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Portions of this Exhibit marked with an * have been omitted and separately filed
with the Securities and Exchange Commission pursuant to a request for
confidential treatment
MICROSOFT CORPORATION
MANUFACTURING AGREEMENT
THIS MICROSOFT CORPORATION MANUFACTURING AGREEMENT (the "Agreement") is
made and entered into as of January 1, 1998 (the "Effective Date"), by and
between Microsoft Corporation ("Microsoft"), a Washington, U.S.A. corporation,
and StarTek Inc., a Colorado corporation ("StarTek"). The parties acknowledge
that StarTek Pacific, a wholly owned subsidiary of StarTek, will perform the
manufacturing services under this Agreement.
RECITALS
WHEREAS, Microsoft and StarTek intend to create a formal relationship
by which StarTek shall provide certain manufacturing services with respect to
orders for Microsoft software products.
WHEREAS, the parties intend in this Agreement to set forth specific
terms and conditions governing the performance of certain manufacturing services
by StarTek for Microsoft; and
NOW, THEREFORE, in consideration of the covenants and conditions set
forth below, the adequacy of which is agreed to and hereby acknowledged, the
parties agree as follows:
AGREEMENT
1. DEFINITIONS.
THE FOLLOWING TERMS, WHENEVER INITIALLY CAPITALIZED, SHALL HAVE THE FOLLOWING
MEANINGS FOR THE PURPOSES OF THIS AGREEMENT:
(a) "BOM" shall mean the xxxx of materials document provided by
Microsoft to StarTek, which xxxx of materials identifies all components
comprising a given Product or Product Component. BOMs may be modified in writing
prospectively from time to time by Microsoft at its sole discretion.
(b) "CUSTOMERS" shall mean customers designated by Microsoft, including
Microsoft internal customers and distribution vendors, to whom Microsoft
authorizes StarTek to deliver Product pursuant to the terms and conditions of
this Agreement and the Statement of Work.
(c) "DELIVERABLES" shall mean and include all code material, source
material, software masters or replicative material or other such documented
material, of any kind or description and in any form including compact disk,
other disks or diskettes, tape, text or any electronic or other medium supplied
by Microsoft or at its direction. It does not include such materials if held
under an independent contractual relationship with an OEM (original equipment
manufacturer) which contract contains the requisite license. Nor does it include
Products acquired for office purposes and used by StarTek in its offices.
(d) "FACILITY" shall mean the manufacturing facility operated, owned,
subcontracted or leased by StarTek, at * .
(e) "FINISHED PRODUCT UNIT" shall mean fully packaged Microsoft
Product, which includes all requisite Product Components and Microsoft software,
ready for delivery to a Customer.
(f) "INSOLVENT" shall mean a financial condition such as to make the
sum of a party's debts greater than all of the party's assets, at fair
valuation; or, when a party has incurred debts beyond that party's ability to
pay
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such debts as they mature; or, when a party is engaged in a business or
transaction for which the party has unreasonably small capital.
(g) "INTELLECTUAL PROPERTY" shall mean any and all trademarks,
copyrights, patents and other proprietary rights comprising or encompassing a
given Product.
(h) "INVENTORY" includes Finished Product Units, work in process,
Product Components or raw materials pertaining to the Products that contain
Microsoft software, trademarks, copyrighted material, logos or other proprietary
materials.
(i) "MANUFACTURE" OR "MANUFACTURING" shall mean the manufacture and
supply of Product Components and assembly of Products as described in the
Statement of Work.
(j) "PRODUCTS LIST" shall mean a list provided to StarTek by Microsoft
from time to time that will list the Products to be manufactured by StarTek
pursuant to the terms of this Agreement.
(k) "PRODUCT(S)" shall mean the copyrighted and/or patented Microsoft
software products, including Product Components, Microsoft software, and any
associated documentation, packaging and other written materials, including,
where applicable, the specified user documentation, which Microsoft may request
StarTek to Manufacture pursuant to this Agreement, by the issuance of a purchase
order .
(l) "PRODUCT COMPONENTS" shall mean each individual component listed on
a BOM as comprising a Product, such as, for example, disks, polyvinyl disk
baggies, documentation, boxes, retail package shrink wrap, or retail *.
(m) "STATEMENT OF WORK" shall mean the attached Exhibit A, including
any modifications made thereto pursuant to Section 14(b).
(n) "TERRITORY" shall mean *.
(o) "UNACCOUNTED PRODUCTS" shall have the meaning as set forth in
Section 9(e).
2. MANUFACTURING AND SERVICES.
(a) GENERAL. StarTek hereby agrees to Manufacture Products on the
Products List at the Facility pursuant to the terms and conditions set forth in
this Agreement, including without limitation, the Statement of Work. StarTek
shall not conduct Manufacturing at or from any location other than the Facility
without Microsoft's prior written approval. In the event of any conflict between
the terms contained in this Agreement and terms contained in the Statement of
Work, the terms contained in this Agreement shall control.
(b) OTHER MANUFACTURING/SERVICES. In addition to Manufacturing
services, the parties may identify other manufacturing and/or services to be
provided under this Agreement through an addendum signed by the parties hereto.
(c) INVENTORY. All of the Inventory shall at all times be held
exclusively for assembly and delivery to Customers within the Territory as
authorized by Microsoft (or as otherwise authorized by Microsoft in writing) and
for no other purpose, use or disposition, except as may be directed in writing
by Microsoft. StarTek shall at all times cause the Inventory to be free and
clear of any and all liens, encumbrances and other claims of its creditors.
StarTek grants Microsoft the option, assignable to any affiliated corporation,
to acquire by purchase all of the Inventory (less Finished Product Units which
have already been purchased by Microsoft) upon * notice, and payment as would
apply for unused Inventory in the case of termination as stated in Section 10,
at the price set forth at in Exhibit B. At any time, upon Microsoft's request,
StarTek shall take all necessary steps and shall execute such documents as may
be necessary or advisable under the local law where the Inventory is located, in
order to effect the sale of such Inventory to Microsoft and to document
Microsoft's title to Inventory owned by Microsoft. Use of Intellectual Property
in any manner by StarTek after expiration or termination of this Agreement for
any reason,
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whether or not incorporated in Inventory, shall be deemed to be in violation of
Microsoft's Intellectual Property rights and shall entitle Microsoft to have all
remedies provided by law or equity (including injunctive relief); provided,
however, (i) this does not preclude StarTek from continuing to use in its
offices Microsoft Products legally acquired for that purpose; and (ii) it does
not preclude StarTek's performance of independent contractual relationships with
Microsoft or an OEM (original equipment manufacturer) or other party, which
contract contains the requisite Microsoft product replication license.
(d) AGREEMENT NOT TO SELL. StarTek acknowledges that, under the terms
of this Agreement, that both during and after the term of this Agreement it has
no rights within the licenses pertaining to software or other Microsoft
proprietary materials or Products which would allow StarTek to be a seller or
distributor of any Products. Whenever requested by Microsoft and from time to
time, it will sign separate mutually acceptable agreements to this effect.
(e) SAFE STORAGE AND *. StarTek agrees not to store any other goods
near or in such relation to the Products or Product Components as to cause
injury to those Products or Product Components through contamination by strong
odors, leakage, or otherwise. *
(f) NON-EXCLUSIVITY. This Agreement is not an exclusive agreement. At
all times Microsoft shall have the right to appoint other third parties to
perform Manufacturing and other services for Microsoft or Customers. Provided
that StarTek would not be placed in breach of this Agreement, StarTek may
contract with and conduct manufacturing services for other software companies.
(g) FINANCIAL INFORMATION. Within * after StarTek learns that it has
become or will become Insolvent, StarTek shall submit financial statements to
Microsoft in sufficient detail to allow Microsoft to determine whether StarTek
shall be capable of continuing to perform its obligations hereunder. The
financial statements shall include, but shall not be limited to, balance sheets
and related statements of income and retained earnings and statements of changes
in financial condition. To the extent those statements are audited, the audit
report of the certified public accountant performing the audit shall also be
made available to Microsoft.
(h) RETURN OF DELIVERABLES. StarTek will have possession of
Deliverables and replicable material for certain Products and other property for
purposes of the replication to be done under this Agreement. Upon termination of
this Agreement and at any early time whenever requested by Microsoft to do so,
StarTek shall immediately deliver, at Microsoft's cost, to Microsoft all of such
Deliverables (provided that in no event shall such a request by Microsoft for
StarTek's return of the Deliverables prejudice StarTek's right to full
performance by Microsoft under this Agreement), replicable materials and all and
any other Microsoft proprietary materials ever received by it and it shall not
retain any copy or original of the same in any way whatsoever.
(i) QUALITY REQUIREMENTS. StarTek shall ensure that in performing its
obligations under this Agreement, it shall operate in accordance with the
quality guidelines as posted on Microsoft's Website, which can be found at
* (the "Microsoft Website") and as set forth in the Statement of Work.
(j) PRODUCTION. StarTek covenants and agrees to meet Microsoft's
demands for Product related to the Territory, as such demands may be adjusted
from time to time. Additional measurement procedures may be implemented as
mutually agreed upon by Microsoft and StarTek.
(k) NON-CONFORMING PRODUCT. StarTek shall promptly replace and deliver,
within * from notification, at no charge to Microsoft or its Customers, any
non-conforming Product if any delivery of Product, or any portion of it, to any
Customer fails to meet the quality standards specified in the Statement of Work.
In the event Microsoft determines that a Product recall is necessary due to a
breach of StarTek's warranties hereunder, or due to a manufacturing defect,
StarTek shall cooperate with Microsoft in all respects to conduct such recall at
StarTek's expense; provided that if StarTek has given prior notice of the
possible defect and recommended against delivery and the Product is nonetheless
delivered at Microsoft's direction, or if the recall is necessary because of a
Microsoft error, the recall on account of that defect shall be at Microsoft 's
expense, but StarTek shall still cooperate with it, and in such a case,
Microsoft shall reimburse StarTek for the costs of Manufacturing the replacement
Products.
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3. PRICE AND PAYMENT.
(a) GENERAL. Microsoft and StarTek agree that StarTek shall be
compensated for the Manufacturing services pursuant to the Price and Payment
terms and conditions set forth in Exhibit B. Microsoft shall be liable for
payment to StarTek for raw materials and Finished Product Units that have been
purchased and/or built in support of the *purchase order(s) issued by Microsoft.
*. All payments due by Microsoft to StarTek under this Agreement shall be *
from Microsoft's receipt of an invoice from StarTek. Any undisputed payment that
is overdue for more than *, shall thereafter bear interest at an annual rate of
* per anum (or such lower rate as may then be the highest rate legally
available).
(b) QUANTITY. The quantity of Product to be used in calculating
Microsoft's obligation to pay StarTek with regard to any particular purchase
order shall be the lesser of (1) the number of Finished Product Units delivered
to a Customer in response to such purchase order, or (2) the quantity indicated
on the original purchase order.
(c) *
(d) TAXES. In the event income taxes are required to be withheld by
Microsoft on payments to StarTek required hereunder, Microsoft agrees to provide
StarTek with reasonable notice in advance of the first such withholding, and
Microsoft may deduct such income taxes from the amounts owed and timely pay such
taxes, when required, to the appropriate taxing authority. Microsoft shall in
turn promptly secure and deliver to StarTek an official receipt for any income
taxes withheld. Microsoft agrees to pay all applicable goods and services or
other applicable consumption taxes (other than income taxes) levied on it by a
duly constituted and authorized taxing authority on the Manufacturing services.
To the extent required by any such taxing authority, StarTek may collect such
taxes, if any, from Microsoft, and, in such case, shall remit to Microsoft
official tax receipts indicating that such taxes have been collected by StarTek
and remitted to the appropriate tax authorities, to the extent such receipts are
available, and StarTek shall show such taxes as separate line items on invoices
to Microsoft. StarTek agrees to take such steps as are reasonably requested by
Microsoft to minimize such taxes in accordance with all relevant laws and to
cooperate with and assist Microsoft, in challenging the validity of any taxes
applicable to the Manufacturing services and collected from Microsoft by StarTek
or otherwise paid by Microsoft. Except as required by law or where expressly
agreed to, in writing, by Microsoft pursuant to Exhibit B, Microsoft shall not
pay any taxes other than those described above, including, without limitation
(1) taxes on or with respect to or measured by any net or gross income or
receipts of StarTek, (2) any franchise taxes, taxes on doing business, gross
receipts taxes or capital stock taxes (including any minimum taxes and taxes
measured by any item of tax preference), (3) any taxes imposed or assessed for
work performed without the written authorization by Microsoft after the date
upon which this Agreement is terminated, (4) taxes based upon or imposed with
reference to StarTek's real and personal property ownership, (5) taxes incurred
by StarTek on all goods and services purchased from other related or unrelated
parties, and/or (6) any taxes similar to or in the nature of those taxes
described in (1), (2), (3), (4) or (5) above. StarTek agrees to make available
to Microsoft any and all records necessary to comply with any and all tax
obligations as provided herein, including but not limited to reports necessary
for goods and services tax compliance and audit purposes. The contents and form
of such reports shall be mutually agreed to between the parties.
(e) CURRENCY FOR INVOICING AND PAYMENT. StarTek shall invoice Microsoft
for the Prices in United States Dollars. All payments made by Microsoft to
StarTek for Products delivered hereunder shall be in United States Dollars. In
computing the monthly payment due for Manufacturing services and in rendering
invoices, StarTek shall make automatic regular adjustments from the * in
accordance with the process outlined in the Statement of Work.
4. LICENSE GRANT.
(a) GENERAL. In order to allow StarTek to perform its Manufacturing as
required hereunder during the term of this Agreement, Microsoft grants StarTek a
non-exclusive, non-transferable, personal, limited license right to the
Intellectual Property for each Product:
(1) to procure, reproduce and/or Manufacture the Product Components
based upon the applicable BOM(s) and purchase orders delivered by Microsoft
pursuant to the Statement of Work;
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(2) to assemble the Product Components into Finished Product
Unit(s) in accordance with the written instructions and BOM(s) delivered by
Microsoft, including the right to reproduce and manufacture any Microsoft
software and documentation specified in the BOM(s) as necessary to build the
Finished Product Unit(s); and
(3) to deliver the Finished Product Unit(s) to Customers in
accordance with the Statement of Work.
(b) LICENSE RESTRICTIONS. StarTek shall not (i) in any way modify any
Products or Intellectual Property without obtaining, in advance, the express
written permission of Microsoft; (ii) reproduce, manufacture, or distribute any
Product or Intellectual Property except pursuant to the terms of this Agreement
or pursuant to a separate legal contractual arrangement, which contains a valid
Microsoft license or authorization to do same; or (iii) reverse engineer,
decompile, or disassemble any Products or Intellectual Property. Notwithstanding
the foregoing, StarTek may physically disassemble those Product Components that
do not consist of software or hardware solely for the purpose improving Product
assembly and/or quality. No other product or informational piece, including
without limitation flyers, literature, documentation and advertising, may be
bundled with any Products without the prior written consent of Microsoft. All
rights not expressly granted herein, without limitation, are reserved by, and
shall exclusively inure to the benefit of, Microsoft.
5. SUBCONTRACTING.
(a) TO THIRD PARTIES. StarTek shall not subcontract any of its rights
or obligations under this Agreement, with respect to Manufacturing, except as
follows:
(1) Prior to any subcontractor performing any such services for
StarTek under this Agreement, StarTek and its subcontractor shall enter into a
written agreement ("Subcontractor Agreement") that expressly provides that
Microsoft is a third party beneficiary of the Subcontractor Agreement with
rights to enforce such agreement should StarTek fail to timely do so; that
Microsoft, at its sole discretion, reserves the right to evaluate the
Subcontractor, either in person or in written form; and further that requires
Subcontractor to:
(A) comply with the applicable obligations identical to
those imposed on StarTek under Sections 2, 4(b), 6(a), 7(a)(1), 8, 9, 10(c), 11,
12, 15(k), 15(l) and Exhibit A of this Agreement, and
(B) halt reproduction of Product(s) as required under this
Agreement or upon notice from StarTek or Microsoft of the termination or
expiration of this Agreement, and
(C) pay Microsoft's attorneys' fees if Microsoft employs
attorneys to enforce any rights arising out of the Subcontractor Agreement; and
(2) StarTek guarantees its subcontractor's fulfillment of the
applicable obligations imposed on StarTek by this Agreement; and
(3) StarTek shall indemnify, defend and hold Microsoft harmless
for all damages and/or costs of any kind, including without limitation, those
incurred by Microsoft and caused by a breach of the Subcontractor Agreement by a
subcontractor and/or subcontractor's failure to fulfill of the applicable
obligations imposed on StarTek by this Agreement, including, but not limited to,
StarTek's payment of any monetary judgments awarded to Microsoft by a court of
competent jurisdiction and any costs and fees relating thereto, not paid by
subcontractor, resulting from subcontractor's unauthorized replication and/or
distribution of Product(s) in accordance with the Subcontractor Agreement; and
(4) Upon execution of this Agreement and thereafter prior to a
subcontractor performing any services under this Agreement, StarTek shall
provide Microsoft with a written certification, signed by a StarTek officer,
representing and warranting that StarTek is in compliance with the provisions of
Section 5 of this Agreement; and
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(5) Microsoft, in its reasonable discretion, will provide an
approved * supplier list as seen in Exhibit E which may be updated by Microsoft
from time to time. If a supplier used by StarTek as a subcontractor is removed
from such list by Microsoft, Microsoft acknowledges that StarTek may not be able
to immediately discontinue use of subcontractor. In such case, subject to other
rights and obligations of enforcement as set forth in the Agreement, Microsoft
and StarTek will mutually agree to a transition plan.
Microsoft will not execute a separate agreement with any of StarTek's
subcontractors, unless StarTek is in breach of this agreement.
(b) RIGHTS PASS THROUGH. It is the intention of this section that
StarTek be able to subcontract in *, provided StarTek fully maintains quality
standards and protects Microsoft's property rights in Microsoft's Intellectual
Property and Deliverables such that, in addition to Microsoft's recourse to
StarTek under this Agreement, Microsoft shall also have rights enforceable
directly against the subcontractor. The responsibility and liability of StarTek
under this Agreement is not diminished on account of any subcontract and StarTek
shall be fully responsible for the subcontractor's performance and work.
(c) EXPORT RESTRICTIONS. StarTek hereby agrees that in subcontracting
portions of the Manufacturing to third parties pursuant to Section 5(a) or (b)
above, StarTek shall not, directly or indirectly, export or transmit (i) any
Product Component, Product and/or technical data or (ii) any Product (or any
part thereof), process, or service that is the direct product of a Product, to
(a) any countries that are subject to U.S. export restrictions (including as of
the Effective Date, but not limited to, Cuba, Iran, Iraq, Libya, North Korea,
Sudan and Syria); (b) any end-user whom StarTek knows or has reason to know will
utilize such Product Component, Product and/or technical data in the design,
development or production of nuclear, chemical or biological weapons; or (c) any
other country to which such export or transmission is restricted by the export
control laws and regulations of the United States, and any amendments thereof,
without prior written consent, if required, of the Bureau of Export
Administration of the U.S. Department of Commerce, or such other governmental
entity as may have jurisdiction over such export or transactions, unless
Microsoft specifically directs StarTek in writing to do so.
(d) INDEMNIFICATION. If StarTek delivers Product(s) to a Customer
specified by Microsoft or at Microsoft's direction, Microsoft agrees to
indemnify StarTek for any consequent indirect violation of the export
restrictions described in subsection 5(c) above.
(e) ENFORCEMENT. StarTek agrees that it will diligently and timely
enforce all rights against or obligations of any subcontractor(s) in order to
enforce compliance with the applicable terms of this Agreement and/or to
otherwise cure a subcontractor breach.
6. REPRESENTATIONS & WARRANTIES.
(a) BY STARTEK. StarTek represents and warrants to Microsoft as
follows:
(1) StarTek has full right and power to enter into and perform
according to the terms of this Agreement and doing so does not violate any
agreement between it and any third party;
(2) the Manufacturing, including any portion done by any
subcontractor as contemplated in Section 5, will strictly comply with all
applicable laws, as well as the terms and conditions of this Agreement,
including without limitation the Statement of Work;
(3) the Products (including the raw materials, reproduction
quality, Product Components and Finished Product Unit quality) will satisfy the
quality workmanship standards and service levels set forth in the Microsoft
Website (*) and Statement of Work and StarTek shall further protect Microsoft's
property rights in Microsoft's Intellectual Property and Deliverables from
unauthorized use within the scope of this Agreement;
(4) StarTek shall at all times comply with its commitments and
obligations as stated in this Agreement;
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(5) StarTek's performance of Manufacturing, pursuant to the
rights granted under this Agreement, does not infringe any third party's patent,
copyright, trade secret and/or any other intellectual property right with
respect to StarTek's replication, assembly, and/or distribution processes;
(6) StarTek will, at all times relevant to this Agreement,
keep any and all license agreement with third parties relevant to Manufacturing
the Products in force and in good standing; and
(7) StarTek shall promptly replace, at no charge to Microsoft
or the Customers, any non-conforming Products, and all transportation, customs,
and/or taxes relating thereto, if any delivery of Products to Microsoft or
Customers, or any portion of it, breaches the warranties of Section 6(a). In the
event Microsoft determines that a Product recall is necessary, StarTek shall
cooperate with Microsoft in all respects to conduct such recall at StarTek's
expense, provided that if the recall is necessary because of a Microsoft error,
the recall on the account of that defect shall be at Microsoft's expense, but
StarTek shall still cooperate with it, and in such a case, Microsoft shall
reimburse StarTek for the costs of producing and distributing the replacement
Products.
(8) All equipment, products, systems and processes utilized by
StarTek in providing the Manufacturing services including without limitation all
hardware, software and networks will be fully and effectively "Year 2000
Compliant."
(9) YEAR 2000 COMPLIANCE.
(A) In this Section 6(a)(9), the expression "Year 2000
Compliant" (and like expressions) shall mean that no operational, financial,
data transmission, communication or process is affected or interrupted by dates
prior to, during or after the Year 2000, and in particular, but without
prejudice to the generality of the foregoing that: *
(i) *
(ii) *
(B) *
(C) *
(D) *
(E) In this Section 6(a)(9), time shall be of the essence.
(b) BY MICROSOFT. Microsoft hereby represents and warrants to StarTek
as follows:
(1) Microsoft has the full and exclusive right and power to enter
into and perform according to the terms of this Agreement;
(2) Microsoft has and will have, at all relevant times, sufficient
rights in the Products to grant StarTek the rights granted in this Agreement;
(3) that at all times relevant to this Agreement, Microsoft will
keep any and all license agreements with third parties relevant to the
reproduction and manufacture of the Products in force and in good standing; and
(4) that any and all software and Intellectual Property provided by
Microsoft to StarTek for incorporation into the Products will be exportable into
the countries where Microsoft requests it be delivered.
(c) DISCLAIMER OF WARRANTY. THE WARRANTIES SET FORTH IN SECTIONS 6(a)
AND 6(b) ABOVE ARE THE ONLY WARRANTIES MADE BY THE PARTIES AND ARE IN LIEU OF
ALL OTHER
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WARRANTIES, EXPRESS OR IMPLIED, OR STATUTORY, INCLUDING BUT NOT LIMITED TO
IMPLIED WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR PURPOSE
WITH RESPECT TO THE PRODUCTS.
7. INDEMNIFICATION.
(a) INDEMNITY.
(1) BY STARTEK. StarTek agrees to hold harmless and indemnify
Microsoft, its subsidiaries and affiliates, and their respective directors,
officers, and employees, from and against any and all claims, suits, actions,
proceedings, or liabilities of any kind, including reasonable attorneys fees and
expenses associated therewith or with successfully establishing the right to
indemnification hereunder, which arises out of or is connected with this
Agreement, except to the comparative extent such claims, suits, actions,
proceedings or liabilities result from the fault, negligence, or willful acts of
Microsoft. StarTek shall further hold harmless and indemnify Microsoft from and
against any and all claims, suits, actions, proceedings, or liabilities of any
kind, including reasonable attorneys fees and expenses incurred in connection
therewith or with successfully establishing the right to indemnification
hereunder, which arise out of the breach or default by StarTek in the
performance of any obligation to be fulfilled by StarTek under this Agreement.
(2) BY MICROSOFT. Microsoft agrees to hold harmless and
indemnify StarTek, its subsidiaries and affiliates, and their respective
directors, officers, and employees, from and against any and all claims, suits,
actions, proceedings, or liabilities of any kind, including reasonable attorneys
fees and expenses associated therewith or with successfully establishing the
right to indemnification hereunder, which arises out of or is connected with any
claim that, if true, would constitute a breach of Microsoft's representations
and warranties set forth in Section 6(b) above.
(b) SURVIVAL. StarTek and Microsoft agree that the indemnities set
forth in this Section 7 shall survive and shall be enforceable beyond the
termination or completion of this Agreement.
(c) LIMITATION ON LIABILITY. STARTEK'S TOTAL LIABILITY AS TO MATTERS
ARISING UNDER THIS AGREEMENT SHALL BE LIMITED TO THE GREATER OF * OR THE TOTAL
AMOUNTS PAID UNDER SECTION 3 OF THIS AGREEMENT, WITH THE EXCEPTION THAT
STARTEK'S LIABILITY SHALL BE UNLIMITED AS TO: (i) ANY INDEMNIFICATION OBLIGATION
FOR PERSONAL INJURY, DEATH OR PROPERTY DAMAGE TO THE EXTENT SUCH CLAIM IS BASED
UPON STRICT LIABILITY, NEGLIGENCE, GROSS NEGLIGENCE, INTENTIONAL ACT OR OTHER
FAULT OF STARTEK OR ITS SUBCONTRACTOR(S); (ii) ANY MATTER ARISING UNDER SECTION
8 OF THIS AGREEMENT; (iii) FOR THE COST OF ANY RECALL INCLUDING THE COST OF
PRODUCING REPLACEMENT PRODUCT(S); (iv) ANY FAILURE TO RETURN ANY DELIVERABLES AS
IS OTHERWISE PROVIDED FOR IN THIS AGREEMENT; OR (v) ANY COPYRIGHT, PATENT,
TRADEMARK OR TRADE SECRET INFRINGEMENT(S) (ALL OF THE FOREGOING BEING
COLLECTIVELY REFERRED TO AS THE "STARTEK EXCLUDED MATTERS"). MICROSOFT'S TOTAL
LIABILITY AS TO MATTERS ARISING UNDER THIS AGREEMENT SHALL ALSO BE LIMITED TO
THE GREATER OF * OR THE TOTAL AMOUNTS PAID UNDER SECTION 3 OF THIS AGREEMENT,
EXCEPT FOR ANY MATTERS ARISING UNDER SECTION 8 OF THIS AGREEMENT. EXCEPT WITH
REGARD TO STARTEK EXCLUDED MATTERS (WHICH TERM FOR THE PURPOSES OF THIS SENTENCE
SHALL NOT INCLUDE ANY LIABILITY AS TO RECALL), NO PARTY HERETO SHALL BE LIABLE
TO ANOTHER FOR ANY INDIRECT, CONSEQUENTIAL, PUNITIVE OR INCIDENTAL DAMAGES
ARISING OUT OR RELATED TO THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THE OTHER
PROVISIONS OF THIS AGREEMENT RELY UPON THE INCLUSION OF THIS SECTION 7(c).
8. CONFIDENTIALITY.
(a) GENERAL. Each party expressly undertakes to retain in confidence
the terms of this Agreement and the Agreement itself, along with all information
and know-how transmitted to or otherwise received by each party that the
disclosing party has identified as being proprietary and/or confidential or
that, by the nature of the circumstances surrounding the disclosure, ought in
good faith to be treated as proprietary and/or confidential
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(collectively, "Confidential Information"), and will make no use of such
Confidential Information except under the terms and during the existence of this
Agreement. Notwithstanding the foregoing, any party may disclose the terms of
this Agreement to its outside legal and financial advisors with whom such party
has a confidential relationship and who are obligated to retain such information
in confidence, in the ordinary course of business. In addition, no party shall
have an obligation to maintain the confidentiality of information that (i) it
received rightfully from an unaffiliated third party prior to its receipt from
the disclosing party; (ii) the disclosing party has disclosed to an unaffiliated
third party without any obligation to maintain such information in confidence;
or (iii) is independently developed by the obligated party. Further, each party
may disclose Confidential Information as required by governmental or judicial
order, provided such party gives the disclosing party prompt written notice
prior to such disclosure, and complies with any protective order (or equivalent)
imposed on such disclosure, and provides the disclosing party the option of
either seeking a protective order or having its Confidential Information be
subject to the same protective orders as may apply to information of the party
subject to the governmental or judicial order. No party shall disclose,
disseminate or distribute any other party's Confidential Information to any
third party without the other's prior written permission. Each party's
obligation under this Section 8 shall extend to the earlier of such time as the
information protected hereby is in the public domain through no fault of the
obligated party or five (5) years following termination or expiration of this
Agreement. Each party shall take all reasonable steps to ensure that their
employees (and in the case of StarTek, also its subcontractors) comply with this
Section 8(a).
(b) FACILITY TOURS. Microsoft acknowledges that customers and potential
customers of StarTek may tour the Facility. Microsoft agrees that any casual
viewing during such a tour of Products that Microsoft has already commercially
released does not violate Section 8(a) above. *. In the event that Microsoft
reasonably believes that additional security measures are necessary, Microsoft
will notify StarTek, and the parties will implement additional mutually
agreeable security procedures for so long as necessary.
9. RISK OF LOSS.
(a) GENERAL. Risk of loss for all Finished Product Units, which are the
subject of this Agreement, together with all Product Components (including the
associated raw materials), shall remain with StarTek except as otherwise
provided in this Section 9. StarTek shall take all reasonable precautions to
protect Microsoft property against loss, damage, theft or disappearance while in
its care, custody or control.
(b) TRANSIT RISKS. Risk of loss for Product(s) or Product Components in
transit shall remain at all times with StarTek unless and until acceptance of
Finished Product Units is made by a Microsoft or Customer directed carrier.
(c) ON PREMISES RISK. StarTek shall be responsible for all risk of loss
or damage to all Microsoft property while located at StarTek's or its
subcontractor's facilities. StarTek shall be responsible for the full amount of
the loss or damage and shall reimburse Microsoft for such loss or damage.
Reimburseable amount for any loss or damage shall be as set forth in Section (d)
below.
(d) REIMBURSABLE AMOUNT. StarTek shall reimburse Microsoft for any
loss or damage to Finished Product Units as follows:
(1) StarTek shall reimburse Microsoft for the * as established by
Microsoft for any loss or damage to Finished Product Units, except loss or
damage resulting from theft, StarTek's negligence or willful acts, or any
Unaccounted Product(s);
(2) StarTek shall reimburse Microsoft for * as established by
Microsoft for any loss to Finished Product Units resulting from theft, the
negligence or willful acts of StarTek, or any Unaccounted Product(s).
(e) UNACCOUNTED PRODUCT(S). StarTek shall be liable for and shall
reimburse Microsoft for any Unaccounted Product(s) that is as reported in the *
build reports provided to Microsoft, or as determined upon physical
inventory/audit conducted pursuant to Section 11 of this Agreement. "Unaccounted
Product(s)" shall be defined as the number of *. StarTek shall also be liable
for Unaccounted Products of its subcontractor(s).
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(f) SALVAGE. At all times, and regardless of whether StarTek or its
insurers are required to compensate Microsoft for property losses as provided
for in this section, Microsoft shall retain sole rights to salvage for damaged
Products. StarTek shall not surrender damaged goods to carriers, insurers, other
parties or for destruction or disposal without first obtaining the written
consent of Microsoft.
(g) *
10. TERM AND TERMINATION.
(a) DURATION. The term of this Agreement shall commence on the
Effective Date and terminate on June 30, 2001 (the "Term").
(b) EARLY TERMINATION AND DEFAULT. Microsoft may terminate this
Agreement immediately upon notice if StarTek: (i) fails to strictly comply with
Section(s) 4 or 8 of this Agreement, (ii) makes or attempts to make an
assignment in violation of Section 15(a) of this Agreement, or (iii) experiences
an Insolvency Event of Default, as defined below. In addition to the foregoing,
Microsoft or StarTek may terminate this Agreement without cause with * notice in
writing. The rights and remedies provided herein to the parties shall not be
exclusive and are in addition to any other rights and remedies provided by law.
In the event a non-defaulting party in its discretion elects not to terminate
this Agreement, such election shall not be a waiver of any claims of that party
for a default(s). Further, the non-defaulting party may elect to leave this
Agreement in full force and effect and to institute legal action against the
defaulting party for specific performance and/or damages suffered by such party
as a result of the default(s). For purposes of this Agreement, an "Insolvency
Event of Default" shall be deemed to have occurred in the event the applicable
party fails to formally dismiss the Insolvency Event of Default within * after
commencement of any of the following proceedings: (x) any party admits in
writing its inability to pay its debts generally or makes a general assignment
for the benefit of creditors; (y) any affirmative act of insolvency by any party
or the filing by or against any party of any petition or action under any
bankruptcy, reorganization, insolvency arrangement, liquidation, dissolution or
moratorium law, or any other law or laws for the relief of, or relating to,
debtors; or (z) the subjection of a material part of any party's property to any
levy, seizure, assignment or sale for or by any creditor, third party or
governmental agency.
Notwithstanding the foregoing, Microsoft may, at its sole discretion,
immediately terminate this Agreement if, due to StarTek's lack of diligence,
StarTek engages in or permits its subcontractor(s) to engage in the unauthorized
replication and/or distribution of Product(s). StarTek will diligently attempt
to prevent any unauthorized replication and/or distribution of Product(s) by
StarTek employees or any subcontractor and will cooperate fully with Microsoft
to that end. Microsoft may, at its sole discretion, immediately terminate
StarTek's right to subcontract the replication and/or assembly of Product(s), in
accordance with Section 5 of this Agreement, if Microsoft determines that
StarTek's subcontractor is or has been involved in the unauthorized replication
and/or distribution of Product(s) or any third party products.
(c) OBLIGATIONS UPON TERMINATION/EXPIRATION OF THIS AGREEMENT. Within
*, or earlier as noted, after termination or expiration of this Agreement,
StarTek shall do all of the following:
(1) deliver to Microsoft any Finished Product Units built against a
Microsoft purchase order, but not yet delivered, at the Prices set forth in
Exhibit B. StarTek shall destroy all other Finished Product Units and shall,
upon request of Microsoft, issue a letter certifying that such destruction has
taken place.
(2) StarTek shall, at Microsoft's election, either deliver to
Microsoft or destroy any other unused Inventory (excluding Finished Product
Units), as designated by Microsoft. Microsoft's payment obligation for such
unused Inventory shall be in accordance with Exhibit B.
(3) Subject to payment as set forth in Exhibit B, StarTek shall, at
Microsoft's request, provide Microsoft the opportunity to purchase any other
Product Components owned by StarTek (excluding unused Inventory).
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(4) StarTek immediately shall deliver to Microsoft any
Microsoft Deliverables and any Confidential Information not covered by the
foregoing. StarTek shall not retain any copy or original of any Microsoft
Deliverable or Confidential Information in any way or form whatsoever.
StarTek shall work with Microsoft to terminate the Manufacturing in an orderly
manner in the event of the termination of this Agreement. Use of Intellectual
Property in any manner by StarTek after expiration or termination of this
Agreement for any reason, whether or not incorporated in Inventory, shall be
deemed to be in violation of Microsoft's Intellectual Property rights and shall
entitle Microsoft to have all remedies provided by law or equity (including
injunctive relief); provided, however, this does not preclude StarTek from
continuing to use Products properly acquired outside of this Agreement in
accordance with the applicable license.
(d) EFFECT OF DEFAULT. If there is a Default, the parties shall have
all rights and remedies provided in this Agreement or otherwise available under
law as limited by this Agreement.
(e) SURVIVAL. Sections 2(d), 6, 7, 8, 10 and 11 shall survive
termination or expiration of this Agreement.
11. RECORD KEEPING AND AUDIT REQUIREMENTS.
(a) RECORD KEEPING REQUIREMENTS. During the term of this Agreement,
StarTek agrees to keep all usual and proper production and delivery records and
books of account and all usual and proper entries relating to StarTek's (and any
subcontractor's) performance of this Agreement for a minimum period of * from
the date they are created. Such records, books of account, and entries shall be
kept in accordance with generally accepted accounting principles.
(b) DOCUMENTATION. During the term of this Agreement, StarTek agrees to
provide Microsoft with any and all information, as mutually agreed upon between
the parties, that Microsoft determines necessary for tax compliance and
statutory reporting purposes. The information required will include, but may not
be limited to, the data shown on Exhibit D. Unless Microsoft indicates
otherwise, StarTek shall provide such information in an electronic format, at an
agreed upon quarterly deadline. Microsoft shall specify the data requirements
and make every reasonable effort to assist StarTek in designing the report
format. All information should be based on the Microsoft fiscal year-to-date
basis (beginning on July 1). Such report shall also cover StarTek's
subcontractor(s). Microsoft reserves the right to modify the form of such
reports by providing StarTek with written notice of any such modifications.
(c) AUDIT. Notwithstanding the foregoing provisions, upon * written
notice if Microsoft reasonably believes a breach is occurring under this
Agreement (with such notice specifying the alleged breach) and otherwise upon
reasonable notice as agreed upon between the parties (but in no event shall such
reasonable notice exceed * and StarTek shall not unreasonably delay or withhold
its agreement), Microsoft may cause an audit to be made of StarTek's (and any
applicable subcontractor's) books and records, and/or an inspection of
replication, assembly, and distribution locations, including the Facility, in
order to verify StarTek's compliance with the terms of this Agreement and to
verify financial reports issued by StarTek. This right of audit extends beyond
the termination of this Agreement for a period *. Any such audit shall be made
by an independent certified public accountant selected by Microsoft (other than
on a contingent fee basis) and/or a Microsoft internal audit team. Any audit
and/or inspection shall be conducted during regular business hours at StarTek's
(or any applicable subcontractor's) offices. StarTek agrees to provide
Microsoft's designated audit or inspection team access to relevant StarTek
records and all replication and/or assembly locations. Any such audit shall be
paid for by Microsoft unless material discrepancies are disclosed. *. If
material discrepancies are disclosed, StarTek agrees to pay Microsoft for the
costs associated with the audit. No unauthorized duplication or replication of
Product will be permitted. StarTek shall be liable for any Unaccounted Product
discrepancies in an amount equal to *. "Unaccounted Product(s)" shall be defined
as the number of Finished Product(s) Units that the audit and/or inspection
determines have been replicated and assembled by StarTek and/or one of StarTek's
subcontractors, but (i) have not been properly delivered in accordance with the
terms of this Agreement, (ii) are not in StarTek's inventory, and/or (iii) have
not been properly destroyed. StarTek shall also be liable for Unaccounted
Products of its subcontractor(s). StarTek's obligation to pay Microsoft for
Unaccounted Product(s) shall not be Microsoft's
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exclusive remedy and is in addition to any other rights and remedies Microsoft
may have as provided by law or this Agreement.
(d) FACILITY INSPECTIONS. Microsoft may cause an inspection to be made,
with at least * prior notice, of the Facility to verify that StarTek and/'or any
subcontractor is providing Manufacturing in compliance with the terms of this
Agreement. Any inspection conducted pursuant to this Section 10(d) shall be
conducted during regular business hours at the Facility. StarTek agrees to
provide Microsoft's designated inspection team access to relevant records and
the Facility. StarTek may designate a representative to accompany the inspector
or inspectors, and it may reasonably restrict access from specific areas
containing confidential information of StarTek or its other customers. If
material discrepancies from the provisions of this Agreement are disclosed,
StarTek agrees to implement agreed-upon corrective action. Nothing herein shall
preclude Microsoft from exercising any other rights or remedies it has under law
or other provisions of this Agreement.
(e) CONFIDENTIALITY. Notwithstanding the foregoing, StarTek may edit
its books and records to protect confidential information of StarTek that is
unrelated to the subject of a Microsoft record review, or to protect
confidential information of StarTek's customers.
(f) PROFIT & LOSS STATEMENTS. StarTek agrees to provide Microsoft with
* (as determined by Microsoft) profit and loss statements and other financial
statements for a particular Facility at Microsoft's request, in each instance
within * after such request. .
Without any limitations and on as many occasions as Microsoft chooses
to do so, StarTek shall permit the audit by Microsoft or its designated agents
or accountants, of all of the records in support of the * financial reports
given or required to be given during the term of this Agreement subject to
subsection (e) above. This right of audit extends beyond the termination of this
Agreement for a period of *.
12. EXPORT RESTRICTIONS.
StarTek shall not, directly or indirectly, export or transmit (i) any
Product Component, Product and/or technical data or (ii) any Product (or any
part thereof), process, or service that is the direct product of a Product, to
(a) any countries that are subject to U.S. export restrictions (including, but
not limited to, Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria); (b) any
End-User whom StarTek knows or has reason to know will utilize them in the
design, development or production of nuclear, chemical or biological weapons; or
(c) any other country to which such export of transmission is restricted by the
export control laws and regulations of the United States, and any amendments
thereof, without prior written consent, if required, of the Bureau of Export
Administration of the U.S. Department of Commerce, or such other governmental
entity as may have jurisdiction over such export or transactions, unless
Microsoft specifically directs StarTek in writing to do so.
StarTek shall indemnify, defend and hold Microsoft harmless from any Claims
arising from or related to any failure by StarTek to comply with this Section
12. In addition, if StarTek delivers Product(s) to a Customer specified by
Microsoft or at Microsoft's direction, Microsoft agrees to indemnify StarTek for
any consequent indirect violation of the export restrictions described in
subsection 12 above.
13. NOTICES AND PRINCIPAL CONTACTS.
All notices, authorizations, and requests in connection with this
Agreement shall be deemed given on the day they are sent by air express courier,
charges prepaid; and addressed as follows:
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STARTEK: StarTek Inc.
Attn: Xxxx Xxxxxx
000 00xx Xx.
Xxxxxxxxx: Xxxxxxx, XX 00000
Fax: 000-000-0000
000-000-0000
With a copy to: StarTek General Counsel
Telephone:
Fax:
MICROSOFT: Microsoft Corporation
Xxx Xxxxxxxxx Xxx
Xxxxxxx, XX 00000-0000
Attn: Eastern SILO Senior * Manager
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Law & Corporate Affairs
Microsoft Corporation
Xxx Xxxxxxxxx Xxx
Xxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Fax: (000) 000-0000
or such other person or address as each party, respectively, so designates by
written notice to the other parties.
14. ENTIRE AGREEMENT AND MODIFICATIONS.
(a) ENTIRE AGREEMENT. This Agreement, including all exhibits hereto,
constitutes the entire agreement between StarTek and Microsoft with regard to
the subject matter hereof and merge all prior and contemporaneous
communications. The Statement of Work, as may be modified pursuant to Section
14(b) below, is a part of this Agreement for all purposes.
(b) STATEMENT OF WORK. The Statement of Work may be modified as
follows: each modification must be approved by Microsoft and StarTek, and such
approval must be documented with a confirming e-mail or other written
communication between authorized representatives of the two parties. In
addition, if Microsoft deems it necessary and appropriate, it shall prepare on a
* basis an updated version of the Statement of Work incorporating all
modifications made since the prior update and clearly setting forth the "Date of
Revision" on the front page. Microsoft shall circulate each such update to
StarTek. The most current revised version of the Statement of Work that has been
circulated in this manner to the parties, together with subsequent modifications
documented pursuant to this Section 15(b) shall constitute the Statement of Work
for the purposes of this Agreement. StarTek shall maintain and make available to
Microsoft upon request copies of all of its documentation regarding
modifications to the Statement of Work. For purposes of this Agreement,
references to Statement of Work includes any agreed modification even if prior
to the quarterly incorporation of such changes.
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(c) AMENDMENT. This Agreement may be amended only in writing signed by
authorized representatives of both parties. Notwithstanding the foregoing,
Microsoft reserves the right to change, by * prior notice to StarTek, any
policies of Microsoft.
(d) OTHER. Except as provided in this Section 14, the provisions of
this Agreement may be modified only by written instrument signed by duly
authorized representatives of Microsoft and StarTek.
15. GENERAL.
(a) PROHIBITION AGAINST ASSIGNMENT. Except as expressly provided in
this Section 15(a), no party may assign its rights or obligations under this
Agreement (by actual assignment or by operation of law, including without
limitation through a merger, consolidation, exchange of shares, or sale or other
disposition of assets, including disposition on dissolution), without the prior
written consent of the other party, which consent shall not be unreasonably
withheld. Microsoft may, however, assign this Agreement to a Microsoft
subsidiary without the consent of StarTek. Notwithstanding the foregoing, this
is a contract for personal services and Microsoft relies upon the
qualifications, reputation and expertise of StarTek to perform all obligations
hereunder. In particular, Microsoft relies upon StarTek's history of performance
over more than * of operation,
(b) CONTROLLING LAW. This Agreement shall be construed and controlled
by the laws of the State of Washington, and StarTek consents to jurisdiction and
venue in the state and federal courts sitting in the State of Washington.
Process may be served on any party in the manner set forth in Section 13 for the
delivery of notices or by such other method as is authorized by Washington law
or court rule.
(c) NO PARTNERSHIP/JOINT VENTURE/AGENCY/FRANCHISE. This Agreement shall
not be construed as creating a partnership, joint venture, employer-employee or
agency relationship or as granting a franchise.
(d) SEVERABILITY. If any provision of this Agreement shall be held by a
court of competent jurisdiction to be illegal, invalid or unenforceable, the
remaining provisions shall remain in full force and effect.
(e) ATTORNEYS' FEES. If any party employs attorneys to enforce any
rights arising out of or relating to Agreement, the prevailing party shall be
entitled to recover its reasonable attorneys' fees, costs and other expenses.
(f) WAIVER. No waiver of any breach of any provision of this Agreement
shall constitute a waiver of any prior, concurrent or subsequent breach of the
same or any other provisions hereof, and no waiver shall be effective unless
made in writing and signed by an authorized representative of the waiving party.
(g) SECTION HEADINGS. The Section headings used in this Agreement are
intended for convenience only and shall not be deemed to supersede or modify any
provisions.
(h) GOVERNMENTAL APPROVALS. Each party shall, at its own expense,
obtain and arrange for the maintenance in full force and effect of any and all
governmental approvals, consents, licenses, authorizations, declarations,
filings, and registrations as may be necessary or advisable for the performance
of all of the terms and conditions of this Agreement.
(i) FORCE MAJEURE.
(1) Except as otherwise provided in this Section 15(i), neither
party shall be in default by reason of any failure in performance of this
Agreement, if such failure arises out of causes beyond the control and without
the fault or negligence of the involving party including, but not restricted to,
acts of God, acts of the Government, fires, floods, epidemics, quarantine
restrictions, strikes, lock-outs, freight embargoes and unusually severe
weather. This Section shall also apply to StarTek's contractors where a
contractor's failure arises out of the same causes, except insofar as StarTek
could have reasonably been expected to obtain contractor supply from alternate
sources.
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(2) StarTek shall give a written notice to Microsoft within * after
StarTek becomes aware of any circumstances or event which may reasonably be
anticipated to cause or constitute, or which constitute a force majeure as
described in Section 15(i)(1), above. Such notice shall contain a detailed
description of the delay and of the affected portion of the Agreement. Within a
further * after such notice, StarTek shall deliver a detailed written
description of the work-around plan, alternative sources, and any other
reasonable means that StarTek shall, at its own cost, use to prevent such
further delay.
(3) If the delivery of any Products shall be delayed by reason of
force majeure for more than * beyond when delivery was scheduled, Microsoft may
upon written notice to StarTek with respect to the undelivered Products, either
terminate any or all this Agreement hereunder. In the event of such termination,
the parties shall comply with their obligations as specified in Section 10.
(J) EXHIBIT(S). The following exhibits, as amended from time to time,
are incorporated into this Agreement by this reference ("Exhibit(s)"):
EXHIBIT DESCRIPTION
A Statement of Work
B Price and Payment Terms
C Insurance
D Required Tax Information
E Approved Subcontractor List
All references to the "Agreement" are references to this Agreement and all
Exhibits, all as amended from time to time. To the extent that any provision
contained in any Exhibit is inconsistent or conflicts with this Agreement
exclusive of the Exhibits, the provisions of this Agreement (exclusive of the
Exhibits) shall control.
(k) PRESS RELEASES/PUBLICITY. StarTek shall not issue any new press
releases or publicity that may relate or refer to this Agreement. Any press
statements shall only be released by joint agreement of the parties, except as
legally required by the SEC or NYSE. StarTek shall not use the name "Microsoft"
or "Microsoft Corporation" in any advertisements. StarTek may, however, with the
prior written consent of Microsoft, use the name "Microsoft Corporation" in
brochures, written response to requests for client lists as part of Requests for
Proposals, Requests for Information, etc. StarTek may also use the name
"Microsoft" or "Microsoft Corporation" in verbal client presentations.
(l) INSURANCE. Prior to the commencement of the Manufacturing services
to be performed hereunder and throughout the entire period of performance by
StarTek, StarTek shall procure and maintain the insurance coverage set forth in
Exhibit C. Such insurance shall be in a form and with insurers acceptable to
Microsoft, and shall comply with the minimum requirements set forth in Exhibit
C.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above. All signed copies of this Agreement shall be deemed originals.
MICROSOFT CORPORATION STARTEK INC.
/s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxxxxx X. Xxxxxx
----------------------------------- --------------------------------
By By
Xxxxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxx
----------------------------------- --------------------------------
Name (Print) Name (Print)
Vice President WW Operations President/CEO
----------------------------------- --------------------------------
Title Title
October 12, 1998 September 29, 1998
----------------------------------- --------------------------------
Date Date
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State of Washington )
) ss:
County of King )
I certify that I know or have satisfactory evidence that
____________________________ is the person who appeared before me, and said
person acknowledged that (he/she) signed this instrument, on oath stated that
(he/she) was authorized to execute the instrument and acknowledged it as the
_______________________ of MICROSOFT CORPORATION to be the free and voluntary
act of such party for the uses and purposes mentioned in the instrument.
Dated:
---------------
---------------------------------------------
Notary Public
[Seal or Stamp]
---------------------------------------------
[Printed Name]
My appointment expires
----------------------
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----------------- )
) ss:
County of ________ )
I certify that I know or have satisfactory evidence that
____________________________ is the person who appeared before me, and said
person acknowledged that (he/she) signed this instrument, on oath stated that
(he/she) was authorized to execute the instrument and acknowledged it as the
______________________ of StarTek Inc. to be the free and voluntary act of such
party for the uses and purposes mentioned in the instrument.
Dated:
----------------
---------------------------------------------
Notary Public
[Seal or Stamp]
---------------------------------------------
[Printed Name]
My appointment expires
----------------------
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EXHIBIT A
STARTEK PACIFIC, INC. *
STATEMENT OF WORK
XXXXX 0, 0000
Xx. N - 1
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TABLE OF CONTENTS
SECTION PAGE
-------- ----
1. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.1 Purpose & Requirement Scope . . . . . . . . . . . . . . . . 4
2. SCOPE OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. FORECASTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 * Rolling Forecast . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Manufacturing Systems . . . . . . . . . . . . . . . . . . . . . . . . 4
4. PURCHASE ORDER PROCEDURES . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Purchase Orders (PO) . . . . . . . . . . . . . . . . . . . 4
4.2 MLP Production Requirements . . . . . . . . . . . . . . . . 5
4.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. FINISHED GOODS TRANSACTION REPORT &
RECEIPTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6. PROCUREMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.1
6.2 Pre-press Work, Engineering, & Die Charges . . . . . . . . 7
7. SUBCONTRACTING . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8. PRINTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8.1 Print and/or Procure . . . . . . . . . . . . . . . . . . . . . . . . 7
8.2 Print Specifications . . . . . . . . . . . . . . . . . . . . . . . . 7
8.3 Monitor & Order Artwork for Printing . . . . . . . . . . . . . . . . 7
8.3.1 Identify Components . . . . . . . . . . . . . . . . . . . . 7
8.3.2 Track Components . . . . . . . . . . . . . . . . . . . . . 7
8.3.3 Monitor MS Artwork Release . . . . . . . . . . . . . . . . 7
8.3.4 * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.3.5 Ordering of Film . . . . . . . . . . . . . . . . . . . . . 8
8.4 Registration / License Card Printing . . . . . . . . . . . . . . . . 8
8.5 CD Component Printing . . . . . . . . . . . . . . . . . . . . . . . . 8
9. DISK DUPLICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9.1 Disk Duplication Capabilities . . . . . . . . . . . . . . . . . . . . 8
9.2 Disk Duplication Quality Control . . . . . . . . . . . . . . . . . . 8
9.3 Disk Duplication Processes . . . . . . . . . . . . . . . . . . . . . 8
9.4 Virus Protection . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.5 Diskette Quality . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.6 Customer Master Disk Handling . . . . . . . . . . . . . . . . . . . . 9
9.7 Disk Copy Protection and Serialization . . . . . . . . . . . . . . 10
9.8 Disk Labeling and Collation . . . . . . . . . . . . . . . . . . . . 10
9.8.1 Label Images . . . . . . . . . . . . . . . . . . . . . . . 10
9.8.2 Label Printers . . . . . . . . . . . . . . . . . . . . . . 10
9.8.3 Labelers . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.8.4 Collation . . . . . . . . . . . . . . . . . . . . . . . . . 10
10. CD REPLICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 10
10.1 CD-ROM Production Processes . . . . . . . . . . . . . . . . 10
10.2 CD Handling of CD-ROM Masters . . . . . . . . . . . . . . . 10
10.3 * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.4 CD-ROM Quality Control . . . . . . . . . . . . . . . . . . 11
10.5 CD Label Screen-Printing . . . . . . . . . . . . . . . . . 11
10.6 Product Identification / CD Key . . . . . . . . . . . . . . 11
Ex. N - 2
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11. PRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11.1 Assembly Capability . . . . . . . . . . . . . . . . . . . . 11
11.2 * and UPC Labels . . . . . . . . . . . . . . . . . . . . . 11
11.3 Shrink-Wrapping . . . . . . . . . . . . . . . . . . . . . . 11
11.4 Assembly Quality . . . . . . . . . . . . . . . . . . . . . 11
11.5 Bundling . . . . . . . . . . . . . . . . . . . . . . . . . 11
11.6 Rework . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.7 Orders Requested Prior to Normal Lead-Time . . . . . . . . 12
11.8 Scrap Process . . . . . . . . . . . . . . . . . . . . . . . 12
12. DELIVERY REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . 12
12.1 Preparation . . . . . . . . . . . . . . . . . . . . . . . . 12
12.2 Pallet Loading . . . . . . . . . . . . . . . . . . . . . . 12
12.3 Finished Goods Handling . . . . . . . . . . . . . . . . . . 12
12.4 Advance Shipment Notification . . . . . . . . . . . . . . . 12
12.5 Ship Direct . . . . . . . . . . . . . . . . . . . . . . . . 12
13. REPORTING / COMMUNICATION REQUIREMENTS . . . . . . . . . . . . . . 13
13.1 Manufacturing Report . . . . . . . . . . . . . . . . . . . 13
13.2 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . 13
14. QUALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
14.1 ISO Certification . . . . . . . . . . . . . . . . . . . . . 14
14.2 Quality Records . . . . . . . . . . . . . . . . . . . . . . 14
14.3 Audits and Corrective Actions . . . . . . . . . . . . . . . 14
14.4 Security Lockout . . . . . . . . . . . . . . . . . . . . . 14
14.5 * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
14.6 * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15. CONFIGURATION MANAGEMENT . . . . . . . . . . . . . . . . . . . . . 14
15.1 BOM's and CAD's . . . . . . . . . . . . . . . . . . . . . . 14
15.2 Changes to BOM's and CAD's . . . . . . . . . . . . . . . . 15
15.3 Configuration Record Retention . . . . . . . . . . . . . . 15
16. INFORMATION TECHNOLOGY . . . . . . . . . . . . . . . . . . . . . . 15
16.1 Infrastructure Requirements . . . . . . . . . . . . . . . . 15
16.2 Electronic Data Interchange (EDI) . . . . . . . . . . . . . 15
16.3 Technical Personnel . . . . . . . . . . . . . . . . . . . . 15
16.4 Data Exchanges . . . . . . . . . . . . . . . . . . . . . . 15
16.5 System Alternatives . . . . . . . . . . . . . . . . . . . . 16
16.6 * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17. MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17.1 Meetings and Reviews . . . . . . . . . . . . . . . . . . . 16
17.2 Piracy . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17.3 Business Loss . . . . . . . . . . . . . . . . . . . . . . . 16
17.4 Risk Management . . . . . . . . . . . . . . . . . . . . . . 16
17.5 Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17.6 Service Level Goals . . . . . . . . . . . . . . . . . . . . 16
18. MICROSOFT GLOBAL SPECIFICATIONS . . . . . . . . . . . . . . . . . . 17
19. ATTACHMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
20. COMMON MICROSOFT ACRONYMS . . . . . . . . . . . . . . . . . . . . . 17
Ex. N - 3
22
DRAFT -- Microsoft Confidential
EXHIBIT A
STARTEK PACIFIC MFG. * STATEMENT OF WORK
For purposes of this Exhibit, "MS" shall mean Microsoft Corporation and
"Company" shall mean StarTek Pacific, Inc.. All other capitalized terms not
otherwise defined in this Exhibit shall have the same meaning as set forth in
the Agreement to which this is an Exhibit.
1. GENERAL:
1.1 PURPOSE AND REQUIREMENT SCOPE:
This document describes the requirements that the Company must meet as a
manufacturer and service provider to MS. The general requirements under this
agreement are:
1.1.1 Source and procure raw material in accordance with MS
specifications.
1.1.2 Build finished package product in accordance with MS
specifications in the quantities ordered by MS pursuant to
a Purchase Order.
1.1.3 Make Finished Product Units available to a MS designated
distribution center.
1.1.4 Provide information regarding production and delivery as
required.
2. SCOPE OF BUSINESS:
MS may elect to split the book of business between two or more
companies.
3. FORECASTS:
3.1 * ROLLING FORECAST:
MS will provide a * rolling forecast for * for all Products anticipated
to be built by the Company. This forecast may be used by the Company at
the Company's discretion for planning and procuring raw materials. MS
may change the forecast up to the issuance of a purchase order with no
penalty or responsibility for any raw materials, Product Components, or
Product acquired/built to such forecast.
3.2 MANUFACTURING SYSTEMS:
The Company shall perform procurement, scheduling and manufacturing
activities on their own manufacturing system(s). MS will not be
responsible for providing the Company with any manufacturing system.
4. PURCHASE ORDER PROCEDURES:
4.1 PURCHASE ORDERS (PO):
During the term of the Agreement, MS will issue a * Purchase Order (PO)
for Finished Product Units to the Company on * for *. Each PO so issued
shall require Finished Product Units to be prepared and ready for pick-
up by the distribution center * from the PO issue date. The purchase
order will include but not be limited to the SKU, quantity, price and
required delivery date. MS may prioritize Products on the PO so Company
will be able to build more urgent requirements first. The purchase
order will officially authorize the Company to manufacture MS Products.
MS accepts ownership and liability for raw materials and finished goods
inventory that have been purchased and/or built in support of the weekly
PO.
Ex. N - 1
23
DRAFT -- Microsoft Confidential
4.2 Once MS has issued a PO, MS may change the build requirements or
issue engineering change notices (ECN) corresponding to that PO,
but raw materials procured by the Company to fulfill such PO that
are left unused will be the responsibility of MS. Company may
charge MS for the storage of any such unused raw materials
remaining in Company's warehouse * after fulfillment of the PO.
MS will reimburse Company for the cost of such raw materials if
they remain unused. In order to be reimbursed by MS, the Company
must provide a raw material inventory age report for which MS
owns liability upon expiration of the * holding period. In case
of an ECN that stops and/or starts a component, the Company must
notify MS of the related charges within * of the change order.
Related charges will be tracked and reviewed at the *. This
notification must include the MS ECN#, the component part number
and the quantity that MS is liable for. MS will determine and
communicate in writing whether or not to scrap any raw material
or finished goods and reimburse the Company accordingly.
MS intends to remit payment to the Company, * * for all Finished Product Units
upon receipt of the advanced ship notice from the applicable *. All error-free
invoices submitted by the Company will be paid within the payment terms of the
Agreement. When invoice discrepancies are found, invoices will be immediately
returned to the Company for correction and re-submittal. Corrected invoices
submitted to MS must reflect a revised invoice date (not the original invoice
date). It is in the Company's best interest to submit error free invoices to MS
for prompt payment, as invoice errors will delay MS payment to the Company.
Microsoft will make payments for services in US dollars. The dollars owed will
be determined through an automatic regular adjustment from the * and the
services rendered. *
5. FINISHED GOODS TRANSACTION REPORT AND RECEIPTS:
5.1 When production has been completed per the MS Purchase Order, the
Company must notify DTV of the completed finished goods.
5.1.1 The Company will send * build order report to the DTV.
When finished goods have been built, the Company will call
the DTV by * to arrange for pick up by *. The DTV plans to
scan the product into its system within * from pick up and
send a receipt confirmation to MS and the Company by *.
The Company will review the receipt confirmation and
resolve any discrepancies with the DTV within *.
5.1.2 Company must notify MS immediately (*) of any inventory
movements that may require inventory adjustments.
Adjustments include but are not limited to quality issues,
cycle count adjustments, first article sample, rework and
site to site stock transfers.
6. PROCUREMENT:
6.1 Company will be responsible for procuring all raw materials for
assembly. Raw materials procured must meet MS Global Quality
specifications for full packaged Product. MS may at times
designate 'Approved Subcontractors' for certain raw material
components such as security components, third party pieces and
hardware. MS may at times supply raw material to the Company.
The Company will be notified of the approved subcontractors.
(Please reference attachment 2). All raw materials that the
Company procures are subject to audit at the Company's Facility
for adherence to MS Global Quality Standards for full packaged
Product (*).
6.2 PRE-PRESS WORK, ENGINEERING, AND DIE CHARGES:
These are costs associated with the output of electronic files to plate ready
film, color separations, proofs prototype, die charges and are not to be
calculated in the unit or component cost of the part. These are to be
Ex. N - 2
24
DRAFT -- Microsoft Confidential
billed on a separate invoice to MS noting the MS part number to which the costs
are related to. Costs associated with frequently performed services such as
outputting post-script files for manual text, preparing provided film for plate
imposition etc. shall be charged at the * (please reference attachment 3).
Charges for other more non-standard goods and services above and beyond
attachment 3 shall be billed *
7. SUBCONTRACTING:
Any references to subcontractors in this Exhibit shall be subject to the
requirements for subcontractors set forth in the Agreement.
8. PRINTING:
8.1 PRINT AND/OR PROCURE:
Company must be capable of printing and/or procuring printed materials per MS
provided specifications and in quantities to meet MS's finished goods
production requirements.
8.2 PRINT SPECIFICATIONS:
Printed materials must meet the quality standards and specifications
identified in MS Print Specifications and in the MS Quality Standards.
*. From time to time printed samples may be requested. The Company
must supply samples to MS upon request.
8.3 MONITOR AND ORDER ARTWORK FOR PRINTING:
It is the Company's responsibility to identify and track components
requiring artwork, monitor MS artwork release report, and pull
electronic files or order film-based components necessary to complete
the finished goods build upon BOM availability on EDT.
8.3.1 IDENTIFY COMPONENTS:
Company will receive a Xxxx of Materials (BOM) via
*. Company will review the MS BOM and determine whether
or not artwork is needed
8.3.2 TRACK COMPONENTS:
Company must have an internal mechanism to track
outstanding artwork and receipt dates for film. The
purpose of the tracking mechanism is to proactively
monitor whether outstanding artwork will impact Product
builds. It will also provide MS visibility to ensure that
MS deliverables are on schedule for Product release.
8.3.3 MONITOR MS ARTWORK RELEASE:
Company will receive a * report * . It is the Company's
responsibility to monitor the * . This report notifies
the Company that the printed components have been released
to manufacturing.
8.3.4 PULLING ELECTRONIC FILES:
It is the Company's responsibility to pull the electronic
files using Microsoft's Electronic Delivery Tool (EDT).
Electronic files include: 1-2 color print components,
print specifications, film order forms (see below) and
software images.
8.3.5 ORDERING FILM:
For film-based components (over 2 colors) it is the
Company's responsibility to pull film order forms from
EDT. Once the form is pulled, the Company completes all
required information (film requirements, ship-to address,
required delivery date and MS PO# etc.) and sends the film
order * directly to the designated film house.
Ex. N - 3
25
DRAFT -- Microsoft Confidential
On average the Company can expect to monitor approximately
*. This activity will increase with MS new Product
releases. Please reference artwork delivery and film
order process, (please reference attachment 4), and EDT
system requirements (please reference attachment 5).
Company (or their print subcontractor) must report all
printed material discrepancies immediately to MS (*) using
MS Discrepant Art Report form.
8.4 REGISTRATION / LICENSE CARD PRINTING:
Company shall have the capability to imprint or have printed
product part numbers; product ID numbers or other MS identified
information on MS registration cards and MS license agreements.
8.5 CD COMPONENT PRINTING:
Company shall have the capability to print or shall approve a
subcontractor of supply of printed components included in CD-
ROMs. These components shall consistently meet the quality
requirements of MS CD ROM Quality Specifications (*). For ongoing
business with MS the Company will access all required quality
specifications using the Internet *.
9. DISK DUPLICATION:
Duplicated disks may be produced or procured by the Company, as set
forth in the * PO.
9.1 DISK DUPLICATION CAPABILITIES:
Company or Company's duplication subcontractor must be capable of duplicating
diskettes in accordance with the requirements identified in MS Global Quality
standards. Company or Company's duplication subcontractor duplication equipment
must have the ability to control all aspects of the quality of the duplication
process including image integrity, bit placement, window margin, and
revolutions per minute (RPM) of the drive spindle.
9.2 DISK DUPLICATION QUALITY CONTROL:
Company or Company's duplication subcontractor must have an audit
process in place consisting of a data interchange or second
spindle verification as well as second image verification
process. * shall be used to ensure that the proper image is
being duplicated.
9.3 DISK DUPLICATION PROCESSES:
Company or Company's duplication subcontractor must have:
9.3.1 A preventive maintenance program or backup subcontracting
program in place capable of preventing disk-duplicating
delays for finished goods production.
9.3.2 A formal training program must be in place for all
duplication operators and support personnel.
9.3.3 A staff technically capable of supporting all of MS's
duplication requirements within the weekly production
variability range.
9.3.4 A write and verify process for all duplicated Product.
9.3.5 The capability to utilize MS * and other tools when
necessary.
9.4 VIRUS PREVENTION:
To ensure that every possible avenue to prevent MS deliverable
Product from being infected with a computer virus, Company shall
implement the following:
*
Ex. N - 4
26
DRAFT -- Microsoft Confidential
9.5 DISKETTE QUALITY:
Company or Company's duplication subcontractor must perform
quality checks on duplicated disks. Diskettes shall be
duplicated and verified in accordance with the *. Company must
be capable of tracking and reporting duplication performance data.
Please reference quality-reporting requirements in attachment 6.
9.6 CUSTOMER MASTER DISK HANDLING:
Company or Company's duplication subcontractor must have the
capability of receiving software master images *. Company or
Company's duplication subcontractor shall ensure proper handling,
storage, retrieval and control of the master disk(s) provided or
created to ensure the integrity of the software images.
9.7 DISK COPY PROTECTION AND *:
Company or Company's duplication subcontractor disk duplication
process must be capable of supporting disk copy protection and *.
9.8 DISK LABELING AND COLLATION:
9.8.1 LABEL IMAGES:
MS will provide all label images that will be *.
9.8.2 LABEL PRINTERS:
Company or Company's duplication subcontractor shall print
*.
9.8.3 LABELERS:
Company or Company's duplication subcontractor's labeling
equipment and/or procedures shall be capable of
consistently meeting or exceeding MS's label placement
specification as described in the MS Quality
Specifications *. For ongoing business with MS the
Company will access all required quality specifications
using the Internet *.
9.8.4 COLLATION:
Company or Company's duplication subcontractor shall have
sufficient and appropriate process equipment to seal
collated disk sets into polyvinyl bags. Company is
responsible for ensuring that collation process for
diskettes meets *.
10. CD REPLICATION:
CD's may be produced or procured by Company, as set forth in the * PO.
Company or Company's CD subcontractor shall have documented processes
and appropriate equipment to effectively produce CD-ROM's and associated
CD components which consistently meet or exceed the requirements of the
MS Global Quality Specifications for CD ROM. Company or Company's CD
subcontractor agrees to perform all required maintenance on the
equipment at its own cost. Company or Company's CD subcontractor shall
have a * to hold CD-ROMs and material until they can be rendered
unusable or recycled. When Company produces or procures CDs, the
following apply:
10.1 CD-ROM PRODUCTION PROCESSES:
Company or Company's CD subcontractor shall have documented
processes for the following:
10.1.1 A preventative maintenance program or backup
subcontracting program in place capable of preventing
delays for finished goods production.
10.1.2 A formal training program in place for all CD operations
(Premastering, Mastering, and Replication) and support
personnel.
Ex. N - 5
27
DRAFT -- Microsoft Confidential
10.1.3 A staff technically capable of supporting all of MS's CD
requirements within the * production variability range.
10.2 CD HANDLING OF CD-ROM MASTERS:
Company or Company's CD subcontractor shall have documented
procedures in place, which ensure proper handling, storage, and
retrieval of MS supplied CD master files.
10.3 CD ANTI-PIRACY AND *:
Company or Company's CD subcontractor shall be capable of
supporting Anti-Piracy initiatives and * applicable to CD-ROMs
upon MS request.
10.4 CD-ROM QUALITY CONTROL:
Company or Company's CD subcontractor shall have a documented
verification process in place to ensure the integrity of the
replicated CD-ROM matches the original supplied by MS. In
addition, Company or Company's CD subcontractor of supply shall
have documented and implemented processes to verify * which
ensure compliance to MS Global Specifications. The Company will
access all required quality specifications using the Internet *.
Company or Company's CD subcontractor must be capable of tracking
and reporting CD quality data to Ms (please reference attachment
6).
10.5 CD LABEL SCREEN PRINTING:
Company or Company's CD subcontractor, should have a process to
receive CD label images *. Process must be established to ensure
the correct label image is applied to the correct CD title.
Processes must prevent any CD's used in the setup of the print
processes *.
10.6 *.
11. PRODUCTION:
11.1 ASSEMBLY CAPABILITY:
Company will establish and maintain an assembly process capable
of producing sufficient quantities of Product that meet MS's
Purchase Order requirements, or minimum capacity cotment,
whichever is lower. If MS demand exceeds the Company's capacity
and subcontracting is necessary to meet this demand, MS must be
notified prior to proceeding with off-site builds. The MS Global
Quality Specifications for full packaged Products as stated *.
11.2 *:
Company shall have the proper equipment to make * for retail
products and shippers in accordance with MS specifications *.
11.3 SHRINK-WRAPPING:
Company shall be capable of shrink-wrapping all sizes of
Products, including CDs, in accordance with MS Quality Standards
*.
11.4 ASSEMBLY QUALITY:
Company shall perform in-process and final verifications of
assembled Products to ensure compliance to the MS requirements
and specifications (please reference attachment 7). The
standards included in First Article Inspection Standards for
Assembled Product (please reference attachment 8) will be used
for initial build of each Product.
11.5 BUNDLING:
MS may notify the Company that a bundling operation is required
and will provide Company with SKU number, quantity and specific
bundling instructions. The Company shall provide the MS Vendor
Account Manager (VAM) with a * for the bundling effort within *
in sufficient detail to allow MS to perform an analysis of the
major cost elements. The VAM will provide
Ex. N - 6
28
DRAFT -- Microsoft Confidential
the Company with written authorization to proceed at the *. The
Company shall be responsible for bundling the Products in
accordance with the MS provided bundling instructions and
submitting an invoice to the VAM at the agreed upon price. The
Company may be required to purchase finished goods and/or raw
materials from other Companies to fulfill the bundling
requirement(s).
11.6 REWORK:
MS may notify the Company that rework is required and will
provide Company with SKU number, quantity and requested
completion date. The Company shall provide the MS VAM with a *
quotation for the rework effort within *, in sufficient detail to
allow MS perform an analysis of the major cost elements. The VAM
will provide the Company with written authorization to proceed at
the *. The Company shall be responsible for reworking the
Products in accordance with the MS BOM and submitting an invoice
to the VAM at the*.
11.7 ORDERS REQUESTED PRIOR TO NORMAL LEAD-TIME:
There will be situations where MS will request orders to be built
in less than the normal * lead-time. (Please reference section
4.1 hereof). When MS requests such an order, the Company will
reply with at least but not limited to *. This will give MS the
opportunity to decide which option best suits the situation.
These orders will be communicated to the Company by the MS VAM in
situations where faster Product deliveries are required due to
urgent customer requests. The MS VAM and Company shall mutually
agree that the option taken is acceptable and the MS VAM will
provide authorization to proceed.
11.8 SCRAP PROCESS:
Subcontractor must have written authorization from MS VAM prior
to scrapping and/or disposing of MS finished goods or components
(please reference attachment 9).
12. DELIVERY REQUIREMENTS:
12.1 PREPARATION:
The Company is responsible for making the Finished Product Units
ready for pick-up by the Distribution Center. This preparation
includes ensuring that finished goods are correctly palletized,
shrink-wrapped and ready for transit to the Distribution Center.
12.2 PALLET LOADING:
The Company shall adhere to the MS Global specifications for
pallet configuration specifications when stacking Product.
12.3 FINISHED GOODS HANDLING:
The Company shall have proper handling procedures for finished
goods to prevent loss of damage between assembly and pick-up by
the Distribution Center.
12.4 ADVANCE SHIPMENT NOTIFICATION:
The Company is responsible for providing an * to the Distribution
Center as soon as shipment is ready for pick-up.
12.5 SHIP DIRECT:
On occasion, the manufacturing supplier will be requested to
prepare Product for direct shipment to the distributor. MS
designated carrier will pick up Product for direct shipment.
The Company will invoice upon shipment. Upon doing any direct
shipment, company will provide MS with electronic notification
containing all relevant shipment information.
Ex. N - 7
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DRAFT -- Microsoft Confidential
13. REPORTING / COMMUNICATION REQUIREMENTS:
13.1 MANUFACTURING REPORT:
The Company shall proactively alert MS to any orders that will
not be completed within the committed lead-time of *. Once
identified, the Company shall provide MS with a * report, as
defined by MS, which includes; *. This report may also include
* and the *. The Company must also be able to track and report
quality data to MS (please reference attachment 1).
13.2 REPORTING:
Company Provides:
o * of finished goods available to ship to DTV-daily.
o Damaged Product Reports - as needed.
o Quality Records - for the term of this agreement.
o Non-Disclosure Agreements (NDA's) with outsourced vendors.
o * build report (as defined in section 13.1) - *
o MLP report (as defined in section 4.2) - *
o Invoices to VAM's - *
o Aged raw material report (MS owns liability) - *
o * reporting - * Will be included on pricing tool
spreadsheet (see attachment 6
o Media Quality reporting - *
o Corrective Action reporting
o ECN start/stop (related charges) - *
o Scrap - Certificate of Destruction for scrap on request.
MS Provides:
o Purchase order- *
o * rolling forecast - *
o Rework Procedures - as required
o Obsolete Inventory & Scrapping Procedures - as required
o Approved Subcontractors (TDLR, "CD sources") See
attachment 2
o BOM's - as required
o ECN's - as required
Ex. N - 8
30
DRAFT -- Microsoft Confidential
o Artwork Release Notification - as required
o Quality Web Site
o
o CORE update-QBR
14. QUALITY:
14.1 ISO CERTIFICATION:
Company shall remain ISO certified during the period of the
Agreement.
14.2 QUALITY RECORDS:
Company shall maintain records of inspection, repairs, reworks
and tests for the term of the Agreement. Records shall be made
available to MS upon request
14.3 *:__
14.4 *:
14.5 *:__
15. CONFIGURATION MANAGEMENT:
15.1 BOM'S AND CAD'S:
Company will use MS supplied Xxxx of Materials (BOM's) and CAD's
as a reference to ensure proper assembly of Product as specified
in MS Global Quality Specifications *.
15.2 CHANGES TO BOM'S AND CAD'S:
All changes to the configuration of Products will be managed
through the MS Configuration group. MS generates approximately
*. The Company must manage all resulting changes to Bills of
Material accordingly. Company may make no changes to Product
configuration or content without written authorization from MS,
however, Company is encouraged to suggest changes that lower
costs or in other ways improve processes or the Product. Any
discrepancies between MS's BOM, CAD or Kit and Company's BOM
shall be resolved prior to each build.
15.2 * RECORD RETENTION:
Company shall maintain records of * used to assemble Product for
the term of the Agreement. All records will be made available to
MS upon request.
16. INFORMATION TECHNOLOGY:
16.1 INFRASTRUCTURE REQUIREMENTS:
The Company Facility shall have an infrastructure capable of
supporting a variety of data communications required to
Manufacture Product. This includes the ability to connect to
MS's external network. External network connections will be used
to transfer information about Product builds.
16.2 *:__
16.3 TECHNICAL PERSONNEL:
The information technology requirements outlined above are deemed
mission critical. The Company shall have in-house or readily
available technical support at the Company's primary facility.
These Company personnel will work with MS personnel to ensure
that the site is properly set up to communicate with MS. MS will
work with the Company to establish
Ex. N - 9
31
DRAFT -- Microsoft Confidential
competency with any non-commercially available MS-specific
software that may be used in the operation. Company will be
responsible for on-going training of replacement or additional
personnel used to support the operation.
16.4 DATA EXCHANGES:
Data exchanges will be required throughout the term of the
Agreement. Exchanges will occur primarily through * and may
include, but are not be limited to, exchange of * and routine
information required to Manufacture Product *
16.5 SYSTEM ALTERNATIVES:
MS may wish to employ any or all of the following system
alternatives:
*
16.6 *:
17. MANAGEMENT:
17.1 MEETINGS AND REVIEWS:
Company will meet with designated MS team members on a * basis
during contract implementation period and at least * thereafter
for * business reviews. These meetings will include a Company
performance review, pricing reviews, continuous improvement
projects, management status reviews, cost reduction initiatives
and other operational areas and issues. * may be held at
Company's facility, MS's facility or by video teleconference
(VTC).
17.2 RISK MANAGEMENT:
Comprehensive Outsource Risk Evaluation (C.O.R.E) is a MS tool
which is used to assess the Company's performance and ability to
meet or exceed MS customers expectations. Company will agree to
participate in a risk management program to ensure Product
availability. STARTEK PACIFIC will on occasion be requested to
provide information that will be used as input to the C.O.R.E.
tool. MS will share the results of the C.O.R.E. at the QBR.
17.3 METRICS:
Goal = *
Number of actual units completed on or before the p.o. due date, divided by
total number of units ordered
Goal = *
Number of lines completed at * on or before the p.o. due date, divided by
total number of lines on the p.o. .
(NOTE: Lines with orders exceeding * count as completed if filled at * or
greater. Lines with order quantities of less than * need to be filled
at *).
EXAMPLE: If you have a PO for * for * each, and *lines shipped the *
units, but the * shipped * units only - the Unit Fill Rate = *) Line
Fill rate = *). No credit would be given for the *. If * lines out of the *
lines shipped * units = Line Item Fill Rate = *.
OPPM
----
APPLIES TO FUNCTIONAL ERRORS ONLY. GOAL: *
Ex. N - 10
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DRAFT -- Microsoft Confidential
18. MICROSOFT GLOBAL SPECIFICATIONS:
18.1 Microsoft Global Specifications for Retail Full Packaged Products
include Workmanship and Engineering Specifications. For ongoing
business with MS, the selected Company(s) will access all required
quality specifications using the Internet *. Changes to
* will be communicated monthly to the Company and as major
revisions occur.
19. ATTACHMENTS:
The following MS documents, which may be modified by MS from time to
time, are hereby incorporated as part of this SOW:
--------------- ---------------------------------------------
ATTACHMENT ATTACHMENT
NUMBER NAME
--------------- ---------------------------------------------
1 * Build Report
--------------- ---------------------------------------------
2 MS Sub-contractors: Approved * Suppliers
--------------- ---------------------------------------------
3 Pre-press Pricing
--------------- ---------------------------------------------
4 Artwork Pull & Film Order Form
--------------- ---------------------------------------------
6 Pricing Tool Spreadsheet
--------------- ---------------------------------------------
5 Destruction / Scrap Procedures
--------------- ---------------------------------------------
20. COMMON MICROSOFT ACRONYMS:
o ASAP As soon as possible
o BOM Xxxx of Materials
o CAD Computer Aided Drawing
o COGS Cost of Goods Sold
o CSP Customer Service Pack's
o DC Distribution Center
o DMF Distributed Media Format
o *
o ECD Engineering Change Date
o ECN Engineering Change Notice
o ECR Engineering Change Request
o EDI Electronic Data Interchange
o EDT Electronic Delivery Tool
o FINOPS Financial Operations
o ISO International Organization of Standards
o ITG Microsoft Information Technology Group
o MLP Microsoft License Pack's
o MS Microsoft
o *
o NDA Non-Disclosure Agreement
o PDM Product Data Manager
o PID Product Identifier
o PO Purchase Order
o PST Pacific Standard Time
o QBR Quarterly Business Review
o RMA Returned Merchandise Authorization
o SOW Statement of Work
o UPC Universal Product Code
o VAM Vendor Account Manager
Ex. N - 11
33
DRAFT -- Microsoft Confidential
Attachment 1
Ex. N - 12
34
DRAFT -- Microsoft Confidential
EXHIBIT B
PRICE AND PAYMENT TERMS
PRICE AND PAYMENT TERMS FOR PRODUCT COMPONENTS
1. During the term of this Agreement, MS will issue * Purchase Orders
(P.O.'s) for Product Components to StarTek on *. Each P.O. so issued shall
require delivery of the Product Components within * days of the P.O. date. If
assembly services are also ordered (see Exhibit C) as part of the P.O., each
P.O. so issued shall require delivery of the Product Components so ordered as
part of the finished Products within * days of the P.O. date. All receipts to
the P.O. entered by the Shipping Location by close of business * will be paid
via the * process, which will result in the issuance of a check within * of
receipt at the Shipping Location.
2. For each P.O. issued under this Agreement for Product Components, MS
agrees to pay Starpak a per Product Component price (e.g., per each Jewel Case
Component ordered) to be calculated as follows:
Per Product Component Price = *
3. *
Definitions:
*
3. Starpak may be required to produce Product Components for new MS
Product SKUs at any time during the term of this Agreement. Pricing for any such
Product Components will be determined by using the formula set forth in Section
2 above. Starpak agrees to make all reasonable effort to provide MS with Product
Component pricing for new MS Product SKUs within * hours of receiving the MS
Product SKU specification and BOM information from MS.
4. From time to time BOM changes occur that may add or delete
components from the MS Product SKU. These additions or deletions to the MS
Product * shall be reflected accordingly in the material and labor *.
Ex. N - 13
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DRAFT -- Microsoft Confidential
PRICE AND PAYMENT TERMS FOR ASSEMBLY SERVICES
1. If assembly services are ordered as part of the P.O., each P.O. so
issued shall require delivery of the finished Products within * of the P.O.
date. Starpak will build and ship according to the Shipping Location. All
receipts to the P.O. entered by the Shipping Location by close of business *
will be paid via the *, which will result in the issuance of a check within *
days of delivery to the Shipping Location.
2. For the assembly of the Product CD ROMs, Disk Set Component, Jewel
Case Component, and the Assembled Box Component into a finished Product
including shrink-wrap, MS agrees to pay Starpak for materials and labor on a *
for each Unit Delivered to be calculated as follows:
*
3. For materials and labor incurred to prepare the products for shipping, MS
agrees to pay Starpak the following *, as part of its freight costs, as
applicable:
*
3. Starpak may be required to produce Product Components for new MS
Product SKUs at any time during the term of this Agreement. Pricing for any such
Product Components will be determined by using the formula set forth in Section
2 above. Starpak agrees to make all reasonable effort to provide MS with Product
Component pricing for new MS Product SKUs within * of receiving the MS Product
SKU specification and BOM information from MS.
4. From time to time BOM changes occur that may add or delete
components from the *. These additions or deletions to the * shall be reflected
accordingly in the material and labor *.
Ex. N - 14
36
DRAFT -- Microsoft Confidential
EXHIBIT C
INSURANCE
This Exhibit "C" is a continuation of that certain Manufacturing Agreement dated
_______________ between MICROSOFT CORPORATION ("Microsoft") and StarTek Inc.
("STARTEK"). Capitalized terms not otherwise defined in this Exhibit shall have
the same meaning as set forth in the Agreement to which this document is an
Exhibit.
1. INSURANCE
Prior to the commencement of the work to be performed hereunder and throughout
the entire period of performance by STARTEK, STARTEK shall procure and maintain
insurance coverage as will reasonably respond to claims and liabilities that
STARTEK may encounter in the course of its business. Such insurance shall be in
a form and with insurers acceptable to Microsoft, and shall comply with the
following minimum requirements:
1.1 INSURANCE FOR LOSS OR DAMAGE TO PROPERTY. STARTEK shall maintain
policies of insurance covering loss or damage to Products and any Microsoft
property in its possession or control, including but not limited to loss or
damage that results from the fraudulent, dishonest, or criminal acts of STARTEK,
its subcontractors, or employees of STARTEK and its subcontractors. Such
policies shall be written with insurers and on policy forms reasonably
acceptable to Microsoft and shall provide limits adequate to cover the full
value of Product(s) at risk, and proceeds of such policies shall be payable in
* United States currency (USD). STARTEK shall cause its insurers to endorse the
policies as follows:
a) Microsoft shall be named as loss payee to the extent of Microsoft's
interest in Product(s),
b) coverage provided by the policy shall be primary to and not
contributory with coverage maintained by Microsoft,
c) rights of subrogation against Microsoft are to be waived, and
d) such policy may not be canceled or materially altered to the
detriment of Microsoft without * advance notice to Microsoft.
Coverage under this policy shall provide the broadest protection available at
reasonable cost.
Upon request STARTEK shall provide Microsoft with a current certificate of
insurance and certified copies of policy endorsements evidencing compliance with
the requirements set forth in this section.
1.2 COMPREHENSIVE GENERAL LIABILITY. STARTEK shall obtain and maintain
a policy of "general", "public", or "commercial" liability insurance written on
an "occurrence form" with limits of not less than * each occurrence for bodily
injury and property damage. The policy shall provide coverage for worldwide
defense, premises and operations, contractual liability (including specifically
the insurable contractual liability assumed in this Agreement), and products and
completed operations.
STARTEK shall also obtain and maintain a policy of "general", "public",
or "commercial" liability insurance written on an "occurrence form" with limits
of not less than * each occurrence for bodily injury and property damage. Such
policy shall provide coverage for defense, premises and operations, contractual
liability (including specifically the insurable contractual liability assumed in
this Agreement), and products and completed operations.
1.3 WORKERS' COMPENSATION. STARTEK shall at all times comply to the
full extent with the Worker's Compensation Act of 1985, reenactments thereof,
and any regulations made thereunder.
Ex. N - 15
37
DRAFT -- Microsoft Confidential
1.4 EMPLOYERS LIABILITY. STARTEK, in addition to complying with the
provisions of section 1.3 above, shall maintain coverage for employers liability
with a policy limit of not less than *.
1.5 CERTIFICATES OF INSURANCE. Upon request by Microsoft, STARTEK shall
provide to Microsoft certificates of insurance evidencing full compliance with
the insurance requirements contained herein. Such certificates shall be kept
current throughout the entire period of performance, and shall provide for at
least *advance notice to Microsoft if the coverage is to be canceled or
materially altered so as not to comply with the foregoing requirements.
FAILURE BY STARTEK, TO FURNISH CERTIFICATES OF INSURANCE OR FAILURE BY
MICROSOFT TO REQUEST SAME SHALL NOT CONSTITUTE A WAIVER BY MICROSOFT OF THE
INSURANCE REQUIREMENTS SET FORTH HEREIN. IN THE EVENT OF SUCH FAILURE ON THE
PART OF STARTEK OR ITS SUBCONTRACTORS TO PROVIDE THE CERTIFICATES AS REQUIRED
HEREIN, MICROSOFT EXPRESSLY RESERVES THE RIGHT TO ENFORCE THESE REQUIREMENTS,
AND IN THE EVENT OF LIABILITY OR EXPENSE INCURRED BY MICROSOFT AS A RESULT OF
SUCH FAILURE BY STARTEK OR ANY SUBCONTRACTOR, STARTEK HEREBY AGREES TO INDEMNIFY
MICROSOFT FOR ALL LIABILITY AND EXPENSE (INCLUDING REASONABLE ATTORNEY'S FEES
AND EXPENSES ASSOCIATED WITH ESTABLISHING THE RIGHT TO INDEMNITY), INCURRED BY
MICROSOFT AS A RESULT OF SUCH FAILURE BY STARTEK OR ITS SUBCONTRACTORS.
Ex. N - 16
38
DRAFT -- Microsoft Confidential
EXHIBIT D
REQUIRED TAX INFORMATION
During the term of this Agreement, StarTek agrees to provide Microsoft with such
information, as mutually agreed upon between the parties, that Microsoft
determines necessary for tax compliance and statutory reporting purposes. Such
information shall include, but may not be limited to the following:
A listing of all transactions, showing for each invoice:
- Invoice Number
- Date of Invoice
- Purchase Order Number(s)
- Total Charges Before *
- *
- Total Amount Due
The data provided in electronic format should agree with the information shown
on actual invoices issued to Microsoft.
If there are any transactions that are exempt from *, such transactions should
be reported separately (but the information required will still be listed as set
forth above, except that the * will be *).
Ex. N - 17
39
DRAFT -- Microsoft Confidential
EXHIBIT E
APPROVED SUBCONTRACTOR LIST
Ex. N - 18
