Unclear licensing wording and intent

[samuel-proulx]

The following section is unclear from a legal standpoint:

"Subject to the terms and conditions of the SLA, the licensee of the
Software (the "Licensee") hereby, receives a non-exclusive,
non-transferable, limited, free-of-charge, perpetual and worldwide
license, to copy, use, distribute and modify the Software, but only
for the purpose of developing, manufacturing, selling, using and
distributing products including the Software in binary form, which
products are used for compression and/or decompression according to
the Khronos standard specifications OpenGL, OpenGL ES and
WebGL. Notwithstanding anything of the above, Licensee may distribute
[etcdec.cxx] in source code form provided (i) it is in unmodified
form; and (ii) it is included in software owned by Licensee."

From my understanding, if we want to distribute the source code, it needs to be distributed as-is with the same license. If we want to change the code, we need to distribute it in binary form.
What about distributing it in binary form without doing compression and decompression? What about products that do compression/decompression that does not follow the Khronos standard specification?
What about a product that is actually another library A, where another user uses this library to build another library B or an application C and does not use the compression/decompression capability of the original library A in library B or application C?

In which circumstances we cannot redistribute the Software in a binary form?

Thank you!