Knotel Broker Program

Knotel Broker Program

THE KNOTEL BROKER PROGRAM (2019)

The program guidelines set forth herein (as the same may be modified from time to time, the "Broker Program Guidelines"), govern participation in this Knotel Broker Program (the "Program"), which sets forth the compensation level that Knotel, Inc. (together with its affiliates and subsidiaries, "Knotel") shall pay to a licensed brokerage house (“Brokerage House”) for each Knotel customer agreement ("Customer Agreement") executed by a customer of Knotel ("Customer") represented by such individual broker (“Broker”) who is represented by such Brokerage House. The payment of any commissions by Knotel (the "Fee") to Broker shall be made pursuant to a separate commission agreement ("Commission Agreement") to be executed between Knotel and the Broker’s Brokerage House. Knotel reserves the right to modify or terminate the Program and the Fees paid thereunder at any time and without notice. In the event of a conflict between these Broker Program Guidelines (as the same may be modified from time to time) and the specific Commission Agreement, the Commission Agreement will control. These Broker Program Guidelines amend, restate and replace any prior terms and conditions relating to the matters contained herein.

I. THE KNOTEL BROKER PROGRAM

Broker will be eligible to participate in the the Program subject to these Broker Program Guidelines as determined by Knotel in its sole discretion. Knotel shall pay the Brokerage House based on the Status of that individual Broker at the time of signing the Customer Agreement. Status levels are based on the cumulative total contract value ("TCV") (calculated by aggregating the monthly service rate payable for each month of the initial term of a Customer Agreement) of all Customer Agreements an individual Broker (or a team headed by an individual Broker) has brought to Knotel ("Status") in a particular calendar year. For the avoidance of doubt, (i) Brokers working in a team shall be considered a single Broker for purposes of the Program and any credit earned shall pertain to the named Broker only provided and (ii) all Brokers operating under one Brokerage House will not receive such benefit of Brokers working on a team by the pure nature of working for such Brokerage House. fBroker's Status shall be used to determine the Fee paid to Broker on a particular transaction for the remainder of the calendar year in which such Status is achieved and for the entirety of the following calendar year as further set forth below. All Brokers are eligible for "Standard" (hereinafter defined) rates prior to the achievement of any Status.

TCV for any Customer Agreement shall be determined based on the TCV on the date of initial execution of the Customer Agreement subject to adjustment as further set forth in these Broker Program Guidelines. By way of example only, a Customer Agreement for a 3 year term signed in 2019 with $1.1 million annual contract value ("ACV") for year 1 (months 1-12), $1.2 million ACV for year 2 (months 13-24), and $1.3 million ACV for year 3 (months 25-36), would have a TCV of $3.6 million.

Status Levels

In order to achieve each Status level, Broker must have achieved a cumulative TCV for all Customer Agreements that surpasses the achievement level of a particular Status. Those achievement levels for the US and Europe are as follows:

US

Status Total Contract Value
Standard < $3 million
Silver ≥ $3 million
Gold ≥ $8 million
Platinum ≥ $15 million

Europe (Non-UK)

Status Total Contract Value
Standard < €3 million
Silver ≥ €3 million
Gold ≥ €8 million
Platinum ≥ €15 million

UK

Status Total Contract Value
Standard < £3 million
Silver ≥ £3 million
Gold ≥ £8 million
Platinum ≥ £15 million

If Broker has not reached the Silver Status level Broker is considered to be "Standard" for the purposes of Fee calculations and any related perks or promotions.

Status Membership Period

There are two timelines associated with Broker Status Membership – the Qualification Period and the Membership Period.

  1. Qualification Period: Current calendar year

  2. Membership Period: Beginning on the date any Status is achieved through December 31 of the following year.

For example, if Broker reaches Silver Status by closing ≥ $3 million of TCV on June 1, 2019, Broker will reach Silver Status on that date, and such Status will be valid through the end of 2020. In this example, once Silver Status is achieved, any Customer Agreements signed after June 1, 2019 will pay Broker according to the fee schedule for that Status level. As soon as Broker qualifies for a higher level, Knotel will automatically upgrade Broker's Status and Broker's new benefits will be effective.

To serve as an example:

  1. Broker 1

    • Deal 1 of 2019

      1. Customer Agreement signed between Customer and Knotel on April 1, 2019.
      2. TCV of Customer Agreement is $2.5 million on a 3-year term
      3. Brooker is still "Standard" since no Status level has been achieved.
      4. Entire $2.5 million is paid on the "Standard" rates based on the fee schedule below.
    • Deal 2 of 2019

      1. Customer Agreement signed between Customer and Knotel on June 20, 2019.
      2. TCV of Customer Agreement is $4 million
      3. 2-year term; $2 million per year
      4. The first $500K is based on the fee schedule of "Standard"
      5. The second $1.5 million is based on the fee schedule of Silver Status
      6. Year 1 Fee is paid at the new revenue rate of 10% of $500k + 12% of $1.5 million
      7. Year 2 Fee is paid at the recurring revenue rate of 2% of $2 million
      8. Silver Status has been achieved, and therefore Broker will be eligible to be paid at the higher Silver Status rates through the end of the Membership Period (i.e. December 31, 2020)
      9. After Deal 2, TCV earned in 2019 by Broker is $6.5 million. If and when Broker achieves another $1.5 million of TCV in 2019 to reach the $8 million threshold, Broker will have earned "Gold Status" for the remainder of 2019 and all of 2020. The same applies for achieving Platinum at $15 million.

The Qualification Period to determine Status shall reset at the beginning of each calendar year. Therefore, in the example above, Broker earned Silver Status in 2019 by closing $6.5 million TCV. If Broker were to close a Customer Agreement with $2 million of TCV on February 1, 2020, the Fees would be paid based on the Silver Status fee schedule since the full 2020 calendar year is within the Membership Period for Silver Status earned in the 2019 Qualification Year. The $2 million of TCV signed on February 1, 2020 counts towards the Broker's Status in the 2020 Qualification Year.

II. FEES

Subject to these Broker Program Guidelines, and provided all conditions set forth in the Commission Agreement are met, including payment in full of any security deposit and advance installments of the Monthly Service Rate due to Knotel from Customer under the Customer Agreement, Knotel will pay Broker a Fee equal to the applicable percentage of each year's annual contract value ("ACV") agreed to in the initial Customer Agreement, in accordance with the Fee schedules set forth below. Fees are calculated based on the Status that Broker holds on the date the Customer Agreement is executed other than for a renewal in which case such Fee shall be calculated based on the Status that Broker holds on the date the Customer Agreement is renewed.

Revenue Type Year STANDARD SILVER GOLD PLATINUM
New Any 10.00% 12.00% 14.00% 16.00%
Renewal At end of existing term 5.00% 6.00% 7.00% 8.00%
Recurring Any 2.00% 2.00% 2.00% 2.00%
  • On the initial year of the Customer Agreement, Broker shall be paid the rate applicable to new revenue on the first year ACV.
  • On any subsequent year, Broker shall be paid the rate applicable to recurring revenue on the ACV of the prior year plus the new revenue rate for any excess ACV for that year over the prior year's ACV.
  • Upon expiration of the term of the existing Customer Agreement, provided Broker remains the Broker of record for the Tenant (as indicated by Tenant in such extension or renewal agreement), then Broker shall be entitled to the renewal rate on the first year ACV and the recurring rate on any subsequent revenue earned in the following years of the renewal terms at the Broker’s then current status. Any annual increases year over year will be paid at the "new revenue" rate at the Broker’s then current status.

Progressive Payment

Fees may be paid at a blended rate based on the achievement of a new Status. For example, if, before a $4 million Customer Agreement is signed, Broker has closed $2.5 million of TCV towards their Status, then by signing this new Customer, Broker will have Silver Status and their new TCV will be $6.5 million. However, since Silver Status was achieved at $3 million, the first $500k of the $4 million TCV would be paid using the Standard fee schedule and the remaining $3.5 million will be paid using the Silver Status fee schedule.

To further the example above, if this is a 4 year ($1 million per year) Customer Agreement with $4 million TCV, the first $500k would be paid at 10% (Year 1 Standard rate for new revenue), the second $500K of Year 1 would be paid at 12% (new revenue rate for Silver Status Brokers), and each of the successive years would be paid at 2% assuming the monthly service rate remained constant.

If a Customer Agreement included annual increases to the Monthly Service Rate, with ACV as set forth below, the Fee would be paid on a blended basis each year based on the Broker's Status at the time of execution of the Customer Agreement. For example:

Year 1 ACV : $1 million

Year 2 ACV: $1.1 million

Year 3 ACV: $1.3 million

Year 4 ACV: $1.6 million

YEAR ACV AMOUNT REV TYPE STATUS FEE %
Year 1 1.0 MILLION 500k New Standard 10%
500k New Silver 12%
Year 2 1.1 MILLION 1 million Recurring Silver 2%
100k New 12%
Year 3 1.3 MILLION 1.1 million Recurring Silver 2%
200k New 12%
Year 4 1.6 MILLION 1.3 million Recurring Silver 2%
300k New 12%

Renewal

A “Renewal Agreement” is a Membership Agreement that has been re-signed by a current Knotel member for a new commitment term pertaining to the same space specified in Customer’s initial Membership Agreement. For each successful Customer Renewal, Knotel will pay Broker a Fee equal to a percentage of the membership fee agreed to in the renewal Membership Agreements in accordance with the Fee structure in the table above subject to a new Commission Agreement. When determining the Fee for such renewal, Knotel will use that status level obtained by Broker at the time of signing the Renewal Agreement. In other words, the status level of the broker at the time of the initial Membership Agreement does not directly impact the status level at the time of renewal.

Example 1:

  • Deal A is signed in June 1, 2019
  • Deal A is a 3 year deal, ending May 31, 2022
  • At the time of signing, the broker held Gold status.
  • Close to the end of the original agreement, the client decides it would like to renew for another 3 year term
  • The renewal is signed on April 1, 2022
  • The renewal term is from June 1, 2022 to May 31, 2025
  • The fee schedule used to determine the broker fee for the renewal agreement will be based on the broker status as of April 1, 2022, the date the renewal contract is signed

The TCV of renewal terms will count towards Broker’s Knotel Broker Status in the same manner as new deals

If the membership agreement contains an auto-renewal option, which allows for the agreement to automatically renew for another year unless cancellation notice is given, by either The Company or The Member, 120 days prior to the end of the agreement, and if the agreement does in fact auto-renew, then The Company will pay the Broker of Record a fee based on their status as of the signing date of the existing contract. Revenue in an auto-renewal year will be paid on the “Recurring Revenue” rate for any year-over-year revenue, and on the “New Revenue” Rate for any amount in excess of the revenue from the prior year.

Example 2:

  • Deal A is signed in June 1, 2019
  • Deal A is a 3 year deal, ending May 31, 2022
  • At the time of signing, the broker held Gold status.
  • As of 120 days prior to the end of the term, member has not notified The Company that is would not like to decline it’s auto-renewal option (nor has the Company); therefore, the agreement was auto-renewed for another year, spanning from June 1, 2022 to May 31, 2023
  • The fee schedule used to determine the broker fee to be paid on the ACV of the term spanning from June 1, 2022 to May 31, 2023 will be based on the broker status as of June 1, 2022, the date of the beginning of the auto-renewed term.
  • If the revenue amount of this 1 year period from June 1, 2022 to May 31, 2023 is $1.3million, for example, and if the revenue from the prior 12 month period was $1.2million, then the payout should be based on the fee schedule for $1.2million of recurring revenue and $100k of new revenue.

Payment Timing

The TCV applicable to Broker's Status is calculated on the execution date of the Customer Agreement. Timing and conditions to payment of the Fee shall be set forth in the Commission Agreement executed by Knotel. Broker shall be responsible for invoicing Knotel for the Fee. Broker should submit the invoice to brokerpayments@knotel.com, and should copy the Knotel Account Executive responsible for the Customer relationship.

Communication

All communication regarding the amount of the Fee and the schedule of payments shall come from the Knotel Broker Partnerships team. Any questions or concerns regarding these terms and the referral program should be addressed to the Knotel Broker Partnerships team at brokers@knotel.com. While Broker may receive unofficial contact from other Knotel departments regarding Broker's referral, please be advised that any such communication shall be considered advisory only, any information provided to Broker by such other team may not be correct or valid, and no determinations, especially regarding validity of a referral, made by such other team may be considered binding. The Knotel Growth team shall be responsible for the final determinations regarding all referrals made pursuant to the Knotel Broker Program.

III. MISCELLANEOUS

Knotel reserves the right in its sole discretion to make any determination under these Broker Program Guidelines, including, without limitation, the determination of Broker's eligibility for the achievement of any Status or eligibility for any Fees. If Knotel determines, in its sole discretion, that Broker has violated these Broker Program Guidelines, Broker will not be eligible for the Fees and Knotel reserves the right to disqualify Broker from the Program. Nothing in these rules grants Broker or any other party any right, title or license to use any of Knotel's trademark or other intellectual property rights. By submitting introductions, Broker will not be deemed to be an employee or agent of Knotel. Broker will not act as an agent of Knotel nor are Broker entitled to make any commitments on behalf of Knotel.

Knotel reserves the right to amend the Broker Program Guidelines, the rules contained herein, the Program and the Fees at any time without prior notice. Broker consents that we may also transfer the personal information collected by us and make it available to our personnel, advisors, professionals, subcontractors, independent consultants, external third-party services providers and our affiliates for the foregoing purposes. Some of these transferees may not be located in Broker's country, and therefore Broker's information may be transferred to countries that may or may not guarantee a level of privacy and data protection that is equivalent to the level of privacy and data protection set by the laws in Broker's country.

These terms of service and any dispute arising out of these terms (including any non-contractual disputes) will be governed by and interpreted according to the laws of the State of New York, without giving effect to its principles or rules of conflict of laws. Any proceedings to resolve or litigate any dispute under these Broker Program Guidelines will be conducted solely on an individual basis. Neither Broker nor Knotel will seek to have any such dispute heard as a class action or in any other proceeding in which either party acts or proposes to act in a representative capacity. No proceeding will be combined with another without the prior written consent of all parties to all affected proceedings.

Questions? Reach out to Broker Partnerships at brokers@knotel.com.

Posted as of: April 1, 2019