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Exhibit 10.11
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT, dated as of February 13th, 1996, by and
among XXXXXX XXXXX XXXXXX, XXXXXXXX X. XXXXX, XXXXXXXX X. XXXXXXX, XXXXXX X.
XXXXX, XXXXXXXXXXX X. XXXX and XXXX XXX XXXXXXXX (collectively, the
"Shareholders") and N2K INC., a Pennsylvania corporation formerly known as
Telebase Systems, Inc. ("Telebase").
WHEREAS, N2K Inc., a New York corporation ("N2K"), and Telebase have
entered into a Merger Agreement, dated as of January 31, 1996 (the "Merger
Agreement"); and
WHEREAS, the execution of this Agreement is a closing condition under
the Merger Agreement;
WHEREAS, the Shareholders collectively own all of the assets and
outstanding capital stock by N2K;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties agree as follows:
SECTION 1. INDEMNIFICATION BY THE SHAREHOLDERS. The Shareholders hereby
jointly and severally agree to indemnify and hold Telebase harmless against and
from any and all liabilities, losses, claims, damages or expenses, including
without limitation reasonable attorneys' fees, arising from or in connection
with:
(a) The breach of any warranty, the failure or misstatement of
any representation, or the failure to fulfill any covenant or agreement made by
N2K in the Merger Agreement or in any certificate, schedule, document or other
instrument furnished by N2K or any representative thereof under or in connection
with he Merger Agreement or the transactions contemplated therein;
(b) Any and all claims, suits, actions or proceedings for
brokerage or other commissions by reason of any claim by any person in whatever
capacity claiming to have been engaged by or on behalf of N2K, or any affiliate
or subsidiary thereof, or with whom N2K, or any affiliate or subsidiary thereof,
is claimed to have made an agreement for compensation relative to the Merger
Agreement or to the transactions contemplated thereby.
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including without limitation
reasonable attorneys' fees) incident to any of the foregoing.
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SECTION 2. PROCEDURE FOR INDEMNIFICATION BY THE
SHAREHOLDERS.
(a) If any claim for indemnification is made by Telebase under
Section 1, Telebase shall send the Shareholders a notice setting forth the
amount claimed and the basis for such claim.
(b) If the facts giving rise to the claim for indemnification
shall involve any actual or threatened claim or demand by any third party
against Telebase or by Telebase against any third party, Telebase shall defend
or prosecute such claim at the Shareholders' expense and through counsel of
Telebase's choosing.
(c) The Shareholders shall cooperate in the defense or prosecution
of any such claim or defense and furnish such records, information and testimony
and attend such conferences, discovery proceedings, hearings, trials, and
appeals as may be reasonably requested in connection therewith. The Shareholders
shall be entitled to participate in the defense of any such claim, demand or
litigation at their expense and through counsel of their own choosing, and
Telebase shall cooperate in such defense to the same extent as the Shareholders
are obligated to cooperate under this subparagraph (c).
(d) Telebase may not settle any claim, demand or litigation which
could result in liability of the Shareholders under this Agreement unless the
Shareholders have consented to such settlement in writing.
SECTION 3. MANNER OF INDEMNIFICATION. All indemnification by the
Shareholders hereunder shall be effected solely by return to Telebase of all or
a portion of the escrowed shares (the "Escrowed Shares") in accordance with the
Escrow Agreement as described in Section 7 hereof. Telebase shall have no
additional or separate rights against the Shareholders other than as set forth
in this Agreement.
SECTION 4. INDEMNIFICATION BY TELEBASE. Telebase hereby agrees to
indemnify and hold harmless the Shareholders and their heirs, successors or
assigns from any liabilities, losses, claims, damages or expenses, including
without limitations reasonable attorneys' fees, arising from or in connection
with:
(a) The breach of any warranty, the failure or misstatement of any
representation, or the failure to fulfill any covenant or agreement made by
Telebase in the Merger Agreement or in any certificate, schedule, document or
other instrument furnished or to be furnished by Telebase or any representative
thereof under or in connection with
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the Merger Agreement or the transactions contemplated therein;
(b) Any and all claims, suits, actions or proceedings for
brokerage or other commissions by reason of any claim by any Person in whatever
capacity claiming to have been engaged by or on behalf of Telebase, or any
affiliate or subsidiary thereof, or with whom Telebase, or any affiliate or
subsidiary thereof, is claimed to have made an agreement for compensation
relative to the Merger Agreement or the transactions contemplated thereby; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including without limitation
reasonable attorneys' fees) incident to any of the foregoing.
SECTION 5. PROCEDURE FOR INDEMNIFICATION BY TELEBASE.
(a) If any claim for indemnification is made by any Shareholder or
Shareholders under Section 4, such Shareholder or Shareholders shall send
Telebase a notice setting forth the amount claimed and the basis for such claim.
(b) If the facts giving rise to the claim for indemnification
shall involve any actual or threatened claim or demand by any third party
against any Shareholder or Shareholders, or by any Shareholder or Shareholders
against any third party, such Shareholder or Shareholders shall defend or
prosecute such claim in the name of such Shareholder or Shareholders at
Telebase's expense and through counsel of such Shareholder's or Shareholders'
choosing.
(c) Telebase shall cooperate in the defense or prosecution of any
such claim or defense and furnish such records, information and testimony and
attend such conferences, discovery proceedings, hearings, trials, and appeals as
may be reasonably requested in connection therewith. Telebase shall be entitled
to participate in the defense of any such claim, demand or litigation at its
expense and through counsel of its own choosing, and the Shareholders shall
cooperate in such defense to a same extent as Telebase is obligated to cooperate
under this subparagraph (c).
(d) The Shareholders may not settle any claim, demand or
litigation which could result in liability of Telebase under these indemnity
provisions unless Telebase has consented to such settlement in writing.
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SECTION 6. MANNER OF INDEMNIFICATION. All indemnification by Telebase
hereunder shall be effected by the issuance by Telebase to the applicable
Shareholders of up to an aggregate of 1,250,000 shares of Common Stock, par
value $0.001 per share ("Common Stock"), of Telebase at a value of $.80 per
share (the air market value of such stock as of the date hereof) in proportion
to each Shareholder's ownership interest in Telebase at the Effective Time of
the Merger. For example, a claim by any Shareholder for $160,000 would result in
such Shareholder receiving an additional 200,000 shares of Common Stock in
addition to the shares received by them at the Effective Time.
SECTION 7. SECURITY FOR PERFORMANCE; ESCROW AGREEMENT. All
indemnification by the Shareholders hereunder shall be effected by the delivery
by the Shareholders to Telebase of up to an aggregate of 1,250,000 shares of
Common Stock at a value of $.80 per share (the fair market value of such stock
as of the date hereof) in proportion to the number of Shares of Common Stock
received by each of them as part of the Merger Consideration.
SECTION 8. LIMITATIONS ON INDEMNIFICATION.
(a) The Shareholders shall not be obligated to pay any amounts for
indemnification to Telebase under Section 1 until the aggregate amounts for
indemnification for any such claims under Section 1 equal $50,000, where upon
the Shareholders shall be obligated to pay all such amounts for indemnification,
including the first $50,000, pursuant to the terms of the Escrow Agreement.
(b) Telebase shall not be obligated to pay any amounts for
indemnification to the Shareholders under Section 4 until the aggregate amounts
for indemnification for any such claims under Section 4 equal $50,000, whereupon
Telebase shall be obligated to pay all such amounts for indemnification,
including the first $50,000, pursuant to Section 6 hereof.
SECTION 9. LIMITATION OF RIGHTS. The rights and remedies contained in
this Agreement shall be the sole and exclusive rights of Telebase and of
Shareholder against each other with respect to the liabilities set forth in
Sections 1 and 4, respectively, hereof. All claims for indemnification made by
the Shareholders against Telebase pursuant to Section 4 hereof and all claims
for indemnification made by Telebase against the Shareholders pursuant to
Section 1 hereof must be made prior to the earlier to occur of (i) one (1) year
from the Effective Time and (ii) the consummation of an Initial Public Offering
by Telebase (the "Cut-Off Time"). Any claims made by any of the parties hereto
after the Cut-Off Time shall not be
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entitled to the rights and benefits of this Agreement. Telebase agrees that,
subject to the terms of the Escrow Agreement, if no claims have been made by
Telebase for indemnification pursuant to Section 1 hereof on or prior to the
Cut-Off Date, the Escrowed Shares promptly shall be returned to the
Shareholders.
SECTION 10. GOVERNING LAW. This Agreement shall be governed by the
laws of the State of New York, without regard to conflict of laws principles.
SECTION 11. COUNTERPARTS. This Agreement may be executed pursuant
to one or more counterparts each of which shall be deemed an original and a part
hereof.
SECTION 12. DEFINED TERMS. All capitalized terms not otherwise
defined herein shall have the meaning set forth in the Merger Agreement.
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IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date first set forth above.
_____________________________________
Xxxxxx Xxxxx Xxxxxx
_____________________________________
Xxxxxxxx X. Xxxxx
_____________________________________
Xxxxxxxx X. Xxxxxxx
_____________________________________
Xxxxxx X. Xxxxx
_____________________________________
Xxxxxxxxxxx X. Xxxx
_____________________________________
Xxxx Xxx Xxxxxxxx
N2K INC.
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Xxxxx Xxxxxxx, Vice President
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