EXHIBIT 10.15
E-Stamp Corporation/Modus Media Turnkey/Inventory Agreement
-----------------------------------------------------------
Parties:
This Turnkey/Inventory Agreement ("the Agreement") is made and entered into
between E-Stamp Corporation ("E-Stamp") 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxx
Xxxx, Xx. 00000 and Modus Media International ("Modus Media"), 000 Xxxxxx
Xxxxxx, Xxxxxxxx, XX 00000.
Purpose:
To define the terms by which Modus Media shall manufacture, warehouse and ship
software Finished Goods for E-Stamp Corporation.
Section A: Deliverables Requirements
------------------------------------
Forecasts:
E-Stamp's requirements typically call for shipment of product in a time frame
that is shorter than the time which the required components can ordinarily be
procured or produced to order. Therefore, Modus Media will use E-Stamp-
generated forecasts as a basis for component and raw material procurement or
production scheduling. E-Stamp agrees to provide Modus Media a 90 day
rolling forecast in 30 day buckets on the second Friday of the month prior
to the beginning of the 90 days reflected in the forecast. Should E-Stamp
fail to timely submit a forecast, Modus Media shall contact E-Stamp and
request the forecast. The forecast will be sent in an agreed to electronic
format, which may take the form of purchase orders or electronic mail
messages. Materials (components and raw materials) will be purchased by Modus
Media on E-Stamp's behalf, according to a forecast and purchase order provided
by E-Stamp, using a net MRP process. This process will include a determination
by Modus Media of an economic order quantity based upon either the month's
forecast quantity, or a maximum of the ninety days forecast requirements less
on hand balance. Authorization for procurement of this quantity is granted to
Modus Media by E-Stamp as long as the quantity to be procured is less than or
equal to the demand shown in the forecast.
Service Commitment:
Modus Media shall provide the services as set forth on Addendum A (Scope of Work
- SOW). Modus Media shall ship products on the same day as orders are received
from E-Stamp, providing orders are supplied by E-Stamp by the deadlines
indicated in the SOW. A ship confirmation file will be sent each day for the
prior days' shipments.
Cancellations:
Should E-Stamp decide to cancel purchase orders, forecasts, or deliveries,
discontinue work, or reduce total quantities, E-Stamp agrees to give Modus Media
written notice, in the form of a purchase change order or electronic mail. In
addition, E-Stamp agrees to pay Modus Media, as set forth below, for any
materials and labor, at Modus Media's cost, for work completed; for all work
procured; also for all work in process as of the date and time Modus Media
receives notification of cancellation or change. This payment may include
extraordinary costs actually incurred by Modus Media, including but not limited
to extraordinary administrative expenses and shall not be unreasonable. Modus
Media agrees to work in good faith to limit the potential chargeable costs by
rescheduling procurement of components, deliveries, and manufacturing and
assembly as long as is
reasonably possible and cost effective. Interrupted but completed work and non-
standard material which cannot be utilized may be invoiced in normal billing
cycles once E-Stamp has been so advised. E-Stamp agrees to provide a revised
Purchase Order for the work completed at the time of cancellation.
Quality Standard:
Modus Media warrants that its services performed and materials requested
hereunder will meet the criteria set forth in the Modus Media International
Standard Attributes Manual and the SOW, attached hereto as Addendum C.
Section B: Procurement, Manufacturing and Inventory
----------------------------------------------------
Component and Raw Material Procurement:
Modus Media will produce or procure components and raw material in accordance
with Section A, "Forecast", and retain ownership of these components on E-
Stamp's behalf as set forth herein. E-Stamp agrees to purchase or dispose of
all such components and raw materials in accordance with the terms and
conditions set forth in this Agreement. Modus Media agrees it shall not dispose
of nor sell such raw material components to others, without E-Stamp's prior
written consent. In no event will Modus Media procure or charge E-Stamp for
unauthorized components or raw materials inventory. Only material which is of a
quality suitable for its original use may be classified as excess or obsolete.
Excess Material:
Modus Media will provide a monthly inventory report which will provide aging
information by raw material component. Any raw materials not made into finished
goods after 90 days will be subject to the storage charges set forth on Addendum
B (Pricing). Should any raw materials not be made into Finished Goods within
180 days, at the end of 180 days, at the request of Modus Media, E-Stamp will
purchase any remaining raw material and component inventory and authorize Modus
Media to scrap the product, ship it to E-Stamp, or to continue to store at the
storage charges set forth on the Addendum B. E-Stamp's purchase of such Excess
Material will be charged at cost plus markup, as set forth on Addendum B. A
scrapping fee, if applicable, will be determined on a case by case basis
depending on circumstances. The scrapping fee shall be reduced or waived if
Modus Media retains recycling benefit of scrapped materials. Modus Media
reserves the right to charge E-Stamp for "cost of money" invested in raw
materials stored for more than ninety (90) days. Addendum B sets forth
applicable storage, and "cost of money" charges.
Manufacturing:
E-Stamp will provide a Purchase Order authorizing Modus Media to build products
according to E-Stamp's forecast. Blanket Purchase Orders will be issued to
cover the turnkey manufacturing. Separate POs will be issued for non-routine
events and will be consistent with the prices set forth on Addendum B. Purchase
Orders may be delivered in hard copy, fax, electronic mail, or via EDI message.
E-Stamp will provide a Purchase Order at the end of each month for the following
month's production, which shall be based on E-Stamp's 90 day rolling forecast.
-2-
Changes in quantities, manufacturing specifications supplied by E-Stamp or
delivery schedules may result in price adjustments and production schedule
changes in accordance with the terms of this Agreement. Modus Media will make
every effort to maintain price consistency and reduce purchase price variance
for E-Stamp in these situations.
Media Replication:
For work involving CD-ROM replication, all input files, CD-Rs or compact discs
furnished by E-Stamp will be used solely for E-Stamp's work and remain E-Stamp's
property. All tooling, including masters, stampers or any other tooling made by
Modus Media will be used solely for E-Stamp work but will remain Modus Media
property.
Finished Goods Inventory:
E-Stamp will purchase all Finished Goods inventory upon completion of
manufacturing. Storage of Finished Goods will be charged as set forth in
Addendum B. Modus Media will provide a costed inventory report each month that
will show the previous month end inventory.
Inventory Reports and Shrinkage:
Modus Media will provide inventory and inventory adjustment reports to E-Stamp
for both Component and Finished Goods Inventory.
Section C: Pricing of Materials
--------------------------------
Pricing of materials and services are set forth on the Addendum B to this
Agreement.
Component and raw material pricing set forth on the Addendum B are subject to
changes in market prices. Modus Media will notify E-Stamp of any change in
component or raw materials pricing that exceeds plus or minus 5%, and change
pricing to reflect such changes at the next periodic pricing review. If a
change in forecast quantity for a component results in a change in price of more
than 10% (+/-) for that component, the price will be changed on that component
at that time of change.
Storage fees for less than 90 days raw materials and components will be included
in the kit pricing.
If overtime is required, Modus Media will so advise E-Stamp of such charges and
obtain prior consent from E-Stamp. Working standard Modus Media holidays, at E-
Stamp's request, will be billed on an overtime basis, as incurred. Overtime
rates will be quoted and agreed upon by both parties before overtime work
begins.
Pricing Methodology: Assembly
All assembly work will be charged a flat per touch rate according to how many
touches per component.
Media Replication:
CD prices are included in Addendum B.
Make ready/Staging Fee:
This charge is reflected in Addendum B.
-3-
Palletization/Materials Fee:
Materials for pallets, corrugated protection, corner-boards and stretch wrapping
are included in Addendum B.
Project Management:
A project management fee will be charged on a per kit basis which includes the
following services:
The management fee is detailed in the pricing section found in Addendum B.
Job Engineering Order Processing
Local Interplant Freight Dedicated Resources
Inventory Management Account Management
Transaction Reporting First Article Inspection
Procured Parts (supplier Specified):
All procured components will be marked-up at the rates provided in Addendum B.
Invoicing
Modus Media International shall submit an invoice to E-Stamp Corporation for
each shipment, or partial shipment of products, components or provision of
services. Invoices will be generated when product is moved into Finished Goods
and when an order is built to ship for bulk distribution. Fulfillment invoices
from Modus Media International will summarize monthly fulfillment charges and
provide detailed accountability broken down by each Sales Order shipped.
Film, Digital Files, and Plates:
All platemaking film made by Modus Media used solely for E-Stamp's work will
become E-Stamp's property upon payment of invoices. All film or electronic
files furnished by E-Stamp used solely for E-Stamp's work will remain E-Stamp's
property. All plates made by Modus Media used solely for E-Stamp's work will
remain Modus Media's property. All electronic imposition files Modus Media
makes from E-Stamp's furnished digital files, all type fonts used for the
production of E-Stamp's work, any storage devices, disks, etc. used to archive
E-Stamp's files and any proprietary software, systems or technology used to
process E-Stamp's files will remain Modus Media property. Modus Media agrees
not to use any film, digital files or plates made on behalf of E-Stamp for any
other purpose other than what has been previously agreed to by E-Stamp.
RMA Service
Please see Addendum A for specific RMA procedure requirements.
Other Pricing:
All relevant pricing for other services is included in Addendum B. Any other
pricing for any other services will be provided upon request.
Terms of Payment, Interest, Collection Costs, and Billing Disputes
Term of Payment is defined as Net 30 from date of invoice. Should any invoice
issued hereunder become past due in excess of 60 days, E-Stamp agrees to pay
interest at the rate of one and one-half percent (1.5%) per month, or the lawful
limit if less, on all such amounts excluding any amounts that E-Stamp is
currently disputing with Modus Media, commencing fifteen (15) days after written
notice
-4-
to E-Stamp as well as all the costs of collection of overdue accounts, if any,
including, but not limited to, reasonable attorney's fees. Interest payable will
be calculated from the invoice due date to the date payment is received. Should
any portion of an invoice be disputed, E-Stamp agrees to pay the undisputed
portion according to its terms and E-Stamp will notify Modus Media promptly of
the dispute. Both parties agree to use their best efforts to resolve the
disputed portion of the invoice within thirty (30) days of learning of the
dispute.
Bankruptcy
If either party shall be adjudicated a bankrupt, institute voluntary proceedings
for bankruptcy or reorganization, make an assignment for the benefit of its
creditors, apply for or consent to the appointment of a receiver for it or its
property, or admit in writing its inability to pay its debts as they become due,
the other party may terminate this Agreement by written notice. Any such
termination will not relieve either party from any accrued obligations
thereunder.
Limitation of Liability
Modus Media will perform the work in a good and workmanlike manner and in
accordance with the specifications and production schedule. In no event will
either party be liable to the other for special, incidental or consequential
damages, including, but not limited to, lost profits or business. Modus Media's
liability shall be limited to the total payments actually received under this
agreement.
Responsibility for Subject Matter
In furnishing Modus Media with matter to reproduce, or distribute, or to have
incorporated in the completed product, E-Stamp represents and warrants that none
of such matter infringes any copyright or other rights of a third party (either
as furnished to Modus Media by E-Stamp or as altered by Modus Media at E-Stamp's
direction), or patent, is libelous, or otherwise violates the rights of or will
cause damage or injury to other persons E-Stamp agrees to indemnify and save
Modus Media harmless from all losses, damages and expenses, including attorneys'
fees, which Modus Media may suffer as the result of any claim of such violation,
damage, or injury.
Work Stoppages
Modus Media will not be liable for delays or non-performance of this Agreement
occasioned by strikes, fires, accidents, or by causes beyond Modus Media's
control including, but not limited to, the inability to obtain necessary
materials or utilities. In the event of a stoppage or delay resulting from any
such cause, Modus Media will perform such parts of the work as Modus Media is
capable of performing. In the event E-Stamp places any other part of the work
elsewhere, E-Stamp agrees to allow Modus to resume the work as promptly as
practical.
Insurance:
Modus Media will carry, at its own expense, fire, sprinkler leakage and extended
coverage insurance, subject to the usual exclusions, limitations, and conditions
of such policies on the actual cash value of all Modus Media materials, work in
process, and all Finished Goods completed and not shipped, and on the actual
cash value of all positives, copy, artwork, paper and other materials finished
by E-Stamp while in Modus Media's care, custody and control. If E-Stamp's
property is damaged as a result of an insured peril under the applicable
insurance policy, then, at Modus Media's option with the concurrence of E-Stamp,
will replace E-Stamp's damaged property or reimburse E-Stamp for the actual cash
value of the damaged property. If Modus Media elects to reimburse
-5-
E-Stamp for the damaged property's actual cash value, the amount payable to E-
Stamp shall be limited to the proceeds of such policy plus any related
deductible, if any, applied to the claim for damage to E-Stamp's property. For
positives and other media Modus Media's insurance coverage and liability shall
be limited to the cost of blank film or other media and the cost of duplication
from an original or other copy.
Passing of Title:
Title and possession will pass to E-Stamp upon delivery into finished goods or
upon date of final invoicing, whichever is earlier.
Governing Law:
The laws of each state where the goods and services are performed will govern
this Agreement.
Section D: General Terms
-------------------------
Term:
The term of this agreement is from December 1, 1998 through December 31, 1999.
The parties agree to negotiate toward a new agreement prior to the end date.
Standard pricing will be reviewed semi-annually.
Termination:
This agreement may be terminated by either party with 90 calendar days written
notice to the other. Upon termination or expiration of this Agreement, the
parties will agree upon disposition of all raw material, work in progress, and
Finished Goods inventories in accordance with the terms of this agreement. Any
such termination or expiration will not relieve either party from any accrued
obligations defined hereunder.
Disputes:
Both parties agree to negotiate disputes in good faith and should they fail to
reach agreement, agree that any dispute, controversy or difference between the
parties, arising out of or related to this Agreement may be resolved, upon the
request of the parties, through final and binding arbitration. The parties
agree that this Section does not apply to breaches of confidentiality or
intellectual property provisions whereby E-Stamp may petition a court of law for
injunctive relief.
This Agreement and the Addendums attached hereto contain all the Agreements,
understanding, representations, conditions, warranties and covenants, and
constitutes the sole and entire agreement between the parties hereto pertaining
to the subject matter hereof and supersedes all prior communications or
agreements, written or oral. This Agreement may not be revised or modified
except by the mutual written consent of both Modus Media and E-Stamp as attested
to by an instrument signed by an officer of each of them.
-6-
Agreed and accepted by:
E-Stamp Corporation Modus Media International
By Xxxxx Xxxxxxx By Xxxxxxx Xxxxxxxx
------------------------------ ------------------------------
Title Director, M&D Title Sales Representative
--------------------------- ---------------------------
Date June 1, 1999 Date June 1, 1999
---------------------------- ----------------------------
Signature /s/ Xxxxx Xxxxxxx Signature /s/ Xxxxxxx Xxxxxxxx
----------------------- -----------------------
-7-
Appendix
--------
Modus Media International will provide E-Stamp Corporation Call Center Services
in Modus Media's Preston Solution Center during their Beta phase. While E-Stamp
is in official Beta phases, their Call Center pricing will be based on an hourly
charge. The charge will be $28.00 per hour of Call Center time. Call Center
Pricing in Addendum B will be applicable once E-Stamp exits Beta Phase.
-8-
December 4, 1998
FULFILLMENT PRICE QUOTE
E-Stamp
Modus Media International
Preston Solution Center
---------------------------------------------------------------------------------------------------
Description Charge Volume Total
---------------------------------------------------------------------------------------------------
Per Month Monthly
ADMINISTRATIVE CHARGES
Monthly Management Fee $1,500.00 1 $ 1,500.00
Set-up Fees $1,200.00 1 $ 1,200.00
RESPONSE MANAGEMENT
Inbound 800 Call Service
0 - 20,000 minutes $ 0.95 4,545 $ 4,317.75
20,001 - 40,000 minutes $ 0.92 0 $ 0.00
40,001 + minutes $ 0.87 0 $ 0.00
Mail / Fax / e-mail Processing $ 1.30 300 $ 390.00
Imported Orders $ 0.35 100 $ 35.00
FINANCIAL PROCESSING
Visa, MasterCard, Discover 3.50% $90,000.00 $ 3,150.00
American Express 4.00% $22,500.00 $ 900.00
Check Processing $ 1.50 25 $ 37.50
Purchase Order Service $ 8.60 25 $ 215.00
Additional Invoice/Statement $ 4.00 0 $ 0.00
Returned Check Processing $ 15.00 1 $ 15.00
Refund Processing $ 0.00 0 $ 0.00
SPECIAL OPERATIONS
Programming, per hour $ 115.00 0 $ 0.00
Clerical, per hour $ 48.00 0 $ 0.00
Data Transfer $ 7.50 42 $ 315.00
FTC Cards $ 0.71 0 $ 0.00
Followup Outbound Calls $ 1.60 500 $ 800.00
Outbound Fax Fee $ 1.30 21 $ 31.50
FULFILLMENT CHARGES
Enduser Pick & Pack first line item $ 2.27 1,000 $ 2,270.00
Additional line items in same carton, per $ 0.35 50 $ 30.00
item
Serial Number Capture $ 0.18
Intl Export Documents, per order $ 3.50 0 $ 0.00
Freight & Postage $ 0.00 0 $ 0.00
End User Returns Processing TBD 0 $ 0.00
Bulk Returns Processing TBD 0 $ 0.00
MATERIALS HANDLING
Receive furnished product, per part # $ 22.90 1 $ 22.90
Storage, per pallet, per month $ 14.50 5 $ 72.50
REPORTING
Standard per occurrence (up to 5 pgs) $ 5.00 0 $ 0.00
Customized Report $ 0.00 0 $ 0.00
TOTAL P.O. $15,520.09
---------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Description Comments
-----------------------------------------------------------------------------------------------------------------------------
ADMINISTRATIVE CHARGES
Monthly Management Fee Covers 1 set of basic reports, on-going training, project coordination and
documentation
Set-up Fees One time fee. Set up includes programming fees and one 800 number.
RESPONSE MANAGEMENT
Inbound 800 Call Service
0 - 20,000 minutes per minute
20,001 - 40,000 minutes per minute
40,001 + minutes per minute
Mail / Fax / e-mail Processing Per mail/fax/e-mail order
Imported Orders Per imported order
FINANCIAL PROCESSING
Visa, MasterCard, Discover 3.5% of total order charge
American Express 4% of total order charge
Check Processing Per Check
Purchase Order Service Per initial order (includes 1st invoice)
Additional Invoice/Statement Per invoice or statement
Returned Check Processing Per returned check
Refund Processing
SPECIAL OPERATIONS
Programming, per hour Per programming hour
Clerical, per hour Per clerical hour
Data Transfer Per file created (ASCII, fixed length, comma delimited)
FTC Cards Per notification (Customer notification of delayed shipment)
Followup Outbound Calls Per Call (Credit Card Problem, etc.)
Outbound Fax Fee Per Fax Page
FULFILLMENT CHARGES
Enduser Pick & Pack first line item Includes pick/pack, packing slip, small ship carton (price may change
depending on carton size)
Additional line items in same carton, per Per additional line items
item
Serial Number Capture Per number captured
Intl Export Documents, per order Per order
Freight & Postage Actual costs billed as incurred
End User Returns Processing Per RMA
Bulk Returns Processing Per RMA Unit (incl receive, log, disposition, scrap or re-stock)
MATERIALS HANDLING
Receive furnished product, per part # Per Part # - Furnished product received from 3rd party
Storage, per pallet, per month Per pallet
REPORTING
Standard per occurrence (up to 5 pgs) Per Occurrence (standard reports beyond the basic set included in the
monthly management fee)
Customized Report Per hour
TOTAL P.O. Sum of all estimated charges
-----------------------------------------------------------------------------------------------------------------------------
-9-
Modus Media International Estamp December 4, 1988
Preston Solution Center
Service Charge Comments
---------------------------------------- -------------- -------------------------------------------------
Turnkey
Administration
--------------
New SKU setup $ 135.00 Per Product Family per Platform
--------------
Management Fee $ 1.00 Per Kit
--------------
BOM Change $ 50.00 Per ECO
--------------
EDI Import $ 0.35 Per Order
--------------
Order Entry Fax Orders $ 1.30 Per Order
--------------
Manufacturing Invoicing Order Timeframe (Each order, day, weekly, monthly)
--------------
Distribution Invoicing Monthly Timeframe (Each order, day, weekly, monthly)
--------------
Payment Terms n-30 (Cash, net 30, net 60, etc.
--------------
Manufacturing
Manufacturing Service Level
--------------
Components Stock 3 Days
--------------
Components Not Stock 10 Days
--------------
Assembly $ 0.10 Touch (Boxes -2; Shrinkwrap -1; Scanning -1; Sleeves -2)
--------------
Disk Subs NA Touch (Disk, label, bag = 1 touch)
--------------
Disk Replication NA HD or LD
--------------
Make ready/staging fee
--------------
Run lengths less than 500 units NA Per Kit
--------------
Run lengths greater than or equal to 500 units NA Per Kit
--------------
Run lengths greater than or equal to 5000 units NA Per Kit
--------------
Palletization $ 0.20 Per Kit
--------------
Rework $ 0.10 Proposed $135 Add'l Charge
--------------
Rush Order NA Per Order
--------------
CD Replication
--------------
24 hr turn Mastering $ 1,100.00 One time charge
--------------
Production $ 0.62 Per CD
--------------
72 hr turn Mastering $ 540.00 One time charge
--------------
Production $ 0.65 Per CD
--------------
5 day turn Mastering $ 0.00 One time charge
--------------
Production $ 0.65 Per CD
--------------
CD insertion into tyvek sleeve $ 0.12 Per CD
--------------
CD insertion into plastic sleeve NA Per CD
--------------
Distribution
Distribution Service Level
--------------
Orders in by ___ ship same day 2:00 PM Time: Mountain Standard
--------------
Expedite orders in by ___ ship same day 2:00 PM Time: Mountain Standard
--------------
Orders in by ___ ship next day 2:00 PM Time: Mountain Standard
--------------
Serial Number Capture (Distribution) $ 0.18 Each
--------------
Generate Customer Letters NA Per Page
--------------
Pick & Pack
End User (Orders from 1 to 20)
--------------
1st Pick $ 2.27 Per Kit
--------------
Additional Picks $ 0.35 Per Kit
--------------
Bulk (Orders from 21 and larger)
--------------
1st Line $ 22.00 Per Line
--------------
Additional Lines $ 22.00 Per Line
--------------
Export Documents Preparation $ 0.05 Per Order
--------------
Modus Media International Estamp December 4, 1988
Preston Solution Center
Service Charge Comments
---------------------------------------- -------------- -------------------------------------------------
--------------
Freight $ 0.04 Per Freight sent via Prepaid & Add, Collect or
3rd Party Billing
--------------
Rush Orders $ 3.50
--------------
RMAs
--------------
1-9 Units Flat fee only
--------------
Over 9 Units Each Kit over 9 + flat fee
--------------
Receiving
--------------
Furnished Parts (Customer Supplied) $ 22.90 Per pallet
--------------
Purchasing
--------------
Outside Purchase markup 18.5% Components Unit Price less than $20
--------------
Outside Purchase markup 18.5% Components Unit Price greater than $20
--------------
Print 3 or 4 Color Off List
--------------
Print 2 Color Off List
--------------
Print 1 Color Off List
--------------
One Time Charges (Prelim)(die costs, etc.) $ 815.00 Billed on a separate PO
--------------
Inventory
--------------
Storage of Components $ 14.50 $Pallet/Month
--------------
Average Number / Month Pallets
--------------
Storage of Finished goods $ 14.50 $Pallet/Month
--------------
Average Number / Month Pallets
--------------
Cost of Money 1.30% Per Month (Stream owned components older than 90 Days)
--------------
Obsolete 180 How many days/months before defined as obsolete
--------------
Monthly When is it dispositioned
--------------
$ 12.50 Per pallet price to return to customer
--------------
Miscellaneous
--------------
Reports $ 5.00 Each
--------------
Faxes $ 1.30 Per page
--------------
File Transfers $ 7.50 Each
--------------
Programming $ 115.00 Per hour
--------------
Forecast
--------------
Manufacturing Rolling 90 Type and timeframe of forecast
--------------
After 21st of Month When provided
--------------
Distribution Type and timeframe of forecast
--------------
Min. daily orders
--------------
Max. daily orders
--------------
Phone Center Type and timeframe of forecast
--------------
Min. daily calls
--------------
Max. daily calls
--------------
