<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1994 Commission File No. 0-14880
MICROLOG CORPORATION
(Exact name of Registrant as specified in its charter)
VIRGINIA 52-0901291
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20270 Goldenrod Lane 20876
Germantown, Maryland (Zip Code)
(Address of principal executive offices)
(301) 428-9100
(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, par value $.01 per share
(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
requirements 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 herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statement incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ( )
The aggregate market value of shares of Common Stock held by non-affiliates
(based on the January 17, 1995 closing price of these shares) was approximately
$3.9 million. The Common Stock is traded over-the-counter and quoted through the
Nasdaq SmallCap Market.
As of January 17, 1995, 3,880,561 shares of the Registrant's
Common Stock were outstanding.
------------------------------------------------------------------------------
<PAGE>
Documents Incorporated by Reference
Parts I and III incorporate information by reference from portions of the
Company's definitive Proxy Statement dated February 13, 1995 (the "Proxy
Statement"). Parts I, II and IV incorporate information by reference from
portions of the Company's Annual Report to Shareholders for the fiscal year
ended October 31, 1994 (the "Annual Report to Shareholders") filed with the
Commission on February 13, 1994.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
The following financial statements are included on pages 6 through 23 of the
Company's Annual Report to Shareholders and are incorporated herein by
reference.
Consolidated Statements of Operations for the years ended October 31,
1992, 1993 and 1994
Consolidated Balance Sheets as of October 31, 1993 and 1994
Consolidated Statements of Changes in Stockholders' Equity for the
years ended October 31, 1992, 1993 and 1994
Consolidated Statements of Cash Flows for the years ended October 31,
1992, 1993 and 1994
Notes to Consolidated Financial Statements
Report of Independent Accountants
(a)(2) Financial Statement Schedules
Unaudited supplementary data entitled "Selected Quarterly Financial Data
(unaudited)" is incorporated herein by reference in Item 8 (included in "Notes
to Financial Statements" as Note 17).
The following financial statement schedules and auditor's report in connection
therewith are attached hereto as pages F-1 through F-5:
F-1 Schedule V Fixed Assets
F-2 Schedule VI Accumulated Depreciation
F-3 Schedule VIII Valuation and Qualifying Accounts and Reserves
F-4 Schedule IX Short-Term Borrowings
F-5 Report of Independent Accountants on Financial Statement Schedules
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
(a)(3) Exhibits
Exhibit
Number Description
3.1 Amended and Restated Articles of Incorporation of Registrant,
as amended 1/
3.2 By-laws of Registrant, as amended 1/
4.1 Specimen Stock Certificate 1/
10.1 Employment Agreements between the Company and Joe J. Lynn and
Steven R. Delmar, respectively 5/
10.2 Deferred Compensation Agreements between the Company and J.
Graham Hartwell and Joe J. Lynn, respectively 3/
10.3 Consulting and Non-Competition Agreement with J. Graham
Hartwell 5/
10.4 Employment Agreement between the Company and Richard A.
Thompson 5/
10.5 Microlog Corporation Executive Deferred Bonus Plan 2/
10.6 Microlog Corporation Medical Reimbursement Plan 5/
10.7 Microlog Corporation 1986 Stock Option Plan, as amended 6/
10.8 Microlog Corporation 1989 Non-Employee Director Non-Qualified
Stock Option Plan 6/
10.9 Agreement with Racal Recorders, Limited 4/
10.10 Agreement with Maryland National Bank 6/
10.11 Amendments to Agreement with NationsBank 7/
10.12 Sub-contracting Agreement with Aspect Telecommunications
Corporation 6/
10.13 Sub-contracting Agreement with Applied Physics Laboratory 6/
10.14 Agreement with Philips Communications System BV*/
13 Annual Report to Shareholders for the fiscal year ended
October 31, 1994 7/
22 Subsidiaries of the Registrant 5/
24 Consent of Price Waterhouse LLP 7/
___________
*/ Confidential treatment has been requested for portions of this
document.
1/ Filed as an Exhibit to Registration Statement on Form S-1, File No.
33-31710, and incorporated herein by reference.
2/ Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
ended October 31, 1987.
3/ Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
ended October 31, 1988.
4/ Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
ended October 31, 1990.
5/ Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
ended October 31, 1992.
6/ Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
ended October 31, 1993.
7/ Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
ended October 31, 1994.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the fiscal year ended
October 31, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this Amendment No. 1 to
its Annual Report on Form 10-K for the fiscal year ended October 31, 1994 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Germantown, State of Maryland on April 3, 1995.
MICROLOG CORPORATION
By /s/ Steven R. Delmar
-------------------------------
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
<PAGE>
Exhibit Index
Exhibit
Number Description
3.1 Amended and Restated Articles of Incorporation of Registrant,
as amended 1/
3.2 By-laws of Registrant, as amended 1/
4.1 Specimen Stock Certificate 1/
10.1 Employment Agreements between the Company and Joe J. Lynn and
Steven R. Delmar, respectively 5/
10.2 Deferred Compensation Agreements between the Company and J.
Graham Hartwell and Joe J. Lynn, respectively 3/
10.3 Consulting and Non-Competition Agreement with J. Graham
Hartwell 5/
10.4 Employment Agreement between the Company and Richard A.
Thompson 5/
10.5 Microlog Corporation Executive Deferred Bonus Plan 2/
10.6 Microlog Corporation Medical Reimbursement Plan 5/
10.7 Microlog Corporation 1986 Stock Option Plan, as amended 6/
10.8 Microlog Corporation 1989 Non-Employee Director Non-Qualified
Stock Option Plan 6/
10.9 Agreement with Racal Recorders, Limited 4/
10.10 Agreement with Maryland National Bank 6/
10.11 Amendments to Agreement with NationsBank 7/
10.12 Sub-contracting Agreement with Aspect Telecommunications
Corporation 6/
10.13 Sub-contracting Agreement with Applied Physics Laboratory 6/
10.14 Agreement with Philips Communications System BV*/
13 Annual Report to Shareholders for the fiscal year ended
October 31, 1994 7/
22 Subsidiaries of the Registrant 5/
24 Consent of Price Waterhouse LLP 7/
___________
*/ Confidential treatment has been requested for portions of this
document.
1/ Filed as an Exhibit to Registration Statement on Form S-1, File No.
33-31710, and incorporated herein by reference.
2/ Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
ended October 31, 1987.
3/ Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
ended October 31, 1988.
4/ Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
ended October 31, 1990.
5/ Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
ended October 31, 1992.
6/ Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
ended October 31, 1993.
7/ Filed as an Exhibit to Annual Report on Form 10-K for the fiscal year
ended October 31, 1994.
(b) Reports on Form 8-K
<PAGE>
EXHIBIT 10.14
AGREEMENT
The undersigned:
1. Philips Communication Systems BV, seated in Eindhoven, The Netherlands,
hereafter referred to as "PCS", on the one hand,
and
2. Microlog Corporation of Maryland, a subsidiary of the Microlog
Corporation seated in Germantown, MD 20876, USA hereafter referred to
as "Microlog", on the other hand,
together referred to as "Parties",
CONSIDERATIONS:
WHEREAS PCS is worldwide engaged in the business of communication systems;
WHEREAS Microlog is engaged in the business of Interactive Voice Response
Products (IVR Products) and related software (IVR Software);
WHEREAS Microlog and PCS have signed a Non-Disclosure Agreement, effective from
23 April 1993 and subsequently a Memorandum of Understanding dated 17 December
1993;
WHEREAS PCS desires to become a Value Added Reseller (VAR) of the IVR Products
on a worldwide basis and Microlog desires to nominate PCS as a preferred VAR;
WHEREAS PCS furthermore desires to receive from Microlog and Microlog desires to
grant PCS a non-exclusive worldwide right and license, including the right to
sublicense, to use, market, and commercialize the IVR Software;
WHEREAS both PCS and Microlog desire to jointly formulate their common agreement
regarding their business relationship with respect to IVR Systems/Products and
IVR Software;
NOW, therefore Parties set forth their understandings as follows:
D5-PF-94/03
July 29, 1994
<PAGE>
Clause 1
Definitions
1.1 Unless provided otherwise, capitalized terms and expressions
as used in this Agreement have the following meaning:
1.1.1 Agreement:
This document including any and all Attachments;
1.1.2 Attachments:
Any and all Attachments to this Agreement as of the date
hereof or subsequently attached hereto upon the mutual written
consent of the Parties;
1.1.3 Documentation:
IVR Product Documentation;
1.1.4 Epidemic Faults:
More failures during a period of (CONFIDENTIAL TREATMENT
REQUESTED) Mean Time Between Failures in Hours (MTBF) *
(CONFIDENTIAL TREATMENT REQUESTED) originally provided by
Microlog. The MTBF shall be specified by Microlog;
1.1.5 IVR Systems/Products:
Interactive Voice Response Systems/Products sold by Microlog,
as defined in Attachment 1 to this Agreement;
1.1.6 IVR Product Documentation:
Documentation regarding the IVR Systems/Products, sold by
Microlog;
1.1.7 IVR Software:
Software either developed and rightfully owned by Microlog, or
rightfully licensed to Microlog by a third party, as described
in Attachment 1.4;
1.1.8 Philips Associated Companies:
Any and all companies, firms and legal entities with respect
to which now or hereafter Philips Electronics N.V. directly or
indirectly holds 50% or more of the nominal value of the
issued share capital or has 50% or more of the voting power at
general meetings or has the power to appoint a majority of the
directors or otherwise directs the activities of such company,
firm or legal entity but any such company, firm or legal
entity shall be deemed a Philips Associated Company only as
long as such liaison exists.
<PAGE>
1.1.9 Purchase Order:
The purchase order for IVR Systems/Products and/or Spare Parts
placed by or for PCS hereunder with reference to this
Agreement.
1.1.10 Spare parts:
All spare parts as referred to in Attachment 1.
1.1.11 Specifications::
The functional requirements, specifications and other
requirements of the IVR Systems/Product detailed in Attachment
2, and such amendment thereto as the parties may agree upon
from time to time in writing.
1.1.12 Time Schedule:
The time schedule attached hereto as Attachment 3.
1.1.13 VAR:
Value Added Reseller.
1.1.14 Zero Hour Warranty:
Warranty applicable before final acceptance of the IVR
Systems/Products by the end user.
1.1.15 PCS Type Approval:
The process of checking the IVR Systems/Products against the
Specifications.
1.1.16 IVR Hardware:
Hardware related to the IVR Systems/Products and provided by
Microlog in accordance with the Specifications and Attachment
1.
1.1.17 Type approval:
Governmental approval of the IVR Systems/Products provided by
Microlog or its suppliers.
<PAGE>
1.1.18 Pre Production Sample:
The hardware and software as specified in Attachment 10 to be
used only be PCS for technical evaluation.
1.1.19 Source Code:
source code of the IVR Software as defined in Attachment 7
Clause 2
Sale/Purchase
2.1 Subject to the terms and conditions of this Agreement Microlog
undertakes to manufacture and to supply and deliver to PCS each time
upon receipt of a Purchase Order from PCS the IVR Systems/Products and
Spare Parts specified in said Purchase Order and PCS will purchase and
take delivery of such IVR Systems/Products and/or Spare Parts for the
purpose of re-sale of the Products and/or Spare Parts by PCS on the
market world-wide under such tradename and trademark as PCS may elect
either directly or indirectly through any of the Philips Associated
Companies, its/their distributors or dealers.
Clause 3
Preproduction samples
3.1 In accordance with the Time Schedule, referred to in Attachment 3,
Microlog undertakes to manufacture and supply to PCS free of charge a
complete and fully operational preproduction sample of the IVR
Systems/Products and IVR Software ("the Preproduction Sample") for
technical evaluation. Microlog shall inform PCS about the progress made
every two (2) weeks, until final acceptance of the IVR
Systems/Products. Any changes to the Time Schedule shall be subject to
agreement and written confirmation between the Parties. PCS will
provide a personal computer to Microlog solely for the purpose of
testing the Preproduction sample during the Preproduction Phase.
3.2 The Preproduction Sample shall, unless otherwise agreed in writing
between the parties hereto, be made with components, materials,
technologies and processes identical to those to be applied during
series production of Products. These Preproduction Sample are destined
for type-approval by PCS. Microlog warrants that all subsequent IVR
Systems/Products will be identical to the Preproduction Sample as
finally approved by PCS.
3.3 Together with the Preproduction Sample Microlog shall provide PCS with
the Documentation and the necessary technical service information as
detailed in Attachment 1.
<PAGE>
3.4 In accordance with the Time Schedule Microlog shall execute such
PCS-Type Approval tests as agreed by the parties to satisfy PCS that
the Preproduction Sample conforms to the requirements specified in the
Specifications and Microlog shall keep informed of the results of the
tests. Microlog shall give PCS a reasonable opportunity to be present
at said tests.
a) If, as a result of these tests, PCS and Microlog are of the
reasonable opinion to be confirmed in writing that certain
additions, alterations or modifications in the Preproduction
Sample are required in order that the Preproduction Sample
complies with the
Specifications or to eliminate faulty or substandard workmanship
and/or material, Microlog undertakes to modify and to make same
in the Preproduction Sample and to supply to PCS, all at
Microlog's cost and expense, the changed Preproduction Sample.
b) If, as a result of these tests, PCS desires modifications or
enhancements of the Preproduction Sample in excess of the
Specifications and which were not earlier agreed upon, then, if
both parties hereto so agree, Microlog will provide a quotation
and a revised Time Schedule for PCS' approval and the execution
by Microlog of any such modification or enhancements shall be
subject of a separate Purchase Order by PCS.
3.5 Upon completion of the tests pursuant to subclause 3.4 hereof
(including tests of the Preproduction Sample modified pursuant to
subclause 3.4.b hereof), PCS shall, if it is satisfied that the
Preproduction Sample conforms to the agreed Specifications (or
additional agreed upon requirements), provide Microlog with a
PCS-Approval Certificate signed by PCS, according to the schedule set
forth in Attachment 4. Within 30 days after certification PCS shall
either buy the relevant hardware of the Preproduction Sample or return
such hardware to Microlog at PCS's cost. In the latter case Microlog
shall have the right to ship such hardware as part of a future IVR
System/Product delivery to PCS.
3.6 Once the IVR System/Product is accepted by PCS as evidenced by said
signed PCS-Approval Certificate, Microlog shall not make any changes or
modifications in the IVR System/Product without prior written consent
of PCS. This requirement, however, does not preclude Microlog from
using equivalent components and parts that do not affect form, fit,
function or interchangeability of spare parts. In the event Microlog
uses such equivalent components and/or parts Microlog shall provide PCS
with an updated version of the relevant Documentation as soon as
possible and at Microlog's costs.
3.7 The Preproduction Sample shall be delivered FOB, as that term is
defined in the Incoterms 1990, issued by the International Chamber of
Commerce.
<PAGE>
3.8 During production of the Preproduction Sample PCS' technical, quality
and service experts are entitled to make suggestions and proposals, but
such suggestions and proposals shall be binding on Microlog and PCS
only if confirmed in a document signed by authorized representatives of
both parties.
3.9 Each successor model of the IVR System/Product shall be subject to the
procedure set forth in this Clause 3.
Clause 4
PCS Type Approval
4.1 Without prejudice to any inspection arrangement specified or referred
to elsewhere in this Agreement it is agreed that the first IVR
System/Product to be delivered under this Agreement shall be checked by
PCS for the purpose of PCS Type Approval. PCS shall use its best
efforts to complete the initial type approval within a reasonable
timeframe. If PCS and Microlog are of the reasonable opinion that
certain alterations are required in order that the IVR System/Product
complies with the Specifications, Microlog undertakes to modify same at
its own cost and expense and resupply the IVR System/Product to PCS.
PCS shall use its best efforts to complete any resubmission for type
approval within a reasonable timeframe.
4.2 As soon as PCS is satisfied that the IVR System/Product conforms to the
Specifications, PCS shall inform Microlog immediately and issue a PCS
Certificate of PCS Type Approval.
4.3 If Microlog makes any changes or modifications to the IVR
System/Product after having been type approved, Microlog shall inform
PCS thereof as soon as possible. In particular, no modification shall
be made with respect to the PCS' specifications in the IVR
System/Product unless Microlog has obtained the prior written consent
of PCS. This requirement does not preclude Microlog from using
equivalent components and parts that do not affect form, fit or
function or interchangeability of spare parts. In the event of any
change in the IVR System/Product Microlog shall provide PCS with an
updated version of the relevant Documentation.
4.4 Microlog shall offer to PCS any future updates and improvements in the
design of the IVR Systems/Products and/or the IVR Software, and
co-operate with PCS to develop updates and improvements which PCS may
identify as a requirement of the market place or as necessary to comply
with new product releases of PCS's PABXS. All improvements and updates
shall be available to PCS, where Microlog has the rights to grant such
improvements, under this Agreement and at a mutually agreed upon price,
commensurate with the IVR Systems/Products and/or IVR Software already
supplied.
4.5 Microlog will provide PCS with a list of all tools and test equipment
required to install, maintain and repair the IVR systems/Products. Any
items which are special-to-type and only available from Microlog will
be specially identified and priced. This list is required not later
than one month before the first delivery of the IVR Systems/Products.
<PAGE>
4.6 Microlog will supply and update all production data and test procedures
used by Microlog to assemble and test IVR Systems/Products. Microlog
will provide a list of all tools and test equipment required to
assemble and test the IVR Systems/Products. Any items which are
special-to-type and only available from Microlog will be specially
identified and priced. This is required one month after PCS has placed
a request for this information at Microlog.
4.7 At PCS' written request for additional development and engineering
activities Microlog shall customize or Microlog shall cause it
subcontractors to customize the IVR Systems/Products in order to tender
for special projects or strategic customers. Microlog will respond to
such a request within 14 days with a detailed quotation on cost and
leadtime. Microlog will use its best efforts to achieve the requested
costlevel and leadtime as indicated by PCS to gain these projects and
strategic customers.
Clause 5
Governmental Type-Approvals
5.1 The Parties agree that the IVR Systems/Products, which have been
approved by PCS under the provisions set forth in Clause 4, may be
subject to certain governmental type approval procedures in the various
European countries.
5.2 (CONFIDENTIAL TREATMENT REQUESTED) obtain the type approvals and
(CONFIDENTIAL TREATMENT REQUESTED) related to type approvals referred
to in this Clause 5.1, for the (CONFIDENTIAL TREATMENT REQUESTED) set
forth in Attachment (CONFIDENTIAL TREATMENT REQUESTED), provided that
Parties shall share the costs on a (CONFIDENTIAL TREATMENT REQUESTED)
basis in case a Governmental Type Approval is required for a complete
IVR System/Product. Parties shall only after mutual written consent add
other countries to the list of countries referred to above.
5.3 PCS shall be prepared upon request to assist in seeking such
governmental type approval to Microlog in order to prevent unnecessary
cost and effort for Microlog. The Parties shall agree the time planning
on a country by country basis.
Clause 6
Planning and Order Procedures
6.1 Purchase Orders shall be submitted on separate Purchase Order forms and
each Purchase Order shall specify the quantity, items, and requested
delivery dates. Purchase Orders may include additional terms relating
to the purchase, shipment and other conditions if previously agreed
upon between PCS and Microlog. Purchase Orders so submitted by PCS
shall be accepted or rejected by Microlog within one (1) week after
receipt by issuing a PCS' Purchase Order confirmation and such Purchase
Orders may be cancelled by PCS only if Microlog defaults its execution.
<PAGE>
6.2 (CONFIDENTIAL TREATMENT REQUESTED) prior to IVR System/Product delivery
PCS shall provide Microlog with a non binding quarterly rolling
forecast of its country specific needs for IVR Systems/Products and a
non-country specific forecast for the next (CONFIDENTIAL TREATMENT
REQUESTED). Purchase orders within the boundaries of the forecast,
shall have a leadtime of (CONFIDENTIAL TREATMENT REQUESTED) working
days from order receipt. Transportation time is not included. Microlog
will use it's best efforts to achieve the same leadtime for purchase
orders outside the boundaries of the forecast. It is agreed between the
Parties hereto that wherever any quantities are mentioned in this
Agreement or are communicated in any other way with Microlog, these are
to be interpreted as PCS' (CONFIDENTIAL TREATMENT REQUESTED) based on
information available when such quantities were first mentioned to
Microlog. These quantities will not be binding.
6.3 PCS may require for additional deliveries outside the boundaries of the
forecast as specified in Clause 6.2 above and Microlog shall use its
best efforts to supply such additional quantities.
6.4 Microlog guarantees to produce and supply to PCS IVR Systems/Products
during a period of at least (CONFIDENTIAL TREATMENT REQUESTED) starting
as from the signing date of the PCS-Type-Approval-Certificate referred
to in article 4.2 hereof. In the event Microlog after said period
wishes to stop production of the IVR Systems/Products, Microlog shall
inform PCS thereof as early as possible in writing, but at least
(CONFIDENTIAL TREATMENT REQUESTED) prior to the date of envisaged
production stop and PCS shall then have an opportunity to place a
Purchase Order for IVR Systems/Products in such quantity as PCS may
require and Microlog shall accept such Purchase Order at the then
prevailing price.
6.5 In the event Microlog is no longer able to or envisages that it shall
not (at short notice) be able to supply IVR Systems/Products to PCS due
to protracted shortage or discontinuance of components and/or Spare
Parts, Microlog shall immediately inform PCS thereof and Microlog shall
then be fully responsible for a proper re-design of the IVR
System/Product, if required without affecting form, fit or function
thereof, all at Microlog's reasonable costs. The re-designed product
shall be subject to the procedure set forth in Clause 3 of this
Agreement.
6.6 If in the event of a change in laws, PCS is unable to obtain permission
to export or import IVR Systems/Products into any country of the world
where previously they have been selling such, upon PCS' request the
Purchase Orders then placed with Microlog shall be reduced
proportionally by the percentage which the expected sales in such
countries bear to the total of such Purchase Orders.
6.7 If for any reason not attributable to PCS Microlog does not deliver the
ordered IVR Systems/Products in accordance with the agreed upon
delivery dates set forth in the applicable Purchase Order(s) , accepted
by Microlog, Microlog shall pay to PCS by way of a penalty an amount
equal to one percent (1%.) of the purchase price of the applicable
delayed IVR Systems/Products per two-weeks of delay or part thereof,
such without prejudice to any other rights accruing under this
Agreement or in law, in particular PCS I right to claim for
indemnification of damages or to cancel this Agreement, without notice
of default or recourse to any court.
6.8 Microlog shall confirm in writing to PCS the shipping details for all
Purchase Orders.
Clause 7
Prices and Delivery
7.1 Microlog shall supply IVR Systems/Products to PCS at prices which,
including their period of validity, are specified in Attachment 1. In
case PCS anticipates a contract with a third party regarding the
sale/purchase of (CONFIDENTIAL TREATMENT REQUESTED), Microlog shall be
prepared to negotiate a special discount arrangement.
<PAGE>
7.2 All prices are based upon (CONFIDENTIAL TREATMENT REQUESTED). Prices
are based on the actual exchange rate of the American Dollar and Dutch
Guilder of April 30st 1994. If the three months average of the exchange
rate exceeds the limit of plus or minus 5 per cent an adjustment of the
prices shall be negotiated between the Parties. The adjustment will be
calculated as the percentage difference f between the parity
established at the beginning and the new parity established via the
three months average, cut-off date will be month end of the latter
three months period. If an adjustment becomes necessary the adaption
will be effective starting the first of the month following the three
month period during which the 5 percent variation has been observed.
The exchange rates to be used for this purpose will be the rates as
quoted by the London Exchange closing prices and published in the
Financial Times.
7.3 The prices of the IVR Systems/Products agreed upon shall remain valid
beyond their expiration date specified in the Attachment 1 unless or
until either party gives a (CONFIDENTIAL TREATMENT REQUESTED) written
notice of its intention to re-open negotiations in order to revise the
prices for the period subsequent to the earliest expiration date stated
in said Attachment or after said two months period, whichever is the
later. Any resulting agreement on revised prices shall not, unless
otherwise agreed upon, take effect before the end of said (CONFIDENTIAL
TREATMENT REQUESTED) period of notice or the earliest expiration date
stated in the Attachment 1, whichever is the later.
<PAGE>
7.4 When price negotiations referred to in this Clause 7 extend beyond the
price-validity period the prices valid for the previous period will
continue to remain in effect until such time as the parties have
reached mutual agreement on the new prices.
7.5 In case no agreement can be reached on new prices after serious
negotiations, either party has the right to terminate this Agreement
giving the other Party (CONFIDENTIAL TREATMENT REQUESTED).
7.6 Microlog undertakes to grant PCS (CONFIDENTIAL TREATMENT REQUESTED) and
(CONFIDENTIAL TREATMENT REQUESTED) for like quantities and services
when taken as a whole.
7.7 Payment conditions are (CONFIDENTIAL TREATMENT REQUESTED) after
shipment date referred to on the invoice.
7.8 IVR Systems/Products shall be delivered (CONFIDENTIAL TREATMENT
REQUESTED) as that term is defined in the Incoterms 1990 issue, issued
by the International Chamber of Commerce.
7.9 IVR Systems/Products shall be supplied in suitable packing in a form to
be reasonably approved by PCS and as specified in Attachment 2. Changes
in approved packing may be introduced only on PCS I written request or
after PCS I prior written approval, which approval shall not be
unreasonably withheld.
7.10 Packing and IVR Systems/Products shall be labelled by Microlog in
accordance with PCS' instructions and as specified in the
Specifications.
Clause 8
Translations and Documentation
Upon the request of PCS for translation and production of Documentation and IVR
screen displays and pre-recorded IVR System phrases, (CONFIDENTIAL TREATMENT
REQUESTED), provided that Parties agree upon reasonable price quotations,
provided by (CONFIDENTIAL TREATMENT REQUESTED).
Clause 9
Trademarks and markings
9.1 Microlog shall deliver the IVR Systems/Products or any printed matter
pertaining thereto without any indication of (CONFIDENTIAL TREATMENT
REQUESTED) or any other (CONFIDENTIAL TREATMENT REQUESTED) provided
that Microlog shall have the right to show its (CONFIDENTIAL TREATMENT
REQUESTED) for some (CONFIDENTIAL TREATMENT REQUESTED) on the screen
during the so called system start-up.
<PAGE>
9.2 PCS shall have the right to brand the IVR Systems/Products or any
printed matter pertaining thereto with any trade mark(s) registered in
his (PCS's) name or with any other trade mark or name - other than any
trade mark owned by Microlog- PCS deems fit for the marketing of the
IVR systems/Products.
Clause 10
Quality Acceptance)
10.1 Microlog shall perform effective quality management of design,
process and manufacturing. All IVR Systems/Products to be supplied by
Microlog to PCS pursuant to this Agreement shall be checked and
tested by Microlog in accordance with the requirements specified in
Microlog's Quality Manual and Quality Plan.
10.2 Microlog will use its best efforts to obtain the ISO 9001 certificate
before December 31, 1994.
10.3 Microlog shall keep record of the test results at least (CONFIDENTIAL
TREATMENT REQUESTED) after delivery of each IVR System/Product and on
request provide PCS with copies thereof. Microlog shall only supply
IVR Systems/Products which comply with the agreed Specifications and
other agreed requirements and which have successfully passed the
agreed tests. PCS is entitled to have its representatives present at
these tests.
10.4 It is explicitly understood by Microlog that PCS is not obligated to
execute any incoming inspection or other inspection concerning
non-compliance with the Specifications of IVR Systems/Products
delivered hereunder by Microlog. Microlog shall be fully responsible
for and hold PCS and the Philips Associated Companies harmless from
any claims for whatever direct damages resulting from any
non-compliance, referred to in the previous sentence. This subsection
shall in accordance with subsection 15.3.
10.5 Notwithstanding the provision set forth in this Clause 10.4, Microlog
shall add to all shipments a test and delivery checklist with:
- PCS 12 ncs and descriptions as defined in
Attachment 1.
- Quantities per 12 nc.
- A statement that all goods were handled and tested
according to all applicable Microlog ISO 9001
procedures.
- A valid signature confirming the statement.
10.6 PCS reserves the right to regularly visit Microlog's or Microlog's
subcontractors premises at its own expense and to conduct a Quality
Audit, during regular business hours and upon reasonable prior
written approval, which approval shall not be unreasonably withheld.
Microlog will use its best efforts to obtain the relevant approval
authority to their (subcontractor's) premises and will use their best
endeavour to satisfy the relevant approval authority about quality
and testing control standards.
<PAGE>
Clause 11
IVR System/ Product Warranty
11.1 In accordance with the time periods specified in Clause 11.2 below,
Microlog guarantees the good quality and the good performance in
accordance with the Specifications of each IVR System/Product
supplied pursuant to this Agreement and that the IVR System/Product
will be free from defects in materials and/or workmanship.
11.2 Under this guarantee Microlog shall provide PCS free of charge with
replacement parts or IVR System/Products, or shall repair IVR
System/Products during a period of (CONFIDENTIAL TREATMENT REQUESTED)
from date of delivery by Microlog to PCS, (CONFIDENTIAL TREATMENT
REQUESTED), from delivery by PCS or any of the Philips associated
companies to its/their ultimate customers, whichever is sooner,
provided that any unauthorized alteration or modification of the
hardware of the IVR System/Product by PCS shall waive the right to
any guarantee, referred to in this subsection. PCS shall insert a
similar subsection with regard to alterations or modifications in its
applicable contracts with third parties. It is explicitly understood
that (CONFIDENTIAL TREATMENT REQUESTED) bear all transportation and
it's own costs in connection with the repair or replacement of said
defective IVR Systems/Products, provided that (CONFIDENTIAL TREATMENT
REQUESTED) the transportation costs in case both Parties conclude
that the guarantee claim has been invalid.
11.3 Within the warranty period set forth in the previous subsection, any
and all On Site Support, shall be provided under the terms and
conditions as set forth in the Support Agreement (Attachment 8).
11.4 In case of an emergency request by PCS the replacement leadtime by
Microlog shall use its best efforts (CONFIDENTIAL TREATMENT
REQUESTED), after receipt of an emergency request.
11.5 In the event of Epidemic Faults caused by Microlog or by a
supplier/subcontractor of Microlog, PCS will inform Microlog as soon
as possible about the event. Microlog and PCS shall after
consultation in order to find the cheapest solution decide in joint
consultation:
a) which corrections and repairs can be made by PCS against the
reimbursement by Microlog for labour and other expenses
incurred by PCS in correcting and repairing IVR
Systems/Products;
<PAGE>
b) which parts and/or IVR Systems/Products shall be replaced free
of charge by Microlog and within which period of time such
replacement shall be effected, it being understood that all
costs connected with the transportation of such replacements
and the building in thereof and the building out of the
defective part(s) shall be for the account of Microlog.
11.6 In case the Epidemic Fault is caused by PCS, PCS shall bear the costs
related to either the repair or replacement, if required.
11.7 In case the Epidemic Faults are attributable to Microlog or a
supplier/subcontractor of Microlog, Microlog will bear all resulting
costs.
11.8 The warranty with respect to Epidemic Faults shall survive
termination of this Agreement.
11.9 Zero Hour Warranty claims will be handled as normal warranty claims,
however the defective module will always be replaced by a new one
that has not been used or repaired before.
11.10 MICROLOG HEREBY DISCLAIMS ALL OTHER WARRANTIES AND REPRESENTATIONS
WITH REGARD TO THE IVR SYSTEMS/PRODUCTS AND THE IVR SOFTWARE EXCEPT
AS EXPRESSLY PROVIDED ABOVE. MICROLOG MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESSED OR IMPLIED, AS TO MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE OR OTHERWISE WITH REGARD TO THE IVR
SYSTEMS/PRODUCTS AND THE IVR SOFTWARE. NEITHER PARTY SHALL BE LIABLE
FOR ANY LOSS OF EARNINGS, PROFIT OR GOODWILL SUFFERED BY THE OTHER,
CAUSED DIRECTLY OR INDIRECTLY BY THE IVR SYSTEMS/PRODUCTS, THE IVR
SOFTWARE. IN NO EVENT SHALL EITHER OF THE PARTIES HERETO BE LIABLE TO
THE OTHER FOR PAYMENT OF ANY CONSEQUENTIAL DAMAGES RESULTING FROM THE
DEFAULT IN THE PERFORMANCE OF THEIR RESPECTIVE OBLIGATIONS UNDER THIS
AGREEMENT.
Clause 12
Spare Parts/Prices/Services
12.1 During the period of this Agreement and (CONFIDENTIAL TREATMENT
REQUESTED) thereafter Microlog shall supply PCS with such Spare Parts
and at prices as specified in Attachment 1. These prices may be
changed in accordance and at the same time as prices for IVR
Systems/Products are renegotiated.
12.2 Notwithstanding the provisions set forth in this Clause 12.1, it is
agreed that in the event Microlog wishes to stop production and/or if
a vendor or subsupplier stops production of one or more of these
Spare Parts, Microlog shall immediately inform PCS thereof in writing
but at least (CONFIDENTIAL TREATMENT REQUESTED) to the date of
envisaged production stop and PCS shall then have an opportunity to
place a Purchase Order for such Spare Parts in such quantity as PCS
may reasonably require and Microlog shall accept such Purchase Order
at the then prevailing price.
<PAGE>
12.3 In the event of component obsolescence, Microlog will supply
components that are technically and functionally equivalent to the
original Spare Parts.
12.4 Subject to the provisions set forth in Clause 7 (Prices and
Delivery), Microlog will use its best efforts to offer PCS prices for
Spare Parts which shall not be considerably higher than the prices
for the equivalent components in the IVR Systems/Products.
12.5 Spare Parts will be available from the first shipment of the IVR
Systems/Products from Microlog to PCS. To the best efforts of
Microlog, the delivery time for Spare Parts will not exceed
(CONFIDENTIAL TREATMENT REQUESTED) or in case of an emergency
(CONFIDENTIAL TREATMENT REQUESTED), after receipt of an emergency
request.
12.6 After expiration of the respective warranty period as set forth in
this Clause, PCS has the right to return defective IVR
Systems/Products to Microlog for repair or replacement (provided that
compatibility remains unchanged), -such repair or replacement being
the sole option of Microlog-, for a period of at least 7 years from
the date of the last production run of the IVR Systems/Products.
Microlog shall return the repaired IVR System/Product or an
equivalent product within 2 months after receipt of the defective IVR
System/Product. Microlog will charge a reasonable (repair) fee.
During the first two years following the date of the last production
run as referred to above, this fee will not exceed 50% of the
purchasing price of a new (equivalent) IVR System/Product. PCS shall
have a guarantee on the repaired IVR Systems/Products during a period
of six (6) months following the receipt of the repaired IVR
System/Product.
12.7 PCS will store an appropriate amount of Spare Parts to be agreed
upon, necessary to execute first line maintenance for PCS's installed
base. Microlog will supply all relevant information, known to
Microlog, to determine the amount of Spare Parts.
Clause 13
License grant
13.1 Microlog shall grant PCS a non-exclusive irrevocable worldwide
license, including the right to sublicense, for the purpose of use,
market and sell of the IVR Software in every market where PCS markets
PABXs under terms and conditions to be agreed upon between the
Parties. In this connection Microlog represents and warrants that it
has full authority to grant the above license.
<PAGE>
13.2 Microlog shall grant PCS (CONFIDENTIAL TREATMENT REQUESTED) to either
(CONFIDENTIAL TREATMENT REQUESTED) the Source Code or acquire an
appropriate (CONFIDENTIAL TREATMENT REQUESTED) license for the
purpose of enhancements and/or problem solving related to the IVR
Systems/Products. Such (CONFIDENTIAL TREATMENT REQUESTED) is subject
to reasonable terms and conditions to be mutually agreed upon between
Parties.
In case Microlog, for any reason or for no reason, cannot provide
adequate support in case of an emergency situation with either PCS or
PCS's clients, Microlog shall, upon reasonable conditions, in any
case grant such access to the (CONFIDENTIAL TREATMENT REQUESTED)
following the notification by PCS of the emergency situation.
13.3 Microlog shall provide PCS free access to (CONFIDENTIAL TREATMENT
REQUESTED) and (CONFIDENTIAL TREATMENT REQUESTED) referred to in
Attachment 2. Upon PCS's request, Microlog shall either (CONFIDENTIAL
TREATMENT REQUESTED) to PCS any and all (CONFIDENTIAL TREATMENT
REQUESTED) and (CONFIDENTIAL TREATMENT REQUESTED), not being referred
to in (CONFIDENTIAL TREATMENT REQUESTED), against a reasonable
implementation fee based upon the additional effort necessary for
Microlog to provide such software to PCS, or a reasonable
(CONFIDENTIAL TREATMENT REQUESTED).
13.4 Parties will jointly develop (CONFIDENTIAL TREATMENT REQUESTED) with
(CONFIDENTIAL TREATMENT REQUESTED) and/or Software. (CONFIDENTIAL
TREATMENT REQUESTED) directly or indirectly, provided that Parties
may agree otherwise upon appropriate terms and conditions to be
agreed upon between Parties.
Clause 14
Marketing/Support/Training
14.1 Parties shall execute the support as set forth in Attachment 8.
14.2 Microlog shall provide PCS free of charge with any pre-existing or
newly developed layouts and original promotional materials for use by
PCS.
14.3 Microlog shall provide the identity of any alternative
marketing/sales channels to PCS, except that this subsection shall
not apply in case Microlog is prohibited to disclose such identity.
14.4 The Parties have agreed on a tentative initial training program on
marketing, selling, applications development and maintenance of the
IVR Systems/Products and/or IVR Software for PCS employees as defined
in Attachment 6.
<PAGE>
14.5 In order to enable business expansion and/or update knowledge of PCS
employees on new developments, Parties will agree on a further
regular training programm given by Microlog at a location to be
mutually agreed upon. Each Party shall bear its own costs related to
this training program.
Clause 15
Indemnification
15.1 Microlog agrees, subject to the conditions set forth in this Clause,
that it will indemnify PCS and the Philips Associated Companies
against all fines, claims, damages, costs and direct and indirect
expenses, arising from a claim brought by a third party claiming that
the IVR System/Products and/or the IVR Software supplied hereunder
constituted) infringement of one or more of the patent rights or
other industrial or intellectual property rights of such third party,
together with the actual justifiable costs and expenses incurred by
PCS and/or the Philips Associated Companies in connection with such a
claim by such third party. Upon condition of PCS giving Microlog full
authority thereto, Microlog shall either settle or defend such claim,
suit or proceeding, PCS giving Supplier reasonable cooperation and
assistance in case Microlog settles or defends such a claim, suit or
proceeding.
15.2 In case an IVR System/Product and/or the IVR Software is held to
constitute infringement and the use thereof is enjoined, Microlog
shall, at its option and expense, either procure for PCS, the Philips
Associated Companies and its/their customers) the right to continue
using said IVR System/Product, or replace same, or a part thereof
with a non-infringing modification in a manner such that performance
of the IVR System/Product is not degraded. Microlog shall not have
any liability towards PCS or the Philips Associated Companies and PCS
or the Philips Associated Companies shall indemnify Microlog for any
claim arising out of any infringement or alleged infringement from
use of the IVR Systems/Products and/or the IVR Software by PCS or the
Philips Associated Companies when such infringement or alleged
infringement arises out of, is based upon or is occasioned by (i) the
combination of the IVR Systems/Products and/or the IVR Software with
products not sold or licensed by Microlog (excluding the agreed upon
items as referred to in Attachment ) or (ii) modifications, adaptions
or changes made by PCS or the Philips Associated Companies to the IVR
Systems/Products and/or the IVR Software or the use of such
modifications, adaptions or changes in conjunction with the IVR
Systems/Products and/or the IVR Software, unless such modifications,
adaptions or changes were approved in advance in writing by Microlog.
<PAGE>
15.3 Microlog shall be responsible for and it shall defend, indemnify and
hold harmless PCS, all of the Philips Associated Companies from and
against any claims, expenses and liabilities to third parties
resulting from injuries and/or damages arising out of the use of IVR
Systems/Products and the IVR Software, if such injuries and/or
damages are attributable to (any party of) the IVR
System(s)/Product(s), or the IVR Software, delivered by Microlog;
provided, however, Microlog shall not be responsible and PCS shall
indemnify Microlog for all claims, expenses and liabilities to third
parties resulting from (i) default, negligence, or intentional acts
of PCS or the Philips Associated Companies; (ii) the combination of
the IVR Systems/Products and/or the IVR Software with products not
sold or licensed by Microlog (excluding the agreed upon items as
referred to in attachment . .) ; or (iii) modifications, adaptions or
changes made by PCS or the Philips Associated Companies to the IVR
Systems/Products and/or the IVR Software or the use of such
modifications, adaptations or changes in conjunction with the IVR
Systems/Products and/or the IVR Software, unless such modifications,
adaptations or changes were approved in advance in writing by
Microlog. In connection with this obligation, it shall be PCS'
responsibility that Microlog is promptly notified of any and all
claims made against it, the Philips Associated Companies or any of
their customers for any such personal injuries and/or damages alleged
to be the result of defective (parts of) IVR Systems/Products and/or
the IVR Software manufactured and/or developed by or for Microlog
hereunder.
15.4 The foregoing states the entire liability of Microlog concerning
Microlog's responsibility for claims, expenses or liabilities with
respect to the IVR Systems/Products and/or the IVR software.
Clause 16
Manufacturing Rights
16.1 For so long as a "Trigger Event" (as such term is defined in Section
16.4 below) is continuing PCS and Philips and the Philips Associated
Companies shall have the right to utilize, (CONFIDENTIAL TREATMENT
REQUESTED) for PCS or the Philips Associated Companies the "Escrowed
Materials" (as such term in defined in Section 16.3 below) and shall
have the right to make, have made, use, lease or sell IVR
Systems/Products in accordance with the terms and conditions of this
Agreement. Upon Microlog's correction of a "Trigger Event" followed
by PCS' written approval that the Trigger Event has been corrected,
which approval shall not be unreasonably withheld, the obligations of
PCS, Philips Associated Companies and Microlog shall immediately
resume in full force and effect.
16.2 For so long as a "Trigger Event" is continuing Microlog shall use its
best efforts to assist PCS and the Philips Associated Companies in
arranging for the (CONFIDENTIAL TREATMENT REQUESTED) at (CONFIDENTIAL
TREATMENT REQUESTED) and the Philips Associated Companies,
(CONFIDENTIAL TREATMENT REQUESTED) of the IVR Systems/Products (i.e.
all component elements of the IVR Systems/Products with respect to
which (CONFIDENTIAL TREATMENT REQUESTED) not own the intellectual
property rights or with respect to which (CONFIDENTIAL TREATMENT
REQUESTED) has not been granted the right to make, have made, use,
lease or sell without any obligation to make additional payments
therefore).
<PAGE>
16.3 The parties shall mutually agree upon an escrow agent and a form of
escrow agreement. In the event the Parties cannot agree on an escrow
agent and/or form of escrow agreement (the "Disputed Matter") then
the parties will submit the Disputed Matter to arbitration in
accordance with the then current Arbitration Rules of the American
Arbitration Association then in force. The parties agree to abide by
the determination rendered in such arbitration proceedings. The
losing party shall be responsible for payment of all fees connected
with such arbitration. Within four (4) weeks after the selection of a
mutually agreed escrow agent (the "Escrow Agent") and escrow
agreement (the "Escrow Agreement"). Microlog shall deliver to such
Escrow Agent, pursuant to the Escrow Agreement, a copy of all
manufacturing know-how, (including, but not limited to, drawings and
other technical information) in the possession or control of Microlog
related to the manufacture of the "Microlog Proprietary Components"
of the IVR Systems/Products (i.e. all component elements of the IVR
Systems/Products with respect to which Microlog either owns the
intellectual property rights or with respect to which Microlog has
been granted the right to make, have made, use lease or sell without
any obligation to make additional payment therefore) (the "Escrowed
Materials"). During the term of the Agreement the Escrowed Materials
shall be supplemented and revised by Microlog as promptly as
reasonably practicable to reflect the then-current version. All
Escrowed Materials shall be delivered to Escrow Agent by Microlog in
sealed envelopes or packages and shall be clearly marked as follows:
"Microlog Escrow Materials furnished on 199.. to
as Escrow Agent, by Microlog Corporation pursuant to an Escrow
Agreement dated .................. 199. . ". Each sealed envelope
shall have affixed thereto a list of its contents. In the event the
more than two versions of the Escrowed are delivered to Escrow Agent,
the oldest version(s) of the Microlog Escrow materials shall be
immediately returned to Microlog by Escrow Agent such that Escrow
Agent holds only the most recent version of the Escrowed Materials in
escrow. All costs associated with the escrow Agreement are the sole
responsibility of PCS.
16.4 The occurrence of any of the following shall constitute a 'Trigger
Event" for the purpose of the Clause 16:
(a) Microlog shall fail to perform, observe or satisfy in any
material respect any covenant, condition or agreement required
by this Agreement to be performed, observed, or satisfied by
Microlog, and such failure shall continue for a period of
thirty (30) days after written notice thereof to Microlog from
PCS or the Philips Associated Companies; or
(b) Microlog shall commit an act of "bankruptcy", which for the
purpose of this Clause 16 shall mean (i) the entry of a decree
or order for relief of Microlog by a court of competent
jurisdiction in any involuntary case involving Microlog under
any bankruptcy, insolvency, or other similar law now or
hereafter in effect; (ii) the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator, or
other similar agent for Microlog or for any substantial part
of Microlog's assets or property; (iii) the filing with
respect to Microlog of a petition in any such involuntary
bankruptcy case, which petition remains undismissed for a
period of ninety (90) days or which is dismissed or suspended
pursuant to Section 305 of the Federal Bankruptcy Code (or any
corresponding provision of any future United States bankruptcy
law); (iv) the commencement by Microlog of a voluntary case
under any bankruptcy, insolvency, or other similar law now or
hereafter in effect; (v) the making by Microlog of any general
assignment for the benefit of creditors; or (vi) the failure
by Microlog generally to pay its debts as such debts become
due.
<PAGE>
Clause 17
Confidentiality
17.1 The parties hereto shall treat all proprietary data and other
information received from the other party, including business
information and technical information as confidential (hereinafter
referred to as "Confidential Information") and proprietary to such
other party. Moreover, neither party shall duplicate or use any
Confidential Information received from the other hereunder for any
purpose other than for the execution of this Agreement. In addition,
neither party shall disclose any Confidential Information to any
party that is not specifically authorized by the other party to
receive it and who has not agreed to the same obligation specified in
this Clause 17.
Each party, respectively, further agrees that it will disclose
the Confidential Information only on a need-to-know-basis to
its employees and under the same obligations as set forth
herein with respect to that Confidential Information.
17.2 The parties agree that Confidential Information shall not be deemed
confidential to the extent the receiving party can prove by written
record that:
(i) it already had knowledge of such information prior to
disclosure, or
(ii) information was already or becomes publicly known
through no fault of the receiving party, or
(iii) information identical to disclosed information was
already in its possession or is subsequently lawfully
obtained without restrictions to the use from a third
party who is free to disclose the same or is
subsequently independently developed by the receiving
party without use of the disclosed information, or
(iv) information is necessarily disclosed in commercially
available product, or
(v) information is required to be disclosed by governmental
authority.
17.3 In protecting information, the receiving party will take all
necessary precautions and information will be treated in the same
manner and with the same degree of care as the receiving party
applies with respect to its own confidential information.
17.4 Nothing contained in this Clause 17 shall be construed as a grant of
license to the other party, to make, use or sell any devices or
systems using information or as a license under any patents or claims
covering same.
17.5 The provisions of this Clause 17 shall retroactively be in full force
and effect from the date first contacts were established with respect
to the subject matter of this Agreement and shall remain in full
force and effect during the duration of this Agreement and five (5)
years thereafter.
<PAGE>
17.6 Neither Party shall remove or permit to be removed from any item or
the IVR Systems/Products and/or IVR Software any notice placed
thereon indicating the confidential nature of and/or the proprietary
rights or the other Party in such products.
Clause 18
Third party hardware
18.1 (CONFIDENTIAL TREATMENT REQUESTED) mutually agreed upon to Microlog
(CONFIDENTIAL TREATMENT REQUESTED). These modules will remain
property of PCS and shall only be used by Microlog to test and
assemble IVR Systems/Products for PCS.
18.2 To ensure full compliance with the Specification in Attachment 2.
Microlog shall take care of certification/benchmarking of other
hardware of third parties identified in Attachment 1.1 and under a
price to be stipulated in Attachment 1.2. The UPS as mentioned in
this Attachment is excluded. On request of PCS Microlog shall take
care of certification/benchmarking of new third party hardware
succeeding the hardware modules mentioned in Attachment 1 or to
enable future expansion of functionality by third party hardware.
Clause 19
0ption
Microlog shall grant PCS an option to buy Voice Processing Products and
any other products from Microlog for resale at a price mutually agreed
to by the Parties in writing.
Clause 20
Duration
20.1 This Agreement is effective from date of signing by both parties and
shall continue for an indefinite period until either Party gives an
at least three months' previous notice in writing to the other Party
of its intention to terminate this Agreement at the expiration of
said period, provided that this Agreement in no event shall terminate
before the expiration date of the validity of the prices, discounts
and other terms of Attachment 1.
20.2 If either Party to this Agreement fails to perform any of the
provisions of this Agreement and has not remedied such failure within
60 days after having been notified in writing by the other party
identifying the failure, the other Party shall be entitled at its own
discretion to terminate this Agreement forthwith by written
notification to the Party concerned.
<PAGE>
20.3 This Agreement may be terminated forthwith by the other party in the
event that either party shall cease to carry on business in the
normal course, becomes insolvent, makes a general assignment for the
benefit of its creditors, suffers or permits the appointment of a
receiver or a manager for its business assets or avails itself or
becomes subject to any proceeding under bankruptcy laws or any other
statute or laws relating to the insolvency of protection of the right
of creditors, or in the event control over it shall be transferred to
others than those exercising control at the time of signing of this
Agreement.
20.4 Purchase Orders placed prior to such termination will remain valid
and shall be honoured by Parties at the terms and conditions
applicable when the Purchase Order was submitted.
Clause 21
Modifications, Enhancements and Joint Inventions,
21.1 Any derivative work or application generated by PCS through the use
of the IVR System/Product and/or the IVR Software shall be the sole
and exclusive property of PCS (excluding any common run-time module,
macros, library functions or similar pre-existing "high level"
programming modules which shall remain the property of Microlog) .
Any modification and/or enhancement produced solely by Microlog shall
be the sole and exclusive property of Microlog. Any modification
and/or enhancement produced solely by PCS shall be the sole and
exclusive property of PCS; provided, however that the underlying IVR
System/Product and/or IVR Software shall remain the property of
Microlog. Any modification and/or enhancement made jointly by the
parties shall be jointly owned by the parties; provided, however,
that the underlying IVR System/Product and/or IVR Software shall
remain the property of Microlog. Any modification and/or enhancement
made by Microlog at the request of PCS shall be the sole and
exclusive property of Microlog; provided, however, PCS shall have the
exclusive, fully paid-up, irrevocable and perpetual license to use,
manufacture and distribute such modification and/or enhancement
unless the parties agree upon terms and conditions under which
Microlog would have the right to use, manufacture and/or distribute
such modification and/or enhancement.
21.2 If either of the Parties shall make an invention, discovery or
development to the IVR System/Product and/or IVR Software, such Party
will share the information with the other Party. This subsection
shall not imply to grant the other Party any right or license to use
or commercialize such invention, discovery or development, unless
otherwise agreed upon between the Parties.
21.3 In the event that after the effective date of this Agreement and
during the term of this Agreement an invention is made jointly by one
or more employees of either of the Parties and its Subsidiaries, then
title to said invention as well as in and to any patent applications
and patents issued there on shall be assigned jointly to those
entities whose employees jointly made said invention and each joint
owner shall have an equal, undivided, nontransferable interest in and
to such joint invention, as well as in and to patent applications and
patents there on in all countries concerned.
<PAGE>
21.4 Each of the joint owners shall have a non-assignable right:
(i) to make, have made, use, lease, sell or otherwise dispose of any
invention claimed in any jointly owned patent application and/or
patent without the consent of and without accounting to the other
owner(s); and (ii) to grant non-exclusive licenses under such jointly
owned patent applications and patents without the consent of and
without accounting to the other owner(s), provided that the owner
granting such license shall have fulfilled its obligation, if any, to
pay its share of taxes or annuities on such patents or patent
applications. In the event that a license under a jointly owned
patent application or patent is granted by one owner, then the other
owner or owners shall not assert any claim with respect to the
licensed application or patent against the licensee of said one owner
thereunder during the term of any such license.
21.5 In case of joint inventions, each Party concerned shall promptly
inform the other Party whose employee is or employees are involved in
such joint invention. The joint owners shall mutually determine
whether or not, and in which countries of the world to file a patent
application on such joint invention and the owner who will prepare
and file such applications.
21.6 The expense for preparing, filing and prosecuting each joint
application and for issuance of any patent there on shall be equally
divided between the owners. The other owner or owners shall furnish
the filing owner with all documents, or other assistance, that may be
necessary for the filing and prosecution of each application. Where
such joint application for patent is filed by any owner in a country
which requires the payment of annual taxes or annuities on a pending
application or on an issued patent, the owner which files the
application shall, prior to filing, request each of the other owners
to indicate whether it will agree to pay its share of such annual
taxes or annuities. If, within sixty (60) days of receiving such
request, the non-filing owner or owners fails to assume in writing
the obligation to pay its or their proportionate share of such annual
taxes or annuities, or if any owner subsequently fails to continue
such payments within sixty (60) days of demand, the owner or owners
failing to assume or make such payments shall forthwith relinquish,
to the other owner or owners which continues) such payments, its or
their title to and interest in such joint application and/or patent,
subject, however, to retention of a paid-up, non-exclusive,
non-assignable license in favour of the relinquishing owner or owners
and any Subsidiary thereof to make, use, lease, sell or otherwise
dispose of any invention claimed in said application and/or patent.
However, the relinquishing owner or owners will no longer have the
right to grant licenses thereunder to third parties.
<PAGE>
Clause 22
Sundry Matters
22.1 General Conditions
--------------------
Neither PCS' general conditions of purchase nor Microlog's general
conditions of sales are applicable to this Agreement or to any
Purchase Orders and Purchase Order confirmations for IVR
Systems/Products. Limited to those countries where PCS currently
markets and sells PABX's and subject to prior commitments of Philips
Electronics N.V., PCS doesn't have the intention to market or sell
products based on the IVR Systems/Products or IVR Software, provided
that the IVR Systems/Products or IVR Software shall continue to meet
the business requirements of PCS.
22.2 Force Majeur
--------------
In the event of Force Majeure (as defined hereinafter) the party
being delayed or damaged thereby shall inform the other party as soon
as possible but in any event within seven (7) days after the start of
such Force Majeure specifying the nature of the Force Majeure as well
as the estimated duration thereof. In the event the Force Majeure
situation continues for more than sixty (60) days or is expected to
last longer than sixty (60) days then either party is entitled to
terminate this Agreement by simple notice in writing and without
either party being entitled to any claim for damages. Otherwise both
parties rights and obligations will be suspended and new time
schedules and supply dates shall be agreed upon between the parties
hereto.
Force Majeure shall be understood to mean and include damage or delay
caused by acts or regulations or decrees of any Government (de facto
or de jure) , natural phenomena, such as earthquakes and floods,
fires, riots, wars, shipwrecks, freight embargoes or other causes,
whether similar or dissimilar to those enumerated above,
unforeseeable and beyond the reasonable control of the parties and
which prevent the total or partial carrying out of any obligation
under this Agreement.
22.3 Microlog's suppliers/subcontractors
-----------------------------------
Microlog shall inform PCS about the identity of any and all suppliers
and subcontractors, used by Microlog in relation to the IVR
Systems/Products.
22.4 Merger/take over
----------------
In case, during the term of this Agreement, either of the Parties
should be merged with a third party, not being an affiliate or
subsidiary of both Parties, or should be taken over by a third party,
the other Party shall guarantee that the Agreement shall be taken
over for the period remaining under the Agreement as from the merger
or take over. Notwithstanding the above Parties shall have the right
to terminate this Agreement in case of a merger with or acquisition
by a third party, as set forth in Clause 20.3.
22.5 Entire Agreement
----------------
This Agreement sets forth the entire intent and understanding among
the parties relating to the subject matter hereof and merge all prior
negotiations and discussions between them and no party shall be bound
by any conditions, representations or warranty other than as
expressly set forth herein or subsequently set forth in writing
executed by both parties hereto.
<PAGE>
22.6 Non Assignment
--------------
Neither party hereto shall assign any of its rights and obligations
under this Agreement to any third party without the prior written
consent of the other party. However, no consent is required for an
assignment or transfer in whole or in part by PCS to any of the
Philips Associated Companies. PCS shall notify Microlog of such
assignment or transfer in writing.
22.7 Severability
------------
If any of the terms and provisions of this Agreement are determined
to be invalid or unenforceable by any court of competent
jurisdiction, it shall not invalidate the rest of this Agreement
which shall remain in full force and effect as if such terms and
provisions had not been a part of this Agreement.
22.8 Waiver
------
No waiver by any of the parties hereto of any breach of any
condition, covenant or term thereof shall be effective unless it is
in writing and it shall not constitute a waiver of such condition,
covenant or term.
22.9 Surviving articles
------------------
All terms and conditions of this Agreement which by their term are
intended to survive the duration or termination of this Agreement
shall so survive.
22.10 Notices
-------
Notices will be addressed as follows:
If to Microlog:
Microlog Corporation
20270 Goldenrod Lane
Germantown, MD 20876
USA.
facs. nr:
attn:
If to PCS
Philips Communication Systems BV
P.O. Box 32
1200 JD Hilversum
The Netherlands
faxnr:
attn:
<PAGE>
or to such other address as the pertaining party will have previously
notified to the other party. All notices will be deemed given ten
(10) working days after they have been mailed by registered mail or
so much earlier as the receiving party appears to have received the
same.
22.11 Hiring of staff
---------------
Microlog covenants with PCS that Microlog and its subsidiaries shall
not for a period of five (5) years after the effective date of this
Agreement engage or employ or solicit or contract any employee of
PCS, unless such person has decided independently from any inducement
by Microlog to leave PCS, or without the prior written consent of the
other Party. This clause applies mutatis mutandis for PCS.
22.12 Health and safety, environment
------------------------------
Microlog, on behalf of itself, its employees and its sub-contractors
undertakes the following:
- that it and they have carried out all testing, and examination
and other work necessary to eliminate any risk to health and
safety resulting from use of the IVR Systems/Products or any
part thereof for the purpose for which it is designed;
- that the IVR Systems/Products comply with mandatory regulations
relating to health, safety, the environment and electromagnetic
interference valid in the country or countries for which the
IVR Systems/Products are destined as mentioned in Attachment 4;
- that where conditions exist under which there will or may be
any risk to health and safety, such conditions will be brought
to the attention of PCS in writing, provided that Microlog
knows or reasonably could have known such conditions;
- the IVR Systems/Products shall remain safe notwithstanding any
faults likely to occur during normal use by the customer.
Microlog will indemnify PCS against claims (including the costs
thereof) by third parties for personal injury, loss or damage to
property, based upon alleged unsafety of IVR Systems/Products, made
under applicable product liability laws and regulations of the
country of the end user or one of the Parties, provided that such
indemnification obligations doesn't apply in case PCS has acted in
gross negligence or wilful intent.
22.13 Advertisements/Publicity
------------------------
Microlog shall not without PCS' prior written consent use Philips,
name or trademark as such and/or use same in connection with any
advertisement or sales literature nor advertise that it is a supplier
of Philips and/or that this Agreement between Microlog and Philips
has been concluded. None of the parties shall give any publicity to
or disclose anything about this Agreement and the various contacts
between the parties, without the prior written consent of the other
party.
<PAGE>
22.14 Approval
--------
This agreement is subject to approval of both the Board of Management
of PCS and the board of directors of Microlog.
22.15 Governing Law and Arbitration
------------------------------
This Agreement shall be construed and shall take effect in accordance
with the laws of the Netherlands. The English language shall be
leading in any dispute. This Agreement shall not be governed by the
United Nations Convention for the International Sale of Goods. Any
dispute, controversy or claim arising out of or in connection with
this Agreement shall be finally settled under rules of conciliation
and arbitration of the International Chamber of Commerce (the ICC) by
a panel of 3 arbitrators, 1 of which shall be appointed by PCS, 1 by
Microlog and 1 by the ICC. The place of such arbitration shall be
Geneva, Switzerland.
IN WITNESS WHEREOF this Agreement has been signed by both parties in duplicate
in a manner duly binding upon them.
Philips Communication Microlog Corporation
Systems B.V.
/s/ Ian Murdoch /s/ Richard A. Thompson
- - ---------------------------- -----------------------------
Name: Ian Murdoch Name: Richard A. Thompson
Title: Product Marketing Title: President
Director
Date: Date:
<PAGE>
Attachments
1.1 List of purchaseable hard- and software modules. IVR LOD SR
2290-93.1116 dated 1994-04-18
1.2 Pricing Schedule
1.3 List of Spare Parts
1.4 List of third party software
2. IVR Systems/Products specification IVR SPS SR 2290-93.0928 dated
1994-04-13
3. Time Schedule of Microlog's activities.
4. Schedule of product release by country.
5. deleted
6. Initial training program
7 Source Codes
8 Support Agreement
9 deleted
10 Pre-Production Sample
<PAGE>
Attachment 1.1
List of purchasable hard- and
softwaremodules.
IVR LOD SR 2290-93.116 dated 1994-08-03
(CONFIDENTIAL TREATMENT REQUESTED)
<PAGE>
Attachment 1.2
Pricing Schedule
(CONFIDENTIAL TREATMENT REQUESTED)
<PAGE>
Attachment 1.3
List of Spare Parts
(CONFIDENTIAL TREATMENT REQUESTED)
<PAGE>
Attachment 1.4
Third Party Products
The following third party products are incorporated into the IVR product:
(CONFIDENTIAL TREATMENT REQUESTED)
Future releases may include other third party products such
as (CONFIDENTIAL TREATMENT REQUESTED).
ATTACHMENT 1.4 - THIRD PARTY
Rev. B
02 August 1994
Page 1 of 1
<PAGE>
Attachment 2.
IVR systems/products specification
IVR SPS SR 2290-39.0928 dated 1994-06-10
(CONFIDENTIAL TREATMENT REQUESTED)
<PAGE>
Attachment 3-Release Schedule
(CONFIDENTIAL TREATMENT REQUESTED)
Rev. D
Printed: Aug/01 194
Page 1 of 1
<PAGE>
Attachment 4.
Schedule of product release by country
COMMERCIAL RELEASE PLAN
Commercial Product Release
- - --------------------------
Commercial release of (CONFIDENTIAL TREATMENT REQUESTED) per country is now
estimated, adjusted for estimated lead times from our side in integration
development/testing, field trial development and testing, documentation
translation/verification, PC platform selection and certification, etc.
Commercial release dates for our first-tier country roll-out, are as follows:
(CONFIDENTIAL TREATMENT REQUESTED)
Organization Roll-out, Philips
Organization gear-up is now taking place, and all relevant staff for IVR will be
in place and fully trained as per the estimated commercial product release date.
(CONFIDENTIAL TREATMENT REQUESTED)
<PAGE>
ATTACHMENT 6
TRAINING COURSES
(CONFIDENTIAL TREATMENT REQUESTED)
ATTACHMENT 6 - TRAINING COURSES 29 July 1994
Rev. C Page 3 of 3
<PAGE>
ATTACHMENT 7
SOURCE CODE
Source code of all software modules as mentioned in Attachment 1.1, with
reference supplier Microlog and with the inclusion or exclusion as indicated in
the following list of third party software.
(CONFIDENTIAL TREATMENT REQUESTED)
ATTACHMENT 7 - SOURCE CODE 18 July 1994
Rev. A Page 1 of 1
<PAGE>
Attachment 8
Support
Starting points for the support are:
1. The telephone support provided by Microlog during the warranty period
(CONFIDENTIAL TREATMENT REQUESTED).
2. The support provided by Microlog regarding any (CONFIDENTIAL TREATMENT
REQUESTED) shall be (CONFIDENTIAL TREATMENT REQUESTED) as long as the
bug is contained within the current release of software or was
contained within the prior version of software and (CONFIDENTIAL
TREATMENT REQUESTED).
3. Other support provided by Microlog shall be provided against charges,
as specified in Attachment 1.2
(CONFIDENTIAL TREATMENT REQUESTED)
First line (field) support:
Installation
Troubleshooting on hardware and cabling
Problem solving with field exchangeable spare units
Second line (local) support
Troubleshooting and problem solving on applications and configurations.
Third line (central) support
Troubleshooting on all problems not solved by first and second line
support.
(CONFIDENTIAL TREATMENT REQUESTED) to assist support employees and
application development (CONFIDENTIAL TREATMENT REQUESTED) in resolving
problems inherent in the IVR System/Product supplied by (CONFIDENTIAL
TREATMENT REQUESTED) the non-warranty rate specified in Attachment 1.2
when the cause of the problem is identified to be in equipment or
software other than that equipment or software (CONFIDENTIAL TREATMENT
REQUESTED) regardless of the warranty status of the system.
(CONFIDENTIAL TREATMENT REQUESTED) associated with equipment or
software supplied or (CONFIDENTIAL TREATMENT REQUESTED) or associated
with system assembly done by Microlog which (CONFIDENTIAL TREATMENT
REQUESTED) will be reported to Microlog. As it pertains to this support
attachment, (CONFIDENTIAL TREATMENT REQUESTED) relating to
(CONFIDENTIAL TREATMENT REQUESTED) and (CONFIDENTIAL TREATMENT
REQUESTED) does not include (CONFIDENTIAL TREATMENT REQUESTED)
associated with hardware provided (CONFIDENTIAL TREATMENT REQUESTED).
Problem reports will be sent by FAX or Internet with a PCF number as a
reference. Problems will be classified routine, urgent or very urgent.
Microlog, as design authority for the IVR Systems/Products and/or
Software (CONFIDENTIAL TREATMENT REQUESTED), by Microlog will undertake
responsibility for the performance of the IVR Systems/Products and/or
Software on the account of Microlog. Microlog also undertakes to lead
and direct in the resolution of problems associated with equipment or
software (CONFIDENTIAL TREATMENT REQUESTED) by Microlog or associated
with (CONFIDENTIAL TREATMENT REQUESTED) done by Microlog, as reported
by PCS.
<PAGE>
Microlog undertakes to investigate and respond to -technical IVR
Systems/Products and/or Software problems as reported by PCS, provided
there are reasonable grounds to believe that the problem originates
within the IVR Systems/Products and/or IVR Software (CONFIDENTIAL
TREATMENT REQUESTED)by Microlog.
Microlog shall inform PCS regularly about the progress in solving and
the status of the reported problems until a solution is found and
accepted by PCS. Microlog will mention the PCS PCF number as a
reference and send the information by FAX or Internet.
Because of prior general support commitments of PCS to it's end users,
specific response times of Microlog are required. Therefore Microlog's
response times and report frequencies after receipt of the PCS problem
report will not exceed the following time boundaries.
- Very urgent problems.
(CONFIDENTIAL TREATMENT REQUESTED)
- Urgent problems.
(CONFIDENTIAL TREATMENT REQUESTED)
- Routine problems
(CONFIDENTIAL TREATMENT REQUESTED)
Microlog shall make best efforts to solve software problems in a level
update for all applicable software modules to be (CONFIDENTIAL
TREATMENT REQUESTED). If there are more than (CONFIDENTIAL TREATMENT
REQUESTED) very urgent, (CONFIDENTIAL TREATMENT REQUESTED) urgent- or
(CONFIDENTIAL TREATMENT REQUESTED) routine problems solved an interim
level update may be available.
Such a level update will be accompanied by a release document
containing the following information:
(CONFIDENTIAL TREATMENT REQUESTED)
<PAGE>
- - - On site support
- - - If an urgent problem cannot be solved by PCS, an on site support
request will be placed at Microlog. Microlog will make every effort to
have an expert in relation with the reported problem available at the
customer site within a typical response (CONFIDENTIAL TREATMENT
REQUESTED) after receipt of the on site support request. The maximum
response time will not (CONFIDENTIAL TREATMENT REQUESTED). On site
support shall be charged at rates referred to in Attachment 1.2.
- - - Support on prior software releases.
After a new software release, Microlog will support the prior version
of the applicable software modules (CONFIDENTIAL TREATMENT REQUESTED).
<PAGE>
ATTACHMENT 10
PRE-PRODUCTION SAMPLE
(CONFIDENTIAL TREATMENT REQUESTED)
ATTACHMENT 10 - PRE-PRODUCTION SAMPLE 29 July 1994
Rev. A Page 1 of I
