Exhibit 10(et)2
AMENDMENT NO. 7
TO
DISTRIBUTION AND MARKETING AGREEMENT
This Amendment No. 7 to Distribution and Marketing Agreement ("Amendment") is
dated as of June 30, 2004 between Artera Group, Inc., a Delaware corporation
("Artera"), and Avaya Inc., a Delaware corporation ("Avaya").
WHEREAS, Artera and Avaya are parties to that certain Distribution and Marketing
Agreement dated as of April 21, 2003, as amended by Amendment No. 1 thereto
dated as of October 8, 2003, as amended by Amendment No. 2 thereto dated as of
April 21, 2004, as amended by Amendment No. 3 thereto dated as of May 19, 2004,
as amended by Amendment No. 4 thereto dated as of June 4, 2004, as amended by
Amendment No. 5 thereto dated as of June 18, 2004, as amended by Amendment No. 6
thereto dated as of June 25, 2004 (as so amended "Distribution Agreement");
WHEREAS, the parties wish to amend certain of the terms and conditions of the
Distribution Agreement and extend the term of the Distribution Agreement, as
more fully described herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, as
well as other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Territory. Section 1.28 of the Distribution Agreement is hereby amended to
read in its entirety as follows:
" `Territory' shall mean worldwide."
2. License. Section 2.1 of the Distribution Agreement is hereby amended to
read in its entirety as follows:
"License. Artera hereby grants to Avaya during the term of this Agreement,
subject to Section 2.3 hereof, (a) a non-exclusive license to distribute
the Licensed Products to Subscribers in the Territory, with the exceptions
set forth in Schedule 2.1; and (b) a non-exclusive, royalty-free license to
use and reproduce the Licensed Products for purposes of development,
evaluation, testing and "Beta" testing and to reproduce demonstration or
evaluation copies of the Licensed Products for the purposes of marketing
and promoting the Licensed Products and in training customers in their use.
The License is intended to grant to Avaya all rights necessary for Avaya to
distribute and market the Licensed Products as provided in this Agreement,
directly or through one or more levels of Resellers. The License includes
the right to make copies of the User Software for Subscribers and to
reproduce, copy and distribute Artera's Licensed Product documentation,
descriptions and promotional materials in connection with such distribution
and marketing. The License conveys no right to modify the Licensed
Products, to prepare derivative works
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of or modifications to the Licensed Products or to sell or copy the
Licensed Products for any purpose other than for delivery to Subscribers
and Resellers as contemplated by this Agreement; provided, however, that it
shall not contravene this sentence for Avaya to bundle its own technology
with Licensed Products through Artera's application program interface
("API"). No agreement between Avaya and an Enterprise Subscriber may be
inconsistent with the rights granted to Avaya under this Agreement. To the
extent that Artera makes API specifications available to Avaya, Artera
grants to Avaya the right to use such API for the purpose of creating
interfaces between Avaya software products and the Licensed Products.
During the term of this Agreement, Artera will provide reasonable technical
support and access to Artera development engineers for the purpose of
answering questions from Avaya on such use of the API at no additional
charge to Avaya.
Artera agrees that Avaya's distributors, resellers, and business partners
are granted a royalty free, non-exclusive, non transferable, non-production
license to use and demonstrate the Licensed Products, as incorporated in
the Avaya Company Product, internally for reselling purposes. No rights are
granted to use the Licensed Products for production purposes. Avaya may
deliver copies of the Licensed Products as incorporated into Company
Product (means "any product developed by Avaya into which the Licensed
Product is to be incorporated"), to prospective End User Customers on a
trial basis for evaluation purposes only ("Evaluation Copy") provided that
each such prospective End User Customer has received a written or
electronic trial license prohibiting the End User Customer from copying,
modifying, reverse engineering, decompiling or disassembling the Licensed
Products or any part thereof. No such license fees shall be reportable or
payable with respect to the Evaluation Copies unless such Evaluation Copy
is replaced with or converted to a standard Avaya offering or the End User
Customer is invoiced for the product directly by Avaya, whichever occurs
first."
3. Right of First Refusal. A new Section 2.9 to the Distribution Agreement is
hereby added, to read in its entirety as follows:
"Right of First Refusal for Fortune 1000 Enterprise Accounts in North
America." During the term of this Agreement, there may be Fortune 1000
Enterprises in North America that Avaya has already contacted or is
planning to contact concerning the distribution of Licensed Products.
Artera will not actively solicit a Fortune 1000 Enterprise in North America
with respect to the Licensed Products, either directly or through its
distribution channels, unless Artera has given Avaya written notice of its
intent to solicit that Enterprise with respect to the distribution of the
Licensed Products. Avaya agrees to respond within 5 business days,
indicating 1) that Avaya will pursue the Enterprise on its own, 2) that
Avaya and Artera should team to pursue the Enterprise, or 3) that Artera is
free to pursue the Enterprise on its own. In the event that Avaya does not
respond within 5 business days, then Artera is free to pursue the
Enterprise.
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4. Unit Royalties. Section 3.1 of the Distribution Agreement is hereby amended
to read in its entirety as follows:
"Unit Royalties. For each Unit initially licensed by or through Avaya that
is, directly or via Reseller(s), covered by a Royalty License, Avaya shall
pay to Artera a Unit Royalty as set forth in Schedule 3.1. Payments to
Artera under this Section 3.1 shall be made as described in Section 3.4
hereof. Avaya payments will be paid net 45 days from invoice. A Subscriber
covered by a Royalty License that discontinues its use of the Licensed
Products but then recommences such use within one year of the
discontinuation shall be considered, following recommencement, to have been
initially licensed by or through Avaya. Nothing in this Section 3.1 or in
Schedule 3.1 shall in any way limit Avaya's right to determine on its own
the actual retail prices it charges for the Licensed Products."
5. Avaya's Marketing Obligations. Section 6.1 of the Distribution Agreement is
hereby deleted, and is replaced with "[DELETED]" so as to preserve the
numbering scheme of Article 6 of the Distribution Agreement.
6. Term. Article 7 of the Distribution Agreement is hereby amended to read in
its entirety as follows:
"The term of this Agreement shall begin on the Effective Date and, unless
extended or earlier terminated by the written agreement of the parties or
pursuant to Article 8 below, shall expire on September 30, 2004."
7. Exceptions to License. A new Schedule 2.1 to the Distribution Agreement is
hereby added, to read in its entirety as set forth in Schedule 2.1 to this
Amendment.
8. Unit Royalty Schedule. Schedule 3.1 to the Distribution Agreement is
hereby amended to read in its entirety as set forth in Schedule 3.1 to this
Amendment.
Except as expressly amended by this Amendment, the Distribution Agreement
will remain in full force and effect. This Amendment may be executed in one
or more counterparts. Each counterpart will be deemed an original, but all
counterparts together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to be signed by their
duly authorized representatives.
AVAYA INC. ARTERA GROUP, INC.
By: /s/ Xxxxx Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------- -------------------------------
Name: Xxxxx Xxxxxxxxx Name: Xxxxxxx X. Xxxxxxxx
Title: Sr. Purch. Specialist Title: Chairman & C.E.O.
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SCHEDULE 2.1
------------
EXCEPTIONS TO LICENSE
1. With respect to distribution of Licensed Products to Major ISP's (as
defined in Section 2.4 of this Agreement), either as Subscribers or as
Resellers, the License shall apply only upon the prior written consent of
Artera in the case of each such Major ISP.
2. With respect to countries that are members of the European Union (except as
otherwise noted below), the License shall not include distribution of
Licensed Products to the entities listed below, either as Subscribers or as
Resellers:
Communications Sector
---------------------
BT
Global Crossing
NTL
Telewest
Carphone Warehouse
Vodafone
Orange
O2
T-Mobile
MCI
Cable and Wireless
Tiscali
Caudwell Group
Energis
Thus
Virgin Mobile
Colt
Kingston
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Onetel
Your Communications
Retail Sector
-------------
Argos
Asda
Tesco
Marks and Xxxxxxx
Woolworths
B&Q
Homebase
Exel Logistics
Next
Dixons Stores Group
4
Construction Sector
-------------------
Amec
Carillion
Bovis
Balfour Xxxxxx
Xxxx
Skanska
Kier Build
Emcor
Xxxxxx Engineering
Xxxx
Xxxxx Young
Land Securities
St Xxxxxxx
Mowlem
First Engineering
XX Xxxxxx
Xxxx Xxxxxxxxx
X. Xxxxxx
Healthcare Sector
-----------------
NHS
Public Private Partnership
Private hospitals
Public Sector (exception is for United Kingdom only)
----------------------------------------------------
Metropolitan Police Authority
PITO (Police IT Office)
National Assembly for Wales
UK Passport Services
Inland Revenue/HMCE
Transport for London
VOSA
Manchester University
Local Authorities
Local Education Authorities
Ofsted
National Probation Directorate
DTI
DWP
Royal Mail
Securicor
HM Treasury
Home Office
BBC
Department for Transport
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National Savings and Investments
Highways agency
Immigration and Nationality Directorate
MoD
3. With respect to the islands listed below (and all islands associated with
them, many of which are too small to list separately), the License shall
include distribution of Licensed Products only to Enterprise Subscribers
that are not Government Entities:
Anguilla
Antigua
Aruba
Bahamas
Barbados
Bonaire
British Virgin Islands
Cayman Islands
Curacao
Dominica
Dominican Republic
Grenada
Guadeloupe
Guyana
Haiti
Jamaica
Martinique
Puerto Rico
Saba
St. Barthelemy
St. Eustatius
St. Kitts
St. Lucia
St. Xxxxxx (both parts)
St. Xxxxxxx and The Grenadines
Trinidad and Tobago
Turks and Caicos
US Virgin Islands
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SCHEDULE 3.1
------------
UNIT ROYALTIES
Unit Royalties are payable in United States dollars. The monthly Unit Royalty
amounts, per End User, are as follows:
1. Small Business Subscribers. The monthly Unit Royalty amount for each End
User of a Small Business Subscriber (including a Government Entity that is a
Small Business Subscriber) is based on the number of End Users within the
applicable Subscriber and on whether Artera provides and operates the Artera
Turbo data center to serve the applicable End User, as follows:
----------------------- ------------------ ----------------------
No. of End Users Within Without Artera With Artera
Subscriber Turbo Data Center Turbo Data Center
----------------------- ------------------ ----------------------
Up to 9 $2.00 $2.20
----------------------- ------------------ ----------------------
10 - 24 $1.90 $2.10
----------------------- ------------------ ----------------------
25 - 49 $1.80 $2.00
----------------------- ------------------ ----------------------
50 - 99 $1.70 $1.90
----------------------- ------------------ ----------------------
100 - 149 $1.60 $1.80
----------------------- ------------------ ----------------------
150 - 199 $1.50 $1.70
----------------------- ------------------ ----------------------
200 - 250 $1.40 $1.60
----------------------- ------------------ ----------------------
Road Warrior 1 $1.80
----------------------- ------------------ ----------------------
2. Enterprise Subscribers. The monthly Unit Royalty amount for each End
User of an Enterprise Subscriber (including a Government Entity that is an
Enterprise Subscriber) is based on whether any Licensed Product software is
resident on the applicable End User's personal computer (client version) and on
whether Artera provides and operates the Artera Turbo data center to serve the
applicable End User, as follows:
----------------------- ------------------ ----------------------
Client Without Artera With Artera
Status Turbo Data Center Turbo Data Center
----------------------- ------------------ ----------------------
Client Version $1.05 $1.25
----------------------- ------------------ ----------------------
Non-Client Version $0.80 $1.00
----------------------- ------------------ ----------------------
Road Warrior $1.80
----------------------- ------------------ ----------------------
3. Residential Subscribers. Without limiting the generality of Schedule 2.1
to this Agreement, in the event that Avaya intends to distribute Licensed
Products to Residential Subscribers, Avaya and Artera shall negotiate in good
faith and use best efforts to agree upon the Unit Royalties relating to such
distribution, either generally, for specified Residential Subscribers, for
specified Resellers, for specified countries or otherwise.
------------------
1 "Road Warrior" refers to a version of the Artera Turbo service used with
mobile computers that at times may be connected to the Internet through a
local area network (LAN), and at other times may be connected to the
Internet on a standalone basis.
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