ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") dated as of the 14th
day of August 1998 (the "Effective Date") between ENTERACTIVE DISTRIBUTION
COMPANY, LLC, a Connecticut limited liability company with its principal office
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Purchaser"), and
CORNERSTONE INTERNET SOLUTIONS COMPANY, (formerly known as ENTERACTIVE, INC.), a
Delaware corporation with its principal office at ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇/▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Seller").
W I T N E S S E T H:
WHEREAS, the parties have previously entered into an Agreement
dated August 15, 1997 (the "Original Agreement"), pursuant to which Seller sold
certain inventory, receivables, and contracts to Purchaser and appointed
Purchaser distributor of certain of Seller's products;
WHEREAS, the parties wish to terminate the Original Agreement and
release each other from claims and obligations relating to the Original
Agreement;
WHEREAS, Seller wishes to sell, and Purchaser wishes to purchase,
certain intellectual property rights (including computer software) and contracts
more particularly described herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
ARTICLE I
TERMINATION OF ORIGINAL AGREEMENT AND RELEASE
1.1 Termination of Original Agreement. The Original Agreement is
hereby terminated, except that the assignment by Seller to Purchaser of the
Distribution Agreements, the Receivables, and the Inventory (each as defined in
the Original Agreement) shall remain effective without condition or reversion.
1.2 Release by Seller. In consideration of the promises and
accommodations to be made or provided by Purchaser, Seller on behalf of itself,
its subsidiaries and affiliates hereby irrevocably waives and releases Purchaser
and its current or former officers, directors,
agents, employees, affiliates and subsidiaries and their respective successors,
heirs and assigns (collectively "Purchaser Releasees") from any and all claims,
debts, liabilities or causes of action of any kind or nature whatsoever that
Seller, its current or former officers, directors, agents, employees, affiliates
and subsidiaries and their respective successors, heirs and assigns have or may
have against Purchaser Releasees arising out of or in connection with the
Original Agreement. Seller further irrevocably and unconditionally agrees not to
▇▇▇ Purchaser or participate or aid in any way in any suit or proceedings (or to
execute, seek to impose, collect or recover upon) or otherwise enforce or accept
any judgment, decision, award or attachment upon any claim released by Seller in
this Agreement. Nothing in this release, however, shall be construed as a
release of Purchaser from any of its agreements set forth in this Agreement.
1.3 Release by Purchaser. In consideration of the promises and
accommodations to be made or provided by Seller, Purchaser on behalf of itself,
its subsidiaries and affiliates, hereby irrevocably waives and releases Seller
and its current or former officers, directors, agents, employees, affiliates and
subsidiaries and their respective successors, heirs and assigns (collectively
"Seller Releasees") from any and all claims, debts, liabilities or causes of
action of any kind or nature whatsoever that Purchaser, its current or former
officers, directors, agents, employees, affiliates and subsidiaries and their
respective successors, heirs and assigns have or may have against Seller arising
out of or in connection with the Original Agreement. Purchaser hereby
irrevocably and unconditionally further agrees not to ▇▇▇ Seller or participate
or aid in any way in any suit or proceedings (or to execute, seek to impose,
collect or recover upon) or otherwise enforce or accept any judgment, decision,
award or attachment upon any claim released by Purchaser in this Agreement.
Nothing in this release, however, shall be construed as a release of Seller from
any of its agreements set forth in this Agreement.
ARTICLE II
SALE OF CERTAIN ASSETS BY SELLER
2.1 Included Assets. Subject to the terms and conditions
hereinafter set forth, Seller hereby sells, assigns, and delivers to Purchaser
the entire right (including without limitation, copyright), title and interest
throughout the world in and to (collectively referred to hereinafter as the
"Assets"):
(a) The programs listed on Schedule A attached hereto,
including without limitation all versions thereof and all versions of the
computer programs therefor, the Source Code (defined in this Section), object
code, models, algorithms and databases that have been and/or are used or
prepared for use in connection with such programs, and further including all
text, artwork, graphics and screens appearing in or prepared for such programs
or appearing on or prepared for the packaging for same, all of the foregoing
including all preliminary
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versions and works in process thereof and all copies, masters disks, and all
forms thereof and all records concerning the development thereof in and on all
media and including all modifications thereof whether or not implemented
(collectively, the "Programs"); "Source Code" means both machine readable and
human readable copies of the Programs consisting of instructions to be executed
upon a computer in the language used by its programmers (i.e., prior to
compilation or assembly) in a form in which the program logic of the Programs is
deducible by a human being, and including all available related flow diagrams
and all other documentation and manuals, if any, to allow persons who are
experienced computer programmers but who are unfamiliar with the Programs to
properly effect modifications and support for the Programs.
(b) All license or other rights for all third party
computer programs and other intellectual property utilized in conjunction with
the Programs where Seller is licensee, including, without limitation, the
programs on which the Programs and/or their databases run or are based, or were
compiled, or were used in preparing or editing the Programs, its databases, its
text, its appearance in text, artwork, graphics and screens, all of which
programs and intellectual property are set forth in Schedule B attached hereto
together with any license fees thereunder (the "Third Party Rights");
(c) The trademark, logos, and/or service marks used on
or in connection with the Programs, and any applications for registrations and
any registrations thereof, all of which are set forth in Schedule C hereto,
together with the goodwill of that portion of the business associated therewith
and the right to ▇▇▇ for past infringement thereof (the "Trademarks");
(d) All copyright in any and all versions of the
Programs, and in all text, artwork, graphics and screens appearing in or
prepared for the Programs or appearing in or prepared for the packaging for the
Programs, except those listed in Schedule B attached hereto, which are licensed
from third parties, and any applications for registrations and any registrations
thereof, all of which are set forth in Schedule D, and the right to ▇▇▇ for past
infringement thereof (the "Copyrights");
(e) All inventions, trade secrets, improvements or
discoveries conceived, made or embodied in or used with any and all versions of
the Programs, except those listed in Schedule B, which are licensed from third
parties, and any patent applications and any patents related thereto, all of
which are set forth in Schedule E attached hereto, and the right to ▇▇▇ for past
infringement thereof (the "Patents");
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(f) All documentation and manuals relating to the
Programs, including all forms thereof in and on all media; and
(g) The distribution, OEM, and international and
domestic license agreements (where Seller is licensor) listed on Schedule F
attached hereto (the "Licensor Agreements").
The Third Party Rights and the Licensor Agreements shall be referred to
hereinafter collectively as the "Contracts."
ARTICLE III
PURCHASE PRICE; ALLOCATION
3.1 Purchase Price. The purchase price for the Assets to be
transferred hereunder and the payment terms are set forth in Schedule G (the
"Purchase Price").
3.2 No Assumed Obligations. Purchaser shall not assume any
liabilities or obligations of Seller, and Seller shall retain and be responsible
for all liabilities and obligations of Seller and all liabilities and
obligations arising from or relating to the Assets prior to the Effective Date,
whether or not known, contingent or liquidated, including but not limited to the
following:
(a) any liability or obligation for Taxes (as defined in
Section 6.5), or payments with respect thereto, attributable to periods ending
on or before the Effective Date or arising in connection with the transactions
contemplated by this Agreement;
(b) liabilities for personal injuries of any nature to
the extent such liability relates to an injury, event or occurrence occurring
prior to the Effective Date;
(c) any other claims, litigation or administrative
proceedings existing prior to the Effective Date;
(d) any liability or obligation arising out of events in
connection with the Programs occurring prior to the Effective Date;
(e) any obligation or liability relating to employees or
former employees of Seller, whether concerning wages, benefits, any employee
benefit plan maintained by Seller, or
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any other claim or matter, all of which Seller covenants to perform or satisfy
promptly as the same become due; and
(f) any obligation or liability relating to Seller's
distributors other than obligations or liabilities expressly assumed by
Purchaser.
Notwithstanding the foregoing, Purchase shall be liable for, and Seller shall
have no obligation whatsoever with respect thereto, any and all liabilities
arising from Purchaser's use and operation of the Assets under the Original
Agreement.
3.3 Allocation. The Purchase Price shall be allocated to the
Assets in the manner required by Section 1060 of the Internal Revenue Code of
1986, as amended, as set forth in Schedule H. Purchaser and Seller agree not to
take inconsistent positions on their tax returns with respect to such
allocations.
ARTICLE IV
TRANSFER AND ASSIGNMENT, APPROVALS
4.1 Instruments of Conveyance and Transfer. The conveyance,
transfer, assignment, and delivery of the Assets shall be effected by Seller's
execution and delivery to Purchaser contemporaneously with this Agreement such
assignments and other instruments of transfer in form and substance sufficient
to vest in Purchaser all of Seller's right, title, and interest in and to the
Assets.
4.2 Assignment of Contracts. Seller shall assign the Contracts to
Purchaser by entering into assignment and assumption agreements simultaneously
with this Agreement in the form required by Purchaser, and the parties shall,
immediately following the Effective Date, jointly send letters to each of the
counterparties of the Contracts advising such counterparties that Seller has
assigned the Contracts to Purchaser. If a consent or approval for assignment or
transfer of any Contract is required pursuant to the terms of such Contract, has
not been obtained by the Effective Date and Purchaser nevertheless accepts the
assignment of such Contract, Seller agrees to cooperate fully with Purchaser's
reasonable requests for assistance after the Effective Date in obtaining such
consent or approval. If such consent or approval is not obtained within one (1)
month following the Effective Date, Seller and Purchaser agree to make
reasonable arrangements designed to provide for Purchaser substantially the same
benefits existing under such Contract as of the Effective Date, and all rights
of Seller against the counterparties thereto.
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4.3 Source Code. Simultaneously with the execution of this
Agreement, Seller shall deliver to Purchaser the master disks ("Master Disks")
for each of the Programs and all copies of the Source Code and executable
versions of the software and related documentation for the Programs.
4.4 Further Assurances. Seller shall, upon the request of
Purchaser and without further consideration, take any and all steps reasonably
necessary and do or cause to be done all further acts as may be reasonably
required in order to place Purchaser in possession and operating control of the
Assets and to vest in Purchaser good, valid, and marketable title to the Assets,
and to assign the Contracts from Seller to Purchaser.
ARTICLE V
BROKERS
Neither Seller nor Purchaser has employed any finder, broker,
agent or other intermediary in connection with the negotiation or consummation
of this Agreement or any of the transactions contemplated hereby. Seller and
Purchaser each hereby indemnifies the other and agrees to hold the other
harmless against any liabilities, expenses (including reasonable attorneys'
fees), costs, losses and claims arising from the employment by the indemnifying
party of, or services rendered to the indemnifying party (or any allegation of
any such employment or services) by, any finder, broker, agent or other
intermediary in connection with the negotiation or consummation of this
Agreement or any of the transactions contemplated hereby.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and warrants
to Purchaser as follows:
6.1 Organization and Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware with full corporate power and authority to carry on its business as now
conducted and to enter into and execute, deliver, and perform this Agreement and
the instruments and documents contemplated hereby.
6.2 Authority. The execution and delivery of this Agreement and
the instruments and documents contemplated hereby, and the consummation of the
transactions
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contemplated hereby and thereby, have been duly authorized by all requisite
corporate action on the part of Seller. Neither the execution nor the delivery
of this Agreement or the instruments or documents contemplated hereby, nor the
consummation of the transactions contemplated hereby or thereby, nor the
compliance with or fulfillment of the terms and provisions hereof or thereof,
will (i) conflict with or result in a breach or violation of any of the terms,
conditions, or provisions of the Certificate of Incorporation or Bylaws of
Seller, or (ii) with or without the giving of notice or lapse of time or both,
conflict with or result in a breach or violation of, or default or loss of a
benefit under, or the creation or imposition of any claim or Encumbrance (as
defined in Section 6.3) upon, or permit the acceleration of any obligation under
or nullify or limit the benefits and rights conferred under, any provision of
any agreement, mortgage, lien, lease, or other instrument of any kind to which
Seller is a party or by which Seller, the Programs or any of the Assets is
otherwise bound or affected, or (iii) violate any order, writ, injunction,
decree, statute, rule, or regulation applicable to Seller, the Programs or any
of the Assets. Upon the execution and delivery of this Agreement and the
instruments and documents contemplated hereby by Seller, this Agreement and such
instruments and documents will be valid and binding obligations of Seller,
enforceable in accordance with their respective terms.
6.3 Title to Properties, Absence of Liens and Encumbrances.
Except as set forth on Schedule B, Seller has and shall transfer and convey to
Purchaser as of the Effective Date, good and valid title to all Assets, in each
case subject to no liens, charges, security interests, or other encumbrances of
any nature whatsoever (collectively, "Encumbrances").
6.4 Litigation. There are no actions, suits, proceedings, claims,
notices of violations, investigations or examinations, whether by governmental
authorities or private parties, at law or in equity, pending or, to the
knowledge of Seller, threatened that (i) arise from or relate to the use of the
Assets or (ii) question the validity or seek to prevent the consummation of this
Agreement or the transactions contemplated hereby.
6.5 Taxes.
(a) Except as set forth in Schedule 6.5, all returns and
reports, including estimated tax returns, required to be filed on or prior to
the Effective Date by Seller with respect to any federal, state, local, foreign
or other income, franchise, capital stock, employees' income withholding, social
security, unemployment, disability, real property, personal property, sales,
use, transfer, and other taxes, including any interest, penalties, or additions
in respect of the foregoing (all the foregoing collectively referred to as
"Taxes"),
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have been duly filed and all Taxes payable pursuant thereto have been paid,
except such Taxes, if any, as are being contested in good faith.
(b) Except as set forth in Schedule 6.5, all returns,
including estimated tax returns, required to be filed after the Effective Date
by Seller with respect to Taxes that, if unpaid, might result in an Encumbrance
on any of the Assets, will be duly filed and all Taxes payable pursuant thereto
will be paid except such Taxes, if any, as may be contested in good faith.
(c) Except as set forth in Schedule 6.5, no deficiency
or adjustment in respect of any Taxes assessed against the Seller and that might
result in an Encumbrance on Assets remains unpaid and the Seller has no
knowledge of any assessed deficiency proposed or any audits or investigations
pending or threatened with respect to any such Taxes.
6.6 Compliance with Laws. Seller has complied and will hereafter
comply in all material respects with all local, state, and federal laws, rules,
regulations, and ordinances (collectively, "Laws") applicable to Seller or the
Assets on or prior to the Effective Date. Except as set forth in Schedule 6.6,
Seller is not in violation of or in default with respect to any order, writ, or
decree of any court or of any governmental department, commission, board,
bureau, agency, or instrumentality, federal, state, local, domestic, or foreign,
and there has not occurred any event that, with notice or lapse of time or both,
would constitute such a violation or default.
6.7 No Bankruptcy Proceedings. Seller has not admitted in writing
its inability to pay its debts generally as they become due, filed or consented
to the filing against it of a petition in bankruptcy or a petition to take
advantage of any insolvency act, made an assignment for the benefit of
creditors, consented to the appointment of a receiver for itself or for the
whole or any substantial part of its property, or had a petition in bankruptcy
filed against it, been adjudicated a bankrupt, or filed a petition or answer
seeking reorganization or arrangement under the federal bankruptcy laws or any
other laws or statutes of the United States of America or any other
jurisdiction, nor does it presently intend to do any of the foregoing.
6.8 Master Disks. The Master Disks shall be in form suitable for
reproduction and use by Purchaser.
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6.9 Contracts. Each Contract is valid and enforceable in
accordance with its terms for the period stated therein, is not subject to any
right of setoff or counterclaim, and no default exists with respect to any
Contract.
6.10 Royalties. Except as disclosed in Schedule B, Seller pays no
royalties with respect to any of the Programs and has the exclusive right to ▇▇▇
for infringement of the Programs.
6.11 No Untrue Statement. Neither this Agreement, nor any
Exhibit, schedule, certificate, instrument or other document furnished or to be
furnished to Purchaser pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements contained therein not misleading. There is no fact that materially
adversely affects or, may materially adversely affect the Assets that has not
been set forth herein, or in any Exhibit, or Schedule, certificate or other
document furnished or to be furnished to Purchaser prior to the Effective Date.
6.12 No Infringement. To the best of Seller's knowledge, neither
the Programs nor the Trademarks nor the use thereof violates or infringes upon
any U.S. patent, copyright, trademark, trade secret or other proprietary right
of any other person, whether or not similar to any of the foregoing, or entitles
any third party to make a claim against Purchaser for the unlawful use of
confidential information or trade secrets.
6.13 Trade Secrets. To the best of Seller's knowledge, all
computer programs for the Programs and all Source Code, object code and
databases therefor including all versions thereof have been maintained in
confidence as trade secrets and have not been released to any third party.
6.14 All Rights. The Assets include all patents, patent
applications, registered copyrights, copyright applications and third party
licenses related to the Programs and all rights necessary for Purchaser to
manufacture, market, and sell the Programs anywhere in the world (in the manner
used by Seller at the time of transfer or the form delivered to Purchaser
hereunder) without restriction, subject only to terms of the Contracts and the
payment of the third-party license fees set forth in Schedule B.
6.15 Meaning of Knowledge Qualifier. Whenever a representation or
warranty of Seller is qualified by the phrase "to the knowledge of" or words of
similar import, it means (a) after a reasonable investigation, Seller has no
knowledge that such representation
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or warranty is untrue or (b) Seller would have had no such knowledge if such an
investigation had been made before signing this Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser hereby represents and
warrants to Seller as follows:
7.1 Organization and Standing. Purchaser is a limited liability
company duly organized and validly existing under the laws of the State of
Connecticut. Purchaser has full power and authority to acquire and own the
Assets to be conveyed to it and to assume the liabilities, to enter into this
Agreement and to perform all of its obligations hereunder.
7.2 Authority. The execution and delivery by Purchaser of this
Agreement and the instruments and documents contemplated hereby, and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by all requisite company action on the part of Purchaser. This
Agreement and the instruments and documents contemplated hereby constitute the
legal, valid, and binding obligations of Purchaser, enforceable in accordance
with their terms. Neither the execution nor the delivery of this Agreement or
the instruments and documents contemplated hereby, nor the consummation of the
transactions contemplated hereby and thereby, nor the compliance with or
fulfillment of the terms and provisions hereof and thereof, will (i) conflict
with or result in a breach or violation of any of the terms, conditions or
provisions of the Articles of Organization or Operating Agreement of Purchaser,
or (ii) conflict with or result in a breach or violation of, or default or loss
of a benefit under, or permit the acceleration of any obligation under any
provision of any material agreement, indenture, mortgage, lien, lease, or other
instrument or restriction of any kind to which Purchaser is a party or by which
it or any of its assets or properties is otherwise bound or affected, or (iii)
violate any order, writ, injunction, decree, statute, rule, or regulation
applicable to Purchaser or any of its assets or properties. No consent, approval
or authorization of, or filing or registration with, any governmental or
regulatory authority is required to be obtained by Purchaser in connection with
the execution and delivery of this Agreement or the instruments and documents
contemplated hereby, or the consummation of the transactions contemplated hereby
and thereby.
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7.3 Litigation. There are no actions, suits, proceedings, claims,
notices of violations, investigations or examinations, whether by governmental
authorities or private parties, at law or in equity, pending or, to the
knowledge of Purchaser, threatened that question the validity or seek to prevent
the consummation of this Agreement or the transactions contemplated hereby.
7.4 No Bankruptcy Proceedings. Purchaser has not admitted in
writing its inability to pay its debts generally as they become due, filed or
consented to the filing against it of a petition in bankruptcy or a petition to
take advantage of any insolvency act, made an assignment for the benefit of
creditors, consented to the appointment of a receiver for itself or for the
whole or any substantial part of its property, or had a petition in bankruptcy
filed against it, been adjudicated a bankrupt, or filed a petition or answer
seeking reorganization or arrangement under the federal bankruptcy laws or any
other laws or statutes of the United States of America or any other
jurisdiction, nor does it presently intend to do any of the foregoing.
7.5 No Untrue Statement. Neither this Agreement, nor any Exhibit,
schedule, certificate, instrument or other document furnished or to be furnished
to Seller pursuant hereto or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements
contained therein not misleading. There is no fact that materially adversely
affects or, may materially adversely affect the Assets that has not been set
forth herein, or in any Exhibit, or Schedule, certificate or other document
furnished or to be furnished to Seller prior to the Effective Date pursuant
hereto.
7.6 Representations of Seller. Based solely on Purchaser's
distribution and sale of the Inventory and the Products under the Original
Agreement (each as defined therein), Purchaser is not aware of any material fact
or circumstance that would make any of the representations and warranties made
hereunder by Seller untrue or misleading and Purchaser is not aware of any fact
that materially adversely affects or may materially adversely affect the Assets.
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ARTICLE VIII
CLOSING DOCUMENTS
Simultaneously with the execution of this Agreement, the parties
shall deliver the following documents and instruments in addition to this
Agreement (the "Closing Documents"):
(a) Assignment and Assumption Agreements for each of the
Contracts in the form required by Purchaser.
(b) Certificates evidencing the good standing of Seller from the
Secretary of State of Delaware and from all other states where it is qualified
to do business or where the conduct of its business requires such qualification.
(c) Escrow Agreement in the form required by Purchaser.
(d) Such other documents, instruments, and agreements as may be
necessary or appropriate to fully consummate the transactions contemplated
hereby.
ARTICLE IX
COVENANTS AND AGREEMENTS OF THE PARTIES
9.1 Noncompetition. For twelve (12) months following the
Effective Date, Seller shall not, directly engage or participate in any business
matter related to the development, marketing, or sale of computer games
software.
9.2 Expenses of Sale. Seller and Purchaser shall each bear its
own direct and indirect expenses incurred in connection with the negotiation and
preparation of this Agreement and the consummation and performance of the
transactions contemplated hereby, including, without limitation, all legal fees
and disbursements.
9.3 Collection of Certain Receivables. Purchaser shall use
commercially reasonable efforts with Seller's cooperation to collect the
receivables known by Seller to be due to Seller under the Contracts prior to the
Effective Date (which receivables are set forth on Schedule I attached hereto)
for a fee equal to 25% of the amounts collected.
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9.4 Confidentiality.
(a) Confidentiality. All data and information that Seller has
obtained regarding the Assets and/or Purchaser, including all of the
proprietary, confidential and trade secret information relating thereto,
information relating to the requirements of customers, and all other information
regarding the affairs of the Purchaser, shall be held in confidence by Seller,
and Seller shall not divulge any of such information to anyone except Purchaser
or its representatives or use it for the benefit of any person or entity other
than Purchaser. The foregoing obligations of confidentiality and non-use shall
not apply to any information that is (i) otherwise publicly available, (ii) with
regard to the Purchaser, that was in Seller's possession prior to disclosure
hereunder, (iii) rightfully received from a third party and not derived directly
or indirectly from any breach of a confidentiality obligation, or (iv) that
Seller shall have received from Purchaser written permission to disclose.
(b) Injunctive Relief. Seller acknowledges that any violation of
any provision of this Section 9.4 will cause irreparable harm to Purchaser, that
damages for such harm may be incapable of precise measurement and that, as a
result, Purchaser will not have an adequate remedy at law to redress the harm
caused by such violations. Therefore, in the event of a violation of this
Section 9.4, each party agrees that in addition to its other remedies, Purchaser
shall be entitled to seek injunctive relief, including but not limited to
temporary restraining orders and/or preliminary or permanent injunctions to
restrain or enjoin any such violation.
(c) Collection Costs. In addition to other relief to which it
shall be entitled, Purchaser shall be entitled to recover from Seller the costs
and reasonable attorneys' fees incurred by Purchaser in seeking enforcement of
this Section 9.4 and relief from Seller's violation of any restriction contained
in this Section 9.4.
ARTICLE X
SURVIVAL
The representations, warranties, covenants, agreements and
covenants of indemnification of Seller and Purchaser contained in this Agreement
and the other Closing Documents (or in any certificate or schedule delivered
pursuant hereto or thereto) shall survive the Closing through December 31, 1998.
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ARTICLE XI
INDEMNIFICATION; LIMITATION OF LIABILITY
11.1 Indemnification by Seller. Seller agrees to reimburse,
defend, indemnify, and hold harmless Purchaser and its principals and affiliates
for, from, against, and in respect of any and all damages, losses, obligations,
liabilities, claims, actions or causes of action, encumbrances, costs, and
expenses (including, without limitation, reasonable attorneys' fees and costs,
interest and penalties), suffered, sustained, incurred, or required to be paid
by Purchaser or any of its principals or affiliates to any third party relating
to or arising out of the breach of any representation, warranty, covenant, or
agreement of Seller contained in or made pursuant to this Agreement or any other
Closing Document. In the event that Seller shall have failed to indemnify
Purchaser pursuant to this Section, Purchaser shall have the right as allowed by
law to offset such amount against any amounts due and payable to Seller.
Seller's above indemnity obligation will not apply to any manufacturing,
marketing, advertising, sale or distribution of the Inventory or the Products
under the Original Agreement (as defined therein).
11.2 Indemnification by Purchaser. Except for instances in which
Seller has retained or assumed liability or agreed to indemnify and defend
Purchaser, Purchaser hereby agrees to reimburse, defend, indemnify, and hold
harmless Seller and its principals and affiliates to any third party for, from,
against, and in respect of any and all damages, losses, obligations,
liabilities, claims, actions or causes of action, encumbrances, costs, and
expenses (including, without limitation, reasonable attorneys' fees and costs,
interest and penalties) suffered, sustained, incurred, or required to be paid by
Seller or any of its principals or affiliates, relating to or arising out of the
breach of any representation, warranty, covenant, or agreement of Purchaser
contained in or made pursuant to this Agreement or any other Closing Document.
11.3 Procedure for Indemnification. Any party seeking
indemnification hereunder shall give written notice to any indemnifying party of
any claim based on the indemnity agreements contained in Sections 11.1 and 11.2,
stating the nature and basis of the claim and the amount thereof, to the extent
known. The indemnifying party shall satisfy its obligation to indemnify the
indemnified party under this Article within thirty (30) days after demand for
payment. In the event that a claim asserted by a third party is subject to
indemnification under Section 11.1 or 11.2, the indemnifying party shall have
the right to defend and/or settle and to control the defense and/or settlement
of, such claim, provided that the other party shall have the right to
participate reasonably in such defense and/or settlement.
11.4 Limitation of Liability. Except for instances in which
Seller has expressly agreed to indemnify and defend Purchaser in Section 11.1
above, neither party shall be liable to the other party hereunder for any
special, indirect, incidental or consequential
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damages, including, without limitation, lost profits or business opportunities.
Seller's entire liability to Purchaser for damages under this Agreement, whether
based in contract, tort, or otherwise, and including its indemnity obligation
under Section 11.1, shall not exceed $100,000.
ARTICLE XII
MISCELLANEOUS
12.1 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Notwithstanding the foregoing, Seller may not
assign any of its rights or obligations under this Agreement unless Purchaser
gives prior consent to such assignment in writing. Nothing expressed or implied
herein is intended or shall be construed to confer upon or give to any other
person any right, remedy, or claim under or by reason of this Agreement or of
any term, covenant, or condition hereto.
12.2 Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by telecopy, or sent, postage prepaid, by registered, certified or
express mail, or reputable overnight courier service, and shall be deemed given
when received as follows:
If to Purchaser, as follows:
Enteractive Distribution Company, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, President
If to Seller, as follows:
Cornerstone Internet Solutions Company
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇/▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
or in any case to such other address as shall be furnished as provided in this
Section by any of the parties to the others.
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12.3 Waiver; Remedies. No failure or delay on the part of
Purchaser or Seller in exercising any right, power, or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of Purchaser or
Seller of any right, power or privilege hereunder operate as a waiver of that or
any other right, power, or privilege hereunder in any other instance, nor shall
any single or partial exercise of any right, power, or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
12.4 Entire Agreement. This Agreement and the other documents and
instruments contemplated hereby constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all other prior
or contemporaneous agreements or understandings of the parties relating thereto.
12.5 Amendment. This Agreement may be modified or amended only by
written agreement of the parties hereto.
12.6 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute a single instrument.
12.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut applicable to
contracts made and to be performed entirely within the state, without regard to
its conflicts of law principles.
12.8 Schedules. All Exhibits and Schedules annexed hereto are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein.
12.9 Captions. All section titles or captions contained in this
Agreement, any Exhibit, any Schedule, or the table of contents to this Agreement
are for convenience only, shall not be deemed a part of this Agreement and shall
not affect the meaning or interpretation of this Agreement.
12.10 Press Release. Neither party shall issue any press release
or make any reference to the transactions contemplated hereby to any third party
(other than its legal counsel and accountants) except as required by law or with
the prior written consent of the other party, which consent shall not be
unreasonably withheld. The parties shall coordinate their efforts in connection
with the announcement of the signing of this Agreement both as to the manner and
content thereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first above written.
ENTERACTIVE DISTRIBUTION
COMPANY, LLC
By: __________________________
▇▇▇▇▇ ▇▇▇▇
President
CORNERSTONE INTERNET
SOLUTIONS COMPANY
By: ____________________________
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Vice President, Chief Financial Officer
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