##### 



EXHIBIT
10.8
 Confidential Portions omitted and filed separately with the Securities and Exchange
Commission. Bullet points denote omissions.
 MASTER REPAIR SERVICES AGREEMENT
 between
 NORTEL NETWORKS LIMITED
 and
 FLEXTRONICS TELECOM SYSTEMS LTD.
 Dated as of June 29, 2004




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##### 



TABLE OF CONTENTS
 DEFINITIONS
    
    
    6SECTION 1 SCOPE OF THE RELATIONSHIP
    
    
    131.1 Expectations
    
    
    131.2 Information Access
    
    
    131.3 Commitments and Obligations
    
    
    141.4 Competitiveness
    
    
    141.5 Structure of the Agreement
    
    
    15SECTION 2 GOVERNANCE PROCESS
    
    
    152.1 Transition Planning
    
    
    152.2 Strategic Governance
    
    
    152.3 Operations Governance
    
    
    162.4 Monthly Operations Reviews
    
    
    162.5 Resources for Repair Services Support
    
    
    17SECTION 3 ORDERS
    
    
    173.1 Service Blanket Orders
    
    
    173.2 Acceptance of Orders
    
    
    173.3. Minimum Commitment
    
    
    173.3.1 Adjustments to the Minimum Commitment
    
    
    173.3.2 Remedy for Failure to Achieve Minimum Commitment
    
    
    183.3.3 Forecast of Required Repair Services
    
    
    183.3.4 Forecast of Additional Required Repair Services
    
    
    183.4 Issuance of Orders Electronically
    
    
    18SECTION 4 TRANSFER OF TITLE AND RISK OF LOSS
    
    
    184.1 Transfer of Title and Risk of Loss
    
    
    18SECTION 5 DELIVERY PROCESS
    
    
    195.1 Repair and Delivery Period
    
    
    195.2 Packaging, Labelling and Trade-Marks
    
    
    195.3 Management of Third Party Contracts
    
    
    19SECTION 6 MATERIALS MANAGEMENT PROCESS
    
    
    206.1 Repair Facility Location
    
    
    206.2 Material and Supplier Management Services
    
    
    206.3 Storing and Handling
    
    
    21SECTION 7 CHANGE MANAGEMENT
    
    
    217.1 Joint Change Management Process
    
    
    217.1.1 Flextronics Proposal
    
    
    217.1.2 Nortel Networks Proposal
    
    
    217.2 Joint Product Change Management Process
    
    
    227.3 New Product for Repair Introduction (NPRI)
    
    
    227.4 New Capital Investments
    
    
    23SECTION 8 INVENTORY MANAGEMENT
    
    
    238.1 End-of-life Planning
    
    
    238.2 Class B Inventory and Class C Inventory
    
    
    238.3 Open Market Purchases
    
    
    248.4 Components
    
    
    24
  Page 1




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##### 



8.5 Purges
    
    
    258.6 Support of Nortel Networks Remanufacturing Activities
    
    
    258.7 Excess Inventory
    
    
    258.8 Consigned Inventory
    
    
    268.9 Order of Inventory Usage
    
    
    278.10 A-B Writedowns
    
    
    278.11 Tracking of Inventory Furnished by Nortel Networks
    
    
    28SECTION 9 QUALITY
    
    
    299.1 Metrics, Report Card and Liquidated Damages
    
    
    299.1.1 Report Card
    
    
    299.1.2 Liquidated Damages for Failure to Meet Metrics
    
    
    309.1.3 Pass-through of Liquidated Damages from Customers
    
    
    319.1.4 Termination for Breach of Metrics
    
    
    319.2 Industry Standards
    
    
    339.3 Source Inspection
    
    
    339.4 Repair Quality
    
    
    33SECTION 10 REPAIR COST MANAGEMENT PROCESS
    
    
    3310.1 Prices for Repair Services
    
    
    3410.2 Payment, Taxes and Duties
    
    
    3410.2.1 Invoices
    
    
    3410.2.2 Payment
    
    
    3510.3 Ongoing Cost Reduction
    
    
    3610.4 Incremental Cost Reduction
    
    
    3610.4.1 Definition of ICR
    
    
    3610.4.2 ICR Commitment
    
    
    3610.4.3 Implementation of ICR
    
    
    3710.4.4 Year 4 Cost Reduction
    
    
    3710.5 OCR Threshold Commitment
    
    
    37SECTION 11 BUSINESS CONTINUITY
    
    
    3811.1 Business Continuity Planning
    
    
    38SECTION 12 WARRANTIES
    
    
    3912.1 Repair Services
    
    
    3912.2 Return of Products under Warranty
    
    
    4012.3 Epidemic Failure
    
    
    4012.3.1 Procedure for Epidemic Failure
    
    
    4012.3.2 Remedies for Epidemic Condition
    
    
    40SECTION 13 INTELLECTUAL PROPERTY RIGHTS AND LICENSES
    
    
    4113.1 License to Nortel Company Proprietary Information Granted
    
    
    4113.2 Limitations on Grant of License
    
    
    4213.3 Flextronics Inventions
    
    
    4213.4 Specifications and Deliverables Owned by NNL
    
    
    4213.5 Flextronics Retains Ownership of Flextronics Proprietary Information
    
    
    4213.6 Assignment of Inventions Agreements with Employees
    
    
    42SECTION 14 INDEMNIFICATION
    
    
    4314.1 Intellectual Property Indemnification
    
    
    4314.1.1 By NNL
    
    
    4314.1.2 By Flextronics
    
    
    4414.1.3 Measures to Safeguard NNL against Liability
    
    
    4414.2 Other Indemnification
    
    
    45
  Page 2




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14.2.1By Flextronics
    
    
    4514.2.2By Nortel Networks
    
    
    45SECTION 15 LIMITATION OF LIABILITY
    
    
    45SECTION 16 COMMUNICATION AND INFORMATION TRANSFER
    
    
    4616.1 Access to Nortel Networks Computer Systems by Flextronics
    
    
    4616.2 Flextronics Compatibility with Nortel Networks Computer Systems
    
    
    4616.3 Information Technology Services
    
    
    47SECTION 17 EQUIPMENT FURNISHED BY NORTEL NETWORKS
    
    
    4717.1 Title to Equipment Furnished by Nortel Networks
    
    
    4717.2 Risk, Insurance and Maintenance of Equipment Furnished by Nortel Networks
    
    
    47SECTION 18 RESERVED ASSETS
    
    
    47SECTION 19 LEGAL AND REGULATORY COMPLIANCE
    
    
    47SECTION 20 INTERNATIONAL TRADE
    
    
    4820.1 Exports
    
    
    4820.2 Customs Invoice
    
    
    4820.3 Duty Drawback and Minimization
    
    
    49SECTION 21 ENVIRONMENTAL POLICIES
    
    
    4921.1 ISO 14001
    
    
    4921.2 Corporate Policy
    
    
    4921.3 VOC Free and Lead-Free Technology
    
    
    5021.4 European Union (EU) Environmental Directives
    
    
    5021.4.1Compliance
    
    
    5021.4.2Indemnification
    
    
    5121.5 Packaging Reusable and Recyclable
    
    
    5121.6 INTENTIONALLY LEFT BLANK
    
    
    5121.7 Collaborate on Environmental Initiatives
    
    
    5121.8 Hazardous Materials
    
    
    51SECTION 22 CONFIDENTIALITY AND PROPRIETARY INFORMATION
    
    
    5322.1 Restriction on Disclosure and Use of Confidential Information
    
    
    5322.2 Publicity
    
    
    54SECTION 23 INSURANCE
    
    
    5423.1 General Liability Insurance
    
    
    5423.2 Property and Business Insurance
    
    
    5523.3 Certificate of Insurance
    
    
    55SECTION 24 EXPIRATION OR TERMINATION
    
    
    5624.1 Termination
    
    
    5624.2 Effect of Expiration or Termination
    
    
    57SECTION 25 TERMINATION ASSISTANCE
    
    
    5825.1 Termination Assistance Services
    
    
    5925.2 Obligation to Provide Termination Services
    
    
    5925.3 Termination Assistance Period
    
    
    59SECTION 26
    
    
    59
  Page 3




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DISPUTE RESOLUTION
    
    
    5926.1 Internal Dispute Resolution
    
    
    59SECTION 27 GENERAL PROVISIONS
    
    
    6027.1 Access to Facilities
    
    
    6027.2 Reporting
    
    
    6027.3 Documentation
    
    
    6027.4 Audits
    
    
    6027.4.1 Agreement Compliance
    
    
    6027.4.2 Control & Security Compliance
    
    
    6127.5 Force Majeure
    
    
    6227.6 Notices
    
    
    6227.7 Independent Contractor
    
    
    6327.8 Flextronics Responsible for its Contractors
    
    
    6427.9 Assignment
    
    
    6427.10 Severability
    
    
    6427.11 Governing Law; Waiver of Jury Trial
    
    
    6527.12 Consent to Jurisdiction
    
    
    6527.13 Entire Agreement; Amendments
    
    
    6527.14 Most Favored Customer
    
    
    6527.15 Construction
    
    
    6527.16 Headings
    
    
    6627.17 Time of Essence
    
    
    6627.18 Agreement by All Flextronics Entities
    
    
    6627.19 Language
    
    
    66
 EXHIBITS
 Exhibit 1
    
    Third Party Management Statement of WorkExhibit 2
    
    Logistics Services Statement of WorkExhibit 3
    
    Repair Services Statement of WorkExhibit 4
    
    A to B Writedown TemplatesExhibit 5
    
    Metrics & ScorecardExhibit 6
    
    ProductsExhibit 7
    
    Pricing and Cost Reduction ProcessExhibit 8
    
    SpecificationsExhibit 9-1
    
    Form of Agreement to Intellectual Property and Confidentiality (Nortel Networks)Exhibit 9-2
    
    Form of Employee Confidential Information and Inventions Agreement (Flextronics)Exhibit 10
    
    Dispute Escalation
  Page 4




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Exhibit 11
    
    EMEA Employment ProvisionsExhibit 12
    
    Managed ContractsExhibit 13
    
    Reserved AssetsExhibit 14
    
    Out of Scope ActivityExhibit 15
    
    Process to Establish Day One Pricing
  Page 5




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##### 

\

Master Contract Repair Services Agreement
      DEFINITIONS
 Affiliate
 (a)
    
    a Manufacturing Licensee;(b)
    
    a joint venture or other cooperative business enterprise formed between
Nortel Networks and one (1) or more person(s) which are not part of or related to
Nortel Networks; and/or(c)
    
    a corporation or other legal entity in which Nortel Networks, directly
or indirectly, at any time, owns or controls twenty (20%) percent or more of the
voting equity shares, or securities convertible into such shares.
 Asset Purchase Agreement
  Page 6




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##### 



Assists
 Business Continuity Plan
 Business Day
 CA
 Carrying Charge  
 Class A Inventory
 Class B Inventory
 Class C Inventory
 Commencement Date
 Competitor
 Component Cost
 Confidential Information
 Consigned Inventory
  Page 7




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##### 



Consumable Material
 Contact Center
 Control and Responsibility 
 Currency Conversion
 Customer
 Daily Usage Rate
 Delivery Location
 Dollar $
 ECO Engineering Change Order
 EDI
 End-of-Life Inventory
 Epidemic Condition
 Flextronics
 Flextronics Invention
 Flextronics Proprietary Information
  Page 8




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##### 



Force Majeure
 GA
 Government Entity
 Hub
 Inventory
 Leadership Category
 License Agreement
 Life Cycle
 Logistics
  Page 9




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##### 



Manufacturing Licensee
 Material and Supplier Management Services
 MCMSA
 Minimum Commitment
 NC Material or NC
 Nortel Company
 Nortel Company Proprietary Information
 (a)
    
    Programs;(b)
    
    technology, designs or other information that enjoy issued or pending statutory
proprietary protection, including patents, copyrights, waivers of moral rights, mask work
rights or integrated circuit topography registrations, industrial design registrations or
design patents but not trade-marks or other indicia of origin;(c)
    
    confidential or non public business information including ideas, formulae, plans,
proposals, designs, schematics, drawings, flow charts, product and process and test
specifications, trade secrets, know how, technical data, algorithms, databases, and
technical reports, and customer, marketing and financial information;
  Nortel Networks
  Page 10




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##### 



Nortel Networks Supplier
 NPRI
 Order(s)
 Party
 Person
 Price
 Product(s)
 Product Family
 Product Specific Inventions
 Programs
 Purge
 Repair
 Repair Change Impact Form
 R DOA Repair Dead On Arrival
  Page 11




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##### 



Repair Facility(ies)
 Repair Services
 Repair Warranty Period
 Repaired Product
 Replacement Value
 Reserved Assets
 SC Material or SC
 Service Blanket Order
 Shared Services Agreement
 Shipping Date
 Shipping Location(s)
 Specifications
 Statement of Work
 Subsidiary
  Page 12




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##### 



System
 Term
 Trade-Marks
 Virtual Systems House Agreement VSHA
 Year One
 Year Two
 Year Three
 Year Four
 SECTION 1
SCOPE OF THE RELATIONSHIP
 1.1 Expectations
  1.2 Information Access
   Page 13




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##### 



1.3 Commitments and Obligations
 
  1.4 Competitiveness
    Page 14




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##### 



1.5 Structure of the Agreement
   1.6 Term
  
 SECTION 2
GOVERNANCE PROCESS
 2.1 Transition Planning
  2.2 Strategic Governance
   Page 15




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##### 



(a)
    
    Quarterly Business Reviews. The Parties shall conduct quarterly business reviews
that are strategic and global in nature, to include but not limited to: consolidated global
Report Card performance, total business and Nortel Networks business trends, key financial
indicators, process improvements, significant technology trends and advancements,
organizational alignments, and cost to market and time to market foot print and trends.(b)
    
    Cost Reduction Opportunities. The Parties shall discuss cost reduction
opportunities, and Flextronics shall use its commercially reasonable efforts to identify such
opportunities including savings in the areas of research and development, head count
investment, risk, timeframe and materials.(c)
    
    Metrics and Report Card. The Parties shall use the performance indicators set forth
in Section 9.1 and Exhibit 5 to establish the Report Card.
 2.3 Operations Governance
  (a)
    
    Dedicate business management teams to provide consistent and efficient responses to mutually
agreed upon goals and requirements.(b)
    
    Create a process to communicate about and resolve issues promptly and to drive continuous
improvement of the day-to-day operation.(c)
    
    Comply with all reporting and meeting requirements, including collecting and reporting
scorecard metrics, as provided in this Agreement.(d)
    
    Upon reasonable prior notice, provide open book access for Nortel Networks at Flextronics
premises to resources, documents, records, databases and any other information that is not in
violation of any third party agreements of confidentiality and is directly relevant to Nortel
Networks cost management, including but not limited to, information relating to the On-going
Cost Reduction and continuous improvement, as more fully described in Section 10.3 and Exhibit
7. Each Party hereby covenants and agrees that it shall keep confidential all information
gathered in the open book process, including not disclosing such information directly or
indirectly to any competitor or supplier of the disclosing Party, all subject to the
provisions of Section 22. Any breach of the preceding sentence shall be considered to be a
material breach of this Agreement.(e)
    
    Review the total cost plan and provide the results of such review to Nortel Networks on a
timely basis
 2.4 Monthly Operations Reviews
   Page 16




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##### 



2.5 Resources for Repair Services Support
  SECTION 3
ORDERS
 3.1 Service Blanket Orders
  3.2 Acceptance of Orders
  3.3. Minimum Commitment
 
 3.3.1 Adjustments to the Minimum Commitment
 (A)
    
    Out of Scope ActivityFlextronics acknowledges that the out of scope activity as defined in Exhibit 14 will not be
part of the Minimum Commitment calculations.(B)
    
    Competitive CriteriaIf Flextronics fails to remain Competitive with its competitors with respect to any Repair
Service, then Nortel Networks may source such Repair Services from another supplier.
Records of any such deductions from the Minimum Commitment will be made in writing and
exchanged between the Parties for full verification and agreement each quarter.
Notwithstanding the foregoing, Nortel Networks will not transfer Repair Service(s) if
Flextronics becomes Competitive within forty-five (45) days from notification by Nortel
Networks that Flextronics has failed to remain Competitive, as defined below.For the purposes of this Section, Competitive shall have the same meaning as Section 1.4
of the Agreement(C)
    
    Performance Issues
  Page 17




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##### 



Nortel Networks may source its requirements for Repair Services from other suppliers, in the
event that Flextronics is in breach of the breachable Report Card metrics as set out in
Exhibit 5. These requirements will not be part of the Minimum Commitment calculations.
 3.3.2 Remedy for Failure to Achieve Minimum Commitment
 
 3.3.3 Forecast of Required Repair Services
  3.3.4 Forecast of Additional Required Repair Services
  3.4 Issuance of Orders Electronically
  SECTION 4
TRANSFER OF TITLE AND RISK OF LOSS
 4.1 Transfer of Title and Risk of Loss
   Page 18




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##### 



SECTION 5
DELIVERY PROCESS
 5.1 Repair and Delivery Period
  5.2 Packaging, Labelling and Trade-Marks
 .
 5.3 Management of Third Party Contracts
    Page 19




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##### 



SECTION 6
MATERIALS MANAGEMENT PROCESS
 6.1 Repair Facility Location
    6.2 Material and Supplier Management Services
   Page 20




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##### 



6.3 Storing and Handling
  SECTION 7
CHANGE MANAGEMENT
 7.1 Joint Change Management Process
  7.1.1 Flextronics Proposal
  7.1.2 Nortel Networks Proposal
   Page 21




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##### 



7.2 Joint Product Change Management Process
  7.3 New Product for Repair Introduction (NPRI)
    Page 22




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##### 



7.4 New Capital Investments
   SECTION 8
INVENTORY MANAGEMENT
 8.1 End-of-life Planning
  8.2 Class B Inventory and Class C Inventory
    Page 23




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##### 



8.3 Open Market Purchases
  8.4 Components
  (a)
    
    conduct and provide to Nortel Networks a summary and forecast of
components that any supplier in the supply chain plans to discontinue;(b)
    
    identify, monitor and react to suppliers end-of-life notifications;(c)
    
    apply strategic technical analysis of the supply base to proactively
warn of potential End-of-Life Inventory trouble areas by product family;(d)
    
    maintain and provide to Nortel Networks a consolidated list of
components (including supplier part numbers) which are approaching end-of-life;(e)
    
    for components that have had last time buys performed, track and
monitor Inventory on hand and projected use up dates with the goal of continuity of
supply and be able to react accordingly if the use up date is advanced;(f)
    
    negotiate with supply base to maintain supply until an alternative
solution can be achieved;(g)
    
    if required by Nortel Networks, research, review and recommend to
Nortel Networks for approval (including business case, detailed cost analysis,
design
  Page 24




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##### 



plans, last time buy quantity required, qualification and verification
plans, scope of intellectual property risk known to Flextronics and the basis of
Flextronics knowledge) of the best alternative available, such as, perform last
time buy, component substitutions, component packaging foot print changes,
elimination of the component by incorporating function into another component,
specification relaxation to eliminate the need for the component. In this regard,
Nortel Networks will provide Flextronics with parameters concerning its forecasted
demand for the Product through the Products end-of-life, including, without
limitation, the estimated sell-off period and aggregate quantity required and
anticipated Product mix (the End of Life Parameters). Flextronics shall be
entitled to rely on such End of Life Parameters in conducting its analysis;
(h) where last-time buy plan is approved by Nortel Networks, Flextronics
shall perform the activities set out in this Section 8.4 including executing the
last-time buy and such Inventory will be considered End-of-Life Inventory.
 8.5 Purges
  8.6 Support of Nortel Networks Remanufacturing Activities
  8.7 Excess Inventory
    Page 25




---



##### 



Uplift AmountYear 1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Year 2Product
    
    Current
    
    Units Sold
    
    Amount
    
    Uplift %
    
    Uplift
    
    Current
    
    Units Sold
    
    Amount
    
    Uplift %
    
    Uplift %Price
    
    to Nortel
    
    Sold
    
    Factor
    
    Amount
    
    Price
    
    to Nortel
    
    Sold
    
    Factor
    
    AmountDuring year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    During yearaaaaaaaa
    
    $
    1,000
    
    
    
    400
    
    
    $
    400,000
    
    
    
    1.0
    %
    
    
    4000
    
    
    $
    990
    
    
    
    400
    
    
    $
    396,000
    
    
    
    1.0
    %
    
    
    3960bbbbbbb
    
    $
    400
    
    
    
    98
    
    
    $
    39,200
    
    
    
    1.0
    %
    
    
    392
    
    
    $
    360
    
    
    
    50
    
    
    $
    18,000
    
    
    
    1.0
    %
    
    
    180ccccccc
    
    $
    136
    
    
    
    4000
    
    
    $
    544,000
    
    
    
    1.0
    %
    
    
    5440
    
    
    $
    122
    
    
    
    3800
    
    
    $
    463,600
    
    
    
    1.0
    %
    
    
    4636ddddd
    
    $
    300
    
    
    
    35
    
    
    $
    10,500
    
    
    
    1.0
    %
    
    
    105
    
    
    $
    270
    
    
    
    30
    
    
    $
    8,100
    
    
    
    1.0
    %
    
    
    819,937
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8857Two yr sum
    
    
    
    
    
    
    18794
   8.8 Consigned Inventory
    Page 26




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##### 



(a)
    
    Unless Nortel Networks otherwise directs, Flextronics shall hold such inventory
on behalf of and, in the ordinary course of business, [ ];(b)
    
    Flextronics shall keep and care for such Consigned Inventory with the same
standard of care as if it were part of the Inventory, including the obligation to hold
at Flextronics risk and to insure against loss. However, no such Consigned Inventory
shall be, nor be deemed to be, a part of the Inventory;(c)
    
    Flextronics shall repurchase all suitable Consigned Inventory from Nortel
Networks prior to repairing Class C Inventory;(d)
    
    When Flextronics is required to acquire Consignment Inventory, Flextronics will
acquire the lesser of all Consigned Inventory or 30 times the Daily Usage Rate.(e)
    
    Flextronics shall make such purchase at the then current Price unless otherwise
agreed by the Parties. Flextronics shall make payment to Nortel Networks for such
purchases within forty (40) days thereof;(f)
    
    In the event Flextronics does not repurchase Consigned Inventory in accordance
with the foregoing, Nortel Networks shall be deemed to have sold such Inventory to
Flextronics and Flextronics will immediately credit Nortel Networks with the amount
attributable to such deemed repurchase;(g)
    
    Flextronics will be responsible for normal cycle count adjustments for
Consigned Inventory. [ ]; and(h)
    
    If Nortel Networks requires Flextronics to increase the level of Consigned
Inventory above the level as of the Effective Date, the Parties will mutually agree if
an adjustment is required to the Price.
 8.9 Order of Inventory Usage
 Flextronics shall utilize inventory in the following order:
 1.
    
    Flextronics Day 1 Inventory

2. Flextronics Zero Cost E & O Inventory (if applicable)3.
    
    Consigned Inventory4.
    
    Class C Inventory repaired and converted to Class B
 8.10 A-B Writedowns
    Page 27




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##### 



a)
    
    The Inventory was lost beyond the threshold as specified in Section 8.9 of this
Agreement.b)
    
    Shortages are caused by Flextronics internal repair process(es) non-performance.
  a)
    
    Provided Nortel Networks has received notice, and Flextronics has used commercially
reasonable efforts to mitigate the issue, Flextronics will not be responsible for shortages
resulting from the non-performance of third-party suppliers under Nortel Networks control
and Flextronics management.b)
    
    Flextronics will be responsible for A-B writedowns if the scrap rate on the part
exceeds the Minimum Performance level as set forth in Exhibit 5 for reasons other than
Customer damage. Nortel Networks is responsible for A-B writedown costs resulting from
Freight Damage, issues arising from ECO implementations beyond Flextronics control,
mutually agreed EOL scrapping, failure analysis authorized by Nortel Networks or other
Nortel Networks authorized scrap activities.c)
    
    Flextronics will be responsible for A-B writedowns that result from shortages caused by
a GCIP processing delay within Flextronics control as agreed in Exhibit 5. Nortel Networks
will be responsible for all other A-B writedowns relating to GCIP delays. Nortel Networks
reserves the right to approve all related A-B writedowns.
  a)
    
    New Product Introductionb)
    
    Last Time Buysc)
    
    Material On Loand)
    
    Qualitye)
    
    Return ratesf)
    
    Retrofitsg)
    
    Manufacturing Discontinued Productsh)
    
    Remanufacturing
 8.11 Tracking of Inventory Furnished by Nortel Networks
   Page 28




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##### 



SECTION 9
QUALITY
 9.1 Metrics, Report Card and Liquidated Damages
 9.1.1
    
    Report Card
 Flextronics shall complete report cards, which shall be used as a method to measure against
the goals of quality, service and cost and shall deliver such report cards to Nortel
Networks on a monthly basis coinciding with the monthly reviews provided for in Section 2.4.
The metrics used to derive the report card scores and the formats for the report cards
shall be as set out in Exhibit 5.For each Metric, there will be two performance criteria: Minimum Performance and
Continuous Improvement. Minimum Performance criteria will be used to measure whether the
process is in control and meeting the minimum performance expectations. Continuous
Improvement criteria will be used to assess improvement of the average performance of the
applicable process and reduction of process variations.The Minimum Performance Baseline and Continuous Improvement Baseline will be established
for each breachable metrics as follows, unless otherwise mutually agreed.
 (a)
    
    an operational definition of each metric will be outlined in
Exhibit 5,(b)
    
    Minimum Performance Baseline:
 (i)
    
    Initial Minimum Performance Baseline will be:
Historical data from the [ ] prior to the Effective Date will be
used to calculate the average performance and standard deviation. In the
event that [ ] of historical data is not available, Flextronics will
measure the metric for [ ] before establishing the average and
standard deviation. The calculation will be done at the Product Family
level.
 1.
    
    For a process that should be maximized
(where a higher metric value is better), the [].2.
    
    For a process that should be minimized,
(where a lower metric value is better), the [].
 (ii)
    
    The Minimum Performance Baseline will be reviewed and
adjusted each calendar year as follows;
 1.
    
    For a process that should be maximized,
the [ ] will be the Minimum Performance Baseline. However,
this adjustment will
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not be lower than the Initial Minimum
Performance Baseline established at the date of each Product
transfer or any Minimum Performance Baseline in following years,
which ever is better.2.
    
    For a process that should be minimized,
the [ ] will be the Minimum Performance Baseline. However,
this adjustment will not be higher than the Initial Minimum
Performance Baseline established at the date of each Product
transfer or any Minimum Performance Baseline in following years,
which ever is better.
 (c)
    
    Continuous Improvement Baseline:
 (i)
    
    The initial Continuous Improvement Baseline will be
the [ ] prior to the Effective Date. In the event that [ ] of
historical data is not available, Flextronics will measure the metric for
[ ] before establishing the average and standard deviation. The
calculation will be done at the Product Family level.(ii)
    
    The Continuous Improvement Baseline will be reviewed
and adjusted each calendar year as follows;
 1.
    
    For a process that should be maximized,
the [ ] will be the Continuous Improvement Baseline. However,
this adjustment will not be lower than the Initial Continuous
Improvement Baseline established at the date of each Product
transfer or any Continuous Improvement Baseline in following years,
which ever is better.2.
    
    For a process that should be minimized,
the [ ] will be the Continuous Improvement Baseline. However,
this adjustment will not be higher than the Initial Continuous
Improvement Baseline established at the date of each Product
transfer or any Continuous Improvement Baseline in following years,
which ever is better.
 9.1.2 Liquidated Damages for Failure to Meet Metrics
 
 
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After 2 consecutive
    
    
    After 3 or moreAfter 1 month
    
    
    months
    
    
    consecutive monthsPerformance betweenTarget and Passing
    
    
    []
    
    
    
    []
    
    
    
    []Performance below
Passing
    
    
    []
    
    
    
    []
    
    
    
    []
 
 After 2 consecutive
    
    
    After 3 or moreAfter 1 month
    
    
    months
    
    
    consecutive monthsPerformance between
Target and Passing
    
    
    []
    
    
    
    []
    
    
    
    []Performance below
Passing
    
    
    []
    
    
    
    []
    
    
    
    []
 
 *
    
    Flextronics revenue for the affected Product Family, as measured in the
aggregate on the relevant Report Card.  9.1.3 Pass-through of Liquidated Damages from Customers
 
  9.1.4 Termination for Breach of Metrics
  
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9.1.5 Transition Performance Period
       Page 32




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9.2 Industry Standards
  (a)
    
    ISO 14001 and ISO 9001 compliance at Delivery Facilities;(b)
    
    applicable TL9000 requirements requested by Nortel Networks;(c)
    
    effective assessments and corrective/preventive actions in respect of processes;(d)
    
    effective assessments and corrective/preventive actions in respect of quality audits;(e)
    
    senior management reviews are undertaken to discuss quality across all processes.
 9.3 Source Inspection
  9.4 Repair Quality
 (a)
    
    Flextronics shall maintain a level of quality with respect to workmanship, testing and
packaging processes that shall limit RDOA occurrences as specified in Exhibit 5, measured
on a monthly basis. Flextronics will provide to Nortel Networks a weekly pareto of RDOA
occurrences and for the top three (3) issues Flextronics will provide to Nortel Networks
(a) a root cause analysis, (b) an action plan detailing corrective actions required and (c)
the action register showing the status of the action plan. At its discretion, Nortel
Networks may participate in the development of these action plans.(b)
    
    For each Repair Facility, Flextronics will develop a quality performance program no
less stringent than the standards currently in place, or as may be updated from time to
time, in the relevant repair facility of Nortel Networks. Flextronics compliance with
these standards will be measured monthly pursuant to Exhibit 5.(c)
    
    Nortel may notify Flextronics in writing if Flextronics has failed to meet the
requirements set forth in either subsection (a) or (b) above. If during the Term, NNL so
notifies Flextronics in each of three (3) consecutive months, Flextronics shall be deemed
to be in material breach of this Agreement. If Flextronics disputes whether there has been
a material breach for the purposes of this Section 9.4 then Flextronics shall be entitled
to invoke the Dispute Resolution Process in Exhibit 10.
 SECTION 10
REPAIR COST MANAGEMENT PROCESS
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10.1 Prices for Repair Services
 10.1.1
    
    Repair Services Prices
 The initial Prices for Repair Services specific to each Product shall be as set out in
Exhibit 6 and periodically updated as set out in Exhibit 7. The Parties agree that Prices
for Repair Services will not be greater after the Effective Date than before provided that
there are no new material services or capabilities required by Nortel Networks.
 10.1.2
    
    Logistics Services
 The Prices for Logistics Services are set forth in Exhibit 6.
 10.1.3
    
    Pricing and Scope
 The Scope of Work broadly defines the activities performed by Nortel Networks prior to the
Effective Date with respect to the Transitioned Business. The Parties agree that the Prices
set forth in this Agreement include all such activities.
 10.1.4
    
    Day One Pricing
 The Parties agree that the Price for Repair Services, on the Effective Date, will not be
greater than the cost incurred by Nortel Networks for such Repair Services on the day before
the Effective Date. In addition, the Price for Repair Services on the day after Flextronics
assumes responsibility of such Repair Services from third party suppliers []. These
Prices are set out in Exhibit 6. Thereafter, Nortel Networks and Flextronics will set Prices
on an annual basis, using the process described in Exhibit 7, incorporating the ICR and OCR
into the committed Price for the forward four quarters.In order to establish Prices as of the Effective Date, Nortel Networks shall provide
sufficient information to support current Prices as at such date. This process is set forth
in Exhibit 15. Flextronics will determine by the end of four (4) months after the Effective
Date whether it is satisfied that the resources and cost responsibilities, as transferred,
are accurately reflected in the Prices as provided by Nortel Networks. If Flextronics is
not so satisfied, it will notify Nortel Networks and present reasonable evidence to support
this determination. If Nortel Networks accepts this determination, the Parties will
mutually agree on restated Prices for the applicable Repair Services, which shall be
retroactive to the first invoice. If Nortel Networks does not accept this determination,
the Parties shall follow the Dispute Resolution Process. Upon acceptance or other
resolution of the revised Pricing, the Party which either overpaid or overcharged will pay
the other Party the difference between the amounts originally invoiced and the revised
Prices forty (40) days after receipt of invoice.
 10.2 Payment, Taxes and Duties
 10.2.1
    
    Invoices
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Each invoice shall be rendered against the relevant Order. On each invoice submitted to
Nortel Networks, Flextronics shall reference the number of the Order(s) issued for the
Repair Services covered by such invoice. Any taxes not included in the Price but which are
to be paid by Nortel Networks and collected by Flextronics and remitted to the applicable
taxing authority, shall be itemized on the invoice except as is required by law to be
included in the Price; if Flextronics is unable to itemize such amounts attributable to
Repair Services listed on any invoice and does not include such amounts on the invoice,
Flextronics shall invoice the applicable Nortel Company as soon as practicable the amount
attributable to such charges for such invoices issued during the preceding calendar month
and provide to Nortel Networks a reconciliation to each such invoice. Flextronics agrees
not to assess any applicable excise tax, sales tax, goods and services tax, value added or
similar taxes where Nortel Networks furnishes Flextronics a tax exemption certificate, a
certificate of authority, a direct pay permit and/or any equivalent acceptable to the
applicable taxing authority. Nortel Networks shall withhold any applicable withholding tax
from payments made to Flextronics pursuant to this Agreement. To assist Flextronics in
obtaining any tax credits for the amounts withheld, Nortel Networks shall promptly provide
Flextronics with such evidence as may be reasonably required by the applicable taxing
authorities to establish that such withholding tax has been paid.
 10.2.2
    
    Payment
 Payment shall be made net [] after the date of the applicable invoice. [].
Nortel Networks may deduct any undisputed credit due and owing it, upon approval of
Flextronics. Payment shall be made in U.S. dollars, unless otherwise agreed upon in the
appropriate Virtual Systems House Agreement or otherwise between the Parties. If payment is
made in currency other than U.S. dollars, the Parties shall use the Currency Conversion
factor except as otherwise set out in the appropriate Virtual Systems House Agreement to
calculate payment. Nortel Networks shall pay by wire transfer in the jurisdictions where
this is possible.[].Nortel Networks shall identify any dispute with respect to an invoice within thirty (30)
days of its receipt of such invoice.[].Flextronics reserves the right to make emergency surcharges (ie fuel, security) to recover
commercially reasonable costs associated with temporary or industry wide situations which
could not be reasonably anticipated at the commencement of this Agreement. Nortel Networks
will receive thirty (30) days written notice of any emergency surcharges. Surcharges will
be reviewed between Nortel Networks and Flextronics every thirty (30) days from the time
that the initial notice period was served until the time at which the temporary surcharges
are removed. All surcharges will be temporary, and will
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apply in addition to negotiated
rates and will be separately identified. Flextronics will attempt to mitigate these costs
wherever possible.
 10.3 Ongoing Cost Reduction
  st
 10.4 Incremental Cost Reduction
   10.4.1
    
    Definition of ICR
 Incremental Cost Reduction or ICR means the list of cost reduction programs set forth in
Exhibit 7. In addition, the Parties agree that any ICRs achieved by Flextronics consistent
with the terms of Exhibit 7, during the time period between the Execution Date and the
Commencement Date shall be credited towards Flextronics ICR Commitment.
 10.4.2
    
    ICR Commitment
 Flextronics agrees that it will pass on to Nortel Networks ICR equal to a certain percentage
of the total revenue received from purchases of Repair Services made by
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Nortel Networks
(Total Revenue). This percentage is defined as the Committed ICR %. []. If the
Total Revenue is reduced because Nortel Networks has not purchased Repair Services from
Flextronics for any of the reasons set out in Section 3.3.1(B) or (C), the ICR to be
delivered shall be calculated as if the Total Revenue had not been so reduced.
 10.4.3
    
    Implementation of ICR
 Incremental Cost Reduction (ICR) will be reflected in the Product price using the Cost Plus,
MPLP or PLP Process, as applicable, and not recovered as a lump sum payment (except in the
case of a true-up). If, as determined in an annual true-up process, the annual guarantee
is not achieved by means of the product pricing at the end of Years 2 and 3 respectively,
Flextronics will pay Nortel Networks the amount of the shortfall as a lump-sum payment. The
Baseline (as defined below) at the end of Years 2 and 3 will be set to include the
guaranteed ICR; provided that the Baseline at the end of Year 3 will be for planning
purposes only for Year 4 and prices for Year 4 will be set according to market conditions.ICR is an in-year amount calculated by applying the Committed ICR % to the applicable
years Total Revenue over a twelve month period. The Baseline is the Total Revenue
determined by Supplier and Nortel Networks as of a certain date. The Year One Baseline will
be the Total Revenue as of the Effective Date assuming that all Transferred Business has
been transferred as of the Commencement Date. [].Cost reduction, including ICR, which exceed the agreed upon level will be subject to the
cost sharing provisions set out in Exhibit 7 of the MRSA; provided, however, that
Flextronics shall be entitled to retain 100% of any ICRs, which exceed the total in-year ICR
Commitment applicable to Year 2. Any ICR achieved as of the end of Year 3 that is greater
than the ICR Commitment will be treated as OCR.
 10.4.4
    
    Year 4 Cost Reduction
 In Year 4 all cost reduction will be managed using the process in Exhibit 7 for OCR
[].
 10.5 OCR Threshold Commitment
 
  Page 37




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
 SECTION 11
BUSINESS CONTINUITY
 11.1 Business Continuity Planning
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SECTION 12
WARRANTIES
 12.1 Repair Services
  (i)
    
    all Repair Services performed under this Agreement shall be performed in a
competent, professional and timely manner in accordance with the standards generally
accepted in the telecommunications industry and in accordance with the applicable
Specifications and the terms of this Agreement;(ii)
    
    it shall use adequate numbers of qualified individuals with suitable training,
education, experience and skill to perform Repair Services;(iii)
    
    it shall provide the Repair Services using proven, current technology that
will enable Customer to take advantage of technological advancements in the
telecommunications industry;(iv)
    
    Repaired Products shall be free of defects in material controlled by
Flextronics and workmanship during the Repair Warranty Period, such period to start
upon shipment of the Repaired Product to Customer;(v)
    
    with the exception of those components recycled by Nortel Networks as of the
Effective Date, only new and unused materials shall be used in the Repair Services,
unless Nortel Networks, in its sole discretion, authorizes Flextronics to use certified
equivalent to new materials for the repair of a specific Product;(vi)
    
    to the best of its knowledge, upon inquiry, it does not and will not employ or
contract the services of (i) forced or prison labor or (ii) employees or contractors
that are younger than the minimum age legally entitled to work in each applicable
jurisdiction in which Repair Services are provided; and(vii)
    
    to the best of its knowledge, upon inquiry,no subcontractor of Flextronics
employs or contracts, directly or indirectly, the services of (i) forced or prison
labor or (ii) employees or contractors that are younger than the minimum age legally
entitled to work in each applicable jurisdiction in which Repair Services are provided.
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12.2 Return of Products under Warranty
   12.3 Epidemic Failure
 12.3.1
    
    Procedure for Epidemic Failure
 If a Repaired Product shows evidence of an Epidemic Condition, each Party shall notify the
other Party within two (2) Business Days of becoming aware of such Epidemic Condition. Upon
notification to Flextronics of the Epidemic Condition, Nortel Networks shall have the right,
pending correction of the Epidemic Condition as provided herein, to postpone further
shipments of such Repaired Product evidencing the Epidemic Condition, by giving notice of
such postponement to Flextronics. Until such Epidemic Condition is corrected, Flextronics
shall negotiate a remedy in good faith within a commercially reasonable period of time with
Nortel Networks which may include acquiring Class A material in order to fulfill its
obligations under this Agreement provided that such Epidemic Condition has been caused
solely by Flextronics or Flextronics suppliers.
 12.3.2
    
    Remedies for Epidemic Condition
 Nortel Networks shall pay the costs of implementing the remedy on Repaired Products to the
extent that the Epidemic Condition results from Flextronics compliance with the
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Specifications. Flextronics shall bear all reasonable costs of implementing the remedy to
the extent the Epidemic Condition arose from Flextronics non-conformance with the
Specifications, defects in SC Material, or defects in workmanship or manufacturing
processes. The Parties shall use reasonable efforts to minimize the costs associated with
the recovery plan without compromising NNLs ability to aggressively respond to Customer
needs.Subject to the foregoing, Flextronics shall:
 (a)
    
    Incorporate the remedy in the affected Repaired Products in accordance
with Nortel Networks ECO procedures;(b)
    
    Subsequently ship only Repaired Products incorporating the required
modification correcting the Epidemic Condition;(c)
    
    Rework, repair and/or replace any Repaired Product at no cost to Nortel
Networks, that shows evidence of the Epidemic Condition; and(d)
    
    At Nortel Networks option, reimburse Nortel Networks for all costs
associated with the repair or replacement of Repaired Products for Nortel Networks.
 Flextronics obligations for Epidemic Condition relating to a Repaired Product unit shall
continue for [] after the shipment of such Repaired Product.The foregoing provisions shall survive termination and expiry of this Agreement.
 SECTION 13
INTELLECTUAL PROPERTY RIGHTS AND LICENSES
 13.1 License to Nortel Company Proprietary Information Granted
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13.2 Limitations on Grant of License
  13.3 Flextronics Inventions
  13.4 Specifications and Deliverables Owned by NNL
  13.5 Flextronics Retains Ownership of Flextronics Proprietary Information
  13.6 Assignment of Inventions Agreements with Employees
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SECTION 14
INDEMNIFICATION
 14.1
    
    Intellectual Property Indemnification
 14.1.1 By NNL
   (a)
    
    arises from Flextronics modification or alteration of the
information supplied by Nortel Networks relating to a Product or the
Specifications, and such modification or alteration is not authorized by Nortel
Networks;(b)
    
    arises from any method or process used in or practiced as a part of
the Repair Services provided by Flextronics under this Agreement (unless such
method or process was specifically requested by Nortel Networks); or(c)
    
    arises from any Repair Services provided by Flextronics under this
Agreement (unless the method or process of providing such Service was
specifically requested by Nortel Networks).
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14.1.2 By Flextronics
 
   (a)
    
    arises from Nortel Networks modification or alteration of the
information supplied by Flextronics relating to the Repair Services, and such
modification or alteration is not authorized by Flextronics;(b)
    
    would not have arisen but for the combination of the information
provided by Flextronics or other result of such method or process or Service
provided by Flextronics with any other product or technology not supplied by
Flextronics, or not authorized by Flextronics.
 14.1.3 Measures to Safeguard NNL against Liability
  (a)
    
    procure the right to continue using such process or method or
intellectual property component, to continue selling the Products or to continue
providing such Repair Services; or
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(b)
    
    modify the process or method, intellectual property component, or
Repair Services, so that the provision of Repair Services, as applicable, no
longer infringes.
  14.2
    
    Other Indemnification
 14.2.1 By Flextronics
  14.2.2 By Nortel Networks
  SECTION 15
LIMITATION OF LIABILITY
   Page 45




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SECTION 16
COMMUNICATION AND INFORMATION TRANSFER
 16.1 Access to Nortel Networks Computer Systems by Flextronics
  16.2 Flextronics Compatibility with Nortel Networks Computer Systems
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16.3 Information Technology Services
  SECTION 17
EQUIPMENT FURNISHED BY NORTEL NETWORKS
 17.1 Title to Equipment Furnished by Nortel Networks
  17.2 Risk, Insurance and Maintenance of Equipment Furnished by Nortel Networks
  SECTION 18
RESERVED ASSETS
  SECTION 19
LEGAL AND REGULATORY COMPLIANCE
  Page 47




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SECTION 20
INTERNATIONAL TRADE
 20.1 Exports
  20.2 Customs Invoice
   Page 48




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20.3 Duty Drawback and Minimization
     SECTION 21
ENVIRONMENTAL POLICIES
 21.1 ISO 14001
 
 21.2 Corporate Policy
  Page 49




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
 21.3 VOC Free and Lead-Free Technology
  
  21.4
    
    European Union (EU) Environmental
Directives 21.4.1

ComplianceFlextronics will engage with Nortel Networks or its designate and mutually agree on the
development and provision of a plan (the Compliance Plan) for the implementation and
management of the WEEE (Waste Electrical and Electronic Equipment) Directive and the RoHS
(Restriction of Hazardous Substances) Directive, as well as any other EU environmental
directives that affect Products to be sold in the EU. Flextronics will provide the
Compliance Plan to Nortel Networks for its approval, within 90 days on receipt of specific
Nortel Networks requirements, which shall include at a minimum: a) overall objectives in
regard to the directives, b) Specifications and other requirements that must be complied
with, c) Products that are impacted, d) an outline of Flextronics and Nortel Networks
responsibilities for achieving the foregoing objectives and requirements and (e) allocation
of any applicable increase in Price to Nortel Networks unless otherwise agreed to by the
Parties. Nortel Networks shall be responsible for those associated costs that result from
Flextronics bringing operations in a legacy Repair Facilities into initial compliance with
regulations regarding any applicable EU directives.
  Page 50




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Flextronics will provide Nortel Networks with any changes to the Compliance Plan within ten
(10) days of the change coming into effect. Nortel Networks reserves the right to inspect
Flextronics facilities to validate compliance with the EU directives.To the extent Flextronics is responsible under the Compliance Plan, Flextronics must be able
to demonstrate to Nortel Networks satisfaction by [ ] that no hexavalent chromium,
cadmium, mercury or polybrominated biphenyls (PBB)/polybrominated diphenyl ethers (PBDE) are
present in Products to be sold in the EU. To the extent Nortel Networks is responsible
under the Compliance Plan, Nortel must be able to demonstrate to Flextronics satisfaction by
[ ] that no hexavalent chromium, cadmium, mercury or polybrominated biphenyls
(PBB)/polybrominated diphenyl ethers (PBDE) are present in Products to be sold in the EU.
[ ]. Nortel Networks and Flextronics agree to address jointly any problems of supply.
If Flextronics can demonstrate that compliance with any EU directives will result in change
to costs or delay in delivery, the Parties will agree on appropriate changes to the Price or
delivery schedule, only to the extent such costs or delays are directly related to the
provision of Repair Services. Flextronics acknowledges that changes to EU directives may
result in decreases or increases to costs and that it will bring any such change to Nortel
Networks attention.21.4.2Indemnification[].21.5
    
    Packaging Reusable and Recyclable
  21.6
    
    INTENTIONALLY LEFT BLANK21.7
    
    Collaborate on Environmental Initiatives
  21.8
    
    Hazardous Materials
   Page 51




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
  Page 52




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SECTION 22
CONFIDENTIALITY AND PROPRIETARY INFORMATION
 22.1 Restriction on Disclosure and Use of Confidential Information
   Page 53




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22.2 Publicity
   SECTION 23
INSURANCE
 23.1 General Liability Insurance
      
    
  Page 54




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23.2 Property and Business Insurance
 
 23.3 Certificate of Insurance
  23.4 Business Continuity
   Page 55




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SECTION 24
EXPIRATION OR TERMINATION
 24.1
    
    Termination(a)
    
    In the event the MCMSA is terminated, the Parties agree to meet and consider the continuance
of this Agreement on terms that are mutually acceptable. If the Parties are unable to agree,
either Party has the right to terminate this Agreement.(b)
    
    In addition to any other right or remedy available to Nortel Networks or any Nortel Company
under this Agreement or at law or in equity, if Flextronics breaches any material term of this
Agreement or an Order and such breach is susceptible of cure but is not corrected within
thirty (30) days after the delivery of written notice thereof by Nortel Networks to
Flextronics or if Flextronics defaults in any payment to Nortel Networks and does not correct
the default in payment issue within thirty (30) days after the date of notice of the breach to
Flextronics NNL may terminate this Agreement and any Nortel Company may terminate any Order.
For greater certainty, if any Service Blanket Order is terminated, all Orders relating thereto
shall be deemed to be concurrently terminated. Notwithstanding the foregoing, (i) Nortel
Networks and any Nortel Company shall have the same rights and remedies without the
requirement to wait for thirty (30) days for cure if the breach by Flextronics relates to
Nortel Company Proprietary Information under Section 13 or Section 22 hereof and such breach
is not susceptible of cure; and (ii) Flextronics shall have the same rights and remedies
without the requirement to wait for thirty (30) days for cure if the breach by any Nortel
Company relates to Flextronics Company Proprietary Information under Section 13 or Section 22
hereof and such breach is not susceptible of cure.(c)
    
    Regardless of the excuse of Force Majeure, if a Party is not able to perform within ninety
(90) days after such event which constitutes Force Majeure, the other Party may terminate this
Agreement in accordance with this Section 24.1 provided such Party purporting to terminate is
not otherwise in default of any of its material obligations under this Agreement. Termination
of this Agreement shall not release or diminish any other obligations of any Party hereunder
that exist as of the date of termination.(d)
    
    If Flextronics shall be declared insolvent or bankrupt, or if any assignment of its property
shall be made for the benefit of creditors or otherwise, or if its interest herein shall be
levied upon under execution or seized by virtue of any writ of any court, or if a petition for
assignment for the benefit of creditor is filed in a court is filed by Flextronics to declare
Flextronics bankrupt, or if a petition is filed by any person other than Flextronics in any
court to declare Flextronics bankrupt which is not dismissed within sixty (60) days of the
filing of such petition, or if a trustee in bankruptcy, receiver or receiver-manager or
similar officer is appointed for or in respect of Flextronics or its assets, then NNL may
terminate this Agreement and/or any Order at its option, and without charge, and shall
thereupon be free from all liability and obligations thereunder except as specifically
provided in Section 24.2(c), all subject to applicable bankruptcy and insolvency legislation
which may otherwise provide. For greater certainty, if any Service Blanket
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Order is
terminated, all Orders relating thereto shall be deemed to be concurrently terminated.(e)
    
    Flextronics may terminate an Order only if the Nortel Company which issued the Order is in
material breach of a term, including, without limitation, any payment obligation of this
Agreement or an Order, and such breach has not been cured within thirty (30) days after the
delivery of written notice thereof by Flextronics to Nortel Company defaulting in any payment
to Flextronics and for any other breach within thirty (30) days after the date of Flextronics
written notice thereof to the applicable Nortel Company in respect of the particular breach,
provided that Flextronics has sent a copy of such notice to NNL. The failure of Nortel
Networks to pay to Flextronics in a timely manner any moneys in dispute shall not constitute a
material breach hereof.(f)
    
    The Parties agree that the provisions of Exhibit 11 shall apply with respect to those
employees in the United Kingdom or European Union countries who were employed by Nortel
Networks prior to the VSHA Effective Date applicable to Monkstown and Chateaudun System
Houses, respectively, and were transferred to Flextronics pursuant to the Asset Purchase
Agreement.24.2
    
    Effect of Expiration or Termination
  (a)
    
    Nortel Networks shall pay all applicable undisputed amounts or charges owed to Flextronics as
provided in this Agreement. Either Party shall have the right with prior written notification
and mutual agreement to set-off any such amounts or charges owed to the Party against any
amounts owing to the other Party pursuant to this Agreement. If the aggregate amount owing by
Nortel Networks to Flextronics is less than the aggregate amount owing by Flextronics to
Nortel Networks, Flextronics shall pay such net amount owing to Nortel Networks promptly and
in full within [] of the date which is the earliest of expiry or termination, as the
case may be.(b)
    
    So long as Nortel Networks has made all payments required pursuant to paragraph (a) above,
Flextronics shall complete all partially completed Repair Services and deliver such Repaired
Products in accordance with the terms of this Agreement that would have otherwise applied to
such Repair Services. Provided Nortel Networks has made all payments required pursuant to
paragraph (a) above, Flextronics shall deliver within three (3) weeks of the later of the date
of expiry or termination or such payment, if required, to Nortel Networks all Products,
Inventory, any Nortel Networks property described in Section 17, in exchange for payment by
Nortel Networks of the Price for Products and Inventory.(c)
    
    The provisions of this Agreement relating to Warranties (Section 12), Equipment Furnished by
Nortel Networks (Section 17), Reserved Assets (Section 18), Confidential and Proprietary
Information (Section 22), Intellectual Property Rights (Section 13) except the license granted
to Flextronics in Section 13.1, Indemnification (Section 14) and Audit (Section 27.4), shall
remain in effect beyond any expiration or termination.
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(d)
    
    Flextronics shall return all Nortel Company Proprietary Information and any Reserved Assets
with respect to which Nortel Networks exercises its right to purchase pursuant to Section 6 of
Exhibit 13 to the locations designated by Nortel Networks and under Nortel Networks
supervision, either return, destroy or erase all copies of such Nortel Company Proprietary
Information in the possession of Flextronics or any of its employees, consultants, agents or
representatives, including copies on paper or other hard copy and copies on computer or other
storage media, provided, however, that this provision shall not apply to any such Nortel
Company Proprietary Information in respect of which Flextronics has a continuing license or
obligation which survives the expiry or termination of this Agreement as expressly provided
herein.(e)
    
    Nortel Networks shall return to the locations designated by Flextronics all Flextronics
Proprietary Information under Flextronics supervision, either return, destroy or erase all
copies of such Flextronics Proprietary Information in the possession of any Nortel Company or
any of their respective employees, consultants, agents or representatives, including copies on
paper or other hard copy and copies on computer or other storage media; provided, however,
that this provision shall not apply to any such Flextronics Proprietary Information in
respect of which Nortel Networks has a continuing license or obligation which survives the
expiry or termination of this Agreement as expressly provided herein.(f)
    
    In the event that Nortel Networks exercises its right to terminate the purchase of any Repair
Services pursuant to Section 3.3.1(B) and (C) or either Party exercises its right to terminate
the purchase or supply of any Products for convenience upon 180 days notice pursuant to
Section 1.6, and in addition to Flextronics obligations in this Section 24.2, Flextronics
will (a) at the beginning of the notice period, put in place a dedicated transition team to
manage the transfer of Repair Services back to Nortel Networks or to a third party (b) fulfill
all obligations under this Agreement for the notice period at the same level required under
this Agreement (c) upon reasonable prior notice, allow Nortel Networks and any third party
designated by Nortel Networks access to Flextronics Sites and to data and information
necessary for a successful transition, and (d) actively support the transition of Repair
Services to Nortel Networks or a third party designated by Nortel Networks.Upon termination, NNL shall have the obligation, to purchase any or all last time buy
components at Flextronics acquisition cost as well as Class B Inventory at the current
Price and Class C Inventory at zero cost.(g)
    
    At Nortel Networks option but subject to Flextronics agreement, Flextronics shall continue
to perform any requested services for a period of time that continues beyond the expiration or
termination of the Term, on terms and conditions to be mutually agreed upon.
 SECTION 25
TERMINATION ASSISTANCE
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25.1
    
    Termination Assistance Services
 Termination Assistance Services
 (a)
    
    cooperating with Nortel Networks in effecting the orderly Repair Services
transfer to a third party or Repair Services resumption by Nortel Networks, provided
that (i) such third parties comply with Flextronics security and confidentiality
requirements, including executing a confidentiality agreement reasonably acceptable to
Flextronics, and (ii) Flextronics shall not be required to disclose any of its
Confidential Information or Flextronics Proprietary Information;(b)
    
    continuing to perform Repair Services until the effective date of expiration or
termination of this Agreement (Conclusion Date); and(c)
    
    continuing to perform those Repair Services requested by Nortel Networks after
the Conclusion Date.
 25.2
    
    Obligation to Provide Termination Services
  25.3
    
    Termination Assistance Period
 Termination Assistance Period 
 SECTION 26
DISPUTE RESOLUTION
 26.1
    
    Internal Dispute Resolution
 .
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SECTION 27
GENERAL PROVISIONS
 27.1
    
    Access to Facilities
  27.2
    
    Reporting
  27.3
    
    Documentation
 
 27.4
    
    Audits27.4.1 Agreement ComplianceUpon Nortel Networks prior reasonable request and at Nortel Networks cost, Flextronics
shall cooperate in the audit of its records in the manner set forth below, for the purpose
of confirming compliance with this Agreement. Nortel Networks may retain the services of a
major, independent accounting firm, other than the accounting firm(s) employed as primary
outside auditors of Nortel Networks or Flextronics Parent (the Accounting Firm). In
conducting any audit hereunder or in making a determination following such audit, the
Accounting Firm shall be directed to take into consideration all relevant aspects of the
matter being audited which may include, among other things, product scope, volume levels,
product complexity, regulatory requirements and Material Overhead for comparative purposes.The Accounting Firm shall be required to maintain in confidence and not disclose to Nortel
Networks any and all Confidential Information concerning the business, affairs and products
of Flextronics that it may learn in the course of conducting its inspections, except to the
extent that it discovers information indicating that Flextronics has violated its
obligations under this Agreement; provided that in no event shall the Accounting Firm
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
 27.4.2 Control & Security Compliance
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review and/or timely
remediation of audit issues. Such cooperation shall extend to agreed Sarbanes Oxley
regulatory compliance, as described below.As the processes impacted by this Agreement and the Sarbanes Oxley rules and regulations
for Section 404 compliance are more fully understood, both Flextronics and Nortel Networks
will work together to determine the exact requirements needed to meet the Sarbanes Oxley
Section 404 legislation. The Parties will work together to determine a reasonable, cost
effective and mutually satisfactory solution to meet each Partys compliance needs. Each
party will maximize the use of its own internal controls and internally available
information to minimize the impact on the other Party.All Inspections will be performed in a manner and frequency intended to minimize disruption
to the Parties respective businesses.27.5
    
    Force Majeure
  27.6
    
    Notices
   
  
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27.7 Independent Contractor
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27.8 Flextronics Responsible for its Contractors
  27.9 Assignment
    27.10 Severability
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27.11 Governing Law; Waiver of Jury Trial
  IN THE EVENT OF ANY DISPUTE BETWEEN THE PARTIES, WHETHER IT RESULTS IN PROCEEDINGS IN ANY COURT IN
ANY JURISDICTION OR IN ARBITRATION, THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY, AND HAVING HAD AN
OPPORTUNITY TO CONSULT WITH COUNSEL, WAIVE ALL RIGHTS TO TRIAL BY JURY, AND AGREE THAT ANY AND ALL
MATTERS SHALL BE DECIDED BY A JUDGE OR ARBITRATOR WITHOUT A JURY TO THE FULLEST EXTENT PERMISSIBLE
UNDER APPLICABLE LAW.
 27.12 Consent to Jurisdiction
  27.13 Entire Agreement; Amendments
  27.14 Most Favored Customer
 
 27.15 Construction
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27.16 Headings
  27.17 Time of Essence
  27.18 Agreement by All Flextronics Entities
  27.19 Language
 Les Parties ont requis que cette Convention ainsi que
tous les documents qui y sont envisagés ou qui sy rapportent soient rédigés en langue anglaise.
 REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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NORTEL NETWORKS LIMITED
    
    FLEXTRONICS TELECOM SYSTEMS, LTD.By:
    
    /s/ CHAHRAM BOLOURI
    
    By:
    
    /s/ MANNY MARIMUTHUPrint Name: Chahram Bolouri
    
    Print Name: Manny MarimuthuTitle:

    President, Global Operations
    
    Title:
    Authorized SignatoryBy:Print Name:Title:
 [Signature page to Repair Agreement]