Common use of PRODUCT AND PROCESS CHANGES Clause in Contracts

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. 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. 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

PRODUCT AND PROCESS CHANGES. 5.1 Supplier Seller shall notify Nortel in writing of all Supplier proposed modifications and changes that may affect processes, form, fit, function, reliability performance or performance to the Products, Nortel's products and/or Processes Price (including source changes that affect the performance of subcomponents or a change in manufacturing location) (herein "Change(s)")) to the Products and/or Processes. Such notification shall be made by Supplier Seller to Nortel within the duration specified [*] of Seller's internal design authorization allowing any such Change except in the relevant section of cases contemplated in Section 5.6, in which case Seller shall promptly so notify Nortel and initiate immediate action to correct the Nortel's Specification Document NPS25268 covering supplier product change notifications, situation. The Changes which require that a copy of which notice be forwarded to Nortel shall be any proposed * Certain information on this page has been provided by NNL omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to Supplierthe omitted portions. 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 incorporated by reference ( "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 unless otherwise expressly set forth in this SectionSection 5. SupplierAll Changes proposed outside the spectrum of GR-209 shall be classified as "O". The interpretation of GR- 209 shall be decided on a per product basis in agreement between Seller and Nortel prior to acceptance of a given PO or addition of a product to Product List in Exhibit A. Seller's Change notifications (herein "Change Notifications") shall be sufficiently detailed so as to disclose adequately in the Change to Nortel.form and content of Exhibit G. * See Exhibit H 5.2 SupplierSeller's written Change notifications 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 implementationGR-209. 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 ProductNotification. 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 Seller shall supply, on loan and without charge, a sufficient production level quality mutually agreed upon quantity of 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. 5.4 Supplier If Nortel disagrees with any classification issued by Seller, Seller shall present evidence in writing, within a period of [*] from Nortel's request therefore, that such a classification is justified. If Nortel still disagrees with the justification, within [*] from its receipt of Seller's written justification of the classification, Nortel shall present evidence in writing that Nortel's disagreement is justified and made in good faith and based on Nortel's product implementation requirements. Thereafter, the Parties shall negotiate in good faith until a final resolution is mutually agreed upon by the Parties within [*] from the date of Seller's Change Notification. In the event that [*] after the date of Seller's Change Notification, the Parties still disagree on the Change classification, Nortel's reasonable and substantiated determination shall prevail and be final. 5.5 Seller shall not implement a Change such as those contemplated above without the prior written consent of Nortel, which consent may not be unreasonably withheld or delayed, however, any provided such consent will be conditioned on is not unreasonably withheld. Should Nortel fail to respond within a period of [*] from the Product or Processes affected date it has received a notice forwarded by Seller under this Section 5, then Seller shall have the right to implement such Change being qualified and Nortel forfeits all rights to object to such Change. 5.6 In addition to Seller's warranty obligations contained in accordance with an Acceptance Program. If Supplier implements a Change Section 12 (Warranty) and without diminishing Seller's obligations under this Section 5 and Sections 6 (Quality Control and Reliability Requirements, Supply Management and Nortel's prior consentAuditing Rights) and 14 (Repair Services) but only on a customer by customer basis and only for as long as Nortel is similarly obligated to such customer with regard to Class A or AC Changes, 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 thatthat an intrinsic design or manufacturing defect of the Product(s), during causes an inoperative, hazardous or unsatisfactory condition of a nature as to require the Product Warranty Period [**]introduction in the Product(s) of a Class A or AC Change, a Product experiences an Epidemic Failureas described in GR-209, Nortel and Supplier Seller 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 possibleat its expense, generate a Class A or AC Change, as defined in GR-209applicable, to eliminate the defect defect, and supply such Change Change, * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to Nortelthe omitted portions. If mutually agreed at no charge, for installation by Nortel at reasonable costs, at Seller's expense, in all defective units of the Parties to be requiredProduct(s), Nortel both installed and Supplier will develop a plan for stocked, in accordance with a retrofit program for units of the failed Productnegotiated by Nortel with its customers. A retrofit program is a program that allows Nortel to install 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 such inoperative, hazardous or unsatisfactory condition first occurs. In the course of Supplier's first knowledge or notice negotiations 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 with its customers, Nortel shall consult closely with Seller with a view to endeavor to achieve the field, which twofold objective of customers' satisfaction and minimization of retrofit costs shall consist of [**] the Field Replacement Unitsto Seller. 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 Seller shall provide, Class A at its expense, seed stock units to support a retrofit program project completion within said [*] in quantities determined in accordance with the following formulae: The [*] calendar ([**]) days as set forth above in Section 5.5period begins when all the details of the retrofit program are determined by Nortel. The number of seed stock units will be calculated as follows: Seed Stock Units = Material Cycle Time (Weeks) × Retrofit x Repair and Return Rate Retrofit Repair and Return 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.Date 5.7 Nortel shall provide Supplier with to Seller Nortel's Customer Product Engineering Code, the release number of the Product and the CLEI code of the Product, if required, for each Product Change under this SectionSection 5. At Nortel's request, this information shall be placed on the Products incorporating the Change by Supplier Seller in accordance with the Specifications. 5.8 Supplier From acceptance of the Products by Nortel in accordance with Section 4 (Nortel's Product Qualification and Acceptance Process), Seller 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 SupplierSeller which affects form, fit, function, performance or Price of the Products. Supplier Seller will use its diligent best efforts to produce these updates within five seven (57) Business Days Days* of each Change date. 5.9 Throughout the Term, Supplier shallSeller shall requalify the Products once every [*] period in accordance with Bellcore Standard TR-NWT-000418, at Issue 2 (Draft 3) September 1992. 5.10 Change notices relating to Product Changes should be sent to Nortel's request, furnish System Engineering department and Change notices relating to Nortel all Supplier data showing that a Product will continue Process Changes should be sent to meet Nortel's Quality Department. Seller's Quality Department shall be responsible for the original Specifications, if a proposed Change is made to a Productobligations described in this Section 5. If Nortel determines that such data is insufficient to determine such compliance * Certain information on this page has been omitted and filed separately with the Specifications, Supplier Securities 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 Exchange Commission. Confidential treatment has been requested with respect to the original application under Section 4. 5.10 Return Rate 5.10.1 Product Returns consist of three categoriesomitted portions.

PRODUCT AND PROCESS CHANGES. 5.1 Supplier Avanex shall notify Nortel Networks in writing of all Supplier proposed modifications and changes that may affect processes, form, fit, function, reliability performance or performance to the Products, Nortel's products and/or Processes Price (including source changes that affect the performance of subcomponents or a change in manufacturing location) (herein "Change(s)")) to the Products and/or Processes. Such notification shall be made by Supplier Avanex to Nortel Networks within seven (7) calendar days of the duration specified Avanex's internal design authorization allowing any such Change except in the relevant section of cases contemplated in Section 5.6, in which case Avanex shall promptly so notify Nortel Networks and initiate immediate action to correct the Nortel's Specification Document NPS25268 covering supplier product change notificationssituation. The Changes which require that a notice be forwarded to Nortel Networks shall include, a copy of which has been provided by NNL to Supplier. Without limiting the generality of the foregoing notice requirementswithout limitation, 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 ). All Changes proposed outside the spectrum of GR-209 shall 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 Productclassified as "O". Supplier Avanex shall comply with GR-209 only except to the extent expressly set forth in this SectionSection 5. SupplierThe reasonable interpretation of GR-209 resides with Nortel Networks. Avanex's Change notifications (herein "Change Notifications") shall be sufficiently detailed so as to disclose adequately in the Change to Nortel.form and content of Exhibit G. 5.2 SupplierAvanex's written Change notifications 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 of 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 notificationNotification. Nortel Avanex will propose a disposition plan for Nortel's Nortel Networks' and its customers' stockrooms. Nortel Networks will notify Supplier Avanex of the type and quantity of Products it requires for the implementation of the Change and the locations location 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 Productdelivered to. 5.3 Nortel Networks reserves the right to request reasonable test data associated with any Product Changes. Furthermore, in the event Nortel Networks determines it is necessary to verify the Change prior to acceptance, under Section 4, Supplier Avanex 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 NortelNortel Networks, 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. 5.4 Supplier If Nortel Networks disagrees with any classification issued by Avanex, Avanex shall present evidence in writing, within a period of five (5) Business Days from Nortel Networks' request therefor, that such a classification is justified. If Nortel Networks still disagrees with the justification, Avanex shall negotiate in good faith with Nortel Networks until a final resolution is mutually agreed upon by the Parties within thirty (30) calendar days from the date of Nortel Networks' notice of disagreement. In the event that thirty (30) calendar days after the date of Nortel Networks' notice of disagreement, the Parties still disagree on the Change classification, Nortel Networks' reasonable determination shall prevail and be final. 5.5 Avanex shall not implement a Change such as those contemplated above without the prior written consent of NortelNortel Networks, 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 Programwithheld. If Supplier implements a Change without Nortel's prior consent, Should Nortel will have no obligations with respect Networks fail 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 respond within a period not to exceed [**] of forty ([**]40) calendar days from the date of Supplier's first knowledge or it has received a notice of the defect. A retrofit can only exceed [**] calendar days ([**]) if agreed to forwarded 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 Avanex under this agreementSection 5, then Avanex shall have the right to implement such Change. 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. 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

PRODUCT AND PROCESS CHANGES. 5.1 Supplier shall notify Nortel Networks in writing of all Supplier proposed modifications and changes that may affect processes, form, fit, function, reliability performance or performance Price (herein "CHANGE(S)") to the Products, Nortel's products Products and/or Processes (including source changes that affect the performance of subcomponents or a change in manufacturing location) ("Change(s)")Processes. Such notification shall be made by Supplier to Nortel Networks within seven (7) calendar days of the duration specified Supplier's internal design authorization allowing any such Change except in the relevant section of cases contemplated in Section 5.6, in which case Supplier shall promptly so notify Nortel Networks and initiate immediate action to correct the Nortel's Specification Document NPS25268 covering supplier product change notificationssituation. The Changes which require that a notice be forwarded to Nortel Networks shall include, a copy of which has been provided by NNL to Supplier. Without limiting the generality of the foregoing notice requirementswithout limitation, 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 ). All Changes proposed outside the spectrum of GR-209 shall 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 Productclassified as "O". Supplier shall comply with GR-209 only except to the extent expressly set forth in this SectionSection 5. The interpretation of GR-209 resides with Nortel Networks. Supplier's Change notifications (herein "CHANGE NOTIFICATIONS") shall be sufficiently detailed so as in the form and content of Exhibit G. The Parties will work together to disclose adequately the Change to Norteladdress any known deviations from GR-209. 5.2 Supplier's written Change notifications 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 of 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 notificationNotification. Nortel Supplier will propose a disposition plan for Nortel's Nortel Networks' and its customers' stockrooms. Nortel Networks will notify Supplier of the type and quantity of Products it requires for the implementation of the Change and the locations location 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 Networks reserves the right to request reasonable test data associated with any Product Changes. Furthermore, in the event Nortel Networks 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 NortelNortel Networks, 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. 5.4 If Nortel Networks disagrees with any classification issued by Supplier, Supplier shall present evidence in writing, within a period of five (5) calendar days from Nortel Networks' request therefor, that such a classification is justified. If Nortel Networks still disagrees with the justification, Supplier shall negotiate in good faith with Nortel Networks until a final resolution is mutually agreed upon by the Parties within thirty (30) calendar days from the date of Supplier's Change Notification. In the event that thirty (30) calendar days after the date of Supplier's Change Notification, the Parties still disagree on the Change classification, Nortel Networks' reasonable determination shall prevail and be final. 5.5 Supplier shall not implement a Change such as those contemplated above without the prior written consent of NortelNortel Networks, which consent may not be unreasonably withheld or delayedwithheld. Should Nortel Networks fail to respond within a period of forty (40) calendar days from the date it has received a notice forwarded by Supplier under this Section 5, however, any then Supplier shall have the right to implement 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 AgreementChange. 5.5 5.6 In addition to Supplier's warranty obligations contained in Section 13 (Warranty) and without diminishing Supplier's obligations under this Section 5 and Sections 6 (Quality Control and Reliability Requirements, Supply Management and Nortel Networks' Auditing Rights) and 15 (Repair Services), in the event that, during the Product Warranty Period [**]or the Term, whichever is longer, an intrinsic design or manufacturing defect of the Product(s), including a Product experiences failure of the Software to operate in the environment in which it is installed, without troubles, due to defects which result from the failure of the Software to conform to the Specifications, causes an Epidemic Failureinoperative, Nortel and hazardous or unsatisfactory condition of a nature as to require the introduction in the Product(s) of a Class A or AC Change, as described in GR-209, 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 possibleat its expense, generate a Class A or AC Change, as defined in GR-209applicable, to eliminate the defect defect, and supply such Change to Nortel. If mutually agreed Change, at no charge, for installation by Nortel Networks at reasonable costs, at Supplier's expense, in all defective units of the Parties to be requiredProduct(s), Nortel both installed and Supplier will develop a plan for stocked, in accordance with a retrofit program for units of the failed Productnegotiated by Nortel Networks with its customers. A retrofit program is a program that allows Nortel Networks to install the Change to be implemented in all of Nortel's, Nortel Affiliate's and other third partiesNetworks' stockrooms and customer locations within a period not to exceed [**] one hundred and eighty ([**]180) calendar days from the date such inoperative, hazardous or unsatisfactory condition first occurs. In the course of Supplier's first knowledge or notice negotiations 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 with its customers, Nortel Networks shall consult closely with Supplier with a view to endeavor to achieve the field, which twofold objective of customers' satisfaction and minimization of retrofit costs shall consist of [**] the Field Replacement Unitsto Supplier. 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 at its expense, seed stock units to support a retrofit program project completion within said [**] calendar one hundred and eighty ([**]180) days as set forth above in Section 5.5quantities determined in accordance with the following formulae: The one hundred and eighty (180) day period begins when all the details of the retrofit program are determined by Nortel Networks. The number of seed stock units will be calculated as follows: Seed Stock Units = Material Cycle Time (Weeks) × Retrofit x Repair and Return Rate Retrofit Repair and Return 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.Date 5.7 Nortel Networks shall provide to Supplier with Nortel's Customer Nortel Networks' Product Engineering Code, the release number of the Product and the CLEI code of the Product, if required, for each Product Change under this SectionSection 5. At Nortel's Nortel Networks' request, this information shall be placed on the Products incorporating the Change by Supplier in accordance with the Specifications. 5.8 From acceptance of the Products by Nortel Networks in accordance with Section 4 (Nortel Networks' Product Qualification and Acceptance Process), Supplier shall provide Nortel Networks 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 SupplierSupplier which affects form, fit, function, performance or Price of the Products. Supplier will use its diligent best efforts to produce these updates within five seven (57) Business Days of each Change date. 5.9 Throughout the Term, Supplier shallshall requalify the Products once every twelve (12) month period in accordance with Bellcore Standard TR-NWT-000418, 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 categoriesIssue 2 (Draft 3)

PRODUCT AND PROCESS CHANGES. 5.1 Supplier Seller shall notify Nortel in writing of all Supplier proposed modifications and changes that may affect processes, form, fit, function, reliability performance or performance to the Products, Nortel's products and/or Processes Price (including source changes that affect the performance of subcomponents or a change in manufacturing location) (herein "Change(s)")) to the Products and/or Processes. Such notification shall be made by Supplier Seller to Nortel within the duration specified seven (7) calendar days* of Seller's internal design authorization allowing any such Change except in the relevant section of cases contemplated in Section 5.6, in which case Seller shall promptly so notify Nortel and initiate immediate action to correct the Nortel's Specification Document NPS25268 covering supplier product change notifications, situation. The Changes which require that a copy of which has been provided by NNL notice be forwarded to Supplier. Without limiting the generality of the foregoing notice requirements, Nortel shall be any proposed Change to the Products in accordance with the classifications described in Telcordia (formerly Bellcore) GR-209-CORE (herein incorporated by reference ( "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 unless otherwise expressly set forth in this SectionSection 5. SupplierAll Changes proposed outside the spectrum of GR-209 shall be classified as "O". The interpretation of GR-209 shall be decided on a per product basis in agreement between Seller and Nortel prior to acceptance of a given PO or addition of a product to Product List in Exhibit A. Seller's Change notifications (herein "Change Notifications") shall be sufficiently detailed so as to disclose adequately in the Change to Nortel.form and content of Exhibit G. * See Exhibit H 5.2 SupplierSeller's written Change notifications 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 implementationGR-209. 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 ProductNotification. 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 Seller shall supply, on loan and without charge, a sufficient production level quality mutually agreed upon quantity of 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. 5.4 Supplier If Nortel disagrees with any classification issued by Seller, Seller shall present evidence in writing, within a period of five (5) calendar days* from Nortel's request therefore, that such a classification is justified. If Nortel still disagrees with the justification, within thirty (30) calendar days* from its receipt of Seller's written justification of the classification, Nortel shall present evidence in writing that Nortel's disagreement is justified and made in good faith and based on Nortel's product implementation requirements. Thereafter, the Parties shall negotiate in good faith until a final resolution is mutually agreed upon by the Parties within thirty (30) calendar days* from the date of Seller's Change Notification. In the event that thirty (30) calendar days* after the date of Seller's Change Notification, the Parties still disagree on the Change classification, Nortel's reasonable and substantiated determination shall prevail and be final. 5.5 Seller shall not implement a Change such as those contemplated above without the prior written consent of Nortel, which consent may not be unreasonably withheld or delayed, however, any provided such consent will be conditioned on is not unreasonably withheld. Should Nortel fail to respond within a period of forty (40) calendar days* from the Product or Processes affected date it has received a notice forwarded by Seller under this Section 5, then Seller shall have the right to implement such Change being qualified and Nortel forfeits all rights to object to such Change. 5.6 In addition to Seller's warranty obligations contained in accordance with an Acceptance Program. If Supplier implements a Change Section 12 (Warranty) and without diminishing Seller's obligations under this Section 5 and Sections 6 (Quality Control and Reliability Requirements, Supply Management and Nortel's prior consentAuditing Rights) and 14 (Repair Services) but only on a customer by customer basis and only for as long as Nortel is similarly obligated to such customer with regard to Class A or AC Changes, 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 thatthat an intrinsic design or manufacturing defect of the Product(s), during causes an inoperative, hazardous or unsatisfactory condition of a nature as to require the Product Warranty Period [**]introduction in the Product(s) of a Class A or AC Change, a Product experiences an Epidemic Failureas described in GR-209, Nortel and Supplier Seller 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 possibleat its expense, generate a Class A or AC Change, as defined in GR-209applicable, to eliminate the defect defect, and supply such Change to Nortel. If mutually agreed Change, at no charge, for installation by Nortel at reasonable costs, at Seller's expense, in all defective units of the Parties to be requiredProduct(s), Nortel both installed and Supplier will develop a plan for stocked, in accordance with a retrofit program for units of the failed Productnegotiated by Nortel with its customers. A retrofit program is a program that allows Nortel to install 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 [**] one hundred and eighty ([**]180) calendar days from the date such inoperative, hazardous or unsatisfactory condition first occurs. In the course of Supplier's first knowledge or notice negotiations 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 with its customers, Nortel shall consult closely with Seller with a view to endeavor to achieve the field, which twofold objective of customers' satisfaction and minimization of retrofit costs shall consist of [**] the Field Replacement Unitsto Seller. 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 Seller shall provide, Class A at its expense, seed stock units to support a retrofit program project completion within said [**] one hundred and eighty (180) calendar days in quantities determined in accordance with the following formulae: The one hundred and eighty ([**]180) calendar days as set forth above in Section 5.5period begins when all the details of the retrofit program are determined by Nortel. The number of seed stock units will be calculated as follows: Seed Stock Units = Material Cycle Time (Weeks) × Retrofit x Repair and Return Rate Retrofit Repair and Return 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.Date 5.7 Nortel shall provide Supplier with to Seller Nortel's Customer Product Engineering Code, the release number of the Product and the CLEI code of the Product, if required, for each Product Change under this SectionSection 5. At Nortel's request, this information shall be placed on the Products incorporating the Change by Supplier Seller in accordance with the Specifications. 5.8 Supplier From acceptance of the Products by Nortel in accordance with Section 4 (Nortel's Product Qualification and Acceptance Process), Seller 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 SupplierSeller which affects form, fit, function, performance or Price of the Products. Supplier Seller will use its diligent best efforts to produce these updates within five seven (57) Business Days Days* of each Change date. 5.9 Throughout the Term, Supplier shallSeller shall requalify the Products once every twelve (12) month period in accordance with Bellcore Standard TR-NWT-000418, at Issue 2 (Draft 3) September 1992. 5.10 Change notices relating to Product Changes should be sent to Nortel's request, furnish System Engineering department and Change notices relating to Nortel all Supplier data showing that a Product will continue Process Changes should be sent to meet Nortel's Quality Department. Seller's Quality Department shall be responsible for 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, obligations described in addition to those that were imposed under the original Acceptance Program for such Product, as it relates to the original application under this Section 4. 5.10 Return Rate 5.10.1 Product Returns consist of three categories5.