, based directly or indirectly, upon death
or personal injury or damage of any kind to any person or property claimed to
have resulted from the gross negligence or willful acts of Supplier or any
defect in Supplier’s workmanship (excluding defects caused by or arising,
directly or indirectly, out of any Specifications or other Company Proprietary
Information supplied or written instructions given by, or on behalf of, the
Company) in any of the Product sold to, or Services supplied to, Company
hereunder or due to failure to comply with the Specifications established
hereunder except to the extent that any such Losses are due to the gross
negligence or willful acts of Company or its Affiliates or their respective
officers, employees or agents.   46.2   Company shall indemnify, defend and hold
harmless Supplier and its Affiliates against all claims and actions brought by
or on behalf of third parties (other than Affiliates of Supplier) in respect of
any Losses to such third parties that may arise or be asserted, based directly
or indirectly, upon death or personal injury or damage of any kind to any person
or property claimed to have resulted from the gross negligence or willful acts
of Company or where Supplier has complied with the Specifications and/or with
the Company Proprietary Information supplied and Company’s manufacturing
processes and written instructions given by, or on behalf of, the Company in
manufacturing the Product, except to the extent that any such Losses are
attributable to the gross negligence or willful act(s) of Supplier or its
Affiliates, and their respective officers, employees or agents.

ARTICLE 47 — INFRINGEMENT

47.1   Supplier shall indemnify, defend and save harmless Company, its
Affiliates and their customers, agents, officers, directors, and employees (all
referred to in this Article 47.1 as “Company”) from and against any Losses that
result from any claims (referred to in this Article 47.1 as “Infringement
Claims”) brought against Company by or on behalf of a third party (other than an
Affiliate of Company) of which Supplier is promptly notified in writing by
Company, arising from or in connection with the violation of a third party’s
proprietary rights, including trade-secret, proprietary-information, trademark,
copyright or patent rights, in connection with the performance by Supplier of
its obligations under this Agreement, except for such claims for which Company
shall indemnify Supplier in accordance with Article 47.2. Supplier shall
(notwithstanding Article 84.3) be solely in control of defending or settling, at
its own expense, any demand, action, or suit on any such Infringement Claim.
Company shall cooperate in good faith and assist Supplier, at Supplier’s
expense, to defend any such Infringement Claim, and Company shall make no
statement or take any action which might hamper or undermine Supplier’s defense
or settlement thereof.   47.2   Company shall indemnify, defend and save
harmless Supplier, its Affiliates and their consultants, representatives,
customers, agents, officers, directors, subcontractors (but only those
subcontractors permitted pursuant to Article 28.1) and employees (all referred
to in this Article 47.2 as “Supplier”), from and against any Losses that result
from any claims (referred to in this Article 47.2 as “Infringement Claims”)
brought against Supplier by or on behalf of a third party (other than an
Affiliate of Supplier) of which Company is promptly notified in writing by
Supplier, arising from or in connection with the violation of any third party’s
proprietary rights, including trade-secret, proprietary-information, trademark,
or copyright or patent rights, in connection with the performance by Supplier of
its obligations under this Agreement which arise: (i) from the compliance by
Supplier with written Specifications furnished or supplied by Company; (ii) from
the combination by Company of a Product with other equipment, products or
apparatus not furnished

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 49

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    by Supplier; (iii) from the material modification of Product by Company made
after delivery by Supplier; (iv) from the compliance by Supplier with any
process or method of manufacture, assembly or testing at the express written
request of Company; or (v) from the use by Supplier of the Licensed Technical
Information, Licensed Trademarks or Licensed Software (as defined in the
Intellectual Property License Agreement) as furnished by Company, but only to
the extent that such Infringement Claim is specifically based on such Licensed
Technical Information, Licensed Trademarks or Licensed Software and not on any
other information, software or processes which may be used in conjunction with
the Licensed Technical Information, Licensed Trademarks or Licensed Software.
Company shall (notwithstanding Article 84.3) be solely in control of defending
or settling, at its own expense, any demand, action, or suit on any such
Infringement Claim to the extent that Company has given an indemnity pursuant to
this Article 47.2. Supplier shall cooperate in good faith and assist Company, at
Company’s expense, to defend any such Infringement Claim, and Supplier shall
make no statement or take any action which might hamper or undermine Company’s
defense or settlement thereof. Company’s obligations to indemnify Supplier under
subsection (v) of this Article 47.2 shall only apply to Infringement Claims
(i) which arise during the term of this Agreement and (ii) with respect to which
an infringement claim is filed prior to six (6) years after the termination of
this Agreement. Except for claims which (A) fall within the Company indemnity
provided for in this Article 47.2, and (B) arise out of the same subject matter
as the claims specifically identified in Schedule 3.12(b) to the Asset Purchase
Agreements (all of which claims shall not be included for the purposes of the
calculation of the limitation of liability provided for under Section 9.3(f) of
the Asset Purchase Agreements), the indemnities provided by Company under this
Article 47.2 shall be subject to the limitation of liability provided for in
Section 9.3(f) of the Asset Purchase Agreements.

ARTICLE 48 — INSURANCE

         
48.1
  (a)   Supplier shall maintain and, unless the parties otherwise agree, cause
Supplier’s subcontractors to maintain the following minimum insurance limits and
coverages during the term of this Agreement:

  (i)   worker’s compensation insurance as prescribed by the law of the State or
nation in which work is performed by Supplier or Supplier’s subcontractors under
this Agreement; and employer’s liability insurance with limits of at least
$500,000 for each occurrence;     (ii)   automobile liability insurance, if the
use of motor vehicles is required in connection with the performance of
Supplier’s obligations under this Agreement, with limits of at least $1,000,000
combined single limit for bodily injury and property damage for each occurrence;
    (iii)   commercial general liability (CGL) ISO 1988 or later occurrence form
of insurance including contractual liability, products/completed operations with
limits of at least $1,000,000 combined single limit for bodily injury and
property damage liability for each occurrence. This insurance should be
maintained for a period of at least three (3) years after termination of this
Agreement;     (iv)   excess/umbrella liability insurance with limits of at
least $10,000,000 per occurrence and in the aggregate, following form of primary
employer’s liability, automobile liability and commercial general liability
insurance policies;     (v)   all-risk property insurance including business
interruption in an amount equal to one-hundred percent (100%) of the replacement
cost value of any building and/or equipment involved under this Agreement.
Company shall be named as a loss payee as its interests may appear under this
Agreement; and

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 50

--------------------------------------------------------------------------------

 

Contract No. WR71050115

  (vi)   where applicable, transit insurance including inland and ocean cargo
with limits equal to one-hundred percent (100%) of the replacement cost value of
the property being shipped.

  (b)   All CGL and automobile liability insurance shall designate Company, its
Affiliates and subsidiaries, its directors, officers and employees as additional
insureds.     (c)   All such insurance should be primary and non-contributory
and is required to respond and pay prior to any other insurance or
self-insurance available. Any other coverage available to Supplier shall apply
on an excess basis. Supplier and its insurer(s) and anyone claiming by, through,
under or on Supplier’s behalf shall have no claim, right of action or right of
subrogation against Company and its end customers based upon any loss or
liability insured against under the foregoing insurance.     (d)   Supplier
shall, and shall cause its subcontractors to, furnish prior to the start of work
by Supplier and/or Supplier’s subcontractors under this Agreement, Certificates
of Insurance or adequate proof of the foregoing insurance including, if
specifically requested by Company, copies of the endorsements and insurance
policies. Company shall be notified at least thirty (30) Business Days prior to
cancellation of or change in any such policy. Insurance companies providing such
coverage shall be rated by A.M. Best with at least an A- rating.

48.2   Supplier shall allow Company’s representatives and representatives of
Company’s insurance carrier to inspect Supplier’s plant(s) at which work is
performed by Supplier under this Agreement at all reasonable times for fire,
flood and other hazards to Company’s property or to any other property for which
Company is or may be responsible or that Company must rely upon for the
performance of this Agreement.

ARTICLE 49 — INVOICING FOR PRODUCTS OR COMMERCIALLY PURCHASED ITEMS

49.1   Orders will be invoiced based on price in effect at time of delivery and
shall be paid in accordance with Article 7.   49.2   Unless otherwise specified
in an Order and subject to the Flexible Delivery Terms outlined in Attachment G,
for each delivery or shipment of Products or Commercially Purchased Items,
Supplier shall: (a) render an original invoice, showing Agreement and Order
number; (b) render separate invoices for each shipment within twenty-four
(24) hours after the preceding shipment; and (c) mail invoices to the address
shown on the Order. Unless otherwise specified in an Order, if prepayment of
transportation charges is authorized, Supplier shall include the transportation
charges from the delivery point to the destination as a separate item on the
invoice, stating the name of the carrier used.   49.3   Supplier’s invoices for
every international shipment of Product or Commercially Purchased Items will
also include the following information for each item shipped: (a) a complete
noun description in English (unless otherwise specified) consistent with the
harmonized tariff schedule, (b) a statement as to the country of origin of the
Product or Commercially Purchased Item, (c) Company’s Comcode for the Product or
Commercially Purchased Item, (d) the price paid or payable by Company for the
Product or Commercially Purchase Item shipped, (e) related assists, (f) an
itemization of all charges for services related to the international shipment of
the Product or Commercially Purchased Item and whether these charges are
included in the price paid or payable, (g) Supplier’s identification number, or
in the absence of such number, the full address of Supplier, (h) the terms of
sale, and (j) if required by the Law of the destination country, a list of all
serial numbers for Products shipped.

ARTICLE 50 — INVOICING FOR SERVICES

50.1   Unless otherwise specified in an Order, Supplier’s invoices for Services
shall be rendered upon completion of the Services as defined in the applicable
Statement of Work or Order and shall be

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 51

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    payable in accordance with the terms set forth in Article 7 when the
Services as defined in the applicable Statement of Work or Order have been
performed to the reasonable satisfaction of Company.

ARTICLE 51 — LIMITATION OF LIABILITY

51.1   NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, IN
NO EVENT SHALL EITHER PARTY BE LIABLE FOR INDIRECT, INCIDENTAL, SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS OR LOST
REVENUES OF THE OTHER PARTY) OF THE OTHER PARTY, ITS SUCCESSORS, ASSIGNS OR
THEIR RESPECTIVE AFFILIATES, AS A RESULT OF OR ARISING FROM THIS AGREEMENT,
REGARDLESS OF WHETHER SUCH LIABILITY ARISES IN TORT, CONTRACT, BREACH OF
WARRANTY, INDEMNIFICATION OR OTHERWISE. [ *** ]   51.2   Each party shall use
commercially reasonable efforts to notify the other party in accordance with
Article 26 upon becoming aware of any claim under this Agreement and agrees to
take commercially reasonable steps to mitigate any Losses that may arise from
such claims.

ARTICLE 52 — LIQUIDATED DAMAGES

52.1   Supplier acknowledges and agrees that there may be certain circumstances
under which Supplier may accept liability for a portion of the liquidated
damages that may be payable by Company to its end customers as a result of
Supplier’s late delivery of Products. In such an event, the Strategic Alliance
Team will determine the conditions under which some portion of such liquidated
damages may be apportioned to Supplier and the appropriate reward Supplier
should receive in exchange for accepting liability for such damages.

ARTICLE 53 — MANUFACTURING RIGHTS

53.1   If at any time during the Term of this Agreement, Supplier is unable or
unwilling to (a) deliver the Product requested by Company in full compliance
with Company’s Specifications and/or (b) meet, in all material respects, the
delivery requirements of Company and at prices which conform to the terms of
this Agreement and/or (c) address Company’s business need (market or otherwise
driven) to establish localized manufacturing in certain countries or regions of
the world or, (d) upon expiration or termination of this Agreement, Supplier
agrees to sell to Company at Company’s request any special tooling, or equipment
which has been purchased by Supplier from Company and is used uniquely by
Supplier for the manufacture of Products for Company. Supplier agrees to sell to
Company at Company’s request any other special tooling or equipment which
Supplier owns and is used uniquely by Supplier for the manufacture of Products
for Company, providing that Supplier does not reasonably anticipate that it
shall need such tooling or equipment for the manufacture of products for any
other customer within the subsequent six (6) months. Supplier also agrees to
sell to Company at Company’s request, Material that is uniquely required to
either manufacture the Product or to have the requested Product manufactured
elsewhere. Prices charged by Supplier to Company for such tooling, equipment or
Material shall be the net book value thereof at the time of such transfer from
Supplier to Company. Such tooling, equipment or Material shall be removed on a
mutually agreeable basis without a significant delay from Supplier’s facility in
a manner which will minimize interruptions to Supplier’s obligations and
commitments to Company and other customers of Supplier.   53.2   Supplier hereby
agrees to maintain, in working condition for the Term of this Agreement, any
such tooling or test equipment purchased from Company which Supplier has
continued to use, performing all routine and other maintenance as may be
required in order to maintain the tooling and test equipment at the same level
of functionality as when Supplier purchased such tooling and test equipment from
Company. During the Term of this Agreement, Supplier shall not sell such tooling
and test equipment to any third party without the prior written consent of
Company and Company shall always have the right of first refusal to repurchase
the tooling and test

 

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 52

--------------------------------------------------------------------------------

 

Contract No. WR71050115
equipment at the net book value thereof. Company shall not incur any additional
expenses or costs as the result of the sale of any equipment initiated by
Supplier.
ARTICLE 54 — MARKING

54.1   All Product or Commercially Purchased Items furnished under this
Agreement shall be marked for identification purposes in accordance with the
Product and packaging Specifications as set forth by Company’s ordering location
or elsewhere in this Agreement and shall indicate the following:
(a) Product/serial number; (b) month and year of manufacture; and (c) country of
origin.   54.2   Upon Company’s written request, trademarks, trade names,
insignia, symbols, decorative designs or packaging designs of Company, or
evidences of Company’s inspection (each, “Insignia”) shall be properly affixed
by Supplier to the Product furnished or its packaging. Such Insignia shall not
be affixed, used or otherwise displayed on the Product furnished or in
connection therewith without written approval by Company. The manner in which
such Insignia will be affixed must be approved by Company in accordance with
standards established by Company. Company shall retain all right, title and
interest in any and all packaging designs, finished artwork and separations
furnished to Supplier. This clause does not reduce or modify Supplier’s
obligations under Articles 35 and Article 44 and with respect to the Licensed
Trademarks as set forth in the Intellectual Property License Agreement.

ARTICLE 55 — MINORITY, WOMEN AND DISABLED VETERAN OWNED BUSINESS ENTERPRISES

55.1   It is Company’s policy that minority, women and disabled veteran owned
business enterprises (“MWDVBEs”) as defined in Attachment L shall have the
maximum practicable opportunity to participate in the performance of this
Agreement. Supplier agrees to use its good faith efforts to award subcontracts
to carry out this policy to the fullest extent consistent with the efficient
performance of this Agreement. Supplier agrees that MWDVBEs will be fairly
considered as subcontractors and suppliers under this Agreement.   55.2  
Nothing in this Article shall affect or diminish Supplier’s obligations under
this Agreement.   55.3   Supplier shall submit to Company monthly reports of
work with those qualified MWDVBEs which have been previously identified in
writing by Company as MWDVBEs. Such periodic reports shall state separately for
MBEs, WBEs and DVBEs the subcontracted work that is attributable to Company. In
instances where direct correlations cannot be determined, such MWDVBE payments
may be established by Supplier comparing Company’s payments to Supplier, in that
period, to total payments to Supplier from all of its customers, in that period,
and then arriving at Company’s portion of such MWDVBE payments.   55.4   The
parties agree to discuss any MWDVBE requirements that Company’s customers may
have for facilities in the United States where Supplier manufactures and/or
repairs Products for Company.

ARTICLE 56 — INTENTIONALLY DELETED
ARTICLE 57 — OFFSET CREDITS

57.1   Orders issued pursuant to this Agreement are placed with the expectation
of current and/or anticipated future offset and localization obligations of
Company or Ordering Companies or their designated assignees to the government of
the country in which the end customer resides and that requires the provision of
offset and localization. Supplier agrees to provide reasonable assistance to
Company or Ordering Companies or their designated assignees in any reasonable
efforts to secure offset credit from the government of the country in which the
end customer resides in an amount equal to the value of the Orders placed under
this Agreement.

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 53

--------------------------------------------------------------------------------

 

Contract No. WR71050115

ARTICLE 58 — OFFSETTING OF INVOICES

58.1   The parties agree that the process of offsetting invoices (being the
process whereby the first party sets off and applies any indebtedness, liability
or obligations of the second party against any indebtedness, liability or
obligations of the first party to the second party) is not an acceptable process
by either party except under extenuating circumstances. Immediately following
the ninetieth (90) day after the date hereof, the parties will establish a team
to mutually agree to those extenuating circumstances under which offsetting of
invoices can occur. If the parties cannot agree to those extenuating
circumstances and the processes under which offsetting of invoices can occur
within thirty (30) days of the date that the team is established, the issue will
be escalated to the Strategic Alliance Team which will have an additional period
of thirty (30) days to address this issue and define the appropriate extenuating
circumstances and the processes.   58.2   In no event shall either party offset
an invoice against the other party until such time as the extenuating
circumstances and the processes have been agreed to by the parties pursuant to
Article 58.1.

ARTICLE 59 — ORDERING COMPANIES AND SUPPLIER ENTITIES

59.1   Company may designate in writing from time to time any of its Affiliates
as an “Ordering Company” under this Agreement. Notwithstanding anything to the
contrary in this Agreement, Company may revoke the designation of any entity as
an Ordering Company at any time.   59.2   Each Ordering Company shall be
eligible to order Products, Commercially Purchased Items and Services on the
same applicable terms and conditions, including the same prices, as set forth in
this Agreement; provided that (i) such Ordering Company shall have executed and
delivered to Supplier a notice in the form of Attachment O, (ii) such Ordering
Company shall have executed and delivered to Supplier such further agreements,
documents or instruments as Supplier may request, acting reasonably, and
(iii) Supplier and such Ordering Company shall have entered into such additional
agreements, instruments and other writings as may be necessary under any
applicable Laws. Any reference to Company in this Agreement shall, where
applicable, be deemed to refer to any Ordering Company in respect of which the
conditions in this Article 59.2 have been fulfilled.

         
59.3
  (a)   Company unconditionally and irrevocably guarantees all payment and
financial obligations, including those obligations which, either directly or
indirectly, could have a financial impact on Supplier and/or its Affiliates and
which arise directly or indirectly, from non-performance of an Ordering
Company’s obligations to Supplier and/or its Affiliate. For certainty, such
obligations shall include, but not be limited to, obligations in Article 12
relating to Excess Inventory and Obsolete Inventory. In the event that an
Ordering Company fails to perform any of its obligations to Supplier and/or its
Affiliates under this Agreement, Supplier may deliver to Company and such
Ordering Company a notice of such non-performance and Supplier shall use
reasonable efforts to resolve such non-performance with such Ordering Company.
If the Ordering Company fails to perform such obligations by the fifteenth
(15th) day following the giving of such notice by Supplier, Supplier may make a
claim against Company under the aforementioned guarantee, and Supplier, if
requested by Company, will use reasonable efforts to assist Company in resolving
such non-performance by such Ordering Company (provided that such assistance by
Supplier shall in no way diminish Company’s obligation to satisfy Supplier’s
claim under the guarantee upon receipt of such claim). Company shall also work
with Supplier and/or its Affiliates to ensure that the Ordering Company meets
all of its non-financial obligations under this Agreement to the extent not
performed in a timely manner. The liability of Company as guarantor hereunder
shall not in any way be affected or modified by (i) failure by Supplier and/or
its Affiliates to exercise any of their respective rights or remedies under this
Agreement, any agreement, instrument or writing with the Ordering Company or at
Law, or (ii) any waiver by Supplier and/or its Affiliates of any of

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 54

--------------------------------------------------------------------------------

 

Contract No. WR71050115

         
 
      their respective rights or remedies under this Agreement, any agreement,
instrument or writing with the Ordering Company or at Law. For greater
certainty, Supplier and/or its Affiliates shall not be required to take any
other steps against the Ordering Company after such fifteen (15) day period
prior to enforcing any of their respective rights or remedies hereunder against
Company.

  (b)   The guarantee of Company under this Article is absolute and
unconditional, subject only to any substantive defense that the Ordering Company
is or would have been entitled to assert against Supplier and/or its Affiliates,
and Company and Ordering Company does assert and prove on a timely basis.    
(c)   For certainty, the parties acknowledge that (i) Article 27 shall not apply
to any dispute between Supplier and/or its Affiliates and any Ordering Company;
and (ii) any dispute between Company and Supplier in respect of Supplier’s
obligations under Article 59.3(a) shall be subject to Article 27.

59.4   Supplier agrees to permit any person designated by Company as an
“Approved Purchaser” to purchase Products, Commercially Purchased Items and
Services from Supplier from time to time pursuant to terms and conditions to be
negotiated by the Approved Purchaser and Supplier. In the event that such terms
and conditions are not negotiated, Supplier’s standard terms and conditions for
the sale of products and services shall apply. Any purchase order issued by an
Approved Purchaser to Supplier shall be issued outside of, and will not be
subject to, any terms and conditions of this Agreement. Such purchases of
Products by Approved Purchasers from Supplier shall be at the prices determined
in accordance with this Agreement. Supplier shall look only to the Approved
Purchaser for performance of its respective obligations under such purchase
orders between Supplier and the Approved Purchaser. Company may revoke the
designation of any entity as an Approved Purchaser at any time.

ARTICLE 60 — INTENTIONALLY DELETED
ARTICLE 61 — PACKING, LABELING AND SERIALIZATION

61.1   Supplier shall place Company’s specified bar code labels on all shipping
packages and containers for the Products and Commercially Purchased Items
shipped under this Agreement. Except as otherwise mutually agreed, such bar code
labels and the placement thereof shall meet Company Specifications entitled
“Shipping & Receiving Bar Code Label Standard 801-001-105 Issue 4, dated
December 12, 1996,” “Bar Code Shipping Label Profile Program 801-001-107 dated
January 15, 1998”, and “Common Language Equipment Identification (“CLEI”) Label
KS22002 Issue 27.2 dated June 20, 2005,” as may be modified from time to time by
Company through the issuance of an Engineering Change Order in accordance with
Article 67.3.   61.2   Products and Commercially Purchased Items purchased,
repaired, replaced, or refurbished under this Agreement shall, except as
otherwise mutually agreed, be packed by Supplier in containers that meet the
requirements of Company Specifications No. PKG91NJ1045 Issue 6, dated April 1,
1998, and No. 801-001-109 Issue 3 dated January 21, 2004, as may be modified
from time to time by Company through the issuance of an Engineering Change Order
in accordance with Article 67.3 as well as any other Specification(s) set forth
in this Agreement or an Order placed pursuant to this Agreement.   61.3   For
the purpose of tracking Warranty and repair availability on all Product provided
by Supplier, Supplier shall, except as otherwise mutually agreed, conform to
Company’s Warranty Eligibility System (“WES”) requirements stated in
Specification entitled “Warranty Eligibility System (“WES”) Non-Lucent
Manufacturers Processing Document Issue 3.5 dated September 8, 2003,” as may be
modified from time to time by Company through the issuance of an Engineering
Change Order in accordance with Article 67.3.

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 55

--------------------------------------------------------------------------------

 

Contract No. WR71050115

61.4   As specified and routed in the applicable Order, Products and
Commercially Purchased Items destined for export shall, except as otherwise
mutually agreed, be packaged in containers to meet the requirements of Company’s
International Export Packaging Specification No. LTP 70.03 dated November 10,
1999 as may be modified from time to time by Company through the issuance of an
Engineering Change Order in accordance with Article 67.3 as well as any other
Specification(s) set forth in this Agreement or an Order placed pursuant to this
Agreement and, except as otherwise mutually agreed, marked in accordance with
Company’s International Export Marking Specification No. LTP 70.04 dated
November 10, 1999 as may be modified from time to time by Company through the
issuance of an Engineering Change Order in accordance with Article 67.3 as well
as any other Specification(s) set forth in this Agreement or an Order placed
pursuant to this Agreement.

ARTICLE 62 — POINT OF SALE AND POINT OF USE INFORMATION

62.1   Supplier agrees to provide to Company, on a quarterly or another mutually
agreed upon basis, electronic and/or written reports, the format and content of
which shall be agreed upon by the parties, which demonstrate Supplier’s total
volume of actual purchases of Material based upon Company’s BOM and utilized in
the manufacture of Product. This report shall include, but not be limited to, a
complete listing of the Material purchased by Supplier, quantities purchased by
Supplier from the Material vendors including the actual prices paid by Supplier
and the Material prices charged to Company identified by Product identification
and/or Order. Subject to Article 30, Company agrees that any right to receive
information under this Article may be limited by and is subject to any
confidentiality obligations that Supplier or its Affiliates may have to Material
vendors.

ARTICLE 63 — PROCESS CERTIFICATION

63.1   Company has the right, subject to the terms of Article 29, to review,
inspect, and evaluate Supplier’s Material and supplies, Supplier’s facilities at
which Supplier manufactures Products for Company under this Agreement, including
Material management systems and supply line management processes and procedures
and Supplier’s sources for Material and supplies to the extent related to
Supplier’s performance of its obligations under this Agreement. Company has the
right to specify the types of Material used in the manufacture and/or repair of
the Product and/or suppliers of Material at any time during the Term of this
Agreement. If such selection of Material impacts the previously agreed to
Product prices, such subsequent Product prices shall be negotiated in good faith
and mutually agreed to by the parties. All changes to Material, supplies, sites
of manufacture and repair, and vendors must be approved in writing by Company.
In regard to Supplier’s manufacturing and repair process for the Products,
Company reserves the right, subject to the terms of Article 30, to perform
periodic quality audits, surveys, evaluations, and approvals, including, but not
limited to, analysis of each manufacturing, assembly, and/or test position for
acceptability of procedures, equipment calibration, test software including
change control, and operator performance, as well as evaluation of quality
control/quality assurance and data collection and analysis procedures, to the
extent related to Supplier’s performance of its obligations under this
Agreement.   63.2   Supplier shall conduct appropriate incoming inspection of
Material used in the manufacture of Products in accordance with its standard
practices and shall maintain a Supplier control, approval, and corrective action
process. Such standard practices shall be subject to audit and approval by
Company and Company may require Supplier to implement recommended changes in
order to facilitate Supplier’s manufacture of conforming Product. Such practices
may be modified from time to time to address specific conditions as requested by
Company.   63.3   Subject to compliance with Article 29, Supplier agrees to
provide Company reasonable access, so as not to interrupt Supplier’s production
processes, to applicable test equipment at Supplier’s facilities at which
Products are manufactured under this Agreement in order for Company to (a) do
test program development or (b) do final prove-in or acceptance of any test
programs.

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 56

--------------------------------------------------------------------------------

 

Contract No. WR71050115

ARTICLE 64 — INTENTIONALLY DELETED
ARTICLE 65 — PRODUCT CONFORMANCE

65.1   Supplier shall establish and maintain agreements with product safety
certification bodies or agencies and/or their assigned representatives as
required to support on-going product safety compliances for Products
manufactured for Company under this Agreement. The product safety certification
of Products is the responsibility of Company, unless otherwise specifically
agreed by the parties. Compliance documentation required to support on-going
compliance inspections at Supplier’s manufacturing location(s) will be provided
and maintained by Company. Costs associated with such inspection agreements and
for the periodic on-going inspections are the responsibility of Company.
Supplier shall have in place a quality process or program which specifically
focuses on maintaining the on-going product safety compliance of Company’s
certified Products.   65.2   Variations or issues found during product
compliance audits by external agencies, bodies or their assigned representatives
are to be immediately forwarded to the organization noted as the applicant on
the certification documentation or other Company personnel as specifically
directed. Supplier shall include such variations or issues as found in these
inspections in its quality system action register or tracking system.   65.3  
Supplier agrees to conform with any additional Specifications that Company may
require in order for Company to meet special and unique requirements set by
Company’s end customers. In such an event, any additional cost incurred by
Supplier to conform to such additional Specifications shall be treated in
accordance with Article 6.

ARTICLE 66 — PRODUCT DOCUMENTATION

66.1   Company shall furnish, or instruct Supplier to acquire from Company’s
designated documentation vendor at Company’s prices and expense Product
documentation, and any changes thereto, as described in the Specifications.
Costs for such Product documentation shall be reflected in the Product price
provided the Product documentation is included in the Product BOM. Otherwise,
the costs for such Product documentation shall be paid separately by Company to
Supplier.

ARTICLE 67 — PRODUCT/SPECIFICATION/PROCESS CHANGES

67.1   Supplier shall not make any changes to the Products, Specifications or
BOM (including engineering changes which affect the Product configurations) or
create enhancements to the Products providing additional features, functions or
performance capabilities (such changes and enhancements referred to collectively
in this Article 67.1 as “Change(s)”), without Company’s prior written consent.
Supplier shall promptly provide Company with written notice of any such proposed
Changes by Supplier. Such notice shall include a summary of the likely impacts
of the Change, including likely impacts on pricing, delivery and on the fit,
form or function of the Product. Company shall attempt to notify Supplier,
within two (2) days of receipt of Supplier’s Change request, of Company’s
documented approval or disapproval. If Company agrees to Supplier’s proposed
Change, all Product affected by the Change and shipped after the effective date
of the Change shall conform to the Change. Any such Change created by Supplier,
in whole or in part, shall remain the exclusive property of Company.   67.2  
Supplier shall not make any process changes that affect the form, fit or
function of the Product, or adversely affect the quality, reliability, or cost
of the Product, or relocate the manufacture or repair of Product to another
Supplier location without prior written consent of Company (“Process Changes”),
which consent shall not be unreasonably withheld. If Company, in its sole
discretion, does not agree to the Process Change and Supplier elects to proceed
with the Process Change, Supplier shall be in material breach of this Agreement.
In such an event, in addition to all other rights and remedies at law or equity
or otherwise, Company shall have the right to terminate any

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 57

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    or all Orders for Product affected by such Process Change. Company may
purchase the terminated Product from a source other than Supplier by invoking
all of its rights under this Agreement, including, but not limited to,
Article 53.

67.3   Company may at any time during the manufacture or repair of Product by
Supplier require modifications of or deviations to the Specifications (each, an
“Engineering Change Order”); provided, however, that Supplier shall have, after
receipt of such Engineering Change Order and before being required to supply
Product in conformance with such Engineering Change Order, a reasonable period
of time to implement such Engineering Change Order. Upon receipt of an
Engineering Change Order from Company, Supplier shall attempt to provide within
two (2) days to Company with the date by which the Engineering Change Order can
be implemented and any Material liability for which Company is responsible for
pursuant to the terms of this Agreement. Supplier will confirm to Company in
writing when an Engineering Change Order has been implemented, and shall report
to Company the results of its inspections of the initial Products manufactured
in accordance with such Engineering Change Order. Any price revision of Product
as a result of such Engineering Change Order will be subject to good faith
negotiations among the parties.   67.4   Supplier agrees to perform design for
manufacturing (DFM) reviews (as defined in Attachment N) of all new, pre-release
Specifications provided to it by Company, including conducting “VALOR”-based
analysis of all circuit pack designs. Supplier shall provide Company with the
initial results of all “VALOR” analysis within 24 hours of initiation thereof,
and shall concurrently advise Company as to the anticipated date of completion
of such analysis, having regard to the required volume and scope thereof.   67.5
  Supplier shall provide prove-in samples to Company upon request, for as long
as reasonably required in order for Company to properly evaluate changes in
accordance with Articles 67.1, 67.2 and 67.3. Title for the prove-in samples
will remain with Supplier but risk of loss and damage will pass to Company while
the prove-in samples are in Company’s possession. Company will return the
prove-in samples to Supplier upon completion of its evaluation. Prior to Company
requesting prove-in samples, the parties will agree on the allocation of costs
for the prove-in samples in the event that the prove-in samples cannot be used
by Supplier in the production of Products for Company. Provided that if the
prove-in samples can be used by Supplier in the production of the Products for
Company, Supplier agrees not to charge Company for the prove-in samples.   67.6
  Supplier shall not make any software or hardware related changes to Supplier’s
information systems that would impede previously established software or
hardware interface(s) with Company’s or Company’s end customers’ information
systems, without prior written approval of Company, which approval shall not be
unreasonably withheld.   67.7   Subject to Article 29, Company shall have the
right to perform an on-site assessment, upon Company’s or Supplier’s
notification to the other party of such Process Changes or Change(s) identified
in Articles 67.1 and 67.2. Supplier shall be solely responsible for any
liability associated with any such Process Changes or Changes made by Supplier
without the written consent of Company.

ARTICLE 68 — PUBLICITY

68.1   SUBJECT TO ARTICLES 35.4 AND 72, NEITHER PARTY SHALL, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE OTHER PARTY, PUBLICLY ANNOUNCE THE EXISTENCE OF THIS
AGREEMENT OR DISCLOSE ITS CONTENTS.

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 58

--------------------------------------------------------------------------------

 

Contract No. WR71050115

ARTICLE 69 — REGISTRATION AND REGISTRATION STANDARDS

69.1   When Products furnished under this Agreement are subject to any
in-country certification and filing procedures required for countries in which
the Products are to be sold, Supplier shall adhere to Specifications and test
instructions for Product to ensure compliance with governing labeling and end
customer requirements. Company may periodically perform on-going compliance
re-testing as defined by Company. Supplier will establish with Company a quality
control program to assure that Products shipped by Supplier under this Agreement
comply with the manufacturing Specifications and test instructions.   69.2  
When Products furnished under this Agreement are subject to Part 68, Part 15 or
any other part of the Federal Communication Commission’s Rules and Regulations,
as may be amended from time to time (“FCC Rules”), Supplier will adhere to
Specifications and test instructions for such Products to ensure compliance with
FCC Rules governing labeling and end customer instruction requirements. Company
may periodically perform on-going compliance re-testing as defined by Company.
Supplier will establish with Company a quality control program to assure that
the Products shipped by Supplier under this Agreement comply with the
manufacturing Specifications and test instructions.   69.3   When Products
furnished under this Agreement are subject to FDA/CDRH laser product and
certification requirements, Supplier will adhere to Specifications and test
instructions for such Product to ensure compliance with governing labeling and
end customer requirements. Company may periodically perform on-going compliance
re-testing as defined by Company. Supplier will establish with Company a quality
control program to assure that the Products shipped by Supplier under this
Agreement comply with the manufacturing Specifications and test instructions.  
69.4   Nothing in this Article shall be deemed to diminish or otherwise limit
Supplier’s obligations under Article 22 or any other Article of this Agreement.

ARTICLE 70 — RELEASES VOID

70.1   Neither party shall require (a) waivers or releases of any personal
rights or (b) execution of documents which conflict with the terms of this
Agreement from employees, representatives or customers of the other in
connection with visits to its premises and both parties agree that no such
releases, waivers or documents shall be pleaded by them or third persons in any
action or proceeding relating to this Agreement.

ARTICLE 71 — RULES OF CONSTRUCTION

71.1   In this Agreement:

  (a)   time periods within which a payment is to be made or any other action is
to be taken hereunder shall be calculated excluding the day on which the period
commences and including the day on which the period ends; and     (b)   whenever
any payment to be made or action to be taken hereunder is required to be made or
taken on a day other than a Business Day, such payment shall be made or action
taken on the next following Business Day.

ARTICLE 72 — SEC DISCLOSURE

72.1   Each party acknowledges that the other party (or an Affiliate of such
other party) may, upon advice of its legal advisors, be required to file this
Agreement with the United States Securities and Exchange Commission (“SEC”). If
a party is required to so file, it shall (i) give notice to the other party of
such filing requirement together with a copy of its draft application to the SEC
requesting the redaction of this Agreement as far in advance of such filing
requirement as is reasonably practicable, and (ii) permit such other party’s
legal advisors to participate in the

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 59

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    redaction of this Agreement on a mutually agreeable basis (with the
understanding that each party shall request in its initial application the
preferred redactions being sought by the other party). Each party agrees that it
will (i) work in good faith to include all recommendations of the other party in
all subsequent response filings with the SEC regarding this Agreement and
(ii) use all reasonable commercial efforts to ensure that only such information
regarding this Agreement is disclosed as is necessary to meet the SEC
requirements. Each party shall cause its legal counsel to act in a timely and
responsive manner in order to meet the other party’s requirements to meet its
filing obligations with the SEC in a timely manner.

ARTICLE 73 — SECTIONS AND HEADINGS

73.1   The division of this Agreement into Articles and Attachments and the
insertion of headings and a table of contents are for convenience of reference
only and shall not affect the construction or the interpretation of this
Agreement. Unless otherwise specified herein, any reference in this Agreement to
an Article or Attachment refers to the specified Article or Attachment to this
Agreement. In this Agreement, the terms “this Agreement”, “hereof”, “herein”,
“hereunder” and similar expressions refer to this Agreement and not to any
particular part, Article or other provision hereof.

ARTICLE 74 — SEVERABILITY

74.1   If any of the provisions of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable this entire Agreement, but rather this entire Agreement
shall be construed as if not containing the particular invalid or unenforceable
provision or provisions, and the rights and obligations of the parties shall be
construed and enforced accordingly.

ARTICLE 75 — SURVIVAL OF OBLIGATIONS

75.1   The obligations of the parties under this Agreement, which by their
nature would continue beyond the termination, cancellation or expiration of this
Agreement, shall survive termination, cancellation or expiration of this
Agreement.

ARTICLE 76 — TAXES, DUTIES AND INSURANCE CONTRIBUTIONS PAYABLE BY SUPPLIER

76.1   Except as otherwise provided in this Agreement, including in Article 77,
and unless otherwise agreed to by the parties, all duties (excluding any duties
or fees relating to the shipment of Products or Commercially Purchased Items),
taxes, and all social insurance contributions arising out of or in connection
with Supplier’s performance of this Agreement will be paid by Supplier
(collectively, “Taxes”). The parties agree that the prices or rates stated
herein include all such charges and that such prices or rates will not be
changed hereafter as a result of Supplier’s failure to include therein any
applicable duties, taxes or insurance contributions. Supplier shall indemnify
and hold Company harmless from its failure to make such payment or
contributions.

ARTICLE 77 — TAXES PAYABLE BY COMPANY

77.1   Company shall be responsible for all sales, value added or other similar
types of transfer taxes (referred to herein in this Article 77.1 collectively as
“Transfer Taxes”) with respect to the prices paid for Products, Commercially
Purchased Items or amounts paid for Services under this Agreement, and Company
agrees to reimburse Supplier for any such Transfer Taxes paid by Supplier.
Supplier will not charge an otherwise applicable Transfer Tax if the Product,
Commercially Purchased Item or Services pricing is exempt from Transfer Tax and
Company furnishes to Supplier a valid exemption certificate. In particular
regard to value added taxes or other similar taxes on turnover and related
charges, Supplier will charge and Company will pay any particular VAT over and
above the stated prices for Products, Commercially Purchased Items and Services.
If Supplier is required by Law to charge VAT, Supplier will ensure its invoices
are in

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 60

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    the proper form to enable Company to claim input VAT deductions. If Supplier
does not need to charge VAT, but Company is required by Law to account for such
VAT (for example, where a “reverse charge” procedure applies), Company accepts
all responsibility and liability for accounting for the VAT properly. Taxes
payable by Company shall be billed as separate items on Supplier’s invoices and
shall not be included in Supplier’s prices or otherwise compensated pursuant to
any other provisions of this Agreement.

77.2   Subject to the provisions of Articles 6 and 77.1, Supplier shall be
responsible for all other Taxes. Notwithstanding any other provision of this
Agreement, Supplier shall be solely liable for Taxes based on Supplier’s net or
gross income. Supplier shall indemnify and hold the Company harmless for
Supplier’s failure to timely pay or withhold Taxes resulting from Supplier’s
performance under this Agreement.   77.3   In order for Company to qualify for
tax benefits on Products exported from the United States by Company, Supplier
shall, upon request by Company, provide Company with documentation, within
forty-five (45) days of such request, that identifies and substantiates the FMV
of the Product content which is manufactured by Supplier or purchased by
Supplier from manufacturers outside of the United States. If Company shall have
requested the aforementioned documentation, Supplier shall provide Company with
timely notice if Supplier has knowledge of any information that would cause the
FMV of the Product content manufactured by Supplier or purchased by Supplier
from manufacturers outside of the United States to either change by ten percent
(10%) or exceed fifty percent (50%) of the selling price charged to Company for
each Product being reported.

ARTICLE 78 — TEST SCOPE

78.1   Unless otherwise agreed to by the parties, Supplier shall manage the
execution of the test process as specified by Company for each Product purchased
pursuant to this Agreement, which includes Supplier testing the Product,
providing test capacity planning, and performing preventative maintenance on the
required test equipment. Supplier shall consider upside volume percentages,
preventative maintenance time, the addition of new products and holding
appropriate spare parts when developing its test capacity plan. Company shall
compensate Supplier in the manner set out herein for any costs associated with
replicating test equipment uniquely required to support Company’s production
requirements or building new test equipment in support of Company’s production
requirements. Such costs shall, by mutual agreement of the parties either (a) be
amortized over a six (6) month period in the cost of the Product, or (b) be
charged by Supplier to Company as a separately billable non-recurring
engineering charge for which Company shall issue Supplier a purchase order in
accordance with Article 9. Prior to fabricating or procuring any test equipment
that is unique to the manufacture of Products, Supplier agrees to review such
plans with Company first. Supplier agrees that all test equipment used in the
production of Products shall be subject to the terms set forth in Articles 37
and Article 53.   78.2   Supplier shall perform each and every test in
conformance to the process and for the quantities identified in the applicable
Specification unless mutually agreed to by the parties otherwise. All Products
delivered to Company and/or its end customers under this Agreement shall have
passed all applicable tests in such Specification. Company shall have the right
to require Supplier to upgrade its test sets in order to conform to requirements
of the Specification.   78.3   Company shall review all fixtures and programs to
assure their quality and reliability. Supplier shall notify Company prior to
implementing any change that would impact the test Specification.   78.4  
Supplier shall maintain adequate test equipment inspection/calibration reports
and Product test documents and shall make such documents available to Company
upon reasonable request.

ARTICLE 79 — TITLE TO MATERIAL CONSIGNED BY COMPANY

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 61

--------------------------------------------------------------------------------

 

Contract No. WR71050115

79.1   Except for Purchased Inventory, Supplier acknowledges and agrees that
unless otherwise agreed, Company has and shall have at all times all right,
title and interest in Material furnished directly or indirectly to Supplier by
Company under this Agreement (“Lucent Technologies’ Consigned Material”).
Supplier shall, within ten (10) Business Days of receipt of the Lucent
Technologies’ Consigned Material, notify Company of any claims for quantity
variation or quality problems in the Lucent Technologies’ Consigned Material
furnished to Supplier. Supplier assumes responsibility for any loss or damage to
such Lucent Technologies’ Consigned Material and shall be liable for the full
actual value of the Lucent Technologies’ Consigned Material with the exception
of loss due to normal waste, shrinkage, breakage or other spoilage, reduction in
moisture content, etc. Supplier shall store the Lucent Technologies’ Consigned
Material safely, indoors in protected areas approved by Company at Supplier’s
facility. If Supplier removes all or any part of the Lucent Technologies’
Consigned Material from one building to another, Supplier shall continue to be
responsible for loss and damage and Supplier shall give Company at least ten
(10) Business Days advance notice of the removal except when the removal is
required during Supplier’s manufacturing process or to protect the Lucent
Technologies’ Consigned Material from damage or loss.   79.2   Upon reasonable
prior notice and subject to the terms of Article 29, Company may inspect,
inventorize and authenticate the account of the Lucent Technologies’ Consigned
Material during Supplier’s normal business hours. Supplier shall provide Company
access to the premises, subject to Article 30, wherein all such Lucent
Technologies’ Consigned Material is located. Wherever practicable, the Lucent
Technologies’ Consigned Material shall be kept segregated in an area marked
“PROPERTY OF LUCENT TECHNOLOGIES”.   79.3   Supplier shall use the Lucent
Technologies’ Consigned Material only in the manufacture or repair of Products
furnished to Company, or otherwise in performing under this Agreement.   79.4  
Supplier shall not allow any security interest, lien, tax lien or other
encumbrance (collectively, “Encumbrances”) to be placed on any Lucent
Technologies’ Consigned Material. Supplier shall give Company immediate written
notice should any third party attempt to place or place an Encumbrance on such
Lucent Technologies’ Consigned Material. Supplier shall indemnify and hold
Company harmless from any such Encumbrance. Supplier shall, at Company’s
request, promptly execute a “protective notice” UCC-1 form for Lucent
Technologies’ Consigned Material located in the United States, or such other
documents reasonably necessary in non-US jurisdictions to enable Company to
protect its interest in such Lucent Technologies’ Consigned Material. The
parties agree that this Agreement shall constitute the security agreement
required by the UCC of the appropriate state in which the Encumbrance is filed,
or the equivalent type of agreement in non-US jurisdictions.   79.5   The
obligations assumed by Supplier with respect to the Lucent Technologies’
Consigned Material are for the protection of Company’s property. If Supplier
defaults in carrying out Supplier’s obligations with respect to the Lucent
Technologies’ Consigned Material under this Agreement or an Order, then, at no
cost to Company and upon twenty-four (24) hours notice to Supplier, Company may
withdraw all or any part of the Lucent Technologies’ Consigned Material.
Supplier shall, at Company’s option, return to Company or hold for Company’s
disposition any or all of such Lucent Technologies’ Consigned Material
(including any Scrap produced as a by-product) in Supplier’s possession at
(a) the completion of the Order, (b) expiration, cancellation or termination of
this Agreement, or (c) the withdrawal of Lucent Technologies’ Consigned
Material, as provided above.

ARTICLE 80 — TITLE TO SPECIAL TOOLING AND EQUIPMENT OWNED BY COMPANY

80.1   Supplier acknowledges and agrees that Company has and shall have at all
times during the Term of this Agreement all right, title and interest in the
special tooling, fixtures, molds, dies, jigs, production machinery, assembly
machinery, testing equipment, and related items (collectively,

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 62

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    “Tooling” or “Tool(s)”) owned and furnished at no cost by Company to
Supplier, or Tooling that Company has fully paid Supplier to develop, or Tooling
that is co-developed at Company’s expense for use under this Agreement, any
Order or subsequent agreements, if any. Any Tooling supplied by Company to
Supplier must be in good working order and comply with all applicable
country-specific safety requirements, codes and standards at the time such
equipment is delivered. Supplier shall:

  (a)   be responsible for the safekeeping of the Tooling, assume all risks of
loss or damage to the Tooling and be liable for the replacement value of such
Tooling except for reasonable wear and tear;     (b)   maintain and use the
Tooling in accordance with all applicable country-specific safety requirements,
codes or standards, and keep in force a policy of Workers’ Compensation
insurance as prescribed by the Law of the state in which work is being
performed, or such other comparable insurance. Supplier may procure whatever
additional insurance Supplier deems appropriate. Supplier agrees that Supplier,
Supplier’s insurer(s) and anyone claiming by, through, under, or on Supplier’s
behalf shall have no claim, right of action, or right of subrogation against
Company or Company’s end customers based on any loss or liability insured
against under any policy of insurance. Supplier agrees to defend (at Company’s
request), indemnify and hold harmless Company and Company’s end customers from
and against any and all Losses (including but not limited to claims resulting
from injuries or death to persons or damage to property) in any way arising out
of or resulting from the maintenance, ownership, possession, operation, use,
condition, storage, or movement of the Tooling or any accident in connection
therewith;     (c)   permanently mark or if impracticable to do so, affix
labeling stating that the Tooling is the property of Lucent Technologies. For
purposes of this clause, the term “Lucent Technologies” shall be deemed to mean
Lucent Technologies Inc., or the Lucent Technologies Inc. affiliated or
associated company which owns the Tooling, as applicable;     (d)   store such
Tools, when not in use, on racks or in sections of Supplier’s plant(s) located
at Supplier’s factory of manufacture, marked “PROPERTY OF LUCENT TECHNOLOGIES”.
If Supplier removes all or any part of the Tooling from one building to another,
Supplier shall continue to be responsible for loss and damage and Supplier shall
give Company at least ten (10) Business Days’ advance notice of the removal
except when the removal is required during Supplier’s manufacturing process or
to protect the Tooling from damage or loss. Supplier shall send to Company on a
mutually agreed to basis, an updated Tooling inventory list, including equipment
upgrades;     (e)   use the Tooling only in the manufacture or repair of Product
or performance of Services furnished to Company, unless otherwise agreed to by
Company, and deliver the Tooling to Company upon demand, properly packaged and
crated for transport, Ex Works (Incoterms 2000) Supplier’s plant at a mutually
agreeable charge for removal, packing, or crating;     (f)   repair or replace
parts of the Tooling as needed from time to time, due to normal wear and tear,
without charge to Company. This includes, among other things, adjusting,
replacing punches or die sections, sharpening, and keeping Tools in good working
condition. All repair and replacement parts shall be deemed Tooling and shall be
subject to the terms of this Agreement. At any time when Supplier proposes
replacing the entire Tool because (a) Tool life has been expended or the Tooling
is worn beyond economical repair, or (b) design changes by Company necessitate
modification or complete replacement, Supplier shall first obtain Company’s
written approval, and the resulting replacement Tooling shall be at Company’s
expense and subject to the terms of this Agreement;

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 63

--------------------------------------------------------------------------------

 

Contract No. WR71050115

  (g)   Supplier shall not allow any Encumbrance to be placed on any Tooling.
Supplier shall give Company immediate written notice should any third party
attempt to place or place an Encumbrance on such Tooling. Supplier shall
indemnify and hold Company harmless from any such Encumbrance. Supplier shall,
at Company’s request, promptly execute a “protective notice” UCC-1 form for
Tooling located in the United States, or such other documents reasonably
necessary in non-US jurisdictions to enable Company to protect its interest in
such Tooling. The parties agree that this Agreement shall constitute the
security agreement required by the UCC of the appropriate state in which the
Encumbrance is filed, or the equivalent type of agreement in non-US
jurisdictions;     (h)   Company may inspect, inventorize, and authenticate the
account of Tooling furnished under this Agreement during Supplier’s normal
business hours. Subject to the terms of Article 29, Supplier shall provide
Company access to the premises where all such Tooling is located. The
obligations assumed by Supplier with respect to Tooling furnished under this
Agreement and/or an Order are for the protection of Company’s property. If
Supplier defaults in carrying out Supplier’s obligations under this Agreement,
then, at no cost to Company and upon twenty-four (24) hours’ notice to Supplier,
Company may withdraw all or any part of the Tooling and Tooling drawings except
as may be required for Supplier to continue to fulfill its ongoing warranty or
support obligations under this Agreement. Supplier shall, at Company’s option,
return to Company or hold for Company’s disposition (free of restrictions), for
a reasonable period of time, any or all of such Tooling and Tooling drawings in
Supplier’s possession at (a) the completion of the applicable Order,
(b) expiration, cancellation or termination of this Agreement, or (c) the
withdrawal of Tooling, as provided above; and     (i)   Supplier’s obligations
under this clause shall survive the expiration, cancellation or termination of
this Agreement or any Order.

80.2   Where Company has requested Supplier to develop or subcontract on
Company’s behalf the development of Tooling for Company and the parties have
agreed to amortize the price of the Tooling over a mutually agreed to quantity
of Products purchased by Company from Supplier pursuant to this Agreement, title
and ownership of the Tooling shall pass to Company once the price charged by
Supplier for such Tooling has been fully paid by Company pursuant to the agreed
to amortization schedule. However, Company shall have the right to take title of
the Tooling at any time by paying in full the agreed to price for such Tooling.

ARTICLE 81 — TOXIC SUBSTANCES AND PRODUCT HAZARDS

81.1   Supplier agrees that, where required by Law, it shall provide to Company
for any new products that are added to this Agreement or changes made to an
existing Product furnished under this Agreement, a product safety data sheet
which complies with the requirements of the Occupational Safety and Health Act
of 1970 and all rules and regulations promulgated thereunder, or a product
information sheet required by equivalent international Laws.

ARTICLE 82 — WAIVER AND AMENDMENT

82.1   Waiver by any party of any default by the other party of any provision of
this Agreement shall not be deemed a waiver by the waiving party of any
subsequent or other default, nor shall it prejudice the rights of the other
party.   82.2   This Agreement may only be amended in writing by authorized
representatives of Company and Supplier.

ARTICLE 83 — WAIVER OF JURY TRIAL

83.1   Each party hereby waives, to the fullest extent possible by applicable
Laws, any right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 64

--------------------------------------------------------------------------------

 

Contract No. WR71050115

    connection with this Agreement. Each party hereto (a) certifies that no
representative, agent or counsel of the other party has represented expressly or
otherwise that the other party would not, in the event of litigation, seek to
enforce the foregoing waiver, and (b) acknowledges that it and the other party
hereto have been induced to enter into this Agreement by, among other things,
the mutual waivers and certifications contained in this Article 83.

ARTICLE 84 — INDEMNIFICATION PROCEDURE

84.1   In the event that any party (the “Indemnified Party”) shall become aware
of any Third Party Claim in respect of which the other party (the “Indemnifying
Party”) has agreed to indemnify the Indemnified Party pursuant to this
Agreement, the Indemnified Party shall promptly give notice thereof to the
Indemnifying Party. Such notice shall specify with reasonable particularity (to
the extent that the information is available):

  (a)   the factual basis for the Claim; and     (b)   the amount of the Claim,
if known.

84.2   With respect to any First Party Claim, following receipt of notice from
the Indemnified Party of the Claim, the Indemnifying Party shall make such
reasonable investigation of the Claim as is considered necessary or desirable.
For the purpose of such investigation, the Indemnified Party shall make
available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree to the validity and amount of such Claim, the Indemnifying Party shall
immediately pay to the Indemnified Party the full agreed upon amount of the
Claim, failing which the matter shall be referred to dispute resolution pursuant
to the provisions of Article 27.   84.3   With respect to any Third Party Claim,
the Indemnifying Party shall have the right, at its expense, to participate in
or assume control of the negotiation, settlement or defence of the Claim and, in
such event, the Indemnifying Party shall reimburse the Indemnified Party for all
the Indemnified Party’s out-of-pocket expenses as a result of such participation
or assumption. Subject to Article 84.4, if the Indemnifying Party elects to
assume such control, the Indemnified Party shall have the right to participate
in, but not control, the negotiation, settlement or defence of such Third Party
Claim and to retain counsel to act on its behalf, provided that the fees and
disbursements of such Indemnified Party’s counsel shall be paid by the
Indemnified Party unless the Indemnifying Party consents to the retention of
such counsel. If the Indemnifying Party, having elected to assume such control,
thereafter fails to defend the Third Party Claim within a reasonable time, the
Indemnified Party shall be entitled to assume such control. In such event, the
Indemnifying Party shall be bound by the results obtained by the Indemnified
Party with respect to such Third Party Claim.   84.4   If the Indemnifying Party
fails to assume control of the defence of any Third Party Claim in accordance
with Article 84.3, the Indemnified Party shall have the exclusive right to
contest, settle or pay the amount claimed. Whether or not the Indemnifying Party
assumes control of the negotiation, settlement or defence of any Third Party
Claim, the Indemnifying Party shall not settle any Third Party Claim without the
written consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed.   84.5   The Indemnified Party and the
Indemnifying Party shall co-operate fully with each other with respect to Third
Party Claims and shall keep each other fully advised with respect thereto
(including supplying copies of all relevant documentation promptly as it becomes
available). Neither party shall make any statement or take any action which
might hamper or undermine the other party’s defense or settlement of a Third
Party Claim.

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 65

--------------------------------------------------------------------------------

 

Contract No. WR71050115

84.6   The provisions of this Article 84 shall only apply to a Claim in respect
of which an Indemnifying Party has agreed to indemnify the Indemnified Party
pursuant to this Agreement with the intent that all such Claims shall be subject
to this Article 84.

ARTICLE 85 — ENTIRE AGREEMENT

         
85.1
  (a)   This Agreement, together with the Attachments and the Transition
Agreement, constitute the entire agreement between the parties with respect to
the subject matter hereof and supersedes all previous communications, and
agreements whether verbal or written, including without limitation, the term
sheet between Company and Supplier relating to the subject matter hereof, the
Modcell 4.0 Supply Agreement Term Sheet dated August 27, 2003, and Agreement No.
WR71010010 to the extent it relates to Products and Services to be provided
pursuant to this Agreement. There are no conditions, covenants, agreements, or
other provisions, express or implied, collateral, statutory or otherwise,
relating to the subject matter hereof except as provided herein or in the
Attachments, the Asset Purchase Agreements or the Intellectual Property License
Agreement. Orders under this Agreement shall only include Order-specific terms,
conditions, and Specifications, as applicable.  
 
  (b)   In the event of a contradiction between the terms of this Agreement and
the terms and conditions of an Attachment, the terms of the Attachment shall
prevail to the extent of such inconsistency.

85.2   The terms and conditions applicable to unique arrangements relating to
the subject matter hereof between the parties will be agreed to in writing
between the parties, and included in an individual Attachment that shall
reference this Agreement and be made a part hereof.   85.3   This Agreement and
any Orders under this Agreement shall not be modified or rescinded, except by an
instrument in writing signed by both parties.

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 66

--------------------------------------------------------------------------------

 

Contract No. WR71050115

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the dates below.

                      CELESTICA CORPORATION       LUCENT TECHNOLOGIES INC.    
 
                   
 
                   
By:
  /s/ Steve Delaney       By:   /s/ Jose A. Mejia    
 
                   
 
                   
Name:
  Steve Delaney       Name:   Jose A. Mejia    
 
                   
 
                   
Title:
  CEO       Title:   President, Supply Chain Networks    
 
                   
 
                   
Date:
  September 30, 2005       Date:   September 22, 2005    
 
                   

  PRIVILEGED AND CONFIDENTIAL   Lucent Technologies and Celestica Proprietary  
Page 67

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment A
Definitions
For the purposes of this Agreement and the related Attachments, unless the
context otherwise requires, the following terms shall have the respective
meanings set out below and grammatical variations of such terms shall have
corresponding meanings:
“Affiliate” means, in relation to any person, any other person that directly or
indirectly controls, that is directly or indirectly controlled by, or that is
under the direct or indirect common control of, such a person; provided,
however, that (i) where one person controls another person, any other person
controlled by the first such person shall be deemed to be an Affiliate of the
second person, and (ii) any corporation in respect of which any person owns
beneficially, directly or indirectly, not less than fifty percent (50%) of such
corporation’s voting securities, shall be deemed to be an Affiliate of such
person. For purposes hereof, “control” means, in respect of any person, the
power of authority to direct, or cause the direction of, directly or indirectly,
the management, policies or actions of any other person, whether through the
ownership of equity securities or voting securities or by contract or otherwise;
“Agreed Portion” has the meaning set out in Article 12.5;
“Agreement” means this external manufacturing services supply agreement together
with all Attachments attached hereto, as amended and supplemented from time to
time;
“Approved Vendor List” or “AVL” means Company’s approved vendor list;
“Asset Purchase Agreements” means, collectively, the asset purchase agreement in
respect of the Oklahoma City Facility and the asset purchase agreement in
respect of the Columbus Facility, each dated July 23, 2001, made in each case
between Company and Supplier;
“Attachments” means any attachment agreed to by the parties and attached to and
made part of this Agreement;
“Audit” has the meaning set out in Article 30.3;
“Background Information” means any Information developed, copyrighted or owned
by Supplier prior to August 31, 2001;
“Basic Services” has the meaning set out in Article 4.1;
“Bill of Material” or “BOM” means a bill of material;
“Blanket Purchase Order” has the meaning set out in Section 3.1 of Attachment G;
“Build to Stock” has the meaning set out in Attachment G;
“Business Day” means a day other than a Saturday, Sunday or a statutory holiday
in the State of New York;
“CAP” or “Corrective Action Plan” means a plan of corrective action to be taken;
“CAR” or “Corrective Action Request” means corrective action request;

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 1

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
“Changes” has the meaning set out in Article 67.1;
“Claim” means any claim, action, demand or proceeding;
“Code” means Object Code and Source Code, collectively;
“Co-Developed IP” has the meaning set out in Article 37.2;
“COGS” means cost of goods sold;
“Comcode” means Company’s internal part number;
“Commercial Material” means, at any time during the Term, any Material
(identified by the manufacturer’s unique part number) of which, the annual
quantity required at such time by Supplier to manufacture the Products for
Company or Ordering Companies under this Agreement, is less than seventy percent
(70%) of the total annual quantity of Material sold by the manufacturer of such
Material on a worldwide basis. The parties shall agree on the process,
methodology, and frequency for determining which Material meets the definition
of Commercial Material;
“Commercially Purchased Item” has the meaning set out in Article 3.2;
“Company” has the meaning set out in the recital to this Agreement;
"Company Controlled Material” means Material procured by Supplier pursuant to
Articles 13.4 and 14 in respect of which Company has sole responsibility for
managing the purchasing decision in respect of such Material, including all
negotiations with Material vendors in respect of price and general commercial
terms in accordance with Attachment K2;
“Company IP” means any Developed IP originated or developed (i) solely by, or
jointly between, Supplier and any of Supplier’s Associates or (ii) jointly
between Company and Supplier or any of Supplier’s Associates, and which arise in
connection with activities performed by Supplier under this Agreement which are
(a) funded by Company through specific project funding and/or NRE fees or
(b) are specifically related to the Products;
“Company Owned Inventory” means inventory that is owned by Company, including
raw materials, finished goods and work-in-process;
“Company Proprietary Information” means Information, including but not limited
to, technology, processes, Specifications or other proprietary property,
including trade secrets, know-how, mask work rights, patent applications and any
other non-public information in any form or medium developed or acquired by
Company, its Affiliates or its licensors other than Supplier, but for greater
certainty, does not include Supplier Proprietary Information or the Intellectual
Property;
“Competing Quote” has the meaning set out in Article 4.1;
“Developed IP” means any and all Information, inventions, discoveries,
improvements, technical information, computer or other apparatus programs,
specifications, drawings, records, documentation, works of authorship or other
creative works, ideas, manufacturing processes or tooling, knowledge or data,
written or otherwise expressed in a material form;
“Disputed Portion” has the meaning set out in Article 12.5(a);
“DOA” has the meaning set out in Article 21.16;
“Documentation” means all documents, whether in human and/or machine-readable
form;

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 2

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
“EDI” means the electronic transfer, from computer to computer, of commercial
and administrative data using a commonly acknowledged standard for the
structuring of messages;
“Effective Date” has the meaning set out in the recitals to this Agreement;
“Electronic Commerce” has the meaning set out in Article 18.1;
“EMAS” has the meaning set out in Article 40.1;
“Emergency Backup Manufacturing Plan” has the meaning set out in Article 16.1;
“EMS” has the meaning set out in Article 40.1;
“Encumbrance” has the meaning set out in Article 79.4;
“Engineering Change Order” has the meaning set out in Article 67.3;
“E&O Claim” has the meaning set out in Article 12.5(a);
“Epidemic Condition” has the meaning set out in Article 21.16;
“ESD” means electrostatic discharge sensitive;
“EST” has the meaning set out in Article 21.10;
“Excess Inventory” has the meaning set out in Article 12;
“Existing Mobility Products” means the printed circuit board assemblies,
subsystems, orderable item kits and full systems listed in Attachment B;
“Export Laws” has the meaning set out in Article 42.1;
“FCC Rules” has the meaning set out in Article 69.2;
“FIFO” has the meaning set out in Article 14.1;
“First Party Claim” means a Claim asserted by one party against the other party
to this Agreement pursuant to Article 84;
“fiscal year” means Company’s fiscal year;
“Flexible Delivery Arrangements” has the meaning set out in Article 10.1;
“Flexible Delivery Terms” means the flexible delivery terms described in
Attachment G;
“FMV” means fair market value;
“Forecast” has the meaning set out in Article 15.2 and shall include any other
forecast delivered by Company (or an Ordering Company, as applicable) to
Supplier in respect of Products or Commercially Purchased Items;
“Indemnified Party” has the meaning set out in Article 84.1;
“Indemnifying Party” has the meaning set out in Article 84.1;

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 3

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
“Information” means all documented and undocumented information (excluding
patents and patent applications), whether in human and/or machine readable form,
including without limitation, Code, Documentation, technical information,
technical memoranda, technical reports, data and drawings of whatever kind in
whatever medium, specifications, tangible and intangible know-how, processes,
formulae, methodologies, production, operating and quality control manuals,
blueprints, instructions, directories, schematics, sketches, photographs,
graphs, dies, molds, tools, tooling, samples, price lists, part lists and
descriptions, and any and all notes, analysis, compilations, studies, summaries,
and other material containing or based, in whole or in part, on any information
included in the foregoing;
“Information Only Metrics” has the meaning set out in Article 11.1;
“Infringement Claims” has the meaning set out in Articles 47.1 and 47.2;
“Initial Prices” has the meaning set out in Article 6.1;
“Initial Term” has the meaning set out in Article 1.1;
“Insignia” has the meaning set out in Article 54.2;
“Intellectual Property” means the Licensed Technical Information, Licensed
Software, Licensed Patents and Licensed Trademarks as set out in the
Intellectual Property License Agreement;
“Intellectual Property License Agreement” means the intellectual property
license agreement dated as of August 31, 2001, made between Lucent Technologies
Inc., Lucent Technologies GRL Corporation and Celestica Liquidity Management
Hungary Limited Liability Company;
"Inventory Buy-Down Cost” has the meaning set out in Article 6.7;
“Inventory Carrying Purchase Order” has the meaning set out in Article 12.2(c);
“Laws” or “laws” has the meaning set out in Article 34.1;
“Licensed Trademarks” has the meaning set out in the Intellectual Property
License Agreement;
“LTB Material” has the meaning set out in Article 13.5;
“Losses” means all liability, losses, damages, penalties, costs and expenses
(including reasonable attorney’s fees and disbursements), but excluding any
incidental, indirect or any lost profits or lost revenues or other consequential
losses;
“Lucent Technologies’ Consigned Material” has the meaning set out in
Article 79.1;
“Manufacturer Per Unit Pricing Formula” means the pricing formula described in
Attachment C;
“Manufacturer Per Unit Pricing Formula Rates” has the meaning set out in
Article 6.8;
“Market-Based Price” means, with respect to any Material, at any time and from
time to time during the Term, the fixed price that the purchaser of such
Material expects to pay for such Material during the calendar quarter in which
the price determination is being made;
“Material” means, collectively, all raw components, parts, and materials
(including labels, product inserts, packaging and other labeling for the
Products) required to manufacture the Products in accordance with the
Specifications;
“Material Value Propositions” has the meaning set out in Article 6.12;

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 4

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
“Mobility Products” means the Existing Mobility Products and all Successor
Products and New Products;
“MWDVBE” has the meaning set out in Article 55.1;
“New Product” means a printed circuit board assembly, subsystem, orderable item
kit, full system or other product introduced by Company or any of its Affiliates
during the Term and mutually agreed by Company and Supplier as within Company’s
“Mobility” product sector and that is not an Existing Mobility Product or a
Successor Product;
“Non-Recurring Engineering “ or “NRE” means non-recurring engineering;
“North American Region” means Canada, the United States and Mexico;
“Notice Receipt Date” has the meaning set out in Article 12.2(c).
“NTF” means no trouble found;
“Object Code” means code in machine-readable form generated by compilation,
assembly or other translation of Source Code and contained in a medium which
permits it to be loaded into and operated on by a processor;
“Obsolete Inventory” has the meaning set out in Article 12.2(e);
“Order” means a discrete order issued by Company (or an Ordering Company, as
applicable) and accepted by Supplier under this Agreement and a blanket purchase
order issued by Company (or an Ordering Company, as applicable) and accepted by
Supplier under this Agreement;
“Order Change” has the meaning set out in Article 9.4;
“Orderable Item” means a Product or a Commercially Purchased Item;
“Ordering Company” means an Affiliate of Company designated as an Ordering
Company pursuant to Article 59.1;
“Out of Tolerance Condition” has the meaning set out in Article 11.4;
“Parts” has the meaning set out in Article 23.5;
“Performance Metrics” has the meaning set out in Article 11.1;
“PES” or “Premium Expedited Services” means the cost that is over and above the
normal costs associated with expediting the delivery of Material that Supplier
would incur due to highly unusual, unique or extraordinary circumstances brought
on solely by Company’s request to procure the delivery of Material to support
Product delivery requirements outside any agreed to Flexible Delivery Terms.
Supplier should not incur any costs associated with Premium Expedited Services
without first getting Company’s prior written approval;
“Price Change” has the meaning set out in Article 6.6;
“Price Reduction Period” has the meaning set out in Article 6.1;
“Pricing Information” has the meaning set out in Article 6.17;

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 5

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
“Process Change” has the meaning set out in Article 67.2;
“Product” or “Products” has the meaning set out in Article 3.1;
“Product Plan” has the meaning set out in Article 21.6;
“Profit” means earnings before interest, amortization and taxes;
"PPV” or “Purchase Price Variation” means the price for Material that is over
and above the normal price charged by the Material vendor to Supplier due to
highly unusual, unique or extraordinary circumstances brought on solely by
Company’s request to procure the delivery of Material to support Product
delivery requirements outside any agreed to Flexible Delivery Terms. Supplier
should not incur any increases in costs associated with Purchase Price Variation
without first getting Company’s prior written approval;
“Purchased Inventory” means the Material and other inventory purchased by
Supplier from Company or any third party in connection with the transfer of the
manufacture of Products to Supplier;
“quarter” means a three (3) month period commencing on the first day of October,
January, April and July;
“Quarterly Performance Review Process” has the meaning set out in Article 25.1;
“Quote” has the meaning set out in Article 4.1;
“Recovery Amount” has the meaning set out in Article 6.6;
“Recovery Amount Statement” has the meaning set out in Article 6.6;
“Renewal Term” has the meaning set out in Article 1.1;
“Required Data” has the meaning set out in Article 12.5(a);
“Revised Quote” has the meaning set out in Article 4.1;
“RMA” means a return materials authorization;
“ROS Profit Rates” means the ROS profit rates set out in Article 6.9;
“Scrap” has the meaning set out in Article 24.1;
“Services” or “Service” has the meaning set out in Article 4.1;
“SG&A” means selling, general and administrative;
“SG&A Rates” means the SG&A rates set out in Article 6.9;
“SIC” means a System Integration Center operated by Company;
“Source Code” means code in any programming language contained in any format,
including human and machine-readable formats, such code including all comments
and procedural code plus all related development documents such as, but not
limited to, flow charts, schematics, statements of principles of operations or
any other specifications;
“Source Inspection” has the meaning set out in Article 21.7;

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 6

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
“Specifications” means the technical and processing specifications for the
development or manufacture or repair of the relevant Product provided by the
Company to Supplier, including all drawings, models, specifications,
documentation, data, product information, engineering standards, technical and
test instructions and test programs, procedures or requirements, functional
information and related data, data files, quality standards, AVL, BOMs,
software, design information, technical manuals, packaging requirements, testing
requirements and know-how, as amended and in effect from time to time;
“Strategic Alliance Team” has the meaning set out in Article 2.1;
“Successor Product” means a printed circuit board assembly, subsystem, orderable
item kit, full system or other product introduced by Company or any of its
Affiliates during the Term within Company’s and its Affiliates’ “Mobility”
product sector that provides the same fundamental functionality or purpose as an
Existing Mobility Product at the time of such introduction;
“Supplier” has the meaning set out in the recital to this Agreement;
“Supplier Associates” has the meaning set out in Article 37.1;
“Supplier Controlled Material” means Material procured by Supplier pursuant to
Article 13.4 in respect of which Supplier has sole responsibility for managing
the purchasing decision, including all negotiations with Material vendors in
respect of price and general commercial terms;
“Supplier Product IP” has the meaning set out in Article 37.3;
"Supplier Proprietary Information” means Information, including but not limited
to, technology, processes or other proprietary property, including trade
secrets, know-how, mask work rights, patent applications, pricing information,
cost information, performance metrics relating to the manufacture of Products or
relating to the operation of Supplier’s facilities and any other non-public
information in any form or medium developed or acquired by Supplier, its
Affiliates or its licensors other than Company, but for greater certainty, does
not include the following: (i) Company Proprietary Information; and (ii) the
Specifications;
“Supply Chain Portal” means Company’s Internet web site for supplier documents
(scportal.lucent.com);
"Target Reduction Rate” has the meaning set out in Article 6.5;
“Term” has the meaning set out in Article 1.1;
“Termination Assistance” has the meaning set out in Article 1.2;
“Third Party Claim” means a Claim asserted by a third party against the
Indemnified Party as contemplated in Article 84;
“Tooling” or “Tools” has the meaning set out in Article 80.1;
“Supplier Associates” has the meaning set out in Article 37.1;
“Transition Agreement” means the transition agreement # HO32050323 made between
the parties;
“VAT” means value added tax;
“Warranty” means the warranty provided by Supplier to Company for Products
pursuant to Article 22;
“Warranty Period” has the meaning set out in Article 22.1;

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 7

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
"WAPRP” has the meaning set out in Article 6.5;
“WES” has the meaning set out in Article 61.3;
“XML” means the application profile known as “Extensible Markup Language”.

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 8

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment B
Products and Initial Prices
The attachment embedded below lists all Mobility Products and Mobility Switching
Packs with pricing effective as of [ *** ], including the applicable Percentage
Reduction for such pricing period.
[ *** ]

     
***
  Portions of this page have been omitted pursuant to a Request for Confidential
Treatment filed separately with the Securities and Exchange Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies/Celestica
Proprietary   Page 1 of 2

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment B1
Commercially Purchased Items
None.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies/Celestica
Proprietary   Page 2 of 2

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment C
Manufacturer Per Unit Pricing Formula Summary
Overview: Per unit pricing shall be determined and reported using the formula
and structure shown in the following spreadsheet.
[ *** ]

  ***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

Privileged and Confidential
Lucent Technologies/Celestica Proprietary
Page 1 of 1

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment D
Cost Savings Submittal Form:

                         Supplier Name:   Case Number:
 
                 
Supplier Address:
  Submitted To:   Date Submitted:    
 
                 
Supplier Contact Name:
  Coordinator:   Assigned to:    
 
                 

Improvement Program : (Program Type — Check all that apply)

                      o Cost Reduction   o Process Improvement   o Inventory
Reduction   o Revenue Generation
 
                   
 
  o Material Cost       o Business        
 
                   
 
  o Labor Cost       o Manufacturing        
 
                   
 
  o Yield Improvement       o Logistics        
 
                   
 
  o Reliability Improvement                
 
                     

         
Program Effect (Annualized Value)
  Project Expenses:    
 
       
Cost Savings ($US Annual)
      Total
 
       
Cost Savings (3 yr. Average)
  Labor   Materials
 
       
 
  Capital   Other
 
         

Description:

 
Proposal:

 
Saving Calculation or Financial Considerations: (Net $)

           
Accomplishment:
       
Measurement Period:
 
                                                                                                                                        
   Total
 
       
Savings ($M):
                                                                             
                                                                 Total
 
         

Privileged and Confidential
Lucent Technologies/Celestica Proprietary
Page 1 of 1

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment E

Supplier Service Fees

Service Fees:
The following rates and fees shall apply as of the Effective Date of this
Agreement, and may be amended from time to time upon agreement of the parties.
Fees in respect of other Services will be based on Supplier’s then current fees
for such additional Services.
[ *** ]

*** Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

Privileged and Confidential
Lucent Technologies/Celestica Proprietary
Page 1 of 1

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment F
Example Product Plan
THE APPLICABLE PRODUCT PLAN WILL BE DISCUSSED AND MODIFIED
BY THE PARTIES AS NEEDED
PRODUCT PLAN Product Description:
Company Contact:
Supplier Contact:
Note: the information below is provided as an example. The specific requirements
and reporting frequencies should be specified for each particular product plan.

          Article Section in Supply         Agreement   Specific Requirements  
Reporting Frequency  
21.2 ISO and Telecommunication Requirements
  A copy of the Registrar Audit Report and subsequent corrective action
responses.   Quarterly update and as any certification change occurs.  
21.3 Quality Audits
  Responses to Corrective Action Requests.   Within 20 days from completion of
each audit.  
21.5 Source Inspection
  Conditions for Transfer of Source Inspection Costs to Supplier and back to
Company: If the Product inspection performance results do not meet the Company’s
inspection requirements after five (5) lots per Product number or Product family
including the First Article lot then the costs of Company’s source inspection
shall be paid by Supplier. Once the Product inspection performance results meet
Company’s inspection requirements for five (5) consecutive lots, then the costs
associated with Company’s source inspection shall no longer be paid by Supplier.
   
 
  Responses to Corrective Action Requests.   Within 30 days.
 
         
21.6 First Article Inspection
  Data, samples.   Upon completion.  
21.8 Product and Manufacturing Quality
  1. Manufacturing quality levels as measured by Supplier.   Monthly.
 
  2. A chart of the test results expressed in percent defective with upper and
lower control limits, Pbar, and a line set at the Company’s Expected Quality
Level (EQL) of 0.13 percent defective.    
 
  3. A pareto of defects by pack code.    
 
  4. Test process yield data by pack code.    
 
  5. A chart of Defects Per Million Opportunities (DPMO) by Circuit Pack Code.  
 
 
  6. A listing of sample sizes, defects, defect quantities, defect part, by pack
code.    
 
  7. An Environmental Stress Test (EST) plan as per Annex C of X-21173, “Generic
Robustness Classification Method For Telecommunications Equipment Using
Environmental Stress Testing”.   As Requested.  

Privileged and Confidential
Lucent Technologies/Celestica Proprietary
Page 1 of 3

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

           
 
  8. Test and Repair data, “ Test and Repair” at the serial number level of
applicable circuit pack/unit from applicable test area.    
 
         
21.8 Product and Manufacturing Quality
  1. KS-23490, Label Specification (Serial/Comcode)   No report necessary.
 
  2. KS-20643, Label Specification (Nameplate).    
 
  3. 801-001-105, Shipping and Receiving Barcode Label Standard.    
 
  4. PKG-91NJ1045, Packaging, Marking, and Labeling Specification for Purchased
Equipment.      
21.9 Supplier and Subcontractor ESD Requirements
  Supplier’s internal audit results.   Annually.  
21.10 Supplier and Subcontractor MSD Requirements
  Per applicable Supplier process instructions for moisture sensitive devices.  
Annually.  
21.11 Nonconforming Product and corrective action
  Corrective action report shall include:   Within 20 days of nonconformance
notification.
procedures
  1. The initial action taken to contain the problem.    
 
  2. An explanation of the root cause of the problem.    
 
  3. The proposed corrective action or solution to the problem.    
 
  4. The actual or planned implementation date of the corrective action.    
 
  5. The plans for verifying that the corrective action was effective. Include
the actual or planned date of the verification of effectiveness.      
21.12 Product Return Rate Calculations and No Trouble Found Requirements.
  Supplier shall provide TL9000 metrics needed by the Company, including but not
limited to return rates. See TL9000 Metrics Handbook (ASQ). First year return
rate requirement < 16 returns per normalization units. Long term return rate
requirement < 0.6%. For those Supplier facilities manufacturing Products for
Company that are not TL9000, Supplier’s Product return data will be monitored.  
Quarterly.  
21.13 Failure Mode Analysis
  Corrective action report shall include:   Within 20 days from the request.
 
  1. The initial action taken to contain the problem.    
 
  2. An explanation of the root cause of the problem.    
 
  3. The proposed corrective action or solution to the problem.    
 
  4. The actual or planned implementation date of the corrective action.    
 
  5. The plans for verifying that the corrective action was effective. Include
the actual or planned date of the verification of effectiveness.      

Privileged and Confidential
Lucent Technologies/Celestica Proprietary
Page 2 of 3

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

         
21.14 Epidemic Failure Condition and Corrective
  Corrective Action Plan shall include:   Within 5 days of the reported
occurrence.
Action Requirements
  1. The initial action taken to contain the problem.    
 
  2. An explanation of the root cause of the problem.    
 
  3. The proposed corrective action or solution to the problem.    
 
  4. The actual or planned implementation date of the corrective action.    
 
  5. The plans for verifying that the corrective action was effective. Include
the actual or planned date of the verification of effectiveness.      
21.15 Annual Quality Improvement Goals and
  1. Company return rates and on time delivery performance.   Quarterly.
Requirements
  2. Verification Test and Workmanship results.    
 
  3. In-circuit, functional and final system test yields.      
61.3 Warranty: Warranty Eligibility System (WES) data
  Provide data fields: Item serial number, Order number, Manufacture ship date,
Parent serial number, Product line, Product identification, Circuit pack code or
microcode, Circuit pack series or issue of microcode, Origination location.  
Upon shipment.  
65 Product Conformance
  To be determined.   To be determined.  
Product-specific documentation
  Inspection Methods of Instruction, Test Design Requirements.   No report
necessary.  

Privileged and Confidential
Lucent Technologies/Celestica Proprietary
Page 3 of 3

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment G
Flexible Delivery Terms
SECTION 1 — BUILD TO STOCK
1.1 Summary of the Program
At Company’s request and within a mutually agreed upon time frame, Company and
Supplier shall implement a build to stock (“Build to Stock”) ordering program
for certain Products ordered by Company under this Agreement. This program is
based on the concept of Supplier manufacturing enough Products in order to
maintain a strategic set of predetermined Supplier finished goods inventory
buffers (“SFGIB”) either to support a Company Flexible Delivery Arrangement such
as Dock to Shop or some other form of Flexible Delivery Arrangement as may be
agreed to by the parties.
The intent of the Build to Stock program is for Supplier, at a minimum, to
manufacture enough Products to maintain the SFGIB at a level agreed to by the
parties as Supplier, Company, or Company’s end customers withdraw Products from
the SFGIB. The SFGIB may be physically located at a Supplier location, a Company
location, or at a mutually agreed upon third party location.
Company may, at its sole option, choose to maintain a Company owned finished
goods inventory buffer (“CFGIB”) that consists of Company owned Products that
are waiting to be shipped to Company’s end customers. Company may, at its sole
option, also choose to have Supplier pre-build enough Product for the CFGIB in
order to meet above capacity periodic demands from Company. In the event Company
chooses either option described in this paragraph, this shall not reduce, limit
nor change Supplier’s commitment to maintain the agreed to SFGIB levels.

1.2   Establishment of SFGIB levels and Local Delivery Requirements

Specific local pull requirements, replenishment request, ship notification
process or other local logistics processes will be mutually determined between
Supplier and Company’s ordering location(s) and shall be detailed in a local
agreement or order.
For each Product, as applicable, the minimum and maximum SFGIB levels shall be
as agreed to by the parties, taking into account the Upside Flexible Delivery
Limits set out in Section 4 of this Attachment.
The SFGIB levels will be reviewed on a monthly basis by the parties and resized
quarterly or as otherwise mutually agreed based upon Company’s demand and actual
pulls in the preceding quarter. Thereafter, the SFGIB levels will be frozen and
will be effective until the end of such quarter. Target algorithms will also be
re-evaluated after each quarter. Company and Supplier will review Forecast,
order fill, inventory, and minimum lot sizes each quarter.

1.3   Ordering and Fulfillment

Blanket Purchase Orders will be issued by Company to Supplier to cover
requirements for the Products delivered by Supplier under the applicable
Flexible Delivery Arrangement.
Lucent Technologies/Celestica Proprietary Information
Page 1 of 4

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Subject to Article 12 of the Agreement, Supplier owns SFGIB inventory until
title for the Products is transferred by Supplier to Company in accordance with
the terms of the applicable Flexible Delivery Arrangement.

1.4   Company’s Liability

Company shall be liable to Supplier for finished goods inventory,
work-in-process, and Material pursuant to Article 12 of the Agreement.
SECTION 2 — BUILD TO ORDER

2.1   Summary of the Program

For certain Products ordered pursuant to the Agreement, Supplier and Company may
establish build-to-order lead-times. At a minimum, Supplier will be expected to
deliver to Company the required quantities of Products on an as ordered basis in
accordance with the agreed to build to order lead-times and, where Company has
provided a Forecast for the build to order Products, in accordance with the
Upside Flexible Delivery Limits set forth in Section 4.0 of this Attachment. For
each such Product, Company and Supplier will mutually agree to a minimum lot
size. Company will load this minimum lot size quantity into its MRP system and
provide “netted” Forecasted demand to Supplier accordingly. Lot sizes will be
evaluated quarterly. In the absence of any Forecasted demand by Company,
Supplier will be expected, at a minimum, to deliver to Company the required
quantities of Products on an as ordered basis in accordance with the agreed to
build to order lead-times.
SECTION 3 — BLANKET ORDERS

3.1   Summary of the Program

Blanket Purchase Orders will cover a specific period of time as identified in
the applicable Order. The quantity of Products specified in such Orders is
Company’s Forecasted usage for the specified period. The Forecast is not a
commitment. Company’s commitment to Supplier is for the number of units of
Product ordered by Company through the issuance of a release (the “Release”),
except as otherwise stated in this Agreement. Each Release shall specify the
number of units of Product to be shipped by Supplier to Company and the shipment
schedule (the “Release Schedule”). Supplier agrees to ship in accordance with
the Release Schedule.
SECTION 4 — UPSIDE FLEXIBLE DELIVERY LIMITS

4.1   Planning Requirements

Unless otherwise agreed to by the parties, in the event that Company delivers to
Supplier requests (the “Additional Quantity Requests”) that Supplier deliver to
Company quantities of a Product in excess of the quantity of such Product
Forecasted on the eighty-fourth (84th) day prior to the Forecast delivery date
of such Product (the “Baseline Quantity”), Supplier shall be able to deliver
such additional quantities of Product to Company, subject to the following
limitations (the “Upside Flexible Delivery Limits”):

  (a)   during the period which is less than eighty-four (84) and more than
fifty-six (56) days prior to the Forecasted delivery date for such Product,
Company may deliver one or more Additional Quantity Requests for up to, in the
aggregate, an additional fifty (50) percent of the Baseline Quantity;     (b)  
during the period which is less than fifty-five (55) and more than twenty-one
(21) days prior to the Forecasted delivery date for the Product, Company may
deliver one or more Additional Quantity Requests for up to, in the aggregate, an
additional twenty-five (25) percent of the Baseline Quantity; and

Page 2 of 4

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

  (c)   if one or more Additional Quantity Requests are received by Supplier
less than twenty-one (21) days prior to the Forecasted delivery date for the
Product, Company may deliver one or more Additional Quantity Requests for up to
an additional aggregate quantity as supported by the quantity of Product in the
SFGIB;

provided, however, that in no event shall Supplier be obligated pursuant to
paragraphs (a) and (b) above to deliver, in the aggregate, more than fifty
(50) percent of the Baseline Quantity under all Additional Quantity Requests
received by Supplier.
It is the parties’ mutual objective that Supplier achieve the ability to deliver
quantities of Products in excess of the Upside Flexibility Limits. To that end,
Supplier shall develop a plan to improve Upside Flexible Delivery Limits, for
approval by the Strategic Alliance Team, and shall use reasonable commercial
efforts to satisfy Company’s demand in excess of the Upside Flexible Delivery
Limits or within the stated lead time.
Supplier is expected to meet the Upside Flexible Delivery Limit requirements by
maintaining an adequate level of finished goods inventory in accordance with the
SFGIB levels agreed to in Section 1 of this Attachment and Material safety
stocks. Company will not pay any additional charges for PPV or PPE to enable
Supplier to meet the Upside Flexible Delivery Limit requirements. In no event
shall Company pay or be liable for additional production, handling or other such
labor charges to Supplier for Supplier’s ability to meet or exceed the Upside
Flexible Delivery Limit requirements.
In the event the SFGIB levels and component safety stock are consumed by
Company’s demand above the Upside Flexible Delivery Limits: (a) Supplier shall
provide Company with a recovery plan, based on the available supply chain, that
will include a projected date for replacing the SFGIB level, and (b) the measure
of Supplier’s performance relating to demand pull metrics shall not be affected.
Page 3 of 4

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment H
Return And Repair Services

         
Privileged and Confidential
  Lucent Technologies and Celestica Proprietary   Page 1 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
TABLE OF CONTENTS

     
Section 1.0
  SCOPE
Section 2.0
  APPLICABLE SPECIFICATIONS
Section 3.0
  GENERAL REPAIR REQUIREMENTS
Section 4.0
  RS&R PROCESS REQUIREMENTS
Section 5.0
  INTENTIONALLY DELETED
Section 6.0
  DELIVERY AND TRANSPORTATION
Section 7.0
  RISK OF LOSS AND DAMAGE AND DELIVERY
Section 8.0
  PRICES
Section 9.0
  INVOICING AND PAYMENT
Section 10.0
  SUPPLIER’S REPAIR WARRANTY
Section 11.0
  CANCELLATION OF REPAIR ORDERS BY COMPANY
Section 12.0
  REPAIR MATERIALS
Section 13.0
  CHANGE CONTROL
Section 14.0
  PROGRAM MANAGEMENT AND PERFORMANCE REPORTING
Section 15.0
  DOCUMENTATION REQUIREMENTS
Section 16.0
  QUARTERLY PERFORMANCE REVIEWS
Section 17.0
  COMMUNICATIONS
Section 18.0
  USE OF SUBCONTRACTORS
Section 19.0
  COMPANY RESPONSIBILITIES CONCERNING THE SCOPE OF THIS ATTACHMENT
Section 20.0
  HEADINGS AND SECTION REFERENCES

LIST OF TABLES

     
I
  Supplier’s Documentation Requirements

LIST OF SCHEDULES

     
Schedule 1
  Repaired Product Prices
Schedule 2
  Periodic Performance Reports
Schedule 3
  Repair System Interface Requirements

         
Privileged and Confidential
  Lucent Technologies and Celestica Proprietary   Page 2 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
1.0            SCOPE
This Attachment H addresses the repair by Supplier at Company’s request of
Products outside of Supplier’s Warranty obligations to Company as set forth in
Article 22 of the External Manufacturing Services Supply Agreement
No. WR71050115 made between Company and Supplier (the “Agreement”), of which
this Attachment is made a part. The terms and conditions of this Attachment
hereby incorporate by reference the terms and conditions of the Agreement. As
used in this Attachment H, “Effective Date” means the effective date (April 1,
2005) of the Agreement.
All capitalized terms used and not otherwise defined in this Attachment shall
have the respective meanings given to such terms in the Agreement. In the event
that there is a conflict between the terms and conditions of this Attachment
regarding Supplier’s or Company’s performance pursuant to this Attachment, as it
relates to the repair of Products, and the terms and conditions of the
Agreement, the terms and conditions contained in this Attachment shall prevail
to the extent of such inconsistency.
Overview
Company’s Local Customer Support (“LCS”) organizations located in various
regions throughout the world serve as Company’s repair and logistics hubs for
the Products identified in this Attachment. The LCS organizations are
responsible for managing both the Product repairs and upgrades during and after
Company’s warranty period to its end customers. Pursuant to the terms of this
Attachment, Supplier will service Repair Orders from the various LCS
organizations throughout the world as contemplated in Article 23.1 of the
Agreement. Supplier may also receive Repair Orders pursuant to this Attachment
from Company’s System Integration Centers. For the purposes of this Attachment,
references to Company’s LCS organizations shall include Company’s System
Integration Centers and other organizations that Company may designate from time
to time. Company shall cause its LCS organizations for which Supplier repairs
Products under this Attachment to abide by the terms and conditions of this
Attachment, including, without limitation, Article 23.1 of the Agreement.
Supplier agrees to provide feedback on all Products returned to Supplier
pursuant to the terms of this Attachment. This feedback will allow Company to
monitor and improve overall Product quality, reliability, and cost.
Product Returns received by Supplier though the RS&R process outlined in
Section 4 of this Attachment and Section B in Schedule 5 will consist of Company
Owned Products and Products owned by Company’s end customers needing repairs or
Modifications. For those Products for which Company has determined that Supplier
is responsible for performing the repair and/or Modification pursuant to this
Attachment and Article 23.1 of the Agreement, the various LCS organizations will
provide a Repair Order to Supplier authorizing Supplier to make the necessary
repairs and/or Modifications to the Products in accordance with the
Specifications.
In addition to providing at Company’s request Return, Service, and Repair
services to Company as contemplated in Article 23.1 of the Agreement, Supplier
may also perform at Company’s request, pursuant to the terms set forth in this
Attachment and Article 23.1 of the Agreement, additional services specific to a
Company location. These additional services (“Additional Services”) are set
forth in Schedule 5 to this Attachment.

         
Privileged and Confidential
  Lucent Technologies and Celestica Proprietary   Page 3 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
DEFINITIONS
“Additional Services” shall have the meaning set out in Section 1.0, “Overview”.
“Agreement” has the meaning set out in Section 1.0, as the same may be amended,
supplemented or modified by the parties thereto from time to time.
“ATP” shall mean all tests passed, otherwise known as “No Trouble Found”. A
Product Return will be considered ATP if it passes all tests and procedures
specified by Company, without further Modification or repair, in order to verify
compliance of the repair services being performed by Supplier under this
Attachment.
“Attachment” shall mean this Attachment H, as the same may be amended,
supplemented or modified from time to time.
“BOD” shall mean a business object document.
“Class A Changes” shall mean a Product update that must be implemented to
correct a Product condition that results in an inoperative or unsatisfactory
operating condition, safety hazard, or non-conformance to the Product technical
Specifications.
“Company Owned Product” shall mean a Product Return owned by Company.
“FMA” shall mean Failure Mode Analysis, which is a situational study requested
by Company, used to diagnose failures.
“Gross Profit” shall mean Supplier’s profit before income taxes.
“Initial Prices” has the meaning set out in Section 8.1.
“LCS” has the meaning set out in Section 1, “Overview”.
“Listed Products” has the meaning set out in Section 8.1.
“Miscellaneous Returns” shall mean a category of Product Returns, which is not
otherwise defined in this Attachment.
“Modification” shall mean a required upgrade or change to a Product as a result
of an Engineering Change Order initiated by Company;
“OEM” shall mean an original equipment manufacturer that owns the control of the
design and manufacture of the OEM Product and will perform the repair on the OEM
Products.
“OEM Product” shall mean a Product that is to be returned to the OEM Vendor.
“OEM Vendor” shall mean the vendor of an OEM Product.
“PIM” shall mean a permanent information memorandum.

         
Privileged and Confidential
  Lucent Technologies and Celestica Proprietary   Page 4 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
“Price Reduction Date” has the meaning set out in Section 8.1.
“Prices” has the meaning set out in Section 8.1.
“Product”, for the purposes of this Attachment, refers to those products defined
in the Agreement in addition to those products defined in this Attachment.
“Product Return” shall mean any Product received by Supplier pursuant to this
Attachment.
“RDMA” shall mean reliability data management and analysis, a system for repair
and reliability information such as return rate and component removal rate.
“Repaired Product” shall mean a Product Return that has been repaired by
Supplier or Supplier’s Repair Vendor and passed all the required testing set
forth in the Specifications.
“Repair Interval” shall mean Repaired Product turnaround time and is measured in
days, starting when the Product Return arrives at Supplier’s dock with complete
and correct documentation and ending when the Repaired Product is either
delivered by Supplier to Company’s designated transportation carrier in
accordance with Section 6.2, or declared to be Unrepairable Product in
accordance with Section 3.9.
“Repair Material” shall mean all parts, components and raw materials (including
labels, product inserts, packaging and other labeling for the Products) required
and owned by Supplier to perform the repair of Products or provide the
Additional Services described in Schedule 5 under this Attachment.
“repair of Product” or “repair” shall mean the repair, upgrade, and testing, as
applicable, of a Product to the Specifications by Supplier or Supplier’s Repair
Vendor.
“Repair Order” shall mean a purchase order issued by Company to Supplier
authorizing Supplier to perform the repair of Products.
“Repair, Service & Return” or “RS&R” shall mean the receiving, repair and return
process that supports the receipt and shipment of Product Returns to and from
Company and customers.
“Repair Warranty” shall have the meaning set out in Section 10.1.
“Returned Goods Memorandum” or “RGM” process covers those Product Returns to
Company that consist primarily of Company installation returns.
“Repeat Return Rate” shall mean the rate, expressed as a percentage of the
aggregate amount of Products repaired by Supplier for Company pursuant to this
Attachment during any six (6) month period, that the same Repaired Product is
returned for the same repair as was previously performed by Supplier at any time
during such six (6) month period.
“Repricing Date” has the meaning set out in Section 8.2.

         
Privileged and Confidential
  Lucent Technologies and Celestica Proprietary   Page 5 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
“Specifications” shall mean the technical and processing specifications for the
development, manufacture or repair of the relevant Product provided by Company
to Supplier, including all drawings, models, specifications, documentation,
data, product information, engineering standards, technical and test
instructions and test programs, procedures or requirements, functional
information and related data, data files, quality standards, AVL, BOMs,
software, design information, technical manuals, packaging requirements, testing
requirements and know-how, as amended and in effect from time to time.
“Storeroom Balance Accuracy” shall mean the percentage of correct part numbers
and counts found in a storeroom audit performed by either Company or Supplier.
“Substituted Product” shall mean a Product that Supplier has substituted on a
Repair Order in place of the Unrepaired Product (bearing a different serial
number) that was originally supposed to be repaired pursuant to such Repair
Order.
“Supplier’s Repair Vendor” shall mean a third party repair vendor approved by
Company but subcontracted by Supplier to perform the repair of Products for
those Products not defined as an OEM Product.
“TF” shall mean trouble found.
“Unrepairable Products” shall mean those Product Returns that have been declared
unrepairable in accordance with Section (3.6 (e)) or Section 3.9.
“Unlisted Products” has the meaning set out in Section 8.2
“Unrepaired Products” shall mean those Product Returns that are assumed to be
defective, regardless of whether or not test data exists confirming such
condition and are to be repaired and tested by Supplier pursuant to the
Specifications.
“Unrepairable Rate” shall have the meaning set out in Section 3.9.
“WES” shall mean Company’s warranty eligibility system.
2.0 APPLICABLE SPECIFICATIONS

2.1   The Specifications listed below are hereby incorporated by reference into,
and shall be adhered to, as applicable, by Supplier in its performance of all
activities pursuant to, this Attachment. For clarification, the Specifications
applicable to this Attachment include but are not limited to the following:

  (a)   drawings, stock lists, change orders, change notices, PIMs, schematics,
and test procedures, copies of which are in Supplier’s possession. These
Specifications will be updated by Company and distributed to Supplier via a
database containing Product change history and detail or via other agreed upon
methods;     (b)   repair quality assurance requirements: Specification #
IPC-A-610 Rev. B Class II, Acceptability of Electronic Assemblies; and     (c)  
repair appearance standard: Specification # IPC-A-610 Rev. B Class II,
Acceptability of Electronic Assemblies.

         
Privileged and Confidential
  Lucent Technologies and Celestica Proprietary   Page 6 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
3.0 GENERAL REPAIR REQUIREMENTS

3.1   At Supplier’s option as specified in Article 23.1 of the Agreement,
Supplier shall be entitled to repair all Products listed in Schedule 1 (the
“Listed Products”) and perform all the necessary tests specified by Company in
order to verify compliance of the repair services being performed under this
Attachment.

3.2   Unless otherwise specified in the applicable Repair Order, Product Returns
that have been successfully repaired and tested by Supplier shall be packed and
labeled by Supplier in accordance with the applicable Specifications in effect
as of the Effective Date, unless changed in accordance with Article 67 of the
Agreement.

3.3   Company shall provide Supplier with a unique location identifier. This
location identifier, along with the date code, shall be incorporated by Supplier
into the repair documentation of all Repaired Products as specified by Company
to clearly identify the origin and date of repair for all Repaired Products.

3.4   Supplier shall, in accordance with Article 61.3 of the Agreement,
participate in Company’s Warranty Eligibility System where applicable for the
purpose of tracking Supplier’s Repair Warranty for all Repaired Product or
Substituted Products.

3.5   Subject to Section 3.6(e) and 3.9 in respect of Unrepairable Products, for
each Repair Order accepted by Supplier, Supplier shall complete the repair and
deliver the Repaired Product within a Repair Interval of ten (10) days. Subject
to Section 3.6(e) and 3.9 in respect of Unrepairable Products, in the event that
Supplier agrees to repair a Product but fails to complete the repairs within the
time period agreed by Supplier and Company, Supplier shall, subject to Company’s
prior approval, replace the Product Return with a Substituted Product.

3.6 Quality Requirements

  (a)   Supplier shall have a written quality plan to ensure that Product
Returns repaired by Supplier meet Company’s quality standards. Such quality plan
shall, at a minimum, include the following:

  (i)   test procedures, documentation, and control;     (ii)   quality
assurance, documentation, and control;     (iii)   final products sampling and
inspection audits;     (iv)   quality data collection, tracking, and reporting;
    (v)   corrective actions; and     (vi)   workmanship standard.

  (b)   Supplier shall perform audits, using valid statistical sampling
strategies to ensure that repair of Products is consistent with the
Specifications.     (c)   Supplier’s ESD program shall be in compliance with
Article 21.11 of the Agreement.     (d)   Supplier shall ensure that the Repeat
Return Rate within the Repair Warranty period for all Products repaired by
Supplier or Supplier’s Repair Vendor is less than or equal to [ *** ] on an
aggregate basis for Mobility Products. This metric will be reviewed quarterly
and adjusted by mutual agreement of the parties.     (e)   Supplier agrees to
work with Company in support of Company’s maintenance of its agreements with its
end customers concerning all required tests (“ATP”) replacements and

  ***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

         
Privileged and Confidential
  Lucent Technologies and Celestica Proprietary   Page 7 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

        metrics. Unless otherwise specified by Company in writing, the maximum
number of consecutive occasions on which each Product may be tested without
repair or Modification and for which there is no trouble found, is twice.
Products which twice pass tests without repair or Modification and for which
there is no trouble found, shall be deemed to be Unrepairable Products and
Supplier shall: (i) disposition the Product in accordance with Section 3.9 and
bill Company using the NTF price indicated on Schedule 1 of this Attachment, and
(ii) at Company’s request and cost and if available, substitute equivalent (same
form, fit and function) Repaired Product on the Repair Order. The Substituted
Product must be noted on the shipping paperwork that Supplier provides noting
the original and replacing serial numbers.

3.7   Company reserves the right to perform, or have Company’s third party
representative perform, periodic audits of Products repaired by Supplier or
Supplier’s Repair Vendor under this Attachment, subject to Article 30 of the
Agreement. Company shall provide Supplier advanced notification of any
unscheduled audit at least forty-eight (48) hours prior to such audit. Company
also reserves the right to perform, or have Company’s third party representative
perform, periodic process audits using ISO 9001/9002, TL 9000 and ISO 14000:
1996 or Eco-Management and Audit Scheme criteria. Company shall ensure that its
third party representative complies with all confidentiality and security terms
and conditions that have been established between Company and Supplier. Should
Supplier not pass an audit conducted by Company or Company’s third party
representative, Supplier shall develop, implement, and submit to Company within
an agreed upon time period a formal Corrective Action Plan which is acceptable
to Company, acting reasonably, of sufficient detail to indicate root cause,
corrective action, and a corrective action implementation timeline. Should
Supplier fail to provide Company with a Corrective Action Plan which is
acceptable to Company acting reasonably within the agreed upon time period, or
fail to implement the identified corrective action within the agreed upon time
period, Company may consider Supplier to be in default, in accordance with
Article 36 of the Agreement.

3.8   All Repaired Products shall be tested by Supplier or Supplier’s Repair
Vendor in sufficient detail to verify compliance with the Specifications prior
to delivery of Repaired Products to Company or Company’s end customer. To this
end, Supplier shall comply with all existing acceptance test Specifications in
place as of the Effective Date unless changed in accordance with Article 67 of
the Agreement. Supplier shall develop and submit for Company’s review and
approval additional acceptance test procedures for any Products not listed on
Schedule 1 which Company requests Supplier to repair (“Unlisted Products”)
subsequent to the Effective Date. To the extent that the costs associated with
the foregoing are not included in the Baseline and/or the overhead for the
Facilities, such costs shall be charged by Supplier to Company as a separate,
billable NRE charge for which Company shall issue Supplier a purchase order in
accordance with Article 9 of the Agreement. Company will support, modify and
provide test information from a database, with continued updates and changes.
Unless otherwise agreed to by the parties, any changes to the test processes or
Specifications shall be made in accordance with Article 67 of the Agreement.
Such acceptance test procedures shall describe, step-by-step, directions for
preparatory operations, directions for making actual measurements or
observations, and a statement of required values and limits. The acceptance test
procedures shall also specify the test equipment used, test configurations,
measurement tolerances, test conditions, environmental exposures imposed,
upgrades and failure, repair, and Modification information.

3.9   Any Product Return that: (a) Supplier can not repair due to damage to the
Product, (b) the parties mutually agree is beyond economic repair, or
(c) Supplier has attempted to repair and is unable, (an “Unrepairable Product”)
shall be identified by Supplier to Company in writing indicating the Repair
Order number, Product description, quantity and reason the Product Return could
not be repaired. Additionally, Supplier shall perform one of the following
steps: (a) If the Repair Order indicates “Return Junk Material — Yes” then
Supplier shall ship the Unrepairable Product using standard precautions and
packaging to the address shown on the Repair Order; or (b) If the Repair Order
indicates “Return Junk Material — No” then such Unrepairable Product shall be
deemed to be Scrap and Supplier shall dispose of it in accordance with
Article 24 of the Agreement. Supplier compensation for Product Returns deemed to
be Unrepairable Product under this Article 3.9 shall be as follows: (i) for
damaged Product and for Product which the parties mutually agree is beyond

         
Privileged and Confidential
  Lucent Technologies and Celestica Proprietary   Page 8 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

    economic repair, Company shall pay Supplier a flat fee of [ *** ]; and
(ii) for Product which Supplier has been unable to repair, Company shall pay
Supplier 80% of the TF price indicated on Schedule 1 of this Attachment. The
compensation for Product Returns deemed to be Unrepairable Products hereunder
shall be reviewed and adjusted if appropriate, by mutual agreement of the
parties.

3.10   With respect to item (c) in Section 3.9, Supplier shall maintain an
unsuccessful repair rate (“Unrepairable Rate”) no greater than [ *** ] on an
aggregate basis. For the purposes of this Attachment, Unrepairable Rate shall be
calculated by dividing the total number of Unrepairable Products by the sum of
the total number of Unrepairable Products plus the total number of Unrepaired
Products which Supplier was successful in repairing during a quarter’s period.
This metric shall be reviewed quarterly and adjusted, if appropriate, by mutual
agreement of the parties.

3.11   If Supplier is unable to complete the repair of a Product Return within
the required time period (other than in respect of an Unrepairable Product),
Supplier shall be entitled, at its option, but without any additional
compensation beyond the repair price specified in Section 8, to replace any
Product Return with an equivalent new or Repaired Product (each, a “Replacement
Product”), subject to prior approval of Company. Supplier shall be entitled to
sell any Product Return that it has replaced with a Replacement Product once
such Product Return has been repaired, provided that if Supplier desires to sell
any such repaired Product Return to any customer, such Product Return shall only
be sold to such customer by Company, on Supplier’s behalf. Company agrees to
provide Supplier such assistance as may reasonably be requested by Supplier in
the disposition of repaired Product Returns as contemplated in this
Section 3.11.

3.12   Supplier shall accept the Repair Order number provided by Company to
track order status when an Unrepaired Product is in Supplier’s possession. If
Supplier normally requires a RMA number to provide such tracking, Supplier
agrees to waive this RMA requirement.

3.13   Supplier will notify Company when Supplier has established the repair
capability for any newly manufactured Products which Company has requested
Supplier to repair, any vintage or older Products that are not set forth on
Schedule 1 and any other Unlisted Products which Company has requested Supplier
to repair, or when it has established a new Modification process to a Listed
Product. This information will be used to maintain Company’s sourcing database.
Company will make commercially reasonable efforts to notify Supplier at least
six (6) months in advance of declaring that repair services are no longer
required for a Product or Product family.

3.14   Upon Company request, Supplier shall provide repair services for all or
some portion of the series, issues and lists of the Listed Products.

3.15    All Process Changes shall be dealt with in accordance with Article 67.2
of the Agreement.
4.0 RS&R PROCESS REQUIREMENTS

4.1   Unless otherwise requested by Company and agreed to by Supplier, for those
Product Returns which are sent to Supplier by Company’s various LCS
organizations or by Company’s end customers and which are specifically addressed
to Supplier as the repair location, Supplier shall comply with the process
requirements set forth in this Section 4.1. The specific tasks to be performed
by Supplier pursuant to this Section 4.1 are as follows:

  (a)   verify contents of the shipment against the shipping manifest and notify
the applicable LCS organization of any discrepancies in order to reconcile such
discrepancies;     (b)   unpack Unrepaired Product and verify that the
individual description and quantity on each Unrepaired Product matches the
description and quantity on the shipping documentation. If the Unrepaired
Product does not match the shipping documents, hold the Unrepaired Product in a
separate holding area and notify the applicable LCS organization in order to
reconcile such discrepancy;

  ***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

         
Privileged and Confidential
  Lucent Technologies and Celestica Proprietary   Page 9 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

  (c)   de-trash all incoming Unrepaired Product packaging and dispose of all
resulting trash in an environmentally safe manner through an authorized
recycling vendor approved by Company;     (d)   upgrade all Unrepaired Product
for all Class A Changes and any upgrades required to facilitate repair and test;
    (e)   test and repair Unrepaired Product within the Repair Interval shown in
Schedule 1. If no Repair Interval is shown, Supplier and Company shall agree on
the Repair Interval for the Unrepaired Product. All Unrepaired Products that
cannot be repaired by Supplier shall be dispositioned in accordance with Section
3.8;     (f)   pack and ship all Repaired Products as directed on the applicable
Repair Order;     (g)   perform any required transportation management services
in accordance with Section 6.0 and notify the appropriate LCS organization of
any shipping issues relating to the shipment by Supplier of Repaired Product to
the address specified on the Repair Order;     (h)   transmit warranty
information to WES as related to Supplier’s Repair Warranty; and     (i)  
provide Company with a copy of Supplier’s open Repair Order report weekly.

4.2   Company will provide a report or dataset of receipt messages for Repaired
Products. This information will be from each Company LCS organization and will
be sent to Supplier weekly.

4.3   For all Product Returns received by Supplier under the RS&R process set
forth in Section 4.1 above, Supplier shall ship Repaired Products within a
Repair Interval of ten (10) days. In the event that the appropriate LCS
organization fails to reconcile discrepancies identified in Sections 4.1(a) or
4.1(b) above within four (4) hours of the notice specified therein, the timing
of the Repair Interval for such shipment shall be suspended until such time as
the discrepancies are reconciled by the parties.

4.4   Where delivery of Repaired Products is delayed due to the unavailability
of any information, materials or other items to be provided by Company to
Supplier, Supplier shall be afforded relief in the delivery requirement of such
Repaired Products. Supplier shall provide to Company, in writing, as soon as
possible but in any event no less than five (5) Business Days prior to the
scheduled delivery date, the cause of any such delay in sufficient detail for
Company to evaluate the appropriate relief in delivery date(s). Company shall
notify Supplier of such relief, in writing, within five (5) Business Days of
receipt of Supplier’s request for a change to delivery dates. Such delays shall
not be deemed to affect any measure of Supplier’s performance in respect of
complying with the Repair Interval for such Repaired Products.

5.0 INTENTIONALLY DELETED
6.0 DELIVERY AND TRANSPORTATION

6.1   Company or Company’s end customer, as the case may be, shall pay any
inbound freight costs for deliveries to Supplier pursuant to this Attachment.

6.2   For any Products that will be shipped to Supplier pursuant to this
Attachment from an origination point outside of the United States and for which
Supplier has been notified by Company or Company’s end customer of said
shipment, Supplier shall, unless otherwise agreed, be the importer of record for
such shipment and be responsible for facilitating directly or indirectly through
a qualified customs broker the importation of the shipped Product into the
United States. In such an event, any applicable duties shall be paid by Supplier
and billed to Company as a separate charge on the Repair Order.

         
Privileged and Confidential
  Lucent Technologies and Celestica Proprietary   Page 10 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

6.3   Supplier shall ship all Repaired Products FCA (Incoterms 2000), to the
ship-to location specified on the Repair Order. All outbound freight shall be
routed according to the instructions on the Repair Order and utilizing Company’s
specified transportation services provider. If no routing instructions are
provided on the Repair Order, then Supplier shall contact Company’s designated
transportation services provider for instructions.   6.4   For any Products that
will be shipped by Supplier at Company’s request to a destination point outside
of the United States, Company shall be the U.S. principal party in interest
(U.S. PPI) for said export shipment. However, Supplier shall be responsible for
facilitating directly or indirectly (i.e. through a qualified agent) the
exportation of the shipped Product outside of the United States. Prior to the
first international shipment by Supplier, Supplier and Company agree to review
the export documentation requirements to make certain both parties are in
compliance with the applicable United States export requirements. Company shall
be responsible for specifying the appropriate freight forwarding and
transportation services provider(s) required to perform the export, and shall be
responsible for payment of all fees and transportation charges associated with
such export.   6.5   Supplier shall work with Company’s designated
transportation claims company to facilitate the resolution of all claims for any
shipping discrepancies.   6.6   Subject to Article 30 of the Agreement, Company
reserves the right to perform, or have Company’s third party representative
perform, periodic audits of export processes, export procedures, and export
documentation for Products repaired and then exported by Supplier under this
Attachment. Company shall ensure that its third party representative complies
with the confidentiality and security terms and conditions that have been
established between Company and Supplier. Company shall provide Supplier
advanced notification of any unscheduled audit at least forty-eight (48) hours
prior to said audit. Should Supplier not pass an audit conducted by Company or
Company’s third party representative, Supplier shall submit to Company a formal
corrective action plan of sufficient detail to indicate root cause, corrective
action, and a corrective action implementation timeline.   7.0   RISK OF LOSS
AND DAMAGE AND DELIVERY   7.1   Title to all Product Returns shall remain with
Company or Company’s end customers, as the case may be.   7.2   The terms of
Article 79 of the Agreement shall apply to any Product Returns in Supplier’s
possession. Risk of loss and damage for Product Returns shall pass from Company
to Supplier upon receipt of same by Supplier’s at its receiving dock. Risk of
loss and damage for Product Returns shall pass from Supplier to Company upon the
occurrence of one of the following events:

  (a)   The applicable Repaired Product is delivered by Supplier to Company’s
transportation provider, in accordance with Section 6; or     (b)   The
applicable Unrepairable Product is scrapped in accordance with Section 3.8, or
otherwise dispositioned in a manner as the parties may mutually agree.

8.0   PRICES   8.1   The prices for the repair of those Products (the “Prices”)
listed in Schedule 1 (the “Listed Products”) (which shall include ATPs and
Modifications) as of the Effective Date are set forth in Schedule 1 (the
“Initial Prices”). The parties acknowledge and agree that the Initial Prices in
respect of repair services provided at Reynosa have been reduced by [ *** ] from
the price charged for the repair of such Products prior to June 1, 2005. The
Prices for the Listed Products shall be reduced by [ *** ] on each of the
following dates: [ *** ] (each such date is referred to hereinafter as the
“Price Reduction Date”).   ***   Portions of this page have been omitted
pursuant to a Request for Confidential Treatment filed separately with the
Securities and Exchange Commission.

      Privileged and Confidential   Lucent Technologies and Celestica
Proprietary   Page 11 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

8.2   For Products not set out in Schedule 1 as of the Effective Date (“Unlisted
Products”), once Company has paid Supplier for all applicable NRE expenses
associated with the development and implementation of repair capabilities,
processes and procedures for such Unlisted Products, in accordance with
Section 3.7, repair Prices (including Modifications and ATP) for the Unlisted
Products shall be calculated by applying the formulas in Section 8.3 and the
Initial Rates. The Prices for the Unlisted Products shall be reset on a
quarterly basis (each a “Repricing Date”) during the Initial Term by applying
the formulas in Section 8.3 and the Initial Rates; provided that each such Price
shall be reduced by [ *** ] on the first Price Reduction Date that occurs
following the [ *** ] the date that a Price was first calculated for such
Product, with further reductions of [ *** ] on each Price Reduction Date
thereafter during the Initial Term.       If, on any date on which Prices for
the repair of Unlisted Products are to be set or reset in accordance with this
Section 8.2, sufficient data is not available to determine the cost of Repair
Material and the average labor hours as defined in Section 8.3, such values
shall be based upon estimates mutually agreed to by the parties in respect of
such Unlisted Product.   8.3   The Prices for the repair of Unlisted Products
shall be determined by applying the formulas set out below:       [ *** ]      
For the purposes of calculating the Prices in accordance with this Section 8.3:
      [ *** ]   ***   Portions of this page have been omitted pursuant to a
Request for Confidential Treatment filed separately with the Securities and
Exchange Commission.

      Privileged and Confidential   Lucent Technologies and Celestica
Proprietary   Page 12 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

8.4   For the purposes of calculating Prices for Unlisted Products in accordance
with Section 8.3, the following percentages and rates shall apply (the “Initial
Rates”), subject to amendment pursuant to Section 8.5:       [ *** ]   8.5   The
Initial rates shall be reviewed and revised, if appropriate, by mutual agreement
of the parties before the second anniversary of the Effective Date, and on a
yearly basis thereafter before each anniversary of the Effective Date. The rates
revised in accordance with the foregoing (the “Revised Rates”) shall take effect
on the next Repricing Date following such revision and shall be applied for
purposes of resetting Prices in accordance with Section 8.3.   8.6  
Intentionally deleted.   8.7   For Unlisted Products, in the event that the
parties fail to agree upon a revision to the Initial Rates or the Revised Rates,
as applicable, prior to the next Repricing Date, as of the next Repricing Date
Company shall have the right to terminate outstanding Repair Orders with respect
to all Unrepaired Products, other than those quantities of Products subject to
the cancelled Repair Order repaired by Supplier prior to such cancellation, and
Company may elect not to place any further Repair Orders under this Agreement.  
8.8   Intentionally deleted.   8.9   Prices for Repair Orders will be calculated
in accordance with the formulas and rates in effect on the date the Unrepaired
Product is received by Supplier.   8.10   Any Failure Mode Analysis (“FMA”)
Services performed by Supplier at Company’s request and beyond what is required
by Supplier to perform the repair shall be performed in accordance with
Article 4 of the Agreement.   8.11   Any Class A services to be performed by
Supplier at Company’s request, which are in excess of what is required in the
standard repair specifications, shall be considered a Service in accordance with
Article 4 of the Agreement.   8.12   Supplier agrees to implement a cost
reduction program that will be centered on Supplier’s implementation of new
repair technologies, Repair Material cost reductions, productivity improvements,
and automation of facilities and repair processes. The goal is to reduce
Company’s aggregate repair costs by a minimum of [ *** ] per year; provided
that, subject to Sections 8.1 and 8.2, Supplier will provide a [ *** ] reduction
in Prices effective [ *** ] of each year during the Initial Term ([ *** ]). In
support of Supplier’s cost reduction program efforts, Company agrees to provide
commercially reasonable assistance where necessary. Supplier’s cost reduction
program shall be reviewed during the Quarterly Performance Review process.
Supplier agrees to equally share any cost savings implemented by either Supplier
or Company through to Company in the form of lower Prices once the cost of
implementing the cost savings has been recovered.   ***   Portions of this page
have been omitted pursuant to a Request for Confidential Treatment filed
separately with the Securities and Exchange Commission.

      Privileged and Confidential   Lucent Technologies and Celestica
Proprietary   Page 13 of 28

 

--------------------------------------------------------------------------------

 

Attachment H
External Manufacturing Services Supply Agreement

8.13   Supplier agrees to produce a transition plan for those Products currently
not repaired by Supplier but by Supplier’s Repair Vendors. Said plan shall
detail the Price reduction or repair performance improvement available to
Company as a result of the transition of such Products to Supplier and shall be
presented by Supplier during the first Quarterly Business Review between the
parties.   9.0   INVOICING AND PAYMENT   9.1   Invoicing for Repair of Products:
Supplier shall invoice Company for the repair of Products in accordance with the
Prices set out in Section 8 when a Repaired Product has: (a) been delivered by
Supplier to Company’s transportation service provider in accordance with
Section 6, (b) scrapped in accordance with Section 3.8, or (c) otherwise
dispositioned in a manner agreed to by the parties. Unless otherwise requested
by Company and agreed to by Supplier, Supplier’s invoices shall include the
quantities, description, process indicator (TF, ATP, or Modification), Comcode
and Price for each of the applicable Products. All invoices will be prepared and
submitted by Supplier in accordance with in Article 49 of the Agreement.   9.2  
Invoicing for RGM Services: Supplier shall invoice Company monthly for any
testing or de-configurations performed by Supplier in support of the RGM process
requirements set forth in Section 5. The monthly invoice shall include the
calendar days in which the work was performed by Supplier, description of the
work performed by Supplier on the RGM Products and the hours incurred (per RGM
Product) by Supplier in performing the work. All invoices will be prepared and
submitted by Supplier in accordance with the terms set forth in Article 50 of
the Agreement.   9.3   All invoices issued by Supplier to Company hereunder
shall be paid in accordance with the terms set forth in Article 7 of the
Agreement.   10.0   SUPPLIER’S REPAIR WARRANTY   10.1   Repaired Products shall
be repaired in accordance with applicable Specifications and the workmanship of
such repairs shall be warranted by Supplier for a period equal to the greater of
(i) six (6) months from the date of repair, and (ii) the remainder of the
Warranty Period for such Product as determined pursuant to Article 22.1 of the
Agreement (the “Repair Warranty”).   11.0   CANCELLATION OF REPAIR ORDERS BY
COMPANY   11.1   Company may at any time cancel a Repair Order or Repair Orders
in whole or in part, upon written notice to Supplier and no further repair of
Products pursuant to such cancelled Repair Order or Repair Orders will be
rendered by Supplier.   11.2   Company’s liability to Supplier with respect to
such cancelled Repaired Order(s) shall be limited to: (a) for Product Returns on
which the repair process has begun, the TF price listed on Schedule 1 of this
Attachment; and (b) for Product Returns on which the repair process has not yet
begun, a flat fee of [ *** ]. However, in no event shall Company’s liability
exceed the Price identified in the applicable Repair Order for the repair of
Products that are cancelled. Such payment by Company shall constitute a full and
complete release and discharge of Company’s obligations to Supplier with respect
to the Repair Orders cancelled in accordance with this Section 11.2.   11.3  
Supplier shall deliver to Company any Repair Material, Unrepaired Product, and
Repaired Product for which Company has paid Supplier pursuant to Section 11.2.  
12.0   REPAIR MATERIALS   12.1   Supplier shall have financial and operational
responsibility and liability for the Repair Materials storeroom at Supplier’s
facilities at which it repairs Products for Company pursuant to this Attachment,
with the exception of any discontinued or “last time buy” Repair Material which
Supplier purchases with Company’s prior written approval (“LTB Repair
Material”). Any quantity of LTB Repair Material which Supplier and its
Affiliates have on hand at any time and which exceeds Supplier’s and its
Affiliates’ requirements for the [***] immediately after such time shall   ***  
Portions of this page have been omitted pursuant to a Request for Confidential
Treatment filed separately with the Securities and Exchange Commission.

      Privileged and Confidential   Lucent Technologies and Celestica
Proprietary   Page 14 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

    constitute “Excess Inventory” and shall be dealt with in accordance with the
provisions of Article 12 of the Agreement. Supplier’s material planners will
look at historical demand and place the appropriate purchase orders with the
Repair Material vendors, at Supplier’s expense, to ensure adequate Repair
Material stocking levels. Supplier will maintain an inventory control system for
the Repair Materials storeroom at Supplier’s facilities at which it repairs
Products for Company pursuant to this Attachment and will perform all material
handling functions associated with such storeroom.   12.2   Supplier shall
procure and store as necessary enough quantities of Repair Material to satisfy
the requirements for the repair of Products by Supplier pursuant to this
Agreement. Supplier shall manage and own the Repair Material inventory. Title to
the Repair Material shall pass from Supplier to Company when the Repaired
Products that incorporate said Repair Material is delivered by Supplier to
Supplier’s transportation carrier in accordance with Section 6, or when Supplier
renders Additional Services to Company that incorporates the Repair Material.  
13.0   CHANGE CONTROL   13.1   All changes to Products, Specifications or
processes by either Supplier or Company under this Attachment shall be in
accordance with Article 67 of the Agreement.   14.0   PROGRAM MANAGEMENT AND
PERFORMANCE REPORTING   14.1   Supplier shall be responsible for all matters
relating to the performance of any resulting Repair Order for the repair of
Products, and Additional Services set forth in this Attachment, and shall ensure
that the personnel and facilities necessary to perform all required tasks are
assigned and made available at the times and places necessary to comply with the
requirements set forth in this Attachment. A single individual shall be assigned
by Supplier to serve as the Program Manager for managing Supplier’s activities
and efforts pursuant to this Attachment.   14.2   Supplier shall establish and
apply a program control system that:

  (a)   provides for monitoring of all activities pursuant to this Attachment,
clearly identifies and measures all milestones, reporting dates, completion
dates, deliveries, and critical paths; and     (b)   provides management
mechanisms for the prompt identification and mitigation of technical, delivery
or any performance problems associated with the repair of Products or Additional
Services performed by Supplier.

14.3   Company reserves the right to conduct special program reviews, as
necessary, at either Company or Supplier’s facility as a result of Supplier’s
action or in action in regards to Supplier’s performance of the requirements set
forth in this Attachment.   14.4   Not later than noon Eastern Time on each
Tuesday, Supplier shall submit a weekly performance report to Company in
accordance with the requirements set out in Schedule 2, covering all repair of
Products and Additional Services performed by Supplier pursuant to this
Attachment during the previous business week. These weekly performance reports
may be sent to Company via electronic or facsimile transmission, as agreed upon
by Supplier and Company.   14.5   Supplier shall provide industry-standard
non-product specific equipment and processes required to support the repair of
advanced technology products (i.e., 5DX, X-ray, 5DX-X-Ray and Class Zero ESD).
Company will provide any Product-specific equipment and processes required to
support repair of advanced technology products (e.g. ICT fixtures, system test
equipment, etc.).   15.0   DOCUMENTATION REQUIREMENTS   15.1   Supplier shall
deliver to Company the documentation and data required in Table I according to
the schedule shown in Table I. Supplier may use electronic means to transfer the
required

      Privileged and Confidential   Lucent Technologies and Celestica
Proprietary   Page 15 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

    documentation to Company provided such electronic transfer is coordinated in
advance with Company and is formatted in a manner mutually agreed upon by the
parties.   16.0   QUARTERLY PERFORMANCE REVIEWS   16.1   Supplier and Company
will regularly review Supplier’s performance under this Attachment in the
Quarterly Performance Reviews set forth in Article 25 of the Agreement. The
agenda items set out below will be reviewed during the Quarterly Performance
Reviews:

  (a)   Performance of Supplier to date based on performance results reported by
Supplier;     (b)   Company’s future repair business projections;     (c)  
Review of Supplier’s cost reduction program;     (d)   Suggested improvements to
this Attachment; and     (e)   Review of Prices for repair and Modifications.

17.0   COMMUNICATIONS   17.1   Communications, correspondence, or direction for
day-to-day issues under this Attachment from Company to Supplier shall be
through the appropriate designated Company representative.   17.2   Where
delivery of Repaired Products by Supplier to Company or Company’s end customer
may be delayed for any reason, Supplier agrees to promptly notify Company’s
designated representative of any such potential delay and the reason for the
potential delay. Company and Supplier will mutually agree upon the notification
method.   17.3   Each party shall provide the other with contact details and
information in writing within one (1) month after the Effective Date and again
as necessary thereafter.   18.0   USE OF SUBCONTRACTORS   18.1   In addition to
the rights conferred in Article 28 of the Agreement, Company agrees to allow
Supplier to subcontract work performed pursuant to this Attachment to a
subcontractor providing Supplier obtains Company’s prior written approval and
promptly furnishes Company with a written agreement of subcontractor to perform
the work in accordance with this Agreement and to permit Company to exercise all
rights and privileges under this Agreement as if subcontractor had executed this
Agreement in Supplier’s place and stead. Supplier shall indemnify Company
against all loss, cost, expense, or liability incurred by Company on account of
Supplier’s failure to furnish such written agreement by subcontractor. This
consent to subcontract does not relieve Supplier of Supplier’s responsibilities
for performing its obligations under this Agreement, and Supplier shall remain
liable for compliance by the subcontractor with all provisions of this
Agreement.   19.0   COMPANY RESPONSIBILITIES CONCERNING THE SCOPE OF THIS
ATTACHMENT   19.1   As of the Effective Date, Company confirms that all required
activities, reporting requirements and performance levels which have been
disclosed to Supplier, specified herein are being achieved. However, should
Supplier determine this not to be the case within a reasonable period of time
after the Effective Date, then Supplier will notify Company in writing of such
case detailing its concern(s) and the parties shall mutually agree to the
resolution of such condition and hereby agree to modify this Attachment
accordingly.   20.0   HEADINGS AND SECTION REFERENCES   20.1   The division of
this Attachment into Sections and Schedules and the insertion of headings and a
table of contents are for convenience of reference only and shall not affect the
construction or the

      Privileged and Confidential   Lucent Technologies and Celestica
Proprietary   Page 16 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
interpretation of this Attachment. Unless otherwise specified herein, any
reference in this Attachment to a Section, Table or Schedule refers to the
specified Section, Table or Schedule to this Attachment. In this Attachment, the
terms “this Attachment”, “hereof”, “herein”, “hereunder” and similar expressions
refer to this Attachment and not to any particular part, Section or other
provision hereof.

      Privileged and Confidential   Lucent Technologies and Celestica
Proprietary   Page 17 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
TABLE I. SUPPLIER’S DOCUMENTATION REQUIREMENTS

                              Item       Attachment   Submit         No.  
Description   Reference   for (a)   Qty.   Schedule
1
  Quality Plan     3.5     R     1     To be reviewed every 6 months
 
                           
2
  Repeat Return Rate     3.5     R     1     Within 5 Business Days of the close
of the month
 
                           
3
  Corrective Action Plan     3.6     A     1     Within 15 Business Days of
audit failure
 
                           
4
  Acceptance Test Procedures     3.7     A     1     Existing Document(s): To be
reviewed annually
New Documents: To be reviewed and approved 10 Business Days prior to the
commencement of testing for all new Products to be repaired by Supplier
 
                           
5
  Periodic Performance Reports   Schedule 2   R     1     By Noon Eastern
Standard Time on Tuesday following the previous week or the first Tuesday of the
fiscal month.

    Notes to Table I Deliverable Documentation:   (a)   R = Review by Company  
    A = Approval by Company   (b)   All documents must be in the English
language

      Privileged and Confidential Lucent Technologies and Celestica Proprietary
  Page 18 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
SCHEDULE 1 — REPAIRED PRODUCT PRICES
     The attachment embedded below lists all Mobility Products and Mobility
Switching Products with pricing effective as of April 1st, 2005, including the
applicable price reduction for such pricing period. The prices listed in the
columns entitled “New Repair Price” and “New NDF Price” are the prices effective
as of April 1st, 2005, including the applicable 2.5% price reduction for such
pricing period.
[ *** ]

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

      Privileged and Confidential Lucent Technologies and Celestica Proprietary
  Page 19 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
SCHEDULE 2 — PERIODIC PERFORMANCE REPORTS
Supplier’s Periodic Performance Reports shall include, but not be limited to the
following:

  I.   REPAIR OF PRODUCTS (Weekly)

  a.   Quantity of Products repaired by Product Code, further categorized to
indicate whether said repairs were trouble found or all tests passed (ATP) or
Unrepairables;     b.   Supplier’s delivery performance which shall include a
detailed listing by Comcode indicating the number of Repaired Products shipped,
the required ship date and the actual ship date;     c.   Supplier’s internal
quality audit results, if applicable, and results of any quality audits
performed by Company;     d.   Supplier’s compliance with the required Repeat
Return Rate for all Repaired Products (monthly), and root cause analysis and
summaries if requested by the Company for any Products that do not meet the
specified requirement.

  II.   RGM PRODUCT PROCESSING (Weekly)

  a.   A detailed list by Comcode of the quantity of Product Returns received by
Supplier, awaiting disposition, sorted and dispositioned, to include type of
disposition.

  III.   ACTION ITEM REGISTER (Monthly)

  a.   Supplier shall develop, maintain and submit to Company as part of its
monthly performance report, an action item register to be used as an archive for
recording issues, regardless of their nature, that require direction, and/or
clarification, and/or resolution from or between the parties. Said action item
register shall include, but not be limited to, a unique register id number, the
issue(s), proposed solution, the Company LCS involved, party and their
representative required accountable for managing the issue(s) and the estimated
completion date.

      Privileged and Confidential Lucent Technologies and Celestica Proprietary
  Page 20 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
SCHEDULE 3 — Repair System Interface Requirements
All of the interfaces listed below will be documented and implemented as soon as
the mutually agreed to schedules have been discussed.

  1.   Company will provide a daily transmission of newly generated Repair
Orders coming out of the Company LCS locations.     2.   Supplier will provide
daily transmissions covering receipt messages for all Company LCS locations.    
3.   Supplier will provide daily transmissions covering scheduling/re-scheduling
messages for all Company LCS locations.     4.   Supplier will provide daily
transmissions covering shipping messages for all Company LCS locations.     5.  
Supplier will provide a daily transmission of newly generated invoices/bills for
Repair Orders originating from Company.     6.   Company will pay those invoices
for Repair Orders originating from Company locations electronically.     7.  
Company will provide a daily transmission of receipt messages for all Repair
Order Products received by the LCS locations.     8.   SES — Several interfaces
will need to be designed moving in both directions. Company system
planners/developers will provide the Specifications.     9.   For the purpose of
improving quality and reliability on all Material provided by Supplier, Supplier
shall conform to Company’s TL9000 and testing data requirements stated in
Company Specification E-1025, DCF Test Data Format Standard Reference, as may be
modified by Company pursuant to Article 67.3.

      Privileged and Confidential Lucent Technologies and Celestica Proprietary
  Page 21 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment I
Performance Metrics

      Privileged and Confidential Lucent Technologies and Celestica Proprietary
Page 22 of 28

 

--------------------------------------------------------------------------------

 

Attachment I
External Manufacturing Services Supply Agreement
“Business Impacting” Metrics

                                          Minimum   Measurement            
Metric Name   Goal   Threshold   Frequency   Metric Provider   Applicable Clause
  Definition/Calculation Methodology
Quality (non-NPI,
Measured at Product
Level)
                           
 
                           
Incoming Process Yield at SIC (System Test and Burn-in) (Not component)
  [***]   [***]   Monthly   Lucent   Per Supply Agreement Article 22.8   Yield
at first test within the SIC. Trigger Points will be 1) if an OI is outside 3
Sigma Level — code specific CAR will be required
2) if more than 10% of OI’s is outside 3 Sigma Level — Business Impacting CAR
will be required 3) If more than 15% of OI’s is outside 3 Sigma Level and
“epidemic” condition may exist
 
                           
 Field Returns (includes ALL materials provided by EMS supplier)
  [***]   [***]   Monthly   CLS   Per Supply Agreement Article 22.14   First
Year Return Rate (YRR), unnormalized, as per TL 9000 ver 3.0. 1st month of not
meeting goal issues an alert; 3 consecutive months of non-compliance results in
epidemic condition
 
                           
Delivery (orderable item
level)
                           
 
                           
Delivery vs. Promise Date
    [***]     [***]   Measured weekly
Reported monthly   Lucent   Per Supply Agreement Article 9   Measured at OI
level as Qty Delivered/Qty Promised
 
                           
Stock-outs
  [***]       Measured weekly
Reported monthly   Lucent   Per Supply Agreement Attachment “I”   The frequency
with which the EMS provider fails to maintain minimum buffer
 
                           
Repair, Service and Return Operations
                           
 Repair Interval
  [***]   [***]   Measured weekly and Monthly   CLS   Per Supply Agreement
Attachment J Article 6   Turnaround time, from dock receipt to dock ship.
Calculation = Average Repair Interval Across all Repair Deliveries
 
                           
New Product Introduction
                           
 Prototype/Model Delivery Interval
  [***]   [***]   Monthly   CLS   Per Supply
Agreement
Attachment P   After all parts & documentation are available. Limited to 3 NPI
apparatus codes simultaneously. Quantity to ship will be mutually agreed on
 
                           
Facility Metrics
(Non-Program Specific)
                           
 
                           
Facility Registration to Compliance with ISO9K, ISO14k, TL9000, ESD ANSI 20.20.
  [***]   [***]   Event Driven   CLS   Per Supply Agreement Article 22.2    

 

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

      Privileged and Confidential Lucent Technologies and Celestica Proprietary
Page 23 of 28

 

--------------------------------------------------------------------------------

 

Attachment I
External Manufacturing Services Supply Agreement
“Operational” Metrics

                                              Minimum   Measurement   Metric    
    Metric Name   Goal   Threshold   Frequency   Provider   Applicable Clause  
Definition/Calculation Methodology
Repair, Service, and Return operations
                               
Unrepairable Rate
    [***]       [***]     Weekly   CLS   Supply Agreement Attachment J
Article 3.8   Rate of unsuccessful repairs
Total # of Unsuccessful Tests /Total # of Tests
 
                               
Repair Repeat Return Rate
  [***]   [***]   Monthly   CLS   Supply Agreement Attachment J Article 3.5  
Rate of returns of repaired product within six (6) months of original repair  
 Repair Cost Reduction
  [***]     [***]     Quarterly   CLS   Supply Agreement Attachment J Article 9
  Reduce cost of services for each of the first three (3) years of the agreement
 
                               
New Product Introduction
                               
 Market Launch Date Variance
    [***]     [***]   Monthly   Lucent   Supply Agreement Attachment P Article 3
  Agreement on Launch Date. Number of Days that exceed beyond launch date Launch
date is defined as the date CLS will be able to provide mutually agreed volume
of an NPI product.
 
                               
Models & Initial Production Quality
    [***]       [***]     Monthly   Lucent   Supply Agreement Attachment P  
Meet LU End-point requirements (per X-21284) w/exception of agreed to
relaxations. Lucent to visually inspect all models, each model can only
contribute once to the measurement
 
                               
DFX Reporting Completeness
    [***]     [***]   Monthly   Lucent   Supply Agreement Attachment P
Article 2.1   Check to see if DFM was Completed as requested (yes or No
Measurement) Limited to 3 NPI Apparatus codes per week. BOM DFX will be minimum
of 10 Days, Process DFX will be 5 Days
 
                               
DFX Reporting Timeliness
    [***]     [***]   Monthly   Lucent   Supply Agreement Attachment P
Article 2.1   Results/reports should be available within 5 days of review and
change request are generated. Measured as whether reports are available within
5 days for Process NPI. Goal is to have 0% of the DFX’s overdue. BOM DFX will be
available within 10 days of re
 
                               
Materials & Asset Management
                               
 
                               
Raw Material Inventory — (NC&NR)
    [***]       [***]     Monthly (not before 15th of the Month)   CLS   Supply
Agreement Article 14   Non-cancellable/non-returnable material all agreed on
material which is not commercial
 
                               
Raw Material — (Non-NC&NR)
    [***]       [***]     Monthly (not before 15th of the Month)   CLS   Supply
Agreement Article 14   Material which is agreed on as Commercial material
 
                               
Finished Goods Inventory
    [***]       [***]     Monthly (not before 15th of the Month)   CLS   Supply
Agreement Article 12   $ on hand & in Hubs
 
                               
Days of Stock (DOS)
  [***]   [***]   Monthly (not before 15th of the Month)   CLS   Supply
Agreement Article 14   On-hand inventory divided by material output per day.
Output per day is material output forecast for the next two months, divided by
number of days in the financial calendar
 
                               
Process Leadership
                               
 % Utilization of Vendor Managed Inventory (Leading Edge Procurement (LEP)
  [***]   [***]   Quarterly   CLS   N/A   % utilization of VMI = Qty of Active
Parts in Supplier “Pull” programs / qty of Active Parts *100. Active Part is
defined as “has usage in Next 12 Months”
 
                               
Facility Metrics (Non-Prgram Specific)
                               
 
                               
SMWDVBE Participation
  [***]   [***]   Bi-annual   CLS   Supply Agreement Article 53   Total $
Purchased from SMWDVBE/ Total Purchsed goods

 

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

      Privileged and Confidential Lucent Technologies and Celestica Proprietary
Page 24 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
“Information Only” Metrics

                                  Minimum   Measurement             Metric Name
  Goal   Threshold   Frequency   Metric Provider   Applicable Clause  
Definition/Calculation Methodology
Materials & Asset Management
                       
WIP Inventory
  [***]   [***]   Monthly (not before 15th of the Month)   CLS   per Supply
Agreement Article 12   $ on hand
 
                       
Inventory Turns (IT)
  [***]   [***]   Monthly (not before 15th of the Month)   CLS   per Supply
Agreement Article 12   Measured as 365/DOS (DOS is Operational Metric)
 
                       
Obsolete Inventory Tracking
  [***]   [***]   Monthly (not before 15th of the Month)   CLS   per Supply
Agreement Article 13   Obsolete inventory is inventory which has no demand for
365 days or is in excess of the requirements for the next 365 days
 
                       
Excess Inventory Tracking
  [***]   [***]   Monthly (not before 15th of the Month)   CLS       Excess
material will be the amount greater than comparisons of a site’s component usage
for previous 60 days and forecast for next 30 days versus the quantity on hand
 
                       
Lucent Accounts Payables (AP)
  [***]   [***]   Monthly (not before 15th of the Month)   CLS   per Supply
Agreement Article 7   Lucent Payments to EMS provider (days and balance)
 
                       
Process Leadership
                       
 
                       
Percent of Commercial vs. Unique Components
  [***]   [***]   Quarterly   CLS       % Commercial vs unique = Qty of Active
Commercial parts / Qty of Active Parts *100 (Active parts is defined parts with
requirements in next 12 months)
 
                       

 

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

      Privileged and Confidential Lucent Technologies/Celestica Proprietary Page
25 of 28

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment J
Intentionally Deleted

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 1 of 1

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment K1
Notice of Commercial Engagement
Name of Supplier: ____________
Attn. _____________________
Address: _______________
Date: _________________
Re: Notice of Commercial Engagement with Supplier for Lucent Mobility product
Dear ___,
The following Notice shall clarify the business relationship between Lucent and
Celestica, its manufacturing partner as it pertains to the supply of components
for products manufactured by Celestica.
Lucent has engaged Celestica in a long term business relationship with respect
to the supply of products for Lucent’s Mobility division. As part of the
business relationship, Lucent expects Celestica to have complete ownership of
the supply chain, including the management of price and general terms and
conditions relating to purchase of materials. As such Celestica shall be
negotiating directly with you in the future and will be responsible for meeting
Lucent’s price reductions, quality and supply flexibility expectations. There
may be exceptions for specific part numbers (as attached to this letter).
In the case there are products produced by your company which may be consumed by
other Lucent divisions, Lucent shall continue managing price and terms of
execution as is being done today.
Lucent has placed significant expectations on Celestica to achieve cost
reductions (leading edge price reductions), superior quality and improved
flexibility. In order for Celestica to meet Lucent’s expectations, it is
critical that you continue to provide price reductions, superior quality,
improved order fulfilment flexibility and responsive service to Celestica in the
same manner as provided to Lucent in the past.
This notice shall also serve as a letter of authorization approving Celestica’s
access to existing commercial terms, specifications and other relevant details
for the respective products being supplied to Celestica for Lucent Mobility.
Sincerely,
Signature:_________________
Name Printed: ______________
Title: ___________________
cc: Celestica

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 1 of 1

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment K2
Company Controlled Material Information
Company Controlled Material Numbers
Company will provide the following information to Supplier when communicating
Company negotiated pricing:
Mandatory Fields:
Company Material Part Number
Manufacturer Name
Manufacturer Material Part Number
Currency
Price
Lead Time
Minimum Order Quantity
FOB Point

Optional Fields* :
Cancellation Lead Time
Lot Size
Return Privilege
Business Split
Other relevant Negotiated T& Cs
Inventory Management (SMI & Lean programs)
Shipping instructions (Air or Sea for landed pricing)

* “Optional Fields” will be provided to Supplier by Company, wherever such
information is available.

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 1 of 1

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment K3
Material Authorization Letter
DATE
Name of Supplier
Attn. ____________________________
ADDRESS: ____________________________
Re: Authorization for Supplier to Purchase Material at Lucent’s negotiated or
contracted prices
Dear ___,
     The purpose of this Material Authorization Letter is to set forth the
understanding by and between ___(“Supplier”) and Lucent Technologies Inc.
(“Lucent”) regarding the purchase by Supplier of Material at Lucent’s negotiated
or contracted prices. Lucent, at its sole option, will seek authorization of
certain Material vendors to permit Supplier, a supplier of Lucent, to purchase
Material at the prices set forth in Lucent’s Material purchase agreements with
its Material vendors. Terms and conditions, stated in such Material purchase
agreements, applicable to Lucent, will not be applicable to Supplier. As a
condition precedent to Lucent using reasonable commercial efforts to seek such
Material vendor authorizations, Supplier and Lucent, in consideration of the
promises and benefits outlined below, agree as follows:

  1.   Supplier shall use Materials purchased at the Lucent prices only for the
production or repair of Product sold to Lucent under this Agreement.     2.  
Savings incurred by Supplier due to the benefit of volume purchase discounts
applicable to Materials purchased under the Lucent Material purchase agreements
will be passed on to Lucent via the Lucent business group placing the purchase
order with Supplier.     3.   Company shall have no liability whatsoever to
either Supplier or Material Vendor for the authorization given or the
transactions contemplated herein between Supplier and Material Vendor.     4.  
Supplier shall hold in confidence any and all information related to the Lucent
Material purchase agreement, including, but not limited to, business
information, specifications, technical information, forecasts, prices; and
Supplier hereby agrees to use such information only for the purpose of
fulfilling its obligations with Lucent. Supplier will use commercial reasonable
effort to share such information only with employees and authorized
representatives with a need to know and will instruct such individuals regarding
their obligation to maintain such information as confidential and as the sole
property of Lucent.     5.   Lucent will notify Supplier in writing of Material
vendors consenting to extend Lucent’s Material prices to Supplier and will
forward appropriate applicable price appendices. Supplier acknowledges and
agrees that Lucent may withdraw its authorization (which will facilitate
Supplier’s purchase described herein) under any or all of the Lucent Material
purchase agreements at any time.     6.   Supplier agrees to provide access to
Lucent, or its authorized representatives, to Supplier’s books and records for
the purpose of verifying compliance with this letter agreement.

WHEREFORE, duly authorized representatives of Supplier hereby execute this
letter agreement indicating approval and understanding of the terms set forth
above; this letter agreement shall be effective as of ___.

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 1 of 2

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

          Accepted by:       LUCENT TECHNOLOGIES INC.   SUPPLIER
 
   
 
   
Signature
  Signature
 
   
 
   
Name
  Name
 
   
 
   
Title
  Title
 
   
 
   
Date
  Date

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 2 of 2

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment L
MWDVBE Definitions

MBE    In general, a minority business is defined as one which is at least 51%
owned, controlled and operated by an ethnic or racial minority group member.    
      The following groups are considered minorities for MBE as defined by
Federal Acquisition Regulations (FARs):           African American means all
persons having origins in any of the Black racial groups.           Asian
Pacific American means all persons having origins in Japan, China, Philippines,
Vietnam, Korea, Samoa, Guam, the U.S. Trust Territory of the Pacific Islands
(Republic of Palau), the Northern Mariana Islands, Laos, Kampuchea (Cambodia),
Taiwan, Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Republic of the
Marshall Islands, or the Federated States of Micronesia.           Asian Indian
American means all persons having origins in India, Pakistan, Bangladesh, Sri
Lanka, Bhutan, or Nepal.           Hispanic American means all persons having
origins in Mexico, Puerto Rico, Cuba, Central, Latin or South America, Portugal,
or other Spanish culture or origins.           Native American means American
Indians, Eskimos, Aleuts, and native Hawaiians.           Non-Minority American
means all persons not covered by the definition of American minority
(MBE) groups above.

WBE    Enterprises that are at least 51% owned, controlled and operated by women
who are not racial or ethnic minorities are women-owned businesses. Non-minority
women-owned businesses are reported separately from minority businesses.     A
business owned by a minority woman would be classified as a minority-owned
business only — not counted under both categories. However, the total number of
women enterprises is easily tracked since minority supplier’s gender information
is recorded.

DVBE    Enterprises that are at least 51% owned, controlled and operated by men
and women who are service disabled veterans.

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 1 of 1

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment M
Warehousing Services
1.0           SCOPE
1.1           The purpose of this Attachment is to establish the terms and
conditions on which Supplier and its Affiliates will provide warehousing and
inventory management services, as set out in Section 5.0 of this Attachment and
otherwise identified in this Attachment (the “W&I Services”) on a worldwide
basis for Company under the Agreement and in such other circumstances as the
parties may mutually agree. The parties agree to negotiate, in good faith, a new
Attachment M based on the new requirements of this Agreement. Until such time,
the following terms and pricing shall apply.
Supplier shall, where required, provide all W&I Services for Existing Mobility
Products, Successor Products and New Products until termination of this
Agreement. For any new W&I Services where rates have not been set forth in this
Attachment M, Company shall afford Supplier with an opportunity to submit a
Quote for the provision of W&I Services in accordance with Article 4.1.
1.2           The W&I Services to be performed by Supplier hereunder will apply
to the following types of goods, inventory and material owned by Company
(collectively, the “Goods”), in respect of which Company issues an Order to
Supplier pursuant to Section 4.0 of this Attachment:

  (a)   Material and finished goods which constitute Excess Inventory, Obsolete
Inventory or Company Owned Inventory under the Agreement;     (b)   any Material
constituting Lucent Technologies’ Consigned Material that is intended to be used
by Supplier in the manufacture or repair of Products under the Agreement; and  
  (c)   with Supplier’s prior consent, any other goods or items in respect of
which Company issues an Order for W&I Services.

2.0           DEFINITIONS
Unless otherwise defined herein, capitalized terms used in this Attachment have
the respective meanings set out in this Agreement. In addition, the following
terms shall have the respective meanings set forth below:
“Comcode” means the unique part number assigned to each type of Material and
finished goods by Company.
“Goods” has the meaning set out in Section 1.2 of this Attachment.
“Order Change” has the meaning set out in Section 10.0 of this Attachment.
“Shipment” means: (i) where Goods are physically shipped to Supplier, a shipment
of Goods delivered and for which Supplier issues one delivery receipt, and
(ii) where no physical transportation of Goods occurs, a transaction implemented
in Supplier’s system to record the segregation of Goods within the designated
Warehouse.
“Shipment Discrepancy Report” has the meaning set out in Section 8.0 of this
Attachment.
“Warehouse” means any warehouse or storage facility owned or operated by
Supplier or its Affiliate, or any third party, at which Supplier stores Goods
for Company pursuant to this Attachment.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies/Celestica
Proprietary   Page 1 of 7

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
“W&I Prices” has the meaning set out in Section 7.1 of this Attachment.
“W&I Services” has the meaning set out in Section 1.1 of this Attachment.
3.0            APPENDICES
The following Appendices are attached to and form part of this Attachment:
Appendix I — W& I Prices
4.0           STATEMENT OF WORK
Subject to Section 13.0 of this Attachment, during the Term of the Agreement,
Supplier shall perform W&I Services as requested by Company pursuant to Orders
issued to Supplier from time to time, at Warehouse locations specified in the
relevant Orders and approved for such purposes by Supplier (Supplier
acknowledges that Warehouse locations where Goods are currently held by Supplier
for Company shall be deemed to be approved by Supplier for the purpose of
storing such Goods).
5.0           MATERIAL HANDLING IN AND OUT OF THE WAREHOUSE
5.1           As part of the W&I Services, Supplier will perform any or all of
the following tasks, as required by Company in the relevant Order: (1) receiving
Shipments at the relevant Warehouse(s), (2) recording the receipt by Supplier of
each Comcode in a Shipment, and providing to Company a report of such receipt in
accordance with Section 17.3, (3) placing Goods into, and removing Goods from,
storage at the relevant Warehouse(s), (4) marking, tagging and stenciling the
packaging containing the Goods, (5) loading and unloading of vehicles on which
the Goods are delivered when the carrier of such Goods is not required to
perform those functions pursuant to the relevant delivery terms, (6) preparing
bills of lading and other shipping documents as required, (7) performing a
monthly reconciliation of inventory balances with a designated representative of
Company, and (8) tendering Goods for delivery to Company or its carrier upon
termination of the W&I Services in respect of such Goods.
5.2           On removal of Goods from the Warehouse(s) upon termination of the
W&I Services in respect of such Goods, Supplier shall prepare bills of lading
and other shipping documents as required, in triplicate, all copies of which
shall be signed by a representative of each of Supplier and Company or its
designated carrier. Supplier shall retain one copy of such shipping documents,
furnish one copy to the carrier, if required, and forward the original copy to
Company to the address shown in Section 17.3 of this Attachment.
6.0           LOCATION
Company’s Order(s) shall specify the city in which the Warehouse(s) at which the
W&I Services will be performed by Supplier from time to time, which location
shall previously have been mutually agreed by both parties. If the W&I Services
are to be provided at Warehouse(s) located in multiple cities, Company will
issue a separate Order for each such city.
7.0           COMPENSATION
7.1           During the period commencing on the Effective Date of the
Agreement to and including [ *** ], Company will pay Supplier for the W&I
Services described herein according to the prices set forth in Appendix I to
this Attachment, (the “W&I Prices”), which prices shall be calculated in a
manner consistent with the activity report issued by Supplier pursuant to
Section 17.1 of this Attachment. In the event that Company requests that
Supplier perform services other than those described herein, Supplier, on a
timely basis, shall submit a quote to Company for the price to be charged to
Company for the requested services. If such quote is acceptable to Company,
Company shall issue to Supplier an Order or Order Change, as applicable, and
Supplier shall perform such additional services at the price stated in
Supplier’s quote.

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies/Celestica
Proprietary   Page 2 of 7

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
7.2           At any time on or before [ *** ], either party may, by written
notice to the other party, request that the W&I Prices be revised (and such
written notice shall set out in reasonable detail the reasons for the requested
change in the W&I Price), effective [ *** ]. If the parties fail to agree upon
revised W&I Prices by [ *** ], the parties shall resolve such dispute in
accordance with Article 27 of the Agreement.
8.0           CARE AND CUSTODY OF PROPERTY AT SUPPLIER FACILITIES
8.1           During the period in which Supplier performs W&I Services in
respect of particular Goods, Supplier shall have the sole and exclusive care,
custody and control of all such Goods. Notwithstanding anything to the contrary,
but subject to Section 19 of this Attachment, Company shall at all times during
Supplier’s performance of the W&I Services have title and bear ultimate risk of
loss or damage to such Goods. Supplier shall use its reasonable efforts to
target 100 percent inventory accuracy.
8.2           Supplier’s obligation to perform W&I Services hereunder in respect
of any particular Goods and its entitlement for compensation pursuant to
Section 7.1 of this Attachment shall commence:

  (a)   if the relevant Goods are not already in Supplier’s physical custody,
upon delivery of the Goods to the specified Warehouse by Company or its
specified carrier, as the case may be;     (b)   if the relevant Goods have been
purchased by Company pursuant to Article 12 of the Agreement and are already in
Supplier’s physical custody, on the date on which such Goods are deemed to be
Excess Inventory or Obsolete Inventory, as applicable, under the Agreement; or  
  (c)   with respect to any other Goods already in Supplier’s physical
possession, upon receipt by Supplier of the Order requesting the W&I Services;

and shall terminate on the earlier of:

  (x)   the expiration of the Agreement or the termination of this Attachment
(subject to Section 13.0 of this Attachment);     (y)   the delivery of the
relevant Goods to Company or a third party designated by Company, in accordance
with Company’s direction or pursuant to the Agreement; and     (z)   the time at
which Supplier purchases the relevant Goods from Company or removes the relevant
Goods from storage for the purposes of incorporating such Goods in Orderable
Items or other products which it manufactures or repairs for Company under the
Agreement.

8.3           If, when the Goods are delivered to Supplier pursuant to
Section 8.2(a), Supplier determines that damage has occurred to the external
packaging of the Goods prior to its receipt thereof (a “Damage Condition”), or
the quantity in the Shipment is higher or lower than the quantity specified in
the shipping documentation (an “Over Condition” and a “Short Condition”,
respectively), Supplier shall promptly note the Damage Condition, Over Condition
or Short Condition, as the case may be, on all copies of the delivery receipt
and, in the case of a Damage Condition, shall request the delivery carrier to
inspect the damaged Goods and to provide an inspection report or waiver of
inspection. Supplier shall thereupon notify Company by issuing a shipment
discrepancy report in the form prepared by Company (a “Shipment Discrepancy
Report”) pursuant to Section 17 of this Attachment.
8.4           Upon the expiration or termination (in whole or in part) of this
Attachment, Supplier will co-operate with Company to ensure an orderly
transition of the W&I Services to Company or any third party designated by
Company. Such cooperation shall include, without limitation, reasonable packing
and preparation for shipment of any Goods to be removed from a Warehouse and the
provision of reports and

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies/Celestica
Proprietary   Page 3 of 7

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
other documentation reasonably necessary for the orderly transition of the W&I
Services, and the parties shall agree to any additional cost to be paid by
Company in respect of the transition of such W&I Services. Except to the extent
necessary in order to comply with Supplier’s confidentiality or security
requirements at the relevant Warehouse in which Goods are stored, Supplier shall
not interfere with or hinder the transfer or transportation of Goods by Company
upon termination of the W&I Services in respect of such Goods.
9.0           TRANSFER OF GOODS
Supplier shall not encumber, permit a lien, lease, transfer or otherwise dispose
of the Goods, except as authorized by Company or as required pursuant to the
Agreement. Except to the extent necessary in order to comply with Supplier’s
confidentiality or security requirements at the relevant Warehouse in which
Goods are stored, Supplier shall not interfere with or hinder the transfer or
transportation of Goods by Company.
10.0           CHANGES
Company may at any time during Supplier’s performance of the W&I Services
require additions, deductions or deviations (all hereinafter referred to as a
“Change”) from the W&I Services, by issuing a written Change Order to Supplier.
Supplier shall not implement any Change, nor shall Supplier be entitled to any
compensation for W&I Services performed pursuant to or in contemplation of a
Change, unless such Change was made pursuant to a Change Order issued by Company
and accepted by Supplier.
11.0           DELIVERY
Goods shall be delivered from Company to the relevant Warehouse DDP (Incoterms
2000) and shall be shipped from the relevant Warehouse to Company EXW (Incoterms
2000) the relevant Warehouse.
12.0           FIRE INSURANCE INSPECTION
Subject to compliance with Supplier’s safety and confidentiality requirements,
and upon reasonable notice to Supplier, Supplier shall allow Company’s
representatives and representatives of Company’s insurance carrier to inspect
the Warehouse(s) at which Supplier performs the W&I Services for Company during
normal business hours for fire, flood and other hazards to the Goods.
13.0           HOLDOVER MATERIAL
Notwithstanding the termination of this Attachment pursuant to Section 7.2 or
otherwise, Supplier shall, at Company’s request, continue to hold the Goods in
the Warehouse(s) on the date of such termination, at the then current W&I Prices
and upon the other terms and conditions of this Attachment, for an additional
period not to exceed sixty (60) days after the date of termination of this
Attachment. Company shall arrange for removal of all Goods at Company’s cost by
the end of such additional period. If Company has not arranged for removal of
all Goods by the end of such additional period, Supplier may arrange for
delivery of the Goods to Company at Company’s cost.
14.0           INVENTORY CONTROL SYSTEM
As part of the W&I Services, Supplier shall utilize an inventory control system
to monitor and manage inventory balances, daily activity and the physical
location and status of Goods.
15.0          STORAGE
Except upon termination of the W&I Services in respect of particular Goods
pursuant to Section 8.2 of this Attachment, Goods shall not be removed from the
Warehouse to which they were originally delivered without Company’s written
consent, unless (i) such Goods are being moved to a Warehouse located in the
same city as the Warehouse in which they are located at such time, or
(ii) Supplier determines that such removal is necessary to protect the Goods
from damage or loss. Unless removal of Goods from one Warehouse to another
Warehouse is at Company’s request (for reasons other than the protection of such

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies/Celestica
Proprietary   Page 4 of 7

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Goods against damage or loss), any such removal of and return Goods shall be at
Supplier’s sole cost and expense.
16.0 WAREHOUSE QUALITY PROCESS
Supplier will adhere to practices and standards established by the International
Standards Organization (ISO) and for which it has been qualified at the
applicable Warehouse(s). Supplier shall use a commercially reasonable standard
of care in performing the W&I Services. From time to time upon Company’s request
and upon reasonable prior notice, representatives of Supplier will meet with
Company’s representatives to review Company’s assessment of Supplier’s
performance of the W&I Services under this Attachment. Where necessary in order
to ensure the safety and/or confidentiality of the Goods, Supplier will limit
access to such Goods to such personnel as it deems necessary, in its sole
discretion, for the provision of the W&I Services.
17.0 REPORTS
17.1 Supplier shall, at the end of each month, submit an activity report to
Company’s designated representative showing monthly transactions in and out of
the Warehouse(s) and on-hand inventory balances of the Goods in storage.
17.2 On a weekly basis, Supplier shall deliver to Company a report listing all
Shipments received for each Comcode in the previous week, at the address below:
Lucent Technologies Inc.
___(Lucent employee position responsible)___
___(complete address)___
17.3 When Supplier receives a Shipment in an Over Condition, Short Condition or
Damaged Condition, it shall issue to Company a Shipment Discrepancy Report
within forty-eight (48) hours after delivery of the Shipment to Supplier. The
Shipment Discrepancy Report shall be delivered to Lucent Technologies Inc., c/o
___(title)___Supervisor, P. O. ___(complete address)___, ___(department or title
name )___and shall be accompanied by:
(a) a photostatic copy of the warehouse receipt;
(b) a copy of the carloading sheets [need explanation];
(c) a copy of the carrier’s freight bill of lading; and
(d) a copy of the list of items shipped [need explanation].
18.0 INSURANCE
Company will, at its sole cost and expense, during the Term of the Agreement,
maintain commercial general liability insurance in respect of the Goods in
respect of which Supplier performs the W&I Services for Company hereunder. To
the extent Supplier maintains any insurance in respect of the Goods in respect
of which Supplier performs the W&I Services for Company hereunder, Supplier
shall not provide its insurers any right of subrogation against Company based
upon any loss or liability to Goods stored by Supplier under this Attachment.
19.0 INDEMNITY
19.1 Company will indemnify, defend and hold harmless Supplier from and against
any and all Losses suffered or incurred by Supplier as a result of or arising
directly or indirectly out of or in connection with the performance by Company,
its agents, subcontractors or employees, of its obligations under this
Attachment, except where such Losses arise out of the breach by Supplier of its
obligation to use a commercially reasonable standard of care in performing the
W&I Services pursuant to Section 16.0 of this Attachment, unexplained variances
in the quantity of Goods stored (including where such variances are due to
theft), damage caused by the Warehouse (including fixtures thereof) where the
W&I Services are performed, or the negligence or willful misconduct of Supplier,
its agents, subcontractors, employees or invitees.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies/Celestica
Proprietary   Page 5 of 7

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
19.2 Supplier will indemnify, defend and hold harmless Company from and against
any and all Losses suffered or incurred by Company as a result of or arising
directly or indirectly out of or in connection with the performance by Supplier,
its agents, subcontractors or employees, of its obligations under this
Attachment, to a maximum amount of $2,000,000 per occurrence, where such Losses
arise out of or are due to the breach by Supplier of its obligation to use a
commercially reasonable standard of care in performing the W&I Services pursuant
to Section 16.0 of this Attachment, unexplained variances in the quantity of
Goods stored (including where such variances are due to theft), damage caused by
the Warehouse (including fixtures thereof) where the W&I Services are performed,
or the negligence or willful misconduct of Supplier, its agents, subcontractors,
employees or invitees.
19.3 The procedures set out in Article 84 of the Agreement shall apply to each
claim for indemnification under Section 19.0 of this Attachment.
20.0 LIMITATION OF LIABILITY
Notwithstanding anything to the contrary in this Attachment, the limitation of
liability in Article 51 of the Agreement shall apply to this Attachment.
21.0 SUPPLIER AFFILIATES
In the event that W&I Services are to be provided by an Affiliate of Supplier,
all references to “Supplier” herein shall refer to Supplier and such Affiliate
of Supplier, which shall be represented by Supplier, provided that Supplier
shall remain responsible for the performance by each such Affiliate of its
obligations hereunder.

          PRIVILEGED AND CONFIDENTIAL   Lucent Technologies/Celestica
Proprietary   Page 6 of 7

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Appendix I
W&I Prices
The following prices will be paid by Company for the W&I Services at any
Warehouse at which W&I Services are performed by Supplier under this Attachment,
subject to any revision pursuant to Section 7.2 of this Attachment:

  •   Receipt into and disbursement from Warehouse: [ *** ] (which price shall
be charged by Supplier (without duplication) upon receipt of the Goods into the
Warehouse). Supplier shall not charge this price to Company for any inventory
received by Supplier on consignment before July 19, 2002     •   Exportation
Paperwork Preparation : [ *** ]     •   Maintenance Fee (cycle count, reporting,
etc.): [ *** ]     •   Warehouse Storage Fees: [ *** ]     •   Insurance Charge:
[ *** ]

*** Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

 

--------------------------------------------------------------------------------

 

Attachment N
New Product Introduction (NPI)
Process
External Manufacturing Services Supply Agreement
1.0 New Product Introduction Support by Supplier

1.1   Supplier acknowledges that the execution of an effective New Product
Introduction (“NPI”) process is a critical competitive requirement for Company.
As part of Company’s NPI process, the parties will develop and mutually agree
upon a documented Program Plan outlining Program Goals for each new Product that
Company intends for Supplier to manufacture pursuant to this Agreement. In
addition, Supplier and Company shall agree upon a one-stop NPI process to be
implemented by Supplier, that provides timely and scalable support from models
through volume production. As such, the parties shall make commercially
reasonable efforts to meet the Program Goals documented in the Program Plan.
Each party’s progress toward meeting the Program Goals shall be measured by the
other party and managed by the responsible party.

1.2   For the purposes of this Attachment, “Program Plan” means Company’s
documented plan outlining the Program Goals for a new Product that Company
intends to have Supplier manufacture pursuant to the terms of the Agreement. An
example of a template that could be used as a Program Plan is shown in Exhibit A
to this Attachment. For the purposes of this Attachment “Program Goals” may mean
but are not necessarily limited to Company’s time to volume goals, volume cost
goals, quality goals, time to market goals and target costs as identified in the
Program Plan.

1.3   Supplier shall provide dedicated NPI managers and/or engineers to assist
in the introduction of Company’s new Products. Part of their responsibility will
be to provide Supplier’s DFx input to Company and manage the Engineering and NPI
Manufacturing Services for Supplier outlined in Sections 2.0 and 4.0 of this
Attachment. At Company’s request, upon mutual agreement of the parties, Supplier
shall co-locate for a mutually agreeable period of time the appropriate Supplier
technical and business personnel with Company’s design teams to assist in the
timely and smooth transfer of new Products from design into Supplier’s
manufacturing process. Such costs shall, by mutual agreement of the parties
either (a) be amortized over a 6 month period in the cost of the Product, or
(b) be charged by Supplier to Company as a separately billable NRE charge for
which Company shall issue Supplier a purchase order in accordance with Article 9
of the Agreement.

2.0 Engineering Services

2.1   For any new Products that Company intends to have Supplier manufacture
pursuant to the terms of this Agreement, Supplier agrees to provide the
following Services to assist in the timely and smooth introduction of new
Products into Supplier’s manufacturing process (“Engineering Services”). Such
costs shall, by mutual agreement of the parties either (a) be amortized over a
six (6) month period in the cost of the Product, or (b) be charged by Supplier
to Company as a separately billable NRE charge for which Company shall issue
Supplier a purchase order in accordance with Article 9 of the Agreement:

  (a)   DFx reviews. Within 24 hours of completion of a Prototype, Supplier
shall provide to Company a preliminary report of DFx preview of such Prototype,
and shall provide detailed and complete reports within a mutually agreeable
timeframe, with a targeted delivery date of five (5) Business Days after each
design or stock list review or Prototype or Pilot build to Company and generate
any appropriate NPI Engineering Change Requests. For the purposes of this
Attachment, “DFx” means, but is not limited to, design for manufacturing, design
for assembly, design for environment, design for test, design for ease of
transition of manufacturing location, and design for the supply chain. The
intention of DFx feedback is to identify opportunities to improve
manufacturability, quality, and/or to reduce cost and Product introduction
interval.     (b)   Stock list reviews triggered by receipt of a Material stock
list from Company. Supplier’s report shall outline Material costs, lead times,
availability, quality rating, and risk assessment for the Material identified on
the stock list. Any recommendations for Material

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 1 of 10

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
substitutions and alternative Material vendors would be provided by Supplier at
that time through appropriate NPI Engineering Change Requests.

  (c)   Packaging and Labeling. Supplier shall be responsible for developing and
acquiring any new packaging and labeling required for all new Products that
Supplier would manufacture pursuant to the terms of this Agreement.     (d)  
Nonrecurring Engineering. Unless otherwise agreed to under a separate
development agreement, Supplier shall be responsible for the NRE necessary to
develop any assembly or test processes or in-circuit or functional test
software, stencils, fixtures, tooling, etc. that are required to support the
manufacture of any new Products by Supplier pursuant to the terms of this
Agreement. The costs and the parties’ responsibilities associated with the
actual fixtures, tooling, and test sets are set forth in Section 3.0 of this
Attachment.

2.2   In addition to the Engineering Services outlined in Section 2.1 and in
accordance with Article 4 of the Agreement, Supplier agrees to provide the
following Services to Company on an as requested basis. The fees associated with
these Services will be agreed to by the parties prior to the start of the work
by Supplier and will not be recovered by Supplier in the Price of the Product
but will be paid by Company to Supplier when the mutually agreed upon milestones
have been met.

(a) Specific component reliability qualification
(b) Compliance testing
(c) Environmental stress testing
(d) Other Services as may be agreed to by the parties
3.0 Fixtures, Tooling and Test Sets

3.1   Unless otherwise agreed to in writing between the parties, Supplier shall
be responsible for funding any costs associated with providing the necessary
stencils, fixtures, tooling, and test sets required to support the manufacture
of a new Product by Supplier and such costs shall, by mutual agreement of the
parties either (a) be amortized over a six (6) month period in the cost of the
Product, or (b) charged by Supplier to Company as a separately billable NRE
charge for which Company shall issue Supplier a purchase order in accordance
with Article 9 of the Agreement.

3.2   Company agrees to reimburse Supplier at Supplier’s actual incurred cost
for any stencils, fixtures, tooling, and test sets that were used while Supplier
was providing NPI Manufacturing Services to Company but cannot be utilized,
through no fault of Supplier, during production.

3.3   Supplier agrees that all stencils, fixtures, tooling, and test sets used
in the production of Products by Supplier shall be subject to the terms set
forth in Article 37 and Article 53 of the Agreement.

4.0 NPI Manufacturing Services

4.1   Supplier shall provide, at Company’s request, NPI Manufacturing Services
to Company as part of the NPI process. For the purposes of this Attachment, “NPI
Manufacturing Services” means manufacturing Services performed by Supplier in
the period prior to the commencement of pre-production or volume manufacture of
a Product by Supplier. These Services are in addition to the Engineering
Services described in Section 2.0 of this Attachment. The scope of Supplier’s
NPI Manufacturing Services to Company may include, without limitation, the
following:

     (a) Material stock list procurement and inventory stocking.
     (b) Manufacture of Product Prototype and Pilot build units.
For purposes of this Attachment, “Prototypes” are either: (a) assemblies
intended for laboratory evaluation of performance or software development, or
(b) assemblies intended to evaluate form, fit, and function and must meet
Company’s Product Specifications, unless specific relaxations

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 2 of 10

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

    have been agreed to by the parties. “Pilot Builds” are assemblies intended
to determine what, if any, changes might be required to the design, assembly and
test processes or the Specifications before the Product is ready for volume
production.       4.2   Payment for the performance of said NPI Manufacturing
Services shall be in accordance with Section 6.0 of this Attachment.

4.3   Company will provide Supplier with a written statement of requirements
that details the Product Prototype or Pilot build quantities and dates, test
requirements, etc. The parties shall subsequently jointly develop a project plan
that includes milestones and relevant due dates in support of said requirements.
During the NPI process, Supplier shall provide to Company regular written
progress reports on at least a weekly basis. All such reports shall include, but
not necessarily be limited to, the following information:

(a) status of Supplier’s progress toward meeting the required Product Prototype
or Pilot build quantities and dates;
(b) short description of problems or potential problems, if any, preventing
Supplier from meeting the said quantities and build dates;
(c) recovery method proposed in order to meet the said quantities and build
dates, if needed, and
(d) any other information related to the NPI Manufacturing Services as may be
reasonably requested by Company.

4.4   Supplier will perform such NPI Manufacturing Services and deliver any
requested deliverables to Company in accordance with the agreed upon schedule
applicable to such deliverable. Additionally, Supplier agrees to:

(a) Deliver Prototype or Pilot build quantities from each build to Company
within a mutually agreed upon timeframe, with a targeted delivery date of [***].
(b) As required, respond to NPI related Engineering Change Orders issued by
Company in accordance with Article 67 of this Agreement.

4.5   Upon Company’s request in writing, Supplier shall have the responsibility
for procuring and storing all the necessary Material to support the agreed upon
Product Prototype, or Pilot build schedules and quantities. Any Excess Inventory
or Obsolete Inventory will be dealt with in accordance with Article 12 of this
Agreement.

4.6   Supplier shall schedule NPI Manufacturing Services in such a manner as to
ensure that the Product Prototype or Pilot build activity will not adversely
impact Supplier’s manufacturing capability to meet Company’s Product Orders.

[ *** ]

***   Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 3 of 10

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
[ *** ]
5.0 Advanced Technology Development

5.1   Company and Supplier will develop means for Company to share its Product
technology roadmaps and future manufacturing technology requirements and for
Supplier to share its manufacturing technology development plans and roadmaps in
order to address technology requirements to support Company’s future products.
This exchange may result in identification of co-development projects whose cost
and schedule will be mutually agreed by the parties. Company and Supplier shall
implement a process to establish jointly developed roadmaps which include the
objectives of introduction of new manufacturing technologies and achieving “CpK”
process capability levels identified by Supplier and Company as critical.

5.2   It is expected that the results of applicable Supplier-funded development
programs will be made available to the Company for inclusion into Company’s DFx
guidelines, as appropriate.

5.3   Supplier is expected to assist Company in keeping Company’s DFx guidelines
up to date, both through review of Company designs and the DFx change management
process. It is understood that Company’s DFX guidelines will be used for
Products made by all of Company’s electronic manufacturing service providers.

6.0 Pricing

6.1   Unless otherwise agreed to by the parties, prices for Product Prototype
quantities and Pilot quantities delivered to Company by Supplier shall be priced
in accordance with the formula discussed below. The multipliers and quantity
price breaks used in the Prototype and Pilot pricing formula below will be
confirmed and agreed to by the parties prior to Company requesting Supplier to
perform such services for the first time under this Attachment. The parties
shall also agree to the period of time in which the agreed to multipliers and
quantity price breaks remain in effect. Pricing for pre-production build
quantities shall be calculated using the Manufacturer Per Unit Pricing Formula
Summary in Attachment C and Article 6 of the Agreement. This pricing formula may
from time to time be mutually adjusted by the parties.

Prototype and Pilot Pricing Formula :
The formula will be used by Supplier to generate Prototype and Pilot build
pricing based on the preliminary BOM information provided by Company at the
commencement of the Prototype phase of a program. This pricing formula will be
used for the following phases of Prototype build: P1, P1+ and P2.
[ *** ]
*** Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 4 of 10

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
[ *** ]
*** This page has been omitted pursuant to a Request for Confidential Treatment
filed separately with the Securities and Exchange Commission.

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 5 of 10

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Exhibit A
PROGRAM PLAN
EXAMPLE ONLY —
THE APPLICABLE PROGRAM PLAN WILL BE DISCUSSED AND MODIFIED
BY THE PARTIES AS NEEDED
A. GENERAL PRODUCT AND SUPPLY CHAIN INFORMATION
I. PRODUCTS:

             
Name:
  Company Part No:   Description:   Delivery Point  
 
             
 
             
 
             
 
             

II. SUPPLIER MANUFACTURING SITES :

             
Country:
  Address:          
 
             
 
           

III. NPI PROJECT MANAGEMENT:

              COMPANY :       SUPPLIER:                  
NPI Project Manager:
      NPI Project Manager:    
 
           
Email Address:
      Email Address:    
 
           
Phone Number:
      Phone Number:    
 
           
Fax Number:
      Fax Number:    
 
           

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 6 of 10

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
B. NPI MANUFACTURING SERVICES
I. PROTOTYPE BUILD REQUIREMENTS:

         
Quantities Required
  Target Prototype Build
Star Dates:   Target Prototype Build
Completion Date:  
 
         
 
       

II. PILOT BUILD REQUIREMENTS:

         
Quantities Required
  Target Pilot Build Start
Dates:   Target Pilot Build
Completion Date:  
 
         
 
       

III. PROTOTYPE AND PILOT BUILD SPECIFICATION REQUIREMENTS:

     
Specifications Required
  Date Needed  
 
     
 
   

IV. PROTOTYPE AND PILOT BUILD TEST REQUIREMENTS:
TEST TO BE PERFORMED DURING PROTOTYPE AND PILOT BUILDS
 
 
 
V. AGENCY APPROVALS

               
 
  Complete as appropriate    

          Privileged and Confidential   Lucent Technologies/Celestica
Proprietary   Page 7 of 10

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

C.   PRICING, MATERIALS AND DELIVERY   I.   PRICING SCHEDULE:

              Name:   Company Part Number:   Prototype Price   Prototype
Quantity:  
 
             
 
             

II.   PURCHASE ORDER-RELATED TERMS:

(a)   Order Lead Time: Purchase Order Lead time for the Products, Service Units
will be ___(___) days.   (b)   Long Lead-Time Materials (Components with
lead-times beyond the above stated PO Lead-time:

          Company Part No.   Description   Material PO Lead-time  
 
         
 
         
 
         
 
       

III.   UNIQUE MATERIALS: The Company-custom components, ROMs, etc. relative to
the Product are as follows:

          Part No.   Description   Supplier  
 
         
 
         
 
         
 
         
 
       

Privileged and Confidential
Lucent Technologies/Celestica Proprietary
Page 8 of 10

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

D.   QUALITY, TEST TECHNOLOGY

I.   SPECIFICATIONS:

The following documents constitute the Specifications for the Product, Service
Units described in this Attachment and are hereby incorporated into this
Agreement by reference:

              Title   Company Part No:       Date:  
 
             
 
             

II.   TEST PROCESS SUMMARY
The Test Process Summaries, or brief description of the tests to be performed,
for the Product and Service Units described in this Addendum are referenced
below. Actual Test Process Summaries, if applicable, will be attached to this
signed Product Plan and are hereby incorporated into this Agreement by
reference:

              Title or Test Process   Company or Supplier   Date:         Part
No, if applicable:          
 
             
 
             

III.   PRODUCT SPECIFIC QUALITY PLANS AND GOALS MAY BE AGREED UPON AT A LATER
DATE AND INCLUDED AS AN AMENDMENT TO THIS AGREEMENT.   IV.   MANUFACTURING
TECHNOLOGY, EQUIPMENT, LABOR, MATERIALS AND FACILITIES: Unless otherwise agreed
in this Section IV, Supplier will provide all technology, equipment, labor,
materials and facilities required to perform the scope of work. Identify any
manufacturing technology, equipment, labor, materials and/or facilities to be
provided by Company in connection with the Products covered by this Addendum.  
   
 
  V.   TEST EQUIPMENT AND FIXTURES:

      Description   NRE (if any)  
 
     
 
     

VI.   SPECIALIZED TOOLING: Items of Tooling built and/or used for the Product:

      Description   NRE (if any)  
 
     
 
     

Privileged and Confidential
Lucent Technologies/Celestica Proprietary
Page 9 of 10

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

E.   PROGRAM GOALS:

      Objective:   Goal:  
Time to Market/General Availability
   
Target Cost at Mark Introduction
   
Volume Production Cost Target
   
Pilot Quality at SIC
     
Time to Volume Production
     

F.   OTHER AND SIGNATURES

    OTHER PRODUCT SPECIFIC TERMS AND CONDITIONS

 
                         (Complete as appropriate)
 
      
 
      
 

    ACCEPTED AND AGREED:

              COMPANY   SUPPLIER
 
       
 
  By:
 
  By:
 
 
  Name:
 
  Name:
 
 
  Title:
 
  Title:
 
 
  Date:
 
  Date:
 

Privileged and Confidential
Lucent Technologies/Celestica Proprietary
Page 10 of 10

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment O
Ordering Company Acknowledgement And Agreement

    TO: CELESTICA CORPORATION (the “Supplier”)

          Reference is made to the External Manufacturing Services Supply
Agreement (the “Agreement”) No. WR71050115 dated n, 2005 made between Supplier
and Lucent Technologies Inc. (the “Company”). Capitalized terms which are
defined in the Agreement and which are used and not otherwise defined herein
have the respective meanings ascribed to them in the Agreement.
          WHEREAS the undersigned is an Affiliate of Company and has been
designated by Company as an Ordering Company pursuant to Article 59.1 of the
Agreement;
          AND WHEREAS Article 59.2 of the Agreement provides that an Ordering
Company may be eligible to order Products, Commercially Purchased Items and
Services from Supplier on the same terms and conditions, including the same
prices, as set forth in the Agreement, provided that the conditions in
Article 59.2 of the Agreement are met;
          NOW THEREFORE the undersigned hereby:

(1)   covenants and agrees to be bound by the Agreement, as the same may be
amended from time to time;   (2)   acknowledges and agrees that Supplier may
exercise against the undersigned all of its rights and remedies which it has
against Company under the Agreement; and   (3)   acknowledges and agrees that
its designation as an Ordering Company may be revoked by Company at any time.

DATED the ______ day of ____________, _____.
[NAME OF ORDERING COMPANY]

                                                            
Name:
Title:
An authorized signing officer

Privileged and Confidential
Lucent Technologies/Celestica Proprietary
Page 1 of 1

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment P
Price Administrative Process
[ *** ]

***   This page has been omitted pursuant to a Request for Confidential
Treatment filed separately with the Securities and Exchange Commission.

Privileged and Confidential
Lucent Technologies/Celestica Proprietary
Page 1 of 2

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement

EMS Price Administration & Cost Management
Process Timeline   (LUCENT TECHNOLOGIES LOGO) [y13681y1368108.gif]

 

          TASKS & MILESTONES   OWNER   DUE DATE
1. Prices of Lucent managed components are updated
  SMG   End of th week
2. Re-pricing notices are generated by BEVO
  EMS   1st day of th week
3a. Price trends for EMS managed components
  SMG   In 5 th week
3b. Price guidelines contractual/target cost
  EMS GM   In 5 th week
4a. CBOM of each OI is re-priced an submitted in BEVO
  EMS   From 6th to 9 th week
4b. Re-priced price model of each OI is up-loaded to PMN
  EMS   From 6th to 9 th week
5a. CBOM and price model are reviewed & preliminary approved
  PM   From 10th to 12th wk
5b. Portfolio of all OI prices is reviewed & finally approved
  EMS GM   In 12th week
6. New prices are loaded into Purchase System
  CFO   End of 13th week
7. [***]
  [***]   [***]

*** Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the Securities and Exchange
Commission.
(SUPPLY CHAIN NETWORKS) [y13681y1368109.gif]

Privileged and Confidential
Lucent Technologies/Celestica Proprietary
Page 2 of 2

 

--------------------------------------------------------------------------------

 

External Manufacturing Services Supply Agreement
Attachment Q
Inventory Management
Operating Principles
For purposes of Article 12.6 of the Agreement, submittals by Supplier shall
include the following, as applicable and as agreed by the parties, acting
reasonably:

          GENERAL   WHY   ACTIONS TAKEN
COMCODE
  JAN SIPP   PUSH/CANCEL
DESCRIPTION
  FEB SIPP   PORTAL
LEAD-TIME
  MAR SIPP   USAGE INSIDE CLS-LU PRODUCT
WHERE-USED
  FEB ACTUAL   USAGE INSIDE CLS-OTHER CLS
CUSTOMERS
LAST-TIME BUILD Y/N
  MAR ACTUAL   BROKERS-% RECOVERY
LAST-TIME BUY Y/N
  APR SIPP   REBALANCED W/IN CLS
ON-HAND VS ON-ORDER INDICATOR
  PORTAL DEMAND   RETURNED TO VENDOR
WHAT
       
OBSOLETE DAY 1
  INITIAL AMOUNT   FINAL AMOUNT REQUESTED
 
  REQUESTED    
OBSOLETE POST DAY 1
  OBSOLETE   OBSOLETE
EXCESS DAY 1
  EXCESS   EXCESS
EXCESS POST DAY 1
       
OBSOLETE-LEGACY
       
EXCESS-LEGACY
      MISCELLANEOUS COMMENTS
EDM CASE INFO
       

Privileged and Confidential
Lucent Technologies/Celestica Proprietary
Page 1 of 1