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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 9, 1997, between XXXXX X. XXXXXXXX,
an individual residing at 000 Xxxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000
("Executive"), and CREDENTIAL SERVICES INTERNATIONAL, INC., a Delaware
corporation, having its principal place of business at 000 Xxxx Xxxxxxxxx Xxxx,
00xx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000 (the "Company").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Executive as President
and Chief 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 President and Chief
Executive Officer of the Company, on the terms and subject to the conditions
hereinafter set forth. In his capacity as President and Chief Executive
Officer of the Company, Executive shall have responsibility for (i) supervising
the day to day operations of the Company; (ii) insuring the co-marketing
operations on endorsed mailings are done profitably; (iii) focusing the Company
on generating free cash flow and EBITDA (as hereinafter defined) in accordance
with the budget attached hereto; establishing appropriate profit and loss
budgets, controls, monitoring and follow-up for products, departments and
methods of marketing; (iv) rationalizing the selling, general and
administrative costs of the Company to a justifiable and economically sensible
level; (v) increasing the membership base; (vi) improving both the short term
and long term prospects of the Company's business; and (vii) such other matters
as the Company's Board of Directors ("Board") or Chairman of the Board shall
determine from time to time, consistent with Executive's position as President
and Chief Executive Officer of the Company. Executive shall report and be
responsible to the Chairman of the Board or such other person as may be
designated by the Board. 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,
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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.
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 December 2, 1999 (the "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) 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; provided, however, that the Company
shall not be deemed to have Cause pursuant to clause (iii)(E) unless the
Company gives Executive written notice that the specified conduct has occurred
and, if such conduct can be cured, Executive fails to cure the conduct within
thirty (30) days after receipt of such notice. Termination of Executive for
Cause shall be communicated by delivery to Executive of a notice specifying the
conduct or event constituting Cause, including, with respect to conduct
described in clause (iii)(E) which Executive can cure, that Executive failed to
cure such conduct during the thirty-day period following the date on which the
Company gave Executive written notice thereof.
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(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 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.
(c) Any termination by the Company pursuant to
subparagraph (b) shall be communicated to Executive 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 (b)(iii), setting forth in
reasonable detail the facts and circumstances giving rise to such termination.
(d) 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 (b)(ii) above; or
(C) the date specified in the Notice of Termination if Executive's employment
is terminated by the Company pursuant to subparagraph (b)(iii), (b)(iv) or
(b)(v) above.
3. Compensation.
(a) The Company shall pay Executive an annual
base salary ("Base Salary") during the Employment Term of $180,000 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 in an amount equal to $25,000 (the "Bonus") within
thirty (30) days after the Accountants (as hereinafter defined) issue and
deliver their report with respect to the audited financial statements of the
Company for such year. In addition, the Company shall pay Executive an annual
special bonus as provided in paragraph 3(b) (the "Special 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 Special Bonus to Executive, Executive shall be entitled to
payment of a Special 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 Special 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 Special Bonus is not paid to Executive because
an
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Adverse Event has occurred or would occur as a result of the payment of the
Special Bonus, the Special 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 Special Bonus.
(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 Xxxxxxxx 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 and Special 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 or Special 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 and Special Bonus earned prior to the end of the
Disability Period, the Company shall pay such Bonus and Special Bonus to the
Executive at the time that such Bonus and Special 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 and Special 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 and Special 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.
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(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 and Special Bonus or any portion of any Bonus and Special Bonus in
the event Executive's employment is terminated for Cause.
(d) If Executive's employment is terminated by
the Company without Cause pursuant to paragraph 2(b)(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 and Special
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 and
Special Bonus are 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. The Company shall provide reasonable
outplacement services for Executive at the Company's reasonable expense for a
period of twelve (12) months following the Date of Termination. In the event
of the termination of this Agreement by the Company without Cause pursuant to
paragraph 2(b)(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;
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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).
7. Other Agreements. 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.
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 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
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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 eighteen (18) months 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 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.
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(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.
12. Fee, Expenses and Indemnification.
(a) Each party hereto shall pay all reasonable
legal fees and related expenses (including the costs of experts, evidence and
counsel) incurred by the other party hereto as a result of the other party's
seeking to obtain or enforce any right or benefit provided by this Agreement,
provided the other party substantially prevails in the proceeding.
(b) Notwithstanding any other provision of this
Agreement to the contrary, the Company agrees that during the term of
Executive's employment with the Company and subsequent to the occurrence of a
termination of Executive's employment, 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 Executive was an employee of the
Company against expenses, including attorney's 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 Executive shall not be entitled to indemnification
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
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expenses, including attorneys' and paralegals' fees, 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 Section 12(b).
13. 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.
000 Xxxx Xxxxxxxxx Xxxx, 00xx Xxxxx,
Xxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Telecopy No.: (000) 000-0000
with a copy to:
Lincolnshire Management, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx Xxx Xxxx 00000
Attention: X.X. Xxxxxxx
Telecopy No.: (000) 000-0000
and to:
Xxxxxxx, Xxxxxxx & Xxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to Executive, to him at his address set forth in the
introductory paragraph of this Agreement.
14. 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).
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(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.
(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/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------
XXXXX X. XXXXXXXX
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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.
