[*] Omitted pursuant to a request for confidential treatment
filed separately with the Commission.
MICROSOFT SUPPLY, MANUFACTURING, AND SERVICES
AGREEMENT
This Microsoft Supply, Manufacturing, and Services Agreement
("Agreement") is made and entered into this 28th day of March, 1996
("Effective Date"), by and between Microsoft Corporation ("MS"), a
Washington, USA corporation, and Starpak, Inc. ("Starpak"), a Colorado
corporation.
RECITALS
WHEREAS, MS is a developer, publisher and distributor of various consumer
software products;
WHEREAS, Starpak is a manufacturer and supplier of software product
components; and
WHEREAS, MS and Starpak desire that Starpak serve as one of the eligible
manufacturers and suppliers to MS of Product Components, assemble certain MS
Products, and otherwise provide services as detailed in the Statement of Work.
Now, Therefore, in consideration of the covenants and conditions set forth
below, the adequacy of which is agreed to and hereby acknowledged, the
parties agree as follows:
AGREEMENT
1. DEFINITIONS. The following terms, whenever initially capitalized, shall
have the following meanings for the purposes of this Agreement:
(a) "MANUFACTURING" shall mean the manufacture and supply of Product
Components and assembly of Products as described in the Statement of Work.
(b) "PRODUCT(S)" shall mean such MS product(s), including Product
Components, MS software, including any associated documentation and/or
packaging, that MS may request Starpak to Manufacture pursuant to this
Agreement, by the issuance of a purchase order.
(c) "STATEMENT OF WORK" shall mean the attached Exhibit A, including any
modifications made thereto pursuant to Section 13.
(d) "FACILITY" shall mean the manufacturing facility operated and owned or
leased by Starpak and located at Greeley, Colorado.
(e) "BOM" shall mean the ▇▇▇▇ of materials document provided by MS to
Starpak, which ▇▇▇▇ of materials identifies all materials comprising a given
Product, including but not limited to the associated Product Components
included in such Product. BOMs may be modified from time to time by MS at
its sole discretion.
(f) "PRODUCT COMPONENTS" shall mean the Product CD ROMs, Jewel Case
Component, Disk Set Component, and Assembled Box Component.
(g) "PRODUCT CD ROMS" shall mean the Product CD ROM media either supplied
by MS or produced or procured by Starpak, but shall not include any MS
software contained on the CD ROMs.
(h) "ASSEMBLED BOX COMPONENT" shall mean fully assembled retail packaging,
including without limitation retail [ * ] and all manuals and other
documentation that is to be included with the Product, but excluding the
Product CD ROMs, Jewel Case Component, and Disk Set Component.
(i) "JEWEL CASE COMPONENT" shall mean the fully assembled jewel case
including all documentation and other printed material, such as the front and
back liners but excluding the Product CD ROMs, to be included as an insert in
the jewel case.
(j) "DISK SET COMPONENT" shall mean the fully assembled disk set including
polyvinyl disk baggies and duplicated disks either supplied by MS and those
produced or procured by Starpak, but excluding any MS software contained on
the disk media.
(k) "SHIPPING LOCATION" shall mean the entity to whom MS authorizes
Starpak to ship Products that are Manufactured pursuant to this Agreement.
(l) "MS DELIVERABLES" shall mean and include all MS proprietary material,
including without limitation BOMs, MS specifications, workmanship standards,
code material (including source code), and documentation of any kind or
description and in any form including compact disk, other disks or diskettes,
tape, text or any electronic or other medium supplied by MS or at its
direction for the Manufacture of Products under this Agreement.
(m) "INTELLECTUAL PROPERTY" shall mean any and all trademarks, copyrights,
patents and other proprietary rights comprising or encompassing a given
Product. The term includes the Intellectual Property in all MS Deliverables.
(n) "INVENTORY" includes finished Product units, work-in-process, Product
Components or raw materials pertaining to the Agreement that contains MS
software, trademarks, copyrighted material, logos or other proprietary
material.
(o) "PRICE" OR "PRICES" as used in this Agreement means the amounts to be
paid by MS to Starpak for the manufacture and supply of Product Components
and assembly of Products to be performed by Starpak pursuant to this
Agreement. Prices are set forth on Exhibit B and Exhibit C and are subject
to revision as provided therein.
2. MANUFACTURING AND SERVICES.
(a) GENERAL. Starpak hereby agrees to Manufacture Products, including
without limitation to manufacture and supply Product Components and/or to
assemble Products, at the Facility and pursuant to the terms and conditions
set forth herein, including without limitation in the Statement of Work.
Starpak shall not conduct Manufacturing at any location other than the
Facility without MS's prior written approval, such approval not to be
unreasonably withheld.
(b) INVENTORY. All of the Product Components and final Product Inventory
shall be held exclusively for assembly and distribution to Shipping Locations
as authorized by MS and for no other purpose, use or disposition, except as
may be directed by MS. Starpak shall cause the Inventory to be free and
clear of any and all liens, encumbrances and other claims of its creditors.
(c) MINIMUM PRODUCTION CAPACITY. Except as provided in the Statement of
Work, Starpak covenants and agrees to maintain at all times during the term
of this Agreement the capacity to Manufacture at the Facility a minimum of
400,000 finished Product units per week (defined as 12:01 AM Saturday through
12:00 PM Friday), at a rate of 80,000 units per day. MS may modify a
specific weekly build forecast with [ * ] notice by the issuance of a
Purchase Order pursuant to Exhibit B, or as the parties may otherwise agree.
(d) CUSTOMER SERVICE REQUIREMENT. Starpak agrees to conduct Manufacturing
in accordance with the reporting/communication requirements identified in the
Statement of Work.
-2-
(e) NON-EXCLUSIVITY. This Agreement is not an exclusive agreement. While
it is MS' intent for Starpak to be their primary provider of finished Product
for [ * ], at all times MS shall have the right to appoint
third parties to perform Manufacturing services for MS.
(f) NON-CONFORMING PRODUCT. Starpak shall promptly replace and deliver,
within two weeks from notification, at no charge to MS or its customers, any
non-conforming Product if any shipment of Product, or any portion of it, to
any Shipping Location fails to meet the quality standards specified in the
Statement of Work. In the event MS determines that a Product recall is
necessary due to a breach of Starpak's warranties hereunder, or due to a
manufacturing defect, Starpak shall cooperate with MS in all respects to
conduct such recall at Starpak's expense; provided that if Starpak has given
prior notice of the possible defect and recommended against shipment and the
Product is nonetheless shipped at MS's direction, or if the recall is
necessary because of a MS error, the recall on account of that defect shall
be at MS's expense, but Starpak shall still cooperate with it, and in such a
case, MS shall reimburse Starpak for the costs of producing and distributing
the replacement Products.
(g)
[ * ]
[ * ]
[ * ]
[ * ]
3. PRICE AND PAYMENT.
(a) GENERAL. MS agrees that Starpak shall be compensated for the
manufacture and supply of Product Components and assembly of Products
provided hereunder pursuant to the Price and Payment terms and conditions set
forth in Exhibit B and Exhibit C attached hereto. All payments made by MS to
Starpak shall be in United States Dollars.
(b) QUANTITY. The quantity of Product to be used in calculating MS's
obligation to pay Starpak with regard to any particular Purchase Order shall
be the lesser of (1) the number of Product units received at the Shipping
Location in response to such Purchase Order, or (2) the quantity indicated on
the original Purchase Order.
(c) TAXES. In the event income taxes are required to be withheld by MS on
payments to Starpak required hereunder, MS may deduct such income taxes from
the amounts owed and pay them to the appropriate taxing authority. MS shall
in turn promptly secure and deliver to Starpak an official receipt for any
income taxes withheld. MS agrees to pay all applicable value added, sales
and use taxes levied on it by a duly constituted and authorized taxing
authority on the Manufacturing. To the extent required by any such taxing
authority, Starpak may collect such taxes, if any, from MS, and, in such
case, shall remit to MS official tax receipts indicating that such taxes have
been collected by Starpak. Starpak agrees to take such steps as are
requested by MS to minimize such taxes in accordance with all relevant laws
and to cooperate with and assist MS, in challenging the validity of any taxes
applicable to the Manufacturing and collected from MS by Starpak or otherwise
paid by MS. Except where expressly agreed to, in writing, by MS pursuant to
Exhibit B and Exhibit C, MS shall not pay any taxes other than those
described above, including, without limitation (a) taxes on or with respect
to or measured by any net or gross income or receipts of Starpak, (b) any
franchise taxes, taxes on doing business, gross receipts taxes or capital
stock taxes (including any minimum taxes and taxes measured by any item of
tax preference), (c) any taxes imposed or assessed for work performed after
the date upon which this Agreement is terminated, (d) taxes based upon or
imposed with reference to Starpak's real and personal property ownership,
and/or (e) any taxes similar to or in the nature of those taxes described in
(a), (b), (c), or (d) above.
4. LICENSE GRANT.
(a) GENERAL. In order to allow Starpak to perform under the terms of this
Agreement, MS grants Starpak the following non-exclusive, non-transferable,
personal, limited license rights to the Intellectual Property for each
Product:
-3-
(1) to procure, reproduce and/or Manufacture the Product Components,
for sale to Microsoft, based upon the applicable BOM(s) and forecasts
delivered by MS pursuant to the Statement of Work and to sublicense such
rights to third party suppliers in accordance with the requirements set forth
in Section 5 below;
(2) to reproduce any MS software and documentation specified in the
BOM(s) as necessary to build the finished Product;
(3) to assemble the Product Components into finished Product in
accordance with the written instructions and BOM(s) delivered by MS; and
(4) to distribute the finished Product to Shipping Locations, only as
may be designated and specified by MS from time to time via the issuance of a
Purchase Order, in accordance with the Statement of Work.
(b) LICENSE RESTRICTIONS. Starpak shall not (i) in any way modify any
Product or Intellectual Property without obtaining, in advance, the express
written permission of MS; (ii) reproduce, manufacture, or distribute any
Product or Intellectual Property except as may be designated and specified by
MS, pursuant to the terms of this Agreement; or (iii) reverse engineer,
decompile, or disassemble any Product or Intellectual Property.
Notwithstanding the foregoing, Starpak may physically disassemble those
Product Components that do not consist of software or hardware solely for the
purpose improving Product assembly and/or quality. MS or its suppliers shall
at all times own the Product software and all Intellectual Property,
including all copies thereof that Starpak is authorized to make under this
Agreement. All rights not expressly granted herein, without limitation, are
reserved by, and shall exclusively inure to the benefit of, MS.
5. SUBCONTRACTING.
(a) TO THIRD PARTIES. Starpak shall not subcontract any of its rights or
obligations under this Agreement except as follows:
(1) OTHER THIRD PARTIES. Except as otherwise provided in the
Statement of Work, Starpak may purchase Product Components from and
sublicense the applicable rights granted hereunder to third parties that (i)
are included on MS's current Approved Supplier List as described in the
Statement of Work; or (ii) have been pre-approved by MS as Starpak suppliers
pursuant to the Statement of Work and, upon request by MS, agree in writing
to undertake the same obligations and/or abide by the same restrictions to
which Starpak is subject under Sections 4(b), 5(b), 6(a)(5), 8(a), 8(b) 9(b),
11(a), 11(b) and 11(c) of this Agreement, as well as any relevant quality
provisions or manufacturing restrictions contained in the Statement of Work;
provided, however, that as to subcontracting relationships existing prior to
execution of this Agreement, Starpak shall use its best efforts, upon request
by MS, to obtain the subcontractor's written agreement to be bound thereby.
Starpak may also subcontract portions of the Manufacturing as agreed to by
the parties pursuant to the Statement of Work. The responsibility and
liability of Starpak under this Agreement is not diminished on account of any
subcontract; it shall be fully responsible for the subcontractor's
performance and work.
(2) RIGHTS PASS THROUGH. It is the intention of this Section that
Starpak be able to subcontract to third parties provided it fully maintains
quality standards and protects MS's property rights in MS's Intellectual
Property and MS Deliverables. Starpak shall make MS, therefore, a third
party beneficiary of any subcontracting agreement entered into by Starpak
pursuant to this Section 5.
-4-
(b) EXPORT RESTRICTIONS. Starpak hereby agrees that in subcontracting
portions of the Manufacturing to third parties pursuant to Section 5(a)
above, Starpak shall not directly or indirectly export or transmit (i) any
Product Component, Product and/or technical data or (ii) any product (or any
part thereof), process, or service that is the direct product of a Product,
to (a) any countries that are subject to U.S. export restrictions (including
as of the Effective Date, but not limited to, Cuba, the Federal Republic of
Yugoslavia (Serbia, Montenegro, UN Protected Areas, and areas of the Republic
of Bosnia & Herzegovina under the control of Bosnian Serb forces), Iran,
Iraq, Libya, North Korea, and Syria); (b) any end-user whom they know or have
reason to know will utilize them in the design, development or production of
nuclear, chemical or biological weapons; or (c) any other country to which
such export or transmission is restricted by the export control laws and
regulations of the United States, and any amendments thereof, without prior
written consent, if required, of the Bureau of Export Administration of the
U.S. Department of Commerce, or such other governmental entity as may have
jurisdiction over such export or transactions.
6. REPRESENTATIONS & WARRANTIES.
(a) BY STARPAK. Starpak represents and warrants to MS as follows:
(1) Starpak has full and exclusive right and power to enter into and
perform according to the terms of this Agreement;
(2) the Manufacturing, including any portion done by any
subcontractor as contemplated in Section 5, will strictly comply with all
applicable laws, as well as with the terms and conditions of this Agreement,
including without limitation the Statement of Work;
(3) Starpak has and will have, at all times relevant to this
Agreement, sufficient proprietary rights to conduct the Manufacturing
pursuant to this Agreement, and none of the Manufacturing processes will
infringe MS' or any third party's proprietary rights;
(4) Starpak will, at all times relevant to this Agreement, keep any
and all license agreements with third parties relevant to the Manufacturing
in force and in good standing; and
(5) the Products (including the raw materials, reproduction quality,
and finished Product quality) will satisfy the quality workmanship standards
set forth herein.
(b) BY MS. MS hereby represents and warrants to Starpak as follows:
(1) MS has the full and exclusive right and power to enter into and
perform according to the terms of this Agreement;
(2) MS has and will have, at all relevant times, sufficient rights in
the Products to grant Starpak the rights granted in this Agreement;
(3) that at all times relevant to this Agreement, MS will keep any
and all license agreements with third parties relevant to the reproduction,
manufacture, and/or distribution of the Products in force and in good
standing; and
(4) that any and all software provided by MS to Starpak for
incorporation into the Products will be exportable into any countries where
MS requests it be delivered.
(c) DISCLAIMER OF WARRANTY. THE WARRANTIES SET FORTH IN SECTIONS 6(a)
AND 6(b) ABOVE ARE THE ONLY WARRANTIES MADE BY THE PARTIES AND ARE IN LIEU OF
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, OR STATUTORY, INCLUDING BUT NOT
LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO THE PRODUCTS.
-5-
7. INDEMNIFICATION.
(a) OBLIGATION TO INDEMNIFY. The parties agree to indemnify, defend, and
hold each other and their successors, officers, directors, agents and
employees harmless from any and all causes of action, claims, demands,
liabilities, penalties, suits, costs, or expenses (including reasonable
attorneys' fees and costs) and damages, of any kind or nature, arising out of
or in connection with any claim (i) that, if true, would constitute a breach
of their obligations, warranties, or representations contained in this
Agreement; or (ii) for personal injury, death, or property damage to the
extent that such claim is based upon the strict liability, negligence, gross
negligence, intentional act, or other fault of the indemnifying party or its
employees.
(b) INDEMNIFICATION PROCESS.
(1) If any cause of action, claim, or demand shall be brought against
any party (the "Claimant") in respect to which indemnity is being sought from
another party (the "Indemnifying Party") pursuant to the provisions of this
Section 7 ("Claim"), the Claimant shall promptly notify the Indemnifying
Party of the Claim in writing, specifying the nature of the Claim and the
total monetary amount sought, if known, or other such relief as is sought
therein.
(2) The Claimant shall have the right, in its sole discretion, to do
one or more of the following: (i) permit the Indemnifying Party to assume the
defense of the Claim; or (ii) defend such Claim itself using counsel of its
own choice, with the attorneys fees and costs associated with that defense to
be paid by the Indemnifying Party pursuant to its indemnity and defense
obligations as set forth in paragraph 7(b)(1) above.
(3) In the event the Claimant elects to defend a Claim itself, the
Indemnifying Party shall cooperate with the Claimant at the Indemnifying
Party's expense and in all reasonable respects in connection with that
defense.
(4) In the event that the Claimant elects to have the Indemnifying
Party assume the defense of a Claim, the Claimant shall (i) have the right to
approve the Indemnifying Party's choice of counsel, which approval shall not
unreasonably be withheld; (ii) cooperate with the Indemnifying Party, at the
Indemnifying Party's expense, in all reasonable respects in connection with
that defense; and (iii) have the right to employ separate counsel of its own
choosing, at its own expense, to monitor and participate in the defense to
the extent that counsel deems appropriate, in which event the Indemnifying
Party agrees to cooperate in keeping such counsel fully informed and involved
in the proceedings. Nothing in this paragraph shall in any way limit the
Indemnifying Party's obligations of indemnification and defense as set forth
in this Section 7.
(5) The Indemnifying Party shall reimburse Claimant upon demand for
any payments made or loss suffered by it at any time after the date hereof
arising out of or in any way connected with a Claim, regardless of whether
that amount is based upon the judgment of any court of competent jurisdiction
or is made pursuant to a bona fide compromise or settlement of a Claim. No
final compromise or settlement of a Claim shall be entered into by the
Claimant without the Indemnifying Party's written consent, which consent
shall not be unreasonably withheld.
-6-
8. CONFIDENTIALITY.
(a) GENERAL. Each party expressly undertakes to retain in confidence the
terms of this Agreement and the Agreement itself, along with all information
and know-how transmitted to or otherwise received by each party that the
disclosing party has identified as being proprietary and/or Confidential or
that, by the nature of the circumstances surrounding the disclosure, ought in
good faith to be treated as proprietary and/or confidential (collectively,
"Confidential Information"), and will make no use of such Confidential
Information except under the terms and during the existence of this
Agreement. Notwithstanding the foregoing, any party may disclose the terms
of this Agreement to its outside legal and financial advisors with whom such
party has a confidential relationship and who are obligated to retain such
information in confidence, in the ordinary course of business. In addition,
no party shall have an obligation to maintain the confidentiality of
information that (i) it received rightfully from an unaffiliated third party
prior to its receipt from the disclosing party; (ii) the disclosing party has
disclosed to an unaffiliated third party without any obligation to maintain
such information in confidence; or (iii) is independently developed by the
obligated party. Further, each party may disclose Confidential Information
as required by governmental or judicial order, provided such party gives the
disclosing party prompt written notice prior to such disclosure, and complies
with any protective order (or equivalent) imposed on such disclosure, and
provides the disclosing party the option of either seeking a protective order
or having its Confidential Information be subject to the same protective
orders as may apply to information of the party subject to the governmental
or judicial order. No party shall disclose, disseminate or distribute any
other party's Confidential Information to any third party without the other's
prior written permission. Each party's obligation under this Section 8 shall
extend to the earlier of such time as the information protected hereby is in
the public domain through no fault of the obligated party or five (5) years
following termination or expiration of this Agreement. Each party shall take
all reasonable steps to ensure that their employees comply with this Section 8.
(b) FACILITY TOURS. MS acknowledges that customers and potential
customers of Starpak may tour the Facility. MS agrees that any casual
viewing during such a tour of the Manufacturing of Products that MS has
already commercially released does not violate Section 8(a) above.
[ * ]
[ * ]
9. WORKERS' COMPENSATION AND RISK OF LOSS.
(a) WORKERS' COMPENSATION. Starpak shall at all times comply fully with
all applicable workers' compensation, occupational disease, and occupational
health and safety laws, statutes, and regulations. Such workers'
compensation and occupational disease requirements shall include coverage for
all employees of Starpak suffering bodily injury (including death) by
accident or disease, which arises out of or in connection with the
performance of this Agreement by Starpak. Satisfaction of these requirements
shall include, but shall not be limited to:
(1) full participation in any required governmental occupational
injury and/or disease insurance program, to the extent participation in such
program is mandatory in any jurisdiction, and
(2) purchase of workers' compensation and occupational disease
insurance providing benefits to employees in full compliance with all
applicable laws, statutes, and regulations (but only to the extent such
coverage is not provided under a mandatory government program as in (1)
above), or
(3) maintenance of a legally permitted and governmentally approved
program of self insurance for workers' compensation and occupational disease.
Except to the extent prohibited by law, Starpaks' program(s) for compliance
with workers' compensation and occupational disease laws, statutes, and
regulations in (1), (2), or (3) above shall provide for a full waiver of
rights of subrogation against MS, its subsidiaries, officers, and employees.
-7-
(b) RISK OF LOSS. Starpak shall assume risk of loss or damage to
materials and goods which are the subject of this Agreement, including but
not limited to Product Components, the associated raw materials, and finished
goods. Starpak's risk for incoming materials and components shall commence
either at the time of shipment from a supplier location or upon delivery of
the materials or components to Starpak's facility, depending on the risk of
loss terms contained in the supply agreement. Starpak's responsibility for
risk of loss shall continue through manufacture, assembly, storage, and, when
Starpak selects the delivery method, shipment of finished goods. Where MS
selects the delivery method for finished goods, Starpak's responsibility for
risk of loss or damage shall terminate upon shipment of the finished goods,
although Starpak shall remain responsible for adequately packing the finished
goods and shipping them pursuant to MS's directions. When Starpak selects
the delivery method, loss or damage with regard to a shipment of finished
goods shall be determined when the variance between the quantity actually
delivered to the Shipping Location and the quantity loaded onto a delivery
truck for shipment, as reflected on the ▇▇▇▇ of lading, exceeds [ * ] of the
quantity loaded onto the delivery truck. In the event of:
(1) damage to any of the materials or goods for which Starpak assumes
risk of loss, Starpak or its insurers agree, except as expressly provided in
this Section 9(b), to indemnify MS, by its direct payment or through
insurance provided at its expense, for [ * ] of MS' published estimated retail
price for Products and the current replacement cost for other property; and
(2) notwithstanding Section 9(b)(1) above, damage or loss to any
finished goods for which Starpak assumes risk of loss where such damage or
loss arises out of Starpak's negligence, gross negligence, or willful
misconduct, Starpak or its insurers agree to indemnify MS, by its direct
payment or through insurance provided at its expense, for the full amount of
MS' published estimated retail price for the relevant Products.
(c) INSURANCE. To assure adequate resources to respond to losses and
damage for which Starpak is responsible under Section 9(b), Starpak shall
maintain an "All Risk" property damage insurance policy covering such loss
and damage. Such policy shall be written with an insurer and on policy form
reasonably acceptable to MS and shall provide limits adequate to cover the
total value of products and property at risk. Starpak shall cause its
insurer to endorse the policy as follows:
(1) MS to be additional insured and direct loss payee to the extent
of MS' interest in products or other property,
(2) coverage provided by the policy shall be primary to and not
contributory with coverage maintained by MS,
(3) rights of subrogation against MS are to be waived,
(4) such policy may not be canceled or materially altered to the
detriment of MS without [ * ] days advance notice to MS.
Upon request, Starpak shall provide MS with a current certificate of
insurance and certified copies of policy endorsements evidencing compliance
with the requirements set forth in this section.
-8-
10. TERM AND TERMINATION.
(a) TERM. The initial term of this Agreement shall begin on the Effective
Date and shall expire on June 30, 1998 ("Initial Term"). At the end of the
Initial Term and at the end of each Renewal Term, this Agreement shall
automatically renew for an additional period of one (1) year each (the
"Renewal Term"), provided, however, that not less than ninety (90) days prior
to the expiration of the Initial Term or of the then-current Renewal Term,
the parties shall have mutually agreed in good faith to any adjustment in the
rates payable by MS to Starpak for the Manufacturing (as described in Section
3). Any adjustments agreed upon by the parties to the rates payable shall
be effective as of the first day of each Renewal Term. If the parties are
not able to agree upon such adjustments in accordance with the foregoing
provision, this Agreement shall automatically expire at the end of the
Initial Term or the then-current Renewal Term.
(b) TERMINATION. MS may terminate this Agreement: (i) immediately upon
notice if Starpak fails to strictly comply with Section 4 or Section 8 of
this Agreement, or (ii) without cause with ninety (90) days notice in
writing. Starpak may terminate this agreement without cause with ninety days
notice in writing. The rights and remedies provided herein to the parties
shall not be exclusive and are in addition to any other rights and remedies
provided by law. In the event a non-defaulting party in its discretion
elects not to terminate this Agreement, such election shall not be a waiver
of any claims of that party for a default(s). Further, the non-defaulting
party may elect to leave this Agreement in full force and effect and to
institute legal action against the defaulting party for specific performance
and/or damages suffered by such party as a result of the default(s).
(c) OBLIGATIONS UPON TERMINATION/EXPIRATION OF THIS AGREEMENT. Within
[ * ] days after termination or expiration of this Agreement, Starpak
shall do all of the following:
(i) deliver to MS any finished Product built against a
MS Purchase Order, but not yet delivered, at the
prices set forth herein. Starpak shall destroy all
other finished Product and shall, upon request of MS,
issue a letter certifying that such destruction has
taken place.
(ii) Starpak shall, at MS' request, either deliver to
MS or destroy any other unused Inventory (excluding
finished Product), as designated by MS. MS' payment
obligation for such unused Inventory shall be in
accordance with the Price terms of this Agreement.
(iii) Starpak shall, at MS' request, provide MS the
opportunity to purchase any other Product Components
owned by Starpak (excluding unused Inventory) at the
prices set forth herein.
(iv) Starpak immediately shall deliver to MS any MS
Deliverables not covered by the foregoing. Starpak
shall not retain any copy or original of any MS
Deliverable in any way whatsoever.
Starpak shall work with MS to terminate the Manufacturing in an orderly
manner in the event of the termination of this Agreement. Use of
Intellectual Property in any manner by Starpak after expiration or
termination of this Agreement for any reason, whether or not incorporated in
Inventory, shall be deemed to be in violation of MS's Intellectual Property
rights and shall entitle MS to have all remedies provided by law or equity
(including injunctive relief); provided, however, this does not preclude
Starpak from continuing to use MS Products properly acquired outside of this
Agreement in accordance with the applicable license.
(d) SURVIVAL. Sections 6, 7, 8, 10 and 11 shall survive termination or
expiration of this Agreement.
11. RECORD KEEPING & REVIEW REQUIREMENTS.
(a) RECORD KEEPING REQUIREMENTS. During the term of this Agreement,
Starpak agrees to keep all usual and proper production and shipment records
and books of account and all usual and proper entries relating to Starpak's
performance of this Agreement for a minimum period of [ * ] from the
date they are created. Such records, books of account, and entries shall be
kept in accordance with generally accepted accounting principles.
-9-
(b) DOCUMENTATION. During the term of this agreement, Starpak agrees to
provide MS with any and all information that MS has determined necessary for
tax compliance and statutory reporting purposes. Unless MS indicates
otherwise, Starpak shall provide such information in an electronic format, at
an agreed upon quarterly deadline. MS shall specify the data requirements
and make every reasonable effort to assist Starpak in designing the report
format. All information should be based on the MS fiscal year-to-date basis
(beginning on July 1).
(c) RECORD REVIEW
(1) RELEVANT RECORDS. Upon reasonable notice, MS may cause a review
of all of Starpak's books and records relevant to this agreement, including
without limitation copies of shipping and production records to support
invoices and copies of third party invoices to support price adjustments (as
may be mutually agreed upon) based on changes in the cost of third party
materials and services (e.g., paper, media, ink, packaging materials, postage
and freight).
(2) REVIEW PROCESS. Any record review conducted pursuant to this
Section 11 (b) shall be made at Starpak's office or such other reasonable
location as MS may request. In no event shall a record review be conducted
more than once quarterly, unless the immediately preceding record review
disclosed a material discrepancy. Notwithstanding the foregoing, in the
event MS has a good faith belief that one or more statements issued by
Starpak is inaccurate, incomplete, or incorrect, MS may cause a record review
to be conducted at any time. If accounting discrepancies in statements
issued by Starpak are disclosed as a result of a record review, Starpak
agrees to implement and or require outside contractors to implement
agreed-upon corrective action. Any such record review shall be paid for by
MS unless Material discrepancies are disclosed. "Material" shall mean the
[ *
] for which Starpak has assumed risk of loss under Section
9(b)(2) that are shipped by Starpak to Shipping Locations as reported by
Starpak to MS within the audit period. If Material discrepancies are
disclosed, Starpak agrees to pay MS for the costs associated with the record
review. Nothing herein shall preclude MS from exercising any other rights or
remedies it has under law or other provisions of this Agreement.
(d) FACILITY INSPECTIONS. MS may cause an inspection to be made, with at
least [ * ] prior notice, of the Facility to verify that Starpak
is providing Manufacturing in compliance with the terms of this Agreement.
Any inspection conducted pursuant to this Section 11(c) shall be conducted
during regular business hours at the Facility. Starpak agrees to provide
MS's designated inspection team access to relevant records and the Facility.
Starpak may designate a representative to accompany the inspector or
inspectors, and it may reasonably restrict access from specific areas
containing confidential information of Starpak or its other customers. If
material discrepancies from the provisions of this Agreement are disclosed,
including without limitation Material discrepancies as defined in Section
11(b), Starpak agrees to implement agreed-upon corrective action. If
Material discrepancies are disclosed, Starpak agrees to pay MS for the costs
associated with the facility inspection. Nothing herein shall preclude MS
from exercising any other rights or remedies it has under law or other
provisions of this Agreement.
(e) UNACCOUNTED PRODUCT. Starpak shall be liable for any Unaccounted
Product discrepancies pursuant to Section 9(b) above.
(f) CONFIDENTIALITY. Notwithstanding the foregoing, Starpak may edit
their books and records to protect confidential information of Starpak that
is unrelated to the subject of a MS record review, or to protect confidential
information of the customers of Starpak.
-10-
12. NOTICES/PRINCIPAL CONTACTS.
All notices, authorizations, and requests in connection with this
Agreement shall be deemed given on the day they are sent by air express
courier, charges prepaid; and addressed as follows:
STARPAK: Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇ ▇▇▇▇ ▇▇.
------------------------------
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
------------------------------
Fax: ▇▇▇-▇▇▇-▇▇▇▇
------------------------------
With a Copy to: Attn.: ▇▇▇▇▇ ▇▇▇
------------------------------
▇▇▇ ▇▇▇▇ ▇▇.
------------------------------
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
------------------------------
Fax: ▇▇▇-▇▇▇-▇▇▇▇
------------------------------
MS: Attn.:
------------------------------
------------------------------
------------------------------
Telephone:
------------------------------
Fax:
------------------------------
With a Copy to: Attn.: J.▇▇▇▇▇ ▇▇▇▇▇▇ or his named
successor Law & Corporate Affairs
Microsoft Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
------------------------------
Fax: ▇▇▇-▇▇▇-▇▇▇▇
------------------------------
or such other person or address as each party, respectively, so designates by
written notice to the other parties.
13. ENTIRE AGREEMENT/MODIFICATIONS.
(a) ENTIRE AGREEMENT. This Agreement, including all exhibits hereto,
constitute the entire agreement between Starpak and MS with regard to the
subject matter hereof and supercedes all prior and contemporaneous
communications.
-11-
(b) STATEMENT OF WORK. The Statement of Work may be modified as follows:
each modification must be approved by MS and Starpak, and such approval must
be documented with a confirming e-mail or other written communication between
these two parties. In addition, MS shall prepare on a [ * ] basis an
updated version of the Statement of Work incorporating all modifications made
since the prior update and clearly setting forth the "Date of Revision" on
the front page. MS shall circulate each such update to Starpak. The most
current revised version of the Statement of Work that has been circulated in
this manner to the parties, together with subsequent modifications documented
pursuant to this Section 13(b) shall constitute the Statement of Work for the
purposes of this Agreement. Starpak shall maintain and make available to MS
upon request copies of all of its documentation regarding modifications to
the Statement of Work. For purposes of this Agreement, references to
Statement of Work includes any agreed modification even if prior to the
quarterly incorporation of such changes.
(c) OTHER. Except as provided in this Section 13, the provisions of this
Agreement may be modified only by written instrument signed by MS and Starpak.
14. GENERAL.
(a) PROHIBITION AGAINST ASSIGNMENT. Starpak may not assign its rights or
obligations under this Agreement (by actual assignment or by operation of
law, including without limitation through a merger, consolidation, exchange
of shares, or sale or other disposition of assets, including disposition on
dissolution), without the prior written consent of MS, which consent shall
not be unreasonably withheld.
(b) CONTROLLING LAW. This Agreement shall be construed and controlled by
the laws of the State of Washington, and Starpak consents to jurisdiction and
venue in the state and federal courts sitting in the State of Washington.
Process may be served on any party in the manner set forth in Section 12 for
the delivery of notices or by such other method as is authorized by
applicable law or court rule.
(c) NO PARTNERSHIP/JOINT VENTURE/AGENCY/FRANCHISE. This Agreement shall
not be construed as creating a partnership, joint venture or agency
relationship or as granting a franchise.
(d) SEVERABILITY. If any provision of this Agreement shall be held by a
court of competent jurisdiction to be illegal, invalid or unenforceable, the
remaining provisions shall remain in full force and effect.
(e) ATTORNEYS' FEES. If any party employs attorneys to enforce any
rights arising out of or relating to Agreement, the prevailing party shall be
entitled to recover its reasonable attorneys' fees, costs and other expenses.
(f) WAIVER. No waiver of any breach of any provision of this Agreement
shall constitute a waiver of any prior, concurrent or subsequent breach of
the same or any other provisions hereof, and no waiver shall be effective
unless made in writing and signed by an authorized representative of the
waiving party.
(g) SECTION HEADINGS. The Section headings used in this Agreement are
intended for convenience only and shall not be deemed to supersede or modify
any provisions.
(h) GOVERNMENTAL APPROVALS. Each party shall, at its own expense, obtain
and arrange for the maintenance in full force and effect of any and all
governmental approvals, consents, licenses, authorizations, declarations,
filings, and registrations as may be necessary or advisable for the
performance of all of the terms and conditions of this Agreement.
(i) FORCE MAJEURE. Except as expressly provided herein, no delay,
failure, or default in performance of any obligation of any party hereunder
shall constitute a breach of this Agreement to the extent caused by force
majeure. In the event of a force majeure that makes continued performance by
any party under this Agreement unfeasible, all parties shall have a right to
terminate upon [ * ] written notice.
-12-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above. All signed copies of this Agreement shall be deemed
originals.
MICROSOFT CORPORATION STARPAK, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------- -----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------ ----------------------------------
(Print Name) (Print Name)
VP Operations President/CEO
------------------------------------ ----------------------------------
Title Title
8/14/96 August 19, 1996
------------------------------------ ----------------------------------
Date Date
-13-
EXHIBIT A
STATEMENT OF WORK
A-1
EXHIBIT A
STATEMENT OF WORK
1 GENERAL
1.1 PURPOSE AND REQUIREMENT SCOPE
This document describes the requirements that Starpak must meet
as a supplier, manufacturer and service provider to MS. The
general requirements under this Agreement are:
1.1.1 Source and procure raw materials in accordance with MS
specifications.
1.1.2 Build Product Components in accordance with MS
specifications in the quantities ordered by MS
pursuant to a Purchase Order.
1.1.3 Assemble finished package Product in accordance with
MS Specifications in the quantities ordered by MS
pursuant to a Purchase Order, and deliver finished
Product to [ * ] or
other Shipping Location specified by MS on or before the
required delivery date.
1.1.4 Provide information regarding production and delivery
as required.
1.2 MEETINGS AND REVIEWS
Starpak will meet with designated MS team members at the Facility
on a [ * ] basis through 12/96 and AT LEAST [ * ] thereafter.
These meetings will include a [ * ] contractor performance
review, pricing reviews, Continuous Improvement Projects, Process
Improvement Projects, Management Status Reviews, Cost Reduction
Initiatives and other operational areas and issues.
2 SCOPE OF BUSINESS
2.1 It is MS' intent for Starpak to be it's primary supplier of finished
Product for [ * ] [ * ], but at all times MS
shall have the right to appoint third parties to perform
Manufacturing for MS.
2.2 Notwithstanding Section 2 of the Agreement, Starpak is not
obligated to maintain the 400,000 unit/week capacity beyond [ * ]
weeks from the current build period when the [ * ] week rolling
forecast described in Section 3 below shows no production
requirements for the last [ * ] weeks of the forecast.
3 FORECASTS
3.1 [ * ] WEEK ROLLING FORECAST
MS will provide a [ * ] week rolling forecast for all Products
anticipated to be built by Starpak. The primary purpose of this
forecast is for Starpak to use it for planning and procuring raw
materials. MS may change the forecast up to the issuance of a P.O.
pursuant to Exhibits B and C of the Agreement (i.e. [ * ]
days before planned production) with no penalty or responsibility
for any raw materials, Product Components, or Product
acquired/built to such forecast.
3.2 FOLLOWING THE ISSUANCE OF A P.O.
Once MS has issued a P.O., MS may change the build requirements
corresponding to that P.O., but raw materials procured by Starpak
to fullfill such P.O. that are left unused will be the
responsibility of MS, and Starpak may charge MS for the storage of
any such unused raw materials remaining in Starpak's warehouse
[ * ] days after fullfillment of the P.O. MS will reimburse
Starpak for the cost of such unused raw materials if they remain
unused.
4 PURCHASE ORDER PROCEDURES
4.1 During the term of this Agreement, MS will issue [ * ] Purchase
Orders (P.O. s) for Product Components and/or finished Products to
Starpak on each [ * ]. Each P.O. so issued shall
require delivery of the Products so ordered within [ * ] of
the P.O. date. The Purchase Order will indicate, but may not be
limited to: the SKU, quantity, price, required delivery date and
Shipping Location for all planned production during that particular
week. MS will prioritize the Products on the P.O. so Starpak will
be able to build more urgent requirements first, where possible or
MS may designate actual build and delivery dates for specific
Products. The Purchase Order will officially authorize Starpak to
manufacture Product Components, assemble finished Product and ship
Products.
5 DELIVERY TO SHIPPING LOCATION
5.1 When Product is shipped to the [ *
] [ *
], Starpak will directly coordinate all deliveries of
finished goods with that location as described below Shipments to
other MS designated Shipping Location(s) may also require similar
delivery coordination.
5.1.1 When the [ * ]
is the Shipping Location, Starpak must obtain a delivery
appointment and provide an Advanced Shipment Notification
by fax or EDI to [ * ] showing SKU, quantity, PO
number, carrier, Pro number and delivery date before the
shipment is tendered to a carrier. Receiving discrepancies
will be reported by [ * ] to Starpak within [ * ]
of receipt.
5.2 The specified mode of transportation to Shipping Location will be
[ * ] [ * ] If Starpak finds that service superior to the
specified mode of transportation is required to meet its delivery
commitments to MS, and the need for that service is through no
fault of MS, Starpak will pay for the incremental cost of such
services. Starpak will attempt to make delivery of Product where
MS has designated the build and ship date using the specified
mode of transportation. If this is not possible, Starpak
will obtain approval from MS to use more costly modes of
transportation to meet delivery requirements.
5.3 Starpak may select its own carrier, upon approval of MS, [ * ]
[ * ]
Otherwise a MS designated carrier must be used. In any case,
freight will be paid by MS through [ * ]
[ * ]
[ * ]
[ * ]
Microsoft RFP Section 2 2
6 BASIC PROCUREMENT
6.1 Starpak will be responsible for procuring almost all raw materials
for manufacturing and assembly. [ *
]
6.2 Raw materials procured from suppliers on the MS Approved Supplier
List meet MS specifications. Raw materials that Starpak wishes to
procure from other sources are subject to audit at Starpak's
facility for adherence to the MS Quality Workmanship Standards.
7 SUBCONTRACTING AND ALTERNATIVE SITES
7.1 SUBCONTRACTING TO OTHER COMPANIES
Any or all of Starpak's production may be sub-contracted to others,
as long as the subcontractors used are approved in writing by MS
(as set forth in Section 5(a)(1) of the Agreement) and conform to
MS specifications for production of finished packaged Product.
7.2 ALTERNATIVE ASSEMBLY/DUPLICATION SITES
Starpak shall notify MS in writing and receive MS documented
approval before using any additional Starpak sites or subcontract
manufacturing facilities, other than the Facility.
8 PRINTING
8.1 PRINT AND/OR PROCURE TO FORECAST
Starpak must be capable of providing printed materials per MS
provided specifications, and in quantities to meet MS's finished
goods production requirements.
8.2 PRINT SPECIFICATIONS
Printed materials must meet the quality standards and
specifications identified in MS Print Specifications and in the MS
Quality Workmanship Standards (Attachment 1).
8.3 RECEIPT OF ARTWORK FOR PRINTING
[ *
] Print sources must have the technical ability
to quickly and efficiently make changes to printed material when
so directed and authorized by MS.
8.4 REGISTRATION/LICENSE CARD PRINTING
Starpak shall print or have printed product part numbers, product
ID numbers or other MS identified information on registration
cards.
8.5 CD COMPONENT PRINTING
Starpak shall have the capability to print or shall approve a
source of supply of printed components included in CD-ROMs. These
components shall consistently meet or exceed the quality
requirements of MS CD ROM Workmanship Standards and Specifications
(Attachments 1).
9 DISK DUPLICATION
9.1 Duplicated disks may be supplied by MS or produced or procured by
Starpak, as set forth in the [ * ] P.O.
Microsoft RFP Section 2 3
9.2 DISK DUPLICATION CAPABILITIES
Starpak or Starpak's duplication source (all duplication sources
must be selected in compliance with Section 5 of the Agreement)
must be capable of duplicating diskettes in accordance with the
requirements identified in the MS Performance Standards for a 3.5
Duplicated Disk (Attachment 6). Starpak or Starpak's duplication
source duplication equipment must have the ability to control all
aspects of the quality of the duplication process including image
integrity, bit placement, window margin, and RPM of the drive
spindle.
9.3 DISK DUPLICATION QUALITY CONTROL
Starpak or Starpak's duplication source must have an audit process
in place consisting of a data interchange or second spindle
verification as well as second image verification process (see
Attachment 6). [ * ] shall be used to ensure
that the proper image is being duplicated. Starpak or Starpak's
duplication source developed [ * ]
[ * ]
9.4 DISK DUPLICATION PROCESSES
Starpak or Starpak's duplication source must have:
9.4.1 A preventive maintenance program or backup
sourcing program in place capable of preventing
disk duplicating delays for finished goods
production.
9.4.2 A formal training program in place for all
duplication operators and support personnel.
9.4.3 A staff technically capable of supporting all
of MS's duplication requirements within the weekly
production variability range.
9.4.4 A write and verify process for all duplicated
product.
9.4.5 The capability to utilize MS [ * ] and
other tools when necessary.
9.5 VIRUS PREVENTION
To ensure that every possible avenue to prevent MS deliverable
product from being infected with a computer virus, Starpak shall
implement the following:
[
*
]
[
*
]
Microsoft RFP Section 2 4
[
*
]
[
*
]
[
*
]
[
*
]
9.6 DISKETTE QUALITY
Starpak or Starpak's duplication source must perform quality checks
on duplicated disks. Diskettes shall be duplicated and verified in
accordance with the Performance Characteristics for a 3.5
Duplicated Disk, the MS Global Disk Standard and Minimum Testing of
Duplication [ * ] Disks (Attachments 3, 6 and 8).
9.7 CUSTOMER MASTER DISK HANDLING
Starpak or Starpak's duplication source must have the capability of
receiving software master images [ * ] Starpak or
Starpak's duplication source shall ensure proper handling, storage,
retrieval and control of the master disk(s) provided or created to
ensure the integrity of the software images.
9.8 DISK COPY PROTECTION AND [ * ]
Starpak or Starpak's duplication source disk duplication process
must be capable of supporting disk copy protection and
[ * ]
9.9 DISK LABELING AND COLLATION
9.9.1 LABEL IMAGES
MS will provide all label [ *
]
9.9.2 LABEL PRINTERS
Starpak or Starpak's duplication source shall
print [
*
]
9.9.3 LABELERS
Starpak or Starpak's duplication source labeling
equipment and/or procedures shall be capable of
consistently meeting or exceeding MS's label
placement specification as described in the MS
Workmanship Standards (Attachments 1).
Microsoft RFP Section 2 5
9.9.4 COLLATION
Starpak or Starpak's duplication source shall have
sufficient and appropriate process equipment to
seal collated disk sets into polyvinyl bags. A
drop height of no more than 18" during the
bagging process will be used to eliminate possible
damage to disks during impact.
10 CD REPLICATION
CDs may be supplied by MS or will be produced or procured by
Starpak, as set forth on the [ * ] P.O. Starpak or Starpak's CD
source shall have documented processes and appropriate equipment to
effectively produce CD-ROMs and associated CD components which
consistently meet or exceed the requirements of the MS Quality
Workmanship Standards and the MS Global CD-ROM Specification
(Attachments 1 and 7). [ * ] Starpak will
assemble finished CD product in jewel cases with backliners,
booklets, frontliners, shrinkfilm and other component parts
[ * ]. Starpak agrees to perform all
required maintenance on the equipment at its own cost. Starpak
shall have a [ * ] to hold CD-ROMs and
material until it can be rendered unusable or recycled. When
Starpak produces or procures CDs, the following apply:
10.1 CD-ROM PRODUCTION PROCESSES
Starpak or Starpak's approved CD source (which shall be selected
in compliance with Section 5 of the Agreement) shall have
documented processes for the following:
10.1.1 A preventative maintenance program or backup
sourcing program in place capable of preventing
delays for finished goods production.
10.1.2 A formal training program in place for all CD
operations (Premastering, Mastering, Replication)
and support personnel.
10.1.3 A staff technically capable of supporting all
of MS's CD requirements within the [ * ]
production variability range.
10.2 CD HANDLING OF CD-ROM MASTERS
Starpak or Starpak's approved CD source shall have documented
procedures in place which ensure proper handling, storage and
retrieval of MS supplied CD master files.
10.3 CD ANTI-PIRACY AND [ * ]
Starpak or Starpak's approved CD source shall be
capable of supporting Anti-Piracy initiatives and
[ * ] applicable to CD-ROMs.
10.4 CD-ROM QUALITY CONTROL
Starpak shall have a documented verification process in place to
ensure the integrity of the replicated CD-ROM matches the original
supplied by MS. In addition, Starpak or Starpak's approved CD
source of supply shall have documented and implemented processes to
[ * ] which ensure compliance
to MS Global CD-ROM Specification (Attachment 10).
10.5 CD LABEL SCREEN PRINTING
Starpak's, or Starpak's supplier, should have a process to receive
CD label images [ * ]. Process must be established to
ensure the correct label image is applied to the correct CD title.
Processes must prevent any CD's used in the setup of the print
processes [ * ]
Microsoft RFP Section 2 6
[
*
]
11 PRODUCTION
11.1 ASSEMBLY CAPABILITY
Starpak will establish and maintain an assembly process capable of
producing sufficient quantities of Product that meet MS's Purchase
Order requirements, or minimum capacity committment, whichever is
lower. The MS quality standards as stated in the MS Quality
Workmanship Standards must be met (Attachment 1).
11.2 [ * ]
Starpak shall have the proper equipment to make [
* ] for retail products and shippers in
accordance with MS specifications which meet or exceed MS
Workmanship Standards (see Attachment 1).
11.3 SHRINK-WRAPPING
Starpak shall be capable of shrink-wrapping all sizes of Products,
including CDs, in accordance with MS Workmanship Standards
(Attachment 1).
11.4 ASSEMBLY QUALITY
Starpak shall perform in-process and final verifications of
assembled Products to ensure compliance to the MS requirements and
specifications ( Attachment 1). The standards included in Minimum
Quality Inspection Standards for Assembled Product, Attachment 7
will be used.
12 DISTRIBUTION AND STORAGE
12.1 PALLET LOADING
Starpak shall adhere to the MS pallet configuration specifications
when stacking product (Attachment 2).
12.2 FINISHED GOODS DISTRIBUTION PROCEDURES
Starpak shall have proper handling procedures for finished goods to
prevent loss or damage between assembly and shipment. Starpak will
properly load finished goods for transport to prevent damage in
transit.
12.3 BILLS OF LADING
Starpak shall prepare a BOL and/or any other applicable
documentation for all MS shipments.
12.4 STORAGE AND INVENTORY OF MS SUPPLIED COMPONENTS
Starpak will store MS supplied components at [ * ]
Starpak will be responsible for inventory recordkeeping and monthly
cycle counting and reporting of MS owned components. Starpak will
[ * ] MS for [ * ] of MS owned inventory while in its
control [ * ].
Microsoft RFP Section 2 7
13 REPORTING/COMMUNICATION REQUIREMENTS
[
*
]
14 QUALITY
14.1 ISO CERTIFICATION
Starpak shall remain ISO 9002 certified during the
period of this Agreement.
14.2 QUALITY RECORDS
Starpak shall maintain records of inspection, repairs,
reworks and tests for the term of this agreement.
Records shall be made available to MS upon request.
14.3 AUDITS AND CORRECTIVE ACTIONS
Pursuant to Section 11 of the Agreement, MS personnel
shall have access to the Facility to audit and evaluate
processes, systems and products. Starpak shall provide
timely response to MS initiated corrective actions
resulting from customer complaints, product defects or
MS audits.
[
*
]
14.5 RISK MANAGEMENT
Starpak will agree to participate in a risk management
program to ensure production availability.
14.6 [ * ]
Starpak will have a [ * ]
[
*
]
15 CONFIGURATION MANAGEMENT
15.1 BOMS AND CADS
Starpak will use MS supplied ▇▇▇▇ of Materials and CADs
as a reference to ensure proper assembly of Product as
specified in MS Workmanship Standards. (Attachment 1).
[
*
] MS will insure the receipt transaction is made
against the correct P.O.
Microsoft RFP Section 2 8
15.2 CHANGES TO BOMS AND CADS
All changes to the configuration of Products will be
managed through the MS Configuration group. Starpak
may make no changes to product configuration or content
without written authorization from MS, however, Starpak
is encouraged to suggest changes that [ * ]
processes or the Product. Any discrepancies between MS's
BOM, CAD or Kit and Starpak's BOM shall be resolved prior
to each build.
15.3 [ * ] RECORD RETENTION
Starpak shall maintain records [ * ] used to
assemble Product for the term of the Agreement Records
will be made available to MS upon request.
16 INFORMATION TECHNOLOGY
16.1 INFRASTRUCTURE REQUIREMENTS
The Facility shall have an infrastructure capable of
supporting a variety of data communications required to
Manufacture Product. This includes facsimile and the
ability to connect to MS's external network. External
network connections will be used to transfer
information about Product builds.
16.2 TECHNICAL PERSONNEL
Starpak shall have in-house or readily available
technical support at the Facility. These Starpak
personnel will work with MS personnel to ensure that
the site is properly set up to communicate with MS. MS
will work with Starpak to establish competency with any
non commercially available MS-specific software that
may be used in the operation. Starpak will be
responsible for on-going training of replacement or
additional personnel used to support the operation.
16.3 DATA EXCHANGES
Data exchanges will be required throughout the term of
this Agreement. Exchanges will occur primarily through
[ * ] and may
include, but are not be limited to, [ * ],
[ * ] and routine
information required to manufacture Product. [
*
]
16.4 MS may wish to employ any or all of the following
system alternatives:
- [ * ]
- [ * ]
- [ * ]
- [ * ]
[
*
]
Microsoft RFP Section 2 9
17 RISK MANAGEMENT
17.1 PIRACY
No unauthorized duplication or replication of product
will be permitted. The discovery of any such
unauthorized duplication or replication of our products
will result in liability to MS at a specified royalty
rate for each product involved and may result in the
immediate termination of the Agreement.
17.2 BUSINESS LOSS
Loss of contractor capability as a result of fire,
natural hazard, or questionable business practices
should be minimized.
18 ATTACHED DOCUMENTATION
The following MS documents, which may be modified from MS
from time to time, are hereby incorporated as part of this
Statement of Work and Starpak hereby acknowledges receipt
thereof.
TITLE ATTACHMENT NUMBER
----------------------------------------------------------------------
MS Quality Workmanship Documents: 1
- [ * ] & Package Labels - Workmanship Standards
(#00100)
- Corrugate Materials Workmanship Standards(#00111)
- Disk Bags -- Workmanship Standards (#00108)
- Disk Labels -- Workmanship Standards (#00107)
- Glossary Workmanship Standards (#00124)
- Manuals -- Workmanship Standards (#00104)
- Manufacturing/Receiving Workmanship Standards (#00109)
- Production -- Workmanship Standards (#00114)
- Quality Quick Reference Guide (#00113)
- Retail Cartons -- Workmanship Standards (#00110)
- Single Sheet/Folded Items (#00105)
- CD-ROM Booklet, Back Liner, Front Liner, Leaflet and
Sleeve Workmanship (#CD Comp)
- CD-ROM Jewelcase Workmanship Standards (#CD Jewel)
- CD-ROM Label Art Workmanship Standards (#CD Label)
- CD Key Label Specification
Pallet Configuration (#00122) 2
Minimum Testing of Duplication [ * ] Disks (#00120) 3
Minimum Requirements for Virus Protection (#00119) 4
First Article Inspection Requirements (#00106) 5
Performance Characteristics for a 3.5 Duplicated Disk 6
MS Global CD-ROM Specification (#CD Spec) 7
MS Global Disk Standard (#00126) 8
Microsoft RFP Section 2 10
EXHIBIT B
PRICE AND PAYMENT TERMS FOR PRODUCT COMPONENTS
1. During the term of this Agreement, MS will issue [ * ] Purchase
Orders (P.O.'s) for Product Components to Starpak on [ * ]
Each P.O. so issued shall require delivery of the Product Components within
[ * ] of the P.O. date. If assembly services are also ordered (see
Exhibit C) as part of the P.O., each P.O. so issued shall require delivery of
the Product Components so ordered as part of the finished Products within
[ * ] of the P.O. date. Starpak will build and ship to the
Shipping Location. All receipts to the P.O. entered by the Shipping Location
by close of business [ * ] will be paid [ * ]
which will result in the issuance of a check within [ * ]
to the Shipping Location.
2. For each P.O. issued under this Agreement for Product Components, MS
agrees to pay Starpak a per Product Component price (e.g., per each Jewel
Case Component ordered) to be calculated as follows:
[
Per Product Component Price =
*
]
---------------------------------
[ * ]
[ * ]
DEFINITIONS:
[ * ] [
*
]
[ * ] [
*
]
[ * ] [
*
]
B-1
[ * ]
[
*
]
[
*
]
[
*
]
[
*
]
3. Starpak may be required to produce Product Components for new MS
Product SKUs at any time during the term of this Agreement. Pricing for any
such Product Components will be determined by using the formula set forth in
Section 2 above. Starpak agrees to make all reasonable effort to provide MS
with Product Component pricing for new MS Product SKUs within [ * ]
of receiving the MS Product SKU specification and BOM information from MS.
4. From time to time BOM changes occur that may add or delete components
from the MS Product SKU. These additions or deletions to the MS Product
[ * ] shall be reflected accordingly in the material and labor
[ * ].
B-2
EXHIBIT C
PRICE AND PAYMENT TERMS FOR ASSEMBLY SERVICES
1. If assembly services are ordered as part of the P.O., each P.O. so
issued shall require delivery of the finished Products within [ * ]
of the P.O. date. Starpak will build and ship according to the Shipping
Location. All receipts to the P.O. entered by the Shipping Location by close
of business [ * ] will be paid via the [ * ] which will
result in the issuance of a check within [ * ] to the
Shipping Location.
2. For the assembly of the Product CD ROMs, Disk Set Component, Jewel
Case Component, and the Assembled Box Component into a finished Product
including shrink-wrap, MS agrees to pay Starpak for materials and labor on a
[ * ] to be calculated as follows:
[
*
]
3. For materials and labor incurred to prepare the products for shipping,
MS agrees to pay Starpak the following [ * ]
as part of its freight costs, as applicable:
[
*
]
C-1