EXHIBIT 2.1
CO-MARKETING AGREEMENT
This Co-Marketing Agreement ("Agreement") is made and entered into as of the
later of the two signature dates below (the "Effective Date") by and between
VERTICALNET, INC. ("VerticalNet"), a Pennsylvania corporation with its principal
business address at 000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxxxx 00000,
and MICROSOFT CORPORATION ("Microsoft"), a Washington corporation with its
principal business address at Xxx Xxxxxxxxx Xxx, Xxxxxxx, Xxxxxxxxxx 00000, with
reference to the following facts:
RECITALS
A. On or about January 17, 2000, VerticalNet and Microsoft entered into
a letter agreement (the "LA") pursuant to which the parties contemplated
negotiating and executing definitive agreements relating to: (i) an investment
by Microsoft in VerticalNet, and (ii) a commercial relationship between
Microsoft and VerticalNet.
B. Concurrently with the execution of this Agreement, VerticalNet and
Microsoft are executing a VERTICALNET, INC. SERIES A CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT (the "Stock Purchase Agreement") and related documents (the
"Ancillary Documents"), which memorialize or effectuate the investment referred
to in the LA and clause (i) of Recital A above.
C. Among other activities, VerticalNet owns and operates a portfolio of
Web Sites consisting of vertical business-to-business trade communities which
feature, among other elements, virtual "storefronts" licensed, developed and
maintained by VerticalNet for third parties.
D. Among other activities, Microsoft develops and licenses software and
owns and operates a business to business Web Site known as bCentral and a group
of Web Sites known as The Microsoft Network, or "MSN".
E. VerticalNet and Microsoft desire to enter into a co-marketing
relationship on the terms and conditions contained in this Agreement. This
Agreement is intended to be the definitive "Commercial Relationship Agreement"
contemplated by the LA and memorializing the relationship referred to in clause
(ii) of Recital A above.
AGREEMENT
Accordingly, VerticalNet and Microsoft, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms (when
initially capitalized) will have the indicated meanings:
1.1 "ADDITIONAL SEEDED STOREFRONT" means an E-Commerce Center or
Storefront: (i) which is Sold to a Microsoft Customer (or to an operating
division of a Microsoft Customer in
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conjunction with said Microsoft Customer's Purchase of a Seeded Storefront
hereunder) and (ii) with respect to which the Microsoft Customer (or operating
division) will be obligated to pay to VerticalNet an amount determined by
VerticalNet. For the sake of clarity, an Additional Seeded Storefront is not a
Seeded Storefront.
1.2 "AVERAGE SELLING PRICE" or "ASP" means an amount computed in
accordance with Exhibit A hereto; an Average Selling Price will be separately
computed for each type of Seeded Storefront/Additional Seeded Storefront
(including without limitation Storefronts and E-Commerce Centers).
1.3 "bCENTRAL" means that certain Web Site owned and operated by
Microsoft providing business-to-business services and accessed through the
domain xxxx://xxx.xxxxxxxx.xxx, and any successor Web Site(s).
1.4 "BUYER'S GUIDES" means any of the "Online Buyer's Guides" contained
in the VerticalNet Communities.
1.5 "CONTRACT QUARTER" means each of the three-month periods during any
Contract Year commencing on April 1, July 1, October 1 and January 1; provided,
however, that the first Contract Quarter under this Agreement shall commence on
the Effective Date and shall end on June 30, 2000.
1.6 "CONTRACT YEAR" means a period of twelve consecutive months
commencing on April 1, 2000 or an anniversary thereof during the Term; provided,
however, that the first Contract Year under this Agreement shall commence on the
Effective Date and shall end on March 31, 2001. Thus, subject to Section 7
(termination), Contract Year 1 means the first twelve consecutive months
commencing on the Effective Date and ending on March 31, 2001; Contract Year 2
means the second twelve consecutive months commencing on April 1, 2001 and
ending on March 31, 2002; and Contract Year 3 means the third twelve consecutive
months commencing on April 1, 2002 and ending on March 31, 2003.
1.7 "CUSTOMER" means a third party with a Storefront or E-Commerce
Center.
1.8 "DERIVATIVE TECHNOLOGY" means: (i) for copyrightable or copyrighted
material, any translation (including translation into other computer languages),
portation, modification, correction, addition, extension, upgrade, improvement,
compilation, abridgment, derivative work or other form in which an existing work
may be recast, transformed or adapted; (ii) for patentable or patented material,
any improvement thereon; and (iii) for material which is protected by trade
secret, any new material derived from such existing trade secret material,
including new material which may be protected by copyright, patent and/or trade
secret.
1.9 "DISCOUNT FACTOR" means the difference of 1 minus (N/100) where N%
is the applicable Discount.
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1.10 "DISCOUNT" means a percentage discount relevant to the computation
of payments required to be made by Microsoft pursuant to Section 2.2.2 below, as
determined in accordance with Exhibit A.
1.11 "E-COMMERCE CENTER" means a Customer's Web Pages in the
VerticalNet Communities which provide online e-commerce transaction
functionality in addition to detailed information about the Customer's products
and services, (or any similar set of Web Pages that VerticalNet may develop
during the Term for the VerticalNet Communities).
1.12 "LINK" means an embedded icon, object, graphic or text within a
Web Page that consists of a hypertext pointer to the URL address of a Web Page.
1.13 "MICROSOFT CUSTOMER" means a third party (which may include
separate operating divisions of the same entity) that Purchases a Seeded
Storefront through Microsoft (or a sub-agent of Microsoft, including
VerticalNet) at any time during the Term. For purposes of this Agreement,
separate operating divisions of the same business entity shall be deemed
separate Microsoft Customers.
1.14 "MSN SERVICE" means the aggregation of Web-based properties (as
such properties may change from time to time in Microsoft's sole discretion)
which is currently marketed by Microsoft as "The Microsoft Network" and/or
"MSN", and accessed through the domain xxxx://xxx.xxx.xxx.
1.15 "NET TRANSACTION REVENUES" means gross revenues received by
VerticalNet from Transactions conducted by a purchaser: (i) that linked to a
Storefront or E-Commerce Center from a jump page or Link on the MSN Service,
bCentral or other Microsoft-owned Web Sites; or (ii) to the extent not
duplicative of clause (i) of this Section, occurring in any Seeded Storefront,
Additional Seeded Storefront, Renewed Seeded Storefront or Renewed Additional
Seeded Storefront, and in either case net of: (a) returns or credits for
rejected goods; (b) trade, quantity and cash discounts actually allowed; (c)
sales, use, value-added or other similar taxes or other governmental charges
that: (1) are owed by purchasers solely as a result of their entering into
Transactions and paying any associated fees, (2) are required or permitted to be
collected from purchasers by VerticalNet under applicable law and are in fact so
collected, and (3) are based solely upon the amounts payable with respect to
such Transactions; (d) freight allowances, insurance and customs; (e) amounts
written off to cover uncollectible accounts and bad debts; (f) sales commissions
paid to distributors and sales agents; and (g) costs of tangible goods sold, if
any. Transactions that originate from any Web Page in the MSN Service, bCentral
or from any other Microsoft-owned Web Site and which subsequently pass through
any of the Storefronts described in clause (ii) above, will be counted as a
single Transaction for purpose of Net Transactions Revenue.
1.16 "PURCHASED" or "SOLD" (and all conjugations thereof), used in
reference to a Storefront or E-Commerce Center, means a third party has entered
into a contract with VerticalNet for the provision of the Storefront or
E-Commerce Center as specified under this Agreement and in the form attached in
Exhibit B.
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1.17 "REGISTRY" means a database of all information collected by
VerticalNet after the Effective Date from business entities through the Buyer's
Guide online registration process (including without limitation company names,
addresses, contact information, product descriptions, product pricing, etc.),
and all associated taxonomy and documentation relating to such database. Such
data may or may not be included in Storefronts or E-Commerce Centers.
1.18 "RENEWED" or "RENEWAL", as used in conjunction with Seeded
Storefront or Additional Seeded Storefront, means that the applicable Microsoft
Customer has: (i) continued or renewed its contract with VerticalNet for a
Storefront or E-Commerce Center beyond its initial term; or (ii) entered into a
replacement or new contract for a Storefront or E-Commerce Center within 6
months after the expiration or other termination of a prior contract for a
similar Storefront or E-Commerce Center. Renewals will be treated hereunder as
having a term of up to 12 months (regardless of the actual contract duration),
so that each Renewal with a term of 12 months or less will be deemed to be 1
Renewal, each Renewal with a term of more than 12 months but not more than 24
months will be deemed to be 2 Renewals, and so on.
1.19 "SEEDED STOREFRONT" means an E-Commerce Center or Storefront: (i)
which is Sold through Microsoft (or a sub-agent of Microsoft) pursuant to this
Agreement; and (ii) with respect to which the Microsoft Customer is not
obligated to make any payments to VerticalNet for 1 year. Seeded Storefronts may
be Sold to Microsoft Customers at no cost for initial terms of one, two or three
years, provided that Seeded Storefronts Sold for two-year initial terms shall be
deemed to be two Seeded Storefronts Sold in two consecutive Contract Years, and
Seeded Storefronts Sold for three-year initial terms shall be deemed to be three
Seeded Storefronts Sold in three consecutive Contract Years.
1.20 "STOREFRONT" means a Customer's Web Pages in the VerticalNet
Communities which provide detailed information about the Customer's products and
services but not online e-commerce transaction functionality (or any similar set
of Web Pages that VerticalNet may develop during the Term for the VerticalNet
Communities).
1.21 "TERM" means the period of 3 consecutive Contract Years commencing
on the Effective Date, subject to earlier termination pursuant to Section 7.2
below.
1.22 "TRANSACTION" means the purchase of products or services from a
Customer on a Storefront or E-Commerce Center.
1.23 "URL" means a uniform resource locator which serves as the address
of a Web Page.
1.24 "VERTICALNET COMMUNITIES" means the VerticalNet portfolio of
wholly-owned Web Sites that consist of vertical business-to-business trade
communities which combine content, community interaction and the ability to
conduct business transactions on line, and which feature, among other elements,
virtual "storefronts" licensed, developed and maintained by VerticalNet for
third parties.
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1.25 "WEB PAGE" means content in the World Wide Web portion of the
Internet accessed via a single URL, and excluding content on other Web Pages
accessed via Links in said content.
1.26 "WEB SITE" means a collection of Web Pages related in some manner
and interconnected via Links within a specific URL domain.
2. MARKETING STOREFRONTS AND E-COMMERCE CENTERS.
2.1 REGISTRY.
2.1.1 VerticalNet will use commercially reasonable efforts
(including but not limited to marketing of its directory service and other
levels of membership participation in the VerticalNet Communities) to grow the
Registry over the Term to include data about more than 500,000 business
entities.
2.1.2 As between VerticalNet and Microsoft:
(a) VerticalNet will solely own all Registry data it
possesses as of the Effective Date;
(b) VerticalNet will solely own all Registry data it
collects or acquires during the Term from or pertaining to business entities who
are not Microsoft Customers;
(c) VerticalNet will solely own the technology it has
developed and in the future develops pertaining to the Registry, together with
the schema used to maintain the Registry, as well as all Derivative Technology
derived therefrom or based thereon;
(d) Microsoft will solely own all Registry data it
collects or acquires during the Term, but excluding Joint Data (defined below)
and Registry data provided by VerticalNet to Microsoft; and
(e) Microsoft and VerticalNet will jointly and
equally own all Registry data VerticalNet collects or acquires during the Term
from or pertaining to Microsoft Customers ("Joint Data").
2.1.3 During the Term, VerticalNet will supply to Microsoft
copies of all Joint Data, in such format as reasonably requested by Microsoft,
upon such regular periodic schedule as the parties may mutually agree or as
otherwise reasonably requested by Microsoft in writing.
2.1.4 Within 60 days after the expiration or termination of
this Agreement, VerticalNet will make its last delivery of the Joint Data to
Microsoft, in such format as reasonably requested by Microsoft. After the
expiration or termination of this Agreement, each party will have the right to
use the Joint Data as it may determine in its sole discretion, without
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any obligation to share in any proceeds it may derive from such usage or to pay
any royalty or other compensation to the other party relating to such usage.
2.1.5 Subject to applicable law, VerticalNet agrees not to
collect Joint Data pursuant to any privacy policy that would in any way restrict
or limit Microsoft's ownership of, or ability to use, Joint Data.
2.2 SEEDED STOREFRONTS AND ADDITIONAL SEEDED STOREFRONTS. Subject to
Section 2.2.7, VerticalNet hereby irrevocably appoints Microsoft, on a
non-exclusive basis, to act during the Term as VerticalNet's sales agent to
market Seeded Storefronts and Additional Seeded Storefronts to third parties
(including to pre-existing Customers of VerticalNet, but only in VerticalNet
Communities different from those in which the Customer already possesses a
Storefront or E-Commerce Center) in accordance with the terms and conditions set
forth in this Section 2.2. Microsoft will use commercially reasonable efforts to
cause Seeded Storefronts to be Sold during the Term in accordance with the
"roll-out" schedule attached hereto as Exhibit C.
2.2.1 Prior to the commencement of each applicable Contract
quarter (and on the April 10, 2000 with respect to the first Contract
Quarter), Microsoft will pay to VerticalNet the following Guaranteed Payments
for Seeded Storefronts to be Sold through Microsoft during said Contract
Quarter:
Contract Quarter Payment
---------------- -------
1 $11,900,000
2 $11,900,000
3 $11,900,000
4 $11,900,000
5 $18,544,032
6 $18,544,032
7 $18,544,032
8 $18,544,032
9 $10,030,823
10 $10,030,823
11 $10,030,823
12 $10,030,823
2.2.2 For each Seeded Storefront Sold during the Term,
Microsoft will pay to VerticalNet, in accordance with Section 8.2 below, an
amount equal to the product of the applicable Discount Factor times the Average
Selling Price applicable to the type of Seeded Storefront; provided, however,
that the Guaranteed Payment made by Microsoft under Section 2.2.1 for each
Contract Quarter shall be credited against Microsoft's payment obligations under
this Section 2.2.2 for Seeded Storefronts Sold during such Contract Quarter (but
not for Seeded Storefronts Sold during future Contract Quarters) until such time
as payments due under this Section 2.2.2 for a Contract Quarter equal the
Guaranteed Payment made by Microsoft under Section 2.2.1 for such Contract
Quarter (i.e., until the credit has been fully applied towards
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Microsoft's payment obligation under this Section 2.2.2). No amount will be
payable by Microsoft hereunder with respect to any Renewal Sales.
2.2.3 For each Additional Seeded Storefront Sold during the
Term, VerticalNet will pay to Microsoft, in accordance with Section 8.2 below,
an amount equal to 25% of the Average Selling Price applicable to the type of
Additional Seeded Storefront.
2.2.4 For each of the first three Renewals of a Seeded
Storefront or Additional Seeded Storefront, VerticalNet will pay to Microsoft,
in accordance with Section 8.2 below, an amount as set forth in the following
table:
Renewal Seeded Storefront Additional Seeded Storefront
------- ----------------- ----------------------------
1st 50% of applicable ASP 20% of applicable ASP
2nd 25% of applicable ASP 20% of applicable ASP
3rd 20% of applicable ASP 20% of applicable ASP
Notwithstanding anything to the contrary contained in this Agreement,
VerticalNet's obligation to make, and Microsoft's entitlement to receive,
payments pursuant to this Section 2.2.4 will continue beyond the expiration or
termination of this Agreement.
2.2.5 Microsoft will have the right to appoint sub-agents, on
such terms and conditions (including without limitation providing such
sub-agents the right to be identified on the home page in each applicable Seeded
Storefront or Additional Seeded Storefront) as Microsoft may determine in its
sole discretion, and Microsoft will not be obligated to share with VerticalNet
any revenues Microsoft may derive from any such sub-agents. Microsoft will
notify VerticalNet of such sub-agents on a quarterly basis, and where
commercially reasonable, discuss such arrangements with VerticalNet before
entering into agreements with those sub-agents.
2.2.6 Microsoft hereby appoints VerticalNet as its sub-agent
hereunder with respect to Seeded Storefronts provided that VerticalNet may only
use its employees and independent contractors to facilitate Sales of Seeded
Storefronts and may not contract with other parties to perform its sub-agent
activities hereunder without the prior written consent of Microsoft, which
consent shall not be unreasonably withheld or delayed. VerticalNet agrees that
it will Sell a minimum commitment of 30,000 Seeded Storefronts and may not
exceed this number without prior written consent of Microsoft, which consent
will not be unreasonably withheld or delayed, unless Microsoft is at Under
Achieving Pace (as described in Exhibit A), in which case VerticalNet may in its
sole discretion increase its Sales of Seeded Storefronts by up to the amount of
the deficit.
2.2.7 Microsoft does not guarantee the performance by
Microsoft Customers under any contracts Microsoft Customers may execute with
VerticalNet, and VerticalNet acknowledges and agrees that Microsoft's
obligations to VerticalNet are as stated in this Agreement and that Microsoft
does not owe any independent fiduciary obligation to VerticalNet notwithstanding
the sales agent relationship. Microsoft will tender to each prospective
Microsoft Customer a contract in the form attached hereto as Exhibit B as may be
amended from time to
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time in the reasonable discretion of VerticalNet and upon reasonable notice to
Microsoft, and agrees not to alter such form in any material manner without
VerticalNet's prior written consent (which VerticalNet will not unreasonably
withhold). VerticalNet agrees to execute any and all contracts tendered to it by
Microsoft in the form of Exhibit B, or conforming to modifications thereto
approved by VerticalNet on a case-by-case basis, regardless of the identity of
the prospective Microsoft Customer; provided, however, that VerticalNet shall
not be required to Sell Seeded Storefronts to a Microsoft Customer in more than
one vertical business-to-business community without VerticalNet's prior written
consent, such consent not to be unreasonably withheld or delayed.
2.2.8 With respect to each Seeded Storefront Sold to a
Microsoft Customer hereunder, VerticalNet agrees to have the Seeded Storefront
available for actual use by the Microsoft Customer within 60 days and the
E-Commerce Centers available for actual use by the Microsoft Customer within 90
days, in either case following the date on which said Microsoft Customer and
VerticalNet execute a written contract for the purchase of the Seeded Storefront
or E-Commerce Center as applicable. Should VerticalNet fail to have any Seeded
Storefront or E-Commerce Center available for actual use by the applicable
Microsoft Customer within said period of time, and such failure is not due to:
(a) the failure of the applicable Microsoft Customer to provide information or
assistance reasonably required in order for VerticalNet to cause the Seeded
Storefront to be available for actual use, or (b) any other cause substantially
beyond the reasonable control of VerticalNet, Microsoft, as its sole and
exclusive remedy for such failure, shall receive an additional two percent (2%)
Discount on the price of the Seeded Storefront (e.g., if the Discount would
otherwise be 65%, it shall increase to 67%). Microsoft shall not be entitled to
any Discount, if VerticalNet fails to have any Seeded Storefront or E-Commerce
Center available for actual use by the applicable Microsoft Customer within the
aforesaid applicable 60 and 90 day periods and such failure is due to: (i) the
failure of the applicable Microsoft Customer to provide information or
assistance reasonably required in order for VerticalNet to cause the Seeded
Storefront to be available for actual use, or (b) any other cause substantially
beyond the reasonable control of VerticalNet. Nothing in this Section 2.2.8 will
be construed to limit Microsoft's rights or VerticalNet's obligations under
Section 10.1.
2.3 COORDINATION OF MARKETING AND OTHER EFFORTS.
2.3.1 The parties agree to maintain strategic teams comprised
of marketing, technical and business development personnel (including, without
limitation, a business-to-business marketing task force) to coordinate the
marketing and technology projects described in this Agreement. These teams shall
meet at least quarterly during the Term to discuss and develop joint programs
and/or plans for implementation of this Agreement. Additionally, representatives
of Microsoft and VerticalNet will meet at least quarterly during the Term to
provide updates to each other as to the marketing efforts being undertaken by
the parties with respect to Storefronts and E-Commerce Centers, and each party's
future marketing plans.
2.3.2 A Microsoft General Manager (or a comparable Microsoft
executive) shall act as an executive sponsor for Microsoft to VerticalNet and
will provide an executive escalation point as required for issues or problems
that may arise. VerticalNet will provide a similar
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executive sponsor to Microsoft at the Senior Vice President level. The parties'
executive sponsors will meet at a minimum on an annual basis for executive
briefings on the progress of the parties' marketing, technical and business
development efforts hereunder.
2.4 MICROSOFT MARKS. Microsoft hereby grants to VerticalNet during the
Term a non-exclusive, non-transferable (except in connection with a permitted
transfer of this Agreement as a whole), personal, worldwide license to use the
Microsoft trademarks, service marks and logos depicted in Exhibit D, as may be
amended from time to time (the "Microsoft Marks"), solely on Storefronts,
E-Commerce Centers and/or other portions of the VerticalNet Communities and on
the XxxxxxxxXxx.xxx Web Site, and otherwise in connection with promoting the
parties' respective products and services provided hereunder, accordance with
the trademark and logo usage guidelines set forth in Exhibit E.
2.4.1 Except as provided in this Section 2.4, this Agreement
does not grant VerticalNet any right, title, interest, or license in or to any
of Microsoft's names, logos, trade dress, designs, or other trademarks and all
uses of the Microsoft Marks will inure solely to the benefit of Microsoft.
2.4.2 VerticalNet acknowledges Microsoft's sole ownership of
the Microsoft Marks worldwide and all associated goodwill. Nothing in this
Agreement or in the performance thereof, or that might otherwise be implied by
law, shall operate to grant VerticalNet any right, title, or interest in or to
the Microsoft Marks other than as specified in the limited license grant herein.
VerticalNet hereby assigns to Microsoft all rights it may acquire by operation
of law or otherwise in the Microsoft Marks, including all applications or
registrations therefore, along with the goodwill associated therewith.
2.4.3 Microsoft has the sole right to and in its sole
discretion may commence, prosecute or defend, and control any action concerning
any Microsoft Xxxx. VerticalNet agrees not to contest the validity of, by act or
omission jeopardize, or take any action inconsistent with, Microsoft's rights or
goodwill in any Microsoft Xxxx in any country, including attempted registration
of any Microsoft Xxxx, or use or attempted registration of any confusingly
similar xxxx.
2.4.4 VerticalNet agrees to maintain the quality and
performance of its services offered on or through the Storefronts, E-Commerce
Centers, VerticalNet Communities and XxxxxxxxXxx.xxx Web Site at a level that
meets all terms of this Agreement and meets or exceeds standards of quality and
performance generally accepted in the industry. VerticalNet shall fully correct
and remedy any deficiencies in its use of the Microsoft Marks, upon reasonable
notice from Microsoft.
2.5 VERTICALNET MARKS. VerticalNet hereby grants to Microsoft during
the Term a non-exclusive, non-transferable (except in connection with a
permitted transfer of this Agreement as a whole), personal, worldwide license to
use the VerticalNet trademarks, service marks and logos depicted in Exhibit D,
as may be amended from time to time (the "VerticalNet Marks"), solely on the MSN
Service, bCentral, Xxxxxxxxx.xxx or any other Web Site within the
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Microsoft family of Web Sites, and otherwise in connection with promoting the
parties' respective products and services provided hereunder in accordance with
the trademark and logo usage guidelines set forth in Exhibit E.
2.5.1 Except as provided in this Section 2.5, this Agreement
does not grant Microsoft any right, title, interest, or license in or to any of
VerticalNet's names, logos, trade dress, designs, or other trademarks and all
uses of the VerticalNet Marks will inure solely to the benefit of VerticalNet.
2.5.2 Microsoft acknowledges VerticalNet's sole ownership of
the VerticalNet Marks worldwide and all associated goodwill. Nothing in this
Agreement or in the performance thereof, or that might otherwise be implied by
law, shall operate to grant Microsoft any right, title, or interest in or to the
VerticalNet Marks other than as specified in the limited license grant herein.
Microsoft hereby assigns to VerticalNet all rights it may acquire by operation
of law or otherwise in the VerticalNet Marks, including all applications or
registrations therefore, along with the goodwill associated therewith.
2.5.3 VerticalNet has the sole right to and in its sole
discretion may commence, prosecute or defend, and control any action concerning
any VerticalNet Xxxx. Microsoft agrees not to contest the validity of, by act or
omission jeopardize, or take any action inconsistent with, VerticalNet's rights
or goodwill in any VerticalNet Xxxx in any country, including attempted
registration of any VerticalNet Xxxx, or use or attempted registration of any
confusingly similar xxxx.
2.5.4 Microsoft agrees to maintain the quality and performance
of its services offered on or through the MSN Service, bCentral and
Microsoft-owned Web Sites at a level that meets all terms of this Agreement and
meets or exceeds standards of quality and performance generally accepted in the
industry. Microsoft shall fully correct and remedy any deficiencies in its use
of the VerticalNet Marks, upon reasonable notice from VerticalNet.
3. CROSS-PROMOTION IN THE MSN SERVICE AND THE VERTICALNET COMMUNITIES.
3.1 BY MICROSOFT. Prior to the commencement of each applicable Contract
quarter (and on April 10, 2000 with respect to the first Contract Quarter),
VerticalNet will pay to Microsoft the amounts indicated in the following table.
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Contract Quarter Payment
---------------- -------
1 $3,750,000
2 $3,750,000
3 $3,750,000
4 $3,750,000
5 $5,000,000
6 $5,000,000
7 $5,000,000
8 $5,000,000
9 $6,250,000
10 $6,250,000
11 $6,250,000
12 $6,250,000
Notwithstanding the foregoing provisions of this Section 3.1, if Microsoft is on
pace to deliver Seeded Storefronts at an Under-Achieving Pace (as described in
Exhibit A) at 18 months after the Effective Date, or at any three-month interval
thereafter, as calculated from the Effective Date, VerticalNet shall pay the
following additional amounts to Microsoft in accordance with Section 8.2:
Interval Payment
-------- -------
18 months $1,666,667
21 months $1,666,667
24 months $1,666,666
27 months $1,666,667
30 months $1,666,667
33 months $1,666,666
36 months $5,000,000
For payments made pursuant to this Section 3.1, Microsoft will provide
VerticalNet with banner ads and other promotional placements in the MSN Service,
bCentral, and, at Microsoft's sole discretion, in other Web Sites within the
Microsoft family of Web Sites, in accordance with a plan and in the amounts
equivalent to the payments made under this Section to be prepared by Microsoft
for each Contract Year and presented to VerticalNet. Each such plan will include
a cash flow schedule for the applicable Contract Year, and will include an
explanation of the pricing applied to each promotional opportunity. VerticalNet
will provide Microsoft with comments on the plan within 10 business days after
receiving it. Microsoft will consider VerticalNet's comments in good faith and
develop and deliver to VerticalNet a revised plan, which will be subject to
VerticalNet's approval (not to be unreasonably withheld) and form the basis for
the application of the amounts paid by VerticalNet for that Contract Year. If
the revised plan is not approved, it will be escalated to the appropriate
persons pursuant to Section 2.3.2.
3.2 BY VERTICALNET. Prior to the commencement of each applicable
Contract quarter (and on April 10, 2000 with respect to the first Contract
Quarter), Microsoft will pay to VerticalNet the amounts indicated in the
following table.
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Contract Quarter Payment
---------------- -------
1 $5,000,000
2 $5,000,000
3 $5,000,000
4 $5,000,000
5 $5,000,000
6 $5,000,000
7 $5,000,000
8 $5,000,000
9 $5,000,000
10 $5,000,000
11 $5,000,000
12 $5,000,000
For such payments, VerticalNet will provide bCentral, MSN Service and other Web
Sites within the Microsoft family of Web Sites banner ads and other promotional
placements in the VerticalNet Communities and on the XxxxxxxxXxx.xxx Web Site,
in accordance with a plan and in an amount equivalent to the payment made in
accordance with this section to be prepared by VerticalNet for each Contract
Year and presented to Microsoft. Except as approved in the annual plan described
in the preceding sentence, subject to VerticalNet's written consent on a
case-by-case basis, Microsoft will have the right to use such banner ads and
other promotional placements as it deems appropriate, including without
limitation, assigning its rights to unrelated third parties. Each such plan will
include a cash flow schedule for the applicable Contract Year, and will include
an explanation of the pricing applied to each promotional opportunity. Microsoft
will provide VerticalNet with comments on the plan within ten business days
after receiving it. VerticalNet will consider Microsoft's comments in good faith
and develop and deliver to Microsoft a revised plan, which will be subject to
Microsoft's approval (not to be unreasonably withheld) and form the basis for
the application of the amounts paid by Microsoft for that Contract Quarter. If
the revised plan is not approved, it will be escalated to the appropriate
persons pursuant to Section 2.3.2.
3.3 REPRESENTATIVE ACTIVITIES. The promotional efforts described in
Sections 3.1 and 3.2 will include activities such as, and without limitation:
marketing placement on certain of the parties' Web Sites; use of key words and
high-yield words in the parties' respective search engine capabilities on
certain Web Sites; joint case studies; joint public relations activities; joint
advertising; and joint participation in trade shows. Within 30 days after the
Effective Date, a joint team will present each party's management team with a
plan for deployment.
3.4 LIMITATION ON USE OF ADVERTISING PAYMENTS. With respect to each
quarterly payment made by VerticalNet under Section 3.1, VerticalNet agrees not
to spend more than twenty percent (20%) of said payment on promotional efforts
relating to "exchanges" in the VerticalNet Communities or on the XxxxxxxxXxx.xxx
Web Site.
12
3.5 NEWS HEADLINES AND BUYER'S GUIDE CONTENT. VerticalNet agrees to
provide Microsoft, free of charge, with original news headlines that Microsoft
may post on the bCentral and the MSN Service, provided that these news headlines
contain Links to the complete news stories in the applicable VerticalNet
Communities. In addition, VerticalNet agrees to provide Microsoft, free of
charge, with portions of Buyer's Guide content that MS may post on bCentral and
the MSN Service, provided that this content contains Links to the complete
Buyer's Guide content in the applicable VerticalNet Communities.
4. NET TRANSACTION REVENUES.
4.1 TO MICROSOFT. VerticalNet will pay to Microsoft, in accordance with
Section 8.2 below, an amount equal to 10% of all Net Transaction Revenues from
each Transaction conducted during the Term, except that if Microsoft is on pace
to deliver Seeded Storefronts at an Under Achieving Pace (as described in
Exhibit A) at 18 months after the Effective Date, then VerticalNet instead will
pay Microsoft an amount equal to 20% of all Net Transaction Revenues from
Transactions conducted during the quarter beginning on such date. VerticalNet
shall continue to pay Microsoft said higher percentage of Net Transaction
Revenues for each quarter thereafter during which Microsoft remains on pace to
deliver Seeded Storefronts at an Under Achieving Pace (as measured at the start
of each such quarter), until Microsoft receives a cumulative amount of
$20,000,000 in Net Transaction Revenue payments pursuant to this Section 4.1.
4.2 TO VERTICALNET. Microsoft will pay to VerticalNet, in accordance
with Section 8.2 below, an amount equal to the percentages in Exhibit F of the
average sales price received by Microsoft for services described in Exhibit F
that are acquired by any purchaser through the MSN Service or bCentral, via Link
and that can be identified by Microsoft through commercially reasonable efforts
as originating from a Microsoft banner ad in the VerticalNet Communities or on
the XxxxxxxxXxx.xxx Web Site. Placement of Links and participation of particular
Web Sites within the MSN Service and bCentral will be established pursuant to
the plan described in Section 3.1 for each Contract Year. The parties agree to
review the royalty percentage set forth in this Section 4.2 after each Contract
Year for consistency with royalties paid to other companies for the sale of the
Microsoft services contemplated under this Section 4.2.
5. SOFTWARE DEVELOPMENT.
5.1 NEW MICROSOFT TECHNOLOGY.
5.1.1 On or before the commencement of each applicable
Contract quarter (and on April 10, 2000 with respect to the first Contract
Quarter), VerticalNet will pay to Microsoft, as a non-refundable advance paid
for the licenses described in Section 5.1.4, the respective amount set forth in
the following table:
13
Contract Quarter Payment
---------------- -------
1 $1,500,000
2 $1,500,000
3 $1,500,000
4 $1,500,000
5 $625,000
6 $625,000
7 $625,000
8 $625,000
9 $625,000
10 $625,000
11 $625,000
12 $625,000
5.1.2 During the Term, Microsoft will use all amounts paid by
VerticalNet pursuant to Section 5.1.1 in connection with the development or
enhancement of products or services relating to business-to-business marketplace
and database software technology. VerticalNet may suggest projects to Microsoft
that it may deem desirable, and VerticalNet will have reasonable input into the
specifications for products and services to be developed, but Microsoft will
have the right to use such funds for the development or enhancement of products
or services relating to business-to-business marketplace and database software
technology as it may determine in its sole and absolute discretion. Microsoft
will specify in a written plan the technology developments or enhancements
against which the funds paid pursuant to Section 5.1.1 will be applied.
5.1.3 Microsoft will own all right, title and interest in and
to all results and proceeds of the development activities undertaken pursuant to
this Section 5.1, and VerticalNet hereby irrevocably assigns to Microsoft all
right, title and interest in and to such results and proceeds. Notwithstanding
the foregoing sentence, VerticalNet shall remain free to exploit, on its own or
with others and for any and all purposes, any ideas, suggestions, and other
input VerticalNet may provide to Microsoft in connection with such development
activities; provided, however, that VerticalNet agrees not to contest or
otherwise dispute Microsoft's right, title and interest in and to the results
and proceeds of such development activities on grounds that said results and
proceeds are derived from ideas, suggestions or other input provided by
VerticalNet in connection with such development activities.
5.1.4 Microsoft agrees to offer to VerticalNet and its
subsidiaries, affiliates and other contractual business partners non-exclusive
licenses, on Microsoft's applicable standard terms and conditions, if any, to
any products or services commercially marketed to businesses by Microsoft which
are based substantially on technology developed by Microsoft pursuant to this
Section 5.1. Licenses will be acquired by VerticalNet via Microsoft's standard
distribution channel for those products or services. To the extent Microsoft
products or services may be acquired directly from Microsoft (without
distribution via third party), Microsoft will provide VerticalNet such products
and services at the best volume price discounts offered to similarly
14
situated customers (excluding, for purposes of calculating the discount,
products and services licensed directly to Microsoft's subsidiaries and
affiliates).
5.2 NEW JOINT TECHNOLOGY.
5.2.1 VerticalNet and Microsoft may decide to pursue jointly
the development by third parties of products or services relating to
business-to-business marketplace and database software technology. VerticalNet
will pay, in accordance with the applicable schedule established by the parties
for the joint projects described in Section 5.2.2, the respective amounts set
forth in the following table to fund such activities:
Contract Quarter Payment
---------------- -------
1 $625,000
2 $625,000
3 $625,000
4 $625,000
5 $625,000
6 $625,000
7 $625,000
8 $625,000
9 $625,000
10 $625,000
11 $625,000
12 $625,000
5.2.2 The determination of appropriate joint projects, and the
engagement of the appropriate third party developers in connection with joint
projects, will be subject to the mutual written approval of Microsoft and
VerticalNet. The parties acknowledge and agree that among the joint development
projects they may discuss are enhancements to pre-existing technology owned by
Microsoft or VerticalNet. Technology developed pursuant to a project funded
under this Section 5.2 will be referred to as "Joint Technology."
5.2.3 Unless the parties otherwise agree in writing with
respect to a specific development project, Microsoft will own all right, title
and interest in and to all Joint Technology, and VerticalNet hereby irrevocably
assigns to Microsoft all right, title and interest in and to said Joint
Technology, provided that notwithstanding the foregoing: (i) each party will
retain all rights in and to any technology owned by it which is used in the
Joint Technology or upon which the Joint Technology is based; (ii) subject to
the immediately preceding clause (i) and Section 5.2.4 below, Microsoft hereby
irrevocably grants to VerticalNet and its wholly-owned subsidiaries, a
non-exclusive, fully paid, royalty-free, worldwide, perpetual license to
reproduce, distribute, publicly perform, publicly display, prepare derivative
works based on, sell, lease, sublicense, and otherwise use and exploit the Joint
Technology, and any and all products or services based thereon, in any and all
manners and in any and in all media now or hereafter known; and (iii) each party
will solely own all right, title and interest in and to any Derivative
Technology it may create based on the Joint Technology (and such Derivative
Technology will
15
not be subject to any license rights of the other party, including, in the case
of Microsoft, the license rights granted in the immediately preceding clause
(ii)). Notwithstanding the foregoing sentence, VerticalNet shall remain free to
exploit, on its own or with others and for any and all purposes, any ideas,
suggestions, and other input VerticalNet may provide to Microsoft in connection
with joint development activities conducted under this Section 5.2; provided,
however, that VerticalNet agrees not to contest or otherwise dispute Microsoft's
right, title and interest in and to the Joint Technology on grounds that said
Joint Technology derived from ideas, suggestions or other input provided by
VerticalNet in connection with such joint development activities.
5.2.4 EACH OF MICROSOFT AND VERTICALNET DISCLAIMS ALL
WARRANTIES RELATING TO THE JOINT TECHNOLOGY OR ANY IDEAS, SUGGESTIONS OR OTHER
INPUT PROVIDED IN CONNECTION WITH THE DEVELOPMENT OF SUCH JOINT TECHNOLOGY,
EITHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO ANY (IF ANY)
IMPLIED WARRANTIES OF MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE, OF
LACK OF VIRUSES, AND OF LACK OF NEGLIGENCE OR LACK OF WORKMANLIKE CONDUCT OR
EFFORT. WITHOUT LIMITATION, NO WARRANTIES OF TITLE, NON-INFRINGEMENT OR QUIET
ENJOYMENT ARE GIVEN BY MICROSOFT OR VERTICALNET WITH RESPECT TO THE JOINT
TECHNOLOGY OR ANY SUCH IDEAS, SUGGESTIONS OR OTHER INPUT. ALL JOINT TECHNOLOGY
LICENSED TO VERTICALNET PURSUANT TO CLAUSE (ii) OF SECTION 5.2.3 ABOVE IS
PROVIDED AS IS, AND WITH ALL FAULTS, AND WITHOUT ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND.
6. VERTICALNET USES OF MICROSOFT TECHNOLOGY.
6.1 ADOPTION AND USE. During the Term, VerticalNet agrees to use
commercially reasonably efforts to adopt and use the Microsoft products listed
in Exhibit G (and successor versions made available to VerticalNet during the
Term), to operate the VerticalNet Communities when appropriate and feasible
(i.e., when the applicable Microsoft product has the requisite functionality and
performance to meet the needs of VerticalNet). The parties recognize that
VerticalNet's adoption and use of the Microsoft products may be subject to
technical feasibility or third-party contractual limitations. If any third party
contract prohibits or restricts VerticalNet's adoption and use of Microsoft
products, VerticalNet agrees to use good faith efforts to adopt and use the
corresponding Microsoft products when the contractual prohibition or restriction
expires or is terminated, provided that the corresponding Microsoft products
have the requisite functionality and performance to meet the needs of
VerticalNet. In addition, VerticalNet agrees to use good faith efforts to
encourage its subsidiaries, affiliates and other contractual business partners
to use Microsoft products and services.
6.2 BIZTALK FRAMEWORK. VerticalNet agrees to adhere to the Microsoft
BizTalk Framework.
16
6.3 PRODUCT MAP. Within 30 days of the Effective Date, the parties will
agree upon a product map or schedule outlining the process for VerticalNet's
adoption and implementation of the Microsoft products described in Exhibit G.
6.4 PREMIER SUPPORT. VerticalNet and Microsoft have entered into a
mutually acceptable modified version of the Microsoft Premier Support for
Developers Agreement, dated March 16, 2000.
6.5 CERTIFIED SOLUTION PROVIDER. During the Term of the Agreement,
VerticalNet will participate as a "Partner" in the Microsoft Certified Solution
Provider program and maintain certifications for the Microsoft products used by
VerticalNet.
6.6 END USER AGREEMENTS. Subject to Section 6.7 below, all uses of
Microsoft products are subject to Microsoft's standard end user license
agreements applicable to the respective Microsoft products.
6.7 VERTICALNET PAYMENTS. Notwithstanding anything to the contrary in
the applicable Microsoft standard end user license or other agreement
(including, without limitation, the Microsoft Master Services Agreement and the
Microsoft Premier Support for Developers Services Description), on or before the
commencement of each applicable Contract quarter (and on April 10, 2000 with
respect to the first Contract Quarter), VerticalNet will pay to Microsoft, for
license and other necessary rights to the Microsoft products and support
services acquired by VerticalNet, which shall include, subject to Section 6.1
above, the Microsoft products and support services described in Exhibit G
attached hereto, the greater of the actual license and other fees for such
Microsoft products and services or the amounts indicated in the following table:
Contract Quarter Payment
---------------- -------
1 $2,875,000
2 $2,875,000
3 $2,875,000
4 $2,875,000
5 $5,000,000
6 $5,000,000
7 $5,000,000
8 $5,000,000
9 $6,250,000
10 $6,250,000
11 $6,250,000
12 $6,250,000
In consideration of said payments, VerticalNet shall receive license rights as
described in the applicable end user license agreements for such Microsoft
products and, with respect to such Microsoft support services, support for the
corresponding Contract Quarter. Furthermore, VerticalNet shall be entitled to
apply said payments to offset the fees due and owing from VerticalNet's
subsidiaries, affiliates and other contractual business partners who license or
17
otherwise obtain rights to said Microsoft products and support services. To the
extent Microsoft products or services may be acquired directly from Microsoft
(without distribution via third party), Microsoft will provide VerticalNet such
products and services at the best volume price discounts offered to similarly
situated customers (excluding, for purposes of calculating the discount,
products and services licensed directly to Microsoft's subsidiaries and
affiliates.
6.8 PAYMENT OVERAGE. If the total payment by VerticalNet in a given
Contract Quarter exceeds the total price of all Microsoft products and support
services acquired by VerticalNet in that Contract Quarter, then the payment
overage may be applied by VerticalNet, in its sole discretion: (i) to additional
development work in connection with the Microsoft and Joint Technology described
in Sections 5.1 and 5.2; (ii) to acquire additional Microsoft products or
support services: and/or (iii) to offset fees and other amounts due and owing
from VerticalNet's subsidiaries, affiliates and other contractual business
partners who license or otherwise obtain rights to Microsoft products and
support services. Any overages not applied by VerticalNet for such purposes
during the Term may be applied by VerticalNet to acquire post-Term products,
support services and/or consulting services from Microsoft directly or through
its distributors for VerticalNet and/or its subsidiaries, affiliates and
contractual business partners at Microsoft's then-standard pricing for similarly
situated customers.
6.9 Post-Term Products and Support Services. Following expiration of
the Term, Microsoft agrees to continue to offer to VerticalNet the products and
support services offered to VerticalNet during the Term. Microsoft shall offer
said products and support services to VerticalNet on terms and conditions
substantially the same as the terms and conditions under which the products and
support services are offered to VerticalNet during the Term; provided, however,
that pricing for said products and support services shall be Microsoft's
then-standard volume discount pricing for similarly situated customers entitled
to "preferred pricing" discounts.
7. TERM AND TERMINATION.
7.1 TERM. The Term of this Agreement shall commence as of the Effective
Date and shall continue until the expiration of the third Contract Year unless
terminated earlier as provided in this Section 7.
7.2 TERMINATION. Either party may terminate this Agreement immediately
upon written notice at any time if:
7.2.1 The other party is in material breach of any material
warranty, term, condition or covenant of this Agreement, and fails to cure that
breach within 45 days after written notice from the non-breaching party (five
days for a material breach of Section 11 or the NDA (defined in Section 11
below)); or
7.2.2 The other party becomes insolvent or makes any
assignment for the benefit of creditors or similar transfer evidencing
insolvency; or suffers or permits the commencement of any form of insolvency or
receivership proceeding; or has any petition under any bankruptcy law
18
filed against it, which proceeding or petition is not dismissed within sixty
(60) days of such filing; or has a trustee or receiver appointed for its
business or assets or any part thereof.
7.2.3 In the event of termination or expiration of this Agreement for
any reason, the following provisions of this Agreement will survive termination
or expiration: Sections 2.1.2, 2.1.4, 2.2.1, 2.2.2, 2.2.3, 2.2.4, 3.1, 3.2,
4.1, 4.2, 5.1.3, 5.1.4, 5.2.3, 5.2.4, 6.8, 6.9, 7.2.3, 8.3, and 9 through 24;
any payment obligations of the parties hereunder accruing prior to the date of
termination or expiration; and any other provision herein expressly surviving
termination or expiration or necessary to interpret the rights and obligations
of the parties in connection with the termination or expiration of the Term of
this Agreement. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR DAMAGES OF ANY
SORT RESULTING SOLELY FROM EXERCISING ITS RIGHT TO TERMINATE OR NOT RENEW THIS
AGREEMENT IN ACCORDANCE WITH THIS SECTION 7.
8. REPORTS & AUDITS.
8.1 REPORTS. VerticalNet will provide Microsoft with quarterly reports
in the form attached as Exhibit H, detailing Microsoft products and services
sold through the VerticalNet Communities.
8.2 PAYMENTS. Payments made pursuant to Sections 2.2.2, 2.2.3, 2.2.4,
3.1 (only for payments made in connection with Under Achieving Pace), 4.1 and
4.2 will be made, by the applicable party as set forth in those Sections, within
45 days following the end of the Contract Quarter during which the payment
obligation accrues. Neither party shall offset any amounts due to the other
party hereunder against amounts owing hereunder by such other party.
8.3 AUDITS. During the Term, and for a period of 12 months following
the expiration or termination of the Term, each party agrees to keep all usual
and proper records related to amounts payable to the other party pursuant to
this Agreement. During the Term and for a period of 12 months following the
expiration or termination of the Term, each party shall have the right to cause
an audit and/or inspection to be made of such records of the other party. Any
such audit or inspection will be conducted by an independent certified public
accountant (other than on a contingent fee basis, which auditor must be approved
by the audited party such approval not to be unreasonably withheld or delayed)
with at least 5 business days' prior written notice by the auditing party to the
party being audited and will be conducted during normal business hours in such a
manner as to not unreasonably interfere with the normal business operations of
the party audited. If a party has audited the other party under this Section
8.3, the party that conducted the audit may not audit the other party within 12
months after the completion of the prior audit. Any audit will be paid for by
the auditing party unless material discrepancies are disclosed. "Material" will
mean a discrepancy of 5% or higher between amounts payable and the amounts
received by the party to whom payment is owed. If discrepancies are disclosed
the audited party will promptly pay any underpayment detected in the audit plus
interest thereon at the rate of the prime lending rate plus 2%. For any material
discrepancy, the audited party must also reimburse the auditing party for the
reasonable costs associated with the audit. Any overpayment
19
discovered in an audit will be promptly refunded to the party from whom the
overpayment was received.
9. REPRESENTATIONS AND WARRANTIES.
Each party represents and warrants to the other that:
(a) it has the requisite corporate right, power and authority to enter
into and perform this Agreement;
(b) it is not a party to any agreement or understanding and knows of no
law or regulation that would prohibit it from entering into and performing this
Agreement or that would conflict with this Agreement; and
(c) this Agreement has been executed by its duly authorized
representative.
10. INDEMNIFICATION.
10.1 INDEMNIFICATION BY VERTICALNET. VerticalNet will at its expense
and Microsoft's request, defend and/or settle any third-party claim or action
brought against Microsoft, and Microsoft's affiliates, directors, officers,
employees, licensees, agents and independent contractors to the extent: (i)
relating in any way to the VerticalNet Communities or the XxxxxxxxXxx.xxx Web
Site and any services provided by VerticalNet in connection with the VerticalNet
Communities or the XxxxxxxxXxx.xxx Web Site including, without limitation, any
third party claim or action alleging that the VerticalNet Communities or the
XxxxxxxxXxx.xxx Web Site, or any portion thereof, or any service provided by
VerticalNet in connection with the VerticalNet Communities or the
XxxxxxxxXxx.xxx Web Site, violates any applicable federal, state, provincial or
local laws, regulations or ordinances, or infringes the copyrights, trademarks,
service marks or other proprietary rights of any third party; or (ii) arising
from any breach, or alleged breach that if true would constitute a breach, of a
VerticalNet warranty or representation or covenant set forth in this Agreement
(collectively, "VerticalNet Claims"). VerticalNet will indemnify and hold
Microsoft harmless from and against any costs, damages and fees reasonably
incurred by Microsoft in the defense and/or settlement of the VerticalNet
Claims, including but not limited to reasonable fees of attorneys and other
professionals, to the extent attributable to such VerticalNet Claims, subject to
Section 10.3. Microsoft will provide VerticalNet reasonably prompt notice in
writing of any such VerticalNet Claims and provide VerticalNet with reasonable
information and assistance, at VerticalNet's expense, to help VerticalNet to
defend such VerticalNet Claims.
10.2 INDEMNIFICATION BY MICROSOFT. Microsoft will, at its expense and
VerticalNet's request, defend and/or settle any third-party claim or action
brought against VerticalNet, and VerticalNet's affiliates, directors, officers,
employees, licensees, agents and independent contractors to the extent: (i)
relating in any way to the MSN Service, bCentral, Xxxxxxxxx.xxx or any other Web
Site
20
within the Microsoft family of Web Sites, and any services provided by Microsoft
in connection with the MSN Service, bCentral, Xxxxxxxxx.xxx or any other Web
Site within the Microsoft family of Web Sites, including, without limitation,
any third party claim or action alleging that the MSN Service, bCentral,
Xxxxxxxxx.xxx or any other Web Site within the Microsoft family of Web Sites,
and any services provided by Microsoft in connection with the MSN Service,
bCentral, Xxxxxxxxx.xxx or any other Web Site within the Microsoft family of Web
Sites, violates any applicable federal, state, provincial or local laws,
regulations or ordinances, or infringes the copyrights, trademarks, service
marks or other proprietary rights of any third party; or (ii) arising from any
breach, or alleged breach that if true would constitute a breach, of a Microsoft
warranty or representation or covenant set forth in this Agreement
(collectively, "Microsoft Claims"). Microsoft will indemnify and hold
VerticalNet harmless from and against any costs, damages and fees reasonably
incurred by VerticalNet in the defense and/or settlement of the Microsoft
Claims, including but not limited to reasonable fees of attorneys and other
professionals, to the extent attributable to such Microsoft Claims, subject to
Section 10.3. VerticalNet will provide Microsoft reasonably prompt notice in
writing of any such Microsoft Claims and provide Microsoft with reasonable
information and assistance, at Microsoft's expense, to help Microsoft to defend
such Microsoft Claims.
10.3 INDEMNIFICATION PROCESS. If any action shall be brought against a
party (the "Claimant") in respect to which indemnity may be sought from the
another party (the "Indemnifying Party") pursuant to the provisions of this
Section 10, the Claimant shall promptly notify the Indemnifying Party in
writing, specifying the nature of the action and the total monetary amount
sought or other such relief as is sought therein. The Claimant shall cooperate
with the Indemnifying Party at the Indemnifying Party's expense in all
reasonable respects in connection with the defense and/or settlement of any such
action. The Indemnifying Party shall, upon written request by the Claimant,
undertake to control and conduct all proceedings or negotiations in connection
therewith, assume and control the defense thereof, and if it so undertakes, it
shall also undertake all other required steps or proceedings to settle or defend
any such action, including the employment of counsel which shall be reasonably
satisfactory to Claimant, and payment of all reasonably incurred expenses.
Claimant shall have the right to employ separate counsel to provide input into
the defense, at Claimant's own cost. The Indemnifying Party shall pay directly
or, if requested, reimburse Claimant upon demand for any payments made or
damages suffered by Claimant, based upon the judgment of any court of competent
jurisdiction or pursuant to a bona fide compromise or settlement of claims,
demands, or actions for which Claimant is entitled to indemnification hereunder.
The Indemnifying Party shall not settle any claim or action under this Section
10 on Claimant's behalf without first obtaining Claimant's written permission,
which permission shall not be unreasonably withheld or delayed, however if
Claimant withholds or unreasonably delays approval of Indemnifying Party's
settlement offer, Claimant shall defend that claim or action and Claimant hereby
waives any right to indemnity hereunder from the Indemnifying Party in excess of
the settlement offer amount. A Claimant may settle any claim or action
hereunder, but the Indemnifying party will not be responsible for any such
settlement unless it shall have approved the settlement, in writing and in
advance, which approval will not be unreasonably withheld or delayed. Each party
agrees not to publicize any settlement without first obtaining the other party's
written permission, which permission will not be unreasonably withheld.
21
10.4 LIMITATION ON DAMAGES. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
EXCEPT AS SET FORTH IN THE NEXT SENTENCE, NEITHER PARTY WILL BE LIABLE TO THE
OTHER FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES OF ANY
NATURE ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING WITHOUT LIMITATION
LOSS OF PROFITS, EVEN IF ADVISED OF THE POSSIBILITY THEREOF. THIS SECTION SHALL
NOT APPLY TO ANY PARTY'S (A) BREACH OF ITS OBLIGATIONS UNDER SECTION 11 OR THE
NDA AND ANY LIABILITIES ASSOCIATED THEREWITH, AND (B) INDEMNIFICATION
OBLIGATIONS AND ASSOCIATED LIABILITIES UNDER SECTION 10.
11. CONFIDENTIALITY.
11.1 EXISTING NON-DISCLOSURE AGREEMENT. Microsoft and VerticalNet
acknowledge and agree that the terms and conditions of the Microsoft Corporation
Non-Disclosure Agreement, attached hereto as Exhibit I ("NDA"), are incorporated
by reference into this Agreement. Each party agrees to negotiate in good faith
modifications to the NDA requested by the other party, if any, within 5 business
days of the date hereof. The terms and conditions of the NDA are incorporated
into this Agreement (including but not limited to its existence) and all
discussions and negotiations related thereto are considered Confidential
Information as defined in the NDA. If any of the incorporated terms of the NDA
are inconsistent with or conflict with this Agreement, then the terms of this
Agreement shall control.
11.2 PERMITTED DISCLOSURES. Each Party may disclose the terms and
conditions of this Agreement to its employees, affiliates and its immediate
legal and financial consultants on a need to know basis as required in the
ordinary course of that party's business, provided that such employees,
affiliates and consultants agree in advance of disclosure to be bound by this
Section 11, or, in the case of its attorneys, are bound by obligations of
confidentiality under applicable state law or otherwise. Further, the parties
acknowledge that this Agreement, or portions thereof, may be required under
applicable laws, rules or regulations to be disclosed, as part of or as an
exhibit to a party's required public disclosure documents. If any party is
advised by its legal counsel that such disclosure is required, it will notify
the other in writing and the parties will jointly seek confidential treatment of
this Agreement to the maximum extent reasonably possible, in documents filed
with the applicable governmental or regulatory authorities.
11.3 EQUITABLE RELIEF. Each Party acknowledges that monetary damages
may not be a sufficient remedy for unauthorized disclosure of the terms and
conditions of this Agreement and that each Party may seek, without waiving any
other rights or remedies and without posting any bond or other security, such
injunctive or equitable relief as may be deemed proper by a court of competent
jurisdiction.
12. PUBLICITY.
Except as may be required by applicable laws, rules or regulations (including
those arising under any securities laws), neither party will originate any
publicity, news release or other public announcement, written or oral, whether
to the public press or otherwise, concerning the
22
relationship between the parties or the transactions described in this Agreement
without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed. In the event disclosure is required by
applicable law, rules or regulations, then the party required to so disclose
such information shall, to the extent possible, provide to the other party for
its approval (such approval not to be unreasonably withheld) a written copy of
such public announcement at least five business days prior to disclosure. As
stated in Section 11.2, the parties acknowledge that this Agreement, or portions
thereof, may be required under applicable laws, rules or regulations to be
disclosed, as part of or as an exhibit to a party's required public disclosure
documents. If any party is advised by its legal counsel that such disclosure is
required, it will notify the other in writing and the parties will jointly seek
confidential treatment of this Agreement to the maximum extent reasonably
possible, in documents filed with the applicable governmental or regulatory
authorities.
13. RELATIONSHIP OF THE PARTIES.
Except as explicitly set forth in Sections 2.2 and 2.2.6 above, this Agreement
is not intended to create any joint venture, partnership, agency or
employee-employer relationship.
14. TAXES.
14.1 PAYMENTS TO VERTICALNET. The amounts to be paid by Microsoft to
VerticalNet herein do not include any foreign, U.S. federal, state, local,
municipal or other governmental taxes, duties, levies, fees, excises or tariffs,
arising as a result of or in connection with the transactions contemplated under
this Agreement including, without limitation: (i) any state or local sales or
use taxes, value added tax, business transfer tax, or similar tax now or
hereafter imposed on the provision of goods and services to Microsoft by
VerticalNet under this Agreement, (ii) taxes imposed or based on or with respect
to or measured by any net or gross income or receipts of VerticalNet, (iii) any
franchise taxes, taxes on doing business, gross receipts taxes or capital stock
taxes (including any minimum taxes and taxes measured by any item of tax
preference), (iv) any taxes imposed or assessed after the date upon which this
Agreement is terminated, (v) taxes based upon or imposed with reference to
VerticalNet's real or personal property ownership and (vi) any taxes similar to
or in the nature of those taxes described in (i), (ii), (iii), (iv) or (v)
above, now or hereafter imposed on VerticalNet (or any third parties with which
VerticalNet is permitted to enter into agreements relating to its undertakings
hereunder) (all such amounts, together with any penalties, interest or any
additions thereto, collectively "VerticalNet Taxes"). Microsoft is not liable
for any VerticalNet Taxes incurred in connection with or related to the sale of
goods and services under this Agreement, and all such VerticalNet Taxes shall be
the financial responsibility of VerticalNet, provided that Microsoft shall pay
to VerticalNet VerticalNet Collected Taxes in accordance with section 14.2
below. VerticalNet agrees to indemnify, defend and hold Microsoft harmless from
any VerticalNet Taxes (other than VerticalNet Collected Taxes) or claims, causes
of action, costs (including, without limitation, reasonable attorneys' fees) and
any other liabilities of any nature whatsoever related to such VerticalNet
Taxes.
23
14.2 TAXES COLLECTED BY VERTICALNET. Any sales or use taxes or similar
tax described in Section 14.1(i) above that: (i) are owed by Microsoft solely as
a result of entering into this Agreement and the payment of the fees hereunder,
(ii) are required to be collected from Microsoft by VerticalNet under applicable
law (whether or not collected in a timely manner), and (iii) are based solely
upon the amounts payable under this Agreement (such taxes the "VerticalNet
Collected Taxes"), will be stated separately as applicable on VerticalNet's
invoices and will be remitted by Microsoft to VerticalNet, whereupon VerticalNet
will remit to Microsoft official tax receipts indicating that such VerticalNet
Collected Taxes have been collected by VerticalNet. Microsoft may provide to
VerticalNet a properly executed exemption certificate (including without
limitation a resale certificate) and/or any other documentation that is required
by law in which case VerticalNet will not collect the taxes covered by such
certificate. VerticalNet agrees to take such steps as are reasonably requested
by Microsoft to minimize such VerticalNet Collected Taxes in accordance with all
relevant laws and to reasonably cooperate with and assist Microsoft, at
Microsoft's request, in challenging the validity of any VerticalNet Collected
Taxes or taxes otherwise paid by Microsoft to VerticalNet. Microsoft will agree
to incur any costs associated with any challenge (e.g., ruling request,
assessment appeal and refund action) to the validity of VerticalNet Collected
Taxes or other taxes otherwise paid by Microsoft to VerticalNet. VerticalNet
will indemnify and hold Microsoft harmless from any VerticalNet Collected Taxes,
penalties, interest, or additions to tax arising from amounts actually paid by
Microsoft to VerticalNet under this Agreement, that are asserted or assessed
against Microsoft to the extent such amounts relate to amounts that are paid to
or collected by VerticalNet from Microsoft under this Section 14.2. In order to
obtain indemnification, Microsoft must timely notify VerticalNet of the
outstanding dispute in order for VerticalNet to attempt to resolve the matter
prior to the issuance of an assessment. Microsoft agrees to take such steps as
are reasonably requested by VerticalNet in challenging the validity of the
assessment. Depending upon the issue, Microsoft and/or VerticalNet will bear the
costs associated with challenging the validity of the assessment. If any taxing
authority refunds any tax to VerticalNet which Microsoft originally paid to
VerticalNet, or VerticalNet otherwise becomes aware that any tax was incorrectly
or erroneously collected from Microsoft, or VerticalNet otherwise receives an
economic benefit (such as an audit offset) as the result of incorrectly or
erroneously receiving VerticalNet Collected Taxes from Microsoft, then
VerticalNet will promptly remit to Microsoft an amount equal to such refund,
(and interest paid by the taxing authority paying such refund), incorrect
collection or tax benefit as the case may be plus any interest thereon accrued
from and after the date of receipt by VerticalNet of the refund from the
applicable taxing authority (such rate of interest shall equal be determined
under Section 6611 of the Internal Revenue Code of 1986, as amended (the
"Code")). Where applicable under state and local law, VerticalNet may assign its
right to obtain refunds to Microsoft.
14.3 WITHHOLDING BY MICROSOFT. If taxes are required to be withheld on
any amounts otherwise to be paid by Microsoft to VerticalNet under this
Agreement, Microsoft will deduct such taxes from the amount otherwise owed and
pay them to the appropriate taxing authority. At VerticalNet's written request
and expense, Microsoft will use reasonable efforts to cooperate with and assist
VerticalNet in obtaining tax certificates or other appropriate documentation
evidencing such payment, provided, however, that the responsibility for such
documentation will remain with VerticalNet.
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14.4 PAYMENTS TO MICROSOFT. The amounts to be paid by VerticalNet to
Microsoft herein do not include any foreign, U.S. federal, state, local,
municipal or other governmental taxes, duties, levies, fees, excises or tariffs,
arising as a result of or in connection with the transactions contemplated under
this Agreement including, without limitation: (i) any state or local sales or
use taxes, value added tax, business transfer tax, or similar tax now or
hereafter imposed on the provision of goods and services to VerticalNet by
Microsoft under this Agreement, (ii) taxes imposed or based on or with respect
to or measured by any net or gross income or receipts of Microsoft, (iii) any
franchise taxes, taxes on doing business, gross receipts taxes or capital stock
taxes (including any minimum taxes and taxes measured by any item of tax
preference), (iv) any taxes imposed or assessed after the date upon which this
Agreement is terminated, (v) taxes based upon or imposed with reference to
Microsoft's real or personal property ownership and (vi) any taxes similar to or
in the nature of those taxes described in (i), (ii), (iii), (iv) or (v) above,
now or hereafter imposed on Microsoft (or any third parties with which Microsoft
is permitted to enter into agreements relating to its undertakings hereunder)
(all such amounts, together with any penalties, interest or any additions
thereto, collectively "Microsoft Taxes"). VerticalNet is not liable for any
Microsoft Taxes incurred in connection with or related to the sale of goods and
services under this Agreement, and all such Microsoft Taxes shall be the
financial responsibility of Microsoft, provided that VerticalNet shall pay to
Microsoft Microsoft Collected Taxes in accordance with section 14.5 below.
Microsoft agrees to indemnify, defend and hold VerticalNet harmless from any
Microsoft Taxes (other than Microsoft Collected Taxes) or claims, causes of
action, costs (including, without limitation, reasonable attorneys' fees) and
any other liabilities of any nature whatsoever related to such Microsoft Taxes.
14.5 TAXES COLLECTED BY MICROSOFT. Any sales or use taxes or similar
tax described in Section 14.4(i) above that: (i) are owed by VerticalNet solely
as a result of entering into this Agreement and the payment of the fees
hereunder, (ii) are required to be collected from VerticalNet by Microsoft under
applicable law (whether or not collected in a timely manner), and (iii) are
based solely upon the amounts payable under this Agreement (such taxes the
"Microsoft Collected Taxes"), will be stated separately as applicable on
Microsoft's invoices and will be remitted by VerticalNet to Microsoft, whereupon
Microsoft will remit to VerticalNet official tax receipts indicating that such
Microsoft Collected Taxes have been collected by Microsoft. VerticalNet may
provide to Microsoft a properly executed exemption certificate (including
without limitation a resale certificate) and/or any other documentation that is
required by law in which case Microsoft will not collect the taxes covered by
such certificate. Microsoft agrees to take such steps as are reasonably
requested by VerticalNet to minimize such Microsoft Collected Taxes in
accordance with all relevant laws and to reasonably cooperate with and assist
VerticalNet, at VerticalNet's request, in challenging the validity of any
Microsoft Collected Taxes or taxes otherwise paid by VerticalNet to Microsoft.
VerticalNet will agree to incur any costs associated with any challenge (e.g.,
ruling request, assessment appeal and refund action) to the validity of
Microsoft Collected Taxes or other taxes otherwise paid by VerticalNet to
Microsoft.. Microsoft will indemnify and hold VerticalNet harmless from any
Microsoft Collected Taxes, penalties, interest, or additions to tax arising from
amounts actually paid by VerticalNet to Microsoft under this Agreement, that are
asserted or assessed against VerticalNet
25
to the extent such amounts relate to amounts that are paid to or collected by
Microsoft from VerticalNet under this Section 14.5. In order to obtain
indemnification, VerticalNet must timely notify Microsoft of the outstanding
dispute in order for Microsoft to attempt to resolve the matter prior to the
issuance of an assessment. VerticalNet agrees to take such steps as are
reasonably requested by Microsoft in challenging the validity of the assessment.
Depending upon the issue, VerticalNet and/or Microsoft will bear the costs
associated with challenging the validity of the assessment. If any taxing
authority refunds any tax to Microsoft which VerticalNet originally paid to
Microsoft, or Microsoft otherwise becomes aware that any tax was incorrectly or
erroneously collected from VerticalNet, or Microsoft otherwise receives an
economic benefit (such as an audit offset) as the result of incorrectly or
erroneously receiving Microsoft Collected Taxes from VerticalNet, then Microsoft
will promptly remit to VerticalNet an amount equal to such refund (and interest
paid by the taxing authority paying such refund), incorrect collection or tax
benefit as the case may be plus any interest thereon accrued from and after the
date of receipt by VerticalNet of the refund from the applicable taxing
authority (such rate of interest shall equal be determined under Section 6611 of
the Code). Where applicable under state and local law, Microsoft may assign its
right to obtain refunds to VerticalNet.
14.6 WITHHOLDING BY VERTICALNET. If taxes are required to be withheld
on any amounts otherwise to be paid by VerticalNet to Microsoft under this
Agreement, VerticalNet will deduct such taxes from the amount otherwise owed and
pay them to the appropriate taxing authority. At Microsoft's written request and
expense, VerticalNet will use reasonable efforts to cooperate with and assist
Microsoft in obtaining tax certificates or other appropriate documentation
evidencing such payment, provided, however, that the responsibility for such
documentation will remain with Microsoft.
14.7 The parties confirm that, in addition to and not in lieu of any
other undertakings by VerticalNet under the Agreement, VerticalNet has the
obligation under applicable law to collect from Customers and remit to the
appropriate taxing authority any sales, use, VAT and other similar taxes imposed
in connection with any Transaction.
15. NO WAIVER.
No delay or omission to exercise any right, power or remedy accruing to
VerticalNet or Microsoft, upon any breach or default under this Agreement, will
impair any such right, power or remedy, nor will it be construed to be a waiver
of any such breach or default, or any acquiescence therein, or of any similar
breach or default thereafter occurring; nor will any waiver of any single breach
or default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character by VerticalNet or Microsoft of any breach or default under this
Agreement, or any waiver by VerticalNet or Microsoft of any provisions or
conditions of this Agreement, must be in writing and will be effective only to
the extent specifically set forth in writing, and all remedies, either under
this Agreement, or by law or otherwise afforded to VerticalNet or Microsoft,
will be cumulative and not alternative.
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16. SEVERABILITY.
If any provision of this Agreement is held by a tribunal of competent
jurisdiction to be illegal, invalid, or otherwise unenforceable in any
jurisdiction, then to the fullest extent permitted by law (i) the same shall not
effect the other terms or provisions of this Agreement, (ii) such term or
provision shall be deemed modified to the extent necessary in the tribunal's
opinion to render such term or provision enforceable, and the rights and
obligations of the parties shall be construed and enforced accordingly,
preserving to the fullest extent the intent and agreements of the parties set
forth herein and (iii) such finding of invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
such term or provision in any other jurisdiction.
17. ASSIGNMENT.
This Agreement will be binding upon and inure to the benefit of each party's
respective successors and permitted assigns; provided, however, that neither
Microsoft nor VerticalNet may assign this Agreement, in whole or in part,
without the prior written approval of the other party, such approval not to be
unreasonably withheld. Notwithstanding the preceding sentence, Microsoft will be
permitted to assign this Agreement to subsidiaries without VerticalNet's prior
written approval, but if Microsoft assigns this Agreement to a subsidiary,
Microsoft shall not be released from its obligations and liabilities under this
Agreement.
18. NOTICES.
18.1 DELIVERY. All notices and other communications required or
permitted hereunder will be in writing and will be: (i) delivered personally,
(ii) delivered by facsimile transmission with transmittal confirmation and with
concurrent delivery via another method specified in this sentence, (iii)
delivered by a nationally recognized overnight courier with written verification
of receipt, or (iv) delivered by certified or registered U.S. mail, return
receipt requested, in each case with all delivery or postal charges pre-paid.
Notices will be addressed: (i) if to the Microsoft, at Microsoft's address as
set forth on the signature page of this Agreement, Attention: Chief Financial
Officer and General Counsel, Finance and Operations, (Fax (000) 000-0000), with
a copy to Xxxxx Xxxxxxxxx at Xxxxxxx Xxxxx & Xxxxx LLP, 5000 Columbia Center,
000 Xxxxx Xxxxxx, Xxxxxxx, XX 00000-0000 (Fax (000) 000-0000), or (ii) if to
VerticalNet, at VerticalNet's address set forth on the signature page of this
Agreement, Attention: General Counsel (Fax (000) 000-0000), with copy to the
attention of Xxxxxxx Xxxxxxx, Xxxxxx, Xxxxx & Xxxxxxx LLP, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxxxx, XX 00000-0000 (Fax (000) 000-0000), or at such other address as
VerticalNet will have furnished to Microsoft (or transferees, as aforesaid) in
writing.
18.2 EFFECTIVENESS. Each such notice or communication, addressed and
posted as aforesaid, will for all purposes of this Agreement be treated as
effective or having been given: (i) when delivered, if delivered personally,
(ii) the business day on which the notice or communication is sent, if delivered
by facsimile transmission as provided above (or, if not sent on a business day,
the next business day), (iii) upon the earlier of its receipt or two (2)
business
27
days after deposit with a nationally recognized overnight courier, if delivered
by such means, or (iv) upon the earlier of its receipt or five (5) business days
after deposit if delivered by registered or certified U.S. mail.
19. ENTIRE AGREEMENT.
This Agreement constitutes the entire understanding and agreement among the
parties with regard to the subject matter hereof, and supersede any and all
prior and contemporaneous agreements and understandings among the parties,
including without limitation, the LA.
20. GOVERNING LAW & ATTORNEYS' FEES.
This Agreement will be governed by and construed and enforced in accordance with
the laws of the State of Delaware as they apply to contracts entered into and
wholly to be performed within such state, and without reference to its
principles of conflicts of law or choice of law. In the event of any litigation
in a court of competent jurisdiction arising in connection with this Agreement,
the prevailing party in judgment will be entitled to recover reasonable legal
fees and costs in connection with such action including any appeals.
21. EXPENSES.
VerticalNet and Microsoft will each bear all expenses that such respective party
has incurred or incurs in connection with this Agreement and the transactions
contemplated hereby, and any amendments or waivers.
22. TITLES.
The titles of the Sections and subsections of this Agreement are for convenience
of reference only and are not to be considered in construing this Agreement.
23. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which will
be an original and all of which together will constitute one instrument. This
Agreement shall become binding when any one or more counterparts hereof,
individually or taken together, bear the signatures of both parties hereto. For
the purposes hereof, a facsimile copy of this Agreement, including the signature
pages hereto, shall be deemed an original.
24. NON-EXCLUSIVE AGREEMENT.
This Agreement is not exclusive as to either party, and, subject to the express
provisions of this Agreement, each party will have the right to conduct any
other business in which it may now or hereafter be engaged. Without limiting the
foregoing, each party will have the right, during the Term and thereafter, but
subject to the express provisions of this Agreement, to (i) itself operate Web
Sites, and/or act as sales agent for other Web Sites, whether or not competitive
to the
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VerticalNet Communities, and (ii) itself or by or through third parties acquire,
license, develop, manufacture, distribute or use software or services, whether
or not competitive with any Microsoft software or services.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered by their proper and duly authorized officers as of the day and
year first written above.
VERTICALNET, INC.
a Pennsylvania corporation
By:
Name:
Title:
Address:
MICROSOFT CORPORATION
a Washington corporation
By:
Name:
Title:
Address:
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EXHIBIT A
AVERAGE SELLING PRICE & DISCOUNT COMPUTATION
1. As of the Effective Date, and until (if ever) changed in accordance with this
Agreement:
(a) the Discount will be 65%;
(b) the ASP for a Storefront will be $6,000.00; and
(c) the ASP for an E-Commerce Center will be $10,000.00.
2. The Discount and each ASP will be recalculated as follows:
(a) During the 30-day period commencing 18 months after the Effective
Date, and at 6-month intervals thereafter during the Term, VerticalNet will
adjust the ASP for a Storefront and the ASP for an E-Commerce Center (in
accordance with the following sentence) based on Sales made during the 6-month
period immediately preceding the 30-day period during which said adjustment
occurs. The adjusted Storefront ASP on each such occasion shall be determined by
dividing: (a) the total number of Storefronts (excluding Seeded Storefronts and
special promotion Renewed Seeded Storefronts) Sold and paid for in arms length
transactions with third parties during the applicable 6-month period, into (b)
the total gross revenues received by VerticalNet for such Sales of Storefronts.
A similar calculation shall be performed to determine the adjusted E-Commerce
Center ASP.
(b) For purposes of re-assessing the Discount, the parties contemplate
that the pace of Sales of Seeded Storefronts will proceed as follows: prorated
monthly with 37.5% to VerticalNet as Microsoft's sub-agent and 62.5% to
Microsoft and its other sub-agents:
Standard Pace (low) Contract Year Sales
------------------- -------------------
1 above 15,000 up to and including 20,000
2 above 27,500 up to and including 36,667
3 above 17,500 up to and including 23,333
Standard Pace (high) Contract Year Sales
-------------------- -------------------
1 between 20,000 and 25,000
2 between 36,667 and 45,833
3 between 23,333 and 29,167
Over-Achieving Pace Contract Year Sales
------------------- -------------------
1 25,000 or more
2 45,833 or more
3 29,167 or more
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Under-Achieving Pace Contract Year Sales
-------------------- -------------------
1 15,000 or less
2 27,500 or less
The parties will re-assess the pace of Sales, based on the tables above, after
each 3 month period during the Term.
(c) If the cumulative pace of Sales was Standard (high) as of the end
of a given 3 month period, then the Discount will be set at 65% for the
immediately subsequent 3 month period. If the cumulative pace of Sales was
Standard (low) as of the end of a given 3 month period, then the Discount will
be set at between 65% and 53.333333%, with the exact amount of the Discount
decreasing linearly from a high of 65% where the pace of Sales was at the high
end of the Standard (low) range, to a low of 53.333333% where the pace of Sales
was at the low end of the Standard (low) range.
(d) If the cumulative pace of Sales was Over-Achieving as of the end of
a given 3 month period, then the Discount will be set at 70% for the immediately
subsequent 3 month period.
(e) If the cumulative pace of Sales was Under-Achieving as of the end
of a given 3 month period, then the Discount will be set at 53.333333% for the
immediately subsequent 3 month period.
(f) Notwithstanding the foregoing, the Discount may not decrease, nor
may there be any adjustment of any amounts payable or contributable by Microsoft
hereunder, if the calculation which otherwise would trigger the adjustment is
attributable in whole or in part to a failure by VerticalNet to perform to at
least the applicable Standard Pace with respect to its prorated Sales goals (as
specified in (b) above).
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