EXHIBIT 10.83
Confidential Portions omitted and filed separately with the Securities and
Exchange
Commission. Bullet point denote omissions.
AGREEMENT
THIS AGREEMENT (“Agreement”) is entered into between Nortel Networks Limited, a
Canadian corporation with a place of business at 8200 Dixie Road, Suite 100,
Brampton, Ontario L6T 5P6 (“Nortel”) and Flextronics Telecom Systems, Ltd., a
company organized under the laws of Mauritius (“Flextronics”), and shall be
effective as of October 13, 2006 (“Effective Date”). Nortel and Flextronics
agree as follows:
1. Restructuring Costs. In the event that Flextronics determines that it is
necessary to restructure a legacy System House, then Nortel agrees to reimburse
Flextronics for any severance, shut down or other restructuring costs incurred
by Flextronics related to any restructuring of any legacy System Houses
(“Restructuring Costs”) up to a maximum of [•]; provided that, Flextronics
provides Nortel with supporting evidence, in reasonable detail, of the
Restructuring Costs in respect of which it is seeking reimbursement. Flextronics
and Nortel will work together to mitigate the parties’ exposure to Restructuring
Costs, including any exposure to Nortel for Restructuring Costs or similar
costs. Nortel may delay the reimbursement of up to [•] of the [•] until Nortel
determines that Flextronics has followed a satisfactory mitigation process,
which determination Nortel will make no later than [•]. The parties will
continue to work together to try to identify alternatives for using the capacity
at the legacy System Houses in order to avoid any such restructuring or
reorganization.
2. Inventory
     2.1. Nortel and Flextronics will implement a joint operational program to
create the best in class supply chain, including at least a [•] inventory turns
model at the System House level. In the event that this operational program does
not increase inventory turns to acceptable levels within [•] will meet to
discuss and agree on a solution for supplementing this operational program so
that the System Houses can reach at least [•] inventory turns.
     2.2. Beginning on the Effective Date, Nortel will purchase [•]. Nortel
agrees to purchase [•]; and (b) all [•].
     2.3. After mitigation by Flextronics, Nortel agrees to purchase on [•], and
every [•] following, all [•]. [•].
     2.4. Nortel agrees that for a commercially reasonable portion of the EMS
Products that Nortel awards to a third party supplier through the BT process, or
if Nortel modifies its inventory terms with any EMS Suppliers, then Nortel will
require that such EMS Suppliers own such EMS Products until Flextronics pulls
the EMS Products at the System House, or, if this is not practical at any
non-legacy System House, then Nortel will own such EMS Products.
3. SH Pricing and ICRs. “Trigger Date” means with respect to each of Chateaudun,
Calgary and Montreal, if and when [•] of the demand for [•], respectively.
Effective as of the Trigger Date, Nortel and Flextronics agree to increase
prices at the legacy System Houses by a factor equal to [•]. On the applicable
Trigger Date for each of the legacy System Houses, Nortel and Flextronics agree
to (a) eliminate the excess uplift model; and (b) Flextronics will pass to
Nortel the ICRs that Flextronics is holding as of the Trigger Date at the
applicable Systems House. In addition, beginning with each respective Trigger
Date, Nortel and Flextronics will meet to adjust MPLP pricing as needed to
reallocate the fixed overhead to the Products remaining in the legacy System
Houses. Flextronics will make commercially reasonable efforts to reduce the
overhead costs.
4. Calgary. [•]. Flextronics will not be required to make the November 1st
payment until (a) Nortel announces the award of the Calgary business; and
(b) Flextronics and Nortel agree that a satisfactory competitive process was
followed in making the award. Nortel must receive Flextronics’s CDMA Product
Family bid by close of business October 4, 2006. [•].
5. System House and EMS Product Sourcing. [•]
6. Component Sourcing Control. Nortel and Flextronics agree that the Materials
Management roles and responsibilities must be aligned. Nortel may unilaterally
change the “NC” or “SC” designation of a supplier on written notice to
Flextronics; provided that, if Nortel is going to change a designation, it must
do so before Nortel commences any benchmarking activities (such as a BT “Wave”).
7. Source Code Access and Ownership. Flextronics will provide all source code
and Nortel IP and licenseable IP when Nortel requests, including providing
Nortel with the requested test set software for all Products. Flextronics will
not be obligated to provide any support or other services to enable
Flextronics’s competitors. Flextronics will

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Confidential Portions omitted and filed separately with the Securities and
Exchange
Commission. Bullet point denote omissions.
continue to support NPI test development and provide software development
services on a purchase order basis pursuant to design orders. Nortel will pay
the unamortized portion of the amounts due for the test software and any
remaining Day 1 software NBV, and Product pricing will be adjusted accordingly.
8. Open Book. Flextronics will provide Nortel with detailed Material Cost and
Transformation Cost data (including historical) for the legacy System Houses.
Flextronics will provide Material Cost data (including historical) only for the
non-legacy System Houses and applicable Flextronics “Tier 1” manufacturing
sites.
9. Wave 1. Nortel will award at least [•] of the [•] to Flextronics, to be moved
to Flextronics’s Guadalajara operations at the “Mexico” quoted price bid by
Flextronics.
10. Binding Amendment; Order of Precedence. This Agreement amends the Amended
and Restated Master Contract Manufacturing Services Agreement dated as of
June 29, 2004, as amended (the “MCMSA”), the Asset Purchase Agreement dated as
of June 29, 2004, as amended (the “APA”), and any related agreements, schedules
or exhibits, as applicable (the “Allegro Agreements”). In the event of any
conflict or inconsistency between the terms and conditions of this Agreement and
such Allegro Agreements, which conflict or inconsistency is inconsistent with
the intent of the parties hereto, the terms and conditions of this Agreement
shall control. All other terms and conditions of the Allegro Agreements shall
remain unchanged; nothing herein shall be construed as relieving either party of
any right or obligation under the Allegro Agreements except as expressly set
forth herein.
11. Miscellaneous. Capitalized terms not defined in this Agreement have the
meaning set forth in the MCMSA and APA. To the extent applicable, references to
“Flextronics” include Flextronics or the applicable Flextronics Company. All
references to “Nortel” means Nortel Networks as defined in the MCMSA.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement by their duly
authorized representatives, to be effective as of the Effective Date first above
written.

             
NORTEL NETWORKS LIMITED
  FLEXTRONICS TELECOM SYSTEMS, LTD.
 
           
By:
  /s/ J. Joel Hackney   By:   /s/ M. Marimuthu
 
           
Name:
  J. Joel Hackney   Name:   Manny Marimuthu
Title:
  Senior Vice President
Global Operations and Quality   Title:   Director

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