"NOTE - Certain confidential technical and commercial information has been
redacted from this exhibit in order to preserve the confidentiality of such
information. All of the confidential information which has been redacted is on
file with the Securities and Exchange Commission. Redacted material is
indicated by the symbol, "[**REDACTED**]" where such redacted text would have
appeared in this exhibit."
AGREEMENT
This Agreement ("Agreement") made this 25th day of February, 1999 (the
"Effective Date") between NETGATEWAY,INC., a Nevada corporation, with offices
located at 000 Xxxxxxxxx, Xxxxx 000, Xxxx Xxxxx, XX 00000 (hereinafter
"Netgateway") and XXXX.XXX INC., a Delaware corporation, with offices located
at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000 (hereinafter "XXXX.xxx.").
Netgateway and XXXX.xxx may be referred to herein collectively as (the
"Parties") or singularly as (a "Party").
WHEREAS, Netgateway is the provider of a unique, World Wide Web storefront
building and hosting product and service ("StoresOnline"); and
WHEREAS, XXXX.xxx is in the business of offering products and programs to its
Members through its Web site on the World Wide Web; and
WHEREAS, Netgateway will supply a private-labeled version of its World Wide
Web storefront building and hosting products and services identified on
Exhibit A hereto, (hereinafter the "Program(s)") to XXXX.xxx and to
Xxxx.xxx's Members; and
WHEREAS, XXXX.xxx agrees to give Netgateway the exclusive right to provide the
services and/or products as described in Exhibit A from the Effective Date
hereof to its current and future Members as further described herein and
subject to the terms and conditions of this Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises and
provisions contained in this Agreement, the Parties hereto agree as follows:
A. SOLICITATION AND ENROLLMENT
XXXX.xxx will market the Programs at its sole cost and expense,
through its XXXX.xxx Web sites, emails, and other means as agreed to by
the Parties. The price and offer for the Programs shall be mutually
agreed upon by the Parties prior to marketing (see Exhibit A).
Netgateway will capture Subscriber information, including Subscriber
name, address, telephone number and email address (for those
Subscribers who agree to enroll in the Paid version of the Program, see
Exhibit A) ("Subscriber Information") and transmit the "Subscriber
Information" to XXXX.xxx at times mutually agreed. Members enrolling in
a Program will become Subscribers in that Program. Enrollment in the
Paid Program includes the Subscriber's understanding that their credit
card will be billed, absent cancellation, for the subscription fee
agreed upon and that their account will continue to automatically be
billed absent cancellation for a renewal subscription term at the then
current rate for the Program at the time of such renewal.
B. START DATE
Marketing of the Programs will commence on or about April 15, 1999.
1
C. NETGATEWAY'S RESPONSIBILITIES
Netgateway shall:
1.) Xxxx and collect subscription fees for Paid Program
subscriptions.
2.) Provide Netgateway's customary XxxxxxXxxxxx.xxx customer
service that Netgateway provides to other paid subscribers,
including 24/7 help desk support, to Subscribers (online
customer service only shall be provided to Subscribers of the
Free Program).
3.) Use reasonable commercial efforts to work with XXXX.xxx to
customize existing Programs for XXXX.xxx Subscribers, as
provided for in Section D.
4.) Pay commissions to XXXX.xxx as follows:
a.) Commissions to XXXX.xxx for Paid Program subscriptions
will be U.S. [**REDACTED**] per month for each Paid
Program Subscriber enrolled by XXXX.xxx for as long as the
Subscriber is active.
b.) No commission shall be payable to XXXX.xxx for any Full Set
Up Service purchased from Netgateway by XXXX.xxx
Subscribers (see Exhibit A), provided that XXXX.xxx will
be entitled to commissions in accordance with 4(a) above
on any monthly subscription fees paid by subscribers who
purchase the Full Set Up Service
c.) In the event that Netgateway's quarterly revenue from fees
paid by Paid Program Subscribers fees exceeds U.S.
[**REDACTED**] Netgateway shall rebate XXXX.xxx U.S.
[**REDACTED**] per month, per enrolled Paid Program
Subscriber. The rebate shall be effective retroactively
based upon Netgateway revenue received that calendar
quarter, and shall be due no later than 30 days after the
end of each calendar quarter.
d.) Netgateway will pay XXXX.xxx a [**REDACTED**] commission
on all net revenues received by Netgatway generated from
components of the XXXX.xxx "Mall" (see Exhibit A). These
"Mall" components include but are not limited to:
- eCommerce advertisers solicited by Netgateway
- Banner advertising, sold by Netgateway, on a pro rata
basis as attributable to the XXXX.xxx "Mall"
- Click through revenue from eTailer sales (need
definition of eTailer)
- Revenue generated from featured product sales
- Any and all revenue-generating components added after
the signature of this Agreement
5.) Provide XXXX.xxx with all End-Customer Data (as defined below)
generated by Subscriber sites of both the Paid Program (unless
End-Customer opts out) and the Free Program.
- An End-Customer is defined as an individual making a
purchase from a XXXX.xxx/Xxxxxxxxxx Subscriber's online
storefront.
- End-Customer Data is defined as, customer name, email
address, credit card number, product purchased during
transaction, and any or
2
all other data as requested by XXXX.xxx subject to its
reasonable availability.
- XXXX.xxx shall be the sole owner of and have exclusive
marketing rights to the End-Customer Data.
- Netgateway shall may use the End-Customer data for its
standard statistical analysis and public reporting
disclosure requirements.
- XXXX.xxx shall ensure that all necessary and appropriate
prior disclosure is made to both Subscribers and
end-customers regarding the collection and use of
end-customer data by XXXX.xxx. (See Exhibit A.)
6.) Agree during the term of this Agreement and for two (2)
years after the effective date of its termination not to
knowingly induce XXXX.xxx Members or Netgateway Subscribers to
terminate their relationships with XXXX.xxx in favor of a
XXXX.xxx competitor.
7.) Shall insure that the performance of the Program shall meet or
exceed industry standards, shall remain competitive with
substantially similar services being offered by third parties,
and shall maintain Program at the same or higher level that it
maintains the Program for its other partners, licensees and
customers. Netgateway shall promptly respond to and remedy any
errors or omissions or problems reported by XXXX.xxx.
D. CUSTOMIZATION/PRIVATE-LABELING
1.) Netgateway will private label the Programs described in
Exhibit A with the XXXX.xxx name and logo, subject to approval
by XXXX.xxx, such approval not be unreasonably withheld.
E. MARKETING RIGHTS
XXXX.xxx holds all rights to the Subscriber Information and
end-customer data for the term of this Agreement and two years
thereafter. In the event of the termination of this Agreement, Netgateway
shall receive co-ownership of Subscriber Information for Subscribers
STILL ACTIVE at the end of a period of two years from the date of
termination of this Agreement.
F. XXXX.XXX'S RESPONSIBILITIES
XXXX.xxx shall:
1.) Actively market the Programs to its Member base by integrating
information to allow Members to enroll in the Programs on the
XXXX.xxx Web sites, its communities area, e-mail to its
Customers, upsells after purchase of its products and programs
and by other means as may be developed and to be mutually agreed
to by the Parties.
a) This marketing shall include active promotion to enroll
Members as Subscribers in Free Program, to enroll Members as
Subscribers in the Paid Program, upsell Subscribers in the
Free Program to the Paid
3
Program (see Exhibit A), and offers promoting the Full Set Up
Service (see Exhibit A).
2.) Electronically transmit newly enrolled Subscriber Information to
Netgateway at mutually agreeable times and in file formats agreed
to.
3.) Use best efforts to ensure that XXXX.xxx's Web site information
contains current Program benefit information as submitted to
XXXX.xxx by Netgateway.
4.) Use best efforts to work with Netgateway to achieve success for
the Programs marketed.
7.) Expend reasonable management time to improve Subscriber
enrollment rates.
8.) Agree during the term of this Agreement and for two (2) years
after the effective date of its termination, not to knowingly
induce then active Subscribers to enroll in a competing product
or service.
G. REPRESENTATIONS, WARRANTIES AND COVENANTS
1. Netgateway represents, warrants and covenants that (i.) the making of
this Agreement does not violate any law, regulation or agreement to which
it is a Party and that Netgateway has the authority to enter into this
Agreement and to perform its obligations hereunder; (ii.) Netgateway has
the right to grant the rights and licenses contemplated by this Agreement,
without the need for any licenses, releases, consents, approvals or
immunities not yet granted; (iii.) the content contained on the Netgateway
Web Pages which is generated and/or provided by Netgateway will be of
standards equivalent to that on the then current XXXX.xxx Membership Sites;
(iv.) the content provided by, or approved by, Netgateway to be displayed
on the Netgateway Web Pages (including all trademarks, tradenames and/or
other intellectual property rights) and the reproduction, distribution and
other use thereof as contemplated by this Agreement do not and will not
infringe or misappropriate any patent, copyright, trademark, trade secret,
publicity, privacy or other rights of any third person, and are not and
will not be defamatory or obscene; and (v.) the representations, warranties
and covenants herein shall survive the expiration and/or termination of
this Agreement.
2. XXXX.xxx represents, warrants and covenants that (i.) the making of this
Agreement does not violate any law, regulation or agreement to which it is
a party and that XXXX.xxx has the authority to enter into this Agreement
and to perform its obligations hereunder; (ii.) XXXX.xxx has the sole and
exclusive right to grant the rights and licenses contemplated by this
Agreement, without the need for any licenses, releases, consents, approvals
or immunities not yet granted; (iii.) the content contained on the XXXX.xxx
Membership Sites which is generated and/or provided by XXXX.xxx will be of
the same high standards as the content on the current main XXXX.xxx site
and services; (iv.) the content provided by, or approved by, XXXX.xxx to be
displayed on the Netgateway Web Pages or otherwise on the XXXX.xxx
Membership Sites (including all trademarks, trade names and/or other
intellectual property rights) and the reproduction, distribution and other
use thereof as contemplated by this
4
Agreement do not and will not infringe or misappropriate any patent,
copyright, trademark, trade secret, publicity, privacy or other rights of
any third person, and are not and will not be defamatory or obscene; and
(v.) the representations, warranties and covenants herein shall survive the
expiration and/or termination of this Agreement.
H. CONFIDENTIALITY
1. Non-Disclosure Agreement. The Parties agree and acknowledge that as a
result of negotiating, entering into and performing this Agreement, each
Party has and will have access to certain of the other Party's Confidential
Information (defined below). Confidential Information shall include
Subscriber Information and End-Customer Data. Each Party also understands
and agrees that misuse and/or disclosure of that information could
adversely effect the other Party's business. Accordingly, the Parties agree
that during the term of this Agreement, each Party shall use the other
Party's Confidential Information only for purposes of this Agreement and
only to the extent necessary for such purpose and shall restrict disclosure
of the other Party's Confidential Information to its employees, consultants
or independent contractors with a need to know and shall not disclose the
other Party's Confidential Information to any third party without the prior
written approval of the other Party. Notwithstanding the foregoing, it
shall not be a breach of this Agreement for either Party to disclose
Confidential Information of the other Party if required to do so under law
or in a judicial or other governmental investigation or proceeding,
provided the other Party has been given as timely prior written notice of
such request for disclosure as is possible, giving such Party a reasonable
opportunity to defend such request for disclosure. The recipient of a
demand for disclosure shall cooperate with the Party whose Confidential
Information is being sought as is reasonably necessary.
2. Confidential Information Defined. As used in this Agreement, the term
"Confidential Information" only refers to information marked as
confidential at the time of disclosure, including: (i.) each Party's trade
secrets, business plans, strategies, methods and/or practices and other
information relating to either Party that is not generally known to the
public, including information about either Party's personnel, products,
customers, marketing strategies, services or future business plans.
Confidential Information shall include Subscriber Information and
End-Customer Data. The terms and conditions contained in this Agreement
shall be considered "Confidential Information". Notwithstanding the
foregoing, the term Confidential Information specifically excludes (i.)
information that is now in the public domain or subsequently enters the
public domain by publication or otherwise through no action or fault of the
receiving Party; (ii.) information that the receiving Party receives from
any third party without restriction on disclosure or use known to such
Party; (iii.) information which was lawfully in the receiving Party's
possession prior to the time Netgateway and XXXX.xxx entered into
discussions regarding this Agreement; and (iv.) information independently
developed by the receiving Party's employees, consultants or agents; and
v.) information that was previously known to the receiving party prior to
receipt from the disclosing Party.
5
I. EXCLUSIVITY
During the term of this Agreement, Netgateway will be the sole and
exclusive provider of services and products described in Exhibit A to
XXXX.xxx and its Members. After termination or expiration of this
Agreement, XXXX.xxx agrees to not itself solicit, nor to assist, nor to
allow solicitation of active Subscribers by any third parties for any
program competitive to the Programs.
J. TERM AND TERMINATION
This Agreement shall remain in effect for a period of one (1) year from
the Effective Date (the "Initial Term"). Thereafter, this Agreement
will automatically renew for additional consecutive one (1) year terms
("Renewal Terms") unless a written notice of intent to terminate is
given to either Party by the other Party ninety (90) days prior to
expiration of the then current term. The term of this Agreement includes
the Initial Term and any Renewal Terms. Sections E, G, H, J, K, L, O and
P shall survive the termination of this Agreement.
Notwithstanding anything else to the contrary in this Agreement, if at
any time during its term either XXXX.xxx or Netgateway breaches its
obligations or responsibilities under this Agreement, the non-breaching
Party may deliver to the breaching Party written notice of its intent to
terminate this Agreement setting forth the nature of the breach.
Termination will be effective thirty (30) days after acknowledged delivery
of the termination notice to the breaching Party unless the breach is cured
within such thirty (30) day period.
Either party may terminate this Agreement: (1) if the other party files
a petition for bankruptcy, becomes insolvent, or makes an assignment for
the benefit of its creditors, or a receiver is appointed for the other
party or its business; (2) upon the occurrence of a material breach of a
material provision of this Agreement by the other party if such breach is
not remedied within thirty (30) days after written notice is received by
the breaching party identifying the matter constituting the material
breach; (3) by mutual consent of the parties.
In the event of termination, XXXX.xxx and Netgateway will continue to
offer those Subscribers enrolled prior to the effective date of termination
continuing access to benefits in any Program or any mutually developed
program in which they are enrolled. Netgateway will continue billing
Subscribers for Program memberships after termination, absent cancellation
by the Subscriber or Netgateway, and XXXX.xxx will continue to receive
commissions on Program subscriptions billed, as provided for in this
Agreement in item (C)(4.)(a.), for a period of two (2) years after the
termination or expiration of this Agreement.
K. INDEMNIFICATION
1. Netgateway's Indemnification. Netgateway hereby agrees to indemnify
XXXX.xxx, its officers, directors, employees and servants against any claim
and
6
hold all of the foregoing harmless from any liabilities, penalties,
damages, costs, reasonable attorneys' fees or other expenses of any
nature whatsoever excluding consequential damages, resulting from
(i.) claims with respect to Netgateway Programs marketed by XXXX.xxx,
(ii.) any claim that any content of Netgateway's Web pages provided
by Netgateway, for use on the XXXX.xxx Membership Sites (including
without limitation logos, domain name and/or trademark) infringes any
third party proprietary rights, or otherwise subjects XXXX.xxx to
liability to any third party with respect to the copy contained
therein and/or (iii.) any claim from its or its agents performance or
failure to perform its obligations under the terms and conditions of
this Agreement.
2. XXXX.xxx's Indemnification. XXXX.xxx shall indemnify Netgateway, its
officers, directors, employees and servants against any claim and hold
all of the foregoing harmless from any liabilities, penalties,
damages, costs, reasonable attorney's fees or other expenses of any
nature whatsoever excluding consequential damages resulting from (i)
any claim that any aspect of the content of XXXX.xxx's Membership
Sites, including the Netgateway Web pages, which was provided by
XXXX.xxx, in conjunction with the XXXX.xxx Membership Sites infringes
any U.S. patent, copyright, license, trade secret (including without
limitation logos, domain name and/or trademark) or infringes any third
party proprietary rights, or otherwise subjects Netgateway to
liability to any third party and/or (iii.) any claim resulting from its
or its agents performance or failure to perform its obligations under the
terms and conditions of this Agreement (iv) any claims arising out of
the Subscriber Information or End Customer Data by or through
XXXX.xxx (v) any claim arising out of the XXXX.xxx Web site or
business operations (vi) any claim arising out of misrepresentation of
the Netgateway products or services by XXXX.xxx.
3. Within five (5) business days after receipt by a Party of a notice of
any demand, claim or circumstances which, with the lapse of time or
otherwise, would or might give rise to a claim or the commencement (or
threatened commencement) of any action, proceeding or investigation
(an "Asserted Liability") that may result in any claim for which a
Party is entitled to indemnification under this Agreement (a "Claim"),
the Party entitled to indemnification (the "Indemnified Party"), shall
promptly give notice thereof (the "Claims Notice") to the Party
obligated to provide indemnification pursuant to this Agreement (the
"Indemnifying Party"); provided however, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations under Section K. (1) or (2)
hereof, except to the extent that the Indemnifying Party is actually
prejudiced by such failure to give notice. The Claims Notice shall
describe the Asserted Liability in reasonable detail, and shall
indicate the amount (estimated, if necessary and to the extent
feasible) of the Claim that has been or may be suffered by the
Indemnified Party.
(i.) The Indemnifying Party may elect to compromise or defend, at
its own expense and by its own counsel, any Asserted Liability.
If the Indemnifying Party elects to compromise or defend such
Asserted Liability, it shall within thirty (30) days (or sooner,
if the nature of the
7
Asserted Liability so requires) notify the Indemnified Party of
its intent to do so, and the Indemnified Party shall reasonably
cooperate, at the sole expense of the Indemnifying Party, in the
compromise of, or defense against, such Asserted Liability.
(ii.) If the Indemnifying Party elects not to compromise or defend
the Asserted Liability, fails to notify the Indemnified Party
of its election as herein provided or contests its obligations
to indemnify under this Agreement, the Indemnified Party may
itself pay, compromise or defend such Asserted Liability and
notify in writing the Indemnifying Party of its election to do
so, at the expense of the Indemnifying Party (if the
Indemnifying party is found obligated to indemnify the
Indemnified Party with respect to the Claim).
(iii.) Subject to the limitations contained in Subparagraph 3(ii)
below (on the obligations of the Indemnifying Party in respect to
proposed settlements), the Indemnified Party shall have the
right to employ its own counsel with respect to any Asserted
Liability, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (1) the employment
of such counsel shall have been authorized and agreed to in
writing by the Indemnifying Party in connection with the defense
of such action, or (2) such Indemnifying Party shall not have,
as provided above, promptly employed counsel to take charge of
the defense of such action, or (3) the Indemnified Party shall
have reasonably concluded based on an opinion of its counsel
and agreed to by counsel for the Indemnifying Party, if any,
that there may be one or more legal defenses available to it
which are different from or additional to those available to such
Indemnifying Party, in any of which events such reasonable fees
and expenses shall be borne by the Indemnifying Party and
the Indemnifying Party shall not have the right to direct the
defense of such action on behalf of the Indemnified Party in
respect of such different or additional defenses.
(iv.) If the Indemnifying Party chooses to defend any Claim, the
Indemnified Party shall make available to the Indemnifying
Party any books, records or other documents within its control
that are reasonably necessary or appropriate for such defense.
If the Indemnifying Party elects not to assume the defense of a
Claim, it will not be obligated to pay the fees and expenses of
more than one counsel for all Indemnified Parties with respect to
such Claim, unless in the reasonable judgment of an Indemnified
Party, and in the opinion of such Indemnified Party's counsel and
agreed to by counsel for the Indemnifying Party, if any, a
conflict of interest may exist between such Indemnified Party and
any other of such Indemnified Parties with respect to such Claim,
in which event the Indemnifying Party shall be obligated to pay
the fees and expenses of such additional counsel or counsels.
8
(v.) Notwithstanding the provisions of Subparagraph 3(iv.) above,
neither the Indemnifying Party nor the Indemnified Party may
settle or compromise any Claim for which indemnification has
been sought and is available hereunder, over the objection of
the other; provided, however, that consent to settlement or
compromise shall not be unreasonably withheld or delayed. If,
however, the Indemnified Party refuses to consent to a bona
fide offer of settlement which the Indemnifying Party wishes to
accept, the Indemnified Party may continue to pursue such
matter, free of any participation by the Indemnifying Party, at
the sole expense of the Indemnified Party. In such event, the
obligation of the Indemnifying Party to the Indemnified Party
shall be equal to the lesser of (i.) the amount of the offer of
settlement which the Indemnified Party refused to accept plus
the costs and expenses of the Indemnified Party prior to the
date the Indemnifying Party notified the Indemnified Party of
the offer of settlement, or (ii.) the actual out-of-pocket
amount the Indemnified Party is obligated to pay as a result of
the Indemnified Party's continuing to pursue such matter. No
Party will be required to consent to entry of any judgment or
enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff
to such Party of a release from all liability in respect to the
Claim.
4. Where a claim for indemnification is made by Netgateway pursuant to
Section K.(2), or where one is reasonably likely to occur in
XXXX.xxx's opinion, XXXX.xxx may with prior written notice to
Netgateway, (i.) replace some portion of the offending content with
non-infringing and reasonably comparable non-offending content, (ii.)
obtain a license to use or request Netgateway to promptly obtain a
license to use any infringing property, and/or (iii.) if the foregoing
options are not reasonably available in XXXX.xxx's reasonable opinion,
terminate this Agreement upon ninety (90) days prior written notice to
Netgateway.
5. Where a claim for indemnification is made by XXXX.xxx pursuant to
Section K.(1), or where one is reasonably likely to occur in
Netgateway's opinion, Netgateway may with prior written notice to
XXXX.xxx, (i.) replace some portion of the offending content with
non-infringing and reasonably comparable non-offending content, (ii.)
obtain a license to use or request XXXX.xxx to promptly obtain a
license to use any infringing property, and/or (iii.) if the foregoing
options are not reasonably available in Netgateway's reasonable
opinion, terminate the Agreement upon ninety (90) days prior written
notice to XXXX.xxx.
L. INTELLECTUAL PROPERTY
XXXX.xxx acknowledges Netgateway's proprietary interest in and
ownership of all intellectual property associated with Netgateway's
Programs and Services, including, but not limited to copy, copyrights,
tradenames, servicemarks, brands and trademarks hereinafter
("Intellectual Property").
9
Neither Party shall use any of the other Party's copy, copyrighted
materials, tradenames, servicemarks, brands or trademarks without
the prior written consent of the other Party. It is expressly
understood by each Party that Intellectual Property is proprietary
to the owning Party and that nothing in this Agreement constitutes
the grant of a general license for one Party to use the Intellectual
Property of the other Party.
Upon termination of this Agreement, any and all rights or privileges
of either Party to use the other Party's Intellectual Property shall
expire, and each Party shall discontinue the use of the other's
Intellectual Property in connection with any business conducted unless
otherwise provided for in writing and signed by authorized
representatives of both Parties.
M. TRANSFERABILITY
This Agreement may be assigned by either Party, in whole or in part with
notice and the written consent of the other Party, to (i.) an Affiliate
which is defined as a subsidiary or related corporate entity whose voting
stock is controlled by a Party hereto, or (ii.) a third party which
acquires all or substantially all of such Party's assets and has the
capability to perform all of the obligations of the assigning Party
under the terms and conditions of this Agreement. A permitted assignment
by a Party hereunder will not relieve such Party from obligations under
the terms of this Agreement.
N. AUDIT OF RECORDS
Netgateway agrees to maintain adequate books and records relating to
sales of the Programs. Such books and records shall be available at their
place of business for inspection by XXXX.xxx or its representative, for
the purpose of determining whether the correct amounts have been paid in
accordance with the terms of this Agreement. In the event that XXXX.xxx
or its representatives shall examine the records, documents, and
materials in the possession or under the control of Netgateway with
respect to the subject matter, such examination should be conducted in
such manner as to not unduly interfere with the business of Netgateway
and such examination should be made after reasonable prior written notice
and during business hours. XXXX.xxx and its representatives shall not
disclose to any other person, firm or corporation any information
acquired as a result of any such examination, provided, however, that
nothing herein contained shall be construed to prevent XXXX.xxx and/or
its duly authorized representatives from testifying in any court of
competent jurisdiction with respect to the information obtained as a
result of such examination, in any action instituted to enforce the
rights of either Party under the terms of this Agreement. XXXX.xxx shall
have the right to have such books and records audited by its
independent certified public accountant, upon thirty (30) days' advance
notice, but no such audit may be conducted more than once in any [twelve
(12) month] period. In the event that such an examination finds an
underpayment/overpayment in excess of the greater of [5%] of the total
amount or [$25,000] the Parties shall attempt to resolve the discrepancy
within a [thirty (30)]
10
day period following the delivery of a written report by the XXXX.xxx's
auditors setting forth the alleged discrepancy, and, if the Parties are
unable to resolve the discrepancy, the dispute shall be resolved by an
independent third party certified public accountant selected by the
Parties' respective certified public accountants, and the decision of
such third party shall be final and binding upon the Parties. Timely
adjustment shall be made to correct for any underpayments/overpayments
disclosed by such examination. If the result of the foregoing procedure
finds an adjustment of more than $25,000 during a twelve (12) month
period due to XXXX.xxx, Netgateway shall pay the reasonable costs of
such audit. All amounts finally determined due to XXXX.xxx, including
payment of auditing fees hereunder, shall be payable to XXXX.xxx and are
due within five (5) business days.
O. LIMITATION OF LIABILITY
1. XXXX.xxx shall not be liable to Netgateway for any damage arising from
or related to technical defects in or failure of the XXXX.xxx Membership
Sites, or for any indirect, consequential or punitive damages arising out
of or in connection with this Agreement or the transfer or use of the
XXXX.xxx Membership Sites other than for damages arising from XXXX.xxx's
gross negligence or willful misconduct; however, XXXX.xxx shall continue
to remain responsible to indemnify Netgateway from third party claims
arising in connection with the above and for Claims pursuant to the
provisions of Section K.
2. Netgateway shall not be liable to XXXX.xxx for any damage arising from or
related to defects in or failure of any Program, or for any indirect,
consequential or punitive damages arising out of or in connection with
this Agreement, including the offering of Programs, or the development
and use of the Netgateway Web Pages, other than for damages arising from
Netgateway's gross negligence or willful misconduct; however, Netgateway
shall continue to remain responsible to indemnify XXXX.xxx from third
party claims arising in connection with the above and for Claims pursuant
to the provisions of Section K.
P. MISCELLANEOUS
1. Force Majeure. Neither Party shall be liable for any damages or have the
right to terminate the Agreement for any delay or default in performing
this Agreement if such delay or default is caused by conditions beyond
its control, including, but not limited to, acts of God, government
restrictions, wars, insurrections, strikes, floods or work stoppages;
provided however, that if such delay or default shall exceed thirty (30)
days, then the Party not delaying or defaulting may, so long as the
delay or default continues beyond such thirty (30) day period, terminate
this Agreement. All amounts due one Party to the other shall be
reconciled and remitted, determined as of the effective termination
date, within ten (10) business days from the end of this thirty (30) day
period. The Party affected by the conditions beyond its control, shall
keep the other Party fully informed on an ongoing basis concerning the
matters causing the delay or default, and the prospects
11
of their ending. The foregoing shall not apply to any failure to comply
with any legal requirements applicable under the terms of this Agreement.
2. Entire Agreement. This Agreement, including Exhibits A and B referred to
herein, contains the entire agreement of the Parties and shall not be
varied, revised, modified, amended or supplemented, except in writing of
subsequent or even date, executed by each of the Parties.
3. Section Headings. Section Headings are for convenience only and are not
a part of this Agreement.
4. Enforceability. If any part of this Agreement shall be held to be
unenforceable, the remainder of this Agreement will nevertheless remain
in full force and effect.
5. Counterparts. This Agreement may be executed in one or more counterparts
which, taken together, shall constitute one and the same agreement, and
either Party may execute this Agreement by signing such counterpart.
6. Public Announcement
No press release, public announcement, confirmation or other information
regarding this Agreement or the contents hereof or thereof shall be made
by any Party without the prior written consent of the other Party, which
consent shall not by unreasonably withheld. It is agreed and understood
that the Parties shall work together to prepare any such press release
or public announcement. Both parties agree to publicly announce the
general terms of the relationship between the Parties and the launch of
the Program and Services contemplated herein. The foregoing
notwithstanding, if a Party is required pursuant to applicable securities
laws to make such an announcement or press release, the Party shall
furnish the other Party with the text of such public announcement or
press release sufficiently in advance of such public announcement or
press release as to afford the receiving Party a reasonable opportunity
to review such public announcement or press release, and to the extent
consistent with its legal disclosure obligations, modify such public
announcement or press release as reasonably requested by the other Party.
No Agency. Nothing in this Agreement shall be construed to constitute or
appoint either Party as the agent or representative of the other Party
for any purpose whatsoever, or to grant to either Party any rights or
authority to assume or create any obligation or responsibility, express
or implied, for or on behalf of or in the name of the other, or to bind
the other in any way or manner whatsoever. Nothing herein shall be deemed
to create a joint venture or partnership between the Parties.
Q. NOTICES
All notices under this Agreement shall be sent i.) by the U.S. mail with
proper postage affixed, or ii.) by a nationally recognized overnight mail
service, or iii.)
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by facsimile acknowledged as transmitted followed by an original copy
forwarded by overnight mail to the Parties at the addresses below:
Netgateway, Inc.: 000 Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxxx, Xx.
XXXX.xxx, Inc.: 000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
ATTN: Xxxxxxx Xxxxx, CEO
R. GOVERNING LAW
This Agreement shall be subject to, governed by and construed under the
laws of the State of California without giving effect to the principles of
conflict of laws.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day
and year first above written.
NETGATEWAY, INC. XXXX.XXX, INC.
BY: /s/ XXXXXX X. XXXXXXX, XX. BY: /s/ XXXXXX XXXXXX
------------------------------- -----------------------------
PRINT NAME: XXXXXX X. XXXXXXX, XX. PRINT NAME: XXXXXX XXXXXX
----------------------- ---------------------
ITS: PRESIDENT ITS: VP-EC
------------------------------ ----------------------------
DATE: 3/8/99 DATE: 3/4/99
----------------------------- ---------------------------
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EXHIBIT A
TO
AGREEMENT
BETWEEN
XXXX.XXX, INC.
AND
NETGATEWAY
PROGRAM TO BE PRIVATE LABELED FOR XXXX.XXX:
The StoresOnline Internet storefront building and hosting product and
service. This product and service provides online storefront creation and
maintenance, full eCommerce features, and 24/7 help desk support, plus any
features and/or benefits that shall be added to the StoresOnline
product/service during the term of this Agreement.
1) A modified version of the Program shall be created for XXXX.xxx,
the "Free Program":
a) Made available for free to XXXX.xxx Members.
b) Will accommodate a maximum of three (3) Subscriber products.
c) Will include online (Internet) based customer service and
support only.
d) Shall include all necessary and appropriate prior disclosure
regarding the collection and use of end-customer data in the
Terms of Service and in the end-customer point of sale.
- There will NOT be an opportunity, for either the
Subscriber or the end-customer, to decline this collection
and use of end-customer data.
2) A full version of the Program shall be created for XXXX.xxx, the
"Paid Program":
a) To be offered for a U.S. [**REDACTED**] monthly subscription
fee.
b) Shall include all features, benefits, and options currently
available and any added in the future in the StoresOnline
service.
c) Will include full customer service and support.
d) Shall include all necessary and appropriate prior disclosure
regarding the collection and use of end-customer data in the
Subscriber Terms of Service and in the end-customer point of
sale.
- There will be an opportunity for the end-customer to
decline collection and use of end-customer data in the point
of sale area only.
3) Full Set Up Service
Netgateway offers a service whereby it will design and construct
Netgateway Subscriber World Wide Web storefronts for a fee of U.S.
[**REDACTED**] This is a service above and separate from the
modified version of the Program and the full version of the Program.
4) Storefront "Mall" (actual name to be determined by XXXX.xxx)
a) Netgateway will create, manage and host a XXXX.xxx private
labeled version of its standard online "mall".
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b) The "mall" shall feature XXXX.xxx Subscriber Web storefronts
as well as other parties' Subscriber Web storefronts from its
storefront "Mall Network."
c) XXXX.xxx's Subscriber Web storefronts shall be included in the
"Mall Network" and may appear in other parties' private labeled
or cobranded "malls."
d) The "mall" will include an appropriate URL (as agreed upon by
both Parties).
e) The "mall" will feature advertising of various third party
advertisers and sponsors recruited by Netgateway.
f) The "mall" shall include an appropriate search engine, commerce
functionality, banner and other appropriate advertising space,
and such other features as the Parties mutually agree.
g) Netgateway has the right to display its logos and appropriate
"Powered By" language on the "mall."
h) Netgateway may, at its discretion, choose to include or not
include XXXX.xxx's NONPAYING Subscriber Web storefronts in the
XXXX.xxx branded "mall" and/or in the "Mall Network" made
available to third party "malls" by Netgateway.
15
EXHIBIT B
TO
AGREEMENT
BETWEEN
XXXX.XXX, INC.
AND
NETGATEWAY
CERTAIN DEFINITIONS
- The XXXX.xxx Membership Sites shall mean all Web sites and sell pages
hosted by XXXX.xxx.
- XXXX.xxx Web site(s) shall mean all XXXX.xxx Membership Sites
- The Netgateway Web Pages shall be the specific Web site and "sell" pages
(located within the XXXX.xxx Membership Sites and other areas) hosted by
XXXX.xxx and featuring Netgateway Programs.
- Members shall mean XXXX.xxx registered Members including, but not limited
those individuals making visits to XXXX.xxx Web sites and those individuals
who have previously purchased products and programs on the XXXX.xxx Web site.
- Subscribers shall mean individuals who subscribe or shall subscribe to any
of the Programs as promoted by XXXX.xxx.
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