EXHIBIT 10.17
First Amendment to Subscription License Agreement
This First Amendment to Subscription License Agreement ("Amendment") is entered
into as of January 31, 2001 by and among VerticalNet, Inc., a Pennsylvania
corporation ("VNI"), and VerticalNet Solutions LLC, a Delaware limited liability
company that is the successor by merger to Tradeum, Inc. ("VNS"), on the one
hand, and Converge, Inc., a Delaware corporation formerly known as eHITEX, Inc.
("Converge"), on the other hand.
Background
A. VNI, VNS and Converge entered into a Subscription License Agreement dated
December 19, 2000 (the "License Agreement").
B. VNI, VNS and Converge desire to amend the License Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Definition of High Technology Industry. The definition of "High Technology
Industry," set forth in Section 1.23 of the License Agreement, is hereby amended
and restated as follows:
1.23 "High Technology Industry" means entities doing business in the
computing, electronic components, telecommunications (including
cellular) equipment, networking equipment and/or consumer
electronics markets.
2. Promotion Efforts and Responsibilities. Section 2.17 of the License Agreement
is hereby amended and restated as follows:
2.17 Marketing and Promotion Efforts and Responsibilities. The parties
will comply with the provisions set forth in Exhibit D, and will
participate in other joint marketing and promotional activities as
mutually agreed from time to time.
3. Exhibit D and Related Schedules. The Exhibit D and Schedule D-1, Schedule D-2
and Schedule D-3 attached to the License Agreement upon its execution are
deleted in their entirety and replaced with the Exhibit D and Schedule ▇-▇,
▇▇▇▇▇▇▇▇ ▇-▇, ▇▇▇▇▇▇▇▇ ▇-▇ and Schedule D-4 attached to this Amendment.
4. Governing Law. This Amendment shall be governed by the laws of the United
States of America and of the State of California as applied to agreements
entered into and to be performed entirely within California between California
residents, excluding its conflicts of law provisions.
5. Ratification. Except as specifically modified by this Amendment, all of the
provisions of the License Agreement are hereby ratified and confirmed to be in
full force and effect.
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6. Binding Effect. This Amendment shall be binding upon, and shall inure to the
benefit of, VNI, VNS and Converge and their respective successors and permitted
assigns.
7. Counterparts. This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument. This Amendment shall become binding when
any one or more counterparts hereof, individually or taken together, bear the
signatures of authorized representatives of each of VNI, VNS and Converge. For
the purposes hereof, a facsimile copy of this Amendment, including the signature
pages hereto, shall be deemed an original.
IN WITNESS WHEREOF, the undersigned do hereby execute this parties have
caused this Amendment to be signed by their duly authorized representatives as
of the date first written above in this Amendment.
VerticalNet, Inc. Converge, Inc.
By: By:
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(Print Name) (Print Name)
Title: Title:
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VerticalNet Solutions LLC
By:
-------------------------------
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(Print Name)
Title:
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Exhibit D
Promotion
1. Definitions. In addition to other terms defined in the Agreement to which
this Exhibit D is attached (the "Agreement"), the following defined terms shall
have the meanings set forth below when used in this Exhibit D:
1.1. "Commissionable Fees" means (i) any and all License Fees paid under a
Qualifying End User License Agreement with respect to either (a) the term
(including any renewal term(s)) of such Qualifying End User License Agreement,
for any Referable Product(s) licensed thereunder that are listed on the
applicable Registration Form registering or re-registering the Qualified Lead
with respect to such Qualified End User License Agreement or (b) the period
commencing on the commencement date of such Qualifying End User License
Agreement and ending on the first anniversary of such date, for all Referable
Product(s) other than those listed on such Registration Form, plus (ii) any and
all fees and payments (excluding the amount of any payment made to reimburse an
expense of VNS or an Affiliate of VNS) paid by a Qualified Lead to VNS or its
Affiliate for professional services (including, without limitation,
implementation and customization services) and/or Maintenance and Support
relating to each such Referable Product during or with respect to its respective
time period under clause (i)(a) or (i)(b) as applicable.
1.2. "End User" means a person or entity that has entered into or is
licensed under an End User License Agreement with VNS or an Affiliate of VNS to
access and use one or more Referable Products.
1.3. "End User License Agreement" means an agreement between VNS or an
Affiliate of VNS and a third party to grant such third party (alone or with
others (e.g., with one or more of such third party's Affiliates)) any right
and/or license to install the Referable Product on computers owned and operated
by or for such third party and to access, use and/or enjoy the benefit of such
Referable Product. For avoidance of doubt, licensing the access and use of
Products as part of or through or via any Converge Marketplace is not an "End
User License Agreement."
1.4. "License Fees" means any and all fees and payments, regardless of how
denominated, paid for the right to access, use and/or enjoy the benefit of a
Referable Product (including without limitation license fees, royalties, user
fees, subscription fees, transaction fees and so forth) and/or Maintenance and
Support of such Referable Product; provided, however, that (a) "License Fees"
with respect to a Referable Product do not include fees and payments for
professional services (including, without limitation, implementation and
customization services) except to the extent in excess of the then standard
rates of VNS and its Affiliates (which standard rates may or may not be the then
published list rates of VNS and its Affiliates) and (b) if a Referable Product
is licensed in a bundle with other product(s) (including any other Product(s))
or services, in one transaction or a series of reasonably related transactions,
then the License Fees attributable to such Referable Product will be its pro
rata share of the total fees and payments for
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all the products and services in the bundle, allocated based on their respective
published list prices.
1.5. "Net Revenue" means, with respect to a period of time, the aggregate,
world-wide amount of the following: (a) the total Commissionable Fees received
by VNI, on a consolidated basis, for such period minus (b) total refunds,
returns, surcharges, cancellation charges, taxes, delivery or shipping costs and
collection costs associated with Commissionable Fees, if any, suffered or paid
by VNI, on a consolidated basis in such period. Net Revenue will be calculated
in US Dollars, and Commissionable Fees and other applicable amounts hereunder
that are paid in foreign currencies shall be converted into US Dollars for that
purpose using the applicable rate of exchange as published in The Wall Street
Journal on the date of such payment.
1.6. "Permitted Systems Integrator" means an entity listed on Schedule D-3
and any additional providers of systems integration professional services added
to Schedule D-3 by written notice from Converge (subject to VNS' approval
pursuant to Section 2.1 of this Exhibit D). Permitted Systems Integrators may
be, but are not required to be, subcontractors of Converge.
1.7. "Qualified Lead" means an entity or a division or operating unit of
an entity that is both (a) registered or re-registered by via a bona fide,
properly completed Registration Form submitted pursuant to Section 2.2 of this
Exhibit D and (b) qualified pursuant to Section 2.3 of this Exhibit D.
1.8. "Qualifying End User License Agreement" means an End User License
Agreement entered into by VNS or its Affiliate with a Qualified Lead during the
period commencing on the date VNS receives a bona fide, properly completed
Registration Form registering or re-registering such Qualified Lead pursuant to
Section 2.2 of this Exhibit D and ending 180 days after the date such Qualified
Lead is qualified pursuant to Section 2.3 of this Exhibit D.
1.9 "Referable Products" means the Products listed on Schedule D-1 plus
any additional Products added to Schedule D-1 by mutual written agreement of the
parties (not to be unreasonably withheld).
1.10. "Referring Party" means Converge, a Converge Affiliate or a
Permitted Systems Integrator, as the case may be.
1.11. "Registration Form" means a registration form in the form of
Schedule D-2 to this Exhibit D, pursuant to which a Qualified Lead is registered
or re-registered pursuant to Section 2.2 of this Exhibit D.
2. Referral of Prospective End Users by a Referring Party.
2.1. Referrals of Prospective End Users. From time to time during the
Product Term, a Referring Party, at its discretion, may: (a) contact
individual(s) with authority to purchase licenses for one or more Referable
Products under End User License Agreement(s) for himself/herself or on behalf of
an entity or a division or operating unit of an entity; (b) identify
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that such individual, or the entity, division or operating unit that he/she
represents, has a need for licensing Referable Product(s) under End User License
Agreement(s); and (c) confirm that such individual, or the entity, division or
operating unit that he/she represents, has an interest in purchasing licenses to
such Referable Product(s) under End User License Agreement(s). Converge and its
Affiliates shall not, and each agreement between Converge and Referring Party
shall require the applicable Referring Party to not, enter into agreements or
arrangements with resellers or sales agents to sell, market or promote the
Referable Products without the prior written consent of VNS, which consent may
be withheld in VNS' sole discretion; provided, however that VNS hereby consents
to Converge entering into subcontracts to sell, market and promote the Referable
Products in accordance with this Exhibit D with the Permitted Systems
Integrators. Each agreement between Converge and a Referring Party (including,
but not limited to, the Permitted Systems Integrators) relating to this Exhibit
D shall be substantially consistent with the terms of this Exhibit D and shall
be subject to VNS' reasonable approval as to whether such agreement is
consistent with this Exhibit D.
2.2. Registration of Referrals. To register or re-register an individual
as a prospective End User or authorized representative of a prospective End User
with VNS, the Referring Party must submit to VNS a completed Registration Form,
with the name of the referred individual that is the prospective End User (or,
if the prospective End User is an entity or a division or operating unit of an
entity, then the name of the referred individual and the name of such
prospective End User) and other information required to complete the
Registration Form. A registration shall be deemed accepted by VNS unless, within
10 Business Days after VNS' receipt of the properly completed Registration Form,
VNS notifies the Referring Party in writing (with a copy to Converge, if it is
not the Referring Party) that the prospective End User identified in the
Registration Form is already a customer of VNS or the applicable referred
individual is being actively pursued by the VNS sales force as a lead previously
identified by VNS, which shall be the only reasons for which VNS may reject a
registration proffered by Converge by a properly completed Registration Form.
2.3. Qualification of Referrals. After VNS' acceptance of the registration
or re-registration of an individual and prospective End User pursuant to Section
2.2 of this Exhibit D, VNS shall either qualify such referred individual and
prospective End User in VNS' reasonable business discretion as a "Qualified
Lead" or, within 20 Business Days after VNS' receipt of the completed
Registration Form, notify the Referring Party in writing (with a copy to
Converge, if it is not the Referring Party) that, in the exercise of its
reasonable discretion, VNS has declined to qualify such individual and
prospective End User. If, within 180 days after the date VNS declines to qualify
a referred individual and a prospective End User, VNS enters into an End User
License Agreement with such prospective End User through such referred
individual (or any individual who was directly contacted by the referred
individual in connection with making the decision to become an End User), then
such decline notwithstanding, such prospective End User shall be deemed to be a
Qualified Lead, and such End User License Agreement shall be deemed a Qualifying
End User License Agreement, for the purposes of this Exhibit D.
2.4. Additional Assistance. From time to time, Converge or another
Referring Party may provide such additional assistance to VNS as the parties may
mutually agree (such
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agreement not to be unreasonably withheld or delayed), in connection with the
execution and delivery of a Qualifying End User License Agreements by specific
Qualified Lead(s).
2.5. Execution and Delivery of a Qualifying End User License Agreement.
After registration and certification of a Qualified Lead pursuant to this
Exhibit D, VNS shall use commercially reasonable efforts to enter into the
then-current standard End User License Agreement with such Qualified Lead within
the applicable time period specified in Section 1.9 of this Exhibit D.
2.6. No Authority. VNS shall have sole and complete control over the
pricing, terms and conditions for the transactions related to the Referable
Products. The Referring Parties shall not represent to any prospective End User
that Converge or any other Referring Party has any power whatsoever to bind VNS
as to any arrangement with such prospective End Users.
3. Payment.
3.1. Payment of Commissions by VNS. VNS shall pay commissions to Converge
as set forth in Schedule D-4 (the "Commissions"), on all Net Revenue for each
whole or partial calendar quarter during the term of this Exhibit D. Within 30
days after the end of such calendar quarter, VNS shall report in writing to
Converge, by individual Referring Party and in reasonable detail, the Net
Revenue and Commissions due for such calendar quarter. VNS' payment to Converge
in full of the aggregate total amount of Commissions due (for all Referring
Parties; see Section 3.2 of this Exhibit D) shall accompany the report.
Commissions shall be calculated and paid in U.S. dollars. All amounts not paid
when due shall be subject to late charges of the lesser of (a) 1.5% per month of
the overdue amount or (b) the maximum permitted under applicable law.
3.2. Commission Sharing. If the Referring Party is not Converge or if
Converge works with one or more other Referring Parties with respect to the
registration or re-registration of a Qualified Lead and if a Commission is
payable with respect to Net Revenue generated therefrom, then VNS shall pay the
resulting Commission to Converge as described in Section 3.1 of this Exhibit D
(only the one Commission shall be owing by VNS) and Converge shall be
responsible for paying the share of such Commissions owed such Referring Party,
in accordance with Converge's separate agreement between Converge and such
Referring Party. Said Referring Party shall not be a third party beneficiary
hereunder, however.
3.3. Expenses. Except as otherwise agreed pursuant to Section 2.4 of this
Exhibit D, VNS shall not be responsible for any costs and expenses, including,
but not limited to, travel, trade show and other sales, marketing and
promotional expenses, incurred by a Referring Party in connection with (a) the
sale, marketing and promotion of the Referable Products by such Referring Party
and (b) any other responsibilities of, and activities by, such Referring Party
under this Exhibit D.
3.4. Audit Rights. During the term of this Exhibit D and the one year
period commencing on the date that the term of this Exhibit D expires or is
terminated, Converge shall have the right reasonably to audit, at its expense,
the compliance with this Exhibit D by VNS (the
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"Audited Party") and its Affiliates (together with the Audited Party, the
"Auditees"), provided that such audit(s) shall be conducted during normal
business hours and in such a manner as not to unreasonably interfere with the
operations of the Auditees. Any such audit will be conducted by accountants from
a nationally recognized public accounting firm chosen and engaged by Converge.
Converge may only conduct one such audit in any 12-month period. If any such
audit discloses (a) an underpayment or overpayment of Commissions, then the
appropriate party will promptly make the requisite correcting payment to the
other party, and (b) an underpayment of Commissions of 10% or more for the
period being audited, then the Audited Party shall reimburse Converge for the
reasonable fees and other amounts payable by Converge to the public accounting
firm that conducts the audit. Converge shall use the information obtained or
observed in the audit solely for the purposes of (a) determining whether the
Auditees are complying with the terms and conditions of this Exhibit D, and (b)
enforcing its rights under this Exhibit D, the Agreement and any applicable
laws. All such information shall be treated as Confidential Information of the
Audited Party for purposes of the Agreement; provided, however, that Converge
may use such information as permitted under clause (b) of the foregoing
sentence. VNS shall require each of its Affiliates to permit Converge to conduct
the audits authorized hereunder. Converge and its auditor shall not disclose any
Confidential Information of the Auditees except as permitted under the
Agreement.
4. Disclaimer of Warranties; Limitation of Liability.
4.1. Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET FORTH HEREIN, WITH
RESPECT TO THIS EXHIBIT D ONLY, EACH PARTY HEREBY DISCLAIMS ALL WARRANTIES,
EXPRESS, IMPLIED OR STATUTORY, THE REFERABLE PRODUCTS AND ITS PERFORMANCE UNDER
THIS EXHIBIT D, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND NON INFRINGEMENT.
With respect to this Exhibit D only, Converge shall not, and each agreement
between Converge and a Referring Party shall require the applicable Referring
Party to not, make any warranty, guarantee or other promise or agreement with
respect to the Products. This limitation shall not affect the rights of any End
User pursuant to the provisions of the applicable Qualifying End User License
Agreement.
4.2. Limitations of Liability. WITH RESPECT TO THIS EXHIBIT D ONLY, EITHER
PARTY'S MAXIMUM AGGREGATE LIABILITY TO THE OTHER PARTY HERETO OR ANY THIRD PARTY
FOR DAMAGES RELATED TO THIS EXHIBIT D OR THE REFERABLE PRODUCTS OR ITS
PERFORMANCE UNDER THIS EXHIBIT D, WHETHER FOR BREACH OF CONTRACT OR WARRANTY,
STRICT LIABILITY, NEGLIGENCE OR OTHERWISE, SHALL NOT EXCEED THE COMMISSIONS
PAYABLE TO CONVERGE UNDER THIS EXHIBIT D. WITH RESPECT TO THIS EXHIBIT D ONLY,
IN NO EVENT SHALL EITHER PARTY BE LIABLE OR OBLIGATED IN ANY MANNER FOR ANY
SPECIAL, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY KIND (INCLUDING,
BUT NOT LIMITED TO, DAMAGES OR COSTS INCURRED AS A RESULT OF LOSS OF TIME, LOSS
OF DATA, LOSS OF PROFITS OR REVENUE), REGARDLESS OF THE FORM OF ACTION, WHETHER
IN ▇▇▇▇▇▇▇▇, ▇▇▇▇,
▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ PRODUCT LIABILITY OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN
INFORMED OF THE POSSIBILITY OF ANY SUCH DAMAGES IN ADVANCE.
5. Term and Termination of this Exhibit D.
5.1. Term. The provisions of this Exhibit D shall be effective during the
Product Term, unless terminated earlier pursuant to Section 5.2 of this Exhibit
D.
5.2. Termination. Either party may terminate this Exhibit D during the
Product Term (a) for cause by written notice to the other party if the other
party materially breaches any provision of this Exhibit D and such breach is not
remedied within 30 days after such party's receipt of written notice thereof, or
(b) if the other party becomes insolvent, files for bankruptcy or is subjected
to involuntary bankruptcy proceedings that are not dismissed within 60 days or
makes a general assignment for the benefit of its creditors. In addition, if the
breach is by VNS of a payment obligation under this Exhibit D, Converge shall
also have the right (whether or not Converge has exercised its right to
terminate this Exhibit D and notwithstanding anything to the contrary in the
Agreement) to offset the amount that is the subject of VNS' breach against any
amounts that thereafter may become due and owing by Converge pursuant to the
provisions of the Agreement. No breach by VNS of any of its payment obligations
under this Exhibit D shall give rise to a right to terminate the Agreement or
any rights or obligations of VNS or Converge thereunder except this Exhibit D.
The balance of the Agreement shall remain in full force and effect, it being
understood that the promotional activities of the parties are not a material
part of the bargain between the parties under the Agreement.
5.3. Effect of Termination. Except as specified in Section 5.4 of this
Exhibit D, the respective rights and obligations of the parties under this
Exhibit D shall automatically terminate upon the effective date of any
termination of this Exhibit D. Section 5.2 of this Exhibit D shall apply to this
Exhibit D only, and termination of this Exhibit D shall not automatically cause
termination of the Agreement to which this Exhibit D is attached nor will it
give rise to any rights of any party to terminate the Agreement, it being
understood that the promotional activities of the parties are not a material
part of the bargain between the parties under the Agreement. Termination of the
Agreement shall be governed solely by the applicable provisions of Section 10
thereof.
5.4. Survival. The following sections of this Exhibit D shall survive the
termination of expiration of this Exhibit D: Section 1, Section 2.6, Sections
3.1-3.3 with respect to amounts due for periods prior to the date of
termination, Section 3.4, Section 4, Section 5.3 and this Section 5.4.
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Schedule D-1
Referable Products
All versions and releases and logical successors of the following Products:
Community Products:
VerticalNet Community Builder
VerticalNet Community Manager
Content Products:
VerticalNet Content Builder
VerticalNet Content Syndicator
VerticalNet Content Manager
Commerce Products:
VerticalNet Auction
VerticalNet Exchange
VerticalNet Aggregated Catalog
VerticalNet Distributed Catalog
VerticalNet RFP/RFQ (available 3/31/01)
VerticalNet Structured Negotiations (available 3/31/01)
Platform:
VerticalNet Trade Server
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Schedule D-2
Registration Form
Prospect Information
Name and Contact Information of Referred Individual:
Name of Applicable End User (either Referred Individual or Company, Division or
Business that Referred Individual Represents):
Referring Party Sales Executive:
Contact History
DATE FORMAT COMMENTS
Engagement Information
Brief description of prospective End User's requirements:
List Referable Products applicable to End User's requirements:
Submitted By
Referring Party: Signature and Date:
Name:
Title:
Telephone Number:
Email:
Acceptance Acknowledgement
Approving VNS Manager: Signature and Date:
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Schedule D-3
Permitted Systems Integrators*
CapGemini Ernst & Young
NEC Systems, Inc.
H-P Consulting
Deloitte Consulting
Compaq Global Services
* The entities listed on this Schedule D-3 are deemed to include their
Affiliates that (a) provide systems integration and other professional services
and (b) have been certified by Converge under its Integration Services program.
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Schedule D-4
Commissions
The Commissions due to Converge shall be calculated on a calendar year basis
ending on (a) December 31 of the first (partial) calendar year and each full
calendar year thereafter and (b) the last day of the term of this Exhibit D for
the last (partial) calendar year. The applicable Commissions due for each
calendar year shall be determined based upon the aggregate Net Revenues for such
year. During the course of each such year, the Commissions paid by VNS to
Converge for each calendar quarter shall be determined on a "step" basis
pursuant to the chart below, based upon the aggregate Net Revenues through and
including the end of such calendar quarter. On or before the first day of the
second calendar quarter following the end of each calendar year, VNS shall pay
to Converge an amount equal to the difference between the Commissions owing by
VNS to Converge for such calendar year and the Commissions paid by VNS to
Converge during such calendar year.
Net Revenue Amount Applicable Commission Percentage
$1 to $5,000,000 12.5% of such Net Revenue
(Greater Than)$5,000,000 to $10,000,000 15.0% of such Net Revenue
(Greater Than)$10,000,000 to $20,000,000 17.5% of such Net Revenue
(Greater Than)$20,000,000 20.0% of such Net Revenue
The following example illustrates the foregoing:
If, during a given calendar year during the term of this Schedule D, VNS
receives $15,000,000 of Net Revenue ($2,000,000 during Q1, $3,000,000 during Q2,
$4,000,000 during Q3 and $6,000,000 during Q4), the total Commissions due to
Converge for such calendar year would equal $2,625,000 ($15,000,000 x 17.5%).
Such amount would be paid as follows:
$ 250,000 within 30 days after the end of Q1
$ 375,000 within 30 days after the end of Q2
$ 600,000 within 30 days after the end of Q3
$1,050,000 within 30 days after the end of Q4
$ 350,000 on or before the first day of Q2 of the following year
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