Supplier Guide

Falco Electronics Mexico - Supplier Guide

As of 12/23/2002, Rev: C3

Index

Vendors are selected and qualified based on their ability to meet all contractual and product requirements.

All defined components are qualified through the examination of samples submitted by the Vendor. Falco shall ask the Vendor to certify the compliance of all parameters that can't be examined or verified by Falco. Any changes to any components shall require a re-sampling and re-qualification to determine if the changes are acceptable.

For all custom-made products Falco shall supply the documentation to the Vendor in order for the Vendor to comply with the requirements. Any changes made by Falco will be documented through a revision change and forwarded to the Vendor.

All vendors are also required to fill-in the Supplier Survey located at

Falco communicates its requirements to Vendors through Purchase Orders. Purchase Orders generally reflect the requirement for the next 13 weeks (one fourth of the year).

Falco normally selects the C.I.F. point to be the Vendor's plant or facility; however Vendors who provide a C.I.F. price to Falco's shipping points are preferred.

Purchase Orders are broken down in releases that must be respected by the Vendor. If Vendors cannot meet the release quantities they shall communicate this to Falco's Purchasing Department immediately. Falco strives to adjust release quantities so that they coincide with Vendor lot or box quantities.

New Purchase Orders and/or change orders are communicated to the Vendor via our website, fax or e-mail. Original copies will not follow by mail. Falco shall make no verbal Purchase Orders or any verbal changes to Purchase Orders or shipping instructions.

Falco's Purchase Orders contain the following information:

BILL TO: Billing address.
SHIP TO: Shipping address.
VENDOR: Vendor code, name, address, phone and fax numbers, tax code and contact name.
PURCHASE ORDER NUMBER
PURCHASE ORDER DATE
BUYER: Name of Falco buyer responsible for issuing and confirming the P.O.
DATE: Date printed.

TRADE TERMS: Incoterms that apply for the Purchase Order - (EXW, FOB, CIF, DDP, etc.)
SHIP VIA: Method of shipment
TRANSIT DAYS: Total days from vendor shipment release to arrival at Falco Plant.
PAYMENT TERMS: Net 30 days, prepayment, etc.
FSN: FALCO STOCK NUMBER
REV: Falco Revision Level
UoM: Unit of Measure
QTY ORDERED: Total quantity ordered
U/P: Unit price
FCY: Currency
EXT: Extended price

VENDOR P/N: Vendor part number
DESCR: Product description

H.S. CODE: Harmonized code.
DUTY RATE: the duty rate (as a % of the value) that will have to be paid by Falco for the import of the goods.
COUNTRY OF ORIGIN

RL: Release number of particular item.
QTY ORDER: Quantity per Release.
REQUESTED RECEIVE DATE: Date when Falco Electronics Mexico Receives parts after confirm ship date plus transit days.
REQUESTED SHIP DATE: Date when Falco Electronics Mexico requires the goods to be shipped.
CONFIRMED SHIP DATE: Date when the Vendor confirms that can make the shipment.
ETA DC: Estimated time of arrival Date Code (for Falco's internal usage).
QTY REC: Quantity received per release.
QTY BO: Back Order per Release.
KG: Total weight of the release in Kilograms.

TOT: PO Totals for:
Quantity Ordered (QTY ORDER)
Quantity Received (QTY REC)
Quantity Back Order (QTY BO)
Weight (KG)

TOTAL PO: Total dollar value of Purchase Order

ACCEPTED BY: Vendors acceptance signature and name.
DATE: Date the order has been accepted by the vendor.

The below text applies to all Purchase Orders that Falco issues:

THIS PURCHASE ORDER CONSTITUTES BUYER'S OFFER TO BUY SOLELY IN ACCORDANCE WITH THE TERMS AND CONDITIONS ON THE FACE OF EACH FALCO ORDER. THIS PURCHASE ORDER IS THE ENTIRE AGREEMENT BETWEEN BUYER AND SELLER, AND MAY ONLY BE MODIFIED IN WRITING BY A DULY AUTHORIZED REPRESENTATIVE OF THE BUYER. NO REFERENCE HEREIN TO SELLER'S PROPOSALS OR QUOTATIONS SHALL INCLUDE ANY DIFFERENT OR ADDITIONAL TERMS AND CONDITIONS THAT ARE HEREBY OBJECTED TO BY THE BUYER.

THIS PURCHASE ORDER MUST BE CONFIRMED IN WRITING WITHIN 48 HOURS OF RECEIPT ADVISING FALCO OF ANY EXCEPTIONS TO THE REQUESTED DELIVERY DATES, QUANTITY, PRICE, OR OTHER APPLICABLE TERMS AND/OR LIMITATIONS THAT APPLY. FAILURE TO ADVISE OF EXCEPTIONS, IN WRITING, CONSTITUTES THE UNQUALIFIED ACCEPTANCE OF THE ORDER AS REQUESTED.

ANY OF THE FOLLOWING SELLER ACTS SHALL ALSO CONSTITUTE SELLER'S UNQUALIFIED ACCEPTANCE OF THE TERMS AND CONDITIONS SET FORTH HEREIN: SUBMISSION OF THE SELLER'S ORDER ACKNOWLEDGMENT; COMMENCEMENT OF ANY WORK OR THE PERFORMANCE OF ANY SERVICES HEREUNDER; SHIPMENT OF GOODS ORDERED HEREIN WITH BUYER'S CONSENT.

a) ALL GOODS SHALL BE PACKED IN ACCORDANCE WITH SOUND COMMERCIAL PRACTICES TO OBTAIN THE LOWEST TRANSPORTATION RATES UNLESS OTHERWISE SPECIFIED IN THE ORDER. NO CHARGES WILL BE ALLOWED FOR PACKING OR BOXING UNLESS SPECIFIED HEREIN.

b) UNLESS OTHERWISE SPECIFIED IN THIS ORDER ALL PALLETIZED GOODS SHALL BE SHIPPED ON INDUSTRY STANDARD 40" x 48" PALLETS. THE FORK ENTRY SIDE SHALL BE THE 40" SIDE AND THE PALLET HEIGHT SHALL NOT EXCEED 52".

c) ALL SHIPMENTS MUST BE ACCOMPANIED BY A PACKING LIST STATING FALCO'S PURCHASE ORDER NUMBER, FALCO STOCK NUMBER, QUANTITY OF PARTS, WEIGHT, AND NUMBER OF PIECES (CARTONS).

d) SELLER SHALL MARK EACH CONTAINER OR PACKAGE WITH THE PURCHASE ORDER NUMBER, FALCO STOCK NUMBER, QUANTITY, AND WEIGHT, IN ADDITION TO ALL THE NECESSARY LIFTING, LOADING, AND SHIPPING INFORMATION.

e) GOODS DELIVERED TO BUYER MORE THAN FOURTEEN (14) DAYS PRIOR TO SCHEDULE SET FORTH HEREIN MAY BE RETURNED AT SELLER'S EXPENSE.

f) ANY OVERSHIPMENT OF GOODS (OTHER THAN QUANTITY VARIATIONS APPROVED IN WRITING BY BUYER PRIOR TO SHIPMENT) MAY BE TREATED AS GRATUITOUS GOODS FOR WHICH SELLER WILL NOT BE PAID. BUYER WILL NOT MAKE ANY EFFORT TO RETURN SAID OVERSHIPPED GOODS.

DELIVERIES ARE TO BE MADE AS REQUESTED IN THIS ORDER UNLESS OTHERWISE INSTRUCTED BY BUYER AND AGREED TO BY SELLER. COUNT DOWN PERIOD WILL BEGIN ON DATE OF SCHEDULED DELIVERY OR DATE OF INVOICE, WHICHEVER OCCURS LATER.

THE ON-TIME DELIVERY WINDOW IS SEVEN (7) DAYS PRIOR TO SCHEDULED DELIVERY AND ZERO (0) DAYS LATE.

IF BUYER AGREES TO ACCEPT DELIVERIES AFTER THE DATE OF DELIVERY HAS PASSED, BUYER SHALL HAVE THE RIGHT TO DIRECT SELLER TO SHIP, USING THE MOST EXPEDITIOUS MEANS, TO THE DELIVERY POINT SET FORTH IN THIS ORDER AT SELLER'S EXPENSE. ACCEPTANCE OF LATE DELIVERIES SHALL NOT BE DEEMED A WAIVER OF BUYER'S RIGHT TO HOLD SELLER LIABLE FOR ANY LOSS OR DAMAGE RESULTING THEREFROM, NOR SHALL IT CONSTITUTE A MODIFICATION OF SELLER'S OBLIGATION TO MAKE FUTURE DELIVERIES IN ACCORDANCE WITH THE DELIVERY SCHEDULES SET FORTH IN THIS ORDER.

EXCUSABLE DELAY -

a) NEITHER BUYER OR SELLER SHALL BE LIABLE FOR A FAILURE TO PERFORM HEREUNDER ARISING FROM (1) ACTS OF GOD OR OF A PUBLIC ENEMY, (2) ACTS OF ANY GOVERNMENT OR POLITICAL AUTHORITY, (3) ACTS OF ANY PERSON ENGAGED IN SUBVERSIVE ACTIVITY OR SABOTAGE, (4) FIRES, FLOODS, EXPLOSIONS, OR OTHER CATASTROPHES, (5) EPIDEMICS OR QUARANTINE RESTRICTIONS, (6) STRIKES, SLOWDOWNS, LOCKOUTS, OR LABOR STOPPAGES AND DISPUTES OF ANY KIND, (7) FREIGHT EMBARGOES.

b) IN THE EVENT OF ANY FAILURE BY SELLER TO PERFORM IN ACCORDANCE WITH THIS PURCHASE ORDER ARISING FROM ANY OF THE ABOVE CAUSES OR EVENTS, THE BUYER SHALL BE ENTITLED TO OBTAIN SUPPLIES OR SERVICES COVERED BY THIS PURCHASE ORDER ELSEWHERE FOR THE DURATION OF SUCH FAILURE, AND TO REDUCE, WITHOUT ANY OBLIGATION, THE QUANTITY ORDERED FROM THE SELLER UNDER THIS PURCHASE ORDER.

BUYER MAY INSPECT ALL MATERIAL WITHIN A REASONABLE TIME AFTER ARRIVAL AT DESTINATION SPECIFIED BY BUYER. ALL OR ANY PORTIONS NOT MEETING BUYER'S SPECIFICATIONS SHALL BE RETURNED AT SELLER'S EXPENSE. PAYMENT OF INVOICES SHALL NOT BE DEEMED AS AN ACCEPTANCE OF MATERIAL DELIVERED HEREUNDER.

a) BUYER MAY AT ANY TIME GIVE WRITTEN NOTIFICATION OF CHANGES TO THE ORDER IN (1) THE QUANTITY OF GOODS AND SERVICES (2) THE SCHEDULE DATES (3) THE DRAWINGS, DESIGNS, AND/OR SPECIFICATIONS (3) THE METHOD OF SHIPPING AND PACKING (4) THE PLACE OF DELIVERY. THE BUYER SHALL MAKE ALL CHANGES IN WRITING AND THE SELLER SHALL ACKNOWLEDGE ALL SUCH CHANGES.

b) IF SUCH CHANGES AFFECT THE TIME FOR PERFORMANCE, THE COST OF MANUFACTURING SUCH SUPPLIES, OR THE COST OF FURNISHING SUCH SERVICES, BUYER SHALL MAKE AN EQUITABLE ADJUSTMENT IN THE PURCHASE PRICE OR THE DELIVERY SCHEDULE, OR BOTH.

c) SELLER SHALL MAKE NO CHANGES IN THE DESIGN OR COMPOSITION OF ANY SUPPLIES ORDERED HEREUNDER WITHOUT THE PRIOR WRITTEN APPROVAL OF BUYER.

BUYER AT ITS OPTION MAY TERMINATE THIS PURCHASE ORDER, IN WHOLE OR IN PART, AT ANY TIME BY DELIVERING OR MAILING A WRITTEN NOTICE OF TERMINATION TO SELLER.

Falco requires all its vendors to confirm or acknowledge new or any kind of changes to Purchase Orders. These confirmations and acknowledgements can be done (by order of importance):

Also all correspondence relative to Purchase Orders should be sent to any one of the following addresses, Attn: Purchasing:

Falco Electronics Mexico

Calle 23 # 311

Fracc. Itzincab

Merida, Yucatan

97392 Mexico

Or:

Falco Electronics Mexico

6800 SW 40th Street, # 111

Miami, FL 33155-3708

USA

Vendors have to keep in mind that usually it will take approximately 1 week for Falco's Purchasing to receive any kind of document mailed from the United States.

Vendors must strictly follow the SHIP TO address stated in each and every Purchase Order. Any changes to the SHIP TO address will always be notified in writing to vendors.

Falco strongly emphasizes the REQUIRED SHIP DATES specified on its Purchase Orders. Falco's Purchase Orders REQUIRED SHIP DATES are already considering the transit times of the requested shipping methods so the goods can be received JUST IN TIME for production, therefore CONFIRMED SHIP DATES and SHIPPING INSTRUCTIONS (SHIP VIA and SHIP TO) have to be respected, and any delays or constraints have to be notified in writing to the respective buyer immediately. The Purchasing Department has established this policy to compensate for any transit delays unforeseen by Vendor.

The following instructions apply to all shipments in which freight charges are the responsibility of FALCO:

*For Falco to receive its discounts the Bill of Lading must be filled on a way that the billing is the same BILL TO address stated on the Purchase Order.

Except to the extent specifically set forth in the schedule of the Purchase Order, these instructions take precedence over any instructions that the Vendor may have received in the past, and will remain in effect unless the Vendor is authorized to deviate therefrom by Falco's Purchasing Department via a new revision of the Purchase Order.

Instructions from the Purchasing Department on a specific Purchase Order may supersede these governing documents. These instructions are to be placed on a permanent file by Vendors and used on all shipments to Falco. Falco will debit the Vendor's account for any additional charges that may result from the Vendor's failure to comply with these instructions.

a) All goods shall be packed in accordance with sound commercial practices to obtain the lowest transportation rates unless otherwise specified in the order. No charges will be allowed for packing or boxing unless specified.

b) All cartons shall conform to the gross weight limitations set forth by the box manufacturer. Shipments damaged in transit due to insufficient or inadequate packaging are subject to rejection and shall be returned at the Vendor's expense.

c) Unless otherwise specified all palletized goods shall be shipped on industry standard 40" x 48" pallets. The fork entry side shall be the 40" side and the total pallet height shall not exceed 52".

d) Unless otherwise instructed the goods shall be shipped to the address shown on the Purchase Order. All shipments to incorrect destinations will result in a charge to the Vendor for any additional freight costs incurred by Falco.

e) Ship only via the means of transportation specified in the Purchase Order. Any shipment routed incorrectly will result in a charge to the Vendor for any additional freight cost incurred by Falco.

f) All motor freight shipments must be accurately classified according to applicable national Motor Freight Classifications, in order to obtain the lowest available rates. All hazardous materials must be accurately and properly classified and labeled in accordance with legal requirements.

g) All shipments must be accompanied by:

1. Packing list stating Falco's Purchase Order number.

2. Falco Stock Number (FSN) ?Part number assigned by Falco.

3. Quantity of parts.

4. Weight.

5. Number of pieces (cartons).

6. All the necessary lifting, loading and shipping information.

h) Whenever making a shipment to Falco, the Vendor must fax a copy of the Packing List(s), Bill of Lading and other shipping documentation, to the respective buyer of the goods.

i) For all suppliers shipping via FEX for Bill To of FEM must mention on HBL or HAWB the notify party as follows:
YUSEN AIR LOGISTICS (XIAMEN) CO., LTD.
No.1 TERMINAL BUILDING, XIAMEN GAOQI AIRPORT, XIAMEN
CHINA
PH: 5736333 (EXT. 11)
FAX: 5736555
CTC: MS AUDREY XU

j) When consolidating shipments, the Vendor must provide Falco with a Master Packing List of the entire shipment detailing it by Purchase Order number rather than sending individual Packing Lists.

k) All Bill of Ladings are to contain the tariff item number, freight classification number. and Falco's Purchase Order number(s). Vendor must consolidate all weekly shipments on one Bill of Lading for all Purchase Orders having identical routing instructions.

l) Goods received more than fourteen (14) days in advance of the schedule set forth in the Purchase Order may be returned at the Vendor's expense.

m) Any over shipment of goods (other than quantity variations approved in writing prior to shipment) may be treated as gratuitous goods for which Seller will not be paid. Buyer will make no effort to return such goods.

n) No Vendor is authorized to ship by any method contrary to Falco's routing instructions unless the Vendor is paying the freight costs.

o) Vendors located in the USA, Japan, Malaysia and Indonesia that ship to SHIP TO addresses located in Hong Kong and the Peoples Republic of China and that use wooden pallets for their shipments are required to enclose in the shipping documents a certificate that the wooden pallet where the shipment is has been fumigated or disinfected.

p) Falco requires that the weight declared on the packing lists and invoices enclosed to each shipment matches the actual shipment weight (within reasonable tolerances of +/- 5% maximum). Weight mismatches can cause Falco problems and delays due to government import regulations. If a customs office penalizes Falco due to mismatches in documented and actual weights, Falco will charge back the Vendor accordingly.

This section is of interest of all Falco's Vendors of:

a) Plastic molded parts

b) Tape

c) Sleaving

d) Varnish

e) lead wire

Falco requires a Certificate of Compliance (CoC) for all molded parts both for our UL systems and our traceability. Falco's vendors have two options to satisfy this requirement:

1) Supply via fax or email a Certificate of Compliance (CoC), which is to contain:

1. Name of recognized company where the component is manufactured or molded. eg Dupont.

2. Material designation and grade. eg Zytel 70G-33L

3. Raw material batch number. eg SH59Y18

4. Purchase Order #. eg RM 1234

5. Falco Stock Number. eg STK 1812-012-001

6. Quantity of parts shipped.eg 3000

7. Signature of Vendor representative supplying this information.

Or

2. Supply the following information on each box:

1. UL file number

2. Name of recognized company where the component is manufactured or molded. eg Dupont .

3. Material designation and grade. eg Zytel 70G-33L

4. Raw material batch number.eg SH59Y18

5. Purchase Order #.eg RM 1234

6. Falco Stock Number. eg STK 1812-012-001

7. Quantity of parts in box. eg 3000

Option number two (2) is only applicable if the Vendor is registered with UL.

For all other plastics that will not be used in our UL system, the following is required:

1. Supply a CoC. The CoC is to contain:

1. Material designation and grade: eg Zytel 70G-33L

2. Purchase Order #.: eg RM 1234

3. Falco Stock Number. eg STK 1812-012-001

4. Quantity. eg 3000

5. Signature of Vendor representative

Or

2. Supply the information on the box:

1. Name of recognized company where the component is manufactured or molded. eg Dupont

2. Purchase Order #. eg RM 1234

3. Falco Stock Number. eg STK 1812-012-001

4. Quantity

Falco will request on a Purchase Order basis a CoC for every item that requires one. This documentation is required with the goods, preferably inside the box or attached to the outside where our incoming inspector can easily identify and store it. Our UL inspectors expect us to have this information up to date when they audit the plant. Please note that if the Vendor does not fulfill these requirements, corresponding invoices will be on hold pending the necessary information.

Falco inspects all incoming material regardless of the Vendor's standing, reputation, or quality record. Incoming Inspection is responsible for receiving and inspecting raw materials by performing the following tasks:

a) Checking that the packaging is adequate and that the goods have arrived in proper condition. If the packaging is damaged or broken the inspector will review the parts to verify that no damage has occurred.

b) Comparing the Packing List against the Purchase Order to verify that the correct parts were shipped.

c) Verifying that the quantity received, number of pieces (boxes / cartons / bundles / pallets), and weight are as stated on the packing list.

d) Locating and reviewing the Certificate of Compliance if required by the Purchase Order.

e) Sampling the lot and inspecting per Falco's specifications as stated in the M.M.E.S.- (Material Mechanical and Electrical Specifications - document specifying all mechanical and electrical parameters checked by Falco).

A Material Review Board (MRB) is responsible to give a disposition for every reject. The MRB is responsible to verify that dispositions are executed.

The disposition of material shall be limited to:

1. Use as is

2. Return to vendor,

3. Sort

4. Rework

The Vendor is notified of the problem prior to taking any actions, and will be required to give written consent to Falco for any charges he approves for re-work or sorting.

A Return Material Authorization number (RMA) will be requested from the Vendor by Falco's Purchasing Department for all parts that are to be returned. Falco will properly pack all parts and enclose a packing list for each RMA. No parts will leave Falco without proper documentation and Vendor authorization.

A Cost of Quality charge will be applied every time that non-conforming material due to supplier error has to be handled by Falco. This applies to incoming material or material in Work In Process (WIP). The charge will be USD $ 50.00 or 15% of the invoice value, whichever is lower. These charges are for recouping the costs of the disruption in business and the handling of faulty material.

Supplier Corrective Action Request (SCAR) is a fast and effective mean of communicating and resolving problems with the Vendor following a report by Incoming Inspection of non-conforming parts.

SCARs are issued when parts are non-conforming due to the supplier's processes or handling and of which Falco is not aware of any action already being taken to resolve the problem. Not every non-conforming part generates a SCAR.

The following information will be included in every SCAR:

DATE: Date of SCAR

VENDOR: Vendor name

ADDRESS: Vendor address

MRR #: Material Rejection Report number

VPN: Vendor part number

FSN: FALCO Stock Number

QUANTITY RECEIVED: Total received in specific occurrence

NATURE OF COMPLAINT: The reasons for making this Corrective Action Request

SIGNATURE OF ORIGINATOR

The Vendor is to provide Falco the following information:

1. Why the problem occurred;

2. How the Vendor is going to prevent the problem from reoccurring;

3. Whether any similar parts at Vendor's facilities are affected

In addition, the Vendor must demonstrate to Falco that all containment issues are resolved and that subsequent deliveries will conform to all of Falco's and/or Vendor specifications.

The Vendor must supply this information to Falco. If required documentation is not received, subsequent deliveries by the Vendor may be rejected.

The Vendor's response will be evaluated by Falco to determine if adequate action has been taken. If Falco is satisfied that such action has been taken the SCAR will be closed. Falco may at a later date carry out an audit to ensure that the Vendor has corrected the problem. If the Vendor's response is deemed inadequate, Falco will notify the Vendor of this fact.

Once a year, the Material Review Board (M.R.B.) on the basis of Quality, Price, and Delivery will review strategic Vendors.

The M.R.B. committee will generate a Source Assessment Report that will be forwarded to Vendors. The result of this review may disqualify a Vendor or a specific component supplied by a Vendor. Any decision regarding Vendor status shall be communicated to the Vendor in writing.

All goods and services are to be invoiced to Falco Electronics Mexico SA de CV and mailed to:

Falco Electronics Mexico

6800 SW 40th Street, # 111

Miami, FL 33155-3708

USA

Or within Mexico to:

Falco Electronics Mexico

Calle 23 # 311

Fracc. Itzincab

Merida, Yucatan

97392 Mexico

Due to new government regulations Falco requires all vendors to supply on a yearly basis a Certificate of Origin (COO) for all the products in Falco's Approved Vendors List. The COO is used to support Falco's import paperwork and the lack of this documentation can delay production and customer deliveries.

Examples and instructions of the COO required by Falco are located in:

NAFTA Origin Certificate Form

Origin Certificate Instructions

Falco also prohibits the circulation of electronic greeting cards or animations, jokes, attachments in *.exe, *.scr, *.vbs or any other attachment that is not strictly work related. All such items are usually carriers of latent viruses that may strike at any time.

Falco has experienced repetitive instances where vendors have transmitted viruses via e-mail. Given the wide usage of e-mail at Falco these viruses spread quickly not withstanding all the safety measures that Falco takes to prevent this.

Falco will not absorb the cost of repair if a virus is received and the Vendor cannot demonstrate that it takes responsible actions internally to prevent this. Vendors will be charged a rate of USD $ 10.00 per hour (minimum of USD $ 100.00) to fix viruses.

Falco works under quality standards that comply with customer requirements as well as the environmental and health norms set by government authorities.

Convinced that environmental protection and employee safety and health are an important aspect in all company activities, Falco has established the following policy and requires that all Falco vendors:

1. Work to correct the conditions that adversely affect the health and safety of their workers, customers, suppliers, and neighbors.

2. Have a commitment to a continuous improvement of environmental, health, and safety objectives.

3. Work with responsibility to correct the conditions that impact health, security and the environment.

4. Manufacturing process has to be secure, energy efficient, and environmentally friendly.

5. Support the development of technological solutions and methods to cure the environmental problems.

6. Obey all environmental regulations.

7. Conduct evaluation audits to assure adherence to the environmental policy.

8. Promote conservation practices in all business areas.

Vendors are required to avoid sending any kind of gifts to Falco employees.

The main reasons for this policy are that gifts:

1. Usually cause problems at customs and delay raw material shipments.

2. Are unfair to other employees who don't receive gifts

3. Can influence employees to favor a particular vendor.

Vendors who have the practice of sending gifts will be initially notified to stop doing so and if they incur they gifts will be refused and returned to sender at the Vendors expense.