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EXHIBIT 10.5
EXECUTION COPY
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of August 15, 1996, between ▇▇▇▇▇ ▇▇▇▇▇▇,
an individual residing at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("Executive"), and CREDENTIAL SERVICES INTERNATIONAL, INC., a Delaware
corporation, having its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Executive as an
executive officer and to be assured of its right to his services, on the terms
and conditions hereinafter set forth, and Executive desires to become so
employed on such terms and conditions;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and conditions herein contained, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Employment Duties. The Company hereby employs
Executive and Executive hereby accepts such employment as Vice Chairman of the
Company, on the terms and subject to the conditions hereinafter set forth. In
such capacity, Executive shall have, subject to the authority of the Company's
Board of Directors ("Board"), primary responsibility for developing and
promoting the Company's reputation and image in the best possible light to the
direct marketing industry, credit card issuers and the business community at
large and such other matters as the Company's Board or Chairman shall determine
from time to time consistent with Executive's position as Vice Chairman of the
Company. Executive shall be based and shall perform his duties at the
Company's offices located in Orange, California and shall travel to the extent
necessary to perform his duties hereunder. Executive shall devote his full
business time and energies to the business and affairs of the Company and shall
not accept other employment, perform any services for any other person, firm or
corporation or permit any of his personal business or investment affairs to
interfere with the performance of his duties hereunder. Executive shall, upon
reasonable notice, furnish such information and proper assistance to the
Company as reasonably may be required by the Company in connection with any
legal action involving the Company or any of its affiliates. Executive agrees
to use his best efforts, skills and abilities to promote and protect the
interests of the Company and, faithfully and to the best of his ability,
perform his duties hereunder. Executive agrees to serve as a director or
officer of any of the Company's subsidiaries or controlled affiliates
requesting his services and to perform such services for such subsidiaries or
controlled affiliates, consistent with his office, as its board of directors
shall request.
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2. Term; Termination.
(a) Executive's employment pursuant hereto shall
commence on the date of this Agreement (the "Employment Date") and shall remain
in effect, subject to renewal pursuant to subparagraph (b) of this paragraph 2
and to earlier termination pursuant to subparagraph (c) of this paragraph 2,
until August 15, 1999 (the "Initial Expiration Date"). The term of employment
hereunder, commencing with the Employment Date and including any renewals or
extensions hereof, is hereinafter referred to as the "Employment Term."
(b) Unless written notice of termination is given
by either party hereto to the other party not less than sixty (60) days prior
to the Initial Expiration Date or any Extension Date (as hereinafter defined),
subject to the provisions of subparagraph (c) of this paragraph 2, this
Agreement shall be automatically extended for additional periods of one year
commencing on the Initial Expiration Date and on each anniversary of the
Initial Expiration Date (each such anniversary date being referred to herein as
an "Extension Date").
(c) In addition to the expiration of the
Employment Term as hereinabove provided, this Agreement and Executive's
employment by the Company shall terminate on the Date of Termination (as
hereinafter defined) as follows:
(i) automatically upon Executive's death;
(ii) at the Company's option if, as a result
of Executive's incapacity due to physical or mental illness, he is unable to
perform the duties of his employment hereunder for a continuous period of sixty
(60) days or an aggregate of ninety (90) days in any one hundred eighty (180)
day period (each such period being hereinafter referred to as a "Disability
Period");
(iii) at the Company's option at any time
for Cause. "Cause" shall be defined to mean (A) the commission by Executive of
any felony, (B) the commission by Executive of any crime involving dishonesty,
(C) the engagement by Executive in any act of fraud, misappropriation or
misfeasance, (D) the engagement by Executive in any activity constituting a
material breach of paragraphs 9, 10 or 11 of this Agreement or other material
breach by Executive of any provision of this Agreement, (E) Executive's failure
to carry out the reasonable written directives of the Board or Chief Operating
Officer (consistent with the provisions of this Agreement) or his repeated non-
attentiveness to or repeated failure to carry out his duties under this
Agreement, (F) the engagement by Executive in any transaction with the Company
involving a conflict of interest or self-dealing, without the prior written
consent of the Board, or (H) the engagement by Executive in conduct materially
adverse to the interests of the Company or which brings discredit to the
Company and materially adversely affects the Company;
(iv) at the Company's option at any time
without Cause; and
(v) at the Company's option at any time
after any fiscal period in which the Company's (A) net revenues and EBITDA (as
hereinafter defined) as reflected on
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the Company's internally prepared financial statements or (B) total membership
as reflected on the Company's books and records do not exceed the amounts
listed on Schedule A.
(d) Any termination by the Company pursuant to subparagraph
(b) or (c) shall be communicated to Executive, or, in the case of a termination
by Executive pursuant to subparagraph (b), shall be communicated to the Company,
by a Notice of Termination. "Notice of Termination" shall mean a written notice
indicating the specific provision of this Agreement upon which such termination
is based and, in the case of a termination pursuant to subparagraph (c), setting
forth in reasonable detail the facts and circumstances giving rise to such
termination.
(e) As appropriate under the circumstances, "Date of
Termination" shall mean, as applicable: (A) the date of Executive's death; (B)
thirty (30) days after a Notice of Termination is given to Executive if
Executive's employment is terminated pursuant to subparagraph (c)(ii) above; or
(C) the date specified in the Notice of Termination if Executive's employment
is terminated by the Company pursuant to subparagraph (c)(iii), (c)(iv) or
(c)(v) above.
3. Compensation.
(a) The Company shall pay Executive an annual
base salary ("Base Salary") during the Employment Term of Two Hundred Fifty
Thousand and 00/100 Dollars ($250,000), payable in equal installments in
accordance with the Company's regular payroll practices for executive level
employees, as determined from time to time by the Board, but in no event less
frequently than monthly. The Company shall also pay Executive an annual bonus
as provided in paragraph 3(b) (the "Bonus"). The Company and the Executive
have agreed to an equity package for Executive as provided in the Restated and
Amended Agreement of Limited Partnership of CIS Acquisition Partners dated as
of May 9, 1997.
(b) As long as no Adverse Event (as hereinafter
defined) has occurred and is continuing or would occur as a result of the
payment of the Bonus to Executive, Executive shall be entitled to payment of a
Bonus equal to that percentage of the Bonus Pool (as hereinafter defined) to be
determined by the Board in the Board's sole discretion. The "Bonus Pool" shall
be an amount determined by the Board in the Board's sole discretion based upon
attainment of business goals.
(c) Any amount payable to Executive on account of
the Bonus for any year during the Employment Term will be paid to Executive by
the Company within thirty (30) days after the Company's regular independent
accountants (the "Accountants") issue and deliver to the Company their report
with respect to the audited financial statements of the Company for such year.
In the event the Bonus is not paid to Executive because an Adverse Event has
occurred or would occur as a result of the payment of the Bonus, the Bonus
shall be paid to Executive on the earliest date on which the Adverse Event has
been cured and would not occur as a result of the payment of the Bonus.
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(d) For purposes of this Agreement, the following
terms shall have the following meanings:
(i) "Adverse Event" shall mean: (x) the
failure of the Company to pay any installment of principal or interest when due
under any Loan Document (as hereinafter defined); or (y) the occurrence of any
event which constitutes, or which, with the giving of notice or the passage of
time will constitute, a default or an event of default under any Loan Document
and with respect to which the lender under such Loan Document has declared an
event of default.
(ii) "Loan Document" shall mean any
agreement, instrument or document executed and delivered by the Company in
connection with its borrowing of funds from, or evidencing the Company's
obligation to pay moneys to, IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company ("IBJ"), TRW
Inc. ("TRW") or any affiliate of IBJ or TRW (or any institution which hereafter
refinances all or any portion of the Company's indebtedness to any of such
lenders), as any such agreement, instrument or document may be amended or
supplemented from time to time.
4. Compensation Upon Termination and During Disability.
(a) If Executive's employment shall be terminated
by his death, the Company shall pay to his estate Executive's unpaid Base
Salary for the period through the Date of Termination from the Company's
regular payroll. In addition, the Company shall pay to the Executive's estate
any Bonus earned prior to the Date of Termination to which the Executive is
unconditionally entitled to be paid at the time that any such Bonus is required
to be paid under the terms of this Agreement, so long as no Adverse Event has
occurred and is continuing or would occur as a result of the payment thereof.
(b) In the event of the Executive's physical or
mental disability, the Company shall continue to pay the Executive his Base
Salary during the Disability Period. If the Executive is unconditionally
entitled to any Bonus earned prior to the end of the Disability Period, the
Company shall pay such Bonus to the Executive at the time that such Bonus is
required to be paid under the terms of this Agreement, so long as no Adverse
Event has occurred and is continuing or would occur as a result of the payment
thereof. If the Company terminates the Executive following the Disability
Period, the Company shall pay the Executive his Base Salary for the period from
the Company's regular payroll through the Date of Termination. The Company
shall also pay the Executive any Bonus earned prior to the Date of Termination
to which the Executive is unconditionally entitled to be paid, at the time that
any such Bonus is entitled to be paid under the terms of this Agreement, so
long as no Adverse Event has occurred and is continuing or would occur as a
result of the payment thereof.
(c) If Executive's employment shall be terminated
for Cause, the Company shall continue to pay Executive his Base Salary through
the Date of Termination. The Company shall have no obligation to pay Executive
any Bonus or any portion of any Bonus in the event Executive's employment is
terminated for Cause.
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(d) If Executive's employment is terminated by
the Company without Cause pursuant to paragraph 2(c)(iv) hereof, the Company
shall continue to pay Executive, at the rate provided in paragraph 3(a) hereof,
an amount equal to his Base Salary for the lesser of twelve (12) months or the
remainder of the Employment Term. In addition, for the period from the Date of
Termination until the earlier of the Expiration Date or the date twelve (12)
months after the Date of Termination, the Company shall provide Executive, at
the Company's expense, medical insurance coverage for the Executive and
Executive's family substantially equivalent to the medical insurance coverage
provided by the Company to Executive immediately prior to the Date of
Termination. The Company shall also pay the Executive any Bonus earned prior
to the Date of Termination to which the Executive is unconditionally entitled
to be paid, at the time that any such Bonus is required to be paid under the
terms of this Agreement, so long as no Adverse Event has occurred and is
continuing or would occur as a result of the payment thereof. In the event of
the termination of this Agreement by the Company without Cause pursuant to
paragraph 2(c)(iv) hereof, the amounts to be paid to Executive pursuant to this
paragraph 4(d) shall constitute liquidated damages and shall be the exclusive
remedy of the Executive.
(e) Unless otherwise agreed by the Company and
Executive, all payments made to Executive (or his estate, as applicable)
pursuant to this paragraph 4, whether during the Disability Period or after the
Date of Termination, shall be made in the amounts, at the times and subject to
the terms and conditions otherwise applicable to payments to Executive pursuant
to paragraph 3 hereof, as if such payments were made to Executive during the
Employment Term.
5. Reimbursement of Expenses. In addition to the
compensation and benefits provided to Executive pursuant to other provisions of
this Agreement, the Company will reimburse Executive in a manner consistent
with established policies of the Company for reasonable out-of-pocket expenses
actually incurred or paid by him in the performance of his services hereunder,
subject to presentation of expense statements, receipts, vouchers or other
supporting information as the Company may reasonably require.
6. Other Benefits. In addition to the compensation and
benefits provided to Executive pursuant to other provisions of this Agreement,
during the Employment Term, Executive shall be entitled to the following:
(a) participation in and receipt of benefits
under: (i) any retirement plan or arrangement for the benefit of executive
employees of the Company; and (ii) any health or other insurance plan or
arrangement for the benefit of executive employees of the Company; all on terms
no less favorable than those offered to other executive level employees of the
Company, to the extent that Executive is otherwise eligible to participate or
receive benefits under any such plan or arrangement, and
(b) a number of paid vacation days, sick days and
personal days which are provided to other executive level employees of the
Company, but in no event shall the number of paid vacation days in any year of
the Employment Term exceed twenty (20).
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7. Other Agreements.
(a) Executive represents and warrants to the
Company that he is not a party to any agreement, written or oral, and is not
bound by the terms of any written or oral agreement to which he is not a party
which prohibits him from performing his duties under this agreement or of
serving the Company in any other capacity. Executive agrees to indemnify the
Company and shall hold the Company harmless from and against any liability,
loss, cost or expense, including reasonable attorneys fees and expenses,
incurred by the Company by reason of the inaccuracy of the representations and
warranties made by Executive in this paragraph 7.
(b) The Company will reimburse Executive in the
amount of Twenty Five Thousand and 00/100 Dollars ($25,000) for reasonable
out-of-pocket expenses incurred by Executive in connection with Executive's
relocation to the vicinity of the Company.
(c) Not later then April 30, 1997, the Company
shall purchase the automobile currently owned by Executive for an amount not to
exceed $31,500.00. Executive shall be entitled to utilize such automobile
during the Employment Term, it being understood that title to such automobile
shall be retained by the Company.
(d) The Company agrees that it shall indemnify
Executive and hold Executive harmless if Executive is made or threatened to be
made a party to any action or proceeding by reason of the fact that Executive
was an employee of the Company against expenses, including attorneys' and
paralegals' fees, judgments, fines and amounts paid in settlement, in each case
to the extent actually and reasonably incurred as a result of such action or
proceeding, or any appeal thereof; provided that the Company shall have no
obligation to indemnify Executive hereunder unless Executive acted in good
faith and in a manner that Executive reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe that Executive's
conduct was unlawful. The Company may, at its election, pay in advance any
expenses, including attorneys' and paralegals' fees, in each case and to the
extent actually and reasonably incurred by Executive in defending any action or
proceeding, or any appeal thereof, upon receipt of Executive's undertaking to
repay such amounts if it is ultimately determined that Executive is not
entitled to be indemnified by the Company as authorized under this provision.
8. Life Insurance. Executive agrees that, if requested
by the Company, he will cooperate with the Company to obtain a policy or
policies of life insurance on his life in such amount(s) as the Company may
determine, including submitting to any appropriate medical examinations and
completing and executing any appropriate application(s) or similar form(s). Any
such policy or policies shall be for the benefit of the Company and the Company
shall pay all premiums thereunder.
9. Inventions, Etc. Executive agrees to promptly
disclose in writing to the Company all ideas, formulae, programs, systems,
devices, processes, business concepts, discoveries and inventions (hereinafter
referred to collectively as "Discoveries"), whether or not patentable, which
he, while employed hereunder, conceives, makes, develops, acquires or
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reduces to practice, whether alone or with others and whether during or after
usual working hours, and which are related to the Company's business or
interest, or are used or usable by the Company, or arise out of or in
connection with the duties performed by Executive hereunder. Executive hereby
transfers and assigns to the Company all right, title and interest in and to
all Discoveries, including any and all domestic and foreign patent rights
therein and any renewals thereof. On request of the Company, Executive shall
from time to time during or after the expiration or termination of his
employment by the Company, execute such further reasonable instruments
(including, without limitation, applications for letters patent and assignments
thereof) and do all such other reasonable and legal acts and things as may be
deemed necessary or desirable by the Company to protect and/or enforce its
rights in respect of Discoveries. All expenses of filing or prosecuting any
patent application shall be borne by the Company, but Executive shall cooperate
in filing and/or prosecuting any such application. Executive shall receive no
additional compensation for the performance of his obligations hereunder,
except as may be agreed to by the Company.
10. Covenant Regarding Confidentiality. All information
about the business and affairs of the Company which is not generally available
to the public or disclosed by the Company and any information about the Company
which becomes generally available to the public as a result of a breach by any
person of any confidentiality obligation to the Company (including, without
limitation, its secrets and information about its business, financial condition
and performance, prospects, products, technology, know-how, merchandising and
advertising programs and plans, and the names of its suppliers, customers and
lenders and the nature of its dealings with them) constitute "Company
Confidential Information." Executive acknowledges that he will have access to,
and knowledge of, Company Confidential Information, and that improper use or
revelation of same by Executive, whether during or after the termination of his
employment by the Company, could cause serious injury to the business of the
Company. Accordingly, Executive agrees that, except as required to perform his
duties under this Agreement, or as required by law, he will forever keep secret
and inviolate all Company Confidential Information which shall come into his
possession, and he will not disclose the same to any other person or
organization for so long as such Company Confidential Information is not
generally known by, or accessible to, the public. Executive further agrees
that he will not use any Company Confidential Information for his own benefit
or directly or indirectly for the benefit of any person or organization other
than the Company and its affiliates.
11. Covenant Not to Compete.
(a) During the Employment Term and for a period
of two (2) years thereafter (whether his employment shall have ended by reason
of the expiration of this Agreement or otherwise), Executive will not: (i)
directly or indirectly, as owner, stockholder, investor, partner, director,
officer, employee, consultant, lender, or otherwise, engage or become
interested in any business, trade or occupation in the Restricted Territory (as
hereinafter defined) which sells products or provides services similar to or
competitive with any business of the Company, as conducted at or within one (1)
year prior to the date of termination of his employment; (ii) directly or
indirectly hire or endeavor to recruit or hire for any purpose any person who
is (or was during the six (6) period [sic] immediately preceding such attempted
hiring or recruitment) employed by the Company or otherwise induce or attempt
to induce any
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then current employee of the Company to terminate such employment, or (iii)
solicit or attempt to solicit for any business any customer of the Company
which conducted business with the Company at any time during the one (1) year
period immediately preceding such solicitation or otherwise induce or attempt
to induce any customer, supplier or lender of the Company to diminish or
terminate such business relationship; provided, however, that the ownership by
Executive of not more than five percent (5%) of any class of outstanding
securities of an issuer listed on a national securities exchange or regularly
traded in the over-the counter market shall nor constitute a violation of this
paragraph 11(a); and further provided, however, in the event this Agreement is
terminated by the Company without Cause the prohibition in subparagraph
11(a)(i) shall not survive beyond the Date of Termination. The "Restricted
Territory" shall mean anywhere in the counties of Orange, California, Dallas,
Texas, Fort Worth, Texas, any other locations in the States of California or
Texas or other location in the United States of America and any other region,
county, city or locality therein where the Company is currently transacting, or
during the past five (5) years, has been transacting business. The parties
agree and intend that the covenants contained in this paragraph 11(a) shall be
construed as a series of separate covenants, one for each applicable county,
state or country. Except for geographic coverage, each such separate covenant
shall be deemed identical in terms.
(b) Executive acknowledges that the operation and
conduct of the business of the Company is special and unique and involves the
use of trade secrets and confidential information and that during the period of
his employment hereunder, Executive will acquire special knowledge and/or skill
that he could effectively utilize in competition with the Company. Executive
further acknowledges that the provisions of paragraphs 9, 10 and 11 hereof are
essential to the goodwill and profitability of the Company and have provided
substantial inducement to the Company's agreement to execute and consummate
this Agreement, and that the application or operation thereof shall not involve
a substantial hardship upon his future business or livelihood. Executive
agrees that remedies at law for any breach by him of the covenants contained in
paragraphs 9, 10 and 11 hereof will be inadequate, and that in the event of a
violation of the covenants therein, in addition to any and all legal and
equitable remedies which may be available to the Company, the said covenants
may be enforced by an injunction in a suit in equity, without the necessity of
proving actual damage, and that a temporary injunction may be granted
immediately upon the commencement of any such suit and without notice. Should
any court determine that any of the separate covenants of this paragraph 11
shall be unenforceable in respect of geographic area, then such covenant shall
be deemed eliminated for the purpose of those proceedings to the extent
necessary to permit the remaining separate covenants to be enforced. If any
other provision of paragraphs 9, 10 and 11 shall be deemed by an appropriate
court to be unenforceable for any reason, then such court shall be empowered to
substitute, to the extent enforceable, provisions similar thereto or other
provisions so as to provide the Company, to the fullest extent permitted by
applicable law, the benefits intended by paragraphs 9, 10 and 11 hereof.
Executive acknowledges that the covenants contained in this paragraph 11 are
intended by the parties to be in addition to and not in lieu of or in
limitation of any other agreement or covenant between Executive and the
Company. Each of the provisions of paragraphs 9, 10 and 11 hereof shall survive
the termination of this Agreement and the termination of Executive's employment
by the Company.
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12. Notices. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date delivered if delivered personally or by
facsimile (followed by first class U.S. mail), or three days after mailing if
mailed by registered or certified mail (postage prepaid, return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice, except that notice of changes
of address shall be effective upon receipt):
If to the Company:
Credentials Services International, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Lincolnshire Management, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Executive, to him at his address set forth in the
introductory paragraph of this Agreement.
13. General.
(a) This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
applicable to contracts made and to be performed entirely within such state
(without regard to principles of conflicts of law of California or of any other
jurisdictions).
(b) The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
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(c) This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter
hereof, and supersedes all prior agreements, arrangements and understandings,
written or oral, between the parties.
(d) This Agreement and the benefits hereunder are
personal to the Company and are not assignable or transferable, nor may the
services to be performed hereunder be assigned by the Company to any person,
firm or corporation; provided, however, that this Agreement and the benefits
hereunder may be assigned by the Company to any corporation acquiring all or
substantially all of the assets or stock of the Company or to any corporation
into which the Company may be merged or consolidated.
(e) All references in this Agreement to amounts
to be paid or benefits to be provided to or on behalf of Executive are to the
gross amounts thereof which are due hereunder. Except as otherwise provided
herein, the Company shall have the right to deduct therefrom or collect from
Executive all sums which may be required to be deducted or withheld under any
provision of law, including, but not limited to, social security payments,
income tax withholding, any other deduction required by law and any interest,
penalties or additions to tax imposed with respect thereto.
(f) This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived, only by a written instrument executed by both parties hereto, or in
the case of a waiver, by the party waiving compliance. The failure of either
party at any time or times to require performance of any provision hereof shall
in no manner affect the right of such party at a later time to enforce the
same. No waiver by either party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such breach, or a waiver of the breach of any other term or
covenant contained in this Agreement.
(g) This Agreement may be executed in
counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same instrument.
(h) Subject to the provisions of paragraph 11
hereof, if any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any partner. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the
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original intent of the parties as closely as possible in an acceptable manner
to the end that the transactions contemplated hereby are fulfilled to the
extent possible.
* * * * *
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
CREDENTIALS SERVICES
INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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SCHEDULE A
Total
Date New Revenues EBITDA Memberships*
---- ------------ ------ -----------
Total Fiscal Year 1997 $52,695,000 $9,700,000 $1,401,000
Six Months Ended
March 31, 1998 $35,469,000 $7,552,000 1,730,000
Total Fiscal Year 1998 $77,445,000 $19,827,000 2,035,000
__________________________________
* Can include multi-year memberships (not to exceed three (3) years)
provided the percentage of multi-year memberships to total memberships does not
exceed that specified in applicable debt covenants with respect to which the
Company is a party. The Company will not sell lifetime memberships unless
approved by the Board of Directors.
