VALUE-ADDED RESELLER (VAR) LICENSE & SERVICES AGREEMENT

EXHIBIT 10.6



FORTE SOFTWARE, INC.





VALUE-ADDED RESELLER (VAR) LICENSE AND SERVICES AGREEMENT











VAR CHORDIANT SOFTWARE, INC

____________________________________________________________________________



Address 20400 Stevens Creek Blvd., Ste. 400

________________________________________________________________________



City Cupertino State CA Zip 95014 ______________________________________ _____________________ ____________





This Value-Added Reseller (VAR) License and Services Agreement (the "Agreement") is between Forte Software, Inc., a Delaware corporation located at 1800 Harrison Street, Oakland, California, 94612 ("Forte"), and the company set forth above, including any wholly or majority owned subsidiaries (the "VAR") for the purpose of setting forth the terms and conditions upon which Forte shall grant to the VAR a license to use and Sublicense the Products listed in Exhibit A attached hereto. This Agreement shall supersede and replace the Value-Added Reseller License and Services Agreement dated September 19, 1996 (and all other agreements and understandings between the parties), which superseded the Value-Added Reseller License and Services Agreement dated February 1, 1995.



The Effective Date of this Agreement is the last date set forth below.





FORTE: VAR:



FORTE SOFTWARE, INC. CHORDIANT SOFTWARE, INC.



Signature: /s/ Bob L. Corey Signature: /s/ Steven R. Springsteel



Name: Bob L. Corey Name: Steven R. Springsteel



Title: Senior Vice President Title: EVP/CFO



Date: October 30, 1998 Date: October 29, 1998



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TERMS AND CONDITIONS



Forte and the VAR hereby agree that the following terms and conditions will apply to each license granted and to all services provided by Forte under this Agreement.



1. DEFINITIONS



1.1 "Cumulative Sublicense Fees" shall mean the total Sublicense fees, including Full Use Sublicense Fees, accrued to Forte beginning upon the Effective Date hereto for Products Sublicensed under this Agreement.



1.2 "Delivery Partners" shall mean a system integrator or other party engaged to provide services to a Sublicensee or VAR with respect to VAR Applications.



1.3 "Designated Developer" shall mean a person within the VAR designated by VAR to develop applications with the Product.



1.4 "Distributors" shall mean Delivery Partners or other third parties appointed by the VAR to market and grant Sublicenses of the VAR Application as further set forth in Section 3.1(h) hereto.



1.5 "Documentation" shall mean the user manuals and operator instructions furnished by Forte in conjunction with the Products.



1.6 "Effective Date" shall mean the date so specified on the signature page of this Agreement or on the applicable Order Form, Sublicense report, or other document.



1.7 "Order Form" shall mean Forte's standard form by which the VAR may order licenses and services for VAR's use under this Agreement. Such Order Form is attached hereto as Exhibit B.



1.8 "Price List" shall mean Forte's then-current price list for the country in which a Product license or service is to be used.



1.9 "Product" or "Products" shall mean the computer software program(s) owned or distributed by Forte for which the VAR is granted a license pursuant to this Agreement and as further set forth in Exhibit A, whether in printed or machine readable form and includes Updates (defined in Section 1.16). Forte agrees that Exhibit A may be amended from time to time by the parties to include other software Products not currently listed on Exhibit A that Forte licenses to its customers generally.



1.10 "Runtime Users" shall mean the maximum number of logged-in persons within a Sublicensee that may use the VAR Application at any one time.



1.11 "Standard Technical Support" shall mean Product technical support services provided under Forte's policies in effect on the date such services are ordered.



1.12 "Sublicense" shall mean a nonexclusive, nontransferable right granted by the VAR or Distributor to use a VAR Application for the Sublicensee's own internal business purposes and not for any further distribution.



1.13 "Sublicensee" shall mean a third party who is granted a Sublicense by the VAR or a Distributor.



1.14 "Support Fees" shall mean the fees payable annually for Standard Technical Support.



1.15 "Supported License" shall mean a Product license for which VAR has a current order for annual Standard Technical Support.



1.16 "Updates" shall mean updated versions of the Products and Documentation which encompass logical improvements, extensions and other changes to the Products which are generally made available to Product licensees who are current in their payment of Support Fees. Updates shall be governed by the terms of this Agreement.



1.17 "VAR Application" shall mean the VAR's software program containing modifiable Product code. A VAR Application shall be developed by the VAR through use of the Products as further set forth in Section 2.1 hereto. The VAR shall provide a description of each VAR Application using the form attached as Exhibit C, and each VAR Application shall be approved in writing by Forte prior to Sublicensing which approval will not be unreasonably withheld. Forte agrees that future approved VAR Applications shall be governed by the terms of this Agreement. Forte hereby approves VAR's CCS Application as described in Exhibit C attached hereto. Notwithstanding any provision to the contrary in this Agreement, nothing stated in this Agreement shall preclude VAR from developing any VAR software program through the use of any third party product.



1.18 "VAR Price List" shall mean the VAR's then-current standard product list and fee schedule. The VAR shall attach hereto as Exhibit D the initial VAR Price List which includes the VAR Application. The VAR agrees to notify Forte of all updates and revisions to such VAR Price List.



2. VAR LICENSE AND SERVICES



2.1 VAR Development License



(a) Fees. In consideration for the license described in (b) below, VAR shall pay Forte the VAR license fee set forth on Exhibit A. Additional Designated Developer and other



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licenses may be obtained for the applicable fees set forth in Exhibit A.



(b) License Grant. Forte grants to VAR a nonexclusive, worldwide,

nontransferable and nonassignable (except as otherwise specified herein)

license to use the Documentation and the Products listed on Exhibit A only

for the following purposes:



(i) to market and Sublicense to Sublicensees worldwide (subject to Section

7.8) VAR Application Development Systems (as defined in Exhibit A) and

the right to Sublicense such rights through multiple tiers of

distribution, each for the purposes described below. In connection with

its license pursuant to this clause, VAR shall limit access to such

Products to the number of Designated Developers indicated on the

applicable Order Form.



(ii) to develop or prototype the VAR Application;



(iii) to demonstrate the VAR Application to potential Sublicenses;



(iv) to provide training and technical support to employees and Sublicensees

solely in conjunction with the VAR Application; and



(v) in connection with providing consulting services and/or providing or

modifying VAR Applications to Sublicensees and potential Sublicensees.



In addition to the temporary Sublicenses specified in Section 3.1(c), VAR may make up to five (5) copies of the Products for demonstration and training purposes, may make a reasonable number of copies of the Products for archival or backup purposes. Except as necessary to exercise its license rights or as otherwise permitted hereunder no other copies shall be made without Forte's prior written consent. Documentation may be obtained from Forte for the fees specified in the Price List. All titles, trademarks, and copyright and restricted rights notices shall be reproduced in such copies. All copies of the Product(s) and Documentation are subject to the terms of this Agreement.



(c) Limitations on Use. VAR shall not use or duplicate the Products (including the Documentation) for any purpose other than as specified in the Agreement, or make the Products available to unauthorized third parties. VAR shall not (i) use the Products for its internal data processing or for processing customer data; (ii) except as noted in Exhibit A Section 4(d) rent, or timeshare the Products; (iii) market the Products by interactive cable or remote processing services or otherwise distribute the Products other than as specified in this Agreement; (iv) publish or describe to any third party the results of any benchmark tests run on the Products without Forte's prior written consent provided, however, that VAR may publish benchmark tests and comparisons limited in scope to the VAR Application's features; functionality and performance, so long as such benchmark tests and comparisons do not directly disclose the functionality, features or performance of any Product (including without limitation memory utilization, response time, transaction throughput, relative performance/functionality on different hardware and/or operating system platforms), or (v) cause or permit the reverse engineering, disassembly, decompilation, or otherwise attempt to derive source code of the Products. Transfer of a Product outside the United States for VAR Application development or support shall be permitted only with Forte's prior written consent, which shall not be unreasonably withheld, and is subject to VARs payment of Forte's then current international fee uplift.



2.2. Development License Support



Subject to VAR's payment of the Support Fees set forth on Exhibit A, and so long as Forte continues to offer similar support services to its other Product licensees, Forte will provide annual Standard Technical Support to VAR as follows:



(a) Telephone Support. Forte will provide telephone consultation at Forte's service location, to assist VAR in identifying, verifying and resolving problems in the use and operation of the Product. Telephone assistance services shall be limited to those VAR personnel indicated on the applicable Order Form, which may be amended from time to time by VAR upon written notice to Forte.



(b) Problem Resolution. Forte will respond to problem reports concerning the Products submitted by VAR to Forte, using the form provided by Forte where possible, including backup material substantiating the Product problem. Upon proper notification of a failure of the Product to perform correctly, which failure can be reproduced at Forte's facility or via remote access to VAR's facility, Forte shall use reasonable efforts to correct the failure and to provide VAR with correcting Product, a work-around or other solution to the problem.



Standard Technical Support services will be provided in accordance with the sections entitled "Types of Assistance Offered" and "How Forte Resolves Your Call" of the Forte Technical Support Users Guide ("Support Guide"), attached hereto as Exhibit F or policies that are substantially similar thereto. In the event of a conflict of inconsistency between this Section 2.2 and the Support Guide, Section 2.2 shall govern.



(c) Updates. Forte will provide VAR with Updates. For a minimum of 12 months after the introduction of a new generally available release, Forte will use reasonable efforts to provide Standard Technical Support for the previous release of the Product.



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(d) Renewal. Forte will notify the VAR at least 30 days before the annual support period is scheduled to expire. Fees for annual support are due annually in advance. Such fees will be those in effect at the beginning of the period for which the fees are paid. Annual support will terminate unless the VAR renews for the next year under Forte's then current policies by providing Forte with a purchase order and/or payment of the next year's fees prior to the expiration date.



(e) Re-Instatement. VAR may reinstate lapsed support services only upon payment of the back Support Fees specified in the Price List, plus current year's Support Fees.



2.3 Consulting and Training Services



Forte will provide on-site consulting services ordered by VAR at Forte's then-standard consulting rates under the terms and conditions of this Agreement and any relevant work order; provided, however, that Forte will consider offering Chordiant a discount on consulting orders of $100,000 or more (such consulting services to be used within six months of purchase). Scheduled service dates will be agreed upon mutually, subject to availability of Forte personnel. Forte's daily consulting rate is based on an eight-hour workday. VAR shall reimburse Forte for actual, reasonable travel and out-of-pocket expenses incurred in performing such services. VAR may also order training from Forte (scheduled classes at Forte's facilities or on-site) at Forte's then-standard rates under this Agreement. All consulting and training services must be utilized by VAR within six (6) months following the date ordered by VAR.



Unless otherwise agreed by the parties in writing, Forte consulting services will be limited to transferring knowledge to and mentoring VAR's staff on "best practices" concerning the Products, and reviewing and providing input on VAR's design and implementation of applications developed and deployed using the Products. Development and deployment of applications will remain at all times under VAR's control and direction. Ultimate responsibility for development and deployment of such applications is with VAR, and Forte will not be liable to VAR or any third party for any delay in completion or non-completion of any application.



2.4 Ownership and Rights to Developments



(a) Products and Documentation. VAR acquires only the right to use the Products and Documentation, and does not acquire any rights of ownership. All right, title, and interest in and to the Products and Documentation, including without limitation all intellectual property rights therein, shall at all times remain with Forte and its licensors.



(b) VAR Application. Exclusive of Product, the VAR Application and all other software that VAR develops (or has developed by a third party), and all changes or modifications thereto, will remain the sole and exclusive property of VAR. Exclusive of Product, Forte shall have no interest or acquire any rights in the VAR Application or other software or in such changes or modifications. Except as may otherwise be agreed to in writing by the parties under Section 2(d)(i), Forte irrevocably assigns to VAR all right, title and interest worldwide in and to any changes or modifications to the VAR Application (exclusive of Product) and all applicable intellectual property rights related to the VAR Application (exclusive of Product), including without limitation, copyrights, trademarks, trade secrets, patents, moral rights, contract and licensing rights. Notwithstanding the foregoing and as a condition of this Agreement and in consideration for the licenses granted herein, VAR agrees that it shall not sublicense or otherwise distribute the VAR Application (containing any Product) after termination or expiration of this Agreement. Nothing in this Agreement shall restrict in any way the license by VAR, or require license or other payments to Forte with respect to products or applications which are not VAR Applications, or require VAR or any other party to license VAR Applications or Products.



(c) Developments. Any ideas, know-how, or techniques concerning the Products or their use which may be developed, conceived or reduced to practice by Forte in the course of providing services under this Agreement, including without limitation any enhancements or modifications made to the Products (collectively, "Developments"), shall be the exclusive property of Forte. Forte may in its sole discretion develop, use, market, and license any Developments. Forte may create items similar or related to the VAR Developments or other products which are developed by Forte for VAR provided such items are independently developed without use of VAR's Confidential Information or trade secrets. Forte shall not be required to disclose information concerning any Developments which Forte deems to be proprietary and confidential. Any ideas, know-how, or techniques concerning the VAR Applications or Products or their use which may be developed, conceived or reduced to practice by VAR, including without limitation any enhancements or modifications made to the VAR Applications (collectively, "VAR Developments"), shall be the exclusive property of VAR. VAR may in its sole discretion develop, use, market, and license any VAR Developments. VAR may create items similar or related to the Products or Developments or other materials developed by Forte for VAR provided such items are independently developed without use of Forte's confidential information or trade secrets. VAR shall not be required to disclose to Forte any information concerning any VAR Developments.



(d) Custom Work Product. Notwithstanding subsection (c) above, if consulting services rendered by Forte will by



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mutual written agreement include the design or development of the VAR Application, other software, documentation, or other intellectual property specific to VAR's needs ("Custom Work Product"), then (i) the parties must agree in writing in each instance on the ownership rights in or to such Custom Work Product prior to Forte's commencement of such services or (ii) if no such agreement is reached, VAR shall have sole and exclusive ownership of the Custom Work Product. Under this subsection (ii), Forte irrevocably assigns to VAR all right, title and interest worldwide in and to the Custom Work Product and all applicable intellectual property rights related to the Custom Work Product, including without limitation, copyrights, trademarks, trade secrets, patents, moral rights, contract and licensing rights. Forte shall have the right to create items similar or related to Custom Work Product provided such items are independently developed without use of VAR's Confidential Information or trade secrets. Notwithstanding any other provision to the contrary, for any consulting services Forte provides to VAR which result in Custom Work Product that is exclusively owned by VAR under subsection (ii) above, Forte shall not be precluded from using Residuals (defined below) from such Custom Work Product. "Residuals" shall mean ideas, concepts and understandings related to the Custom Work Product which would be retained in the memory of an ordinary employee not intent on appropriating such Custom Work Product when performing such services. Notwithstanding the parties' agreement that VAR shall own any particular Custom Work Product, any Developments and any proprietary software or other items previously developed and/or owned by Forte and included in the Custom Work Product shall remain the exclusive property of Forte. Forte hereby grants to VAR a non-exclusive, perpetual, worldwide, fully paid-up license to copy, modify, Sublicense, distribute and use solely for VAR's exercise of rights granted under this Agreement all Developments and other Forte-owned items included in the Custom Work Product. All copies of any Custom Work Product which is wholly or partially owned by Forte shall include Forte's copyright notice and may not be provided to third parties without Forte's prior written consent.



3. SUBLICENSING



3.1 Terms and Conditions



(a) Right to Sublicense. Forte hereby grants VAR a nonexclusive, nontransferable and nonassignable (except as expressly provided in this Agreement) license to market and Sublicense to Sublicensees worldwide (subject to Section 7.8) and the right to Sublicense such rights through multiple types of distribution (e.g., system integrators) (i) the Products as an integral part of the VAR Application, (ii) the Core System Products (as defined in Exhibit A) for use with applications other than the VAR Application (a "Full Use License"), provided that a Sublicensee has also received a license to a VAR Application and provided that a Forte Regional Sales Manager has reviewed and approved all quotations for any Products above and beyond a Forte Core System prior to being presented to the proposed Sublicensee. Each Sublicense shall be granted solely through a written Sublicense agreement which shall include terms substantially similar to those set forth on Exhibit E hereto. In the event of any Full Use License, Forte shall promptly ship such Products and Documentation directly to the applicable Sublicensee as identified on the Order Form. At Forte's request, VAR shall provide Forte with a copy of VAR's standard Sublicense agreement. VAR may only Sublicense those Products which VAR has previously licensed from Forte.



(b) Sublicense Fees. VAR shall pay Forte the Sublicense fee set forth on Exhibit A. Sublicense fees shall be due and payable with each applicable Sublicense report.



(c) Temporary Sublicenses. VAR and its Distributors shall be entitled to grant temporary Sublicenses of the VAR Application or Full Use Licenses at no charge, for evaluation/pilot purposes only, with no Sublicense fees owed to Forte as long as a maximum of twenty (20) such temporary Sublicenses are in effect at any one time. The term of each such temporary Sublicense shall be for a period not to exceed ninety (90) days. VAR shall terminate or pay to Forte the applicable Sublicense fees for perpetual Sublicenses for any temporary Sublicenses outstanding in excess of ninety (90) days.



(d) Sublicensee Use. VAR is granted the Sublicensing rights described herein on the understanding that, except for a Full Use License or where such a restriction is not permitted by applicable law, Sublicensees will be permitted use of the Products only in connection with the VAR Application. VAR shall use reasonable commercial efforts to enforce the terms of its Sublicense agreements to the extent that they relate to the Products. If VAR is aware that a Sublicensee without a Full Use License is using a Product beyond the limited functionality set forth in the VAR Application Sublicense agreement (for example, use of any Product for development purposes outside of the scope of the VAR Application), VAR or Distributor shall immediately notify the Sublicensee of such unauthorized use. If the Sublicensee fails to discontinue such unauthorized use following notification, VAR or Distributor shall at VAR's option either terminate the sublicense, or forward to Forte one hundred percent (100%) of the applicable then current Product full use license fee.



(e) Sublicensing Practices. At all times during this Agreement VAR shall: (i) avoid deceptive, misleading, illegal, or unethical practices that may be detrimental to Forte or to the Products; (ii) not make any representations, warranties, or guarantees to Sublicensees concerning the Product that are inconsistent with or in addition to those made in this Agreement and (iii) comply with all



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applicable laws and regulations with respect to the VAR Application and related services rendered by VAR.



(f) Sublicense Reports. Within forty-five (45) days of the last day of each quarter, VAR shall send Forte a report detailing for the quarter:



(i) for each VAR Application or Product for a Full Use License shipped during the prior quarter, Sublicensee name and address, date of shipment, whether the Sublicense is temporary for evaluation purposes, and total Sublicense fees due to Forte;



(ii) for each grant of additional rights to use a VAR Application previously shipped, a description of such additional rights, and a description of the applicable Sublicense fees and Support Fees due Forte for such grant; and the Distributor agreements executed during the prior month, including names and addresses of the Distributors.



With each sublicense report, VAR shall simultaneously provide Forte with payment of all fees required under such report. VAR shall require its Distributors to report the information in clause (i) above to VAR on a quarterly basis and will include it in the report for the quarter in which VAR received the information.



VAR hereby agrees that the information obtained by Forte pursuant to clause (i) above, with the prior written consent of the VAR Sales Director, may be used by Forte for the sole purpose of contacting such new Sublicensee to address any opportunities outside of the VAR Application solution. Such information shall be deemed to be Confidential Information as defined in Section 7.1 of this Agreement. The VAR shall be eligible for compensation on sales by Forte of Full Use Licenses above and beyond a Full Use Core System License to such customers, in accordance with the then-current `reverse royalty' or similar program maintained by Forte.



(g) Sublicensee Documentation. VAR shall be responsible for providing documentation for Sublicensees. VAR shall have the right to incorporate portions of the Documentation into the VAR's documentation subject to the provisions of Section 7.4 of the Agreement at no additional charge to VAR. Forte shall provide VAR with electronic copies of all current documentation, in the form of CDs or such other means as reasonably requested by VAR.



(h) Distributors. VAR may appoint Distributors to market and Sublicense the VAR Application under the terms of the Agreement. If a Distributor desires to make any Product-specific modifications to the VAR Application requiring the Product, it must do so pursuant to a development license unless such Distributor already has an appropriate license acquired directly from Forte or other third party. Each Distributor's agreement with VAR shall allow it to market and Sublicense the VAR Application only in accordance with the Sublicensing provisions of this Agreement. Forte shall be deemed a third party beneficiary of the portions of the Agreement between VAR and such Distributor that relate to the Products. VAR agrees to use all reasonable efforts to enforce its Distributor agreements and to inform Forte immediately of any known material breach thereof related to the Products.



(i) VAR Audit. VAR shall maintain adequate books and records in connection with its activity under this Agreement, which shall include but not be limited to executed Sublicense agreements. Forte may at its expense, retain an independent third party to audit the relevant accounting books and records of VAR regarding shipment of VAR Applications or Products to ensure compliance with the terms of this Agreement. If an audit reveals that VAR has underpaid fees to Forte; VAR shall promptly pay such fees. Any such audit shall be conducted during regular business hours a ...