Exhibit 10.14A
Exhibit No. 10.14
FIRST AMENDMENT
TO
CUSTOM COMPUTER PROGRAMMING AGREEMENT
This Agreement is made and entered into as of April 1, 1998 by and between Xxxxx
0 Xxxxxxx, Xxx., x Xxx Xxxx corporation, having its principal place of business
at Xxx Xxxx Xxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000 ("Level 8"), and Liraz Systems
Ltd., an Israeli corporation having its principal place of business at 0
Xxxxxxxx Xxxxxx, Xxxxx 00000 Xxxxxx ("Liraz").
RECITALS
Xxxxx 0 and Liraz are parties to that certain Custom Computer Programming
Agreement dated July ___, 1995 (the "Original Agreement") pursuant to which
Liraz undertook to perform certain computer programming services for Level 8 as
part of the development by Xxxxx 0 of what eventually became known as FalconMQ
(the "Program") under terms and conditions provided therein. All terms not
otherwise defined herein shall have the meaning assigned to them in the Original
Agreement.
Level 8 is currently undergoing final negotiations with respect to the
acquisition, at a significant expense to Xxxxx 0, of an unrelated software
company, with the intent of, among other things, combining that company's
software product with and into the Program and making subsequent improvements
thereto (the "New Product").
It is expected that after a certain transitional period following the
acquisition of the other company, the Product will no longer be available as a
stand alone product and will be replaced in full by the New Product.
Consequently, the computation of Royalties for purposes of the Original
Agreement will no longer be feasible.
The parties desire, in light of these and other circumstances, to amend and
simply the Original Agreement, on the terms and conditions set forth more fully
herein.
Furthermore, Xxxxx 0 xxxxxxx xx xxxxxxx Xxxxx, xxx Xxxxx agrees to be appointed,
as an authorized reseller of the Program and the New Product, on the terms and
conditions set forth more fully herein.
NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements set forth herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Modifications.
(a) Repeal of Original Royalties Provision. Section 4 of the Original
Agreement, related to Payments, is hereby deleted in its entirety.
(b) New Royalties Provision. In lieu of the provisions set forth in
Section 4 of the Original Agreement, the following shall be applicable.
(1) In consideration for the Services, Xxxxx 0 hereby undertakes
to pay Liraz the following royalties:
(i) an amount equal to $1,500,000, reflecting Liraz's
out-of-pocket expenses incurred in developing the Program and
a return thereon, payable in three
installments, the first of which, in the amount of $600,000,
shall be made simultaneously with the execution of this
Agreement and the second and third installments, each in the
amount of $450,000, payable on the first and second
anniversaries, respectively, of the execution of this
Agreement, in each case together with interest thereon at rate
of 8%, compounded annually, calculated from the date hereof to
the date of payment of such installment; plus
(ii) 3% of Program Revenues or New Product Revenues, as applicable,
generated on or after January 1, 1998 (the "Royalties");
provided, however, that in the event that either (i) a third
party acquires from Level 8 the ownership rights to the
Program or the New Product, or (ii) a change of control of
Xxxxx 0 xxxxx xxxxx, Xxxxx 0 shall have the right to terminate
its obligation to pay Royalties upon terms and conditions
mutually agreed to by the parties.
(2) Royalties shall be payable under March 31, 2001 at which point
the obligation to pay them shall terminate.
(3) For purposes of this Agreement, the term "New Product
Revenues" shall mean the world wide revenues (net of returns,
sales taxes, discounts etc.) generated by Level 8 from the
sale of the New Product.
(4) Royalties accrued during any calendar quarter shall be paid,
subject to any withholding or other deduction imposed by
applicable law, by Xxxxx 0 to Liraz within 30 days after the
last day of such calendar quarter.
(5) Each Royalty payment shall be accompanied by a statement,
summarizing the basis of calculating the amount of such
payment. Liraz shall have the right at any time, by its own
personnel or its agents, to audit all sales records which
Level 8 maintains for purposes of this Agreement. Such right
to audit shall be subject to receipt of reasonable notice by
Level 8 and shall be performed during normal business hours.
(6) Level 8 shall have the exclusive right to determine or change
the prices and/or charges set by it with respect to the
Program or the New Product, at its sole discretion and without
notice or approval by Liraz.
(7) Level 8 shall make a good faith allocation to the Program
Revenues or New Product Revenues in instances where the
Program or New Product, as the case may be, is bundled with
other products (e.g., site licenses).
(c) Termination of Funding Obligations. Liraz's obligations under Section
3 of the Original Agreement (relating to Funding and Budget) are
terminated effective March 31, 1998.
(d) Technical Correction. The reference in Section 10(1) of the Original
Agreement to Section 4(g) of the Original Agreement shall be deemed a
reference to Section 1(b)(1)(ii) of this Agreement.
Section 2. Continuation and Claim Waivers.
Except to the extent they are inconsistent with the provisions of this
Agreement, the provisions of the Original Agreement shall remain in force. Each
party hereby acknowledges that it has no claim whatsoever, and it hereby waives
any claim it may have, against the other with respect to any aspect of the
Original Agreement as in effect prior to its amendment by this Agreement.
Section 3. Appointment as Reseller.
Level 8 hereby appoints Liraz as an authorized reseller of the Program and, when
available, the New Product, in Israel. Liraz hereby undertakes to provide
technical support for end-users of the Program and, when available, the New
Product, in Israel. All other terms and conditions of such reseller arrangement
shall be as agreed to by the parties from time to time.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date
first written above.
Liraz Systems Ltd. Level 8 Systems, Inc.
/s/ X. Xxxxxx /s/ Xxxx Xxxxxx
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Signature Signature
X. Xxxxxx Xxxx Xxxxxx
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Name Name
CEO CEO
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Title Title
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Date Date
