EXHIBIT 10.7.1
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
TOTAL TIME 120 AMENDMENT
This Amendment, dated as of 7/22/96_______, is between ADP, Inc., a Delaware
corporation ("ADP") with offices at One ADP Boulevard, Roseland, New Jersey
07068, and Kronos Incorporated, a Massachusetts corporation ("Kronos") with
offices at 400 Fifth Avenue, Waltham, Massachusetts 02154.
WHEREAS, the parties entered a Software License and Support and Hardware
Purchase Agreement dated April 2, 1993 as amended on [date of main contract
amendment,] ("Agreement"), and a Development Agreement dated March 21, 1995;
WHEREAS, the parties desire to add new products to the Agreement and to amend
the Agreement in part with respect to those new products;
NOW, THEREFORE, the parties agree as follows:
1. Definitions
The following definitions are added to the Agreement:
(a) "Total Time 120" shall mean the software which meets the
specifications attached to this Agreement as Exhibit A-1.
"Total Time 120" shall also be considered "Kronos Software"
and "Total Time Software," as those terms are defined in the
Agreement; provided, however, that the only part of Exhibit C
which applies to Total Time 120 shall be the additions
contained on Exhibit C-1 added herein.
(b) "ADP 150" and "ADP 154" shall mean the hardware which
meets the specifications attached to this Agreement as Exhibit
A-2. "ADP 150" and "ADP 154" shall also be considered
"Hardware," as that term is defined in the Agreement;
provided, however, that the only part of Exhibit B which
applies to such items shall be the additions contained on
Exhibit B-1 added herein.
2. Applicability of the Agreement
ADP and Kronos agree that all terms and conditions of the Agreement
shall apply to Total Time 120, ADP 150 and ADP 154, except that, with
respect to Total Time 120, ADP 150 and ADP 154, the following
modifications shall apply:
(a) Each time the words "Exhibit B" appear, they shall be deleted
and replaced with "Exhibit B-1". Each time the words "Exhibit
C" appear, they shall be deleted and replaced with "Exhibit
C-1".
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(b) Section 2(b) is amended by deleting, in the first
sentence, the clause "which is an ADP Client" and by adding,
after the first sentence, the following: "Notwithstanding
the preceding sentence, and subject to the provisions of
Section 2(g), ADP shall have the right to Sublicense Total
Time 120 only to any person or entity which has 120 or fewer
employees using the Total Time 120 at any individual
location. In addition, ADP shall have the right to
Sublicense Total Time 120 only to any person or entity using
the Total Time 120 with an ADP 150 or ADP 154, or using
Total Time 120 independent of any hardware, (not including
Devices) unless Kronos has given ADP its prior written
consent to Sublicense Total Time 120 on different Hardware
for a particular person or entity. Furthermore, ADP shall
only have the right to Sublicense Total Time 120 to any
person or entity located in the Territory of Interboro
Systems Corporation, as defined herein if such person is an
ADP Client."
Section 2(b) is further amended by adding the following
paragraph to the end thereof: "Subject to the provisions of
sections 2(d) and (e) below, Kronos may license/sublicense,
directly or indirectly, the Total Time 120 (which will be
renamed by Kronos for Kronos sublicensing) only to any person
or entity which has 120 or fewer employees using the renamed
Total Time 120 at any individual location. In addition, Kronos
agrees to sublicense, directly or indirectly, the renamed
Total Time 120 only to any person or entity using the renamed
Total Time 120 with a Model 150 or Model 154, or using renamed
Total Time 120 independent of any hardware, (not including
Devices) or on hardware for which Kronos has given its written
consent to ADP pursuant to the preceding paragraph."
(c) Section 2(c) is amended by deleting subsection (ii) and
replacing it with the following: "(ii)to combine Total
Time 120 or any part thereof only with the ADP 150 or ADP 154,
unless Kronos gives ADP its prior written consent for a
particular person or entity. In addition, Kronos grants to
ADP the right to combine Total Time 120 with Devices, as
defined in Section 2.(c) of the Agreement, and Kronos shall
waive the $25.00 fees which would otherwise apply to such
combinations. In the event that ADP desires to combine Total
Time 120 with any data collection equipment other than ADP
150, ADP 154 or Devices, ADP shall be required to obtain
Kronos' prior written consent; provided that if such
equipment, which is non-Kronos data collection equipment,
is materially different from, and not competitive with, any
2
data collection equipment then being sold by Kronos, ADP shall
first request that Kronos develop equipment equivalent to such
non-Kronos equipment; if Kronos declines to develop such
equipment, Kronos shall not unreasonably withhold its consent
for ADP to combine Total Time 120 with the desired non-Kronos
data collection equipment. ADP can market/sublicense such
Total Time 120 and non-Kronos equipment only to ADP Clients,
if within the Territory of Interboro Systems Corporation.
If ADP believes, for any calendar year during the term of this
Agreement, that the failure rate of all the ADP 150's and
154's sold by Kronos to ADP within the preceding five (5)
years and that are five years old or newer and are no longer
under warranty by Kronos, is greater than twenty-five percent
(25%) in that year, ADP shall notify Kronos in writing and
provide Kronos with verification of such failure rate. The
parties agree that any failures attributable to reasons
specified in Section 12(b) shall be excluded. If Kronos agrees
that the failure rate exceeded 25%, the parties agree that
Kronos shall have six (6) months to correct the failure rate
problem. If Kronos is unable to correct the failure rate
problem within such six (6) month period, Kronos agrees to
sell the Kronos 440 (without modem) terminal to ADP at the
same price as the Total Time 150 and the Kronos 440 (with
modem) at the same price as the ADP 154 for the next six (6)
months. If Kronos has not corrected the failure rate problem
by the end of that second six (6) months period, until Kronos
does correct the failure rate problem, Kronos agrees to waive
the provisions of this Section 2(c) which require ADP to
combine Total Time 120 only with the ADP 150, ADP 154 and/or
Devices. As soon as the failure rate problem is corrected,
that waiver shall no longer remain in effect and the
provisions of this Section 2(c) shall remain in full force and
effect. The termination of the waiver under the preceding
sentence shall not affect combinations of Total Time 120
validly made while the waiver was in effect.
(d) Section 2(g) is amended be deleting the last sentence and
replacing it with the following:, "In addition, ADP will
combine the ADP 150 and/or the ADP 154 Hardware only with
Total Time 120, unless Kronos gives ADP its prior written
consent for a particular person or entity. In the event that
ADP desires to combine the ADP 150 or ADP 154 with software
other than Total Time 120, ADP shall be required to obtain
Kronos' prior written consent; provided that if such non-Total
Time 120, is materially different from, and not competitive
with, any
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE
OMISSIONS.
software then being sold/licensed by Kronos, ADP shall first
request that Kronos develop software substantially equivalent
to such non-Total Time 120; if Kronos declines to develop such
software, Kronos shall not unreasonably withhold its consent
for ADP to combine the desired software with ADP 150 or ADP
154 and Sublicense such software."
(e) Section 5(a)(i). The following shall be inserted after the
word "copy" on the second line: "or bundled".
(f) Sections 5(b) shall apply only to Sublicensees of Total Time
120 to Sublicensees, who pay for the Total Time services on a
recurring basis, rather than a one-time basis.
(g) Section 5(c) is deleted and replaced with the following:
(c) If at any time during the term of this Agreement, Kronos
shall reduce the list prices for the Total Time 120 licensed
hereunder, so that the applicable price charged to ADP on
Exhibit C-1 is greater than the Kronos list price less a ***
discount, then the applicable price listed on Exhibit C-1
shall be reduced to the sum of the following two amounts:
(i) the Kronos list price, less a *** discount, plus (ii) the
Kronos standard manufacturing cost for that item. If Kronos
reduces the list price for the Total Time 120 licensed
hereunder, so that the applicable price charged to ADP on
Exhibit C-1 is greater than the Kronos list price less a
*** discount, ADP may, at its option, reproduce/manufacture
the Total Time 120, and the parties agree they will negotiate
mutually acceptable audit terms and conditions , so that
Kronos has adequate assurances that it will receive the
applicable C-1 license price for each copy of the Total
Time 120 reproduced/manufactured by ADP.
(h) Section 7(d) is amended by deleting the words "Initial Custom
Software" each time they appear and replacing them with the
words "Total Time 120", and by deleting the last sentence
entirely.
(i) Section 8 is amended by adding the following proviso at the
end of the second sentence: "; provided however, that as to
the ADP 150 and ADP 154, such updates or enhancements shall
include only firmware enhancements and time and attendance
(not including features specifically designed for Kronos'
Workforce Management products, such Workforce Management
products to be defined as automated scheduling, business
forecasting and workforce planning) modifications to the
Hardware."
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In addition Section 8 is amended by adding the following at
the end: "Unless Kronos has given ADP its prior written
consent, ADP agrees that it shall have the right to sell,
lease, rent or otherwise transfer the ADP 150 and the ADP 154
only to persons or entities which are "Sublicensees" of Total
Time 120 under Section 2(b). It is understood that in no event
may ADP sell, lease, rent or transfer the ADP 150 or ADP 154:
(a) to any person or entity which is competitor of Kronos and
(b) within the Territory of Interboro Systems Corporation, to
any person or entity which is not an ADP Client.
(j) The following shall be added to the end of the second sentence
of Section 9(a): ;provided however, that each order of Total
Time 120 shall be required to contain at least 200 units
(i.e., a "unit" is considered to be one "bundled" package or
one separately ordered Total Time 120 or separately ordered
ADP 150 or ADP 154.), with such units to be delivered to a
single delivery point.
(k) The last five sentences of Section 9(a) shall be deleted and
replaced with the following: "Commencing on the signing of
this Amendment, ADP shall provide to Kronos quarterly
forecasts of the expected volume of Hardware orders for the
following four quarters; provided however, that ADP shall have
the right to revise the forecasts for either or both of the
two latest (i.e.,farthest away in time from the revision)
quarters in its most current four-quarter forecasts by
notifying Kronos in writing. Notwithstanding the second
preceding sentence, in the event actual orders for any quarter
exceed forecasted orders for such quarter by up to 20% of such
forecast, Kronos shall be required to deliver an amount equal
to 120% of such forecast within 30 days after receipt of the
P.O. Kronos shall not be obliged to deliver an amount in
excess of the 120% of forecasted orders within 30 days after
Order Acceptance Date. However, Kronos will use its best
efforts to deliver such excess amounts as soon as practicable
and for amounts up to 200% of the original forecast, no later
than 120 days after receipt of the P.O. Kronos shall in any
event confirm the delivery dates with respect to all P.O.'s."
(l) Section 9(b) is amended by adding the following proviso: ";
provided however, that ADP may not cancel any order received
within four (4) months prior to the termination of this Total
Time 120 Amendment."
(m) Section 9(c) is amended by deleting the word "three"
in the second sentence, and replacing it with the word "ten".
5
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE
OMISSIONS.
(n) Section 10(a) is amended by deleting the last four
sentences and replacing them with the following sentence:
"If at any time during the term of this Agreement, Kronos
shall reduce the list prices of items of Hardware (or
replacement or new items described in preceding clauses
(i)and (ii)) purchasable by ADP hereunder so that the
applicable price charged to ADP on Exhibit B-1 for an item
is greater than *** ******* ***** ** ***** ***** ****
**** **** ** *** * ******* ********** **** *** *
********** ****** ****, **** * ** ********, then the
applicable price listed on Exhibit B-1 shall be reduced to
*** ******* ***** ** ***** ***** **** **** **** ** ***
****** ***** *** ****** *** ******** *** ****** *******
***** *** **** ****** ****, **** * ** ********. ***
******* ***** ** ***** ***** **** **** **** ** *** *
******* (excluding ADP), for any particular fiscal year
and item shall be determined by calculating the average prices
at which ***** * ******* purchased that item in
that fiscal year. Any price decreases pursuant to this
section shall apply prospectively only. The calculation
of average price at which Kronos sold an item ** ***
******* shall be made at the end of each Kronos fiscal
year. ***** *** ******* ***** ** ******* ** *** ********
** ***** ******* ***** *** *** ******* ***** **********
*** ******* ************* ******** ********* ** *** *****
******** ** ***** ******.
(o) Section 10(e) is amended by deleting the first two
sentences and replacing them with the following
sentences: "Kronos shall issue one invoice for each
shipment. Invoices shall be directed to ADP corporate
headquarters".
(p) Section 14(a) is amended by deleting the first sentence
and replacing it with the following: "The initial term
of this Total Time 120 Amendment shall commence on the
date of signing and continue until April 2, 2001."
(q) Section 15(a) is deleted, and replaced with the following:
"Kronos and ADP agree that if Kronos develops new hardware
and/or new software during the term of the Agreement which is
to be sold/sublicensed to End-Users with fewer than 120
employees, Kronos will permit ADP to sell/sublicense such
hardware and software, subject to mutually agreed terms and
conditions, and Kronos further agrees to abide by the
restrictions contained in the last sentence of Section 2.(d)
of the Agreement for such hardware and software."
(r) Section 15(b) is amended by adding the following to the end
of the first sentence: "on a one-time, paid-up
6
sublicense basis".
(s) All other terms and conditions of the Agreement remain
in full force and effect.
AGREED TO AND ACCEPTED:
KRONOS INCORPORATED ADP, INC.
By: S/ W. Patrick Decker By: S/ Ron Clarke
(Signature) (Signature)
Name: W. Patrick Decker Name: Ron Clarke
(Please print) (Please print)
Title: Vice President, Marketing Title: President, Electronics
and Field Operations Services Division
Date: 7/22/96 Date: 7/22/96
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EXHIBIT A-1
PRODUCT DESCRIPTIONS
PRODUCT SPECIFICATIONS
System 400 Man, Operators ADP/400
System 100 Man, Users 100/Kronos Term
TKC V8 Man, Procedural Guide, TKC V8C/D
TimeMaker II Man, User Manual, TimeMaker II
8A
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE
OMISSIONS.
EXHIBIT B-1
ADP 150 and ADP 154 Hardware Description and Pricing
If the ADP 150 and/or ADP 154 is purchased by ADP separately from the Total Time
120 Software, the prices are as follows:
Price
ADP 150 ****
ADP 154 (Modem) ****
If the ADP 150 and/or ADP 154 is purchased by ADP "bundled" with the Total Time
120 Software, the "bundled" prices specified on Exhibit C-1 shall apply.
The prices specified above are F.O.B. Chelmsford, Massachusetts, exclude freight
and tax costs, and are valid only for shipments of a minimum of 200 units per
order to a single delivery point. The prices include the user
manual/installation guide.
On October 1, 1997, Kronos shall determine the standard manufacturing cost
("SMC") for the Kronos 150 for Kronos' fiscal year 1996. Beginning in Kronos'
fiscal year 1998 (i.e., October 1, 1997) and continuing for each fiscal year
thereafter during the term of this Amendment, if the SMC for the preceding
fiscal year is less than the SMC for fiscal year 1996, Kronos will reduce the
Price (stated above) on the ADP 150 by *** of the reduction in the SMC. In
addition, the same procedure described herein will be done on the Kronos 154,
with decrease in price to be applied to the ADP 154.
Any decrease in price resulting from the procedure described herein will apply
prospectively only (i.e., beginning on October 1, 1997). The procedure described
herein will be repeated at the beginning of each Kronos fiscal year during the
term of this Amendment.
8B
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE
OMISSIONS.
EXHIBIT C-1
Total Time 120 Software Description and Pricing
If Total Time 120 is purchased by ADP separately from the ADP 150 or ADP 154
Hardware, the price of Total Time 120 is ****. Total Time 120 includes the ADP
Central Controller, the Scheduler, the Archiver and CardSaver, whether Total
Time 120 is purchased separately or on "bundled" basis.
If Total Time 120 is purchased by ADP "bundled" with the ADP 150 or ADP 154, the
following prices shall apply:
ADP 150
Total Time 120
50 badges
100 feet of cable
Bundled Price is ****
ADP 154 (includes modem)
Total Time 120
50 badges
100 feet of cable
Bundled price is ****
No sales/licenses of Total Time 120, whether sold separately or on "bundled"
basis, shall be counted toward the 15,000 units listed on Exhibit C of the
Agreement.
The prices specified above are F.O.B. Chelmsford, Massachusetts, exclude freight
and tax costs, and are valid only for shipments of a minimum of 200 units per
order to a single delivery point. A "bundled" package counts as one unit. The
prices include the user manual/installation guide.
9
EXHIBIT 10.7.1 (CONTINUED)
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE
OMISSIONS.
AMENDMENT TO SOFTWARE LICENSE AND
SUPPORT AND HARDWARE PURCHASE AGREEMENT
This Amendment, which shall be effective as of
___________7/22/96__________________, is between ADP, Inc., a Delaware
corporation ("ADP") with offices at One ADP Boulevard, Roseland, New Jersey
07068, and Kronos Incorporated, a Massachusetts corporation ("Kronos") with
offices at 400 Fifth Avenue, Waltham, Massachusetts 02154.
WHEREAS, the parties entered a Software License and Support and Hardware
Purchase Agreement dated April 2, 1993 ("Agreement"), and a Development
Agreement dated March 21, 1995;
WHEREAS, the parties desire to amend the Agreement;
NOW, THEREFORE, the parties agree as follows:
1. Section 1 is amended by adding the following subsection: "(ee) Territory of
Interboro Systems Corporation" shall mean Puerto Rico; the following
counties in New York: Nassau, Suffolk, Bronx, Kings, New York, Queens,
Richmond, Orange, Putnam, Rockland, Westchester; and the following counties
in New Jersey: Atlantic; Bergen, Essex, Hudson, Hunterdon, Mercer,
Middlesex, Monmouth, Morris Ocean, Passaic, Somerset, Sussex, Union, and
Warren."
2. Section 2.(c) is amended by adding the following sentences at the end:
"Subject to the requirements of the following three sentences, Kronos
hereby grants to ADP the right to combine Total Time Software with
telephone data collection devices (comparable to TALX's system), swipe
readers, point of sale systems, palm readers, scanners, portable hand-held
data collectors, excluding personal computers (hereafter collectively
"Devices"); provided however, that such portable hand-held collectors must
be used in a mobile-type of application i.e., not secured to a stationary
object for operation. In each calendar year, ADP shall purchase from Kronos
a minimum of eighty per cent (80%) of the total number of Devices (for
which Kronos has a comparable product) that ADP purchases in that year, so
long as Kronos will sell to ADP such Devices at a competitive price for
similar quantities, functionality and warranty coverage. If ADP sublicenses
Total Time Software for use with any Device (including Devices for which
Kronos has no comparable product) ADP did not purchase from Kronos, ADP
shall pay Kronos a fee of twenty-five dollars ($25.00) for each copy of
Total
1
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE
OMISSIONS.
Time Software combined with one or more Devices which ADP did not purchase
from Kronos. The fee required under the preceding sentence shall not apply
if the End-User purchasing such a Device also purchases, as part of the
same order, at least one unit of Hardware (i.e., clock) which is connected
to the Total Time Software, or the End-User already had installed at that
same location at least one unit of Hardware (i.e., clock), or the Total
Time Software is connected via modem to a unit of Hardware located
elsewhere."
3. Section 2.(d) is amended by deleting the second sentence and replacing it
with the following: "In addition, during the term of this Agreement, Kronos
shall not in *** ****** ****** ** ******* ***** **** *** ***** ******* **
***** ********* ********* ** ******* *********** **** *** ********** ** ***
** *** ******* ********** ******** ** ***** ********* ********** ********
******** *** *** ******* ** ********** ******** *********** ** ***********
****** **** *** ********** ** ********** ******** **** **** ************
******* ********** ******** ** ***** ********* ********** ********. If
Kronos ****** **** * ***** ******* ** ***** ********* ********* ** *******
*********** **** ** *** ********** ********** **** ************ ********
***** *** *** ******* ********** ** ***** ********* ********** ********,
Kronos agrees, for one year after the termination of this Agreement, that
Kronos will *** ***** **** *** ***** ******* ** ***** ********* *********
** ******* *********** **** **** ********** ********** **** ************
******* ********** ** ***** ********* ********** ********.
4. Section 2.(d) is amended by deleting the last sentence and replacing it
with the following: "Furthermore, Kronos covenants and agrees that, during
the term of this Agreement, it will not in *** ****** ******* ** *******
***** * ****** **** ** ****** **** ****** ** *** ****** ****** *** ********
** *** **** ******* ** *** ********* ********** ***** ******* ******* ****
****** ******** ***** **** * **** ***** *** *** **** *********
**************** ****** ********* ***** *** * **** ********** ** ****
******** ********* *** ******** ********* ***** *** *** ******* *********
5. Section 2.(g) is deleted and replaced with the following: "Except as
provided in the following sentence, ADP hereby covenants and agrees that
during the term of this Agreement it will not enter into any joint venture
or joint marketing agreement or similar arrangement with any third party
for the purpose of
2
developing, marketing, and/or manufacturing time and attendance or
scheduling hardware or software. Kronos agrees that ADP may enter a joint
venture or joint marketing agreement or similar arrangement with, or
acquire, a third party developing, marketing or manufacturing time and
attendance or scheduling software or hardware, so long as (i) such
agreement is limited to sales/licenses into European countries or, (ii)
such agreement concerns time and attendance or scheduling software (not
hardware) and such time and attendance or scheduling software does not
compete with Kronos products. If any such third party develops, markets
and/or manufactures time and attendance or scheduling hardware or software,
and ADP enters into a joint venture or joint marketing agreement or similar
arrangement concerning that third party's products which are not time and
attendance or scheduling hardware or software, ADP agrees, for one year
after the termination of this Agreement, that ADP will not enter into any
joint venture or joint marketing agreement or similar arrangement with that
third party concerning that third party's time and attendance or scheduling
hardware or software. ADP further agrees that, during the term of this
Agreement, it will not develop, other than pursuant to this Agreement, any
time and attendance or scheduling hardware or software which shall compete
with Kronos products. The parties agree that, for purposes of the three
preceding sentences, the following shall not be deemed to compete with
Kronos products: (i) software which allows businesses to collect employees'
time worked by client/activity for the purpose of generating
bills/invoices, and (ii) electronic capture of employees' time where
processing is limited to basic arithmetic (i.e., subtracting start/stop
times and adding totals across activities or days); provided however, that
this exception shall not include any if/then type logic, such as rounding,
overtime calculations, premium calculations, etc. In addition, ADP will not
combine Hardware with any non-Total Time software without the prior written
consent of Kronos; provided further that in the event that ADP desires to
combine Hardware with non-Total Time software, which is materially
different from, and not competitive with, any software then being
sold/licensed by Kronos, ADP shall first request that Kronos develop
software substantially equivalent to such non-Total Time software; if
Kronos declines to develop such software, Kronos shall not unreasonably
withhold its consent for ADP to combine the desired software with Hardware
and sublicense such software to ADP Clients."
3
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
6. Section 2 is further amended by adding the following subsection: "(i) The
obligations and rights of Kronos specified in Section 2 of the Agreement
shall be deemed to apply to each Kronos "Subsidiary", as "Subsidiary" is
defined in the Agreement. The obligations and rights of ADP shall be deemed
to apply to each ADP "Subsidiary", as "Subsidiary" is defined in the
Agreement."
7. Exhibit B is deleted and replaced with the Exhibit B attached to this
Amendment.
8. Section 11 is amended by deleting the second and third sentences in the
third paragraph and replacing them with the following: "In addition, ADP
may engage a third party to provide on-site maintenance and/or installation
to Total Time customers of the Hardware and Software; provided however,
that such third party shall not be a direct competitor of Kronos. In
addition, ADP may engage the same, or a different, third party to perform
depot maintenance services, provided however, that such third party shall
not be a direct competitor of Kronos.
9. Section 12.(a)(i) is amended by striking the first sentence and replacing
it with the following: "Kronos warrants that the Kronos 440, 460 and 480
Hardware shipped hereunder will be free from defects in material or
workmanship and will perform in accordance with its published
specifications for a period of *** days from the date of shipment by
Kronos, and the ADP 140, 144, 150 and 154 Hardware shipped hereunder will
be free from defects in material or workmanship and will perform in
accordance with its published specifications for a period of ******* ****
months from the date of shipment by Kronos, (such *** day and such ** month
periods, as applicable, hereafter shall be called "Warranty Period")."
10. Section 14.(a) is amended by deleting "April 2, 1998" and replacing it with
"April 2, 2001".
11. Section 22 is amended by adding the following subsection (m): "The parties
agree to conduct a twelve month "standalone marketing test," subject to the
following requirements. The parties agree that the test shall last for
twelve (12) months, shall be conducted in Houston only, and that there will
be a ninety (90) day period after the end of the twelve (12) month test
when the parties negotiate and mutually
4
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
agree to terms and conditions governing the "standalone" product. During
the period of the test and for the geographic territory covered by the
test, all terms and conditions of this Agreement shall apply, except that
Kronos agrees to waive the requirement of subsection 2(b) of this Agreement
that ADP Sublicense only to ADP Client(s) and permit ADP to Sublicense to
persons or entities other than ADP Clients. If, at the end of the ninety
(90) day period following the completion of standalone marketing test, ADP
desires to continue the sublicensing on a standalone basis but Kronos does
not agree to such further sublicensing, the parties agree to take the
following steps: (i) make good faith efforts to negotiate the terms and
conditions under which Kronos would develop, and ADP would sublicense, a
modified kind of Total Time Software for standalone sublicenses, and/or,
upon mutual agreement, for sublicenses to ADP Clients as well; and (ii) if
the parties are unable to agree to the terms and conditions in (i) above,
(including pricing), the following will occur: (a) ADP may enter a joint
venture or joint marketing agreement or similar arrangement with one third
party developing, marketing or manufacturing time and attendance or
scheduling software subject to the following restrictions: (i) ADP can have
such an arrangement with only one such third party at any point in time;
(ii) ADP is permitted to sublicense such third party's software only to
persons or entities having between one hundred (100) and one thousand
(1000) employees on any one software database (i.e., profiles/payrolls
maintained on one personal computer); (iii) the third party software must
either work independently of any hardware, or if sold to be used on
hardware (excluding personal computers), such software must be
sold/sublicensed in conjunction with Hardware or in conjunction with
Devices; provided however that the use of Devices shall be subject to all
the requirements of Section 2(c); and (iv) ADP shall notify Kronos in
advance in writing of any contact ADP has with any third party developing,
marketing or manufacturing time and attendance or scheduling software, with
which ADP is considering a joint venture, joint marketing agreement or
similar arrangement.
(b) If ADP enters into a joint venture or joint marketing agreement or
similar arrangement pursuant to the terms of paragraph (a) above, then
Kronos may ***** * ****** **** ** ****** **** ******* ** *** ******
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
****** *** ******** ** *** **** ******* ** *** *** *** ***** ** *****
******* ********** ********* ******* ** ***** ********* ********** ********
******* ** ***** * ***** ******* ** ***** ********* ********* ** *******
*********** **** *** *** *** ***** ** ***** ******* ********** ********
******* ** ***** ********* ********** ******** ******** ******** ********
**** *** **** ******** ***** ******** *** ********* ********* ** *******
*********** shall not be deemed to include the right to sell Hardware; and
provided further that such ******** ** ******* ********** ******** *******
** ***** ********* ********** ******** ******* may only license, sell or
otherwise transfer the Software to persons or entities having between one
hundred (100) and one thousand (1000) employees on any one software
database (i.e., profiles/payroll maintained on one personal computer).
Kronos agrees to notify ADP in advance in writing of any contact Kronos has
with *** ***** ***** ******* ********** ******** ******* ** ***** *********
********** ******** ******** to which Kronos is considering ******** ****
******* ** **** ***** ****** ** *********** * ***** ******** *****
********* ** ******* ************
12. All other terms and conditions of the Agreement remain in full force and
effect.
AGREED TO AND ACCEPTED:
KRONOS INCORPORATED ADP, INC.
By: S/W. Patrick Decker By: S/Ron Clarke
(Signature) (Signature)
Name: W. Patrick Decker Name: Ron Clarke
(Please Print) (Please Print)
Title: VICE PRESIDENT, Title: PRESIDENT,
MARKETING & FIELD OPERATIONS ELECTRONICS
SERVICES DIVISION
Date: 7/22/96 Date: 7/22/96
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
EXHIBIT B
Hardware Description and Pricing
Unit Price Per Unit
Kronos 440 Basic Bar Code 128K $ ***
Kronos 460 Full Bar Code 128K $ ***
Kronos 440 Basic Bar Code Modem 128K $ ***
Kronos 460 Full Bar Code Modem 128K $ ***
Kronos 480 Full 256K $ ***
Kronos 480 Full 512K $*****
ADP 140 Bar Code $ ***
ADP 144 Bar Code (Modem) $ ***
ALL COMPATIBLE PERIPHERAL SERVICES
Ethernet Daughter Board Kit $ ***
Printer Option Upgrade for 460's & 480's $ ***
Smart Converter $ **
Remote Reader $ ***
Bell Relay Kit $ **
Battery Back-up Modem $ ***
Secure Wall Mount $ **
* Should new versions of the 140, 144, 440 and 460 firmware be released
by Kronos which contain features designed to work in conjunction with
newly released software features being used by ADP, these firmware
versions will be provided to ADP at no additional cost.
** Kronos will provide a *** discount on all Kronos manufactured
peripheral devices.
*** ADP recognizes and agrees that the ADP 140 and the ADP 144 are
designed for use at locations with fifty (50) or fewer employees a day
and will only permit fifty (50) or fewer employees to punch during a
day.
**** Should ADP decide to purchase the 440, 460, and/or 480 in lots of
100, and have them shipped to one central location, a discount of ***
per terminal may be applied.
Kronos has determined its standard manufacturing cost ("SMC") for Kronos' fiscal
year 1995. Beginning in Kronos' fiscal year 1997 (i.e., October 1, 1996), if the
SMC for the preceding fiscal year is less than the SMC for fiscal year 1995,
Kronos will reduce the Price Per Unit (stated above) on the Kronos 440, 460, and
480 by *** of the reduction in the
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
SMC. For example, if Kronos determines, at the beginning of its fiscal year
1997, that the SMC for the System 400 was *** less in fiscal year 1996 than in
fiscal year 1995, Kronos would reduce the price per unit on the Kronos 440, 460
and 480 by *** so that the price charged to ADP, beginning on October 1, 1996,
would be ****. Any decrease in price will apply prospectively only beginning
with all orders received after September 30 (i.e., orders placed on or after
October 1). The procedure described herein will be repeated at the beginning of
each Kronos fiscal year during the term of this Agreement.
In addition, beginning in Kronos' fiscal year 1997, Kronos will determine the
average selling price ("ASP") for the System 440, 460, 480, 300, (including
modem and only if sold with TKC 250 or TKC for fewer than 250 employees) for the
preceding fiscal year. If the ASP is below ****, Kronos will reduce the Price
Per Unit (stated above) on the Kronos 440, 460 and 480 by *** of the amount by
which the ASP is less than *****. For example, if the ASP in fiscal year 1996
was *****, Kronos would reduce the price per unit charged to ADP by ***,
beginning on October 1, 1996. Any decrease in price will apply prospectively
only beginning with all orders received after September 30. The procedure
described herein will be repeated at the beginning of each Kronos fiscal year
during the term of this Agreement.
On October 1, 1997, Kronos will determine its standard manufacturing cost
("SMC") for the Kronos 140 for Kronos' fiscal year 1996. Beginning in Kronos'
fiscal year 1998 (i.e., October 1, 1997) and continuing for each fiscal year
thereafter, if the SMC for the preceding fiscal year is less than the SMC for
fiscal year 1996, Kronos will reduce the Price Per Unit (stated above) on the
ADP 140 by *** of the reduction in the SMC. In addition, the same procedure
described herein will be done on the Kronos 144, with any decrease in price
applied to the ADP 144. Any decrease in price will apply prospectively only
(i.e. beginning on October 1, 1997). The procedure described in this paragraph
will be repeated for each fiscal year during the term of this Agreement,
beginning in Kronos' fiscal year 1998.
In addition, beginning in Kronos' fiscal year 1998 (i.e., October 1, 1997)
Kronos will determine the ASP for the Kronos 140 and the Kronos 144. If the ASP
is below ****, Kronos will reduce the Price Per Unit (stated above) on the
Kronos 140 and/or 144, as applicable, by *** of the amount by which the ASP is
less than ****. Any decrease in price will apply prospectively only. The
procedure described herein will be repeated at the beginning of each Kronos
fiscal year during the term of this Agreement.
On April 2, 1998, the parties agree to review, in good faith, the provisions of
the price adjustment paragraphs above.
8