Terms Sheet - Egenera and Celestica Corp.
TERMS SHEET, MARCH 12, 2003
TERMS PROVISIONS
PARTIES EGENERA ("Customer"), a Delaware corporation
with offices located at 165 Forest St.,
Marlboro, MA 01752.
CELESTICA Corporation ("Supplier"), a Delaware
corporation with offices located at 9
Northeastern Boulevard, Salem, NH 03079.
GENERAL Supplier and Customer agree that this Terms
Sheet, including Exhibit A (Pricing Agreement
and costed boms), constitute a Letter of
Agreement between the two companies that
describes how they will conduct business, and
that it applies to all manufacturing services
performed by SUPPLIER for CUSTOMER, regardless
of geographic location of SUPPLIER site.
The intent of this agreement is to allow
Supplier to begin procuring material to support
Customer's requirements, and begin the transfer
of manufacturing from Customer's current
Supplier. It is a further intent of both
parties to develop a pricing model where
pricing is aligned by cost drivers.
NEGOTIATION PROCESS The parties agree that they will
negotiate for the purpose of completing a
formal manufacturing agreement to govern the
relationship between them. The parties shall
work diligently to complete such an agreement
within ninety days of the signing of this LOA.
This Agreement shall continue to apply until
the execution of the formal manufacturing
agreement.
Either party can terminate the relationship for
convenience at any time prior to the execution
of the definitive agreement.
Both parties have spent considerable effort to
put in place the relationship desired, and have
visited many of the terms that will be part of
the eventual manufacturing agreement. It is
envisioned that the spirit of the work on these
issues will become part of the agreement. Any
material or pricing reconciliations will take
place quarterly.
PRODUCTION EFFORT AND TEST OF For the purposes of this agreement,
THE PRODUCTS manufacturing services refer to prototype
manufacturing, test development and
implementation, new products introduction,
process engineering, materials procurement and
management, printed circuit assembly and test,
systems assembly and test, order management and
fulfillment, quality and Customer satisfaction
management, and post manufacturing services,
plus any other services as mutually agreed by
both parties.
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TERMS PROVISIONS
BUSINESS MANAGEMENT PROCEDURES The parties hereby agree to adopt "Business
Management Procedures", in support of CUSTOMER,
even if such corporate-wide decisions may be
perceived by individual SUPPLIER site(s) to be
sub-optimal, including:
SUPPLIER will name Program Manager, senior
materials resource, and senior engineering
resource that will be dedicated to CUSTOMER'S
business. Named resources to be full time,
regular SUPPLIER employees, and not part time,
and not contract employees. Changes in named
individual will be communicated with a minimum
of 30 days notice, and SUPPLIER commits to
managing an adequate overlap period to ensure
an orderly changeover, provided the reason for
the changeover is not the resignation of the
named individual from SUPPLIER'S employment.
Notwithstanding this, CUSTOMER Agrees that
those resources would be available for
consulting purposes on other priorities from
time to time, provided those efforts do not
dilute the focused effort on CUSTOMER'S
business.
- Monthly business reviews; including
SUPPLIER and CUSTOMER executive level
sponsor attendance quarterly.
- Annual meetings at the executive level.
- Reporting requirements, including on-going
cumulative quality, delivery, and
flexibility metrics tracking.
- Quarterly material cost and cost reduction
plans and projections.
- Monthly reports and projections of inventory
days of supply (DOS) and CUSTOMER liability.
TRANSITION SUPPLIER and CUSTOMER both agree to transition
products and services from CUSTOMER'S Current
Manufacturing Services Provider with
appropriate priority, resources, and effort so
as to minimize impact on CUSTOMER'S revenue
stream, or on CUSTOMER'S Customer satisfaction.
Current Manufacturing Services Provider means
CUSTOMER'S Manufacturing Services Provider
prior to the time this agreement is signed.
SUPPLIER agrees that all SUPPLIER'S labor, both
direct and indirect, necessary to successfully
transition these products and services will be
provided at SUPPLIER'S expense. Examples
include labor necessary to create process
packages, design floor layouts, implement
production
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TERMS PROVISIONS
lines, and establish a materials pipeline.
Exceptions will be agreed to by both parties,
in writing, and treated as NRE.
SUPPLIER and CUSTOMER agree that New Products
Introductions agreements regarding Generic and
Unique Equipment will apply to all other
aspects of the Transition from CUSTOMER'S
Current Manufacturing Services Provider.
NEW PRODUCT INTRODUCTIONS SUPPLIER and CUSTOMER both agree to introduce
new CUSTOMER products with appropriate
priority, resources, and effort so as to
minimize impact on CUSTOMER'S new product
introduction program objectives. It is further
recognized that important CUSTOMER new product
introductions will be underway in parallel with
the Transition from CUSTOMER'S Current
Manufacturing Services Provider, and that the
level of activity may require additional
resources beyond what is normally allocated for
NPI activities alone.
CUSTOMER agrees that all SUPPLIER'S labor, both
Direct (DL) and Indirect (IL), necessary to
successfully introduce new CUSTOMER products
and services will be provided at CUSTOMER'S
expense. This labor includes that necessary to
create process packages, develop and debug test
programs, design floor layouts, implement
production lines, procure prototype materials,
build prototypes, implement Engineering Change
Orders (ECOs), and whatever else is necessary.
The charges for these Non-Recurring Engineering
(NRE) activities will be calculated as total IL
hours times agreed upon IL rate/hour, plus
total DL hours times agreed upon DL rate/hour,
unless both parties agree in advance on a total
charge for the complete program.
SUPPLIER agrees that each new product design,
component selection, and Supplier selection
will be assessed for producibility and for
cost, and that recommendations will be made for
producibility improvement, and for cost
reductions. These recommendations will be made
as early in the program as possible, so as
maximize the opportunity to implement them in
the CUSTOMER'S program. CUSTOMER agrees that
all such Design For Manufacturability (DIM)
efforts will be provided at CUSTOMER expense,
at agreed upon NRE hourly rates, provided such
feedback is provided in an organized manner and
on a timely basis.
SUPPLIER agrees that all Equipment that is
Generic to the Manufacturing Services being
provided to CUSTOMER will be provided at
SUPPLIER expense. Examples of generic equipment
are: screen printer, automatic placement
equipment, flying probe, 5DX X-ray, ICT
equipment, roller lines, packaging equipment,
as well as
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TERMS PROVISIONS
business systems to support SUPPLIER'S standard
Manufacturing Services offerings.
CUSTOMER agrees that all Equipment that is
Uniquely required for the introduction,
production, and delivery of CUSTOMER products
will be provided at CUSTOMER expense, and will
be owned by CUSTOMER. Examples of Unique
equipment are: stencils, solder fixtures, ICT
fixtures, product functional test equipment,
Master Blaster, and any capitalized CUSTOMER
product that is used as part of any test
station.
QUALITY SUPPLIER agrees that product price includes
benefit from ongoing quality management
process, which includes: process measurement
and controls, training, appropriate inspections
and audits, closed-loop corrective action
process, management reviews, and all other
activities necessary to understand and manage
ongoing product quality.
SUPPLIER certifies that all sites involved in
the production and delivery of CUSTOMER'S
product are certified to ISO9000/2000.
SUPPLIER agrees that any incremental actions
taken by CUSTOMER, that are required to ensure
acceptable outgoing quality will be done at the
expense of SUPPLIER, and will be billed at
agreed upon NRE rates, unless those actions are
required due to CUSTOMER'S design, component
selection, or Supplier selection.
CUSTOMER agrees that any incremental actions
necessary to maintain minimum acceptable levels
of outgoing quality will be taken at CUSTOMER'S
expense, and will be billed at agreed upon NRE
rates, provided those actions are required due
to CUSTOMER'S design, component selection, or
Supplier selection.
PRICES FOR PRODUCTS The agreed price for each Product is set forth
in Exhibit A to this agreement.
SUPPLIER and CUSTOMER agree to work together to
achieve a [**]% price reduction per year on all
products combined. Prices will be reviewed
quarterly, and reductions will be measured
quarterly from same quarter prior year.
SUPPLIER and CUSTOMER agree that benefits from
cost reduction of component materials that are
achieved primarily through the efforts of
SUPPLIER will be [**]% by SUPPLIER for a period
of three months, and [**] between SUPPLIER and
CUSTOMER for an additional period of three
months, [**]% to CUSTOMER thereafter, provided
CUSTOMER is realizing a cumulative [**]% annual
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TERMS PROVISIONS
material cost reduction across all products. In
the event CUSTOMER is not realizing the [**]%
annual material cost reduction across all
products, benefits from cost reduction of
component materials will be divided between
SUPPLIER and CUSTOMER in a way that will
maximize its contribution to achieving that
goal. This agreement shall be called the
Purchase Price Variance (PPV) sharing
agreement.
SUPPLIER agrees that all material cost
reduction benefits will be disclosed to
CUSTOMER at or before the time the benefit will
impact SUPPLIER.
PLANNING ASSUMPTIONS, CUSTOMER agrees that all demand will be placed
PURCHASING AND COMMODITY on SUPPLIER in the form of Purchase Orders.
MANAGEMENT SERVICES CUSTOMER will endeavor to provide purchase
order coverage for a minimum of 90 days to a
maximum of 180 days of requirements.
SUPPLIER and CUSTOMER agree that it is their
objective to reach agreement that minimizes the
material content that is controlled and/or
sourced by CUSTOMER. Such agreement will depend
upon terms that support the business objectives
of both parties.
SUPPLIER agrees to procure all component
materials to fulfill CUSTOMER'S purchase
orders, with the exception of components that
are managed and sourced directly by CUSTOMER,
which are subsequently consigned to SUPPLIER by
CUSTOMER. Cost for execution of this
responsibility is included in agreed upon price
for each product.
All CUSTOMER owned materials that are consigned
to SUPPLIER to be kept in a separate, secured
inventory location. Records will be maintained
for these materials, and CUSTOMER shall have
access to the records and materials for audit
purposes.
The price of products listed on the Purchase
Order shall be firm, and not subject to change
based on varying costs or expenses of SUPPLIER.
SUPPLIER shall be responsible for any
incremental costs arising from changes in
component prices from the date of the original
purchase order, even if such changes occur
prior to the date on which, according to the
commodity leadtime approved by CUSTOMER (as
specified below), SUPPLIER is first anticipated
to acquire such materials; similarly, SUPPLIER
shall receive the benefit of any incremental
price reduction during that (or subsequent
periods), according to the PPV Sharing
Agreement (above); except as specified below
where CUSTOMER does not place the order within
the specified leadtime, or where SUPPLIER and
CUSTOMER agree to
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TERMS PROVISIONS
the contrary in specific instances. Exceptions
would be made for components that have gone on
global allocation by commodity, provided
SUPPLIER can show evidence that diligence has
been applied to mitigate the effects of the
allocation situation.
SUPPLIER also agrees to provide to CUSTOMER
prior to or in connection with the Purchase
Orders a listing of all materials that are
deemed to be Non-Cancelable, Non-Returnable
(NCNR). Notwithstanding such classification,
however, the provisions below regarding
rescheduling shall continue apply to such
materials.
SUPPLIER agrees to accept changes in purchase
order quantities for the third period of every
calendar quarter, provided such changes are
communicated before 59 days prior to the start
of that period. CUSTOMER agrees that those
changes will be limited to the range of
[**]%/[**]% of total demand for each product
for that period, and/or reschedule of demand
for each product for that period into the next
quarter. Both parties agree, in the event of a
reduction and/or reschedule of third period
demand, to endeavor to level load the remaining
demand for that quarter across the full three
periods. SUPPLIER agrees that CUSTOMER will
incur no incremental charge as a result of
exercising this flexibility agreement.
In the event CUSTOMER finds it necessary to
cancel or reduce the quantities in certain
purchase orders (in amounts beyond the
flexibility set forth above to cancel or
restructure orders), CUSTOMER will be
responsible for SUPPLIER's out of pocket cost
for materials, but SUPPLIER shall use its best
efforts, including the full effect of
SUPPLIER's global material's leverage, to
mitigate such cost. CUSTOMER shall have no
liability for labor costs or overhead which are
avoided by the failure to manufacture the
materials specified in the cancelled or reduced
purchase orders.
CUSTOMER agrees that expected requirements
beyond the coverage of purchase orders will be
communicated in the form of non-binding
forecasts, and that through a combination of
purchase orders and forecast, will endeavor to
provide a full twelve months visibility to
expected demand.
CUSTOMER agrees that any requirements for
materials with leadtime greater than the period
for which purchase order coverage is provided
will be supported on an exception basis with a
separate purchase order. SUPPLIER agrees to
provide CUSTOMER with timely notification of
such situations.
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TERMS PROVISIONS
SUPPLIER agrees to provide CUSTOMER with a
Standard Leadtime Chart, with which SUPPLIER
commit to leadtime by commodity, as well as
SUPPLIER leadtime commit by component for any
component with a leadtime that exceeds its
Standard commodity leadtime. It is the
responsibility of SUPPLIER to keep the Standard
Leadtime Chart current with revisions as
required. This information will be used for
planning purposes and as the basis for
determination of premium responsibilities.
Customer acknowledges that lead times of
component varies, and supplier will use
reasonable commercial efforts to keep updated
though it can happen that lead times change
with no notice to supplier.
CUSTOMER agrees that incremental costs arising
from premiums required to procure certain
components within leadtime as defined by
Standard Leadtime Chart will be the
responsibility of CUSTOMER, provided that
timing of CUSTOMER'S purchase order did not
allow SUPPLIER enough time to procure those
parts at those leadtimes, and provided SUPPLIER
informs CUSTOMER on a timely basis of the need
for premium, the cause, and he estimated cost,
and secures CUSTOMER approval prior to
incurring that cost. SUPPLIER agrees that
premiums in all other cases are at SUPPLIER
expense.
SUPPLIER agrees to develop and propose to
CUSTOMER a sourcing strategy that would allow
SUPPLIER to provide [**]% upside for materials
availability within six weeks notice, such
notice to be communicated in the form of change
orders to existing purchase orders. Both
parties agree to complete such a plan before
the formal manufacturing agreement is signed.
CUSTOMER will consider providing SUPPLIER with
a separate purchase order to cover materials
for which a minimum order quantity would result
in cost savings or avoidance, compared to
limiting the procurement to quantities
supported by CUSTOMER'S existing purchase
orders. SUPPLIER agrees to provide information
on a timely basis for consideration and action
prior to leadtime for those components.
SUPPLIER further agrees to minimize these
situations by taking their total demand across
their Customer portfolio into account to
endeavor to realize the minimum order quantity.
CUSTOMER agrees to be responsible for all
materials procured by SUPPLIER in support of
CUSTOMER'S purchase orders, provided such
materials were not ordered by SUPPLIER earlier
than leadtime as defined in Standard Leadtime
Charge and provided SUPPLIER can provide
evidence of using best efforts, including the
full effect of SUPPLIER'S global materials
leverage to mitigate. CUSTOMER
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TERMS PROVISIONS
agrees to be responsible for finished goods and
work in process, provided those assemblies are
produced in support of CUSTOMER purchase
orders.
PRICES FOR COMPONENTS To Be Included in Appendix A
BUY DOWN OF INVENTORY CUSTOMER may "buy down" SUPPLIER'S inventory on
any component parts for the difference between
SUPPLIER'S actual cost and the future
negotiated Component Cost.
ORDER FULFILLMENT SUPPLIER agrees to build and test certain of
CUSTOMER'S products to a semi-finished goods
state, and perform final configuration and test
of those products when CUSTOMER transmits their
Sales Order for those products to SUPPLIER.
CUSTOMER shall initiate product shipment by
transmitting CUSTOMER Sales Orders to SUPPLIER.
Sales Orders to include final quantities,
configuration, Customer name, ship to address,
and required shipment date. Sales Orders to be
transmitted through agreed EDI processes.
SUPPLIER shall ship product on required ship
date specified on CUSTOMER Sales Order,
provided CUSTOMER Purchase Order supports the
required quantities and configurations, and at
least one week notice is given to SUPPLIER to
allow for final configuration and test of
product.
CUSTOMER purchases product at time of shipment
from SUPPLIER.
SUPPLIER agrees to extend to CUSTOMER a line of
credit for the purposes of financing inventory,
including component parts, both on hand and, in
the case of NCNR materials, on order, and work
in process, and finished goods, as well as
financing accounts receivable from CUSTOMER.
Amount of Line of Credit to be determined based
on CUSTOMER cash position, burn rate, revenue
stream, payments history, and CUSTOMER business
plan going forward, and other criteria, such
criteria to be disclosed by SUPPLIER to
CUSTOMER prior to its being incorporated into
any calculation. SUPPLIER agrees to communicate
details of method of determination of actual
credit limit, based on these inputs, upon
signing this agreement, these details to
include frequency and timing of credit
analysis. SUPPLIER agrees to provide CUSTOMER
with a minimum of thirty (30) days notice of
any proposed reduction in the line of credit.
Such notice to be communicated in an executive
discussion between both parties. Exceptions to
the 30 day notice would be dramatic and
unfavorable
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TERMS PROVISIONS
changes to customer's financial picture.
Delivery terms are fob Supplier's dock.
Unless the Customer provides appropriate
exemption certificates, the Customer will be
solely responsible for and will pay all taxes.
Warranty is one year on workmanship and pass
through on material warranty as long as total
warranty is at least one year.
Supplier can accept or reject purchase order(s)
but must notify the Customer in writing within
5 days.
In cases where best effort is stated, this will
mean reasonable commercial efforts.
INVENTORY CARRYING COSTS To be included in attachment A
PAYMENT SUPPLIER agrees to invoice CUSTOMER against
existing Purchase Order upon shipment of the
Product payment due 30 days after receipt of
invoice by CUSTOMER.
WARRANTIES -- GENERAL SUPPLIER provides warranties of good title; no
pending claims; possession of necessary right
and powers; services performed in a competent,
professional manner and in accordance with the
applicable Specifications; each Product and all
Components shall be new and unused at the time
of initial delivery; each Product shall be free
from defects in workmanship, shall be free from
defects in components for which SUPPLIER has
turnkey component management responsibility,
under normal use and operation, and conforms to
the applicable Specification.
WARRANTIES -- EPIDEMIC FAILURE Special Warranty and procedures for Epidemic
Failure, to be added as a part of the formal
manufacturing agreement.
REPAIR SUPPLIER agrees to repair all hardware products
that are returned from the field, subject only
to limitations based on technological
obsolescence or as otherwise agreed.
CUSTOMER agrees that all materials returned
from the field for repair will remain the
property of CUSTOMER and be consigned to
SUPPLIER for repair.
CUSTOMER agrees to order from SUPPLIER spare
parts to support anticipated repair
requirements. CUSTOMER agrees that such parts
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TERMS PROVISIONS
will be owned by CUSTOMER and consigned to
SUPPLIER for the purposes of repair.
SUPPLIER agrees to repair and retest all
returned product in a reasonable time period.
Such time period to be determined and specified
in the formal manufacturing agreement.
COST OF REPAIR SUPPLIER agrees to incur the expense of all
repairs required due to workmanship. With
respect to components for which SUPPLIER has
component management responsibility, SUPPLIER
shall pass through to CUSTOMER the benefit of
all third party warranties on such components;
provided SUPPLIER shall ensure that such
warranties shall extend at least one year from
the date of sale by CUSTOMER of the finished
product containing such component; any
shortfall shall be covered by SUPPLIER
CUSTOMER agrees to incur the expense of all
repairs required due to (i) CUSTOMER design
issue, (ii) component (other than components
for which SUPPLIER has component management
responsibility)failure, (iii) repairs based on
out-of-warranty or Customer satisfaction
(non-defect) reasons (iv) returned product not
assembled by Celestica.
TREATMENT OF USED PARTS SUPPLIER understands the need to segregate new
and returned/remanufactured/used parts streams,
and will ensure that new products shall be
composed only of new parts, while repaired and
spare parts make be composed of a combination
of returned/remanufactured/used parts.
INTELLECTUAL PROPERTY; CUSTOMER and supplier will agree on terms of
CONFIDENTIALITY; intellectual property in the manufacturing
INDEMNIFICATION; agreement.
LIMITATION OF LIABILITY
Standard terms relating to protection of'
confidential information
Standard cross-indemnification provisions
Limitation of liability to direct damages (no
consequential damages), with no limitation for
indemnification for intellectual property
rights infringement by third parties
GENERAL PROVISIONS Standard provisions, including Access to
Facilities, Force Majeure, Exports law
compliance, Disaster Recovery Plan, Country of
Origin, No Assignment by Supplier,
Massachusetts Law and Venue.
11.1 Customer agrees to indemnify, defend and
hold harmless Celestica from and against all
third party claims, costs, damages, fines,
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TERMS PROVISIONS
losses and expenses (including reasonable
attorney's fees) to the extent that such
claims, costs, damages, fines, losses and
expenses result from: (i) death, personal
injury or property damage arising from
Customer's negligent acts or omissions or
willful misconduct; or, (ii) an intellectual
property infringement claim arising from any
specifications, software, information supplied
or any instructions given to Celestica by or on
behalf of the Customer provided that Celestica
gives Customer prompt notice in writing of the
claim, provides reasonable assistance and
cooperation to Customer in defense of the claim
and permits Customer to control the defense of
the claim. Celestica may employ counsel, at its
own expense, to assist in the defense of the
claim. Celestica shall have no authority to
settle any claim on behalf of the Customer.
11.2 Celestica agrees to indemnify, defend and
hold harmless Customer from and against all
third party claims, costs, damages, fines,
losses and expenses (including reasonable
attorney's fees) to the extent that such
claims, costs, damages, fines, losses and
expenses result from: (i) death, personal
injury or property damage arising from
Celestica's negligent acts or omissions or
wilful misconduct; or, (ii) an intellectual
property infringement claim arising from
Celestica proprietary manufacturing processes
used for the Customer provided that Customer
gives Celestica prompt notice in writing of the
claim, provides reasonable assistance and
co-operation to Celestica in defense of the
claim and permits Celestica to control the
defense of the claim. Customer may employ
counsel, at its own expense, to assist in the
defense of the claim. Customer shall have no
authority to settle any claim on behalf of
Celestica.
EXCLUSIONS AND LIMITATION OF LIABILITY
12.1 To the maximum extent permitted by law,
under no circumstances will either party have
any liability whether in contract or for
negligence or otherwise, and except for any
obligation to pay amounts which are properly
due and payable hereunder, and whether related
to any single event or series of connected
events, for any of the following:
(a) any liability in excess of (i) in the
case of damage to or loss of tangible
property, the value of such property; and
(ii) in any event, regarding any other
liability, the total prices paid for the
affected product(s) giving rise to such
liability or $500,000 (whichever is the
lesser);
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TERMS PROVISIONS
(b) any liability for any incidental
indirect or consequential damages or loss
of business, loss of records or data, loss
of use, loss of profits, revenue or
anticipated savings or other economic loss
whether or not a party was informed or was
aware of the possibility of such loss; or
(c) any third party claims, other than
claims arising under Section 11, against
the other party for any loss, damage,
costs or expenses.
12.2 Neither the Customer nor Celestica may
bring an action more than two (2) years after
the cause of action arose. The prevailing party
in a legal action will be reimbursed by the
other party for its expenses, including
reasonable legal fees
By signing below, both parties agree to the
terms of this Agreement, and represent that the
individuals signing below have authority to
bind their respective corporations.
Agreed to:
CELESTICA CORPORATION EGENERA
By: /s/Nathan Kawaye By: /s/James H. Kelly
--------------------------------- ---------------------------------
(Signature) (Signature)
Name: Nathan Kawaye Name: James H. Kelly
Title: Sr. VP Title: VP. Mfg. Egenera
Date: March 12, 2003 Date: March 24, 2003
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TERM SHEET ATTACHMENT A
TERM SHEET EXHIBIT A
Q3 Q3 Q3 Q3 Q3 Q3 Q3
SMTC
Transition p CLS Build p
blade blade c blade s blade spine frame
PART NUMBER 980-000023 980-000023 950-000013 950-000014 950-000017 980-000021 MAYNARD
VOLUMES QUOTED 100 being
jointly
worked
Material $ [**] $ [**] [**] $ [**] $ [**] $ [**]
any components > $[**] [**] [**] $ [**]
any components > $[**]
Total Material $ [**] $ [**] [**] [**] $ [**] [**]
Material mark up (Q3) [**]% $ [**] $ [**] [**] [**] $ [**] [**]
Mark up (Q3) comp >300 [**]% $ [**] $ [**] [**] [**]
MVA $ [**] $ [**] [**] [**] [**]
Mfg Subtotal $ [**] $ [**] [**] [**] $ [**] [**]
SGA $ [**] $ [**] [**] [**] $ [**] [**]
Profit $ [**] $ [**] [**] [**] $ [**] [**]
Total Price $ [**] $ [**] [**] [**] $ [**] [**]
Note. In Q2'03, pricing will be adjusted if required to account for difference
in metal pricing between SMTC and Celestica metal pricing.
NRE
880-11 pca [**] 1 per in 980-23
880-17 pca [**] 1 per in 950-13
880-3 pca [**] 1 per in 950-14
880-21 pca [**] 2 per in 950-13
980-21 system [**] Transition NRE
DL Hourly Rate for Q2 beyond NRE noted above [**] IL Rate Hourly for Q2 beyond NRE noted above [**]
10 DAY TURNS, QTY 10,25,50 Material estimated at [**]% higher
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MVA [**]% higher
5 DAY TURN Premium of [**]% to 10 day turn
COST OF MONEY [**]% Cost of Money is the monthly charge that
can be assessed to Egenera by Celestica for
inventory that does not achieve the turns
assumption built into the pricing model. The
details and mechanisms for charging cost of money
will be detailed in the formal Manufacturing
Services agreement.
NOTE ON COSTED BOMS The cost of some parts were provided by Egenera.
Reconciliation to actual costs will be conducted
and resolved during the quarter. Differences will
be netted and resolved at quarter end.