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EXHIBIT 2.4
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INDEMNIFICATION AGREEMENT
AGREEMENT entered into as of the day of May, 1999 by and between 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"), XXXXXX X. XXXXX, an individual with his
address at 0000 X. Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 ("Xxxxx"),
DEFER LIMITED PARTNERSHIP, a Nevada limited partnership with its address at X.X.
Xxx 0000, Xxxxxxxxx, Xxxxxx 00000 ("Defer"), XXXXXX X. XXXXXXX, an individual
with his address at {Confidential Portion Omitted and Filed Separately with the
Commission} ("Xxxxxxx"), XXXXXX LIMITED PARTNERSHIP, a Nevada limited
partnership with its address at X.X. Xxx 0000, Xxxxxxxxx, Xxxxxx 00000 (
"Maslin"), XXXXX XXXXX, an individual with his address at {Confidential Portion
Omitted and Filed Separately with the Commission} ("Xxxxx"), X. XXXXX FAMILY
PARTNERSHIP LP a Colorado limited partnership located at {Confidential Portion
Omitted and Filed Separately with the Commission} ("Xxxxx XX"), and ACCESS
RESOURCE SERVICES, INC., a Florida corporation with offices at 0000 X. Xxxxxxx
Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 (hereafter referred to as "ARS").
Feder, Defer, Lindsey, Maslin, Xxxxx and Pstolz LP are sometimes collectively
referred to as the "Selling Principals".
RECITALS:
A. Concurrently with the execution and delivery of this Agreement, Xxxxxxx
and each of Defer, Maslin, and Xxxxx XX have entered into agreements
("the Redemption Agreements") providing for Xxxxxxx'x purchase from
them of an aggregate of ________________ shares of Xxxxxxx'x common
stock (the "Shares"); and Xxxxxxx and each of Xxxxx, Xxxxxxx and Xxxxx
have entered into agreements amending certain Non-Competition and Right
of First Refusal Agreements dated September 10, 1996 (the
"Amendments"), and Xxxxxxx and ARS have entered into an agreement
providing for, among other things, restrictions on Xxxxxxx'x conduct of
certain "900" pay-per-call psychic services telephone number business
described therein (the "ARS Agreement"). The Redemption Agreements, the
Amendments and the ARS Agreement are collectively referred to as the
"Main Agreements".
B. The Selling Principals and Xxxxxxx have agreed to enter into this
Agreement for good and valuable consideration, receipt of which is
hereby acknowledged.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
acknowledged by the parties, it is hereby agreed as follows:
3. CAPITALIZED TERMS.
Unless otherwise defined in this Agreement, capitalized terms are used
with the meanings
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ascribed thereto in the Main Agreements.
4. INDEMNIFICATION BY XXXXXXX UNDER THE REDEMPTION AGREEMENTS.
If the closing under the Redemption Agreements (the "Closing") takes
place, Xxxxxxx shall indemnify, defend and hold harmless the Selling Principals
and ARS and their respective shareholders, general partners, limited partners,
directors and officers, as the case may be against any and all damages, losses,
claims, liabilities, charges, suits, penalties, costs and expenses, including
court costs, attorneys' fees and expenses and other costs of collection
(collectively, "LOSS" or "LOSSES"), which the Selling Principals personally or
ARS, or their respective shareholders, general partners, limited partners,
directors and officers, as the case may be, sustain, or to which any of them may
be subjected, arising out of or attributable to any actions brought against the
Selling Principals or ARS, or their respective shareholders, general partners,
limited partners, directors and officers, following the Closing by third parties
alleging a violation by the members of Xxxxxxx'x Board of Directors of their
duty to Xxxxxxx in approving Xxxxxxx'x purchase of the Selling Principals'
shares of Xxxxxxx common stock pursuant to the Redemption Agreements or
Xxxxxxx'x entry into this Agreement and the Amendments on the basis that the
transactions were not fair to Xxxxxxx. Xxxxxxx shall have no obligation to
indemnify the Selling Principal, ARS or their respective shareholders, general
partners, limited partners, directors and officers with respect to any Loss
described in this Section 2, and shall have the right to suspend the defense of
any Claim for which Xxxxxxx would otherwise have been liable to indemnify the
Selling Principals, ARS or their respective shareholders, general partners,
limited partners, directors and officers under the provisions of this Section 2:
(1) in the event of any default by any of the
Selling Principals or ARS in the performance
of any of their obligations under the Main
Agreements;
(2) in the event that any representation made by
any of the Selling Principals or ARS in any
of the Main Agreements is untrue in any
material respect;
(3) in the event that any of the Selling
Principals makes a claim against Xxxxxxx or
any of its officers, directors, employees or
agents which was waived or released under
the provisions of the Redemption Agreements;
(4) if any Claim arises out of or in connection
with any misrepresentation, act of
wrongdoing, malfeasance or misfeasance by
any of the Selling Principals or ARS, or
arises out of any failure to act by any of
the Selling Principals or ARS which breaches
an obligation owed by any of the Selling
Principals or ARS to Xxxxxxx or any third
party asserting such Claim;
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(5) if the Loss arises out of a judgment
rescinding the sale of the Shares by any of
the Selling Principals to Xxxxxxx or the
transactions described in the Main
Agreements or a money judgment based on a
finding that the consideration paid to
Xxxxxxx in connection with the Main
Agreements was inadequate.
5. INDEMNIFICATION BY ARS UNDER THE ARS AGREEMENT.
If the Closing occurs and Xxxxxxx and ARS consummate the ARS Agreement,
ARS shall indemnify, defend and hold harmless Xxxxxxx, its officers, directors,
employees and agents against any and all Losses which any of them may sustain,
or to which any of them may be subjected following the Closing, arising out of
or attributable to any actions brought against any of them arising out of:
i. ARS's conduct of its business after the Closing Date,
including its offering of 900 Pay-Per-Call Psychic
Services;
ii. the Sunrise Lease obligations assumed by ARS pursuant
to this Agreement;
iii. any matter regarding the Xxxxxxx Media Employees
arising from an event occurring after the Closing;
and
iv. the Xxxxxxx Media Expenses assumed by ARS.
6. NOTICE AND RESOLUTION OF INDEMNITY CLAIMS.
a. A party entitled to indemnification under this Agreement shall
be referred to hereafter as an "Indemnified Party" and a party
obligated to provide indemnification shall be referred to
hereafter as an "Indemnifying Party". If at any time an
Indemnified Party shall claim indemnification from an
Indemnifying Party for any Loss or, in the reasonable judgment
of the Indemnified Party, for what, in the future, may result
in a Loss ("ANTICIPATED LOSS") due to the filing, at or before
the time of such claim, of an action, claim or suit with an
arbitrator, mediator, court or other governmental entity as to
which the Indemnified Party is entitled to indemnification
under this Agreement ("CLAIM"), then the Indemnified Party
shall promptly send written notice of the same (a "NOTICE OF
CLAIM") to the Indemnifying Party describing such Claim in
reasonable detail. A Notice of Claim shall specify the basis
for such Claim supported by relevant information and
documentation.
b. If the Indemnifying Party shall allege that the Indemnified
Party is not entitled to indemnification with respect to such
Claim, it shall give written notice of such
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objection (a "NOTICE OF OBJECTION") to the Indemnified Party
within 15 business days after receipt by the Indemnifying
Party of the Notice of Claim, specifying the basis of the
objections. If the Indemnifying Party does not give a Notice
of Objection within such 15 business days, or shall have
agreed to pay such Claim in whole or in part within such 15
business-day period, the Indemnifying Party shall thereupon be
liable for the payment of all Losses relating to such Claim,
except as otherwise provided in Section 2 herein.
c. In the event that the Indemnified Party shall have timely
given a Notice of Objection in whole or in part to any Notice
of Claim, during the 20-day period following that date, the
Indemnified Party and the Indemnifying Party shall privately
attempt to resolve the Claim. If the Indemnified Party and the
Indemnifying Party shall have failed to resolve or compromise
or agree to postpone resolution of the Claim within such
20-day period, then the Claim shall be settled by arbitration
in New York, New York if the party initiating the arbitration
is ARS or any of the Selling Principals and in Fort
Lauderdale, Florida if the party initiating the arbitration is
Xxxxxxx (the place in which the arbitration is to be held
shall be referred to as the "Arbitration Venue"), as
determined by the three arbitrators referred to in Paragraph
4(d) below, in accordance with the rules of the American
Arbitration Association and the procedures set forth below.
d. Each of (A) the Indemnified Party and (B) the Indemnifying
Party shall appoint one arbitrator, and the two arbitrators so
appointed shall then together appoint a third arbitrator
("neutral arbitrator") from a list of persons supplied by the
American Arbitration Association in the Arbitration Venue. If
one party shall fail to appoint the arbitrator to be appointed
by it within 15 days after the end of the 20-day period
provided for in Section 4(c) above, the arbitrator appointed
by the other party shall select from a list of persons
supplied by the American Arbitration Association a person who
shall serve as the single neutral arbitrator for purposes of
the arbitration. If each party shall have appointed one
arbitrator, but such designees cannot agree on the person to
act as the neutral arbitrator within a period of 15 days after
the appointment of the second arbitrator, then either party
may apply to the American Arbitration Association in the
Arbitration Venue, which shall appoint a neutral arbitrator.
The arbitrators shall conduct the arbitration with all
reasonable dispatch in accordance with the rules of the
American Arbitration Association, provided, however, that the
parties to such arbitration shall take such action and execute
such instruments as shall be necessary to cause the rules of
civil procedure of the state in which the Arbitration Venue is
located pertaining to pre-trial discovery to be applicable in
respect of such proceeding. The arbitrators shall render a
written award (the "AWARD") which shall be delivered to the
Indemnified Party and the Indemnifying Party. An Award
hereunder may be used as a basis for the entry of judgment in
any jurisdiction. In the event the parties have submitted a
Claim for an Anticipated Loss to arbitration under this
Section 4 then the arbitrators may, in their sole discretion,
postpone resolution of the Claim until the time which they
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have determined, in their sole discretion, to be the time when
such Anticipated Loss shall have occurred or passed.
e. Prior to making the Award, the arbitrators shall direct the
Indemnified Party and the Indemnifying Party to submit
statements describing any element of Loss or Anticipated Loss
as to which a Claim is made that is attributable to attorneys'
fees, disbursements, and any similar costs incident to such
Loss or Anticipated Loss, supported by affidavits showing that
such costs actually have been or are likely to be incurred,
and all such attorneys' fees, disbursements and other costs
shall be apportioned as determined by the arbitrators. All
fees of the arbitrator and administrative expenses of the
American Arbitration Association shall be treated as costs for
purposes of this Section 4. As a part of each Award made
pursuant to this Agreement, the arbitrators shall allow
interest thereon (other than on the portion of the Award
representing attorneys' fees, disbursements and costs) from
the date of the Loss or the date the Anticipated Loss becomes
a Loss to the date of payment at the rate of 10% per annum.
f. The Award shall be a conclusive determination of the matter
and shall be binding upon the Indemnified Party and the
Indemnifying Party, and shall not be contested by either of
them. The Indemnifying Party shall satisfy its obligations to
pay an Award in cash.
g. If the subject of a Claim involves a third-party claim which
has not yet been determined, the arbitrators may in their
discretion make a separate determination solely as to whether
the third-party claim is one for which indemnification may be
had or may defer a determination as to whether indemnification
may be had pending the further development of information as
to the nature of the third-party claim. If the arbitrators
determine that the third-party claim is not subject to
indemnification, they shall set forth the basis of his
decision in detail, which decision shall be deemed to be an
"Award" hereunder.
h. If the Indemnified Party requests that the Indemnifying Party
defend it against a Claim involving an Anticipated Loss, then
the Indemnifying Party may, at its option, assume the defense
of the Indemnified Party against such Claim (including the
employment of counsel, who shall be counsel satisfactory to
the Indemnified Party,) and the payment of expenses. If the
Indemnified Party does not request the Indemnifying Party to
defend it against such Claim or the Indemnifying Party fails
to assume the defense of such Claim within a reasonable time
after having been requested by the Indemnified Party to assume
the defense, then the Indemnified Party shall have the right
to defend himself in any such action and, if appropriate under
Section 4(a) above, be indemnified for his costs and fees of
defense by the Indemnifying Party. The Indemnified Party, at
its own cost, may employ separate counsel to assert, based on
an opinion of counsel to the Indemnified Party, one or more
legal defenses available to it which are different from or
additional to those available to such Indemnifying Party; the
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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. The
Indemnifying Party shall not be liable to indemnify the
Indemnified Party for any settlement of any such action or
claim effected without the consent of the Indemnifying Party,
but if settled with the written consent of the Indemnifying
Party, or if there be a final judgment for the plaintiff in
any such action, the Indemnifying Party shall indemnify and
hold harmless the Indemnified Party from and against any Loss
by reason of such settlement or judgment and the Indemnifying
Party shall thereupon be liable for the payment of such Loss.
7. MISCELLANEOUS.
a. No party to this Agreement may assign its or his rights and
obligations under this Agreement without the consent of the
other parties.
b. Each of Defer, Maslin and Xxxxx XX represents and warrants to
Xxxxxxx that it is a limited partnership, duly organized,
validly existing and in good standing under the laws of its
jurisdiction of formation, and has the power and authority to
execute and deliver this Agreement, to consummate the
transactions hereby contemplated, and to take all other
actions required to be taken by it pursuant to the provisions
hereof; that the corporation (in the case of Defer and Maslin)
executing this Agreement on its behalf is its sole general
partner, is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of
incorporation; and that the person executing this Agreement on
behalf of such general partner is its duly elected officer and
has been duly authorized to execute and deliver this Agreement
and the Redemption Agreement which it has executed on behalf
of a Selling Principal, and in the case of Xxxxx XX, that
Xxxxx Xxxxx is its sole general partner and has the power and
authority on behalf of Xxxxx XX to execute and deliver this
Agreement and the Redemption Agreement which he has executed
on behalf of Xxxxx XX.
c. Each of Xxxxx and Xxxxxxx represents and warrants to Xxxxxxx
that he is the sole shareholder and director of the corporate
general partner of, respectively, Defer and Maslin.
d. Each of the Selling Principals represents and warrants to
Xxxxxxx that he or it, as the case may be, is not subject to,
or a party to, any contract, agreement, instrument, order,
judgment or decree, or any other restriction of any kind or
character, which would prevent its entry into or performance
under this Agreement, and no consent of or other action by or
notice to any third party is required in connection with any
such Selling Principal's entering into and performing under
this Agreement.
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e. ARS represents and warrants to Xxxxxxx that ARS is a
corporation, duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation,
and has the corporate power and authority to execute and
deliver this Agreement, to consummate the transactions hereby
contemplated, and to take all other actions required to be
taken by it pursuant to the provisions hereof, and is not
subject to, or a party to, any contract, agreement,
instrument, order, judgment or decree, or any other
restriction of any kind or character, which would prevent its
entry into the performance under this Agreement, and no
consent of or other action by or notice to any third party is
required in connection with ARS' entering into and performing
under this Agreement.
x. Xxxxxxx represents and warrants to the other parties to this
Agreement that Xxxxxxx is a corporation, duly organized,
validly existing and in good standing under the law of
Delaware, and upon the approval of the Main Agreements and
this Agreement by its Board of Directors, Xxxxxxx will have
the corporate power and authority to execute and deliver this
Agreement, to consummate the transactions hereby contemplated,
and to take all other actions required to be taken by it
pursuant to the provisions hereof, and is not subject to, or a
party to, any contract, agreement, instrument, order, judgment
or decree, or any other restriction of any kind or character,
which would prevent its entry into the performance under this
Agreement, and no consent of or other action by (other than
its Board of Directors) or notice to any third party is
required in connection with Xxxxxxx'x entering into and
performing under this Agreement.
g. 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.
h. 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.
i. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter contained
herein.
j. 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.
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k. This Agreement may not be changed orally, but only by an
agreement in writing signed by the party or parties to be
charged thereby.
l. 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 5(e)
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.
m. 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.
n. 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
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.
o. 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.
p. 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
XXXXXXX COMMUNICATIONS, INC. ACCESS RESOURCE SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxx
________________________________ _______________________________
Name: Xxxxxxx X. Xxxxxxxx Name: Xxxxxx X. Xxxxx
Title: Chairman and CEO Title: CEO
DEFER LIMITED PARTNERSHIP
By: DEFER, INC. its general partner
By: /s/ Xxxxxx X. Xxxxx /s/ Xxxxxx X. Xxxxx
________________________________ ________________________________
Name: Xxxxxx X. Xxxxx Xxxxxx X. Xxxxx, individually
Title: President
MASLIN LIMITED PARTNERSHIP
By: MASLIN, INC. its general partner
By: /s/ Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx
________________________________ ________________________________
Name: Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxx, individually
Title: President
X. XXXXX FAMILY PARTNERSHIP LP
By: /s/ Xxxxx Xxxxx
________________________________
Xxxxx Xxxxx, its general partner
/s/ Xxxxx Xxxxx
________________________________
Xxxxx Xxxxx, individually
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