<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 2
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1997
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from __________________to________________.
Commission file no. 0-24308
COHERENT COMMUNICATIONS SYSTEMS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
Delaware 11-2162982
(State of Incorporation or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation of Organization)
44084 Riverside Parkway, Landsdowne Business Center, Leesburg, VA 22075
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number Including Area Code: (703) 729-6400
</TABLE>
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of August 8, 1997:
Class Number of Shares
Outstanding
Common Stock, Par Value $.01 Per Share 15,272,522 Shares
1
<PAGE> 2
COHERENT COMMUNICATIONS SYSTEMS CORPORATION
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 10.1- Value Added Reseller Agreement dated December
31, 1992 between the Company and Nokia Telecommunications Oy,
as amended June 13, 1995 and as further amended April 3, 1997*
Exhibit 11 - Computation of net income per share (1)(Exhibit
11)
Exhibit 27 - Financial Data Schedule share (1)(Exhibit 27)
(1) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1997 and incorporated by reference.
* Confidential portions of the exhibit have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(b) Reports on Form 8-K
None
No other applicable items.
2
<PAGE> 3
COHERENT COMMUNICATIONS SYSTEMS CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COHERENT COMMUNICATIONS SYSTEMS
CORPORATION
By: /s/ Daniel L. McGinnis
-----------------------
Daniel L. McGinnis
Chief Executive Officer
Date: December 15, 1998
3
<PAGE> 4
COHERENT COMMUNICATIONS SYSTEMS CORPORATION
EXHIBIT INDEX
The following is a list of exhibits required by Item 601 of Regulation S-K filed
as part of this Report. Where so indicated by footnote, exhibits which were
previously filed are incorporated by reference. For exhibits incorporated by
reference, the location of the exhibit in the previous filing is indicated in
parentheses.
Exhibit 10.1- Value Added Reseller Agreement dated December 31, 1992
between the Company and Nokia Telecommunications Oy, as amended June
13, 1995 and as further amended April 3, 1997 *
Exhibit 11 - Computation of net income per share (1)(Exhibit 11)
Exhibit 27 - Financial Data Schedule share (1)(Exhibit 27)
(1) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1997 and incorporated by reference.
* Confidential portions of the exhibit have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
4
<PAGE> 1
COHERENT COMMUNICATIONS SYSTEMS CORPORATION
EXHIBIT 10.1
VALUE ADDED RESELLER AGREEMENT DATED DECEMBER 31, 1992 BETWEEN THE COMPANY
AND NOKIA TELECOMMUNICATIONS OY, AS AMENDED JUNE 13, 1995 AND AS FURTHER
AMENDED APRIL 3, 1997
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED UPON A
REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN
SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE OMITTED PORTIONS ARE MARKED WITH AN *.
<PAGE> 2
Exhibit 10.1
AGREEMENT No: H 7810/92
1 (16)
VALUE ADDED RESELLER AGREEMENT
between
COHERENT COMMUNICATIONS SYSTEMS CORPORATION
and
NOKIA TELECOMMUNICATIONS OY
THIS VALUE ADDED RESELLER AGREEMENT (hereinafter "Agreement") made and
entered into this 31st day of December, 1992 by and between Coherent
Communications Systems Corporation, a company incorporated in the U.S.A.,
whose registered office is at 44084 Riverside Parkway, Lansdowne, VA 22075,
USA (hereinafter "Coherent") and Nokia Telecommunications Oy, a company
incorporated in Finland, whose registered office is at Makkylan Puistotie
1, 02600 Espoo, Finland (hereinafter "Nokia").
WHEREAS Coherent is engaged in the manufacture and sale of echo
cancellers, acoustic cancelling audio systems, data communications and
accompanying software products; and
WHEREAS Nokia is engaged in the manufacture and sale of telecommunications
equipment and systems; and
WHEREAS Coherent desires to sell Products to Nokia; and
WHEREAS Nokia desires to purchase Products and to sell them to third
parties as component in Nokia's certain telecommunications products and in
the regular course of Nokia's business; and
NOW THEREFORE, the parties hereto agree with each other as follows:
ARTICLE ONE
APPOINTMENT AND OBJECT OF THE AGREEMENT
Coherent hereby appoints Nokia and Nokia hereby accepts such appointment as
a Coherent sole and exclusive value-added reseller world-wide of the
Products as shown in APPENDIX 1. Coherent wishes to sell to Nokia and Nokia
wishes to purchase from Coherent, in accordance with the terms and
conditions hereof, certain products (referred to as "Product" or "Products"
in this Agreement) which shall be developed by Coherent in accordance with
the certain
<PAGE> 3
AGREEMENT No: H 7810/92
2 (16)
Product Development Agreement H 7800/92 between the parties dated 31st of
December 1992 (below "Product Development Agreement"), and which are to be
ordered by Nokia from time to time, are specified in APPENDIX 1 hereto and
are manufactured by Coherent (and its subcontractors permitted by Nokia) in
accordance with the specifications (hereinafter referred to as
'Specifications') provided in APPENDIX 2 hereto.
ARTICLE TWO
GENERAL TERMS AND CONDITIONS OF SALE
2.1 Products
2.1.1 The Products to be supplied hereunder are specified in APPENDIX 1
hereto.
2.1.2 The Parties may, upon mutual agreement, amend APPENDIX 1 to include
any new item to, or to delete any item from, the definition of
Products.
2.1.3 Notwithstanding Clause 2.1.2 above, Nokia may after * and with *
written notice to Coherent, delete any item from the definition of
Products for the following reasons:
(1) The particular item may no longer be used by Nokia due to changes
in Nokia's product; and
(2) The particular item does not meet the Specifications and/or causes
serious quality problems in Nokia's products. However, Nokia will
inform Coherent in writing of the defect or problem and Nokia will
give Coherent reasonable time to rectify the stated problem.
2.1.4 APPENDIX 1 hereto includes a list of the Products to be kept in buffer
stock by Coherent. Nokia commits to buy buffer stock from Coherent.
2.1.5 Coherent agrees to inform Nokia of any export or re-export
restrictions relating to the Products.
2.2 Orders
2.2.1 Nokia shall place written orders for the Products by mail or by
telefax. Coherent shall forthwith and not later than one (1) week
thereafter send Nokia a confirmation of the order and Coherent's
agreed shipment schedule, which will not be outside of defined
conditions in this Agreement. Coherent shall not have the right to
refuse to supply the Products
<PAGE> 4
AGREEMENT No: H 7810/92
3 (16)
ordered by Nokia in accordance with the purchase volumes referred to
in APPENDIX 1 unless Nokia is in default of payment for previous
shipment, but shipment schedule will be in accordance with the
forecast schedule, Clause 2.8.
2.2.2 All sales of the Products pursuant to this Agreement shall be subject
to the terms of this Agreement.
2.2.3 Nokia commits to purchase such minimum quantity of the Products each
calendar year (below "Year") as specified in Appendix 1 on condition
that both of the following conditions are fulfilled: (i) the Products
are in conformity with the Specifications and the requirements and
provisions of the Product Development Agreement (ii) However if Nokia
commits to a higher volume, than minimum quantity specified at the
beginning of the calendar year, then Coherent agrees to supply
Products at the applicable unit price as shown in APPENDIX 1. If the
volume levels shown in APPENDIX 1 are exceeded then further volume
discounts will be negotiated. Both Parties will meet one month prior
to the end of the year to agree the commitment levels for the
following year and review market conditions.
2.3 Prices
2.3.1 Prices for the Products and quantity levels are provided in APPENDIX 1
hereto.
2.3.2 The prices which are determined as renegotiable may be renegotiated
upon mutual agreement at any time during the validity of this
Agreement for instance in case of * .
The new price agreed upon shall become valid immediately for new
orders.
2.3.3 Coherent also commits to study new working methods in order to
decrease the costs of the products.
2.3.4 All prices are net of all applicable taxes and expressed in USD.
2.4 Terms of Payment
Nokia shall pay the Products within fortyfive (45) days from the date
of Coherent's invoice, provided always, that Nokia has, prior to
payment, received the respective Products.
<PAGE> 5
AGREEMENT NO. H 7810/92
4(16)
2.5 Terms of Delivery
2.5.1 The terms of delivery are FCA loaded New York (Kennedy) airport
(INCOTERMS 1990). APPENDIX 4. Risk of loss, damage or destruction of the
Products shall pass to Nokia on delivery to the designated forwarding
agent in New York according INCOTERMS 1990.
2.5.2 The forwarding agent in Finland is Oy Huolintakeskus Ab.
The forwarding agent in the U.S.A. is Emery Worldwide, 149 Avenue,
Springfield Gardens N.Y. 11413. Tel. 718 995 3703.
2.6 Packing
Products will be packed to the agreed specification as shown in APPENDIX
9. Pricing includes cost of packing to the specifications to withstand
transportation and when applicable, as required and instructed
differently by Nokia at extra costs.
2.7 Delivery Times
2.7.1 The agreed delivery times are of the essence in this Agreement.
2.7.2 As a minimum each month Nokia will provide an order covering the forecast
for next * Nokia will provide a forecast once a month as follows:
* fixed backlog
* flex band
* or more with unlimited flexibility
Coherent commits to reserve capacity and material according to Nokia's
firm forecast.
The length of the forecast is * . Both parties will operate in close
cooperation concerning forecast volumes to minimize the level of excess
inventories held both by Coherent and Nokia.
If Nokia is not releasing forecast or Nokia's forecast is over the agreed
flexible bands the maximum delivery time is * .
All changes in delivery times are subject to Nokia's and Coherent's
acceptance.
2.7.3 If Coherent can not deliver the Products in accordance with the agreed
delivery times, then Coherent shall,
<PAGE> 6
AGREEMENT NO. H 7810/92
5(16)
not less than two (2) weeks prior to the agreed delivery time, inform
Nokia thereof in writing stating the reason for the delay and propose a
new date for delivery.
2.7.4 In case the Parties have not agreed on a new date of delivery on the
basis of the proposal made in accordance with Clause 2.7.3 above, and
in case the respective delivery of the Products is delayed *
or more from the agreed delivery time due to reasons attributable to
Coherent excluding Force Majeure, then Nokia shall have the right to
cancel the respective order without any liability thereof to Coherent.
2.7.5 In case Nokia does not wish to exercise the right of cancellation
provided under Clause 2.7.4 above, than in case of delays in delivery
attributable to Coherent, Nokia reserves the right to and Coherent agrees
to pay to Nokia liquidated damages calculated on the basis of the price
of the delayed Products at the rate of * per each week or part thereof
up to a maximum of * .
2.7.6 The liquidated damages determined above in Clause 2.7.5 shall mean the
full and final compensation by Coherent to Nokia in respect of delays in
delivery under this Agreement. Nokia shall not be obliged to show
evidence to Coherent in respect of having suffered actual damage as a
result of the delay in delivery in order to claim the liquidated damages.
Nokia shall be entitled to deduct the liquidated damages from any
payments to be made to Coherent under this Agreement, and Coherent shall
be obliged, upon request by Nokia, to provide Nokia with a credit advice
thereof.
2.8 Re-scheduling and cancellation
2.8.1 Nokia may once, without additional costs, upon notice to Coherent not
less than * prior to the agreed date of delivery, re-schedule the
respective delivery to take place within a * period following the
agreed date of delivery. Any alternative reasonable request will be
discussed mutually.
2.8.2 Should Nokia in an exceptional circumstances, wish to cancel shipment
Coherent will negotiate the cancelation with Nokia.
<PAGE> 7
AGREEMENT No: H 7810/92
6 (16)
2.9 Inspections
2.9.1 Nokia shall inspect the Products upon delivery to ascertain correct
quantities and whether there exists any visible damage in the Products
delivered. Coherent agrees to repair without delay or replace Product
failing the agreed incoming inspection test and not suffering visual
transit damage. Until Coherent rectifies the defect, payment for the
defective product only will be delayed by the same amount of time and
Nokia will deduct the value from Coherents invoice. However, for product
damaged in transit a claim will be against the shipping agent. In such
cases, the relevant incoming inspection report will be given to
Coherent without delay. Coherent has the right to refuse a claim for
non-acceptance of Product if made after thirty (30) days of receipt of
Product by Nokia. Return of the Products shall be made at Coherent's
expense.
2.9.2 Without affecting the generality of the beforesaid in Clause 2.9.1,
Nokia may use statistical sampling methods in the incoming inspection.
In case the delivered Products do not pass this inspection, then Nokia
has the right to reject the whole particular delivery. In any such case,
Nokia shall have the option to either (i) demand Coherent to forthwith
replace the rejected delivery or (ii) cancel the respective order
without any liability thereof to Coherent.
2.9.3 Coherent shall undertake the inspection on behalf of Nokia according to
Quality Plan approved by Nokia and Coherent and fulfilling quality and
performance requirements of the Contract Products as specified in
APPENDIX 8. The procedures determined in APPENDIX 3 shall be strictly
followed.
2.10 Quality Requirements
Coherent warrants that it shall manufacture the Products in accordance
with the Requirements and Specifications given in APPENDIX 8.
2.11 Quality Plan
It is recorded here, that Coherent shall issue Quality Plan in
compliance with ISO 9002 requirements approved by Nokia, in four (4)
weeks from signing of this Agreement. The Quality Plan defines process
phases, quality control, quality assurance from design to after sales
services.
<PAGE> 8
AGREEMENT No: H 7810/92
7(16)
2.12 Facility Surveys
Nokia shall have the right, by itself or through appointed
representative, during regular business hours and following reasonable
notice to Coherent, to review Coherent's physical facilities and
Coherent's quality control procedures, both prior to first delivery of
the Products under this Agreement and periodically thereafter, in order
to assure compliance with the Specifications agreed. Quality
Requirements, Quality Plan and other standard industry practices and
procedures. The right determined hereinabove shall also apply to Nokia's
customers. Coherent shall maintain quality control procedures mutually
agreed upon by the Parties as a result of such facility survey. In the
event that Nokia determines, in good faith, during any facility survey,
that the quality procedures applied by Coherent are insufficient as to
insure consistent acceptable quality and not conforming to the agreed
Quality Plan, then Nokia shall specifically inform Coherent thereof and
of the reasonable corrective measures to be undertaken by Coherent.
Coherent hereby agrees to undertake any such corrective measures without
delay. The Parties further agree, that the above shall also apply to any
and all sub-supplier's of Coherent involved in the manufacture of the
Products. Coherent hereby agrees to take all appropriate measures in
order to ensure compliance thereto on behalf of its respective
sub-suppliers.
2.13 Warranty
2.13.1 Coherent shall give a warranty for a period of * from delivery
(hereinafter referred to as the "Warranty Period") for the Products
supplied hereunder. The warranty provided hereunder shall include that
the Products supplied shall:
(1) Be new and unused and shall be in satisfactory working order and
free from all defects including defects arising out of faulty
design, inferior materials, faulty and inferior workmanship;
(2) Strictly conform to the Specifications and the Quality
Requirements.
2.13.2 Coherent shall repair or replace, at its own option and cost and without
delay, all defects in materials and workmanship of the Products
appearing within the Warranty Period.
<PAGE> 9
AGREEMENT NO: H 7810/92
8(16)
2.13.3 Nokia shall pay the one way shipping cost of the failed Product Module
to the designated Coherent customer service facility. Coherent shall
pay the shipping costs for the return of the failed Product.
The above warranties shall not apply if the Product or part has been
damaged by accident, neglect, misuse, faulty installations, causes
other than ordinary use or as a result of service or modification other
than that performed or authorized by Coherent. Warranty service
hereunder shall not operate to extend the original Warranty Period.
2.13.4 This warranty specifically excludes damage incurred in shipment from
Coherent. In the event an item is received in damaged condition, the
carrier should be notified immediately. All claims for such damage
should be filed with the carrier by Nokia.
2.13.5 No warranty shall apply to any Product or part thereof which has been
altered or changed after delivery to Nokia or to any Product or part
which, after delivery to Nokia, has been repaired by anyone other than
Coherent's authorized repair personnel.
2.13.6 The liability of Coherent to Nokia arising out of the supply of any
Product or part or its use, whether based upon warranty, contract or
otherwise, shall not in any case exceed the original cost to Nokia of
said Products or part as herein provided.
2.13.7 If a Product is returned for warranty repair and Coherent tests and
trustfully ascertains "NO FAULT FOUND", Nokia may be billed for test
time according to Coherent's then current price list. Prior to
returning any equipment under the warranty provisions set forth above,
Nokia must first obtain from Coherent and Coherent shall give to Nokia
upon request a "Return Authorization Number". All replaced parts and
equipment shall become the property of Coherent.
2.14 Product Liability
As regards third party claims relating to the Product, the parties hereto
have agreed to the following:
Nokia shall be liable for damage to property other than the Products and
damage to persons caused by, relating to, or arising from (1) use of the
Product in conjunction with Nokia's products for the purpose that it is
designed for, or (2) installation of the Product, or (3) maintenance of the
Product, and Nokia agrees to indemnify and hold harmless Coherent and its
employees, agents, successors and
<PAGE> 10
AGREEMENT No: H 7810/92
9 (16)
assigns from and against all such liabilities, damages, claims, suits and
expenses (including legal expenses and attorneys fees) relating thereto;
provided that such damages are not caused by the sole negligence of
Coherent; and provided further that: (a) Coherent informs Nokia in writing
promptly upon any third party's claim or action in any such case, and (b)
Coherent shall fully assist Nokia, as reasonably requested, regarding such
claim or action, and (c) Coherent gives Nokia full authority to defend and
settle the third party's claim or action (but Coherent may also retain its
own counsel at its expense), and Coherent gives Nokia full information and
assistance, as reasonably requested, in this matter, and (d) Coherent shall
make no statements prejudicial to Nokia's defense or settlement in settling
such claims or actions.
2.15 Discontinuation of Production
Due to the product being built especially for Nokia then discontinuation
of production will be based on Nokia's forecast figures and will be
mutually agreed. Any discontinuation of supply of a certain component will
be covered by an ECN (Engineering Change Notice) and the intended use of
an alternative component will be documented to Nokia by ECN with 90 days
prior notice of implementation and Nokia will respond within 30 days to
Coherent accepting or rejecting the recommendation in the ECN.
2.16 Environmental Management
Nokia agrees to comply with the principles of the Business Charter for
Sustainable Development (published by the International Chamber of
Commerce in 1991) for environmental management. Nokia encourages the
adoption of the principles therein by Coherent and its sub-suppliers.
Nokia may, where appropriate, request improvements in Coherent's practices
to ensure compliance with the said principles.
2.17 Export
Nokia agrees that it will not sell, directly or indirectly, or export in
violation of or cause to be violated any of the export laws or regulations
of the United States, including the United States Export Administration
Regulations then in effect.
2.18 Repairs
2.18.1 After termination of this Agreement and after termination of
warranty period of each Product sold hereunder, Coherent agrees
to provide spare parts, repairs and maintenance for the Products
according to
<PAGE> 11
AGREEMENT No: H 7810/92
10 (16)
reasonable terms and conditions for a period ending on the tenth
(10th) anniversary of last shipment.
2.18.2 Coherent commits itself to make repairs according to APPENDIX 6.
Post-warranty repairs shall cover * time. Minor modifications to the
Product to repair design failures (as defined in Product Development
Agreement in clause 4.6) which are service affecting will be carried
out by either Nokia or Coherent and if carried out at Coherent's
premises will be implemented at no cost. Shipping costs etc. will be
as per warranty clause 2.13 in this Agreement. During the production
phase of the Products Coherent commits to repair each Product (sent
by Nokia to be repaired by Coherent) within * maximum after
reception by Coherent on best effort basis. Upon request by Nokia
Coherent will agree a spares holding policy and costs to cover
repairs based on the experience so far gained. Price list for repairs
is in APPENDIX 6.
Coherent MTBF forecast is in APPENDIX 7.
2.19 Products integral part of Nokia's system
Nokia certifies and covenants that the Products purchased hereunder will
be incorporated by Nokia, in whole or in part, as an integral part of a
system comprised of equipment or services manufactured or provided by
Nokia which Nokia sells or leases to third Parties in the regular course
of Nokia's business.
2.20 Technical assistance, training
Coherent shall supply Nokia with training and technical assistance
concerning the Products at the quantity, levels and prices stated in
APPENDIX 5.
2.21 Engineering staff
Coherent shall provide Nokia such reasonable access to Coherent's
engineering staff, to enable Nokia to integrate Coherent's Products into
Nokia's products, subject, however, to the provisions of clause 4.1 of
this Agreement. Any engineering services provided by Coherent under this
Clause 2.21 will be at charge referred to in APPENDIX 1 for such services.
2.22 Escrow
Third party custody arrangement provisions contained in Articles 8.1-8.11
of the Product Development Agreement shall be incorporated herein by
reference and they shall
<PAGE> 12
AGREEMENT No: H 7810/92
11 (16)
survive any termination of this Agreement, where termination is due to a
material breach of this Agreement whilst this Agreement is in force.
ARTICLE THREE
INDUSTRIAL PROPERTY RIGHTS
3.1 Ownership of the copyright in all drawings, specifications, manuals,
documents, data, and software provided by one Party hereto to the other
under this Agreement shall remain with the Party first referred to above
but the receiving Party shall be deemed to have the right to use such
copyright for the performance of the Agreement hereunder. Nokia's customers
and other end users shall have a nonexclusive license free of charge to use
all software of the Product(s) in the equipment sold by Nokia incorporating
such Product(s). Nokia is expressly prohibited from extracting the
software/firmware from the Equipment or using that particular software in
any other system or configuration.
3.2 Coherent agrees at its expense to defend or settle any suit against Nokia
and to assume responsibility to pay all claims, suits, actions or demands
asserted against Nokia or its customers, arising directly from any claim by
third parties of infringement of any intellectual property right like
patent, trade marks, copyrights or designs and other proprietary rights
(herein "IPR") which may be attributable to the incorporation by Nokia of
any Product in equipment sold by Nokia or sold by any customers of Nokia or
which may be attributable to the use or sale of Products by Nokia or by any
of Nokia's direct or indirect customers; provided that (i) Coherent is
notified by Nokia promptly and without delay, in writing, of such a claim
or infringement, (ii) Coherent shall be given full authority, information,
and assistance in settling and defending such claims, and (iii) Nokia shall
make no statements prejudicial to Coherent's defense or settlement of any
such claim. Coherent shall have no liability whatsoever hereunder with
respect to any claims settled by Nokia, without Coherent's prior written
consent. Coherent shall, at its sole discretion, and its own expense either
(i) procure for Nokia or its Customers as applicable the right to use the
Product in question, or (ii) modify said Products in a manner accepted in
writing by Nokia so they become non-infringing. Coherent's obligation set
forth above will not apply to the extent (i) the Product in question has
been modified by Nokia or its customer, or (ii) the infringement is due to
Coherent's compliance with designs clearly made by Nokia and asked by Nokia
in writing to Coherent to follow. Coherent's obligation to assume
responsibility to pay all claims as set forth above shall not be applicable
to, and Coherent
<PAGE> 13
AGREEMENT No: H 7810/92
12 (16)
shall not be liable for, costs or damage incurred by Nokia as a result of
any suit or proceeding brought against Nokia insofar as it is held in such
suit or proceeding that the use of the Products, or any part thereof,
furnished hereunder in combination with products not supplied or specified
by Coherent constitutes infringement of any patent, where absent such
combination the use of the Products, or any part thereof, would not have
constituted infringement.
ARTICLE FOUR
CONFIDENTIALITY
4.1 Each Party ("Receiving Party") shall not disclose to third parties nor use
for any purpose other than for the proper fulfillment of this Agreement any
technical or commercial information ("Information") received from the other
Party ("Disclosing Party") in whatever form under or in connection with
this Agreement without the prior written permission of the Disclosing Party
except information which
(a) was in the possession of the Receiving Party prior to disclosure
hereunder; or
(b) was in the public domain at the time of disclosure or later became
part of the public domain without breach of the confidentiality
obligations herein contained; or
(c) was disclosed by a third party without breach of any obligation of
confidentiality owed to the Disclosing Party; or
(d) was independently developed by personnel of the Receiving Party having
no access to the Information.
4.2 The provisions of this Article 4 shall survive the termination of this
Agreement for whatsoever reason.
ARTICLE FIVE
FORCE MAJEURE
5.1 Neither Party shall be liable to the other for any delay or non-performance
of its obligations hereunder in the event and to the extent that such delay
or non-performance is due to an event of Force Majeure.
5.2 Events of Force Majeure are events beyond the control of the Party which
occur after the date of signing of this Agreement and which were not
reasonably foreseeable at the time of signing of this Agreement and whose
effects are not
<PAGE> 14
AGREEMENT No: H 7810/92
13 (16)
capable of being overcome without unreasonable expense and/or loss of
time to the Party concerned. Events of Force Majeure shall include
(without being limited to) war, civil unrest, strikes, lock-outs and
other general labor disputes, acts of government, natural disasters,
exceptional weather conditions, breakdown or general unavailability of
transport facilities, fire, explosions, and general shortages of
energy.
5.3 In the event that the delay or non-performance of either Party hereto
continuously for a period of six (6) months due to reasons of Force
Majeure, then either Party shall have the right to terminate this
Agreement with immediate effect.
ARTICLE SIX
VALIDITY
6.1 Effective Date and Term
6.1.1 This Agreement shall become valid and effective on the date of
signature hereof and shall remain valid until 31.12.1995.
6.1.2 The Parties agree to commence negotiations at least two (2)
months prior to the intended date of termination of this
Agreement in order to review the possibilities of extending the
validity of this Agreement on terms and conditions acceptable to
both Parties.
6.1.3 The termination of this Agreement in accordance with Clause
6.1.1 above, shall not affect the delivery of the Products, in
accordance with the terms and conditions hereof, which have been
ordered and confirmed prior to the termination and Nokia will pay
for the ordered products when payment is due.
6.2 Premature Termination
6.2.1 In the event that a Party hereto is in default of a material
obligation under this Agreement and fails to remedy such default
within a reasonable time fixed by the non-defaulting Party (which
period shall not be less than thirty (30) days) in a written
notice drawing the attention of the defaulting Party to the
default and requiring the same to be remedied, then the
non-defaulting Party shall have the right to terminate this
Agreement with immediate effect after the expiry of the fixed
period. In the event of bankruptcy, receivership or comparable
procedure under applicable Bankruptcy Ordinance of a Party hereto
or
<PAGE> 15
AGREEMENT No: H 7810/92
14 (16)
in case the default is not capable of being remedied then the
non-defaulting Party may terminate this Agreement forthwith.
6.2.2 The termination of this Agreement in accordance with Clause 6.2.1
above, shall also terminate the carrying out of any outstanding orders,
whether confirmed or not. However Nokia will settle outstanding
invoices.
ARTICLE SEVEN
APPLICABLE LAW AND SETTLEMENT OF DISPUTES
7.1 This Agreement shall be governed by and construed in accordance with the
laws of the Canton of Zurich, Switzerland.
7.2 All disputes arising in connection with or as a result of this Agreement
shall be finally settled according to the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by three (3)
arbitrators appointed in accordance with the Rules.
The arbitration shall take place in Zurich, Switzerland in the English
language.
ARTICLE EIGHT
FINAL PROVISIONS
8.1 Neither Party shall assign or transfer to any third party, without the
prior written consent of the other Party, this Agreement or any of its
share or interest therein.
8.2 This Agreement contains the entire understanding between the Parties in
respect of this matter and all previous correspondence, memoranda, minutes
of meetings, offers, enquiries and other documents exchanged between the
Parties prior to the date of this Agreement shall be cancelled and
superseded by this Agreement.
<PAGE> 16
AGREEMENT No.: H 7810/92
15 (16)
8.3 In addition to this Agreement, the following documents are hereby made
part of this Agreement:
APPENDIX 1 Products, Prices, Purchase Volumes and Buffer stock
APPENDIX 2 NIEC Hardware and Software specifications
APPENDIX 3 Quality Plan
APPENDIX 4 Cost distribution between Seller and Nokia in Summary
APPENDIX 5 Training and Technical Assistance
APPENDIX 6 Price list for repairs
APPENDIX 7 Coherent's MTBF forecast
APPENDIX 8 Acceptance Quality Levels for Component Board
APPENDIX 9 Packing Procedure
In case of any discrepancies between the above documents, the text of this
Agreement document shall always prevail over any of the Appendices or the
Schedules thereto. The Appendices shall apply in the order set forth above.
8.4 Alterations or amendments to this Agreement shall be made in writing with
the signatures of both Parties.
8.5 The following persons shall act as the representatives of the Parties
regarding notices, performance, extension, termination and changes in
respect of this Agreement:
REPRESENTING NOKIA REPRESENTING COHERENT
Erkki Sipila David Powell
Nokia Telecommunications Oy Coherent Communications
P.O. Box 33 System Ltd.
02601 Espoo, Finland 29 The Quadrant
Telephone + 358 0 51151 Abingdon Science Park
Telefax + 358 0 5115536 Barton Lane, Abingdon
Oxon OX14 3 YS, U.K.
Telephone +44 235 524400
Telefax +44 235 524450
8.6 The Parties further agree, that in case any sub-supplier of Nokia or
sub-Supplier of Nokia's subsidiary or affiliated company of Nokia wishes to
purchase Products from Coherent to be used in the manufacture of products
for Nokia or such subsidiary or affiliated company, then such sub-supplier
may purchase Products from Coherent on equal terms and conditions herewith.
The Parties further agree, that Nokia shall specifically introduce such
sub-supplier to Coherent,and if required, provide Coherent with adequate
information regarding the manufacturing activities of the sub-supplier.
<PAGE> 17
AGREEMENT No: H 7810/92
16 (16)
8.7 Notwithstanding any other provision of this Agreement, neither Party shall
under any circumstances be liable for any indirect or consequential damage
howsoever arising under or in connection with this Agreement, except in
cases of intentional misconduct or gross negligence.
8.8 No failure or delay of either Party in exercising its rights hereunder
(including but not limited to the right to require performance of any
provision of this Agreement) shall be deemed to be a waiver of such rights
unless expressly made in writing by the Party waiving its rights.
8.9 In the event that any provision of this Agreement shall be held invalid as
contrary to any law, statute or regulation in that regard, the invalidity
of such provision shall in no way affect the validity of any other
provision of this Agreement and each and every provision shall be severable
from each and every other.
8.10 The headings used in this Agreement are inserted for convenience only and
shall not affect the interpretation of the respective provisions of this
Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed by
their duly authorized representatives.
Espoo 31st December, 1992
SIGNED FOR AND ON BEHALF OF SIGNED FOR AND ON BEHALF OF
NOKIA TELECOMMUNICATIONS OY COHERENT COMMUNICATIONS
SYSTEMS CORPORATION
/s/ Keijo Olkkola /s/ David Powell
- --------------------------------- --------------------------------
Keijo Olkkola David Powell
/s/ Jorma Nyberg /s/ Miles R. Pratt
- --------------------------------- --------------------------------
Jorma Nyberg Miles Pratt
<PAGE> 18
AGREEMENT No. H 7810/92 AMENDMENT 13 June 1995
CONTRACT # T-8479
2.5 Terms of Delivery
2.5.1 The terms of delivery are FCA loaded New York (Kennedy)
airport (INCOTERMS 1990). APPENDIX 4. Risk of loss, damage
or destruction of the Products shall pass to Nokia on
delivery to the designated forwarding agent in New York
according INCOTERMS 1990.
2.5.2 The forwarding agent in Finland is Oy Huolintakeskus Ab.
The forwarding agent in the U.S.A. is Emery World-wide,
149 Avenue, Springfield Gardens N.Y. 11413.
Tel. 718 995 3703.
2.6 Packing
Products will be packed to the agreed specification as shown
in APPENDIX 9. Pricing includes cost of packing to the
specifications to withstand transportation and when
applicable, as required and instructed differently by Nokia
at extra costs.
2.7 Delivery Times
2.7.1 The agreed delivery times are of the essence in this
Agreement.
2.7.2 As a minimum each month Nokia will provide an order covering
the forecast for next * Nokia will provide a forecast
once a month as follows:
* fixed backlog
* flex band
* or more with unlimited flexibility
Coherent commits to reserve capacity and material
according to Nokia's firm forecast.
The length of the forecast is at minimum * . Both parties
will operate in close co-operation concerning forecast
volumes to minimise the level of excess inventories held
both by Coherent and Nokia.
If Nokia is not releasing forecast or Nokia's forecast is
over the agreed flexible bands the maximum delivery time
is * .
All changes in delivery times are subject to Nokia's and
Coherent's acceptance.
2.7.3 If Coherent can not deliver the Products in accordance
with the agreed delivery times, then Coherent shall,
<PAGE> 19
AMENDMENTS TO AGREEMENT No. H7810/92
In Witness Whereof, the Parties have agreed these amendments to the original
version of the above agreement signed by both parties in Espoo on 31st December,
1992.
Espoo 13th June, 1995
SIGNED FOR AND ON BEHALF OF SIGNED FOR AND ON BEHALF OF
NOKIA TELECOMMUNICATIONS OY COHERENT COMMUNICATIONS
SYSTEMS CORPORATION
/s/ Keijo Olkkola /s/ Keith Gibson
- ---------------------------- ------------------------------
Keijo Olkkola Keith Gibson
/s/ Aate Kirjanen /s/ Miles Pratt
- ---------------------------- ------------------------------
Aate Kirjanen Miles Pratt
<PAGE> 20
CONTRACT AMENDMENT
FOR VALUE ADDED RESELLER AGREEMENT
No H7810/92
NOKIA TELECOMMUNICATIONS OY
AND
COHERENT COMMUNICATIONS
SYSTEMS CORPORATION
ON 3RD APRIL 1997
<PAGE> 21
Agreement No: H 7810/92 Amendment 3rd April 1997
3 (16)
ordered by Nokia in accordance with the purchase volumes referred to in
APPENDIX 1 unless Nokia is in default of payment for previous shipment,
but shipment schedule will be in accordance with the forecast schedule,
Clause 2.8.
2.2.2 All sales of the Products pursuant to this Agreement shall be subject
to the terms of this Agreement.
2.2.3 Nokia's best estimate to purchase Products each calendar year (below
"Year") as specified in Appendix 1 is on condition that the following
condition is fulfilled -- the Products are in conformity with the
Specifications and the requirements and provisions of the Product
Development Agreement. If the volume levels shown in APPENDIX 1 are
exceeded then further volume discounts may be negotiated.
2.3 PRICES
2.3.1 Prices for the Products and quantity levels are provided in APPENDIX 1
hereto.
2.3.2 The prices which are determined as renegotiable may be renegotiated
upon mutual agreement at any time during the validity of this Agreement
for instance in case of *.
The new price agreed upon shall become valid immediately for new
orders.
2.3.3 Coherent also commits to study new working methods in order to decrease
the costs of the products.
2.3.4 All prices are net of all applicable taxes and expressed in USD.
2.4 TERMS OF PAYMENT
Payment terms as specified in Nokia's Netting Payment System will become
affective during 1997. Payments will be made within 45 to 60 days maximum.
Until such change the current payment terms will remain effective.
For new orders the invoicing shall be as follows to reflect the charge for
a Software License:
<TABLE>
<CAPTION>
Hardware Software License (ILS-NIEC)
----------------------------------------------------------------
<S> <C>
NIEC and IDEC2X *
EC2X *
</TABLE>
ILS-NIECx is a Software Fee and License to use. Each order for Hardware
must be accompanied by an order for an equal number of Software Licenses
which will be invoiced at the same time.
<PAGE> 22
Agreement No: H 7810/92 Amendment 3rd April 1997
4(16)
2.5 Terms of Delivery
2.5.1 The terms of delivery are FCA loaded New York (Kennedy)
airport (INCOTERMS 1990). APPENDIX 4. Risk of loss, damage or
destruction of the Products shall pass to Nokia on delivery to
the designated forwarding agent in New York according to
INCOTERMS 1990.
2.5.2 The forwarding agent in Finland is Oy Huolintakeskus Ab.
The forwarding agent in the U.S.A. is Emery Worldwide, 149
Avenue, Springfield Gardens, N.Y. 11413. Tel. 718-995-3703.
2.6 Packing
Products will be packed to the agreed specification as shown in
APPENDIX 9. Pricing includes cost of packing to the
specifications to withstand transportation and when applicable,
as required and instructed differently by Nokia at extra costs.
2.7 Delivery Times
2.7.1 The agreed delivery times are of the essence in this Agreement.
2.7.2 Each month Nokia will provide a forecast for [CONFIDENTIAL
TREATMENT REQUESTED] with an authorization to Manufacture
covering the *. This commitment
to deliver is based upon the following:
* firm
* of the volume can be
rescheduled up to *
* of the volume can be
rescheduled up to *
Coherent commits to reserve capacity and material according to
Nokia's firm forecast.
The length of the forecast is *.
Both parties will operate in close cooperation concerning
forecast volumes to minimize the level of excess inventories held
both by Coherent and Nokia.
If Nokia is not releasing forecast or Nokia's forecast is over
the agreed flexible bands the maximum delivery time is
* .
All changes in delivery times are subject to Nokia's and
Coherent's acceptance.
<PAGE> 23
Agreement No: H 7810/92 Amendment 3rd April 1997
13(16)
capable of being overcome without unreasonable expense and/or loss of
time to the Party concerned. Events of Force Majeure shall include
(without being limited to) war, civil unrest, strikes, lock-outs and
other general labor disputes, acts of government, natural disasters,
exceptional weather conditions, breakdown or general unavailability of
transport facilities, fire, explosions, and general shortages of energy.
5.3 In the event that the delay or non-performance of either Party hereto
continuously for a period of six (6) months due to reasons of Force
Majeure, then either Party shall have the right to terminate this Agreement
with immediate effect.
ARTICLE SIX
VALIDITY
6.1 EFFECTIVE DATE AND TERM
6.1.1 This Agreement shall become valid and effective on the date of
signature hereof and shall remain valid until 31.12.1999.
6.1.2 The Parties agree to commence negotiations at least two (2) months
prior to the intended date of termination of this Agreement in order
to review the possibilities of extending the validity of this
Agreement on terms and conditions acceptable to both Parties.
6.1.3 The termination of this Agreement in accordance with Clause 6.1.1
above, shall not affect the delivery of the Products, in accordance
with the terms and conditions hereof, which have been ordered and
confirmed prior to the termination and Nokia will pay for the ordered
products when payment is due.
6.2 PREMATURE TERMINATION
6.2.1 In the event that a Party hereto is in default of a material
obligation under this Agreement and fails to remedy such default
within a reasonable time fixed by the non-defaulting Party (which
period shall not be less than thirty (30) days) in a written notice
drawing the attention of the defaulting Party to the default and
requiring the same to be remedied, then the non-defaulting Party
shall have the right to terminate this Agreement with immediate effect
after the expiry of the fixed period. In the event of bankruptcy,
receivership or comparable procedure under applicable Bankruptcy
Ordinance of a Party hereto or
<PAGE> 24
Agreement No. H7810/92 Amendment 3rd April 1997
IN WITNESS WHEREOF, the parties have caused this Amendment to be signed by
their duly authorised representatives.
Espoo 3rd April 1997
Signed for and on behalf of Signed for and on behalf of
NOKIA TELECOMMUNICATIONS OY COHERENT COMMUNICATIONS
SYSTEMS CORPORATION
/s/ Lauri Melamies /s/ Miles R. Pratt
- ------------------------------ ------------------------------
Lauri Melamies Miles R. Pratt
/s/ Jorma Nyberg /s/ David Powell
- ------------------------------ ------------------------------
Jorma Nyberg David Powell
