Document:

Addendum Three to Amended Distribution Agreement

Exhibit 10.27 

 
 
January 1, 2003 
 
Primus Knowledge Solutions, KK 
Ebisu Prime Sq. Tower 
1-1-39 Hiroo, Shibuya-ku 
Tokyo, JAPAN 150 
 

	 Re:
	  	 Addendum Three to Amended and Restated Distribution Agreement (“Distribution
Agreement”), effective March
31, 2000, as amended, between Primus Knowledge
Solutions, Inc. (“Primus”) and Primus Knowledge Solutions, KK (“Distributor”)

 
Dear Partner: 
 
We have recently discussed a
number of issues with respect to our Agreement. This Addendum Three will clarify and memorialize our agreement on these points. Except as otherwise expressly defined in this Amendment, capitalized terms shall have the meanings ascribed to them in
the Distribution Agreement. 
 
Therefore, we hereby agree to amend
our Distribution Agreement as follows: 
 

	 	1.	 	Guaranteed Annual Minimum Payment—Modified Payment Schedule and Transitional Resource Allocation Plan 

 
Section 7.10 to the Distribution Agreement is amended as
follows: 
 
(1) Modified Payment
Schedule for 2003-2004 Term. Primus and Primus KK agree to amend the schedule and structure of the Guaranteed Annual Minimum for a period of two (2) calendar years beginning January 1, 2003 and ending December 31, 2004 (the “Modified
Payment Schedule Term”). During the Modified Payment Schedule Term, the Benchmark and Baseline Payments will be modified as outlined in Schedule 1 to this Amendment. The Second Bi-Annual Baseline for the period ended
March 31, 2003 will be $350,000. Thereafter the First Bi-Annual Baseline and Second Bi-Annual Baseline will be changed to a Guaranteed Quarterly Minimum measured by four quarterly periods, (“Quarterly
Baseline(s)”) and, within each Quarterly Baseline, three fixed monthly minimum payments (“Monthly Payment(s)”). Distributor will pay Primus the difference between the Software Distribution Fees actually accrued
during any respective quarterly period (as adjusted for any carryover as set forth in (2) below) and the applicable minimums of the Quarterly Baseline. During the Modified Payment Schedule Term, each Monthly Payment is $41,667, and the Quarterly
Baselines are $250,000. 
 
(a) After
Expiration of the Modified Payment Schedule Term. If, before the end of December 31, 2004, Distributor demonstrates to Primus both business viability and 
 

 
sufficient
revenue growth for Primus to reasonably consider extending the above 50% resource allocation for the succeeding year, the parties will meet to discuss the continuation of such terms. If the parties fail to agree on a continuation into the succeeding
year, then after the Modified Payment Schedule Term, the schedule and structure of the Guaranteed Annual Minimum set forth in Section 7.10 of the Distribution Agreement shall continue beginning January 1, 2005 on the terms set forth in subsection
(4) of Section 7.10 and as depicted in the Table attached to Addendum Two. 
 
(2) Shortfalls and Excess Amounts in the Quarterly Baseline for the Modified Payment Schedule Term. Quarterly Baselines represent the total amount of Software Distribution Fees accrued
during any three-month Quarterly Baseline Period. Distributor will pay to Primus the shortfall between the Software Distribution Fees actually accrued during any Quarterly Baseline Period and the applicable Quarterly Baseline (each of such payments
called a “Baseline Adjustment”). During the Quarterly Baseline Period, accrued Software Distribution Fees that exceed an applicable Quarterly Baseline shall be carried forward and applied to the next Quarterly Baseline
Period(s) within the same calendar year of the Modified Payment Schedule Term (but not between calendar years of the Modified Payment Schedule Term), but not to any period thereafter, but such excess shall not be retroactively applied to reduce a
previous Baseline Adjustment. Baseline Adjustments are due within seventy-five (75) days of the applicable Quarterly Period and shall not be considered purchases of additional Software or any other form of credit. 
 
(3) Primus Minimum Resource Commitment.
Beginning February 1, 2003, to further facilitate Distributor taking a more active role in product development, Primus will allocate resources to projects selected by Distributor, and reasonably approved by Primus, valued at no less than the Monthly
Payment. The value of allocated resources will include all salary, benefits, direct expenses, and allocation of overhead. Primus will provide a monthly accounting of the resources allocated to Distributor. To the extent allocation of Primus resource
does not meet the required Monthly Payment, as Distributor’s sole remedy for such failure the shortfall may be withheld from the Monthly Payment, and if applicable, such shortfall concerning the Monthly Payment may be withheld from the
applicable Baseline Adjustment payment, until the resources allocated by Primus are expended in an amount equivalent to the value withheld or suspended, at which time such suspended/withheld payment shall be made with the next payment owing.
Allocated resources will work on initiatives and priorities as selected and communicated by Primus KK, and reasonably approved by Primus. Any excess allocation of resources in a month beyond the Monthly Payment will be first allocated to any prior
shortfall, if any, and then shall be carried forward for application against any future shortfall, if any. If for any reason Primus KK does not desire or request projects requiring resources of at least the Monthly Payment and such resources are not
made available, the Monthly Payment shall still be made. During the Modified Payment Schedule Term, paid-up, but unallocated resources in any one-month may be carried over for two (2) successive fiscal quarters of Primus KK. 
 

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	2.	 	U.S. Product Roadmap 

 
To further coordinate resources and enable greater synergies of product development and marketing strategies, Primus will provide Primus KK with its U.S.
product development roadmap on a periodic basis, but no less than twice a year (if available), and promptly notify Primus KK of any material changes (as determined by Primus) thereto as may arise from time-to-time. Such roadmap will only be made
available in the form and detail as Primus uses for its internal management product reviews. 
 

	3.	 	Japan Product Development Plan 

 
At the end of each calendar year, Primus and Primus KK will coordinate on the Primus KK product development plan for the following year, and then review
the plan periodically throughout the year, but no less than once, in order to, among others, measure performance against plan, assess changing conditions, and address issues that may from time-to-time require greater coordination and discussion.

 

	4.	 	Source Code Limited License 

 

	 	A.	 	Scope.    Distributor desires to obtain the source code (excluding any and all third party software, collectively,
“Source Code”) and one (1) copy of the existing, written explanatory materials related to and appropriate to understand the use and operation of the Software (the “Documentation”) for the Software that
is currently being distributed under the Distribution Agreement, and any and all upgrades, updates or new versions of such code line. 

 

	 	B.	 	 Limited License.    Primus hereby grants Distributor a limited, nonexclusive, nontransferable, non-assignable license to
use the Source Code and Documentation solely to (i) develop or modify the Software for localization purposes for license in the Territory, (ii) perform additional customization work necessary or desirable to meet the local commercial needs of
customers in the Territory; and (iii) determine and isolate technical support issues and potential workarounds, fixes, and other changes to the Source Code (all such changes and modifications are “New Works”) only as
necessary for Distributor to support its ability to license Software in the Territory and support its customer’s use of the Software, all in accordance with the Distribution Agreement. Notwithstanding the rights granted in the preceding
sentence, under no circumstances, however, is Distributor granted the right to nor may Distributor use the Source Code and Documentation in development of any other product or program. All New Works shall be the sole and exclusive property of
Primus. Distributor shall provide source code (and/or object code as requested by Primus) copies of all such New Works (and related Documentation thereto) to Primus or its representative upon request. Distributor’s use of the Source
Code, Documentation and all New Works shall be subject to the rights and restrictions set forth in the Distribution Agreement concerning the Software generally, except as expressly stated otherwise herein. Distributor shall execute all confirmatory

 

3 

	 	 
assignments reasonably requested by Primus for any and all New Works. In addition to treating the Source Code and Documentation as
Confidential Information of Primus under the Confidential Information Agreement, Distributor shall secure and maintain the Source Code and source code to New Works (and related Documentation thereto) as a Trade Secret of Primus, in accordance with
the provisions of the Distribution Agreement and applicable law, permitting access to the Source Code and source code to New Works (and related Documentation thereto) only by Primus or full time employees of Distributor with a need-to-know who have
(1) been pre-approved to have access to the Source Code by Primus and (2) executed a confidentiality agreement containing obligations on limited use and non-disclosure approved by Primus or its representative, provided such obligations shall be
substantially similar to the confidentiality obligations set forth in the Confidential Information Agreement. 

 

	 	C.	 	INAPPLICABLE SECTIONS.    Sections 4 (Primus Obligations), 5 (Other Obligations of the Parties), 6
(Ordering and Shipment), 7 (Fees and Payment), 8 (Trademark Matters), and 9 (Warranties) and Schedule 3 (Secondline Support) of the Distribution Agreement shall not apply to Source Code delivered to Distributor for
the limited uses granted this Addendum Three. 

 

	 	D.	 	SOURCE CODE DELIVERY:    Primus will make original delivery of source code materials as soon as reasonably practical after
execution and delivery of this Addendum Three. Thereafter for the duration of the effectiveness of the Distribution Agreement, Primus will deliver the Source Code and Documentation upon Distributor’s request within a reasonable period of time
not to exceed thirty (30) days and/or within thirty (30) days of the commercial release in the U.S. of any and all upgrades, updates or new versions of the code line. All deliveries will be made in electronic format. 

 

	 	E.	 	DISCLAIMER OF WARRANTY.    The Source Code is provided free of charge, and by itself may not be supported by Primus
(provided, however, that the lack of support for Source Code or New Works will not alter Primus’s Secondline Support obligations under the Distribution Agreement). Primus will not have no obligation to support any modifications or changes to
the Source Code made by Distributor. Primus will have no obligation to support New Works. Distributor acknowledges that (i) the Source Code may contain errors, “bugs” or other imperfections that may result in failure of the Source Code to
perform as intended and may not satisfy all of Distributor’s requirements and (ii) use of the Source Code may not be uninterrupted or error-free. The Source Code is provided “AS IS” and with all faults. PRIMUS DISCLAIMS AND
DISTRIBUTOR WAIVES AND RELEASES ALL RIGHTS AND REMEDIES OF DISTRIBUTOR, AND ALL WARRANTIES, OBLIGATIONS, AND LIABILITIES OF PRIMUS, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY BUG, ERROR, OMISSION, DEFECT, DEFICIENCY, OR
NONCONFORMITY IN ANY SOURCE CODE, OTHER ITEMS, OR SERVICES FURNISHED UNDER THIS SECTION 4 OF ADDENDUM THREE, INCLUDING BUT NOT LIMITED TO ANY: (A) IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE;

 

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(B) IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING, OR USAGE OF
TRADE; (C) CLAIM OF INFRINGEMENT; OR (D) STATUTORY REMEDY. 
 

	 	F.	 	LIMITATION ON LIABILITY.    IN NO EVENT SHALL PRIMUS, OR ITS OFFICERS, DIRECTORS, EMPLOYEES, OR REPRESENTATIVES BE LIABLE
(WHETHER IN TORT OR CONTRACT, UNDER STATUTE OR OTHERWISE) FOR ANY INDIRECT, SPECIAL, RELIANCE, CONSEQUENTIAL OR INCIDENTAL DAMAGES, INCLUDING WITHOUT LIMITATION DAMAGES FOR LOSS OF PROFITS, LOSS OF GOODWILL, BUSINESS INTERRUPTION, LOSS OF
INFORMATION AND THE LIKE, ARISING OUT OF ITS PERFORMANCE OR NONPERFORMANCE OF THIS SECTION 4 OF ADDENDUM THREE, OR THE INSTALLATION, USE, INABILITY TO USE OR RESULTS OF USE OF THE SOURCE CODE, EVEN IF PRIMUS HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES. DISTRIBUTOR AGREES THAT THE SOLE AND EXCLUSIVE REMEDY AVAILABLE TO DISTRIBUTOR FOR CLAIMS RELATED TO THE SUBJECT MATTER OF THIS SECTION 4 OF ADDENDUM THREE SHALL BE LIMITED TO RECOVERY OF ACTUAL DIRECT DAMAGES NOT IN EXCESS OF $50.
THE PARTIES AGREE THAT THE LIMITATIONS PROVIDED IN THIS SECTION F SHALL SURVIVE AND CONTINUE IN FULL FORCE AND EFFECT DESPITE ANY FAILURE OF ANY EXCLUSIVE REMEDY. FOR THE AVOIDANCE OF DOUBT, THE LIMIATIONS OF LIABILITY IMPOSED BY THIS SECTION F
SHALL APPLY SOLELY WITH RESPECT TO CLAIMS ARISING UNDER THIS SECTION 4 OF ADDENDUM THREE AND SHALL NOT CONSTITUTE IN ANY WAY AN AMENDMENT OR MODIFICATION OF THE DISTRIBUTION AGREEMENT. 

 

	 	G.	 	TERMINATION. Primus may terminate the rights and licenses granted under this Section 4 of this Addendum Three immediately upon breach of the Distribution Agreement
on notice to Distributor and without any other action on the part of Primus. Within ten (10) working days after notice, Distributor will deliver to Primus all copies of the Source Code or any New Works (and related Documentation) based thereon.

 
Except as expressly stated above, this letter
Addendum provides no other consent, express or implied, to materially modify the Distribution Agreement. 
 

5 

 
Please indicate your agreement
to this letter by executing the enclosed duplicate in the space provided below. This Addendum Three shall be effective as of January 1, 2003 on the terms set forth above (the “Effective Date”). 
 

	 Sincerely,
	 	 Agreed and Accepted:

	
	 Primus Knowledge Solutions, Inc.
	 	 Primus Knowledge Solutions, KK

	
	 	 	 By:    /s/ Taizo Otahara

	 /s/    Ron Stevens
	 	 Name:  Taizo Otahara

	
	 Ronald M. Stevens
	 	 Its:  President

	
	 Chief Financial Officer
	 	 Date:  Jan. 27, 2003

 

6 

Schedule 1 
 
Modified Payment Schedule 
 
The following table depicts the schedule and structure of the Guaranteed Annual Minimum Payment:

 

	 	    	 Original Benchmark and
Baseline Payment Schedule

	    	 Amended Benchmark and
Baseline Payment Schedule

	 Period Ended:
	    	 Benchmark

	    	 Baseline

	    	 Monthly Payment

	    	 Baseline

	 December 31, 2002
	    	 	 	    	 	 	    	 $
	 100,000
	    	 	 
	 January 31, 2003
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 February 28, 2003
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 March 31, 2003
	    	 $
	 100,000
	    	 $
	 600,000
	    	 $
	 41,667
	    	 $
	 350,000

	 	    	
	
	    	
	
	    	
	
	    	
	

	 Total
	    	 $
	 100,000
	    	 $
	 600,000
	    	 $
	 225,001
	    	 $
	 350,000

	 	    	
	
	    	
	
	    	
	
	    	
	

	 April 30, 2003
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 May 31, 2003
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 June 30, 2003
	    	 $
	 100,000
	    	 	 	    	 $
	 41,667
	    	 $
	 250,000

	 July 31, 2003
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 August 31, 2003
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 September 30, 2003
	    	 $
	 100,000
	    	 $
	 400,000
	    	 $
	 41,667
	    	 $
	 250,000

	 October 31, 2003
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 November 30, 2003
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 December 31, 2003
	    	 $
	 100,000
	    	 	 	    	 $
	 41,667
	    	 $
	 250,000

	 January 31, 2004
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 February 29, 2004
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 March 31, 2004
	    	 $
	 100,000
	    	 $
	 600,000
	    	 $
	 41,667
	    	 $
	 250,000

	 	    	
	
	    	
	
	    	
	
	    	
	

	 Total
	    	 $
	 500,000
	    	 $
	 1,000,000
	    	 $
	 500,004
	    	 $
	 1,000,000

	 	    	
	
	    	
	
	    	
	
	    	
	

	 April 30, 2004
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 May 31, 2004
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 June 30, 2004
	    	 $
	 100,000
	    	 	 	    	 $
	 41,667
	    	 $
	 250,000

	 July 31, 2004
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 August 31, 2004
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 September 30, 2004
	    	 $
	 100,000
	    	 $
	 400,000
	    	 $
	 41,667
	    	 $
	 250,000

	 October 31, 2004
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 November 30, 2004
	    	 	 	    	 	 	    	 $
	 41,667
	    	 	 
	 December 31, 2004
	    	 $
	 100,000
	    	 	 	    	 $
	 41,667
	    	 $
	 250,000

	 	    	
	
	    	
	
	    	
	
	    	
	

	 Total
	    	 $
	 300,000
	    	 $
	 400,000
	    	 $
	 375,003
	    	 $
	 750,000

	 	    	
	
	    	
	
	    	
	
	    	
	

	 	    	  
  
  
  
  
  
  
  
  
  
	 Shortfalls paid
 as Quarterly
 Adjustment
 within 75 days
 of end of Q-B
 Period; no
 excess carried
 back for Q-A
 Period
 Adjustment
	    	  
  
  
  
  
  
  
  
  
  
  
  
	 Shortfalls paid
 as Baseline
 Adjustment
 within 75 days
 of end of Q-B
 Period; no
 excess carried
 forward into
 Second Bi-
 Annual
 Baseline
 Period
	    	  
  
  
  
  
	 Monthly
 Payments
 made against
 Quarterly
 Baseline
	    	  
  
  
  
  
  
  
  
  
  
  
  
  
	 Baseline
 Shortfalls paid
 as Baseline
 Adjustment
 within 75 days
 of end of Q-B
 Period; excess
 carried forward
 into next
 Quarterly
 Baseline, but
 only for each
 calendar year.

 
 

7Third Amendment to Rights Agreement, dated January 23, 2003

 
EXHIBIT 4.4

TARGETED GENETICS CORPORATION 
THIRD AMENDMENT TO RIGHTS AGREEMENT 
 
This THIRD AMENDMENT TO RIGHTS AGREEMENT (this “Amendment”) is made as of January 23, 2003 by and between Targeted Genetics Corporation, a Washington corporation (the “Company”),
and Mellon Investor Services LLC, a New Jersey limited liability company, formerly known as ChaseMellon Shareholder Services L.L.C., as rights agent (the “Rights Agent”). 
 
RECITALS 
 
WHEREAS, the Company and the Rights Agent are parties to the Rights Agreement dated as of October 16, 1996, as amended by the First
Amendment of Rights Agreement dated as of July 21, 1999 and the Second Amendment to Rights Agreement dated September 25, 2002 (the “Rights Agreement”). Any capitalized terms not specifically defined in this Amendment shall have the
meanings given those terms in the Rights Agreement. 
 
WHEREAS, the parties wish to amend the Rights Agreement as provided herein. 
 
AGREEMENT 
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 
 

	1.	 	Section 2 of the Rights Agreement is hereby amended to delete the following words: 

 
“and the holders of the Rights (who prior to the Distribution Date also be the holders of the Common
Stock).” 
 

	2.	 	Section 19(a) of the Rights Agreement is hereby amended by adding the following to the end of such Section 19(a): 

 
“The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or expense (including, without limitation, the reasonable fees and expenses of legal counsel), incurred without gross
negligence or bad faith on the part of the Rights Agent (which gross negligence or bad faith must be determined by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction), for any action taken, suffered or
omitted by the Rights Agent in connection with the acceptance, administration, exercise and performance of its duties under this Agreement. The costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company. The
provisions of this Section 19 and Section 21 below shall survive the termination of this Agreement, the exercise or expiration of the Rights and the resignation or removal of the Rights Agent.” 

 

	3.	 	Section 21(c) of the Rights Agreement is hereby amended by replacing such Section 21(c) in its entirety with the following words: 

 
“The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own gross negligence or bad faith (which gross negligence or bad faith must be determined by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction). Anything to the
contrary notwithstanding, in no event shall the Rights Agent be liable for special, punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Rights Agent has been
advised of the likelihood of such loss or damage. Any liability of the Rights Agent under this Rights Agreement will be limited to the amount of fees paid by the Company to the Rights Agent.” 
 

	4.	 	Section 25 of the Rights Agreement is hereby amended by adding the following address of counsel immediately following the address of the Company set forth in such
Section 25: 

 
“with a copy to:

 
Orrick Herrington & Sutcliffe LLP

719 Second Avenue, Suite 900 
Seattle, Washington 98104 
Attention: Stephen M. Graham” 
 
Section 25 of the Rights Agreement is further amended by
replacing the address of the Rights Agent set forth in such Section 25 with the following address: 
 
“Mellon Investor Services, LLC 
520 Pike Street, Suite 1220 
Seattle, Washington 98101 
Attention: Stock Transfer Department 
 
with a copy to: 
 
Kelley Drye & Warren LLP 
101 Park Avenue, Floor 28 
New York, New York 10178 
Attention: Russell Oken” 
 

	5.	 	Each party represents and warrants to the other party that it has full power and authority to execute and deliver this Amendment and to perform the transactions
contemplated hereunder. 

 

	6.	 	The terms and provisions of the Rights Agreement, as amended hereby, shall remain in full force and effect. All references to the “Rights Agreement”
contained therein shall mean the Rights Agreement, as amended by this Amendment. 

 

	7.	 	This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement. 

 
[Signature Page Follows] 

 
IN WITNESS WHEREOF, each of
the parties hereto have caused this Amendment to be duly executed as of the date first written above. 
 
 

	 TARGETED GENETICS CORPORATION
  

	
	 By:
	 	 /s/    Todd E. Simpson

	 Name:
	 	 Todd E. Simpson

	 Title:
	 	 Vice President, Chief Financial Officer
 and Secretary

 
 
 

	 MELLON INVESTOR SERVICES LLC
  

	
	 By:
	 	 /s/    Thomas L. Cooper

	 Name:
	 	 Thomas L. Cooper

	 Title:
	 	 Assistant Vice President

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