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Exhibit 10.2.5
AGREEMENT REGARDING CERTAIN
TELECOMMUNICATIONS "CLUB" OPERATIONS
AND EXCEPTION TO NONCOMPETITION AGREEMENT
AGREEMENT entered into as of the 1st day of September, 1998 by and among XXXXXXX
COMMUNICATIONS, INC., a corporation organized under the laws of Delaware with
offices at One Xxxx Xxxx Xxxxx, Xxxxx Xxxxx, Xxxxx Xxxxx, Xxx Xxxx 00000
(hereafter referred to as "Xxxxxxx"; Xxxxxxx and its subsidiaries and
affiliates, and entities controlling, controlled by or under common control with
Xxxxxxx are collectively referred to as the "Xxxxxxx Companies"), ACCESS
RESOURCE SERVICES, INC., a Delaware corporation with offices at 0000 X. Xxxxxxx
Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 (hereafter referred to as "Access"),
REAL COMMUNICATION SERVICES, INC., a Delaware corporation with offices at 0000
X. Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 (hereafter referred to as
"RCI") and BAHIA ENCOUNTERS INC., a Florida corporation with offices at 0000 X.
Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 (hereafter referred to as
"Bahia")], and XXXXXX X. XXXXX, an individual residing at 00 Xxxx Xxxxx Xxxxx,
Xxxx Xxxxxxxxxx, Xxxxxxx 00000 ("Xxxxx"). Access, RCI, and Bahia and their
respective subsidiaries and affiliates, and entities controlling, controlled by
or under common control with Access, RCI, Bahia or Xxxxx, including Psychic
Readers Network, Inc., a Florida corporation ("PRN"), are collectively referred
to as the "PRN Companies".
RECITALS:
1. Xxxxxxx, Xxxxx and other principals of the PRN Companies (the "PRN
Principals") are parties to Noncompetition and Right of First Refusal Agreements
dated September 10, 1996 (the "Noncompetition Agreements"), which, among other
things, prohibit PRN and the PRN Principals from engaging in any business
activity competitive with the businesses conducted by the Xxxxxxx Companies,
including theme related telephone service programs or membership clubs.
2. The PRN Companies have been engaged in the business of offering telephone
entertainment services on a pay-per-call basis (the "800 Number Pay-per-Call
Business").
3. The Xxxxxxx Companies market membership clubs ("Clubs") offering enhanced
telecommunications products and services, including voice-mail and other
telecommunications services (the "Telco Services"), entitling the club member
("Club Member") to utilize the Telco Services offered by the Clubs for a certain
number of free minutes of telephone time during a specified period, and which
have been billed to the customers as 900 number telephone services.
4. In addition to the 800 Number Pay-per-Call Business, the PRN Companies,
with the consent of Xxxxxxx pursuant to an agreement dated as of February 1,
1998, have marketed Clubs offering telephone psychic and "new-age" entertainment
services which have been billed to their customers as 800 number telephone
services (the "PRN 800 Number Psychic Clubs").
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5. The Xxxxxxx Companies have agreed, on the terms set forth in this
Agreement, to permit the PRN Companies to market to their customers Clubs
offering Telco Services, which will be billed to customers as 800 Number
voice-mail or other telecommunication services (the "PRN 800 Number Telco
Clubs"), and which may include offerings of psychic, new age and astrological
services (the services to be offered by the PRN 800 Number Telco Clubs are
referred to as the "PRN Club Services").
6. The PRN Companies are parties to an agreement with VRS Billing Systems, a
division of Integretel, Incorporated ("VRS"), a telecommunications billing
company, under which telecommunications services furnished by telecommunications
carriers ("Carriers") are provided to the PRN Companies for use in providing
telephone entertainment services to their customers, as well as to customers of
the Xxxxxxx Companies (VRS and any other billing company or service bureau
providing such telecommunications services are referred to as "Service
Bureaus").
NOW, THEREFORE, for good and valuable consideration, receipt of which is
acknowledged by the parties, it is hereby agreed as follows:
1. CESSATION OF PRN'S 800 NUMBER PSYCHIC CLUB BUSINESS.
a. The PRN Companies and Xxxxx represent, warrant and covenant that
they have ceased the operation of the PRN 800 Number Psychic Club
business, and shall not engage in any other telecommunications
service Club business offering voice-mail or other
telecommunications services or psychic, astrology, personals or
other similar services using either 800 or 900 telephone numbers,
except in connection with the operation of PRN 800 Number Telco
Clubs pursuant to the terms of this Agreement.
b. It is acknowledged that certain of the PRN Companies provide the
Xxxxxxx Companies with live psychic operator services pursuant to
another agreement with certain Xxxxxxx Companies, and will continue
to provide such services to the Xxxxxxx Companies, and will also
provide such services to the PRN Companies in connection with the
operation of the PRN 800 Number Telco Clubs.
2. OPERATION OF THE PRN 800 NUMBER TELCO CLUBS.
x. Xxxxxxx hereby consents to the operation of the PRN 800 Number Telco
Clubs by the PRN Companies.
b. In consideration for Xxxxxxx'x consent, and as a condition to the
continuation of Xxxxxxx'x consent to the operation of the PRN 800
Number Telco Clubs, the PRN Companies agree to all of the provisions
of this Paragraph 2(b).
i. All of the following matters shall require Xxxxxxx'x prior
approval:
(1) the type of services offered by the PRN 800 Number Telco
Clubs,
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(2) the terms upon which the PRN Club Services are offered
by the PRN 800 Number Telco Clubs,
(3) the form and content of the Club's marketing materials,
including without limitation, telemarketing scripts,
infomercials and commercials in all media, and
(4) the use of any Service Bureau other than VRS in
connection with the operation of the PRN 800 Number
Telco Clubs.
ii. On all telephone calls to the PRN 800 Number Telco Club 800
telephone number in which new customers are enrolled or in
which existing customers are offered new or additional PRN
Club Services, a VRU preamble will offer the caller the
opportunity to join a Xxxxxxx Club selected by Xxxxxxx (the
"VRU Preamble"). The contents of the VRU Preamble shall be
approved in advance by Xxxxxxx. Use of the VRU Preamble may be
discontinued by PRN in the offering of PRN 800 Number Telco
Clubs on thirty (30) days prior written notice to Xxxxxxx, and
upon such discontinuance, the PRN Companies shall immediately,
without the requirement of any notice or demand from Xxxxxxx,
cease the solicitation of new customers for the PRN 800 Number
Telco Clubs, but may continue the operation of the PRN 800
Number Telco Clubs for their existing Club customers, subject
to all of the other provisions of this Agreement, including
the payment of the Xxxxxxx Fee referred to below. Xxxxxxx may
give thirty (30) days prior written notice to Access that use
of the VRU Preamble by the PRN Companies in the offering of
PRN 800 Number Telco Clubs be discontinued, and upon such
discontinuance, the PRN Companies shall immediately, without
the requirement of any further notice or demand from Xxxxxxx,
cease the solicitation of new customers for the PRN 800 Number
Telco Clubs, but may continue the operation of the PRN 800
Number Telco Clubs for their existing Club customers, subject
to all of the other provisions of this Agreement, including
the payment of the Xxxxxxx Fee referred to below.
iii. The PRN Companies, jointly and severally, agree that Xxxxxxx
will be paid on a monthly basis, within thirty (30) days after
the end of each calendar month during which the PRN 800 Number
Telco Clubs operate, an amount equal to the product of
{$ Confidential portion omitted and filed separately with the
Commission} multiplied by the number of PRN 800 Number Telco
Club customers billed during such month (hereafter such amount
payable to Xxxxxxx is referred to as the "Xxxxxxx Fee"). The
Xxxxxxx Fee shall be paid when due without set-off or
deduction of any kind. In the event that the aggregate
payments collected by the PRN Companies from the Service
Bureau for the PRN 800 Number Telco Club
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xxxxxxxx is less than the aggregate Xxxxxxx Fee (the amount by
which such collections are less than the aggregate Xxxxxxx Fee
is referred to as the "Shortfall"), and the Shortfall occurs
because of the insolvency or bankruptcy of the Service Bureau,
then, provided that the PRN Companies use diligent efforts to
collect the Shortfall (including, without limitation
commencement of actions to collect the Shortfall and filing
and prosecution of proofs of claim), that portion of the
Xxxxxxx Fees equal to the Shortfall shall not be payable to
Xxxxxxx until such time as and only to the extent that any of
the PRN Companies collect the Shortfall.
(1) Concurrently herewith, the PRN Companies which have a
contractual relationship with VRS have issued a letter
of direction to VRS authorizing VRS to deduct the
Xxxxxxx Fee from any amounts due from VRS to the PRN
Companies prior to making any payment to the PRN
Companies, and to pay the amount of the Xxxxxxx Fee so
deducted directly to Xxxxxxx or for its account. Such a
letter of direction shall be delivered by the PRN
Companies to any other Service Bureau with which any of
them arrange for the provision of telecommunications
Carrier services for the PRN 800 Number Telco Clubs. The
PRN Companies hereby agree that a copy of this Agreement
may be delivered by Xxxxxxx to any such Service Bureau
which does not receive a letter of direction as evidence
of such direction, and further agree that delivery of
such a copy shall constitute authorization by the PRN
Companies to the Service Bureau to deduct the Xxxxxxx
Fee and pay or credit same to Xxxxxxx'x account.
(2) By his signature at the end of this Agreement, Xxxxx
personally guarantees to Xxxxxxx the payment of the
Xxxxxxx Fee when due.
c. The PRN Companies represent and warrant to the Xxxxxxx Companies
that they will conduct the operations of the PRN 800 Number Telco
Clubs in accordance with all applicable laws and regulations.
d. The Xxxxxxx Companies shall have the right in their discretion to
cease the operation of any or all of the Xxxxxxx Clubs for any
reason or no reason, in which event the PRN Companies shall upon
notice from Xxxxxxx immediately discontinue any reference to such
discontinued Xxxxxxx Club in the VRU Preamble.
e. The Xxxxxxx Companies shall have the right in their discretion to
modify the terms of their consent to the operation of the PRN 800
Number Telco Clubs, for any reason or no reason, and if Xxxxxxx and
the PRN Companies are unable for any reason to reach agreement upon
such modifications, the PRN Companies shall within thirty (30) days
after receipt of notice to such effect from Xxxxxxx xxxxx the
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solicitation of new customers for the PRN 800 Number Telco Clubs,
but may continue the operation of the PRN 800 Number Telco Clubs for
their existing Club customers subject to all of the other provisions
of this Agreement, including the payment of the Xxxxxxx Fee. The
Xxxxxxx Companies shall also have the right in their discretion to
terminate their consent to the operation of the PRN 800 Number Telco
Clubs, for any reason or no reason, and the PRN Companies shall
within thirty (30) days after receipt of notice to such effect from
Xxxxxxx xxxxx the operation of the PRN 800 Number Telco Clubs the
solicitation of new customers for the PRN 800 Number Telco Clubs,
but may continue the operation of the PRN 800 Number Telco Clubs for
their existing Club customers, subject to all of the other
provisions of this Agreement, including the payment of the Xxxxxxx
Fee.
3. INDEMNIFICATIONs.
a. The PRN Companies jointly and severally agree to indemnify the
Xxxxxxx Companies against any claims made by PRN 800 Number Telco
Club Members, VRS or any other Service Bureau providing services to
the PRN 800 Number Telco Clubs, any governmental or regulatory body,
or any other party, arising out of the operation of the PRN 800
Number Telco Clubs and shall hold the Xxxxxxx Companies harmless
from any liability, cost or expense arising in connection therewith.
b. The Xxxxxxx Companies jointly and severally agree to indemnify the
PRN Companies against any claims made by Xxxxxxx Club Members, any
Service Bureau providing services to the Xxxxxxx Clubs, any
governmental or regulatory body, or any other party, arising out of
the operation of the Xxxxxxx Clubs advertised as part of the PRN 800
Number Telco Clubs in accordance with this Agreement, and shall hold
the PRN Companies harmless from any liability, cost or expense
arising in connection therewith.
c. Promptly after receipt by any party hereto (the "Indemnitee") of
notice of any demand, claim or circumstances which, with the lapse
of time, 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 "Indemnitee")
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 Indemnitee to give notice as provided herein shall
not relieve the Indemnifying Party of its obligations under
paragraph (a) or (b) of this Section, 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,
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if necessary and to the extent feasible) of the Claim that has been
or may be suffered by the Indemnitee.
d. 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 Asserted Liability so requires) notify the Indemnitee
of its intent to do so, and the Indemnitee shall cooperate, at the
expense of the Indemnifying Party, in the compromise of, or defense
against, such Asserted Liability.
i. If the Indemnifying Party elects not to compromise or defend
the Asserted Liability, fails to notify the Indemnitee of its
election as herein provided or contests its obligation to
indemnify under this Agreement, the Indemnitee may pay,
compromise or defend such Asserted Liability at the expense of
the Indemnifying Party (if the Indemnifying Party is found
obligated to indemnify the Indemnitee with respect to the
Claim).
ii. Subject to the limitations contained in Paragraph 3(e)( on the
obligations of the Indemnifying Party in respect of proposed
settlements, the Indemnitee 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 Indemnitee unless (1) the employment of such counsel
shall have been authorized 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 reasonably satisfactory to the
Indemnitee to take charge of the defense of such action, or
(3) the Indemnitee shall have reasonably concluded based on an
opinion of counsel 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 Indemnitee in respect of such different or
additional defenses.
iii. If the Indemnifying Party chooses to defend any claim, the
Indemnitee shall make available to the Indemnifying Party any
books, records or other documents within its control that are
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 Indemnitees with respect to such claim, unless
in the reasonable judgment of an Indemnitee, and in the
opinion of such Indemnitee's counsel, a conflict of interest
may exist between such Indemnitee and any other of such
Indemnitees 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.
e. Notwithstanding the provisions of paragraph 3(c) neither the
Indemnifying Party nor the Indemnitee may settle or compromise any
claim for which indemnification
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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 Indemnitee refuses to consent to a bona fide offer of
settlement which the Indemnifying Party wishes to accept, the
Indemnitee may continue to pursue such matter, free of any
participation by the Indemnifying Party, at the sole expense of the
Indemnitee. In such event, the obligation of the Indemnifying Party
to the Indemnitee shall be equal to the lesser of (i) the amount of
the offer of settlement which the Indemnitee refused to accept plus
the costs and expenses of the Indemnitee prior to the date the
Indemnifying Party notified the Indemnitee of the offer of
settlement, or (ii) the actual out-of-pocket amount the Indemnitee
is obligated to pay as a result of the Indemnitee'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. MISCELLANEOUS.
a. Neither PRN nor any of the PRN Companies may assign its rights and
obligations under this Agreement without the consent of Xxxxxxx,
except that assignment to any subsidiary or affiliate controlling,
controlled by or under common control with the PRN Companies shall
not require such consent, but only prior written notice to Xxxxxxx.
Any of the Xxxxxxx Companies may assign its rights and obligations
under this Agreement to any subsidiary or affiliate controlling,
controlled by or under common control with the Xxxxxxx Companies, or
in connection with the sale of all or substantially all of the
assets of any of the Xxxxxxx Companies or a merger or consolidation
of any of the Xxxxxxx Companies with another entity, provided prior
written notice of such assignment is given to Access.
b. The Noncompetition Agreements remain in full force and effect. The
consent given by Xxxxxxx to the operation of the PRN 800 Number
Telco Clubs shall not be deemed to be a waiver of any of the rights
and obligations of the parties to the Noncompetition Agreements. Any
other exceptions to the provisions of the Noncompetition Agreements
shall require the written consent of Xxxxxxx.
c. Any notice or other communications required or permitted hereunder
shall be in writing and shall be deemed effective (a) upon personal
delivery, if delivered by hand and followed by notice by mail or
facsimile transmission; (b) one day after the date of delivery by
Federal Express or other nationally recognized courier service, if
delivered by priority overnight delivery between any two points
within the United States; or (c) five days after deposit in the
mails, if mailed by certified or registered mail (return receipt
requested) between any two points within the United States, and in
each case of mailing, postage prepaid, addressed to a party
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at its address first set forth above, or such other address as shall
be furnished in writing by like notice by any such party.
d. No waiver by a party of any breach of this Agreement by the other
shall be deemed to be a waiver of any preceding or subsequent
breach.
e. This Agreement contains the entire understanding of the parties
hereto with respect to the subject matter contained herein.
f. Each party hereto intends that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any person
other than the parties hereto and the other persons executing this
Agreement.
g. This Agreement may not be changed orally, but only by an agreement
in writing signed by the party or parties to be charged thereby.
h. This Agreement shall be governed by and construed in accordance with
the law of New York, including its choice of law rules. Any judicial
proceeding brought against any of the parties to this Agreement on
any dispute arising out of this Agreement or any matter related
hereto shall be brought in the courts of the State of New York in
New York County or in the United States District Court for the
Southern District of New York, and, by execution and delivery of
this Agreement, each of the parties to this Agreement accepts for
itself the jurisdiction of the aforesaid courts, irrevocably
consents to the service of any and all process in any action or
proceeding by the mailing of copies of such process to such party at
its address provided for the giving of notices under Section 6(b)
above, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. Each party hereto
irrevocably waives to the fullest extent permitted by law any
objection that it may now or hereafter have to the laying of the
venue of any judicial proceeding brought in such courts and any
claim that any such judicial proceeding has been brought in an
inconvenient forum.
i. This agreement does not constitute a joint venture or partnership by
the parties, and each party is entering into this Agreement as a
principal and not as an agent of the other.
j. This Agreement is intended to be performed in accordance with, and
only to the extent permitted by, all applicable laws, ordinances,
rules and regulations. In case any one or more of the provisions
contained in this Agreement or any application thereof shall be
invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained
herein and any other application thereof shall not in any way be
affected or impaired thereby, and the extent of such invalidity or
unenforceability shall not be deemed to destroy the basis of the
bargain among the parties as expressed herein, and the
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remainder of this Agreement and the application of such provision to
other Persons or circumstances shall not be affected thereby, but
rather shall be enforced to the greatest extent permitted by law.
k. The section headings appearing in this Agreement are for convenience
of reference only and are not intended, to any extent or for any
purpose, to limit or define the text of any section.
l. This Agreement may be executed in several counterparts and all
counterparts so executed shall constitute one agreement binding on
all the parties hereto, notwithstanding that all the parties are not
signatory to the original or the same counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
XXXXXXX COMMUNICATIONS, INC. BAHIA ENCOUNTERS, INC.
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxxx X. Xxxxx
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PSYCHIC READERS NETWORK, INC. REAL COMMUNICATION SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
---------------------------- ----------------------------
ACCESS RESOURCE SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxx /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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