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EXHIBIT 10.28
AGREEMENT REGARDING OWNERSHIP OF ASA {CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION} CLUB AND
FULFILLMENT OF FREE MINUTES AND EXCESS MINUTES
USED BY CLUB MEMBERS
AGREEMENT entered into as of the 1st day of June 1997 by and among XXXXXXX
ENTERTAINMENT, 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"), CALLING CARD CO., INC., a corporation
organized under the laws of New York with offices at One Xxxx Xxxx Xxxxx, Xxxxx
Xxxxx, Xxxxx Xxxxx, Xxx Xxxx 00000 (hereafter referred to as "CC", Xxxxxxx and
CC, and their respective subsidiaries and affiliates, and entities controlling,
controlled by or under common control with Xxxxxxx and CC 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"), and REAL COMMUNICATION
SERVICES, INC., a Delaware corporation with offices at 0000 X. Xxxxxxx
Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 (hereafter referred to as "RCI");
Access and RCI, and their respective subsidiaries and affiliates, and entities
controlling, controlled by or under common control with Access and RCI,
including Psychic Readers Network, Inc., a Florida corporation ("PRN") are
collectively referred to as the "PRN Companies".
RECITALS:
A. The Xxxxxxx Companies intend to market a membership club which they have
called the ASA {Confidential portion omitted and filed separately with the
Commission} Club (the "{Confidential portion omitted and filed separately with
the Commission} Club") offering premium telephone psychic and "new-age"
entertainment services (the "Service") for a flat rate membership fee of
{Confidential portion omitted and filed separately with the Commission} (the
"Membership Fee"), entitling the club member ("Club Member") to utilize the
Service for a certain number of free minutes of telephone time during a
specified period (the "Free Service Minutes").
B. The Xxxxxxx Companies anticipate that Club Members will utilize additional
minutes of telephone time in addition to the Free Service Minutes for which Club
Members will be charged (the "Excess Service Minutes"; the Free Service Minutes
and the Excess Service Minutes provided to Club Members shall be collectively
referred to as the "Service Minutes").
C. The PRN Companies are also involved in the marketing of premium audiotext
telephone entertainment and also provide the Xxxxxxx Companies with live psychic
operator services pursuant to another agreement with the Xxxxxxx Companies (the
"Service Agreement").
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D. The PRN Companies are parties to agreements with telecommunications service
bureaus such as West Interactive Corporation ("Service Bureaus") 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.
E. The Xxxxxxx Companies are also party to agreements with Service Bureaus under
which telecommunications services furnished by the Service Bureaus and Carriers
are provided to the Xxxxxxx Companies and their affiliates for use in providing
telephone entertainment services to their customers.
F. The PRN Companies have assisted the Xxxxxxx Companies in the development of
the {Confidential portion omitted and filed separately with the Commission}
Club, and have agreed to assume responsibility for fulfillment of the obligation
to provide the Free Service Minutes to Club Members, in consideration for which
the Xxxxxxx Companies and the PRN Companies have agreed that the revenues, if
any, from the charges to Club Members for the Excess Service Minutes and the
expenses incurred in connection with the {Confidential portion omitted and filed
separately with the Commission} Club shall be divided between them in the manner
and on all of the other terms described in this Agreement.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
acknowledged by the parties, it is hereby agreed as follows:
1. OWNERSHIP AND OPERATION OF THE {CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION} CLUB. The Xxxxxxx Companies shall have the sole
and exclusive right to market and sell the Service offered by the {Confidential
portion omitted and filed separately with the Commission} Club to the Xxxxxxx
Companies' customers and potential customers in their sole and absolute
discretion, in accordance with all applicable laws and regulations.
a. The PRN Companies shall provide live psychic operator
services to the Xxxxxxx Companies pursuant to the Service
Agreement in connection with the operation of the
{Confidential portion omitted and filed separately with
the Commission} Club. All of the Service Minutes which
are required to be provided to Club Members under the
terms of membership in the {Confidential portion omitted
and filed separately with the Commission} Club shall be
provided to the Club Members by the PRN Companies under
the PRN Companies' agreements with the Service Bureaus.
b. The PRN Companies shall not market the {Confidential
portion omitted and filed separately with the Commission}
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Club (or any program similar thereto) to their customers or
potential customers.
c. The Xxxxxxx Companies shall be the sole owners of all
tangible and intangible property rights with respect to
the {Confidential portion omitted and filed separately
with the Commission} Club. The Xxxxxxx Companies shall
have the sole right to the use of the names, telephone
numbers and other information generated about the
customers and potential customers of the {Confidential
portion omitted and filed separately with the Commission}
Club from the marketing and operation of the
{Confidential portion omitted and filed separately with
the Commission} Club, and the PRN Companies shall treat
such information as Confidential Information of the
Xxxxxxx Companies under the terms of the Service
Agreement.
2. DIVISION OF RESPONSIBILITY FOR EXPENSES OF THE {CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE COMMISSION} CLUB.
a. All charges rendered by the Service Bureaus and the
Carriers for the Free Service Minutes used by the Club
Members shall be paid in a timely fashion by the PRN
Companies in accordance with their agreements with the
Service Bureaus. The PRN Companies shall indemnify the
Xxxxxxx Companies against any claim made by the Club
Members, the Service Bureaus or the Carriers for charges,
fees or expenses incurred in providing the Free Service
Minutes to which the Club Members are entitled under the
terms of their membership in the {Confidential portion
omitted and filed separately with the Commission} Club
and the PRN Companies shall hold the Xxxxxxx Companies
harmless from any cost or expense arising in connection
therewith. The Xxxxxxx Companies shall give notice to
the PRN Companies of any claim for indemnification made
under this paragraph in accordance with Section 5 of this
Agreement, and the Xxxxxxx Companies shall be entitled to
offset any payment made by them with respect to such
indemnified claim against amounts due to the PRN
Companies by the Xxxxxxx Companies under the Service
Agreement or any other agreement between them.
b. The Xxxxxxx Companies shall reimburse the PRN Companies
for fifty percent (50%) of all charges rendered by the
Service Bureaus and the Carriers for the Excess Service
Minutes used by the Club Members, and which are not
deducted by the Service Bureaus and Carriers from
payments made in account of such Service Minutes, within
thirty (30) days after receipt of a statement from the
PRN Companies of such charges, and the PRN Companies
shall be entitled to offset any such charges not paid by
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the Xxxxxxx Companies against amounts due to the Xxxxxxx
Companies by the PRN Companies under any other agreement
between them. In the event that the Xxxxxxx Companies dispute
the charges rendered by the Service Bureaus and the Carriers
for the Excess Service Minutes used by the Club Members, the
PRN Companies will cooperate with the Xxxxxxx Companies in
seeking adjustment and refund, if applicable, of disputed
charges, and in the event of any refund by the Service Bureaus
and Carriers of charges for which the Xxxxxxx Companies have
reimbursed the PRN Companies under this paragraph, such amount
shall in turn be refunded to the Xxxxxxx Companies.
c. The Xxxxxxx Companies shall be solely responsible for all
other costs and expenses arising in connection with the
marketing and operation of the {Confidential portion
omitted and filed separately with the Commission} Club.
The Xxxxxxx Companies shall indemnify the PRN Companies
against any claims made by the Club Members or any other
party (other than the Service Bureaus, Carriers or Club
Members with respect to the charges for the Free Service
Minutes) arising out of the operation of the
{Confidential portion omitted and filed separately with
the Commission} Club and shall hold the PRN Companies
harmless from any cost or expense arising in connection
therewith.
d. The Xxxxxxx Companies shall have the right in their sole
and absolute discretion to discontinue the {Confidential
portion omitted and filed separately with the Commission}
Club at any time, and to alter the membership terms,
provided that any increase in the amount of Free Service
Minutes shall be subject to the approval of the PRN
Companies unless the Xxxxxxx companies assume
responsibility for the charges of the Service Bureaus and
Carriers for any such additional Free Service Minutes.
3. DIVISION OF REVENUES OF THE {CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION} CLUB. The revenues generated by the charges
billed to the Club Members for the Excess Service Minutes provided to Club
Members by the PRN Companies' Service Bureaus and Carriers shall be shared
equally by the PRN Companies and the Xxxxxxx Companies.
a. The Membership Fee paid by the Club Members shall be the sole
property of the Xxxxxxx Companies, and the PRN Companies shall
have no right to share in or have any other interest in the
Membership Fee.
b. The Xxxxxxx Companies shall be entitled to all revenues,
other than the revenues from charges to Club Members for
Excess Service Minutes provided by the PRN Companies'
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Service Bureaus and Carriers, generated by or derived from the
sale of other goods or services in connection with the
operation of the {Confidential portion omitted and filed
separately with the Commission} Club.
4. REPRESENTATIONS AND WARRANTIES OF THE PRN COMPANIES. The PRN Companies
represent and warrant to the Xxxxxxx Companies that: (i) they have the ability
to provide all of the fulfillment of the Service Minutes required under this
Agreement and to satisfy all charges rendered by the Service Bureaus and
Carriers in connection therewith, subject to reimbursement by the Xxxxxxx
Companies in accordance with this Agreement; (ii) annexed hereto as an Exhibit
is a balance sheet and income statement of PRN for the six (6) month period
ended June 30, 1997, and subsequent to such date PRN has organized RCI and
Access Resource Services, Inc., a Delaware corporation, as wholly owned
subsidiaries of PRN to conduct certain operations theretofore conducted by PRN,
and the operation of such subsidiaries shall have no materially adverse effect
upon the combined net income or results of operation of the PRN Companies.
5. INDEMNIFICATION. 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, if
necessary and to the extent feasible) of the Claim that has been or may be
suffered by the Indemnitee.
a. 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.
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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
5(b) 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.
b. Notwithstanding the provisions of paragraph 5(a) neither the
Indemnifying Party nor the Indemnitee 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 Indemnitee refuses to consent
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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.
6. MISCELLANEOUS.
a. Neither PRN nor any of the PRN Companies may assign its
rights and obligations under this Agreement without the
consent of 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.
b. 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 at its address first set forth above, or such other
address as shall be furnished in writing by like notice
by any such party.
c. 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.
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d. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter
contained herein.
e. 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.
f. This Agreement may not be changed orally, but only by an
agreement in writing signed by the party or parties to be
charged thereby.
g. 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.
h. 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.
i. 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
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to destroy the basis of the bargain among the parties as
expressed herein, and the 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.
j. 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.
k. 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 ENTERTAINMENT, INC. CALLING CARD CO., INC.
By: By:
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PSYCHIC READERS NETWORK, INC. REAL COMMUNICATION SERVICES,
INC.
By: By:
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ACCESS RESOURCE SERVICES, INC.
By:
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