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PARTICIPATING ADDENDUM

COMPUTER EQUIPMENT, SOFTWARE, PERIPHERALS AND RELATED SERVICES

MAST]~R PRICE AGREEMENTLenovo (United States) Inc.Contract Number A74813

The State of Hawaii

1. Scope:All Governmental entities within thl3 State of Hawaii, including any department, commission,council, board, bureau, authority, c:ommittee, institution, legislative body, agency governmentcorporation, or other establishment or office of the executive, legislative, or judicial branch of theState, including the University of Hawaii, the office of Hawaiian affairs, and the several counties ofthe State, are authorized to purchase products and services under the terms and conditions ofthis price agreement. Equipment shall be defined as ThinkCentre commercial desktop systems,ThinkPad notebooks, ThinkVision Products, Lenovo options, and Express Models.

2. Changes:

A. Entire Agreement:

This Participating Addendum includes the Department of the Attorney General, GeneralConditions which are attached hereto and incorporated herein by reference as Exhibit "A", as

~ modified by the Special Condition~; and Clarifications which are attached hereto and incorporatedherein by reference as Exhibit "8", which together with the Western States Contracting Alliance'sMaster Price Agreement, Identifie(j as number A74813, and contractor's product and priceschedule, set forth all of the agreements, conditions, understandings, promises, warranties, andrepresentations between the State and the Contractor relative to this Participating Addendum.This Participating Addendum supersedes all prior agreements, conditions, understandings,promises, warranties, and representations, which shall have no further force or effect. There areno agreements, conditions, under~)tandings, promises, warranties, or representations, oral orwritten, express or implied, betwe«3n the State and the Contractor other than as set forth herein.

B. Shipment and Risk of Loss:

Section 10 of the MPA is hereby dleleted in its entirety and replaced with the following:

"Title and Risk of LossWhen Contractor accepts your order, Contractor agrees to sell you the Machine described in atransaction document. Contractor transfers title to you or, if you choose, your lessor whenContractor ships the Machine. However, Contractor reserves a purchase money security interestin the Machine until Contractor re(:;eives the amounts due. For a feature, conversion, or upgradeinvolving the removal of parts, which become Contractor's property, Contractor reserves asecurity interest until Contractor rE3ceives payment of all the amounts due and the removed parts.You authorize Contractor to file appropriate documents to permit Contractor to perfect itspurchase money security interest.

For each Machine, Contractor bears the risk of loss or damage up to the time it is delivered to theContractor desianated carrier for ~)hipment to you or your designated location. Thereafter, you

Lenovo (United States) Inc.8123 S. Hardy DriveTempe, AZ 85284

And all payments are to loe issued to:Lenovo (United States) Inc.PO Box 643055Pittsburgh, PA 15264-30!>5

This Participating Addendum and the Master Price Agreement together with their exhibits, set forth theentire agreement between the parties with respect to the subject matter hereof and replaces any and allprevious communications, representations or agreements, whether oral or written, with respect to thesubject matter hereof. Terms and conditiorls inconsistent with, contrary or in addition to the terms andconditions of this Participating Addendum and the Master Price Agreement, together with their exhibits,shall not be added to or incorporated into this Participating Addendum or the Master Price Agreement andtheir exhibits, by any subsequent purchase order or otherwise, and any such attempts to add orincorporate such terms and conditions are hereby rejected. The terms and conditions of this ParticipatingAddendum and the Master Price Agreemelnt and their exhibits shall prevail and govern in the case of anysuch inconsistent or additional terms.

IN WITNESS WHEREOF, the parties have executed this Participating Addendum as of the date ofexecution by Contractor belo'w.

State of Hawaii LenovoStat urement Office

B By:.Name: Name: Dale R. Doane

Title: Procurement Administrator - Title: Public Sector Marketina Manaaer

Date: 1 ~ ~ ~ 0 ~ - Date: ~ - ~ 1-f-6,5

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EXHIBIT A

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U GENERAL CONDITIONS o.

ITab1e of Contents '

Page( s)

1. Coordination ofServic~:s b" the ST}\T~ ... 1

2. Re1ationshiR of~ IndeDendent Contractor Statusand FlesDonsibi1ities. Inc1uding Tax FlesDonsibi1ities 1

3. Personne1 Fteauirernents 2

4. Nondiscrimination ~

5. Conflicts of Interest 2

6. Subcontracts and }\ssi~ents 3

7. lndemnifjcation and I)~ 4

~... 8. Cost ofLitieation 4

9. Liauidated I>arnages ..~ 4

10. States ~eht of ()ffset 4

11. I>isRutes 5

12. SusDension of Con trag 5

13. Termination forI)efa-l!1! 6

14. Termination for Conv'enience ... 7

15. Claims Based on the Agenc~ Procurernent()fJicer's J\ctions or ()rnissions ; 10

16. Costs and ~xRenses 11

17. Pa'/ment Procedures: Final Pa\'Inent: Tax Clearance 11

18. Federal Funds .' ' ' ' 12

~;IJ 19. 1\1odifjcations of Contract 12

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20. Change Order 13

21. Price Adiustment :.. ,.., 14

22. Variation in Quantity for Definite QuantityContracts 15

23. <:hanges in <:ost-IteirnlJ\lrSernent <:ontract 15

24. <:onfidentia1i~ of1vfater~ 16

25. PulJ1icity 17

26. OVV11ersl1ilJ !tights and C:oQYIi~t 17

27. ~iens and'VVarranties. 17

28. Audit of Books and Itec:ords of the CONTRACTOIt 17~~ ~ 29. Cost or Pricing Data ,. 17

~ 30. Audit of Cost orPricinj~ 17

31. Itecords Itetention 18

32. Antitrust C1airns ., 18

33. Patented Articles ... 18

34. Governing ~aw ... 18

35. <:ornnliance with ~aw!~ 18

36. Conflict lJetween Gen(~ra1 <:onditions and- -~ -- ~

ProcurernentItules 18

37. Entire Contract 19

38. Severability 19

39. 'VVaiver ~ 19

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~ GENERAL CONDITIONS e.

I. Coordination of Services bv the STATE. The "head of the purchasing agency," (whichtenD includes the designee of the head of the purchasing agency), shall coordinate theservices to be provided by th(~ CONTRACTOR in order to complete the perfonnancerequired in the Contract. The ICONTRACTOR shall maintain communications with thehead of the purchasing agency at all stages of the CONTRACTOR's work, and submit tothe head of the purchasing agency for resolution any questions which may arise as to theperfoffi1ance of this Contract. "Purchasing agency" as used in these General Conditionsmeans and includes any governmental body which is authorized under chapter lO3D,HRS, or its implementing rules and procedures, or by way of delegation, to enter intocontracts for the procurement of services.

2.Tax ResRonsibilities.

a. In the performance of services required under this Contract, the CONTRACTORis an "independent contractor," with the authority and responsibility to control anddirect the perfoffi1ance and details of the work and services required under thisContract; however, the STATE shall have a general right to inspect work inprogress to deteffi1ine whether, in the STATE's opinion, the services are being~ performed by the CONTRACTOR in compliance with this Contract. Unlessotherwise provided by special condition, it is understood that the STATE does notagree to use the CONTRACTOR exclusively, and that the CONTRACTOR is freeto Agreement to provide services to other individuals or entities while underAgreement with the ST ATE.

b. The CONTRACTOR and the CONTRACTOR's employees and agents are not byreason of this Contract, agents or employees of the State for any purpose, and theCONTRACTOR and the CONTRACTOR's employees and agents shall not beentitled to claim or n~ceive from the Slate any vacation, sick leave, retirement,workers' compensation, unemployment insurance, or other benefits provided tostate employees.

c. The CONTRACTOR shall be responsible for the accuracy, completeness, andadequacy of the CONTRACTOR's performance under this Contract.Furthermore, the CONTRACTOR intentionally, voluntarily, and knowinglyassumes the sole and entire liability to the CONTRACTOR's employees andagents, and to any individual not a party to this Contract, for all loss, damage, orinjury caused by the CONTRACTOR, or the CONTRACTOR's employees oragents in the course of their employment.

. d. The CONTRACTOR shall be responsible for payment of all applicable federal,state, and county taxes and fees which may become due and owing by the

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"\\ CONTRACTOR by reason of this Contract, inclllding but not limited to (1)J income taxes, (ii) employment related fees, assessments, and taxes, and (iii)

general excise taxes. The CONTRACTOR also is responsible for obtaining alllicenses, permits, and (~ertificates that may be required in order to perform thisContract. '

e. The CONTRACTOR shall obtain a general excise tax license from theDepartment of Taxation, State of Hawaii, in accordance with section 237-9, HRS,and shall comply with all requirements thereof The CONTRACTOR shall obtaina tax clearance certificalte from the Director of Taxation, State of Hawaii, showingthat all delinquent taxies, if any, levied or accrued under state law against theCONTRACTOR have been paid and submit the same to the STATE prior tocommencing any performance under this Contract. The CONTRACTOR shallalso be solely responsible for meeting all requirements necessary to obtain the taxclearance certificate required for final payment under sections 103-53 and 237-45,HRS, and paragraph 17' of these General Conditions.

f The CONTRACTOR :is responsible for securing all employee-related insurancecoverage for the CO]~TRACTOR and the CONTRACTOR's employees andagents that is or may be required by law, and for payment of all premiums, costs,and other liabilities associated with securing the insurance coverage.

.A 3. Personnel Reauirements.

a. The CONTRACTOR shall secure, at the CONTRACTOR's own expense, allpersonnel required to perform this Contract.

b. The CONTRACTOR :shall ensure that the CONTRACTOR's employees or agentsare experienced and J:ully qualified to engage in the activities and perform theservices required under this Contract, and that all applicable licensing andoperating requiremen1:s imposed or required under federal, state, or county law,and all applicable accreditatjon and other standards of quality generally acceptedin the field of the actjvities of such employees and agents are complied with and

satisfied.

4. Nondiscrimination. No person performjng work under this Contract, including anysubcontractor, employee, or agent of the CONTRACTOR, shall engage in anydiscrimination that is prohibited by any applicable federal, state, or county law.

5. Conflicts of Interest. The CONTRACTOR represents that nejther the CONTRACTOR,nor any employee or agen1: of the CONTRACTOR, presently has any interest, andpromjses that no such interest, djrect or indjrect, shall be acquired, that would or mightconflict in any manner or degree with the CONTRACTOR's performance under this

...I Contract.

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(I 6. Subcontracts and Assi@ments. The CONTRACTOR sha!! not assign or subAgreement'V any of the CONTRACTOR's duties, obligations, or interests under this Agreement and

no such assignment or subAgrleement shall be effective unless (i) the CONTRACTORobtains the prior written consent of the STATE and (ii) the CONTRACTOR's assigneeor subcontractor submits to the STATE a tax clearance certificate from the Director ofTaxation, State of Hawaii, showing that all delinquent taxes, if any, levied or accruedunder state law against the CO"NTRACTOR's assignee or subcontractor have been paid.Additionally, no assignment by the CONTRACTOR of the CONTRACTOR's right tocompensation under this Agreement shall be effective unless and until the assignment isapproved by the Comptroller oj:" the State of Hawaii, as provided in section40-58, HRS.

a. Recognition of a successor in interest. When in the best interest of the State, asuccessor in interest may be recognized in an assignment agreement in which theSTATE, the CONTRACTOR and the assignee or transferee (hereinafter referredto as the "Assignee") agree that:

(1) The Assignee as:sumes all of the CONTRACTOR's obligations;

(2) The CONTRACTOR remains liable for all obligations under thisAgreement but waives all rights under this Agreement as against theSTATE; and

y (3) The CONTRACTOR shall continue to furnish, and the Assignee shall also

furnish, all required bonds.

b. Change of~. When the CONTRACTOR asks to change the name in which itholds this Agreement ,~ith the STATE, the procurement officer of the purchasingagency (hereinafter referred to as the "Agency procurement officer") shall, uponreceipt of a document acceptable or satisfactory to the Agency procurementofficer indicating such change of name (for example, an amendment to theCONTRACTOR's articles of incorporation), enter into an amendment to thisAgreement with the CONTRACTOR to effect such a change of name. Theamendment to this Agreement changing the CONTRACTOR's name shallspecifically indicate that no other terms and conditions of this Agreement arethereby changed.

c. Rel2orts. All assignment agreements and amendments to this Agreement effectingchanges of the CONTRACTOR's name or notations hereunder shall be reportedto the CPO within thirty days of the date that the assignment Agreement oramendment becomes effective.

d. Actions affecting m.ore than one 12urchasing agency. Notwithstanding thei. .. provisions of subparagraphs 6a through 6c herein, when the CONTRACTOR'4 holds Contracts with more than one purchasing agency of the State, the

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0\ assignment Contracts and the novation and chang~, of name amendments herein, authorized shall be processed only through the CPO's office.

7. Indemnification and Defense. The CONTRACTOR shall defend, indemnify, and holdharn1less the State of Hawaii, 1the contracting agency, and their officers, employees, andagents from and against all liability, loss, damage, cost, and expense, including allattorneys' fees, and all claims, suits, and demands therefor, arising out of or resultingfrom the acts or omissions of the CONTRACTOR or the CONTRACTOR's employees,officers, agents, or subcontrac1tors under this Contract. The provisions of this paragraphshall remain in full force and effect notwithstanding the expiration or early termination ofthis Contract.

8. Cost of Litigation. In case the :STATE shall, without any fault on its part, be made a partyto any litigation commenced by or against the CONTRACTOR in connection with thisContract, the CONTRACTOR shall pay all costs and expenses incurred by or imposed onthe STATE, including attorneys' fees.

9. Liquidated Damages. When, the CONTRACTOR is given notice of delay ornonperformance as specified in paragraph 13 (Termination for Default) and fails to curein the time specified, it is agreed the CONTRACTOR shall pay to the STATE theamount, if any, set forth in fins Agreement per calendar day from the date set for cure

) until either (i) the STATE reasonably obtains similar goods or services, or both, if the-.-)J CONTRACTOR is terminated for default, or (ii) until the CONTRACTOR provides the

goods or services, or both, if the CONTRACTOR is not terminated for default. To theextent :hat the CONTRACTOR's delay or nonperformance is excused under paragraph13d (Excuse for Nonperformance or Delay Performance), liquidated damages shall not beassessable against the CONTRACTOR. The CONTRACTOR shall remain liable fordamages caused other than by delay.

10. State's Right of Offset. The STATE nay offset against any monies or other obligationsthe STATE owes to the CONTRACTOR under this Contract, any amounts owed to theState of Hawaii by the CONrfRACTOR under this Agreement or any other Contracts orpursuant to any law or o,ther obligation owed to the State of Hawaii by theCONTRACTOR, including, 'l\'ithout limitation, the payment of any taxes or levies of anykind or nature. The STATE 'l\'ill notify the CONTRACTOR in writing of any offset andthe nature of such offset. For purposes of this paragraph, amounts owed to the State ofHawaii shall not include debts or obligations which have been liquidated, agreed to bythe CONTRACTOR, and are covered by an installment payment or other settlement planapproved by the State of Hawaii, provided, however, that the CONTRACTOR shall beentitled to such exclusion only to the extent that the CONTRACTOR is current with, andnot delinquent on, any payments or obligations owed to the State of Hawaii under suchpayment or other settlement plan.

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.. A 11. Di~utes. Disputes shall be resolved in accordance with.,section 1 03D- 703, HRS, and"W chapter 126, Procurement Rules, as the same may be amended from time to time.

12. Sus~ension Qf Contract. The STATE reserves the right at any time and for any reason tosuspend this Agreement for any reasonable period, upon written notice to theCONTRACTOR in accordance with the provisions herein.

a. Order to sto~ ~erfonl1ance. The Agency procurement officer, may, by writtenorder to the CONTRACTOR, at any time, and without notice to any surety,require the CONTRACTOR to stop all or any part of the performance called forby this Contract. This order shall be for a specified period not exceeding sixty(60) days after the order is delivered to the CONTRACTOR, unless the partiesagree to any further period. Any such order shall be identified specifically as astop performance order issued pursuant to this section. Stop work orders shall notexceed sixty consecutive days and shall include, as appropriate: (1) A cleardescription of the work to be suspended; (2) Instructions as to the issuance offurther orders by the CONTRACTOR for material or services; (3) Guidance as toaction to be taken on subcontracts; and (4) Other instructions and suggestions tothe CONTRACTOR for minimizing costs. Upon receipt of such an order, theCONTRACTOR shall forthwith comply with its terms and suspend allperformance under this Agreement at the time stated., provided, however, theCONTRACTOR shall take all reasonable steps to minimize the occurrence of

~ costs allocable to the perfonl1ance covered by the order during the period ofperformance stoppage. Before the stop performance order expires, or within anyfurther period to which the parties shall have agreed, the Agency procurementofficer shall either:

(1) Cancel the stop perfonl1ance order; or

(2) Terminate the perfonl1ance covered by such order as provided in thetermination fc,r default provision or the termination for convenienceprovision of this Contract.

b. Cancellation or ~x~iration of the order. If a stop performance order issued underthis section is cancelled at any time during the period specified in the order, or ifthe period of the order or any extension thereof expires, the CONTRACTOR shallhave the right to resurne performance. An appropriate adjustment shall be made inthe delivery schedule or Agreement price, or both, and the Agreement shall bemodified in writing accordingly, if

(1) The stop performance order results in an increase in the time required for,or in the CONTRACTOR's cost properly allocable to, the performance ofany part of this Contract; and

"'" (2) The CONTRACTOR asserts a claim for such an adjustment within thirty

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l -' (30) days after the end of the period of pe.t:fonnance stoppage; provided. that, if the Agency procurement officer decides that the facts justify such

action, any such claim asserted may be received and acted upon at anytime prior to final payment under this Contract.

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c. Tennination of sto~~ed nerfonnance. If a stop perfonnance order is not cancelledand the performance covered by such order is tenninated for default orconvenience, the reasona.ble costs resulting from the stop perfonnance order shall'be allowable by adjustment or otherwise.

d. Adiustment of ~rice. Any adjustment in Agreement price made pursuant to thisparagraph shall be determined in accordance with the price adjustment provisionof this Contract.

13. Termination for Default.

a. :Q~. If the CONTRACTOR refuses or fails to perfonn any of the provisionsof this Agreement with such diligence as will ensure its completion within thetime specified in this Contract, or any extension thereof, otherwise fails to timelysatisfy the Agreement provisions, or commits any other substantial breach of thisContract, the Agency procurement officer may notify the CONTRACTOR inwriting of the delay or non-perfonnance and if not cured. in ten (10) days or any

U.. longer time specified in writing by the Agency procurement officer, such officer'W' may tenninate the CONTRACTOR's right to proceed with the Agreement or such

part of the Agreement as to which there has been delay or a failure to properlyperfonn. In the event of termination in whole or in part the Agency procurementofficer may procure similar goods or services in a manner and upon the termsdeemed appropriate by the Agency procurement officer. The CONTRACTORshall continue performance of the Agreement to the extent it is not terminated andshall be liable for excess costs incurred in procuring similar goods or services.

b. CONTRACTOR's du~. Notwithstanding termination of the Agreement andsubject to any directions from the Agency procurement officer, theCONTRACTOR shall take timely, reasonable, and necessary action to protect andpreserve property in the possession of the CONTRACTOR in which the STATEhas an interest.

c. Coml2ensation. Payment for completed goods and services delivered and acceptedby the STATE shall be at the price set forth in the Contract. Payment for theprotection and preservation of property shall be in an amount agreed upon by theCONTRACTOR and the Agency procurement officer. If the parties fail to agree,the Agency procurement officer shall set an amount subject to theCONTRACTOR's rights under chapter 126, Procurement Rules. The STATE

~ may withhold from ~LffiOunts due the CONTRACTOR such sums as the Agencyprocurement officer deems to be necessary to protect the STATE against loss

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L~ because of outstanding .liens or claims and to reimb);1rse the STATE for the excess~ costs expected to be incurred by the ST ATE in procuring similar goods and

servIces.

d. Excuse for nonnerfon11:mce or delayed perfon11ance. The CONTRACTOR shallnot be in default by rea1;on of any failure in performance of this Agreement inaccordance with its ternl1s, including any failure by the CONTRACTOR to makeprogress in the prosecu1:ion of the perfon11ance hereunder which endangers suchperfon11ance, if the CO:NTRACTOR has notified the Agency procurement officerwithin fifteen (15) days after the cause of the delay and the failure arises out ofcauses such as: acts ofl30d; acts of a public enemy; acts of the State and anyother governmental body in its sovereign or contractual capacity; fires; floods;epidemics; quarantine restrictions; strikes or other labor disputes; freightembargoes; or unusually severe weather. If the failure to perfonn is caused by thefailure of a subcontractor to perfon11 or to make progress, and if such failurearises out of causes similar to those set forth above, the CONTRACTOR shall notbe deemed to be in default, unless the goods and services to be furnished by thesubcontractor were reai50nably obtainable from other sources in sufficient time topen11it the CONTRACTOR to meet the requirements of the Contract. Uponrequest of the CONTRACTOR, the Agency procurement officer shall ascertainthe facts and extent of :such failure, and, if such officer determines that any failureto perfon11 was occasioned by anyone or more of the excusable causes, and that,

~ A but for the excusable cause, the CONTRACTOR's progress and performance,. would have met the terms of the Contract, the delivery schedule shall be revised

accordingly, subj ect to the rights of the STATE under this Contract. As used inthis paragraph, the terrn "subcontractor" means subcontractor at any tier.

e. Erroneous ten11ination for default. If, after notice of tennination of theCONTRACTOR's rig"ht to proceed under this paragraph, it is detennined for anyreason that the CONTRACTOR was not in default under this paragraph, or thatthe delay was excusable under the provisions of subparagraph l3d, "Excuse fornonperformance or delayed perfon11ance," the rights and obligations of the partiesshall be the same as iJ[ the notice of ten11ination had been issued pursuant to such

provIsIon.

F Additional rights and remedies. The rights and remedies provided in thisparagraph are in addiition to any other rights and remedies provided by law or

under this Contract.

14. Ten11ination for Convenienc~~.

a. Ten11ination. The A!~ency procurement officer may, when the interests of theST ATE so require, ten11inate this Agreement in whole or in part, for theconvenience of the ST ATE. The Agency procurement officer shall give written

~ notice of the ten11ination to the CONTRACTOR specifying the part of the"'W Agreement ten11inated and when ternnination becomes effective.

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U b. CONTRACTOR's obligations. The CONTRACTOR shall incur no furtherobligations in connection with the tenIlinated perfonIlance and on the date(s) setin the notice of tenIlination the CONTRACTOR will stop perfonIlance to theextent specified. The C'ONTRACTOR shall also tenninate outstanding orders andsubcontracts as they re:late to the tenIlinated perfonIlance. The CONTRACTORshall settle the liabilities and claims arising out of the termination of subcontractsand orders connected w'ith the tenIlinated performance. The Agency procurementofficer may direct the CONTRACTOR to assign the CONTRACTOR's right,title, and interest under terminated orders or subcontracts to the STATE. TheCONTRACTOR must ~;till complete the performance not terminated by the noticeof termination and may incur obligations as necessary to do so.

c. Right to goods and work l2roduct. The Agency procurement officer may requirethe CONTRACTOR to transfer title and deliver to the ST ATE in the manper andto the extent directed b~{ the Agency procurement officer:

(1) Any completed goods or work product; and

(2) The partially completed goods and materials, parts, tools, dies, jigs,fixtures, plans, drawings, infonIlation, and Agreement rights (hereinaftercalled "manufacturing material") as the CONTR&-CTOR has specifically

-..J) produced or specially acquired for the perfonIlance of the terminated partof this Agreem(~nt.

The CONTRACTOR shall, upon direction of the Agency procurementofficer, protect and preserve property in the possession of the CONTRACTOR inwhich the STATE has an interest. If the Agency procurement officer does notexercise this right, the CONTRACTOR shall use best efforts to sell such goodsand manufacturing materials. Use of this paragraph in no way implies that theSTATE has breache,d the Agreement by exercise of the tenIlination for. . .convenIence prOVISIon.

d. Coml2ensation.

(1) The CONTRP~CTOR shall submit a tenIlination claim specifying theamounts due because of the termination for convenience together with thecost or pricing data, submitted to the extent required by subchapter 15,chapter 3-122:, Procurement Rules, bearing on such claim. If theCONTRACTOR fails to file a tenIlination claim within one year from theeffective date of tenIlination, the Agency procurement officer may pay theCONTRACTOR, if at all, an amount set in accordance with subparagraph14d(3) below.

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~ (2) The Agency procurement officer and the CQNTRACTOR may agree to a. settlement provided the CONTRACTOR has filed a termination claim

supported by cost or pricing data submitted as required and that thesettlement doesn,ot exceed the total Agreement price plus settlement costsreduced by payments previously made by the STATE, the proceeds of anysales of goods mId manufacturing materials under subparagraph 14c, andthe Agreement Pl"ice of the perfonnance not terminated.

(3) Absent completl~ Agreement under subparagraph 14d(2) the Agencyprocurement officer shall pay the CONTRACTOR the following amounts,provided paym(:nts agreed to under subparagraph 14d(2) shall notduplicate payments under this subparagraph for the following:

(A) Agreeme:nt prices for goods or services accepted under the

Contract;

(B) Costs incurred in preparing to perform and performing thetenninatf:d portion of the performance plus a fair and reasonableprofit on such portion of the performance, such profit shall notinclude anticipatory profit or consequential damages, less amountspaid or to be paid for accepted goods or services; provided,however" that if it appears that the CONTRACTOR would have

.., sustainecl a loss if the entire Agreement would have beencompletf:d, no profit shall be allowed or included and the amountof compc~nsation shall[ be reduced to reflect the anticipated rate of

loss;

(C) Costs of settling and paying claims arising out of the terminationof subcontracts or orders pursuant to subparagraph 14b. Thesecosts must not include costs paid in accordance with subparagraph

14d(3)(B);

(D) The rea!;onable settlement costs of the CONTRACTOR includingaccounting, legal, clerical, and other expenses reasonablynecessary for the preparation of settlement claims and supportingdata with respect to the terminated portion of the Agreement andfor the tennination of subcontracts thereunder, together withreasonal)le storage, transportation, and other costs incurred inconnection with the protection or disposition of property allocableto the t(:rminated portion of this Contract. The total sum to be paidthe CO1'1;fTRACTOR under this subparagraph shall not exceed thetotal A!?;reement price plus the reasonable settlement costs of theCONTFlACTOR reduced by the amount of payments otherwise

,", made, 1he proceeds of any sales of supplies and manufac~uring.I materials under subparagraph 14d(2), and the Agreement pnce of

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perfonnarlce not tenninated.

') (4) Costs claimed, a;greed to, or established urider subparagraphs 14d(2) andl4d(3) shall be in accordance with Chapter 3-123 (Cost Principles) of theProcurement RuLes.

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15. Claims Based on the Agency Procurement Officer's Actions or Omissions.

a. Changes in sco~e. If any action or omission on the part of the Agencyprocurement officer (~/hich tenn includes the designee of such officer forpurposes of this paragraph 15) requiring perfonnance changes within the scope ofthe Agreement constiultes the basis for a claim by the CONTRACTOR foradditional compensation, damages, or an extension of time for completion, theCONTRACTOR shall continue with perfonnance of the Agreement incompliance with the directions or orders of such officials, but by so doing, theCONTRACTOR shall not be deemed to have prejudiced any claim for additionalcompensation, damages, or an extension of time for completion; provided:

(1) Written notice reguired. The CONTRACTOR shall give written notice tothe Agency procurement officer:

(A) Prior to the commencement of the performance involved, if at thattime the CONTRACTOR knows of the occurrence of such action

) or omission;

(B) Within thirty (30) days after the CONTRACTOR knows of theoccurrence of such action or omission, if the CONTRACTOR didnot have such knowledge prior to the commencement of theperfonnance; or

(C) Within such further time as may be allowed by the Agencyprocurement officer in writing.

(2) Notice content. This notice shall state that the CONTRACTOR regards theact or omission as a reason which may entitle the CONTRACTOR toadditional compensation, damages, or an extension of time. The Agencyprocurement officer, upon receipt of such notice, may rescind such action,remedy such omission, or take such other steps as may be deemedadvisable in the discretion of the Agency procurement officer;

(3) Basis must be ex~lained. The notice required by subparagraph 15a(l)describes as clearly as practicable at the time the reasons why theCONTRACTOR believes that additional compensation, damages, or anextension of time may be remedies to which the CONTRACTOR is

(,) entitled; and

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) (4) Claim must be ~i'ustified. The CONTRACTOR must maintain and, uponrequest, make available to the Agency procurement officer within areasonable time, detailed records to the extent practicable, and otherdocumentation 'and evidence satisfactory to the STATE, justifying theclaimed additional costs or an extension of time in connection with suchchanges.

b. CONTRACTOR not ex~. Nothing herein contained, however, shall excusethe CONTRACTOR from compliance with any rules or laws precluding any stateofficers and CONTRACTOR from acting in collusion or bad faith in issuing orperforming change orders which are clearly not within the scope of the Contract.

c. Price adjustment. Any adjustment in the price made pursuant to this paragraphshall be determined in accordance with the price adjustment provision of thisContract.

16. Costs and ExRenses. Any reimbursement due the CONTRACTOR for per diem andtransportation expenses under this Agreement shall be subject to chapter 3-123 (CostPrincjples) of the Procurement Rules and the followjng guideljnes:

~ a. Reimbursement for ajr transportation shall be for actual cost or coach class airfare, whichever is less.

b. Reimbursement for grolund transportation costs shall not exceed the actual cost ofrenting an intermediate-sjzed vehicle.

c. Unless prior written approval of the DIRECTOR is obtained, reimbursement forsubsjstence allowance (i.e., hotel and meals, etc.) shall not exceed the appljcabledaily authorized rates for interisland or out-of-state travel that are set forth in thecurrent Governor's Executive Order authorizing adjustments in salaries andbenefits for state officers and employees in the executive branch who areexcluded from collective bargaining coverage.

17. Payment Procedures: Final Payment: Tax Clearance.

a. Original invoices reQuired. All payments under this Agreement shall be madeonly upon submission by the CONTRACTOR of original jnvoices specifying theamount due and certifying that services requested under the Agreement have beenperformed by the CO1'~TRACTOR according to the Contract.

b. Subject to available funds. Such payments are subject to availability of funds andallotment by the Director of Finance in accordance with chapter 37, HRS. Further,~ all payments shall be made in accordance with and subject to chapter 40, HRS.

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) c. Prom~t ~aYillent. "

(1) Any money, other than retainage, paid to the CONTRACTOR shall bedispersed to subcontractors within ten days after receipt of the money inaccordance with the terms of the subcontract; provided that thesubcontractor has met all the terms and conditions of the subagreementand there are no bona fide disputes; and

(2) Upon final payment to the CONTRACTOR, full payment to thesubcontractor, including retainage, shall be made within ten days afterreceipt of the money; provided that there are no bona fide disputes overthe subcontractor's performance under the subcontract.

d. Final ~aYillent. Final payment under this Agreement shall be subject to sections103-53 and 237-45, HRS, which require a tax clearance from the Director ofTaxation, State of Hawaii, showing that all delinquent taxes, if any, levied oraccrued under state law against the CONTRACTOR have been paid.

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18. Federal Funds. If this Agreem(~nt is payable in whole or in part from federal funds,CONTRACTOR agrees that, as to the portion of the compensation under this Agreementto be payable from federal funds, the CONTRACTOR shall be paid only from such fundsreceived from the federal government, and shall not be paid from any other funds.

::a 19. Modifications of Contract

a. In writing. Any modification, alteration, amendment, change, or extension of anyterm, provision, or condition of this Agreement permitted by this Agreement shallbe made by written amendment to this Contract, signed by the CONTRACTORand the STATE, provided that change orders shall be made in accordance withparagraph 20 herein.

b. No oral modification. No oral modification, alteration, amendment, change, orextension of any term, provision or condition of this Agreement shall bepermitted.

c. Agency yrocurement 4~. By a written order, at any time, and without noticeto any surety, the Agency procurement officer, subject to mutual consent of theparties to this Agreement and all appropriate adjustments, may makemodifications within the general scope of this Agreement to include anyone ormore of the following:

(A) Drawings, designs, or specifications;

;j (B) Method or pla,ce of delivery;

12 Form AG2-GC(1/Ol)

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) (C) Description of services to be performed; '.

(D) Time of performance (i.e., hours of the day, days of the week, etc.);

(E) Place ofperfonnance of the services; or

(F) Other provisions of the Agreement accomplished by mutual action of theparties to the Contract.

d. Adiustments of Qrice or time for Qerformance. If any modification increases ordecreases the CONTRACTOR's cost of, or the time required for, performance ofany part of the work under this Contract, an adjustment shall be made and thisAgreement modified in writing accordingly. Any adjustment in Agreement pricemade pursuant to this clause shall be determined, where applicable, in accordancewith the price adjustment clause of this Agreement or as negotiated.

e. Claim barred after final QaYD]ent. No claim by the CONTRACTOR for anadjustment hereunder shall be allowed if written Agreement of modification is notmade prior to final paYlnent under this Contract.

f Claims not barred. In the absence of an Agreement modification, nothing in thisclause shall be deemed to restrict the CONTRACTOR's right to pursue a claim,) under this Agreement or for a breach of contract.

g. CPO a}2Qroval. If this i~) a professional services Agreement awarded pursuant tosection 103D-303 or 1 03D-304, HRS, any modification, alteration, amendment,change, or extension ot~ any term, provision, or condition of this Agreement whichincreases the amount payable to the CONTRACTOR by at least $25,000.00 or tenper cent (10%) of the initial Agreement price, whichever increase is higher, mustreceive the prior approval of the CPO.

h. Tax Clearance. The STATE may, at its discretion, require the CONTRACTOR tosubmit to the STATE, prior to the STATE's approval of any modification,alteration, amendment, change, or extension of any term, provision, or conditionof this Contract, a tax clearance from the Director of Taxation, State of Hawaii,showing that all delinquent taxes, if any, levied or accrued under state law againstthe CONTRACTOR have been paid.

i. Sole Source Contracts. Amendments to sole source Contracts that would changethe original scope of the Agreement may only be made with the approval of theCPO. Annual renewal of a sole source Agreement for services should not besubmitted as an amendment.

I" 20. Change Order. The ~gency pro~urement.officer may, by a written.order signed only. by'--:I the STATE, at any tIme, and wIthout notIce to any surety, and subject to all appropnate

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) \ adjustments, make changes within the general scope of !pis Agreement in anyone or" more of the following:

(1) Drawings, designs, or specifications, if the goods or services to befurnished are to be specially provided to the ST ATE in accordancetherewith;

(2) Method of delive:ry; or

(3) Place of delivery.

a. Adiustments of nrice or time for nerfonnance. If any change order increases ordecreases the CONTRACTOR's cost of, or the time required for, perfonnance ofany part of the work under this Contract, whether or not changed by the order, anadjustment shall be made and the Agreement modified in writing accordingly.Any adjustment in the Agreement price made pursuant to this provision shall bedetennined in accordance with the price adjustment provision of this Contract.Failure of the parties to agree to an adjustment shall not excuse theCONTRACTOR from proceeding with the Agreement as changed, provided thatthe Agency procurement officer promptly and duly makes the provisionaladjustments in payment or time for perfonnance as may be reasonable. By

, proceeding with the work, the CONTRACTOR shall not be deemed to haveJ prejudiced any claim for additional compe~sation, or any extension of time for

completion.

b. Time neriod for claim. Within thirty (30) days after receipt of a written changeorder under subparagraph 20a, unless the period is extended by the Agencyprocurement officer in writing, the CONTRACTOR shall file notice of intent toassert a claim for an adjustment. Later notification shall not bar theCONTRACTOR's claim unless the STATE is prejudiced by the delay innotification.

c. Claim barred after final nay!!}ent. No claim by the CONTRACTOR for anadjustment hereunder shall be allowed if notice is not given prior to final payment,under this Contract.

d. Other claims not barr~. In the absence of a change order, nothing in thisparagraph 20 shall be deemed to restrict the CONTRACTOR's right to pursue aclaim under the Agreement or for breach of contract.

21. Price Adiustment.

a. Price adiustment. Any adjustment in the Agreement price pursuant to a provision..J in this Agreement shall be made in one or more of the following ways:

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) (1) By Agreement on a fixed price adjustment.,before commencement of thepertinent perfonnance or as soon thereafter as practicable;

(2) By unit prices specified in the Agreement or subsequently agreed upon;1

(3). By the costs attributable to the event or situation covered by the provision,plus appropriate profit or fee, all as specified in the Agreement orsubsequently agreed upon;

(4) In such other manner as the parties may mutually agree; or

(5) In the absence of Agreement between the parties, by a unilateraldetennination by the Agency procurement officer of the costs attributableto the event or situation covered by the provision, plus appropriate profitor fee, all as computed by the Agency procurement officer in accordancewith generally accepted accounting principles and applicable sections ofchapters 3-123 and 3-126 of the Procurement Ru1es.

b. Submission of cost or pricing data. The CONTRACTOR shall provide cost orpricing data for any price adjustments subject to the provisions of subchapter 15,chapter 3-122 of the Procurement Rules.

.) 22. Variation in Quantity for Definite QuantitY Contracts. Upon the Agreement of theSTATE and the CONTRACTOR, the quantity of goods or services, or both, if a definitequantity is specified in this Contract, may be increased by a maximum of ten per cent(10%); provided the unit prices wi11 remain the same except for any price adjustmentsotherwise app1icab1e; and the CPO makes a written detennination that such an increasewill either be more economica1 than awarding another Agreement or that it wou1d not bepractical to award another Contract.

23. Changes in Cost-Reimbursement Contract. If this Agreement is a cost-reimbursementContract, the following provisions shall apply:

a. The Agency procurement officer may at any time by written order, and without. notice to the sureties, if any, make changes within the genera1 scope of the

Agreement in anyone or more of the following:

(1) Description ofperfonnance (Attachment 1);

(2) Time ofperfonnance (i.e., hours of the day, days of the week, etc.);

(3) P1ace of perfonnance of services;

,...)

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). (4) Drawings, designs, or specifications when the supplies to be furnished are

to be specially manufactured for the STATE in accordance with thedrawings, designs, or specifications;

(5) Method of shipment or packing of supplies; or

(6) Place of delivery.

b. If any change causes an increase or decrease in the estimated cost of, or the timerequired for performance of, any part of the performance under this Contract,whether or not changed by the order, or otherwise affects any other terms andconditions of this Contract, the Agency procurement officer shall make anequitable adjustment in the (I) estimated cost, delivery or completion schedule, orboth; (2) amount of any fixed fee; and (3) other affected terms and shall modifythe Agreement accordingly.

c. The CONTRACTOR must assert the CONTRACTOR's rights to an adjustmentunder this provision within thirty (30) days from the day of receipt of the writtenorder. However, if the Agency procurement officer (decides that the facts justifyit, the Agency procurement officer may receive and act upon a proposal submittedbefore final payment under the Contract.

) d. Failure to agree to any adjustment shall be a dispute under paragraph 11 of thisAgreement. However, nothing in this provision shall excuse the CONTRACTORfrom proceeding with the Agreement as changed.

e. Notwithstanding the terms and conditions of subparagraphs 23a and 23b, theestimated cost of this Agreement and, if this Agreement is incrementally funded,the funds allotted for the performance of this Contract, shall not be increased orconsidered to be increased except by specific written modification of theAgreement indicating the new Agreement estimated cost and, if this Agreement isincrementally funded, the new amount allotted to the Contract

24. Confidentiality of Material.

a. All material given to or made available to the CONTRACTOR by virtue of thisContract, which is identified as proprietary or confidential information, will besafeguarded by the CONTRACTOR and shall not be disclosed to any individualor organization without the prior written approval of the STATE.

b. All information, data, or other material provided by the CONTRACTOR to theSTATE shall be subject to the Uniform Information Practices Act, chapter 92F,

.) HRS.

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, 25. Publicity. The CONTRACTOR shall not refer to the ST~TE, or any office, agency, orofficer thereof, or any State employee, including the head of the purchasing agency, theCPO, the DIRECTOR, the Agency procurement officer, or to the services or goods, orboth, provided under this Contract, in any of the CONTRACTOR's brochures,advertisements, or other publicity of the CONTRACTOR. All media contacts with theCONTRACTOR about the subject matter of this Agreement shall be referred to theAgency procurement officer.

26. Ownership Rights and Co~vright. The STATE shall have complete ownership of allmaterial, both finished and unfinished, which is developed, prepared, assembled, orconceived by the CONTRACTOR pursuant to this Contract, and all such material shallbe considered "works made for hire." All such material shall be delivered to the STATEupon expiration or tennination of this Contract. The ST ATE, in its sole discretion, shallhave the exclusive right to copyright any product, concept, or material developed,prepared, assembled, or conceived by the CONTRACTOR pursuant to this Contract.

27. Liens and Warranties. Goods provided under this Agreement shall be provided free of allliens and provided together with all applicable warranties, or with the warrantiesdescribed in the Agreement documents, whichever are greater.

28. Audit of Books and Records of the CONTRACTOR. The STATE may, at reasonable1 times and places, audit the books and records of the CONTRACTOR, prospective..J contractor, subcontractor or prospective subcontractor which are related to:

a. The cost or pricing data, and

b. A State contract, including subcontracts, other than a finn fixed-price contract.

29. Cost or Pricing Data. Cost or pricing data must be submitted to the Agency purchasingofficer and timely certified as accurate for contracts over $100,000 unless the Agreementis for a multiple-tenn or as otherwise specified by the procurement officer. Unlessotherwise required by the Agency procurement offieer, cost or pricing data submission isnot required for Contracts awarded pursuant to competitive sealed bid procedures.

If certified cost or pricing data are subsequently found to have been inaccurate,incomplete, or noncurrent as of the date stated in the certificate, the ST ATE is entitled toan adjustment of the Agreement price, including profit or fee, to exclude any significantsum by which the price, including profit or fee, was increased because of the defectivedata. It is presumed that overstated cost or pricing data increased the Agreement price inthe amount of the defect plus related overhead and profit or fee. Therefore, unless there isa clear indication that the defective data was not used or relied upon, the price will bereduced in such amount.

( , 30. Audit of Cost or Pricing Data. When cost or pricing principles are applicable, the STATE'oJ may require an audit of cost or pricing data.

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:) 31. Records Retention. The CONTRACTOR and any sub~~ntractors shall maintain thebooks and records that relate to the Agreement and any cost or pricing data for three (3)years from the date of final payment under the Contract.

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32. Antitrust Claims. The STATE and the CONTRACTOR recognize that in actual economicpractice, overcharges resulting from antitrust violations are in fact usually borne by thepurchaser. Therefore, the CONTRACTOR hereby assigns to STATE any and all claimsfor overcharges as to goods and materials purchased in connection with this Contract,except as to overcharges which result from violations commencing after the price isestablished under this Agreement and which are not passed on to the STATE under anescalation clause.

33. Patented Articles. The CONTRACTOR shall defend, indemnify, and hold harmless theState of Hawaii, the contracting agency, and their officers, employees, and agents fromand against all liability, loss, damage, cost, and expense, including all attorneys' fees, andall claims, suits, and demands arising out of or resulting from any claims, demands, oractions by the patent holder for infringement or other improper or unauthorized use ofany patented article, patented process, or patented appliance in connection with thisContract. The CONTRACTOR shall be solely responsible for correcting or curing to thesatisfaction of the State any such infringement or improper or unauthorized use,including, without limitation: (a) furnishing at no cost to the STATE a substitute article,

.:) process, or appliance acceptable to the ST ATE, (b) paying royalties or other requiredpayments to the patent holder, (c) obtaining proper authorizations or releases from thepatent holder, and (d) furnishing such security to or making such arrangements with thepatent holder as may be necessary to correct or cure any such infringement or improperor unauthorized use.

34. Governing Law. The validity of this Agreement and any of its terms or provisions, aswell as the rights and duties of the parties to this Contract, shall be governed by the laws0.£ the State of Hawaii. Any action at law or in equity to enforce or interpret theprovisions of this Agreement shall be brought in a state court of competent jurisdiction inHonolulu, Hawaii.

35. Compliance with Laws. The CONTRACTOR shall comply with all federal, state, andcounty laws, ordinances, codes, rules, and regulations, as the same may be amended fromtime to time, that in any way affect the CONTRACTOR's performance of this Contract.

36. Conflict between General Conditions and Procurement Rules. In the event of a conflictbetween the General Conditions and the Procurement Rules, the Procurement Rules ineffect on the date this Agreement became effective shall control and are herebyincorporated by reference.

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.) , 37. Entire Contract. This Agreement sets forth all o( the Contracts, conditions,

understandings, promises, warranties, and representations between the STATE and theCONTRACTOR relative to this Contract. This Agreement supersedes all prior Contracts,conditions, understandings, promises, warranties, and representations, which shall haveno further force or effect. There are no Contracts, conditions, understandings, promises,warranties, or representations, oral or written, express or implied, between the STATEand the CONTRACTOR other than as set forth or as referred to herein.

38. Severability. In the event that any provision of this Agreement is declared invalid orunenforceable by a court, such invalidity or unenforceability shall not affect the validityor enforceability of the remaining tenDS of this Contract.

39. Waiver. The failure of the STATE to insist upon the strict compliance with any term,provision, or condition of this Agreement shall not constitute or be deemed to constitute awaiver or relinquishment of the STATE's right to enforce the same in accordance withthis Contract. The fact that the STATE specifically refers to one provision of theProcurement Rules or one section of the Hawaii Revised Statutes, and does not includeother provisions or statutory sections in this Agreement shall not constitute a waiver orrelinquishment of the STATE's rights or the CONTRACTOR's obligations under theProcurement Rules or statutes.

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.) Exhibit B - Special Conditions and Clarifications

The following terms and conditions supersede portions of the Department of theAttorney General, General Conditions, which is attached hereto and made a part hereof

as Exhibit A.

Item 2:Includina Tax Responsibilities is hereby deleted in its entirety and replaced with the

following:

"If any authority imposes a duty, tax, levy, or fee, excluding those based on Contractor'snet income, upon any transaction under this Agreement, then you agree to pay thatamount as specified in an invoice or supply exemption documentation. You areresponsible for any personal property taxes for each Product from the date Contractor

ships it to you".

Item 6: Subcontracts and Assianments is deleted in its entirety.

Item 7: Indemnification and Defense is deleted in its entirety.

Item 8: Cost of Litiqation is deleted in its entirety.

I Item 9: Liauidated Damaqes is deleted in its entirety.

Item 12: Suspension of Contract is deleted in its entirety.

Item 13: Termination for Default is deleted in its entirety.

Item 14: Termination for Convenience is deleted in its entirety.

Item 22: Variation in Quantitv for Definite Quantitv Contracts is deleted in its entirety.

Item 23: Chanaes if Cost-Reimbursement Aareement is deleted in its entirety.

Item 24: Confidentiality of Material is deleted in its entirety.

Item 26: Ownership Riqh1s and Copvriqht is deleted in its entirety.

Item 27: Liens or Warranties is deleted in its entirety.

Item 33: Patented Articles is deleted in its entirety.

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) Additional General Conditions Clarifications

20. Chanae Order

This clause is clarified with the understanding that any changes under this contract shallbe made by mutual, written agreement, of the parties and that adjustments in price shallbe made in accordance with the price adjustment provisions of the contract, as clarified.

21. Price Adjustment

This clause is clarified with the understanding that any price adjustments required underthis contract will be accomplished through mutual negotiation and agreement on the

final price adjustment

28. Audit of Books and Records of the Contractor and 30. Audit of Cost or Pricina Data

Should the Contractor have any concerns of a confidential or proprietary nature aboutsubmissions 91 its _cost/price data to the_State under this provision, tbe_St9te agrees todiscuss these concerns with the Contractor to arrive at a mutually agreeable resolutionof what data will be provided by the Contractor to the State. However, in the event that amutually agreeable resolution cannot be reached to address the Contractor's concerns,Contractor agrees that it will comply with any court determination as to the State's rights

J to audit such data, pursuant to the terms of this contract.

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