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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Annual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 28, 1997
Commission File Number: 0-4384
MICRODYNE CORPORATION
(Exact name of Registrant as specified in its charter)
MARYLAND 52-0856493
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
3601 EISENHOWER AVENUE, ALEXANDRIA, VA 22304
(Address of principal executive offices) (Zip Code)
(703) 329-3700
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.10 Par Value
(Title of Class)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND, (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENT FOR THE PAST 90 DAYS. YES X NO ____
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. ( )
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT, BASED ON THE AVERAGE BID AND ASKED PRICES, APPROXIMATES $79,837,795
AS OF THE CLOSE OF BUSINESS ON DECEMBER 15, 1997.
THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF COMMON
STOCK AS OF THE CLOSE OF BUSINESS ON DECEMBER 15, 1997 IS 13,034,742 SHARES OF
COMMON STOCK, $0.10 PAR VALUE.
DOCUMENTS INCORPORATED BY REFERENCE: THE INFORMATION REQUIRED BY PART III (ITEMS
10,11,12,AND 13) IS INCORPORATED BY REFERENCE FROM THE REGISTRANT'S DEFINITIVE
PROXY STATEMENT REQUIRED TO BE FILED PURSUANT TO REGULATION 14A.
SEE PAGE 35 FOR EXHIBITS.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MICRODYNE CORPORATION
By: /s/ Michael E. Jalbert July 6, 1998
-------------------------------
Michael E. Jalbert
President and Chief Executive
Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
PRINCIPAL EXECUTIVE OFFICER:
/s/ Michael E. Jalbert President July 6, 1998
- ---------------------- Chief Executive Officer
Michael E. Jalbert Director
PRINCIPAL FINANCIAL OFFICER:
/s/ Massoud Safavi Chief Financial Officer July 6, 1998
- -------------------
Massoud Safavi
/s/ Philip T. Cunningham Director July 6, 1998
- ------------------------ Chairman, Board of Directors
Phillip T. Cunningham
- ---------------------- Director
Gregory W. Fazakerley
Director
- ---------------------
H. Brian Thompson
/s/ Curtis M. Coward Director July 6, 1998
- --------------------
Curtis M. Coward
/s/ Christopher M. Maginniss Director July 6, 1998
- ----------------------------
Christopher M. Maginiss
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EXHIBIT INDEX
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EXHIBIT No. DESCRIPTION SEQUENTIAL PAGE NO.
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2.1 Merger Agreement between Incorporated by reference
Federal Technology Corporation to Exhibit 2.1 to the
and Registrant, dated March 7, Registrant's 1991 Form S-4
1991. Registration Statement.
3.1 Articles of Merger. Incorporated by reference
to Exhibit 3.1 to the
Registrant's 1991 Form S-4
Registration Statement.
3.2 Articles of Amendment and Incorporated by reference
Restatement of Articles of to Exhibit 4(A)(1) to the
Incorporation of Registrant. Registrant's 1989 Form S-2
Registration Statement.
3.3 Bylaws of Registrant. Incorporated by reference
to Exhibit 4(B)(1) to the
Registrant's 1990 Form S-3
Registration Statement.
4.1 Specimen Common Stock Incorporated by reference
Certificate. to Exhibit 49A) to the
Registrant's 1979
Registration Statement
(File. No. 2-634130).
10.3 Form of Amended and Restated Incorporated by reference
1991 Key Employee Stock to Exhibit 4.1 to the
Option Plan. Registrant's Registration
Statement on Form S-8
dated May 6, 1992
(File No. 33-47709).
10.7 Form of 1993 Non-Employee Incorporated by reference
Directors Stock Option Plan. to Exhibit 10.7 to
Registrant's 1994
Form 10-K Annual Report
10.8 Form of 1992 Employee Stock Incorporated by reference
Purchase Plan. to Exhibit 4.1 to the
Registrant's Registration
Statement on Form S-8
dated May 6, 1992
(File No. 33-47710).
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10.9 Credit Agreement dated Incorporated by reference
January 27, 1995 among the to Exhibit 10.11 to
Registrant, Crestar Bank and Amendment No. 2 to the
NBD Bank Registrant's 1995 Form S-3
Registration Statement
10.10 First Amendment to Credit Incorporated by reference
Agreement among the Registrant, to Exhibit 10.12 to
Crestar Bank and NBD bank, dated Amendment No. 2 to the
October 26, 1995 Registrant's 1995 Form S-3
Registration Statement
10.11 Second Amendment to Credit Incorporated by reference
Agreement among the Registrant, to Exhibit 10.11 to
Crestar Bank and NBD bank, dated Registrant's 1996 Form
June 30, 1996. 10K Annual Report
10.12 Third Amendment to Credit Incorporated by reference
Agreement among the Registrant, to Exhibit 10.12 to
Crestar Bank and NBD bank, dated Registrant's 1996 Form
August 19, 1996. 10K Annual Report
10.13 Fourth Amendment to Credit Incorporated by reference
Agreement among the Registrant, to Exhibit 10.13 to
Crestar Bank and NBD bank, dated Registrant's 1996 Form
September 27, 1996. 10K Annual Report
10.14 Incentive Stock Option Plan of Incorporated by reference
1988 ("1988 Plan"). to Exhibit No. 1 to
Registrant's Form 8-K Report dated April 27,
1988 (File No. 0-4384).
10.15 Amendment of 1988 Plan adopted Incorporated by reference
by the Board of Directors on to Exhibit No. 4(F)(1)(a) to
June 27, 1989. Registrant's 1989 Form
10-K Annual Report.
10.16 Amendment of 1988 Plan adopted Incorporated by reference
by the Board of Directors on to Exhibit No. 10(G)(3) to
January 25, 1990. Registrant's 1990 Form
10-K Annual Report.
10.18 Microdyne Corporation 401-K Incorporated by reference
Summary Plan Description. to Exhibit No. 10.18 to the
Registrant's September 30,
1992 10K.
</TABLE>
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10.19 Federal Technology Corporation Incorporated by reference
Long-Term Incentive Plan. to Exhibit No. 10 to the
Registrant's June 21, 1991
Form 10-K.
10.20 Token Ring Purchase Agreement Incorporated by reference
dated July 26, 1994 between the to Exhibit 1 to the
Registrant and Digital Registrant's Form 8-K
Communications Associates. Report dated July 29, 1994.
(File No. 0-4384)
10.21 Noncompetition Agreement dated Incorporated by reference
June 21, 1995 between Microdyne to Exhibit 10.1 to
Corporation and Philip T. Amendment No. 1 to the
Cunningham Registrant's 1995 Form S-3
Registration Statement
10.22 Executive Employment Agreement Incorporated by reference
dated October 24, 1995 between to Exhibit 10.2 to
Microdyne Corporation and Philip Amendment No. 1 to the
T. Cunningham Registrant's 1995 Form S-3
Registration Statement
10.23 WNIM Purchase Agreement dated Incorporated by reference
June 14, 1994 between Microdyne to Exhibit 10.3 to
Peyton Street Corporation and Amendment No. 1 to the
Gateway Communication, Inc. Registrant's 1995 Form S-3
Registration Statement
10.24 Asset Purchase Agreement dated Incorporated by reference
June 14, 1994 between Microdyne to Exhibit 10.4 to
Peyton Street Corporation and Amendment No.1 to the
Gateway Communications, Inc. Registrant's 1995 Form S-3
Registration Statement
10.25 Asset Purchase Agreement dated Incorporated by reference
January 6, 1995 between the to Exhibit 1 to the
Registrant and Artisoft, Inc. Registrant's Form 8-K
dated January 6, 1995
10.26 Asset Purchase Agreement dated Incorporated by reference
January 6, 1995 between the to Exhibit 1 to the Registrant's
Registrant and Artisoft, Inc. Form 8-K dated January 6, 1995
10.27 Asset Purchase Agreement dated Incorporated by reference
September 12, 1995 between the to Exhibit 1 to Amendment
Registrant and National No.1 to the Registrant's 1995
Semiconductor Corporation Form S-3 Registration Statement
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10.28 License Agreement between Incorporated by reference
Novell Inc. and the Registrant to Exhibit No. 10.8 to
Dated July 31, 1992 Amendment No. 2 to the
Registrant's 1995 Form
S-3 Registration Statement
10.29 OEM Agreement between Incorporated by reference
Novell Inc. and the Registrant to Exhibit No. 10.9 to
Dated June 14, 1994 amendment No. 2 to the
Registrant's 1995 Form S-3
Registration Statement
10.30 Technology Purchase Agreement Incorporated by reference
between Novell Inc. and the Registrant to Exhibit 10.30 to the
Dated April 22, 1996 Registrant's 1996 Form 10-K
Annual Report
10.31 Agreement between Epson America, Incorporated by reference to
Inc. and the Registrant Dated Exhibit 10.31 to the Registant's
March 20, 1996. 1996 Form 10-K Annual Report
10.32* Amendment One to the agreement Filed with this Form 10-K
between Epson America, Inc. and the
Registrant Dated January 20, 1997.
Portions of this exhibit have been
omitted pursuant to a request for
confidential treatment.
10.33* Amendment Two to the agreement Filed with this Form 10-K
between Epson America, Inc. and the
Registrant Dated August 1, 1997.
Portions of this exhibit have been
omitted pursuant to a request for
confidential treatment.
10.34 Agreement between Alpine Electronics Filed with this form 10-K
of America Inc. and the Registrant
Dated September 26, 1997
10.35 Fifth Amendment to Credit Filed with this form 10-K
Agreement among the Registrant,
Crestar Bank and NBD bank
Dated March 14, 1997
10.36 Sixth Amendment to Credit Filed with this form 10-K
Agreement among the Registrant,
Crestar Bank and NBD bank
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Dated June 17, 1997
10.37 Seventh Amendment to Credit Filed with this form 10-K
Agreement among the Registrant,
Crestar Bank and NBD bank
Dated September 15, 1997
10.38 Employment Agreement dated Filed with this form 10-K
February 10, 1997 between Microdyne
Corporation and Michael E.
Jalbert
10.39 Agreement between the Italian Ministry Filed with this form 10-K
of Defense and the Registrant
Dated December 6, 1996
11.1 Statement regarding computation of Filed with this Form 10-K
per-share earnings.
23.1 Consent of Grant Thornton to the Filed with this Form 10-K
incorporation by reference in the
Registration Statements on Form S-8
dated December 27, 1991, February
28, 1992, May 6, 1992, March 3, 1995,
November 2, 1995, and October 7, 1996.
27.1 Financial Data Schedule Incorporated by reference
to Exhibit No. 27 to
Amendment No. 1 to the
Registrant's 1995 Form S-3
Registration Statement.
</TABLE>
* Portions of the exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission.
<PAGE> 1
Exhibit 10.32
*** CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
AMENDMENT ONE TO THE SUPPORT SERVICES AGREEMENT
Epson America, Inc. (Epson,) and Microdyne Corporation (Microdyne)
amend the Support Services Agreement (the "Agreement") which commenced effective
April 1, 1996.
RECITALS
Whereas, Epson has established a telephone support center in Torrance,
California (commonly referred to as the "Epson Connection") and Epson
anticipates a level of calls that will exceed the Epson Connection's current
capacity,
Whereas, Microdyne has offered Epson an interim solution to the excessive call
load through a telephone support facility that Microdyne will set up in the
general vicinity of Torrance, California, and,
Whereas, Epson wants to accept Microdyne's offer of services and assist
Microdyne in operating the telephone service center,
Now, therefore, the parties agree as follows:
1. Term- This Amendment will remain in effect for a six (6) month period
beginning March 1, 1997 when Microdyne will commence responding to
customer calls. After the expiration of six months, this Amendment
will continue in effect on a month by month basis unless either party
provides the other with thirty (30) days prior written notice of its
intent to terminate the Amendment. Prior to the expiration of the six
(6) month period described above, this Amendment can only be
terminated for cause, as defined in Provision 11.2 of the Agreement.
2. Microdyne's Telephone Support Center: Microdyne will open a telephone
support center in the general vicinity of Epson's headquarters in
Torrance, California and provide qualified personnel to respond to
customer calls, primarily regarding ink jet printers, The parties
anticipate a ramp-up period with increasing support capabilities over
the first two (2) months of this Amendment. Microdyne will provide
computer equipment and lease NEC telephone equipment sufficient to
interface with the Epson Connection and provide high quality support
to customers. Microdyne will also provide the T I telephone and data
link to connect its facility to the Epson Connection at Epson's
Madrona facility.
3. Minimum Call Level Commitment: Epson will refer a minimum number of
*** calls per month to Microdyne. This *** minimum call level is
intended to provide Microdyne with a sufficient volume of calls to
establish and staff the telephone service center. The parties
anticipate, however, that Microdyne will not be able to handle the
entire minimum volume of calls during the first two (2) months of
operation.
4. Epson's Costs: Epson will compensate Microdyne for providing
telephone support service ***. (As referred to herein, talk minutes
refer to on-line time actually expended by Microdyne employees in
Talk Mode pursuant to the ACD records for such calls and NEC
Navigator activity reports.) Epson will pay the telephone
communication costs for 800 number calls by customers. Epson shall
also provide product training and telephone support training for
Microdyne personnel in the same manner that training is currently
provided to Microdyne employees assigned to work directly within the
Epson Connection. Upon termination of the Amendment, Epson may, if
mutually agreeable to the parties, take over the NEC equipment lease
entered by Microdyne for telephone equipment. If Microdyne chooses to
purchase NEC equipment, instead of leasing, Epson may purchase
equipment if a mutually agreeable price can be negotiated.
<PAGE> 2
5 Microdyne's Costs: Microdyne will provide the facilities, equipment
and staff sufficient to provide high quality technical support to
customers. Microdyne will be solely responsible for all facility
leasing costs, costs for telephone, and computer equipment, the cost
of the T-1 link, all safety and all general administrative expenses
required to operate the Microdyne telephone support center.
6. Record Retention: Microdyne will retain such electronic data and
records regarding customer calls as may reasonably be requested by
Epson.
7. Entire Agreement: This Amendment includes the entire Agreement of the
parties regarding the telephone support service to be provided by
Microdyne. Except as explicitly set forth in this Amendment, all of
the provision of the Support Services Agreement remain in full force
and effect.
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EPSON AMERICA, INC. MICRODYNE CORPORATION
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By: /s/ Richard D. Bullot By: /s/ John Dillender
Name Richard D. Bullot Name: John Dillender
Title: Vice-President Services and Support Title: Vice-President Support Services Division
Date: January 20, 1997 Date: January 20, 1997
</TABLE>
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EXHIBIT 10.33
*** CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
AMMENDMENT TWO TO THE SUPPORT SERVICES AGREEMENT
THIS AMENDMENT (the "Amendment"), dated as of August 1, 1997, is
between Epson America, Inc. ("Epson") and Microdyne Corporation ("Microdyne").
This Amendment amends the Support Services Agreement which commenced effective
April 1, 1996 (as amended by the Amendment One to the Support Services Agreement
of January 20, 1997, the "Original Agreement").
Recitals
A. Under the Original Agreement, Microdyne has established the Watson Call
Center, an off-site telephone support facility that handles excess Epson call
load which Microdyne is unable to handle at Epson's site.
B. Because of Epson's continuing, heavy call load, Microdyne intends to
establish a new, larger off-site call center (the "New Center") and to move the
Watson Call Center into the New Center.
C. The parties wish to enter into an agreement establishing the terms of
Microdyne's expanded off-site call support for Epson, and providing for the
phase-in of that expanded support.
NOW, THEREFORE, the parties agree as follows:
Agreement
1. Outsourced Telephone Technical Support. Under the terms of this
Amendment, and in accordance with Microdyne's March 18, 1997 response
(the "RFP Response") to Epson's RFP of February 17, 1997 (the "RFP"),
Microdyne will provide outsourced telephone technical support service
to Epson end users and other Epson customers as may be designated by
Epson. The services will be phased in over two phases.
1.1 In Phase 1, Microdyne will expand the Watson Call Center in
order to handle increased call load from Epson. Phase 1 will
commence on August 1, 1997 and continue until the start of
Phase 2. As provided in Section 5 of this amendment, Epson
will compensate Microdyne
*** from the start of Phase 1.
1.2 In Phase 2, Microdyne will establish the New Center, and move
the personnel and equipment from the Watson Call Center to the
New Center. The commencement date for Phase 2 is September 2,
1997.
Except as specifically stated otherwise in this Amendment, all the
terms and conditions of this Amendment apply from August 1, 1997,
across both phases.
2. Level of Support. Microdyne will supply Level One telephone support.
In the future, Epson may wish to move to Microdyne's Level One/Level
Two support. In that case, the parties will negotiate mutually
satisfactory terms of the support, including billing rate, billing
method and management metrics. Until terms are negotiated, the terms
in this agreement will continue as provided in this agreement.
3. Hours. Support will be provided from 6:00 AM to 8:00 PM, Pacific Time, Monday
through Friday, and from 7:00 AM to 4:00 PM, Pacific Time, Saturday and Sunday.
Epson may increase or decrease the hours of coverage over time. Epson will
provide Microdyne with a written 14 day notice for changes in operating hours.
Microdyne will not be required to provide support on holidays designated by
Epson. For the remainder of 1997, the holidays are: Labor Day, Thanksgiving Day,
Christmas Day and December 26. Holidays for subsequent years shall be
communicated to Microdyne by January 10 of each calendar year. The first holiday
in 1998 will be New Year's Day.
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4. Dedicated Personnel. Microdyne will provide adequate personnel to service the
Epson business. Each representative who handles Epson business shall handle only
Epson business. Each representative will speak English as his/her primary
language. As stated in the RFP Response (Part B, Section Relevant Experience,
Question 6), "If we have a service objective, once we reach that threshold, we
will continue to focus the efforts of our 'Epson dedicated' staff to further
improve the service level (and not balance their time in order to achieve some
other customer's minimum target)."
5. Cost. As detailed in Exhibit G (Pricing Table Worksheet) of the RFP Response,
the only cost to Epson for Microdyne's off-site services will be a fixed price
per agent connection minute (talk time). Microdyne billing to Epson will be
based on queue-time service level. The queue-time service level Epson has
selected ***. Epson will compensate Microdyne for the cost per talk minute for
this Level One service ***. This rate shall be effective from August 1, 1997.
6. Minimum Level of Calls. Epson will refer *** calls per month to Microdyne at
the New Center. There will be a ramp up period where calls will be offered to
match agent resources. It is anticipated that the New Center will be staffed to
handle the *** calls per month volume by November 1, 1997.
7. Microdyne's-Costs. Microdyne will provide the facilities, telephone and data
links to connect its facility to the Epson Connection at Epson's Madrona
facility, equipment and staff sufficient to provide high quality technical
support to Epson's customers, while meeting or exceeding the performance metrics
specified herein. Microdyne will be solely responsible for all facility leasing
costs, furniture, costs for telephone, network and computing equipment, software
applications and associated licenses, the cost of T-l and data lines, all
salaries, and all general administrative expenses required to operate the
Microdyne off-site telephone support call centers. Epson will pay for the
inbound per minute usage fees for Epson's toll free telephone numbers.
8. Casepoint-System. Microdyne will totally integrate the Epson CBR2 Casepoint
knowledge-base system and software at the New Center. Microdyne personnel will
continue to participate in the Casepoint database development.
9. Reporting in General
9.1 Microdyne will provide a greatly expanded reporting platform with the
New Center. Also, reports will be available from several additional
systems, including the VRU and Auto Quality/P&Q Review. Microdyne
will not charge Epson for any additional reporting.
9.2 Microdyne will provide Epson with access to the Rockwell InfoServer,
an information gateway platform. The InfoServer has the ability to
gather data from various systems and generate integrated reporting.
Per the RFP Response (Part B, Page 3), depending on the integration
limitations of the existing NEC ACD, Microdyne will actively explore
the feasibility of utilizing the InfoServer to generate combined
reports from the Epson systems and the Rockwell/VoiceTek platforms.
If the NEC ACD platforms are open and the traffic data is available
to the InfoServer, Microdyne will work closely with Epson to design
the report package.
10. Measurement, Confirmation and Reporting of Customer Satisfaction.
10.1 In response to Epson's request that Microdyne (a) monitor customer
satisfaction, (b) maintain Epson's currently high level of customer
satisfaction and (c) take corrective actions at the individual and
program level when customer satisfaction levels do not meet Epson
targets, Microdyne will implement a program to measure, confirm and
report customer satisfaction. Reports will be made in a manner and
frequency acceptable to Epson. This program will begin no later than
60 days after execution of this Amendment. Rather than create a
separate and new measurement program, Epson suggests that Microdyne
coordinate efforts with the existing Service 800, Inc. program.
10.2 Microdyne will review its current monitoring program, and the
Connection Stentor monitoring program (currently functioning in
Canada), and make a recommendation to Epson regarding the future of
the Microdyne monitoring program. This recommendation
<PAGE> 3
will be made within 60 days of execution of this Amendment.
10.3 Results of Microdyne's internal agent monitoring and quality program
will be presented to Epson as follows:
Weekly during the first four weeks after implementation of Phase I
and Phase 2.
Weekly for three weeks after each new hire and new product training
session.
Quarterly.
10.4 Microdyne will track and report to Epson the number of hours of
training each dedicated representative receives. Microdyne will also
specify the skills required of a technician to effectively and
efficiently provide support to Epson end users. Microdyne will report
to Epson the percentage of agents not meeting these requirements on a
monthly basis.
10.5 Microdyne will provide Epson with employee turnover data. For support
representatives and management (up to but excluding the call center
site manager) this data will be tracked monthly, measured on an
annualized basis, and presented to Epson monthly.
10.6 Epson will provide product, procedure and Epson system training to
Microdyne trainers. This train-the-trainer program will cover the
ink-jet product family for the initial Phase 2
start-up. As new Epson products are released, Epson will provide
product training to the Microdyne trainers. Epson will also provide
one of each product for training and subsequent technical support.
11. Disaster Plan. As described in the RFP Response (Part A, Section 4.2.2),
Microdyne will present its multi-level disaster plan to Epson within 30 days
of Phase 2 implementation.
12. Standards.
12.1. In light of Epson's decision to work more closely with
Microdyne, and its commitment to greatly increase Microdyne's call
center business, it is Epson's desire that Microdyne pursue and
obtain COPC-2000 Certification for its existing and New Center
operations. Epson understands this certification process is
currently under evaluation by Microdyne, and that Microdyne may
elect to not follow through with the COPC certification.
Nevertheless, Microdyne acknowledges that Epson will look to the
COPC standards as one measure of Microdyne's performance, whether
Microdyne pursues certification or not.
12.2 Maintaining high levels of customer satisfaction requires Epson
to carefully manage Microdyne. Epson's goal is to achieve superior
customer satisfaction results. These results are produced by
Microdyne people and processes. Epson management of Microdyne will
focus on these four key areas:
Performance Measurement, Processes, People, and Planning and
Leadership.
These areas were thoroughly addressed in the RFP. The commitments in
the RFP Response in these areas will become part of the measurement
criteria used to continually monitor and evaluate Microdyne's
performance. Microdyne data presented to Epson relative to each area
must be accurate, objective and valid. The data must be gathered at
an appropriate frequency. This data must be used by Microdyne to
make decisions, take action and produce results. This will help
ensure that Microdyne delivers superior customer service and
improved operational performance.
13. Call Monitoring. As part of the on-going quality process, Epson will be
provided with the capability of remotely and silently monitoring telephone
calls. This monitoring will be conducted randomly and weekly. This spot checking
is not intended to replace Microdyne's internal agent monitoring programs.
Microdyne shall maintain the procedures required by Epson from time to time
(including consents signed by Microdyne representatives and recorded notices to
end user callers) for enabling this call monitoring.
<PAGE> 4
14. Performance Metrics. Microdyne will measure and report the following
metrics at the intervals listed. These metrics and objectives will be
reviewed quarterly and adjustments can be made with joint approval from
Epson and Microdyne.
14.1 Talk Time. Microdyne will measure Talk Time and strive to achieve
and maintain the lowest possible talk time for Level One Inkjet and
MAC calls, while balancing call quality, customer satisfaction and
talk time. The following are talk time objectives for this Level
One support. It is assumed Microdyne will require a two month ramp
up period prior to achieving these targets:
Average monthly Inkjet talk time of (***).
Average monthly MAC talk time of (***).
14.2 Abandonment Rate. Microdyne will measure the Abandonment Rate.
The total abandonment rate is defined as the total number of calls
dropped after being seized by the Microdyne ACD divided by the Total
number of calls seized by the Microdyne ACD. This number will be
reported as a percentage.
Abandoned calls shall not exceed 10% of the total number of inbound
calls seized by the Microdyne ACD in any given hour of operation.
Abandoned calls shall not exceed 8% of the total number of inbound
calls seized by the Microdyne ACD on any given day of operation.
Abandoned calls shall not exceed 7% of the total number of inbound
calls seized by the Microdyne ACD in any calendar month.
Microdyne will also provide a monthly pareto analysis of the various
points the calls abandon. This would be prior to menu selection,
during menu selection, after menu selection, during the queue, after
call is presented to agent.
14.3 Busy Calls. Microdyne will provide a measurement of Percent of
Calls Busy using an All Trunks Busy Measurement and a Blocked Call
measurement.
The All Trunks Busy measurement will be Total Time, in seconds, the
Trunks are busy during business hours divided by the Total Time, in
seconds, during the business day. This will be measured as a
percentage each hour of operation and reported monthly by day.
The Blocked Call measurement will be the number of calls prevented
from connecting to the Microdyne ACD divided by the number of calls
offered to the Microdyne ACD. This blockage will be measured hourly
by day and reported weekly (Sunday - Saturday) and for each calendar
month. It is understood that Microdyne will need to obtain these
blocked call statistics from either MCI (the network provider), NEC
(Epson's ACD vendor), Rockwell (Microdyne's ACD provider), or
Microdyne's local exchange carrier.
14.4 ASA. Microdyne will measure the Average Speed of Answer (ASA).
The Speed of Answer is defined as the time, in seconds, for a
caller to reach a live agent after the caller has navigated through
an automated selection process. If there is no automated selection
process, then the speed of answer would be the time, in seconds,
from the call entering the Microdyne ACD to call being answered by a
live agent.
The Average Speed of Answer (ASA) would be the Total Speed of Answer
Time, in seconds, for all Calls Handled by Live Agents divided by
the Total Calls Handled by Live Agents.
Microdyne will measure the ASA in half-hour increments.
The ASA data will be reported by hour, by day of week and by
calendar month. The data
<PAGE> 5
will be delivered to Epson by 8:00 AM on the next business day
following the close of the reporting period.
The ASA distribution will also be measured and reported. The report
will show the percentage of calls answered in 0-30 seconds, 31-90
seconds, 91-180 seconds, 181- 300, and 301- 480 seconds, and 481+
seconds. This ASA distribution will be delivered to Epson at the end
of each seven day week (Sunday - Saturday) and at the end of each
calendar month.
14.5 Transferred Calls. In an effort to monitor First Call Resolution,
Microdyne will measure and report transferred calls. Microdyne will
analyze transferred calls, calls requiring callbacks, consultation
calls, and any other calls requiring an action other than First
Contact Resolution. A pareto analysis will be presented monthly for
three months. During the fourth month Epson and Microdyne will agree
upon and implement monthly call transfer objectives. These
statistics will be tracked daily and weekly (Sunday - Saturday) and
will be reported monthly.
14.6 Logs. Microdyne will create a complete (as defined by Epson) call
log for each call handled. The complete call log objective is 93%.
This will be reported monthly.
14.7 Inference-Usage,. Microdyne will track and measure Inference usage.
For products supported (when a domain exists), usage objectives will
be 83%. The Unresolved/Canceled objective will be 5%. The Resolved
Cases objective will be 93%. These figures will be measured and
reported weekly. EPSON will allow Microdyne to access this data
through the EPSON Highway in order to prepare these statistical
reports.
14.8 ACD Statistics. Microdyne will provide Epson with a comprehensive
set of ACD statistics on a daily, weekly and monthly basis. For
Monday through Thursday of each week, daily statistics will be
delivered to Epson by the close of business on the following
business day. For Friday through Sunday, daily statistics and all
weekly reports will be delivered by the close of business on the
following Tuesday. Monthly reports will be delivered by the close of
business on the second business day of the following month. The
reports will include at the least, the following information:
Number of calls offered
Number of calls handled
Number of abandoned calls
Percent of abandoned calls
Abandon call distribution
Average talk time
Total talk time
Average speed of answer
Average speed of answer distribution
Longest waiting call
Percent of all trunks busy
Percent of call blockage
First call resolution
Number of escalated calls
Percent of escalated calls
Call activity summary by product split
Transferred call reports
Outbound call activity
Service level
Call queue time
Distribution of queued calls
15. Miscellaneous
15.1 Other Services. Epson may elect to outsource additional product
support and services, in its sole discretion. These include, but are
not limited to:
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Other Epson product lines
Fulfillment
Ad reply
Accessory sales
End user surveys
Other support methods
15.2 Record Retention: Microdyne will retain such electronic data and
records regarding customer calls as may reasonably be requested by
Epson.
15.3 Entire Agreement: This Amendment includes the entire agreement of
the parties regarding the off-site telephone support service to be
provided by Microdyne. Except as explicitly se,. forth in this
Amendment, all of the provisions of the Original Agreement remain in
full force and effect.
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IN WITNESS WHEREOF, this Amendment is executed in counterparts by duly
authorized representatives, each of which counterpart shall be deemed an
original.
<TABLE>
<CAPTION>
EPSON AMERICA, INC. MICRODYNE CORPORATION
<S> <C>
By: /s/ Richard D. Bulot By: /s/ Christopher Maginniss
Name Richard D. Bulot Name: Christopher Maginniss
Title: Vice-President Services and Support Title: President Support Services Division
Date: August 1, 1997 Date: July 31, 1997
</TABLE>
