Division Repair/Refurbishment Agreement
Support Materials Organization
Contract Number C2-603
Revision A
This Divisional Repair/Refurbishment Agreement is entered into by and between
Support Materials Organization referenced as "SMO" a division of the
Hewlett-Packard Company referenced as "HP", located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and Delta Parts, Inc., referenced as "DPI", located at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. This agreement is as follows:
The purpose of this agreement is to provide for an arrangement between HP and
DPI pursuant to which DPI will provide to HP repair, refurbishment, and
disassembly services and develop written processes therefor with respect to HP's
personal computer, netserver, and network products.
1. Precedence
1.1 The provisions of this agreement and the attached exhibits take
precedence over HP's or DPI'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.
1.2 In the event of any conflict between the provisions of this
agreement and any release or exhibit, the order of precedence is as
follows:
a) This agreement;
b) The exhibits to this agreement;
c) Any instructions on the front of HP's written or electronic
release;
1.3 All instruments such as purchase orders, releases, order
acceptances, confirmations, invoices and the like used in connection
with this agreement shall be for the sole purpose of describing,
defining or identifying products, services, quantities, prices, amounts
due, delivery dates and destinations. and to this extent only are
incorporated into this Agreement All of the printed or other terms on
the front and reverse side of any such instrument shall be void and of
no force or effect.
1.4 All references in this agreement to "HP" shall mean only the
Support Materials Organization (SMO).
2. Notices
2.1 Any notices sent by DPI pursuant to this agreement are to be sent
to Hewlett-Packard, Support Materials Organization. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and to the attention to the Account
Manager.
2.2 Releases, order information and other routine notices shall be sent
to DPI at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. All other notices
shall be sent to both DPI's Rocklin, California address as well as to
its headquarters at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
3. Governing Law
3.1 Both parties 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:
(a) The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Occupational Safety Health Act of 1970, as
amended, and any rules, regulations, or order issued thereunder;
(b) All applicable nondiscrimination requirements, including without
limitation the provisions of Presidential Executive Order 11246
and the rules and regulations issued thereunder;
(c) The Fair Labor Standards Act. as amended, including all applicable
requirements of sections 6, 7 and 12 of the act and the
regulations and orders of the U.S. Department of Labor issued
under section 14; and
(d) Vocational Rehabilitation Act and the Vietnam Era Veterans'
Readjustment Act.
3.2 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. As a pre-condition to bringing any action, each
party shall try to settle the dispute in good faith. If that does not
resolve the dispute, each party shall appoint a senior official to
attempt in good faith to settle the dispute.
4. Product and Process Scope
This agreement covers the repair, test, refurbishment, disassembly, and
packaging processes for HP Materials to the specifications supplied to
DPI by HP. The processes may take place on and within HP property or in
a DPI leased or owned facility that has been approved by HP. Changes in
the pricing or processes associated with DPI'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 and/or using HP
owned or leased equipment systems, and processes, DPI shall notify HP
in writing within sixty (60) days of its intent to provide services to
other entities, and any such notice will be reviewed and agreed to in
writing by both parties.
4.1 Supervision
All persons engaged in the work described in this agreement shall be
subject to the direction, supervision, and control of DPI. DPI shall
ensure that all persons involved in the work are appropriately skilled
for that portion of the work assigned to them.
4.2 Relationship of the Parties
The relationship of the parties to this agreement is that of owner and
independent contractor, and not that of master and servant, principle
and agent, employer and employee, partners, or joint venturers.
4.3 DPI's Employee Obligations and Assignment of Rights
All employees of DPI are obliged and required to follow all
written/verbal HP plant, safety and security rules in place while on
the premises of HP. DPI shall neither assign any rights nor delegate
any duties
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under this agreement without the prior written consent of HP. DPI shall
not subcontract any of the work without the prior written consent of
HP; if HP consents to the use of a subcontractor, such subcontractor
shall be bound to the terms and conditions of this Agreement as an
agent of DPI.
4.4 General Responsibilities
DPI shall:
(a) Be solely responsible for the means, methods, techniques,
sequences, and/or results of the work and all acts and
omissions of DPI's employees and agents;
(b) Obtain all permits required to perform the work;
(c) Abide by all written/verbal safety. environmental
guideline, and security procedures of HP;
(d) Coordinate all work without unreasonable interference with
HP's employees or operations in areas around the work site:
and
(e) Proceed in good faith to comply with Presidential Order
11246 and all rules and regulations issued thereunder.
4.5 Releases
(a) HP will initiate a request for refurbishment or
disassembly services by issuing a purchase order to DPI
specifying quantity of product and due date for project. Each
purchase order will be accompanied by project specific
instructions and expected material condition (good, supposed
to be good, defective, or ready for resale).
(b) Repair services will be triggered by demand shown on the
Real-time Production Scheduling (RPS) on-line report or
subsequent replacement reports. DPI will process repairs based
upon the demand and availability of defective material.
5. Term
5.1 This shall be a forty eight (48) month agreement for the period of
February 20, 1996 to February 28, 2000, inclusive. Either party may, at
any time, except as stated in section 22, on or after the first
anniversary of the commencement date, terminate this agreement in
writing upon one hundred twenty (120) days prior written notice. If no
such notice is given, this agreement will expire on February 28, 2000.
In such event, HP shall be liable only for payment in accordance with
the provisions of this agreement for work performed prior to the
effective date of termination, and DPI shall deliver to HP all work
completed or in progress up to the date of termination. In the event
DPI terminates this agreement, HP may require that DPI complete work in
progress; such complete work shall be subject to approval by HP before
payment is made.
5.2 Upon the expiration of the original 48-month term of this Agreement
or of any extension hereof, or upon an earlier termination of this
Agreement by HP as provided above, the parties recognize that DPI will
incur costs for canceling or fulfilling agreements, commitments, or
contracts and will have continuing obligations that it cannot satisfy
out of revenues theretofore provided by HP under this Agreement. It is
the
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intention of the parties that HP shall pay or reimburse to DPI such
costs and shall assume or satisfy such obligations. Such costs and
obligations are hereinafter referred to each as an "Obligation" and
collectively as "Obligations."
5.3 Without limiting the generality of Section 5.2, upon such
expiration or early termination, HP shall assume DPI's then remaining
Obligations under any lease or leases on any facility or facilities
being used (in whole or in part) by DPI to provide services to HP (to
the extent DPI vacates the same), and shall pay, or reimburse to DPI,
as the case may be, the out-of-pocket costs actually incurred or
payable by DPI for canceling or fulfilling any other Obligations to the
extent they extend beyond the date of such expiration or early
termination.
5.4 In the event of a termination by notice as provided above, or in
the event that HP gives DPI advance notice that it will not renew or
extend this Agreement upon its expiration, DPI will use commercially
reasonable efforts to cancel any Obligations with respect to any period
after such termination or expiration in a manner designed to minimize
the cost of such Obligations to be paid or assumed by HP.
5.5 No Obligation incurred by DPI, except for Obligations incurred in
the normal and ordinary course of its day-to-day business shall be
paid, reimbursed or assumed by HP unless such Obligation was approved
by HP in advance. However, DPI shall obtain HP's prior consent and
approval before entering into any real estate lease, any obligation to
pay for real estate leasehold improvements, any single equipment lease
with annual lease payments in excess of $6,000. or any single purchase
commitment for delivery of goods or services over greater than a twelve
(12) month period.
6. Pricing
The price for repair, testing, refurbishment, disassembly, and
packaging shall be in U. S. dollars, unless otherwise stated, and shall
remain in effect during the Term as defined in section 5. Prices and
volumes will be reviewed two times per year. Price changes must be
agreed to by both HP and DPI.
6.1 Payment
Payment by HP for services shall be net fifteen (15) days, after
receipt by HP of an appropriate invoice from DPI.
6.2 Costing Data
DPI agrees to help HP understand DPI's costs. DPI further agrees to
disclose the cost components of its repair, testing, refurbishment.
disassembly, and packaging processes with the intent of reducing
overall costs. HP agrees to provide assistance and information
necessary to enable DPI to reduce its costs with the understanding that
such cost savings shall be shared with HP. DPI and HP may enter into a
DPI employee incentive program (gain sharing) at some future date.
6.3 Profit Margin
Refer to Exhibit IV, Compensation.
7. Compensation
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7.1 Rates
Refer to Exhibit IV, Compensation.
7.2 List of Personnel
Prior to the start of work and subsequently as personnel are added, DPI
shall maintain a list of all current employees who perform or who are
expected to perform any portion of the work. This list shall state the
names and classifications of each employee and will be provided to HP
monthly. Upon termination of any employee DPI will inform HP and take
all necessary actions to remove that person's ability to access DPI or
HP property or information.
7.3 Limit on Compensation and Expenses
HP's compensation to DPI will not exceed the total expenditure by DPI
for all previously approved expenses, including all labor for
value-added services with a 12% (twelve percent) profit and operating
expenses at cost over a six month period. For value-added services,
compensation will be based upon a maximum hourly rate determined
quarterly. Any expenditures for capital or operating equipment and
labor services for non-value added processes that exceed $2000 will be
reviewed by HP prior to DPI committing funds for said equipment or
labor services.
8. Invoice Processing
HP's invoicing guidelines shall be followed as stated in Exhibit III.
9. Delivery and Performance
DPI commits to repairing, testing, refurbishment, disassembly. and
packaging assemblies within the time frame defined in Exhibit 1. If DPI
consistently fails to meet these requirements, HP shall so inform DPI
in writing, and if DPI 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, except as noted in
sections 5.2 and 5 3.
10. Supplier Status Reports
10.1 Upon reasonable request from HP, DPI shall furnish information
concerning its financial status (i.e.; 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.
10.2 On a weekly basis, 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 DPI, and shall be returned to HP in accordance with the mutually
agreed upon reporting schedule.
11. DPI Access to HP Proprietary Databases and Documentation
DPI will have access to HP confidential and proprietary databases and
documentation which is necessary for the successful completion of work
under this agreement. DPI will not disclose any information derived
from such databases and documentation to any source external to HP,
including other Hewlett-Packard
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Company entities or to anyone other than those employees of DPI who are
directly involved in the processes being performed under this
agreement.
12. Inspection
HP shall have the right to physically inspect at will, during normal
business hours, the repair, testing, refurbishment, disassembly, and
packaging processes being performed by DPI. HP shall also have the
right to perform audits and processes to ensure that inventory.
quality, process, and business controls are maintained and as to DPI'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 DPI's
compliance with HP's quality requirements, referenced in Exhibit II. If
requested to do so, DPI will use commercially reasonable efforts to
extend HP inspection rights to any vendor or supplier of DPI.
13. HP Property
13.1 DPI 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, DPI shall return any HP Property to HP. Upon the
departure of a DPI employee, DPI shall ensure that such employee has
returned all HP Property to DPI. In the event DPI is unable to secure
the return of HP's Property from a departing DPI employee, DPI 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 within a reasonable time period not to
exceed sixty (60) days after the employee's termination date.
13.2 Any work product directly created for and funded by HP in the
course of performing services under this agreement (including, for
example, reports) shall be the property of HP and 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 contract is in
effect DPI will have the right to use the work product in its
performance of this contract.
13.3 DPI will be diligent in its efforts to protect HP Property (such
as products for repair, disassembly or refurbishment, component
inventory, tools and test equipment) in the care, custody, and control
of DPI from theft by DPI's agents, employees and subcontractors for
from any event due to DPI's negligence. If loss beyond $500 per
incident occurs, DPI will be liable for reimbursing HP for such loss.
The funds for reimbursement to HP will be fully funded by DPI. HP
agrees to limit DPI's liability to HP for loss of real and personal
property and consequential damages to a maximum of $1,000,000 per
occurrence.
13.4 DPI shall provide all security posting instructions to HP and
updates of any changes. DPI will also insure that HP is notified of all
security breaches though the incident report process.
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14. Tooling / Equipment
14.1 All designs, materials and equipment finished to DPI 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 filling releases from HP;
d) Be kept reasonably separate from other materials, tools, or
property of DPI or held by DPI;
e) Not he modified in any manner by DPI without prior agreement
by HP;
f) Have periodic maintenance performed by DPI; and
g) Be kept free of liens and encumbrances which may arise due to
actions of DPI.
14.2 In the event HP is willing to release any equipment or tools for
DPI's use during this agreement, the parties shall execute a separate
Equipment Loan Agreement.
14.3 DPI agrees that persons operating HP Property will be fully
trained in the proper use thereof. DPI hereby releases HP of all
liability arising out of the misuse, or damage caused by DPI or DPI's
agents to HP equipment or tools.
15. Insurance
During the term and at all times that DPI performs services for HP, DPI
shall maintain in full force and effect, at DPI's expense, the
following minimum insurance coverages.
15.1 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 $500,000 per accident for bodily injury by accident, $500,000
policy limit by disease, and $500,000 per employee for bodily injury by
disease.
15.2 General Liability Insurance
DPI 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.
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.
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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.
Except with respect to products and completed operations coverage, the
aggregate limits shall apply separately to DPI's services under this
agreement.
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 DPI offers insurance to or on behalf of HP employees. During
the Term and at all times that DPI performs services for HP, DPI shall
maintain in full force and effect, at DPI's own expense, insurance
coverage to include
If "claims made" policies are provided, DPI shall maintain such
policies without endangering aggregate limits at the above stated
minimums, for at least five years after the expiration of the term.
15.3 Automobile Liability Insurance
DPI 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.
15.4 Fidelity / Crime Bond
DPI will be covered by Fidelity Insurance or Commercial Crime Bond as
respects DPI's agents, employees, and subcontractors performing under
this Agreement with blanket limits of at least $1,000,000 per
occurrence.
15.5 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. All
insurance policies shall be written by a company authorized to do
business in the state where the services are rendered. DPI shall
furnish copies of any endorsements subsequently issued which amend
coverage or limits.
16. Indemnification
16.1 HP, as one party, and DPI, as another party (as the case may
be, the "Indemnifying Party"), shall defend, indemnify and hold
harmless the other party (as the case may be, the "Benefited Party")
from and against any and all claims, losses, demands, attorney fees,
damages, liabilities, costs, expenses, obligations, causes of action or
suits;
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(a) 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 act or omission
by the Indemnifying Party or its employees or agents
(provided, however, where both parties are negligent,
liability shall be apportioned between the parties based upon
the relative negligence of each);
(b) Arising out of labor, materials, services or supplies
furnished by the Indemnifying Party, or its subcontractor(s)
(it being understood that DPI shall be responsible to HP,
relating to any such defective DPI work performed as a
subcontractor for HP) and from all laborer's, materialmen's or
mechanics liens arising from work performed by or for the
Indemnifying Party;
(c) Arising out of or resulting from breach by the
Indemnifying Party of its obligations under this agreement:
and
(d) Arising out of or relating to a failure by the
Indemnifying party to comply with any applicable federal,
state or local law, regulation, order, judgment or decree.
(e) From any claims by a third party of infringement of
intellectual properties resulting from the acts of
indemnifying party pursuant to this agreement, provided that
the other party
(1) gives the indemnifying party prompt notice of any such
claims,
(2) renders reasonable assistance to the indemnifying
party thereon, and
(3) permits the indemnifying party to direct the defense
or settlement of such claims This indemnification
shall not include any consequential damages sustained
by the other party as result of any such third party
claims.
16.2 The Indemnifying Party shall promptly notify the Benefited Party
in writing of any matter as to which the above indemnification
obligation relates.
16.3 The Benefited Party shall promptly, and in all events within sixty
(60) days of obtaining actual knowledge thereof, notify the
Indemnifying Party of the existence of any claim, demand, or other
matter requiring a defense to which the Indemnifying Party's
obligations under this section 16 would apply. The Benefited Party
shall give the Indemnifying Party a reasonable opportunity to defend
the claim, demand or matter at the Indemnifying Party's own expense and
with counsel selected by the Indemnifying Party and satisfactory to the
Benefited Party; provided that the Benefited Party shall at all times
also have the right to fully participate in the defense at its own
expense. Any such claim, demand or other matter shall not be settled or
compromised without the consent of the Benefited Party; provided,
however, if the Benefited Party does not consent to such settlement or
compromise, such claim, demand or other matter shall not be settled or
compromised, but the Indemnifying Party's obligation to indemnify with
respect hereto shall be limited to the amount for which such claim,
demand, or other matter could have been settled or compromised,
together with the cost of defense through the date such matter could
have been settled or compromised. If the Indemnifying Party shall,
within a reasonable time after the receipt of the notice, fail to
defend, the Benefited Party shall have the right, but not the
obligation, to undertake the defense, and to compromise or settle,
exercising reasonable business judgment, the claim, demand or other
matter on behalf, for the account and at the risk of the Indemnifying
Party. If the claim is one that cannot by its nature
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he defended solely by the Indemnifying Party (including, without
limitation, any federal or state proceeding) the Benefited Party shall
make available, or cause to be made available, all information and
assistance that the Indemnifying Party may reasonably request.
17. Packaging
Product packaging for Finished Goods Inventory (FGI) material shall be
in accordance with the SMO packaging guidelines part number 5181-1981.
For Hardware Recycling Organization (HRO) material packaging will be
specified by project.
18. Cancellation
HP may postpone, decrease, or cancel any release by verbal notice to
DPI if business needs dictate. If DPI incurs expenses due to a
cancellation or to any changes that are not covered by a current
purchase order, DPI and HP will mutually agree to the compensation DPI
will receive.
19. Proprietary Rights
19.1 DPI shall use commercially reasonable efforts to ensure that its
employees respect and protect HP's proprietary rights in connection
with the services performed.
(a) DPI shall use commercially reasonable efforts to ensure that
its employees agree not to make any unauthorized use or
disclosure, during or subsequent to their employment by DPI, of
any knowledge or information of any unpublished confidential or
proprietary nature respecting HP's inventions, designs, process or
methods, systems, improvements, trade secrets or other private or
confidential matter of HP to which DPI's employees are exposed, or
observe or which is generated or otherwise acquired by them during
their employment by DPI.
(b) Any HP confidential information received by DPI s employees
shall be held in trust and confidence by them and DPI, and shall
not be disclosed without the prior written consent of HP.
(c) DPI warrants and represents that it has, through agreements
with its employees or otherwise, the right and power to effect the
foregoing obligations.
(d) DPI shall not make or use any copies, synopses, or summaries
of oral or written material, photographs or any other
documentation or information made available or supplied by HP to
DPI. unless authorized in writing by HP, except as necessary to
perform work under this agreement.
19.2 HP retains all rights and remedies afforded it under the patent
and other laws of the United States and the states thereof which are
designed to protect property or confidential information.
19.3 DPI will protect HP's processes and knowledge transferred from
being used in a competitive nature in repairing, disassembling, or
refurbishing HP products for other customers. Services under this
clause include repair, refurbishment, or disassembly processes of HP
products for customers other than HP that have been learned through the
services DPI is providing to HP in California and subsequent locations.
This
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clause does not include services that DPI has developed solely in their
operations in Minneapolis, Minnesota to service HP products.
20. Confidential Information
20.1 The provisions of Sections 11, 13, 19 and 20 of this agreement
serve as the Confidential Disclosure Agreement between DPI and HP.
20.2 DPI shall not disclose to any person or entity, except as
necessary to perform work under this agreement, any confidential
information of HP, whether written or oral, which DPI may obtain from
HP or otherwise, discover. As used in this article, the term
"confidential information" shall include, without limitation:
o All information or data concerning or related to HP products
(including the discovery, invention, research, improvement,
development, manufacture, or sale of HP products) or business
operations (including sales costs, profits, pricing methods,
organizations, employee or customer lists, and processes);
o All forecasts for production, support, or service requirements
submitted by HP pursuant to this agreement, whether oral, written,
or communicated in computer-readable format; and
o All other HP property of a confidential nature.
20.3 DPI shall maintain all confidential information in strict
confidence. DPI shall take all reasonable steps to ensure that no
unauthorized person or entity has access to confidential information,
and that all authorized persons having access to confidential
information refrain from any unauthorized disclosure. DPI shall
maintain a signed copy of DPI's "Invention and Non-Disclosure Letter
Agreement", attached as Exhibit V, for each person employed for work
pertaining to this agreement.
20.4 The provisions of sections 11, 13, 19 and 20 shall not apply to
any information that:
o Is rightfully known to DPI prior to disclosure by HP;
o Is rightfully obtained by DPI from any third-party without any
obligation of confidentiality;
o Is made available by HP to the public without restrictions;
o Is disclosed by DPI with the prior written approval of HP;
o Is independently developed by DPI; or o Is required to be
disclosed by court order or any judicial or administrative
procedure.
20.5 HP shall provide any proprietary or non-proprietary documentation
to DPI regarding the products deemed necessary by HP to service and
support the products, including but not limited to schematics, material
lists and engineering change orders.
21. Contingencies
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21.1 DPI shall not be liable for any delay in performance under this
agreement caused by an act of God or any other cause beyond DPI's
control and without DPI's fault or negligence (collectively "delaying
cause"). DPI shall, in the event of a delaying cause, immediately give
notice to HP of that cause.
21.2 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.
22. Default
22.1 If either party fails to perform or breaches any material
provision of this agreement, and if the damaged party provides written
notice to the offending party of such failure to perform or breach and
if the offending party fails to provide a written response within ten
(10) days from receipt of the damaged party's written notice, and fails
to cure the failure to perform or the breach within sixty (60) days,
from the receipt of such written notice, then the damaged party may,
except as otherwise prohibited by the United States Bankruptcy laws,
terminate the whole or any part of this agreement. Further, if
voluntary bankruptcy proceedings are instituted against DPI and not
discharged within sixty (60) days, HP may, except as otherwise
prohibited by United States Bankruptcy laws, terminate the whole or any
part of the agreement.
22.2 In the event that HP terminates this agreement in whole or in part
as provided in Section 22.1 above, HP may procure, upon such terms and
in such manner as HP deems appropriate, services similar to the
services as to which this agreement is terminated. DPI shall reimburse
HP upon demand for all additional costs incurred by HP in purchasing
such similar services.
22.3 The rights and remedies granted to the parties pursuant to this
agreement are in addition to. and shall not be deemed to limit or
affect, any other rights or remedies available at law or in equity.
23. Miscellaneous
Unless otherwise stated all references to "days" shall mean calendar
days.
24. Exhibits Attached
All exhibits attached to this agreement shall be deemed a part of this
agreement and incorporated herein. Terms which are defined in this
agreement, and used in any exhibit, have the same meaning in the
exhibit as in the agreement.
The following exhibits are hereby made a part of this agreement:
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Exhibit I Purchased Product Provisions
Exhibit II Special Quality Provisions
Exhibit III Invoicing / HP Part Return Billing Process
Exhibit IV Compensation
Exhibit V DPI Invention and Non-Disclosure Letter Agreement
This agreement, including all exhibits, is approved and agreed to by:
Hewlett-Packard Company - SMO Delta Parts, Inc.
----------------------------- ----------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: SMO Manufacturing Manager Title: President
Signature: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ Signature: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------- ---------------------
Date Signed: _____________________ Dated Signed: __________________
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Exhibit I
Purchased Product Provisions
1. Quality
1.1 DPI warrants that all work and resulting material shipped to
HP shall:
a) Be in conformance with HP's Quality Workmanship Standards,
and HP's Packaging Standards;
b) Conform to the specified requirements for all releases;
c) Be processed by DPI or by companies authorized by DPI under
DPI s direction and HP's prior approval.
1.2 DPI shall designate an appropriate technical person as the
principle technical contact on repair, test, refurbishment,
disassembly, and packaging issues, should support be needed.
2. Shipment/Delivery
2.1 Upon request from HP, DPI shall use commercially reasonable efforts
to accommodate fluctuations in HP's production schedule which includes
expediting, pull-in and/or push outs. Any/all charges for this service
will be negotiated and mutually agreed upon.
2.2 If requested by HP, DPI will provide emergency delivery service
("Hotline Service") during normal business hours. DPI will make
diligent efforts to meet HP's customer requirements during the same day
and not-to-exceed twenty-four (24) hours of the original request. HP
will pay a negotiated and mutually agreed upon service charge provided
there are no past due orders.
2.3 All products processed for the Hardware Recycling Organization
(HRO) will follow the specific instructions for that project.
2.4 DPI shall, for any proposed variances in completing work schedules,
give HP no less than twenty-four (24) hours advance notice. This notice
will be accompanied by a mutually agreed upon recovery plan describing
corrective actions necessary, a proposed completion plan, and a
"recovery date". If DPI's completions are less than seventy (70%)
percent on time, a corrective action meeting will be arranged by HP, at
a mutual place and time, with the appropriate representatives of both
parties. During HP's consideration of any proposed variance, DPI shall
use commercially reasonable efforts to continue to ship products
released according to the then agreed upon lead time.
2.5 Material for repair will be processed in accordance with the
procedure / instructions for the Real-Time Production Scheduling
Report. IF DPI is unable to provide material volumes in accordance with
the plan they will notify the appropriate HP buyer within twelve (12)
hours.
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Exhibit II
Special Quality Provisions
1. Purpose
The purpose of these Special Quality Provisions is to establish an
understanding and agreement between HP and DPI regarding Shipping
Inspection, Ship To Stock (STS), and Reliability Programs.
2. Requirements
2.1 DPI shall initially inspect a percentage of their finished product
at the shipping inspection area until Ship to Stock (STS) yields are
achieved. STS yields are defined to be a minimum of ninety nine percent
(99%), allowing a maximum of one percent for both major or minor
defects. Major defects are specification violations that HP believes
will result in a customer complaint upon installation. A minor defect
is a specification violation of a lesser nature which may not result in
a customer complaint. HP shall tabulate and present all specification
violations to DPI as a major portion of the general Supplier profile.
Profile information will be utilized as a means to generate continuous
improvement.
2.2 HP shall return rejected units to DPI for analysis, corrective
action, and repair. HP expects that STS quality will be attained within
one hundred twenty (120) days of first production receipts.
2.3 Upon request, DPI shall supply HP with monthly analysis data and
corrective action reports. Failures categorized by HP as high priority
require such reports in forty-eight (48) hours.
2.4 A rejected unit is defined to be a unit that does not meet the
agreed upon specified requirement.
2.5 If units are rejected due to gross negligence by DPI then all
rework costs for those units will he at DPI's expense.
2.6 HP reserves the right to exercise "MIL STD 105D Sampling Plan" or
other mutually agreed quality verification program as a means of
verifying the ninety-nine (99%) percent shipping inspection yield at
DPI.
3. Supplier Responsibility
3.1 DPI shall strive to ship defect-free material as measured at
Shipping Inspection at DPI.
3.2 DPI shall analyze all units returned by HP, and document timely
corrective action instituted to prevent any further rejects. For all
corrective action, DPI shall provide HP with written analysis, results,
and implementation date.
3.3 DPI shall be Electro-Static Discharge (ESD) compliant as defined by
HP.
3.4 DPI shall document all failed units and lots. This documentation
will be provided to HP upon request.
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4. HP Responsibility
4.1 HP shall provide written specifications for DPI to utilize within
their processes that will be used for measuring their compliance with
this exhibit.
4.2 HP shall inform DPI of any customer complaints that are due
to DPI's processing of product under this agreement.
4.3 HP shall, as instructed by DPI, arrange to ship defective
units or lots to the appropriate DPI facility.
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Exhibit III
Invoicing / HP Part Return Billing Process
1. Invoicing
1.1 DPI is required to generate an invoice twice monthly. One invoice
shall cover the first through the fifteenth day of the month. The
second shall cover the sixteenth day of the month through the month's
end. Each invoice will reference the purchase order number for the
appropriate work and time frame. All invoices are to be sent to the HP
Account Manager for review and approval prior to mailing to the
following address:
Hewlett-Packard Company
Financial Service Center
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
The HP Account manager will review all invoices within two (2) working
days of receipt. If DPI has not received a response from HP on the
approval of the invoices within the two (2) working days they may
process the invoices for payment. If discrepancies are discovered, DPI
and HP will provide diligent efforts to resolve the discrepancies in a
timely manner.
1.2 DPI shall send all invoices to HP within thirty (30) days of
completion of work. Any open invoices that DPI has not sent for payment
within ninety (90) days of completion of work require approval by the
HP Account Manager prior to submittal for payment.
2. Defective Material Processing
Upon notification of defective material in HP's FGI stock, that was
repaired by DPI, DPI will rework the material in accordance with the
original specifications. If the defective material is due to DPI's
gross negligence, DPI will incur the costs thereof and not ▇▇▇▇ HP.
Under all other circumstances HP and DPI will mutually agree as to the
compensation to DPI for the rework.
3. Supplier Account Status Report
Upon request from HP, DPI shall furnish HP with a statement detailing
the outstanding invoices issued to HP.
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Exhibit IV
Compensation
Area Process for Determining Payment
Repair -
April & May 1996 Actual Costs for all labor and expenses incurred. No
profit to be added.
--------------------------------------------------------------------------------
June 1, 1996 - 12 % profit margin applied to value-added labor rates
May 31, 1997 Value-added labor is composed of direct labor.
engineering labor, and direct administrative labor.
Additional labor and expenses will be passed through
at cost. Billing will be based upon actual expenses
incurred.
--------------------------------------------------------------------------------
June 1 1997 - 12 % profit margin applied to value-added labor rates
duration Value-added labor is composed of: direct labor,
engineering labor, and direct administrative labor.
Additional labor and expenses will be passed through
at cost.
On a quarterly basis HP and DPI will agree to a labor
rate which will cover all DPI expenses for the
California facility that is operated for HP. This
labor rate will be applied to the standard time
established for each product being repaired. Billing
will he based upon the number of pieces of each
assembly flowed into FGI at HP. On a monthly basis
all expenses incurred by DPI will be mutually
reviewed to ensure that the proper profit has been
earned by DPI. In the event of over or under recovery
by DPI, a mutual agreement will be reached as to
disposition of such funds.
--------------------------------------------------------------------------------
Disassembly, Test Prior to the beginning of each project, a time
and Refurbishment estimate for processing a single unit will be
established. This time estimate will he
applied to an appropriate hourly rate that has been
mutually determined by HP and DPI on a quarterly
basis. Billing will be based upon the number of items
processed for the specific project. On a quarterly
basis all expenses incurred by DPI will be mutually
reviewed to ensure that the proper profit has been
earned by DPI. In the event of over or under recovery
by DPI, a mutual agreement will be reached as to
disposition of such funds.
--------------------------------------------------------------------------------
Process Development DPI is to estimate labor costs for process
(Labor Services) development so HP can select certain options.
Labor will include a 12% profit margin.
Options:
1. Charge costs to a special account number for
process development and include with monthly invoices
as noted above (similar to training and meetings), or
2. Spread costs over a number of months, or
3. Recover costs in a lump sum payment following the
start up.
18
--------------------------------------------------------------------------------
Start Up or Process DPI to estimate start up costs for process
Development Costs development so HP can select certain options.
(Equipment, Tooking No profit margin on start up costs or equipment.
and Test Equipment) Options:
1. Spread costs over certain number of months and
keep within HP's fiscal year to avoid a carry over,
or
2. Recover costs in a lump sum payment following the
start up.
--------------------------------------------------------------------------------
Repair Material, HP has certain options.
Packaging Material 1. No DPI risk if we follow agreed to order
And Orders policies: Subcontract actual costs, no profit
margin, direct ▇▇▇▇ to HP weekly and pass along any
material acquisition costs not covered in
DPI overhead (i.e., inspection time, handling
discrepant material, etc.)
2. Full DPI risk: Actual costs plus 12% profit
margin, billed separately as material is consumed.
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Exhibit V
Delta Parts, Inc.
INVENTION AND NON-DISCLOSURE LETTER AGREEMENT
Delta Parts, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
In consideration of my employment with Delta Parts, Inc. (the Company"), I
hereby agree as follows:
1. Definitions. As used in this letter agreement -
1.1 Confidential Information means all information (whether or not
patentable and whether or not copyrightable) owned, possessed, or
used by the Company including, but without limitation thereto, any
Invention (as defined below), formula, vendor information,
customer information, non-public financial information, apparatus,
equipment, trade secret, research report, technical data,
know-how, computer program, software, software documentation,
hardware design, technology, or business plan that is communicated
to, learned of, developed, or otherwise acquired by me in the
course of my employment with the Company and that is not generally
known to the public. Without limiting the generality of the
foregoing, Confidential Information shall expressly include, but
not be limited to -
1.1.1 All Hewlett Packard Company ("HP") information marked
"proprietary" and/or "confidential"; 1.1.2 All information
acquired through access to any HP computer system or database; and
1.1.3 All information received by the Company or me from HP's
Hardware Recycling Organization for processing of HP equipment.
1.2 Employment Period means the period during which I am employed by
the Company.
1.3 Invention means any invention, discovery, computer program,
software, data technology, design, innovation or improvement
(whether or not patentable and whether or not copyrightable) that
is related to the Business of the Company (as defined below) and
that is made, conceived, reduced to practice, created, written,
designed or developed by me alone or jointly with others, whether
during normal working hours or otherwise, either (a) during the
Employment Period, or (b) following the expiration of the
Employment Period if resulting or directly derived from the
Company's Confidential Information.
1.4 Business of the Company means any research. development,
application or other activity related to, or in the field of, the
repair of technology products, the sale and exchange of
replacement parts for such products, the disassembly of such
products, and the refurbishment of such products.
20
2. Inventions, Patents, Copyrights etc.
2.1 I will promptly disclose to the Company all Inventions and will
maintain a laboratory and research notebook or equivalent record
in order to document the conception and/or first actual reduction,
to practice of any Invention.
2.2 Each Invention shall be the property of the Company.
2.3 I hereby assign to the Company all Inventions and any and all
related patents, copyrights, trademarks, trade names. and any
other industrial and intellectual property rights and applications
therefor, in the United States and elsewhere, and I hereby appoint
any officer of the Company as my duly authorized attorney to
execute, file, prosecute and protect the same before any
government agency, court or authority.
2.4 Upon request of the Company and at the Company s expense, I shall
execute such further assignments documents and other instruments
as may be necessary or desirable in order to fully and completely
assign all Inventions to the Company and to assist the Company in
applying for and obtaining and enforcing patents or copyrights or
other rights in the United States and in any foreign country with
respect to any Invention.
3. Confidential Information
3.1 I agree that I will not during the employment period or at any
time thereafter, disclose, communicate or divulge to another, or
use for my own benefit or for the benefit of another, any
confidential Information or Invention.
3.2 My obligations under this Paragraph 3 will not apply to any
information that (a) is or becomes known to the general public
under circumstances involving no breach by me or others of the
terms of this Paragraph 3; (b) is generally disclosed to third
parties by the Company without restriction on such third parties;
or (c) that is approved for release by written authorization of
the Board of Directors of the Company.
3.3 Upon termination of my employment with the Company or at any other
time upon request by the Company, I will promptly deliver to the
Company all records, files, memoranda, notes, designs, data,
reports, price lists, customer lists, drawings, plans, computer
programs, software, software documentation, sketches, laboratory
and research notebooks and other documents (and all copies or
reproductions of such materials) relating to the business of the
Company in my possession or control. However, I shall not be
required to deliver to the Company my personal copies of reference
or educational materials that are not Confidential Information and
materials distributed generally to Customers or other persons
outside the Company that are not Confidential Information.
3.4 I represent that my employment with the Company and my performance
under this letter agreement do not and will not breach any
agreement which obligates me to keep in confidence any trade
secrets of confidential or proprietary information of mine or of
any other party, or obligates me to refrain from competing,
directly or indirectly, with the business of any other person or
organization I further represent that I shall not disclose to the
Company any trade secrets or confidential or proprietary
information of mine or of any other person or organization.
21
3.5. I agree to submit to the Company any proposed publication that
contains any discussion relating to the Company or any work
performed by me during the course of my employment with the
Company related to the Business of the Company, and I will not
proceed with such publication without the prior written consent of
the Company.
3.6 During the Employment Period, I will not emerge in any activity
that is in conflict with the interests of the Company, including
any employment, business or other activity that is competitive
with the Business of the Company, and I will not assist any other
person or organization which competes or intends to compete with
the Company.
4. Covenant Not to Solicit. For a period of one (1) year after my
employment with the Company terminates, in order to permit the Company
to protect Confidential Information, I shall not directly or indirectly
recruit or otherwise solicit or induce any employees of the Company or
of any of its subsidiaries to terminate their employment with, or
otherwise cease their relationships with, the Company or any of its
subsidiaries.
5. General Provisions
5.1 This letter agreement shall be binding upon and inure to my
benefit and the benefit of the Company and our respective heirs,
executors, administrators, legal representatives, successors and
assigns.
5.2 In case any provision of this letter agreement shall, for any
reason, be held invalid or unenforceable in any respect, such
invalidity or unenforceability shall not affect any other
provision, and this letter agreement shall be construed as if such
invalid or unenforceable provision had not been included herein.
5.3 Any waiver or accommodation by the Company at any time shall not
act as or be deemed to be a continuing waiver or accommodation and
shall not require the Company to provide any future or later
waiver or accommodation.
5.4 I acknowledge and agree that a breach by me of the provisions of
this letter agreement will cause the Company irreparable injury
and damage. I therefore expressly agree that the Company shall be
entitled to injunctive and/or other equitable relief in any court
of competent jurisdiction to prevent or otherwise restrain a
breach of this letter agreement.
5.5 This letter agreement may be amended only by a written document
executed by me and the Company.
Very truly yours,
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------- Date_______________________________
Accepted and Agreed as of the date set forth above:
Delta Parts, Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
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