EXHIBIT 10 (x)
HP
invent
AMENDMENT TO AGREEMENT
HP Agreement No.: 01-17-6261
Supplier: Pinnacle Data Systems, Inc.
ORIGINAL
Amendment No.: 01
This Amendment to the above referenced HP Agreement is executed by and between
the Supplier named above and Hewlett-Packard Company:
This Amendment adds new Exhibit VIII to Appendix B (Statement of Work):
Exhibit VIII (Support Terms for Tape Library Products) to Appendix B (Statement
of Work is attached herein (pages 2 - 12).
All other Terms and Conditions contained in this Agreement shall remain
unchanged.
This Amendment to Agreement has been reviewed and accepted by the following
parties as duly noted by signatures below.
HEWLETT-PACKARD COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇
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Typed Name: ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇
Title: Storage Manager
Date: 11/5/02
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PINNACLE DATA SYSTEMS, INC.
By: /s/ ▇. ▇. ▇▇▇▇
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Typed Name: ▇▇▇ ▇▇▇▇
Title: Vice President/COO
Date: 10/15/02
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Appendix B Statement of Work
Exhibit V111
SUPPORT TERMS FOR TAPE LIBRARY PRODUCTS
Purpose of this Exhibit. The terms contained in this Exhibit apply to any
component part, sub-assembly, or assembly of a FRU Product identified by a
unique HP Part Number assigned by HP and purchased by HP Global Supply
Operations ("HP-GSO") from Supplier under the terms of this Agreement. This
Agreement Exhibit VIII shall be deemed as an Addendum of the Statement of Work
Appendix B to Divisional Service Agreement # 0 1 - 17-6261 between Hewlett
Packard and Pinnacle Data Systems Inc. (hereafter referred to as PDS) herein.
1.0 Definitions.
I "Field Replaceable Unit" FRU shall mean any component part, sub-
assembly, or assembly of a Product identified by a unique HP Part
Number assigned by HP and purchased by HP-GSO from Supplier under this
agreement. Such Product(s) may be used by HP GSO to replace in the
field the same FRU(s) that has been identified as defective or non
functional in a HP customer's system/product. FRU(s) purchased under
the terms of this Exhibit are generally intended for use by HP only in
post sales repair and support of Products and/or HP customer systems.
2.0 Scope.
2.1 Supplier shall manufacture or repair all Automated Tape Storage FRU(s)
according to the manufacturing or repair process specification by HP and
shall ship said FRU(s) to HP GSO according to the terms for Purchase Order
and Delivery as set forth in this agreement or to customers via the Virtual
Sourcing program.
2.2 The terms for Product Support of those FRU(s) provided by Supplier and
identified as set forth in paragraph 3.1 of this Exhibit, shall include
HP's Product Manufacture Life ("Product Life") and HP's Product Manufacture
Discontinuance Support Life ("Support Life") defined as follows:
2.2.1 Product Life shall mean the period that spans from the date of
the first shipment of the Product from Manufacturer to the date
the Product is deleted from the HP Corporate Price List ("CPL")
or last ship date.
2.2.2 Support Life shall mean the period of time from the date the
Product is deleted from the HP Corporate Price List (CPL) plus
five (5) years and nine (9) months.
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2.2.3 Supplier will provide technical support and ongoing
manufacturing support for the FRU(s) for a period of (5) years
from the date the FRU(s) is removed from the CPL. Prior to the
end of (5) year period, and upon HP GSO request, Supplier will
perform a last build and Supplier shall transfer to HP GSO all
current manufacturing documentations and specifications listed
in paragraph 4.1 of this Exhibit. Supplier shall transfer or
sell to HP GSO all unique tools and equipment related to
manufacturing. In addition, Supplier shall provide necessary
training and technical support to HP GSO or Third party
Supplier on NRE basis.
3.0 Product Support Documentation.
3.1 For HP designed Products, Supplier shall review HP commercial and
technical support documentation for accuracy, and provide feedback to
HP if necessary. HP will provide Supplier with current manufacturing
documentation and Specifications listed below on the occasions of new
Product introductions and changes for updates or revisions through
HP's Product Life and Support Life:
3.1.1 ▇▇▇▇ of Materials ("BOM");
3.1.2 Approved Vendor List ("AVL)
3.1.3 Schematic drawings;
3.1.4 Assembly drawings;
3.1.5 Document revision history;
3.1.6 Functional test and in-circuit test ("ICT") manufacturing test
programs, fixtures, schematics, process flows, yields and test
time;
3.1.7 Raw PC board CAD data and drilling assembly drawings;
3.1.8 A "No change" note for any of the above documents that are
unchanged (no revisions); and
3.1.9 Packaging requirements, workmanship and quality specifications.
4.0 Technical Support for Product Support. During the Product Life and until
the end of Support Life, to facilitate Supplier's ability to perform
manufacturing of FRU(s), Supplier must maintain technical expertise on
manufacturing of FRU(s), including: trained personnel, documentation,
Supplier as single point of contact for HP GSO, tools and equipment
(operational) needed for manufacture and repair; and ready access to the
most current manufacturing documents.
4.1 Supplier must follow the manufacturing and/or test processes developed
for FRU(s) subject to the Manufacturing Process Change Management
provisions of this agreement.
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5.0 TQRDCE. See Exhibit D of Divisional Service Agreement # 0 1 - 17-6261
between HP and PDS.
6.0 Manufacturing/Test Process Change Management. No geographical relocation of
Manufacturing/Test facilities, process changes, design changes, or process
step discontinuances affecting the electrical performance, the mechanical
form, fit or function, or availability of FRU(s) will be made or
incorporated into a Product's manufacturing or repair process without prior
written HP approval. In addition, sixty (60) days prior to the first
proposed shipment of any FRU(s) involving such a change, Supplier must give
written notice to BP GSO that purchase said FRU(s). Less than thirty days
notice of such changes may be given only when the parties have implemented
an automated process management and/or notice process that allows for less
than sixty (60) days notice to affected BF GSO.
6.1 Manufacturing Process Discontinuance. Supplier must maintain all
manufacturing processes required to provide FRU(s) to HP GSO until the
end of Support Life. Upon obtaining HP GSO approval, manufacturing of
FRU(s) may be subcontracted to a third party of Supplier's choice.
Supplier must notify HP GSO of its desire to implement such a
subcontract process no less than 180 days, unless authorized by HP
GSO, prior to implementation of the subcontract process.
6.1.1 Under no circumstances will approval of subcontract process(es)
relieve Supplier of its obligations specified in this Agreement.
6.2 Product Revision Updates. All FRU(s) shall be manufactured at the most
current manufacturing revision level approved or provided by HP prior
shipment to HP GSO or customers, unless otherwise specified by BP.
6.3 HP GSO Organization Forecasts. HP GSO may provide forecasts to
Supplier. All forecasts so provided Supplier pursuant to this Exhibit
are only estimates, and shall not be construed to be commitments to
purchase fixed quantities, however HP GSO shall use reasonable efforts
to ensure said forecasts are accurate.
6.4 Purchase Order Lead-time. PDS agrees to communicate most current
lead-time to the appropriate HP Procurement Representative and HP
agrees to reflect most current lead-time in the HP planning system(s).
Parts on the Virtual Sourcing program will follow the guidelines and
requirements as set forth in the Direct Connect VS Agreement # C2-607.
6.5 Shipping Discrepancies. Any Product that is shipped by the Supplier in
error shall be brought to the attention of HP GSO immediately. Timely
resolution of shipping errors is critical. Examples of shipping
discrepancies may include, but are not limited to: damaged Products,
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missing parts or components, wrong Products in box, Products shipped
but not on the packing list, wrong quantity, and incomplete Products.
6.5.1 Discrepancy Report. HP will submit to Supplier a report which
identifies all shipping errors, indicating quantity and
reason(s) for errors, as requested. HP GSO requires Supplier to
provide written response showing corrective action(s) to be
taken to correct errors within 10 days.
6.6 Purchase Order Placements and Acknowledgement Process. Supplier must
provide a delineation of the process required for placement of an
order.
6.7 Acknowledgement Turn Around Time. HP GSO requires that Supplier
acknowledge a minimum of 97% of Purchase Orders within 24 hours of
receipt of the Purchase Order or Release. HP GSO further requires that
no Purchase Orders remain unacknowledged by Supplier for a period
greater than five (5) business days.
6.8 Purchase Order Re-Acknowledgement Conditions. On-Time Delivery by
Supplier will be measured against the originally acknowledged ship
date. If Supplier is unable to meet the originally acknowledged ship
date and informs BP GSO of a change to the acknowledged ship date. HP
GSO may change the shipment due date (i.e., re-acknowledged ship date)
against which Supplier is measured if the re-acknowledged ship date is
due to the following:
6.8.1 The originally acknowledged ship date does not respect the
agreed Purchase Order lead-time; or
6.8.2 The orders exceed the capacity of the dedicated repair equipment
assuming full utilization of Supplier labor resources.
6.9 Partial shipment In the event only a portion of the Purchase Order on
order is available on the current acknowledged ship date, Supplier
shall notify HP GSO, provide an update of the current acknowledged
ship date (re-acknowledgement as stated in section 6.8 above), and
ship the available FRU(s) unless directed by HP GSO to reschedule the
entire shipment. If HP GSO agrees to accept partial shipment, the
acknowledged ship date for the effected Purchase Order shall be
adjusted by HP GSO to reflect the same.
7.0 Purchase Order Cancellation. HP GSO may without charge postpone,
decrease, or cancel any order of FRU(s) by written notice to Supplier.
Such notice shall be given to Supplier at least twenty (20) business
days prior to the acknowledged Delivery Date.
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8.0 Product Allocation Management Process. In situations where Supplier is
unable to fulfill Purchase Order requirements for multiple HP GSO orders
(i.e., Product or component shortages), Supplier shall immediately notify
all effected parties when a resource conflict exists. Upon notification, HP
GSO and the effected Eligible Purchasers will determine allocation of
resources and notify Supplier of their decision.
9.0 Lower Level Component Safety Stock. Supplier shall always maintain a
minimum safety stock level equivalent to two weeks inventory of lower level
component based on HP GSO most recent previous three month's consumption of
FRU(s) or forecast.
10.0 Rework Data. Supplier must maintain complete records of rework performed on
FRU(s) returned by HP. Individual traceability shall be based on each
Product's unique Serial Number. Rework data collected shall include, at a
minimum, the following information: HP part number, Cause of failure and/or
failure code, No Trouble Found (NTF), lower level component consumption,
number of times each unique Product has been reworked/tested, actual
component failure replaced, date of test/rework.
10.1 Reporting. Supplier shall report all available quality data as
requested. Supplier will evaluate implementation of web-based quality
data reporting application program specified by HP GSO as requested.
10.2 ISO Certification. Supplier shall provide written documentation of
manufacturing procedures and meet other requirements that may be
required by HP GSO to receive and retain ISO Certification until the
end of Support Life.
10.3 ESD Compliant. Supplier must meet all ESD requirements as required by
HP.
11.0 Individual Packaging for Product Support. All FRU(s) shipped by Supplier to
HP GSO or HP GSO designated drop-ship location for Product Support purposes
shall be packaged in individual packaging ("single-pack") and shall be in
accordance with HP packaging standards set forth in HP document number A-
▇▇▇▇-▇▇▇▇-▇, as specified in the Statement of Work. Supplier shall be
responsible for any loss or damage due to its failure to properly preserve,
package, handle or pack the FRU(s). Individual box labeling shall include
the following information, at a minimum: HP's FRU Part Number, Product
Description, Product Revision, unique Serial Number, Unit of Measure, and
Country of Origin.
In addition to the requirements and specifications for FRU(s) and their
packaging set forth elsewhere in this Agreement, all Products and their
packaging will comply with HP's General Specifications for Environment, DWG
No. A-5951 -
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12.0 Delivery. For each order, Supplier will be measured by HP GSO on actual
shipments of Quantities/Line Items made by Supplier according to the
current delivery dates. The On-Time Delivery requirement for Line
Items/Quantities of shipment by Supplier, of 100 percent of Products within
a window of -3 days early, +0 days late, based on the ship date specified
in the Purchase Order submitted by Eligible Purchaser and acknowledged by
Supplier. Delivery performance is measured on a monthly basis. If Delivery
Performance falls below 95%, Supplier needs to provide HPGSO a Corrective
Action Plan within 10 days. Virtual Supplier shipments will meet delivery
performance criteria as specified in Statement of Work and Virtual Sourcing
requirements.
13.0 Shipment Pre-Alert Notification and Weekly Open Order Report: Supplier
shall send Pre-Alert notice to HP GSO when Purchase Order shipped.
Pre-Alert notice must specify part number, order quantity, purchase order
and ship date. HP GSO shall send Supplier a weekly open order report.
Supplier must send response to HP GSO on a weekly basis, unless HP GSO
sends a report on a less frequent basis, with the following information:
13.1 Date of shipment of Purchase Order (qty per HP PN)
13.2 Confirmation of acknowledged Delivery Dates for FRU Purchase Orders
placed during the week as reported.
13.3 Acknowledged ship dates and proposed new ship date if Supplier
foresees a prospective failure to ship the specified quantity of
FRU(s) on the current acknowledged ship date.
14.0 Shipment.
14.1 Product Ownership Transfer and Risk of Loss. The terms governing the
shipment and delivery of FRU(s) will be interpreted in accordance with
the International Chamber of Commerce Incoterms 2000 Edition.
14.1.1 FRU Product. All FRU(s) shipped by Supplier and received by HP
at HP's specified location will be shipped FOB supplier, as
Delivery Duty Unpaid (DDU) and risk of loss of FRU(s) will pass
to HP upon receipt.
14.2 Expedited Freight Costs Reimbursement. If Supplier fails to make a
timely shipment due to circumstances within Supplier's control,
Supplier shall ship the FRU(s) affected by other expedient means
acceptable to Eligible Purchaser. Supplier shall pay for any resulting
increase in the freight cost, by standard overnight methods or its
equivalent, over the cost HP GSO would have been required to pay if
the specified normal method of transportation had been utilized.
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14.3 Incremental Late Deliyea Penalties. In addition, if Supplier's
Delivery Performance falls below 90% within three consecutive months,
due to circumstances within Supplier's control, then HP GSO shall
impose late delivery penalties as follows:
14.3.1 Charges. For each business day a shipment is delayed for
reasons attributable to the Supplier, Supplier will credit HP
GSO 2% of the total amount of the Purchase Order with a maximum
credit of 10% of the value of the Purchase Order.
14.3.2 Zero dollar Purchase Orders. In the event shipment under a zero
dollar Purchase Order is delayed for reasons attributable to
the Supplier, for each business day the shipment is delayed for
reasons attributable to the Supplier, then Supplier will credit
2% of the total value of the sum of the quantity specified in
the zero dollar Purchase Order multiplied by the FRU price of
one unit. The maximum credit shall not exceed 10% of the sum of
the quantity specified in the zero dollar Purchase Order
multiplied by the FRU price for one unit.
14.3.3 Exceptions. Reimbursements pursuant to sections 14.1 and late
delivery charges pursuant to section 15.0 shall only apply to
Purchase Orders that were issued in accordance with the
lead-time parameters set forth elsewhere in this Exhibit.
15.0 FRU Pricing
15.1 FRU(s) purchased for Product Support. The price paid by HP GSO for
FRU(s) shall be the price as agreed upon by the parties as set forth
in the initial price quotes for FRU(s), which are to be attached after
signing this agreement.
15.2 Price Changes. All price changes will be submitted to HP account
manager for approval.
15.3 Price Reduction. Supplier will strive to a minimum of a 3% cost
reduction proposal per six months in the price of all Automated Tape
FRUs.
16.0 Invoicing Product Support. Supplier shall generate an invoice for every
shipment transacted to HP GSO, regardless of whether there are any charges
associated with that specific shipment. No-charge transactions (such as
rework) must still be invoiced at zero dollars. The invoice must contain
the following information: HP FRU Part Number, HP Purchase Order Number,
Price Per Unit, Quantity Shipped, Unit of Measure, and Total Invoice Cost.
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16.1 Supplier must reference the above information on each invoice.
16.2 All invoices are to be sent to the following address:
Hewlett Packard Company Financial Operations
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16.3 Payment Terms: Payment terms shall be net 45 days for both accounts
receivables and accounts payable related to business pertaining to
this agreement.
17.0 Support Specific Quality & Reliability. All FRU(s) shipped by Supplier to
HP GSO, shall meet the same Quality and Reliability specifications for new
FRU(s). All FRU(s) must meet performance specifications in form, fit and
function for new Products.
17.1 Product Support Specific DOA HP GSO measures Dead on Arrival (DOA) as
FRU(s) that fails within 24 hours of installation. Supplier a must
meet or exceed a monthly DOA rate of 2% or less. Upon request,
Supplier shall provide failure analysis and corrective action on all
selected assemblies which exceed quality goals of DOA rate > 2%.
Format of data and analysis will be specified by HP GSO.
17.2 DOA Return Materials Authorization (RMA) Process . Supplier agrees to
provide a block of RMA numbers, or a RMA number within one (1)
business days, of receipt of HP GSO's request for an RMA number to
properly manage the return of DOA FRU(s) to the Supplier for repair or
replacement.
18.0 Quality / Responsibility. Supplier shall provide appropriate technical
personnel to meet with the HP' Engineering team not less than once a week,
for the duration necessary to review all quality issues identified by HP
GSO. HP GSO reserves the right to request additional meetings as required
to address quality/reliability issues.
19.0 Class Failure Resolution. Supplier shall work with HP to resolve all class
failures during the Product Life and Support Life. Class Failure means the
occurrence of the same failure in any FRU assemblies or 10% of a particular
type of FRU, within a one (1) month period provided that such failure is
attributable to Manufacturer or repair provider.
19.1 Characterization. In the event a class failure has been identified
pursuant to the definitions stated above, HP may request Supplier to
work together with HP to characterize the class failure and determine
root cause.
19.2 Corrective Action Plan. Upon the determination of root cause if it is
determined that the class failure is characterized as an epidemic
failure
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requiring a part or product recall, the parties shall work together to
develop and implement a cost-effective plan to address or correct the
situation.
19.3 Product and Part Recall Expense Responsibility. Notwithstanding any
limitations of liability set forth elsewhere in this Agreement, if it
is determined that Supplier is at fault or partially at fault for a
class failure that requires a Product or part recall, Supplier will be
responsible, according to Supplier's proportionate fault as determined
by the parties, for HP's cost of implementation of the mutually agreed
upon recovery plan which shall include consideration of any damages,
loss, costs and expenses incurred by HP and any of its affiliated
entities for implementing the recovery plan.
19.4 Emergency Training/Technical Support. If an epidemic failure is found
to be the responsibility of Supplier and HP is required to make
emergency repairs at HP rather than returning FRU(s) to Supplier,
Supplier shall provide to HP at no charge, Product training as
requested by HP at a mutually agreed time and location. Supplier shall
assume all responsibility and liability associated with providing this
training and/or technical support to HP.
19.5 Exception. If the epidemic failure is determined not to be Supplier's
fault, then Supplier shall not be responsible for any damages, losses,
costs and expenses incurred by HP and any of its affiliated entities.
20.0 HP Property provided for FRU Product Manufacturing. All property, including
without limitation, tooling, equipment, designs, or other materials
furnshed to Manufacturer by Eligible Purchaser in connection with this
Agreement (collectively "HP Property") shall:
a.) Be clearly marked or tagged as property of HP
b.) Be and remain personal property, and not become a fixture to real
property
c.) Be subject to inspection by Eligible Purchaser at any time
d.) Be used only for the purpose of filling order releases from
Eligible Purchaser
e.) Be kept separate from other materials, tools, or property of
Supplier or held by Supplier
f.) Not be modified in form, fit or function by Supplier
g.) Have periodic maintenance performed by Supplier
h.) Be kept free of liens and encumbrances
20.1 In the event HP is willing to release any equipment or tools for
Supplier's use during this Agreement, the parties will execute a
separate Equipment Loan Agreement.
20.2 Supplier agrees that persons operating HP property will be fully
trained on the proper use of equipment. Supplier hereby releases HP of
all liability related to using HP equipment or tools.
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21.0 Class I and Class Il Substance. (Supplier) hereby warrants, certifies,
represents and agrees that the FRU(s) and all components of the FRU(s)
(excluding Components consigned or supplied by HP):
a) Do not contain any "class I" or "class Il" substance, as those
terms are defined in 42 USC Section 7671 (3) as now in existence or
hereafter amended, or
b) have not been manufactured with a process that uses any "class I"
or "class II" substance within the meaning of 42 USC Section 7671 J
(d)(2) as now in existence or hereafter amended.
22.0 Chemical Substances. Without limiting the generality of Section 19.0 above,
Manufacturer warrants that (a) each chemical substance contained in the
Product(s) is on the inventory of chemical substances compiled and
published by the Environmental Protection Agency pursuant to the Toxic
Substances Control Act, and (b) all Material Safety Data Sheets required to
be provided by Manufacturer for the Product(s) will be provided to Eligible
Purchaser prior to shipment of the Product(s) and will be complete and
accurate.
23.0 Communications & Escalations Linkages. Supplier and Eligible Purchaser
shall identify specific individuals who will be responsible for managing an
orderly flow of communications regarding Product issues. This
communications model shall include primary, secondary, and escalation
contacts for both Supplier and Eligible Purchaser.
24.0 Intellectual Property Ownership Rights:
24.1 Work Product. means models, devices, reports, computer programs,
tooling, schematics and other diagrams, instructional materials and
anything else Supplier, its agents, employees, and subcontractors
produce in connection with this Agreement.
24.1.1 Any Work Product directly created for or funded by HP ("Paid
for by HP"), in the course of performing services under this
Agreement (including but not limited to) reports, charts,
computer programs, test scripts, process documentation. BOMs,
test procedures, 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 Supplier will have the right to use
the work product in its performance of this contract. Supplier,
its agents, employees, and subcontractors will deliver all Work
Product to BP upon the earlier of the expiration/termination of
this Agreement or upon HP's request.
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24.2 Works of Authorship. Supplier will promptly disclose to HP any works
of authorship produced or developed in connection with this Agreement,
and Supplier hereby assigns to HP all copyrights in such works. To the
extent permitted by law, Supplier 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. Supplier 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. HP will own all patents, copyrights or
trade secrets covering such materials and will have full rights to use
the materials without claim on the part of Supplier for additional
compensation.
24.3 Access to Information Assets/Systems. Access for Supplier, if any, is
granted solely to facilitate the business relationship described in
the Agreement, and is limited to those specific HP Assets/Systems,
time periods and personnel designated by Supplier as are separately
agreed to by HP and Supplier 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 HP
Assets/Systems is expressly prohibited. This prohibition applies even
when an HP Asset/System which Supplier is authorized to access serves
as a gateway to other HP Assets/Systems outside the scope of
Supplier's authorization. Use of HP Assets/Systems during other time
periods or by individuals not authorized by HP is expressly
prohibited. Upon reasonable notice, HP may audit Supplier to verify
Supplier's compliance with these obligations. Unless prior written
approval is provided to Supplier by HP, Supplier must only use any
information assets/systems, hardware, or software, either supplied by
HP or Paid for by HP, for the performance of work required by an HP
entity that provided or funded that HP Assets/Systems, hardware, or
software.
24.0 Supplier Managed Inventory. HP-GSO and Suppliers shall consult with each
other before implementing a Business-to-Business e-solution (Virtual
Sourcing) as a means to support HP's Customers on Tape Drive products.
25.0 If HP terminations this agreement prematurely, then HP is responsible for
all material cost up to 3 months average useage.
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