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the applicable provisions of the California Uniform Commercial Code. Pursuant to the <br />consignment program: <br />a. SPA will provide consigned inventory of MRO Products to City. Said MRO Products <br />will be stored at City's Central Stores Warehouse ("City Store"), 215 Center Street, Santa <br />Ana, California 92703. <br />b. Risk of loss of MRO Products will transfer to City upon delivery to City Store. City shall <br />acknowledge the receipt and financial responsibility upon delivery of MRO Products to <br />City Store. <br />c. SPA shall provide mutually agreed upon quantities for the initial consigned MRO <br />Product assortment. The initial stock may be later amended by the parties' mutual <br />agreement, based upon actual City material usage trends for MRO Products. City shall <br />acknowledge the receipt of and financial responsibility for MRO Products upon delivery. <br />These MRO Products shall be paid for by City upon usage following normal established <br />billing procedures. With the exception of mutual consignment adjustments to the MRO <br />Product assortment, SPA shall with each delivery, provide a packing slip listing MRO <br />Products delivered, City returns, and unit prices. Said packing slips shall be listed on the <br />monthly statement. Stock retums/refunds will be handled through internal debit/credit. <br />memos. <br />d. The MRO Products shall be restocked as often as necessary to maintain the inventory at <br />initial stock level, as adjusted by mutual agreement of the parties. SPA will hold firm <br />Pricing set forth in Exhibit A, from January 2013 thru June 2013, using the <br />manufacturer's commitment letters and contracts already in place. Pricing will be <br />maintained firm thru December 31, 2013, providing, however, if SPA is unable to <br />successfully negotiate with the manufacturers, SPA may request a price increase <br />for those products. Price increases over 5% may be approved only upon submittal <br />of manufacturer documentation and the City of Santa Ana approval. SPA will <br />aggressively negotiate to provide fixed pricing for the balance of the first two year <br />term, through calendar year 2014. Subsequent extensions may be approved based <br />on SPA fixed pricing for the two year extension period. If during an extension <br />term, SPA proposes a price increase SPA will provide City with 120 days notice <br />of such price increase to allow City to attempt to negotiate lower pricing and/or to <br />account for any such increase during its annual budget process. <br />e. A physical inventory with both parties present shall be performed every quarter on the <br />SPA-owned and consigned MRO Products located at City Store, and any missing or <br />damaged inventory shall be billed to City and shall appear on a monthly statement. <br />Overages will be credited to City. The inventory process shall include a physical count <br />and verification of all on-site, consigned materials in accordance with standard industry <br />practices. <br />f. All MRO Product returns and claims for adjustments and other matters relating to the <br />supply of MRO Products shall be directed by City to SPA. MRO Products that are <br />returned must be new and in resalable condition. City will be responsible for any <br />vendor/manufacturer restocking charges, on a pass through basis, on returned products. <br />SPA shall assist in the resolution of any disputes between City and any vendor or <br />manufacturer regarding any MRO Products supplied pursuant to this Agreement. This