exv10w33






EXHIBIT
10.33



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 6th 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





	1.	 	DEFINITIONS






	 	a.	 	After Receipt of Order (“ARO”)
	 
	 	 	 	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).
	 
	 	b.	 	Demand
	 
	 	 	 	Shall mean quantities of Assemblies required by Harmonic and communicated to
Plexus via Forecast and/or Harmonic’s Purchase Orders.







 




			
	*	 	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.





Plexus and Harmonic

Rev. Date November 20, 2007

Demand Pull Addendum




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	 	c.	 	Demand Flexibility
	 
	 	 	 	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.
	 
	 	d.	 	Demand Pull
	 
	 	 	 	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
	 
	 	e.	 	Manufacturing Lead-Time
	 
	 	 	 	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).
	 
	 	f.	 	Reorder Point (“ROP”)
	 
	 	 	 	Shall mean the point in time when reached Plexus needs to release a replenishment
order for Components or Sub-Assemblies in a ROQ.
	 
	 	g.	 	Reorder Quantity (“ROQ”)
	 
	 	 	 	Shall mean the minimum or economic order quantity for a Component or Sub-Assembly
	 
	 	h.	 	Safety Stock
	 
	 	 	 	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.
	 
	 	i.	 	Service Level
	 
	 	 	 	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.






	2.	 	FORECASTS AND PURCHASE ORDERS






	a.	 	Forecasts
	 
	 	 	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.
	 
	b.	 	Service Level Modeling
	 
	 	 	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 stipulated in this
Addendum in creating an optimal fulfillment model and associated cost model. If,
after a period of time, the actual Modeling Inputs deviate from what was
originally
modeled, Plexus reserves the right to request that a new optimal fulfillment
model, and corresponding cost model, be implemented.





Plexus and Harmonic

Rev. Date November 20, 2007

Demand Pull Addendum




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	 	c.	 	Purchase Orders
	 
	 	 	 	Harmonic agrees to issue Purchase Orders for an Assembly at least a Manufacturing
Lead-Time in advance of the requested Delivery Date set forth in Harmonic’s
Purchase Order. Plexus will use commercially reasonable efforts to respond to
(CTO) Purchase Orders in writing within 24 hours with either its acceptance or
rejection of the Purchase Order. Any rejection by Plexus of a Purchase Order
shall be accompanied with an explanation of the reasons for the rejection. Plexus
will make reasonable efforts to accommodate all Purchase Orders.
	 
	 	d.	 	Component Procurement
	 
	 	 	 	Unless otherwise agreed by the parties, Plexus will procure all Components based
on two basic procurement models:






(i) Plexus will procure some Components necessary to fulfill Demand at
replenishment lead-time. These Components will be managed on an MRP-push
basis.




(ii) Plexus will procure other Components based on initializing and
maintaining a properly calculated Safety Stock, ROP, and ROQ for those
Components which are to be managed on a replenishment or Demand-pull basis to
achieve the Service Level.




	 	 	 	Components will be selected for these two procurement models based on the written
mutual agreement of Plexus and Harmonic, which shall not be unreasonably withheld
by any party.
	 
	 	e.	 	Manufacture of Assemblies
	 
	 	 	 	Plexus will manufacture Assemblies as needed, to support both the discrete
Harmonic orders, and the Harmonic’s Configuration to Order/Direct Order
Fulfillment model, where Plexus agrees to build and stock levels of
Sub-Assemblies, then configure as required, and ship directly to Harmonic’s end
customer.






	3.	 	DEMAND CHANGES AND CANCELLATION
	 
	 	 	Plexus operates under two models concerning the exercise of Demand Changes and
Cancellations; one for programs with defined Demand Flexibility parameters, and another for
programs with Frozen Periods within the planning horizon.
	 
	 	 	Under Demand Flexibility parameters, Demand changes and cancellations will be handled based
on the agreed level of Demand Flexibility described herein. Any changes that fall within
the agreed ranges will result in no additional liability or any additional costs to
Harmonic, unless explicitly described in writing by Plexus prior to the exercise of the
change or cancellation. Any changes that fall outside of the agreed levels of Demand
Flexibility require Harmonic to pay for any costs incurred by Plexus to exercise the change
or cancellation. All such costs are to be paid per the payment terms in the PSA.
	 
	 	 	From time to time, demand fluctuations outside of the modeling parameters may occur that
result in inventories of Configured Finished Goods Units (CFGU) at Plexus.





Plexus and Harmonic

Rev. Date November 20, 2007

Demand Pull Addendum




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	 	 	For CFGU that age beyond [*] ([*]) days, Harmonic agrees to provide Plexus with a
Non-Cancelable/Non-Deferrable Purchase Order to re-configure the CFGU at Harmonic expense
within thirty (30) days from the date that Harmonic is notified in writing by Plexus.
	 
	 	 	Plexus will make all reasonable efforts to accommodate any increase in Demand by Harmonic.
Plexus will notify Harmonic in writing as soon as practicable of any Components impeding
Harmonic’s requested increase in Demand. Should any additional costs be required to
expedite delivery of Assemblies or Components to meet Harmonic’s increase in Demand, Plexus
will notify Harmonic in writing of the same and, if approved by Harmonic in writing,
Harmonic shall pay Plexus for such additional cost.
	 
	4.	 	DELIVERY
	 
	 	 	The delivery date for an Assembly will be the delivery date set forth in Harmonic’s
Purchase Order accepted in writing by Plexus (the “Delivery Date”). Assemblies will be
shipped to Harmonic’s customers (ie. non-Harmonic facilities) by Plexus Ex Works (Incoterms
2000) Plexus’ plant of manufacture in Penang and/or Nampa. Assemblies will be deemed
delivered upon Plexus’ release of Assemblies to the carrier for shipment. For all
shipments directly to Harmonic, terms in PSA will apply.





B. Inventory Mitigation, Reporting, and Liability





	1.	 	DEFINITIONS






	 	a.	 	Aged Sub-Assemblies
	 
	 	 	 	Shall mean those Assemblies that result from a calculated decrease in required Kan
Ban quantities, due to a decrease in Demand, that have aged in Plexus’ inventory
for more than [*] ([*]) days. All Aged Sub-Assemblies shall be fully usable
Assemblies, and not unusable Assemblies due to rework, debug, etc.






	2.	 	COMPONENT INVENTORY REPORTING, LIABILITY AND COVERAGE






	 	a.	 	Component Liability
	 
	 	 	 	Both parties acknowledge that Harmonic’s maximum liability for a Component under
demand pull is equal to the ROQ plus the Safety Stock plus any Components on order
subject to the ROP.
	 
	 	b.	 	Aged Sub-Assemblies Reporting and Resolution
	 
	 	 	 	From time to time, on its own initiative or upon Harmonic request, Plexus will
provide a written report to Harmonic detailing the level of Aged Sub-Assemblies at
Plexus (the “Aged Sub-Assembly Report”) that support the Configure-to-Order (CTO)
model. Harmonic will respond to Plexus in writing within thirty (30) days of
receipt of the Aged Sub-Assembly Report with any good faith disagreement to it,
detailing with reasonable particularity the nature of any such disagreement.
Harmonic’s failure to respond within such period will represent its acceptance of
the Aged Sub-Assembly Report. Should Harmonic disagree with the Aged Sub-Assembly
Report, Harmonic and Plexus will work in good faith to promptly resolve







 




			
	*	 	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.





Plexus and Harmonic

Rev. Date November 20, 2007

Demand Pull Addendum




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	 	 	 	the disagreement, escalating such disagreement to executive management at the
request of either party. Any undisputed portion of the Aged Sub-Assembly Report
will proceed to resolution as provided immediately below.
	 
	 	 	 	For Aged Sub-Assemblies that age beyond [*] ([*]) days, Plexus reserves the right
to charge Harmonic an inventory management cost of [*] ([*]) per month, for the
period from [*] ([*]) days aged to [*] ([*]) days aged.
	 
	 	 	 	In the event that Aged Sub-Assemblies age beyond [*] days, Harmonic shall issue
Plexus a Non-Cancelable/Non-Deferrable Purchase Order to consume these
Sub-Assemblies within fifteen (15) days.




This Addendum shall supplement and supersede the applicable provisions of the Agreement with
respect to the subject matter herein. All other provisions not modified by this Addendum shall
remain in full force and effect. In the event of any conflict or inconsistency in the definition
or interpretation of any term or provision set forth in this Addendum and the Agreement, such
conflict or inconsistency shall be resolved by giving precedence first to this Addendum.



IN WITNESS WHEREOF, EACH OF THE PARTIES HERETO HAS EXECUTED THIS ADDENDUM, OR HAS CAUSED THIS
ADDENDUM TO BE DULY EXECUTED ON ITS BEHALF, AS OF THE EFFECTIVE DATE SET FORTH ABOVE.




	 	 	 
	HARMONIC INC.

	 	PLEXUS SERVICES CORP
	 
	 	 
	 

	 	 
	(Signature)

	 	(Signature)
	 
	 	 
	 

	 	 
	(Printed Name)

	 	 (Printed Name)
	 
	 	 
	 

	 	 
	(Title)

	 	(Title)








 




			
	*	 	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.





Plexus and Harmonic

Rev. Date November 20, 2007

Demand Pull Addendum







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