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Exhibit 4.2    
  

Confidential
Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions. 

Nortel
Networks Corporation

8200 Dixie Road, Suite 100

Dept. 0019, GMS 036/NO/163

Brampton, Ontario, Canada L6T 5P6 

November 8,
2002 

Bookham
Technology plc

90 Milton Park

Abingdon, Oxfordshire X14 4RY

United Kingdom 

Ladies
and Gentlemen: 

        Reference
is made to the Acquisition Agreement, dated as of October 7, 2002, between Nortel Networks Corporation and Bookham Technology plc (the "Acquisition Agreement") and the
Exhibits and Schedules thereto. Capitalized terms used but not defined in this Letter Agreement have the meanings set forth in the Acquisition Agreement. 

        The
Purchaser and the Seller hereby agree to the following: 

        (1)  The
Acquisition Agreement shall be modified and amended as follows. 

	(A)
	Section 2.05
shall be replaced in its entirety with the following: 

SECTION
2.05. Closing. Subject to the terms and conditions of this Agreement, the sale and purchase of the Assets, and the assumption of the Assumed Liabilities pursuant
to Section 2.02, as contemplated hereby shall take place at a closing (the "Closing") to be held at 5:59 p.m., New York City time, on Friday,
November 8, 2002, at the offices of Cleary, Gottlieb, Steen & Hamilton located at One Liberty Plaza, New York, New York (the "Closing Date"). 

	(B)
	Section 5.06
shall be replaced in its entirety with the following: 

SECTION
5.06. Insurance. Effective 5:59 p.m. (New York City time) on the Closing Date, the Business shall cease to be insured by the insurance policies of the
Seller and the Selling Subsidiaries. With respect to events or circumstances covered by insurance coverage written on an "occurrence basis," the Seller and the Selling Subsidiaries shall have no
Liability for occurrences that take place on and after 5:59 p.m. (New York City time) on the Closing Date. With respect to insurance coverage written on a "claims made basis," the Seller and
the Selling Subsidiaries shall have no Liability under such insurance coverage for claims made after 5:59 p.m. (New York City time) on the Closing Date. 

	(C)
	The
words "Within thirty (30) days of the date of this Agreement," at the opening of Section 5.08(e) shall be replaced in their entirety
with the words "At the Closing,".

	(D)
	Section 5.23(a)(i)(D)
shall be replaced in its entirety with the following: 

(D)    holding
up to [**] percent ([**]%) of the equity interests in any Person which produces or sells Competitive Products. 

1

 

	(E)
	Section 6.01(b)(ii)(B)
shall be replaced in its entirety with the following: 

(B)    hiring
such Employees or Transferring Employees identified through such employment searches other than the Employees listed on Appendix 6.01(b)
hereto who the Seller may not hire, employ or engage other than through a Permitted Engagement pursuant to generalized employment searches or otherwise; and 

	(F)
	The
first sentence of Section 6.04(a) shall be replaced in its entirety with the following: 

Prior
to the Effective Date, the Seller shall reduce the number of Employees listed in Section 3.12(a) of the Seller Disclosure
Schedule with a work location in Canada from 358 to 271 and shall reduce the number of Employees listed in Section 3.12(a) of the
Seller Disclosure Schedule with a work location in the United States from 16 to 12 (for an aggregate reduction in the number of Employees listed on
Section 3.12(a) of the Seller Disclosure Schedule of 91). 

	(G)
	Notwithstanding
anything to the contrary in Section 6.04(a) or Section 6.04(b): (i) the Interim Employee
Information shall be provided to the Purchaser no later than ten (10) Business Days prior to the Effective Date; (ii) the Interim Employee Information shall not include the Vacation
Information; and (iii) the Seller shall provide the Purchaser with the Vacation Information and the Updated Employee Information on November 6, 2002. 

        (2)  The
Purchaser and the Seller agreed to make certain changes to the Ancillary Agreements and the Real Estate Agreements and Assignments (collectively, the
"Acquisition Agreement Exhibits") as evidenced by such Acquisition Agreement Exhibits as executed on the Closing Date. 

        (3)  The
Seller Disclosure Schedule shall be modified and amended as follows: 

	(A)
	Section 1.01(e):
Certain Third Party Licenses. Section 1.01(e) of the
Seller Disclosure Schedule shall be amended by adding to it the following:

	1.
	Cross
License Agreement of Intellectual Property Rights, dated February 19, 1999, between Nortel PLC and IOC International PLC (and Integrated Optical Components Limited).

	2.
	Amendment
to License Agreement (SC-11 Cement License), dated October 8, 2002, among Northern Telecom Limited, 561158 Ontario Limited and Victor Steinberg. 

	(B)
	Section 1.01(g):
Transferred Passive Patents. Section 1.01(g) of the Seller Disclosure
Schedule shall be in the form attached hereto.

	(C)
	Section 1.01(h):
Transferred Patents. Section 1.01(h) of the Seller Disclosure
Schedule shall be in the form attached hereto.

	(D)
	Section 2.01(a)(iii):
Owned Equipment. Section 2.01(a)(iii) of the Seller Disclosure
Schedule shall be in the form attached hereto.

	(E)
	Section 2.01(a)(vii):
Third Party Licenses Exclusive to the Business. Section 2.01(a)(vii) of the
Seller Disclosure Schedule shall be amended by adding to it the following:

	1.
	All
rights associated with the Amendment to License Agreement—SC-11 Cement, dated October 8, 2002, among Northern Telecom Limited, 561158 Ontario Limited
and Victor Steinberg ("SC-11 Amendment"), other than rights under Paragraph 2 of the SC-11 Amendment, which rights Seller and the Selling
Subsidiaries expressly retain and do not assign to Purchaser. 

2

 

	(F)
	Section 2.01(a)(viii):
Other Seller Contracts. Section 2.01(a)(viii) of the
Seller Disclosure Schedule shall be amended as follows:

	1.
	by
reclassifying the following agreement from "Customer Agreement under negotiation" to "Customer Agreement":

	(i)
	Item
33. Framework Purchase Agreement to which Agilent Technologies Deutschland GmbH is a party. 

	2.
	Item
20. Miscellaneous transactions consummated on a customer purchase order and Seller Order Acknowledgment Form or supply agreement. Attachment B shall
be in the form attached hereto.

	3.
	Item
43. Attachment E shall be in the form attached hereto. 

	(G)
	Section 2.03(c):
Purchase Price Allocation. Section 2.03(c) of the
Seller Disclosure Schedule shall be in the form attached hereto.

	(H)
	Section 3.16(a):
Title to Intellectual Property. Section 3.16(a) of the
Seller Disclosure Schedule shall be in the form attached hereto. 

        (4)  Other
Agreements. 

	(A)
	Other
Security Interests. The Purchaser hereby agrees that, in the event that it or any of its Subsidiaries sells, transfers or otherwise disposes to the
Purchaser or any of its Subsidiaries of any of the Collateral (as defined in the U.S. Security Agreement), the Purchaser shall, or shall cause the applicable Subsidiary of the Purchaser to, deliver to
the Seller appropriate fully executed filings, recordings, registrations and other documents, in each case prepared by the Seller, as are reasonably requested by the Seller to establish a legal and
valid security interest in favor of the holders of the Series B Notes or, if such security interest may not be established under applicable Law, to execute and deliver to the Seller such other
documents, in each case prepared by the Seller, as are reasonably requested by the Seller to provide similar protections through title retention arrangements or otherwise.

	(B)
	Poughkeepsie
Utilities. The Seller and the Purchaser hereby agree that, from and after the Closing and until such time as the Purchaser or the Purchasing
Subsidiaries enter into an agreement with CH Energy Group for the provision of utilities (the "Utilities") at the premises located at 66 Firemens Way, Poughkeepsie, NY, the Seller shall pay for such
Utilities on behalf of the Purchaser or the Purchasing Subsidiaries, and the Purchaser or the Purchasing Subsidiaries shall reimburse the Seller, promptly upon written request (which request shall
include a copy of the Utility invoice) for the amount of such paid Utility invoice.

	(C)
	Removal
of Idle Assets. Following the Closing Date, the Purchaser shall, upon reasonable advance notice to the Purchaser, grant the Seller and its
representatives reasonable access to the facilities and properties of the Purchaser and its Subsidiaries for the purpose of removing or causing to be removed those items of personal property of the
Seller listed on Appendix 4(C) hereto that are located in or on any such facility or property (the "Idle Assets"). The Seller shall be
responsible for the costs of removal of the Idle Assets and shall reimburse the Purchaser for any costs or Liabilities incurred as a result thereof, including any damage or destruction of property of
the Purchaser or any of its Subsidiaries resulting therefrom. Such removal shall take place only upon reasonable advance notice to, and with the consent of, the Purchaser during normal business hours.
Seller shall remove or cause the removal of any such property within 90 days following the Closing Date. 

3

 

	(D)
	Zurich
Lease Assignment. The Seller and the Purchaser hereby agree that, from and after the Closing and until such time as Binz (as such term is defined
in the Zurich Lease Assignment) executes the Zurich Lease Assignment, the Seller and the Purchaser shall, in accordance with Section 5.11 of the Acquisition Agreement, cooperate to provide that
the Purchaser and the Purchasing Subsidiaries shall receive all benefits and be responsible for all Liabilities associated with the Zurich Lease Assignment, and the Seller and the Purchaser shall
treat the Zurich Lease Assignment as though it was validly executed by Binz.

	(E)
	License
to Occupy the Monticello Premises. The Seller and the Purchaser hereby agree that, from and after the Closing and until such time the Purchaser or
any of its Subsidiaries shall have entered into a lease agreement in respect of the premises located in Monticello, MN (the "Monticello Premises") occupied as of the date
hereof by the Seller, but in no event after November 22, 2002, in accordance with Section 5.11 of the Acquisition Agreement, the Purchaser and its
Subsidiaries shall be granted a license to occupy the Monticello Premises on the same terms as those set forth in the Canadian License Agreement. If, by November 22, 2002, the Purchaser or any
of its Subsidiaries shall not have entered into a lease agreement in respect of the Monticello Premises, the Purchaser and its Subsidiaries shall be obligated to vacate the Monticello Premises as of
such date.

	(F)
	Waiver
of Condition. The Seller hereby waives the condition to its obligation to consummate the transactions contemplated by the Acquisition Agreement
contained in Section 8.01(f) of the Acquisition Agreement.

	(G)
	[**].
The Seller and the Purchaser hereby agree to the following:

	1.
	The
Seller shall use its commercially reasonable efforts to either [**] on behalf of the Purchaser, or (b) amend the [**]
Agreement [**] between the Seller and [**], in either case [**] as manufactured and sold by the Seller on or prior to the
Closing Date (the "Applicable Products") to the same extent following the Closing Date as such activities were conducted by the Seller before the Closing Date and
[**] before the Closing Date; provided that, in the event that [**], the provisions of paragraph 2 below shall apply.

	2.
	[**]
the Purchaser or the Seller [**], the Seller and the Purchaser shall [**]:

	(i)
	[**]
the Purchaser [**] after the Closing Date [**]; and 

[**]
the Seller or the Purchaser [**] of the Closing Date [**]The [**] Purchaser, and
[**] the Seller and [**] the Purchaser. Notwithstanding the foregoing, the [**] the Seller hereunder shall be
[**] in respect of Series B Notes to the extent any Series B Notes are then outstanding or, if no Series B Notes [**] in respect of
any Series A Notes then outstanding. Neither the Seller nor the Purchaser shall [**] in connection with the [**] and the
[**] and the [**]. In the event that both the Seller and the Purchaser are [**]. The Purchaser and the Seller will
[**]. Other than as set forth above, the Seller shall [**]. 

	3.
	[**],
the Seller and the Purchaser further agree that the [**]. 

	(H)
	[**].
For the avoidance of doubt, any [**] in connection with the [**] of the applicable portions
[**].

	(I)
	Stockroom
Services Agreement. The Purchaser and the Seller agree to enter into a stockroom services agreement on the terms set forth in
Appendix 4(J) hereto.

	(J)
	Additional
Payment. The Purchaser represents that it has effected a wire transfer of funds in the amount of $[**] as of the
Closing Date. If the cash payment is not received in the account of the Seller on the Closing Date, the Purchaser shall pay the Seller an additional $[**] per day, not
including the date of receipt, until the cash payment is so received and, in all events, shall ensure that such funds are delivered. 

(Remainder
of page intentionally left blank) 

4

 

        Please
evidence your agreement with the foregoing by executing this Letter Agreement as indicated below. This Letter Agreement may be executed in one or more counterparts, each of which
shall be an original but all of which shall constitute one and the same agreement. 

	 	 	Very truly yours,
	

 	
 	
NORTEL NETWORKS CORPORATION
	

 	
 	
By:	

/s/  KHUSH DADYBURJOR      

	 	 	Name:	Khush Dadyburjor
	 	 	Title:	Attorney-in-Fact
	

 	
 	
BOOKHAM TECHNOLOGY PLC
	

 	
 	
By:	

/s/  PHILIP S.J. DAVIS      

	 	 	Name:	Philip S.J. Davis
	 	 	Title:	Company Secretary

5

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Exhibit 4.3    
  

EXECUTION COPY  

Confidential
Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions. 

 
 
 

SUPPLY AGREEMENT    
  

Nortel Networks Agreement No: 011634  

OPTICAL COMPONENTS  

SUPPLY AGREEMENT  

By and Between  

Nortel Networks Limited  

And  

Bookham Technology plc  

  

 
 

TABLE OF CONTENTS    
  

	1.	 	DEFINITIONS	 	1
	

2.	
 	

SCOPE	
 	

5
	

3.	
 	

PRODUCTS	
 	

9
	

4.	
 	

NORTEL'S PRODUCT QUALIFICATION AND ACCEPTANCE PROGRAM	
 	

12
	

5.	
 	

PRODUCT AND PROCESS CHANGES	
 	

15
	

6.	
 	

CERTIFICATION, QUALITY CONTROL AND RELIABILITY REQUIREMENTS, CAPACITY PLANNING, SUPPLY MANAGEMENT AND NORTEL'S AUDITING RIGHTS	
 	

20
	

7.	
 	

ORDERING	
 	

22
	

8.	
 	

DELIVERY	
 	

25
	

9.	
 	

PRICES AND PAYMENTS	
 	

27
	

10.	
 	

INSURANCE, TITLE, AND RISK OF LOSS	
 	

30
	

11.	
 	

ACCEPTANCE OR REJECTION	
 	

31
	

12.	
 	

WARRANTY	
 	

31
	

13.	
 	

REPAIR PROCEDURES	
 	

33
	

14.	
 	

REPAIR SERVICES	
 	

35
	

15.	
 	

CONTINUING AVAILABILITY OF PRODUCT	
 	

38
	

16.	
 	

DOCUMENTATION	
 	

38
	

17.	
 	

CONFIDENTIAL INFORMATION	
 	

39
	

18.	
 	

INDEMNIFICATION	
 	

40
	

19.	
 	

HAZARDOUS MATERIALS	
 	

41
	

20.	
 	

COUNTRY OF ORIGIN, INTERNATIONAL TRADE	
 	

42
	

21.	
 	

COMPLIANCE WITH LAWS	
 	

43
	

22.	
 	

CONSEQUENTIAL DAMAGES AND LIMITATION OF LIABILITY	
 	

44
	

23.	
 	

FORCE MAJEURE	
 	

44
	

24.	
 	

TERM	
 	

44
	

25.	
 	

TERMINATION AND CONTINUING RIGHTS	
 	

44
	

26.	
 	

NOTICES	
 	

46
	

27.	
 	

GOVERNING LAW	
 	

46
	

28.	
 	

DISPUTE RESOLUTION	
 	

47
	

29.	
 	

GRANT OF LICENSE 29.1	
 	

47
	

30.	
 	

GENERAL	
 	

49

i

 
 
 

EXHIBITS    
  

	Exhibit A	—Product Lists, Share Allocation and Custom Products	 	 
	Exhibit A-1	—Minimum Commitment	 	 
	Exhibit A-2	—Products in Development	 	 
	Exhibit B	—Specifications	 	 
	Exhibit C	—Demand Pull	 	 
	Exhibit D	—Monthly Reports	 	 
	Exhibit E	—Procedures for Electronic Communication	 	 
	Exhibit F	—Certification	 	 
	Exhibit G	—Prohibited Manufacturers	 	 

ii

   
This Optical Components Supply Agreement (this "Agreement") is entered into by and between Nortel Networks Limited, (hereinafter collectively referred
to as "NNL") and Bookham Technology plc (hereinafter referred to as "BT"). 

WITNESSETH
that the Parties agree as follows: 

1.        DEFINITIONS  

	1.1
	As
used herein:

	(a)
	"Acceptance Date" has the meaning specified in Section 4.1.

	(b)
	"Acceptance Program" has the meaning specified in Section 4.1.

	(c)
	"Acquisition Agreement" means the Acquisition Agreement between the Parties, dated as of the Effective Date hereof.

	(d)
	"AMPS Family" means components or subsystems that amplify an optical signal in digital optical communication systems.

	(e)
	"ARO" means after receipt of a Purchase Order or Release.

	(f)
	"Assist" mean goods and services supplied directly or indirectly, by Nortel or Nortel Affiliates to Supplier 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 or incorporated into 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 county of import.

	(g)
	"Blanket Purchase Order" means an internal Nortel mechanism issued for Products to support the Demand-Pull Program. Blanket
Purchase Orders (i) do not indicate a Delivery Date, (ii) may be issued by Nortel or Nortel Affiliate under the Demand Pull Program of this Agreement, and (iii) are
non-binding except to the extent Releases are subsequently issued for specific quantities of the Products.

	(h)
	"Business" means the Business as defined in the Acquisition Agreement.

	(i)
	"Business Continuity Plan" means a plan to be put into effect if a site becomes unable to produce Products for any reason, including
Force Majeure, for a period of more than five (5) continuous days.

	(j)
	"Business Day" means any day other than a Saturday, Sunday, or any statutory holiday observed in the jurisdiction where a right is to
be exercised or an obligation to be executed hereunder.

	(k)
	"Change" has the meaning specified in Section 5.1.

	(l)
	"Closing" means the Closing as defined in the Acquisition Agreement.

	(m)
	'Closing Date" means the Closing Date as defined in the Acquisition Agreement.

	(n)
	"Committed Delivery Dates" means, as applicable, (i) the dates specified by Supplier for delivery of Products covered under each
Nortel Forecast pursuant to the Demand-Pull Program; or (ii) the dates specified by Supplier for delivery of Products ordered by Nortel pursuant to a Purchase Order. 

1

 

	(o)
	"Delivery Date" means the date specified in a Release or as mutually agreed upon pursuant to a Purchase Order, in either event, when
the Products are to be delivered.

	(p)
	"Demand-Pull Program" means Nortel's ordering process as described in Section 7 (Ordering) and Exhibit C
hereto.

	(q)
	"Documentation" means the documentation as described in Section 16.

	(r)
	"Effective Date" means the Closing Date as defined in the Acquisition Agreement.

	(s)
	"Epidemic Failure" means that a [**] Product (whether in the installed base or in stock at Nortel, Nortel
Affiliate, Nortel customers or distributors) has experienced in any [**] period a FIT rate, measured on Field Returns, in excess of [**] times the FIT
rate as specified in the applicable Specification for the Product and such failure affects Product functionality.

	(t)
	"Failures in Time (FIT)" means number of failures in one billion 1,000,000,000 (109) hours of device operation.

	(u)
	"Field-Replaceable Unit (FRU)" means replacement Product, parts, sub-assemblies, circuit cards, modules and other
electronic and mechanical assemblies that may be replaced at an end-user location.

	(v)
	"Flex" has the meaning specified in Section 7.1.6.

	(w)
	"Forecast" has the meaning specified in Section 7.1.1.

	(x)
	"FCA" has the meaning set forth in the International Chamber of Commerce document, "INCOTERMS 2000".

	(y)
	"Intellectual Property License Agreement" means the Intellectual Property License Agreement between the Parties, dated as of the
Effective Date.

	(z)
	"Material Cycle Time" means the period which begins once Nortel receives seed stock; such period continues while Nortel ships to seed
stock to customer, customer changes out unit, customer ships returned unit to Nortel, Nortel receives unit and ships to Supplier, and such period ends when Supplier receives unit.

	(aa)
	"Mature Product" means a Product that has been accepted, in accordance with Section 4, for more than six (6) months.

	(bb)
	"Nortel" means collectively NNL and Nortel Subsidiaries.

	(cc)
	"Nortel Subsidiary" means a corporation or other legal entity in which NNL or Nortel Networks Corporation effectively owns or
controls, and continues to own or control, directly or indirectly, more than fifty percent (50%) of the voting stock or shares, or other indices of ownership.

	(dd)
	"No Fault Found (NFF)" means a Product returned or rejected by Nortel, due to a suspected fault but where Supplier does not detect a
fault through testing and the Parties mutually agree to designate the returned component NFF.

	(ee)
	"Party" means either of NNL and BT, as the context requires and "Parties" means both NNL and BT.

	(ff)
	"Pre-Closing Design" means a design for a Product as it existed on or prior to Closing. 

2

 

	(gg)
	"Pre-Closing Process" means a Process qualified for manufacturing Products as it existed on or prior to Closing.

	(hh)
	"Pre-Closing Products" means components manufactured and sold by the Business, prior to Closing, to Nortel and Nortel
Affiliates; and in Nortel's, Nortel Affiliates' and other third party's stockrooms and customer locations.

	(ii)
	"Prices" means the prices applicable to the Products and Repair Services determined in accordance with Section 9 and
Exhibit A, which Prices are in US Dollars.

	(jj)
	"Primary Sourced Products" means Products for which Nortel relies on Supplier for [**]% or more of its Product
requirements, and which are indicated as such in Exhibit A hereof or as may be otherwise agreed.

	(kk)
	"Process" means a set of interrelated resources, techniques and methods used in manufacturing the Products, which are specified and
designed by designers/developers of the Products.

	(ll)
	"Product and Process Technical Information" shall mean that technical information necessary for the manufacture of Products, including
without limitation, all design, technical, and manufacturing information (including, drawings, specifications and circuit schematics) of assemblies, sub-assemblies and parts, sole source
and other components (including the part number, name and location of the supplier), associated test requirements and lists of associated manufacturing tools and test equipment, as well as, repair and
maintenance specifications and test procedures, as are used by Supplier for the manufacturing of Products.

	(mm)
	"Product" means any component listed in Exhibit A, which may be modified, from time to time, by written agreement of the
Parties; and "Products" means some or all of such Products. Whenever the term "product" is used in this Agreement with respect to any component, such term designates: a) other products of
Supplier not yet accepted by Nortel in accordance with Section 4 (Nortel's Product Qualification and Acceptance Program); or b) products in development listed on
Exhibit A-2. The term "products" means some or all of such products. For the avoidance of doubt, the term "product" shall not be deemed to include the term "Nortel product" or "NNL
product" referred to anywhere in this Agreement.

	(nn)
	"Purchase Order" means any discrete written purchase order issued by any means of transmission in respect of any Products or products.
For greater clarity a Purchase Order does not include a Blanket Purchase Order or Release.

	(oo)
	"Release" means a written release, including electronic release, issued pursuant to Section 7.1 or Exhibit C by any
means of transmission, that is initiated by Nortel pursuant to a Blanket Purchase Order, and which specifies the Delivery Date for a specified Product. Each release shall include, at a minimum, the
following information consistent with the terms and conditions of this Agreement: (i) the identity of the Products required and the quantity of each such Product, (ii) the Delivery
Date(s) and delivery address(es) for each such Product and (iii) the agreed Price for each such Product (in accordance with Section 9 and Exhibit A).

	(pp)
	"Repair Date" means the date on which the repair of a Product is completed and which is stamped on the Product according to
Section 13.5. 

3

 

	(qq)
	"Repair Service" means, in the case of Products, the upgrade, the repair or replacement of defective Products as set forth in
Section 14 (Repair Services) to be performed during and after the applicable Product Warranty Period (as defined in Section 12) in accordance with the provisions of this Agreement.

	(rr)
	"Repair Services Pool" means a stock of FRU's that will be maintained by Supplier during the Term, as further described in
Section 14.

	(ss)
	"Series A Notes" means the Series A Notes as defined in the Acquisition Agreement.

	(tt)
	"Series B Notes" means the Series B Notes as defined in the Acquisition Agreement.

	(uu)
	"Services" means collectively assembly, customization, manufacturing, analysis, and test services, as may be agreed to from time to
time, and Repair Services.

	(vv)
	"Share Allocation" has the meaning specified to such term in Section 2.1 and Exhibit A hereof.

	(ww)
	"[**] Products" means Products for which Nortel relies on Supplier for [**]% of its
Product requirements and which are indicated as such in Exhibit A hereof or as otherwise may be agreed by the Parties.

	(xx)
	"Specifications" means the technical specifications and the other requirements listed, described or referred to in Exhibit B,
including the certifications listed in Exhibit F, acceptance test specifications, which are required to be met by the Products, and the Documentation, including any modifications or waivers of
those specifications and requirements to which both Parties have agreed in writing.

	(yy)
	"BT Subsidiary" means a corporation or other legal entity in which BT effectively owns or controls, and continues to own or control,
directly or indirectly, more than fifty percent (50%) of the voting stock or shares, or other indices of ownership.

	(zz)
	"Supplier" means BT and BT Subsidiaries.

	(aaa)
	"Term" has the meaning specified to such term in Section 24 (Term) of this Agreement.

	(bbb)
	"TxRx Family" means components or subsystems that convert an electrical signal into an optical signal or convert an optical signal
into an electrical signal in digital optical communication systems. 

	1.2
	Any
reference in this Agreement to another agreement shall mean such other agreement as executed by the Parties thereto and all subsequent amendments to such agreement, unless
otherwise explicitly stated. 

4

 

2.        SCOPE  

	2.1
	Share
Allocations and Minimum Commitment.

	2.1.1
	The
Parties have had and continue to have a business relationship, which entails the cooperative sharing of information, and the development and manufacture of Products and products
by Supplier for purchase by Nortel. The Parties are now entering into a series of agreements relating to the Business intended to bind the Parties to a closer working relationship. As partial
consideration for entering into this closer relationship, each Party desires to commit to and bind the other to certain obligations, including those set forth in this Agreement. This Agreement
requires that NNL purchase from Supplier a specific percentage of its requirements for specific Products, as specified in Exhibit A, ("Share
Allocation"), as well as certain specific commitments as set out in Exhibit A-1 ("Minimum Commitment").
Except with respect to the products listed on Exhibit A-2 ("Products in Development"), NNL agrees to purchase from Supplier the
specific percentage of its requirements for each specific Product as set out on Exhibit A, at Closing, during the initial three (3) years of the Term. Subject to the provisions of
Section 2.1.2, NNL agrees to maintain the Share Allocation percentages specified in Exhibit A for the period commencing on January 1, 2004 until the end of the initial three
(3) year term. The Share Allocation for Products in Development shall be as set forth in Exhibit A-2; provided however, that Supplier acknowledges that the Share Allocation
for such Products in Development will be reduced, as specified in Exhibit A-2, when NNL develops second sources for such products. The Share Allocation for new products and Products
in Development that are accepted as Products will be agreed to by the Parties at the time such new products are added to Exhibit A.

	2.1.2
	NNL's
obligations with respect to the Share Allocation for a given Product are conditional upon the following: a) Supplier is not in breach of a material
provision of this Agreement which affects or which is anticipated to affect such Product, which breach remains uncured for more than thirty (30) calendar days after receipt of notice,
b) Supplier remains competitive with its competitors on the basis of Product price, Product performance, quality (return rate), delivery and customer service level with respect to such Product,
and c) Supplier has Product available to meet the Target Product Total Stock for each Product in accordance with the terms of Exhibit C. Supplier acknowledges that the allocation of risk
under the terms and conditions of this Agreement will have an impact on the cost of the Products to Nortel. For the purposes of clarity, the Parties agree that any cost that can be reasonably
associated with the additional level of risk that Nortel has been required to assume under this Agreement (as compared to the level of risk that Nortel has assumed in its agreements with other
suppliers, which agreements shall be of similar scope and shall be for products comparable to the affected Products in technical sophistication and manufacturing complexity) will be factored into the
Price for the purposes of determining whether such Price is competitive. 

5

 

	2.1.3
	For
the avoidance of doubt, except as specified in Exhibit A and Exhibit A-1, this Agreement does not bind Nortel to purchase any particular Product or to
purchase a specific quantity of Products, but requires that NNL purchase the Share Allocation of its total requirement for the Products as listed in Exhibit A, as such requirements are modified
by the Forecasts. For the avoidance of doubt, NNL agrees and acknowledges that (a) the Share Allocation and Minimum Commitment are separate and distinct obligations of NNL, each of which must
be satisfied and (b) purchases made to satisfy the Share Allocation shall be applied to satisfy the Minimum Commitment for the corresponding time period, if applicable, and vice versa.
Exhibit A contains the estimated Product requirements of Nortel as of the date of this Agreement which is based upon the scenario Nortel currently expects for the 12 months following
Closing. The Share Allocations specified in Exhibit A are the percentage of Nortel's Product purchases from Supplier, without regard to any changes in Nortel's estimated or forecasted amounts.

	2.1.4
	If
in a given calendar half year, measured from January 1 to June 30 and July 1 to December 31 respectively, Nortel's aggregate purchases of a Product
are less than [**] ([**]%) percent, but more than or equal to [**] ([**]%) percent, of the Share
Allocation percentage set out in Exhibit A for such Product and Supplier is not in breach of the a material provision of this Agreement which affects or which is anticipated to affect such
Product, which breach remains uncured for more than [**] ([**]) calendar days after receipt of notice, then NNL will purchase, in the next calendar
quarter immediately following such half year, a quantity of that Product equal to the difference between the quantity of that Product actually purchased from Supplier by Nortel and Nortel Affiliates
in that calendar half year and the quantity that Nortel and Nortel Affiliates would have purchased from Supplier in that calendar half year, if NNL had complied with the Share Allocation percentage.

	2.1.5
	If
in a given calendar half year, measured in accordance with Section 2.1.4, Nortel's aggregate purchases of a given Product are less than [**]
([**]%) percent of the Share Allocation Percentage set out in Exhibit A for such Product and Supplier is not in breach of a material provision of this Agreement which
affects or which is anticipated to affect such Product, which breach remains uncured for more than [**] ([**]) calendar days after receipt of notice,
then NNL may at its option: a) purchase, in the first month of the next calendar quarter immediately following such half-year, a quantity of that Product equal to the difference
between the quantity of that Product actually purchased from Supplier by Nortel in that calendar half-year and the quantity of Product that Nortel would have purchased from Supplier in
that calendar half-year, if Nortel had met the Share Allocation percentage; or b) provide notice to Supplier, of its intent to pay and pay Supplier, within
[**] ([**]) days of receipt of an invoice from Supplier, [**] ([**]%) percent of the aggregate value of
the difference between the quantity that Nortel would have purchased from Supplier in that calendar half year if Nortel had met the Share Allocation percentage and the quantity of that Product
actually purchased from Supplier by Nortel in that calendar half year, based on the Price for such Product during the calendar half year in question.

	2.1.6
	The
remedies set out in Sections 2.1.4 and 2.1.5 shall be Supplier's sole remedies in the event of NNL's failure to meet the required Share Allocation.

	2.1.7
	As
a general principle, subject to the Share Allocations set out in Exhibit A, Nortel is permitted to second source any of its needs from a third party. 

6

 

	2.2
	Target
Allocations

	2.2.1
	Provided
Supplier is not in breach of a material provision of this Agreement with respect to the supply of any Product within the product family at issue, which breach remains
uncured for more than [**] ([**]) calendar days after receipt of notice, during the first three (3) years of the Term, NNL will endeavor to
purchase from Supplier a percentage of NNL's product family requirements as set out in the table below ("Target Allocations"): 

	 
	 	2002
	 	2003
	 	2004
	 	2005

	TxRx Family	 	[**]%	 	[**]%	 	[**]%	 	[**]%
	AMPS Family	 	[**]%	 	[**]%	 	[**]%	 	[**]%

The
Target Allocation will be measured on a calendar half-year basis on the aggregate value of Nortel and Nortel Affiliates purchases from Supplier for each product family during each
calendar year, as a function of the aggregate purchases by Nortel and Nortel Affiliates, from all vendors of products, within each product family, that: a) Supplier is capable of manufacturing
during the measurement period; b) Supplier has the capacity to manufacture during the measurement period; and c) Supplier's products have passed the Acceptance Program, in accordance
with Article 4 ("Target Product"). 

	Target Allocation

(By Product Family)	 	=	 	100% ×	 	Value of Nortel's and Nortel Affiliates' purchases from Supplier of Target Product Target
 Value of Nortel's and Nortel Affiliates' purchases from all vendors of Target Product

	2.2.2
	With
respect to the foregoing Target Allocations, Nortel and Nortel Affiliates will be deemed to have purchased from Supplier the value of any Product that Nortel and Nortel
Affiliates purchased from other sources solely because the Supplier did not offer, during the relevant period, a Product that was competitive in terms of price, performance and availability.

	2.2.3
	The
Parties will compare Nortel's and Nortel Affiliates' actual and deemed purchases under this Agreement against the Target Allocations on a calendar half-year basis.
If NNL fails to meet the Target Allocations, such a failure will not constitute a breach of this Agreement and in the event of such a failure the Parties shall discuss actions to avoid similar
occurrences in the future. NNL will have no liability or obligation if the Target Allocations are not met. 

7

 

	2.3
	Nortel
Subsidiaries and Nortel Affiliates

	2.3.1
	Supplier
and NNL intend that NNL's contract manufacturers, non-controlled subsidiaries and such other third parties as may be designated by NNL from time
to time, with the prior written approval of Supplier (collectively, "Nortel Affiliates") be permitted to purchase Products pursuant to the terms of this
Agreement. In such event this Agreement shall be deemed to extend to and for the benefit of Nortel Affiliates as set forth in this Agreement. The Parties agree that each Nortel Subsidiary and Nortel
Affiliate purchasing Products, including Custom Products, will agree in writing to be bound by the terms and conditions of this Agreement, and will have the rights and obligations of Nortel set forth
herein with respect to the purchase of Products, including, without limitation, the right to place Purchase Orders together with the rights and obligations which accrue in respect of the Products or
in respect of the ordering payment or delivery of such Products. For the purposes of giving effect to the above, where a Nortel Subsidiary or Nortel Affiliate purchases Products pursuant to this
Agreement, where the context so admits, references to Nortel herein shall be deemed to be references to the relevant Nortel Subsidiary or Nortel Affiliate which is ordering and/or purchasing Products
in accordance with the terms of this Agreement. In addition, where the context so admits, reference to Supplier herein shall be deemed to be references to the relevant BT Subsidiary, which is
supplying Products in accordance with the terms of this Agreement. Each Blanket Purchase Order and release thereunder, and Purchase Order shall create rights and obligations solely between BT or BT
Subsidiary which fulfils, and the Nortel Subsidiary or Nortel Affiliate which issues, the Blanket Purchase Order, and related Release and the Purchase Order. BT or BT Subsidiary is entitled to refuse
any Blanket Purchase Order, Release or Purchase Order from a Nortel Subsidiary or Nortel Affiliate that does not meet BT's or BT Subsidiary's normal and commercially reasonable customer credit
requirements for such a transaction, or for which BT and/or BT Subsidiary have a good-faith basis for believing that such Nortel Subsidiary or Nortel Affiliate will not or cannot comply
with a material provision of this Agreement. Product purchases made by a Nortel Affiliate or Nortel Subsidiary will be counted toward the Minimum Commitment, Share Allocations in Exhibit A of
this Agreement, and Target Allocations.

	2.3.2
	In
the event that a dispute arises between Supplier and a Nortel Subsidiary or Nortel Affiliate, NNL will provide reasonable assistance to Supplier in enforcing the terms of this
Agreement, as well as any Blanket Purchase Order, and related Release, or Purchase Order, as against such Nortel Subsidiary or Nortel Affiliate. Further, to the extent practicable, NNL will use
diligent efforts to enforce any relevant contractual provisions NNL may have with such Nortel Subsidiary or Nortel Affiliate, to require such Nortel Subsidiary or Nortel Affiliate to comply with the
terms of this Agreement. 

8

 

	2.4
	The
following Exhibits are an integral part of this Agreement and are incorporated by reference: 

Exhibit A—Product
Lists, Price, Share Allocation, and Custom Products

Exhibit A-1—Minimum Commitment

Exhibit A-2—Products in Development

Exhibit B—Specifications

Exhibit C—Demand Pull Program

Exhibit D—Monthly Reports

Exhibit E—Procedures for Electronic Communication

Exhibit F—Certification

Exhibit G—Prohibited Manufacturers 

3.        PRODUCTS  

	3.1
	Custom
Products

	3.1.1
	NNL
and Supplier agree that the Products marked with a "C" in Exhibit A, as such Exhibit may be amended from time to time by agreement of the Parties,
("Custom Products") form a subset of the Products and are of special importance for Nortel to maintain its competitive position in the market
place. It is agreed that: (a) these Custom Products shall be manufactured by Supplier for supply to Nortel only and (b) NNL will order [**]% of its requirements
for Custom Products exclusively from Supplier and will not order such Custom Products from a second source, from the date any such Product is designated as a Custom Product until
[**] ([**]) months after such Product ceases to be designated as a Custom Product; provided that NNL will not be prohibited from engaging a second
source if Supplier is not fulfilling its obligations with respect to delivery or Product quality for such Custom Product.

	3.1.2
	Nortel
may request Supplier to customize or modify any Product, product or Documentation. Supplier and Nortel will enter into good faith negotiations with respect to any request for
customization including the establishment of a mutually acceptable price. Customization requirements, if any, shall be incorporated in the Specifications and the sale and purchase of any customized
Product or Documentation shall be in accordance with the terms and conditions of this Agreement and Exhibits. For the avoidance of doubt, the Parties agree that a Product customized in accordance with
this Section 3.1.2 shall not be deemed a Custom Product unless (a) the Product was previously designated a Custom Product pursuant to Section 3.1.1 above, or (b) the
Parties otherwise mutually agree in writing. 

9

 

	3.1.3
	In
the event that, after a reasonable time and reasonable discussion between the Parties, an agreement cannot be reached on the customization or Supplier declines to carry out the
customization, then subject to the term of Section 29, Nortel will be free to engage a third party to carry out the customization and Supplier agrees to reasonably cooperate with Nortel and
such third party to effect the customization, including offering a license on commercially reasonable terms to such third party to effect the customization as more particularly set out in
Section 29. In that event, Nortel may purchase any product that has been customized by a third party in accordance with this Section 3.1.3, directly from that third party, together with
any required support for such product and the Share Allocation percentages for the affected Product shall be adjusted to take into consideration the fact that the Supplier declined such customization. 

	3.2
	Branding

The
Products will incorporate Nortel's branding requirements, which includes without limitation, Nortel's name, trademark and logotype, Nortel's color, Nortel's part number, Nortel's
bar-codes and/or CLEI codes, and Nortel's technical handbook (standard gray color binder), all in accordance with the Specifications. Further, the packing material for each Product will
incorporate Nortel's logotype and Nortel's box bar coding, applicable to each shipment. Nortel shall be solely responsible for supplying all the information required by Supplier to comply with the
foregoing obligations. 

	3.3
	Modifications;
New Products

	3.3.1
	Nortel
and Supplier may from time to time, by mutual agreement, modify the Product Lists contained in Exhibit A to add other products offered for sale by Supplier and/or to
incorporate therein enhancements or new features introduced in Products by Supplier. Supplier shall advise Nortel and offer and make available to Nortel for incorporation in this Agreement, any new
product or Product enhancement or new feature that Supplier makes generally available to third parties (collectively, "New Product"). The Share
Allocation for such New Product will be agreed to by the Parties at the time such New Product is added to Exhibit A, giving consideration to applicable product family Target Allocation,
NNL's then-current sourcing arrangements, and such New Product's competitiveness based on technology, quality, delivery and price.

	3.3.2
	With
respect to any modifications (including enhancements or new features) introduced to a Product made specifically to Nortel specifications, Supplier will give Nortel notice of
such modifications as per the terms of Section 26 of this Agreement.

	3.3.3
	With
respect to New Products introduced that perform the same basic function as a Product and which Supplier makes generally available to third parties, Supplier will use its
commercially reasonable efforts to give Nortel notice of such New Product within [**] ([**]) Business Days, but in no event later than
[**] ([**]) Business Days, after Supplier's decision that such New Product meets Supplier quality, reliability and other standards for the sale of such
products. If Nortel accepts Supplier's offer, the actual qualification of any such New Product under this Agreement will take place only after it complies with Nortel's acceptance requirements under
Section 4. At the time any New Product is qualified as a Product under this Agreement, Exhibit A shall be amended to add the Prices, Share Allocation and the availability date applicable
to such New Product. 

10

 

	3.4
	Preferred
Supplier Status

	3.4.1
	For
present and future optical components (including Products in Development) required by NNL during the Term, which Supplier is capable of manufacturing, NNL and Supplier agree to
take the necessary steps to add each such component as a Product under this Agreement and NNL agrees, upon completion of those steps, to purchase from Supplier a greater share of each such Product,
than NNL purchases from any other supplier measured by Product volume over successive six month periods during the Term, ("Preferred Supplier Status"), giving consideration to the Target Allocations
and NNL's then-current sourcing arrangements with other suppliers; provided, however, that (i) Supplier is able to provide NNL's volume capacity
requirements for such Product; (ii) Supplier is able to deliver such Product on a timely basis in accordance with this Agreement; (iii) there are no material quality problems or issues
with such Product; and (iv) the price for such Product, is competitive with other actual or potential sources of such component, taking into consideration any cost that can be reasonably
associated with any additional level of risk that Nortel has been required to assume under this Agreement, as compared to the level of risk that Nortel has assumed in its agreements with other
suppliers, (which agreements shall be of similar scope and shall be for products comparable to the Products in technical sophistication and manufacturing complexity).

	3.4.2
	If
Supplier has Preferred Supplier status for a given Product pursuant to Section 3.4.1 and thereafter no longer satisfies one or more of the criteria described in subparts
(i) through (iv) of Section 3.4.1 for such Product, NNL shall be relieved from giving Supplier Preferred Supplier Status for such Product and may adjust its purchases of such
Product to levels appropriate to protect NNL's security of supply of such Product based on the severity and expected continuation of such issues.

	3.4.3
	Notwithstanding
that Supplier meets all the conditions for Preferred Supplier Status outlined in Section 3.4.1 for a particular Product, NNL will not be in violation of its
obligation to accord Supplier Preferred Supplier Status with respect to such Product to the extent that NNL has existing binding contractual commitments with other suppliers which are inconsistent
with such Preferred Supplier Status for such Product. However, NNL will use reasonable commercial efforts to reduce such commitments to a sufficient level so that Supplier is accorded Preferred
Supplier Status with respect to such Product as reasonably promptly as possible, so long as such reductions do not result in liability by NNL for liquidated damages, cancellation charges or similar
liabilities or do not create a material risk of disruption to NNL's security of supply of the applicable components.

	3.4.4
	The
parties shall hold periodic reviews at least quarterly and establish a communications mechanism to give each other early visibility into opportunities to work together as
development collaborators or in a supplier-customer relationship. These opportunities shall include, in the case of Supplier, its new and potential product offerings and, in the case of NNL,
opportunities for which Supplier might be considered as a potential supplier or a potential collaborator to engage in cooperative product definition or development activities. 

11

 

	3.4.5
	For
those opportunities for which Supplier wishes to be considered as a development collaborator or supplier and for which NNL reasonably concurs, NNL undertakes to make available
to Supplier reasonable and appropriate NNL resources to work with Supplier to facilitate its analysis of such opportunities and Supplier's suitability to participate in such opportunities.

	3.4.6
	NNL
will allow Supplier, with respect to all new components required by NNL which Supplier is reasonably qualified to provide and has or is expected to have the capability of
manufacturing, to have at least an equal opportunity to submit a bid or proposal (a) for the initial supply of such components to NNL; and (b) to work with NNL to design Supplier's
components offering into NNL's products and to engage in the requisite development with NNL to achieve such design.

	3.4.7
	The
Parties shall set up reasonable mechanisms to publicize internally and otherwise facilitate the cooperative undertakings contemplated in Section 3.4.4, provided that such
mechanisms will be designed so as not to place unreasonable demands on the resources or systems of either Party. Notwithstanding the undertakings of the Parties under the preceding sentence, if NNL
through inadvertence fails to meet its obligations under Section 3.4.4, such a failure will not constitute a breach of Section 3.4.4 and in the event of such a failure the Parties shall
discuss actions to avoid similar occurrences in the future. Nothing in Section 3.4.4 shall (i) obligate NNL to accept any Supplier bid; or (ii) prevent NNL, during or after the
bidding process with Supplier, from soliciting and considering alternative bids from other suppliers; or (iii) prevent NNL from engaging in joint product definition or development activities
with other parties. 

4.        NORTEL'S PRODUCT QUALIFICATION AND ACCEPTANCE PROGRAM  

	4.1
	Supplier
shall supply Products that comply with the Specifications. Except as otherwise set forth herein, prior to being purchased by Nortel, any new product, product listed in
Exhibit A-2 as not having passed the acceptance program or a Product subject to a Change, as set out in Section 5, will undergo a program of evaluation, qualification and
acceptance by Nortel, in consultation with Supplier ("Acceptance Program") to verify its compliance with the Specifications. With respect to each
product that will be subject to an Acceptance Program in order to become a Product hereunder, the parties will agree on the date on which such Acceptance Program is to be completed and the product
accepted ("Acceptance Date"). Products listed in Exhibit A have been accepted by Nortel, unless otherwise identified.

	4.2
	It
is acknowledged by Supplier that circumstances may arise where Nortel will desire to purchase one or more products prior to acceptance in accordance with this Section 4.
Such circumstances will be examined in good faith by the Parties on a case-by-case basis. In the event that Nortel requests to purchase such product and Supplier agrees to sell
such products prior to its Acceptance Date, Nortel will issue Purchase Order(s) covering same. Purchase Orders for any product will be subject to this Agreement and all terms and conditions applicable
to Products in this Agreement will apply to the products ordered by Nortel, unless otherwise agreed in writing. 

12

 

	4.3
	Acceptance
by Nortel of a product(s) will take place upon successful completion by Nortel of its verification that the product complies with the Specifications. The verification
process shall be developed by Nortel, in consultation with Supplier. Nortel's development department will notify Supplier in writing of its acceptance of the products within
[**] ([**]) Business Days from successful verification. Once such products have been accepted; and the Parties have agreed to Price and Share Allocation
for same; such products shall become Products under this Agreement and shall be deemed to be included in Exhibit A. Once Nortel accepts a Product under this Acceptance Program for a specific
application, the Product shall be qualified for supply to Nortel pursuant to the terms of this Agreement and Nortel will not impose any additional requirements on the Product in order for such Product
to remain qualified hereunder, for such specific application, except pursuant to Section 5 of this Agreement (Product and Process Changes).

	4.4
	In
the event that in the course of carrying out the Acceptance Program, Nortel reasonably determines that a product fails to comply with the Specifications, Nortel will promptly
notify Supplier in writing of such failure, providing reasonable detail of the basis therefore. Upon receipt of such notice, Supplier will, take prompt and effective action, at its expense, to correct
the notified deficiencies by the applicable Acceptance Date. In such case, acceptance of the product will take place upon verification by Nortel that the notified deficiencies have been corrected, and
the accepted product shall become a Product hereunder and shall be deemed to be included in Exhibit A in accordance with Section 4.3.

	4.5
	In
the event that acceptance of a product does not take place on or before the Acceptance Date, or in the event Nortel and Supplier, acting reasonably, do not expect that acceptance
will take place on the Acceptance Date, then either Party may request that a design review be held between Supplier's and Nortel's engineers in order to determine a revised timeline for the product to
achieve acceptance (the "Revised Acceptance Date"). In addition, if and to the extent that, the failure to accomplish acceptance by Supplier on the
Acceptance Date is due to a failure by Supplier to diligently pursue the Acceptance Program, then Nortel may recover from Supplier the damages that Nortel is legally obligated to pay to its
customer(s) as a direct result of the products not being accepted by the Acceptance Date; provided that:

	(a)
	Supplier
had written notice of such damages prior to Supplier's agreement on the Acceptance Date; and agreed in writing to be responsible for such damages after Supplier's agreement
on the Acceptance Date; and

	(b)
	in
no event shall Supplier's liability per occurrence under this Section 4.5 exceed the lesser of (i) [**] percent
([**]%) of any such damages, or (ii) [**] Dollars ($[**]). 

13

 

	4.6
	In
the event that the product is not accepted by the Acceptance Date, or the Revised Acceptance Date, as the case may be, for reasons not attributable to Nortel, or Nortel Affiliate
and Supplier has accepted Nortel's Purchase Order(s) for the product, Nortel may, in addition to its rights under this Section 4.6, request that Supplier provide, and in such event, Supplier
will use diligent efforts to provide as an alternate solution, for purchase by Nortel, a functionally equivalent product acceptable to Nortel's customer(s) (if and to the extent that such functionally
equivalent product is available). Supplier shall invoice Nortel for the price of such functionally equivalent product, which invoice shall be subject to this Agreement, and the terms and conditions
applicable to Products in this Agreement shall apply to such functionally equivalent Products. Supplier will continue to use diligent efforts to make such functionally equivalent products available
until the Product has successfully completed the Acceptance Program and has been successfully phased into Nortel's production. Once the Product has passed the Acceptance Program, and if Nortel desires
to replace the functionally equivalent products with the Product, Supplier shall, at its own cost, supply to Nortel a sufficient amount of Product to enable Nortel to replace the functionally
equivalent product with the Product. In the event that the amount paid by [**] for the functionally equivalent product [**], Supplier shall
[**] of the Product being delivered to Nortel. In the event that the Price of the Product [**] for the functionally equivalent product,
[**] of the Product being delivered to Nortel. For the purposes of clarity, [**] the amount paid by Nortel for the functionally equivalent product.
Further, the purchases of the functionally equivalent product [**] for the applicable product family. The Parties shall work in good faith to minimize the cost to the other
Party if a product is not accepted by the Acceptance Date.

	4.7
	In
the event that either Party decides to terminate any Acceptance Program for any product prior to the Acceptance Date (or Nortel decides not to market or integrate into a Nortel
system product, a Product which has successfully completed the Acceptance Program), the terminating party (or Nortel if Nortel decides not to market or integrate into a Nortel system product, a
Product as described above) will reimburse [**]% of the out-of-pocket expenses, and [**]% of the labor costs that the other
party has reasonably incurred or is reasonably obligated to incur, as a direct result of the Acceptance Program and its termination; provided, however, that no such payment will be made if the
termination results from a breach by the non-terminating Party of any written commitment it has made to the terminating Party with respect to the Acceptance Program for such Product. 

14

 

5.        PRODUCT AND PROCESS CHANGES  

	5.1
	Supplier
shall notify Nortel in writing of all Supplier proposed modifications and changes that may affect processes, form, fit, function, reliability or performance to the Products,
Nortel's products and/or Processes (including source changes that affect the performance of subcomponents or a change in manufacturing location)
("Change(s)"). Such notification shall be made by Supplier to Nortel within the duration specified in the relevant section of the Nortel's Specification
Document NPS25268 covering supplier product change notifications, a copy of which has been provided by NNL to Supplier. Without limiting the generality of the foregoing notice requirements, any
proposed Change to the Products in accordance with the classifications described in Telcordia (formerly Bellcore) GR-209-CORE (herein
"GR-209") require that a notice be forwarded to Nortel; except, however, that no notice will be required for Class D Changes under
GR-209 which do not affect form, fit, function or performance of the Product. Supplier shall comply with GR-209 only to the extent expressly set forth in this Section.
Supplier's Change notifications shall be sufficiently detailed so as to disclose adequately the Change to Nortel.

	5.2
	Supplier's
written Change notifications shall be numbered in a single sequential numbering scheme and shall include the information specified in GR-209 including the
following: a detailed list of the Products and/or Processes affected and associated Changes that must be implemented in conjunction with or prior to the notified Change, the compatibility of the
Change with the Products and/or Processes currently deployed, a detailed description of the reason for the Change, the effect on the Products and/or Processes once the Change is implemented and a
summary of the procedure for implementation. In addition, a detailed description of the Change, the consequences if the Change is not implemented and the planned implementation date of the Change
shall be included in the Change notification. Nortel will propose a disposition plan for Nortel's and its customers' stockrooms. Nortel will notify Supplier of the type and quantity of Products it
requires for the implementation of the Change and the locations where such Products should be delivered, and the Parties will agree on the quantity of the Products to be supplied on the understanding
that Nortel must be made whole as soon as practical. Supplier will stamp any changed Product with a serial number that clearly distinguishes it from the previous Product.

	5.3
	Nortel
reserves the right to request reasonable test data associated with any Product Changes. Furthermore, in the event Nortel determines it is necessary to verify the Change prior
to acceptance, under Section 4, Supplier shall supply, on loan and without charge, a sufficient production level quality Products for such verification, or offer some other alternative
arrangement, reasonably satisfactory to Nortel, for such verification. All such Products furnished on loan will remain the property of Supplier, and will not be resold by Nortel, unless those Products
are subsequently purchased by Nortel from Supplier. 

15

 

	5.4
	Supplier
shall not implement a Change without the prior written consent of Nortel, which consent may not be unreasonably withheld or delayed, however, any such consent will be
conditioned on the Product or Processes affected by the Change being qualified in accordance with an Acceptance Program. If Supplier implements a Change without Nortel's prior consent, Nortel will
have no obligations with respect to the changed Product. Supplier will make the unchanged Product available for purchase until the changed Product has successfully completed the Acceptance Program and
has successfully been phased into Nortel's production, unless the Parties otherwise agree. Notwithstanding the foregoing, nothing in this Agreement shall be determined to prevent Supplier from making
any changes to any Products, excluding Custom Products, for the benefit of any third parties not subject to this Agreement.

	5.5
	In
the event that, during the Product Warranty Period [**], a Product experiences an Epidemic Failure, Nortel and Supplier shall, as expeditiously as possible,
meet in good faith to decide if a Change is necessary and how the cost of such Change shall be allocated according to each Party's fault. In the event the Parties agree that a Change is necessary and
the failure has been caused by a fault in a Pre-Closing Design or a Pre-Closing Process, Nortel and Supplier [**]. Where the Parties have agreed that a
Change is necessary and to the extent that the failure has been caused by a fault in a Process or Product design other than a Pre-Closing Design or Pre-Closing Process, the
cost of the Change [**]. If Nortel and Supplier mutually agree that a Change is necessary, Supplier shall, as expeditiously as possible, generate a Class A or AC Change,
as defined in GR-209, to eliminate the defect and supply such Change to Nortel. If mutually agreed by the Parties to be required, Nortel and Supplier will develop a plan for a retrofit
program for units of the failed Product. A retrofit program is a program that allows the Change to be implemented in all of Nortel's, Nortel Affiliate's and other third parties' stockrooms and
customer locations within a period not to exceed [**] ([**]) calendar days from the date of Supplier's first knowledge or notice of the defect. A
retrofit can only exceed [**] calendar days ([**]) if agreed to by Nortel's affected customers. The retrofit plan will be implemented by Nortel
[**]; provided, however, that Supplier will [**] as determined above, [**] such retrofit program in the field, which costs shall
consist of [**] the Field Replacement Units. The remedies set out in Sections 5.5 and 5.6 for Epidemic Failure are in addition to any other remedies available to Nortel at law
or under this agreement.

	5.6
	Supplier
shall provide, Class A seed stock units to support a retrofit program completion within said [**] calendar ([**]) days
as set forth above in Section 5.5. The number of seed stock units will be calculated as follows: 

Seed
Stock Units = Material Cycle Time (Weeks) × Retrofit Rate 

	Retrofit Rate	 	=	 	Number of units to be retrofitted

Change Completion Date — Implementation Date

Upon
completion of the retrofit program, Nortel will have no obligation to purchase any of the seed stock units. Further, Nortel may return seed stock units to Supplier and Supplier will treat such
seed stock units as Product removed from the field during the retrofit program. The cost of providing such Class A seed stock units will be allocated according to the Parties relative liability
as determined under Section 5.5 above. 

16

 

	5.7
	Nortel
shall provide Supplier with Nortel's Customer Product Code, the release number of the Product and the CLEI code of the Product, if required, for each Product Change under this
Section. At Nortel's request, this information shall be placed on the Products incorporating the Change by Supplier in accordance with the Specifications.

	5.8
	Supplier
shall provide Nortel with a field baseline report covering the Products which will include: part number, Current Revision Level, New Revision Level, Reason for Change, Parts
affected by Change, Old and New Revision of printed circuit board ("PCB"), if applicable. This report will be updated whenever a Change to the Products
is generated by Supplier. Supplier will use its diligent efforts to produce these updates within five (5) Business Days of each Change date.

	5.9
	Throughout
the Term, Supplier shall, at Nortel's request, furnish to Nortel all Supplier data showing that a Product will continue to meet the original Specifications, if a proposed
Change is made to a Product. If Nortel determines that such data is insufficient to determine such compliance with the Specifications, Supplier and Nortel will agree to any additional testing or
qualification procedures that may be required to do so provided, however, that such testing or qualification procedures shall not impose any new requirements for compliance, in addition to those that
were imposed under the original Acceptance Program for such Product, as it relates to the original application under Section 4.

	5.10
	Return
Rate

	5.10.1
	Product
Returns consist of three categories

	(a)
	"Field
Returns" means the number of units, within a product family, returned by Nortel's customers, excluding Other Returns;

	(b)
	"Factory
Returns" means the number of units, within a product family, returned for out-of-Specification performance prior to the said units being delivered to
Nortel customers, excluding Other Returns and NFF;

	(c)
	"Other
Returns" means the number of units, within a product family, returned for out-of-Specification performance which is not caused by Supplier, including,
but not limited to damaged connectors and damage due to shipping. 

	5.10.2
	Supplier
agrees that the Total Return Rate for a given Product (as determined by Supplier in accordance with the formula set out below) will not exceed the return rate set out in
Exhibit A, or if applicable in the Product Specification ("Target Return Rate"). The Total Return Rate for a given Product will be calculated as
follows: 

	Total Return Rate	 	=	 	Field Returns + Factory Returns over a

six (6) month period

Total units within a product family shipped during the same 6 month period
	

For the avoidance of doubt the provisions relating to Total Return Rate (including this section 5.10 and section 5.11) shall only apply to Mature Products.

	5.10.3
	Supplier
will track the Total Return Rate on a monthly basis, and provide Nortel with monthly reports. 

17

 

	5.11
	High
Total Return Rate

	5.11.1
	(a)    If
the Total Return Rate for a given Product (as defined in Section 5.10 hereof) is higher than [**] ([**])
times the Target Return Rate, (a "High Total Return Rate"), Supplier and NNL shall confer to determine the cause of the High Total Return Rate, and Supplier shall promptly develop and adopt, in
consultation with NNL, corrective measures to resolve the problem. NNL may take such interim action as is reasonably required to protect its source of supply of the Product, based on the severity and
expected continuation of such issues and NNL's obligations with respect to Share Allocation for the affected Product will be reduced, to the extent Nortel is required to obtain the
Product from an alternate source. 

(b)    If
Supplier fails to promptly develop and adopt such mutually agreed corrective measures, or such corrective measures fail to reduce the High Total Return Rate for a Mature Product to
an acceptable Total Return Rate within [**] ([**]) Business Days of adoption of such corrective measures, then NNL may reduce the Share Allocation for
such Mature Product, by a further [**] ([**]%) percent per month, while the Total Return Rate exceeds the specified level, up to a maximum reduction of
[**]%. For the purposes of clarity, the Share Allocation reduction set out in the previous sentence, is in addition to any Share Allocation reduction which occurs as a result
of Nortel being required to obtain the Product from an alternate supplier to protect its security of supply. 

	5.11.2
	Any
occurrence of a High Total Return Rate may result in the cancellation of all orders, including Releases, for Products affected by the default in quality requirements (without
Nortel incurring any liability or affecting Nortel's other remedies under this Agreement).

	5.11.3
	Once
the High Total Return Rate issue giving rise to actions under Section 5.11.1 has been corrected, and the actual Total Return Rate does not exceed the Target Return Rate
for the affected Product, then NNL will undertake to return the Share Allocations with respect to the affected Product to the original levels that existed prior to NNL exercising its rights under
Section 5.11.1, taking into consideration, among other things, any binding contractual commitments NNL has made to alternate suppliers because of the prior reduction of the Supplier's Share
Allocation for the Product. NNL shall endeavor not to enter into any agreement with an alternate supplier binding NNL to purchase a quantity or share of Products that is or will be in conflict with
NNL's Share Allocation set forth in Exhibit A hereof.

	5.11.4
	In
the event that Section 5.11.1 applies to a [**] Product, once the High Total Return Rate issue giving rise to actions under Section 5.11.1
has been corrected, and the actual Total Return Rate does not exceed the Target Return Rate for the affected Product, a [**] ([**]%) percent reduction
in Price will be applied to the number of units purchased by Nortel equal to the number of defective units affected by the High Total Return Rate. 

18

 

	5.11.5
	If
NNL elects to reduce the Share Allocation for a particular Product, in accordance with Section 5.11.1(b), such reduction of the Share Allocation will be
NNL's sole remedy for Supplier's failure to comply with the provisions of Section 5.10 of this Agreement. However, if NNL does not elect to reduce the Share Allocation in
accordance with Section 5.11.1(b), NNL shall have the right to take any action or exercise any other right pursuant to this Agreement or applicable law. 

19

   6.        CERTIFICATION, QUALITY CONTROL AND RELIABILITY REQUIREMENTS, CAPACITY PLANNING, SUPPLY MANAGEMENT AND NORTEL'S AUDITING RIGHTS

	6.1
	Certification

	6.1.1
	Nortel
represents that on the Effective Date it has received ISO 9001 certification for the Business and TL 9000 certification for the Paignton facility. Supplier shall maintain the
foregoing ISO 9001 and TL 9000 certifications in effect throughout the Term. Further Supplier undertakes to have all other facilities used by Supplier to manufacture Products, certified under ISO 9001
and TL 9000 on or before June 30, 2003 and shall maintain such ISO 9001 and TL 9000 certification for as long as such facilities are being used for manufacture of any Products under this
Agreement.

	6.1.2
	Supplier
will obtain the certifications set out in Exhibit F. 

	6.2
	Quality
Control and Reliability Requirements

	6.2.1
	It
is acknowledged that Supplier will be taking over the operation of the Business at Closing and Supplier agrees that it will at least maintain Nortel's quality programs existing
at the time of Closing in relation to the Business and will strive to improve performance with respect to those programs to meet Nortel's quality and reliability target metrics for the Products, such
metrics to include, without limitation, mean time between failure, return rate and supplier product quality level.

	6.2.2
	Products
furnished by Supplier shall be tested and inspected by Supplier prior to shipment in accordance with testing and inspection procedures mutually agreed, in writing, by
Supplier and Nortel. Inspection records shall be maintained by Supplier and made available to Nortel upon request.

	6.2.3
	Supplier
shall provide Nortel with a monthly report covering the items shown in Exhibit D and any other items reasonably required by Nortel in a format reasonably acceptable
to Nortel.

	6.2.4
	Supplier
shall report to Nortel in writing, within five (5) Business Days of becoming aware of an actual failure of any Product to conform to the Specifications. 

	6.3
	Capacity
Planning

	6.3.1
	Supplier
shall implement a capacity plan to meet Nortel's and Nortel Affiliates' Products requirements and as such requirements are modified in the Forecast. 

20

 

	6.4
	Supply
Management and Business Continuity

	6.4.1
	The
Parties will have monthly and quarterly business review meetings. During the regular monthly meetings which shall review capacity planning, Product cost road maps,
competitiveness, supply management, Flex requirements and Forecasts with Nortel, Supplier will provide Nortel with a list of its suppliers (throughout the entire supply chain) of
sole-source and critical components so that Nortel may have input and raise any concerns it may have with respect to such suppliers. Prior to these meetings, Nortel will provide Supplier
with Nortel's 12 month view of its requirements for Products, anticipated new products, Product mix and any other significant matters that may impact Nortel's Forecast. The quarterly business
review meetings will be a senior level review of the business between the Parties, including capacity and security of supply reviews. It is also agreed that Supplier will supply appropriate
on-site personnel at Nortel's sites to facilitate this Agreement.

	6.4.2
	During
the quarterly business reviews, Supplier will identify to Nortel in writing any sole source/critical components incorporated into the Products.

	6.4.3
	In
the event Supplier desires to subcontract to a third party a part of its obligations under this Agreement, Supplier shall notify Nortel, including the name of the proposed
subcontractor and the scope of the subcontract. Nortel will, as promptly as possible, but no later than five (5) Business Days after receipt of such notice, advise Supplier of any issues or
concerns regarding such proposed subcontract and its impact on Supplier's performance of this Agreement. In the event Nortel raises issues or concerns about a proposed subcontract, the Parties shall
meet and seek in good faith to agree on actions to be taken by Supplier to resolve Nortel's issues or concerns. Supplier will not implement a subcontract (a) without notifying Nortel and giving
Nortel reasonable period of time to identify issues or concerns; and (b) if issues or concerns are identified by Nortel, without resolving them to the reasonable satisfaction of Nortel.

	6.4.4
	Supplier,
in cooperation with NNL, shall develop and implement a Business Continuity Plan for each manufacturing site used to manufacture Products. Where a recent Business
Continuity Plan exists on Closing for the Business, Supplier agrees to maintain the Business Continuity Plan currently in place. Supplier's goal is to be able to continue to produce Products in
accordance with the time schedules required under this Agreement. Such Business Continuity Plan is expected to contain, at a minimum, provisions for documentation storage (product, process, fixture,
tools), information systems technology redundancy, a demonstration of Supplier's capability to recover in an emergency if one of its own manufacturing facilities or processes becomes unable to produce
Products and if one of its component suppliers or subcontractors experiences such an emergency.

	6.4.5
	Throughout
the Term of this Agreement, Supplier shall provide NNL with access to the Business Continuity Plan and shall provide NNL with notification of any changes in the Business
Continuity Plan to NNL within ten (10) Business Days of any change. Supplier shall put the Business Continuity Plan into effect if a site becomes unable to produce products for any reason,
including Force Majeure, for a period of more than five (5) days. A period of Force Majeure or other event causing inability to produce Products shall be deemed to commence on the date that the
event of Force Majeure or other such event first occurs.

	6.4.6
	NNL
and Supplier shall review Supplier's Business Continuity Plan annually. 

21

 

	6.5
	Nortel's
Inspection Rights

	6.5.1
	Nortel
employees whose job responsibilities encompass the responsibility to audit quality management, control and/or assurance of Nortel suppliers ("Quality
Auditors") may inspect or test, at all reasonable times during Supplier's normal business hours and at Supplier's locations, any Products covered by this Agreement upon not
less than five (5) Business Days prior written notice, but no more than six (6) times per calendar year, unless there are quality problems in which case NNL may inspect the problem
location as many times as the Parties determine appropriate in order to rectify such quality issues. Supplier shall provide at no additional cost such facilities, labor, data, specifications, manuals
and information as are reasonably required to allow Nortel Quality Auditors to perform a full range of quality assurance functions without unduly interfering with Supplier's normal
day-to-day operations. Inspection of Products may be performed in whole or in part prior to final assembly and/or completion of manufacturing or repair Processes. Testing of
Products may be performed only in the event that either Party has detected quality problems or failures relating to the Product being tested. Supplier will reasonably cooperate with Nortel to ensure
that any contract manufacturer used by Supplier in relationship to the manufacturing or assembly of any Product will be subject to a similar standard of inspection and test as related to those
Products as consistent with good commercial practice in that industry. NNL's Quality Auditors shall observe all of Supplier's site rules regarding safety, security, environment, health
and other working practice, NNL shall have and maintain in force general liability insurance with limits of either (i) $5,000,000 combined single limit per occurrence for bodily injury and
property damage or (ii) $3,000,000 bodily injury per occurrence and $2,000,000 property damage per occurrence.

	6.5.2
	Subject
to the provisions of Section 4 hereof, any exercise of or failure by Nortel to inspect Products, Processes and Supplier's manufacturing locations shall not
constitute, or be construed as acceptance of the Products and Processes by Nortel or as relieving Supplier from its obligation to furnish all Products under this Agreement. 

7.        ORDERING  

	7.1
	Demand-Pull
Program

	7.1.1
	For
Products in the Demand-Pull Program, Nortel shall provide each week a twelve (12) month rolling forecast report
("Forecast") of its Products requirements. The first three (3) months of each Forecast will be detailed on a weekly basis. Supplier will respond
on a monthly basis with a plan for the Committed Delivery Dates for the first three (3) months of a Forecast. The remaining nine (9) months of each Forecast will be detailed on a monthly
basis. Releases under clause 7.1.5(a) below will be issued by Nortel on the basis of the then current Forecast. 

22

 

	7.1.2
	Except
as set out in Exhibit A and A-1, Supplier acknowledges and agrees that the Forecasts and Blanket Purchase Orders are issued for convenience only, and
Nortel's issuance of a Forecast and/or Blanket Purchase Order is not a purchase of Products or commitment to purchase any quantity of the Products identified in the Forecast and/or Blanket Purchase
Order. Neither Party is legally bound to purchase or sell Product on the basis of a Blanket Purchase Order. Releases will be issued by Nortel in accordance with Nortel's requirements. On a quarterly
basis the Parties will agree upon targeted Product stocking requirements for Supplier stated on a Finished Goods ("FG") and
Work-In-Process ("WIP") basis, (collectively, "Target Product Total Stock")
which Target Product Total Stock will be set out in Exhibit C.

	7.1.3
	Nortel
shall purchase all FG and WIP, held in stock at Supplier, as agreed by the Parties. In the event Nortel is required to purchase WIP, it will be valued at
[**]% of the Product Price. If Products constituting FG are not purchased by Nortel within [**]([**]) days of becoming FG, both
parties shall negotiate to arrive at a mutually acceptable disposition of such FG. If such disposition is not agreed to by Supplier and Nortel within [**]
([**]) days after the beginning of negotiations, the FG shall be shipped and invoiced to Nortel.

	7.1.4
	FG
will be maintained at a delivery location (the "Proximity Warehouse") in a close and mutually agreeable proximity to Nortel System
Houses or other Nortel designated destinations, such as but not limited to Nortel Affiliates locations or facilities under Nortel's Vendor Managed Inventory Program. All inventory, logistic costs
(including but not limited to freight, duty, customs brokerage), taxes and other charges associated with delivering the Products to the Proximity Warehouse will be borne by Supplier.

	7.1.5
	With
respect to the Demand-Pull Program:

	(a)
	Supplier
shall manufacture Product as per weekly Forecasts, but shall ship Products only per latest Release from Nortel. A Release will not exceed the Forecast plus Flex (as defined
below).

	(b)
	Supplier
shall maintain FG and WIP stocking quantities as agreed, such FG and WIP quantities to be updated monthly as Forecast requirements change.

	(c)
	Supplier
shall provide to Nortel's designated purchasing department representative a weekly report of Supplier's FG and WIP status. 

	7.1.6
	Supplier
will make reasonable efforts, to target NNL's schedule flexibility objectives ("Flex"), NNL Flex objectives
will be updated at each Quarterly Business Review. NNL's short term Flex objectives through to [**] are as follows:

	(a)
	[**]%
increases in Product demand, within [**] weeks of request by Nortel;

	(b)
	[**]%
increases in Product demand within [**] weeks of request by Nortel; and

	(c)
	[**]%
increases in Product demand within [**] weeks of request by Nortel. 

NNL's
long term Flex objectives will be discussed at each Quarterly Business Review. NNL's long term Flex objectives, as of the Effective Date, for 2004 and the remainder
of the Term are as follows: 

	(a)
	[**]%
increases in Product demand, within [**] weeks of request by Nortel; 

23

 

	(b)
	[**]%
increases in Product demand within [**] weeks of request by Nortel; and

	(c)
	[**]%
increases in Product demand within [**] weeks of request by Nortel. 

All
percentages are based on increases or decreases from the current Forecasted demand. 

Where
the Supplier has acquired inventory as part of the Acquisition Agreement, Supplier will use such inventory to provide additional flexibility. 

	7.2
	Notwithstanding
that a Blanket Purchase Order, a Release or a Purchase Order issued in respect of Products does not refer to this Agreement, any such Blanket Purchase Order, Release
or Purchase Order issued by Nortel during the Term shall be deemed to have been issued pursuant to this Agreement and shall be deemed to incorporate and be governed solely by the terms and conditions
set forth in this Agreement unless the Parties expressly agree in writing to the contrary. Subject to the following sentence, any standard and pre-printed terms and conditions contained in
any Blanket Purchase Order, Release or Purchase Order or in any Supplier's acknowledgment, invoice or other documentation shall be deemed deleted and of no force or effect. Any additional typed and/or
written terms and conditions contained in any Purchase Order or Release and any Supplier's acknowledgment, invoice or other documentation shall be for administrative purposes only, i.e., to identify
the types and quantities of Products to be supplied, line item Prices and total Price, delivery schedule, and other similar ordering data, all in accordance with the provisions of this Agreement.

	7.3
	Nortel
shall not be obligated to purchase any quantities of Products hereunder, except that Nortel will be obligated to purchase: (a) the Share Allocation and Minimum
Commitment for Products as shown in Exhibits A and A-1; and (b) any quantities required in order to satisfy Nortel's obligations to purchase Products pursuant to the
Demand-Pull Program as expressly set forth in Section 7.1; provided, however, that any quantities purchased to satisfy such Demand-Pull Program obligations will also be
considered in determining whether NNL has satisfied its Share Allocation and Minimum Commitment as set out in Exhibits A and A-1. Supplier acknowledges that no minimum line item value or
minimum order values shall apply in order for Supplier to ship Products to Nortel.

	7.4
	Supplier
shall supply to Nortel the Products contained in the first three months of the Forecast. Supplier shall acknowledge receipt of: each Release within two (2) hours ARO
if received during normal business hours; and each Blanket Purchase Order or Purchase Order within two (2) Business Days ARO if received during normal business hours.

	7.5
	Any
change to the first three months of the Forecast (or to a Release or Purchase Order) shall be mutually agreed ("Change Order"),
referencing the original Forecast or Release or Purchase Order. In the event that the Change Order affects work already performed, the adjustment of the Forecast, Release or Purchase Order Product
price shall include reasonable charges incurred by Supplier related to such work. No such changes shall be performed until a Change Order has been agreed by the Parties in writing.

	7.6
	In
addition to Products purchased through the Demand-Pull Program, as described in this Section, Nortel may from time to time, on an ad hoc basis submit Purchase Orders
for Products or Services to Supplier. Such Purchase Orders may only be accepted by Supplier on a commercially reasonable basis. 

24

 

	7.7
	At
its discretion Nortel may issue Blanket Purchase Orders, Releases and Purchase Orders by electronic communication, as described in Exhibit E. 

8.        DELIVERY  

	8.1
	Products
ordered pursuant to this Agreement shall be shipped by Supplier FCA from the Proximity Warehouse to be received by Nortel by the Committed Delivery Date. No partial shipment
shall be made without Nortel's prior consent.

	8.2
	Supplier
shall package the Products in accordance with the packing and external marking practices agreed upon by Nortel and Supplier which shall comply with any criteria set forth in
the Specifications.

	8.3
	Supplier
shall mark each Product with Supplier's model number and where practical, the description of the Product and its revision level.

	8.4
	In
the event Supplier, for any reason whatsoever, fails to deliver Products to meet a Committed Delivery Date and such failure results in a disruption to Nortel's manufacturing or
delivery routines, unless such failure is attributable to force majeure or any wrongful act or omission of NNL, Nortel Subsidiary or Nortel Affiliate, NNL may, by written notice to Supplier, at its
option:

	(a)
	cancel
the affected quantity of Products in such Purchase Order or Release (without incurring any liability to purchase from Supplier such quantity or affecting its other remedies
under this Agreement) and reduce the relevant Target Product Total Stock (as set out in Section 7.1) by an amount not greater than the affected quantity of Products, and Nortel may thereafter
purchase the affected quantity of Products (or equivalent products) from third parties and such purchases will count toward Nortel's Share Allocation, Target Allocations and Minimum Commitments; or

	(b)
	allow
Supplier to make partial and/or late shipment of some or all of the affected quantity of Products, in which case Nortel will pay for Product actually shipped. 

Nortel
may, without liability, reschedule the Committed Delivery Date for Products provided such rescheduled Committed Delivery Date shall not exceed thirty (30) Business Days from the date the
Products were originally scheduled to be delivered, and such rescheduling shall not prejudice Nortel's obligations pursuant to Section 7.1 for such Products. 

	8.5
	Supplier
will notify Nortel of any anticipated delay in meeting a Committed Delivery Date specified in any Purchase Order or Release and shall reasonably co-operate with
Nortel in the implementation by Supplier of any appropriate action or workaround plans with a view to enable Nortel to satisfy its customers' requirements. Upon receiving notification of the
anticipated delay, Nortel may, by written notice to Supplier, at its option:

	(a)
	permit
Supplier to make a partial shipment of Products;

	(b)
	permit
Supplier to substitute products acceptable to Nortel until the Products are delivered; or

	(c)
	permit
Supplier to implement a workaround plan acceptable to Nortel and Nortel's customers. 

25

 

	8.6
	In
the event a delay in delivery is attributable to force majeure, and such delay lasts more than thirty (30) days, the Parties shall make a joint effort to find a solution;
provided, however, that, in the event any delay attributable to force majeure extends for a period such that Nortel's manufacturing or delivery routines are materially adversely affected, Nortel shall
have the right, without obligation or liability, to cancel any Release or Purchase Order affected by such delay.

	8.7
	Regardless
of the Committed Delivery Dates, it is the Parties intent that Supplier's delivery performance will be measured against its ability to meet customer requested dates
("CRD"), among other metrics. CRD is defined as the date Nortel or Nortel Affiliates request that the Product be delivered. These requests for Products
will include all forecasted demand plus Flex as determined pursuant to Section 7.1.6. For greater certainty, Supplier will not, in any way, be in default of this Agreement if it does not meet
any CRD.

	8.8
	Delivery
Performance

	8.8.1
	If
Supplier is in default of meeting Nortel's requirements under this Section 8.8, Supplier must advise Nortel, in writing within five (5) Business Days. NNL may take
such interim action as is reasonably required to protect its source of supply of the affected Product, based on the severity and expected continuation of Supplier's inability to meet Nortel's delivery
requirement, and NNL's obligations with respect to Share Allocation for the affected Product will be reduced, to the extent Nortel is required to obtain the Product from an alternate
source. Supplier will be in default of its commitment to meet Nortel's requirements if any one of the following occurs due to any reason other than force majeure or the fault of Nortel or Nortel
Affiliate (a "Delivery Default"):

	(a)
	3
consecutive weeks with a Delivery Performance (as defined below) to Committed Delivery Dates below [**]%, or

	(b)
	4
nonconsecutive weeks within a 13 week period, with a Delivery Performance to Committed Delivery Dates below [**]%. 

where
Delivery Performance shall be calculated as follows: 

	Delivery Performance	 	=	 	100% ×	 	On-time deliveries with respect to Committed Delivery Dates made over a one week period
 Total deliveries made with respect to Committed Delivery Dates over the same one week
period

	8.8.2
	If
a Delivery Default occurs with respect to a Mature Product, NNL is permitted to reduce the Share Allocation for such Mature Product, by a further [**]
([**]%) percent per month, up to a maximum reduction of [**]%, for each consecutive month that a Delivery Default occurs until the problem is corrected.
For purposes of this Section 8.8.2, a Delivery Default is deemed to occur in a month if the last week that constitutes such default, i.e., the third week for Section 8.8.1(a) and the
fourth week for Section 8.8.1(b), ends in a given month. For the purposes of clarity, the Share Allocation reduction set out in the previous sentence, is in addition to any Share Allocation
reduction which occurs as a result of Nortel being required to obtain the Product from an alternate source to protect its source of supply for such Product. 

26

 

	8.8.3
	Any
default in meeting Nortel's delivery requirements may result in the cancellation of all orders, including Releases, affected by the default in delivery performance (without
Nortel incurring any liability or affecting Nortel's other remedies under this Agreement).

	8.8.4
	Once
the delivery performance issue giving rise to actions under this Section 8.8 is corrected then Nortel will undertake to return the Share Allocations with respect to the
affected Product to the original levels that existed prior to Nortel exercising its rights under this Section 8.8, taking into consideration, among other things, any binding contractual
commitments Nortel has made to alternate suppliers because of the prior reduction of the Supplier's Share Allocation for the Product. NNL shall endeavor not enter into any agreement with an alternate
Supplier binding NNL to purchase a quantity or share of Products that is or will be in conflict with NNL's Share Allocation set forth in Exhibit A hereof.

	8.8.5
	In
the event that Section 8.8.1 applies to a [**] Product, and NNL is entitled to lower the Share Allocation for such [**]
Product as provided in Section 8.8.2, then NNL may, as an alternative to reducing the Share Allocation for such Product, lower the Share Allocation, of a different Product in accordance with
Section 8.8.2 and 8.8.4 so as to effect a similar financial impact on Supplier.

	8.8.6
	If
NNL elects to reduce the Share Allocation for a particular Product, in accordance with 8.8.2, such reduction of the Share Allocation will be NNL's sole remedy for
Supplier's failure to comply with the provisions of Section 8 of this Agreement. However, if NNL does not elect to reduce the Share Allocation in accordance with Section 8.8.2, NNL shall
have the right to take any action or exercise any other right pursuant to this Agreement or applicable law. 

	8.9
	In
the event Products ordered by Nortel or Nortel Affiliates are not delivered on the Committed Delivery Date; and Nortel or Nortel Affiliates are required to obtain the Product, or a
functional equivalent, from an alternate source; NNL's obligations with respect to Share Allocation for the affected Product, will be reduced in accordance with Section 8.8; and
Target Allocation, and Minimum Commitment will be reduced, to the extent Nortel or Nortel Affiliate is required to obtain the Product from an alternate source. 

9.        PRICES AND PAYMENTS  

	9.1
	The
Price for each Product supplied to Nortel are set forth in Exhibit A and shall be firm for the period commencing on the Effective Date and ending
[**]. Thereafter, Prices will be reviewed and agreed to every six months as set out in Section 9.4 and shall be firm for the six month period following each such review.
Notwithstanding the preceding two sentences, Prices will be adjusted to take into account any price reductions and volume discounts agreed to between the Parties.

	9.2
	Product
Prices are: (a) FCA (from Proximity Warehouse) to the delivery location specified by Nortel, including packaging; and (b) exclude all applicable federal,
provincial and local taxes. 

27

 

	9.3
	To
the extent that Supplier's records may be relevant in determining whether Supplier is complying with the [**] requirements in Section 9.5, NNL shall
have the right upon at least ten (10) Business Days prior written notice, to have a qualified independent third party auditor reasonably acceptable to both Parties examine not more frequently
than once per year, and during normal business hours, such records of Supplier as may, under recognized accounting practices, contain information bearing upon the Product Prices. NNL will be
responsible for the cost of such audit, unless it is determined that Supplier is in breach of Section 9.5, in which case Supplier will reimburse NNL for the cost of such audit.

	9.4
	The
Parties shall review the Prices charged for each Product supplied to NNL hereunder twice annually, in December and June, with the new Prices coming into effect in January and June
of each year, unless the Forecast volumes change significantly (more than [**]% up or down between Forecasts) in which case the Prices may be reviewed quarterly. The Parties
agree that the Price for each Product in effect on Closing Date will be reduced by: (a) [**]% for the period commencing July 1, 2003 and ending
December 31, 2003; and (b) an additional [**]% for the period commencing January 1, 2004 and ending June 30, 2004. Thereafter, Nortel expects that
market conditions will require a [**]% annual price reduction, year over year. Notwithstanding anything else in this Agreement to the contrary, Prices for Products shall be set
by Supplier, in consultation with NNL, giving consideration to market conditions, and subject to the other provisions of this Section 9. For the purposes of clarity, the Price, with respect to
Products on Exhibit A at Closing, will not be a factor in determining Share Allocation during the period commencing on the Effective Date and ending on [**].

	9.5
	Supplier
further represents and warrants that the [**] Products and Repair Services supplied hereunder [**] Products and Repair
Services or for products or services interchangeable with, or equivalent to, the Products and Repair Services, during the same time period, in similar quantities for delivery in the same geographic
area, and with similar terms and conditions (including warranty, delivery, intellectual property and other terms).

	9.6
	[**],
as identified in Section 9.5 above, Supplier will [**], and [**]. This Agreement will be amended
[**]. In the event that the Parties are unable to agree on the applicability of this Section 9.6 in any particular instance, then the Parties shall first appoint a
qualified independent auditor, reasonably acceptable to both Parties, to make an independent assessment of the applicability of this Section 9.6 according to recognized industry and accounting
standards. The Parties shall share equally the cost of such auditor. If, after receiving the auditor's assessment, the Parties are still unable to agree on the applicability of this
Section 9.6, then each Party shall be entitled, subject to the dispute resolution procedures set forth in Section 28 hereof, to exercise and right or seek any remedy available to them
under this Agreement, whether under contract, tort or otherwise.

	9.7
	If
Nortel cancels a Release or Purchase Order, Supplier will use all reasonable efforts to minimize any costs related to the Products (e.g., returning excess components to suppliers
or reducing cancellation costs to suppliers). 

28

 

	9.8
	Nortel
shall pay Supplier, upon invoice, the amount of any applicable sales tax, use or service tax, goods and services tax and value added or similar taxes that Supplier may be
required to collect because of its performance under or in connection with this Agreement (except for any franchise tax, withholding tax (as described below) or any tax imposed on Supplier's net
income). Supplier shall identify any such tax as a separate item on each invoice (unless taxes are required under the law of the relevant jurisdiction to be included in the price). Supplier agrees not
to assess these taxes where Nortel furnishes Supplier with a tax exemption certificate, a certificate of authority, a direct pay permit and/or any equivalent document acceptable to the applicable
taxing authority. Nortel shall withhold any applicable withholding taxes required under the applicable law from any payments made to Supplier pursuant to this Agreement. To assist Supplier in
obtaining any tax credits for the amounts withheld, Nortel shall furnish Supplier with such reasonable evidence as may be required by the applicable taxing authorities to establish that such
withholding tax has been paid. Supplier shall reimburse Nortel to the extent taxes paid by Nortel are recovered by Supplier from the taxing or governmental authorities. To the extent such items may
only be refunded to Nortel by the taxing or governmental authorities, Supplier agrees to reasonably cooperate with Nortel in obtaining a refund or reimbursement of such taxes.

	9.9
	Payment
shall be due to Supplier from Nortel [**] ([**]) calendar days following the receipt by Nortel of an invoice for the Products,
Repair Services or other services for which Supplier is entitled to receive payments hereunder. All invoices for Products shall be delivered to Nortel no earlier than the Delivery Date of the
Products.

	9.10
	North
Optical Components Limited, North (U.K.) Limited and North HPOCS Inc., on its own behalf or on behalf of NL, North Subsidiary or North Affiliate, will have the right to
make payment of up to [**] ([**]%) of any amounts owed hereunder, for any Products, products or Services, purchased in any calendar quarter that are in
excess of the quarterly purchase targets set forth below, by surrendering an equivalent portion of the amounts due in respect of the Series B Notes or, if no Series B Notes remain
outstanding, an equivalent portion of the amounts dues in respect of the Series A Notes. 

	 
	 	Quarterly Target Purchases

	 
	 	Series A
 
	 	Series B
 

	4Q02	 	$[**] million	 	$[**] million
	1Q03	 	$[**] million	 	$[**] million
	2Q03	 	$[**] million	 	$[**] million
	3Q03	 	$[**] million	 	$[**] million
	4Q03	 	$[**] million	 	$[**] million

For
the avoidance of doubt, the quarterly target purchases, are targets set to trigger the surrendering of the Series B Notes and Series A Notes, as a result of the aggregate value of
purchases under this Agreement. The quarterly target purchases do not constitute an obligation or commitment on the part of Nortel or Nortel Affiliates to purchase such target levels. 

	9.11
	Invoices
for Products delivered hereunder, and for any other amounts which may be payable hereunder shall be forwarded directly to the appropriate Nortel location as directed by
Nortel from time to time in writing. 

29

 

10.      INSURANCE, TITLE, AND RISK OF LOSS  

	10.1
	Insurance

	10.1.1
	General
Liability Insurance. 

Supplier
shall maintain during the Term of this Agreement, with insurers acceptable to Nortel and under policies the wording of which shall be subject to the approval of Nortel, the following
insurance coverages: 

	(a)
	general
liability insurance (including contractual, products liability and broad form vendors' endorsement) with limits of either (US) $10,000,000 combined single limit per occurrence
for bodily injury and property damage or (US) $6,000,000 bodily injury per occurrence and (US) $4,000,000 property damage per occurrence;

	(b)
	workers'
compensation insurance and other employee insurance coverages required by law, and employer's liability insurance with limits of (US) $1,000,000;

	(c)
	owned
or non-owned automobile liability with limits of (US) $1,000,000; and

	(d)
	Errors &
Omissions insurance with limits of not less than (US) $10,000,000. 

Such
insurance shall be primary and non-contributory (except in respect of Errors & Omissions referred to in subparagraph (d) above, which may be primary and
non-contributory as regards negligence or negligent acts, as applicable) with respect to any insurance that Nortel may have and each applicable Nortel Subsidiary and Nortel Affiliate shall
be named under the Supplier's general liability insurance as an additional insured with a cross-liability endorsement. 

	10.1.2
	Property
and Business Insurance 

Supplier
shall provide evidence satisfactory to Nortel that its property and business are adequately insured 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. 

	10.1.3
	Business
Continuity 

Supplier
acknowledges that the existence, content and adequacy of its Business Continuity Plan in accordance with the requirements under Section 6.4.4 hereof shall be used by Nortel as part of
initial and ongoing assessment criteria for review of Supplier's overall performance under this Agreement. Supplier shall use commercially reasonable efforts to maintain a suitable level of property
protection (including, where appropriate, sprinklers, earthquake bracings, flood protection, windstorm protection, maintenance, regular testing and inspection etc.) to meet or exceed the level
maintained by Nortel on Closing in relation to the Business. NNL shall notify Supplier in writing of such levels maintained on Closing. NNL and/or its insurance companies shall be allowed to inspect
any site at any time, at NNL's sole expense, not more than twice every year, upon reasonable written notice during normal business hours and to recommend to Supplier any appropriate
protection improvements. NNL and Supplier shall review any recommendations made as a result of such inspection and Supplier shall implement any reasonable recommendations that may reduce business
continuity exposures in the most effective manner 

30

 

	10.1.4
	Certificate
of Insurance Prior to the commencement of the Term and upon reasonable demand of Nortel thereafter, Supplier shall furnish to Nortel a certificate or certificates of
insurance evidencing that all insurance required in this Section 10.1 is in effect. The certificate shall also state that Nortel shall be notified in writing by Supplier's insurance carrier(s)
at least thirty (30) days prior to any cancellation and, to the extent not prohibited by law, such certificate shall also require notification of material change in terms and conditions of
insurance and/or exhaustion of the aforementioned limits. Supplier 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. 

	10.2
	Title
to the Products and risk of loss of and damage to the Products will pass to Nortel upon delivery FCA at the delivery location specified by Nortel. 

11.      ACCEPTANCE OR REJECTION  

	11.1
	Nortel
reserves the right to accept or reject Products ordered hereunder after the delivery of such Products to Nortel's facility or, as the case may be, to a Nortel customer's site.
A rejection must be based on Nortel's reasonable good-faith belief that the Products meet the criteria for rejection set out in 11.2 below, or that their delivery does not comply with the
requirements of this Agreement. Products shall be deemed accepted by Nortel unless Nortel notifies Supplier that such Products are rejected and provides the reasons for such rejection within thirty
(30) Business Days after Nortel's receipt thereof at its facilities or, when the Products are received at a Nortel customer's site, as the case may be, upon completion of installation and
testing of the Products or thirty (30) Business Days after such receipt of the Products at Nortel customer's site, whichever event occurs first.

	11.2
	If
any Products are found not to be in substantial conformance with this Agreement, including the Specifications, applicable Purchase Order or Release, and/or in the event that
excessive failures are observed by Nortel with respect to Products contained in a lot/shipment, Nortel shall have the right, notwithstanding the warranty provisions contained in this Agreement, to at
its option (a) reject the lot/shipment and cancel the affected Purchase Order or Release, (b) require that such Products be replaced or repaired, where possible, within one
(1) Business Day for Releases and within ten (10) Business Days for Purchase Orders at Supplier's risk and expense (including shipping charges) or (c) if Nortel has already paid
Supplier for the Products, Nortel may require Supplier to issue a credit memo to Nortel for the amount paid for the returned Products. Any notice of rejection issued by Nortel under this
Section 11.2 will include a reasonable description of the deficiencies.

	11.3
	Payment
or acceptance by Nortel shall not be deemed to constitute a waiver of the rights which Nortel may have resulting from Supplier's delivery of faulty or defective Products. 

12.      WARRANTY  

	12.1
	Supplier
warrants that:

	(a)
	Products
shall, at the actual delivery date, be new and free and clear of all security interest or other lien or any other encumbrance; 

31

 

	(b)
	for
a period of 12 months from the actual delivery date (such period being hereinafter referred to as the "Product Warranty
Period"), the Products shall be free from any defect in materials or workmanship, or any other condition, which causes the Products to fail to conform to and operate in
accordance with the Specifications; and

	(c)
	with
the exception of any notice which may be provided by Supplier pursuant to Section 19 or as noted in the relevant Specifications, the Products furnished by Supplier, and
used in accordance with professional standards and any written instructions provided by Supplier to Nortel, are safe for normal use, are non-toxic, present no abnormal hazards to persons
or their environment, and may be disposed of as normal refuse without special precautions. 

	12.2
	The
warranty in Section 12.1(b) does not apply to items normally consumed in operation, such as lamps and fuses and to any defect which has been caused by NNL, Nortel
Subsidiary, Nortel Affiliate or any of their end customers.

	12.3
	Supplier
shall, at its expense, during the Product Warranty Period, provide Repair Services in accordance with Section 14 in respect of Products which have failed to conform
to the warranty in Section 12.1(b).

	12.4
	Product
supplied under Section 14 pursuant to Supplier's warranty obligations under this Section 12.1(b), shall be functionally equal to or better than the vintage of
the replaced unit.

	12.5
	Product
repairs or replacements effected during the Product Warranty Period shall be warranted, as provided in Section 12.1, for the remainder of the Product Warranty Period
or for a period of nine (9) months from the Repair Date or replacement date, whichever is longer. Product repairs or replacements effected after expiry of the Product Warranty Period, in
accordance with Section 13 and 14, shall be warranted, as provided in Section 12.1 and the warranty period for such repaired or replacement Products with respect to the warranty in
Section 12.1 (b) shall be for a period of nine (9) months from the Repair Date or the replacement date, as applicable. All transportation and insurance expenses arising from
shipping the non-conforming Products to, and the repaired or replacement Products from, Supplier during the Product Warranty Period shall be paid by Supplier.

	12.6
	Supplier
represents and warrants that all services provided under this Agreement will be provided in a highly professional manner consistent with applicable industry practice.

	12.7
	Supplier
warrants and covenants that: (a) it does not and will not employ or otherwise use, directly or indirectly, any forced, bonded or involuntary labor or employees or
contractors that are younger than the minimum age legally entitled to work in each applicable jurisdiction in which the production effort is conducted or in which BT or any BT Subsidiary carries on
business; and (b) to the best of its knowledge, upon inquiry, no supplier or other subcontractor of Supplier employs or otherwise uses, directly or indirectly, any forced, bonded or involuntary
labor or employees or contractors that are younger than the minimum age legally entitled to work in each applicable jurisdiction in which the production effort is conducted or in which BT or any BT
Subsidiary carries on business.

	12.8
	The
above warranties shall survive inspection, acceptance and payment. 

32

 

	12.9
	Upon
mutual agreement of the parties, Nortel may repair or replace any defective Product on its own or arrange for such repair, replacement or correction by other entities, and
Supplier shall reimburse Nortel for all reasonable costs and expenses so incurred by Nortel during the applicable Product Warranty Period.

	12.10
	EXCEPT
FOR THE EXPRESS WARRANTIES STATED IN THIS AGREEMENT, SUPPLIER DISCLAIMS ALL WARRANTIES ON PRODUCTS AND SERVICES FURNISHED UNDER THIS AGREEMENT, EXPRESS OR IMPLIED, ORAL OR
WRITTEN INCLUDING, WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF CONDITION, VALUE, MERCHANTABILITY    NON-INFRINGEMENT,    VALIDITY, COMPLETENESS OR FITNESS OR
SUITABILITY FOR A PARTICULAR PURPOSE. TO THE EXTENT THAT REPAIR OR REPLACEMENT OF PRODUCTS WILL SATISFY SUPPLIER'S WARRANTY OBLIGATIONS UNDER THIS SECTION 12, SUCH REMEDY SHALL BE
NORTEL'S AND NORTEL AFFILIATES' SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH OF THE WARRANTIES SET OUT IN THIS SECTION 12. 

13.      REPAIR PROCEDURES  

	13.1
	This
Section 13 shall be applicable to the providing of Repair Services described in Section 14 by Supplier during and after the Product Warranty Period for Products
and Pre-Closing Products (collectively "Repair Products").

	13.2
	Prior
to returning any defective Repair Products to Supplier's repair location, Nortel will notify Supplier orally of the defect, if known at that time, and will request
authorization from Supplier for the return of such Repair Products. Upon such request, Supplier shall provide Nortel with a Return Material Authorization
("RMA") number to be prominently displayed on the shipping container for the defective Repair Products and advise Nortel of the repair location to which
the Repair Products should be returned.

	13.3
	In
all cases covered in Section 14, Nortel shall then ship such Repair Products to Supplier, freight prepaid and properly insured. Nortel shall prepare proper export
documentation as per Supplier's instructions, evidencing Nortel's ownership of the Repair Products.

	13.4
	Nortel
shall furnish the following information in writing with Repair Products returned to Supplier for Repair Services:

	(a)
	Nortel's
or the Nortel Affiliates' name and complete address;

	(b)
	quantities
and model numbers of Repair Products being delivered for repair;

	(c)
	the
nature of the defect or failure, if known;

	(d)
	Purchase
Order number under which repairs are to be made, if Repair Product is no longer under warranty;

	(e)
	name(s)
and telephone number(s) of Nortel's employee(s) or other designated persons to contact in case of questions about the Repair Products;

	(f)
	ship-to
address or Nortel's location to which repaired or replacement Repair Products should be returned; and

	(g)
	whether
or not returned Repair Products are under warranty. 

33

 

	13.5
	Supplier
shall date stamp each repaired and returned or replacement Repair Product with the Repair Date and type of repair "pre fix" as per GR-209 specifications and the
Specifications. Repair Product repaired by Supplier shall be stamped in accordance with requirements outlined in Telcordia TR-NWT-000078. Without limiting the generality of the
foregoing, the stamping shall include the Repair Date stencilled or otherwise identified in a permanent manner at a readily visible location on the Repair Product, unless otherwise directed by Nortel.

	13.6
	Supplier
shall promptly provide a written notice to Nortel with the name(s) and telephone number(s) of the individual(s) to be contacted concerning any questions that may arise with
respect to the Repair Services, and if required, specify any special packing of Repair Products which might be necessary to provide adequate in-transit protection from transportation
damage. 

Supplier
will: 

	(a)
	track
any defective Repair Product by its unique serial number throughout the repair process;

	(b)
	repair
and update the Repair Products to the minimum field baseline;

	(c)
	return
the same Repair Product shipped by Nortel for repair. If the returned Repair Product's serial number has changed, Supplier will put the following on repair tag originally
provided by Nortel: (i) old serial number, (ii) new serial number and (iii) reason(s) for change; and,

	(d)
	target
to complete the Same-for-Same process within 10 calendar days of having received the defective Repair Product, but in not event will the
Same-for Same process exceed thirty (30) calendar days after receiving the defective Repair Product, unless Nortel agrees in writing to an extension and Supplier provides Nortel
with a replacement Product at no charge. The Parties acknowledge that on Closing the Business completes the Same-for-Same process with a mean time of 14 calendar days after
receiving the defective Repair Product. 

	13.7
	Once
Repair Products that are out of warranty have been repaired or replaced by Supplier, Supplier shall reissue to Nortel an invoice for the charges applicable to the providing of
Repair Services for such repaired or replacement Repair Products. Supplier's invoice shall contain the following:

	(a)
	Nortel's
Purchase Order number for the Repair Services;

	(b)
	a
detailed description of the Repair Services provided by Supplier and the need therefor;

	(c)
	quantities
and model numbers of Repair Products repaired or replaced and associated repair charges;

	(d)
	total
amount payable including applicable shipping and insurance charges and sales or excise taxes; and

	(e)
	an
address to which payment should be sent. 

	13.8
	The
repaired or replacement Repair Products shall be delivered by Supplier to the destination specified by Nortel, freight prepaid and properly insured. Supplier shall prepare proper
export documentation as per Nortel's instructions, evidencing Nortel's ownership of the Repair Products. 

34

 

	13.9
	Supplier
shall promptly notify Nortel of returned Repair Products which are found by Supplier to be beyond repair. Repair Products shall only be considered beyond repair after
agreement of the Parties to that effect.

	13.10
	Nothing
in this Agreement shall be construed as giving Supplier an exclusive privilege to repair any Repair Products covered under this Agreement, provided that during the Product
Warranty Period Supplier will be the exclusive repair provider or the warranty will be voided. 

14.      REPAIR SERVICES  

	14.1
	This
Section 14 shall be applicable to the providing of Repair Services by Supplier during and after the Product Warranty Period with respect to Repair Products.

	14.2
	To
order Repair Services after expiry of the applicable Product Warranty Period, Nortel shall issue a Purchase Order and such Purchase Order shall contain the description of the
requested Repair Services as set forth in Section 13 above.

	14.3
	Repair
Services shall be provided by Supplier at no charge to Nortel during the Product Warranty Period. For Repair Services for Repair Products not covered by warranty, the repair
fees will be equal to Supplier's then standard fees for such or similar services.

	14.4
	Spares

	14.4.1
	At
Supplier's factory or at a location agreed upon by the parties, Supplier will store the Repair Services Pool. The quantity of spares will be agreed on in writing by the parties,
based on the (a) volume of Products delivered, (b) the applicable mean time between failure rates, and (c) Nortel's desire to provide its customers with immediate Product
replacement. Supplier will not use the Repair Services Pool for retrofits or upgrades. The parties may agree in writing to change the quantity of spares, based on changes in the installed base of
Products.

	14.4.2
	At
all times Supplier will maintain the agreed quantity of spares in the Repair Services Pool. However, Supplier will be responsible to ensure that the Repair Services Pool will be
sufficient to provide Nortel with FRU replacement Product within [**] ([**]) Business Days of (as applicable) (a) Nortel' request for a
replacement, (b) Supplier's failure to repair by the end of the Repair Period, or (c) the parties' agreeing that the Product is uneconomical to repair
("UTR").

	14.4.3
	The
Repair Services Pool may consist of stock of new FRU's or previously used FRU's, refurbished to conform to the Specifications. Spares added to the Repair Services Pool will
(a) be functionally equal or better than the inventory being replenished, (b) be backward compatible, and (c) meet the minimum field baseline. Supplier may provide new Products as
spares. 

	14.5
	Information
about the status of Repair Products being repaired will be included in the Monthly Report described in Exhibit D of the Agreement. 

35

 

	14.6
	Fast
Cycle Failure Analysis 

During
the Repair Period (as defined in Section 15.3), Supplier shall perform a Fast Cycle Failure Analysis ("FCFA") at no cost to Nortel on
Repair Products which have caused any service interruption in the field or as may otherwise be reasonably requested by Nortel. Nortel will request a separate RMA number for each Product returned for a
FCFA. A FCFA shall be performed by Supplier in accordance with the following additional requirements: 

	(a)
	FCFA
shall include a detailed root cause analysis, using engineering tools such as Environment Stress Screening ("ESS") and any other
tools which may be required to determine the cause of the failure.

	(b)
	Supplier
shall track the defective Repair Product by its unique serial number throughout the repair process.

	(c)
	Supplier
shall return, after having repaired and updated the defective Repair Product at a minimum to its release vintage, the exact same Repair Product having the same serial number.
If the serial number has to change for any reason, Supplier shall, on the "repair tag" originally provided by Nortel, document the following information: old serial number, new serial number and
reason(s) for change. This information will also be documented in the FCFA report. The Repair Product shall not be "upgraded" to other than the actual unit release vintage until root cause analysis is
completed and the Repair Product successfully passes the complete test cycle. The Repair Product shall not be repaired without completion of the FCFA activity.

	(d)
	Supplier
shall return the repaired Repair Product (i) with a written report documenting all findings as a result of the FCFA (ii) an invoice for the repair services in
accordance with the then-current prices for such services, unless the Repair Product is still under warranty or if the defect was caused by an Epidemic Failure within the period specified
in Section 5.5 of this Agreement.

	(e)
	Supplier
shall endeavor to complete the FCFA process within [**] ([**]) calendar days of having received the defective Repair Product
at the Repair Location, but in no event will the FCFA process exceed [**] ([**]) calendar days except with respect to die problems and other problems
reasonably requiring extensive analysis. In the case of a die problem or other problem reasonably requiring extensive analysis, the Parties acknowledge that the FCFA process may not be completed
within [**] ([**]) calendar days, however, Supplier will complete the FCFA process as expeditiously as possible. Nortel shall provide all available
technical information to allow Supplier to understand the circumstances and environmental conditions that led to the failure of the Repair Product.

	(f)
	Supplier
shall inform Nortel of the return Repair Product shipping information as soon as it is available. The shipping information will include date shipped, carrier, waybill number
and any other information that will help Nortel expedite the return of the Repair Product.

	(g)
	In
the event that the results of the FCFA indicate deficiencies with the Repair Product caused by Supplier, then Supplier will modify all deficient Products during the Product
Warranty Period and for four years thereafter, in the case of Epidemic Failure, to eliminate such FCFA indicated deficiencies. Such modifications will be implemented in accordance with
Section 5. 

36

 

	14.7
	Products
accepted by Nortel and found defective within the first [**] ([**]) calendar days from their initial utilization at customer
site, (referred to as "Dead On Arrival' ("DOA") or Early Life Failure ("ELF") shall be returned to
Supplier along with the RMA documentation. Nortel will immediately notify Supplier of a DOA/ELF Product and Supplier will immediately ship a new Product to the location indicated by Nortel. Returned
DOA/ELF Products shall, at no charge to Nortel, be tested through adequate functional tests including full functional tests and ESS when necessary in order to provide a root cause analysis. After
testing, Supplier shall then repair, re-furbish, (and, at Nortel's option and expense, upgrade to the latest version or release) and stamp (with the repair date) DOA/ELF Products. Such
DOA/ELF Products will be considered new Products. Supplier will update Nortel in writing with the findings of the root cause analysis as well as with the corrective plan of action. Supplier will
maintain data on Repair Product return rates and No Fault Found Products. Supplier and Nortel will work diligently on root cause analysis and corrective action plans for each cause of a Repair Product
return or No Fault Found Product, with priority given to the causes which occur most frequently. Unless otherwise agreed by the Parties, Supplier will exercise diligent efforts to provide a
preliminary written report to Nortel, within [**] Business Days of receipt by Supplier of the returned Product and a final written report, outlining the cause of the Repair
Product failure, as expeditiously as possible and within [**] calendar days of receipt by Supplier of the returned Product. The priorities and progress on these root cause
analyses and corrective action plans will be reviewed by the Parties at their regular program reviews.

	14.8
	No
Fault Found

	14.8.1
	Supplier
will return the NFF Products to Nortel, using Nortel' chosen carrier. Supplier will take no more than [**] Business Days from the later of its
receipt of Nortel' PO or receipt of the returned Products to test the Repair Products and return them to Nortel.

	14.8.2
	If
NFF Products are more than [**] percent ([**]%) of the Repair Product repairs and returns as defined in the Specifications,
Supplier and NNL will enter into good faith discussions to investigate the cause of the NFF, including an analysis of outgoing and incoming test procedures against agreed Specifications. Subject to
the foregoing, Supplier will use diligent efforts to implement a plan to correct the NFF occurrences in accordance with a time table mutually acceptable to the Parties, giving consideration to
NNL's customer requirements. Supplier will include the analysis results and the plan in the Monthly Report described in Exhibit D. 

37

   15.      CONTINUING AVAILABILITY OF PRODUCT  

	15.1
	Unless
otherwise agreed in writing by the Parties, Supplier shall not discontinue the production or sale of a Product without having first given Nortel at least
[**] months advance notice, and in the case of Custom Products, [**] Products or Primary Sourced Products [**] months advance
notice, (the "MD Notice"). The date of discontinuance of manufacture of the Product will be the "MD
Date". Supplier will negotiate in good faith any request by Nortel to extend the MD Date to a date later than [**] months after the date of the MD
Notice.

	15.2
	No
later than [**] months prior to the MD Date, Nortel may place a "Last Time Buy" Purchase Order at the Price in effect one day prior to the MD Notice, for a
quantity of the Product not to exceed Supplier's annual manufacturing capacity for that Product. Supplier will deliver the Last Time Buy order in accordance with the delivery schedule agreed upon by
the Parties, provided however that Supplier will not be required to exceed or increase its production capacity for the Product; and the entire Last Time Buy quantity must be delivered no later than
[**] months after the MD Date.

	15.3
	For
a period of [**] years after the earlier of (a) the MD Date or (b) the expiration or termination of this Agreement the
("Repair Period"), Supplier agrees to diligently endeavor to: 1) provide Repair Services on Products ordered hereunder and; 2) offer for
sale to Nortel, functionally equivalent maintenance, replacement and repair parts as may be necessary for the continued maintenance of such Products or; 3) together with Nortel find a mutually
acceptable third party subcontractor to provide Repair Services on Products.

	15.4
	The
terms of this Section 15.4 apply, for each Product, during the period in which Supplier is supplying that Product hereunder until the MD Date for that Product, Supplier
will identify to Nortel the components (if any) of a Product for which there is only one supplier and which are critical to the Product. For any such components, Supplier will use reasonable
commercial efforts to ensure that Supplier's supplier gives Supplier at least eighteen months prior written notice before discontinuing the manufacture of that component. Upon receipt of such notice,
Supplier will consult with Nortel to determine the appropriate course of action to ensure continuity of supply of the Product, which may include making a last time buy. 

16.      DOCUMENTATION  

	16.1
	Supplier
shall provide to Nortel, at no charge, for each type of Product delivered one (1) set of (a) Supplier's promotional materials for the Products and
(b) the following materials ("Documentation") in accordance with the Specifications: all Product descriptions, planning guides, operations
manuals, installation manuals, and maintenance manuals normally provided by Supplier to customers to facilitate their installation, use, and maintenance of the Products.

	16.2
	Supplier
hereby grants to Nortel, at no charge, the right to use, copy, modify, translate and distribute to Nortel's customers and potential customers, Supplier's promotional
materials for the Products, the Product Documentation furnished hereunder and other material relating to the Products made generally available by Supplier to its customers and to use such material to
further Nortel's marketing efforts with respect to the Products. Nortel shall not remove, and shall reproduce, any and all proprietary rights notices from and on the Documentation, including
Supplier's name and logos, on any and all copies of the Documentation permitted to be made hereunder. 

38

 

17.      CONFIDENTIAL INFORMATION  

	17.1
	It
is expected that the Parties will disclose to each other certain business, marketing, technical, scientific or other information of either Party, including, without limitation,
the Specifications which, at the time of disclosure, is designated as confidential (or like designation) or which would reasonably be considered to be confidential information
("Confidential Information"). With respect to such Confidential Information, this Section 17 will apply, to the exclusion of any other
confidentiality, non-disclosure or similar terms in any other agreements between the Parties. Each Party recognizes the value and importance of the protection of the other's Confidential
Information. All Confidential Information of a Party disclosed to the other Party shall remain solely the property and a trade secret of the disclosing Party, and its confidentiality shall be
maintained and protected by the other Party with the same degree of care used to protect its own proprietary and confidential information of a similar nature, but no less than reasonable care, to
prevent the unauthorized use, dissemination or publication of the Confidential Information. Except to the extent required or expressly permitted by this Agreement or otherwise authorized in writing by
the disclosing Party, the receiving Party agrees not to use in any manner the other's Confidential Information or to disclose it to any of their employees not having a need to know for the purposes of
this Agreement or to any third party. The receiving Party's employees (and the employees of the receiving Party's controlled subsidiaries) having a need to know the Confidential Information for the
purpose of this Agreement may receive disclosure of the Confidential Information. The confidentiality obligations contained herein shall survive the expiration or termination of this Agreement for a
period of five (5) years, unless otherwise agreed in writing.

	17.2
	Confidential
Information shall not include information which:

	(a)
	now
is, or hereafter becomes, available to the public through no act or omission of the receiving Party; or

	(b)
	is
documented as being known by the receiving Party prior to its disclosure by the other Party; or

	(c)
	is
independently developed by the receiving Party by persons who have not had access to the Confidential Information and without recourse to any Confidential Information received
under this Agreement and is so documented; or

	(d)
	is
lawfully obtained by the receiving Party from a third party or parties without breach of confidentiality obligations or is disclosed hereafter to the receiving Party by a third
party who did not acquire the information directly or indirectly from the disclosing Party; or

	(e)
	is
disclosed in response to a valid order of a court or other governmental body or any political subdivision thereof, but only to the extent and for the purpose of such order and only
if the receiving Party, to the extent possible, first notifies the disclosing Party, of such order and permits and reasonably assists it in seeking an appropriate protective order. 

	17.3
	Subject
to the non-compete obligation of NNL set forth in Section 5.23 of the Acquisition Agreement between the Parties, nothing in this Agreement shall be
interpreted or construed to limit either Party's right to perform or to continue to perform its own independent research, development, manufacturing or marketing of any type of products or systems
even if such research, development, manufacturing or marketing pertains to technology or products similar to the Products. 

39

 

	17.4
	Prior
to the publication or use by a Party hereto of any advertising, sales promotions, press releases or other publicity matters relating to the Products or this Agreement in which
the name or logo of the other Party is mentioned or language from which the connection of said name can be reasonably inferred or implied, including any public statement about the relationship between
the Parties, each Party shall obtain the prior written consent of the other Party. The terms and conditions of this Agreement including, but not limited to, Prices, the Product Lists, discounts and
other information contained in Exhibit A hereto, shall be held in confidence by both Parties and only disclosed as may be agreed to in writing by both Parties or as may be required to meet
securities disclosure or export permit requirements. Neither Party shall make public statements or issue publicity or media releases with regard to this Agreement or the relationship between the
Parties without the prior written approval of the other Party. 

18.      INDEMNIFICATION  

	18.1
	Supplier
agrees to indemnify, defend and hold Nortel harmless from all claims, damages, liabilities, settlements, losses, costs and expenses (including reasonable attorneys' fees)
(collectively "Claims") arising out of or related to any claim that the use, manufacture sale and/or distribution of any Product purchased under this
Agreement, infringes or violates any patent, copyright, trade secret or other intellectual property right ("Infringement Claim"). This indemnity shall
not apply to the extent that such Claim is based on (i) use manufacture, sale and/or distribution of the Product in a manner that is not contemplated by this Agreement, the Specifications or
the Documentation, or has not otherwise been approved by Supplier; (ii) use manufacture, sale and/or distribution of the Product in combination with products or services not provided by
Supplier where such combination is not reasonably contemplated by this Agreement or authorized by Supplier and where such infringement would not occur in the absence of such combination; provided,
however, this sub-clause (ii) shall not apply to any Product that is designed into an NNL product (or that is reasonably contemplated for incorporation into such NNL product) unless
Supplier has previously notified Nortel that the combination is not authorized; (iii) modification of the Product if the infringement or misappropriation arises from such modification, and if
such modification is not authorized by Supplier; (iv) continued use of the Product after the Supplier has provided a non-infringing replacement for the Product; or (v) any
design or special instruction supplied by Nortel or Nortel Affiliate, after Closing, where such infringement or misappropriation would not occur in the absence of the adoption of such design or
special instruction. Nortel agrees to indemnify, defend and hold harmless Supplier from and against any Infringement Claims to the extent such Infringement Claims arise from or relate to items
(i) through (v) above.

	18.2
	In
the event of an adjudication that the Product infringes any patent, copyright or other intellectual property right or misappropriates any trade secret of a third party, as its
sole option and expense, Supplier may take the following actions with respect to such Product:

	(a)
	secure
for Nortel the right to continue using, selling and distributing the Product; or

	(b)
	replace
or modify such Product to make it non-infringing or non-misappropriating, but with substantially equivalent functionality and capabilities to enable
Nortel to continue to use, sell and distribute the Product as it had before the infringement or misappropriation occurred; or 

40

 

	(c)
	if
Supplier has used diligent efforts to take the actions described in (a) and (b), but has been unsuccessful, Supplier may accept the return of the Product and refund to
Nortel all amounts paid for such Product, as well as compensate Nortel for reasonable labour costs associated with collecting and returning the Product. 

	18.3
	Supplier
shall indemnify and save harmless Nortel from and against any Claims which arise directly from any injury or death to persons or loss of or damage to property which is
caused directly by a Product ("Product Liability Claim").

	18.4
	The
rights of indemnification are set out in Section 18.1 and 18.3 are subject to the following:

	(a)
	The
indemnified Party shall provide prompt written notice to the indemnifying Party of the Claim and facts giving rise to a right of indemnification under this Agreement.

	(b)
	The
indemnifying Party shall be given the right to assume control of the defense of any such of such Claim and the indemnified Party, as its own expense, shall have the right to
participate in such defense with counsel of its own choosing.

	(c)
	The
indemnified Party shall provide all reasonable assistance to the indemnifying Party with respect to the defense of the claim including, without limitation, making available
records, documents, and witnesses, and provided that the indemnifying Party pays all reasonable out-of-cost expenses associated with such assistance.

	(d)
	The
indemnifying Party shall vigorously and diligently defend such proceedings to final conclusion, but shall not enter into any settlement or compromise, or consent to the entry of
any judgement, that affects the rights of the indemnified Party without the prior written consent of the indemnified Party, which consent will not be unreasonably withheld. 

	18.5
	The
indemnity obligations under the foregoing provisions shall survive the termination or expiration of this Agreement.

	18.6
	Nothing
contained in this Agreement shall be deemed to grant, either directly or indirectly or by implication, any license under any patents or patent applications of Supplier,
except that Nortel shall have the normal non exclusive, royalty-free license to use that which is implied or otherwise arises by operation of law, in the sale, resale or distribution of
the Products. 

19.      HAZARDOUS MATERIALS  

	19.1
	Supplier
shall identify and list in a written notice forwarded to Nortel all of the hazardous or toxic materials which are contained in the Products, which notice will be updated
promptly by Supplier to reflect new information, changes or new Products.

	19.2
	Supplier
shall indemnify Nortel for any reasonable expenses (including the cost of substitute materials, less accumulated depreciation) that Nortel may incur by reason of the recall
or prohibition against continued use or disposal of the Products furnished by Supplier, whether such recall or prohibition is directed by Supplier, or occurs under compulsion of law. Nortel shall
cooperate with Supplier to facilitate and minimize the expense of any recall or prohibition against use of the Products directed by Supplier or under compulsion of law. 

41

 

	19.3
	Supplier
shall indemnify, defend and hold harmless Nortel from any claims, demands, suits, judgments, liabilities, damages, fines, costs and expenses including, without limitation,
reasonable attorneys' fees which Nortel may incur under any of the laws, rules and regulations applicable to any hazardous/toxic substances contained in the Products (whether or not identified by
Supplier pursuant to Section 19.1) or any amendment to said statutes by reason of Nortel's acquisition, use, sale or disposal of the Products furnished by Supplier; provided that Nortel is in
compliance with Supplier's reasonable written instructions regarding proper use of the Products.

	19.4
	The
right of indemnification under this Section 19 shall be subject to the procedures set forth in Section 18.4 hereof. 

20.      COUNTRY OF ORIGIN, INTERNATIONAL TRADE  

	20.1
	Country
of Origin Declaration and Marking

	20.1.1
	Supplier
shall certify to Nortel the correct country of origin of each Product, determined in accordance with the rules of origin set out under the applicable laws and treaties, on
a periodic basis as required by Nortel for the purposes of allowing Nortel to provide certification of origin in accordance with such rules, laws and treaties. Supplier shall use commercially
reasonable efforts to notify Nortel at least thirty (30) days in advance of any change in the origin of a Product. Supplier shall maintain supporting documentation sufficient to meet the
requirements of any audit of the origin information by Nortel or by any governmental entity. Supplier shall cooperate with Nortel in any audit relating to this Section at NNL's expense,
unless it is determined that Supplier has not complied with its obligations hereunder, in which case Supplier will reimburse NNL for the cost of such audit.

	20.1.2
	Supplier
shall obtain from each of its suppliers the appropriate certificate of origin of any material used in manufacturing a Product, including any subcomponent(s),
("Materials") and shall provide to Nortel quarterly a report identifying which suppliers of Materials have, and which suppliers have not, certified the
country of origin for all Materials supplied by it to Supplier for manufacture of the Products.

	20.1.3
	All
Products must be marked with their country of origin. The degree of permanence of the origin marking on the Product shall be sufficient to ensure that, in any reasonably
foreseeable circumstance, the marking shall remain on the Product throughout its expected life. Both the Product's immediate packaging and the outermost containers shall also be marked to indicate the
country of origin. Supplier shall be solely responsible for all fines, penalties, costs and seizures resulting from inadequate marking, packaging or labelling of Materials and Products provided by
Supplier hereunder except to the extent such inadequacy was attributable to the fault of Nortel. 

42

 

	20.2
	Exports

Each
Party agrees that it shall not knowingly (i) export or re-export, directly or indirectly, 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, directly or indirectly, 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). This clause shall survive termination or cancellation of this Agreement. 

	20.3
	Customs
Invoice 

Unless
otherwise set forth in this Agreement, Supplier shall take all administrative actions required to 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 manufactured 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 Section 13 or 14 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, the value of such upgrade shall be so indicated. Supplier shall be solely responsible for all fines, penalties and costs resulting from a customs invoice not being so
compliant unless such non-compliance is solely the result of an action or omission of Nortel. All customs invoices must indicate whether or not any Assists were provided and the value of
said Assists. 

	20.4
	Trade
Treaties 

Supplier
shall perform all administrative actions required to determine the eligibility of each Product for preferential treatment under the rules of any applicable trade treaties/agreements and, if
eligible, provide the necessary documentation and obtain such preferential treatment. Supplier shall be responsible for all penalties and costs resulting from any such documents subsequently
determined to be invalid, shall maintain all documentation to support the eligibility and shall respond in a timely manner to verification questionnaires or reviews. 

	20.5
	Duty
Drawback 

Each
Supplier shall provide to Nortel, when and where applicable, a duty drawback waiver for duty paid on any Materials imported by such Supplier and used or consumed in the manufacture of Products
supplied to Nortel. These waivers shall be provided on the approved forms and issued by Supplier at least monthly. 

21.      COMPLIANCE WITH LAWS  

	21.1
	Each
Party shall in its operations and actions in performance of this Agreement comply with and shall continue to comply with and have obtained and will continue to maintain in
effect all licenses and permits required by, and the Products shall be in conformance with, all applicable laws and governmental orders and regulations in effect in any country in which Products are
manufactured or delivered to at the time of the Delivery Date applicable thereto. 

43

 

22.      CONSEQUENTIAL DAMAGES AND LIMITATION OF LIABILITY  

	22.1
	Notwithstanding
any other provision of this Agreement, neither Party shall be liable pursuant to this Agreement for any incidental, indirect, punitive, or consequential damages or
for any damages for loss of profits or revenues, except (a) with respect to either Party's indemnification obligations under Section 18; (b) damages arising from a Party's breach
of its confidentiality obligations as set forth in Section 17, (c) damages resulting from injury or death of a person or damage or loss of property during performance of this Agreement
and (d) damages set out in Section 4.5 and 5.5.

	22.2
	EXCEPT
FOR LIABILITY ARISING UNDER SECTION 17 OR 18 OF THIS AGREEMENT, NEITHER PARTY'S AGGREGATE LIABILITY UNDER THIS AGREEMENT, WHETHER IN CONTRACT OR IN TORT, OR HOWEVER OTHERWISE
ARISING, SHALL EXCEED [**]. 

23.      FORCE MAJEURE  

	23.1
	If
the performance of any obligation under this Agreement or a Release or Purchase Order is interfered with by reason of any circumstances beyond the reasonable control of the Party
affected, such as, without limitation, fire, explosion, power failure, acts of nature, war, revolution, civil unrest or any law, order, regulation, ordinance or requirement of any government or legal
body, and labor difficulties, including without limitation, strikes, slowdowns, picketing or boycotts (except such labor difficulties occurring at the Party affected) then the Party affected shall be
excused from such performance for a period equal to the delay resulting from any such causes and such additional period as may be reasonably necessary to allow the Party to resume its obligations (and
the other Party shall likewise be excused from performance of its obligations to the extent such Party's obligations relate to the performance which was interfered with). The Party so affected shall
make reasonable efforts to remove such causes of non-performance; provided, however, that, in the event any such cause of non-performance extends for a period such that either
Party's manufacturing or delivery routines are disrupted, such Party shall have the right, without obligation or liability, to cancel any Release or Purchase Order affected by such cause.

	23.2
	Either
Party shall notify the other Party in writing within two (2) Business Days after becoming aware of the occurrence of any force majeure event which may cause any delay
or failure on the part of the notifying Party to perform its obligations hereunder. 

24.      TERM  

	24.1
	This
Agreement shall remain in effect for a period of three (3) years from the Effective Date (the "Term"). Both Parties shall
meet at least six (6) months prior to the expiration of this Agreement to review any extensions to this Agreement, provided that no such extension shall be effective unless mutually agreed upon
by the Parties in writing. 

25.      TERMINATION AND CONTINUING RIGHTS  

	25.1
	This
Agreement may be terminated upon notice by one Party, as its sole discretion in the event the other Party assigns this Agreement or any part thereof in violation of
Section 30.4. 

44

 

	25.2
	This
Agreement or, if only a specific Blanket Purchase Order(s), Release(s) or Purchase Order(s) is/are affected by the breach, such Blanket Purchase Order, Release or Purchase Order
may be terminated, in whole or in party by either Party, in the event the other Party materially breaches any one of its material obligations hereunder and fails to remedy the breach within thirty
(30) calendar days after written notice of the breach given by the non-breaching Party. Neither Party may exercise any right under this Section 25.2 (including the service of
a termination notice to the breaching Party) without first complying with the dispute resolution provisions set forth in Section 28 hereof.

	25.3
	In
the event either NNL or Supplier:

	(a)
	admits
in writing its inability to pay its debts generally as they become due; or

	(b)
	is
the subject of a petition or assignment in bankruptcy under applicable bankruptcy laws or other similar laws, that is not discharged in ninety (90) calendar days of such
institution; or

	(c)
	files
a notice of intention to make a proposal or otherwise seeks a reorganization under applicable bankruptcy laws or any other similar law or statute of any relevant jurisdiction;
or

	(d)
	makes
an assignment for the benefit of its creditors; or

	(e)
	consents
to the appointment of a receiver or receiver-manager of itself or of the whole or any substantial part of its property; or

	(f)
	enters
into an arrangement with or for the general benefit of its creditors, 

it
shall be deemed to have committed an incurable material breach and the other Party may terminate this Agreement immediately upon written notice. 

	25.4
	The
termination rights shall be without prejudice to the rights or claim one Party may have against the other with respect to the performance, non-performance, or breach
of such Party's obligations hereunder, and shall not operate so as to extinguish any rights or obligations which arose prior to the date of termination, and each Party shall have the right, except as
expressly limited elsewhere in this Agreement, to pursue each and every available remedy at law and in equity.

	25.5
	This
Agreement may be terminated upon written agreement of the Parties to that effect.

	25.6
	Notwithstanding
any termination or expiry of this Agreement, the provisions of Sections 12 (Warranty), 13 (Repair Procedures), 14 (Repair Services), 15 (Continuing Availability of
Product), 17 (Confidential Information), 18 (Indemnification), 19 (Hazardous Materials), 20.2 (Exports), 22 (Consequential Damages and Limitations of Liability), 29 (Grant of License) and all
consequent rights, obligations and liabilities, and Nortel's obligation to make payments hereunder shall survive the termination or expiry of this Agreement. 

45

 

26.      NOTICES  

	26.1
	Any
and all notices or other information to be given by one of the Parties to the other hereunder shall be sent by registered or certified mail, postage prepaid, return receipt
requested or by confirmed fax or hand delivery to the other Party at the addresses, specified below: 

	 
	 	 

	Supplier:	 	Bookham Technology plc

90 Milton Park

Abingdon

Oxfordshire, OX14 4RY

UNITED KINGDOM

Attention: Company Secretary

Facsimile:
	

With Copy to:	
 	

Brobeck, Phleger & Harrison LLP

1633 Broadway, 47(th) Floor

New York, NY 10019

Attention: Kenneth L. Johnson

Facsimile: (212) 586-7878
	

Nortel:	
 	

Nortel Networks Limited

2351 Boulevard Alfred Nobel

St. Laurent, Quebec, Canada

H4S 2A9

Attention: Product Supply Management Leader

Facsimile: +1-514-818-3222
	

With Copy to:	
 	

Nortel Networks Limited

3500 Carling Avenue

Ottawa, Ontario

K2H 8E9

Attention: Senior Counsel, Supply Management

	26.2
	Notices
given pursuant to Section 26.1 shall be deemed to have been received five (5) Business Days after mailing if given by registered or certified mail, and one
(1) business day after sending if given by confirmed facsimile and upon delivery if given by hand.

	26.3
	Either
Party may change its address at any time by giving fifteen (15) Business Days' prior written notice to the other Party as provided above. 

27.      GOVERNING LAW  

	27.1
	The
validity, construction, interpretation and performance of this Agreement and the rights and obligations of the Parties and any purchase made hereunder shall be governed by the
laws of the State of New York, without regard to its rules with respect to the conflict of laws. The application of the U.N. Convention on Contracts for the International Sale of Goods is specifically
excluded from this Agreement. 

46

 

28.      DISPUTE RESOLUTION  

	28.1
	In
the event of any dispute relating to any provision of this Agreement, Supplier and Nortel shall each promptly appoint a business representative from it company in an initial
attempt to resolve such dispute, as described in this paragraph. Such representatives shall meet not later than 15 calendar days after the last representative has been appointed, in order to make a
good faith effort to resolve such dispute. However, if they are not able to resolve such dispute within 15 calendar days after their first meeting, then they shall be joined by their immediate
supervisors (who, at a minimum shall be at a Vice-President level) in their respective company. These four individuals will then have 15 more calendar days to attempt to resolve such
dispute following the involvement of such supervisors. If these four individuals are unable to resolve the dispute and such inability to resolve the dispute can reasonably lead to either Party
terminating all or a substantial part of this Agreement, then the dispute shall be referred to the Chief Executive Officer and/or President of each Party for resolution. These two individuals will
then attempt to resolve the dispute within 30 calendar days of their involvement in the dispute resolution. If no resolution is reached as per this Section 28, the affected Party shall have the
right to take any action or exercise any right pursuant to this Agreement or applicable laws. 

29.      GRANT OF LICENSE  

	29.1
	Subject
to the terms and conditions of this Agreement, including, but not limited to, Section 29.2, Supplier, to the extent of its legal right so to do, hereby grants to
Nortel a personal, non-transferable, non-assignable, indivisible, non-exclusive, irrevocable, worldwide license (including a license to any required intellectual
property rights) to: (1) make and have made those Products, (2) incorporate and combine Products with Nortel's products, (3) sell, distribute and support Products incorporated
with Nortel's products and (4) use the Product Technical Information and Process Technical Information to manufacture, support and repair Products as provided in this Section 29.
Supplier will provide technical assistance in conjunction with this license at its standard commercial rates.

	29.2
	The
license in Section 29.1 is only exercisable in the event that Supplier: (1) to a material degree is unable to manufacture or supply [**]
Products or Primary Sourced Products, in accordance with the terms of this Agreement for a continuous period of not less than [**] months; (2) does not agree to
customize a Product as per Section 3.1; (3) discontinues manufacturing a [**] Product or Primary Sourced Product in accordance with the provisions of
Section 15.1; (4) fails to implement a material provision of any Business Continuity Plan developed in accordance with Section 6.4.4 hereof and such failure continues for
[**] months after notification by Nortel of such failure; (5) institutes insolvency, receivership or bankruptcy proceedings or any other material proceedings for the
settlement of its debts which proceedings are not dismissed within [**] days of such institution; or (6) as the Parties may otherwise agree in writing. The license in
Section 29.1 will only be exercisable for Products or sub-components thereof which are the cause or subject of the exercisable event described above. 

If
the license in Section 29.1 is exercisable pursuant to Section 29.2(4), the grant of license shall only apply to affected [**] Products. 

	29.3
	NNL
will give written notice to Supplier prior to exercising its license under Section 29.1. 

47

 

	29.4
	In
the event the license under Section 29.1 is exercisable as described above, NNL may elect to have a third party manufacturer manufacture Products. Due to the proprietary
nature of the Product and Process Technical Information, NNL agrees that it will not use the manufacturers, listed on Exhibit G ("Prohibited
Manufacturers"), as a third party manufacturer under this Section 29 unless the Supplier provides written consent. However, NNL is not required to obtain Supplier's
consent to engage a third party manufacturer, not listed on Exhibit G. Any Product and Process Technical Information and required intellectual property rights may be provided by NNL to such
third party manufacturer solely for the purpose of manufacturing Products to be provided to Nortel and Nortel Affiliates. As a condition precedent to providing any of such Product and Process
Technical Information to a third party manufacturer, such third party manufacturer shall sign a confidentiality and license agreement with NNL, reasonably acceptable to Supplier (which shall include,
without limitation, royalty payment, termination rights and reasonable audit rights provisions in favor of Supplier, and will name Supplier as a third party beneficiary to such agreement); and agree
to future audits of its operation by an independent auditor to verify its compliance with the confidentiality and license agreement.

	29.5
	If
exercisable pursuant to Section 29.2, the grant of license in Section 29.1 will continue until such time as the parties reasonably determine that the condition under
Section 29.2 (1), (4), (5) or (6) that triggered such licensing right has been rectified or cured. Supplier acknowledges that NNL may have expended considerable effort and monies
to establish its own manufacturing capacity or obtain the required capacity from a third party manufacturer and agrees that the license granted hereunder shall, in the event of termination of such
license pursuant to the preceding sentence, remain in effect for a reasonable period of time to allow Nortel to wind down its operations or meet contractual obligations entered into with a third party
manufacturer in order to establish or maintain the required capacity, and NNL will endeavor to return supply to Supplier within three (3) months of Supplier rectifying the matter which caused
NNL to exercise its rights hereunder.

	29.6
	The
Parties will diligently negotiate a reasonable royalty, payable to Supplier, giving consideration to the circumstances under which the license is being exercised. The Supplier
agrees that if the license is exercised as a result of an event set out in Section 29.2(1) or (4) the royalty payable by NNL will be nominal and shall not exceed
[**]% of the Price of the affected Product. It is the Parties objective that the negotiation of any royalty will not interfere with or delay the transfer of the Product and
Process Technical Information to Nortel or a third party. Notwithstanding the foregoing, in the event NNL exercises the rights under this Section 29 pursuant to Section 29.2 (2), (3),
(5) or (6) above, Supplier will have no obligation to transfer the Product and Process Technical Information to Nortel or a third party until the Parties agree upon the foregoing royalty
payments. 

48

 

	29.7
	In
the event the license in Section 29.1 becomes exercisable by NNL pursuant to Section 29.2 (2), (3) or (5) above and NNL attempts and is unable to
secure the required capacity from any third party manufacturer as a result of the limitation that the Products must be manufactured exclusively for NNL, Supplier and NNL will negotiate in good faith
to mutually agree to reasonable license terms (including royalty fees payable to Supplier) which will permit the third party manufacturer to manufacture and sell the Product to third parties other
than Nortel for the duration of this Agreement. In the event the Parties are unable to reach agreement upon such license terms, NNL shall not have the right to authorize the third party manufacturer
to manufacture the Products for any third party.

	29.8
	Supplier
shall have the right upon not less than ten (10) Business Days prior written notice to have an independent qualified auditor, reasonably acceptable to both Parties
examine, not more than twice per year, the relevant books and records of NNL to verify compliance with the provisions of this Section 29. Supplier will be responsible for the cost of any such
audit, unless NNL is in breach of this Section 29, in which case NNL will reimburse Supplier for the cost of such audit. 

30.      GENERAL  

	30.1
	Severability

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

	30.2
	Subject
to the provisions of Section 30.4 below, this Agreement shall continue to be valid and binding on the legal successors and assigns of each party.

	30.3
	Nortel
certifies that it will not export or reexport the Products unless it complies with all applicable regulations of the United States relating to such export or reexport.

	30.4
	Assignment

Neither
Party shall assign or otherwise transfer all or any part of this Agreement or any rights, obligations or duties hereunder, or any interest herein, without the prior written consent of the
other Party. Except with respect to subcontractors engaged by the Business on the Closing Date (but limited solely to the extent of such engagement on the Closing Date) and as provided in
Section 6.4.3, Supplier shall not subcontract any of its obligations or duties hereunder. 

	30.5
	Waiver

Failure
by either Party at any time to require performance by the other Party or to claim a breach of or to enforce any provision of this Agreement shall not be construed as affecting any subsequent
breach or the right to require performance with respect thereto or to claim a breach with respect thereto and shall not constitute a waiver of any such provision or the right of such Party to enforce
each and every provision of this Agreement. 

49

 

	30.6
	Independent
Contractors 

Nortel
and Supplier are independent contractors in all relationships and actions under and contemplated by this Agreement. This Agreement shall not be construed to create or to authorize the creation
of any employment, partnership or agency relation, or to authorize Nortel or Supplier to enter into or make any commitment, agreement, representation or warranty binding on the other, or to allow one
Party to accept service of any legal process addressed to, or intended for, the other Party. Nothing contained in this Agreement shall limit, in any manner, Nortel's right to enter into other
agreements with other parties. 

	30.7
	Section
Headings 

Section
headings are inserted herein for convenience only and shall not affect the meaning or interpretation of this Agreement or any provision hereof. 

	30.8
	Entire
Agreement 

This
Agreement, including Exhibits A through G attached hereto, comprises all the terms, conditions and agreements of the Parties hereto with respect to the subject matter hereof, and it may not be
altered or amended except in writing signed by authorized representatives of each Party hereto. 

            IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day and year last written below. 

	BOOKHAM TECHNOLOGY PLC
	
By:	

/s/  PHILIP S.J. DAVIS      

	Name: Philip S.J. Davis

Title: Company Secretary

Date:
	
NORTEL NETWORKS LIMITED
	
By:	

/s/  KHUSH DADYBURJOR      

	Name: Khush Dadyburjor
 Title: Attorney-in-Fact

Date:

50

  

 
 

EXHIBIT A    
  

 
 

PRODUCT LISTS, SHARE ALLOCATION AND CUSTOM PRODUCTS    
  

	Family
	 	Sub-Family
	 	CPC
	 	NNOC

P/N
	 	Item Desc
	 	LOB
	 	Custom
	 	Allocation

2H02
	 	2H02

Price
	 	1H03

Price
	 	Allocation

2H03
	 	2H03

Price
	 	Allocation

1H04
	 	1H04

Price
	 	Target

Return

Rate

	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

Confidential
Materials omitted and filed separately with the

Securities and Exchange Commission. 

1

  

 
 

EXHIBIT A-1    
  

 
 

MINIMUM COMMITMENT    
  

        During the period commencing on Closing and ending on the last day of the sixth calendar quarter, following Closing, as described herein, (the
"Commitment Period"), NNL commits that the combined aggregate value of Releases and Purchase Orders issued by Nortel and Nortel Affiliate to Supplier
for Products, products and Services, to be delivered in the applicable calendar quarter, shall be equal to [**] ($[**]) Dollars per calendar quarter
(the "Minimum Commitment"). 

        NNL
will receive a credit against the Minimum Commitment, in the following circumstances: 

	i.
	Supplier
is unable or unwilling to meet Nortel's and Nortel Affiliates' bona fide volume capacity requirements for a particular Product, that it could
reasonably be expected to be able to manufacture giving consideration to the Forecast and Flex requirements;

	ii.
	Products
ordered by Nortel or Nortel Affiliates are not delivered on the applicable Committed Delivery Date and, subject to Force Majeure
(Section 23), such late delivery materially impacts Nortel or Nortel Affiliates production schedule or commitments, such that Nortel or Nortel Affiliates are required to obtain Products, or
substitutes therefor, from an alternate source;

	iii.
	A
Product has a High Total Return Rate, which requires Nortel or a Nortel Affiliate to seek an alternate source for such Product, or substitutes
therefor. 

        For
the purposes of subsection (i) the credit against the Minimum Commitment will be equivalent to the value of the Products that would have been produced, if the volume capacity
had been met. With respect to subsections (ii) and (iii), the value of the credit against the Minimum Commitment will be the value of the Products, or substitutes therefor, that Nortel and the
Nortel Affiliates are required to obtain from an alternate source. 

        During
the Commitment Period, the Parties shall meet in the 6th week of each calendar quarter to review the aggregate value of the Purchase Orders and Releases issued by Nortel and
Nortel Affiliates during such calendar quarter to determine whether Nortel's and Nortel Affiliates' requirements for Product, products and Services, as set out in the Forecast for the remainder of
such calendar quarter, are in line with the Minimum Commitment. Giving consideration to the Forecast, Nortel's and Nortel Affiliates' requirements and Supplier's available capacity, as described in
subsection (i) above, the Parties will agree on the manner in which the Minimum Commitment will be met and will implement such agreement (the "Quarterly
Agreement"). 

        If
it is determined that the aggregate value of the Purchase Orders and Releases issued by Nortel and Nortel Affiliates in a particular calendar quarter will be less than
[**]% of the Minimum Commitment, then during the 10th week of such calendar quarter, NNL will, either a) issue a Purchase Order or Release, for Products, products and
Services in line with the Quarterly Agreement, to be delivered in the last week of such calendar quarter, having a value equal to the difference between [**]% of the applicable
Minimum Commitment and the aggregate value of the Purchase Orders and Releases issued by Nortel and Nortel Affiliates for delivery in such calendar quarter; or b) issue a Purchase Order to
Supplier, in the last week of such calendar quarter, for cancellation fees equal to [**] ([**]%) percent of the difference between
[**]% of the applicable Minimum Commitment and the aggregate value of the Purchase Orders and Releases issued by Nortel and Nortel Affiliates in such calendar quarter. 

1

 

        Further,
for the duration of the Commitment Period, at the end of each calendar quarter, during the quarterly business review meetings, the Parties will reconcile the Minimum Commitment
obligations for the prior calendar quarter with the value of the actual Purchase Orders and Releases issued by Nortel and Nortel Affiliates for such period. If it is determined that the aggregate
value of the actual Purchase Orders and Releases issued by Nortel and Nortel Affiliates, in a particular calendar quarter, are less than 100% of the Minimum Commitment, then, in the following calendar
quarter, NNL agrees that the difference between the Minimum Commitment and the aggregate value of the actual Purchase Orders and Releases issued by Nortel and Nortel Affiliates, in such calendar
quarter, ("Carry Over Commitment") will be added to the value of the Minimum Commitment in the immediately following calendar quarter. 

        The
remedies set out herein are Supplier's sole remedies in the event the combined aggregate value of Products, products and Services, purchased by Nortel and Nortel Affiliate, from
Supplier, do not meet the Minimum Commitment. 

        In
the event that Closing occurs on or after October 1, 2002, but before January 1, 2003, the $[**] quarterly Minimum Commitment will be pro rated
for the period commencing on the Effective Date and ending on December 31, 2002. In the event Closing occurs on or before November 14, 2002, the difference between the
$[**] and the pro rated amount for the period ending on December 31, 2002, will be added to the value of the quarterly Minimum Commitment for the period commencing on
January 1, 2004 and ending March 31, 2004. In the event Closing occurs on or after November 15, 2002, but before January 1, 2003 NNL commits that the combined aggregate
value of Products, products and Services, purchased by Nortel and Nortel Affiliate, from Supplier, during the calendar quarter commencing on April 1, 2004 and ending June 30, 2004, shall
be equal to the difference between the $[**] and the pro rated amount for the period ending on December 31, 2002. 

        In
the event that Closing occurs on or after January 1, 2003, but before April 1, 2003, the $[**] quarterly Minimum Commitment will be pro rated for
the period commencing on the Effective Date and ending on March 31, 2003. In the event Closing occurs on or before February 14, 2003, the difference between the
$[**] and the pro rated amount for the period ending on March 31, 2003, will be added to the value of the quarterly Minimum Commitment for the period commencing on
April 1, 2004 and ending June 30, 2004. In the event Closing occurs on or after February 15, 2003, but before April 1, 2003 NNL commits that the combined aggregate value of
Products, products and Services, purchased by Nortel and Nortel Affiliate, from Supplier, during the calendar quarter commencing on July 1, 2004 and ending September 30, 2004, shall be
equal to the difference between the $[**] and the pro rated amount for the period ending on March 31, 2003. 

        NNL's
obligations with respect to Minimum Commitment in a particular calendar quarter are conditional upon the Supplier being not in breach of a material provision of this
Agreement, during that calendar quarter, which breach remains uncured for more than [**] ([**]) calendar days after receipt of notice. 

        For
the purposes of clarity, the calendar quarters will be measured as follows: 

January 1
to March 31; 

April 1
to June 30; 

July 1
to September 30; and 

October 1
to December 31. 

2

  

 
 

EXHIBIT A-2    
  

PRODUCTS IN DEVELOPMENT  

	Family	 	Sub-Family	 	CPC	 	NNOC P/N	 	Item Desc	 	LOB Custom	 	Allocation

2H02	 	2H02

Price	 	Allocation

1H03	 	1H03

Price	 	Allocation

2H03	 	2H03

Price	 	Allocation

1H04	 	1H04

Price	 	Comments
	

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. 

1

  

 
 

EXHIBIT B    
  

 
 

SPECIFICATIONS    
  

	PEC
	 	CPC
	 	Product Description
	 	Specification

	    	 	 	 	 	 	 

Confidential
Materials omitted and filed separately with the

Securities and Exchange Commission. 

1

 
 
 

EXHIBIT C    
  

 
 

DEMAND PULL
  
    DEMAND-PULL PROGRAM    
  

	1.
	Demand-Pull Program Forecast—On the first business day of each week during the Term, Nortel will provide
Supplier with a 12 month rolling forecast (Forecast) of its Demand-Pull Program Product requirements. Nortel will issue a Blanket
Purchase Order for the quantity of Products shown for the first 6 months of the first Forecast (Blanket Purchase Order). Nortel will update the
Blanket Purchase Order as required. If Supplier's stock of components exceeds Supplier's requirements for Products purchased by Nortel under Releases against the Blanket Purchase Order, Supplier will
sell the excess to third parties to the extent reasonably possible. Any and all actions undertaken by Supplier in respect of any Forecast or Blanket Purchase Orders that do not correspond identically
to the information set forth in Releases against Blanket Purchase Orders, if any, shall be solely at the risk and cost of Supplier, unless otherwise expressly agreed in a separate mutually executed
writing between the parties.

	2.
	Target Products Total Stock—Target Product Total Stock or  TPTS means the total quantity of goods targeted (Target Finished Goods) plus works in progress
(Target WIP) as agreed between the Parties and set out in Attachment 1 to Exhibit C. The Product run rate is included in Attachment 1 to
Exhibit C. The maximum number of weeks for which Supplier will maintain the Target Product Total Stock is indicated on Attachment 1. However, if the Target Finished Goods is inactive for more
than [**] days, the parties will agree on a reasonable disposition of all or part of the maximum Target Product Total Stock, subject to Section 7 of this
Exhibit C.

	2.1
	Increase Target Product Total Stock—Supplier will have the capability of increasing the then-current Target
Product Total Stock by (a) [**]% within 1 month of Nortel's request, and (b) [**]% within 2 months of Nortel's request. It
is the Parties intent that these Flex requirements will be reviewed and updated at the Quarterly Business Review.

	2.2
	Depletion of Target Product Total Stock—In the event that Nortel's and Nortel Affiliates' demand for a Product exceeds the
Forecast and Flex, Nortel may instruct Supplier to draw on the Target Product Total Stock. In such a case, if the Target Product Total Stock is reduced, Supplier will replenish such Target Product
Total Stock within the applicable Product lead time. 

	3.
	Delivery—Demand-Pull Program Products will be delivered FCA Proximity Warehouse, within 24 hours after
Nortel issues the Release(s) to Supplier.

	4.
	Discrete PO's—Nortel may purchase Products included in the Demand-Pull Program by issuing a P.O. for the
Products under terms of the Agreement rather than the terms of the Demand-Pull Program. The Products purchased under the P.O. will count towards Nortel's purchases of Target Product Total
Stock.

	5.
	Target Finished Goods Report—Supplier will provide Nortel's designated purchasing department representative with a weekly
written report detailing the status of the Target Products Total Stock.

	6.
	Cancellation—Nortel may cancel the Demand-Pull Program in whole or in part by providing Supplier with written
notice. Such cancellation will be effective immediately, and the then current Blanket Purchase Order will be cancelled. The parties will agree on a reasonable disposition of the maximum Target Product
Total Stock, subject to Section 7 of this Exhibit C. 

2

 
	7.
	Disposition
of the Target Product Total Stock due to inactivity described at Section 2 of this Exhibit or due to cancellation described at Section 6 of this Exhibit will
be subject to the following:

	(a)
	Delivery
schedule for applicable Target Product Total Stock will be as agreed by the parties hereto, provided that Nortel will have the right to require delivery in accordance with
the time periods set out in this Agreement.

	(b)
	Nortel's
total liability under the Demand-Pull Program, including without liability for Supplier's stock of finished goods and works in progress, will not exceed the
Target Product Total Stock maintained by Supplier for the maximum number of weeks indicated on Attachment 1.

	(c)
	Amounts
to be paid by Nortel for agreed upon Target Product Total Stock will be:

	A.
	Target
Finished Goods @ [**]% of the applicable Product Price; 
	B.
	Target
WIP @ [**]% of the applicable Product Price. 

3

 

 
 

EXHIBIT C    
  

 
 

ATTACHMENT 1    
  

        The Parties agree, until Attachment 1 is completed on a per Product basis, to the following provisional Target Product Total
Stock:

Target Finished Good Stock: [**] weeks

Target WIP:[**] weeks

[To be completed on a per Product basis following Closing]

	CPC

NO.
	 	DESCRIPTION
	 	MAX

WKS

TPTS
	 	RUN

RATE
	 	TARGET

FG STK
	 	TARGET

WIP
	 	ACTUAL

FG STK
	 	ACTUAL

WIP
	 	LEAD

TIME

	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	    	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

NORTEL APPROVAL:	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

DATE:	
 	

	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

SUPPLIER APPROVAL:	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

DATE:	
 	

	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 

4

 
 
 

EXHIBIT D    
  

 
 

REPORTING REQUIREMENTS    
  

	1)
	Shipment
reports including the following information weekly and monthly overview: 

—Ship
to/from location

—Ship date

—CPC

—Qty

—W/B

—Requested qty

—YTD qty shipped by CPC

—PO#

—Total $ spend YTD by CPC 

	2)
	Stock
reports monthly—template available—should show: 

—F/G
level

—WIP thru various stages of manufacturing measured at key process points. 

	3)
	Supply
chain contract monthly reports: 

—Delta
to targets highlighted

—Recovery plans provided within 24hrs

—Any upside analysis or demand—response to requirements within 48hrs. 

	4)
	CR
road map monthly—updated quarterly.

	5)
	Price
files issued quarterly.

	6)
	Delta
to ship request report weekly—recovery issued within 24hrs of delta to ship report.

	7)
	Quality
issues outlined monthly as follows: 

—PP
100/1000 defect

—Corrective actions

—Root cause

—Trend by CPC 

	8)
	Web
tools will be used 

—PO
confirmed/acknowledged on Web

—Stock report on web

—Projected shortages responses on web 

	9)
	Invoice
discrepancy report 3rd week of month/issued once a month. 

5

 
 
 

EXHIBIT E    
  

 
 

PROCEDURES FOR ELECTRONIC COMMUNICATION    
  

	I.
	PROCEDURES FOR ORDERS AND FORECAST UTILIZING ST-LAURENT SPECIFIC WEB TOOL

(REV
DG            020701a) 

        WEB Tools refer to a set of tools developed by NNL's St-Laurent System House known as eSupply and used to
transfer business related information, Purchase Orders and Release using a secure Internet connection. 

	1.
	WEB Browser Certificate—Before utilizing the WEB Tools the Supplier will have to install a computer WEB Browser Certificate
to comply with Nortel Corporate security requirements and create proper account on the SAM server. This operation will allow the user to receive encrypted mail from Nortel and access the secure
Supplier web page via specific URL.

	2.
	Supported Transactions—eSupply supports transmission and confirmation, replenishment signal, forecast, inventory status as
well as shipping details.

	3.
	Purchase Orders—and Releases

	1.
	A
Purchase Orders or Release is created in the ERP system.

	2.
	The
Purchase Order or Release is sent by Nortel through eSupply.

	3.
	The
suppliers access the Purchase Orders/Release (Web Tool) to acknowledge "New Purchase Order/Release".

	4.
	Once
acknowledged by the Supplier, the Purchase Order/Release is sent back, through the web, to Nortel.

	5.
	The
buyer receives the Purchase Order/Release and Accept or Cancel the Purchase Order/Release.

	6.
	If
accepted, the Purchase Order/Release will update the Purchasing module of Nortel ERP system.

	7.
	If
cancelled, the buyer will contact the supplier to come to an agreement. 

	4.
	Replenishment Signal—The POU module part of the eSupply system is used to request material pulls from the Supplier pursuant
to Exhibit C herein

	a.
	Team-leader
at the Nortel facility will pull all items from Supplier based on manufacturing requirements

	b.
	Nortel
will track the pulls and extract delivery performance information

	c.
	Supplier
will use the web interface of POU to respond and communicate with Nortel. 

	5.
	Forecast—Nortel will transmit on a weekly basis, typically on Monday a detailed forecast using the System House ERP data and
latest forecast information.

	a.
	The
requirements showing in the Forecast tool are the Nortel gross requirements based on the manufacturing aspect, not based on any current Blanket Purchase Order. This is particularly
important in regards of the "Back Schedule". A Back Schedule in the forecast means that the Nortel production is delayed Supplier's delivery should not be delayed.

	b.
	All
information in the Forecast is downloadable. 

6

 

	6.
	Inventory Status—Inventory status is a tool whereby the Supplier can be asked to provide to Nortel an updated FG and WIP
inventory as agreed upon in the Agreement.

	a.
	The
list of parts to be updated will be posted every week on the specific WEB page.

	b.
	Suppliers
will be responsible to update information via the WEB page or using the upload capability before the end of the next working day. 

	7.
	Shipping Details—If Nortel requires such information, the shipping module allows updates on Suppliers shipment and serves as
an Advanced Ship Notice to Nortel.

	a.
	Once
the Supplier has shipped the material, it signs on to the Web Shipping module to complete the transaction.

	b.
	Supplier
enters the waybill, finds the appropriate Purchase Order/Release Line and submits the transaction.

	c.
	This
input is extracted and fed back through a Corporate Interface Supply Link to Carrier Solutions St. Laurent, updating the Packing and Shipping Modules of Nortel's ERP
system. 

7

 

 
 

EXHIBIT F    
  

 
 

CERTIFICATIONS    
  

        Supplier will obtain the design certifications listed below for new or modified designs after production release. At Supplier's expense, Nortel and Supplier will
make joint submissions to the certifying regulatory bodies. However, Nortel will be responsible for any costs in excess of those for a solo submission. The parties will notify each other about design
changes that might invalidate a certification. The exposure will be included in the Change Notification process whether or not the changed or modified design will be in a production release. 

        Supplier
will obtain the following certifications and any other certifications required by law: 

CEMark

UK Type Approval

UL/CSA/EN safety

FCC parts 15 and 101 

8

 
 
 

EXHIBIT G    
  

 
 

PROHIBITED MANUFACTURERS    
  

[**] 

9

QuickLinks

Exhibit 4.3

SUPPLY AGREEMENT

TABLE OF CONTENTS

EXHIBITS

EXHIBIT A

PRODUCT LISTS, SHARE ALLOCATION AND CUSTOM PRODUCTS

EXHIBIT A-1

MINIMUM COMMITMENT

EXHIBIT A-2

EXHIBIT B

SPECIFICATIONS

EXHIBIT C

DEMAND PULL DEMAND-PULL PROGRAM

EXHIBIT C

ATTACHMENT 1

EXHIBIT D

REPORTING REQUIREMENTS

EXHIBIT E

PROCEDURES FOR ELECTRONIC COMMUNICATION

EXHIBIT F

CERTIFICATIONS

EXHIBIT G

PROHIBITED MANUFACTURERS

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