UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Transmedia Network Inc.
(Name of Issuer)
Common Stock, $0.02 par value, and Options
to purchase additional shares of Common Stock, $0.02 par value
(Title of Class of Securities)
893767301
(CUSIP Number)
Robert Dean Avery, Esq.
Jones, Day, Reavis & Pogue
77 West Wacker
Chicago, IL 60601-1692
(312) 269-4103
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
July 30, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule
13D, and is filing this schedule because of Rule 13d-1(e), (f) or
(g), check the following box / /.
(Continued on following pages)
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CUSIP NO. 893767301
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1 Names of reporting persons SignatureCard, Inc.
IRS Nos. of above persons (entities only) 36-287-7527
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2 Check the appropriate box if a member of a group (a)/ /
(b)/ /
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3 SEC use only
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4 Source of funds SignatureCard, Inc. acquired the securities
through a sale of certain assets of its Dining a
la Card business to Transmedia Network Inc. 00
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5 Check if disclosure of legal proceedings is required pursuant to Items
2(d) or 2(e) / /
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6 Citizenship or place of organization Indiana
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Number of shares beneficially owned by each reporting person with:
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7 Sole voting power 0
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8 Shared voting power 800,000
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9 Sole dispositive power 0
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10 Shared dispositive power 800,000
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11 Aggregate amount beneficially owned by each reporting person. 800,000
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12 Check if the aggregate amount in Row (11) excludes certain shares / /
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13 Percent of class represented by amount in Row (11) 6.2%
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14 Type of reporting person CO
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<PAGE>
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CUSIP NO. 893767301
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General Electric Company
1 Names of reporting persons 14-0689340
IRS Nos. of above persons (entities only)
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2 Check the appropriate box if a member of a group (a)/ /
(b)/ /
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3 SEC use only
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4 Source of funds 00
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5 Check if disclosure of legal proceedings is required pursuant to Items
2(d) or 2(e) /x/
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6 Citizenship or place of organization New York
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Number of shares beneficially owned by each reporting person with:
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7 Sole voting power 0
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8 Shared voting power 800,000
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9 Sole dispositive power 0
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10 Shared dispositive power 800,000
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11 Aggregate amount beneficially owned by each reporting person. 800,000
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12 Check if the aggregate amount in Row (11) excludes certain shares / /
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13 Percent of class represented by amount in Row (11) 6.2%
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14 Type of reporting person CO
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<PAGE>
ITEM 1. SECURITY AND ISSUER
The securities to which this statement relates are shares of Common
Stock, par value $0.02 ("Common Stock"), of Transmedia Network Inc., a Delaware
corporation ("Transmedia"), and stock options to purchase additional shares of
Common Stock. Transmedia's principal executive offices are located at 11900
Biscayne Boulevard, Miami, Florida 33181.
ITEM 2. IDENTITY AND BACKGROUND
SignatureCard, Inc., an Indiana corporation ("SignatureCard"), operates
a membership program under the Dining a la Card(R) trade name and service mark,
which offers to members cash rebates or mileage credits in selected airline
mileage programs on charges at participating restaurants. SignatureCard's
principal office is located at 200 N. Martingale Road, Schaumburg, Illinois
60173.
Information concerning the current executive officers and directors of
SignatureCard is set forth on Schedule A to this Schedule 13-D. Each of such
executive officers and directors is a citizen of the United States.
SignatureCard is an indirect, wholly owned subsidiary of General
Electric Company, a New York corporation ("GE"). GE is one of the largest and
most diversified industrial corporations in the world. GE has engaged in
developing, manufacturing and marketing a wide variety of products for the
generation, transmission, distribution, control and utilization of electricity
since its incorporation in 1892. Over the years, GE has developed or acquired
new technologies and services that have broadened considerably the scope of its
activities.
GE's products include major appliances; lighting products;
industrial automation products; medical diagnostic imaging equipment; motors;
electrical distribution and control equipment; locomotives; power generation and
delivery products; nuclear power support services and fuel assemblies;
commercial and military aircraft jet engines; and engineered materials, such as
plastics, silicones and superabrasive industrial diamonds.
GE's services include product services; electrical product supply
houses; electrical apparatus installation, engineering, repair and rebuilding
services; and computer-related information services. Through its affiliate, the
National Broadcasting Company, Inc., GE delivers network television services,
operates television stations, and provides cable programming and distribution
services. Through another affiliate, General Electric Capital Services, Inc., GE
offers a broad array of financial and other services including consumer
financing, commercial and industrial financing, real estate financing, asset
management and leasing, mortgage services, consumer savings and insurance
services, specialty insurance and reinsurance, and satellite communications.
GE operates in more than 100 countries around the world, including 280
manufacturing plants in 26 different nations. GE's principal executive offices
are located at 3135 Easton Turnpike, Fairfield, CT 06431 (telephone (203)
373-2211).
Information concerning the current executive officers and directors of
General Electric is set forth on Schedule A to this Schedule 13-D.
Except as set forth on Schedule A, to the best knowledge of the filing
persons, no filing person or person named in Schedule A to this Schedule 13-D
during the last five years has been (a) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (b) has been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On March 17, 1999, SignatureCard and Transmedia entered into an Asset
Purchase Agreement pursuant to which Transmedia acquired certain assets of
SignatureCard's Dining a la Card(R) business. As part of the consideration for
the sale of these assets, on June 30, 1999 (the "Closing Date"), Transmedia
issued 400,000 shares of Common Stock (the "Closing Date Shares") and stock
options to purchase an additional 400,000 shares of Common Stock (the "Options")
to SignatureCard. The descriptions of the terms and provisions of the Asset
Purchase Agreement are qualified in their entirety by reference to the text of
the Asset Purchase Agreement and the amendments thereto, which are filed as
Exhibit 1 hereto and incorporated by reference herein. The Options are
exercisable beginning on September 28, 1999 at an exercise price per share of
$4.00. The descriptions of the terms and provisions of the Option Agreement are
qualified in their entirety by reference to the text of the Option Agreement,
which is filed as Exhibit 2 hereto and incorporated by reference herein.
ITEM 4. PURPOSE OF TRANSACTION
SignatureCard acquired the Closing Date Shares and Options as partial
consideration for the sale of certain assets of its Dining a la Card(R) business
pursuant to the Asset Purchase Agreement. In addition, SignatureCard received
the right to put the Closing Date Shares back to Transmedia at a price per share
of $8.00 (the "Put"). The Put is exercisable starting six months after the
Closing Date and for a period of two and a half years thereafter. SignatureCard
will not be permitted to exercise the Put if, at the time of exercise, it is in
material breach of the Services Collaboration Agreement, dated the Closing Date,
between SignatureCard and Transmedia (the "Services Collaboration Agreement").
The descriptions of the terms and provisions of the Asset Purchase Agreement are
qualified in their entirety by reference to the text of the Asset Purchase
Agreement, which is filed as Exhibit 1 hereto and incorporated by reference
herein.
Pursuant to the terms of the Services Collaboration Agreement,
SignatureCard and its affiliates (which include all filing persons) are
restricted from purchasing more than 3% of Transmedia's voting securities (in
addition to the Closing Date Shares and any shares issued upon exercise of the
Options) or from taking certain other actions designed to influence the control
of Transmedia for a period of five years following the Closing Date. The
descriptions of the terms and provisions of the Services Collaboration Agreement
are qualified in their entirety by reference to the text of the Services
Collaboration Agreement, which is filed as Exhibit 3 hereto and incorporated by
reference herein.
Notwithstanding the above, SignatureCard from time to time intends to
review its investments in Transmedia on the basis of various factors, including
Transmedia's business, financial condition, results of operations and prospects,
general economic and industry conditions, the securities markets in general and
those for Transmedia's securities in particular, as well as other developments
and other investment opportunities. SignatureCard will also consider its
personal financial situation, including liquidity, alternative investment
opportunities and tax and estate planning considerations. Based upon such
review, SignatureCard will take such actions in the future as it may deem
appropriate in light of the circumstances existing from time to time. If
SignatureCard believes that further investment in Transmedia is attractive,
whether because of the market price of Transmedia's securities or otherwise,
SignatureCard may acquire securities of Transmedia either in the open market or
in privately negotiated transactions. Similarly, depending on market and other
factors, SignatureCard may determine to dispose of some or all of the securities
currently owned by it or otherwise acquired by it either in the open market or
in privately negotiated transactions. The ability of SignatureCard to acquire or
dispose of securities of Transmedia is limited by the terms of the Asset
Purchase Agreement, the Option Agreement, the Services Collaboration Agreement
and the Transition Services Agreement (as defined below), which are filed as
Exhibits 1, 2, 3 and 4 to this Schedule 13-D and incorporated herein by
reference. SignatureCard may, from time to time, engage one or more professional
advisors to assist in its evaluation of the above factors.
Except as set forth above and to the knowledge of the filing persons,
no filing person or director of officer thereof has formulated any plans or
proposals which relate to or would result in: (a) the acquisition by any person
of additional securities of Transmedia or the disposition of securities of
Transmedia, (b) an extraordinary corporate transaction involving Transmedia or
any of its subsidiaries, (c) a sale or transfer of a material amount of the
assets of Transmedia or any of its subsidiaries, (d) any change in the present
board of directors or management of Transmedia, (e) any material change in
Transmedia's present capitalization or dividend policy, (f) any other material
change in Transmedia's business or corporate structure, (g) any change in
Transmedia's charter or bylaws or other instrument corresponding thereto or
other action which may impede the acquisition of control of Transmedia by any
person, (h) causing a class of Transmedia securities to be de-listed, (i) a
class of equity securities of Transmedia becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934, as amended or (j) any action similar to any of those enumerated above.
See Item 6 for additional information, the response to which is
incorporated herein by reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
The share information listed in this Item Five relates to the Closing
Date Shares and shares issuable upon exercise of the Options discussed in
Item 1.
(a) On the Closing Date, SignatureCard, Inc acquired 400,000 shares of
Common Stock, and upon exercise of the Options, it may acquire up to an
additional 400,000 shares of Common Stock. The Options are exercisable beginning
on September 28, 1999 at a price per share of $4.00. The descriptions of the
terms and provisions of the Option Agreement are qualified in their entirety by
reference to the text of the Option Agreement, which is filed as Exhibit 2
hereto and incorporated by reference herein. The aggregate number of shares
SignatureCard beneficially owns is 800,000 shares of Common Stock, representing
6.2% of the shares of Common Stock issued and outstanding as of May 10, 1999
(based solely upon information contained in Transmedia's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1999, as filed with the Securities and
Exchange Commission).
(b) SignatureCard may be deemed to have shared power to vote or direct
the vote of and shared power to dispose of or to direct the disposition of the
800,000 shares of Common Stock referred to in (a) above.
As the ultimate parent corporation of SignatureCard, GE may be deemed
to have shared power to vote or to direct the vote of and shared power to
dispose of or to direct the disposition of the 800,000 shares of Common Stock
referred to in (a) above. Accordingly, in the aggregate GE may be deemed to
beneficially own 800,000 shares of Common Stock, which would constitute
approximately 6.2% of such Common Stock issued and outstanding at May 10, 1999
(based solely upon information contained in Transmedia's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1999, as filed with the Securities and
Exchange Commission).
(c) No filing person nor, to the knowledge of the filing persons, any
executive officer or director of the filing persons, has effected any
transactions in the Common Stock during the past sixty days.
(d) No other person is known to have the right to receive or the power
to direct the receipt of dividends from, or the proceeds from the sale of, the
shares of Common Stock referred to above.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Pursuant to the Asset Purchase Agreement, SignatureCard sold certain
assets of its Dining a la Card(R) business. In exchange for the acquired assets
and in addition to certain acquired liabilities and cash, Transmedia issued the
Closing Date Shares and Options to SignatureCard on the Closing Date. The
Options are exercisable beginning on September 28, 1999 at a price per share of
$4.00. SignatureCard also received the Put, which enables SignatureCard to put
the Closing Date Shares to Transmedia at a price of $8.00 per share, subject to
certain limitations described in the Asset Purchase Agreement. The Put is
exercisable starting six months after the Closing Date and for a period of two
and a half years thereafter. The descriptions of the terms and provisions of the
Asset Purchase Agreement and the Option Agreement are qualified in their
entirety by reference to the text of the Asset Purchase Agreement and the
amendments thereto and the Option Agreement, which are filed as Exhibits 1 and 2
hereto and incorporated by reference herein.
In addition to entering into the Asset Purchase Agreement and the
Option Agreement, SignatureCard and Transmedia executed the Services
Collaboration Agreement and a Transition Services Agreement, dated the Closing
Date (the "Transition Services Agreement"). Under the Services Collaboration
Agreement, SignatureCard is required to perform certain marketing and
promotional activities for the Dining A La Card(R) business and Transmedia is
responsible for the daily operations of the Dining a la Card(R) business. The
descriptions of the terms and provisions of the Services Collaboration Agreement
are qualified in their entirety by reference to the text of the Services
Collaboration Agreement, which is filed as Exhibit 3 hereto and incorporated by
reference herein.
Pursuant to the terms of the Services Collaboration Agreement,
SignatureCard and its affiliates (which include all filing persons) are
restricted from purchasing more than 3% of Transmedia's voting securities (in
addition to the Closing Date Shares and any shares issued upon exercise of the
Options) or from taking certain other actions designed to influence the control
of Transmedia for a period of five years following the Closing Date. The
descriptions of the terms and provisions of the Services Collaboration Agreement
are qualified in their entirety by reference to the text of the Services
Collaboration Agreement, which is filed as Exhibit 3 hereto and incorporated by
reference herein.
Under the Transition Services Agreement and a related sublease between
Transmedia and a non-filing affiliate of SignatureCard, Transmedia rents space
at SignatureCard's principal executive offices in Schaumburg, Illinois.
SignatureCard also provides customer service personnel, computer and systems
support and other miscellaneous services to Transmedia under the Transition
Services Agreement. The Transition Services Agreement expires on the first
anniversary of the Closing Date. The descriptions of the terms and provisions of
the Transition Services Agreement are qualified in their entirety by reference
to the text of the Transition Services Agreement, which is filed as Exhibit 4
hereto and incorporated by reference herein.
The responses to Items 4 and 5 are also incorporated by reference to
this Item 6.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following Agreements are filed as Exhibits to this Schedule 13-D
and incorporated herein by reference.
Exhibit No. Title of Agreement
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1.1 Asset Purchase Agreement, dated as of March 17, 1999, between
SignatureCard and Transmedia.
1.2 Amendment No. 1 to Asset Purchase Agreement, dated as of April 15, 1999,
between SignatureCard and Transmedia.
1.3 Amendment No. 2 to Asset Purchase Agreement, dated as of May 31, 1999,
between SignatureCard and Transmedia
2 Option Agreement dated as of June 30, 1999, between SignatureCard and
Transmedia
3 Services Collaboration Agreement dated as of June 30, 1999, between
SignatureCard and Transmedia
4 Transition Services Agreement dated as of June 30, 1999, between
SignatureCard and Transmedia
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
SIGNATURECARD, INC. GENERAL ELECTRIC COMPANY
/s/ John B. Euwema /s/ Robert E. Healing
Name: John B. Euwema Name: Robert E. Healing
Title: Senior Vice President, Secretary Title: Corporate Counsel
and General Counsel
Date: August 9, 1999
<PAGE>
SCHEDULE A
SIGNATURECARD, INC.
EXECUTIVE OFFICERS:
Position presently vacant Chief Executive Officer
Christopher R. Behrens Senior Vice President (Sales and Client Marketing)
John B. Euwema Senior Vice President, Secretary and General Counsel
Wayne B. Romanchuk Senior Vice President (Clubs Marketing)
Vincent A. Sanchez Senior Vice President (Operations)
Reid E. Simpson Senior Vice President and Chief Financial Officer
Rodney E. Starmer Senior Vice President (Clubs Marketing)
Patrick J. Casey Vice President (Investments) and Treasurer
DIRECTORS:
Position presently vacant Chairman
John B. Euwema
The present business address of all of the Executive Officers and the Director
of SignatureCard, Inc. is 200 N. Martingale Rd., Schaumburg, IL 60173.
GENERAL ELECTRIC COMPANY
DIRECTORS:
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
J.I.Cash, Jr. Harvard Business School Professor of Business
Baker Library 187 Administration-Graduate
Soldiers Field School of Business
Boston, MA 02163 Administration, Harvard
University
S.S. Cathcart 222 Wisconsin Avenue Retired Chairman,
Suite 103 Illinois Tool Works
Lake Forest, IL 60045
D.D. Dammerman General Electric Company Vice Chairman of the Board
3135 Easton Turnpike & Executive Officer, General
Fairfield, CT 06431 Electric Company; Chairman
and Chief Executive Officer,
General Electric Capital
Services, Inc.
P. Fresco Fiat SpA Chairman of the Board,
via Nizza 250 Fiat SpA
10126 Torino, Italy
A. M. Fudge Kraft Foods, Inc. Executive Vice President
555 South Broadway
Tarrytown, NY 10591
C.X. Gonzalez Kimberly-Clark de Mexico, Chairman of the Board
S.A. de C.V. and Chief Executive
Jose Luis Lagrange 103, Officer,
Tercero Piso Kimberly-Clark de Mexico,
Colonia Los Morales S.A. de C.V.
Mexico, D.F. 11510, Mexico
A. Jung Avon Products, Inc. President and Chief
1345 Avenue of the Americas Operating Officer,
New York, NY 10105 Avon Products, Inc.
K.G. Langone Invemed Associates, Inc. Chairman, President and
375 Park Avenue Chief Executive Officer,
New York, NY 10152 Invemed Associates, Inc.
G.G. Michelson Federated Department Stores Former Member of the
151 West 34th Street Board of Directors,
New York, NY 10001 Federated Department
Stores
S. Nunn King & Spalding Partner, King & Spalding
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
J.D. Opie General Electric Company Vice Chairman of the
3135 Easton Turnpike Board and Executive
Fairfield, CT 06431 Officer, General Electric
Company
R.S. Penske Penske Corporation Chairman of the Board
13400 Outer Drive, West and President, Penske
Detroit, MI 48239-4001 Corporation
F.H.T. Rhodes Cornell University President Emeritus
3104 Snee Building Cornell University
Ithaca, NY 14853
A.C. Sigler Champion International Retired Chairman of the
Corporation Board and CEO
1 Champion Plaza and former Director,
Stamford, CT 06921 Champion International
Corporation
D.A. Warner III J. P. Morgan & Co., Inc. Chairman of the Board,
& Morgan Guaranty Trust Co. President, and Chief
60 Wall Street Executive Officer,
New York, NY 10260 J.P. Morgan & Co.
Incorporated and Morgan
Guaranty Trust Company
J.F. Welch, Jr. General Electric Company Chairman of the Board
3135 Easton Turnpike and Chief Executive
Fairfield, CT 06431 Officer, General Electric
Company
Citizenship
C. X. Gonzalez Mexico
P. Fresco Italy
Andrea Jung Canada
All Others U.S.A.
EXECUTIVE OFFICERS
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
J.F. Welch, Jr. General Electric Company Chairman of the Board and
3135 Easton Turnpike Chief Executive Officer
Fairfield, CT 06431
P.D. Ameen General Electric Company Vice President and
3135 Easton Turnpike Comptroller
Fairfield, CT 06431
J.R. Bunt General Electric Company Vice President and Treasurer
3135 Easton Turnpike
Fairfield, CT 06431
W.J. Conaty General Electric Company Senior Vice President -
3135 Easton Turnpike Human Resources
Fairfield, CT 06431
D.M. Cote General Electric Company Senior Vice President -
3135 Easton Turnpike GE Appliances
Fairfield, CT 06431
D.D. Dammerman General Electric Company Vice Chairman of the Board
3135 Easton Turnpike and Executive Officer,
Fairfield, CT 06431 Electric Company; Chairman
and Chief Executive Officer,
General Electric Capital
Services, Inc.
L.S. Edelheit General Electric Company Senior Vice President -
P. O. Box 8 Corporate Research
Schenectady, NY 12301 and Development
B.W. Heineman, Jr. General Electric Company Senior Vice President -
3135 Easton Turnpike General Counsel and
Fairfield, CT 06431 Secretary
J.R. Immelt General Electric Company Senior Vice President -
P.O. Box 414 GE Medical Systems
Milwaukee, WI 53201
G.S. Malm General Electric Company Senior Vice President -
3135 Easton Turnpike Asia
Fairfield, CT 06431
W.J. McNerney, Jr. General Electric Company Senior Vice President -
1 Neumann Way GE Aircraft Engines
Cincinnati, OH 05215
R.L. Nardelli General Electric Company Senior Vice President -
1 River Road GE Power Systems
Schenectady, NY 12345
R.W. Nelson General Electric Company Vice President -
3135 Easton Turnpike Corporate Financial Planning
Fairfield, CT 06431 and Analysis
J.D. Opie General Electric Company Vice Chairman of the Board
3135 Easton Turnpike and Executive Officer
Fairfield, CT 06431
G.M. Reiner General Electric Company Senior Vice President -
3135 Easton Turnpike Chief Information Officer
Fairfield, CT 06431
J.G. Rice General Electric Company Vice President -
2901 East Lake Road GE Transportation Systems
Erie, PA 16531
G.L. Rogers General Electric Company Senior Vice President -
1 Plastics Avenue GE Plastics
Pittsfield, MA 01201
K.S. Sherin General Electric Company Senior Vice President
3135 Easton Turnpike - Finance and Chief Financial
Fairfield, CT 06431 Officer
L.G. Trotter General Electric Company Senior Vice President -
41 Woodford Avenue GE Industrial Systems
Plainville, CT 06062
M.S. Zafirovski General Electric Company Senior Vice President -
Nela Park GE Lighting
Cleveland, OH 44112
Citizenship
G. S. Malm Sweden
All Others U.S.A.
Item 2(d) GE Convictions Within the Past Five Years
Her Majesty's Inspectorate of Pollution v. IGE Medical Systems
Limited (St. Albans Magistrates Court, St. Albans, Hertsfordshire, England, Case
No. 04/00320181)
In April, 1994, GEMS' U.K. subsidiary, IGE Medical Systems Limited
(IGEMS) discovered the loss of a radioactive barium source at the Radlett,
England facility. The lost source, used to calibrate nuclear camera detectors,
emits a very low level of radiation. IGEMS immediately reported the loss as
required by the U.K. Radioactive Substances Act. An ensuing investigation,
conducted in cooperation with government authorities, failed to locate the
source. On July 21, 1994, Her Majesty's Inspectorate of Pollution (HMIP) charged
IGEMS with violating the Radioactive Substances Act by failing to comply with a
condition of registration. The Act provides that a registrant like IGEMS, which
"does not comply with a limitation or condition subject to which (it) is so
registered ... shall be guilty of (a criminal) offense." Condition 7 of IGEMS'
registration states that it "shall so far as is reasonably practicable prevent
... loss of any registered source."
At the beginning of trial on February 24, 1995, IGEMS entered a guilty
plea and agreed to pay of fine of (pound)5,000 and assessed costs of
(pound)5,754. The prosecutor's presentation focused primarily on the 1991 change
in internal IGEMS procedures and, in particular, the source logging procedure.
The prosecutor complimented IGEMS' investigation and efforts to locate the
source and advised the court that IGEMS had no previous violations of the
Radioactive Substances Act. He also told the court that the Radlett plant had
been highlighted as an exemplary facility to HIMP inspectors as part of their
training. In mitigation, IGEMS emphasized the significant infrastructure and
expense undertaken by IGEMS to provide security for radiation sources and the
significant effort and expense incurred in attempting to locate the missing
source.
End of Schedule A
<PAGE>
Exhibit 1.1
ASSET PURCHASE AGREEMENT
dated as of March 17, 1999
Between
TRANSMEDIA NETWORK INC.
as Purchaser
and
SIGNATURECARD, INC.
as Seller
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I SALE OF ASSETS; CONSIDERATION 1
1.1 Sale of Assets 1
1.2 Excluded Assets 5
1.3 Consideration 7
ARTICLE II CLOSING 14
2.1 Closing 14
ARTICLE III REPRESENTATIONS AND WARRANTIES 19
3.1 Seller's Representations and Warranties 19
3.2 Purchaser's Representations and Warranties 31
ARTICLE IV ADDITIONAL COVENANTS 36
4.1 Ordinary Course of Business 36
4.2 Access to Information 37
4.3 Confidentiality and Return of Documents 39
4.4 Non-Solicitation 41
4.5 Further Assurances 41
4.6 Books and Records. 43
4.7 Tax Cooperation 43
4.8 Regulatory and Other Permits 44
4.9 Taxes and Fees 45
4.10 Processing 45
4.11 Financial Statements 46
4.12 Covenant Not to Compete 46
4.13 Commercially Reasonable Efforts 47
4.14 Reservation of Shares 47
4.15 No Impairment. 47
4.16 Bulk Transfer Laws. 47
4.17 Collection of Rights-to-Receive 48
4.18 Financing 48
4.19 Listing of Shares 48
ARTICLE V CONDITIONS TO CLOSING 48
5.1 Conditions to the Obligations of Purchaser 48
5.2 Conditions to the Obligations of Seller 50
ARTICLE VI TERMINATION 52
6.1 Termination 52
6.2 Fees and Expenses 53
6.3 Effect of Termination 54
ARTICLE VII SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION 54
7.1 Survival of Representations, Warranties and Covenants 54
7.2 Seller's Indemnification Obligations 55
7.3 Purchaser's Indemnification Obligations 56
7.4 Claims for Indemnification; Defense of Indemnified Claims;
Limitations on Indemnification
57
7.5 Payments; Non-Exclusivity 59
7.6 Set Off 60
7.7 Subrogation 61
7.8 Mitigation 61
7.9 Consequential Damages 61
ARTICLE VIII EMPLOYMENT AND BENEFITS MATTERS 62
8.1 Hiring of Employees. 62
8.2 Terms of Employment. 63
8.3 Seller's Retention of Liability. 63
8.6 No Third-Party Rights. 65
8.7 Right to Terminate or Modify Plans.65
ARTICLE IX MISCELLANEOUS; GENERAL 66
9.1 Modification or Amendment 66
9.2 Waiver of Conditions 66
9.3 Counterparts 66
9.4 Governing Law 66
9.5 Dispute Resolution (Arbitration) 66
9.6 Consent to Jurisdiction 67
9.7 Notices 67
9.8 Disclosure Schedules and Exhibits; Entire Agreement 68
9.9 Assignment; Delegation 69
9.10 Definition of "Affiliate" 70
9.11 Titles and Captions 70
9.12 Severability. 70
9.13 Publicity 71
9.14 No Third Party Beneficiaries 71
Exhibit A - Option Agreement
Exhibit B - General Assignment, Assumption and Bill of Sale
Exhibit C-1 - Trademark Assignment
Exhibit C-2 - Domain Name Assignment
Exhibit D - Services Collaboration Agreement
Exhibit E-1 - Intellectual Property License Agreement
Exhibit E-2 - Software License Agreement
Exhibit F - Transition Services Agreement
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of March 17, 1999,
between Transmedia Network Inc., a Delaware corporation ("Purchaser"), and
SignatureCard, Inc., an Indiana corporation ("Seller").
WHEREAS, Seller operates a membership program, under the
Dining a la Card ("DALC") trade name and service mark, offering to members
("Members") cash rebates or mileage credits in selected airline mileage programs
on charges at participating restaurants and other establishments ("Merchants")
(the "Business"); and
WHEREAS, Purchaser desires to purchase and Seller desires to
sell certain assets of the Business specified herein on the terms and subject to
the conditions specified herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, on the basis of and in reliance upon the
representations and warranties set forth in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE
SALE OF ASSETS; CONSIDERATION
Sale of Assets. On the terms and subject to the conditions in
this Agreement and for the consideration specified herein, at the Closing (as
hereinafter defined):
Seller shall sell, transfer, convey, assign and deliver to
Purchaser (or its designee), and Purchaser (or its designee) shall purchase,
acquire and accept from Seller, free and clear of all mortgages, pledges,
assessments, security interests, conditional sale or title retention contracts,
leases, liens, adverse claims, Taxes (as hereinafter defined), levies, charges,
options, rights of first refusal, transfer restrictions or other encumbrances of
any nature, or any contracts, agreements or understandings to grant any of the
foregoing (collectively, "Liens"), all of Seller's right, title and interest in,
to and under the following assets and rights, in each case to the extent used or
held for use in the Business, exclusive of the Excluded Assets (as hereinafter
defined):
all rights-to-receive and other credits (both funded and
unfunded) consisting of food, beverage, tax and tip credits at all Merchants
wherever located, and all agreements, contracts, guarantees, instruments,
security agreements and other documents evidencing or securing, and any and all
collateral and security interests securing, such rights-to-receive and credits
and any and all claims, rights and causes of action related thereto
(collectively, the "Rights-to-Receive");
all arrearage sales contracts, rights and arrangements made in
connection with the Business as listed in Schedule 3.1(i)(i) (collectively, the
"Arrearage Sale Contracts");
all fictional business names, trade names, d/b/a names, logos,
Internet domain names (www.dalc.com, www.dining-a-la-card.com and
www.diningalacard.com), trademarks, service marks (including but not limited to
DINING A LA CARD(R)), trade dress and any and all federal, state, local and
foreign applications, registrations and renewals therefor, and all the goodwill
associated therewith (collectively, "Marks"); all patents (including but not
limited to all continuations, extensions, and reissues), patent applications,
and inventions and discoveries that may be patentable (collectively, "Patents");
all copyrights in both published works and unpublished works (including but not
limited to the copyright subsisting in any Marketing Materials, Membership Data,
and Merchant Data (each, as defined below), and in online works such as Internet
web sites, excluding any proprietary software underlying such web sites, and any
federal or foreign applications, registrations and renewals therefor
(collectively, "Copyrights"); all rights in any and all licensed or proprietary
computer software, firmware, middleware, programs, applications, databases, and
files (in whatever form or medium), including all material documentation,
relating thereto, and all source and object codes relating thereto
(collectively, "Computer Software and Files"); all know-how, trade secrets,
confidential information, competitively sensitive and proprietary information
(including but not limited to pricing information, supplier information,
telephone and telefax numbers, and e-mail addresses), technical information,
data, process technology, business plans, drawings, and blue prints
(collectively, "Trade Secrets"); and the right to sue for past infringement, if
any, in connection with any of the foregoing (collectively, the "Intellectual
Property");
all agreements and arrangements permitting Seller's use of the
Intellectual Property and Computer Equipment (as hereinafter defined) owned by
third parties, or permitting third party use of the Intellectual Property or
Computer Equipment owned by Seller, or for the processing, use, licensing,
leasing, storage, or retrieval of software, data and information related to the
Business (collectively, "Intellectual Property and Computer Agreements");
all lists, files, records, information and data related to
Members who were acquired other than pursuant to an Excluded Contract (the
"Membership Data") and all rights to such Members, and all lists, files,
records, information and data related to Merchants (the "Merchant Data") and all
rights to such Merchants;
any and all accounting business information, management
information and internal reporting data and related books and records (in
whatever form or medium maintained), including but not limited to advertising,
marketing and sales programs, business, marketing and strategic plans, research
and development reports and records, and advertising copy (including radio and
television scripts), creative materials, production agreements, and all other
promotional brochures, flyers, inserts and other materials used exclusively in
connection with the Business (collectively, the "Marketing Materials");
all computer tapes, discs and other media which are used to
store Intellectual Property, Membership Data, Merchant Data and Marketing
Materials (the "Computer Equipment");
all agreements, contracts, guaranties, instruments and other
documents to which Seller is a party that are listed in Schedule 3.1(i)(ii) (the
"Assigned Contracts");
all claims of Seller against third parties relating to the
Assets (as hereinafter defined), whether choate or inchoate, known or unknown,
or contingent or non-contingent; and
to the extent transferable, any and all Permits (as
hereinafter defined) used exclusively in connection with the Business; all as
the same shall exist on the Closing Date (items (i) through (x) being,
collectively, the "Assets").
Excluded Assets. Notwithstanding anything in this Agreement to
the contrary, all assets, properties and rights of Seller other than those set
forth in Section 1.1, including without limitation, the following assets,
properties and rights of Seller (the "Excluded Assets"), shall be excluded from
and shall not constitute part of the Assets, and Purchaser (and its designee)
shall have no rights, title or interest in or duties or obligations of any
nature whatsoever with respect thereto by virtue of the consummation of the
transactions contemplated by this Agreement:
all contracts and other agreements to which Seller is a party
(other than those described in Section 1.1 above), including contracts relating
to marketing partner arrangements, that are listed in Schedule 1.2(i) (the
"Excluded Contracts");
all rights of Seller in and to the trademarks, service marks,
and any applications, registrations and renewals therefor, and all the goodwill,
associated therewith, licensed by or subject to the Master License Agreement
dated as of October 14, 1996 between Seller and CardPlus Japan Co., Ltd., as
amended (the "Japanese License Agreement") and which are listed (by country and
trademark) on Schedule 1.2(ii) hereto (collectively, the "Excluded Marks");
all rights of Seller in and to (x) the Card Member System,
including all documentation relating thereto and all source and object codes
relating thereto and (y) the Japan DALC Interface Software (as defined in the
Japan DALC/USA DALC Interface Software Development Agreement between Seller and
Card Plus Japan Co., Ltd. dated September 17, 1997) (together, the "Excluded
Software"); all rights of Seller in the Internet domain name "sigg.com" and in
and to the Internet website accessed via such domain name, including but not
limited to all copyrights in all materials on such site and the software
underlying such site, all trademarks, service marks, trade names and goodwill
associated therewith, all proprietary computer software, programs, applications,
databases, files (in whatever form or medium) and all proprietary information
related thereto, in each case only to the extent that the foregoing is not
otherwise required to be listed on Schedule 3.1(j)(i) hereto;
all rights of Seller in and to the Japanese License Agreement
and the Original Equityholders Agreement dated as of November 15, 1996 by and
among Richard Parkinson, Masaru Morimoto, Hiroshi Sato and Seller, as amended,
and all other agreements between Seller and CardPlus Japan Co., Ltd. or related
thereto, as set forth in Schedule 1.2(v) hereto;
all lists, files, records, information and data relating to
Members who were acquired pursuant to an Excluded Contract (the "Excluded
Membership Data") and all rights to such Members;
all advertising, marketing and sales programs, advertising
copy (including radio and television scripts), creative materials, production
agreements, broadcasting rights, broadcasting and advertising time, space,
allowances and credits, and other promotional brochures, flyers, inserts and
other materials used solely in connection with an Excluded Contract;
all proprietary software underlying the websites included
among the Intellectual Property;
any assets, properties, rights and interests relating to the
Excluded Liabilities (as hereinafter defined); and
all rights of Seller under this Agreement and the documents
and instruments delivered to Seller pursuant to this Agreement.
Consideration.
As consideration for the Assets:
(i) Purchaser shall deliver to Seller at the Closing:
(A) stock certificates evidencing and representing 400,000 shares of
Common Stock, par value $.02 per share, of Purchaser (the "Closing Date
Shares"), registered in the name of Seller (or its nominee); and
(B) options, evidenced by an option agreement substantially in the
form of Exhibit A attached hereto (the "Option"), to purchase an
additional 400,000 shares of Common Stock, par value $.02 per share, of
Purchaser (the "Option Shares"), having an exercise price and such other
terms and conditions as are specified in the Option.
(ii) Purchaser shall pay to Seller at the Closing, an amount (the
"Estimated Amount") in cash equal to the cash funded by Seller for all Qualified
Rights-to-Receive (as hereinafter defined), net of usage and adjustments, as set
forth on a schedule thereof to be prepared by Seller and delivered to and
approved by Purchaser (which approval shall not be unreasonably withheld or
delayed) at least two but not more than five business days prior to Closing, by
wire transfer of immediately available funds to an account in Seller's name at
such bank or banks in the United States as Seller shall specify in writing to
Purchaser at least two business days prior to the Closing Date.
(iii) After the total of the amounts Purchaser receives, within two years
after the Closing Date, through normal usage or collection efforts of all
Rights-to-Receive equals the Closing Amount (as hereinafter defined and as
finally determined), Purchaser will pay to Seller in cash the amounts specified
in the next sentence. The amounts payable to Seller pursuant to the preceding
sentence shall be one-half of the lesser of (i) Seller's funded cost, net of
usage and adjustments, in, and (ii) the amount actually received (net of
out-of-pocket collection costs) in respect of, any Rights-to-Receive which
Purchaser receives, through normal usage or collection efforts, within two years
after the Closing Date (but after the date on which the condition in the first
sentence of this paragraph (iii) is satisfied). For the purposes of the
preceding sentences, (1) the amounts Purchaser shall be deemed to receive with
respect to any Qualified Right-to-Receive shall not exceed the amount Purchaser
pays Seller for such Qualified Right-to-Receive pursuant to this Section 1.3;
and the amounts Purchaser shall be deemed to receive with respect to any
Non-Qualified Right-to-Receive shall not exceed Seller's funded cost therefor;
(2) the amounts payable to Seller shall be reduced by any third party
out-of-pocket collection costs Purchaser incurs with respect to the
Rights-to-Receive; (3) if the condition stated in the first sentence of this
paragraph (iii) is satisfied within two years following the Closing Date, any
amounts recovered at any time with respect to any Rights-to-Receive following
judgment or settlement of proceedings commenced prior to or within two years of
the Closing Date to recover the same shall be deemed to have been recovered
within such two-year period; and (4) no Rights-to-Receive originated after the
Closing Date (whether by renewal or otherwise) shall be included in any
calculation pursuant to this paragraph (iii). Payments that Seller is entitled
to receive under this paragraph (iii) shall be made within 45 days following the
last day of each calendar quarter after the date on which the condition in the
first sentence of this paragraph (iii) is satisfied. It is expressly understood
and agreed that Purchaser's payment obligations to Seller under this paragraph
(iii) of Section 1.3(a) may be subordinate and junior in right of payment to the
rights of lenders under any financing arrangements into which Purchaser may
enter in connection with the transactions contemplated hereby and Purchaser
shall not be obligated to make any such payment to Seller until after such
payment may be made under the terms of such financing arrangement.
(iv) Effective as of the Closing Date, Purchaser will assume and agree to
pay, perform and discharge, as and when due, and indemnify and hold Seller
harmless from and against, (x) each obligation of Seller to be performed after
the Closing Date with respect to the Assets and the Assigned Contracts and (y)
each other liability of Seller thereunder (including liabilities for any breach
of a representation, warranty or covenant, or for any claims for indemnification
contained therein) to the extent and only to the extent that such liability is
due to the actions of Purchaser (or any of Purchaser's Affiliates,
representatives or agents) after the Closing Date (collectively, the "Assumed
Liabilities"). Purchaser shall not assume, and shall not be obligated to pay,
perform or discharge any liability or obligation of Seller other than the
Assumed Liabilities (whether or not related to the Assets or Business)
(collectively, the "Excluded Liabilities"), and shall not be obligated for any
other claim, loss or liability relating to any act, omission or breach by Seller
with respect to the Business, the Assets or the Assigned Contracts, or for any
claim, loss or liability related to the Excluded Assets or the Excluded
Liabilities, all of which Seller shall remain obligated to pay, perform and
discharge and to indemnify and hold Purchaser harmless against.
"Qualified Rights-to-Receive" means the Rights-to-Receive,
exclusive of credit balances, (i) which are included among the Assets and
reflected on the unaudited balance sheet of the Business (net of any reserves)
prepared by Seller in the ordinary course of business as of the close of the
month preceding the Closing Date or are acquired by Seller after the date of
such balance sheet in the ordinary course of business; (ii) which constitute
food, beverage, tax and tip credits at Merchants that are currently in business,
as to which Seller has not received written notice of, or does not otherwise
have actual knowledge of, the commencement of any bankruptcy (whether voluntary
or involuntary), reorganization or liquidation proceeding, arrangement with
creditors or similar process or as to which Seller is otherwise explicitly
informed will not remain in business for at least twelve months following the
Closing Date, and (iii) which, based upon average sales at each Merchant during
the two months prior to the Closing Date, can be expected to be used in the
twelve-month period immediately following the Closing Date; provided, however,
that all Rights-to-Receive reasonably funded and purchased by Seller in the
ordinary course of business and consistent with past practice within two
calendar months prior to the Closing Date involving Merchants that had not
previously participated in the Business shall be included in the calculation of
Qualified Rights-to-Receive at 100% of the funded cost thereof, net of usage and
adjustments, as of the Closing Date. "Non-Qualified Rights-to-Receive" means all
Rights-to-Receive that are not Qualified Rights-to-Receive.
(c) Post Closing Adjustment. Promptly following the Closing
but in no event later than thirty days following the Closing, Purchaser and
Seller shall each calculate the actual amount of Qualified Rights-to-Receive,
net of usage and adjustments, included among the Assets at the Closing Date and
shall deliver to each other a statement (the "Closing Statements") setting forth
its calculation of the amount of cash funded by Seller therefor (the "Closing
Amount"). The Closing Statements shall be prepared from the books and records
maintained by Seller and transferred to Purchaser at the Closing in connection
with the Business and shall fairly present the amount of Qualified
Rights-to-Receive included among the Assets on a basis consistent with that
regularly employed by Seller to value its Rights-to-Receive. In the event that
the Closing Amount set forth on the Closing Statement prepared by one party
differs from that set forth on the Closing Statement prepared by the other, the
parties shall use their commercially reasonable efforts to agree upon the
Closing Amount within ten days following the date on which both parties have
received the Closing Statement prepared by each other. Any dispute not resolved
within such 10-day period shall be submitted for resolution to a mutually
acceptable, independent public accounting firm the expense of whose retention
shall be shared equally by Seller and Purchaser, and the decision of such firm
shall be final and binding on the parties. In the event that the Estimated
Amount exceeds the Closing Amount (as finally determined), Seller shall pay to
Purchaser the amount of such overage. In the event that the Closing Amount (as
finally determined) exceeds the Estimated Amount, Purchaser shall pay to Seller
the amount of such shortfall. Any payments to be made pursuant to this paragraph
(c) shall be made three (3) business days following the earlier of the date on
which the (x) parties agree on the Closing Amount or (y) the decision of any
independent accounting firm is rendered, and shall be made in the same manner as
provided in paragraph (a)(ii) above.
(d) Put Right.
(i) Seller shall have the right, upon delivery to
Purchaser of notice in accordance with Section 9.7 hereof, to
require Purchaser to purchase all or any part of the Closing
Date Shares at a purchase price of $8.00 per share which price
shall be adjusted equitably in the event of any stock split,
combination or the like (the "Put Right"), free and clear of
all Liens, proxies, voting restrictions, and other
encumbrances, at any time within the period beginning on the
date that is six (6) months after the Closing Date and ending
on the third (3rd) anniversary of the Closing Date (the "Put
Period"); provided that Seller shall have delivered to
Purchaser a certificate, signed by its Chief Executive Officer
or Chief Financial Officer, stating that, as of the date of
delivery of the Put Notice (as hereinafter defined) and as of
the Put Date (as hereinafter defined), no material breach by
it exists or will exist (or, with notice, lapse of time or
both, would exist) under Section 11.2 of the Services
Collaboration Agreement (as hereinafter defined); provided
further, that if Seller is unable to deliver such certificate
as at the dates set forth above but is able to cure such
material breach within the cure period provided in Section
11.2 of the Services Collaboration Agreement, Seller shall be
entitled to exercise the Put upon such cure, regardless of
whether the Put Period has then tolled.
(ii) In order to exercise the Put Right, Seller shall
deliver written notice of its exercise thereof to Purchaser on
any business day during the Put Period ("Put Notice"). A Put
Notice shall be irrevocable and shall specify the number of
Closing Date Shares as to which Seller is exercising the Put
Right and the date (the "Put Date") for the repurchase of such
Closing Date Shares, which shall not be less than twenty (20)
nor more than sixty (60) days from the date of delivery of the
Put Notice, and the bank account to which the purchase price
therefor shall be paid. Seller shall not be entitled to
deliver more than three (3) Put Notices to Purchaser.
(iii) Each closing of the repurchase of the Closing Date
Shares pursuant to this paragraph (d) shall take place on the
relevant Put Date at the offices of Purchaser or on such other
date or at such other place as the parties may agree. At the
closing thereof, Purchaser shall deliver to Seller the
purchase price for the Closing Date Shares being repurchased,
payable by wire transfer of immediately available funds to the
bank account specified in the Put Notice, against delivery by
Seller to Purchaser (or its designee) of stock certificates
evidencing such Closing Date Shares, duly endorsed for
transfer, free and clear of all Liens, proxies, voting
restrictions and other encumbrances and with appropriate stock
transfer stamps attached and appropriate stock powers duly
endorsed in blank.
(e) Allocation of Consideration. The consideration payable by
Purchaser to Seller pursuant to this Section 1.3 represents the amount agreed
upon by the parties to be the aggregate value of the Assets and shall be
allocated among the Assets in accordance with their respective fair market
values, which the parties have agreed are as set forth on Schedule 1.3 hereto.
Any adjustment to the consideration made pursuant to paragraph (c) of this
Section 1.3 shall be reflected as an adjustment to the amount set forth on
Schedule 1.3 that is allocated to the specific Asset, if any, giving rise to the
adjustment, and if any such adjustment does not relate to a specific Asset, such
adjustment shall be allocated among the Assets in accordance with Section 1060
of the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations thereunder. Purchaser and Seller shall report the purchase and sale
of the Asset, including, without limitation, on all tax returns (including,
without limitation, Asset Acquisition Statements on IRS Form 8594) prepared and
filed by or for any of Purchaser or Seller, in accordance with the allocation
made pursuant to this paragraph (e) of Section 1.3 and shall not take a position
in any tax proceeding or audit or otherwise that is inconsistent with such
allocation.
ARTICLE
CLOSING
Closing.
1. Date and Place. The closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of Morgan,
Lewis & Bockius LLP, 5300 South East Financial Center, 200 S. Biscayne
Boulevard, Miami, Florida 33131-2339, or such other location as the parties
shall agree, commencing at 10:00 a.m. local time, on the fifth business day
following the satisfaction or waiver of the conditions specified in Article V
hereof, or at such other time and place as the parties may agree in writing.
Subject to Section 6.1(f) hereof if, on the Closing Date, a breach in any
representation or warranty hereunder shall exist such that the conditions set
forth in Section 5.1(a) or Section 5.2(a) hereof are not satisfied, the Closing
shall be adjourned for up to thirty (30) days to allow Purchaser or Seller, as
the case may be, to cure such breach or inaccuracy. "Closing Date" means
Seller's close of business on the date on which the Closing occurs.
2. Documents to be Delivered by Seller. At the Closing, Seller
shall execute and deliver to Purchaser (or its designee):
a) copies of (A) the resolutions of the Boards of Directors of
Seller, Montgomery Ward Enterprises, Inc., a Delaware corporation and the sole
shareholder of Seller ("MWE") and Montgomery Ward Holding Corp., a Delaware
corporation and the indirect corporate parent of MWE and Seller ("Parent")
authorizing and approving this Agreement, the Additional Agreements (as
hereinafter defined) and the transactions contemplated hereby and thereby, and
(B) the constitutive documents of Seller, MWE and Parent, each as amended and
certified by the respective corporate Secretaries or Assistant Secretaries of
Seller, MWE and Parent to be true, correct, complete and in full force and
effect and unmodified as of the Closing Date;
a duly executed counterpart of the General Assignment,
Assumption and Bill of Sale substantially in the form of Exhibit B hereto (the
"Bill of Sale");
copies of all material approvals, consents of or filings with
governmental authorities, and all material consents and approvals of third
persons, required to permit the consummation of the transactions contemplated by
this Agreement;
a certificate, dated the Closing Date signed by the Executive
Vice President, General Counsel and Secretary of Parent, stating that the
Creditors' Committee of Parent has consented to the entering into by Seller of
this Agreement and the Additional Agreements and the consummation by Seller of
the transactions contemplated hereby and thereby;
duly executed instruments of assignment (including, without
limitation, the Trademark Assignment in substantially the form of Exhibit C-1
hereto and the Domain Name Assignment in substantially the form of Exhibit C-2
hereto (together, the "Intellectual Property Assignments") to Purchaser of all
of the Intellectual Property, including without limitation, the DINING A LA
CARD(R) trademark and tradename;
the certificate required by Section 5.1(f);
evidence of due filing by Parent with the United States
Federal Trade Commission (the "FTC") and the Antitrust Division of the United
States Department of Justice (the "DOJ") pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and the
expiration of any waiting period thereunder;
incumbency certificates of the appropriate officers of Seller,
MWE and Parent;
duly executed assignments of the Financing Statements (as
hereinafter defined) and evidence of the due filing of the same;
a duly executed counterpart of the Services Collaboration
Agreement, dated as of the Closing Date, by and between Purchaser and Seller in
substantially the form of Exhibit D hereto (the "Services Collaboration
Agreement");
a duly executed counterpart of the License Agreement and the
Software License Agreement, each dated as of the Closing Date by and between
Purchaser and Seller, in substantially the form of Exhibits E-1 and E-2 hereto,
respectively (together, the "License Agreements"); a duly executed counterpart
of the Transition Services Agreement, dated as of the Closing Date, by and
between Purchaser and Seller, in substantially the form of Exhibit F hereto (the
"Transition Services Agreement");
a counterpart of a Services Agreement, dated as of the Closing
Date, by and between Purchaser and CardPlus Japan Co., Ltd., duly executed by
CardPlus Japan Co., Ltd., in form and substance reasonably acceptable to
Purchaser, Seller and CardPlus Japan Co., Ltd. (the "Services Agreement";
together with the Bill of Sale, the Services Collaboration Agreement, the
Option, the Transition Services Agreement and the License Agreements, the
"Additional Agreements"); and
a) such other documents or instruments to effect the transfer
of the Assets and the other transactions contemplated hereby, and in such form,
as Purchaser reasonably may request.
2. Documents to be Delivered by Purchaser. At the Closing,
Purchaser (and its designee, if any) shall execute and deliver to Seller:
a) copies of (A) the resolutions of the Boards of Directors of
Purchaser (and its designee) authorizing and approving this Agreement and all
other transactions and agreements contemplated hereby, and (B) the constitutive
documents of Purchaser (and its designee), each as amended and certified by the
respective corporate Secretary or Assistant Secretary of Purchaser (and its
designee) to be true, correct, complete and in full force and effect and
unmodified as of the Closing Date;
the certificate required by Section 5.2(f) hereof;
evidence of payment of the Estimated Amount determined in
accordance with the provisions of Section 1.3 hereof in the manner set forth in
such Section;
stock certificates representing the Closing Date Shares
registered in the name of Seller (or its nominee);
the Option, duly executed;
a certificate of incumbency of the appropriate officers of
Purchaser (and its designee);
evidence of the due filing by Purchaser with the FTC and the
DOJ pursuant to the HSR Act and the expiration of the waiting period thereunder;
aduly executed counterpart of the Services Collaboration Agreement;
a duly executed counterpart of the License Agreements;
a duly executed counterpart of the Services Agreement;
a duly executed counterpart of the Transition Services
Agreement;
an instrument of assumption of the Assumed Liabilities; and
a) such other documents or instruments to effect the transfer
of the Assets and the other transactions contemplated hereby, and in such form,
as Seller reasonably may request.
2. Rights of Purchaser. From and after the Closing, Purchaser
as successor in interest to Seller but on behalf of and for the benefit of
Purchaser, may at its own cost or expense collect, assert or enforce any claim,
right or title of any kind in or with respect to any of the Assets (including,
without limitation, instituting and prosecuting any proceedings in connection
therewith), or defend or compromise any and all claims, actions, suits or
proceedings in respect of any of the Assets, and otherwise do all such acts and
things in relation to the Assets as it may deem advisable (including, without
limitation, asserting any rights under any of the Assets or performing or
accepting performance under any agreements included among the Assets), and
Purchaser shall retain for its own account any amounts collected pursuant to the
foregoing, including any sums payable as interest in respect thereof, subject
only to the provisions of Section 1.3(a)(iii) and Section 4.17 hereof.
I. ARTICLE
REPRESENTATIONS AND WARRANTIES
A. Seller's Representations and Warranties. Seller represents,
warrants and covenants to Purchaser that, except as disclosed in the disclosure
schedules to this Agreement (the "Disclosure Schedules"), which Disclosure
Schedules specifically reference the particular Sections hereof to which they
relate:
Organization and Qualification. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Indiana, has all requisite corporate power and authority to own, lease and
operate the Assets as they are now being owned, leased and operated and to carry
on the Business as it is now being conducted and is duly qualified, registered
or licensed and in good standing to do business in each jurisdiction in which
the nature of the Business or the ownership of the Assets makes such
qualification necessary, except such jurisdictions, if any, where the failure to
be so qualified would not have a Material Adverse Effect. The jurisdictions in
which Seller is qualified to conduct business are set forth on Schedule 3.1(a).
"Material Adverse Effect" means any event, change, changes, effect or effects
that individually or in the aggregate are materially adverse to (x) the
ownership, use, operation or value of the Assets or (y) the condition (financial
or other) or results of operations of, or prospects for, the Business.
1. Authority. Seller has all requisite corporate power and
authority to execute and deliver this Agreement and the Additional Agreements to
which it is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by Seller of this Agreement and the Additional Agreements to which it
is a party and the consummation by Seller of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate or
stockholder action, and no other corporate proceedings on the part of Seller or
any Affiliate of Seller are necessary to authorize this Agreement or the
Additional Agreements to which Seller is a party or to consummate the
transactions contemplated hereby and thereby. This Agreement has been, and at
the Closing the Additional Agreements to which Seller is a party will be, duly
executed and delivered by Seller and constitute or will constitute, as
applicable, legal, valid and binding obligations of Seller enforceable against
it in accordance with their respective terms.
2. No Conflict; Required Filings and Consents.
a) The execution, delivery and performance by Seller of this
Agreement and the Additional Agreements to which it is a party do not, and the
consummation of the transactions contemplated hereby and thereby will not, (i)
conflict with or violate the Articles of Incorporation or By-Laws of Seller;
(ii) conflict with or violate any federal, state, local or foreign laws, rules,
ordinances, regulations, licenses, judgments, orders or decrees (collectively
"Laws") applicable to Seller, the Business or the Assets or by which Seller, the
Business or the Assets are bound or affected; or (iii) result in any material
breach of or constitute a material default (or an event that with notice or
lapse of time or both would become a material default) under, or give to any
other person any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a Lien on any of the Assets pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, mortgage, license,
permit, franchise or other instrument or obligation to which Seller is a party
or by which Seller, the Business or the Assets are bound or affected.
The execution, delivery and performance by Seller of this
Agreement and the Additional Agreements to which it is a party and the
consummation by it of the transactions contemplated hereby and thereby do not
require Seller or any of its Affiliates (including Parent) to receive any
consent, approval, authorization or permit from, or make any filing with or
notification to, any governmental agency, authority or court or any other
person, body or committees (including, without limitation, any consent,
approval, authorization, permit, filing or notification in connection with or
relating to the bankruptcy proceedings of Parent) other than pursuant to the HSR
Act and those which will have been obtained or made prior to the Closing Date.
Permits; Compliance with the Law. Seller is in possession of
all franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary for it to own
and use the Assets as presently owned and used and to carry on the Business as
it is now being conducted (the "Permits"), except for those Permits the failure
of which to obtain or maintain would not result in a Material Adverse Effect,
and no suspension, revocation, cancellation or refusal to review any of the
Permits has occurred, or to the knowledge of Seller, is threatened or
anticipated. Each of the Permits is listed on Schedule 3.1(d). Seller has
conducted and is conducting the Business, and has owned, used and operated and
is owning, using and operating the Assets in compliance with, and not in
violation in any material respect of, (i) any Law applicable to it or by which
it, the Business or the Assets is bound or affected or (ii) any of the Permits
(except in either case for any such violations as, singly or in the aggregate,
would not have a Material Adverse Effect), and neither Seller nor any Affiliate
of Seller has received any written notice to any such effect.
Financial Statements. Each of the Financial Statements (as
hereinafter defined), including all related schedules, delivered or to be
delivered by Seller to Purchaser, relating to Seller have been, or upon delivery
will be, prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods involved and followed in the
preparation of the consolidated financial statements of Signature/Financial
Marketing, Inc., a Delaware corporation and the sole stockholder of MWE ("SFM"),
and its subsidiaries as at December 31, 1997 and 1996, and for the two fiscal
years in the period ended December 31, 1997, except for (i) the absence of
footnotes, and (ii) with respect to financial statements for interim periods,
year-end adjustments, none of which are expected to have a Material Adverse
Effect. The balance sheets included among the Financial Statements fairly
present, in all material respects, the condition of Seller as at the dates
thereof, and the statements of income included among the Financial Statements
do, or will upon delivery, fairly present, in all material respects, the results
of the operations of Seller for the periods indicated. Since December 31, 1997,
there has been no material change in accounting policies or practices of Seller.
"Financial Statements" means the unaudited balance sheets of Seller as of
December 31, 1996 and 1997 and November 30, 1998 and the related statements of
income for the periods then ended. For purposes of this paragraph (e),
"material" and "Material Adverse Effect" shall have the meaning given to such
terms as applied to Parent.
Absence of Certain Changes. Since December 31, 1997, Seller
has operated the Business in the ordinary course, diligently and in good faith,
consistent with past practices and there has not been (i) any material adverse
change in the business, financial or other condition, assets, results of
operations or prospects of Seller relating to the Business; (ii) any damage,
destruction or loss, whether covered by insurance or not, which has had a
Material Adverse Effect; (iii) any entry into any material commitment or
transaction relating to the Business other than in the ordinary course of
business; or (iv) any sale or other disposition by Seller of any assets or
properties relating to the Business other than in the ordinary course of
business.
Title to Assets. Seller owns, or will own on the Closing Date,
free and clear of any Liens, and has or will have on the Closing Date, full
right to sell, assign and convey, all of the Assets, and at the Closing will
convey the Assets to Purchaser (or its designee), free and clear of any Liens.
Absence of Litigation. There is no pending or threatened in
writing, nor has there been at any time during the twelve months preceding the
date hereof, any, claim, complaint, action, suit, litigation, proceeding or
arbitration or, to Seller's knowledge, any inquiry or investigation of any kind
by any state attorney general, consumer protection agency or other governmental
or self-regulatory agency seeking to enforce consumer protection laws or any
other persons (i) which involves the Business or any of the Assets, or (ii)
which seeks to enjoin, delay or restrict any of the transactions contemplated by
this Agreement or the Additional Agreements. Neither Seller nor any of its
Affiliates is subject to any judgment, order, writ, injunction, decree or award
which relates to any of the Assets or to the Business.
1. Merchant Data; Contracts; No Default; Etc.
a) (A) Seller has delivered to Purchaser a computer disc
containing a complete and accurate list of all Merchants and all Merchant Data
available as of January 5, 1999, including, in particular, with respect to each
Merchant, the Merchant's name, address, phone and fax number, bank account
number, bank name, address, phone and fax number and ABA transit number, the
funded and unfunded Rights-to-Receive, and other credit balances, Arrearage Sale
Contracts, and each financing statement or other similar filing made by or on
behalf of Seller to perfect any Liens securing any Rights-to-Receive, Arrearage
Sale Contracts, credits, loans or advances or any of the other receivables
included among the Assets (the "Financing Statements"). Correct and complete
copies of all written agreements, Financing Statements, and other documents
evidencing or securing the Rights-to-Receive and Arrearage Sale Contracts,
together with all related amendments, supplements and other instruments
(including side letters) effecting a modification or waiver of the terms
thereof, have been made available to Purchaser and the material terms of any
oral agreements and related Rights-to-Receive, if any, have been disclosed to
Purchaser.
(B) Each Right-to-Receive and any Liens securing the same, and
each Arrearage Sale Contract is valid, subsisting and, to Seller's knowledge,
enforceable, save only that such enforceability may be affected by bankruptcy,
insolvency, fraudulent conveyance, moratorium and other similar laws affecting
the rights of creditors generally and by general principles of equity (whether
considered in a proceeding at law or in equity), and any such liens or security
interests have been, and remain, to Seller's knowledge, duly perfected under all
applicable Laws, to the extent such liens can be perfected by the filing of a
UCC Financing Statement filed at the office of the Secretary of State in the
state which the Merchant to which such financing statement relates is located.
There is no material default (or any event known to Seller which, with the
giving of notice or lapse of time or both, would constitute a material default)
by Seller or, to the knowledge of Seller, any other party, in the due and timely
payment or performance of any obligation relating to any Right-to-Receive or
Arrearage Sale Contract. Seller has not received any written notice of a filing
or proposed filing under any bankruptcy, insolvency or other law for the relief
of debtors by any Merchant whose Rights-to-Receive or Arrearage Sale Contract
are included among the Assets. Seller has not agreed to amend, reduce,
compromise or cancel any Right-to-Receive or Arrearage Sale Contract, included
among the Assets.
(C) No Merchant from which Seller has acquired any
Rights-to-Receive or Arrearage Sale Contract, has notified Seller in writing
that it has canceled, not renewed or otherwise terminated, or intends to cancel,
not renew or otherwise terminate, its relationship with Seller or its agreement
to participate in the Business.
a) Schedule 3.1(i)(ii) of the Disclosure Schedule lists each
Assigned Contract. Correct and complete copies of each Assigned Contract,
together with all amendments, supplements and other instruments (including side
letters) thereto effecting a modification or waiver of the terms thereof, have
been delivered to Purchaser. Each Assigned Contract is valid, subsisting and, to
Seller's knowledge, enforceable in accordance with its terms, save only that
such enforceability may be affected by bankruptcy, insolvency, fraudulent
conveyance, moratorium and similar laws affecting the rights of creditors
generally and by general principles of equity (whether considered in a
proceeding at law or in equity). Each such Assigned Contract is in full force
and effect, no written notice of termination or non-renewal of any Assigned
Contract has been given to Seller or, to the knowledge of Seller, is
anticipated, and there is no material default (or any event known to Seller
which, with the giving of notice or lapse of time or both, would constitute a
material default) by Seller or, to the knowledge of Seller, by any other party
to any such Assigned Contract, in the due timely payment or performance of any
obligation to be performed or paid under any Assigned Contract.
2. Intellectual Property and Computer Assets.
a) Seller owns all right, title and interest in, or has valid
and subsisting license rights sufficient to use and to continue to use all
Intellectual Property used in the conduct of the Business as currently conducted
by Seller, all items of which Intellectual Property (other than the intellectual
property included in the Excluded Assets), are disclosed in Schedule 3.1(j)(i).
All Intellectual Property used in the conduct of the Business (other than the
intellectual property included in the Excluded Assets), is being transferred to
Purchaser hereunder. Except as set forth in Schedule 3.1(j)(ii), all
Intellectual Property disclosed in Schedule 3.1(j)(i) is free and clear of any
and all Liens. All Intellectual Property and Computer Agreements, true and
correct copies of which have been provided to Purchaser, are identified in
Schedule 3.1(j)(i). The consummation of the transactions contemplated by this
Agreement will neither violate nor result in the breach, modification,
cancellation, termination or suspension of any of the Intellectual Property and
Computer Agreements. Seller is in compliance with, and has not breached any
material terms of, the Intellectual Property and Computer Agreements, and to
Seller's knowledge, all of the other parties to such Intellectual Property and
Computer Agreements are in compliance with, and have not breached, any of the
material terms thereof (such material terms including, without limitation, all
representations and warranties). To Seller's knowledge, there is no dispute
between Seller and any licensor or licensee regarding the scope of the license
or performance under any Intellectual Property and Computer Agreement, including
with respect to any payments to be made by Seller thereunder.
Schedule 3.1(j)(i) also lists all of Seller's United States
and foreign registrations and applications issued by, filed with or recorded by
any governmental regulatory authority with respect to the Intellectual Property
listed in Schedule 3.1(j)(i). Except as listed in Schedule 3.1(j)(ii), all of
such registrations and applications are valid and in full force and effect and
all necessary actions to maintain the registrations or applications for
registration of such Intellectual Property have been taken or instructions have
been given that such actions be taken, and such actions will be taken as of the
Effective Date of this Agreement. Except as described in Schedule 3.1(j)(ii),
there are no restrictions on the direct or indirect transfer of any Intellectual
Property. Seller has made available to Purchaser prior to the execution of this
Agreement all material documentation in Seller's possession with respect to any
invention, process, design, computer software and program or other know-how or
trade secret or proprietary information included in any Intellectual Property.
Seller has taken reasonable security measures to protect the secrecy,
confidentiality and value of its trade secrets and proprietary information
relating to the Business. Seller has not granted any license, agreement or other
permission to use such Intellectual Property except pursuant to the Intellectual
Property and Computer Agreements, each of which is listed in Schedule 3.1(j)(i).
To Seller's knowledge, none of the Intellectual Property listed in Schedule
3.1(j)(i) is being infringed by any other Person. To Seller's knowledge, none of
the Intellectual Property listed in Schedule 3.1(j)(i) infringes any
intellectual property right of any other Person, and no claim is pending or has
been threatened to such effect or with respect to the ownership, validity,
license or use of, or any infringement resulting from, the sale of any products
or services by Seller in connection with the Business or from the Intellectual
Property.
Except as set forth on Schedule 3.1(j)(iii), all Computer
Software and Files and Computer Equipment, to Seller's knowledge, are "Year 2000
Compliant." For purposes of this Agreement, "Year 2000 Compliant" means that the
Computer Software and Files and Computer Equipment will (A) consistently and
accurately process date and time information and data with values before, during
and after January 1, 2000, including but not limited to, accepting date input,
providing date output, and performing calculations on dates; and (B) function
accurately and in accordance with its specifications without an adverse change
in performance resulting from processing time data with values before, during
and after January 1, 2000.
1. Membership. Seller has delivered to Purchaser a computer
disc containing a complete and accurate list of all active Members of the
Business who were acquired other than pursuant to an Excluded Contract and all
available Membership Data as of February 26, 1999, including, in particular, all
data regarding card usage by such Members since the inception of the operations
of the Business. For purposes of this Section 3.1(k), every Member shall be
deemed an "active" Member unless he or she (i) has not paid a fee for membership
in the DALC program during the 12-month period preceding the date hereof and
(ii) has not used the DALC program at least once during the 12-month period
preceding the date hereof. Seller has, during the two-year period preceding the
date hereof, not sold, rented or granted to any person other than its Affiliates
any rights to any Member or to use the Membership Data and, to Seller's
knowledge, no person other than Seller and its Affiliates has access thereto. To
Seller's knowledge, the Membership Data has been compiled and maintained in
compliance with all applicable Laws.
2. Taxes. Seller represents and warrants as follows, limited
however to matters that (i) include, relate to or otherwise affect the Business
or the Assets, (ii) could result in the imposition of a Lien on, or the
assertion of a claim against, the Purchaser, the Business or the Assets or (iii)
could affect the tax position of Purchaser with respect to the Business or the
Assets after the Closing Date: Seller has duly and timely filed all returns,
reports or statements (including information statements) ("Tax Returns")
required to have been filed with respect to all federal, state, local or foreign
net or gross income, gross receipts, net proceeds, sales, use, ad valorem,
transfer, value added, franchise, bank shares, withholding, payroll, employment,
disability, excise, property, alternative or add-on minimum, environmental or
other taxes, assessments, duties, fees, levies or other governmental charges of
any nature whatever, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto
("Taxes"); each such Tax Return correctly and completely reflects the income,
franchise or other Tax liability and all other information required to be
reported thereon; and all Taxes due and payable by Seller, whether or not shown
on any Tax Return, have been paid.
(m) Investment Representation. Seller represents, warrants and
agrees that it is acquiring the Shares and the Option, and will acquire the
Option Shares upon exercise of the Option, for its own account and not with a
view to the resale or distribution thereof or any interest therein, except in
compliance with the registration requirements of applicable securities laws or
pursuant to an exemption therefrom. Any certificates evidencing the Shares or
the Option Shares and the Option may contain a legend, in customary form, to
such effect.
(n) Brokers. No broker, finder or other person is entitled to
any fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Seller or any of its
Affiliates, other than Lazard Freres & Co. LLC and Furman Selz LLC whose fees,
if any, are payable solely by Seller.
(o) Benefit Plans. Each Benefit Plan which is intended to be
qualified under Section 401(a) of the Code has either received a determination
letter from the Internal Revenue Service to the effect that such Plan is so
qualified or is a standardized prototype plan which relies on an opinion letter
issued to the sponsor of such prototype. No Benefit Plan (i) is a "defined
benefit plan" within the meaning of Section 414(j) of the Code, (ii) is a
multiemployer plan within the meaning of Section 3(37) of ERISA, or (iii)
provided health benefit or life insurance coverage beyond the termination of an
employee's employment, except as required by Part 6 of Subtitle B of Title I of
ERISA or Section 4980B of the Code. For purposes hereof: "Benefit Plan" means
each Plan pursuant to which Seller maintains, contributes to, or has any
liability in respect of current or former employees, agents, directors, or
independent contractors or any beneficiaries or dependents of any such current
or former employees agents, directors, or independent contractors; "ERISA" means
the Employee Retirement Income Security Act of 1974, as amended, and the rules
and regulations promulgated thereunder; and "Plan" means any bonus, incentive
compensation, deferred compensation, pension, profit sharing, retirement, stock
purchase, stock option, stock ownership, stock appreciation rights, phantom
stock, leave of absence, layoff, vacation, day or dependent care, legal
services, cafeteria, life, health, accident, disability, workmen's compensation
or other insurance, severance, separation or other employee benefit plan,
practice, policy or arrangement of any kind, whether written or oral, or whether
for the benefit of a single individual or more than one individual including,
but not limited to, any "employee benefit plan" within the meaning of Section
3(3) of ERISA.
Purchaser's Representations and Warranties. Purchaser
represents and warrants to Seller that, except as disclosed in the Disclosure
Schedules, which Disclosure Schedules specifically reference the particular
Sections hereof to which they relate:
Organization and Qualification. Purchaser is a corporation,
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power to own, lease and
operate its properties and assets as they are now owned, leased and operated and
to carry on its business as now conducted and presently proposed to be
conducted.
1. Authority. Purchaser has all the requisite corporate power
and authority to execute and deliver this Agreement and the Additional
Agreements to which it is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby
(including, without limitation, to issue the Closing Date Shares and the Option
and to fulfill its obligations under the Put Right). The execution and delivery
by Purchaser of this Agreement and the Additional Agreements to which it is a
party, and the consummation by Purchaser of the transactions contemplated hereby
and thereby (including, without limitation, the issuance of the Closing Date
Shares, the Option and the Option Shares (upon exercise of the Option in
accordance with the terms thereof) and the grant and performance of the Put
Right in accordance with the terms hereof) have been duly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
Purchaser or its stockholders are necessary to authorize this Agreement and the
Additional Agreements to which it is a party or to consummate the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Closing Date Shares, the Option and the Option Shares (upon the exercise of
the Option in accordance with the terms thereof) and the grant and performance
of the Put Right in accordance with the terms hereof). This Agreement has been,
and at the Closing the Additional Agreements to which Purchaser is a party will
be, duly executed and delivered by Purchaser and constitute or will constitute,
as applicable, the legal, valid and binding obligations of Purchaser enforceable
against it in accordance with their respective terms.
2. No Conflict; Required Filings and Consents.
a) The execution, delivery and performance by Purchaser of
this Agreement and the Additional Agreements to which it is a party do not, and
the consummation of the transactions contemplated hereby and thereby (including,
without limitation, the issuance of the Closing Date Shares, the Option and the
Option Shares (upon exercise of the Option in accordance with the terms thereof)
and the grant and performance of the Put Right in accordance with the terms
hereof) will not, (i) conflict with or violate the Certificate of Incorporation
or By-Laws of Purchaser, (ii) conflict with or violate any Laws applicable to
Purchaser or by which it or any of its properties are bound or affected, or
(iii) result in any material breach of or constitute a material default (or an
event that with notice or lapse of time or both would become a material default)
under, or give to any other persons any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any
properties or assets of Purchaser pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Purchaser is a party or by which Purchaser or
any of its properties is bound or affected.
b) The execution, delivery and performance by Purchaser of
this Agreement and the Additional Agreements to which it is a party and the
consummation by it of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Closing Date Shares, the
Option and the Option Shares (upon exercise of the Option in accordance with its
terms) and the grant and performance of the Put Right in accordance with its
terms) do not require Purchaser or any of its Affiliates to receive any consent,
approval, authorization or permit from, or make filing with or notification to,
any governmental authority or court, or any other person, body or committee,
other than those required pursuant to the HSR Act and those which will have been
obtained or made prior to the Closing Date. 3. Absence of Litigation. There is
no claim, action, suit, litigation, proceeding, arbitration or investigation of
any kind pending or threatened in writing which seeks to enjoin, delay or
restrict any of the transactions contemplated by this Agreement or the
Additional Agreements (including, without limitation, the issuance of the
Closing Date Shares, the Option and the Option Shares (upon exercise of the
Option in accordance with its terms) and the grant and performance of the Put
Right in accordance with its terms). Purchaser is not subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement or, to the knowledge of Purchaser, continuing investigation by, any
governmental authority, or any judgment, order, writ, injunction, decree or
award of any governmental authority, or any arbitrator, including, without
limitation, cease-and-desist or other orders, which relates to the acquisition
of the Assets by Purchaser.
Financial Statements. The audited financial statements filed
by Purchaser in its Annual Report on Form 10-K for the fiscal year ended
September 30, 1998 were prepared in accordance with GAAP consistently applied
and fairly present in all material respects the financial condition of Purchaser
as at September 30, 1998 and the results of operations and cash flows for the
three-year period then ended.
No Material Adverse Change. Since September 30, 1998, there
has been no material adverse change in the business, financial or other
condition, results of operations or prospects of Purchaser, except as reflected
in its Quarterly Reports on Form 10-Q filed with the Securities and Exchange
Commission since that date.
Capitalization. The authorized capital stock of Purchaser
consists of 20,000,000 shares of common stock, par value $.02 per share, of
which 12,952,709 shares were issued and outstanding as of March 16, 1999, and
1,000,000 shares of preferred stock, par value $.10 per share, none of which
were outstanding as of such date. All of the outstanding shares of capital stock
of Purchaser have been duly authorized and validly issued and are fully paid and
nonassessable. No stockholder of Purchaser has any preemptive right or Right of
First Offer by reason of the issuance of the Closing Date Shares or the Option.
The Closing Date Shares, when issued in accordance with Section 1.3(a) hereof,
will be validly issued, fully paid and nonassessable, and will be free of any
Liens other than restrictions under applicable securities laws. The Option
Shares have been duly and validly reserved for issuance and are not, and will
not be, subject to any preemptive rights or rights of first refusal and, when
issued and paid for in compliance with the provisions of the Option, will be
validly issued, fully paid and nonassessable and will be free of any Liens,
other than restrictions under applicable securities laws. Subject to the truth
and accuracy of Seller's representation set forth in Section 3.1(m), the offer,
sale and issuance of the Closing Date Shares and the Option pursuant to this
Agreement constitute transactions exempt from the registration requirements of
the Securities Act of 1933, as amended and any applicable state securities laws.
Brokers. No broker, finder or other person is entitled to any
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Purchaser or any of
its Affiliates, other than Equity Group Investments, Inc. whose fee is payable
solely by Purchaser.
I. ARTICLE
ADDITIONAL COVENANTS
A. Ordinary Course of Business.
1. Conduct of the Business Pending the Closing. From the date
hereof through the Closing Date, and except as otherwise consented to or
approved by Purchaser in writing, Seller covenants and agrees that:
Seller will conduct the Business in the ordinary course,
diligently and in good faith, consistent with past practices during the year
preceding the date hereof;
Seller will use commercially reasonable efforts to maintain
and to keep available for the benefit of Purchaser its business relationships
with Members, Merchants, airlines consultants, customers, sponsors, suppliers
and others having business relationships with Seller relating to the Business;
Seller will provide complete and accurate copies by means of
electronic transmission of all periodic reports prepared by management in
operating the Business including, without limitation, any and all (A) monthly
financial forecast packages, (B) monthly money at risk reports, (C) return on
cash investment reports, and (D) market performance reports, in each case only
to the extent that it relates to Seller's operation of the Business and in the
same format as previously provided to Purchaser;
Seller will not enter into any material transactions or make
any material commitment relating to the Business or the Assets;
Except as provided herein, Seller will not amend, modify,
impair, reduce, compromise, cancel, mortgage, pledge, encumber or dispose of any
of the Assets, the Assigned Contracts or the Excluded Contracts other than in
the ordinary course of business; provided, however, that Seller shall prior to
Closing terminate each of the contracts between Seller and the independent
contractors listed on Schedule 1.2(i), including, without limitation, the
independent sales contracts between Seller and each of: (i) Riverside Marketing,
(ii) Universal Biotics Corp., (iii) Card Service International, Inc. and (iv)
Bancard Systems, Inc.; and
Seller will not take, or agree to commit to take, or permit
any of its Affiliates to take, any action that would make any representation or
warranty of Seller contained herein inaccurate (as to any representation or
warranty qualified as to materiality) or inaccurate in any material respect (as
to any representation or warranty not so qualified).
Subject to clause (v) above, nothing in this Section 4.1 or
elsewhere in this Agreement shall be construed as limiting Seller's ability, and
Seller shall be permitted at any time, to sell, convey or otherwise dispose of
any of the Excluded Assets.
A. Access to Information.
a) From and after the date of this Agreement, to and including
the Closing Date, Seller (A) shall provide to the officers, employees,
attorneys, accountants, and other authorized representatives of Purchaser (the
"Representatives") reasonable access, during normal business hours and upon
reasonable notice, to the offices, facilities, properties, books and records
(including, without limitation, accounting, auditing and tax work papers) of
Seller relating to the Business and the Assets, to the employees, consultants,
customers, suppliers and (with the Seller's participation) marketing partners of
Seller involved with the Business, to the Members (other than those whose
membership was acquired pursuant to an Excluded Contract) and Merchants, and
(with the Seller's participation) the independent public accountants of Seller
in order that Purchaser may have a full opportunity to make such legal,
financial, accounting, tax and other reviews or investigations of the Business
and the Assets as it reasonably shall desire to make, (B) shall furnish, and
cause the officers and employees of Seller to furnish, to Purchaser and its
Representatives such additional financial, tax and operating data and other
information as to the Assets and the Business as Purchaser shall from time to
time reasonably request, and (C) shall otherwise reasonably cooperate in
permitting Purchaser to investigate the business, properties and financial
condition of Seller relating to the Business and the Assets.
From and after the Closing Date each party shall afford to the
other, its counsel, its accountants and its authorized representatives, during
normal business hours upon reasonable notice, reasonable access to the books,
records and other data of Seller (including those conveyed to Purchaser
hereunder and all accounting, auditing and tax work papers) relating to the
Business, the Assets, the Assumed Liabilities and the Excluded Liabilities and
the right to make copies and extracts therefrom, to the extent that such access
is required by the requesting party (x) to facilitate the investigation,
litigation and final disposition of any claims which may have been made against
any party or its Affiliates or (y) for any other legitimate business purpose.
Each party may take such action as it deems reasonably appropriate to separate
or redact information unrelated to the Business from documents and other
materials requested and made available pursuant to this Section 4.2(ii) and to
condition access to materials that it deems confidential to the execution and
delivery of an agreement by the other party not to disclose or misuse such
information. Each party shall, upon the written request and at the requesting
party's expense, make personnel available to assist in locating and obtaining
any books and records to the extent that they relate to the condition or
operation of the Business prior to the Closing and make personnel available
whose assistance, participation or testimony is reasonably required in
anticipation of, preparation for or the prosecution or defense of any
investigation and final disposition of any claims, actions or proceeds of a
governmental authority.
From and after the date of this Agreement to and including the
Closing Date, Seller will keep Purchaser informed of all material developments
concerning the Excluded Contracts, the operation of the Business, the condition
of the Assets and the financial results of the Business.
a) From and after the date of the Agreement to and including
the Closing Date, Seller shall promptly disclose to Purchaser in writing any
information set forth in the Disclosure Schedules which no longer is accurate
and any information which would have been required to be included in the
Disclosure Schedules if such information had been known on the date of this
Agreement, including, without limitation, any event or condition that would
cause any of the representations and warranties to be inaccurate as if such
representation or warranty were made on or as of the date of such event or
condition.
B. Confidentiality and Return of Documents.
a) From the date of this Agreement and for all periods
thereafter, Seller agrees to treat as confidential all records and information
previously treated as confidential by Seller relating to the Business and the
Assets (other than records and information included in the Excluded Assets and
the Excluded Liabilities) and shall refrain from disclosing the same except with
the written consent of Purchaser; provided, however, that the foregoing
restriction shall not apply to any such information (x) which is or becomes in
the public domain by publication or otherwise, (y) the disclosure of which is
required by Law, or (z) which is rightfully obtained from a third party without
restriction.
Purchaser agrees to abide by the terms of the Confidentiality
Agreement, dated January 27, 1998, between Purchaser and Seller through the
Closing Date or, if this Agreement is terminated in accordance with Article VI
hereof, through the termination date stipulated in the Confidentiality
Agreement; provided, however, that with respect to information furnished to
Purchaser that relates to the Excluded Assets and the Excluded Liabilities,
Purchaser agrees to abide by the terms of such Confidentiality Agreement for so
long as the Services Collaboration Agreement remains in full force and effect;
provided, further, that notwithstanding the foregoing, Purchaser agrees
thereafter to continue to treat such information as confidential to the extent
such information is required to be treated as such by Seller pursuant to the
terms of any Excluded Contracts in full force and effect on the Closing Date;
provided, however, that the foregoing restriction shall not apply to any such
information (x) which is or becomes in the public domain by publication or
otherwise, (y) the disclosure of which is required by Law, or (z) which is
rightfully obtained from a third party without restriction.
In the event that the Closing of the transactions contemplated
hereby shall not take place hereunder, Seller and Purchaser shall promptly
return all records and information, each to the other, received in connection
with the transactions contemplated hereby without retaining any copies or
summaries thereof, and shall continue to treat as confidential all such records
and information which were previously treated as confidential by the other party
and shall refrain from disclosing the same to others or utilizing it in their
respective businesses except with the written permission of the other party;
provided, however, that the foregoing restrictions shall not apply to any such
information (A) which is or becomes in the public domain by publication or
otherwise; (B) which relates to Seller and was known to Purchaser, or which
relates to Purchaser and was known to Seller, at the time of disclosure thereof;
(C) which is rightfully obtained from a third party without restriction; or (D)
the disclosure of which is required by Law or the requirements of the New York
Stock Exchange, Inc.
A. Non-Solicitation. During the period from the date of this
Agreement to and including the second anniversary of (x) the Closing Date or (y)
the effective date of any termination hereunder for any reason, neither party
shall, without the prior written consent of the other party, solicit or endeavor
to entice away from the other party any person who at the date of this Agreement
is an employee of the other party or any Affiliate thereof.
B. Further Assurances.
a) Seller agrees that after the Closing, upon Purchaser's
request, it shall from time to time execute and deliver to Purchaser (or its
designee) all such instruments and documents or further assurances as shall be
necessary to vest in Purchaser (or its designee) title to and possession of the
Assets and shall provide or otherwise make available to Purchaser all such
documents, instruments, agreements and other information as shall be necessary
to enable Purchaser to carry out its obligations with respect to the Assigned
Contracts and the Rights-to-Receive or as otherwise required to carry out the
obligations of Purchaser hereunder and fully to consummate the transactions
contemplated hereby.
To the extent that the full benefit of any existing claims,
contracts, licenses, permits, leases, commitments, or Rights-to-Receive cannot
be obtained for Purchaser without the consent of a third party or without giving
rise to an event of default or a right of cancellation in favor of such third
party (the "Non-Assignable Items"), Seller and Purchaser agree to use their
commercially reasonable efforts to obtain such consent of the other party or
parties to any such Non-Assignable Item on or before the Closing Date; provided,
however, that Seller shall have no obligation to amend, change, or cause to be
amended or changed, any Non-Assignable Item and Seller shall not be obligated to
pay any consideration therefor to the party from whom such consent is requested
nor shall Seller be obligated to incur any obligation as a secondary obligor or
surety with respect to any Non-Assignable Item in order to obtain any consent
(unless Purchaser provides Seller with an indemnity for such obligation in each
case reasonably satisfactory to Seller). If such consent is not obtained by the
Closing Date, Seller agrees to cooperate with Purchaser (or its designee) and
Purchaser (or its designee) agrees to cooperate with Seller in any reasonable
arrangement designed to obtain such consent and to provide for Purchaser (or its
designee) the benefits under, and to allow Purchaser to assume the liabilities
under, any such Non-Assignable Item, including enforcement for the account and
at the expense of Purchaser (or its designee) after the Closing Date of any and
all rights of Seller against the other party thereto arising out of the breach
or cancellation thereof by such other party or otherwise; it being expressly
understood and agreed, however, that no Right-to-Receive or Assigned Contract as
to which such consent has not been obtained on or before the Closing Date shall
be included among the Rights-to-Receive or Assigned Contracts to be conveyed as
part of the Assets hereunder unless and until Purchaser receives the benefits
therefrom and assumes the liabilities thereunder, and the consideration set
forth in Section 1.3(a) hereof shall be reduced to the extent that such
Rights-to-Receive or Assigned Contracts (if identified on Schedule 5.1(b)) have
not been conveyed.
Books and Records. Unless otherwise consented to in writing by
Purchaser or Seller, as the case may be, neither party shall, for a period of
seven (7) years following the date hereof, destroy, alter or otherwise dispose
of any of the books and records relating to the Business and the Assets without
first offering to surrender to the other party such books and records or any
portion thereof which such party may intend to destroy, alter or dispose of.
Each party shall allow the other party's representatives, attorneys and
accountants access to such books and records upon reasonable request and during
normal business hours for the purpose of examining and copying the same in
connection with any matter whether or not relating to or arising out of this
Agreement or the transactions contemplated hereby (including, without
limitation, to permit Seller to examine Purchaser's books and records relating
to Rights-to-Receive collected during the two years following the Closing).
Tax Cooperation. After the Closing, Seller and Purchaser shall
each, and shall cause their respective subsidiaries and Affiliates to, provide
the other party with such cooperation and assistance as any of them may
reasonably request of one another in respect of Taxes imposed on or in respect
of the Business or the Assets; the preparation of any Tax Return, amended Tax
Return or claim for refund in respect of the Business or the Assets; or the
participation in or conduct of any audit or other examination by any Taxing
authority or judicial or administrative proceeding relating to the liability for
Taxes of the Business and the Assets and each will retain and provide the other
with any records or information that reasonably may be relevant to such audit or
examination, proceeding or determination. Such cooperation and information shall
include making appropriate employees available on a mutually convenient basis to
provide explanations of any documents or information provided. The party
requesting assistance shall reimburse the other party for reasonable
out-of-pocket expenses (other than salaries or wages of any employees of the
parties) incurred in providing such assistance. Except as may be required in
connection with an audit or examination proceeding or determination relating to
Taxes, any information obtained pursuant to this Section 4.7 shall be kept
confidential by the parties hereto.
Regulatory and Other Permits. Purchaser and Seller will use
their commercially reasonable efforts to obtain all authorizations, consents,
orders and approvals of, and effect all necessary registrations and filings
with, any federal, state, local and foreign governmental or regulatory bodies or
officials that may be or become necessary for the performance of their
respective obligations under this Agreement and the Additional Agreements and
the consummation of the transactions contemplated hereby and thereby and will
cooperate reasonably with each other in promptly seeking to obtain such
authorizations, consents, orders and approvals and to effect such registrations
and filings as may be necessary for the performance of their respective
obligations under this Agreement and the Additional Agreements. Purchaser and
Seller shall file or cause to be filed promptly with the FTC and the DOJ all
requisite notification and report forms and documentary materials which comply
with the provisions of the HSR Act and the rules thereunder, and will cooperate
and coordinate with each other to file promptly any additional information
requested as soon as practicable after receipt of a request from the FTC or the
DOJ. Purchaser and Seller shall use their respective commercially reasonable
efforts to obtain early termination of the applicable waiting period under the
HSR Act and to overcome any objection made by either the FTC or the DOJ in
connection therewith. The fees and costs of filing any such notification and
report forms and related materials (other than the expenses of legal, financial
or other professionals engaged to provide services in respect of such filing,
which expenses shall be borne solely by the party engaging such professionals)
shall be borne by Purchaser.
Taxes and Fees. All transfer, documentary, sales, use,
registration and other Taxes and fees (and any penalties and interest relating
to such Taxes and fees) which become payable in connection with the transactions
contemplated by this Agreement, and all fees and expenses incident to the filing
or recording of assignments of the Financing Statements, shall be borne by
Seller.
Processing. Seller shall diligently and in good faith endeavor
to complete, to the reasonable satisfaction of Purchaser, all testing,
certification and conversion of all presenter networks and communication to all
protocols necessary for the migration of all Paymentech processing in connection
with the Business to OrderTrust LLC in accordance with the Schedule established
by the Conversion Plan Seller has previously provided to Purchaser. On or prior
to the Closing, Seller shall have entered into a binding agreement with
Paymentech, requiring Paymentech to continue processing files for the benefit of
Seller until such conversion is complete. Seller agrees to timely pay all
presenter fees owing to Paymentech through April 30, 1999, with such fees
thereafter payable 50% by Seller and 50% by Purchaser.
Financial Statements. On or prior to April 15, 1999, Seller
shall furnish to Purchaser copies of the (a) audited balance sheets of Seller
relating to the Assets and the Business as at December 31, 1996 and 1997, and
related audited statements of income and retained earnings and source and
application of funds for the two fiscal years ended December 31, 1997, together
with the notes thereto and the report thereon of Arthur Andersen LLP,
independent public accountants and (b) audited balance sheets of Seller relating
to the Assets and the Business as at December 31, 1998, and related audited
statements of income and retained earnings and source and application of funds
for the year then ended, together with the notes thereto and the report thereon
of Arthur Andersen LLP, independent public accountants.
Covenant Not to Compete. For two (2) years following the
Closing Date, Seller shall not, nor shall it permit any of its Affiliates,
directly or indirectly, anywhere in the world other than Japan, Hong Kong
(including Hong Kong Island, Kowloon and the New Territories), Macau, Australia,
Singapore, South Korea, Taiwan, Malaysia, Phillippines, New Zealand, Thailand,
Vietnam, Indonesia, Guam, Saipan and The People's Republic of China, to (i)
engage in or invest in the Business in direct or indirect competition with
Purchaser and its Affiliates, or (ii) offer, market or promote any program or
other arrangement which directly competes with the DALC registered card program
or any other substantially similar dining program marketed or promoted by
Purchaser and its Affiliates during such two-year period; it being understood
that nothing herein shall limit any dining transaction or dining program
membership fees being charged to any credit card program maintained or serviced
by General Electric Corporation and its affiliates; provided, however, that
nothing contained herein shall prohibit Seller from performing its obligations
under the Services Collaboration Agreement or the License Agreements, owning the
Closing Date Shares, the Option and, upon exercise thereof, the Option Shares,
owning securities in CardPlus Japan Co., Ltd., or owning, solely as an
investment, securities of any person which are traded on any national securities
exchange, the Nasdaq National Market or the Nasdaq Stock Market, Inc., if Seller
does not, directly or indirectly, own more than 20% of any class of securities
of such person; and provided, further, that Seller shall not be bound by this
Section 4.12 from and after the date, if ever, on which a petition against
Purchaser is filed under Chapter VII of United States Bankruptcy Code (whether
such filing is voluntary or involuntary) and such petition is not dismissed or
stayed within 60 days or Purchaser materially ceases to engage in the Business,
causing the Services Collaboration Agreement to terminate.
Commercially Reasonable Efforts. Seller and Purchaser agree to
use their respective commercially reasonable efforts to facilitate the
consummation of the transactions contemplated by this Agreement so as to permit
the closing of such transaction to take place as promptly as practicable.
Reservation of Shares. Purchaser shall at all times following
the Closing reserve for issuance the number of shares of its Common Stock,
issuable upon exercise of the Option.
No Impairment. Purchaser will not, without the prior written
consent of Seller, take any action or enter into any agreement, instrument or
understanding that would restrict or preclude Purchaser from fulfilling its
obligations under the Option or the Put Right.
Bulk Transfer Laws. Purchaser hereby waives compliance by
Seller with the laws of any jurisdiction relating to bulk transfers which may be
applicable in connection with the transfer of the Assets to Purchaser; provided,
however, that Seller shall indemnify, defend and hold Purchaser and its
Affiliates and representatives harmless from and against any and all Damages (as
defined in Section 7.2 hereof) directly or indirectly arising out of, resulting
from or relating to any failure to comply with such laws.
Collection of Rights-to-Receive. During the two year period
following the Closing Date, Purchaser agrees to use commercially reasonable
efforts to recover amounts owed to it under the Rights-to-Receive.
Financing. Purchaser shall use commercially reasonable efforts
to obtain financing necessary to enable it to satisfy its obligations hereunder,
including payment of the cash consideration set forth herein.
Listing of Shares. Purchaser shall use its commercially
reasonable efforts to cause the Closing Date Shares and, upon exercise of the
Option, the Option Shares, to be listed on the New York Stock Exchange.
I. ARTICLE
CONDITIONS TO CLOSING
A. Conditions to the Obligations of Purchaser. The obligation
of Purchaser to consummate the transactions contemplated hereby is subject to
the fulfillment at or prior to the Closing of the following conditions, any or
all of which may be waived in whole or in part by Purchaser to the extent
permitted by applicable law:
Representations and Warranties; Covenants. The representations
and warranties of Seller set forth in this Agreement or in any certificate or
document delivered pursuant to Article II hereof shall be true and correct in
all respects (as to those representations qualified by materiality) and in all
material respects (as to those representations not so qualified) when made and
shall be so true and correct on and as of the Closing Date, as if made on such
date, except for representations and warranties made as of a specified date,
which shall be true and correct as of the specified date only. Seller shall have
duly performed, complied with and fulfilled in all material respects each of its
agreements, covenants, conditions and obligations contained in this Agreement.
It is expressly understood and agreed that the disclosure by Seller to Purchaser
of any information pursuant to Section 4.2(iv) hereof shall in no way affect the
satisfaction of, or any failure to satisfy, the conditions set forth in this
Section 5.1(a) and Purchaser shall not be bound to accept any information so
provided in waiver of its rights under this Article V.
Other Consents and Filings. All material approvals and
consents of or filings with governmental or regulatory authorities, and all
material approvals and consents of any other persons (including, without
limitation, all third party consents under each of the Assigned Contracts),
required to permit the consummation of all of the transactions contemplated
hereby shall have been obtained or made, as the case may be, to the reasonable
satisfaction of Purchaser; provided, however, that it shall not be a condition
to Purchaser's obligation to close the transactions contemplated hereby if the
failure to obtain any such approvals, consents or filings would not be material
to the Business or the Assets. For purposes of this paragraph (b), it is
understood and agreed that the failure to obtain any of the approvals, consents
and filings listed on Schedule 5.1(b) shall be deemed to be material to the
Business or the Assets.
HSR Act. All filings with the FTC and the DOJ required for the
consummation of the transactions contemplated hereby pursuant to the HSR Act
shall have been made and the waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Assets shall have expired or been
terminated.
Absence of Litigation. No proceeding, action, suit,
investigation, litigation or claim challenging the legality of, or seeking to
restrain, prohibit or modify the transactions contemplated by this Agreement or
the Additional Agreements shall have been instituted and not settled or
otherwise terminated.
Closing Deliveries. Seller shall have duly executed and
delivered to Purchaser all bills of sale, instruments of transfer and assignment
and other statements, instruments, and documents (including, without limitation,
the Additional Agreements) and shall have furnished Purchaser with copies of
such items, opinions and certificates as set forth in Section 2.1(b) hereof, and
Seller shall have furnished Purchaser with such other certificates and documents
as Purchaser and its counsel reasonably may request pursuant to Section
2.1(b)(xiv), in each case in sufficient time prior to the Closing Date to permit
review and evaluation thereof.
Closing Certificate. Purchaser shall have received a
certificate dated the Closing Date signed by the Chief Executive Officer or the
Chief Financial Officer of Seller to the effect that the conditions set forth in
paragraphs (a) and (b) of this Section 5.1 have been satisfied.
Conditions to the Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated hereby are subject to the
fulfillment at or prior to the Closing of the following conditions, any or all
of which may be waived in whole or in part by Seller to the extent permitted by
applicable Law:
Representations and Warranties; Covenants. The representations
and warranties of Purchaser set forth in this Agreement or in any certificate or
document delivered pursuant to Article II hereof shall be true and correct in
all respects (as to those representations not so qualified) and in all material
respects (as to those representations qualified by materiality) when made and
shall be so true and correct on and as of the Closing Date, as if made on such
date, except for representations and warranties made as of a specified date,
which shall be true and correct as of the specified date only. Purchaser shall
have duly performed, complied and fulfilled in all material respects with each
of its agreements, covenants, conditions and obligations contained in this
Agreement.
Other Consents and Filings. All material approvals and
consents of or filings with governmental or regulatory authorities and all
material approvals and consents of any other persons, required to permit the
consummation of all of the transactions contemplated hereby shall have been
obtained or made, as the case may be, to the reasonable satisfaction of Seller;
provided, however, that it shall not be a condition to Seller's obligation to
close the transactions contemplated hereby if the failure to obtain any such
approvals, consents or filings would not be material to the Business or the
Assets.
HSR Act. All filings with the FTC and the DOJ required for the
consummation of the transactions contemplated hereby pursuant to the HSR Act
shall have been made and the waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Assets hereby shall have expired
or been terminated.
Absence of Litigation. No proceeding, action, suit,
investigation, litigation or claim challenging the legality of, or seeking to
restrain, prohibit or modify the transactions contemplated by this Agreement or
the Additional Agreements shall have been instituted and not settled or
otherwise terminated.
Closing Deliveries. Seller shall have received from Purchaser
duly executed copies of each of the certificates, opinions, instruments of
assumption and other documents (including, without limitation, the Additional
Agreements) required pursuant to the provisions of Section 2.1(c) hereof and
Purchaser shall have furnished Seller with copies of all such other certificates
and documents as Seller and its counsel reasonably may request pursuant to
Section 2.1(c)(xiii), in each case in sufficient time prior to the Closing Date
to permit review and evaluation thereof. Closing Certificate. Seller shall have
received a certificate dated the Closing Date signed by the Chief Executive
Officer or the Chief Financial Officer of Purchaser to the effect that the
conditions set forth in paragraphs (a) and (b) of this Section 5.2 have been
satisfied.
ARTICLE
TERMINATION
Termination. This Agreement may be terminated at any time
prior to the Closing Date: by the mutual written consent of Seller and
Purchaser; by Purchaser, if there has been a material breach of any
representation, warranty, covenant or agreement on the part of Seller set forth
in this Agreement which breach has not been cured within 30 days following
written notice to Seller of such breach;
by Purchaser, if it is unable to obtain financing, on terms
(acceptable to it) to enable it to pay the consideration set forth herein,
provided that Purchaser has used reasonable commercial efforts to obtain the
same, and provided further, that Purchaser shall remain obligated to render
payment in accordance with Section 6.2(b);
by Seller, if there has been a material breach of any
representation, warranty, covenant or agreement on the part of Purchaser set
forth in this Agreement which breach has not been cured within 30 days following
notice of such breach;
by Seller or Purchaser, if any injunction or other order of a
court or other competent authority preventing the consummation of the
transactions contemplated hereby shall have become final and non-appealable; or
1. by either Purchaser or Seller, if the transactions contemplated hereby shall
not have been consummated before May 31, 1999, provided that the party seeking
to terminate this Agreement is not otherwise in breach in any material respect
of any of its obligations hereunder.
B. Fees and Expenses.
1. Except as expressly provided herein, each party hereto
shall bear the legal, accounting and other costs and expenses incurred by it in
connection with the negotiation, preparation and execution of this Agreement and
the Additional Agreements and the transactions contemplated hereby and thereby.
Purchaser agrees that if it shall terminate this Agreement
pursuant to Section 6.1(c), then Purchaser shall reimburse Seller for legal,
accounting and other costs and expenses reasonably incurred by it in connection
with the negotiation, preparation and execution of this Agreement and the
Additional Agreements and the transactions contemplated hereby and thereby;
provided, however, that Purchaser shall not be obligated to reimburse Seller for
expenses in excess of $250,000 in the aggregate.
Effect of Termination. In the event of termination of this
Agreement by either Purchaser or
Seller as provided in Section 6.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Purchaser or
Seller, or their respective officers, directors or Affiliates except (x) with
respect to Section 4.3, 4.4, 4.9 and Section 6.2 and (y) Article VII, to the
extent that such termination results from the breach by a party hereto of any of
its representations, warranties, covenants or agreements set forth in this
Agreement.
I. ARTICLE
SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND COVENANTS; INDEMNIFICATION
A. Survival of Representations, Warranties and Covenants. All
representations and warranties contained in this Agreement, any Schedule hereto
and any certificate, written statement, or other document (other than the
Additional Agreements) delivered at the Closing pursuant to this Agreement by or
on behalf of Seller shall survive for a period of 18 months after the Closing
Date, except for all such representations and warranties relating to Taxes which
shall survive until the 60th day following the expiration of the relevant
statute of limitations (or any extension or waiver thereof). All covenants
contained in this Agreement shall survive for an indefinite period after the
Closing Date. Notwithstanding the foregoing, any representation or warranty that
would otherwise terminate in accordance with the first sentence of this Section
7.1 (x) shall continue to survive if the party making such representation or
warranty knowingly engages in fraud with respect thereto until 18 months from
the discovery thereof by the party in whose favor such representation or
warranty is made and (y) shall continue to survive if a notice shall have been
given under this Article VII on or prior to such termination date until the
related claim for indemnification has been satisfied or otherwise resolved as
hereinafter provided in this Article VII.
Seller's Indemnification Obligations. Subject to the terms and
conditions of this Article VII, Seller agrees to defend, indemnify and hold
Purchaser, its Affiliates and their respective officers, directors, agents,
attorneys, employees and representatives harmless from and against any and all
liabilities, losses, costs, damages, expenses, penalties, fines and Taxes
including, without limitation, reasonable legal and other expenses
(collectively, "Damages") directly or indirectly arising out of, resulting from
or relating to:
any misrepresentation or breach of any warranty of Seller
contained in this Agreement or in any Schedule or any certificate, written
statement or other document delivered by or on behalf of Seller pursuant to this
Agreement, except for such misrepresentations or breaches expressly waived by
Purchaser in writing on or prior to the Closing Date;
any breach of any covenant, agreement or obligation of Seller
contained in this Agreement;
any Excluded Liability;
the conduct of the Business, and the ownership, use and
operation of the Assets, on or prior to the Closing Date;
the use, operation or ownership of the Excluded Assets prior
to or after the Closing; and
any claim by any employee of Seller not hired by Purchaser
with respect to his or her employment by Seller before or after the Closing,
including any group insurance claims, workers' compensation claims or
liabilities arising out of any accident, illness or other event occurring before
or after the Closing and other claims with respect to pension, retirement and/or
welfare benefits as they relate to such employee's services for Seller.
any claim or liability retained by Seller pursuant to the
provisions of Section 8.3 hereof.
Purchaser's Indemnification Obligations. Subject to the terms
and conditions of this Article VII, Purchaser agrees to defend, indemnify and
hold Seller, its Affiliates and their respective officers, directors, agents,
attorneys, employees and representatives harmless from and against any and all
Damages directly or indirectly arising out of, resulting from or relating to:
any misrepresentation or breach of any warranty of Purchaser
contained in this Agreement or any certificate, written statement or other
document delivered by or on behalf of Purchaser pursuant to this Agreement,
except for such misrepresentations or breaches expressly waived by Seller in
writing on or prior to the Closing Date;
any breach of any covenant, agreement or obligation of
Purchaser contained in this
Agreement;
any Assumed Liability (including, without limitation, any
failure by Purchaser to perform pursuant hereto the obligations to be performed
by it after the Closing under the Assigned Contracts) or the use, operation or
ownership of the Assets or operation of the Business after the Closing;
any claim by any employee of Seller hired by Purchaser with
respect to his or her employment by Purchaser or termination of such employment
after the Closing (other than as set forth in Article VIII hereof), including
any group insurance claims, workers' compensation claims or liabilities arising
out of any accident, illness or other event occurring after the Closing and
other claims with respect to pension, retirement and/or welfare benefits as they
relate to such employee's services for Purchaser after the Closing; and
1. any requirement by Purchaser to perform under any novation
agreement executed by Seller and Purchaser in connection with the transactions
contemplated by this Agreement.
B. Claims for Indemnification; Defense of Indemnified Claims;
Limitations on Indemnification.
1. For purposes of this Section, the party entitled to
indemnification shall be known as the Indemnified Party and the party required
to indemnify shall be known as the Indemnifying Party. In the event that the
Indemnifying Party shall be obligated to the Indemnified Party pursuant to this
Article VII or in the event that a suit, action, investigation, claim or
proceeding is begun, made or instituted as a result of which the Indemnifying
Party may become obligated to the Indemnified Party hereunder, the Indemnified
Party shall give prompt written notice to the Indemnifying Party of the
occurrence of such event, specifying the basis for such claim or demand, and the
amount or estimated amount thereof to the extent then determinable (which
estimate shall not be conclusive of the final amount of such claim or demand);
provided, however, that the failure to give such notice shall not constitute a
waiver of the right to indemnification hereunder unless the Indemnifying Party
is actually prejudiced in a material respect thereby. The Indemnifying Party
agrees to defend, contest or otherwise protect against any such suit, action,
investigation, claim or proceeding at the Indemnifying Party's own cost and
expense with counsel of its own choice, who shall be, however, reasonably
acceptable to the Indemnified Party. The Indemnifying Party may not make any
compromise or settlement without the prior written consent of the Indemnified
Party (which will not be unreasonably withheld or delayed) and the Indemnified
Party shall receive a full and unconditional release reasonably satisfactory to
it pursuant to such compromise or settlement. The Indemnified Party shall have
the right but not the obligation to participate at its own expense in the
defense thereof by counsel of its own choice. If requested by the Indemnifying
Party, the Indemnified Party shall (at the Indemnifying Party's expense) (i)
cooperate with the Indemnifying Party and its counsel in contesting any claim or
demand which the Indemnifying Party defends, (ii) provide the Indemnifying Party
with reasonable access during normal business hours to its books and records to
the extent they relate to the condition or operation of the Business and are
requested by the Indemnifying Party to perform its indemnification obligations
hereunder, and to make copies of such books and records, and (iii) make
personnel available to assist in locating any books and records relating to the
Business or whose assistance, participation or testimony is reasonably required
in anticipation of, preparation for or the prosecution and defense of, any claim
subject to this Article VII. In the event that the Indemnifying Party fails
timely to defend, contest or otherwise protect the Indemnified Party against any
such suit, action, investigation, claim or proceeding, the Indemnified Party
shall have the right to defend, contest or otherwise protect the Indemnified
Party against the same and may make any compromise or settlement thereof and
recover the entire cost thereof from the Indemnifying Party including without
limitation, reasonable attorneys' fees, disbursements and all amounts paid as a
result of such suit, action, investigation, claim or proceeding or compromise or
settlement thereof.
Notwithstanding anything to the contrary contained in this
Agreement, the Indemnifying Party shall not be required to make any payment
pursuant to this Article VII for breaches of representation or warranty unless
and until the aggregate amount of Damages for all claims for breaches of
representation or warranty for which an Indemnified Party asserts a right to
indemnification hereunder shall total $75,000, after which the Indemnifying
Party shall be responsible only for Damages in excess of such amount. The
maximum aggregate amount which shall be recoverable by an Indemnified Party for
breaches of representation or warranty under this Article VII shall be limited
to $40 million; provided, however, that such limitation shall not apply in the
event that the Indemnifying Party engages in fraud.
Payments; Non-Exclusivity. Any amounts due an Indemnified
Party under this Article VII shall be due and payable by the Indemnifying Party
within fifteen (15) business days after (x) in the case of a claim which does
not involve any third party, receipt of written demand therefor and (y) in the
case of a claim which involves a third party, the final disposition of such
claim or demand, provided legal and other out-of-pocket costs and expenses are
reimbursed currently within 15 business days after demand therefor. The remedies
conferred in this Article VII are intended to be without prejudice to any other
rights or remedies available at law or equity to the Indemnified Parties, now or
hereafter.
Set Off. If from time to time and at any time Purchaser shall
be entitled to be paid any amount under the provisions of this Agreement
(including this Article VII) or under the Services Collaboration Agreement,
Purchaser shall be entitled, if it so elects, to set off such amount against any
other amounts due to Seller from Purchaser or any of its Affiliates hereunder,
under the Services Collaboration Agreement or otherwise; provided that Purchaser
shall have a good faith basis for the claim of the right of set off; and
provided, further, that in the event Seller shall dispute Purchaser's right to
set off any amounts under this Section 7.6, Purchaser shall place such disputed
amounts in an escrow account pending resolution between the parties or a final,
nonappealable judgment of an arbitration panel or court. All amounts held in the
escrow account shall be invested in (x) direct obligations of the government of
the United States of America, or any agency thereof, or obligations
unconditionally guaranteed by the United States of America having a maturity of
not more than one year, (y) certificates of deposit of any bank organized or
licensed to conduct banking business under the laws of the United States or any
State thereof having capital and surplus of at least $100 million, which
certificates have a maturity of not more than one year or (z) commercial paper
which, at the time of acquisition by Purchaser, is accorded the highest rating
by Standard & Poor's Corporation, Moody's Investors Service, Inc. or any other
nationally recognized credit rating agency. All such amounts, together with
accrued interest thereon, shall be distributed in accordance with the agreement
of the parties or, if applicable, any such judgment; provided, however, that in
the event that judgment is rendered in favor of Seller, Purchaser shall be
obligated to pay Seller interest on the escrowed amounts, in excess of that
actually earned, at the rate of 8% per annum. In no event shall escrowed funds
be commingled with any other funds of Purchaser. The right of set off provided
in this Section shall be in addition to and not in substitution of any other
rights Purchaser shall be entitled to under the provisions of this Article VII,
under the Services Collaboration Agreement or otherwise.
Subrogation. To the extent that a claim for indemnification is
discharged hereunder, any rights against third parties the Indemnifying Party
may have with respect to the subject matter of such claim shall be subrogated to
those of the Indemnified Party.
Mitigation. An Indemnified Party shall take all reasonable
steps to mitigate all indemnifiable Damages upon and after becoming aware of any
event which is reasonably likely to give rise to such Damages.
Consequential Damages. An Indemnifying Party shall have no
obligation to indemnify an Indemnified Party for any Damages arising out of any
interruption of business, loss of profits, loss of use of facilities, loss of
customers, loss of goodwill or other indirect or consequential damages (a) to
the extent, if any, such Damages are caused or contributed to by the actions of
the Indemnified Party or (b) are recoverable (and actually recovered) by the
Indemnified Party from any third party (including insurers). If the amount of
any Damages at any time subsequent to payment thereof by the Indemnifying Party
to the Indemnified Party pursuant to this Article VII is reduced by any
recovery, settlement or otherwise or under or pursuant to any insurance coverage
or pursuant to any claim, recovery settlement against or with any third party
(including any insurer), the amount of such reduction (net of out-of-pocket
expenses incurred in obtaining such reduction) shall promptly be repaid by the
Indemnified Party to the Indemnifying Party. To the extent that an Indemnifying
Party discharges any claim for indemnification hereunder, the Indemnified Party
shall promptly notify the Indemnifying Party of any and all claims the
Indemnified Party has against third parties (including insurers) and the
Indemnifying Party shall be subrogated (and the Indemnified Party shall take all
reasonable steps to effect such subrogation) to all related rights of the
Indemnified Party against third parties (including any insurers).
I. ARTICLE
EMPLOYMENT AND BENEFITS MATTERS
A. Hiring of Employees. Effective as of the Closing Date,
Purchaser shall offer employment to those employees of Seller engaged in the
conduct of the Business who are set forth on Section 8.1 of the Disclosure
Schedules (the "Employees") on such terms and conditions as determined by
Purchaser, subject to the remaining provisions of this Article VIII. All
Employees who are offered and accept such employment with Purchaser are
hereinafter referred to as the "Transferred Employees." It is the intention of
the Purchaser to employ the Transferred Employees from the Closing Date until at
least the termination or expiration of the Transition Services Agreement (such
period, the "Transition Period") (other than in the case of the termination of
any such Transferred Employee for cause, as reasonably determined by the
Purchaser in good faith, in which case any such employee may be terminated on an
earlier date). Seller shall use its commercially reasonable efforts to provide
Purchaser with access to Employees for the purpose of hiring such Employees, and
shall not (a) actively dissuade Employees from accepting employment with
Purchaser or (b) offer employment (or arrange to have another person or firm
offer employment) to any Employees listed on Schedule 8.1 of the Disclosure
Schedules unless such employee has declined an offer of employment with
Purchaser.
Terms of Employment. During the Transition Period, Transferred
Employees who are employed by Purchaser shall be paid a base salary or wage no
less than that in effect immediately prior to the Closing Date, and, subject to
applicable waiting periods, shall be eligible for 401(k) plan participation,
health plan coverage and vacation and sick leave benefits provided by Purchaser
on the same basis as similarly situated employees of Purchaser. The Transferred
Employees shall be credited with prior service with Seller for the purpose of
participation and vesting under such 401(k) and health plans and, to the extent
relevant, for purposes of vacation accrual and sick leave under any policy that
may be established by Purchaser. With respect to such health plan coverage,
Purchaser shall not impose any pre-existing condition limitation, and shall
credit each Transferred Employee for out-of-pocket expenses incurred during the
year in which the Closing Date occurs under Seller's group health plan. For
purposes of this Section 8.2 only, each of Scott Brennan, Mark Knoeppel and
Carol Voellinger shall be deemed to be Transferred Employees.
A. Seller's Retention of Liability. Purchaser shall not assume
any liabilities which have arisen or may arise in connection with any Benefit
Plan or liabilities which have arisen or may arise in any way from the
employment, compensation or benefits of any employee or former employee of
Seller or any Affiliate, including but not limited to the Transferred Employees,
attributable to the period prior to the Closing, or the termination of such
employment. Without limiting the scope of the foregoing, Seller shall be
responsible for (i) all medical claims incurred by the Transferred Employees on
or prior to the Closing under Seller's group health plan, (ii) claims relating
to COBRA coverage attributable to "qualifying events" occurring on or prior to
the Closing Date with respect to any Transferred Employee, (iii) claims relating
to the provision of health or COBRA benefits to or on behalf of any Employee or
former Employee who is not a Transferred Employee, regardless of when incurred,
and (iv) all accrued and unused vacation and sick leave for all Transferred
Employees as of the Closing, payment for which shall be made by Seller if
required under Seller's policies. Purchaser shall be responsible for all medical
claims incurred by the Transferred Employees after the Closing Date under
Purchaser's group health plan. For purposes of the foregoing, a medical claim
shall be considered incurred when the services or supplies for a given condition
are provided, and not when the condition arose; provided that claims relating to
hospital confinements that commence on or prior to the Closing Date but continue
thereafter shall be treated as incurred on or prior to the Closing Date.
Severance Benefits During Transition Period. In the event that
any Transferred Employee is terminated by Purchaser upon or prior to the
expiration of the Transition Period (other than for cause, as reasonably
determined by Purchaser in good faith), Seller agrees to provide such terminated
Transferred Employee with the severance benefits in such amounts as calculated
pursuant to Schedule 8.4 of the Disclosure Schedule (such policy, the "Severance
Policy"). In the event that any Transferred Employee is retained by Purchaser
after the expiration of the Transition Period, Seller shall have no liability
for severance.
Severance Payments. Purchaser shall not incur any liability
for any severance payments or benefits under Seller's severance policies or
plans in the event that Scott Brennan, Mark Knoeppel and Carol Voellinger are
terminated by the transaction contemplated by this Agreement. In the event that
such individuals are hired by Purchaser, Purchaser's sole obligation for
severance payments or benefits with respect thereto shall be limited to, if any,
Purchaser's severance policies or plans and, notwithstanding Section 8.4, Seller
shall have no further liability for severance benefits in respect of such
individuals in the event that their employment is terminated by Purchaser.
No Third-Party Rights. Nothing in this Article VIII express or
implied shall confer upon any Transferred Employee or other person or legal
representative thereof any rights or remedies, including any right to employment
or compensation or benefits of any nature or kind whatsoever.
Right to Terminate or Modify Plans. Other than as specifically
set forth herein, nothing in this Article VIII shall be construed to prevent
Purchaser from terminating or modifying to any extent or in any respect any
employee benefit plan, program or arrangement that Purchaser may contribute to,
maintain, or establish for the benefit of Transferred Employees or such other
employees, directors, consultants, contractors, or otherwise, at any time for
any reason.
I. ARTICLE
MISCELLANEOUS; GENERAL
A. Modification or Amendment. No modification, amendment or
waiver of any provision of this Agreement will be effective against Purchaser or
Seller, unless such modification, amendment or waiver is approved in writing and
signed by Purchaser and Seller or, in the case of a waiver, the party waiving
compliance. The failure of either party to enforce any of the provisions of this
Agreement will in no way be construed as a waiver of such provisions and will
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
Waiver of Conditions. The conditions to each party's
obligations to consummate the transactions contemplated hereby are for the sole
benefit of such party and may be waived by such party (in the manner provided
for herein) in whole or in part to the extent permitted by applicable law.
Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the one and the same instrument.
Governing Law. This Agreement shall be governed by the
substantive law of the State of New York, without regard to the conflicts of
laws principles thereof.
Dispute Resolution (Arbitration). It is agreed that any
controversy or claim arising out of or relating to this Agreement, or the breach
hereof, shall be settled by arbitration administered by the American Arbitration
Association in Chicago, Illinois under its Commercial Arbitration Rules, before
a panel of three (3) arbitrators, one of whom shall be selected by Purchaser,
one of whom shall be selected by Seller, and one of whom shall be selected
jointly by Seller and Purchaser (or, in the event that Purchaser and Seller
cannot agree, by the first two arbitrators). Judgment on the award rendered by
the arbitrators may be entered in any court having jurisdiction over the
parties. The costs of such arbitration, including without limitation reasonable
attorneys' fees, shall be borne by the non-prevailing party.
Consent to Jurisdiction. The parties to this Agreement hereby
irrevocably consent to the non-exclusive jurisdiction of any court of civil
jurisdiction sitting in Chicago, Illinois, for purposes of enforcing an arbitral
award or for any other purpose relating to or arising out of this Agreement.
Notices. Any notice, request, instruction or other document to
be given hereunder by any party to the others shall be in writing and shall be
deemed to have been duly given when received, if delivered personally or sent by
telecopy or overnight delivery (and confirmed in writing within three business
days thereafter), or five calendar days after the same is sent, if sent by
registered or certified mail, return receipt requested, postage prepaid, as set
forth below, or to such other persons or addresses as may be designated in
writing in accordance with the terms hereof by the party to receive such notice.
If to Seller:
SignatureCard, Inc.
200 North Martingale Road
Schaumburg, Illinois 60173-2096
Facsimile No.: (847) 605-3044
Attn.: General Counsel
With a copy to:
Montgomery Ward & Co., Incorporated
535 West Chicago Avenue, Suite 26-S
Chicago, Illinois 60671
Facsimile No.: (312) 467-3064
Attn.: Spencer Heine, Esq.
and to:
Jones, Day, Reavis & Pogue
77 West Wacker Drive
Chicago, Illinois 60601-1692
Facsimile No.: (312)782-8585
Attn.: Robert Dean Avery, Esq.
If to Purchaser:
Transmedia Network Inc.
11900 Biscayne Boulevard
North Miami, Florida 33181
Facsimile No.: (305) 892-3342
Attn.: Chief Executive Officer
With a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile No.: (212) 309-6273
Attn.: Stephen P. Farrell, Esq.
Disclosure Schedules and Exhibits; Entire Agreement. The
Disclosure Schedules and all exhibits and attachments to the Disclosure
Schedules or exhibits, or documents expressly incorporated into this Agreement,
and any other attachments to this Agreement are hereby incorporated into this
Agreement and are hereby made a part hereof as if set out in full in this
Agreement. This Agreement (and the agreements, certificates and other documents
delivered hereunder), unless otherwise provided herein, supersedes all other
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof.
Assignment; Delegation. Except as provided in the following
sentence, this Agreement and the rights and obligations of the parties hereto
shall not be assignable, by operation of law or otherwise, or delegable.
Purchaser may assign any or all of its rights and interests and delegate any or
all of its obligations under this Agreement to any one or more wholly-owned
subsidiaries of Purchaser or any wholly-owned subsidiaries of such subsidiaries
which executes a counterpart to this Agreement and agrees to be bound as
Purchaser by the terms hereof, in which event the relevant rights and
obligations of Purchaser (including, without limitation, delivery of the
documents required under Section 2.1(c) hereof) and remedies available to it
hereunder shall extend to and be enforceable by such subsidiary, but Purchaser
shall remain, and the assignee or delegee shall be, fully liable for the
performance of all such obligations in the manner prescribed in this Agreement.
In the event of any such assignment and delegation the terms "Purchaser" and
"party" as used in this Agreement shall be deemed to refer to such assignee or
delegee where reference is made to actions to be taken with respect to the
acquisition of the Assets by such assignee or delegee, and shall be deemed to
include both Purchaser and such assignee or delegee where appropriate. Any
purported assignment in violation of this Section 9.9 shall be void. Subject to
the four preceding sentences, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns.
Definition of "Affiliate". When a reference is made in this
Agreement to an affiliate of a party, the word "affiliate"means, with respect to
a specified corporation or other organization, a corporation or organization
that directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, the corporation or organization
specified. For purposes of this definition, the term "control" means (a) the
power, direct or indirect, to vote more than 50% of the securities having
ordinary voting power for the election of directors (or others performing
similar functions) of such corporation or organization or (b) being a general
partner of such organization. Notwithstanding the foregoing, for purposes of
Section 4.12 hereof, no corporation or other organization (including, without
limitation, General Electric Capital Corporation) that would be deemed an
Affiliate of Seller solely by virtue of its control of Parent or any material
stockholder of Parent shall be deemed an Affiliate of Seller unless and until it
purchases substantially all of the assets or the stock of SFM, and thereafter
the term "affiliate" shall include General Electric Capital Services, Inc. and
its subsidiaries but shall not include the General Electric Company and its
other subsidiaries.
A. Titles and Captions. The titles, captions and table of
contents contained in this Agreement are inserted herein only as a matter of
convenience and for reference and in no way affect, limit, extend or describe
the scope of this Agreement or the intent of any provision hereof.
Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereby waive any provision of law which may render any provision hereof
prohibited or unenforceable in any respect.
Publicity. During the period through the Closing Date,
Purchaser, Seller and their respective Affiliates shall consult before making
any public announcements or public comments regarding this Agreement or the sale
contemplated hereby, except as required by applicable Law.
No Third Party Beneficiaries. This Agreement has been made for
the sole benefit of Purchaser and Seller and shall not be construed to confer
any benefit or rights upon, nor may it be enforced by, any other person,
including any officer, director, employee, stockholder or creditor of the
Purchaser or Seller.
[Signature Page to Follow]
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first hereinabove written.
TRANSMEDIA NETWORK INC.
By:_____________________________________
Name: Gene M. Henderson
Title: President and Chief Executive Officer
SIGNATURECARD, INC.
By:_____________________________________
Name:
Title:
<PAGE>
Exhibit 1.2
AMENDMENT NO. 1
TO
AGREEMENT
AMENDMENT No.1, dated as of April 15, 1999, to the Asset Purchase Agreement,
dated as of March 17, 1999 (the "Agreement"), by and between TRANSMEDIA NETWORK
INC., a Delaware corporation, and SIGNATURECARD, INC., an Indiana corporation.
WHEREAS, the parties wish to amend Section 4.11 of the Agreement;
NOW, THEREFORE, the parties agree as follows:
1. Amendment to Section 4.11 of the Agreement. Section 4.11 of the
Agreement is hereby amended by deleting the date "April 15, 1999" in the first
line thereof and inserting in lieu thereof the date "April 30, 1999."
2. Effect on Agreement. Except as expressly provided herein, the terms
and conditions of the Agreement shall continue in full force and effect. From
and after the date hereof, all references to the Agreement shall be deemed to
mean the Agreement as amended by this Amendment.
3. Counterparts. This Amendment may be executed in one (1) or more
counterparts, each of which, when executed, shall be deemed to be an original,
but all of which, taken together, shall constitute one (1) and the same
instrument. Each counterpart may consist of a number of copies each signed by
less than all, but together signed by all, the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Amendment or caused
this Amendment to be executed as of the day and year first above written.
TRANSMEDIA NETWORK INC. SIGNATURECARD, INC.
By: /s/ Stephen E. Lerch By: /s/ Rodney E. Starmer
Name: Stephen E. Lerch Rodney E. Starmer
Title: Executive V.P. and CFO Senior Vice President
<PAGE>
Exhibit 1.3
AMENDMENT NO. 2
TO
AGREEMENT
AMENDMENT No. 2, dated as of May 31, 1999, to the Asset Purchase
Agreement, dated as of March 17, 1999 (the "Agreement"), by and between
Transmedia Network Inc., a Delaware corporation, and SignatureCard, Inc., an
Indiana corporation.
WHEREAS, the parties wish to amend the Agreement.
NOW, THEREFORE , the parties agree as follows:
I. Amendment to Section 1.3(b) of the Agreement. Section 1.3(a) of the Agreement
is hereby amended by deleting the word "two" in the fifteenth line thereof and
inserting in lieu thereof the word "three".
I. Amendment to Section 2.1(b) of the Agreement.
(a) Section 2.1(b)(xiii) of the Agreement is hereby amended by
deleting the word "and" in the sixth line thereof.
(b) Section 2.1(b)(xiv) of the Agreement is hereby deleted and
renumbered as Section 2.1(b)(xvi) thereof.
(c) Section 2.1(b) of the Agreement is hereby amended by adding
subsections (xiv) through (xv) thereto which shall read as follows:
"(xiv) a duly executed counterpart of a Consent to Assignment, dated
as of the Closing Date, made and given by Seller to Purchaser and RTR
Funding LLC, substantially in the form of Exhibit G hereto;
(xv) a duly executed UCC-1 financing statement pertaining to the sale
of the Rights-to-Receive and related rights and the assignment of the
Seller's security interests with respect to the related Merchants by Seller
to Purchaser substantially in the form of Exhibit H hereto; and"
3. The reference contained in Section 5.1(e) to 2.1(b)(xiv) shall refer
instead to Section 2.1(b)(xvi). 4. Amendment to Section 6.1(f) of the Agreement.
Section 6.1(f) of the Agreement is hereby amended by deleting the date "May 31,
1999" in the second line thereof and inserting in lieu thereof the date "June
30, 1999".
5. Amendment to Section 5.2(a) of the Agreement. Section 5.2(a) of the
Agreement is hereby amended by (a) deleting the phrase "(as to those
representations not so qualified)" in the third and fourth lines thereof and
inserting in lieu thereof the phrase "(as to those representations qualified by
materiality)" and (b) deleting the phrase "(as to those representations
qualified by materiality)" in the fourth and fifth lines thereof and inserting
in lieu thereof the phrase "(as to those representations not so qualified)".
6. Amendment to Section 4.11 of the Agreement. Section 4.11 of the
Agreement is hereby amended by adding thereto the following: Seller shall
furnish to Purchaser, at Purchaser's sole cost and expense (which expense shall
include all of Seller's out-of-pocket expenses incurred in connection with the
following), (x) as soon as practicable following the Closing (but in no event
later than 40 days following the Closing), copies of the unaudited balance
sheets of Seller relating to the Assets and the Business as at June 30, 1999 and
as at June 30, 1998, and the related unaudited statements of income and retained
earnings, cash flows and changes in Parent's equity in division for the
six-month periods ended June 30, 1999 and 1998, and (y) as soon as practicable
following Purchaser's request therefor (but in no event later than 40 days
thereafter), such additional financial information of a comparable nature of
Seller relating to the Assets and the Business as at such dates and for such
periods as Purchaser shall specify to permit its compliance with the rules and
regulations of the Securities and Exchange Commission, in each case, together
with a "review letter" from Arthur Andersen LLP, independent public accountants,
satisfactory in form and substance to Purchaser, as to such interim financial
statements and such other matters as Purchaser shall reasonably request. Seller
agrees to cooperate fully (and to cause Arthur Andersen LLP to cooperate fully)
with Purchaser, at Purchaser's sole cost and expense, to prepare and provide to
Purchaser all such financial information as promptly, and in such form, as
Purchaser shall request.
7. Effect on Agreement. Except as expressly provided herein, the terms and
conditions of the Agreement shall continue in full force and effect. From and
after the date hereof, all references to the Agreement shall be deemed to mean
the Agreement as amended by Amendment No. 1 and this Amendment.
8. Counterparts. This Amendment may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original, but
all of which taken together shall constitute one and the same instrument. Each
counterpart may consist of a number of copies each signed by less than all, but
together signed by all, the parties hereto.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment or caused
this Amendment to be executed as of the day and year first above written.
TRANSMEDIA NETWORK INC.
By:_________________________
Name:
Title:
SIGNATURECARD, INC.
By:_________________________
Name:
Title:
<PAGE>
EXHIBIT G
CONSENT TO ASSIGNMENT
This Consent to Assignment (this "Consent") is made and given by
SignatureCard, Inc., an Indiana corporation ("SignatureCard"), to Transmedia
Network Inc. ("TMN"), a Delaware corporation, Transmedia Restaurant Company Inc.
("Restaurant"), a Delaware corporation, Transmedia Service Company Inc.
("Service"), a Delaware corporation (collectively, TMN, Restaurant and Service
are the "Assignors"), and RTR Funding LLC, a Delaware limited liability company
("Assignee").
A. SignatureCard and TMN have entered into that certain Asset Purchase
Agreement, dated as of March 17, 1999, as amended by Amendment No. 1 thereto,
dated as of April 15, 1999 and Amendment No. 2 thereto, dated as of May 31, 1999
(the "Asset Purchase Agreement"), pursuant to which SignatureCard has agreed to
sell and TMN has agreed to acquire certain rights-to-receive and related
security (collectively, the "Rights-to-Receive") and other assets of
SignatureCard.
A. TMN may assign some or all of its estate, right, the interest, benefits
powers and privileges in respect of the Rights-to-Receive to Restaurant and/or
Service.
A. Assignee intends to purchase the Rights-to-Receive from one or more of
the Assignors pursuant to a Receivables Purchase Agreement, among Assignors and
Assignee (the "Receivables Purchase Agreement").
A. It will be a condition to Assignee's obligations under the Receivables
Purchase Agreement that, pursuant thereto, Assignors shall have collaterally
assigned all of their estate, right, title, interest, benefits, powers and
privileges in respect of the Rights-to-Receive to Assignee and that
SignatureCard shall have consented to such assignment.
NOW, THEREFORE, SignatureCard hereby consents and agrees to the terms of
the Assignment and further agrees as follows:
A. Acknowledgments, Confirmations and Agreements. SignatureCard
acknowledges, confirms and agrees that as of the date hereof: (i) it has all
requisite corporate power and authority to execute and deliver this Consent and
(ii) the execution and delivery of this Consent by SignatureCard has been duly
authorized by all necessary corporate action and does not require any additional
approvals or consents or any other action by or any notice to or filing with any
person, including, without limitation, any governmental entity.
A. Consent. SignatureCard consents to the assignment by the Assignors of
all of their estate, right, title, interest, benefits, powers and privileges in
respect of the Rights-to-Receive.
A. Continuing Obligations. The execution and delivery of an assignment to
the Assignee on the part of one or more of the Assignors shall not impair or
diminish any obligations of TMN or SignatureCard under the Asset Purchase
Agreement, shall not impose on the Assignee (or its designee) any such
obligations and shall not impose any additional obligations on SignatureCard.
4. Acknowledgment of Section 1.3(a)(iii) of the Asset Purchase Agreement.
The parties hereto acknowledge that the Credit Agreement dated as of June 30,
1999 between Transmedia Network Inc. and The Chase Manhattan Bank, as lender,
and the receivables transfer agreement to be entered into by some or all of the
Assignors, the Assignee, Park Avenue Receivables Corporation, The Chase
Manhattan Bank, and certain other parties will be "financing arrangements" as
such term is used in Section 1.3(a)(iii) of the Asset Purchase Agreement.
IN WITNESS WHEREOF, the parties have executed this Consent or
caused this Consent to be executed as of the day and year first above written.
SIGNATURECARD, INC.
By:__________________
Name:
Title:
<PAGE>
Exhibit 2
OPTION AGREEMENT
THIS OPTION AND ANY SHARES ACQUIRED UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE SUCH
A REGISTRATION IS IN EFFECT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT.
This OPTION AGREEMENT (the "Agreement") is entered into as of this 30th
day of June, 1999 (the "Effective Date"), by and between SignatureCard, Inc., an
Indiana corporation ("Optionee"), and Transmedia Network Inc., a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into an Asset Purchase
Agreement, dated as of March 17, 1999, as the same may be amended from time to
time (the "Asset Purchase Agreement"), pursuant to which the Company is
purchasing certain assets (the "Assets") from Optionee relating to the
membership program operated under the Dining a la Card trade name and service
mark, offering to members cash rebates or mileage credits in selected airline
mileage programs on charges at participating restaurants and other
establishments (the "Business");
WHEREAS, as partial consideration for the Assets, pursuant to Section
1.3(a)(i)(B) of the Asset Purchase Agreement, the Company has agreed to issue
and deliver to Optionee an option to purchase up to 400,000 shares of the common
stock of the Company, par value $.02 per share (the "Common Stock"), on the
terms and subject to the conditions contained herein; and
WHEREAS, it is a condition precedent to the closing of the transactions
contemplated by the Asset Purchase Agreement that this Agreement be executed;
NOW, THEREFORE, in consideration of the purchase of the Assets and of
the premises and the respective covenants and conditions contained herein and in
the Asset Purchase Agreement, the parties, intending to be legally bound, hereby
agree as follows (capitalized terms used and not defined herein having the
meanings ascribed thereto in the Asset Purchase Agreement):
I. Grant of Option. The Company hereby grants to Optionee as of the date hereof
an option (the "Option") to purchase up to 400,000 shares of Common Stock (the
"Shares") on the terms and subject to the conditions set forth herein.
I. Term and Conditions. The grant and exercise of the Option is subject to
the following terms and conditions:
(a) Option Price. Subject to the provisions of Section 5, the purchase
price for the Shares subject to the Option shall be $4.00 per share (the
"Exercise Price").
(b) Option Period. The Option shall be exercisable, in whole or in
part, from time to time and at any time, on any business day during the
period (the "Option Period") commencing at 5:00 p.m. 90 days from the
Effective Date (the "Effective Time") and terminating at 5:00 p.m. eastern
standard time (the "Expiration Time") on the third anniversary of the
Effective Date (the "Expiration Date"), after which time the Option shall
terminate and be of no further force or effect.
I. Manner of Exercise of the Option. The Optionee may exercise the Option
from time to time at any time prior to the Expiration Time, by delivering a
written notice of exercise of the Option (an "Exercise Notice") addressed to the
Company, as set forth in Section 10(a) hereof. The Exercise Notice shall specify
the number of Shares being purchased and the date on which the closing of such
purchase will occur, which date shall be within five (5) days after the date of
the delivery to the Company of the Exercise Notice. At the closing, (a) Optionee
shall pay an amount equal to the Exercise Price times the number of Shares being
purchased pursuant to the Option (i) in cash or by certified or official bank
check to the Company or by wire transfer of immediately available funds to an
account designated by the Company; or (ii) through the written election of the
Optionee to have Shares withheld by the Company from the Shares otherwise to be
received, with such withheld Shares having an aggregate fair market value on the
date of closing equal to the aggregate Exercise Price; and (b) the Company shall
deliver to Optionee certificates evidencing the Shares then being purchased upon
exercise of the Option. The closing of the purchase and sale shall take place at
the offices of the Company, unless the parties shall otherwise agree.
I. Non-Assignability of the Option. The Option shall not be assignable,
transferable or subject to pledge or hypothecation; provided, however, that the
Optionee may assign or transfer the Option to an Affiliate (as defined in the
Asset Purchase Agreement) or to any successor-in-interest of the Optionee or of
such Affiliate (collectively, "Permitted Transferees") . The Option is
exercisable only by the Optionee or a Permitted Transferee.
I. Adjustments. The number of Shares subject to the Option and the Exercise
Price shall be adjusted appropriately for any recapitalization, reorganization,
stock split, stock dividend, increase or decrease in the issued and outstanding
Common Stock or similar event which occurs after the Effective Date. In the
event of any merger, consolidation, share exchange, sale or transfer of all or
substantially all of the assets of the Company or similar event, the Optionee
upon exercise of the Option, shall be entitled to receive only the kind and
amount of securities, cash or other property as it would have received had it
purchased the number of Shares for which it is then exercising the Option
immediately prior to such merger, consolidation, share exchange, sale or
transfer. For purposes of determining the relative amounts of cash, securities
and other property the Optionee shall be entitled to receive, it shall be
presumed that the Optionee shall have failed to exercise any right of election
as to the kind or amount of securities, cash or other property it was to
receive.
I. Reservation of Shares of Common Stock. The Company shall, at all times
during the Option Period, reserve and keep available such number of shares of
Common Stock as will be sufficient to satisfy the requirements of the Option,
shall pay all original issue taxes with respect to the issuance of Shares
pursuant hereto, and all other taxes, fees and expenses necessarily incurred by
the Company in connection therewith and will, from time to time, use its best
efforts to comply with all laws and regulations which, in the opinion of counsel
for the Company, shall be applicable thereto.
I. Restriction on Exercise and Resale. Optionee covenants and agrees that
it is acquiring the Option solely for the purpose of investment and not with a
view to, or for sale in connection with, any distribution thereof. Optionee
acknowledges and agrees that neither the Option nor the Shares have been
registered under the Securities Act of 1933, as amended (the "Securities Act")
and will not be so registered at the time such Option is exercised, and that
neither the Option nor the Shares may be transferred or sold except in
compliance with the registration provisions of the Securities Act, or pursuant
to an applicable exemption therefrom and in compliance with applicable state and
local securities laws and regulations. Optionee consents to the inclusion on
each Share certificate of the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be
transferred, sold or otherwise disposed of except while such a
registration is in effect or pursuant to an exemption from registration
under such Act."
Optionee acknowledges and agrees that it has made his own independent
investigation, analysis and evaluation of the Company and the desirability of
acquiring the Option and, upon exercise thereof, the Shares.
I. Restrictions on Issuing Shares. Each exercise of the Option shall be
subject to the condition that if at any time the Company shall determine that
the satisfaction of withholding tax or other withholding liabilities, or that
the listing, registration, or qualification of any Shares otherwise deliverable
upon such exercise upon any securities exchange or under any state or federal
law, or that the consent or approval of any regulatory body, is necessary or
desirable as a condition of, or in connection with, such exercise or the
delivery or purchase of Shares pursuant thereto, then in any such event, such
exercise shall be deferred until such withholding, listing, registration,
qualification, consent, or approval shall have been effected or obtained free of
any conditions not reasonably acceptable to the Company; provided, that the
Company shall notify Optionee of any such restriction (and its removal) and
shall use its reasonable best efforts to promptly permit the exercise of such
Option, and the length of the Option Period shall be extended for the amount of
time any such restriction is in effect.
I. No Rights as a Stockholder. Until Optionee shall have validly exercised
the Option, delivered the Exercise Price to the Company and purchased the Shares
in accordance with the terms contained herein, the Optionee shall have no rights
as a stockholder of the Company solely by virtue of this Agreement including the
right to receive dividends or distributions or to vote with respect to the
Shares.
I. General.
A. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when received, if delivered personally or sent
by telecopy or reputable overnight carrier (and confirmed in writing within
three business days thereafter), or five calendar days after the same is sent,
if sent by registered or certified mail, return receipt requested, postage
prepaid, to the parties at the addresses and facsimile numbers as set forth in
Section 9.7 of the Asset Purchase Agreement or as otherwise designated by the
parties from time to time.
A. Exclusive Agreement. This Agreement supersedes all prior agreements
between the parties (written or oral) with respect to the terms and conditions
of the Option and is intended as a complete and exclusive statement of the terms
of the agreement between the Parties with respect to the subject matter hereof.
A. Governing Law. This Agreement shall be governed by the internal laws of
the State of Delaware, without giving effect to the conflict of laws principles
thereof.
A. Dispute Resolution (Arbitration). It is agreed that any controversy or
claim arising out of or relating to this Agreement, or the breach hereof, shall
be settled by arbitration administered by the American Arbitration Association
in Chicago, Illinois under its Commercial Arbitration Rules, before a panel of
three (3) arbitrators, one of whom shall be selected by the Company, one of whom
shall be selected by Optionee, and one of whom shall be selected jointly by the
Company and Optionee (or, in the event that the Company and Optionee cannot
agree, by the first two arbitrators). Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction over the parties.
The costs of such arbitration, including without limitation reasonable
attorneys' fees, shall be borne by the non-prevailing party.
A. No Assignment; Third Parties. Except as otherwise provided herein, no
party shall assign this Agreement or any part hereof without the prior written
consent of the other party. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective heirs, successors, and assigns.
Except as provided herein, nothing in this Agreement shall entitle any person
other than the parties to any claim, cause of action, remedy, or right of any
kind.
A. Further Assurances. The parties agree to deliver or cause to be
delivered to the other on the closing of the exercise of the Option and at such
other times thereafter as shall be reasonably agreed, any such additional
agreement, document, or instrument as either of them may reasonably request for
the purpose of carrying out this Agreement.
A. Captions. All section or paragraph headings contained in this Agreement
are for the convenience of the parties and shall not affect the meaning or
interpretation of any provision of this Agreement.
A. Savings Clause. In the event that any word, phrase, clause or provision
of this Agreement should ever be deemed to be invalid, such word, phrase, clause
or provision shall automatically be amended to conform to all applicable legal
requirements. If this is impossible, such word, phrase, clause or provision
shall be given no effect as if it had not been inserted and the remaining
provisions of this Agreement shall survive as if such word, phrase, clause or
provision had not been inserted.
A. Amendments; Modifications. Any amendment or modification to this
Agreement must be in writing signed by the parties hereto
[Signature Page to Follow]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
SIGNATURECARD, INC.
By:
Name:
Title:
TRANSMEDIA NETWORK INC.
By:
Name:
Title:
[Signature Page to Option Agreement]
<PAGE>
Exhibit 3
SERVICES COLLABORATION AGREEMENT
between
TRANSMEDIA NETWORK INC.
and
SIGNATURECARD, INC.
June 30, 1999
<PAGE>
SERVICES COLLABORATION AGREEMENT
SERVICES COLLABORATION AGREEMENT ("Agreement") is made as of the 30th
day of June, 1999, between Transmedia Network Inc., a Delaware corporation
("Transmedia"), and SignatureCard, Inc., an Indiana corporation ("Signature").
WHEREAS, Transmedia operates a membership program under the
"Transmedia" trade name and service mark and, as of the date hereof, has
acquired certain assets of Signature related to a similar membership program
which Signature formerly operated under the Dining a la Card trade name and
service mark;
WHEREAS, Signature has retained certain marketing partner relationships
pertaining to the DALC Program, and wishes to (i) continue to promote and market
the DALC Program to existing DALC Members acquired from such relationships, (ii)
acquire new DALC Members pursuant to such relationships, and (iii) develop new
marketing partner relationships;
WHEREAS, each party has determined that it is advisable that (i)
Signature conduct marketing and promotional programs, and seek to enter into
marketing partner relationships, to acquire DALC Members in the United States of
America, and (ii) Transmedia generally manage the DALC Program, including
performing certain DALC Member services and managing the Merchant network, all
on the terms and subject to the conditions prescribed herein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. ARTICLE
GENERAL
1. Capitalized terms used in this Agreement have the respective meanings set
forth in Schedule I hereto.
2. This Agreement shall be effective as of the date first written above and
thereafter shall remain in full force and effect until terminated in
accordance with Article XI hereof.
2. ARTICLE
SERVICES COMMITTEE
1. Services Committee. Promptly following the execution and delivery of this
Agreement, the parties shall establish a Services Committee (the "Services
Committee"). The Services Committee shall consist of two members, one of
whom shall be the Chief Executive Officer or other designee of Transmedia
reasonably acceptable to Signature and one of whom shall be the Signature
senior executive primarily responsible for the DALC Program or other
designee of Signature reasonably acceptable to Transmedia (such acceptance,
in each case, not to be unreasonably withheld). The Services Committee
shall act as the committee for strategic initiatives and major operational
issues relating to the Operating Guidelines and the Economic Covenants
(each, as hereinafter defined), and shall review, among other things, the
performance of the parties hereunder, including adherence by the parties to
the Operating Guidelines and compliance by the parties with the Economic
Covenants. The Services Committee otherwise shall review strategies
designed to enhance and market the DALC Program and to maximize the fees
and revenue therefrom. Each party shall designate its member to the
Services Committee and shall notify the other party in writing each time it
proposes to permanently replace its member and appoint a new designated
member, but shall not permanently replace its member and appoint a new
designated member without the prior written consent of the other party
(which consent shall not be unreasonably withheld).
2. Meetings. The Services Committee shall meet at such times and places as it
may elect but in any event, not less than once each calendar quarter. The
Services Committee may meet in person or by telephonic or video conference,
and either member may call such a meeting. All costs of participation by
each member in the activities of the Services Committee shall be borne by
the party appointing such member.
3. Specific Responsibilities of the Services Committee. The responsibilities
of the Services Committee shall, with respect to the promotion and
marketing of the DALC Program, include, but not be limited to:
1. review or development of new marketing and promotional
strategies;
2. review of all new marketing partner contracts;
3. review of design and uses of advertising, marketing, promotional
and solicitation materials and selection and use of all media;
4. review and oversight of adherence by the parties to the Operating
Guidelines and, where appropriate, recommending corrective
action;
5. evaluation and approval of proposals by a party desiring to enter
into a marketing partner contract or other arrangement contrary
to the requirements of the Operating Guidelines and the Economic
Covenants and, if appropriate, enforce payment of the Make-Whole
Amount pursuant to Article VII hereof;
6. review of and, if appropriate, adjustment to, the Operating
Guidelines and Economic Covenants on a periodic basis; and
7. review of, and determination with respect to, proposals to close
a market.
It is expressly acknowledged that the responsibilities of the Services
Committee shall be limited to issues relating solely to the DALC Program as
operated by the parties in accordance with the terms hereof, and the
Services Committee shall have no jurisdiction over matters that relate to,
arise out of or are in connection with the respective businesses of the
parties hereto other than the DALC Program. The parties shall notify their
respective employees and their respective Affiliates who perform services
in connection with this Agreement of this limitation and shall require them
to abide by its terms.
4. Voting. Each member of the Services Committee shall have one vote
on all matters and the Services Committee shall act by the
unanimous vote of its members. If the Services Committee is
unable to obtain the required vote to approve, or take other
action on, any matter requiring a vote, or if any member wishes
to contest a deadlock, then the matter may be settled in
accordance with the provisions of Section 14.4 hereof, and any
requirement for approval by the Services Committee under this
Agreement shall be satisfied by action in accordance with such
Section.
3. ARTICLE
ROLES AND RESPONSIBILITIES OF THE PARTIES
1. Signature Responsibilities.
1. Signature shall perform the marketing and promotional functions
described in this Section 3.1 in connection with the DALC Program with
respect to Signature DALC Members only, in accordance with the terms
of this Agreement. The goals of Signature's marketing and promotional
functions are to generate new, active members for the DALC Program and
to induce members of the DALC Program, where applicable, to renew
their memberships annually and to be active members of the DALC
Program.
2. Signature, in conjunction with Transmedia shall, at Signature's
expense:
(1) develop a promotional and marketing strategy to be implemented by
Signature with respect to the Signature DALC Members for the DALC
Program (including, without limitation, at Signature's
discretion, developing and implementing programs and strategies
to stimulate utilization by inactive and low usage DALC Members);
(2) prepare a plan for the marketing and promotion of the DALC
Program in advance of each calendar year, update and modify the
same during each calendar year and provide to Transmedia periodic
reports of the DALC Program's performance measured against such
plan;
(3) maintain and expand Exclusive DALC Sponsor Relationships and
relationships with other DALC Sponsors existing on the date
hereof and develop and initiate new Exclusive DALC Sponsor
Relationships and relationships with other DALC Sponsors in
addition to those in existence on the date hereof, all in
accordance with the marketing and promotion plan prepared
pursuant to Section 3.1(b)(ii);
(4) develop advertising and promotional materials to be used by
Signature to support the DALC Program;
(5) select the print and broadcast media to be used by Signature in
marketing and promoting the DALC Program; and
(6) perform such other functions as Signature and Transmedia may
agree are appropriate to Signature's marketing and promoting the
DALC Program to the Signature DALC Members.
3. In addition to the responsibilities set forth in paragraph (b) above,
Signature shall, in connection with Exclusive DALC Sponsor
Relationships existing on the date hereof or entered into in
accordance with the terms hereof, pay for all airline miles purchased
thereunder and Transmedia shall reimburse Signature for the same
within ten business days following Transmedia's receipt from Signature
of Signature's "Request for Distribution" or other documentation
substantiating the amount paid. The amounts for which Transmedia is
required to reimburse Signature under this Section 3.1(c) shall not be
subject to set off against any amounts owed or alleged to be owed by
Signature to Transmedia under this Agreement or any other agreement
between the parties.
4. Marketing activities which may be undertaken by Signature under this
Agreement may include, among other things:
(1) preparation and mailing of solicitation materials;
(2) telemarketing;
(3) advertising, including via radio, television, newspapers,
magazines and other print media, internet or other electronic
media and other appropriate venues; and
(4) conducting DALC Member surveys and marketing tests;
provided, however, that Transmedia shall have the right to approve the form
and content of any of the foregoing activities or materials solely for the
purpose of (x) ensuring that the statements contained therein are accurate,
and (y) protecting the value of the DALC Intellectual Property or the
Transmedia Intellectual Property and the reputation of the DALC Program;
provided, further, that such approval shall not be unreasonably withheld.
2. Transmedia Responsibilities.
1. Transmedia shall have charge of the day-to-day management and
operations of the DALC Program. Transmedia's responsibilities will
include, but not be limited to:
(1) making all Transmedia personnel decisions (including those
personnel who have responsibility for the DALC Program);
(2) approval of all non-employee sales personnel engaged by Signature
to perform marketing or promotional services hereunder;
(3) review of all product offerings proposed by Signature in
connection with the DALC Program and all descriptions,
solicitations, advertising copy or other marketing and
promotional materials proposed for use in connection therewith;
(1)
(4) approval of all DALC Sponsor contracts entered into after the
date hereof whose term extends beyond three years;
(5) approval of all DALC Sponsor contracts entered into after the
date hereof which would preclude Transmedia from collecting Fee
Income, if any, from DALC Members acquired pursuant thereto;
(6) provision of membership benefits to all DALC Members;
(7) provision of customer service, including fulfillment, preparation
and distribution of directories, preparation and distribution of
DALC Member statements, issuance of rebate checks and airline
miles, if applicable, and responding to consumer complaints or
inquiries;
(8) collection of Fee Income from DALC Members (except to the extent
otherwise provided in a contract between Signature and a DALC
Sponsor in existence on the date hereof or approved by Transmedia
in accordance with paragraph (v) above) and Rights-to-Receive
from Merchants;
(9) communication with Merchants (including development of collateral
sales materials and periodic Merchant reporting);
(10) management of Merchant processing partner relationships;
(11) technological functions, including maintenance and management of
databases, software programs and the like;
(12) communication with regulatory authorities concerning provision of
membership benefits and advertising, marketing and promotional
materials; provided, however, that to the extent such materials
relate to the responsibilities and obligations of Signature
hereunder, Signature and Transmedia shall jointly communicate
with regulatory authorities;
(13) maintain, update and program interfaces onto the websites
associated with the DALC Program (including, without limitation,
such information with respect to arrangements with DALC Sponsors
and links to websites of such DALC Sponsors as Signature
reasonably requests from time to time);
(14) provision to Signature (either through electronic access or other
reasonable means) of such data and information relating to the
DALC Program as may, from time to time, be required by the terms
of any DALC Sponsor contract existing on the date hereof or
hereafter entered into in accordance with the terms hereof and
such other data and information as the parties may reasonably
agree; and
(15) subject to Signature's areas of responsibility and obligations as
described herein, each other function, duty or service (other
than those expressly undertaken by the Services Committee under
Section 2.3 hereof), the performance of which is deemed by
Transmedia in its sole discretion to be necessary or advisable in
operating the DALC Program.
2. Notwithstanding the provisions of Section 3.1 and of paragraph (a) of
this Section 3.2, it is expressly understood and agreed that
Transmedia and/or its Affiliates may, in its sole discretion,
undertake to perform, with respect to any DALC Member other than a
Signature DALC Member, any of the functions required to be performed
by Signature with respect to Signature DALC Members hereunder. Any
such activity undertaken by Transmedia shall not be subject to the
terms of this Agreement and Signature shall have no obligations with
respect to such DALC Members.
4. ARTICLE
MARKETING AND PROMOTION; EXPENSES;
LICENSE OF INTELLECTUAL PROPERTY
1. Marketing Efforts. During the term of this Agreement, Signature agrees
that it shall (and shall cause its successor to) maintain marketing
and sales personnel capable of performing its obligations hereunder,
and shall be solely responsible for the hiring, compensation,
management and evaluation of such personnel.
2. Advertising and Promotional Materials. All marketing, advertising, and
promotional materials (including, without limitation, any and all
telemarketing scripts) for Signature's marketing of the DALC Program
shall comply with all applicable laws and regulations and shall be
submitted to and subject to approval by Transmedia as provided herein
prior to the use thereof; provided that such approval -------- shall
not be unreasonably withheld. Signature and Transmedia shall advise
one another of customer and Merchant reactions to the marketing and
promotional materials they use. All such materials shall include, in a
location and in a manner which can easily be seen and read, the
following notice: "The Dining A La Card(R)program and trademark are
the property of Transmedia Network Inc., used under license by
SignatureCard, Inc." As permitted by applicable laws and regulations,
all documentary information, promotional materials and media
presentations (where practical) promoting the DALC Program shall
display the trade names, trademarks, service marks, logos and trade
dress thereof in a manner consistent with the past practices of the
parties.
3. Expenses. Signature shall bear the expense for the preparation of all
solicitation materials and all marketing, advertising and promotional
expenses it incurs in marketing and promoting the DALC Program to the
Signature DALC Members. Except to the extent costs and expenses are
deducted from revenues in accordance with the definition of "Profit"
as set forth in Schedule I, Transmedia shall bear the expense for its
performance hereunder.
4. Membership Applications. Signature shall cause all applications for
membership in the DALC Program generated by Signature's performing of
marketing and promotional functions to be transmitted directly to
Transmedia for its review.
5. Membership Data. Transmedia shall maintain appropriate records
identifying (i) which persons are DALC Members on the date hereof as
set forth on a computer disc delivered to Transmedia pursuant to
Section 3.1(k) of the Asset Purchase Agreement, (ii) which persons are
DALC Members on the date hereof pursuant to an Excluded Contract (as
defined in the Asset Purchase Agreement) as set forth on a computer
disc delivered to Transmedia pursuant to Section 6.3 hereof, and (iii)
which persons become DALC Members after the date hereof as a result of
Signature's marketing and promotional efforts hereunder; it being
understood and agreed that the DALC Members identified in clauses (i)
through (iii) of this sentence are the only DALC Members Transmedia
shall be obligated to service under this Agreement.
6. Licenses of Intellectual Property. Pursuant to the terms of the
License Agreement and the Software License Agreement by and between
Transmedia and Signature of even date herewith (together, the "License
Agreements"), Transmedia shall grant to Signature (a) a non-exclusive
license to use the DALC Intellectual Property and an exclusive license
to use the "Earn Meals for Your Miles" service mark, in each case for
the sole purpose of performing marketing and promotional functions
with respect to the DALC Program as contemplated by this Agreement
during the term hereof, (b) a non-exclusive license to use, and
prepare derivative works of, any advertising copy prepared by
Signature under this Agreement, for use only in connection with
Signature's other non-dining programs, and (c) a royalty-free,
perpetual, non-exclusive license to use the Data Merchant System
solely for the purposes set forth in the Software License Agreement.
7. No Rights by Implication. Except as specifically provided herein or in
the License Agreement, no rights or licenses with respect to the DALC
Intellectual Property, other technical information or other
proprietary rights (including licenses or rights in confidential
information, membership data and information, marketing plans,
surveys, research, member information, merchant information and
records, service information, marketing strategies, training
materials, marketing and promotional materials or other information
relating to advertising, marketing, promotion or commercial sale of
the DALC Program) are granted or deemed granted by Transmedia to
Signature hereunder or in connection herewith.
5. ARTICLE
OPERATING GUIDELINES
1. Operating Guidelines. Each party hereto shall use its commercially
reasonable efforts to preserve the integrity and reputation of the
DALC Program. By signing this Agreement, each party recognizes that
adherence to the operating guidelines set forth on Annex A hereto (as
the same may be adjusted from time to time by the Services Committee
in accordance with the terms hereof, the "Operating Guidelines") is in
its best interests and covenants to and agrees with the other party
that it shall use its commercially reasonable efforts to abide by the
Operating Guidelines applicable to it in performing its duties
hereunder. If, at any time during the term of this Agreement, a party
has performed its duties in a manner inconsistent with the Operating
Guidelines applicable to it, it shall use its commercially reasonable
efforts to explain the same and the reasons therefor to the Services
Committee and shall cooperate, in good faith, with the Services
Committee to rectify the situation (including, without limitation, by
taking any corrective action deemed appropriate by the Services
Committee).
2. Opening New Markets. The parties shall cooperate with each other in
identifying and selecting new markets in which to offer, market or
promote the DALC Program. If (i) Transmedia deems it advisable to open
a market in a Territory, and (ii) Signature commits to deliver a
sufficient number of DALC Members within the Territory such that, with
respect to the number of DALC Members residing therein, the Territory
would become a Qualified Territory solely through the efforts of
Signature, then Transmedia shall use its commercially reasonable
efforts, within 180 days of its receipt of notice from Signature of
such commitment (such date is hereinafter referred to as the "Market
Launch Date"), to deliver a sufficient number of Merchants to satisfy
a minimum Member-Merchant Ratio of 150:1. If Transmedia delivers the
number of Merchants required to satisfy its obligations hereunder and
Signature does not achieve DALC Member acquisition or utilization at
the levels established by the Operating Guidelines with respect to
such new market, Signature shall be responsible for, shall assume the
liability of, and shall reimburse Transmedia for, all uncollected
Rights-to-Receive incurred by Transmedia in such market. Signature
shall remit any payments owed to Transmedia pursuant to the preceding
sentence within thirty (30) days following its receipt of notice from
Transmedia referencing the failure to comply with this Section 5.2 and
specifying the amount owed, together with appropriate documentation
evidencing the same. If Signature delivers the number of DALC Members
required to satisfy its obligations as set forth above and Transmedia
does not supply DALC Merchants at the levels and quality established
by the Operating Guidelines with respect to such new market,
Transmedia shall be responsible for, shall assume the liability of,
and shall reimburse Signature for, all marketing and promotional
expenditures reasonably incurred by Signature in delivering DALC
Members in such market. Transmedia shall remit any payments owed to
Signature pursuant to the preceding sentence within thirty (30) days
following its receipt of notice from Signature referencing the failure
to comply with this Section 5.2 and specifying the amount owed,
together with appropriate documentation evidencing the same. Neither
party may deliver any notice hereunder prior to the Market Launch
Date. The remedies provided by this Section 5.2 shall be the sole and
exclusive remedies of the parties with respect to the liabilities
incurred in connection with opening new markets hereunder, and they
each hereby waive any and all rights that might otherwise be available
at law or in equity with respect thereto.
6. ARTICLE
MARKETING EXCLUSIVITY AND SPONSOR INFORMATION
1. Signature Exclusivity. Signature shall, during the Profit Sharing
Period, have the exclusive right to market the DALC Program through
use of all of its existing and hereafter acquired Airline Frequent
Flyer Member Files and the Exclusive DALC Sponsor Relationships, and
Transmedia and its Affiliates shall not market or promote the DALC
Program or the Transmedia Program through use thereof; provided,
-------- however, that nothing in this Section 6.1 shall be deemed to
prohibit Transmedia and its Affiliates from (i) offering mileage
credits in airline mileage programs in connection with the DALC
Program, the Transmedia Program or otherwise, (ii) marketing or
promoting other non-dining services to the Exclusive DALC Sponsor
Relationships, (iii) receiving relevant information about, and
servicing DALC Members acquired through the use of DALC Sponsor
Relationships (whether existing or hereinafter initiated) or Airline
Frequent Flyer Member Files under the terms of this Agreement, or (iv)
marketing the DALC Program or the Transmedia Program to DALC Members
acquired by Transmedia pursuant to the Asset Purchase Agreement,
notwithstanding that any such DALC Member may also be listed on any
computer disc delivered pursuant to Section 6.3 hereof.
2. Non-Exclusivity. It is expressly understood and agreed that Signature
shall not have the exclusive right to market the DALC Program, the
Transmedia Program or any other dining program through the use of any
DALC Sponsors or other marketing partners other than the Exclusive
DALC Sponsor Relationships, and Transmedia and its Affiliates may, at
any time, market and promote the DALC Program, the Transmedia Program
or other dining program through such other DALC Sponsors and such
other marketing partners. The parties agree to use their commercially
reasonable efforts to coordinate their respective marketing activities
vis a vis such prospective DALC Sponsors or marketing partners.
3. Membership Files and Data. Prior to or simultaneous with the execution
and delivery of this Agreement, Signature shall deliver to Transmedia
(in addition to those DALC Members acquired by Transmedia pursuant to
the terms of the Asset Purchase Agreement) a computer disc containing
a complete and accurate list of all current DALC Members who were
acquired pursuant to the Excluded Contracts (as defined in the Asset
Purchase Agreement) and all other data ("Data") related to such DALC
Members as of the date hereof which is reasonably required by
Transmedia in order for it to fulfill its obligations hereunder.
4. Negotiation of DALC Sponsor Contracts. During the term of this
Agreement, Signature shall advise Transmedia of each significant
meeting (as reasonably determined by Signature in good faith) whether
in person, by telephone or video conference, it schedules with a DALC
Sponsor and each other current or future marketing partner of
Signature at which an existing or proposed arrangement (pertaining to
the DALC Program) with Signature is to be discussed or negotiated, and
shall invite at least one representative of Transmedia to attend such
meeting and participate therein at Transmedia's expense. In addition,
Signature shall afford Transmedia the right to review, on a timely
basis, all significant correspondence relating to such arrangements,
and to review all new contracts into which Signature may enter with
DALC Sponsors or other marketing partners prior to their execution and
to review and, to the extent provided herein, approve all marketing
and promotional materials proposed for use pursuant thereto.
Transmedia shall grant or withhold its approval of such materials
within ten business days following receipt of the same and shall not
unreasonably withhold its approval.
7. ARTICLE
ECONOMIC COVENANTS
1. Economic Covenants.
1. The parties recognize that each operates businesses other than
the DALC Program. In recognition of the fact that each party will
be harmed by the other party entering into uneconomic
transactions so as to advance the interests of such other
businesses, the parties agree that compliance with the economic
covenants set forth in Annex B hereto (as the same may be
adjusted from time to time by the Services Committee in
accordance with the terms hereof, the "Economic Covenants") is
essential. Signature covenants and agrees with Transmedia that
it, its Affiliates, and their respective employees,
representatives and agents, will comply with the Economic
Covenants set forth in Section I of Annex B. Transmedia covenants
and agrees with Signature that it, its Affiliates and their
respective employees, representatives and agents, will comply
with the Economic Covenants set forth in Section II of Annex B.
2. Notwithstanding the provisions of paragraph (a) of this Section
7.1, either party hereto may enter into a transaction which would
result in an event of non-compliance with respect to an Economic
Covenant applicable to it if (i) prior to entering into such
transaction, the party obtains the written consent of the other
party hereto or (ii) the party tenders payment to the other party
of a Make-Whole Amount. For purposes of this Section 7.1, the
"Make-Whole Amount" shall mean: (x) the actual amount of the
expenditure pursuant to the proposed transaction, less (y) the
amount of the expenditure if the applicable Economic Covenant had
been complied with; it being understood and agreed that no
payment shall be due or made by either party hereunder if the
amount set forth in clause (y) exceeds the amount set forth in
clause (x). Subject to the foregoing proviso, any event of
non-compliance with the Economic Covenants as to which the
affected party has not consented shall give rise to an obligation
by the other party to tender payment of the Make-Whole Amount.
The remedies provided by this Section 7.1 shall be the sole and
exclusive remedies of the parties with respect to liabilities
incurred in connection with any event of non-compliance with the
Economic Covenants as to which the affected party has not
consented, and the parties each hereby waive any and all rights
that might otherwise be available at law or in equity with
respect thereto.
8. ARTICLE
MARKETING FEES PAYABLE TO SIGNATURE
<PAGE>
In consideration of the marketing services to be provided by Signature
hereunder, Transmedia shall pay to Signature the following amounts:
1. Fee Sharing. Signature shall receive sixty-seven percent (67%) (i) of
all Membership Fee Income collected (during the five-year period
commencing on the date hereof) from persons who are DALC Members on
the date hereof, and (ii) of all Membership Fee Income collected from
persons (during the five-year period following their initially
becoming DALC Members) who become DALC Members after the date hereof
as a result of Signature's marketing and promotional efforts
hereunder; provided, -------- however, that Signature shall not be
entitled to any percentage of Membership Fee Income received after the
end of the Profit Sharing Period. Transmedia shall pay and deliver to
Signature the portion of Membership Fee Income to which it is
entitled, together with a calculation in appropriate detail of the
Membership Fee Income received from new and existing DALC Members,
within forty-five (45) days following the end of each calendar
quarter. Subject to the previous sentence, if Signature shall collect
Membership Fee Income from any DALC Member in accordance with the
terms of this Agreement, it shall remit the full amount thereof to
Transmedia within forty-five (45) days following the end of each
calendar quarter.
2. Profit-Based Payments.
1. Signature shall receive during the twelve and one-half year
period commencing on the date hereof, unless this Agreement is
earlier terminated in accordance with Section 11.2, in which
event during the period ending on such termination date (the
"Profit Sharing Period"), a quarterly marketing fee equal to
forty percent (40%) of all Profits derived from persons who are
(as of the date hereof) or, as a direct result of Signature's
performance of marketing and promotional services hereunder with
respect to the DALC Program, become (after the date hereof) DALC
Members. Transmedia shall pay and deliver to Signature the
portion of the Profits to which it is entitled, together with a
calculation thereof in appropriate detail, within forty-five (45)
days following the end of the first three fiscal quarters of each
fiscal year of Transmedia and within sixty (60) days following
the end of each fiscal year of Transmedia, subject to appropriate
fiscal year-end adjustments.
2. If Transmedia generates Operating Losses, the same shall be taken
into account in calculating Profits, but Signature shall not
otherwise be required to contribute to the funding thereof.
9. ARTICLE
GRANT OF ADDITIONAL MARKETING RIGHTS
1. Transmedia Program Memberships. Signature shall be entitled to
purchase from Transmedia such number of memberships in the Transmedia
Program as Transmedia and Signature shall agree. Such memberships,
unless Transmedia and Signature otherwise agree (i) may be resold by
Signature for cash or other consideration acceptable to Transmedia
only in connection with the marketing and promotional services
Signature provides to Transmedia and its Affiliates with respect to
the Transmedia Program, (ii) shall entitle the holders thereof to
discounts and other benefits generally available to other members of
the Transmedia Program, and (iii) shall be renewable upon terms
generally applicable to members of the Transmedia Program having
similar memberships.
2. No Rights to Members or Membership Data. Nothing in this Article IX
shall grant or convey or be deemed to grant or convey to Signature any
rights whatsoever to Transmedia Members or any rights whatsoever to
the membership lists or files pertaining to Transmedia Members; it
being expressly understood and agreed that all such rights are and
shall at all times remain the sole and exclusive property of
Transmedia.
10. ARTICLE
OWNERSHIP, CONFIDENTIALITY AND PUBLIC INFORMATION
1. Ownership. Transmedia is the sole and exclusive owner of the DALC
Intellectual Property and the Transmedia Intellectual Property and
shall own any and all rights in intellectual property developed by
Signature or Transmedia for use in the DALC Program, the Transmedia
Program or any other programs offering discount dining during the term
of this Agreement, including but not limited to all copyright rights
and other intellectual property rights in any and all brochures,
advertising, promotional and marketing materials (including, without
limitation, videos, scripts, recordings, etc.) that are developed by
Signature in the fulfillment of its responsibilities hereunder. All
materials and works created or produced by Signature in the
fulfillment of its responsibilities hereunder falling within 17
U.S.C.ss.101 shall be deemed works made for hire and will rest in and
will be the property of Transmedia. To the extent that any works or
materials created or produced by Signature in fulfillment of its
responsibilities hereunder do not fall within 17 U.S.C.ss.101,
Signature hereby assigns to Transmedia all right, title and interest
now existing or that may in the future exist in, and to any
intellectual property rights, including any trademarks, copyrights,
patents and inventions, any trade secrets in any and all works or
materials created or produced by Signature for Transmedia and in and
to any and all other works or materials created or produced in the
course of preparing such works or materials for Transmedia. Except as
set forth in the penultimate sentence to this paragraph, to the extent
such rights are held by third parties, Signature shall obtain all
assignments, consents and agreements necessary to convey to Transmedia
all right, title and interest in and to any and all such intellectual
property. Signature shall furnish to Transmedia copies of such
assignments, consents and agreements. The foregoing intellectual
property rights include, but are not limited to (x) all rights to
register, or to renew any registration(s) or letter(s) patent for,
such intellectual property rights and (y) all causes of action related
to such intellectual property rights, including the right to sue for
past damages. Notwithstanding the foregoing, Transmedia acknowledges
that Signature's existing agreements with the persons set forth in
Schedule II hereto do not contain the assignment provision required
herein, and agrees that, as such, these agreements do not contravene
Signature's obligations under this Section. Signature will not attempt
to register any works or materials created or produced by Signature
pursuant to this Agreement at the U.S. Copyright Office, the U.S.
Patent and Trademark Office, or in any foreign counterparts of those
U.S. offices. Nothing herein shall be interpreted or construed to
grant to Signature or any other party any rights, license or interest
in the DALC Intellectual Property or the Transmedia Intellectual
Property, except as expressly provided in this Agreement and the
License Agreement.
2. Ownership Exclusions. Notwithstanding Section 10.1 above, Signature
owns and shall own all intellectual property included in the Excluded
Assets (as defined in the Asset Purchase Agreement) (i.e., the ----
intellectual property rights in any and all brochures, advertising,
promotional and marketing materials (including, without limitation,
videos, scripts, recordings, etc.) that were, are or are in the future
developed exclusively for and used exclusively in the marketing of the
dining program presently conducted by Signature Japan Co., Ltd. (f/k/a
CardPlus Japan Co., Ltd.)), and nothing herein shall be interpreted or
construed to grant to Transmedia any rights, license or interest
therein.
3. Confidentiality.
1. Signature and its Affiliates agree to treat as confidential and
not to disclose to any person (other than to Signature employees
who have a need to know the same for purposes of Signature's
performing its obligations hereunder) or use the same for its own
benefit or for any purpose other than performing its obligations
hereunder all confidential or proprietary information, data,
plans, strategies, projections, budgets, reports, research,
financial information, files, reports, agreements and other
materials and information it receives, obtains or learns about
Transmedia and its Affiliates, the DALC Program, the Transmedia
Program or any other program, service or product Transmedia
and/or Signature develops in connection with this Agreement.
Signature shall notify those of its employees who perform
services for Transmedia and its Affiliates of this covenant and
shall secure their agreement to abide by its terms.
(b) Transmedia and its Affiliates agree, during the term of this Agreement
(and, with respect to any DALC Sponsor contract existing on the date hereof
or entered into in accordance with the terms hereof, during the period
Signature is required to treat information as confidential pursuant
thereto), to treat as confidential and not to disclose to any person (other
than to Transmedia employees who have a need to know the same for purposes
of Transmedia's performing its obligations hereunder) or use the same for
its own benefit or for any purpose other than performing its obligations
hereunder all confidential or proprietary information it receives, obtains
or learns about Signature and its Affiliates, including information
relating to the DALC Sponsors and the DALC Members generated thereby.
Transmedia shall notify those of its employees who perform services under
this Agreement of this covenant and shall secure their agreement to abide
by its terms.
(c) Notwithstanding the foregoing, neither party shall be obligated with
respect to confidential or proprietary information that it can document:
(1) is or has become readily publicly available through no fault of its
own or that of its employees or agents; or
(2) is received from a third party lawfully in possession of such
information and lawfully empowered to freely disclose such information
to it; or
(3) was lawfully in its possession, without restriction, after the date
hereof.
4. Covenant Not to Compete. During the two (2) year period following the
date of this Agreement, for any reason, Signature shall not, nor shall
it permit any of its Affiliates, directly or indirectly, anywhere in
the world other than Japan, Hong Kong (including Hong Kong Island,
Kowloon and the New Territories), Macau, Australia, Singapore, South
Korea, Taiwan, Malaysia, Philippines, New Zealand, Thailand, Vietnam,
Indonesia, Guam, Saipan, and The People's Republic of China to (x)
engage in, or invest in, the Business (as defined in the Asset
Purchase Agreement) in direct or indirect competition with Transmedia
and its Affiliates, or (y) offer, market or promote any program or
other arrangement which directly competes with the DALC Program, the
Transmedia Program or any other substantially similar discount dining
program marketed or promoted by Transmedia during the term hereof; it
being understood that nothing herein shall limit any dining
transaction or dining program membership fees being charged to any
credit card program maintained or serviced by General Electric
Corporation and its affiliates; provided, however, that nothing
contained herein shall prohibit Signature from performing its
obligations hereunder or under the License Agreements, from owning the
Closing Date Shares, the Option and, upon exercise thereof, the Option
Shares (each, as defined in the Asset Purchase Agreement) pursuant to
the terms of the Asset Purchase Agreement, owning securities in
Signature Japan Co., Ltd. (f/k/a CardPlus Japan Co., Ltd.) or from
owning solely as an investment, securities of any person which are
traded on any national securities exchange, the Nasdaq National Market
or on Nasdaq Stock Market Inc, if Signature does not, directly or
indirectly, own more than 20% of any securities of such person; and
provided, further, that Signature shall not be bound by this Section
10.4 from and after the date, if ever, on which a petition against
Transmedia is filed under Chapter VII of the United States Bankruptcy
Code (whether such filing is voluntary or involuntary) and such
petition is not dismissed or stayed within 60 days or Transmedia
materially ceases to engage in the DALC Program, causing a termination
hereunder pursuant to Section 11.2 hereof.
5. Public Announcements. Each party agrees that prior to releasing any
media or press announcement with respect to this Agreement or the
functions to be performed hereunder, it shall submit the text thereto
to the other party for review and approval (which approval shall not
be unreasonably withheld).
11. ARTICLE
TERM AND TERMINATION
1. Term. This Agreement shall be effective as of the date first above
written and shall, unless sooner terminated or extended in accordance
with the two succeeding sentences, be in full force and effect through
December 31, 2011 (the "Stated Termination Date"). Any party not
desiring to extend the term of this Agreement for an additional
two-year period (a "Renewal Term") shall notify the other eighteen
months prior to the Stated Termination Date. Thereafter, this
Agreement shall be subject to further renewals of a two (2) year
duration each unless one party notifies the other of its intention not
to renew at least three (3) months prior to the end of a Renewal Term.
2. Early Termination by Either Party. This Agreement may be terminated by
either party prior to the expiration of the term set forth in Section
11.1 upon written notice to the other party in accordance with Section
14.8 hereof in the event of a material breach by the other party of
its covenants and obligations hereunder that is continuing and is not
effectively cured within sixty (60) days (or, in the case of the event
described in clause (d) below, within thirty (30) days) after notice
thereof from the other party. For purposes of the foregoing, the
following events shall be deemed a "material breach":
1. the failure by the other party to pay any Make-Whole Amount when
due;
2. a material breach by the other party of the covenants set forth
in Section 10.3 hereof;
3. a material breach by Signature of the covenant set forth in
Section 10.4 hereof;
4. a material breach by the other party of its obligations under the
License Agreement;
5. a petition is filed against the other party under Chapter VII of
the United States Bankruptcy Code (whether such filing is
voluntary or involuntary) and such petition is not dismissed or
stayed within the period described above;
6. Transmedia materially ceases to operate the DALC Program or
otherwise materially abandons its duties hereunder;
7. Signature materially ceases to market the DALC Program or
otherwise materially abandons its duties hereunder;
8. a material breach by Transmedia of Section 6.1 hereof; or
9. a material breach by Transmedia of its obligations to pay
Signature as set forth in Section 8.1 or 8.2 hereof (except to
the extent such amounts are the subject of a dispute hereunder or
subject to set off by Purchaser in accordance with Section 7.6 of
the Asset Purchase Agreement).
12. ARTICLE
EFFECT OF TERMINATION
1. Run-off. Upon (x) notification by a party of its intention not to
renew this Agreement under Section 11.1 or (y) termination of
this Agreement in accordance with Section 11.2, the marketing
arrangement set out in this Agreement shall enter "Run-Off."
Run-Off means that (i) Transmedia shall continue to service
active DALC Members existing on the date of notification or
termination, as the case may be, until their membership is
cancelled by the DALC Member or by the DALC Sponsor which
generated the DALC Member (but not by either party hereto), and
(ii) Signature may continue to acquire DALC Members through the
term of the Exclusive DALC Sponsor Relationships in effect as of
the date of notification or termination, as the case may be (but
may not enter into new contracts). Notwithstanding the foregoing,
the parties understand and agree that the economic relationship
between the parties hereunder (including under Article VIII
hereof) shall terminate upon the termination or expiration of
this Agreement in accordance with Article XI hereof.
2. Confidential Information. Upon conclusion of the Run-Off period
set forth in Section 12.1, Signature shall immediately return to
Transmedia any and all confidential or proprietary information
and data it shall have received or developed in connection with
this Agreement or the functions to be performed by it hereunder
and Transmedia shall immediately return to Signature any and all
confidential or proprietary information it shall have received in
connection with this Agreement.
3. Accrued Obligations. Subject to the provisions of Section 12.1,
termination of this Agreement shall not relieve the parties
hereto of any liability which accrued hereunder prior to the
effective date of such termination nor prejudice either party's
right to obtain performance of any obligation provided for in
this Agreement which expressly survives termination or
expiration.
4. Return of Materials. Upon conclusion of the Run-Off period set
forth in Section 12.1, Signature shall, at Transmedia's election,
either destroy or return to Transmedia all promotional materials
relating to the DALC Program or the Transmedia Program then in
Signature's possession, except to the extent that a DALC Sponsor
has proprietary rights in such materials.
5. Remedies. The fact that either party exercises any right of
termination it may have under this Agreement shall not prevent
such party from seeking any other remedy it may be entitled to in
law or equity, except as otherwise specifically provided in this
Agreement; nor shall any provision under this Agreement which
provides a remedy to a party for the other party's
non-performance be deemed to be an exclusive remedy, except as
otherwise specifically provided in this Agreement. Prior to
seeking relief through the courts, the parties must attempt to
resolve any dispute through the mechanism set forth in Section
14.4 hereof.
6. Survival. The provisions of Article X, this Article XII and
Article XIII, as well as those rights and obligations which by
their intent or meaning have validity beyond termination of
expiration of this Agreement, shall survive the termination or
expiration of this Agreement.
13. ARTICLE 1.
INDEMNIFICATION
1. Indemnification by Signature. Signature shall indemnify, defend and
hold harmless Transmedia and its Affiliates, and its and their
respective employees, officers, directors and agents, and each of
their respective successors and assigns (each, a "Transmedia
Indemnified Party"), from and against any and all liability, loss,
damage, cost, tax, penalty, fine and expense (including, without
limitation, reasonable attorneys' fees) (collectively, a "Liability"),
which a Transmedia Indemnified Party may incur, suffer or be required
to pay resulting from or arising in connection with (i) the breach by
Signature of any covenant, representation or warranty contained in
this Agreement, or (ii) any negligent or wrongful act or omission of
Signature or its Affiliates (including, without limitation, fraud) in
the performance of its obligations hereunder.
2. Indemnification by Transmedia. Transmedia shall indemnify, defend and
hold harmless Signature and its Affiliates and its and their
respective employees, officers, directors and agents, and each of
their respective successors and assigns (each, a "Signature
Indemnified Party") from and against any and all Liabilities, which a
Signature Indemnified Party may incur, suffer or be required to pay
resulting from or arising in connection with (i) the breach by
Transmedia of any covenant, representation or warranty contained in
this Agreement, or (ii) any negligent or wrongful act or omission of
Transmedia or its Affiliates (including, without limitation, fraud) in
the performance of its obligations hereunder.
<PAGE>
3. Indemnification Procedure. Any person seeking indemnification
hereunder shall give written notice to the indemnifying party of the
claim for indemnification promptly after the party claiming
indemnification becomes aware of the Liability for which
indemnification or the basis therefor; provided, -------- however,
that the failure to give such notice shall not constitute a waiver of
the right to indemnification hereunder unless the indemnifying party
is actually prejudiced in a material respect thereby. The indemnifying
party agrees to assume the defense of any suit or claim related to the
Liability at the indemnifying party's own cost and expense with
counsel of its own choice, who shall be, however, reasonably
acceptable to the indemnified party (such acceptance not to be
unreasonably withheld), and such assumption shall conclusively
establish that the indemnifying party is responsible for the subject
matter of such suit or claim within the scope of this Article XIII. No
Liability shall be compromised or settled without the prior written
consent of the party seeking indemnification therefor (unless the sole
relief provided is monetary damages that are paid in full by the
indemnifying party), which consent shall not be unreasonably withheld
or delayed, and the indemnified party will have no liability or
obligation with respect to any compromise or settlement of such claims
without its prior written consent. The indemnified party shall have
the right but not the obligation to participate at its own expense in
the defense thereof by counsel of its own choice. If requested by the
indemnifying party, the indemnified party shall (at the indemnifying
party's expense) (i) cooperate with the indemnifying party and its
counsel in contesting any claim or demand which the indemnifying party
defends, (ii) provide the indemnifying party with reasonable access
during normal business hours to its books and records to the extent
they relate to the condition or operation of the DALC Program and are
requested by the indemnifying party to perform its indemnification
obligations hereunder, and to make copies of such books and records,
and (iii) make personnel available to assist in locating any books and
records relating to the DALC Program or whose assistance,
participation or testimony is reasonably required in anticipation of,
preparation for or the prosecution and defense of, any claim subject
to this Article XIII. In the event that the indemnifying party fails
timely to defend, contest or otherwise protect the indemnified party
against any such suit, action, investigation, claim or proceeding, the
indemnified party shall have the right to defend, contest or otherwise
protect itself against the same and may make any compromise or
settlement thereof and recover the entire cost thereof from the
indemnifying party, including without limitation, reasonable
attorneys' fees, disbursements and all amounts paid as a result of
such suit, action, investigation, claim or proceeding or compromise or
settlement thereof.
4. Consequential Damages. An indemnifying party shall have no obligation
to indemnify an indemnified party for any Liabilities arising out of
any interruption of business, loss of profits, loss of use of
facilities, loss of customers, loss of goodwill or other indirect or
consequential damages (a) to the extent, if any, such Liabilities are
caused or contributed to by the actions of the indemnified party or
(b) that are recoverable (and actually recovered) by the indemnified
party from any third party (including insurers). If the amount of any
Liabilities at any time subsequent to payment thereof by the
indemnifying party to the indemnified party pursuant to this Article
XIII is reduced by any recovery, settlement or otherwise or under or
pursuant to any insurance coverage or pursuant to any claim, recovery
settlement against or with any third party (including any insurer),
the amount of such reduction (net of out-of-pocket expenses incurred
in obtaining such reduction) shall promptly be repaid by the
indemnified party to the indemnifying party. To the extent that an
indemnifying party discharges any claim for indemnification hereunder,
the indemnified party shall promptly notify the indemnifying party of
any and all claims the indemnified party has against third parties
(including insurers) and the indemnifying party shall be subrogated
(and the indemnified party shall take all reasonable steps to effect
such subrogation) to all related rights of the indemnified party
against third parties (including any insurers).
5. Subrogation. To the extent that a claim for indemnification is
discharged hereunder, any rights against third parties the
indemnifying party may have with respect to the subject matter of such
claim shall be subrogated to those of the indemnified party.
6. Mitigation. An indemnified party shall take all reasonable steps to
mitigate all indemnifiable Liabilities upon and after becoming aware
of any event which is reasonably likely to give rise to such
Liabilities.
14. ARTICLE
MISCELLANEOUS
1. Governing Law. This Agreement shall be deemed to have been made in the
State of New York and its form, execution, validity, construction and
effect shall be determined in accordance with the laws of the State of
New York, without giving effect to the principles of conflicts of law
thereof.
2. Injunctive Relief. The parties acknowledge that damages at law may be
an inadequate remedy for the breach of any of the covenants and
obligations of the parties contained in this Agreement; accordingly,
to the extent permitted under, and in accordance with, Section 14.4(b)
and the other provisions of this Agreement, each party shall be
entitled, without the need of establishing actual damages, to such
injunctive relief as may be necessary to prevent, or to enjoin the
continuation of, any such breach.
3. Tax Characterization. The parties hereby agree to, and cause their
respective affiliates to, treat the services arrangements that are the
subject of this Agreement in the following manner for all federal,
state and local tax purposes:
(1) this Agreement and the services arrangements set out herein shall
be treated as a contractual relationship between independent
contractors, and not as a partnership or other separate entity;
(2) the sharing of Membership Fee Income pursuant to Section 8.1
shall be treated as a non-partnership revenue sharing arrangement
(with the consequence that each of Transmedia and Signature shall
include in gross income directly its share of the Membership Fee
Income); and
(3) the profit-based marketing fees payable to Signature pursuant to
Section 8.2 shall be treated as fees paid by Transmedia to
Signature for the marketing services provided by Signature
hereunder.
4. Access; Dispute Resolution.
1. Access. Transmedia and Signature shall provide each other's
authorized employees, auditors and attorneys with access, once a
calendar quarter, at reasonable times during regular business
hours and upon reasonable prior notice, and subject to the
confidentiality undertakings contained in this Agreement, to such
party's books and records relating to Profits, Operating Losses
and Membership Fee Income for purposes of reviewing the
calculations thereof; provided, however, any audits performed
hereunder will be at the expense of the party -------- -------
requesting the audit.
2. Dispute Resolution (Mediation). Signature and Transmedia will
endeavor in good faith to promptly, reasonably and equitably
settle disputes arising out of or relating to this Agreement or
the breach hereof (including claims with respect to a party's
performance, failure to perform or adequacy of performance
hereunder). All disputes which the parties cannot settle in the
normal course of business or with the assistance of the Services
Committee shall be mediated in accordance with the provisions of
this Section 14.4(b). The party asserting the claim shall give a
written statement to the other party describing the nature and
substance of the dispute, a brief summary of its position with
respect thereto and its justifications therefor, and its proposal
for resolution. The other party shall provide a written response
thereto within ten business days of its receipt. The position
papers shall be forwarded to Mr. Philip Handy of Transmedia (or,
in the event of Mr. Handy's unavailability, the Chairman of the
Board of Transmedia) and to Mr. Spencer Heine of Montgomery Ward
& Co. Incorporated (or, in the event of Mr. Heine's
unavailability, a designee of Montgomery Ward & Co. Incorporated
or its successor) (together, the "Senior Executives"). The Senior
Executives shall, within ten business days of receiving position
papers, meet to attempt to resolve the dispute. Any such
mediation shall be concluded within 30 days of its commencement.
3. Dispute Resolution (Arbitration). If the mediation provided by
Sectionu14.4(b) of this Agreement is unsuccessful, it is agreed
that any controversy or claim arising out of or relating to this
Agreement, or the breach hereof, shall be presented for
arbitration within 60 days of the conclusion of such mediation.
Such arbitration shall be administered by the American
Arbitration Association in Chicago, Illinois under its Commercial
Arbitration Rules, before a panel of threeu(3) arbitrators, one
of whom shall be selected by Transmedia, one of whom shall be
selected by Signature, and one of whom shall be selected jointly
by Transmedia and Signature (or, in the event that Transmedia and
Signature cannot agree, by the first two arbitrators). Judgment
on the award rendered by the arbitrators may be entered in any
court having jurisdiction over the parties. The costs of such
arbitration, including, without limitation, reasonable attorneys'
fees, shall be borne by the nonprevailing party. Any such
arbitration shall be concluded within ninety (90) days of its
commencement.
5. Severability.
1. If any provision of this Agreement is held to be invalid or
unenforceable, it shall be modified, if possible, to the minimum
extent necessary to make it valid and enforceable or, if such
modification is not possible, it shall be stricken and the
remaining provisions shall remain in full force and effect;
provided, however, that if a provision is stricken so as to
significantly alter the economic arrangements of this Agreement,
the party adversely affected may terminate this Agreement upon
thirty (30) days' prior written notice to the other party.
2. If any of the terms or provisions of this Agreement is in
conflict with any applicable statute or rule of law in any
jurisdiction, then such term or provision shall be deemed
inoperative in such jurisdiction to the extent of such conflict
and the parties will renegotiate the affected terms and
conditions of this Agreement to resolve any inequities.
6. Entire Agreement. This Agreement constitutes the entire agreement
between the parties relating to the subject matter hereof and
supersedes all previous writings and understandings, whether oral or
written.
7. Amendment. This Agreement may not be amended, supplemented or
otherwise modified except by an instrument in writing signed by both
parties.
8. Notices. Any notice required or permitted under this Agreement to be
sent shall be sent by certified mail or courier service, charges
pre-paid, or by facsimile transmission, to the address or facsimile
number specified below:
If to Signature: SignatureCard, Inc.
200 North Martingale Road
Schaumburg, Illinois 60173-2096
Attn.: General Counsel
Telephone: (847) 605-7390
Fax: (847) 605-3044
With a copy to: Montgomery Ward & Co., Incorporated
535 West Chicago Avenue
Suite 26-S
Chicago, Illinois 60671
Telephone: (312) 467-2220
Fax: (312) 467-3064
With a copy to: Jones, Day, Reavis & Pogue
77 West Wacker Drive
Chicago, Illinois 60601-1692
Attn.: Robert Dean Avery, Esq.
Telephone: (312)782-3939
Fax: (312) 782-8585
If to the Company:Transmedia Network Inc.
11900 Biscayne Boulevard
Suite 460
North Miami, Florida 33181
Attn.: Gene Henderson
Telephone: (305) 892-3321
Fax: (305) 892-3342
With a copy to: Equity Group Investments
Two North Riverside Plaza, Suite 600
Chicago, Illinois 60606
Attn.: F. Philip Handy
Telephone: (312) 466-3799
Fax: (312) 454-1671
With a copy to: Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attn.: Stephen P. Farrell, Esq.
Telephone: (212) 309-6000
Fax: (212) 309-6273
or to such other address or facsimile number as the person may specify
in a notice duly given to the sender as provided herein. A notice will
be deemed to have been given when received, if delivered personally,
sent by telecopy or overnight courier (and confirmed in writing within
three (3) business days thereafter), or five calendar days after the
same is sent by registered or certified mail, return receipt
requested, postage prepaid.
<PAGE>
9. Assignment. Except as provided in the following sentence, this
Agreement and the rights and obligations of the parties hereto and
their respective interests hereunder shall not be assignable or
delegable (other than by operation of law). Either party may assign
any or all of its rights and interests and delegate any or all of its
obligations under this Agreement to any one or more of its Affiliates
without the prior written consent of the other party, in which event
the relevant rights and obligations of the assignor and remedies
available to it hereunder shall extend to and be enforceable by such
Affiliate; provided, however, that the assignor shall remain, and the
assignee shall be, fully liable for the performance of all such
obligations in the manner prescribed in this Agreement. In the event
of any such assignment and delegation, any reference to the assignor
by name or as a "party" in this Agreement shall be deemed to refer to
such assignee and shall be deemed to include both the assignor and
such assignee where appropriate. Subject to the preceding sentences,
this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective successors
(including by merger, sale or otherwise) and assigns. Any assignment
in contravention of the provisions of this Section 14.9 shall be void.
10. Standstill. Signature agrees with Transmedia that for a period of five
(5) years following the date of this Agreement, it will not, and it
will ensure that its Affiliates and any person acting on behalf of or
in concert with it or any of its Affiliates shall not, without the
prior written consent of Transmedia: (1) acquire, offer to acquire or
agree to acquire, directly or indirectly (in addition to the Closing
Date Shares, the Option and, upon exercise thereof, the Option Shares
(each, as defined in the Asset Purchase Agreement)), by purchase or
otherwise, more than 3% of the voting securities or (direct or
indirect rights to acquire more than 3% of the voting securities of
Transmedia), on a fully diluted basis, or any assets of Transmedia or
any subsidiary or division thereof or of any such successor
controlling person;
(2) make, or in any way participate, directly or indirectly, in, any
"solicitation" for "proxies" to vote (as such terms are used in
the rules of the Securities and Exchange Commission), or seek to
advise or influence any person or entity with respect to the
voting of any voting securities of Transmedia;
(3) submit a proposal for, or offer (with or without conditions) of
any extraordinary transaction involving Transmedia or its
securities or assets; or
(4) form, join or in any way participate in a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, in connection with any of the foregoing.
Signature shall promptly advise Transmedia of any inquiry or proposal
made to it with respect to any of the foregoing.
11. Headings and References. All section headings contained in this
Agreement are for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement. Unless the context
requires otherwise, all references in this Agreement to any article or
section shall be deemed and construed as references to an article or
section of this Agreement.
12. No Agency; No Partnership. It is understood and agreed that each party
shall have the status of an independent contractor under this
Agreement and that nothing in this Agreement shall be construed as
authorization for either party to act as agent for the other. The
relationship between the parties as set forth herein shall not be
construed as a partnership and neither party shall have any fiduciary
duties to the other.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of
which together shall constitute but one and the same instrument. A
facsimile transmission of the signed Agreement shall be legal and
binding on all parties.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the parties, through their authorized officers,
have duly executed this Agreement intending it to be effective and binding as of
the date first written above.
TRANSMEDIA NETWORK INC.
By:_______________________________
Name:
Title:
SIGNATURECARD, INC.
By:_______________________________
Name:
Title:
[Signature Page to Services Collaboration Agreement]
<PAGE>
SCHEDULE I
DEFINITIONS
"Active DALC Member" means a DALC Member who has paid the annual fee, if
applicable, and has used the DALC Program at least once within the previous
three months.
"Affiliate" means, with respect to a specified corporation or other
organization, a corporation or organization that directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under common
control with, the corporation or other organization specified. For purposes of
this definition, the term "control" means (a) the power, direct or indirect, to
vote more than 50% of the securities having ordinary voting power for the
election or directors (or others performing similar functions) of such
corporation or organization or (b) being a general partner of such organization.
Notwithstanding the foregoing, for purposes of Sections 10.4, 14.9 and 14.10, no
corporation or other organization (including, without limitation, General
Electric Capital Corporation) that would be deemed an Affiliate of Signature
solely by virtue of its control of Montgomery Ward Holding Corp. or any material
stockholder of Montgomery Ward Holding Corp. shall be deemed an Affiliate of
Signature unless and until it purchases substantially all of the assets or the
stock of Signature/Financial Marketing, Inc., and thereafter the term
"affiliate" shall include General Electric Capital Services,uInc. and its
subsidiaries but shall not include the General Electric Company and its other
subsidiaries.
"Airline Frequent Flyer Member Files" means the lists, files, records,
information and data relating to members of frequent flyer and similar programs
of the Exclusive DALC Sponsor Relationships.
"approval" means the process by which a party's authorization(s) for specified
actions and materials are requested and obtained through submitting such actions
or materials to the approving party. Unless otherwise indicated herein, all
disapprovals must be in writing, and all actions or materials as to which
approval or disapproval is not communicated within five (5) business days
following submission of the action or material to the party from whom approval
is being sought shall be deemed to have been approved by such party. No
approvals shall be unreasonably withheld.
"Asset Purchase Agreement" means the Asset Purchase Agreement dated as of March
17, 1999 between Signature and Transmedia, as the same may be amended from time
to time.
"DALC Intellectual Property" means all fictional business names, trade names,
d/b/a names, logos, Internet domain names (including www.dalccom,
www.dining-a-la-card.com and www.diningalacard.com), trademarks, service marks
(including but not limited to DINING A LA CARD(R)), trade dress and any and all
federal, state, local and foreign applications, registrations and renewals
therefor, and all the goodwill associated therewith (collectively, "DALC
Marks"); all patents (including but not limited to all continuations,
extensions, and reissues), patent applications, and inventions and discoveries
that may be patentable (collectively, "DALC Patents"); all copyrights in both
published works and unpublished works (including but not limited to the
copyright subsisting in any marketing materials, membership data, and merchant
data, and in online works such as Internet web sites, excluding any proprietary
software underlying such web sites), and any federal or foreign applications,
registrations and renewals therefor (collectively, "DALC Copyrights"); all
rights in any and all licensed or proprietary computer software, firmware,
middleware, programs, applications, databases, and files (in whatever form or
medium) including all material documentation, relating thereto, and all source
and object codes relating thereto (collectively, "DALC Computer Software and
Files"); all know-how, trade secrets, confidential information, competitively
sensitive and proprietary information (including but not limited to pricing
information, supplier information, telephone and telefax numbers, and e-mail
addresses), technical information, data, process technology, business plans,
drawings, and blue prints (collectively, "DALC Trade Secrets"); and the right to
sue for past infringement, if any, in connection with any of the foregoing; in
each case to the extent used or held for use in the DALC Program; provided,
however, that the DALC Intellectual Property shall not be deemed to include any
intellectual property included among the Excluded Assets (as defined in the
Asset Purchase Agreement).
"DALC Members" means the members, from time to time, of the DALC Program.
"DALC Program" means the registered card, discount dining club membership
program operated under the Dining a la Card(R) trade name and service mark.
"DALC Sponsors" means the marketing partners with which Signature, from time to
time, contracts in relation to the DALC Program.
"Data" has the meaning specified on Section 6.3.
"Economic Covenants" has the meaning specified in Section 7.1(a).
"Exclusive DALC Sponsor Relationships" means any and all marketing partner
arrangements with all airlines worldwide to which Signature is or may, during
the term of this Agreement, be a party.
"GAAP" means generally accepted accounting principles in the United States,
consistently applied.
"Initial Fee Income" means the income from initial membership fees paid by
persons upon becoming DALC Members, net of cancellations, charge backs and other
similar credits.
"Liability" has the meaning specified in Section 13.1.
"License Agreements" have the meaning specified in Section 4.6.
"Make-Whole Amount" has the meaning specified in Section 7.1(b).
"Market Launch Date" has the meaning specified in Section 5.2.
"Member-Merchant Ratio" means the applicable number of total DALC Members to
Merchants within a Territory.
"Membership Fee Income" means Initial Fee Income plus Renewal Fee Income.
"Merchants" means the restaurants and other establishments, from time to time,
that participate in the DALC Program.
"Operating Guidelines" has the meaning specified in Section 5.1.
"Operating Losses" means the excess of (i) the sum of all direct costs,
including, but not limited to, cost of sales, rebate, loss reserves, third party
processing, health insurance premium increases directly attributable solely to
the addition or termination of the Transferred Employees (as defined in the
Asset Purchase Agreement) by Purchaser during the term of the Transition
Services Agreement dated as of the date hereof between the parties and payable
by Transmedia, sales commissions, residual sales commissions payable in respect
of existing Rights-to-Receive generated by the following active independent
sales contractors listed on Schedule 1.2(i) to the Asset Purchase Agreement: (i)
Riverside Marketing, (ii) Universal Biotics Corp., (iii) Card Service
International, Inc. and (iv) Bancard Systems, Inc., customer service (including
directory, fulfillment, enrollment processing call center maintenance costs
associated with both active and inactive members) and cost of inventory (e.g.,
capital cost) (but not including fixed overhead) over (ii) dining revenue from
restaurant spending by DALC Members (net of tax and tip, to the extent
reimbursed to Merchants), all as determined in accordance with GAAP.
"Profits" means the excess of dining revenue from restaurant spending by DALC
Members (net of tax and tip, to the extent reimbursed to Merchants) over all
direct costs, including, but not limited to, cost of sales, rebate, loss
reserves, third-party processing, health insurance premium increases directly
attributable solely to the addition or termination of the Transferred Employees
(as defined in the Asset Purchase Agreement) by Purchaser during the term of the
Transition Services Agreement dated as of the date hereof between the parties
and payable by Transmedia, sales commissions, residual sales commissions payable
in respect of existing Rights-to-Receive generated by the following active
independent sales contractors listed on Schedule 1.2(i) to the Asset Purchase
Agreement: (i) Riverside Marketing, (ii) Universal Biotics Corp., (iii) Card
Service International, Inc. and (iv) Bancard Systems, Inc., customer service
(including directory, fulfillment, enrollment processing, call center
maintenance costs associated with both active and inactive members) and cost of
inventory (e.g., capital cost) but before fixed overhead, as determined in
accordance with GAAP. Profits during any period shall be reduced by any
Operating Losses accumulated from any prior period, to the extent not applied to
the reduction of Profits in any prior period.
"Profit Sharing Period" has the meaning specified in Section 8.2(a).
"Qualified Territory" means a Territory in which at least 15,000 DALC Members
reside within its boundaries.
"Renewal Fee Income" means the income from annual membership fees paid by DALC
Members, net of cancellations, chargebacks and other similar credits.
"Renewal Term" has the meaning specified in Section 11.1.
"Rights-to-Receive" means all rights-to-receive and other credits consisting of
food, beverage, tax and tip credits at all Merchants wherever located in the
United States of America and all agreements, contracts, guarantees, instruments,
security agreements and other documents evidencing or securing, and any and all
collateral and security interests securing, such rights-to-receive and credits
and any and all claims, rights and causes of action related thereto in
connection with the DALC Program.
"Run-off" has the meaning specified in Section 12.1.
"Senior Executives" has the meaning specified in Section 14.4(b).
"Services Committee" has the meaning specified in Section 2.1.
"Signature DALC Members" means each DALC Member which (i) is or was acquired
pursuant to an Exclusive DALC Sponsor Relationship, (ii) is or was acquired
pursuant to an arrangement with any other DALC Sponsor or (iii) is acquired
after the date hereof solely through the marketing and promotional efforts of
Signature.
"Stated Termination Date" has the meaning specified in Section 11.1.
"Territory" means a Designated Market Area as reported by the Standard Rate and
Data Service.
"Transmedia Intellectual Property" means all fictional business names, trade
names, d/b/a names, logos, Internet domain names and other Internet addresses,
trademarks, service marks (including but not limited to TRANSMEDIA(R)), trade
dress and any and all federal, state, local and foreign applications,
registrations and renewals therefor, and all the goodwill and going concern
value associated therewith (collectively, "Transmedia Marks"); all patents
(including but not limited to all continuations, extensions, and reissues),
patent applications, and inventions and discoveries that may be patentable
(collectively, "Transmedia Patents"); all copyrights in both published works and
unpublished works (including but not limited to the copyright subsisting in any
marketing materials, membership data, and merchant data, and in online works
such as Internet web sites, including the software underlying such web sites),
and any federal or foreign applications, registrations and renewals therefor
(collectively, "Transmedia Copyrights"); all rights in any and all licensed or
proprietary computer software, firmware, middleware, programs, applications,
databases, and files (in whatever form or medium) including all documentation
relating thereto, and all source and object codes relating thereto
(collectively, "Transmedia Computer Software and Files"); all know-how, trade
secrets, confidential information, competitively sensitive and proprietary
information (including but not limited to pricing information, supplier
information, telephone and telefax numbers, and e-mail addresses), technical
information, data, process technology, business plans, drawings, and blue prints
(collectively, "Transmedia Trade Secrets"); and the right to sue for past
infringement, if any, in connection with any of the foregoing; in each case to
the extent used or held for use in the Transmedia Program.
"Transmedia Members" means the members, from time to time, of the Transmedia
Program.
"Transmedia Program" means the discount dining program operated by Transmedia
and its Affiliates under the Transmedia(R) tradename and service mark.
<PAGE>
SCHEDULE II
INDEPENDENT CONTRACTORS
1. All Marketing Partner contracts between Signature and the airlines;
2. Dining A La Card membership agreement between Chase Manhattan Bank
USA, N.A. and Signature, dated November, 1997; and
3. Agreement between First USA Bank and Signature, dated January 1, 1998.
<PAGE>
OPERATING GUIDELINES
SIGNATURE OPERATING GUIDELINES
During the term of the Agreement to which this Annex A is attached
(unless a different period is specified below), Signature shall be guided by the
following principles, and shall use its commercially reasonable efforts to
adhere to such principles whenever possible:
I. MEMBERSHIP ACQUISITION
Exclusive DALC Sponsor Relationships. During the five-year period
commencing on the date of the Agreement to which this Annex A is attached,
subject to Section III below, Signature shall deliver, from the Exclusive DALC
Sponsor Relationships only, the following number of new DALC Members (i.e.,
persons who are not as of the date of this Agreement, and were not during the
preceding 12 months, DALC Members) in the aggregate for each year of such
five-year period, distributed evenly (to the extent practicable) on a quarterly
basis; provided, however, that the yearly totals set forth below shall be
cumulative as measured in two year increments:
Year 1 - 500,000
Year 2 - 600,000
Year 3 - 500,000
Year 4 - 400,000
Year 5 - 300,000
---------
2,300,000
II. UTILIZATION
The average monthly utilization rate during the five-year period following the
date of the Agreement shall be no less than 12%.
III. MERCHANT-MEMBER RATIO
Notwithstanding the requirements of Section I above, Signature may not deliver
new DALC Members of such quantity so as to cause the Member-Merchant Ratio
within a Territory to exceed 300:1 at any time; provided, however, that if
Transmedia does not deliver a sufficient number of quality Merchants to enable
Signature to satisfy the guidelines set forth under Section I above, Signature
shall be relieved of any obligation to satisfy such guidelines to the extent of
Transmedia's failure to deliver a sufficient number of qualified Merchants.
IV. TELEMARKETING STANDARDS
To the extent that Signature engages in telemarketing in connection with the
performance of its duties hereunder, Signature shall use commercially reasonable
efforts to ensure that the quality thereof is consistent with Transmedia's
overall service quality standards as provided to Signature in writing from time
to time. Signature shall use its commercially reasonable efforts to ensure that
the following guidelines are followed:
A. Signature representatives (or communicators employed by vendors) shall
approach each call courteously and professionally.
B. Signature shall use its commercially reasonable efforts to ensure that
all communicators understand the DALC Program and the particulars of
the offer being promoted and are able to respond to all probable
questions.
C. The communicator who makes or receives calls shall clearly identify
himself or herself when the call begins.
D. Signature shall not call consumers who are listed on the TPS Service
provided by the Direct Marketing Association.
E. The consumer shall always have the choice to freely accept or reject
any telemarketing offer.
F. Signature communicators and representatives shall respond to (but not
necessarily resolve) all consumer questions or complaints regarding
telemarketing that are referred to it within 48 hours.
G. All offers and promotions made by Signature to businesses or consumers
shall be legal and legitimate.
H. All telemarketing scripts shall clearly communicate all terms of the
offer to the consumer, and the terms and scripts shall have been
presented to and, to the extent provided in this Agreement, approved
by Transmedia in advance (which approval shall not be unreasonably
withheld).
I. Signature shall not solicit through the use of prerecorded messages.
J. Signature shall require its telemarketing vendors to monitor and
follow all federal, state and local telemarketing laws and
regulations.
K. Signature shall promptly advise Transmedia of, or fulfill, all
telemarketing requests for additional written information relevant to
the product offering made by the consumer prior to his or her making a
purchase decision.
L. Signature shall not call consumers or prospective DALC Members on the
following holidays: New Year's Eve (stop calling at 1:00 p.m.), New
Year's Day, Good Friday, Easter Sunday, Passover (first two nights),
Rosh Hashanah Eve and Rosh Hashanah, Yom Kippur Eve and Yom Kippur
Day, Christmas Eve (stop calling at 1:00 p.m.) and Christmas Day.
M. To ensure quality assurance, calls shall periodically be monitored by
supervisors (including Transmedia employees or representatives) and
recorded.
TRANSMEDIA OPERATING PRINCIPLES
Transmedia shall, during the term of this Agreement, comply with the
standards set forth in DALC Sponsor contracts existing on the date of this
Agreement or hereafter entered into in accordance with the terms hereof, as the
same may from time to time be in effect. In addition, during the term of the
Agreement to which this Annex A is attached (unless a different period is
specified below), Transmedia shall be guided by the following principles, and
shall use its commercially reasonable efforts to adhere to such principles
whenever possible:
I. MERCHANT ACQUISITION
During the period commencing 180 days after the date of the Agreement to which
this Annex A is attached and terminating on the fifth anniversary of the date of
the Agreement, Transmedia shall satisfy the following:
(A) Number of Merchants. For every 150 DALC Members existing and delivered
in any Qualified Territory, Transmedia shall, within 180 days of the
date on which either (i) the Territory becomes Qualified or (ii) the
requisite number of DALC Members is delivered, deliver one Merchant;
provided, however, that in no event shall either party permit the
Member-Merchant ratio to exceed 300:1 at any time.
(B) Merchant Quality. At least ninety percent of Merchants in a Qualified
Territory shall have credit card receipts equal to or greater than
$300,000 during the 12 months preceding measurement.
II. FULFILLMENT & DIRECTORY
(A) Within five (5) business days of Transmedia's receipt and approval of
an application for enrollment in the DALC Program, Transmedia will
send to the new DALC Member a fulfillment kit containing the following
materials:
1. Merchant directory
2. Welcome letter
3. Membership brochure
4. Outer envelope
5. Such other materials as the parties shall from time to time
determine.
Transmedia shall fulfill all offers made by Signature in
accordance with the terms of such offers.
(B) Subsequent to delivery of the fulfillment kit, Active DALC Members
will continue to receive at least four updated Directories each year
at times to be determined by the parties in advance. Transmedia
reserves the right to cease sending directory updates to Members who
have not used the DALC Program at least once in the preceding
six-month period; provided, that such members will automatically be
reactivated and be eligible to receive a directory once they use the
DALC Program.
III. DALC MEMBER STATEMENT & REBATE CHECK
(A) Transmedia will produce and mail a monthly statement to all Active
DALC Members, containing the following information:
1. Itemized list of Merchants visited
2. Total expenditure per visit
3. Total number of miles and/or total amount of cash rebate
earned per visit 4. Total amount of mileage credits and/or
cash rebates earned that month 5. Such other information as
the parties shall from time to time determine.
(B) Transmedia shall issue and mail to each DALC Member a check equal to
the requisite discount applicable to such Member's total expenditures
during qualified visits at Merchants during the previous month or (ii)
if elected by a DALC Member (and permitted under a DALC Sponsor
contract, if any), arrange to have the requisite discount reflected on
the DALC Member's credit card statement. Rebate checks, if applicable,
should be processed within fifteen (15) business days of the end of
the calendar month in which the rebate was earned.
IV. CUSTOMER SERVICE
Transmedia shall use commercially reasonable efforts to achieve the following
customer service standards on a per calendar quarter basis:
(A) Transmedia shall maintain a toll-free customer service number which
shall be set forth on all directories.
(B) Transmedia representatives (or communicators employed by vendors)
shall approach each customer call courteously and professionally.
(C) The communicator who makes or receives calls shall clearly identify
himself or herself when the call begins.
(D) Transmedia shall use commercially reasonable efforts to ensure that
all communicators understand the call subject matter and are able to
respond to probable questions.
(E) All correspondence or customer service inquiries should be resolved
within an average of five (5) business days.
(F) On a monthly basis, all Membership and customer service telephone
inquiries should be answered personally within an average of 20
seconds or less.
(G) On a monthly basis, no greater than an average of five percent (5%) of
inbound telephone inquiries should be abandoned.
(H) On a monthly basis, busy signal rates for inbound telephone inquiries
should not exceed an average of five percent (5%) during the hours of
9:00 a.m. to 8:00 p.m., E.S.T.
(I) Customer Service hours of operation initially shall be 24 hours per
day, seven days a week (except legal holidays); provided, however,
that Signature shall use commercially reasonable efforts to
renegotiate DALC Sponsor contracts to substantially reduce such hours
of operation.
(J) To ensure quality assurance, calls shall periodically be monitored by
supervisors (including Transmedia employees or representatives) and
recorded.
<PAGE>
ANNEX B
to Marketing Agreement
ECONOMIC COVENANTS
I. Signature Covenants. Signature and its Affiliates covenant and agree with
Transmedia that it shall not during the term of the Agreement to which this
Annex B is attached:
(A) offer rebates to DALC Members in excess of 20% of the gross dining
bill (including tax, tip and, if applicable, beverage);
(B) agree with any person to provide a directory of Merchants more
frequently than once per calendar quarter;
(C) enter into any marketing partner arrangements with existing or
hereafter acquired DALC Sponsors pursuant to which the directory,
fulfillment and service costs thereof would exceed a standard unit
cost agreed to by the Services Committee by more than 5%; or
(D) sell any new DALC membership during the nine-month period following
the date of this Agreement without charging an annual fee of at least
$49.00, provided, however, that such amount shall thereafter be
subject to adjustment from time to time by the Services Committee
(whose approval shall not be unreasonably withheld or delayed);
II. Transmedia Covenants. Transmedia and its Affiliates covenant and agree with
Signature that it shall not, during the term of the Agreement to which this
Annex B is attached:
(A) incur new Rights-to-Receive such that the ratio of food and beverage
(including tax and tip, if applicable) credits received to cash
advanced is not, during the three year period commencing on the date
of this Agreement, less than 1.6:1 in the first year, 1.7:1 in the
second year and 1.8:1 in the third year; provided, however, that up to
10% of all Rights-to-Receive outstanding at any time or 10% of all
Merchants to which such Rights-to-Receive relate (at Transmedia's
election) shall be excluded from the foregoing calculation; or
(B) grant or pay to any salesperson, independent contractor or other sales
personnel commissions in a manner or in an amount inconsistent with
Transmedia's practices in respect of sales of the Transmedia Program;
provided, however, that for five years after the date hereof,
Transmedia shall not exceed the following commission standards:
(i) For tier one sales people, 5% for the first year of the
restaurant contract and 2% for each subsequent year renewal; and
(ii) For tier two sales people (defined as sales people with a
restaurant portfolio in excess of $3 million in gross usage per
year), 3% for the first year of the restaurant contract and 2%
for each subsequent year renewal;
provided, further, that these standards shall be subject to adjustment
by the Services Committee after the end of the fifth year following
the date of this Agreement.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I GENERAL
ARTICLE II SERVICES COMMITTEE
2.1 Services Committee 2
2.2 Meetings 2
2.3 Specific Responsibilities of the Services Committee 2
2.4 Voting 3
ARTICLE III ROLES AND RESPONSIBILITIES OF THE PARTIES
3.1 Signature Responsibilities 3
3.2 Transmedia Responsibilities. 5
ARTICLE IV MARKETING AND PROMOTION; EXPENSES; LICENSE OF INTELLECTUAL PROPERTY
4.1 Marketing Efforts 7
4.2 Advertising and Promotional Materials. 7
4.3 Expenses. 8
4.4 Membership Applications. 8
4.5 Membership Data. 8
4.6 Licenses of Intellectual Property 8
4.7 No Rights by Implication. 8
<PAGE>
ARTICLE V OPERATING GUIDELINES
5.1 Operating Guidelines 9
5.2 Opening New Markets 9
ARTICLE VI MARKETING EXCLUSIVITY AND SPONSOR INFORMATION
6.1 Signature Exclusivity. 10
6.2 Non-Exclusivity. 10
6.3 Membership Files and Data 10
6.4 Negotiation of DALC Sponsor Contracts 11
ARTICLE VII ECONOMIC COVENANTS
7.1 Economic Covenants 11
ARTICLE VII MARKETING FEES PAYABLE TO SIGNATURE
8.1 Fee Sharing. 12
8.2 Profit-Based Payments 12
ARTICLE IX GRANT OF ADDITIONAL MARKETING RIGHTS
9.1 Transmedia Program Memberships 13
9.2 No Rights to Members or Membership Data. 13
<PAGE>
ARTICLE X OWNERSHIP, CONFIDENTIALITY AND PUBLIC INFORMATION
10.1 Ownership. 13
10.2 Ownership Exclusions. 14
10.3 Confidentiality. 14
10.4 Covenant Not to Compete. 15
10.5 Public Announcements. 16
ARTICLE XI TERM AND TERMINATION
11.1 Term. 16
11.2 Early Termination by Either Party. 16
ARTICLE XII EFFECT OF TERMINATION
12.1 Run-off 17
12.2 Confidential Information. 18
12.3 Accrued Obligations. 18
12.4 Return of Materials. 18
12.5 Remedies. 18
12.6 Survival. 18
ARTICLE XIII INDEMNIFICATION
13.1 Indemnification by Signature. 19
13.2 Indemnification by Transmedia. 19
13.3 Indemnification Procedure. 19
13.4 Consequential Damages. 20
13.5 Subrogation. 20
13.6 Mitigation 20
ARTICLE XIV MISCELLANEOUS
14.1 Governing Law. 21
14.2 Injunctive Relief. 21
14.3 Tax Characterization 21
14.4 Access; Dispute Resolution. 21
14.5 Severability. 22
14.6 Entire Agreement. 23
14.7 Amendment. 23
14.8 Notices. 23
14.9 Assignment 24
14.10 Standstill. 25
14.11 Headings and References. 25
14.12 No Agency; No Partnership. 26
14.13 Counterparts. 26
Schedule I Definitions
Annex A Operating Guidelines
Annex B Economic Covenants
<PAGE>
Exhibit 4
TRANSITION SERVICES AGREEMENT
TRANSITION SERVICES AGREEMENT dated as of this 30th day of
June, 1999 between SIGNATURECARD, INC., an Indiana corporation
("SignatureCard"), and TRANSMEDIA NETWORK INC., a Delaware corporation
("Purchaser").
RECITALS
WHEREAS, SignatureCard and Purchaser are parties to an Asset
Purchase Agreement dated as of March 17, 1999 (as the same may be amended,
modified or supplemented from time to time, the "Purchase Agreement"), pursuant
to which Purchaser has agreed to purchase certain assets of SignatureCard
related to the membership program operated under the Dining a la Card(R) trade
name and service mark (the "DALC Program"); and
WHEREAS, Purchaser desires that SignatureCard provide, and
SignatureCard is willing to provide, either directly or through its affiliates,
certain services during the period and on the other terms and conditions
hereinafter set forth, as contemplated by Section 2.1(b)(xiii) of the Purchase
Agreement (capitalized terms used and not otherwise defined herein having the
meanings ascribed thereto in the Purchase Agreement).
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
I. SECTION SERVICES PROVIDED.
A. Commencing on the Closing Date and during the term of this Agreement,
SignatureCard shall, or shall cause its affiliates to, provide to Purchaser and
its subsidiaries (i) inbound customer service support staff and services, (ii)
computer and information technology support staff and services and (iii) other
incidental support services, all as described on Annex A hereto and in
accordance with the requirements of Section 1(b) hereof. SignatureCard shall, or
shall cause its affiliates to, furnish such services at the reasonable request
of, and on reasonable and customary notice to, Purchaser, consistent with its
past practice during the twelve month period prior to the date hereof and
consistent with the standards of conduct applicable to Purchaser under the
Operating Guidelines pursuant to the Services Collaboration Agreement between
the parties of even date herewith (the "Services Collaboration Agreement").
A. The services to be provided hereunder shall be consistent in kind,
quality and amount with those that SignatureCard or its affiliates have provided
to the DALC Program in the ordinary course of business during the 12 month
period prior to the date hereof.
I. SECTION OFFICE SPACE. In addition to the services to be provided pursuant to
Section 1, SignatureCard shall cause Montgomery Ward Life Insurance Company ("MW
Life") to enter into a sublease with Purchaser in substantially the form of
Exhibit A hereto (the "Sublease") providing for Purchaser's use of the eastern
half of the seventh floor of the office space located at 150 North Martingale
Road, Schaumburg, Illinois 60173 (as more particularly described in such
Sublease and on Annex B hereto), fully outfitted and equipped, as the same has
been provided to the DALC Program in the ordinary course of business during the
12 month period prior to the date hereof.
I. SECTION FEES.
A. Commencing as of the Closing and continuing until the earlier of the
expiration of the term or the effective date of a termination of the term under
Section 4 hereof, Purchaser shall pay to SignatureCard (or, in the case of
clause (iii) below, its affiliates) the following amounts:
1. for services provided under Section 1(a)(i) hereof, a flat rate, call
cost-per-minute fee (the "Customer Service Fee") equal to $.662 and a flat-rate
cost per-member month fee (the "Non-Customer Service Fee") equal to $.035;
1. for services provided under Section 1(a)(ii) hereof, a flat rate monthly
fee (the "Information Technology Support Fee") equal to $128,000 and a flat fee
to be mutually agreed upon for other information technology projects (the
"Special Projects Fee");
1. the actual direct costs of SignatureCard (or its affiliates) for
telephone charges (other than as paid pursuant to clauses (i) and (ii) above),
copy costs, equipment maintenance, faxes and such other incidental charges as
are incurred by Purchaser's employees or independent contractors in the office
space referred to in Section 2 above; and
1. the actual direct costs of SignatureCard (and its affiliates) for
production and fulfillment of membership materials for the DALC Program provided
by the Information Technology Division of National Computer Systems, Inc. prior
to August 1, 1999.
The Customer Service Fee, the Non-Customer Service Fee, the Information
Technology Support Fee, the Special Projects Fee and all such other charges
shall be payable monthly within 30 days following Purchaser's receipt of an
invoice from SignatureCard of the same, together with supporting documentation
necessary to substantiate the amount charged and providing operating statistics
relative to the DALC Program.
A.
1. SignatureCard (or its affiliates) will have the right to retain third
parties to provide services hereunder on behalf of Purchaser and its
subsidiaries from time to time, in accordance with SignatureCard's customary
practice in the ordinary course of business during the 12 month period prior to
the date of this Agreement. The use by SignatureCard (or its affiliates) of any
such third party will not be subject to approval by Purchaser; provided that if
requested by Purchaser, SignatureCard will keep Purchaser advised from time to
time regarding any significant use of such third parties and the cost of such
use.
1. SignatureCard (or its affiliates) shall be required to retain such third
parties if services to which Purchaser is entitled as described in Section 1
hereof are requested by Purchaser and SignatureCard and its affiliates elected
not to employ or hire personnel sufficient to perform such services.
SignatureCard shall be reimbursed for the fees and expenses of any such third
party retained by SignatureCard or its affiliates, subject to the provisions of
Section 3(a).
I. SECTION TERM.
A. This Agreement shall continue in effect until March 31, 2000, unless
terminated in accordance with Section 4(b) below, provided that if Purchaser
desires a continuation of the term of this Agreement beyond March 31, 2000 and
Purchaser notifies SignatureCard thereof on or before March 1, 2000,
SignatureCard agrees to negotiate with Purchaser in good faith as to the scope
and duration of services to be provided and as to appropriate fees therefor
based upon the cost to SignatureCard or its affiliates of the provision of such
services (including overhead and other allocated costs); provided; however, that
nothing in this Section 4(a) shall be construed to require SignatureCard to
extend such term.
A. Purchaser may terminate this Agreement for any reason at any time upon
at least 30 days' prior written notice to SignatureCard. Upon termination of
this Agreement pursuant to this Section 4(b), the fees payable under Section 3
hereof shall be payable only through the effective date of termination.
A. SignatureCard may terminate this Agreement upon the occurrence of any of
the following events: (i) termination of the Services Collaboration Agreement
pursuant to Section 11.2(e) or (f), (ii) termination of the Sublease due to the
material breach thereof by Purchaser, or (iii) the failure by Purchaser to make
any payment required to be made hereunder, and such failure has not been cured
within 60 days following Purchaser's receipt of written notice from
SignatureCard of the same. Upon termination of this Agreement pursuant to this
Section 4(c), the fees payable under Section 3 hereof shall be payable only
through the effective date of termination.
A. Upon termination of this Agreement or upon expiration of the term
hereof, SignatureCard shall retain all books and records, or copies thereof,
pertaining to the business of Purchaser and its subsidiaries used or generated
in the course of the provision of services hereunder. Thereafter, SignatureCard
will have the right to dispose of such books and records, but will not do so
unless it has given Purchaser at least 90 days' prior notice of such disposition
and the reasonable opportunity, to the extent practicable, to have such books
and records copied or delivered to Purchaser at Purchaser's expense.
I. SECTION INDEPENDENT CONTRACTOR; NO PARTNERSHIP.
A. SignatureCard shall select the SignatureCard employees to provide
services hereunder on a basis consistent with past practice, and such
individuals shall not be deemed to be employees of Purchaser or any of its
subsidiaries. All work performed hereunder by SignatureCard shall be performed
by SignatureCard as an independent contractor and in accordance with past
practices of SignatureCard in conducting the DALC Program and the standards set
forth in the Operating Guidelines applicable to Purchaser pursuant to the
Services Collaboration Agreement.
A. Notwithstanding anything herein to the contrary, no partnership or joint
venture has been created in or by this Agreement or as a result of the provision
of services hereunder.
I. SECTION EXCLUSIVE.
A. Subject to the following sentence, this Agreement shall not be
assignable by either party without the express prior written consent of the
other party. Either party may assign any or all of its rights and interests and
delegate any or all of its obligations under this Agreement to any one or more
of its affiliates without the prior written consent of the other party, in which
event the relevant rights and obligations of the assignor and remedies available
to it hereunder shall extend to and be enforceable by such affiliate; provided,
however, that the assignor shall remain, and the assignee shall be, fully liable
for the performance of all such obligations in the manner prescribed in this
Agreement. In the event of any such assignment and delegation, any reference to
the assignor by name or as a "party" in this Agreement shall be deemed to refer
to such assignee and shall be deemed to include both the assignor and such
assignee where appropriate. Subject to the preceding sentences, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective successors (including by merger, sale or otherwise)
and assigns. Any assignment in contravention of the provisions of this Section
5(a) shall be void.
A. This Agreement may be amended only by an instrument in writing or
executed by the parties hereto. This Agreement does not amend, modify or
supersede the Purchase Agreement in any way.
I. SECTION NOTICES. All notices and other written communications hereunder shall
be in writing and shall be given in accordance with the provisions of the
Purchase Agreement.
I. SECTION SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage will occur if any provision of this Agreement is not performed in
accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any other remedy at law
or equity; provided, however, that each of the parties agrees to provide the
other with written notice at least two business days prior to filing any motion
or other pleading seeking a temporary restraining order, a temporary or
permanent injunction, specific performance, or any other equitable remedy and to
give the other and its counsel a reasonable opportunity to attend and
participate in any judicial or administrative hearing or other proceeding held
to adjudicate or rule upon any such motion or pleading.
I. SECTION GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Illinois without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Illinois or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Illinois.
I. SECTION SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
I. SECTION COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
I. SECTION DISPUTE RESOLUTION (MEDIATION). SignatureCard and Purchaser will
endeavor in good faith to promptly, reasonably and equitably settle disputes
arising out of or relating to this Agreement or the breach hereof (including
claims with respect to a party's performance, failure to perform or adequacy of
performance hereunder). All disputes which the parties cannot settled in the
normal course of business shall be settled with the assistance of the Services
Committee pursuant to the terms of the Services Collaboration Agreement or, in
the event the Services Committee shall fail, mediated in accordance with the
provisions of Section 14.4(b) of the Services Collaboration Agreement. Any such
mediation shall be concluded within 30 days of its commencement.
I. SECTION DISPUTE RESOLUTION (ARBITRATION). If the mediation provided by
Section 12 of this Agreement is unsuccessful, it is agreed that any controversy
or claim arising out of or relating to this Agreement, or the breach hereof,
shall be presented for arbitration within 60 days of the conclusion of such
mediation. Such arbitration shall be administered by the American Arbitration
Association in Chicago, Illinois under its Commercial Arbitration Rules, before
a panel of three (3) arbitrators, one of whom shall be selected by Purchaser,
one of whom shall be selected by SignatureCard, and one of whom shall be
selected jointly by SignatureCard and Purchaser (or, in the event that Purchaser
and SignatureCard cannot agree, by the first two arbitrators). Judgment on the
award rendered by the arbitrators may be entered in any court having
jurisdiction over the parties. The costs of such arbitration, including without
limitation reasonable attorneys' fees, shall be borne by the non-prevailing
party. Any such arbitration shall be concluded within ninety (90) days of its
commencement.
I. SECTION CONSENT TO JURISDICTION. The parties to this Agreement hereby
irrevocably consent to the non-exclusive jurisdiction of any court of civil
jurisdiction sitting in Chicago, Illinois, for purposes of enforcing an arbitral
award or for any other purpose relating to or arising out of this Agreement.
I. SECTION ANNEXES. The Annexed to this Agreement is deemed a part of this
Agreement and is subject to all of the provisions herein (including without
limitation Section 4(c) hereof).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
SIGNATURECARD, INC.
By
Name:
Title:
TRANSMEDIA NETWORK INC.
By
Name:
Title:
[Signature Page to Transition Services Agreement]
<PAGE>
ANNEX A
SERVICES TO BE PROVIDED
1. Maintenance and administration of Internet sites.
2. Reciprocity processing for members and merchants with Signature Japan Co.,
Ltd. (f/k/a CardPlus Japan Co., Ltd.) ("CPJ") as determined by the Master
License Agreement, dated as of October 14, 1996, between Signature and CPJ.
<PAGE>
ANNEX B
SCHEMATIC OF LEASED PROPERTY
[TO BE ATTACHED]
