<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1 TO FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [Fee Required]
For the fiscal year ended December 31, 1995
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]
For the transition period from ______ to __________.
Commission file number 0-27196
SQA, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3079083
-------- ----------
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
One Burlington Woods Drive
Burlington, Massachusetts 01803
------------------------- -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (617) 229-3500
--------------
Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value
----------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X].
The aggregate market value of the Common Stock, $.01 par value, of the
registrant held by non-affiliates of the registrant as of September 30, 1996
(computed based on the closing price of such stock on The Nasdaq National Market
on September 30, 1996) was $157,317,915.
As of September 30, 1996, 8,041,189 shares of the registrant's Common Stock,
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
================================================================================
This Amendment No. 1 on Form 10-K/A to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1995 (as amended, the "Report"), is being
filed to (i) amend and restate Section 5.1 and Exhibits C and H to Exhibit 10.8,
International Software Development and Distribution Agreement between the
Company and Mitsubishi Corporation, of the Report pursuant to a confidential
treatment request as to certain portions, and (ii) to file Exhibit 23.1, the
consent of Arthur Andersen LLP. All other exhibits to the Report remain
unchanged and have been previously filed with the Securities and Exchange
Commission.
<PAGE>
EXHIBIT INDEX
-------------
The following exhibits are filed as part of and incorporated by reference
into, this Annual Report on Form 10-K:
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<C> <S>
3.1(1) Amended and Restated Certificate of Incorporation of the Company
3.2(1) Amended and Restated By-Laws of the Company
4.1(1) Specimen certificate representing the Common Stock
10.1(1)* 1990 Incentive and Nonqualified Stock Option Plan
10.2(1)* 1995 Stock Plan
10.3(1)* 1995 Employee Stock Purchase Plan
10.4(1)* 1995 Non-Employee Director Stock Option Plan
10.5(1) Letter of employment dated July 7, 1992 between Ronald H. Nordin
and the Company
10.6(1) 10 State Street, Woburn, MA Lease dated January 22, 1993, as amended
10.7** Sublease of space at One Burlington Woods Drive, Burlington, MA
dated February 26, 1996
10.8***# International Software Development and Distribution Agreement
between the Company and Mitsubishi Corporation dated
December 26, 1995
11.1** Statement recomputation of per share earnings
13.1** The Company's 1995 Annual Report to Stockholders, certain portions
of which have been incorporated herein by reference
21.1(1) List of Subsidiaries of the Company
23.1*** Consent of Arthur Andersen LLP
24.1** Power of Attorney
</TABLE>
_____________
(1) Previously filed as an Exhibit to the Company's Registration Statement on
Form S-1 (File No. 33-98598).
* Indicates a management contract or any compensatory plan, contract or
arrangement.
** Previously filed as an Exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995.
*** Filed herewith.
# Confidential treatment requested.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, this 22 day of October,
1996.
SQA, INC.
By: /s/ Ronald H. Nordin
----------------------
Ronald H. Nordin
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title(s) Date
- --------- -------- ----
<S> <C> <C>
/s/ Ronald H. Nordin President, Chief Executive October 22, 1996
- --------------------------- Officer (Principal
Ronald H. Nordin Executive Officer), and
Director
/s/ Thomas Bogan Vice President, Finance and October 22, 1996
- --------------------------- Administration and Chief
Thomas Bogan Financial Officer
(Principal Financial
Officer and Principal
Accounting officer)
* October 22, 1996
- ---------------------------
Edward T. Anderson Director
* October 22, 1996
- ---------------------------
Thomas I. Csathy Director
* October 22, 1996
- ---------------------------
Ted R. Dintersmith Director
* October 22, 1996
- ---------------------------
Jerald G. Fishman Director
* October 22, 1996
- ---------------------------
Paul A. Maeder Director
*By: /s/ Ronald H. Nordin
- --------------------------------------
Ronald H. Nordin, Attorney in Fact.
</TABLE>
<PAGE>
[LOGO OF SQA APPEARS HERE]
SQA, Inc.
10 State Street
Woburn, MA 01801
USA
Telephone: +1-617-932-0110
Fax: +1-617-932-3280
INTERNATIONAL SOFTWARE DEVELOPMENT AND DISTRIBUTION
AGREEMENT
Agreement made as of the _____ day of _________________, 199_, by and between
SQA Inc., a Delaware corporation having its principal place of business as shown
above (hereinafter referred to as "SQA") and Mitsubishi Corporation, a Japanese
corporation having its principal place of business as 2-6-3 Marunouchi,
Chiyodaku, Tokyo 100-86, JAPAN (hereinafter referred to as "MC").
SECTION 1: DEFINITIONS
1.1. "Authorized Hardware" is set forth in Exhibit A.
1.2. "Authorized Reseller" is a sublicensee of MC's right to market and
distribute Products in the Territory who has signed an agreement with
MC sufficient to fulfill MC's obligations to SQA hereunder.
1.3. "Double-Byte Support" is the ability to support a mixed-width
character set in which some characters consist of more than one byte.
A double-byte character set is a specific type of character set which
includes some characters that consist of two bytes.
1.4. "End User" is any customer acquiring one or more copies of a Product
for the customer's own internal use.
1.5. "Evaluation Copies" are copies of the Products which will
automatically cease to function upon the expiration of a stated
period, i.e. which include a "Time Bomb," and which are
copy-protected with a hardware key, tracked by means of unique serial
numbers, include appropriate notices regarding SQA's proprietary
rights, as approved in writing by SQA, and subject to the license
granted in Section 3.2 of this Agreement.
1.6. "First Line Support" is the activity of communicating with End Users
by telephone on the use, operation, installation, configuration and
implementation of the Products, assisting End Users in the use and
interpretation of Product documentation, and passing on reports of
errors and suspected errors in the Products for Second Line Support.
1.7. "Japanese Localized Version" shall be that version of the Products
which results from the development efforts undertaken by the parties
in Section 2 of this Agreement and which are:
1.7.1. In the case of software, copy protected with a hardware key
(or an equivalent software protection scheme or mechanism
approved in writing by SQA prior to its
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SQA International Development and Distribution Agreement Page 1
<PAGE>
implementation), tracked by means of unique serial numbers,
and which include appropriate notices approved by SQA
regarding SQA's proprietary rights; and
1.7.2. In the case of documents, including training materials,
translated into Japanese by MC and which include appropriate
notices approved by SQA regarding SQA's proprietary rights.
1.8. "License Agreement" is an End User license agreement written by MC
with terms at least as strong as the terms in SQA's end user license
agreement as shown in Exhibit B.
1.9. "PLUS Agreement" stands for "Product License Upgrade Support" and is
an annual maintenance agreement which provides the End User with one
copy of an upgrade release of each Product (and the appropriate
copies of related documentation) incorporating improvements,
enhancements and corrections to the prior release of the Product, and
one copy of a maintenance release of the Product. End Users receive
the SQA TestExpress Newsletter and access to the SQA CompuServe
Forum. PLUS programs are sold on a per Product license (that is, per
copy) basis and must be purchased within sixty (60) days of
acquisition of the applicable copy of the Product. The program runs
for twelve (12) months following expiration of the sixty-day warranty
period.
1.10. "Products" are those software products shown in Exhibit C, in their
most current versions and as developed by the parties in accordance
with Section 2 of this Agreement, including documentation and any
other related materials described in Exhibit C. SQA may amend
Exhibit C from time to time upon sixty (60) days' prior written
notice as updates or new releases of the Products are provided.
1.11. "Second Line Support" is the activity of updating, enhancing,
modifying and correcting errors in the Products.
1.12. "Product Support Agreement" is either or both of the USA and
PLUS Agreements.
1.13. "US Version" is any Product in the English language distributed
by SQA.
SECTION 2: DELIVERY AND PRODUCT DEVELOPMENT
2.1. SQA shall deliver to MC those items set forth in Exhibit D for
MC's use in accordance with the license granted and terms of this
Agreement.
2.2. SQA, with the cooperation of MC, will undertake efforts to
develop Double-Byte Support for the Products in accordance with the
Double-Byte Support Development Schedule set forth in Exhibit E.
2.2.1. SQA and MC will share equally the expenses incurred by
SQA in the development of the Double-Byte Support, including
labor and benefits costs, travel and expenses, and variable
overhead costs.
2.3. MC, with the cooperation of SQA, will undertake efforts to localize
the Products for the Japanese market, in accordance with the
Localization Development Schedule set forth in Exhibit F.
2.3.1. MC will, at no cost to SQA, loan to SQA the necessary
hardware and software components to create a mirror
laboratory environment, including Japanese-specific versions
of computers, networks and software, at SQA's facilities in
Woburn,
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SQA International Development and Distribution Agreement Page
<PAGE>
Massachusetts, USA, in accordance with the terms of
Exhibit G, and shall deliver and maintain current versions of
all Japanese Localized Versions of the Products at such
mirror laboratory at all times during the term of this
Agreement.
2.3.2. MC shall develop and shall obtain SQA's written approval of a
plan of quality assurance programs, including Beta programs,
for the Japanese Localized Version of a Product and shall
conduct all such quality assurance programs in accordance
with such plan.
2.3.3. All costs associated with the Localization Development
effort shall be borne by MC.
2.4. All rights in the developments completed by either party shall,
in accordance with Section 10.1, belong to SQA.
SECTION 3: GRANT OF RIGHT TO MARKET
3.1. SQA hereby grants, and MC hereby accepts, an exclusive,
non-transferable right and license to sublicense, market, reproduce,
distribute and support the Japanese Localized Version of the Products
and a non-transferable right to sublicense, market, distribute and
support the US Version of the Products to Authorized Resellers and
End Users located in Japan for the End User's internal use only and
only pursuant to an effective written License Agreement, that is
signed or otherwise accepted by End User in a manner chosen by MC.
The right granted herein for the US Version of the Product shall
be exclusive against SQA only. SQA also grants to MC an exclusive,
non-transferable license to use (and to sublicense its Authorized
Resellers and partners to use) that number of copies of the Japanese
Localized Version of the Products necessary for evaluation,
demonstration and training purposes in accordance with the License
Agreement (the "Not for Resale Copies"). The Not for Resale Copies
shall not count towards any sales benchmarks or royalty payments
due SQA.
3.2. SQA hereby grants, and MC hereby accepts, an exclusive,
non-transferable right and license to market and distribute
Evaluation Copies of the Japanese Localized Version of the Products
for End User evaluation of the Products, without the prerequisite of
an effective License Agreement.
3.3. In order to be eligible for the Product Support set forth in
Section 4 or the Product warranty set forth in Section 8, the
Products must be run on Authorized Hardware.
3.4. The Products are supplied to MC solely for the purposes set forth in
this Agreement. MC is authorized to use, reproduce and distribute the
Products to Authorized Resellers and End Users solely for such
purposes, and may not reproduce or modify the Products except as
otherwise specifically provided herein. MC shall have no right to
market or service products developed by SQA other than the Products
in Exhibit C.
3.4.1. SQA shall notify MC of the release of a beta version of
any new SQA product. MC shall have thirty (30) days from the
date of such notice to enter into an amendment to this
Agreement which:
3.4.1.1. Adds the new product to Exhibit C; and
3.4.1.2. Adds a Localization Development Schedule for the
new product to Exhibit F.
3.4.2. If the parties do not enter into a mutually agreed upon
amendment to this Agreement as provided in Section 3.4.1
above within the thirty (30) day period, SQA shall have no
- --------------------------------------------------------------------------------
SQA International Development and Distribution Agreement Page
<PAGE>
further obligation to MC with respect to such product and
shall have no restriction on its development or distribution
for or within Japan or otherwise.
3.5. MC acknowledges that its rights under this Agreement are exclusive
only with respect to the Japanese Localized Version of the Products
and only within the geographic borders of Japan. SQA reserves the
right to license Products to other agents, distributors, value added
resellers, original equipment manufacturers, end users and other
parties, located outside Japan and to permit other agents,
distributors, value added resellers, original equipment
manufacturers, end users and other parties to use and to distribute
products other than the Japanese Localized Version of the Products
within Japan.
SECTION 4: PRODUCT SUPPORT AND TECHNICAL TRAINING
4.1. MC agrees to provide First Line Support to End Users of the Products.
The Product Support Agreement must, among other things, clearly state
that the agreement is assignable to SQA (or SQA's designee) upon
termination of MC's right to provide First Line Support to End User.
4.2. SQA will provide Second Line Support to MC by telephone, fax,
CompuServe forum or electronic mail during SQA's normal business
hours for the purposes of supporting End Users and Authorized
Resellers. MC will designate two (2) primary contacts to handle all
contact with SQA for Second Line Support.
4.3. Provided that MC pays to SQA the requisite PLUS Agreement fees, SQA
shall provide to MC all Product updates (including any error
corrections) that SQA generally makes available to its own end users,
and shall make them available to MC without additional charge for the
benefit of its End Users that have PLUS Agreements in effect. MC
shall promptly distribute to all End Users who have PLUS Agreements
in effect copies of any such updates. SQA shall have no other
obligation to enhance, revise or improve the Products.
4.4. Upon request, SQA will provide a five (5) day class of standard SQA
product training for up to three (3) of MC's sales, marketing and
support personnel, a certification class in SQA Process methodology
to one of MC's quality assurance consultants, and hotline telephone
on-the-job training for up to two (2) of MC's support personnel.
Unless otherwise agreed, all training will be provided at SQA's home
office at mutually agreed upon times. Any charges for training in
addition to the above, or at other than SQA's site, will be in
accordance with SQA's standard fees and expenses.
SECTION 5: PRICE, PAYMENT TERMS, AND RECORDS
5.1. In accordance with Exhibit H, MC shall make a one-time non-refundable
cash payment of USD $[Confidential Treatment Requested] upon
execution of this Agreement.
5.2. The license fees to be paid by MC for Products, Product Support
Agreements and use of SQA materials in training classes conducted by
MC will be determined by reference to SQA's Recommended International
End User Pricing Schedule set forth in Exhibit C hereto, as amended
from time to time by SQA upon sixty (60) days' prior written notice,
and shall meet or exceed the Guaranteed Minimum Revenue Stream
provided for in Exhibit H and Section 11.2.1 hereof on a yearly
basis. All Not for Resale Copies of Products used by MC or its
Authorized Resellers for evaluation, demonstration, support and
training, shall not be subject to a license fee. The license fee for
other internal use of the Products (other than evaluation,
demonstration, support and training) shall be in accordance with
Exhibit C.
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SQA International Development and Distribution Agreement Page
<PAGE>
5.2.1. MC shall prepay to SQA the Amount Due for each quarter as
set forth in Exhibit H on the first last day of the first
month of each quarter.
5.2.2. For the period beginning at the earlier of a) three months
after the release of Copernicus in the US, or b) the release
of the Japanese localized version of Copernicus by MC, and
ending on the last day of the fourth quarter following such
date (such four quarters to include the quarter in which the
earlier event occurs) a comparison will be made of the
Guaranteed Minimum Revenue Stream Cumulative Amount Due as
set forth in Exhibit H (which will include the payments made
by MC in accordance with Sections 5.1 and 5.2.1 above prior
to such date) and the amount of actual license fees payable
by MC to SQA pursuant to Section 5.2 for such period. If the
actual license fees payable by MC to SQA for such period
exceed the Guaranteed Minimum Revenue Stream Cumulative
Amount Due as set forth in Exhibit H, MC shall pay SQA such
excess in accordance with the provisions of Section 5.4. If
the actual license fees payable by MC to SQA for such period
do not exceed the Guaranteed Minimum Revenue Stream
Cumulative Amount Due as set forth in Exhibit H, no
additional payment shall be due and no adjustment will be
made to any amount due to SQA hereunder. If the actual
license fees payable by MC to SQA for such period do not
exceed the Guaranteed Minimum Revenue Stream Cumulative
Amount Due as set forth in Exhibit H, the licenses granted in
Section 3 of this Agreement may become, at SQA's option, non-
exclusive. If the licenses granted in Section 3 of this
Agreement become non-exclusive, MC shall be released from its
obligation to pay the Guaranteed Minimum Revenue Stream set
forth in Exhibit H for the subsequent quarters.
5.2.3. For the period beginning on the first day of the quarter
immediately following the period provided for in Section
5.2.2 above and ending on the last day of the following
quarter (a period of two quarters or six months), a
comparison will be made of the Guaranteed Minimum Revenue
Stream Amount Due as set forth in Exhibit H (which will
include the quarterly payments made in advance by MC in
accordance with the terms of this Agreement for each of the
two quarters) and the amount of actual license fees payable
by MC to SQA pursuant to Section 5.2 for such period. If the
actual license fees payable by MC to SQA for such period
exceed the Guaranteed Minimum Revenue Stream Amount Due for
the two quarters as set forth in Exhibit H, MC shall pay SQA
such excess in accordance with the provisions of Section 5.4.
If the actual license fees payable by MC to SQA for such
period do not exceed the Guaranteed Minimum Revenue Stream
Amount Due for the two quarters as set forth in Exhibit H, no
additional payment shall be due and no adjustment will be
made to any amount due to SQA hereunder. If the actual
license fees payable by MC to SQA for such period do not
exceed the Guaranteed Minimum Revenue Stream Cumulative
Amount Due as set forth in Exhibit H, the licenses granted in
Section 3 of this Agreement may become, at SQA's option, non-
exclusive. If the licenses granted in Section 3 of this
Agreement become non-exclusive, MC shall be released from its
obligation to pay the Guaranteed Minimum Revenue Stream set
forth in Exhibit H for the subsequent quarters.
5.2.4. The procedure set forth in Section 5.2.3 above shall be
repeated for each subsequent two quarter period.
5.3 Each purchase order submitted pursuant to this Agreement for US
Version Products shall include accurate shipping and billing
instructions and shall state that it is subject to the terms and
conditions of this Agreement. Products will be shipped F.O.B. Woburn,
Massachusetts, USA. SQA shall make reasonable efforts to ship
Products within forty-eight (48) hours of receipt of order.
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SQA International Development and Distribution Agreement Page
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5.4 All payments to SQA shall be in U. S. dollars, and are due within
thirty (30) days of invoice. Payments will be conducted via cable
transfer of funds to the bank account specified by SQA. Prices listed
are exclusive of any shipping costs, import duties, sales, use, value
-added, privilege, excise or similar taxes or duties levied upon SQA,
or any other charges or assessments established by any government
agency in Japan, that are based upon licensing of the Products
pursuant to this Agreement, all of which shall be paid by MC. SQA
will reimburse MC for the 10% Japanese withholding tax on SQA net
revenues actually paid by MC on SQA's behalf as SQA is capable of
taking advantage of such credits.
5.5. MC shall prepare and maintain complete and accurate books and
records documenting the licensing and servicing of Products and any
compensation received therefrom.
5.6. During the term of this Agreement and for a period of one year
thereafter, SQA shall have the right, at its expense and upon
reasonable notice, to examine or have examined by an accountant MC's
books and records once each calendar quarter, in order to determine
and verify performance under this Agreement.
5.7. In the event that MC at any time during the term of this Agreement
has outstanding payables to SQA more than one hundred twenty (120)
days past due aggregating to 10% of the total account balance, SQA
may elect to send notice of default of this contract to MC and it
shall be considered a material breach of this Agreement.
SECTION 6: SALES COLLATERAL AND TRADEMARKS
6.1. SQA will provide MC with up-to-date copies of all sales collateral,
documentation, or other promotional materials for MC's use in
marketing the Products. MC may purchase these materials as required
at SQA's reproduction costs plus reasonable mark-up for
administrative overhead. SQA may prohibit the use of any materials
which include trademarks which SQA has not successfully registered in
Japan.
6.2. All packaging, documentation and promotional materials prepared by MC
shall be subject to SQA's prior written approval, which approval
shall be given within five (5) business days after receipt of a
sample and shall not be unreasonably withheld. SQA will provide MC
with copies of appropriate trademarks, trade names, logos and
identifying slogans (hereafter the "Marks") in a format suitable for
incorporation into MC's packaging, documentation and promotional
materials so approved. Such Marks may vary from the Marks utilized by
SQA in jurisdictions other than Japan.
6.3. MC will not remove, alter, cover, or obfuscate any copyright notice,
Mark or other proprietary rights, notice placed by SQA on the
Products or any copy or portion thereof. MC acknowledges that the
Marks used by SQA or by MC in relation to the Products, whether
registered or not registered, belong exclusively to SQA. MC will,
during the term of this Agreement, use the Marks solely in connection
with the promotion and marketing of the Products and SQA hereby
grants to MC, during the term of this Agreement, a non-exclusive,
nontransferable right to use and reproduce the Marks solely for the
purposes of promoting and marketing the Products as authorized
herein. MC will accompany each use of the Marks with a conspicuous
notation that the Marks are owned by SQA and any other proprietary
legend that SQA determines reasonably necessary to protect its rights
herein. MC shall not use the Marks in conjunction with the promotion
or marketing of services to be performed by MC except to the extent
necessary to indicate SQA as the source of training materials and
only with SQA's prior written approval of such use. MC will not
register any of the Marks or any other mark, sign, symbol, design,
device or trademark used in relation to the
________________________________________________________________________________
SQA International Development and Distribution Agreement Page
<PAGE>
Products. All rights which may accrue to MC in relation to the Marks
or any other mark, sign, symbol, design, device or trademark used in
relation to the Products are understood to be the property of SQA,
and MC agrees that, at SQA's request, MC will take reasonable steps
as are necessary to perfect such rights.
6.4. MC hereby acknowledges that SQA has the exclusive rights to license
the use of the Marks and that by reason of MC's use of the Marks
under this Agreement, it shall not acquire ownership of the Marks or
any part thereof. All use of the marks by MC shall inure to SQA's
benefit.
6.5. Upon termination of this Agreement, MC shall cease all use of the
Marks, except as necessary under Section 11.3.3
SECTION 7: OTHER MC OBLIGATIONS
7.1. In addition to other terms and conditions set forth in this
Agreement, MC agrees as follows:
7.1.1. By the fifteenth working day of each month, MC shall supply
to SQA the following reports for the previous calendar month:
all shipments of Products to Authorized Resellers and End
Users; all orders received for Products; all Authorized
Resellers and End User training conducted using SQA training
materials; and consulting engagements conducted using SQA
Process methodology.
7.1.2. By the end of each calendar quarter, MC will report all End
User identifying information to SQA.
7.1.3. MC shall promptly inform SQA in writing of all inquiries for
the Products outside Japan.
7.1.4. MC shall not export the Products in violation of the export
control laws of the United States or of any other country,
and agrees to indemnify SQA for any breach of this warranty.
7.1.5. MC shall deliver and maintain current versions of all
Japanese Localized Versions of the Products created hereunder
at SQA's facilities in Woburn, Massachusetts, USA at all
times during the term of this Agreement.
SECTION 8: SQA WARRANTY AND INDEMNITY
8.1. SQA hereby warrants that it has the right to enter into this
Agreement and to grant the licenses and distribution rights
hereunder. SQA agrees to indemnify MC against any and all losses,
damage or liability assessed against MC or incurred by MC arising out
of or in connection with any claim that Products provided to MC under
this Agreement infringe a patent, trademark or copyright, provided:
(a) MC notifies SQA promptly and in writing that any such claim,
action or suit is threatened or has been brought; (b) SQA has the
right to assume the defense of such claim, action or suit with
counsel selected by SQA; and (c) SQA receives MC's full and complete
cooperation in the defense of such claim, action or suit. SQA shall
have no liability for costs incurred or settlements made without its
consent.
8.2. In the event of any such claim, action or suit, SQA shall have the
right, at its option, to either:
8.2.1. procure for MC and its End Users the right to continue using
and selling the Products,
8.2.2. modify the Products so that they are non-infringing, or
8.2.3. withdraw the Products.
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SQA International Development and Distribution Agreement Page
<PAGE>
8.3. In the event any Product is withdrawn, MC agrees to cooperate with
SQA in the retrieval of such Product. SQA's sole liability to MC in
such event shall be to refund all amounts paid by MC to SQA for such
Product.
8.4. SQA does not warrant that the functions contained in a Licensed
Program will meet an End User's requirements or that the operation of
a Product will be error free. For sixty (60) days from the date of
shipment by MC to an Authorized Reseller or End User, and provided
that Products are run exclusively on Authorized Hardware, SQA
warrants that the Products will perform substantially as documented
in the applicable SQA technical documentation. If the Product fails
to perform as warranted, MC shall notify SQA of the problem with
specificity, and SQA will make reasonable efforts to remedy the
problem. If SQA's efforts to remedy a problem are unsuccessful, MC
acknowledges and agrees that SQA's sole and exclusive obligations
hereunder to MC and its Authorized Resellers and End Users will be
limited to the replacements of defective media of the US Version of
the Product, or to a refund to MC of the license fee paid by MC
pursuant to Exhibit C. Before returning US Versions of the Product to
SQA for replacement, MC must first obtain a return merchandise
authorization (RMA) from SQA's technical support function.
8.5. THE FOREGOING LIMITED WARRANTY OF SQA IS IN LIEU OF ALL OTHER
WARRANTIES OF SQA, EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCTS,
INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
8.6. Notwithstanding anything in this Section 8, SQA shall not be liable
for any damages caused by:
8.6.1. any claim of infringement resulting in any way from operating
Products on other than Authorized Hardware;
8.6.2. the use of the Products with infringing software or data, or
from modifications made to the software by MC pursuant to the
development effort set forth in Section 2 of this Agreement.
8.6.3. any modification of the Products provided by SQA by any
person other than SQA.
8.7. THIS SECTION 8 STATES THE ENTIRE LIABILITY OF SQA FOR PATENT,
COPYRIGHT, TRADEMARK OR OTHER INTELLECTUAL PROPERTY RIGHT
INFRINGEMENT OR FOR ANY BREACH OF WARRANTY, EXPRESS OR IMPLIED.
8.8. SQA AGREES TO INDEMNIFY MC AGAINST CLAIMS RESULTING FROM SQA'S BREACH
OF THE WARRANTIES SET FORTH IN THIS SECTION 8, BUT IN NO EVENT SHALL
SQA BE LIABLE TO MC OR TO ANY END USER FOR ANY LOSS OF PROFITS, LOSS
OF DATA, OR LOSS OF USE OF HARDWARE, OR FOR ANY INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF MC, ANY END USER OR ANY OTHER
THIRD PARTY.
SECTION 9: MC WARRANTY AND INDEMNITY
9.1. MC hereby warrants that it has the right to enter into this Agreement
and to perform the development work provided for in Section 2. MC
agrees to indemnify SQA against any and all losses, damage or
liability assessed against SQA or incurred by SQA arising out of or
in connection with any claim that any portion of the Japanese
Localized Version of the Products developed by MC hereunder (but not
the portions of the Japanese Localized Version of the
________________________________________________________________________________
SQA International Development and Distrution Agreement Page
<PAGE>
Products that remain unmodified from the Products delivered by SQA
hereunder) infringe a patent, trademark, copyright or other
intellectual property right, provided: (a) SQA notifies MC promptly
and in writing that any such claim, action or suit is threatened or
has been brought; (b) MC has the right to assume the defense of such
claim, action or suit with counsel selected by MC; and (c) MC
receives SQA's full and complete cooperation in the defense of such
claim, action or suit. MC shall have no liability for costs incurred
or settlements made without its consent.
9.2. MC agrees to indemnify SQA against any and all losses, damage or
liability assessed against SQA or incurred by SQA arising out of or
in connection with any claim asserted against SQA with respect to
MC's marketing or distribution of the Japanese Localized Version of
the Products developed or prepared by MC hereunder, provided: (a) SQA
notifies MC promptly and in writing that any such claim, action or
suit is threatened or has been brought; (b) MC has the right to
assume the defense of such claim, action or suit with counsel
selected by MC; and (c) MC receives SQA's full and complete
cooperation in the defense of such claim, action or suit. MC shall
have no liability for costs incurred or settlements made without its
consent. Nothing in this Section shall effect SQA's liability to MC
pursuant to Section 8 of this Agreement.
SECTION 10: PROPRIETARY AND CONFIDENTIAL INFORMATION
10.1. MC recognizes that SQA is the owner of the Products licensed under
this Agreement, the results of the development performed hereunder by
or on behalf of either party, and all copies thereof, and of all
copyright, trade secret, patent and other intellectual or industrial
property rights therein, all of which are valuable property of SQA.
To the extent necessary for SQA to own the entire right, title and
interest in and to the results of any development performed by MC in
relation to the Products, including all development conducted
pursuant to Section 2 above, MC does hereby assign and agree to
assign to SQA, all that right, title and interest in and to any such
development, such assignment occurring as soon as capable of taking
place in law or equity. MC shall obligate all persons employed or
engaged by MC to perform any such development to provide to MC, which
shall supply to SQA at no additional charge, all such assignments,
rights and covenants as are deemed appropriate by SQA to assure and
perfect such assignment.
10.2. MC shall take all reasonable measures to assist SQA in maintaining
its proprietary rights. Such measures shall include using diligent
efforts to prevent End Users from copying or using the Products
outside the scope of this Agreement or the License Agreement. In the
event of any violations or suspected violations of such provisions,
MC shall immediately notify SQA and MC will, at SQA's expense, assist
SQA in enforcing SQA's proprietary interest in the Products.
10.3. MC hereby acknowledges and agrees that SQA in any case has the right
to enforce and protect its own rights in the Products directly
against any and all parties, including, without limitation, End
Users.
10.4. Except as specifically provided in this Agreement, neither MC nor any
End User is authorized to modify, enhance or otherwise change the
Products, including documentation and any other related materials
described in Exhibit C, without the prior written consent of SQA.
10.5. MC shall not cause or permit disclosure, copying, display, loan,
publication, transfer of possession (whether by sale, exchange, gift,
operation of law or otherwise) or other dissemination of the
Products, in whole or in part, to any third party, except as
permitted in this Agreement.
10.6. In any distribution of the Products, MC will preserve and respect
SQA's copyright, trade secret, patent, proprietary and/or other legal
notices contained on or in copies of the Products.
________________________________________________________________________________
SQA International Development and Distribution Agreement Page
<PAGE>
10.7. MC will maintain appropriate records relating to the disposition and
use of all copies of Products.
10.8. MC shall not disassemble or reverse compile any Product or portion
thereof, nor create any derivative works thereof other than those
specifically provided for hereunder. Neither shall MC bypass any
security device provided with the Products.
10.9. Each party shall keep confidential any confidential, proprietary
information of the other party received from the other party in
writing and appropriately marked to indicate its confidential or
proprietary nature, until such time as that information enters the
public domain except by the unauthorized efforts of the party bound
to keep it a secret.
SECTION 11: TERM AND TERMINATION OF AGREEMENT
11.1. The term of this Agreement shall begin on the date first stated above
and shall expire fully and finally on the date three years after the
earlier of: (i) three months after the release of Copernicus (US
version by SQA) or (ii) the release of the localized version of
Copernicus by MC. Any follow-on arrangement shall be by separate
written agreement on mutually agreeable terms on an annual basis.
11.2. This Agreement may be terminated as follows:
11.2.1. Except as otherwise herein provided, either party may
terminate this Agreement upon the other party's failure to
cure a default (including the failure to make any of the
prepayments or payments provided for in Section 5) under this
Agreement within thirty (30) days of receipt of notice of
default. Notwithstanding the foregoing, SQA may terminate
this Agreement immediately, upon written notice to MC, if MC
violates any terms and conditions of or relating to SQA's
proprietary rights or to United States export control laws.
11.2.2. If either party shall have ceased business, been adjudged
bankrupt or insolvent under the laws of any relevant
jurisdiction, made an assignment for the benefit of
creditors, or filed, or had filed against it, a petition of
bankruptcy, reorganization or other insolvency proceeding,
the other party may terminate the Agreement upon written
notice.
11.2.3. If there should be any transfer of a controlling interest in,
or a change in the management of MC, SQA may terminate this
Agreement upon thirty (30) days' written notice, where such
change, in the judgment of SQA, substantially impairs MC's
ability to perform its obligations pursuant to this
Agreement. If there should be any transfer of a controlling
interest in SQA to any entity headquartered in Japan, MC may
terminate this Agreement upon thirty (30) days' written
notice, where such change, in the judgment of MC,
substantially impairs SQA's ability to perform its
obligations pursuant to this Agreement.
11.3. Upon termination of this Agreement, the duties and rights of the
parties shall be as follows:
11.3.1. MC's right and license to market the Products shall terminate
and, except as provided herein, MC shall immediately stop
marketing and using the Products, and shall cease to provide
Authorized Resellers and End Users with First Line Support.
MC shall immediately return to SQA all Products as well as
all technical and marketing materials
________________________________________________________________________________
SQA International Development and Distribution Agreement Page
<PAGE>
relating to the Products and all copies thereof. MC shall
promptly return to SQA any confidential information belonging
to SQA.
11.3.2. Within ninety (90) days of termination of this Agreement, a
duly authorized officer of MC shall certify in writing that
all Products and all technical and marketing materials
relating to the Products have been returned to SQA.
11.3.3. MC shall have ninety (90) days to complete sales to potential
Authorized Resellers and End Users contacted by MC prior to
the date of termination of this Agreement. During this time,
SQA shall continue to provide MC with Second Line Support in
accordance with Section 4 in order to assist MC in completing
sales to potential Authorized Resellers and End Users
contacted by MC prior to the termination date.
11.3.4. Within ninety (90) days of termination of this Agreement, MC
shall pay SQA all sums due and owing under this Agreement on
or prior to the effective date of such termination. IN NO
EVENT SHALL SQA BE REQUIRED TO PAY MC ANY TERMINATION DAMAGES
OR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND.
11.3.5. All Product Support Agreements relating to SQA Products
between MC and End Users in effect at the time of termination
of this Agreement shall be assigned by MC to SQA (or its
designee), which shall thereupon assume the performance of
MC's First Line Support obligations to each End User that has
paid all fees and charges due pursuant to such Product
Support Agreement (but not to any End User that has not paid
all such fees and charges).
SECTION 12: GENERAL PROVISIONS
12.1. The parties agree to cooperate fully in exchanging all
consents, information and documents which may be reasonably
necessary in fulfilling the terms of this Agreement,
including such information and documents required under
Japanese laws and regulations.
12.2. The Agreement does not create and shall not be construed as
creating any relationship of agency, partnership, or
employment between the parties. SQA and MC enter this
Agreement as and shall remain independent parties.
12.3. MC shall have no right or authority to assume, create or
enlarge any obligation or commitment on behalf of SQA and
shall not represent itself as having the authority to
obligate or bind SQA in any manner except as provided for in
this Agreement.
12.4. All notices or other communications given by either party to
the other under this Agreement shall be in writing and shall
be personally delivered or sent by registered or certified
mail, return receipt requested, to the other party at this
address set forth above or such other address as a party may
subsequently designate in writing. Notices shall be effective
upon receipt.
12.5. MC may not assign this Agreement without the consent of SQA.
This Agreement shall inure to the benefit of SQA, its
successors, administrators, heirs, and assigns.
12.6. This Agreement supersedes all prior agreements and
understandings, including oral representations, between the
parties relating to the distribution rights for the Products,
is intended by the parties as a complete and exclusive
statement of the terms of this Agreement, and may be modified
only in a written instrument executed by the parties. In case
of any
________________________________________________________________________________
SQA International Development and Distribution Agreement Page
<PAGE>
discrepancy between this Agreement and any other documents,
the terms of this Agreement shall prevail.
12.7. Waiver of breach of any provision of this Agreement on any
occasion shall not be deemed a waiver of that provision or of
any other provision on any other occasion, nor shall such
waiver affect the right of either party to terminate this
Agreement. The remedies herein reserved shall be cumulative
and additional to any other remedies in law or equity.
12.8. Because unauthorized use or transfer of the Products, or any
information contained therein, may diminish substantially the
value of such materials and irrevocably harm SQA, if MC
breaches any of its obligations under this Agreement, SQA
(without limiting its other rights or remedies) shall be
entitled to injunctive and/or equitable relief, in addition
to other remedies afforded by law, to protect its interests .
12.9. In case of a dispute arising from the interpretation or
enforcement of patents, trademarks or copyrights, the parties
agree to submit to the exclusive jurisdiction of the United
States District Court for the District of Massachusetts,
located in Boston, Massachusetts, USA All other disputes
shall be submitted exclusively to the American Arbitration
Association, whose decision shall be binding on the parties.
This Agreement will not be governed by the United Nations
Convention of Contracts for the International Sale of Goods,
the application of which is hereby expressly excluded.
12.10. The provisions of Sections 6.4, 6.5, 10.1, 10.2, 10.3, 10.5,
10.8, and 10.9 shall survive the termination of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal
as of the day and year indicated above in Woburn, Massachusetts, USA
AGREED AND ACCEPTED AGREED AND ACCEPTED
- ------------------- -------------------
for SQA for MC
By: _____________________ By: ___________________
Title: _____________________ Title: ___________________
________________________________________________________________________________
SQA International Development and Distribution Agreement Page
<PAGE>
Exhibit A
Authorized Hardware
To be determined.
________________________________________________________________________________
SQA International Development and Distribution Agreement Page 1
<PAGE>
Exhibit B
Terms for Inclusion in End User License
1. THE LICENSE: Subject to the terms and conditions of this Agreement, and
payment of the appropriate license fees, SQA hereby grants End User a non-
exclusive, non-transferable license for End User to use the software, including
documentation and related materials contained in this package (collectively, the
"Product") for End User's own operations on an Installed Workstation basis. The
Product is licensed to End User at a rate of one licensed copy of the Product
for each Workstation Installation. In no event may the number of Workstation
Installations containing copies of the software exceed the number of licenses
purchased.
End User may make one archival copy of the software (but not the documentation
or other components) for your own internal convenience. End User agrees to
include the serial number plus any copyright notices, trademark notices,
legends, and logos on any archival copy.
2. PRODUCT SUPPORT: At End User's request, SQA or its designee will enter
into a Product support agreement with End User, whereby SQA or its designee will
provide End User with, at a minimum, telephone hotline support and error
corrections in accordance with our standard Product support plan. Provided that
End User completes and returns the Registration Card included in the Product
package, SQA or its designee will provide such Product support at no additional
charge during the warranty period referenced in Section 3.
At End User's request and where applicable, SQA can arrange to make available to
End User or to End User's designee certain interface specifications in order
that End User may develop its own software interfaces to provide
interoperability with SQA's Product.
3. SQA WARRANTIES: SQA represents that SQA has full power and right to
license the Product to End User. SQA agrees to indemnify End User against and
hold End User harmless from any and all loss, damage, or liability asserted
against End User or incurred by End User, arising out of or in connection with
any claim that the Product infringes a patent, copyright, or trade secret. End
User agrees to notify SQA promptly of any such claim or action and SQA shall
control the defense or settlement. SQA have no liability for costs incurred or
settlements made without its consent.
For sixty (60) days from date of shipment, SQA warrants the following: The
Product will work substantially as stated in the SQA documentation supplied. If
the Product fails to perform as warranted, End User shall notify SQA or its
support designee of the problem with specificity, and provided that End User has
returned a completed Registration Card to SQA or its support designee, SQA will
make reasonable efforts to remedy the problem.
SQA does not warrant that the functions contained in the software will meet any
of End User's requirements other than those set forth in the SQA documentation,
or that the operation of the software will be error free. End User agrees that
its sole and exclusive remedy hereunder will be limited to SQA's or its support
designees' efforts to remedy stated above, or to refund of its license fee if
SQA or its support designee is unable to remedy the problem.
SQA agrees to indemnify End User against any claims because of its breach of
this warranty, but IN NO EVENT SHALL SQA BE LIABLE TO END USER FOR ANY INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES OF EITHER END USER OR A THIRD PARTY AGAINST END
USER ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT. Except for claims
arising out of patent, copyright, or trade secret infringement, SQA's liability
for damages in connection with the products and services furnished hereunder
shall not exceed the amounts paid by End User under this Agreement.
End User may have certain statutory rights, as a consumer or otherwise, to which
the exclusions set forth in Section 3 of this License Agreement do not apply.
Any modification of the Product by any persons other than
________________________________________________________________________________
SQA International Development and Distribution Agreement Page 1
<PAGE>
SQA or any use of the Product with infringing software or data will void SQA's
affirmative duties under the indemnity and warranty provisions of this Section
3.
THE FOREGOING LIMITED WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES THAT SQA MAY
MAKE, EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCT, INCLUDING WITHOUT
LIMITATION WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
THE FOREGOING FURTHER STATES OUR ENTIRE LIABILITY FOR PATENT, COPYRIGHT, OR
TRADE SECRET INFRINGEMENT OR FOR ANY BREACH OF WARRANTY AGAINST INFRINGEMENT,
EXPRESS OR IMPLIED.
4. END USER REPRESENTATIONS: End User warrants that End User will not exceed
the number of Workstation Installations authorized pursuant to Section 1, and
will, upon request, certify in writing that End User has bought a sufficient
number of licenses for each Workstation Installation in use. Upon notice, SQA
will have a reasonable right to audit End User's compliance with the per
Workstation Installation requirement.
End User agrees to preserve and respect any copyright notice that SQA includes
with the Product. End User agrees to maintain appropriate records, whether
written or oral, of the location of any archival copy of the software. End User
agrees that End User will not copy the Product except for the archival copy of
the software, and that End User will not disassemble or decompile the software
or any portion thereof, including for reasons of error correction. Neither may
End User make any derivative works from the software.
End User represents that End User will not export or re-export the Product in
violation of any export control laws of the United States or of any other
country, and agrees to indemnify SQA for any breach of this representation.
5. TERMINATION: This Agreement shall be effective until terminated by mutual
consent, or by election of either End User or SQA in case of the other party's
unremedied material breach. In case of any termination of this Agreement, End
User will immediately return the Product to SQA, and will certify in writing
that all Product components and any copies of the software have been returned or
erased from the memory of End User's computer or made non-readable.
6. GENERAL TERMS: This Agreement supersedes all prior agreements and
understandings, including oral representations, between End User and SQA
relating to End User's license for the Product, is intended by End User and SQA
as the complete and exclusive statement of the terms of this Agreement, and may
be modified only in writing by both End User and SQA. In case of any
discrepancy between this Agreement and any other documents, the terms of this
Agreement shall prevail. Waiver or breach of any provision of this Agreement
shall not be deemed a waiver of that provision or of any other provision. The
remedies herein reserved shall be cumulative and additional to any other
remedies in law or equity.
This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, USA, and shall inure to the benefit of SQA, Inc., its successors,
administrators, heirs, and assigns. In case of a dispute arising from the
interpretation or enforcement of patents, trademarks or copyrights, End User and
SQA agrees to submit to the exclusive jurisdiction of the United States District
Court for the District of Massachusetts, located in Boston, Massachusetts, USA.
Sections 3, 4, and 6 shall survive any termination of this Agreement.
________________________________________________________________________________
SQA International Development and Distribution Agreement Page
<PAGE>
Exhibit C
Products, SQA's Recommended International End User Prices*, and Discounts
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Item Discount from International List
- ---------------------------------------------------------------------------
Japanese Version US Version
<S> <C> <C>
- -----------------------------------------------------------------------------
Standard Software Products (Int. List) [Confidential Treatment Requested]
- ----------------------------------------
[Confidential Treatment Requested]
SQA Robot ($XXXXX)
SQA Manager ($XXXXX)
SQA LoadTest
5-agent version ($XXXXXX)
10-agent version ($XXXXXX)
25-agent version ($XXXXXX)
50-agent version ($XXXXXX)
SQA Suite: TeamTest Edition ($XXXXX)
(SQA Robot and SQA Manager)
SQA Suite: Client Server Edition
(SQA Robot, SQA Manager & SQA LoadTest)
5-agent version ($XXXXXX)
10-agent version ($XXXXXX)
25-agent version ($XXXXXX)
50-agent version ($XXXXXX)
- ---------------------------------------------------------------------------
</TABLE>
*SQA's Recommended International End User Prices are indicated as of the date of
execution of this Agreement and are subject to amendment pursuant to Section
5.2.
________________________________________________________________________________
SQA International Development and Distribution Agreement Page 1
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Item Discount from International List
- ------------------------------------------------------------------------------
Japanese Version US Version
- ------------------------------------------------------------------------------
<S> <C> <C>
Maintenance Pricing (Int. List) [Confidential Treatment Requested]
- -------------------------------
PLUS Agreement (Product License Upgrade
& Support)
[Confidential Treatment Requested]
SQA Robot ($XXX)
SQA Manager ($XXX)
SQA LoadTest
5-agent version ($XXXXX)
10-agent version ($XXXXX)
25-agent version ($XXXXX)
50-agent version ($XXXXX)
SQA Suite: TeamTest Edition ($XXX)
(SQA Robot and SQA Manager)
SQA Suite: Client Server Edition
(SQA Robot, SQA Manager & SQA LoadTest)
5-agent version ($XXXXX)
10-agent version ($XXXXX)
25-agent version ($XXXXX)
50-agent version ($XXXXX)
- -------------------------------------------------------------------------------
Software Product Upgrades (Int. List) [Confidential Treatment Requested]
- -------------------------------------
SQA Robot
[Confidential Treatment Requested]
Version 3.0 to 4.0 ($XXX)
Version 3.1 to 4.0 ($XXX)
SQA Manager
Version 3.0 to 4.0 ($XXX)
Version 3.1 to 4.0 ($XXX)
SQA Suite: TeamTest Edition
Version 3.0 to 4.0 ($XXXX)
Version 3.1 to 4.0 ($XXX)
SQA LoadTest
5 agent to 10 agent ($XXXXX)
5 agent to 25 agent ($XXXXXX)
5 agent to 50 agent ($XXXXXX)
10 agent to 25 agent ($XXXXXX)
10 agent to 50 agent ($XXXXXX)
25 agent to 50 agent ($XXXXXX)
SQA Suite: Client/Server Edition
5 agent to 10 agent ($XXXXX)
5 agent to 25 agent ($XXXXXX)
5 agent to 50 agent ($XXXXXX)
10 agent to 25 agent ($XXXXXX)
10 agent to 50 agent ($XXXXXX)
25 agent to 50 agent ($XXXXXX)
- --------------------------------------------------------------------------------
SQA Process
- -----------
1996 [$2000/engagement $2000/engagement]
1997 [$3000/engagement $3000/engagement]
1998 [$5000/engagement $5000/engagement]
- --------------------------------------------------------------------------------
</TABLE>
________________________________________________________________________________
SQU International Development and Distribution Agreement Page 1
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Item Discount from International List
- ---------------------------------------------------------------------------
Japanese Version US Version
- ---------------------------------------------------------------------------
<S> <C> <C>
SQA Standard Training Classes (Int. List) [Confidential Treatment Requested]
- -----------------------------------------
SQA Process Primer [Confidential Treatment Requested]
SQA Suite: TeamTest Edition - Quick Start
[Confidential Treatment Requested]
SQA Suite: TeamTest Edition - Advanced
[Confidential Treatment Requested]
SQA LoadTest [Confidential Treatment Requested]
- ---------------------------------------------------------------------------
</TABLE>
________________________________________________________________________________
SQA International Development and Distribution Agreement Page
<PAGE>
Exhibit D
SQA Deliverables
Production versions of:
SQA Suite: TeamTest Edition
SQA Suite: Client/Server Edition (5 agent version)
SQA LoadTest - (5 Agent Version)
SQA Process
Documentation set(s) in Hard Copy and on Diskette
SQA Suite: TeamTest Edition
SQA Suite: Client/Server Edition
SQA LoadTest
SQA Process
One Each of SQA Marketing Material
Where available, one each of SQA Marketing Materials on disk
SQA Training Materials in Hard Copy and on disk:*
Instructor Guide
Student Kit
Presentation Overheads
Sample Applications
Electronic Versions of SQA Logo
One set of camera-ready artwork of SQA Logo
*Dependent upon MC's agreement to use SQA Training Materials and pay associated
royalty.
________________________________________________________________________________
SQA International Development and Distribution Agreement Page 1
<PAGE>
Exhibit E
Double-Byte Support Development Schedule
To be determined.
________________________________________________________________________________
SQA International Development and Distribution Agreement Page 1
<PAGE>
Exhibit F
Localization Development Schedule
To be determined.
________________________________________________________________________________
SQA International Development and Distribution Agreement Page
<PAGE>
Exhibit G
Equipment Loan Terms
SQA and MC agree that the following terms and conditions apply when MC
loans SQA equipment and programs including associated user manuals and similar
documentation ("Loaned Items"). Loaned Items may also be referred to as "Loaned
Equipment" or "Loaned Programs," as applicable.
1. Authorized Use. MC provides the Loaned Items to SQA solely for use in
--------------
maintaining a mirror laboratory according to the terms of this Agreement.
Loan Period. MC will provide the Loaned Items to SQA on or about January 1,
-----------
1996. The Loan Period for each Loaned Item will extend from the actual date
of delivery until the date of expiration or earlier termination of this
Agreement.
2. Ownership and License. MC retains title to all Loaned Items. SQA may not
---------------------
transfer Loaned Items to any other party except to permitted assignees under
this Agreement. MC grants SQA a license to use, store, modify and make
sufficient copies of the Loaned Programs to support SQA's use of the Loaned
Items under this Agreement. Any authorized copies made by SQA will be deemed
to be Loaned Items.
3. Delivery and Installation. MC will deliver and install the Loaned Items to
-------------------------
SQA's site in Woburn, Massachusetts, USA.
4. Risk of Loss or Damage. MC relieves SQA of the risk of loss of, or damage
----------------------
to, all Loaned Items, except for loss or damage resulting from SQA's breach
of this Agreement.
5. Security. SQA will use reasonable care in the use and security of all Loaned
--------
Items. SQA will provide an operating environment for the Loaned Items
consistent with the related technical documentation. SQA will not move the
Loaned Items to another location without MC's prior written approval.
6. Service and Support. MC will service the Loaned Items regularly and maintain
-------------------
them in good operating condition, performing in accordance with their
technical documentation, at all times. SQA will permit MC personnel full,
free and safe access to the Loaned Items during normal business hours, for
the purpose of inspection, preventive maintenance service or remedial
maintenance service. MC shall reimburse SQA for the reasonable cost of non-
routine maintenance of the Loaned Items.
7. Alterations and Attachments. An alteration to Loaned Equipment may be made
---------------------------
only upon MC's prior written approval. An attachment to Loaned Equipment may
be made without notice to MC. SQA will remove any alteration or attachment
and restore Loaned Equipment to its unaltered condition before its return to
MC or upon MC's notice to SQA that the alteration or attachment renders
maintenance of the Loaned Equipment impractical.
8. Changes. MC may provide additional items to SQA during the term of this
-------
Agreement. Such additions will be specified in a revised Agreement.
9. Disposition of Loaned Items. SQA will return the Loaned Items to MC at the
---------------------------
end of the Loan Period. SQA will return the Loaned Equipment in the same
condition as when delivered to SQA, reasonable wear and tear excepted.
SQA will permit MC personnel access during SQA's normal business hours to
allow MC to remove the Loaned Items.
________________________________________________________________________________
SQA International Development and Distribution Agreement Page
<PAGE>
10. Intellectual Property Rights. If the operation of a Loaned Item becomes, or
----------------------------
MC believes is likely to become, the subject of a claim that it infringes a
patent, copyright or other intellectual property right, MC may, at its
option and expense, either secure the right for SQA to continue using the
Loaned Item or replace or modify it so that it becomes non-infringing. MC
agrees to indemnify and hold SQA harmless against any and all losses, damage
or liability assessed against SQA or incurred by SQA arising out of or in
connection with any claim that a Loaned Item provided to SQA under this
Agreement infringes a patent, copyright or other intellectual property
right, provided: (a) SQA notifies MC promptly and in writing that any such
claim, action or suit is threatened or has been brought; (b) MC has the
right to assume the defense of such claim, action or suit with counsel
selected by MC; and (c) MC receives SQA's full and complete cooperation in
the defense of such claim, action or suit.
________________________________________________________________________________
SQA International Development and Distribution Agreement Page
<PAGE>
Exhibit H
Guaranteed Minimum Revenue Stream
<TABLE>
<CAPTION>
Cumulative
Date Amount Due Amount Due
- ---------------------------------------------------------------------
[Confidential Treatment Requested]
<S> <C> <C>
Contract Signing (Nov. 15, 1995) $XXXXXXX $ XXXXXXX
- ---------------------------------------------------------------------
January 2, 1996 $ XXXXXX $ XXXXXXX
- ---------------------------------------------------------------------
April 1, 1996 $ XXXXXX $ XXXXXXX
- ---------------------------------------------------------------------
July 1, 1996 $XXXXXXX $ XXXXXXX
- ---------------------------------------------------------------------
October 1, 1996 $XXXXXXX $ XXXXXXX
- ---------------------------------------------------------------------
January 2, 1997 $XXXXXXX $ XXXXXXX
- ---------------------------------------------------------------------
April 1, 1997 $XXXXXXX $ XXXXXXX
- ---------------------------------------------------------------------
July 1, 1997 $XXXXXXX $XXXXXXXXX
- ---------------------------------------------------------------------
October 1, 1997 $XXXXXXX $XXXXXXXXX
- ---------------------------------------------------------------------
January 2, 1998 $XXXXXXX $XXXXXXXXX
- ---------------------------------------------------------------------
April 1, 1998 $XXXXXXX $XXXXXXXXX
- ---------------------------------------------------------------------
July 1, 1998 $XXXXXXX $XXXXXXXXX
- ---------------------------------------------------------------------
October 1, 1998 $XXXXXXX $XXXXXXXXX
- ---------------------------------------------------------------------
</TABLE>
377DGL7423/1.219215-1
________________________________________________________________________________
SQA International Development and Distribution Agreement Page 1
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated January 26, 1996 incorporated by reference in this Form 10-K, into
the Company's previously filed Registration Statements File No's 0-27196 and
33-01074. It should be noted that we have not audited any financial statements
of the Company subsequent to December 31, 1995 or performed any audit procedures
subsequent to the date of our report.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 21, 1996
