MANAGEMENT AGREEMENT
This Management Agreement ("Agreement") is entered into this 24th
day of April, 1997, by and among the following named individuals: Xxxx
Xxxxxxx ("Paisley"), Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx"), Xxxx Xxxxx ("Guest"),
Xxxx Xxxxx ("Xxxxx") and Xxxxx Xxxxxxx ("Xxxxxxx") Messrs. Paisley, Guest and
Xxxxxxxx are collectively referred to as the "TII Parties".
RECITALS
X. Xxxxxxx, Guest and Xxxxxxxx are the duly elected three
directors of Travelmax International, Inc., a Utah corporation ("TII-Utah")
and Travelmax International, Inc., a California corporation
("TII-California")(collectively, TII-Utah and TII-California are referred to
as the "Companies"). Paisley is also the Chief Financial Officer, Guest is
the Executive Vice President and Xxxxxxxx is the Chief Executive Officer of
the Companies. The Companies are, or are on the verge of being, insolvent.
X. Xxxxx and Xxxxxxx are independent businessmen who are in the
position of being able to provide or arrange for additional capital and other
financing for troubled businesses and who are capable of assuming management
duties on behalf of the Companies. Notwithstanding the condition of the
Companies, Xxxxx and Xxxxxxx are willing to accept election to the board of
directors of the Companies and to accept appointment as officers of the
Companies, subject to the terms of this Agreement.
C. The directors and officers of the Company, Xxxxxxxx, Guest and
Paisley, and the TII Parties agree that for the sake of saving the Companies
from bankruptcy, insolvency or other or further harm, it would in the best
interests of the Companies and the shareholders for: (i) Paisley and Xxxxxxxx
to resign their respective positions as directors and officers of the
Companies, as applicable, and for Xxxxx and Xxxxxxx to replace Xxxxxxxx and
Paisley as directors and officers of the Companies on the terms set forth in
this Agreement; and (ii) TII-Utah to issue to Xxxxxxx and Xxxxx shares of its
common stock in consideration for the services rendered and actions taken by
them for the preservation of TII-Utah, as described herein.
In consideration of the foregoing, the parties agree as follows:
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1. RESIGNATIONS AND ACCEPTANCE OF ELECTION. Contemporaneous with
the execution of this Agreement, Paisley and Xxxxxxxx shall resign all
positions as directors and officers of TII-Utah and TII-California by
executing and delivering to the Secretary or another executive officer of the
Companies the Resignations attached hereto as Exhibits A and B, respectively;
provided, however, that Paisley shall resign first and effective upon his
resignation, the two remaining directors, Xxxx Xxxxx ("Guest") and Xxxxxxxx,
shall elect Xxxxx a director of each of the Companies by executing the
Directors' Action by Unanimous Written Consent in the forms attached as
Exhibits C and D, to fill the vacancy caused by the resignation of Paisley
and further provided, that Xxxxxxxx shall resign immediately thereafter and
effective upon his resignation, the two remaining directors, Guest and Xxxxx,
shall elect Xxxxxxx a director of each of the Companies by executing the
Directors' Action by Unanimous Written Consent in the forms attached as
Exhibit E and F, to fill the vacancy caused by the resignation of Xxxxxxxx.
Xxxxx and Xxxxxxx each agree to accept their respective election as a
director of each of TII-Utah and TII-California and to use their best
business judgment and business skills for and on behalf of, and for the
benefit of, the Companies. The resignations of directors Paisley and
Xxxxxxxx shall be effective only after said directors have executed the
Unanimous Written Consent pursuant to Paragraph 6, below, and attached as
Exhibit I, regarding the issuance of shares of TII-Utah capital stock.
2. COOPERATION. In order to assist in the recovery of the
Companies and the transition to new management, after their resignations, the
TII Parties shall cooperate with the Companies by providing such information
and taking such actions as the Companies and its representatives may
reasonably request or as may be contemplated by the terms of this Agreement.
Without limitation, Paisley and Xxxxxxxx agree to cooperate in deleting their
names, signatures and authorizations from all bank accounts, credit cards and
other assets of the Companies.
3. THE COMPANIES' ASSETS. Each of the TII Parties represents and
warrants to Xxxxx and Xxxxxxx and to the Companies that the assets listed in
Exhibit G are a true and complete list of all of the property, perquisites
and other assets and benefits of the Companies in the possession or control
of each of them or which either of them enjoy or may utilize or to which
either of them have access, as of the date of this Agreement (collectively,
the "Assets"). As promptly as possible but in no event later than 2 business
days after the execution of this Agreement, each of the TII Parties shall
return to the Companies, or relinquish to the Companies the control of, all
of the Companies' Assets identified in Exhibit G, by physically delivering
the Assets, where possible (such as, for example, files, lists, trade secret
and other Confidential Information (as defined below) of the Companies,
equipment automobiles, manuals, marketing and program materials)
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and/or by physically delivering the means to access, use or control Assets
(such as, for example, membership cards, access cards, checks and other
financial instruments, credit and debit cards, keys, maps, directions, access
codes and signature cards) to the Companies at their headquarters at 0000 Xxx
Xxxx, Xxxxxxx Xxxxx, XX 00000. The TII Parties shall cooperate fully in the
return of the Assets to the Companies, including but not limited to, any
changes in title or registration or removal of their names from access or use
of Assets.
4. NONSOLICITATION. From the date of this Agreement and thereafter for
the maximum period of time permitted by law, none of the TII Parties shall
solicit for employment or hire any employees of the Companies, except with
the prior written consent of the Companies.
5. NONDISCLOSURE AND NON-USE OF CONFIDENTIAL INFORMATION. Each of the
TII Parties agrees and represents that each knows, has used on behalf of the
Companies and each has had access to, all of the confidential, non-public and
proprietary information concerning the business and operations of the
Companies, including, but not limited to, trade secrets, know-how, lists,
manuals, structures and programs (collectively, the "Confidential
Information"). Confidential Information shall not include any information
that becomes generally available to the public other than as a result of
disclosure by any of the TII Parties in violation of this Agreement. Each
represents, warrants and covenants that for the maximum period permitted by
law, he will not disclose or use Confidential Information for any purpose
whatsoever, including any purpose competitive with the Companies' business or
in a manner which may otherwise harm or detract from the Companies' business,
provided, however, that their use of Confidential Information in connection
with cooperating with the Companies as required under this Agreement shall
not be considered a breach of this covenant. Each of the TII Parties further
agrees to return to the Companies all Confidential Information in whatever
form or medium existing in their possession or under their control pursuant
to Paragraph 3, above.
6. SALE OF RIGHTS TO SHARES OF TII-UTAH. In consideration of Xxxxx and
Xxxxxxx: (i) accepting election to the board of directors of the Companies,
(ii) accepting appointments as officers of the Companies, (iii) undertaking
to provide financing to prevent the Companies' bankruptcy or insolvency:
(a) And in consideration for paying the aggregate sum of $10.00 to
the TII Parties, each of Guest and Xxxxxxxx hereby assign to the Company for
cancellation all of their right, title and interest in and to all of their
warrants, stock options and other rights of any kind to acquire shares of
capital stock of either of the Companies or any of their affiliates to which
any of them is entitled (collectively, the "Rights"), all as more
particularly
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identified in Exhibit H. Each of the TII Parties represents and warrants
that Exhibit H fully and accurately sets forth all of the Rights owned or
controlled by such TII Party or on his behalf. As used herein, "affiliates"
means: (i) any corporation or other business entity which is wholly or
partially owned by the Companies or in which the Companies have any kind of
an equity interest, and (ii) any corporation or other business entity that
operates in conjunction with or its operations are related to the business or
operations of the Companies. Each of the TII Parties shall execute and
deliver a stock power or assignment and such other documents as may be
requested by Xxxxxxx and Xxxxx in order to effect the transfer of the Shares
and the Rights as provided or contemplated in this Agreement.
(b) And in further consideration of the payment of $10.00 to
TII-Utah, the TII Parties, in their capacity as the directors of TII-Utah,
adopt a resolution to issue to Xxxxx and Xxxxxxx a number of common shares of
TII-Utah in an amount equal to two times the sum of: (i) all of the issued
and outstanding shares of capital stock of TII-Utah, plus (ii) the number of
shares issuable upon the exercise of all warrants, stock options and any
other rights to purchase or acquire capital stock of TII-Utah; less the
number of shares acquired by Xxxxxxx and Xxxxx under in subparagraph 6(a),
above. Attached as Exhibit I is a true and correct copy of the Action by
Unanimous Written Consent of the Board of Directors of TII-Utah, pursuant to
which the board of directors authorizes and approves the sale and issuance of
capital stock as provided herein.
(c) The shares of TII-Utah capital stock issued to Xxxxx and
Xxxxxxx pursuant to subparagraph 6(b) are "restricted securities" under
applicable federal securities laws and regulations and are subject to
restrictions upon their transfer. The TII Parties each agree to restrict the
transfer of all of their shares of TII-Utah capital stock now owned or
controlled by them as if all of such shares were "restricted securities"
issued at the same time as the shares of TII-Utah capital stock issued to
Xxxxxxx and Xxxxx pursuant to subparagraph 6(b).
7. CONDITION. The effectiveness of this Agreement is conditioned
upon the execution of another agreement by Messrs. Xxx Xxxxxxxx, Xxx Xxxxxx
and Xxxx Xxxxxxx pursuant to which each of them assigns to Xxxxx and Xxxxxxx
all of their right, title and interest in and to one-half (1/2) of all of the
shares of capital stock of the Companies and any of their affiliates, owned
or controlled by each of them or on their behalf and all of their respective
right, title and interest in and to all of the warrants, stock options and
other rights of any kind to acquire shares of capital stock of either of the
Companies or any of their affiliates to which any of them is entitled.
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8. ATTORNEYS' FEES. In the event of any suit, action or
proceeding brought by any party for the breach of any term hereof, or to
enforce any provisions hereof, the prevailing party shall be entitled to
reasonable attorneys' fees in addition to court costs and other expenses of
litigation. This provision for attorneys' fees shall include any attorneys'
fees and costs incurred in connection with any appellate action.
9. SEVERABILITY AND GOVERNING LAW. If any provision of this
Agreement is determined to be unenforceable, validity and enforceability of
the remaining provisions of the Agreement shall not be affected. Each
provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by applicable law. Any provision determined to be invalid
or unenforceable may be reformed or modified to make such provision valid or
enforceable so as to accomplish the intent of the provision as closely as
possible. To the extent consistent with applicable law The validity,
enforcement, performance, construction, and interpretation of this Agreement
shall be determined in accordance with California law.
10. WAIVER. This Agreement shall not be changed or modified, and
no provision may be waived, in whole or in part, except as contained in a
written document signed by all the parties.
11. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure
to the benefit of, the parties hereto and their respective successors and
assigns, but shall not be assignable by Paisley or Xxxxxxxx.
12. INDEMNIFICATION. In addition to any other remedy at law or
equity available to Xxxxx and Xxxxxxx, each of the TII Parties, jointly and
individually, shall defend, indemnify and hold harmless Xxxxx and Xxxxxxx
from and against all loss, damage and liability, including attorneys fees and
costs, arising from any breach or nonperformance of this Agreement, including
without limitation, any misrepresentation, breach of a warranty or
nonperformance of a covenant.
13. RECITALS. The parties agree, represent and warrant that the
recitals are true and correct and the sane are incorporated in this Agreement.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each counterpart shall be deemed to be on original
instrument, but all of such counterparts together shall constitute but one
agreement.
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The parties execute this Agreement on the date set forth above in
Newport Beach, California.
/s/ Xxxx Xxxxx /s/ Xxxxx Xxxxxxx
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Xxxx Xxxxx Xxxxx Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxx Xxxxxxx
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Xxxxxxx X. Xxxxxxxx Xxxx Xxxxxxx
/s/ Xxxx Xxxxx
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Xxxx Xxxxx
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