Exhibit 10.34
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
Amendment 013 to Outsourcing Agreement
between
IBM and MSL
The purpose of this document is to amend the IBM/MSL Outsourcing Agreement
between International Business Machines Corporation ("IBM") and Manufacturer's
Services Western U.S. Operations, Incorporated ("MSL"), dated May 5, 1998
("Agreement"). Following execution signatures by IBM and MSL (each a Party and
together the "Parties"), this amendment will be effective on June 1, 2002 unless
otherwise stated for specific Sections of this Amendment 013.
The Parties agree to amend the Agreement as follow:
1. Delete Section 1.15 of the Outsourcing Base Agreement, as amended in
Amendment 012, in its entirety and replace with the following:
""Product Attachment" shall mean Attachments A, G, and L of the
Statement of Work and Exhibit 1 to Supplement 1 of the Statement of
Work to this Agreement which describe the details of a specific
transaction or series of transactions. Product Attachments are
incorporated into and made a part of this Agreement."
2. Delete the first sentence in SECTION 4.0 TERM of the Outsourcing Base
Agreement, as amended in Amendment 012, in its entirety and replace with the
following:
"This Agreement shall become effective on the Effective Date and shall
continue for a period of seven (7) years unless terminated as provided
in Section 5.0."
3. Delete SECTION 2.0 TERM of Attachment 1, Statement of Work to the Agreement,
as amended in Amendment 012, in its entirety and replace with the following:
"This Attachment and its Product Attachments shall become effective on
the Effective Date and shall continue for a period of seven (7) years
unless terminated as provided in Section 5.0 of the Base Agreement.
This Attachment will automatically be renewed for periods of twelve
(12) months unless either party gives six (6) months written notice of
its intent to terminate this Agreement. Such renewals shall continue
for successive periods under the same terms and conditions, unless
otherwise agreed in writing by both Parties."
4. Delete the RELATIONSHIP MANAGERS identification information which follows
Section 5.2 g) of Attachment 1, Statement of Work to the Agreement, as amended
in Amendment 012, in its entirety and replace with the following:
Page 1 of 14
"WORLD WIDE RELATIONSHIP MANAGERS:
IBM: Xxxxx Xxxxxxxx Ons
Mgr of RS Mfg&FF Operations Local Mgr X. Xxxxxxxxxx / Murcia
Xxxxxxx xx Xxxxxx, 00 00000 Xxxxxxxx ( Spain )
x00-00-0000000
x00-00-0000000
jmartinez @ xx.xxx.xxx
MSL: J. Xxxxxx Xxxxxx
VP Worldwide Sales and Program Management
000 Xxxxx Xxxxxx Xxxxxxx, Xxxxxxxxxxxxx XXX 00000-0000
x0-000-000-0000
x0-000-000-0000
don.oldham @xxx.xxx"
5. Add the following to Section 7.4 of Attachment 1, Statement of Work to the
Agreement in its entirety:
"f) In the event that IBM recognizes a potential loss of an
incremental business opportunity, based upon the pricing of
MSL Products and/or Services, including, without limitation,
those for pre machine type 4800 RS Product(s), and IBM
believes that MSL can assist by making reasonable adjustments
to such pricing of MSL Products and/or Services, IBM will
notify the MSL World Wide Relationship Manager in writing,
requesting special pricing consideration. MSL shall have five
(5) Days after such IBM written notice to respond to IBM's
request in writing with it's good faith efforts to satisfy
IBM's request."
6. Delete Section 7.5 e) of Attachment 1, Statement of Work to the Agreement, as
amended in Amendment 012, in its entirety and replace with the following:
"Proposals for updates to the initial prices will be reviewed each
quarter on a thirty (30) calendar day cycle. The schedule will be as
follows
"T" shall be the date that MSL prices and IBM Inter Company
Billing Price's (ICBPs) are ready for table load; it is the
last day of a calendar quarter end month.
Thirty (30) calendar days before T, MSL shall initiate an
update proposal.
Fifteen (15) calendar days before T, MSL shall answer all IBM
questions and issues and revise its proposal.
Update reviews shall include:
i) Updates of materials costs, including packaging costs, with
latest quotes of IBM Nominated Suppliers and MSL suppliers.
IBM Parts materials costs will be updated to the latest IBM
market price. For Parts with a low annual value, the material
costs will be updated to the latest purchase costs.
Page 2 of 14
ii) Updates of MSL Value Add shall only occur semiannually.
MSL Value Add updates are to be included in MSL prices on the
last calendar day of each March and on the last calendar day
of each September. MSL Value Add is determined by multiplying
Materials Cost times the appropriate Value Add Rate from table
1 a) of Appendix 1: Xxxx Up to Attachment 1, Statement of Work
to the Agreement.
iii) Update of MSL quotes for MSL manufactured Products.
iv) Changes in MSL labor rates, markups and margins, in
accordance with the best price and Product price conditions of
Sections 7.4 and 7.5 a), b), c), and d).
v) Changes in Integration Labor Hours for specific Integration
projects based on the latest IBM agreed to quotes."
7. Delete Section 13.0 f) of Attachment 1, Statement of Work to the Agreement in
its entirety and replace with the following:
"MSL prices, and MSL WW surplus inventory carrying charges ("SICC") as
specified in Section 13.0 g) of Attachment 1, Statement of Work to the
Agreement, include charges for MSL inventory management and ownership.
Both parties agree that IBM has no liability for inventories that MSL
purchases for the purposes of this contract, providing that forecast
(requirements) accuracy is equal to or greater than the level defined
in Appendix 2. If Requirements Accuracy falls below 65% liabilities for
any machine type for any quarter, IBM will compensate MSL according to
the method describe in Appendix 2."
8. Add the following to Section 13.0 of Attachment 1, Statement of Work to the
Agreement in its entirety:
"g) IBM will pay agreed to SICC to MSL quarterly at [**]% annual
rate as specified in Section 13.0 g) i) and as specified in
Section 13.0 g) ii) and as specified in Section 13.0 g) iii).
The SICC rate will be renegotiated annually such that a
revised rate is effective each June, beginning June 2003. IBM
and MSL must mutually agree upon MSL WW surplus RS inventory
subject to SICC. MSL WW surplus RS inventory is MSL RS
inventory which exceeds the next 12 months requirements
according to the latest IBM forecast, and which MSL purchased
consistent with IBM forecasts and agreed upon lead times.
i) For a period beginning June 1, 2002 through the term
of the Agreement, IBM will pay MSL SICC for inventory
contained in the March 2001 ICC payment list, less
the inventory sold or otherwise no longer mutually
considered part of this inventory .
ii) For a period beginning April 1, 2002 through the term
of the Agreement, IBM will pay MSL SICC for MSL WW
surplus RS inventory which was purchased prior to
June 1,2002, and which is not contained in the March
2001 ICC payment list, less the inventory sold or
otherwise no longer mutually considered part of this
inventory.
Page 3 of 14
iii) For MSL WW surplus RS inventory which was purchased
on June 1, 2002 or later (less the inventory sold or
otherwise no longer considered part of this
inventory), IBM, at the end of each quarter, will
calculate the maximum MSL WW surplus RS inventory for
all machine types and models by using an algorithm
which has been agreed upon by both Parties in
writing. At the end of each quarter, the average ship
cost for all RS machine types and models is known and
will be stated in US currency. IBM's maximum
liability for MSL WW surplus RS inventory for the
quarter will be the maximum MSL WW surplus RS
inventory multiplied by the respective average ship
cost, multiplied by the current SICC rate. IBM's
maximum SICC liability for MSL WW surplus RS
inventory for the quarter will be compared to MSL' s
respective claim, and IBM will pay MSL the lower of
the two."
9. Add the following to the first paragraph of Section 7.0 of Attachment 1,
Statement of Work to the Agreement in its entirety.
"All prices in this Agreement which are stated in pesetas will be
divided by [**] for conversion to Euros."
10. Add the following to the end of the first paragraph of Section 11.2 of
Attachment 1, Statement of Work to the Agreement:
"Weekly when driven by significant change to the most recent IBM
forecast, IBM may provide updates of up to the current month plus the
following two months."
11. Delete Section 11.2 b of Attachment 1, Statement of Work to the Agreement
in its entirety and replace with the following:
"MSL will notify IBM within ten (10) Days of receipt of a monthly
forecast if MSL is unable to meet the quantities and Delivery Dates.
MSL will notify IBM within five (5) Days of receipt of a weekly
forecast if MSL is unable to meet the quantities and Delivery Dates. If
MSL cannot meet the quantities and Delivery Dates in a weekly forecast,
MSL shall have an additional five (5) Days to meet the quantities and
Delivery Dates in the weekly forecast. MSL will notify IBM, again,
within the additional five (5) Days if MSL remains unable to meet the
quantities and Delivery Dates requested in the weekly forecast. If MSL
fails to notify IBM within ten (10) Days following receipt of a monthly
forecast, or if MSL fails to notify IBM within the five (5) Days
following receipt of a weekly forecast, or if MSL fails to notify IBM
again within the additional five (5) Days following receipt of a weekly
forecast, MSL will be deemed to have accepted the quantities and
Delivery Dates and will be bound by them; provided, however, that MSL's
actual or deemed acceptance of any forecast shall be subject to the
availability of IBM Parts and IBM Designated Parts as needed, and MSL
shall not be subject to any penalties (and IBM shall not be able to
reject any proposed rescheduling of Delivery Dates) under this
Agreement for failure to meet Delivery Dates due to the unavailability
of such Parts at the times necessary to meet Delivery Dates, provided
further however that such unavailability of IBM Parts or IBM Designated
Parts is not due to MSL's failure to properly order such Parts or
otherwise properly manage its relationship with the provider of such
Parts."
Page 4 of 14
12. Delete the first paragraph of Section 11.2 c) of Attachment 1, Statement of
Work to the Agreement in its entirety and replace with the following:
"If MSL notifies IBM that it cannot meet the quantities and Delivery
Dates in an IBM forecast, MSL's notification will include the
quantities MSL can deliver within the forecast's Delivery Dates and
proposed schedule of Delivery Dates for delivering the quantities MSL
cannot deliver within the forecast. IBM shall notify MSL in writing,
within ten (10) Days of receipt of MSL's notification relative to a
monthly forecast or within (5) Days of receipt of MSL's additional five
(5) Day notification relative to a weekly forecast, of its decision
either, in its sole discretion to:"
13. Add the following to Section 11.2 of Attachment 1, Statement of Work to the
Agreement:
"e) MSL, has on Ian. 15, 2002, forwarded to IBM a proposed
solution for the weekly full MRP Plan ("Proposal"). The
parties agree to work together in good faith to finalize the
processes, timing and costs of the Proposal with the common
goal to implement the Proposal as soon as practicable. Subject
to such timely implementation, MSL will have WW processes in
place by Dec. 31, 2002 such that MSL will respond to IBM's
monthly rolling twelve (12) month forecast by machine type,
model and geography within five (5) Days with notification to
IBM of MSL's ability to meet requested quantities and
Delivery Dates."
14. Delete the table in 1 a) of Appendix 1: Xxxx Up, as amended by Amendment
012, to Attachment 1, Statement of Work to the Agreement in its entirety and
replace it with the following:
(a) Value Add and Profit Rates are per the following table:
VALUE ADD PROFIT
RATES RATES
----- ------
RS Fulfillment (US & V ALENCIA Work Centers),
IBM payment to MSL within fifth teen (15) Days
after receipt of an acceptable invoice. [**]% [**]%
IBM payment to MSL within thirty (30) Days
after receipt of an acceptable invoice. [**]% [**]%
IBM payment to MSL within forty five (45) Days
after receipt of an acceptable invoice. [**]% [**]%
except Drop Shipments (refer to notes 1. and 2.) [**]% [**]%
except GEM POS [**]% [**]%
except 4678 -Electronic Shelve Label (refer to note 3.)
Page 5 of 14
VALUE ADD PROFIT
RATES RATES
----- ------
Security Mfg & Fulfillment
A-Sourced Products [**]% [**]%
MSL Manufactured Products [**]% [**]%
Spares to Mechanicsburg and Amsterdam
US Work Center [**]% [**]%
Valencia Work Center [**]% [**]%
note 1. IBM will limit RS machine type Drop Shipments to 5% of total RS
annual machine type fulfillment volumes.
note 2. except that the sum of the Value Add and Profit rates to be
applied to 4001- T01 shall be [**]%.
note 3. 4678 Electronic Shelve Label pricing is as agreed by IBM and
MSL in Exhibit 1 and Exhibit 2 to Attachment A, Product Attachment for RS, to
Attachment 1, Statement of Work, to the Agreement."
15. Delete Section 1 b) i) of Appendix 1: Xxxx Up, as amended by Amendment 012,
to Attachment 1, Statement of Work to the Agreement in its entirety and replace
it with the following:
"The Scrap Rate is equal TO [**]% except no scrap provision will be
applied to RS Drop Shipments or to OEM Products other than OEM POS as
identified in Attachment A, Product Attachment for RS, to Attachment 1,
Statement of Work, to the Agreement."
16. Delete Section 1 b) ii) of Appendix 1: Xxxx Up to Attachment 1, Statement of
Work to the Agreement in its entirety and replace it with the following:
"Initial NIC rates NIC RATES
Mar. 01, 2002 through April 01, 2002 through
Mar. 31, 2002 May 31, 2005, with updates
US Val. US Val
4610- 20 ft. ocean [**]% [**]% [**]% [**]%
4610- 40 ft. ocean [**]% [**]% [**]% [**]%
4694 large -20 ft. ocean [**]% [**]% [**]% [**]%
4694 large -40 ft. ocean [**]% [**]% [**]% [**]%
4694 small- 20 ft. ocean [**]% [**]% [**]% [**]%
4694 small- 40 ft. ocean [**]% [**]% [**]% [**]%
4800- 20 ft. ocean [**]% [**]% [**]% [**]%
4800- 40 ft. ocean [**]% [**]% [**]% [**]%
4820- 20 ft. ocean [**]% [**]% [**]% [**]%
4820- 40 ft. ocean [**]% [**]% [**]% [**]%
4840- 20 ft. ocean [**]% [**]% [**]% [**]%
Page 6 of 14
4840- 40 ft. ocean [**]% [**]% [**]% [**]%
US peripherals -surface* [**]% [**]% [**]% [**]%
US peripherals -ocean* [**]% [**]% [**]% [**]%
AP peripherals -ocean* [**]% [**]% [**]% [**]%
EU peripherals-surface* [**]% [**]% [**]% [**]%
Mex/Can peripherals -surface* [**]% [**]% [**]% [**]%
Mex/Can peripherals -ocean* [**]% [**]% [**]% [**]%
LA peripherals -ocean* [**]% [**]% [**]% [**]%
*The above Initial NIC rates/NIC RATES for peripherals are temporary.
IBM and MSL will develop mutually agreed to replacement Initial NIC
rates/NIC RATES for peripherals on or before Feb. 15, 2002.
Products not itemized in the above Initial NIC rates/NIC RATES will
utilize the respective Initial NIC rates/NIC RATES for peripherals for
the appropriate geography.
Following execution signatures by IBM and MSL of this Amendment 013, the above
Initial NIC rates will be effective beginning the first calendar day of March
2002 through March 31, 2002. The above NIC RATES will be effective beginning the
first calendar day of Apri1 2002. NIC RATES shall be updated on the first
calendar day of each April and on the first calendar day of each October,
beginning October 2002. Such NIC RATES updates will be based upon latest quotes,
from mutually agreed upon suppliers, received by MSL for freight, duty, customs,
clearance, appropriate insurance, and any other costs MSL incurs to bring
Product into the US and/or Valencia Work Centers. Updates to NIC RATES must be
agreed upon in writing by both Parties.
For the period beginning the first calendar day of March 2002 through March 31,
2002, any differences between;
(a) actual invoices paid by MSL for freight, duty, customs, clearance,
appropriate insurance, and any other costs MSL incurs to bring Product,
which MSL purchased consistent with IBM forecasts and agreed upon lead
times, into the US and/or Valencia WorkCenters, and
(b) the respective NIC compensation which MSL would receive through
application of NIC RATES in effect as of April 01, 2002,
will be determined and agreed prior to May 31,2002. Differences will be invoiced
to MSL or to IBM as the case may be.
For the period beginning the first calendar day of April 2002 through September
30, 2002, any differences between;
(a) actual invoices paid by MSL for freight, duty, customs, clearance,
appropriate insurance, and any other costs MSL incurs to bring Product,
which MSL purchased consistent with IBM forecasts and agreed upon lead
times, into the US and/or Valencia Work Centers, and
Page 7 of 14
(b) the respective NIC compensation which MSL would receive through
application of the updated NIC RATES in effect as of October 01, 2002,
will be determined and agreed prior to November 30, 2002. Differences will be
invoiced to MSL or to IBM as the case may be."
THE REMAINDER OF THIS PAGE 8. IS INTENTIONALLY LEFT BLANK
Page 8 of 14
17. Delete Section 3. of Appendix 1: Xxxx Up to Attachment 1, Statement of Work
to the Agreement in its entirety and replace it with the following:
"RS Integration prices will be per the formula of Section 7.2 b) with
the following rates:
US Work Center
Complex (RS) Integration up to 120K direct hours per year
@ $[**]/direct hour
Complex (RS) Integration greater than 120K direct hours per year
@ $[**]/ direct hour
Simple (PC) Integration up to 50K direct hours per year
@ $[**]/direct hour
Simple (PC) Integration greater than 50K direct hours per year
@ $[**]/direct hour
Valencia Work Center
Complex (RS) Integration @ [**] pesetas*/direct hour
Simple (PC) Integration @ [**] pesetas/direct hour
* Without MSL account coordinator.
18. Delete Attachment A, Product Attachment -Retail Store Solutions (RS), to
Attachment 1, Statement of Work, to the Agreement in its entirety and replace it
with the attached Product Attachment of the same name. Exhibits 1 and 2 to
Attachment A, Product Attachment for RS, to Attachment 1, Statement of Work, to
the Agreement are unchanged by this Amendment 013.
19. Delete Attachment C, Product Attachment -Finance Products, to Attachment 1,
Statement of Work to the Agreement in its entirety.
20. Delete Attachment E, Product Attachment -OEM B, Network Computer Division,
PSG, to Attachment 1, Statement of Work to the Agreement in its entirety.
21. Delete Attachment G, Product Attachment -Security Products to Attachment 1,
Statement of Work to the Agreement in its entirety and replace it with the
attached Product Attachment of the same name.
22. Delete Attachment J, Product Attachment -OEM E, Network Computer Division,
PSG, to Attachment 1, Statement of Work to the Agreement in its entirety.
THE REMAINDER OF THIS PAGE 9. IS INTENTIONALLY BLANK
Page 9 of 14
23. Delete Section 11.0 of Attachment L -PRODUCT ATTACHMENT for Product Support
Services ("PSS"), to Attachment 1, Statement of Work to the Agreement in its
entirety and replace it with the following:
"11.0 COORDINATORS
All communications between the parties will be carried out through the following
designated coordinators:
-----------------------------------------------------------------------------------------------------------------------------
Relationship Managers for MSL Valencia
-----------------------------------------------------------------------------------------------------------------------------
FOR SUPPLIER FOR BUYER
----------------------------- -------------------------------------- ------------------------ -------------------------------
Name J. Xxxxxx Xxxxxx Name Xxxxx Xxxxxxxx Ons
----------------------------- -------------------------------------- ------------------------ -------------------------------
Title VP Worldwide Sales and Program Title Mgr of RS Mfg&FF Operations
Management Local Mgr X. Xxxxxxxxxx /
Murcia
----------------------------- -------------------------------------- ------------------------ -------------------------------
Address Country 000 Xxxxx Xxxxxx Address Country Xxxxxxx xx Xxxxxx, 00
Xxxxxxx, Xxxxxxxxxxxxx XXX 00000 Valencia ( Spain )
01742-2121
----------------------------- -------------------------------------- ------------------------ -------------------------------
Phone x0-000-000-0000 Phone x00-00-0000000
----------------------------- -------------------------------------- ------------------------ -------------------------------
Fax x0-000-000-0000 Fax x00-00-0000000
----------------------------- -------------------------------------- ------------------------ -------------------------------
E-mail xxx.xxxxxx@xxx.xxx E-mail imartinez @ xx.xxx.xxx
----------------------------- -------------------------------------- ------------------------ -------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Business Coordinators for MSL Valencia
-----------------------------------------------------------------------------------------------------------------------------
Name Xxxxxxxxx Xxxxxx Name Xxxxx Xxxxxx
----------------------------- -------------------------------------- ------------------------ -------------------------------
Title Program Manager Title Buyer
----------------------------- -------------------------------------- ------------------------ -------------------------------
Address Country Carretera, Valencia Address Country Johan Xxxxxxxxxxxx 000, Xxx
Xxxxxx, Xx Xxxxx xx Xxxxxxxx Xxxxxxxxxxx
(VALENCIA), Spain
----------------------------- -------------------------------------- ------------------------ -------------------------------
Phone +34- 96- 2754328 Phone x00-00-0000000
----------------------------- -------------------------------------- ------------------------ -------------------------------
Fax +34- 96- 2754328 Spain x00-00-0000000
----------------------------- -------------------------------------- ------------------------ -------------------------------
E-mail Xxx_xxxxxx@xxx.x-xxxx.xxx E-mail Xxxxx_Xxxxxx@xx.xxx.xxx
----------------------------- -------------------------------------- ------------------------ -------------------------------
THE REMAINDER OF THIS PAGE 10. IS INTENTIONALLY BLANK
Page 10 of 14
-----------------------------------------------------------------------------------------------------------------------------
Relationship Managers for MSL Charlotte
-----------------------------------------------------------------------------------------------------------------------------
FOR SUPPLIER FOR BUYER
----------------------------- -------------------------------------- ------------------------ -------------------------------
Name J. Xxxxxx Xxxxxx Name Xxxxx Xxxxxxxx Ons
----------------------------- -------------------------------------- ------------------------ -------------------------------
Title VP Worldwide Sales and Program Title Mgr of RS Mfg&FF Operations
Management Local Mgr X. Xxxxxxxxxx /
Murcia
----------------------------- -------------------------------------- ------------------------ -------------------------------
Address Country 000 Xxxxx Xxxxxx Address Country Xxxxxxx xx Xxxxxx, 00
Xxxxxxx, Xxxxxxxxxxxxx XXX 00000 Valencia ( Spain )
01742-2121
----------------------------- -------------------------------------- ------------------------ -------------------------------
Phone x0-000-000-0000 Phone x00-00-0000000
----------------------------- -------------------------------------- ------------------------ -------------------------------
Fax x0-000-000-0000 Fax x00-00-0000000
----------------------------- -------------------------------------- ------------------------ -------------------------------
E-mail xxx.xxxxxx@xxx.xxx E-mail imartinez @ xx.xxx.xxx
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Business Coordinators for MSL Charlotte
-----------------------------------------------------------------------------------------------------------------------------
Name Xxxxx X. Xxxx Name Xxxx Xxxxxxxxxx
----------------------------- -------------------------------------- ------------------------ -------------------------------
Title Program Manager Title Procurement Advisor
----------------------------- -------------------------------------- ------------------------ -------------------------------
Address Country 0000 XXX Xxxxx, Xxxxxxxxx XX 00000 Address Country Mechanicsburg, USA
----------------------------- -------------------------------------- ------------------------ -------------------------------
Phone x0-000-000-0000 Phone x0-000-000-0000
----------------------------- -------------------------------------- ------------------------ -------------------------------
Fax x0-000-000-0000 Spain x0-000-000-0000
----------------------------- -------------------------------------- ------------------------ -------------------------------
E-mail Xxxxx.Xxxx@xxx.xxx E-mail xxxxxxxx@xx.xxx.xxx
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
EMERGENCY ORDER INFORMA TION MSL VALENCIA
-----------------------------------------------------------------------------------------------------------------------------
Supplier Contact Xxxxxx Xxxxxx Xxxxxx_Xxxxxx@xxx.x-xxxx.xxx
----------------------------- ----------------------------------------------- -----------------------------------------------
Phone x00-000 000 000
----------------------------- ----------------------------------------------- -----------------------------------------------
Fax x00-00 000 0000
----------------------------- ----------------------------------------------- -----------------------------------------------
E-mail Xxxxxxx@xxx.x-xxxx.xxx
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
EMERGENCY ORDER INFORMA TION MSL CHARLOTTE
-----------------------------------------------------------------------------------------------------------------------------
Supplier Contact Xxx Xxxxxx xxx.xxxxxx@xxx.xxx.xxx
----------------------------- ----------------------------------------------- -----------------------------------------------
Phone x0-000-000-0000
----------------------------- ----------------------------------------------- -----------------------------------------------
Fax x0-000-000-0000
----------------------------- ----------------------------------------------- -----------------------------------------------
E-mail xxxxxxxxxxxxx@xxx.xxx
----------------------------- ----------------------------------------------- -----------------------------------------------
THE REMAINDER OF THIS PAGE 11. IS INTENTIONALLY BLANK
Page 11 of 14
24. Delete the list of appendices, attachments, and supplements and associated
attachments as listed on page 1 of Attachment 1, Statement of Work to the
Agreement, and as amended by Amendment 0 11, in its entirety and replace it with
the following list:
a) Appendix 1 Markup
b) Appendix 2 Requirements Accuracy
c) Appendix 3 Performance Specifications
d) Appendix 4 Inventory Supply Flexibility
e) Attachment A -Product Attachment for RS
f) Exhibit 1 to Attachment A
g) Exhibit 2 to Attachment A
h) Attachment G -Product Attachment for Security Products
i) Attachment L -Product Attachment for Product Support Services ("PSS")
j) Supplement 1 -Transition Services and associated Attachments as listed;
k) Exhibit 1 to Supplement 1 -Product Attachment for Wedge Products
l) Exhibit 2 to Supplement 1 -Wedge Inventory List
m) Agreement Exchange of Confidential Information Number 4998560076
n) IBM Purchase Orders
o) IBM Customer Orders
p) Equipment and Program Loan Agreement
25. Delete Section 1 of Attachment 4 -Expense Participation to the Outsourcing
Base Agreement in its entirety and replace with the following:
"X. Xxxxxxxx Product Engineering Support
IBM shall pay MSL [**] Euros on the first day of each calendar month
during the term of the Agreement for MSL' s completion of the product
engineering responsibilities defined in Product Attachment A of the
Statement of Work. For any period of less than one month, the above
amount shall be apportioned based upon the number of days in that
month."
26. Delete Section 2 of Attachment 4 -Expense Participation of the Outsourcing
Base Agreement in its entirety.
27. Delete Section 5 of Attachment 4 -Expense Participation to the Outsourcing
Base Agreement, as amended by Amendment 0 11, in its entirety and replace with
the following:
"5. Connectivity Operational Costs for the Valencia Work Center
MSL agrees to acquire and maintain connectivity to IBM systems through
IESC secure connections (i.e., the IBM Firewall) beginning July 1, 1999
and for the period in which IBM requires those systems links, that
include SNA connectivity, IFX dataflow, Service Manager access and
TCP/IP dial services. IBM agrees to reimburse MSL for actual A TT
charges for those links up to the following limits:
Page 12 of 14
Operation cost: ATT fixed charges for connectivity up to a limit of [**]
Euros ([**]) per year.
ATT variable IFX consumption charges up to a limit of [**]
Euros per year.
MSL will not add any markup to ATT charges.
IBM will give MSL 90 calendar day advance notice of when that
connectivity is no longer required, at which time IBM will no longer
pay MSL for Operational costs. In the event that MSL has to pay penalty
charges because IBM cancels the connectivity requirement before the
IBM/MSL Outsourcing Agreement terminates, IBM and MSL will mutually
agree on a compensation, that will not exceed the penalty charges that
MSL pays to the A TT nor will be more than [**] Euros. MSL and IBM
agree to work together towards reducing the operational cost of their
system links and migrating to more industry standard, e-commerce based
connectivity."
28. Add the following to Attachment 4 -Expense Participation, to the Outsourcing
Base Agreement.
"6. Manufacturing Utilization Expense Participation
a) By the fifteenth (15) calendar day of the second month of each
quarter, IBM will provide MSL, an original forecast for each week of
the third month of that quarter by machine type, model and by
geography. Such forecasts may be revised by IBM upon written
notification to MSL.
b) Lower limit liability: IBM will pay MSL [**] percent ([**]%) of the
actual expense that MSL paid for unused direct subcontractor labor
resulting from a shortfall of work in the third month of a quarter.
which had been forecasted by IBM in the original forecast as described
in item a) of this Section, unless that forecast had been revised. If
the original forecast as described in item a) of this Section is
revised by IBM. IBM will pay MSL [**] percent ([**]%) of the actual
expense that MSL paid for unused direct subcontractor labor resulting
from a shortfall of work in the third month of a quarter. which had
been forecasted by IBM in the original forecast and which is within
fourteen (14) calendar days from the date of the revised forecast. For
the purpose of this item b). the revised forecast replaces the
original forecast and the process repeats; except that IBM will not pay
multiple payments for any period within the third month of a quarter.
c) Upper limit liability: IBM will pay MSL [**] percent ([**]%) of the
MSL standard labor rate for actual MSL direct employee labor resulting
from work in the third quarter which is in excess of [**] percent
([**]%) of that which had been forecasted by IBM in the original
forecast as described in item a) of this Section, unless that forecast
has been revised. If the original forecast as described in item a) of
this Section is revised by IBM, IBM will pay MSL [**] percent ([**]%)
of the MSL standard labor rate for actual MSL direct employee labor
resulting from work in the third quarter which is in excess of [**]
percent ([**]%) of that which had been forecasted by IBM in the
original forecast and
Page 13 of 14
which is within fourteen (14),calendar days from the date of the
revised forecast. Also, IBM will pay MSL [**] percent ([**]%) of the
direct subcontractor labor rate for actual direct subcontractor labor
resulting from work in the third quarter which is in excess [**]
percent ([**]%) of that which had been forecasted by IBM in the
original forecast as described in item a) of this Section, unless that
forecast has been revised. If the original forecast as described in
item a) of this Section is revised by IBM, IBM will pay MSL [**]
percent ([**]%) of the direct subcontractor labor rate for actual
direct subcontractor labor resulting from work in the third quarter
which is in excess [**] percent ([**]%) of that which had been
forecasted by IBM in the original forecast and which is within fourteen
(14) calendar days from the date of the revised forecast. For the
purpose of this item c), the revised forecast replaces the original
forecast and the process repeats; except that IBM will not pay multiple
payments for any period within the third month of a quarter.
d) Items c) and b) of this Section will be implemented for the MSL US
Work Center and MSL Valencia Work Center independently."
29. Delete Attachment 5: Equipment and Program Loan List, to the Outsourcing
Base Agreement, as amended by Amendment 012, in its entirety and replace it with
the Attachment 5: Equipment and Program Loan List, to the Outsourcing Base
Agreement dated July 25,2001.
All other terms and conditions of the Agreement, its attachments, and amendments
shall remain in full force and effect.
The Parties hereto have caused this Amendment 013 to be executed by their
respective authorized representatives.
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
International Business Machines Corp. Manufacturer's Services Western U.S.
Operations, Inc.
By: /S/ XXX X. XXXXXXXX By: /S/ X.X. XXXXXXXXXX
------------------------------- --------------------------------
XXX X. XXXXXXXX X.X. XXXXXXXXXX
------------------------------- --------------------------------
Print Name Print Name
VP, PRODUCTION PROC. VP & TREASURER
------------------------------- --------------------------------
Title Title
2/6/02 2/6/02
------------------------------- --------------------------------
Date Date
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