Thank you for your inquiry.
The paragraph you have quoted refers to redistribution rights, that is when you would like to develop a commercial solution in which Telerik's software is integrated, and sell this same solution to your customers. Please note that the quoted clause ( "The SOFTWARE may not be distributed as part of products that have the same or substantially the same primary functionality as the SOFTWARE. ")
does not prevent you from building SharePoint WebParts with Telerik's controls but only from redistributing these WebParts on their own.
It is okay to build and include SharePoint WebParts in an application you are developing for a client of yours - the only requirement is that the primary functionality of the application differs from the primary functionality of the Telerik's controls you have integrated.
We will be glad to consider your exact scenario and advise further on the matter. Hence, please describe in detail the product you would like to distribute – what is the intended functionality, are you going to ship the source code, are your customers end-users or developers?
I hope the provided information was helpful and we'll be looking forward to assisting you further.
the Telerik team