The Supplier shall be responsible for ensuring that all procedures used by the Supplier when importing, storing, handling and distributing the Products are (a) safe, (b) suitable to maintain the quality of the Products, (c) processed in order to avoid contamination, (d) processed to ensure correct delivery, and (e) in accordance with local, state, federal and international requirements for its operation.

The Supplier shall be responsible for implementing and maintaining a quality system that is compliant with the applicable version of ISO 13485, ISO 9001, or compliant to FDA 21CRF820 guidance (the “Quality System”) and shall provide documentation confirming the same to PartsSource on an annual basis. The Quality System shall be certified (the “Certification”) by an internationally recognized certification body, the results of which, as well as any follow-up audits, shall be communicated to PartsSource.

3.1    The Supplier shall ensure that all facilities at which the Products are stored, warehoused, handled and/or offered, as well as all equipment used for transportation, shall:

(a)    be of suitable size and construction to facilitate cleaning, maintenance, and proper operations;

(b)    have storage areas designed to provide adequate and appropriate lighting, ventilation, temperature, sanitation, humidity, space, equipment, and security conditions;

(c)    have records and storage systems or procedures that (where covered Product is identified by batch or lot) allows for only one batch per location in the warehouse and that individual batches can be traced to the end customer, to ensure full batch traceability;

(d)    have a quarantine area for storage of Products that are outdated, damaged, deteriorated, misbranded, or adulterated, or that are in immediate or sealed, secondary containers that have been opened;

(e)    be maintained in a clean and orderly condition; 

(f)    be free from infestation by insects, rodents, birds, or vermin of any kind; and

(g)    be compliant to IATA guidance for hazardous materials

3.2    The Supplier shall use its reasonable business efforts to notify PartsSource at least sixty (60) days in advance and in any event as soon as reasonably possible of any major changes proposed by the Supplier in connection with its handling, storage or transportation of the Products, including any changes to the physical storage location or storage conditions of the Products.

3.3    Upon receipt, each outside shipping container shall be visually examined by the Supplier for identity and to prevent the acceptance of contaminated Products or Products that are otherwise unfit for resale. The examination shall be adequate to reveal container damage that would suggest possible contamination or other damage to the contents.

3.4    Each outgoing shipment shall be carefully inspected by the Supplier for identity of the Products to ensure that the Product has not been damaged in storage or held under wrong conditions and that the correct Product is being delivered to the correct end delivery address.

3.5    The record keeping requirements in this Annex shall be followed by the Supplier for all incoming and outgoing Products.

4.1    All inventories and records provided for in this Annex shall be retained by the Supplier for a period of at least three (3) years after the date of their creation, or two (2) years after the shelf life of the Product in question has expired, or as may be expressly provided otherwise in this Agreement (whichever is longest).

4.2    The Supplier shall ensure that the records described in this Annex are kept at the inspection site or can be immediately retrieved by computer or other electronic means, and are readily available for authorized inspection during the retention period.  Records kept at a central location apart from the inspection site and not electronically retrievable shall be made available for inspection by the Supplier within two (2) working days of a request by a law enforcement agency, regulatory authority or any of PartsSource, its affiliates or its and their agents.

4.3    Supplier shall be and remain in compliance with HIPAA and its corresponding, applicable regulations and requirements, including but not limited to: (i) its application to PHI (Protected Health Information) and ePHI (electronic Protected Health Information) handled or received by suppliers and vendors of medical devices; (ii) HIPAA Section 164.310; and/or (iii) the reuse/repair/recycling/resale of medical devices which may contain PHI and/or ePHI.  Before shipment, Supplier shall ensure that any and all potential PHI or ePHI has been completely removed and/or deleted from all parts, products and equipment sent by Supplier to PartsSource or its customers; this includes, but is not limited to, all potential electronic storage within such units (such as within software, computers, back-up systems, etc.).

The Supplier, upon the request of PartsSource, shall give a representative of PartsSource or its affiliate copies of all requested records and information required by this Annex. The Supplier shall permit any of PartsSource’s, its affiliates and its or their representatives, at any time upon three (3) business days prior notice, and during normal business hours, to enter and inspect any of the Supplier’s premises and delivery vehicles, and audit any and all books, records, inventories, procedures and other documentation and materials of the Supplier relating to this Annex or the Products. The Supplier agrees to reasonably cooperate with such audit (which cooperation will not require the expenditure of funds by Supplier). PartsSource shall conduct the audit in a manner that does not unreasonably interfere with the conduct of the Supplier’s ongoing business.

Supplier’s “Fill Rate” for the Products shall be 99.5% or greater and is defined as: the rate at which all orders, including orders for electronically priced/quoted Products, are in stock and shipped when ordered, excluding Products not shipped due to missed shipping cutoff. Supplier shall maintain a return rate of 4% or less, and an OBF (Out of Box Failure) rate of 2% or less, and 99.5% Fill Rate, each for any rolling ninety (90) day period under this Agreement. If such rates are not achieved, PartsSource has the right to perform an onsite audit as provided above in Section 5 of this Annex and review all documentation related to returns and or OBF’s and inspect site related to quality issues. If, after audit and correction plan, the Supplier continues to be below expectations, then PartsSource may suspend or, notwithstanding anything to the contrary herein, may terminate this agreement or the Preferred Supplier Agreement immediately upon notice to Supplier.

If the Preferred Supplier Agreement (or other supply agreement) between the parties expires or is terminated, or if at any time the Supplier ceases to sell a certain Product for any reason, Supplier’s record keeping requirements and inspection and audit rights in this Annex shall continue thereafter in full force and effect for the duration specified.