EXHIBIT 10(m)
HPCS
DIVISIONAL SERVICE AGREEMENT
HP/PINNACLE DATA SYSTEMS, INC.
AGREEMENT # 01-17-6261
TABLE OF CONTENTS
1.0 Purpose
2.0 Scope of Work
3.0 Definitions
4.0 Agreement
5.0 Terms of Agreement and Terminations
6.0 Time
7.0 DELETED
8.0 Cost Schedule
9.0 Invoicing and Payment
10.0 Right to Audit
11.0 Record Keeping
12.0 Changes
13.0 Warranties
14.0 Insurance
15.0 Intellectual Property
16.0 Indemnification
17.0 Continuing Obligations
18.0 Documentation
19.0 Supervision
20.0 Back-up Personnel
21.0 Subcontractors
22.0 HP Property
23.0 HP Products
24.0 Limitation of Liability
25.0 Tooling and Equipment
26.0 Facility and Equipment
27.0 Performance
28.0 Program Process, Reporting. Metrics and Measures
29.0 Governing Law and Compliance
30.0 Assignment
31.0 Safety and the Environment
32.0 Background and Drug Screening
33.0 Relationship of the Parties
34.0 Taxes and Benefits
35.0 General Responsibilities
36.0 Materials Management
37.0 Design, Material and Process Change
38.0 Pricing and Cost
39.0 Notices
40.0 Business Continuity Plan
41.0 Force Majeure
42.0 No Waiver
43.0 Severability
44.0 Modification and Amendment
45.0 Exhibits and Appendices attached
Exhibit A Expenditure Proposal
Exhibit B Contractor Security Requirements
Exhibit C Equipment Loan Agreement
Exhibit D Performance Evaluation (TQRDCE)
Exhibit E Packaging Standards
Exhibit F HP Holiday Schedule
Exhibit G Pinnacle Holiday Schedule
Exhibit H Pinnacle Business Continuity Plan
Exhibit I Electrostatic Discharge Control Standard
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Program Agreement
Hp Commercial Support (Hpcs)
Contract Number 01-17-6261
This Divisional Service Agreement is entered into by and between Hewlett-Packard
Company, a Delaware corporation, its divisions, sub-divisions, affiliates and
subsidiaries (hereinafter referred to as "HP"), and Pinnacle Data Systems, Inc.,
an Ohio corporation (hereinafter referred to as "Contractor").
1.0 PURPOSE
1.1. Purpose: This Agreement specifies the terms and conditions under
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which Contractor will provide to HP, Program Services as set forth
in each Appendix attached here to, and develop written processes
therefore with respect to products as designated by HP. The terms
and conditions herein constitute the Divisional Service Agreement
for all Program Services provided by Contractor to HP.
1.2. Relationship between the Divisional Agreement and Appendices: This
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Agreement is the Divisional Service Agreement ("DSA") that sets
forth the terms and conditions of the overall agreement between HP
and Contractor. Contractor will provide PROGRAM Services for HP
pursuant to the terms set forth in the attached Appendices. This
Agreement is incorporated into each Appendix so that this Agreement
and each Appendix form a separate and divisible contract for the
applicable Program.
1.3. Unless otherwise agreed upon in writing by the parties in an
Appendix that specifically cites the Articles in this Agreement that
will be modified or changed, to the extent there are any
inconsistencies between the terms of an Appendix and the terms of
this Agreement, the terms specified in this Agreement will control
and take precedence. If an Appendix is terminated, this Agreement
and/or any other Appendices will not be affected.
1.4 The provisions of this Agreement and the attached Appendices take
precedence over HP's or Contractor's additional or different terms
and conditions, to which notice of objection is hereby given. No
change or modification of any of the terms or conditions herein
shall be valid or binding on either party unless in writing and
signed by an authorized representative of each party.
1.5 In the event of any conflict between the provisions of this
Agreement and any release or Appendix, the order of precedence is as
follows:
a) This Agreement;
b) The Appendix to this Agreement;
c) Any instructions on the front of HP's written or electronic
release;
d) The preprinted provisions on either parties written release.
In consideration of the above and the mutual promises contained
herein, HP and Contractor agree as follows:
2.0 SCOPE OF WORK
2.1 This Agreement covers Program Services and processes for HP Products
to the specifications supplied to Contractor by HP. The
processes/work may take place on and within HP property or in a
CONTRACTOR leased or owned facility. Program Services covered under
this Agreement shall include, but not be limited, to the following:
1. Warehousing of Hewlett-Packard goods
2. Supply Chain Management
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3. Kitting and Parts Assembly
4. Inventory Management
5. Packaging
6. Planning and Procurement
7. Testing
2.2 It is clearly understood and acknowledged by Contractor that the
list stated in 2.1 is not meant to be all inclusive; instead, it
is intended to serve as a general outline, supplemented by the
Appendices, attached hereto and incorporated herein.
2.3 Changes in the pricing or processes associated with Contractor's
process location shall be reviewed and agreed to
by both parties in writing prior to their implementation. While
in an HP owned or leased facility, or while in a Contractor
owned or leased facility and using HP owned or leased equipment,
systems, or processes, Contractor shall notify the appropriate
HP division and the HP Account Manager in writing sixty (60)
days prior to its intent to provide services using said HP
Facility or HP owned or leased equipment, systems or processes
to other HP entities or companies other than HP. HP will
promptly review any such notice, and Contractor shall not
provide any such services unless and until HP approves
Contractor's request in writing.
2.4 In the event that HP may, from time to time, make changes or
modifications to any scope of work or Appendix, Contractor hereby
agrees to make any and all changes, furnish the materials and
perform all such work that HP may require, without nullifying
this Agreement, at a reasonable addition to, or reduction from,
the Agreement Cost stated herein. Contractor shall adhere
strictly to the performance metrics and processes unless both
parties mutually agree upon a change.
3.0 DEFINITIONS
3.1 "BFT(s)" means a Business Fundamental Table (metrics) used as
measurements of how CONTRACTOR is performing in defined areas per
each Appendix.
3.2 "Capital Expenditure" means an investment in a tangible asset in
excess of five thousand dollars ($5,000.00).
3.3 "Contractor Developments" means any Intellectual Property Rights
developed solely by Contractor under this Agreement and not "Paid
for by HP".
3.4 "Cost(s)" means the actual cost(s), including any related
rebates, discounts or leveraged volumes, paid or incurred by
CONTRACTOR prior to any ▇▇▇▇ up or margin by CONTRACTOR.
3.5 "Days" means calendar days (unless otherwise stated).
3.6 "Epidemic Failure" means any failure that is over twice the
average monthly rate, based on the previous 3 month average, of
Dead On Arrival and Time To Failure rates for that item.
3.7 "Equipment" means manufacturing tooling fixtures and the like
used to perform work under this Agreement, including but not
limited to: equipment, test equipment and fixtures, inspection
equipment and fixtures, storage equipment and fixtures used to
repair, move, and store inventory.
3.8 "Contractor Inventory" means units, sub-assemblies, and parts
purchased by Contractor that are physically located within any
location that Contractor uses to perform the work under this
Agreement and will be systematically tracked by Contractor as
Contractor owned inventory.
3.9 "HP" means Hewlett-Packard Company, its divisions, subsidiaries,
worldwide affiliates and any controlled entity.
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3.10 "HP Property" means real property, equipment, materials and
information, including Tools that are provided to Contractor by
HP or on HP's behalf, or separately paid for by HP for use by
Contractor in connection with its performance of Program
Services.
3.11 "HP Processes" means processes developed by HP and made available
to HP suppliers and service contractors as part of the Program.
Such processes include, but are not limited to, production
processes, inventory reconciliation processes, data management
processes, information access processes, financial reporting
processes and metrics reporting. These processes are at all
times owned by HP and any changes to such processes, must be
approved by HP.
3.12 "HP Inventory" means units, sub-assemblies, and parts either
purchased by Contractor and paid for by HP or provided to
Contractor by HP that are physically located within any location
that Contractor uses to perform the work under this Agreement
and will be systematically tracked by Contractor as HP owned
inventory.
3.13 "HP Products" means any part, sub-assembly, or unit that HP
either manufactures, markets, or distributes.
3.14 "HP or HP Authorized vendor" means (i) HP (ii) third parties
selected, approved and qualified by HP in writing; and (iii)
with HP's prior written approval, third parties selected by
Contractor.
3.15 "Intellectual Property Rights" means all rights in and to
inventions (which are potentially patentable subject matter
within the meaning of 35 U.S.C. 101), patents, patent
applications, utility models, copyrights, author's rights, moral
rights, trade secrets, mask works, names and marks used in
trade, and all rights of a similar nature.
3.16 "Itemized Cost Statement" means a non-audited statement of
itemized costs incurred by Contractor during a billing period.
3.17 "Labor Fees" means the mutually agreed dollar amount that
CONTRACTOR will charge HP for each labor hour worked on HP
products.
3.18 "Part" means a component of a unit or sub-assembly.
3.19 "Pre-Existing Intellectual Property" means any trade secret,
invention, work of authorship, mask work, process design or
protectable design that has already been conceived or developed
by anyone other than HP before Contractor renders any Program
Services.
3.20 "Pre-Existing Intellectual Property Rights" means Intellectual
Property Rights of a party in the Preexisting Intellectual
Property defined in 3.20.
3.21 "Program" means the Program Services provided by Contractor
pursuant to the terms and conditions of an Appendix.
3.22 "Standard Unit Cost" means the inventory cost for HP Product as
set forth in HP's accounting system.
3.23 "Sub-Assembly" means a module or replaceable part of a unit.
3.24 "Tools" means any tooling, dies, jigs or fixtures or other
property either built or acquired by Contractor in connection
with its performance of Program Services.
3.25 "Unit" means a shipping level part number.
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4.0 AGREEMENT.
4.1 This Divisional Services Agreement (hereinafter "Agreement")
outlines the arrangement between Contractor and HP. HP desires
to engage Contractor as a service provider to perform certain
assembly, repair and refurbishment services, warehouse
management services and special projects to HP and all
designated distribution centers.
4.2 Each provision of the Agreement and its Appendices shall be
valid and enforceable to the fullest extent permitted by law. If
any provision of this Agreement or the application of such
provision, to any extent, is found to be invalid or
unenforceable, the remainder of this Agreement or the
application of such provisions shall remain in full force and
effect without impairment or invalidation.
4.3 This Agreement shall replace and supersede any and all other
previous Agreements, expressed and/or implied to the extent that
they are inconsistent with this Agreement. All such
aforementioned documents and instruments including all
Appendices and Exhibits attached shall form the Agreement.
4.4 Contractor certifies and agrees that it is fully familiar with
all of the terms, conditions and obligations of all the work
that is required and specified in this Agreement, the location
of the job site, and the conditions under which the work is to
be performed, and that Contractor enters into this Agreement
based upon such knowledge and previous experience with HP.
4.5 Independent Contractor Status. The express intention of the
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parties is that Contractor is an independent contractor and not
an employee, agent, joint venturer or partner of HP. Nothing in
this Agreement shall be interpreted or construed as creating or
establishing the relationship of employee and employer between
Contractor or any of its employees, agents and/or subcontractors
and HP or of HP's subsidiaries, divisions or departments. Both
parties acknowledge Contractor is not an employee for state or
federal tax purposes. Contractor declares that it is in
compliance with all federal, state and local business permits
and licensing requirements necessary to perform the duties
described in this Agreement. Contractor also declares that it is
in compliance with all necessary federal, state and local
employment tax requirements and that Contractor shall file all
necessary tax returns and pay all of the necessary employment
taxes. HP shall not assist Contractor with any federal or state
income tax withholdings, or make any tax contributions on behalf
of Contractor, nor shall HP pay for or reimburse Contractor for
any profit-sharing programs, any health or group insurance
programs, or any worker's compensation insurance or for any
other benefit of employment.
4.6 HP, at its sole and absolute discretion, reserves the right
to modify, alter, reduce or remove any scope of work or
business activity without Contractor's prior consent.
5.0 TERMS OF AGREEMENT AND TERMINATION.
5.1 Term.
This Agreement shall become effective from September 01, 2001
(the "Effective Date") and shall automatically terminate without
notice at midnight on August 31, 2004 (the "Expiration Date")
with the option to extend this Agreement for a subsequent
additional one-year period, provided that both parties mutually
agree in writing at least sixty 60 days prior to the expiration
of the then-current term.
5.2 Termination:
5.2.1 Notwithstanding the provisions of Article 5.1 above, this
Agreement shall terminate immediately and automatically upon
either: (i) the expiration of the Term; (ii) Assignment or
transfer by Contractor; (iii) Contractor's default and/or
breach of any portion of this Agreement.
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5.2.2 HP may terminate this Agreement with ninety (90) days
written notice to Contractor at anytime, with or without
cause.
5.2.3 In addition to the above, this Agreement may be terminated
immediately and automatically by HP, at HP's sole and
absolute discretion, if any of the following events occur:
5.2.3.1 Contractor makes any materially false or
misleading statement or representation which
induces HP to enter into this Agreement, or which
is relevant to the relationship between the
parties hereto; or,
5.2.3.2 Contractor becomes insolvent or commits an act of
bankruptcy or takes advantage of any law for the
benefit of debtors or Contractor's creditors, or
if a receiver is appointed for Contractor; or,
5.2.3.3 Contractor engages in fraud or criminal misconduct
or is convicted of a felony or of a misdemeanor
involving fraud, or commercial dishonesty,
whether or not the crime arose from Contractor's
relationship with HP or not; or,
5.2.3.4 Contractor intentionally and/or deliberately
invoices, bills or charges HP for any services,
cost, or expense(s) or invoices, bills or
requests payment for any other reimbursements not
contracted for or covered in this Agreement; or,
5.2.3.5 For any of the reasons set forth in any applicable
statute, law, regulation or judicial decision.
5.3 If this Agreement or any Appendix is terminated, then HP has the
right, but not the obligation:
5.3.1 To assume for the remainder of the term of the Appendix,
subject to the landlord's approval, and without being
assessed any fees or penalties, each facility lease entered
into by Contractor for any terminated Program or applicable
portion thereof.
5.3.2 To purchase from Contractor or assume Contractor's lease
of any capital equipment that is an integral part of or
was exclusively purchased or leased by Contractor for the
Program. The purchase price of such equipment will be an
amount equal to its unamortized cost, using the
depreciation period specified in the applicable Program
Contract, plus applicable sales and transfer taxes.
5.4 Termination of this Agreement by either party for any reason
shall not relieve the parties of any obligation theretofore
accrued under this Agreement. In the event that this Agreement
is terminated, regardless of the cause or reason, Contractor's
services during the time of notice of such Termination until
the last day of its services shall not be diminished in any way
and Contractor shall continue to provide first class service.
5.5 Default by Contractor. In the event Contractor, at any time,
refuses or neglects to supply a sufficient number of properly
skilled employees or a sufficient quantity of materials of
proper quality, or files any kind of arrangement proceeding
with any governmental agency or court, or makes an assignment
for benefit of creditors without HP's consent, or fails in any
respect to properly and diligently prosecute the work covered
by this Agreement, or otherwise fails to perform fully any
portion or all of the appendices or conditions precedent herein
contained, HP may at its option, after the lapse of fourteen
(14) days from the giving of a written deficiency notice to
Contractor (during which time Contractor shall have the right
to cure said default as more specifically set forth in section
5.7), terminate Contractor's right to proceed with the work. If
HP so terminates Contractor's right to proceed with the work,
Contractor shall immediately cease performing Program Services,
and HP shall withhold any outstanding payments owed to
Contractor at the time of such termination. HP will then
promptly begin working to find an alternative provider to
perform the Program Services performed by Contractor, and
Contractor shall be responsible for all incremental labor costs
and expenses associated with procuring an alternative provider.
However, in no event shall Contractor be responsible for any
incremental labor costs or expenses incurred more than 180 days
after the
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date HP terminates Contractor's right to proceed with the work.
All incremental labor costs and expenses shall be deducted from
any outstanding balance owed by HP to Contractor at the time of
termination. If the costs and expenses incurred by HP exceed the
outstanding balance owed by HP at the time of termination, then
Contractor shall reimburse HP for the difference within fifteen
(15) days after receiving a final ▇▇▇▇ from HP.
5.6 The remedies referred in section 5.5 shall not be exclusive, and
the provisions herein do not in any way limit HP's entitlement
to any other remedy, legal or equitable.
5.7 If at anytime Contractor shall fail to remedy any default under
this Agreement within fourteen (14) days after receipt of
written notice of any such default with respect to any of the
provisions, terms or conditions of this Agreement, then in the
event the default cannot reasonably be cured within said
fourteen (14) day period, Contractor shall not be in default
under this Agreement if Contractor commences to cure the
default within the fourteen (14) day period and diligently and
in good faith continues to cure the default.
5.8 Upon the occurrence of any default by CONTRACTOR not cured within
the applicable period provided for in sections 5.5 and 5.7
above, in addition to any or all other rights or remedies of HP
provided by law, HP shall have the right, at HP's sole option,
to declare this Agreement terminated as more specifically set
forth in section 5.5 above.
5.9 Rights and Duties Upon Termination. Upon termination of this
Agreement, for any reason, Contractor agrees to surrender any
and all property, equipment and inventory on the date specified
in the notice of termination and to immediately discontinue all
functions and services. HP shall have the absolute right,
immediately upon termination, to take possession of all
property, equipment and inventory. Contractor shall return all
proprietary information, documentation, trademark or other such
property to HP.
6.0 TIME
6.1 Time and production are the essence of this Agreement and
Contractor shall use its best efforts to complete any or all of
its duties in the timeliest manner possible. Should Contractor
be delayed in the prosecution or completion of the work by the
act, neglect or default of HP, or should Contractor be delayed
waiting for materials, if required by this Agreement to be
furnished by HP, or by damage caused by fire or other casualty
for which Contractor is not responsible, or in the event of a
lockout by HP, then the time herein fixed for the completion of
work shall be extended the number of days that Contractor has
thus been delayed, but no allowance or extension shall be made
unless a formal request is presented in writing to HP within
forty-eight (48) hours of the commencement of such delay, and
under no circumstances, excepting circumstances outside the
control of Contractor, which in the judgment of HP, could have
reasonably resulted in such delay, shall the time for
completion be extended to a date which will prevent HP from
completing the work within the time HP allows for such
completion.
7.0 DELETED
8.0 COST SCHEDULE
8.1 Because of expected changes in costs due to cost improvements,
business needs, inflationary measures, etc., the cost schedule
will be documented as an Appendix, which may be amended from
time to time, whereby any changes will not impact the content
of this Agreement.
9.0 INVOICING AND PAYMENTS
9.1 Terms of Payment:
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Contractor will prepare and submit its invoices to HP in
accordance with the terms set forth in the applicable Appendix.
HP will pay Contractor invoices that are prepared as specified in
the applicable Appendix within forty-five (45) calendar days of
receipt.
9.2 Billing:
9.2.1 For each Program, Contractor will invoice all services
at the end of each 30-day billing period for services
provided during that period. One copy will be delivered
to the appropriate Program Manager and one copy to the
appropriate HP Finance Service Center. The Itemized Cost
Statement will be in a form agreed to by the appropriate
Program Manager and the Contractor Program Manager and
as set forth in the applicable Appendix.
9.2.2 HP will have the right, upon request, to audit invoices
to ensure compliance with the Program. Audits are
limited to services (hours, units processed, inventory,
space, etc.) and actual cost data for non-reoccurring
expense.
9.2.3 Contractor will prepare Itemized Cost Statements in
accordance with Generally Accepted Accounting Principles
(GAAP). Within sixty (60) days following the end of each
HP fiscal year during the term of this Agreement, the
designated representative of the Contractor will certify
to HP that the Itemized Cost Statements submitted to HP
during that fiscal year have been prepared in accordance
with GAAP and accurately and fairly represents the costs
associated with the Program Services provided. At HP's
request, HP may audit Contractor's adherence to GAAP.
9.2.4 Any ▇▇▇▇▇▇▇▇ for charges incurred outside of the current
invoice cycle must be accompanied by a written statement
of explanation supporting their applicability and are
subject to HP's approval.
9.3 Cost and Expenses:
9.3.1 Capital Expenditures:
9.3.1.1 Without HP's prior written authorization,
Contractor will not incur any individual capital
expenditure with respect to which HP will be
invoiced for any costs, either as an amortization
or depreciation expense, if HP will be carrying
the termination risk.
9.3.1.2 If Contractor deems it reasonable and necessary
to incur a capital expenditure requiring
written authorization, Contractor will complete
and submit to HP an Expenditure Proposal (EP)
in the form set forth in Exhibit A.
9.3.2 Excluded Costs: Costs reimbursable by or allocated to HP
will exclude any and all fines and penalties with
respect to violations of any statute, ordinance,
regulation, rule, order, judgment or decree (including
settlement thereof) by Contractor or its
subcontractors, all of which will be the sole
responsibility of Contractor.
9.3.3 Expense and Cost Containment: Contractor will use its
best efforts to implement procedures to reduce or
contain its expenses and costs without adversely
affecting the performance of the Program Services. At
HP's request, Contractor will provide HP information
about and access to records and operations to allow HP
to ensure compliance with this obligation. Access to
Contractors actual cost records is limited to
non-reoccurrence ("direct ▇▇▇▇") items. HP will
measure Contractor's compliance with this obligation
in accordance with the terms set for in the applicable
Appendix.
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9.4 Rates and Charges:
9.4.1 General: HP will pay Contractor for the Program Services
provided pursuant to this Agreement at the rates and
subject to the terms and conditions set forth in the
applicable Appendices.
9.4.2 Additional Services: Services requested by HP, in
addition to those identified in the Appendices, will be
negotiated separately, and are subject to mutual
agreement on terms and conditions applicable to such
requirements. Any additional services will result in a
reissue/amendment of all affected Appendices prior to
performance of the additional services.
9.4.3 Rate Increases and Decreases:
9.4.3.1 All rates and charges set forth in an
Appendix will be effective for a period of
not less than one (1) year from the
effective date. These rates will reflect
prevailing business conditions (activity and
product volumes and processes). After the
expiration of the initial one-year period,
if the business conditions have changed in a
manner that alters the costs used to
determine the initial rates, HP will
consider changes to rates, provided
Contractor submits a written request to
change the rates no less than 60 days prior
to the expiration of the initial one-year
period. After the expiration of the initial
one-year period, Contractor and HP will meet
quarterly to review the business conditions
and rates.
9.4.3.2 Any rate or charge increase must be agreed to
in writing by HP's and Contractor's
respective Program Managers before it becomes
effective. The format for communicating this
change shall be outlined in the applicable
Appendix.
10.0 RIGHT TO AUDIT.
10.1 HP has the right, but not the obligation, to inspect at any time
during business hours, and with or without prior notice to
Contractor, any Contractor facility at which Program Services are
performed; all processes, operations, and records associated with
Contractor's performance of Program Services; and all HP Products
under the possession or control of Contractor.
10.2 HP's inspection may be for any reason directly related to this
Agreement or any Appendix, including ensuring Contractor's
compliance with the requirements of this Agreement or the
applicable Appendix.
10.3 HP's right of inspection, with coordinating efforts with the
Contractor, will also apply to any vendor or subcontractor of
Contractor. Contractor will inform such vendors or subcontractors
of HP's right to inspect and, if necessary, use all reasonable
effort to secure such rights for HP.
10.4 Any inspection by HP will be solely for HP's benefit and not for
the benefit of any other party, including Contractor or any of its
vendors or subcontractors. Notwithstanding the foregoing, upon
request, HP will provide Contractor a copy of all audit or
inspection results.
10.5 HP shall have the right at anytime and upon request, to audit any
Itemized Cost Statements, invoice or bills provided by Contractor
and to audit Contractor's use of the HP Processes to ensure
compliance with the Program. In the event that the results of such
audit reveal an inconsistency or are in contradiction to any
invoices forwarded to and/or paid by HP, or are not covered by or
are out of scope of this Agreement, then HP shall have the right
to correct
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such inconsistencies or request a cash refund, adjust
CONTRACTOR's affected invoices, or withhold any future payment
until such inconsistent balances are corrected.
11.0 RECORD KEEPING
11.1 Contractor will keep and maintain records and reports of business
measures for the Program. Upon request, HP will have the option to
audit one-week period statements and to audit period statements in
accordance with generally accepted principles and practices.
11.2 Contractor will provide record retention of all forms, reports and
other paperwork as required by HP's Corporate Audit Guidelines.
Copies of the relevant portion of HP's Corporate Audit Guidelines
are attached as exhibits to the Appendices as deemed applicable by
HP.
11.3 Licenses: Contractor at its sole cost and expense, will procure and
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maintain any and all licenses, permits, and authorizations required
by applicable laws or regulations for the performance of this
Agreement except for those licenses and fees that by law or
regulation must be the sole responsibility of HP due to the nature
of the products or processes being supported by Contractor for HP.
HP agrees to pay for licenses and fees, which are or become its
sole responsibility.
12.0 CHANGES
12.1 HP may change, modify, alter, reduce or remove any portion of any
scope of work or business activity at any time in any project at
any time. In the event of any such change, the price shall be
adjusted accordingly. Any such change shall be requested and
documented by Contractor's Approval Process before the change is
performed.
12.2 Except as provided in Section 12.1 (Changes) above, any claim by
Contractor for additional compensation arising out of this
Agreement must be made in writing within ten days after the
commencement of the event, giving rise to the claim. Otherwise, any
such claim shall be deemed waived by CONTRACTOR, notwithstanding
actual notice thereof on the part of HP.
13.0 WARRANTIES
13.1 With respect to the goods and Program Services provided by
Contractor pursuant to this Agreement, Contractor hereby warrants
as follows:
13.1.1 All goods and Programs Services shall conform in all
material respects to the design criteria, specifications,
descriptions, drawings, samples, and other requirements that
are set forth in this Agreement, applicable Appendix, or
otherwise agreed to by the parties for a period of 180 days;
13.1.2 Any rework that must be done within the 180 day period will
be done at the expense of the Contractor;
13.1.3 All goods and Program Services shall be free from material
defects in design, material, and workmanship;
13.1.4 All goods and Program Services shall be free of all liens,
encumbrances, and other claims against title;
13.1.5 All goods and Program Services shall be manufactured,
processed, and assembled, as applicable, by Contractor under
Contractor's direction;
13.2 DISCLAIMER: EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR THE
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ATTACHED APPENDICES, CONTRACTOR MAKES NO OTHER WARRANTIES, EITHER
EXPRESS OR IMPLIED, REGARDING ANY HP PRODUCTS AND SERVICES, OR
REGARDING THEIR MERCHANTABILITY OR THEIR FITNESS FOR ANY PARTICULAR
PURPOSE.
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14.0 INSURANCE
14.1 Coverage: During the term and at all times that CONTRACTOR performs
services for HP, CONTRACTOR shall maintain in full force and effect
the following minimum insurance coverages.
14.1.1 Workers' Compensation and Employer's Liability Insurance
Workers' Compensation insurance shall be provided as
required by law or regulation.
Employer's Liability insurance shall be provided in amounts
not less than $1,000,000 per accident for bodily injury by
accident, $1,000,000 policy limit by disease, and
$1,000,000 per employee for bodily injury by disease.
If employees or subcontractors of CONTRACTOR are exposed to
injury which may fall under the U.S. Longshoremen and
Harbor Workers' Compensation Act, the ▇▇▇▇▇ Act, or under
laws, regulations, or statutes to maritime or railroad
employees, then coverage will be included for such injuries
or claims.
14.1.2 General Liability Insurance: CONTRACTOR shall carry either
comprehensive general liability insurance or commercial
general Liability insurance with limits of liability and
coverage as indicated below:
(A) Premises, operations, and equipment;
(B) Products and completed operations;
(C) Contractual Liability;
(D) Bodily injury Liability;
(E) Personal injury Liability.
14.1.2.1 Comprehensive general liability policy limits shall
be not less than combined single limits of $1,000,000
per occurrence and general aggregate of $2,000,000.
14.1.2.2 Commercial general liability (occurrence) policy
limits shall not be less than $1,000,000 per
occurrence (combined single limit for bodily injury
and property damage), $1,000,000 for personal injury
liability, $1,000,000 aggregate for products and
completed operations, and $2,000,000 general
aggregate.
14.1.2.3 Except with respect to products and completed
operations coverage, the aggregate limits shall apply
separately to CONTRACTOR's services under this
Agreement.
14.1.2.4 If "claims made" policies are provided, CONTRACTOR
shall maintain such policies without endangering
aggregate limits at the above stated minimums, for at
least five years after the expiration of the term.
14.1.2.5 Such policies shall name HP, its officers, directors
and employees as Additional Insureds and shall
stipulate that the insurance offered Additional
Insureds shall apply as primary insurance and that no
other insurance carried by any of them shall be
called upon to contribute to a loss covered
thereunder. Such policies shall not be construed to
imply that CONTRACTOR offers insurance to or on
behalf of HP employees.
14.1.3 Automobile Liability Insurance: CONTRACTOR shall carry
bodily injury, property damage, and automobile contractual
liability coverage for owned, hired, and non-owned autos
with a combined single limit of liability for each accident
of not less than $1,000,000.
14.1.4 Fidelity / Crime Bond: CONTRACTOR will be covered by
Fidelity Insurance or Commercial Crime Bond as respects
CONTRACTOR's agents, employees, and subcontractors
performing under this Agreement with blanket limits of at
least $100,000 per occurrence.
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14.1.5 Property / Warehouse Liability: CONTRACTOR will carry
Property or Warehouse Liability insurance in amounts
adequate to cover risks of damage or loss to HP Property in
its care, custody and control, as assumed under the terms of
this Agreement. Any such insurance will name HP as Loss
Payee.
14.2 Certificate of Insurance: Certificates of Insurance evidencing the
required coverage and limits shall be furnished to HP before any
services are commenced hereunder and shall provide that there will
be no cancellation or reduction of coverage without thirty (30)
days prior written notice to HP. A company authorized to do
business in the State where the services are rendered shall write
all insurance policies. CONTRACTOR shall furnish copies of any
endorsements subsequently issued, which amend coverage or limits.
15.0 INTELLECTUAL PROPERTY
15.1 Confidential Information: Neither Contractor nor Contractor's
employees, agents, or subcontractors shall use or disclose to any
person or entity any Confidential Information of HP (whether in
written, oral, electronic, or other form) which is obtained from
HP or otherwise prepared or discovered either in the performance
of this Agreement, through access to HP's Information
Assets/Systems, or while on HP premises. As used herein, the term
"Confidential Information" shall include, without limitation, all
Work Product, all information designated by HP as confidential,
all information or data concerning or related to HP's products
(including the discovery, invention, research, improvement,
development, manufacture, or sale thereof), processes, or general
business operations (including sales costs, profits, pricing
methods, organization and employee lists), and any information
obtained through access to any Information Assets/Systems
(including computers, websites, networks, voicemail, etc.) which,
if not otherwise described above, is of such a nature that a
reasonable person would believe it to be confidential or
proprietary. For avoidance of doubt, all order-specific data
(including dates, product data, shipment data, etc) relating to HP
Products, HP Property or HP Processes shall be automatically
deemed HP's Confidential Information. For purposes of this
Agreement, Information Assets/Systems shall include, but are not
limited to, computers, voice and data networks, databases, records
systems, voicemail, security systems, tokens, logon scripts,
passwords, and such other hardware, software, firmware, or other
device as may be used to access such systems/assets. These
restrictions on using, publishing, or revealing Confidential
Information continue perpetually unless HP agrees otherwise in
writing or unless the Confidential Information becomes public.
15.2 Exclusions: The foregoing confidentiality obligations will not
apply to Confidential Information that (a) is already known to
Contractor prior to disclosure by HP; (b) is or becomes a matter
of public knowledge through no fault of Contractor; (c) is
rightfully received from a third party by Contractor without a
duty of confidentiality; (d) is independently developed by
Contractor; (e) is disclosed under operation of law; or (f) is
disclosed by Contractor with the prior written approval of HP.
15.3 Work Product. "Work Product" means models, devices, reports,
computer programs, tooling, schematics and other diagrams,
instructional materials, and anything else the Contractor produces
in connection with this Agreement or any Statement of Work and
paid for by HP. All Work Product will belong to HP. HP shall have
the sole right to use, sell, license, publish or otherwise
disseminate or transfer rights of such Work Product. As long as
this Agreement is in effect Contractor will have the right to use
said Work Product in its performance of this Agreement. Contractor
will deliver all Work Product to HP upon the earlier of completion
of Services or HP's request.
15.4 Contractor will promptly disclose to HP any inventions made in
connection with this Agreement and paid for by HP. HP will own all
intellectual property rights in such inventions. Contractor will
sign any necessary documents and will otherwise assist HP, at HP's
expense, in obtaining patent registrations and otherwise
protecting such inventions in any country.
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15.5 Works of Authorship. Contractor will promptly disclose to HP
any works of authorship created in connection with this
Agreement and paid for by HP. Contractor hereby assigns to
HP all copyrights in such works. To the extent permitted by
law, Contractor waives any moral rights, such as the right
to be named as author, the right to modify, the right to
prevent mutilation and the right to prevent commercial
exploitation, whether arising under the Berne Convention or
otherwise. Contractor will sign any necessary documents and
will otherwise assist HP, at HP's expense, in registering
HP's copyrights and otherwise protecting HP's rights in such
works in any country.
15.6 Access to Information Assets/Systems: Access, if any, is
granted solely to facilitate the business relationship
described in the Agreement, and is limited to those specific
Assets/Systems, time periods and personnel designated by
Contractor as are separately agreed to by HP and Contractor
from time to time. Access is subject to business control and
information protection policies, standards, and guidelines
as may be provided by HP. Use of any other Assets/Systems is
expressly prohibited. This prohibition applies even when an
Asset/System which Contractor is authorized to access serves
as a gateway to other Assets/Systems outside the scope of
Contractor's authorization. Use of Assets/Systems during
other time periods or by individuals not authorized by HP is
expressly prohibited. Without limiting the foregoing,
Contractor warrants that it has adequate security measures
in place to comply with the above obligations and to insure
that access granted hereunder will not impair the integrity
and availability of HP information asset/systems. Upon
reasonable notice, HP may audit Contractor to verify
Contractor's compliance with these obligations. Unless prior
written approval is provided to Contractor by the providing
HP entity, Contractor can only use any information
assets/systems, hardware, or software, either supplied by HP
or funded by HP, for the HP entity that provided or funded
that information Assets/Systems, hardware, or software.
15.7 Security of Information: Without limiting the foregoing, each
party agrees to maintain security measures to comply with
the above obligations and to ensure that access granted will
not impair the integrity and availability of the others
party's Systems. Upon reasonable notice, HP may audit
Contractor to verify Contractor's compliance with these
obligations.
15.8 Pre-Existing Intellectual Property: Contractor will not use
any Pre-Existing Intellectual Property including, but not
limited to, any trade secret, invention, work of authorship,
mask work or protectable design that has already been
conceived or developed by anyone other than HP before
Contractor renders any services under this Agreement, unless
Contractor has the right to use it for HP's benefit. If
Contractor is not the owner of such Pre-Existing
Intellectual Property, Contractor will obtain from the owner
any rights necessary to enable Contractor to comply with
this Agreement. If Contractor uses any Pre-Existing
Intellectual Property in connection with this Agreement, and
HP requires rights to that Pre-Existing Intellectual
Property to utilize the services, Contractor hereby grants
to HP a non-exclusive, royalty-free, worldwide, perpetual
license to make, have made, sell, use, reproduce, modify,
adapt, display, distribute, make other versions of and
disclose the property and to sublicense others to do these
things. Contractor will give HP notice immediately if at any
time the Contractor knows or reasonably should know of any
third party claim to any intellectual property provided by
Contractor pursuant to this Agreement.
15.9 Intellectual Property Infringement Warranty. Contractor hereby
represents and warrants that all goods and Program Services
furnished by Contractor and/or its subcontractors under this
Agreement will not violate or infringe any third party
intellectual property rights and Contractor further warrants
that it is not aware of any facts upon which such claim could
be made. If Contractor learns of any claim or any facts upon
which a claim could be made, it will promptly notify HP of
this information.
15.10 Additional Obligations. Contractor warrants that each
employee, agent, or subcontractor who performs services or
other work in connection with this Agreement has been
informed of the obligations contained herein and has agreed
to be bound by them. If Contractor engages any third party
in furtherance of its duties under this Agreement,
Contractor shall cause such
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third party to execute a written agreement binding such third
party under all provisions of this Section 15, as if such
party were Contractor.
16.0 INDEMNIFICATION
16.1 General Indemnity.
16.1.1 Contractor shall defend, indemnify and hold harmless
the HP from and against any and all claims, losses,
demands, attorney fees, damages, liabilities, costs,
expenses, obligations, causes of action, suits, or
settlement costs for damage or injury (including
death) to any person (including employees) or damage
to or loss of any property arising out of or resulting
from any negligent or willful act or omission by
Contractor or its employees or agents except to the
extent of HP's negligence or willful
misconduct.
16.1.2 Contractor shall defend, indemnify and hold harmless
HP from and against any and all claims, losses,
demands, attorney fees, damages, liabilities, costs,
expenses, obligations, causes of action, suits, or
settlement costs arising out of labor, materials,
services or supplies furnished by Contractor, or its
subcontractors (it being understood that Contractor
shall be responsible to HP, relating to any such
defective Contractor work performed as a
subcontractor for HP) or having an impact upon the
performance of this Agreement (including but not
limited to any laborer's, materialmen's or mechanics'
liens).
16.1.3 Contractor shall also defend, indemnify and hold HP
harmless from any claims or suits against HP arising
from Contractor's use of HP Equipment loaned to
Contractor by HP, including use by its employees,
agents or subcontractors. Contractor will pay all
costs, damages, losses and expenses (including
reasonable attorneys' fees) incurred by HP and will
pay any award with respect to any such claim or
agreed to in any settlement.
16.2 Intellectual Property Indemnity. Contractor will give HP
notice immediately if at any time Contractor knows or
reasonably should know of any third party claim to any
intellectual property used by Contractor to perform Program
Services for HP, provided by Contractor to HP, or made
accessible by Contractor to HP, pursuant to this Agreement.
Contractor will defend, indemnify and hold harmless HP from
all liability arising from the use of such intellectual
property.
16.3 Mechanics of Indemnity. The party claiming a right to
indemnity will provide the indemnifying party with prompt
notice of, and reasonable assistance (at the indemnifying
party's expense) with, any claim, action or proceeding
covered by the indemnity obligations set forth in sections
16.1 and 16.2 above. The party claiming a right to indemnity
will give the indemnifying party the authority necessary to
defend or settle any such claim, action, or proceeding. The
indemnifying party will have the exclusive right to defend
any such claim, action or proceeding. However, neither HP nor
Contractor shall settle or compromise any such claim, action
or proceeding without prior written consent of the other
party. Said written consent will not be unreasonably withheld
by either party. In the event the indemnifying party does not
diligently pursue resolution of the claim, action or
proceeding or provide the other party with reasonable
assurances that the indemnifying party will diligently pursue
resolution, then the other party may, without in any way
limiting its other rights and remedies, defend and/or settle
or compromise such claim, action or proceeding. If the other
party defends such a claim, action or proceeding,
indemnifying party will pay, in addition to any damages
awarded, the actual and reasonable costs and expenses
incurred by the other party in connection with such defense.
17.0 CONTINUING OBLIGATIONS
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17.1 Upon any termination of this Agreement or any Appendix, sections
9, 10, 13, 14, 15, 16, 21, 22, 23, 24, 25, 26, 29, 31, 34, 38,
and this section 17, shall survive in accordance with their
terms.
18.0 DOCUMENTATION
18.1 HP shall provide any proprietary or non-proprietary documentation
(as HP deems necessary) to Contractor regarding the products to
service and support, including but not limited to schematics,
material lists and engineering change orders.
19.0 SUPERVISION
19.1 All persons engaged in the work described in this Agreement shall
be subject to the exclusive direction, supervision, and control
of Contractor. Contractor shall ensure that all persons involved
in the work are appropriately skilled for that portion of the
work assigned to them.
20.0 BACK-UP PERSONNEL
20.1 Contractor shall provide back-up personnel for each of their
employee(s) assigned to HP's account in the event of their
illness, disability, vacation, leave, or absence for any reason.
Said back-up personnel are expected to cover all duties and
responsibilities of Contractor's regular personnel with no
disruption in service.
21.0 SUBCONTRACTORS
21.1 Subcontractors. Contractor will not subcontract any of the
Services to other persons or entities without the prior written
approval of HP. All obligations imposed upon Contractor will be
similarly imposed by Contractor upon any authorized
Subcontractor.Contractor's execution of any subcontracts,
including subcontracts approved by HP, will not relieve, waive
or diminish any obligation Contractor may have to HP under this
Agreement. Fees for subcontracted Services will be included in
the fees and costs billed by Contractor.
21.2 Other Contracts. HP may contract with other Providers in
connection with the Services. Contractor will cooperate with
any other Contractors retained by HP.
21.3 Co-existence. Contractor will not use any process, equipment, or
facility supplied by, developed for, or funded by HP without the
prior written approval of the appropriate HP entity. Since
HP-HPCS is the HP division that oversees the Contractor account
with HP and this Agreement, Contractor will notify HP's HPCS
Account Manager within two (2) working days when any HP division
or non HP business request Contractor to perform similar work
using the same equipment or facilities as HP.
21.4 List of Personnel. Contractor shall maintain a list of all
Contractor employees or Contractor's subcontractors, who have
been granted access to HP information systems and will provide
such list to HP as requested by HP. Upon termination of any
employee, Contractor will inform HP, and take all necessary
actions to remove that person's ability to access Contractor or
HP property or information.
22.0 HP PROPERTY
22.1 Contractor shall ensure that its employees do not remove any HP
Property from the work premises without HP's written permission.
Upon the request of HP, Contractor shall return any HP Property
to HP. Upon the departure of an Contractor employee, Contractor
shall ensure that such employee has returned all HP Property to
Contractor. In the event Contractor is unable to secure the
return of HP's Property from a departing Contractor employee,
Contractor shall be responsible for making diligent efforts to
effect the return of the item and for reimbursing HP for the
value of the HP Property should it not be returned or replaced
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within a reasonable time period not to exceed thirty (30) days
after the employee's termination date.
23.0 HP PRODUCTS
23.1 Consignment. With respect to all HP Products, Equipment or other
property owned by HP and consigned to Contractor (referred to as
"Consignee" in this section), Consignee hereby grants to HP
(referred to as "Consignor" in this section) its power of attorney
to file a UCC-1 financing statement or similar notice describing
the Consigned Goods or HP Products and the proceeds thereof [in
substantially the form attached hereto as Exhibit ___, wherever
HP deems appropriate to provide notice to other parties that the
Consigned Goods are not property of Consignee. Should this
Agreement or the transactions under this Agreement be deemed for
any reason to pass title of the Consigned Goods to Consignee,
Consignee agrees that HP shall be deemed to hold, and Consignee
hereby grants to HP, a purchase money security interest in the
Consigned Goods, and the proceeds thereof including without
limitation the cash and checks described above, to secure all of
its obligations to HP including without limitation obligations
under this Agreement
23.2 Liability for Loss or Damage to HP Products.
23.2.1 General Liability. Contractor shall be liable to HP for
actual loss of, or damage to, HP Products owned by HP
other than loss or damage caused by intentional acts or
gross negligence as set forth in section 23.2.2 below,
with a maximum liability of $1,000,000.00 (US) per
occurrence. The value of all HP Products will be the
invoice price for the HP Products. Contractor's overall
liability under this section shall be subject to the
$5,000,000.00 Limitation of Liability set forth in
section 24.1 below.
23.2.2 Liability for Intentional Acts or Gross Negligence. In
the case of intentional or grossly negligent acts or
omissions, dishonest acts, or the failure to follow
any provision of the agreed upon security requirements
on the part of Contractor or its employees, agents or
subcontractors, Contractor will be liable to HP for
the actual loss of, or damage to, HP Products owned by
HP. The value of all HP Products will be the invoice
price for the HP Products. Contractor's liability
under this section will not be subject to the
liability limitations set forth in sections 23.2.1 or
24.1.
23.2.3 Security Requirements. CONTRACTOR and its employees,
agents or subcontractors agree to follow the attached
security plan Exhibit B.
23.2.4 Inventory Shrinkage Losses. Contractor will be liable
to HP for inventory shrinkage losses as a business
risk and will not charge HP for any separate
insurance to cover this liability. Contractor's
liability to HP for shrinkage losses are excluded
from the limitations of liability set forth in
sections 23.2.1 and 23.2.2 above, as well as section
24.1 below.
23.2.5 Fire or Water Damage. Contractor will be liable for any
Fire or Water damage that causes loss to HP owned
equipment or parts.
23.2.6 Claims Procedure.
23.2.6.1 Contractor must promptly notify HP upon
discovering any loss of, or damage to, HP
Products. Within 60 days following receipt
of such notice, HP will file a claim for
such loss, including loss due to inventory
shrinkage.
23.2.6.2 Contractor will acknowledge all claims
within 30 days of occurrence; resolve all
undisputed claims filed by HP within 60
days of submission by HP; and resolve all
disputed claims filed by HP within 120
days. For any claims outstanding after 120
days, Contractor will be required to
provide written statements to HP concerning
the status of each claim.
23.2.6.3 Reconciliation of all claims filed by HP
against Contractor will not be contingent
upon Contractor's recovery of HP Products or
funds from its
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subcontractors. HP must file any legal
proceedings regarding a disputed claim within 12
months following receipt of notice of loss or
damage.
23.2.7 Limitation of Liability Related to HP Products. Contractor
and its subcontractors will not be liable for loss or damage
resulting from:
23.2.7.1 The negligence or willful misconduct of HP, the
recipient of the HP Products, or anyone with an
ownership interest in the HP Products;
23.2.7.2 Failure of HP systems impacting HP revenues;
23.2.7.3 Any pre-existing defect of the HP Products;
23.2.7.4 Actions of government or sovereign power, or by any
authority maintaining or using military, naval or air
forces; or
23.2.7.5 Earthquakes or other Acts of God.
23.2.8 Dispositions.
23.2.8.1 Contractor, or Contractor's agents and subcontractors,
agree to use its best efforts to protect HP's product
integrity and brand names in the event of transit
damage to said products. HP shall have the exclusive
control over the disposition of salvage and the
disposition of partially damaged product, subject,
however to the laws governing the Contractor's right to
an allowance for any salvage or residual value for
products destroyed by HP in lieu of their sale on the
salvage market.
23.2.8.2 Contractor, or Contractor's agents and
subcontractors have thirty (30) days to return a
product that has been damaged, or refused delivery
by Customer to HP.
23.2.8 Contractor, or Contractor's agents and
subcontractors are not permitted to keep damaged
or defective freight without prior written consent
from HP.
24.0 LIMITATION OF LIABILITY
24.1 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY
FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES IN
ANY WAY ARISING OUT OF OR RELATING TO THIS AGREEMENT EVEN IF THE
POSSIBILITY OF SUCH DAMAGES HAS BEEN COMMUNICATED TO THE OTHER
PARTY. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR
DAMAGES FOR ANY CAUSE WHATSOEVER IN AMOUNT IN EXCESS OF
$5,000,000.00. NOTWITHSTANDING THE FOREGOING, THERE SHALL BE NO
LIMIT ON THE AMOUNT OR TYPE OF DAMAGES RELATING TO BREACH OF ANY
CONFIDENTIALITY OBLIGATION (SECTION 15.1), INTELLECTUAL PROPERTY
INDEMNIFICATION (SECTION 16.2), PERSONAL INJURY OR PROPERTY
DAMAGE INDEMNIFICATION (SECTION 16.1.1) OR CONTRACTOR'S GROSSLY
NEGLIGENT OR INTENTIONAL ACTS OR OMISSIONS RESULTING IN LOSS OR
DAMAGE TO HP PRODUCT (SECTION 23.2.2).
25.0 TOOLING AND EQUIPMENT
25.1 General. All designs, materials and equipment furnished to Contractor
by HP or paid for by HP in connection with this Agreement
(collectively "HP Property") shall:
a) Be clearly marked or tagged as property of HP;
b) Be subject to inspection by HP at any time during normal
business hours;
c) Be used only in performing work under this
Agreement;
d) Be kept reasonably separate from other materials, tools, or
property of Contractor or held by Contractor;
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e) Not be modified in any manner by Contractor without prior
agreement by HP;
f) Have periodic maintenance performed by Contractor;
g) Be kept free of liens and encumbrances which may arise due
to actions of Contractor; and
h) Will be tracked and documented by Contractor on a consolidated
list of all HP property. This list will be provided to the HP
Account Manager on a quarterly basis,noting changes since
prior list was provided.
25.2 Equipment Loan to CONTRACTOR. In the event HP is willing to assign any
equipment or tools for CONTRACTOR's use during this Agreement, the
parties shall execute a separate Equipment Loan Agreement ("ELA"). An
example of an ELA is attached hereto as Exhibit C.
25.3 Equipment Use. Contractor agrees that persons operating HP Property
will be fully trained in the proper use thereof. Contractor hereby
releases HP of all liability arising out of the misuse, or damage
caused by Contractor or Contractor's agents to HP equipment or tools
as provided for in Section 26 (Facility and Equipment).
25.4 Depreciation and Taxes. Contractor shall be solely responsible to
conform to all tax laws and depreciation schedules on all tools and
equipment either leased or procured by Contractor to perform work
under this Agreement. If HP deems necessary, HP may assume the lease
of said tools and equipment. At any time after Contractor's lease of
said tools and equipment is complete, HP may, at HP's discretion,
procure any of said tools and equipment from Contractor for the total
sum of one (1) U.S. dollar.
26.0 FACILITY AND EQUIPMENT
26.1 With the exception of equipment, warehouse facilities, and computer
systems owned by HP, utilized in carrying out the Scope of Work as
described in each Appendices, all equipment, warehouse facilities, and
computer systems used by Contractor in the performance of the Program
Services hereunder shall at all times be owned or leased by
Contractor. Use of HP owned equipment and computer systems by
Contractor shall be at the discretion of HP and shall be restricted to
only those processes that directly support HP and no other customer of
Contractor.
26.2 All expenses incurred by Contractor in the operation of the equipment,
warehouse facilities, and computer systems shall be paid by Contractor
without reimbursement from HP unless specifically identified for
reimbursement in each Appendices. Contractor's sole compensation for
the Program services and other services rendered to HP and sole work
performed for HP shall be as provided for in this Appendix.
26.3 Contractor's administration operation shall provide the computing
systems and peripherals necessary to transact business with its
corporate headquarters or to other Contractor entities.
26.4 All equipment purchased and/or replaced by Contractor must have the
ability to be supported, maintained, and repaired by HP. Contractor
will verify through HP's IT department the supportability of the
equipment before purchase.
26.5 Any and all electronic devices and or wiring connected to HP business
processing systems shall become the property of HP and HP shall retain
title to such devices and/or wiring. It is clearly understood and
acknowledged, that prior to connecting any such electronic devices or
wiring to any HP system, HP must pre-approve of such, in writing,
otherwise the Contractor shall be fully and solely responsible for and
liable for any and all damage. Furthermore, HP shall be responsible
for the purchase, repair and maintenance of such equipment, provided,
however, that HP has pre-approved such, in writing.
26.6 Contractor shall retain title to all other equipment (except as
expressed in Section 26.1 (Facilities and Equipment) and the
(Equipment Loan Agreement) and all documentation related to or
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accompanying the equipment. Contractor shall not loan, transfer,
encumber, sell or otherwise dispose of the equipment without HP's
prior written permission. If any of the above provisions are not met
in their entirety then it shall be deemed that Contractor is in
default of this Agreement.
26.7 Contractor employees, agents and/or subcontractors are hereby strictly
prohibited from removing any equipment, inventory or proprietary
information that is the sole property of HP from HP's or Contractor's
premises or warehouses. In the event that any equipment, inventory or
proprietary information is removed from any of HP's or Contractor's
premises or warehouses, then HP shall have the sole and absolute right
to immediately terminate this Agreement as provided in Section 5.0
(Termination) and Contractor shall be responsible to immediately
reimburse HP for the full retail value of any such inventory or
equipment.
27.0 PERFORMANCE
27.1 Delivery. Contractor commits to Program Services within the time frame
defined in each Appendix. If Contractor fails to meet these
requirements for 2 (two) consecutive months, or any 3 months of a 6
month period, HP shall so inform Contractor in writing, and if
Contractor is unable to remedy the problem within sixty (60) days, HP
may in addition to any other rights it may have, terminate this
Agreement without further liability.
27.2 Supplier Financial Reports. Upon reasonable request from HP,
Contractor shall furnish information concerning its financial status
in relation to this Agreement, including but not limited to: balance
sheet, income statement, and statement of cash flows, to HP. A copy of
all public filings (SEC 10K's and annual reports) will be provided to
HP when they are provided to the public.
27.3 Reports. On a weekly basis, updates of all BFT's, material shortages,
and written reports of the cumulative quantities of materials
processed or in process will be provided to the HP Account Manager.
Such reports shall be submitted on a form agreed upon by HP and
Contractor, and shall be returned to HP in accordance with the
mutually agreed upon reporting schedule.
27.4 Inspection. HP shall have the right to physically inspect at will,
during normal business hours, the Program Services being performed by
Contractor under this Agreement. HP shall also have the right to
perform audits of processes to ensure that inventory, quality,
process, and business controls are maintained and as to Contractor's
compliance to pre-established Electro Static Discharge (ESD) handling
procedures. HP's inspection may be for any purpose reasonably related
to this Agreement, including without limitation to ensure Contractor's
compliance with HP's quality requirements, referenced in each
applicable Appendix. If requested to do so, Contractor will use
commercially reasonable efforts to extend HP inspection rights to any
vendor or supplier of Contractor.
27.5 BFT's. Contractor will run the business to maintain all Business
Fundamental Tables within the agreed control limits and goals set
forth in each Appendix. Contractor will report the BFT's per each site
Appendix as included. Failure on Contractor's part to report BFT's as
agreed or maintain the goals and control limits for 2 (two)
consecutive months or any 3 months of a 6-month period, are grounds
for the termination of this Agreement. Included with the monthly
BFT's, Contractor will provide HP a deviation report for any BFT
metric that is outside the control limits or goals. The deviation
report must include an action plan of how and time line of when the
metric will be corrected within the control limits or goals.
28.0 PROGRAM PROCESS, REPORTING, METRICS AND MEASURES
28.1 Contractor will be measured through the most currently approved
version of HP's Supplier Performance Rating tool, that may focus on
Technology, Quality, Responsiveness, Delivery, Communication,
Environment, Strategic Alliance Relationship, Operational Performance,
and Cost Controls.
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28.2 An example of the Supplier Performance Evaluation is shown in Exhibit
D (TQRDCE Performance Evaluation). The measures will be jointly
developed and supported by HP and Contractor.
28.2.1 Contractor and HP are required to jointly establish
operational metrics for all the Distribution Process. The
management representatives of Contractor and HP will ensure
the operational metrics are kept current and available to
their respective companies. It is acknowledged that the
operational metrics may be modified from time to time to
reflect changes in HP's business, and that HP and Contractor
shall keep each other currently advised as to any such
changes which affect the metrics and the metrics will be
modified accordingly. Contractor is expected to track the
data and provide the information to HP.
28.2.2 Contractor and HP will mutually agree on the operational
metrics that Contractor will be measured and held
accountable for. These metrics will in all attempts measure
those processes that Contractor is in control of.
28.2.3 Contractor commits to perform distribution services per the
established metrics as listed in each Appendix. HP reserves
the right to re-set goals every quarter. HP and Contractor
will mutually agree on any goals that are re-set.
28.3 Contractor management representatives will lead regularly scheduled
meetings between HP and Contractor to review Contractor's performance
in accordance with this Agreement. These reviews will include but not
be limited to:
28.3.1 Monthly BFT reviews. Contractor deliverables, at a minimum,
will include:
28.3.1.1 Reporting on metrics, discussing deviation reports, and
root cause analysis issues.
28.3.1.2 Analyze and report on Program targets vs. actual costs.
28.3.1.3 Report on rolling three month, six month, yearly goals
and progress made to date.
28.3.1.4 Overtime if it exceeds 5%, notification should be
discussed.
28.3.1.5 Cycle Count.
28.3.2 Year-End Review. Will be conducted with a pre-published
schedule.
28.3.3 Process Documentation and Changes: All processes
documentation will be in ISO format or similar standard.
Contractor shall demonstrate to the HP Account Manager that
there are appropriate quality measures in place to meet
designated performance metrics.
28.3.4 TQRDCE will be the method used for these reviews on a
semi-annual basis.
29.0 GOVERNING LAW AND COMPLIANCE
29.1 General. Contractor shall comply with all applicable federal, state,
local and foreign laws, rules, regulations, or orders issued by any
public authority having jurisdiction over their respective obligations
under this Agreement, and furnish to HP any information required to
enable HP to comply with such laws, rules and regulations in its use
of services including without limitation:
29.1.1 The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Occupational Safety Health Act of 1970,
as amended, and any rules, regulations, or order issued
thereunder;
29.1.2 All applicable nondiscrimination requirements, including
without limitation the provisions of Presidential Executive
Order 11246 and the rules and regulations issued thereunder;
29.1.3 The Fair Labor Standards Act, as amended, including all
applicable requirements of the act and the regulations and
orders of the U. S. Department of Labor;
29.1.4 Vocational Rehabilitation Act, American Disability Act, and
the Vietnam Era Veterans' Readjustment Act; and
21
29.1.5 All applicable Environmental Regulations and Laws.
29.2 Dispute Resolution. The Agreement and all rights and obligations
hereunder, including matters of construction, validity, and
performance, shall be governed by the laws of California without
giving effect to the conflict of laws provisions thereof.
Contractor and HP consent to the jurisdiction and venue of such
courts. As a pre-condition to bringing any such action, the
parties shall attempt to settle any controversy, claim, or
dispute between HP and Contractor arising out of or in
connection with this Agreement or any breach, termination or
invalidity thereof, promptly and in good faith, through
authorized representatives of the parties having the authority
to resolve any such dispute. If that does not resolve the
dispute, each party shall appoint a senior official to attempt
in good faith to settle the dispute.
30.0 ASSIGNMENT
30.1 Neither party may, directly or indirectly, in whole or in part,
neither by operation of law or otherwise, assign or transfer
this Agreement or delegate any of its obligations under this
Agreement without the other party's written consent. Any
attempted assignment, transfer or delegation without such prior
written consent will be void. Notwithstanding the foregoing, HP,
or its permitted successive assignees or transferees, may
assign or transfer this Agreement or delegate any rights or
obligations hereunder without consent to any entity controlled
by, or under common control with, HP, or its permitted
successive assignees or transferees. Without limiting the
foregoing, this Agreement will be binding upon and inure to the
benefit of the parties and their permitted successors and
assigns.
31.0 SAFETY AND THE ENVIRONMENT
31.1 Safety.
31.1.1 Contractor shall maintain the facilities and
operations and perform all Program Services under
this Agreement in compliance with all applicable laws
and regulations of any governmental entity or
sovereign authority with jurisdiction over any
applicable Program Services, whether federal, state
or local and whether of the United States or another
country or countries, which pertain to safety,
security, fire protection, and loss control
standards. Upon reasonable written notice, Contractor
will allow HP and its designated representatives
which have been previously approved by Contractor, to
visit any facility at which Program Services are
performed and conduct loss control audits of the
facility and operations.
31.1.2 Contractor shall provide to its employees, agents or
subcontractors such suitable safety appliances as may
be needed to safely perform all Program Services.
31.1.3 As an independent contractor, Contractor acknowledges
and agrees that it is and will remain solely
responsible for the health and safety of its
employees, agents and/or subcontractors.
31.1.4 Contractor shall establish and maintain such
programs, processes and procedures, provide such
equipment and training and take such other steps as
may be required by applicable laws and regulations to
protect the health and safety of Contractor's
employees, agents and subcontractors performing work
or services for Contractor under this Agreement, and
HP shall have no responsibility or liability
therefore, except as provided by law, per Section 29
(Governing Law and Compliance).
31.2 Environment.
22
31.2.1 Ozone Depleting Substances. Contractor shall not use
any Class I or Class II substances, as those terms
are defined in 42 U.S.C. 7671, and in the
implementation regulations of the United States
Environmental Protection Agency, at 40 CFR Part 82 in
its performance of Program Services.
31.2.2 Disposition of Excess Materials. Contractor shall
recycle or dispose of any non-regulated, non-hazardous
excess or waste materials resulting from HP Products or
HP Property in compliance with the provisions of this
Agreement and the applicable Exhibits, and with the
laws and regulations of any governmental entity or
sovereign authority with jurisdiction. Contractor
shall recycle or dispose of any other non-regulated,
non-hazardous excess materials generated from its
operations in performance of Program Services in
compliance with the laws and regulations of any
governmental entity or sovereign authority with
jurisdiction. Any revenue generated from these
operations will be used to offset Contractor's costs
or will be applied as a credit on applicable invoices.
HP has the right to determine disposition of any excess
materials.
31.2.2 Processes and Compliance. Contractor shall
continuously implement and maintain processes and
policies designed, to protect the environment and
will adhere to all applicable laws and regulations
regarding protection of the environment at any
facility, whether owned or leased by Contractor or by
HP, at which Program Services are performed by
Contractor.
31.2.3 Contractor shall establish and maintain such
programs, processes, and procedures, provide such
equipment, and training, and take such other steps as
may be required by applicable laws and regulations,
to protect the health and safety of Contractor's
employees, agents and subcontractors performing work
or services for Contractor under this Agreement, and
HP will have no responsibility or liability
therefore, except as provided by law.
31.2.4 Contractor shall stack and store Material in
compliance with HP's Packaging Standards, marked as
Exhibit E, attached hereto and incorporated herein.
32.0 BACKGROUND AND DRUG SCREENING
32.1 Requiring background and drug screenings is in keeping with HP's
objectives to provide and maintain a safe and secure working
environment; to reduce the risk of thefts of property, funds,
and proprietary information; and to have a work force of the
highest quality and integrity.
32.2 Contractor shall conduct background and drug screenings as
established in the Contractor's Background and Drug Screening
policies. Should the Contractor's Program Services operation be
conducted on a HP owned or leased facility, then Contractor shall
be required to follow HP's Drug and Background Screening
Guidelines which is attached to each applicable Appendix.
32.3 Should any portion of Contractor's work be subcontracted,
Contractor shall warrant and ensure that commensurate
background and drug screenings, which equal or exceed the
expectations set forth for Contractor and Contractor's employees,
have been completed on all subcontractors, and subcontractor's
employees, subcontractors, and/or agents prior to those
individuals performing work directly or indirectly involving HP
or those individuals who otherwise have access to HP sites, data,
products, and assets.
33.0 RELATIONSHIP OF THE PARTIES
33.1 The relationship of the parties to this Agreement is that of
owner and independent contractor. Neither Contractor nor
Contractor's employees, consultants, contractors or agents are
agents, employees or joint ventures of HP, nor do they have any
authority to bind HP by contract or otherwise to any obligation.
They will not represent to the contrary, either expressly,
implicitly, by appearance or otherwise. Contractor will
determine, in Contractor's sole discretion,the
23
manner and means by which the work under this
Agreement is accomplished, subject to the express condition that
Contractor will at all times comply with applicable law.
34.0 TAXES AND BENEFITS
34.1 It is Contractor's obligation to appropriately report all
compensation received by Contractor pursuant to this Agreement
and pay all taxes due on such compensation. Contractor will
indemnify HP against and hold it harmless from any obligation
imposed on HP to pay any employee withholding taxes, social
security, unemployment insurance, workers' compensation
insurance,disability insurance or similar items, including
interest and penalties thereon, in connection with any payments
made to Contractor by HP pursuant to this Agreement.
35.0 GENERAL RESPONSIBILITIES.
35.1 Contractor shall:
35.1.1 Be solely responsible for the means, methods,
techniques, sequences, and/or results of the work and
all acts and omissions of Contractor's employees and
agents;
35.1.2 Obtain all permits required to perform the work;
35.1.3 Abide by all written/verbal safety, and security
procedures of HP while on HP premises;
35.1.4 Coordinate all work without unreasonable interference
with HP's employees or operations in areas around the
work site;
35.1.5 Proceed in good faith to comply with all applicable
Federal, State, and Local laws, statutes and
regulations; and;
35.1.6 Meet, at minimum, HP's environmental guidelines.
36.0 MATERIALS MANAGEMENT
36.1 Packaging. Product packaging for Finished Goods Inventory (FGI)
material shall be in accordance with the HP's packaging
guidelines as stated in each applicable Appendix. Any varying
requirements will be specified by project.
37.0 DESIGN, MATERIAL AND PROCESS CHANGE
37.1 Approval of changes. Contractor will not change any process,
material, or component used in repairing product for HP that
affects Form, Fit, Function, or any specification of any
component, material, or unit without obtaining HP's prior
written approval. Any such changes, including changes that will
increase HP's costs in any way, must be approved by HP prior to
Contractor implementing the change.
37.2 At Contractor's request. Contractor's request will include
applicable test results and any cost, schedule, or other
impact of such change to HP at least thirty (30) days before
it wishes to implement such a change. If required, HP may
request, at HP's expense, (within 5 days) Contractor to
provide sample units of the modified product for HP's evaluation.
HP will approve or disapprove Contractor's request within
ten (10) days after the receipt of information or sample units.
37.3 At HP's request. Should HP desire modifications to the design of
a product, HP will submit a written Production Change Order
("PCO") to Contractor. Contractor will implement the PCO as
stated within the PCO and notify HP of any impact in cost or
schedule within 3 working days of receipt of PCO.
37.4 Continued Process Improvement. Contractor will conduct business
in a manner that promotes a work environment that continually
results in process and quality improvements.
24
38.0 PRICING AND COST
38.1 Currency and pricing. The price for all Program Services and HP
processes, including but not limited to warehousing, receiving,
shipping, and logistic sevices shall be in U.S. dollars, unless
otherwise stated, and shall remain in effect during the Term as
defined in each Appendix. Prices and volumes will be reviewed
mutually on a quarterly basis. Both HP and CONTRACTOR must agree
to price changes in writing prior to the change going into
effect.
38.2 Costing Data. Contractor agrees to help HP understand
Contractor's costs. Contractor further agrees to disclose all
the cost components of the Program Services and Program processes
performed for HP with the intent of reducing overall costs.
39.0 NOTICES
39.1 Notices from CONTRACTOR. Any notices sent by Contractor pursuant
to this DSA are to be sent to the address listed below. If the
notice pertains to any of the attached Appendices of this
Agreement, then the notice shall be sent to the address listed
in each applicable Appendix:
Hewlett-Packard,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇/▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
39.2 Notices from HP. shall be sent to CONTRACTOR at:
Pinnacle Data Systems, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇
40.0 BUSINESS CONTINUITY PLAN
40.1 Contractor will develop and keep current a business continuity
plan which details strategies for response to and recovery from
a broad spectrum of potential disasters that could disrupt
operations and timely delivery of materials required pursuant to
this Agreement.("Disaster" means a serious disruption of the
functioning of an organization, causing widespread human,
material or environmental losses that exceed the ability of the
organization to cope using only its own resources.)
40.2 This plan will include a baseline hazard analysis, a written
recovery plan, and procedures, a mitigation plan to prevent
losses or minimize effects of unavoidable ones and a crisis
communication plan. "Hazard" means an existing or unusual
occurrence in the natural or human-made environment that may
adversely affect human life, property, or activity to the extent
of a disaster. Industrial/Technological Hazards include aircraft
crashes, destruction of data storage, retrieval, and processing
facilities, hazardous materials release, loss of data systems
integrity from breaches of security, power failures, structural
failures, telecommunications failures and transportation failures
Natural Hazards include earthquake, flood, hurricane, landslide,
tornado, tsunami, volcano, wild or forest fire, windstorm and
winter storm.
40.3 Contractor will conduct an annual test and evaluation of its
business continuity plan to ensure expected systemic and process
responsiveness from the Contractor. Any reasonable costs related
to physical movement or relocation of equipment or material
related to this test, will be paid by HP per pre-approved plan.
25
40.4 Upon request, Contractor will make its business continuity plan
and the annual evaluation available to HP or its designated
representative for review.
41.0 FORCE MAJEURE
41.1 Neither Contractor or HP will be liable for any failure or delay in
its performance under this Agreement due to causes, including, but
not limited to acts of God, acts of civil or military authority,
fires, epidemics, floods, earthquakes, riots, wars, sabotage, labor
shortages or disputes, governmental actions, and the unavailability
of materials and components necessary for the repair of units or
sub-assemblies provided that:
41.1.2 performance or delay is beyond CONTRACTOR's reasonable
control;
41.1.3 Contractor gives HP written notice of such cause
promptly, and in any event within five (5) days of
discovery thereof; and
41.1.4 Contractor uses its reasonable efforts to correct such
failure or delay in performance.
41.2 Contractor's time for performance or cure under this section will
be extended for a period equal to the duration of the cause or
sixty (60) days, whichever is less. In the event of a delaying
cause, HP may elect to suspend the Agreement in whole or in part
for the duration of the delaying cause.
42.0 NO WAIVER
42.1 The waiver of any term, condition, or provision of this Agreement
must be in writing and signed by an authorized representative of
both parties. Any such waiver will not be construed as a waiver of
any other term, condition, or provision except as provided in
writing, nor as a waiver of any subsequent breach of the same
term, condition, or provision.
43.0 SEVERABILITY
43.1 If any provision in this Agreement or any Exhibit, or Appendix is
held invalid or unenforceable by a body of competent jurisdiction,
such provision will be construed, limited or, if necessary,
severed to the extent necessary to eliminate such invalidity or
unenforceability. The parties agree to negotiate in good faith a
valid, enforceable substitute provision that most nearly effects
the parties' original intent in entering into this Agreement or to
provide an equitable adjustment in the event no such provision can
be added. The other provisions of this Agreement or any Exhibit or
Appendix will remain in full force and effect.
44.0 MODIFICATION AND AMENDMENT
44.1 No modification or amendment of this Agreement or any Exhibit or
Appendix will be binding on either party unless it is in writing
and signed by an authorized representative of each party and it
expressly states that it is a modification or amendment to this
Agreement or any Exhibit or Appendix.
45.0 EXHIBITS and APPENDICES ATTACHED
All exhibits and Appendices attached to this Agreement shall be deemed
a part of this Agreement and incorporated herein. Terms that are
defined in this Agreement, and used in any exhibit and appendix, have
the same meaning in the exhibit and appendix as in the Agreement.
The following exhibits are hereby made a part of this Agreement:
Exhibit A: Expenditure Proposal
Exhibit B: Contractor Security Requirements
26
Exhibit C: Equipment Loan Agreement
Exhibit D: Performance Evaluation (TQRDCE)
Exhibit E: Packaging Standards
Exhibit F: HP Holiday Schedule
Exhibit G: Pinnacle Holiday Schedule
Exhibit H: Pinnacle Business Continuity Plan
Exhibit I: Electrostatic Discharge Control Standard
This Agreement, including all exhibits, is approved and agreed to by:
Hewlett-Packard Company - HP PINNACLE DATA SYSTEMS, INC.
---------------------------- ---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇ ▇▇▇▇
Title: HP Customer Support Manager Title: Vice President/COO
Signature: _______________________ Signature: _______________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Sourcing Development Manager
Signature: _______________________
27
Exhibit A
Expenditure Proposal
EXPENDITURE PROPOSAL FORM
-------------------------
The following items have been approved by the ________________________Division
of Hewlett-Packard for purchase for the ______________________________ program
operated by [Contractor's Name] ("Contractor") for the benefit of
Hewlett-Packard. It is acknowledged that these items exceed the pre-approved
expenditure allowance of $___________.
-----------------------------------------------------------------------
ITEM/DESCRIPTION COST AMORTIZATION OWNER AFTER
PERIOD DEPRECIATION
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
SUBMITTED BY: DATE:
-----------------------------------------------------------------------
APPROVED BY: DATE:
Hewlett-Packard Co.
-----------------------------------------------------------------------
APPROVED BY: DATE:
Contractor
-----------------------------------------------------------------------
NOTE: For each item listed above, a separate document MUST be attached that
fully describes how transfer of ownership of the item, or distribution of funds
from sale or salvage of the item, will be handled in each the following
situations:
1. The item will no longer be required for the program being managed
by Contractor, OR
2. Either HP or the Contractor terminates the contract for the program
being managed by Contractor.
28
Exhibit B
Contractor Security Guidelines
1. ACCESS CONTROL
1.1. ACCESS CONTROL (EMPLOYEES, CONTRACTORS, TRUCKERS)
A formal access control program is required for all individuals that
enter a warehouse where HP products are stored, manufactured,
repaired or shipped to other destinations. All individuals should be
granted access on a business need only basis. HP reserves the right
to refuse access to any individual for business, security or safety
reasons.
1.2. VISITOR BADGE PROCESS and ESCORT PROGRAM
All visitors should be properly identified and issued ID badges
accordingly. Any person other than an employee of the third party
vendor should be required to be escorted at all times while in the
facility. An exception to this would be employees of the third party
supplier.
1.3. SIGN IN and OUT PROCEDURE
All individuals should be required to sign in and out of any third
party warehouse facility. An exception to this would be if the
facility is under card key control. Those individuals who hold valid
card keys would use the system to log in and out. All others would
still be required to sign the log. All logs should be archived for a
period of one year.
1.4. TOUR CONTROL
Any individual (including Hewlett-Packard employees) should be
required to have pre-authorization from HP Program Manager or their
representative PRIOR to any tour into designated areas of facilities
where services are being provided or inventory is being stored for
HP.
2. ALARM SYSTEMS
2.1. DOCK DOORS and ALARM CONTACTS
A process should exist to prevent unauthorized access via dock
doors. The process shall include:
2.1.1. Ensuring that doors are only open when a trailer is
properly attached and sealed to the building;
2.1.2. Ensuring that security officers are present in the case of
any open door(s);
2.1.3. Ensuring that all doors are equipped with alarm contacts
linked to a local security command center or central
monitoring station.
2.2. EMERGENCY EXITS and ARMING, I.E. LOCAL SCREAMERS, ETC.
All non-staffed emergency exits should at a minimum be alarmed with
local screamers that require reset by a key. Additional enhancements
could include reporting back to a command center or central
monitoring station.
2.3. INTERIOR ELECTRONIC DETECTION IN BUILDING/ZONING OF ALARM SYSTEM
To compliment perimeter controls, infrared protection within the
facility has proven to be beneficial especially in low use areas.
Consideration may be given to establishing zone patterns for alarms.
This will enable management to provide additional protection to low
use areas as well as component storage during normal business hours.
29
2.4. ALL MANNED DOORS SHOULD HAVE LATCH PLATES INSTALLED
External doors should have latch plates installed to prevent
unauthorized entry.
2.5. ROOF HATCHES
Roof hatches should be assessed for adequate protection levels.
Considerations should be given to monitor contact alarms or steel
grates/bars preventing easy intrusion.
2.6. ALARM REPORTING RESPONSE AND ALARM ARMING
A process should be in place to ensure timely reporting and
escalation of all alarm conditions. This process should include
alarm & de-alarming procedures, i.e. times of day, who can authorize
an unlock, etc.
2.7. ALARM CHECKS AND PM PROCESSES
Written procedures should be in place to ensure that all alarms are
checked frequently to ensure proper operation. A preventative
maintenance program should compliment this process.
3. SECURITY SYSTEMS
3.1. DOCK AND PERSONNEL DOOR CAMERAS
It is preferable to have surveillance cameras at all non-staffed
employees access doors. All shipping and receiving docks should have
cameras installed to adequately monitor all activities in these
areas.
3.2. ARCHIVING VCR TAPES
Tapes that have been used to record access, egress and dock
activities should be archived for a minimum of ninety (90) days.
New, replacement tapes should be provided to replace tapes that
begin to deteriorate in picture quality & resolution.
4. PRODUCT and INVENTORY PROTECTION
4.1. HP PRODUCT PROTECTION
All Hewlett-Packard property and products should be stored in such a
way that they are not mixed in with other companies' property. Where
possible, motion sensors should compliment segregation procedures to
enhance inventory protection. High-risk materials should not be
stored outside of the warehouse, i.e. not left in trailers or on
exterior docks.
4.2. SMALL COMPONENTS IN CAGES
Small components such as microprocessors and other chips with high
street dollar values should be stored in cages that have additional
security procedures for access. This would include limited access,
which could be controlled by card key access, high level key systems
and/or sign in and out logs. Cameras should be installed to monitor
the inventories stored in these cages.
5. EXTERIOR and PERIMETER PROTECTION
5.1. EXTERIOR LIGHTING
Lighting should be adequate enough to cover all building perimeters
and personnel parking areas. All gatehouses should be well
illuminated to enable proper identification of employees and
vehicles.
5.2. PERIMETER FENCING and GATES
All facilities should be fenced, at least seven (7) feet high with
chain link fabric of number nine (9) wire, and with three (3)
strands of barbed wire on outward supports at the top. All gates
should be locked when not in use. Gatehouses should be staffed by a
security officer during normal business hours and locked when not in
use.
30
Exhibit C
Equipment Loan Agreement
THIS EQUIPMENT LOAN AGREEMENT, NO. ____ (the "Agreement") is entered into
between HEWLETT-PACKARD COMPANY, a Delaware corporation ("HP"), and
__________________, a ______________ company located at_________________________
("Recipient"). This Agreement is effective as of _______________, _____
(the "Effective Date").
[Recipient and HP are currently parties to a _________________________ Agreement
(the "Master Service Agreement"), dated as of______________, _____.]
1 Loan of Equipment. HP hereby loans to Recipient, for the applicable Term
-----------------
defined below, the HP-owned equipment (collectively, "HP Equipment"),
which may consist of hardware, software and documentation described in the
HP Equipment Schedule attached as Attachment 1. HP may, from time to time,
------------
add, upgrade, or remove HP Equipment from Recipient's site during the
Term. All HP Equipment received by Recipient during the Term will be
described in an amended HP Equipment Schedule signed by Recipient and
appended to this Equipment Loan Agreement. Recipient agrees, by its
receipt of HP Equipment, that all HP Equipment is subject to the
provisions of this Agreement.
2 Term. This Agreement will begin as of the Effective Date and run for a
----
term of _________ months (the "Term"), unless earlier terminated by HP
or Recipient upon thirty (30) days written notice to the other. HP may
in writing extend the Term, or establish a separate Term with respect
to particular items of HP Equipment.
3 Use. Recipient may use the HP Equipment solely for purpose of:
---
______________________________ [in accordance with the Master Service
Agreement]. Recipient may not move any HP Equipment from the location
specified in the HP Equipment Schedule without the prior written consent
of HP. Recipient's right to use the HP Equipment is non-transferable.
4 Software and Documentation. All software provided with the HP Equipment is
--------------------------
hereby licensed to Recipient under HP's Software License Terms, a current
form of which is attached as Attachment 2. If Recipient requires a license
------------
to use any software other than as stated in the Software License Terms,
that license must be specified in the HP Equipment Schedule. Any
documentation listed in the HP Equipment Schedule is licensed to Recipient
for its use solely for the purposes stated in Section 3 above. If
Recipient wishes to make copies of any documentation, it must first obtain
HP's prior written consent.
5 Ownership. HP retains all right, title and ownership to the HP Equipment,
---------
unless Recipient purchases any such HP Equipment. Recipient hereby
nominates and appoints HP as its attorney-in-fact for the sole purpose of
executing and filing, on Recipient's behalf, UCC-1 financing statements
(and any appropriate amendments thereto) or a suitable substitute document
(including this Agreement) under the provisions of the Uniform Commercial
Code for the HP Equipment loaned to Recipient hereunder. A form of an
UCC-1 financing statement will be used for this purpose. If requested by
HP, Recipient will affix any label or marking supplied by HP evidencing
HP's ownership of the HP Equipment. HP may, from time to time, inspect the
HP Equipment. Recipient may not sell, transfer, assign, pledge, or in any
way encumber or convey the HP Equipment or any portion or component of
such equipment.
6 Warranty Disclaimer. ALL HP EQUIPMENT IS PROVIDED "AS IS", WITHOUT
-------------------
WARRANTY OF ANY KIND, WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING BUT
NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. Recipient understands that some newly manufactured HP Equipment
may contain remanufactured parts equivalent to new in performance.
31
7 Indemnification. Recipient hereby agrees to defend, indemnify and hold HP
---------------
harmless from any claims or suits against HP arising from Recipient's use
of the HP Equipment, including use by its employees, agents or
subcontractors. Recipient will pay all costs, damages, losses and expenses
(including reasonable attorneys' fees) incurred by HP and will pay any
award with respect to any such claim or agreed to in any settlement.
8 Maintenance. During the Term, Recipient will maintain all HP Equipment in
-----------
good operating order and condition. All maintenance must be provided by
personnel authorized by HP. HP will provide standard installation, support
and maintenance for the HP Equipment [at no cost] [at HP's standard rates]
to Recipient during the Term; however, all maintenance costs and expenses
due to Recipient's negligence will be borne by Recipient. Recipient will
be responsible for providing HP personnel ready and safe access to the HP
Equipment for such maintenance and support.
9 Risk of Loss. Recipient will bear all risk of loss with respect to the HP
------------
Equipment from receipt until such HP Equipment is returned to HP. All HP
Equipment returned to HP must include the same components as received by
Recipient, and must be in good operating order and condition. Charges may
be imposed by HP if Recipient fails to return the HP Equipment in such
condition or within the return timeframe set forth herein.
10 Shipping Costs. Unless otherwise agreed in writing by HP, Recipient will
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be responsible for and pay all delivery, freight and rigging charges, all
taxes and duties, and all other shipping costs and expenses with respect
to the delivery or return of any HP Equipment hereunder.
11 Limitation of Liability. HP WILL NOT BE LIABLE FOR ANY DIRECT, INDIRECT,
-----------------------
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON CONTRACT,
TORT, OR ANY OTHER LEGAL THEORY, ARISING OUT OF THIS EQUIPMENT LOAN
AGREEMENT OR RECIPIENT'S USE OF THE HP EQUIPMENT.
12 Termination. Upon expiration or earlier termination of the Term, Recipient
-----------
will return to HP all HP Equipment within 10 workdays. HP may permit
Recipient to purchase certain items of the HP Equipment upon termination
under the purchase terms set forth below. In the event that Recipient is
permitted to purchase any of the HP Equipment and fails to return that
Equipment to HP upon expiration of the Term within such 10-day period,
Recipient will be deemed to have elected to purchase the HP Equipment,
and HP will invoice Recipient accordingly.
13 Purchase Option. If HP permits Recipient to purchase any of the HP
---------------
Equipment, Recipient may elect to purchase those items of the HP Equipment
under HP's then current standard terms and conditions, provided that such
HP Equipment may not be purchased solely for resale. Upon purchase, such
HP Equipment will be provided with HP's then current standard warranty
provisions for used equipment. The purchase price for HP Equipment
purchased under this Section will be the then current list price less
a ______% discount. No other promotional or purchase discounts will apply.
Such purchase will not qualify for any stock rotation or price protection
under any other agreement that Recipient may have with HP.
14 General Provisions.
------------------
a) Notices . All notices to be given under this Agreement must be in
-------
writing and addressed to the location specified in the Master
Agreement or as designated in the opening Section of this
Agreement if there is no Master Agreement. Notices are validly
given upon the earlier of confirmed receipt by the receiving party or
three days after dispatch by courier or certified mail, postage
prepaid, properly addressed to the receiving party. Notices may also
be delivered by telex and will be validly given upon oral or written
confirmation of receipt. Either party may change its address for
purposes of notice by giving notice to the other party in accordance
with these provisions.
32
b) No Assignment. Neither this Agreement nor any right, privilege,
-------------
license or obligation set forth herein may be assigned,
transferred or shared by Recipient without HP's prior written
consent, and any such attempted assignment or transfer is void.
Any merger, consolidation, reorganization, transfer of
substantially all assets of Recipient or other change in control
or ownership of Recipient will be considered an assignment for the
purposes of this Agreement.
c) Entire Agreement. This Agreement and the attached Exhibits
----------------
comprise the entire understanding between the parties with respect
to its subject matter and supersede any previous communications,
representations, or agreements, whether oral or written. No
modification of this Agreement will be binding on either party
unless in writing and signed by an authorized representative of
each party.
d) Governing Law. This Agreement will be governed in all respects by
-------------
the laws of ____________ without reference to any choice of laws
provisions, as though this Agreement were entered into by
residents of that State to be wholly performed within that State.
The parties hereby waive any application of the United Nations
Convention on Contracts for the International Sale of Goods (as
promulgated in 1980 and any successor or subsequent conventions)
with respect to the performance or interpretation of this
Agreement.
APPROVED AND AGREED:
RECIPIENT:_____________________ HEWLETT-PACKARD COMPANY
By: By:
Print Name: Print Name:
Title: Title:
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PROGRAM EQUIPMENT LOAN AGREEMENT
AND ASSET LIST
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Program Equipment and Asset List Page 1
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Contract # Location Contractor Name:
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Responsible
Date ID # or Equipment Equipment Description Equipment for Disposition Disposition Name of
Listed HP Asset # Serial # Manufacturer Model # Condition Maintenance Date Description Disposer
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Exhibit D
Performance Evaluation (TQRDCE)
TQRDCE is a set of performance expectations and measurement criteria for use in
qualifying new service CONTRACTORs, and managing the ongoing long-term business
relationship with existing service CONTRACTORs.
The initials TQRDCE represent: Technology, Quality, Responsiveness, Delivery,
Cost and Environment.
The success of service CONTRACTOR performance is rightfully shared with our
service CONTRACTORs who specifically contribute to our commitment to
excellence. Successful service CONTRACTOR performance in the areas of TQRDCE
will increase the opportunity for repeat business, increased sales, and
profitable growth.
A primary objective for procurement is: To maintain a competitive advantage by
providing materials of the highest quality and lowest cost, with the best
delivery, responsiveness, and technology available, by selecting fewer but
better service CONTRACTORs. In order to accomplish this objective, the TQRDCE
criteria were developed.
Technology
HP must compete in the world market on the basis of manufacturing technology, as
well as design technology. We expect our service CONTRACTORs to be technological
leaders in their respective fields of design and manufacturing. Service
CONTRACTORs are expected to participate in mutual engineering throughout HP's
products' life cycle to enable timely introductions and continuous quality and
cost improvements.
Quality
HP set a quality goal of zero defective products for electrical, mechanical,
cosmetic, and administrative reasons. HP's quality expectation is defect-free
materials. Quality and reliability are expected to be achieved through superior
design, process control and continuous process improvements. All material is to
be fit for use, and to be cosmetically acceptable.
Responsiveness
HP expects service CONTRACTORs to be responsive to swings in demand, with short
cycle times, and appropriate inventory management, while maintaining flexible
capacity capabilities to successfully resolve problems and improve worldwide
service.
Delivery
HP expects deliveries to be 100% on time all the time within a window of -3/+0
(three days early and no days late). To achieve this expectation there must be
continuous improvement in overall delivery performance and our service
CONTRACTORs must be prepared to meet commitments worldwide. Lead times must be
short by industry standards, reliable and decreasing over time.
COST
HP expects to minimize costs and obtain the lowest average price worldwide.
Environment
HP recognizes its obligations to be a good citizen in each nation and community
in which it operates. HP must conduct its operations in such a manner that
protects the environmental quality of these countries and communities. Our
service CONTRACTORs are an integral part of this effort; therefore, HP service
CONTRACTORs are expected to conduct their operations in an environmentally
responsible manner.
By setting service CONTRACTOR expectations HP hopes to:
- maximize customer satisfaction;
35
- maximize profitability for all contributors to the system;
- maximize responsiveness to change; and
- provide a framework for effective communications
To accomplish these objectives HP will need to:
- establish and maintain long-term commitments;
- promote effective communications;
- obtain mutual agreement on expectations and goals;
- treat a service CONTRACTOR's process as an extension of HP's
processes;
- and utilize a team approach to achieve performance improvements
(proactive/cooperative).
The success of service CONTRACTOR performance is rightfully shared
with our service CONTRACTORs who specifically contribute to our
commitment to excellence. Successful service CONTRACTOR performance in
the areas of TQRDCE will increase the opportunity for repeat business,
increased sales, and profitable growth.
36
Exhibit E
HP Packaging Standards
37
Exhibit F
HP HOLIDAY SCHEDULE
=========================================================================================
HP 2001 2002 2003
Company-Designated Date/Day Date/Day Date/Day
Holiday Observed Observed Observed
=========================================================================================
=========================================================================================
New Year's Day Jan 01 (Mon) Jan 01 (Tue) Jan 1 (Wed)
=========================================================================================
▇▇▇▇▇▇ ▇▇▇▇▇▇ Jan 15 (Mon) Jan 21 (Mon) Jan 20 (Mon)
King Day
=========================================================================================
Presidents' Day Feb 19 (Mon) Feb 18 (Mon) Feb 17 (Mon)
=========================================================================================
Memorial Day May 28 (Mon) May 27 (Mon) May 26 (Mon)
=========================================================================================
Independence Day July 04 (Wed) Jul 04 (Thu) Jul 04 (Fri)
=========================================================================================
Floater ----------- Jul 05 (Fri) -----------
=========================================================================================
Labor Day Sep 03 (Mon) Sep 02 (Mon) Sep 01 (Mon)
=========================================================================================
Thanksgiving Nov 22 (Thu) Nov 28 (Thu) Nov 27 (Thu)
=========================================================================================
Day After Thanksgiving Nov 23 (Fri) Nov 29 (Fri) Nov 28 (Fri)
=========================================================================================
Floater Dec 24 (Mon) ----------- -----------
=========================================================================================
Christmas Dec 25 (Tue) Dec 25 (Wed) Dec 25 (Thu)
=========================================================================================
Floater ----------- ----------- Dec 26 (Fri)
=========================================================================================
March 01, 2001
38
Exhibit G
Contractor Holiday Schedule
39
Exhibit H
Contractor Business Continuity Plan
40
Exhibit I
Electrostatic Discharge Control Standard
(begins on following page)
41