Exhibit 10.7.2
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
SECOND AMENDMENT TO SOFTWARE LICENSE AND
SUPPORT AND HARDWARE PURCHASE AGREEMENT
This Second Amendment, which shall be effective as of
February 11, 1998, (except as set forth below in Section 3.) 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 02451.
WHEREAS, the parties entered a Software License and Support and Hardware
Purchase Agreement dated April 2, 1993 ("Agreement"), a Development Agreement
dated March 21, 1995, an Amendment to the Agreement dated July 22, 1996, and a
Total Time 120 Amendment dated July 22, 1996;
WHEREAS, the parties desire to further amend the Agreement;
WHEREAS, ADP has acquired Time Resource Management, Inc. ("TRM"), effective on
February 11, 1998;
WHEREAS, TRM has time and attendance software which is competitive to Kronos'
time and attendance software;
NOW, THEREFORE, the parties agree as follows:
1. Section 2(g) shall be amended by adding the following to the end of the
second sentence: "; or (iii)
such agreement is for acquiring TRM."
2. Section 2(g) shall be amended by deleting the fourth sentence and
replacing it with the following sentence: "ADP further agrees that,
during the term of this Agreement, it will not develop, other than
pursuant to this Agreement, (which Agreement shall be deemed to permit
internal ADP development of TRM software or development of TRM software
by its consultants; provided however, that such consultants shall not
be in the business of time and attendance or scheduling), any time and
attendance or scheduling hardware or software which shall compete with
Kronos products."
3. Section 2(g) shall be amended by adding the following sentences to the
end of the Section: "Notwithstanding the foregoing sentence, Kronos
agrees to permit ADP to combine TRM software with Hardware, and ADP
agrees that it will sell exclusively Kronos Hardware (and no third
party hardware) with the TRM software, if Kronos provides the Hardware
which is to be combined with the TRM software at a price and with
features and functionality equivalent to the hardware that would
otherwise be available to TRM (if it had not been acquired by ADP) at
the time of the sale of such Hardware.
ADP's sales force shall be permitted to sell TRM software, subject to
the following restrictions: (i) a total of only 300 salespeople derived
from the ADP sales force dedicated to selling to clients and prospects
employing between 100 and 1000 employees (the "Major Account Sales
Force") and/or derived from the ADP sales force dedicated to selling to
clients and prospects employing under 100 employees (the "EBS Sales
Force") shall be permitted to sell TRM software and the accompanying
hardware and/or services; and (ii) such 300 ADP salespeople derived
from the Major Account Sales Force and the EBS Sales Force shall be
permitted to sell TRM software, accompanying hardware or Hardware
and/or services only to clients or prospects within the hotel industry
having a SIC code beginning with "70" as the first two digits; and
(iii) ADP shall not provide or permit compensation/ credit (including,
but not limited to, commissions and/or roll call or quota credit) to
any member of the Major Account Sales Force or the EBS Sales Force,
other than the 300 salespeople described in subpart (i), for generating
a sales lead or sales referral for TRM software, accompanying hardware
or Hardware and/or services; provided however, that ADP's breach of its
obligations under this subpart (iii) shall not be deemed material
unless such breach occurs more than one hundred times prior to the
termination of this Agreement; and provided further that the foregoing
restrictions on the Major Account Sales Force and the EBS Sales Force
shall not apply to sales/sublicensing of the TRM software to End-Users
in Puerto Rico and the Caribbean. Except as specified above in this
paragraph, the Major Account Sales Force and EBS Sales Force shall not
be permitted to sell
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
(i.e., shall not receive training or receive any payment for selling)
any time and attendance or scheduling software or hardware or services,
other than Total Time Software and Hardware and services. The ADP sales
force dedicated to selling to clients and prospects employing over 1000
employees shall not be subject to the restrictions stated in this
paragraph.
This Paragraph 3, which amends Section 2(g), shall be effective as of
September 30, 1999, provided that the provisions of this Paragraph 3
shall not apply to any sales resulting from leads or referrals
provided, or other sales activity conducted, by the Major Accounts
Sales Force or EBS Sales Force prior to September 30, 1999.
4. Section 2(h) shall be deleted and replaced with the following: "Subject
to Sections 2(j) and 15(a) hereof, ADP shall determine in its sole
discretion and from time to time hereafter the fees it will charge for
the Total Time Services and the degree of effort to be expended by ADP
in support, promotion and marketing of the Total Time Software or any
part thereof; provided however, that ADP agrees to make a good faith
effort to support, promote and market the Total Time Software. Nothing
in this Agreement shall prevent ADP at any time hereafter from
re-pricing the Total Time Software or any part thereof."
5. The following shall be added as Section 2(j):
"(j) ADP shall purchase a minimum of the following units of Kronos
Hardware and Total Time Software:
Kronos' FY'98 Kronos' FY'99 Kronos' FY'00 Kronos FY'01
(10/1/97 to (10/1/98 to (10/1/99 to (10/1/00 to Cumulative Unit
9/30/98) 9/30/99) 9/30/00) 4/2/01) Purchase Total
Kronos Product
------------------- --------------- ----------------- ---------------- ---------------- -----------------
Hardware * * * * *
Total Time * * * * *
Software
It is understood and agreed that ADP shall be required to purchase the
applicable number of units of Hardware or Software during the time
periods specified above, until ADP has purchased the applicable
Cumulative Unit Purchase Total specified above. Once ADP has purchased
such Cumulative Unit Purchase Total, no further minimum purchase
requirements shall apply. If ADP does not purchase the minimums
specified above during the applicable time periods, ADP shall be
required to purchase the difference between the minimum specified and
its actual purchases, on the first day following the end of the
applicable time period.
Kronos agrees that, beginning on April 3, 2001 and ending on April 3,
2002, to permit ADP to exchange units of Total Time Software for a
later version of such Total Time Software, subject to the following
requirements: (i) the number of Total Time Software Units exchanged by
ADP can be no greater than the number of Total Time Software units
purchased/licensed by ADP from Kronos and shipped to an ADP Client or
ADP customer within the 12 months preceding April 3, 2001; and (ii) any
unit exchanged can be exchanged only for a later version within the
same operating system (e.g., DOS for DOS, Windows for Windows, C/S for
Total Time 120 for C/S for Total Time 120, etc.); and (iii) the unit
proposed to be exchanged must be in ADP's inventory on April 3, 2001,
and Kronos must have been paid by ADP for it.
6. Section 5(d) shall be deleted and replaced with the following:
"(d) The provisions of Section 5(a) set forth the entire obligation of
ADP for payment (other than amounts that may be payable pursuant to
Section 7, Section 14, 17(c) and (d) or pursuant to the Second
Amendment to the Agreement) with respect to the work to be performed by
Kronos pursuant hereto in connection with the Total Time Software and
the rights and licenses granted by Kronos hereunder in connection with
the Total Time Software. ADP's payment obligations with respect to the
purchase of Hardware hereunder are as set forth in Sections 2(j) and
10."
7. Section 14(d) shall be amended by deleting the period at the end of the
Section and adding the following: ";except that ADP shall be required
to pay all minimum amounts owed under Section 2(j) and when applicable,
Section 14(f)."
8. Section 14(f) shall be deleted and replaced with the following:
"(f) In the event ADP breaches the provisions of Section 2(g), Kronos
shall have the right to receive from ADP an amount equal to the value
of all products, including Total Time Software, Hardware and
accessories which would have been realized by Kronos (which value shall
not be limited to the minimums specified in Section 2(j)) during a
period equal to the greater of (i) 2-1/2 years or (ii) the remaining
term of this Agreement had no termination notice been given."
9. The following shall be added as Section 22(n):
"(n) Notwithstanding anything to the contrary in Section 2(a) or any
other Section of the Agreement or of this Second Amendment, Kronos
shall no longer have any obligations to ADP to provide Source Code or
updates, enhancements or any other modifications thereto; provided
however, that if ADP provides Kronos with written notice that ADP's
lack of access to such Source Code has made it unable to proceed with a
material additional feature or functionality for the Total Time
Software, and Kronos fails to define an acceptable resolution within
thirty (30) days after receipt of such notice, then Kronos agrees to
supply ADP with the Source Code necessary to proceed with such
additional feature or functionality, and such Source Code shall be
subject to all the terms and conditions of this Agreement. In addition,
Kronos will agree to place Source Code updates, enhancements and
modifications, if any, in escrow, at ADP's expense and upon ADP's
written request. Any such source code escrow shall be subject to
execution of a mutually agreed source code escrow agreement which shall
provide for release of the Source Code only upon Kronos' bankruptcy,
liquidation or otherwise ceasing to do business. This Section shall not
affect ADP's obligations concerning Source Code previously provided by
Kronos."
10. The following shall be added as Section 22(o):
"(o) Notwithstanding anything to the contrary in this Agreement or this
Second Amendment, any individual, whether an ADP employee or
contractor, working on the engineering of the TRM product/technology
shall be strictly prohibited from having any access to the Source Code
and any other Kronos confidential information (as defined in Section
18) and ADP shall not use the Source Code in any way with or for the
TRM product(s). Any employee or consultant working on the engineering
of Total Time Software or Hardware, cannot be transferred to work on
any TRM product/technology, and vice versa. In addition,
notwithstanding anything to the contrary in this Agreement or this
Second Amendment, any individual, whether an ADP employee or
contractor, working on the development of the TRM product/ technology
shall be strictly prohibited from having any access to the Source Code,
and shall also be prohibited, with the exception of marketing/product
management individuals and individuals developing an interface from a
Kronos or TRM product to an internally developed ADP module or to third
party hardware or software, from having any access to any other Kronos
confidential information (as defined in Section 18). ADP shall not use
the confidential information in any way with or for the TRM product(s).
Any employee or consultant working on the development of Total Time
Software or Hardware, cannot be transferred to work on any TRM
product/technology, and vice versa, with the exception of
marketing/product management individuals and individuals developing an
interface from a Kronos or TRM product to an internally developed ADP
module or to third party hardware or software. Kronos reserves the
right to audit ADP's compliance with this paragraph."
AGREED TO AND ACCEPTED:
KRONOS INCORPORATED ADP, INC.
By:/s/W Patrick Decker By:/s/Georg I. Stoeckert
Name:W. Patrick Decker Name:George I. Stoeckert
Title:President, COO Title:President, Major Accounts Division
Date:9/14/99 Date:September 7, 1999