Document:

exv10w8

 

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

Master Contract Repair Services Agreement

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	DEFINITIONS
	 	 	6	 
	 
	 	 	 	 
	SECTION 1 SCOPE OF THE RELATIONSHIP
	 	 	13	 
	 
	 	 	 	 
	1.1 Expectations
	 	 	13	 
	1.2 Information Access
	 	 	13	 
	1.3 Commitments and Obligations
	 	 	14	 
	1.4 Competitiveness
	 	 	14	 
	1.5 Structure of the Agreement
	 	 	15	 
	 
	 	 	 	 
	SECTION 2 GOVERNANCE PROCESS
	 	 	15	 
	 
	 	 	 	 
	2.1 Transition Planning
	 	 	15	 
	2.2 Strategic Governance
	 	 	15	 
	2.3 Operations Governance
	 	 	16	 
	2.4 Monthly Operations Reviews
	 	 	16	 
	2.5 Resources for Repair Services Support
	 	 	17	 
	 
	 	 	 	 
	SECTION 3 ORDERS
	 	 	17	 
	 
	 	 	 	 
	3.1 Service Blanket Orders
	 	 	17	 
	3.2 Acceptance of Orders
	 	 	17	 
	3.3. Minimum Commitment
	 	 	17	 
	3.3.1 Adjustments to the Minimum Commitment
	 	 	17	 
	3.3.2 Remedy for Failure to Achieve Minimum Commitment
	 	 	18	 
	3.3.3 Forecast of Required Repair Services
	 	 	18	 
	3.3.4 Forecast of Additional Required Repair Services
	 	 	18	 
	3.4 Issuance of Orders Electronically
	 	 	18	 
	 
	 	 	 	 
	SECTION 4 TRANSFER OF TITLE AND RISK OF LOSS
	 	 	18	 
	 
	 	 	 	 
	4.1 Transfer of Title and Risk of Loss
	 	 	18	 
	 
	 	 	 	 
	SECTION 5 DELIVERY PROCESS
	 	 	19	 
	 
	 	 	 	 
	5.1 Repair and Delivery Period
	 	 	19	 
	5.2 Packaging, Labelling and Trade-Marks
	 	 	19	 
	5.3 Management of Third Party Contracts
	 	 	19	 
	 
	 	 	 	 
	SECTION 6 MATERIALS MANAGEMENT PROCESS
	 	 	20	 
	 
	 	 	 	 
	6.1 Repair Facility Location
	 	 	20	 
	6.2 Material and Supplier Management Services
	 	 	20	 
	6.3 Storing and Handling
	 	 	21	 
	 
	 	 	 	 
	SECTION 7 CHANGE MANAGEMENT
	 	 	21	 
	 
	 	 	 	 
	7.1 Joint Change Management Process
	 	 	21	 
	7.1.1 Flextronics Proposal
	 	 	21	 
	7.1.2 Nortel Networks Proposal
	 	 	21	 
	7.2 Joint Product Change Management Process
	 	 	22	 
	7.3 New Product for Repair Introduction (NPRI)
	 	 	22	 
	7.4 New Capital Investments
	 	 	23	 
	 
	 	 	 	 
	SECTION 8 INVENTORY MANAGEMENT
	 	 	23	 
	 
	 	 	 	 
	8.1 End-of-life Planning
	 	 	23	 
	8.2 Class B Inventory and Class C Inventory
	 	 	23	 
	8.3 Open Market Purchases
	 	 	24	 
	8.4 Components
	 	 	24	 

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	8.5 Purges
	 	 	25	 
	8.6 Support of Nortel Networks Remanufacturing Activities
	 	 	25	 
	8.7 Excess Inventory
	 	 	25	 
	8.8 Consigned Inventory
	 	 	26	 
	8.9 Order of Inventory Usage
	 	 	27	 
	8.10 A-B Writedowns
	 	 	27	 
	8.11  Tracking of Inventory Furnished by Nortel Networks
	 	 	28	 
	 
	 	 	 	 
	SECTION 9 QUALITY
	 	 	29	 
	 
	 	 	 	 
	9.1 Metrics, Report Card and Liquidated Damages
	 	 	29	 
	9.1.1 Report Card
	 	 	29	 
	9.1.2 Liquidated Damages for Failure to Meet Metrics
	 	 	30	 
	9.1.3 Pass-through of Liquidated Damages from Customers
	 	 	31	 
	9.1.4 Termination for Breach of Metrics
	 	 	31	 
	9.2 Industry Standards
	 	 	33	 
	9.3 Source Inspection
	 	 	33	 
	9.4 Repair Quality
	 	 	33	 
	 
	 	 	 	 
	SECTION 10 REPAIR COST MANAGEMENT PROCESS
	 	 	33	 
	 
	 	 	 	 
	10.1 Prices for Repair Services
	 	 	34	 
	10.2 Payment, Taxes and Duties
	 	 	34	 
	10.2.1 Invoices
	 	 	34	 
	10.2.2 Payment
	 	 	35	 
	10.3 Ongoing Cost Reduction
	 	 	36	 
	10.4 Incremental Cost Reduction
	 	 	36	 
	10.4.1 Definition of ICR
	 	 	36	 
	10.4.2 ICR Commitment
	 	 	36	 
	10.4.3 Implementation of ICR
	 	 	37	 
	10.4.4 Year 4 Cost Reduction
	 	 	37	 
	10.5 OCR Threshold Commitment
	 	 	37	 
	 
	 	 	 	 
	SECTION 11 BUSINESS CONTINUITY
	 	 	38	 
	 
	 	 	 	 
	11.1 Business Continuity Planning
	 	 	38	 
	 
	 	 	 	 
	SECTION 12 WARRANTIES
	 	 	39	 
	 
	 	 	 	 
	12.1 Repair Services
	 	 	39	 
	12.2 Return of Products under Warranty
	 	 	40	 
	12.3 Epidemic Failure
	 	 	40	 
	12.3.1 Procedure for Epidemic Failure
	 	 	40	 
	12.3.2 Remedies for Epidemic Condition
	 	 	40	 
	 
	 	 	 	 
	SECTION 13 INTELLECTUAL PROPERTY RIGHTS AND LICENSES
	 	 	41	 
	 
	 	 	 	 
	13.1 License to Nortel Company Proprietary Information Granted
	 	 	41	 
	13.2 Limitations on Grant of License
	 	 	42	 
	13.3 Flextronics Inventions
	 	 	42	 
	13.4 Specifications and Deliverables Owned by NNL
	 	 	42	 
	13.5 Flextronics Retains Ownership of Flextronics Proprietary Information
	 	 	42	 
	13.6 Assignment of Inventions Agreements with Employees
	 	 	42	 
	 
	 	 	 	 
	SECTION 14 INDEMNIFICATION
	 	 	43	 
	 
	 	 	 	 
	14.1 Intellectual Property Indemnification
	 	 	43	 
	14.1.1 By NNL
	 	 	43	 
	14.1.2 By Flextronics
	 	 	44	 
	14.1.3 Measures to Safeguard NNL against Liability
	 	 	44	 
	14.2 Other Indemnification
	 	 	45	 

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	14.2.1By Flextronics
	 	 	45	 
	14.2.2By Nortel Networks
	 	 	45	 
	 
	 	 	 	 
	SECTION 15 LIMITATION OF LIABILITY
	 	 	45	 
	 
	 	 	 	 
	SECTION 16 COMMUNICATION AND INFORMATION TRANSFER
	 	 	46	 
	 
	 	 	 	 
	16.1 Access to Nortel Networks Computer Systems by Flextronics
	 	 	46	 
	16.2 Flextronics Compatibility with Nortel Networks Computer Systems
	 	 	46	 
	16.3 Information Technology Services
	 	 	47	 
	 
	 	 	 	 
	SECTION 17 EQUIPMENT FURNISHED BY NORTEL NETWORKS
	 	 	47	 
	17.1 Title to Equipment Furnished by Nortel Networks
	 	 	47	 
	17.2 Risk, Insurance and Maintenance of Equipment Furnished by Nortel Networks
	 	 	47	 
	 
	 	 	 	 
	SECTION 18 RESERVED ASSETS
	 	 	47	 
	 
	 	 	 	 
	SECTION 19 LEGAL AND REGULATORY COMPLIANCE
	 	 	47	 
	 
	 	 	 	 
	SECTION 20 INTERNATIONAL TRADE
	 	 	48	 
	20.1 Exports
	 	 	48	 
	20.2 Customs Invoice
	 	 	48	 
	20.3 Duty Drawback and Minimization
	 	 	49	 
	 
	 	 	 	 
	SECTION 21 ENVIRONMENTAL POLICIES
	 	 	49	 
	 
	 	 	 	 
	21.1 ISO 14001
	 	 	49	 
	21.2 Corporate Policy
	 	 	49	 
	21.3 VOC Free and Lead-Free Technology
	 	 	50	 
	21.4 European Union (“EU”) Environmental Directives
	 	 	50	 
	21.4.1Compliance
	 	 	50	 
	21.4.2Indemnification
	 	 	51	 
	21.5 Packaging Reusable and Recyclable
	 	 	51	 
	21.6 INTENTIONALLY LEFT BLANK
	 	 	51	 
	21.7 Collaborate on Environmental Initiatives
	 	 	51	 
	21.8 Hazardous Materials
	 	 	51	 
	 
	 	 	 	 
	SECTION 22 CONFIDENTIALITY AND PROPRIETARY INFORMATION
	 	 	53	 
	 
	 	 	 	 
	22.1 Restriction on Disclosure and Use of Confidential Information
	 	 	53	 
	22.2 Publicity
	 	 	54	 
	 
	 	 	 	 
	SECTION 23 INSURANCE
	 	 	54	 
	 
	 	 	 	 
	23.1 General Liability Insurance
	 	 	54	 
	23.2 Property and Business Insurance
	 	 	55	 
	23.3 Certificate of Insurance
	 	 	55	 
	 
	 	 	 	 
	SECTION 24 EXPIRATION OR TERMINATION
	 	 	56	 
	 
	 	 	 	 
	24.1 Termination
	 	 	56	 
	24.2 Effect of Expiration or Termination
	 	 	57	 
	 
	 	 	 	 
	SECTION 25 TERMINATION ASSISTANCE
	 	 	58	 
	 
	 	 	 	 
	25.1 Termination Assistance Services
	 	 	59	 
	25.2 Obligation to Provide Termination Services
	 	 	59	 
	25.3 Termination Assistance Period
	 	 	59	 
	 
	 	 	 	 
	SECTION 26
	 	 	59	 

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	DISPUTE RESOLUTION
	 	 	59	 
	 
	 	 	 	 
	26.1 Internal Dispute Resolution
	 	 	59	 
	 
	 	 	 	 
	SECTION 27 GENERAL PROVISIONS
	 	 	60	 
	 
	 	 	 	 
	27.1 Access to Facilities
	 	 	60	 
	27.2 Reporting
	 	 	60	 
	27.3 Documentation
	 	 	60	 
	27.4 Audits
	 	 	60	 
	27.4.1 Agreement Compliance
	 	 	60	 
	27.4.2 Control & Security Compliance
	 	 	61	 
	27.5 Force Majeure
	 	 	62	 
	27.6 Notices
	 	 	62	 
	27.7 Independent Contractor
	 	 	63	 
	27.8 Flextronics Responsible for its Contractors
	 	 	64	 
	27.9 Assignment
	 	 	64	 
	27.10  Severability
	 	 	64	 
	27.11 Governing Law; Waiver of Jury Trial
	 	 	65	 
	27.12 Consent to Jurisdiction
	 	 	65	 
	27.13 Entire Agreement; Amendments
	 	 	65	 
	27.14 Most Favored Customer
	 	 	65	 
	27.15 Construction
	 	 	65	 
	27.16 Headings
	 	 	66	 
	27.17 Time of Essence
	 	 	66	 
	27.18 Agreement by All Flextronics Entities
	 	 	66	 
	27.19 Language
	 	 	66	 

EXHIBITS

	 	 	 
	Exhibit 1
	 	Third Party Management Statement of Work
	Exhibit 2
	 	Logistics Services Statement of Work
	Exhibit 3
	 	Repair Services Statement of Work
	Exhibit 4
	 	A to B Writedown Templates
	Exhibit 5
	 	Metrics & Scorecard
	Exhibit 6
	 	Products
	Exhibit 7
	 	Pricing and Cost Reduction Process
	Exhibit 8
	 	Specifications
	Exhibit 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

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	Exhibit 11
	 	EMEA Employment Provisions
	Exhibit 12
	 	Managed Contracts
	Exhibit 13
	 	Reserved Assets
	Exhibit 14
	 	Out of Scope Activity
	Exhibit 15
	 	Process to Establish Day One Pricing

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\

Master Contract Repair Services Agreement

This Agreement is entered into between Nortel Networks Limited, a Canadian corporation with a
place of business at 8200 Dixie Road, Suite 100, Brampton, Ontario (“NNL”) and Flextronics Telecom
Systems Ltd., a company organized under the laws of Mauritius, and having its registered office
located at Suite 802 St James Court, St Denis Street, Port Louis, Mauritius, executed as of June
29, 2004 (“Execution Date”). As set out in the Phased Closing Side Letter, dated as of the
Execution Date, the Effective Date of this Master Repair Services Agreement (the “Agreement”) shall
be the date that the first Virtual System House Agreement is executed (“Effective Date”). The
Parties agree that the terms and conditions of this Agreement shall come into effect for each VSHA
executed as such VSHAs are executed (“VSHA Effective Date(s)).

WHEREAS NNL wishes Flextronics to provide NNL certain repair services relating to orders made by
NNL to Flextronics in respect of products manufactured pursuant to the terms of the MCMSA (as
defined herein).

WHEREAS Flextronics International Ltd., a company duly established under the laws of Singapore, and
having its registered office located at 2 Changi South Lane, Singapore 486123 acting through its
Hong Kong branch office with offices at Room 908, Dominion Centre, 43-59 Queen’s Road East,
Wanchai, Hong Kong and NNL have executed that certain Performance Guarantee dated X, 2004;

WHEREAS NNL has agreed to purchase and Flextronics has agreed, upon the terms and conditions set
out herein, to provide the services as more particularly defined herein;

NOW THEREFORE, in consideration of the mutual promises hereinafter set forth (the receipt and
sufficiency of which is hereby acknowledged), the Parties hereby agree as follows:

DEFINITIONS

“Affiliate” means individually or collectively:

	 	(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” means the agreement executed between NNL and Flextronics dated June 29,
2004.

Master Repair Services Agreement

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“Assists” means goods and services supplied directly or indirectly, free of charge or at a reduced
cost for use in connection with the production of imported goods, such as raw materials,
components, parts used for or incorporated into the imported goods, tools, dies, moulds and other
equipment used to produce the finished goods, any materials used to produce the finished goods
being imported, engineering, development work, art work, designs, plans or sketches undertaken
anywhere other than the country of import.

“Business Continuity Plan” has the meaning set forth in Section 11.1, known to Flextronics as the
Business Resumption Plan.

“Business Day” means, for the purposes of dealings between (i) NNL and Flextronics hereunder, any
day other than Sunday, or a statutory holiday or otherwise scheduled holiday agreed to in writing
by the parties on which either of such parties is closed for business.

“CA” means a point of time at which the Class A material is available to select customers.

“Carrying Charge” means [•] per annum. For Carrying Charge applied to End-of-Life Inventory,
the Carrying Charge will be [•].

“Class A Inventory” is sometimes referred to as Class A material and means Products that are brand
new and have not been installed in a Customer’s live network.

“Class B Inventory” is sometimes referred to as Class B material and means those Products repaired
and available for use.

“Class C Inventory” is sometimes referred to as Class C material and means unrepaired inventory.

“Commencement Date” means the VSHA Effective Date for the last of the following System Houses to be
transferred: Calgary, Montreal, Monkstown, or Chateaudun; provided that the optical designers in
Ottawa and Monkstown and the logistics management and embedded physical repair in St. Laurent and
Calgary must have been transferred.

“Competitor” means any company with more than $50 million in revenues from the development or sale
of telecom, optical or wireless networking equipment or $10 million of repair revenue.

“Component Cost” means Flextronics’ actual unburdened cost of components, inclusive of freight and
duty, as set forth and verifiable by Flextronics’ purchase order with its components supplier.
This cost will take into consideration all rebates and favourable payment terms (cash, term or
other).

“Confidential Information” has the meaning set out in Section 22.1.

“Consigned Inventory” shall mean End-of-Life Inventory or other Inventory purchased by Nortel
Networks but held by Flextronics under the terms set out in Section 8.8.

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“Consumable Material” means materials that are consumed in the repair and logistics process, such
as solder, finished goods packaging, labels, skids, pallets and shipping packaging materials.

“Contact Center” means the point of contact designated by Nortel Networks for its Customers to
request Repair Services.

“Control and Responsibility” means, for the purposes of this Agreement, [•].

“Currency Conversion” means a factor used in calculating Price or Material Cost, or any part
thereof, for purchases in a currency other than the currency in which Nortel Networks is required
to pay Flextronics hereunder, based on the “FX Bench” forward currency rate as published
by Reuters 12.00 CET on the mutually agreed date for pricing (the “Exchange Rate”), or any other
benchmark as otherwise agreed in the applicable VSHA.

“Customer” means a direct or indirect customer of Nortel Networks.

“Daily Usage Rate” means the amount of Class B Inventory expressed in units that were sold in the
last 90 calendar days divided by 90.

“Delivery Location” means the location specified in an Order to which the Repaired Product shall be
delivered or to the stocking location.

“Dollar” or “$” means U.S. dollars.

“ECO” or “Engineering Change Order” means a written direction in the form of an engineering change
order to make a change to a Product including a change to the design, manufacture, and repair or
test procedure for a Product.

“EDI” means electronic data interchange.

“End-of-Life Inventory” means components that are necessary for the repair of the Products which
have been or are scheduled to be discontinued by suppliers.

“Epidemic Condition” means when RDOA Repaired Product failures equal or exceed the percentage as
mutually agreed and set forth in Exhibit 5.

“Flextronics” means Flextronics and, as applicable, any Subsidiary of Flextronics that is to
perform Repair Services pursuant to this Agreement.

“Flextronics Invention” means any innovation, improvement, idea or feature, whether or not
patentable or registerable, which is conceived or created in the course of the performance by
Flextronics of the Repair Services, but shall not include any Product Specific Inventions.

“Flextronics Proprietary Information” means information, technology, processes, or other
proprietary property, including copyrights, trade secrets, know-how, mask work rights, any waiver
to moral rights, patents and/or patent applications in any form or medium developed or

Master Repair Services Agreement

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acquired by
Flextronics or its licensors other than Nortel Networks, but for greater certainty, does not
include the following: (i) Nortel Company Proprietary Information or such information or processes
listed above which are derived from Nortel Company Proprietary Information; (ii) the Specifications
and all deliverables resulting from the Services; (iii) Reserved Assets; (iv) materials and/or
equipment loaned pursuant to Section 17.1; (v) Product Specific Inventions; and (vi) such
information, technology, processes, etc. developed or arising out of Services funded by Nortel
Networks under this Agreement.

“Force Majeure” means all acts or events beyond the reasonable control of a Party. This definition
shall not include any act or event that would have been prevented, or the effects of which would
have been substantially mitigated, by implementation of a Business Continuity Plan in accordance
with best practices in the relevant equipment manufacturing industry for telecommunications by
Flextronics as required under Section 11.1, unless Flextronics demonstrates that it has made a good
faith effort to implement such a plan. For clarity, the following will be considered an event of
Force Majeure: an act of God, act or decree of governmental or military bodies, strike, lock-out,
fire, casualty, flood, earthquake, war, epidemic, destruction of production facilities, riot,
insurrection; provided however a Party’s failure to resolve its own labour difficulties such as
strike or lock-out shall only be considered an event of Force Majeure if that Party (i) has
included specific action plans related to strikes and lock-outs in its Business Continuity Plan
(ii) is in compliance with fair labour practices under the law of the applicable jurisdiction, and
(iii) has made commercially reasonable efforts to resolve such labour difficulties.

“GA” means general availability of Class A material.

“Government Entity” means any federal, provincial, state, municipal or other governmental
authority, domestic or foreign, or any entity exercising executive, legislative, judicial,
regulatory, or administrative functions of government.

“Hub” means a physical location where Customers return Products and where Inventory is located.

“Inventory” means components purchased by Flextronics, work in process, and Products.

“Leadership Category” means a business division within Nortel Networks, which is currently
designated as one of Wireless Networks, Optical Networks, Wireline Networks and Enterprise
Networks.

“License Agreement” means the agreement or agreements entered into between NNL and Flextronics on
the date of this Agreement whereby NNL has agreed to grant to Flextronics certain licenses in
respect of certain licensed intellectual property, as defined therein.

“Life Cycle” means, with respect to any Product, the time beginning at CA until end-of-life.

“Logistics” as more particularly described in Exhibit 2, means those services including i)
warehouse services, ii) transportation coordination and management, iii) export services, iv)
packaging and labeling, v) Inventory control and reporting, and vi) trade and compliance.

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“Manufacturing Licensee” means a third party which enters into an agreement with Nortel Networks to
manufacture, in modified or unmodified form, Products, whether or not associated with a right to
lease, sell, sublicense or otherwise distribute (directly or indirectly through distributors) such
Products under the brand name of a Nortel Company or that of the Manufacturing Licensee.

“Material and Supplier Management Services” shall mean those services to be provided by Flextronics
described in Section 6.2.of this Agreement.

“MCMSA” means the Amended and Restated Master Contract Manufacturing Services Agreement dated June
29, 2004, between NNL and Flextronics with respect to manufacturing services to be provided to
Nortel Networks relating to the products specified therein.

“Minimum Commitment” means Nortel Networks’ spend on Repair Services as set forth in Section 3.3.

“NC Material” or “NC” means components or services which are sourced under a contract or other
commercial relationship with Nortel Networks and Nortel Networks retains sourcing control.

“Nortel Company” means NNL or any of its Subsidiaries.

“Nortel Company Proprietary Information” means:

	 	(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;

embodied in any form or medium and owned or developed by or on behalf of a Nortel Company or
acquired from its licensors with rights to disclose or sublicense that pertains to Nortel Company’s
business, including Products and their design, manufacture, use and testing and Pre-Production
Products as defined in the MCMSA, Systems, Specifications and all deliverables resulting from the
Repair Services, and Product Specific Inventions or any Flextronics Proprietary Information deemed
to be owned by a Nortel Company pursuant to Section 13.4 hereof.

“Nortel Networks” means NNL or, as applicable, any Nortel Company that has become a Party to this
Agreement by issuing an Order under this Agreement.

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“Nortel Networks Supplier” means an Affiliate or any Person who supplies repair services to Nortel
Networks.

“NPRI” means new products and process introduction for Repair of Products that are introduced for
the first time at a Repair Facility.

“Order(s)” means either the “hard copy” document or EDI used by Nortel Networks to order Repair
Services under this Agreement pursuant to Section 3.4 of this Agreement.

“Party” means either NNL or Flextronics and “Parties” shall mean both NNL and Flextronics.

“Person” means an individual, a partnership, a corporation, an association, a limited liability
company, a joint stock company, a trust, a joint venture, an unincorporated organization or a
Government Entity.

“Price” means the price paid by Nortel Networks to Flextronics with respect to any Repair Services
as set forth herein.

“Product(s)” means those products identified in Exhibit 6 as of the Effective Date and any
additions to Exhibit 6 specifically agreed as evidenced in a written instrument signed by
authorized representatives of the Parties.

“Product Family” means NNL’s Optical, Wireline, Wireless and Enterprise leadership categories.

“Product Specific Inventions” means Flextronics innovations, improvements, ideas or features
relating to or incorporated in a Product, but not including any such innovations, ideas or feature
relating solely to repair processes for the Product.

“Programs” means software used or retained for use in the provision of Repair Services in whatever
form, including that which is ROM resident, listings, flowcharts, logic diagrams, operating
instructions, and any other related documentation, whether or not described in the Specification.

“Purge” means the rework of Inventory as further defined in Section 8.5.

“Repair” means test analysis, repair, upgrade, incircuit testing, system level testing, packing,
Logistics and refurbishment, as set out in the Statement of Work, provided to Nortel Networks by
Flextronics.

“Repair Change Impact Form” means the form to be completed by Flextronics in response to a change
to the Repair or test procedure of a Product. This form shall contain, at a minimum, an estimate of
the change of the price in the relevant Repair Services as well as any Purge charges as defined in
Section 8.5.

“R DOA” or “Repair Dead On Arrival” means Product that has been repaired and is being returned for
repair again within 90 days of the initial Repaired Product shipment.

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“Repair Facility(ies)” means (a) Flextronics facility(ies) where Flextronics performs Repair
Services.

“Repair Services” means the services specific to repair and distribution of the Products, including
engineering, technical, programming, Logistics, Repair, overhaul and other functions and services
as applicable, provided to Nortel Networks by Flextronics as set forth in the applicable Statement
of Work.

“Repair Warranty Period” means twelve (12) months from Shipping Date.

“Repaired Product” means a Product on which a Repair has been completed by Flextronics or third
parties managed by Flextronics.

“Replacement Value” means the cost of replacing any Repaired Product, Product to be Repaired or
Nortel Networks property with an equivalent value asset.

“Reserved Assets” means all test fixtures, functional test equipment, and system test equipment
unique to NNL as well as those assets included in the Subject Assets as defined in the Asset
Purchase Agreement and which may be repurchased by Nortel Networks from Flextronics pursuant to the
provisions of Section 18 of this Agreement.

“SC Material” or “SC” means components or services sourced under a contract or other
commercial relationship with Flextronics and Flextronics retains sourcing control.

“Service Blanket Order” means an Order which does not set forth a delivery date, Shipping Date
and/or specific quantities.

“Shared Services Agreement” means the Shared Services Agreement between NNL and Flextronics as
provided in the Asset Purchase Agreement.

“Shipping Date” means the date when a Product shall be delivered to the carrier at the Shipping
Location for shipment to the Delivery Location.

“Shipping Location(s)” means the location(s) as may be amended from time to time by the Parties,
from which a Product shall be shipped by Flextronics.

“Specifications” means the documents referenced in Exhibit 8. These Specifications may be amended
from time to time as mutually agreed by the Parties.

“Statement of Work” means the description of Repair Services attached hereto as Exhibits 1, 2 and
3.

“Subsidiary” means, with respect to any specified Person, means any corporation with respect to
which the Person directly or indirectly owns more than fifty percent (50%) of the issued and
outstanding equity securities or securities convertible into such securities or has the power to
vote or direct the voting of sufficient securities to elect a majority of the directors. With
respect

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to the Parties, a specified Person shall be Nortel Networks Corporation and Flextronics
International Ltd.

“System” means a Nortel Networks’ product comprised of various components and sub-assemblies and
which incorporates one (1) or more Products.

“Term” means has the meaning set forth in Section 1.6.

“Trade-Marks” mean words, designs, shapes, configurations, guises or brands that serve as
indications that the origin of Products is Nortel Networks and includes model numbers and product
designations as used both internally and externally on the Products or in conjunction with their
sale or other distribution.

“Virtual Systems House Agreement” or “VSHA” shall mean any Virtual Systems House Agreement agreed
upon in writing between Nortel Networks and Flextronics, a form of which is attached to the MCMSA
as Exhibit 2, which when executed, together with its Schedules, shall form part of the MCMSA.

“Year One” means the twelve months following the Commencement Date.

“Year Two” means the twelve months following the first anniversary of the Commencement Date.

“Year Three” means the twelve months following the second anniversary of the Commencement Date.

“Year Four” means the twelve months following the third anniversary of the Commencement Date.

SECTION 1

SCOPE OF THE RELATIONSHIP

1.1 Expectations

Nortel Networks and Flextronics will collaborate in the development and execution of strategic
plans for support of Nortel Networks’ business strategy worldwide for Repair Services. Nortel
Networks has designated Flextronics as a Strategic Supplier under Nortel Networks current Supplier
Business Engagement Model.

1.2 Information Access

Flextronics will have access to the Nortel Networks Proprietary Information and NNL shall have
access to Flextronics Proprietary Information as set forth in this Agreement. To enable

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Flextronics
to perform the Repair Services NNL shall provide all mutually agreed to information related to
those Repair Services.

1.3 Commitments and Obligations

Nortel Networks shall maintain a central Contact Center where Customers may request Repair
Services. During the Term, and provided Flextronics is not in material breach of this Agreement,
Nortel Networks agrees to purchase from Flextronics [•].

Flextronics agrees to perform Repair Services in respect of all Products received from Nortel
Networks in accordance with the Statement of Work and the Nortel Networks workmanship standards and
procedures as set out in the Specifications or any more stringent standard mutually agreed with
Flextronics and indicated herein in writing. Flextronics shall perform the Repair Services solely
for, either directly or on behalf of, Nortel Networks. Flextronics shall not perform services on
Nortel Networks Products for third parties.

1.4 Competitiveness

If Flextronics fails to remain Competitive with its competitors with respect to the Repair
Services, then Nortel Networks may source such Repair Service from another supplier.
Notwithstanding the foregoing, Nortel Networks will not transfer the Repair Services if Flextronics
becomes Competitive within forty-five (45) days from notification by Nortel Networks.

For the purposes of this Section, “Competitive” means terms and conditions taken as a whole
that are at least as favorable to Nortel Networks as any “bona fide benchmarking” exercise or bona
fide quote from a third party considering price, product quality, lead times, local content,
delivery, warranty, technical support, Inventory ownership, payment terms, assumption of overhead,
logistics, and other criteria identified by Nortel Networks in writing to Flextronics. A “bona fide
benchmarking exercise” shall be considered to be one performed by an independent recognized
benchmarking firm which is (i) selected by Nortel Networks from those companies which are regularly
engaged in the industry related to the Repair Services, (ii) is not a Competitor of Flextronics and
(iii) which has executed a non-disclosure agreement reasonably satisfactory to Flextronics. All
fees and charges paid to such benchmarking firm shall be borne by Nortel Networks, and such fees
and charges shall not be contingent upon reaching a conclusion favorable to Nortel Networks. Each
party shall have the opportunity to advise the benchmarking firm of any information or factors that
it deems relevant to the conduct of the benchmarking, with the intention of providing an “apples to
apples” comparison, so long as such information is disclosed to the other Party. The benchmarking
firm shall provide the written reports and the core data resulting from the benchmarking to both
Nortel Networks and Flextronics, including the factors actually used to perform the benchmarking,
data on participants and confidence factors related to the accuracy of the data and the
benchmarking methodology. Flextronics will be entitled to challenge the accuracy of the results of
the benchmarking exercise pursuant to the Dispute Resolution process in Exhibit 10.

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1.5 Structure of the Agreement

This Agreement sets out the terms and conditions of the relationship between NNL and Flextronics
and the Repair Services to be performed by Flextronics pursuant to this Agreement and the terms of
performance of such Repair Services by Flextronics. Each Order, or Service Blanket Order issued to
Flextronics shall create rights and obligations between the Nortel Company which issues the Order
and the Flextronics Subsidiary to which it is issued. An Order, or Service Blanket Order, shall
bind solely the Nortel Company that issued it and the Flextronics Subsidiary to which it is issued,
and neither NNL nor any other Nortel Company shall be liable for any Order or Service Blanket Order
not issued by it.

This Agreement shall continue to apply to an Order issued during the Term until all obligations
provided for in this Agreement are performed. Notwithstanding that an Order does not refer to this
Agreement, any Order issued by a Nortel Company during the Term shall be deemed to have been issued
pursuant to this Agreement unless the Parties expressly agree in writing to the contrary. In the
event of any conflict or inconsistency between the terms of this Agreement and any other document
ancillary or relating thereto, the following order of precedence shall apply, but only to the
extent of an express conflict or inconsistency: (1) this Agreement, (2) Exhibits, (3) Order(s), and
(4) Service Blanket Order(s).

1.6 Term

This Agreement shall commence on the Effective Date and continue until terminated in accordance
with this Agreement (the “Term”). For purposes of this Section, Section 10 and related Exhibits,
Year One shall begin on the Commencement Date. Years Two, Three and Four shall begin on the
respective anniversaries of such Commencement Date. Either Party may deliver a notice for
termination for convenience to take effect [•] following such notice; provided however, that
no such notice may be delivered before a date that is [•] before the fourth anniversary of
the beginning of Year One.

SECTION 2

GOVERNANCE PROCESS

2.1 Transition Planning

The Parties will mutually agree to meet to discuss transition planning in respect of the Repair
Services as frequently as is required. Such discussions shall consider the terms of any transition
implementation plans developed by the Parties.

2.2 Strategic Governance

Nortel Networks and Flextronics shall meet quarterly at a management level to exchange and align
business strategies around the following areas:

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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

Nortel Networks and Flextronics shall:

	(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

Flextronics and Nortel Networks shall conduct monthly (or on a schedule as otherwise agreed)
operations reviews of the business performance, processes and procedures of both Flextronics and
Nortel Networks at the leadership category level with the intent to improve the overall supply
chain performance.

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2.5 Resources for Repair Services Support

Throughout the term of this Agreement, Flextronics shall provide Repair Services in accordance with
the terms of this Agreement. Flextronics will maintain available repair resources which may at
Flextronics’ discretion be independent of manufacturing resources.

SECTION 3

ORDERS

3.1 Service Blanket Orders

Nortel Networks may issue Service Blanket Orders to Flextronics for Repair Services of Products.
There shall be no minimum order quantity.

3.2 Acceptance of Orders

Nortel Networks or its designated Nortel Networks Supplier shall submit an Order to Flextronics
and if the Order complies with the terms of this Agreement, Flextronics will acknowledge its
acceptance of the Order issued by Nortel Networks or its designated Nortel Networks Supplier.

3.3. Minimum Commitment

During the Term of this Agreement, Nortel Networks will source [•] of it’s spend on Repair
Services with Flextronics (Minimum Commitment), excluding any adjustments to the Minimum Commitment
as set forth in Section 3.3.1.

3.3.1 Adjustments to the Minimum Commitment

	(A)	 	Out of Scope Activity
	 
	 	 	Flextronics acknowledges that the out of scope activity as defined in Exhibit 14 will not be
part of the Minimum Commitment calculations.
	 
	(B)	 	Competitive Criteria
	 
	 	 	If 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

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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

If Nortel Networks fails to meet the Minimum Commitment for any reason other than those set out in
Section 3.3.1(A), (B) or (C) above, Nortel Networks shall compensate Flextronics for [•].
The Parties will negotiate such costs in good faith.

3.3.3 Forecast of Required Repair Services

If Nortel Networks provides Flextronics with a forecast or an estimate of Repair Services that it
expects to order, whether set forth in this Agreement or otherwise, Flextronics acknowledges that
Nortel Networks shall not be obligated to submit an Order for any portion of such forecast or
estimate.

3.3.4 Forecast of Additional Required Repair Services

Should Flextronics require additional facilities from additional requirements which did not exist
at the Effective Date, and provided that Nortel Networks approved Flextronics forecast or estimate,
Nortel Networks shall be obliged to discharge the commercially reasonable costs that may arise
owing to an underutilization of these additional facilities, additional Reserved Assets, any
related additional severance costs, or other mutually agreed costs caused by the forecast or
estimate of incremental Services.

3.4 Issuance of Orders Electronically

If Nortel Networks issues an Order electronically, such transaction shall be carried out in
accordance with the provisions set forth in Exhibit 26 of the MCMSA.

SECTION 4

TRANSFER OF TITLE AND RISK OF LOSS

4.1 Transfer of Title and Risk of Loss

Class B orders will be shipped DDU (Delivered Duty Unpaid) from Flextronics’ Delivery Facility to a
named destination within the same country, title shall pass to Nortel Networks upon delivery to the
named destination. Class B orders will be shipped DDU (Delivered Duty Unpaid) from Flextronics’
Delivery Facility to a Nortel Networks or a Customer’s named destination in a different country,
title shall pass to Nortel Networks immediately prior to importation into the country specified in
the named destination.

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Class C Inventory returns will be shipped DDU (Delivered Duty Unpaid) from Nortel Networks or a
Customer to Flextronics’ or Flextronics’ subcontractor’s premises and title shall pass to
Flextronics upon delivery to the named destination.

Nortel Networks may make a written request that title and risk of loss to Class B orders or Class C
Inventory pass to it at the points other than as outlined above. Upon mutual agreement, Flextronics
will comply with such request provided that the revised transfer point is no later in the delivery
process then the relevant points stated above.

For Class B orders and Class C Inventory returns that are shipped from Flextronics’ Delivery
Facility to another Flextronics’ Facility/Subcontractor and/or repair vendor, title and risk of
loss will remain with Flextronics. Unless otherwise covered in existing third party/vendor
agreements, all shipping activities and costs are the responsibility of Flextronics.

SECTION 5

DELIVERY PROCESS

5.1 Repair and Delivery Period

Flextronics shall repair Products and deliver Repaired Products as set forth in the Statement of
Work.

5.2 Packaging, Labelling and Trade-Marks

Products shall be packaged and labeled in accordance with Nortel Networks’ practices as more
particularly set forth in Exhibit 2, the relevant Specifications, or as Nortel Networks may
otherwise direct in writing, and consistent with the provisions of Section 21.5. Flextronics
shall not otherwise apply to or display on the Products Flextronics’ trade–marks or other markings
without the express written permission of Nortel Networks, which may be withheld in its absolute
discretion. Flextronics shall use the Trade-Marks only to apply to Products on Nortel Networks’
behalf together with other legends, notices or markings as Nortel Networks may direct.

5.3 Management of Third Party Contracts

Flextronics shall be responsible for managing applicable third party vendors as set forth in
Exhibit 1 in order to provide Repair Services under this Agreement.

5.3.1 Where Nortel Networks has financial obligations in connection with contracts or other
agreements relating to assets, inventory, facilities or services to which Nortel Networks is a
party for the performance of Repair Services contemplated under this Agreement with a third party
and in the event that Flextronics pursuant to such contracts or other agreements becomes liable to
discharge the financial obligations contained therein to any third party due to a mutual

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decision
by the Parties to terminate the relevant contract or other documented agreement, then Nortel
Networks shall have an obligation to pay Flextronics a sum equal to the financial obligation
required to be discharged by Flextronics. Any sums due and not recovered under this Section may be
recovered by Flextronics from Nortel Networks as a debt. The parties hereby intend that this
obligation shall survive the termination of this Agreement and will remain in effect until
fulfilled.

SECTION 6

MATERIALS MANAGEMENT PROCESS

6.1 Repair Facility Location

Flextronics shall repair each Product at the Site and/or on the repair line initially agreed to by
Flextronics and Nortel Networks, and Flextronics shall not change such Site or repair line unless
Nortel Networks consents in writing. Flextronics shall follow Nortel Networks’ qualification
process as set out in Exhibit 3 of MCMSA. Where Flextronics proposes additional sites for Repair
Services to be performed, Flextronics shall provide a complete qualification report. Nortel
Networks shall provide its approval of the change within sixty (60) days of receiving a complete
and satisfactory qualification report. If Nortel Networks fails to provide such approval within
such time period, Flextronics will be relieved of its obligation to provide Incremental Cost
Reduction (as defined in Section 10.4.1 below) related to such move for the period of default.

Flextronics agrees to support Nortel Networks’ customer needs by transferring the Repair Services
to alternate Flextronics sites or providing an equivalent alternative solution to support such
Nortel Networks customer in each region as requested, provided that Nortel Networks and Flextronics
will discuss and agree upon the appropriate delivery terms.

At Nortel Networks’ request, Flextronics will evaluate setting up operations in another country or
equivalent alternative solution, and each Party shall bear its respective reasonable costs of such
evaluation. If Flextronics is unable or unwilling to meet such in-country or regional needs in a
timely fashion, and provided Flextronics has been provided prior written notice of such in-country
needs and a minimum of thirty (30) days to provide a plan in reasonable detail to meet such needs,
including, without limitation, cost, quality and service, in a reasonable time frame as specified
by Nortel Networks, Nortel Networks shall have the right to place such business with an alternative
supplier in such new location. Any such sourcing changes shall not change NNL obligations with
respect to the Minimum Commitment unless otherwise specified in Section 3.3.

6.2 Material and Supplier Management Services

Flextronics shall perform Material and Supplier Management Services and activities consistent with
the Statement of Work and any other related services the Parties agree to perform. All materials
required by Flextronics for the performance of Repair Services shall be purchased by Flextronics
only from suppliers approved by Nortel Networks. Flextronics agrees that only

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materials approved by
Nortel Networks and purchased from such approved suppliers shall be used for the performance of
Repair Services.

Any alternative sources of supply shall be qualified and managed by Flextronics, subject to Nortel
Networks’ approval. Flextronics may recycle various components as mutually agreed by the Parties.

6.3 Storing and Handling

Flextronics shall deal with all materials and Products in accordance with the storage and handling
standards as set out in Exhibit 2.

SECTION 7

CHANGE MANAGEMENT

7.1 Joint Change Management Process

Either Party may propose in writing a change to the Repair or test procedure of any Product,
pursuant to the procedures set out below:

7.1.1 Flextronics Proposal

In the event Flextronics proposes in writing a change to the Repair or test procedure of any
Product, Nortel Networks shall provide an acknowledgement in writing within ten (10)
Business Days as to whether Flextronics is required to prepare and provide Nortel Networks
with a Repair Change Impact Form. If Flextronics is required to prepare and provide Nortel
Networks with a Repair Change Impact Form, Nortel Networks shall, upon receipt of such
Repair Change Impact Form, promptly determine if it wants to go forward with the change. If
Nortel Networks requires the change to be implemented, the Parties shall negotiate any open
issues, including additional material or software liability that shall be identified on a
revised Repair Change Impact Form, and set the implementation date. Flextronics shall fully
implement the change and co-ordinate the activities of Flextronics’ sub-contractors, if
necessary for such implementation. Nortel Networks shall pay no charges not specifically
identified by Flextronics on the Repair Change Impact Form and agreed to by Nortel Networks.
Flextronics and Nortel Networks shall each pay their own respective administration charges
associated with the assessment and implementation of the change to the Repair or test
procedure of a Product. In the event that Nortel Networks determines that it does not wish
to proceed with a proposed change, Flextronics shall be entitled to invoke the Dispute
Resolution Process in Exhibit 10.

7.1.2 Nortel Networks Proposal

In the event Nortel Networks proposes in writing a change to the Repair or test procedure of
any Product, Flextronics shall, within ten (10) Business Days of receipt of Nortel Networks’
proposal, respond to such proposal with a Repair Change Impact Form. Upon receipt by Nortel
Networks of the Repair Change Impact Form, Nortel Networks shall promptly determine if it
wants to go forward with the change. If Nortel Networks

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requires the change to be
implemented, the Parties shall negotiate any open issues, including additional material or
software liability that shall be identified on a revised Repair Change Impact Form, and set
the implementation date. Flextronics shall fully implement the change and co-ordinate the
activities of Flextronics’ sub-contractors, if necessary for such implementation. Nortel
Networks shall pay no charges not specifically identified by Flextronics on the original or
the revised Repair Change Impact Form. Flextronics and Nortel Networks shall each pay their
own respective administration charges associated with the assessment and implementation of
the change to the Repair or test procedure of a Product.

7.2 Joint Product Change Management Process

In the event Nortel Networks has created an ECO for a Product, Nortel Networks shall provide
Flextronics with a copy of the ECO and any other relevant information to enable Flextronics to
determine the implications for the Repair of the applicable Products. If Flextronics considers
such implications to be significant, Flextronics shall, within ten (10) Business Days of receipt of
the ECO or any such other relevant information, respond to the ECO with a Repair Change Impact
Form. Upon receipt of Flextronics’ Repair Change Impact Form, Nortel Networks shall promptly
determine if it wants to go forward with the change. If Nortel Networks requires the ECO to be
implemented, the Parties shall use commercially reasonable efforts to negotiate any open issues,
including additional material or software liability and incremental costs identified and agreed
upon on an implementation date. Flextronics shall fully implement the ECO and co-ordinate the
activities of third party suppliers, if necessary for such implementation. Both parties have the
right to invoke the Dispute Resolution Process. Flextronics and Nortel Networks shall each pay
their own respective administration charges associated with ECO assessment.

7.3 New Product for Repair Introduction (NPRI)

Flextronics shall have a NPRI process and a transfer process for assuming responsibility for the
Repair of a Product which (a) are aligned with the Nortel Networks’ NPRI process and transfer
process; (b) which are common and consistent at all Repair Facilities; and (c) are acceptable to
Nortel Networks. The parties shall be obliged to meet and negotiate in good faith a mutually
acceptable agreement for the transfer of responsibility to Flextronics for the Repair of any new
products.

Prior to the transfer of responsibility for the Repair of any new product to Flextronics hereunder,
Flextronics shall demonstrate to Nortel Networks’ reasonable satisfaction that such transfer shall
not negatively affect cost, quality, service or customer requirements. Without limiting the
generality of the foregoing, with respect to the Repair of any products identified in any
implementation plan relating to the Repair Facility, Flextronics shall meet all Nortel Networks
requirements specified therein prior to the transfer of responsibility for the Repair of such
products to Flextronics.

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7.4 New Capital Investments

If Nortel Networks agrees that Flextronics must invest in equipment in order to carry out a
particular NPRI project, Nortel Networks shall reimburse Flextronics for such equipment
expenditures, which are (i) necessary for the NPRI process, and (ii) pre-approved by Nortel
Networks. Nortel Networks shall determine, in consultation with Flextronics, if the cost of this
equipment is to be paid for by one of the following methods: (a) upfront at the start of the
project, (b) amortized over a specific quantity of Product, (c) in agreed upon installation
payments over a defined term or (d) built in the total cost of Product. Nortel Networks’ preference
for the applicable method of payment for the equipment shall be set out in the project plan
provided by Nortel Networks prior to start of the project. This project plan may include a
mechanism to deal with any unamortized or un-recovered expenses incurred by Flextronics under
scenarios (b) or (c) above. In the case of scenario (b) or (c), the calculation of the
amortization costs will use the Carrying Charge as the cost of money over a three (3) year period.
Unique equipment shall be deemed to be a Reserved Asset under this Agreement.

In the event that the Reserved Assets have not been fully funded for the applicable Product, within
the agreed depreciation period, Nortel Networks will reimburse Flextronics on the anniversary of
the Effective Date for the under-depreciated capital as described under scenario b), c) or d)
above.

SECTION 8

INVENTORY MANAGEMENT

8.1 End-of-life Planning

From time to time, Nortel Networks may declare that a Product is to be manufacture discontinued, or
Nortel Networks or a supplier may advise Flextronics that a material or component required for the
Repair of a Product is to be manufacture discontinued. The Parties acknowledge that the Repair
requirements for the applicable Product shall continue well beyond the date at which such Product,
material or component is manufacture discontinued, and Flextronics shall provide Repair Services
consistent with the terms of this agreement, including performance of all relevant test processes
and securing material availability, for each Product. At least quarterly, Nortel Networks and
Flextronics shall jointly meet to discuss actions involving Products which could be eliminated from
the Repair operations.

8.2 Class B Inventory and Class C Inventory

Flextronics shall be responsible for maintaining appropriate levels of Class B Inventory in order
to fulfil its obligations under this Agreement provided that Flextronics is able to obtain from
Nortel Networks such volumes and types of Class C Inventory which shall be necessary in order to
provide such Class B Inventory levels.

During the Term, Flextronics shall maintain the Class B Inventory, as determined on a PEC by PEC
basis, at levels which do not exceed the greater of 5 units or 90 times the Daily Usage Rate,
unless Flextronics inherited such excess Class B Inventory at the Effective Date or as otherwise
mutually agreed by the Parties.

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Should there be insufficient Class B Inventory available to service a Customer order, it is
expected that Flextronics will fast track a unit from Class C Inventory in order to meet the level
of service criteria as shown in Exhibit 5. Should there not be enough Class C stock available to
either service a customer order or a normal Class B Inventory restocking demand, then Flextronics
shall inform the appropriate Nortel Networks representative as soon as is reasonably practicable.
Provided that Flextronics has met it’s obligations in this Agreement for controlling, planning and
securing Class C Inventory, Flextronics shall not be held accountable for those level of service
misses caused by not having enough Class C Inventory. Flextronics shall not hold Nortel Networks
financially accountable for any loss of repair revenues due to a lack of Class C Inventory. Should
such event result in an A-B writedown, then Nortel Networks will be financially accountable for any
A-B writedown costs.

Except as otherwise agreed in writing by Nortel Networks, all Class B Inventory and Class C
Inventory acquired by Flextronics after the Effective Date shall be used by Flextronics exclusively
for the satisfaction of any obligation it may have to provide Repair Services, directly or
indirectly, to Nortel Networks under this Agreement.

If Flextronics decides to junk or dispose of Class C Inventory or Class B Inventory, Flextronics
will, upon authorization by Nortel Networks, dispose of such Inventory free of processing charges
to Flextronics utilizing Nortel Networks’ designated reclamation center.

8.3 Open Market Purchases

Flextronics shall seek prior written approval from Nortel Networks prior to obtaining any Class B
Inventory or Class C Inventory from the open market.

8.4 Components

Flextronics shall perform, on an ongoing basis, all activities necessary to manage the supply of
Repaired Products in accordance with the terms of this Agreement, such activities to include, but
not be limited to, the following:

	 	(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

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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

Flextronics shall be responsible to keep Class B Inventory at or above the baseline shippable
release levels (“Baseline”). Upon either party determining that such Inventory is not at Baseline,
Flextronics shall bring Inventory to Baseline provided that there is a viable upgrade path.
Flextronics shall propose via the process outlined in Section 7.2, and Nortel Networks shall pay,
for those commercially reasonable costs provided that Nortel Networks has approved those charges,
and provided that Flextronics has used commercially reasonable planning practices within its
control. Upon agreement that a Purge needs to be performed, Flextronics will use commercially
reasonable efforts to Purge the Inventory within 15 days.

8.6 Support of Nortel Networks Remanufacturing Activities

From time to time, Nortel Networks may need to utilize Class C Inventory or purchase Class B
Inventory in order to satisfy Nortel Networks or Nortel Networks’ third parties obligations for
remanufacturing activities. Upon request by Nortel, Flextronics shall use commercially reasonable
efforts to sell such Inventory and notify Nortel Networks of any potential negative impact on
service level agreement deliverables or commercially reasonable costs.

8.7 Excess Inventory

Nortel Networks shall have no obligation or liability to Flextronics with respect to excess and
obsolete Inventory, other than as set out herein.

For every Product sold to Nortel Networks, Flextronics shall be permitted to charge Nortel Networks
an uplift percentage applicable on the Product Price. The Parties will agree to the percentage
uplift prior to the Effective Date. The Parties understand that the uplift factor(s) during Year 1
will be greater than for subsequent years due to the purchase of one year’s inventory at the
Effective Date by Flextronics. After the first anniversary of the Effective Date, the uplift
factor will reflect only the on-going events beyond Flextronics’ control. The Parties agree that
the uplift percentage will be reviewed six (6) months after the Effective Date and

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annually on the
anniversary of the Effective Date. In conjunction with each uplift factor review, Flextronics will
perform an E & O calculation based on one year’s historical demand, NPI forecast, and known events.
During such reviews, the Parties may mutually agree to adjust the uplift percentage. For any
increase of the uplift percentage, Flextronics must demonstrate to Nortel Networks that such
adjustment is material (greater than 2% of total Inventory) and the result of an act or event
outside Flextronics’ control.

The table below provides an example of how the uplift percentage shall be applied.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Uplift Amount	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Year 1	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Year 2	 	 
	Product	 	Current	 	Units Sold	 	Amount	 	Uplift %	 	Uplift	 	Current	 	Units Sold	 	Amount	 	Uplift %	 	Uplift %
	 	 	Price	 	to Nortel	 	Sold	 	Factor	 	Amount	 	Price	 	to Nortel	 	Sold	 	Factor	 	Amount
	 	 	 	 	 	 	During year	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	During year	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	aaaaaaaa
	 	$	1,000	 	 	 	400	 	 	$	400,000	 	 	 	1.0	%	 	 	4000	 	 	$	990	 	 	 	400	 	 	$	396,000	 	 	 	1.0	%	 	 	3960	 
	bbbbbbb
	 	$	400	 	 	 	98	 	 	$	39,200	 	 	 	1.0	%	 	 	392	 	 	$	360	 	 	 	50	 	 	$	18,000	 	 	 	1.0	%	 	 	180	 
	ccccccc
	 	$	136	 	 	 	4000	 	 	$	544,000	 	 	 	1.0	%	 	 	5440	 	 	$	122	 	 	 	3800	 	 	$	463,600	 	 	 	1.0	%	 	 	4636	 
	ddddd
	 	$	300	 	 	 	35	 	 	$	10,500	 	 	 	1.0	%	 	 	105	 	 	$	270	 	 	 	30	 	 	$	8,100	 	 	 	1.0	%	 	 	81	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	9,937	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	8857	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Two yr sum	 	 	 	 	 	 	18794	 	 	 	 	 	 	 	 	 	 	 	 	 

On an annual basis, Nortel Networks and Flextronics shall perform the calculations as shown in
the examples above and project the uplift percentage required for the following year. In the event
that the accumulated uplift fund is greater than the excess Inventory requirements, Flextronics
shall agree to reduce the uplift factor to an agreed upon factor for on-going operations under
Flextronics control.

Thirty days prior to the Effective Date both Parties will jointly meet and agree on the percentage
to be used as an uplift factor. Considerations in determining the uplift factor will include
analyzing Nortel Networks historical E & O requirements and determining whether these factors are
applicable to the inventory model which Flextronics will be operating under after the Effective
Date.

8.8 Consigned Inventory

On the Effective Date, Nortel Networks will sell twelve (12) months demand of Class B Inventory on
a PEC code by PEC code basis to Flextronics. All other transferred inventory will be held by
Flextronics as Consigned Inventory.

With respect to Consigned Inventory:

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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 Inventory
	 
	 	4.	 	Class C Inventory repaired and converted to Class B

8.10 A-B Writedowns

On a regular basis Flextronics will be responsible for acquiring additional Inventory to maintain
appropriate levels of safety stocks in order to perform the Repair Services under this Agreement.
Such acquisitions may be made from reliable secondary market sources approved by Nortel Networks,
third party manufacturers, Flextronics’ manufacturing facilities or any other Nortel Networks
qualified sources.

Approximately fifteen days prior to the beginning of a quarter, Flextronics will review the
requirements for inventory replenishment as referenced in Exhibit 4 and shall request written
approval from Nortel Networks prior to acquiring the Inventory. Provided that Flextronics

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remains
within the approved quarterly budget, Flextronics shall have the flexibility to respond to demand
changes to the approved plan for the quarter, provided that Flextronics demonstrates that the
deviation was necessary and Flextronics submits to Nortel Networks a monthly summary of status
against the plan. Payment will only be made against authorized purchase orders.

The Parties will be responsible for payment to replenish Inventory as follows:

Flextronics Responsibility:

	 	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.

Joint Responsibility:

	 	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.

NNL Responsibility:

	 	a)	 	New Product Introduction
	 
	 	b)	 	Last Time Buys
	 
	 	c)	 	Material On Loan
	 
	 	d)	 	Quality
	 
	 	e)	 	Return rates
	 
	 	f)	 	Retrofits
	 
	 	g)	 	Manufacturing Discontinued Products
	 
	 	h)	 	Remanufacturing

8.11 Tracking of Inventory Furnished by Nortel Networks

Flextronics shall maintain appropriate tracking and recording procedures to mitigate against loss
of Inventory and Consigned Inventory owned by Nortel Networks. In addition to periodic cycle

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counts, Flextronics shall perform an annual physical inventory. These records shall be made
available upon request to Nortel Networks and it may, at its discretion, perform a physical audit.
Should an audit or physical inventory indicate, in respect of any Inventory or Consigned Inventory
location, that a loss or shrinkage in excess of 0.5% of the aggregate units owned by Nortel
Networks has occurred; Flextronics will be responsible for either the Book Value of such property
or replacement of such property, at Nortel Networks’ reasonable discretion.

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

The Parties acknowledge that the failure of Flextronics to obtain performance results better
than or equal to the metric target for RDOA and On-Time Delivery elements on the report card
with respect to any Product Family as a result of any act or omission within Flextronics’
Control and Responsibility, for [• ] (measured as the weighted average of the
scorecards for each of those months), shall entitle Nortel Networks to receive the
applicable liquidated damages as set out in the table below.

The assessment of liquidated damages shall be limited to one assessment per [•]. In
instances where Nortel Networks is entitled to receive damages for more than one metric, a
single assessment (being the largest of the applicable assessments) shall apply. Liquidated
damages shall be assessed as follows:

For the period of 0-4 months after the Effective Date, no liquidated damages shall be
assessed for any Product.

For the period of 5-8 months after the Effective Date, liquidated damages shall be assessed
as follows:

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	 	 	 	 	 	 	After 2 consecutive	 	 	After 3 or more	 
	 	 	After 1 month	 	 	months	 	 	consecutive months	 
	Performance between
	 	 	 	 	 	 	 	 	 	 	 	 
	Target and Passing
	 	 	[•]	 	 	 	[•]	 	 	 	[•]	 
	Performance below
Passing
	 	 	[•]	 	 	 	[•]	 	 	 	[•]	 

After [• ] from the Effective Date, liquidated damage shall be assessed as
follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	After 2 consecutive	 	 	After 3 or more	 
	 	 	After 1 month	 	 	months	 	 	consecutive months	 
	Performance between
Target and Passing
	 	 	[•]	 	 	 	[•]	 	 	 	[•]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Performance below
Passing
	 	 	[•]	 	 	 	[•]	 	 	 	[•]	 

 

			
	*	 	Flextronics’ revenue for the affected Product Family, as measured in the
aggregate on the relevant Report Card.

Payments for liquidated damages shall be made 40 days from the date Nortel Networks has
documented the claim and the Parties have agreed on the amount to be assessed.

9.1.3 Pass-through of Liquidated Damages from Customers

In the event Flextronics fails to meet its obligations for a specific order, and as a result
Nortel Networks is required to pay liquidated damages to its Customer, Nortel Networks shall
be entitled to receive from Flextronics an amount representing [•] imposed on Nortel
Networks by the Customer.

In the event that Flextronics is required to pay liquidated damages under this Section
9.1.3, the order(s) against which damages were assessed shall not be used in the calculation
of whether Flextronics has met a relevant metric under Section 9.1.2.

9.1.4 Termination for Breach of Metrics

The failure of Flextronics to obtain performance results better than or equal to the passing
grade for those breachable metrics identified in Exhibit 5 for each element on the report
card with respect to any Product Family as a result of any act or omission within
Flextronics’ Control and Responsibility, for [•] (measured as the weighted average of
the scorecards for each of those [•]), constitutes a material breach of Flextronics’
obligations under this Agreement with respect to that Product Family. If Nortel Networks
does not exercise its right to terminate for such breach, any applicable liquidated damages
owing pursuant to Section 9.1.2 will be paid by Flextronics for each successive month that
Flextronics fails to obtain metric target as set out herein. If Nortel Networks does

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exercise its right to terminate for such breach, Flextronics’ liability for any damages
Nortel Networks may have suffered due to the breach shall be reduced by the amount of
liquidated damages already paid. If Flextronics disputes whether there has been a material
breach for purposes of this Section 9.1.4, then such dispute will be submitted to the
Dispute Resolution Process in Section 26 prior to Nortel Networks exercise of its
termination rights or Flextronics obligation to pay any liquidated damages.

9.1.5 Transition Performance Period

Nortel Networks acknowledges that Flextronics’ ability to perform its obligations at the
Effective Date under the attached Exhibits is dependent upon Flextronics ability to engage
certain Nortel Networks current internal/external suppliers to continue to perform the
Repair Services defined in this Agreement at the metric levels required in Exhibit 5. In
addition, Flextronics’ ability to perform its obligations at the Effective Date is dependent
upon Nortel Networks timely transfer of the necessary Nortel Networks’ equipment,
information, processes and personnel, to satisfy the requirements set forth in Exhibits 2
and 3.

Nortel Networks agrees to provide all reasonable assistance to Flextronics including the
assignment of certain agreements and as appropriate the facilitation of discussions with
other third parties that Flextronics desires to engage, to assist Flextronics in gaining the
capability to deliver the Repair Services in accordance with the stipulated service levels.

Except where indicated in the relevant Statement of Work, Flextronics shall be obligated to
deliver all of the Repair Services as of the Effective Date, provided however that during
the four (4) month period after the Effective Date, Nortel Networks shall not use any
breachable metric measured during this four (4) month period to terminate this Agreement
pursuant to Section 9.1.4 of this Agreement for Breach of Metrics unless the breach of the
performance metric is solely attributable to an action of Flextronics.

To the extent that during this four (4) month period Flextronics is able to demonstrate that
any of the service levels were not achieved prior to the Effective Date, then Flextronics
shall be excused from achieving the service level. In this circumstance, the Parties agree
to meet and negotiate in good faith a timeline for achieving the service level including any
associated cost issues and to amend the relevant Exhibit(s) to reflect the agreed
resolution.

If subsequent to the agreed timeline to achieve the required service level, Flextronics
still cannot achieve the required service level then, notwithstanding the commitments and
obligations in Section 3.3 of this Agreement, Nortel Networks shall be permitted to arrange
for the Repair Services from another service provider or provide the Repair Service itself
until Flextronics is able to reasonably demonstrate that Flextronics can achieve the
required service level.

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9.2 Industry Standards

If in existence on the Effective Date, Flextronics agrees to maintain the industry standards set
out below. If Nortel Networks requires Flextronics to implement an industry standard not certified
on the Effective Date, Flextronics will pursue such standard, subject to the mutual agreement of
the Parties on the associated costs.

	 	(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

Nortel Networks may perform source inspections of parts, assemblies or processes at a Flextronics
supplier or subcontractor facility whenever Nortel Networks decides it is necessary. The source
inspection shall be conducted during normal business hours and with reasonable prior written notice
to Flextronics.

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

“Ongoing Cost Reduction” or “OCR” means the universe of cost reductions minus the “Incremental Cost
Reductions” or “ICR” (as defined in Section 11.9.1 of the MCMSA). The parties acknowledge that
they have arrived at the concepts of OCR and ICR by assigning cost reductions that Nortel Networks
generally would have been able to achieve through its own efforts, and/or through Nortel Networks
existing supply chain, had it retained the Transferred Business to the OCR category and cost
reduction that Nortel Networks generally would not have been thus able to achieve to the ICR
category. Flextronics commits to the cost reduction to the Prices as set out in Exhibit 6 of the
MRSA. The implementation is set out in Exhibit 7 of the MRSA. Nortel Networks is responsible for
generating the plan for the OCR for Year One. OCR cannot be used to fulfill the Committed ICR %.

If Flextronics achieves more than the quarterly take-down in any given quarter, it is not obligated
to pass through the cost reduction in the current quarter, or the quarter following, but will
provide 100% of the reduction in the current quarter plus two. The implementation of this method
would be the 1st day of the quarter following the full quarter of share. The Parties
will enter into a supplement to the Joint CR Commit and Pricing Agreement (as defined in Exhibit
17-1 of the MCMSA) to reflect this incremental cost reduction.

10.4 Incremental Cost Reduction

Flextronics will use its cost management, cost to market sites, vertical integration, logistics,
repair and design services capabilities to achieve additional cost reductions, which are
incremental to the OCR. The process for measuring and implementing incremental cost reduction is
set out in Exhibit 7.

Flextronics will use its materials management capabilities to leverage SC and NC spend, cost
management, cost to market sites, vertical integration, logistics, repair and design services
capabilities to achieve additional cost reductions, which are incremental to the OCR.

	 	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

In the event that Flextronics considers that, due to any unforeseen event or condition beyond
Flextronics’ control that the OCR commitment will be missed by a threshold of [•] or greater.
Flextronics will present to Nortel Networks quantifiable information, including, third party
benchmarking, to enable Nortel Networks to validate that the Annual Commitment and Product Prices
are not achievable due to such conditions, the Parties will review the Annual Commitment and
Product Price at the monthly Cost Review Meeting. Where Nortel Networks does so validate, then the
Parties will agree to revise the Product Prices and Annual Commitment for the balance of the
quarters remaining. Nortel Networks shall have fifteen (15) calendar days to notify Flextronics
that it is either validating or rejecting Supplier’s request. If Nortel Networks

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fails to respond
in such time, Flextronics will have the right to update the Exhibit 6 Pricing. The amount of this
revision will reflect directly the validated number/percentage.

(Example: [•]. )

SECTION 11

BUSINESS CONTINUITY

11.1 Business Continuity Planning

Flextronics shall maintain a business continuity plan for each Repair Facility to be put into
effect if a Repair Facility becomes unable to provide Repair Services for any reason, including
Force Majeure, for a period of more than five (5) days (“Business Continuity Plan”). Flextronics’
goal is to be able to continue to provide Repair Services in accordance with the time schedules
required under this Agreement.

The Business Continuity Plan shall contain, at a minimum, (a) a risk assessment and business impact
analysis, (b) a prevention/mitigation plan, and (c) a resumption of Repair Services plan, including
a recovery/restoration plan. The preceding will cover, but not be limited to, provisions for
documentation storage (product, process, fixture, tools), information systems technology
redundancy, a demonstration of Flextronics’ capability to recover in an emergency if one of its own
repair facilities or processes becomes unable to provide Repair Services and if one of its
component suppliers or subcontractors experiences such an emergency.

At Nortel Networks’ request and at no additional charge to Nortel Networks, Flextronics will
participate in any commercially reasonable tests implemented by Nortel Networks or discussions
initiated by Nortel Networks for purposes of evaluating and coordinating and integrating the
business continuity plans of its suppliers with Nortel Networks’ overall business continuity plan,
in so much as current Repair Services and associated level of service metrics are not impacted by
said test. As reasonably requested by Nortel Networks during the Term, Flextronics will adjust the
Business Continuity Plan to better conform to and integrate with Nortel Networks’ business
continuity plan, on terms to be mutually agreed to by the Parties.

Throughout the Term, Flextronics shall provide a copy of any changes in the Business Continuity
Plan to NNL within ten (10) days of any such change. A period of Force Majeure or other event
causing inability to provide Services shall be deemed to commence on the date that the event of
Force Majeure or other such event first occurs.

NNL and Flextronics shall review Flextronics’ Business Continuity Plan annually.

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SECTION 12

WARRANTIES

12.1 Repair Services

Flextronics covenants and warrants that:

	 	(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.

Nortel Networks represents and warrants that: (i) it has the right to enter into this Agreement,
including the right to grant the license set forth in Section 13.1; (ii) no claim or action is
pending or threatened against Nortel Networks or, to Nortel Networks knowledge as of the Effective
Date, against any licensor or supplier of Nortel Networks that might, if adversely decided,
adversely affect the ability of Flextronics to perform the Repair Services; (iii) it has all rights
and powers necessary to perform its obligations under this Agreement; and (iv) this Agreement does
not violate the terms of its agreements with any suppliers.

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Nortel Networks covenants and warrants that it will perform its obligations under this Agreement in
a competent, professional and timely manner in accordance with the standards generally accepted in
the telecommunications industry and the terms of this Agreement.

12.2 Return of Products under Warranty

Any Product for which Flextronics has performed Repair Services and which fails while under the
Repair Warranty Period described in Section 12.1 may be returned to Flextronics and Flextronics
shall replace or repair, as mutually agreed, and bring to current baseline these Products at the
agreed to costs in Exhibit 6 (inclusive of upgrade costs unless otherwise defined in Exhibit 6).
During the Repair Warranty Period, in those instances where the Product is diagnosed as No Trouble
Found (“NTF”), Flextronics shall also bring the Product to current baseline. If Products require
repair during the Repair Warranty Period due to reasons outside of Flextronics’ control such as
customer abuse, NTF, planned retrofits, destructive failure analysis authorized by Nortel Networks,
or freight damage, then Flextronics shall be entitled to charge the appropriate rate for such
services.

NORTEL NETWORKS’ SOLE AND EXCLUSIVE REMEDY AND FLEXTRONICS’ ENTIRE LIABILITY FOR BREACH OF WARRANTY
IN RESPECT OF SECTIONS 12.1(iv) AND 12.1(v) SHALL BE AS SET FORTH IN SECTIONS 12.2 AND 12.3 AND
SUBJECT TO THE LIMITATIONS SET FORTH IN SECTION 15 BELOW. NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS AGREEMENT BUT SUBJECT TO SECTION 14 AND TO THE EXTENT PERMITTED BY LAW, THE FOREGOING IS
FLEXTRONICS’ SOLE WARRANTY WITH RESPECT TO THE REPAIRED PRODUCTS AND FLEXTRONICS HEREBY EXPRESSLY
DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

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

Flextronics shall have the right and Nortel Networks hereby grants to Flextronics, to the extent of
its legal right to do so, a world-wide, non-exclusive, non-transferable, royalty-free license to
use Nortel Company Proprietary Information communicated to Flextronics by Nortel Networks as
appropriate for provision of the Repair Services in question solely for internal use for the
purpose of performing the Repair Services hereunder in connection with Repaired Products. Nortel
Networks shall retain exclusive rights and title to all Nortel Company Proprietary Information
provided hereunder. This license is non-transferable, may be used only in connection with the
performance of Repair Services by Flextronics for Nortel Networks under this Agreement, and shall
expire on the date on which Flextronics obligations to support the repair Product or to perform
Repair Services terminate under this Agreement.

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13.2 Limitations on Grant of License

Except as expressly stated herein, nothing in this Agreement shall be deemed to grant, either
directly or indirectly by implication, estoppel or otherwise, any licenses to Flextronics of Nortel
Company Proprietary Information or any Trade-Marks, and Flextronics acknowledges that Nortel
Networks shall retain exclusive right and title to the foregoing.

13.3 Flextronics Inventions

Flextronics Inventions, including Flextronics Inventions relating solely to a repair process not
specific to the repair of a Product, shall be the property of Flextronics. Flextronics shall and
does hereby grant Nortel Networks, subject to fulfillment of its payment obligation, a limited,
irrevocable, world-wide, non-exclusive, royalty-free license, but not as a standalone license,
solely to make or have made and use such Flextronics Invention and Nortel Networks shall have the
right to sub-license such rights to Nortel Networks Suppliers for the purpose of repairing
Products. Nortel Networks shall be fully responsible for any damages accrued to Flextronics
arising out of any third party’s violation of the scope of the license granted hereunder.

13.4 Specifications and Deliverables Owned by NNL

The Specifications and all deliverables resulting from the Repair Services shall be the property of
Nortel Networks. Flextronics agrees not to offer or provide the Specifications or deliverables to
any third parties without Nortel Networks’ prior written consent, which shall not be unreasonably
withheld.

13.5 Flextronics Retains Ownership of Flextronics Proprietary Information

Flextronics shall retain exclusive right, title, and interest to all Flextronics Proprietary
Information; and provided, that Nortel Networks has fulfilled its payment obligations, Flextronics
will grant NNL a limited, world-wide, non-exclusive, and royalty-free license, but not as a
stand-alone license, solely to make or have made, use, and sell any Flextronics Proprietary
Information incorporated into the Products or used in the repair of the Products and provided that
Nortel Networks shall have the right to sub-license such rights to Nortel Networks Suppliers for
the purpose of repairing Products.

13.6 Assignment of Inventions Agreements with Employees

In respect of any inventions which are specific and related to the repair of Nortel Networks’
Products, Flextronics shall have agreements with its employees, consultants, agents or
representatives (individually “Counter-Party”), in which each such Counter-Party shall agree in
writing that any and all inventions, discoveries, developments, modifications, procedures, ideas,
innovations, systems, Programs, know-how or designs developed by any such Counter-Party during the
term of its relationship with Flextronics, shall be the property of Flextronics. Furthermore, such
agreement between any such Counter-Party and Flextronics shall contain usual clauses including an
undertaking by such Counter-Party to execute applications for patents, copyrights, industrial
designs, mask work rights, integrated circuit topographies and other

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registerable intellectual
property rights thereon to the extent so requested by Flextronics and/or to assign the same to
Flextronics.

SECTION 14

INDEMNIFICATION

	14.1	 	Intellectual Property Indemnification

14.1.1 By NNL

Except as otherwise provided in this Section 14, Nortel Networks shall, at its expense and
at Flextronics’ request, indemnify and defend Flextronics against any claim or action
brought against Flextronics by a third party to the extent that such claim is based on an
assertion that Flextronics’ activities as part of the Repair Services infringe, directly as
a result of Flextronics’ compliance with the Specifications or directions by Nortel Networks
to Flextronics relating to a Product for use under this Agreement, any patent, copyright or
trademark, or violates any trade secret or other proprietary right of a third party. Nortel
Networks shall pay any pre-judgment and pre-settlement costs as wells as any resulting costs
and damages finally awarded against Flextronics or agreed to in any settlement, and
Flextronics’ reasonable attorneys’ or patent agent’s or other expert’s fees incurred in
connection therewith, provided that (i) Flextronics promptly notifies Nortel Networks in
writing of any such claim, (ii) Nortel Networks has sole control of the defense and all
related settlement negotiations, and (iii) Flextronics reasonably cooperates, at Nortel
Networks’ cost, in the defense and furnishes all related evidence under its control.

Notwithstanding the foregoing, Nortel Networks shall have no liability under Section 14.1 to
the extent the alleged infringement or violation:

	 	(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

Flextronics shall, at its expense and at Nortel Networks’ request, indemnify and defend all
Nortel Companies against any claim or action brought against any Nortel Company by a third
party to the extent that such claim is based on an assertion that any method or process used
or practiced by Flextronics in or during the provision of any Service provided by
Flextronics under this Agreement infringes any patent, copyright or trademark, or violates
any trade secret or other proprietary right of a third party, unless such method or process
was specifically requested by Nortel Networks [•].

In any such case Flextronics shall pay any pre-judgment and pre-settlement costs as well as
any resulting costs and damages finally awarded against Nortel Networks or agreed to in any
settlement, and Nortel Networks’ reasonable attorneys’ or patent agent’s or other expert’s
fees incurred in connection therewith, provided that (a) Nortel Networks promptly notifies
Flextronics in writing of any such claim, (b) Flextronics has sole control of the defense
and all related settlement negotiations, and (c) Nortel Networks reasonably cooperates, at
Flextronics’ cost, in the defense and furnishes all related evidence under its control.

Notwithstanding the foregoing, Flextronics shall have no liability under Section 14.1 to the
extent the alleged infringement or violation:

	 	(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

If, as a result of a claim described in 14.1.2 above, the continued use by Flextronics of
any method or process used in or practices as part of the Repair Services or the continued
use of any intellectual property component of the Repair Services, an injunction is obtained
against the sale or distribution of any Repaired Product or the continued use of such method
or process or intellectual property component, or if either Party reasonably determines on
the advice of counsel that there is a likelihood of such continued use exposing either Party
to material liability, Flextronics shall forthwith at its option and expense, unless such
element, method or process was specifically requested by Nortel Networks, use its
reasonable efforts to either:

	 	(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.

THE FOREGOING SECTION 14.1 STATES THE ENTIRE LIABILITY OF THE PARTIES TO EACH OTHER
CONCERNING INFRINGEMENT OF PATENT, COPYRIGHT, TRADE SECRET OR OTHER INTELLECTUAL PROPERTY
RIGHTS HELD BY THIRD PARTIES.

	14.2	 	Other Indemnification

14.2.1 By Flextronics

With respect to matters not covered in Section 14.1, Flextronics shall indemnify and hold
Nortel Networks, its customers, distributors and their employees, harmless from any losses,
damages, liabilities and costs including reasonable attorney’s fees arising from any injury
or death to persons or loss of or damage to property to the extent caused by any method or
process used in the performance of Repair Services, and, any defect or deficiency including
any defect or deficiency in any parts or components used in the Repair process, or
Flextronics’ negligence or willful misconduct.

14.2.2 By Nortel Networks

With respect to matters not covered in Section 14.1 or 14.2.1, Nortel Networks shall
indemnify and hold Flextronics, its customers, distributors and their employees, harmless
from any losses, damages, liabilities and costs including reasonable attorney’s fees arising
from any injury or death to persons or loss of or damage to property to the extent caused by
Nortel Networks’ negligence or willful misconduct.

SECTION 15

LIMITATION OF LIABILITY

NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT EXCEPT FOR THE PARTIES’ OBLIGATIONS UNDER SECTION
14 AND A BREACH OF THE OBLIGATIONS IN SECTIONS 12.3, AND 22, TO THE MAXIMUM EXTENT PERMITTED BY
LAW, UNDER NO CIRCUMSTANCES AND UNDER NO LEGAL THEORY, WHETHER TORT (INCLUDING NEGLIGENCE), PRODUCT
LIABILITY, CONTRACT, OR OTHERWISE, SHALL ONE PARTY BE LIABLE TO THE SECOND PARTY OR ANY OTHER
PERSON FOR ANY LOSS OF PROFIT OR ANY INDIRECT, SPECIAL, INCIDENTAL, RELIANCE OR CONSEQUENTIAL
DAMAGES, EVEN IF THE FIRST PARTY SHALL HAVE BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES.
NOTHING IN THIS AGREEMENT SHALL ACT TO RESTRICT OR EXCLUDE LIABILITY FOR DEATH OR PERSONAL INJURY
CAUSED BY THE NEGLIGENCE OF ANY PARTY. FOR PURPOSES OF CLARITY, THE PARTIES AGREE THAT THE PAYMENT
OF PERFORMANCE LIQUIDATED DAMAGES, CUSTOMER PASS-THROUGH

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LIQUIDATED DAMAGES AND REVENUE SHORTFALL
LIQUIDATED DAMAGES SHALL NOT BE RESTRICTED OR EXCLUDED BY THIS LIMITATION OF LIABILITY.

SECTION 16

COMMUNICATION AND INFORMATION TRANSFER

16.1 Access to Nortel Networks Computer Systems by Flextronics

Flextronics shall limit access and use of any Nortel Networks computer systems solely to the supply
of Products and/or Repair Services and shall not access or attempt to access any intranet, computer
systems, files, software or services other than those required for the supply of Products and/or
Repair Services. Flextronics shall limit such access to those employees with an express
requirement to have such access in connection with supply of Products and/or Repair Services, and
shall strictly follow all security rules and procedures of Nortel Networks for restricting access
to its computer systems. All user identification numbers and passwords disclosed to Flextronics
and any information obtained by Flextronics as a result of Flextronics’ access to, and use of
Nortel Networks’ computer systems shall be deemed to be, and treated as, Nortel Company Proprietary
Information in accordance with the provisions set forth in Section 22, with the same degree of care
as such Flextronics uses for its own information of a similar nature, but in no event a lower
standard than a reasonable standard of care. Flextronics shall cooperate in the investigation of
any apparent unauthorized access to any Nortel Networks computer system. The requirements of this
Section shall apply equally to any access and use by Flextronics of any Nortel Networks intranet,
electronic mail system, of any Nortel Networks’ electronic switched network, either directly or via
a direct inward service access (DISA) feature or of any other property, equipment or service of
Nortel Networks.

16.2 Flextronics Compatibility with Nortel Networks Computer Systems

Flextronics shall use and maintain business systems capable of interfacing with Nortel Networks’
business systems in such a way that meets the Nortel Networks definition of managed access for
electronic information exchange as set out in Exhibit 26 of the MCMSA. Information to be exchanged
as of the Effective Date, as applicable, may include: on time shipment, on line work-in-process
status, Product Quality status, shipment notification, and Product design information.

Nortel Networks will assist Flextronics with the integration of Flextronics’ information technology
systems with the Nortel Networks systems, as further set out in Exhibit 26 to the MCMSA.

Flextronics and Nortel Networks shall each take necessary precautions to put in place contingency
plans adequate to safeguard data and enable ongoing operations in the event of a systems outage.

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16.3 Information Technology Services

Flextronics shall be responsible for providing the information technology services as set out in
Exhibit 26 of the MCMSA.

SECTION 17

EQUIPMENT FURNISHED BY NORTEL NETWORKS

17.1 Title to Equipment Furnished by Nortel Networks

Any equipment loaned by Nortel Networks in connection with the Repair Services described in the
Statement of Work, with or without charge to Flextronics, shall be deemed bailed to Flextronics,
and title thereto shall at all times remain with Nortel Networks. Upon the earlier of such Nortel
Networks request therefore or the completion of the Repair Services, Flextronics shall return, at a
commercially reasonable expense and risk borne by Nortel Networks, all such equipment in the same
condition as they were when furnished to Flextronics, reasonable wear and tear excepted.
Flextronics shall provide Nortel Networks a list of all such equipment in Flextronics’ possession
on a quarterly basis.

17.2 Risk, Insurance and Maintenance of Equipment Furnished by Nortel Networks

All Nortel Networks equipment in Flextronics’ custody or control shall be held at Flextronics’ risk
and be kept insured by Flextronics at Flextronics’ expense in an amount no less than the
replacement cost with loss payable to the supplying Nortel Company. Flextronics shall use such
equipment solely in the performance of its obligations hereunder and with the consent of Nortel
Networks Flextronics may use such equipment for other tasks. Upon the expiration or termination of
this Agreement, or upon the written request of Nortel Networks at any time, Flextronics shall
deliver such equipment to the supplying Nortel Company in the same condition as originally received
by Flextronics, reasonable wear and tear excepted. The supplying Nortel Company shall have the
right, at all reasonable times, upon prior request, to enter Flextronics’ premises to inspect any
and all of its equipment and any equipment or goods manufactured, developed or created with the aid
of its equipment.

SECTION 18

RESERVED ASSETS

From time to time Nortel Networks may convey or otherwise transfer Reserved Assets in connection
with this Agreement and, in such event; the provisions of Exhibit 13 shall apply.

SECTION 19

LEGAL AND REGULATORY COMPLIANCE

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Flextronics shall at no additional charge to Nortel Networks, comply with and obtain all licenses
and permits necessary to repair Products and provide Repair Services in accordance with this
Agreement and, for Products in respect of which Flextronics provides Logistics pursuant to Exhibit
2, Flextronics covenants and agrees that each Repaired Product shall, with respect to the repair,
conform with, all applicable laws, governmental orders and regulations in effect in all countries
to which such Repaired Product is shipped and any other relevant international agreements relating
to the Products Each Party shall provide all information under its control, which is necessary or
useful to obtain any export, or import license or document required to ship or receive product,
including but not limited to, U.S. Customs Certificates of Delivery, Affidavits or Origin and U.S.
Federal Communications Commission Identifier, if applicable.

SECTION 20

INTERNATIONAL TRADE

20.1 Exports

In addition to the requirements of Exhibit 2, each Party agrees that it shall not knowingly (i)
export or re-export, tangible or intangible, any technical data (as defined by the U.S. Export
Administration Regulations or any other jurisdiction with import or export restrictions), including
software received from the other under this Agreement or (ii) export or re-export, tangibly or
intangibly, any direct product of such technical data, including software, to any destination to
which such export or re-export is restricted or prohibited by U.S. or applicable non-U.S. law
without obtaining prior authorization from the U.S. Department of Commerce and/or other competent
government authorities to the extent required by those laws. In addition, each Party agrees to
comply with all the requirements of the Export and Import Permits Act (Canada) all export control
laws and regulations of the exporting country, and any other applicable legislation throughout the
world. As it is relevant to all outstanding shipments, this clause shall survive termination or
cancellation of this Agreement.

20.2 Customs Invoice

Unless otherwise set forth in this Agreement, Flextronics shall produce customs invoices and
country of origin documents for all shipments crossing international borders which comply with all
laws, treaties and regulations of both the exporting country and the importing country. If a
Product is repaired in more than one country, then to the extent required by applicable laws, the
different countries of origin must be identified on the customs invoices, along with the related
quantities/serial numbers of such Materials. If any upgrade of Products to the most recent
revision level in accordance with this Agreement is performed, the applicable fee for this upgrade
must be included on the customs invoice, or, if such upgrade is performed at no charge to Nortel
Networks, the value of such upgrade shall be so indicated. Flextronics shall be solely responsible
for all fines, penalties and costs resulting from any customs invoice, document, or declaration not
being so compliant unless such non-compliance is solely the result of an action or omission of
Nortel Networks in which case, Nortel Networks shall be responsible for the fine, penalty and costs
or its proportionate share of that fine and/or penalty and cost. Any cost related to Value Added
Tax, duties and fines will be charged to Nortel Networks at Flextronics cost with

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no markup. All
customs invoices must indicate whether or not any Assists were provided and the value of said
Assists.

20.3 Duty Drawback and Minimization

In the countries where Nortel Networks maintains a duty drawback program, Flextronics shall provide
Nortel Networks with a quarterly report of part numbers and import duties paid or refunded (at
entry and through subsequent adjustment) on behalf of Nortel Networks for all deliveries in country
and for which Nortel Networks may become a subsequent exporter entitled to duty drawback.
Flextronics shall provide a duty drawback waiver on the appropriate form for duty paid on any
materials imported by Flextronics and used or consumed in the manufacture of Products supplied to
Nortel Networks. Nortel Networks shall provide guidelines to Flextronics with respect to the data
required to be provided by Flextronics.

In the countries in which Nortel Networks does not currently maintain a duty drawback program, the
Parties shall work together with a view to implementing a similar duty drawback program as soon as
practicable and as mutually deemed required.

When Nortel Networks determines that duties warrant a drawback claim, Flextronics shall provide all
necessary and relevant data and/or documentation and shall cooperate with Nortel Networks in
pursuing the claim. Flextronics will cooperate with Nortel Networks in any audit relating to this
Section. Similarly, when Flextronics determines that duties warrant a drawback claim, Nortel
Networks shall provide all necessary and relevant data and/or documentation and shall cooperate
with Flextronics in pursuing the claim. In either case, the costs of preparing and filing the
drawback claim will be borne by the parties in proportion to their relative drawback benefits and
Nortel Networks will cooperate with Flextronics in any audit relating to this Section.

Flextronics will utilize duty minimization programs such as inward and outward processing relief,
ATA Carnets (An international customs document that permits duty-free and tax-free temporary import
of goods for up to one year), and temporary imports to mitigate duty costs to Nortel Networks.
Duty minimization programs will be reviewed and agreed by both parties. Flextronics shall not be
required to pursue a specific duty minimization program if that program is unlikely to yield
savings greater than the cost of implementing it.

SECTION 21

ENVIRONMENTAL POLICIES

21.1 ISO 14001

Flextronics agrees to maintain ISO 14001 registration for those Repair Facilities so registered as
of the Effective Date and to obtain such registration within [•] of the Effective Date for
those Repair Facilities not so registered as of the Effective Date.

21.2 Corporate Policy

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Within [•] of the Effective Date, Flextronics shall produce for Nortel Networks’ review and
approval its corporate-wide Environmental Policy.

21.3 VOC Free and Lead-Free Technology

Where applicable, Flextronics shall use VOC-free technology in the provision of Repair Services.

Except in the circumstances where exemptions allowing the use of lead shall apply under applicable
law, Flextronics agrees to have fully qualified and be ready to deploy lead-free technology in the
Repair Facilities by [•]. Such implementation shall include lead-free components to the
extent required in a Virtual Systems House Agreement or in the relevant bill of material. The
Parties acknowledge the required use of lead-free components may involve different components and
costs attributable to these different components in the Price, and the Parties will allocate such
costs to Nortel Networks unless otherwise agreed. Nortel Networks and Flextronics agree to address
jointly any problems of supply.

If Flextronics can demonstrate that compliance with any VOC-free or lead-free requirements 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 VOC-free and lead-free
requirements may result in decreases or increases to costs and that it will bring any such change
to Nortel Networks’ attention. Nortel Networks shall be responsible for those associated costs that
result from Flextronics bringing operations in legacy Repair Facilities into initial compliance
with regulations regarding lead and VOC-free technology.

	21.4	 	European Union (“EU”) Environmental
Directives 

21.4.1

Compliance
	 
	 	 	Flextronics 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.

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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

Flextronics shall use only packaging that complies with the Canadian Code of Preferred Packaging
Practices and equivalent legislated requirements, as applicable. Flextronics shall strive to
minimize all product packaging and to design packaging that delivers reusable/returnable packaging
options or is constructed of recyclable materials.

	21.6	 	INTENTIONALLY LEFT BLANK
	 
	21.7	 	Collaborate on Environmental Initiatives

Flextronics and Nortel Networks agree to collaborate in good faith on environmental initiatives
aimed at addressing particular customer and market requirements.

	21.8	 	Hazardous Materials

Flextronics shall supply to Nortel Networks a list of all components used in the Repair of a
Product which are classified as toxic or hazardous under applicable laws and regulations,
information on the safe handling of each Repaired Product and any pertinent information concerning
any adverse effects on people or the environment that may result from use of,

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exposure to, or
disposal of such Repaired Product. [•]. Nortel Networks shall cooperate with Flextronics to
facilitate and minimize the damages, costs and expenses of any recall or prohibition against such
use.

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SECTION 22

CONFIDENTIALITY AND PROPRIETARY INFORMATION

22.1 Restriction on Disclosure and Use of Confidential Information

Any Nortel Company Proprietary Information provided or made available by any Nortel Company to
Flextronics and any Flextronics Proprietary Information provided or made available by Flextronics
to Nortel Networks shall be deemed for the purposes of this Agreement to be “Confidential
Information” of the person disclosing (“discloser”) such information to another person
(“recipient”), except if such information disclosed to recipient is (a) in or becomes part of the
public domain through no fault of recipient; (b) disclosed to recipient by a third party without
breach of any obligation or other restriction; (c) known to recipient at the time of disclosure and
has been so documented prior to receipt thereof; (d) independently developed by recipient without
access to any information furnished to it by discloser and has been or is so documented; or (e)
disclosed by recipient to the extent required to be disclosed pursuant to any applicable law or
order, decree or directive of any competent judicial, legislative or regulatory body or authority,
provided that the recipient shall have provided prior notice to discloser of such requirement and
an opportunity for discloser to take action to contest or attempt to prohibit or limit such
disclosure as permitted by law and such information shall continue to be Confidential Information
for the purposes hereof to the extent disclosure is prohibited or limited by law. All Confidential
Information shall be owned and remain the sole and exclusive property of discloser, and all rights
to Confidential Information made available to recipient by discloser shall be held in trust by
recipient for the exclusive benefit of discloser. All Confidential Information of discloser shall
be held in confidence by recipient and, if in a form of any physical media of any kind, returned by
recipient upon request of discloser. Recipient shall not (i) reproduce the Confidential
Information of discloser without the written consent of discloser or (ii) use the Confidential
Information for any purpose other than the performance by recipient of its obligations under this
Agreement. Each Nortel Company and Flextronics shall cause each of their respective employees,
consultants, agents and representatives who shall have access to Confidential Information to sign a
written agreement setting forth confidentiality obligations of each such employee, consultant,
agent and representative, substantially in the form of Exhibits 9-1 and 9-2, which are attached
hereto and incorporated herein by reference. Flextronics shall be liable for and shall indemnify
NNL and each Nortel Company, its officers, directors, employees, subcontractors, agents against any
losses, claims, costs or expenses arising from the failure of Flextronics or its employees,
consultants, agents and representatives against any losses, claims, costs or expenses arising from
the failure of Flextronics or its employees, consultants, agents and representatives, for whatever
reason, to execute the form of agreement set out in Exhibit 9 hereof or to comply with the terms
thereof, and Nortel Networks shall be liable for and shall indemnify Flextronics, its officers,
directors, employees, subcontractors, agents against any losses, claims, costs or expenses arising
from the failure of each Nortel Network Company or NNL, its respective employees, consultants,
agents and representatives for any corresponding failures by Nortel Company to Flextronics in
respect of such obligations. Each Party acknowledges that monetary damages may not be adequate in
the event of a default of this Section, and the discloser shall be entitled to injunctive or other
affirmative relief and/or to give notice of default pursuant to this Agreement, or both.

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22.2 Publicity

Flextronics shall not in any advertising, sales promotion materials, press releases or any other
publicity matters use the name “NORTEL NETWORKS”, “Northern Telecom”, “BNR”, “Bell-Northern
Research”, “Nortel Networks Technology” or the name of any Affiliate, or any variation thereof or
language from which the connection of said names may be implied, nor shall Flextronics disclose or
advertise in any manner the nature of Products repaired or Repair Services which are part of the
repair process or any order by Nortel Networks hereunder, or the fact that Flextronics has entered
into this Agreement, unless Flextronics is otherwise required to make such disclosure under
applicable law or Nortel Networks, in its sole discretion, grants Flextronics prior written
permission to do so.

No Nortel Company shall in any advertising, sales promotion materials, press releases or any other
publicity matters use the name “FLEXTRONICS CORPORATION”, “Flextronics”, or any variation thereof
or language from which the connection of said names may be implied, nor shall any Nortel Company
disclose or advertise in any manner the fact that Nortel Networks has entered into this Agreement,
unless Nortel Networks is otherwise required to make such disclosure under applicable law or
Flextronics, in its sole discretion, grants Nortel Networks prior written permission to do so.

SECTION 23

INSURANCE

23.1 General Liability Insurance

Flextronics shall maintain during the Term, with insurers with an A.M. Best rating of A- or better
policies providing the following insurance coverage: 1) general umbrella liability insurance
(including contractual and products liability ) with limits of either [•] combined single
limit per occurrence for bodily injury and property damage or [•] bodily injury per
occurrence and [•] property damage per occurrence, 2) workers’ compensation insurance and
other employee insurance coverage required by law, and employer’s liability insurance with limits
of [•] 3) owned or non-owned automobile liability with limits of [•] and 4) Errors &
Omissions insurance with limits of not less than [•].

Nortel Networks shall maintain during the Term, insurance coverage: 1) general liability insurance
(including contractual, products liability and broad form vendors’ endorsement) with limits of
either [•] combined single limit per occurrence for bodily injury and property damage or
[•] bodily injury per occurrence and [•] property damage per occurrence, 2) workers’
compensation insurance and other employee insurance coverage required by law, and employer’s
liability insurance with limits of [•].

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Flextronics’ insurance shall be primary and non-contributory (except with respect of Errors &
Omissions referred to in subparagraph 4) above, which may be primary and non-contributory as
regards negligence or negligent acts, as applicable) with respect to any insurance that Nortel
Networks may have and each applicable Nortel Company shall be named under Flextronics’ general
liability insurance as an additional insured.

23.2 Property and Business Insurance

Flextronics shall provide evidence satisfactory to Nortel Networks that its property and business
are adequately insured up to at least [•] against all risks of loss or damage, including
business interruption, for at least the amount of the Maximum Foreseeable Loss as defined within
the insurance industry.

23.3 Certificate of Insurance

Prior to the commencement of the Initial Term and upon demand of Nortel Networks thereafter,
Flextronics shall furnish to Nortel Networks a certificate or certificates of insurance evidencing
that all insurance required in this Section 23 is in effect. Flextronics will endeavor to provide
at least 30 days notice of any change in insurance coverage which would impact compliance with the
requirements of this Section 23.3. Flextronics shall in such event furnish a new certificate in
the event of cancellation or expiration of any insurance evidencing that replacement coverage is in
effect.

23.4 Business Continuity

Flextronics acknowledges that the existence, content and adequacy of its Business Continuity Plan
shall be used by Nortel Networks as part of initial and ongoing assessment criteria for review of
Flextronics’ overall performance under this Agreement. Flextronics shall maintain its property
conservation program to address risks in its worldwide locations. Flextronics will share a
description of this program with Nortel Networks, and shall provide Nortel Networks annually, or as
requested upon reasonable notice, information related to property protection and insurer’s
engineering recommendations for the locations relevant to the Repair Services. Nortel Networks
and/or its insurance companies shall be allowed to inspect any Site at any time upon reasonable
notice and during normal business hours and to recommend to Flextronics any appropriate protection
improvements. Nortel Networks and Flextronics shall review any recommendations made as a result of
such inspection and Flextronics shall implement any recommendations or alternative solutions which
are mutually agreed.

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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

Upon expiration or any termination of this Agreement by either Party:

	(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

On notice from Nortel Networks to Flextronics after a determination that an expiration or
termination of this Agreement will occur, Flextronics shall provide to Nortel Networks any and all
termination services (collectively, the “Termination Assistance Services”) reasonably requested by
Nortel Networks to facilitate the orderly transfer of responsibility for the Repair Services to
Nortel Networks or its designee. The Termination Assistance Services may include:

	 	(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

Except as otherwise agreed within the scope of Termination Assistance Services, Flextronics will
have no obligation to provide Repair Services or any part thereof after the Conclusion Date.

	25.3	 	Termination Assistance Period

Flextronics shall provide the Termination Assistance Services, and Nortel Networks shall pay
applicable fees for provision of Termination Assistance Services for a period of up to four (4)
months after the Conclusion Date (“Termination Assistance Period”), at [•].

SECTION 26

DISPUTE RESOLUTION

	26.1	 	Internal Dispute Resolution

Except as otherwise expressly provided in this Agreement, the Parties initially shall attempt to
resolve all disputes, claims, questions or differences between the Parties with respect to the
interpretation of any provision of this Agreement or with respect to the performance by Contractor
or Customer of their respective obligations hereunder (a “Dispute”), informally in accordance with
the dispute resolution procedure set forth in Exhibit 10.

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SECTION 27

GENERAL PROVISIONS

	27.1	 	Access to Facilities

Nortel Networks shall have the right to review Flextronics’ facilities, operations, and procedures
as they relate to the Repair Services, at any reasonable time with adequate prior notice for
purposes of determining compliance with the requirements of this Agreement. From time to time a
Customer may request the right to review Flextronics facilities and operations for the purpose of
qualification. Flextronics shall permit such reviews with notice of five (5) Business Days,
provided that Flextronics does not consider the Customer to be a competitor of Flextronics, and
such Customer signs an acceptable non-disclosure agreement. Flextronics shall not grant access to
those areas of its facilities where Repair Services are conducted to a Competitor of Nortel
Networks without Nortel Networks’ express written permission.

	27.2	 	Reporting

Flextronics shall provide Nortel Networks with the reports as set forth herein and in the Statement
of Work or as mutually agreed by the parties consistent with the appropriate management of the
Repair Services.

	27.3	 	Documentation

Flextronics shall maintain documentation and information relating to the Repair Services and
Specifications, and updates thereto consistent with industry best practices, but in no event less
than [•].

	27.4	 	Audits
	 
	 	 	 27.4.1 Agreement Compliance
	 
	 	 	Upon 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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make disclosure to Nortel Networks of information relating to any customer of Flextronics.
Flextronics agrees to permit the Accounting Firm to inspect any of Flextronics’ facilities
where Flextronics’ records are located or stored, and to fully cooperate with such audits
including, without limitation, giving the Accounting Firm full access to all such facilities
and all records, documents, and personnel related to the Products. Nortel Networks shall
give reasonable notice to Flextronics of its desire to conduct such an audit. Audits shall
occur during normal business hours and, except when Nortel Networks in its sole discretion
believes a violation of this Agreement has occurred, shall occur not more often than once in
any twelve (12) month period.

[•]

27.4.2 Control & Security Compliance

Upon five (5) Business Days notice to Flextronics and during normal business hours, Nortel
Networks shall be permitted to audit, inspect and/or verify relevant Flextronics’ operations
and other areas of service to confirm that (i) Flextronics is maintaining controls and
security measures specific to Flextronics’ fulfillment of its obligations to Nortel Networks
pursuant to this Agreement (ii) billings to Nortel Networks are correct, (iii) reports
relating to Flextronics’ performance are complete and accurate, (iv) records relating to
consigned inventory are accurate, complete, valid and appropriately valued, and (v) proof of
shipping are accurate, complete and valid (‘Inspections’). Nortel Networks shall clearly
state the nature of the Inspection being requested.

Such Inspections shall be limited to information that relates directly to Flextronics’
fulfillment of its obligations pursuant to this Agreement. Nortel Networks may conduct
Inspections itself or with the assistance of a third party organization acceptable to
Flextronics, provided that the third party organization executes a confidentiality agreement
reasonably acceptable to Flextronics, at Nortel Networks expense, as appropriate.
Inspections may be made as frequently as Nortel Networks reasonably deems appropriate.

Flextronics will provide to Nortel Networks and its respective auditors (including internal
audit staff), inspectors, regulators, consultants and other representatives (collectively
‘Inspectors’) as Nortel Networks may from time to time designate in writing, reasonable
access to, without limitation: (i) Flextronics’ facilities where the services and/or
operations are being performed; (ii) Flextronics’ personnel and subcontractors providing any
of the services/operations; and (iii) data and records, and (iv) operational or security
audit reports and findings including remediation plans in the possession of Flextronics
relating to any of the relevant services and/or operations. Flextronics will provide such
access to Inspectors upon reasonable written notice by Nortel Networks during regular
business hours, provided that all such persons adhere to Flextronics’ customary security and
safety policies and have executed a confidentiality agreement reasonably acceptable to
Flextronics.

Upon request by Nortel Networks and with Flextronics’ prior consent, not to be unreasonably
withheld, delayed or conditioned, Flextronics will assist and cooperate with Nortel Networks
Inspectors in connection with Inspection functions, including the

Master Repair Services Agreement

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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

A Party affected by an event of Force Majeure shall be released without any liability on its part
from the performance of its obligations (other than an obligation to pay money) under this
Agreement, but only to the extent and only for the period that its performance of such obligations
is prevented by circumstances of Force Majeure and provided that such Party shall have given prompt
notice to the other Party. Such notice shall include a description of the nature of the event of
Force Majeure, its cause, and its possible consequences. The Party claiming circumstances of Force
Majeure shall promptly notify the other Party of the conclusion of the event.

	27.6	 	Notices

All demands, notices, communications and reports provided for in this Agreement shall be in writing
and shall be either sent by facsimile transmission with confirmation to the number specified below
or personally delivered or sent by reputable overnight courier services (delivery charges prepaid)
to any party at the address specified below, or at such address, to the attention of such other
person, and with such other copy as the recipient party has specified by prior written notice to
the sending party pursuant to the provisions of this Section:

Nortel Networks:

Nortel Networks

3500 Carling Avenue

Ottawa, Ontario

Canada K2H 8E9

Attention: Vice President Supply Management

With a copy to:

NNL Corporate Secretary

8200 Dixie Road, Suite 100,

Brampton, Ontario

Canada L6T 5P6

Master Repair Services Agreement

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Flextronics:

Flextronics Telecom Systems Ltd.

802 St. James Court,

St. Denis Street,

Port Louis,

Mauritius

Phone: 230 212 7600

Fax: 230 210 9168

Attention: President

With a copy to:

Flextronics International Inc.

Room 908, Dominion Centre,

43-59 Queen’s Road East, Wanchai, Hong Kong

Attention: President

With a copy to:

Corporate Legal Department at the address above

Any such demand, notice, communication or report shall be deemed to have been given pursuant to
this Agreement when delivered personally, when confirmed if by facsimile transmission, or on the
Business Day after deposit with a reputable overnight courier service, as the case may be.

27.7 Independent Contractor

This Agreement shall not constitute Flextronics the agent or legal representative of Nortel
Networks for any purpose and Flextronics shall not hold itself out as an agent of Nortel Networks
other than as expressly provided in this Agreement. This Agreement creates no relationship of
joint venturers, partners, associates, employment or principal and agent between the Parties, and
both Parties are acting as independent contractors. Neither Party shall have the right to exercise
any control or direction over the operations, activities, employees or agents of the other Party in
connection with this Agreement. Other than as expressly permitted or provided elsewhere in this
Agreement, Flextronics is not granted any right or authority to, and shall not attempt to, assume
or create any obligation or responsibility for or on behalf of any Nortel Company or Affiliate.
Flextronics shall have no authority to bind any Nortel Company or Affiliate to any contract,
whether of employment or otherwise, and Flextronics shall bear all of its own expenses for its
operations, including the compensation of its employees, contractors, representatives and agents
and the maintenance of its offices, service, warehouse and transportation facilities. Flextronics
shall be solely responsible for its own employees and sales people and for their omissions, acts
and the things done by them. Other than as expressly permitted or provided elsewhere in this
Agreement, Nortel Networks expressly disclaims any liability for any commitments on behalf of
Nortel Networks made by Flextronics.

Master Repair Services Agreement

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27.8 Flextronics Responsible for its Contractors

Flextronics may subcontract Repair Services only with Nortel Networks’ prior written approval,
which approval may be withheld in Nortel Networks’ sole discretion. The approval by Nortel
Networks of any subcontractor chosen by Flextronics shall in no way be construed to relieve
Flextronics of any of its duties, responsibilities and obligations to Nortel Networks under this
Agreement.

27.9 Assignment

Except as expressly set forth in this Agreement, neither this Agreement nor any license or rights
hereunder, in whole or in part, shall be assignable or otherwise transferable whether by merger,
operation of law or otherwise, without the prior written consent of the other Party. Any change of
control in fact of a Party shall be deemed to constitute an assignment for the purposes of this
Section.

Subject to the condition that Flextronics is satisfied, upon reasonable evidence, that such future
assignee possesses sufficient creditworthiness and future assignee has accepted the assignment
without reservation, NNL may assign this Agreement or any portion thereof (i) to any of NNL’s
Subsidiaries or company of which NNL becomes a Subsidiary; or (ii) to a person or entity into which
it has merged or which has otherwise succeeded to all or substantially all of its business and
assets to which this Agreement pertains, by purchase of stock, assets, merger, reorganization or
otherwise, and which has assumed in writing or by operation of law its obligations under this
Agreement. Any attempted assignment in violation of the provisions of this Section shall be void.
In any assignment in case (ii) above, the person or entity into which NNL has merged or which has
otherwise succeeded to all or substantially all of NNL’s business and assets, shall agree in
writing to be bound by the terms of this Agreement.

Flextronics agrees to give NNL, to the extent legally permissible, notice of the direct or indirect
acquisition by any entity of (1) shares in the capital of Flextronics or of any Subsidiary of
Flextronics, if rights sufficient to elect a majority of the board of directors of such entity
(pursuant to a shareholders agreement or otherwise) are attached to such shares or such Subsidiary
of Flextronics ceases to be a Subsidiary of Flextronics, or (2) substantially all of the assets of
Flextronics or of such Subsidiary of Flextronics.

27.10 Severability

If any provision of this Agreement is held illegal, invalid or unenforceable by any competent
authority in any jurisdiction, such illegality, invalidity or unenforceability shall not in any
manner affect or render illegal, invalid or unenforceable such provision in any other jurisdiction
or any other provision of this Agreement in any jurisdiction, and such invalid or unenforceable
provision shall be replaced for the purposes of the jurisdiction in which it is held to be illegal,
invalid or unenforceable with an enforceable clause which most closely achieves the result intended
by the invalid provision.

Master Repair Services Agreement

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27.11 Governing Law; Waiver of Jury Trial

All issues and questions concerning the construction, validity, enforcement, interpretation and
performance of this Agreement, the rights and obligations arising hereunder and any purchase made
hereunder shall be governed by the laws of the Province of Ontario and the federal laws of Canada
applicable therein, without reference to the UNCITRAL Conventions on Contracts for the
International Sale of Goods and without giving effect to any choice of law or conflict of law,
rules or provisions (whether of such Province or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the Province of Ontario. In furtherance of
the foregoing, the internal Laws of the Province of Ontario shall control the interpretation and
construction of this Agreement, even though under that jurisdiction’s choice of Law or conflict of
Law analysis, the substantive Law of some other jurisdiction would ordinarily apply.

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

The parties hereto submit to and consent to the non-exclusive jurisdiction of Courts located in
each Province within Canada.

27.13 Entire Agreement; Amendments

This Agreement, including all Exhibits and Schedules thereto, and the other transaction documents
referenced therein, constitutes the entire agreement between the parties pertaining to the subject
matter thereof and such Exhibits and Schedules thereto are incorporated herein by reference. This
Agreement supersedes all prior agreements and understandings between the parties, written or oral,
with respect to such subject matter. No representation or statement of any kind made by a
representative of either Party that is not stated in this Agreement shall be binding. The
provisions of this Agreement may be amended or waived only by an instrument in writing signed by
the authorized representatives of each Party, except as otherwise expressly provided in this
Agreement.

27.14 Most Favored Customer

[•].

27.15 Construction

Unless the context requires otherwise, all words used in this Agreement in the singular number

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shall extend to and include the plural, all words in the plural number shall extend to and include
the singular, and all words in any gender shall extend to and include all genders.

Wherever the Agreement uses the expression “including” or “such as” or similar expressions denoting
examples, such expressions shall be interpreted as being “without limitation”.

27.16 Headings

The headings used in this Agreement are for the purpose of reference only and shall not affect the
meaning or interpretation of any provision of this Agreement.

27.17 Time of Essence

Time shall be of the essence of this Agreement, except as otherwise expressly provided in this
Agreement.

27.18 Agreement by All Flextronics Entities

Flextronics has entered into this Agreement for and on behalf of itself and its Subsidiaries.
Flextronics represents and warrants that it has full power and authority to negotiate this
Agreement for itself and for and on behalf of each of its Subsidiaries.

27.19 Language

The Parties have requested that this Agreement and all documents contemplated thereby or relating
thereto be drawn up in the English 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

Master Repair Services Agreement

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IN WITNESS WHEREOF, the Parties hereto have signed this Agreement by their duly authorized
representatives, to be effective as of the Effective Date, although actually signed by the Parties
on the dates below their respective signatures.

	 	 	 	 	 	 	 	 	 
	NORTEL NETWORKS LIMITED	 	FLEXTRONICS TELECOM SYSTEMS, LTD.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ CHAHRAM BOLOURI
 

	 	By:
	 	/s/ MANNY MARIMUTHU
 

	 	 
	 
	 	 	 	 	 	 	 	 
	
Print Name: Chahram Bolouri
	 	Print Name: Manny Marimuthu	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 President, Global Operations
	 	Title:
	 Authorized Signatory	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Print Name:

	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 

[Signature page to Repair Agreement]exv10w9

 

EXHIBIT 10.9

Confidential Portions omitted and filed separately with the Securities and Exchange

Commission. Bullet points denote omissions.

MASTER CONTRACT LOGISTICS SERVICES AGREEMENT

between

NORTEL NETWORKS LIMITED

and

FLEXTRONICS TELECOM SYSTEMS LIMITED

Dated as of June 29, 2004

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	Section 1	 	 	 	 	 	 
	SCOPE OF THE RELATIONSHIP	 	 	11	 
	 
	 	1.1	 	Expectations	 	 	11	 
	 
	 	1.2	 	Information Access	 	 	11	 
	 
	 	1.3	 	Commitments and Obligations	 	 	12	 
	 
	 	1.4	 	Competitiveness	 	 	12	 
	 
	 	1.5	 	Structure of the Agreement	 	 	12	 
	 
	 	1.6	 	Term	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	Section 2	 	 	 	 		 
	GOVERNANCE PROCESS	 	 	13	 
	 
	 	2.1	 	Transition Planning	 	 	13	 
	 
	 	2.2	 	Strategic Governance	 	 	13	 
	 
	 	2.3	 	Operations Governance	 	 	14	 
	 
	 	2.4	 	Monthly Operations Reviews	 	 	14	 
	 
	 	2.5	 	Resources for Service Support	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	Section 3	 	 	 	 		 
	ORDERING AND DELIVERING	 	 	15	 
	 
	 	3.1	 	Blanket Purchase Orders	 	 	15	 
	 
	 	3.2	 	Acceptance of Orders	 	 	15	 
	 
	 	3.3	 	INTENTIONALLY LEFT BLANK	 	 	15	 
	 
	 	3.4	 	Issuance of Orders via EDI	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	Section 4	 	 	 	 		 
	RISK OF LOSS	 	 	15	 
	 
	 	4.1	 	Risk of Loss	 	 	15	 
	 
	 	4.2	 	Title	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	Section 5	 	 	 	 		 
	DELIVERY PROCESS	 	 	16	 
	 
	 	5.1	 	Delivery Method	 	 	16	 
	 
	 	5.2	 	Packaging, Labelling and Nortel Networks Trade Marks	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	Section 6	 	 	 	 		 
	MATERIALS MANAGEMENT PROCESS	 	 	17	 
	 
	 	6.1	 	Delivery Facility	 	 	17	 
	 
	 	6.2	 	Flextronics Management Services	 	 	17	 
	 
	 	6.3	 	Warehousing	 	 	17	 
	 
	 	6.4	 	Management of Third Party Contracts	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	Section 7	 	 	 	 		 
	CHANGE MANAGEMENT	 	 	18	 
	 
	 	7.1	 	Joint Change Management Process	 	 	18	 
	 
	 	7.2	 	New Services	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	Section 8	 	 	 	 		 
	QUALITY	 	 	19	 
	 
	 	8.1	 	Performance Metrics and Report Cards	 	 	19	 
	 
	 	8.2	 	Industry Standards	 	 	21	 
	 
	 	8.3	 	Source Inspection	 	 	22	 
	 
	 	8.4	 	Service Quality	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	Section 9	 	 	 	 		 
	SERVICE COST MANAGEMENT PROCESS	 	 	22	 
	 
	 	9.1	 	Prices for Services	 	 	22	 
	 
	 	9.2	 	Payment, Taxes and Duties	 	 	23	 

( i )

 

	 	 	 	 	 	 	 	 	 
	 
	 	9.3	 	Financial Review and Targets	 	 	24	 
	 
	 	9.4	 	Forecasting	 	 	25	 
	 
	 	9.5	 	Audit	 	 	25	 
	 
	 	9.6	 	Cost Reduction with respect to Services described in Exhibit "1-A"	 	 	26	 
	 
	 	9.7	 	Cost Reduction with respect to Services described in Exhibit "1-B"	 	 	29	 
	 
	 	 	 	 	 	 	 	 
	Section 10	 	 	 	 		 
	BUSINESS CONTINUITY	 	 	30	 
	 
	 	10.1	 	Business Continuity Planning	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	Section 11	 	 	 	 		 
	WARRANTIES	 	 	31	 
	 
	 	11.1	 	Services	 	 	31	 
	 
	 	11.2	 	Return of Orders	 	 	32	 
	 
	 	11.3	 	General	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	Section 12	 	 	 	 		 
	INTELLECTUAL PROPERTY RIGHTS AND LICENSES	 	 	32	 
	 
	 	12.1	 	License to Nortel Company Product Information Granted	 	 	32	 
	 
	 	12.2	 	Limitations on Grant of License	 	 	32	 
	 
	 	12.3	 	Flextronics’ Inventions	 	 	33	 
	 
	 	12.4	 	Flextronics Retains Ownership of Flextronics Proprietary Information	 	 	33	 
	 
	 	12.5	 	Assignment of Inventions Agreements with Employees	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	Section 13	 	 	 	 		 
	INDEMNIFICATION	 	 	34	 
	 
	 	13.1	 	Intellectual Property Indemnification	 	 	34	 
	 
	 	13.2	 	Other Indemnification	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	Section 14	 	 	 	 		 
	LIMITATION OF LIABILITY	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	Section 15	 	 	 	 		 
	COMMUNICATION AND INFORMATION TRANSFER	 	 	36	 
	 
	 	15.1	 	Transmissions	 	 	36	 
	 
	 	15.2	 	Access to Nortel Networks Computer Systems by Flextronics	 	 	36	 
	 
	 	15.3	 	Flextronics Compatibility with Nortel Networks Computer Systems	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	Section 16	 	 	 	 		 
	EQUIPMENT FURNISHED BY NORTEL NETWORKS	 	 	37	 
	 
	 	16.1	 	Title to Equipment Furnished by Nortel Networks	 	 	37	 
	 
	 	16.2	 	Risk, Insurance and Maintenance of Equipment Furnished by Nortel Networks	 	 	37	 
	 
	 	16.3	 	Tracking of Equipment Furnished by Nortel Networks	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	Section 17	 	 	 	 		 
	LEGAL AND REGULATORY COMPLIANCE	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	Section 18	 	 	 	 		 
	INTERNATIONAL TRADE	 	 	38	 
	 
	 	18.1	 	Exports	 	 	38	 
	 
	 	18.2	 	Customs Invoice	 	 	38	 
	 
	 	18.3	 	Duty Drawback and Minimization	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	Section 19	 	 	 	 	 	 
	ENVIRONMENTAL POLICIES	 	 	40	 
	 
	 	19.1	 	Corporate Policy	 	 	40	 
	 
	 	19.2	 	European Union ("EU") Environmental Directives	 	 	40	 
	 
	 	19.3	 	Packaging Reusable and Recyclable	 	 	41	 
	 
	 	19.4	 	Disposal Policies	 	 	41	 

( ii )

 

	 	 	 	 	 	 	 	 	 
	 
	 	19.5	 	Collaborate on Environmental Initiatives	 	 	41	 
	 
	 	19.6	 	Hazardous Materials	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	Section 20	 	 	 	 		 
	CONFIDENTIALITY AND PROPRIETARY INFORMATION	 	 	41	 
	 
	 	20.1	 	Restriction on Disclosure and Use of Confidential Information	 	 	41	 
	 
	 	20.2	 	Publicity	 	 	42	 
	 
	 	 	 	 	 	 	 	 
	Section 21	 	 	 	 		 
	INSURANCE	 	 	43	 
	 
	 	21.1	 	General Liability Insurance	 	 	43	 
	 
	 	21.2	 	Property and Business Insurance	 	 	43	 
	 
	 	21.3	 	Certificate of Insurance	 	 	43	 
	 
	 	21.4	 	Business Continuity	 	 	44	 
	 
	 	 	 	 	 	 	 	 
	Section 22	 	 	 	 		 
	EXPIRATION OR TERMINATION	 	 	44	 
	 
	 	22.1	 	Termination	 	 	44	 
	 
	 	22.2	 	Intentionally left blank	 	 	46	 
	 
	 	22.3	 	Intentionally left blank	 	 	46	 
	 
	 	22.4	 	Effect of Expiration or Termination	 	 	46	 
	 
	 	 	 	 	 	 	 	 
	Section 23	 	 	 	 		 
	TERMINATION ASSISTANCE SERVICES	 	 	47	 
	 
	 	23.1	 	Scope of Termination Assistance Services.	 	 	47	 
	 
	 	23.2	 	Limit on Obligation to Provide Termination Assistance Services.	 	 	47	 
	 
	 	23.3	 	Termination Assistance Period.	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	Section 24	 	 	 	 		 
	ISSUE RESOLUTION AND ESCALATION PROCESS	 	 	48	 
	 
	 	24.1	 	Issue Resolution and Escalation Process	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	Section 25	 	 	 	 		 
	GENERAL PROVISIONS	 	 	48	 
	 
	 	25.1	 	Access to Facilities	 	 	48	 
	 
	 	25.2	 	Reporting	 	 	48	 
	 
	 	25.3	 	Documentation	 	 	48	 
	 
	 	25.4	 	Audits	 	 	48	 
	 
	 	25.5	 	Force Majeure	 	 	50	 
	 
	 	25.6	 	Notices	 	 	50	 
	 
	 	25.7	 	Independent Contractor	 	 	51	 
	 
	 	25.8	 	Contractor Responsible for its Contractors	 	 	52	 
	 
	 	25.9	 	Assignment	 	 	52	 
	 
	 	25.10	 	Severability	 	 	53	 
	 
	 	25.11	 	Governing Law	 	 	53	 
	 
	 	25.12	 	Consent to Jurisdiction	 	 	53	 
	 
	 	25.13	 	Entire Agreement; Amendments	 	 	53	 
	 
	 	25.14	 	Construction	 	 	54	 
	 
	 	25.15	 	Headings	 	 	54	 
	 
	 	25.16	 	Time of Essence	 	 	54	 
	 
	 	25.17	 	Agreement by All Contractor Entities	 	 	54	 
	 
	 	25.18	 	Most Favoured Customer	 	 	54	 
	 
	 	25.19	 	Language	 	 	54	 
	 
	 	25.20	 	Counterparts	 	 	54	 

( iii )

 

LOGISTICS EXHIBITS

Exhibit “1-A“Freight, Duty and Delivery Services

Exhibit “1-B“Logistics Operations Services

Exhibit “1-B“Schedule “A” Intentionally Left Blank

Exhibit “1-C“Strategic Logistics Services

Exhibit “2” Performance Metrics & Scorecard

Exhibit “2” Schedule “A” — Service Level Reports

Exhibit “3” Cost Reporting

Exhibit “3” Schedule “A” Cost Reduction Baseline and Measurement (Exhibit “1-A” Services)

Exhibit “3” Schedule “B” Cost Reduction Baseline and Measurement (Exhibit “1-B” Services)

Exhibit “3” Schedule “C” Nortel Networks programs to deliver OCR

Exhibit “3” Schedule “D” Flextronics programs to deliver ICR

Exhibit “4” Managed Contracts

Exhibit “5” Intentionally Left Blank

Exhibit “6” Nortel Networks’ Non-Disclosure Form

Exhibit “6-1“Flextronics’ Non-Disclosure Form

Exhibit “7” Issue Resolution and Escalation Process

Exhibit “8” UK Service Cessation

( iv )

 

Master Contract Logistics Services Agreement

     This Agreement is entered into between Nortel Networks Limited (formerly Nortel Networks
Corporation), a Canadian corporation with a place of business at 8200 Dixie Road, Suite 100,
Brampton, Ontario (“NNL”) and Flextronics Telecom Systems Limited, a company duly established under
the laws of Mauritius, and having its registered office located at Suite 802 St James Court, St
Denis Street, Port Louis, Mauritius, executed on June 29, 2004(“Execution Date”). As set out in the
Phased Closing Side Letter, dated as of the Execution Date, the Effective Date of this Master
Contract Logistics Services Agreement (the “Agreement”) shall be the date that the first Virtual
System House Agreement is executed (“Effective Date”). The Parties agree that the terms and
conditions of this Agreement shall come into effect for each VSHA executed as such VSHAs are
executed (“VSHA Effective Date(s)”).

     WHEREAS NNL is transferring certain telecommunication, product assembly, integration and test
activities, and repair activities (including the management or purchasing and other procurement
activities and customer order fulfillment activities) to Flextronics pursuant to the Asset Purchase
Agreement (the “Operations”).

     WHEREAS Flextronics International Ltd., a company duly established under the laws of
Singapore, and having its registered office located at 2 Changi South Lane, Singapore 486123 acting
through its Hong Kong branch office with offices at Room 908, Dominion Centre, 43-59 Queen’s Road
East, Wanchai, Hong Kong and NNL have executed that certain Performance Guarantee dated June 29,
2004;

     WHEREAS NNL wishes Flextronics (in connection with the Operations) to provide NNL certain
transportation and logistics services (which services are currently being provided by NNL’s
internal staff or by certain third party providers) relating to the material movement of Materials.

     WHEREAS NNL has agreed to purchase and Flextronics has agreed, upon and subject to the terms
and conditions set out herein, to provide the services as more particularly defined herein;

     NOW THEREFORE, in consideration of the mutual promises hereinafter set forth (the receipt and
sufficiency of which is hereby acknowledged), the Parties hereby agree as follows:

DEFINITIONS

“Affiliate” means individually or collectively:

	 	(a)	 	a joint venture or other cooperative business enterprise formed between Nortel
Networks and one (1) or more persons which are not part of or related to Nortel
Networks; and/or

( 5 )

 

	 	(b)	 	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” means the agreement between NNL and Flextronics executed on June 29,
2004 pursuant to which Flextronics has purchased certain assets pertaining to the business of NNL
and has made offers of employment to certain employees identified therein.

“Assists” means goods and services supplied directly or indirectly, free of charge or at a reduced
cost for use in connection with the production of imported goods, such as raw materials,
components, parts used incorporated into the imported goods, tools, dies, moulds and other
equipment used to produce the finished goods, any materials used to produce the finished goods
being imported, engineering, development work, art work, designs, plans, sketches undertaken
anywhere other than the country of import.

“Blanket Purchase Order” means an Order for Services which does not set forth a Delivery Date,
Shipping Date and/or specific quantities.

“Business Continuity Plan” has the meaning set forth in Section 10.1.

“Business Day” means, for the purposes of dealings between NNL and Flextronics hereunder, any day
other than Sunday, or a statutory holiday or otherwise scheduled holiday agreed to in writing by
the Parties, on which either of such Parties is closed for business.

“Class A” means items that are brand new and have not been installed in a Customer’s live network.

“Commencement Date” means the VSHA Effective Date for the last of the following System Houses to be
transferred: Calgary, Montreal, Monkstown, or Chateaudun; provided that the optical designers in
Ottawa and Monkstown and the logistics management and embedded physical repair in St. Laurent and
Calgary must have been transferred.

“Competitor” means any company with more than $50 million in revenues from the development or sale
of telecom, optical or wireless networking equipment.

“Confidential Information” means all information which can reasonably be considered to be
confidential and proprietary, whether transmitted electronically or in written form, relating to
the business, operations, processes or technology of either Party or any of its affiliates, which
shall include but not be limited to all data, reports, interpretations, financial statements,
forecasts and records containing or otherwise reflecting information concerning the Party or any of
its affiliates which a Party may receive from the other Party in connection with this Agreement,
including Flextronics Proprietary Information, Nortel Company Proprietary Information, business and
marketing strategies (including pricing policies, cost and profit information, Customer
information, supplier information), product development plans, information relating to the design
of equipment or facilities or products, trade secrets, together with other documents, which contain
or otherwise reflect information regarding a Party and/or any of its affiliates.

( 6 )

 

“Contact Centre” means the point of contact designated by Nortel Networks for its Customers.

“Control and Responsibility” means, for the purposes of Section 8.1.2 [• ].

“Currency Conversion” means a factor used in calculating Price, or any part thereof, for purchases
in a currency other than the currency in which Nortel Networks is required to pay Flextronics
hereunder, based on a rolling three (3) month window for the exchange of such other currency into
such payment currency required from Nortel Networks as published by the Royal Bank of Canada from
time to time (the “Exchange Rate”). Currency fluctuations shall be measured when the invoices are
produced. If there is a fluctuation of ±5% in the Exchange Rate from the preceding month, the
Currency Conversion factor shall be adjusted to reflect the Exchange Rate in the current months
invoice.

“Customer” means Nortel Networks’ customers which receive Materials delivered pursuant to the
Services provided by Flextronics.

“Delivery Date” means the date when the Materials are to be delivered to the Delivery Location.

“Delivery Facility” means the applicable Flextronics facility from which Materials are shipped at
the direction of Flextronics to the Delivery Location.

“Delivery Location” means the location specified in an Order For Materials to which the Materials
shall be delivered or to any applicable stocking location.

“Dollar” or “$” means U.S. dollars.

“EDI” means electronic data interchange of information related to Orders.

“Flextronics” means Flextronics Telecom Systems Limited, and any other Person that directly or
indirectly Controls, or is under common Control with, or is Controlled by, Flextronics Telecom
Systems Limited. For the purposes of this definition, “Control”, including, with its correlative
meanings, “Controlled by” and “under common Control with”, has the meaning ascribed thereto in the
Canada Business Corporations Act.

“Flextronics Invention” means any innovation, improvement, idea or feature, whether or not
patentable or registerable, which is conceived or created in the course of the performance by
Flextronics of Services, but shall not include Product Specific Inventions.

“Flextronics Proprietary Information” means information, technology, processes, or other
proprietary property, including copyrights, trade secrets, know-how, mask work rights, any waiver
to moral rights, patents and/or patent applications in any form or medium developed or acquired by
Flextronics or its licensors other than Nortel Networks, but for greater certainty, does not
include the following: (i) Nortel Networks Proprietary Information or such information or processes
listed above which are derived from Nortel Networks Proprietary Information; (ii) Product Specific
Inventions; (iii) Orders for Materials; (iv) Orders and all deliverables
resulting from the provision of Services; (v) Nortel Networks Product Information; (vi) property
 

( 7 )

 

furnished by Nortel Networks pursuant to Section 16; and (vii) such information, technology,
processes, or other methods developed or arising out of Services funded by Nortel Networks under
this Agreement.

“Flextronics System” means all software and systems used by Flextronics in the performance of this
Agreement.

“Force Majeure” means all acts or events beyond the reasonable control of a Party. This definition
shall not include any act or event that would have been prevented, or the effects of which would
have been substantially mitigated, by implementation of a Business Continuity Plan in accordance
with best practices in the logistics industry for telecommunications and electronics products by
Flextronics as required under Section 10.1, unless Flextronics demonstrates that it has made a good
faith effort to implement such a plan. For clarity, the following will be considered an event of
Force Majeure: an act of God, act or decree of governmental or military bodies, strike, lock-out,
fire, casualty, flood, earthquake, war, epidemic, destruction of logistics facilities, riot,
insurrection; provided however a Party’s failure to resolve its own labour difficulties such as
strike or lock-out shall only be considered an event of Force Majeure if that Party (i) has
included specific action plans related to strikes and lock-outs in its Business Continuity Plan
(ii) is in compliance with fair labour practices under the law of the applicable jurisdiction, and
(iii) has made commercially reasonable efforts to resolve such labour difficulties.

“Freight and Duty” means the cost of freight and duty in respect of the delivery of Materials from
the Delivery Facility to the applicable Delivery Location.

“Government Entity” means any federal, provincial, state, municipal or other governmental
authority, domestic or foreign, or any entity exercising executive, legislative, judicial,
regulatory or administrative function of government.

“Intellectual Property Rights” means all patents, copyrights, trade secrets and other proprietary
rights related to the Nortel Company Product Information.

“Materials” includes both products manufactured by Flextronics pursuant to the MCMSA and material
purchased by Flextronics on behalf of Nortel Networks.

“Materials Purchase Price” has the meaning given to the term “Price” in the MCMSA.

“MCMSA” means the Amended and Restated Master Contract Manufacturing Agreement dated June 29, 2004,
between NNL and Flextronics with respect to manufacturing services to be provided to Nortel
Networks relating to the products specified therein.

“Nortel Company” means NNL or a Subsidiary of NNL.

“Nortel Networks” means NNL or, as applicable, any Nortel Company that has become a Party to this
Agreement by issuing an Order, a Blanket Purchase Order or an Order for Materials under this
Agreement.

( 8 )

 

“Nortel Company Inventory” means Materials held and managed by Flextronics but owned by Nortel
Networks.

“Nortel Company Product Information” means all know-how, processes and procedures, product
architecture, specifications, designs, design information, drawings, artwork, manufacturing
information and data, circuit schematics, stocklists, assembly drawings, drill data, wiring
diagrams, functional schematics, piece part drawings (magnetics, sheet metal and cable assembly),
tooling and test routines, programs and data, any other information and materials, functional
description and technical or business information or data, computer programs, technology,
inventions, discoveries, techniques, which may be disclosed orally, visually, in writing, in
machine recognizable form or in any other fixed form relating to Materials and required for the
delivery of the Services.

“Nortel Company Proprietary Information” means:

	 	a)	 	Programs;
	 
	 	b)	 	Nortel Company Product Information;
	 
	 	c)	 	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;
	 
	 	d)	 	confidential or non public business information including without limitation,
ideas, formulae, plans, proposals, designs, schematics, drawings, flow charts, product
and process specifications, trade secrets, know how, technical data, algorithms,
databases, and technical reports, and customer, marketing and financial information;

embodied in any form or medium and owned or developed by or on behalf of a Nortel Company or
acquired from its licensors with rights to disclose or sublicense that pertains to a Nortel
Company’s business, including products and their design, manufacture, use and testing, systems,
specifications and all deliverables resulting from the Services, and Product Specific Inventions or
any Flextronics Proprietary Information.

“Nortel Networks Trade-Marks” mean words, designs, shapes, configurations, guises or brands that
serve as indications that the origin of packaging or Materials is Nortel Networks and includes
model numbers and product designations as used both internally and externally on the packaging or
Materials or in conjunction with their sale or other distribution.

“Operations” means those certain telecommunication, product assembly, integration and test
activities and repair activities (including the management or purchasing and other procurement
activities and customer order fulfillment activities) that Nortel Networks is transferring to
Flextronics pursuant to the Asset Purchase Agreement.

( 9 )

 

“Order(s)” means either the “hard copy” document or EDI used by Nortel Networks to order Services
under this Agreement. For purposes of this Agreement, a reference to an Order shall include a
Blanket Purchase Order.

“Order(s) For Materials” means an order placed by Nortel Networks to Flextronics for the purchase
of Materials.

“Order Fulfillment” means the preparation of Materials for shipment, including all applicable
documentation, in accordance with the provisions of this Agreement.

“Party” means either Nortel Networks or Flextronics and “Parties” shall mean both Nortel Networks
and Flextronics.

“Person” means an individual, a partnership, a corporation, an association, a limited liability
company, a joint stock company, a trust, a joint venture, an unincorporated organization or a
Government Entity.

“Price” means the price paid by Nortel Networks to Flextronics with respect to any applicable
Services provided under this Agreement, as such amount is defined in Section 9.1.

“Product Specific Inventions” means Flextronics innovations, improvements, ideas or features
relating to or incorporated into the Materials, but not including any such innovations, ideas or
feature relating solely to the material movement of the Materials.

“Programs” means software used or retained for use in the provision of Services, in whatever form,
including that which is ROM resident, listings, flowcharts, logic diagrams, operating instructions,
and any other related documentation.

“Replacement Value” means the cost to Nortel Networks of replacing property furnished to
Flextronics pursuant to Section 16 of this Agreement.

“SCO” or “Service Change Order” means a direction in the form of a service change order to make a
change to Services.

“Service Change Impact Form” means the form to be completed by Flextronics in response to a
proposed change to the Services, which form shall contain, at a minimum, an estimate of the time
necessary to complete the change and the increase or decrease, if any, in the Price of the relevant
Services.

“Service Exhibits” means, collectively, Exhibit “1-A” – Freight, Duty and Delivery Services,
Exhibit “1-B” – Logistics Operations Services, and Exhibit “1-C” – Management of Third Party
Service Providers.

“Services” means transportation and logistics services (which services are currently being provided
by Nortel Networks’ internal staff or by certain third party providers) relating to the
material movement of Materials to an applicable Delivery Location, such services as more
particularly described in the Service Exhibits.

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“Shared Services Agreement” means the Shared Services Agreement entered into between NNL and
Flextronics as of the Effective Time.

“Shipping Date” means the date when Materials are tendered by Flextronics to a carrier at the
Delivery Facility for shipment to the Delivery Location.

“Subsidiary” means any corporation with respect to which a specified Person (or a Subsidiary
thereof) directly or indirectly owns more than fifty percent (50%) of the issued and outstanding
equity securities or securities convertible into such securities or has the power to vote or direct
the voting of sufficient securities to elect a majority of the directors.

“TDI” means technical data interchange by electronic means.

“Term” has the meaning set forth in Section 1.6.

“Virtual System House Agreement” or “VSHA” has the meaning set forth in the MCMSA.

“Year” means any twelve month period following the Commencement Date or annual anniversary of the
Commencement Date.

“Year One” means the twelve months following the Commencement Date.

“Year Two” means the twelve months following the first anniversary of the Commencement Date.

“Year Three” means the twelve months following the second anniversary of the Commencement Date.

“Year Four” means the twelve months following the third anniversary of the Commencement Date.

Section 1

SCOPE OF THE RELATIONSHIP

	1.1	 	Expectations

Nortel Networks and Flextronics will collaborate to provide a variable cost infrastructure to
deliver Materials to Customers.

	1.2	 	Information Access

Flextronics will have access to the Nortel Networks Product Information, to the extent it is
relevant for the provision of the Services. To enable Flextronics to perform the Services Nortel
Networks shall provide relevant information reasonably required by Flextronics.

( 11 )

 

	1.3	 	Commitments and Obligations

Nortel Networks shall maintain a central Contact Centre to which Customers shall be instructed to
contact Nortel Networks regarding the provision of Services. During the Term of this Agreement,
and provided Flextronics is not in material breach of this Agreement, Nortel Networks agrees to
purchase from Flextronics [• ].

Flextronics covenants and agrees to perform the Services in accordance with terms of this Agreement
and in accordance with Nortel Networks workmanship standards as set out in this Agreement and any
Exhibits attached hereto or any more stringent standard indicated herein or mutually agreed to at a
later date.

	1.4	 	Competitiveness

If Flextronics fails to remain Competitive with its competitors with respect to the Services, then
Nortel Networks may source such Service from another supplier. Notwithstanding the foregoing,
Nortel Networks will not transfer the Service if Supplier becomes Competitive within forty-five
(45) days from notification by Nortel Networks that Supplier has failed to remain Competitive, as
defined below. For the purposes of this Section, “Competitive” means terms and conditions taken as
a whole that are more favourable to Nortel Networks, as determined in a “bona fide benchmarking”
exercise or as provided in a bona fide quote from a third party considering price, service quality,
delivery interval, service commitments, and other criteria identified by Nortel Networks in writing
to Flextronics. A “bona fide benchmarking exercise” shall be considered to be one performed by an
independent recognized benchmarking firm which is (i) selected by Nortel Networks from those
companies which are regularly engaged in the logistics industry, or other consultant as agreed
between the Parties, (ii) is not a competitor of Flextronics and (iii) which has executed a
non-disclosure agreement reasonably satisfactory to Flextronics. All fees and charges paid to such
benchmarking firm shall be borne by Nortel Networks, and such fees and charges shall not be
contingent upon reaching a conclusion favourable to Nortel Networks. Each Party shall have the
opportunity to advise the benchmarking firm of any information or factors that it deems relevant to
the conduct of the benchmarking, with the intention of providing an “apples to apples” comparison,
so long as such information is disclosed to the other Party. The benchmarking firm shall provide
the written reports and the core data resulting from the benchmarking to both Nortel Networks and
Flextronics, including the factors actually used to perform the benchmarking, data on participants
and confidence factors related to the accuracy of the data and the benchmarking methodology.
Flextronics will be entitled to challenge the accuracy of the results of the benchmarking exercise
pursuant to the Issue Resolution and Escalation Process.

	1.5	 	Structure of the Agreement

This Agreement sets out the terms and conditions of the relationship between Nortel Networks and
Flextronics and the Services to be performed by Flextronics pursuant to this Agreement and
the terms of performance of such Services by Flextronics. Each Order, or Blanket Purchase

( 12 )

 

Order
issued to Flextronics shall create rights and obligations between the Nortel Company which issues
the Order and Flextronics. No Nortel Company shall be liable to Flextronics for performance of
any obligation by another Nortel Company arising in connection with this Agreement.

This Agreement shall continue to apply to an Order issued during the Term until all obligations
provided for in this Agreement are performed. Notwithstanding that an Order does not refer to this
Agreement, any Order issued by a Nortel Company during the Term shall be deemed to have been issued
pursuant to this Agreement unless the Parties expressly agree in writing to the contrary. In the
event of any conflict or inconsistency between the terms of this Agreement and any other document
ancillary or relating thereto, the following order of precedence shall apply, but only to the
extent of an express conflict or inconsistency: (1) this Agreement and Exhibits, (2) Order(s), (3)
Blanket Purchase Order(s), and (4) Orders for Materials and related schedules as applicable to the
particular Delivery Facility.

	1.6	 	Term

This Agreement shall commence on the Effective Date and continue until terminated in
accordance with this Agreement (the “Term”). Either Party may deliver a notice for termination for
convenience to take effect [• ] following such notice; provided however, that no such notice
may be delivered before a date that is [• ] before the fourth anniversary of the Commencement
Date.

Section 2

GOVERNANCE PROCESS

	2.1	 	Transition Planning

The Parties will mutually agree to meet to discuss transition planning in respect of the Services
as frequently as is required, regarding the delivery of the Services. Such discussions shall
consider the terms of any transition implementation plans developed by the Parties.

	2.2	 	Strategic Governance

Nortel Networks and Flextronics shall meet quarterly at a management level to exchange and align
business strategies around the following areas:

	(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, cost to market, time to market, foot print, and trends.

	(b)	 	Cost Reduction Opportunities. The Parties shall discuss cost reduction opportunities
(in addition to those opportunities previously identified by the Parties), and Flextronics
shall
identify such opportunities including savings in the areas of transportation management,
supply chain optimization, freight, duty and logistics operating costs, warehousing

( 13 )

 

	 	 	rationalization/labour and such other factors as the Parties may determine from time to
time.

	(c)	 	Performance Metrics and Report Card. The Parties shall use as a guideline the
criteria for performance excellence as set forth in Exhibit “2”.

	2.3	 	Operations Governance

Nortel Networks and Flextronics shall:

	(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 report
card metrics, as provided in Exhibit “2” of this Agreement.

	(d)	 	Upon reasonable advance written 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 relevant to
Nortel Networks’ cost management, including but not limited to, information relating to
“On-going Cost Reduction”, “Incremental Cost Reduction” and continuous improvement, as more
fully described in Section 9 and Exhibit of this Agreement. 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 20. Any breach of the
preceding sentence shall be considered to be a material breach of this Agreement.

	2.4	 	Monthly Operations Reviews

Flextronics and Nortel Networks shall conduct monthly operations reviews of the business
performance, processes and procedures of both Flextronics and Nortel Networks (i) at each
applicable Delivery Facility; (ii) from each Delivery Facility to each applicable region; (iii) by
individual region; and (iv) at the Customer level, with the intent to improve the overall supply
chain performance. The review shall include, at a minimum, performance measurements of quality,
delivery, Customer satisfaction, corrective and preventive actions, costs, capacity, supply
constraints, intervals, actual versus forecasted demand, innovations and cost reductions for the
Services.

	2.5	 	Resources for Service Support

Throughout the Term of this Agreement, Flextronics shall provide the Services in accordance with
the terms of this Agreement. Flextronics shall maintain sufficient resources for the purposes of
achieving the strategic management of the Services.

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Section 3

ORDERING AND DELIVERING

	3.1	 	Blanket Purchase Orders

Nortel Networks may issue either; (i) an Order; or (ii) a Blanket Purchase Order to Flextronics
for Services. There shall be no minimum Order quantity.

	3.2	 	Acceptance of Orders

Flextronics shall accept any Order issued by Nortel Networks for the Services under this
Agreement.

	3.3	 	INTENTIONALLY LEFT BLANK

	3.4	 	Issuance of Orders via EDI

If Nortel Networks uses EDI to issue an Order, such transaction shall be carried out in accordance
with the provisions set forth in Exhibit “26” of the MCMSA.

Section 4

RISK OF LOSS

	4.1	 	Risk of Loss

Flextronics shall deliver Materials to the named destination duty unpaid as defined by ICC
Incoterms 2000 (“DDU”). For only those countries listed in Exhibit 22 of the MCMSA, Nortel
Networks may require Flextronics to deliver Materials to the named destination duty paid as defined
by ICC Incoterms 2000 (“DDP”). If Nortel Networks requests a delivery term other than (i) DDU or
(ii) DDP to the countries listed in Exhibit 22 of the MCMSA, the Parties shall agree upon this
delivery term and written confirmation of this agreement shall govern in the case of a conflict
with a delivery term stated on the applicable Order for Materials. Risk of loss will pass to
Nortel Networks pursuant to the applicable Incoterms, determined as stated herein, or as otherwise
required by Nortel Networks.

If Nortel Networks or a Customer returns Materials, risk of loss, damage or theft for such
Materials shall pass to Flextronics when the Materials are delivered to Flextronics’ or
Flextronics’ subcontractor’s premises.

	4.2	 	Title

For Orders for Materials that are shipped from Flextronics’ Delivery Facility to a named
destination within the same country, title shall pass to Nortel Networks upon delivery to the named
destination. For Orders for Materials that are shipped from Flextronics’ Delivery Facility

( 15 )

 

to a
named destination in a different country, title shall pass to Nortel Networks immediately prior to
importation into the country specified in the named destination.

Nortel Networks may make a written request that title pass to it at a point other than as outlined
above. Flextronics shall comply with such request provided that the revised transfer point is no
later in the delivery process then the relevant points stated above.

For returns that are shipped from Nortel Networks or a Customer to Flextronics’ or Flextronics’
subcontractor’s premises within the same country, title shall pass to Flextronics upon delivery to
the agreed upon destination. For returns that are shipped from Nortel Networks or a Customer to
Flextronics’ or Flextronics’ subcontractor’s premise in a different country, title shall pass to
Flextronics immediately prior to importation into the country specified in the named agreed upon
destination.

Section 5

DELIVERY PROCESS

	5.1	 	Delivery Method

Flextronics shall deliver the Materials in the manner set forth in Exhibit “1-A” and Exhibit
“1-B”.

	5.2	 	Packaging, Labelling and Nortel Networks Trade Marks

Materials shall be packaged and labeled in accordance with Nortel Networks’ packaging standards as
more particularly set forth in Exhibit “1-B” and shall be consistent with the provisions of
Section 19.3 of this Agreement. Notwithstanding anything to the contrary in Exhibit “1-B”,
Flextronics shall not apply to or display on the packaging, shipping documentation or any other
identifiable medium any of Flextronics’ trade-marks or other markings without the express written
permission of Nortel Networks, which may be withheld in its absolute discretion. Nothing in this
Agreement shall be taken to grant expressly or by implication a license to Flextronics to use
Nortel Networks trademarks. To enable Flextronics to comply with these requirements Nortel
Networks shall provide information to Flextronics with regard to the current practices and
guidelines, as of the Effective Date, in which Materials are to be properly and sufficiently
prepared, packed, stowed labeled and/ or marked, and that the preparation, packing, stowage,
labeling and marking are appropriate to any operations or transactions affecting the Materials and
the characteristics of the Materials in compliance with any statutory regulations or official or
recognized standards. Within three months of the Effective Date, Flextronics shall review, and
revise as required, all practices and guidelines to ensure Materials are properly and sufficiently
prepared, packed, stowed labeled and/ or marked, and that the preparation, packing,
stowage, labeling and marking are appropriate to any operations or transactions affecting the
Materials and the characteristics of the Materials in compliance with any statutory regulations or
official or recognized standards. Nortel Networks shall be obliged to cooperate with Flextronics
in order to enable Flextronics to meet the objectives of this Section 5.2.

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Section 6

MATERIALS MANAGEMENT PROCESS

	6.1	 	Delivery Facility

Flextronics shall only deliver Materials from the Delivery Facilities initially agreed to by
Flextronics and Nortel Networks, and Flextronics shall not change such Delivery Facilities without
Nortel Networks’ prior written consent such consent shall not be unreasonably withheld by Nortel
Networks.

	6.2	 	Flextronics Management Services

Flextronics shall perform material and supplier management services and activities consistent with
the Services described in the Service Exhibits and any other related services the Parties agree to
perform. Notwithstanding the foregoing, Nortel Networks reserves the right to require Flextronics
to provide for specific Customer requirements in accordance with Section 1.11 of Exhibit “1-B”.

	6.3	 	Warehousing

Flextronics shall deal with all Materials in accordance with the warehousing standards as set out
in Section 1.1 of Exhibit “1-B”.

	6.4	 	Management of Third Party Contracts

Flextronics agrees that pursuant to the terms of the Asset Purchase Agreement, Nortel Networks will
assign to it and Flextronics will assume all performance and financial obligations in connection
with all contracts or other documented agreements relating to assets, facilities or Services to
which Nortel Networks is a party and which contracts or other documented agreements relate to the
delivery of the Services. However, this Agreement shall not constitute an agreement to assign any
contracts or other documented agreements if any assignment or attempted assignment of the same
without the consent of the other party would (i) constitute a breach thereof or otherwise not be
permitted under applicable law or environmental law, (ii) increase any obligation of Nortel
Networks thereunder, or (iii) create any additional obligation of Nortel Networks thereunder (the
“Non-Assignable Contracts”), such Non-Assignable Contracts being those contracts listed in Exhibit
“4”. Nortel Networks shall, prior to and after the Effective Date, use its commercially reasonable
efforts (it being understood that such efforts shall not include any requirement of Nortel Networks
or any of its Affiliates to pay money, commence any litigation, or offer or grant any
accommodation, financial or otherwise, to any third party),
and Flextronics shall cooperate in all reasonable respects with Nortel Networks to obtain all
consents and waivers and to resolve all impracticalities of assignments or transfers necessary to
convey any Non-Assignable Contracts to Flextronics. If any such Non-Assignable Contracts are not
able to be assigned or transferred (whether because a consent in respect of any Non-Assignable
Contracts could not be obtained or otherwise), (i) Nortel Networks shall use its commercially
reasonable efforts (it being understood that such efforts shall not include any

( 17 )

 

requirement of
Nortel Networks or any of its Affiliates to pay money, commence litigation, or offer or grant any
accommodation, financial or otherwise, to any third party) to provide or cause to be provided to
Flextronics, to the extent permitted by applicable law or environmental law, the benefits of any
such Non-Assignable Contracts; (ii) Nortel Networks shall (to the extent Flextronics has undertaken
the responsibilities thereunder) promptly pay or cause to be paid to Flextronics all monies
received by Nortel Networks or any of its Affiliates with respect to any such Non-Assignable
Contracts; (iii) Flextronics shall perform and discharge on behalf of Nortel Networks all of Nortel
Networks’ debts, liabilities, obligations or commitments, if any, thereunder, and subject to and in
accordance with the provisions thereof; and (iv) Flextronics shall be responsible for directing the
third parties in performing the Services. In this circumstance, Flextronics shall be responsible
for any additional financial liabilities caused by an error or omission of Flextronics in directing
the third parties under the Non-Assignable Contracts. On any Non-Assignable Contract where the
third party is unwilling to provide loss and damage coverage at least equivalent to that provided
to Nortel Networks under the Non-Assignable Contract, for Materials held by the third party,
Flextronics shall be entitled forthwith to transfer the Materials to another site provided that
this transfer does not cause a reduction in service or increased costs to Nortel Networks.

6.4.1 Where Nortel Networks has financial obligations in connection with contracts or other
documented agreements relating to assets, facilities or Services to which Nortel Networks is a
party for the performance of Services contemplated under this Agreement with a third party and in
the event that Flextronics pursuant to such contracts or other documented agreements becomes liable
to discharge the financial obligations contained therein to any third party due to a mutual
decision by the Parties to terminate the relevant contract or other documented agreement, then
Nortel Networks shall have an obligation to pay Flextronics a sum equal to the financial obligation
required to be discharged by Flextronics. Any sums due and not recovered under this Section may be
recovered by Flextronics from Nortel Networks as a debt. The Parties hereby intend that this
obligation shall survive the termination of this Agreement and will remain in effect until
fulfilled.

Section 7

CHANGE MANAGEMENT

	7.1	 	Joint Change Management Process

Either Party may propose in writing a change to the Services, pursuant to the procedures set out
below:

	 	7.1.1	 	Flextronics Proposal

In the event Flextronics has created a Service Change Order (“SCO”), Nortel Networks shall
provide an acknowledgement in writing within ten (10) Business Days as to whether
Flextronics is required to prepare and provide Nortel Networks with a SCO Form. If
Flextronics is required to prepare and provide Nortel Networks with a SCO Form, Nortel
Networks shall, upon receipt of such SCO Form, promptly determine if it will agree to go
forward with the change. If Nortel Networks agrees to have the change

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implemented, the
Parties shall negotiate any open issues, including additional liability that shall be
identified on a revised SCO Form, and set the implementation date. Nortel Networks shall not
pay charges unless specifically identified by Flextronics on the SCO Form and agreed to by
Nortel Networks within ten (10) Business Days. Flextronics and Nortel Networks shall each
pay their own costs associated with the assessment and implementation of the change to the
Services. Nortel Networks may not unreasonably withhold consent to a proposed change.

	 	7.1.2	 	Nortel Networks Proposal

In the event Nortel Networks has created a SCO, Flextronics shall, within ten (10) Business
Days of receipt of Nortel Networks’ proposal, respond to such SCO with a Service Change
Impact Form that will include but not be limited to information relating to cost and
timeline. Upon receipt by Nortel Networks of the Service Change Impact Form, Nortel
Networks shall promptly determine if it wishes Flextronics to implement the change. If
Nortel Networks requires the change to be implemented, the Parties shall negotiate any open
issues, including additional liability that shall be identified on a revised Service Change
Impact Form, and set the implementation date. Flextronics shall fully implement the SCO and
co-ordinate the activities of Flextronics’ sub-contractors, if necessary for such
implementation. Nortel Networks shall not pay charges unless specifically identified by
Flextronics on the original or the revised Service Change Impact Form. Flextronics and
Nortel Networks shall each pay their own costs associated with the assessment and
implementation of the change to the Services.

	7.2	 	New Services

In the event that Nortel Networks desires to have additional services performed that are materially
similar to those Services covered by Exhibits 1-A, 1-B and 1-C (collectively, “New Services”),
Nortel Networks may in its sole discretion select to (i) perform such New Services itself; or (ii)
enter into agreements with third parties to perform such New Services provided that Nortel Networks
shall give adequate opportunity to Flextronics to submit a proposal for New Services and provided
the proposal is competitive and meets the other stipulated requirements Nortel Networks shall give
preference to a proposal from Flextronics for New Services. In the event the Parties have agreed
to the provision of a New Service pursuant to the terms of a tender process, the New Service shall
become a “Service” and any relevant Schedules shall be updated accordingly.

Section 8

QUALITY

	8.1	 	Performance Metrics and Report Cards

	 	8.1.1	 	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 operations reviews provided

( 19 )

 

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 “2”. Nortel Networks reserves the right to
review the report cards and to conduct a joint audit with Flextronics to determine their
accuracy.

	 	8.1.2	 	Breach of Performance Metrics

(i) Breach of Performance Metrics Leading to Termination

The failure of Flextronics to obtain performance results above a Passing Grade on
any of the performance metrics (as defined in the report cards as set out in Exhibit
“2”) on the Global Report Card in Table 1 of Exhibit “2” or on the Regional Report
Card (but only as it relates to North America and Europe, Middle East and Africa
regions) in Table 2 of Exhibit “2” with respect to an applicable Service as a result
of any act or omission within Flextronics’ Control and Responsibility, [ • ],
constitutes a material breach of Flextronics’ obligations under this Agreement.
Such a material breach shall entitle Nortel Networks, at its discretion, to
terminate this Agreement.

(ii) Breach of Performance Metrics Without Termination

The failure of Flextronics to obtain performance results above a Passing Grade on
any of the performance metrics (as defined in the report cards as set out in Exhibit
“2”) on the Regional Report Card (but only as it relates to the Caribbean and Latin
America, and Asia Pacific regions) in Table 2 of Exhibit “2”, on the Delivery
Facility Site Report Card in Table 3 of Exhibit “2”, or on the Delivery Facility
Site by Region Report Card in Table 4 of Exhibit “2” with respect to an applicable
Service as a result of any act or omission within Flextronics’ Control and
Responsibility, [ • ], constitutes a material breach of Flextronics’ obligations
under this Agreement. Such a material breach shall entitle Nortel Networks, at its
discretion, to perform the relevant Services itself, engage a third party to perform
the relevant Services, or direct Flextronics on how specifically the relevant
Services should be performed.

	 	8.1.3	 	Transition Period Performance

Nortel Networks acknowledges that Flextronics’ ability to perform its obligations at the
Effective Date under the attached Exhibits is dependent upon Flextronics ability to engage
certain Nortel Networks current 3PL providers to continue to perform the Services defined in
this Agreement at the metric levels required in Exhibit 2. In addition, as it relates to
Class A returns activity, Flextronics’ ability to perform its obligations at the Effective
Date is dependent upon Nortel Networks timely transfer of the necessary Nortel Networks’
equipment, information, processes and personnel, to satisfy the requirements set forth in
the Exhibit 1-B, Section 1.7.

( 20 )

 

Nortel Networks agrees to provide all reasonable assistance to Flextronics including the
assignment of certain agreements and, as appropriate, the facilitation of discussions with
other third parties that Flextronics desires to engage, to assist Flextronics in gaining the
capability to deliver the Services in accordance with the stipulated service levels.

Except where indicated in the relevant Service Exhibit, Flextronics shall be obligated to
deliver all of the Services as of the Effective Date, provided however that during the four
(4) month period after the Effective Date, Nortel Networks shall not use any breachable
metric measured during this 4 month period to terminate this Agreement pursuant to section
8.1.2 of this Agreement for Breach of Performance Metrics unless the breach of the
performance metric is solely attributable to an action of Flextronics.

To the extent that during this four month period Flextronics is able to demonstrate that any
of the service levels were not achieved prior to the Effective Date, then Flextronics shall
be excused from achieving the service level. In this circumstance, the Parties agree to meet
and negotiate in good faith a timeline for achieving the service level including any
associated cost issues and to amend the relevant Exhibit/s to reflect the agreed resolution.

If subsequent to the agreed timeline to achieve the required service level, Flextronics
still cannot achieve the required service level then, notwithstanding the commitments and
obligations in Section 1.3 of this Agreement, Nortel Networks shall be permitted to arrange
for the Services from another service provider or provide the Service itself until
Flextronics is able to reasonably demonstrate that Flextronics can achieve the required
service level.

	8.2	 	Industry Standards

If in existence on the Effective Date, Flextronics agrees to maintain the industry standards set
out below. If Nortel Networks requires Flextronics to implement an industry standard not certified
on the Effective Date, Flextronics will pursue such standard, subject to the mutual agreement of
the Parties on the associated costs.

	(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.

( 21 )

 

	8.3	 	Source Inspection

Nortel Networks may perform source inspections of means and processes at any Delivery Facility or
subcontractor facility (if applicable) whenever Nortel Networks decides it is necessary. The
source inspection shall be conducted during normal business hours and with reasonable prior written
notice to Flextronics.

	8.4	 	Service Quality

	(a)	 	Flextronics covenants and agrees to maintain a level of quality with respect to workmanship,
testing and packaging processes that shall result in the achievement of the performance
metrics as specified in Exhibit “2”, measured on a monthly basis. For any breach of a
performance metric, Flextronics shall 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.

	(b)	 	For each Delivery Facility, Flextronics will develop a quality performance program no less
stringent than the standards currently in place in the relevant delivery facility of Nortel
Networks. Flextronics’ compliance with these standards will be measured monthly pursuant to
Exhibit “2”.

	(c)	 	Nortel Networks 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.

Section 9

SERVICE COST MANAGEMENT PROCESS

	9.1	 	Prices for Services

The Parties agree that Nortel Networks’ cost for Services will be variable in nature. The Price
for Services shall be calculated in accordance with the following methods:

	 	(a)	 	Cost Method for Services in Exhibit “1-A”. The Price for the Services in
Exhibit “1-A” in or before Year 1 shall be equal to the [• ]. The Price for the
Services in Exhibit “1-A” in or before Year 1 shall be adjusted on an ongoing basis
to reflect any Ongoing Cost Reductions as defined in section 9.6.2 below. In or
before Year 1, if no Nortel Networks rate exists for a given lane and service level
then Flextronics will charge Nortel Networks the [• ] for the relevant lane and
service level.
	 
	 	 	 	In Year 2, Year 3, Year 4, and any Year thereafter during which this Agreement
continues in force the Price for the Services in Exhibit “1-A” shall be the
[• ]. For the purpose of this clause, “Actual Flextronics Costs” means the
actual costs exclusive of rebates paid by Flextronics to provide the Services.
Notwithstanding

( 22 )

 

	 	 	 	the preceding, should [• ] in Year 2, Year 3, and Year 4 not be
at least equal to or lower than the Price at the end of Year 1, then Flextronics
shall charge Nortel Networks the Price in effect at the end of Year 1.
	 
	 	 	 	Additionally, in or before Year 1, Year 2, Year 3, Year 4, and any Year thereafter
during which this Agreement continues in force, Flextronics shall be permitted to
pass on to Nortel Networks any temporary industry surcharges that are assessed
against Nortel Networks shipments. Flextronics shall only be entitled to recover
their actual costs as they relate to Nortel Networks shipments and no Margin shall
apply. These surcharges should be identified as separate charges and shall only
apply as long as the industry surcharge exists.

	 	(i)	 	Flextronics must obtain Nortel Networks written approval prior
to making any changes to the delivery of Services that will cause an increase
in cost by more than [• ], unless such change in cost is related to an
increased volume of Services to be provided. Flextronics shall not make
changes that cause an increase in the Price for the Services unless those
increased costs are to offer new services or are offset by reduced Material
Purchase Prices in the MCMSA.

	 	(b)	 	Cost Method for Services in Exhibit “1-B”: The Price for the Services in
Exhibit “1-B” form part of the Materials Purchase Price.
	 
	 	(c)	 	Cost Method for Services in Exhibit “1–C”: As of the Effective Date, the
Parties agree that the Services in Exhibit “1-C” will be provided by a third party.
The costs for the Services provided by that third party will be paid directly by Nortel
Networks. If, after the Effective Date, Nortel Networks desires Flextronics to provide
certain of the Services described in Exhibit “1-C”, and Flextronics and Nortel Networks
agree that Flextronics should begin to deliver all or part of the Services described in
Exhibit “1-C”, Nortel Networks agrees to pay Flextronics for agreed to costs associated
with Flextronics providing those Services [ • ].

	9.2	 	Payment, Taxes and Duties

	 	9.2.1	 	Invoices

After the Services in Exhibit “1-A” have been performed, Flextronics shall issue invoices
every other week in the currency specified in an Order net of any discounts or initial
overpayments made by Flextronics to Flextronics’ sub-contractors. If Actual Flextronics’
Costs are paid by Flextronics in a currency other than that which Flextronics will be
invoicing Nortel Networks, then Flextronics shall use the Currency Conversion factor to
calculate the invoice. Nortel Networks shall be credited for any amounts resulting from
audits which result in lower costs after initial invoices are issued by Flextronics. On
each invoice submitted to Nortel Networks, Flextronics will reference the appropriate Order.

( 23 )

 

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.

The Parties shall co-operate with each other to minimize the amount of tax payable pursuant
to this Agreement in accordance with applicable laws. Each Party shall provide the other
Party or any other Person with any certificates, tax numbers, supplier invoices or any other
documents, which may reduce the taxes payable by a Party or entitle a Party to recover taxes
paid.

	 	9.2.2	 	Payment

Payment shall be made net [• ] from the date of the invoice. In the event that payment
of the invoice has not been made by the due date and Flextronics cannot provide a proof of
delivery of said invoice, then Nortel Networks shall not be considered in breach of this
Agreement.

The Parties will agree to an accounts payable/accounts receivable process to proactively
resolve any payment and invoicing issues in a timely manner.

Nortel Networks may deduct any undisputed credit due and owing it, upon approval of
Flextronics. Payment shall be made in the currency of the invoice issued by Flextronics.
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.

[• ]

	9.3	 	Financial Review and Targets

Flextronics shall review quarterly as part of the quarterly business reviews described in Section
2.2(a) [• ]. As part of such review, Flextronics shall provide key financial performance
reports as detailed in Exhibit “3”.

( 24 )

 

	9.4	 	Forecasting

Flextronics shall present its forecasted expenditure plans that relate to the Services, with the
relevant cost quotes and budget for Services, quarterly to Nortel Networks. The forecasted
expenditures for Services expenses shall be categorized by Delivery Facility. Freight expenditure
forecasts will be based on forecasted demand as provided by Nortel Networks. Flextronics shall not
be required to provide forecasts that extend beyond the term of those forecasts provided by Nortel
Networks.

Current forecasts will be submitted for the current quarter plus two quarters in the future. An
operations budget will be itemized by categories outlined in Exhibit “3”. Flextronics’ freight and
duty budget forecast will be categorized by items including, but not limited to: (i) Nortel
Networks region; (ii) Nortel Networks leadership category or business unit; and (iii) Delivery
Facility. The freight and duty budget will include estimates by transportation mode (air, ground,
sea) and service level (express, standard, deferred).

	9.5	 	Audit

	 	(a)	 	Nortel Networks shall have the right, upon five Business Days notice, to
conduct a cost audit of the costs related to the Services. This may include the audit
of purchase orders, invoices, and financial records.
	 
	 	(b)	 	Flextronics shall not be required to share any documents where doing so would
be a violation of any third party agreements of confidentiality.
	 
	 	(c)	 	Nortel Networks shall have the right, upon five Business Days notice, to
conduct a general audit of performance related to the Services by Flextronics and the
performance of Flextronics’ sub-contractors. This may include, but is not limited to,
site visits, inspection of quality, warehouse management, material handling, and
financial processes and systems, and inspection of the business continuity policy and
its implementation.
	 
	 	(d)	 	Flextronics shall provide Nortel Networks access and assistance to premises,
facilities, employees, process documentation, business records, financial records,
suppliers, contracts and agreements with suppliers, and other relevant information
and documentation.
	 
	 	(e)	 	Nortel Networks and Flextronics will each bear their own costs related to the
audit except where the audit reveals that Flextronics is materially in breach of it
obligations under the Agreement. In this case, the Flextronics will reimburse Nortel
Networks immediately (being not more than two (2) Business Days) for its reasonable
audit expense plus any amounts charged to Nortel Networks incorrectly. In the case
where Flextronics has invoiced Nortel Networks by five thousand dollars more than it
should have, Flextronics in addition to refunding any overcharge shall also be liable
for Nortel Networks reasonable audit expenses.

( 25 )

 

	 	(f)	 	Each Party hereby covenants and agrees that it shall keep confidential all
information gathered in this audit process, including not disclosing such information
directly or indirectly to any competitor or supplier of the disclosing Party.

Flextronics shall promptly remedy any non-compliance with its obligations under this
Agreement, which is revealed by the audit.

	9.6	 	Cost Reduction with respect to Services described in Exhibit “1-A”

The Parties agree that one of Flextronics’ primary goals is to reduce costs while ensuring delivery
of the Services at or above the performance standards set out in this Agreement. At the end of Year
1, Year 2, Year 3, Year 4, and any Year thereafter during which this Agreement continues in force,
Flextronics shall demonstrate to Nortel Networks the achievement of cost reductions related to the
Services in Exhibit “1-A” through a manual reconciliation exercise whereby each program is assessed
to determine the extent of the cost reduction.

Additionally, the model described in Schedule “A” to Exhibit “3” shall be used to measure the
achievement of cost reductions related to the Services in Exhibit “1-A” at an aggregate level. At
the end of each quarter, Flextronics covenants and agrees to provide to Nortel Networks all data
related to the manual reconciliation exercise and the information required to complete the model
described in Schedule “A” to Exhibit “3” in preparation for the cost reviews described in Section
9.3, in a prompt manner.

	 	9.6.1	 	Intentionally left blank
	 
	 	9.6.2	 	On-Going Cost Reduction with respect to Services described in Exhibit “1-A”

“On-Going Cost Reduction” or “OCR” means cost reduction that Nortel Networks would have been
able to achieve through its own efforts and through Nortel Networks’ existing supply chain,
had it retained the Operations. For greater certainty, (i) OCR is the universe of cost
reduction minus ICR (as defined below) and (ii) OCR cannot be used to
fulfill the ICR Commitment, as set out below. “OCR Commitment” is equal to the cost
reductions that Flextronics commits to achieving based on the process defined below.

For Year 1, the Parties shall meet prior to the Commencement Date to discuss the OCR
Commitment for Year 1. Flextronics shall provide an OCR Commitment applicable to the
Services described in Exhibit “1-A”. OCR is calculated by [• ]. The programs that
Flextronics agrees to implement to deliver the OCR in Year 1 are listed in Schedule “C” to
Exhibit “3”. OCR programs with respect to the Services in Exhibit “1-A” include, but are
not limited to: mode and service levels (air, ground, sea, express, deferred);
transportation lanes; efficiencies; Flextronics’ or Nortel Networks’ sub-contractor
negotiations; and direct ship.

( 26 )

 

For each of Year 2, Year 3, Year 4, and any Year thereafter during which this Agreement
continues in force, the Parties shall meet ninety (90) days prior to the start of the
applicable Year to discuss the annually set OCR Commitment for the upcoming Year. The
purpose of these meetings is to provide an opportunity for the Parties to brainstorm to
identify the OCR programs for the upcoming Year including but not limited to: business cases
defining savings; head count; investment; risk; timeframe; capital; and implementation
schedule. The meeting must produce an OCR Commitment for the applicable Year based on the
OCR programs identified by the Parties that Flextronics must achieve.

Additionally, at any time during the term of this Agreement, Nortel Networks or Flextronics
may propose other intra-year OCR programs that have not been identified either in Schedule
“C” to Exhibit “3” or during the annual joint OCR planning sessions. The Parties agree to
negotiate in good faith any OCR Commitment and implementation timetable related to these
additional OCR programs.

If Flextronics is able to implement any OCR program prior to the implementation date agreed
to by the Parties such that the benefits of the cost reduction program also begins to accrue
prior to the planned implementation date, then Nortel Networks agrees to share the
incremental benefit of the early implementation equally with Flextronics. In addition, if
the OCR program yields cost reductions during the first 90 days past the planned
implementation date greater than that agreed to by the Parties, then Flextronics shall be
entitled to the benefit of this greater than expected savings. [ • ].

If Flextronics does not achieve its annually set OCR Commitment for a given Year such that
the logistics costs have decreased by the applicable OCR Commitment (as determined in the
manual reconciliation process) then, at the end of the respective Year, Nortel Networks
shall be entitled, at its option, either (i) to set-off such amount indicated below against
the Price for Services; or (ii) to require Flextronics to provide a certified cheque to
Nortel Networks, equal to the total Price for Services in Exhibit “1-A” for the applicable
Year as defined in section 9.1 (a) times (OCR Commitment (expressed as a percentage) minus
actual OCR achieved (expressed as a percentage) in applicable Year).

If Flextronics does not achieve its intra-year OCR Commitment for any additional OCR program
agreed to by the Parties such that the logistics costs have decreased by the applicable OCR
Commitment (as determined in the manual reconciliation process) then at the end of the 12
month period following the planned implementation date of any additional OCR program agreed
to by the Parties, Nortel Networks shall be entitled, at its option, either (i) to set-off
such amount indicated below against the Price for Services; or (ii) to require Flextronics
to provide a certified cheque to Nortel Networks, equal to the total cost of the Exhibit
“1-A” Services related to the OCR program times (OCR Commitment (expressed as a percentage)
minus actual OCR (expressed as a percentage) related to the OCR program).

( 27 )

 

Additionally Flextronics shall achieve Flextronics Freight OCR in Year 3 and Year 4.
“Flextronics Freight OCR” means that the Price for Services in Exhibit “1-A” in Year 3 will
be [ • ] than Price for Services in Exhibit “1-A“for Year 2, and Price for Services in
Exhibit “1-A” in Year 4 will be [ • ] than Price for Services in Exhibit “1-A” for Year
3. The Flextronics Freight OCR will be measured by comparing the Price for Services in
Exhibit “1-A“in the relevant Year to the Calculated Flextronics Cost to provide the same
Services. For purposes of this clause, the “Calculated Flextronics Cost” is calculated by
applying the rates that Flextronics has in place with its suppliers in the previous Year to
each shipment made in relevant Year, using the same mode and service level used by
Flextronics for those same shipments. All temporary industry surcharges shall be netted out
of the costs.

[ • ].

Flextronics will pay all Flextronics’ costs associated with identification of cost reduction
opportunities.

Flextronics shall maintain lists of opportunities for On-Going Cost Reduction. Flextronics
shall, as part of its plan to reduce cost and continuously improve processes, seek out other
continuous improvement opportunities within the logistics chain.

	 	9.6.3	 	Incremental Cost Reduction with respect to Services described in Exhibit “1-A”

“Incremental Cost Reduction” or “ICR” means cost reduction that Nortel Networks would not
have been able to achieve, through its own efforts and/or its existing supply chain, if it
had retained the Operations. For greater certainty, (i) a list of the programs which may be
used by Flextronics to achieve ICR is set out in Schedule “D” to Exhibit “3” (“ICR
Programs”); and (ii) ICR cannot be used to fulfill OCR Commitments in any Year. The ICR
Programs generally relate to reductions in the freight rates.

[ • ].

Flextronics shall track and report the achievement of the ICR Commitment. The ICR Commitment
in each of Year 2 and Year 3 will be measured by comparing the Price for the Services in
Exhibit “1-A” for the respective Year to the Calculated Nortel Networks Cost to provide the
same Services in that Year. For purposes of this clause, the “Calculated Nortel Networks
Cost” is calculated by applying the rates that Nortel Networks has in place with its current
suppliers as of the Effective Date, minus all of OCR associated with those rates that has
been achieved up to the start of the relevant Year, to each shipment made in the same Year,
using the same mode and service level used by Flextronics for those same shipments. All
temporary industry surcharges shall be netted out of the costs.

( 28 )

 

	 	9.6.4	 	Other Cost Changes with respect to Services described in Exhibit “1-A”

The Parties recognize that there are variables that influence logistics costs that fall
outside of the control of those responsible for managing these costs. These variables would
include such things as product design changes (i.e. product weighs less or more), sourcing
decisions (i.e. may need to ship a different distance or across boarders), etc. The Parties
agree that the cost impact of these variables shall be excluded from OCR and ICR discussions
under this Agreement. However, for the purposes of supporting ICR discussions under the
MCMSA, Flextronics shall track and report on a project by project basis the impact to cost
for the Exhibit “1-A” Services due to ICR initiatives under the MCMSA or if applicable, any
VSHA.

	9.7	 	Cost Reduction with respect to Services described in Exhibit “1-B”

Nortel Networks will receive the benefit of OCR and ICR programs with respect to Services described
in Exhibit “1-B” as adjustments in the Materials Purchase Price. The model in Schedule “B” to
Exhibit “3” will be used to validate whether the level of recovery of costs by Flextronics as part
of the Materials Purchase Price is consistent with the actual costs incurred by Flextronics. At the
end of each quarter, Flextronics covenants and agrees to provide to Nortel Networks the information
required to complete the model in preparation for the cost reviews described in Section 9.3.

	 	9.7.1	 	On-Going Cost Reduction with respect to Services described in Exhibit “1-B”

For Year 1, the Parties shall meet prior to the Commencement Date to discuss the OCR
Commitment for Year 1. Flextronics shall provide an OCR Commitment applicable to the
Services described in Exhibit “1-B”. The programs that Flextronics agrees to implement to
deliver the OCR in Year 1 are listed in Schedule “C” to Exhibit “3”. This OCR Commitment
will be built into the Materials Purchase Price for Year 1.

For each of Year 2, Year 3, Year 4, and any Year thereafter during which this Agreement
continues in force, the Parties shall meet ninety (90) days prior to the start of the
applicable Year to discuss the OCR Commitment for the upcoming Year. The purpose of these
meetings is to provide an opportunity for the Parties to brainstorm to identify the
OCR programs for the upcoming Year including, but not limited to: business cases defining
savings; head count; investment; risk; timeframe; capital; and implementation schedule. The
meeting must produce an OCR Commitment that will be built into the Materials Purchase Price
for the applicable Year based on the OCR programs identified by the Parties.

Additionally, at any time during the term of this Agreement, Nortel Networks or Flextronics
may propose other OCR programs that have not been identified either in Schedule “C” to
Exhibit “3” or during the annual joint OCR planning sessions. The Parties agree to negotiate
in good faith any OCR Commitment and implementation timetable related to these additional
OCR programs.

( 29 )

 

Flextronics will pay all Flextronics’ costs associated with identification of cost reduction
opportunities.

Flextronics shall maintain lists of opportunities for On-Going Cost Reduction. Flextronics
shall, as part of its plan to reduce cost and continuously improve processes, seek out other
continuous improvement opportunities within the logistics chain.

	 	9.7.2	 	Incremental Cost Reduction with respect to Services described in Exhibit “1-B”

A list of the programs which may be used by Flextronics to achieve ICR with respect to the
Services described in Exhibit “1-B” is set out in Schedule “D” to Exhibit “3”. ICR cannot
be used to fulfill OCR Commitments in any Year. The ICR Programs generally relate to
product sourcing changes.

Flextronics shall provide an ICR Commitment related to Actual Logistics Operations Cost in
Year 2 and Year 3, respectively. “ICR Commitment” means the Actual Logistics Operations Cost
that Flextronics is committed to saving related to ICR Programs. The ICR Commitment will be
built into the Materials Purchase Price for the applicable Years based on the ICR programs
identified in Schedule “D” to Exhibit “3”.

Section 10

BUSINESS CONTINUITY

	10.1	 	Business Continuity Planning

Flextronics shall maintain a business continuity plan to be put into effect if Flextronics becomes
unable to perform the applicable Services for any reason, including Force Majeure, for a period of
more than five (5) days (“Business Continuity Plan” or “BCP”). Flextronics’ goal is to be able to
continue to provide the Services in accordance with the time schedules required under this
Agreement.

The Business Continuity Plan shall contain, at a minimum, (a) a risk assessment and business impact
analysis, (b) a prevention/mitigation plan, and (c) a resumption of Services plan, including a
recovery/restoration plan. The preceding will cover, but not be limited to, provisions for
documentation storage (product, process, fixture, tools), information systems technology
redundancy, a demonstration of Flextronics’ capability to recover in an emergency if it becomes
unable to perform the Services or if one of its subcontractors experiences such an emergency.

At Nortel Networks’ request and at no additional charge to Nortel Networks, Flextronics will
participate in any commercially reasonable tests implemented by Nortel Networks or discussions
initiated by Nortel Networks for purposes of evaluating, coordinating and integrating the business
continuity plans of its suppliers with Nortel Networks’ overall business continuity plan, in so
much as current activities and associated On Time Delivery metrics are not impacted by said test.
As reasonably requested by Nortel Networks during the Term, Flextronics will adjust

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the BCP to
better conform to and integrate with Nortel Networks’ business continuity plan, on terms to be
mutually agreed to by the Parties.

Throughout the Term, Flextronics shall provide a copy of any changes in the Business Continuity
Plan to Nortel Networks within ten (10) days of any such change. A period of Force Majeure or
other event causing inability to perform the Services shall be deemed to commence on the date that
the event of Force Majeure or other such event first occurs.

Nortel Networks and Flextronics shall review Flextronics’ Business Continuity Plan annually.

Section 11

WARRANTIES

	11.1	 	Services

Flextronics covenants and warrants that:

	 	(i)	 	all 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 performance
metrics and the terms of this Agreement;
	 
	 	(ii)	 	it shall use adequate numbers of qualified individuals with suitable training,
education, experience and skill to perform Services;
	 
	 	(iii)	 	it shall provide the Services using proven, current technology that will
enable Nortel Networks to take advantage of technological advancements in the
telecommunications industry;
	 
	 	(iv)	 	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 Services are provided; and
	 
	 	(v)	 	to the best of its knowledge, upon inquiry, no subcontractor of Flextronics
employs or contracts, directly or indirectly, the services (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 Services are provided.

Nortel Networks represents and warrants that: (i) no claim or action is pending or threatened
against Nortel Networks or, to Nortel Networks knowledge as of the Effective Date, against any
licensor or supplier of Nortel Networks that might, if adversely decided, adversely affect the
ability of Flextronics to provide the Services; and (ii) this Agreement does not violate the terms
of its agreements with any suppliers.

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Nortel Networks covenants and warrants that it will perform its obligations under this Agreement in
a competent, professional and timely manner in accordance with the standards generally accepted in
the telecommunications industry and the terms of this Agreement.

	11.2	 	Return of Orders

The acceptance of Materials is subject to inspection at the Delivery Location. If Materials do not
conform to the Order for Material requirements (including arrival of the Order for Material at
Delivery Location in undamaged condition), and it is established that Flextronics is responsible
for the problem, the Materials may be returned to Flextronics and Flextronics shall bear the
expense in respect of making Nortel Networks whole in respect of such Order for Materials.

	11.3	 	General

Each Party represents and warrants that it has all rights and powers necessary to (i) enter into
this Agreement, (ii) grant any applicable licenses hereunder, (iii) perform its obligations under
this Agreement and; (iv) perform its obligations in a manner that complies with all applicable
laws.

Section 12

INTELLECTUAL PROPERTY RIGHTS AND LICENSES

	12.1	 	License to Nortel Company Product Information Granted

Flextronics shall have the right and Nortel Networks hereby grants to Flextronics, to the extent of
its legal right to do so, a world-wide, non-exclusive, non-transferable, royalty-free license to
use Nortel Company Proprietary Information communicated to Flextronics by Nortel Networks as
appropriate for the conduct of the Services in question solely for internal use for the purpose of
performing the Services. Nortel Networks shall retain exclusive rights and title to all Nortel
Company Proprietary Information provided hereunder. This license is non-transferable, may be used
only in connection with the performance of Services by Flextronics for Nortel Networks
under this Agreement, and shall expire on the date on which Flextronics obligations to perform
Services terminate under this Agreement.

	12.2	 	Limitations on Grant of License

Except as expressly stated herein, nothing in this Agreement shall be deemed to grant, either
directly or indirectly by implication, estoppel or otherwise, any licenses to Flextronics of Nortel
Company Proprietary Information or any trademarks, and Flextronics acknowledges that Nortel
Networks shall retain exclusive right and title to the foregoing.

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	12.3	 	Flextronics’ Inventions

	 	12.3.1	 	Ownership of Flextronics Inventions

Flextronics Inventions, including Flextronics Inventions relating solely to the delivery of
the Services, shall be the property of Flextronics.

	 	12.3.2	 	License to Flextronics Proprietary Information

Flextronics shall and does hereby grant Nortel Networks, subject to fulfillment of its
payment obligation, a limited, irrevocable, world-wide, non-exclusive, royalty-free license,
but not as a standalone license, solely to make or have made and use such Flextronics
Invention and Nortel Networks shall have the right to sub-license such rights to Nortel
Networks subcontractors for the purpose of the delivery of services. Nortel shall be fully
responsible for any damages accrued to Flextronics arising out of any third party’s
violation of the scope of the license granted hereunder.

	12.4	 	Flextronics Retains Ownership of Flextronics Proprietary Information

Flextronics shall retain exclusive right, title, and interest to all Flextronics Proprietary
Information; and provided, that Nortel Networks has fulfilled its payment obligations, Flextronics
will grant Nortel Networks a limited, world-wide, non-exclusive, and royalty-free license, but not
as a stand-alone license, solely to make or have made, use, and sell any Flextronics Proprietary
Information incorporated into the delivery of the Services and provided that Nortel Networks shall
have the right to sub-license such rights to Nortel Networks subcontractors for the purpose of
delivery of services.

12.5 Assignment of Inventions Agreements with Employees

Flextronics shall have agreements with its employees, consultants, agents or representatives
(individually “Counter-Party”), in which each such Counter-Party shall agree in writing that any
and all inventions, discoveries, developments, modifications, procedures, ideas, innovations,
systems, Programs, know-how or designs developed by any such Counter-Party during the term of its
relationship with Flextronics, shall be the property of Flextronics. Furthermore, such agreement
between any such Counter-Party and Flextronics shall contain usual clauses including
an undertaking by such Counter-Party to execute applications for patents, copyrights, industrial
designs, mask work rights, integrated circuit topographies and other registerable intellectual
property rights thereon to the extent so requested by Flextronics and/or to assign the same to
Flextronics.

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Section 13

INDEMNIFICATION

	13.1	 	Intellectual Property Indemnification

	 	13.1.1	 	By Nortel Networks

Except as otherwise provided in this Section 13, Nortel Networks shall, at its expense and
at Flextronics’ request, indemnify and defend Flextronics against any claim or action
brought against Flextronics by a third party to the extent that such claim is based on an
assertion that Flextronics’ activities as part of the Services infringe, directly as a
result of Flextronics’ compliance with instructions by Nortel Networks to Flextronics
relating to an Order under this Agreement, infringes any patent, copyright or trademark, or
violates any trade secret or other proprietary right of a third party. Nortel Networks
shall pay any pre-judgment and pre-settlement costs as wells as any resulting costs and
damages finally awarded against Flextronics or agreed to in any settlement, and Flextronics’
reasonable attorneys’ or patent agent’s or other expert’s fees incurred in connection
therewith, provided that (i) Flextronics promptly notifies Nortel Networks in writing of any
such claim, (ii) Nortel Networks has sole control of the defense and all related settlement
negotiations, and (iii) Flextronics reasonably cooperates, at Nortel Networks’ cost, in the
defense and furnishes all related evidence under its control.

Notwithstanding the foregoing, Nortel Networks shall have no liability under Section 13.1 to
the extent the alleged infringement or violation:

	 	(a)	 	arises from Flextronics’ modification or alteration of the information
supplied by Nortel Networks relating to an Order, Blanket Purchase Order, or Order
for Materials, or any other materials provided by Nortel Networks, and such
modification or alteration is not authorized by Nortel Networks;
	 
	 	(b)	 	arises from any method or process used in or practiced as part of the
Services provided by Flextronics under this Agreement (unless such method or
process was specifically requested by Nortel Networks); or
	 
	 	(c)	 	arises from any Services provided by Flextronics under this Agreement
(unless the method or process of providing such Service was specifically requested
by Nortel Networks).

	 	13.1.2	 	By Flextronics

Flextronics shall, at its expense and at Nortel Networks’ request, indemnify and defend all
Nortel Companies against any claim or action brought against any Nortel Company by a third
party to the extent that such claim is based on an assertion that any method or
process used in or practiced in any Service provided by Flextronics under this Agreement
infringes any patent, copyright or trademark, or violates any trade secret or other
proprietary right of a third party, unless such method or process was specifically requested
by Nortel Networks.

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In any such case Flextronics shall pay any pre-judgment and pre-settlement costs as well as
any resulting costs and damages finally awarded against Nortel Networks or agreed to in any
settlement, and Nortel Networks’ reasonable attorneys’ or patent agent’s or other expert’s
fees incurred in connection therewith, provided that (a) Nortel Networks promptly notifies
Flextronics in writing of any such claim, (b) Flextronics has sole control of the defense
and all related settlement negotiations, and (c) Nortel Networks reasonably cooperates, at
Flextronics’ cost, in the defense and furnishes all related evidence under its control.

Notwithstanding the foregoing, Flextronics shall have no liability under Section 13.1.2 to
the extent the alleged infringement or violation arises from Nortel Networks’ modification
or alteration of the information supplied by Flextronics relating to the Services, and such
modification or alteration is not authorized by Flextronics.

	 	13.1.3	 	Measures to Safeguard Nortel Networks against Liability

If, as a result of the continued use by Flextronics of any method or process used in or
practices as part of the Services or the continued use of any intellectual property
component of the Services, an injunction in respect of the provision of the Services or the
continued use of such method or process or intellectual property component, or if either
Party reasonably determines on the advice of counsel that there is a likelihood of such
continued use exposing either Party to material liability, Flextronics shall, unless
otherwise requested by Nortel Networks, forthwith at its option and expense, use its
reasonable efforts to either:

	 	(a)	 	procure the right to continue using such process or method or intellectual
property component, to continue providing the Services; or
	 
	 	(b)	 	replace or modify the process or method, intellectual property component, or
Services, so that the provision of Services, no longer infringes.

THE FOREGOING SECTION 13.1 STATES THE ENTIRE LIABILITY OF THE PARTIES TO EACH OTHER
CONCERNING INFRINGEMENT OF PATENT, COPYRIGHT, TRADE SECRET OR OTHER INTELLECTUAL PROPERTY
RIGHTS HELD BY THIRD PARTIES.

	13.2	 	Other Indemnification

	 	13.2.1	 	By Flextronics

With respect to matters not covered in Section 13.1, Flextronics shall indemnify and hold
Nortel Networks, its Customers, distributors and their employees, harmless from any losses,
damages, liabilities and costs including reasonable attorney’s fees arising from any injury
or death to persons or loss of or damage to property to the extent caused by any

( 35 )

 

method or
process relating to the Services, any errors and omissions made by Flextronics in connection
with the delivery of the Services, or Flextronics’ negligence or willful misconduct.

	 	13.2.2	 	By Nortel Networks

With respect to matters not covered in Section 13.1, Nortel Networks shall indemnify and
hold Flextronics, its customers, distributors and their employees, harmless from any losses,
damages, liabilities and costs including reasonable attorney’s fees arising from any injury
or death to persons or loss of or damage to property to the extent caused by Nortel
Networks’ negligence or wilful misconduct.

Section 14

LIMITATION OF LIABILITY

NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT EXCEPT FOR THE PARTIES’ OBLIGATIONS UNDER SECTION
13 AND A BREACH OF THE OBLIGATIONS IN SECTION 20, TO THE MAXIMUM EXTENT PERMITTED BY LAW, UNDER NO
CIRCUMSTANCES AND UNDER NO LEGAL THEORY, WHETHER TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY,
CONTRACT, OR OTHERWISE, SHALL ONE PARTY BE LIABLE TO THE SECOND PARTY OR ANY OTHER PERSON FOR ANY
LOSS OF PROFIT OR ANY INDIRECT, SPECIAL, INCIDENTAL, RELIANCE OR CONSEQUENTIAL DAMAGES, EVEN IF THE
FIRST PARTY SHALL HAVE BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES. NOTHING IN THIS AGREEMENT
SHALL ACT TO RESTRICT OR EXCLUDE LIABILITY FOR DEATH OR PERSONAL INJURY CAUSED BY THE NEGLIGENCE OF
ANY PARTY.

Section 15

COMMUNICATION AND INFORMATION TRANSFER

	15.1	 	Transmissions

If Nortel Networks decides to use TDI to exchange technical information, the TDI transmissions
regarding such transaction shall be made in accordance with the provisions set forth in Exhibit 26
of the MCMSA.

	15.2	 	Access to Nortel Networks Computer Systems by Flextronics

Flextronics shall limit access and use of any Nortel Networks computer systems solely to the supply
of Services and shall not access or attempt to access any intranet, computer systems, files,
software or services other than those required for the supply of Services. Flextronics shall limit
such access to those employees with an express requirement to have such access in connection

( 36 )

 

with
supply of Services, and shall strictly follow all security rules and procedures of Nortel Networks
for restricting access to its computer systems. All user identification numbers and passwords
disclosed to Flextronics and any information obtained by Flextronics as a result of Flextronics’
access to, and use of Nortel Networks’ computer systems shall be deemed to be, and treated as,
Nortel Company Proprietary Information in accordance with the provisions set forth in Section 20,
with the same degree of care as such Flextronics uses for its own information of a similar nature,
but in no event a lower standard than a reasonable standard of care. Flextronics shall cooperate
in the investigation of any apparent unauthorized access to any Nortel Networks computer system.
The requirements of this Section shall apply equally to any access and use by Flextronics of any
Nortel Networks intranet, electronic mail system, of any Nortel Networks’ electronic switched
network, either directly or via a direct inward service access (DISA) feature or of any other
property, equipment or service of Nortel Networks.

	15.3	 	Flextronics Compatibility with Nortel Networks Computer Systems

Flextronics shall be responsible for providing the information technology services as set out in
Exhibit 26 of the MCMSA.

Section 16

EQUIPMENT FURNISHED BY NORTEL NETWORKS

	16.1	 	Title to Equipment Furnished by Nortel Networks

Any equipment loaned by Nortel Networks in connection with the Services, with or without charge to
Flextronics, shall be deemed bailed to Flextronics, and title thereto shall at all times remain
with Nortel Networks. Upon the earlier of such Nortel Networks request therefore or the completion
of the Services, Flextronics shall return, at its expense and risk, all such equipment in the same
condition it was when furnished to Flextronics, reasonable wear and tear excepted. Nortel Networks
makes no warranties with respect to any equipment loaned by Nortel Networks to Flextronics, whether
written or oral, statutory, express or implied including, without limitation, any warranty or
merchantability or fitness for a particular purpose.

	16.2	 	Risk, Insurance and Maintenance of Equipment Furnished by Nortel Networks

	 	 	All Nortel Networks equipment in Flextronics’ custody or control shall be held at Flextronics’ risk
and be kept insured by Flextronics at Flextronics’ expense in an amount no less than the Book
Value, with loss payable to the supplying Nortel Company. Flextronics shall use such equipment
solely in the performance of its obligations under this Agreement, and with the consent of Nortel
Networks, Flextronics may use such equipment for other tasks. Upon the expiration or termination
of this Agreement, or upon the written request of Nortel Networks at any time, Flextronics shall
deliver such equipment to the supplying Nortel Company in the same condition as originally received
by Flextronics, reasonable wear and tear excepted. The supplying Nortel Company shall have the
right upon prior request, to enter Flextronics’ premises to inspect any and all of its equipment
and any property or goods manufactured, developed or created with the aid of its equipment.

( 37 )

 

	16.3	 	Tracking of Equipment Furnished by Nortel Networks

Flextronics shall maintain appropriate tracking and recording procedures to guard against loss of
equipment owned by Nortel Networks. If Nortel Networks’ equipment is lost, Flextronics will be
responsible for providing a suitable replacement, if required by Nortel Networks.

Section 17

LEGAL AND REGULATORY COMPLIANCE

Flextronics shall at no additional charge to Nortel Networks, comply with and obtain all licenses
and permits necessary to provide the Services in accordance with this Agreement and covenants and
agrees that all Services shall conform with all applicable laws, governmental orders and
regulations in effect in all countries where such Services are performed and any other relevant
international agreements relating to the Services provided. Each Party shall provide all
information under its control, which is necessary or useful to obtain any export, or import license
or document required to ship or receive product, including but not limited to, U.S. Customs
Certificates of Delivery, Affidavits of Origin and U.S. Federal Communications Commission
Identifier, if applicable.

Section 18

INTERNATIONAL TRADE

	18.1	 	Exports

In addition to the requirements of Exhibit “1-B”, each Party agrees that it shall not knowingly (i)
export or re-export, tangibly or intangibly, any technical data (as defined by the U.S. Export
Administration Regulations or any other jurisdiction with import or export restrictions), including
software received from the other under this Agreement or (ii) export or re-export, tangibly or
intangibly, any direct product of such technical data, including software, to any destination to
which such export or re-export is restricted or prohibited by U.S. or applicable non-U.S. law
without obtaining prior authorization from the U.S. Department of Commerce and/or other competent
government authorities to the extent required by those laws. In addition, each Party agrees to
comply with all the requirements of the Export and Import Permits Act (Canada) all export control
laws and regulations of the exporting country, and any other applicable legislation throughout the
world. As it is relevant to all outstanding shipments, this clause shall survive termination or
cancellation of this Agreement.

	18.2	 	Customs Invoice

In addition to the requirements of Exhibit “1-B” and unless otherwise set forth in this Agreement,
Flextronics shall produce customs invoices and country of origin documents for all shipments
crossing international borders which comply with all laws, treaties and regulations of both the
exporting country and the importing country. If an Order for Materials includes Materials having
different countries of origin, the different countries of origin must be identified

( 38 )

 

on the customs
invoice, along with the related quantities/serial numbers of such Materials. If any upgrade of
Material to the most recent revision level in accordance with this Agreement is performed, the
applicable fee for this upgrade must be included on the customs invoice, or, if such upgrade is
performed at no charge to Nortel Networks, the value of such upgrade shall be so indicated.
Flextronics shall be solely responsible for all fines, penalties and costs resulting from any
customs invoice, document, or declaration not being so compliant unless such non-compliance is the
result of an act or omission of Nortel Networks in which case, Nortel Networks shall be responsible
for the fine, penalty and costs or its proportionate share of that fine and/or penalty and cost.
Any cost related to Value Added Tax, duties and fines will be charged to Nortel Networks at
Flextronics cost with no markup. All customs invoices must indicate whether or not any Assists were
provided and the value of said Assists.

	18.3	 	Duty Drawback and Minimization

In the countries where Nortel Networks maintains a duty drawback program, Flextronics shall provide
Nortel Networks with a quarterly report of part numbers and import duties paid or refunded (at
entry and through subsequent adjustment) on behalf of Nortel Networks for all deliveries in country
and for which Nortel Networks may become a subsequent exporter entitled to duty drawback.
Flextronics shall provide a duty drawback waiver on the appropriate form for duty paid on any
materials imported by Flextronics and used or consumed in the manufacture of Products supplied to
Nortel Networks. Nortel Networks shall provide guidelines to Flextronics with respect to the data
required to be provided by Flextronics.

In the countries in which Nortel Networks does not currently maintain a duty drawback program, the
Parties shall work together with a view to implementing a similar duty drawback program as soon as
practicable and as mutually deemed required.

When Nortel Networks determines that duties warrant a drawback claim, Flextronics shall provide all
necessary and relevant data and/or documentation and shall cooperate with Nortel Networks in
pursuing the claim. Flextronics will cooperate with Nortel Networks in any audit relating to this
Section. Similarly, when Flextronics determines that duties warrant a drawback
claim, Nortel Networks shall provide all necessary and relevant data and/or documentation and shall
cooperate with Flextronics in pursuing the claim. In either case, the costs of preparing and
filing the drawback claim will be borne by the Parties in proportion to their relative drawback
benefits and Nortel Networks will cooperate with Flextronics in any audit relating to this Section.

Flextronics will utilize duty minimization programs such as inward and outward processing relief,
ATA Carnets (An international customs document that permits duty-free and tax-free temporary import
of goods for up to one year), and temporary imports to mitigate duty costs to Nortel Networks.
Duty minimization programs will be reviewed and agreed by both Parties. Flextronics shall not be
required to pursue a specific duty minimization program if that program is unlikely to yield
savings greater than the cost of implementing it.

( 39 )

 

Section 19

ENVIRONMENTAL POLICIES

	19.1	 	Corporate Policy

Flextronics agrees to maintain ISO 14001 registration for those Delivery Facilities so registered
as of the Effective Date. For those Delivery Facilities not so registered as of the Effective
Date, Flextronics agrees to obtain such registration within [ • ] of the Effective Date. If
Nortel Networks requires Flextronics to obtain such registration for a Delivery Facility that is
managed by a party other than Flextronics, Nortel Networks agrees to negotiate in good faith the
cost of this registration.

	19.2	 	European Union (“EU”) Environmental Directives

	 	19.2.1	 	Compliance

Flextronics will engage with Nortel Networks or its designate in 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 the Services to be delivered in the EU.
Flextronics will provide the Compliance Plan to Nortel Networks for its approval,
[ • ] 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) Services 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 Delivery Facility into initial compliance with
regulations regarding any applicable EU directives.

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.

	 	19.2.2	 	Indemnification

[ • ]

( 40 )

 

	19.3	 	Packaging Reusable and Recyclable

In respect of the Materials, Flextronics shall use only packaging that complies with Section 1.4 of
Exhibit “1-B” and covenants and agrees to comply with applicable legislative requirements in other
relevant jurisdictions. Flextronics shall strive to minimize all product packaging and to design
packaging that delivers reusable/returnable packaging options or is constructed of recyclable
materials.

	19.4	 	Disposal Policies

Flextronics covenants and agrees to comply with any relevant disposal policies, directives,
regulations and laws as mandated in any applicable jurisdiction.

	19.5	 	Collaborate on Environmental Initiatives

Flextronics and Nortel Networks agree to collaborate in good faith on environmental initiatives
aimed at addressing particular Customer and market requirements.

19.6 Hazardous Materials

Flextronics shall supply to Nortel Networks a list of all materials used in respect of the Services
which are classified as toxic or hazardous under applicable laws and regulations, information on
the safe handling of any relevant product and any pertinent information concerning any adverse
effects on people or the environment that may result from use of, exposure to, or disposal of in
connection with the Services. [ • ]. Nortel Networks shall cooperate with Flextronics to
facilitate and minimize the damages, costs and expenses of any recall or prohibition against such
use.

Section 20

CONFIDENTIALITY AND PROPRIETARY INFORMATION

	20.1	 	Restriction on Disclosure and Use of Confidential Information

Any Nortel Company Proprietary Information provided or made available by any Nortel Company to
Flextronics and any Flextronics’ Proprietary Information provided or made available by Flextronics
to Nortel Networks shall be deemed for the purposes of this Agreement to be “Confidential
Information” of the person disclosing (“discloser”) such information to another person
(“recipient”), except if such information disclosed to recipient is (a) in or becomes part of the
public domain through no fault of recipient; (b) disclosed to recipient by a third party without
breach of any obligation or other restriction; (c) known to recipient at the time of disclosure and
has been so documented prior to receipt thereof; (d) independently developed by recipient without
access to any information furnished to it by discloser and has been or is so documented; or (e)
disclosed by recipient to the extent required to be disclosed pursuant to any applicable law or
order, decree or directive of any competent judicial, legislative or regulatory body or authority,
provided that the recipient shall have provided prior notice to discloser of such requirement and
an opportunity for discloser to take action to contest or attempt to prohibit or limit such
disclosure as permitted by law and such information shall continue to be

( 41 )

 

Confidential Information
for the purposes hereof to the extent disclosure is prohibited or limited by law. All Confidential
Information shall be owned and remain the sole and exclusive property of discloser, and all rights
to Confidential Information made available to recipient by discloser shall be held in trust by
recipient for the exclusive benefit of discloser. All Confidential Information of discloser shall
be held in confidence by recipient and, if in a form of any physical media of any kind, returned by
recipient upon request of discloser. Recipient shall not (i) reproduce the Confidential
Information of discloser without the written consent of discloser or (ii) use the Confidential
Information for any purpose other than the performance by recipient of its obligations under this
Agreement. Each Nortel Company and Flextronics shall cause each of their respective employees,
consultants, agents and representatives who shall have access to Confidential Information to sign a
written agreement setting forth confidentiality obligations of each such employee, consultant,
agent and representative, substantially in the form of Exhibit 6, which Exhibit 6 is attached
hereto and incorporated herein by reference. Flextronics shall be liable for and shall indemnify
Nortel Networks and each Nortel Company, its officers, directors, employees, subcontractors, and
agents against any losses, claims, costs or expenses arising from the failure of Flextronics, its
respective employees, consultants, agents and representatives against any losses, claims, costs or
expenses arising from the failure of Flextronics or its respective employees, consultants, agents
and representatives, for whatever reason, to execute the form of agreement set out in Exhibit 6 or
Exhibit 6.1 hereof as applicable or to comply with the terms thereof, and Nortel Networks shall be
liable for and shall indemnify Flextronics, its officers, directors, employees, subcontractors, and
agents against any losses, claims, costs or expenses arising from the failure of each of Nortel
Network Company or Nortel Networks, its respective employees, consultants, agents and
representatives for any corresponding failures by Nortel Company to Flextronics in respect of such
obligations. Each Party acknowledges that monetary damages may not be adequate in the event of a
default of this Section, and the discloser shall be entitled to injunctive or other affirmative
relief and/or to give notice of default pursuant to this Agreement, or both.

	20.2	 	Publicity

Flextronics shall not in any advertising, sales promotion materials, press releases or any other
publicity matters use the name “NORTEL NETWORKS”, “Northern Telecom”, “BNR”, “Bell-Northern
Research”, “Nortel Networks Technology” or the name of any Affiliate, or any variation thereof or
language from which the connection of said names may be implied, nor shall Flextronics disclose or
advertise in any manner the nature of the Services or any Order by Nortel Networks hereunder, or
the fact that Flextronics has entered into this Agreement, unless Flextronics is otherwise required
to make such disclosure under applicable law or Nortel Networks, in its sole discretion, grants
Flextronics prior written permission to do so.

No Nortel Company shall in any advertising, sales promotion materials, press releases or any other
publicity matters use the name “FLEXTRONICS CORPORATION”, “Flextronics”, or any variation thereof
or language from which the connection of said names may be implied, nor shall any Nortel Company
disclose or advertise in any manner the fact that Nortel Networks has entered into this Agreement,
unless Nortel Networks is otherwise required to make such

( 42 )

 

disclosure under applicable law or
Flextronics, in its sole discretion, grants Nortel Networks prior written permission to do so.

Section 21

INSURANCE

	21.1	 	General Liability Insurance

Flextronics shall maintain during the Term, with insurers with an A.M. Best rating of A- or better
policies providing the following insurance coverage: 1) general umbrella liability insurance
(including contractual and products liability ) with limits of either [ • ] combined single
limit per occurrence for bodily injury and property damage or [ • ] bodily injury per
occurrence and [ • ] property damage per occurrence, 2) workers’ compensation insurance and
other employee insurance coverage required by law, and employer’s liability insurance with limits
of [ • ], 3) owned or non-owned automobile liability with limits of [ • ] and 4) Errors &
Omissions insurance with limits of not less than [ • ].

Nortel Networks shall maintain during the Term, insurance coverage: 1) general liability insurance
(including contractual, products liability and broad form vendors’ endorsement) with limits of
either [ • ] combined single limit per occurrence for bodily injury and property damage or
[ • ] bodily injury per occurrence and [ • ] property damage per occurrence, and 2)
workers’ compensation insurance and other employee insurance coverage required by law, and
employer’s liability insurance with limits of [ • ].

Flextronics’ insurance shall be primary and non-contributory (except with respect of Errors &
Omissions referred to in 4) above, which may be primary and non-contributory as regards negligence
or negligent acts, as applicable) with respect to any insurance that Nortel Networks may have and
each applicable Nortel Company shall be named under Flextronics’ general liability insurance as an
additional insured.

	21.2	 	Property and Business Insurance

Flextronics shall provide evidence satisfactory to Nortel Networks that its property and business
are adequately insured up to at least [ • ] against all risks of loss or damage, including
business interruption, for at least the amount of the Maximum Foreseeable Loss as defined within
the insurance industry.

	21.3	 	Certificate of Insurance

Prior to the commencement of the Term and upon demand of Nortel Networks thereafter, Flextronics
shall furnish to Nortel Networks a certificate or certificates of insurance evidencing that all
insurance required in this Section 21 is in effect. Flextronics will endeavor to provide at least
30 days notice of any change in insurance coverage which would impact compliance with the
requirements of this Section 21. Flextronics shall in such event furnish a new certificate in

( 43 )

 

the
event of cancellation or expiration of any insurance evidencing that replacement coverage is in
effect.

	21.4	 	Business Continuity

Flextronics acknowledges that the existence, content and adequacy of its Business Continuity Plan
shall be used by Nortel Networks as part of initial and ongoing assessment criteria for review of
Flextronics overall performance under this Agreement. Flextronics shall maintain its property
conservation program to address risks in its worldwide locations. Flextronics will share a
description of this program with Nortel Networks, and shall provide Nortel Networks annually, or as
requested upon reasonable notice, information related to property protection and insurer’s
engineering recommendations for the locations relevant to logistics. Nortel Networks and/or its
insurance companies shall be allowed to inspect any site at any time upon reasonable notice and
during normal business hours and to recommend to Flextronics any appropriate protection
improvements. Nortel Networks and Flextronics shall review any recommendations made as a result of
such inspection and Flextronics shall implement any recommendations or alternative solutions which
are mutually agreed.

Section 22

EXPIRATION OR TERMINATION

	22.1	 	Termination

	 	22.1.1	 	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.
	 
	 	22.1.2	 	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 Blanket
Purchase 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 12 or Section 20 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

( 44 )

 

	 	 	 	Company Proprietary Information under Section 12
or Section 20 hereof and such breach is not susceptible of cure.
	 
	 	22.1.3	 	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 22.1 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.
	 
	 	22.1.4	 	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 Nortel Networks 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
22.4(c), all subject to applicable bankruptcy and insolvency legislation which may
otherwise provide. For greater certainty, if any Blanket Purchase Order is terminated,
all Orders relating thereto shall be deemed to be concurrently terminated.
	 
	 	22.1.5	 	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 Nortel Networks. The failure of Nortel
Networks to pay to Flextronics in a timely manner any moneys in dispute shall not
constitute a material breach hereof.
	 
	 	22.1.6	 	The Parties agree that the provisions of Exhibit “8” shall apply with respect to those
employees in the United Kingdom who were employed by Nortel Networks prior to Effective
Date, and were transferred to Flextronics pursuant to the Asset Purchase Agreement.

( 45 )

 

	22.2	 	Intentionally left blank
	 
	22.3	 	Intentionally left blank
	 
	22.4	 	Effect of Expiration or Termination

Upon expiration or any termination of this Agreement by either Party:

	(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 Services and deliver applicable Materials in accordance with
the terms of this Agreement. Provided Nortel Networks has made all payments required pursuant
to paragraph (a) above, Flextronics shall deliver to the Delivery Locations designated by
Nortel Networks within three (3) weeks of the later of the date of expiry or termination or
such payment, if required, all Materials and any Nortel Networks property described in Section
16.

	(c)	 	The provisions of this Agreement relating to Warranties (Section 11); Property Furnished by
Nortel Networks (Section 16); Confidential and Proprietary Information (Section 20);
Intellectual Property Rights (Section 12) except the license granted to Flextronics in
Section 12.1; Indemnification (Section 13); and Audit (Section 25.4) shall remain in effect
beyond any expiration or termination.

	(d)	 	Flextronics shall return all Nortel Networks Proprietary Information and property furnished
by Nortel Networks pursuant to Section 16 to the locations designated by Nortel Networks, and
under Nortel Networks’ supervision, destroy or erase all copies of such Nortel Networks
Proprietary Information in the possession of Flextronics 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 Nortel Networks 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 and under Flextronics’ supervision, either return, destroy or erase
all copies of such Flextronics Proprietary Information in the possession of Nortel

( 46 )

 

	 	 	Networks 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.

Section 23

TERMINATION ASSISTANCE SERVICES

	23.1	 	Scope of Termination Assistance Services.

On notice from Nortel Networks to Flextronics after a determination that an expiration or
termination of this Agreement will occur, Flextronics shall provide to Nortel Networks any and all
termination services (collectively, the “Termination Assistance Services”) reasonably requested by
Nortel Networks to facilitate the orderly transfer of responsibility for the Services to Nortel
Networks or its designee. The Termination Assistance Services may include:

	 	(a)	 	cooperating with Nortel Networks in effecting the orderly Services transfer to
a third party or 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 Services until the effective date of expiration or
termination of this Agreement (“Conclusion Date”); and
	 
	 	(c)	 	continuing to perform those Services requested by Nortel Networks after the
Conclusion Date.

	23.2	 	Limit on Obligation to Provide Termination Assistance Services.

Except as otherwise agreed within the scope of Termination Assistance Services, Flextronics will
have no obligation to provide Services or any part thereof after the Conclusion Date.

	23.3	 	Termination Assistance Period.

Flextronics shall provide the Termination Assistance Services, and Nortel Networks shall pay
applicable fees for provision of Termination Assistance Services for a period of up to four (4)
months after the Conclusion Date (“Termination Assistance Period”), at [ • ].

( 47 )

 

Section 24

ISSUE RESOLUTION AND ESCALATION PROCESS

	24.1	 	Issue Resolution and Escalation Process

If any disagreement of any kind or nature whatsoever arises between Flextronics and Nortel Networks
with respect to this Agreement, Flextronics and Nortel Networks shall first attempt to resolve the
disagreement informally. If the Parties are unable to so resolve the disagreement, either Party
may invoke the Issue Resolution and Escalation Process, set out in Exhibit “7”. Flextronics and
Nortel Networks shall use reasonable efforts and shall conduct discussions in good faith to resolve
all disagreements.

Section 25

GENERAL PROVISIONS

	25.1	 	Access to Facilities

Nortel Networks shall have the right to review Flextronics’ facilities, operations, and procedures
as they relate to the Services at any reasonable time with adequate prior notice for purposes of
determining compliance with the requirements of this Agreement. From time to time a Customer may
request the right to review Flextronics’ facilities and operations for the purpose of
qualification. Flextronics shall permit such reviews with notice of five (5) Business Days,
provided that Flextronics does not consider the Customer to be a competitor of Flextronics, and
such Customer signs an acceptable non-disclosure agreement. Flextronics shall not grant access to
those areas of its facilities where Services are conducted to a Competitor of Nortel Networks
without Nortel Networks’ express written permission.

	25.2	 	Reporting

Flextronics shall provide Nortel Networks with the reports as set out in Schedule “A” to Exhibit
“2” and Exhibit “3”.

	25.3	 	Documentation

Flextronics shall maintain documentation and information relating to the Services and Orders, and
updates thereto consistent with industry best practices, but in no event less than [ • ].

	25.4	 	Audits

	 	25.4.1	 	Agreement Compliance

Upon 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,

( 48 )

 

independent
accounting firm, other than the accounting firm(s) employed as primary outside auditors of Nortel
Networks’ or Flextronics (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, Service scope, volume levels, Service complexity, regulatory requirements, and Service
costs 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 services 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 make disclosure to Nortel Networks
of information relating to any customer of Flextronics. Flextronics agrees to permit the
Accounting Firm to inspect any of Flextronics’ facilities where Flextronics’ records are located or
stored, and to fully cooperate with such audits including, without limitation, giving the
Accounting Firm full access to all such facilities and all records, documents, and personnel
related to the Services. Nortel Networks shall give reasonable notice to Flextronics of its desire
to conduct such an audit. Audits shall occur during normal business hours and, except when Nortel
Networks in its sole discretion believes a violation of this Agreement has occurred, shall occur
not more often than once in any twelve (12) month period.

[ • ]

	 	25.4.2	 	Control & Security Compliance

Upon five (5) Business Days notice to Flextronics and during normal business hours, Nortel Networks
shall be permitted to audit, inspect and/or verify relevant Flextronics’ operations and other areas
of Service to confirm that (i) Flextronics is maintaining controls and security measures specific
to Flextronics’ fulfillment of its obligations to Nortel Networks pursuant to this Agreement (ii)
billings to Nortel Networks are correct, (iii) reports relating to Flextronics’ performance are
complete and accurate, (iv) records relating to consigned inventory are accurate, complete, valid
and appropriately valued, and (v) proof of shipping are accurate, complete and
valid (‘Inspections’). Nortel Networks shall clearly state the nature of the Inspection being
requested.

Such Inspections shall be limited to information that relates directly to Flextronics’ fulfillment
of its obligations pursuant to this Agreement. Nortel Networks may conduct Inspections itself or
with the assistance of a third party organization acceptable to Flextronics, provided that the
third party organization executes a confidentiality agreement reasonably acceptable to Flextronics,
at Nortel Networks expense, as appropriate. Inspections may be made as frequently as Nortel
Networks reasonably deems appropriate.

Flextronics will provide to Nortel Networks and its respective auditors (including internal audit
staff), inspectors, regulators, consultants and other representatives (collectively ‘Inspectors’)
as Nortel Networks may from time to time designate in writing, reasonable access to, without
limitation: (i) Flextronics’ facilities where the Services and/or operations are being performed;

( 49 )

 

(ii) Flextronics’ personnel and subcontractors providing any of the Services/operations; and (iii)
data and records, and (iv) operational or security audit reports and findings including remediation
plans in the possession of Flextronics relating to any of the relevant Services and/or operations.
Flextronics will provide such access to Inspectors upon reasonable written notice by Nortel
Networks during regular business hours, provided that all such persons adhere to Flextronics’
customary security and safety policies and have executed a confidentiality agreement reasonably
acceptable to Flextronics.

Upon request by Nortel Networks and with Flextronics’ prior consent, not to be unreasonably
withheld, delayed or conditioned, Flextronics will assist and cooperate with Nortel Networks
Inspectors in connection with Inspection functions, including the 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.

	25.5	 	Force Majeure

A Party affected by an event of Force Majeure shall be released without any liability on its part
from the performance of its obligations (other than an obligation to pay money) under this
Agreement, but only to the extent and only for the period that its performance of such obligations
is prevented by circumstances of Force Majeure and provided that such Party shall have given
prompt notice to the other Party. Such notice shall include a description of the nature of the
event of Force Majeure, its cause, and its possible consequences. The Party claiming circumstances
of Force Majeure shall promptly notify the other Party of the conclusion of the event.

	25.6	 	Notices

All demands, notices, communications and reports provided for in this Agreement shall be in writing
and shall be either sent by facsimile transmission with confirmation to the number specified below
or personally delivered or sent by reputable overnight courier services (delivery charges prepaid)
to any Party at the address specified below, or at such address, to the attention of such other
person, and with such other copy as the recipient Party has specified by prior written notice to
the sending Party pursuant to the provisions of this Section:

( 50 )

 

Nortel Networks:

Nortel Networks

3500 Carling Avenue

Ottawa, Ontario

Canada K2H 8E9

Attention: Vice President Supply Management

with a copy to:

NNL Corporate Secretary

8200 Dixie Road, Suite 100,

Brampton, Ontario

Canada L6T 5P6

Flextronics:

Flextronics Telecom Systems Ltd.

802 St. James Court,

St. Denis Street,

Port Louis,

Mauritius

Phone: 230 212 7600

Fax: 230 210 9168

Attention: President

With a copy to:

Flextronics International Inc.

Room 908, Dominion Centre,

43-59 Queen’s Road East, Wanchai, Hong Kong

Attention: President

with a copy to:

Corporate Legal Department at the address above

Any such demand, notice, communication or report shall be deemed to have been given pursuant to
this Agreement when delivered personally, when confirmed if by facsimile transmission, or on the
Business Day after deposit with a reputable overnight courier service, as the case may be.

	25.7	 	Independent Contractor

This Agreement shall not constitute Flextronics to be the agent or legal representative of Nortel
Networks for any purpose and Flextronics shall not hold itself out as an agent of Nortel Networks
other than as expressly provided in this Agreement. This Agreement creates no relationship of
joint ventures, partners, associates, employment or principal and agent between the Parties, and
both Parties are acting as independent contractors. Neither Party shall have the right to exercise
any control or direction over the operations, activities, employees or agents of the other Party in
connection with this Agreement. Other than as expressly permitted or provided elsewhere in this
Agreement, Flextronics is not granted any right or authority to, and

( 51 )

 

shall not attempt to, assume
or create any obligation or responsibility for or on behalf of any Nortel Company or Affiliate.
Flextronics shall have no authority to bind any Nortel Company or Affiliate to any contract,
whether of employment or otherwise, and Flextronics shall bear all of its own expenses for its
operations, including the compensation of its employees, contractors, representatives and agents
and the maintenance of its offices, service, warehouse and transportation facilities. Flextronics
shall be solely responsible for its own employees and sales people and for their omissions, acts
and the things done by them. Other than as expressly permitted or provided elsewhere in this
Agreement, Nortel Networks expressly disclaims any liability for any commitments on behalf of
Nortel Networks made by Flextronics.

	25.8	 	Contractor Responsible for its Contractors

Flextronics may subcontract Services only with Nortel Networks’ prior written approval, which
approval may not be unreasonably withheld in Nortel Networks’ sole discretion. The approval by
Nortel Networks of any subcontractor chosen by Flextronics shall in no way be construed to relieve
Flextronics of any of its duties, responsibilities and obligations to Nortel Networks under this
Agreement.

	25.9	 	Assignment

Except as expressly set forth in this Agreement, neither this Agreement nor any license or rights
hereunder, in whole or in part, shall be assignable or otherwise transferable whether by merger,
operation of law or otherwise, without the prior written consent of the other Party. Any change of
control in fact of a Party shall be deemed to constitute an assignment for the purposes of this
Section.

Subject to the condition that Flextronics is satisfied, upon reasonable evidence, that such future
assignee possesses sufficient creditworthiness and future assignee has accepted the assignment
without reservation, NNL may assign this Agreement or any portion thereof (i) to any of NNL’s
Subsidiaries or company of which NNL becomes a Subsidiary; or (ii) to a person or entity into
which it has merged or which has otherwise succeeded to all or substantially all of its business
and assets to which this Agreement pertains, by purchase of stock, assets, merger, reorganization
or otherwise, and which has assumed in writing or by operation of law its obligations under this
Agreement. Any attempted assignment in violation of the provisions of this Section shall be void.
In any assignment in case (ii) above, the person or entity into which NNL has merged or which has
otherwise succeeded to all or substantially all of NNL’s business and assets, shall agree in
writing to be bound by the terms of this Agreement.

Flextronics agrees to give NNL, to the extent legally permissible, notice of the direct or indirect
acquisition by any entity of (1) shares in the capital of Flextronics or of any Subsidiary of
Flextronics who is a party to this Agreement, if rights sufficient to elect a majority of the board
of directors of such entity (pursuant to a shareholders agreement or otherwise) are attached to
such shares or such Subsidiary of Flextronics ceases to be a Subsidiary of Flextronics, or (2)
substantially all of the assets of Flextronics or of such Subsidiary of Flextronics.

( 52 )

 

	25.10	 	Severability

If any provision of this Agreement is held illegal, invalid or unenforceable by any competent
authority in any jurisdiction, such illegality, invalidity or unenforceability shall not in any
manner affect or render illegal, invalid or unenforceable such provision in any other jurisdiction
or any other provision of this Agreement in any jurisdiction, and such invalid or unenforceable
provision shall be replaced for the purposes of the jurisdiction in which it is held to be illegal,
invalid or unenforceable with an enforceable clause which most closely achieves the result intended
by the invalid provision.

	25.11	 	Governing Law

All issues and questions concerning the construction, validity, enforcement, interpretation and
performance of this Agreement, the rights and obligations arising hereunder and any purchase made
hereunder shall be governed by the laws of the Province of Ontario and the federal laws of Canada
applicable therein, without reference to the UNCITRAL Conventions on Contracts for the
International Sale of Goods and without giving effect to any choice of law or conflict of law,
rules or provisions (whether of such Province or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the Province of Ontario. In furtherance of
the foregoing, the internal Laws of the Province of Ontario shall control the interpretation and
construction of this Agreement, even though under that jurisdiction’s choice of Law or conflict of
Law analysis, the substantive Law of some other jurisdiction would ordinarily apply.

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.

	25.12	 	Consent to Jurisdiction

The Parties hereto submit to and consent to the non-exclusive jurisdiction of Courts located in
each Province within Canada.

	25.13	 	Entire Agreement; Amendments

This Agreement, including all Exhibits and Schedules thereto, together with the MCMSA, the Asset
Purchase Agreement and the Shared Services Agreement and the other transaction documents referenced
therein, constitutes the entire agreement between the Parties pertaining to the subject matter
thereof. This Agreement supersedes all prior agreements and understandings between the Parties,
written or oral, with respect to such subject matter. No representation or statement of any kind
made by a representative of either Party that is not stated in this Agreement shall be binding.
The provisions of this Agreement may be amended or waived only

( 53 )

 

by an instrument in writing signed
by the authorized representatives of each Party, except as otherwise expressly provided in this
Agreement.

	25.14	 	Construction

Unless the context requires otherwise, all words used in this Agreement in the singular number
shall extend to and include the plural, all words in the plural number shall extend to and include
the singular, and all words in any gender shall extend to and include all genders.

Wherever the Agreement uses the expression “including” or “such as” or similar expressions denoting
examples, such expressions shall be interpreted as being “without limitation”.

	25.15	 	Headings

The headings used in this Agreement are for the purpose of reference only and shall not affect the
meaning or interpretation of any provision of this Agreement.

	25.16	 	Time of Essence

Time shall be of the essence of this Agreement, except as otherwise expressly provided in this
Agreement.

	25.17	 	Agreement by All Contractor Entities

Flextronics has entered into this Agreement for and on behalf of itself and its Subsidiaries.
Flextronics represents and warrants that it has full power and authority to negotiate this
Agreement for itself and for and on behalf of each of its Subsidiaries.

	25.18	 	Most Favoured Customer

[ • ]

	25.19	 	Language

The Parties have requested that this Agreement and all documents contemplated thereby or relating
thereto be drawn up in the English 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.

	25.20	 	Counterparts

The Parties may execute this Agreement in two (2) or more counterparts (no one of which need
contain the signatures of all Parties), each of which will be an original and all of which together
will constitute one and the same instrument.

( 54 )

 

IN WITNESS WHEREOF, the Parties hereto have signed this Agreement by their duly
authorized representatives, to be effective as of the Effective Date, although
actually signed by the Parties on the dates below their respective signatures.

	 	 	 	 	 	 	 	 	 
	NORTEL NETWORKS LIMITED	 	 	 	FLEXTRONICS TELECOM SYSTEMS, LTD.
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ CHAHRAM BOLOURI
	 	 	 	By:
	 	/s/ MANNY MARIMUTHU
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Print Name: Chahram Bolouri	 	 	 	Print Name: Manny Marimuthu
	 
	 	 	 	 	 	 	 	 
	Title:

	 	President, Global Operations
	 	 	 	Title:
	 	Authorized Signatory
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Print Name:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 

[Signature page to Logistics Agreement]

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