Common use of PRODUCT AND PROCESS CHANGES Clause in Contracts

PRODUCT AND PROCESS CHANGES. 5.1 Seller shall notify Nortel in writing of all proposed modifications and changes that affect form, fit, function, performance or Price (herein "Change(s)") to the Products and/or Processes. Such notification shall be made by Seller to Nortel within [*] of Seller's internal design authorization allowing any such Change except in the cases contemplated in Section 5.6, in which case Seller shall promptly so notify Nortel and initiate immediate action to correct the situation. The Changes which require that a notice be forwarded to Nortel shall be any proposed * 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 the omitted portions. Change to the Products in accordance with the classifications described in GR-209-CORE incorporated by reference ( "GR-209") unless otherwise expressly set forth in this Section 5. All 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 in the form and content of Exhibit G. * See Exhibit H 5.2 Seller's written Change Notifications shall be numbered in a single sequential numbering scheme and shall include the information specified in GR-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. 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, Seller shall supply, on loan and without charge, a mutually agreed upon quantity of Products for such verification, or offer some other alternative arrangement, satisfactory to Nortel, for such verification. 5.4 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, provided such consent is not unreasonably withheld. Should Nortel fail to respond within a period of [*] from the date it has received a notice forwarded by Seller under this Section 5, then Seller shall have the right to implement such Change and Nortel forfeits all rights to object to such Change. 5.6 In addition to Seller's warranty obligations contained in 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 Auditing 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, in the event that an intrinsic design or manufacturing defect of the Product(s), causes an inoperative, 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, Seller shall, as expeditiously as possible, at its expense, generate a Class A or AC Change, as applicable, to eliminate the defect, and supply such 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 the omitted portions. at no charge, for installation by Nortel at reasonable costs, at Seller's expense, in all defective units of the Product(s), both installed and stocked, in accordance with a retrofit program negotiated by Nortel with its customers. A retrofit program is a program that allows Nortel to install the Change in all of Nortel's stockrooms and customer locations within a period not to exceed [*] from the date such inoperative, hazardous or unsatisfactory condition first occurs. In the course of negotiations of the retrofit program with its customers, Nortel shall consult closely with Seller with a view to endeavor to achieve the twofold objective of customers' satisfaction and minimization of retrofit costs to Seller. Seller shall provide, at its expense, seed stock units to support a retrofit project completion within said [*] in quantities determined in accordance with the following formulae: The [*] period begins when all the details of the retrofit program are determined by Nortel. Seed Stock Units = Material Cycle Time (Weeks) x Repair and Return Rate Repair and Return Rate = Number of units to be retrofitted --------------------------------------- Change Completion Date - Implementation Date 5.7 Nortel shall provide to Seller Nortel's Product Engineering Code, the release number of the Product and the CLEI code of the Product, if required, for each Product Change under this Section 5. At Nortel's request, this information shall be placed on the Products by Seller in accordance with the Specifications. 5.8 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 which will include: part number, Current Revision Level, New Revision Level, Reason for Change, Parts affected by Change, Old and New Revision of PCB, if applicable. This report will be updated whenever a Change is generated by Seller which affects form, fit, function, performance or Price of the Products. Seller will use its best efforts to produce these updates within seven (7) Business Days* of each Change date. 5.9 Throughout the Term, Seller shall requalify the Products once every [*] period in accordance with Bellcore Standard TR-NWT-000418, Issue 2 (Draft 3) September 1992. 5.10 Change notices relating to Product Changes should be sent to Nortel's System Engineering department and Change notices relating to Process Changes should be sent to Nortel's Quality Department. Seller's Quality Department shall be responsible for the obligations described in this Section 5. * 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 the omitted portions.

PRODUCT AND PROCESS CHANGES. 5.1 Seller 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 Price a change in manufacturing location) (herein "Change(s)") to the Products and/or Processes). Such notification shall be made by Seller Supplier to Nortel within [*] of Seller's internal design authorization allowing any such Change except the duration specified in the cases contemplated in Section 5.6relevant section of the Nortel's Specification Document NPS25268 covering supplier product change notifications, in a copy of which case Seller shall promptly so notify Nortel and initiate immediate action has been provided by NNL to correct Supplier. Without limiting the situation. The Changes which require that a generality of the foregoing notice be forwarded to Nortel shall be requirements, any proposed * 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 the omitted portions. Change to the Products in accordance with the classifications described in Telcordia (formerly Bellcore) GR-209-CORE incorporated by reference ( (herein "GR-209") unless otherwise 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 5Section. All 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. SellerSupplier's Change notifications (herein "Change Notifications") shall be in sufficiently detailed so as to disclose adequately the form and content of Exhibit G. * See Exhibit HChange to Nortel. 5.2 SellerSupplier's written Change Notifications notifications shall be numbered in a single sequential numbering scheme and shall include the information specified in GR-209GR-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 Notificationnotification. 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, Seller under Section 4, Supplier shall supply, on loan and without charge, a mutually agreed upon quantity of 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 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 Supplier shall not implement a Change such as those contemplated above without the prior written consent of Nortel, provided which consent may not be unreasonably withheld or delayed, however, any such consent is 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 unreasonably withheld. Should Nortel fail subject to respond within a period of this Agreement. 5.5 In the event that, during the Product Warranty Period [*] from the date it has received *], a notice forwarded by Seller under this Section 5Product experiences an Epidemic Failure, then Seller shall have the right to implement such Change Nortel and Nortel forfeits all rights to object to such Change. 5.6 In addition to Seller's warranty obligations contained in 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 Auditing 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, in the event that an intrinsic design or manufacturing defect of the Product(s), causes an inoperative, 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, Seller Supplier shall, as expeditiously as possible, at its expensemeet 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 applicabledefined in GR-209, to eliminate the defect, defect and supply such ChangeChange to Nortel. If mutually agreed by the Parties to be required, * Certain information on this page has been omitted Nortel and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. at no charge, Supplier will develop a plan for installation by Nortel at reasonable costs, at Seller's expense, in all defective a retrofit program for units of the Product(s), both installed and stocked, in accordance with a retrofit program negotiated by Nortel with its customersfailed Product. 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 of Supplier's first knowledge or unsatisfactory condition first occurs. In the course of negotiations 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 with its customersin 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 shall consult closely with Seller with a view to endeavor to achieve the twofold objective of customers' satisfaction and minimization of retrofit costs to Seller. Seller at law or under this agreement. 5.6 Supplier shall provide, at its expense, Class A seed stock units to support a retrofit project program completion within said [**] in quantities determined in accordance with the following formulae: The calendar ([*] period begins when all the details *]) days as set forth above in Section 5.5. The number of the retrofit program are determined by Nortel. seed stock units will be calculated as follows: Seed Stock Units = Material Cycle Time (Weeks) x Repair and Return × Retrofit Rate Repair and Return Retrofit Rate = Number of units to be retrofitted --------------------------------------- Change Completion Date - — Implementation DateDate 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 to Seller Supplier with 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 Section 5Section. At Nortel's request, this information shall be placed on the Products incorporating the Change by Seller Supplier in accordance with the Specifications. 5.8 From acceptance of the Products by Nortel in accordance with Section 4 (Nortel's Product Qualification and Acceptance Process), Seller 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 Seller which affects form, fit, function, performance or Price of the ProductsSupplier. Seller Supplier will use its best diligent efforts to produce these updates within seven five (75) Business Days* Days of each Change date. 5.9 Throughout the Term, Seller shall requalify the Products once every [*] period in accordance with Bellcore Standard TR-NWT-000418Supplier shall, Issue 2 (Draft 3) September 1992. 5.10 Change notices relating to Product Changes should be sent to at Nortel's System Engineering department and request, furnish to Nortel all Supplier data showing that a Product will continue to meet the original Specifications, if a proposed Change notices relating is made to Process Changes should be sent a Product. If Nortel determines that such data is insufficient to Nortel's Quality Department. Seller's Quality Department shall be responsible for the obligations described in this Section 5. * Certain information on this page has been omitted and filed separately determine such compliance with the Securities Specifications, Supplier and Exchange Commission. Confidential treatment has been requested with respect 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 omitted portions.original application under Section 4. 5.10 Return Rate 5.10.1 Product Returns consist of three categories

PRODUCT AND PROCESS CHANGES. 5.1 Seller Supplier shall notify Nortel Networks in writing of all proposed modifications and changes that affect form, fit, function, performance or Price (herein "Change(sCHANGE(S)") to the Products and/or Processes. Such notification shall be made by Seller Supplier to Nortel Networks within [*] seven (7) calendar days of Sellerthe Supplier's internal design authorization allowing any such Change except in the cases contemplated in Section 5.6, in which case Seller Supplier shall promptly so notify Nortel Networks and initiate immediate action to correct the situation. The Changes which require that a notice be forwarded to Nortel Networks shall be include, without limitation, any proposed * 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 the omitted portions. Change to the Products in accordance with the classifications described in GR-209-CORE incorporated by reference ( (herein "GR-209") unless otherwise expressly set forth in this Section 5). All Changes proposed outside the spectrum of GR-209 shall be classified as "O". Supplier shall comply with GR-209 except to the extent expressly set forth in this Section 5. The interpretation of GR- 209 shall be decided on a per product basis in agreement between Seller and GR-209 resides with Nortel prior to acceptance of a given PO or addition of a product to Product List in Exhibit A. SellerNetworks. Supplier's Change notifications (herein "Change NotificationsCHANGE NOTIFICATIONS") shall be in the form and content of Exhibit G. * See Exhibit HThe Parties will work together to address any known deviations from GR-209. 5.2 SellerSupplier's written Change Notifications shall be numbered in a single sequential numbering scheme and shall include the information specified in GR-209GR-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 the procedure 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 Notification. Supplier will propose a disposition plan for 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 location where such Products should be delivered. 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, Seller Supplier shall supply, on loan and without charge, a mutually agreed upon quantity of sufficient production level quality Products for such verification, or offer some other alternative arrangement, satisfactory to NortelNortel Networks, for such verification. 5.4 If Nortel Networks disagrees with any classification issued by SellerSupplier, Seller Supplier shall present evidence in writing, within a period of [*] five (5) calendar days from Nortel's Nortel Networks' request thereforetherefor, that such a classification is justified. If Nortel Networks 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 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 SellerSupplier's Change Notification. In the event that [*] thirty (30) calendar days after the date of SellerSupplier's Change Notification, the Parties still disagree on the Change classification, Nortel's Nortel Networks' reasonable and substantiated determination shall prevail and be final. 5.5 Seller Supplier shall not implement a Change such as those contemplated above without the prior written consent of NortelNortel Networks, provided such which consent is may not be unreasonably withheld. Should Nortel Networks fail to respond within a period of [*] forty (40) calendar days from the date it has received a notice forwarded by Seller Supplier under this Section 5, then Seller Supplier shall have the right to implement such Change and Nortel forfeits all rights to object to such Change. 5.6 In addition to SellerSupplier's warranty obligations contained in Section 12 13 (Warranty) and without diminishing SellerSupplier's obligations under this Section 5 and Sections 6 (Quality Control and Reliability Requirements, Supply Management and Nortel's Nortel Networks' Auditing Rights) and 14 15 (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), in the event that that, during the Product Warranty Period or the Term, whichever is longer, an intrinsic design or manufacturing defect of the Product(s), including a 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 inoperative, 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, Seller Supplier shall, as expeditiously as possible, at its expense, generate a Class A or AC Change, as applicable, to eliminate the defect, and supply such 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 the omitted portions. at no charge, for installation by Nortel Networks at reasonable costs, at SellerSupplier's expense, in all defective units of the Product(s), both installed and stocked, in accordance with a retrofit program negotiated by Nortel Networks with its customers. A retrofit program is a program that allows Nortel Networks to install the Change in all of Nortel's Nortel Networks' 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 negotiations of the retrofit program with its customers, Nortel Networks shall consult closely with Seller Supplier with a view to endeavor to achieve the twofold objective of customers' satisfaction and minimization of retrofit costs to SellerSupplier. Seller Supplier shall provide, at its expense, seed stock units to support a retrofit project completion within said [*] one hundred and eighty (180) days in quantities 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 NortelNortel Networks. Seed Stock Units = Material Cycle Time (Weeks) x Repair and Return Rate Repair and Return Rate = Number of units to be retrofitted --------------------------------------- -------------------------------------------- Change Completion Date - Implementation Date 5.7 Nortel Networks shall provide to Seller Nortel's Supplier 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 Section 5. At Nortel's Nortel Networks' request, this information shall be placed on the Products by Seller Supplier in accordance with the Specifications. 5.8 From acceptance of the Products by Nortel Networks in accordance with Section 4 (Nortel's Nortel Networks' Product Qualification and Acceptance Process), Seller Supplier shall provide Nortel Networks with a field baseline report which will include: part number, Current Revision Level, New Revision Level, Reason for Change, Parts affected by Change, Old and New Revision of PCB, if applicable. This report will be updated whenever a Change is generated by Seller Supplier which affects form, fit, function, performance or Price of the Products. Seller Supplier will use its best efforts to produce these updates within seven (7) Business Days* Days of each Change date. 5.9 Throughout the Term, Seller Supplier shall requalify the Products once every [*] twelve (12) month period in accordance with Bellcore Standard TR-NWT-000418, Issue 2 (Draft 3) September 1992. 5.10 Change notices relating to Product Changes should be sent to Nortel's System Engineering department and Change notices relating to Process Changes should be sent to Nortel's Quality Department. Seller's Quality Department shall be responsible for the obligations described in this Section 5. * 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 the omitted portions.)

PRODUCT AND PROCESS CHANGES. 5.1 Seller Avanex shall notify Nortel Networks in writing of all proposed modifications and changes that affect form, fit, function, performance or Price (herein "Change(s)") to the Products and/or Processes. Such notification shall be made by Seller Avanex to Nortel Networks within [*] seven (7) calendar days of Sellerthe Avanex's internal design authorization allowing any such Change except in the cases contemplated in Section 5.6, in which case Seller Avanex shall promptly so notify Nortel Networks and initiate immediate action to correct the situation. The Changes which require that a notice be forwarded to Nortel Networks shall be include, without limitation, any proposed * 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 the omitted portions. Change to the Products in accordance with the classifications described in GR-209-CORE incorporated by reference ( (herein "GR-209") unless otherwise expressly set forth in this Section 5). All Changes proposed outside the spectrum of GR-209 shall be classified as "O". Avanex shall comply with GR-209 except to the extent expressly set forth in this Section 5. The reasonable interpretation of GR- 209 shall be decided on a per product basis in agreement between Seller and GR-209 resides with Nortel prior to acceptance of a given PO or addition of a product to Product List in Exhibit A. SellerNetworks. Avanex's Change notifications (herein "Change Notifications") shall be in the form and content of Exhibit G. * See Exhibit HG. 5.2 SellerAvanex's written Change Notifications shall be numbered in a single sequential numbering scheme and shall include the information specified in GR-209GR-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 the procedure 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 Notification. Avanex will propose a disposition plan for Nortel Networks' and its customers' stockrooms. Nortel Networks will notify Avanex of the type and quantity of Products it requires for the implementation of the Change and location where such Products should be delivered 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, Seller Avanex shall supply, on loan and without charge, a mutually agreed upon quantity of sufficient production level quality Products for such verification, or offer some other alternative arrangement, reasonably satisfactory to NortelNortel Networks, for such verification. 5.4 If Nortel Networks disagrees with any classification issued by SellerAvanex, Seller Avanex shall present evidence in writing, within a period of [*] five (5) Business Days from Nortel's Nortel Networks' request thereforetherefor, that such a classification is justified. If Nortel Networks 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 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 Seller's Change NotificationNortel Networks' notice of disagreement. In the event that [*] thirty (30) calendar days after the date of Seller's Change NotificationNortel Networks' notice of disagreement, the Parties still disagree on the Change classification, Nortel's Nortel Networks' reasonable and substantiated determination shall prevail and be final. 5.5 Seller Avanex shall not implement a Change such as those contemplated above without the prior written consent of NortelNortel Networks, provided such which consent is may not be unreasonably withheld. Should Nortel Networks fail to respond within a period of [*] forty (40) calendar days from the date it has received a notice forwarded by Seller Avanex under this Section 5, then Seller Avanex shall have the right to implement such Change and Nortel forfeits all rights to object to such Change. 5.6 In addition to Seller's warranty obligations contained in 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 Auditing 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, in the event that an intrinsic design or manufacturing defect of the Product(s), causes an inoperative, 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, Seller shall, as expeditiously as possible, at its expense, generate a Class A or AC Change, as applicable, to eliminate the defect, and supply such 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 the omitted portions. at no charge, for installation by Nortel at reasonable costs, at Seller's expense, in all defective units of the Product(s), both installed and stocked, in accordance with a retrofit program negotiated by Nortel with its customers. A retrofit program is a program that allows Nortel to install the Change in all of Nortel's stockrooms and customer locations within a period not to exceed [*] from the date such inoperative, hazardous or unsatisfactory condition first occurs. In the course of negotiations of the retrofit program with its customers, Nortel shall consult closely with Seller with a view to endeavor to achieve the twofold objective of customers' satisfaction and minimization of retrofit costs to Seller. Seller shall provide, at its expense, seed stock units to support a retrofit project completion within said [*] in quantities determined in accordance with the following formulae: The [*] period begins when all the details of the retrofit program are determined by Nortel. Seed Stock Units = Material Cycle Time (Weeks) x Repair and Return Rate Repair and Return Rate = Number of units to be retrofitted --------------------------------------- Change Completion Date - Implementation Date 5.7 Nortel shall provide to Seller Nortel's Product Engineering Code, the release number of the Product and the CLEI code of the Product, if required, for each Product Change under this Section 5. At Nortel's request, this information shall be placed on the Products by Seller in accordance with the Specifications. 5.8 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 which will include: part number, Current Revision Level, New Revision Level, Reason for Change, Parts affected by Change, Old and New Revision of PCB, if applicable. This report will be updated whenever a Change is generated by Seller which affects form, fit, function, performance or Price of the Products. Seller will use its best efforts to produce these updates within seven (7) Business Days* of each Change date. 5.9 Throughout the Term, Seller shall requalify the Products once every [*] period in accordance with Bellcore Standard TR-NWT-000418, Issue 2 (Draft 3) September 1992. 5.10 Change notices relating to Product Changes should be sent to Nortel's System Engineering department and Change notices relating to Process Changes should be sent to Nortel's Quality Department. Seller's Quality Department shall be responsible for the obligations described in this Section 5. * 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 the omitted portions.

PRODUCT AND PROCESS CHANGES. 5.1 Seller shall notify Nortel in writing of all proposed modifications and changes that affect form, fit, function, performance or Price (herein "Change(s)") to the Products and/or Processes. Such notification shall be made by Seller to Nortel within [*] seven (7) calendar days* of Seller's internal design authorization allowing any such Change except in the cases contemplated in Section 5.6, in which case Seller shall promptly so notify Nortel and initiate immediate action to correct the situation. The Changes which require that a notice be forwarded to Nortel shall be any proposed * 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 the omitted portions. Change to the Products in accordance with the classifications described in GR-209-CORE incorporated by reference ( "GR-209") unless otherwise expressly set forth in this Section 5. All Changes proposed outside the spectrum of GR-209 shall be classified as "O". The interpretation of GR- 209 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 in the form and content of Exhibit G. * See Exhibit H 5.2 Seller's written Change Notifications shall be numbered in a single sequential numbering scheme and shall include the information specified in GR-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. 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, Seller shall supply, on loan and without charge, a mutually agreed upon quantity of Products for such verification, or offer some other alternative arrangement, satisfactory to Nortel, for such verification. 5.4 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, provided such consent is not unreasonably withheld. Should Nortel fail to respond within a period of [*] forty (40) calendar days* from the date it has received a notice forwarded by Seller under this Section 5, then Seller shall have the right to implement such Change and Nortel forfeits all rights to object to such Change. 5.6 In addition to Seller's warranty obligations contained in 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 Auditing 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, in the event that an intrinsic design or manufacturing defect of the Product(s), causes an inoperative, 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, Seller shall, as expeditiously as possible, at its expense, generate a Class A or AC Change, as applicable, to eliminate the defect, and supply such 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 the omitted portions. at no charge, for installation by Nortel at reasonable costs, at Seller's expense, in all defective units of the Product(s), both installed and stocked, in accordance with a retrofit program negotiated by Nortel with its customers. A retrofit program is a program that allows Nortel to install the Change in all of Nortel's 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 negotiations of the retrofit program with its customers, Nortel shall consult closely with Seller with a view to endeavor to achieve the twofold objective of customers' satisfaction and minimization of retrofit costs to Seller. Seller shall provide, at its expense, seed stock units to support a retrofit 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 period begins when all the details of the retrofit program are determined by Nortel. Seed Stock Units = Material Cycle Time (Weeks) x Repair and Return Rate Repair and Return Rate = Number of units to be retrofitted --------------------------------------- ------------------------------------------- Change Completion Date - Implementation Date 5.7 Nortel shall provide to Seller Nortel's Product Engineering Code, the release number of the Product and the CLEI code of the Product, if required, for each Product Change under this Section 5. At Nortel's request, this information shall be placed on the Products by Seller in accordance with the Specifications. 5.8 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 which will include: part number, Current Revision Level, New Revision Level, Reason for Change, Parts affected by Change, Old and New Revision of PCB, if applicable. This report will be updated whenever a Change is generated by Seller which affects form, fit, function, performance or Price of the Products. Seller will use its best efforts to produce these updates within seven (7) Business Days* of each Change date. 5.9 Throughout the Term, Seller shall requalify the Products once every [*] twelve (12) month period in accordance with Bellcore Standard TR-NWT-000418, Issue 2 (Draft 3) September 1992. 5.10 Change notices relating to Product Changes should be sent to Nortel's System Engineering department and Change notices relating to Process Changes should be sent to Nortel's Quality Department. Seller's Quality Department shall be responsible for the obligations described in this Section 5. * 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 the omitted portions.