CERTAIN
INFORMATION FROM THIS DOCUMENT HAS BEEN REDACTED PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST BY HARMONIC INC. UNDER 17 C.F.R.
§§ 200.80(B)(4), 200.83 AND 240.24B-2 AND SUBMITTED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
Addendum 1
To the Professional Services Agreement
Between Harmonic and Plexus
For ROP/ROQ Demand Pull Program
This
Addendum 1 (“Addendum”), to the Professional
Services Agreement, entered into on September 22, 2003,
including its Amendment made 6 th of
January 2006 (“Agreement”), is made and entered
into as of November 26, 2007 (Effective Date) by and between
Plexus Services Corp, including its subsidiaries and affiliates
(“Plexus”) and Harmonic Inc., including its
subsidiaries and affiliates (“Harmonic”).
WHEREAS ,
Harmonic and Plexus have entered into the Agreement and;
WHEREAS ,
Harmonic and Plexus each desire to supplement the
Agreement.
NOW
THEREFORE , in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
This
Addendum applies to the ROP/ROQ Demand Pull Program:
A. Forecasting, Ordering, and
Inventory Planning
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a.
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After Receipt of Order
(“ARO”)
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Shall be the amount of time from
Plexus’ receipt of a Purchase Order to the time Plexus ships
the Assemblies, and is set at [*] days (with the intent to get to
[*] days).
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b.
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Demand
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Shall mean quantities of Assemblies
required by Harmonic and communicated to Plexus via Forecast and/or
Harmonic’s Purchase Orders.
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*
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Information
redacted pursuant to a confidential treatment request by Harmonic
Inc. under 17 C.F.R. §§ 200.80(b)(4), 200.83 and
240.24b-2 and submitted separately with the Securities and Exchange
Commission.
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Plexus and
Harmonic
Rev. Date November 20, 2007
Demand Pull Addendum
1
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c.
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Demand Flexibility
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Shall mean the defined level of
Demand variability that the program is normally able to absorb and
still provide the Service Level, and is set between 32% to 85%,
dependent upon Assembly.
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d.
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Demand Pull
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Shall mean the procurement of
Components, the movement of either Components or work-in-process
Sub-Assemblies, and the manufacture of Sub-Assemblies as demanded
for use or to replace the Components or Sub-Assemblies consumed by
Demand
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e.
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Manufacturing
Lead-Time
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The
lead-time communicated by Plexus to Harmonic to kit Components and
manufacture an Assembly, and set between 2 to 3 weeks,
dependent upon Assembly. (NOTE: This does NOT include the Transit
time).
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f.
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Reorder Point
(“ROP”)
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Shall mean the point in time when
reached Plexus needs to release a replenishment order for
Components or Sub-Assemblies in a ROQ.
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g.
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Reorder Quantity
(“ROQ”)
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Shall mean the minimum or economic
order quantity for a Component or Sub-Assembly
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h.
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Safety Stock
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Shall be the mutually agreed to
quantity of Components and Sub-Assemblies on hand at Plexus
necessary to provide Harmonic with the desired Service
Level.
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i.
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Service Level
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Shall be the mutually agreed to
percentage of Assemblies delivered complete to the
Harmonic-requested Delivery Date, and is set at 98.0% initially.
This level is subject to change after periodic review of conditions
and mutual agreement.
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2.
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FORECASTS AND PURCHASE
ORDERS
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a.
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Forecasts
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Harmonic agrees to provide Plexus an
updated Forecast each month for each Assembly manufactured by
Plexus. Forecasts will be non-binding on Harmonic with respect to
Assemblies estimated to be required, but Harmonic will be
responsible for Components procured to support Forecasts and the
agreed-to Safety Stock necessary to achieve the desired Service
Level, as provided herein.
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b.
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Service Level
Modeling
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Harmonic agrees to make all
reasonable efforts to provide Plexus with historical Demand data
for all Assemblies relevant to the program being entered upon. This
will include, by Assembly number, original Purchase Order creation
date, original Purchase Order requested Delivery Date, and quantity
requested. Historical Demand data will be used in conjunction with
the agreed upon Modeling Inputs (Demand Flexibility, Service Level,
ARO, Manufacturing and Component Lead-Time(s) to establish Safety
Stock, ROP and ROQ levels for Components and Sub-Assemblies.)
Harmonic understands that Plexus utilized the Modeling Inputs
stip
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